TIDMRSW
RNS Number : 8551M
Renishaw PLC
19 September 2023
Renishaw plc
19 September 2023
Preliminary announcement of results for the year ended 30 June
2023
Solid performance in challenging markets
2023 2022 Change
Revenue (GBPm) 688.6 671.1 +3%
Adjusted(1) profit before
tax (GBPm) 141.0 163.7 -14%
Adjusted(1) earnings per
share (pence) 155.1 185.5 -16%
Dividend per share (pence) 76.2 72.6 +5%
Statutory profit before tax
(GBPm) 145.1 145.6 -
Statutory earnings per share
(pence) 159.7 165.4 -3%
Performance highlights
-- Revenue of GBP688.6m (FY2022 GBP671.1m):
-- Revenue growth in challenging trading conditions, although 1%
lower at constant exchange rates; and
-- Good revenue growth from system sales, offset by weaker
demand from the semiconductor sector.
-- Manufacturing technologies revenue increased by 2% to GBP648.2m, with:
-- Good growth in sales of multi-laser additive manufacturing
(AM) systems, 5-axis co-ordinate measuring machine (CMM) inspection
systems, laser encoders and machine calibration systems; and
-- Weaker demand for optical encoders, notably in APAC, due to
lower investment in the semiconductor sector.
-- Analytical instruments and medical devices revenue increased by 10% to GBP40.3m, with:
-- Record sales for our Spectroscopy product line, with strong
growth across all our regions; and
-- Growth for our Neurological product line, with renewed growth in robot sales.
-- Adjusted(*) profit before tax of GBP141.0m (FY2022
GBP163.7m), with return on sales reduced to 20% (24% last
year).
-- 1% reduction in gross margin before engineering costs:
employee pay inflation and reduction in production volumes (leading
to a lower recovery of fixed overheads) , partially offset by
currency and price increases; and
-- Engineering, distribution and administration costs up 12%:
targeted recruitment, plus investment in employee pay in all areas
to improve employee retention, and other inflationary pressures
.
-- Statutory profit before tax of GBP145.1m (FY2022: GBP145.6m).
-- Strong balance sheet with net cash and bank deposit balances
of GBP206.4m, compared with GBP253.2m at 30 June 2022:
-- Invested GBP73.8m (FY2022: GBP30.8m) in capital expenditure,
including ongoing development of our production facility in Miskin,
Wales
-- Final dividend of 59.4p per share.
(*) Note 29, 'Alternative performance measures', defines how
Adjusted profit before tax, Adjusted earnings per share, Adjusted
operating profit and Revenue at constant exchange rates are
calculated
Strategic progress
-- A number of new product launches including a new radio
transmission system for our machine tool probes, a scanning
electron microscope interface for our Raman spectrometers, and a
smart factory software platform to consolidate shop floor
measurement data.
-- Introduced our new Industrial Automation product line to
enhance the accuracy and productivity of industrial robots,
applying our proven technology and knowledge to a close adjacent
market that is experiencing strong underlying growth.
-- In shop-floor metrology, we achieved good growth in end user
sales of our AGILITY(R) co-ordinate measuring machines equipped
with REVO(R) 5-axis systems, and we've also seen increased sales of
our EQUATOR(TM) flexible gauges for electric vehicle manufacturing
applications.
-- A significant number of machine tool builders have now
evaluated our FORTiS(TM) enclosed optical encoders with a growing
number of early adopters fitting them to machines being produced in
volume.
-- Growth in repeat sales of our multi-laser AM machines to the
medical and consumer electronics sectors.
-- Rising sales of our Virsa(TM) Raman analyser which takes
research-grade materials analysis out of the lab and into sampling
applications in-situ, including solar cell analysis and cultural
heritage.
-- Upgraded our machine tools and expanded our automated encoder
assembly systems to enable us to rapidly ramp production up and
down to track cyclical demand.
-- Good progress on our largest ever capital expenditure project
at Miskin, where we are increasing manufacturing floorspace by 50%
in a phased manner.
-- Committed to a new Net Zero target with an aim to achieve a
50% reduction in our Scope 3 emissions by 2030.
William Lee, Chief Executive, commented:
" In challenging trading conditions, our performance
demonstrates the resilience of our business model, and the hard
work and dedication of our teams around the world. In a year when
we saw a downturn in demand from one of our key sectors, we
achieved good growth in systems sales, which is an area of
strategic priority.
We have seen a steady start to FY2024 and our order book remains
solid. We continue to see positive trends for investment in low
emission transportation, defence, additive manufacturing and
robotics. Meanwhile, demand from semiconductor equipment suppliers
for position encoders remains subdued. While the short-term
macroeconomic picture remains unclear, we continue to manage costs
prudently, we are implementing further price rises, and remain
focused on improving our productivity.
I'm confident in our strategy and the actions we're taking to
deliver sustainable long-term growth, including investments in
people, infrastructure and product innovation."
About Renishaw
We are a world leading supplier of measuring and manufacturing
systems. Our products give high accuracy and precision, gathering
data to provide customers and end users with traceability and
confidence in what they're making. This technology also helps our
customers to innovate their products and processes. We are a global
business, with customer-facing locations across our three sales
regions; the Americas, EMEA, and APAC. Most of our R&D work
takes place in the UK, with our largest manufacturing sites located
in the UK, Ireland and India .
Results presentation and live Q&A session today
See below a video presentation of these results, presented by
William Lee, Chief Executive, and Allen Roberts, Group Finance
Director. There will be a live audio-only question and answer
session with William and Allen at 10:30 BST today. Details of how
to register for and access this webcast are available at the
following link:
https://attendee.gotowebinar.com/register/3038498618137830494
Questions can be submitted in advance of the webcast either
through the webcast platform or to communications@renishaw.com (if
sending by email, please submit by 10:00 BST).
A recording of the Q&A session will be made available by
Wednesday 20 September 2023 at: www.renishaw.com/investors .
Enquiries: communications@renishaw.com
Your browser does not support HTML5 video.
COMMENTARY BY THE CHAIRMAN
It's a pleasure for me to use this opportunity to thank every
one of our talented and inspiring people who have helped to make
our business what it is today.
Since co-founding Renishaw in 1973 with John Deer, I continue to
be immensely proud of how far we have come. From the early days of
production taking place in John's family home (with dust seals made
from the underlay of my carpets!), we have grown into a truly
global and respected business.
We've been pioneers and innovators on behalf of our customers
throughout our 50 years. To play a part in this and to transform
the capabilities of manufacturing - making the products, creating
the materials and developing the therapies that are going to be
needed for the future - is a true honour.
This has been a year of celebration for the Board and me, and it
has also been a year of revenue growth despite challenging market
conditions. Throughout FY2023 we have continued to build upon our
strategy and deliver our purpose of Transforming Tomorrow
Together.
The Board, like our people, embodies our values of innovation,
inspiration, integrity and involvement. As we continue to grow,
it's important that we stay true to the principles that have
ensured our success over the past 50 years.
50 years of innovation
Innovation has always been central to what we do. Our products
have revolutionised component manufacturing and scientific
research, helping to make the high-performing, precision products
that we all use in our daily lives.
Each year we launch new products, and this year has been no
different. We've released innovative new products for smart
factories and robot metrology and introduced new technologies to
strengthen our established product ranges.
I am a passionate engineer, and it's a privilege to continue
working on product developments that will transform our customers'
capabilities. This year, I have worked closely with our Additive
Manufacturing (AM) team on our next-generation machine. To be
involved in, and directly witness, the technological advancements
our engineers make, means everyday is very exciting.
Inspiring each other, our customers and our communities
Last year, I talked about how embedding and communicating our
values are of particular importance to the Board.
To demonstrate that importance, we launched a new annual global
values competition this year to encourage employees to share ways
in which they have exemplified our values through their work.
The competition was a great success, and I was delighted to
review the entries from across the business with my fellow
Executive Directors. As part of the contest, each winning team
chose a charity to receive a GBP5,000 (or local currency
equivalent) donation. So, through our values, we also aim to
inspire our local communities by making a difference to people's
lives.
We want to share our success with the communities where we
operate, who have been highly supportive of our growth. Therefore,
as part of our anniversary celebrations, the Board was delighted to
approve a '50 at 50' charity initiative. During our 50th year, we
will donate GBP150,000 to 50 not-for-profit organisations in our
local communities.
Integrity is at the heart of what we do
Our ambition to be more sustainable is testament to how we put
integrity at the heart of our business. It is also central to our
purpose as we work closely with our customers to help them on their
own sustainability journeys and are focused on promoting the
sustainability benefits that our products offer. For example, as I
have seen first-hand in my work with the AM team, this technology
has the potential to reduce energy and material consumption
compared to traditional subtractive manufacturing.
We are also playing our part in creating a sustainable future.
This year we have made excellent progress in reducing our
environmental impact.
We expect our employees to always act with integrity. To support
this, we are currently working on our new Code of Conduct which we
will launch globally in FY2024. This will apply to our employees,
customers and suppliers. It will provide guidance on
decision-making and behaviours and bring all our key policies and
compliance expectations together in one place.
This year we held an externally-facilitated Board evaluation
which highlighted that the Board is working effectively. It found
that meetings were conducted with a good dynamic, facilitating
challenge but also encouraging the effective contribution of the
whole Board. It also highlighted our culture of trust, openness and
debate.
Following feedback from investors, including at our Capital
Markets Day, the Board has also this year reviewed our approach to
investor relations, and we will be looking at how we can increase
engagement with investors over the next year.
Involvement of all our people is key to success
Equality, Diversity and Inclusion (EDI) remains an important
area of focus for the Board. We pride ourselves on our open and
collaborative culture. This year, we were pleased to appoint a
dedicated EDI Lead, who will be instrumental in the development of
our global approach to EDI. This will help us provide an inclusive,
rewarding environment for all our people.
I am delighted to welcome Professor Karen Holford CBE to the
Board as a Non-executive Director with effect from 1 September
2023. Karen brings extensive experience with her strong background
in engineering research and development. A Fellow of the Royal
Academy of Engineering, Karen received a CBE for services to
engineering and the advancement of women in engineering in 2017,
and her appointment also enhances the diversity of views we have on
the Board.
We acknowledge that we still have a way to go as a business. In
appointing Directors, the Board considers diversity at all stages
of the process while being mindful that the right person for the
long-term success of the Company should be appointed. The
Nomination Committee continues to take diversity in all its forms
into consideration when considering Board succession plans in
FY2024.
To improve involvement across the business, we also reorganised
our existing product groups during the year. We believe this will
bring synergies between teams and technologies and simplify
reporting to the Board. We are also currently reviewing succession
plans throughout the business.
Celebrating 50 years
Our anniversary year has given us a wonderful opportunity to
celebrate. Throughout 2023, employees across the world have taken
part in local events and activities to mark the occasion. From
dressing up in 1970s clothing to family open days, it's been
fantastic to see our people come together and celebrate.
This year also marked the anniversary of the opening of several
of our global subsidiaries including China, who are celebrating 30
years in the market, and Austria, Canada, Hungary, Israel and
Sweden which are each marking 20 years.
It's been wonderful to reflect on and celebrate our success, but
we wouldn't be where we are today without our customers, suppliers
and other stakeholders. We've had close relationships with many of
them for most of our history and they continue to support us
today.
We've achieved a great deal over 50 years. I would like to thank
everyone who has been a part of Renishaw's story and I'm proud of
the difference we continue to make to the world.
It's important to look back and mark these milestones, but we
have always been focused on the future. So, as we move into our
sixth decade, I am eager to see what Renishaw and our customers
will accomplish next.
Sir David McMurtry
Executive Chairman
18 September 2023
COMMENTARY BY THE CHIEF EXECUTIVE
I'm pleased to look back on a year in which we've made further
progress, as we continue to fulfil our purpose, execute our
strategy, and invest in our long-term success. We've achieved 3%
revenue growth at actual exchange rates, although this was a 1%
reduction at constant currency.
We delivered good growth in systems sales, one of our strategic
priority areas, which was offset by weaker demand for optical
encoders from the semiconductor sector. Our performance
demonstrates the resilience of our business model, our excellent
position in attractive markets, and the hard work and dedication of
our teams around the world.
Our purpose of Transforming Tomorrow Together remains central to
everything that we do. We continue to work closely with our
customers, helping them to create the products, materials and
therapies of the future. We play a leading role in the transition
towards a sustainable future in which manufacturing processes are
increasingly efficient, automated and self-governing.
Group performance
Total revenue this year was GBP688.6m, compared with GBP671.1m
in FY2022, with both our operating segments delivering growth.
While this is record revenue for the Group, at constant currency
rates our revenue was 1% lower than last year. At actual currency
rates we had growth in the EMEA and Americas regions but saw a
small reduction in the APAC region. We introduced targeted price
increases in H1 FY2023 which have contributed to the revenue
growth.
Our Manufacturing technologies segment delivered 2.2% revenue
growth. There were notable advances for our REVO 5-axis co-ordinate
measuring machine (CMM) inspection systems, additive manufacturing
(AM) machines, and machine calibration solutions. By contrast, we
have seen lower capital investment in the key semiconductor market
this year. This has reduced demand for our open optical encoders,
most notably in the APAC region.
Meanwhile, our Analytical instruments and medical devices
segment delivered 10.5% revenue growth. Our Spectroscopy product
line achieved record revenue, with growing research and industrial
applications for Raman spectroscopy, while our Neurological product
line also grew.
This year's Adjusted* profit before tax was GBP141.0m compared
with GBP163.7m last year. Adjusted* earnings per share was 155.1p
compared with 185.5p last year. Adjusted measures are the ones we
use as a Board to measure our underlying trading performance.
Statutory profit before tax was GBP145.1m compared with GBP145.6m
last year, leading to Statutory earnings per share of 159.7p
compared with 165.4p last year.
Profits fell this year due to a combination of modest revenue
growth and inflationary increases in our labour costs and expenses.
For more detail see the commentary by the Group Finance
Director.
Strategic progress
Innovation has always been the lifeblood of our business, and we
continue to focus on developing new solutions for emerging customer
needs. We have grown our R&D teams, and increased total
engineering expenditure by 14.8%. This year, we've introduced new
products to strengthen our market-leading product ranges. These
include the RMI-QE machine tool radio transmission system, and
inLux scanning electron microscope interface for our Raman
spectrometers. We have a strong pipeline of significant new
products under development, which we will introduce over the next
few years.
The use of industrial robots is accelerating as manufacturers
automate work handling, fabrication, and assembly operations. This
year, we launched our new Industrial Automation product line to
enhance the accuracy and productivity of industrial robots. Our new
products enable rapid robot cell installation, and reduce the time
taken to recover from unplanned stoppages from several days to just
a few minutes. We can also compensate for errors in a robot's
motion. This improves positioning accuracy so that robots can be
used for higher precision tasks. We are excited about our prospects
in this high-growth market.
Over the years we've pioneered in-process control of machining
processes, helping manufacturers to minimise waste and boost
productivity. We are now taking this a step further with Renishaw
Central, our new smart factory software platform. Central
consolidates actionable data from almost any shop-floor metrology
device, enabling fast, robust process control feedback. This means
we can help customers improve process outcomes, rather than simply
monitoring them. We believe this is a major step towards autonomous
manufacturing.
Our global sales and marketing teams support our customers'
success around the world. Our metrology probes and position
encoders are primarily sold via machine builders and distributors,
and our priority here is to boost fitment levels and gain market
share. For example, our open optical encoders are being designed
into a wide range of manufacturing equipment in the automotive,
semiconductor, robotics, and automation sectors. Meanwhile, more
than 100 machine tool builders have evaluated our FORTiS enclosed
optical encoders and a growing number of early adopters are fitting
them to machines being produced in volume.
We also supply complete machines and software, mostly sold
direct to end users, and serviced by our global teams. We have
significant opportunities to gain market share in substantial,
high-growth markets, so our priority is to grow these products
towards market leadership positions.
Shop-floor metrology systems are a key growth area for us. We've
been particularly successful this year with our AGILITY CMMs
equipped with REVO 5-axis systems, where we have gained repeat
sales from key customers in the automotive, aerospace and consumer
electronics sectors. Our unique combination of rapid scanning and
multi-sensor measurement, including optical and ultrasonic sensors,
enables complete inspection in a single automated process. We've
also increased sales of Equator flexible gauges for electric
vehicle (EV) applications.
It's been a similar story for our RenAM family of multi-laser AM
machines this year, with growth of repeat sales to the medical and
consumer electronics sectors. Meanwhile, our Spectroscopy business
has seen rising sales of the Virsa Raman analyser, which takes
research-grade materials analysis out of the lab and onto the
factory floor.
Our in-house manufacturing is also critical to our success,
giving us the flexibility to meet changing demands, while
maintaining our exacting standards. The current inflationary
environment makes it essential that we improve our productivity, so
we can absorb higher costs while remaining price competitive. We
continue to upgrade our machine tools and expand our automated
encoder assembly systems, which will enable us to rapidly ramp
production up and down to track cyclical demand. We've also been
running Renishaw Central in our machine shops over the last year,
reducing our own unplanned stoppages and batch changeover
times.
Meanwhile, we are making our biggest ever capital investment. We
are progressing well with building works at our site in Miskin,
Wales, that will, in a phased manner, increase our manufacturing
floorspace by 50%, giving us room to grow in the years ahead.
Sustainability
Sustainability is at the heart of our purpose, and we are
committed to making our entire business Net Zero by no later than
2050. We've made good progress on our plan, reducing greenhouse gas
(GHG) emissions relating to our own operations and purchased
energy, by 21% in FY2023.
A major focus this year has been our work towards fully
quantifying the emissions relating to our supply chain and the
distribution and use of our products, known as Scope 3 emissions.
We estimate that these accounted for 97% of our total carbon
emissions in our baseline year (FY2020). We are targeting a 50%
reduction in these emissions by 2030, and will publish our full
climate transition plan next year.
People
Sir David has already acknowledged the tremendous contribution
our employees have made this year and throughout the past 50 years.
I'd also like to add my own thanks for everything they've done to
drive us forward towards our vision to innovate and transform the
capabilities of our customers.
To pursue our purpose of Transforming Tomorrow Together, we need
to attract and develop outstanding people. We are focused on
modernising our approach to pay and reward, improving our
performance reviews, and supporting career development to help our
people fulfil their potential. We've increased our average pay by
around 10.2% in FY2023 compared to FY2022, excluding other factors,
such as headcount growth. Our global voluntary turnover rate has
fallen from 10.7% to 6.8% this year.
We've responded to slowing customer demand for our optical
encoders this year by reducing direct manufacturing headcount
through non-replacement of leavers. We continue to take a long-term
view for success, and our early careers programmes provide a vital
pipeline of new talent to maintain and grow our teams. As of 30
June 2023, we employ 343 apprentices and graduates and in FY2023 we
took on 45 industrial placement students.
Outlook
FY2023 has seen mixed conditions for our markets. Demand for
most of our product lines has risen, with good growth in systems
sales, but the semiconductor equipment sector has been notably
weaker this year.
We have seen a steady start to FY2024 and our order book remains
solid. We continue to see positive trends for investment in low
emission transportation, defence, additive manufacturing and
robotics. Meanwhile, demand from semiconductor equipment suppliers
for position encoders remains subdued. While the short-term
macroeconomic picture remains unclear, we continue to manage costs
prudently, we are implementing further price rises, and remain
focused on improving our productivity.
I'm confident in our strategy and the actions we're taking to
deliver sustainable long-term growth, including our investments in
people, infrastructure and product innovation.
Will Lee
Chief Executive
18 September 2023
* Note 29, Alternative performance measures, defines how
Adjusted profit before tax and Adjusted earnings per share are
measured.
COMMENTARY BY THE GROUP FINANCE DIRECTOR
We have achieved revenue for the year of GBP688.6m, compared
with GBP671.1m last year. However, revenue at constant exchange
rates* was GBP662.8m, a reduction of 1% from last year. The
weakening of the semiconductor market during the year has resulted
in challenging trading conditions, however we have seen good growth
in our systems sales.
We have made significant investments in our production
infrastructure and our people during the year. We continue to be in
a strong financial position, with cash and cash equivalents and
bank deposit balances of GBP206.4m at 30 June 2023 (30 June 2022:
GBP253.2m).
Revenue analysis
Manufacturing technologies revenue grew by 2.2% to GBP648.2m
this year at actual rates. Our optical encoder revenue has fallen,
mainly due to lower demand from the semiconductor market, notably
in the APAC region. However, we are pleased that this has been
largely offset by good growth in sales of our multi-laser AM
systems, machine calibration systems, laser encoder systems, and
CMM inspection systems.
Revenue from our Analytical instruments and medical devices
segment grew by 10.5% to GBP40.3m this year, with record revenue
for our Spectroscopy products. We also saw growth in our
Neurological business.
The below table shows revenue by geographic region.
2023 2022 Underlying
revenue revenue change at
at actual Change at actual constant
exchange from exchange exchange
rates 2022 rates rates
GBPm % GBPm %
-------------------- ----------- ------ ----------- -----------
APAC 310.6 -2 317.0 -4
-------------------- ----------- ------ ----------- -----------
EMEA 216.5 +5 205.8 +3
-------------------- ----------- ------ ----------- -----------
Americas 161.5 +9 148.2 0
-------------------- ----------- ------ ----------- -----------
Total Group revenue 688.6 +3 671.1 -1
-------------------- ----------- ------ ----------- -----------
Operating costs
Our labour costs are our largest cost. We have taken a cautious
approach to recruitment during the year and our headcount was 5,175
at 30 June 2023, compared with 5,097 at the end of June 2022. This
growth includes continued investment in our early careers
programmes.
We have carried out global salary benchmarking, which has helped
improve employee retention. This, together with an increase in
average headcount of 205, are the main drivers for total labour
costs (excluding bonuses) increasing by 13% to GBP268.2m from
GBP236.5m last year. Accordingly, our production, engineering,
distribution and administrative costs have all increased. A
reduction in performance bonuses of GBP6.6m has partially offset
the total labour cost increases.
This year's gross margin (excluding engineering costs) was 64%,
compared with 65% last year. This change is mostly due to a
reduction in production volumes (leading to a lower recovery of
fixed overheads) and the higher labour pay rates. We helped
minimise the effect of these by introducing targeted price
increases and not replacing leavers in our direct manufacturing
teams.
We remain committed to our long-term strategy of delivering
growth by developing innovative and patented products. To that end,
we invested GBP72.5m in research and development expenditure,
compared with GBP59.4m last year (see Note 4 to the Financial
statements). We also incurred GBP28.1m (FY2022: GBP26.4m) of other
engineering expenditure, to support existing products and
technologies.
Travel and exhibition costs are higher this year as
COVID-19-related restrictions have been lifted and we have been
able to engage in more customer facing activity. In addition to the
labour cost growth, this has increased our distribution costs by
12%.
We have also experienced inflationary increases across other
cost categories, notably software licences, health insurance and
professional fees.
Profit and tax
As a result of the increased costs in a year of modest revenue
growth, Adjusted* profit before tax amounted to GBP141.0m, compared
with a record GBP163.7m in FY2022. This is a reduction of 13.9%.
Statutory profit before tax was GBP145.1m, compared with GBP145.6m
in the previous year.
Sometimes infrequently occurring events can affect our financial
statements, recognised according to applicable IFRSs. We exclude
such events from adjusted performance measures to give the Board
and other stakeholders another useful metric to understand and
compare our underlying performance.
This year, the items we excluded from Adjusted profit before tax
include: gains of GBP5.5m from forward contracts deemed ineffective
for cash flow hedging (FY2022: GBP8.3m losses); a revised estimate
of FY2020 restructuring provisions of GBP0.7m gain (FY2022: GBP1.7m
gain); and a defined benefit (DB) pension scheme past service cost
relating to termination of the US DB pension scheme totalling
GBP2.1m. These have not affected cash flow during the financial
year. Additional items excluded in the previous year are detailed
in Note 29. The table below reconciles Adjusted profit before tax
to Statutory profit before tax.
2023 2022
GBP'000 GBP'000
--------------------------------------- -------- --------
Adjusted profit before tax 140,983 163,742
--------------------------------------- -------- --------
Revised estimate of 2020 restructuring
provisions 717 1,688
--------------------------------------- -------- --------
Third-party FSP (formal sale process)
costs - 200
--------------------------------------- -------- --------
US/UK DB pension scheme past service
cost (2,139) (11,695)
--------------------------------------- -------- --------
Fair value gains/(losses) on financial
instruments 5,504 (8,349)
--------------------------------------- -------- --------
Statutory profit before tax 145,065 145,586
--------------------------------------- -------- --------
Adjusted operating profit in our Manufacturing technologies
segment was GBP125.5m, compared with GBP158.6m last year.
Meanwhile, in our Analytical instruments and medical devices
segment, Adjusted operating profit was GBP4.9m, compared with
GBP2.8m last year.
Financial income for the year was GBP9.7m, compared with GBP0.9m
last year, and includes a GBP5.5m increase in interest on bank
deposits mainly due to higher interest rates.
The FY2023 effective tax rate has increased to 20.0% (FY2022:
17.3%) mostly as a result of a reduction in patent box tax
incentives and an increase in the UK tax rate from 19% to 25%. Note
7 provides further analysis of the effective tax rate.
Consolidated balance sheet
We have invested GBP74.0m (FY2022: GBP31.0m) in capital
expenditure, including production plant and equipment and the
ongoing development of our production facility in Miskin,
Wales.
Within working capital, we have increased our inventories to
GBP185.8m from GBP162.5m at the beginning of the year. This is
mainly a result of targeted increases in components and
sub-assemblies for our optical encoder products following global
supply chain shortages in previous years. Given the reduction in
demand for optical encoders some of our components are currently
overstocked. Now that supply chain challenges have eased, we have
plans to reduce safety stock levels of critical components.
However, we remain committed to our policy of holding sufficient
finished goods to ensure customer delivery performance, given our
short order book.
Trade receivables reduced from GBP127.6m to GBP123.4m due to
lower levels of trading in the fourth quarter of FY2023 relative to
the previous year. Debtor days remained constant year-on-year at 64
days. We continue to experience low levels of defaults, and hold a
provision for expected credit losses at 0.4% of trade receivables
(FY2022: 0.2%).
Total equity at the end of the year was GBP896.7m, compared with
GBP815.2m at 30 June 2022. This is primarily a result of profit for
the year of GBP116.1m, offset by dividends paid of GBP53.4m.
Cash and liquidity
We continue to have a strong liquidity position, with cash and
cash equivalents, and bank deposit balances at 30 June 2023 of
GBP206.4m (30 June 2022: GBP253.2m). This is a result of our
trading performance, offset by our previously noted capital
investments and working capital movements, and dividends paid of
GBP53.4m.
We disclose details of 'severe but plausible' scenario forecasts
used in our going concern and viability assessments in note 1 and
conclude that we have a reasonable expectation that we will retain
a liquid position and be able to continue in operation for at least
the next three years.
Pensions
At the end of the year, our DB pension schemes, now closed for
future accrual, showed a net surplus of GBP57.4m, compared with
GBP42.2m at 30 June 2022.
In October 2022, following a significant improvement in the UK
scheme's funding position due to rising gilt yields, the Trustees
(in consultation with the Company) de-risked the investment
strategy by disinvesting from the scheme's equity and diversified
growth holdings and investing the proceeds into index-linked gilts.
The overall impact of these changes is to reduce investment risk,
with the assets better matching the expected movements in the
liabilities. We now believe the scheme is fully funded and are in
the process of seeking to insure the liabilities.
During the year, pension schemes' liabilities decreased from
GBP174.5m to GBP139.0m, on an IAS 19 basis, primarily reflecting
the increase in the UK scheme discount rate from 3.6% to 5.1%.
Our DB pension schemes' assets at 30 June 2023 decreased to
GBP196.3m from GBP216.7m at 30 June 2022, with UK asset values
falling (in line with expectations) given the liability matching
approach.
A termination of the US DB pension scheme was formally commenced
during the year. The Trustees of the scheme and Renishaw Inc agreed
that the surplus will be distributed to the members of the scheme,
resulting in a change to members' benefits. Accordingly, this
change has resulted in a charge of GBP2.1m to the Consolidated
income statement, which has been excluded from Adjusted profit
before tax.
See Note 23 for further details on employee benefits.
Treasury policies
Our treasury policies are designed to manage the financial risks
that arise from operating in multiple foreign currencies. The
majority of sales are made in these currencies, while most
manufacturing and engineering is carried out in the UK, Ireland and
India.
We use forward exchange contracts to hedge a proportion of
anticipated foreign currency cash inflows and the translation of
foreign currency denominated intercompany balances.
There are forward contracts in place to hedge against our Euro,
US Dollar and Japanese Yen cash inflows, and to offset movements on
Renishaw plc's Euro, US Dollar and Japanese Yen intercompany
balances. We do not speculate with derivative financial
instruments.
Our treasury policies are also designed to maximise interest
income on our cash and bank deposits and to ensure that appropriate
funding arrangements are available for each of our companies.
Sustainability
With our Sustainability team doing more work this year to better
understand the risks and opportunities of climate change, we have
reviewed the effect on our financial statements and financial
planning. Our five-year financial plan includes estimates of the
capital expenditure needed in this period to help deliver our own
Net Zero plans. We have also considered the potential impact on
topics such as the expected useful lives of tangible assets and the
headroom on intangible assets, and have not identified a material
effect on this year's financial statements. We will continue to
review this as the Group further develops its work on both our own
Net Zero plans and the wider impact of climate change on our risks
and opportunities.
Capital allocation strategy
Our Board regularly reviews the capital requirements of the
Group, to maintain a strong financial position to protect the
business and provide flexibility to fund future growth.
We've consistently applied our capital allocation strategy for
many years. Organic growth is our first priority and we're
committed to R&D investment for new products, manufacturing
processes and global support infrastructure to generate growth in
future returns and improve productivity. This is evidenced in the
year by our capital expenditure, the increase in working capital
and investments in R&D.
We may supplement organic growth with acquisitions in current
and adjacent market niches that are aligned to our strategy. We
have always valued having cash in the bank to protect the core
business from downturns, and we monitor our cash against a minimum
holding according to forecast overheads and revenue downturn
scenarios. This cash also allows us to react swiftly as investment
or market capture opportunities arise.
Actual and forecast returns, along with our strong financial
position, support our progressive dividend policy, which aims to
increase the dividend per share while maintaining a prudent level
of dividend cover.
Earnings per share and dividend
Adjusted earnings per share is 155.1p, compared with 185.5p last
year, while statutory earnings per share is 159.7p, compared with
165.4p last year.
We paid an interim dividend of 16.8 pence per share (FY2022:
16.0p) on 11 April 2023 and are pleased to propose a final dividend
of 59.4 pence per share in respect of the year (FY2022: 56.6p).
Looking forward
Given the uncertain market conditions, we continue to be
cautious as we enter FY2024, and are currently recruiting for
critical roles only.
Where possible, we are implementing further price rises to
mitigate ongoing inflation, and are focused on delivering
productivity improvements across the business.
However, we have many drivers in our key markets to deliver
long-term revenue growth and we continue to invest in the
infrastructure required to meet the expected future demand. We
expect to spend around GBP35m to complete phase 1 of our new
production facility at Miskin, Wales, which is expected to be
operational from early 2024, and continue to invest in automation
and productivity opportunities.
Allen Roberts
Group Finance Director
18 September 2023
* Note 29, 'Alternative performance measures', defines how
revenue at constant exchange rates, Adjusted profit before tax,
Adjusted operating profit and Adjusted earnings per share are
calculated.
PRINCIPAL RISKS AND UNCERTAINTIES
Our performance is subject to a number of risks - the principal
risks, factors impacting on them and mitigations are ranked in the
table below, as well as an indication of the movement of the risk
in the last year, our appetite towards that risk, and how the risk
links to our strategy. The Board has conducted a robust assessment
of the principal risks facing the business.
Appetite: Link to strategy:
- Low: Minimal risk exposure is considered the - SM: Sales & Marketing
safest approach, which may mean lower returns. - E: Engineering
- Medium: A balanced approach which carefully - P: People and Culture
considers the risks and rewards. - M: Manufacturing
- High: Greater risk tolerance, which may involve - CS: Corporate Services
maximum risk for maximum return. - S: Sustainability
Economic and political uncertainty
Movement: increased risk Appetite: High Link to strategy:
All Risk owner: Chief Executive
Risk description
As a global business, we may be affected by global political,
economic or regulatory developments. This could include a
global recession, USA-China trade relations, or the Russia-Ukraine
conflict. This risk can also drive industry fluctuations.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Loss of financial and physical * Monitoring external economic and commercial
environments and markets in which we operate, and
identifying relevant headwinds.
assets in a region.
* Supply issues leading to failures to meet contractual
obligations. * Maintaining sufficient headroom in our cash balances.
* Reduced revenue, profit and * Maintaining appropriate levels of buffer inventory.
cash generation. * Resilient business model and clear strategy, both of
* Increased risk to credit, liquidity and currency. which are subject to regular scrutiny.
----------------------------------------------------------------------
Innovation strategy
Movement: stable risk Appetite: High Link to strategy: E Risk
owner: Directors of Industrial Metrology, Position Measurement
and Additive Manufacturing
Risk description
Failure to create new cutting-edge, high-quality products,
or failing to protect the intellectual property that underpins
these products, which allows us to differentiate ourselves
from our competitors.
As a business driven by innovation, there is a higher risk
when venturing outside our traditional field of expertise
where the science and engineering are less proven.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Failure to lead the market in innovation of products * Increase in R&D expenditure with a continued focus on
in our core and adjacent sectors. investment for new product development.
* Loss of market share. * Establishing a 'Product Group Directors Team', which
focuses on R&D productivity initiatives around the
Group. Topics in FY2023 included: embedding the
* Reduced revenue, profit and flagship projects programme and establishing in-depth
quarterly reviews with the Chief Executive; and
evolving hybrid working. We will see the impact of
cash generation. these initiatives in FY2024.
* Failing to recover investment in R&D.
* Monthly monitoring of the 'key technologies' R&D
targets, with an aim of identifying business value
and accelerating our promising new technologies and
associated patents very early in the life-cycle.
* Continuing the drive towards incremental development
and more open customer collaboration at early stages
of R&D projects, to ensure our innovations are
successful in the market.
----------------------------------------------------------------------
People
Movement: decreased risk Appetite: Medium Link to strategy:
P Risk owner: Head of Group HR
Risk description
Our people are fundamental to the success of our business.
Inability to attract, retain and develop key talent at all
levels of the organisation, as well as a failure to ensure
we have appropriate succession plans in place, could mean
we fail to successfully deliver our strategic objectives.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Loss of expertise, skills, and specialist talent * Continuing our focus on attracting, rewarding and
could affect delivery of objectives. retaining our people globally.
* Poor retention and engagement could slow the delivery * Continuing our global salary benchmarking programme,
of our strategic objectives and product delivery. with our largest investment in reward, to date. We
have seen an improvement in retention since
conducting our benchmarking exercises.
* Failure to develop future leaders, insufficient
talent progression.
* Working towards implementing a global engagement
platform.
* Loss of market share, reduced revenue, poor customer
service, and reduced profit.
* Continuing to invest in our education and early
career programmes as well as talent development and
succession planning. For example, we opened our
dedicated STEM Centre at our headquarters in
Gloucestershire, UK.
* Developing a competency framework to complement our
new job architecture.
* Advancing our employee engagement through multi-media
communications, surveys, promoting wellbeing,
evolving feedback mechanisms and further developing
our work to build an inclusive culture.
* Establishing continuity plans to enable rapid
adaptation to changing circumstances.
----------------------------------------------------------------------
Industry fluctuations
Movement: stable risk Appetite: High Link to strategy: SM,
M, E Risk owner: Chief Executive
Risk description
We're exposed to the cyclical nature of demand from aerospace,
automotive, semiconductor and consumer electronics markets,
which may be more severe if downcycles in these key industries
coincide. This risk can also be influenced by economic and
political uncertainty.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Reduced revenue, profit and cash generation. * Closely monitoring market developments.
* Increased competition on prices. * Expanding our product range to serve different
industry sectors and markets.
* Loss of market share if unable to meet rapid
increases in demand. * Identifying and meeting the needs of rapidly growing
markets, for example in robotic automation.
* Maintaining a strong balance sheet and strategic
inventories with the ability to flex.
----------------------------------------------------------------------
Route to market / customer satisfaction model
Movement: stable risk Appetite: Medium Link to strategy: SM
Risk owner: Chief Executive
Risk description
Failure to implement appropriate and efficient sales and support
processes relating to systems integration and the sale of
capital goods could restrict growth opportunities in these
areas.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Low capital efficiency - high people costs and low * Focusing on key customers to generate reporting
productivity. revenues.
* High application engineering and distribution costs. * Closely monitoring customer feedback.
* Adversely affects customer satisfaction levels, * Collaborating with complementary third parties.
revenue, and profits.
* Adopting new approaches to the sale of capital goods.
----------------------------------------------------------------------
Cyber
Movement: increased risk Appetite: Low Link to strategy: All
Risk owner: Director of Group Operations
Risk description
External and internal threats that could result in a loss
of (i) data, including IP; or (ii) our ability to operate
our systems, which could severely affect our business.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Loss of IP and/or commercially sensitive data and/or * Ensuring substantial resilience and back-up is built
personal data. into our systems, which are continuously updated for
current threats and good industry practice. This
includes duplication of hardware, dual and diverse
* Inability to access, or disruption to, our systems connections where possible, and regular back-up
leading to reduced service to customers. schedules.
* Financial loss and reputational damage. * Regularly discussing cyber and security risks at
Board and Audit Committee meetings, including the
strength of our control environment.
* Impact on decision-making due to lack of clear and
accurate data, or disruption caused by the lack of
service. * Deploying physical and logical control measures to
protect our information and systems. Real-life
restores of data and services are carried out
regularly.
* Conducting regular security awareness training,
including phishing simulation exercises, which are
proving effective. We also conduct external
penetration testing as appropriate.
----------------------------------------------------------------------
IT transformation failure
Movement: increased risk Appetite: Low Link to strategy: All
Risk owner: Director of Group Operations
Risk description
The upgrade of our Sage CRM and Sage ERP systems to Microsoft
Dynamics 365, to remove legacy systems and ensure our global
operations are better integrated, could affect our business
if there are major technical issues, or it is poorly integrated.
This risk could also result in problems if there are significant
delays to the programme or it runs significantly over budget.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Major disruption to our systems, causing delays to * Maintaining close project management between
our operations. ourselves, Microsoft and our system integrator.
* Affect our ability to process or issue invoices and * Working to a clear, risk-elimination-based roadmap
customer orders, or to procure goods and services. with measurable milestones.
* Increased costs, including to fix technical issues * Strengthening the deployment team to accelerate roll
and restore or upgrade other affected systems. out, with targeted recruitment and upskilling.
* Obtaining commitment from the Board to invest as
necessary.
----------------------------------------------------------------------
Supply chain dependencies
Movement: decreased risk Appetite: Low Link to strategy: M,
S Risk owner: Head of Group Manufacturing
Risk description
Critical components, or some components that we buy from single-source
suppliers, make us vulnerable to an interruption in supply.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Inability to fulfil customer orders, leading to a * Maintaining a risk dashboard for our key
reduction in revenue and profits, and damage to manufacturing sites, to help us prioritise and
reputation. determine stock levels.
* Failure to meet contractual requirements. * Adapting stock levels for high-risk items, to take
account of supply lead times and time to redesign in
the event of loss of supply. We actively seek
* Increased cost of alternative sourcing or redesign. cost-effective alternative sources of supply
(including in-house manufacturing), to reduce
dependency on single-source suppliers, with a
* Loss of market share. continued focus on key components.
* Collaborating with product groups on an ongoing basis
to review risks and, where appropriate, carry out
reviews and updates to specifications where necessary
to facilitate alternative sourcing or redesign.
----------------------------------------------------------------------
Competitive activity
Movement: stable risk Appetite: Low Link to strategy: All
Risk owner: Chief Executive
Risk description
Failure to adapt to market and/or technological changes.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Reduced revenue, profits and cash generation. * Ensuring we are diversified across a range of
products, industries and geographies.
* Loss of market share.
* Closely monitoring market developments, particularly
across our core product groups.
* Price erosion.
* Maintaining local sales and engineering support to
* Loss of reputation as a leader in innovation. quickly identify changing local needs.
* Continuing to build our product portfolio through our
strong historic and ongoing commitment to R&D (see
Note 4 to the Financial statements for details of R&D
expenditure).
----------------------------------------------------------------------
Capital and resource allocation
Movement: stable risk Appetite: Medium Link to strategy: E
Risk owner: Group Finance Director
Risk description
This risk could be triggered by a failure to properly allocate
budget and resource between core and emerging activities.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Investing in declining or less profitable areas at * Defining, prioritising, and developing strategies for
the expense of more profitable and strategically all core and emerging areas of the business.
important areas.
* Scrutinising all expenditure, including regular
* Reduced profits. reporting on labour costs and capital expenditure.
* Loss of market share. * Regular reporting of cash balances.
* Impact on innovation. * Tracking performance objectives, including regular
reporting on flagship project progress.
----------------------------------------------------------------------
Exchange rate fluctuations
Movement: increased risk Appetite: Medium Link to strategy:
SM Risk owner: Group Finance Director
Risk description
We report our results and pay dividends in Sterling and, with
more than 90% of our revenue generated outside the UK, we're
exposed to volatility in exchange rates that could have a
significant impact on our results.
Movements of Sterling against our major trading currencies
cause cash flow, currency translation, and intercompany balance
translation risks.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Significant variations in profit. * Maintaining rolling forward contracts for cash-flow
hedges in accordance with Board-approved policy, and
one-month forward contracts to manage risks on
* Reduced cash generation. intercompany balances.
* Increased competition on product prices. * Tracking overseas net assets value compared to the
market capitalisation.
* Increased costs.
* Obtaining input from external sources, including our
banks.
----------------------------------------------------------------------
Climate change
Movement: stable risk Appetite: Low Link to strategy: All
Risk owner: Head of Group Manufacturing
Risk description
We could be exposed to climate-related physical risks, such
as hurricanes, floods, wildfires and pandemics, which could
potentially affect our ability to operate.
Other risks related to a transition to a low-carbon economy
could also affect us if we fail to react adequately to new
climate- related legislation, technology or market factors.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Increased costs of key raw materials, due to climate- * Our Sustainability team supports the Risk Committee
related legislation affecting the macroeconomic in evaluating and understanding the possible effect
landscape with the introduction of carbon taxes. of climate-related risks and opportunities.
* Disruption to operations caused by climate-related * Climate-related hazards have been a driver in
hazards could reduce our revenue, create safety risks developing our manufacturing approach. More detail o
to our people and increase our operational costs. n
our risk mitigation work can be found in the
descriptions of our Loss of manufacturing output and
* If we fail to achieve Net Zero commitments, we could Supply chain dependencies risks.
experience damage to reputation and loss of business.
* Using our product groups' priorities to manage
climate-related transitional risks.
* Reviewing and maintaining business interruption and
other insurance cover.
* Investing to reduce energy consumption and increase
renewable energy generation across the Group. For
example, we are aiming for all new buildings and
refurbishments to achieve Net Zero emissions in
operation.
----------------------------------------------------------------------
Loss of manufacturing output
Movement: decreased risk Appetite: Low Link to strategy: M
Risk owner: Head of Group Manufacturing
Risk description
Manufacturing output can be adversely affected by factors
including environmental hazards, technical delays or outages,
plant or equipment failure, inadequate resourcing levels,
or factors affecting the workforce, such as a pandemic.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Inability to fulfil customer orders leading to a * Duplication of high-dependency processes, such as
reduction in revenue, failure to meet contractual component manufacturing and finishing, electronic
requirements and damage to reputation. printed circuit board assembly, and microelectronics
assembly, across multiple manufacturing locations.
* Increased costs of alternative sourcing or redesign.
* Ensuring we have flexible manufacturing capacity and
sufficient resilience across our manufacturing sites.
* Impact on maintenance of buffer inventory.
* Ensuring standardised approaches to assembly, annual
* Loss of market share. risk assessments, and business continuity planning.
* Reviewing and maintaining business interruption and
other insurance cover.
----------------------------------------------------------------------
Non-compliance with laws and regulations
Movement: stable risk Appetite: Low Link to strategy: All
Risk owner: General Counsel & Company Secretary and Managing
Director - Renishaw Medical
Risk description
We operate in a large number of territories and in some highly-regulated
sectors. We are subject to a wide variety of laws and regulations,
including those relating to anti-bribery, anti-money laundering,
sanctions, competition law, privacy, health and safety, product
safety, and medical devices.
There is a risk that somewhere in the Group we may not be
fully compliant with these laws and regulations.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Damage to reputation and loss of future business. * Maintaining our whistleblowing hotline (Speak up),
available to all employees and third parties who
provide services for or on behalf of the Group, which
* Potential penalties and fines, and cost of means that our people and other stakeholders can make
investigations. us aware of any potential non- compliance issues.
* Management time and attention in dealing with reports * Establishing global compliance programmes for all
of non-compliance. high-risk areas, which includes policies, key
controls and effective communication. Training also
includes refreshed mandatory anti-bribery and
* Inability to attract and retain talent. anti-corruption modules.
* Promoting all compliance functions under the umbrella
brand 'Responsible Renishaw'. This helps to raise
awareness about compliance, and makes it easier for
our people to find the information they need to
comply.
* Maintaining our global privacy programme.
----------------------------------------------------------------------
Product failure
Movement: stable risk Appetite: Low Link to strategy: E, M
Risk owner: Group Quality Manager and Quality Manager - Healthcare
Regulatory
Risk description
The quality of our products could be adversely affected by
internal threats, such as inadequate quality management processes.
Product quality could also be affected by external threats,
such as substandard performance from third-party suppliers.
We could also be affected by other external risk factors,
including grey market and counterfeit goods in our supply
chain, and this may result in latent risks where product failures
are not yet realised.
This risk is particularly notable in our neurological products,
where failure could result in significant personal injury
claims or regulatory action.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Damage to reputation. * Ensuring we have rigorous internal product
development and testing procedures (during
development, manufacturing and release) to
* Claims, including personal injury. international standards where applicable, to ensure
high levels of quality assurance. This includes
following ISO 14971 and ISO 13485 for all medical
* Potential penalties and fines, cost of investigations devices.
and high recall costs for medical devices.
* Interacting with customers and regulators to obtain
* Increase in non-revenue-generating warranty activity. and address feedback.
* Inability to fulfil customer orders leading to a * Conducting a thorough vendor approval process, and
reduction in sales. regular monitoring of third-party suppliers to ensure
incoming parts and sub-contracted activity meet
requirements.
* Applying grey market product verification activity
where component sourcing is not from original
equipment manufacturers (OEMs) or franchised
providers.
* Limiting our liability through our terms and
conditions of sale and we also have product liability
insurance. For clinical studies, we have separate
trial insurance.
----------------------------------------------------------------------
Pensions
Movement: stable risk Appetite: Medium Link to strategy: P
Risk owner: Group Finance Director
Risk description
Investment returns and actuarial assumptions of our defined
benefit pension (DB) schemes are subject to economic and social
factors outside our control.
Potential impact What we are doing to manage this
risk
----------------------------------------------------------------------
* Any deficit may need additional funding in the form * Implementing recovery plan for the UK DB scheme in
of supplementary cash payments to the plans or the June 2019, with the aim of funding to
provision of additional security. self-sufficiency by 2031.
* Significant management time. * Appointing a corporate Trustee in June 2022, which
has reduced management time and support costs.
* External support costs.
* Engaging with the corporate Trustee on investment
strategy.
* Damage to reputation.
* The corporate Trustee works to a statement of
investment principles, and the Company and corporate
Trustee seek appropriate independent professional
advice, if needed.
* During FY2023, the Company and Trustees of the UK DB
scheme agreed to de-risk the investment strategy by
disinvesting from the scheme's equity and diversified
growth holdings and investing the proceeds into
index-linked gilts. This followed a significant
improvement in the scheme's funding position due to
rising gilt yields. As a result, the Trustees agreed
to GBP8.7m of funding due between 1 October 2022 and
30 September 2023 being deferred to 2026.
----------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2023
from continuing operations 2023 2022
notes GBP'000 GBP'000
Revenue 2 688,573 671,076
Cost of sales 4 (337,908) (313,527)
Gross profit 350,665 357,549
Distribution costs (137,744) (122,455)
Administrative expenses (74,894) (69,736)
UK defined benefit pension scheme past
service cost 23 - (11,695)
US defined benefit pension scheme past
service cost 23 (2,139) -
Losses from the fair value of financial
instruments 25 (1,399) (10,413)
Operating profit 134,489 143,250
Financial income 5 9,669 932
Financial expenses 5 (1,861) (2,938)
Share of profits of joint ventures 13 2,768 4,342
Profit before tax 145,065 145,586
Income tax expense 7 (28,963) (25,235)
Profit for the year 116,102 120,351
----------------------------------------- ------ ---------- ----------
Profit attributable to:
Equity shareholders of the parent company 116,102 120,351
Non-controlling interest 26 - -
Profit for the year 116,102 120,351
------------------------------------------------- -------- --------
pence pence
Dividend per share arising in respect of
the year 26 76.2 72.6
Dividend per share paid in the year 26 73.4 68.0
Earnings per share (basic and diluted) 8 159.7 165.4
Adjusted profit before tax for the year was GBP140,983,000
(2022: GBP163,742,000). See note 29 Alternative performance
measures for more details.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE
for the year ended 30 June 2023
2023 2022
notes GBP'000 GBP'000
Profit for the year 116,102 120,351
---------------------------------------------------- ------ -------- ---------
Other items recognised directly in equity:
Items that will not be reclassified to the
Consolidated income statement:
Current tax on contributions to defined benefit
pension schemes - 1,653
Deferred tax on contributions to defined benefit
pension schemes - (1,653)
Remeasurement of defined benefit pension scheme
assets/liabilities 23 13,612 69,078
Deferred tax on remeasurement of defined benefit
pension scheme assets/liabilities (3,071) (15,997)
Total for items that will not be reclassified 10,541 53,081
---------------------------------------------------- ------ -------- ---------
Items that may be reclassified to the Consolidated
income statement:
Exchange differences in translation of overseas
operations 26 (8,000) 12,151
Exchange differences in translation of overseas
joint venture 26 - 118
Current tax on translation of net investments
in foreign operations 26 313 (1,529)
Effective portion of changes in fair value
of cash flow hedges, net of recycling 26 23,167 (28,423)
Deferred tax on effective portion of changes
in fair value of cash flow hedges 7,26 (5,692) 6,155
Total for items that may be reclassified 9,788 (11,528)
---------------------------------------------------- ------ -------- ---------
Total other comprehensive income and expense,
net of tax 20,329 41,553
---------------------------------------------------- ------ -------- ---------
Total comprehensive income and expense for
the year 136,431 161,904
---------------------------------------------------- ------ -------- ---------
Attributable to:
Equity shareholders of the parent company 136,431 161,904
Non-controlling interest 26 - -
Total comprehensive income and expense for
the year 136,431 161,904
---------------------------------------------------- ------ -------- ---------
CONSOLIDATED BALANCE SHEET
at 30 June 2023 2023 2022
notes GBP'000 GBP'000
----------------------------------------- ------ -------- ---------
Assets
Property, plant and equipment 9 286,085 243,853
Right-of-use assets 10 8,402 9,950
Investment properties 11 10,323 10,568
Intangible assets 12 46,468 44,218
Investments in joint ventures 13 22,414 20,570
Finance lease receivables 14 9,935 6,961
Employee benefits 23 57,416 43,241
Deferred tax assets 7 19,944 22,893
Derivatives 25 9,443 -
Total non-current assets 470,430 402,254
----------------------------------------- ------ -------- ---------
Current assets
Inventories 16 185,757 162,482
Trade receivables 25 123,427 127,551
Finance lease receivables 14 3,764 3,348
Contract assets 861 578
Short-term loans to joint ventures - 302
Current tax 19,558 8,901
Other receivables 25 27,979 27,068
Derivatives 25 5,373 7,121
Bank deposits 15 125,000 100,000
Cash and cash equivalents 15,25 81,388 153,162
Total current assets 573,107 590,513
----------------------------------------- ------ -------- ---------
Current liabilities
Trade payables 25 21,551 30,947
Contract liabilities 18 9,971 12,956
Current tax 7,118 10,078
Provisions 17 2,758 4,244
Derivatives 25 5,089 17,890
Lease liabilities 21 3,009 3,714
Borrowings 20 4,694 919
Other payables 19 48,130 51,949
Total current liabilities 102,320 132,697
----------------------------------------- ------ -------- ---------
Net current assets 470,787 457,816
----------------------------------------- ------ -------- ---------
Non-current liabilities
Lease liabilities 21 5,624 6,466
Borrowings 20 - 5,160
Employee benefits 23 45 996
Deferred tax liabilities 7 38,770 22,815
Derivatives 25 120 9,463
Total non-current liabilities 44,559 44,900
----------------------------------------- ------ -------- ---------
Total assets less total liabilities 896,658 815,170
----------------------------------------- ------ -------- ---------
Equity
Share capital 26 14,558 14,558
Share premium 42 42
Own shares held 26 (2,963) (750)
Currency translation reserve 26 6,772 14,459
Cash flow hedging reserve 26 6,552 (10,923)
Retained earnings 871,777 798,541
Other reserve 26 497 (180)
Equity attributable to the shareholders
of the parent company 897,235 815,747
----------------------------------------- ------ -------- ---------
Non-controlling interest 26 (577) (577)
Total equity 896,658 815,170
----------------------------------------- ------ -------- ---------
These financial statements were approved by the Board of
Directors on 18 September 2023 and were signed on its behalf
by:
Sir David McMurtry Allen Roberts
Directors
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2023
Cash
Own Currency flow Non-
Share Share Shares translation hedging Retained Other controlling
capital premium Held reserve reserve earnings reserve interest Total
Year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
Balance at 1 July
2021 14,558 42 (404) 3,719 11,345 674,603 44 (577) 703,330
-------------------- -------- -------- -------- ------------ --------- --------- -------- ------------ ---------
Profit for the year - - - - - 120,351 - - 120,351
Other comprehensive
income and expense
(net of tax)
-------------------- -------- -------- -------- ------------ --------- --------- -------- ------------ ---------
Remeasurement of
defined benefit
pension
scheme liabilities - - - - - 53,081 - - 53,081
Foreign exchange
translation
differences - - - 10,622 - - - - 10,622
Relating to
associates
and joint ventures - - - 118 - - - - 118
Changes in fair
value
of cash flow
hedges - - - - (22,268) - - - (22,268)
Total other
comprehensive
income and expense - - - 10,740 (22,268) 53,081 - - 41,553
Total comprehensive
income and expense - - - 10,740 (22,268) 173,432 - - 161,904
Share-based
payments
charge - - - - - - 180 - 180
Own shares
transferred
on vesting - - 404 - - - (404) - -
Own shares
purchased - - (750) - - - - - (750)
Dividends paid - - - - - (49,494) - - (49,494)
-------------------- -------- -------- -------- ------------ --------- --------- -------- ------------ ---------
Balance at 30 June
2022 14,558 42 (750) 14,459 (10,923) 798,541 (180) (577) 815,170
Year ended 30 June
2023
Profit for the year - - - - - 116,102 - - 116,102
Other comprehensive
income and expense
(net of tax)
-------------------- -------- -------- -------- ------------ --------- --------- -------- ------------ ---------
Remeasurement of
defined benefit
pension
scheme
assets/liabilities - - - - - 10,541 - - 10,541
Foreign exchange
translation
differences - - - (7,687) - - - - (7,687)
Changes in fair
value
of cash flow
hedges - - - - 17,475 - - - 17,475
Total other
comprehensive
income and
expenses - - - (7,687) 17,475 10,541 - - 20,329
Total comprehensive
income and
expenses - - - (7,687) 17,475 126,643 - - 136,431
Share-based
payments
charge - - - - - - 677 - 677
Own shares
purchased - - (2,213) - - - - - (2,213)
Dividends paid - - - - - (53,407) - - (53,407)
Balance at 30 June
2023 14,558 42 (2,963) 6,772 6,552 871,777 497 (577) 896,658
-------------------- -------- -------- -------- ------------ --------- --------- -------- ------------ ---------
More details of share capital and reserves are given in note
26.
CONSOLIDATED STATEMENT OF CASH FLOW
for the year ended 30 June 2023
2023 2022
notes GBP'000 GBP'000
------------------------------------------------ ------ --------- ---------
Cash flows from operating activities
Profit for the year 116,102 120,351
------------------------------------------------ ------ --------- ---------
Adjustments for:
Depreciation of property, plant and equipment,
investment properties 9,11 19,882 25,898
Loss on sale of property, plant and equipment 9 155 157
Impairment of property, plant and equipment 9 - 1,259
Depreciation of right-of-use assets 10 4,223 4,205
Impairment of right-of-use-assets - 1,837
Amortisation of development costs 12 5,150 4,698
Amortisation of other intangibles 12 1,012 1,225
Impairment of development costs 12 1,611 -
Write-off of intangible assets - 3,510
Loss on disposal of intangible assets 550 -
Share of profits from joint ventures 13 (2,768) (4,342)
Profit on disposal of investment in associate - (582)
Write-off of lease liabilities - (1,985)
Defined benefit pension schemes past service
cost 23 2,437 11,695
Financial income 5 (9,669) (932)
Financial expenses 5 1,861 2,938
(Gains)/losses from the fair value of
financial instruments 25 (5,504) 8,349
Share-based payment expense 24 677 180
Tax expense 7 28,963 25,235
48,580 83,345
------------------------------------------------ ------ --------- ---------
Increase in inventories (23,275) (48,919)
Increase in trade, finance lease and other
receivables (12,379) (11,301)
(Decrease)/increase in trade and other
payables (15,013) 12,288
Decrease in provisions (1,486) (2,015)
(52,153) (49,947)
------------------------------------------------ ------ --------- ---------
Defined benefit pension scheme contributions 23 (2,341) (8,866)
Income taxes paid (25,891) (23,410)
Cash flows from operating activities 84,297 121,473
------------------------------------------------ ------ --------- ---------
Investing activities
Purchase of property, plant and equipment,
and investment properties 9,11 (74,024) (30,960)
Sale of property, plant and equipment 7,948 687
Development costs capitalised 12 (10,448) (7,966)
Purchase of other intangibles 12 (379) (929)
(Increase)/decrease in bank deposits 15 (25,000) 20,000
Interest received 5 6,302 834
Dividend received from joint ventures 13 924 525
Proceeds from sale of shares in associate - 582
Payments from pension scheme cash escrow
account - 10,578
Cash flows from investing activities (94,677) (6,649)
------------------------------------------------ ------ --------- ---------
Financing activities
Repayment of borrowings 20 (914) (974)
Interest paid 5 (656) (591)
Repayment of principal of lease liabilities 22 (4,206) (4,081)
Own shares purchased 26 (2,213) (750)
Dividends paid 26 (53,407) (49,494)
Cash flows from financing activities (61,396) (55,890)
------------------------------------------------ ------ --------- ---------
Net (decrease)/increase in cash and cash
equivalents (71,776) 58,934
Cash and cash equivalents at beginning
of the year 153,162 95,008
Effect of exchange rate fluctuations on
cash held 2 (780)
Cash and cash equivalents at end of the
year 15 81,388 153,162
------------------------------------------------ ------ --------- ---------
NOTES (FORMING PART OF THE FINANCIAL STATEMENTS)
1. Accounting policies
This section sets out our significant accounting policies that
relate to the financial statements as a whole, along with the
critical accounting judgements and estimates that management has
identified as having a potentially material impact on the Group's
consolidated financial statements. Where an accounting policy is
applicable to a specific note in the financial statements, the
policy is described within that note.
Basis of preparation
Renishaw plc (the Company) is a company incorporated in England
and Wales. The Group financial statements consolidate those of the
Company and its subsidiaries (together referred to as the Group,
and 'we') and equity account the Group's interest in associates and
joint ventures. The parent company financial statements present
information about the Company as a separate entity and not about
the Group.
The financial information set out in the announcement does not
constitute the Group's statutory accounts for the years ended 30
June 2023 or 30 June 2022. The financial information for the year
ended 30 June 2022 is derived from the statutory accounts for that
year, which have been delivered to the Registrar of Companies. The
auditor reported on those accounts; their report was unqualified,
did not draw attention to any matters by way of emphasis without
qualifying their report and did not contain a statement under s498
(2) or (3) Companies Act 2006. In respect of the year ended 30 June
2023, an unqualified auditor's report was signed on 18 September
2023. The statutory accounts will be delivered to the Registrar of
Companies following the Group's annual general meeting.
The consolidated financial statements are presented in Sterling,
which is the Company's functional currency and the Group's
presentational currency, and all values are rounded to the nearest
thousand (GBP'000).
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
Group financial statements. Judgements made by the Directors, in
the application of these accounting policies, that have a
significant effect on the financial statements and estimates with a
significant risk of material adjustment in the next year are noted
below.
Basis of consolidation
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to or has rights to variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. In
assessing control, the Group takes into consideration potential
voting rights that are exercisable. The acquisition date is the
date on which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases. Losses applicable to the non-controlling
interests in a subsidiary are allocated to the non-controlling
interests even if doing so causes the non-controlling interests to
have a deficit balance.
Joint ventures are accounted for using the equity method
(equity-accounted investees) and are initially recognised at cost.
The Group's investment includes goodwill identified on acquisition,
net of any accumulated impairment losses.
The consolidated financial statements include the Group's share
of the total comprehensive income and equity movements of equity
accounted investees, from the date that significant influence
commences until the date that significant influence ceases. When
the Group's share of losses exceeds its interest in an equity
accounted investee, the Group's carrying amount is reduced to nil
and recognition of further losses is discontinued except to the
extent that the Group has incurred legal obligations or made
payments on behalf of an investee.
Intragroup balances and transactions, and any unrealised income
and expenses arising from intragroup transactions, are eliminated
on consolidation. Unrealised gains arising from transactions with
equity accounted investees are eliminated against the investment to
the extent of the Group's interest in the investee. Unrealised
losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
Foreign currencies
On consolidation, overseas subsidiaries' results are translated
into Sterling at weighted average exchange rates for the year by
translating each overseas subsidiary's monthly results at exchange
rates applicable to each of the respective months. Assets and
liabilities denominated in foreign currencies at the balance sheet
date are translated into Sterling at the foreign exchange rates
prevailing at that date. Differences on exchange resulting from the
translation of overseas assets and liabilities are recognised in
Other comprehensive income and are accumulated in equity.
Monetary assets and liabilities denominated in foreign
currencies are reported at the rates prevailing at the time, with
any gain or loss arising from subsequent exchange rate movements
being included as an exchange gain or loss in the Consolidated
income statement. Foreign currency differences arising from
transactions are recognised in the Consolidated income
statement.
New, revised or changes to existing accounting standards
The following accounting standard amendments became effective as
at 1 January 2022 and have been adopted in the preparation of these
financial statements, with effect from 1 July 2022:
- amendments to IFRS3, References to the Conceptual
Framework;
- amendments to IAS 16, Property, Plant and Equipment - Proceeds
before Intended Use; and
- amendments to IAS 37, Onerous Contracts - Costs of Fulfilling
a Contract.
These have not had a material effect on these financial
statements.
At the date of these financial statements, the following
amendments that are potentially relevant to the Group, and which
have not been applied in these financial statements, were in issue
but not yet effective:
- amendments to IAS 1, Classification of Liabilities as Current
or Non-current (not yet endorsed by the UK);
- amendments to IAS 1 and IFRS Practice Statement 2, Disclosure
of Accounting Policies;
- amendments to IAS 7, Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures (not yet endorsed by the
UK);
- amendments to IAS 8, Definition of Accounting Estimates;
- amendments to IAS 12, International Tax Reform Pillar Two
Model Rules;
- amendments to IAS 12, Deferred Tax related to Assets and
Liabilities arising from a Single Transaction; and
- amendments to IFRS 16, Lease Liability in a Sale and
Leaseback.
The adoption of these Standards and Interpretations in future
periods is not expected to have a material impact on the financial
statements of the Group.
The Finance (No 2) Bill 2023, that includes Pillar Two
legislation, was substantively enacted on 20 June 2023 for IFRS
purposes. As permitted by the amendments to IAS 12 International
Tax Reform Pillar Two Model Rules the Group has applied the
exemption from recognising and disclosing information about
deferred tax assets and liabilities related to Pillar Two income
taxes.
Alternative performance measures
The financial statements are prepared in accordance with adopted
IFRS and applied in accordance with the provisions of the Companies
Act 2006. In measuring our performance, the financial measures that
we use include those which have been derived from our reported
results, to eliminate factors which distort year-on-year
comparisons.
These are considered non-GAAP financial measures. We believe
this information, along with comparable GAAP measurements, is
useful to stakeholders in providing a basis for measuring our
operational performance. The Board use these financial measures,
along with the most directly comparable GAAP financial measures, in
evaluating our performance (see note 29).
Separately disclosed items
The Directors consider that certain items should be separately
disclosed to aid understanding of the Group's performance.
Gains and losses from the fair value of financial instruments
are therefore separately disclosed in the Consolidated income
statement, where these gains and losses relate to certain forward
currency contracts that are not effective for hedge accounting.
Restructuring costs are also separately disclosed where significant
costs have been incurred in rationalising and reorganising our
business as part of a Board-approved initiative, and relate to
matters that do not frequently recur.
During the period, a change to the US defined benefit pension
scheme rules, per note 23, resulted in a significant non-recurring
amount being recognised in the Consolidated income statement. In
the previous period, a change to the UK defined benefit pension
scheme rules resulted in a significant non-recurring amount being
recognised in the Consolidated income statement. These have also
been separately disclosed.
These items are also excluded from Adjusted profit before tax,
Adjusted operating profit and Adjusted earnings per share measures,
as explained in note 29 Alternative performance measures.
Critical accounting judgements and estimation uncertainties
The preparation of financial statements in conformity with
UK-adopted IAS requires management to make judgements, estimates
and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and other factors that are believed to be reasonable
under the circumstances. The results of this form the basis of
making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may therefore differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing
basis.
The areas of key estimation uncertainty and critical accounting
judgement that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities in the
next financial year are summarised below, with further details
included within accounting policies as indicated.
Item Key judgements (J) and estimates (E)
------------------------- -------------------------------------------
Taxation E - Estimates of future profits to
use deferred tax assets
Research and development J - Whether a project meets the criteria
costs for capitalisation
Goodwill and capitalised E - Estimates of future cash flows
development costs for impairment testing
Inventories E - Determination of net realisable
value
Defined benefit pension E - Valuation of defined benefit pension
schemes schemes' liabilities
Cash flow hedges E - Estimates of highly probable forecasts
of the hedged item
------------------------- -------------------------------------------
Climate change
We have considered the potential effect of physical and
transitional climate change risks when preparing these consolidated
financial statements and have also considered the effect of our own
Net Zero commitments. Our consideration of the potential effect of
climate change on these consolidated financial statements included
reviewing:
- discounted cashflow forecasts, used in accounting for
goodwill, capitalised development costs, and deferred tax
assets;
- useful economic lives and residual values of property, plant
and equipment;
- planned use of right-of-use assets; and
- expected demand for inventories.
We also considered the estimated capital expenditure needed in
the next five years to deliver our Net Zero plan.
Overall, we do not believe that climate change has a material
effect on our accounting judgements and estimates, nor in the
carrying value of assets and liabilities in the consolidated
financial statements for the year ended 30 June 2023. We will
continue to review the effect of climate change on financial
statements in the future, and update our accounting and disclosures
as the position changes.
Going concern
In preparing these financial statements, the Directors have
adopted the going concern basis. The decision to adopt the going
concern basis was made after considering:
- the Group's business model and key markets;
- the Group's risk management processes and principal risks;
- the Group's financial resources and strategies; and
- the process undertaken to review the Group's viability,
including scenario testing.
The financial models for the viability review were based on the
pessimistic version of the five-year business plan, but covering a
period to 30 September 2026. For context, revenue in the first year
of this pessimistic base scenario is similar to FY2023 revenue of
GBP688.6m, while costs and other cash outflows still reflect
ambitious growth plans. In the going concern assessment, the
Directors reviewed this same version of the plan but to 30
September 2024, as well as the 'severe but plausible' scenarios
used in the viability review, again to 30 September 2024. These
scenarios reflected a significant reduction in revenue, a
significant increase in costs, and a third scenario incorporating
both a reduction to revenue and an increase in costs but to a less
degree than the first two scenarios. In each scenario the Group's
cash balances remained positive throughout the period to 30
September 2024.
The Directors also reviewed a reverse stress test for the period
to 30 September 2024, identifying what would need to happen in this
period for the Group to deplete its cash and cash equivalents and
bank deposit balances. This identified a trading level so low
(between 50 and 60% of FY2023 revenue) that the Directors feel that
the events that could trigger this would be remote. The Directors
also concluded that the risk of a one-off cash outflow that would
exhaust the Group's cash and cash equivalents and bank deposits
balances in the assessment period was also remote.
Based on this assessment, incorporating a review of the current
position, the scenarios, the principal risks and mitigation, the
Directors have a reasonable expectation that the Group will be able
to continue operating and meet its liabilities as they fall due
over the period to 30 September 2024.
2. Revenue disaggregation and segmental analysis
We manage our business by segment, comprising Manufacturing
technologies and Analytical instruments and medical devices, and by
geographical region. The results of these segments and regions are
regularly reviewed by the Board to assess performance and allocate
resources, and are presented in this note.
Accounting policy
The Group generates revenue from the sale of goods, capital
equipment and services. These can be sold both on their own and
together.
a) Sale of goods, capital equipment and services
The Group's contracts with customers consist both of contracts
with one performance obligation and contracts with multiple
performance obligations.
For contracts with one performance obligation, revenue is
measured at the transaction price, which is typically the contract
value except for customers entitled to volume rebates, and
recognised at the point in time when control of the product
transfers to the customer. This point in time is typically when the
products are made available for collection by the customer,
collected by the shipping agent, or delivered to the customer,
depending upon the shipping terms applied to the specific
contract.
Contracts with multiple performance obligations typically exist
where, in addition to supplying product, we also supply services
such as user training, servicing and maintenance, and installation
services. Where the installation service is simple, does not
include a significant integration service and could be performed by
another party then the installation is accounted for as a separate
performance obligation. Where the contracts include multiple
performance obligations, the transaction price is allocated to each
performance obligation based on the relative stand-alone selling
prices. The revenue allocated to each performance obligation is
then recognised when, or as, that performance obligation is
satisfied. For installation, this is typically at the point in time
in which installation is complete. For training, this is typically
the point in time at which training is delivered. For servicing and
maintenance, the revenue is recognised evenly over the course of
the servicing agreement except for ad-hoc servicing and maintenance
which is recognised at the point in time in which the work is
undertaken.
b) Sale of software
The Group provides software licences and software maintenance to
customers, sold both on their own and together with associated
products. For software licences, where the licence and/or
maintenance is provided as part of a contract that provides
customers with software licences and other goods and services then
the transaction price is allocated on the same basis as described
in a) above.
The Group's distinct software licences provide a right of use,
and therefore revenue from software licences is recognised at the
point in time in which the licence is supplied to the customer.
Revenue from software maintenance is recognised evenly over the
term of the maintenance agreement.
c) Extended warranties
The Group provides standard warranties to customers that address
potential latent defects that existed at point of sale and as
required by law (assurance-type warranties). In some contracts, the
Group also provides warranties that extend beyond the standard
warranty period and may be sold to the customer (service-type
warranties).
Assurance-type warranties are accounted for by the Group under
IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'.
Service-type warranties are accounted for as separate performance
obligations and therefore a portion of the transaction price is
allocated to this element, and then recognised evenly over the
period in which the service is provided.
d) Contract balances
Contract assets represent the Group's right to consideration in
exchange for goods, capital equipment and/or services that have
been transferred to a customer, and mainly includes accrued revenue
in respect of goods and services provided to a customer but not yet
fully billed. Contract assets are distinct from receivables, which
represent the Group's right to consideration that is
unconditional.
Contract liabilities represent the Group's obligation to
transfer goods, capital equipment and/or services to a customer for
which the Group has either received consideration or consideration
is due from the customer.
e) Disaggregation of revenue
The Group disaggregates revenue from contracts with customers
between: goods, capital equipment and installation, and aftermarket
services; operating segment; and geographical location.
Management believe these categories best depict how the nature,
amount, timing and uncertainty of the Group's revenue is affected
by economic factors.
Within the two operating segments there are multiple product
offerings with similar economic characteristics, similar production
processes and similar customer bases. Our Manufacturing
technologies business consists of industrial metrology, position
measurement and additive manufacturing (AM) product groups, while
our Analytical instruments and medical devices business consists of
spectroscopy and neurological product lines.
Year ended 30 June 2023 Analytical
Manufacturing instruments
technologies and medical Total
devices
GBP'000 GBP'000 GBP'000
------------------------------------------- ---------------- ----------------- ----------
Revenue 648,240 40,333 688,573
Depreciation, amortisation and impairment 28,431 3,447 31,878
Operating profit before losses from
fair value of financial instruments
and US defined benefit pension scheme
past service cost 132,843 5,184 138,027
Share of profits from joint ventures 2,768 - 2,768
Net financial income/(expense) - - 7,808
US defined benefit pension scheme past
service cost - - (2,139)
Losses from the fair value of financial
instruments - - (1,399)
Profit before tax - - 145,065
------------------------------------------- ---------------- ----------------- ----------
Year ended 30 June 2022 Analytical
Manufacturing instruments
technologies and medical Total
GBP'000 devices GBP'000 GBP'000
------------------------------------------- ---------------- ----------------- ----------
Revenue 634,588 36,488 671,076
Depreciation, amortisation and impairment 36,552 2,570 39,122
Operating profit before losses from
fair value of financial instruments
and UK defined benefit pension scheme
past service cost 162,549 2,809 165,358
Share of profits from joint ventures 4,342 - 4,342
Net financial expense - - (2,006)
UK defined benefit pension scheme past
service cost - - (11,695)
Losses from the fair value of financial
instruments - - (10,413)
Profit before tax - - 145,586
------------------------------------------- ---------------- ----------------- ----------
There is no allocation of assets and liabilities to operating
segments. Depreciation, amortisation and impairments are allocated
to segments on the basis of the level of activity.
The following table shows the analysis of non-current assets,
excluding deferred tax, derivatives and employee benefits, by
geographical region:
2023 2022
GBP'000 GBP'000
-------------------------- -------- --------
UK 231,619 181,530
Overseas 152,008 155,725
--------------------------- -------- --------
Total non-current assets 383,627 337,255
--------------------------- -------- --------
No overseas country had non-current assets amounting to 10% or
more of the Group's total non-current assets.
The following table shows the disaggregation of group revenue by
category:
2023 2022
GBP'000 GBP'000
------------------------------------------- -------- --------
Goods, capital equipment and installation 624,992 615,641
Aftermarket services 63,581 55,435
-------------------------------------------- -------- --------
Total Group revenue 688,573 671,076
-------------------------------------------- -------- --------
Aftermarket services include repairs, maintenance and servicing,
programming, training, extended warranties, and software licences
and maintenance. There is no significant difference between our two
operating segments as to their split of revenue by type.
The analysis of revenue by geographical market was:
2023 2022
GBP'000 GBP'000
-------------------------- -------- --------
APAC total 310,637 317,023
--------------------------- -------- --------
UK (country of domicile) 38,899 31,536
EMEA, excluding UK 177,582 174,290
--------------------------- -------- --------
EMEA total 216,481 205,826
Americas total 161,455 148,227
Total Group revenue 688,573 671,076
--------------------------- -------- --------
Revenue in the previous table has been allocated to regions
based on the geographical location of the customer. Countries with
individually significant revenue figures in the context of the
Group were:
2023 2022
GBP'000 GBP'000
--------- -------- --------
China 155,360 152,772
USA 138,721 128,531
Japan 67,915 69,829
Germany 61,565 58,636
---------- -------- --------
There was no revenue from transactions with a single external
customer which amounted to more than 10% of the Group's total
revenue.
3. Personnel expenses
The remuneration costs of our people account for a significant
proportion of our total expenditure, which are analysed in this
note.
The aggregate payroll costs for the year were:
2023 2022
GBP'000 GBP'000
------------------------------------------ -------- --------
Wages and salaries 226,126 207,783
Compulsory social security contributions 26,579 24,497
Contributions to defined contribution
pension schemes 26,142 21,988
Share-based payment charge 677 180
------------------------------------------- -------- --------
Total payroll costs 279,524 254,448
------------------------------------------- -------- --------
Wages and salaries and compulsory social security contributions
include GBP11,338,000 (2022: GBP17,914,000) relating to performance
bonuses.
The average number of persons employed by the Group during the
year was:
2023 2022
Number Number
----------------------------- ------- -------
UK 3,332 3,132
Overseas 1,804 1,799
Average number of employees 5,136 4,931
----------------------------- ------- -------
Key management personnel have been assessed to be the Directors
of the Company and the Senior Leadership Team (SLT), which includes
an average of 21 people (2022: 21 people).
The total remuneration of the Directors and the SLT was:
2023 2022 restated* 2022
GBP'000 GBP'000 GBP'000
-------------------------------------- -------- --------------- --------
Short-term employee benefits 5,659 8,061 3,763
Post-employment benefits 511 444 121
Share-based payment charge 677 180 180
Total remuneration of key management
personnel 6,847 8,685 4,064
-------------------------------------- -------- --------------- --------
Short-term employee benefits include nil (2022: GBP2,791,000)
relating to performance bonuses payable in cash.
The share-based payment charge relates to share awards granted
in previous years, not yet vested. No shares (2022: GBP1,915,000
equivalent) are to be awarded in respect of 2023 (see note 24).
*The assessment of key management personnel was updated during
the year to include the SLT, who are, along with the Directors,
deemed to have authority and responsibility for planning, directing
and controlling the activities of the Renishaw Group. This also
follows the expansion of the deferred annual equity incentive plan
(DAEIP) to include the SLT, as explained in the Governance section.
Accordingly, 2022 figures have been restated.
4. Cost of sales
Our cost of sales includes the costs to manufacture our products
and our engineering spend on existing and new products, net of
capitalisation and research and development tax credits.
Included in cost of sales are the following amounts:
2023 2022
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Production costs 247,665 234,919
----------------------------------------------------------- -------- --------
Research and development expenditure 72,500 59,415
Other engineering expenditure 28,063 26,356
----------------------------------------------------------- -------- --------
Gross engineering expenditure 100,563 85,771
----------------------------------------------------------- -------- --------
Development expenditure capitalised (net of amortisation) (5,298) (3,268)
Development expenditure impaired 1,611 -
Research and development tax credit (6,633) (3,895)
----------------------------------------------------------- -------- --------
Total engineering costs 90,243 78,608
----------------------------------------------------------- -------- --------
Total cost of sales 337,908 313,527
----------------------------------------------------------- -------- --------
Production costs includes the raw material and component costs,
payroll costs and sub-contract costs, and allocated overheads
associated with manufacturing our products.
Research and development expenditure includes the payroll costs,
material costs and allocated overheads attributed to projects
identified as being related to new products or processes. Other
engineering expenditure includes the payroll costs, material costs
and allocated overheads attributed to projects identified as being
related to existing products or processes.
5. Financial income and expenses
Financial income mainly arises from bank interest on our
deposits, while we are exposed to realised currency gains and
losses on translation of foreign currency denominated intragroup
balances and offsetting financial instruments.
Included in financial income and expenses are the following
amounts:
2023 2022
Financial income notes GBP'000 GBP'000
------------------------------------------------------- ------ -------- --------
Bank interest receivable 6,302 834
Interest on pension schemes' assets 23 1,639 -
Fair value gains from one-month forward currency
contracts 25 1,728 98
------------------------------------------------------- ------ -------- --------
Total financial income 9,669 932
------------------------------------------------------- ------ -------- --------
Financial expenses
Net interest on pension schemes' liabilities 23 29 306
Currency losses 1,130 1,414
Lease interest 21 348 481
Interest payable on borrowings 20 46 52
Other interest payable 308 110
Realised currency reserve losses from discontinuation
of foreign operation - 575
------------------------------------------------------- ------ -------- --------
Total financial expenses 1,861 2,938
------------------------------------------------------- ------ -------- --------
Currency losses relate to revaluations of foreign
currency-denominated balances using latest reporting currency
exchange rates. The losses recognised in 2022 and 2023 largely
related to an appreciation of Sterling relative to the US dollar
affecting US dollar-denominated intragroup balances in the
Company.
Certain intragroup balances are classified as 'net investments
in foreign operations', such that revaluations from currency
movements on designated balances accumulate in the Currency
translation reserve in Equity. Rolling one-month forward currency
contracts are used to offset currency movements on remaining
intragroup balances, with fair value gains and losses being
recognised in financial income or expenses. See note 25 for further
details.
6. Profit before tax
Detailed below are other notable amounts recognised in the
Consolidated income statement.
Included in the profit before tax are the following
costs/(income):
2023 2022
notes GBP'000 GBP'000
------------------------------------------------------- ------ -------- --------
Depreciation and impairment of property, plant
and equipment and investment properties (a) 9,11 19,882 27,157
Loss on sale of property, plant and equipment (a) 9 155 157
Depreciation and impairment of right-of-use assets
(a) 10 4,223 6,042
Amortisation, impairment, and write-off of intangible
assets (a) 12 7,773 5,923
Profit from sale of shares in associate (c) - 582
Impairment of net assets of foreign operation (b) - 2,126
Grant income (a) (3,017) (2,840)
------------------------------------------------------- ------ -------- --------
These costs/(income) can be found under the following headings
in the Consolidated income statement: (a) within cost of sales,
distribution costs and administrative expenses, (b) within
distribution costs, and (c) within administrative expenses. Further
detail on each element can be found in the relevant notes.
Grant income relates to government grants, relating to R&D
activities, which are recognised in the Consolidated income
statement as a deduction against expenditure. Where grants are
received in advance of the related expenses, they are initially
recognised in the Consolidated balance sheet and released to match
the related expenditure. Where grants are expected to be received
after the related expenditure has occurred, and there is reasonable
assurance that the entity will comply with the grant conditions,
amounts are recognised to offset the expenditure and an asset
recognised.
Costs within Administrative expenses relating to auditor fees
included:
2023 2022
GBP'000 GBP'000
------------------------------------------- -------- --------
Audit of these financial statements 707 718
Audit of subsidiary undertakings pursuant
to legislation 576 526
Other assurance 6 32
All other non-audit fees - -
Total auditor fees 1,289 1,276
-------------------------------------------- -------- --------
7. Taxation
The Group tax charge is affected by our geographic mix of
profits and other factors explained in this note. Our expected
future tax charges and related tax assets are also set out in the
deferred tax section, together with our view on whether we will be
able to make use of these in the future.
Accounting policy
Tax on the profit for the year comprises current and deferred
tax. Tax is recognised in the Consolidated income statement except
to the extent that it relates to items recognised directly in Other
comprehensive income, in which case it is recognised in the
Consolidated statement of comprehensive income and expense. Current
tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in previous
years.
Deferred tax is provided on 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 other than in a business
combination; and
- differences relating to investments in subsidiaries, to the
extent that they will probably not reverse in the foreseeable
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.
Key estimate - Estimates of future profits to support the
recognition of deferred tax assets
Deferred tax assets are recognised to the extent it is probable
that future taxable profits (including the future release of
deferred tax liabilities) will be available, against which the
deductible temporary differences can be used, based on management's
assumptions relating to the amounts and timing of future taxable
profits. Estimates of future profitability on an entity basis are
required to ascertain whether it is probable that sufficient
taxable profits will arise to support the recognition of deferred
tax assets relating to the corresponding entity.
The following table shows an analysis of
the tax charge: 2023 2022
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Current tax:
UK corporation tax on profits for the year 5,814 9,288
UK corporation tax - prior year adjustments (1,307) (28)
Overseas tax on profits for the year 14,161 16,734
Overseas tax - prior year adjustments 291 (176)
---------------------------------------------------- -------- --------
Total current tax 18,959 25,818
---------------------------------------------------- -------- --------
Deferred tax:
---------------------------------------------------- -------- --------
Origination and reversal of temporary differences 9,140 (1,372)
Prior year adjustments (1,052) 166
Derecognition of previously recognised tax
losses and excess interest 439 623
Recognition of previously unrecognised tax (591) -
losses and excess interest
Effect on deferred tax for changes in tax 2,068 -
rates
---------------------------------------------------- -------- --------
10,004 (583)
Tax charge on profit 28,963 25,235
---------------------------------------------------- -------- --------
The tax for the year is lower (2022: lower) than the weighted UK
standard rate of corporation tax of 20.5% (2022: 19%). The
differences are explained as follows:
2023 2022
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Profit before tax 145,065 145,586
--------------------------------------------------------- -------- --------
Tax at 20.5% (2022: 19%) 29,738 27,661
Effects of:
Different tax rates applicable in overseas subsidiaries (1,695) (1,834)
Permanent differences 1,595 978
Companies with unrelieved tax losses 292 -
Share of profits of joint ventures (567) (825)
Tax incentives (patent box and capital allowances
super-deduction) (679) (1,400)
Prior year adjustments (2,068) (38)
Effect on deferred tax for changes in tax rates 2,068 -
Recognition of previously unrecognised tax losses (591) -
and excess interest
Derecognition of previously recognised tax losses
and excess interest 439 623
Irrecoverable withholding tax 609 2
Other differences (178) 68
Tax charge on profit 28,963 25,235
--------------------------------------------------------- -------- --------
Effective tax rate 20.0% 17.3%
--------------------------------------------------------- -------- --------
We operate in many countries around the world and the overall
effective tax rate (ETR) is a result of the combination of the
varying tax rates applicable throughout these countries. The FY2023
effective tax rate has increased mostly as a result of a reduction
in patent box tax incentives and an increase in the UK tax rate
from 19% to 25%.
The Group's future ETR will mainly depend on the geographic mix
of profits and whether there are any changes to tax legislation in
the Group's most significant countries of operations.
Deferred tax
Deferred tax assets and liabilities are offset where there is a
legally enforceable right of offset and there is an intention to
net settle the balances. After taking these offsets into account,
the net position of GBP18,826,000 liability (2022: GBP78,000 asset)
is presented as a GBP19,944,000 deferred tax asset (2022:
GBP22,893,000 asset) and a GBP38,770,000 deferred tax liability
(2022: GBP22,815,000 liability) in the Consolidated balance
sheet.
Where deferred tax assets are recognised, the Directors are of
the opinion, based on recent and forecast trading, that the level
of profits in current and future years make it more likely than not
that these assets will be recovered.
Balances at the end of the year were:
2023 2022
------------------------- --------------------------------- ---------------------------------
Assets Liabilities Net Assets Liabilities Net
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- ------------ --------- -------- ------------ ---------
Property, plant and
equipment 735 (25,124) (24,389) 517 (19,966) (19,449)
Intangible assets - (3,922) (3,922) - (2,980) (2,980)
Intragroup trading
(inventories) 16,765 - 16,765 20,158 - 20,158
Intragroup trading
(fixed assets) 1,770 - 1,770 1,457 - 1,457
Defined benefit pension
schemes 6 (14,354) (14,348) 125 (11,173) (11,048)
Derivatives - (2,184) (2,184) 3,508 - 3,508
Tax losses 2,281 - 2,281 3,893 - 3,893
Other 5,894 (693) 5,201 4,953 (414) 4,539
Balance at the end
of the year 27,451 (46,277) (18,826) 34,611 (34,533) 78
------------------------- -------- ------------ --------- -------- ------------ ---------
Other deferred tax assets include temporary differences relating
to inventory provisions totalling GBP2,256,000 (2022:
GBP1,774,000), other provisions (including bad debt provisions) of
GBP913,000 (2022: GBP975,000), and employee benefits relating to
Renishaw KK of GBP806,000 (2022: GBP853,000), with the remaining
balance relating to several other smaller temporary
differences.
The movements in the deferred tax balance during the year
were:
2023 2022
GBP'000 GBP'000
---------------------------------------------- ---- --------- ---------
Balance at the beginning of the year 78 10,890
Movements in the Consolidated income
statement (10,004) 583
---------------------------------------------------- --------- ---------
Movement in relation to the cash flow
hedging reserve (5,692) 6,155
Movement in relation to the defined
benefit pension schemes (3,071) (17,650)
---------------------------------------------------- --------- ---------
Total movement in the Consolidated statement
of comprehensive income and expense (8,763) (11,495)
Currency translation (137) 100
Balance at the end of the year (18,826) 78
---------------------------------------------------- --------- ---------
The deferred tax movement in the Consolidated income statement
is analysed as:
2023 2022
GBP'000 GBP'000
----------------------------------- --------- --------
Property, plant and equipment (4,940) (2,328)
Intangible assets (942) (371)
Intragroup trading (inventories) (3,393) 5,619
Intragroup trading (fixed assets) 313 205
Defined benefit pension schemes (229) 2,255
Derivatives - 284
Tax losses (1,612) (4,472)
Other 799 (609)
------------------------------------ --------- --------
Total movement for the year (10,004) 583
------------------------------------ --------- --------
Deferred tax assets of GBP2,281,000 (2022: GBP3,893,000) in
respect of losses are recognised where it is considered likely that
the business will generate sufficient future taxable profits.
Deferred tax assets have not been recognised in respect of tax
losses carried forward of GBP6,563,000 (2022: GBP4,815,000), due to
uncertainty over their offset against future taxable profits and
therefore their recoverability. These losses are held by Group
companies in France, Brazil, Australia, Canada and the US, where
for 97% of losses there are no time limitations on their
utilisation.
In determining profit forecasts for each Group company, the key
variable is the revenue forecasts, which have been estimated using
consistently applied external and internal data sources.
Sensitivity analysis indicates that a reduction of 5% to relevant
revenue forecasts would result in an impairment to deferred tax
assets recognised in respect of losses and intragroup trading
(inventories) of less than GBP300,000. An increase of 5% to
relevant revenue forecasts would result in additions to deferred
tax assets in respect of tax losses not recognised of less than
GBP200,000.
It is likely that the majority of unremitted earnings of
overseas subsidiaries would qualify for the UK dividend exemption.
However, GBP65,555,000 (2022: GBP61,204,000) of those earnings may
still result in a tax liability principally as a result of
withholding taxes levied by the overseas jurisdictions in which
those subsidiaries operate. The tax liabilities for the earnings
for which management intend to repatriate in the foreseeable future
are not material and consequently no deferred tax liability has
been recognised.
8. Earnings per share
Basic earnings per share is the amount of profit generated in a
financial year attributable to equity shareholders, divided by the
weighted average number of shares in issue during the year.
Basic and diluted earnings per share are calculated on earnings
of GBP116,102,000 (2022: GBP120,351,000) and on 72,719,565 shares
(2022: 72,774,147 shares), being the number of shares in issue. The
number of shares excludes 68,978 (2022:14,396) shares held by the
Employee Benefit Trust (EBT). On this basis, earnings per share
(basic and diluted) is calculated as 159.7 pence (2022: 165.4
pence).
There is no difference between the weighted average earnings per
share and the basic and diluted earnings per share.
For the calculation of adjusted earnings per share, per note 29,
earnings of GBP116,102,000 (2022: GBP120,351,000) are adjusted by
post-tax amounts for:
- fair value (gains)/losses on financial instruments not
eligible for hedge accounting (reported in Revenue), which
represents the amount by which revenue would change had all the
derivatives qualified as eligible for hedge accounting,
GBP5,488,000 gain;
- fair value (gains)/losses on financial instruments not
eligible for hedge accounting (reported in Gains/(losses) from the
fair value of financial instruments), GBP1,133,000 loss;
- a revised estimate of 2020 restructuring costs, GBP570,000
gain; and
- a US defined benefit pension scheme past service cost,
GBP1,626,000 loss.
9. Property, plant and equipment
The Group makes significant investments in distribution and
in-house manufacturing infrastructure. During the year we have
significantly expanded our production facility in Wales and
invested in our manufacturing equipment in the UK. We expect to
complete this facility and continue our investments in property,
plant and equipment in the coming year.
Accounting policy
Freehold land is not depreciated. Other assets are stated at
costs less accumulated depreciation and accumulated impairment
losses, if any. Depreciation is provided to write off the costs of
assets less their estimated residual value on a straight-line basis
over their estimated useful economic lives as follows: freehold
buildings, 50 years; plant and equipment, 3 to 25 years; and
vehicles, 3 to 4 years.
Freehold Assets
in the
land Plant Motor course
and and of
buildings equipment vehicles construction Total
Year ended 30 June 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- ---------- --------- ------------- ---------
Cost
At 1 July 2022 217,820 263,557 7,520 7,481 496,378
Additions 1,730 16,934 1,033 54,075 73,772
Transfers 3,240 4,847 - (8,087) -
Disposals (5,383) (9,681) (1,369) - (16,433)
Currency adjustment (4,022) (2,501) (72) - (6,595)
At 30 June 2023 213,385 273,156 7,112 53,469 547,122
------------------------- ---------- ---------- --------- ------------- ---------
Depreciation
At 1 July 2022 43,816 202,214 6,495 - 252,525
Charge for the year 4,175 14,891 576 - 19,642
Disposals (1,619) (5,544) (1,167) - (8,330)
Currency adjustment (725) (2,015) (60) - (2,800)
------------------------- ---------- ---------- --------- ------------- ---------
At 30 June 2023 45,647 209,546 5,844 - 261,037
------------------------- ---------- ---------- --------- ------------- ---------
Net book value
At 30 June 2023 167,738 63,610 1,268 53,469 286,085
------------------------- ---------- ---------- --------- ------------- ---------
At 30 June 2022 174,004 61,343 1,025 7,481 243,853
------------------------- ---------- ---------- --------- ------------- ---------
Losses on disposals of Property, plant and equipment amounted to
GBP155,000 (2022: GBP157,000). Additions to assets in the course of
construction comprise GBP42,646,000 (2022: GBP826,000) for land and
buildings and GBP11,429,000 (2022: GBP6,318,000) for plant and
equipment. At 30 June 2023, properties with a net book value of
GBP88,778,000 (2022: GBP54,208,000) were subject to a fixed charge
to secure the UK defined benefit pension scheme liabilities.
Freehold Assets
in the
land Plant Motor course
and and of
buildings equipment vehicles construction Total
Year ended 30 June 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ---------- ---------- --------- ------------- ---------
Cost
At 1 July 2021 216,783 242,432 7,421 7,109 473,745
Additions 5,715 16,756 1,150 7,144 30,765
Transfers of assets in the
course of construction 2,800 3,972 - (6,772) -
Transfers to investment
properties (11,563) - - - (11,563)
Disposals 97 (3,587) (1,269) - (4,759)
Currency adjustment 3,988 3,984 218 - 8,190
---------------------------- ---------- ---------- --------- ------------- ---------
At 30 June 2022 217,820 263,557 7,520 7,481 496,378
Depreciation
At 1 July 2021 38,530 182,557 6,416 - 227,503
Charge for the year 4,623 20,029 1,056 - 25,708
Impairment 1,259 - - - 1,259
Transfers to investment
properties (1,222) - - - (1,222)
Disposals 81 (2,837) (1,180) - (3,936)
Currency adjustment 545 2,465 203 - 3,213
---------------------------- ---------- ---------- --------- ------------- ---------
At 30 June 2022 43,816 202,214 6,495 - 252,525
---------------------------- ---------- ---------- --------- ------------- ---------
Net book value
At 30 June 2022 174,004 61,343 1,025 7,481 243,853
---------------------------- ---------- ---------- --------- ------------- ---------
At 30 June 2021 178,253 59,875 1,005 7,109 246,242
---------------------------- ---------- ---------- --------- ------------- ---------
10. Right-of-use assets
The Group leases mostly properties and cars from third parties
and recognises an associated right-of-use asset where we are
afforded control and economic benefit from the use of the
asset.
Accounting policy
At the commencement date of a lease arrangement the Group
recognises a right-of-use asset for the leased item and a lease
liability for any payments due. Right-of-use assets are initially
measured at cost, being the present value of the lease liability
plus any initial costs incurred in entering the lease and less any
incentives received. See note 21 for further detail on lease
liabilities. Right-of-use assets are subsequently depreciated on a
straight-line basis from the commencement date to the earlier of
the end of the useful life or the end of the lease term.
Leasehold Plant and Motor vehicles Total
property equipment
Year ended 30 June 2023 GBP'000 GBP'000 GBP'000 GBP'000
Net book value
At 1 July 2022 8,055 117 1,778 9,950
Additions 261 64 2,907 3,232
Reductions in consideration (308) - (13) (321)
Depreciation (2,737) (93) (1,392) (4,222)
Currency adjustment (202) 1 (36) (237)
At 30 June 2023 5,069 89 3,244 8,402
----------------------------- ---------- ----------- --------------- --------
Leasehold Plant and Motor vehicles Total
property equipment
Year ended 30 June 2022 GBP'000 GBP'000 GBP'000 GBP'000
Net book value
At 1 July 2021 10,297 102 2,030 12,429
Additions 1,293 115 1,058 2,466
Depreciation (2,805) (102) (1,298) (4,205)
Impairment (1,837) - - (1,837)
Currency adjustment 1,107 2 (12) 1,097
At 30 June 2022 8,055 117 1,778 9,950
------------------------- ---------- ----------- --------------- --------
11. Investment properties
The Group's investment properties consist of five properties in
the UK, Ireland and India. Which, are occupied by rent-paying third
parties.
Accounting policy
Where property owned by the Group is deemed to be held to earn
rentals or for long-term capital appreciation it is recognised as
investment property.
Where a property is part-occupied by the Group, portions of the
property are recognised as investment property if they meet the
above description and if these portions could be sold separately
and reliably measured. If the portions could not be sold
separately, the property is recognised as an investment property
only if a significant proportion is held for rental or appreciation
purposes.
The Group has elected to value investment properties on a cost
basis, initially comprising an investment property's purchase price
and any directly attributable expenditure. Depreciation is provided
to write off the cost of assets on a straight-line basis over their
estimated useful economic lives, being 50 years. Amounts relating
to freehold land is not depreciated.
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
Cost
Balance at the beginning of the year 11,905 -
Transfers from Property, plant and equipment - 11,563
Additions 252 195
Disposals - (102)
Currency adjustment (261) 249
Balance at the end of the year 11,896 11,905
---------------------------------------------- -------- --------
Depreciation
Balance at the beginning of the year 1,337 -
Transfers from Property, plant and equipment - 1,222
Charge for the year 240 190
Disposals - (81)
Currency adjustment (4) 6
---------------------------------------------- -------- --------
Balance at the end of the year 1,573 1,337
---------------------------------------------- -------- --------
Net book value 10,323 10,568
---------------------------------------------- -------- --------
The Group has no restrictions on the realisability of its
investment properties and no contractual obligations to purchase,
construct or develop investment properties.
Amounts recognised in the Consolidated income statement relating
to investment properties:
2023 2022
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Rental income derived from investment properties 915 453
Direct operating expenses (including repairs
and maintenance) 258 105
-------------------------------------------------- -------- --------
Profit arising from investment properties 657 348
-------------------------------------------------- -------- --------
The fair value of the Group's investment properties totalled
GBP14,718,000 at 30 June 2023 (2022: GBP14,626,000). Fair values of
each investment property have been determined by independent
valuers who hold recognised and relevant professional
qualifications and have recent experience in the location and
category of each investment property being valued.
12. Intangible assets
Our Consolidated balance sheet contains significant intangible
assets, mostly in relation to goodwill, which arises when we
acquire a business and pay a higher amount than the fair value of
its net assets, and capitalised development costs. We make
significant investments into the development of new products, which
is a key part of our business model, and some of these costs are
initially capitalised and then expensed over the lifetime of future
sales of that product.
Accounting policy
Goodwill arising on acquisition represents the difference
between the cost of the acquisition and the fair value of the net
identifiable assets acquired, net of deferred tax. Identifiable
intangibles are those which can be sold separately or which arise
from legal rights regardless of whether those rights are
separable.
Goodwill is stated at cost less any accumulated impairment
losses. It is not amortised but is tested annually for impairment
or earlier if there are any indications of impairment. The annual
impairment review involves comparing the carrying amount to the
estimated recoverable amount and recognising an impairment loss if
the recoverable amount is lower. Impairment losses are recognised
in the Consolidated income statement.
Intangible assets such as customer lists, patents, trade marks,
know-how and intellectual property that are acquired by the Group
are stated at cost less amortisation and impairment losses.
Amortisation is charged to the Consolidated income statement on a
straight-line basis over the estimated useful lives of the
intangible assets. The estimated useful lives of the intangible
assets included in the Consolidated balance sheet reflect the
benefit derived by the Group and vary from five to 10 years.
Expenditure on research activities is recognised in the
Consolidated income statement as an expense as incurred.
Expenditure on development activities is capitalised if: the
product or process is technically and commercially feasible; the
Group intends and has the technical ability and sufficient
resources to complete development; future economic benefits are
probable; and the Group can measure reliably the expenditure
attributable to the intangible asset during its development.
Development activities involve a plan or design for the
production of new or substantially improved products or processes.
The expenditure capitalised includes the cost of materials, direct
labour and an appropriate proportion of overheads. Other
development expenditure is recognised in the Consolidated income
statement as an expense as incurred.
Capitalised development expenditure is amortised over the useful
economic life appropriate to each product or process, ranging from
five to 10 years, and is stated at cost less accumulated
amortisation and less accumulated impairment losses. Amortisation
commences when a product or process is available for use as
intended by management. Capitalised development expenditure is
removed from the balance sheet 10 years after being fully
amortised.
All non-current assets are tested for impairment whenever there
is an indication that their carrying value may be impaired. An
impairment loss is recognised in the Consolidated income statement
to the extent that an asset's carrying value exceeds its
recoverable amount, which represents the higher of the asset's fair
value less costs to sell and its value-in-use. An asset's
value-in-use represents 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.
Goodwill and capitalised development costs are subject to an
annual impairment test.
Key judgement - Whether a project meets the criteria for
capitalisation
Product development costs are capitalised once a project has
reached a certain stage of development, being the point at which
the product has passed testing to demonstrate it meets the
technical specifications of the project and it satisfies all
applicable regulations. Judgements are required to assess whether
the new product development has reached the appropriate point for
capitalisation of costs to begin. These costs are subsequently
amortised over their useful economic life once ready for use.
Should a product be subsequently obsoleted, the accumulated
capitalised development costs would need to be immediately written
off in the Consolidated income statement.
Key estimate - Estimates of future cash flows used for
impairment testing.
Determining whether goodwill and capitalised development costs
are impaired requires an estimation of the value-in-use of
cash-generating units (CGUs) to which goodwill has been allocated.
To calculate the value-in-use we need to estimate the future
cashflows of each CGU and select the appropriate discount rate for
each CGU.
Internally Software
Other generated licences
and
intangible development Intellectual
Goodwill assets costs property Total
Year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2023
Cost
At 1 July 2022 20,475 4,629 168,212 22,379 215,695
Additions - 254 10,448 125 10,827
Disposals - - - (10,518) (10,518)
Currency adjustment (214) (8) - (8) (230)
--------------------- --------- ----------- ------------ ------------- ---------
At 30 June 2023 20,261 4,875 178,660 11,978 215,774
--------------------- --------- ----------- ------------ ------------- ---------
Amortisation
At 1 July 2022 9,028 2,240 139,460 20,749 171,477
Charge for the year - 179 5,150 833 6,162
Impairment - - 1,611 - 1,611
Disposals - - - (9,969) (9,969)
Currency adjustment - 33 - (8) 25
At 30 June 2023 9,028 2,452 146,221 11,605 169,306
--------------------- --------- ----------- ------------ ------------- ---------
Net book value
At 30 June 2023 11,233 2,423 32,439 373 46,468
--------------------- --------- ----------- ------------ ------------- ---------
At 30 June 2022 11,447 2,389 28,752 1,630 44,218
--------------------- --------- ----------- ------------ ------------- ---------
Other intangible Internally Software
assets generated licences
Goodwill development and intellectual
costs property Total
Year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
Cost
At 1 July 2021 19,533 15,783 177,291 24,962 237,569
Additions - 53 7,966 876 8,895
Write-off - - - (3,510) (3,510)
Disposals - (11,211) (17,045) - (28,256)
Currency adjustment 942 4 - 51 997
At 30 June 2022 20,475 4,629 168,212 22,379 215,695
--------------------- ----------- ----------------- ------------- ------------------ ---------
Amortisation
At 1 July 2021 9,028 13,254 151,807 19,685 193,774
Charge for the year - 201 4,698 1,024 5,923
Disposals - (11,211) (17,045) - (28,256)
Currency adjustment - (4) - 40 36
At 30 June 2022 9,028 2,240 139,460 20,749 171,477
--------------------- ----------- ----------------- ------------- ------------------ ---------
Net book value
At 30 June 2022 11,447 2,389 28,752 1,630 44,218
--------------------- ----------- ----------------- ------------- ------------------ ---------
At 30 June 2021 10,505 2,529 25,484 5,277 43,795
--------------------- ----------- ----------------- ------------- ------------------ ---------
Goodwill
Goodwill has arisen on the acquisition of several businesses and
has an indeterminable useful life. It is therefore not amortised
but is instead tested for impairment annually and at any point
during the year when an indicator of impairment exists. Goodwill is
allocated to cash generating units (CGUs). This is the lowest level
in the Group at which goodwill is monitored for impairment and is
at a lower level than the Group's operating segments.
The analysis of goodwill according to business acquired is:
2023 2022
GBP'000 GBP'000
----------------------------------- -------- --------
itp GmbH 2,985 2,985
Renishaw Mayfield S.A. 2,089 2,055
Renishaw Fixturing Solutions, LLC 5,454 5,677
Other smaller acquisitions 705 730
Total goodwill 11,233 11,447
------------------------------------ -------- --------
The recoverable amounts of acquired goodwill are based on
value-in-use calculations. These calculations use cash flow
projections based on the financial business plans approved by
management for the next five financial years. The cash flows beyond
this forecast are extrapolated to perpetuity using a nil growth
rate on a prudent basis, to reflect the uncertainties over
forecasting beyond five years.
The following pre-tax discount rates have been used in
discounting the projected cash flows:
2023 2022
Business acquired CGU Discount Discount
rate rate
-------------------- ------------------------- --------- ---------
itp GmbH itp GmbH entity ('ITP') 13.2% 11.3%
Renishaw Fixturing
Solutions, LLC Renishaw plc ('PLC') 14.3% 11.5%
Renishaw Mayfield Renishaw Mayfield S.A.
S.A. entity ('Mayfield') 26.3% 22.9%
-------------------- ------------------------- --------- ---------
The Group post-tax weighted average cost of capital, calculated
at 30 June 2023, is 10.7% (2022: 9.0%). The increase is mainly
driven by higher risk-free rates in the market. Pre-tax discount
rates for Manufacturing technologies CGUs (ITP and PLC) are
calculated from this basis, given that they are aligned with the
wider Group's industries, markets and processes. The Analytical
instruments and medical devices' CGU (Mayfield) has a higher risk
weighting, reflecting the less mature nature of this segment.
During the period, the CGU relating to the goodwill arising on
the acquisition of Renishaw Fixturing Solutions, LLC has been
changed from the Renishaw fixturing product line to Renishaw plc.
This follows the closure of Renishaw Fixturing Solutions, LLC, with
production of fixturing products now undertaken by the
manufacturing division of Renishaw plc.
For there to be an impairment in the PLC, ITP or Mayfield CGUs
the discount rate would need to increase to at least 20%, 18% and
32% respectively.
The following bases have been used in determining cash flow
projections:
2023 2022
CGU Basis of forecast Basis of forecast
------------------------------ ------------------- -------------------
itp GmbH entity five-year business five-year business
plan plan
Renishaw plc five-year business five-year business
plan plan
Renishaw Mayfield S.A. entity five-year business five-year business
plan plan
------------------------------ ------------------- -------------------
These five-year business plans are considered fair estimates
based on management's view of the future and experience of past
performance of the individual CGUs, and are calculated at a
disaggregated level. Within these plans, revenue forecasts are
calculated with reference to external market data, Renishaw past
outperformance, and new product launches, consistent with revenue
forecasts across the Group. Production costs, engineering costs,
distribution costs and administrative expenses are calculated based
on management's best estimates of what is required to support
revenue growth and new product development. Estimates of capital
expenditure and working capital requirements are also included in
the cash flow projections.
The key estimate within these business plans is the forecasting
of revenue growth, given that the cost bases of the businesses can
be flexed in line with revenue performance. Given the average
revenue growth assumptions included in the five-year business
plans, management's sensitivity analysis involves modelling a
reduction in the forecast cash flows utilised in those business
plans and therefore into perpetuity. For there to be an impairment
there would need to be a reduction to these forecast cash flows of
29% for ITP, 30% for PLC and 21% for Mayfield. Management deems the
likelihood of these reductions to be unlikely.
Internally generated development costs
The key assumption in determining the value-in-use for
internally generated development costs is the forecast unit sales
over the useful economic life, which is determined by management
using their knowledge and experience with similar products and the
sales history of products already available in the market.
Resulting cash flow projections over five to 10 years, the period
over which product demand forecasts can be reasonably predicted and
internally generated development costs are written off, are
discounted using pre-tax discount rates, which are calculated from
the Group post-tax weighted average cost of capital of 10.7% (2022:
9.0%).
There was an impairment of GBP1,611,000 (2022: nil) of
internally generated development costs in the year, which wholly
related to a drug delivery project in our Neurological business.
Revenue from our drug delivery business continues to be slow due to
the long lead-time of pharmaceutical programmes, although we remain
confident in our opportunity pipeline. The uncertainty of the
near-term cash flows resulted in this partial impairment of
GBP1,611,000, with the remaining net book value totalling
GBP1,984,000 at 30 June 2023.
For the largest projects, comprising 95% of the net book value
at 30 June 2023, a 10% reduction to forecast unit sales, or an
increase in the discount rate by 5%, would result in an impairment
of less than GBP800,000.
13. Investments in joint ventures
Where we make an investment in a company which gives us
significant influence but not full control, we account for our
share of their post-tax profits in our financial statements. We
have joint venture arrangements with two companies, RLS and
MSP.
The Group's investments in joint ventures (all investments being
in the ordinary share capital of the joint ventures), whose
accounting years end on 30 June, were:
Country of Ownership Ownership
incorporation and
principal place of business
--------------------------------------------------
2023 2022
------------------------------------- -----------
% %
------------------------------------- ----------- ---------- ----------
RLS Merilna tehnika d.o.o. ('RLS')
- joint venture Slovenia 50.0 50.0
Metrology Software Products Limited England &
('MSP') - joint venture Wales 70.0 70.0
------------------------------------- ----------- ---------- ----------
Although the Group owns 70% of the ordinary share capital of
MSP, this is accounted for as a joint venture as the 'control'
requirements of IFRS 10 are not satisfied. This is primarily
because the shareholders agreement includes that for so long as the
Group's holding is less than 75% of the total shares of MSP,
Renishaw agrees to exercise its voting rights such that it only
votes as if it has the same aggregate shareholding as the remaining
Management Shareholders.
Movements during the year were: 2023 2022
GBP'000 GBP'000
-------------------------------------- -------- --------
Balance at the beginning of the year 20,570 16,634
Dividends received (924) (525)
Share of profits of joint ventures 2,768 4,342
Currency differences - 119
Balance at the end of the year 22,414 20,570
-------------------------------------- -------- --------
Summarised financial information for joint ventures:
RLS MSP
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- -------- --------
Assets 43,168 42,308 4,539 4,601
Liabilities (4,969) (7,422) (378) (963)
----------------------------------------- -------- -------- -------- --------
Net assets 38,199 34,886 4,161 3,638
----------------------------------------- -------- -------- -------- --------
Group's share of net assets 19,100 17,443 2,913 2,547
----------------------------------------- -------- -------- -------- --------
Revenue 35,764 35,247 2,554 2,492
Profit/(loss) for the year 5,162 7,886 264 570
----------------------------------------- -------- -------- -------- --------
Group's share of profit/(loss) for the
year 2,583 3,943 185 399
----------------------------------------- -------- -------- -------- --------
The financial statements of RLS have been prepared on the basis
of Slovenian Accounting Standards.
The financial statements of MSP have been prepared on the basis
of FRS 102.
14. Leases (as lessor)
The Group acts as a lessor for Renishaw-manufactured equipment
on finance and operating lease arrangements. This is principally
for high-value capital equipment such as our additive manufacturing
machines .
Accounting policy
Where the Group transfers the risks and rewards of ownership of
lease assets to a third party, the Group recognises a receivable in
the amount of the net investment in the lease. The lease receivable
is subsequently reduced by the principal received, while an
interest component is recognised as financial income in the
Consolidated income statement. Standard contract terms are up to
five years and there is a nominal residual value receivable at the
end of the contract.
Where the Group retains the risks and rewards of ownership of
lease assets, it continues to recognise the leased asset in
Property, plant and equipment. Income from operating leases is
recognised on a straight-line basis over the lease term and
recognised as Revenue rather than Other revenue as such income is
not material. Operating leases are on one to five year terms.
The total future lease payments are split between the principal
and interest amounts below:
2023 2022
------------ ----------- --------------- ------------ ----------- ---------------
Gross Net investment Gross Net investment
investment Interest GBP'000 investment Interest GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------ ----------- --------------- ------------ ----------- ---------------
Receivable in less than
one year 4,375 611 3,764 3,703 355 3,348
Receivable between one and
two years 3,600 447 3,153 2,882 252 2,630
Receivable between two and
three years 3,283 289 2,994 2,015 148 1,867
Receivable between three
and four years 2,478 151 2,327 1,779 70 1,709
Receivable between four
and five years 1,502 41 1,461 770 15 755
---------------------------- ------------ ----------- --------------- ------------ ----------- ---------------
Total future minimum lease
payments receivable 15,238 1,539 13,699 11,149 840 10,309
---------------------------- ------------ ----------- --------------- ------------ ----------- ---------------
Finance lease receivables are presented as GBP9,935,000 (2022:
GBP6,961,000) non-current assets and GBP3,764,000 (2022:
GBP3,348,000) current assets in the Consolidated balance sheet.
The total of future minimum lease payments receivable under
non-cancellable operating leases were:
2023 2022
GBP'000 GBP'000
------------------------------------------------ -------- --------
Receivable in less than one year 1,394 1,246
Receivable between one and four years 1,569 2,365
Total future minimum lease payments receivable 2,963 3,611
------------------------------------------------ -------- --------
During the year, GBP974,000 (2022: GBP1,184,000) was recognised
in Revenue from operating leases.
15. Cash and cash equivalents and bank deposits
We have always valued having cash in the bank to protect the
Group from downturns and enable us to react swiftly to investment
or market capture opportunities. We currently hold significant cash
and bank deposits, which is mostly in the UK and spread across a
number of banks with high credit ratings.
Accounting policy
Cash and cash equivalents comprise cash balances, and deposits
with an original maturity of less than three months or with an
original maturity date of more than three months where the deposit
can be accessed on demand without significant penalty for early
withdrawal and where the original deposit amount is recoverable in
full.
Cash and cash equivalents
An analysis of cash and cash equivalents at the end of the year
was:
2023 2022
GBP'000 GBP'000
-------------------------------- -------- --------
Bank balances and cash in hand 80,196 141,208
Short-term deposits 1,192 11,954
Balance at the end of the year 81,388 153,162
--------------------------------- -------- --------
Bank deposits
Bank deposits at the end of the year amounted to GBP125,000,000
(2022: GBP100,000,000), of which GBP30,000,000 matured on 7 August
2023, and GBP45,000,000 matures in December 2023, and GBP50,000,000
matures in March 2024.
16. Inventories
We have increased our inventories in the year, in line with
increases in global demand and reflecting planned increases in
certain component safety stock levels to mitigate global supply
shortages, and remain committed to high customer delivery
performance.
Accounting policy
Inventory and work in progress is valued at the lower of actual
cost on a first-in, first-out (FIFO) basis and net realisable
value. In respect of work in progress and finished goods, cost
includes all production overheads and the attributable proportion
of indirect overhead expenses that are required to bring
inventories to their present location and condition. Overheads are
absorbed into inventories on the basis of normal capacity or on
actual hours if higher.
Key estimate - Determination of net realisable inventory
value
Determining the net realisable value of inventory requires
management to estimate future demand, especially in respect of
provisioning for slow moving and potentially obsolete inventory.
When calculating an inventory provision, management use historic
usage levels (capped at 18 months), demand from customer orders and
manufacturing build plans as a basis for estimating the future
annual demand of individual stock items, except in the following
instances:
- for key products and their components, provisions are
typically made for quantities held in excess of three years'
demand. A demand basis lower than three years is used for those key
products and related components where the sales history is more
volatile; and
- where strategic purchases of critical components have been
made, an outlook beyond three years is considered where
appropriate.
An analysis of inventories at the end of the year was:
2023 2022
GBP'000 GBP'000
-------------------------------- -------- --------
Raw materials 66,210 56,034
Work in progress 35,354 31,002
Finished goods 84,193 75,446
Balance at the end of the year 185,757 162,482
--------------------------------- -------- --------
At the end of the year, the gross cost of inventories which had
provisions held against them totalled GBP24,525,000 (2022:
GBP17,520,000). During the year, the amount of write-down of
inventories recognised as an expense in the Consolidated income
statement was GBP8,228,000 (2022: GBP481,000).
A 10% reduction in the value of exceptions in the Renishaw plc
inventory calculation would result in an increase in the write-down
of inventories of GBP1,130,000. Inventories in Renishaw plc account
for 64% of total inventories of the Group.
17. Provisions
A provision is a liability recorded in the Consolidated balance
sheet, where there is uncertainty over the timing or amount that
will be paid, and is therefore often estimated. The main provision
we hold is in relation to warranties provided with the sale of our
products.
Accounting policy
The Group provides a warranty from the date of purchase, except
for those products that are installed by the Group where the
warranty starts from the date of completion of the installation.
This is typically for a 12-month period, although up to three years
is given for a small number of products. A warranty provision is
included in the Group financial statements, which is calculated on
the basis of historical returns and internal quality reports.
Warranty provision movements during the year were:
2023 2022
GBP'000 GBP'000
-------------------------------------- -------- --------
Balance at the beginning of the year 4,244 6,259
Created during the year 2,382 1,975
Unused amounts reversed (717) (1,688)
Utilised in the year (3,151) (2,302)
-------------------------------------- -------- --------
(1,486) (2,015)
Balance at the end of the year 2,758 4,244
-------------------------------------- -------- --------
The warranty provision has been calculated on the basis of
historical return-in-warranty information and other internal
reports. It is expected that most of this expenditure will be
incurred in the next financial year and all expenditure will be
incurred within three years of the balance sheet date.
18. Contract liabilities
Contract liabilities represent the Group's obligation to
transfer goods, capital equipment and/or services to a customer for
which the Group has either received consideration or consideration
is due from the customer. Our balances mostly comprise advances
received from customers and payments for services yet to be
completed.
Balances at the end of the year were: 2023 2022
GBP'000 GBP'000
------------------------------------------- -------- --------
Goods, capital equipment and installation 615 1,470
Aftermarket services 4,793 4,471
------------------------------------------- -------- --------
Deferred revenue 5,408 5,941
Advances received from customers 4,563 7,015
------------------------------------------- -------- --------
Balance at the end of the year 9,971 12,956
------------------------------------------- -------- --------
The aggregate amount of the transaction price allocated to
performance obligations that are unsatisfied at the end of the year
is GBP9,971,000 (2022: GBP12,956,000). Of this, GBP2,214,000 (2022:
GBP1,620,000) is not expected to be recognised in the next
financial year.
19. Other payables
Separate to our trade payables and contract liabilities, which
directly relate to our trading activities, our Other payables
mostly comprises amounts payable to employees, or relating to
employees.
Balances at the end of the year were:
2023 2022
GBP'000 GBP'000
------------------------------------- -------- --------
Payroll taxes and social security 6,677 6,823
Performance bonuses 11,338 16,179
Holiday pay and retirement accruals 7,383 7,810
Indirect tax payable 4,486 1,762
Other creditors and accruals 18,246 19,375
Total other payables 48,130 51,949
-------------------------------------- -------- --------
Holiday pay accruals are based on a calculation of the number of
days' holiday earned during the year, but not yet taken. Other
creditors and accruals includes a number of other individually
smaller accruals.
20. Borrowings
The Group's only source of external borrowing is a
fixed-interest loan facility in our Japanese subsidiary, entered
into to directly finance the purchase of a new distribution
facility in Japan in 2019.
Third-party borrowings at 30 June 2023 consist of a five year
loan entered into on 31 May 2019 by Renishaw KK, with original
principal of JPY 1,447,000,000 (GBP10,486,000). Principal of JPY
12,000,000 is repayable each month, with a fixed interest rate of
0.81% also paid on monthly accretion. The residual principal at 31
May 2024 of JPY 739,000,000 can either be repaid in full at that
time, or extended for another five years. There are no covenants
attached to this loan.
Movements during the year were:
2023 2022
GBP'000 GBP'000
--------------------------------- -------- --------
Balance at the beginning of the
year 6,079 7,449
Interest 46 52
Repayments (914) (974)
Currency adjustment (517) (448)
Balance at the end of the year 4,694 6,079
---------------------------------- -------- --------
Borrowings are held at amortised cost. There is no significant
difference between the book value and fair value of borrowings,
which is estimated by discounting contractual future cash flows,
which represents level 2 of the fair value hierarchy defined in
note 25.
21. Leases (as lessee)
The Group leases mostly distribution properties and cars from
third parties and recognises an associated lease liability for the
total present value of payments the lease contracts commits us
to.
Accounting policy
At the commencement date of a lease arrangement the Group
recognises a right-of-use asset for the leased item and a lease
liability for any payments due. Lease liabilities are initially
measured at the present value of the lease payments that are not
paid at the commencement date, discounted using the incremental
borrowing rate of the applicable entity. The lease liability is
subsequently measured at amortised cost using the effective
interest method and is remeasured if there is a change in future
lease payments arising from a change in an index or rate (such as
an inflation-linked increase) or if there is a change in the
Group's assessment of whether it will exercise an extension or
termination option. When this happens there is a corresponding
adjustment to the right-of-use asset. Where the Group enters into
leases with a lease term of 12 months or less, these are treated as
'short-term' leases and are recognised on a straight-line basis as
an expense in the Consolidated income statement. The same treatment
applies to low-value assets, which are typically IT equipment and
office equipment.
Lease liabilities are analysed as below:
2023
Leasehold Plant Motor
property and equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ---------------- ----------- ----------
Due in less than one year 1,737 21 1,520 3,278
Due between one and two years 691 13 1,192 1,896
Due between two and three years 510 13 858 1,381
Due between three and four years 351 6 387 744
Due between four and five years 110 1 66 177
Due in more than five years 3,481 - - 3,481
------------------------------------- ------------ ---------------- ----------- ----------
Total future minimum lease payments
payable 6,880 54 4,023 10,957
------------------------------------- ------------ ---------------- ----------- ----------
Effect of discounting (1,566) (1) (756) (2,324)
------------------------------------- ------------ ---------------- ----------- ----------
Lease liability 5,314 53 3,267 8,633
------------------------------------- ------------ ---------------- ----------- ----------
2022 Leasehold Plant and Motor
property equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ ----------- ----------
Due in less than one year 2,916 33 930 3,879
Due between one and two years 1,857 18 523 2,398
Due between two and three years 805 10 278 1,093
Due between three and four years 624 9 78 711
Due between four and five years 553 3 7 563
Due in more than five years 3,611 - - 3,611
Total future minimum lease payments
payable 10,366 73 1,816 12,255
------------------------------------- ------------ ------------ ----------- ----------
Effect of discounting (1,993) (1) (81) (2,075)
------------------------------------- ------------ ------------ ----------- ----------
Lease liability 8,373 72 1,735 10,180
------------------------------------- ------------ ------------ ----------- ----------
Lease liabilities are also presented as a GBP3,009,000 (2022:
GBP3,714,000) current liability and a GBP5,624,000 (2022:
GBP6,466,000) non-current liability in the Consolidated balance
sheet.
Amounts recognised in the Consolidated income statement relating
to leases were:
2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
Depreciation of right-of-use assets 4,223 4,205
Impairment of right-of-use assets - 1,837
Derecognition of lease liabilities - (1,985)
Interest expense on lease liabilities 348 481
Expenses relating to short-term and
low-value leases 471 51
Total expense recognised in the Consolidated
income statement 5,042 4,589
----------------------------------------------- -------- --------
Total cash outflows for leases 5,025 4,613
----------------------------------------------- -------- --------
During the previous year we withdrew from Russia, including
moving out of a leased property by August 2022. We therefore
derecognised amounts relating to the leased property totalling
GBP1,985,000, with a corresponding impairment to the right-of-use
asset of GBP1,837,000.
22. Changes in liabilities arising from financing activities
1July Cash Other Currency 30 June
2022 flows 2023
------------------- -------- ------------- -------- ----------- ----------
Lease liabilities 10,180 (4,206) 2,918 (259) 8,633
Borrowings 6,079 (914) 46 (517) 4,694
------------------- -------- ------------- -------- ----------- ----------
16,259 (5,120) 2,964 (776) 13,327
------------------- -------- ------------- -------- ----------- ----------
1July Cash flows Other Currency 30 June
2021 2022
Lease liabilities 12,562 (4,081) 513 1,186 10,180
Borrowings 7,449 (974) 52 (448) 6,079
20,011 (5,055) 565 738 16,259
------------------- -------- ------------- -------- ----------- ----------
See notes 20 and 21 for further details on borrowing and leasing
activities.
23. Employee benefits
The Group operates contributory pension schemes, largely for UK,
Ireland and USA employees, which were of the defined benefit type
up to 5 April 2007, 31 December 2007 and 30 June 2012 respectively,
at which time they ceased any future accrual for existing members
and were closed to new members. The Group's largest defined benefit
scheme is in the UK.
Accounting policy
Defined benefit pension schemes are administered by trustees who
are independent of the Group finances. Investment assets of the
schemes are measured at fair value using the bid price of the
unitised investments, quoted by the investment manager, at the
reporting date. Pension scheme liabilities are measured using a
projected unit method and discounted at the current rate of return
on a high-quality corporate bond of equivalent term and currency to
the liability. Remeasurements arising from defined benefit schemes
comprise actuarial gains and losses, the return on scheme 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 schemes are included in the Consolidated income
statement.
The pension schemes' surpluses, to the extent that they are
considered recoverable, or deficits are recognised in full and
presented on the face of the Consolidated balance sheet under
Employee benefits. Where a guarantee is in place in relation to a
pension scheme deficit, liabilities are reported in accordance with
IFRIC 14 'The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction'. To the extent that
contributions payable will not be available as a refund after they
are paid into the plan, a liability is recognised at the point the
obligation arises, which is the point at which the minimum funding
guarantee is agreed. Overseas-based employees are covered by a
combination of state, defined benefit and private pension schemes
in their countries of residence. Actuarial valuations of overseas
pension schemes were not obtained, apart from Ireland and USA,
because of the low number of members.
For defined contribution schemes, the amount charged to the
Consolidated income statement represents the contributions payable
to the schemes in respect of the accounting period.
Key estimate - Valuation of defined benefit pension schemes'
liabilities
Determining the value of the future defined benefit obligation
requires estimation in respect of the assumptions used to determine
the present values. These include future mortality, discount rate
and inflation. Management makes these estimates in consultation
with independent actuaries.
The total pension cost of the Group for the year was
GBP26,142,000 (2022: GBP21,988,000), of which GBP126,000 (2022:
GBP121,000) related to Directors and GBP6,220,000 (2022:
GBP5,292,000) related to overseas schemes.
The latest full actuarial valuation of the UK defined benefit
pension scheme was carried out as at 30 September 2021 and updated
to 30 June 2023 by a qualified independent actuary. The mortality
assumption used for 2023 is the S3PxA base tables and CMI 2022
model, with long-term improvements of 1% per annum. Adjustments
have been made to both the core base tables and CMI 2022 model to
allow for the scheme's membership profile and best estimate
assumptions of future mortality improvements.
Major assumptions used by actuaries for the UK, Ireland and US
schemes were:
30 June 2023 30 June 2022
---------------------- ------------------------------------ ------------------------------------
Ireland Ireland
UK scheme scheme US scheme UK scheme scheme US scheme
---------------------- ------------ -------- ------------ ------------ -------- ------------
Rate of increase in
pension payments 3.05% 2.70% - 3.05% 2.45% -
Discount rate 5.10% 3.60% - 3.60% 3.20% 4.50%
Inflation rate (RPI) 3.25% 2.70% - 3.10% 2.45% -
Inflation rate (CPI) 2.25% - - 2.10% - -
pre-2030 pre-2030
3.25% 3.10%
post-2030 post-2030
---------------------- ------------ -------- ------------ ------------ -------- ------------
Retirement age 64 65 65 64 65 65
---------------------- ------------ -------- ------------ ------------ -------- ------------
The life expectancies from the retirement age of 65 for the UK
scheme implied by the mortality assumption at age 65 and 45
are:
2023 2022
years years
-------------------------- ------ ------
Male currently aged 65 21.1 21.5
Female currently aged 65 23.5 23.8
Male currently aged 45 21.8 22.2
Female currently aged 45 24.3 24.7
--------------------------- ------ ------
The weighted average duration of the UK defined benefit
obligation is around 17 years (2022: 22 years).
The assets and liabilities in the defined benefit schemes at the
end of the year were:
30 June % of total 30 June % of total
2023 GBP'000 assets 2022 GBP'000 assets
-------------------------------- -------------- ----------- -------------- -----------
Market value of assets:
Index linked gilts 55,183 28 1,489 1
Credit and fixed income
funds 54,656 28 19,489 9
Cash and other 40,576 20 802 -
Multi-asset funds 26,966 14 82,442 38
Fixed interest gilts 13,219 7 1,502 1
Equities 5,729 3 111,025 51
196,329 100 216,749 100
Actuarial value of liabilities (138,958) - (174,504) -
-------------------------------- -------------- ----------- -------------- -----------
Surplus/(deficit) in the
schemes 57,371 - 42,245 -
-------------------------------- -------------- ----------- -------------- -----------
Deferred tax thereon (14,348) - (11,048) -
-------------------------------- -------------- ----------- -------------- -----------
The UK scheme was in a net surplus position at 30 June 2023
totalling GBP57,416,000, (2022: surplus GBP40,331,000), and is
therefore presented in non-current assets in the Consolidated
balance sheet. The Ireland scheme was in a net deficit position at
30 June 2023 (2022: deficit), totalling GBP45,000, and is therefore
presented in non-current liabilities.
Equities are held in externally-managed funds and primarily
relate to UK and US equities. Credit and fixed income funds, fixed
interest gilts, and index linked gilts relate to UK, US and
Eurozone government-linked securities, again held in
externally-managed funds. The fair values of these equity and fixed
income instruments are determined using the bid price of the
unitised investments, quoted by the investment manager, at the
reporting date and therefore represent 'Level 2' of the fair value
hierarchy defined in note 25. Multi-asset funds are also held in
externally-managed funds, with active asset allocation to diversify
growth across asset classes such as equities, bonds and
money-market instruments. The fair value of these funds is
determined on a comparable basis to the equity and fixed income
funds, and therefore are also 'Level 2' assets. Cash and other at
30 June 2023 mostly comprises a Sterling liquidity fund, in which
the principal is preserved and same day liquidity is available.
In October 2022, following a significant improvement in the UK
scheme's funding position due to rising gilt yields, the Trustees
(in consultation with the Company) de-risked the investment
strategy by disinvesting from the scheme's equity and diversified
growth holdings and investing the proceeds into index-linked gilts.
The overall impact of these changes is to reduce investment risk,
with the assets better matching the expected movements in the
liabilities. We now believe the scheme is fully funded and are in
the process of seeking to insure the liabilities. No scheme assets
are directly invested in the Group's own equity.
The movements in the schemes' assets and liabilities were:
Assets Liabilities Total
Year ended 30 June 2023 GBP'000 GBP'000 GBP'000
----------------------------------------- --------- ------------ --------
Balance at the beginning of the year 216,749 (174,504) 42,245
Contributions paid 2,341 - 2,341
Interest on pension schemes 7,745 (6,135) 1,610
Remeasurement loss from augmentation of
members' benefits (US) - (1,930) (1,930)
Remeasurement gain/(loss) under IAS 19 (16,722) 30,334 13,612
Scheme administration expenses (398) - (398)
(Loss)/gain on settlements (1,098) 989 (109)
Benefits paid (12,288) 12,288 -
Balance at the end of the year 196,329 (138,958) 57,371
----------------------------------------- --------- ------------ --------
Assets Liabilities Total
Year ended 30 June 2022 GBP'000 GBP'000 GBP'000
----------------------------------------- --------- ------------ ---------
Balance at the beginning of the year 231,355 (255,053) (23,698)
Contributions paid 8,866 - 8,866
Interest on pension schemes 4,337 (4,643) (306)
Remeasurement loss from augmentation of
members' benefits (UK) - (11,695) (11,695)
Remeasurement gain/(loss) under IAS 19,
the asset ceiling and IFRIC 14 (17,264) 86,342 69,078
Benefits paid (10,545) 10,545 -
----------------------------------------- --------- ------------ ---------
Balance at the end of the year 216,749 (174,504) 42,245
----------------------------------------- --------- ------------ ---------
The analysis of the amount recognised in the Consolidated
statement of comprehensive income and expense was:
2023 2022
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
Actuarial gain/(loss) arising from:
- Changes in demographic assumptions 2,028 3,860
- Changes in financial assumptions 37,318 67,442
- Experience adjustment (9,012) (7,818)
Return on plan assets excluding interest income (16,722) (17,264)
Adjustment for the asset ceiling - 3,280
Adjustment to liabilities for IFRIC 14 - 19,578
Total amount recognised in the Consolidated statement
of comprehensive income and expense 13,612 69,078
------------------------------------------------------- --------- ---------
The cumulative amount of actuarial gains and losses recognised
in the Consolidated statement of comprehensive income and expense
was a loss of GBP8,807,000 (2022: loss of GBP22,419,000).
The net surplus of the Group's defined benefit pension schemes,
on an IAS 19 basis, has increased from GBP42,245,000 at 30 June
2022 to GBP57,371,000 at 30 June 2023, primarily reflecting the
effect of an increase in the UK discount rate, based on increases
in corporate bond yields, which was partially offset by a reduction
in investment asset values.
In 2022, the Company agreed to an augmentation of UK scheme
members' benefits to reflect current and historic administrative
revaluation practice. The impact on liabilities of this plan
amendment, totalling GBP11,695,000, was recognised as a past
service cost in the Consolidated income statement.
In 2023, a termination of the US plan (other than distribution
of surplus) was completed, with most members opting for lump sum
payments, and it was agreed that the surplus will be distributed to
qualifying scheme members. Accordingly, the surplus of GBP1,930,000
has been treated as an augmentation to member benefits. This,
together with related expenses of GBP209,000, has been reported
separately in the Consolidated income statement as a past service
cost and excluded from adjusted profit measures.
For the UK scheme, the latest actuarial report prepared in
September 2021 shows a deficit of GBP52,800,000, which is based on
funding to self-sufficiency and uses prudent assumptions. IAS 19
requires best estimate assumptions to be used, resulting in the IAS
19 net surplus being higher than the actuarial deficit.
The existing deficit funding plan for the UK defined benefit
pension scheme is in place until 30 June 2031, at which time any
outstanding deficit will be paid. The agreement will end sooner if
the actuarial deficit (calculated on a self-sufficiency basis) is
eliminated in the meantime. The net book value of properties
subject to fixed charges under this agreement at 30 June 2023 was
GBP88,778,000 (2022: GBP54,208,000).
The charges may be enforced by the Trustees if one of the
following occurs: (a) the Company does not pay funds into the
scheme in line with the agreed plan; (b) an insolvency event occurs
in relation to the Company; or (c) the Company does not pay any
deficit at 30 June 2031.
Under the Ireland defined benefit pension scheme deficit funding
plan, a property owned by Renishaw Ireland (DAC) is subject to a
registered fixed charge to secure the Ireland defined benefit
pension scheme's deficit.
For the UK defined benefit scheme, a guide to the sensitivity of
the value of the respective liabilities is as follows:
Approximate
Variation effect on liabilities
---------------------- --------------------- ----------------------
UK - discount rate Increase/decrease by -GBP9.6m/+GBP10.7m
0.5%
UK - future inflation Increase/decrease by +GBP8.2m/-GBP7.6m
0.5%
UK - mortality Increased/decreased +GBP4.0m/-GBP3.8m
life by one year
---------------------- --------------------- ----------------------
24. Share-based payments
The Group provides share-based payment arrangements to certain
employees in accordance with the Renishaw plc deferred annual
equity incentive plan. The Governance section provides information
of how these awards are determined.
Accounting policy
Renishaw shares are granted in accordance with the Renishaw plc
deferred annual equity incentive plan (the Plan). The share awards
are subject only to continuing service of the employee and are
equity settled. The fair value of the awards at the date of grant,
which is estimated to be equal to the market value, is charged to
the Consolidated income statement on a straightline basis over a
three-year vesting period, with appropriate adjustments made to
reflect expected or actual forfeitures. The corresponding credit is
to Other reserve.
The number of shares to be awarded is calculated by dividing the
relevant amount of annual bonus under the Plan by the average price
of a share during a period determined by the Remuneration Committee
of not more than five dealing days ending with the dealing day
before the award date. These shares must be purchased on the open
market and cannot be satisfied by issuance of new shares or
transfer of existing treasury shares.
The Renishaw Employee Benefit Trust (EBT) is responsible for
purchasing shares on the open market on behalf of the Company to
satisfy the Plan awards. These are held by the EBT until
transferring to the employee, which will normally be on the third
anniversary of the award date, subject to continued employment.
Malus and clawback provisions can be operated by the Committee
within five years of the award date. During the vesting period, no
dividends are payable on the shares. However, upon vesting,
employees will be entitled to additional shares or cash, equivalent
to the value of dividends paid on the awarded shares during this
period. This amount is accrued over the vesting period.
Own shares held are recognised as an element in equity until
they are transferred at the end of the vesting period, and such
shares are excluded from earnings per share calculations.
The total cost recognised in the 2023 Consolidated income
statement in respect of the Plan was GBP677,000 (2022: GBP180,000).
See note 26 for reconciliations of amounts recognised in Equity
In accordance with the Plan, no shares (2022: GBP1,915,000
equivalent) are to be awarded in respect of 2023.
25. Financial instruments
The Group has exposure to credit risk, liquidity risk and market
risk arising from its use of financial instruments. This note
presents information about the Group's exposure to these risks,
along with the Group's objectives, policies and processes for
measuring and managing the risks.
Accounting policy
The Group measures financial instruments such as forward
exchange contracts at fair value at each balance sheet date in
accordance with IFRS 9 'Financial Instruments'. Fair value, as
defined by IFRS 13 'Fair Value Measurement', is the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. This note provides detail on the IFRS 13 fair
value hierarchy.
Trade and other current receivables are initially recognised at
fair value and are subsequently held at amortised cost less any
provision for bad and doubtful debts and expected credit losses
according to IFRS 9. Loans to associates and joint ventures are
initially recognised at fair value and are subsequently held at
amortised cost. Trade and other current payables are initially
recognised at fair value and are subsequently held at amortised
cost.
Financial liabilities in the form of loans are initially
recognised at fair value and are subsequently held at amortised
cost. Financial liabilities are assessed for embedded derivatives
and whether any such derivatives are closely related. If not
closely related, such derivatives are accounted for at fair value
in the Consolidated income statement.
Foreign currency derivatives are used to manage risks arising
from changes in foreign currency rates relating to overseas sales
and foreign currency-denominated assets and liabilities. The Group
does not enter into derivatives for speculative purposes. Foreign
currency derivatives are stated at their fair value, being the
estimated amount that the Group would pay or receive to terminate
them at the balance sheet date, based on prevailing foreign
currency rates.
Changes in the fair value of foreign currency derivatives which
are designated and effective as hedges of future cash flows are
recognised in Other comprehensive income and in the Cash flow
hedging reserve, and subsequently transferred to the carrying
amount of the hedged item or the Consolidated income statement.
Realised gains or losses on cash flow hedges are therefore
recognised in the Consolidated income statement within revenue in
the same period as the hedged item.
Hedge accounting is discontinued when the hedging instrument
expires or when the hedging instrument or hedged item no longer
qualify for hedge accounting. If the forecast transaction is still
expected to occur, but is no longer highly probable, the cumulative
gain or loss in the cash flow hedge reserve remains in that reserve
until the transaction occurs. If the forecast transaction is no
longer expected to occur, the cumulative gain or loss in the cash
flow hedge reserve is immediately reclassified to the Consolidated
income statement.
Changes in fair value of foreign currency derivatives, which are
ineffective or do not meet the criteria for hedge accounting in
IFRS 9, are recognised in the Consolidated income statement within
Gains/losses from the fair value of financial instruments.
In addition to derivatives held for cash flow hedging purposes,
the Group uses short-term derivatives not designated as hedging
instruments to offset gains and losses from exchange rate movements
on foreign currency-denominated assets and liabilities. Gains and
losses from currency movements on underlying assets and
liabilities, realised gains and losses on these derivatives, and
fair value gains and losses on outstanding derivatives of this
nature are all recognised in financial income and expenses in the
Consolidated income statement.
Key estimate - Estimates of highly probable forecasts of the
hedged item.
Derivatives are effective for hedge accounting to the extent
that the hedged item is 'highly probable' to occur, with 'highly
probable' indicating a much greater likelihood of occurrence than
the term 'more likely than not'. Determining a highly probable
sales forecast for Renishaw plc and Renishaw UK Sales Limited,
being the hedged item, over a multiple year time period, requires
judgement of the suitability of external and internal data sources
and estimations of future sales.
Fair value
There is no significant difference between the fair value of
financial assets and financial liabilities and their carrying value
in the Consolidated balance sheet. All financial assets and
liabilities are held at amortised cost, apart from the forward
foreign currency exchange contracts, which are held at fair value,
with changes going through the Consolidated income statement unless
subject to hedge accounting.
The fair values of the forward foreign currency exchange
contracts have been calculated by a third-party expert, discounting
estimated future cash flows on the basis of market expectations of
future exchange rates, representing level 2 in the IFRS 13 fair
value hierarchy. The IFRS 13 level categorisation relates to the
extent the fair value can be determined by reference to comparable
market values. The classifications are: level 1 where instruments
are quoted on an active market; level 2 where the assumptions used
to arrive at fair value have comparable market data; and level 3
where the assumptions used to arrive at fair value do not have
comparable market data.
Credit risk
The Group's liquid funds are substantially held with banks with
high credit ratings and the credit risk relating to these funds is
therefore limited. The Group carries a credit risk relating to
non-payment of trade receivables by its customers. The Group's
policy is that credit evaluations are carried out on all new
customers before credit is given above certain thresholds. Risk is
spread across a large number of customers with no significant
concentration with one customer or in any one geographical area.
The Group establishes an allowance for impairment in respect of
trade receivables where recoverability is considered doubtful.
An analysis by currency of the Group's financial assets at the
year end is as follows:
Trade & finance Other receivables Cash and cash equivalents
lease receivables and bank deposits
2023 2022 2023 2022 2023 2022
Currency GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---------- --------- --------- --------- ------------- -------------
Pound Sterling 17,530 21,391 20,592 19,565 161,489 201,668
US Dollar 49,609 45,433 814 867 12,465 13,965
Euro 28,418 28,314 1,433 1,568 6,481 8,712
Japanese Yen 16,555 19,480 137 457 6,481 5,720
Other 25,014 23,242 5,003 4,611 19,472 23,097
---------------- ---------- --------- --------- --------- ------------- -------------
137,126 137,860 27,979 27,068 206,388 253,162
---------------- ---------- --------- --------- --------- ------------- -------------
The above trade & finance lease receivables, other
receivables and cash and bank deposits are predominately held in
the functional currency of the relevant entity, with the exception
of GBP19,669,000 (2022: GBP21,271,000) of US Dollar-denominated
trade receivables being held in Renishaw (Hong Kong) Limited and
GBP1,697,000 (2022: GBP1,852,000) of Euro-denominated trade
receivables being held in Renishaw UK Sales Limited, along with
some foreign currency cash balances which are of a short-term
nature.
The ageing of trade receivables past due, but not impaired, at
the end of the year was:
2023 2022
GBP'000 GBP'000
-------------------------------- -------- --------
Past due zero to one month 11,808 9,548
Past due one to two months 3,880 3,879
Past due more than two months 9,732 5,252
--------------------------------- -------- --------
Balance at the end of the year 25,420 18,679
--------------------------------- -------- --------
Movements in the provision for impairment of trade receivables
during the year were:
2023 2022
GBP'000 GBP'000
--------------------------------- -------- --------
Balance at the beginning of the
year 2,540 3,826
Changes in amounts provided 1,784 (834)
Amounts used (886) (452)
---------------------------------- -------- --------
Balance at the end of the year 3,438 2,540
---------------------------------- -------- --------
The Group applies the simplified approach when measuring the
expected credit loss for trade receivables, with a provision matrix
used to determine a lifetime expected credit loss.
For this provision matrix, trade receivables are grouped into
credit risk categories, with category 1 being the lowest risk and
category 5 the highest. Risk scores are allocated to the customer's
country of operation, their type (such as distributor, end-user and
OEM), their industry and the proportion of their debt that was past
due at the year-end. These scores are then weighted to produce an
overall risk score for the customer, with the lowest scores being
allocated to category 1 and the highest scores to category 5. The
matrix then applies an expected credit loss rate to each category,
with this rate being determined by adjusting the Group's historic
credit loss rates to reflect forward-looking information.
Where certain customers have been identified as having a
significantly elevated credit risk these have been provided for on
a specific basis. Both elements of expected credit loss are shown
in the matrix below and have been shown separately so as not to
distort the expected credit loss rate.
Risk Risk Risk Risk Risk 2023
category category category category category Total
1 2 3 4 5
Year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2023
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Gross trade receivables 3,126 60,826 57,991 4,922 - 126,865
Expected credit loss
rate 0.34% 0.38% 0.41% 0.44% - 0.39%
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Expected credit loss
allowance 11 228 240 22 - 501
Specific loss allowance - 219 1,313 1,405 - 2,937
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Total expected credit
loss 11 447 1,553 1,427 - 3,438
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Net trade receivables 3,115 60,379 56,438 3,495 - 123,427
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Risk Risk Risk Risk Risk 2022
category category category category category Total
1 2 3 4 5
Year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Gross trade receivables 2,742 51,598 70,298 5,453 - 130,091
Expected credit loss
rate 0.19% 0.20% 0.22% 0.24% - 0.21%
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Expected credit loss
allowance 5 104 154 13 - 276
Specific loss allowance - - 1,502 762 - 2,264
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Total expected credit
loss 5 104 1,656 775 - 2,540
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Net trade receivables 2,737 51,494 68,642 4,678 - 127,551
------------------------- ---------- ---------- ---------- ---------- ---------- --------
Finance lease receivables are subject to the same approach as
noted above for trade receivables.
Derivative assets are assessed based on the credit risk of the
banks counterparty to the forward contracts.
Other receivables include mostly prepayments and indirect tax
receivables. Prepayment balances are reviewed at each reporting
period to confirm that prepaid goods or services are still expected
to be received, while tax balances are reviewed for
recoverability.
Other receivables at the year end comprised:
2023 2022
GBP'000 GBP'000
------------------------- -------- --------
Indirect tax receivable 9,304 9,010
Software maintenance 5,857 7,430
Grants 1,426 1,250
Other prepayments 11,392 9,378
Total other receivables 27,979 27,068
-------------------------- -------- --------
The maximum exposure to credit risk is GBP386,309,000 (2022:
GBP425,211,000), comprising the Group's trade, finance and other
receivables, cash and cash equivalents and derivative assets.
The maturities of non-current other receivables, being only
derivatives, at the year end were:
2023 2022
GBP'000 GBP'000
------------------------------------- -------- --------
Receivable between one and two years 9,443 -
Receivable between two and five - -
years
------------------------------------- -------- --------
9,443 -
------------------------------------- -------- --------
Liquidity risk
Our approach to managing liquidity is to ensure, as far as
possible, that we will always have sufficient liquidity to meet our
liabilities when due, without incurring unacceptable losses or
risking damage to the Group's reputation. We use monthly cash flow
forecasts on a rolling 12-month basis to monitor cash
requirements.
With cash and cash equivalents and bank deposits at 30 June 2023
totalling GBP206,388,000 and GBP84,297,000 cash flows generated
from operating activities in the period, the Group remains in a
strong liquidity position.
In respect of cash and cash equivalents and bank deposits, the
carrying value is materially the same as fair value because of the
short maturity of the bank deposits. Bank deposits are affected by
interest rates that are either fixed or floating, which can change
over time, affecting the Group's interest income. An increase of 1%
in interest rates would result in an increase in interest income of
approximately GBP1,250,000.
The contractual maturities of financial liabilities at the year
end were:
Contractual cash flows
Carrying Effect Gross Up to 1-2 years 2-5 years
amount of discounting maturities 1 year
Year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2023
-------------------- --------- ---------------- ------------ -------- ---------- ----------
Trade payables 21,551 - 21,551 21,551 - -
Other payables 48,130 - 48,130 48,130 - -
Borrowings 4,694 36 4,730 4,730 - -
Forward exchange
contracts 5,209 - 5,209 5,089 120 -
-------------------- --------- ---------------- ------------ -------- ---------- ----------
79,584 36 79,620 79,500 120 -
-------------------- --------- ---------------- ------------ -------- ---------- ----------
Effect Gross Contractual cash flows
of
Carrying discounting maturities Up to 1 1-2 years 2-5 years
amount year
Year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
-------------------- --------- ------------ ----------- -------- ---------- ----------
Trade payables 30,947 - 30,947 30,947 - -
Other payables 51,949 - 51,949 51,949 - -
Borrowings 6,079 82 6,161 926 5,235 -
Forward exchange
contracts 27,353 - 27,353 17,890 9,463 -
-------------------- --------- ------------ ----------- -------- ---------- ----------
116,328 82 116,410 101,712 14,698 -
-------------------- --------- ------------ ----------- -------- ---------- ----------
Market risk
The Group operates in several foreign currencies with the
majority of sales being made in these non-Sterling currencies, but
with most manufacturing being undertaken in the UK, Ireland and
India.
A large proportion of sales are made in US Dollar, Euro and
Japanese Yen, therefore the Group enters into US Dollar, Euro and
Japanese Yen derivative financial instruments to manage its
exposure to foreign currency risk, including:
i. forward foreign currency exchange contracts to hedge a
significant proportion of the Group's forecasted US Dollar, Euro
and Japanese Yen revenues over the next 24 months;
ii. foreign currency option contracts, entered into alongside
the forward contracts above until May 2018 as part of the Group
hedging strategy, are ineffective for cash flow hedging purposes.
Note 29, 'Alternative performance measures', gives an adjusted
measure of profit before tax to reflect the original intention that
these derivatives were entered into for hedging purposes. The final
option contract matured in November 2021; and
iii. one-month forward foreign currency exchange contracts to
offset the gains/losses from exchange rate movements arising from
foreign currency-denominated intragroup balances of the
Company.
The amounts of foreign currencies relating to these forward
contracts and options are, in Sterling terms:
2023 2022
Nominal Fair Nominal Fair
value value value value
GBP'000 GBP'000 GBP'000 GBP'000
---------
US Dollar 345,010 5,009 306,270 (26,249)
Euro 179,992 1,389 129,799 1,711
Japanese Yen 30,318 3,209 37,941 4,306
---------
555,320 9,607 474,010 (20,232)
---------
The following are the exchange rates which have been applicable
during the financial year.
2023 2022
Average Year Average Average Year Average
Currency forward end exchange exchange forward end exchange exchange
contract rate rate contract rate rate
rates rates
US Dollar 1.24 1.27 1.21 1.34 1.22 1.33
Euro 1.13 1.16 1.15 1.12 1.16 1.18
Japanese Yen 141 183 166 132 165 156
Hedging
In relation to the forward currency contracts in a designated
cash flow hedge, the hedged item is a layer component of forecast
sales transactions. Forecast transactions are deemed highly
probable to occur and Group policy is to hedge around 75% of net
foreign currency exposure for USD, EUR and JPY. The hedged item
creates an exposure to receive USD, EUR or JPY, while the forward
contract is to sell USD, EUR or JPY and buy GBP. Therefore, there
is a strong economic relationship between the hedging instrument
and the hedged item. The hedge ratio is 100%, such that, by way of
example, GBP10m nominal value of forward currency contracts are
used to hedge GBP10m of forecast sales. Fair value gains or losses
on the forward currency contracts are offset by foreign currency
gain or losses on the translation of USD, EUR and JPY based sales
revenue, relative to the forward rate at the date the forward
contracts were arranged. Foreign currency exposures in HKD and USD
are aggregated and only USD forward currency contracts are used to
hedge these currency exposures. Sources of hedge ineffectiveness
according to IFRS 9 Financial Instruments include:
- changes in timing of the hedged item;
- reduction in the amount of the hedged sales considered to be
highly probable;
- a change in the credit risk of Renishaw or the bank
counterparty to the forward contract; and
- differences in assumptions used in calculating fair value.
During 2020, global macroeconomic uncertainty resulted in a
reduction to the 'highly probable' revenue forecasts of Renishaw
plc and Renishaw UK Sales Limited, being the hedged item, which
resulted in proportions of forward contracts failing hedge
effectiveness testing, with nominal value amounting to
GBP247,547,000. These contracts have matured in the periods since,
and the remaining nominal value of ineffective forward contracts at
30 June 2023 was nil (2022: GBP63,045,000). Fair value gains of
GBP5,504,000 (2022: GBP8,349,000 losses) recognised in the
Consolidated income statement relate to the unwinding of the
mark-to-market valuations of the ineffective contracts.
No contracts have become ineffective during the period. A
decrease of 10% in the highly probable forecasts would result in
around GBP30,000,000 nominal value of forward contracts becoming
ineffective.
The following table details the fair value of these forward
foreign currency derivatives according to the categorisations of
instruments noted previously:
2023 2022
Nominal Fair Nominal Fair
value value value value
GBP'000 GBP'000 GBP'000 GBP'000
Forward currency contracts in
a designated cash flow hedge
(i)
Non-current derivative assets 268,908 9,443 - -
Current derivative assets 118,271 4,461 77,460 7,077
Current derivative liabilities 109,434 (5,048) 128,950 (12,046)
Non-current derivative liabilities 21,148 (120) 179,149 (9,463)
517,761 8,736 385,559 (14,432)
Amounts recognised in the Consolidated
statement of comprehensive income
and expense - 23,167 - 28,423
Forward currency contracts ineffective
as a cash flow hedge (i)
Current derivative liabilities - - 63,045 (5,504)
Amounts recognised in Gains/(losses)
from the fair value of financial
instruments in the Consolidated
income statement - (1,399) - (11,551)
Amounts recognised in Gains/(losses)
from the fair value of financial
instruments in the Consolidated
income statement - - - 1,138
Forward currency contracts not
in a designated cash flow hedge
(iii)
Current derivative assets 17,134 912 4,880 44
Current derivative liabilities 20,425 (41) 20,526 (340)
37,559 871 25,406 (296)
Amounts recognised in Financial
income/(expense) in the Consolidated
income statement - 1,728 - 98
Total forward contracts and
options
Non-current derivative assets 268,908 9,443 - -
Current derivative assets 135,405 5,373 82,340 7,121
Current derivative liabilities 129,859 (5,089) 212,521 (17,890)
Non-current derivative liabilities 21,148 (120) 179,149 (9,463)
555,320 9,607 474,010 (20,232)
The total losses recognised in Revenue in the Consolidated
income statement relating to cash flow hedges previously recognised
through other comprehensive income amounted to GBP21,553,000 (2022:
GBP3,385,000).
For the Group's foreign currency forward contracts at the
balance sheet date, if Sterling appreciated by 5% against the US
Dollar, Euro and Japanese Yen, this would increase pre-tax equity
by GBP24,655,000 and increase profit before tax by GBP1,789,000,
while a depreciation of 5% would decrease pre-tax equity by
GBP27,251,000 and decrease profit before tax by GBP1,977,000.
26. Share capital and reserves
The Group defines capital as being the equity attributable to
the owners of the Company, which is captioned on the Consolidated
balance sheet. The Board's policy is to maintain a strong capital
base, ensuring the security of the Group, and to maintain a balance
between significant returns to shareholders, with a progressive
dividend policy. This note presents figures relating to this
capital management, along with an analysis of all elements of
Equity attributable to shareholders and non-controlling
interests.
Share capital
2023 2022
GBP'000 GBP'000
Allotted, called-up and fully paid 72,788,543
ordinary shares of 20p each 14,558 14,558
The ordinary shares are the only class of share in the Company.
Holders of ordinary shares are entitled to vote at general meetings
of the Company and receive dividends as declared. The Articles of
Association of the Company do not contain any restrictions on the
transfer of shares nor on voting rights.
Dividends paid
Dividends paid comprised:
2023 2022
GBP'000 GBP'000
------------------------------------
2022 final dividend paid of 56.6p
per share (2021: 52.0p) 41,190 37,850
Interim dividend paid of 16.8p per
share (2022: 16.0p) 12,217 11,644
Total dividends paid 53,407 49,494
-------------------------------------
A final dividend of 59.4p per share is proposed in respect of
2023, which will be payable on 7 December 2023 to shareholders on
the register on 3 November 2023.
Own shares held
The EBT is responsible for purchasing shares on the open market
on behalf of the Company to satisfy the Plan awards, see note 24
for further detail. Own shares held are recognised as an element in
equity until they are transferred at the end of the vesting
period.
Movements during the year were:
2023 2022
GBP'000 GBP'000
-------- --------
Balance at the beginning of the year (750) (404)
Disposal of own shares on vesting
of awards - 404
Acquisition of own shares (2,213) (750)
Balance at the end of the year (2,963) (750)
-------- --------
In November 2021, 14,396 shares were purchased on the open
market by the EBT at a price of GBP52.10, costing a total of
GBP750,017. The fair value of these awards at the grant date, being
28 October 2021, was GBP734,317. These shares will vest on 28
October 2024, with no forfeitures expected at 30 June 2023.
In November 2022, 54,582 shares were purchased on the open
market by the EBT at a price of GBP40.24, costing a total of
GBP2,212,831. The fair value of these awards at the grant date,
being 26 October 2022, was GBP1,915,000. These shares will vest on
26 October 2025, with no forfeitures expected at 30 June 2023.
Other reserve
The other reserve relates to share-based payments charges
according to IFRS 2 in relation to the Plan, along with historical
amounts relating to investments in subsidiary undertakings not
eliminated on consolidation.
Movements during the year were:
2023 2022
GBP'000 GBP'000
Balance at the beginning of the year (180) 44
Share-based payments charge in respect of share
vesting in 2022 - 16
Transfer of own shares on vesting of awards - (404)
Share-based payments charge in respect of share
vesting in 2024 245 164
Share-based payments charge in respect of shares
vesting in 2025 432 -
Balance at the end of the year 497 (180)
Currency translation reserve
The currency translation reserve comprises all foreign exchange
differences arising from the translation of the financial
statements of the overseas operations and currency movements on
intragroup loan balances classified as net investments in overseas
operations.
Movements during the year were: 2023 2022
GBP'000 GBP'000
Balance at the beginning of the year 14,459 3,719
(Loss)/gain on net assets of foreign currency operations (5,905) 3,529
Transfer of accumulated loss relating to net assets
of Russian operation - 575
(Loss)/gain on intragroup loans classified as net
investments in foreign operations (2,095) 8,047
Tax on translation of net investments in foreign
operations 313 (1,529)
(Loss)/gain in the year relating to subsidiaries (7,687) 10,622
Currency exchange differences relating to joint
ventures - 118
Balance at the end of the year 6,772 14,459
See note 5 for further information on intragroup loans
classified as net investments.
Cash flow hedging reserve
The cash flow hedging reserve, for both the Group and the
Company, comprises all foreign exchange differences arising from
the valuation of forward exchange contracts which are effective
hedges and mature after the year end. These are valued on a
mark-to-market basis, are accounted for in Other comprehensive
income and expense and accumulated in Equity, and are recycled
through the Consolidated income statement and Company income
statement when the hedged item affects the income statement, or
when the hedging relationship ceases to be effective. See note 25
for further detail.
Movements during the year were: 2023 2022
GBP'000 GBP'000
Balance at the beginning of the year (10,923) 11,345
Losses on contract maturity recognised in revenue
during the year (21,553) (3,385)
Revaluations during the year 44,720 (25,038)
Deferred tax movement (5,692) 6,155
Balance at the end of the year 6,552 (10,923)
Non-controlling interest
Movements during the year were: 2023 2022
GBP'000 GBP'000
Balance at the beginning of the year (577) (577)
Share of profit for the year - -
Balance at the end of the year (577) (577)
The non-controlling interest represents the minority
shareholdings in Renishaw Diagnostics Limited - 7.6%.
27. Capital commitments
At the end of a financial year, we typically have obligations to
make payments in the future, for which no provision is made in the
financial statements. In 2022, we committed to the expansion of one
of our production facilities in Wales, UK, which is expected to
cost an additional GBP35m over the next year.
Authorised and committed capital expenditure at the end of the
year were:
2023 2022
GBP'000 GBP'000
------------------------------------- --------
Freehold land and buildings 35,607 65,328
Plant and equipment 11,423 22,760
Motor vehicles 14 319
Total committed capital expenditure 47,044 88,407
-------------------------------------- --------
28. Related parties
We report our two joint venture companies, RLS Merilna tehnika
d.o.o. and Metrology Software Products Limited, as related
parties.
Joint ventures and other related parties had the following
transactions and balances with the Group:
Joint ventures
2023 2022
GBP'000 GBP'000
Purchased goods and services from the Group
during the year 117 553
Sold goods and services to the Group during
the year 24,271 29,355
Paid dividends to the Group during the year 924 525
Amounts owed to the Group at the year end 35 1
Amounts owed by the Group at the year end 2,837 3,950
Loans owed to the Group at the year end - 350
There were no bad debts relating to related parties written off
during 2023 or 2022.
By virtue of their long-standing voting agreement, Sir David
McMurtry (Executive Chairman 36.23% shareholder) and John Deer
(Non-executive Deputy Chairman, together with his wife, 16.59%),
are the ultimate controlling party of the Group.
29. Alternative performance measures
There are sometimes infrequently occurring events which impact
on our financial statements, recognised according to applicable
IFRS, that we believe should be excluded from adjusted performance
measures in order to give readers a more understandable and
comparable view of our underlying performance.
In accordance with Renishaw's alternative performance measures
(APMs) policy and ESMA Guidelines on Alternative Performance
Measures (2015), APMs are defined as - Revenue at constant exchange
rates, Adjusted profit before tax, Adjusted earnings per share and
Adjusted operating profit.
Revenue at constant exchange rates is defined as revenue
recalculated using the same rates as were applicable to the
previous year and excluding forward contract gains and losses.
2023 2022
Revenue at constant exchange rates GBP'000 GBP'000
--------- --------
Statutory revenue as reported 688,573 671,076
Adjustment for forward contract gains 7,815 (744)
Adjustment to restate current year at previous (33,549) -
year exchange rates
--------- --------
Revenue at constant exchange rates 662,839 670,332
--------- --------
Year-on-year revenue growth at constant exchange -1.1% -
rates
--------- --------
Year-on-year revenue growth at constant exchange rates for 2022
was +18.3%.
Adjusted profit before tax, Adjusted earnings per share and
Adjusted operating profit are defined as the profit before tax,
earnings per share and operating profit after excluding:
- costs relating to a revision to a provision made in 2020
relating to restructuring (a);
- third-party costs relating to the formal sales process ('FSP')
(b);
- a UK defined benefit pension scheme past service cost (c);
- a US defined benefit pension scheme past service cost (d);
and
- gains and losses in fair value from forward currency contracts
which did not qualify for hedge accounting and which have yet to
mature (e).
a) Restructuring costs, where applicable during a year, are
reported separately in the Consolidated income statement and
excluded from adjusted measures on the basis that they relate to
matters that do not frequently recur. During 2022, a revised
estimate of a warranty provision relating to restructuring in 2020
resulted in a reduction to this provision of GBP1,688,000, then in
2023 a further revision resulted in a reduction of GBP717,000. As
this provision was initially excluded from adjusted measures, the
revised estimates have also been excluded.
b) Third-party legal and advisory costs relating to the 2021 FSP
were excluded from adjusted measures in 2021. During 2022,
GBP200,000 was released from an accrual made in respect of these
costs relating to indirect tax, which was also excluded in the
previous year.
c) In 2022, the Company agreed to an augmentation of UK defined
benefit pension scheme members' benefits. This was effected in the
scheme Rules through a Deed of Amendment to the Trust Deed and
Rules, signed by the Trustees and Company on 20 June 2022,
therefore relates to a matter which is not expected to frequently
recur. The impact on liabilities of this plan amendment, totalling
GBP11,695,000, were recognised as a past service cost, reported
separately in the Consolidated income statement and excluded from
adjusted profit measures.
d) In 2023, a termination of the US plan (other than
distribution of surplus) was completed, with most members opting
for lump sum payments. It was agreed that the surplus will be
distributed to qualifying scheme members. Accordingly, the surplus
of GBP2,139,000 has been treated as an augmentation to member
benefits, reported separately in the Consolidated income statement
and excluded from adjusted profit measures. See note 23 for further
detail.
e) From 2017, the gains and losses from the fair value of
financial instruments not effective for cash flow hedging have been
excluded from statutory profit before tax, statutory earnings per
share and statutory operating profit in arriving at Adjusted profit
before tax, Adjusted earnings per share and Adjusted operating
profit to reflect the Board's intent that the instruments would
provide effective hedges. This is classified as 'Fair value
(gains)/losses on financial instruments not eligible for hedge
accounting (i)' in the following reconciliations. The amounts shown
as reported in revenue represent the amount by which revenue would
change had all the derivatives qualified as eligible for hedge
accounting.
Gains and losses which recycle through the Consolidated income
statement as a result of contracts deemed ineffective during 2020,
as described in note 25, are also excluded from adjusted profit
measures, on the basis that all forward contracts are still
expected to be effective hedges for Group revenue. This is
classified as 'Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (ii)' in the following
reconciliations.
The Board considers these alternative performance measures to be
additional useful measures to analyse the underlying performance of
the Group.
2023 2022
Adjusted profit before tax: GBP'000 GBP'000
--------
Statutory profit before tax 145,065 145,586
Revised estimate of 2020 restructuring provisions (717) (1,688)
Third-party FSP costs - (200)
UK defined benefit pension scheme past service
cost - 11,695
US defined benefit pension scheme past service
cost 2,139 -
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (i):
- reported in revenue - 2,621
- reported in (gains)/losses from the fair value
in financial instruments - (1,138)
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (ii):
- reported in revenue (6,903) (4,685)
- reported in (gains)/losses from the fair value
of financial instruments 1,399 11,551
Adjusted profit before tax 140,983 163,742
2023 2022
Adjusted earnings per share: pence pence
Statutory earnings per share 159.7 165.4
Revised estimate of 2020 restructuring provisions (0.8) (0.3)
Third-party FSP costs - (1.9)
UK defined benefit pension scheme past service
cost - 13.0
US defined benefit pension scheme past service
cost 2.2 -
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (i):
- reported in revenue - 2.9
- reported in (gains)/losses in fair value in
financial instruments - (1.3)
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (ii):
- reported in revenue (7.5) (5.2)
- reported in (gains)/losses from the fair value
of financial instruments 1.5 12.9
Adjusted earnings per share 155.1 185.5
2023 2022
Adjusted operating profit: GBP'000 GBP'000
--------
Statutory operating profit 134,489 143,250
Revised estimate of 2020 restructuring provisions (717) (1,688)
Third-party FSP costs - (200)
UK defined benefit pension scheme past service
cost - 11,695
US defined benefit pension scheme past service
cost 2,139 -
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (i):
- reported in revenue - 2,621
- reported in (gains)/losses in fair value in
financial instruments - (1,138)
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (ii):
- reported in revenue (6,903) (4,685)
- reported in (gains)/losses from the fair value
of financial instruments 1,399 11,551
Adjusted operating profit 130,407 161,406
Adjustments to the segmental operating profit:
2023 2022
Manufacturing technologies GBP'000 GBP'000
Operating profit before losses from fair value
of financial instruments and UK and US defined
benefit pension schemes' past service cost 132,843 162,549
Revised estimate of 2020 restructuring provisions (717) (1,688)
Third-party FSP costs - (197)
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (i):
- reported in revenue - 2,576
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (ii):
- reported in revenue (6,644) (4,605)
Adjusted manufacturing technologies operating
profit 125,482 158,635
2023 2022
Analytical instruments and medical devices GBP'000 GBP'000
--------
Operating profit before loss from fair value of
financial instruments and
UK and US defined benefit pension schemes' past
service cost 5,184 2,809
Third-party FSP costs - (3)
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (i):
- reported in revenue - 45
Fair value (gains)/losses on financial instruments
not eligible for hedge accounting (ii):
- reported in revenue (259) (80)
Adjusted analytical instruments and medical devices
operating profit 4,925 2,771
Registered office:
Renishaw plc
New Mills
Wotton-under-Edge
Gloucestershire
GL12 8JR
UK
Registered number: 01106260
LEI number: 21380048ADXM6Z67CT18
Telephone: +44 1453 524524
Email: communications@renishaw.com
Website: www.renishaw.com
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September 19, 2023 02:00 ET (06:00 GMT)
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