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RNS Number : 8551M

Renishaw PLC

19 September 2023

Renishaw plc

19 September 2023

Preliminary announcement of results for the year ended 30 June 2023

Solid performance in challenging markets

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\n \n	\n \n 2023 \n \n	\n \n 2022 \n \n	\n \n Change \n
\n Revenue (£m) \n	\n 688.6 \n	\n 671.1 \n	\n +3% \n
\n \n	\n \n	\n \n	\n \n
\n Adjusted¹ profit before tax (£m) \n	\n 141.0 \n	\n 163.7 \n	\n -14% \n
\n \n	\n \n	\n \n	\n \n
\n Adjusted¹ earnings per share (pence) \n	\n 155.1 \n	\n 185.5 \n	\n -16% \n
\n \n	\n \n	\n \n	\n \n
\n Dividend per share (pence) \n	\n 76.2 \n	\n 72.6 \n	\n +5% \n
\n \n	\n \n	\n \n	\n \n
\n Statutory profit before tax (£m) \n	\n 145.1 \n	\n 145.6 \n	\n - \n
\n \n	\n \n	\n \n	\n \n
\n Statutory earnings per share (pence) \n	\n 159.7 \n	\n 165.4 \n	\n -3% \n

Performance highlights

· Revenue of £688.6m (FY2022 £671.1m):

• Revenue growth in challenging trading conditions, although 1% lower at constant exchange rates; and

• Good revenue growth from system sales, offset by weaker demand from the semiconductor sector.

· Manufacturing technologies revenue increased by 2% to £648.2m, with:

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

• Weaker demand for optical encoders, notably in APAC, due to lower investment in the semiconductor sector.

· Analytical instruments and medical devices revenue increased by 10% to £40.3m, with:

• Record sales for our Spectroscopy product line, with strong growth across all our regions; and

• Growth for our Neurological product line, with renewed growth in robot sales.

· Adjusted^* profit before tax of £141.0m (FY2022 £163.7m), with return on sales reduced to 20% (24% last year).

• 1% reduction in gross margin before engineering costs: employee pay inflation and reduction in production volumes (leading to a lower recovery of fixed overheads), partially offset by currency and price increases; and

• Engineering, distribution and administration costs up 12%: targeted recruitment, plus investment in employee pay in all areas to improve employee retention, and other inflationary pressures.

· Statutory profit before tax of £145.1m (FY2022: £145.6m).

· Strong balance sheet with net cash and bank deposit balances of £206.4m, compared with £253.2m at 30 June 2022:

• Invested £73.8m (FY2022: £30.8m) in capital expenditure, including ongoing development of our production facility in Miskin, Wales

· Final dividend of 59.4p per share.

^* Note 29, 'Alternative performance measures', defines how Adjusted profit before tax, Adjusted earnings per share, Adjusted operating profit and Revenue at constant exchange rates are calculated

Strategic progress

· A number of new product launches including a new radio transmission system for our machine tool probes, a scanning electron microscope interface for our Raman spectrometers, and a smart factory software platform to consolidate shop floor measurement data.

· Introduced our new Industrial Automation product line to enhance the accuracy and productivity of industrial robots, applying our proven technology and knowledge to a close adjacent market that is experiencing strong underlying growth.

· In shop-floor metrology, we achieved good growth in end user sales of our AGILITY® co-ordinate measuring machines equipped with REVO® 5-axis systems, and we've also seen increased sales of our EQUATOR™ flexible gauges for electric vehicle manufacturing applications.

· A significant number of machine tool builders have now evaluated our FORTiS™ enclosed optical encoders with a growing number of early adopters fitting them to machines being produced in volume.

· Growth in repeat sales of our multi-laser AM machines to the medical and consumer electronics sectors.

· Rising sales of our Virsa™ Raman analyser which takes research-grade materials analysis out of the lab and into sampling applications in-situ, including solar cell analysis and cultural heritage.

· Upgraded our machine tools and expanded our automated encoder assembly systems to enable us to rapidly ramp production up and down to track cyclical demand.

· Good progress on our largest ever capital expenditure project at Miskin, where we are increasing manufacturing floorspace by 50% in a phased manner.

· Committed to a new Net Zero target with an aim to achieve a 50% reduction in our Scope 3 emissions by 2030.

William Lee, Chief Executive, commented:

\"In challenging trading conditions, our performance demonstrates the resilience of our business model, and the hard work and dedication of our teams around the world. In a year when we saw a downturn in demand from one of our key sectors, we achieved good growth in systems sales, which is an area of strategic priority.

We have seen a steady start to FY2024 and our order book remains solid. We continue to see positive trends for investment in low emission transportation, defence, additive manufacturing and robotics. Meanwhile, demand from semiconductor equipment suppliers for position encoders remains subdued. While the short-term macroeconomic picture remains unclear, we continue to manage costs prudently, we are implementing further price rises, and remain focused on improving our productivity.

I'm confident in our strategy and the actions we're taking to deliver sustainable long-term growth, including investments in people, infrastructure and product innovation.\"

About Renishaw

We are a world leading supplier of measuring and manufacturing systems. Our products give high accuracy and precision, gathering data to provide customers and end users with traceability and confidence in what they're making. This technology also helps our customers to innovate their products and processes. We are a global business, with customer-facing locations across our three sales regions; the Americas, EMEA, and APAC. Most of our R&D work takes place in the UK, with our largest manufacturing sites located in the UK, Ireland and India.

Results presentation and live Q&A session today

See below a video presentation of these results, presented by William Lee, Chief Executive, and Allen Roberts, Group Finance Director. There will be a live audio-only question and answer session with William and Allen at 10:30 BST today. Details of how to register for and access this webcast are available at the following link:

https://attendee.gotowebinar.com/register/3038498618137830494

Questions can be submitted in advance of the webcast either through the webcast platform or to communications@renishaw.com (if sending by email, please submit by 10:00 BST).

A recording of the Q&A session will be made available by Wednesday 20 September 2023 at: www.renishaw.com/investors.

Enquiries: communications@renishaw.com

COMMENTARY BY THE CHAIRMAN

It's a pleasure for me to use this opportunity to thank every one of our talented and inspiring people who have helped to make our business what it is today.

Since co-founding Renishaw in 1973 with John Deer, I continue to be immensely proud of how far we have come. From the early days of production taking place in John's family home (with dust seals made from the underlay of my carpets!), we have grown into a truly global and respected business.

We've been pioneers and innovators on behalf of our customers throughout our 50 years. To play a part in this and to transform the capabilities of manufacturing - making the products, creating the materials and developing the therapies that are going to be needed for the future - is a true honour.

This has been a year of celebration for the Board and me, and it has also been a year of revenue growth despite challenging market conditions. Throughout FY2023 we have continued to build upon our strategy and deliver our purpose of Transforming Tomorrow Together.

The Board, like our people, embodies our values of innovation, inspiration, integrity and involvement. As we continue to grow, it's important that we stay true to the principles that have ensured our success over the past 50 years.

50 years of innovation

Innovation has always been central to what we do. Our products have revolutionised component manufacturing and scientific research, helping to make the high-performing, precision products that we all use in our daily lives.

Each year we launch new products, and this year has been no different. We've released innovative new products for smart factories and robot metrology and introduced new technologies to strengthen our established product ranges.

I am a passionate engineer, and it's a privilege to continue working on product developments that will transform our customers' capabilities. This year, I have worked closely with our Additive Manufacturing (AM) team on our next-generation machine. To be involved in, and directly witness, the technological advancements our engineers make, means everyday is very exciting.

Inspiring each other, our customers and our communities

Last year, I talked about how embedding and communicating our values are of particular importance to the Board.

To demonstrate that importance, we launched a new annual global values competition this year to encourage employees to share ways in which they have exemplified our values through their work.

The competition was a great success, and I was delighted to review the entries from across the business with my fellow Executive Directors. As part of the contest, each winning team chose a charity to receive a £5,000 (or local currency equivalent) donation. So, through our values, we also aim to inspire our local communities by making a difference to people's lives.

We want to share our success with the communities where we operate, who have been highly supportive of our growth. Therefore, as part of our anniversary celebrations, the Board was delighted to approve a '50 at 50' charity initiative. During our 50th year, we will donate £150,000 to 50 not-for-profit organisations in our local communities.

Integrity is at the heart of what we do

Our ambition to be more sustainable is testament to how we put integrity at the heart of our business. It is also central to our purpose as we work closely with our customers to help them on their own sustainability journeys and are focused on promoting the sustainability benefits that our products offer. For example, as I have seen first-hand in my work with the AM team, this technology has the potential to reduce energy and material consumption compared to traditional subtractive manufacturing.

We are also playing our part in creating a sustainable future. This year we have made excellent progress in reducing our environmental impact.

We expect our employees to always act with integrity. To support this, we are currently working on our new Code of Conduct which we will launch globally in FY2024. This will apply to our employees, customers and suppliers. It will provide guidance on decision-making and behaviours and bring all our key policies and compliance expectations together in one place.

This year we held an externally-facilitated Board evaluation which highlighted that the Board is working effectively. It found that meetings were conducted with a good dynamic, facilitating challenge but also encouraging the effective contribution of the whole Board. It also highlighted our culture of trust, openness and debate.

Following feedback from investors, including at our Capital Markets Day, the Board has also this year reviewed our approach to investor relations, and we will be looking at how we can increase engagement with investors over the next year.

Involvement of all our people is key to success

Equality, Diversity and Inclusion (EDI) remains an important area of focus for the Board. We pride ourselves on our open and collaborative culture. This year, we were pleased to appoint a dedicated EDI Lead, who will be instrumental in the development of our global approach to EDI. This will help us provide an inclusive, rewarding environment for all our people.

I am delighted to welcome Professor Karen Holford CBE to the Board as a Non-executive Director with effect from 1 September 2023. Karen brings extensive experience with her strong background in engineering research and development. A Fellow of the Royal Academy of Engineering, Karen received a CBE for services to engineering and the advancement of women in engineering in 2017, and her appointment also enhances the diversity of views we have on the Board.

We acknowledge that we still have a way to go as a business. In appointing Directors, the Board considers diversity at all stages of the process while being mindful that the right person for the long-term success of the Company should be appointed. The Nomination Committee continues to take diversity in all its forms into consideration when considering Board succession plans in FY2024.

To improve involvement across the business, we also reorganised our existing product groups during the year. We believe this will bring synergies between teams and technologies and simplify reporting to the Board. We are also currently reviewing succession plans throughout the business.

Celebrating 50 years

Our anniversary year has given us a wonderful opportunity to celebrate. Throughout 2023, employees across the world have taken part in local events and activities to mark the occasion. From dressing up in 1970s clothing to family open days, it's been fantastic to see our people come together and celebrate.

This year also marked the anniversary of the opening of several of our global subsidiaries including China, who are celebrating 30 years in the market, and Austria, Canada, Hungary, Israel and Sweden which are each marking 20 years.

It's been wonderful to reflect on and celebrate our success, but we wouldn't be where we are today without our customers, suppliers and other stakeholders. We've had close relationships with many of them for most of our history and they continue to support us today.

We've achieved a great deal over 50 years. I would like to thank everyone who has been a part of Renishaw's story and I'm proud of the difference we continue to make to the world.

It's important to look back and mark these milestones, but we have always been focused on the future. So, as we move into our sixth decade, I am eager to see what Renishaw and our customers will accomplish next.

Sir David McMurtry

Executive Chairman

18 September 2023

COMMENTARY BY THE CHIEF EXECUTIVE

I'm pleased to look back on a year in which we've made further progress, as we continue to fulfil our purpose, execute our strategy, and invest in our long-term success. We've achieved 3% revenue growth at actual exchange rates, although this was a 1% reduction at constant currency.

We delivered good growth in systems sales, one of our strategic priority areas, which was offset by weaker demand for optical encoders from the semiconductor sector. Our performance demonstrates the resilience of our business model, our excellent position in attractive markets, and the hard work and dedication of our teams around the world.

Our purpose of Transforming Tomorrow Together remains central to everything that we do. We continue to work closely with our customers, helping them to create the products, materials and therapies of the future. We play a leading role in the transition towards a sustainable future in which manufacturing processes are increasingly efficient, automated and self-governing.

Group performance

Total revenue this year was £688.6m, compared with £671.1m in FY2022, with both our operating segments delivering growth. While this is record revenue for the Group, at constant currency rates our revenue was 1% lower than last year. At actual currency rates we had growth in the EMEA and Americas regions but saw a small reduction in the APAC region. We introduced targeted price increases in H1 FY2023 which have contributed to the revenue growth.

Our Manufacturing technologies segment delivered 2.2% revenue growth. There were notable advances for our REVO 5-axis co-ordinate measuring machine (CMM) inspection systems, additive manufacturing (AM) machines, and machine calibration solutions. By contrast, we have seen lower capital investment in the key semiconductor market this year. This has reduced demand for our open optical encoders, most notably in the APAC region.

Meanwhile, our Analytical instruments and medical devices segment delivered 10.5% revenue growth. Our Spectroscopy product line achieved record revenue, with growing research and industrial applications for Raman spectroscopy, while our Neurological product line also grew.

This year's Adjusted* profit before tax was £141.0m compared with £163.7m last year. Adjusted* earnings per share was 155.1p compared with 185.5p last year. Adjusted measures are the ones we use as a Board to measure our underlying trading performance. Statutory profit before tax was £145.1m compared with £145.6m last year, leading to Statutory earnings per share of 159.7p compared with 165.4p last year.

Profits fell this year due to a combination of modest revenue growth and inflationary increases in our labour costs and expenses. For more detail see the commentary by the Group Finance Director.

Strategic progress

Innovation has always been the lifeblood of our business, and we continue to focus on developing new solutions for emerging customer needs. We have grown our R&D teams, and increased total engineering expenditure by 14.8%. This year, we've introduced new products to strengthen our market-leading product ranges. These include the RMI-QE machine tool radio transmission system, and inLux scanning electron microscope interface for our Raman spectrometers. We have a strong pipeline of significant new products under development, which we will introduce over the next few years.

The use of industrial robots is accelerating as manufacturers automate work handling, fabrication, and assembly operations. This year, we launched our new Industrial Automation product line to enhance the accuracy and productivity of industrial robots. Our new products enable rapid robot cell installation, and reduce the time taken to recover from unplanned stoppages from several days to just a few minutes. We can also compensate for errors in a robot's motion. This improves positioning accuracy so that robots can be used for higher precision tasks. We are excited about our prospects in this high-growth market.

Over the years we've pioneered in-process control of machining processes, helping manufacturers to minimise waste and boost productivity. We are now taking this a step further with Renishaw Central, our new smart factory software platform. Central consolidates actionable data from almost any shop-floor metrology device, enabling fast, robust process control feedback. This means we can help customers improve process outcomes, rather than simply monitoring them. We believe this is a major step towards autonomous manufacturing.

Our global sales and marketing teams support our customers' success around the world. Our metrology probes and position encoders are primarily sold via machine builders and distributors, and our priority here is to boost fitment levels and gain market share. For example, our open optical encoders are being designed into a wide range of manufacturing equipment in the automotive, semiconductor, robotics, and automation sectors. Meanwhile, more than 100 machine tool builders have evaluated our FORTiS enclosed optical encoders and a growing number of early adopters are fitting them to machines being produced in volume.

We also supply complete machines and software, mostly sold direct to end users, and serviced by our global teams. We have significant opportunities to gain market share in substantial, high-growth markets, so our priority is to grow these products towards market leadership positions.

Shop-floor metrology systems are a key growth area for us. We've been particularly successful this year with our AGILITY CMMs equipped with REVO 5-axis systems, where we have gained repeat sales from key customers in the automotive, aerospace and consumer electronics sectors. Our unique combination of rapid scanning and multi-sensor measurement, including optical and ultrasonic sensors, enables complete inspection in a single automated process. We've also increased sales of Equator flexible gauges for electric vehicle (EV) applications.

It's been a similar story for our RenAM family of multi-laser AM machines this year, with growth of repeat sales to the medical and consumer electronics sectors. Meanwhile, our Spectroscopy business has seen rising sales of the Virsa Raman analyser, which takes research-grade materials analysis out of the lab and onto the factory floor.

Our in-house manufacturing is also critical to our success, giving us the flexibility to meet changing demands, while maintaining our exacting standards. The current inflationary environment makes it essential that we improve our productivity, so we can absorb higher costs while remaining price competitive. We continue to upgrade our machine tools and expand our automated encoder assembly systems, which will enable us to rapidly ramp production up and down to track cyclical demand. We've also been running Renishaw Central in our machine shops over the last year, reducing our own unplanned stoppages and batch changeover times.

Meanwhile, we are making our biggest ever capital investment. We are progressing well with building works at our site in Miskin, Wales, that will, in a phased manner, increase our manufacturing floorspace by 50%, giving us room to grow in the years ahead.

Sustainability

Sustainability is at the heart of our purpose, and we are committed to making our entire business Net Zero by no later than 2050. We've made good progress on our plan, reducing greenhouse gas (GHG) emissions relating to our own operations and purchased energy, by 21% in FY2023.

A major focus this year has been our work towards fully quantifying the emissions relating to our supply chain and the distribution and use of our products, known as Scope 3 emissions. We estimate that these accounted for 97% of our total carbon emissions in our baseline year (FY2020). We are targeting a 50% reduction in these emissions by 2030, and will publish our full climate transition plan next year.

People

Sir David has already acknowledged the tremendous contribution our employees have made this year and throughout the past 50 years. I'd also like to add my own thanks for everything they've done to drive us forward towards our vision to innovate and transform the capabilities of our customers.

To pursue our purpose of Transforming Tomorrow Together, we need to attract and develop outstanding people. We are focused on modernising our approach to pay and reward, improving our performance reviews, and supporting career development to help our people fulfil their potential. We've increased our average pay by around 10.2% in FY2023 compared to FY2022, excluding other factors, such as headcount growth. Our global voluntary turnover rate has fallen from 10.7% to 6.8% this year.

We've responded to slowing customer demand for our optical encoders this year by reducing direct manufacturing headcount through non-replacement of leavers. We continue to take a long-term view for success, and our early careers programmes provide a vital pipeline of new talent to maintain and grow our teams. As of 30 June 2023, we employ 343 apprentices and graduates and in FY2023 we took on 45 industrial placement students.

Outlook

FY2023 has seen mixed conditions for our markets. Demand for most of our product lines has risen, with good growth in systems sales, but the semiconductor equipment sector has been notably weaker this year.

I'm confident in our strategy and the actions we're taking to deliver sustainable long-term growth, including our investments in people, infrastructure and product innovation.

Will Lee

Chief Executive

18 September 2023

* Note 29, Alternative performance measures, defines how Adjusted profit before tax and Adjusted earnings per share are measured.

COMMENTARY BY THE GROUP FINANCE DIRECTOR

We have achieved revenue for the year of £688.6m, compared with £671.1m last year. However, revenue at constant exchange rates* was £662.8m, a reduction of 1% from last year. The weakening of the semiconductor market during the year has resulted in challenging trading conditions, however we have seen good growth in our systems sales.

We have made significant investments in our production infrastructure and our people during the year. We continue to be in a strong financial position, with cash and cash equivalents and bank deposit balances of £206.4m at 30 June 2023 (30 June 2022: £253.2m).

Revenue analysis

Manufacturing technologies revenue grew by 2.2% to £648.2m this year at actual rates. Our optical encoder revenue has fallen, mainly due to lower demand from the semiconductor market, notably in the APAC region. However, we are pleased that this has been largely offset by good growth in sales of our multi-laser AM systems, machine calibration systems, laser encoder systems, and CMM inspection systems.

Revenue from our Analytical instruments and medical devices segment grew by 10.5% to £40.3m this year, with record revenue for our Spectroscopy products. We also saw growth in our Neurological business.

The below table shows revenue by geographic region.

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\n \n	\n 2023 \nrevenue \nat actual \nexchange \nrates \n£m \n	\n Change \nfrom \n2022 \n% \n	\n 2022 \nrevenue \nat actual \nexchange \nrates \n£m \n	\n Underlying \nchange at \nconstant \nexchange \nrates \n% \n
\n APAC \n	\n 310.6 \n	\n -2 \n	\n 317.0 \n	\n -4 \n
\n EMEA \n	\n 216.5 \n	\n +5 \n	\n 205.8 \n	\n +3 \n
\n Americas \n	\n 161.5 \n	\n +9 \n	\n 148.2 \n	\n 0 \n
\n Total Group revenue \n	\n 688.6 \n	\n +3 \n	\n 671.1 \n	\n -1 \n

Operating costs

Our labour costs are our largest cost. We have taken a cautious approach to recruitment during the year and our headcount was 5,175 at 30 June 2023, compared with 5,097 at the end of June 2022. This growth includes continued investment in our early careers programmes.

We have carried out global salary benchmarking, which has helped improve employee retention. This, together with an increase in average headcount of 205, are the main drivers for total labour costs (excluding bonuses) increasing by 13% to £268.2m from £236.5m last year. Accordingly, our production, engineering, distribution and administrative costs have all increased. A reduction in performance bonuses of £6.6m has partially offset the total labour cost increases.

This year's gross margin (excluding engineering costs) was 64%, compared with 65% last year. This change is mostly due to a reduction in production volumes (leading to a lower recovery of fixed overheads) and the higher labour pay rates. We helped minimise the effect of these by introducing targeted price increases and not replacing leavers in our direct manufacturing teams.

We remain committed to our long-term strategy of delivering growth by developing innovative and patented products. To that end, we invested £72.5m in research and development expenditure, compared with £59.4m last year (see Note 4 to the Financial statements). We also incurred £28.1m (FY2022: £26.4m) of other engineering expenditure, to support existing products and technologies.

Travel and exhibition costs are higher this year as COVID-19-related restrictions have been lifted and we have been able to engage in more customer facing activity. In addition to the labour cost growth, this has increased our distribution costs by 12%.

We have also experienced inflationary increases across other cost categories, notably software licences, health insurance and professional fees.

Profit and tax

As a result of the increased costs in a year of modest revenue growth, Adjusted* profit before tax amounted to £141.0m, compared with a record £163.7m in FY2022. This is a reduction of 13.9%. Statutory profit before tax was £145.1m, compared with £145.6m in the previous year.

Sometimes infrequently occurring events can affect our financial statements, recognised according to applicable IFRSs. We exclude such events from adjusted performance measures to give the Board and other stakeholders another useful metric to understand and compare our underlying performance.

This year, the items we excluded from Adjusted profit before tax include: gains of £5.5m from forward contracts deemed ineffective for cash flow hedging (FY2022: £8.3m losses); a revised estimate of FY2020 restructuring provisions of £0.7m gain (FY2022: £1.7m gain); and a defined benefit (DB) pension scheme past service cost relating to termination of the US DB pension scheme totalling £2.1m. These have not affected cash flow during the financial year. Additional items excluded in the previous year are detailed in Note 29. The table below reconciles Adjusted profit before tax to Statutory profit before tax.

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n 2023 \n£'000 \n	\n 2022 \n£'000 \n
\n Adjusted profit before tax \n	\n 140,983 \n	\n 163,742 \n
\n Revised estimate of 2020 restructuring provisions \n	\n 717 \n	\n 1,688 \n
\n Third-party FSP (formal sale process) costs \n	\n - \n	\n 200 \n
\n US/UK DB pension scheme past service cost \n	\n (2,139) \n	\n (11,695) \n
\n Fair value gains/(losses) on financial instruments \n	\n 5,504 \n	\n (8,349) \n
\n Statutory profit before tax \n	\n 145,065 \n	\n 145,586 \n

Adjusted operating profit in our Manufacturing technologies segment was £125.5m, compared with £158.6m last year. Meanwhile, in our Analytical instruments and medical devices segment, Adjusted operating profit was £4.9m, compared with £2.8m last year.

Financial income for the year was £9.7m, compared with £0.9m last year, and includes a £5.5m increase in interest on bank deposits mainly due to higher interest rates.

The FY2023 effective tax rate has increased to 20.0% (FY2022: 17.3%) mostly as a result of a reduction in patent box tax incentives and an increase in the UK tax rate from 19% to 25%. Note 7 provides further analysis of the effective tax rate.

Consolidated balance sheet

We have invested £74.0m (FY2022: £31.0m) in capital expenditure, including production plant and equipment and the ongoing development of our production facility in Miskin, Wales.

Within working capital, we have increased our inventories to £185.8m from £162.5m at the beginning of the year. This is mainly a result of targeted increases in components and sub-assemblies for our optical encoder products following global supply chain shortages in previous years. Given the reduction in demand for optical encoders some of our components are currently overstocked. Now that supply chain challenges have eased, we have plans to reduce safety stock levels of critical components. However, we remain committed to our policy of holding sufficient finished goods to ensure customer delivery performance, given our short order book.

Trade receivables reduced from £127.6m to £123.4m due to lower levels of trading in the fourth quarter of FY2023 relative to the previous year. Debtor days remained constant year-on-year at 64 days. We continue to experience low levels of defaults, and hold a provision for expected credit losses at 0.4% of trade receivables (FY2022: 0.2%).

Total equity at the end of the year was £896.7m, compared with £815.2m at 30 June 2022. This is primarily a result of profit for the year of £116.1m, offset by dividends paid of £53.4m.

Cash and liquidity

We continue to have a strong liquidity position, with cash and cash equivalents, and bank deposit balances at 30 June 2023 of £206.4m (30 June 2022: £253.2m). This is a result of our trading performance, offset by our previously noted capital investments and working capital movements, and dividends paid of £53.4m.

We disclose details of 'severe but plausible' scenario forecasts used in our going concern and viability assessments in note 1 and conclude that we have a reasonable expectation that we will retain a liquid position and be able to continue in operation for at least the next three years.

Pensions

At the end of the year, our DB pension schemes, now closed for future accrual, showed a net surplus of £57.4m, compared with £42.2m at 30 June 2022.

In October 2022, following a significant improvement in the UK scheme's funding position due to rising gilt yields, the Trustees (in consultation with the Company) de-risked the investment strategy by disinvesting from the scheme's equity and diversified growth holdings and investing the proceeds into index-linked gilts. The overall impact of these changes is to reduce investment risk, with the assets better matching the expected movements in the liabilities. We now believe the scheme is fully funded and are in the process of seeking to insure the liabilities.

During the year, pension schemes' liabilities decreased from £174.5m to £139.0m, on an IAS 19 basis, primarily reflecting the increase in the UK scheme discount rate from 3.6% to 5.1%.

Our DB pension schemes' assets at 30 June 2023 decreased to £196.3m from £216.7m at 30 June 2022, with UK asset values falling (in line with expectations) given the liability matching approach.

A termination of the US DB pension scheme was formally commenced during the year. The Trustees of the scheme and Renishaw Inc agreed that the surplus will be distributed to the members of the scheme, resulting in a change to members' benefits. Accordingly, this change has resulted in a charge of £2.1m to the Consolidated income statement, which has been excluded from Adjusted profit before tax.

See Note 23 for further details on employee benefits.

Treasury policies

Our treasury policies are designed to manage the financial risks that arise from operating in multiple foreign currencies. The majority of sales are made in these currencies, while most manufacturing and engineering is carried out in the UK, Ireland and India.

We use forward exchange contracts to hedge a proportion of anticipated foreign currency cash inflows and the translation of foreign currency denominated intercompany balances.

There are forward contracts in place to hedge against our Euro, US Dollar and Japanese Yen cash inflows, and to offset movements on Renishaw plc's Euro, US Dollar and Japanese Yen intercompany balances. We do not speculate with derivative financial instruments.

Our treasury policies are also designed to maximise interest income on our cash and bank deposits and to ensure that appropriate funding arrangements are available for each of our companies.

Sustainability

With our Sustainability team doing more work this year to better understand the risks and opportunities of climate change, we have reviewed the effect on our financial statements and financial planning. Our five-year financial plan includes estimates of the capital expenditure needed in this period to help deliver our own Net Zero plans. We have also considered the potential impact on topics such as the expected useful lives of tangible assets and the headroom on intangible assets, and have not identified a material effect on this year's financial statements. We will continue to review this as the Group further develops its work on both our own Net Zero plans and the wider impact of climate change on our risks and opportunities.

Capital allocation strategy

Our Board regularly reviews the capital requirements of the Group, to maintain a strong financial position to protect the business and provide flexibility to fund future growth.

We've consistently applied our capital allocation strategy for many years. Organic growth is our first priority and we're committed to R&D investment for new products, manufacturing processes and global support infrastructure to generate growth in future returns and improve productivity. This is evidenced in the year by our capital expenditure, the increase in working capital and investments in R&D.

We may supplement organic growth with acquisitions in current and adjacent market niches that are aligned to our strategy. We have always valued having cash in the bank to protect the core business from downturns, and we monitor our cash against a minimum holding according to forecast overheads and revenue downturn scenarios. This cash also allows us to react swiftly as investment or market capture opportunities arise.

Actual and forecast returns, along with our strong financial position, support our progressive dividend policy, which aims to increase the dividend per share while maintaining a prudent level of dividend cover.

Earnings per share and dividend

Adjusted earnings per share is 155.1p, compared with 185.5p last year, while statutory earnings per share is 159.7p, compared with 165.4p last year.

We paid an interim dividend of 16.8 pence per share (FY2022: 16.0p) on 11 April 2023 and are pleased to propose a final dividend of 59.4 pence per share in respect of the year (FY2022: 56.6p).

Looking forward

Given the uncertain market conditions, we continue to be cautious as we enter FY2024, and are currently recruiting for critical roles only.

Where possible, we are implementing further price rises to mitigate ongoing inflation, and are focused on delivering productivity improvements across the business.

However, we have many drivers in our key markets to deliver long-term revenue growth and we continue to invest in the infrastructure required to meet the expected future demand. We expect to spend around £35m to complete phase 1 of our new production facility at Miskin, Wales, which is expected to be operational from early 2024, and continue to invest in automation and productivity opportunities.

Allen Roberts

Group Finance Director

18 September 2023

*Note 29, 'Alternative performance measures', defines how revenue at constant exchange rates, Adjusted profit before tax, Adjusted operating profit and Adjusted earnings per share are calculated.

PRINCIPAL RISKS AND UNCERTAINTIES

Our performance is subject to a number of risks - the principal risks, factors impacting on them and mitigations are ranked in the table below, as well as an indication of the movement of the risk in the last year, our appetite towards that risk, and how the risk links to our strategy. The Board has conducted a robust assessment of the principal risks facing the business.

\n\n\n\n\n\n\n\n

Appetite:

- Low: Minimal risk exposure is considered the safest approach, which may mean lower returns.

- Medium: A balanced approach which carefully considers the risks and rewards.

- High: Greater risk tolerance, which may involve maximum risk for maximum return.

Link to strategy:

- SM: Sales & Marketing

- E: Engineering

- P: People and Culture

- M: Manufacturing

- CS: Corporate Services

- S: Sustainability

\n Economic and political uncertainty \n
\n Movement: increased risk Appetite: High Link to strategy: All Risk owner: Chief Executive \n
\n Risk description \n
\n As a global business, we may be affected by global political, economic or regulatory developments. This could include a global recession, USA-China trade relations, or the Russia-Ukraine conflict. This risk can also drive industry fluctuations. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Loss of financial and physical \n assets in a region. \n · Supply issues leading to failures to meet contractual obligations. \n · Reduced revenue, profit and \n cash generation. \n · Increased risk to credit, liquidity and currency. \n	\n · Monitoring external economic and commercial environments and markets in which we operate, and identifying relevant headwinds. \n · Maintaining sufficient headroom in our cash balances. \n · Maintaining appropriate levels of buffer inventory. \n · Resilient business model and clear strategy, both of which are subject to regular scrutiny. \n
\n Innovation strategy \n
\n Movement: stable risk Appetite: High Link to strategy: E Risk owner: Directors of Industrial Metrology, Position Measurement and Additive Manufacturing \n
\n Risk description \n
\n Failure to create new cutting-edge, high-quality products, or failing to protect the intellectual property that underpins these products, which allows us to differentiate ourselves from our competitors. \n As a business driven by innovation, there is a higher risk when venturing outside our traditional field of expertise where the science and engineering are less proven. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Failure to lead the market in innovation of products in our core and adjacent sectors. \n · Loss of market share. \n · Reduced revenue, profit and \n cash generation. \n · Failing to recover investment in R&D. \n	\n · Increase in R&D expenditure with a continued focus on investment for new product development. \n · Establishing a 'Product Group Directors Team', which focuses on R&D productivity initiatives around the Group. Topics in FY2023 included: embedding the flagship projects programme and establishing in-depth quarterly reviews with the Chief Executive; and evolving hybrid working. We will see the impact of these initiatives in FY2024. \n · Monthly monitoring of the 'key technologies' R&D targets, with an aim of identifying business value and accelerating our promising new technologies and associated patents very early in the life-cycle. \n · Continuing the drive towards incremental development and more open customer collaboration at early stages of R&D projects, to ensure our innovations are successful in the market. \n
\n People \n
\n Movement: decreased risk Appetite: Medium Link to strategy: P Risk owner: Head of Group HR \n
\n Risk description \n
\n Our people are fundamental to the success of our business. \n Inability to attract, retain and develop key talent at all levels of the organisation, as well as a failure to ensure we have appropriate succession plans in place, could mean we fail to successfully deliver our strategic objectives. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Loss of expertise, skills, and specialist talent could affect delivery of objectives. \n · Poor retention and engagement could slow the delivery of our strategic objectives and product delivery. \n · Failure to develop future leaders, insufficient talent progression. \n · Loss of market share, reduced revenue, poor customer service, and reduced profit. \n	\n · Continuing our focus on attracting, rewarding and retaining our people globally. \n · Continuing our global salary benchmarking programme, with our largest investment in reward, to date. We have seen an improvement in retention since conducting our benchmarking exercises. \n · Working towards implementing a global engagement platform. \n · Continuing to invest in our education and early career programmes as well as talent development and succession planning. For example, we opened our dedicated STEM Centre at our headquarters in Gloucestershire, UK. \n · Developing a competency framework to complement our new job architecture. \n · Advancing our employee engagement through multi-media communications, surveys, promoting wellbeing, evolving feedback mechanisms and further developing our work to build an inclusive culture. \n · Establishing continuity plans to enable rapid adaptation to changing circumstances. \n
\n Industry fluctuations \n
\n Movement: stable risk Appetite: High Link to strategy: SM, M, E Risk owner: Chief Executive \n
\n Risk description \n
\n We're exposed to the cyclical nature of demand from aerospace, automotive, semiconductor and consumer electronics markets, which may be more severe if downcycles in these key industries coincide. This risk can also be influenced by economic and political uncertainty. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Reduced revenue, profit and cash generation. \n · Increased competition on prices. \n · Loss of market share if unable to meet rapid increases in demand. \n \n	\n · Closely monitoring market developments. \n · Expanding our product range to serve different industry sectors and markets. \n · Identifying and meeting the needs of rapidly growing markets, for example in robotic automation. \n · Maintaining a strong balance sheet and strategic inventories with the ability to flex. \n
\n Route to market / customer satisfaction model \n
\n Movement: stable risk Appetite: Medium Link to strategy: SM Risk owner: Chief Executive \n
\n Risk description \n
\n Failure to implement appropriate and efficient sales and support processes relating to systems integration and the sale of capital goods could restrict growth opportunities in these areas. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Low capital efficiency - high people costs and low productivity. \n · High application engineering and distribution costs. \n · Adversely affects customer satisfaction levels, revenue, and profits. \n	\n · Focusing on key customers to generate reporting revenues. \n · Closely monitoring customer feedback. \n · Collaborating with complementary third parties. \n · Adopting new approaches to the sale of capital goods. \n
\n Cyber \n
\n Movement: increased risk Appetite: Low Link to strategy: All Risk owner: Director of Group Operations \n
\n Risk description \n
\n External and internal threats that could result in a loss of (i) data, including IP; or (ii) our ability to operate our systems, which could severely affect our business. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Loss of IP and/or commercially sensitive data and/or personal data. \n · Inability to access, or disruption to, our systems leading to reduced service to customers. \n · Financial loss and reputational damage. \n · Impact on decision-making due to lack of clear and accurate data, or disruption caused by the lack of service. \n	\n · Ensuring substantial resilience and back-up is built into our systems, which are continuously updated for current threats and good industry practice. This includes duplication of hardware, dual and diverse connections where possible, and regular back-up schedules. \n · Regularly discussing cyber and security risks at Board and Audit Committee meetings, including the strength of our control environment. \n · Deploying physical and logical control measures to protect our information and systems. Real-life restores of data and services are carried out regularly. \n · Conducting regular security awareness training, including phishing simulation exercises, which are proving effective. We also conduct external penetration testing as appropriate. \n
\n IT transformation failure \n
\n Movement: increased risk Appetite: Low Link to strategy: All Risk owner: Director of Group Operations \n
\n Risk description \n
\n The upgrade of our Sage CRM and Sage ERP systems to Microsoft Dynamics 365, to remove legacy systems and ensure our global operations are better integrated, could affect our business if there are major technical issues, or it is poorly integrated. This risk could also result in problems if there are significant delays to the programme or it runs significantly over budget. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Major disruption to our systems, causing delays to our operations. \n · Affect our ability to process or issue invoices and customer orders, or to procure goods and services. \n · Increased costs, including to fix technical issues and restore or upgrade other affected systems. \n	\n · Maintaining close project management between ourselves, Microsoft and our system integrator. \n · Working to a clear, risk-elimination-based roadmap with measurable milestones. \n · Strengthening the deployment team to accelerate roll out, with targeted recruitment and upskilling. \n · Obtaining commitment from the Board to invest as necessary. \n
\n Supply chain dependencies \n
\n Movement: decreased risk Appetite: Low Link to strategy: M, S Risk owner: Head of Group Manufacturing \n
\n Risk description \n
\n Critical components, or some components that we buy from single-source suppliers, make us vulnerable to an interruption in supply. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Inability to fulfil customer orders, leading to a reduction in revenue and profits, and damage to reputation. \n · Failure to meet contractual requirements. \n · Increased cost of alternative sourcing or redesign. \n · Loss of market share. \n	\n · Maintaining a risk dashboard for our key manufacturing sites, to help us prioritise and determine stock levels. \n · Adapting stock levels for high-risk items, to take account of supply lead times and time to redesign in the event of loss of supply. We actively seek cost-effective alternative sources of supply (including in-house manufacturing), to reduce dependency on single-source suppliers, with a continued focus on key components. \n · Collaborating with product groups on an ongoing basis to review risks and, where appropriate, carry out reviews and updates to specifications where necessary to facilitate alternative sourcing or redesign. \n
\n Competitive activity \n
\n Movement: stable risk Appetite: Low Link to strategy: All Risk owner: Chief Executive \n
\n Risk description \n
\n Failure to adapt to market and/or technological changes. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Reduced revenue, profits and cash generation. \n · Loss of market share. \n · Price erosion. \n · Loss of reputation as a leader in innovation. \n	\n · Ensuring we are diversified across a range of products, industries and geographies. \n · Closely monitoring market developments, particularly across our core product groups. \n · Maintaining local sales and engineering support to quickly identify changing local needs. \n · Continuing to build our product portfolio through our strong historic and ongoing commitment to R&D (see Note 4 to the Financial statements for details of R&D expenditure). \n \n \n \n \n
\n Capital and resource allocation \n
\n Movement: stable risk Appetite: Medium Link to strategy: E Risk owner: Group Finance Director \n
\n Risk description \n
\n This risk could be triggered by a failure to properly allocate budget and resource between core and emerging activities. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Investing in declining or less profitable areas at the expense of more profitable and strategically important areas. \n · Reduced profits. \n · Loss of market share. \n · Impact on innovation. \n	\n · Defining, prioritising, and developing strategies for all core and emerging areas of the business. \n · Scrutinising all expenditure, including regular reporting on labour costs and capital expenditure. \n · Regular reporting of cash balances. \n · Tracking performance objectives, including regular reporting on flagship project progress. \n
\n Exchange rate fluctuations \n
\n Movement: increased risk Appetite: Medium Link to strategy: SM Risk owner: Group Finance Director \n
\n Risk description \n
\n We report our results and pay dividends in Sterling and, with more than 90% of our revenue generated outside the UK, we're exposed to volatility in exchange rates that could have a significant impact on our results. \n Movements of Sterling against our major trading currencies cause cash flow, currency translation, and intercompany balance translation risks. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Significant variations in profit. \n · Reduced cash generation. \n · Increased competition on product prices. \n · Increased costs. \n	\n · Maintaining rolling forward contracts for cash-flow hedges in accordance with Board-approved policy, and one-month forward contracts to manage risks on intercompany balances. \n · Tracking overseas net assets value compared to the market capitalisation. \n · Obtaining input from external sources, including our banks. \n
\n Climate change \n
\n Movement: stable risk Appetite: Low Link to strategy: All Risk owner: Head of Group Manufacturing \n
\n Risk description \n
\n We could be exposed to climate-related physical risks, such as hurricanes, floods, wildfires and pandemics, which could potentially affect our ability to operate. \n Other risks related to a transition to a low-carbon economy could also affect us if we fail to react adequately to new climate-related legislation, technology or market factors. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Increased costs of key raw materials, due to climate- related legislation affecting the macroeconomic landscape with the introduction of carbon taxes. \n · Disruption to operations caused by climate-related hazards could reduce our revenue, create safety risks to our people and increase our operational costs. \n · If we fail to achieve Net Zero commitments, we could experience damage to reputation and loss of business. \n	\n · Our Sustainability team supports the Risk Committee in evaluating and understanding the possible effect of climate-related risks and opportunities. \n · Climate-related hazards have been a driver in developing our manufacturing approach. More detail on our risk mitigation work can be found in the descriptions of our Loss of manufacturing output and Supply chain dependencies risks. \n · Using our product groups' priorities to manage climate-related transitional risks. \n · Reviewing and maintaining business interruption and other insurance cover. \n · Investing to reduce energy consumption and increase renewable energy generation across the Group. For example, we are aiming for all new buildings and refurbishments to achieve Net Zero emissions in operation. \n \n \n \n \n \n \n \n
\n Loss of manufacturing output \n
\n Movement: decreased risk Appetite: Low Link to strategy: M Risk owner: Head of Group Manufacturing \n
\n Risk description \n
\n Manufacturing output can be adversely affected by factors including environmental hazards, technical delays or outages, plant or equipment failure, inadequate resourcing levels, or factors affecting the workforce, such as a pandemic. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Inability to fulfil customer orders leading to a reduction in revenue, failure to meet contractual requirements and damage to reputation. \n · Increased costs of alternative sourcing or redesign. \n · Impact on maintenance of buffer inventory. \n · Loss of market share. \n	\n · Duplication of high-dependency processes, such as component manufacturing and finishing, electronic printed circuit board assembly, and microelectronics assembly, across multiple manufacturing locations. \n · Ensuring we have flexible manufacturing capacity and sufficient resilience across our manufacturing sites. \n · Ensuring standardised approaches to assembly, annual risk assessments, and business continuity planning. \n · Reviewing and maintaining business interruption and other insurance cover. \n
\n Non-compliance with laws and regulations \n
\n Movement: stable risk Appetite: Low Link to strategy: All \n Risk owner: General Counsel & Company Secretary and Managing Director - Renishaw Medical \n
\n Risk description \n
\n We operate in a large number of territories and in some highly-regulated sectors. We are subject to a wide variety of laws and regulations, including those relating to anti-bribery, anti-money laundering, sanctions, competition law, privacy, health and safety, product safety, and medical devices. \n \n There is a risk that somewhere in the Group we may not be fully compliant with these laws and regulations. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Damage to reputation and loss of future business. \n · Potential penalties and fines, and cost of investigations. \n · Management time and attention in dealing with reports of non-compliance. \n · Inability to attract and retain talent. \n	\n · Maintaining our whistleblowing hotline (Speak up), available to all employees and third parties who provide services for or on behalf of the Group, which means that our people and other stakeholders can make us aware of any potential non- compliance issues. \n · Establishing global compliance programmes for all high-risk areas, which includes policies, key controls and effective communication. Training also includes refreshed mandatory anti-bribery and anti-corruption modules. \n · Promoting all compliance functions under the umbrella brand 'Responsible Renishaw'. This helps to raise awareness about compliance, and makes it easier for our people to find the information they need to comply. \n · Maintaining our global privacy programme. \n
\n Product failure \n
\n Movement: stable risk Appetite: Low Link to strategy: E, M \n Risk owner: Group Quality Manager and Quality Manager - Healthcare Regulatory \n
\n Risk description \n
\n The quality of our products could be adversely affected by internal threats, such as inadequate quality management processes. Product quality could also be affected by external threats, such as substandard performance from third-party suppliers. We could also be affected by other external risk factors, including grey market and counterfeit goods in our supply chain, and this may result in latent risks where product failures are not yet realised. \n \n This risk is particularly notable in our neurological products, where failure could result in significant personal injury claims or regulatory action. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Damage to reputation. \n · Claims, including personal injury. \n · Potential penalties and fines, cost of investigations and high recall costs for medical devices. \n · Increase in non-revenue-generating warranty activity. \n · Inability to fulfil customer orders leading to a reduction in sales. \n	\n · Ensuring we have rigorous internal product development and testing procedures (during development, manufacturing and release) to international standards where applicable, to ensure high levels of quality assurance. This includes following ISO 14971 and ISO 13485 for all medical devices. \n · Interacting with customers and regulators to obtain and address feedback. \n · Conducting a thorough vendor approval process, and regular monitoring of third-party suppliers to ensure incoming parts and sub-contracted activity meet requirements. \n · Applying grey market product verification activity where component sourcing is not from original equipment manufacturers (OEMs) or franchised providers. \n · Limiting our liability through our terms and conditions of sale and we also have product liability insurance. For clinical studies, we have separate trial insurance. \n
\n Pensions \n
\n Movement: stable risk Appetite: Medium Link to strategy: P Risk owner: Group Finance Director \n
\n Risk description \n
\n Investment returns and actuarial assumptions of our defined benefit pension (DB) schemes are subject to economic and social factors outside our control. \n
\n Potential impact \n	\n What we are doing to manage this risk \n
\n · Any deficit may need additional funding in the form of supplementary cash payments to the plans or the provision of additional security. \n · Significant management time. \n · External support costs. \n · Damage to reputation. \n	\n · Implementing recovery plan for the UK DB scheme in June 2019, with the aim of funding to self-sufficiency by 2031. \n · Appointing a corporate Trustee in June 2022, which has reduced management time and support costs. \n · Engaging with the corporate Trustee on investment strategy. \n · The corporate Trustee works to a statement of investment principles, and the Company and corporate Trustee seek appropriate independent professional advice, if needed. \n · During FY2023, the Company and Trustees of the UK DB scheme agreed to de-risk the investment strategy by disinvesting from the scheme's equity and diversified growth holdings and investing the proceeds into index-linked gilts. This followed a significant improvement in the scheme's funding position due to rising gilt yields. As a result, the Trustees agreed to £8.7m of funding due between 1 October 2022 and 30 September 2023 being deferred to 2026. \n

CONSOLIDATED INCOME STATEMENT

for the year ended 30 June 2023

\n \n from continuing operations \n	\n \n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n notes \n	\n £'000 \n	\n £'000 \n
\n \n	\n \n	\n \n	\n \n
\n Revenue \n	\n 2 \n	\n 688,573 \n	\n 671,076 \n
\n \n	\n \n	\n \n	\n \n
\n Cost of sales \n	\n 4 \n	\n (337,908) \n	\n (313,527) \n
\n \n	\n \n	\n \n	\n \n
\n Gross profit \n	\n \n	\n 350,665 \n	\n 357,549 \n
\n \n	\n \n	\n \n	\n \n
\n Distribution costs \n	\n \n	\n (137,744) \n	\n (122,455) \n
\n Administrative expenses \n	\n \n	\n (74,894) \n	\n (69,736) \n
\n UK defined benefit pension scheme past service cost \n	\n 23 \n	\n - \n	\n (11,695) \n
\n US defined benefit pension scheme past service cost \n	\n 23 \n	\n (2,139) \n	\n - \n
\n Losses from the fair value of financial instruments \n	\n 25 \n	\n (1,399) \n	\n (10,413) \n
\n \n	\n \n	\n \n	\n \n
\n Operating profit \n	\n \n	\n 134,489 \n	\n 143,250 \n
\n \n	\n \n	\n \n	\n \n
\n Financial income \n	\n 5 \n	\n 9,669 \n	\n 932 \n
\n Financial expenses \n	\n 5 \n	\n (1,861) \n	\n (2,938) \n
\n Share of profits of joint ventures \n	\n 13 \n	\n 2,768 \n	\n 4,342 \n
\n \n	\n \n	\n \n	\n \n
\n Profit before tax \n	\n \n	\n 145,065 \n	\n 145,586 \n
\n \n	\n \n	\n \n	\n \n
\n Income tax expense \n	\n 7 \n	\n (28,963) \n	\n (25,235) \n
\n \n	\n \n	\n \n	\n \n
\n Profit for the year \n	\n \n	\n 116,102 \n	\n 120,351 \n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n Profit attributable to: \n	\n \n	\n \n	\n \n
\n Equity shareholders of the parent company \n	\n \n	\n 116,102 \n	\n 120,351 \n
\n Non-controlling interest \n	\n 26 \n	\n - \n	\n - \n
\n Profit for the year \n	\n \n	\n 116,102 \n	\n 120,351 \n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n pence \n	\n pence \n
\n Dividend per share arising in respect of the year \n	\n 26 \n	\n 76.2 \n	\n 72.6 \n
\n Dividend per share paid in the year \n	\n 26 \n	\n 73.4 \n	\n 68.0 \n
\n \n	\n \n	\n \n	\n \n
\n Earnings per share (basic and diluted) \n	\n 8 \n	\n 159.7 \n	\n 165.4 \n

Adjusted profit before tax for the year was £140,983,000 (2022: £163,742,000). See note 29 Alternative performance measures for more details.

\n \n

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE

for the year ended 30 June 2023

\n \n	\n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n notes \n	\n £'000 \n	\n £'000 \n
\n Profit for the year \n	\n \n	\n 116,102 \n	\n 120,351 \n
\n \n	\n \n	\n \n	\n \n
\n Other items recognised directly in equity: \n	\n \n	\n \n	\n \n
\n \n	\n \n	\n \n	\n \n
\n Items that will not be reclassified to the Consolidated income statement: \n	\n \n	\n \n	\n \n
\n Current tax on contributions to defined benefit pension schemes \n	\n \n	\n - \n	\n 1,653 \n
\n Deferred tax on contributions to defined benefit pension schemes \n	\n \n	\n - \n	\n (1,653) \n
\n Remeasurement of defined benefit pension scheme assets/liabilities \n	\n 23 \n	\n 13,612 \n	\n 69,078 \n
\n Deferred tax on remeasurement of defined benefit pension scheme assets/liabilities \n	\n \n	\n (3,071) \n	\n (15,997) \n
\n Total for items that will not be reclassified \n	\n \n	\n 10,541 \n	\n 53,081 \n
\n \n	\n \n	\n \n	\n \n
\n Items that may be reclassified to the Consolidated income statement: \n	\n \n	\n \n	\n \n
\n Exchange differences in translation of overseas operations \n	\n 26 \n	\n (8,000) \n	\n 12,151 \n
\n Exchange differences in translation of overseas joint venture \n	\n 26 \n	\n - \n	\n 118 \n
\n Current tax on translation of net investments in foreign operations \n	\n 26 \n	\n 313 \n	\n (1,529) \n
\n Effective portion of changes in fair value of cash flow hedges, net of recycling \n	\n 26 \n	\n 23,167 \n	\n (28,423) \n
\n Deferred tax on effective portion of changes in fair value of cash flow hedges \n	\n 7,26 \n	\n (5,692) \n	\n 6,155 \n
\n Total for items that may be reclassified \n	\n \n	\n 9,788 \n	\n (11,528) \n
\n \n	\n \n	\n \n	\n \n
\n Total other comprehensive income and expense, net of tax \n	\n \n	\n 20,329 \n	\n 41,553 \n
\n \n	\n \n	\n \n	\n \n
\n Total comprehensive income and expense for the year \n	\n \n	\n 136,431 \n	\n 161,904 \n
\n \n	\n \n	\n \n	\n \n
\n Attributable to: \n	\n \n	\n \n	\n \n
\n Equity shareholders of the parent company \n	\n \n	\n 136,431 \n	\n 161,904 \n
\n Non-controlling interest \n	\n 26 \n	\n - \n	\n - \n
\n Total comprehensive income and expense for the year \n	\n \n	\n 136,431 \n	\n 161,904 \n

CONSOLIDATED BALANCE SHEET

\n at 30 June 2023 \n	\n \n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n notes \n	\n £'000 \n	\n £'000 \n
\n Assets \n	\n \n	\n \n	\n \n
\n Property, plant and equipment \n	\n 9 \n	\n 286,085 \n	\n 243,853 \n
\n Right-of-use assets \n	\n 10 \n	\n 8,402 \n	\n 9,950 \n
\n Investment properties \n	\n 11 \n	\n 10,323 \n	\n 10,568 \n
\n Intangible assets \n	\n 12 \n	\n 46,468 \n	\n 44,218 \n
\n Investments in joint ventures \n	\n 13 \n	\n 22,414 \n	\n 20,570 \n
\n Finance lease receivables \n	\n 14 \n	\n 9,935 \n	\n 6,961 \n
\n Employee benefits \n	\n 23 \n	\n 57,416 \n	\n 43,241 \n
\n Deferred tax assets \n	\n 7 \n	\n 19,944 \n	\n 22,893 \n
\n Derivatives \n	\n 25 \n	\n 9,443 \n	\n - \n
\n Total non-current assets \n	\n \n	\n 470,430 \n	\n 402,254 \n
\n \n	\n \n	\n \n	\n \n
\n Current assets \n	\n \n	\n \n	\n \n
\n Inventories \n	\n 16 \n	\n 185,757 \n	\n 162,482 \n
\n Trade receivables \n	\n 25 \n	\n 123,427 \n	\n 127,551 \n
\n Finance lease receivables \n	\n 14 \n	\n 3,764 \n	\n 3,348 \n
\n Contract assets \n	\n \n	\n 861 \n	\n 578 \n
\n Short-term loans to joint ventures \n	\n \n	\n - \n	\n 302 \n
\n Current tax \n	\n \n	\n 19,558 \n	\n 8,901 \n
\n Other receivables \n	\n 25 \n	\n 27,979 \n	\n 27,068 \n
\n Derivatives \n	\n 25 \n	\n 5,373 \n	\n 7,121 \n
\n Bank deposits \n	\n 15 \n	\n 125,000 \n	\n 100,000 \n
\n Cash and cash equivalents \n	\n 15,25 \n	\n 81,388 \n	\n 153,162 \n
\n Total current assets \n	\n \n	\n 573,107 \n	\n 590,513 \n
\n \n	\n \n	\n \n	\n \n
\n Current liabilities \n	\n \n	\n \n	\n \n
\n Trade payables \n	\n 25 \n	\n 21,551 \n	\n 30,947 \n
\n Contract liabilities \n	\n 18 \n	\n 9,971 \n	\n 12,956 \n
\n Current tax \n	\n \n	\n 7,118 \n	\n 10,078 \n
\n Provisions \n	\n 17 \n	\n 2,758 \n	\n 4,244 \n
\n Derivatives \n	\n 25 \n	\n 5,089 \n	\n 17,890 \n
\n Lease liabilities \n	\n 21 \n	\n 3,009 \n	\n 3,714 \n
\n Borrowings \n	\n 20 \n	\n 4,694 \n	\n 919 \n
\n Other payables \n	\n 19 \n	\n 48,130 \n	\n 51,949 \n
\n Total current liabilities \n	\n \n	\n 102,320 \n	\n 132,697 \n
\n Net current assets \n	\n \n	\n 470,787 \n	\n 457,816 \n
\n \n	\n \n	\n \n	\n \n
\n Non-current liabilities \n	\n \n	\n \n	\n \n
\n Lease liabilities \n	\n 21 \n	\n 5,624 \n	\n 6,466 \n
\n Borrowings \n	\n 20 \n	\n - \n	\n 5,160 \n
\n Employee benefits \n	\n 23 \n	\n 45 \n	\n 996 \n
\n Deferred tax liabilities \n	\n 7 \n	\n 38,770 \n	\n 22,815 \n
\n Derivatives \n	\n 25 \n	\n 120 \n	\n 9,463 \n
\n Total non-current liabilities \n	\n \n	\n 44,559 \n	\n 44,900 \n
\n Total assets less total liabilities \n	\n \n	\n 896,658 \n	\n 815,170 \n
\n \n	\n \n	\n \n	\n \n
\n Equity \n	\n \n	\n \n	\n \n
\n Share capital \n	\n 26 \n	\n 14,558 \n	\n 14,558 \n
\n Share premium \n	\n \n	\n 42 \n	\n 42 \n
\n Own shares held \n	\n 26 \n	\n (2,963) \n	\n (750) \n
\n Currency translation reserve \n	\n 26 \n	\n 6,772 \n	\n 14,459 \n
\n Cash flow hedging reserve \n	\n 26 \n	\n 6,552 \n	\n (10,923) \n
\n Retained earnings \n	\n \n	\n 871,777 \n	\n 798,541 \n
\n Other reserve \n	\n 26 \n	\n 497 \n	\n (180) \n
\n Equity attributable to the shareholders of the parent company \n	\n \n	\n 897,235 \n	\n 815,747 \n
\n Non-controlling interest \n	\n 26 \n	\n (577) \n	\n (577) \n
\n Total equity \n	\n \n	\n 896,658 \n	\n 815,170 \n

These financial statements were approved by the Board of Directors on 18 September 2023 and were signed on its behalf by:

Sir David McMurtry Allen Roberts

Directors

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2023

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n \n	\n \n	\n \n	\n Cash \n	\n \n	\n \n	\n \n	\n \n
\n \n	\n \n	\n \n	\n Own \n	\n Currency \n	\n flow \n	\n \n	\n \n	\n Non- \n	\n \n
\n \n	\n Share \n	\n Share \n	\n Shares \n	\n translation \n	\n hedging \n	\n Retained \n	\n Other \n	\n controlling \n	\n \n
\n \n	\n capital \n	\n premium \n	\n Held \n	\n reserve \n	\n reserve \n	\n earnings \n	\n reserve \n	\n interest \n	\n Total \n
\n Year ended 30 June 2022 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Balance at 1 July 2021 \n	\n 14,558 \n	\n 42 \n	\n (404) \n	\n 3,719 \n	\n 11,345 \n	\n 674,603 \n	\n 44 \n	\n (577) \n	\n 703,330 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Profit for the year \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 120,351 \n	\n - \n	\n - \n	\n 120,351 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Other comprehensive income and expense (net of tax) \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Remeasurement of defined benefit pension scheme liabilities \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 53,081 \n	\n - \n	\n - \n	\n 53,081 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Foreign exchange translation differences \n	\n - \n	\n - \n	\n - \n	\n 10,622 \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 10,622 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Relating to associates and joint ventures \n	\n - \n	\n - \n	\n - \n	\n 118 \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 118 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Changes in fair value of cash flow hedges \n	\n - \n	\n - \n	\n - \n	\n - \n	\n (22,268) \n	\n - \n	\n - \n	\n - \n	\n (22,268) \n
\n Total other comprehensive income and expense \n	\n - \n	\n - \n	\n - \n	\n 10,740 \n	\n (22,268) \n	\n 53,081 \n	\n - \n	\n - \n	\n 41,553 \n
\n Total comprehensive income and expense \n	\n - \n	\n - \n	\n - \n	\n 10,740 \n	\n (22,268) \n	\n 173,432 \n	\n - \n	\n - \n	\n 161,904 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Share-based payments charge \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 180 \n	\n - \n	\n 180 \n
\n Own shares transferred on vesting \n	\n - \n	\n - \n	\n 404 \n	\n - \n	\n - \n	\n - \n	\n (404) \n	\n - \n	\n - \n
\n Own shares purchased \n	\n - \n	\n - \n	\n (750) \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n (750) \n
\n Dividends paid \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n (49,494) \n	\n - \n	\n - \n	\n (49,494) \n
\n Balance at 30 June 2022 \n	\n 14,558 \n	\n 42 \n	\n (750) \n	\n 14,459 \n	\n (10,923) \n	\n 798,541 \n	\n (180) \n	\n (577) \n	\n 815,170 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Year ended 30 June 2023 \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Profit for the year \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 116,102 \n	\n - \n	\n - \n	\n 116,102 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Other comprehensive income and expense (net of tax) \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Remeasurement of defined benefit pension scheme assets/liabilities \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 10,541 \n	\n - \n	\n - \n	\n 10,541 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Foreign exchange translation differences \n	\n - \n	\n - \n	\n - \n	\n (7,687) \n	\n - \n	\n - \n	\n - \n	\n - \n	\n (7,687) \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Changes in fair value of cash flow hedges \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 17,475 \n	\n - \n	\n - \n	\n - \n	\n 17,475 \n
\n Total other comprehensive income and expenses \n	\n - \n	\n - \n	\n - \n	\n (7,687) \n	\n 17,475 \n	\n 10,541 \n	\n - \n	\n - \n	\n 20,329 \n
\n Total comprehensive income and expenses \n	\n - \n	\n - \n	\n - \n	\n (7,687) \n	\n 17,475 \n	\n 126,643 \n	\n - \n	\n - \n	\n 136,431 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Share-based payments charge \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n 677 \n	\n - \n	\n 677 \n
\n Own shares purchased \n	\n - \n	\n - \n	\n (2,213) \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n (2,213) \n
\n Dividends paid \n	\n - \n	\n - \n	\n - \n	\n - \n	\n - \n	\n (53,407) \n	\n - \n	\n - \n	\n (53,407) \n
\n Balance at 30 June 2023 \n	\n 14,558 \n	\n 42 \n	\n (2,963) \n	\n 6,772 \n	\n 6,552 \n	\n 871,777 \n	\n 497 \n	\n (577) \n	\n 896,658 \n

More details of share capital and reserves are given in note 26.

CONSOLIDATED STATEMENT OF CASH FLOW

for the year ended 30 June 2023

\n \n	\n \n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n notes \n	\n £'000 \n	\n £'000 \n
\n Cash flows from operating activities \n	\n \n	\n \n	\n \n
\n Profit for the year \n	\n \n	\n 116,102 \n	\n 120,351 \n
\n Adjustments for: \n	\n \n	\n \n	\n \n
\n Depreciation of property, plant and equipment, investment properties \n	\n 9,11 \n	\n 19,882 \n	\n 25,898 \n
\n Loss on sale of property, plant and equipment \n	\n 9 \n	\n 155 \n	\n 157 \n
\n Impairment of property, plant and equipment \n	\n 9 \n	\n - \n	\n 1,259 \n
\n Depreciation of right-of-use assets \n	\n 10 \n	\n 4,223 \n	\n 4,205 \n
\n Impairment of right-of-use-assets \n	\n \n	\n - \n	\n 1,837 \n
\n Amortisation of development costs \n	\n 12 \n	\n 5,150 \n	\n 4,698 \n
\n Amortisation of other intangibles \n	\n 12 \n	\n 1,012 \n	\n 1,225 \n
\n Impairment of development costs \n	\n 12 \n	\n 1,611 \n	\n - \n
\n Write-off of intangible assets \n	\n \n	\n - \n	\n 3,510 \n
\n Loss on disposal of intangible assets \n	\n \n	\n 550 \n	\n - \n
\n Share of profits from joint ventures \n	\n 13 \n	\n (2,768) \n	\n (4,342) \n
\n Profit on disposal of investment in associate \n	\n \n	\n - \n	\n (582) \n
\n Write-off of lease liabilities \n	\n \n	\n - \n	\n (1,985) \n
\n Defined benefit pension schemes past service cost \n	\n 23 \n	\n 2,437 \n	\n 11,695 \n
\n Financial income \n	\n 5 \n	\n (9,669) \n	\n (932) \n
\n Financial expenses \n	\n 5 \n	\n 1,861 \n	\n 2,938 \n
\n (Gains)/losses from the fair value of financial instruments \n	\n 25 \n	\n (5,504) \n	\n 8,349 \n
\n Share-based payment expense \n	\n 24 \n	\n 677 \n	\n 180 \n
\n Tax expense \n	\n 7 \n	\n 28,963 \n	\n 25,235 \n
\n \n	\n \n	\n 48,580 \n	\n 83,345 \n
\n Increase in inventories \n	\n \n	\n (23,275) \n	\n (48,919) \n
\n Increase in trade, finance lease and other receivables \n	\n \n	\n (12,379) \n	\n (11,301) \n
\n (Decrease)/increase in trade and other payables \n	\n \n	\n (15,013) \n	\n 12,288 \n
\n Decrease in provisions \n	\n \n	\n (1,486) \n	\n (2,015) \n
\n \n	\n \n	\n (52,153) \n	\n (49,947) \n
\n Defined benefit pension scheme contributions \n	\n 23 \n	\n (2,341) \n	\n (8,866) \n
\n Income taxes paid \n	\n \n	\n (25,891) \n	\n (23,410) \n
\n Cash flows from operating activities \n	\n \n	\n 84,297 \n	\n 121,473 \n
\n \n	\n \n	\n \n	\n \n
\n Investing activities \n	\n \n	\n \n	\n \n
\n Purchase of property, plant and equipment, and investment properties \n	\n 9,11 \n	\n (74,024) \n	\n (30,960) \n
\n Sale of property, plant and equipment \n	\n \n	\n 7,948 \n	\n 687 \n
\n Development costs capitalised \n	\n 12 \n	\n (10,448) \n	\n (7,966) \n
\n Purchase of other intangibles \n	\n 12 \n	\n (379) \n	\n (929) \n
\n (Increase)/decrease in bank deposits \n	\n 15 \n	\n (25,000) \n	\n 20,000 \n
\n Interest received \n	\n 5 \n	\n 6,302 \n	\n 834 \n
\n Dividend received from joint ventures \n	\n 13 \n	\n 924 \n	\n 525 \n
\n Proceeds from sale of shares in associate \n	\n \n	\n - \n	\n 582 \n
\n Payments from pension scheme cash escrow account \n	\n \n	\n - \n	\n 10,578 \n
\n Cash flows from investing activities \n	\n \n	\n (94,677) \n	\n (6,649) \n
\n \n	\n \n	\n \n	\n \n
\n Financing activities \n	\n \n	\n \n	\n \n
\n Repayment of borrowings \n	\n 20 \n	\n (914) \n	\n (974) \n
\n Interest paid \n	\n 5 \n	\n (656) \n	\n (591) \n
\n Repayment of principal of lease liabilities \n	\n 22 \n	\n (4,206) \n	\n (4,081) \n
\n Own shares purchased \n	\n 26 \n	\n (2,213) \n	\n (750) \n
\n Dividends paid \n	\n 26 \n	\n (53,407) \n	\n (49,494) \n
\n Cash flows from financing activities \n	\n \n	\n (61,396) \n	\n (55,890) \n
\n \n	\n \n	\n \n	\n \n
\n Net (decrease)/increase in cash and cash equivalents \n	\n \n	\n (71,776) \n	\n 58,934 \n
\n Cash and cash equivalents at beginning of the year \n	\n \n	\n 153,162 \n	\n 95,008 \n
\n Effect of exchange rate fluctuations on cash held \n	\n \n	\n 2 \n	\n (780) \n
\n Cash and cash equivalents at end of the year \n	\n 15 \n	\n 81,388 \n	\n 153,162 \n

NOTES (FORMING PART OF THE FINANCIAL STATEMENTS)

1. Accounting policies

This section sets out our significant accounting policies that relate to the financial statements as a whole, along with the critical accounting judgements and estimates that management has identified as having a potentially material impact on the Group's consolidated financial statements. Where an accounting policy is applicable to a specific note in the financial statements, the policy is described within that note.

Basis of preparation

Renishaw plc (the Company) is a company incorporated in England and Wales. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the Group, and 'we') and equity account the Group's interest in associates and joint ventures. The parent company financial statements present information about the Company as a separate entity and not about the Group.

The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 30 June 2023 or 30 June 2022. The financial information for the year ended 30 June 2022 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The auditor reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under s498 (2) or (3) Companies Act 2006. In respect of the year ended 30 June 2023, an unqualified auditor's report was signed on 18 September 2023. The statutory accounts will be delivered to the Registrar of Companies following the Group's annual general meeting.

The consolidated financial statements are presented in Sterling, which is the Company's functional currency and the Group's presentational currency, and all values are rounded to the nearest thousand (£'000).

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements. Judgements made by the Directors, in the application of these accounting policies, that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are noted below.

Basis of consolidation

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Joint ventures are accounted for using the equity method (equity-accounted investees) and are initially recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses.

The consolidated financial statements include the Group's share of the total comprehensive income and equity movements of equity accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal obligations or made payments on behalf of an investee.

Intragroup balances and transactions, and any unrealised income and expenses arising from intragroup transactions, are eliminated on consolidation. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Foreign currencies

On consolidation, overseas subsidiaries' results are translated into Sterling at weighted average exchange rates for the year by translating each overseas subsidiary's monthly results at exchange rates applicable to each of the respective months. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Sterling at the foreign exchange rates prevailing at that date. Differences on exchange resulting from the translation of overseas assets and liabilities are recognised in Other comprehensive income and are accumulated in equity.

Monetary assets and liabilities denominated in foreign currencies are reported at the rates prevailing at the time, with any gain or loss arising from subsequent exchange rate movements being included as an exchange gain or loss in the Consolidated income statement. Foreign currency differences arising from transactions are recognised in the Consolidated income statement.

New, revised or changes to existing accounting standards

The following accounting standard amendments became effective as at 1 January 2022 and have been adopted in the preparation of these financial statements, with effect from 1 July 2022:

- amendments to IFRS3, References to the Conceptual Framework;

- amendments to IAS 16, Property, Plant and Equipment - Proceeds before Intended Use; and

- amendments to IAS 37, Onerous Contracts - Costs of Fulfilling a Contract.

These have not had a material effect on these financial statements.

At the date of these financial statements, the following amendments that are potentially relevant to the Group, and which have not been applied in these financial statements, were in issue but not yet effective:

- amendments to IAS 1, Classification of Liabilities as Current or Non-current (not yet endorsed by the UK);

- amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting Policies;

- amendments to IAS 7, Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures (not yet endorsed by the UK);

- amendments to IAS 8, Definition of Accounting Estimates;

- amendments to IAS 12, International Tax Reform Pillar Two Model Rules;

- amendments to IAS 12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction; and

- amendments to IFRS 16, Lease Liability in a Sale and Leaseback.

The adoption of these Standards and Interpretations in future periods is not expected to have a material impact on the financial statements of the Group.

The Finance (No 2) Bill 2023, that includes Pillar Two legislation, was substantively enacted on 20 June 2023 for IFRS purposes. As permitted by the amendments to IAS 12 International Tax Reform Pillar Two Model Rules the Group has applied the exemption from recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.

Alternative performance measures

The financial statements are prepared in accordance with adopted IFRS and applied in accordance with the provisions of the Companies Act 2006. In measuring our performance, the financial measures that we use include those which have been derived from our reported results, to eliminate factors which distort year-on-year comparisons.

These are considered non-GAAP financial measures. We believe this information, along with comparable GAAP measurements, is useful to stakeholders in providing a basis for measuring our operational performance. The Board use these financial measures, along with the most directly comparable GAAP financial measures, in evaluating our performance (see note 29).

Separately disclosed items

The Directors consider that certain items should be separately disclosed to aid understanding of the Group's performance.

Gains and losses from the fair value of financial instruments are therefore separately disclosed in the Consolidated income statement, where these gains and losses relate to certain forward currency contracts that are not effective for hedge accounting. Restructuring costs are also separately disclosed where significant costs have been incurred in rationalising and reorganising our business as part of a Board-approved initiative, and relate to matters that do not frequently recur.

During the period, a change to the US defined benefit pension scheme rules, per note 23, resulted in a significant non-recurring amount being recognised in the Consolidated income statement. In the previous period, a change to the UK defined benefit pension scheme rules resulted in a significant non-recurring amount being recognised in the Consolidated income statement. These have also been separately disclosed.

These items are also excluded from Adjusted profit before tax, Adjusted operating profit and Adjusted earnings per share measures, as explained in note 29 Alternative performance measures.

Critical accounting judgements and estimation uncertainties

The preparation of financial statements in conformity with UK-adopted IAS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances. The results of this form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may therefore differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.

The areas of key estimation uncertainty and critical accounting judgement that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities in the next financial year are summarised below, with further details included within accounting policies as indicated.

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n Item \n	\n \n Key judgements (J) and estimates (E) \n
\n Taxation \n	\n E - Estimates of future profits to use deferred tax assets \n
\n Research and development costs \n	\n J - Whether a project meets the criteria for capitalisation \n
\n Goodwill and capitalised development costs \n	\n E - Estimates of future cash flows for impairment testing \n
\n Inventories \n	\n E - Determination of net realisable value \n
\n Defined benefit pension schemes \n	\n E - Valuation of defined benefit pension schemes' liabilities \n
\n Cash flow hedges \n	\n E - Estimates of highly probable forecasts of the hedged item \n

Climate change

We have considered the potential effect of physical and transitional climate change risks when preparing these consolidated financial statements and have also considered the effect of our own Net Zero commitments. Our consideration of the potential effect of climate change on these consolidated financial statements included reviewing:

- discounted cashflow forecasts, used in accounting for goodwill, capitalised development costs, and deferred tax assets;

- useful economic lives and residual values of property, plant and equipment;

- planned use of right-of-use assets; and

- expected demand for inventories.

We also considered the estimated capital expenditure needed in the next five years to deliver our Net Zero plan.

Overall, we do not believe that climate change has a material effect on our accounting judgements and estimates, nor in the carrying value of assets and liabilities in the consolidated financial statements for the year ended 30 June 2023. We will continue to review the effect of climate change on financial statements in the future, and update our accounting and disclosures as the position changes.

Going concern

In preparing these financial statements, the Directors have adopted the going concern basis. The decision to adopt the going concern basis was made after considering:

- the Group's business model and key markets;

- the Group's risk management processes and principal risks;

- the Group's financial resources and strategies; and

- the process undertaken to review the Group's viability, including scenario testing.

The financial models for the viability review were based on the pessimistic version of the five-year business plan, but covering a period to 30 September 2026. For context, revenue in the first year of this pessimistic base scenario is similar to FY2023 revenue of £688.6m, while costs and other cash outflows still reflect ambitious growth plans. In the going concern assessment, the Directors reviewed this same version of the plan but to 30 September 2024, as well as the 'severe but plausible' scenarios used in the viability review, again to 30 September 2024. These scenarios reflected a significant reduction in revenue, a significant increase in costs, and a third scenario incorporating both a reduction to revenue and an increase in costs but to a less degree than the first two scenarios. In each scenario the Group's cash balances remained positive throughout the period to 30 September 2024.

The Directors also reviewed a reverse stress test for the period to 30 September 2024, identifying what would need to happen in this period for the Group to deplete its cash and cash equivalents and bank deposit balances. This identified a trading level so low (between 50 and 60% of FY2023 revenue) that the Directors feel that the events that could trigger this would be remote. The Directors also concluded that the risk of a one-off cash outflow that would exhaust the Group's cash and cash equivalents and bank deposits balances in the assessment period was also remote.

Based on this assessment, incorporating a review of the current position, the scenarios, the principal risks and mitigation, the Directors have a reasonable expectation that the Group will be able to continue operating and meet its liabilities as they fall due over the period to 30 September 2024.

2. Revenue disaggregation and segmental analysis

We manage our business by segment, comprising Manufacturing technologies and Analytical instruments and medical devices, and by geographical region. The results of these segments and regions are regularly reviewed by the Board to assess performance and allocate resources, and are presented in this note.

Accounting policy

The Group generates revenue from the sale of goods, capital equipment and services. These can be sold both on their own and together.

a) Sale of goods, capital equipment and services

The Group's contracts with customers consist both of contracts with one performance obligation and contracts with multiple performance obligations.

For contracts with one performance obligation, revenue is measured at the transaction price, which is typically the contract value except for customers entitled to volume rebates, and recognised at the point in time when control of the product transfers to the customer. This point in time is typically when the products are made available for collection by the customer, collected by the shipping agent, or delivered to the customer, depending upon the shipping terms applied to the specific contract.

Contracts with multiple performance obligations typically exist where, in addition to supplying product, we also supply services such as user training, servicing and maintenance, and installation services. Where the installation service is simple, does not include a significant integration service and could be performed by another party then the installation is accounted for as a separate performance obligation. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the relative stand-alone selling prices. The revenue allocated to each performance obligation is then recognised when, or as, that performance obligation is satisfied. For installation, this is typically at the point in time in which installation is complete. For training, this is typically the point in time at which training is delivered. For servicing and maintenance, the revenue is recognised evenly over the course of the servicing agreement except for ad-hoc servicing and maintenance which is recognised at the point in time in which the work is undertaken.

b) Sale of software

The Group provides software licences and software maintenance to customers, sold both on their own and together with associated products. For software licences, where the licence and/or maintenance is provided as part of a contract that provides customers with software licences and other goods and services then the transaction price is allocated on the same basis as described in a) above.

The Group's distinct software licences provide a right of use, and therefore revenue from software licences is recognised at the point in time in which the licence is supplied to the customer. Revenue from software maintenance is recognised evenly over the term of the maintenance agreement.

c) Extended warranties

The Group provides standard warranties to customers that address potential latent defects that existed at point of sale and as required by law (assurance-type warranties). In some contracts, the Group also provides warranties that extend beyond the standard warranty period and may be sold to the customer (service-type warranties).

Assurance-type warranties are accounted for by the Group under IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'. Service-type warranties are accounted for as separate performance obligations and therefore a portion of the transaction price is allocated to this element, and then recognised evenly over the period in which the service is provided.

d) Contract balances

Contract assets represent the Group's right to consideration in exchange for goods, capital equipment and/or services that have been transferred to a customer, and mainly includes accrued revenue in respect of goods and services provided to a customer but not yet fully billed. Contract assets are distinct from receivables, which represent the Group's right to consideration that is unconditional.

Contract liabilities represent the Group's obligation to transfer goods, capital equipment and/or services to a customer for which the Group has either received consideration or consideration is due from the customer.

e) Disaggregation of revenue

The Group disaggregates revenue from contracts with customers between: goods, capital equipment and installation, and aftermarket services; operating segment; and geographical location.

Management believe these categories best depict how the nature, amount, timing and uncertainty of the Group's revenue is affected by economic factors.

Within the two operating segments there are multiple product offerings with similar economic characteristics, similar production processes and similar customer bases. Our Manufacturing technologies business consists of industrial metrology, position measurement and additive manufacturing (AM) product groups, while our Analytical instruments and medical devices business consists of spectroscopy and neurological product lines.

\n Year ended 30 June 2023 \n	\n \n Manufacturing technologies \n	\n Analytical instruments and medical devices \n	\n \n \n Total \n
\n \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n \n	\n \n	\n \n	\n \n
\n Revenue \n	\n 648,240 \n	\n 40,333 \n	\n 688,573 \n
\n Depreciation, amortisation and impairment \n	\n 28,431 \n	\n 3,447 \n	\n 31,878 \n
\n Operating profit before losses from fair value of financial instruments and US defined benefit pension scheme past service cost \n	\n \n 132,843 \n	\n \n 5,184 \n	\n \n 138,027 \n
\n Share of profits from joint ventures \n	\n 2,768 \n	\n - \n	\n 2,768 \n
\n Net financial income/(expense) \n	\n - \n	\n - \n	\n 7,808 \n
\n US defined benefit pension scheme past service cost \n	\n - \n	\n - \n	\n (2,139) \n
\n Losses from the fair value of financial instruments \n	\n - \n	\n - \n	\n (1,399) \n
\n Profit before tax \n	\n - \n	\n - \n	\n 145,065 \n
\n \n	\n \n	\n \n	\n \n
\n Year ended 30 June 2022 \n	\n \n Manufacturing technologies \n £'000 \n	\n Analytical instruments and medical devices £'000 \n	\n \n \n Total \n £'000 \n
\n Revenue \n	\n 634,588 \n	\n 36,488 \n	\n 671,076 \n
\n Depreciation, amortisation and impairment \n	\n 36,552 \n	\n 2,570 \n	\n 39,122 \n
\n Operating profit before losses from fair value of financial instruments and UK defined benefit pension scheme past service cost \n	\n \n 162,549 \n	\n \n 2,809 \n	\n 165,358 \n
\n Share of profits from joint ventures \n	\n 4,342 \n	\n - \n	\n 4,342 \n
\n Net financial expense \n	\n - \n	\n - \n	\n (2,006) \n
\n UK defined benefit pension scheme past service cost \n	\n - \n	\n - \n	\n (11,695) \n
\n Losses from the fair value of financial instruments \n	\n - \n	\n - \n	\n (10,413) \n
\n Profit before tax \n	\n - \n	\n - \n	\n 145,586 \n

There is no allocation of assets and liabilities to operating segments. Depreciation, amortisation and impairments are allocated to segments on the basis of the level of activity.

The following table shows the analysis of non-current assets, excluding deferred tax, derivatives and employee benefits, by geographical region:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n UK \n	\n \n	\n 231,619 \n	\n 181,530 \n
\n Overseas \n	\n \n	\n 152,008 \n	\n 155,725 \n
\n Total non-current assets \n	\n \n	\n 383,627 \n	\n 337,255 \n

No overseas country had non-current assets amounting to 10% or more of the Group's total non-current assets.

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

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n Goods, capital equipment and installation \n	\n \n	\n 624,992 \n	\n 615,641 \n
\n Aftermarket services \n	\n \n	\n 63,581 \n	\n 55,435 \n
\n Total Group revenue \n	\n \n	\n 688,573 \n	\n 671,076 \n

Aftermarket services include repairs, maintenance and servicing, programming, training, extended warranties, and software licences and maintenance. There is no significant difference between our two operating segments as to their split of revenue by type.

The analysis of revenue by geographical market was:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n APAC total \n	\n \n	\n 310,637 \n	\n 317,023 \n
\n UK (country of domicile) \n	\n \n	\n 38,899 \n	\n 31,536 \n
\n EMEA, excluding UK \n	\n \n	\n 177,582 \n	\n 174,290 \n
\n EMEA total \n	\n \n	\n 216,481 \n	\n 205,826 \n
\n Americas total \n	\n \n	\n 161,455 \n	\n 148,227 \n
\n Total Group revenue \n	\n \n	\n 688,573 \n	\n 671,076 \n

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

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n China \n	\n \n	\n 155,360 \n	\n 152,772 \n
\n USA \n	\n \n	\n 138,721 \n	\n 128,531 \n
\n Japan \n	\n \n	\n 67,915 \n	\n 69,829 \n
\n Germany \n	\n \n	\n 61,565 \n	\n 58,636 \n

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

3. Personnel expenses

The remuneration costs of our people account for a significant proportion of our total expenditure, which are analysed in this note.

The aggregate payroll costs for the year were:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n Wages and salaries \n	\n \n	\n 226,126 \n	\n 207,783 \n
\n Compulsory social security contributions \n	\n \n	\n 26,579 \n	\n 24,497 \n
\n Contributions to defined contribution pension schemes \n	\n \n	\n 26,142 \n	\n 21,988 \n
\n Share-based payment charge \n	\n \n	\n 677 \n	\n 180 \n
\n Total payroll costs \n	\n \n	\n 279,524 \n	\n 254,448 \n

Wages and salaries and compulsory social security contributions include £11,338,000 (2022: £17,914,000) relating to performance bonuses.

The average number of persons employed by the Group during the year was:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n Number \n	\n Number \n
\n UK \n	\n 3,332 \n	\n 3,132 \n
\n Overseas \n	\n 1,804 \n	\n 1,799 \n
\n Average number of employees \n	\n 5,136 \n	\n 4,931 \n

Key management personnel have been assessed to be the Directors of the Company and the Senior Leadership Team (SLT), which includes an average of 21 people (2022: 21 people).

The total remuneration of the Directors and the SLT was:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n 2023 \n	\n 2022 restated* \n	\n 2022 \n
\n \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n Short-term employee benefits \n	\n 5,659 \n	\n 8,061 \n	\n 3,763 \n
\n Post-employment benefits \n	\n 511 \n	\n 444 \n	\n 121 \n
\n Share-based payment charge \n	\n 677 \n	\n 180 \n	\n 180 \n
\n Total remuneration of key management personnel \n	\n 6,847 \n	\n 8,685 \n	\n 4,064 \n

Short-term employee benefits include nil (2022: £2,791,000) relating to performance bonuses payable in cash.

The share-based payment charge relates to share awards granted in previous years, not yet vested. No shares (2022: £1,915,000 equivalent) are to be awarded in respect of 2023 (see note 24).

\n*The assessment of key management personnel was updated during the year to include the SLT, who are, along with the Directors, deemed to have authority and responsibility for planning, directing and controlling the activities of the Renishaw Group. This also follows the expansion of the deferred annual equity incentive plan (DAEIP) to include the SLT, as explained in the Governance section. Accordingly, 2022 figures have been restated.

4. Cost of sales

Our cost of sales includes the costs to manufacture our products and our engineering spend on existing and new products, net of capitalisation and research and development tax credits.

Included in cost of sales are the following amounts:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n £'000 \n	\n £'000 \n
\n Production costs \n	\n 247,665 \n	\n 234,919 \n
\n Research and development expenditure \n	\n 72,500 \n	\n 59,415 \n
\n Other engineering expenditure \n	\n 28,063 \n	\n 26,356 \n
\n Gross engineering expenditure \n	\n 100,563 \n	\n 85,771 \n
\n Development expenditure capitalised (net of amortisation) \n	\n (5,298) \n	\n (3,268) \n
\n Development expenditure impaired \n	\n 1,611 \n	\n - \n
\n Research and development tax credit \n	\n (6,633) \n	\n (3,895) \n
\n Total engineering costs \n	\n 90,243 \n	\n 78,608 \n
\n Total cost of sales \n	\n 337,908 \n	\n 313,527 \n

Production costs includes the raw material and component costs, payroll costs and sub-contract costs, and allocated overheads associated with manufacturing our products.

Research and development expenditure includes the payroll costs, material costs and allocated overheads attributed to projects identified as being related to new products or processes. Other engineering expenditure includes the payroll costs, material costs and allocated overheads attributed to projects identified as being related to existing products or processes.

5. Financial income and expenses

Financial income mainly arises from bank interest on our deposits, while we are exposed to realised currency gains and losses on translation of foreign currency denominated intragroup balances and offsetting financial instruments.

Included in financial income and expenses are the following amounts:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n \n	\n \n	\n \n 2023 \n	\n \n 2022 \n
\n Financial income \n	\n notes \n	\n £'000 \n	\n £'000 \n
\n Bank interest receivable \n	\n \n	\n 6,302 \n	\n 834 \n
\n Interest on pension schemes' assets \n	\n 23 \n	\n 1,639 \n	\n - \n
\n Fair value gains from one-month forward currency contracts \n	\n 25 \n	\n 1,728 \n	\n 98 \n
\n Total financial income \n	\n \n	\n 9,669 \n	\n 932 \n
\n Financial expenses \n	\n \n	\n \n	\n \n
\n Net interest on pension schemes' liabilities \n	\n 23 \n	\n 29 \n	\n 306 \n
\n Currency losses \n	\n \n	\n 1,130 \n	\n 1,414 \n
\n Lease interest \n	\n 21 \n	\n 348 \n	\n 481 \n
\n Interest payable on borrowings \n	\n 20 \n	\n 46 \n	\n 52 \n
\n Other interest payable \n	\n \n	\n 308 \n	\n 110 \n
\n Realised currency reserve losses from discontinuation of foreign operation \n	\n \n	\n - \n	\n 575 \n
\n Total financial expenses \n	\n \n	\n 1,861 \n	\n 2,938 \n

Currency losses relate to revaluations of foreign currency-denominated balances using latest reporting currency exchange rates. The losses recognised in 2022 and 2023 largely related to an appreciation of Sterling relative to the US dollar affecting US dollar-denominated intragroup balances in the Company.

Certain intragroup balances are classified as 'net investments in foreign operations', such that revaluations from currency movements on designated balances accumulate in the Currency translation reserve in Equity. Rolling one-month forward currency contracts are used to offset currency movements on remaining intragroup balances, with fair value gains and losses being recognised in financial income or expenses. See note 25 for further details.

6. Profit before tax

Detailed below are other notable amounts recognised in the Consolidated income statement.

Included in the profit before tax are the following costs/(income):

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n notes \n	\n £'000 \n	\n £'000 \n
\n Depreciation and impairment of property, plant and equipment and investment properties (a) \n	\n 9,11 \n	\n 19,882 \n	\n 27,157 \n
\n Loss on sale of property, plant and equipment (a) \n	\n 9 \n	\n 155 \n	\n 157 \n
\n Depreciation and impairment of right-of-use assets (a) \n	\n 10 \n	\n 4,223 \n	\n 6,042 \n
\n Amortisation, impairment, and write-off of intangible assets (a) \n	\n 12 \n	\n 7,773 \n	\n 5,923 \n
\n Profit from sale of shares in associate (c) \n	\n \n	\n - \n	\n 582 \n
\n Impairment of net assets of foreign operation (b) \n	\n \n	\n - \n	\n 2,126 \n
\n Grant income (a) \n	\n \n	\n (3,017) \n	\n (2,840) \n

These costs/(income) can be found under the following headings in the Consolidated income statement: (a) within cost of sales, distribution costs and administrative expenses, (b) within distribution costs, and (c) within administrative expenses. Further detail on each element can be found in the relevant notes.

Grant income relates to government grants, relating to R&D activities, which are recognised in the Consolidated income statement as a deduction against expenditure. Where grants are received in advance of the related expenses, they are initially recognised in the Consolidated balance sheet and released to match the related expenditure. Where grants are expected to be received after the related expenditure has occurred, and there is reasonable assurance that the entity will comply with the grant conditions, amounts are recognised to offset the expenditure and an asset recognised.

Costs within Administrative expenses relating to auditor fees included:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n Audit of these financial statements \n	\n \n	\n 707 \n	\n 718 \n
\n Audit of subsidiary undertakings pursuant to legislation \n	\n \n	\n 576 \n	\n 526 \n
\n Other assurance \n	\n \n	\n 6 \n	\n 32 \n
\n All other non-audit fees \n	\n \n	\n - \n	\n - \n
\n Total auditor fees \n	\n \n	\n 1,289 \n	\n 1,276 \n

7. Taxation

The Group tax charge is affected by our geographic mix of profits and other factors explained in this note. Our expected future tax charges and related tax assets are also set out in the deferred tax section, together with our view on whether we will be able to make use of these in the future.

Accounting policy

Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the Consolidated income statement except to the extent that it relates to items recognised directly in Other comprehensive income, in which case it is recognised in the Consolidated statement of comprehensive income and expense. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:

- the initial recognition of goodwill;

- the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and

- differences relating to investments in subsidiaries, to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

Key estimate - Estimates of future profits to support the recognition of deferred tax assets

Deferred tax assets are recognised to the extent it is probable that future taxable profits (including the future release of deferred tax liabilities) will be available, against which the deductible temporary differences can be used, based on management's assumptions relating to the amounts and timing of future taxable profits. Estimates of future profitability on an entity basis are required to ascertain whether it is probable that sufficient taxable profits will arise to support the recognition of deferred tax assets relating to the corresponding entity.

\n The following table shows an analysis of the tax charge: \n	\n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n Current tax: \n	\n \n	\n \n	\n \n
\n UK corporation tax on profits for the year \n	\n \n	\n 5,814 \n	\n 9,288 \n
\n UK corporation tax - prior year adjustments \n	\n \n	\n (1,307) \n	\n (28) \n
\n Overseas tax on profits for the year \n	\n \n	\n 14,161 \n	\n 16,734 \n
\n Overseas tax - prior year adjustments \n	\n \n	\n 291 \n	\n (176) \n
\n Total current tax \n	\n \n	\n 18,959 \n	\n 25,818 \n
\n Deferred tax: \n	\n \n	\n \n	\n \n
\n Origination and reversal of temporary differences \n	\n \n	\n 9,140 \n	\n (1,372) \n
\n Prior year adjustments \n	\n \n	\n (1,052) \n	\n 166 \n
\n Derecognition of previously recognised tax losses and excess interest \n	\n \n	\n 439 \n	\n 623 \n
\n Recognition of previously unrecognised tax losses and excess interest \n	\n \n	\n (591) \n	\n - \n
\n Effect on deferred tax for changes in tax rates \n	\n \n	\n 2,068 \n	\n - \n
\n \n	\n \n	\n 10,004 \n	\n (583) \n
\n Tax charge on profit \n	\n \n	\n 28,963 \n	\n 25,235 \n

The tax for the year is lower (2022: lower) than the weighted UK standard rate of corporation tax of 20.5% (2022: 19%). The differences are explained as follows:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n 2023 \n	\n \n 2022 \n
\n \n	\n £'000 \n	\n £'000 \n
\n Profit before tax \n	\n 145,065 \n	\n 145,586 \n
\n Tax at 20.5% (2022: 19%) \n	\n 29,738 \n	\n 27,661 \n
\n Effects of: \n	\n \n	\n \n
\n Different tax rates applicable in overseas subsidiaries \n	\n (1,695) \n	\n (1,834) \n
\n Permanent differences \n	\n 1,595 \n	\n 978 \n
\n Companies with unrelieved tax losses \n	\n 292 \n	\n - \n
\n Share of profits of joint ventures \n	\n (567) \n	\n (825) \n
\n Tax incentives (patent box and capital allowances super-deduction) \n	\n (679) \n	\n (1,400) \n
\n Prior year adjustments \n	\n (2,068) \n	\n (38) \n
\n Effect on deferred tax for changes in tax rates \n	\n 2,068 \n	\n - \n
\n Recognition of previously unrecognised tax losses and excess interest \n	\n (591) \n	\n - \n
\n Derecognition of previously recognised tax losses and excess interest \n	\n 439 \n	\n 623 \n
\n Irrecoverable withholding tax \n	\n 609 \n	\n 2 \n
\n Other differences \n	\n (178) \n	\n 68 \n
\n Tax charge on profit \n	\n 28,963 \n	\n 25,235 \n
\n Effective tax rate \n	\n 20.0% \n	\n 17.3% \n

We operate in many countries around the world and the overall effective tax rate (ETR) is a result of the combination of the varying tax rates applicable throughout these countries. The FY2023 effective tax rate has increased mostly as a result of a reduction in patent box tax incentives and an increase in the UK tax rate from 19% to 25%.

The Group's future ETR will mainly depend on the geographic mix of profits and whether there are any changes to tax legislation in the Group's most significant countries of operations.

Deferred tax

Deferred tax assets and liabilities are offset where there is a legally enforceable right of offset and there is an intention to net settle the balances. After taking these offsets into account, the net position of £18,826,000 liability (2022: £78,000 asset) is presented as a £19,944,000 deferred tax asset (2022: £22,893,000 asset) and a £38,770,000 deferred tax liability (2022: £22,815,000 liability) in the Consolidated balance sheet.

Where deferred tax assets are recognised, the Directors are of the opinion, based on recent and forecast trading, that the level of profits in current and future years make it more likely than not that these assets will be recovered.

Balances at the end of the year were:

\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n Assets \n	\n Liabilities \n	\n Net \n	\n Assets \n	\n Liabilities \n	\n Net \n
\n \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n Property, plant and equipment \n	\n 735 \n	\n (25,124) \n	\n (24,389) \n	\n 517 \n	\n (19,966) \n	\n (19,449) \n
\n Intangible assets \n	\n - \n	\n (3,922) \n	\n (3,922) \n	\n - \n	\n (2,980) \n	\n (2,980) \n
\n Intragroup trading (inventories) \n	\n 16,765 \n	\n - \n	\n 16,765 \n	\n 20,158 \n	\n - \n	\n 20,158 \n
\n Intragroup trading (fixed assets) \n	\n 1,770 \n	\n - \n	\n 1,770 \n	\n 1,457 \n	\n - \n	\n 1,457 \n
\n Defined benefit pension schemes \n	\n 6 \n	\n (14,354) \n	\n (14,348) \n	\n 125 \n	\n (11,173) \n	\n (11,048) \n
\n Derivatives \n	\n - \n	\n (2,184) \n	\n (2,184) \n	\n 3,508 \n	\n - \n	\n 3,508 \n
\n Tax losses \n	\n 2,281 \n	\n - \n	\n 2,281 \n	\n 3,893 \n	\n - \n	\n 3,893 \n
\n Other \n	\n 5,894 \n	\n (693) \n	\n 5,201 \n	\n 4,953 \n	\n (414) \n	\n 4,539 \n
\n Balance at the end of the year \n	\n 27,451 \n	\n (46,277) \n	\n (18,826) \n	\n 34,611 \n	\n (34,533) \n	\n 78 \n

Other deferred tax assets include temporary differences relating to inventory provisions totalling £2,256,000 (2022: £1,774,000), other provisions (including bad debt provisions) of £913,000 (2022: £975,000), and employee benefits relating to Renishaw KK of £806,000 (2022: £853,000), with the remaining balance relating to several other smaller temporary differences.

The movements in the deferred tax balance during the year were:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n Balance at the beginning of the year \n	\n \n	\n 78 \n	\n 10,890 \n
\n Movements in the Consolidated income statement \n	\n \n	\n (10,004) \n	\n 583 \n
\n Movement in relation to the cash flow hedging reserve \n	\n \n	\n (5,692) \n	\n 6,155 \n
\n Movement in relation to the defined benefit pension schemes \n	\n \n	\n (3,071) \n	\n (17,650) \n
\n Total movement in the Consolidated statement of comprehensive income and expense \n	\n \n	\n (8,763) \n	\n (11,495) \n
\n Currency translation \n	\n \n	\n (137) \n	\n 100 \n
\n Balance at the end of the year \n	\n \n	\n (18,826) \n	\n 78 \n

The deferred tax movement in the Consolidated income statement is analysed as:

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n \n	\n £'000 \n	\n £'000 \n
\n Property, plant and equipment \n	\n \n	\n (4,940) \n	\n (2,328) \n
\n Intangible assets \n	\n \n	\n (942) \n	\n (371) \n
\n Intragroup trading (inventories) \n	\n \n	\n (3,393) \n	\n 5,619 \n
\n Intragroup trading (fixed assets) \n	\n \n	\n 313 \n	\n 205 \n
\n Defined benefit pension schemes \n	\n \n	\n (229) \n	\n 2,255 \n
\n Derivatives \n	\n \n	\n - \n	\n 284 \n
\n Tax losses \n	\n \n	\n (1,612) \n	\n (4,472) \n
\n Other \n	\n \n	\n 799 \n	\n (609) \n
\n Total movement for the year \n	\n \n	\n (10,004) \n	\n 583 \n

Deferred tax assets of £2,281,000 (2022: £3,893,000) in respect of losses are recognised where it is considered likely that the business will generate sufficient future taxable profits. Deferred tax assets have not been recognised in respect of tax losses carried forward of £6,563,000 (2022: £4,815,000), due to uncertainty over their offset against future taxable profits and therefore their recoverability. These losses are held by Group companies in France, Brazil, Australia, Canada and the US, where for 97% of losses there are no time limitations on their utilisation.

In determining profit forecasts for each Group company, the key variable is the revenue forecasts, which have been estimated using consistently applied external and internal data sources. Sensitivity analysis indicates that a reduction of 5% to relevant revenue forecasts would result in an impairment to deferred tax assets recognised in respect of losses and intragroup trading (inventories) of less than £300,000. An increase of 5% to relevant revenue forecasts would result in additions to deferred tax assets in respect of tax losses not recognised of less than £200,000.

It is likely that the majority of unremitted earnings of overseas subsidiaries would qualify for the UK dividend exemption. However, £65,555,000 (2022: £61,204,000) of those earnings may still result in a tax liability principally as a result of withholding taxes levied by the overseas jurisdictions in which those subsidiaries operate. The tax liabilities for the earnings for which management intend to repatriate in the foreseeable future are not material and consequently no deferred tax liability has been recognised.

8. Earnings per share

Basic earnings per share is the amount of profit generated in a financial year attributable to equity shareholders, divided by the weighted average number of shares in issue during the year.

Basic and diluted earnings per share are calculated on earnings of £116,102,000 (2022: £120,351,000) and on 72,719,565 shares (2022: 72,774,147 shares), being the number of shares in issue. The number of shares excludes 68,978 (2022:14,396) shares held by the Employee Benefit Trust (EBT). On this basis, earnings per share (basic and diluted) is calculated as 159.7 pence (2022: 165.4 pence).

There is no difference between the weighted average earnings per share and the basic and diluted earnings per share.

For the calculation of adjusted earnings per share, per note 29, earnings of £116,102,000 (2022: £120,351,000) are adjusted by post-tax amounts for:

- fair value (gains)/losses on financial instruments not eligible for hedge accounting (reported in Revenue), which represents the amount by which revenue would change had all the derivatives qualified as eligible for hedge accounting, £5,488,000 gain;

- fair value (gains)/losses on financial instruments not eligible for hedge accounting (reported in Gains/(losses) from the fair value of financial instruments), £1,133,000 loss;

- a revised estimate of 2020 restructuring costs, £570,000 gain; and

- a US defined benefit pension scheme past service cost, £1,626,000 loss.

9. Property, plant and equipment

The Group makes significant investments in distribution and in-house manufacturing infrastructure. During the year we have significantly expanded our production facility in Wales and invested in our manufacturing equipment in the UK. We expect to complete this facility and continue our investments in property, plant and equipment in the coming year.

Accounting policy

Freehold land is not depreciated. Other assets are stated at costs less accumulated depreciation and accumulated impairment losses, if any. Depreciation is provided to write off the costs of assets less their estimated residual value on a straight-line basis over their estimated useful economic lives as follows: freehold buildings, 50 years; plant and equipment, 3 to 25 years; and vehicles, 3 to 4 years.

\n \n	\n Freehold \n	\n \n	\n \n	\n Assets in the \n	\n \n
\n \n	\n land and \n	\n Plant and \n	\n Motor \n	\n course of \n	\n \n
\n \n	\n buildings \n	\n equipment \n	\n vehicles \n	\n construction \n	\n Total \n
\n Year ended 30 June 2023 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n Cost \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n At 1 July 2022 \n	\n 217,820 \n	\n 263,557 \n	\n 7,520 \n	\n 7,481 \n	\n 496,378 \n
\n Additions \n	\n 1,730 \n	\n 16,934 \n	\n 1,033 \n	\n 54,075 \n	\n 73,772 \n
\n Transfers \n	\n 3,240 \n	\n 4,847 \n	\n - \n	\n (8,087) \n	\n - \n
\n Disposals \n	\n (5,383) \n	\n (9,681) \n	\n (1,369) \n	\n - \n	\n (16,433) \n
\n Currency adjustment \n	\n (4,022) \n	\n (2,501) \n	\n (72) \n	\n - \n	\n (6,595) \n
\n At 30 June 2023 \n	\n 213,385 \n	\n 273,156 \n	\n 7,112 \n	\n 53,469 \n	\n 547,122 \n
\n Depreciation \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n At 1 July 2022 \n	\n 43,816 \n	\n 202,214 \n	\n 6,495 \n	\n - \n	\n 252,525 \n
\n Charge for the year \n	\n 4,175 \n	\n 14,891 \n	\n 576 \n	\n - \n	\n 19,642 \n
\n Disposals \n	\n (1,619) \n	\n (5,544) \n	\n (1,167) \n	\n - \n	\n (8,330) \n
\n Currency adjustment \n	\n (725) \n	\n (2,015) \n	\n (60) \n	\n - \n	\n (2,800) \n
\n At 30 June 2023 \n	\n 45,647 \n	\n 209,546 \n	\n 5,844 \n	\n - \n	\n 261,037 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Net book value \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n At 30 June 2023 \n	\n 167,738 \n	\n 63,610 \n	\n 1,268 \n	\n 53,469 \n	\n 286,085 \n
\n At 30 June 2022 \n	\n 174,004 \n	\n 61,343 \n	\n 1,025 \n	\n 7,481 \n	\n 243,853 \n

Losses on disposals of Property, plant and equipment amounted to £155,000 (2022: £157,000). Additions to assets in the course of construction comprise £42,646,000 (2022: £826,000) for land and buildings and £11,429,000 (2022: £6,318,000) for plant and equipment. At 30 June 2023, properties with a net book value of £88,778,000 (2022: £54,208,000) were subject to a fixed charge to secure the UK defined benefit pension scheme liabilities.

\n \n	\n Freehold \n	\n \n	\n \n	\n Assets in the \n	\n \n
\n \n	\n land and \n	\n Plant and \n	\n Motor \n	\n course of \n	\n \n
\n \n	\n buildings \n	\n equipment \n	\n vehicles \n	\n construction \n	\n Total \n
\n Year ended 30 June 2022 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n Cost \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n At 1 July 2021 \n	\n 216,783 \n	\n 242,432 \n	\n 7,421 \n	\n 7,109 \n	\n 473,745 \n
\n Additions \n	\n 5,715 \n	\n 16,756 \n	\n 1,150 \n	\n 7,144 \n	\n 30,765 \n
\n Transfers of assets in the course of construction \n	\n 2,800 \n	\n 3,972 \n	\n - \n	\n (6,772) \n	\n - \n
\n Transfers to investment properties \n	\n (11,563) \n	\n - \n	\n - \n	\n - \n	\n (11,563) \n
\n Disposals \n	\n 97 \n	\n (3,587) \n	\n (1,269) \n	\n - \n	\n (4,759) \n
\n Currency adjustment \n	\n 3,988 \n	\n 3,984 \n	\n 218 \n	\n - \n	\n 8,190 \n
\n At 30 June 2022 \n	\n 217,820 \n	\n 263,557 \n	\n 7,520 \n	\n 7,481 \n	\n 496,378 \n
\n Depreciation \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n At 1 July 2021 \n	\n 38,530 \n	\n 182,557 \n	\n 6,416 \n	\n - \n	\n 227,503 \n
\n Charge for the year \n	\n 4,623 \n	\n 20,029 \n	\n 1,056 \n	\n - \n	\n 25,708 \n
\n Impairment \n	\n 1,259 \n	\n - \n	\n - \n	\n - \n	\n 1,259 \n
\n Transfers to investment properties \n	\n (1,222) \n	\n - \n	\n - \n	\n - \n	\n (1,222) \n
\n Disposals \n	\n 81 \n	\n (2,837) \n	\n (1,180) \n	\n - \n	\n (3,936) \n
\n Currency adjustment \n	\n 545 \n	\n 2,465 \n	\n 203 \n	\n - \n	\n 3,213 \n
\n At 30 June 2022 \n	\n 43,816 \n	\n 202,214 \n	\n 6,495 \n	\n - \n	\n 252,525 \n
\n \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n Net book value \n	\n \n	\n \n	\n \n	\n \n	\n \n
\n At 30 June 2022 \n	\n 174,004 \n	\n 61,343 \n	\n 1,025 \n	\n 7,481 \n	\n 243,853 \n
\n At 30 June 2021 \n	\n 178,253 \n	\n 59,875 \n	\n 1,005 \n	\n 7,109 \n	\n 246,242 \n

10. Right-of-use assets

The Group leases mostly properties and cars from third parties and recognises an associated right-of-use asset where we are afforded control and economic benefit from the use of the asset.

Accounting policy

At the commencement date of a lease arrangement the Group recognises a right-of-use asset for the leased item and a lease liability for any payments due. Right-of-use assets are initially measured at cost, being the present value of the lease liability plus any initial costs incurred in entering the lease and less any incentives received. See note 21 for further detail on lease liabilities. Right-of-use assets are subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life or the end of the lease term.

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n Leasehold property \n	\n Plant and equipment \n	\n Motor vehicles \n	\n Total \n
\n Year ended 30 June 2023 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n \n Net book value \n	\n \n	\n \n	\n \n	\n \n
\n At 1 July 2022 \n	\n 8,055 \n	\n 117 \n	\n 1,778 \n	\n 9,950 \n
\n Additions \n	\n 261 \n	\n 64 \n	\n 2,907 \n	\n 3,232 \n
\n Reductions in consideration \n	\n (308) \n	\n - \n	\n (13) \n	\n (321) \n
\n Depreciation \n	\n (2,737) \n	\n (93) \n	\n (1,392) \n	\n (4,222) \n
\n Currency adjustment \n	\n (202) \n	\n 1 \n	\n (36) \n	\n (237) \n
\n At 30 June 2023 \n	\n 5,069 \n	\n 89 \n	\n 3,244 \n	\n 8,402 \n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n Leasehold property \n	\n Plant and equipment \n	\n Motor vehicles \n	\n Total \n
\n Year ended 30 June 2022 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n	\n £'000 \n
\n \n Net book value \n	\n \n	\n \n	\n \n	\n \n
\n At 1 July 2021 \n	\n 10,297 \n	\n 102 \n	\n 2,030 \n	\n 12,429 \n
\n Additions \n	\n 1,293 \n	\n 115 \n	\n 1,058 \n	\n 2,466 \n
\n Depreciation \n	\n (2,805) \n	\n (102) \n	\n (1,298) \n	\n (4,205) \n
\n Impairment \n	\n (1,837) \n	\n - \n	\n - \n	\n (1,837) \n
\n Currency adjustment \n	\n 1,107 \n	\n 2 \n	\n (12) \n	\n 1,097 \n
\n At 30 June 2022 \n	\n 8,055 \n	\n 117 \n	\n 1,778 \n	\n 9,950 \n

11. Investment properties

The Group's investment properties consist of five properties in the UK, Ireland and India. Which, are occupied by rent-paying third parties.

Accounting policy

Where property owned by the Group is deemed to be held to earn rentals or for long-term capital appreciation it is recognised as investment property.

Where a property is part-occupied by the Group, portions of the property are recognised as investment property if they meet the above description and if these portions could be sold separately and reliably measured. If the portions could not be sold separately, the property is recognised as an investment property only if a significant proportion is held for rental or appreciation purposes.

The Group has elected to value investment properties on a cost basis, initially comprising an investment property's purchase price and any directly attributable expenditure. Depreciation is provided to write off the cost of assets on a straight-line basis over their estimated useful economic lives, being 50 years. Amounts relating to freehold land is not depreciated.

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n \n	\n 2023 \n	\n 2022 \n
\n \n	\n £'000 \n	\n £'000 \n
\n Cost \n	\n \n	\n \n
\n Balance at the beginning of the year \n

Property, plant and equipment

Right-of-use assets

Investment properties

Trade payables

Borrowings

Share capital

Cash flows from operating activities

Cash flows from operating activities

Investing activities

Financing activities

Repayment of borrowings

Interest paid

Repayment of principal of lease liabilities

Own shares purchased

Dividends paid

Cash and cash equivalents at beginning of the year

Year ended 30 June 2023

Revenue

Depreciation, amortisation and impairment

Operating profit before losses from fair value of financial instruments and US defined benefit pension scheme past service cost

Share of profits from joint ventures

Net financial income/(expense)

US defined benefit pension scheme past service cost

Losses from the fair value of financial instruments

Profit before tax

Year ended 30 June 2022

Revenue

Depreciation, amortisation and impairment

Operating profit before losses from fair value of financial instruments and UK defined benefit pension scheme past service cost

Share of profits from joint ventures

Net financial expense

UK defined benefit pension scheme past service cost

Losses from the fair value of financial instruments

Profit before tax

UK

Overseas

Total non-current assets

Goods, capital equipment and installation

Aftermarket services

Total Group revenue

APAC total

UK (country of domicile)

EMEA, excluding UK

EMEA total

Americas total

Total Group revenue

China

USA

Japan

Germany

Wages and salaries

Compulsory social security contributions

Contributions to defined contribution pension schemes

Share-based payment charge

Total payroll costs

UK

Overseas

Average number of employees

Short-term employee benefits

Post-employment benefits

Share-based payment charge

Total remuneration of key management personnel

Production costs

Research and development expenditure

Other engineering expenditure

Gross engineering expenditure

Development expenditure capitalised (net of amortisation)

Development expenditure impaired

Research and development tax credit

Total engineering costs

Total cost of sales

Financial income

Bank interest receivable

Interest on pension schemes' assets

Fair value gains from one-month forward currency contracts

Total financial income

Financial expenses

Net interest on pension schemes' liabilities

Currency losses

Lease interest

Renishaw PLC (RSW) Regulatory Announcement

Final Results