For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240206:nRSF0894Ca&default-theme=true
RNS Number : 0894C Renishaw PLC 06 February 2024
Renishaw
plc
6 February 2024
Interim report 2024 - for the six months ended 31 December 2023
Highlights
A solid performance in challenging market conditions with growth opportunities
in H2
6 months to 6 months to Change %
31 December 31 December
2023 2022
Revenue (£m) 330.5 347.7 -5
Adjusted(*) profit before tax (£m) 56.5 73.5 -23
Adjusted(*) earnings per share (pence) 62.1 83.4 -26
Dividend per share (pence) 16.8 16.8 -
Statutory profit before tax (£m) 56.5 77.8 -27
Statutory earnings per share (pence) 62.1 88.1 -26
· Revenue 5% lower at £330.5m:
• Manufacturing technologies revenue lower by 6%, with solid growth
in Industrial Metrology offset by continued weak demand for position encoders
for semiconductor manufacturing equipment.
• Analytical instruments and medical devices revenue up 16%,
with strong growth in Spectroscopy products.
• Group revenue lower by 2% at constant currency; APAC +6%, EMEA -6%
and Americas -13%.
• Q2 similar to Q1 this year and Q2 FY2023; stable order book.
· Adjusted* profit before tax of £56.5m (H1 FY2023 £73.5m):
• Represents 17% of revenue (21% last year).
• 3% reduction in gross margin before engineering costs: targeted
price rises, offset by adverse currency impact on revenue, employee pay
inflation, and lower production overhead absorption due to planned inventory
reductions.
• Cost control in engineering, distribution and administration
limiting year-on-year increases to 3%.
· Statutory profit before tax of £56.5m (H1 FY2023: £77.8m).
· Strong balance sheet with cash and cash equivalents and bank
deposit balances of £178.3m, compared with £206.4m at 30 June 2023, with the
£43.2m final dividend for FY2023 paid in H1.
• Targeted reductions in inventory contribute to cash flow from
operating activities increasing to £55.6m (H1 FY2023: £21.6m).
· Interim dividend of 16.8p per share.
William Lee, Chief Executive, commented:
"We have achieved a solid performance in challenging market conditions, with
growth from Industrial Metrology products in APAC being offset by continued
weak demand from some key sectors, most notably semiconductor equipment. We
expect an improvement in our trading performance in the second half of the
financial year as market conditions improve, and as we continue to pursue a
range of growth opportunities. To support our through-cycle growth strategy,
we are continuing to focus on productivity and to make targeted investments in
our people, our production facilities, and our new product pipeline."
* Note 12, 'Alternative performance measures', defines how adjusted profit
before tax and adjusted earnings per share are calculated.
About Renishaw
We are a world leader in 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
guided by our purpose - Transforming Tomorrow Together. This means working
with our customers to make the products, create the materials, and develop the
therapies that are going to be needed for the future. Our vision is to
innovate and transform the capabilities of our customers and end users through
unparalleled levels of precision, productivity and practicality.
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.com/en/register-for-the-2024-interim-results-webcast--48539
(https://www.renishaw.com/en/register-for-the-2024-interim-results-webcast--48539)
Questions can be submitted during the live Q&A session using the webcast
platform or in advance to communications@renishaw.com
(mailto:communications@renishaw.com) (please submit by 09:30 GMT).
Enquiries: communications@renishaw.com (mailto:communications@renishaw.com)
Overview for the six months ended 31 December 2023
Revenue
Revenue for the six months ended 31 December 2023 was £330.5m, compared with
£347.7m for the corresponding period last year. Manufacturing technologies
revenue was lower by 6%, with solid growth in Industrial Metrology offset by
continued weak demand for position encoders for semiconductor manufacturing
equipment. Analytical instruments and medical devices revenue was up 16%,
with strong growth in Spectroscopy products. Overall, revenue in Q2 FY2024
was similar to the corresponding period last year and marginally above Q1
FY2024. The order book at 31 December 2023 was similar to that at 30 June
2023.
At constant currency, revenue was lower by 2%. APAC revenue was up 6%, with
strong growth in Industrial Metrology offsetting continuing weak demand from
semiconductor equipment manufacturers. EMEA revenue was lower by 6%, with
strong Spectroscopy sales, but weaker demand for Position Measurement and
Additive Manufacturing products. Americas revenue was lower by 13%, with
growth in metrology systems offset by weaker sales elsewhere, but an improved
order book.
6 months to 6 months to Change % Constant fx* change %
31 December 31 December
2023 2022
Group revenue £330.5m £347.7m -5% -2%
Comprising:
APAC £161.2m £161.7m - 6%
Americas £72.1m £83.6m -14% -13%
EMEA £97.2m £102.4m -5% -6%
New product introductions and commercialisation
Since June, we have launched new products including the HPMA-X tool setting
arm for large CNC lathes and RMP24-micro, the world's smallest wireless
machine tool probe. The latter is designed for manufacturers of high-precision
miniature components such as those found in the medical, watchmaking and
micro-mechanics industries. At the Formnext exhibition in November, we
launched two new products for our additive manufacturing (AM) product line.
TEMPUS™ technology enables lasers to fire at the same time as a machine's
recoater is moving, substantially reducing build times. The new RenAM 500
Ultra system includes this new technology, plus advanced process monitoring
software, with the aim to reduce cost per part which is vital to the wider
adoption of AM technology.
During the period we have also continued the global roll-out of Renishaw
Central, our smart manufacturing data platform that collects, presents, and
actions accurate process and metrology data. Our new industrial automation
product line, which aims to transform the process of commissioning and
servicing of industrial robots, has also achieved some early adopters,
including a global aerospace company.
Operating costs
We have continued to take a cautious approach to recruitment during the year,
and our total headcount of 5,166 is similar to 30 June 2023 and 31 December
2022. We have continued to invest in our early careers programmes, whilst we
have undertaken a targeted mutually agreed severance scheme in the UK to allow
employees to voluntarily leave the company. We have made major investment in
employee remuneration in recent years to ensure competitiveness and retention
of highly skilled and trained employees, resulting in employee turnover being
consistently below target. Labour costs (excluding bonuses) have increased by
2.4% to £136.5m for the period, primarily reflecting the January 2023 pay
review and nearly £1.9m of payments relating to the mutually agreed severance
scheme.
We have controlled engineering, distribution and administration costs,
limiting the year-on-year increase to 3%. This includes an increase in
third-party support costs in relation to our new global ERP system (Microsoft
D365). We successfully completed the first implementation during the period,
and the roll-out of this system will continue over the next few years.
Our gross margin (excluding engineering costs) for the period was 61% of
revenue, compared to 64% over the comparable period in the previous year. This
change is partly due to a lower recovery of production overheads this year, as
we have targeted inventory reductions, whilst retaining manufacturing resource
in expectation of demand increasing in the second half of the financial year.
Currency rate changes have also had an adverse impact on the gross margin. The
effect of these has been partially offset by further targeted price rises.
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 gross engineering spend, including research and
development, increased by 2.4% to £51.5m. Net engineering spend includes a
£1.5m year-on-year increase in the R&D tax credit, primarily as a result
of the rate applicable to qualifying spend increasing from 13% to 20%.
Profit and tax
Adjusted* profit before tax for the period was £56.5m (17% of revenue)
compared with £73.5m (21% of revenue) last year. Statutory profit before tax
for the period was £56.5m, compared with £77.8m last year. H1 FY2023
included a £4.4m fair value gain 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 £7.2m compared with £5.0m last year, and
includes a £2.2m increase in interest on bank deposits.
The income tax expense in the Consolidated income statement has been estimated
at a rate of 20.1% (H1 FY2023: 17.7%) 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 20.0% achieved in FY2023.
Adjusted earnings per share were 62.1p, compared with 83.4p last year.
Statutory earnings per share were 62.1p, compared with 88.1p last year.
Manufacturing technologies
Revenue for this segment, which comprises our Industrial Metrology, Position
Measurement and Additive Manufacturing businesses, was £311.1m for the first
six months, compared with £330.9m last year. We achieved solid growth in our
Industrial Metrology business, with notable growth in demand for our gauging
system and machine tool probing product lines, particularly from the consumer
electronics sector in APAC. In our Position Measurement business, we have
continued to see weak levels of demand for optical encoders from semiconductor
manufacturing equipment builders, however, we remain optimistic about the
through-cycle growth opportunities in this important sector. In Additive
Manufacturing, whilst revenues were below the same period last year, we are
seeing repeat demand from a growing number of customers, and we entered the
second half with a strong order book. Adjusted operating profit was £46.0m,
compared with £66.8m for the comparable period last year.
Analytical instruments and medical devices
Revenue from this segment for the first six months was £19.4m, an increase of
16% compared with £16.8m last year. There was strong growth for our
Spectroscopy products, particularly the EMEA region. We continue to see
growing demand for the Virsa™ analyser, a portable system that allows sample
analysis outside of a laboratory, and the inLux™ 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. The adjusted operating profit was £1.2m in the first half of this
year compared with £0.1m for the comparable period last year.
Balance sheet
Cash and cash equivalents and bank deposit balances at 31 December 2023 were
£178.3m, compared with £206.4m at 30 June 2023, primarily reflecting the
cash generated from operating profit of £55.6m, less capital expenditure of
£40.4m, and the final dividend payment of £43.2m in respect of FY2023.
Capital expenditure mostly relates to the expansion of our manufacturing
facility in Wales, and we expect capital spend for the full year to be similar
to last year.
We have reduced our inventory balances by £11.4m since 30 June 2023, largely
reflecting targeted reductions in components and sub-assemblies for our
optical encoder products as supply chains have normalised. Trade receivables
have decreased by £7.1m in the same period, with receivables days improving
by 3 days since 30 June to 61 days, and no significant movement in expected
credit losses. The planned reduction in inventory has contributed
significantly to an increase in the cash flows from operating activities
compared with the corresponding period in the previous year.
During the period, an insurance buy-in of the UK defined benefit pension
liabilities was successfully completed. This mitigates the majority of funding
risk going forward. See note 11 for further detail.
Dividend
The Board has approved an interim dividend of 16.8 pence net per share
(FY2023: 16.8p), which will be paid on 9 April 2024 to shareholders on the
register on 8 March 2024.
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 we continue to
monitor developing geopolitical 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 52 to 59
of the 2023 Annual Report therefore remain relevant.
Sustainability
We continue to make strong progress towards our target of Net Zero for Scopes
1 and 2 emissions by 2028. We self-generate 11% of our electricity consumption
and by the end of 2024 all the electricity that we purchase globally will meet
our sustainability requirements. During the period, we have contracted with a
green-energy provider to supply our main UK sites with 100 per cent renewable
electricity.
We see significant commercial opportunities arising from the drive to Net
Zero. Our customers are setting sustainability targets and the products we
supply them help to increase their manufacturing efficiencies by reducing
energy consumption and waste, and also improve the performance of the products
they supply to their own customers.
The company has formalised the management of sustainability, including
climate-related financial disclosures, through a new ESG Steering Committee,
chaired by William Lee, with oversight provided by one of our Independent
Non-executive Directors. With the support of specialist advisors, the
Committee is developing a comprehensive ESG strategy which will be published
in this year's Annual Report.
Directors and employees
The Directors would like to thank our employees for continuing to drive us
forward towards our vision to innovate and transform the capabilities of our
customers.
Outlook
The Board remains confident in our organic growth model, built on solving
customer problems with innovative products, global service and world-class
in-house manufacturing. Whilst we operate in cyclical markets, we aim for
high single digit average organic growth rates through the cycle.
We have achieved a solid performance in challenging market conditions, with
growth from Industrial Metrology products in APAC being offset by continued
weak demand from some key sectors, most notably semiconductor equipment. We
expect an improvement in our trading performance in the second half of the
financial year as market conditions improve, and as we continue to pursue a
range of growth opportunities. To support our through-cycle growth strategy,
we are continuing to focus on productivity and to make targeted investments in
our people, our production facilities, and our new product pipeline.
At this stage we expect full year revenue to be in the range of £675m to
£715m. Adjusted profit before tax is expected to be in the range of £122m to
£147m.
Sir David McMurtry William Lee Allen Roberts
Executive Chairman Chief Executive Group Finance Director
( ) ( ) ( )
6 February 2024 ( ) ( )
( ) ( )
* 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 to 6 months to Year ended
31 December 31 December 30 June
2023 2022 2023
Notes £'000 £'000 £'000
Revenue 2 330,489 347,679 688,573
Cost of sales 3 (175,904) (172,442) (337,908)
Gross profit 154,585 175,237 350,665
Distribution costs (68,871) (66,836) (137,744)
Administrative expenses (38,520) (35,311) (74,894)
US defined benefit pension scheme past service cost - - (2,139)
Losses from the fair value of financial instruments 10 - (1,792) (1,399)
Operating profit 47,194 71,298 134,489
Financial income 4 7,168 5,003 9,669
Financial expenses 4 (351) (290) (1,861)
Share of profits from joint ventures 2,530 1,803 2,768
Profit before tax 56,541 77,814 145,065
Income tax expense 5 (11,364) (13,746) (28,963)
Profit for the period 45,177 64,068 116,102
Profit attributable to:
Equity shareholders of the parent company 45,177 64,068 116,102
Non-controlling interest - - -
Profit for the period 45,177 64,068 116,102
pence pence pence
Dividend per share arising in respect of the period 7 16.8 16.8 76.2
Earnings per share (basic and diluted) 6 62.1 88.1 159.7
Consolidated statement of comprehensive income and expense
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Profit for the period 45,177 64,068 116,102
Other items recognised directly in equity:
Items that will not be reclassified to the Consolidated income statement:
Remeasurement of defined benefit pension scheme assets/liabilities (49,459) 16,127 13,612
Deferred tax on remeasurement of defined benefit pension scheme 12,349 (3,739) (3,071)
assets/liabilities
Total for items that will not be reclassified (37,110) 12,388 10,541
Items that may be reclassified to the Consolidated income statement:
Exchange differences in translation of overseas operations 1,576 2,960 (8,000)
Exchange differences in translation of overseas joint venture 159 456 -
Current tax on translation of net investments in foreign operations (297) (310) 313
Effective portion of changes in fair value of cash flow hedges, net of 4,422 1,870 23,167
recycling
Deferred tax on effective portion of changes in fair value of cash flow hedges (1,105) (318) (5,692)
Total for items that may be reclassified 4,755 4,658 9,788
Total other comprehensive income and expense, net of tax (32,355) 17,046 20,329
Total comprehensive income and expense for the period 12,822 81,114 136,431
Attributable to:
Equity shareholders of the parent company 12,822 81,114 136,431
Non-controlling interest - - -
Total comprehensive income and expense for the period 12,822 81,114 136,431
Consolidated balance sheet
Unaudited Unaudited Audited
At 31 December At 31 December At 30 June
2023 2022 2023
Notes £'000 £'000 £'000
Assets
Property, plant and equipment 8 318,036 254,640 286,085
Right-of-use assets 10,049 9,321 8,402
Investment properties 10,181 10,374 10,323
Intangible assets 9 48,319 46,117 46,468
Investments in joint ventures 24,529 21,905 22,414
Finance lease receivables 8,814 6,223 9,935
Employee benefits 9,128 61,788 57,416
Deferred tax assets 20,006 22,786 19,944
Derivatives 10 3,233 3,542 9,443
Total non-current assets 452,295 436,696 470,430
Current assets
Inventories 174,383 179,754 185,757
Trade receivables 10 116,268 123,141 123,427
Finance lease receivables 3,552 3,125 3,764
Contract assets 1,775 1,455 861
Current tax 13,642 7,382 19,558
Other receivables 35,918 32,084 27,979
Derivatives 10 11,585 3,948 5,373
Bank deposits 119,000 155,541 125,000
Cash and cash equivalents 59,258 55,957 81,388
Total current assets 535,381 562,387 573,107
Current liabilities
Trade payables 22,011 21,434 21,551
Contract liabilities 7,811 8,298 9,971
Current tax 1,452 5,989 7,118
Provisions 2,722 3,513 2,758
Derivatives 10 1,529 16,149 5,089
Lease liabilities 3,217 3,535 3,009
Borrowings 4,372 959 4,694
Other payables 43,654 41,873 48,130
Total current liabilities 86,768 101,750 102,320
Net current assets 448,613 460,637 470,787
Non-current liabilities
Lease liabilities 7,083 6,068 5,624
Borrowings - 4,933 -
Employee benefits 90 328 45
Deferred tax liabilities 27,007 26,952 38,770
Derivatives 10 - 5,933 120
Total non-current liabilities 34,180 44,214 44,559
Total assets less total liabilities 866,728 853,119 896,658
Equity
Share capital 14,558 14,558 14,558
Share premium 42 42 42
Own shares held (2,963) (2,963) (2,963)
Currency translation reserve 8,210 17,565 6,772
Cash flow hedging reserve 9,869 (9,371) 6,552
Retained earnings 836,649 833,807 871,777
Other reserve 940 58 497
Equity attributable to the shareholders of the parent company 867,305 853,696 897,235
Non-controlling interest (577) (577) (577)
Total equity 866,728 853,119 896,658
Consolidated statement of changes in equity
Unaudited Own Currency Cash flow Non-
Share Share shares translation hedging Retained Other controlling
capital premium held reserve reserve earnings reserve interest Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
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 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
Profit for the period - - - - - 52,034 - - 52,034
Other comprehensive income and expense (net of tax)
Remeasurement of defined benefit pension liabilities - - - - - (1,847) - - (1,847)
Foreign exchange translation differences - - - (10,337) - - - - (10,337)
Relating to joint ventures - - - (456) - - - - (456)
Changes in fair value of cash flow hedges - - - - 15,923 - - - 15,923
Total other comprehensive income and expense - - - (10,793) 15,923 (1,847) - - 3,283
Total comprehensive income and expense - - - (10,793) 15,923 50,187 - - 55,317
Transactions with owners recorded in equity
Share-based payments charge - - - - - - 439 - 439
Dividends paid - - - - - (12,217) - - (12,217)
Balance at 30 June 2023 14,558 42 (2,963) 6,772 6,552 871,777 497 (577) 896,658
Profit for the period - - - - - 45,177 - - 45,177
Other comprehensive income and expense (net of tax)
Remeasurement of defined benefit pension liabilities - - - - - (37,110) - - (37,110)
Foreign exchange translation differences - - - 1,279 - - - - 1,279
Relating to joint ventures - - - 159 - - - - 159
Changes in fair value of cash flow hedges - - - - 3,317 - - - 3,317
Total other comprehensive income and expense - - - 1,438 3,317 (37,110) - - (32,355)
Total comprehensive income and expense - - - 1,438 3,317 8,067 - - 12,822
Transactions with owners recorded in equity
Share-based payments charge - - - - - - 443 - 443
Dividends paid - - - - - (43,195) - - (43,195)
Balance at 31 December 2023 14,558 42 (2,963) 8,210 9,869 836,649 940 (577) 866,728
Consolidated statement of cash flow
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Cash flows from operating activities
Profit for the period 45,177 64,068 116,102
Adjustments for:
Depreciation of property, plant and equipment, and investment properties 9,319 8,741 19,882
(Profit)/loss on sale of property, plant and equipment (29) 302 155
Depreciation of right-of-use assets 2,187 1,974 4,223
Amortisation of development costs 2,477 2,527 5,150
Impairment of development costs - - 1,611
Amortisation of other intangibles 411 581 1,012
Loss on disposal of intangible assets - - 550
Share of profits from joint ventures (2,530) (1,803) (2,768)
Defined benefit pension schemes past service cost 397 - 2,437
Financial income (7,168) (5,003) (9,669)
Financial expenses 351 290 1,861
Gains from the fair value of financial instruments - (4,350) (5,504)
Share-based payment expense 445 239 677
Tax expense 11,364 13,746 28,963
17,224 17,244 48,580
Decrease/(increase) in inventories 11,374 (17,272) (23,275)
Decrease/(increase) in trade and other receivables 486 1,777 (12,379)
Decrease in trade and other payables (6,381) (24,411) (15,013)
Decrease in provisions (36) (732) (1,486)
5,443 (40,638) (52,153)
Defined benefit pension scheme contributions (83) (2,260) (2,341)
Income taxes paid (12,191) (16,858) (25,891)
Cash flows from operating activities 55,570 21,556 84,297
Investing activities
Purchase of property, plant and equipment, and investment properties (40,443) (20,229) (74,024)
Sale of property, plant and equipment 200 2,636 7,948
Development costs capitalised (4,542) (4,201) (10,448)
Purchase of other intangibles (30) (609) (379)
Decrease/(increase) in bank deposits 6,000 (55,541) (25,000)
Interest received 4,745 2,575 6,302
Dividend received from joint ventures 573 924 924
Cash flows from investing activities (33,497) (74,445) (94,677)
Financing activities
Repayment of borrowings (393) (494) (914)
Interest paid (351) (274) (656)
Repayment of principal of lease liabilities (2,607) (2,100) (4,206)
Own shares purchased - (2,212) (2,213)
Dividends paid (43,195) (41,190) (53,407)
Cash flows from financing activities (46,546) (46,270) (61,396)
Net decrease in cash and cash equivalents (24,473) (99,159) (71,776)
Cash and cash equivalents at the beginning of the period 81,388 153,162 153,162
Effect of exchange rate fluctuations on cash held 2,343 1,954 2
Cash and cash equivalents at the end of the period 59,258 55,957 81,388
Notes
1. Basis of preparation
The Interim report, which includes the condensed consolidated financial
statements for the six months ended 31 December 2023, was approved by the
Directors on 6 February 2024.
The condensed consolidated financial statements for the six months ended 31
December 2023 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 2023, 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 2023 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 £448.6m at 31 December
2023 (compared to £470.8m at 30 June 2023), including £178.3m cash and bank
deposits at 31 December 2023.
We have updated our reverse stress testing to identify what would need to
happen in the period to 28 February 2025 for the Group to deplete its cash and
cash equivalents and bank deposit balances. This identified a trading level so
low (significantly below FY2023 revenue) that the Directors feel that the
events that could trigger this would be remote. The Directors also concluded
that a one-off cash outflow that would exhaust the Group's cash and cash
equivalents and bank deposit balances in the assessment period was also
remote.
Based on this assessment, the Directors have a reasonable expectation that the
Group will be able to continue operation and meet its liabilities as they fall
due over the period to 28 February 2025.
2. Segmental information
The Group manages its business in two segments, being Manufacturing
technologies and Analytical instruments and medical devices. Within each
operating segment, 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 2023 Annual
Report.
In normal trading conditions, although 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
does not believe that the business is 'highly seasonal' in accordance with IAS
34.
6 months to 31 December 2023 Analytical instruments and medical devices
Manufacturing technologies
Total
£'000 £'000 £'000
Revenue 311,069 19,420 330,489
Depreciation, amortisation and impairment 13,391 783 14,174
Operating profit 45,953 1,241 47,194
Share of profits from joint ventures 2,530 - 2,530
Net financial income - - 6,817
Profit before tax - - 56,541
6 months to 31 December 2022
Revenue 330,916 16,763 347,679
Depreciation, amortisation and impairment 12,841 982 13,823
Operating profit before losses from fair value of financial instruments 72,957 133 73,090
Share of profits from joint ventures 1,803 - 1,803
Net financial income - - 4,713
Losses from the fair value of financial instruments - - (1,792)
Profit before tax - - 77,814
Year ended 30 June 2023
Revenue 648,240 40,333 688,573
Depreciation, amortisation and impairment 28,431 3,447 31,788
Operating profit before losses from fair value of financial instruments 132,843 5,184 138,027
Share of profits from joint ventures 2,768 - 2,768
Net financial income - - 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
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
2023 2022 2023
£'000 £'000 £'000
Goods, capital equipment and installation 300,745 318,959 624,992
Aftermarket services 29,744 28,720 63,581
Total Group revenue 330,489 347,679 688,573
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 following table shows the analysis of revenue by geographical market:
6 months to 6 months to Year ended
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
APAC 161,199 161,726 310,637
UK (country of domicile) 17,173 18,942 38,899
EMEA, excluding UK 80,035 83,497 177,582
EMEA 97,208 102,439 216,481
Americas 72,082 83,514 161,455
Total Group revenue 330,489 347,679 688,573
Revenue in the above table has been allocated to regions based on the location
of the customer. Countries with individually significant revenue figures in
the context of the Group were:
6 months to 6 months to Year ended
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
China 90,369 81,112 155,360
USA 60,707 73,157 138,721
Japan 26,366 34,678 67,915
Germany 25,646 30,089 61,565
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 to 6 months to Year ended
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Production costs 130,473 126,333 247,665
Research and development expenditure 32,156 36,202 72,500
Other engineering expenditure 19,390 14,114 28,063
Gross engineering expenditure 51,546 50,316 100,563
Development expenditure capitalised (net of amortisation) (2,065) (1,674) (5,298)
Development expenditure impaired - - 1,611
Research and development tax credit (4,050) (2,533) (6,633)
Total engineering costs 45,431 46,109 90,243
Total cost of sales 175,904 172,442 337,908
4. Financial income and expenses
6 months to 6 months to Year ended
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Financial income
Bank interest receivable 4,745 2,575 6,302
Interest on pension schemes' assets 1,439 844 1,639
Fair value gains from one-month forward currency contracts 380 59 1,728
Currency gains 604 1,525 -
Total financial income 7,168 5,003 9,669
Financial expenses
Interest on pension schemes' liabilities - 16 29
Currency losses - - 1,130
Lease interest 214 171 348
Interest payable on borrowings 24 52 46
Other interest payable 113 51 308
Total financial expenses 351 290 1,861
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 20.1% (H1 FY2023: 17.7%), 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 20.0% reported in FY2023.
6. Earnings per share
The earnings per share for the six months ended 31 December 2023 is calculated
on earnings of £45,177,000 (December 2022: £64,068,000) and on 72,719,565
shares (December 2022: 72,719,565 shares), being the number of shares in issue
during the period. This excludes 68,978 shares (December 2022: 68,978 shares)
held by the Renishaw Employee Benefit Trust.
7. Dividends
6 months to 6 months to Year ended
31 December 31 December 30 June
Dividends paid during the period were: 2023 2022 2023
£'000 £'000 £'000
FY2023 final dividend paid of 59.4p per share (FY2022: 56.6p) 43,195 41,190 41,190
Interim dividend paid of 16.8p per share (FY2022: 16.0p) - - 12,217
Total dividends paid during the period 43,195 41,190 53,407
All shareholders on the register on 8 March 2024 will be paid an interim
dividend of 16.8p net per share on 9 April 2024, resulting in a dividend
payable of £12,228,475.
8. Property, plant and equipment
Freehold Assets in the
land and Plant and Motor course of construction
buildings equipment vehicles Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 July 2023 213,385 273,156 7,112 53,469 547,122
Additions 491 3,841 171 35,939 40,442
Transfers 3,591 2,264 - (5,855) -
Disposals - (548) (562) - (1,110)
Currency adjustment 1,098 317 36 - 1,451
At 31 December 2023 218,565 279,030 6,757 83,553 587,905
Depreciation
At 1 July 2023 45,647 209,546 5,844 - 261,037
Charge for the period 2,022 6,929 285 - 9,236
Released on disposals - (390) (549) - (939)
Currency adjustment 274 236 25 - 535
At 31 December 2023 47,943 216,321 5,605 - 269,869
Net book value
At 31 December 2023 170,622 62,709 1,152 83,553 318,036
At 30 June 2023 167,738 63,610 1,268 53,469 286,085
Additions to assets in the course of construction of £35,939,000 (December
2022: £17,363,000) comprise £25,685,000 (December 2022: £8,474,000) for
freehold land and buildings and £10,254,000 (December 2022: £8,889,000) for
plant and equipment. At the end of the period, assets in the course of
construction, not yet transferred, of £83,553,000 (December 2022:
£23,914,000) comprise £62,777,000 (December 2022: £9,707,000) for freehold
land and buildings and £20,776,000 (December 2022: £14,207,000) for plant
and equipment. This mostly relates to the expansion of our manufacturing
facility in Miskin, Wales.
9. Intangible assets
Other intangible assets Internally Software
Goodwill generated licences and intellectual property
development costs
Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 July 2023 20,261 4,875 178,660 11,978 215,774
Additions - - 4,542 30 4,572
Currency adjustment 156 6 - 13 175
At 31 December 2023 20,417 4,881 183,202 12,021 220,521
Amortisation
At 1 July 2023 9,028 2,452 146,221 11,605 169,306
Charge for the period - 107 2,477 304 2,888
Currency adjustment - (1) - 9 8
At 31 December 2023 9,028 2,558 148,698 11,918 172,202
Net book value
At 31 December 2023 11,389 2,323 34,504 103 48,319
At 30 June 2023 11,233 2,423 32,439 373 46,468
As detailed in the 2023 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 2023. This includes an assessment of our discount rate based on
prevailing market assumptions at 31 December 2023, which has remained at
10.7%. As a result, no impairments have been recognised in the six months to
31 December 2023 (December 2022: nil).
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 2023, the Group has generally not experienced a
deterioration in debtor repayments nor in the assumptions used in calculating
allowances for expected credit losses. At 31 December 2023, total expected
credit losses amounted to £4,170,000, (3.5% of gross trade receivables),
compared with £3,348,000 at 30 June 2023 (2.7% 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. Cash and cash equivalents and
bank deposits at 31 December 2023 totalled £178,258,000, compared with
£206,388,000 at 30 June 2023. This reduction included a dividend payment of
£43,195,000 and cash generation from operating activities of £55,570,000
during the period. In consideration of this, the Group remains in a strong
liquidity position.
Market risk
The Group continues to mitigate market risk on cash flows using USD, EUR and
JPY forward currency contracts. At 31 December 2023 the total nominal value of
USD, EUR and JPY forward contracts held for cash flow hedging purposes was
£414,873,000 (December 2022: £525,603,000). At 31 December 2023, there were
no remaining forward contracts ineffective for cash flow hedging and yet to
mature (December 2022: £21,950,000), with no additional forward contracts
becoming ineffective for hedge accounting purposes in the six months to 31
December 2023. 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 no forward contracts becoming ineffective at 31 December 2023.
11. Employee benefits
The net surplus of the Group's defined benefit pension schemes, on an IAS 19
basis, has reduced from a £57,371,000 asset at 30 June 2023 to a £9,038,000
asset at 31 December 2023. The difference largely relates to the insurance
buy-in of the UK scheme, described below. The US scheme has now been fully
terminated, and the Ireland scheme is in a deficit position of £90,000. The
approach and methodologies used to calculate liabilities at 31 December 2023
are consistent with 30 June 2023.
During the 6 months to 31 December 2023, the Trustee of the UK defined benefit
pension scheme undertook a buy-in and insured around 99% of the Scheme's
liabilities by purchasing an insurance policy. This contract is effective from
19 October 2023 and is held in the name of the Trustee. The value of the
contract is recognised as a Fund asset for the purposes of IAS19. In line with
IAS19.115, for a buy-in insurance contract such as this, where the income
received from the policy matches exactly the benefit payments due to the
members it is covering, the value attributable to the contract to be
recognised as an asset is the equivalent IAS19 value of the corresponding
liabilities.
The value of the corresponding IAS19 liabilities for the members covered by
the buy-in contract was calculated based on individual member data as at 27
January 2023, allowing for known deaths and transfer-outs between 27 January
2023 and 19 October 2023. The IAS19 liabilities in respect of the buy-in
policy were lower than the transaction price of the insurance contract.
Consequently, the value attributable to the insurance contract has reduced
from the actual price paid, and the resulting remeasurement loss (or 'strain')
is recognised in the 'Return on plan assets' item in the Consolidated
Statement of Comprehensive Income and Expense. The IAS19 liabilities as at 19
October 2023 were £118,500,000. The final premium paid for the buy-in was
£150,400,000, and therefore a loss of £31,900,000 has been reflected in the
OCI.
Benefits in the UK Fund are subject to a DC underpin at the point of
retirement or transfer out. Historically, this has been allowed for in the
accounts in a consistent manner to current administrative practice and the
triennial funding valuations. During the buy-in process, it was identified
that the drafting of the DC underpin in the UK Fund Rules may require that the
DC underpin is applied in a manner which is different to the administrative
practice which has been applied. The Trustee and Company are currently seeking
legal clarification and advice on this issue. No allowance for this matter has
been made in the 31 December 2023 position, due to the uncertainty of legal
treatment and therefore any potential impact on liabilities. This position
will be reviewed at year-end. There is also uncertainly around the process
required to resolve these potential issues, therefore a provision for legal
fees relating to this have not yet been recognised.
Separately, in June 2023, the High Court ruled that certain historic
amendments made to the rules of the Virgin Media pension scheme were invalid
without the scheme's actuary having provided the associated S37 certificates
necessary. This judgment has been appealed to the Court of Appeal,
particularly the extent to which invalidity of past changes to the Virgin
Media pension scheme's rules could affect associated benefit entitlements of
members of that pension scheme. If upheld, the High Court's decision could
have wider ranging implications, affecting other schemes that were
contracted-out on a salary-related basis, and made amendments between April
1997 and April 2016. The UK Fund was contracted out until 5 April 2007 and
amendments were made during the relevant period and as such the ruling could
have implications for the UK Fund. However, as we are still awaiting a final
outcome to the Virgin Media case, the possible implications for the Fund have
not been investigated in detail at this stage. The Court of Appeal hearing
for the Virgin Media case has been set for 25 June 2024. The Trustee and
Company will continue to seek legal advice on the matter and act accordingly.
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 to 31 December 2023 6 months to 31 December 2022
£'000 £'000
Statutory revenue as reported 330,489 347,679
Adjustment for forward contract losses 1,853 7,045
Adjustment to restate at previous year exchange rates 14,610 -
Revenue at constant exchange rates 346,952 354,724
Year-on-year revenue growth at constant exchange rates -2% -
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, and gains and
losses in fair value from forward currency contracts which did not qualify for
hedge accounting and which have yet to mature.
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 to 31 December 2023 6 months to 31 December 2022 Year ended 30 June 2023
£'000 £'000 £'000
Statutory profit before tax 56,541 77,814 145,065
Revised estimate of FY2020 restructuring provisions - - (717)
US defined benefit pension scheme past service cost - - 2,139
Fair value (gains)/losses on financial instruments not eligible for hedge accounting
- reported in revenue - (6,142) (6,903)
- reported in (gains)/losses from the fair value of financial instruments - 1,792 1,399
Adjusted profit before tax 56,541 73,464 140,983
Adjusted earnings per share 6 months to 31 December 2023 6 months to 31 December 2022 Year ended 30 June 2023
pence pence pence
Statutory earnings per share 62.1 88.1 159.7
Revised estimate of FY2020 restructuring provisions - - (0.8)
US defined benefit pension scheme past service cost - - 2.2
Fair value (gains)/losses on financial instruments not eligible for hedge accounting
- reported in revenue - (6.7) (7.5)
- reported in (gains)/losses from the fair value of financial instruments - 2.0 1.5
Adjusted earnings per share 62.1 83.4 155.1
Adjusted operating profit 6 months to 31 December 2023 6 months to Year ended 30 June 2023
31 December 2022
£'000 £'000 £'000
Statutory operating profit 47,194 71,298 134,489
Revised estimate of FY2020 restructuring provisions - - (717)
US defined benefit pension scheme past service cost - - 2,139
Fair value (gains)/losses on financial instruments not eligible for hedge accounting
- reported in revenue - (6,142) (6,903)
- reported in (gains)/losses from the fair value of financial instruments - 1,792 1,399
Adjusted operating profit 47,194 66,948 130,407
Adjustments to segmental operating profit:
Manufacturing technologies 6 months to 31 December 2023 6 months to Year ended 30 June
31 December 2022 2023
£'000 £'000 £'000
Operating profit before gains from fair value of financial instruments 45,953 72,957 132,843
Revised estimate of FY2020 restructuring provisions - - (717)
Fair value gains on financial instruments not eligible for hedge accounting
- reported in revenue - (6,131) (6,644)
Adjusted manufacturing technologies operating profit 45,953 66,826 125,482
Analytical instruments and medical devices 6 months to 31 December 2023 6 months to 31 December 2022 Year ended 30 June 2023
£'000 £'000 £'000
Operating profit before gains from fair value of financial instruments 1,241 133 5,184
Fair value gains on financial instruments not eligible for hedge accounting
- reported in revenue - (11) (259)
Adjusted analytical instruments and medical devices operating profit 1,241 122 4,925
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 2023.
No related party transactions have taken place in the first six months of the
financial year, nor 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
6 February 2024
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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UPUQWPUPCGRA