TIDMRSW

RNS Number : 6529O

Renishaw PLC

02 February 2023

Renishaw plc

2 February 2023

Interim report 2023 - for the six months ended 31 December 2022

Highlights

Good revenue growth from strategic priorities offsets weaker demand, as expected, from the semiconductor and electronics sectors. Continued investment for longer-term growth.

 
                                   6 months       6 months   Change % 
                                         to             to 
                                31 December    31 December 
                                       2022           2021 
 
 Revenue (GBPm)                       347.7          325.2         +7 
 
 Adjusted(1) profit before 
  tax (GBPm)                           73.5           84.2        -13 
 
 Adjusted(1) earnings 
  per share (pence)                    83.4           97.2        -14 
 
 Dividend per share (pence)            16.8           16.0         +5 
 
 Statutory profit before 
  tax (GBPm)                           77.8           81.5         -5 
 
 Statutory earnings per 
  share (pence)                        88.1           94.2         -6 
 
   --      Revenue of GBP347.7m (H1 FY2022 GBP325.2m): 
   --       Record revenue for a half year, 7% above last year (1% growth at constant exchange rates) 

-- Strong growth in sales of multi-laser additive manufacturing (AM) systems, 5-axis co-ordinate measuring machine (CMM) inspection systems and laser encoders

-- Weaker demand, as expected, for optical encoders from semiconductor and consumer electronics sectors, including customers reducing stock levels due to improved supply chain lead times

   --      Adjusted (1) profit before tax of GBP73.5m (H1 FY2022 GBP84.2m): 
   --       Representing 21% of revenue (26% last year) 
   --       Stable gross margin before engineering costs 
   --       Targeted investments in headcount and pay for long-term growth 
   --      Statutory profit before tax of GBP77.8m (H1 FY2022: GBP81.5m ). 

-- Strong balance sheet with net cash and bank deposit balances of GBP211.5m, compared with GBP253.2m at 30 June 2022, with the GBP41.2m final dividend for FY2022 paid in H1.

   --      Interim dividend of 16.8p per share. 

William Lee, Chief Executive, commented:

"I am pleased to report record revenue in a period of expected lower demand from the semiconductor and electronics sectors. We have made good progress in our strategy; gaining market share, introducing new products into close-adjacent markets and taking advantage of long-term growth opportunities in additive manufacturing, shop-floor measurement, materials research and semiconductor manufacturing. We continue to invest in our people, product development and infrastructure to deliver sustainable, long-term growth."

(1) Note 12, 'Alternative performance measures', defines how adjusted profit before tax and adjusted earnings per share are calculated.

About Renishaw

We are a world leading supplier of measuring systems and production 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 GMT today. Details of how to register for and access this webcast are available at the following link:

https://www.renishaw.co m/en/register-for-the-2023-interim-results-qa-webcast--47761

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 GMT).

Enquiries: communications@renishaw.com

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Overview for the six months ended 31 December 2022

Revenue

Revenue for the six months ended 31 December 2022 was GBP347.7m, an increase of 7% (1% increase at constant exchange rates) compared with GBP325.2m for the corresponding period last year. We achieved revenue growth of 21% (8% at constant exchange rates) in the Americas, 7% (4% at constant exchange rates) in EMEA and 1% (-4% at constant exchange rates) in APAC. There was growth for both our Manufacturing technologies, and Analytical instruments and medical devices segments, with strong growth in sales of multi-laser additive manufacturing (AM) systems, machine calibration systems, laser encoder systems and REVO(R) 5-axis co-ordinate measuring machine (CMM) inspection systems. Demand from the semiconductor and electronics sectors was weaker, resulting in a reduction in sales of our optical encoder products.

 
                    6 months to     6 months to                    Constant 
                    31 December     31 December                fx(1) change 
                           2022            2021    Change %               % 
 Group revenue        GBP347.7m       GBP325.2m          +7              +1 
                 --------------  --------------  ----------  -------------- 
 Comprising: 
                 --------------  --------------  ----------  -------------- 
  APAC                GBP161.7m       GBP160.6m          +1              -4 
                 --------------  --------------  ----------  -------------- 
  Americas             GBP83.6m        GBP69.1m         +21              +8 
                 --------------  --------------  ----------  -------------- 
  EMEA                GBP102.4m        GBP95.5m          +7              +4 
                 --------------  --------------  ----------  -------------- 
 

Operating costs

Our gross margin (excluding engineering costs) for the period was 64% of revenue, which is similar to the previous year. An increase in manufacturing costs, primarily arising from pay rises for our employees, has been offset by a favourable currency effect on revenue and increases in our sales prices.

Group headcount has increased by 53 since the end of June and was 5,150 at the end of December 2022. This increase includes continued investment in our early careers programmes (mostly for research and development) and in our global sales and support teams. Labour costs (excluding bonuses) were GBP133.4m in this period compared to GBP115.1m last year, with the average headcount in the first half-year being 5,166 (H1 FY2022: 4,824). The increase also reflects the pay reviews we have carried out across our business over the last 14 months, helping to improve employee retention. Our pay benchmarking will now be undertaken around December each year, with the December 2022 review resulting in around GBP4m of additional annual cost.

With pandemic related restrictions now largely lifted, we have increased our investment in customer facing activities, resulting in higher travel and exhibitions costs compared to last year.

We remain committed to our long-term strategy of developing innovative and patented products to create strong market positions. During the first six months of this year, our investment in engineering, including research and development, increased by 22% to GBP46.1m. Since June, we have launched new products including the CENTRUM(TM) metal rotary scale disc system for our ATOM DX(TM) encoder series, the ACS-1 system that brings improved accuracy and speed to the calibration of machine tool probes and the new inLux(TM) SEM Raman interface for our spectroscopy line.

Profit and tax

Adjusted profit before tax(1) for the period was GBP73.5m (21% of revenue) compared with GBP84.2m (26% of revenue) last year. Statutory profit before tax for the period was GBP77.8m, compared with GBP81.5m last year, which includes a GBP4.4m fair value gain (H1 FY2022: GBP2.9m loss) on financial instruments not effective for hedge accounting and not included in adjusted profit before tax. No forward contracts have been designated as ineffective since FY2020.

Financial income for the period was GBP5.0m compared with GBP0.4m last year, and includes a GBP2.3m increase in interest on bank deposits.

The income tax expense in the Consolidated income statement has been estimated at a rate of 17.7% (H1 FY2022: 15.9%) and is based on management's best estimate of the full year effective tax rates by geographical unit applied to half-year profits. This is comparable with the 17.3% achieved in FY2022 and includes an increase in the UK corporation tax rate for the year to 20.5% from 19.0%, which is largely offset by a forecast increase in the UK patent box benefit.

Adjusted earnings per share were 83.4p, compared with 97.2p last year. Statutory earnings per share were 88.1p, compared with 94.2p last year.

Manufacturing technologies

Revenue for this segment, which comprises our Industrial Metrology, Position Measurement and Additive Manufacturing businesses, was GBP330.9m for the first six months, compared with GBP308.7m last year. We achieved strong growth in the Americas and good growth in EMEA, with reduced revenue in our APAC region (at constant exchange rates) mainly due to lower sales of optical encoders to the semiconductor and electronics market. Adjusted operating profit was GBP66.8m, compared with GBP81.3m for the comparable period last year. As already noted there was strong growth for our RenAM 500Q multi-laser AM system where its productivity and ability to produce high quality parts is leading to repeat business from customers in sectors as diverse as consumer electronics, healthcare, aerospace, defence and tooling. There was also strong growth for our CMM inspection systems, based on the REVO(R) 5-axis system, which is meeting customer demands for multi-sensor metrology to provide comprehensive inspection and process feedback from a single measurement platform. Our calibration business also had strong growth compared to the same period last year as machine builders focus on the accuracy and reliability of ever more complex machinery. Weaker demand from our semiconductor customers due to reducing their stock levels and market uncertainty, led to reduced sales of our optical encoder products. However, demand for our high accuracy laser encoders for front-end semiconductor manufacturing processes was very strong. Global forecasts for the construction of semiconductor fabrication plants, driven by new technology, geopolitical considerations and supply chain security, remain positive and we are optimistic about a mid-term recovery in sales to this important sector.

Analytical instruments and medical devices

Revenue from this segment for the first six months was GBP16.8m, compared with GBP16.5m last year. There was strong growth in both APAC and Americas regions, offset by significantly weaker demand from EMEA. The adjusted operating profit was GBP0.1m in the first half of this year compared with GBP1.6m for the comparable period last year. Revenue for our spectroscopy products was flat but we are seeing growth in the order book and strong demand in H1 for our newer products - the Virsa(TM) analyser, a portable system that allows sample analysis outside of a laboratory, and the recently launched inLux(TM) SEM Raman interface which allows simultaneous Raman and scanning electron microscope imaging. Our neurological business is continuing to progress opportunities with pharmaceutical companies to use our drug delivery technology for clinical trials.

Balance sheet

Net cash and bank deposit balances at 31 December 2022 were GBP211.5m, compared with GBP253.2m at 30 June 2022, primarily reflecting the cash generated from operating profit of GBP81.2m, offset by the working capital movement of GBP40.6m, capital expenditure of GBP20.2m, tax payments of GBP16.9m and the final dividend payment of GBP41.2m in respect of FY2022.

Inventory balances have increased by GBP17.3m since 30 June 2022, mainly reflecting targeted increases in components and sub-assemblies for our optical encoder products. Trade receivables have decreased by GBP4.4m in the same period, with receivables days remaining consistent with June levels and no significant movement in expected credit losses. Trade and other payables have reduced by GBP19.6m since June, reflecting lower purchasing activity in the second quarter and payment of bonuses accrued at June.

We invested GBP20.2m (H1 FY2022: GBP12.2m) in capital expenditure during the first six months of this financial year, which includes production plant and equipment and GBP7.8m for the ongoing development of our production facility in Miskin, Wales.

Dividend

The Board has approved an interim dividend of 16.8 pence net per share (FY2022: 16.0p), relecting the Board's confidence in the medium term growth prospects of the business, which will be paid on 11 April 2023 to shareholders on the register on 10 March 2023.

Principal risks and uncertainties

The Board has considered the risks and uncertainties which could have a material effect on the Group's performance and position. While there is heightened uncertainty arising from geopolitical matters and trade tensions, the overall impact and likelihood of our principal risks is not considered to have changed significantly. This conclusion also reflects the mitigation undertaken by the Group in response to these risks. The principal risks and uncertainties set out on pages 39 to 49 of the 2022 Annual Report therefore remain relevant.

COVID-19 update

We continue to monitor the impact of COVID-19 on our people and business. The recent easing of restrictions in China led to a surge in COVID cases and whilst this is causing some short-term disruption to our customers' operations this is expected to dissipate in the next few months. The removal of travel restrictions in China is enabling us to better serve our customer base from across our extensive local office network. We continue to make better use of digital technology to work with each other, our customers and our suppliers, meaning we can work in a more sustainable way by travelling less.

Sustainability

The drive to Net Zero represents many opportunities for our business as our products positively contribute to our customers' own sustainability ambitions by reducing energy consumption, minimising waste and improving the inherent performance of the products that they supply to their customers.

During the period we have continued to make strong progress towards our target of Net Zero for Scopes 1 and 2 emissions by 2028, including switching to renewable energy contracts for all UK sites and our main sites in India and the US. We are also moving to ultra-low emission vehicles (ULEV) fleet vehicles in the UK and, as part of our commitment to reduce Scope 3 emissions, we have also introduced a ULEV salary sacrifice scheme, initially in the UK, which will enable our employees to reduce their commuting emissions. As part of this project, we have installed over 70 charging points at our New Mills HQ site which will be replicated at our other key sites in the UK.

As part of our commitment to achieve a science-based Net Zero emissions target of no later than 2050 for our entire business, we will include in our next Annual Report our progress on three of the UN's Sustainable Development Goals (SDGs); SDG 8 (sustained, inclusive and sustainable economic growth), SDG 12 (sustainable consumption) and SDG 13 (urgent action to combat climate change).

Directors and employees

The Directors would like to thank our employees for their continuing efforts to drive our business forward. During the period we ran a global competition encouraging teams to share how they demonstrate our values: innovation, inspiration, integrity and involvement. We received entries from across the Group, from Mexico to China, and we announced the winning teams in December. Each team chose a charity which will shortly receive a GBP5,000 donation, including a school for blind children in India and a cancer treatment centre in Wales.

Outlook

The Board remains confident in our strategy to deliver sustainable, profitable growth over the medium term. Our approach of building long-term relationships with customers helps us to identify opportunities in our markets, and our agility and resources ensure we can respond to these opportunities.

Our results so far this year have benefited from products released in recent years and the relationships we have been building with new customers. These relationships, new products and the expected improvement in semiconductor and electronics markets, supports our confidence for medium term growth. To support this, we are continuing to make targeted investments in our people, our production facilities, and our new product pipeline. We have a strong order book, and at this stage we expect full year revenue to be in the range of GBP690m to GBP730m. Adjusted profit before tax is expected to be in the range of GBP140m to GBP165m .

 
 Sir David McMurtry   Will Lee          Allen Roberts 
 Executive Chairman   Chief Executive   Group Finance 
                                         Director 
 
 2 February 2023 
 
 

(1) Note 12, 'Alternative performance measures', defines how revenue at constant exchange rates, adjusted profit before tax, adjusted operating profit and adjusted earnings per share are calculated.

Consolidated income statement

 
                                                         Unaudited      Unaudited       Audited 
                                                          6 months       6 months    Year ended 
                                                                to             to       30 June 
                                                       31 December    31 December          2022 
                                              Notes           2022           2021       GBP'000 
                                                           GBP'000        GBP'000 
 Revenue                                       2           347,679        325,176       671,076 
 
 Cost of sales                                 3         (172,442)      (153,293)     (313,527) 
 
 Gross profit                                              175,237        171,883       357,549 
 
 Distribution costs                                       (66,836)       (55,830)     (122,455) 
 Administrative expenses                                  (35,311)       (33,560)      (69,736) 
 UK defined benefit pension scheme 
  past service cost                                              -              -      (11,695) 
 Losses from the fair value of financial 
  instruments                                 10           (1,792)        (2,313)      (10,413) 
 
 Operating profit                                           71,298         80,180       143,250 
 
 Financial income                              4             5,003            445           932 
 Financial expenses                            4             (290)          (658)       (2,938) 
 Share of profits from associates and 
  joint ventures                                             1,803          1,515         4,342 
 
 Profit before tax                                          77,814         81,482       145,586 
 
 Income tax expense                            5          (13,746)       (12,949)      (25,235) 
 
 Profit for the period                                      64,068         68,533       120,351 
-----------------------------------------  --------  -------------  -------------  ------------ 
 
 Profit attributable to: 
 Equity shareholders of the parent 
  company                                                   64,068         68,533       120,351 
 Non-controlling interest                                        -              -             - 
-----------------------------------------  --------  -------------  -------------  ------------ 
 Profit for the period                                      64,068         68,533       120,351 
-----------------------------------------  --------  -------------  -------------  ------------ 
 
                                                             Pence          Pence         Pence 
 Dividend per share arising in respect 
  of the period                                7              16.8           16.0          72.6 
-----------------------------------------  --------  -------------  -------------  ------------ 
 
 Earnings per share (basic and diluted)        6              88.1           94.2         165.4 
-----------------------------------------  --------  -------------  -------------  ------------ 
 

Consolidated statement of comprehensive income and expense

 
                                                     Unaudited      Unaudited       Audited 
                                                      6 months       6 months    Year ended 
                                                            to             to       30 June 
                                                   31 December    31 December          2022 
                                                          2022           2021       GBP'000 
                                                       GBP'000        GBP'000 
 
 Profit for the period                                  64,068         68,533       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                                    -            827         1,653 
 Deferred tax on contributions to defined 
  benefit pension schemes                                    -          (827)       (1,653) 
 Remeasurement of defined benefit pension 
  scheme liabilities                                    16,127          (806)        69,078 
 Deferred tax on remeasurement of defined 
  benefit pension scheme liabilities                   (3,739)             73      (15,997) 
 
 Total for items that will not be reclassified          12,388          (733)        53,081 
-----------------------------------------------  -------------  -------------  ------------ 
 
 Items that may be reclassified to the 
  Consolidated income statement: 
 Exchange differences in translation of 
  overseas operations                                    2,960            434        12,151 
 Exchange differences in translation of 
  overseas joint venture                                   456          (229)           118 
 Current tax on translation of net investments 
  in foreign operations                                  (310)          (245)       (1,529) 
 Effective portion of changes in fair 
  value of cash flow hedges, net of recycling            1,870        (3,256)      (28,423) 
 Deferred tax on effective portion of 
  changes in fair value of cash flow hedges              (318)            607         6,155 
 
 Total for items that may be reclassified                4,658        (2,689)      (11,528) 
-----------------------------------------------  -------------  -------------  ------------ 
 
 Total other comprehensive income and 
  expense, net of tax                                   17,046        (3,422)        41,553 
-----------------------------------------------  -------------  -------------  ------------ 
 
 Total comprehensive income and expense 
  for the period                                        81,114         65,111       161,904 
-----------------------------------------------  -------------  -------------  ------------ 
 
 Attributable to: 
 Equity shareholders of the parent company              81,114         65,111       161,904 
 Non-controlling interest                                    -              -             - 
 
 Total comprehensive income and expense 
  for the period                                        81,114         65,111       161,904 
-----------------------------------------------  -------------  -------------  ------------ 
 

Consolidated balance sheet

 
                                                            Unaudited         Unaudited    Audited 
                                                       At 31 December    At 31 December      At 30 
                                                                 2022              2021       June 
                                              Notes           GBP'000           GBP'000       2022 
                                                                                           GBP'000 
 Assets 
 Property, plant and equipment                 8              254,640           248,098    243,853 
 Right-of-use assets                                            9,321            11,973      9,950 
 Investment properties                                         10,374                 -     10,568 
 Intangible assets                             9               46,117            44,917     44,218 
 Investments in associates and joint 
  ventures                                                     21,905            17,920     20,570 
 Finance lease receivables                                      6,223             6,814      6,961 
 Employee benefits                                             61,788                 -     43,241 
 Deferred tax assets                                           22,786            21,150     22,893 
 Derivatives                                  10                3,542             6,836          - 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 Total non-current assets                                     436,696           357,708    402,254 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 
 Current assets 
 Inventories                                                  179,754           135,895    162,482 
 Trade receivables                            10              123,141           111,864    127,551 
 Finance lease receivables                                      3,125             1,524      3,348 
 Contract assets                                                1,455               757        578 
 Short-term loans to associates 
  and joint ventures                                              155               616        302 
 Current tax                                                    7,382             3,279      8,901 
 Other receivables                                             31,929            27,174     27,068 
 Derivatives                                  10                3,948             9,839      7,121 
 Pension scheme cash escrow account                                 -            10,580          - 
 Bank deposits                                                155,541           160,000    100,000 
 Cash and cash equivalents                                     55,957            62,038    153,162 
 Total current assets                                         562,387           523,566    590,513 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 
 Current liabilities 
 Trade payables                                                21,434            27,954     30,947 
 Contract liabilities                                           8,298             5,707     12,956 
 Current tax                                                    5,989             6,700     10,078 
 Provisions                                                     3,513             6,342      4,244 
 Derivatives                                  10               16,149             3,877     17,890 
 Lease liabilities                                              3,535             3,644      3,714 
 Borrowings                                                       959               972        919 
 Other payables                                                41,873            47,732     51,949 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 Total current liabilities                                    101,750           102,928    132,697 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 Net current assets                                           460,637           420,638    457,816 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 
 Non-current liabilities 
 Lease liabilities                                              6,068             8,672      6,466 
 Borrowings                                                     4,933             5,919      5,160 
 Employee benefits                                                328            20,229        996 
 Deferred tax liabilities                                      26,952            12,029     22,815 
 Derivatives                                  10                5,933             1,598      9,463 
 Total non-current liabilities                                 44,214            48,447     44,900 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 Total assets less total liabilities                          853,119           729,899    815,170 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 
 Equity 
 Share capital                                                 14,558            14,558     14,558 
 Share premium                                                     42                42         42 
 Own shares held                                              (2,963)             (750)      (750) 
 Currency translation reserve                                  17,565             3,679     14,459 
 Cash flow hedging reserve                                    (9,371)             8,696   (10,923) 
 Retained earnings                                            833,807           704,553    798,541 
 Other reserve                                                     58             (302)      (180) 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 Equity attributable to the shareholders 
  of the parent company                                       853,696           730,476    815,747 
 Non-controlling interest                                       (577)             (577)      (577) 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 Total equity                                                 853,119           729,899    815,170 
-----------------------------------------  --------  ----------------  ----------------  --------- 
 

Consolidated statement of changes in equity

 
 Unaudited                                  Own      Currency       Cash                                 Non- 
                     Share      Share    shares   translation       flow    Retained      Other   controlling 
                   capital    premium      held       reserve    hedging    earnings    reserve      interest      Total 
                   GBP'000    GBP'000   GBP'000       GBP'000    reserve     GBP'000    GBP'000       GBP'000    GBP'000 
                                                                 GBP'000 
 Balance at 1 
  July 2021         14,558         42     (404)         3,719     11,345     674,603         44         (577)    703,330 
 
 Profit for the 
  period                 -          -         -             -          -      68,533          -             -     68,533 
 
 Other 
 comprehensive 
 income 
 and expense 
 (net of tax) 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 Remeasurement 
  of defined 
  benefit 
  pension 
  liabilities            -          -         -             -          -       (733)          -             -      (733) 
 Foreign 
  exchange 
  translation 
  differences            -          -         -           189          -           -          -             -        189 
 Relating to 
  associates 
  and joint 
  ventures               -          -         -         (229)          -           -          -             -      (229) 
 Changes in 
  fair value 
  of cash flow 
  hedges                 -          -         -             -    (2,649)           -          -             -    (2,649) 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 Total other 
  comprehensive 
  income and 
  expense                -          -         -          (40)    (2,649)       (733)          -             -    (3,422) 
 Total 
  comprehensive 
  income 
  and expense            -          -         -          (40)    (2,649)      67,800          -             -     65,111 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 
 Transactions 
 with owners 
 recorded in 
 equity 
 Share-based 
  payments 
  charge                 -          -         -             -          -           -         58             -         58 
 Own shares 
  transferred 
  on vesting             -          -       404             -          -           -      (404)             -          - 
 Own shares 
  purchased              -          -     (750)             -          -           -          -                    (750) 
 Dividends paid          -          -         -             -          -    (37,850)          -             -   (37,850) 
 Balance at 31 
  December 
  2021              14,558         42     (750)         3,679      8,696     704,553      (302)         (577)    729,899 
 
 Profit for the 
  period                 -          -         -             -          -      51,818          -             -     51,818 
 
 Other 
 comprehensive 
 income 
 and expense 
 (net of tax) 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 Remeasurement 
  of defined 
  benefit 
  pension 
  liabilities            -          -         -             -          -      53,814          -             -     53,814 
 Foreign 
  exchange 
  translation 
  differences            -          -         -        10,433          -           -          -             -     10,433 
 Relating to 
  associates 
  and joint 
  ventures               -          -         -           347          -           -          -             -        347 
 Changes in 
  fair value 
  of cash flow 
  hedges                 -          -         -             -   (19,619)           -          -             -   (19,619) 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 Total other 
  comprehensive 
  income and 
  expense                -          -         -        10,780   (19,619)      53,814          -             -     44,975 
 Total 
  comprehensive 
  income 
  and expense            -          -         -        10,780   (19,619)     105,632          -             -     96,793 
 
 Transactions 
 with owners 
 recorded in 
 equity 
 Share-based 
  payments 
  charge                 -          -         -             -          -           -        122             -        122 
 Dividends paid          -          -         -             -          -    (11,644)          -             -   (11,644) 
 Balance at 30 
  June 2022         14,558         42     (750)        14,459   (10,923)     798,541      (180)         (577)    815,170 
 
 Profit for the 
  period                 -          -         -             -          -      64,068          -             -     64,068 
 
 Other 
 comprehensive 
 income 
 and expense 
 (net of tax) 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 Remeasurement 
  of defined 
  benefit 
  pension 
  liabilities            -          -         -             -          -      12,388          -             -     12,388 
 Foreign 
  exchange 
  translation 
  differences            -          -         -         2,650          -           -          -             -      2,650 
 Relating to 
  associates 
  and joint 
  ventures               -          -         -           456          -           -          -             -        456 
 Changes in 
  fair value 
  of cash flow 
  hedges                 -          -         -             -      1,552           -          -             -      1,552 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 Total other 
  comprehensive 
  income and 
  expense                -          -         -         3,106      1,552      12,388          -             -     17,046 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 Total 
  comprehensive 
  income 
  and expense            -          -         -         3,106      1,552      76,456          -             -     81,114 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 
 Transactions 
 with owners 
 recorded in 
 equity 
 Share-based 
  payments 
  charge                 -          -         -             -          -           -        238             -        238 
 Own shares 
  purchased              -          -   (2,213)             -          -           -          -             -    (2,213) 
 Dividends paid          -          -         -             -          -    (41,190)          -             -   (41,190) 
 Balance at 31 
  December 
  2022              14,558         42   (2,963)        17,565    (9,371)     833,807         58         (577)    853,119 
---------------  ---------  ---------  --------  ------------  ---------  ----------  ---------  ------------  --------- 
 

Consolidated statement of cash flow

 
                                                          Unaudited      Unaudited       Audited 
                                                           6 months       6 months    Year ended 
                                                                 to             to       30 June 
                                                        31 December    31 December          2022 
                                                               2022           2021       GBP'000 
                                                            GBP'000        GBP'000 
 Cash flows from operating activities 
 Profit for the period                                       64,068         68,533       120,351 
----------------------------------------------------  -------------  -------------  ------------ 
 Adjustments for: 
 Depreciation of property, plant and equipment, 
  and investment properties                                   8,741          9,748        25,898 
 Loss on sale of property, plant and equipment                  302             17           157 
 Impairment of property, plant and equipment                      -              -         1,259 
 Depreciation of right-of-use assets                          1,974          1,981         4,205 
 Impairment of right-of-use-assets                                -              -         1,837 
 Amortisation of development costs                            2,527          4,035         4,698 
 Amortisation of other intangibles                              581            396         1,225 
 Impairment of development costs                                  -            185             - 
 Write-off of intangible assets                                   -              -         3,510 
 Share of profits from associates and joint 
  ventures                                                  (1,803)        (1,515)       (4,342) 
 Profit on disposal of investment in associate                    -              -         (582) 
 Derecognition of lease liabilities                               -              -       (1,985) 
 UK defined benefit pension scheme past service 
  cost                                                            -              -        11,695 
 Financial income                                           (5,003)          (445)         (932) 
 Financial expenses                                             290            658         2,938 
 (Gains)/losses from the fair value of financial 
  instruments                                               (4,350)          2,936         8,349 
 Share based payment expense                                    239             59           180 
 Tax expense                                                 13,746         12,949        25,235 
                                                             17,244         31,004        83,345 
----------------------------------------------------  -------------  -------------  ------------ 
 Increase in inventories                                   (17,272)       (22,332)      (48,919) 
 Decrease/(increase) in trade and other receivables           1,777          5,375      (11,301) 
 (Decrease)/increase in trade and other payables           (24,411)        (1,075)        12,288 
 (Decrease)/increase in provisions                            (732)             83       (2,015) 
                                                           (40,638)       (17,949)      (49,947) 
----------------------------------------------------  -------------  -------------  ------------ 
 Defined benefit pension scheme contributions               (2,260)        (4,431)       (8,866) 
 Income taxes paid                                         (16,858)       (10,366)      (23,410) 
 Cash flows from operating activities                        21,556         66,791       121,473 
----------------------------------------------------  -------------  -------------  ------------ 
 
 Investing activities 
 Purchase of property, plant and equipment, 
  and investment properties                                (20,229)       (12,199)      (30,960) 
 Sale of property, plant and equipment                        2,636            363           687 
 Development costs capitalised                              (4,201)        (4,820)       (7,966) 
 Purchase of other intangibles                                (609)          (784)         (929) 
 (Increase)/decrease in bank deposits                      (55,541)       (40,000)        20,000 
 Interest received                                            2,575            261           834 
 Dividend received from associates and joint 
  ventures                                                      924              -           525 
 Proceeds from sale of shares in associate                        -              -           582 
 Payments from pension scheme cash escrow 
  account                                                         -              -        10,578 
 Cash flows from investing activities                      (74,445)       (57,179)       (6,649) 
----------------------------------------------------  -------------  -------------  ------------ 
 
 Financing activities 
 Repayment of borrowings                                      (494)          (471)         (974) 
 Interest paid                                                (274)          (324)         (591) 
 Repayment of principal of lease liabilities                (2,100)        (1,741)       (4,081) 
 Own shares purchased                                       (2,212)          (750)         (750) 
 Dividends paid                                            (41,190)       (37,845)      (49,494) 
 Cash flows from financing activities                      (46,270)       (41,131)      (55,890) 
----------------------------------------------------  -------------  -------------  ------------ 
 
 Net (decrease)/increase in cash and cash 
  equivalents                                              (99,159)       (31,519)        58,934 
 Cash and cash equivalents at the beginning 
  of the period                                             153,162         95,008        95,008 
 Effect of exchange rate fluctuations on 
  cash held                                                   1,954        (1,451)         (780) 
----------------------------------------------------  -------------  -------------  ------------ 
 Cash and cash equivalents at the end of 
  the period                                                 55,957         62,038       153,162 
----------------------------------------------------  -------------  -------------  ------------ 
 

Notes

   1.         Basis of preparation 

The Interim report, which includes the condensed consolidated financial statements for the six months ended 31 December 2022, was approved by the Directors on 2 February 2023.

The condensed consolidated financial statements for the six months ended 31 December 2022 were prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' (IAS 34) as issued by the International Accounting Standards Board and as adopted by the UK. These apply the same accounting policies, presentation and methods of calculation as were applied in the preparation of the Group's consolidated financial statements for the year ended 30 June 2022, except for income taxes which are accrued using the forecast tax rate for the financial year, and except for the adoption of new accounting standards.

The condensed consolidated financial statements included in this Report have not been audited and do not constitute the Group's statutory accounts as defined in section 434 of the Companies Act 2006. The information relating to the year ended 30 June 2022 is an extract from the Group's published Annual Report for that year, which has been delivered to the Registrar of Companies, and on which the auditor's report was unqualified and did not contain any emphasis of matter or statements under section 498(2) or 498(3) of the Companies Act 2006.

Going concern

The Directors have prepared the unaudited interim financial information on a going concern basis. In considering the going concern basis, the Directors have considered the previously mentioned principal risks and uncertainties, as well as the Group's current trading performance and updated cashflow forecasts. The Directors have also considered the financial resources available to the Group, with net current assets of GBP460.6m at 31 December 2022 (compared to GBP457.8m at 30 June 2022), including GBP211.5m net cash and bank deposits at 31 December 2022.

We have updated our reverse stress testing to identify what would need to happen in the period to 31 January 2024 to result in the Group having negative bank deposit and cash balances. We found that this would occur if revenue fell to GBP24m, for each of the 12 months to January 2024. The GBP24m per month is before consideration of longer-term mitigating actions such as reducing labour costs and reducing capital expenditure, and is considerably lower than forecast. This assessment reflects the conclusion that the overall impact and likelihood of our principal risks is not considered to have changed significantly during the period.

Having made appropriate enquiries, the Directors are satisfied that, at the time of approving the unaudited condensed consolidated financial statements, it is appropriate to continue to adopt a going concern basis of accounting.

   2.         Segmental information 

The Group manages its business in two segments, comprising Manufacturing technologies and Analytical instruments and medical devices. Within the operating segments, there are multiple product offerings with similar economic characteristics, similar production processes and similar customer bases. The results of these segments are regularly reviewed by the Board to allocate resources and to assess their performance. More details of the Group's products and services are given in the Strategic Report of the 2022 Annual Report.

In normal trading conditions, whilst future revenue is difficult to predict given that the Group's outstanding order book is typically less than three months' worth of revenue value, larger consumer electronics orders in the APAC region within the manufacturing technologies segment typically fall in the first or last quarter of the financial year. In addition, the Group typically experiences lower demand in August and December, and so revenue and operating profits are typically lower in the first half of the year. This information is provided to allow for a better understanding of the results, and management do not believe that the business is 'highly seasonal' in accordance with IAS 34.

 
                                                                  Analytical 
                                                Manufacturing    instruments 
                                                 technologies    and medical      Total 
 6 months to 31 December 2022                                        devices 
                                                      GBP'000        GBP'000    GBP'000 
 Revenue                                              330,916         16,763    347,679 
 
 Depreciation, amortisation and impairment             12,841            982     13,823 
 
 Operating profit before gains from 
  fair value of financial instruments                  72,957            133     73,090 
 Share of profits from associates and 
  joint ventures                                            -              -      1,803 
 Net financial income                                       -              -      4,713 
 Losses from the fair value of financial 
  instruments                                               -              -    (1,792) 
 Profit before tax                                          -              -     77,814 
-------------------------------------------  ----------------  -------------  --------- 
 
 
  6 months to 31 December 2021 
 Revenue                                              308,707         16,469    325,176 
 
 Depreciation, amortisation and impairment             15,508            837     16,345 
 
 Operating profit before gains from 
  fair value of financial instruments                  80,938          1,555     82,493 
 Share of profits from associates and 
  joint ventures                                        1,515              -      1,515 
 Net financial expense                                      -              -      (213) 
 Losses from the fair value of financial 
  instruments                                               -              -    (2,313) 
 Profit before tax                                          -              -     81,482 
-------------------------------------------  ----------------  -------------  --------- 
 
 Year ended 30 June 2022 
 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                 162,549          2,809    165,358 
 Share of profits from associates and 
  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 is included within certain other overhead expenditure which is allocated to segments on the basis of the level of activity.

The following table shows the disaggregation of Group revenue by category:

 
                              6 months to    6 months to   Year ended 
                              31 December    31 December      30 June 
                                     2022           2021         2022 
                                  GBP'000        GBP'000      GBP'000 
 Goods, capital equipment 
  and installation                318,959        299,077      615,641 
 Aftermarket services              28,720         26,099       55,435 
 Total Group revenue              347,679        325,176      671,076 
--------------------------  -------------  -------------  ----------- 
 

Aftermarket services include repairs, maintenance and servicing, programming, training, extended warranties, and software licences and maintenance.

The following table shows the analysis of revenue by geographical market:

 
                              6 months to    6 months to   Year ended 
                              31 December    31 December      30 June 
                                     2022           2021         2022 
                                  GBP'000        GBP'000      GBP'000 
 APAC                             161,726        160,562      317,023 
--------------------------  -------------  -------------  ----------- 
 UK (country of domicile)          18,942         15,485       31,536 
 EMEA, excluding UK                83,497         80,007      174,290 
--------------------------  -------------  -------------  ----------- 
 EMEA                             102,439         95,492      205,826 
 Americas                          83,514         69,122      148,227 
 Total Group revenue              347,679        325,176      671,076 
--------------------------  -------------  -------------  ----------- 
 

Revenue in the above table has been allocated to regions based on the geographical location of the customer. Countries with individually material revenue figures in the context of the Group were:

 
             6 months to    6 months to   Year ended 
             31 December    31 December      30 June 
                    2022           2021         2022 
                 GBP'000        GBP'000      GBP'000 
 China            81,112         80,700      152,772 
 USA              73,157         60,324      128,531 
 Japan            34,678         32,066       69,829 
 Germany          30,089         27,600       58,636 
 

There was no revenue from transactions with a single external customer amounting to 10% or more of the Group's total revenue.

   3.         Cost of sales 
 
                                             6 months       6 months   Year ended 
                                                   to             to      30 June 
                                          31 December    31 December         2022 
                                                 2022           2021      GBP'000 
                                              GBP'000        GBP'000 
 
 Production costs                             126,333        115,477      234,919 
--------------------------------------  -------------  -------------  ----------- 
 Research and development expenditure          36,202         27,944       59,415 
 Other engineering expenditure                 14,114         12,644       26,356 
--------------------------------------  -------------  -------------  ----------- 
 Gross engineering expenditure                 50,316         40,588       85,771 
--------------------------------------  -------------  -------------  ----------- 
 Development expenditure capitalised 
  (net of amortisation)                       (1,674)          (785)      (3,268) 
 Development expenditure impaired                   -            185            - 
 Research and development tax 
  credit                                      (2,533)        (2,172)      (3,895) 
--------------------------------------  -------------  -------------  ----------- 
 Total engineering costs                       46,109         37,816       78,608 
 Total cost of sales                          172,442        153,293      313,527 
--------------------------------------  -------------  -------------  ----------- 
 
   4.         Financial income and expenses 
 
                                                 6 months       6 months   Year ended 
                                                       to             to      30 June 
                                              31 December    31 December         2022 
                                                     2022           2021      GBP'000 
                                                  GBP'000        GBP'000 
 Financial income 
------------------------------------------  -------------  -------------  ----------- 
 Fair value gains from one-month forward 
  currency contracts                                   59              -           98 
 Interest on pension schemes' assets                  844              -            - 
 Currency gains                                     1,525            184            - 
 Bank interest receivable                           2,575            261          834 
------------------------------------------  -------------  -------------  ----------- 
 Total financial income                             5,003            445          932 
------------------------------------------  -------------  -------------  ----------- 
 Financial expenses 
------------------------------------------  -------------  -------------  ----------- 
 Interest on pension schemes' liabilities              16            156          306 
 Currency losses                                        -              -        1,414 
 Fair value losses from one-month forward               -            178            - 
  currency contracts 
 Realised currency reserve losses from 
  discontinuation of foreign operation                  -              -          575 
 Lease interest                                       171            236          481 
 Interest payable on borrowings                        52             30           52 
 Other interest payable                                51             58          110 
 Total financial expenses                             290            658        2,938 
------------------------------------------  -------------  -------------  ----------- 
 
 

Currency gains and losses relate to revaluations of foreign currency-denominated balances using latest reporting currency exchange rates. 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.

   5.         Taxation 

The income tax expense in the Consolidated income statement has been estimated at a rate of 17.7% (H1 FY2022: 15.9%), based on management's best estimate of the full year effective tax rates by geographical unit applied to half-year profits. This is comparable with the 17.3% achieved in FY2022, and includes an increase in the UK effective tax rate for the year to 20.5% from 19%, which is largely offset by a forecast increase in the patent box benefit.

   6.         Earnings per share 

The earnings per share for the six months ended 31 December 2022 is calculated on earnings of GBP64,068,000 (December 2021: GBP68,533,000 ) and on 72,719,565 shares (December 2021: 72,774,147 shares), being the number of shares in issue during the period. This excludes 68,978 shares (December 2021: 14,396 shares) held by the Renishaw Employee Benefit Trust.

   7.         Dividends 
 
                                           6 months       6 months   Year ended 
                                                 to             to      30 June 
   Dividends paid during the period     31 December    31 December         2022 
   were:                                       2022           2021      GBP'000 
                                            GBP'000        GBP'000 
 
 FY2022 final dividend paid of 
  56.6p per share (2021: 52.0p)              41,190         37,850       37,850 
 Interim dividend paid of 16.0p 
  per share (2022: 14.0p)                         -              -       11,644 
 Total dividends paid during the 
  period                                     41,190         37,850       49,494 
------------------------------------  -------------  -------------  ----------- 
 

All shareholders on the register on 10 March 2023 will be paid an interim dividend of 16.8p net per share on 11 April 2023, resulting in a dividend payable of GBP12,228,475.

   8.         Property, plant and equipment 
 
                            Freehold                                        Assets 
                            land and         Plant        Motor             in the 
                           buildings           and     vehicles             course     Total 
                                         equipment                 of construction 
                             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                     1,080         1,078          710             17,363    20,231 
 Transfers                        44           886            -              (930)         - 
 Disposals                      (73)       (4,508)        (863)                  -   (5,444) 
 Currency adjustment           2,066           868           37                  -     2,971 
 
 At 31 December 2022         220,937       261,881        7,404             23,914   514,136 
-----------------------  -----------  ------------  -----------  -----------------  -------- 
 
 Depreciation 
 At 1 July 2022               43,816       202,214        6,495                  -   252,525 
 Charge for the period         1,955         6,539          140                  -     8,634 
 Released on disposals             -       (1,848)        (658)                  -   (2,506) 
 Currency adjustment             278           527           38                  -       843 
 
 At 31 December 2022          46,049       207,432        6,015                  -   259,496 
-----------------------  -----------  ------------  -----------  -----------------  -------- 
 
 Net book value 
 At 31 December 2022         174,888        54,449        1,389             23,914   254,640 
-----------------------  -----------  ------------  -----------  -----------------  -------- 
 At 30 June 2022             174,004        61,343        1,025              7,481   243,853 
-----------------------  -----------  ------------  -----------  -----------------  -------- 
 

Additions to assets in the course of construction of GBP17,363,000 (December 2021: GBP5,927,000 ) comprise GBP8,474,000 (December 2021: GBP1,095,000) for freehold land and buildings and GBP8,889,000 (December 2021: GBP4,832,000) for plant and equipment. At the end of the period, assets in the course of construction, not yet transferred, of GBP23,914,000 (December 2021: GBP11,602,000) comprise GBP9,707,000 (December 2021: GBP4,308,000) for freehold land and buildings and GBP14,207,000 (December 2021: GBP7,294,000) for plant and equipment.

   9.         Intangible assets 
 
                                             Other     Internally            Software 
                            Goodwill    intangible      generated            licences 
                                            assets    development    and intellectual 
                                                            costs            property     Total 
                             GBP'000       GBP'000        GBP'000             GBP'000   GBP'000 
 Cost 
 At 1 July 2022               20,475         4,629        168,212              22,379   215,695 
 Additions                         -           255          4,201                 354     4,810 
 Disposals                         -             -              -                (76)      (76) 
 Currency adjustment             201            10              -                  43       254 
 
 At 31 December 2022          20,676         4,894        172,413              22,700   220,683 
-----------------------  -----------  ------------  -------------  ------------------  -------- 
 
 Amortisation 
 At 1 July 2022                9,028         2,240        139,460              20,749   171,477 
 Charge for the period             -            92          2,527                 489     3,108 
 Released on disposals             -             -              -                (44)      (44) 
 Currency adjustment               -          (10)              -                  35        25 
 
 At 31 December 2022           9,028         2,322        141,987              21,229   174,566 
-----------------------  -----------  ------------  -------------  ------------------  -------- 
 
 Net book value 
 At 31 December 2022          11,648         2,572         30,426               1,471    46,117 
-----------------------  -----------  ------------  -------------  ------------------  -------- 
 At 30 June 2022              11,447         2,389         28,752               1,630    44,218 
-----------------------  -----------  ------------  -------------  ------------------  -------- 
 

As detailed in the 2022 Annual Report, the key assumption in determining the value-in-use of intangible assets are sales forecasts. Latest sales forecasts, and other factors which may impact the business plans, for relevant cash generating units have been reviewed for indicators of impairment at 31 December 2022. This includes a revision to our discount rate from 9.0% to 10.4% based on prevailing market assumptions at 31 December 2022. As a result, no impairments have been recognised in the six months to 31 December 2022 (December 2021: GBP185,000).

   10.        Financial instruments 

There is no significant difference between the fair value of financial assets and financial liabilities and their book value in the Consolidated balance sheet. All financial assets and liabilities are held at amortised cost, apart from the forward 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 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. There were no transfers between levels during any period disclosed.

Credit risk

The Group carries a credit risk relating to non-payment of trade receivables by its customers and establishes an allowance for impairment in respect of trade receivables where recoverability is considered doubtful. In the six months to 31 December 2022, the Group has not experienced a deterioration in debtor repayments nor in the assumptions used in calculating allowances for expected credit losses. At 31 December 2022, total expected credit losses amounted to GBP2,441,000, being 1.9% of gross trade receivables, compared with GBP2,540,000 at 30 June 2022, being 2.0% of gross trade receivables.

Liquidity risk

The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, and the Group continues to use monthly cash flow forecasts on a rolling 12-month basis to monitor cash requirements. Net cash and bank deposits at 31 December 2022 totalled GBP211,498,000, compared with GBP253,162,000 at 30 June 2022. This reduction included a dividend payment of GBP41,193,000 and cash generation from operating activies of GBP21,556,000 during the period. In consideration of this, the Group remains in a strong liquidity position.

Market risk

At 31 December 2022 the total nominal value of USD, EUR and JPY forward contracts held for cash flow hedging purposes was GBP525,603,000 (December 2021: GBP516,547,000). At 31 December 2022 the remaining nominal value of USD, EUR and JPY forward contracts ineffective for cash flow hedging and yet to mature amounted to GBP21,950,000 (December 2021: GBP109,199,000), with no additional forward contracts becoming ineffective for hedge accounting purposes in the six months to 31 December 2022. A decrease of 10% in the highly probable revenue forecasts of Renishaw plc and Renishaw UK Sales Limited, being the hedged item, would result in an additional GBP5.8m of forward contracts becoming ineffective at 31 December 2022. On an ongoing basis, a 10% depreciation of GBP against USD, EUR and JPY would result in a GBP2,439,000 gain being recognised in the Consolidated Income Statement, while a 10% appreciation would result in a GBP1,995,000 loss. Fair value gains and losses relating to this have been excluded from adjusted profit measures, see note 12 for further detail.

   11.        Employee benefits 

The net surplus of the Group's defined benefit pension schemes, on an IAS 19 basis, has increased from a GBP42,245,000 net asset at 30 June 2022 to a GBP61,460,000 net asset at 31 December 2022. This mostly relates to a reduction in liabilities resulting from a 1.05% increase in the UK scheme discount rate. Changes to other key assumptions from 30 June 2022 to 31 December 2022 have not had a material effect on these financial statements. During the first half of this financial year, there has also been a change in the UK scheme asset portfolio, to increase the proportion of assets held as gilts and therefore increase the correlation with future liability exposure.

   12.        Alternative performance measures 

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.

 
 Revenue at constant exchange rates                 6 months    6 months 
                                              to 31 December       to 31 
                                                        2022    December 
                                                                    2021 
                                                     GBP'000     GBP'000 
 
 Statutory revenue as reported                       347,679     325,176 
 Adjustment for forward contract losses                7,045         391 
 Adjustment to restate at previous year             (26,239)           - 
  exchange rates 
 Revenue at constant exchange rates                  328,485     325,567 
------------------------------------------  ----------------  ---------- 
 Year-on-year revenue growth at constant                  1%           - 
  exchange rates 
------------------------------------------  ----------------  ---------- 
 

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 business restructuring, third-party costs relating to the formal sales process ('FSP'), and gains and losses in fair value from forward currency contracts which did not qualify for hedge accounting and which have yet to mature.

From FY2017, 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 FY2020 are also excluded from adjusted profit measures, on the basis that all forward contracts are still expected to be effective hedges for Group revenue, while the potentially high volatility in fair value gains and losses relating to these contracts will otherwise cause confusion for users of the financial statements wishing to understand the underlying trading performance of the Group. 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 more relevant and reliable in evaluating the Group's performance.

 
 Adjusted profit before tax                                   6 months          6 months   Year ended 
                                                        to 31 December    to 31 December      30 June 
                                                                  2022              2021         2022 
                                                               GBP'000           GBP'000      GBP'000 
 
 Statutory profit before tax                                    77,814            81,482      145,586 
 Revised estimate of FY2020 restructuring 
  provisions                                                         -                 -      (1,688) 
 Third-party FSP costs                                               -             (200)        (200) 
 UK defined benefit pension scheme past service 
  cost                                                               -                 -       11,695 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (i) 
  - reported in revenue                                              -             2,621        2,621 
  - reported in (gains)/losses from the fair 
   value of financial instruments - derivatives                      -           (1,138)      (1,138) 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (ii) 
  - reported in revenue                                        (6,142)           (1,998)      (4,685) 
  - reported in (gains)/losses from the fair 
   value of financial instruments - derivatives                  1,792             3,451       11,551 
 Adjusted profit before tax                                     73,464            84,218      163,742 
----------------------------------------------------  ----------------  ----------------  ----------- 
 
 
 Adjusted earnings per share                            6 months    6 months   Year ended 
                                                           to 31       to 31      30 June 
                                                        December    December         2022 
                                                            2022        2021 
                                                           pence       pence        pence 
 Statutory earnings per share                               88.1        94.2        165.4 
 Revised estimate of FY2020 restructuring 
  provisions                                                   -           -        (0.3) 
 Third-party FSP costs                                         -       (0.2)        (1.9) 
 UK defined benefit pension scheme past service 
  cost                                                         -           -         13.0 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (i) 
  - reported in revenue                                        -         2.9          2.9 
  - reported in (gains)/losses from the fair 
   value of financial instruments - derivatives                -       (1.3)        (1.3) 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (ii) 
  - reported in revenue                                    (6.7)       (2.2)        (5.2) 
  - reported in (gains)/losses from the fair 
   value of financial instruments - derivatives              2.0         3.8         12.9 
 Adjusted earnings per share                                83.4        97.2        185.5 
----------------------------------------------------  ----------  ----------  ----------- 
 
 
 Adjusted operating profit                                    6 months       6 months   Year ended 
                                                        to 31 December             to      30 June 
                                                                  2022    31 December         2022 
                                                                                 2021 
                                                               GBP'000        GBP'000      GBP'000 
 Statutory operating profit                                     71,298         80,180      143,250 
 Revised estimate of FY2020 restructuring 
  provisions                                                         -              -      (1,688) 
 Third-party FSP costs                                               -          (200)        (200) 
 UK defined benefit pension scheme past service 
  cost                                                               -              -       11,695 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (i) 
  - reported in revenue                                              -          2,621        2,621 
  - reported in (gains)/losses from the fair 
   value of financial instruments - derivatives                      -        (1,138)      (1,138) 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (ii) 
  - reported in revenue                                        (6,142)        (1,998)      (4,685) 
  - reported in (gains)/losses from the fair 
   value of financial instruments - derivatives                  1,792          3,451       11,551 
 Adjusted operating profit                                      66,948         82,916      161,406 
----------------------------------------------------  ----------------  -------------  ----------- 
 

Adjustments to segmental operating profit:

 
 Manufacturing technologies                                   6 months       6 months   Year ended 
                                                        to 31 December             to      30 June 
                                                                  2022    31 December         2022 
                                                                                 2021 
                                                               GBP'000        GBP'000      GBP'000 
 Operating profit before gain/loss from fair 
  value of financial instruments and UK defined 
  benefit pension scheme past service cost                      72,957         80,938      162,549 
 Revised estimate of 2020 restructuring provisions                   -              -      (1,688) 
 Third-party FSP costs                                               -          (196)        (197) 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (i) 
  - reported in revenue                                              -          2,572        2,576 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (ii) 
  - reported in revenue                                        (6,131)        (1,960)      (4,605) 
 Adjusted manufacturing technologies operating 
  profit                                                        66,826         81,354      158,635 
----------------------------------------------------  ----------------  -------------  ----------- 
 
 
 Analytical instruments and medical devices             6 months    6 months   Year ended 
                                                           to 31       to 31      30 June 
                                                        December    December         2022 
                                                            2022        2021 
                                                         GBP'000     GBP'000      GBP'000 
 Operating profit before loss from fair value 
  of financial instruments and UK defined 
  benefit pension scheme past service cost                   133       1,555        2,809 
 Third-party FSP costs                                         -         (4)          (3) 
 Fair value (gains)/losses on financial instruments 
  not eligible for hedge accounting (i) 
  - reported in revenue                                        -          49           45 
 Fair value gains on financial instruments 
  not eligible for hedge accounting (ii) 
 - reported in revenue                                      (11)        (38)         (80) 
 Adjusted analytical instruments and medical 
  devices operating profit                                   122       1,562        2,771 
----------------------------------------------------  ----------  ----------  ----------- 
 
   13.        Related party transactions and events subsequent to the end of the reporting period 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Full details of the Group's other related party relationships, transactions and balances are given in the Group's Annual Report for the year ended 30 June 2022.

No related party transactions have taken place in the first six months of the financial year, or events subsequent to the end of the reporting period, that have materially affected the financial position or the performance of the Group during that period.

   14.        Responsibility statement 

The condensed set of financial statements is the responsibility of, and has been approved by, the Directors. We confirm that to the best of our knowledge:

- As required by DTR 4.2 of the Disclosure Rules and Transparency Rules, the condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation as a whole. The Interim report has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as issued by the International Accounting Standards Board and as adopted by the UK.

   -       The Interim report includes a fair review of the information required by: 

(a) DTR 4.2.7 of the Disclosure Rules and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8 of the Disclosure Rules and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Allen Roberts FCA

Group Finance Director

2 February 2023

Financial calendar

 
 2023 interim dividend record    10 March 2023 
  date 
 2023 interim dividend payment   11 April 2023 
  date 
 Investor day                    8 June 2023 
 

Registered office:

Renishaw plc

New Mills

Wotton-under-Edge

Gloucestershire

GL12 8JR

UK

 
 Registered 
  number:      01106260 
 Telephone:    +44 1453 524524 
 Email:        uk@renishaw.com 
 Website:      www.renishaw.com 
 

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END

IR UPUMCPUPWGMG

(END) Dow Jones Newswires

February 02, 2023 02:00 ET (07:00 GMT)

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