Oxford Instruments plc Report and Financial Statements 2022

Oxford Instruments plc

Report and Financial Statements 2022

Oxford Instruments plc, a leading provider

of high technology products and systems

for industry and research

Contents

...enabling a

greener

economy

...increasing

connectivity

...improving

health

...making leaps

in scientific

understanding

Read about how we are

helping improve the

performance capabilities of

alternative energy sources

Read about our role in helping

meet the surge in demand for

data and connectivity

Read about how we are

helping improve diagnostics

fora growing and ageing

population

Read about how we are

helping to make the science

oftoday the technology of

tomorrow

Find out more on page 8 Find out more on page 9 Find out more on page 10 Find out more on page 11

Strategic Report

Highlights 1

Making a Material Difference 2

Chair’s Statement 12

Chief Executive’s Review 14

Market Context 20

Business Model 22

Our Strategy 24

Engaging with Stakeholders 26

Key Performance Indicators 34

Operations Review 36

Sustainability 48

TCFD Report 57

Finance Review 67

Risk Management 77

Viability Statement 85

Governance

Chair’s Governance Overview 88

Board of Directors 90

Board Leadership and Company Purpose 92

Corporate Governance Statement 92

Division of Responsibilities 93

Composition, Succession and Evaluation 98

Nomination Committee Report 106

Audit and Risk Committee Report 110

Sustainability Committee Report 117

Directors’ Remuneration Report 120

Shareholder Information 142

Directors’ Report 143

Financial Statements

Directors’ Responsibilities 148

Independent Auditor’s Report 149

Consolidated Statement of Income 156

Consolidated Statement of

ComprehensiveIncome 157

Consolidated Statement of

Financial Position 158

Consolidated Statement of

Changes in Equity 159

Consolidated Statement of Cash Flows 160

Accounting Policies 161

Notes to the Financial Statements 167

Parent Company Statement of

Financial Position 198

Parent Company Statement of

Changes in Equity 199

Notes to the Parent Company

FinancialStatements 200

Historical Financial Summary 208

Strong performance over the year provides

thefoundation for sustainable growth and

continued medium-term marginexpansion

Financial highlights

•

Organic revenue growth of 14.5%,

partially constrained by supply chain

disruption. Reported revenue growth

bolstered by WITec acquisition

•

Strong growth in orders of 19.9%

atorganic constant currency

•

Reported order book of £260.2m,

growth of 26.6% at organic constant

currency

•

Strong growth in adjusted operating

profit of 16.9%, with margin rising

to18.1%

•

Statutory profit measures include

a£6.4m charge as a result of the

unwind of the brought forward

£6.1mfinancial derivative asset

•

Growth and phasing of orders and

revenue led to an increase in working

capital, resulting in normalised cash

conversion of 84%

•

Growth in total dividend for the year

of 6.5%

Operational highlights

•

Resilience of our business model

and product strength underpinned

improved financial performance

despite significant inflationary

pressures

•

Strong order growth across each

ofour end markets supported by

long-term structural growth drivers

and global sustainability agenda

•

Investment in semiconductor

markets drives strong growth across

our materials analysis and etch and

deposition portfolio

•

Research and development of

advanced materials supports strong

demand for our range of analysis

and imaging systems

•

Launch of advanced benchtop

microscopy system complements

our imaging technology, increasing

our product reach and capability into

Healthcare & Lifescience

•

Quantum computing research and

evolving commercial market drive

demand for our cryogenic systems

and scientific cameras

•

Strong performance from WITec

acquisition in first year with key

applications across advanced

materials and life science research

Adjusted

Statutory

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Revenue

£367.3m

(2021: £318.5m) +15.3%

% change organic

constant currency

+14.5%

Revenue

£367.3m

(2021: £318.5m) +15.3%

Adjusted profit before taxation

£65.9m

(2021: £55.9m) +17.9%

Profit before taxation

£47.6m

(2021: £52.2m) (8.8%)

Adjusted operating profit

£66.3m

(2021: £56.7m) +16.9%

% change organic

constant currency

+15.2%

Operating profit

£48.3m

(2021: £53.0m) (8.9%)

Adjusted basic earnings per share

94.3p

(2021: 78.6p) +20.0%

Basic earnings per share

67.1p

(2021: 72.8p) (7. 8%)

Adjusted operating profit margin

18.1%

(2021: 17.8%) +30bps

Operating profit margin

13.2%

(2021: 16.6%)

Cash conversion

84%

(2021: 102%)

Net cash

£85.9m

(2021: £97.6m)

Dividend per share for the year

18.1p

(2021: 17.0p) +6.5%

1. Adjusted items exclude the amortisation and

impairment of acquired intangible assets,

acquisition items, 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. Cash conversion measures the percentage

of adjusted cash from operations to adjusted

operating profit, as set out in the Finance Review.

3. Net cash includes total borrowings, cash at bank and

bank overdrafts but excludes IFRS 16 lease liabilities.

4. 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. Organic numbers remove the impact

of the acquisition of WITec.

Highlights

Oxford Instruments plc | Report and Financial Statements 2022

We want our employees to feel proud

towork for a company that is recognised

as a leader in its field.

For over 60 years we have been making a positive difference to

the world through our products and services and over this time

we have developed a unique culture.

Through our Horizon strategy, we place our customers at the

centre of everything we do. We have a shared responsibility

across the business to earn the trust of our colleagues, customers,

shareholders and other key stakeholders, taking responsibility for

solving problems and ensuring that we do whatwe say we willdo.

For more information on how we engage with our key

stakeholders, please see pages 26 to 33.

We continue to focus on ensuring that everyone who works

herefeels included and valued. We actively seek out different

perspectives, helping to create a strong sense of belonging and

encouraging everyone to contribute and to feel that they can

bring their whole self to work.

Our ability to innovate continues to make this a great place to

work and to partner with. Everyone can challenge the status quo

and question why we do something a certain way in order to

help drive improvements.

Making a Material Difference

Our purpose,

strategy,

values and

culture

Customer

People

Capabilities

People

Capabilities

Customer

Support

Innovation

and Product

Development

Market

Intimacy

Operational

Excellence

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Our values are: Our culture

Our cultural KPIs

We monitor our culture by assessing,

amongst other things, feedback received

from our global employee engagement

surveys. This year we have also instigated

CEO Townhalls that all employees are

invited to and where they are encouraged

to ask questions and comment on what

they believe. Carefully considering

employee feedback and views helps us

to identify the areas in which we may

need to take action to ensure that we

enhance or preserve our culture.

Our core purpose is to support our customers in addressing some of the

world’smost pressing challenges, enabling a greener, healthier, more connected,

advanced society for all. Delivery against our strategy is aligned with our purpose

and is also underpinned by our values, culture and how we do business.

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.

Being

Oxford

Instruments

98%

of new starters say

we’re friendly and

welcoming

92%

of employees feel

trusted to do a

good job

85%

of employees

proud to work at

Oxford Instruments

8,308

online training

courses completed

43%

of staff work

outside the UK

25%

female workforce

Employee

Pride

Reputation

Trust

Care

Respect Accountability

Sustainable

Health and

Safety

in working for us

and makinga

difference

for positive

contribution to

society

our people to

deliver

we care about our

employees, our

customers and our

impact on the

world

being inclusive and

valuingour

employees

for our

actions

taking our role

seriously as we

progress our

environmental,

social and

governance

agendas

ensuring everyone

is safe

During the year, we monitored progress across a

rangeofculturalKPIs:

Oxford Instruments plc | Report and Financial Statements 2022

Making a Material Difference continued

Understanding

Oxford Instruments

What we do:

Materials &

Characterisation

50% of Group revenue

Research &

Discovery

33% of Group revenue

Service &

Healthcare

17% of Group revenue

Products and solutions that enable

the fabrication and characterisation

of materials and devices down to

theatomic scale, predominantly

supporting customers across applied

R&D as well as the production and

manufacture of high technology

products and devices.

Provides advanced solutions that

create unique environments and

enable imaging and analytical

measurements down to the

molecular and atomic level,

predominantly used in scientific

research and applied R&D.

Provides customer service and

support forour own products.

Revenue

£185.5m +24.8%

Adjusted operating profit

£26.1m +28.6%

Revenue

£120.3m +6.1%

Adjusted operating profit

£21.3m +9.2%

Revenue

£61.5m +8.8%

Adjusted operating profit

£18.9m +11.8%

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Who we work with:

Healthcare & Lifescience

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.

Advanced Materials

Where there is increased investment into new materials to enable higher

and often disruptive performance, as well as demand for more

sustainable use of valuable and finite natural resources.

Research & FundamentalScience

Where we help customers develop breakthrough applications, gaining

previously unknown insights.

Semiconductor & Communications

The push for more power-efficient devices, increased connectivity and the

increased demand for semiconductor chips across consumer electronics

is creating opportunities for growth.

Quantum Technology

Increased national programmes and associated funding as researchers

continue to make significant advances with quantum technology and the

promise of practical commercial quantum technology.

Energy & Environment

Revitalisation and global recognition of dramatic changes to energy

requirements and the global urgency regarding carbon emissions are

accelerating the move to new energy and environmental solutions.

Academic

43%

Commercial

57%

Academic

74%

Commercial

26%

Where we

operate:

Revenue by region:

Rest of World

UK

Germany

Japan

Rest of Europe

Rest of Asia

USA

China

£9.8m

£20.2m £28.1m £45.7m£39.0m £40.7m £79.9m £103.9m

Oxford Instruments plc | Report and Financial Statements 2022

Horizon is delivering tangible

financial benefits and our continued

execution of it has provided the

capabilities needed to deliver

continued progress in the face of

exceptional challenges over the

past few years. 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.

Making a Material Difference continued

Reasons

to invest

Confidence in strategy

Strong financial position

World-class brand

reputation

See pages 24 and 25 See pages 67 to 76 See pages 36 to 47

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 achievement of our

strategy and deliver considerable

long-term benefits.

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 continue to strengthen

our relationships with customers,

developing more efficient and

effective ways of increasing the

value of our support offering.

Wecontinue to add value to

existing customers, as well as

creating growth opportunities in

new market segments, through

application-specific solutions with

improved workflows, bespoke

analytics, data interpretation and

associated support services.

Cocoon Nebula

Image: Bill Snyder

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

The 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 our chosen

end markets and their fundamental

growth drivers.

Access to attractive

markets

Focus on sustainability

See pages 20 and 21 See pages 48 to 66

Sustainability is the cornerstone

ofour strategy to drive stakeholder

value and as a Group we recognise

the important role we play and the

impact we have on the environment

and society. We remain committed

to reducing the impact of our

operations and encouraging

engagement from our suppliers

also. Through our products and

services, we make a significant

positive impact on the world by

enabling a greener, healthier, more

connected advanced society and

as such we are well positioned to

drive positive change in the world.

As well as being a technical leader,

Oxford Instruments is on the path

tobecoming a green leader in the

marketplace.

Oxford Instruments plc | Report and Financial Statements 2022

Find out more on page 41

The World Health Organization has said

climate change is the greatest threat

toglobal health in the 21st Century.

Sincethe 1800s, human activities have

been the main driver of climate change,

predominantly through the burning of

fossil fuels. We have all seen or

experienced the impact this is having on

the world: increased flooding, extreme

heat, and food and water scarcity. With a

global commitment to achieve net zero,

reducing carbon emissions to the lowest

level possible, by 2050, there is increasing

pressure on everyone to phase out the

use of and reliance on fossil fuels.

The challenge, however, is finding

alternative energy sources that offer

thesame performance capabilities,

andwhile fossil fuels remain plentiful and

inexpensive it can be difficult for many to

make the transition. One widely available

alternative is solar energy, with the level

of solar energy reaching habitable land

being 1,000 times the amount of fossil

fuel energy extracted globally per year.

The problem is finding a way to capture,

convert, store and distribute this energy

efficiently and affordably.

Solar panels offer the solution,

withresearchers looking at how to make

these more efficient and cost effective.

Our enabling technologies, including our

material analysis tools, are helping

manufacturers and researchers image

and analyse solar cells to understand

how composition impacts performance,

allowing them to design enhanced

capabilities into the cells. Our products

offer users unique insight as their

sensitivity provides visualisation with

minimal damage to the sample,

lettingthem analyse solar cell details that

were previously impossible to capture.

Batteries offer a further alternative to

fossil fuels and can facilitate more

sustainable travel, as well as providing

efficient and affordable storage for

renewable energy. Batteries require less

maintenance and run cleaner than

traditional fuel convertors, however they

must overcome a few challenges before

they can fully permeate the transport

market. This includes making them

lighter, more cost effective and more

energy efficient in regard to discharge

and recharge times.

Our atomic force microscopes (AFM),

nuclear magnetic resonance (NMR) and

material characterisation solutions are

being used by many battery

manufacturers to help them understand

more about the properties of batteries at

the nanoscale and how these change

over the lifetime of a battery. This is

helping researchers find new battery

materials and structures that could

translate into lower cost, higher

performing, more environmentally

friendly solutions. By being close to our

customers we have been able to stand

out in the market with a tailored portfolio

of solutions dedicated to the specific

needs of the battery market.

We continue to look for further

opportunities to offer solutions that can

help those working to accelerate our

transition to a low-carbon economy.

Enabling

agreener

economy

Making a Material Difference continued

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Find out more on page 39

Increasing

connectivity

One thing that has become clear in recent

years is that being connected to the

internet is no longer just a nice-to-have

option, but a necessity that is becoming

increasingly vital for everyday activities.

The essential nature of connectivity and

communication is such that many can no

longer imagine life without it; it has

become an integral part of working,

retail,healthcare, logistics and education.

In line with this, we currently find

ourselves in the middle of a technology

boom, considered by many to be the next

industrial revolution. As technology

advances, connectivity is driving

personal, social and economic

development and the UN has gone so far

as to propose having access to internet

services should be a part of our human

rights. This industrial transformation is

being powered by constant connectivity,

which demands 24/7 access to

high-speed internet, changing how we

live, learn, work and play.

Together, the advancement of technology

and the drive for connectivity is driving an

unprecedented increase in demand for

semiconductor chips, to enhance

electronics and provide faster, more

accessible bandwidth to ensure ultimate

performance from the products.

The range of semiconductor applications

is poised to expand dramatically with the

spread of 5G, advances in the Internet of

Things (IoT), autonomous driving and

neural sensors. Devices themselves range

from phones and tablets through to

washing machines and cars. It is

expected that the number of devices

thatcan connect through the IoT will

reach 22billion by 2025. The world is

increasingly mobile, as we consume

andgenerate more data every year.

The result of more people trying to

connect at once and the increasing

amount of data being transferred is a

need for faster, more stable and secure

networks. The onus is on data centres to

meet these requirements as well as on

device manufacturers to make products

that can help people shape their activities

to improve their quality of life.

The huge demand for connectivity is

driving demand for our specialised

analysis solutions and our compound

semiconductor processing systems. As

silicon semiconductor chips become

smaller, analysis becomes more

challenging and the ever more important

our tools become. The precision and

resolution of our products are clear

differentiators for us, making us the

supplier of choice for many leading

electronic device manufacturers.

Our defect review tools are helping

manufacturers during the quality

assurance and quality control stage,

providing insights into possible

performance enhancements for next

generation devices. Customers choose

usas we ensure their processes deliver

the required performance, as well as

driving manufacturing efficiency and

reducing costs.

Thanks to the relationships we build with

our customers, we understand the

challenges they face, including increased

demand for compound semiconductors

which needs improved manufacturing

capabilities and higher production yields.

Here our specialised processing systems

and critical layer solutions are making a

positive impact on end device

performance, driving down costs and

increasing yields. Our solutions are being

used to produce high performance indium

phosphide devices to help build reliable

and fast fibre optic networks supporting

the rise in 5G and cloud applications, and

the resulting amount of data being

produced. Customers choose our

products as we can offer significant

advantages for them, such as delivering

more devices per wafer, improved yield,

and enhanced device performance for

the end user.

Oxford Instruments plc | Report and Financial Statements 2022

Find out more on page 44

Making a Material Difference continued

Improving

health

By 2050 it is estimated that the global

population will have reached nearly 10

billion, with 16% being aged over 65.

Growth in age and population in turn

increases the number of people living

with chronic health conditions, which

results in greater pressures on the

healthcare system. One way to ease the

pressure is by transforming the efficacy of

medicines and treatments through

developing a better understanding of

health and disease at a cellular and

molecular level.

Our microscopy solutions are often

chosen by researchers working to garner

a fundamental understanding of diseases

such as cancer, Alzheimer’s, diabetes and

cystic fibrosis. Building on our market

intimacy we have enhanced our offerings

to better meet the specific needs of

researchers in this field. For example, we

offer imaging capabilities for larger

samples in an easy-to-use platform,

which was previously unavailable in the

market. The sensitivity of our systems is

also revealing previously unseen details

that show cellular response to stimuli,

such as difficult treatment options.

Using these unique insights to build a

fuller picture of disease mechanisms, we

can help accelerate the speed of drug

development. Measuring indications can

guide what treatments may, or may not,

work, improving the efficacy of medicines

and reduce development costs.

Currently it costs around £1.5 billion to

bring a single drug to market, and only

one drug in 5,000 gets there. The huge

development costs result in prohibitively

expensive medications or even barriers

totheir developments for some illnesses.

A disease can also vary between patients

with the same condition and medications

also have a different success rate across

patients as well. Currently all patients

with a certain condition receive the same

initial treatment, even though it may only

be 30%-60% effective. This means

patients require medical assistance for

longer periods of time, putting pressure

on healthcare providers, or they are

suffering more with a condition than

others, impacting their quality of life.

Personalised medicine will help address

these issues and is becoming more of a

reality. Building on the insights

researchers have gathered, the use of

gene sequencing is helping unlock insight

regarding the individual patient, allowing

doctors to develop a treatment plan that

will work best for them. The ability of our

cameras to capture fine details very

quickly is helping researchers use gene

sequencing to reveal more about likely

responses to different treatment options.

This will enable doctors to treat patients

more successfully and help reduce spend

on ineffective medications.

Edward Teller famously stated that the

science of today is the technology of

tomorrow. Another way to think of this is

that today’s curiosity is tomorrow’s cure.

Many of our everyday essentials would

have been considered impossible even a

decade ago, but through fundamental

science researchers have been able to

solve some of the most important

challenges the world has faced.

Over the past 200 years there has been a

huge rate of change, driven largely by the

application of fundamental science to aid

economic, social and technological

progress. By exploring the limits of what’s

possible, researchers have created new

understanding and pushed boundaries to

explore ideas, test them and expand

them, helping to generate the solutions

for everyday life, as well as provide

answers to some of the great mysteries of

the universe. As scientific understanding

drives advances in technological

capabilities, this in turn can help facilitate

new scientific breakthrough and

discoveries, a truly virtuous circle.

Our products are helping researchers

make these step-change advances,

helping to progress a broad range of

application areas. It is through the use of

our cryogenic refrigerators that we have

aided the continued development of

quantum technology, helping researchers

build quantum computers and supporting

the commercialisation of this field. By

working closely with our customers to

understand their changing needs, we can

ensure our products can best support

them and anticipate their requirements.

Our advanced solutions are helping

researchers to explore and understand

the realms of nuclear fusion, which has

the potential to influence next generation

materials and provide abundant

carbon-free electricity. Thanks to the

heightened speed of our products, we

can capture what happens in minute

fractions ofa second, which is key to

unlocking nuclear fusion.

Astronomers often choose our high

sensitivity scientific cameras to aid their

understanding of the world around us, as

well as the universe at large. Our cameras

are favoured because of their unrivalled

speed, extra large field of view and

excellent sensitivity. One recent project is

helping facilitate optimal alignment of the

mirrors within the Extremely Large

Telescope in Chile, which will help reveal

details of the birth of the earliest stars

and galaxies. This will help answer many

of the most pressing, unsolved questions

about our universe, which will help us

understand more about the earth, the

probability of other life-sustaining

planets, and possible approaches that

could help us address the climate

changecrisis.

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Find out more on page 45

Making leaps

inscientific

understanding

Oxford Instruments plc | Report and Financial Statements 2022

This is further enhanced by the deep

insights we gain through the value-driven

relationships we have with our customers.

By nurturing these relationships, and

through strategic collaborations, we build

a unique understanding of our customers’

current and future needs, informing our

development efforts and enabling us to

sustain our leadership positions, and

allowing our customers to deliver on

theirgoals.

Impressive performance against

a challenging backdrop

The strength of our end markets, the

quality of our market-leading portfolio

and the resilience of our business model

are demonstrated by the Group’s strong

performance in the year, which has been

delivered despite global supply chain

shortages and inflationary pressures.

The unprovoked attack on Ukraine by

Russia has shocked the world and, as a

global company committed to upholding

our values, the Board strongly condemns

this abhorrent action and fully supports

the decision to cease trading in the

territories of the Russian Federation

andBelarus.

Throughout the ongoing covid-related

disruptions, with regional lockdowns

intermittently in place across some of our

territories, we have remained committed

to protecting the health, safety and

wellbeing of all our employees and for

the Group to provide additional support

where required.

We have further developed our hybrid

workplace model, driving efficiencies

across the Group, maintaining business

continuity throughout, and providing

improved support for our customers.

Clear opportunities ahead with

execution of Horizon strategy

The successful execution of our strategy

to date has driven a track record of

improved financial performance by

keeping our focus on attractive end

markets with strong growth drivers, many

of which are further strengthened by the

global sustainability agenda, alongside

driving operational efficiency

improvements and the transformation of

our service offering.

The Board remains fully supportive of the

ongoing delivery and evolution of Horizon

and is excited by the expansive

opportunities ahead as we build scale

and enhance the capabilities across our

well-established platform. Webelieve the

investments being made in the business

will continue to drive future growth,

including our growing, commercially

driven R&D programme, our new facilities,

and the successful execution of selective

acquisitions, as demonstrated by the

acquisition of Wissenschaftliche

Instrumente und Technologie GmbH

(WITec).

We can also see the clear benefits of

theinvestment that has been made in

enhancing the talent and capabilities

within the Group, including commercial,

technical and service, as well as in the

transformation of our customer services’

infrastructure.

As per the announcements made in

February and March 2022, we note the

unsolicited proposal from Spectris plc

which was withdrawn. The Board remains

highly confident that the Group has a

clear and compelling strategy to achieve

growth and create value for Shareholders

over the medium term.

Advancing our

sustainabilityagenda

The establishment of the Board’s

Sustainability Committee has elevated

the oversight and leadership of the

Group’s sustainability agenda and

re-emphasises our view that embedding

sustainability throughout the Group

creates long-term value for all our

stakeholders and will secure our

long-term success.

This year, the Group has focused on

developing our frameworks and

processes to adopt and align with the

various reporting frameworks. We are

delighted to be publishing our first

TaskForce on Climate-Related Financial

Disclosures (TCFD) Statement in our

Report and Financial Statements and

ourfirst standalone Sustainability Report

this year.

Chair’s Statement

I am proud of the role we play in making a positive

impact on the world around us, driven by our core

purpose to enable a greener, healthier, more

connected, advanced society.

Neil Carson

Chair

Oxford Instruments plc | Report and Financial Statements 2022

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Diversity throughout the

organisation

The Board and executive team have

spent considerable time this year looking

at ways to build on the culture of diversity

that is already strong within the Group.

With inclusivity being a key value, the

Group encourages all employees to bring

their authentic self to work, recognising

how mutually beneficial diversity is to us

and our employees.

We are committed to promoting diversity,

equality, and inclusion, both on the Board

and throughout the Group. We also have a

clear action plan which will help us to reach

gender and diversity representation

recommendations at Board level,

asproposed by the FTSE Women Leaders

Review and the Parker Review. In the

immediate-term, we are aiming to exceed

33% female representation on the Board by

July 2022, with the appointment of a further

female Director with specific capabilities

and experiences which meet the needs of

the Board now and in the future.

Board changes

During the year Thomas Geitner and Steve

Blair stepped down from the Board. I thank

them for their valued service to the Group.

Alison Wood has also taken up the role of

Senior Independent Director and has

already made a much-valued contribution

in this position. We also welcomed

NigelSheinwald in September as a

Non-Executive Director and Chair of the

newly formed Sustainability Committee.

Sir Martin Wood: 1927-2021

The Board and I were saddened to learn

ofthe passing of the Oxford Instruments

founder, Sir Martin Wood, in November

2021. Martin’s brilliance, innovations and

enthusiasm provided the foundation for

ground-breaking developments that have

saved millions of lives and transformed

our understanding of chemistry. As a

company we were fortunate to benefit

from his vision and consider him one of

thegreat minds in scientific advancement.

Weagain offer our sincere condolences to

his wife, Lady Audrey Wood, and their

extended family.

Our employees

The Board and I are extremely grateful

forthe commitment and innovation of

ouremployees in their approach to

maintaining and growing the business

despite the many challenges we have all

faced. We thank them for embracing new

approaches to working and for adapting

quickly to new ways of supporting our

customers. In recognition of the impact

the rising cost of living has had, we fully

support the action the executive team

have taken to help our employees,

implementing a notable pay rise ahead

ofthe usual time to do so.

During the year, we took the opportunity to

engage further with employees, gathering

their feedback to ensure we can best

consider their interests as part ofour

decision-making process. TheBoard looks

forward to continuing this programme in

the year ahead, by visiting sites and

meeting employees in person.

Dividend

In line with our progressive dividend

policy and robust trading performance in

the year, the Board is proposing a final

dividend of 13.7p per share (2021:12.9p

per share), which is subject to shareholder

approval at our Annual General Meeting

on 28 July 2022.

Looking ahead

Over the last five years, we have delivered

a compound annual growth rate for

revenue and adjusted profit before tax of

6% and 16% respectively. Ouroperating

margin has grown from 13.6% in 2017 to

18.1% in 2022, along with sustained high

cash conversion year on year.

Despite the challenges during the past

two years, the Group has delivered

significant progress, emerging even

stronger and further aligned with

structurally growing end markets.

Thisreflects the excellent execution of

Horizon, the highly talented employees

we have around the world, our

high-quality products and services, and

our brand leadership. The Board remains

confident in the Group’s strategic direction

as a platform to deliver sustainable

growth and further margin enhancement.

Neil Carson

Chair

13 June 2022

Oxford Instruments plc | Report and Financial Statements 2022

CEO’s message

As I look back on the past twelve months,

Iamextremely proud of the Group’s

performance and am even more excited

about the future growth and margin

expansion opportunities that lie ahead.

We have successfully navigated the

turbulence of the last two years, and,

thanks to the dedication of our talented

global team and the successful execution

of our Horizon strategy, we have emerged

as a stronger, more focused business.

Weare now even better aligned to meet

the needs of our customers in attractive

end markets with long-term structural

growth drivers.

As a global provider of high technology

products and services we are aware of

the critical role we play in the overall

advancement of society by enabling

leading industrial companies and

scientific research institutes to tackle

some of the world’s most complex

challenges and growth opportunities.

From healthcare to climate change to

digital communications and quantum

computing, we work with our customers

to create the products they need to

generate meaningful change and market

growth. This fuels our mission to enable

agreener, healthier, more connected,

andadvanced world – and puts us at

theheart of creating a more sustainable

future.

During the year we delivered strong

order,revenue and profit growth with

further improvement in operating margin

despite inflationary pressures, supply

chain challenges and ongoing

covid-related disruptions. This is

testament to the resilience of our

business model, the quality of our

product portfolio, the strength of our

endmarkets and our commitment to

continuous improvement. The results

alsorepresent considerable growth

relative to the 2020 pre-covid year.

Our resilience and commitment have

been demonstrated throughout the year,

including through the way in which our

employees embraced new ways of

working, how we have optimised our

internal operations in response to supply

chain challenges, and the transformation

of our sales, marketing and customer

service approaches to support the

shifting needs of our customers.

At the end of August 2021, we completed

the acquisition of Wissenschaftliche

Instrumente und Technologie GmbH,

(WITec), a leading Raman and optical

imaging business, further enhancing our

materials analysis product portfolio.

Thebusiness has performed in line with

our expectations, and I have been

delighted with its integration into the

Group. Their additional capabilities are

already benefiting our existing customers

as well as allowing us to expand into

adjacent markets.

Chief Executive’s Review

As I look back on the past twelve months, I am

extremely proud of the Group’s performance and am

even more excited about the future growth and margin

expansion opportunities that lie ahead.

Ian Barkshire

Chief Executive

Orders

£423m

(2021: £353.7m)

Revenue

£367m

(2021: £318.5m)

Adjusted operating profit

£66.3m

(2021: £56.7m)

Operating margin

18.1%

(2021: 17.8%)

Oxford Instruments plc | Report and Financial Statements 2022

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We have also made significant

investments to support our future growth,

including in talent, product R&D, business

systems and remote digital support

capabilities, as well as building a new

state-of-the-art facility in Bristol, UK for

our compound semiconductor systems

business.

I am particularly pleased with the

progress across the Group in our

multi-faceted approach to sustainability,

including the further development of our

roadmaps across environmental, social

and governance aspects of our agenda,

not least as it is a topic that I am

personally very passionate about.

Our holistic approach to building a

stronger business has helped us to make

significant improvements not only in our

financial performance, but also in how we

support our customers, key markets,

employees, communities, and strategic

partners. These will all strengthen our

position for future growth.

Bringing higher value to markets

with long-term structural

growth drivers

The health and resilience of our chosen

end markets has played a critical role in

our improved performance. The global

economic recovery and increasing

sustainability agenda have reinforced

their structural drivers in both the

academic and commercial sectors.

This has stimulated increased funding

within our target markets, accelerating our

customers’ roadmaps, and increasing

demand for our solutions and services

across each of our end markets. To meet

the evolving needs and expand our global

leadership, we are building scale and

capability in each of our chosen markets,

increasing the value we bring through a

more targeted portfolio of higher

performing, easier-to-use solutions.

•

Within Semiconductor &

Communications the exponential

increases in digital data and

connectivity, the requirement for

moreenergy-efficient power devices

and the increased deployment of

human-machine interfaces (e.g. facial

recognition) is driving strong demand

for our specialised analysis solutions as

well as our compound semiconductor

processing systems.

•

Within Healthcare & Lifescience,

anunderstanding of the fundamental

disease mechanisms and the efficacy

of treatments at the cellular and

molecular levels is helping accelerate

the creation of new medicines and

therapies at a fraction of the cost,

driving growth across our portfolio of

optical microscopy systems and

scientific cameras.

•

The deployment of and search for new

Advanced Materials, which serve as

the building blocks for modern society,

are driving improved performance and

more sustainable use of valuable and

finite resources in nearly all end

markets and continues to drive demand

across our materials analysis portfolio.

•

In the Quantum Technology market,

we are working with the leaders in the

field as the market continues its

evolution from earlier stage research

into applied R&D and the rapidly

evolving commercial market. We are

well positioned to power this growing

market and take advantage of its

growth, as it remains poised to disrupt

applications from drug discovery to

logistics and financial services

acrossgovernment and commercial

entities alike.

•

In the Energy & Environment market,

the transition away from fossil fuels is

accelerating the investment in

batteries, solar cells and more

energy-efficient devices, where our

systems provide invaluable insights for

research and applied R&D, as well as

the critical quality assurance

measurements needed for

high-volume manufacturing.

As we look to the future, we believe

ourstrong position in these end

markets–and their structural growth

drivers – willcontinue to create value

forour customers and present significant

opportunities for sustainable economic

growth.

Oxford Instruments plc | Report and Financial Statements 2022

Strong order, revenue and profit growth

We delivered continued financial progress with strong order, revenue and operating profit growth and further improvement in

operating margin despite the challenging external operating environment. The results also reflect significant growth for each of

these key metrics relative to the financial year ended 31 March 2020, highlighting the underlying health of our end markets and the

strength of our portfolio. The enhanced performance was delivered across our portfolio with an improved performance in each of

the Materials & Characterisation, Research & Discovery and Service & Healthcare sectors.

Group FY22

Constant

currency

Growth vs 2021

Constant

currency

Growth vs 2020

Orders £423m 24% 32%

Revenue £367m 19% 21%

Adjusted operating profit £66.3m 20% 35%

Operating margin 18.1% 30bps 220bps

Reported orders increased by 19.6% to £423.1m (2021: £353.7m), representing growth of 24.0% on a constant currency basis with

strong increased global demand resulting in high double-digit growth in North America, Europe and Asia. We had strong growth

across all of our target markets apart from Research & Fundamental Science, which reduced in the period due in part to lower

external investment in these projects and our own increased focus on our other, higher-value end markets.

The superior performance of our products and the notable funding into our target markets supported high double-digit growth to

academic customers. Our heightened market intimacy focus on commercial applications, combined with the launch of new

targeted products and services for high-volume manufacturing, Quality Assurance (QA) & Quality Control (QC), as well as corporate

R&D, drove even stronger growth with commercial customers, which grew to account for 50% of orders in the year (2021: 46%).

Reported revenue grew 15.3% to £367.3m, representing growth of 19.2% at constant currency despite the global supply chain

challenges for materials and electronic components which hindered conversion of the growing order book throughout the period.

Revenue grew in each of our sectors, up 28.9% in Materials & Characterisation, 9.3% in Research & Discovery and 13.5% in Service &

Healthcare on a constant currency basis. There was strong growth to both commercial and academic customers, with the

proportion of revenue to commercial customers increasing to 47%(2021: 45%) in the year.

From an end markets perspective, we had particularly strong growth in the Semiconductor & Communications, Advanced Materials

and Quantum Technology markets. Revenue in both Energy & Environment and Healthcare & Lifescience markets grew strongly,

ending the year ahead of their 2020 levels after a subdued 2021. Revenue in Research & Fundamental Science declined in line with

reduced customer activity and our own decreased focus in this area.

Group revenue by segment

Market segment

2022

segment

revenue growth

2022

proportion of

revenue

2021

proportion of

revenue

Healthcare & Lifescience 5.4% 20% 22%

Semiconductor & Communications 21.4% 29% 28%

Quantum Technology 36.2% 9% 7%

Energy & Environment 13.9% 8% 8%

Advanced Materials 21.9% 28% 27%

Research & Fundamental Science (20.0)% 6% 8%

Revenue profiles were distorted by region relative to demand due to the staggered timing and extent of easing of covid-related

restrictions. This resulted in strong revenue growth in Asia and North America and good growth in Europe, strengthened by an

improving situation through the second half of the year.

Our continued focus on driving operational efficiencies and a policy of proactive offsetting of inflationary pressures through price

management supported growth in reported adjusted operating profit, up 16.9% to £66.3m and further margin enhancement to 18.1%,

an increase of 30 basis points, notwithstanding our continued investment to fuel future growth.

The strength of our end markets and continued positive order momentum resulted in a book-to-bill ratio of 1.15 and order book

growth of 31.5% to £260.3m (2021: £197.9m). Continued focus on quality of profits resulted in strong cash conversion of 84% (excluding

the investment in our new facility for our semiconductor systems business) and a net cash position of £85.9m at year end after the

acquisition of WITec GmbH at the end of August 2021.

Chief Executive’s Review continued

Oxford Instruments plc | Report and Financial Statements 2022

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Horizon: our strategy for

creating value

Our financial success is underpinned by

our Horizon strategy, launched in 2017 to

drive sustainable growth and the margins

commensurate with a high technology

company and the value we create for

ourcustomers.

The key elements of our strategy are:

•

The transformation of the business into

a customer-centric, market driven

Group, whereby we deliberately focus

on building scale and capability in

specific end markets, with long-term

structural growth drivers where we can

sustain leadership positions for

technologies and products that create

high value for customers.

•

Proactive engagement with customers

across the full technology cycle, from

research to applied R&D to

high-volume manufacturing, to

maximise the returns from our core

technologies whilst positioning us to

benefit from rapid growth and each

wave of technology disruption.

•

Our own unique operating framework

which creates expertise and balance

across the four pillars of Market

Intimacy, Innovation & Product

Development, Operational Excellence

and Customer Service & Support.

•

A relentless dedication to continuous

improvement driving ongoing synergies,

efficiencies, and strong commercial

processes across the Group.

•

Drive above-market growth through

organic investments further

augmented by synergistic acquisitions.

We made continued progress in the

execution of our Horizon strategy in the

year, further strengthening our

capabilities within the four pillars of our

operating model.

•

Through our commitment to market

intimacy, we have developed stronger,

more personalised relationships with

our target customers, deepened our

understanding of core markets, and

opened opportunities for expansion

into new and adjacent markets. By

establishing an intimate knowledge of

our customers’ worlds, anticipating

their challenges, and responding with

a portfolio of products and solutions

that helps them achieve their goals,

we have grown our business in all our

major markets.

In addition to nurturing these

relationships, we have used our

market knowledge to expand into

adjacent markets, driving new and

incremental sales. This expansion

supports our growth objectives and

iscurrently being applied with great

success in larger, faster growth

commercial markets. In the year,

webuilt on our market intimacy

strength, bringing in new talent with

specific domain knowledge to

augment our existing team.

•

Innovation and product development

is central to our business strategy and

our heritage of innovation. We invest in

creating differentiated products and key

enabling technologies, informed by our

customer and market intimacy.

Byunderstanding not just customer

requirements, but also the challenges

and opportunities they face – near and

long-term – we have been able to invest

in the development of more strategic

solutions that deliver greater value and

returns on investment. These are the

products and solutions that shift the

paradigm of what is possible for our

customers, transforming their

capabilities and fuelling their growth

and ours. In the year, we have increased

our investment in strategic R&D, with a

dual focus on new products and

solutions that not only create maximum

value for our existing customers but

also enable us to expand into new or

adjacent markets and support future

growth, such as our new optical

microscopy system, BC43, which offers

research-level performance in a

revolutionary ease ofuse benchtop

system, with a significantly more

accessible price point.

Our R&D spend increased 9.7% to

£31.7m (2021: £28.9m), growing broadly

in line with sales and representing

8.6% of revenue. Tounderpin our

barriers to entry, weare more focused

on protecting and expanding our

intellectual property portfolio across

our core markets. Our vitality index,

representing the revenuefrom

products launched in thelast three

years, was a healthy 34% of increased

Group revenues (2021: 38%).

•

Our operational excellence

programme has enabled us to drive

efficiencies and synergies across the

Group which directly impact

performance and growth. This includes

strengthening our supply chain through

executing a procurement strategy

focused on leveraging our scale and

building long-term strategic

relationships with fewer suppliers,

which has enabled us to mitigate the

industry-wide supply chain challenges.

In addition, we embedded improved

manufacturing processes and created

centres of excellence to promote

delivery across the wider Group.

Asweemerge from the pandemic,

these investments in operational

excellence will continue to support our

performance this year and beyond.

•

The covid-related travel restrictions of

the past two years have heightened

the importance of service continuity

and the expectations from global

customers. Through our customer

service transformation programme,

we are exploiting our market intimacy

to provide service offerings tailored to

the specific needs and goals of our

customers for their usage, application

and region, throughout the lifetime use

of our products. We have increased

our investment in our regional service

teams and have embedded remote

digital support capabilities across our

portfolio, ensuring we can deliver our

global expertise locally, enhancing

customer capabilities and productivity,

with improved operational efficiency.

Through Horizon, we have delivered

substantial tangible gains across the

Group, leading to improved financial

performance. In the year, we undertook

acomprehensive review of our strategy,

capabilities and opportunities for further

improvement in order to deliver our full

potential. This confirmed the compelling

opportunities that still lie ahead to extract

further value as we continue with our

strategy, driving sustainable growth and

margin enhancement, while uncovering

efficiency opportunities Company wide.

Oxford Instruments plc | Report and Financial Statements 2022

Shaping a sustainable future

Sustainability is a cornerstone of our

long-term strategy to drive stakeholder

value. We recognise the role we, and our

technologies, can play to create a positive

impact on the environment and society

and, in line with our values and purpose,

we are passionate about being a positive

influence on the world. By taking a holistic

approach to sustainability, led by myself

and the executive team, with enhanced

oversight at Board level through our newly

established Sustainability Committee,

wereview all aspects of our business to

drive positive change and believe that

embedding sustainability throughout the

Group is the best way to secure our

long-term success.

I am delighted with the progress we have

made in the development and execution

of our sustainability initiatives as well as

the enthusiasm across the business for a

progressive and ambitious sustainability

agenda.

Since its establishment during the

financial year, our Board-level

Sustainability Committee has embraced

the importance of its role in driving the

Group’s sustainability agenda at Board

level and overseeing activity within the

Company. Upon his appointment to the

Board in September 2021, Nigel

Sheinwald has chaired this committee

and brings a wealth of experience to our

organisation from his previous role as

chair of Shell’s sustainability committee.

Environment

We have embraced the adoption of the

Task Force on Climate-Related Financial

Disclosures (TCFD) recommendations and

reporting framework to help to expand

the environmental aspects of our

sustainability agenda and effectively

communicate our work in this area. We

are delighted to be publishing our first

TCFD Statement as well as our first

standalone Sustainability Report.

Whilst the impact our facilities have on

the environment is relatively small, we

have made great strides in reducing our

carbon footprint and waste products from

our manufacturing processes and

facilities (Scope 1 and 2 emissions) and

are committed to building on this

progress. To accurately assess our overall

environmental impact, and in support of

the TCFD reporting framework, we have

engaged with the specialist advisers

EcoAct. Working together we have

confirmed our Scope 1 and 2 emissions

and have made good progress in

mapping the contribution through our

supply chain, distribution, and customer

use of our products (Scope 3). Once this

phase is completed, we will set our

targets in line with the best practice

guidance, validated by the Science

BasedTargets initiative. We also

recognise our role in supporting our

customers in achieving their sustainability

ambitions, as well as encouraging similar

commitments from our supply chain.

Wehave created ethical and

environmental standards for our suppliers

and partners to follow and are building

broad sustainability considerations into

our product development guidelines.

Social and governance

Whilst our environmental focus is

extremely important, it is only one part

ofour overarching sustainability agenda.

We believe how we do business is as

important as what we do. This is

embedded within our approach to the

social and governance aspects of

business too.

Being inclusive, and creating a diverse

workplace where difference is valued

and people are recognised for what they

bring to the team, is a core Company

value and a key element in delivering

business excellence. Through our

recruitment, employment policies and a

Company culture based on respect and

creating asense of belonging, we look to

attract and retain an incredibly talented,

diverseworkforce.

Communication has also been critical

toour overall success. We have invested in

increasing connectivity and communication

between our teams and have embraced

our hybrid workplace model, focused on

anoutcomes-based approach to work

andmanagement. This shift, along with

additional investments in technology,

hasenabled us to create a more rewarding

and collaborative working environment for

our people, where employees can build

successful careers, make a personal

impact on the world andenjoy a healthy

work-life balance. Atthe same time,

thisincreases efficiencies across our teams

and unlocks new synergies across

business units and regions. It has also

ledto accelerated innovation and

cross-business product developments

which further enhance our market

intimacy and improve the way in which

we reach, work with, and support our

customers.

In line with our values, after the

unprovoked attack on Ukraine by

Russia,we decided to cease trading in

the territories of the Russian Federation

and Belarus (this represents less than 1%

of Group revenue). In addition, the Board

approved a charitable donation of

£30,000 (with £10,000 of this dedicated

to matching employee donations) to the

International Red Cross or UNICEF, to

support those displaced or otherwise in

need, because of the conflict.

Sustainability, in its broadest sense, is one

of the most transformative opportunities

in our lifetimes, and one that brings us

closer to realising our mission of

“changing the art of the possible”.

Itiswiththis mindset that we are

committed to making even greater

progress this year and beyond.

Chief Executive’s Review continued

Oxford Instruments plc | Report and Financial Statements 2022

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Investing in building

ourcapabilities

The capabilities and dedication of our

employees are critical to our success and

the delivery of our strategy, which is

underpinned by the combination of our

technical, market and commercial

expertise. To support our growth, we have

continued to invest in our existing team to

build on their skills and experience as

wellas providing the development

opportunities to enable them to reach their

full potential. This has included the launch

of a Group-wide project aiming to better

facilitate and promote employee mobility

within the organisation and throughout

their careers. During the past year, we

have been delighted to see over 11% of our

employees being promoted or taking on

new responsibilities to augment their

development. In addition, we have

continued to build on our team with the

recruitment of individuals with specific

knowledge or capabilities. Our goal for all

our employees is simple: to create a safe

and vibrant workplace environment where

employees can build successful careers,

make a personal impact on the world, and

enjoy a healthy work-life balance.

I am extremely proud of how our

employees and leadership team have

navigated through the ongoing

challenges caused by the external

operating environment to deliver our

improved performance. By embracing

alternative ways of working, which

provide additional flexibility, we have

been able to better meet the needs of our

customers as well as increase the

essential connectivity needed between

teams to drive and foster innovation.

I would like to thank all our employees for

their continued support, commitment,

and resilience during the year, and for

their ongoing investment in a culture that

helps underpin our success.

Summary and outlook

We have successfully navigated the

turbulence of the last two years, and,

through the dedication of our talented

global team and the successful execution

of our Horizon strategy, we have emerged

as a stronger, more focused business,

even better aligned to meet the needs of

our customers in attractive end markets

with long-term structural growth drivers.

The business has performed strongly this

year, despite supply chain disruption

impacting the conversion of orders into

revenue and cost inflation holding back

margin progression. Looking ahead, we

do not foresee short-term relief from the

current economic headwinds and

ongoing supply chain constraints.

However, our diverse end-markets remain

resilient, and we enter the year with good

visibility due to a strong order book and

continued order growth. This supports full

year outlook in line with our expectations.

Our products play a critical role for our

customers in enabling a greener, healthier,

more connected, and advanced society

which puts us at the heart of creating a

more sustainable future. Our leading

product portfolio, the strength of our brand

and our relentless drive for continuous

operational improvement provide the

foundation for sustainable organic growth

and continued margin expansion over the

medium term, while our strong financial

position supports augmenting growth

through synergistic acquisitions.

Ian Barkshire

Chief Executive

13 June 2022

Oxford Instruments plc | Report and Financial Statements 2022

Market Context

We are well positioned to meet the needs of our customers in

attractive end markets with long-term, structural growth drivers.

Bybuilding strong relationships with our customers, we can

understand more about the changing drivers in our end markets,

anticipating customer needs and helping to address them.

Healthcare & Lifescience

An increasing and ageing population is

placing the healthcare system under great

strain due to the increased number of

people living with medical conditions that

impact their daily lives. Building an

understanding of fundamental disease

mechanisms at the cellular and molecular

level is helping to accelerate the

development of new medicines, with

enhanced efficacy and at a reduced cost.

Semiconductor &

Communications

The ongoing proliferation of semiconductor

chips within consumer electronics and the

exponential increases in digital data and

connectivity is driving the need for more

semiconductor chips and devices. The higher

focus that is being placed on minimising

environmental impact is increasing emphasis

on higher performing and more

energy-efficient devices. This is driving

demand for more compact 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.

Quantum Technology

The market continues its evolution from

earlier stage research into applied R&D

andthe rapidly evolving commercial

market. Quantum computing remains highly

disruptive, with the ability to revolutionise

end markets from drug discovery, climate

change, logistics and financial services by

helping solve complex problems beyond the

capability of current computers.

Energy & Environment

Ever-increasing environmental demands

are being placed on energy generation,

which is leading to diversification of energy

sources, such as batteries and solar cells,

that will help the transition towards a low

carbon economy, moving away from fossil

fuels. With the growing population there is

more focus on sustainable food production,

increasing requirements for food safety and

the characterisation of food composition.

Another key area in this market is the need

for accurate and traceable testing within

forensic investigations.

Advanced Materials

As the building blocks of society,

thedemand for lighter, stronger, higher

functioning materials, as well as the more

sustainable use of valuable and finite

resources, is present in a wide range of

markets, from those designing safer cars,

developing more efficient battery storage

tothose creating new materials for

medical implants. Accurately measuring

the composition and structure of materials

down to the nanoscale is helping develop

the next generation of materials and in

quality control for high volume

manufacturing.

Research &

FundamentalScience

The fundamental shifts in technology and

capability are driving increased research

and applied development as we continue

tounderstand the world around us. In the

global race for technical leadership,

investment is made to help advance

societies and support sustainable economic

growth. This is helping make advances in

new material and device development as

well as fundamental research in the

physical sciences, including astrophysics.

Market drivers:

•

The quest to find a cure for

life-threatening illnesses is driving further

research into the pathology of disease

states to aid understanding about their

origins and progression.

•

The need to develop more affordable

treatments with improved efficacy rates,

recognising individual responses to therapy

vary, is driving the demand for advanced

and personalised treatment plans.

Market drivers:

•

Increased demand for more efficient and

faster power devices to support a green

economy, e.g. enabling greater electric

vehicle range, faster charging times and

reduced energy wastage.

•

Increased investment supporting the drive

for improved connectivity and the

increased deployment of human-machine

interfaces (e.g. facial recognition), resulting

in the need for enhanced bandwidth,

capacity and speed.

•

Buoyant compound semiconductor

market and strong ramp-up in demand

for mainstream silicon semiconductor

chips and devices, driven largely by the

transition to hybrid working.

Market drivers:

•

Quantum is making progress from

fundamental science to applied research,

targeting commercial applications with

end market drivers including quantum

computing, secure communications,

advanced sensors and imaging.

•

Significant breakthroughs in the

development of quantum technologies

are increasing the level of global

investment and accelerating practical

commercial exploitation of the technology.

Market drivers:

•

Drive for improved battery technology

with less reliance on finite and expensive

components, and more efficient and

effective alternative energy sources,

suchas wind and solar.

•

Sustainable supply of goods and foods

toenable an advanced society.

•

Increasing importance being placed on

accurate and rapid forensic testing.

Market drivers:

•

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 fuel

consumption in cars and reduction in raw

material usage and wastage in

manufacturing.

•

Move towards higher-performing

materials and super alloys in the

automotive and aerospace industry.

Market drivers:

•

Increasing academic interest is driving

international funding for research into

fundamental material properties.

•

Continued interest in astronomy driven

bythe exploration of the universe, the

tracking of space debris and the

monitoring of solar activity.

Our response:

•

Our advanced imaging and analysis

solutions, including our scientific

cameras, microscopy systems and AFMs,

are helping to reveal sub-cellular detail,

while allowing observation of real-time

interactions to help understand our

immune response to foreign organisms.

•

Our cameras are being used in gene

sequencing, helping researchers learn

more about how genetics influence

response to therapies to enhance

success rates of treatment.

•

Through our MRI service team in Japan,

we continue to ensure these vital hospital

diagnostic systems are running efficiently

and effectively.

Our response:

•

Our etch and deposition process

solutions are used across a range of

semiconductor, device and materials

applications to help develop next

generation disruptive technology.

•

Our leading expertise in the processing of

compound semiconductors is helping

deliver the speed, capacity and energy

efficiencies demanded from increasing

device connectivity.

•

We have further optimised our image and

analysis solutions to enable the

development of next generation devices

with ever-decreasing dimensions and the

quality control and yield management

supporting the efficient production of

current devices.

Our response:

•

Our cryogenics, advanced fabrication,

imaging and characterisation solutions

are all critical to the advancement of this

field and provide the fundamental

capabilities and platforms to enable both

the research and development of viable

commercial applications.

•

Our single photon sensitive cameras are

helping researchers investigate and

develop quantum optics, which are

required for secure quantum-based

communication systems.

Our response:

•

Our imaging and analysis solutions are

helping improve the performance and

storage capability of batteries and solar

cells by helping researchers understand

their structure at the nanoscale.

•

Our benchtop analysers are playing an

increasing role in the quality control and

assurance undertaken within the food

industry, helping establish nutritional

values and the oil and fat content.

•

Our specialist GSR software is used in

the leading forensic laboratories around

the world as it offers accurate and

validated results.

Our response:

•

Our advanced solutions are enabling the

mechanical properties, performance and

reliability of advanced materials to be

determined through the design and

precise control of the composition

micro-structure and thin films coatings,

faster and more accurately.

•

Our ability to measure a range of critical

properties is helping manufacturers

assess the performance and quality of

their processes; for example, by detecting

nanoscale impurities which can degrade

performance, they are able to avoid

catastrophic failures.

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 our

understanding of the structure, properties

and performance of these materials.

•

Our dedicated scientific cameras are

helping astronomers see more detail than

ever before, allowing them to discover

new exoplanets, safely operate satellites

around space debris and help predict

interruptions caused by solar flares.

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

As a result, we believe that our strong position in our

end markets will continue to create value for our

customers and present significant opportunities for

economic growth.

Healthcare & Lifescience

An increasing and ageing population is

placing the healthcare system under great

strain due to the increased number of

people living with medical conditions that

impact their daily lives. Building an

understanding of fundamental disease

mechanisms at the cellular and molecular

level is helping to accelerate the

development of new medicines, with

enhanced efficacy and at a reduced cost.

Semiconductor &

Communications

The ongoing proliferation of semiconductor

chips within consumer electronics and the

exponential increases in digital data and

connectivity is driving the need for more

semiconductor chips and devices. The higher

focus that is being placed on minimising

environmental impact is increasing emphasis

on higher performing and more

energy-efficient devices. This is driving

demand for more compact 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.

Quantum Technology

The market continues its evolution from

earlier stage research into applied R&D

andthe rapidly evolving commercial

market. Quantum computing remains highly

disruptive, with the ability to revolutionise

end markets from drug discovery, climate

change, logistics and financial services by

helping solve complex problems beyond the

capability of current computers.

Energy & Environment

Ever-increasing environmental demands

are being placed on energy generation,

which is leading to diversification of energy

sources, such as batteries and solar cells,

that will help the transition towards a low

carbon economy, moving away from fossil

fuels. With the growing population there is

more focus on sustainable food production,

increasing requirements for food safety and

the characterisation of food composition.

Another key area in this market is the need

for accurate and traceable testing within

forensic investigations.

Advanced Materials

As the building blocks of society,

thedemand for lighter, stronger, higher

functioning materials, as well as the more

sustainable use of valuable and finite

resources, is present in a wide range of

markets, from those designing safer cars,

developing more efficient battery storage

tothose creating new materials for

medical implants. Accurately measuring

the composition and structure of materials

down to the nanoscale is helping develop

the next generation of materials and in

quality control for high volume

manufacturing.

Research &

FundamentalScience

The fundamental shifts in technology and

capability are driving increased research

and applied development as we continue

tounderstand the world around us. In the

global race for technical leadership,

investment is made to help advance

societies and support sustainable economic

growth. This is helping make advances in

new material and device development as

well as fundamental research in the

physical sciences, including astrophysics.

Market drivers:

•

The quest to find a cure for

life-threatening illnesses is driving further

research into the pathology of disease

states to aid understanding about their

origins and progression.

•

The need to develop more affordable

treatments with improved efficacy rates,

recognising individual responses to therapy

vary, is driving the demand for advanced

and personalised treatment plans.

Market drivers:

•

Increased demand for more efficient and

faster power devices to support a green

economy, e.g. enabling greater electric

vehicle range, faster charging times and

reduced energy wastage.

•

Increased investment supporting the drive

for improved connectivity and the

increased deployment of human-machine

interfaces (e.g. facial recognition), resulting

in the need for enhanced bandwidth,

capacity and speed.

•

Buoyant compound semiconductor

market and strong ramp-up in demand

for mainstream silicon semiconductor

chips and devices, driven largely by the

transition to hybrid working.

Market drivers:

•

Quantum is making progress from

fundamental science to applied research,

targeting commercial applications with

end market drivers including quantum

computing, secure communications,

advanced sensors and imaging.

•

Significant breakthroughs in the

development of quantum technologies

are increasing the level of global

investment and accelerating practical

commercial exploitation of the technology.

Market drivers:

•

Drive for improved battery technology

with less reliance on finite and expensive

components, and more efficient and

effective alternative energy sources,

suchas wind and solar.

•

Sustainable supply of goods and foods

toenable an advanced society.

•

Increasing importance being placed on

accurate and rapid forensic testing.

Market drivers:

•

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 fuel

consumption in cars and reduction in raw

material usage and wastage in

manufacturing.

•

Move towards higher-performing

materials and super alloys in the

automotive and aerospace industry.

Market drivers:

•

Increasing academic interest is driving

international funding for research into

fundamental material properties.

•

Continued interest in astronomy driven

bythe exploration of the universe, the

tracking of space debris and the

monitoring of solar activity.

Our response:

•

Our advanced imaging and analysis

solutions, including our scientific

cameras, microscopy systems and AFMs,

are helping to reveal sub-cellular detail,

while allowing observation of real-time

interactions to help understand our

immune response to foreign organisms.

•

Our cameras are being used in gene

sequencing, helping researchers learn

more about how genetics influence

response to therapies to enhance

success rates of treatment.

•

Through our MRI service team in Japan,

we continue to ensure these vital hospital

diagnostic systems are running efficiently

and effectively.

Our response:

•

Our etch and deposition process

solutions are used across a range of

semiconductor, device and materials

applications to help develop next

generation disruptive technology.

•

Our leading expertise in the processing of

compound semiconductors is helping

deliver the speed, capacity and energy

efficiencies demanded from increasing

device connectivity.

•

We have further optimised our image and

analysis solutions to enable the

development of next generation devices

with ever-decreasing dimensions and the

quality control and yield management

supporting the efficient production of

current devices.

Our response:

•

Our cryogenics, advanced fabrication,

imaging and characterisation solutions

are all critical to the advancement of this

field and provide the fundamental

capabilities and platforms to enable both

the research and development of viable

commercial applications.

•

Our single photon sensitive cameras are

helping researchers investigate and

develop quantum optics, which are

required for secure quantum-based

communication systems.

Our response:

•

Our imaging and analysis solutions are

helping improve the performance and

storage capability of batteries and solar

cells by helping researchers understand

their structure at the nanoscale.

•

Our benchtop analysers are playing an

increasing role in the quality control and

assurance undertaken within the food

industry, helping establish nutritional

values and the oil and fat content.

•

Our specialist GSR software is used in

the leading forensic laboratories around

the world as it offers accurate and

validated results.

Our response:

•

Our advanced solutions are enabling the

mechanical properties, performance and

reliability of advanced materials to be

determined through the design and

precise control of the composition

micro-structure and thin films coatings,

faster and more accurately.

•

Our ability to measure a range of critical

properties is helping manufacturers

assess the performance and quality of

their processes; for example, by detecting

nanoscale impurities which can degrade

performance, they are able to avoid

catastrophic failures.

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 our

understanding of the structure, properties

and performance of these materials.

•

Our dedicated scientific cameras are

helping astronomers see more detail than

ever before, allowing them to discover

new exoplanets, safely operate satellites

around space debris and help predict

interruptions caused by solar flares.

Oxford Instruments plc | Report and Financial Statements 2022

We recognise our responsibility and role in the

advancement ofsociety, helping to create a more

sustainable future.

Business Model

Driven by

Underpinned by our financial model

Our financial model

How we add value

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.

Impacted by

Our stakeholders

Engagement with our stakeholders allows us to grow and execute our strategy, so

we consider the impact we have on them as well as what they consider important

when developing our plans for long-term success.

Our markets

The health and resilience of our chosen end markets has played a critical role in our

improved performance. We believe our strong position in these end markets, along

with their structural growth drivers, will continue to create value for our customers

and present significant opportunities for sustainable economic growth.

Our risk management

The identification and evaluation of emerging risks is derived from the Group’s

quarterly risk reporting framework. Any new risks reported by the business units are

specifically identified and discussed as part of this process, with a formal review of

emerging risks at the year end.

Our core activities

Fundamental

research

Providing solutions to those exploring

new frontiers down to the nano and

molecular level.

Find out more on pages 20 and 21

Applied R&D

Our key enabling technologies and

solutions facilitate the development

of more advanced products.

Find out more on pages 20 and 21

High tech

manufacturing

Providing products to support today’s

manufacturing challenges and

increase productivity.

Find out more on pages 20 and 21

Cash generated from

operations

£58.4m

Cash generated from

disposals

nil

Proceeds from issue

of share capital

nil

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Within our chosen end markets, our products, solutions and

servicesare helping customers accelerate their applied R&D,

increaseproductivity and make ground-breaking discoveries.

Underpinned by our financial model

How we use this capital

How we add value Our operations Outcomes

Adjusted basic earnings

pershare

94.3p

Revenue

£367. 3m

Dividend per share

18.1p

Group gender split

75% male

25% female

Reduction in

carbon emissions 2019-22

48%

Driven by our

strategicobjectives

01. To create competitive advantage

through our customer-centric, market

driven approach

Find out more on pages 24 and 25

02. To deliver outstanding product

solutions supported by innovation

and technical leadership

Find out more on pages 24 and 25

03. To offer value-driven customer

service and an unrivalled customer

experience

Find out more on pages 24 and 25

04. To support our performance and

our customers by being a highly

efficient and synergistic Group

Find out more on pages 24 and 25

05. To continue investment in

building our capabilities and creating

a culture for success

Find out more on pages 24 and 25

Supported by our sectors

Materials &

Characterisation

Find out more on pages 36 to 41

Research &

Discovery

Find out more on pages 42 to 45

Service &

Healthcare

Find out more on pages 46 and 47

Growing the business

organically:

•

Cash spent on R&D: £31.7m

•

Capital expenditure: £13.9m

Growing the business

inorganically:

•

Acquisition of WITec:

£30.6m

Returning surplus capital to

shareholders:

•

Dividend payments in the year:

£12.3m

Customer

People

Capabilities

People

Capabilities

Customer

Support

Innovation

and Product

Development

Market

Intimacy

Operational

Excellence

Oxford Instruments plc | Report and Financial Statements 2022

Our financial success is underpinned by

our Horizon strategy, which drives

sustainable growth and margin

enhancement, while offering increased

value for our customers. Built around our

purpose to enable a greener, healthier,

more connected advanced society,

through Horizon, we have positioned

ourselves in attractive, global niche

markets that have strong, structural

growth drivers.

We have deliberately focused on building

scale and capability in specific end

markets, offering sustainable

differentiation within advanced materials,

life science and semiconductor markets.

Horizon has driven engagement with

customers across the full technology

cycle, from research to applied R&D to

high volume manufacturing, to maximise

the returns from our core enabling

technologies, whilst positioning us to

benefit from rapid growth and each

waveof technology disruption.

Thisembeds resilience into the heart

ofour business model.

As a customer-centric, market driven

Group, we put our customers at the heart

of all we do. Building such close

relationships brings us unique insight into

the technical and commercial challenges

faced by our customers. We then use this

insight to inform our product roadmaps to

ensure we can offer real solutions both

today and in the future.

Our Strategy

Strategic goals Description In the year Year ahead

1. To create competitive

advantage through our

customer-centric,

marketdriven approach

Our in-depth knowledge and competitive

insights about our customers’ world

allow us to better meet their needs,

delivering products and support that will

delight our customers, providing added

value throughout the relationship.

Through our commitment to market intimacy, we have

strengthened our customer relationships and deepened our

understanding of our core markets and the opportunities

therein. We have grown our business by anticipating our

customers’ challenges and responding with a portfolio that

helps them achieve their goals. We have also used our

enhanced insight to help us grow in adjacent markets and to

strengthen our commercial offering.

We will continue to grow our presence in adjacent markets and

build our share of commercial customers, while maintaining our

position in the academic market. By strengthening our market

intimacy capabilities with new talent with specific domain

knowledge, we can continue to build more targeted and relevant

communications and solutions for our different end markets.

2. To deliver outstanding

product solutions

supported by innovation

and technical leadership

Focusing our R&D investment on creating

differentiated products and key enabling

technologies for higher-growth markets,

prioritising and aligning product

roadmaps with market developments

and customer needs.

We have continued to integrate our market insight into our

product development roadmaps. We have increased our

R&D investment to develop new products that will create

maximum value for our customers and enable our expansion

into adjacent markets. We have maintained our focus on

protecting and expanding our intellectual property portfolio

to strengthen our barriers to entry.

We will use our understanding of the challenges and

opportunities our customers and markets face to steer our

investment into the development of solutions that will deliver

greater value and returns on our investment. We remain

committed to enabling our customers to achieve long-term

success and will support them with their environmental agenda

by ensuring our products have sustainability designed into them.

3. To offer value-driven

customer service and

anunrivalled customer

experience

Providing high quality and high value

customer services, with a compelling

portfolio of tailored service products that

improve our customers’ productivity and

the delivery of their outcomes throughout

the lifetime use of our products.

In the year we have delivered more service offerings that are

tailored to the specific needs of our customers, applications

and regions. We have enhanced our regional services to help

us deliver our global expertise, locally. We have further

strengthened our digital offerings, including our remote

support capabilities to ensure maximum uptime for

ourcustomers.

We will continue to build our service portfolio to offer solutions

for our customers throughout the lifetime use of our products.

We will further enhance our digital offering to provide our

customers with an increasing level of real-time insights to

enhance their capabilities and productivity.

4. To support our

performanceand our

customers by being a

highlyefficient and

synergistic Group

Investing in operational excellence to

drive the continuous improvements

across the organisation in procurement,

operational efficiency and logistics that

will support our performance now and in

the future.

The work we have undertaken in previous years to strengthen

our supply chain and develop long-term partnerships with

fewer suppliers has helped us mitigate theindustry-wide

supply chain challenges this year. Wehavealso embedded

and improved manufacturing processes and created centres

of excellence to help us achieve the delivery of operational

excellence across the Group.

With supply chain challenges likely to persist in the year, we will

continue to nurture relationships with our suppliers to help us

minimise any ongoing impact from this disruption. We will also

continue our investment in operational excellence as it

continues to support our performance now and in the future.

5. To continue investment

inbuilding our capabilities

and creating a culture for

success

Identifying and developing the skills and

experience that will help us continue to

grow and be successful, whilst also

offering staff opportunities that will help

them reach their full potential and feel

empowered to own the challenge and

the solution.

We have continued to invest in our existing team to

furtherenhance their skills and experience, especially

thosecapabilities that underpin our technical, market and

commercial expertise. In the year we also launched our

programme to help employees move within the Group as

part of their career development to help build their

experience in different business units.

We will continue to enrich our employees’ experience of working

for Oxford Instruments, creating a safe and vibrant environment.

This will include further opportunities to build a successful

career here, making a personal, positive impact on the world

around us.

We made continued progress in the execution of

ourHorizon strategy in the year, further strengthening our

capabilities across the four pillars of our operating model.

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Strategic goals Description In the year Year ahead

1. To create competitive

advantage through our

customer-centric,

marketdriven approach

Our in-depth knowledge and competitive

insights about our customers’ world

allow us to better meet their needs,

delivering products and support that will

delight our customers, providing added

value throughout the relationship.

Through our commitment to market intimacy, we have

strengthened our customer relationships and deepened our

understanding of our core markets and the opportunities

therein. We have grown our business by anticipating our

customers’ challenges and responding with a portfolio that

helps them achieve their goals. We have also used our

enhanced insight to help us grow in adjacent markets and to

strengthen our commercial offering.

We will continue to grow our presence in adjacent markets and

build our share of commercial customers, while maintaining our

position in the academic market. By strengthening our market

intimacy capabilities with new talent with specific domain

knowledge, we can continue to build more targeted and relevant

communications and solutions for our different end markets.

2. To deliver outstanding

product solutions

supported by innovation

and technical leadership

Focusing our R&D investment on creating

differentiated products and key enabling

technologies for higher-growth markets,

prioritising and aligning product

roadmaps with market developments

and customer needs.

We have continued to integrate our market insight into our

product development roadmaps. We have increased our

R&D investment to develop new products that will create

maximum value for our customers and enable our expansion

into adjacent markets. We have maintained our focus on

protecting and expanding our intellectual property portfolio

to strengthen our barriers to entry.

We will use our understanding of the challenges and

opportunities our customers and markets face to steer our

investment into the development of solutions that will deliver

greater value and returns on our investment. We remain

committed to enabling our customers to achieve long-term

success and will support them with their environmental agenda

by ensuring our products have sustainability designed into them.

3. To offer value-driven

customer service and

anunrivalled customer

experience

Providing high quality and high value

customer services, with a compelling

portfolio of tailored service products that

improve our customers’ productivity and

the delivery of their outcomes throughout

the lifetime use of our products.

In the year we have delivered more service offerings that are

tailored to the specific needs of our customers, applications

and regions. We have enhanced our regional services to help

us deliver our global expertise, locally. We have further

strengthened our digital offerings, including our remote

support capabilities to ensure maximum uptime for

ourcustomers.

We will continue to build our service portfolio to offer solutions

for our customers throughout the lifetime use of our products.

We will further enhance our digital offering to provide our

customers with an increasing level of real-time insights to

enhance their capabilities and productivity.

4. To support our

performanceand our

customers by being a

highlyefficient and

synergistic Group

Investing in operational excellence to

drive the continuous improvements

across the organisation in procurement,

operational efficiency and logistics that

will support our performance now and in

the future.

The work we have undertaken in previous years to strengthen

our supply chain and develop long-term partnerships with

fewer suppliers has helped us mitigate theindustry-wide

supply chain challenges this year. Wehavealso embedded

and improved manufacturing processes and created centres

of excellence to help us achieve the delivery of operational

excellence across the Group.

With supply chain challenges likely to persist in the year, we will

continue to nurture relationships with our suppliers to help us

minimise any ongoing impact from this disruption. We will also

continue our investment in operational excellence as it

continues to support our performance now and in the future.

5. To continue investment

inbuilding our capabilities

and creating a culture for

success

Identifying and developing the skills and

experience that will help us continue to

grow and be successful, whilst also

offering staff opportunities that will help

them reach their full potential and feel

empowered to own the challenge and

the solution.

We have continued to invest in our existing team to

furtherenhance their skills and experience, especially

thosecapabilities that underpin our technical, market and

commercial expertise. In the year we also launched our

programme to help employees move within the Group as

part of their career development to help build their

experience in different business units.

We will continue to enrich our employees’ experience of working

for Oxford Instruments, creating a safe and vibrant environment.

This will include further opportunities to build a successful

career here, making a personal, positive impact on the world

around us.

There are still many compelling opportunities that lie ahead to

extract further value as we continue with our strategy, driving

sustainable growth and margin enhancement.

Oxford Instruments plc | Report and Financial Statements 2022

Section 172(1) Statement

During the year to 31 March 2022, the

Board of Directors has acted to promote

the long-term success of the Company

for the benefit of its shareholders, whilst

having due regard to the matters set out

in Section 172(1)(a) to (f) of the Companies

Act 2006, being:

a. The likely consequences of any

decision in the long term.

b. The interests of the Company’s

employees.

c. The need to foster the Company’s

business relationships with suppliers,

customers and others.

d. The impact of the Company’s

operations on the community and the

environment.

e. The desirability of the Company

maintaining a reputation for high

standards of business conduct.

f. The need to act fairly between

members of the Company.

Further information which demonstrates

how the Board has had regard to these

matters can be found in the following

section on Engaging with our stakeholders

on pages 28 to 33 and in our Governance

Report on page 96.

Engaging with our stakeholders

Promoting the success of the

Company for the benefit of all

stakeholders

Engagement with our stakeholders

allows us to grow and execute our

strategy, so we consider the impact

wehave on them as well as what they

consider important when developing our

plans for long-term success. We use a

range of engagement mechanisms in

order to understand and consider our

stakeholders’ views. In some cases the

Board engages directly with stakeholders

but there is also significant engagement

by senior management and throughout

the Company. The Board receives reports

and updates on such engagement and

the views and feedback gathered from

stakeholders is used to inform discussion

and decision-making.

Engaging with Stakeholders

Additional information on how the Board has had regard to the s172 factors

Matters per Section 172(1)(a) to (f) of

the Companies Act 2006 Key example(s) Page number

Consequences of any decision in the long term

•

Our culture and purpose

•

Our strategy

•

Risk management

•

2 and 3

•

24 and 25

•

77 to 84

Interests of employees

•

Employee engagement

•

Our culture and purpose

•

Sustainability

•

29 and 30

•

2 and 3

•

48 to 66

Fostering business relationships with suppliers,

customers and others

•

Engagement with suppliers

•

Engagement with customers

•

Supply chain practices

•

Impact of operations on the community and the

environment

•

Sustainability

•

48 to 66

Maintaining a reputation for high standards of

business conduct

•

Our culture and purpose

•

Compliance

•

Anti-bribery and anti-corruption

•

Human rights and modern slavery

•

Privacy and data protection

•

Data security

•

Whistle-blowing

•

Export Control Policy

•

2 and 3

•

114

•

Acting fairly between members

•

Shareholder engagement

•

Shareholder information

•

31 and 96

•

142

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Case study:

STEM education project gives students

unique opportunity to experience

scientific research

What did we do?

As part of the Hitachi High-Tech

America Inspire STEM Education

Outreach Programme in the UK and in

conjunction with the Natural History

Museum, London and the Institute for

Research in Schools, a collaborative

STEM outreach project saw over

6,000students from 46 schools given

the chance to use high-level scientific

instruments to carry out their own

experiments.

In support of this collaborative project,

we provided AZtecLive One Xplore

energy dispersive X-ray systems (EDS)

for use with Hitachi TM4000 scanning

electron microscopes (SEM) for use in

scientific demonstrations and

experiments. Teacher training was

delivered to allow staff to train students

and carry out basic maintenance.

Technical support was also provided on

the analytical software to ensure the

schools could use the features to their

full potential and to give the students

an in-depth experience of STEM

research. The SEMs and remote training

were provided by Hitachi High-Tech

America Inspire STEM Education

Outreach Programme.

Why did we do it?

The project aimed to instil an interest in

STEM in the students taking part by

allowing them direct access to real

scientific instrumentation. A total of 46

schools were involved in the project,

either directly as SEM hosts, or

indirectly through visiting other

institutions to use the equipment.

We are committed to helping young

people at all stages of their education,

so were delighted to get involved with

this important project.

What was the impact?

The project was an overwhelming

success, with resoundingly positive

feedback from all who took part. The

level of engagement from the students,

teachers and technical staff proves just

how exciting and important this

experience was. Projects such as this

can help to break down the barriers to

STEM that young people often

experience and give them the

opportunity to practically engage with

STEM subjects at an earlier age outside

of a classroom setting. The project not

only gave the participants a new set of

skills and the ability to think more

analytically, but it also gave them an

insight to just how exciting science

canbe.

Inspiring the next

generation of researchers

“ The number of students that have been introduced to the

possibilities of working with high-technology scientific

instrumentation in such a short period of time, and the

enthusiasm with which they have embraced the experience, is

remarkable andthis can only be a positive influence on inspiring

the next generation of young scientists and engineers.”

Image was provided by the

Natural History Museum.

Oxford Instruments plc | Report and Financial Statements 2022

Engaging with our stakeholders continued

The section below sets out our key stakeholder groups, the value of each group to the Company, the issues that matter most to

them and how we engage with them, focusing on our activity over the past year.

Customers

Why we value them

Our Horizon strategy places our customers at the centre of everything we do. Customer intimacy is key to helping us not only

identify additional opportunities to deliver increased value to our customers, but to the long-term growth of our business.

Our core purpose is to support our customers in addressing some of the world’s most pressing challenges, enabling a greener,

healthier, more connected, advanced society for all.

What matters to them and how we engage

Excellent ongoing customer support and appropriate engagement and assistance

throughout the buying cycle

•

The Executive Directors and senior management frequently host direct meetings with major customers from around the

world, both virtually and in person at our sites. These meetings provide meaningful opportunities to understand first hand,

at a senior level of the organisation, how we can enhance the customer support we provide by shaping our understanding

of customers’ current and future needs.

•

The Board considers periodic updates regarding feedback from these meetings and regarding, for example, outputs from

our heightened customer intimacy such as customer trends. This helps the Board to more meaningfully consider the

interests of customers as part of their decision-making processes.

High quality products and technical expertise

•

We continue to invest in R&D so that we can deliver cutting-edge products and services and the insights gained from our

customer intimacy is instrumental in helping us to determine where such investment can most meaningfully be made.

•

The Board recognises that continued investment in high quality products and technical expertise is key to the long-term

growth of the business and is in firm alignment with the Company’s strategy, which they set and support.

Products which deliver value and help them to meet their own objectives

•

By being customer-centric and market driven, we continuously seek to increase our depth of understanding of customer

needs. Through a deeper knowledge of our target market segments and the diverse challenges faced by our customers,

we have 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 our customers.

This has allowed us to help our customers to accelerate their applied R&D, increase productivity in high tech

manufacturing and make ground-breaking discoveries.

•

Insights from our customer relationships are informing and aligning our innovation and product development initiatives to

customers’ strategic roadmaps, to allow us to create differentiated products and solutions that will provide significant value

for our customers.

Remote access and continuity of timely supply and support during disruption

•

We have accelerated the transformation of our service offering with digital connectivity helping to maintain productivity

through remote access and service. The digitisation of our product portfolio has allowed us to offer an increasing level of

real time insights that are enhancing customer capabilities and productivity.

•

We are changing the way in which we support our customers, embracing remote service and support approaches,

combined with increased delivery through our regional teams supported by our global expertise. Utilising cross-business

capabilities also helps us to deliver quicker response times and increased local support for installations.

•

The investment in our regional service teams and the embedding of remote digital support capabilities ensures we can

deliver our global expertise locally, providing increased customer response times and reduced travel.

Engaging with Stakeholders continued

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Employees

Why we value them

A high capability, diverse workforce enables us to better understand our customers and markets. Building an organisation

with a broad range of perspectives and experiences increases our ability to innovate, to make the right decisions and to

exceed our customers’ expectations.

What matters to them and how we engage

Understanding how they contribute to our strategy and success

•

We have re-energised and restructured our approach to connecting with our employees this year. Approaching this in a

methodical way, we first hosted a series of sessions focused on “building our future”, attended by over 250 employees.

These sessions generated meaningful feedback on the employee experience across the Group which was used to help

develop our engagement plan.

•

An internal SharePoint site, accessible by all employees, was implemented to communicate news, events and stories from

around the Group. Data analytics show that this has been successful in reaching the majority of our colleagues, with one

recent news story on the site attracting over 2,000 individual views.

•

We hosted communication events, aiming to reach all employees in all roles and levels across the Group. In March 2022,

our Chief Executive and Chief HR Officer hosted a series of townhall sessions regarding sustainability and Company

strategy. Importantly, these sessions provided a two-way communication channel.

•

The Board has been delighted to take a number of opportunities to engage directly with employees. This has included

NeilCarson visiting our Bristol, UK site and meeting with a broad range of employees; Richard Friend becoming a

standingattendee at meetings of the Oxford Instruments Fellows Group and each of Alison Wood, Mary Waldner and

Nigel Sheinwald hosting sessions with employees in the US, Asia and Europe, respectively. Post each of these events,

theBoard has discussed, as a specific agenda item, the insights gained and determined any appropriate actions,

includingproviding feedback to the Management Board. These sessions have strengthened the Board’s understanding

ofemployees’ perspectives, which in turn has shaped more meaningful consideration of employees as a key stakeholder,

for example during Board discussions relating to a terminated potential offer for the Company during the year.

•

The Board has also agreed a comprehensive programme of engagement activity for the year ahead. For further

information regarding the Board’s engagement with our workforce, please see the Governance Report on page 96.

Development and progression opportunities

•

We launched a Group-wide project aiming to better facilitate and promote employee mobility within the organisation and

throughout their careers. In alignment with this, we have made a dedicated effort to present development and progression

opportunities to colleagues as we restructure certain teams and to embed the right structures to ensure that such

opportunities will be available going forward too.

•

During the past year, we have been delighted to see over 11% of our employees being promoted or taking on new

responsibilities to augment their development. With restructuring activity leading to the creation of our Materials Analysis

Group, we were particularly pleased to see two senior colleagues promoted to key leadership roles within this new group.

Health, safety and wellbeing

•

As part of our ongoing “Push for Zero” health and safety practices improvement programme, we launched a “Safety is the

choice you make” campaign, aiming to increase awareness of key hazard messages using both digital and poster formats.

•

We have worked to increase the number of safety observations reported by employees, so that remedial actions can be

implemented to prevent issues escalating into accidents. The Shield health and safety software platform was successfully

rolled out at all sites, leading to a 38% increase in reported observations.

•

We have continued to ensure that covid health and safety precautions are in place at all sites in order to protect employees

and maintain production activities in a safe environment.

•

As part of our continued focus on mental health, in March 2021, we provided all employees in the UK with access to

Unmind, a workplace mental health app which aims to empower employees to proactively measure, understand, and

improve their mental wellbeing. So far we have had 24% employee uptake and 15% using the app on at least a monthly

basis, which benchmarks favourably. In addition, we have implemented employee assistance programmes with a mental

health focus in most of the countries in which we operate.

Oxford Instruments plc | Report and Financial Statements 2022

Employees continued

What matters to them and how we engage continued

Equality, diversity and inclusion

•

We have made significant progress in developing and implementing our equality, diversity and inclusion agenda, with our

Management Board reviewing and outwardly re-emphasising their commitment to encourage a supportive and

collaborative working environment so all our people feel able to be open about their own unique identity, and they have a

strong sense of belonging within Oxford Instruments.

•

We have become an active partner with external organisations advocating on various elements of diversity. We recognise

that this helps us to continually improve our awareness and understanding of research and best practice in diversity and

inclusion for businesses. We have also aimed to learn from the lived experience of those with diverse characteristics and at

our annual internal HR conference, were delighted to hear from a range of individuals about the workplace adaptations

they felt would make a meaningful difference.

•

The Board, through the Sustainability Committee, considered our planned approach and approved our internal targets and

measures relating to this topic as well as a range of other social matters relevant to the Company’s sustainability agenda.

For more information please see our Sustainability report on pages 48 to 66.

Clarity of expectation on how recognition and remuneration structures align with accountabilities

•

The Remuneration Committee has a duty to review wider workforce remuneration and related policies to ensure they are

aligned to the long-term strategic goals of the Company and support its values and desired culture and takes these into

account when setting Executive Director and Management Board remuneration each year.

•

As part of its annual HR review, the Board considered the wider workforce remuneration landscape, noting the challenges

posed by the ongoing talent war and the range of actions which management were implementing in order to attract and

retain the capabilities which are critical to the growth and continued success of the business.

•

Recognising the impact of inflation rates on the cost of living, we awarded higher than normal pay review percentages and

accelerated the annual pay review from July to April, so employees would feel the benefit of their pay increase three

months earlier than planned. In addition, we have offered a range of enhanced benefits across the Group including

improved healthcare and paid-time-off provision in the US and improved insurances and healthcare options across Asia.

•

We have scheduled a session for July 2022 in which Alison Wood, Chair of the Remuneration Committee, will meet with

employees to discuss and explain the different components of executive remuneration and how they are measured, as well

as the alignment of executive remuneration and Company reward policy with delivery of the growth strategy.

Engaging with Stakeholders continued

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Shareholders

Why we value them

Generating value for shareholders is part of the Board’s fundamental role, alongside promoting the long-term sustainable

success of the Company and the Group and contributing to wider society.

Our goal is to deliver shareholder returns through profitable, sustainable growth with strong cash conversion and efficient

useof capital.

What matters to them and how we engage

Current and future financial performance

•

We actively engage with shareholders throughout the year to ensure they understand the performance of the business.

•

Our ongoing programme of dialogue includes numerous shareholder meetings and roadshows, which are facilitated

alongside the publication of the Report and Financial Statements and full-year and half-year results announcements.

Communication and engagement

•

The Board recognises the importance of engaging with shareholders in order to best understand their views on, amongst

other things, governance-related matters and the Company’s performance against its strategy.

•

During the year, the Chair, Senior Independent Director, Remuneration Committee Chair and Executive Directors all directly

engaged with a range of shareholders, including both virtual and in-person meetings at our sites. All current Directors

attended the 2021 AGM, which also provided an opportunity to meet with shareholders.

•

Topics discussed with shareholders during the year included the Company’s full and half-year financial results, strategy,

Board diversity, implementation of the Directors’ Remuneration Policy and the terminated potential offer for the Company

during the year.

•

The Board as a whole receives updates regarding the nature and outcome of meetings and engagement by certain

Directors with the Company’s shareholders.

Sustainability

•

Through the establishment of the Board Sustainability Committee, we readily demonstrate the top-level oversight and

ownership of our sustainability agenda.

•

We have a dedicated sustainability section on our website, which makes information regarding our approach to

sustainability easily accessible by shareholders.

•

We are delighted to have published our first Task Force on Climate-Related Financial Disclosures Statement as set out on

pages 57 to 66, our enhanced, dedicated Sustainability report which is available on pages 48 to 66 and our first standalone

Sustainability Report which can be found on our website in our sustainability section: oxinst.com/sustainability

Oxford Instruments plc | Report and Financial Statements 2022

Engaging with Stakeholders continued

Suppliers

Why we value them

Our supply chain plays a vital role in supporting sustainable growth and efficiency across the business.

Particularly as we outsource many sub-assemblies and purchase a wide variety of raw materials, it is imperative that we

attain the highest quality and service for our customers, whilst also striving to enhance the efficiency of the business and

toreduce risk.

What matters to them and how we engage

Long-term partnerships

•

As part of our operational excellence programme, we have continued to work to strengthen our supply chain through

executing a procurement strategy focused on leveraging our scale and building long-term strategic relationships with

fewer suppliers, which has enabled us to mitigate the industry-wide supply chain challenges, for example, despite the

well-publicised global shortages of semiconductors and electronics, the Materials & Characterisation sector delivered

strong revenue growth through positive engagement with our strategic suppliers.

•

Throughout the year the Board received regular updates regarding the industry-wide supply chain challenges and the

ongoing work with our strategic suppliers to mitigate the impacts of these challenges.

Visibility of the wider supply chain, so that they can best forecast future requirements

•

The Group outsources many sub-assemblies and we also purchase a wide variety of raw materials. It is essential to ensure

we attain the highest quality and service for our customers whilst we enhance the efficiency of our business and reduce

risk. As a result, we develop strong working partnerships with our suppliers, providing them with the visibility to extend our

supply chain through their supply base too, in order to create added value.

•

It is crucial to provide our suppliers accurate forward visibility in order to align our customers’ requirements with our total

supply capabilities. We share the output from our sales and operations planning process with them, and we have dedicated

Category Managers to help reduce risk and improve efficiency. We must ensure 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.

Strong relationships built on trust and respect

•

We recognise that relationships built on trust and respect with our business partners establish mutually beneficial relations.

During the year we made a particular effort to live out our Company values and to support our suppliers, bearing in mind

their various, different needs, in light of supply chain challenges and ongoing covid-related disruptions.

•

We have reviewed and improved our supplier due diligence and audit procedures. We have a zero-tolerance approach to

all forms of modern slavery, including servitude, forced, bonded and compulsory labour and human trafficking and we

expect our suppliers to adopt the same approach.

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Local communities

Why we value them

We recognise that making a meaningful contribution to wider society enables us to support the development of stronger

communities and have a positive environmental and social impact.

What matters to them and how we engage

Environment

•

We actively engage in locally focused activities that make our communities and environments a better place to live and

work. Encouraged by a strong level of employee engagement, we have established a “Go Green” committee on many of

our sites to deliver a local environment agenda and promote positive behaviours amongst peers. They are focused on

finding innovative ways to improve our environmental impact, including energy reduction initiatives, wildflower seed gifts,

removing single-use plastic from our sites, installing electric vehicle charging points and reducing our food miles by

offering seasonal food in our canteens.

Local small businesses

•

When we arrange gifts, celebrations, events and activities for our teams we aim to support the small, independent

businesses near our sites.

•

During the covid pandemic, our Belfast site made a dedicated effort to support local small businesses in the hospitality

sector by engaging them to supply food to the site.

•

Our Boston site also provides a pack to all new joiners which includes products sourced from local small businesses,

previously including soap produced by the Potager Soap Company, a women-owned business based in West Concord.

Schools and colleges within their region

•

We are committed to empowering students with an understanding of the working world and the range of career

opportunities that choosing STEM subjects could open up. To support this, we facilitate school visits, work experience

programmes and industrial postdoctoral placements.

•

During the year we were delighted to support a STEM education project aiming to inspire the next generation of

researchers by providing students with a unique opportunity to experience scientific research. See our case study, “Inspiring

the next generation of researchers” on page 27 for more information on this exciting project.

Volunteering opportunities

•

Many of our people are keen to share their expertise and to make a difference to the people and organisations that are

close by and we encourage them to get involved through volunteering schemes. We operate a “Volunteer time off”

programme for eligible employees, which enables them to take two days’ paid time off to volunteer each year and believe

that operating such a scheme generates a range of benefits, including increasing the positive impact we have in our

communities, boosting employee morale and enhancing team bonding.

Charitable donations and response to the conflict in Ukraine

•

We encourage our employees to support their local communities through charitable donations. This has included

collections of contributions to local food banks and fundraising activity for local charities, with, for example, our Belfast site

supporting a nominated charity each year, including Aware NI for 2020 and 2021 and Helping Hand (charity to the Royal

Belfast Hospital for Sick Children) for 2022, and our Tubney Woods site supporting Aspire Oxfordshire (which supports

people facing homelessness, poverty and disadvantage).

•

In response to the conflict in Ukraine, the reaction of our employees in wanting to support those displaced or otherwise in

need as a result of the conflict in Ukraine was simply overwhelming. The Board was keen to recognise this and, on an ad

hoc basis, approved a charitable donation of up to £30,000 (with £10,000 of this dedicated to matching employee

donations) to the International Red Cross or UNICEF.

The appearance and tangible impact of our sites and operations

•

We aim to be considerate neighbours in all aspects of how we operate, but in particular recognise the importance of the

appearance and tangible impact of our sites and operations. We take active steps to minimise traffic noise and congestion

and are committed to minimising emissions. Our sites and grounds are also well maintained and sensitive to the local

environment and wildlife.

Oxford Instruments plc | Report and Financial Statements 2022

Measuring our performance

Our goal through our financial KPIs

istodeliver shareholder returns through

profitable, sustainable growth and

strongcash conversion and efficient

useof capital.

The Group uses a range of measures to

monitor progress against its strategic

plans. The key performance indicators

are presented here.

Key Performance Indicators

The Group uses a range of measures to monitor

progress against its strategic plans. The key

performance indicators are presented below:

20.0

Adjusted operating profit

margin (%)

Why we measure:

To consistently maintain

underlyingoperating margins

Link to strategy:

  

20222021202020192018

18.1

17.8

15.9

15.2

16.6

Adjusted earnings per

share (EPS) growth (%)

Why we measure:

To achieve long-term growth in EPS

Link to strategy:

  

20222021202020192018

12.0

12.7

11.6

35.8

Return on capital

employed (ROCE) (%)

Why we measure:

To deliver ROCE in excess of our

costof capital

Link to strategy:

  

20222021202020192018

30.8

33.9

27. 2

21.0

18.3

Revenue growth

(%)

Why we measure:

To drive profitable, sustainable

growththrough the implementation

ofour strategy

Link to strategy:

  

20222021202020192018

15.3

0.3

1.1

13.2

0.6

Cash flow conversion

(%)

Why we measure:

To maintain a strong operating

cashconversion ratio and high level

offree cash flow

Link to strategy:

  

20222021202020192018

101

124

100

Financial KPIs

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

Employee engagement

(%)

What we measure:

Engagement across a number of areas

for feelings of inclusion, value and

respect

Why we measure:

Regular surveys to measure employee

engagement and identify areas of

focus. This measure began in 2019

Link to strategy:



202220212020

Inventing the future

(%)

What we measure:

Proportion of revenue coming from

products launched in the previous

three years

Why we measure:

To measure the effectiveness of our

R&D programmes

Link to strategy:



20222021202020192018

Adding personal value

(#)

What we measure:

“Value Add” = (adjusted operating

profit+ employment costs)/

employment costs

Why we measure:

To measure efficiency

Link to strategy:



20222021202020192018

1.57

1.52

1.50

1.51

1.53

Accident rates

(#)

What we measure:

Five-year view of accidents/1,000

employees for ongoing businesses.

Accident/1,000 employees

Why we measure:

To measure the impact of our safety

drive, Push for Zero, to reduce

accidents

Link to strategy:



20222021202020192018

Strategic goals



Market

Intimacy 

Customer

Support 

Operational

Excellence 

Innovation and

Product Development 

Sustainable

culture

Non-Financial KPIsStrategic KPIs

Oxford Instruments plc | Report and Financial Statements 2022

Materials &

Characterisation

Operations Review

Key highlights

Orders

£219.2m

+25.3% (2021: £175.0m)

Constant currency growth

vs 2021: 29.8% (vs 2020: 48.4%)

Adjusted

operating margin

14.1%

(2021: 13.7%)

Revenue

£185.5m

+24.8% (2021: £148.6m)

Constant currency growth

vs 2021: 28.9% (vs 2020: 32.7%)

Statutory operating profit

£20.8m

(2021: £16.6m)

Adjusted

operating profit

£26.1m

+28.6% (2021: £20.3m)

Constant currency growth

vs 2021: 30.4% (vs 2020: 26.1%)

1. For definition refer to note on page 1.

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

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Materials & Characterisation

overview

The Materials & Characterisation sector

has a broad customer base across a wide

range of applications for:

•

the imaging and analysis of materials

down to the atomic level where our

leading product performance, ease of

use and advanced analytics enhance

our customers’ capabilities, provide

actionable insights and increase their

productivity. Our portfolio of systems

(across Asylum Research,

NanoAnalysis, Magnetic Resonance

and newly acquired WITec) include our

range of market-leading X-ray and

electron analysis systems, used in

conjunction with electron microscopes,

and our performance-leading atomic

force and Raman microscopes, and

magnetic resonance; and

•

the fabrication of semiconductor

devices and structures, where our

portfolio of advanced semiconductor

etch and deposition process systems

(Plasma Technology) provide our

customers with the ability to create

and manipulate materials with atomic

scale accuracy to fabricate advanced

compound semiconductor devices.

The sector has a strong focus on

accelerating our customers’ applied R&D,

enabling the development of new devices

and next generation higher performing

materials, and enhancing productivity in

advanced manufacturing, quality

assurance (QA) and quality control (QC).

Operational and

strategicprogress

During the year, we broadened the

capabilities that we offer our existing

customers through the acquisition of

WITec, which brought complementary

leading Raman microscopy solutions to our

portfolio and can be used in conjunction

with our existing characterisation solutions.

Theacquisition, which completed on

31August 2021, enables the further

exploitation of synergies across the sales,

marketing and service teams, and

increases the role we can play in

supporting our customers, and provides

access into new adjacent markets.

In line with our Horizon strategy,

wehaveenhanced our market-leading

semiconductor etch and deposition

processing systems for R&D and now

also provide a suite of dedicated systems

for use in high-volume manufacturing.

Construction on our new state-of-the-art

facility for the business has progressed

well, with completion expected later

in2022.

The Materials & Characterisation sector delivered

strong growth, underpinned by the strength of our

portfolio and increased demand across all our target

end markets.

Oxford Instruments plc | Report and Financial Statements 2022

Operations Review continued

A strong performance

intheyear

The Materials & Characterisation sector

delivered strong growth, underpinned

bythe strength of our portfolio and

increased demand across all our

targetend markets, with particularly

strong growth from semiconductor,

electronics, and advanced materials.

Strong order growth reflected significant

uplift in demand across North America

and Asia as well as strong growth in

Europe. Order growth was also supported

by our increased market focus and the

launch of new products tailored for

specific end applications and customers

workflows, for example our portfolio

semiconductor processing systems

dedicated for high-volume

manufacturing. Our market intimacy

approach and end application focus

supported strong double-digit growth to

academic customers with twice the

growth into commercial customers as we

continued to nurture existing accounts

and expand into new adjacent

opportunities.

Despite the well-publicised global

shortages of semiconductors and

electronics, the sector delivered strong

revenue growth through positive

engagement with our strategic suppliers.

The phasing of the easing of travel and

access restrictions to customers’ sites

strongly influenced the regional delivery

of the growing order book, resulting in

strong revenue growth into Asia with

good growth into North America and

Europe as the situation improved in these

regions through the second half of the

year. In line with orders, we had strong

double-digit revenue growth to academic

customers with even stronger growth to

commercial organisations, resulting in the

proportion of revenue to commercial

customers increasing slightly to 57% in the

year (2021: 56%). The continued growth of

the sector over the past two years reflects

the resilience of the end market drivers

and the positive positioning of our

products within them. The order book for

future deliveries increased by more than

50% in the year to £116.0m (2021: £74.3m).

From an end market perspective, thesector

had strong double-digit order growth into

each of our target end markets, with a

similar pattern for revenue growth apart

from the QuantumTechnologies segment,

which remained in line with the previous

year due to the phasing of shipments.

Revenue in thesector is dominated by

theSemiconductor & Communications

andAdvanced Materials markets,

representing 46% and 33% of revenue,

respectively. Energy & Environment and

Healthcare & Lifescience both grew

strongly to represent 14% and 6% of

revenue, with Quantum Technology and

Research & Fundamental Science each

representing 1%.

The book-to-bill of 1.18 led to a 56.1%

increase in the order book for future

deliveries to £116.0m (2021: £74.3m).

Profitability for the sector was further

enhanced in the period with reported

profit increasing to £26.1m (2021: £20.3m),

representing an adjusted operating

margin of 14.1% (2021: 13.7%).

Materials &

Characterisation

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Semiconductor &

Communications

This market is a key focus for us, in which

we delivered strong double-digit order

and revenue growth across both our

imaging and analysis portfolio and

semiconductor processing systems.

Growth was aided by the long-term

structural drivers within this market,

including the ramp up in global demand

due to their burgeoning use into everyday

consumer products such as cars and

computers, as well as commercial

products. This is leading to an increase in

production capacity as well as the

development of the next generation of

devices with the relentless drive to reduce

feature sizes to drive manufacturing

efficiency, increased processing power

and reduced costs. Our imaging and

analysis solutions are used to measure

the composition and structure of the

devices down to the nanoscale which, as

dimensions shrink in size, becomes ever

more critical in the development of next

generation devices, their successful

transfer to manufacturing, and for quality

control in high volume production. The

leading precision and resolution of our

solutions is a core differentiator and

allows us to support our customers to

deliver their demanding roadmaps and

increase their productivity.

In addition to the mainstream silicon

market, exponential increases in digital

data flow, driven by surging demand for

connectivity, the requirement for more

energy-efficient devices, and the

increased deployment of

human-machine interfaces (e.g. facial

recognition), are all driving strong

demand for compound semiconductors

with improved performance and higher

manufacturing yields. This is leading to

strong orders for our compound

semiconductor processing systems,

specifically designed for commercial R&D

and high-volume production. Within these

applications, our market intimacy has

helped us to focus on developing

solutions for the critical layers within

devices that have the biggest impact on

end device performance, cost, and yield.

For example, we have seen strong growth

in demand for our indium phosphide (InP)

solutions which are used to manufacture

the optical devices with the fibre optic

networks that are supporting 5G and

cloud-based systems. Furthermore,

infrastructure with improved connectivity

is a critical enabler to the introduction of

electric vehicles and expansion of the

Internet of Things. For example, a moving,

connected electric vehicle produces

25GB of data per hour (more than 5x the

average person’s monthly usage) and this

is forecast to rise to between 1TB and

19TB per hour with the introduction of

autonomous vehicles.

We have also seen strong growth in

demand for our gallium nitride (GaN)

solutions which enable manufacturers to

produce more efficient power devices for

consumer electronics products, and our

silicon carbide (SiC) solutions are

enabling the production of faster

charging and enhanced power

management to improve the range and

reliability of electric vehicles. In addition,

the expansion of human-device

interaction, such as virtual reality and

facial recognition on mobile phones and

within autonomous driving vehicles, is

driving growth into vertical cavity lasers

(VCSELs) and 3D sensing devices where

our proprietary processes offer significant

performance and yield advantages.

Oxford Instruments plc | Report and Financial Statements 2022

Operations Review continued

Advanced Materials

Double-digit order and revenue growth

into advanced materials applications were

underpinned by them being the building

blocks of modern society, enabling

everything from the screens we watch and

the cars we drive to the batteries that

power our world. Of increasing importance

is the pivotal role that advanced materials

will play in enabling a sustainable, net zero

future through their ability to transform

product performance and providing a

roadmap to the more sustainable use of

our valuable and finite resources. All

materials and products undergo some

form of analysis, driving increasing

demand for our market-leading product

portfolio of imaging and analysis systems,

which allows our customers to measure

down to the nanoscale, optimising the

performance and the subsequent

economic production of these lighter,

stronger and higher functioning materials

across a diverse range of end applications.

The automotive industry is a good example

of a market undertaking transformational

change due to increasingly stringent

emissions regulations and customer

demand for higher electric vehicle range

and improved safety. This drives the need

for dramatic reductions in weight whilst

also improving structural integrity, which is

particularly relevant for electric and hybrid

vehicles where lighter and stronger

materials must offset the additional weight

of the batteries. This is driving the

increased use of carbon fibre composites

and lightweight alloys, and new advanced

steels. As such, there is significant

investment into the understanding and

control of composition and structure at the

nanoscale, which enables the design of

materials with performance tailored for the

end application, such as stronger car

safety cages or crash absorption crumple

sections. Steel manufacturers are also

investing in transforming their highly

emission-intensive manufacturing

processes, which contribute about 8% of

global CO

emissions.

This is leading to further investment in the

characterisation of nanostructures and

precise composition of their products,

supporting increased demand for our

imaging and analysis systems.

Ourgrowth has been further supported

by our new products which provide the

ability toobserve even smaller features,

with dramatically faster throughput and

ease of use, making them ideal for both

research and development as well as

QAand QC.

Another area of increasing focus is

additive manufacturing, which is gaining

both government and commercial

impetus. The approach requires the

creation of complex, strong and

lightweight structures with optimised

production methods which dramatically

reduce material usage and waste.

Materials &

Characterisation

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Our electron microscopy products are

helping researchers unlock the full

potential of 3D printing, allowing them

toquickly understand the microstructure

impact of key properties ensuring they

deliver the same performance as

traditional materials, for example

checking the risk of corrosion damage

orthe potential for a reduced lifetime

ofnew products.

Our products are also used in the

research and development of exotic new

materials such as graphene-like

structures, with the long-term goal of

transforming the performance of next

generation semiconductors and batteries.

Energy & Environment

Strong growth in the Energy &

Environment segment for our analysis

products has been underpinned by

sustained investment within the global

battery market and the continued

recovery of markets such as forensics

and environmental science, after reduced

customer activity during the peak of the

covid-related lockdowns.

Batteries play a key role in the transition

from fossil fuels, enabling sustainable

travel and providing efficient and

affordable storage to complement

renewable energy generation. This is

driving continued investment into new,

improved materials and battery

structures in the pursuit of lower cost,

higher performing, more environmentally

friendly solutions.

As is the case for steels, battery

performance is determined by the

material properties at the nanoscale and

how these change through the lifetime of

charging cycles. This has led to strong

growth across our Materials &

Characterisation portfolio and investment

into development and production control

applications. Over the past few years, as

a result of our market intimacy, we have

supported this growing market by

launching a tailored portfolio of solutions

dedicated to the nuances of the battery

market, from our new “Feature Express”

product that reduces the time to identify

contaminants by a factor of four, to our

benchtop NMR and newly acquired

Raman systems which characterise the

performance of the analyte which

enables the flow of charge across the

battery. Our portfolio supports our

customers’ roadmaps, providing insights

to give them a competitive edge and

eliminating defects that compromise

safety and performance.

In addition to the environmental impacts

of global warming, reducing pollution

remains a key part of a sustainable future.

We have started to develop analysis

solutions for this critical market, including

our benchtop NMR systems which can

measure the fats, oils and grease in

wastewater, providing a cost-effective

solution for environmental authorities and

industries to monitor pollution releases

into river and sewer systems as well as

preventing harmful blockages.

Healthcare & Lifescience

We have continued to see strong growth in

this segment, with dedicated solutions for

the pharmaceutical industry. OurRaman

imaging techniques are used to assess

and ensure the safety and therapeutic

effect of medications. Thisisfurther

supported by our dedicated,

regulatory-approved pharmaceutical

software for our electron microscopy

products, which screens for foreign body

contamination within and on tablet

surfaces. Our material characterisation

tools are also being used to develop and

monitor the performance of the increasing

range and complexity of medical implants

such as micro-sized stents and joint

replacements, to understand the size and

distribution of nanoscale precipitates that

can cause areaction.

Quantum Technology

We continue to see opportunities in

quantum technology markets. Through

the combination of our expertise in

semiconductor processing and

characterisation, and our intimacy with

customers within the quantum market,

we are providing compound

semiconductor processing systems for

the fabrication of high performing qubits

and their subsequent characterisation.

Oxford Instruments plc | Report and Financial Statements 2022

Research

&Discovery

Operations Review continued

Key highlights

Orders

£133.9m

+15.7% (2021: £115.7m)

Constant currency growth

vs 2021: 19.6% (vs 2020: 13.0%)

Adjusted

operating margin

17.7%

(2021: 17.2%)

Revenue

£120.3m

+6.1% (2021: £113.4m)

Constant currency growth

vs 2021: 9.3% (vs 2020: 6.9%)

Statutory operating profit

£15.0m

(2021: £13.1m)

Adjusted

operating profit

£21.3m

+9.2% (2021: £19.5m)

Constant currency growth

vs 2021: 10.5% (vs 2020: 48.7%)

1. For definition refer to note on page 1.

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

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Research & Discovery overview

There are a higher proportion of sales to

academia and a growing proportion to

commercial customers as we develop

application-specific, easy-to-use

solutions based on our high-end

researchorientated platforms.

Our imaging and analytical systems

portfolio includes market-leading

scientific cameras, confocal microscopes,

spectrometers, lasers and X-ray tubes.

Our ultra-low temperature cryogenic and

high magnetic field platforms provide

both versatile research platforms as well

as dedicated systems for more applied

and increasingly routine use. In addition

to selling directly to end customers,

where we have a strong brand presence,

we also exploit our position across a

broad range of additional end markets by

providing our key enabling technologies

to strategic OEM partners.

The sector’s products play a key role

across a broad range of life, material and

physical science applications, with a

critical role in the development and

advancement of quantum technologies.

A positive performance

The Research & Discovery sector

delivered a good performance with

double-digit order growth, good growth in

revenue and improved profitability.

Positive market drivers led to increased

demand, which, combined with our

leading product portfolio and targeted

product launches, have led to strong

order growth relative to the previous year

across each of our end markets. The

exception being Research & Fundamental

Science, which declined in the year due in

part to our increased focus on higher

value markets as well as slower customer

activity in the period. Europe continued its

first half recovery with particularly strong

growth in the year, complemented by

double-digit growth in both North

America and Asia. This included strong

order growth to academia with even

stronger growth to commercial

customers, with commercial customers

growing to 33% of orders for the sector

(2021: 26%).

The sector delivered strong constant

currency revenue growth, up 9.3%.

Supplychain challenges through the

second half of the year and ongoing

customer site restrictions hindered

revenue despite strong demand and

impacted regional profiles.

This resulted in strong growth in

NorthAmerica and Asia, with Europe

improving in the second half and ending

in line with the previous year. Revenue

grew strongly to both academic and

commercial customers, with the

proportion to commercial customers only

increasing slightly to 26% (2021: 25%) due

to the phasing of delivery of the orders.

From an end market perspective,

Healthcare & Lifescience represented

37% of revenue, with Advanced Materials

and Quantum Technology 23% and 21%

respectively. Research & Fundamental

Science fell to 14%, with Semiconductor

&Communications and Energy

&Environment representing 4% and 1%

ofrevenue respectively.

The book-to-bill ratio of 1.11 led to a 12.9%

increase in the order book for future

deliveries to £108.7m (2021: £96.2m).

Profitability for the sector was further

enhanced in the period with adjusted

operating profit increasing to £21.3m

(2020: £19.5m), representing an adjusted

operating margin of 17.7% (2020: 17.2%).

This was supported by the continued

realisation of tangible gains through our

Horizon strategy despite considerable

inflationary headwinds.

The sector, which comprises Andor Technology, NanoScience and X-Ray

Technology, provides advanced solutions and technologies that enable imaging

and analytical measurements down to the atomic and molecular level, as well as

ultra-low temperature and high magnetic field environments, used across scientific

research, applied R&D, and commercial applications.

Oxford Instruments plc | Report and Financial Statements 2022

Operations Review continued

Healthcare & Lifescience

The positive momentum of the first half

continued with increased demand and

strong double-digit order growth in the

year. This was supported by an increasing

number of customer sites re-opening and

recommencing programmes after

temporary covid-related closures in the

previous year. Long-term market growth

drivers, such as a focus on improving the

health and wellbeing of society, driven by

an ageing population and an increased

focus on improved and cost-effective

healthcare provision, also strengthened.

The emergence of covid showed that

understanding fundamental disease

mechanisms at a molecular level and

using this knowledge to rapidly develop

effective treatments transformed the

global approach to dealing with a

pandemic. Our products and technologies

have been key to this and are being

increasingly applied by our customers to

accelerate similar transformations across

a range of conditions including cancer,

Alzheimer’s, cystic fibrosis and diabetes.

This has supported strong growth in

supply to the research community of our

imaging solutions and scientific camera

portfolio. Furthermore, we have seen

strong growth into the broader life

science and pharma markets through our

strategic OEM partnerships where our key

enabling technologies sit at the heart of

their products; for example, gene

sequencers and 3D micro-CT scanners,

which are increasingly being used to

undertake breast cancer screening as

well as biopsy sample analysis.

Through our market intimacy focus, we

have continued to develop solutions and

key enabling technologies that

specifically address the needs of

customers in cell biology, neuroscience,

immunology and personalised medicine.

Our new benchtop microscopy system,

BC43, has been designed to provide

research grade capability, with

unprecedented ease of use at a much

more affordable price point. This is

already proving popular with those

working in early cancer research by

dramatically improving productivity and

the understanding of cell dynamics and

response to stimuli. The new details and

insights that our products facilitate are

accelerating personalised treatment

plans, which will deliver optimal

outcomes for cancer patients and those

battling other debilitating conditions such

as cystic fibrosis.

In addition to the success of BC43, our

Dragonfly portfolio has continued to grow,

and is targeting the most challenging of

applications as well as central research

facilities, where several different teams

utilise the equipment. Its ability to

undertake high-speed imaging over and

through large samples with

unprecedented resolution has supported

particularly strong growth into cell

biology and neuroscience applications.

In the year we had a reduction in sales to

covid-related applications, such as on

chip diagnostic testing and screening,

and are now seeing volumes similar to

the pre-covid era.

Quantum Technology

The quantum market continues its

evolution into applied R&D and more

commercial applications with growing

investment across governments and

increasingly commercial organisations

such as Google, Amazon, IBM and a

plethora of smaller enterprises. The driver

continues to be the realisation of the

potential and increasing likelihood that

quantum computers could radically

disrupt existing markets such as

pharmaceuticals, logistics and financial

services, as well as providing the ability to

maintain long-term data security. This is

leading to an increase in research and

development investment as nations and

corporates seek to gain leadership

positions as well as an emerging

commercial cloud-based quantum

computing market and ecosystem with

pay-per-use services.

This has supported strong growth across

our portfolio of cryogenic platforms and

scientific cameras. Thanks to our strong

collaborations with many of the key

players in the market, we can use the

insights gained to develop solutions

tailored for the specific needs of

customers. This ranges from rapid

exchange systems enabling a tenfold

increase in productivity for qubit

development through to highly stable

platforms for commercial quantum

computers and high-speed cameras for

secure communication applications.

We remain well positioned to support the

growth of this exciting market and are

building our plans for future products to

enable our customers’ roadmaps.

Research

&Discovery

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Advanced Materials

Strong growth in the Advanced Materials

segment reflects increased investment

and customer demand to explore and

characterise the more fundamental

properties of materials for a broad range

of applications from sensors,

semiconductors, and batteries. This has

led to increased demand for our materials

analysis systems which combine ultra-low

temperatures and high magnetic fields

environments, allowing researchers to

fully characterise the fundamental

properties of existing materials and gain

the necessary insights to design future

candidates that will transform markets

and create new possibilities. To support

our evolving market, we have developed

easier to operate systems with increased

automation and data analytics

capabilities to improve productivity and

broaden the accessibility of the product.

We also received increased demand for

our scientific cameras and optical

spectrometers to customers developing

more efficient catalysts and new

chemicals.

Energy & Environment

In the year we saw strong order growth

for our scientific cameras across a range

of applications in this segment. This

included a recovery in OEM demand for

airport security scanners after being

heavily subdued during the travel

restrictions of the past few years, and our

ultrafast cameras that are used to study

and optimise the critical phases of

nuclear fusion experiments. Due to the

timing of orders, revenue remained

extremely low in the year.

Research & Fundamental

Science

The Research & Fundamental Science

market has been subdued in recent years,

especially for those programmes that

have required multi-institution and

international collaboration. This,

combined with our own decision to

accept fewer orders for one-off

specialised cryogenic and high magnetic

field systems that do not benefit our own

product roadmap or margin expectations,

led to a decline in orders and revenue in

the year. Within these parameters we

continue to see a healthy forward-looking

pipeline for our portfolio across a broad

range of research themes including

astronomy, chemistry, and physics.

Within astronomy, our Balor large area

camera is being used on the Extremely

Large Telescope (ELT) in Chile to align the

mirrors to ensure precision

measurements. The ELT is the largest

ground-based telescope in the world and

will gather a billion times more light than

the human eye. It will help tackle some of

the greatest scientific challenges today,

including the search for other earth-like

planets and measuring the properties of

the earliest stars and galaxies.

Oxford Instruments plc | Report and Financial Statements 2022

Service &

Healthcare

Operations Review continued

Key highlights

Orders

£70.0m

+11.1% (2021: £63.0m)

Constant currency growth

vs 2021: 16.0% (vs 2020: 29.3%)

Adjusted

operating margin

30.7%

(2021: 29.9%)

Revenue

£61.5m

+8.8% (2021: £56.5m)

Constant currency growth

vs 2021: 13.5% (vs 2020: 20.6%)

Statutory operating profit

£18.9m

(2021: £16.9m)

Adjusted

operating profit

£18.9m

+11.8% (2021: £16.9m)

Constant currency growth

vs 2021: 19.3% (vs 2020: 34.5%)

1. For definition refer to note on page 1.

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

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Service & Healthcare overview

The sector delivered continued

strongorder, revenue and increased

profitability, driven by the service

activities related to our products, with

orders and revenues related to the

service of third-party MRI systems

broadly in line with the previous year.

With customer support being more highly

appreciated than it ever has been before,

our service transformation programme

provides the opportunity to create

significant additional customer value,

support our expansion into commercial

markets, and provide meaningful growth

and margin enhancement for the Group.

We made excellent progress with our

transformational programme in the year,

which underpinned constant currency

order growth of 19% for services related to

our own products, with strong double-digit

growth in Europe, North America and Asia,

and into both academic and commercial

customers. Revenue growth, as was the

case for the other sectors, was restricted

by supply chain challenges in the year.

Adjusted operating margin increased to

30.8% (2021: 29.9%) despite significant

investments in our service infrastructure.

As part of our service transformation,

weutilised our deep market knowledge

todevelop a portfolio of tailored service

offerings for specific end markets,

customer types and regions that better

address the full life cycle use of our

products, creating value linked to their

specific situation and workflows.

Thisincluded building on our digital

andremote service capabilities,

withconnectivity across our products

increasing response times and enabling

usto reach customers that have previously

been difficult to support effectively

because of their location. Wehave also

developed digital analytics packages

which are providing actionable insights for

end users and OEM partners, increasing

productivity and efficiency.

Secondly, we have also adopted a

flexible approach to service bundling

tobetter address our full install base

byoptimising the service elements that

create value for individual customers.

Asan example, our self-sufficiency

packages that are designed to provide

fast response and parts guarantees have

driven strong growth to production

customers with their own in-house

support teams.

Thirdly, building on our positive

experiences throughout the pandemic

wehave transitioned to a regionally led

service model, where our global

processes are implemented and

delivered locally. By exploiting synergies

across our local teams, investing in digital

infrastructure and cross-product training

for our field engineers, we can respond

more quickly to our customer requests

and improve our efficiency whilst

dramatically reducing our travel footprint.

The Service & Healthcare sector comprises the Group’s service and

support products related to Oxford Instruments’ own products, and

the support and service of third-party MRI scanners in Japan.

Image: Matt Renshaw, Francis Crick Institute, London

Oxford Instruments plc | Report and Financial Statements 2022

As a Group we believe sustainability is the

cornerstone of our strategy to drive

stakeholder value and we recognise the

important role we play and the impact we

have on the environment and society.

Through our products and services, we

make a significant positive impact on the

world by enabling a greener economy,

improved healthcare and a more

connected advanced society. Through

our actions in sustainability, we set an

example for others.

The establishment of our Board

Sustainability Committee reflects the

prominent role sustainability has within

the organisation. The Committee helps to

drive our agenda and measure our

progress against our goals. We also have

a leadership team and employee base

that are passionate about sustainability,

supporting our progress to date and our

ongoing journey to net-zero.

Through our leadership team, we are

taking a holistic approach to

sustainability ensuring that it is

embedded in everything we do across

the organisation. In support of this we

have created three main channels of

focus – environment, social and

governance.

Our guiding principle is to be a leading

organisation in the global approach to

sustainability. As such, we have set the

ambition to be ahead of the curve on the

following themes:

•

Our values and purpose

•

Material impact on the world and our

strategic performance

•

Stakeholder areas of focus and

direction of travel

•

Internationally recognised

recommendations e.g. UN 17

Sustainability Goals

•

Legislative framework of the countries

in which we operate

While we support all the UN

Sustainability Development Goals, we

have specifically aligned ourselves with

several key goals in those areas where

we have the most potential to influence

and shape a sustainable future.

Delivering on our purpose and values

demonstrates our dedication to being a

sustainability leader through continuous

improvements in our own operations,

whilst supporting and enabling our

customers to deliver on their own

ambitions. We are focused on

challenging mindsets and driving actions

to build a more sustainable future. This is

more important than ever as the world

looks to accelerate the transition away

from fossil fuels.

Sustainability at all levels – ethical,

social, environmental and economic

–iscritical for us to create the value and

positive impact we seek to achieve, and

we are committed to making even greater

progress in the year ahead and beyond.

Sustainability

Sustainability has become a key agenda item for everyone –

governments, companies, shareholders, consumers and

employeesalike.

Our products have the ability to make a contribution toward the following goals:

Good health

and wellbeing

Affordable

and clean

energy

Industry,

innovation

and

infrastructure

How we run our business and the actions we take throughout our value chain offer support against the following goals:

Gender

equality

Clean water

and sanitation

Decent work

and economic

growth

Industries,

innovation

and

infrastructure

Responsible

consumption

and

production

Peace, justice

and strong

institutions

Environment

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Whilst we are proud to be recognised as the leaders in what we do

and for the positive impact our products make in the world, we

understand the need to minimise our own environmental footprint.

Environment

The Group has continued on its journey to

understand the environmental footprint of

its operations, products and services,

recognising the ongoing threat climate

change plays to the world. To ensure we

have an accurate view of this, we have

widened our scope of monitoring to

capture all our sites and offices. Previously,

our smaller offices with low emissions

were excluded from our measures.

However we recognise that in order to

ensure we address our full impact, it is

essential all our operations are

considered. We have stated this year’s

numbers to cover our full operating base.

Building on the continued engagement of

our employees for the environment, we

have continued to empower our Go Green

committees across our sites to help us

further embed sustainability throughout the

Group. The support of our employees with

our focused efforts has enabled us to make

excellent progress in continuing to

understand and manage our CO

emissions

and continue to reduce the amount of

waste products generated at our

manufacturing sites, facilities and activities.

This year we have embraced the

adoption of the TCFD reporting

framework, utilising it to further expand

our green agenda and taking the

opportunity to demonstrate the

importance of this by reporting our

progress. Working with external advisers,

we have confirmed our Scope 1 and 2

(direct and indirect) emissions and are

making good progress in mapping the

wider indirect impact we have through

our supply chain, distribution network and

customer use of our products (Scope 3).

In support of our ambitions, we have

updated the environmental policy that is

implemented at all our sites. This commits

the Group to achieving net zero emissions

through significantly reducing our

environmental footprint andthe continuous

monitoring and improvement of our

activities that contribute to climate change.

Our strategy includes continued energy

savings, efficient energy usage, the

choice of our supply chain partners as

well as the adoption of new technologies

and systems as they become available.

Energy and emissions

As previously mentioned, this year

wehave widened our scope of energy

monitoring, which improves our

understanding of our carbon footprint.

Ithas increased the reported energy

consumed but demonstrates how serious

we are about reaching our net-zero target

ahead of 2050. Our latest acquisition,

WITec, is also included in our figures for

this year and we have also seen an

increase in consumption relative to last

year as more of our staff return to the office

after working from home during covid.

On a like-for-like basis, we have retained

a significant reduction on emissions

based on our pre-pandemic levels.

Wehave maintained supply of 100%

renewable electricity consumed by our

manufacturing activities. We continue to

look at ways to reduce our fossil fuel

consumptions, which now primarily come

from our smaller facilities.

Oxford Instruments consumed a total

of14.94 GWh of energy globally during

2021/22. This figure consisted of 11.40

GWh of electricity (2020/21: 10.01 GWh),

2.43 GWh of gas (2020/21: 1.27 GWh),

0.53GWh of oil (2020/21: 0.570 GWh),

0.22GWh of district heating (2020/21: not

measured), 0.007 of LPG (2020/21: not

measured), 0.35 GWh of car fuel and

0.01GWh of grey fleet (2020/21: car fuel

and grey fleet reported together –

0.19GWh) .

With the drive to improve accuracy by

including all our facilities for the first time,

this year we have an increase in energy

consumption. This has resulted in our

intensity metric increasing to 40.67 MWh

per £m of revenue (2020/21: 37.17MWh).

The Group’s Scope 1 and 2 global carbon

footprint for 2022 increased to

1,476.1tCO

e from 520.06 tCO

e in the

previous year. Again, this increase reflects

the increased scope of our reporting,

anacquisition, the return of staff to our

offices who were working from home,

andthe wider recommencement of

business travel.

Water and waste

While we measure our water usage,

thelevel is minimal and not material

sohas been excluded from this report.

We have also included our use of

hydrofluorocarbons. Three of our main

manufacturing sites are zero waste to

landfill, where our waste is recycled either

directly or indirectly, for example general

waste being used to generate electricity

at dedicated incinerator sites.

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

Environment continued

Transport

Our transport-related emissions continue

tobe a large contributor to our emissions,

which, in the previous year, was significantly

reduced due to covid-related restrictions

and our adoption of new ways of working.

With the global recovery and the increased

ability to travel our transport emissions

have increased, which is to be expected

given the restricted travel in the previous

year. Weremain committed to utilising the

hybrid workplace model utilising digital and

remote communications to help us reduce

our ongoing travel requirements.

Air travel equated to around 6 million km,

with the air travel carbon equivalent to

947.45 tCO

Air travel

2021/22

5,980,961.21 km

(2020/21: 900,074 km)

Carbon

equivalent

947.45 tCO

(2020/21: 130.31

tCO

Car fuel

The car fuel figures are drawn from fuel

card and business mileage expense claim

records and these totalled 35,361 litres of

fuel used in the last year.

UK car fuel = 35,361 litres

Carbon

equivalent

= 84.4 tCO

Electricity consumption as carbon

Type of emissions

2021/22 2020/21

tCO

e % of total tCO

e % of total

% difference in

emissions

Direct (Scope 1) 666.7 45.2% 379.8 73.0% 76%

Indirect (Scope 2) 806.1 54.6% 140.8 27.0% 473%

Scope 1 and 2 Total 1,472.7 99.8% 520.6 100.0% 183%

Fuel directly purchased by the Company (Scope 3) 3.4 0.2% — — —

Indirect other (Scope 3) Total 3.4 0.2% — — —

Total gross emissions (tCO

e) 1,476.1 520.6 184%

Intensity ratio:

Scope 1 and 2 tCO

e per GBP £m turnover 4.01 1.63 145%

Energy consumption used to calculate

Scope 1 and 2 emissions /kWh 14,937,971 11,850,000 26%

Our total carbon footprint for April 2021 to March 2022 is as follows:

Type of emissions Activity

Emissions

(tCO₂e) % of total

Direct (scope 1) Natural gas 444.9 30.1%

Gas oil 136.6 9.3%

LPG 1.7 0.1%

Owned vehicles 80.9 5.5%

Refrigerant 2.5 0.2%

Subtotal 666.6 45.2%

Indirect energy (scope 2) Purchased electricity 798.5 54.1%

Purchased district

Heating and steam 7.6 0.5%

Subtotal 806.1 54.6%

Indirect other (scope 3)

Fuel directly purchased

by the Company 3.4 0.2%

Subtotal 3.4 0.2%

Total emissions (tCO

e) 1,476.1

Energy consumption used to calculate emissions (kWh) 14,937,971.0

Intensity ratio: Tonnes of gross CO

e per million GBP turnover 4.01

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Environmental Directives

The Group is working to ensure it

complies with all environmental

legislation in countries where it operates.

This includes European Directives such as:

•

Waste Electronic and Electrical

Equipment (WEEE) Directive –

compliance achieved in the UK by

membership of B2B Compliance – an

authorised compliance body. Other

compliance bodies are contracted for

our European operations.

•

Restriction on use of certain

Hazardous Substances (RoHS)

regulations – all products that were

within scope and were sold into

Europe since July 2017 complied with

these regulations. Some of our

products are outside of the RoHS

scope or are covered by exemptions.

•

Registration, Evaluation, Authorisation

of 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 what

should be entered into the database to

ensure compliance.

Streamlined Energy and Carbon

Reporting (SECR) regulations

This year, for the first time, we have

engaged with an external consultant to

produce a separate report for SECR

compliance. Please see The Streamlined

Energy and Carbon Report, which can be

found on our website in our sustainability

section: oxinst.com/sustainability

SECR responsibility

andmethodology

Our environmental lead within the

Leadership Team is responsible for

collating energy data, providing this to

ourexternal advisers, and reporting to the

Board on an annual basis. Working with

ourexternal advisers, the lead is responsible

for compiling the SECR report to submit to

senior management for sign off.

Data collected for compiling the SECR

report is gathered by various methods,

including submetering, direct meter

readings, and direct readings from

energy bills.

SECR carbon intensity

measurefrom energy use

Oxford Instruments has a statutory duty

to report greenhouse gas emissions as

tonnes of carbon dioxide equivalent

(tCO

e). The Company’s chosen carbon

intensity measure for energy use is

tonnes of carbon dioxide equivalent

(tCO

e) per £m of revenue.

Our total carbon footprint for April 2021

to March 2022 can be found on the

previous page.

The data from the SECR report for

2021/22 gives an emissions ratio for

energy of 4.0 tCO

e/£m of revenue

(2020/21: 1.6 tCO

e/£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.

We continue to use renewable energy

where it is available with a goal of moving

all our consumption to renewable energy

in our journey to net-zero. All of our

manufacturing sites are now powered by

renewable energy, which reduced our

carbon footprint by over 2000 tCO

e in

the last year.

Beyond SECR

We remain committed to being net zero

well ahead of 2050. The business is

currently analysing our options for

net-zero while looking to the Science

Based Targets initiative (SBTi) to further

validate our roadmap to net-zero over the

next financial year.

Social

Oxford Instruments plc | Report and Financial Statements 2022

Sustainability continued

We are dedicated to being a truly

sustainable organisation and we are

keenly aware of our responsibility to our

employees, the communities that we

impact and the generations to come.

Bylistening to our stakeholders and

taking action now, we are resolute in

ensuring that we have a positive impact

on the world around us.

We believe that businesses have a

valuable contribution to make in the

development of societies that enable

their members to thrive. Over the last few

years, the pace and extent of social

change has been phenomenal, from the

impacts of covid to social change

movements like Black Lives Matter and

#MeToo. We have worked hard to provide

a progressive business culture and to

remain ahead of the curve on our key

sustainability themes while remaining

respectful of the cultures of the countries

that we operate in.

At Oxford Instruments, our social

sustainability agenda comprises five key

subject areas, where we have established

policies to support us in achieving our

ambitions and targets. During the year we

have reviewed and updated the

measures we have in place and going

forward we will provide updates on our

progress against these targets.

Equality, diversity and inclusion

We are committed to equality, diversity

and inclusion in its broadest sense. Being

inclusive is a core company value and is

based on respect for the individual and

creating a sense of belonging.

In everything we do, we seek to develop

and sustain a culture where difference is

recognised, valued and celebrated.

We encourage a supportive and

collaborative working environment, so

allour people feel able to be open about

their own unique identity, and they have

astrong sense of belonging within the

Company.

We recognise that equality, diversity and

inclusion is important for all our people

and society as a whole, but we also

recognise that we operate in 26 countries

around the world in which the legislative

frameworks and cultural landscapes vary

hugely. In each of the countries in which

we operate, we aim to be ahead of the

curve in our equality, diversity and

inclusion targets and working practices

ofthat country but will ensure that we

arenot in conflict with the legislative

framework of that country.

We have identified several key areas

offocus, including gender, ethnicity,

disability, sexual orientation and gender

identity. In each area we are reviewing

options to become an active partner with

external organisations that advocate for

these areas. We have done this to ensure

that we are continually improving our

awareness and understanding of

research and best practice in diversity

and inclusion for businesses. We also

engage in externally run schemes offering

internships and career opportunities in

our diversity and inclusion focus areas.

We continue to build on the work we

havedone so far to establish balanced

shortlists in our recruitment processes,

only engaging executive search firms who

have signed up to the Voluntary Code of

Conduct on gender diversity. Through the

use of our employee engagement survey,

we gather feedback from our teams

about how they feel we are doing with

regard to equality, diversity and inclusion,

and use this feedback to drive further

initiatives within the organisation.

During the year we updated a number

ofour policies to include our new hybrid

working model, allowing employees to

balance their work and home demands.

We also restructured our US healthcare

package to cover domestic partners and

gender reassignment. In June we aligned

with Pride and updated our logo to reflect

our support. We continued to promote our

relaunched values, which now includes a

much stronger emphasis on diversity, and

we reconfigured our internal employee

data portals to include the Office for

National Statistics ethnicity categories

and increased the breadth of gender

selection options.

New employees over the last twelve

months by gender:

Gender New employees

Female 35%

Male 65%

We believe that businesses have a valuable contribution to make in

the development of societies that enable their members to thrive.

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Targets:

Objective Target date Progress to date

Balanced shortlists for recruitment End of FY22: 60% End of FY22: 62%

Ethnicity representation on the Board By end of FY23: 1 person of colour In progress

Women on the Board By end of FY24: 40% women Recruitment to a new NED role in progress

that will broaden the skill set on the Board

and will take us above the gender target

in the Hampton-Alexander Review

Women as a proportion of senior leadership By end 2025: 40% women Currently 25%

Health, safety and wellbeing

We are committed to achieving a high standard of health and safety for anyone involved in, or affected by, our activities. We strive to

provide a safe workplace and working environment, for all employees wherever they work.

Our approach is based on the ongoing identification and control of risk. We focus on preventative measures to remove hazards

before they can escalate into accidents or near misses. We apply safe working practices supported by structured health and safety

management systems, that are externally audited where appropriate.

Our overall accident frequency trend has decreased over the past four years and compares favourably with industry benchmarks.

Gender split

Male Female

Global Oxford Instruments 75% 25%

Plc Board 71% 29%

Management Board 86% 14%

Managers 80% 20%

Employees 74% 26%

Gender split by region

Male Female

UK 78% 22%

Europe 66% 34%

Asia 71% 29%

Americas 70% 30%

0 10 20 30 40 50 60

2017

35 1

49 3

48 5

43 5

34 1

2018

2019

2020

2021

Five-year view of accidents in ongoing businesses

showing severity Excludes disposals

Minor Serious

0 5 10 15 20 25 30 35

2017

2018

2019

2020

2021

Five-year view of accidents/1,000 employees

for ongoing businesses Accident/1,000 employees

On all our sites, health and safety is a priority. We continue our Push for Zero programme, with the objective of a sustained reduction

in accident levels across the Group. We introduced the SHIELD health and safety software platform, where accidents and safety

observations can be recorded and corrective action set, to prevent recurrence.

We believe employees deserve to have access to the right mental health support to help them feel their best in a supportive culture.

We aim to give people the tools to keep themselves and their colleagues healthy; we encourage them to access support when it’s

needed, and we empower people with long-term mental health issues or a disability to thrive in work. This year we provided all

employees in the UK with access to Unmind, a workplace mental health app, to give them a wide range of resources that can help

with mental wellbeing.

We continue to support our team of Mental Health First Aiders and provide independent and confidential digital platforms and

services that employees can access all over the world.

Target:

Objective Target Comments

Serious accidents Zero No employees should

experience a serious

accident at work

Accident frequency rate Continuous improvement Push 4 Zero aims to

reduce the accident rate

year-on-year

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

Social continued

Investing in our people

Our people and their capabilities are core

to what makes us a great company. We

want our employees to be successful,

realise their full potential and to be able

to make a difference. We are committed

to being the company where the best

people in our sector want to work and we

offer high quality, stable employment and

flexible careers with favourable

conditions and pay. Because of the type

of business we are, we can offer a broad

range of career development

opportunities across technical,

commercial, operational and business

support functions.

It is imperative that we are able to offer

our employees and future employees a

clear and credible skills and career

development pathway. We look to

combine internal mobility with flexible

working practices, attractive benefits and

inclusive and engaging recruitment

practices.

We provide a range of opportunities for

our employees to gain knowledge, skills

and experience to achieve individual and

organisation goals. This includes

challenging assignments, learning from

colleagues or targeted training. Our talent

management processes attract talented

people and develop their capabilities to

meet our current and future business

needs. We integrate these processes

within our business planning cycle.

We continue to strengthen our Oi

Academy, which offers development

programmes, core skills training courses

and extensive e-learning opportunities.

We also offer a broad range of

secondments, career breaks,

apprenticeships and support towards

external qualifications.

We have developed Career Pathways

todeliver career mapping for all roles

across the Group, allowing employees to

utilise this information to review potential

career pathways of interest to them.

We are committed to building the skills

that society needs now and in the future

by investing, over the long term, in our

people.

Next generation talent

We take our responsibility towards

developing the next generation workforce

seriously and are committed to inspiring

the next generation of scientists,

engineers and business people by

showing them the difference they can

make in the world and by providing work

experience and employment skills and

development opportunities.

For us, this begins in schools, colleges

and learning institutions, where we equip

and encourage our employees around

the world to take any opportunity they

can to talk to young people about careers

in our industry. We partner with

universities and post-graduate schools

tohelp students understand the range

ofcareers available in a technology

company, supporting this with work

experience and engagement with

employees from a broad range of

backgrounds. A popular benefit we

offerall employees is the offer of work

experience to family members between

the ages of 16 and 25.

We remain committed to providing

structured apprenticeships, sponsorships,

internships, early career jobs and

graduate programmes. We intentionally

reach out to attract a diverse range of

people and those from untapped talent

pools, ensuring we are inclusive and

accessible.

Community impact

We actively engage in locally focused

activities that make our communities and

environments a better place to live and

work. We encourage our employees to

join volunteering schemes, charity

outreach programmes and we offer

sponsorship of local community events.

Our GoGreen teams are present on each

site and help us look at better ways to be

more environmentally friendly, both as a

business and as individuals. We have

taken steps to minimise traffic noise and

congestion around our sites and remain

committed to minimising emissions from

our own activities. You can read more

about this in the environment section,

starting on page 49.

When we arrange gifts, celebrations,

events and activities for our teams we

aim to support the small, independent

businesses near our sites.

During the year, across our sites, we

organised a number of activities that

supported our local businesses.

Thisincluded bringing a barber on site,

running exercise classes, and dog walks.

We also participated in a range of charity

outreach activities, including raffles,

marathon sponsorships, pub quizzes

andcoffee mornings.

UK 57%

Americas 10%

Asia 17%

Europe 16%

Geographical spread

ofemployees

Employee turnover rates:

Year Turnover

2017 12%

2018 10%

2019 7%

2020 6%

2021 11%

Governance

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Conducting our business in an ethical

manner is vital to our ongoing success.

Governance

Conducting our business in an ethical

manner is vital to our ongoing success.

We strongly believe that there is never a

right way to do the wrong thing and all

our employees are expected to behave in

a way that is consistent with our values.

We are a company united by strong

values and standards, with our brand and

reputation built on this. Corporate

responsibility is integral to our ongoing

business success as it enables us to

adapt to the changing landscapes we

operate within.

In our governance practices, we address

the wide range of corporate activities we

undertake, the policies we have in place

and our management structure.

Our governance sustainability agenda is

comprised of eight key areas.

Anti-bribery and anti-corruption

When dealing with business partners,

suppliers and customers, or when

engaging with public officials, our

employees are expected to act in a

transparent and fair manner. We choose

our business partners and suppliers

carefully and avoid working with those

that do not meet and adhere to the same

high standards.

The key principles we expect everyone to

follow include not offering or accepting

bribes or improper payments; not

improperly influencing an individual; and

not participating in any kind of corrupt

business activity either directly or through a

third party. To help our employees

understand what is expected of them we

have developed and mandate completion

of a comprehensive training course and

have published a detailed policy document.

Adherence to our due diligence procedure

for the onboarding of third-party agents

and distributors continues to be regularly

audited, and training delivered by our

Group Legal team to all new Finance

Directors and Contract Managers.

Sanctions, export control

andcustoms

In the past year we reviewed our

Sanctions Policy to confirm compliance

with the UN, UK, EU and US sanctions.

We also introduced a Group Customs

Policy to document our specific

expectations in this area.

We delivered an internal compliance

programme for export controls and

customs in the year and complemented

this with an external review of our export

control policies and procedures by an

independent consultant. As a result of the

findings, we have implemented a few key

changes to further strengthen our

protection in this area.

Dissemination of inside

information to the market

andshare dealing

We take reasonable steps to establish

and maintain adequate procedures,

systems and controls to comply with

ourobligations that arise from the

ListingRules and Disclosure Guidance

and Transparency Rules. On an ongoing

basis, we also continue to ensure that

ourprocedures, systems and controls

areadequate regarding the Market

Abuse Regulation.

We maintain and update a secure list of

anyone who has access to inside

information whether on a regular or

occasional basis and ensure that anyone

working on our behalf or on our account

do the same. We ensure that those on the

list are aware of and acknowledge the

legal and regulatory duties required of

them while on the list.

The Company Secretariat is responsible

for ensuring compliance in this area. We

have recently launched a new policy, to

document our approach and practices

regarding the dissemination of inside

information to the market.

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

Governance continued

Supply chain

responsiblesourcing

The Group uses an approved vendor list

for the supply of continuous use

production materials, which is managed

by Group Strategic Sourcing. Our policy

isthat all key suppliers on this list must

complete a governance questionnaire via

an online supplier portal. In the year we

have focused on ensuring that we have

up-to-date governance questionnaires

for all key suppliers.

We have continued to remove risk from

our supplier base by consolidating our

suppliers and ensuring suppliers go

through the onboarding process.

Overthelast year we have achieved a

15% reduction in our direct supplier base;

a reduction of 55% since we started

thisstrategy.

Our online supplier portal allows us to

store and audit all our supplier

documents and we will be expanding this

functionality to collect sustainability

information and data from our suppliers.

During the year ahead our Group

Strategic Sourcing team will work closely

with WITec to align their policies and

processes with the rest of the Group.

Human rights and

modernslavery

We have a zero-tolerance approach to all

forms of modern slavery, including

servitude, forced bonded and compulsory

labour, and human trafficking. Training is

available to help employees recognise

where there may be risks of modern

slavery and human trafficking within our

business and our supply chains.

We have a procedure in place to help

anyone that needs to report a business

malpractice and report any concerns they

have. We have further guidance available

in our Global Human Rights Policy, and

employees can use these documents in

their due diligence of suppliers.

In addition, we have a publicly available

global Code of Business Conduct and

Ethics, which sends a clear message to

our employees, business partners,

investors and other stakeholders of our

business principles and ethics.

Our Anti-Slavery and Human Trafficking

Statement can be found on our website.

We also submit this statement to the

Government’s new modern slavery

statement registry.

Intellectual property

andconfidentiality

Our intellectual property (IP) is one of

ourmost important assets; it is key to

oursuccess in the market and enables

ustosecure and maintain a competitive

advantage. We have comprehensive

policies and procedures in place to

protect our IP.

We continue to protect our inventions,

brand and designs through the use of

registered IP rights. In the year we filed

16new priority patent applications,

anincrease of seven compared to

theprevious year.

As the basis for protecting our trade

secrets we have in place a

well-established process for preparation,

review and signing of all confidentiality

agreements. All employees are able to

download a standard set of templates,

along with guidance and training on how

to complete these templates on our

internal SharePoint pages.

Data protection, data privacy

and data security

Our global privacy standard sets out the

principles that guide our approach to

handling personal information as a

business and all employees are required

to undertake mandatory training on data

protection.

This year, we have made some minor

adjustments to our privacy policies,

notices and other internal documents

toreflect that the UK has now created

itsown UK GDPR since leaving the EU.

Wehave produced specific privacy

notices and assessments, and supported

our HR teams on data protection issues

with respect to covid, such as to allow

foron-site testing to take place at our

UKsites and the collection of personal

information regarding vaccination status.

We continue to run training sessions and

have updated our guidance notes for our

marketing teams to ensure that their lead

generation and other marketing activities

are compliant with the GDPR and related

privacy legislation.

During the year China introduced its new

Personal Information Protection Law and

we have worked with our teams there

todevelop a compliance programme

toallow us to operate within the

requirements of this new legislation.

Wecontinue to stay on top of developing

compliance programmes around the

world to ensure we can respond quickly

to any changes made in the data

protection legislation.

Financial sustainability and

taxtransparency

The Group continues to maintain a focus

on cash generation to ensure we are

financially stable and we have published

our policy within the Sustainability section

of our website.

Global policies

•

Code of Business Conduct and Ethics

•

Global Anti-Bribery and

Anti-Corruption Policy

•

Group Conflict of Interests Policy

•

Group Export Controls Policy

•

Group Sanctions Policy

•

Group Customs Policy

•

Group Share Dealing Policy and

Procedure

•

Code of Conduct for Representatives

and Suppliers

•

Global Human Rights Policy

•

Modern Slavery Statement

•

Group Reporting a Business

Malpractice Procedure

•

Global Data Privacy Standards

•

Global IT Infrastructure and Use Policy

•

Oxford Instruments plc Tax Strategy

Strategic Report

Oxford Instruments plc | Report and Financial Statements 2022

Task Force on Climate-Related Financial Disclosures (TCFD) Statement

fortheyearended31March2022

Introduction

We believe that our sustainability ambition is a competitive differentiator for us as the energy transition and other societal changes

advance, and are enthusiastic about embracing the environmental, social and governance considerations essential to running a

modern business.

Having been on our sustainability journey for many years, we have developed a strong track record of delivering against our

sustainability-related objectives, such as reducing the CO

emissions and waste products from our manufacturing processes

andfacilities.

Within our focus on environmental matters, we are committed to expanding both our reporting and the detail of our various targets,

whilst also working to align these with best practice such as that of the Science Based Targets initiative (SBTi). Having previously

stated that we aspire to reach Net Zero ahead of 2050, we aim to be ambitious in the new targets that we set during the following

financial year, and as we develop our low carbon transition plan to help us to reach this goal.

Progress roadmap

A snapshot of our journey so far, our progress during the latest financial year and our action plan for the year ahead, are

summarised in the table below.

Prior to FY22 Progress during FY22 Focus for FY23

•

Established a “Go Green” committee

at each site to deliver a local

environment agenda and promote

positive behaviours.

•

Invested in sustainable infrastructure

and renewable technology including

the energy efficient design of our new

Plasma Technology facility and solar

panels on our X-Ray Technology site.

•

Converted three manufacturing sites

to become zero waste to landfill, with

the business units on these sites

representing approximately 60% of

Group revenue in FY20/21.

•

Confirmed our aspiration to reach

NetZero ahead of 2050.

•

Maintained 100% renewable

electricity across our UK

manufacturing activities, with the

applicable business units

representing approximately 85% of

Group revenue in FY21/22.

•

Reduced our CO

emissions by 48%

from 2,844 tCO

e to 1,476 tCO

between FY18/19 and FY21/22.

•

Further reduced the volume of waste

to landfill.

•

First year reporting on our work to

align with the recommendations of

the Task Force on Climate-Related

Financial Disclosures (TCFD).

•

Commenced full Scope 1, 2 and 3

emissions assessment and

calculation for the latest financial

year and for 2018 (our baseline year).

•

Set new, ambitious targets to reach

Net Zero before 2050.

•

Complete full Scope 1, 2 and 3

emissions assessment and achieve

science-based target validation

through the Science Based Targets

initiative (SBTi).

•

Progress contracting of renewable

electricity across our non-UK sites.

•

Complete our first Carbon Disclosure

Project (CDP) submission.

•

Engage in and build upon quantitative

climate scenario analysis as part of

TCFD alignment.

•

Progress with zero waste to landfill at

our remaining UK site.

•

Work with Board and Sustainability

Committee to develop our abatement

strategy and to consider the offsetting

options for residual emissions.

TCFD report

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

Compliance statement

As we are a premium listed company, we

have reported on a ‘comply-or-explain’

basis against the TCFD framework.

OurTCFD report is included in full in our

Report and Financial Statements 2022

which can be found on our website in

oursustainability section: oxinst.com/

sustainability.

In line with the requirements of the

Financial Conduct Authority’s Listing Rule

9.8.6(8)R, we note that our disclosures in

respect of the financial year ended

31March 2022 are not fully consistent with

the recommendations and recommended

disclosures of the TCFD.

The below table summarises our

compliance per the disclosures made in

this report.

As noted earlier, we are committed to

expanding our reporting in this area.

Throughout our dedicated TCFD report,

we have endeavoured to explain why our

disclosures are not yet fully consistent with

the recommendations and recommended

disclosures of the TCFD, toexplain the

steps we are taking or planto take to be

able to make consistentdisclosures in the

future and the timeframes for doing so

(where applicable).

We have also embedded cross-references

to the various sections of our Report and

Financial Statements where additional

relevant information can be found.

In determining whether our

climate-related financial disclosures

wereconsistent with the TCFD

recommendations and recommended

disclosures, we undertook a detailed

assessment of those disclosures which

took into account the applicable

guidance referenced under Listing Rule

9.8.6BG.

TCFD pillar Recommended disclosure Compliance

Governance: Disclose the

organisation’s governance

around climate-related risks

and opportunities.

a. Describe the Board’s oversight of climate-related risks and

opportunities.

Partial compliance

b. Describe management’s role in assessing and managing climate-

related risks and opportunities.

Partial compliance

Strategy: Disclose the actual

and potential impacts of

climate-related risks and

opportunities on the

organisation’s businesses,

strategy, and financial planning

where such information is

material.

a. Describe the climate-related risks and opportunities the organisation

has identified over the short, medium, and long term.

Partial compliance

b. Describe the impact of climate-related risks and opportunities on

the organisation’s businesses, strategy, and financial planning.

Partial compliance

c. Describe the resilience of the organisation’s strategy, taking into

consideration different climate-related scenarios, including a 2°C or

lower scenario.

Not compliant

Risk management: Disclose

how the organisation identifies,

assesses, and manages

climate-related risks.

a. Describe the organisation’s processes for identifying and assessing

climate-related risks.

Partial compliance

b. Describe the organisation’s processes for managing climate-related

risks.

Partial compliance

c. Describe how processes for identifying, assessing, and managing

climate-related risks are integrated into the organisation’s overall risk

management.

Not compliant

Metrics and targets: Disclose

the metrics and targets used to

assess and manage relevant

climate-related risks and

opportunities where such

information is material.

a. Disclose the metrics used by the organisation to assess climate-

related risks and opportunities in line with its strategy and risk

management process.

Not compliant

b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse

gas emissions, and the related risks.

Partial compliance

c. Describe the targets used by the organisation to manage climate-

related risks and opportunities and performance against targets.

Not compliant

TCFD report continued

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Governance

The Board has ultimate responsibility for

the oversight of climate-related issues

and is supported by its committees, the

Management Board and the wider senior

leadership team. During the year, the

Board established a formal Sustainability

Committee, comprising all of the

Non-Executive Directors and with

particular accountability for assessing

and reporting to the Board on progress

against the targets to be set to address

climate-related issues as part of its core

business. With reference to the

organisational structure set out on page

93, climate-related considerations are

embedded throughout our governance

structure, at Board level and across

theorganisation.

During the year, the Board devoted time

to developing its understanding of

climate-related issues. Through its

quarterly Audit and Risk Committee, they

considered our climate-related risks and

opportunities and liaised with the Head of

Internal Audit and Risk to fully understand

the methodologies used to determine

these. Across each of its meetings since

its establishment, the Sustainability

Committee held dedicated sessions with

the Chief Executive, Management Board

and our external consultant, on

climate-related topics such as the

Greenhouse Gas Protocol, SBTi, CDP, UN

Sustainable Development Goals and the

TCFD Disclosure framework, amongst

other things. They also debated the

pathway to achieving Net Zero, including

determining appropriate targets and best

practice guidance as regards abatement

and offsetting activities.

Outside of formal meetings, the Chair

ofthe Sustainability Committee worked

directly with various members of the

management team and our external

consultant and reported back to the

Board regarding the insights gained.

TheBoard and its Committees will,

through continued education and sharing

of information, aim to stay abreast of

developments concerning climate

change and other environmental issues.

The Board and its Committees have

considered climate-related issues

throughout the year, with such matters

forming part of the discussions in a range

of areas including the Company’s

strategy. The Board has explicitly

delegated responsibility to its

Sustainability Committee on a number

ofenvironment-related issues, including

asking that they: consider and

recommend to the Board for approval,

sustainability-related targets, including

environmental targets and timescales;

review the Company’s progress towards

decarbonisation of energy use globally

and consider and recommend to the

Board for approval, the methodology to

be used for achieving Net Zero.

Climate-related risks and opportunities

have also been considered and discussed

by the Audit and Risk Committee, with

their feedback being used by the internal

team to refine their risk and opportunity

identification methodology.

During the next financial year, the

Sustainability Committee intends to

consider, and recommend to the Board

for approval, sustainability-related

targets, including environmental targets

and timescales, as well as a low carbon

transition plan.

This is in line with the duties delegated

tothe Sustainability Committee by the

Board, per its formal terms of reference.

Itis anticipated that progress against

these goals will be considered as a

standing item at Sustainability Committee

meetings goingforward.

We make a conscious effort to ensure

that our Management Board are well

informed regarding climate-related

issues. During the year, the team

increased their familiarity with a broad

range of topics including the Greenhouse

Gas Protocol, Streamlined Energy and

Carbon Reporting Regulations, CDP,

UNSustainable Development Goals,

theTCFD Disclosure framework and steps

toward determining our Net Zero targets.

This equipped the Management Board

tomeaningfully discuss a range

ofclimate-related issues at their regular,

formal meetings, including potential

carbon-related targets and the

Company’s environmental headline

strategy.

In addition to internal engagement led

bythe Head of Internal Audit and Risk,

wealso invited our external consultant to

facilitate a dedicated climate-related risk

and opportunities workshop for a broader

range of colleagues in various functional

and operational roles across the Group,

inorder to ensure that they had the

necessary depth of understanding in

order to contribute to this workstream in

ameaningful way.

To successfully evaluate and respond to the challenges and opportunities posed

by climate change, we recognise the importance of fostering knowledge of climate

change issues across the business, supported by effective governance.

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

TCFD report continued

We recognise that climate-related risks and opportunities

could potentially have a significant impact on our business

model and strategy, both positive and negative.

Strategy

We recognise that climate-related risks

and opportunities could potentially have

a significant impact on our business

model and strategy, both positive and

negative. Our initial focus has been on

theidentification and evaluation of key

climate-related risks and opportunities,

including understanding the impact of

therisk or opportunity in terms of its time

horizon, likelihood, magnitude and the

stakeholders or areas of the business

which it may affect, as well as the current

controls in place to manage the risk or

the mechanisms in place to capitalise

onopportunities.

During FY 23, we will work to prioritise

theactions needed to mitigate these risks

and capitalise on the opportunities,

basing this on their impact and ease of

implementation. We will then integrate

these actions into our strategy to ensure

we have the appropriate focus on

thisarea.

This will also help to inform our climate

scenario analysis during the coming

year. During the year we have worked

with colleagues from a range of

functional and operational roles across

the Group to identify existing and

emerging climate-related risks and

opportunities. Having performed this

evaluation, we consider climate change

to be a principal risk.

We consider climate-related risks and opportunities across the short, medium and

long term, defined as:

Impact time

horizon Year from Year to Duration

Short-term

2022 2030 <10 years

Medium-term

2030 2050 10-30 years

Long-term

2050 2100 30+ years

Climate Scenario Analysis

With the support of our external consultant, we are conducting a qualitative Climate

Scenario Analysis to help to further develop our understanding of climate-related

physical and transition risks and opportunities in light of a range of climate change

scenarios, which could impact our business in the future.

We are now working to determine the appropriate methodology and modelling tools to

be used to complete this exercise and note that the approach may comprise

stakeholder engagement and the prioritisation of climate-related risks and

opportunities which may require deeper analysis via quantitative modelling and

ultimately support our understanding of the resilience of our low carbon transition plan

under different climate change scenarios.

The outcomes from the Climate Scenario Analysis will be considered as part of our

process for the assessment of climate change related risks and will support our future

climate-related financial planning.

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Risk management

We define risk as uncertain events which

could have an adverse impact on the

Group’s business model, financial

performance, liquidity or reputation.

Ourapproach to identifying and

assessing risks and opportunities is set

out in detail in the Risk Management

section on pages 77 to 84 of the Report

and Financial Statements 2022.

During the year, we ran a separate

process for the identification and

assessment of climate change related

risks, distinct from the wider enterprise

risk management process.

This helped us to focus on identifying a

wide range of existing and emerging

climate-related risks and opportunities

which may impact our business.

Climate-related risks are identified and

assessed in line with our standard

enterprise risk management

methodology as set out in the Risk

Management section on pages 77 to 84

of the Report and Financial Statements

2022, albeit adapted to ensure that the

nuances required by the TCFDreporting

framework are captured.

When assessing climate-related risks,

weconsider both the impact and

likelihood of occurrence across short,

medium and long-term impact time

horizons, as defined above. This provides

aninherent risk score which is then used

to rank our risks.

Impact

Rating

Financial

impact (risk or

opportunity) Transitional (2°C change) Physical (4°C change)

Severe

More than £2m

•

Complete relocation of manufacturing

•

Significant change in supplier base

•

Change in technology due to supply

constraints

•

Relocation of facilities due to flood,

excessheat or wildfires

•

Potential for product obsolescence

plus new markets and opportunities

as the paradigm shift required to deal

with extremes of climate change

drives the emergence of new or

disruptive technologies (e.g.

photocatalytic water splitting) that

previously might not have been

commercially viable

Major

£1m – £2m

•

Investment in infrastructure required,

forexample in relation to additional

cooling, water supply or power

•

Significant change in supplier base

•

Increased severe weather causing

continued disruption

•

Multiple changes in supplier

•

Loss of customers due to global

changes

Significant

£500k – £1m

•

Relocation of sales offices to another

country

•

Changing of suppliers

•

Investment in infrastructure required,

forexample in relation to additional

cooling, water supply or power

•

Significant change in supplier base

Notable

£100k – £500k

•

Additional investment infrastructure

tomanage global change

•

Relocation of sales offices to another

country

•

Changing of suppliers

Insignificant

Less than £100k

•

Minor relocation of personnel

•

Update of company fleet to electric

vehicles

•

Relocation of sales offices within

samecountry

•

Changing of minor suppliers

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

Likelihood

Likelihood Description

Highly unlikely

< 10% likelihood that the risk/opportunity will occur with 2°C/4°C climate change

Low

10%-20% likelihood that the risk/opportunity will occur with 2°C/4°C climate change

Moderate

20%-50% likelihood that the risk/opportunity will occur with 2°C/4°C climate change

Highly likely

> 50% likelihood that the risk/opportunity will occur with 2°C/4°C climate change

Climate-related risks and opportunities are characterised in the terms set out below.

Physical risks

Physical risks stemming from severe weather events (acute),

such as increased heatwaves, storms and floods, or long-

term changes (chronic) in climatic conditions (rainfall

patterns, average temperatures) can cause severe damage

and disruption to companies’ operations and supply chain

and generate increased product prices.

•

Acute physical risks – Those that are event-driven,

including increased severity of extreme weather events,

such as cyclones, hurricanes or floods.

•

Chronic physical risks – Longer-term shifts in climate

patterns (e.g. sustained higher temperatures) that may

cause sea level rise or chronic heatwaves.

Transition risks

With increasing scrutiny of company climate strategies, and

as global Net Zero target setting continues, we are seeing

market-related, regulatory and reputational risks develop.

•

Technology risk – Technological improvements or

innovations that support the transition to a lower-carbon,

energy-efficient economic system can have a significant

impact on organisations.

•

Market risk – Whilst the circumstances in which markets

could be affected by climate change are varied and

complex, one of the major ways is through shifts in supply

and demand for certain commodities, products and

services as climate-related risks and opportunities are

increasingly considered.

•

Policy and legal – Policy actions that attempt to constrain

actions that contribute to the adverse effects of climate

change or policy actions that seek to promote adaptation

to climate change.

•

Legal actions – Recent years have seen an increase in

climate-related litigation claims being brought before the

courts by property owners, municipalities, states, insurers,

shareholders, and public interest organisations.

•

Reputation risk – Climate change has been identified as

apotential source of reputational risk tied to changing

customer or community perceptions of an organisation’s

contribution to or detraction from the transition to a

lower-carbon economy.

TCFD report continued

Risk management continued

A process for the assessment and management of climate-related risks and opportunities across all business units and regions has

been established and mirrors the process that the Group uses for wider enterprise risk management. It will now be carried out on a

quarterly basis ahead of being reported to the Board via its Audit and Risk Committee. As with wider enterprise risks, the Board as a

whole is responsible for determining how risks are to be managed.

Climate-related risks and opportunities

Risks and opportunities are evaluated against a scoring matrix of likelihood and impact. Likelihood considers the probability

oftherisk or opportunity occurring whilst impact evaluates the magnitude of the potential consequences, whether in financial,

reputational or other terms. This mirrors the process that the Group uses for wider enterprise risk management. As a result,

climate-related risks are evaluated on a consistent basis with other risks.

The guidance used when assessing impact and likelihood are as set out below and the ratings are aligned to those used as part

ofour wider enterprise risk management process.

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

The risks and opportunities which we consider to be most relevant for us at present are set out below.

Climate-related risks

Price inflation from

decarbonisation

(Transition:Market)

Component obsolescence

dueto regulatory changes

(Transition: Policy and legal)

Severe event disrupts

globalsupply chains

(Acutephysical)

Context

Global supply chains implementing

more expensive production methods

and/or changes in raw materials in order

to reduce CO

emissions.

Context

Ban on critical materials or production

processes in either our own operations

and/or our supply chain as a result of

regulatory changes.

Context

Flooding and/or other natural disasters

linked to climate change could lead to

shortages in the global availability of key

components.

Risk impact

Increased material cost of sales leading

to reduced margins without increases in

selling price.

Time horizon: Short-term

Likelihood: Low

Magnitude of impact: Significant

Impact area: Operations

Risk impact

Rise in material prices for switching to

compliant products or disruption to

production if unable to react in sufficient

time.

Time horizon: Short-term

Likelihood: Moderate

Magnitude of impact: Significant

Impact area: Operations

Risk impact

Supply chain disruption leading to higher

prices or shortages in raw materials.

Impact on increased cost ofsales or, in

the extreme, disruption toproduction

until normal supply resumes or

alternatives can be found.

Time horizon: Medium-term

Likelihood: Low

Magnitude of impact: Significant

Impact area: Operations

Current risk controls

Product Development and Strategic

Sourcing teams identify and evaluate

viable alternatives in materials and

processes and work closely with

keysuppliers to deliver supply

chainsolutions.

Current risk controls

We have product compliance processes

in place to manage this type of change

in the regulatory environment, with

oversight and support from the Group

Head of Quality. We use existing

processes to meet RoHS and REACH

requirements which remain appropriate

to manage future changes in standards.

Current risk controls

Long-term supply agreements with key

suppliers can mitigate short-term price

volatility. Business interruption insurance

provides a degree of cover in the event

that supply chain issues cause

significant disruption to production.

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

Risk management continued

TCFD report continued

Climate-related risks continued

Severe event causes existing

customers to relocate

operations (Acute physical)

Extreme weather impacts

global logistics capacity (Acute

physical)

Extreme weather

impactsoperations

(Acutephysical)

Context

Flooding and/or other natural disasters

linked to climate change could cause

customers to relocate from areas that

are particularly affected by the physical

impact of climate change.

Context

Logistics disruption due to extreme

weather events, or loss of infrastructure

due to rising water levels (reduced

airport and port capacity).

Context

Disruption to manufacturing operations

due to loss of infrastructure arising from

wildfires or other physical damage

related to climate change. Particularly

relevant for operations in California.

Risk impact

Unplanned relocations may lead to a

short-term hiatus in demand. As a Group

we may need to adapt and relocate

operations ourselves to meet the revised

geographical profile of demand.

Time horizon: Medium-term

Likelihood: Low

Magnitude of impact: Notable

Impact area: Service operations

Risk impact

Increased competition for limited

transport options drives up the price of

transport, affecting both goods in and

goods out.

Time horizon: Medium-term

Likelihood: Highly likely

Magnitude of impact: Notable

Impact area: Operations and

customers

Risk impact

Potentially ranging from short-term

disruption to operations if employees are

unable to access facilities (e.g. due to

road closures), to major disruption in the

event of a total loss of the manufacturing

facilities.

Time horizon: Medium-term

Likelihood: Moderate

Magnitude of impact: Notable to severe

Impact area: Operations and

customers

Current risk controls

Strategic review of logistics,

supplychain, manufacturing,

andservice operations.

Current risk controls

Strategic review of logistics,

supplychain, manufacturing,

andservice operations.

Current risk controls

Business continuity plans and global

business interruption insurance.

Oxford Instruments plc | Report and Financial Statements 2022

Strategic Report

Climate-related opportunities

Investment in R&D required for

decarbonisation (Transition:

Technology)

Geopolitical uncertainty and

resource competition

(Transition: Regulatory)

Migration from fossil fuels

torenewable energy

(Transition:Market)

Context

Product innovation will be required to

decarbonise the economy. It will entail

significant expenditure on research and

development into new materials,

technologies, and new ways of working.

Context

Geopolitical tensions may arise from

climate change, leading to increased

requirement for local development and

manufacturing capacity in the growing

markets of semiconductors electronics

and quantum technologies.

Context

The path to Net Zero requires migration

from fossil fuel energy to renewables

(e.g. from ICE to EV). Thespeed of

change is likely to be accelerated by

geopolitical supply concerns over fossil

fuels.

Opportunity impact

Due to the requirement for

decarbonisation, demand for Oxford

Instruments products and services may

increase.

Product innovation as a result of

decarbonisation may help reduce

operating costs e.g. through remote

delivery services.

Time horizon: Short-term

Likelihood: Highly likely

Magnitude of impact: Significant

Impact area: Customers

Opportunity impact

Increased demand for enabling

technologies resulting in an increased

market opportunity for our business.

Time horizon: Short-term

Likelihood: Highly likely

Magnitude of impact: Significant

Impact area: Shareholders

Opportunity impact

Increased demand for our products and

services that enable the development of

more efficient battery technology and

highly efficient energy conversion

devices.

Time horizon: Short-term

Likelihood: Highly likely

Magnitude of impact: Significant

Impact area: Shareholders, Customers,

Society

How we are capitalising

Our products and services play

akeyrole in the technology pathway to

enable the transition from fossil fuels to

a low-carbon economy. Ourenabling

technologies such as materials analysis

solutions and semiconductor equipment

help customers address these

challenges.

How we are capitalising

We continue to invest in our product

portfolio to assist our customers in

delivering their global and regional

roadmaps and supporting sufficient

manufacturing capacity by location.

How we are capitalising

Increased investment in key enabling

technologies such as analytical

instruments and semiconductor

equipment that are key in the transition

to renewables.

Sustainability continued

Oxford Instruments plc | Report and Financial Statements 2022

Metrics and targets

We currently use a range of metrics to

help us to track our progress across a

number of aspects of environmental

sustainability. This includes assessment of

our electricity consumption, Scope 1 and 2

emissions in line with the Greenhouse Gas

Protocol methodology, water and waste,

the use of hydro-fluorocarbons and the

impact of transport. Please see the

Environment section of our Report and

Financial Statements on pages 49 to 51 for

further information.

We do not yet report against further

metrics and targets in addition to those

noted above, as our work to assess our

climate-related risks and opportunities is

not yet fully embedded in our strategy

and risk management processes. We

intend to develop further metrics and

targets and to report on our progress in

line with these, as we progress with our

sustainability agenda.

We are committed to reaching Net Zero

and to monitoring and calculating our

carbon footprint in line with industry

standards. We are currently working with

an external consultant to validate our

Scope 1 and 2 assessment and to

evaluate both our Scope 3 emissions and

also our base year (2018) carbon

footprint. Once this work has been

completed, we will be able to determine

meaningful carbon reduction targets to

work towards, with the goal of presenting

this to the SBTi for their approval. We

have previously stated that we aspire to

reach Net Zero ahead of 2050 and aim to

be ambitious in the new targets that we

set and report on, to help us reach this

goal. Assessing our progress towards

reaching these targets will then form a

crucial part of the future work of the

Sustainability Committee.

TCFD report continued

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Strategic Report

Company InformationFinancial Statements

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 of underlying performance.

Adjusted items exclude the amortisation

and impairment of acquired intangible

assets; acquisition items; other

significantnon-recurring items; and the

mark-to-market movement of financial

derivatives. All of these are included in the

statutory figures. Note 1 provides further

analysis of the adjusting items in reaching

adjusted profit measures. Definitions of the

Group’s material alternative performance

measures along with reconciliation to

theirequivalent IFRS measure are

included within the Finance Review.

The Group trades in many currencies

andmakes reference to constant currency

numbers to remove the impact of currency

effects in the year. These 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.

The acquisition of WITec was completed

on 31 August 2021. Growth rates expressed

on an organic basis remove the impact

ofthe acquired business for the period

under ownership.

Reported orders increased by 19.6% to

£423.1m (2021: £353.7m), an increase of

19.9% at organic constant currency. At the

end of the period, the Group’s order book

for future deliveries stood at £260.2m

(31March 2021: £198.0m). The order book

grew 31.4% on a reported basis and 26.6%

at organic constant currency.

Reported revenue increased by 15.3% to

£367.3m (2021: £318.5m). Organic revenue,

excluding currency effects, increased by

14.5%, with the movement in average

currency exchange rates over the year

reducing reported revenue by £12.4m.

Adjusted operating profit increased by

16.9% to £66.3m (2021: £56.7m). Organic

adjusted operating profit, excluding

currency effects, increased by 15.2%,

witha currency headwind in the year of

£1.9m. Adjusted operating margin

increased by 30 basis points to 18.1%

(2021: 17.8%). Excluding currency effects,

adjusted operating margin increased by

20 basis points to 18.0%.

Statutory operating profit includes the

amortisation of acquired intangibles of

£9.5m, acquisition-related costs of £0.4m,

a margin adjustment relating to the sale

of WITec inventories in the period of

£1.7m, and a charge of £6.4m relating to

unwind of the brought forward financial

derivative asset. Statutory operating profit

of£48.3m (2021: £53.0m) fell by 8.9%,

principally due to the mark-to-market

charge on currency hedges relative to a

large credit the previous year.

Adjusted profit before tax grew by 17.9%

to£65.9m (2021: £55.9m), representing a

margin of 17.9% (2021: 17.6%).

Statutory profit before tax fell by 8.8%

to£47.6m (2021: £52.2m), following the

non-cash uncrystallised charge on

currency hedges and increase in

amortisation of acquired intangibles

following the acquisition of WITec. This

represents a margin of 13.0% (2021: 16.4%).

Adjusted basic earnings per share grew

by 20.0% to 94.3p (2021: 78.6p). Basic

earnings per share were 67.1p

(2021:72.8p), a decline of 7.8%.

Finance Review

We delivered a strong financial performance with

growth in orders, revenue and underlying cash flow.

We have increased capital investment and maintained

a robust balance sheet and enter the new financial

year with a healthy order book.

Gavin Hill

Chief Financial Officer

Oxford Instruments plc | Report and Financial Statements 2022

Finance Review continued

Summary continued

Cash from operations of £58.4m (2021: £49.7m) represents 72% (2021: 101%) cash conversion. During the year, we incurred

expenditure of £7.4m on the construction of our new semiconductor facility near Bristol; cash conversion on a normalised basis

thatexcludes this expenditure was 84%. Net cash decreased from £97.6m on 31 March 2021 to £85.9m on 31 March 2022, after the

€37.0m initial consideration for the acquisition of WITec.

At the end of March, our revolving credit facility remained undrawn, leaving approximately £103m of committed facilities.

Thisrepresents total headroom of just under £190m.

Income Statement

The Group’s Income Statement is summarised below.

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m Change

Revenue 367.3 318.5 +15.3%

Adjusted operating profit 66.3 56.7 +16.9%

Amortisation of acquired intangible assets (9.5) (8.4)

Non-recurring items (2.1) (1.7)

Mark-to-market of currency hedges (6.4) 6.4

Statutory operating profit 48.3 53.0 (8.9%)

Net finance costs

(0.7) (0.8)

Adjusted profit before taxation 65.9 55.9 +17.9%

Statutory profit before taxation 47.6 52.2 (8.8%)

Adjusted effective tax rate 17.8% 19.3%

Effective tax rate 18.9% 19.9%

Adjusted earnings per share – basic 94.3p 78.6p +20.0%

Earnings per share – basic 67. 1p 72.8p (7.8%)

Dividend per share (total) 18.1p 17.0p +6.5%

1. Net finance costs for 2022 include a non-cash charge of £0.3m against the unwind of discount on WITec contingent consideration.

Oxford Instruments plc | Report and Financial Statements 2022

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Revenue and orders

Following the acquisition of WITec, the business is reported within the Materials & Characterisation segment. Growth rates

expressed on an organic basis exclude the impact of WITec.

Reported revenue of £367.3m (2021: £318.5m) increased by 15.3% (+14.5% at organic constant currency). Reported revenue grew

by24.8% for Materials & Characterisation (+18.9% at organic constant currency), with strong growth for our electron microscope

analysers and semiconductor processing tools. Good demand for our optical imaging and microscopy systems, and cryogenic

andcomplex magnets as we progress with fulfilment of the large order from the Institute of Physics in China, resulted in reported

revenue growth for Research & Discovery of 6.1% (+9.3% at constant currency). Revenue growth from service of our own products

resulted in reported growth of 8.8% (+13.5% at constant currency) for Service & Healthcare.

Total reported orders grew by 19.6% (+19.9% at organic constant currency) to £423.1m. Reported orders grew by 25.3%

(+21.5%atorganic constant currency) for Materials & Characterisation and by 15.7% (+19.6% at constant currency) for Research

&Discovery. Service & Healthcare increased by 11.1% (+16.0% at constant currency).

The book-to-bill ratio (orders received to goods and services billed in the period) for the year was 115% (2021: 111%).

On a geographical basis, revenue grew by 2.1% in Europe (down 2.2% at organic constant currency), impacted by fewer shipments

ofsemiconductor process tools due to supply constraints, in addition to a strategic move away from tenders with high-configured

systems. Organic constant currency orders grew by 14.9%.

Revenue for North America increased by 10.7% on a reported basis and by 12.3% at organic constant currency, with good demand

for our electron microscope analysers, and imaging and microscopy products. Orders grew by 22.8% at organic constant currency,

with strong demand across the breadth of our product portfolio.

Asia delivered strong growth of 25.6% (+25.6% at organic constant currency) with strong demand for our electron microscope

analysers, semiconductor processing tools, and cryogenic systems. Asia remains our largest region by revenue, with China

constituting 55% of regional revenue and 28% of total Group revenue. Orders for the region at organic constant currency grew by

21.5%, driven by demand for electron microscope analysers, semiconductor processing tools, and our imaging and microscopy

products.

Geographic revenue growth

£m

2021/22

£m

2021/22

% of total

2020/21

£m

2020/21

% of total

Change

£m

growth

% growth

at constant

currency

% organic

growth constant

currency

Europe 89.0 24% 87. 2 27% +1.8 2.1% 5.5% (2.2%)

North America 84.9 23% 76.7 24% +8.2 10.7% 14.6% 12.3%

Asia 188.6 51% 150.2 47% +38.4 25.6% 29.6% 25.6%

Rest of World 4.8 2% 4.4 2% +0.4 9.1% 18.2% 11.4%

367.3 100% 318.5 100% +48.8 15.3% 19.2% 14.5%

The total reported order book grew by 31.4% (26.6% at organic constant currency). The order book, at organic constant currency,

compared to 31 March 2021, increased by 45.2% 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 2022/23

financial year, the timing of which will be subject to timely deliveries of components. Research & Discovery grew by 12.9%

(+12.3%atconstant currency), with strong demand for our imaging and microscopy products and X-ray tubes. Supply chain

disruption has led to slower order conversion than would normally be expected, placing upward pressure on the order book.

Continued focus on own product service resulted in growth of 29.5% (+26.6% at constant currency) from Service & Healthcare.

£m

Materials &

Characterisation

Research &

Discovery

Service &

Healthcare Total

Revenue: 2020/21 148.6 113.4 56.5 318.5

Constant currency growth 28.1 10.6 7.6 46.3

Revenue at organic constant currency: 2020/21 176.7 124.0 64.1 364.8

Acquisition 14.9 — — 14.9

Currency (6.1) (3.7) (2.6) (12.4)

Revenue: 2021/22 185.5 120.3 61.5 367. 3

Revenue growth: reported 24.8% 6.1% 8.8% 15.3%

Revenue growth: organic constant currency 18.9% 9.3% 13.5% 14.5%

Oxford Instruments plc | Report and Financial Statements 2022

Finance Review continued

Income Statement continued

Gross profit

Gross profit grew by 14.0% to £187.8m (2021: £164.8m), representing a gross profit margin of 51.1%, a reduction of 60 basis points over

last year, due to increases to component costs, particularly for electronics.

Adjusted operating profit and margin

Following the acquisition of WITec, the business is reported within the Materials & Characterisation segment. Growth rates

expressed on an organic basis exclude the impact of WITec.

Adjusted operating profit increased by 16.9% to £66.3m (2021: £56.7m), representing an adjusted operating profit margin of 18.1%,

anincrease of 30 basis points against last year. At constant currency, the adjusted operating profit margin was 18.0%, an increase

of20 basis points.

Reported Materials & Characterisation adjusted operating profit increased by 28.6% (+16.1% at organic constant currency) with

reported margin increasing by 40 basis points to 14.1% (2021: 13.7%). This was attributable to a revenue scale benefit from our

higher-margin imaging and analysis systems, and the partial release of a warranty provision on a particular product in their portfolio

wherethe liability is less than originally anticipated. Supply chain disruption led to a weaker than expected performance from our

scanning probe microscopy business.

Research & Discovery’s adjusted operating margin increased to 17.7% (2021: 17.2%), growth of 50 basis points. At constant currency,

the margin was 17.4%, an increase of 20 basis points, supported by a strong improvement in margin from our X-Ray Technology

business.

Service & Healthcare margin increased by 80 basis points to 30.7% (2021: 29.9%). At constant currency, the margin was 31.5%, an

increase of 160 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

£1.9mwhen compared to blended hedged exchange rates for the comparative period.

£m

Materials &

Characterisation

Research &

Discovery

Service &

Healthcare Total

Adjusted operating profit: 2020/21 20.3 19.5 16.9 56.7

Constant currency growth 3.3 2.1 3.2 8.6

Adjusted operating profit at organic constant currency: 2020/21 23.6 21.6 20.1 65.3

Acquisition 2.9 — — 2.9

Currency (0.4) (0.3) (1.2) (1.9)

Adjusted operating profit: 2021/22 26.1 21.3 18.9 66.3

Adjusted operating margin

: 2020/21 13.7% 17.2% 29.9% 17.8%

Adjusted operating margin

: 2021/22 14.1% 17.7% 30.7% 18.1%

Adjusted operating margin

(constant currency): 2021/22 13.8% 17.4% 31.5% 18.0%

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

currency divided by revenue at constant currency.

Statutory operating profit and margin

Statutory operating profit fell by 8.9% to £48.3m (2021: £53.0m), representing an operating profit margin of 13.2%. Statutory operating

profit is after the amortisation and impairment of acquired intangible assets; acquisition items; other significant non-recurring items;

and the mark-to-market of financial derivatives. The reduction in statutory operating profit is principally due to a large charge arising

from the movement in the mark-to market valuation on financial derivatives.

Oxford Instruments plc | Report and Financial Statements 2022

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Adjusting items

Amortisation of acquired intangibles of £9.5m relates to intangible assets recognised on acquisitions, being the value of technology,

customer relationships and brands. The increase in the charge from last year reflects the intangibles recognised following the

acquisition of WITec.

Non-recurring items comprise £0.4m of professional fees on the acquisition of WITec. In addition, a charge of £1.7m has been taken

that eliminates the profit arising in the acquired WITec business from revaluing their inventories to fair value, in accordance with

accounting standards.

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 24 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 up to 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 for these derivatives.

Net movements on mark-to-market derivatives in respect of transactional currency exposures of the Group in future periods are

disclosed in the Income Statement as foreign exchange and excluded from our calculation of adjusted profit before tax. In the year

this amounted to a charge of £6.4m (2021: £6.4m credit). The movement from a large net asset to a small net liability for derivative

financial instruments over the year reflects: (i) the crystallisation of forward contracts that were hedging the 2021/22 financial year,

which are recognised in adjusted operating profit; and an uncrystallised reduction in the mark-to-market valuation of forward

contracts from a fall in the value of Sterling at the balance sheet date against a blended rate achieved on US Dollar contracts that

will mature over the next 18 months. The mark-to-market valuation of financial derivatives that are hedging contracts that will

mature over the next 18 months is a liability of £0.4m.

Net finance costs

The Group’s adjusted net interest costs (excluding credit on pension scheme net assets) fell by £0.9m to £0.8m (2021: £1.7m),

principally due to the repayment of private placement notes at the previous year end. An interest credit on pension scheme net

assets of £0.4m (2021: £0.9m) arising from the pension surplus brings net finance charges to £0.4m (2021: £0.8m). In addition, we

recorded in financial expenditure a non-cash charge of £0.3m against the unwind of discount on WITec contingent consideration.

Adjusted profit before tax and margin

Adjusted profit before tax increased by 17.9% to £65.9m (2021: £55.9m). The adjusted profit before tax margin of 17.9% (2021: 17.6%)

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

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Statutory profit before tax 47.6 52.2

Add back:

Amortisation of acquired intangible assets 9.5 8.4

Non-recurring items (Note 1) 2.4 1.7

Mark-to-market of currency hedges 6.4 (6.4)

Adjusted profit before tax 65.9 55.9

Statutory profit before tax and margin

Statutory profit before tax decreased by 8.8% to £47.6m (2021: £52.2m). Statutory profit before tax is after the amortisation and

impairment of acquired intangible assets; acquisition items; other significant non-recurring items; and the mark-to-market of

financial derivatives. The statutory profit before tax margin of 13.0% (2021: 16.4%) was below last year, principally due to the charge

from the mark-to market valuation movement on financial derivatives.

Taxation

The adjusted tax charge of £11.7m (2021: £10.8m) represents an effective tax rate of 17.8% (2021: 19.3%). The tax charge of £9.0m

(2021: £10.4m) represents an effective tax rate of 18.9% (2021: 19.9%). The reduction in tax rate reflects a prior year adjustment,

primarily relating to the recognition of patent box claims in respect of sales prior to the grant of the patent.

Earnings per share

Adjusted basic earnings per share increased by 20.0% to 94.3p (2021: 78.6p); adjusted diluted earnings per share grew by 19.8%

to93.0p (2021: 77.6p). Basic earnings per share decreased by 7.8% to 67.1p (2021: 72.8p); diluted earnings per share fell by 7.9% to

66.2p (2021: 71.9p).

The number of undiluted weighted average shares increased to 57.5m (2021: 57.4m).

Oxford Instruments plc | Report and Financial Statements 2022

Finance Review continued

Income Statement continued

Currency

The Group faces transactional and translational currency exposure, most notably against the US Dollar, Euro and Japanese Yen.

Forthe year, approximately 23% of Group revenue was denominated in Sterling, 44% in US Dollars, 20% in Euros, 10% 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) Revenue

Adjusted

operating

profit

Sterling 85.2 (57.2)

US Dollar 162.7 58.7

Euro 74.8 41.1

Japanese Yen 36.6 21.7

Chinese Renminbi 5.8 0.8

Other 2.2 1.2

367.3 66.3

The Group maintains a hedging programme against its net transactional exposure using internal projections of currency trading

transactions expected to arise over a period extending from twelve to 24 months. As at 31 March 2022, the Group had currency

hedges inplace extending up to 18 months forward.

For the full year 2022/23, our assessment of the currency impact is, based on hedges currently in place and forecast currency rates,

a tailwind of £5.1m to revenue, and headwind of £4.0m to profit. Forecast currency rates on unhedged positions for the full year are

– GBP:USD 1.28; GBP:EUR 1.20; GBP:JPY 163. The headwind to operating profit is due to stronger Sterling currency rates achieved on

hedges in place for 2022/23 and unhedged transactional exposures, against hedges that crystallised in 2022/21. This adverse

impact to operating profit is partially mitigated by a gain due to weaker blended Sterling currency rates on unhedged transactional

and translational exposures against actual currency rates achieved in 2021/22. All currency impacts are prior to mitigating pricing

and cost actions. Uncertain volume and timing of shipments and acceptances, currency mix and rate volatility may significantly

affect full-year currency forecast effects.

Looking further ahead to the financial year 2023/24, based on the above currency assumptions, we would expect currency effects

to have a neutral impact to revenue and a £1.9m benefit to operating profit.

Acquisition of WITec

On 31 August 2021, the Group completed the purchase of 100% of the share capital in WITec for an initial consideration of €37.0m.

Additional consideration of up to €5m is conditional on trading performance over a period of twelve months following completion.

Based on current forecasts, this payment is expected to be made in full. During the period under ownership, the business

contributed constant currency revenue of £14.9m and an operating profit of £2.9m.

Dividend

The Group’s policy on the dividend takes into account changes to underlying earnings, dividend cover, movements in currency and

demands on our cash. After a resilient year of trading, the Board has proposed a final dividend of 13.7p per share. This results ina

total dividend of 18.1p per share, growth of 6.5%. An interim dividend of 4.4p per share was paid on 14 January 2022. The final

dividend will be paid, subject to Shareholder approval, on 23 August 2022 to Shareholders on the register as at 15July2022.

Oxford Instruments plc | Report and Financial Statements 2022

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Cash flow

The Group cash flow is summarised below.

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Adjusted operating profit 66.3 56.7

Depreciation and amortisation 9.4 9.1

Adjusted

EBITDA 75.7 65.8

Working capital movement (11.8) (2.7)

Equity settled share schemes 2.1 1.8

Non-recurring items — 0.3

Pension scheme payments above charge to operating profit (7.6) (15.5)

Cash from operations 58.4 49.7

Interest (0.5) (1.6)

Tax (8.8) (6.3)

Capitalised development expenditure (0.7) (0.9)

Expenditure on tangible and intangible assets (13.9) (4.0)

Acquisition of subsidiaries, net of cash acquired (30.6) —

Acquisition-related costs (0.4) —

Dividends paid (12.3) —

Proceeds from issue of share capital and exercise of share options 0.1 0.2

Payments made in respect of lease liabilities (3.4) (2.8)

Decrease in borrowings (0.1) (27.9)

Net (decrease)/increase in cash and cash equivalents from continuing operations (12.2) 6.4

1. 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 £58.4m (2021: £49.7m) represents 72% (2021: 101%) cash conversion. Cash conversion on a normalised basis

was 84% once we exclude expenditure relating to our new semiconductor facility. Cash conversion is defined as cash from operations

before business reorganisation costs and pension scheme payments above charge to operating profit, less capitalised development

expenditure, capital expenditure and payments made in respect of lease liabilities, divided by adjusted operating profit.

Reconciliation of cash generated from operations to adjusted operating cash flow

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Cash from operations 58.4 49.7

Add back/(Deduct):

Non-recurring items — (0.3)

Pension scheme payments above charge to operating profit 7.6 15.5

Capitalised development expenditure (0.7) (0.9)

Expenditure on tangible and intangible assets (13.9) (4.0)

Payments made in respect of lease liabilities (3.4) (2.8)

Adjusted cash from operations 48.0 57.2

Cash conversion % (adjusted cash from operations/adjusted operating profit) 72% 101%

Cash conversion % (normalised

) 84% 102%

1. Cash conversion calculated on a normalised basis excludes expenditure in the year of £7.4m (2021: £0.8m) on the new semiconductor facility.

Working capital increased by £11.8m with receivables increasing by £21.6m. The receivables movement reflects the high number of

orders, shipments and acceptances in the final month of the year compared to last year, particularly with reference to high-value

semiconductor process systems, resulting in an increase in invoicing against customer deposits, installation and acceptances. This

was partially offset by a reduction in payables and customer deposits of £9.9m. Business growth and post-Brexit transit flows have

also resulted in higher VAT balances in receivables and payables.

Interest

Net interest paid was £0.5m (2021: £1.6m), the reduction reflecting the repayment of private placement notes at the end of the last

financial year.

Tax

Tax paid was £8.8m (2021: £6.3m).

Oxford Instruments plc | Report and Financial Statements 2022

Finance Review continued

Cash flow continued

Investment in Research and Development (R&D)

Total cash spend on R&D in the year was £31.7m, equivalent to 8.6% of sales (2021: £28.9m, 9.1% of sales). A reconciliation between

the adjusted amounts charged to the Consolidated Statement of Income and the cash spent is given below:

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

R&D expense charged to the Consolidated Statement of Income 32.8 30.0

Depreciation of R&D-related fixed assets (0.2) (0.1)

Amounts capitalised as fixed assets 0.3 0.6

Amortisation and impairment of R&D costs capitalised as intangibles (1.9) (2.5)

Amounts capitalised as intangible assets 0.7 0.9

Total cash spent on R&D during the year 31.7 28.9

Net cash and funding

Net cash

Cash from operations in the full year was offset by the payment of initial consideration for the acquisition of WITec, resulting in

adecrease in the Group’s net cash position from £97.6m at 31 March 2021 to £85.9m on 31 March 2022. The Group invested in

capitalised development costs of £0.7m and tangible and intangible assets of £13.9m, of which £7.4m relates to payments

associated with the new semiconductor facility under construction.

Up to 31 March 2022, we had incurred costs of £8.2m on the new semiconductor facility under construction. For the financial year

ended31 March 2023, we expect additional payments of approximately £25m to complete the facility. We are at the early stage

ofaprocess to sell the current site, with completion expected in the 2023/24 financial year.

Movement in net cash £m

Net cash after borrowings as at 31 March 2021 97.6

Cash generated from operations 58.4

Interest (0.5)

Tax (8.8)

Capitalised development expenditure (0.7)

Capital expenditure on tangible and intangible assets (6.5)

Capital expenditure on new semiconductor facility (7.4)

Acquisition of subsidiaries (net of cash and debt) (30.6)

Dividend paid (12.3)

Other items (3.3)

Net cash after borrowings as at 31 March 2022 85.9

Net cash including lease liabilities

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Net cash after borrowings 85.9 97.6

Lease liabilities (18.4) (7.5)

Net cash and lease liabilities after borrowings 67. 5 90.1

Oxford Instruments plc | Report and Financial Statements 2022

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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 defined

as 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 34.7%, with

the change principally reflecting a higher level of earnings.

Return on capital employed

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Adjusted operating profit 66.3 56.7

Amortisation of acquired intangible assets (9.5) (8.4)

Adjusted operating profit after amortisation of acquired intangible assets 56.8 48.3

Property, plant and equipment 31.7 21.1

Right-of-use assets 17.9 7.3

Intangible assets 140.7 122.6

Inventories 65.3 58.7

Trade and other receivables 104.7 75.6

Non-current lease payables (14.9) (4.9)

Non-current provisions (0.1) (0.7)

Trade and other payables (149.5) (126.1)

Current lease payables (3.5) (2.6)

Current provisions (7.7) (8.7)

Capital employed 184.6 142.3

Average capital employed 163.5 147. 8

Return on capital employed (ROCE) 34.7% 32.7%

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

capital is 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. ROIC increased slightly on the

previous year due to the improvement in operating profit and reduction in taxation rates, more than offsetting any dilution in ROIC

from the recent acquisition.

Return on invested capital

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Adjusted operating profit 66.3 56.7

Taxation (11.7) (10.8)

Adjusted operating profit after taxation 54.6 45.9

Total equity 316.4 266.2

Net cash (including lease liabilities) (67.5) (90.1)

Invested capital 248.9 176.1

Average invested capital 212.5 184.4

Return on invested capital (ROIC) 25.7% 24.9%

Funding

On 2 July 2018, the Group entered into an unsecured multi-currency revolving facility agreement, which is committed until

June2025. The facility has been entered into with two banks and comprises a Euro-denominated multi-currency facility of

€50.0m(£42m) and a US Dollar-denominated multi-currency facility of $80.0m (£61m).

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 2022

thebusiness had net cash.

Oxford Instruments plc | Report and Financial Statements 2022

Finance Review continued

Pensions

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.

On an IAS 19 basis, the surplus arising

from our defined benefit pension scheme

obligations on 31 March 2022 was £51.7m

(2021: £16.3m). The value of scheme

assets increased to £351.7m (2021:

£340.2m). Scheme liabilities decreased to

£300.0m (£323.9m), principally due to an

increase in the discount rate from 2.1% to

2.8%. This was offset slightly by an

increase in the inflation assumption, from

3.0% to 3.4%.

Pension recovery payments above

charge to operating profit total £7.6m

(2021: £15.5m). The comparative period

included a one-off contribution of £8.1m

tothe UK defined benefit pension

scheme, inaddition to the annual

recovery payments.

The scheme’s actuarial valuation review,

rather than the accounting basis,

determines our cash payments into the

scheme. The cash contributions into the

scheme are expected to continue until

2025/26, at which point we expect, based

on current assumptions, for the scheme to

achieve self-sufficiency. In 2022, these

contributions amounted to £8.0m.

Thescheme rules provide that in the

event of a surplus remaining after settling

contractual obligations to members,

theGroup may determine how the

surplus is utilised.

Going concern

The Group’s business activities, together

with the factors likely to affect its future

development, performance and position,

are set out in the Performance Highlights,

Chief Executive’s Review and Operations

Review sections of this Report. The

financial position of the Group, its cash

flows, liquidity position and borrowing

facilities are described in the

FinanceReview.

Trading for the Group has been strong

during the year. The Group has prepared

and reviewed a number of scenarios for

the Group based on key risks noted for

the business and the potential impact on

orders, trading and cash flow

performance. In addition, the Group has

overlaid the risk of long-term adverse

movements in currency rates to our cash

flow forecasts. The Board is satisfied,

having considered the sensitivity analysis,

as well as its funding facilities, that the

Group has adequate resources to

continue in operational existence for the

foreseeable future.

Forward-looking statements

This document contains certain

forward-looking statements.

Theforward-looking statements reflect

the knowledge 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

forecast by the Company.

Gavin Hill

Chief Financial Officer

13 June 2022

Oxford Instruments plc | Report and Financial Statements 2022

Governance

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Approach to risk management

Within the Group there is an ongoing

process for identifying, evaluating and

managing the significant risks faced by

the Group that is embedded in all

business units. Day-to-day management

of this process has been delegated by the

Board to the Executive Directors. Details

of the process are set out in the Audit and

Risk Committee Report on page 115. The

current risk management and internal

control systems have been in place

throughout the financial year and up to

the date of approval of the Report and

Financial Statements and are subject to

annual review by the Board. In respect of

the year ended 31 March 2022, the Board

considered that these processes

remained effective.

Summaries of our risk management

framework and risk management process

can be found below and on page 79,

respectively.

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 major

risks 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 80 to

84 provide an overview of the major risks

and uncertainties faced by the Group. All

operating businesses follow a standard

process for risk identification and

reporting. The process is further described

on page 79. On a regular basis, each

business reviews and updates its risk

Executive. If a material risk changes or

arises, this is reported to the Chief

Executive, at which time there is a

discussion on the adequacy of the

mitigating actions taken. In addition, the

Board and the Audit and Risk Committee

consider risks to the Group’s strategic

objectives which arise at a Group level and

develop appropriate actions to manage

and mitigate these risks where possible.

Priorities during financial year

ended 31 March 2022

During the year ended 31 March 2022 the

principal priority was the development of

the risk management framework required

for the Taskforce for Climate-Related

Financial Disclosures (TCFD) reporting.

Having conducted a pilot with the

NanoScience business unit in the prior

year, the main objective was to enhance

the process and extend it across all

business units and the larger regional

offices in 2021/22. The risk management

function collaborated with the

environmental working group that reports

into the Sustainability Committee to

deliver a process for identifying,

evaluating, and reporting on

climate-related risks and opportunities

across the Group. The output from this

process provided the inputs for the risks

and opportunities that are set out in the

TCFD statement.

In compliance with the Financial Conduct

Authority’s Listing Rule 14.3.27, the

climate-related financial disclosures

consistent with the TCFD

Recommendations and Recommended

Disclosures have been included within the

TCFD statement on pages 57 to 66, which

also encompasses further information

regarding the Group’s exposure to

climate-related risks and opportunities.

Risk Management

Risk governance framework

The diagram below summarises the key accountabilities and features of our risk governance framework.

Operational

management

Internal audit and

assurance function

Audit and Risk

Committee

Board

Responsible for risk

management and control

within their business and,

through the Management

Board, implementing Board

policies on risk and control.

Guided by the internal

audit and assurance

function, completes

detailed risk reviews on a

quarterly basis.

Assesses the adequacy

and effectiveness of the

management of significant

risk areas and provides

oversight of operational

management’s front line

and assurance activities.

Further information

regarding the scope of

internal audit and

assurance activities is set

out on page 115.

Reviews the internal

financial controls systems

that identify, assess,

manage and monitor

financial risks, and other

internal control and risk

management systems.

More information regarding

the work of the Committee

can be found in its report

on pages 110 to 116.

Oversees the internal

control framework, and

determines the nature and

extent of the principal risks

the Company is willing to

take in order to achieve its

long-term strategic

objectives.

Ultimately accountable for

approving the adequacy

and effectiveness of

internal controls operated

by the Group.

Audit, risk and internal control

Oxford Instruments plc | Report and Financial Statements 2022

Risk Management continued

Internal control

The internal control framework includes

central direction, oversight and risk

management of the key activities within

the Group. This framework includes a

financial planning process which

comprises a five-year planning model

and a detailed annual budget which is

subject to Board approval. All Group

businesses’ results are reported monthly

and include variance analysis to budget

and the prior year. Management also

prepares monthly reforecasts.

Control activities include policies and

procedures for appropriate authorisation

and approval of transactions, the

application 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 the

Group’s internal audit and assurance

function.

The internal control framework has been

designed to manage rather than

eliminate material risks to the

achievement of strategic and business

objectives and can provide only

reasonable, and not absolute, assurance

against material misstatement or loss.

Due to inherent limitations, internal

controls over financial reporting may not

prevent or detect all misstatements.

There has been no material change to the

Group’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:

•

a formal schedule of matters reserved

to the Board for decision and specific

terms of reference for each of its

Committees; other than these matters,

the Board delegates to the Chief

Executive, who in turn reviews the

delegation of authorities throughout

the management structure;

•

the Group’s internal management

beneath the Board is led by the

Management Board. Its membership

comprises the Executive Directors,

senior managers with Group-wide

functional responsibilities and the

heads of the principal businesses of

the Group’s activities. Day-to-day

responsibility for the management of

the Group is delegated to the

Management Board. The responsibility

is based on the identification of

separate businesses for each of the

Group’s activities for which there are

clearly defined lines of management

responsibilities at all levels up to and

including the Group Board and the

Group’s accounting and reporting

functions reflect this organisation;

•

whilst financial executives within

Group businesses report to their own

operational head, there is also a

well-established and acknowledged

functional reporting relationship

through to the Chief Financial Officer;

•

the Board reviews strategic issues and

options 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 model

ofthe Group and its individual

businesses;

•

annual budgets are prepared for each

of the Group’s businesses which

include monthly figures for turnover,

profit, capital expenditure, cash flow

and borrowings. The budgets are

reviewed through the Group

management structure and result in

aGroup financial budget which is

considered and approved by the

Board;

•

the businesses prepare monthly

management accounts which

compare the actual operating result

with both the budget and prior year.

They also prepare rolling reforecasts

for orders, turnover, operating profit

and cash. These are reviewed by

theBoard at each of its scheduled

meetings;

•

the Board approves all acquisition and

divestment proposals and there are

established procedures for the

planning, approval and monitoring of

capital expenditure;

•

for all major investments, the

performance of at least the first twelve

months against the original proposal is

reviewed by the Board;

•

an internal audit is carried out through

a system of regular reviews of the

financial and non-financial internal

controls at each site. This is further

explained in the Audit and Risk

Committee Report on pages 110 to 116.

These reviews are co-ordinated by the

Group Head of Risk and Assurance;

•

the Board receives regular updates on

pensions, sustainability, business

ethics and health and safety and the

Audit and Risk Committee receives

regular updates on treasury, tax,

insurance and litigation;

•

authorisation limits are set at

appropriate levels throughout the

Group; compliance with these limits is

monitored by the Chief Financial

Officer and the Group assurance

function;

•

there is a detailed and risk-based

delegation of authority structure in

place for sales contracts and

managing commercial risks. Contracts

with onerous terms and conditions

(such as unlimited liability contracts)

require approval by either the Chief

Executive or Chief Financial Officer;

•

the International Trade Committee

monitors, considers action and makes

recommendations around the

management of key risks relating to

international trade, including

sanctions, export controls and

customs; and

•

as regards the UK pension scheme,

the Group nominates half of the

trustee directors of the corporate

trustee to the pension scheme,

involves as appropriate its own

independent actuary to review

actuarial assumptions, agrees the

investment 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 independent

actuarial valuation every three years

and agrees funding levels to provide

adequate funding to meet the benefit

payments to the members as they

falldue.

Audit, risk and internal control continued

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Risk management process

The diagram below summarises our methodical approach to risk management. The principal risks and uncertainties detailed on

pages 80 to 84 of this report are monitored utilising this risk management process.

Alignment with

strategy

The broad range of

potential factors which

could impact the Group are

considered and those

which have a significant

effect on its ability to

deliver its strategy are

determined to be principal

risks and uncertainties.

Evaluation of risk

Careful consideration is

given to:

i) the specific scenarios in

which the risk could

manifest; and

ii) the various potential

impacts which the risk

could present.

Mitigation

implementation

Suitable management

actions or robust control

mechanisms are

determined, developed

and implemented.

Review risk

An embedded, cyclical

process review:

i) determination of principal

risks and uncertainties;

and

ii) the effectiveness of the

implemented mitigation

mechanisms.

Emerging risks

The Board is required to complete a

robust assessment of the Company’s

emerging and principal risks and confirms

that it performed such an evaluation

during the financial year.

It is recognised that emerging risks can

also be principal risks. A detailed

description of the principal risks and the

activities to mitigate these are set out on

pages 80 to 84.

The identification and evaluation of

emerging risks is derived from the Group’s

quarterly risk reporting framework. The

output from the business units’ detailed

risk registers is reviewed by the Group

Head of Risk and Assurance and the Chief

Financial Officer every quarter. Any new

risks reported by the business units are

specifically identified and discussed as

part of this process. Further, there is a

formal review of emerging risks at the

year end, with commentary provided to

the Audit and Risk Committee as part of

its review of the Group risk register and

principal risks and uncertainties.

The emerging risks identified from the

latest review include climate change and

inflationary pressures which are disclosed

as principal risks. The key climate change

related risks are also disclosed in the

TCFD statement on pages 57 to 66.

Inflationary risks are managed through

regular reviews of product pricing and,

with regard to the supply chain, via the

Group’s strategic sourcing strategy, which

manages long-term arrangements with

key suppliers.

Principal risks and uncertainties

Principal risks are reported and discussed

at every meeting of the Audit and Risk

Committee. For Oxford Instruments,

principal risks are generally those that

could have a significant adverse impact

on the Group’s business model, financial

performance, liquidity or reputation.

TheAudit and Risk Committee also

considers emerging risks within the risk

management framework. A formal

reviewof emerging risks is conducted

around the year end. For the year

ended31March2022, the output of

thisassessment was the identification of

inflation and climate change as emerging

risks that are also considered to be

principal risks. Further information is

setout below.

The principal risks and uncertainties are

set out on pages 80 to 84.

The key change in the Group’s approach

to risk management in 2021/22 has been

in TCFD reporting. The Group has

implemented a climate-related risks and

opportunities reporting process across all

business units and regional offices.

Initially this has been established to

operate alongside the wider enterprise

risk management processes, although in

2022/23 we aim to integrate it into the

wider process. Further details are set out

in the Sustainability Report.

In terms of the wider risk management

process there have been no significant

changes during the year ended

31March2022. Business units continue

toperform a detailed assessment of key

risks using a standardised methodology.

The output is reported to the Group and

isthe basis for the compilation of the

quarterly Group risk register by the risk

management function, in collaboration

with the Executive Directors. The resulting

Group risk register is reported to the Audit

and Risk Committee every quarter.

Oxford Instruments plc | Report and Financial Statements 2022

Risk Management continued

Principal risks and uncertainties matrix

To facilitate meaningful comparison of the relative importance of the principal risks

and uncertainties at a Group level, these have been mapped onto a probability and

impact matrix. This matrix includes arrows which indicate the change in the risk in

comparison to the prior year’s assessment. The methodology for mapping the risks

uses the Group’s assessment of the residual risk, being the probability of the risk

occurring and the potential impact it may have and taking account of any mitigating

actions and controls that have been implemented.

The output of this assessment is shown in the chart below. The most significant risks

are located in the top right quadrant of the chart, while those assessed as being the

least significant are found in the bottom left. The chart shows that the Group’s

assessment of geopolitical risk, supply chain risk and legal/compliance risk have

increased compared to the prior year. In contrast, the risks relating to covid and

pensions have decreased.

Key:

Geopolitical risk

Foreign exchange

Supply chain

Information Technology

OEM route to market

R10

People

New product innovation (NPI)

R11

Business interruption

Inflation

R12

Climate change

Legal & regulatory breach

R13

Pensions

Covid

Arrows indicate movement compared to the prior year.

The risk management process identified 13 principal risks that are set out below.

Thenarrative provides a summary of the risk, explains why it is relevant to the Group and

also sets out the potential consequences should the risk materialise, together with the

mechanisms used for risk mitigation. The arrows indicate the direction of travel (up for an

increased risk, down for a decreased risk). A static risk is depicted by the equals symbol.

Risks are managed by the Board and are not assigned an individual risk owner.

Specific risk 1:

Geopolitical risk

Context: The Group operates in global

markets and can be required to secure

licences for relevant exports. Government

policy on the export of specific technologies

or the wider issue of tariffs can change over

time.

Risk

Changes in the geopolitical landscape or an

escalation in global trade tensions resulting

in major obstacles to trade with customers

in key markets. This could arise from export

licence refusals, trade tariffs, trade

embargoes, or nations seeking to reduce

reliance on foreign imports in strategic

technologies through the development of

domestic competition and/or protectionist

measures. This is potentially relevant to

customers in key export markets including,

but not limited to, China, the European

Union, Japan and the USA.

Possible impact

•

Lower export volumes or net pricing to

key markets adversely affecting revenue

•

Increases to input costs and lower gross

margins

•

Limitations on ability to provide

after-sales service to existing customers

•

Certain product lines might not be

sustainable if access to key export

markets is severely restricted

Control mechanisms

•

Contract review and protection against

breach of contract should export licences

be withheld

•

Proactive dialogue with relevant

government authorities

Mitigation

•

Broad global customer base; contractual

protection

•

Improved information flows to

decision-makers

Change in the year:

Minor Moderate Significant Major Severe

Likelihood

R11

R10

R13

R12

Impact

Rare Unlikely Possible Probable Very likely

New

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Specific risk 2:

Supply chain risk

Context: The Group operates a global

supply chain, sourcing from many suppliers

across a wide range of categories. For

certain technologies, there are limited

alternative sources.

Risk

•

Operational disruption or price increases,

due to supply chain shortages, particularly

in electronic components

•

Suppliers de-committing orders due to

demand pressures in other sectors.

•

Change of supplier ownership resulting in

loss of supply

•

Regulatory changes or economic viability

causing suppliers to discontinue

production, impacting the long-term

availability of key components

Possible impact

•

Short-term delays or hiatus in our

production arising from component

shortages

•

Lost revenue

•

Downward pressure on margins

•

Increased lead times and potential of

foregone orders

•

Poor customer service/reputational

damage

•

Increased stock holding adversely

impacting cash conversion

Control mechanisms

•

Sales and operational planning process

•

Group strategic sourcing programme to

consolidate demand and manage key

supplier risks

•

Focused efforts on higher-risk suppliers

identified

•

Long-term contracts with key suppliers

Mitigation

•

Long-term demand planning

•

Buffer stock in extended supply chain

•

Relationship management with key

suppliers

•

Responsive and adaptive engineering

change process

Change in the year:

Specific risk 3:

Routes to market

Context: In some instances, the Group’s

products are components of higher-level

systems sold by OEMs, and thus the Group

does not control its route to market.

Risk

•

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 product

performance to customer needs

•

Positioning of the Oxford Instruments

brand and marketing directly to end

users

Mitigation

•

Strategic relationships with OEMs to sell

performance of combined systems

•

Product differentiation to promote

advantages of Oxford Instruments’

equipment and solutions

•

Direct marketing to end users

Change in the year:

Specific risk 4:

Technical risk

Context: The Group provides high

technology equipment, systems and

services to its customers.

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 and

reduced profitability

•

Additional NPI expenditure

•

Adverse impact on the Group’s brand and

reputation

Control mechanisms

•

“Voice of the Customer” approach and

market intimacy to direct product

development activities

•

Formal NPI processes to prioritise

investment and to manage R&D

expenditure

•

Product life cycle management

Mitigation

•

Understanding customer needs/

expectations and targeted new product

development programme to maintain

and strengthen product positioning

•

Stage gate process in product

development to challenge commercial

business case and mitigate technical risks

•

Operational practices around

sales-production matching and inventory

management to mitigate stock

obsolescence risks

Change in the year:

Oxford Instruments plc | Report and Financial Statements 2022

Risk Management continued

Specific risk 5:

Inflation

Context: Global inflation placing upward

pressure on principal elements of the cost

base such as labour and materials.

Risk

•

Rises in key cost drivers such as people

costs, energy, components, and raw

materials

•

For long lead time items, required to

make inflationary estimates which may

be inaccurate

Possible impact

•

Increased cost of production leading to a

reduction in operating profit if not offset

by sufficient price increases

•

Potential for under-recovery of increases

if inflation estimates are too low or

reduction in order volumes if competitors

do not react similarly

Control mechanisms

•

Price reviews

•

Inflation protection in commercial

response to long lead time tenders and

long-term agreements

Mitigation

•

Ability to address inflationary pressures

through price management reviews

•

Reviews of key drivers of financial

performance

Change in the year:

New

Specific risk 6:

Legal/compliance risk

Context: The Group operates in a complex

technological and regulatory environment,

particularly in areas such as export controls

and product compliance. Competitors may

seek to protect their position through

intellectual property rights and the Group

may at times experience unintentional

regulatory or IP compliance issues.

Risk

•

Infringement of a third party’s intellectual

property

•

Regulatory breach

Possible impact

•

Potential loss of future revenue

•

Future royalty payments

•

Payment of damages

•

Fines and non-financial sanctions such as

restrictions on trade, disbarment from

public procurement contracts

•

Reputational damage

Control mechanisms

•

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

•

Product compliance teams

Mitigation

•

Confirmation of “Freedom to Operate”

during new product development stage

gate process

•

Compliance monitoring programme over

key risk areas

Change in the year:

Specific risk 7:

New covid variant

causes major disruption

Context: Variants of covid may be highly

transmissible and have a greater impact

than current variants, even on vaccinated

populations.

Government response to covid outbreaks

may lead to further lockdowns/travel

restrictions.

Risk

•

Potential disruption to supply chains,

Group operations and customers, leading

to delays in production and/or installation

at customer sites

Possible impact

•

Delays in both manufacturing and service

activity leading to lost or delayed product

and service revenue

Control mechanisms

•

Working closely with key suppliers

•

Safe ways of working and changes to

shift patterns to maximise capacity

•

Remote service activities

•

Strategic review of location of service

personnel compared to installed base

Mitigation

•

Sales and operational planning process

•

Contractual protection

•

Strategic procurement, working with

supply chain to mitigate risk

Change in the year:

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Specific risk 8:

Adverse movements in

long-term foreign

currency rates

Context: A high proportion of the Group’s

revenue is in foreign currencies, notably US

Dollars, while the cost base is

predominantly denominated in Sterling.

Risk

•

Long-term strengthening of Sterling

against key currencies such as the US

Dollar, Japanese Yen and the Euro

Possible impact

•

Reduced revenue and profitability

Control mechanisms

•

Treasury management of short-term

hedging programme

•

Strategic management of currency

exposure

Mitigation

•

Review of supply chain currency base

•

Active review of net exposure in key

currencies

Change in the year:

Specific risk 9:

IT risk

Context: Elements of production, financial

and other systems rely on IT availability.

Risk

•

Cyber-attack on the Group’s IT

infrastructure

•

Ransomware/spread of viruses or

malware

Possible impact

•

System failure/data loss and sustained

disruption to production operations

•

Loss of business-critical data

•

Financial and reputational damage

Control mechanisms

•

Suite of IT protection mechanisms

including penetration testing, regular

backups, virtual machines, and cyber

reviews

•

External IT security consultants

•

Internal IT governance to maintain

protection systems and our incident

response

•

Employee awareness training

Mitigation

•

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:

Specific risk 10:

People

Context: A number of the Group’s

employees have business-critical skills.

Risk

•

Key employees leave and effective

replacements are not recruited on a

timely basis

Possible impact

•

Adverse impact on NPI

•

Operational disruption

•

Lower sales and profitability

Control mechanisms

•

HR people strategy for retention and

recruitment 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:

Oxford Instruments plc | Report and Financial Statements 2022

Risk Management continued

Specific risk 11:

Operational risk

Context: Business units’ production facilities

are typically located at a single site.

Risk

•

Sustained disruption to production arising

from a major incident at a site

Possible impact

•

Inability to fulfil orders in the short term,

resulting in a reduction in sales and

profitability

•

Additional, non-recurring overhead costs

Control mechanisms

•

Contingency plans are in place for all

manufacturing sites

•

Contractual clauses to limit financial

consequences of delayed delivery

Mitigation

•

Detailed responses in contingency plans

can reduce downtime arising from

incidents and facilitate the restoration or

relocation of production

•

Standard sales contracts include clauses

for limitation of liability, liquidated

damages and the exclusion of

consequential losses

•

Business interruption insurance

Change in the year:

Specific risk 12:

Climate change

Context: Climate change generates both

risks and opportunities. Our response needs

to address risks and optimise opportunities.

Risk

•

The transition from fossil fuels to a

low-carbon/net zero economy may

require significant changes in materials

and production methods that may impact

our own operations and our suppliers

•

Chronic changes in weather and extreme

weather events may disrupt supply

chains, operations, and logistics

Possible impact

•

Rises in production costs and product

development costs to reduce all CO

emissions linked to our products

•

Delayed production and/or installation

leading to delayed revenue

•

More expensive freight and packaging

costs

Control mechanisms

•

Sustainability Committee

•

Climate-related risks and opportunities

evaluation and reporting embedded in

business units

•

Strategic sourcing

•

Product compliance groups

Mitigation

•

Product compliance teams have an

established methodology to deal with

changes to environmental regulations

•

Investment in product development to

capitalise on the opportunities for our key

enabling technologies to help customers

address climate-related challenges

Change in the year:

New

Specific risk 13:

Pensions

Context: The actuarial pension deficit is

sensitive to changes in the actuarial

assumptions.

Risk

•

The actuarial pension deficit is sensitive

to movements in actuarial assumptions

and returns on investments

Possible impact

•

Variations to the current deficit

recoveryplan

•

Increase in the annual levy paid to the

Pension Protection Fund

Control mechanisms

•

Ongoing review of investment strategy,

including active control of risk, by the

trustee’s investment sub-committee

•

Liability hedging programme to mitigate

exposure to movements in interest rates

and inflation

•

Reduced exposure to equity markets

Mitigation

•

The Group closed its UK defined benefit

pension scheme to future accrual in 2010

•

The Group has a funding plan in place to

eliminate the actuarial deficit by 2025/26

Change in the year:

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In accordance with section 4 of 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

its introduction, the viability assessment period covers a three-year time frame. The Directors consider that this continues to be the

most appropriate period for assessing the Group’s longer-term viability. This year’s assessment covers the period from 1 April 2022

to 31 March 2025 (the “Viability Assessment Period”).

Key criteria applied in the assessment

The criteria for considering the Group’s viability remain unchanged. The Directors consider that either maintaining a net cash

position during the Viability Assessment Period or, failing that, the ability to operate within agreed banking facilities, demonstrate

that the Group would be able to meet its liabilities as they fall due. Currently, the Group has committed credit facilities of roughly

£103m. There are covenants associated with these 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 and are factored into the viability

assessment calculations, if relevant.

Methodology and sensitivities applied

In performing the assessment, the Group has considered the potential impact of the principal risks and uncertainties and grouped

them by the nature of the expected impact. The list of key risks and uncertainties that have been considered in this assessment are

disclosed on the preceding pages 80 to 84 of the Report and Financial Statements.

The table below summarises the risks by their potential impact and the sensitivities that have been applied to AOP.

No Risk areas Potential impact Sensitivity applied

1 Geopolitical, supply chain,

routes to market, technical, new

covid variant and operational

risks

Loss of revenue due to lower

volumes, leading to lost margin

Revenue growth restricted to the lower of 5% or the

business unit specific rate in the Group Forecast, if

lower than 5% in year two. No growth in year three.

2 Supply chain risk, inflation risk,

climate change

Reduction in gross margin if

business units are unable to

mitigate cost increases through

higher selling prices

Increased overheads

The following percentage point reductions in the gross

margin % by year

•

Year one – 2 percentage points

•

Year two – 5 percentage points

•

Year three – 5 percentage points

The following increases applied to overheads:

•

5% increase in overheads in year two compared

toyear one

•

Additional 2% increase in overheads in year three

over year two

3 Legal/compliance, IT, NPI,

people and pensions risks

Additional non-recurring

overhead costs

Additional non-recurring charges in years two and

three

4 Foreign exchange risk Lower revenue and margin in

Sterling

Reduction in adjusted operating profit (AOP) in year

threeonly

The potential impact of IT risk (e.g. disruption to business as usual 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) but also because in aggregate, the potential impact of other risks is considered sufficient for the

purpose of this assessment.

Sensitivity 1 considers the potential reduction in revenue and contribution margin that could arise from the risks identified. It has

been applied as a reduction to the growth anticipated in the Baseline in years two and three of the Viability Assessment Period only,

with the aim of reflecting only a modest increase in selling price (no more than 5%) and no volume growth. In year two growth was

restricted to the lower of 5% or the forecast rate for any business unit with lower than 5% growth. Year three assumes no growth in

revenue compared to year two.

Sensitivity 2 quantifies the possible impact of increases in both direct costs and overheads due to the impact of inflation, supply

chain risk and risks related to climate change. The sensitivities applied simulate lower gross margins from failing to recover

increased input costs via increases in the selling price and incremental overheads that could arise in key areas such as staff costs,

logistics and facilities costs, including energy. It has been applied to all business units and, in respect of overheads, to the Group

function also.

Sensitivity 3 has been applied as a contingency with the impact of increasing overhead costs in years two and three. It has been

applied at Group level only.

Viability Statement

Oxford Instruments plc | Report and Financial Statements 2022

Viability Statement continued

Methodology and sensitivities

applied continued

Sensitivity 4 considers the risk of adverse

movements in foreign exchange rates

compared to the Baseline rate against

net currency exposure (i.e. net receivables

that are not hedged). While the reported

impact would be realised across the

business units that face currency

exposure, for simplicity the impact is

assessed at a Group level. Due to the

Group’s hedged position in year one and

the use of prudent rates in the Baseline

(which are unfavourable compared to

current rates), the sensitivity has been

applied in year three only. Further, based

on the forecast rates used and the

short-term currency hedging programme,

it is reasonable to expect a currency

tailwind in year one. This approach is

consistent with the risk relating to longer

term adverse movements in foreign

exchange rates.

Over the three-year Viability Assessment

Period, the cumulative impact of the

sensitivities applied would result in a

45%reduction in AOP compared to the

Baseline. Notwithstanding this significant

reduction in AOP, most elements of the

Baseline cash flow forecasts have not

been adjusted in the viability assessment

to reflect possible mitigating actions that

the Group could take. Movements in

working capital, capital expenditure,

R&Dexpenditure and financing activities

have not been adjusted in the viability

assessment. However, tax cash flows

have been reduced, in direct proportion

with the reduction in AOP, and the

dividend has been held at an annual

levelof £11.0m in each year, rather than

increasing in line with the Baseline.

In practical terms, in the event of a

significant reduction in profitability

compared to the Baseline, the Group

would implement cash saving measures

to mitigate the net cash impact. However,

the potential favourable impact of such

mitigating actions has not been factored

into the viability assessment

Further, a reverse stress test has been

performed to identify the incremental

reduction in AOP that would be required

to cause the Group to eliminate its

existing cash reserves over the Viability

Assessment Period. While AOP is just one

of several variables that determine

cashflow, it indicates that an adverse

movement in AOP of approximately

£280m (120% of the Baseline AOP figure)

without any mitigating actions, would be

required to cause such an impact.

Thisrepresents an incremental £174m

ofdownside in AOP compared to the

viability assessment calculations.

TheBoard considers the likelihood of

such a scenario arising to be remote.

Outcome

In each year of the Viability Assessment

Period, the forecasts show that the Group

would continue to generate operating

profit and a positive cash flow. The

forecast level of net cash throughout the

Viability Assessment Period, combined

with banking facilities of approximately

£105m indicate that the Group would

maintain substantial headroom.

Consequently, the Board has a

reasonable expectation that the Group

will be able to continue in operation and

meet its liabilities as they fall due over the

next three years.

This assessment supports not only the

viability statement above, but also the

statement on going concern, set out as

follows.

Going concern statement

The Group’s business activities and

factors that are considered likely to affect

its performance and position in the future

are set out in the Strategic Report on

pages 1 to 86. The Finance Review on

pages 67 to 76 discloses information

relevant to the Group’s financial position,

its cash flows, borrowing facilities and

liquidity.

The Directors have considered the

Group’s current financial position and

future prospects and, as set out in the

viability statement above, have

performed an assessment of longer-term

viability up to 31 March 2025. On this

basis, the Directors conclude that there is

a reasonable expectation that the Group

will continue in operational existence for

the foreseeable future and that there are

no material uncertainties that may cast

significant doubt over its ability to

continue as a going concern.

As a result, the Directors continue to

prepare the Financial Statements under

the going concern basis.

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

Governance

Chair’s Governance Overview

See pages 88 and 89 of the Corporate Governance Report.

Board of Directors

See pages 90 and 91 of the Corporate Governance Report.

Board Leadership and Company Purpose

See page 92 of the Corporate Governance Report.

Corporate Governance Statement 2022

See page 92 of the Corporate Governance Report.

Division of Responsibilities

See pages 93 to 97 of the Corporate Governance Report.

Composition, Succession and Evaluation

See pages 98 to 105 of the Corporate Governance Report.

Nomination Committee Report

See pages 106 to 109 of the Corporate Governance Report.

Audit and Risk Committee Report

See pages 110 to 116 of the Corporate Governance Report.

Sustainability Committee Report

See pages 117 to 119 of the Corporate Governance Report.

Directors’ Remuneration Report

Letter from the Chair of the Remuneration Committee

Directors’ Remuneration Policy (A)

Annual Report on Remuneration (B)

See pages 120 to 141 of the Corporate Governance Report.

Shareholder Information

See page 142 of the Corporate Governance Report.

Directors’ Report

Non-Financial Information Statement

See pages 143 to 146 of the Corporate Governance Report.

Oxford Instruments plc | Report and Financial Statements 2022

Chair’s Governance Overview

Dear Shareholder,

On behalf of the Board, I am pleased to

introduce the Governance Report for the

year ended 31 March 2022. This report

describes our governance structures and

procedures, summarises the work of our

Board and its Committees during the year

and illustrates how our responsibilities

have been discharged. We recognise that

the Board’s fundamental role is to

promote the long-term sustainable

success of the Company and the Group,

generating value for shareholders and

contributing to wider society. To achieve

this, we strive to ensure that we

implement and follow good governance

practices and that our Board’s

composition encompasses the necessary

skills, knowledge and experience to

provide effective leadership.

Sustainability

We believe that embedding sustainability

throughout the Group creates long-term

value for all our stakeholders and will

secure our long-term success, and have

developed oversight of the Group’s

sustainability agenda at Board level, with

the establishment of the Sustainability

Committee. More information regarding

their work during the year can be found

on pages 117 to 119.

In conjunction with the Sustainability

Committee, we are delighted to have

published our first Task Force on

Climate-Related Financial Disclosures

Statement, as set out on pages 57 to 66,

our enhanced, dedicated Sustainability

report which is available on pages 48 to

66 and our first standalone Sustainability

Report which can be found on our

website in our sustainability section:

oxinst.com/sustainability.

The production of these reports involved

input from teams across the Group,

support from our external advisers and

thorough assessment of the climate

change related risks and opportunities by

the Audit and Risk Committee, in addition

to their usual robust assessment of the

Group’s principal and emerging risks.

Board composition and diversity

There were a number of changes to our

Board’s composition during the year.

Steve Blair and Thomas Geitner stepped

down as Directors with effect from the

conclusion of our AGM in September 2021

and we were thankful for their valued

contributions during their time on the

Board. Alison Wood succeeded Steve

Blair in the role of Senior Independent

Director and Nigel Sheinwald joined the

Board on 22 September 2021, taking up

the role of Chair of our newly established

Sustainability Committee. We anticipate

making a further change to our Board as

we are currently pursuing the imminent

appointment of a further female

Non‑Executive Director with specific

capabilities and experience.

For further information regarding our

approach to Board composition and

diversity, please see pages 52 and 53 and

100 to 103.

We recognise that the Board’s fundamental role is to

promote the long-term sustainable success of the

Company and the Group, generating value for

shareholders and contributing to wider society.

Neil Carson

Chair

Governance highlights

•

Establishment of Sustainability

Committee as a formal committee

of the Board to help to amplify

oversight of this remit at Board level

•

Alison Wood took up the role of

Senior Independent Director with

effect from the conclusion of the

AGM on 21 September 2021

•

Nigel Sheinwald joined the Board

as a Non-Executive Director with

effect from 22September 2021,

also taking up the role of

Sustainability Committee Chair

•

Commenced appointment process,

seeking to recruit a further female

Non‑Executive Director with specific

capabilities and experience

•

Externally facilitated Board

evaluation carried out by Round

Governance Services

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

Stakeholder engagement

Whilst we give due consideration to the

interests of all of our key stakeholders,

weembraced further opportunities to

engage directly with our workforce in

order to strengthen the Board’s

understanding of employees’

perspectives. Post each of these events,

the Board has discussed, as a specific

agenda item, the insights gained and

determined any appropriate actions,

which has in turn shaped more

meaningful consideration of employees

as a key stakeholder. We are looking

forward to participating in our

comprehensive programme of

engagement activity for 2022/23.

To find out more about our approach to

stakeholder engagement, please see the

Engaging with our Stakeholders section

on pages 26 to 33 and the Stakeholder

engagement disclosures on page 96.

Externally facilitated Board

evaluation

In light of the need for the Board to

continually monitor and improve its

performance, we engaged Round

Governance Services to complete an

externally facilitated Board evaluation.

AllDirectors participated fully in the

review process in order to make it a

meaningful exercise.

We were pleased that the findings of the

evaluation recognised that we have a

well-functioning Board with an evident

diversity of thought, as well as providing

feedback on areas for further

development which will help to enhance

our effectiveness.

For more information regarding our

externally facilitated Board evaluation,

including the process, outcomes and

actions, please see pages 104 and 105.

Terminated potential offer for

the Company

In February 2022 the Company received

a non-binding indicative cash and share

proposal from Spectris plc regarding a

possible offer for the entire issued, and to

be issued, share capital of Oxford

Instruments plc. This proposal followed a

series of earlier proposals from Spectris,

the first of which was received on

11February 2022. On 7 March 2022,

Spectris plc announced that discussions

regarding the possible offer had been

terminated. The proposals were

unsolicited and the Board continues to

believe that the Company has a clear and

compelling strategy to achieve growth

and create value for shareholders over

the medium term.

Annual General Meeting

The 2022 Annual General Meeting (“AGM”)

of Oxford Instruments plc will be held at

Tubney Woods, Abingdon, Oxfordshire

OX13 5QX at 11.00am on Thursday

28July2022.

Further details, including the resolutions

to be proposed to our shareholders, can

be found in the Notice of Meeting which

has been sent to our shareholders and

which is also available on our website at:

https://www.oxinst.com/investors-

content/annual-general-meeting

Theresult of the votes on the resolutions

put forward at the AGM will be publicly

announced to the stock exchange and

published on our website as soon as

possible following the conclusion of the

meeting.

I will be in attendance at the AGM and will

be very happy to take any questions you

may have regarding the operation of the

Board during the year. We look forward to

seeing you there.

Neil Carson

Chair

13 June 2022

Oxford Instruments plc | Report and Financial Statements 2022

Board of Directors

Key to Committees

Audit and Risk

Nomination

Remuneration

Sustainability

Chair of Committee

Neil Carson

Mary Waldner

Ian Barkshire

Sir Nigel Sheinwald

Gavin Hill

Professor Sir Richard Friend

Alison Wood

Neil Carson

Chair

Appointed to the Board: December 2018

Executive/Non-Executive: Non-Executive

Independent: No

Skills and experience:

Neil is a former FTSE 100 chief executive. After

completing an engineering degree, Neil joined

Johnson Matthey in 1980 where he held several

senior management positions in the UK and the

USA, before taking up the role of Chief Executive

Officer from 2004 to 2014. He has a broad

industrial outlook and a highly commercial

approach with a practical perspective on business.

He provides valuable insight based on his former

executive position and operational experience and

brings a track record of strong operational

exposure, familiarity with capital-intensive

business and a first‑class international perspective

on driving value in complex environments and this

experience makes him particularly well suited to

serving as Chair of the Board. Neil was awarded an

OBE for services to the chemical industry in 2016.

Neil’s previous non-executive roles include serving

as Chairman of TT Electronics plc, Deputy

Chairman of TI Fluid Systems plc and as a

Non-Executive Director of Paypoint plc and Amec

Foster Wheeler plc.

External appointments:

Non-Executive Director, member of the Safety,

Environment and Sustainability Committee and

Chair of the Remuneration Committee of Shell plc.

Director of The Goldsmiths’ Company Charity.

1. Neil was independent upon appointment to the

Board, in line with provision 10 of the UK Corporate

Governance Code 2018.

R SN

Ian Barkshire

Chief Executive

Appointed to the Board: November 2015

Appointed Chief Executive: May 2016

Executive/Non-Executive: Executive

Independent: No

Skills and experience:

Ian has worked for Oxford Instruments since 1997

in a number of senior leadership roles, including

Managing Director, Divisional Head, Group

Technical Director and Chief Operating Officer,

before taking up the role of Chief Executive in

May2016. Throughout his career, he has driven

growth in high technology and innovative

companies across a broad range of end markets.

In his time at Oxford Instruments he has been

involved in developing the Group’s strategy,

acquisition and the direct leadership of a number

of the individual operating businesses. The Board

believes that Ian’s contributions demonstrate that

his ongoing appointment as a Director remains

important to the Company’s long-term sustainable

success.

Ian’s previous roles include Senior Principal

Scientist at GEC Marconi Materials Technology

andResearch Fellowships at the University of York.

He holds a BSc and DPhil in physics from the

University of York, is a Chartered Physicist, a

Member of the Institute of Physics and a Fellow

ofthe Royal Academy of Engineering.

Gavin Hill

Chief Financial Officer

Appointed to the Board: May 2016

Executive/Non-Executive: Executive

Independent: No

Skills and experience:

Gavin holds a BA in Economics and Agricultural

Economics from the University of Exeter. He is a

Chartered Accountant and an Associate Member

of the Association of Corporate Treasurers.

Gavin served as Group Finance Director of Synergy

Health plc from April 2010 until its successful

combination with STERIS Corporation on

3November 2015. He previously served as

Corporate Finance Director of Serco Group plc and

has also worked in a variety of regional, corporate

and treasury roles with Syngenta AG and

AstraZeneca plc. The Board believes that Gavin’s

ongoing appointment as a Director remains

important to the Company’s success due to the

expertise which he brings.

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

Mary Waldner

Non-Executive Director

Appointed to the Board: February 2016

Executive/Non-Executive: Non-Executive

Independent: Yes

Skills and experience:

Mary is the Chief Financial Officer of Lloyd’s

specialising in engineering and technology for the

maritime industry. She holds an MA in physics from

the University of Oxford and is a Fellow of the

Chartered Institute of Management Accountants.

She has a broad range of experience in a variety of

sectors and an excellent track record of delivery

throughout a number of senior financial roles with

major public limited companies, which particularly

benefits her role as Chair of the Audit and Risk

Committee.

Mary was previously the Group Finance Director of

Ultra Electronics Holdings plc, the Director, Group

Finance at QinetiQ Group plc and Group Financial

Controller of 3i Group plc. Prior to this, Mary held a

number of senior roles at British Airways, General

Motors and Vauxhall Motors.

External appointments:

Chief Financial Officer of Lloyd’s Register.

Non-Executive Director of Senior plc.

A R SN

Alison Wood

Senior Independent Director

Appointed to the Board: September 2020

Executive/Non-Executive: Non-Executive

Independent: Yes

Skills and experience:

Alison holds a BA in Engineering, Economics and

Management from the University of Oxford and

anMBA from Harvard Business School. Her

background is in leading business development,

M&A and strategic planning across blue-chip UK

companies, particularly in the defence sector.

Shewas formerly the Global Director for Corporate

Development & Strategy at National Grid plc and

before that, Group Strategic Development Director

for BAE Systems plc. She is a highly experienced

Non-Executive Director and committee chair, with

her experience being particularly well suited to

herrole as Chair of Oxford Instruments’

Remuneration Committee.

Alison’s previous roles include serving as Senior

Independent Director and Remuneration Committee

Chair of Costain Group PLC, a Non‑Executive

Director and Remuneration Committee Chair of

Cobham plc, Senior Independent Director of e2v plc

and a Non-Executive Director of both BTG plc and

THUS plc.

External appointments:

Non-Executive Director and Chair elect of Galliford

Try Holdings plc.

Non-Executive Director and Chair of the

Remuneration Committee of TT Electronics plc.

Non-Executive Director and Chair of the

Remuneration Committee of Capricorn Energy PLC

(formerly Cairn Energy PLC).

Senior Independent Director and Chair of the

Remuneration Committee of the British Standards

Institute.

Sir Nigel Sheinwald

Non-Executive Director

Appointed to the Board: September 2021

Executive/Non-Executive: Non-Executive

Independent: Yes

Skills and experience:

Sir Nigel previously served as a British diplomat

and has deep knowledge of international politics,

strategy, regulation and communication. He holds

an MA from Balliol College, University of Oxford,

where he is now an Honorary Fellow. He joined the

Diplomatic Service in 1976 and served in Brussels,

Moscow, Washington and in a wide range of policy

roles in London. He served as British Ambassador

to the United States (2007-12) and European Union

(2000-03) and as Foreign Policy and Defence

Adviser to the Prime Minister (2003-07). Since

leaving the Diplomatic Service in 2012 he has

served on a wide range of corporate and

not‑for‑profit boards. The extensive range of skills

and experience that he brings, along with his

commitment to Oxford Instruments’ sustainability

agenda, is a good fit with the Group’s requirements

and particularly benefit his role as Chair of the

Sustainability Committee.

Sir Nigel was previously a Non-Executive Director

and Chair of the Safety, Environment and

Sustainability Committee at Royal Dutch Shell plc

(now Shell plc).

External appointments:

Non‑Executive Director of Invesco Ltd.

Senior Adviser to Tanium, a cyber security

company.

Senior Adviser to the Universal Music Group.

Chair of the Royal Institute of International Affairs

(Chatham House).

Visiting Professor at King’s College, London.

S A N R

Professor Sir Richard Friend

Non-Executive Director

Appointed to the Board: September 2014

Executive/Non-Executive: Non-Executive

Independent: Yes

Skills and experience:

Professor Sir Richard is in the Department of

Physics at the University of Cambridge and has

considerable experience both within academia

and also the world of business. He has pioneered

the physics, materials science and engineering of

semiconductor devices made with carbon-based

semiconducting polymers. His expertise is

reflected in the insights and constructive

challenges he brings to the boardroom.

Professor Sir Richard is a Fellow of the Royal

Society and of the Royal Academy of Engineering

and a Foreign Member of the US National

Academy of Engineering and he has previously

served as a council member of The Engineering

and Physical Sciences Research Council.

External appointments:

Director of Research at the University of

Cambridge, and a Fellow of St. John’s College.

Non-Executive Director of Cambridge Photon

Technology Limited.

Non‑Executive Director of Eight19 Limited.

Non‑Executive Director of Helio Display Materials

Limited.

A N

Changes to the Board

anditsCommittees

During the financial year and up to the date

of signing of the Report and Financial

Statements, the composition of the Board

andits Committees changed as follows:

•

Steve Blair and Thomas Geitner resigned

as Non-Executive Directors on

21September 2021

•

Alison Wood assumed the role of

SeniorIndependent Director on

21September2021 (succeeding Steve

Blair who previously held this role)

•

Nigel Sheinwald was appointed as a

Non-Executive Director and Chair of the

Sustainability Committee on

22September2021

•

Neil Carson, Alison Wood, Mary Waldner

and Richard Friend joined the

Sustainability Committee on

2November2021

Sarah Harvey

Company Secretary

Sarah became the Company Secretary

inAugust 2021. She is an Associate of the

Chartered Governance Institute. Before

joining Oxford Instruments, Sarah held

company secretarial roles at intu properties

plc, HSBC Holdings plc, BP plc and PwC

Legal LLP.

Oxford Instruments plc | Report and Financial Statements 2022

Board Leadership and Company Purpose

Corporate Governance Statement

for the year ended 31March 2022

This Corporate Governance Statement, along with the Governance Report as a whole, details how the Group has applied the

principles and complied with the relevant provisions of the UK Corporate Governance Code 2018 (the “Code”) and other relevant

requirements to which it is subject, such as the Financial Conduct Authority’s Listing Rules and Disclosure Guidance and

Transparency Rules, during the financial year ended 31 March 2022.

This Corporate Governance Statement, as required by the Disclosure Guidance and Transparency Rules, forms part of the

Directors’Report and has been prepared in line with the Code, which can be found on the website of the Financial Reporting

Councilat www.frc.org.uk. The structure of the Governance Report largely aligns with the structure of the Code in order to most

effectively demonstrate how its principles have been applied.

During the financial year ended 31 March 2022, the Board considers that it has complied with the provisions of the Code, except

thatdedicated workforce engagement to explain how executive remuneration aligns with wider company pay policy did not take

place during the financial year. A session of this nature has been arranged to take place during July 2022, post the publication of

the2022 Directors’ Remuneration Report, and will be hosted by the Chair of the Remuneration Committee, Alison Wood.

Whilst the specific disclosures required by Disclosure Guidance and Transparency Rule 7.2 are met in more depth throughout the

Report and Financial Statements, by way of reference, these can be found as follows:

•

A description of the main features of our internal control and risk management systems in relation to the financial reporting

process can be seen on pages 77 to 79.

•

Share capital information can be found in the Directors’ Report on page 144.

•

Details of the composition of the Board and its Committees can be found on pages 90 and 91.

•

Our Board diversity policy is described on page 109.

Board approval of the Corporate Governance Statement

This separate Corporate Governance Statement is approved by the Board and signed on behalf of the Board by its Chair and

Company Secretary.

Neil Carson

Chair

Sarah Harvey

Company Secretary

13 June 2022

Effective Board

The primary function of the Board is to

promote the long-term sustainable

success of the Group, to generate and

preserve value and to contribute to wider

society. Our Board equips itself to achieve

this by utilising good governance practices

and it comprises Directors who possess

the necessary skills, knowledge and

experience to provide effective leadership.

The Board’s approach to governance is

explained throughout this Governance

Report, on pages 88 to 146, and each

Director’s biographical information is

setout in the Board biographies on

pages90 and 91.

Purpose, strategy and

stakeholders

Our core purpose is to support our

customers in addressing some of the

world’s most pressing challenges,

enabling a greener, healthier, more

connected, advanced society for all.

The Board is responsible for establishing

our purpose. It is also responsible for

setting the strategy which will deliver in

line with the purpose, and which is

underpinned by our values, culture and

how we do business.

For more information on our purpose, see

pages 2 and 3 and for more information

on our strategy, see pages 23 and 24.

To ensure that it fulfils its obligations to its

shareholders and wider stakeholders,

theBoard activity engages with these

groups in order to understand their needs

and how delivery of our strategy impacts

and delivers value for them.

For more information on our approach to

shareholder and stakeholder

engagement, see pages 26 to 33 and 96.

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

Division of Responsibilities

Our governance structure

The below structure summarises our approach to governance throughout the organisation. The Board is ultimately responsible for

having oversight of and providing leadership to the Group. Our governance structure demonstrates how the Board is supported in

carrying out its responsibilities. It is particularly supported by its Committees, the Management Board and the work of various

internal forums comprised of senior management.

Nomination CommitteeAudit and Risk Committee Remuneration Committee Sustainability Committee

Board of Directors

Management Board

Senior management: Internal forums

Social

Energy policy and carbon footprint Culture, values and engagement Supply chain responsible sourcing

Pollution, water and waste Inclusion and belonging Regulatory and export compliance

Shipping and travel policy Health, safety and wellbeing

Financial sustainability and tax transparency

Product life cycle management policy Community impact Data protection, privacy and data security

Environmental reporting requirements Next generation talent and investment in people Modern slavery

Ethical business practices

Board diversity

Executive and wider workforce remuneration

Climate change business impact risk assessment

Environment Governance

Board of Directors

•

The role of the Board is to promote the long-term sustainable success of

theCompany, generating value for shareholders and contributing to

wider society

•

Responsibilities of the Board are documented within its schedule of

reserved matters which form part of its governance reference materials

which are reviewed and amended by the Board periodically

•

Delegates certain matters to its Committees and the day-to-day

running of the business to the Executive Directors and Management

Board

•

Collectively responsible for engagement with the workforce

Management Board

•

Responsible for the day-to-day running of the business of the Group,

where delegated by the Chief Executive

•

Focuses on Group-wide performance, strategy and risk management

•

Meets at least monthly

Board Committees

•

Comprised of Non-Executive Directors and meet the independence

requirements set out in the UK Corporate Governance Code 2018

•

Four dedicated Committees: Audit and Risk, Nomination, Remuneration

and Sustainability

•

A summary of the key responsibilities of each Committee is set out in

their respective reports included within this Report and Financial

Statements

•

Responsible for a range of matters specifically delegated by the

Board,as set out in their respective terms of reference which are

reviewed on an annual basis and can be found on our website at:

https://www.oxinst.com/investors-content/advisers-and-company-

secretary

Senior management: Internal forums

•

Report to the Management Board either directly or indirectly

•

Lead internally on delivering the objectives delegated by management

as well as workstreams which encompass our sustainability strategy

C D

Oxford Instruments plc | Report and Financial Statements 2022

Division of Responsibilities continued

Responsibilities of the Chair, Chief Executive and Senior Independent Director

The responsibilities of the Chair, Chief Executive and Senior Independent Director are documented within the Board’s governance

reference materials which are reviewed and amended by the Board on a periodic basis. A high-level summary of these

responsibilities is set out below.

Chair Chief Executive Senior Independent Director

•

Leads the Board

•

Promotes high standards of

governance and ensures the Board

is effective in directing the Company

•

Ensures that the Board has effective

decision-making processes and

applies appropriate challenge to

major proposals

•

Sets the agenda of the Board

•

Facilitates participation and

engagement by all Directors in

meetings

•

Day-to-day running of the business

of the Group

•

Leads the Management Board

•

Proposes and implements the

strategy

•

Acts as a sounding board to the

Chair and supports delivery of their

objectives

•

Leads the evaluation of the Chair

on behalf of the other Directors

•

Available to the Company’s

shareholders

Directors’ continuous development and access to advice

The Chair is responsible for ensuring that all of the Directors are appropriately briefed on matters arising at Board meetings and that

they have full and timely access to accurate and relevant information. To enable the Board to discharge its duties, all Directors

receive sufficient information, including briefing papers distributed in advance of their meetings. The Committees of the Board have

access to sufficient resources to discharge their duties, including external advisers and access to internal resources and personnel.

Where they judge it to be necessary to discharge their responsibilities, Directors may obtain independent professional advice at the

Company’s expense. All Directors also have access to the advice of the Company Secretary, who is responsible for advising the

Board on all governance matters.

For information regarding the development activities undertaken by the Board during the year, see the Board professional

development section on page 100.

Board and Committee meetings and attendance

The table below sets out the number of meetings attended by each Director during the year ended 31 March 2022, of those which

they were required and eligible to attend.

This includes a number of ad hoc meetings scheduled in relation to specific, time‑sensitive matters such as the terminated

potentialoffer for the Company during the year. The Directors also held a number of meetings without the Executive Directors

present, both with and without the external auditor in attendance. As noted in the Committee reports included within this Report

andFinancial Statements, Directors who are not members of the respective Committees may be invited to join meetings as regular

or ad hoc attendees.

Director Board

Audit and

Risk Committee

Nomination

Committee

Remuneration

Committee

Sustainability

Committee

Neil Carson 10/10 N/A 3/3 4/4 3/3

Ian Barkshire 10/10 N/A N/A N/A N/A

Gavin Hill 10/10 N/A N/A N/A N/A

Alison Wood 10/10 4/4 3/3 4/4 3/3

Mary Waldner 10/10 4/4 3/3 4/4 3/3

Richard Friend 10/10 4/4 3/3 4/4 3/3

Nigel Sheinwald

5/5 2/2 1/1 2/2 3/3

Steve Blair

4/4 1/1 2/2 2/2 N/A

Thomas Geitner

4/4 1/1 1/2 2/2 N/A

1. Appointed to the Board on 22 September 2021.

2. Resigned from the Board with effect from the conclusion of the AGM on 21 September 2021.

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

Board priorities during the year

The table below summarises some of the highlights from the Board’s key areas of focus and discussion during the financial year.

Formore information regarding the key areas of focus for the Committees of the Board, please see their respective reports as

included within this Report and Financial Statements.

Strategy and

performance

•

Annual dedicated strategy review and technology strategy session

•

Regular reviews of business development activities and acquisition proposal pipeline

•

Acquisition of WITec Wissenschaftliche Instrumente und Technologie GmbH

•

In-depth review of strategy supported by external advisers

•

Considered the terminated potential offer for the Company

Finance, reporting,

risk management,

andcontrols

•

Monitored progress against the 2021/22 financial plan and reviewed and approved the

2022/23 financial plan

•

Updates on tax and treasury matters

•

Approved the Report and Financial Statements, half-year results and trading updates

•

Considered and approved the proposed interim and final dividend payments

•

Developing our approach to reviewing climate-related risks and opportunities

Operations

•

Received regular operational updates

•

Monitored performance and provided challenge in key areas of operations, such as health

and safety, operational excellence, human resources, innovation and business development

Leadership

andpeople

•

Appointment of Non-Executive Director with capability and expertise to Chair the new Board

Sustainability Committee

•

Commenced appointment process, seeking to recruit a further female Non-Executive Director

with specific capabilities and experience

•

Assessed current composition of Board including tenure, skills, experience and diversity

characteristics, in order to determine approach to future Board composition

•

Continued focus on organisational capability and succession planning within senior

leadership teams and across the organisation

•

Reviewed the Gender Pay Gap Report 2021 ahead of its publication

Governance

•

Participated in an external Board effectiveness review led by Round Governance Services

•

Consideration of views of key stakeholders and impact of decisions on them, including

reviews of shareholder feedback as collated by external advisers

•

Dedicated workforce engagement activities

•

Regular meetings without the Executive Directors present, both with and without the external

auditor in attendance

Sustainability and

climate-related

matters

•

Established formal Sustainability Committee and implemented the necessary formalities

inorder to ensure its smooth future operation

•

Development of sustainability strategy, including determining the guiding principles to

beused when setting targets in relation to the Group’s sustainability goals and

implementation plans

Oxford Instruments plc | Report and Financial Statements 2022

Division of Responsibilities continued

Stakeholder engagement

The Board is committed to developing

itsunderstanding of the views of its key

stakeholders. As noted earlier in this

Report and Financial Statements, in some

instances the Board engages directly with

stakeholders but there is also significant

engagement by senior management and

throughout the Company. The Board

receives reports and updates on such

engagement and the views and feedback

gathered from stakeholders is used to

inform discussion and decision-making.

Please see page 26 for the Board’s

Section 172(1) statement and pages 26 to

33 for the Engaging with our stakeholders

section, which includes information which

demonstrates how the Board has had

regard to the Section 172(1) (a) to (f)

factors.

In line with the recommendations of

theCode, additional information

regarding the Board’s approach to

engagement with two of its key

stakeholders – shareholders and

workforce – is included below.

Shareholder engagement

The Board recognises the importance of

engaging with shareholders in order to

best understand their views on, amongst

other things, governance-related matters

and the Company’s performance against

its strategy.

During the year, the Chair, Senior

Independent Director, Remuneration

Committee Chair and Executive Directors

all directly engaged with a range of

shareholders, including both virtual and

in-person meetings. All current Directors

attended the 2021 AGM, which also

provided an opportunity to meet

withshareholders.

Topics discussed with shareholders

during the year included the Company’s

full and half‑year financial results,

strategy, Board diversity, implementation

of the Directors’ Remuneration Policy and

the terminated potential offer for the

Company during the year.

The Board as a whole receives updates

regarding the nature and outcome of

meetings and engagement by certain

Directors with the Company’s

shareholders.

Workforce engagement

The Board as a whole is responsible

forengagement with the workforce.

Theyusevarious methods to develop

their understanding of the views of

employees, so that these can be

meaningfully considered in the Board’s

discussions and decision-making.

TheBoard considers that this approach

isparticularly effective as it allows each

ofthe Directors to gain a first‑hand

understanding of the concerns and

opinions of employees and offers

flexibility in terms of the nature, volume

and timing of engagement activities.

Inparticular, it supports agility of

engagement, as they can swiftly act

toinvestigate issues or deep dive into

particular matters, as they feel

appropriate. It also benefits the Board

inshaping a diverse range of informed

Director perspectives on employee

matters.

As noted in the Engaging with our

stakeholders section of this Report and

Financial Statements on pages 29 and

30, the Board has been delighted to take

a number of opportunities to engage

directly with employees. This has

included Neil Carson visiting the Bristol,

UK site and meeting with a broad range

of employees; Richard Friend becoming

astanding attendee at meetings of the

Oxford Instruments Fellows Group; and

each of Alison Wood, Mary Waldner and

Nigel Sheinwald hosting sessions with

employees in the US, Asia and Europe,

respectively. These sessions have

strengthened the Board’s understanding

of employees’ perspectives, which in turn

has shaped more meaningful

consideration of employees as a

keystakeholder.

Post each of these events, the Board has

discussed, as a specific agenda item,

theinsights gained and determined any

appropriate actions. An example which

makes clear the beneficial impact of the

Board’s engagement activities, was

where the Board gained candid feedback

regarding employees’ expectations for

communication and being provided with

an understanding of how they contribute

to the Group’s strategy and success. The

Board shared their recommendations

with the executive team, who in turn

addressed this feedback as part of the

re-energised and restructured approach

to connecting with our employees

launched during the year.

The Board has agreed a comprehensive

programme of engagement activity for

2022/23, which it has already embarked

upon delivering. This programme has been

devised with the specific expertise and

interests of each Director in mind – so as to

make the engagement as meaningful as

possible. Planned activities include site

visits, continuing attendance at meetings

of theOxford Instruments Fellows Group,

employee mentoring, virtual meetings

withemployees in regions and roles across

the world and also a session in which the

Chair of the Remuneration Committee will

meet with employees to discuss and

explain the different components of

executive remuneration and how they are

measured, as well as the alignment of

executive remuneration and Company

reward policy with delivery of the growth

strategy. An update on the outcomes of

these activities will be provided in next

year’s Report and Financial Statements.

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

Board independence

At the conclusion of the financial year,

theBoard comprised seven Directors,

including the Chair (who was considered

independent upon appointment to the

Board), four Non-Executive Directors (all

of whom were considered by the Board

tobe independent upon annual

assessment), and two Executive Directors

(being the Chief Executive and Chief

Financial Officer). The Board is therefore

compliant with the recommendation of

the UK Corporate Governance Code 2018,

that it should be comprised of at least

50% independent Non-Executive

Directors, excluding the Chair. The

Committees of the Board also remained

compliant with the recommendations of

the Code during the year and further

information regarding their membership

can be found within the respective

Committee reports included within this

Report and Financial Statements.

Board independence as of

31March 2022

Data as of 31 March 2022.

Chair

 Executive

Directors

 Independent

Non-Executive

Directors

External commitments

The Board is mindful of the time

commitment required by the

Non-Executive Directors in order to

effectively fulfil their duties. Prior to

appointment, prospective Directors

provide details regarding other roles

andsignificant commitments which may

impact their ability to commit to the

Company. All Directors keep the Board

informed regarding proposed external

appointments or significant commitments

as they arise, with Chair approval

required prior to taking on any additional

external appointment and commitments

monitored to ensure that each Director

has sufficient time to fulfil their

obligations. Each Director’s biographical

information and significant time

commitments are set out in the Board

biographies on pages 90 and 91. Changes

to Directors’ commitments during the year

are noted in the below table.

Conflicts of interest

The Companies Act 2006 states that

Directors must avoid a situation where

they have, or can have, a direct or indirect

interest that conflicts, or possibly may

conflict, with the Company’s interests.

Boards of public companies may

authorise conflicts and potential conflicts,

where appropriate, if permitted by the

Company’s Articles of Association – and

the Company’s Articles of Association do

allow for this.

Directors are required to disclose conflicts

and potential conflicts to the Chair and

the Company Secretary as and when

they arise. When a Director takes on

additional external commitments, they

will discuss the potential position with the

Chair and confirm that, as far as they are

aware, there are no conflicts of interest.

During the year, none of the Directors

declared to the Company any actual or

potential conflicts of interest between any

of his or her duties to the Company and

his or her private interests and/or other

duties, except for the Executive Directors,

who hold the position of Director of the

Company as well as acting as director of

a number of Group subsidiary companies.

The system for monitoring potential

Director conflicts remained effective

throughout the period.

Change in Directors’ commitments

The table below sets out the changes to the external appointments of the Directors which took effect or were confirmed during the

financial year.

Director Change in commitment Effective date of change

Mary Waldner Appointed as Non-Executive Director of Senior plc 1 December 2021

Alison Wood Resigned as Senior Independent Director and Remuneration

Committee Chair of Costain Group PLC

28 January 2022

Appointed as Non‑Executive Director of Galliford Try Holdings plc

1 April 2022

1. Will assume the role of Chair of Galliford Try Holdings plc with effect from 15 September 2022.

Oxford Instruments plc | Report and Financial Statements 2022

Composition, Succession and Evaluation

Appointments to the Board

The Nomination Committee is responsible for leading the process for appointments to the Board.

This process was successfully followed in relation to the appointment of Nigel Sheinwald during the year. We are also currently

pursuing this process in relation to the prospective appointment of a further female Director to our Board.

The process we follow when making new appointments to our Board is set out below.

Director appointment process

Evaluate Board composition and

determine required capabilities of

proposed appointee

Evaluate the Board’s skills, experience, independence, diversity and knowledge

andutilise this to develop a specification which reflects the role and specific

capabilities required.

Advertise role and determine long list

of potential candidates

Advertise the role using open advertising (unless confidential) and by instructing

external executive search consultants with the necessary expertise.

Identify long list ofpotential candidates based on, amongst other things,

experience,capabilities, meritand diversity.

Refine short list of potential

candidates and complete interviews

Determine short list and invite the potential candidates to complete a formal

interviewprocess.

Interview process to be facilitated by various Board members, but specifically the

Chair, Chief Executive and senior management.

Consideration and approval by

Nomination Committee

Nomination Committee to consider the short-listed candidates and feedback

frominterview process from both interviewers and interviewee.

Determine the preferred candidate and recommend their appointment to the Board

forapproval.

Consideration and approval by Board

Board to consider and, if thought fit, approve the proposed appointment of the

preferred candidate.

Market announcement is made by the end of the next working day following the

Board’s decision.

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

Director re-election

In line with best practice and the

Company’s Articles of Association, all

Directors are required to retire from office

at each AGM, in order to be proposed for

re-election by the Company’s

shareholders should they wish to continue

in their role.

At the Company’s 2021 AGM, all current

Directors were re-appointed by

shareholders with majority votes ranging

from 85.62% to 99.99%.

All Directors will retire and seek

re-election at the 2022 AGM apart from

Nigel Sheinwald, who was appointed as a

Director by the Board with effect from

22September 2021 and who will stand

for election by the Company’s

shareholders for the first time. The initial

appointment dates of each Director and

their tenure up to the date of the approval

of this Report and Financial Statements

are set out below.

Having considered the performance and

contribution of each of the Directors, the

Board remains satisfied that they are

operating effectively and continue to

demonstrate commitment to their roles.

As such, the Board will recommend the

election or re-election of each Director at

the AGM.

The biographical information of each

Director, along with the reasons for their

respective election or re-election, can

befound on pages 90 and 91. More

information regarding the Board and the

Director evaluation process is set out on

pages 104 and 105.

Director Appointed

Neil Carson 1 December 2018

Alison Wood 8 September 2020

Richard Friend 1 September 2014

Mary Waldner 4 February 2016

Nigel Sheinwald 22 September 2021

Ian Barkshire 10 November 2015

Gavin Hill 9 May 2016

Case study

Appointment and

induction of

Sir Nigel Sheinwald

as Non-Executive

Directorand Chair of the

Sustainability Committee.

Tailored induction

Nigel Sheinwald was appointed to the Board with effect from 22 September 2021

and, since joining, has undertaken a full and formal induction, tailored to his

individual needs and based on his experience and background. The tailored

induction programme encompassed a comprehensive overview of the Group with

a focus on sustainability matters. The programme comprised a number of

elements, with highlights including:

•

Dedicated session on sustainability with core members of team leading and

driving this agenda internally.

•

One-to-one sessions with the Executive Directors to gain an in-depth

understanding of the business, strategy and financial overview.

•

Sessions with all members of the Management Board, to develop an

understanding of their roles and responsibilities, including those specifically

relating to the Horizon strategy.

•

Site visit to Tubney Woods (NanoScience and Head Office). Accompanied by

Chief Executive, Ian Barkshire, to site visits at High Wycombe (NanoAnalysis

and Magnetic Resonance) and Bristol (Plasma Technology). Virtual briefing with

Andor team, based in Belfast.

•

Meetings with various functional and regional heads including the Company

Secretary, General Counsel, Director of Communications, Group Health, Safety

and Environment Manager, Head of Strategic Sourcing & Operational

Excellence Programme Director, Group IT Director and the heads of the

regional offices in China and the US.

We are delighted to welcome Sir Nigel to the

OxfordInstruments Board. The extensive range of

skills and experience that he brings, along with his

enthusiasm for our sustainability agenda, is a good

fit with the Group’s requirements at this stage in its

growth journey. I look forward to working closely

with Sir Nigel as we continue to support the Group

in achieving its full potential.

Neil Carson

Chair

Oxford Instruments plc | Report and Financial Statements 2022

100

Composition, Succession and Evaluation continued

Board induction programme

The Chair and Company Secretary are

responsible for ensuring that all Directors

receive a full, formal and tailored induction

upon joining the Board. Whilst our

induction programme will be tailored

based on the needs, experience and

background of the individual Director, it

will ensure that they gain a comprehensive

understanding of the Group through

activities including: one-to-one sessions

with the Executive Directors, sessions with

all members of the Management Board,

visits to our sites, meetings with various

functional and regional heads, and the

opportunity to meet with a range of

employees across the business.

The case study on page 101 provides an

illustration of our induction programme in

practice, following the appointment of

Nigel Sheinwald as a Director during the

financial year.

Board professional development

The Board and Committees receive

dedicated training and information on

matters relevant to the Group’s business,

including operational and technological

briefings and updates on legal, regulatory

and governance developments. During

the year, training and updates were

provided by the Company’s remuneration

adviser and external counsel, as well as

internal subject matter experts.

As described in our TCFD statement on

pages 57 to 66, one focus of the Board’s

development during the year was in

respect of climate-related issues. The

Board was educated on these matters in

a range of ways. Through its Audit and

Risk Committee, they gained an

understanding of climate-related risks

and opportunities, with the Head of

Internal Audit and Risk thoroughly

explaining the methodology as well as

the risks and opportunities themselves.

Further, the Sustainability Committee

received updates from the Chief

Executive, senior management and an

external adviser, regarding

climate-related matters such as the

Greenhouse Gas Protocol, Science-Based

Targets initiative, Carbon Disclosure

Project, UN Sustainable Development

Goals and the Task Force on

Climate-Related Financial Disclosures,

amongst other things, as well as an

in-depth overview of the pathway to

achieving net zero, including determining

appropriate targets.

For more information regarding our

approach to Directors’ continuous

development and access to advice,

please see page 94.

Board composition

The Board, via the Nomination

Committee, keeps under continuous

review its composition and that of its

Committees. Their review considers the

balance of the Directors’ skills and

experience as well as their tenure,

independence, time commitment

anddiversity.

As noted in the Report and Financial

Statements 2021, the Board agreed

during the previous financial year that it

would be appropriate to appoint a further

Non-Executive Director to the Board and

this culminated in the appointment of

Nigel Sheinwald on 22 September 2021,

who has also taken up the role of Chair of

the newly established Sustainability

Committee.

As explained in more detail in the report

of the Nomination Committee on pages

106 to 109, the Board is also now

progressing a formal process to appoint a

further female Director to the Board and

intends to appoint a further Director in

light of the future needs of the Board in

terms of skills and experience as well as

diversity characteristics, in light of the

recommendations of the FTSE Women

Leaders Review and the Parker Review.

Board gender diversity

Data as of 31 March 2022.

Tenure of Chair and

Non-Executive Directors

Data as of 31 March 2022.

Female Male

All

Directors

Executive Non-

Executive

Number of Directors

year

1-3

years

3-6

years

6-9

years

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

101

Sir Nigel Sheinwald

Chair of the Sustainability Committee

Q&A with Nigel Sheinwald

What attracted you to take

upthe role of Non-Executive

Director and Chair of the

Sustainability Committee at

Oxford Instruments plc?

Which element of your

induction process did you

enjoymost and why?

Which aspects of your

previous experience do

youfeel are particularly

beneficialto your new role?

I was immediately drawn to the Oxford

Instruments brand, which represents

quality and innovation here in the UK

and around the world. As I looked into

the Company’s track record, I was

enormously impressed by its business

strategy, and its focus on customers and

performance. Initial contacts confirmed

my affinity with the executive leadership

team and the Board. And lastly, I was

attracted to the opportunity to work

closely, as the first Chair of the

Sustainability Committee, with the Board

and wider team in building up the

Company’s sustainability agenda. I have

greatly enjoyed my first nine months,

helping to develop the comprehensive

sustainability strategy which is presented

in this Report and Financial Statements.

As a non‑scientist, I wanted first of all to

get a better understanding of the

Company’s products and technologies,

which was achieved through discussion

with experts within the business and

seeing the processes at first hand at three

of the UK-based sites. But induction is

always about people, and I particularly

enjoyed meeting with a range of

colleagues working in all areas of the

business. I was struck by the sheer

expertise of those I met, and their

inventiveness, for example, in dealing

with the supply chain issues which have

affected Oxford Instruments and many

other companies over the past year.

Two aspects stand out. First, I served on

the Shell plc board for nine years and

throughout that time was a member of

the equivalent Sustainability Committee,

with my three final years as its Chair.

Whilst the two companies are very

different, my familiarity from my time at

Shell with environmental and climate

change issues, health and safety

practices, and other matters causing

societal concern provided very valuable

and relevant background. Second,

having worked in the public sector as

amember of the British Diplomatic

Service for nearly four decades, I am

familiar with geopolitical issues, and

with dealing with governments and

stakeholders on policy issues and

concerns. I hope that experience will be

useful in an international company like

Oxford Instruments when working in

different political and social cultures

and having to deal with a complex

international regulatory environment.

Oxford Instruments plc | Report and Financial Statements 2022

102

Composition, Succession and Evaluation continued

Board skills and experience

Board skills

Chairmanship

Prior FTSE experience

Business and strategy

Strategy development

International business experience

Commercial business development

Business management

Finance

Financial reporting

Financial acumen

Investor relations

Risk management

Governance

Operations and manufacturing

Services and lifecycle revenue

Digital

Sustainability

Technology, science or engineering

Other

People

Workforce engagement

Executive remuneration

People leadership

Board skills, experience and diversity characteristics

The Board is committed to promoting diversity and inclusion, both on the Board and throughout the Group. The Board recognises

that diversity, construed in its broadest sense and including gender, religious and ethnic diversity, disability, sexual orientation, social

and economic backgrounds, age and cognitive and personal strengths, is an important factor in Board and, indeed, operational

effectiveness.

During the year, the Board participated in a process to identify their own skills, experience and diversity characteristics. The results

of this process are set out on the page opposite and have been used to help assess the future needs of the Board, particularly in

determining the ideal attributes of prospective appointees to the Board.

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

103

The Board diversity policy and our plans and progress in line with the recommendations of the FTSE Women Leaders Review and

the Parker Review, respectively, are described in the Nomination Committee Report on pages 106 to 109.

For more information regarding our approach to equality, diversity and inclusion across the Group, please see the Engaging with our

stakeholders section on page 30 and our Sustainability Committee Report on page 52.

Board diversity characteristics

Age

41‑55 2

56–70 5

What is your ethnic group?

White British 7

Were you educated

outside of the UK?

No 6

 Educated inside

and outside of the UK 1

Do you consider yourself to have

adisability defined by the

EqualityAct 2010?

No 7

What is your highest level of

educational attainment?

Level 6 – Bachelor’s degree 3

Level 7 – Master's degree 2

Level 8 – Doctorate or PhD 2

Oxford Instruments plc | Report and Financial Statements 2022

104

Composition, Succession and Evaluation continued

Annual Board evaluation

Review of Board effectiveness

The Board recognises the need for it to

continually monitor and improve its

performance. As such, it carries out either

internal reviews or externally facilitated

Board effectiveness evaluations on a

periodic basis, in order to obtain feedback

which will highlight areas for further

development which will in turn help to

improve effectiveness.

External Board evaluation 2021/22: Process

The Board engaged Round Governance Services to complete an externally facilitated

evaluation during the financial year. Round Governance Services has no connection to

any individual Director and at the time of completing the review, had no other

connection to the Company.

The process was conducted as set out below.

Meeting with Chair and Company Secretary to gain an understanding of the

operation of the Board and to confirm scope of evaluation

External evaluator provided with access to Board and Committee meeting

papers, core governance-related documentation and given a fulsome overview

of how the Board practically operates

External evaluator carried out in-depth, one-to-one interviews with all

Directorsand the Company Secretary

External evaluator completed Board and Committee meeting observation

Evaluation report prepared and findings discussed with Chair and

CompanySecretary

Full evaluation report shared with Board and external evaluator attended

Boardmeeting to present and discuss the findings

Board discussed and agreed actions to be implemented. Action plan prepared

and approved

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

105

External Board evaluation 2021/22: Outcomes and actions

The key findings from the externally facilitated Board effectiveness evaluation concluded that the Company has a small but agile

and well‑functioning Board with an evident cohesiveness and a diversity of thought. It recognised that the Board andits Committees

function well and that all individual Directors contribute meaningfully and demonstrate sufficient commitment to their roles.

The externally facilitated Board effectiveness evaluation also provided a number of suggestions. The Board considered these

recommendations and agreed to work to implement a range of actions set out in a dedicated action plan. Highlights from the

agreed action plan are summarised below.

Theme Action(s)

Board composition and

succession planning

Continue to consider Board diversity in work on succession planning, particularly

in relation to gender and diversity per the recommendations of the FTSE Women

Leaders Review and Parker Review.

Senior management succession

planning

Ensure that sufficient consideration is given to succession planning and processes

at senior management level and continue to build relationships with individuals

identified as potential successors. In line with the recommendations of the FTSE

Women Leaders Review, continue to consider and work to improve the gender

balance of senior leadership.

Board development programme Devise and implement a formal Board development programme to help to further

ensure that Directors are fully briefed on matters relevant to the Group’s business,

including operational and technological briefings and updates on legal, regulatory

and governance developments.

Workforce engagement plan Continue to work to deliver the workforce engagement plan, specifically aiming to

meet a broad range of employees at all levels and roles across the Group, globally.

Include a specific agenda item at Board meetings periodically to share feedback

andlearnings from the sessions.

Oxford Instruments plc | Report and Financial Statements 2022

106

Nomination Committee Report

Dear Shareholder,

I am pleased to present the report of the

Nomination Committee for the year

ended 31 March 2022.

The Committee has enjoyed a busy year,

with a particular focus upon Director

recruitment, a review of our approach to

diversity and an in-depth assessment of

the Board’s composition and future

needs, in addition to reviewing the

leadership needs within the organisation

and considering succession for Board and

Management Board positions.

After pursuing a thorough appointment

process, we were delighted to

recommend that the Board appoint

NigelSheinwald as a Director with effect

from 22 September 2021.

In particular, we felt that Nigel’s skills and

experience would complement and

supplement those of the current Board

and that his expertise would equip him

well to lead the newly formed

Sustainability Committee. We have also

commenced and are now progressing a

process to appoint a further female

Director to our Board.

In line with our diversity aspirations,

weopted to recruit from a female‑only

candidate pool, also bearing in mind the

specific skills, experience and capabilities

required of our Board now and in the

future. We hope to formalise this

proposed appointment imminently and,

as required, will make the necessary

market announcement as soon as such

process has been concluded. More

information regarding our Director

appointment process can be found on

page 98.

We have also reviewed our approach to

diversity, particularly in light of the

recommendations of the FTSE Women

Leaders Review and the Parker Review.

We are committed to meeting the targets

and recommendations set out in these

respective reviews, at Board level, for

senior management and further

throughout the organisation, as

appropriate. Our Board diversity policy

and our plans and progress in line with

the recommendations is explained on

page 109, but in short, we aim to make a

further Board appointment which will

help to address this.

Ahead of embarking on further

recruitment activity, we felt it prudent to

take the opportunity to reassess the

Board’s composition and future needs,

bearing in mind in particular the current

tenure, skills, experience and diversity

characteristics of our Board. This has

proved particularly helpful in determining

the ideal attributes of prospective

appointees to the Board.

I will be available at the AGM to answer

any questions you may have regarding

the work of the Committee.

Neil Carson

Chair of the Nomination Committee

13 June 2022

The Committee has enjoyed a busy year, with a

particular focus upon active Director recruitment, a

review of our approach to diversity and an in-depth

assessment of the Board’s composition and future

needs.

Neil Carson

Chair of the Nomination Committee

Governance

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107

Committee membership and attendance

The members of the Nomination Committee during the financial year and their dates of

appointment to or resignation from the Committee, are as set out below.

Current members

Date of appointment

Neil Carson (Chair) 1 December 2018

Mary Waldner 4 February 2016

Richard Friend 1 September 2014

Alison Wood 8 September 2020

Nigel Sheinwald 22 September 2021

Members who resigned during the financial year, upon stepping down from

theBoard

Date of resignation

Steve Blair 21 September 2021

Thomas Geitner 21 September 2021

1. Became a member of the Committee upon joining the Board during the year.

For details of attendance at Committee meetings during the financial year, please see the

Board and Committee meeting attendance table on page 94.

The biographies of all Committee members are available in the Board biographies section on

pages 90 and 91.

Key responsibilities

•

Review the structure, size and composition (including the skills, knowledge, experience and

diversity) of the Board

•

Ensure plans are in place for orderly succession to Board and Management Board

positions, and oversee the development of a diverse pipeline for succession, taking into

account the challenges and opportunities facing the Company, and the skills and expertise

needed on the Board in the future

•

Review the leadership needs of the organisation, both Executive and Non-Executive,

withaview to ensuring the continued ability of the organisation to compete effectively

inthe marketplace

•

Be responsible for identifying and nominating for the approval of the Board, candidates to

fill Board vacancies as and when they arise

•

Before any appointment is made by the Board, evaluate the balance of skills, knowledge,

experience and diversity on the Board and, in the light of this evaluation, prepare a

description of the role and capabilities required for a particular appointment and the time

commitment expected

•

Ensure that, on appointment to the Board, Non-Executive Directors receive a formal letter

of appointment setting out clearly what is expected of them

•

Review the results of the Board performance evaluation process that relate to the

composition of the Board and succession planning

•

Review annually the time required from Non-Executive Directors

•

The Committee shall also make recommendations to the Board concerning: changes

needed to the succession planning process, if required; suitable candidates as new

Directors and succession for existing Directors; membership of the Audit and Risk,

Remuneration and Sustainability Committees; the re-appointment of Non-Executive

Directors at the conclusion of their specified term of office; the re‑election by shareholders

of Directors; any matters relating to the continuation in office of any Director at any time;

and the appointment of any Director to executive or other office

Oxford Instruments plc | Report and Financial Statements 2022

108

Nomination Committee Report continued

Committee membership, skills

and experience

In line with the Committee’s terms of

reference, which are available on our

website at: www.oxinst.com/investors-

content/advisers-and-company-

secretary the Committee is comprised of

a majority of independent Non-Executive

Directors and is chaired by the Chair of

theBoard, Neil Carson.

During the financial year, the membership

of the Committee changed as noted

previously, with Steve Blair and Thomas

Geitner resigning from the Committee

upon stepping down from the Board on

21September 2021 and Nigel Sheinwald

becoming a member of the Committee

upon joining the Board on

22September2021.

Meetings

The Nomination Committee holds a

minimum of one meeting annually, as

required under its terms of reference, and

this year held three meetings. Regular

attendees at meetings include the Chief

Executive, Chief Financial Officer and

Chief HR Officer. The Company Secretary

is the secretary to the Committee.

Committee effectiveness review

During the year, an external evaluation of

the effectiveness of the Committee was

conducted as part of the wider review of

the Board and the Board Committees.

More information can be found on pages

104 and 105. The review found that the

Committee functions effectively and that

matters are dealt with appropriately.

How the Committee spent its

time during the year ended

31March 2022

The responsibilities of the Committee are

set out in its terms of reference, which

were last updated in January 2022 and

which are summarised on page 107.

Whilst these responsibilities guide the

operation of the Committee and shape

itsagenda, it will also consider other

matters as requested by the Board and

as relevant to its remit.

The key activities and areas of focus for

the Committee during the year are as set

out below.

•

Leading the recruitment process for a

new Non-Executive Director who

would be well suited to establishing

and leading the Board’s Sustainability

Committee. This resulted in the

appointment of Nigel Sheinwald.

•

Commenced a process to appoint a

further female Director to our Board,

with a specific set of skills and

experience to complement the current

and future needs of the Board.

•

Reviewed our approach to diversity,

particularly in light of the

recommendations of the FTSE Women

Leaders Review and the Parker

Review. Agreed to appoint a further

Director in recognition of the need to

enhance our Board diversity.

•

Took the opportunity to reassess the

Board’s composition and future needs,

bearing in mind in particular the

current tenure, skills, experience and

diversity characteristics of our Board.

•

Reviewed the succession plans for

Board and Management Board

positions.

Board composition and

succession planning

The Nomination Committee keeps under

continuous review the composition of the

Board and its Committees. During the

year, they took the opportunity to

complete an in-depth reassessment of

the Board’s composition and future

needs, bearing in mind in particular the

tenure, independence, time

commitments, skills, experience and

diversity characteristics of our current

Directors. This has proved particularly

helpful from a succession perspective,

particularly in determining the ideal

attributes of prospective appointees to

the Board.

As noted in the Report and Financial

Statements 2021, the Board agreed

during the previous financial year that it

would be appropriate to appoint a further

Non-Executive Director to the Board and

this culminated in the appointment of

Nigel Sheinwald on 22 September 2021,

who has also taken up the role of Chair of

the newly established Sustainability

Committee.

As explained earlier in this report, the

Committee is currently progressing with a

process to appoint a further female

Director to the Board and also intends to

appoint a further Director in light of the

future needs of the Board in terms of skills

and experience as well as diversity

characteristics, in light of the

recommendations of the FTSE Women

Leaders Review and the Parker Review.

The Nomination Committee engaged

Russell Reynolds, an executive search

agency, to assist with both Non-Executive

Director appointments. The Company and

the Directors have no other connection

with Russell Reynolds.

In addition to reviewing Board

composition, the Nomination Committee

oversees the succession of the

Management Board and has consistent

opportunities to meet with the

Management Board and other members

of the wider senior leadership through

their attendance at Board meetings to

report on their respective business areas

or particular projects and through

workforce engagement activities.

Governance

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109

Board diversity

The Board is committed to promoting

diversity and inclusion, both on the Board

and throughout the Group. The Board

recognises that diversity, construed in its

broadest sense and including gender,

religious and ethnic diversity, social and

economic backgrounds, age and

cognitive and personal strengths, is an

important factor in Board and, indeed,

operational effectiveness. The Board’s

diversity policy considers a range of

characteristics, namely age, disability,

social and educational backgrounds, as

well as gender and ethnicity, and includes

a commitment to increasing female and

ethnic representation on the Board and

throughout the wider organisation.

At the end of the financial year, the Board

had 29% female representation and no

ethnically diverse representation, not yet

meeting the recommendations of the

FTSE Women Leaders Review (40%

female representation by the end of 2025)

and the Parker Review (at least one

Director of colour by the end of 2024) and

falling short of the recommendations of

the Hampton‑Alexander Review (33%

female representation by the end of

2021). The Board is committed to

addressing this and the manner in which

it aims to do so is as follows:

•

Aiming for 33% female representation

on the Board, with the appointment of

a further female Director. The process

to make such appointment is currently

in progress.

•

Aiming for 40% female representation

on the Board by March 2025 (in line

with the end of our financial year) but

no later than the end of 2025.

Toachieve this, we intend to appoint a

further female Director in addition to

the above. Anticipating the likely

departure of Richard Friend and

MaryWaldner as Directors in July2023

and 2024 respectively (inline with best

practice in relation to their tenure and

independence) this will mean that our

Board is comprised of seven Directors

– three female and four male – and

reflecting 43% female representation.

•

Aiming for the Board to include at least

one Director of colour by the end of

2023, but no later than the end of

2024. Whilst all appointments will be

made on merit, as part of future

Director appointments we are

committed to taking the opportunity to

increase the diversity of the Board.

We have also met the recommendation

of the FTSE Women Leaders Review to

have at least one woman in the role of

Chair or Senior Independent Director,

and/or in the Chief Executive or Chief

Financial Officer role by the end of 2025,

as Alison Wood currently serves as our

Senior Independent Director, having taken

up this role post the conclusion of the

AGM on 21 September 2021.

Nevertheless, we will keep this under

review as part of our succession planning

responsibilities.

For information regarding our approach

to diversity within the wider organisation,

please see our Sustainability Committee

Report on page 52.

Any future appointments to the Board

willcontinue to be based on merit and

objective criteria to ensure that the best

individuals are considered and appointed

to the role. Wherever possible, the search

pool will be extensive and where an

executive search consultancy is used,

wewill only engage with those firms that

have adopted the “Voluntary Code of

Conduct for Executive Search Firms”.

Thisincludes Russell Reynolds, who we

have previously engaged.

Oxford Instruments plc | Report and Financial Statements 2022

110

Audit and Risk Committee Report

Dear Shareholder,

I am pleased to present the report of the

Audit and Risk Committee for the year

ended 31 March 2022. The Committee

has continued to demonstrate its critical

role as part of the Group’s governance

framework, monitoring the integrity of the

Financial Statements of the Company

and providing oversight and challenge

across the financial reporting processes

and internal control environment.

During the year, the Committee’s work

focused particularly on the Group’s

approach to several key areas of

governance whilst continuing to deliver its

core remit. Specific areas of focus included:

•

Developing the methodology for

identifying, reporting and acting on

climate-related risks and opportunities.

This has been co-ordinated with the

Sustainability Committee to ensure that

the risk management element of TCFD

reporting is appropriate, consistent with

the wider framework for enterprise risk

management and that it has been

embedded within the Group.

•

Delivery of the internal audit plan

across a broad range of key risk areas.

This included the first audits at three UK

business units as part of the UK export

controls internal compliance

programme and a sales process review

at the Asylum business unit, focused on

the management of contractual risk.

•

Further, the Committee maintained

oversight over a significant change to

the original audit plan to deliver an ad

hoc project. The work focused on

de-risking the routes to market (i.e. the

use of third-party distributors in Asia)

at one of the principal operating

business units and on identifying

process improvement opportunities in

trade compliance.

•

Developing the approach to internal

audit – driving audit efficiency through

better utilisation of remote auditing

options with the additional objective

ofa significant reduction in air travel

requirements compared to

pre-pandemic levels.

•

The review of papers and supporting

calculations and data relating to the

significant Audit and Risk Committee

judgements and estimates during the

financial year ended 31 March 2022.

Throughout the next financial year, the

Committee intends to retain its focus on

assessing the level of assurance provided

over key financial controls whilst also

addressing a range of risk-based audit

areas to include a fraud risk review in

keytransaction cycles such as sales

andpurchasing. As regards new or

non-recurring subjects, the Committee

will also review the plans of the internal

audit function, in order to implement

recommendations arising from

developments on the reform of the UK’s

corporate governance, audit and

reporting regime, as appropriate.

I will be available at the AGM to answer

any queries you may have regarding the

work of the Committee. Should you have

any questions or comments, I would be

delighted to hear from you.

Mary Waldner

Chair of the Audit and Risk Committee

13 June 2022

During the year, the Committee has continued to

demonstrate its integral role as part of the Group’s

governance framework, monitoring the integrity of the

Financial Statements of the Company and providing

oversight and challenge across the financial reporting

processes and internal control environment.

Mary Waldner

Chair of the Audit and Risk Committee

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

111

Committee membership and attendance

The members of the Audit and Risk Committee during the financial year and their dates of

appointment to or resignation from the Committee, are as set out below. All members of the

Committee are considered to be independent.

Members

Date of appointment

Mary Waldner (Chair) 4 February 2016

Richard Friend 1 September 2014

Alison Wood 8 September 2020

Nigel Sheinwald 22 September 2021

Members who resigned during the financial year, upon stepping down from

theBoard

Date of resignation

Steve Blair 21 September 2021

Thomas Geitner 21 September 2021

1. Became a member of the Committee upon joining the Board during the year.

For details of attendance at Committee meetings during the financial year, please see the

Board and Committee meeting attendance table on page 94.

The biographies of all Committee members are available in the Board biographies section

onpages 90 and 91.

Committee membership, skills

andexperience

In line with the requirements of the UK

Corporate Governance Code and the

Committee’s terms of reference, which are

available on our website at: www.oxinst.com/

investors-content/advisers-and-company-

secretary the Committee is comprised of

independent Non-Executive Directors and,

asa whole, has competence relevant to the

sector in which the Company operates.

MaryWaldner, the Committee Chair, has

specific, recent and relevant financial

experience as the Chief Financial Officer of

Lloyd’s Register, a Fellow of the Chartered

Institute of Management Accountants and has

also held a number of senior executive

financial roles with major public companies.

During the financial year, the membership of

the Committee changed as noted above, with

Steve Blair and Thomas Geitner resigning from

the Committee upon stepping down from the

Board on21September 2021 and Nigel

Sheinwald becoming a member of the

Committee upon joining the Board on

22September 2021.

Key responsibilities

•

Monitor the integrity of the Financial Statements of the Company and Group and review

and report to the Board on significant financial reporting issues and judgements

•

Review statements relating to financial performance and narrative reporting, including any

climate‑related financial disclosures

•

Review the Company’s internal control and risk management systems

•

Review the arrangements relating to compliance, speaking up and fraud

•

Monitor and review the effectiveness of the Company’s internal audit function

•

Advise the Board on the appointment, re-appointment and removal of the external auditor,

agree their terms of engagement and monitor their independence and objectivity

•

Review the effectiveness of the external audit process

•

Develop and implement the policy on the engagement of the external auditor to supply

non-audit services

Oxford Instruments plc | Report and Financial Statements 2022

112

Audit and Risk Committee Report continued

Meetings

The Audit and Risk Committee holds a minimum of three meetings annually, as required under its terms of reference, and this year

held four meetings. Regular attendees at meetings include the Chief Executive, Chief Financial Officer, Director of Accountancy, Tax

and Treasury, Head of Risk and Assurance and BDO LLP, our external auditor. Other attendees who attend as required include the

Chair and members of senior management. The Company Secretary is the secretary to the Committee.

Committee effectiveness review

During the year, an external evaluation of the effectiveness of the Committee was conducted as part of the wider review of the

Board and the Board Committees. More information can be found on pages 104 and 105. The review found that the Committee

functions effectively and that matters are dealt with in a thoughtful and rigorous manner.

How the Committee spent its time during the year ended 31 March 2022

Structured programme of activities

The responsibilities of the Committee are set out in its terms of reference, which were last updated in January 2022.

The Committee sets a structured programme of activities for the year, as developed from its terms of reference and including

standing items for their consideration at certain meetings. In addition, it considers specific risk areas identified for detailed review in

light of the evolving risk environment; assurance activities relating to key non‑financial areas such as new product innovation, IT and

cyber-security, people and health and safety; and any other matters that arise during the year.

The main areas considered at each Committee meeting during the year are set out below.

Matters considered

June

2021

September

2021

November

2021

January

2022

Half‑year and full‑year Financial Statements including appropriateness of

accounting policies, representation letters, associated narrative reporting

(Report and Financial Statements) and market announcements

• •

External auditor year-end audit report and interim review report • •

Significant accounting estimates and judgements • •

Going concern • •

Viability Statement •

Group risk register • • • •

Principal risks and uncertainties • •

Climate risk and opportunity registers (including consideration of

TCFDdisclosures)

• •

Adequacy of internal control environment including internal control

framework and risk management processes

•

Internal audit update (specific theme addressed at each meeting, per the

internal audit plan for the financial year)

• • • •

Internal audit plan •

Effectiveness of internal audit function •

External auditor strategy for year-end audit •

External auditor terms of engagement and fees •

External auditor independence and objectivity • •

Effectiveness of external audit process •

Non-audit services carried out by external auditor •

Litigation register • •

Treasury arrangements •

Tax arrangements and Group tax strategy •

Systems and controls for detecting fraud and the prevention of bribery

and corruption

•

Whistle-blowing arrangements •

Committee effectiveness review •

Committee terms of reference •

Committee members and external auditor closed meeting • • •

Financial Statements and reporting

During the year, the Committee continued to monitor the financial reporting process of the Group. As part of the year‑end reporting

process the Committee reviewed in detail this Report and Financial Statements in respect of the year ended 31 March 2022 and

concluded that, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders

to assess the Company’s position, performance, business model and strategy. The Board recognises the important role which the

Committee plays in making such assessments.

Governance

Strategic Report Company InformationFinancial Statements

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113

Significant Audit and Risk

Committee judgements and

estimates during the financial

year ended 31March 2022

The Committee considered reports from

management on accounting policies,

current accounting issues and the key

judgements and estimates in relation to

this Report and Financial Statements. It

assessed whether suitable accounting

policies had been adopted and the

reasonableness of the judgements and

estimates that had been made by

management. Below are summaries of

those significant issues which received

particular focus from the Committee in

relation to the Financial Statements for

the year ended 31March 2022 and how

these issues were addressed.

Revenue recognition

Revenue is recognised in accordance with

IFRS 15 Revenue from Contracts with

Customers. Revenue is recognised using

principles-based criteria with the timing

of recognition dependent on fulfilment of

the performance conditions in the

customer contract. The Group applies

prescriptive rules relating to revenue

recognition that are appropriate to both

products and services. With the adoption

of IFRS 15 principles, revenue recognition

is less subjective than in the past,

although revenue cut‑off remains an area

of audit focus. The Committee has

received no reports of any significant

error in revenue recognition.

Goodwill arising on the acquisition

of WITEC

The Group completed the acquisition of

Wissenschaftliche und Instrumente

GmbH (“WITEC“) on 31 August 2021.

Akeyaccounting judgement relating

tothe acquisition is the calculation of

goodwill. Goodwill is the difference

between the total consideration payable

and the fair value of the assets and

liabilities acquired. The Audit and Risk

Committee has reviewed papers

prepared by Group finance and by

BDOrelating to the transaction. The

Committee considers that the basis of the

calculation of goodwill is reasonable and

that the disclosures set out in note 6 to

the Financial Statements are appropriate.

UK defined benefit pension scheme

Under IAS 19, the Group is required to

recognise in the balance sheet, any

difference between the net present

valueof the pension scheme’s liabilities

and the fair value of its assets as at

31March2022 as either a pension

scheme asset or deficit. IAS 19 also

requires the Group to appoint an external

actuary to value its obligations to

members of its defined benefit pension

scheme at each reporting date. The

actuary is also required to recommend

suitable assumptions for use in the

preparation of the valuation. The Group

has appointed Aon (the pension scheme‘s

actuary) to perform bi-annual valuations

on our behalf for accounting purposes.

Itsrecommended assumptions are

consistent with those adopted at the prior

year end. The net present value of the

scheme’s liabilities decreased by £23.9m

during the year, largely as a result of

remeasurement gains. The scheme’s

investment manager, Schroders

Solutions, provided a valuation of the

scheme assets in line with current market

practice relating to the valuation of

investment assets, the methodology for

which has not changed since the prior

year.

As disclosed in Note 25 to the Financial

Statements, the actuarial surplus for the

UK scheme has increased from £16.3m in

the prior year to £51.7m at 31 March 2022.

This arises from the decrease in scheme

liabilities of £23.9m combined with an

increase in the scheme’s assets of £11.5m

(arising primarily from interest and asset

returns of £15.0m, company contributions

of £8.0m, net of benefits paid and

administrative costs).

Product quality related provisions

During the year ended 31 March 2021,

aquality issue was identified with a

component that is incorporated into

acustomer’s system. As a result, the

affected business unit recognised a

provision of £1.9m as an estimate of the

potential costs to remediate the issue.

During the course of FY21‑22, the issue

was investigated further and the actual

performance issue was not as significant

as feared. Consequently, management

have retained a relatively small provision

(£0.4m) to cover future remediation costs.

The Committee has reviewed

management’s calculations in support of

this provision and the external auditor’s

report on the matter. While it is likely 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

thismatter.

Provisions for intellectual

propertyclaims

The Group faces potential exposure to

third-party claims in relation to alleged

intellectual property infringement. The

Committee obtains management reports

and analysis on potential claims twice a

year. The Committee has reviewed the

information and explanations provided by

management relating to the provisions for

intellectual property claims that have

been recognised in the Financial

Statements. This also covers claims for

which no provision has been recognised.

The external auditor has also reported on

intellectual property provisions.

Oxford Instruments plc | Report and Financial Statements 2022

114

Audit and Risk Committee Report continued

Significant Audit and Risk

Committee judgements and

estimates during the financial

year ended 31March 2022

continued

Provisions for intellectual

propertyclaims continued

As at 31March 2022, the value of the

provisions recognised in the Financial

Statements is not material. However, it

remains an area of significant accounting

judgement and estimation. The

Committee has verified that the

approach and calculations performed to

estimate the level of provisions required

is reasonable and is consistent with the

prior year. The Committee recognises

that the final determination in any

specific case is likely to vary from the

amount provided. However, when

considered in aggregate, the Committee

considers thatno adjustment to the

provisions is required.

Adjusted profit and EPS

The Group applies adjustments to the

statutory definition of profit and EPS to

present adjusted profitability and

earnings, as the Board considers that

they present a clearer picture of the

financial performance of the Group.

These adjustments are set out at Note 1

to the Financial Statements. For the year

ended 31 March 2022, the aggregate sum

of the adjustments to operating profit was

£18.0m. The largest item in value terms

was the amortisation charge relating to

capitalised intangible assets of £9.5m

(£8.4m in the prior year). The Group

recognised losses of £6.4m (compared to

a gain of £6.4m in the prior year) arising

from the mark-to-market impact of

currency hedging contracts. It also

incurred transaction costsof £0.4m

relating to the acquisition of Witec and

there was a further fair value adjustment

of £1.7m which is a non-recurring gain.

Inaddition, £0.3m of finance charges

relating to unwinding the discount on the

deferred consideration for the Witec

acquisition are also included as an

adjustment to profit before tax. The

Committee has reviewed Group reports

setting out the nature of the adjustments

and the methodologies used to calculate

them and as a result concluded that

adjustments have been applied

consistently. Further, the Committee is

satisfied with disclosure of these

adjusting items in the 2022

FinancialStatements.

Misstatements

The Committee received reports from

Group management that they were not

aware of any material misstatements or

immaterial misstatements that had been

made with the intent of achieving a

particular presentation in the Financial

Statements. The Committee also

reviewed BDO’s report on unadjusted

audit differences and these were

discussed during the Committee meeting

in June2022.

On the basis of its review and those

discussions, the Committee concluded

that the unadjusted differences were not

material to the Financial Statements and

therefore no adjustment was required.

The Committee also concluded that the

external auditor had fulfilled its duties

with diligence and with an appropriate

level of professional scepticism.

Based on the Committee’s review of

management reports and information

and explanations provided by BDO, it was

satisfied that key estimates and critical

judgements required in the preparation

of the Financial Statements had been

appropriately addressed with regard to

both quantum and the information

disclosed. The Committee also

concluded that there had been suitable

scrutiny of the key assumptions used to

determine the value of assets and

liabilities reported in the Financial

Statements and that these had been

subject to appropriate challenge.

Viability and going concern

assessment and statements

The Committee and the Board reviewed

the viability and going concern

statements as presented in more detail

on pages 85 and 86.

The Committee reviewed the viability

assessment, which was based upon

consideration of the Group’s current

financial position and the potential

impact of certain of its principal risks and

uncertainties on future performance.

Itperformed a review of the scenario

analyses prepared by management in the

viability assessment and concluded that

the Group would be able to continue in

operation and meet its liabilities as they

fall due over the next three years.

In addition, the Committee noted that

there were no material uncertainties

which may cast significant doubt over the

Group’s ability to continue as a going

concern over the period of at least twelve

months from the date of approval of the

Financial Statements and concluded that

it was appropriate to continue to adopt

the going concern basis of accounting.

Whistle-blowing

Employees can report concerns of

non-compliance, ethical issues or

malpractice via an independent and

confidential reporting route. Reports can

be made anonymously if required and are

covered by the Group’s Whistle-blowing

Policy which provides for protected

disclosure. The Group recognises the

importance of other reporting channels

such as via line management and HR.

Further, a reporting route to the Senior

Independent Director is also available.

Employees are informed of the reporting

channels through the Code of Business

Conduct and Ethics. Irrespective of the

reporting channel used, the Group

operates a formal protocol for the

independent investigation of reports

which is overseen by the Chief HR Officer

and Services Director and Group

Compliance. The Committee performs an

annual review of the Whistle-blowing

Policy and receives a summary report

into the outcome of investigations during

the year. It also receives a report from

management on its activities in this area.

The latest report and review took place in

January 2022 and all matters raised in

the year to date had been resolved.

Governance

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Internal control

The Committee oversees the internal

control framework on behalf of the Board.

In June each year, it undertakes an

annual review of the effectiveness of the

internal control environment, comprising

the Company’s internal financial controls

systems that identify, assess, manage

and monitor financial risks, and other

internal control and risk management

systems. To support this review, the

Committee liaised with the Head of Risk

and Assurance and considered the

internal and external audit reports

presented. In respect of the financial year

ended 31 March 2022 and up to the date

of the approval of this Report and

Financial Statements, the Committee

concluded that the required standards

had been met and noted that during the

financial year, they had received no

reports in the year about concerns of

possible improprieties in matters of

financial reporting.

Risk management

The key risk management activities

performed by the Group are described on

pages 77 to 84.

The Committee reviews the Group risk

and opportunities registers at each

meeting and uses these, supplemented

by reports from management, the

external auditor and other subject matter

experts, to assess the approach taken to

identify and mitigate the risks faced by

the Group. The Committee will continue to

carefully review risk reporting and the

associated risk management activities

during the year ahead, in particular,

aiming to develop and enhance its

approach to the consideration of

climate-related risks and opportunities

aswell as the broader landscape of

emerging risks.

For more information regarding our

approach to risk management see

pages77 to 84.

Internal audit function

The internal audit function is led by the

Head of Risk and Assurance, who is a

regular attendee at Committee meetings.

Its purpose is to provide assurance

regarding the effectiveness of internal

controls. Once finalised, all internal reports

are also shared with the external auditor.

The Head of Risk and Assurance has direct

access to the Chair of the Board and the

Chair of the Committee, to help safeguard

independence from the executive and

accountability to the Committee.

Internal audit plan

The annual internal audit plan was

presented to the Committee at their

meeting in January 2022. It comprises

audits which address the effectiveness of

internal financial controls, to be

performed on a rotational basis across

operational business units and the

principal regional offices and,

complementing this, the programme also

includes risk-based audit areas which are

proposed or recommended by a

combination of the Committee and

management. Following due

consideration, the Committee approved

the proposed annual internal audit plan.

Effectiveness review

The Committee has a responsibility to

carry out an annual assessment of the

effectiveness of the internal audit

function. As part of its assessment in

respect of the financial year ended

31March 2022, the Committee liaised

with the Head of Risk and Assurance,

reviewed and assessed the annual

internal audit plan, reviewed the results

ofthe internal auditor’s work, considered

whether the quality, experience and

expertise of internal audit remains

appropriate for the business and

reviewed the actions taken by

management to implement the

recommendations of internal audit and

tosupport the effective working of the

internal audit function.

Following due consideration, the

Committee agreed that the internal audit

function had remained effective.

External auditor

The Committee has principal

responsibility for managing the

relationship with the external auditor,

including assessing its performance,

effectiveness and independence and

making recommendations to the Board

regarding their re-appointment, removal

and terms of engagement, including

allfees.

BDO LLP was re‑appointed as external

auditor at the 2021 Annual General

Meeting, having been initially selected to

undertake this role with effect from the

financial year ended 31 March 2021

following a competitive tender process.

Inline with the current requirement to

complete a tender for audit services

every ten years, the Committee intends to

conduct a tender process ahead of the

financial year ended 2031. This remains

subject to the outcome of the

Committee’s annual assessment of the

performance, effectiveness and

independence of the incumbent external

auditor.

The Committee regularly meets with the

external auditor, both with and without

the Executive Directors or members of the

management team present, to discuss

any appropriate matters in a frank and

open manner.

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116

Audit and Risk Committee Report continued

External auditor continued

Audit strategy

BDO LLP presented their proposed audit

strategy and plan for the financial year

ended 31 March 2022 to the Committee

at their meeting in January 2022.

Thesuggested strategy had been

informed through feedback from various

stakeholders including the Committee

Chair, Chief Financial Officer and Director

of Accounting, Treasury and Tax. The

proposal included details of the

recommended scope, materiality, fees

and timelines plus the principal areas of

audit risk and the anticipated approach

for addressing such. Following due

consideration, the Committee approved

BDO LLP’s proposed audit strategy

andplan.

Effectiveness review

The Committee has a responsibility to

review the effectiveness of the audit

process, including an assessment of the

quality of the audit, the handling of key

judgements by the auditor, and the

auditor’s response to questions from

theCommittee.

As part of its assessment in respect of the

financial year ended 31 March 2021, the

Committee considered reports from BDO

LLP and feedback from key members of

the Group’s finance team. The

assessment recognised that this had

been the first audit completed by BDO

LLP further to their appointment as

auditor, noted the impact of the

limitations on face-to-face and on-site

meetings due to the ongoing pandemic

and emphasised that when issues did

arise, BDO LLP reacted appropriately and

supported pragmatic resolutions.

Following due consideration, the

Committee agreed that the audit had

been effective.

In line with the Committee’s structured

programme of activities, an assessment

of the effectiveness of the audit for the

financial year ended 31 March 2022 is

expected to be carried out in

September2022.

Independence and objectivity

The Committee should assess on an

annual basis, the external auditor’s

independence and objectivity taking into

account relevant law, regulation, the

Ethical Standard and other professional

requirements and the Group’s relationship

with the auditor as a whole, including any

threats to the auditor’s independence and

the safeguards applied to mitigate those

threats including the provision of any

non-audit services.

To make this assessment, the Committee

obtains confirmation from the external

auditor regarding whether they consider

themselves to remain independent and

also satisfies itself that there are no

relationships between the auditor and the

Company (other than in the ordinary

course of business) which could adversely

affect the auditor’s independence and

objectivity. During the financial year, the

Committee made this assessment in both

June 2021 and January 2022, in addition

to again assessing in June 2022. In all

instances, the Committee was

comfortable that BDO LLP remained

independent and objective.

Non-audit services

The Committee oversees the Company’s

formal policy regarding the provision of

non-audit services by the auditor,

including prior approval of non-audit

services by the Committee and specifying

the types of non-audit service to be

pre-approved, and assessment of

whether non-audit services have a direct

or material effect on the audited Financial

Statements. During the financial year,

theCommittee approved the provision

ofnon‑audit services by BDO LLP

amounting to £10k, which when

considered in light of the audit fees

amounting to £674k, represented a

non-audit fee to audit fee ratio of 1:67.4

or1.5% of the total fees payable to the

auditor and its associates. A further

illustration of this comparison can be

seen in the table below.

Audit and non-audit fees for the

financial year ended 31 March 2022

Fees Proportion

Audit fees £630k 92.1%

Audit-related

assurance services

£44k 6.4%

Non-audit services £10k 1.5%

Total fees payable

to the auditor and

its associates

£684k 100%

See Note 4 on page 171 of the Financial

Statements for further information

regarding the external auditor’s

remuneration.

Statement of Compliance with the

Competition and Markets Authority

(CMA) Order

The Company confirms that it has

complied with The Statutory Audit

Services for Large Companies Market

Investigation (Mandatory Use of

Competitive Processes and Audit

Committee Responsibilities) Order 2014

(Article 7.1), including with respect to the

Audit and Risk Committee’s

responsibilities for agreeing the audit

scope and fees and authorising non-audit

services.

Re-appointment of external auditor

BDO LLP has expressed their willingness

to continue as auditor of the Company

and separate resolutions will be brought

to the Company’s 2022 AGM, proposing

BDO LLP’s re‑appointment as auditor and

to authorise the Board, through the

Committee, to negotiate and agree

theirremuneration.

Governance

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Sustainability Committee Report

Dear Shareholder,

I am pleased to present the report of the

Sustainability Committee for the year

ended 31 March 2022, particularly as it is

not just my first report as Chair but also

the first report of the Committee.

Since its establishment during the financial

year, the Committee has embraced the

importance of its role in driving the Group’s

sustainability agenda at Board level and

overseeing activity within the Company.

We have focused on developing a firm

foundation for the Committee’s future

work, establishing the guiding principles to

be used when setting targets in relation to

the Group’s sustainability goals and

implementation plans.

Along with my fellow Directors, I have

been delighted to meet with a range of

employees during the year. The topic of

sustainability is one which consistently

arises in our discussions and it is clear

that employees across the Group are

passionate about the need for us to

continue to make meaningful progress on

our work in this area, not least so that we

can continue to best serve our customers,

suppliers, shareholders, local communities

and other stakeholders inthe future.

In conjunction with the Board, we are

delighted to have published our first

TaskForce on Climate‑Related Financial

Disclosures Statement as set out on

pages57 to 66, our enhanced, integrated

Sustainability report which is available

onpages 48 to 66 and our first standalone

Sustainability Report which can be

foundon our website at: oxinst.com/

sustainability. The production of these

reports has been a truly collaborative

effort, with wide‑ranging input from the

Management Board and teams across the

Group, support from our external advisers

and careful assessment of the climate

change related risks and opportunities by

the Audit and RiskCommittee.

In the years ahead we will strive to

expand both our reporting and the extent

and detail of our sustainability targets.

We aim to be ambitious and believe that

our commitment to sustained competitive

financial and operational results is both

consistent with and underpinned by

delivering on our responsibilities to

society, our stakeholders and workforce.

We see these as part of the same

Company strategy and our sustainability

ambition as a competitive differentiator

for us as the energy transition,

environmental awareness and societal

changes advance.

I will be available at the AGM to answer

any questions you may have regarding

the work of the Committee.

Nigel Sheinwald

Chair of the Sustainability Committee

13 June 2022

We believe that embedding sustainability throughout

the Group creates long-term value for all of our

stakeholders and will secure our long-term success.

Nigel Sheinwald

Chair of the Sustainability Committee

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118

Sustainability Committee Report continued

Committee membership and attendance

During 2021, the Sustainability Committee was newly established as a formal committee

ofthe Board. Nigel Sheinwald took up the role of Committee Chair with effect from his

appointment as a Director on 22 September 2021 and all other Non-Executive Directors

wereappointed as members of the Committee with effect from its first formal meeting.

The current composition of the Committee is as set out below.

Current members Date of appointment

Nigel Sheinwald (Chair) 22 September 2021

Neil Carson 2 November 2021

Alison Wood 2 November 2021

Mary Waldner 2 November 2021

Richard Friend 2 November 2021

For details of attendance at Committee meetings during the financial year, please see the

Board and Committee meeting attendance table on page 94.

The biographies of all Committee members are available in the Board biographies section

onpages 90 and 91.

Key responsibilities

•

Review all sustainability-related narrative reporting and external disclosures, including,

but not limited to, those relating to the Greenhouse Gas Protocol, Streamlined Energy and

Carbon Reporting Regulations, Sustainability Accounting Standards Board framework,

Sustainable Development Goals or the Task Force on Climate-Related Financial

Disclosures

•

Determine the guiding principles to be used when setting targets in relation to the Group’s

sustainability goals and implementation plans

•

Oversee the Group’s ongoing activities and progress in relation to the three key elements

of its sustainability agenda, broadly comprising environmental, social and governance

related matters, as follows

•

Environmental: consider and recommend to the Board for approval,

sustainability-related targets, including environmental targets and timescales;

reviewing the Company’s progress towards decarbonisation of energy use globally; and

consider and recommend to the Board for approval, the methodology to be used for

achieving Net Zero

•

Social: review any relevant policies and approve targets set, in respect of the following

areas: equality, diversity, inclusion and belonging; health, safety and wellbeing;

investing in our people; next generation talent; and community impact

•

Governance: review any relevant policies and approve targets set, in respect of the

following areas: anti-bribery and anti-corruption; sanctions, export control and customs;

dissemination of inside information to the market and share dealing; supply chain

responsible sourcing; human rights and modern slavery; intellectual property and

confidentiality; data protection, data privacy and data security; and financial

sustainability and tax transparency

•

Review on a regular basis that the highest ethical standards and concern for human rights

is embedded in the Company across its global operations

Governance

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Committee membership,

skillsand experience

In line with its terms of reference,

whichare available on our website at:

www.oxinst.com/investors-content/

advisers-and-company-secretary the

Committee is comprised of a majority of

independent Non-Executive Directors.

NigelSheinwald, the Committee Chair,

brings a wealth of skills and experience,

particularly from his time as Chair of Shell

plc’s equivalent Sustainability Committee

and his appointment is a good fit with the

Group’s requirements at this stage in its

sustainability journey.

Meetings

The Sustainability Committee holds a

minimum of three meetings annually,

asrequired under its terms of reference,

and this year held three meetings since

its establishment. Regular attendees at

meetings include the Chief Executive,

Chief Financial Officer, Chief HR Officer

and other members of senior management.

The Company Secretary isthe secretary

to the Committee.

Committee effectiveness review

Given the recent establishment of the

Committee, an in‑depth effectiveness

review did not take place this year.

Ameaningful review of the Committee’s

effectiveness will take place next year.

How the Committee spent its

time during the year ended

31March 2022

The responsibilities of the Committee are

set out in its terms of reference, which

were last updated in March 2022 and

which are summarised on page 118.

Whilst these responsibilities guide the

operation of the Committee and shape its

agenda, it will also consider other

matters as requested by the Board and

as relevant to its remit.

The key activities and areas of focus for

the Committee during the year are as set

out below.

•

As part of its establishment as a

formal Board Committee,

implemented the necessary

formalities in order to ensure its

smooth future operation, including:

•

developing its terms of reference

and recommending these to the

Board for approval;

•

clarified and agreed with the Board,

Audit and Risk Committee,

Nomination Committee and

Remuneration Committee what the

proposed division of responsibilities

between each forum should be,

given the importance of avoiding

duplication or failing to address any

issues; and

•

meeting cadence and high-level

themes for consideration during the

annual cycle.

•

Received updates from the Chief

Executive, management and an

external provider, regarding

climate-related matters such as the

Greenhouse Gas Protocol,

Science-Based Targets initiative,

Carbon Disclosure Project, UN

Sustainable Development Goals and

the Task Force on Climate-Related

Financial Disclosures, amongst other

things, as well as an in-depth overview

of the pathway to achieving net zero,

including determining targets.

•

Reviewed and endorsed the proposed

guiding principles to be used when

determining targets against

sustainability goals and devising

implementation plans.

•

Considered the planned approach and

approved any targets and measures

regarding social and governance

matters relevant to the Company’s

sustainability agenda.

•

Noted the Company’s environmental

policy for 2022/23.

•

Post year end, reviewed and

recommended to the Board for

approval, the sustainability-related

narrative reporting and external

disclosures, comprising the Task Force

on Climate-Related Financial

Disclosures Statement as set out on

pages 57 to 66 of this report, our

dedicated integrated Sustainability

report and our standalone

Sustainability Report which can be

found on our website at: oxinst.com/

sustainability

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120

Directors’ Remuneration Report

Letter from the Chair of the RemunerationCommittee

Dear Shareholder,

On behalf of the Remuneration

Committee, I am pleased to introduce the

Directors’ Remuneration Report for the

year ended 31 March 2022. This report is

presented in three sections, as follows:

•

Annual Statement summarising the

work of the Committee during the year

and our approach to Directors’

remuneration;

•

Remuneration Policy section, which

sets out the policy approved at the

2020 AGM. The full Remuneration

Policy can be found on pages 96 to 98

of the 2020 Report and Financial

Statements (and is also available on

the Company website); and

•

Annual Report on Remuneration,

which sets out the remuneration

outcomes for the financial year ended

31 March 2022 and the proposed

implementation of the Remuneration

Policy in the forthcoming year.

We delivered another strong set of results

despite the lingering impact of the covid

pandemic in the early part of the year

and significant supply chain disruption

and inflationary pressures later in the

year. Adjusted operating profit grew by

16.9% to £66.3m alongside a strong order

book, which provides continued

confidence.

Operation of the Remuneration

Policy in 2021/22 and incentive

plan payments

During the year, the focus of the

Committee shifted from the impact on

remuneration for all employees of the

pandemic and towards the impact of

rising inflation and cost of living. The

Committee was keen to ensure that there

remained a compassionate approach to

the remuneration for employees and

consistency across the Group, to ensure

that decisions made regarding senior

executive pay were aligned with those

made for the wider workforce.

The annual bonus for 2021/22 has been

determined by performance against 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.

Group financial performance was again

strong, as highlighted above, and the

annual bonus payout in respect of the

financial element was at 82.8% of base

salary for the CEO and CFO. For the

personal element relating to the

remaining 15% of base salary, this was

based on the achievement of strategic

KPIs, which the Committee judged to

have been achieved at a 10% and

12.5%(out of 15%) achievement level for

the CEO and CFO, respectively.

Accordingly, the overall bonus outturn

achieved was 92.8% and 95.3% of salary

for the CEO and CFO, respectively.

A portion of the bonus will be paid in

shares, which are deferred for three

years. The Committee notes that this is

the first year of the operation of the bonus

plan at the higher limit of 125% of salary

and is satisfied that the achievement of

the stretch performance targets

demonstrates a strong link between

reward and performance.

Awards granted under the Performance

Share Plan (PSP) in 2019 were based on

performance over the three years to

31March 2022. The EPS performance

condition, applied to 50% of the award,

was met in full, with compound EPS

growth of 14.8%. The Company’s ROCE

was outstanding, at 30.9% for the year

ended 31 March 2022, which exceeded

the stretch target, resulting in 100% of this

element vesting. Accordingly, across both

measures, 100% of the total award will

vest and shares will be required to be

held for a further two years.

The Committee reflected on the

formula-driven outturn from these

incentive plan payments in the context

ofthe broader environment and

employee and shareholder experience.

Inrelation to employees there have

generally been good bonus payments

across the Group with all eligible

employees in several business units and

teams receiving a bonus (and where

performance had significantly improved

but had just missed targets, resulting in a

zero bonus, the bonus award has been

topped up).

For another year of excellent performance, we have

ensured that the remuneration outcome for executives

are aligned to the experience of shareholders,

employees and our wider stakeholders.

Alison Wood

Chair of the Remuneration Committee

Governance

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In relation to the shareholder experience,

the Committee recognised the strong

shareholder return (+17%) over the

financial year 2021/22 and the

significantly higher total shareholder

return (TSR) over the three-year

performance period of the PSP award

cycle (+125%).

Given the strong performance of the

business over both 2021/22 and the

longer three-year performance period of

the PSP award, the Committee is

comfortable that there has been a robust

link between reward and performance

and alignment with investor returns.

Accordingly, the Committee is satisfied

the policy has operated as intended and

has concluded that there are no

circumstances arising where it would

need to exercise discretion to adjust any

of the 2021/22 variable pay outcomes.

Operation of the Remuneration

Policy in 2022/23

The Committee reviewed the operation of

the policy for the final year of the current

three-year policy period and concluded

that the policy and its operation should

remain unchanged for 2022/23.

The Committee carefully reviewed

management’s recommendation

regarding the level of the base salary

increase for all employees and, with

consumer price inflation at around 9%

and the true cost of living considered to

be higher in some respects, determined

that salary increases for UK employees

should be 6%. They agreed with

management’s recommendation that

base salary increases should take effect

from 1 April rather than 1 July, as usual,

toensure that employees received the

benefit of the increase as soon as

possible. This approach was mirrored

across all of the jurisdictions in which we

operate. When considering the level of

increase for the Management Board and

the Executive Directors, the Committee

determined that a 6% salary increase

should also apply, albeit effective from

the usual review date of 1 July, noting the

continuing excellent performance of the

team and the fact that the overall

remuneration packages for the

ExecutiveDirectors (and the CEO’s salary

in particular) was significantly below the

current mid-market benchmarks.

Accordingly, the base salaries for the CEO

and CFO will increase from £500,000 and

£359,406 to £530,000 and £380,970,

respectively.

The 2022/23 annual bonus will be based

on the same combination of financial

performance measures as prior year, with

stretching target ranges set in respect of

each and which are linked to accelerating

growth, operational effectiveness, our

sustainability agenda and shareholder

engagement.

PSP awards will continue to be based

50% on ROCE and 50% on earnings per

share, in line with our business strategy

and with stretching targets set for each

measure, building on the excellent

performance delivered recently. The

growth range for EPS will require

compound annual growth of between

4%and 10% over three years. Whilst this

isslightly lower than the 4%‑12% range

setlast year, this year’s range will be

measured from an all-time-high level

ofprofitability and our ROCE range has

beenincreased to 26%‑32% to ensure

management remains focused on

delivering returns to shareholders.

Bothtarget ranges are, in the view of the

Committee, appropriately stretching.

Non-Executive Directors’ fees

The Chair’s fee and the Non-Executive

Directors’ fees were increased by 5%,

beingslightly below the UK workforce

average increase but still acknowledging

the current impact of inflation and market

positioning below mid-market benchmarks.

Broader employee

remunerationconsiderations

As noted above, in recognition of the

impact of inflation rates on the cost of

living, the Committee endorsed the

awardof higher than normal pay review

percentages and the rescheduling of

theannual pay review for less senior

employees, from July to April 2022, so

that they would feel the benefit of their

pay increase three months earlier than

planned. We pay above minimum wage

across the world and above the living

wage in the UK and also aim to provide

benefits which are above the statutory

minimums, where appropriate.

Thestructures of bonus plans throughout

the organisation are aligned to incentivise

thebehaviours which deliver value,

bothfinancial and non‑financial,

toshareholders and our key stakeholders.

There are processes in place to address

unconscious diversity and inclusion

biases during recruitment, including the

use of balanced shortlists, and decisions

about career progression and

remuneration.

Remuneration Policy review and

shareholder engagement

The Committee will be reviewing the

current policy during the upcoming year,

ahead of seeking shareholder approval

for a new policy at the 2023 AGM. As part

of this review the Committee will consider

the overall competitiveness of the

package and mix of performance

measures, to ensure that these remain

optimised to the business strategy.

Thereview of the performance measures

will include matters relating to ESG and

sustainability, and we will continue to

lookto establish how sustainability

metrics can be most effectively

incorporated into Directors’ remuneration,

including longer-term measures within

the LTIP structure. We will engage with

our major shareholders and other

stakeholders to ensure that our approach

to remuneration continues to benefit from

their strong support.

Conclusion

We have carefully considered the

operation of the Remuneration Policy

toensure that there is a strong alignment

between the remuneration paid to the

executives and the experience of

shareholders, employees and our wider

stakeholders. I hope you will be supportive

of the annual advisory vote toapprove

theAnnual Report on Remuneration,

whichsets out the remuneration outcomes

for the year under review and how the

policy will be operated for the year ahead.

Ilook forward to our AGM on 28 July 2022.

Alison Wood

Chair of the Remuneration Committee

13 June 2022

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Directors’ Remuneration Report continued

Letter from the Chair of the RemunerationCommittee continued

Committee membership and attendance

The members of the Remuneration Committee during the financial year and their dates of

appointment to or resignation from the Committee, are as set out below.

Current members

Date of appointment

Alison Wood (Chair) 8 September 2020

Neil Carson 1 December 2018

Mary Waldner 4 February 2016

Richard Friend 1 September 2014

Nigel Sheinwald 22 September 2021

Members who resigned during the financial year

Date of resignation

Steve Blair 21 September 2021

Thomas Geitner 21 September 2021

1. Became a member of the Committee with effect from her appointment to the Board on 8 September 2020 and took up

the role of Committee Chair with effect from 26 January 2021.

2. Became a member of the Committee upon joining the Board during the year.

3. Resigned from the Committee upon stepping down from the Board.

Regular attendees at meetings include the Chief HR Officer and, where appropriate, the

ChiefExecutive and Chief Financial Officer. The Company Secretary is the secretary tothe

Committee.

For details of attendance at Committee meetings during the financial year, please see the

Board and Committee meeting attendance table on page 94.

The biographies of all Committee members are available in the Board biographies section on

pages 90 and 91.

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 business

strategyand the wider workforce

•

Reviewing the Group’s Remuneration Policy periodically

•

Determining the policy for pension arrangements, service agreements, recruitment

termsand termination payments

Governance

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123

Remuneration at a glance:

Base

salary

Benefits

Pension

LTIP

Annual

bonus

Total

remuneration

Fixed

Variable

Performance

Share Plan

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.

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.

Find out more on pages 134 and 135 Find out more on pages 135 and 136

Adjusted PBT

55%

Threshold: £56m

Target : £61.4m

Max: £64.5m

Actual:

£65.9m

Adjusted operating profit margin

27.5%

Threshold: 17.8%

Target : 18.3%

Max: 18.5%

Actual:

18.1%

Cash conversion

27.5%

Threshold: 82%

Target : 85%

Max: 92%

Actual:

86.3%

Strategic objectives

15%

Targets based on a

range of objectives

– see pages 134

and 135 for details

Actual:

Strong

1. 125% of salary at year end is payable for maximum performance.

Earnings per share growth

(% CAGR p.a.)

50%

Threshold: 4% p.a. CAGR

Max: 12% p.a. CAGR

Actual (CAGR

over three

years to

31March 2022):

14.8%

Return on

capital employed

50%

Threshold: 24%

Max: 30%

Actual

(2021/22)

30.9%

Executive Directors’ remuneration at a glance

Total remuneration payable for 2021/22

Base salary

£’000

Benefits

£’000

Pension

£’000

Annual bonus

£’000

LTIP

£’000

Other

£’000

Total

£’000

Ian Barkshire 488 67 58 464 1,067 1 2,145

Gavin Hill 358 23 46 343 833 1 1,604

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Directors’ Remuneration Report continued

Directors’ Remuneration Policy (A)

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 on 8 September 2020 and the policy,

unless changed with Shareholders’ prior agreement, will continue until the 2023 AGM. A copy of the approved

policy can be found in the 2019Directors’ Remuneration Report which is available on our website at

https://www.oxinst.com/investors-content/financial-reports-and-presentations

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 the

Group’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, the

Committee ensures that the overall Remuneration Policy does not encourage inappropriate risk-taking.

The Committee’s approach to determining the new policy

The Committee considered the following factors when determining the current 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 their

rationale and operation should be

easy to understand.

•

Our Remuneration Policy is in line with market norms.

•

The application of the policy is described clearly each year in this report with

aclear link between reward and performance.

Risk – remuneration arrangements

should ensure reputational and other

risks from excessive rewards, and

behavioural risks that can arise from

target-based incentive plans, are

identified and mitigated.

•

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

•

introducing discretion to override the formulaic outturn of incentives; and

•

enhancing clawback and malus provisions.

•

Performance Shares (with holding periods), annual bonus deferral, together with

stretching share ownership requirements, including post-employment share

ownership 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 and

explained at the time of approving

thepolicy.

•

The scenario chart on page 130 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.

Proportionality – the link between

individual awards, the delivery of

strategy 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 the

individual limits and payout for different levels of performance set out in the policy

on pages 125 to 128 and the scenario chart on page 130.

•

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.

Governance

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Principle Committee approach

Alignment to culture – incentive

schemes should drive behaviours

consistent with Company purpose,

values and strategy.

•

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 that are

not consistent with the Company’s purpose, values and strategy.

•

The Committee reviews the wider workforce pay and policies to ensure there is

alignment 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 the senior

managementteam.

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. During the period of

consultation on revisions it wished to make to the Remuneration Policy ahead of its approval at the 2020 AGM, 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 until the 2023 AGM. 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 Operation Maximum opportunity

Base salary

•

To provide a

competitive and

appropriate level of

basic fixed pay to

recruit and retain

superior talent and

avoid excessive

risk-taking that might

otherwise result from

an over-reliance on

variable remuneration.

•

Reflects the experience,

performance and

responsibilities of the

individual.

•

Reviewed annually with any increase

usually effective 1 July.

•

Takes account of experience,

performance and responsibilities as well

as the performance of the Company, the

complexity of the role within the Group

and salary increases for employees

generally.

•

Set with regard to market data for

comparable positions in similar

companies in terms of size,

internationality, business model, structure

and complexity, including within the

industry.

•

There is no minimum or

maximum annual increase.

•

Higher increases than the

average percentage for the

workforce may be

appropriate; for example,

where an individual changes

role, where the complexity of

the Group changes, where

an individual is materially

below market comparators

or is appointed on a

below-market salary with

the expectation that his/her

salary will increase with

experience and

performance.

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Directors’ Remuneration Report continued

Directors’ Remuneration Policy (A) continued

Element of pay

Purpose and

link to strategy Operation Maximum opportunity

Benefits

•

Provided on a

market-competitive

basis, aids retention

and follows the reward

structure for all

employees.

•

Currently include, but are not limited to,

the cost of:

•

life assurance;

•

private medical insurance;

•

company car benefit (car, driver, car

allowance, fuel); and/or

•

overnight hotel accommodation

where necessary to enable the

executive to carry out his duties

efficiently at the Head Office and other

Company sites.

•

The benefits provided may be subject to

amendment from time to time by the

Committee within this policy.

•

Relocation costs and other incidental

expenses may be provided as necessary

and reasonable.

•

Benefits are not part of pensionable

earnings.

•

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

and controlled and represent

a small element of total

remuneration costs.

Pension

•

To contribute towards

the cost of living in

retirement.

•

Company contributions to a money

purchase pension scheme.

•

Salary supplement where HMRC annual

or lifetime allowances are exceeded.

•

14% of base salary based

onthe 2019/20 salaries for

incumbents, which represents

£61,964 and £48,363 per year

for the CEO and CFO

respectively.

•

Pension contributions for

incumbents will reduce to the

rate applying to the majority

of the workforce at the end

ofthe policy period.

•

Newly recruited Directors

will receive a pension

contribution in line with the

rate applying to the majority

of the workforce.

Remuneration Policy continued

Governance

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Element of pay

Purpose and

link to strategy Operation Maximum opportunity

Annual bonus

•

Drives and rewards the

successful achievement

of annual targets set at

the start of the year.

•

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 the

target level, 50% will be paid in shares,

which are beneficially owned and which

must be held by the Executive Director for

at least three years.

•

The Committee may use discretion to

override the result of any formula-driven

bonus payment.

•

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.

Long-term

incentive

(Performance

Share Plan)

•

To incentivise the

executives and reward

them for meeting

stretching long-term

targets linked to the

business strategy.

•

To align the Directors’

interests with those of

Shareholders.

•

Facilitates share

ownership to provide

further alignment with

Shareholders.

•

Annual awards of Performance Shares

with vesting subject to achievement of

performance targets. Both the vesting

and performance period will be over a

minimum 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 threshold

performance 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 (other

than to pay tax).

•

The Committee may use discretion to

override the result of any formula-driven

payment.

•

The maximum normal award

limit is 150% of salary. This

limit may be exceeded in

exceptional circumstances,

e.g. recruitment, up to a limit

of 200% of base salary.

•

Dividend equivalents may

accrue on the PSP awards

over the vesting period and

would normally be paid out

as shares in respect of the

number of shares that have

vested.

All-employee

share schemes

•

To encourage

employee share

participation.

•

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.

•

The schemes are subject to

the limits set by tax

authorities.

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Directors’ Remuneration Report continued

Directors’ Remuneration Policy (A) continued

Element of pay

Purpose and

link to strategy Operation Maximum opportunity

Shareholding

guideline

•

To further align

Executive Directors’

interests with

Shareholders’.

•

The Committee has established

shareholding guidelines which

encourage the Executive Directors to

build 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 from

exercise/vesting of share awards as

appropriate after allowing for tax

payable.

•

Post cessation of employment there will

be a requirement to retain the lower of

the level of shareholding at that time, or

200% 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 to

discourage further self-purchases.

•

Not applicable.

Non-Executive

Director fees

•

To remunerate the

Chair and

Non-Executive

Directors.

•

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 in

other companies of a similar size and/or

business to Oxford Instruments.

•

Out-of-pocket expenses including travel

may be reimbursed by the Company in

accordance with the Company’s

expenses policy including tax thereon

“grossed up” as appropriate.

•

There is no prescribed

maximum or maximum

annual increase.

Remuneration Policy continued

Governance

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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 from

quantum and participation levels in

incentive schemes, which reflect the fact

that a greater emphasis is placed on

performance-related pay for Executive

Directors and the most senior individuals

in the management team. Outside the

senior 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 that

decisions in relation to executive pay are

considered in the round.

The objectives and targets for all

employees are cascaded through the

organisation each year to ensure

alignment with the Company strategy.

The bonus plans for the workforce are

designed 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 some

measures being Group-wide and others

specific to their areas of control. This

alignment is explained to the workforce

at the time that objectives and targets are

set each year.

Choice of performance

measures and approach

tosetting targets

The Committee selects financial and

strategic measures for the annual bonus

that are key performance indicators for

the business over the short term. For the

long-term incentives, the Committee will

select a combination of measures that

provide a good focus on the outcomes of

the Company strategy together with

sustainable improvements in long-term

profitability.

The Committee sets appropriate and

demanding targets for variable pay in

the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 and

strategic 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

business environment.

Discretions retained by the

Committee in operating its

incentive plans

The Committee may adjust the

formula-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 or

overall shareholder experience. Any such

use 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 their

respective rules and in accordance with

HMRC rules where relevant. To ensure the

efficient administration of these plans, the

Committee 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-based

plans in the event of a change of

control;

•

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 the annual bonus plan and

discretionary share plans from year

toyear.

The Committee may adjust the targets

and/or set different measures and alter

weightings for existing annual bonus

plans and share-based awards only if an

event occurs which causes the

Committee to reasonably consider that

the performance conditions would not

without alteration achieve their original

purpose and the varied conditions are no

less difficult to satisfy than the original

conditions. Any changes, and the

rationale for those changes, will be set

out clearly in the Annual Report on

Remuneration in respect of the year in

which they are made.

Legacy arrangements

In approving this Directors’ Remuneration

Policy, authority is given to the Company

to honour any commitments entered into

with current or former Directors (such as

the payment of a pension or the vesting

or exercise of past share awards) that

have been disclosed to and approved by

Shareholders in previous remuneration

reports. Details of any payments to

former Directors will be set out in the

Annual Report on Remuneration as

theyarise.

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Directors’ Remuneration Report continued

Directors’ Remuneration Policy (A) continued

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 2022/23 (see notes for assumptions):

Remuneration scenarios

Chief Executive (CEO) Chief Financial Officer (CFO)

Fixed pay

Target Max

£’000

500

1,000

1,500

2,000

2,500

3,000

Fixed pay

Annual bonus

LTIP

50% share price growth on LTIP value

100%

£659k

30%

32%

38%

Total including

share price growth:

£1,786k

Total :

£1,500k

44%

28%

£1,024k

100%

£452k

31%

38%

46%

27%

£1,454k

Total including

share price growth:

£2,514k

Total :

£2,116k

Assumptions for charts above:

•

Fixed pay comprises salary levels as at 1 July 2022, fixed pension contribution and the value of benefits received in 2021/22.

•

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. 150% of salary.

•

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 and the

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 and

total remuneration may be set initially at below normal market rates on the basis that it may be increased once expertise and

performance 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 deferred

remuneration, 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 any

other incidental expenses as appropriate.

Governance

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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 the

Company’s AGM, are as follows:

Contract date Unexpired term of contract

Ian Barkshire 11 May 2016 Twelve-month rolling contract

Gavin Hill 9 February 2016 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

or compensation, 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 and settlement of claims or potential compensation claims.

Remuneration entitlements Pro-rata bonus may also become payable for the period of active service along with vesting for

outstanding 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 the

discretion of the Committee, “good leaver” status may be applied. Under the 2014 PSP, awards to good leavers will vest on the

normal vesting date, subject to the satisfaction of the relevant performance conditions at that time and normally be scaled back

toreflect the proportion of the original vesting period actually served. In the event of a good leaver there would be no early release

from 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 are appointed under letters of appointment for fixed terms of three years, however in line with governance

best practice, the Company proposes all Directors for annual re-election by shareholders at the AGM. Their appointment can be

terminated without notice and with no compensation payable on termination, other than accrued fees and expenses.

Date of appointment Notice period

Neil Carson 1 December 2018 Rolling six months

Richard Friend 1 September 2014 None

Mary Waldner 4 February 2016 None

Alison Wood 8 September 2020 None

Nigel Sheinwald 22 September 2021 None

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Directors’ Remuneration Report continued

Annual Report on Remuneration (B)

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 the Remuneration

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,

Richard Friend, Mary Waldner, Nigel

Sheinwald, and the Chair of the Board,

Neil Carson. Alison Wood has held the

role of Chair of the Committee since

26January 2021 and has significant prior

remuneration committee experience, in

particular, chairing Remuneration

Committees at other listed companies

and is sufficiently experienced to

undertake this role in line with Provision

32 of the UK Corporate Governance

Code2018.

The Chief Executive, Chief Financial

Officer and the Chief HR Officer and

otherexecutives are invited to attend

Committee meetings as deemed

appropriate. 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 UK

Corporate Governance Code regarding

remuneration.

The performance of the Committee is

reviewed at least once a year as part of

the Board evaluation process and during

the financial year, was reviewed as part

of the externally facilitated Board

evaluation facilitated by Round

Governance Services.

During the year, the Committee fulfilled its

duties, as set out in the Committee’s

terms of reference, in line with the normal

annual cycle of remuneration-related

matters, except as noted in the Corporate

Governance Statement for the year

ended 31 March 2022 on page 92 which

explains that dedicated workforce

engagement to explain how executive

remuneration aligns with wider company

pay policy did not take place during the

financial year. A session of this nature has

been arranged to take place during July

2022, post the publication of the 2022

Directors’ Remuneration Report, and will

be hosted by the Chair of the

Remuneration Committee, Alison Wood.

Korn Ferry (KF) was the Committee’s

independent remuneration consultant

during the year and continues with this

appointment in 2022/23. 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 the Code. 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 £23,581 (excluding VAT).

During the year KF also provided executive

search related services to the Company

(butnot for Board appointments) through

aseparate 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.

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

133

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

Salary

£’000

Benefits

£’000

Pension

£’000

Annual

bonus

£’000

Long‑term

incentive

awards

£’000

Other

£’000

Total

fixed

£’000

Total

variable

£’000

Total

£’000

Ian Barkshire 2022 488 67 58 464 1,067 1 614 1,531 2,145

2021 424 52 55 451 1,575 1 532 2,026 2,558

Gavin Hill 2022 358 23 46 343 833 1 428 1,176 1,604

2021 330 22 43 352 1,229 1 396 1,581 1,977

Total 2022 846 90 104 807 1,900 2 1,042 2,707 3,749

2021 754 74 98 803 2,804 2 928 3,067 4,535

1. “Salary” – 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 2022, the provision

of a driver accounted for £57,141 (2021: £31,664) 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 2022 and would usually be paid in the July 2022 payroll. Of the amounts disclosed, £44,553

and£36,518 will be paid in shares for the CEO and CFO 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 value

of the PSP award granted on 15 July 2019. The value has been determined using the average share price over the three months to 31 March 2022, £21.71. Further details

of how these sums are arrived at are set out on page 136. The share price used on grant of the 2019 PSP award was £13.74 and the total face value at grant of the vested

number of shares is £663,903 for the CEO and £518,177 for the CFO. On vesting (based on an average share price for the last three months of the financial year) the share

price was £21.71, giving a total vested award value of £1,049,005 for the CEO and £818,749 for the CFO. The value of the PSP award that has been attributable to share

price growth is, therefore, £385,102 and £300,573 for the CEO and CFO respectively. Dividend equivalents have been added to arrive at the total figure included in the

table above. The value of the prior year awards has been restated using the share price on the vesting date of 5 July 2021 of £23.80, giving a total vested award value,

including dividend equivalents, of £1,574,894 (before restatement £1,261,173) for the CEO and £1,229,175 (before restatement £984,319) for the CFO.

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 2021/22, Ian Barkshire and Gavin Hill participated in the SIP up to the maximum extent permitted by HMRC. The Company offers a 1:5 match for

partnership shares purchased by employees and this amounted to £360 each of matching shares for Ian Barkshire and Gavin Hill.

Non-Executive

Fees

£’000

Benefits

£’000

Pension

£’000

Annual

bonus

£’000

Long‑term

incentive

awards

£’000

Total

£’000

Neil Carson 2022 186 — — — — 186

2021 172 — — — — 172

Steve Blair

2022 28 — — — — 28

2021 55 — — — — 55

Richard Friend 2022 52 — — — — 52

2021 48 — — — — 48

Thomas Geitner

2022 24 — — — — 24

2021 53 — — — — 53

Mary Waldner 2022 60 — — — — 60

2021 55 — — — — 55

Alison Wood 2022 64 — — — — 64

2021 31 — — — — 31

Nigel Sheinwald

2022 30 — — — — 30

2021 — — — — — —

Total 2022 444 — — — — 444

2021 414 — — — — 414

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. Steve Blair and Thomas Geitner resigned as Non‑Executive Directors with effect from the conclusion of the AGM on 21 September 2021.

3. Alison Wood was appointed as a Non‑Executive Director effective 8 September 2021.

4. Nigel Sheinwald was appointed as a Non‑Executive Director and Chair of the Sustainability Committee effective 22 September 2021.

Oxford Instruments plc | Report and Financial Statements 2022

134

Directors’ Remuneration Report continued

Annual Report on Remuneration (B) continued

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 Targets

Measure Threshold On target Maximum Threshold On target Maximum Actual

Payout

% of salary

Adjusted PBT 7.5% 30% 55% £56m £61.4m £64.5m £65.9m 55%

Adjusted operating

profit margin

3.75% 15% 27. 5% 17. 8% 18.3% 18.5% 18.1% 10.5%

Cash conversion 3.75% 15% 27. 5% 82% 85% 92% 86.3% 17. 3%

Strategic objectives — 15% — — — —

See

below

CEO 10%

CFO 12.5%

CEO 92.8%

CFO 95.3%

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 that the executive team had made some progress in the year to strengthen the portfolio through acquisitions and

new products resulting in a bonus payment of 50% of the total bonus available against this objective. In addition, very good progress

was made across the sustainability agenda, engagement with shareholders and a major site relocation project resulting in the

maximum payment being made against these objectives. Details of the objectives and an assessment as to their achievement are

set out below:

CEO objectives Weighting Achievements towards objectives/performance

Build on and sustain the organic growth of the

current businesses whilst taking substantive

steps to progress supplemental inorganic growth

opportunities identified through a comprehensive

strategic review. The inorganic growth

opportunities are expected to include both

opportunities closely aligned to the Company’s

current activities and expansive adjacent

opportunities.

2/3

•

Strong orders and order book set the foundation for

growth

•

New products launched and progressed in year

including the BC43 product taking us into new

markets

•

Broad range of acquisition opportunities identified,

assessed and progressed

•

Acquisition of WiTec completed in year

5 out of 10

Establish clear Company strategic goals across

the broad sustainability agenda and implement

the appropriate programmes to deliver tangible

in-year progress towards those goals.

1/3

•

Sustainability Committee in place and teams

established within the Group with accountability to

progress each agenda area

•

External advisers appointed and supporting

development of environmental agenda

•

Targets identified against several aspects of the

social and governance agenda

5 out of 5

Total 100% 10% out of 15%

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135

CFO objectives Weighting Achievements towards objectives/performance

Build on and sustain the organic growth of the

current businesses whilst taking substantive

steps to progress supplemental inorganic

growth opportunities identified through a

comprehensive strategic review.

1/3

•

Strong orders and order book set the foundation for

growth

•

New products launched and progressed in year including

the BC43 product taking us into new markets

•

Broad range of acquisition opportunities identified,

assessed and progressed

•

Acquisition of WiTec completed in year

2.5 out of 5

Develop engagement with a broader range of

potential shareholders commensurate with the

strategic direction of the Company.

1/3

•

A series of investor meetings, visits and briefings have

taken place throughout the year with a view to careful

alignment against strategy

5 out of 5

Provide leadership and governance oversight

of the Plasma Technology business relocation,

ensuring that the project is managed to time

and to budget; and effective measures are put

in place to ensure business continuity.

1/3

•

Practical completion of construction phase now complete

•

Rigorous management to budget and timescales,

adapting to materials challenges and costs

5 out of 5

Total 100% 12.5% out of 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 2022, are set out below.

On-target

bonus

(% of salary)

Maximum

bonus

(% of salary)

Actual bonus

payable for

2021/22

(% of salary)

Actual bonus

payable for

2021/22

(% of maximum)

Actual bonus

payable

1,2

for

2021/22

(£’000)

Ian Barkshire 75% 125% 92.8% 74.2% 464,107

Gavin Hill 75% 125% 95.3% 76.2% 342,591

1. Bonus is calculated on salary as at 31 March 2022.

2. Of the amounts disclosed, £44,553 and £36,518 will be paid in shares for the CEO and CFO respectively, which must be held for three years, as per the policy.

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 2021/22 are as follows:

Performance Share Plan (PSP)

The performance targets which applied to the awards made on 15 July 2019 for the performance period ending in the year under

review 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 2019:

Performance level EPS growth required % of award that will vest

Below threshold Less than 4% per annum over three years 0%

Threshold 4% per annum over three years 25%

Between threshold and maximum 4% to 12% per annum over three years 25%-100%

Maximum 12% per annum and above over three years 100%

Actual EPS 94.3p

Actual growth achieved over the period (per annum) 14.8% 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 ROCE

for the final year of the performance period % of award that will vest

Below threshold Less than 20.5% 0%

Threshold 20.5% 25%

Between threshold and maximum Between 20.5% and 23.4% 25%-100%

Maximum 23.4% per annum and above 100%

Actual ROCE achieved in 2021/22 30.9% 100%

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 75.

Oxford Instruments plc | Report and Financial Statements 2022

136

Directors’ Remuneration Report continued

Annual Report on Remuneration (B) continued

Long-term incentive plans (audited) continued

Performance Share Plan (PSP) continued

Based on the performance against targets as set out as set out on the previous page, the PSP awards will vest on 15 July 2022

asfollows:

Date

award

granted

Total numbe r

of shares

granted

Percentage

of award

vesting

Number of

shares vesting

Value

shares vesting

(£’000)

Number of

awarded as

dividend

equivalent

Value

shares vesting

including

dividend

equivalent

(£’000)

Ian Barkshire 15 July 2019 48,319 100% 48,319 1,049 847 1,067

Gavin Hill 15 July 2019 37,7 13 100% 37,71 3 819 661 833

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 2022, £21.71. 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 the

vesting 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 5 July 2021 were as follows:

Date award granted

Total numbe r

of shares

granted

Percentage

of salary

Face value of

award at grant

date

Share price

on day before

award date Vesting date

Ian Barkshire 5 July 2021 32,468 150% £772,738 £23.10 5 July 2024

Gavin Hill 5 July 2021 23,338 150% £555,444 £23.10 5 July 2024

The awards have been granted as nil-cost options and are subject to two performance conditions measured over a three-year

period commencing 1 April 2021. One half of each award is subject to a performance condition based on the Company’s compound

annualised earnings per share (EPS) growth. The other half of each award is subject to a performance condition based on the

Company’s return on capital employed in the final year of the performance period.

Vesting of 50% of the award is based on EPS measured over a three-year performance period starting 1 April 2021 as follows:

Performance level EPS growth over three years % of award that will vest

Below threshold Less than 4% per annum 0%

Threshold 4% per annum 25%

Between threshold and maximum 4% to 12% per annum 25%-100%

Maximum 12% per annum and above 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 2021:

Performance level ROCE for the final year of the performance period % of award that will vest

Below threshold Less than 24% 0%

Threshold 24% 25%

Between threshold and maximum Between 24% and 30% 25%-100%

Maximum 30% per annum and above 100%

Governance

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137

As at 31 March 2022, the outstanding options for Ian Barkshire and Gavin Hill under the Executive Share Option Scheme (ESOS) and

the PSP

were as follows:

Name Scheme

31 March

2022 Granted Exercised Lapsed

Dividend

equivalents

1 April

2021

Exercise

price

on date

of grant

Date of

grant

Earliest

exercise

Latest

exercise

Ian Barkshire ESOS — 15,000 15,000 £9.90 £9.87 14/12/11 14/12/14 13/12/21

ESOS — 37,549 37, 549 £10.28 £10.31 15/06/15 15/06/18 14/06/25

PSP — 80,973 80,973 £nil £7. 34 21/06/16 21/06/19 20/06/26

PSP 67,998 67, 998 £nil £9.58 25/09/17 25/09/20 24/09/27

PSP 66,172 1,559 64,613 £nil £10.10 03/07/18 03/07/21 02/07/28

PSP 48,319 48,319 £nil £14.00 15/07/19 15/07/2 2 14/07/29

PSP 42,019 42,019 £nil £16.24 23/09/20 23/09/23 22/09/30

PSP 32,468 32,468 — £nil £23.80 05/07/21 05/07/24 04/07/31

Gavin Hill PSP — 63,198 63,198 £nil £7. 34 21/06/16 21/06/19 20/06/26

PSP 53,071 53,071 £nil £9.58 25/09/17 25/09/20 24/09/27

PSP 51,646 1,216 50,430 £nil £10.10 03/07/1 8 03/07/21 02/07/28

PSP 37,713 37,7 13 £nil £14.00 15/07/19 15/07/2 2 14/07/29

PSP 32,796 32,796 £nil £16.24 23/09/20 23/09/23 22/09/30

PSP 23,338 23,338 — £nil £23.80 05/07/21 05/07/24 04/07/31

1. Dividend equivalents are awarded on PSP shares vesting, for the period to vesting, in respect of the actual number of shares vesting.

The market price of the shares at 31 March 2022 was £21.10 (2021: £19.06) and the range during the year was £17.60 – £26.80

(2021:£11.36‑£20.85).

Performance conditions for outstanding, unvested awards are described below:

PSP 50% of award 50% of award

15 July 2019

2,3

EPS growth – 4% p.a.

(25% vesting) to 12% p.a. (100% vesting)

ROCE

in the final year of the performance period

– 20.5% (25% vesting) to 23.4% (100% vesting)

25 September 2020

EPS growth – 3% p.a.

(25% vesting) to 8% p.a. (100% vesting)

ROCE

in the final year of the performance period

– 20.5% (25% vesting) to 23.4% (100% vesting)

– subsequently increased to 24%-30% by the

Committee using Committee discretion

5 July 2021

EPS growth – 4% p.a.

(25% vesting) to 12% p.a. (100% vesting)

ROCE

in the final year of the performance period

– 24% (25% vesting) to 30% (100% vesting)

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 75.

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.

Achievement of performance conditions (unaudited)

EPS and ROCE performance targets are tested using the audited accounts of the Company. Performance against targets and

the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 the Company

remains within this limit. As at the date of this report, the Company’s utilisation is under 3%, well within the available 10%

headroomposition.

Oxford Instruments plc | Report and Financial Statements 2022

138

Directors’ Remuneration Report continued

Annual Report on Remuneration (B) continued

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 2022 are shown in the table below.

Beneficially

owned

PSP and

ESOS awards

vested but

unexercised

Percentage of

salary held in

shares under

shareholding

guideline

Guideline

met as at

31 March 2022

Unvested PSP

awards

Ian Barkshire 1,995 134,170 309% Yes 122,806

Gavin Hill 1,738 104,717 336% Yes 93,847

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. Shares

valued using the market price of the shares on 31 March 2022: £21.10.

2. Award granted in July 2019 will vest in full in July 2022. Awards granted in September 2020 and July 2021 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 with

the 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 (2021: £4,000) into the Company’s Group Personal Pension Plan in respect of

IanBarkshire and £4,000 (2021: £4,000) into a personal defined contribution plan in respect of Gavin Hill. Balancing payments of

£54,000 to Ian Barkshire and £42,147 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 2022 was £1,219,549 (2021: £996,936). The normal retirement age applicable

to Ian under the scheme, is 65 and should he retire early, no additional benefits would be provided.

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.

Performance graph and CEO’s remuneration (unaudited)

The graph below shows for the ten years ended 31 March 2022 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 comparator

groups for the Company. TSR has been calculated by reference to the relevant share price for each constituent company assuming

dividends are reinvested.

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

2022

31 March

2021

100

200

300

400

500

Oxford Instruments

FTSE 250

FTSE 350 E & EE

FTSE Techmark

This graph shows the value, by 31 March 2022, of £100 invested in Oxford Instruments plc on 31 March 2012 compared with the

value of £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.

Governance

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Oxford Instruments plc | Report and Financial Statements 2022

139

The total remuneration of the CEO over the last ten years is shown in the table below. The annual bonus payout and PSP vesting

level as a percentage of the maximum opportunity are also shown.

2017

Year ending 31 March 2013 2014 2015 2016 DJF IRB 2018 2019 2020 2021 2022

Total remuneration (£’000) 2,348 1,179 579 743 64 620 791 1,957 1,967 2,244 2,145

Annual bonus outcome (%) 69.1% 15.0% 7.5% 38.6% 0% 56.3% 63.7% 94.4% 62.9% 100% 74.2%

ESOS vesting (%) 100% 100% 0% 0% 0% N/A N/A N/A N/A N/A N/A

SELTIS/PSP

vesting (%) 100% 100% 0% 0% 0% N/A N/A 92.8% 100% 100% 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long‑term incentive.

Ratio of Chief Executive pay to that of employees generally

The Chief Executive to employee pay ratio for 2021/22 and prior financial years is set out below:

Financial year Method

25th

percentile

50th

percentile

75th

percentile

2021/22 A 67.1:1 49.9:1 37. 3:1

2020/21 A 72.6:1 55.0:1 39.8:1

2019/21 A 62.5:1 47.8 :1 33.3:1

The pay for the CEO and the employees at the percentiles for the 2021/22 ratio are set out below:

CEO

25th

percentile

50th

percentile

75th

percentile

Salary £487,863 £29,294 £38,532 £53,338

Total pay £2,144,823 £31,948 £43,015 £57,4 85

The ratios have been calculated in accordance with Option A under the relevant regulations, as this is the most statistically accurate

method. The CEO pay is compared to the pay of our UK employees at the 25th, 50th and 75th percentile, calculated based on

full‑time equivalent pay data for the full financial year to 31 March 2022. 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 to a

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 2021/22. None of the employees at the percentiles received share awards.

The CEO pay ratio has decreased this year as a result of the relative value of the PSP award that has been attributable to share

price growth in the period between the awards made in July 2018 and July 2019. In addition, there has been considerable upward

pressure on employee salaries both at recruitment and for retention of key skills and staff.

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, reward

and progression policies in place for all employees.

Oxford Instruments plc | Report and Financial Statements 2022

140

Directors’ Remuneration Report continued

Annual Report on Remuneration (B) continued

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 2020/21 and 2021/22, and 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).

2020/21 to 2021/22 2019/20 to 2020/21

Directors as of 31 March 2022

Salary

% change

Benefits

% change

Bonus

% change

Salary

% change

Benefits

% change

Bonus

% change

Ian Barkshire 15.0 30.1 2.8 -3.6 -41.3 62.1

Gavin Hill 8.5 2.3 -2.8 -4.1 8.2 57.1

Neil Carson 8.0 — — -4.3 — —

Richard Friend 8.0 — — -3.4 — —

Mary Waldner 8.3 — — -3.8 — —

Alison Wood

N/A — — N/A — —

Nigel Sheinwald

N/A — — N/A — —

Average employee pay

4.24 -8.4 -23.1 -0.7% -6.7 7.0

1. Average employee includes all UK employees in service on 1 April 2020 and 31 March 2022 but excludes those who were on maternity leave, long term sick leave and

those who started or ended employment within the period.

2. The average pay increase across all employees in the UK in 2021/22 was 2%.

3. The value of the average employee bonus for the year ended 31 March 2022 (to be paid in July 2022) 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.

5. Nigel Sheinwald joined the Board on 22 September 2021.

Relative importance of the spend on pay

The following table shows the Group’s employee costs relative to dividends and share buybacks:

Year ended

31 March

2022

Year ended

31 March

2021 % change

Employee costs (£m) 115.5 101.4 13.91%

Dividends (£m) 10.4 9.8 6.1%

Share buybacks (£m) — — —

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:

Resolution Votes for Votes against % for % against

Votes marked

as abstain

To approve the Directors’ Remuneration Policy 46,549,719 1,849,350 96.2 3.8 4,242

The resolution to approve the Annual Report on Remuneration at the 2021 AGM received the following votes from Shareholders:

Resolution Votes for Votes against % for % against

Votes marked

as abstain

To approve the Annual Report on Remuneration 46,588,504 1,554,711 96.8 3.2 6,960

How the policy will be applied in 2022/23 (unaudited)

Base salaries

With effect from 1 July 2022, the salaries of the CEO and CFO will increase from £500,00 to £530,000 and £359,406 to £380,970,

respectively. This represents an increase of 6%, which is in line with the salary increase applied with effect from 1 April 2022, for the

wider UK workforce.

Benefits and pension

These will be awarded in accordance with the approved policy. Benefits will be in line with those received in 2021/22. Pension will

be £61,964 for the CEO and £48,363 for the CFO (14% of the level of the (normal) salary rate at the start of 2020/21, frozen for the

duration of this policy period). This equates to c.11.7% of salary for the CEO and 12.7% of salary for the CFO for 2022/23.

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

141

Annual bonus

The maximum opportunity under the annual bonus plan for 2022/23 will be 125% of base salary for both the CEO and CFO, payable

in 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 the

annual bonus for the CEO and CFO as detailed in the table below:

Weighting as

a % of salary

Measure Maximum

Adjusted operating profit margin (%) 27.5%

Profit (£m) 55%

Cash conversion (%) 27.5%

Strategic objectives 15%

Non‑financial strategic targets have been agreed. For the CEO and CFO, these objectives are linked to accelerating growth,

operational effectiveness, our sustainability agenda and shareholder engagement.

The Committee has chosen not to disclose, in advance, the performance targets for the forthcoming year as these include matters

which the Committee considers commercially sensitive. Retrospective disclosure of the performance against them will be made in

next year’s Annual Report on Remuneration.

Long‑term incentives in respect of the financial year

The 2022/23 PSP awards will be over shares with a market value at grant of 150% of salary for the CEO and CFO. Vesting will be

subject to the performance conditions as set out below measured over a three-year performance period commencing 1 April 2022.

The top end of the range for the EPS measure has decreased from that set for last year’s awards reflecting the strong EPS

performance in 2021/22 which results in a high baseline for growth for the 2022/23 award and for the ROCE measure the target

range has increased. The Committee is satisfied these target ranges are appropriately stretching in light of the business plan and

market outlook.

Half of the award Half of the award

EPS growth – 4% p.a. (25% vesting) to 10% p.a. (100% vesting)

over three financial years commencing with the 2022/23

financial year.

ROCE – 26% in the final year of the performance period

(2024/25 financial year) (25% vesting) to 32% (100% vesting).

Non-Executive Directors’ fees

The Committee and the Board, as appropriate, have reviewed the fees for the Chair and Non-Executive Directors. In line with the

general workforce, the basic fees for the Chair and the Non‑Executive Directors will increase by 5% for 2022/23, effective from

1July2022.

2021/22 2022/23 % increase

Board Chair £187,272 £196,636 5%

Additional fee for Deputy Chair £5,202 £5,202 0%

Basic fee £52,071 £54,675 5%

Additional fee for Senior Independent Director £7, 803 £7, 803 0%

Additional fee for Committee Chair £7, 803 £7,8 03 0%

Note: The fees shown for 2021/22 and 2022/23 are the annual rates as at 1 July 2021 and 1 July 2022, respectively.

Approval

This report was approved by the Committee on 13 June 2022 and has been approved subsequently by the Board for submission

toShareholders at the Annual General Meeting to be held on 28 July 2022.

Alison Wood

Chair of the Remuneration Committee

13 June 2022

Oxford Instruments plc | Report and Financial Statements 2022

142

Shareholder Information

Financial calendar

14 June 2022 Announcement of preliminary results

14 July 2022 Final dividend ex-dividend date

15 July 2022 Final dividend record date

28 July 2022 Annual General Meeting

02 August 2022 Final dividend DRIP election date

23 August 2022 Final dividend payment date

08 November 2022 Announcement of half-year results

01 December 2022 Interim dividend ex-dividend date

02 December 2022 Interim dividend record date

20 December 2022 Interim dividend DRIP election deadline

13 January 2023 Interim dividend payment date

31 March 2023 Financial year end

1. Please note that the above dates are subject to change.

Analysis of share register at 31 March 2022

Total numbe r

of holdings

Percentage

of holders

Total number

of shares

Percentage of

issued share

capital

By type of shareholder

Individual 1,557 76.59 3 ,897,923 6.76

Institutions and others 476 23.41 53,756,532 93.24

By size of shareholding

1-500 1,223 60.16 212,070 0.37

501-1,000 243 11.95 183,419 0.32

1,001-10,000 328 16.13 1,003,591 1.74

10,001-100,000 146 7.18 5,332,780 9.25

100,001-500,000 65 3.20 14,733,513 25.55

Over 500,000 28 1.38 36,188,782 62.77

Total 2,033 100 57,654,455 100

Shareholder enquiries

Please contact Link Group, our Registrar,

using the below details, for all enquiries

regarding your shareholding, including

updating your address or other contact

details, direct dividend payments,

merging duplicate shareholder accounts

and amending your communication

preferences.

Online: www.signalshares.com

To register to use this site, will need your

Investor Code (IVC) which can be found

on your share certificate

By telephone: 0371 664 0300

Calls are charged 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 9.00am‑

5.00pm, Monday to Friday excluding

public holidays in England and Wales.

By post: Link Group, PXS 1,

Central Square,

10th Floor,

29 Wellington Street,

Leeds,

LS1 4DL

Annual General Meeting 2022

The 2022 Annual General Meeting

ofOxford Instruments plc will be held

atTubney Woods, Abingdon,

OxfordshireOX13 5QX at 11.00am

onThursday 28July2022.

Further details can be found in the Notice

of Meeting which has been sent to our

shareholders and which is also available

on our website at: https://www.oxinst.

com/investors-content/annual-

general-meeting

Company Information

Company

name: Oxford Instruments plc

Company

number: 00775598

Registered

office address: Tubney Woods,

Abingdon,

Oxon

OX13 5QX

Type: Public Limited Company

Website: www.oxinst.com

Auditor: BDO LLP

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

143

Directors’ Report

The Directors present their Report and

theFinancial Statements of Oxford

Instruments plc for the year ended

31March 2022.

Principal activity and

businessreviews

The Company is the ultimate holding

company of a group of subsidiary

undertakings (the “Group”) which are a

leading provider of high technology

products and services to industrial

companies and scientific research

communities. The Company is required

toset out in this report a true and fair view

of the business of the Group during the

financial year ended 31 March 2022, the

position of the Group at the end of the

financial year and a description of the

principal risks and uncertainties facing

the Group. The information which fulfils

these requirements includes the

Operations Review on pages 36 to 47,

theFinance Review on pages 67 to 76

and the report on Sustainability on pages

48 to 66, which are incorporated in this

report by reference. 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 86.

Results and dividends

The results for the year are shown in the

Consolidated Statement of Income on

page 156. The Directors recommend a

final dividend of 13.7p per ordinary share,

which together with the interim dividend

of 4.4p per ordinary share is a total of

18.1p per ordinary share for the year

(2021: 17.0p per ordinary share). Subject to

Shareholder approval, the final dividend

will be paid on 23 August 2022 to

Shareholders registered at close of

business on 15 July 2022.

Risks and uncertainties

The Board exercises proper and

appropriate corporate governance

acrossthe Group. It ensures that there are

effective systems of internal controls in

place to manage Shareholders’ interests

and the Group’s assets, including the

assessment and the management of

therisks to which the businesses are

exposed, and to monitor and manage

thecompliance with all the legal

requirements that affect the Group’s

worldwide business activities. However,

such systems are designed to manage

rather than eliminate the risk of failure to

achieve business objectives and can

provide only reasonable and not absolute

assurance against material misstatement

or loss.

The Executive Directors report to the

Board on changes in the business and in

the external environment which may

affect the risks which the Group faces.

The Executive Directors also provide the

Board with financial information at each

Board meeting. Key performance

indicators are reviewed periodically.

There are a number of risks and

uncertainties which may have a material

effect on the Group. These are described

in Principal Risks on pages 80 to 84.

Directors

Biographies of all the Directors at the

date of this report, including

Non-Executive Directors, are set out on

pages 90 and 91. During the year ended

31 March 2022 there were a number of

changes to the Board. Steve Blair and

Thomas Geitner stepped down as

Directors with effect from the conclusion

of the AGM on 21 September 2021 and

Nigel Sheinwald joined the Board on

22September 2021.

Directors’ conflicts of interest

The Companies Act 2006 allows

Directors of public companies to

authorise conflicts and potential conflicts

of interest, where appropriate. Only

Directors with no interest in the matter

under consideration may participate in

the relevant decision and in doing so they

must act in a way which they consider in

good 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 and

potential conflicts is maintained.

Directors’ interests

The beneficial interests of the Directors in

the Company’s share capital, all in fully

paid up shares at 31 March 2022, are

shown below.

Details of share options for the Executive

Directors are shown in the Remuneration

Report on page 137.

31 March

2022

31 March

2021

Ian Barkshire 1,995 12,642

Neil Carson 8,000 8,000

Richard Friend — —

Gavin Hill 1,738 660

Mary Waldner 1,000 1,000

Alison Wood — —

Nigel Sheinwald — 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 2022, no Director

had a material interest in any contract of

significance 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 each

participate in the Oxford Instruments

Share Incentive Plan and since the year

end have each increased their beneficial

holding by 17 shares.

Oxford Instruments plc | Report and Financial Statements 2022

144

Insurance cover and

Directors’indemnities

For a number of years, the Group has

purchased insurance to cover its Directors

and Officers against their costs in

defending themselves in legal

proceedings taken against them in that

capacity and in respect of damages

resulting from the unsuccessful defence

of any proceedings. In addition, to the

extent permitted by UK law, the Group

indemnifies its Directors and Officers for

liabilities 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 share

capital, which comprises ordinary shares

of 5p each. All shares forming part of the

ordinary share capital have the same

rights and carry one vote each. There are

no unusual restrictions on the transfer of

a share.

The full rights and obligations attaching

to the Company’s ordinary shares, as well

as 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

contacting the Company Secretary.

During the year to 31 March 2022, the

Board issued 193,002 new shares

(2021:26,690) following the exercise of

options under the Company’s share

option schemes. At 31 March 2022, the

issued share capital of the Company was

57,654,455 ordinary shares of 5p each.

Inconnection with the Company’s

equityincentive plans, a separately

administered trust held 2,370 ordinary

shares at 31 March 2022 (representing

0.004% of the total issued share capital of

the Company). No shares in the Company

were acquired by the Company during

the year (2021: nil). Details of the share

capital and options outstanding as at

31March 2022 are set out in Notes 23

and11 respectively to the Financial

Statements.

At this year’s Annual General Meeting, the

Directors 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-third

of the Company’s issued share capital

and, where full pre-emption rights are

applied, 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 the

Company’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 Company, in accordance with Chapter 5 of the Disclosure Guidance and Transparency Rules, of the

Company’s issued ordinary share capital, the only class of voting capital, at 25 May 2022:

Direct/

indirect

‘000

% of

total

Columbia Threadneedle Investments Indirect/direct 7,152,870 12.41

BlackRock Inc Indirect 5,259,281 9.12

Artemis Fund Managers Indirect 3,094,983 5.37

Lady KA Wood and the Estate of the late Sir MF Wood Direct 2,903,030 5.03

Directors’ Report continued

Governance

Strategic Report Company InformationFinancial Statements

Oxford Instruments plc | Report and Financial Statements 2022

145

Tax strategy

The Group’s tax strategy supports the

strategic objectives of the Group and

applies equally to both UK and non-UK

taxes and to all forms of tax. The Group

pays a significant amount of tax to

national and local governments,

including taxes on employment,

corporate taxes on profits, customs and

excise duty on purchases, withholding

taxes and environmental taxes. We also

administer VAT and similar sales taxes

charged to our customers and

withholdings on payments made to our

employees. The Group’s tax strategy is

published on the Group’s website at

www.oxinst.com/investors-content/

tax-strategy.

Payment of suppliers

The Group does not follow a standard

payment practice but agrees terms and

conditions for its business transactions

with each of its suppliers. Payment is then

made in accordance with these terms.

Charitable donations

During the year, the Group made

charitable donations of £38,877

(2021:£3,871).

Political donations

During the year, the Group made no

political donations (2021:nil).

Fixed assets

Whilst the market value of some fixed

assets may differ from book value, the

Directors believe that the differences are

not material.

Disclosure of information

toauditor

Pursuant to Section 418(2) of the

Companies Act 2006, the Directors who

held office at the date of approval of this

Directors’ 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 has

taken all the steps that he or she might

reasonably have been expected to have

taken as a Director to make himself or

herself aware of any relevant audit

information and to establish that the

Company’s auditor is aware of

thatinformation.

Annual General Meeting

The Notice of the Annual General

Meeting to be held on 28 July 2022

issetout in a letter to Shareholders

together with explanatory notes

relatingto the resolutions.

External auditor

A resolution to re‑appoint BDO LLP as

auditor for the financial year 2021/22 was

passed at the 2021 Annual General

Meeting and a resolution to re-appoint

them as auditor for the financial year

2022/23 will be proposed at the 2022

Annual General Meeting on 28 July 2022.

Change of control arrangements

There are a number of agreements that

take effect, alter or terminate upon a

change of control of the Company

following a takeover, such as banking

agreements and Company share plans.

On a change of control, the Company’s

committed credit facilities may be

cancelled by lenders by giving not less

than three days’ notice. It is also possible

that pension plan funding arrangements

would need to be changed following a

change of control if that resulted in a

weakening of the employer covenant.

Corporate governance

The Board reviews its work on corporate

governance in the Governance Report on

pages 88 to 146.

Financial risk management

Details of the Group’s financial risk

management objectives and policies,

including the exposure to price, credit and

liquidity risk, are set out in Note 21 to the

Financial Statements.

Employees

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 and

that there is an inclusive culture where

differences are valued and people are

given the environment in which they can

do their best work. The Sustainability

report on pages 117 to 119 further

describes how diversity and inclusion is

managed within Oxford Instruments.

It is the policy of the Company to give full

and fair consideration to applications for

employment from disabled persons; to

continue, wherever possible, the

employment of members of staff who

may become disabled; and to ensure that

suitable training, career development and

promotion of disabled persons takes

place.

Greenhouse gas emissions

To meet the requirements of the

Companies Act 2006 (Strategic and

Directors’ Report) Regulations 2013, CO

emissions are reported on as part of our

reporting on greenhouse gas emissions in

Sustainability on pages 50 and 51.

Material events

There were no material events since the

year end to report.

By order of the Board

Sarah Harvey

Company Secretary

13 June 2022

Oxford Instruments plc | Report and Financial Statements 2022

146

Directors’ Report continued

Non-Financial Information Statement

The table below explains where relevant non‑financial information can be found within this report, further to the Financial Reporting

Directive requirements contained in Sections 414CA and 414CB of the Companies Act 2006. Where appropriate, details on where

additional information relating to these matters can be found, have also been included.

Key policies and procedures Information within this report Additional information

Environmental

matters

Health and Safety Policy

Group Energy Policy

Environmental Policy

Supplier Due Diligence and Audit

Procedures

Sustainability – protecting the

environment: pages 49 to 51

Sustainability Committee Report:

pages 117 to 119

www.oxinst.com/corporate‑

content/sustainability

www.oxinst.com/CBCE

www.oxinst.com/corporate‑

content/supplier‑and‑partner‑

engagement

Employees 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

Information

Employee engagement:

pages29 and 30

How we look after our

employees: pages 29 and 30

Board Leadership and Group

Purpose: page 92

Sustainability Committee Report:

pages 117 to 119

www.oxinst.com/corporate‑

content/health‑and‑safety

www.oxinst.com/CBCE

www.oxinst.com/corporate‑

content/employees

www.oxinst.com/corporate‑

content/diversity‑and‑inclusion

https://careers.oxinst.com/

working-here

Social matters Export Control Policy

Code of Business Conduct and Ethics

Group Sanctions Policy

Global Marketing Policy

Group Export Controls

Community engagement: page33

Sustainability Committee Report:

pages 117 to 119

www.oxinst.com/corporate‑

content/privacy

www.oxinst.com/CBCE

www.oxinst.com/investors‑

content/compliance/group‑

export-controls-policy

Human rights Global Human Rights Policy

Modern Slavery Statement

Gender Pay Report

Ethics – human rights: page 56 www.oxinst.com/corporate‑

content/human‑rights‑policy

www.oxinst.com/corporate‑

content/modern‑slavery

www.oxinst.com/corporate‑

content/gender‑pay‑report

www.oxinst.com/corporate‑

content/privacy

Anti-bribery

and corruption

Anti-bribery and Anti-corruption Policy

Reporting a Business Malpractice Policy

Share Dealing Policy

Supplier Code of Conduct

Conflicts of Interest Policy

Supplier Due Diligence and Audit

Procedures

Ethics – anti-bribery and

corruption: page 55

Supplier engagement: page 32

www.oxinst.com/CBCE

Additional

disclosures:

– Business

model

– Principal risks

– Non-financial

KPIs

Group Tax Strategy Investment case: pages 6 and 7

Business Model: pages 22 and 23

Strategy: pages 24 and 25

KPIs: pages 34 and 35

Principal Risks: pages 80 to 84

Audit and Risk Committee

Report: pages 110 to 116

www.oxinst.com/investors‑

content/compliance/group‑tax‑

strategy

The Directors’ Report is approved by the Board and signed on its behalf by

Sarah Harvey

Company Secretary

13 June 2022

GovernanceStrategic Report Company Information

Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

147

Financial Statements

Directors’ Responsibilities

See page 148 of the Financial Statements.

Independent Auditor’s Report

See pages 149 to 155 of the Financial Statements.

Consolidated Statement of Income

See page 156 of the Financial Statements.

Consolidated Statement of Comprehensive Income

See page 157 of the Financial Statements.

Consolidated Statement of Financial Position

See page 158 of the Financial Statements.

Consolidated Statement of Changes in Equity

See page 159 of the Financial Statements.

Consolidated Statement of Cash Flows

See page 160 of the Financial Statements.

Accounting Policies

See pages 161 to 166 of the Financial Statements.

Notes to the Financial Statements

See pages 167 to 197 of the Financial Statements.

Parent Company Statement of Financial Position

See page 198 of the Financial Statements.

Parent Company Statement of Changes of Equity

See page 199 of the Financial Statements.

Notes to the Parent Company Financial Statements

See pages 200 to 207 of the Financial Statements.

Oxford Instruments plc | Report and Financial Statements 2022

148

The Directors are responsible for

preparing the Report and the Group

andParent Company Financial

Statements in accordance with

applicable 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 to

prepare the Group Financial Statements

in accordance with UK-adopted

International Accounting Standards 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 a

true 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, the

Directors are required to:

•

select suitable accounting policies and

then apply them consistently;

•

make judgements and estimates that

are reasonable, relevant, reliable and

prudent;

•

for the Group Financial Statements,

state whether they have been

prepared in accordance with

UK-adopted International Accounting

Standards;

•

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 a

going concern, disclosing, as

applicable, matters related togoing

concern; and

•

use the going concern basis of

accounting 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 with

reasonable accuracy at any time the

financial position of the Parent Company

and enable them to ensure that its

Financial Statements comply with the

Companies Act 2006. They are

responsible for such internal control as

they determine is necessary to enable the

preparation of Financial Statements that

are free from material misstatement,

whether due to fraud or error, and have

general responsibility for taking such

steps as are reasonably open to them

tosafeguard the assets of the Group and

to prevent and detect fraud and other

irregularities.

Under applicable law and regulations,

the Directors are also responsible for

preparing a Strategic Report, Directors’

Report, Directors’ Remuneration Report

and Corporate Governance Statement

that comply with thatlaw and those

regulations.

The Directors are responsible for the

maintenance and integrity of the

corporate and financial information

included on the Company’s website.

Legislation in the UK governing the

preparation and dissemination of

Financial Statements may differ from

legislation in other jurisdictions.

Responsibility statement of

theDirectors in respect of the

annualfinancial report

We confirm that to the best of our

knowledge:

•

the Financial Statements, prepared in

accordance with the applicable set of

accounting standards, give a true and

fair view of the assets, liabilities,

financial position and profit or loss of

the Company and the undertakings

included in the consolidation taken as

a whole; and

•

the Strategic Report/Directors’ Report

includes a fair review of the

development and performance of the

business and the position of the issuer

and the undertakingsincluded in the

consolidation taken as a whole,

together with a description of the

principal risks and uncertainties that

they face.

We consider the Report and Financial

Statements, taken as a whole, is fair,

balancedand understandable and

provides the information necessary for

Shareholders to assess the Group’s

position and performance, business

model and strategy.

Signed on behalf of the Board

Ian Barkshire Gavin Hill

Chief Executive Chief Financial

Officer

13 June 2022

Directors’ Responsibilities

in relation to the Report and Financial Statements

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149

Opinion on the Financial

Statements

In our opinion:

•

the Financial Statements give a true

and fair view of the state of the Group’s

and of the Parent Company’s affairs as

at 31 March 2022 and of the Group’s

profit for the year then ended;

•

the Group Financial Statements have

been properly prepared in accordance

with UK adopted international

accounting standards;

•

the Parent Company Financial

Statements have been properly

prepared in accordance with United

Kingdom Generally Accepted

Accounting Practice; and

•

the Financial Statements have been

prepared in accordance with the

requirements of the Companies Act

2006.

We have audited the Financial Statements

of Oxford Instruments Plc (the ‘Parent

Company’) and its subsidiaries (the

‘Group’) for the year ended 31 March 2022

which comprise the Consolidated

Statement of Income, the Consolidated

Statement of Comprehensive Income,

Consolidated statement of 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 in the preparation of

the Group Financial Statements is

applicable law and UK adopted

international accounting standards.

Thefinancial reporting framework that

has been applied in the preparation of

the Parent Company Financial Statements

is applicable law and United Kingdom

Accounting Standards, including Financial

Reporting Standard 101 Reduced

Disclosure Framework (United Kingdom

Generally Accepted Accounting Practice).

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 described in 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 to provide a basis for our

opinion. Our audit opinion is consistent

with the additional report to the audit

committee.

Independence

Following the recommendation of the

audit committee, we were appointed by

the Board of Directors on 4March2020 to

audit the Financial Statements forthe

year ended 31March2021 and

subsequent financial periods. The period

of total uninterrupted engagement is two

years, covering the years ended

31March2021 and 31March2022.

Weremain independent of the Group and

the Parent Company in accordance with

the ethical requirements that are relevant

to our 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.

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. Our evaluation

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 and reliability

of underlying data used to make the

assessment, and whether assumptions

and changes to assumptions from

prior 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,

includingorder books.

•

Challenging management on

whetherthe reverse stress test is

appropriate and appropriately

stressesthe business based on our

industry knowledge.

•

Reviewing the period assessed by the

Directors ensuring that it meets the

requirements of the applicable

accounting standards and the

corporate governance code, and

challenging Directors on whether there

are any future events that may impact

the assessment completed.

•

Reviewing the adequacy and

appropriateness of disclosures in the

Financial Statements regarding the

going concern assessment.

•

Comparing the level of available

financial resources with the Group’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.

Independent Auditor’s Report

to the members of Oxford Instruments plc

Oxford Instruments plc | Report and Financial Statements 2022

150

Conclusions relating to going concern continued

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 the Group and the Parent Company’s ability to continue as a going concern

for a period of at least twelve months from when the Financial Statements are authorised for issue.

In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material

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 with respect to going concern are described in the relevant sections of

this report.

Overview

Coverage

98% of Group profit before tax

91% of Group revenue

90% of Group total assets

Key audit matters

2022 2021

Revenue

 

Business combinations

 

Materiality Group Financial Statements as a whole

£2.5m (2021: £2.6m) based on 5.3% (2021: 5.0%) of Profit before tax.

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 of

internal 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 Directors that may have

represented a risk of material misstatement.

For the Group audit we determined the individual components on which the scope of our work would be undertaken, and for each of

these components we then determined whether they are significant, material or other in-scope. We consider that a component is

significant if it either represents over 15% of Group revenues, or 15% of PBT. We defined material as between 10-15% of the same

metrics, and other in-scope was defined as balances scoped in to ensure sufficient audit coverage overall. A full scope audit was

undertaken for the significant components, along with certain material components which had full scope local reporting requirements.

This provided total coverage of 66% of revenues and 78% of PBT, of which 34% and 48% respectively was performed by the Group

engagement team, with the remainder performed by local BDO member firms. Full scope procedures provided coverage of 80%

across total Group assets. In addition specific procedures, including revenue testing, were performed on the other in scope

components representing 32% of Group revenues and 13% of PBT, of which 8% and 0% respectively was performed by the Group

engagement team.

The Group has 28 components, of which we have classified four as significant, and all of which are in the UK, and four as material,

including the Parent Company in the UK, with the others being in the US, Germany and Japan. All these have been audited under

fullscope audit procedures. In addition, there are eight other in-scope components where specified audit procedures have been

undertaken. Three of the significant UK components and the Parent Company were audited by the Group engagement team,

withtheforth undertaken by a BDO member firm in Belfast. In addition the Group engagement team audited three of the other

in-scope components. Local BDO member firms performed the audit work on the remaining three material components,

inadditiontofive of the other in-scope components.

The remaining twelve components have been subject to specified audit procedures using Group materiality.

Independent Auditor’s Report continued

to the members of Oxford Instruments plc

GovernanceStrategic Report Company Information

Financial Statements

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151

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 Group team instructed the component auditors with specific focus on the significant risk areas to be covered, including the

KeyAudit Matter (Revenue) detailed below. The component materialities were set by the Group audit team, 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 on-site and remotely.

The Group audit team visited component sites in Belfast, along with the two German component locations, and had remote calls

with component management in Japan and the US. For all significant and material locations not audited by the Group team,

regularremote calls were undertaken through the planning, execution and completion stages of the work, where findings were

discussed, remote reviews of component auditors’ files were performed and additional work was undertaken as necessary by the

component auditor.

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 to

fraud) 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 the

Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

How the scope of our audit addressed the

key audit matter

Revenue recognition

(Revenue £367.3m;

2021: £318.5m)

Refer to page 113

(Audit Committee

Report), page 165

(accounting policy).

Given the nature of the products’

varying shipping terms and

installation arrangements, across the

various divisions, there are manual

procedures involved in determining

when control has passed, and

therefore revenue recognised, which

is assessed by two factors: when

shipping terms have been met and

when the installation element of the

sale has been completed.

Therefore, this was considered to be

a key audit matter.

Our procedures included:

Testing, on a sample basis, whether specific product revenue

transactions during the year and around the year end,

including those within deferred and accrued income

balancesat the year end, had been recognised in the

appropriate period.

Each item was tested by assessing the nature of products, the

terms of sale within the associated contracts, the estimated

split of revenue between product delivery and installation

based on the individual selling price, confirming to customer

acceptance where installation has occurred, and verifying the

shipping/delivery dates to carrier information where

installation has yet to occur.

We tested a sample of product sales around the year end,

witha focus on the higher value, more complex systems, and

specifically in the NanoScience division by obtaining evidence

of installation completion to verify that revenue has been

recognised in the appropriate period.

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.

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152

Key audit matter

How the scope of our audit addressed the

key audit matter

Business

combinations

Refer to page 113

(Audit Committee

Report), page 161

(accounting policy)

and page 172

(financial disclosures).

On 31 August 2021 the Group

completed its acquisition of WITec

Wissenschaftliche Instrumente und

Technologie GmbH (“WITec”).

We determined this to be a key area

of focus for the audit and hence a

key audit matter due to the

significance of the transaction in the

consolidated Financial Statements

and the degree of judgement

required in the identification and

valuation of the assets and liabilities

acquired, along with the

consideration paid.

Our audit procedures included assessing the appropriateness

of the accounting treatment adopted and challenging the

Directors’ assessment of the fair value of the assets acquired

and liabilities assumed with reference to a Purchase Price

Allocation (“PPA”) provided by management and the

requirements of the applicable accounting standards.

With the use of our internal valuation experts, where

applicable, we performed the following procedures to in

respect of the fair value of the assets acquired. This included:

•

evaluating the completeness and existence of intangible

assets recognised;

•

assessment of the valuation methodologies applied;

•

assessment of the key assumptions made by management,

such as discount rates and growth rates which were

compared to our independently calculated range;

•

benchmarking the assumptions used with other

transactions in the sector;

•

performing sensitivity analysis to understand the extent to

which changes in key assumptions may give rise to a

materially different valuation for the intangible asset;

•

assessing the likelihood of payment of contingent

consideration, along with the discount rates used to reflect

these amounts back to fair value;

•

reviewing the calculations for the release of unrealised

profit in acquired inventory through the Income Statement.

•

auditing the local GAAP completion accounts; and

•

reviewing the conversion from local GAAP to UK adopted

international accounting standards, and ensuring that the

methodology used is appropriate and in line with the

applicable framework.

We assessed the completeness and accuracy of the

disclosures relating to the acquisition taking into account the

requirements of the accounting standards.

Key observations:

Nothing has come to our attention which suggests that, in all

material respects, the fair values of the acquired assets and

liabilities of WITec, and consideration paid, are not appropriate.

Our application of materiality

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 decisions

of 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.

Independent Auditor’s Report continued

to the members of Oxford Instruments plc

An overview of the scope of our audit continued

Key audit matters continued

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Financial Statements

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153

Based on our professional judgement, we determined materiality for the Financial Statements as a whole and performance

materiality as follows:

Group Financial Statements Parent Company Financial Statements

2022

£m

2021

£m

2022

£m

2021

£m

Materiality 2.50 2.60 1.75 1.50

Basis for determining

materiality

5.3% Profit before tax 5% Profit before tax

70% of Group materiality

60% of Group materiality

Rationale for the

benchmark applied

As a trading Group, profit before tax is considered

to be the most relevant measure for the users

of the Financial Statements.

Set at 70% (2021: 60%) of Group materiality

giventhe assessment of the components

aggregation risk.

Performance materiality 1.63 1.56 1.14 0.90

Basis for determining

performance materiality

65% of materiality 60% of materiality 65% of materiality 60% of materiality

We applied performance materiality levels to our testing to ensure that the risk of errors exceeding

component materiality was appropriately mitigated, and taking into account our assessment of the control

environment, the history of misstatements, along with management’s attitude to proposed adjustments.

Component materiality

We set materiality for each component of the Group based on a percentage of between 40% and 80% of Group materiality

dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged

from £1.0m to £2.0m. In the audit of each component.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £62,500 (2021:£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 of

assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other

information 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 to

determine 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 Governance

Code 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 and

longer-term viability

•

The Directors’ statement with regards to the appropriateness of adopting the going concern

basis of accounting and any material uncertainties identified set out on page 148; and

•

The Directors’ explanation as to their assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate set out on pages 85 and 86.

Other Code provisions

•

Directors’ statement on fair, balanced and understandable set out on page 148;

•

Board’s confirmation that it has carried out a robust assessment of the emerging and

principal risks set out on page 148;

•

The section of the annual report that describes the review of effectiveness of risk

management and internal control systems set out on pages 77 to 84; and

•

The section describing the work of the audit committee set out on pages 110 to 116.

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154

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 the

Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report and

Directors’ 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

applicable legal 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

prepared in accordance with the Companies Act 2006.

Matters on which we are

required to report by

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 for our 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 be audited 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 is

necessary 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 to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no

realistic alternative but to do so.

Auditor’s responsibilities for the audit of 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 an auditor’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 a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

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Financial Statements

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155

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. These procedures were

incorporated into our instructions to the component auditors for the significant and material components not audited by the Group

engagement team, and the results included as part of our review of their work. The extent to which our procedures are capable of

detecting irregularities, including fraud is detailed below:

•

We have identified and assessed the potential risks related to irregularities, including fraud, by considering the following:

•

The nature of the industry, including the design of the Group’s remuneration policies;

•

Enquiries of management and those charged with governance regarding: the compliance with laws and regulations;

thedetection and response to the risk 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 and regulations;

•

Obtaining an understanding of the legal and regulatory framework in which the Group operates, including Companies Act

2006, relevant taxation legislation, along with the relevant financial reporting framework.

•

We have responded to risks identified by performing procedures including the following:

•

In response to the risk of fraud in revenue recognition, the procedures set out in the key audit matters section above;

•

Enquiry of in-house management and external legal counsel concerning actual and potential litigation and claims;

•

Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of

misstatement due to fraud; and

•

Reading the minutes of meetings of those charged with governance.

•

We have also considered the risk of fraud through management override of controls by:

•

Sample testing the appropriateness of journal entries and other adjustments by agreeing to supporting documentation; and

•

Assessing whether the judgements made in making accounting estimates are indicative of potential bias in particular in

respect of the determination of assumptions in respect of business combinations (refer to the key audit matter), provisions for

intellectual property-related claims and assumptions used in determining the defined benefit pension liability.

•

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members,

including component auditors and remained alert to any indications of fraud or non-compliance with laws and regulations

throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the Financial Statements, recognising that the

risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud

may involve deliberate concealment by, for example, 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 reflected in the Financial Statements, the less likely we are to become aware 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 the Companies

Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are

required to state to them in an auditor’s report and 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 a body, for our audit work,

for this report, or for the opinions we have formed.

Ian Oliver

(Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor Reading, United Kingdom

13 June 2022

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Oxford Instruments plc | Report and Financial Statements 2022

156

2022 2021

Note

Adjusted

£m

Adjusting

items

£m

Total

£m

Adjusted

£m

Adjusting

items

£m

Total

£m

Revenue 3 3 6 7. 3 — 3 6 7. 3 318. 5 — 318 .5

Cost of sales (179.5) — (179. 5) (153.7) — (153.7)

Gross profit 1 8 7. 8 — 1 8 7. 8 16 4. 8 — 16 4. 8

Research and development 5 (32 .8) — (32 .8) (30.0) (1 .3) (31 . 3)

Selling and marketing (52. 5) — (52 . 5) (4 4. 5) — (4 4 . 5)

Administration and shared services (4 2 . 2) (11 .6) (53 .8) (34 . 5) (8.8) (4 3 . 3)

Foreign exchange gain/(loss) 6 .0 (6. 4) (0. 4) 0. 9 6.4 7. 3

Operating profit 66.3 (18 .0) 48. 3 56 .7 (3 .7) 53 .0

Interest credit on pension scheme net assets 0.4 — 0. 4 0.9 — 0. 9

Other financial income 0.1 — 0. 1 0. 2 — 0. 2

Financial income 7 0. 5 — 0. 5 1 .1 — 1 .1

Financial expenditure 8 (0.9) (0. 3) (1 . 2) (1 .9) — (1 .9)

Profit/(loss) before income tax 3 65.9 (18 .3) 4 7. 6 55.9 (3 .7) 52. 2

Income tax (expense)/credit 12 (11 . 7) 2 .7 (9.0) (10. 8) 0.4 (10 .4)

Profit/(loss) for the year attributable to equity

Shareholders of the parent 54. 2 (15 .6) 38.6 45 .1 (3 .3) 41 . 8

Earnings per share pence pence pence pence

Basic earnings per share 2

– From profit for the year 94. 3 6 7. 1 78 .6 72.8

Diluted earnings per share 2

– From profit for the year 93 .0 66. 2 7 7. 6 71.9

Dividends per share 13

Dividends paid 21 .4 —

Dividends proposed 13.7 1 7. 0

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.

The attached notes form part of these Financial Statements.

Consolidated Statement of Income

Year ended 31 March 2022

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157

Consolidated Statement of Comprehensive Income

Year ended 31 March 2022

2022

£m

2021

£m

Profit for the year 38.6 41 . 8

Other comprehensive income/(expense):

Items that may be reclassified subsequently to Consolidated Statement of Income

Foreign exchange translation differences 1 .0 (4.9)

Items that will not be reclassified to Consolidated Statement of Income

Remeasurement gain/(loss) in respect of post-retirement benefits 2 7. 3 (30. 8)

Tax (charge)/credit on items that will not be reclassified to Consolidated Statement of Income (6. 8) 5.5

Total other comprehensive income/(expense) 21 .5 (30. 2)

Total comprehensive income for the year attributable to equity Shareholders of the parent 60. 1 11 .6

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158

Note

2022

£m

2021

£m

Assets

Non-current assets

Property, plant and equipment 14 31 .7 2 1.1

Right-of-use assets 29 1 7. 9 7. 3

Intangible assets 15 1 40. 7 122.6

Derivative financial instruments 22 — 1 .1

Retirement benefit asset 25 51 .7 16 .3

Deferred tax assets 16 13.7 13 .1

255.7 181. 5

Current assets

Inventories 17 65.3 58.7

Trade and other receivables 18 10 4. 7 75. 6

Current income tax receivable 0.8 1 .9

Derivative financial instruments 22 1 .0 5 .0

Cash and cash equivalents 19 96.4 128 .0

268. 2 269. 2

Total assets 523. 9 45 0.7

Equity

Capital and reserves attributable to the Company’s equity Shareholders

Share capital 23 2.9 2.9

Share premium 62 .5 62 .4

Other reserves 0. 2 0. 2

Translation reserve 7. 6 6 .6

Retained earnings 243. 2 194 .1

316. 4 26 6. 2

Liabilities

Non-current liabilities

Bank loans 24 1 .3 —

Lease payables 29 1 4.9 4.9

Derivative financial instruments 22 0. 3 —

Provisions 28 0. 1 0.7

Deferred tax liabilities 16 15.4 4.9

32 .0 10 .5

Current liabilities

Bank loans and overdrafts 24 9. 2 30.4

Trade and other payables 26 149. 5 1 26. 1

Lease payables 29 3.5 2.6

Current income tax payables 4.5 6. 2

Derivative financial instruments 22 1.1 —

Provisions 28 7. 7 8 .7

175 . 5 1 74 . 0

Total liabilities 2 0 7. 5 184 .5

Total liabilities and equity 523. 9 45 0.7

The Financial Statements were approved by the Board of Directors on 13 June 2022 and signed on its behalf by:

Ian Barkshire Gavin Hill

Director Director

Company number: 775598

Consolidated Statement of Financial Position

As at 31 March 2022

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159

Consolidated Statement of Changes in Equity

Year ended 31 March 2022

Share capital

£m

Share premium

£m

Other reserves

£m

Translation

reserve

£m

Retained

earnings

£m

Total

£m

As at 1 April 2021 2. 9 62 .4 0. 2 6.6 19 4.1 266 .2

Total comprehensive income/(expense):

Profit for the year — — — — 38.6 3 8.6

Other comprehensive income/(expense):

– Foreign exchange translation differences — — — 1 .0 — 1 .0

– Net cumulative foreign exchange gain on disposal

of subsidiaries recycled to the Income Statement — — — — — —

– Remeasurement gain in respect of

post-retirement benefits — — — — 2 7. 3 2 7. 3

– Tax charge on items that will not be reclassified

to Consolidated Statement of Income — — — — (6 .8) (6 .8)

Total comprehensive income attributable

toequity Shareholders of the parent — — — 1 .0 59. 1 60. 1

Transactions with owners recorded directly

inequity:

– Credit in respect of employee service costs

settled by award of share options — — — — 2.1 2 .1

– Tax credit in respect of share options — — — — 0. 2 0. 2

– Proceeds from shares issued — 0. 1 — — — 0. 1

– Dividends — — — — (12 .3) (12 . 3)

Total transactions with owners recorded directly

in equity: — 0. 1 — — (10. 0) (9.9)

As at 31 March 2022 2 .9 62 .5 0. 2 7. 6 243. 2 316 .4

As at 1 April 2020 2.9 62. 2 0. 2 11 .5 1 74 . 8 251 .6

Total comprehensive income/(expense):

Profit for the year — — — — 41 . 8 41 .8

Other comprehensive (expense)/income:

– Foreign exchange translation differences — — — (4.9) — (4.9)

– Remeasurement loss in respect of

post-retirement benefits — — — — (3 0. 8) (30 .8)

– Tax credit on items that will not be reclassified to

Consolidated Statement of Income — — — — 5. 5 5.5

Total comprehensive (expense)/income

attributable to equity Shareholders of the parent — — — (4.9) 16. 5 11 .6

Transactions with owners recorded directly

inequity:

– Credit in respect of employee service costs

settled by award of share options — — — — 1 .8 1.8

– Tax credit in respect of share options — — — — 1 .0 1 .0

– Proceeds from shares issued — 0. 2 — — — 0. 2

– Dividends — — — — — —

Total transactions with owners recorded directly

in equity: — 0. 2 — — 2.8 3 .0

As at 31 March 2021 2.9 62.4 0. 2 6.6 194 .1 26 6. 2

Other reserves comprise the capital redemption reserve, which represents the nominal value of shares repurchased and then

cancelled during the year ended 31 March 1999.

The foreign exchange translation reserve comprises all foreign exchange differences arising since 1 April 2004 from the translation

of the Group’s net investments in foreign subsidiaries into Sterling.

The Group holds 2,370 (2021: 52,631) 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 2022

160

Consolidated Statement of Cash Flows

Year ended 31 March 2022

Note

2022

£m

2021

£m

Profit for the year 38.6 41 . 8

Profit for the year from continuing operations 38.6 41 . 8

Adjustments for:

Income tax expense 12 9 .0 10 .4

Net financial expense 0.7 0.8

Fair value movement on financial derivatives 6.4 (6 .4)

WITec post-acquisition gross margin adjustment 1.7 —

Acquisition-related costs 0.4 0.4

Impairment of capitalised development costs — 1.3

Amortisation and impairment of acquired intangibles 15 9. 5 8.4

Depreciation of right-of-use assets 29 3.4 2.8

Depreciation of property, plant and equipment 14 4.1 3.8

Amortisation of capitalised development costs 15 1 .9 2. 5

Adjusted earnings before interest, tax, depreciation and amortisation 75 .7 65 .8

Charge in respect of equity settled employee share schemes 11 2 .1 1 .8

Restructuring costs (paid)/received — 0. 3

Cash payments to the pension scheme more than the charge to operating profit (7. 6) (15. 5)

Operating cash flows before movements in working capital 70. 2 52.4

Increase in inventories 20 (0. 1) (1 .3)

Increase in receivables 20 (2 1 .6) (10 .5)

Increase in payables and provisions 20 11 .4 11 .3

Increase/(decrease) in customer deposits 20 (1 . 5) (2. 2)

Cash generated from operations 58. 4 49.7

Interest paid (0. 5) (1 . 6)

Income taxes paid (8.8) (6. 3)

Net cash from operating activities 49.1 41 . 8

Cash flows from investing activities

Proceeds from sale of property, plant and equipment — 0. 2

Acquisition of property, plant and equipment (13 .9) (4.2)

Acquisition of subsidiaries, net of cash acquired 6 (30. 6) —

Acquisition-related costs (0.4) —

Acquisition of intangibles (0.1) —

Capitalised development expenditure (0. 7) (0. 9)

Interest received 0.1 —

Net cash used in investing activities (45. 6) (4.9)

Cash flows from financing activities

Proceeds from issue of share capital 0.1 0. 2

Payments made in respect of lease liabilities 29 (3.4) (2 .8)

Repayment of borrowings (0. 1) (2 7. 9)

Dividends paid (12 .3) —

Net cash used in financing activities (15 .7) (30 .5)

Net (decrease)/increase in cash and cash equivalents (12 . 2) 6 .4

Cash and cash equivalents at beginning of the year 9 7. 6 95 .4

Effect of exchange rate fluctuations on cash held 2.3 (4.2)

Cash and cash equivalents at end of the year 19 8 7. 7 9 7. 6

Comprised of:

Cash and cash equivalents as per the Consolidated Statement of Financial Position 19 96.4 1 28 .0

Bank overdrafts 24 (8. 7) (3 0.4)

8 7. 7 9 7. 6

GovernanceStrategic Report Company Information

Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

161

Oxford Instruments plc (the “Company”) is

a company incorporated and domiciled in

the UK.

The Group Financial Statements have

been prepared and approved by the

Directors in accordance with UK adopted

International Accounting Standards (IAS)

and interpretations issued by the IFRS

Interpretations Committee (IFRS IC)

applicable to companies reporting under

UK adopted IFRS and in conformity with

the requirements of the Companies Act

2006. The Company has elected to

prepare its Parent Company Financial

Statements in accordance with FRS 101;

these are presented on pages 198 and 199.

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 based

on the Directors’ opinion, after making

reasonable enquiries, that the Group has

adequate resources to continue in

operational existence for the foreseeable

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 24 and 25. The financial position of

the Group, its cash flows, liquidity position

and borrowing facilities are described in

the Finance Review on pages 67 to 76.

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 and

flexed them to incorporate a number of

potential scenarios relating to changes in

trading performance and believe that the

Group will be able to operate within its

existing debt facilities which expire on

28June 2025. This review also considered

hedging arrangements in place. As a

consequence, the Directors believe that

the Group is well placed to manage its

business risks successfully. Further

information can be found in the viability

statement on pages 85 and 86.

The Financial Statements were

authorised for issuance on 13 June 2022.

(a) New accounting standards

No new accounting standards have been

adopted during the year.

(b) Significant estimates and

judgements

The preparation of Financial Statements

requires management to make

judgements, estimates and assumptions

that affect the application of accounting

policies and the reported amounts of

assets, liabilities, income and expenses.

Actual results may differ from these

estimates.

Significant judgements

In the opinion of the Group there are no

judgements made in the preparation of

the Financial Statements in respect of

which taking a different view would have

a material impact on the Financial

Statements.

Significant estimates

Revisions to accounting estimates are

recognised in the period in which the

estimate is revised if the revision affects

only that period or in the period of the

revision and future periods if the revision

affects both current and future periods.

Two key areas where estimates have

been used and assumptions applied have

been identified as follows:

Measurement of defined benefit

scheme liabilities

The Group recognises and measures

costs relating to defined benefit

pension schemes in accordance with

IAS 19 (Revised) Employee Benefits.

Inapplying IAS 19 (Revised) the costs

are assessed in accordance 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 on

plan assets and the selection of suitable

discount rates. The factors affecting

these assumptions 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.

Acquisition of WITec

Wissenschaftliche Instrumente und

Technologie GmbH (“WITec”)

On the acquisition of a business in order

to comply with IFRS 3 (Revised) Business

Combinations it is necessary to reflect the

assets and liabilities acquired at their fair

value. This requires certain estimates and

assumptions in relation to, inter alia, the

forecast performance of the acquired

business, the expected life of certain

intangible assets and the likely future

customer base of the business. In order to

assist in undertaking this fair value

exercise, the Group appointed an external

firm of advisers. The fair value

adjustments arising from this review are

set out in Note 6 on page 172.

Provisions for IP-related claims

Provisions for IP-related claims are

recognised in the period when it becomes

probable that there will be a future

outflow of funds resulting from past

expectations or events which can be

reasonably estimated. The timing of

recognition requires the application 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 28).

Accounting Policies

Year ended 31 March 2022

Oxford Instruments plc | Report and Financial Statements 2022

162

Accounting Policies continued

Year ended 31 March 2022

consolidation

The Financial Statements are presented

in Sterling, rounded to the nearest £0.1m

and are prepared on the historical cost

basis 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 to

eliminate intra-Group balances and any

unrealised gains and losses or income

and expenses arising from intra-Group

transactions.

Subsidiaries are entities controlled by the

Group. Control exists when the Group is

exposed to or has rights to variable

returns from its investment with the

investee and has the ability to affect

those returns through its power over the

investee. In assessing control, potential

voting rights that are currently exercisable

or convertible are taken into account.

Theresults of subsidiary companies are

included in the consolidated Financial

Statements from the date that control

commences until the date that control

ceases. The acquisition method is used to

account for the acquisition of subsidiaries.

The assets and liabilities of foreign

operations, including goodwill and fair

value adjustments arising on

consolidation, are translated into Sterling

at exchange rates ruling at the end of the

reporting period. Income statements and

cash flows of foreign operations are

translated into Sterling at average

monthly exchange rates which

approximate foreign exchange rates

atthe date of the transaction. Foreign

exchange differences arising on

retranslation are recognised through

theStatement of Comprehensive Income.

(d) Foreign currency

An individual entity’s transactions in

foreign currencies are translated at the

foreign exchange rate ruling at the date

of the transaction. Monetary assets and

liabilities denominated in foreign

currencies at the reporting date are

translated at the foreign exchange rate

ruling at that date. Foreign exchange

differences arising on translation are

recognised in profit or loss. Non-monetary

assets and liabilities that are measured in

terms of historical cost in a foreign

currency are translated using the

exchange rate at the date of the

transaction.

(e) Financial instruments

Financial assets and liabilities are

recognised in the Group’s Consolidated

Statement of Financial Position when the

Group becomes a party to the contractual

provisions of the instrument. Derivative

financial instruments of the Group are

used 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 at fair 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.

Subsequent to initial recognition,

derivatives are measured at fair value

and gains or losses on the settlement

ofsuch derivatives are recognised in

operating expenses. Where such

derivatives relate to the following year’s

exposure, any gains or losses resulting

from the change in fair value are

recognised as an adjusting item in

operating expenses.

The fair value of forward exchange

contracts is their market price at the

Consolidated Statement of Financial

Position date, being the present value

ofthe 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 is

measured at fair value at the date of

acquisition and subsequently carried at

fair value, with movements recognised in

the Consolidated Statement of Income.

Interest-bearing borrowings are

recognised initially at fair value less

attributable transaction costs.

Subsequent to initial recognition,

interest-bearing borrowings are stated

atamortised cost with any difference

between cost and redemption value

being recognised in the Consolidated

Statement of Income over the period of

the borrowing on an effective interest

basis.

(f) Property, plant and

equipment

Property, plant and equipment is

statedathistorical cost less provisions for

impairment (see accounting policy k) and

depreciation which, with the exception of

freehold land which is not depreciated

and rental assets (see below), is provided

on a straight-line basis over each asset’s

estimated economic life. Depreciation is

provided based on historical cost less

estimated residual value. The principal

estimated economic lives used for this

purpose are:

Freehold buildings,

long leasehold land

and buildings 50 years

Furniture and fittings 10 years

Machinery and

other equipment 5 to 10 years

Computer

equipment 4 years

Vehicles 4 years

For leasehold improvements, where

the length of the lease is less than the

principal estimated economic lives noted

above, the length of the lease is used.

GovernanceStrategic Report Company Information

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Oxford Instruments plc | Report and Financial Statements 2022

163

(g) Intangible assets

(i) Goodwill

All business combinations are accounted

for by applying the acquisition method.

Goodwill represents amounts arising on

acquisition of subsidiaries. In respect of

business acquisitions that have occurred

since 31 March 2004, goodwill represents

the difference between the cost of the

acquisition and the fair value of the

assets, liabilities and contingent liabilities

acquired. In respect of acquisitions prior

to this date, goodwill is included on the

basis of its deemed cost, which

represents the amount recorded under

previous GAAP.

The Group expenses transaction costs

associated with its acquisitions and

movements in liabilities relating to

contingent consideration within the

Consolidated Statement of Income in

conformity with IFRS 3.

Goodwill arising on acquisitions is stated

at cost less any accumulated impairment

losses and allocated to cash generating

units that are anticipated to benefit from

the combination. It is not amortised but is

tested annually for impairment (see

accounting policy k), or more frequently

when there is an indicator that the unit

may be impaired.

(ii) Development costs

Research and Development costs are

charged to the Consolidated Statement

of Income in the year in which they are

incurred unless development expenditure

is 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 be

available for sale and that the asset will

generate probable future economic

benefits. Where expenditure meets the

criteria, development costs are

capitalised and amortised through the

Consolidated Statement of Income over

their useful economic lives.

(iii) Acquired intangible assets

An intangible asset acquired with a

subsidiary undertaking is recognised as

an intangible asset if it is separable from

the acquired business or arises from

contractual or legal rights, is expected

togenerate future economic benefits and

its fair value can be reliably measured.

The asset is amortised through the

Consolidated Statement of Income over

its useful economic life.

(iv) Amortisation

Amortisation of intangible assets is

charged to the Consolidated Statement

of Income on a systematic basis in

proportion to the use of the assets over

their estimated useful economic lives

asfollows:

Capitalised

development costs 3 to 5 years

Technology-related

acquired intangibles 5 to 12 years

Customer-related

acquired intangibles

6 months to

15 years

Development costs

acquired intangibles 10 years

Software 10 years

Customer-related acquired intangible

assets include a number of different types

of asset. For example, the shorter end of

the useful economic life relates to the

order book of acquired businesses, whilst

the longer useful economic life relates to

assets such as trademarks.

(h) Trade and other receivables

Trade and other receivables are initially

recognised at fair value and subsequently

stated at their amortised cost less

appropriate provision for impairment.

Theprovision for impairment of

receivables is based 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 by assessing

historic credit loss experience. The

movement in the provision is recognised

in the Consolidated Statement of Income.

(i) Inventories

Inventories are stated at the lower of cost

and net realisable value. Cost includes

materials, direct labour, an attributable

proportion of production overheads

based on normal operating capacity

andall 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 completion and selling expenses.

Provision is made for obsolete,

slow-moving and defective stock

whereappropriate in light of recent

usage, expected future requirements,

new product introduction plans and

likelyrealisable values.

As outlined in note (r) below, the revenue

associated with both the sale and

installation 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 at

amortised cost.

Cash and cash equivalents comprise

cash balances and call deposits and are

carried at amortised cost. Bank

overdrafts that are repayable on demand

and form an integral part of the Group’s

cash management are included as a

component of cash and cash equivalents

for the purpose of the Statement of

CashFlows.

Oxford Instruments plc | Report and Financial Statements 2022

164

Accounting Policies continued

Year ended 31 March 2022

(k) Impairment of non-current

assets

All non-current assets are tested for

impairment whenever events or

circumstances 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 the

smallest group of assets that generates

cash flows from continuing use that are

largely independent of the cash inflows

from other groups of assets.

An impairment loss is recognised in the

Consolidated 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 of

money and the risks specific to the asset

concerned.

Impairment losses recognised in previous

periods for an asset other than goodwill

are reversed if there has been a change

in estimates 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 in previous periods.

Impairment losses in respect of goodwill

are not reversed.

Impairment losses recognised in respect

of cash generating units are allocated

first 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 of

defined benefit pension plans is

calculated separately for each plan by

estimating the amount of future benefit

that current and past 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 is deducted.

Thecalculation is performed by a

qualified actuary using the projected

unitcredit method.

All actuarial gains and losses in

calculating the Group’s net obligation are

recognised in the Consolidated Statement

of Comprehensive Income in the year.

The charge to the Consolidated

Statement of Income reflects the current

service cost. The interest expense or

income is calculated on the net defined

benefit liability by applying the discount

rate to the net defined benefit liability,

and is included within financial

expenditure or financial income in the

Consolidated Statement of Income

respectively.

(iii) Share-based payment

transactions

The fair value of equity settled share

option programmes is measured at

grantdate and charged to the

Consolidated Statement of Income,

withacorresponding increase in equity,

on a straight-line basis over the period

during which the employees become

unconditionally entitled to the options.

The fair value of the options granted is

measured using an option valuation

model, taking into account the terms

andconditions upon which the options

were granted.

The amount recognised as an expense is

adjusted to reflect the actual number of

share 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 sales

of shares in the Group are debited and

credited directly to equity.

(m) Provisions

A provision is recognised in the

Consolidated Statement of Financial

Position when the Group has a present

legal or constructive obligation

as a result of a past event and it is

probable that an outflow of economic

benefits will be required to settle the

obligation. Aprovision for warranty and

product-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 the

restructuring has either commenced or

has been announced publicly. A provision

for onerous contracts is recognised when

the expected benefits to be derived by

the Group from a contract are lower

than the unavoidable cost of meeting its

obligations under the contract.

Aprovision for a claim or dispute is made

when it is considered probable that an

adverse outcome will occur and the

amount of the loss can be reasonably

estimated.

Contractual and other provisions

represent the Directors’ best estimate of

the cost of settling future obligations

where the Directors, taking into account

professional advice received, assess that

it is more likely than not that such

proceedings may be successful.

If the effect is material, provisions are

determined by discounting the expected

future cash flows at a pre-tax rate that

reflects current market assessments of

the time value of money and, where

appropriate, the risks specific to the

liabilities.

GovernanceStrategic Report Company Information

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Oxford Instruments plc | Report and Financial Statements 2022

165

(n) Trade and other payables

Trade and other payables are initially

recognised at their fair value and

subsequently stated at amortised cost.

(o) Contractual liabilities

Customer deposits and deferred income

are classified as contract liabilities and

included within trade and other payables

in 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 the

case of complex products where revenue

is not recognised until installation).

– Deferred income represents the

contract obligation of the Group to

provide services to customers where

payment has been received in advance,

typically at inception of a service or

maintenance contract.

(p) Government grants

Grants from governments are recognised

at their fair value where there is a

reasonable 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 the

Consolidated Statement of Income over

the period necessary to match them with

the costs they are intended to

compensate. Government grants relating

to property, plant and equipment are

deducted from the carrying amount of

the asset and are credited to the

Consolidated Statement of Income on a

straight-line basis over the expected

useful economic lives of the related

assets.

(q) Interest-bearing borrowings

Interest-bearing borrowings are

recognised initially at fair value less

attributable transaction costs.

Subsequent to initial recognition,

interest-bearing borrowings are stated at

amortised cost with any difference

between cost and redemption value

being recognised in the Consolidated

Statement of Income over the period of

the borrowings on an effective interest

basis.

(r) Revenue

Revenue is recognised in the

Consolidated Statement of Income when

the performance conditions in the

contract with the customer are met.

In most cases where the contract

includes the sale of both a product and

installation, then the sale of the product

and the related installation are treated as

two separate performance conditions.

This is because the Group considers that

the customer is able to benefit from the

product even if the Group does not supply

installation, i.e. it would be possible for

them to arrange installation by a third

party. In such situations, revenue in

respect of the product is recognised when

control passes to the customer, which is

normally upon shipment of the product.

Revenue in respect of the installation is

recognised when the customer confirms

acceptance of the installation.

Revenue is allocated between the

product and installation based on the

relative standalone selling prices of those

products and installation activities.

Where it is difficult to establish a

standalone selling price by market

comparator, the standalone selling price

is estimated, where required, by applying

the cost plus margin approach.

In the NanoScience business, which is

part of the Research & Discovery

segment, certain contracts for the sale of

more complex systems are deemed to

comprise just one performance condition

as customers are unable to realise the

economic benefit from having received

the equipment without the specialist

installation. Given the highly

interdependent nature of the product and

installation, this performance condition is

met, and the revenue recognised, when

the customer confirms acceptance of the

installed product at their premises.

In the Service & Healthcare segment,

revenue for fixed term maintenance and

support contracts is recognised using the

output 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 for

the other segments as outlined above are

applied.

Revenue excludes value added tax and

similar 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 the

year 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 which

case 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 of

previous years.

Tax positions are reviewed to assess

whether a provision should be made

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 the

amounts used for taxation purposes. The

following temporary differences are not

provided for: the initial recognition of a

deferred tax liability in respect of goodwill

arising on a business combination; the

initial recognition of assets or liabilities

that affect neither accounting nor taxable

profit; and differences relating to

investments in subsidiaries to the extent

that they will probably not reverse in the

future.

The amount of deferred tax provided is

based on the expected manner of

realisation 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 to

the extent that it is probable that future

taxable 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 are

recognised at the same time as the

liability to pay the related dividend.

Oxford Instruments plc | Report and Financial Statements 2022

166

Accounting Policies continued

Year ended 31 March 2022

(s) Income tax continued

Where there is uncertainty surrounding

an income tax position, consideration is

given to whether the tax authority (with

full knowledge of the facts) would

probably be more or less likely to accept

the uncertain tax position. If the

conclusion reached is that 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 outcomes are binary or

concentrated on one value) or as the

expected value (where there is a range of

possible outcomes) depending on which

method would provide the better

prediction for the resolution of the

uncertainty.

(t) Leases

The Group recognises a right-of-use asset

and a lease liability at the lease

commencement date. The right-of-use

asset is initially measured at cost, which

comprises the initial amount of the lease

liability adjusted for any lease payments

made at or before the commencement

date, plus any initial direct costs incurred

and an estimate of costs to dismantle and

remove 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 the

lease term. The estimated useful lives of

right-of-use assets are determined on the

same basis as those of property and

equipment. 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 payments

that 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, the

Group uses its incremental borrowing rate

as the discount rate.

Lease payments included in the

measurement of the lease liability

comprise fixed payments.

The lease liability is measured at

amortised cost using the effective interest

method. It is remeasured when there is a

change in future lease payments arising

from a change in an index or rate, if there

is a change in the Group’s estimate of the

amount expected to be payable under a

residual value guarantee, or if the Group

changes its assessment of whether it will

exercise a purchase, extension or

termination option. If such

remeasurement is required, it is

performed using the original incremental

borrowing rate, unless there is a change

in estimated lease term; in which case it is

performed 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 the

right-of-use asset, or is recorded in profit

or loss if the carrying amount of the

right-of-use asset has been reduced to

zero.

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 lease term 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 earn

revenues and incur expenses, including

any revenues and expenses that relate to

transactions with any of the Group’s other

components. 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.

(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

the Group in the current or future

reporting periods and on foreseeable

future transactions.

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167

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

2022 2021

Operating

profit

£m

Profit before

income tax

£m

Operating

profit

£m

Profit before

income tax

£m

Statutory measure 48.3 47.6 53.0 52.2

Acquisition-related costs 0.4 0.4 0.4 0.4

WITec post-acquisition gross margin adjustment 1.7 1.7 — —

Impairment of capitalised development costs — — 1.3 1.3

Amortisation and impairment of acquired intangibles 9.5 9.5 8.4 8.4

Fair value movement on financial derivatives 6.4 6.4 (6.4) (6.4)

Unwind of discount in respect of contingent consideration — 0.3 — —

Total non-GAAP adjustments 18.0 18.3 3.7 3.7

Adjusted measure 66.3 65.9 56.7 55.9

Adjusted income tax expense (11.7) (10.8)

Adjusted profit for the year 66.3 54.2 56.7 45.1

Adjusted effective tax rates 17.8% 19.3%

Acquisition-related costs

These represent the costs of one-off charges incurred at the balance sheet date relating to the acquisition of WITec.

WITec post-acquisition gross margin adjustment

The finished goods and work in progress inventories were revalued to provisional fair value, based on selling price less costs to sell.

The £1.7m adjustment relates to the gross margin which would have been earned on post-acquisition sales to 31 March 2022, but

which has been absorbed into the acquisition date fair value. This will not recur, once all such inventory at the acquisition date has

been delivered to customers.

Impairment of capitalised development costs

During the year to 31 March 2021, the Group reviewed the capitalised development costs to ensure they remained directly related

totargeted product or software developments. The one-off non-cash impairment relates to delays in market launch of specific

development projects within the Materials & Characterisation segment.

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

alsomeasured at fair value. In respect of instruments used to hedge foreign exchange risk and interest rate risk, the Group does not

take advantage of the hedge accounting rules provided for in IFRS 9 since that standard requires certain stringent criteria to be met

in order to hedge account, which, in 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 the

valuation of these instruments so that the underlying performance of the Group can be more clearly seen.

Unwind of discount in respect of contingent consideration

Adjusted profit excludes the unwind of the discount in respect of the contingent consideration on the acquisition of WITec.

Notes to the Financial Statements

Year ended 31 March 2022

Oxford Instruments plc | Report and Financial Statements 2022

168

Notes to the Financial Statements continued

Year ended 31 March 2022

1 Non-GAAP measures continued

Adjusted income tax expense

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

2022

£m

2021

£m

Net (decrease)/increase in cash and cash equivalents (12.2) 6.4

Effect of exchange rate fluctuations on cash held 2.3 (4.2)

Movement in net cash in the year (9.9) 2.2

Net cash at start of the year 97.6 95.4

Net cash at the end of the year 87.7 97.6

Reconciliation of net cash to Statement of Financial Position

2022

£m

2021

£m

Overdrafts (8.7) (30.4)

Cash and cash equivalents 96.4 128.0

Net cash at the end of the year 87.7 97.6

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 the

Consolidated Statement of Income. Basic and diluted EPS from total operations are based on the result for the year attributable to

equity Shareholders of the parent. Adjusted and diluted adjusted EPS are based on adjusted profit for the year from continuing

operations. The profit measures noted above are divided by the weighted average number of ordinary shares outstanding during

the year, excluding shares held by the Employee Share Ownership Trust. The table below reconciles these different profit measures.

2022

£m

2021

£m

Profit for the year attributable to equity Shareholders of the parent 38.6 41.8

Adjusting items:

Business reorganisation items 0.4 0.4

WITec post-acquisition gross margin adjustment 1.7 —

Impairment of capitalised development costs — 1.3

Amortisation and impairment of acquired intangibles 9.5 8.4

Fair value movement on financial derivatives 6.4 (6.4)

Unwind of discount in respect of contingent consideration 0.3 —

Adjusted income tax expense (2.7) (0.4)

Adjusted profit for the year 54.2 45.1

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

is as follows:

2022

million

2021

million

Weighted average number of shares outstanding 57. 7 57. 5

Less: weighted average number of shares held by Employee Share Ownership Trust (0.2) (0.1)

Weighted average number of shares used in calculation of basic earnings per share 57. 5 57.4

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Oxford Instruments plc | Report and Financial Statements 2022

169

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

2022

million

2021

million

Number of ordinary shares per basic earnings per share calculations 57. 5 57.4

Effect of shares under option 0.8 0.7

Number of ordinary shares per diluted earnings per share calculations 58.3 58.1

For the purposes of calculating diluted and diluted adjusted EPS, the weighted average number of ordinary shares is adjusted to

include 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.

3 Segment information

The Group has nine operating segments. These operating segments have been combined into three aggregated operating

segments to the extent that they have similar economic characteristics, with relevance to products and services, type and class of

customer, methods of sale and distribution and the regulatory environment in which they operate. Each of these three aggregated

operating segments is a reportable segment. The aggregated operating segments are as follows:

•

the Materials & Characterisation segment comprises a group of businesses focusing on applied R&D and commercial customers,

enabling the fabrication and characterisation of materials and devices down to the atomic scale;

•

the Research & Discovery segment comprises a group of businesses providing advanced solutions that create unique

environments and 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 three

aggregated 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 a

reasonable basis. The operating results of each are regularly reviewed by the Chief Operating Decision Maker, which is deemed to

be the Board of Directors. Discrete financial information is available for each segment and used by the Board of Directors for

decisions on resource allocation and to assess performance. No asset information is presented below as this information is not

presented in reporting to the Group’s Board of Directors.

On 31 August 2021, the Group acquired 100% of the issued share capital of WITec, which has been integrated into the Materials

&Characterisation segment.

Results from continuing operations

2022

Materials &

Characterisation

£m

Research &

Discovery

£m

Service &

Healthcare

£m

Total

£m

Total segment revenue 185.5 120.3 61.5 367. 3

Segment adjusted operating profit from continuing operations 26.1 21.3 18.9 66.3

2021

Materials &

Characterisation

£m

Research &

Discovery

£m

Service &

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

Revenue in the Materials & Characterisation and Research & Discovery segments represents the sale of products. Revenue in the

Service & Healthcare segment relates to service income.

As at 31 March 2022, the Group had unfulfilled performance obligations under IFRS 15 of £260.2m (2021: £198.1m). It is anticipated

that £250.5m (2021: £178.9m) of this balance will be satisfied within one year. The remainder is anticipated to be satisfied in the

following financial year.

Oxford Instruments plc | Report and Financial Statements 2022

170

Notes to the Financial Statements continued

Year ended 31 March 2022

3 Segment information continued

Reconciliation of reportable segment profit from continuing operations

2022

Materials &

Characterisation

£m

Research &

Discovery

£m

Service &

Healthcare

£m

Unallocated

Group items

£m

Total

£m

Segment adjusted operating profit from continuing operations 26.1 21.3 18.9 — 66.3

Acquisition-related costs (0.4) — — — (0.4)

WITec post-acquisition gross margin adjustment (1.7) — — — (1.7)

Amortisation and impairment of acquired intangibles (3.2) (6.3) — — (9.5)

Fair value movement on financial derivatives — — — (6.4) (6.4)

Financial income — — — 0.5 0.5

Financial expenditure — — — (1.2) (1.2)

Profit/(loss) before income tax from continuing operations 20.8 15.0 18.9 (7.1) 47.6

2021

Materials &

Characterisation

£m

Research &

Discovery

£m

Service &

Healthcare

£m

Unallocated

Group items

£m

Total

£m

Segment adjusted operating profit from continuing operations 20.3 19.5 16.9 — 56.7

Acquisition-related costs (0.4) — — — (0.4)

Impairment of capitalised development costs (1.3) — — — (1.3)

Amortisation and impairment of acquired intangibles (2.0) (6.4) — — (8.4)

Fair value movement on financial derivatives — — — 6.4 6.4

Financial income — — — 1.1 1.1

Financial expenditure — — — (1.9) (1.9)

Profit before income tax from continuing operations 16.6 13.1 16.9 5.6 52.2

Depreciation

2022

£m

2021

£m

Materials & Characterisation 3.8 3.3

Research & Discovery 1.5 1.3

Service & Healthcare 0.7 0.6

Unallocated Group items 1.5 1.4

Total 7.5 6.6

Capital expenditure

2022

£m

2021

£m

Materials & Characterisation 11.4 3.2

Research & Discovery 1.7 1.3

Service & Healthcare 0.1 0.1

Unallocated Group items 0.7 0.2

Total 13.9 4.8

Amortisation and impairment

2022

£m

2021

£m

Materials & Characterisation 5.0 5.6

Research & Discovery 6.4 6.6

Service & Healthcare — —

Unallocated Group items — —

Total 11.4 12.2

Capitalised development costs

2022

£m

2021

£m

Materials & Characterisation 0.7 0.8

Research & Discovery — 0.1

Service & Healthcare — —

Unallocated Group items — —

Total 0.7 0.9

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Oxford Instruments plc | Report and Financial Statements 2022

171

Revenue from continuing operations from external customers by destination

2022

£m

2021

£m

UK 20.2 14.5

China 103.9 76.8

Japan 39.0 39.6

USA 79.9 72.1

Germany 28.1 32.8

Rest of Europe 40.7 39.9

Rest of Asia 45.7 33.8

Rest of World 9.8 9.0

Total 367.3 318.5

Non-current assets (excluding deferred tax)

2022

£m

2021

£m

UK 182.8 146.0

Germany 32.7 2.9

USA 14.2 8.7

Japan 2.4 0.6

China 1.8 0.3

Rest of Europe 7.2 7. 8

Rest of Asia 0.3 0.2

Rest of World 0.6 0.9

Total 242.0 167.4

4 Auditor’s remuneration

2022

£’000

2021

£’000

Audit of these Financial Statements 210 200

Amounts received by the auditor and its associates in respect of:

– Audit of Financial Statements of subsidiaries pursuant to legislation 420 349

– Taxation compliance services — —

– Audit-related assurance services 44 44

– Other assurance services 10 6

Total fees payable to the auditor and its associates 684 599

5 Research and development (R&D)

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

2022

Materials &

Characterisation

£m

Research &

Discovery

£m

Total

£m

R&D expense charged to the Consolidated Statement of Income 23.0 9.8 32.8

Less: depreciation of R&D-related fixed assets — (0.2) (0.2)

Add: amounts capitalised as fixed assets — 0.3 0.3

Less: amortisation of R&D costs previously capitalised as intangibles (1.8) (0.1) (1.9)

Add: amounts capitalised as intangible assets 0.7 — 0.7

Total cash spent on R&D during the year 21.9 9.8 31.7

2021

Materials &

Characterisation

£m

Research &

Discovery

£m

Total

£m

R&D expense charged to the Consolidated Statement of Income 20.2 9.8 30.0

Less: depreciation of R&D-related fixed assets — (0.1) (0.1)

Add: amounts capitalised as fixed assets — 0.6 0.6

Less: amortisation of R&D costs previously capitalised as intangibles (2.3) (0.2) (2.5)

Add: amounts capitalised as intangible assets 0.8 0.1 0.9

Total cash spent on R&D during the year 18.7 10.2 28.9

Oxford Instruments plc | Report and Financial Statements 2022

172

Notes to the Financial Statements continued

Year ended 31 March 2022

6 Acquisition of WITec

On 31 August 2021, the Group acquired 100% of the issued share capital of WITec Wissenschaftliche Instrumente und Technologie

GmbH (“WITec”) on a cash-free, debt-free basis for consideration of €42m (£36.0m), of which €5m (£4.3m) is conditional on trading

performance over a period of twelve months from the acquisition. The conditions for the deferred consideration are meeting certain

revenue, order and margin thresholds. In the calculations below, it has been assumed that these thresholds have been met. WITec is

a leading designer and manufacturer of Raman microscopy imaging solutions, based in Ulm, Germany.

The book and fair value of the assets and liabilities acquired is given in the table below. Fair value adjustments will be made to

better align the accounting policies of the acquired business with the Group accounting policies and to reflect the fair value of

assets and liabilities acquired. The business has been integrated into the Materials & Characterisation segment.

Book value

£m

Adjustments

£m

Fair value

£m

Intangible assets — 8.3 8.3

Property, plant and equipment 0.2 — 0.2

Right-of-use assets 2.8 — 2.8

Inventories 5.3 2.6 7.9

Trade and other receivables 3.0 — 3.0

Deferred tax 0.2 (3.0) (2.8)

Trade and other payables (2.1) — (2.1)

Lease liabilities (2.8) — (2.8)

Provisions (0.5) — (0.5)

Bank loans (1.9) — (1.9)

Cash 1.7 — 1.7

Net assets acquired 5.9 7.9 13.8

Goodwill 20.6

Total consideration 34.4

Net debt acquired 0.2

Deferred consideration after discounting to transaction date (3.6)

Creditor in respect of working capital adjustment (0.4)

Net cash outflow relating to the acquisition 30.6

The goodwill arising is considered to represent the value of the acquired workforce and the value of technology that has not been

individually fair valued.

Acquisition-related costs of £0.4m (2021: £0.4m) were expensed to the Consolidated Statement of Income as an adjusting item in the

administration and shared services cost line.

The acquisition contributed revenue of £14.3m, adjusted operating profit of £2.8m and a statutory loss before tax of £0.3m to the

Group’s profit for the year.

If the acquisition had occurred on the first day of the year the acquisition would have contributed revenue of £19.6m, adjusted

operating profit of £3.1m and a statutory result before tax of £nil.

7 Financial income

2022

£m

2021

£m

Interest receivable 0.1 0.2

Interest credit on pension scheme net assets 0.4 0.9

0.5 1.1

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173

8 Financial expenditure

2022

£m

2021

£m

Bank interest payable 0.6 1.8

Interest on lease liabilities 0.3 0.1

Unwind of discount on contingent consideration 0.3 —

1.2 1.9

9 Personnel costs

2022

£m

2021

£m

Wages and salaries 96.4 85.6

Social security costs 12.2 10.5

Contributions to defined contribution plans (note 25) 4.8 4.0

Defined benefit expense/(income) (note 25) — (0.5)

Charge in respect of employee share options 2.1 1.8

115.5 101.4

Directors’ emoluments are disclosed in the Remuneration Report on pages 120 to 141 of this Report and Financial Statements.

10 Employees

The average number of people employed by the Group (including Directors and temporary employees) during the year was as

follows:

2022

Number

2021

Number

Production 732 628

Sales and marketing 467 405

Research and development 430 367

Administration and shared services 249 219

1,878 1,619

11 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 the participating 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

aminimum of three years (but may be up to five years).

Oxford Instruments plc | Report and Financial Statements 2022

174

Notes to the Financial Statements continued

Year ended 31 March 2022

11 Share option schemes continued

Performance Share Plan Scheme (PSP) continued

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 135 to 137.

Administrative expenses include a charge of £2.1m (2021: £1.8m) 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 over the

vesting period after adjusting for an expectation of non-vesting.

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 2022 and 2021, the fair value per option granted and the assumptions used in the

calculation are as follows:

Medium-Term

Incentive Plan

Scheme

July 2021

Performance

Share Plan

Scheme

July 2021

Medium-Term

Incentive Plan

Scheme

September 2020

Performance

Share Plan

Scheme

September 2020

Fair value at measurement date £22.60 £22.60 £15.68 £15.68

Share price at grant date £23.10 £23.10 £15.80 £15.80

Exercise price £nil £nil £nil £nil

Expected volatility 39.4% 39.4% 42.4% 42.4%

Expected option life (expressed as weighted average life used in the modelling) 3 years 3 years 3 years 3 years

Expected dividend yield 0.7% 0.7% 0.3% 0.3%

Risk-free interest rate 0.5% 0.5% -0.1% -0.1%

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Oxford Instruments plc | Report and Financial Statements 2022

175

The options existing at the year end were as follows:

2022 2021

Number of

Exercise

price Period when exercisable

Number of

Options subsisting at the year end on unissued ordinary shares:

Executive Share Option Schemes

December 2011 — £9.90 14/12/14 – 13/12/21 22,426

June 2015 82,875 £10.28 15/06/18 – 14/06/25 150,831

June 2016 18,000 £7. 38 21/06/19 – 20/06/26 18,000

November 2016 36,403 £6.27 29/11/19 – 28/11/26 43,849

Total options subsisting on existing ordinary shares 137,278 235,106

Percentage of issued share capital 0.2% 0.4%

Medium-Term Incentive Plan

September 2017 29,490 £nil 25/09/20 – 24/09/27 48,532

July 2018 48,219 £nil 03/07/21 – 02/07/2 8 85,294

July 2019 78,593 £nil 1 5/07/22 – 14/07/2 9 90,149

September 2020 71,136 £nil 23/09/23 – 22/09/30 80,376

July 2021 65,781 £nil 02/07/24 – 01/07/31 —

Total options subsisting on existing ordinary shares 293,219 304,351

Percentage of issued share capital 0.5% 0.5%

Performance Share Plan

June 2016 — £nil 21/06/19 – 20/06/26 137,783

September 2017 116,853 £nil 25/09/20 – 24/09/27 116,853

July 2018 115,043 £nil 03/07/21 – 02/07/28 115,043

July 2019 86,032 £nil 1 5/07/22 – 1 4/07/29 86,032

September 2020 74,815 £nil 23/09/23 – 22/09/30 74,815

July 2021 55,806 £nil 02/07/24 – 01/07/31 —

Total options subsisting on existing ordinary shares 448,549 530,526

Percentage of issued share capital 0.8% 0.9%

The number and weighted average exercise prices of those options are as follows:

2022 2021

Weighted

average

exercise price

Number of

options

Weighted

exercise

average price

Number of

options

Outstanding at the beginning of the period £2.04 1,069,983 £2.44 1,024,758

Granted during the year £nil 125,602 £nil 155,191

Forfeited during the year — (27,003) — (59,735)

Exercised during the year £2.55 (236,875) £5.97 (45,850)

Lapsed during the year £6.88 (52,661) £9.91 (4,381)

Outstanding at the year end £1.38 879,046 £2.04 1,069,983

Exercisable at the year end £2.71 446,883 £4.05 538, 274

The weighted average share price at the time of exercise of the options was £23.29 (2021: £16.78).

The total consideration received from exercise of options in the year was £0.1m (2021: £0.2m).

Oxford Instruments plc | Report and Financial Statements 2022

176

Notes to the Financial Statements continued

Year ended 31 March 2022

12 Income tax expense

2022

£m

2021

£m

Recognised in the Consolidated Statement of Income

Current tax expense

Current year 9.0 9.7

Adjustment in respect of prior years (1.0) (3.2)

8.0 6.5

Deferred tax expense

Origination and reversal of temporary differences 1.2 2.0

Adjustment in respect of prior years (0.2) 1.9

1.0 3.9

Total tax expense 9.0 10.4

Reconciliation of effective tax rate

Profit before income tax 47.6 52.2

Income tax using the weighted average statutory tax rate of 21% (2021: 21%) 10.0 11.0

Effect of:

Tax rates other than the weighted average statutory rate 0.1 0.4

Change in rate at which deferred tax recognised 0.6 0.1

Non-taxable income and expenses (0.3) 0.3

Tax incentives not recognised in the Consolidated Statement of Income (0.2) —

Movement in unrecognised deferred tax — (0.1)

Adjustment in respect of prior years (1.2) (1.3)

Total tax expense 9.0 10.4

Taxation charge/(credit) recognised directly in other comprehensive income

Deferred tax – relating to employee benefits 6.8 (5.5)

Taxation credit recognised directly in equity

Deferred tax – relating to share options (0.2) (1.0)

On 5 March 2021, it was announced that the rate of UK corporation tax would be increased to 25% from 1 April 2023. This change

was substantively enacted on 24 May 2021. As such, the UK deferred tax assets and liabilities have been calculated based on the

enacted rate of 19% where they are anticipated to be utilised prior to 31 March 2023, but at 25% when utilisation is expected to occur

after that date.

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.

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Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

177

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 to

recover 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 respect

of interest unless the decision is successfully challenged in the EU Courts. The Group believed that £0.2m might ultimately have

been 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 was accordingly 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. The Group

received a cash tax refund of $2.1m in July 2021.

13 Dividends per share

The following dividends per share were paid by the Group:

2022

pence

2021

pence

Previous period interim dividend 4.1 —

Previous period final dividend 12.9 —

Current period interim dividend 4.4 —

21.4 —

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

2022

pence

2021

pence

Interim dividend 4.4 4.1

Final dividend 13.7 12.9

18.1 17.0

The final dividend for the year to 31 March 2021 of 12.9 pence per share was approved by Shareholders at the Annual General

Meeting on 21 September 2021 and was paid on 15 October 2021. The interim dividend for the year to 31 March 2022 of 4.4 pence

was approved by the Board on 8 November 2021 and was paid on 14 January 2022.

The proposed final dividend of 13.7 pence per share was not provided at the year end and is subject to Shareholder approval at the

Annual General Meeting on 28 July 2022. It is expected to be paid on 23 August 2022, to Shareholders on the register on the record

date of 15 July 2022, with an ex-dividend date of 14 July 2022 and with the last date of election for the Dividend Reinvestment Plan

(DRIP) being 02 August 2022.

Oxford Instruments plc | Report and Financial Statements 2022

178

Notes to the Financial Statements continued

Year ended 31 March 2022

14 Property, plant and equipment

Land and

buildings

£m

Plant and

equipment

£m

Fixtures and

fittings

£m

Total

£m

Cost

Balance at 1 April 2020 14.5 35.4 7.8 57.7

Additions 0.2 3.8 0.1 4.1

Disposals (0.8) (2.2) (0.1) (3.1)

Effect of movements in foreign exchange rates (0.1) (0.5) (0.1) (0.7)

Balance at 31 March 2021 13.8 36.5 7.7 58.0

Balance at 1 April 2021 13.8 36.5 7.7 58.0

Additions – business combinations — 0.2 — 0.2

Additions – other 7.8 5.3 0.8 13.9

Disposals (0.2) (2.0) (0.3) (2.5)

Effect of movements in foreign exchange rates 0.4 0.4 0.1 0.9

Balance at 31 March 2022 21.8 40.4 8.3 70.5

Depreciation and impairment losses

Balance at 1 April 2020 5.1 25.2 5.6 35.9

Depreciation charge for the year 0.4 3.1 0.4 3.9

Disposals — (2.1) — (2.1)

Effect of movements in foreign exchange rates (0.1) (0.6) (0.1) (0.8)

Balance at 31 March 2021 5.4 25.6 5.9 36.9

Balance at 1 April 2021 5.4 25.6 5.9 36.9

Depreciation charge for the year 0.3 3.6 0.2 4.1

Disposals (0.2) (2.0) (0.2) (2.4)

Effect of movements in foreign exchange rates — 0.2 — 0.2

Balance at 31 March 2022 5.5 27.4 5.9 38.8

Carrying amounts

Balance at 1 April 2020 9.4 10.2 2.2 21.8

Balance at 31 March 2021 and 1 April 2021 8.4 10.9 1.8 21.1

Balance at 31 March 2022 16.3 13.0 2.4 31.7

As at 31 March 2022, the net book value of plant and equipment included £nil (2021: £1.2m) of assets under construction.

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179

15 Intangible assets

Goodwill

£m

Customer-

related acquired

intangibles

£m

Technology-

related acquired

intangibles

£m

Development

costs acquired

intangibles

£m

Development

costs internally

generated

£m

Software

£m

Total

£m

Cost

Balance at 1 April 2020 103.3 31.3 95.6 1.8 52.0 4.2 288.2

Additions – internally generated — — — — 0.9 — 0.9

Disposals — (0.5) — — (4.4) — (4.9)

Effect of movements in foreign

exchange rates (1.5) (1.5) (3.9) — — — (6.9)

Balance at 31 March 2021 101.8 29.3 91.7 1.8 48.5 4.2 27 7.3

Balance at 1 April 2021 101.8 29.3 91.7 1.8 48.5 4.2 27 7.3

Additions – business combinations 20.6 3.3 5.0 — — — 28.9

Additions – internally generated — — — — 0.7 0.1 0.8

Effect of movements in foreign

exchange rates 0.2 0.5 1.5 — — — 2.2

Balance at 31 March 2022 122.6 33.1 98.2 1.8 49.2 4.3 309.2

Amortisation and impairment losses

Balance at 1 April 2020 22.9 23.2 58.8 1.1 43.9 2.8 152.7

Amortisation and impairment

charged — 1.1 7.1 0.2 3.8 0.1 12.3

Disposals — (0.5) — — (4.4) — (4.9)

Effect of movements in foreign

exchange rates (1.2) (1.3) (2.9) — — — (5.4)

Balance at 31 March 2021 21.7 22.5 63.0 1.3 43.3 2.9 154.7

Balance at 1 April 2021 21.7 22.5 63.0 1.3 43.3 2.9 154.7

Amortisation and impairment

charged — 1.8 7.5 0.2 1.9 — 11.4

Effect of movements in foreign

exchange rates 0.5 0.5 1.4 — — — 2.4

Balance at 31 March 2022 22.2 24.8 71.9 1.5 45.2 2.9 168.5

Carrying amounts

Balance at 1 April 2020 80.4 8.1 36.8 0.7 8.1 1.4 135.5

Balance at 31 March 2021 and

1April2021 80.1 6.8 28.7 0.5 5.2 1.3 122.6

Balance at 31 March 2022 100.4 8.3 26.3 0.3 4.0 1.4 140.7

During the year the Group made impairments of £nil (2021: £1.3m) 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 99% (2021: 98%) of total acquired

intangible assets:

2022 2021

£m

Amortisation

period

years

Remaining

amortisation

period

years £m

Trademarks – Andor 5.6 15.0 6.8 6.4

Technology, know-how and patents – Andor:

– Product related 16.2 12.0 3.8 20.4

– Software related 2.0 10.0 1.8 3.1

Trademarks – WITec 2.5 10.0 9.6 —

Technology, know-how and patents – WITec 4.6 5.0 4.6 —

Technology, know-how and patents – Asylum 3.8 12.0 2.7 5.2

Oxford Instruments plc | Report and Financial Statements 2022

180

Notes to the Financial Statements continued

Year ended 31 March 2022

15 Intangible assets continued

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to

benefit from that business combination. The carrying amount of goodwill was allocated to individual CGUs as follows:

2022

£m

2021

£m

Materials & Characterisation

NanoAnalysis 9.8 9.8

Magnetic Resonance 2.3 2.3

WITec 20.3 —

Research & Discovery

Andor 61.3 61.3

NanoScience 6.7 6.7

100.4 80.1

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 which

contains 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.

In the review undertaken in March 2021, the impact of coronavirus was considered in preparing the base case and downside profit

forecast based on the Group’s five-year planning process completed in November 2021 and budget submitted in January 2022.

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.

In the current year, the previous methodology of considering the Board-approved five-year cash flow forecasts and Budget for the

following year were considered, with a 2.5% per annum growth rate for the subsequent 20 years. Again, this growth rate is

considered to be below long-term market trends for the Group’s businesses.

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 11.6%-12.1% (2021: 13.6%-14.1%) and 11.6%-12.1% (2021: 13.6%-14.1%) respectively, in line with the risk associated with each of

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 180 basis point increase in the discount

rate would be required in order to eliminate the headroom of £8.6m in the recently acquired WITec business – along with a 20%

deterioration from the 5-year forecast. Similarly, a reduction in the growth rate to 0.9% along with a 20% deterioration from the

5-year forecast would be required in order to result in an impairment in that business. No reasonably possible change in

assumptions would result in an impairment in the other businesses.

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Oxford Instruments plc | Report and Financial Statements 2022

181

16 Deferred tax

Property,

plant and

equipment

£m

Inventory

£m

Employee

benefits

£m

Intangibles

assets

£m

Tax losses

£m

Other

£m

Total

£m

Balance at 1 April 2020 0.8 2.5 (3.5) (6.2) 9.0 4.5 7.1

Recognised in income (0.1) 0.3 (3.0) 0.6 (1.5) (0.2) (3.9)

Recognised in other comprehensive

income — — 5.5 — — — 5.5

Recognised directly in equity — — 1.0 — — — 1.0

Effect of movements in foreign

exchange rates — (0.2) (0.1) (0.1) (0.7) (0.4) (1.5)

Balance at 31 March 2021 0.7 2.6 (0.1) (5.7) 6.8 3.9 8.2

Recognised in income (1.6) 1.3 (1.2) 0.6 (0.3) 0.2 (1.0)

Recognised in other comprehensive

income — — (6.8) — — — (6.8)

Recognised directly in equity — — 0.2 — — — 0.2

Acquired on business combination — (0.7) 0.1 (1.9) — (0.1) (2.6)

Effect of movements in foreign

exchange rates — — — — 0.2 0.1 0.3

Balance at 31 March 2022 (0.9) 3.2 (7.8) (7.0) 6.7 4.1 (1.7)

Certain deferred tax assets and liabilities have been offset as follows:

Assets Liabilities Net

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

Gross assets/(liabilities) 14.3 15.1 (16.0) (6.9) (1.7) 8.2

Offset (0.6) (2.0) 0.6 2.0 — —

Net assets/(liabilities) 13.7 13.1 (15.4) (4.9) (1.7) 8.2

Deferred tax assets have not been recognised in respect of the following items:

2022

£m

2021

£m

Deductible temporary differences — —

Tax losses 0.2 0.3

0.2 0.3

The tax losses and the deductible temporary differences do not expire under current tax legislation. Deferred tax assets have not

been 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 £56.0m (2021: £32.2m) 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 of

remittances so that any tax is not expected to arise in the foreseeable future.

17 Inventories

2022

£m

2021

£m

Raw materials and consumables 28.6 21.4

Work in progress 23.2 19.4

Finished goods 13.5 17.9

65.3 58.7

The amount of inventory recognised as an expense was £147.2m (2021: £129.9m). In the ordinary course of business, the Group

makes impairment provisions for slow-moving, excess and obsolete inventory as appropriate. Inventory is stated after charging

impairments of £0.7m in the current period (2021: £0.9m). In the current year, £nil (2021: £nil) was reversed relating to previous

impairments. Impairments are included within gross profit.

Inventory carried at net realisable value is £1.5m (2021: £0.3m).

Oxford Instruments plc | Report and Financial Statements 2022

182

Notes to the Financial Statements continued

Year ended 31 March 2022

18 Trade and other receivables

2022

£m

2021

£m

Trade receivables 78.4 61.5

Less provision for impairment of receivables (3.6) (2.2)

Net trade receivables 74.8 59.3

Accrued income 4.2 2.9

Prepayments 8.5 4.1

Other receivables 17. 2 9.3

104.7 75.6

Trade receivables are non-interest-bearing. Standard credit terms provided to customers differ according to business and country

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:

2022

£m

2021

£m

UK 12.0 9.0

China 19.9 11.1

Japan 11.8 10.5

USA 16.6 17.3

Germany 13.1 8.3

Rest of Europe 10.7 9.0

Rest of Asia 11.4 5.5

Rest of World 0.7 0.8

96.2 71.5

The ageing of financial assets comprising net trade receivables and other receivables plus accrued income at the reporting

datewas:

2022

£m

2021

£m

Current (not overdue) 61.0 49.3

Less than 31 days overdue 13.5 10.1

More than 30 but less than 91 days overdue 11.2 4.8

More than 90 days overdue 10.5 7. 3

96.2 71.5

In both periods presented the entire provision against trade receivables and other receivables plus accrued income relates to

balances more than 90 days overdue.

The movement of the Groups expected credit losses provision in respect of trade receivables and other receivables plus accrued

income was as follows:

2022

£m

2021

£m

Balance at start of year 2.2 2.1

Transferred in on acquisition of WITec 0.2 —

Increase in loss allowance recognised in the Comprehensive Statement of Income in the year 1.2 0.1

Balance at end of year 3.6 2.2

The loss allowance is recognised in the administration and shared services line in the Consolidated Statement of Income.

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Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

183

19 Cash and cash equivalents

2022

£m

2021

£m

Cash balances 96.4 128.0

Bank overdrafts (8.7) (30.4)

Cash and cash equivalents in the Consolidated Statement of Cash Flows 87.7 97.6

20 Working capital movements

Reconciliation of movements in working capital:

Inventories

£m

Receivables

£m

Payables and

provisions

£m

Customer

deposits

£m

Total

£m

As at 1 April 2020 58.8 72.0 (91.7) (45.3) (6.2)

Working capital movement 1.3 10.5 (11.3) 2.2 2.7

Exchange differences (1.4) (0.8) 2.9 1.2 1.9

FV movement on financial derivatives — — 6.5 — 6.5

As at 31 March 2021 and 1 April 2021 58.7 81.7 (93.6) (41.9) 4.9

Working capital movement 0.1 21.6 (11.4) 1.5 11.8

WITec related flows 6.2 3.0 (6.7) (0.3) 2.2

Exchange differences 0.3 (0.6) 0.7 (0.6) (0.2)

FV movement on financial derivatives — — (6.4) — (6.4)

As at 31 March 2022 65.3 105.7 (117.4) (41.3) 12.3

1. Receivables and payables include derivative financial instruments.

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Group is 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 for such

derivatives.

Oxford Instruments plc | Report and Financial Statements 2022

184

Notes to the Financial Statements continued

Year ended 31 March 2022

21 Financial risk management continued

Foreign currency risk

Foreign currency risk arises both where sale or purchase transactions are undertaken in currencies other than the respective

functional 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, the

Euro and the Japanese Yen. To reduce uncertainty, the Group maintains a rolling hedge of forward contracts equivalent to 80%

(2021: 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 2022 amount to £1.4m (2021: £nil) and those

recognised as an asset amount to £1.0m (2021: £6.1m).

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 elements

of 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 the

Consolidated 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 and

medium-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 when

due, 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 2022 are set out in Note 24.

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 concentrations

of credit risk on its trade receivables. The Group’s experience of credit loss is minimal, which has and continues to be mitigated

through receiving payment in advance of delivery or using trade guarantees provided by the Group’s relationship banks. In the

unusual 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 the

Group’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.

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185

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 2022 is as shown below:

2022

£m

2021

£m

Trade receivables 74.8 59.3

Other receivables and accrued income 21.4 12.2

Cash and cash equivalents 96.4 128.0

Derivative financial instruments 1.0 6.1

193.6 205.6

The maximum exposure to credit risk for trade receivables is discussed in Note 18.

Other receivables include £14.0m (2021: £7.9m) 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 £230.5m (2021: £168.6m).

The Board’s long-term objective is to have an efficient capital structure by maintaining a balance between the higher returns that

might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. This is

monitored by reference to the ratio of net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) and the

Board has set itself internal limits, which are well inside any covenants the Group has with lenders. The Group maintains the right to

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 to increase

dividends in line with underlying earnings, although the Board will also take into account other considerations in their

decision-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 can

deliver 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.

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 11), 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.

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186

Notes to the Financial Statements continued

Year ended 31 March 2022

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 fair

value if the carrying amount is a reasonable approximation of fair value.

2022 2021

Fair value

hierarchy

Carrying

amount

£m

Fair value

£m

Carrying

amount

£m

Fair value

£m

Assets carried at amortised cost

Trade receivables 74.8 59.3

Other receivables and accrued income 21.4 12.2

Cash and cash equivalents 96.4 128.0

Assets carried at fair value

Derivative financial instruments:

– Foreign currency contracts 2 1.0 1.0 6.1 6.1

Liabilities carried at fair value

Derivative financial instruments:

– Foreign currency contracts 2 (1.4) (1.4) — —

Liabilities carried at amortised cost

Trade and other payables (87.0) (67.7 )

Bank overdrafts (8.7) (30.4)

Borrowings (1.8) —

Lease payables (18.4) (7. 5)

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected

in 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.

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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

2022

Carrying

amount

£m

Contractual

cash flows

£m

Due within

one year

£m

Due one

to five years

£m

Due more

than five years

£m

Foreign exchange contracts (1.4) 1.4 1.1 0.3 —

Trade and other payables (87.0) 87.0 87.0 — —

Bank overdrafts (8.7) 8.7 8.7 — —

Borrowings (1.8) 1.8 0.5 1.3 —

Lease payables (18.4) 19.9 3.5 10.8 5.6

(117.5) 118.6 100.6 12.4 5.6

2021

Carrying

amount

£m

Contractual

cash flows

£m

Due within

one year

£m

Due one

to five years

£m

Due more

than five years

£m

Foreign exchange contracts — — — — —

Trade and other payables (67.7 ) 67.7 67.7 — —

Bank overdrafts (30.4) 30.4 30.4 — —

Lease payables ( 7. 5) 11.4 1.9 6.7 2.8

(105.6) 109.5 100.0 6.7 2.8

Carrying

amount

2022

£m

Carrying

amount

2021

£m

Variable rate instruments

Financial assets 96.4 128.0

Financial liabilities (8.7) (30.4)

Fixed rate instruments

Financial assets — —

Financial liabilities (1.8) —

Oxford Instruments plc | Report and Financial Statements 2022

188

Notes to the Financial Statements continued

Year ended 31 March 2022

22 Financial instruments continued

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-case scenarios

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. Accordingly, they show the impact on the balance

sheet of an instantaneous shock. The calculations include all hedges in place at the year end.

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.

2022

increase

in interest rates

£m

10%

weakening

in Sterling

£m

10%

strengthening

in Sterling

£m

Impact on adjusted profit (Note 1) 0.9 (6.3) 6.3

Impact on reported profit 0.9 (4.3) 4.3

Impact on equity 0.8 (3.5) 3.5

2021

increase

in interest rates

£m

10%

weakening

in Sterling

£m

10%

strengthening

in Sterling

£m

Impact on adjusted profit (Note 1) 0.8 (9.8) 9.8

Impact on reported profit 0.8 (7.7 ) 7.7

Impact on equity 0.8 3.9 ( 7. 2)

23 Called up share capital

Issued and fully paid ordinary shares:

2022

Number

of shares

2021

Number

of shares

At the beginning of the year 57,461,453 57,434,763

Issued for cash 193,002 26,690

At the end of the year 57,654,455 57,461,453

2022 2021

Number

of shares £m

Number

of shares £m

Allotted, called up and fully paid

Ordinary shares of 5 pence each 57,654,455 2.9 57,461,453 2.9

The holders of the ordinary shares are entitled to receive dividends as declared, a proportionate amount of capital on a winding up

of the Company and one vote per share at meetings of the Company.

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189

24 Borrowings

Effective

interest rate

Earlier of

repricing date

or maturity date

2022

£m

2021

£m

Current

Covid loan at WITec 1.00% May 2026 0.5 —

Bank overdrafts 8.7 30.4

At the end of the year 9.2 30.4

Effective

interest rate

Earlier of

repricing date

or maturity date

2022

£m

2021

£m

Non-current

Covid loan at WITec 1.00% May 2026 1.3 —

At the end of the year 1.3 —

The Group’s undrawn committed facilities available at 31 March 2022 were £103.0m, comprising the undrawn portion of the Group’s

£103.0m revolving credit facilities. These facilities expire on 28 June 2025 and comprise an $80m and a €50m facility.

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 2022 were £18.6m.

A reconciliation of the Group’s borrowings balances is shown below.

2022

£m

2021

£m

Balance at the beginning of the year 30.4 52.0

Increase in borrowings (from acquisition of WITec) 1.9 —

Repayment of borrowings (cash flow from financing activities) (0.1) (27.9)

Increase/(decrease) in bank overdrafts (21.7) 6.3

Interest charged 0.5 1.6

Interest paid (0.5) (1.6)

At the end of the year 10.5 30.4

25 Retirement benefit obligations

The Group operates a defined benefit plan in the UK. The plan 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 has been closed to new

members since 2001 and closed to future accrual since 2010.

The amounts recognised in the Consolidated Statement of Financial Position are:

2022

£m

2021

£m

Present value of funded obligations 300.0 323.9

Fair value of plan assets (351.7) (340.2)

Recognised asset for defined benefit obligations (51.7) (16.3)

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190

Notes to the Financial Statements continued

Year ended 31 March 2022

25 Retirement benefit obligations continued

The reconciliation of the opening and closing balances of the present value of the defined benefit obligation is as follows:

2022

£m

2021

£m

Benefit obligation at the beginning of the year 323.9 290.7

Past service cost — —

Interest on defined benefit obligation 6.7 7.2

Benefits paid (11.1) (8.8)

Settlement payment — —

Remeasurement (gain)/loss on obligation (19.5) 34.8

Exchange rate adjustment — —

Benefit obligation at the end of the year 300.0 323.9

The reconciliation of the opening and closing balances of the present value of the fair value of plan assets is as follows:

2022

£m

2021

£m

Fair value of plan assets at the beginning of the year 340.2 321.4

Interest on plan assets 7.1 8.1

Contributions by employer 8.0 15.9

Benefits paid (11.1) (8.8)

Settlement payment — —

Administrative expenses (0.4) (0.4)

Actual return on assets excluding interest income 7.9 4.0

Exchange rate adjustment — —

Fair value of plan assets at the end of the year 351.7 340.2

The expense recognised in the Consolidated Statement of Income is:

2022

£m

2021

£m

Total defined benefit (income)/expense — (0.5)

Contributions to defined contribution schemes 4.8 4.0

4.8 3.5

Pension costs are recorded in the following lines in the Consolidated Statement of Income:

2022

£m

2021

£m

Cost of sales 1.7 1.0

Research and development 1.2 1.1

Selling and marketing costs 1.0 1.0

Administration and shared services 1.3 1.3

Financial income (0.4) (0.9)

4.8 3.5

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 £8.0m (2021: £7.8m) for the financial year. In the prior year, the Directors decided to make an additional one-off

payment of £8.1m to the UK pension scheme to reduce the Group’s exposure.

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191

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 case

concluded 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 year to 31 March 2022,

theallocation to on-risk assets has been further reduced to 35%, 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 £8.2m to the UK defined benefit plan in the next financial year.

Remeasurement gains and losses shown in the Consolidated Statement of Comprehensive Income:

2022

£m

2021

£m

Actual return on assets excluding interest income 7.9 4.0

Experience (loss)/gain on scheme obligations (1.6) 4.6

Changes in assumptions underlying the present value of scheme obligations:

– Financial 23.5 (40.1)

– Demographic (2.5) 0.6

Cumulative actuarial loss recorded in the Statement of Comprehensive Income

since 1 April 2004 (date of transition to IFRS) (3.5) (30.8)

The table below shows the sensitivity of the Consolidated Statement of Financial Position to changes in the significant pension

assumptions:

2022

£m

Discount rate

(-0.1% p.a.)

£m

Inflation rate

(+0.1% p.a.)

£m

Life expectancy

(+one year)

£m

Present value of funded obligations 300.0 305.1 304.1 313.2

Fair value of plan assets (351.7) (351.7) (351.7) (351.7)

Surplus (51.7) (46.6) (47.6) (38.5)

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.

Oxford Instruments plc | Report and Financial Statements 2022

192

Notes to the Financial Statements continued

Year ended 31 March 2022

25 Retirement benefit obligations continued

Defined benefit scheme – UK

A 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 2022 by a qualified independent actuary.

The major assumptions used by the actuary for the purposes of IAS 19 were (in nominal terms):

2022

2021

Discount rate 2.8 2.1

Rate of increase in pensions in payment (“3LPI”) 2.6 2.5

Rate of increase in pensions in payment (“5LPI”) 3.4 3.0

Rate of inflation (“CPI”) 2.8 2.5

Mortality – pre and post-retirement 91% of S2PA tables

(93% for females) future

improvement in line with

CMI 2021 with 1.25%

long-term trend

91% of S2PA tables

(93% for females) future

improvement in line with

CMI 2000 with 1.25%

long-term trend

As at 31 March 2022 the weighted average duration of the defined benefit obligations was 17 years (2021: 18 years).

The mortality assumptions imply the following expected future lifetime from age 65:

2022

years

2021

years

Pre-retirement – males 23.6 23.6

Pre-retirement – females 25.7 25.7

Post-retirement – males 22.3 22.3

Post-retirement – females 24.2 24.2

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:

2022

£m

2021

£m

Equities 61.0 59.8

Corporate and emerging market bonds 24.7 32.6

Gilts 198.8 186.4

Property 5.3 9.9

Insurance-linked funds 21.2 21.4

Credit and global loan funds 0.1 0.1

Hedge funds 31.3 19.9

Liability hedge overlay — 1.7

Cash 9.3 8.4

Fair value of plan assets at the end of the year 351.7 340.2

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 query

the 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 from

changes 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.

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193

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 the

defined 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

2022

£m

2021

£m

Trade payables 29.3 21.6

Customer deposits 41.3 41.9

Social security and other taxes 3.7 3.8

Accrued expenses 35.1 32.8

Deferred income 21.2 16.5

Other payables 18.9 9.5

149.5 126.1

27 Contract assets and liabilities

2022 2021

Contract asset Contract liability Contract asset Contract liability

Accrued

income

£m

Customer

deposits

£m

Deferred

income

£m

Accrued

income

£m

Customer

deposits

£m

Deferred

income

£m

Balance at 1 April 2.9 (41.9) (16.5) 1.2 (45.3) (13.9)

Acquired business 0.6 (0.3) (0.1) — — —

Transfers in the period from contract assets to

trade receivables (2.9) — — (1.2) — —

Amounts included in contract liabilities that were

recognised as revenue during the period — 31.8 16.5 — 33.8 13.6

Excess of revenue recognised over cash (or rights

to cash) being recognised during the period 3.6 — — 2.9 — —

Cash received in advance of performance and not

recognised as revenue during the period — (30.9) (21.1) — (30.4) (16.2)

Balance at 31 March 4.2 (41.3) (21.2) 2.9 (41.9) (16.5)

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 and

service 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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194

Notes to the Financial Statements continued

Year ended 31 March 2022

28 Provisions for other liabilities and charges continued

Warranties

£m

IP-related

claims

£m

Other

£m

Total

£m

Balance as at 1 April 2021 5.0 0.6 3.8 9.4

Provisions made during the year 3.0 — 1.0 4.0

Provisions used during the year (2.0) — (0.1) (2.1)

Provisions released during the year (2.1) — (1.4) (3.5)

Balance as at 31 March 2022 3.9 0.6 3.3 7.8

Amounts falling due before one year 3.9 0.6 3.2 7.7

Amounts falling due after more than one year — — 0.1 0.1

Warranty provisions

Product warranty provisions reflect commitments made to customers on the sale of goods in the ordinary course of business and

included 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 other

parties. Provisions are made for the expected costs associated with such matters, based on past experience of similar items and

other 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 outcome

of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 such

proceedings may be successful. 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,

dilapidation provisions and provisions for other claims. £0.1m of other provisions fall due after more than one year and are expected

to fall due within the next seven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 contain

a 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 the

absence of a break clause would expose the Group to excessive risk. Typically, factors considered in deciding to negotiate a break

clause 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.

The Group leases assets including land and buildings, vehicles and machinery. Information about leases for which the Group is a

lessee is presented below:

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195

Right-of-use assets

Property leases

£m

Other leases

£m

Total

£m

Cost

Balance at 1 April 2020 12.3 1.7 14.0

Additions 2.2 0.3 2.5

Disposals (0.1) (0.1) (0.2)

Effect of movements in foreign exchange rates (1.1) — (1.1)

Balance at 31 March 2021 13.3 1.9 15.2

Balance at 1 April 2021 13.3 1.9 15.2

Additions – business combinations 2.6 0.2 2.8

Additions – other 10.1 0.8 10.9

Disposals (1.7) (0.3) (2.0)

Effect of movements in foreign exchange rates 0.7 — 0.7

Balance at 31 March 2022 25.0 2.6 27.6

Depreciation and impairment losses

Balance at 1 April 2020 5.1 0.7 5.8

Depreciation charge for the year 2.4 0.4 2.8

Disposals — (0.1) (0.1)

Effect of movements in foreign exchange rates (0.6) — (0.6)

Balance at 31 March 2021 6.9 1.0 7.9

Balance at 1 April 2021 6.9 1.0 7.9

Depreciation charge for the year 2.9 0.5 3.4

Disposals (1.7) (0.2) (1.9)

Effect of movements in foreign exchange rates 0.3 — 0.3

Balance at 31 March 2022 8.4 1.3 9.7

Carrying amounts

Balance at 1 April 2020 7. 2 1.0 8.2

Balance at 31 March 2021 and 1 April 2021 6.4 0.9 7. 3

Balance at 31 March 2022 16.6 1.3 17.9

Lease liabilities

2022

£m

2021

£m

Balance at beginning of year 7.5 8.6

Additions – business combinations 2.8 —

Additions – other 10.9 2.5

Disposals — (0.1)

Payments made (cash flows from financing activities) (3.4) (2.8)

Interest charge 0.3 0.1

Effect of movements in foreign exchange rates 0.3 (0.8)

18.4 7. 5

Amounts falling due after more than one year 14.9 4.9

Amounts falling due in less than one year 3.5 2.6

Oxford Instruments plc | Report and Financial Statements 2022

196

Notes to the Financial Statements continued

Year ended 31 March 2022

29 Leases continued

Lease liabilities continued

Amounts recognised in Consolidated Statement of Income

2022

£m

2021

£m

Interest on lease liabilities (0.3) (0.1)

Depreciation of right-of-use assets (3.4) (2.8)

Expenses on short-term leases not capitalised — —

Expenses on low-value asset leases not capitalised — —

Income from sub-letting right-of-use assets — —

Amounts recognised in Consolidated Statement of Cash Flows

2022

£m

2021

£m

Payments made in respect of lease liabilities (3.4) (2.8)

30 Capital commitments

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. Practical completion occurred on 30 May 2022 and consequently the Group has entered into a 20-year lease.

Thisresulted in a right-of-use asset and corresponding lease liability of £13.5m on this date.

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:

2022

£m

2021

£m

Short-term employee benefits 3.7 3.4

Post-employment benefits 0.2 0.2

Share-based payment charges 1.6 1.5

Total 5.5 5.1

Key management personnel include the Executive Directors and the Management Board.

Short-term employee benefits comprise salary and benefits earned during the year and bonuses awarded for the year.

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197

33 Exchange rates

The principal exchange rates to Sterling used were:

Year-end rates 2022 2021

US Dollar 1.32 1.38

Euro 1.18 1.17

Japanese Yen 160 152

Average translation rates

2022 US Dollar Euro Japanese Yen

April 1.38 1.16 152

May 1.40 1.16 153

June 1.40 1.16 154

July 1.39 1.17 153

August 1.38 1.17 152

September 1.36 1.16 151

October 1.36 1.17 153

November 1.35 1.18 153

December 1.34 1.18 153

January 1.35 1.19 155

February 1.34 1.20 155

March 1.33 1.19 157

Average translation rates

2021 US Dollar Euro Japanese Yen

April 1.25 1.14 134

May 1.25 1.13 134

June 1.24 1.11 133

July 1.27 1.11 136

August 1.33 1.11 140

September 1.32 1.11 139

October 1.29 1.11 136

November 1.34 1.12 139

December 1.35 1.12 140

January 1.37 1.12 142

February 1.39 1.14 146

March 1.39 1.16 151

Oxford Instruments plc | Report and Financial Statements 2022

198

Notes

2022

£m

2021

£m

Assets

Non-current assets

Intangible assets d 1.3 1.3

Tangible assets c 0.4 0.4

Right-of-use assets 0.1 —

Investments in subsidiary undertakings e 323.6 322.8

Debtors f 35.9 29.8

Derivative financial instruments — 1.1

Retirement benefit asset j 11.8 3.7

Deferred tax assets i 0.1 1.7

373.2 360.8

Current assets

Debtors f 26.0 20.6

Cash and cash equivalents 54.8 7 7. 3

80.8 97. 9

Total assets 454.0 458.7

Equity

Capital and reserves attributable to the Company’s equity Shareholders

Share capital 2.9 2.9

Share premium 62.5 62.4

Capital redemption reserve 0.1 0.1

Other reserves 7.6 7. 6

Retained earnings 271.7 260.8

344.8 333.8

Liabilities

Non-current liabilities

Derivative financial instruments g 0.3 —

0.3 —

Current liabilities

Overdrafts h 0.1 7.8

Other creditors g 108.8 117.1

108.9 124.9

Total liabilities 109.2 124.9

Total liabilities and equity 454.0 458.7

The Company’s profit for the financial year was £16.3m (2021: £10.7m). Other comprehensive income in the year was £4.7m (2021:

expense of £5.8m). The income will not subsequently be reclassified to profit or loss.

The Financial Statements were approved by the Board of Directors on 13 June 2022 and signed on its behalf by:

Ian Barkshire Gavin Hill

Director Director

Company number: 775598

Parent Company Statement of Financial Position

As at 31 March 2022

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Oxford Instruments plc | Report and Financial Statements 2022

199

Parent Company Statement of Changes in Equity

Year ended 31 March 2022

Share capital

£m

Share premium

account

£m

Capital

redemption

reserve

£m

Other reserves

£m

Retained

earnings

£m

Total

£m

As at 1 April 2021 2.9 62.4 0.1 7.6 260.8 333.8

Profit for the year — — — — 16.3 16.3

Other comprehensive income:

– Remeasurement of defined benefit liability, net

of tax — — — — 4.7 4.7

Total comprehensive income for the year — — — — 21.0 21.0

– Share options awarded to employees — — — — 1.3 1.3

– Share options awarded to employees of

subsidiaries — — — — 0.8 0.8

– Tax credit in respect of share options — — — — 0.1 0.1

– Proceeds from shares issued — 0.1 — — — 0.1

– Dividends paid — — — — (12.3) (12.3)

As at 31 March 2022 2.9 62.5 0.1 7.6 271.7 344.8

As at 1 April 2020 2.9 62.2 0.1 7.6 253.4 326.2

Profit for the year — — — — 10.7 10.7

Other comprehensive income:

– Remeasurement of defined benefit liability, net

of tax — — — — (5.8) (5.8)

Total comprehensive income for the year — — — — 4.9 4.9

– Share options awarded to employees — — — — 1.2 1.2

– Share options awarded to employees of

subsidiaries — — — — 0.6 0.6

– Tax credit in respect of share options — — — — 0.7 0.7

– Proceeds from shares issued — 0.2 — — — 0.2

As at 31 March 2021 2.9 62.4 0.1 7.6 260.8 333.8

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 11 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 13 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.

Oxford Instruments plc | Report and Financial Statements 2022

200

Notes to the Parent Company Financial Statements

Year ended 31 March 2022

(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 that

derivative financial instruments are stated

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 the

requirements of the Companies Act 2006.

In these Financial Statements, the

Company has applied the exemptions

available under FRS 101 in respect of the

following 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 capital

management;

•

the effects of new, but not yet effective,

accounting standards; and

•

disclosures in respect of the

compensation of key management

personnel.

As the consolidated Financial Statements

of Oxford Instruments plc include the

equivalent 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; and

•

certain disclosures required by IFRS 13

Fair Value Measurement and the

disclosures required by IFRS 7

Financial Instrument Disclosures.

As permitted by Section 408 of the

Companies 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 the

Company has adequate resources to

continue in operational existence for the

foreseeable future. Further details on the

Group’s going concern can be found on

pages 76, 85 and 86.

Taxation

Income tax on the profit or loss for the

year 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 which

case 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 of

previous years.

Deferred tax is recognised in respect of

temporary differences between the

carrying amounts of assets and liabilities

for financial reporting purposes and the

amounts used for taxation purposes. The

following temporary differences are not

provided 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 the

extent that they will probably not reverse

in the future.

The amount of deferred tax provided is

based on the expected manner of

realisation or settlement of the carrying

amount of assets and liabilities, using tax

rates enacted or substantively enacted at

the balance sheet date.

A deferred tax asset is recognised only to

the extent that it is probable that future

taxable 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 are

recognised at the same time as the

liability to pay the related dividend.

Non-derivative financial

instruments

Non-derivative financial instruments

comprise trade and other debtors, cash

and cash equivalents, loans and

borrowings, and trade and other creditors.

Trade and other debtors

Trade and other debtors are recognised

initially at fair value. Subsequent to initial

recognition they are measured at

amortised cost using the effective interest

method, less any impairment losses.

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Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

201

Trade and other creditors

Trade and other creditors are recognised

initially at fair value. Subsequent to initial

recognition they are measured at

amortised 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 are

recognised initially at fair value less

attributable transaction costs.

Subsequent to initial recognition,

interest-bearing borrowings are stated at

amortised cost using the effective interest

method, less any impairment losses.

Details of the Group’s interest-bearing

borrowings are included in Note 24 to the

Group Financial Statements.

Intra-Group lending

The Company has lent funds to and from

its UK subsidiaries on interest-free terms.

These amounts are repayable on

demand. They are stated at cost less any

impairment losses.

Derivative financial instruments

The Company’s accounting policies for

financial instruments are the same as the

Group’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 162.

Tangible fixed assets

Tangible fixed assets are stated at cost

less accumulated depreciation and

accumulated impairment losses. Where

parts of an item of tangible fixed assets

have different useful lives, they are

accounted for as separate items of

tangible fixed assets.

Depreciation is charged to the profit and

loss account on a straight-line basis over

the estimated useful lives of each part of

an item of tangible fixed assets. The

estimated useful lives are as follows:

•

Computer equipment – four years

•

Motor vehicles – four years

Depreciation methods, useful lives and

residual values are reviewed at each

balance sheet date.

Intangible assets

Intangible assets represents internally

developed software. Amortisation is

charged to the profit and loss account on

a straight-line basis over the estimated

useful lives of intangible assets unless

such lives are indefinite. Intangible assets

are amortised from the date they are

available for use. The estimated useful

lives are as follows:

•

Software – ten years

Impairment excluding deferred

taxassets

Financial assets (including trade

and other debtors)

Trade and other debtors are initially

recognised at fair value and subsequently

stated at their amortised cost less

appropriate provision for impairment.

Theprovision for impairment of debtors is

based 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 by

assessing historic credit loss experience.

The movement in the provision is

recognised in the Company’s statement

of 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, the

estimated future cash flows are

discounted to their present value using a

pre-tax discount rate that reflects current

market assessments of the time value of

money and the risks specific to the asset.

For the purpose of impairment testing,

assets that cannot be tested individually

are grouped together into the smallest

group of assets that generates cash

inflows from continuing use that are

largely independent of the cash inflows

ofother assets or groups of assets (the

“cash generating unit” or CGU).

An impairment loss is recognised if the

carrying amount of an asset or its CGU

exceeds its estimated recoverable

amount.

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 then

to reduce the carrying amounts of the

other assets in the unit (group of units) on

a pro-rata basis.

Impairment losses recognised in prior

periods 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 or amortisation, if no

impairment loss had been recognised.

Oxford Instruments plc | Report and Financial Statements 2022

202

Notes to the Parent Company Financial Statements continued

Year ended 31 March 2022

(a) Accounting policies continued

Employee benefits

Defined contribution plans

A defined contribution plan is a

post-employment benefit plan under

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.

Defined benefit plans

A defined benefit plan is a

post-employment benefit plan other

thana defined contribution plan.

TheCompany’s net obligation in respect

of defined benefit pension plans is

calculated by estimating the amount

offuture benefit that employees have

earned in return for their service in the

current and prior periods; that benefit is

discounted to determine its present value,

and the fair value of any plan assets

(atbid price) is deducted. The Company

determines the net interest on the net

defined benefit liability/(asset) for the

period by applying the discount rate used

to measure the defined benefit obligation

at the beginning of the annual period to

the net defined benefit liability/(asset).

The discount rate is the yield at the

reporting date on bonds that have a

credit rating of at least AA that have

maturity dates approximating the terms

of the Company’s obligations and that are

denominated in the currency in which the

benefits 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 the

asset ceiling (if any, excluding interest).

The Company recognises them

immediately in other comprehensive

income and all other expenses related to

defined benefit plans in employee benefit

expenses in profit or loss. The calculation

of the defined benefit obligations is

performed by a qualified actuary using

the projected unit credit method. When

the calculation results in a benefit to the

Company, the recognised asset is limited

to the present value of benefits available

in the form of any future refunds from the

plan or reductions in future contributions

and takes into account the adverse effect

of any minimum funding requirements.

The Company is the sponsoring employer

of a Group-wide defined benefit pension

plan. The net defined benefit cost of the

plan 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 for

approximately 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 the

amount expected to be paid under

short-term cash bonus or profit-sharing

plans if the Company has a present legal

or constructive obligation to pay this

amount as a result of past service

provided by the employee and the

obligation can be estimated reliably.

Termination benefits

Termination benefits are recognised as

anexpense when the Company is

demonstrably committed, without

realistic possibility of withdrawal, to a

formal detailed plan to either terminate

employment before the normal

retirement date, or to provide termination

benefits as a result of an offer made to

encourage voluntary redundancy.

Termination benefits for voluntary

redundancies are recognised as an

expense if the Company has made an

offer of voluntary redundancy, it is

probable that the offer will be accepted,

and the number of acceptances can be

estimated reliably. If benefits are payable

more than twelve months after the

reporting date, then they are discounted

to their present value.

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 the

awards. The fair value of the awards

granted is measured using an option

valuation model, taking into account the

terms and conditions upon which the

awards were granted. The amount

recognised as an expense is adjusted to

reflect the actual number of awards for

which 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 the

number of awards that do meet the

related service and non-market

performance conditions at the vesting

date. For share-based payment awards

with non-vesting conditions, the grant date

fair value of the share-based payment is

measured to reflect such conditions and

there is no true-up for differences between

expected and actual outcomes.

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Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

203

Where the Company grants options over

its own shares to the employees of its

subsidiaries, it recognises, in its individual

Financial Statements, an increase in the

cost of investment in its subsidiaries

equivalent to the equity settled

share-based payment charge recognised

in its consolidated Financial Statements

with the corresponding credit being

recognised directly in equity. Amounts

recharged to the subsidiary are

recognised as a reduction in the cost of

investment in subsidiary. If the amount

recharged exceeds the increase in the

cost of investment, the excess is

recognised as a dividend.

Own shares held by ESOP trust

The policy with regard to transactions of

the Company-sponsored ESOP trust can

be found in the Group accounting policies.

Leases

The Company recognises a right-of-use

asset and a lease liability at the lease

commencement date. The right-of-use

asset is initially measured at cost, which

comprises the initial amount of the lease

liability adjusted for any lease payments

made at or before the commencement

date, plus any initial direct costs incurred

and an estimate of costs to dismantle

andremove 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 the

lease term. The estimated useful lives of

right-of-use assets are determined on the

same basis as those of property and

equipment. 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 payments

that 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, the

Company uses its incremental borrowing

rate as the discount rate.

Lease payments included in the

measurement of the lease liability

comprise fixed payments.

The lease liability is measured at

amortised cost using the effective interest

method. It is remeasured when there is a

change in future lease payments arising

from 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 the

Company 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 the

right-of-use asset, or is recorded in profit

or loss if the carrying amount of the

right-of-use asset has been reduced

to zero.

Short-term leases and leases of

low-value assets

The Company has elected not to

recognise right-of-use assets and lease

liabilities for short-term leases of

machinery 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.

Foreign currencies

The Company enters into forward

exchange contracts and options to

mitigate the currency exposures that

arise on sales and purchases

denominated in foreign currencies.

Transactions in foreign currencies are

converted into Sterling at the rate ruling

on the date of the transaction. Monetary

assets and liabilities denominated in

foreign currencies are translated at the

rates ruling at the balance sheet date.

Exchange profits and losses arising from

the above are dealt with in the profit and

loss account.

Investments

Investments in subsidiaries are stated at

cost, 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 at

that date to the extent that they are

appropriately authorised and are no

longer at the discretion of the Company.

Unpaid dividends that do not meet these

criteria are disclosed in the notes to the

Financial Statements.

Financial guarantee contracts

Where the Company enters into financial

guarantee contracts to guarantee the

indebtedness of other companies within

its Group, the Company considers these

to be insurance arrangements and

accounts 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 a

payment under the guarantee.

Oxford Instruments plc | Report and Financial Statements 2022

204

Notes to the Parent Company Financial Statements continued

Year ended 31 March 2022

(b) Profit for the year

The Company’s profit for the financial year was £16.3m (2021: £10.7m). Other comprehensive income in the year was £4.7m

(2021: expense of £5.8m). The income will not subsequently be reclassified to profit or loss.

The auditor’s remuneration comprised £210,000 (2021: £200,000) for the statutory audit.

The average number of people employed by the Company (including Directors) during the year was 79 (2021: 57). All these

individuals were involved in administration.

The aggregate payroll costs (including Directors) of these people were as follows:

2022

£m

2021

£m

Wages and salaries 6.4 5.4

Social security costs 1.5 1.6

Other pension costs 0.2 0.4

8.1 7.4

The share-based payment charge was £1.3m (2021: £1.2m). Details of the Group’s share option schemes are included in Note 11 to

the Group Financial Statements.

Full details of the emoluments paid to Directors can be found in the Remuneration Report on pages 120 to 141.

Computer

equipment

£m

Total

£m

Cost

Balance at 1 April 2021 2.7 2.7

Additions 0.2 0.2

Balance at 31 March 2022 2.9 2.9

Depreciation

Balance at 1 April 2021 2.3 2.3

Charge for year 0.2 0.2

Balance at 31 March 2022 2.5 2.5

Net book value

Balance at 31 March 2021 0.4 0.4

Balance at 31 March 2022 0.4 0.4

(d) Intangible assets

Software

£m

Cost

Balance at 1 April 2021 2.9

Additions 0.1

Balance at 31 March 2022 3.0

Depreciation and impairment losses

Balance at 1 April 2021 1.6

Charge for year 0.1

Balance at 31 March 2022 1.7

Net book value

Balance at 31 March 2021 1.3

Balance at 31 March 2022 1.3

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Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

205

(e) Investments

Investments

in subsidiary

undertakings

£m

Cost or valuation

Balance at 1 April 2021 341.5

Expense in respect of share options transferred to subsidiary undertakings 0.8

Balance at 31 March 2022 342.3

Impairment

Balance at 1 April 2021 and 31 March 2022 18.7

Net book value

Balance at 31 March 2021 322.8

Balance at 31 March 2022 323.6

The following is a full list of the subsidiaries and associates and their country of registration as at 31 March 2022. This information

isprovided 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 2022 are as follows.

Subsidiaries Registered office address

Country of

incorporation

Andor Technology Limited 7 Millennium Way, Springvale Business Park, Belfast, NI, BT12 7AL UK

Andor Technology, Inc. 300 Baker Avenue, Suite 150, Concord MA 0174 US

Bitplane AG Zurcherstrasse 6, 8952 Schlieren Switzerland

Bitplane Inc 300 Baker Avenue, Suite 150, Concord MA 0174 US

Oxford Instruments AFM Limited Tubney Woods, Abingdon, Oxon, OX13 5Q UK

Oxford Instruments America Inc 300 Baker Avenue, Suite 150, Concord MA 0174 US

Oxford Instruments Asylum Research Inc 7416 Hollister Avenue, Santa Barbara, CA 93117 US

Oxford Instruments Funding Limited PO Box 175, Frances House, Sir William Place, St Peter Port,

GY1 4HQ

Guernsey

Oxford Instruments GmbH Borsigstrasse 15a, 65205, Wiesbaden Germany

Oxford Instruments Holdings 2013 Inc Corporation Trust Centre, 1209 Orange Street, Wilmington,

New Castle, Delaware 1980

Oxford Instruments Holdings Europe Limited Tubney Woods, Abingdon, Oxon, OX13 5QX, England UK

Oxford Instruments Holdings GmbH Borsigstrasse 15a, 65205, Wiesbaden Germany

Oxford Instruments India Private Limited Plot No. A-279, Ground Floor Road No. 16A, Ambica Nagar,

Wagle Industrial Estate, Thane (West), Thane, MH, 400604

India

Oxford Instruments Industrial Products

Holdings Limited

Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments Industrial Products Limited Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments KK IS Building, 3-32-42 Higashi-Shinagawa, Shinagawa-ku,

Tokyo, 140-0002

Japan

Oxford Instruments Molecular Biotools Limited Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments Nanotechnology Tools

Holdings Limited

Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments Nanotechnology

Tools Limited

Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments Nordiska Ab C/o TMF Sweden AB, Sergels Torg 12, 111 57, Stockholm Sweden

Oxford Instruments Overseas Holdings

2008 Limited

Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments Overseas Holdings Ltd Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments Overseas Marketing GmbH Borsigstrasse 15a, 65205, Wiesbaden Germany

Oxford Instruments Overseas Marketing Limited Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments Pension Trustee Limited Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments plc | Report and Financial Statements 2022

206

Notes to the Parent Company Financial Statements continued

Year ended 31 March 2022

Subsidiaries Registered office address

Country of

incorporation

Oxford Instruments Private Limited Messrs Tan Rajah & Cheah, 80 Raffles Place,

#58-01 UOB Plaza 1, 048624

Singapore

Oxford Instruments SAS 77 Z.A. de Montvoisin, 91400 Gometz la Ville France

Oxford Instruments Technologies Oy Technopolis Innopoli 1, Tekniikantie 12, Espoo, 02150 Finland

Oxford Instruments Technology (Shanghai) Co.

Ltd

Floor 1, Building 60, 461 Hongcao Road, Xuhui District,

Shanghai

China

Oxford Instruments UK 2013 Limited Tubney Woods, Abingdon, Oxon, OX13 5QX UK

Oxford Instruments X-Ray Technology Inc 360 El Pueblo Road, Scotts Valley CA 95066 US

Spectral Applied Research Inc 199 Bay Street, Suite 5300, Commerce Court West,

Toronto ON M5L 1B9

Canada

WITec (Beijing) Scientific Technology Co. Ltd. Unit 1307A, Air China Plaza Tower 1, No. 36 Xiaoyun Road,

Chaoyang District, 100027, Beijing

China

WITec Instruments Corp. 130G Market Place Blvd, Knoxville, Tennessee 37922 US

WITec KK 1-1-5 Furo-cho, Naka-ku, Yokohama City, Kanagawa Pref.,

231-0032

Japan

WITec Pte. Ltd. 25 International Business Park, #03-59A German Centre, 609916 Singapore

WITec Wissenschaftliche Instrumente und

Technologie GmbH

Lise-Meitner-Str. 6, D-89081 Ulm Germany

1. UK tax resident.

Equity owned by the Company represents issued ordinary share capital. All subsidiaries are consolidated in the Group accounts.

(f) Debtors

2022

£m

2021

£m

Amounts falling due after one year:

Amounts owed by subsidiary undertaking 35.9 29.8

Amounts falling due within one year:

Amounts owed by subsidiary undertaking 17.8 12.4

Other debtors 6.8 7.6

Prepayment and accrued income 1.4 0.6

61.9 50.4

Amounts owed by subsidiary undertakings are interest-free, unsecured and repayable on demand.

The Company has no immediate intention to recall £35.9m (2021: £29.8m) of these balances in the short term and so these amounts

are classified as amounts falling due after more than one year.

(g) Creditors

2022

£m

2021

£m

Amounts falling due after one year:

Derivative financial instruments 0.3 —

Amounts falling due within one year:

Trade creditors 3.1 0.1

Amounts owed to subsidiary undertaking 94.5 106.9

Tax, social security and sales-related taxes 4.2 5.6

Derivative financial instruments 3.4 —

Other financial liabilities — 0.5

Accruals and deferred income 3.6 4.0

109.1 117.1

Amounts owed to subsidiary undertakings are interest-free and repayable on demand.

(e) Investments continued

GovernanceStrategic Report Company Information

Financial Statements

Oxford Instruments plc | Report and Financial Statements 2022

207

(h) Overdraft

2022

£m

2021

£m

Current

Bank overdraft 0.1 7.8

At the end of the year 0.1 7. 8

(i) Deferred tax asset

2022

£m

2021

£m

Balance at 1 April 1.7 0.3

Profit and loss debit (0.1) (0.6)

Other comprehensive income credit/(debt) (1.5) 2.0

Balance at 31 March 0.1 1.7

The amounts of deferred tax assets are as follows:

Recognised

2022

£m

2021

£m

Excess of depreciation over corresponding capital allowance 0.5 0.4

Employee benefits – pension and share scheme (0.4) 1.3

0.1 1.7

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.

On 5 March 2021, it was announced that the rate of UK corporation tax would be increased to 25% from 1 April 2023. This change

was substantively enacted on 24 May 2021. As such, the UK deferred tax assets and liabilities have been calculated based on the

enacted rate of 19% where they are anticipated to be utilised prior to 31 March 2023, but at 25% when utilisation is expected to occur

after that date.

(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 are

charged 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 employees

of 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 £1.8m (2021: £3.7m).

(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 (2021: £10.0m) in respect of net overdraft

facilities, of which £nil (2021: £nil) was drawn at the year end.

(l) Commitments

At 31 March 2022, capital commitments contracted were £nil (2021: £nil) and authorised were £nil (2021: £nil).

(m) Related party transactions

The Company has a related party relationship with its Directors and Executive Officers and with its wholly owned subsidiary companies.

Transactions with key management personnel are disclosed in the Remuneration Report on pages 120 to 141. There were no other

significant transactions with key management personnel in either the current or preceding year.

Oxford Instruments plc | Report and Financial Statements 2022

208

Historical Financial Summary

2018

£m

2019

£m

2020

£m

2021

£m

2022

£m

Consolidated Statement of Income

Revenue from continuing operations 27 7. 5 314.0 317.4 318.5 367.3

Adjusted operating profit from continuing operations

46.1 47.7 50.5 56.7 66.3

Other operating income 3.3 — — — —

Acquisition-related costs — — — (0.4) (0.4)

Restructuring costs (0.4) — (0.2) — —

Restructuring costs – relating to associate (0.4) (0.3) — — —

Past service cost on defined benefit pension scheme — (0.3) 0.6 — —

WITec post-acquisition gross margin adjustment — — — — (1.7)

Share of impairment recognised by associate (2.0) 0.6 — — —

Inventory impairment — — (0.4) — —

Profit on disposal of associate — — 6.5 — —

Impairment of internally generated intangible assets — — (7.1) (1.3) —

Amortisation of acquired intangibles (9.8) (8.8) (8.7) (8.4) (9.5)

Fair value movement on financial derivatives 3.1 (1.5) (1.4) 6.4 (6.4)

Operating profit from continuing operations 39.9 37.4 39.8 53.0 48.3

Net financing costs (4.2) (3.1) (1.0) (0.8) (0.7)

Profit before taxation from continuing operations 35.7 34.3 38.8 52.2 47.6

Income tax expense (12.0) (6.5) (6.8) (10.4) (9.0)

Profit for the year from continuing operations 23.7 27.8 32.0 41.8 38.6

Adjusted profit before tax from continuing operations 42.0 45.5 49.5 55.9 65.9

Consolidated Statement of Financial Position

Property, plant and equipment 22.8 24.2 21.8 21.1 31.7

Right-of-use assets — 8.8 8.2 7.3 17.9

Intangible assets 158.7 152.5 135.5 122.6 140.7

Investment in associate 4.1 4.6 — — —

Long-term receivables 1.4 0.3 — — —

Deferred and current tax 3.6 7.1 2.7 3.9 (5.4)

Inventories 45.9 60.8 58.8 58.7 65.3

Trade and other receivables 73.9 79.4 72.0 81.7 105.7

Trade and other payables (84.1) (118.0) (128.6) (126.1) (150.9)

Lease payables — (3.0) (2.1) (2.6) (3.5)

Net assets excluding net cash 226.3 216.7 168.3 166.6 201.5

Cash and cash equivalents 73.3 74.6 119.5 128.0 96.4

Bank overdrafts (52.6) (39.4) (24.1) (30.4) (8.7)

Bank borrowings (40.4) (28.5) (27.9) — (1.8)

Net (debt)/cash (19.7) 6.7 67.5 97. 6 85.9

Lease payables — (6.0) (6.5) (4.9) (14.9)

Provisions (11.7) (8.7) (8.4) (9.4) (7.8)

Retirement benefit obligations (15.3) (6.5) 30.7 16.3 51.7

Net assets employed/capital and reserves attributable to the

Company’s equity holders 179.6 202.2 251.6 266.2 316.4

Cash flows from continuing operations

Net cash from operating activities 26.8 40.8 55.2 42.0 49.1

Net cash generated from/(used in) investing activities 68.7 (9.2) 6.0 (5.1) (45.6)

Net cash used in financing activities (104.0) (22.1) (11.4) (30.5) (15.7)

Net (decrease)/increase in cash equivalents from

continuing operations (8.5) 9.5 49.8 6.4 (12.2)

pence pence pence pence pence

Per ordinary share

Earnings – continuing 41.6 48.6 55.9 72.8 67.1

Adjusted earnings

55.8 62.3 70.2 78.6 94.3

Dividends 13.3 14.4 — 17.0 18.1

Employees

Average number of employees 1,642 1,579 1,585 1,619 1,878

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.

For more information please email: info.oiplc-web@oxinst.com

This publication is the copyright of Oxford Instruments plc and provides outline information only, which (unless agreed

by the Company inwriting) may not be used, applied or reproduced for any purpose or form part of any order or

contract or regarded as the representation relating to the products or services concerned. Oxford Instruments’ policy

is one of continued improvement. The Company reserves the right to alter, without notice, the specification, design or

conditions of supply of any product or service. Oxford Instruments acknowledges alltrademarks and registrations.

Cover imagery courtesy of:

First row, second column: Âlvaro Tavares, Ines Baião-Santos, CBMR Universidade do Algarve & Claudia Florindo,

Oxford Instruments Andor

Second row, first column: Marc Laxineta

Second row, third column: Dr Yu-Suk Choi, University ofWestern Australia

Bottom row, first column: Julien Rességuier at NorMIC

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Oxford Instruments plc Report and Financial Statements 2022