Slide 1: Full-year results presentation and strategy update
Full-year results presentation and strategy update 11th June 2024 Richard Tyson, CEO Gavin Hill, CFO © Oxford Instruments 2024
Slide 2: Market-leading technology provides excellent platform for sustainable revenue growth and margin expansion
Full-year results presentation and strategy update Market-leading technology provides excellent platform for sustainable revenue growth and margin expansion What we’ll cover today: • 2023/24 performance highlights • Our strategy to grow Oxford Instruments • Finance update 2023/24 • Your questions ©
Slide 3: Robust performance provides excellent platform for growth and margin expansion
Robust performance provides excellent platform for growth and margin expansion Strong revenue growth: 9.8% at constant currency Adjusted operating profit up 3.7% at constant currency Positive underlying book-to-bill and good order book visibility Action taken to pivot from sensitive markets in China
Slide 4: Oxford Instruments: Refreshed strategy through a new lens
Oxford Instruments: Refreshed strategy through a new lens © Oxford Instruments 2024 4
Slide 5: Significant value creation potential
Comprehensive review, well-placed good business, great opportunity Exceptional technology and software Well positioned in key structural growth markets Strong team, unique expertise in scientific research and application engineering Well-invested with a strong innovation pipeline Opportunities to im
Slide 6: A refreshed strategy: a new lens on Oxford Instruments
A refreshed strategy: a new lens on Oxford Instruments • New simplified divisional structure • Focus on 3 main markets: materials analysis, semiconductors and 5-8% 20%+ healthcare & life science Organic Margin growth CAGR • Major operational improvement programme Enhance 8-9% growth, >30% • Step cha
Slide 7: Explore, Develop, Produce
Leveraging our technology insight across the research and commercial production lifecycle Academic research Commercial applied R&D | Production and testing Growing by 3-6% a year Mid to high single digit market growth Explore Develop Produce c. 35% of Group revenue c. 45% of Group revenue c. 20% of
Slide 8: Positioned in structural growth markets
Positioned in structural growth markets Three key structural growth end markets Structural drivers 4–7% £1.2bn 43% Materials Market Market size* % Group • Supports advanced material development growth pa* revenue and sustainability progress Analysis • Improved performance from finite resources Struc
Slide 9: A clear plan for value creation
A clear plan for value creation Imaging & Analysis Advanced Technologies Good to great Fix, improve and grow Compound semiconductor fabrication equipment Leading range of microscopy, scientific cameras, Capabilities spectroscopy and associated analytical tools and software Cryogenic and magnet techn
Slide 10: High margin products and analytical software, common routes to market
Imaging & Analysis (70% of Group revenue) Imaging & Analysis Capabilities Rationale Leading range of microscopy, scientific cameras, spectroscopy and associated Similar smaller analytical tools, software and scale imaging and Common operating Greater service products analysis equipment framework, ro
Slide 11: Imaging & Analysis: revenue by end market and region
Imaging & Analysis (70% of Group revenue) Imaging & Analysis Capabilities 7% Pro-forma Leading range of indicative and 22% 25% unaudited microscopy, scientific cameras, FY23/24 numbers spectroscopy and associated 26% analytical tools, software and Revenue Revenue service products £328m 54% £328m 26%
Slide 12: Imaging & Analysis: Good to great
Imaging & Analysis: Good to great Imaging & Analysis Sustainable growth Improve sales and Focus on our service channels strengths Optimise efficiency Operational Simplify the performance organisation step change © Oxford Instruments 2024 12
Slide 13: Imaging & Analysis: sustainable growth and optimise efficiency
Imaging & Analysis: Good to great Imaging & Analysis Sustainable growth Optimise efficiency Operational Improve sales and Focus on our Simplify the performance service channels strengths organisation step change • Deploy best practice sales • Continue investment in Create integrated Deliver transfor
Slide 14: Operational performance step change opportunity
Operational performance step change opportunity Imaging & Analysis Camera value stream evaluation Imaging & Analysis on-time delivery performance Inefficient and First-time pass Inefficient highly bespoke rates currently workstations limiting 100% testing software averaging 30% test throughout 80% 6
Slide 15: Operational transformation programme underway
Operational transformation programme underway Programme to transform manufacturing performance at all UK facilities • Implement world-class lean 2024 2025 2026 & beyond manufacturing in a high-mix, low-volume environment Completed Current • Standardise production systems Future and performance manag
Slide 16: Leverage regional best practice and streamline processes
Leverage regional best practice and streamline processes Imaging & Analysis Success story shows art of the possible: Focus on improvement: China (£127m sales) North America (£123m sales) New leadership and organisation changes from Q1 Opportunity to exploit market growth 2021/22, including increased
Slide 17: Continuing to drive market-leading innovation
Continuing to drive market-leading innovation Imaging & Analysis 8-9% of revenue invested in rigorously focused R&D with 30% ROCE target Award-winning Symmetry Unity: latest breakthrough innovation Successful acquisition integration 12 times faster than • Brand new technique predecessor • High-speed
Slide 18: High value, long cycle, high technology
Advanced Technologies (30% of revenue) Advanced Technologies Capabilities Rationale • Compound semiconductor etch and deposition equipment • Dilution refrigerators and magnet technology for quantum and advanced research Low volume, Opportunity Step change Markets longer lead time to leverage in oper
Slide 19: Advanced Technologies: revenue by end market and region
Advanced Technologies (30% of revenue) Advanced Technologies Capabilities Pro-forma 17% indicative 14% • Compound semiconductor 20% etch and deposition equipment and unaudited numbers* • Dilution refrigerators and 3% 39% Revenue magnet technology for quantum and advanced research Revenue 22% £142m £
Slide 20: Progress with actions pivoting towards growth opportunities outside China
Progress with actions pivoting towards growth opportunities outside China Advanced Technologies Accelerated actions and China Exit quantum and high-end refocused away from China semiconductor; £23m orders removed from orderbook; In-year orders 75% down 2023/24 orders (£36m) China Rest of £7m Asia Eu
Slide 21: Advanced Technologies: Fix, Improve and Grow
Advanced Technologies: Fix, Improve and Grow Advanced Technologies Action plan underway Progress to date Drive efficiency improvements from new Severn Beach facility as volume increases Restructure cost base in Quantum Pivot from China to other regions and market segments Create operating leverage f
Slide 22: Pilot project underway in quantum business
Deploy value engineering to drive down material costs Advanced Technologies Pilot project underway in quantum business Current cost: The opportunity Part supplied from Step 1: Remove cost, drive margin growth local provider Central sourcing team enable Step 2: alternative suppliers Bottom-up assessm
Slide 23: Compound semiconductor equipment facility in Bristol now operational
Compound semiconductor equipment facility in Bristol, UK, now operational Advanced Technologies Investment triples capacity and facilitates production efficiencies to drive growth and operating leverage Significant growth New world-class capacity from new clean room and site production facility 42%
Slide 24: Significant value creation potential from market opportunity and margin improvement
Key drivers of organic growth and building blocks to margin expansion Group-wide • Deliver cost improvement plan and turnaround for quantum business • New divisional combination 20%+ process and overhead Mix effect Target efficiencies Growth FX 20%+ leverage • Execute on operational 17%+ Operational
Slide 25: Capital allocation priorities
Maintain financial strength and disciplined capital allocation Group-wide Capital allocation priorities Well invested at all sites Invest in the business Opex – expansion, improvement and growth R&D spend at c8-9% Focus on adding capabilities in Imaging & Analysis Selective acquisitions Good pipelin
Slide 26: A refreshed strategy: a new lens on Oxford Instruments
A refreshed strategy: a new lens on Oxford Instruments • New simplified divisional structure • Focus on 3 main markets: materials analysis, semiconductors and 5-8% 20%+ healthcare & life science Organic Margin growth CAGR • Major operational improvement programme Enhance 8-9% growth, >30% • Step cha
Slide 27: Consolidated statement of income
Consolidated statement of income £m 2023/24 2022/23 Reported change Constant currency change Revenue 470.4 444.7 +5.8% +9.8% Adjusted1 operating profit 80.3 80.5 (0.2%) +3.7% Amortisation of acquired intangibles (9.1) (9.3) Non-recurring items (2.2) (1.8) Mark-to-market movement of currency hedges (
Slide 28: Revenue by sector
Revenue by sector £470.4m £444.7m +5.7%1 +12.6%1 (4.0%)2 +5.8%2 +11.4%1 Research & Discovery Service & Healthcare Currency Reported Materials & Characterisation +9.8%2 Constant Currency 1 Constant currency growth rate compared to prior year sector venue 2 Growth rate compared to prior year Group tot
Slide 29: Adjusted operating profit by sector
Adjusted operating profit by sector Material & Characterisation 18.4% 17.3% Margin FY24 Margin FY23 £80.5m £80.3m +20.2%1 (26.1%)1 (2.3%)1 (4.0%)2 Materials & Research & Service & Currency (0.2%)2 Research & Discovery Discovery Healthcare Reported Characterisation 9.6% 12.9% Margin FY24 Margin FY23
Slide 30: Materials & Characterisation
Materials & Characterisation 2023/24 2022/23 Growth Constant currency £m £m growth Orders 235.4 272.8 (13.7) % (10.6)% 3% 5% Revenue 252.2 234.5 +7.5% +11.4% Adjusted1 operating profit 46.4 40.5 +14.6% +20.2% Adjusted1 operating margin 18.4% 17.3% 40% 52% Statutory operating profit 41.7 35.7 +16.8%
Slide 31: Research & Discovery
Research & Discovery 2023/24 2022/23 Growth Constant Currency £m £m Growth Orders 145.1 160.4 (9.5) % (6.5)% Revenue 142.1 139.4 +1.9% +5.7% 27% 38% Adjusted1 operating profit 13.6 18.0 (24.4)% (26.1)% Adjusted1 operating margin 9.6% 12.9% Statutory operating profit 9.4 11.3 (15.8)% 3% 32% Key perfo
Slide 32: Service & Healthcare
Service & Healthcare 2023/24 2022/23 Growth Constant Currency Growth £m £m Orders 78.6 78.4 +0.3% +4.3% Revenue 76.1 70.8 +7.5% +12.6% Adjusted1 operating profit 20.3 22.0 (7.7)% (2.3)% Adjusted1 operating margin 26.7% 31.1% Statutory operating profit 20.3 22.4 (9.4)% Key performance highlights: • G
Slide 33: Revenue and orders by region
Revenue and orders by region Order growth Revenue 3% Europe Europe +5% +5% +11% +11% 25% Reported Constant currency Reported Constant currency North America North America (9%) (5%) (6%) (2%) £470m Reported Constant currency Reported Constant currency 47% Asia Asia Revenue (19%) (15%) +10% +16% Repor
Slide 34: Order book by sector
Order book by sector £320m £135m £48m £302m £119m (11%)1 +1%1 +11%1 (6%)2 Materials & Research & Discovery Service & Healthcare Reported Characterisation (4%)2 Constant currency 1 Constant currency growth rate compared to prior year sector venue 2 Growth rate compared to prior year Group total reven
Slide 35: Consolidated statement of cash flows
Consolidated statement of cash flows Cash conversion Adj effective tax rate 47% (64%1) 24.4% FY23: 58% (88%1) FY23: 20.7% Working capital outflow Pension asset £24.7m £16.1m FY23: £9.1m outflow FY23: £26.4m Capex Dividend £26.5m £11.4m Capex & capitalised development cost FY23: £32.1m FY23: £10.6m C
Slide 36: FX sensitivity
FX sensitivity Adverse currency impact in the year: Revenue: -£17.8m ; AOP: £-3.2m Estimated full year 2024/25 currency impact • Assuming current hedges as at 31/03/24 and no change from current forecast rates, approximate currency sensitivity against 2023/24 is a headwind to revenue of £8.4m and AO
Slide 37: Summary
Summary 01 02 03 Positive book-to-bill, Good CC revenue growth of Currency headwind in the year; normalised for export 10%; operating margin fell to further headwind expected in licence restrictions 17.1% due to commercial 2024/25 quantum exit from China and overhead investment 04 05 06 Confidence i
Slide 38: A strong platform with a clear strategy for growth and margin enhancement
A strong platform with a clear strategy for growth and margin enhancement Robust performance in year 20%+ medium- term margin Updated strategy: Oxford Instruments through a new lens Clear plan, simplified structure, actions underway 5-8% organic growth CAGR Strong order book and improvement actions
Slide 39: To accelerate the breakthroughs that create a brighter future for our world
To accelerate the breakthroughs that create a brighter future for our world. Our technology and scientific expertise enables our customers to discover and bring to market exciting new advances that drive human progress. © Oxford Instruments 2024 39
Slide 40: Appendix
Appendix © Oxford Instruments 2024
Slide 41: A simplified structure for the Group
A simplified structure for the Group Existing Group structure: 3 segments, 9 business units, 6 end markets Materials & Characteristics Business Units Capabilities Markets Key financials 23/24 • Materials Analysis • Microscopy • Advanced Materials • Revenue: £252m New structure: 2 divisions, 3 end ma
Slide 42: Currency exposure
Currency exposure Revenue (£m equivalent) Adjusted Operating Profit (£m equivalent) Sterling £81m Sterling £(92)m US Dollar £243m US Dollar £115m Euro £94m Euro £32m Japanese Yen £42m Japanese Yen £23m Chinese Renminbi £5m Chinese Renminbi £1m Other £5m Other £1m © Oxford Instruments 2024 42