Oxford Instruments : 2023-2024 Preliminary Results Annual and Half Year Reports

To accelerate

the breakthroughs that create a brighter future for our world.

Oxford Instruments plc

Annual Report 2024

B	Oxford Instruments plc	Overview	Strategic Report	Governance	Financial Statements	01
Annual Report 2024

2024	At a glance	Our purpose-
highlights		led approach

To accelerate

the breakthroughs that create a brighter future for our world

page 02	page 04
Chief Executive	Reasons
Officer's	to invest
review

page 10page 16

page 06

Our strategy

page 22

Our technology and scientific expertise enables our customers to discover and bring to market exciting new advances that drive human progress.

Sustainability Finance

review

page 34

page 58

Governance

page 83

We provide academic and commercial organisations worldwide with market- leading scientific technology and expertise across our key market segments: Materials Analysis, Semiconductors and Healthcare & Life Science.

Innovation is the driving force behind our growth and success, supporting our core purpose to accelerate the breakthroughs that create a brighter future for our world.

We hold a unique position to anticipate global drivers and connect academic researchers with commercial applications engineers, acting as a catalyst that powers real

world progress.

Visit our investor centre on our website to view the rest of our reporting suite:

www.oxinst.com/investors

Contents

Overview	Governance
02	2024 highlights	84	Chair's overview
04	At a glance	86	Board of Directors
06	Our purpose-led approach	89	Board leadership and company purpose
08	Chair's statement	89	Corporate Governance statement
Strategic Report	90	How we engage with our stakeholders
96	Section 172(1) Statement
10	Chief Executive Officer's review
97	Division of responsibilities
16	Reasons to invest
101	Composition, succession and evaluation
18	Our business model
106	Nomination Committee Report
20	Engaging with our stakeholders
110	Audit and Risk Committee Report
22	Our strategy
117	Sustainability Committee Report
24	Key performance indicators
120	Directors' Remuneration Report
26	Operations review
144	Shareholder information
27	Materials & Characterisation
145	Directors' report
30	Research & Discovery
148	Directors' responsibilities
33	Service & Healthcare
34	Sustainability
35	Sustainability: Environment
40	Sustainability: TCFD statement
51	Sustainability: Social
56	Sustainability: Governance
58	Finance review
70	Risk management
79	Viability statement		Contents	Next page

82 Non-financial information statement

Financial Statements

1. Consolidated statement of income
2. Consolidated statement of comprehensive income
3. Consolidated statement of financial position
4. Consolidated statement of changes in equity
5. Consolidated statement of cash flows
6. Material accounting policies

161 Notes to the Consolidated Financial Statements

1. Parent company statement of financial position
2. Parent company statement of changes in equity
3. Notes to the parent company financial statements

204 Independent auditor's report to the members of Oxford Instruments plc

212 Historical financial summary

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02	Oxford Instruments plc
Annual Report 2024

2024 HIGHLIGHTS

Robust performance sustainable growth

Robust performance and market-leading technology in structural growth markets provide an excellent platform for revenue growth and margin expansion.

Overview

Strategic Report

Governance

Financial Statements

03

Operational and sustainability highlights

• New CEO and leadership team develop		• Withdrawal of quantum commercial
refreshed strategy; Group to be structured		activities in China, in response to
in two new divisions to drive growth and		geopolitical dynamics, resulted in
margin expansion		in-year losses
• 9.8% constant currency revenue		• Action taken to focus resources on
growth underpinned by strong		non-sensitive areas in China and grow
academic funding		revenue in other regions

Adjusted financial highlights1

Revenue		Net cash3
£470.4m	£83.8m
(2023: £444.7m)	% change	(2023: £100.2m)
	constant currency
+5.8%	+9.8%	Adjusted operating profit
Cash conversion2		£80.3m
64%
	(2023: £80.5m)	% change
	constant currency
	(0.2%)	+3.7%

• Underlying book-to-bill positive at 1.03,

underlying orders at constant currency down 2.5%5 against a strong comparator

• £75m state-of-the-art compound semiconductor facility in Severn Beach now operational
• Further investment for growth includes expansion of Belfast microscopy and scientific camera facility

• Carbon reduction goals accelerated to achievenet zero in Scopes 1 and 2

by 2030

• AA rating from MSCI for Oxford Instruments' ESG performance
• 78% employee engagement score
  (September 2023) reflects engaged employees and supportive, inclusive culture

(2023:	88%)
Adjusted basic earnings per share	Adjusted operating profit margin
109.0p	17.1%
(2023:	112.7p)	(2023: 18.1%)

(3.3%)(100bps)

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, pages 58 to 69, and Note 2, pages 163 to 165.
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.
5. Adjusted for the impact of £23m orders from China removed from orderbook due to export licence controls.

www.oxinst.com

Statutory financial highlights

RevenueOperating profit marginBasic earnings per share

£470.4m	14.5%	87.7p
(2023: £444.7m)	(2023: 16.3%)	(2023: 101.6p)
+5.8%	(180bps)	(13.7%)
Operating profit	Profit before taxation	Dividend per share
£68.3m	£71.3m	for the year (proposed)
20.8p
(2023: £72.4m)	(2023: £73.5m)
(5.7%)	(3.0%)	(2023: 19.5p)
+6.7%

04	Oxford Instruments plc
Annual Report 2024

AT A GLANCE

We are a leading provider of scientific technology and expertise to academic and commercial partners worldwide

What we do

We develop and manufacture market-leading imaging, analysis and fabrication tools that accelerate new scientific breakthroughs. Our technology and market insight place us in a unique position to anticipate global drivers and connect academic researchers with commercial applications engineers, acting as a catalyst that powers real world progress.

Materials & Characterisation

Materials imaging and analysis solutions and advanced etch and deposition systems for compound semiconductor devices

 For more information / Pages 27 to 29

		Total revenue
		£470.4m
	Research & Discovery
	Scientific cameras, microscopy,
	cryogenic and superconducting magnet
	technology and X-ray tubes
	For more information / Pages 30 to 32

Overview

Strategic Report

Governance

Financial Statements

05

+2,000

25

23

Employees

Base locations

Countries from

which we operate

Where we operate	Who we work with
We sell products and services all over	We work with thousands of academic
the world, employing more than 2,000	and commercial organisations in three
people across 25 bases in 23 countries.	key structural growth markets.

Service & Healthcare

Customer service and support for our own products and for third-party MRI scanners in Japan

 For more information / Page 33

From 2024 the Group will report against

a new divisional structure:

Imaging & Analysis

Microscopy, cameras, analytical

instruments and software

Advanced Technologies

Compound semiconductor fabrication equipment, cryogenic and superconducting magnet technology and X-ray tubes

Revenue split by sector

Materials & Characterisation	£252.2m
Research & Discovery	£142.1m
Service & Healthcare	£76.1m

From 2024/25, we will report in a new divisional structure.

 For further details / Pages 10 to 15

4	3
primary regions	primary end markets

Revenue by region		Revenue by market
	Europe	£116.1m		Materials Analysis	£201.0m
	North America	£122.9m		Semiconductor	£126.9m
	China	£127.4m		Healthcare & Life Science	£90.6m
	Japan and ESEA	£94.1m		Other markets, including quantum	£51.9m
	Rest of world	£9.9m

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06	Oxford Instruments plc
Annual Report 2024

OUR PURPOSE-LED APPROACH

To accelerate the breakthroughs that create a…

Our technology and scientific expertise enables our customers to discover and bring to market exciting new advances that drive human progress.

Overview

Strategic Report

Governance

Financial Statements

07

…brighter future for our world

Powering our ambition

Be the scientific instrumentation partner in every significant lab and production facility across the world

Driven by our strategy	Our strategic priorities / Pages 22 to 23

Delivering for

our key end markets

Materials

Analysis

Market drivers

Supporting advanced material development and sustainability progress, with improved performance from finite resources

Creating value

for our stakeholders

Customers

Customer intimacy helps us to identify additional opportunities to deliver increased value to our customers

Shareholders

Delivering strong growth and shareholder returns promotes the long-term sustainable success of the company

Deliver strong growth

Deliver a step change in

Simplify the organisation,

through 'customer first'

operational performance

increasing collaboration

ways of working

(delivery, quality, efficiency)

and accountability

Supporting growth in

Semiconductors bandwidth, connectivity and faster devices; power

efficiency and the greening of the economy

Local communities

We strive to support the development of stronger communities and have a positive environmental and social impact

Employees

By working together as one team, we help and trust each other to succeed

Continue to invest in new

Embed our values

technology and products,

and ways of working

protecting and enhancing

so that they are

our core strengths

lived every day

Healthcare

& Life Science

Supporting development of improved treatments & vaccines at lower cost, and personalised medicine & therapies

Suppliers

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

Society

Our technology and scientific expertise enables our customers to discover and bring to market exciting new advances that drive human progress

Our key end markets / Pages 26 to 33

Stakeholder engagement / Pages 90 to 96

Underpinned by our values​:

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	Purposeful
We build successful, long-term relationships	We care, and our passion and commitment
based on accountability, integrity and respect	drive positive change in the world

www.oxinst.com

08	Oxford Instruments plc
Annual Report 2024

CHAIR'S STATEMENT

Overview

Strategic Report

Governance

Financial Statements

09

A strong platform for growth

This has been another good year for Oxford Instruments, with good financial results and progress made on

manyfronts.It hasalso been a year of transition, as we developour newstrategy and look to the future.

"The strategic work we have

carried out this year has

reinforced the positive impact

we have on the world around us.

We are committed to protecting

and enhancing our core strengths as we take the steps needed

to realise the full potential of

Oxford Instruments."

NEIL CARSON

Chair

www.oxinst.com

I am pleased to report on a busy and purposeful year at Oxford Instruments: we delivered record revenue, welcomed our new CEO Richard Tyson, completed the significant investment in our new compound semiconductor equipment facility in the UK, gained further new colleagues with the acquisition of First Light Imaging, and developed a refreshed purpose and strategy for the Group, all while successfully navigating geopolitical and economic challenges.

We were delighted that Richard accepted the opportunity to lead us through the next stage in our growth, joining us in October 2023. Richard comes to Oxford Instruments with an excellent track record of success, having driven transformational change during his nine-year leadership of TT Electronics plc. He is an astute and strategic leader with a remarkable ability to get quickly to the heart of a challenge and find the solution. He is also people-focused, and I was pleased to see that he made it a firm priority to meet his new colleagues face to face, at all our sites, in a matter of weeks, to get their insights into Oxford Instruments.

Over the few months since he joined, Richard has led the development of a refreshed strategy for Oxford Instruments, working with the Board, with leadership teams and with colleagues around the Group to identify the steps we need to take to realise the potential of the Group, building on our strengths. As he sets out on pages 10 to 15, while we have many strengths, there are also opportunities to do some things differently and drive improved outcomes which will benefit all our stakeholders.

Our new structure (see page 12) will drive growth by facilitating the delivery of action plans that are targeted to the precise and differing needs of each division, while Group-wide we will focus on simplifying our organisation and processes, driving customer-first ways of working and delivering a step change in operational performance.

A new purpose

One of the central elements of the strategy is our commitment to protect and enhance our core strengths.

Our new purpose statement neatly encapsulates both the achievements of which we are so proud and the ambition we are all striving towards:

To accelerate the breakthroughs that create a brighter future for our world.

Our technology and scientific expertise enable our customers to discover and bring to market exciting new advances that drive human progress - and we are determined to continue to do so for the long term.

Sustainability

The strategic work we have carried out has reinforced the positive impact we have on the world around us through our products and services. We want that positive impact to extend throughout our operations, from the inclusive culture we seek to build to the reduction of our carbon footprint. I am particularly pleased that this year we have committed to reach net zero in our own operations by 2030 (see page 35).

People at the heart of our success

On behalf of the whole Board, I would like to thank all our employees. The company's success is their success, generated as the result of their hard work, talent and commitment. We are enormously grateful this year, as we are each year, for the contribution of every individual and every team.

A fond farewell to

Ian Barkshire

I would also like to extend sincere thanks and best wishes on behalf of the whole Board to Ian Barkshire, who retired as Chief Executive in October 2023. Oxford Instruments made significant progress during Ian's tenure: it was he who drove the development and delivery of the Horizon strategy, building the strong foundations from which we move forward today. Ian's vision to position the company in structural growth markets, founded on deep market insights, underpinned a period of remarkable growth. He can be very proud of what he and his colleagues achieved together.

Further Board changes in the year

We were delighted to welcome Hannah Nichols to the Board as a Non-Executive Director in January. Hannah brings strong financial expertise, extensive international experience and a track record of driving transformational change, both within and beyond the finance function.

I am very pleased to confirm that Hannah will take up the role of Chair of the Audit and Risk Committee following the Annual General Meeting (AGM) on 25 July 2024, at which point Mary Waldner will step down from the role in preparation for leaving the Board in February 2025, following her nine years of sterling service.

We bade farewell to Sir Richard Friend in July 2023. Richard had served for almost nine years as Non-Executive Director, and his deep insights, derived from many years' experience at the highest levels of academia, and in business, will be much missed in Board discussions.

Finally, Reshma Ramachandran will stand down as a Non-Executive Director with effect from the conclusion of the AGM, due to her appointment in a new executive role externally, which will restrict the time she is able to commit to her role with Oxford Instruments. The Board sincerely thanks Reshma for the valuable contributions she has made during her time as a Director.

Dividend

In line with our progressive dividend policy and strong trading performance in the year, the Board is proposing a final dividend of 15.9p per share (2023: 14.9p), which is subject to approval at the AGM on 25 July 2024.

Looking ahead

I am full of optimism for the future of Oxford Instruments. Visiting our state- of-the-art new facility at Severn Beach with my Board colleagues last month, and hearing from the team there how warmly they welcome the Group's new strategic direction, marked a particular milestone. I was struck by the atmosphere full of momentum, pace and energy, which I sense is replicated right around the business. I am hugely looking forward to seeing our plans come to fruition over the coming year, and the years that follow.

NEIL CARSON

Chair

10 June 2024

10	Oxford Instruments plc
Annual Report 2024

CHIEF EXECUTIVE OFFICER'S REVIEW

Overview

Strategic Report

Governance

Financial Statements

11

Robust financial performance and a refreshed strategy through a new lens

I am pleased to report a robust set of results

for Oxford Instruments, and to set out a new

strategy for the Group to enable us to fulfil

our strongpotential.

"Our exceptional technology,

strong talent base, well-distributed

regional infrastructure andchoice

of markets give us a strong platform from which to grow.

There are significant opportunities

ahead - but to address them in full we need to structure Oxford

Instruments differently."

RICHARD TYSON

Chief Executive Officer

I am pleased to report a robust set of results for Oxford Instruments. We have delivered 9.8% revenue growth at constant currency, driven by a 7% increase in semiconductor revenue, reflecting our greater exposure to the compound semiconductor market, and double-digit growth in Materials Analysis and Healthcare & Life Science markets, underpinned by strong research funding.

Orders

£459.1m

(2023: £511.6m)

Revenue

£470.4m

(2023: £444.7m)

Adjusted operating profit

£80.3m

(2023: £80.5m)

Operating margin

17.1%

(2023: 18.1%)

Adjusted operating profit of £80.3m was in line with expectations, up 3.7% on a constant currency basis. Adjusted operating margin was down 100bps at 17.1% (2023: 18.1%), in line with guidance, primarily reflecting losses incurred in our quantum business as a result of ceasing certain commercial activities for these products in China and continued operational investment.

The successful transition of our compound semiconductor business to a new purpose-built facility has been a key operational highlight of the year, delivering streamlined production and increased capacity, and presenting significant opportunity to scale. A further focus has been the action we have taken in response to the shifting geopolitical landscape, pivoting to less sensitive applications in China and growing revenue in other regions. Our robust revenue growth in Europe and the rest of Asia bears out the success of this programme, which will continue into FY24/25.

Underlying order intake (excluding the pivot from China) remained robust, supported by a good performance in Europe and the rest of Asia. Underlying book to bill is positive, despite the strong revenue growth, and the orderbook provides good visibility into the year ahead. Our pipeline is strong across all geographies and markets.

A strong platform for growth

Since joining Oxford Instruments in October, I have carried out a thorough review of our business model and markets, working collaboratively with our leadership team and gathering input from across the business.

Our work confirms that academic research is the bedrock of Oxford Instruments' success. Representing more than a third of our revenue, it is resilient across cycles and grows steadily at 3-6% a year.

Our market-leading technology and expertise, developed over 60 years, spans all areas of fundamental research and provides unrivalled reach into academic institutions worldwide.

In recent years, by developing and leveraging our market insight, we have strengthened our position in commercial markets applied R&D, where the technology is used to develop new products for industrial applications (a market four times larger than the academic research market), which now represents c.

45% of our revenue. We have also started to make early inroads into the even larger commercial production market, representing c.20% of our revenue today. The volume potential in commercial applied R&D and production markets is significantly bigger, offering high single-digit growth underpinned by structural growth drivers requiring new technologies

to support decarbonisation and productivity globally.

Our deep dive review highlights that 90% of our revenue is generated in three primary markets - Materials Analysis, Semiconductors and Healthcare & Life Science. All three have clear sustainability drivers with high single-digit structural growth potential. Quantum technology, a much smaller contributor to our current revenue, also represents a growth opportunity, though its trajectory is less linear.

Our strategy for the future

Our exceptional technology, strong talent base, well-distributed regional infrastructure and choice of markets give us a strong platform from which to grow. There are significant opportunities ahead - but to capture them in full and achieve industry- leading margins, we need to structure Oxford Instruments differently.

		Reported growth	Constant currency
	Full year to	vs full year to	growth vs full year to
Group	31 March 2024	31 March 2023	31 March 2023
Orders	£459.1m	(10.3%)	(2.5%1)
Revenue	£470.4m	+5.8%	+9.8%
Adjusted operating profit	£80.3m	(0.2%)	+3.7%
Adjusted operating margin	17.1%	(100bps)	(100bps)

1. Underlying order growth is adjusted for the impact of prior year China orders removed from current year order intake due to export licence restrictions.

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12	Oxford Instruments plc
Annual Report 2024

CHIEF EXECUTIVE OFFICER'S REVIEW continued

Overview

Strategic Report

Governance

Financial Statements

13

As we set out below, the different areas of our business fall naturally into two distinct groupings, reflecting different drivers and business models. This new structure will also facilitate targeted actions to unlock the potential in each.

Our future divisional structure

We are restructuring the business and will be creating two new divisions: Imaging & Analysis and Advanced Technologies.

How we are structured today:

Materials & Characterisation

Materials imaging and analysis solutions and advanced tech and deposition systems for compound semiconductor devices

Research & Discovery

Scientific cameras, microscopy,

cryogenic and superconducting magnet

technology and X-ray tubes

Service & Healthcare

Customer service and support for our own products and for third-party MRI scanners in Japan

From 2024 the Group will report against

a new divisional structure:

Imaging & Analysis

Microscopy, cameras, analytical

instruments and software

Advanced Technologies

Compound semiconductor fabrication

equipment, cryogenic and superconducting

magnet technology and X-ray tubes

Imaging & Analysis will comprise our microscopy and cameras business Andor and our materials analysis businesses Asylum Research, Magnetic Resonance, NanoAnalysis and WITec. (recent adjusted operating profit margin history 22-24%).

Advanced Technologies will comprise our compound semiconductor business Plasma Technology and our quantum- focused business NanoScience, together with the much smaller X-RayTechnology business. (recent adjusted operating profit margin history 0-4%).

Moving forward, service revenue will be reported within each respective division. We will report against the new structure at our half-year results in November 2024. The indicative and unaudited pro forma numbers under the proposed divisional structure for the full year 2024 are disclosed in the Finance Review and the annual results presentation.

The rationale for the planned reporting change is as follows.

The businesses which will form the new Imaging & Analysis division represent c.70% of Group revenue, and have strong existing synergies and a track record of success.

They provide similar relatively small- scale imaging and analysis equipment and software, have common business models, go-to-market strategies and margins, and they address a similar client base in their three key markets in materials analysis, semiconductors, and healthcare & life science.

In recent years, particularly since the acquisition of WITec in 2021, the Materials Analysis businesses have collaborated more closely, driving cross-selling opportunities and efficiencies. Joining forces with our scientific camera and microscopy business will facilitate further synergies and simplification. Together, they will provide an unrivalled range of microscopy, scientific cameras, spectroscopy and analytical tools and software.

Action plans for these high-performing business units are under way. It

will result in improved growth and operational leverage supporting strong margins. Strategic priorities will include:

• improving sales and service channels by going to market through streamlined regional customer-facing teams and generating more whole life revenue from a better customer experience;
• greater focus to leverage maximum opportunity from the existing product portfolio and R&D programme;
• simplifying the organisation by streamlining business processes and removing duplication;

• increasing cross-selling through shared marketing initiatives;
• delivering a step change in operational performance by optimising production and enhancing performance management and value engineering; and
• increasing commercial sales through sharing of best go-to- market practice across regions and targeted key account management.

The businesses which will form our new Advanced Technologies division (representing c.30% of Group revenue) have a very different profile. They sell much lower volumes of larger-scale complex systems into very specialised markets (compound semiconductor and quantum) with unique growth drivers and principally separate customer bases. These businesses each require a dedicated, focused approach to leverage their well-invested base, deliver improved margins and achieve their full growth and margin potential.

Our compound semiconductor business is growing strongly. Scale is important to reap the benefits and recover the costs of our new, larger dedicated facility in Severn Beach, outside Bristol, UK. The business is poised to take advantage of the structural growth in the compound semiconductor market, which does not have the cyclicality inherent in

the silicon semiconductor market. The leadership team have identified key areas of specialism within the compound semiconductor landscape where we have leading capability, or have the potential to do so.

Here, we will maximise productivity and output following the site move, taking advantage of the process and efficiency opportunities the site provides, look to optimise our supply chain, and continue to simplify our product range, in order to deliver good growth and strong margin progression. A further key focus area is customer service, which requires a step change to meet the stretching requirements of the business's growing commercial production customer base.

Our quantum business has been impacted by export restrictions which have limited our ability to sell these capabilities into China. This, combined with operational challenges, larger project timescales and strong competition in the high potential,

but uncertain quantum market, has impacted performance in 2023/24.

We have already started to restructure the cost base, commenced a major operational turnaround programme in operations and refocused sales teams on Europe and the USA. This will continue at pace, focusing on value engineering, cost reduction and performance management.

While leveraging our regional sales and marketing infrastructure, the businesses in the Advanced Technologies division will operate with greater independence than their counterparts in Imaging & Analysis, enabling them to address their specialist markets in ways which will maximise their ability to grow both scale and margin and removing this complexity from the wider business. Structuring our business in these two new divisions will improve our customers' experience and facilitate the delivery of targeted action plans designed to suit the opportunities and the challenges in each, whilst supporting greater transparency of their different paths to significant value creation for investors.

We will provide a progress update on the development of the new divisions via our interim reporting in November, at which point we will report in the new divisional structure.

Group-level strategic priorities

While our action plans are targeted at divisional level, the following core priorities underpin our strategy Group-wide.

Improve our customers' experience

Further growing our reach into commercial markets requires on-time delivery paired with exceptional customer service and responsiveness, particularly in production environments, where deadlines are non-negotiable and down time is not tolerated.

More broadly, we will focus on delivering deep customer insight and best-in-class customer service through our regional teams around the world. We also see significant opportunity to extend whole-life revenue via our services proposition.

Drive a step change in operational performance and productivity

The Group's rapid growth has challenged both capacity and capabilities in some of our manufacturing facilities, opening up significant opportunities in both divisions to reconfigure production areas, design more efficient production processes and upskill colleagues to increase

their productivity.

We have appointed a Chief Transformation Officer who is leading a broad-ranging transformation programme covering all aspects of operational performance and productivity, from the layout of our facilities to value engineering to reduce our cost

of goods.

In addition, we have appointed a dedicated customer service lead who will focus on our after- sales support infrastructure and capabilities, and target significant improvements in our service to our customers.

Simplify our organisational structure

With significant overlap between business units and markets, the structure of Oxford Instruments had become overly complex over a number of years, making it confusing for stakeholders

to understand and leading to duplication of processes internally. Consolidating our eight business units and six previous end markets into just two divisions and three core markets, supported by a simplified customer-facing regional structure, will drive efficiencies and operational gearing, and provide greater transparency

of Oxford Instruments as an investment proposition.

Focus on our key strengths

We will continue to protect, invest and enhance our core strengths by investing c.8-9% of revenue annually in R&D, and working closely with our regional teams and our customers to ensure we focus our efforts on the most economically attractive opportunities, delivering strong return on capital employed.

Focusing on our core markets - materials analysis, semiconductors, and healthcare & life science - will enable us to maximise our impact in all three markets, while deriving efficiencies from this more targeted approach.

www.oxinst.com

14	Oxford Instruments plc
Annual Report 2024

CHIEF EXECUTIVE OFFICER'S REVIEW continued

Overview

Strategic Report

Governance

Financial Statements

15

Capital allocation priorities

These can be summarised as follows:

• Invest in the business
	Our businesses are well invested,
	as evidenced by the capital
	investments we are making in
	new facilities at Severn Beach
	and Belfast. We will continue to
	invest c.8-9% of revenue in R&D,
	and make targeted operational
	investments to support growth.
•	Drive shareholder returns
	We are committed to delivering
	strong shareholder returns,
	taking account of underlying
	earnings, dividend cover,
	currency movements and
	demands on our cash.
•	Make selective acquisitions
	Our acquisition strategy is highly
	selective and disciplined. We will
	focus on adding capabilities in
	Imaging & Analysis, with a good
	pipeline of owner-managed
	businesses under consideration.
• Maintain strong balance sheet
	Our strong balance sheet gives
	us flexibility. We will continually
	assess the appropriateness of
	returns to shareholders in the

As evidenced by the recent financial performance in Advanced Technologies, specific restructuring and improvement activities are required in the short term which have been commenced and are expected to have some impact in the coming financial year.

Overall, we expect these actions to deliver good sustainable organic growth in the medium term, coupled with the opportunity to generate significant value through operating margin enhancement to 20%+.

Our anticipated mid-term outcomes can be summarised as follows:

• Organic growth of 5-8% CAGR.
• Adjusted operating margin improvement to 20%+.
• Cash conversion of over 85%.
• Continuing to invest in growth, including 8-9% on R&D.
• Strong return on capital employed (currently 29%).
• Selective acquisitions bringing complementary capabilities.

A clear purpose

People and planet

I have visited almost all our global sites since joining last autumn and have been impressed by the energy and commitment of the colleagues I have met at every level of the organisation. Our engagement scores are high, at 78%, based on the organisation-wide survey carried out last September. But there is no room for complacency, and in recent months I have led a deep dive exercise, as part of the development of our strategy, to understand our organisational culture and to drive action where there is scope to improve.

We have many strengths. Our workforce is highly skilled, with deep expertise in a wide range of disciplines, from science and engineering to marketing and sales, and our people are passionate about what we do and the impact we have. However, there are areas we need to focus on as we move forward in line with our new strategy. We are clear on our new strategic priorities, and have worked collaboratively with focus groups around the business to set out new ways of working to deliver them.

We are committed to creating a values-driven, inclusive culture. To

Richard Tyson with colleagues in Shanghai (top left) and Belfast (above right); Richard and his Board colleagues also met apprentices on the site visit to Severn Beach (bottom left).

context of the strategy.

Journey to growth and higher margins

We expect to deliver revenue growth and higher margins from both divisions over the medium term, with the Group capable of delivering a revenue CAGR of 5-8% and an adjusted operating profit margin of 20%+. Actions to support growth have begun. Changes in focus and sharing of best practice are expected to be implemented over the next 18 months. Operational performance improvements will require investment in the short term, meaning the margin improvement profile will not be linear. The initial efforts of the last year or so have been supplemented with a dedicated Chief Transformation Officer and we have added resources and built a more extensive change team who have started improvement actions in our Belfast facility first.

We make a tremendous positive impact through our products and services - from supporting Nobel Prize-winning scientific endeavours and the development of personalised treatments for cancer to accelerating the path to decarbonisation through our extensive role in the battery ecosystem. Our technology and scientific expertise enable our customers to discover and bring to market exciting new advances that drive human progress. I am proud of the unique contribution we make. As we set out on our new strategy, I am delighted to share a new purpose for Oxford Instruments:

To accelerate the breakthroughs that create a brighter future for our world.

Our position is unique among UK-based technology companies - and it is my hope that this new purpose, which has been warmly embraced by colleagues around the world, will highlight our positive impact, and focus the energy of everyone at Oxford Instruments.

that end, we have launched a new equity, diversity and inclusion policy, and successfully piloted new Inclusive Leadership training to be rolled out over the coming year.

Our employees have launched impact groups focused on women's issues and neurodiversity this year, adding to the network begun with our race and ethnicity and LGBTQ+ impact groups.

Our products and services have a remarkably positive impact on the world around us. We want to generate a brighter future through our own operations, too. To that end, we are accelerating our progress to net zero, in all the areas we can control. Last year, we committed to achieve a 50% reduction in Scope 1 emissions and a 70% reduction in Scope 2 emissions by 2030. Today, we are setting a new target to achieve net zero in Scopes

1 and 2 by 2030, and sooner if we can. We will continue to work with our product development teams and our supply chain to minimise our Scope 3 emissions, with the goal of accelerating our overall target to achieve net zero faster than our current target year of 2045.

Summary and outlook

I am pleased with the results for the full year and the development of the business during the period. We have reported strong revenue growth of 9.8% at constant currency, with adjusted operating profit in line with expectations. I am grateful to my colleagues across Oxford Instruments for their commitment and energy through a busy year.

We have rebalanced our positions in regional markets in the face of geopolitical shifts, focusing our resources on non-sensitive areas in China, and successfully growing revenue and orders in Europe and elsewhere in Asia.

We have continued to make organic investments to support our future growth, with our state-of-the-art compound semiconductor facility now operational. Underlying order intake has remained robust, with a positive book to bill even though we had stronger growth in the second half, and the orderbook gives us good visibility into the year ahead.

I am hugely impressed with the strong platform at Oxford Instruments, anchored by our market-leading technologies and our talented and committed workforce. My work with leadership teams around the business has confirmed our view that there

is significant opportunity to build on our core strengths. I have today outlined a new strategy, setting targets to improve the returns from the business in the medium term.

As part of this strategy, we are reorganising the Group into two distinct business divisions to simplify and enhance our operations. We will target growth by focusing on fewer markets and a sharpened product portfolio, tackling key areas where improvement is required and delivering a step change in operational and service performance.

We are in a strong position to improve and grow the business, putting it on a sustainable growth footing through our market-leading offering together with operational and efficiency improvements. Given our strong order book and pipeline, coupled with positive business improvement actions, we expect to make good constant currency progress in the full year ending March 2025.

RICHARD TYSON

Chief Executive Officer

10 June 2024

www.oxinst.com

16	Oxford Instruments plc
Annual Report 2024

REASONS TO INVEST

Our investment case is centred around the following key characteristics

Overview

Strategic Report

Governance

Financial Statements

17

Our leading technology and customer-centric,market-focused strategy provide a strong platform from which to deliver sustainable growth, margin expansion and enhanced shareholder returns.

Purpose driven, with differentiated, innovative technologies providing high value add to customers

• Clear purpose to accelerate the breakthroughs that create a brighter future for our world is well aligned with global mega trends.
• Competitive advantage built on
  60-year brand heritage and broad technology base spanning all scientific disciplines, placing Oxford
  Instruments in a unique position to anticipate global drivers and connect academic and commercial customers, acting as a catalyst that powers real world progress.
• Value-addproducts and services accelerating customers' progress across the technology development and production cycle.

Leading positions in attractive structural growth markets

• Leadership in specialist technologies and embedded positions across three primary end markets with long-term structural growth drivers: materials analysis, semiconductors, and healthcare
  & life science (together, c.90%

of revenues).

• Diverse commercial and academic customer base spanning the world's leading companies and scientific research communities, primarily across Asia, North America
  and Europe.

Purpose and impact commitments key to attracting high-quality talent and customers which are creating a more sustainable planet

• Strong attraction and retention of outstanding people with deep expertise, and a highly experienced management team, reflect our compelling purpose and ongoing investment in talent.
• Technologies critical to customer efforts to optimise the use of resources, advance the green transition, develop drug delivery, and sustainably power an increasingly digital world.
• Building on our strong responsible business foundations through six initiatives: progress to net zero (Scopes 1 and 2 by 2030; Scope 3 by 2045); environmental impact; operating responsibly; sustainable product stewardship; inclusive culture; and community and connection.

Track record of delivery, driving returns

• Revenue CAGR of 8.4% over the last five years, supporting strong 2023/24 ROCE of 29.1% and a progressive dividend, with growth of 6.7% in 2023/24.
• Complemented by value-accretive acquisitions; most recently, WITec and First Light Imaging.

Clear opportunities to accelerate growth and enhance margins

• Strong order book and pipeline provide a positive underpin for continued growth.
• Attractive opportunities to accelerate growth through existing product portfolio, new product pipeline, servicing offer, and selective M&A.
• Margin enhancement opportunities through operational and supply chain optimisation, synergies across the Group and enhanced customer experience.

Strong balance sheet and attractive financial profile supporting investment in growth

• High margin and cash generative with a strong balance sheet with significant net cash.
• Well positioned to invest in expanding operational capacity and infrastructure (recent investments in state-of-the-art facilities in
  Bristol and Belfast), new product development (8-9% of revenue annually), and selected acquisitions.

See CEO Review /	See Operations Review /	See Sustainability Report /
Pages 10 to 15	Pages 26 to 33	Pages 34 to 57

See Finance Review /	See CEO Review /	See Finance Review /
Pages 58 to 69	Pages 10 to 15	Pages 58 to 69

www.oxinst.com