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Annual report and accounts 2015
Renishaw plc Annual report and accounts 2015
Aerial view of the New Mills site, showing the new 153,000 sq ft Renishaw Innovation Centre building (top left) which was officially opened in
July 2015 by HRH The Princess Royal.
CONTENTS
Strategic report
1
Introduction
2 Chairman’s statement
6 Our business model
7 Our strategy
8 Our strategy in action
Governance
Introduction
60
Financial statements
91 Consolidated income statement
62 Board of directors and company secretary
92
64 Executive Board
65
International Sales and Marketing Board
66 Directors’ corporate governance report
Consolidated statement of comprehensive
income and expense
93
Consolidated balance sheet
94 Consolidated statement of changes in equity
95 Consolidated statement of cash flow
96
Notes (forming part of the
financial statements)
119 Company balance sheet
120 Reconciliation of movements
in shareholders’ funds
121 Notes to the Company financial statements
Shareholder information
130 10 financial year record
131 Shareholder information
10 Our business sectors – Metrology
72 Nomination committee report
18 Our business sectors – Healthcare
73 Audit committee report
24 Our markets – Delivering solutions globally
76
Directors’ remuneration report
84 Other statutory and regulatory disclosures
87 Directors’ responsibilities
88
Independent auditor’s report
26 Performance – Overview
28 Performance – Metrology
32 Manufacturing overview
34 Performance – Healthcare
38 Performance – Financial review
42 Key performance indicators
44 Principal risks and uncertainties
46 Corporate social responsibility
1
INTRODUCTION
Renishaw is a world-leading metrology company.
With our highly experienced team, we are confidently
driving our future growth through innovative and
patented products and processes, efficient high-quality
manufacturing, and the ability to provide local support
in a growing number of geographies and markets.
95% of our sales are outside the UK.
Our continuing investment in new product development,
plant and equipment, and facilities (c.£90m in the last
year) is the key to our confidence in the Group’s long-term
strategy and prospects. With around 4,100 skilled and
motivated people, we continue to be at the leading edge
of technological innovation.
FIND MORE INFORMATION ONLINE
Downloads
and webcasts
You can access the annual and half year
reports for the last five years from our
website. Also available are recordings
of previous webcasts.
www.renishaw.com/financials
Investor
information
Information of interest to shareholders and others,
such as videos explaining our products and
business strategy, are provided on our website.
www.renishaw.com/investor
This Annual report has been prepared for the purpose of assisting the Company’s shareholders to assess
the strategies adopted by the Company and the potential for those strategies to succeed and no-one,
including the Company’s shareholders, may rely on it for any other purpose. The directors owe their duties
only to the Company as a whole and they undertake no duty of care to individual shareholders, other
stakeholders or potential investors. This Annual report has been prepared on the basis of the knowledge
and information available to the directors at the time. Given the nature of some forward-looking information,
which has been given in good faith, the Company’s shareholders should treat this information with
due caution.
All dates within this document refer to financial years unless stated otherwise.
For more information visit:
www.renishaw.com
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 2
CHAIRMAN’S STATEMENT
“ I am delighted to present
our 2015 annual results,
representing an
exceptional year with
record revenue and profit.”
Sir David R McMurtry
Chairman and Chief Executive
I am delighted to present our 2015
annual results, representing an
exceptional year with record revenue
and profit.
material difference between revenue
at actual exchange rates and
revenue restated at previous year’s
exchange rates.
Revenue for the year ended 30th June
2015 was £494.7m, compared with
£355.5m for last year, an increase
of 39%. As highlighted in our Interim
results, we had further large orders
from Far East customers in the
consumer electronics markets, which
generated exceptionally good growth
in our metrology business sector.
Adjusting for these large orders we
experienced underlying revenue growth
of 11% for the year. There was no
Geographic analysis shows growth
of 91% in the Far East, 13% in the
Americas, 3% in Europe and 7% in the
UK. More specifically, revenue in the
Far East increased from £134.6m to
£257.7m, in the Americas from £85.6m
to £96.3m, in Europe from £100.2m to
£103.1m, and in the UK from £23.8m
to £25.5m.
The Group’s profit before tax for the
year more than doubled to £144.2m,
compared with an adjusted £70.1m
last year. Statutory profit before tax for
last year was £96.4m, which included
the exceptional gain of £26.3m on
the disposal of our shareholding in
Delcam plc.
This year’s tax charge amounts to
£22.8m (2014: £10.7m) representing a
tax rate of 15.8% (2014: 15.3% adjusted).
The patent box and research and
development tax credit amounted to
£5.7m compared to £2.9m last year.
Earnings per share were 167.5p,
compared with an adjusted 82.3p
last year, an increase of 104%.
Statutory earnings per share were
167.5p and last year were 118.4p.
2015 performance
2015
2014
Change Statutory
2015
2014
Change
Revenue (£m)
494.7
355.5
+39% Profit before tax (£m)
144.2
96.4
+50%
Operating profit (£m)
Adjusted profit before tax (£m)*
143.9
144.2
70.4
+104% Basic earnings per share (pence)
167.5
118.4
41%
70.1
+106%
Adjusted earnings per share (pence)*
167.5
82.3
+104%
Dividend per share (pence)
46.5
41.2
+13%
*Adjusted results are for 2014 and exclude the gain on disposal of the shareholding in Delcam plc (£26.3m).
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 3
Metrology
Revenue from our metrology business
for the year was £467.0m, compared
with £326.6m last year, an increase of
43%. Metrology revenue in the Far East
increased by 100%, from £124.8m to
£249.9m, and in the Americas, there
was growth of 12% from £80.1m last
year to £89.4m.
Along with our good growth in our
machine tool products line, we also
experienced increased demand for
our measurement automation, additive
manufacturing and encoder products.
Operating profit was £150.7m
(2014: £74.4m).
The significant growth has been
supported by the sustained investment
in our manufacturing facilities, processes
and latest plant and machinery in the
UK, Ireland and India.
We have continued to invest in research
and development with total engineering
costs in this business segment of
£55.0m, net of capitalised costs
(2014: £45.3m) with a number of new
product launches during the year.
Healthcare
Revenue from our healthcare business
for the year was £27.7m, compared
with £28.9m last year. We experienced
growth in both our medical dental and
neurological product lines, but, as noted
in our Interim report, spectroscopy
sales were adversely affected in the first
half due to delayed academic research
funding in some territories and the
strength of Sterling. Spectroscopy has
however seen very strong second half
growth and much improved order intake.
In our neurological products line, we
made further sales of our neuromate®
surgical robot, including first sales in
the USA following FDA authorisation at
the end of last year. We also released
neuroinspire™ V4.0 surgical planning
software, which includes significant new
functionality, is CE marked and now
available for sale in the EU. This software
now integrates with our neuromate
robot. We also launched neurolocate™,
a CE marked frameless patient
registration system for the neuromate
stereotactic robot.
In our medical dental products line
we entered into an agreement with
DENTSPLY Implants, one of the
world’s leading companies in implant
dentistry, which will see them purchase
Renishaw additive manufacturing
technology for the manufacture of
dental products. This product line has
also started to supply custom-made
craniomaxillofacial implants that support
reconstructive surgery, where we act
as a subcontractor to hospitals and a
university design centre.
In our diagnostics products line,
following completion of performance
evaluation studies to verify the Fungiplex
assay system, the product is expected
to be available with a CE mark later in
this calendar year.
There was an operating loss of £6.8m,
compared with a loss of £4.0m last
year. We remain focused on moving
this business into profit.
Revenue £m
494.7
Adjusted profit
before tax £m
144.2
Adjusted earnings
per share pence
167.5
355.5
346.9
331.9
288.7
79.2
70.1
86.0
80.4
82.3
88.9
95.6
88.5
Dividend per share pence
46.5
41.2
40.0
38.5
35.0
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 4
CHAIRMAN’S STATEMENT CONTINUED
Continued investment for
long-term growth
The Group strategy to invest for the long
term, expanding our global marketing
and distribution infrastructure, along
with increasing manufacturing capacity
and research and development
activities continues.
Our workforce at the end of June 2015
was 4,112, an increase of 620 from the
3,492 at the start of the financial year
to support our production requirements
as well as growth in research and
development and global sales and
marketing activities. The staff increase
included 30 apprentices and 58
graduates in the UK, taken on as part
of our ongoing aim and commitment to
train and develop skilled resource for
the Group in the future.
Capital expenditure on property, plant
and equipment for the year was £48.4m,
of which £20.9m was spent on property
and £27.5m on plant and equipment.
Work has continued to implement
regional data centres to further enhance
the resilience and efficiency of the
Group’s IT infrastructure.
In the UK, the building of an additional
153,000 sq ft facility at New Mills has
now been completed and this building,
the Renishaw Innovation Centre, was
formally opened on 7th July by HRH
The Princess Royal. Also in the UK,
our additive manufacturing business
acquired and relocated into 90,000 sq ft
facilities in Stone, Staffordshire, providing
capacity for R&D expansion, a customer
solution centre and service facility as
well as providing capacity for a material
development centre.
In Ireland, we have purchased additional
properties adjacent to our existing facility
and in the USA, Mexico and the Czech
Republic, we have purchased land, on
which to build offices for our expanding
sales and marketing operations in
those countries.
In Spain, we acquired additional offices
adjacent to our existing premises,
providing space for future growth.
Working capital
Group inventory increased to £77.7m
from £63.0m at the beginning of the
year, to support growth in revenue and
our policy of holding finished stock to
maintain delivery performance given our
short order book of approximately five
weeks. Trade debtors increased from
£81.8m to £101.2m in line with higher
revenue for the year, with debtor days
outstanding at the end of the current
year at 67 days (2014: 63 days).
Net cash balances at 30th June 2015
were £82.2m, compared with £43.6m at
30th June 2014. Additionally there is an
escrow account of £14.7m (2014: £9.5m)
relating to the provision of security to the
UK defined benefit pension scheme.
Directors and employees
Ben Taylor, Assistant Chief Executive,
has informed the Company of his
decision to retire at the end of July 2016.
He will remain in full-time employment
until the end of October this year and
continue thereafter on a part-time
basis until his retirement. The Board
is considering how his duties and
responsibilities will be managed and
will make appropriate announcements
in due course.
With effect from 1st January 2015,
Kath Durrant was appointed as an
additional non-executive director.
Kath was until recently the Group HR
Director at Rolls-Royce plc and a member
of the executive team. She has significant
prior experience with AstraZeneca plc
and GlaxoSmithKline plc. Kath currently
sits as an advisory board member for the
Lancaster University Management School.
During the year we have appointed
William Lee to the Executive Board. He is
the Director and General Manager of the
machine tool and laser and calibration
products lines and responsible for the
spatial measurement products line.
In June, Clive Martell, previously the
chief executive of Delcam plc, joined
the Group as head of global additive
manufacturing and was appointed to the
International Sales and Marketing Board.
The directors thank employees for their
invaluable support and contribution
during this exceptional year.
Investor communications
In line with our commitment to improve
investor communications, our second
investor day was held on 14th May
2015, for existing and potential new
investors. This involved presentations
on group strategy, business segments
and product lines, given by members
of the Board and senior management,
as well as tours covering the Group’s
activities and various Q&A sessions.
The event was again well attended and
gives shareholders another opportunity,
in addition to the AGM and half-year and
year-end webcasts, to learn more about
Renishaw’s business and strategy.
Queen’s Award
On 21st April 2015, Renishaw received a
Queen’s Award for Enterprise 2015 in the
Innovations category for its revolutionary
absolute position encoder. This award
was granted for the development and
manufacture of our RESOLUTE™
family of non-contact, optical position
feedback devices. RESOLUTE enables
a step change in the performance
of motion control systems used in
manufacturing and other environments.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 5
1. RESOLUTE’s uniquely innovative design
has won us our 18th Queen’s Award.
2. Sir David McMurtry and John Deer receiving
the inaugural Lifetime Achievement
Award at the 2014 Gloucester Citizen and
Gloucestershire Echo Business Awards.
3. HRH The Princess Royal discusses the
Queen’s Award winning RESOLUTE
encoder with Jim Henshaw, Director
and General Manager of the encoder
products line.
4. Product demonstration area inside the new
Renishaw Innovation Centre.
3
Outlook
Whilst it is hard to predict to what extent
there will be significant large orders in
this coming year, with the development
of new products and applications and
continued growth in our underlying
business, your directors remain
confident in the long-term prospects
for the Group. At this early stage in the
current financial year, we anticipate that
revenue for this year will be in the range
of £460m to £485m and profit before tax
will be in the range of £85m to £105m.
Dividends
A final dividend of 34.0 pence net per
share will be paid on 19th October 2015,
to shareholders on the register on
18th September 2015, giving a total
dividend of 46.5 pence for the year, an
increase of 13% over last year’s
41.2 pence.
Sir David R McMurtry
CBE, RDI, FRS, FREng, CEng, FIMechE
Chairman and Chief Executive
29th July 2015
1
2
4
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 6
OUR BUSINESS MODEL
We identify customer needs, and then apply innovative engineering
to deliver successful solutions.
Successful solutions
• We are a highly vertically integrated
company to assure success for our
customers. We not only undertake
design of innovative products, we also
manufacture and sell them through
our wholly-owned manufacturing and
sales organisations.
Customer
needs
Customer needs
• Future trends are anticipated in order
to solve problems before they are visible
to customers.
• All areas of our organisation work in
partnership with their customers to
understand and solve their current
and anticipated real-life problems.
• We provide solutions that drive efficiency
and reduce costs.
Successful
solutions
Innovative
engineering
Driving sustainable growth
and shareholder return
Our ordinary dividend, funded from our
annual cash flow, is the primary form of
shareholder return. We have increased the
ordinary dividend per share by more than
20% over the last three years. We aim to
maintain a progressive and sustainable
dividend policy.
Driving
sustainable
growth and
shareholder
return
Innovative engineering
• Renishaw’s strategy of investment in
R&D and engineering skills enables us
to take a longer term view of the viability
of new technologies.
• We are actively expanding our
significant portfolio of innovative
and patented products.
Key performance indicators
Our key performance indicators are shown on pages 42 and 43.
Principal risks and uncertainties
Information on the risks associated with our business is contained on pages 44 and 45.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 7
OUR STRATEGY
Eight strategic priorities drive our business model.
2
Continual research
creating strong
market positions
with innovative
products
3
Efficient high-quality
manufacturing
4
Global
customer support
8
Supplementing
the business
via niche
acquisitions
1
People
5
Focus on
delivering
solutions
7
Consistent
organic growth
6
Strong market
presence and focus
on emerging markets
“ We are actively developing our next generation
of products with a view to integrating elements
together to form overall market solutions.
Renishaw continues to invest strategically in
a number of key areas, for example, additive
manufacturing and neuro, as part of our
medium and long-term business plan.”
Geoff McFarland
Group Engineering Director
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 8
OUR STRATEGY IN ACTION
The progress we made during 2015 is summarised below:
1
2
3
4
People
Description
Renishaw’s people are central
to the success of its business.
Our innovative, hard-working
and loyal employees make
Renishaw the business
success that it is. Many of
them have worked in the Group
for two or three decades,
creating a wealth of specialised
engineering expertise.
In addition, Renishaw has
actively focused on the
ongoing recruitment and
training of many bright
and enthusiastic young
graduates, apprentices and
experienced professionals.
Progress
Headcount has increased
in the Group to 4,112.
This includes 1,387 in our
overseas subsidiaries and
2,725 in the UK. Renishaw’s
in-house Academy, initially
established to focus on
technical training modules
for applications engineers,
has now expanded to
include sales development
and corporate introductory
courses for employees,
including graduates and
apprentices. Training can be
as diverse as presentation
skills, team-building and
technical training with one
of Renishaw’s software
products such as MODUSTM
or Productivity+TM. Courses are
held throughout the year,
and as part of a structured
development programme.
Continual research
creating strong market
positions with innovative
products
Renishaw is well known for its
sector-leading investment in
R&D and engineering.
“Apply innovation” is a way of
life for Renishaw employees,
not just a strap-line. We have
continued to protect our core
businesses with exciting
new patented technology
and process developments,
whilst also diversifying into
new product and market areas.
A significant range of new
products have been brought
to market during the year,
including MODUS 2 and Primo,
which introduces a genuinely
breakthrough business model.
25 new patents have been
filed and 104 granted during
this financial year. The RenDx
Fungiplex diagnostic system
is in the process of obtaining
CE certification.
Efficient high-quality
manufacturing
Global customer
support
Renishaw is a highly vertically
integrated organisation
with significant in-house
manufacturing capabilities.
With high-quality manufacturing
plants located in the UK,
Ireland, India, Germany, USA
and France, we are able to
deliver robust and reliable
products tested to our exacting
standards. Our efficiencies,
through in-house automation
and the use of our own latest
product developments, enable
us to be competitive with the
highest volume processes.
Renishaw is founded on the
belief that excellent customer
support delivers success.
Our customers can be global,
with an order being placed
in one country, the product
shipped to another and the
eventual end-user often
located on a different continent.
By having “local” global support
through our wholly-owned
subsidiary network, we are
able to assure customers that
whatever their needs, we are
able to support and assist them,
resulting in a positive return
on their investment.
Renishaw continues to invest
in training for both its technical
support and sales people.
As the business continues to
grow and diversify, headcount
has been increased accordingly
(+ 127) to ensure that resources
are available where and
when needed. The Renishaw
Academy now offers over 70
courses at all levels, training
Renishaw employees around
the world to ensure that
they are able to deliver the
excellent support levels that
our customers demand.
During the last year, Renishaw’s
various manufacturing
operations have supported a
significant growth in turnover.
This has only been possible
as a result of our long-term
strategic commitment to
manufacturing and our
sustained investments in
the latest technologies and
facilities. Recent strategic
manufacturing investment
decisions have enabled
Renishaw to manufacture
sufficient products in-house
to satisfy order growth and
to react to the large changes
in demand on very short
lead-times. We have done
this by accelerating additional
capacity, including the
refurbishment of Miskin, where
we now have 50% occupancy.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 9
5
6
7
8
Focus on delivering
solutions
Strong market presence
and focus on emerging
markets
Consistent organic
growth
Supplementing the
business via niche
acquisitions
Description
Renishaw’s business has
transitioned over recent
years from primarily being a
supplier of products to capital
equipment manufacturers,
to becoming much more
focused on delivering a full
solution directly to end-users.
Our experience in our core
product lines, which has
highlighted that our global
customers need assistance
in solving their problems, is
being carried across into our
newer product lines (medical
dental, gauging, neurological,
diagnostics and additive
manufacturing). Our sales
force and technical support
teams need to be ever more
knowledgeable, not just about
what our products do, but
also how they can be applied
to benefit our customers’
processes and practices.
By truly understanding our
customers’ needs, we are able
to offer a cost-effective, efficient
and easy-to-use solution.
Progress
Complex problems ideally
require simple solutions.
Whilst Renishaw’s hardware
uses the latest technologies
and innovative approaches to
deliver robust and repeatable
functionality that is world-class,
our software is becoming ever
more user-friendly, intuitive and
packaged for specific problems.
The user’s experience of
Renishaw includes the
sales teams, applications
engineers and products, and
we endeavour to make this
interaction a professional and
positive experience.
Renishaw has always been
a global group with a strong
“local” presence. By ensuring
we target emerging markets
we are able to develop strong
working partnerships with
newly developing businesses.
These loyal relationships build
quickly as our customers
realise that all our customers
are important to us.
Whilst Renishaw does invest
for the long term, it also closely
manages costs at all levels
and ensures that it does not
undertake undue risks. It is
through this approach that
Renishaw has been able to
deliver such a long-term track
record of profitable growth.
We actively undertake
acquisitions as a means to
expand our product portfolio,
quicken geographic market
penetration and gain access
to new patents, technologies
and customers.
Renishaw’s expansion into new
growth economies continues,
and this year we have opened,
extended or relocated to larger
premises in the UK, Singapore,
Vietnam, Hong Kong,
Ireland, Spain and Slovenia.
This includes the relocation to
a new 26,000 sq ft property in
Hong Kong, to accommodate
growth in the Far East region.
The process for developing
larger offices in the USA,
Czech Republic and Mexico
is also underway.
Renishaw’s new 153,000 sq ft
building at the New Mills site,
which houses R&D, corporate
services teams and corporate
demonstration and training
areas, is now fully occupied.
The additive manufacturing
products line recently relocated
to a larger 90,000 sq ft
facility in Stone, Staffordshire
to help nurture sustained
business growth.
We continue to integrate
acquired businesses and
evaluate acquisition
opportunities. For example,
we recently acquired a 20%
shareholding in HiETA
Technologies Limited, a UK
company specialising in the
design and delivery of additive
manufacturing products, such
as heat exchangers for a
range of applications – a
complementary business for
our additive manufacturing
products line.
To see how we measure performance on these strategic priorities please see pages 42–43.
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 10
Renishaw plc Annual report and accounts 2015
STRATEGIC REPORT
OUR BUSINESS SECTORS – METROLOGY
Renishaw Primo™
system: first “pay-as-
you-go” probing system
for entry-level users.
REVENUE (+43%)
£467.0m
OPERATING PROFIT
(+103%)
£150.7m
PERCENTAGE
OF GROUP REVENUE
94%
Open
here
for more
detail...
w
12–13
OUR BUSINESS SECTORS – METROLOGY CONTINUED
Our metrology products help manufacturers to maximise production output,
significantly reduce the time taken to produce and inspect components, and
keep their machines running reliably. In the fields of industrial automation and
motion systems, our position measurement and calibration systems allow builders
to manufacture highly accurate and reliable products. This illustration highlights
typical applications for our products within a metal-part production facility and
semiconductor manufacturing plant.
25
24
23
CMM
22
21
27
28
MT
26
31
MT
29
MT
30
46
48
17
M 2 : B o r e
O u t p u t
D
S
G 5 4
X
Y
Z
47
MT
20
19
18
MT
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT A
1
2
3
MT
32
MT
C
35
34
D
41
33
43
44
45
CMM
36
B
40
42
AM
MT
37
39
38
4
5
AM
6
M 2 : B o r e
O u t p u t
D
S
G 5 4
X
Y
Z
CMM
10
11
7
8
9
16
15
14
13
12
Group products
1
TONiC™
incremental encoder
for position feedback
8
AM250
additive
manufacturing
system
15 OMP600
optical transmission
machine tool probe
22
MODUS™
Organiser
software for shop
floor operation of
Equator™ gauge
2
RLE
fibre-optic laser
interferometer
encoder system
9
MRS2
rack for
automated probe/
stylus changing
16
NC4
laser non-contact
tool setting system
23
RGH41
incremental
encoder for
position feedback
3
RM44
magnetic position
encoder for use
in industrial
environments
4 RMP60
radio transmission
machine tool probe
10
MCU5
hand controller
for CMM axes/
motorised head
17
Primo Radio
Part Setter
radio transmission
machine tool probe
24
OTS
optical transmission
tool setting probe
11
REVO®
5-axis
measurement
system with
rack
18
RMP600
high-accuracy
radio transmission
machine tool probe
25
OMP400
high-accuracy
optical transmission
machine tool probe
5 RTS
radio transmission
tool setting probe
12
MODUS 2
metrology software
for inspection
on CMMs
19
AxiSet™
Check-Up
health check for
machine tool
rotary axes
26
Equator™
versatile
gauging system
96
XL-80
laser calibration
system
13 RGH22
incremental
encoder for
position feedback
20
Renishaw OMV
machine tool
software for
inspection/
verification
27
SPRINT™
MTM Toolkit
repeatable
diameter
measurement
7
Controller
software
software for
the AM250
system control
14
TRS2
non-contact
broken tool
detection system
21
SP25
for high-speed
scanning on
Equator™ gauge
28
SPRINT™
OSP60
optical transmission
scanning probe
14–15
Renishaw plc Annual report and accounts 2015
29
CNC Reporter
analysis and
reports from
Productivity+™
35
ATOM™
miniature
incremental
position
feedback encoder
41
RGH41
incremental
encoder for
position feedback
47
Primo Radio
3D Tool Setter
radio transmission
tool setting probe
30
SPRINT™
Blade Toolkit
high-speed
measurement of
blade sections
36
RESOLUTE™
true absolute
position feedback
encoder
42
MCR20
automated module
changing for PH20
allowing use of
multiple styli
48
GoProbe
user-friendly
probing software
S
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G
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Productivity+™
37
XR20-W
CNC plug-in
software for
SPRINT™ system
rotary axis
calibration system
43
Renishaw
fixtures
modular fixturing
for measurement
systems
32
Process Monitor
38
RotaryXL
re-mastering
software for
Equator™ gauge
rotary axis
calibration software
44
QC20-W
wireless ballbar
for checking
machine tools
33
INTUO™
software
easy-to-use
gauging software
39
RA100
Raman analyser for
process monitoring
45
Ballbar 20
software for
operating
QC20-W ballbar
34
TONiC™
incremental
encoder for
position feedback
40
PH20
5-axis touch-
trigger system
for CMMs
46
Inspection
Plus
macro software
for machine
tool probing
Key:
1
2
Hardware
Software
CMM Co-ordinate measuring machine used
for off line inspection of components
A Flat panel display
manufacturing
MT
CNC machine tool for machining
metal components
C
Semiconductor
wafer handling
B
D
Semiconductor
wafer inspection
Wire bonder
AM Additive manufacturing machine
i
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n
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s
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S
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11
The product range includes
the following:
Machine tool probe systems
Sensors and software for computer
numerically controlled (“CNC”) metal-
cutting machine tools that allow the
automation of setting and on-machine
measurement operations, leading
to more productivity from existing
machines and reductions in scrap
and rework. These include laser tool
setters, contact tool setters, tool
breakage detectors, touch probes,
contact scanning systems and
high-accuracy inspection probes.
Co-ordinate measuring machine
(“CMM”) products
Sensors, software and control
systems for three-dimensional CMMs,
including touch-trigger and scanning
probes, automated probe changers,
motorised indexing probe heads
and 5-axis measurement systems,
which enable the highly accurate
measurement of manufactured
components and finished assemblies.
Styli for probe systems
Precision styli that attach to probe
sensors for CMMs, machine tools,
scanning probes and EquatorTM
gauging systems to ensure that
accurate measurement data is
acquired at the point of contact.
Performance testing products
Calibration and testing products to
determine the positioning accuracy
of a wide range of industrial and
scientific machinery to international
standards, including a laser
interferometer, rotary axis calibrator
and wireless telescoping ballbar.
Gauging
EquatorTM enables process control
by delivering highly repeatable,
thermally insensitive, versatile and
reprogrammable gauging to the shop
floor. New INTUOTM software is an
ideal alternative to traditional manual
gauging, with training in a few hours,
allowing engineers to program parts
in minutes.
Spatial measurement
High-speed laser measurement and
surveying systems for use in extreme
environments, such as mine and
quarry surveying, marine positioning
and mobile mapping.
Fixtures
Modular and custom fixtures used to
hold parts securely for dimensional
inspection on CMM, vision and
gauging systems.
Position encoders
Position encoders that ensure
accurate linear and rotary
motion control in a wide range
of applications from electronics,
flat panel displays, robotics and
semiconductors to medical, precision
machining and print production.
These include magnetic encoders,
incremental optical encoders,
absolute optical encoders and laser
interferometer encoders.
Additive manufacturing (“AM”)
Advanced metal AM systems for
direct manufacturing of 3D-printed
metallic components. A total solution
is offered from systems, materials,
ancillaries and software through to
consultancy, training and support for a
range of industries including industrial,
healthcare and mould tooling.
Vacuum casting
Vacuum casting machines from
entry-level to high capacity for
rapid prototyping and production
of polymer end-use parts.
Modular fixtures for CMM inspection
providing improved throughput,
reproducibility and accuracy.
Quarryman® Pro laser scanner for quarry
surveying and stockpile monitoring.
Miniature ATOM™ optical incremental
readhead mounted on glass discs of
various sizes.
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1
Spatial measurement
devices overview
Renishaw’s world-class laser
systems and modules for high-
performance mapping, surveying,
positioning and measuring, even
in extreme environments.
Our high-speed laser measurement and
surveying systems are designed for use
in extreme environments where speed,
accuracy and safety are essential.
From underground voids and cavities,
to offshore and marine applications,
mining, quarrying or overhead, our laser
systems have been developed over
many years of close work with those in
the field, and have been adopted widely
due to their reliability and ease of use.
2
3
4
Group products
1
Pencil beam
laser module
for distance
and presence
detection
2
Fanbeam® 5
prisms
mounted to oil
rig docking
station
5
C-ALS®
slimline
underground
laser scanner
for deployment
through boreholes
6
Cavity Profiler
C-ALS®
user-friendly
software for fast,
accurate 3D
cavity scans
9 Cabled
Boretrak®
borehole deviation
measurement for
safer blasts
10
Quarryman® Pro
for quarry surveying
and stockpile
monitoring
3
Fanbeam® 5
laser-based
dynamic
positioning
system
7
Void scanner
underground
mapping of
voids and
cavities
11 Quarryman®
Viewer
intuitive software
for Quarryman
surveying systems
4 Dynascan®
(marine
mounted)
mobile mapping
and surveying
system
8
Cavity Profiler
– VS
simple,
functional mining
software for
modelling voids
12
Dynascan®
(vehicle
mounted)
mobile mapping and
surveying system
Key:
1
Hardware
2
Software
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 17
“ Pay-as-you-go”
probing
Renishaw’s customer research
has shown that concerns,
including investment cost, ease
of use and durability, have held
some companies back from
using probes.
Our response is the Renishaw
Primo™ system, a truly innovative
approach that addresses each of
these concerns. With a low initial
cost, free training kit and immediate
parts replacement, the Primo system
enables manufacturers to grasp
the opportunities of high-value
manufacturing regardless of the
size of their operation.
The latest pioneering initiative from
Renishaw, and a first for the industry,
the Primo system offers users all the
advantages of automated tool setting
at a very affordable price. The twin
probe system comprises the Primo
Radio Part Setter, Primo Radio 3D
Tool Setter and Primo Interface.
Renishaw Primo Credit Tokens enable
the “pay-as-you-go” solution, which
makes the Primo system unique and
ensures an affordable initial investment,
attractive overall purchase price and
fast payback. Users buy six-month
credit tokens which enable unlimited
use of the Primo machine tool probe
system during that period. An upgrade
credit token is also available to
provide unrestricted continuous use.
Registration of a valid six-month
credit token activates Primo Total
Protect, which provides cover against
accidental probe damage.
Finally, the GoProbe software and
supporting training kit makes these
already easy-to-use machine tool
probes even simpler. A comprehensive
self-study package with a range of
training tools and modules guides users
through everything they need to get the
most out of the Renishaw Primo system.
See more at www.renishaw.com/primo
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 18
OUR BUSINESS SECTORS – HEALTHCARE
Image shows a LaserImplant™ cranial
plate created in titanium alloy using
Renishaw’s additive manufacturing
technology. Such implants can be used
in craniomaxillofacial surgery to replace
bone removed as a result of trauma
or disease treatment.
REVENUE (-4%)
OPERATING LOSS
PERCENTAGE
OF GROUP REVENUE
£27.7m
£6.8m
6%
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT OUR BUSINESS SECTORS – HEALTHCARE CONTINUED
Our technologies are helping within applications such as craniomaxillofacial
surgery, dentistry, neurosurgery, chemical analysis and nanotechnology research.
These include engineering solutions for stereotactic neurosurgery, diagnosis of
infectious diseases, analytical tools that identify and characterise the chemistry
and structure of materials, supply of implants to hospitals and specialist design
centres for craniomaxillofacial surgery, and products and services that allow dental
laboratories to manufacture high-quality dental restorations. This illustration highlights
applications for our products within a simulated healthcare facility.
15
14
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18
1
2
3
4
5
6
7
20–21–22
Group products
1
neuroinspire™
surgical
planning software
7
OMP400
high-accuracy
machine tool probe
13 DIXI medical
electrodes
recording electrodes
for epilepsy
2 AM250
additive
manufacturing
system
8
Furnace
for sintering
milled zirconia
dental structures
14 inVia
Raman microscope
for non-destructive
material analysis
3
Controller software
software for
the AM250
system control
9
Productivity+™
PC-based machine
tool probing software
15 Structural and
chemical analyser
(SCA)
combines SEM and Raman
analytical technologies
4
OTS
optical transmission
tool setting probe
10
Renishaw
Dental Studio
CAD software for
dental scanning
16
RenDx SA-2000
analyser for
identification of
biological targets
5
Maxillofacial
build plate
additively manufactured
parts for cutting and
placement guides
11
DS10
contact
dental scanner
17
RenDx SP-2000
sample processor
6
Dental build plate
additively manufactured
dental structures
912
DS30
blue light optical
dental scanner
18
neuromate®
robot for
stereotactic
neurosurgery
Key:
1
Hardware
2
Software
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 Renishaw plc Annual report and accounts 2015
23
The neuromate® stereotactic robot can be used
in a variety of neurosurgical procedures such as
biopsy, neuroendoscopy, deep brain stimulation
and stereoelectroencephalography.
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Hybrid Raman systems
Renishaw’s hybrid systems unite the
chemical analysis power of Raman
spectroscopy with the high spatial
resolution of other techniques,
such as atomic force microscopy
and scanning electron microscopy.
These new instruments are vital tools
for investigating materials and devices
for nanotechnology applications.
Turnkey Raman analysis
The RA800 benchtop platform
provides companies with a high-
performance chemical imaging and
analysis system that can be tailored
for the needs of their customers.
RA800 gives research-grade Raman
microscopy performance in a Class 1
laser-safe, simple-to-use form.
Diagnostic systems
Renishaw Diagnostics Limited has
developed the RenDx Multiplex Assay
System, an automated, multiplex
platform for clinical diagnosis of
infectious disease, and is in the
process of obtaining CE certification
for the platform and its first assay,
Fungiplex, for diagnosis of invasive
fungal infections.
The product range includes
the following:
Dental scanners
3D contact scanners and non-
contact optical scanners used for
digitising of dental preparations and
the measurement of implant locations
for tooth-supported frameworks and
custom abutments.
Dental computer-aided design
(“CAD”) software
Dental CAD software that allows
set-up of scanning routines and
enables laboratory staff to design
abutments and structures for crowns
and bridges, including powerful
anatomic design functions.
Dental structures manufacturing
service
A central manufacturing service
that can handle CAD files from a
wide variety of dental CAD systems
to produce structures for crowns
and bridges in zirconia, cobalt
chrome, PMMA (used for temporary
restorations) and wax, and abutments
in cobalt chrome.
Neurosurgical robot
A stereotactic robot that provides
a platform solution for a broad
range of functional neurosurgical
procedures including deep
brain stimulation (“DBS”),
stereoelectroencephalography
(“SEEG”), neuroendoscopy,
stereotactic biopsies and is
being used to trial the delivery
of therapeutics deep into the brain.
Neurosurgical planning software
Software that allows advanced
planning of targets and trajectories for
stereotactic neurosurgery.
Neurosurgical implants
Implantable devices that allow
surgeons to verify expected DBS
electrode position relative to targeted
anatomy using magnetic resonance
imaging (“MRI”) for the treatment of
Parkinson’s disease, other movement
disorders and neuropathic pain.
Neurosurgical accessories
Specialist electrodes and instruments
for use in epilepsy neurosurgery,
manufactured by DIXI Medical.
Craniomaxillofacial
custom-made implants
Additively manufactured from titanium,
custom-made craniomaxillofacial
implants are structural implants
that are used in the reconstruction
of a patient’s head, face or jaw.
These are most commonly required
after oncology treatment or as a result
of trauma.
Raman microscopes
Scientists and engineers worldwide
use Renishaw’s research-grade
inVia Raman microscope for the
non-destructive chemical analysis
and imaging of materials. Its high-
speed, high-quality results and
upgradeability are valued in fields as
diverse as nanotechnology, biology
and pharmaceuticals.
Preparing the RenDx SP-2000 to process
a diagnostic assay.
Checking a processed assay before analysis
on the RenDx SA-2000 sample analyser.
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Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 24
Renishaw plc Annual report and accounts 2015
STRATEGIC REPORT
OUR MARKETS – DELIVERING SOLUTIONS GLOBALLY
The Group has over 70 locations in 33 countries
from where we distribute and support products
for our global customer base, with 95% of sales
outside the UK. We manufacture our products in
the UK, Ireland, India, Germany, USA and France.
Our products are used in many applications, the principal markets and relevant key
drivers of consumption being the following:
Agriculture
Increasing global demand for food
products from developing nations
Increasing global demand for biofuels
Greater investment in machinery
for intensive farming capabilities
Automotive
Continuing investment in
manufacturing capacity to
meet growing global demand
Improved fuel efficiency
requires tighter tolerances
on powertrain components
Cost efficiencies and automated
processes required throughout the
supply chain
Aerospace
New aircraft production to meet
growing global demand for civil
air transport
New fuel-efficient engines
with complex parts requiring
faster measurement
Improvements to fuel efficiency
by minimising airframe weight
Construction
Major infrastructure projects
driving heavy equipment sales
Skills shortages requiring
more automation in
equipment manufacturers
Power generation
Manufacture of components for
civil nuclear, wind and solar energy
Medical
Neurological disorders require
highly precise surgical therapies
Increasing focus on maximising
output from machinery used in
power generation
Growing demand for cosmetic
dentistry with superior aesthetics
Need to rapidly diagnose
infectious diseases for faster,
more specific treatments
Consumer products
Rapid growth in consumer products
New technologies prompting flat
screen factory investment
New generations of electronic
devices demand precision
manufacturing systems
Resource exploration
Equipment manufactured to
stringent safety requirements
requires accurate, cost-effective
and traceable processes
Non-renewable resources require
exploration in demanding terrains
and appropriate surveying tools
Global population growth and
urbanisation drive long-term
demand for fossil fuels
25
Key facilities developments
Stone and Miskin, UK
Acquired new 90,000 sq ft
facilities in Stone to help
cope with sustained
business growth.
Refurbishment of the
remaining 125,000 sq ft
of factory space in Miskin
is in progress, including
an annexe to house
the Healthcare Centre
of Excellence.
Hong Kong, China
Relocated to a larger facility
with over 26,000 sq ft of
space. The new premises
house a larger office
space, warehouse and
demonstration area.
Barcelona, Spain
Acquired two buildings
adjacent to our current
premises in Barcelona,
providing an additional
22,000 sq ft.
Dublin, Ireland
Purchased buildings
adjacent to our current
premises in Swords,
Dublin, providing an
additional 57,000 sq ft.
Illinois, USA
New purpose-built facility
due for completion by 2016.
Measuring 133,000 sq ft, it
will include offices, training
rooms, a demonstration
centre, a service centre, a
warehouse and an additive
manufacturing centre.
North and
South America
9 Locations
Metrology revenue
£89.4m
Healthcare revenue
£6.9m
UK and
Ireland
15 Locations
Metrology revenue
£20.7m
Healthcare revenue
£4.8m
Continental
Europe
19 Locations
Metrology revenue
£96.2m
Healthcare revenue
£6.9m
Other
regions
7 Locations
Metrology revenue
£10.8m
Healthcare revenue
£1.3m
Far East
22 Locations
Metrology revenue
£249.9m
Healthcare revenue
£7.8m
93%
7%
81%
19%
93%
7%
89%
11%
97%
3%
Metrology
Healthcare
Strategic reportGovernanceFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015
26
PERFORMANCE – OVERVIEW
Renishaw saw a year of record
revenue and profit with a continuing
focus on investments required to
achieve long-term business growth.
This included strong investments
in R&D facilities, manufacturing
capacity, global marketing and
distribution infrastructure, new
product development and the
recruitment and training of
skilled people.
Review of 2015
Exceptionally high revenue from
a number of Far East customers,
particularly in the consumer electronics
markets, ensured the achievement of
record revenue and operating profit.
After adjusting for these large orders
there was still 11% of underlying growth.
These results provided confidence
to continue our strong investments
for the long-term sustainability of
the Group, which included global
marketing and distribution infrastructure,
R&D facilities, new product
development, manufacturing capacity
and the recruitment and training
of skilled employees.
The year saw a particularly high level
of capital investment in the acquisition
and refurbishment of property.
The 153,000 sq ft Renishaw Innovation
Centre at our New Mills headquarters
site, was officially opened by HRH
The Princess Royal on 7th July, which
together with the refurbishment of other
buildings at the site, allowed employees
from our spectroscopy and calibration
products lines to relocate to New Mills
during the summer of 2015. We have
planning permission to add another
77,000 sq ft to the new building, all of
which will enable us to meet the space
requirements for our projected future
growth in R&D resource across all
product lines and the necessary growth
in corporate support functions.
Investment continued in our Miskin
site, where by December 2015 we will
have invested or committed almost
£40m in the site acquisition and
refurbishment, and purchase of plant
and machinery. Towards the end of the
financial year, refurbishment started
on the remaining buildings at the site,
including a 122,000 sq ft production
hall and an annexe which will house a
new “Healthcare Centre of Excellence”
(see page 33). The planning application
for 1.74 million sq ft of development at
the Miskin site, including 400,000 sq ft
for long-term use by Renishaw, has
recently been approved by the local
planning authority.
Both the Miskin and Stonehouse
machine shops have seen significant
further investment in machinery, with
31 machine tools delivered in the
second half of the year, providing
component machining capacity that
will allow us to respond quickly to future
projected demand.
In Staffordshire, two adjacent properties
totalling 90,000 sq ft have been
acquired to allow Renishaw’s additive
manufacturing products line to relocate
from its former premises. The new
facilities include training and lecture
rooms and large R&D facilities, and will
house our UK additive manufacturing
solutions centre, one of a global network
that is being established.
Outside the UK, there were further
investments in group facilities, with
the acquisition of 57,000 sq ft of
space adjacent to our existing facilities
near Dublin, providing additional
manufacturing capacity. In Hong Kong,
our offices have been relocated to a
new 26,300 sq ft facility close to the
main container port, whilst in Shanghai
the remainder of the 18,000 sq ft
space acquired last year has been
refurbished. In the Czech Republic,
63,600 sq ft of land has been acquired
adjacent to our existing premises in
Brno, on which it is planned to create
a 43,000 sq ft extension.
Occupying 9,700 sq ft in the suburb of
Mulgrave, our new offices in Australia are
in the heart of Melbourne’s technology hub.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 27
Also in Europe, we acquired additional
offices adjacent to our current
premises in Spain, providing space
for future growth.
In the USA, we acquired an 11 acre site
in West Dundee, Illinois, which will allow
us to build a 133,000 sq ft facility and
consolidate operations from two existing
sites. Land was also acquired in Mexico
to develop facilities for our expanding
sales and marketing operations.
The skills agenda continues to dominate
discussions amongst engineering
and science-based businesses, so it
was a boost to again be recognised
by The JobCrowd (a UK graduate job
review website) as a Top 3 employer
of graduates in the UK’s engineering/
manufacturing sector. Competition for
the best talent is very strong and there
was again a major drive to develop
younger people that will ensure the
future success of the business, with a
planned record intake of 70 graduates
and 44 apprentices this summer.
Market conditions
This was an exceptional year for
our Far East business, primarily
due to large orders from China and
South Korea for our machine tool
products used in the manufacture of
consumer electronics, but there was
also a favourable environment for
position encoders created through
investments in LED manufacture and
the semiconductor sector.
Away from the Far East, the Americas
showed good growth (13%), whilst
Europe (3%) and the UK (7%) also
experienced modest growth.
This spread of growth on a global basis
underlines the strength of our product
portfolio and distribution infrastructure.
As already mentioned, there were
strong business drivers in the Far East
electronics sector, but worldwide, the
investment in production systems and
processes for key sectors such as
aerospace, automotive and energy
continued during the year. All these
sectors require Renishaw systems
to meet their need for ever tighter
production tolerances and cost controls.
Strategy
To meet our key strategic aims, we
continued to make investments, which
this year included focusing on enhancing
our manufacturing capabilities and
continuing to develop a strong market
presence in emerging markets.
As well as the previously mentioned
investments at Miskin and in Ireland,
which increased manufacturing capacity
and reduced supply chain risk, we also
established Renishaw Tehnicni Inženiring
d.o.o., a company located within the
Faculty of Electrical Engineering at
the University of Ljubljana, Slovenia.
The new company will design,
develop and supply application-
specific integrated circuits and sensor
technologies for the Group and RLS, our
Slovenian associate company, which will
provide an alternative controlled source
for custom-designed integrated circuits.
During the year, Renishaw Singapore,
which is responsible for commercial
activities in the ASEAN region, moved
to a larger 4,300 sq ft office, offering
improved demonstration and training
facilities. With more manufacturing
moving into the ASEAN markets, our first
office in Hanoi, Vietnam, was opened,
with a 2,150 sq ft facility.
New 34,400 sq ft headquarters over
two levels at the Shibei Hi-Tech Park
in Shanghai’s Zhabei district.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 28
PERFORMANCE – METROLOGY
Performance
As already reported, there was
exceptional growth for our machine
tool products line, but there
was also strong growth for our
measurement automation, styli and
fixturing, and additive manufacturing
(metal 3D printing) products lines.
The measurement automation products
line, which is currently focused on
the award-winning Equator™ gauge,
continues to see high levels of success
in the automotive, aerospace and
consumer electronics sectors on a
global basis, with integration within
automation cells continuing to be a
notable trend.
The additive manufacturing (“AM”)
products line, which includes the LBC
business in Germany (specialising in AM
parts manufacture, including conformally
cooled mould tools and tool inserts
for injection moulding and die-casting
applications), continues to benefit from
high levels of investment and integration
within the Group’s infrastructure,
including the new facility in Staffordshire,
more machines for demonstration
facilities and plans for a series of AM
solutions centres which will aid adoption
of AM technologies by new customers.
Renishaw is now being seen as a key
player in the sector and we are receiving
strong interest from large manufacturers
in a wide range of sectors, including
aerospace, motion control, mould and
die, medical and motorsport.
A new web shop was introduced during
the year for the promotion and sales
of styli, fixtures and other metrology
accessories, with the site now available
in 14 different countries. Our co-ordinate
measuring machine (“CMM”) products
line also showed good growth,
with the REVO® measuring system
continuing to be adopted by some
major global automotive businesses.
At one manufacturer, an installation of
seven systems led to an average 45%
improvement in the cycle time to inspect
engine blocks and cylinder heads,
leading to an additional eight systems
being ordered.
Position encoders also exhibited solid
growth, benefitting from investments
in the Far East electronics and
semiconductor sectors, and a global
drive towards industrial automation
which will increase capacity and
flexibility, improve product quality
and reduce manufacturing lead times
and costs. Such automation requires
the rapid, reliable and accurate
measurement of position between
moving parts, delivered by our encoders.
In a similar way as we have dealt with
the unpredictable demand for machine
tool products, our manufacturing
investments and expert local support
organisations have given us an agile
capability that allows us to quickly
respond to the large encoder orders
from customers supplying the fast-
paced electronics sector.
Market conditions
Manufacturers around the world
are continuing the relentless drive to
reduce costs, shorten lead times and
improve the quality of finished products.
Renishaw technologies provide them
with proven solutions to keep machines
running reliably, maximise output from
those machines and significantly reduce
the time taken to inspect finished
components. The skills shortages faced
on a global basis in engineering and
manufacturing are also driving increased
investments in automated processes,
many of which require products from
across our various lines.
The civil aviation sector continues
to forecast very positive trends for
Renishaw, with the 2015 Airbus Global
Market Forecast predicting a doubling of
air traffic over the next 15 years and also
forecasting that over the next 20 years,
some additional 32,600 passenger
and freight aircraft will be required.
Our products are used heavily in the
aerospace sector and the continuing
drive towards more fuel-efficient aircraft
also requires more tightly toleranced
parts, and the “lightweighting” of
components, hence strong interest
in additive manufacturing.
Renishaw products are
deployed in space for
the first time
The European Space Agency’s
Sentinel-1A satellite was launched
from the European spaceport in
French Guiana with Renishaw’s
new space-encoder technology
installed on the advanced
Optical Communications Payload
(“OCP”) of the satellite, part of a
revolutionary inter-satellite laser
communication system.
The OCP provides an optical Low
Earth Orbit (“LEO”) to Geostationary
Earth Orbit (“GEO”) communications
link through a pair of Laser
Communication Terminals (“LCT”) by
space telecommunications company
Tesat-Spacecom (“Tesat”) of Backnang,
Germany. The GEO LCT is currently
accommodated on Europe’s AlphaSat.
Space is an exceptionally harsh
environment that demands encoder
performance and reliability far in
excess of normal operational limits.
Tesat required a new rotary encoder for
the coarse pointing assembly (“CPA”)
of its second generation LCT, which is
essentially a telescope with coherent
receiver and transmitter hardware.
The space-encoder, developed in
collaboration with Tesat, is designed
to withstand operating temperatures
from -40 °C to +80 °C, bombardment
by solar/cosmic radiation and high
mechanical loads consistent with rocket
launch. Radiation hardening, combined
with Renishaw’s extremely robust
optical detection principle, resulted
in the encoder achieving qualification
for an impressive 15 years’ service in
a GEO environment.
The space-encoder is installed on both
rotary axes of the CPA and achieves a
resolution of less than 0.5 microradians,
with a short-range error of less than
0.5 microradians and long-range error
of less than 5 microradians.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 29
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
Close-up of rotary
space-encoder
developed by Renishaw
and Tesat-Spacecom,
which is utilised on
axes 1 and 2
1
In-space laser communication.
2
Laser Communications Terminal
from Tesat-Spacecom.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information
30
PERFORMANCE – METROLOGY CONTINUED
Strategy for growth
We continue to position Renishaw
as a “solutions provider” and reduce
the risks of over-reliance on large
customers who integrate our products.
Our measurement automation, AM
and accessory ranges, such as styli
and fixtures, can be supplied direct
to the end-user, whilst we continue to
strengthen our portfolio of hardware
and software for CMMs that can be
used to upgrade measuring machines
already installed. For example, our new
MODUS 2 software suite is designed to
simplify the programming of CMMs and
supports the full range of measurement
tasks, from basic manual inspection
devices to fully automated machines
with five-axis systems such as REVO®.
A key focus is on developing
technologies that provide patented
products and methods which support
our product strategies, with £55.0m
(net of capitalisation costs) expenditure
on R&D and engineering during the
year. The current technology focus
includes miniaturised high-resolution
position feedback systems, user-
friendly metrology software products
for gauging, co-ordinate measurement
and calibration, and the development
of AM systems with faster processing
capability and improved process control
for large-scale manufacturing.
Fanbeam® 5 – the laser-based marine
dynamic positioning for offshore
support vessels.
We also constantly evaluate
new opportunities for existing or
complementary technologies both to
increase sales to our existing customer
base and to expand upon that base.
For example, a 20% stake in HiETA
Technologies Limited was recently
acquired. The design and delivery of
additive manufacturing products such
as heat exchangers for a range of
applications, which HiETA specialises in,
will greatly complement our existing AM
technology and products. Many of the
opportunities for AM sales are to existing
customers who understand Renishaw’s
holistic approach to manufacturing and
also the complementary products that
can assist their part production, such as
gauging or CMM inspection products.
Key developments
During the year, we launched a new
concept in probing, designed to appeal
to a more price-sensitive market.
The Primo™ twin probe system (see
page 17) offers a low initial cost and a
“pay-as-you-go” approach, which
is already gaining popularity after
initial launches in India and China.
Also introduced towards the end of
the year was Primo LTS, a single-axis
tool setter that allows users to set
tool length, check for breakage and
compensate for thermal growth on
CNC machining centres.
There have been several new software
products, all designed to simplify the
operation of our metrology products,
including MODUS 2 mentioned
previously. For machine tool probe
users, GoProbe is simplified software
that requires no prior probing experience
and comes with easy-to-use training
materials, including a smartphone
app. To make using the Equator
system similarly straightforward,
our new INTUO™ gauging software
requires minimal training and allows a
programmer to create gauging routines
simply by using the part to be measured
and its associated engineering drawing.
Other products introduced during the
year for our CMM products line include
the PH20 MT system (an entry-level
“machine touch” only version of the
market leading PH20 five-axis touch-
trigger system), RSP3-6 (a new scanning
probe for the REVO system that enables
the use of ultra-long styli up to 800mm
in length to measure deep bores) and
UCCsuite software V4.9.2 (CMM control
software which supports new products
and improvements to CMM calibration).
Additional products for the Equator
gauging system include a touch-trigger
probe kit which gives much shorter cycle
times for certain applications and EZ-IO
4.0, an updated version of software
that allows Equator to be more easily
configured for use in automated cells.
An upgrade was also introduced for
the AM250 additive manufacturing
machine, which includes new optical
control software, a gas knife lens
window protection system and a high-
capacity filtration system, all designed
to give faster and cleaner processing
of AM parts.
Outlook
We continue to be confident that
there will be increased adoption of
AM technologies by many of our
existing customer groups, whilst a
continuing recovery in the electronics
sector will benefit our position encoder
products line.
Growth in the world’s middle-classes,
with increasing disposable income,
is also forecast to drive demand in
areas such as civil aviation, consumer
products, agriculture, construction
and power generation (including oil,
gas and renewables). These trends
should all result in increased demand
for our metrology products to help
drive efficiencies, reduce waste,
increase automation and aid product
measurement traceability.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 31
Original design of mould tool for K2 rear
yellow case.
New design of mould tool by Renishaw
showing additively manufactured conformal
cooling channels.
55% reduction in
cooling time increases
Kärcher’s productivity
Based in Germany, Alfred Kärcher
GmbH & Co. KG (“Kärcher”) and
its high-pressure washers with
their distinctive yellow cases, are a
popular item in households around
the world.
More than 2 million units of the basic
Kärcher K2 pressure washer model
leave the company’s Obersontheim
factory every year.
As part of a project to reduce the total
cycle time for the manufacture of the
K2’s moulded yellow case by at least
20%, Kärcher turned to Renishaw
GmbH based in Pliezhausen,
Germany. “Our aim was to reduce
the cycle time from the original 52
seconds to between 40 and 42
seconds”, explained Leopold Hoffer,
Kärcher’s injection moulding process
co-ordinator.
Renishaw carried out a full analysis
of the original injection moulding
process, where cooling accounted
for 22 seconds of the 52 second total
cycle time and recommended various
design improvements to the mould
tools, which were adopted by Kärcher.
The solution combined a mix of
conventional temperature control
cooling technology, vacuum-brazed
cores and additively manufactured
conformal cooling channels that follow
the shape of the injection mould tool
cavity to achieve rapid uniform cooling.
Combined with the re-organisation of
external processes, including material
feed and handling systems, overall
cycle time reduced by almost 30%
from 52 seconds to 37 seconds,
within which cooling time reduced
from 22 seconds to just 10 – a 55%
improvement. Overall daily output of
the K2 case has risen from 1,496 to
2,101 units.
Kärcher K2 pressure washer.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 32
MANUFACTURING OVERVIEW
During the last year, manufacturing
operations have had to support
Renishaw’s substantial business growth.
This has been aided by our sustained
long-term strategic commitment to the
latest manufacturing technologies and
facilities. The Group has manufacturing
facilities in the UK (Woodchester
165,000 sq ft, Stonehouse 100,000 sq ft,
Miskin 460,000 sq ft and smaller
operations at New Mills, Old Town, Stone
and York), Ireland (Swords 70,000 sq ft),
India (Pune 50,000 sq ft), Germany
(Völklingen 19,000 sq ft), France (Lyon
5,500 sq ft) and the USA (Grand Haven
14,000 sq ft).
Strategy
At a strategic level, Renishaw’s
manufacturing operations are highly
vertically integrated. This results
from our commitment to delivering
exceptional service levels in terms of
delivery, service and product quality
to our customers. This approach also
ensures that we are in control of our
costs, quality and many of the supply
chains that are critical to the success of
our business.
Over many years, we have strived to
ensure that our products are designed to
optimise manufacturing capability, whether
in relation to our machining and assembly
processes, or that of third party suppliers.
This is best illustrated by our approach
to metal cutting, where a high degree of
standardisation has been applied to the
hardware used to perform machining
operations, since we have an excellent
understanding of process capability for
each platform. A secondary benefit to
this strategy is that it provides the ability
to upscale production through duplication,
as required, without the need to invent
alternative techniques, and this has been
key to delivering the growth in our turnover
in recent years.
The same standardisation philosophies
are applied during product and process
development to design for assembly
and test. Standardisation enables us to
transfer our manufacturing across to other
sites, and during the last year, a number
of new products have transferred from
pre-production to the assembly sites in
the UK, Ireland and India.
Long-term investment
Renishaw continues to be committed to
significant investment in its manufacturing
capability for both the medium and
long term. The Renishaw Automated
Mill Turn Inspection Centre (“RAMTIC”)
system developed in the early 1990s
uses a standard machine tool platform
that has been modified to provide a
highly efficient manufacturing solution,
involving a high degree of automation
and closed-loop control that is facilitated
by Renishaw probing technology for
tool setting, in-process monitoring and
component validation. Whilst the base
machine platform has evolved with
improvements in machine tool technology,
the fundamental process remains the
same and is the mainstay of Renishaw’s
standard machining platforms for
prismatic parts, with 50 RAMTIC systems
now in operation. There has been
continual and substantial investment in
the latest manufacturing technologies in
order to optimise the cost and capability
of our manufacturing systems, resulting
in investment in new equipment in the
UK of £29m in the period between 2010
and 2015.
The same approach has also been
taken with respect to our investments
in assembly-based technologies.
Renishaw has a very broad product
range that is largely produced in low
to medium volumes, but through our
strategies of standardisation and design
for manufacture we have created the
circumstances to develop and invest in
highly efficient and capable assembly
systems that deliver exceptional process
control and efficiencies. The electronics
production facilities utilise the very latest
technology capable of placing 40,000
components per hour, process control
by using in-line component validation,
automated optical inspection and
innovative technology to validate the
performance of assembled printed circuit
boards (“PCBs”). Another example is the
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT MANUFACTURING OVERVIEW
33
in-house development of automation
systems for assembly of certain products
in the UK and Ireland facilities, where
automation and closed-loop controls
have delivered significant reductions
in process variation, hence providing
enhanced product quality, as well as
reducing our costs.
We have continued to be proactive
in providing exceptional facilities
within which to conduct our
manufacturing operations.
Miskin
Our investment in the 460,000 sq ft site
at Miskin in 2012 may have been seen
by some as overly ambitious at the time.
However, the Board’s confidence in the
future growth of the business has been
proven to be justified given the business
performance since that time and the fact
that we are now at 50% occupancy at
the site.
Refurbishment of the remaining space at
Miskin is currently in progress to provide
the necessary space for expansion.
Planning permission for the development
of the 193 acre site has recently been
obtained and includes an additional
400,000 sq ft to provide capacity for
our own future expansion requirements.
Supply chain management
As a manufacturer operating in a high
mix/low volume situation, with a strategy
of delivering exceptional customer service,
our approach has been to maintain as
much control as possible of our supply
chains. This has been achieved through
a combination of in-house manufacturing
(including the creation of in-house
capability for critical processes as they
become financially viable), duplication
of critical processes, dual sourcing and
strategic long-term partnerships with our
third party suppliers. We also have supply
chain management teams based in China,
India and at our manufacturing facilities
in Ireland.
Following the acquisition of the Miskin
facility, we have taken the opportunity
to duplicate key processes in order to
reduce the risk associated with certain
critical in-house supply chains, such as
anodising of aluminium components
and the assembly and test of electronic
PCBs. For third party supply chains,
regular monitoring and review takes
place with a view to determining supply
risk, dual sourcing strategies and our
contractual terms with suppliers, in
order to ensure continuity of supply.
People
Consistent with Renishaw’s overall
philosophies, the manufacturing
operations take a long-term view
with regard to development of our
people. The movement of the business
towards providing end-user solutions
has introduced a much higher level of
volatility to demand. As a result, we
employ a proportion of our assembly
team on a fixed-term contract basis
in order to cater for the variations
in demand. Employee turnover
within manufacturing is below
10%, and this stability, coupled
with a growing business, provides
a platform to develop our people
within the organisation. In many
cases, employees transfer from
manufacturing into other parts of the
business to assist other functions,
such as new product development or
applications engineering, making best
use of the experience gained within the
manufacturing arena.
The investment in apprentices and
graduates is very much in evidence
at the manufacturing operations
at each site. All manufacturing
graduates and apprentices follow
a well-defined programme that
provides exposure to a wide range
of functions and technologies such
that we develop well-rounded
individuals with a broad grounding
in a variety of manufacturing-related
disciplines. Many of our apprentices
and graduates succeed in developing
career paths into more senior
engineering and operational roles
within the organisation.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 34
PERFORMANCE – HEALTHCARE
Performance
Growth came from our medical dental
and neurosurgical products lines, while
spectroscopy grew markedly in the
second half.
During the year, the dental products
line was re-named “medical dental”,
reflecting the wider portfolio of
products now being developed,
including craniomaxillofacial implants.
This line saw another record for the
annual production levels of metal
dental structures created from cobalt
chrome powder using Renishaw
AM machines, including LaserPFM™
frameworks (crowns and bridges) and
LaserAbutments™, which are implant-
supported custom abutments that
are machine finished for fitment (a
custom abutment is a prosthetic device
inserted into an implant to replace
natural dentition and provide functional
support for a crown). We continue to
benefit from offering dental materials
that are fully certified and traceable, and
a central manufacturing facility to dental
laboratories which use non-Renishaw
CAD systems.
An important agreement was reached
with DENTSPLY Implants which will
see this world-leading dental company
purchase Renishaw AM machines for
the manufacture of dental products.
At the end of the previous financial
year, the FDA issued clearance for
the marketing of the neuromate®
stereotactic robotic system in the USA.
The first installation of the system
was made during the year at Thomas
Jefferson Hospital in Philadelphia,
and is now being used regularly in
stereoelectroencephalography (“SEEG”)
cases to identify areas of the brain where
epileptic seizures originate in epilepsy
patients, with use of the robot reducing
procedure times from eight hours to just
two hours. A second neuromate system
for the USA was delivered to Ohio
State University Hospital in Columbus
at the end of the year.
Research into graphene and other
2D materials, life sciences, medical
research, pharmaceuticals and
advanced materials for the green energy
market, require high-performance
Raman instrumentation for which
our spectroscopy products are ideally
suited. Hybrid systems, combining
Raman chemical analysis with the high
spatial resolution of either scanning
electron microscopy or atomic force
microscopy, continue to be in strong
demand. Likewise, the growing life
science market is showing renewed
interest in Raman combined with
laser scanning confocal microscopy.
Market conditions
Life expectancy is increasing in both
developed and developing markets,
meaning that key drivers include the
requirement for faster procedures
to reduce waiting times, more
economical treatments and safer
procedures with reduced human errors.
Our medical dental and neurological
products are well placed to deliver
on these requirements.
Global economic conditions have seen
academic research funding delayed
or reduced in certain markets while
remaining strong in others, but this
improved markedly in the second
half and the outlook is much more
positive. Global funding for biomedical
research, advanced 2D materials and
green energy remains strong and our
spectroscopy products are well placed
to service this sector.
Strategy for growth
We aim to develop innovative healthcare
products that will significantly advance
our customers’ operational performance
by maximising research capabilities,
reducing process times and improving
the efficacy of medical procedures.
As a key Renishaw focus is to develop
technologies that provide patented
products and methods, we invested
£8.3m (net of capitalisation costs) of
expenditure on R&D and engineering
during the year.
Bristol Royal
Children’s Hospital
Bristol Royal Children’s Hospital
(“BRCH”) acquired a Renishaw
neuromate® robot as a result of the
“Grand Appeal” charity fundraising
in 2012. Since then, it has been used
for several stereotactic procedures,
including deep brain stimulation
treatment for dystonia and the
delivery of micro-catheters for the
treatment of brain cancer in children.
Neil Barua, Clinical Lecturer in
Neurosurgery, explains more about
the oncology work: “The main type
of brain tumour we treat in children
is called brain stem glioma. This is
probably the worst kind of cancer you
can have, and at the moment, children
who are diagnosed would be expected
to survive between about 7 and
12 months from diagnosis.”
He added, “The brain stem is really
‘tiger’ country for any kind of surgery,
it’s where the clockwork of the brain
is, and it’s the area where the nerves
controlling the face, heart rate, blood
pressure and breathing are. If we
are going to operate in that area, we
have to make sure we are as safe and
accurate as possible.”
The team at BRCH use the neuromate
robot and a special version of the
neuroinspire™ planning software and
catheter system (both manufactured
by Renishaw, according to BRCH’s
specifications) in a technique called
convection enhanced drug delivery,
where very fine micro-catheters
deliver chemotherapies direct to
the tumour site.
Neil comments, “Our accuracy is
typically within 1mm of the planned
catheter target, which helps to make
surgery less risky.”
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 35
Neil Barua, Clinical Lecturer
in Neurosurgery, planning
surgery with the Renishaw
neuroinspire™ software.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 36
PERFORMANCE – HEALTHCARE CONTINUED
The regulatory requirements for
healthcare products demand significant
investment, but make barriers to entry
high for competitive products.
Our metrology and healthcare
businesses are interconnected and we
employ core metrology technologies
and manufacturing expertise to minimise
technology risks. This is illustrated very
clearly in our dental CAD/CAM scanners
and the zirconia milling systems that we
use in our dental structure production,
which utilise proven measurement
sensors, encoders, software and our
knowledge of subtractive machining,
whilst, as mentioned previously, we
also produce a range of 3D-printed
metal dental structures on Renishaw
AM machines.
We also apply AM to an increasing
number of healthcare applications
including the metal delivery port
of an investigational drug delivery
system, which is manufactured
using a combination of AM and
conventional machining, and
also as part of developments
for craniomaxillofacial surgery.
We actively consider acquiring
businesses and/or technologies that we
feel are complementary to our existing
healthcare products.
Key developments
During the year, version 4.1 of our
neuroinspire™ surgical planning
software was CE marked, making
it available for sale in the EU.
This new version includes significant
new functionality, including the ability to
interface with hospital data networks,
support for SEEG procedures, and
importantly, it also integrates with the
neuromate robot, allowing direct control
of the robot from surgical plans prepared
within the software.
At the end of the year, we announced
the launch of the neurolocate™ patient
registration system in countries that
recognise the CE mark. neurolocate is a
frameless patient registration system for
the neuromate stereotactic robot with
technology based on a robot arm used
in connection with an intraoperative
X-Ray/CT.
The spectroscopy line released WiRE™
4.1 during the year, an updated software
package that offers improvements in 2D
and 3D Raman imaging. There were also
four new applications launched for use
with the inVia Raman microscope – two
for biological analysis and two for the
material science industry. A new Raman
demonstration laboratory was opened
within the new Renishaw facility in
Shanghai, featuring an environmentally-
controlled clean room.
At the end of the year, the medical dental
line launched LaserImplants™, custom-
made craniomaxillofacial implants that
support reconstructive surgery, typically
resulting from head or neck trauma, birth
defects or cancer treatment. This will be
one of the products that will eventually
be produced at the new “Healthcare
Centre of Excellence” being created
at the Miskin site. This centre will have
an ISO13485 quality management
system for the design and manufacture
of medical devices and will operate
additive manufacturing processes to
produce medical products. As well
as design and production facilities,
the centre will include training and
conferencing suites to showcase
Renishaw’s solutions in neurosurgery,
dentistry, craniomaxillofacial surgery
and molecular diagnostics.
Outlook
Increased life expectancy on a global
basis means greater incidences of
degenerative neurological diseases,
which will require surgical therapies.
With new regulatory approvals we
are increasingly well-placed to supply
neurosurgeons with the products and
techniques to support such procedures.
In developing markets, levels of
wealth are increasing at a national and
individual level, which is driving demand
for higher-quality medical treatments,
often requiring more technologically
advanced products.
The market for Raman spectroscopy
continues to grow in fields such as
nanotechnology, advanced materials
and life sciences.
Automation of a diagnostic assay on the
SP-2000.
Raman image revealing the chemical
compounds of a tablet.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 37
Raman systems used
to study 2D materials
Boston University’s Department
of Electrical and Computer
Engineering (“DECE”) houses
the Optical Characterization and
Nanophotonics laboratory. Here,
research focuses on developing,
and applying, advanced optical
characterisation techniques to the
study of solid-state and biological
phenomena, at the nanoscale.
The group uses Renishaw Raman
spectrometers to measure strain
in 2D materials and the friction
between 2D materials and their
underlying substrates.
Anna Swan is an associate professor in
the DECE and involved with a research
group that is currently focusing on 2D
materials, such as graphene, boron
nitride, molybdenum disulphide and
phosphorene. They are interested
in how strain, and designed strain
fields, can be used to manipulate the
electronic and optical properties in
these materials. For this work, they are
looking at how they can control the
boundary conditions and manipulate
the extent of friction between the 2D
material and substrate. They are using
Raman spectroscopy to measure
strain, the coupling between strain
and Raman shifts, and the friction.
Dr Swan and her colleagues have
been using Renishaw Raman systems
for a number of years, recently
acquiring a new inVia confocal Raman
microscope. Their older Renishaw
RM1000 system is now connected
to different custom-designed
chambers, for specific research under
environmentally-controlled conditions.
The new inVia provides a number of
advantages such as easy switching
between lasers, fast spectral mapping,
automatic alignment and integrated
calibration, making it the “go to system”
for the lab.
Dr Anna Swan of Boston University
with her Renishaw inVia confocal
Raman microscope.
High-resolution Raman image
of graphene sheet.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 38
PERFORMANCE – FINANCIAL REVIEW
“ The Group has achieved
exceptional results with
revenue of £494.7m (2014:
£355.5m) and a profit
before tax more than
doubled to £144.2m.”
Allen Roberts
Group Finance Director
Financial performance
It was another record year for group
revenue, which increased by 39%
from last year’s £355.5m to £494.7m.
Exchange rate changes relative to the
previous year had an overall minimal
effect on group revenue.
As with last year, there was substantial
revenue arising from trade with Far East
customers in the consumer electronics
industry. Adjusting for these sales, we
experienced underlying revenue growth
of 11% for the year.
The Group has invested heavily in its
production facilities enabling the Group
to meet the high customer demand
experienced in the year and also
providing capacity for future growth.
Investment in sales and marketing
resource and research and development
activities has continued in line with group
strategy. Profit before tax for the year
more than doubled to £144.2m (2014:
adjusted £70.1m), giving an improved
return on sales of 29%, compared with
20% last year.
Revenue
Group revenue for the year was
£494.7m, an increase of £139.2m, or
39%, over the previous year of £355.5m.
There was growth of 91% in the Far
East (88% at constant exchange rates),
or an underlying growth of 19% after
adjusting for the sales to customers
in the consumer electronics industry
referred to above. We experienced
growth of 13% in the Americas (11%
at constant exchange rates), 7% in the
UK and 3% in Europe (11% at constant
exchange rates).
The Group hedges a proportion of its
revenue by the use of forward contracts.
This mitigated the impact of a stronger
Sterling and contributed to the result
of a minimal effect of exchange rate
fluctuations relative to the previous year.
The net effect of forward contracts
increased reported revenue by £11.5m.
The table below shows the analysis of
group revenue by geographical market.
In our metrology business segment,
revenue grew by 43%, from £326.6m
last year to £467.0m this year.
Revenue in our healthcare business
segment was £27.7m, compared with
£28.9m last year.
A geographical analysis of our metrology
and healthcare businesses is shown on
page 25.
Revenue by region
Far East, including Australasia
Continental Europe
North, South and Central America
UK and Ireland
Other regions
Total group revenue
2015 revenue
at actual
exchange rates
£’000
Change
from
2014
%
2015 revenue
at 2014
exchange rates
£’000
257,665
103,106
96,284
25,499
12,166
+91%
+3%
+13%
+7%
+7%
252,993
110,891
94,628
25,499
12,166
Change
from
2014
%
+88%
+11%
+11%
+7%
+7%
2014 revenue
at actual
exchange rates
£’000
134,569
100,199
85,562
23,816
11,352
494,720
+39.2%
496,177
+39.6%
355,498
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 39
Profit and tax
The group profit before tax amounted
to £144.2m (2014: an adjusted £70.1m,
the adjustment being for the exclusion
of the non-taxable profit of £26.3m
on the disposal of our shareholding
in Delcam plc).
Statutory profit before tax for the
previous year was £96.4m.
In our metrology business, operating
profit was £150.7m, compared with
£74.4m last year. In our healthcare
business we recorded an operating
loss of £6.8m, compared with a loss
of £4.0m last year.
The overall effective rate of tax
was 15.8% (2014 adjusted: 15.3%).
The Group operates in many countries
around the world and the overall
effective tax rate is a result of the
combination of the varying tax rates
applicable throughout these countries.
In the UK, the tax charge for the
current year benefitted from a lower UK
current corporation tax rate of 20.75%
(2014: 22.5%) and an increase in the
credit arising from the research and
development credit and patent box from
£2.9m to £5.7m. The previous year’s tax
rate benefitted by 2.2% as a result of
a reduction in the corporation tax rate
used for deferred tax calculations from
23% to 20%.
Earnings per share (“eps”)
and dividend
Adjusted eps, excluding the exceptional
item in the previous year, increased
from 82.3p last year to 167.5p this year.
Statutory eps for the previous year
was 118.4p.
In line with the Group’s progressive
dividend policy, a final dividend of 34.0p
net per share (2014: 29.87p) results in a
total dividend for the year of 46.5p, an
increase of 13% over the 41.2p in 2014.
Dividend cover is 3.6 times (2014: 2.0
times when based on adjusted eps).
Research and development
Gross expenditure on engineering costs,
including research and development
on new products, was £66.1m
(2014: £56.8m). The capitalisation of
development costs (net of amortisation
charges) amounted to £2.8m
(2014: £3.5m), giving a net charge in
the Consolidated income statement
of £63.3m (2014: £53.3m). The gross
charge amounts to 13% of group
revenue (2014: 16%).
Between the business segments, net
of the capitalisation costs, £55.0m
(2014: £45.3m) was spent in the
metrology segment and £8.3m
(2014: £8.0m) was spent in our
healthcare segment.
New product research and development
expenditure amounted to £42.3m, which
compares with £36.3m spent last year.
There have been a number of new
product releases in both our metrology
and healthcare business segments, and
a number of new product introductions
are anticipated during the 2016
financial year.
Group headcount
Group headcount has increased from
3,492 at 30th June 2014 to 4,112 at 30th
June 2015, with the average for the year
of 3,811, compared with 3,345 last year.
The increase during the year of 620
comprised additional employees of 411
in the UK and 209 overseas. Over half
(316) were in production. The increase in
the UK included 30 apprentices and 58
graduates, and, in addition, we sponsor
77 students at universities across the
UK, demonstrating our commitment to
the training and development of skilled
people within our engineering and
commercial functions.
Working capital £m
Capital expenditure £m
% of revenue
144.7
130.5
105.1
97.6
75.7
36.7%
29.3%
2015
2014
30.3%
2013
29.4%
2012
26.2%
2011
48.4
27.5
39.2
17.9
28.0
30.3
21.1
16.7
20.9
21.3
16.5
11.1
13.6
2012
5.4
2011
2015
2014
6.9
2013
Plant and equipment
Land and buildings
International Financial
Reporting Standards
(“IFRS”)
In accordance with EU law, the
consolidated financial statements
of the Company are prepared in
accordance with IFRS adopted by
the EU. The Company has elected
to prepare its parent company
financial statements in accordance
with UK GAAP (“Generally Accepted
Accounting Practice”).
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 40
PERFORMANCE – FINANCIAL REVIEW CONTINUED
Four regional data centres have been
established around the Group, further
enhancing the resilience and efficiency
of the IT infrastructure.
Within working capital, inventories
increased to £77.7m from £63.0m at the
beginning of the year to support growth
in revenue and our policy of holding
finished stock to maintain delivery
performance given our short order book
of approximately five weeks.
Trade debtors increased from £81.8m
to £101.2m as a result of higher fourth
quarter revenue and a small increase
in debtor days from 63 in 2014 to 67
in 2015.
Cash balances at 30th June 2015 were
£82.2m (2014: £43.6m), in addition to
which is the pension scheme escrow
account of £14.7m (2014: £9.5m).
As noted below under Treasury policies,
the Group uses forward contracts to
hedge against future foreign currency
inflows. At the end of the year, these
contracts, which mature over the next
three and a half years, showed a gain
of £17.2m, net of tax, when re-valued
at the year-end, compared with a
gain of £25.6m at the start of the year,
with movements reported through the
currency reserve.
At the end of the year, the Group’s
defined benefit pension funds, which
closed in 2007 for future accrual,
showed a deficit of £48.1m, compared
with a deficit of £43.1m at 30th
June 2014. Defined benefit pension
scheme assets at 30th June 2015
increased to £140.5m from £129.8m
at 30th June 2014, representing
investment performance during the
year. Pension fund liabilities increased
from £172.8m to £188.6m, reflecting
the market rates at 30th June 2015
and the effect of applying IFRIC14
to the guarantee provided by the
Company in respect of the UK pension
scheme deficit.
The Company has given a guarantee
relating to recovery plans for the UK
defined benefit pension scheme deficit,
which is supported by registered
charges over certain UK properties and
the escrow account. The application
of IFRIC14 increased pension scheme
liabilities by £10.2m (2014: £8.0m).
For the UK and Irish defined benefit
pension schemes, a guide to the
sensitivity of the value of the respective
liabilities is as follows:
Valuation sensitivity
Variation
Approximate effect on liabilities
UK – discount rate
UK – future inflation
Increase/decrease by 0.5%
-£18.2m/+£21.2m
Increase/decrease by 0.5%
+£16.0m/-£14.4m
Ireland – discount rate
Increase/decrease by 0.5%
Ireland – future inflation
Increase/decrease by 0.5%
-£1.2m/+£1.5m
+£1.5m/-1.3m
Labour costs increased by 18% to
£173.7m (2014: £146.9m) reflecting an
annual pay increase, additional bonus
provision and the cost of the employees
taken on in both 2014 and 2015.
Consolidated balance sheet
The Group’s shareholders’ funds at
the end of the year were £431.2m, an
increase of £78.4m over the £352.8m at
30th June 2014, arising from an increase
in retained reserves.
Additions to tangible fixed assets totalled
£48.4m, of which £20.9m was spent
on property and £27.5m on plant and
machinery and IT equipment.
The main property additions were:
• at New Mills, the 153,000 sq ft
Renishaw Innovation Centre was
completed and occupied during
the year;
• also in the UK, our additive
manufacturing products line
acquired larger premises at Stone,
in Staffordshire, which facilitates
research and development expansion,
a customer solution centre and
service facility as well as providing
capacity for materials development;
• in Ireland, the Group acquired
additional premises adjacent
to our existing facility, for future
production expansion;
• in Spain, the Group acquired
additional premises, also adjacent
to our existing facility, for future
expansion of the sales and marketing
activity; and
• in the USA, Czech Republic and
Mexico, land was purchased
for the build of larger premises
for our expanding sales and
marketing operations.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 41
Also, currency contracts are used to
minimise the interest cost of maintaining
the currency borrowings. The foreign
currency borrowings are short term
with floating interest rates. The Group
does not speculate with derivative
financial instruments.
See note 22 for an analysis of cash
balances and currency borrowings
at the year-end.
Investment for the future
In recent years, the Group has made
a number of small niche-market
acquisitions, which have broadened the
Group’s range of products and markets
in both our metrology and healthcare
businesses. We have also invested
significantly in expanding our research
and development resources, production
capacity and our marketing and support
infrastructure. We will continually look
to the long-term growth of the Group
and to invest in R&D, manufacturing
and production processes to ensure
capacity for the future, and expand our
marketing and support presence around
the world.
Allen Roberts
Group Finance Director
29th July 2015
Treasury policies
The Group’s treasury policies are
designed to manage financial risks
to the Group that arise from operating
in a number of foreign currencies and
to maximise interest income on cash
deposits. As an international group, the
main exposure is in respect of foreign
currency risk on the trading transactions
undertaken by group companies and
on the translation of the net assets of
overseas subsidiaries.
The information below includes
disclosures which are required by IFRS
and are an integral part of the financial
statements. Weekly group-wide cash
management reporting and forecasting
is in place to facilitate management
of this currency risk. The operations
of group treasury, which is situated at
head office, are governed by board-
approved policies.
All Sterling and foreign currency
balances not immediately required for
group operations are placed on short-
term deposit with leading international
highly-rated financial institutions.
The Group uses a number of financial
instruments to manage foreign
currency risk, such as foreign currency
borrowings to hedge the exposure
on the net assets of the overseas
subsidiaries and forward exchange
contracts to hedge a significant
proportion of anticipated foreign
currency cash inflows.
There are forward contracts in place
to hedge against the Group’s Euro, US
Dollar and Japanese Yen cash inflows.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 42
KEY PERFORMANCE INDICATORS
The Group’s long-term aim is to achieve sustainable growth in
revenue and profits in order to provide an increasing dividend to
shareholders. This is to be achieved through substantial investment
in people and research and development of new products and
processes, acquisition of niche businesses complementary to and
supporting the Group’s strategic development aims, the application
of technologies into different market areas and the development
of its global marketing facilities. The main performance measures
monitored by the Board are:
Financial KPIs
Revenue growth £m
494.7
355.5
346.9
331.9
288.7
2015
2014
2013
2012
2011
2011
Total engineering costs
including research and
development £m
Included in the Consolidated
income statement
Gross expenditure
66.1
63.3
56.8
53.3
51.8
48.7
47.9
45.0
40.0
37.1
Adjusted earnings
per share pence
Dividend per share
pence
167.5
82.3
88.9
95.6
88.5
46.5
41.2
40.0
38.5
35.0
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2011
2015
2014
2013
2012
2011
2011
Related strategic priorities:
1 to 8
We are focused on growth in
revenue, through increasing
our market and geographic
penetration and continually
introducing new products.
We have also made a number of
acquisitions over the last five years
which expand our product range
and will support revenue growth
by using the Group’s worldwide
marketing and distribution
infrastructure to expand
these businesses.
1 2 3 7
The growth of the business
is fundamentally dependent
on the continuing investment
in engineering costs for the
development of new products
and processes. The Group
continues to make significant
investment in future products,
with engineering costs equal
to approximately 13% of group
revenue, and has also been
accelerating new product
development in certain areas.
1 to 8
In order to provide an increasing
return to shareholders, along
with retaining adequate funds
for reinvestment in the business,
we aim to achieve year-on-year
growth in earnings per share.
1 to 8
We aim to achieve significant
long-term returns to shareholders
by maintaining a progressive
dividend policy, whilst maintaining
a solid capital base with sufficient
working capital to support the
forecast growth.
KPIs are linked to strategic priorities; please see pages 6–9 for more information.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 43
A number of our graduates on a team-building exercise as part of their induction programme.
Non-financial KPIs
Employee turnover %
UK average employee turnover
Renishaw employee turnover
10.0%
9.5%
8.0%
8.0%
9.3%
5.7%
5.0%
2015
2014
3.2%
2013
5.5%
6.0%
2012
2011
Related strategic priorities:
1 to 4
We continue to train, develop
and reward our employees
so that we retain skilled and
effective teams of people.
Our aim is to maintain a UK
employee turnover rate which
is below the UK average
for the manufacturing and
production sector.
Number of apprentices in
training
Training
Health and safety
114
105
71
51
33
2015
2014
2013
2012
2011
Number of new placements
and members of the graduate
and apprenticeship schemes
Total lost working time injuries per
100,000 hours worked
105
108
70
40
2015
68
40
2014
New placements
New graduates
New apprenticeships
94
55
24
2013
80
40
25
2012
85
30
20
2011
0.05
0.04
0.03
0.03
0.02
2015
2014
2013
2012
2011
1 to 4
We believe in the need to provide
many options for career entry for
young people, and we are proud
of our apprentice programme
and the success it has achieved,
both for the apprentices that
have trained with us, and for
Renishaw by solving skills
gaps. In a period of growth, we
intend to increase the number of
apprentices taken into training
each year.
1 to 4
Our strategy is to grow organically
and therefore developing students
and taking on apprentices and
graduates forms a key element
of this strategy. Dependent on
economic conditions, we propose
to increase year-on-year the
number of new apprenticeships,
graduates and student
placements we take on.
1 3
In a manufacturing environment,
it is crucial that we maintain
high standards of health and
safety. Our aim is to have zero
fatalities and zero lost working
time injuries.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 44
PRINCIPAL RISKS AND UNCERTAINTIES
Current trading levels and order book
Revenue growth is unpredictable and
orders from customers generally involve
short lead-times with the outstanding
order book at any time being around
one month’s worth of revenue value.
Potential impact
Global market conditions continue to highlight
risks to growth and demand, which can lead
to fluctuating levels of revenue.
Related strategic priorities:
2 4 5 6 8
Whilst global investment in production
systems and processes is expected to
expand, future growth is difficult to predict,
especially with such a short-term order book.
This limited forward order visibility leaves the
annual revenue forecasts uncertain.
Mitigation
• The Group is expanding and diversifying
its product range in order to maintain
a world-leading position in its sales of
metrology products. Investment in sales
and marketing resources continues
in order to support the diversified
product range.
• The Group is applying its measurement
expertise to grow its healthcare
business activities.
• The Group regularly monitors the
integration of acquisitions which
expand its product range in new and
complementary market sectors.
Research and development
The development of new products
and processes involves risk, such as
development timescales, meeting
the required technical specification
and the impact of alternative
technology developments.
Related strategic priority:
2
Supply chain management
Customer deliveries may be threatened
by a failure in the supply chain.
Related strategic priority:
3
Note: the unprecedented demand for our
products this year has tested a number of
these mitigating controls and demonstrated
the Group’s ability to react to such demand.
Potential impact
Mitigation
Being at the leading edge of new technology
in metrology and healthcare, there are
uncertainties whether new developments will
provide an economic return.
• Patent and intellectual property
generation is core to new
product developments.
• R&D programmes are regularly reviewed
against milestones and forecast business
plans and, when necessary, projects
are cancelled.
• Medium to long-term R&D strategies are
reviewed at least annually by both the
Board and Executive Board.
• New products involve beta testing at
customers to ensure they will meet the
needs of the market.
• Market developments are closely
monitored.
Potential impact
Mitigation
Inability to meet customer deliveries could
result in loss of revenue and profit.
• Production facilities are maintained with
fire and flood risk in mind.
• Critical production processes are
replicated at different locations
where practical.
• Ability to flex manufacturing resource
levels and shift patterns.
• Regular vendor reviews are performed
for critical part suppliers.
• Stock policies are reviewed by the Board
on a regular basis.
• Product quality is closely monitored.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 45
Mitigation
• Specialist legal, regulatory and quality
assurance teams are employed to
support the healthcare business.
• Experience of healthcare regulatory
matters exists at board level.
• Healthcare operations in the UK and
France have ISO13485 certification for
their quality management systems, with
Ireland and other subsidiary healthcare
operations falling under the UK quality
management system.
Mitigation
• The investment strategy is managed
by the pension fund trustees, who
operate in line with a statement of
investment principles.
• Recovery plans are in place for the 2006,
2009 and 2012 actuarial valuations.
Regulatory legislation for healthcare products
The expansion of the Group’s business
within the healthcare markets involves
a significantly increased requirement to
obtain regulatory approval prior to the
sale of these products.
Potential impact
Regulatory approval can be very expensive
and time-consuming. This area is also very
complex and there is a risk that the correct
approvals are not obtained, which could
result in loss of revenue and profit.
Related strategic priorities:
2 5 6
Defined benefit pension schemes
Investment returns and actuarial
valuations of the defined benefit
pension fund are subject to economic
and social factors, which are outside the
control of the Group.
Potential impact
Volatility in investment returns and actuarial
assumptions can significantly affect the
defined benefit pension fund deficit,
impacting on future funding requirements.
Related strategic priority:
1
Treasury
Fluctuating foreign exchange rates may
affect the results of the Group.
Related strategic priorities:
1 6
Potential impact
Mitigation
With over 94% of revenue generated
outside of the UK, there is an exposure
to major currency fluctuations, mainly in
respect of the US Dollar, Euro and Japanese
Yen. Such fluctuations could adversely
impact the Group’s income statement and
balance sheet.
• The Group enters into forward contracts
to hedge varying proportions of
forecast US Dollar, Euro and Japanese
Yen revenue.
• The Group uses currency borrowings to
hedge the foreign currency denominated
assets held in the Group’s balance sheet.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 46
CORPORATE SOCIAL RESPONSIBILITY
“ With the introduction of our CSR strategy last year, we have spent this year consolidating and
improving a number of our processes. We have seen increased engagement from our people across
a range of CSR-related activities, particularly on waste, charity and community activities, throughout
the Group. We are pleased to have achieved a number of our CSR targets.
We are capturing data from more sites than ever to reduce our reliance on industry average data and
increase the accuracy of our waste and Greenhouse Gas (“GHG”) footprints. We have shown
continued growth within the business, in the building space we occupy, the number of employees and
our production levels. However, we have still achieved an absolute reduction of waste to landfill and a
reduction of GHG emissions per £m turnover. We are pleased with the advancements made
throughout this year, and will continue to strive for further progress.
In this period of growth, a record number of apprentices are now in training and we have invested
more than ever in developing our people.”
Ben Taylor
Assistant Chief Executive
Strategy update
By focusing attention on our strategic
goals over this last year, we have
been able to target areas with the
greatest impact. A key focus has
been on improving our efficiencies
in manufacturing through waste and
energy management. In addition, we
have reduced the GHG footprint of our
business travel this year; this is due to
increasing control on the flight bookings
process and significant investment in
videoconferencing facilities.
Our strategy continues to be appropriate
for the Group. In this report, we
concentrate on progress on our
manufacturing and training targets on
page 47, and we will be posting updates
on our progress against all our CSR
targets on the website.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 47
Progress on selected CSR targets:
Targets
Waste management
5%
reduction of waste to landfill from
UK operations
Energy
Investigate business case for the
investment in renewables
Progress
P
• We implemented a new waste strategy in
February 2014, focused on segregation
at source.
• Our Carbon Trust waste certificate covers
roughly 90% of our generated waste.
• Less than 4% of our waste is sent
to landfill.
• Just over 2,487 tonnes of waste were
diverted away from landfill this year.
P
• First solar array commissioned this year.
• Second solar array planned with a
further generating capacity in excess of
220,000 kWh.
• The replacement of lighting systems with
lower energy options have a potential
annual saving of 656,000 kWh.
reduction of waste to landfill from UK operations.
59%
96%
of all waste diverted from landfill.
123,056
kWh renewable energy generated to date.
Solar array with an annual generating capacity
280,000
kWh has
in excess of
been installed.
GHG emissions
3%
reduction in GHG tCO2e per million pounds
turnover compared to 2014
P
• 38% reduction in GHG emissions from
gas consumption.
• 28% reduction in GHG emissions from
business travel.
• Over £2m invested in energy
reduction activities.
13%
reduction in GHG tCO2e per million pounds turnover
compared to 2014.
People
5%
of our UK employees as apprentices,
graduates or sponsored students on
structured programmes
P
• 4,112 people employed globally, an
increase of 620 since last year.
• First graduates from our apprenticeship
programme in Germany.
• Over 200 people across the Group
on formal apprenticeships and
graduate programmes.
8% of our UK workforce
(5% globally) are on structured
apprenticeship or graduate programmes.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information
48
CORPORATE SOCIAL RESPONSIBILITY CONTINUED
People
Diversity
Renishaw enjoys the advantages
of being a global company. With 26
nationalities represented in our senior
management group, we benefit from
their understandings of different cultures
and acknowledge the advantages that
these varied experiences bring to the
business. We work hard to promote
a workplace that encourages open
communication and innovative thinking;
as we encourage this, we are able to
ensure our people feel valued and can
achieve their career goals.
Like many engineering companies,
Renishaw has a majority of male
employees, but we are working hard to
encourage females into an engineering
career through our educational outreach
programmes (see the Education section
on pages 52–54 for more information).
Over the last two years, we have
employed 80 apprentices and 138
graduates, and of these, 193 (89%) are
male and 25 (11%) are female. We have
114 people on apprentice programmes,
which, combined with graduates,
represents 5% of all employees.
female. There are nine directors on the
Board, consisting of seven males and
two females. The senior management
group is made up of 52 people, of
which 49 (94%) are male and 3 (6%)
are female. Renishaw regards its senior
management group to be the Executive
Board, the heads of each product
line, sales territory and manufacturing
organisation who report directly into the
Executive Board and the directors of
Renishaw’s subsidiary undertakings.
Employee retention
We have continued to promote
career development within Renishaw
and to provide an excellent working
environment. Our UK employee
turnover rate is 5.7% (2014: 5.0%),
which continues to be significantly
lower than the UK manufacturing
industry national average of 10%.
To ensure we reward our employees’
loyalty and hard work, we regularly
hold pay reviews and benchmark
our salaries against those within the
engineering sector. We have a group
performance-based bonus programme
based on group profitability for all
qualifying employees.
On 30th June 2015, we employed 4,112
people across the Group, an increase
of 620 since last year. Of these, 3,142
(76%) are male and 970 (24%) are
We offer on-site fitness suites,
appropriate flexible working (to
encourage a good work-life balance),
discount schemes with a number of
local businesses, a sports and social
club, subsidised restaurants at our key
UK locations and a crèche at our facility
in Pune, India.
Communication and participation
As a group that operates in a large
number of territories across the globe,
we recognise the need for clear and
open communication across the
business between sites, functions and
levels of management. Our flat structure
encourages employees to voice their
ideas or concerns to management and
we have had many excellent ideas as a
result of this open dialogue. To facilitate
the dissemination of top-down
information and to keep the employees
abreast of developments within the
business, regular communication
meetings are held where a board
member is present. These also give
an opportunity for an open discussion
between employees and a member
of the Board. Communications are
supported by presentations of the
annual and half-year financial results
given by the Assistant Chief Executive
at our larger locations, supplemented
by videoconference presentations for
smaller remote sites.
Our first graduate and apprentices
from our apprenticeship programme
in Germany.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT
49
for September 2015. A further 70 new
graduates also start with Renishaw this
summer (2014: 68).
The quality of our apprenticeship
and graduate programmes is widely
recognised through external award
schemes. We also award our own
Apprentice of the Year prizes.
We are a founding member of the 5%
Club, a UK industry-led campaign to
increase the recruitment of apprentices
and graduates, the members of which
commit to ensuring that 5% of their UK
workforce are apprentices, graduates
or sponsored students on structured
programmes within the next five years.
We are happy to report that against a
backdrop of a significant increase in
our people of 620 over the past twelve
months, we have maintained 8% of
our UK employees (5% of our global
employees) on structured apprenticeship
or graduate programmes, helping to
ensure the future of our highly skilled
people across the Group.
Human rights
A strict non-discrimination policy is
embedded into our Group Business
Code, which states the minimum
standards of operation expected within
the Group and our representatives.
This Code sets out our position that
all employees have the right to non-
discriminatory treatment and equal
opportunities, and to work in a safe and
secure working environment with a fair
wage. Proper consideration is given to
applications for employment from all
ethnic backgrounds and from those
with disabilities. Opportunities are given
to employees who become disabled
to continue in their employment or be
trained for other positions. We reject
the use of compulsory, forced and child
labour. We communicate this Code to all
potential suppliers and require appointed
suppliers to work to the spirit of this
Code. The full Code can be found at
www.renishaw.com/en/renishaw-group-
business-code--14444.
We continue to encourage our people
to communicate any suggestions and
ideas they may have, to either their
management teams or the Board
directly. A suggestion scheme enables
employees to submit ideas. We value
these suggestions and their suitability
for adoption are assessed, with awards
given for the best ideas received.
In addition, there is an inventors’ award
scheme for individuals who are named
as inventors on granted patents.
Training and development
We value our highly skilled people and
recognise that retaining them is essential
to the future of our business; as such,
we place a large emphasis on ensuring
our training programmes continue.
We have long held the view that
investing in people enables us to
acquire the necessary talent to grow
the business and mitigate the impacts
of a general skills shortage. This is
evidenced by our apprenticeship and
sponsored student schemes that we
started in 1979 and 1984 respectively.
This summer, some 105 (2014: 105)
students entered Renishaw for paid
placements – 60 summer placements,
40 one-year industrial placements and
5 pre-university placements. There are
114 craft and technical apprentices
currently in training (2014: 105) with 3
in our German subsidiary for the first
time, and 44 new starters confirmed
Having joined Renishaw as an apprentice
aged 16 and later gaining a first-class
engineering honours degree, Lucy Ackland
(left) won the national Women’s Engineering
Society Prize award for her work engaging
young children with STEM activities.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 50
CORPORATE SOCIAL RESPONSIBILITY CONTINUED
Community
With an increasing global footprint, we
recognise the positive contribution that
can be made to our local communities
through varied interactions with local
residents, businesses, schools and
not-for-profit organisations. This is
especially true in the west of England,
where we are one of the region’s
largest employers.
In many of our markets, we
communicate a positive story about
the role played by science, engineering
and manufacturing to enhance the
lives of the general populace and the
attractive nature of a career within these
sectors. We see this as vital to overcome
perceptions about career options in
these areas and to ensure a strong
pipeline of future talent, not just for our
own needs, but also for our wider supply
chain and customer base.
During the past year we have hosted
tour groups and given talks to a range
of organisations including primary and
secondary schools, universities and
colleges, business clubs and societies.
This includes our subsidiaries in Italy
and Spain, which are increasingly active
with higher education establishments.
With an increasing profile, we are also
regularly asked to give interviews to
international, national and local media,
and contribute our knowledge through
debates on a range of topics including
manufacturing, exports, education,
human resource management,
innovation and 3D printing.
Senior directors, including Sir David
McMurtry, Ben Taylor and Geoff
McFarland, are regular speakers at
conferences and business/community
events. In the past year, this has
included keynote presentations on the
future of manufacturing, innovation
and automation.
We continue to actively support
the business community regionally,
nationally and internationally,
through membership of trade
and lobbying associations such
as the Confederation of British
Industry, the Dental Laboratories
Association, the Association of British
Healthcare Industries, the European
Society for Precision Engineering &
Nanotechnology, Verein Deutscher
Werkzeugmaschinenfabriken e.V.
(Germany) and UCIMU-SISTEMI PER
PRODURRE (Italy). We also support
local chambers of trade and business
networking groups.
We are also a member of various
industry research centres across the
globe, some of these include The
Manufacturing Technology Centre (UK),
the Advanced Manufacturing Research
Centre (UK), Canada Makes (Canada),
PräziGen (Germany), Light Alliance
(Germany) and BazMod (Germany).
We continue to sponsor and help judge
a range of regional and national business
award programmes that help encourage
and recognise business and individual
excellence. Ben Taylor is a judge for
the West of England Business Awards,
whilst Head of Communications, Chris
Pockett, helped judge the Manufacturing
Excellence Awards organised by the
Institution of Mechanical Engineers and
the main business awards programmes
in Bristol and Gloucestershire.
To further our aim of establishing
awareness of Renishaw as a significant
regional employer, we continue to
sponsor a wide range of festivals, sports
clubs and organisations in the west of
England and South Wales. During the
year we became the first corporate
partner of a project which aims to raise
funds for “Being Brunel”, a new public
museum that will celebrate the life and
achievements of the great engineer
Isambard Kingdom Brunel, which is
scheduled to open in 2017.
In South Wales, we have advertising
boards at the Liberty Stadium, home
to the Ospreys rugby club and Premier
League football club, Swansea City.
We also sponsor Swansea City
footballer Ki Sung-Yeung, who plays
internationally for South Korea, an
important market for our products.
We continue to sponsor Ben Morgan,
the Gloucester and England rugby
international, who this year presented
our Apprentice of the Year Awards.
In Germany, we continue to sponsor
Handball-Bundesliga team HBW
Balingen-Weilstetten, which is based
in an area where many of our major
customers are located.
With significant public interest in 3D
printing, we have collaborated with
individuals and organisations on a
range of projects, including the creation
of a titanium public arts installation in
Folkestone, Kent, and the manufacture
of a prosthetic plastic hand for a young
man whose mother approached us,
having read about our expertise.
As reported in last year’s report, we
produced an innovative 3D-printed bike
frame for Empire Cycles, which has
been exhibited across the globe and is
now recognised by the Guinness Book
of World Records as the first of its kind.
Renishaw-sponsored ‘Arabian Lights’ was
one of 70 giant Shaun the Sheep sculptures
that formed part of the Shaun in the City
Bristol trail, raising funds for the Bristol Royal
Children’s Hospital.
Image courtesy of charity no. 1043603. Shaun in
the City © & ™ Aardman Animations Ltd 2015.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 51
Donations
Just under
£100,000
donated to local organisations
(www.renishaw.com/charity)
Charity
In the UK, the Renishaw Charities
Committee (“RCC”) was formed
in the 1980s to distribute funds to
charitable and voluntary organisations
and support the individual fundraising
efforts of all UK employees. The RCC
is made up of representatives from
Renishaw’s main Gloucestershire sites
and has a particular focus on assisting
organisations that help enrich the lives
of children and adults, from toddler
groups and sports clubs, through to
organisations that support the disabled
and the bereaved.
A separate fund is also administered
by the RCC, which donates monies
to aid the victims of global disasters,
from which, during the year, a £10,000
donation was made to the Disasters
Emergency Committee which
co-ordinated UK fundraising for victims
of the devastating earthquakes in Nepal.
During the year, the RCC made
donations totalling just under £100,000
to a diverse range of over 200
organisations. Beneficiaries included
disability support groups, primary and
secondary schools, counselling and
carers support groups, hospice care
organisations, animal sanctuaries,
medical research groups, church
restoration funds and senior
citizen groups.
The RCC fully matches funds raised
by employees for UK national initiatives
such as Movember, Comic Relief and
Wear it Pink, including £2,500 raised for
Children in Need.
During the year, significant donations of
£2,000 or more were made by the RCC
to eight organisations, including support
for capital projects at Minchinhampton
Rugby Club and Kingswood
Football Club.
Renishaw’s Indian subsidiary gave funds
to provide a swimming pool hoist for
disabled children.
The GreenTeam, based at the University of Stuttgart, and Renishaw GmbH collaborated to
develop and additively manufacture optimised wheel carriers for a Formula Student racing car,
reducing the overall weight of the car by 1.5 kg and making it their lightest vehicle to date.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 52
CORPORATE SOCIAL RESPONSIBILITY CONTINUED
Renishaw India is also highly
supportive of its local community and
during the year has given significant
grants to three non-governmental
organisations based in Pune, supporting
exploited women and disabled and
disadvantaged children.
One of these organisations is Balkalyan
Sanstha, which was established in
1979 to provide entertainment and
recreational facilities for disabled children
in Maharashtra State. It was given funds
by Renishaw to replace 35-year-old
playground equipment and provide a
hoist that enables children to enjoy the
local swimming pool. Funding was also
given to Chaitanya Mahila Mandal, which
cares for women (and their children) who
are victims of sexual exploitation and
trafficking – funds helped purchase an
ambulance, a toilet block and furniture
for a computer training centre.
Education
There is growing consensus regarding
the importance of science, technology,
engineering and mathematics (“STEM”)
education, skills and careers advice.
The perceptions of engineering are
improving and the numbers studying
engineering in the UK are increasing.
Despite these encouraging signs, the
rate of change in the growth of supply
is far too slow to meet the forecasted
demand for engineering skills in the UK.
There are also some significant UK
population challenges in the coming
years that will affect the pool of
students available for progressing into
apprenticeships and higher education.
The number of 14-year-olds is set to
fluctuate significantly, falling by 7.3%
between 2012 and 2017 before jumping
by 15.9% five years later. The number
of 18-year-olds will decrease by 8.9%
between 2012 and 2022.
There remains a disappointing negativity
towards the engineering sector amongst
the influencers of young people, with
17% of STEM teachers believing that a
career in engineering is undesirable for
their students. Furthermore, only 36%
of STEM teachers felt confident giving
engineering careers advice (Engineering
UK report 2015).
Targeting the influencers of young
people with up-to-date, accurate and
non-stereotypical information about
the range of engineering and STEM-
related careers is essential in persuading
students to persist with STEM
subjects throughout school, university,
apprenticeships and employment.
Renishaw has continued to target these
influencers over the last year. As part
of the week-long Stroud Festival of
Manufacturing and Engineering, we
hosted and co-organised with other
local engineering and manufacturing
companies an event entitled “Girl
Power”. This was held on a Saturday
with girls between the ages of 14 and 18
invited to attend a series of workshops,
activities and talks, and importantly,
they had to be accompanied by a
parent who shadowed their daughters
all day. Feedback suggested that
parents’ minds can be changed
about encouraging their daughters
to pursue an interest in engineering.
Feedback from the girls was
equally encouraging:
“ It has really opened
up my eyes to what
I could be doing when
I am older and has really
inspired me.”
A group of children from Old Sodbury Primary school looking at
Renishaw products in the Renishaw Innovation Centre.
Renishaw apprentices proudly showing off their Greenpower cars.
The Greenpower Education Trust promotes sustainable engineering
to young people.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 53
“ It has helped me learn
what sort of person I am
and what job would best
suit me. There are no limits
in engineering.”
Another way of influencing teachers is
to increase their skills and awareness
with respect to the latest technology.
The National Foundation for Educational
Research found that the quality of STEM
courses for 16-year-olds and over is
being undermined by a lack of time
that tutors have to develop their skills
and knowledge in line with the pace of
change in their subject areas.
During the year, we carried out a pilot
project in conjunction with the Design
and Technology Association (“DATA”)
to tackle the skills gap of design and
technology teachers at Marling School in
Stroud. Steve Berry, head of design and
technology, Marling School, said, “It was
brilliant and inspiring for staff, particularly
those with no previous programming
experience who did not believe how
much they could achieve. Being guided
by experts, with up-to-date industry
experience, was invaluable.”
The project is now available nationwide
for teachers to download from the DATA
website, and we have supported two
other schools in 2015, enabling their
teachers to learn the skills to pass on to
their students.
We have continued to offer all our
new graduates and second-year
apprentices the opportunity to be STEM
ambassadors. We now have over 100
ambassadors at Renishaw and each
must carry out at least one STEM
activity each year, which helps to sustain
and grow our multiple initiatives with
schools and universities, including talks
and lectures, career fairs, after-school
clubs and STEM projects.
We continue to develop relationships
with key universities that have been
identified as having relevant courses for
our business needs. This includes the
sponsorship of engineering societies
and engineering teams that design,
build, test and race a small-scale formula
style racing car in the global Formula
Student competition.
Renishaw has long-standing links with
a number of key regional universities
that have some of the highest levels
of student retention in the UK, and
therefore more likely to take up jobs in
our catchment areas after graduation.
We have a number of employees
who act as visiting professors at
these and other universities, with
projects taking place at a large
number. Examples include Bath and
Bristol universities where we have a
number of research projects, PhD and
undergraduate projects, whilst at Cardiff
University we sponsor the Trevithick
Library, the Renishaw Metrology
Laboratory and several PhD and
undergraduate students. We have also
made significant efforts to re-establish
teaching of a manufacturing course, with
close collaboration on the development
of academic content. There are a
number of research projects and a
metrology laboratory at Heriot-Watt
University, and we have established
a relationship with the University of
Loughborough, whereby a number of
their students apply to Renishaw for
summer and industrial placements.
Over100
STEM ambassadors
each carrying out at least one
STEM activity per year
The six winners of the national Renishaw
Engineering Experience competition on the
BBC Breakfast sofa.
Pupils from the SS Great Britain Future
Brunel’s programme being shown
electrode implantation procedures for deep
brain stimulation.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information
54
CORPORATE SOCIAL RESPONSIBILITY CONTINUED
After an invitation from the Ministry
of Education, Culture and Sport in
Spain, Renishaw Ibérica returned
as a key sponsor of the 35th annual
SpainSkills competition in Madrid (part
of the WorldSkills global career skills
competition). As well as supplying an
Equator™ gauging system, Renishaw
sent highly experienced employees to
provide guidance for the teams.
We continue to work with industry
leading organisations and engineering
peers to advise the UK government
on national policy that will benefit the
sector in general. For example, we are
members of the Royal Academy of
Engineering’s Leadership and Diversity
Board (“DLG”) which has been set-up
to help remove barriers and encourage
more women and other under-
represented groups into engineering.
This year, through the DLG, we made a
major contribution, along with a number
of other large engineering companies,
to develop a guidance document for
work experience students. Many small
and medium-sized enterprises (“SMEs”)
are deterred from taking on a student
for work experience, yet this is a
major contributor to a young person’s
career choice. There is also emerging
evidence that work experience plays
a part in supporting admissions to
higher education.
The DLG aims to encourage SMEs
to offer experience to students
from their local schools, and the
guidance document was published
in summer 2015.
Environment
We recognise that improving the
operational efficiencies of our locations
across the world contributes to the
sustainable growth of our business.
We continue to work hard on ensuring
the impact of our business activities
is as low as practical. Through our
assessments, we have seen that the
areas of our operations with a significant
impact are energy consumption and
waste generation. We also recognise
that our business travel and product
shipments make a significant
contribution to our carbon footprint.
First solar array was commissioned on the
new RIC building this year, with an annual
generating capacity in excess of 280,000 kWh.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 55
We have normalised our carbon
emissions by turnover (tCO2e/£m).
Whilst, as a result of the growth in
our business, we have had an overall
increase of GHG emissions, we have
achieved a 13% tCO2e/£m reduction
compared to the previous financial year.
To ensure the impact of our business
activities is minimised as far as
practical, we continue to maintain
our environmental management
system (“EMS”), which covers our UK
manufacturing and head office sites.
Through regular EMS meetings, we
co-ordinate activities to minimise our
environmental impact.
Reduction of carbon emissions
13%
tCO2e/£m
We recognise that we are legally obliged
to report on Scope 1 and 2 emissions
(as defined by the Greenhouse Gas
Protocol). However, through analysis, it
is evident that our Scope 3 emissions
amount to a significant proportion of
our carbon footprint. We will continue to
disclose our Scope 1, 2 and significant
Scope 3 emissions and to put efforts
into improving data quality, the scope of
data and expanding our Scope 3 data
capture, to enable a more complete
picture of our GHG emissions.
In the year, our total GHG emissions
for our Scope 1 and 2 emissions
(statutory disclosure) were 22,914.26
tCO2e. Our significant Scope 3
emissions (voluntary disclosure) were
24,434.17 tCO2e.
To calculate our GHG emissions, we
have used the GHG Protocol Corporate
Accounting and Reporting Standard
(revised addition), data gathered for
our CRC submission and the UK
government’s GHG reporting guidance
as the basis of our methodology and
the source of GHG emissions factors.
Our GHG emissions are based on
data that is taken from bills, invoices,
meter readings and expense claims
when possible. For our Scope 1 and 2
emissions, less than 1% of the data uses
estimates based on average datasets.
We recognise the impact from
employees commuting to our sites
and whilst we have not yet quantified
this, we actively promote a car share
scheme through an intranet site which
can be used to find car share partners.
We provide excellent facilities for
employees who choose to commute
by bike, such as lockers, showers and
covered bike storage areas.
This year, we have undertaken a
number of projects that have been
completed or are ongoing. We have
commissioned our first solar array that
has an annual generating capacity in
excess of 280,000 kWh. This array is
on the new Renishaw Innovation Centre
(“RIC”) building located at our New Mills
headquarters. During the construction
of the RIC, we were able to work with
our contractors and set the floor level
to optimise the cut and fill so that no
subsoil was required to be removed
from site. The subsoil was re-used
and stabilised using a lime-mix to form
a solid base on which to construct,
negating the need for 5,000 tonnes of
freshly quarried stone. Removing the
need to dispose of 4,500 tonnes of
subsoil and delivery of stone avoided in
excess of 520 lorry journeys. The RIC
contains over two acres of carpeting
with a recycled content of over 62%, the
equivalent of around 24 tonnes of waste
diverted from landfill.
Through refurbishment and maintenance
programmes, we are gradually using
more energy efficient forms of lighting,
with installations during the year
reducing energy demand by around
815,700 kWh, or 450 tCO2e per annum.
We have decommissioned an old gas
boiler system at our Miskin site and
replaced it with a much more efficient
air conditioning and localised gas-fired
boiler system. This work will reduce the
energy demand on the site by around
780,000 kWh or 160 tCO2e per annum.
Renishaw continues to participate in
the Carbon Reduction Commitment
(“CRC”) Energy Efficiency Scheme and
the Carbon Disclosure Project (“CDP”).
We use the CDP as a benchmarking
tool and are working extensively to
ensure our efforts in GHG emission
management are fully disclosed and
are as transparent as is expected of
us by our employees, customers and
investors. Our efforts were recognised
in the last CDP reporting period as we
were ranked 9th in our sector.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information
56
CORPORATE SOCIAL RESPONSIBILITY CONTINUED
Total GHG emissions (tCO2e)
2013
20141
20153
Scope 1
Gas consumption
Owned transport
Generator diesel
Heating oil
Fugitive emissions
On-site generation of electricity (solar array commissioned 2015)
Out of scope (biofuel blend)
Total Scope 1 (tCO2e)
Scope 2
Purchased electricity
Total Scope 2 (tCO2e)
Total statutory GHG emissions2 (tCO2e)
1,479.53
1,521.53
1,438.39
2,684.40
31.91
56.74
88.72
na
39.74
24.74
43.57
252.67
na
55.35
889.19
2,219.33
302.78
40.59
286.68
0
59.42
3,178.43
4,443.77
3,738.57
13,629.09
16,576.71
19,175.69
13,629.09
16,576.71
19,175.69
16,807.52
21,020.48
22,914.26
Normalised statutory GHG emissions2 by revenue (tCO2e/£m)
48.45
59.13
46.32
Scope 3
Business travel
Product distribution
Raw material purchase
Post and communications
Transmissions and distribution
WTT total
Out of scope (biofuel blend)
Total significant Scope 3 (tCO2e)
Total GHG emissions (tCO2e)
Normalised total GHG emissions4 by revenue (tCO2e/£m)
7,392.76
6,916.31
4,737.95
3,545.49
5,292.98
11,570.67
4,020.35
500.13
1,745.09
4,912.26
8.81
799.72
557.85
1,991.70
2,775.10
49.97
1,199.31
655.04
2,288.45
3,982.75
42.41
22,116.08
18,333.66
24,434.17
38,923.60
39,354.14
47,348.43
112.21
110.70
95.71
1 2014 figures have been restated due to improvements in our methodology, updated GHG conversion factors and replacing the calculation used for the June
2014 data last year – see footnote 3.
2 Statutory emissions are Scopes 1 and 2 as required by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013.
3 To facilitate the timely capture of information, this disclosure uses internally reported data from July to May and the June data is given as an average of the
previous three months. This will be restated next year if a significant difference is seen.
4 Total GHG emissions include Scopes 1 and 2 (statutory) and significant Scope 3 (voluntary) emissions.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 57
Incidents/near-misses
A total of 67 (2014: 68) near-misses were
recorded for the period. No significant
repeating common causes have
been established.
Accident reporting
A new online accident reporting system
has been introduced with the ability
to raise actions, generate automatic
reminders and update statistics
in real-time.
UK site compliance auditing
A full audit of all UK sites regarding
health and safety compliance has
recently taken place and an action list
is being generated.
Improvement Notices
The Company was issued with an
Improvement Notice relating to our site in
Stone on 20th March 2015 by the Health
& Safety Executive (“HSE”). This related
to a failure to have assessments in
place with regard to hand-arm vibration
operations following a RIDDOR
submission by the Company, for an
employee with carpal tunnel syndrome.
Actions were taken pursuant to the
Improvement Notice and the results
were approved and signed off by the
HSE on 28th May 2015.
Product compliance
We continue to prepare for the
extension of the Restriction of the use
of Hazardous Substances Regulations
(“RoHS”), which will cover the majority
of our products in 2017. Our entire
existing encoder product range is
RoHS compliant, with robust design
procedures in place to ensure all future
products are compliant. We continue
to monitor substances against those
identified as “substances of very
high concern” (“SVHC”) under the
Registration, Evaluation, Authorisation
and Restriction of Chemicals (“REACH”)
Directive, and to date, nothing we use
are on the SVHC lists. Whilst we do
not fall within the remit of the USA’s
Dodd-Frank Wall Street Reform and
Consumer Protection Act, we recognise
that compliance with the conflict
minerals assessment and disclosure
aspects of such legislation is important
to a number of our customers. We also
recognise that it is our responsibility
to ensure that our supply chain does
not support illegal or unfair practices.
Continual investigations in our supply
chain are carried out to help ensure
conflict minerals are not present; we are
working with a number of key suppliers
on this project. Any issues we consider
to be against the spirit of our Group
Business Code are monitored and
we work with suppliers where issues
are identified.
Health and safety
We have a well-established corporate
health and safety management system
that is in line with the ISO18001
requirements. It is recognised that an
injury may develop into something
more serious if not cared for correctly.
As our people are essential to our
business, all injuries from the smallest
of paper cuts to the most serious of
incidents are recorded, enabling us to
manage treatment and investigate all
incidents effectively.
The total number of accidents for the
period was 230 (2014: 151) against
a year-end headcount of 4,112
(2014: 3,492). This equates to an
accident ratio of 0.056 accidents per
person and is 30% up on the same
period the year before. The introduction
of an online accident reporting system,
which has made the reporting process
much easier and raised awareness of
the importance of reporting any accident
however minor, is the primary reason for
the increase.
Reportable accidents
There were four reportable accidents
under the UK RIDDOR reporting
requirements: one bumped head, one
pulled back muscle, one cut to a hand
and one torn back muscle resulting in a
total lost time of 222 hours, or 28 days.
Occupational health
We have had no work-related ill health
or diseases reported.
Health monitoring in the form of lung
function testing, hearing testing and eye
testing, where appropriate for a job role,
has been established for several years
and is ongoing.
Health support for employees is
offered in the form of subsidised health
monitoring (blood pressure, diabetes,
cholesterol and BMI).
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 58
CORPORATE SOCIAL RESPONSIBILITY CONTINUED
A tube of un-compacted metal swarf next to a compacted briquette containing the same quantity of material. The significant reduction in size
reduces the number of lorry loads required to move the material to a recycling plant. Producing swarf briquettes also enables us to remove the
majority of the oil residue, improving the quality of the material and increasing its value as a recyclate.
Renishaw plc Annual report and accounts 2015STRATEGIC REPORT 59
Waste management
In February 2014, we implemented a
new waste strategy, designed to ensure
as much waste as feasibly possible
is diverted from landfill. This strategy
continued to drive our efforts throughout
the year, resulting in a further 2,487
(2014: 1,515) tonnes of waste being
diverted from landfill. Around 90% of
all waste generated this year originated
from our UK sites which are covered
by the Carbon Trust Waste Standard.
These sites have been recognised
by the Carbon Trust for their efforts
in moving waste away from landfill as
a disposal option, towards recovery,
recycling and re-use.
Renishaw has introduced a segregation-
at-source programme as part of this
strategy, which has been trialled at
a number of sites and is being rolled
out to others. This enables a direct
engagement with employees by placing
a responsibility upon them to maximise
recycling. Regular feedback through
email, notice boards and communication
meetings helps reinforce this behaviour.
Last year, we set a target of 5% for the
reduction of waste to landfill in our UK
operations. We are pleased to report
that, through our employees’ efforts
over the past year, we have achieved
this target, with a reduction of waste
to landfill of 59% in the UK and 23%
globally (2014: 40%). We are now
re-using, recycling or recovering around
96% (2014: 92%) of our waste around
the world.
We continue to ensure that our waste
can be seen as a commodity. As such,
there are projects focused around our
waste metals and oils, to maximise the
recycling and value of the metals and to
provide a closed-loop on-site re-use of
the oils.
Renishaw recognises that large
gains are often made by many small
changes in practice, so our technical
and sales documentation is distributed
electronically whenever possible.
In addition, user guides for some of
our product groups are only available
online. Our commercial documentation,
payslips in the UK and invoices are all
managed through paperless systems.
Internal communications, wherever
possible, are only made via emails or
through the Renishaw intranet.
The Strategic report was approved by
the Board on 29th July 2015 and signed
on its behalf by
Sir David R McMurtry
Chairman and Chief Executive
Reduction of waste to landfill
Waste diverted from landfill (tonnes)
1,210.97
1,515.10
2,487.07
Waste re-used (tonnes)
2013
0
Restated
20141
9.33
20152
12.96
59%
in the UK
23%
globally
Waste sent to landfill (tonnes)
Percentage of waste sent to landfill
220.40
15.28%
131.54
7.99%
101.13
3.91%
1 Restated to remove the calculations used for the June figures (see note 2) and replace them with actual
figures. It also now contains more data from non-UK sites to enable a year-on-year comparison.
2 To facilitate the timely capture of information, this disclosure uses internally reported data from July to
May and the June data is given as an average of the previous three months. This will be restated next
year if a significant difference is seen.
Renishaw plc Annual report and accounts 2015Strategic reportGovernanceFinancial statementsShareholder information 60
INTRODUCTION
In relation to our remuneration report on
pages 76 to 83, the policy table from our
three-year remuneration policy which
was approved by 86% of shareholder
votes at our annual general meeting
(“AGM”) in October 2014 is set out for
information purposes only.
The annual report on remuneration
2015 sets out the details of directors’
compensation throughout this financial
year, which will be subject to the normal
advisory vote at the 2015 AGM.
The Board takes seriously its
responsibilities for making sure that
all employees are aware of their
obligations to act with openness,
honesty and transparency. This strong
anti-corruption culture is embedded in
our Group Business Code and Anti-
Bribery Policy which can be found
at www.renishaw.com/en/renishaw-
group-business-code--14444. In 2015,
we undertook a specific anti-bribery
monitoring project in order to update
our last risk assessment undertaken
in 2011/2012 when we originally
implemented our policy in response to
the Bribery Act 2010. Progress updates
were provided to the Audit committee.
Other appropriate steps were also
taken in order to maintain adequate
procedures. We have now trained 1,085
people worldwide via our anti-bribery
E Learning module, as well as other
training initiatives.
In the coming year, the Board is
reviewing its risk management and
internal control framework, and is
looking to enhance its operation so that
it remains fit for purpose and in line with
the changes to the Code published by
the FRC in September 2014.
“ The Board is ultimately
responsible to shareholders
for all the Group’s activities,
its strategy and financial
performance, for the
efficient use of the Group’s
resources and for social,
environmental and
ethical matters.”
David Grant
Senior Independent Director
With the assistance of the Audit
committee, the Board approves the
Group’s governance framework and
reviews its risk management and
internal control processes with a view to
maintaining high standards of corporate
governance throughout the Group.
A key area of focus for 2015 was
a review of our external audit
arrangements. Following revisions to
the UK Corporate Governance Code
(the “Code”) published by the Financial
Reporting Council (“FRC”) in September
2012 (the “2012 Code”) recommending
that the external audit is put out to
tender at least every 10 years, the Board
has determined that it will commence a
tender process in the spring of 2016 with
the chosen audit firm to be appointed
later in 2016.
Our Nomination committee led the
process to recruit a new non-executive
director, and Kath Durrant joined the
Board in January 2015.
Renishaw plc Annual report and accounts 2015GOVERNANCE 61
The UK Listing Authority’s Disclosure
Rules and Transparency Rules (“DTR”),
require the Annual report to include a
management report which can be found
in the Strategic report.
The Directors’ corporate governance
report and Other statutory and
regulatory disclosures set out on
pages 66 to 71 and 84 to 86 form the
Directors’ report.
For the purposes of the DTR, which
require a corporate governance
statement to be included in the
Directors’ report, the Company’s
corporate governance practices are
set out in the Directors’ corporate
governance report, which forms part
of the Directors’ report.
For the purposes of the UK Listing
Authority’s Listing Rules (“LR”), certain
information required to be provided to
the shareholders is also contained in
the Directors’ corporate governance
report, the Directors’ remuneration
report and the Other statutory and
regulatory disclosures, including certain
information relating to arrangements with
controlling shareholders.
For the purposes of the DTR, the
information required by section 7 of
such rules is referred to in the Directors’
corporate governance report.
Compliance disclosures
This corporate governance report
has been prepared in accordance
with the 2012 Code. The Board has
also considered, in advance of the
commencement date for the Company,
the principles and provisions of the
updated Code published by the FRC
in September 2014 (“2014 Code”) to
ensure that processes and procedures
are in place to apply the principles and
provisions of the 2014 Code. This report,
which incorporates the reports of
the Audit committee and Nomination
committee, together with the Directors’
remuneration report, describes how we
have applied the main principles of the
2012 Code.
We report on the operation of our
business in the following ways:
A review of the Group’s business and
likely future developments is given in
the Chairman’s statement and the
Strategic report. Segmental information
by geographical market is given in note 2
to the financial statements.
Disclosure of information under Listing Rule 9.8.4R
The information that fulfils the reporting requirements under this rule can be found in the Directors’ report, the Directors’
remuneration report and on the pages identified below, as applicable.
Section
Topic
(1)
(2)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
Interest capitalised
Publication of unaudited financial information
Details of long-term incentive schemes
Waiver of emoluments by a director
Waiver of future emoluments by a director
Non pre-emptive issues of equity for cash
As item (7), in relation to major subsidiary undertakings
Parent participation in a placing by a listed subsidiary
Contracts of significance
Location
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Provision of services by a controlling shareholder
Directors’ remuneration report p76–83
Shareholder waivers of dividends
Shareholder waivers of future dividends
Not applicable
Not applicable
Agreements with controlling shareholders
Other statutory and regulatory disclosures p86
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 62
BOARD OF DIRECTORS AND COMPANY SECRETARY
Sir David McMurtry N
CBE, RDI, FRS, FREng, CEng, FIMechE
Chairman and Chief Executive
• Formerly employed by Rolls-Royce plc,
Bristol, for 17 years, holding the positions
of Deputy Chief Designer and Assistant
Chief of Engine Design for all Rolls-Royce
engines manufactured at Filton, Bristol.
• Invented the original measuring probe in
the early 1970s and co-founded Renishaw
with John Deer in 1973.
• Responsible for Group technology.
John Deer
Deputy Chairman
• Trained as a mechanical engineer and
worked for Rolls-Royce plc, Bristol, for
14 years.
Ben Taylor
CEng, FIMechE
Assistant Chief Executive
• Was the Director of Engineering at
Sheffield Measurement, USA, before
joining Renishaw, Inc. as President in 1985.
• Co-founded Renishaw with Sir David
• Appointed to the Board of Renishaw plc
McMurtry in 1973, serving as Managing
Director from 1974 to 1989.
• Primarily involved in the commercial
direction of the Group, with particular
emphasis on marketing and the
establishment of the Group’s wholly-
owned subsidiaries.
• Responsible for Group manufacturing
and Chair of the overseas
marketing subsidiaries.
in 1987.
• Responsible for Group marketing,
international operations, human
resources and metrology regulatory
quality assurance.
• Reports to the Board on corporate social
responsibility matters.
Allen Roberts
FCA
Group Finance Director
• Qualified as a chartered accountant
in 1972 and is a Fellow of the Institute
of Chartered Accountants in England
and Wales.
Geoff McFarland
Group Engineering Director
• Graduated with a BEng in computer-aided
mechanical engineering at Heriot-Watt
University, and subsequently worked for
several years as a research associate.
• Joined Renishaw in 1979 and appointed
to the Board of Renishaw plc in 1980.
• Heads Group finance, business systems
and Wotton Travel Ltd.
• After working briefly in the high-volume
manufacturing electronic sector, joined
Renishaw in 1994.
• Appointed to the Board of Renishaw plc
• Responsible for the healthcare regulatory
in 2002.
and quality assurance functions.
• Responsible for Group engineering and
Group IP and patents.
Dr David Grant A R N
CBE, FREng, FLSW, CEng, FIET
Senior Independent Director
• Appointed to the Board of Renishaw plc
in April 2012.
• Vice-Chancellor of Cardiff University
from 2001 to 2012 and previously held
leadership positions at Dowty Group
and GEC.
• Currently senior independent director
of IQE plc, non-executive director of
the Defence Science and Technology
Laboratory (Dstl), chair of STEMNET, and
chair of the National Physical Laboratory.
Renishaw plc Annual report and accounts 2015GOVERNANCE 63
Notes:
3D angle:
-135%
0
0
0
10pt
No shadowing
Notes:
3D angle:
-135%
0
0
0
10pt
No shadowing
Notes:
3D angle:
-135%
0
0
0
10pt
No shadowing
Board nationality
Board tenure
Board balance
UK
USA
Ireland
6
2
1
0–3 years 4
10+ years 5
1
Chairman
Executive
4
Non-executive 4
Carol Chesney A R N
FCA
Non-executive director
• Appointed to the Board of Renishaw plc
in October 2012.
• Chartered accountant who worked
at Arthur Andersen for seven years in
audit services.
• Worked for some time in the Group
accounts function at English China
Clays plc.
• Currently Company Secretary of
Halma plc, having also been Group
Financial Controller.
Kath Durrant R N
Non-executive director
• Appointed to the Board of Renishaw plc
in January 2015.
• Held a variety of senior positions at
AstraZeneca plc, including Vice President,
HR and Communications for its research
and development division.
• Until recently was the Group HR Director
at Rolls-Royce plc and a member of the
executive team.
• Currently an Advisory Board
member for the Lancaster University
Management School.
John Jeans A R N
CBE, CEng
Non-executive director
• Appointed to the Board of Renishaw plc
in April 2013.
• Currently chair of the Council of Cardiff
University, Imanova and UK Biocentre Ltd.
• Board member of the University and
College Employers Association.
• Leads Innovate UK’s Stratified Medicine
Advisory Board.
• Appointed advisor to the Prime Minister at
the Office of Life Sciences in June 2014.
Norma Tang
General Counsel and Company Secretary
• Joined Renishaw plc in 2001.
• Qualified as a solicitor in 1988 and
since then has specialised in company
and commercial legal matters,
advising business clients and as an in-
house counsel.
• Heads the legal and company secretariat
function, advising the Board on legal
compliance and governance matters.
Audit committee A Remuneration committee R
Nomination committee N
Carol Chesney (Chair)
David Grant
John Jeans
David Grant (Chair)
Carol Chesney
Kath Durrant
John Jeans
Sir David McMurtry (Chair)
Carol Chesney
Kath Durrant
David Grant
John Jeans
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 64
EXECUTIVE BOARD
Sir David McMurtry
CBE, RDI, FRS, FREng,
CEng, FIMechE
Chairman and Chief Executive
See pages 62 and 63
for biography
John Deer
Deputy Chairman
See pages 62 and 63
for biography
Ben Taylor
CEng, FIMechE
Assistant Chief Executive
See pages 62 and 63
for biography
Allen Roberts
FCA
Group Finance Director
See pages 62 and 63
for biography
Geoff McFarland
Group Engineering Director
See pages 62 and 63
for biography
Norma Tang
General Counsel and
Company Secretary
See pages 62 and 63
for biography
Leo Somerville
President, Renishaw, Inc.
• Joined Renishaw in 1984.
• Initially served as Business
Manager for machine tool
probing and calibration
products at Renishaw, Inc.
• Became President of
Renishaw, Inc. in 1993 and
appointed to Executive Board
in 2004.
• Appointed as a member of
the International Sales and
Marketing Board in 2008.
Dave Wallace
Director and General Manager,
CMM, Styli and Fixturing Products
• Joined Renishaw in 1989
through Renishaw’s
sponsored student scheme.
• Worked in various functions
of the business including
a one-year secondment
at Renishaw’s German
subsidiary, before being
appointed Director and
General Manager for the CMM
products line in 2002.
• Appointed to the Executive
Board in 2008.
William Lee
Director and General Manager,
Machine Tool and Laser and
Calibration Products
• Joined Renishaw in 1997.
• Holds a degree in physics
from Oxford University and an
MBA from Bath University.
• Became Director and General
Manager for the laser and
calibration products line
in 2007 and subsequently
Director and General Manager
of the machine tool products
line in 2014.
• Appointed to the Executive
Board in 2015.
Renishaw plc Annual report and accounts 2015GOVERNANCE
65
Rhydian Pountney
General Manager, ROW Sales
• Joined Renishaw in 1979.
• Appointed as a member of
the International Sales and
Marketing Board in 2008.
• Over 30 years’ experience
in sales and marketing.
Responsible for 10 overseas
operations, including India
and Russia.
• UK Chair of the Technology
Collaboration in Advanced
Engineering working group of
the UK – India joint economic
and trade committee.
John Deer
Deputy Chairman,
Chair of International Sales and
Marketing Board
See pages 62 and 63
for biography
Allen Roberts
FCA
Group Finance Director
See pages 62 and 63
for biography
Ben Taylor
CEng, FIMechE
Assistant Chief Executive
See pages 62 and 63
for biography
Leo Somerville
President, Renishaw, Inc.
See page 64 for biography
Norma Tang
General Counsel and
Company Secretary
See pages 62 and 63
for biography
INTERNATIONAL SALES AND MARKETING BOARD
Kevin Gani
Director of Sales Development
• Joined Renishaw in 2011 and
was appointed Director of
Sales Development in 2012.
• Responsible for the
development of commercial
teams, systems and
processes.
• Manages and leads the
development of the
Renishaw Academy.
• Appointed as a member of
the International Sales and
Marketing Board in 2012.
Sean Hymas
President and Representative
Director, Renishaw KK
• Joined Renishaw in 1989
following a year’s sandwich
placement between 1987
and 1988.
• Over 20 years’ experience of
marketing, international sales,
and product management.
• Moved to Japan in 2008
to further drive sales and
marketing at Renishaw KK.
• Appointed President
of Renishaw KK and to
the International Sales
and Marketing Board in
December 2012.
Rainer Lotz
Managing Director,
Renishaw GmbH
• Joined Renishaw in 2006.
• Over 20 years’ experience
in related positions.
• Appointed as a member of
the International Sales and
Marketing Board in 2008.
Stewart Lane
General Manager, UK Sales and
Group Business Development
• Joined Renishaw in 2000
working as both a design and
business manager within the
machine tool products line.
• Graduated with a degree
in Manufacturing Systems
Engineering before
working internationally for
a number of years in the
automotive industry.
• Appointed as the Group’s
Business Development
Manager in 2012 and General
Manager for the UK sales
organisation in 2013.
• Joined the Board of the West
of England Aerospace Forum
in 2015.
Jean-Marc Meffre
Managing Director, Far East
• Joined Renishaw in 1988
as Managing Director of
Renishaw France.
• Holds a master’s degree in
Economics and Marketing.
• Moved to Renishaw
Hong Kong in 1997.
Responsible for all the
operations in the Far East and
Australasia, except Japan.
• Appointed as a member of
the International Sales and
Marketing Board in 2008.
Clive Martell
Head of Global
Additive Manufacturing
• Joined Renishaw in 2015.
• Responsible for the
strategy and direction of
additive manufacturing.
• Over 30 years’ experience in
advanced engineering and
international sales.
• Progressed from graduate
engineer to CEO of Delcam
plc, managed transition from
AIM listed company to a
division of Autodesk.
• Appointed as a member of
the International Sales and
Marketing Board in 2015.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015
66
DIRECTORS’ CORPORATE GOVERNANCE REPORT
Board structure
Board
Executive
Board
Audit
committee
Nomination
committee
Remuneration
committee
International Sales and Marketing Board, divisions and
subsidiary undertakings
patent-related disputes and other
material litigation, forecasts and major
product development projects.
The Board meets as often as is
necessary to discharge its duties
effectively. In the financial year ended
30th June 2015, the Board met 11 times
and the directors’ attendance record
at board and committee meetings
is set out at the end of this report.
In addition, the non-executive directors
met a number of times without executive
directors present.
A high level summary of subject areas
discussed during the year are set out on
page 67.
A. Leadership
The role of the Board
The Board comprises four executive
and four independent non-executive
directors in addition to the executive
Chairman. The directors holding office
at the date of this report and short
biographical details are given on pages
62 and 63. Full biographical details
are available at www.renishaw.com.
The Company maintains liability
insurance for its directors and officers,
as disclosed in the Other statutory and
regulatory disclosures.
There is a formal schedule of matters
specifically reserved for its decision.
These include the approval of annual
and half-year results and trading
statements, company and business
acquisitions and disposals, major capital
expenditure, borrowings, material
agreements, director and company
secretary appointments and removals,
Renishaw plc Annual report and accounts 2015GOVERNANCE 67
High level summary of subjects discussed during the year:
Strategy
• Business strategy
• Reviewing potential acquisitions/disposals
• Products and technology
Risk
• Group’s risk analysis
• Patent litigation
Governance
• Legal updates and new
disclosure requirements
• Board evaluation
• Succession planning/executive
management structure
• Controlling shareholder agreement
Finance
• Forecasts
• Oversight of the preparation and management
Stakeholder engagement
• AGM and other shareholder feedback
• Investor day
Safety
• Health and safety system and reports
of the financial statements
• Dividend policy
• Trading statements
HR
• Pensions
• Remuneration policy
• Salary reviews
• Bonus
The Board has three formally constituted
committees, the Audit committee,
the Remuneration committee and the
Nomination committee.
There is an executive management
committee known as the Executive
Board that is responsible for the
executive management of the Group’s
businesses. It is chaired by the
Chairman and includes the executive
directors and three senior management
representatives responsible for the
CMM products line and machine
tool products line and the North and
Central American market, respectively.
The Executive Board usually meets
for two days on a monthly basis
and considers the performance and
strategic direction of the metrology and
healthcare businesses and other matters
of general importance to the Group.
In addition, there is an executive sales
and marketing committee known as the
International Sales and Marketing Board
which meets quarterly to determine the
Group’s sales and marketing policies
and strategies and review its sales and
marketing activities. This committee
is chaired by the Deputy Chairman
and includes the Assistant Chief
Executive and Group Finance Director
plus the directors of the five largest
sales regions, the Director of Sales
Development and the Head of Global
Additive Manufacturing.
A framework of delegated authorities
is in place that maps out the structure
of delegation below the Board and
includes the matters reserved to
the Executive Board and the level of
authorities given to management below
the Executive Board.
The Board has adopted a conflict
of interests policy, putting in place
procedures for the disclosure and review
of any conflicts and potential conflicts,
and authorisation by the Board (if felt
appropriate). Authorisations granted and
the terms of such are reviewed on an
annual basis. New disclosures are made
where applicable.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 68
DIRECTORS’ CORPORATE GOVERNANCE REPORT CONTINUED
Division of responsibilities/
the Chairman
The role of Chairman and Chief
Executive is a combined role and thus
contrary to the recommendations of
the Code. Sir David McMurtry has held
this position since the Company listed
in 1983 and he and John Deer hold
the majority of the voting interests in
the Company.
There has been a voting agreement
in place between Sir David and John
Deer since 1983, further details of which
are set out in the Other statutory and
regulatory disclosures on page 84.
The Board considers that there is still a
clear division of responsibilities at board
level to ensure an appropriate balance
of power and authority so that there is
no one person with unfettered powers
of decision. The Board and Executive
Board meet on a sufficiently regular
basis to make decisions of significance
to the metrology and healthcare
business segments and review
management actions. It is intended that
this combined role will continue for so
long as Sir David McMurtry remains
on the Board and he and John Deer
hold a majority of the voting interests in
the Company.
The Chairman has no other significant
commitments as regards employment or
directorships of other companies.
Non-executive directors
David Grant is the Senior Independent
Director and is available to discuss
material concerns with shareholders
should the normal channels of the
Chairman and Chief Executive or
the Group Finance Director fail to
resolve such concerns. The non-
executive directors meet without the
executive directors present to discuss
performance and other matters.
B. Effectiveness
Composition of the Board
All the non-executive directors are
considered by the Board to be
independent in character and judgement
and there are no relationships or
circumstances that are likely to affect
a non-executive director’s judgement.
David Grant was interim CEO of
Innovate UK between January 2015
and May 2015, is currently the senior
independent director of IQE plc (having
been appointed in September 2012),
chair of STEMNET (appointed in
December 2011), chair of the National
Physical Laboratory (appointed in May
2015) and on the board of the Defence
Science and Technology Laboratory
(Dstl) (appointed in June 2012). He was
previously Vice-Chancellor of Cardiff
University from October 2001 to August
2012. The Company has dealings
with these organisations from time to
time such as grant funded research
projects, or research, collaboration
or supply agreements. The Company
confirms that David Grant has taken no
part in decisions relating to any of the
dealings between the Company and
these organisations.
John Jeans was appointed chair of
the Council of Cardiff University in
December 2011, is chair of Innovate
UK’s Stratified Medicine Steering Group
(having been appointed in February
2014) and was chair of MRC Technology
from December 2008 until November
2014. The Company has dealings
with these organisations from time to
time such as grant funded research
projects, or research, collaboration
or supply agreements. The Company
confirms that John Jeans has taken no
part in decisions relating to any of the
dealings between the Company and
these organisations.
The dealings referred to above are not
material (i.e., in aggregate they are less
than 0.5% of the Company’s revenue
for the financial year ended 30th
June 2015).
The Code recommends that at least
half the Board, excluding the Chairman,
should comprise independent non-
executive directors. The Board has
complied with this requirement since
January 2015 when Kath Durrant joined,
but due to retirements the Board was
not compliant prior to the appointment
of Kath Durrant.
Appointments to the Board
A description of the structure and
activities of the Nomination committee
are set out in the Nomination committee
report on page 72. Kath Durrant was
successfully recruited and joined the
Board in January 2015 (further details
are on page 63).
Commitment
The terms of appointment of the non-
executive directors, which includes
the expected time commitment and
requirement to discuss any changes
to other significant commitments with
the Chairman and Chief Executive in
advance, are available for inspection at
the AGM and the registered office upon
written request.
None of the executive directors holds a
directorship in a FTSE 100 company.
Development
Directors are offered the opportunity
to attend formal training courses to
update their knowledge of their duties as
directors. Guidance notes, papers and
presentations on changes to law and
regulations are provided as appropriate.
Non-executive directors are invited
to attend internal conferences, which
provide information to the Group on new
product development and marketing
initiatives, as well as our investor days,
the second of which was held in May
2015. Business presentations are given
at board meetings to provide updates
on, and opportunities to discuss,
products and business strategies.
Renishaw plc Annual report and accounts 2015GOVERNANCE 69
An induction pack is provided to new
appointees to the Board, and the
induction programme (together with the
continuing development programme)
includes site visits and briefings by
senior managers, attendance at internal
senior management conferences
and external trade shows, as well as
foreign subsidiary visits, as applicable.
For example, non-executive directors
visited Renishaw’s China and Japan
operations in the period and attended
strategy days, the investor day, the
group managers’ conference (where
global senior management were present)
and various trade shows. This has
facilitated a better understanding of the
Group, leadership team and Renishaw’s
products and markets.
Information and support
The Board receives appropriate
documentation, management accounts,
forecasts and commentaries thereon
in advance of each board meeting
to enable its members to review the
financial performance of the Group,
current trading and key business
initiatives. Regular financial updates
are also provided between meetings.
The Company Secretary advises the
Board on all governance matters.
All directors have access to the
Company Secretary and to independent
professional advice at the Company’s
expense where necessary to discharge
their responsibilities as directors.
The appointment and removal of the
Company Secretary is a matter reserved
for the Board.
Evaluation
The Board and its committees
undertake an annual evaluation of
their performance. The format of the
evaluation varies each year.
Given the full external evaluation in 2013,
an internal evaluation was conducted
in 2014 with actions focusing on
improvements to information flows,
organisational structure and succession
planning. The evaluation process for
2015 has taken place and the results
will be discussed early in the new
financial year. The Chairman and Chief
Executive discusses performance with
individual directors.
Re-election
In accordance with the Code all the
directors will retire from the Board at the
next AGM and will offer themselves up
for re-election at the AGM.
C. Accountability
Financial and business reporting
The respective responsibilities of the
directors and auditor in connection with
the financial statements are explained
in Directors’ responsibilities on page 87
and the Independent auditor’s report
on pages 88 to 90.
Fair, balanced and understandable
The directors consider that the Annual
report, taken as a whole, is fair, balanced
and understandable, and provides the
information necessary for shareholders
to assess the Group’s performance,
business model and strategy.
Going concern
The Group’s strategy for delivering its
objectives and business model, together
with the factors likely to affect its future
development, performance and position
are set out in the Strategic report, where
details of the financial and liquidity
positions are also given. In addition,
note 22 to the financial statements
includes the Group’s objectives and
policies for managing its capital, details
of its financial instruments and hedging
activities and its exposures to credit risk
and liquidity risk.
The Group has considerable financial
resources at its disposal and the
directors have considered the current
financial projections. As a consequence,
the directors believe that the Group
is well placed to manage its business
risks successfully.
After making enquiries, the directors
have a reasonable expectation that
both the Company and the Group
have adequate resources to continue
in operation for the foreseeable future.
Accordingly, they continue to adopt the
going concern basis in preparing the
Annual report and accounts.
Risk management and internal
control
The Board is responsible for the
Company’s systems of risk management
and internal control, and for reviewing
their effectiveness. Any system of
internal control is designed to manage
rather than eliminate the risk of failure
to achieve business objectives and
can only provide reasonable and not
absolute assurance against material
misstatement or loss.
There are defined lines of responsibility
and delegation of authorities.
Established and centrally documented
control procedures also exist, including,
for example, capital and other
expenditure, information and technology
security and legal and regulatory
compliance. These are applied
throughout the Group.
The group internal audit function
provides independent and objective
assurance that the control procedures
are appropriate and effectively applied.
The Group Audit Manager attends Audit
committee meetings to present annual
internal audit plans and the results
of such internal audits. Actions are
monitored by the Audit committee
on an ongoing basis.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 70
DIRECTORS’ CORPORATE GOVERNANCE REPORT CONTINUED
Constructive use of the AGM
The AGM takes place at the Company’s
headquarters or one of the Company’s
other sites and formal notification is sent
to the shareholders at least 20 working
days before the meeting. A business
presentation is given and all directors are
available for questions during and after
the meeting, including the chairs of the
Audit, Remuneration and Nomination
committees. Tours of the Company’s
facilities are offered.
Separate resolutions are proposed for
each substantially separate issue, and
all resolutions will be taken on a poll.
The Company reports on the number
of votes lodged on each resolution, the
balance for and against each resolution
and the number of votes withheld.
This information is published via an RIS
and on the Company’s website following
the meeting.
There is a process for the review of
business risks throughout the Group.
These are reported on a monthly basis
by senior management and overseas
subsidiaries. These reports are reviewed
by the Board.
The Board ensures that there are
effective internal controls over the
financial reporting and consolidation
processes. Monthly accounts and
forecasts are presented to the Board for
review. The group internal audit function
undertakes a review of subsidiaries’
accounting processes and performance
to provide assurance to the Board on
the integrity of the information supplied
by each company forming part of the
Group’s consolidated results.
The Board undertakes an annual
formal review of the effectiveness of
the Group’s system of internal controls
and an updated risk and controls
analysis. The review covers all material
controls, including financial, operational
and compliance controls and risk
management systems.
The Board is satisfied that there is
an ongoing process for identifying,
evaluating and managing the significant
risks facing the Group, that it has been
in place during the year, is regularly
reviewed and accords with the FRC
guidance on risk management and
control. The Board confirms that
necessary action has been or is being
taken to remedy any significant failings
or weaknesses identified from its review.
Audit committee and auditor
A description of the structure and
activities of the Audit committee are set
out in the Audit committee report on
pages 73 to 75.
D. Remuneration
The Directors’ remuneration report
explains how the Company applies
the 2012 Code principles relating
to remuneration.
E. Relations with
shareholders
Dialogue with shareholders
The Board announced a new policy
in the 2013 Annual report. No private
meetings will be held other than
shareholder meetings with the
Chairman, Senior Independent Director
and/or any other non-executive director
where a shareholder has material issues,
concerns or questions. The director
attending such a meeting will
communicate the shareholder’s issues,
concerns or questions to the Board.
The Board’s response will be published
on the Renishaw website for the benefit
of all shareholders where appropriate.
The interim and annual results and
presentations are posted on the website
promptly after announcement of the
results to the UK Listing Authority via
an RIS.
Open webcasts of presentations on
annual and half-year results are held
and recordings of the presentations
and the subsequent question and
answer sessions made available after
the webcast on the Company’s website.
Analysts’ and brokers’ reports will be
circulated to the Board. The Board
intends to hold open discussions with
any shareholder who wishes to share
views with the directors at the AGM
or the annual investor day at which
presentations on group strategy,
business segments and product lines
will be given by members of the Board
and senior management, as well as
tours covering the Group’s activities.
This year, 80 visitors attended the
Company’s investor day, which included
various Q&A sessions with the Board
during the day as well as an opportunity
to ask questions during tours, lunch and
refreshment breaks.
Renishaw plc Annual report and accounts 2015GOVERNANCE 71
Disclosure rule DTR 7.2.6 R
The information regarding share capital
required to be disclosed by this rule is
contained in the Other statutory and
regulatory disclosures.
Board and committee
meeting attendance record
Shown against each director’s name
in the table below is the number
of meetings of the Board and its
committees at which the director was
present, and, in brackets, the number
of meetings that the director was eligible
to attend during the year.
Compliance statement
The Board considers that it has
complied with the requirements of the
2012 Code throughout the year except
in relation to the following matters (the
reasons for non-compliance are stated
in the report above):
• the combined role of Chairman and
Chief Executive (Code provision A.2.1);
and
• for part of the year at least half the
Board did not comprise independent
non-executive directors (Code
provision B.1.2).
David Grant
Senior Independent Director
29th July 2015
Board attendance record
Director
Sir David McMurtry
D J Deer
B R Taylor
A C G Roberts
G McFarland
C T Chesney
K L Durrant1
D Grant
D J Jeans
Board
11 (11)
10 (11)2
11 (11)
11 (11)
11 (11)
11 (11)
6 (6)
10 (11)3
11 (11)
Audit
committee
Remuneration
committee
Nomination
committee
–
–
–
–
–
3 (3)
–
3 (3)
3 (3)
–
–
–
–
–
7 (7)
3 (3)
6 (7)3
6 (7)4
1 (1)
–
–
–
–
1 (1)
0 (0)
1 (1)
1 (1)
1 Kath Durrant was appointed to the Board on 1st January 2015.
2 John Deer did not attend one board meeting because of illness.
3 David Grant did not attend one board meeting and a Remuneration committee meeting held on the same day because of illness.
4 John Jeans did not attend one Remuneration committee meeting for family medical reasons.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 72
NOMINATION COMMITTEE REPORT
“ The Nomination committee
has an important role in
leading the process for
Board appointments and
ensuring that the Board
has the correct balance
of experience, diversity
and skills to support our
business model
and strategy.”
Sir David R McMurtry
Chairman and Chief Executive
Chair of the Nomination committee
Nomination committee role
and composition
The Nomination committee, which
meets on an ad hoc basis as
required, is responsible for reviewing
the size, structure and composition
of the Board, including its balance
of skills, knowledge and experience
and for nominating candidates for
appointment to the Board.
The members of the Nomination
committee are Sir David McMurtry
(Chair), Carol Chesney, Kath Durrant,
David Grant and John Jeans.
The majority of the members of
this committee are independent
non-executive directors. The terms
of reference of this committee are
published on the Company’s website.
Activities during the year
The committee met once during the
year. Further details are on page 71.
A recruitment consultant, CT Partners
Augmentum, was engaged in 2014
to seek appropriate candidates for
appointment as an additional non-
executive director, following a review of
the composition of the Board and the
experience represented. The shortlist
for interviews was to include candidates
that have the required skills and
experience and, where possible, at
least one-third to be female candidates.
A range of experienced candidates were
considered. I am pleased to report that
Kath Durrant joined the Board in January
2015, bringing with her extensive
experience as a senior HR executive
in the healthcare and engineering
industries. CT Partners Augmentum has
no other connection with the Company.
In addition to this appointment,
succession plans for the Board and
senior executives were also discussed.
Boardroom diversity
The Board has considered the
recommendations of the “Women on
Boards” report issued by Lord Davies
of Abersoch as regards setting out
aspirations for the appointment of
women to the Board by 2013 and 2015,
and has decided that it is inappropriate
to set out any levels that may require
positive discrimination in this respect,
as the overriding requirement is to
appoint directors with the necessary
skills and experience for the role.
However, as an international company,
the Board acknowledges that diversity
of all types is a benefit and should be
borne in mind when recruiting to all roles
within the Company, and has a policy
to provide equal opportunities to all.
The Board’s policy is to request, where
recruitment consultants are appointed,
that a proportion of female candidates
are included in their shortlist.
Sir David R McMurtry
Chair of the Nomination committee
29th July 2015
Renishaw plc Annual report and accounts 2015GOVERNANCE 73
AUDIT COMMITTEE REPORT
The Audit committee comprises the three
non-executive directors, Carol Chesney
(Chair), David Grant and John Jeans.
The Board is satisfied that at least one
member of the committee has recent
and relevant financial experience, being
Carol Chesney. The terms of reference are
available on the Company’s website.
Meetings
The committee meets at least three times
a year with the Group Finance Director,
the Group Financial Controller, the Group
Audit Manager, the Company Secretary
and the external auditor in attendance.
At least one meeting, or part thereof, is
held with the external auditor without
executive directors present. This year the
committee met three times; further details
are on page 71.
“ The Audit committee
has a vital role to play in
ensuring the integrity of
our financial statements,
the effectiveness of our risk
management processes
and internal controls,
and in evaluating the
performance of the
external audit process.
We fulfil our role by close
engagement with
management, internal audit
and the external auditor.
During 2015 we also
monitored the various
changes to the Code.
This report explains how
we fulfilled our duties.”
Carol Chesney
Non-executive director
Chair of the Audit committee
Audit committee role
and composition
The Audit committee is appointed
by the Board from the non-executive
directors of the Company. The Audit
committee’s terms of reference include
all matters indicated by Disclosure and
Transparency Rule 7.1 and the Code.
The terms of reference are considered
annually by the Audit committee and
any changes are recommended to the
Board for approval.
The Audit committee reviews the
Group’s accounting policies and
procedures, its annual and interim
financial statements before submission
to the Board and its compliance
with statutory requirements.
The committee monitors the integrity
of the Group’s financial statements
and announcements relating to
financial performance and reviews
the significant reporting judgements
contained therein. It also reviews the
scope, remit and effectiveness of the
internal control systems and internal
audit function.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 74
AUDIT COMMITTEE REPORT CONTINUED
Key issues and activities
In addition to reviewing the financial reporting of the Company, the committee also spends a significant amount of time reviewing
the effectiveness of the Group’s internal control processes. Combined with the committee’s review of the internal and external
audit functions, it is able to obtain sufficient information to discharge its responsibilities.
The principal activities in the year were:
Financial statements and reports
Risk management
Internal audit
External auditor and non-
audit work
• reviewed the output from
the Group’s risk review
process to identify,
evaluate and mitigate
risks and considered
whether changes
in risk profile were
adequately addressed;
• considered proposals
to further enhance the
robustness of the risk
management process;
• received updates on
compliance with the
Group’s anti-bribery and
corruption policy; and
• reviewed the Group’s
whistleblowing policy
and process.
• reviewed the effectiveness of the
Group’s risk management and internal
controls and disclosures made in the
2015 Annual report;
• reviewed the 2015 Annual report,
the 2015 Interim report and all other
trading updates issued during the year.
The committee received a report from
the external auditor on the audit of the
2015 Annual report;
• reviewed areas of the accounts
requiring judgement including the
carrying value of goodwill, the carrying
value of inventory, capitalisation of
internally generated development
costs, amortisation of intangible
assets, debtor provisions, warranty
provisions and taxation provisions;
• reviewed the accounting and
disclosures in the 2014 Annual
report in relation to the acquisition
of Advanced Consulting and
Engineering, Inc; and
• reviewed the accounting and
disclosures in relation to the Group’s
defined benefit pension schemes.
• evaluated the scope of
work to be undertaken by
the internal audit function;
• considered the timing and
process for the external
audit tender;
• reviewed progress on
recommendations brought
forward and considered
recommendations arising
during the year; and
• reviewed, considered and
agreed the scope and
methodology of the audit
work to be undertaken by
the external auditor;
• considered the resource
levels available to the
internal audit function.
• evaluated the
independence and
objectivity of the
external auditor;
• agreed the terms of
engagement and the fees
to be paid to the external
auditor for the audit of the
2015 financial statements;
• reviewed the level and
nature of non-audit services
provided by the external
auditor; and
• undertook an effectiveness
review of the external
audit process.
An additional committee meeting is planned for October 2015, primarily to focus on the external audit tender, enhancements
to the Group’s risk management process and to consider other changes to the Code and their implementation in the 2016
financial year.
Fair, balanced and
understandable report
and accounts
One of the key governance requirements
is for the Annual report to be fair,
balanced and understandable.
Ensuring that this standard is met
requires continuous assessment of
the financial reporting issues affecting
the Group on a year-round basis
in addition to a number of focused
exercises that take place during the
accounts production process within a
strict timeframe.
An extensive verification exercise
was undertaken to ensure the factual
accuracy of the Annual report by
the Board and senior management.
An advanced draft of the Annual report
was considered by the committee at
its meeting on 8th July 2015 with a
final draft being reviewed on 24th July
2015, prior to it being presented to the
Board. Following those discussions, the
committee advised the Board that the
Annual report, taken as a whole, is fair,
balanced and understandable.
Significant issues in relation
to the financial statements
As part of the reporting and review
process, the committee has regular
discussions with management and the
external auditor relating to significant
issues. During the year the committee
considered the significant issues set
out below in relation to the financial
statements. Also contained below is
a commentary on how these issues
were addressed:
The directors’ statement on a fair,
balanced and understandable Annual
report is set out on page 87.
i) The carrying value of goodwill
The committee focused on the
impairment testing by the Company
Renishaw plc Annual report and accounts 2015GOVERNANCE 75
of the carrying value of goodwill.
By applying knowledge and making
enquiries of the relevant cash-generating
units, reviewing the forecasts and the
sensitivity analysis, the committee
agreed with the conclusion reached that
no impairments were required.
ii) The carrying value of inventory
Provisions are made to write down
slow-moving and obsolete inventory
items to net realisable value, based
on an assessment of technological
and market developments and on
an analysis of historic and projected
demand. The assessment used
to calculate the provisions needed
requires the application of judgement
by management.
The committee received confirmation
from management that the approach
used to determine the provision was
consistent with the previous year and
made enquiries of management to gain
an understanding of how business
developments, both technological
and market-driven, had impacted the
provision during the year. The external
auditor explained to the committee
the work they had performed on
inventory provisions during the year.
The committee was satisfied that the
management judgements applied were
appropriate and that the provision was
appropriately stated at the year end.
Approach to auditor
appointment and audit quality
The committee has primary
responsibility for making the
recommendation on the appointment,
reappointment and removal of the
external auditor, which the Board puts
to shareholders for approval at the AGM.
KPMG LLP and its predecessor firms
have been auditor since 1974 and the
lead audit partner has changed in line
with their internal rotation requirements.
There has been no tender for audit
services since 1974. It is intended that
a tender will be undertaken in 2016.
When tendering for audit services,
tenders will not be assessed solely
on the basis of lowest fees, but on
a number of issues including:
• skills and knowledge of the team
proposed to do the work;
• quality of the work;
• independence of the audit firm from
the Company;
• audit partner rotation and
succession planning;
• global coverage for the
Company’s subsidiaries;
• value for money;
• audit approach and methodology;
• internal governance processes;
• technical capabilities of the firm as
a whole; and
• ethical behaviour and fair dealing.
The committee assesses the
effectiveness of the external audit
process and the quality of the audit work
throughout the year by considering:
• any issues arising from the prior
year audit;
• the proposed audit plan including
the identification of risks specific
to the Group, audit scope and
materiality thresholds;
• feedback from executive
management, including the review
of a report presented by the Group
Finance Director, Group Financial
Controller and the Group Audit
Manager on the effectiveness of the
external audit process;
• the delivery of the audit in line with
the plan;
• the communication of matters arising
during the audit to the committee;
• private meetings with the auditor
without management being present;
and
• the independence and objectivity of
the auditor.
Independence of
external auditor
In order to safeguard the independence
and objectivity of the external auditor, the
committee reviews the nature and extent
of the non-audit services supplied,
receiving reports on the balance of
audit to non-audit fees. The committee
regards it most cost efficient to use
the external auditor for tax advice and
compliance since this requires an in-
depth knowledge and understanding
of the Company’s business, products,
customer base and markets. The non-
audit services policy provides that the
auditor shall not be allowed to provide
services where there is involvement in
management functions or management
decision making, and/or any service on
which management may place primary
reliance in determining the adequacy
of internal controls, financial systems
or financial reporting. There are also
specified services which require the
prior approval of the Group Finance
Director and Audit committee chair
before the auditor may be appointed
to provide such services. In addition,
there are specified levels of authorisation
to be obtained before the auditor
may be permitted to tender for non-
audit services.
An analysis of fees paid to KPMG LLP,
including the split between audit and
non-audit services, is included in note 6
to the accounts.
Other matters
The committee reviews the policy by
which employees of the Company may,
in confidence, raise matters of concern,
including possible improprieties in
financial reporting or other matters.
It also monitors the effectiveness of
the Company’s procedures to avoid
any bribery related to the activities of
the Group.
Carol Chesney
Chair of the Audit committee
29th July 2015
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 76
DIRECTORS’ REMUNERATION REPORT
Statement from the chair of the Remuneration committee
David Grant
Senior Independent Director
Chair of the Remuneration committee
Remuneration committee role and composition
The Remuneration committee
is responsible for deciding the
Company’s framework of executive
director remuneration and setting
remuneration packages for each of the
executive directors. The committee’s
policy is to motivate and retain
executive directors by rewarding
them with competitive salary, benefit
packages and incentives. These are
linked to the overall performance of the
Group and, in turn, to the interests of
the shareholders.
The committee also reviews the
remuneration structure and packages
for the next level of senior leaders
across the business to ensure
appropriate competitiveness, equity
and progression for those identified as
potential successors to the Board and
senior executive team.
All the members of the committee
are non-executive directors,
comprising David Grant (Chair), Carol
Chesney, John Jeans and Kath
Durrant. The terms of reference of
the committee are published on the
Company’s website. No executive
director attends meetings of the
committee, except by invitation.
Independent advisers are used
as required.
The committee reviews annually the
executive directors’ remuneration in the
context of the Group’s performance
during the year.
Renishaw plc Annual report and accounts 2015GOVERNANCE 77
The committee considers it essential
that the Group can assure its ability
to attract and retain talent, in different
markets and in both established and
emerging businesses. This is particularly
important as employment markets
remain competitive, as the Group grows
and as a future generation of leadership
is developed within the Group. As a
result, the committee will continue the
review process in the 2016 financial year
and commission further work to ensure
appropriate remuneration benchmarking
at the executive director level and in the
next levels of leadership, and continue
to monitor current remuneration
practices including the advantages and
disadvantages of introducing longer-
term incentive plans. Any change to
policy would be tabled for approval
by shareholders.
David Grant
Chair of the Remuneration committee
29th July 2015
On behalf of the Board, I am pleased
to present the Directors’ remuneration
report for 2015.
The report continues to comply with the
requirements for reporting on directors’
pay introduced in October 2013 and is
split into the following three sections:
1. a statement from the Chair of the
Remuneration committee;
2. the remuneration policy table (pages
78 and 80) which was approved at
the AGM on 16th October 2014 for a
three-year period; and
3. an annual report on remuneration,
setting out information on directors’
remuneration paid during the year.
Remuneration committee
activities during the year
The Group continues to show strong
progress, delivering its strategy in key
markets, and performance against
all financial metrics was excellent.
Significant leadership attention was
focused on ensuring fulfilment of large
orders in the Far East and on strategies
for medium-term growth in both
established and emerging businesses.
The leadership team and employees of
the Company are congratulated on their
achievements during the year.
The Remuneration committee’s
approach continues to be to align
executive director remuneration with the
Group’s performance, using clear and
simple remuneration structures.
During the year, the committee approved
executive directors’ base salaries for
2015 and the executive director bonus
for 2014 in line with the programme set
for that year and considered and set
the executive director annual bonus
programme for 2015. In relation to
the 2015 annual bonus, we reviewed
the bonus targets and maintained a
transparent profit before tax target that
was introduced in 2014.
In relation to setting remuneration
for the next financial year, the
committee has taken into account
the performance of the Company, the
economic environment and employee
remuneration conditions within the UK
and the overseas markets in which
we operate, together with employee
retention and recruitment reviews.
Renishaw’s executive directors do not
participate in a long-term incentive plan
(“LTIP”). The Remuneration committee
recognises that this is unusual
compared to many other companies,
and we therefore question annually
whether Renishaw’s performance would
be enhanced through the introduction of
such a scheme.
The committee commissioned phase
one of an independent review of current
remuneration practices during the year.
The review concluded that the current
remuneration practices do not impede
the performance of the Company
at present, and that motivation and
commitment levels to the Company
are high – borne out in practice by the
retention of key leaders globally. It did,
however, indicate opportunities for
improvement in the communications
surrounding bonus structure and
payouts, and in the performance and
development review processes used
by the Company.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 78
DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration policy
REMUNERATION POLICY
The Company’s remuneration policy for executive and non-executive directors was approved by shareholders at the AGM on
16th October 2014 for a three-year period. No change will be proposed at the AGM on 15th October 2015.
Key extracts of the policy are provided below for information purposes only. The full policy can be found on our investor relations
website (downloads and video section) within the 2014 Directors’ remuneration report, contained in the 2014 Annual report.
Executive directors’ policy table
Set out below is a table describing each component of the remuneration package applicable to the executive directors.
* The page reference change below under the maximum column was updated in the table for information only in order to be factually correct, since the table has
Performance
measures
To reflect the
director’s role,
performance
and experience.
Not applicable.
Maximum
110% of median salaries
in a comparator group
as decided by the
committee. Renishaw has
historically paid base
salaries that are higher
than median, reflecting
the lack of an LTIP (see
Statement on page 77). *
The committee retains
the discretion to make
adjustments at the
annual review to take
into account matters
affecting an individual
director such as changes
in responsibility and
anomalies discovered
during benchmarking.
Excluding
accommodation and
relocation costs, not to
exceed £50k p/a.
been reproduced from last year’s Annual report (as explained above).
Element of
remuneration
Purpose and
relevance to strategy
Operation
Base salary
To provide a
competitive fixed
salary to motivate
and retain executive
directors of the
required quality
to meet the
Group’s objectives.
Renishaw aims to pay the base rate
salary at least at the current median
market rate or above, as compared to
the equivalent job position/ level in the
relevant industrial sector(s) applicable to
Renishaw, as defined in the appropriate
benchmarking pay surveys, statistics
and peer comparisons (such peer
selection to include factors such as size
and location).
Base salary is reviewed annually
taking into account the award for the
UK workforce.
Benefits
To provide market-
competitive benefits
to motivate and
retain executive
directors of the
required quality to
meet the Group’s
objectives and to
support them to give
maximum attention
to their role.
Benefits provided on an ongoing basis
include the following principal benefits:
• a car or car allowance;
• private medical insurance;
• life assurance;
• long-term disability cover;
• home telephone costs.
If, on the recruitment of a new executive
director, relocation is required to the
director’s place of work, relocation
support which is regarded by the
committee to be necessary to provide
appropriate support to the director will
be provided to cover items such as
transaction and legal fees, removals
and temporary accommodation and
subsistence costs.
Renishaw plc Annual report and accounts 2015GOVERNANCE 79
Performance
measures
Based on group
performance,
primarily financial,
but the committee
may introduce
non-financial
metrics or make
adjustments to
reflect appropriate
performance
or competitive
factors, provided
that the bonus will
always be subject
to achievement
of the baseline
financial targets
and such non-
financial metrics
shall not form more
than 25% of the
bonus opportunity.
Not applicable.
Executive directors’ policy table continued
Element of
remuneration
Purpose and
relevance to strategy
Operation
Bonus
To incentivise
and reward
execution of the
Group’s objectives.
The committee sets group performance
targets, including a baseline below
which no bonus is earned, with a bonus
payable from that point, increasing on
a straight-line basis to a target at which
75% of salary would be earned and
a cap at which a maximum 100% of
salary would be earned.
Part or all of any bonus paid may be
subject to repayment in the case of
any financial misstatement, errors in
calculation or gross misconduct.
Maximum
100% of salary.
Pension
To provide a
competitive pension
as appropriate to
motivate and retain
executive directors
of the required
quality to meet the
Group’s objectives.
The maximum
contribution to the defined
contribution scheme,
or, where applicable,
additional salary payment
in lieu of contributions will
be 15% of base salary.
Each of Allen Roberts, Ben Taylor and
Geoff McFarland receive an additional
payment of 15% of base salary, being
the amount that would otherwise be
contributed to a pension scheme on
their behalf.
For any new executive director,
annual contributions based on a
percentage of base salary will be
made to the Company’s defined
contribution scheme or additional
salary may be paid in lieu, as agreed by
the committee.
Geoff McFarland is a deferred member
of the Company’s defined benefit
scheme which closed for future
accruals on 5th April 2007.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 80
DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration policy continued
Non-executive directors’ policy table
The remuneration of the non-executive directors is determined by the executive directors and consists of a fee only. There is no
entitlement to any benefits, bonus, incentive plans or pension. Set out below is a table showing the fees for the non-executive
directors of the Company:
Element of
remuneration
Purpose and
relevance to strategy
Operation
Fee
To provide a
competitive fee to
motivate and retain
non-executive
directors of the
required quality
to meet the
Group’s objectives.
The non-executive directors are
paid the same fee, irrespective of
membership of or acting as a Chair
of a committee.
The fees are reviewed annually with
reference to fees payable to non-
executive directors of companies of
a similar size and complexity.
Reasonable expenses incurred in
undertaking duties as a director
are reimbursed.
Performance
measures
Not applicable.
Maximum
The maximum fees
payable will be set by the
Company’s Articles of
Association, currently an
aggregate of £300,000
per annum.
ANNUAL REMUNERATION REPORT
This section of the report sets out the remuneration of the directors in the year ended 30th June 2015.
Single total figure table (audited)
Sir David McMurtry
D J Deer
B R Taylor
A C G Roberts
G McFarland1
C T Chesney
K L Durrant2
D Grant
D J Jeans
Salary/fees
Benefits
Bonus
Pension
Total
2015
£’000
648
392
451
367
367
43
22
43
43
2014
£’000
2015
£’000
2014
£’000
2015
£’000
2014
£’000
2015
£’000
2014
£’000
630
381
438
357
347
42
n/a
42
42
2
19
20
20
18
n/a
n/a
n/a
n/a
2
19
19
19
18
n/a
n/a
n/a
n/a
648
392
451
367
367
n/a
n/a
n/a
n/a
0
0
0
0
0
n/a
n/a
n/a
n/a
n/a
n/a
68
55
55
n/a
n/a
n/a
n/a
n/a
n/a
66
53
63
n/a
n/a
n/a
n/a
2015
£’000
1,298
803
990
809
807
43
22
43
43
2014
£’000
632
400
523
429
428
42
n/a
42
42
1 Figures for G McFarland reflect an element of salary sacrifice for 2014.
2 K Durrant was appointed a director with effect from 1st January 2015.
Renishaw plc Annual report and accounts 2015GOVERNANCE 81
Car
allowance
£’000
Private medical cover applies to all
executive directors and home telephone costs,
insurance on personal cars, M4 bridge toll fees,
US tax return advice is provided to certain directors
£’000
n/a
18
18
18
18
2
1
2
2
0
Payments to past directors
No payments were made to past
directors during the year.
Loss of office payments
There was no termination of employment
of directors during the year.
Performance graph
The graph below shows the Company’s
total shareholder return (“TSR”)
performance, compared with the FTSE
mid 250 index, which the directors
believe is the most appropriate broad
index for comparison.
The share price and the FTSE mid 250
index have been rebased to 100 at 1st
July 2009.
Renishaw
FTSE mid 250
800
700
600
500
400
300
200
100
0
2009
2010
2011
2012
2013
2014
2015
Benefits
Sir David McMurtry
D J Deer
B R Taylor
A C G Roberts
G McFarland
Bonus
For the year in question, the bonus
was determined by group performance
targets for the year, based on an
adjusted profit before tax set at levels
above the previous year’s profit before
tax and with a threshold below which no
bonus is earned. A target profit before
tax set for the year in question enabled
75% of salary to be earned as a bonus.
A further bonus could be earned based
on performance subject to a maximum
100% of salary. No other performance
measures were set.
Total pension entitlements
G McFarland is a member of the
Company’s closed defined benefit
scheme. At 30th June 2015, the value of
the defined benefit pension entitlement
was £28,645 per annum. The normal
retirement age for G McFarland is 65.
On death, pension benefits would pass
to dependants.
Current year pension scheme
contributions payable by the Company
have been taken as cash.
The value of G McFarland’s defined
contribution scheme at 30th June 2015
was £403,329.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 82
DIRECTORS’ REMUNERATION REPORT CONTINUED
Annual remuneration report continued
Executive directors serving
as non-executive directors
of other companies
None of the executive directors served
as non-executive directors of any other
company during the year.
Statement of directors’
shareholding and
share interests
None of the directors is required to own
shares in the Company. The interests of
the directors who have served during
the year in shares (including connected
persons) are:
Sir David McMurtry
D J Deer
B R Taylor
A G Roberts
G McFarland
C T Chesney
K L Durrant
D Grant
D J Jeans
Number of
ordinary shares of 20p each
26,377,291
12,233,040
10,147
5,165
2,000
500
_
–
–
There were no share-based payments
made or share schemes in place during
the year.
Chief Executive total
remuneration
The table below sets out information
relating to Sir David McMurtry, who was
the Chief Executive for each of the years
in question:
Single figure of
total
remuneration
(£‘000)
1,298
632
663
969
1,066
472
Annual bonus
payout against
maximum
opportunity %
100%
0%
10%
69%
100%
0%
Year
2015
2014
2013
2012
2011
2010
Long-term
incentive
vesting rates
against
maximum
opportunity %
n/a
n/a
n/a
n/a
n/a
n/a
Percentage change in
remuneration of the
Chief Executive
The following table sets out a
comparison of the percentage change
in the Chief Executive’s remuneration
to the average percentage change in
remuneration for all UK employees from
2014 to 2015.
Statement of implementation
of remuneration policy in the
next year
The executive directors’ salaries will
be increased by 2.7% for the 2016
financial year, which is in line with the
UK workforce salary review. The bonus
scheme targets have been set based on
the policy as set out in the policy table.
Percentage
change
in salary
Percentage
change in
benefits
Percentage
change in
annual
bonus
+3%
0%
n/a
+4%
+4%
+65%
Chief
Executive
UK
employees
(average)
UK employees have been chosen as a
comparator group in order to avoid the
impact of exchange rate movements
over the year. UK employees make
up 66% of the total number of
group employees.
Relative importance of spend
on pay
The following table sets out the total
amount spent in the current financial
year and the previous year on
remuneration to all group employees
and on dividends to shareholders:
2015
£’000
2014
£’000
change
%
Employee
remuneration
Shareholder
dividends paid
173,744
146,850 +18%
30,841
29,115 +6%
Except as shown above, no other
distributions have been made to
shareholders or other payments or
uses of profit or cash flow which impact
on the understanding of the relative
importance of spend on pay.
Consideration by directors
of matters relating to
directors’ remuneration
During the year, the Remuneration
committee considered the amount
of the executive directors’ salary and
the framework for the annual bonus.
The members of the Remuneration
committee for this purpose were:
D Grant (Chair)
C T Chesney
D J Jeans
K Durrant (from 1st January 2015)
PricewaterhouseCoopers LLP (“PWC”)
and a consultant, Gerard Hutchinson,
assisted the committee in their
consideration of the executive director
and senior leadership team bonus
arrangements. Total fees paid to PWC
were £5,000 and no fees have yet been
paid to Gerard Hutchinson. Both PWC
and Gerard Hutchinson were appointed
by the committee as they were known to
members of the committee and neither
have advised the Company on any other
matters. The committee is of the opinion
that the advice received was objective
and independent.
The Company Secretary acts as
secretary to the committee.
Renishaw plc Annual report and accounts 2015GOVERNANCE 83
Statement of voting at
general meeting
At the annual general meeting held on
16th October 2014, votes cast by proxy
in respect of the directors’ remuneration
were as follows:
Resolution
Approval of
remuneration
report
Approval of
remuneration
policy
Votes for*
% for*
Votes
against
% against
Total votes
cast
Votes
withheld
60,067,785
97.15% 1,760,527
2.85% 61,828,312
116,826
52,998,077
86.42% 8,323,776
13.57% 61,321,853
623,285
*including Chairman’s discretion.
As the Company deems that a significant
percentage of votes against as being
more than 20%, as a result of which
the Company would be required to
provide in this report any reasons known
to it for such a vote and any actions
taken, no commentary is necessary in
respect of the voting at the 2014 annual
general meeting.
The report was approved by the Board
of directors and has been signed on its
behalf by:
David Grant
Chair of the Remuneration committee
29th July 2015
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 84
OTHER STATUTORY AND REGULATORY DISCLOSURES
Dividends
The directors propose a final dividend
of £24,748,105 or 34.0p per share
(2014: £21,741,938 or 29.87p per share)
which, together with the interim dividend
of £9,098,568 or 12.5p per share
(2014: £8,246,942 or 11.33p) makes a
total amount of dividends for the year
of £33,846,673 or 46.5p per share,
compared to £29,988,880 or 41.2p per
share for the previous year.
Directors and their interests
The directors at the end of the year are
listed below together with their interests
in the share capital of the Company (with
the equivalent number of voting rights),
as notified to the Company.
All the above interests were beneficially
held with the exception of 2,434,411
shares (2014: 2,434,411 shares) which
were non-beneficially held by D J
Deer but in respect of which he has
voting rights.
There has been no change in the
holdings below in the period 1st July
2015 to 29th July 2015. In accordance
with the provisions of the Code all
directors will retire and, being eligible,
offer themselves for re-election at the
annual general meeting (“AGM”) to be
held on 15th October 2015. Details of
the directors are shown on pages 62
and 63 and full biographical details are
available at www.renishaw.com.
Review of the business
A review of the business and likely future
developments is given in the Chairman’s
statement and the Strategic report.
Segmental information by geographical
market is given in note 2 to the
financial statements.
The Group has established and acquired
overseas manufacturing, marketing and
distribution subsidiaries to manufacture
some of the Group’s products and to
provide support to customers in our
major markets in the following regions
outside the UK:
• Europe: Germany, France, Italy, Spain,
Switzerland, Netherlands, Czech
Republic, Poland, Russia, Sweden
and Austria;
• Americas: USA, Mexico, Brazil
and Canada;
• Far East: Japan, Hong Kong,
Australia, South Korea, People’s
Republic of China, Singapore and
Taiwan; and
• Other regions: India and Israel.
There are also representative offices
in Hungary, Turkey, Malaysia, Vietnam,
Indonesia and Thailand and an
associate company in Slovenia, RLS,
which is 50%-owned.
Also part of the Group is a subsidiary
established in 2014 in Slovenia which
designs and arranges the procurement
of application-specific integrated circuits
for the Group and RLS.
Further information is available
on the Company’s website:
www.renishaw.com.
Sir David McMurtry, as one party, and
D J Deer and Mrs M E Deer, as the other
party, have entered into an agreement
relating to the way each party would
vote in respect of his or her shares
if requested by the other party to do
so. Under this agreement Sir David
McMurtry, John Deer and Mrs Deer
agree that (i) Mr and Mrs Deer will vote
their shares in favour of any ordinary
resolution if requested to do so by
Sir David McMurtry and (ii) Sir David
McMurtry will vote his shares against
any special or extraordinary resolution
if requested to do so by John Deer.
The voting arrangement was renewed
in 2013 for a further period of five years
and will terminate on the earlier of 25th
May 2018 and the deaths of both of Sir
David McMurtry and John Deer.
The rules on appointment,
reappointment and retirement by
rotation of the directors and their powers
are set out in the Company’s Articles
of Association. There are no powers
given to the directors that are regarded
as unusual.
Directors’ and officers’
indemnity insurance
Subject to the provisions of the
Companies Act 2006, the Company’s
Articles of Association provide for the
directors and officers of the Company
to be appropriately indemnified.
The Company maintains insurance for
its directors and officers in respect of
their acts and omissions during the
performance of their duties.
Ordinary shares of 20p each
Sir David McMurtry
D J Deer
B R Taylor
A C G Roberts
G McFarland
C T Chesney
D Grant
D J Jeans
K Durrant
26,377,291
12,233,040
10,147
5,165
2,000
500
nil
nil
nil
Renishaw plc Annual report and accounts 2015GOVERNANCE 85
Share capital and change
of control
Details of the Company’s share capital,
including rights and obligations, is given
in note 21 to the financial statements.
The Company is not a party to any
significant agreements that might
terminate upon a change of control of
the Company.
A shareholder’s authority for the
purchase by the Company of a
maximum of 10% of its own shares was
in existence during the 2015 financial
year. However, the Company did not
purchase any of its own shares during
that time.
Auditor
A resolution to reappoint KPMG LLP
as auditor of the Company, will be
proposed at the forthcoming AGM.
Disclosure of information
to auditor
The directors who held office at the date
of approval of this statement confirm
that, so far as they are each aware, there
is no relevant audit information of which
the Company’s auditor is unaware, and
each director has taken all the steps
that he or she ought to have taken as a
director to make himself/herself aware
of any relevant audit information and to
establish that the Company’s auditor is
aware of that information.
Annual general meeting
The notice convening the AGM and an
explanation of the resolutions sought
are set out in a separate circular. At the
meeting, the Company will be seeking
shareholder approval for, amongst
other things, the ability to make market
purchases of its own ordinary shares,
up to a total of 10% of the issued
share capital.
The directors consider that all the
resolutions proposed are in the
best interests of the Company
and its shareholders as a whole
and unanimously recommend that
shareholders vote in favour of the
resolutions, as they intend to do in
respect of their own holdings.
Substantial shareholdings
Apart from the shareholdings (and
corresponding voting rights) of Sir David
McMurtry and John Deer (36.2% and
16.8% respectively), the table below
discloses the voting rights that have
been notified to the directors under
the requirements of the UK Listing
Authority’s Disclosure Rules and
Transparency Rules DTR 5, which
represent 3% or more of the voting
rights attached to issued shares in the
Company, as at 30th June 2015.
Research and development
The Group has a continuing
commitment to a high level of research
and development. The expenditure
involved is directed towards the
research and development of new
products relating to metrology,
including computer-aided design and
manufacturing systems, and relating to
healthcare products, including Raman
spectroscopy systems, dental systems
and certain areas in the medical
devices field. Further information on
the expenditure on research and
development is contained in the financial
review section of the Strategic report.
Employees
The maintenance of highly-skilled
employees is essential to the future of
the business, and the directors place
great emphasis on the continuation
of the Company’s approved training
policy. Health and safety matters are
given special attention by the directors
and well established systems of safety
management are in place throughout
the Group to safeguard employees,
customers and visitors.
Employment policies are designed
to provide equal opportunities
irrespective of race, colour, religion,
sex, age, disability or sexual orientation.
Proper consideration is given to
applications for employment from
disabled people where suitable for
appropriate vacancies. Employees who
become disabled whilst with the
Company will be given every opportunity
to continue their employment through
reasonable adjustment to their working
conditions, equipment, or where this
is not possible, re-training for other
positions. They will also be afforded
opportunities to continue training and
gain promotion on the same basis as
any other employee.
Details on information provided to
employees on the performance of the
business, consultation with employees
and performance incentives are
contained in the description of corporate
social responsibility activities set out on
pages 46 to 59.
There are no agreements with
employees providing for compensation
for any loss of employment that occurs
because of a takeover bid.
Substantial shareholdings
Baillie Gifford & Co
BlackRock Inc.
Capital Research and Management Company
Standard Life Investments Limited
% of issued
share capital
Number of
shares
5.25%
4.92%
4.76%
4.99%
3,846,993
3,578,133
3,465,730
3,631,612
No notifications have been received under the provisions of DTR 5 in the period
1st July 2015 to 29th July 2015.
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 86
OTHER STATUTORY AND REGULATORY DISCLOSURES CONTINUED
Donations
No political donations were made during
the year.
Controlling shareholders’
arrangements
In May 2014 the Listing Rules were
amended to include new requirements
relating to controlling shareholders.
The revised Listing Rules require
that premium listed companies with
“controlling shareholders” (defined as
a shareholder who individually or with
any of their concert parties exercises
or controls 30% or more of the votes
able to be cast on all or substantially all
the matters at the Company’s general
meeting) must enter into a relationship
agreement containing specific
independence provisions, and for
existing listed companies this agreement
was required to be entered into by
16th November 2014.
The independence provisions required
by the Listing Rules are that:
(i) transactions and arrangements with
the controlling shareholder (and/or any
of its associates) will be conducted
at arm’s length and on normal
commercial terms;
(ii) neither the controlling shareholder
nor any of its associates will take
any action that would have the effect
of preventing the Company from
complying with its obligations under
the Listing Rules; and
(iii) neither the controlling shareholder nor
any of its associates will propose or
procure the proposal of a shareholder
resolution which is intended or
appears to be intended to circumvent
the proper application of the
Listing Rules.
By virtue of his shareholding in
the Company, Sir David McMurtry
(Chairman, 36% shareholder) is a
controlling shareholder. John Deer
(Deputy Chairman, together with
his wife, 17%) is also a controlling
shareholder by virtue of a long-
standing voting agreement between
John Deer (and his wife) with Sir David
McMurtry. The Board confirms that the
Company has not been able to enter
into a relationship agreement with its
controlling shareholders, containing
the independence provisions required
by the Listing Rules. The Financial
Conduct Authority (“FCA”) has been
notified of this, as required by the Listing
Rules. The controlling shareholders
have informed the Board that they are
not willing to enter into a relationship
agreement because they are of the view
that the requirement to enter into the
relationship agreement infringes upon
their rights as shareholders and their
track record demonstrates that they act
in the best interests of the Company.
The Company continues to discuss the
requirement for a relationship agreement
with the controlling shareholders and
with the FCA. As a result of there being
no relationship agreement in place,
the Listing Rules provide that certain
enhanced oversight measures will apply
to the Company.
This means that, unless and to the
extent that the FCA agrees otherwise,
all transactions with the controlling
shareholders must be approved by the
Company’s shareholders (excluding the
controlling shareholders) in accordance
with the related party transaction
requirements of the Listing Rules, and
none of the normal exemptions apply.
The Company has been in discussions
with the FCA about the application of
the enhanced oversight measures to
the remuneration and benefits received
by the controlling shareholders in
their capacity as executive directors
(in accordance with the Company’s
approved remuneration policy) as well
other ordinary course corporate matters,
such as the payment of dividends
by the Company to all shareholders.
Guidance has been received from
the FCA that either these are not
transactions or arrangements that fall
within the enhanced oversight measures
or that the FCA will permit a modification
of the enhanced oversight measures
so that they will not apply provided that
the arrangements remain in the ordinary
course of business and, in the case of
salary reviews and bonuses, provided
that they fall within the small transaction
exemption in the Annex to LR 11.
Greenhouse gas emissions
The disclosures concerning greenhouse
gas emissions required by law are set
out in the Corporate social responsibility
report on page 56.
Norma Tang
Company Secretary
29th July 2015
Renishaw plc
Registered number 1106260
England and Wales
Renishaw plc Annual report and accounts 2015GOVERNANCE 87
DIRECTORS’ RESPONSIBILITIES
• for the parent company financial
statements, state whether applicable
UK Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the parent company financial
statements; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and the parent company will
continue in business.
The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the parent
company’s transactions and disclose
with reasonable accuracy at any time
the financial position of the parent
company and enable them to ensure
that its financial statements comply with
the Companies Act 2006. They have
general responsibility for taking such
steps as are reasonably open to them
to safeguard the assets of the Group
and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations,
the directors are also responsible for
preparing a Strategic report, Directors’
report, Directors’ remuneration report
and corporate governance statement
that complies with that law and
those regulations.
The directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the UK governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Directors’ responsibility
statement
We confirm that to the best of
our knowledge:
• the financial statements, prepared in
accordance with the applicable set
of accounting standards, give a true
and fair view of the assets, liabilities,
financial position and profit or loss of
the Company and the undertakings
included in the consolidation taken as
a whole; and
• the Strategic report includes a fair
review of the development and
performance of the business and
the position of the Company and
the undertakings included in the
consolidation taken as a whole,
together with a description of the
principal risks and uncertainties that
they face.
We consider the Annual report and
accounts, taken as a whole, is fair,
balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy.
Signed on behalf of the Board
Allen Roberts
Group Finance Director
29th July 2015
Allen Roberts
Group Finance Director
The directors are responsible for
preparing the Annual report and the
group and parent company financial
statements in accordance with
applicable law and regulations.
Company law requires the directors to
prepare group and parent company
financial statements for each financial
year. Under that law they are required to
prepare the group financial statements
in accordance with IFRSs as adopted
by the EU and applicable law and have
elected to prepare the parent company
financial statements in accordance with
UK Accounting Standards.
Under company law the directors must
not approve the financial statements
unless they are satisfied that they give a
true and fair view of the state of affairs
of the Group and parent company and
of their profit or loss for that period.
In preparing each of the group and
parent company financial statements,
the directors are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that
are reasonable and prudent;
• for the group financial statements,
state whether they have been
prepared in accordance with IFRSs as
adopted by the EU;
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015 88
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RENISHAW PLC
Opinions and conclusions
arising from our audit
1. Our opinion on the financial
statements is unmodified
We have audited the financial statements
of Renishaw plc for the year ended
30th June 2015 set out on pages 91 to
129. In our opinion:
• the financial statements give a true
and fair view of the state of the
Group’s and of the parent company’s
affairs as at 30th June 2015 and of the
Group’s profit for the year then ended;
• the group financial statements have
been properly prepared in accordance
with International Financial Reporting
Standards as adopted by the European
Union (IFRSs as adopted by the EU);
• the parent company financial
statements have been properly
prepared in accordance with UK
Accounting Standards; and
• the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006 and, as regards the group
financial statements, Article 4 of the
IAS Regulation.
2. Our assessment of risks of
material misstatement
In arriving at our audit opinion above
on the financial statements the risks
of material misstatement that had
the greatest effect on our audit were
as follows.
Carrying value of Goodwill (£19.7m)
Refer to pages 74 and 75 (Audit
committee report), page 98 (accounting
policy) and pages 106 and 107
(financial disclosures).
• The risk – The Group has engaged in
a number of business combinations in
recent years; a number of acquisitions
are still in the research and
development phase and have not yet
started trading; this makes forecasting
inherently more judgemental.
Adverse changes in assumptions,
particularly relating to forecast cash
flows and discount rates, could
reduce the recoverable amount
below the carrying amount, and
give rise to an impairment charge.
The forecasting of cash flows and
the selection of an appropriate
discount rate are therefore key
judgemental areas that our audit is
concentrated on.
• Our response – In this area our audit
procedures included evaluating the
Group’s budgeting procedures upon
which the forecast cash flows are
based by performing an assessment
of the historical accuracy of budgets
for trading entities by comparing
previously budgeted figures to actual
results. We also critically assessed the
ongoing forecasts for companies in the
research and development phase, by
considering the assumptions adopted
by the directors when preparing the
forecasts for these entities and taking
into account the experience of the
Group at maturing past research and
development companies into profitable
trading entities.
We challenged the Group’s
selection of the discount rates used
by considering the assumptions
underlying the calculation of each
discount rate; using external data
(including competitor analysis) to
determine an appropriate range
for each type of business and
comparing the actual rate used to
that range. For the period beyond
the financial budgets and forecasts,
we assessed whether the growth
rate used was consistent with both
historical performance and future
business strategies.
We evaluated the Group’s sensitivity
analysis, by performing our own
analysis to assess the sensitivity of the
impairment reviews to changes in the
key assumptions of the discount rate,
the forecast cash flows and growth
rate beyond the financial budgets.
We assessed the adequacy of the
Group’s disclosures in respect of the
impairment testing of goodwill and
whether disclosures about the sensitivity
of the outcome of the impairment
assessment to changes in key
assumptions properly reflected the risks
inherent in it.
Carrying value of Work in progress
(£20.1m) and Finished goods (£29.2m)
Refer to pages 74 and 75 (Audit
committee report), page 98
(accounting policy) and page 112
(financial disclosures).
• The risk – There are significant inventory
holdings throughout the Group; in the
key manufacturing centres in the UK,
Ireland and India and sales offices
around the world. Due to the fast-paced
nature of the industry there is a risk of
product obsolescence.
The Group maintains an inventory
provision for potential product
obsolescence to the extent that
the cost of inventory is not deemed
to be recoverable through future
sales. This provision is calculated
at a disaggregated level based on
the historic and future forecast sales
patterns of individual stock items.
These assumptions are judgemental
and changes could have a material
impact on the calculation of
the provision.
• Our response – In this area our audit
procedures included challenging
the Group’s assumptions in respect
of the provision calculation by
assessing historical accuracy of the
inventory provision. We also critically
assessed the adequacy of the
Group’s provisions against inventory
by identifying slow-moving line items,
considering whether these items
should be provided for in accordance
with the Group’s policy by comparison
to the most recent sales invoices
for those items. We compared the
current carrying amount of a sample
of inventory items to recent sales
invoices to assess whether these
Renishaw plc Annual report and accounts 2015GOVERNANCE
89
Telephone conference meetings were
held with the component auditors to
assess the audit risk, strategy and audit
findings. During these meetings, the
findings reported to the group audit
team were discussed in more detail, and
any further work required by the group
audit team was then performed by the
component auditor.
4. Our opinion on other matters
prescribed by the Companies Act
2006 is unmodified
In our opinion:
• the part of the Directors’ remuneration
report to be audited has been
properly prepared in accordance with
the Companies Act 2006; and
• the information given in the Strategic
report and the Directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements.
items should be written down to net
realisable value.
We also assessed the adequacy of
the Group’s disclosures in respect of
the inventory provision.
3. Our application of materiality
and an overview of the scope of
our audit
The materiality for the financial
statements as a whole was set at
£7m. This has been determined with
reference to a benchmark of total
revenue, which we consider to be
one of the principal considerations for
members of the company in assessing
the financial performance of the Group.
Materiality represents 1.4% of group
revenue and 4.9% of group profit
before tax.
We report to the Audit committee
any corrected or uncorrected
identified misstatements exceeding
£0.2m, in addition to other identified
misstatements that warranted reporting
on qualitative grounds.
Of the Group’s 41 reporting
components, we subjected seven to
audits for group reporting purposes
and one to specified risk-focused
audit procedures. The latter was
not individually financial significant
enough to require an audit for group
reporting purposes, but did present
specific individual risks that needed
to be addressed over revenue and
trade receivables.
The components within the scope of our
work accounted for the percentages of
the Group’s results specified in the table
set out below.
The remaining 3% of total group
revenue, 1% of group profit before
tax and 13% of total group assets
is represented by 21 reporting
components, none of which individually
represented more than 4% of any of total
group revenue, group profit before tax or
total group assets.
For the remaining components, we
performed analysis at an aggregated
group level to re-examine our
assessment that there were no
significant risks of material misstatement
within these.
The group audit team instructed
component auditors as to the significant
areas to be covered, including the
relevant risks detailed above and
the information to be reported back.
The group audit team approved the
component materialities, which ranged
from £2.5m to £3.5m, having regard
to the mix of size and risk profile of
the Group across the components.
The work on the specified risk-focused
audit procedures and five of the audits
for group reporting purposes was
performed by component auditors and
the rest by the group audit team.
Number of
components Revenue (%)
Profit before
tax (%)
Total assets
(%)
Audits for group reporting purposes
Specified risk-focused audit procedures
Reviews of component financial information
Coverage
7
1
12
20
78%
10%
9%
97%
94%
2%
3%
99%
75%
5%
7%
87%
GovernanceStrategic reportFinancial statementsShareholder informationRenishaw plc Annual report and accounts 2015
90
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RENISHAW PLC
CONTINUED
5. We have nothing to report in
respect of the matters on which we
are required to report by exception
Under ISAs (UK and Ireland) we are
required to report to you if, based on
the knowledge we acquired during
our audit, we have identified other
information in the Annual report that
contains a material inconsistency with
either that knowledge or the financial
statements, a material misstatement of
fact, or that is otherwise misleading.
Under the Listing Rules we are required
to review:
• the Directors’ statement, set out on
page 69, in relation to going concern;
and
• the part of the corporate governance
statement on page 71 relating to the
Company’s compliance with the 10
provisions of the 2012 UK Corporate
Governance Code specified for
our review.
In particular, we are required to report
to you if:
We have nothing to report in respect
of the above responsibilities.
• we have identified material
inconsistencies between the
knowledge we acquired during our
audit and the Directors’ statement
that they consider that the Annual
report and financial statements
taken as a whole is fair, balanced
and understandable and provides
the information necessary for
shareholders to assess the Group’s
performance, business model and
strategy; or
• the Audit committee report does
not appropriately address matters
communicated by us to the
Audit committee.
Under the Companies Act 2006 we
are required to report to you if, in
our opinion:
• adequate accounting records have
not been kept by the parent company,
or returns adequate for our audit have
not been received from branches not
visited by us; or
• the parent company financial
statements and the part of the
Directors’ remuneration report to be
audited are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’
remuneration specified by law are not
made; or
• we have not received all the
information and explanations we
require for our audit.
Scope of report and
responsibilities
As explained more fully in the
Directors’ responsibilities statement
set out on page 87, the directors are
responsible for the preparation of the
financial statements and for being
satisfied that they give a true and
fair view. A description of the scope
of an audit of financial statements is
provided on the Financial Reporting
Council’s website at www.frc.org.uk/
auditscopeukprivate. This report is
made solely to the Company’s members
as a body and is subject to important
explanations and disclaimers regarding
our responsibilities, published on
our website at www.kpmg.com/uk/
auditscopeukco2014a, which are
incorporated into this report as if set out
in full and should be read to provide an
understanding of the purpose of this
report, the work we have undertaken
and the basis of our opinions.
Virginia Stevens
(Senior Statutory Auditor)
for and on behalf of KPMG LLP,
Statutory Auditor
Chartered Accountants
100 Temple Street
Bristol
BS1 6AG
29th July 2015
Renishaw plc Annual report and accounts 2015GOVERNANCE FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
at 30th June 2015
from continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit
Exceptional item
Financial income
Financial expenses
Share of profits of associates less related amortisation
Profit before tax
Income tax expense
Profit for the year from continuing operations
Profit attributable to:
Equity shareholders of the parent company
Non-controlling interest
Profit for the year from continuing operations
Dividend per share arising in respect of the year
Dividend per share paid in the year
Earnings per share (basic and diluted)
91
notes
2
2015
£’000
2014
£’000
494,720
355,498
(221,089)
(178,553)
273,631
176,945
(87,879)
(41,828)
(75,367)
(31,190)
143,924
70,388
–
26,280
884
(1,492)
880
679
(1,736)
775
144,196
96,386
(22,850)
(10,720)
121,346
85,666
121,908
(562)
121,346
pence
46.5
42.4
167.5
86,215
(549)
85,666
pence
41.2
40.0
118.4
4
5
5
11
6
7
21
21
8
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 92
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE
for the year ended 30th June 2015
Profit for the year
Other items recognised directly in equity:
Items that will not be reclassified to the Consolidated income statement:
Remeasurement of defined benefit liabilities
Deferred tax on remeasurement of defined benefit liabilities
Total for items that will not be reclassified
Item that may be reclassified to the Consolidated income statement:
Foreign exchange translation differences
Effective portion of changes in fair value of cash flow hedges, net of recycling
Deferred tax on effective portion of changes in fair value of cash flow hedges
Total for items that may be reclassified
notes
2015
£’000
121,346
2014
£’000
85,666
15
21
21
(6,032)
1,580
(4,452)
111
(10,511)
2,102
(8,298)
(2,233)
(530)
(2,763)
(5,754)
32,876
(6,602)
20,520
Total other comprehensive income and expense, net of tax
(12,750)
17,757
Total comprehensive income and expense for the year
108,596
103,423
Attributable to:
Equity shareholders of the parent company
Non-controlling interest
Total comprehensive income and expense for the year
109,158
103,972
21
(562)
(549)
108,596
103,423
Renishaw plc Annual report and accounts 2015 93
notes
2015
£’000
2014
£’000
9
10
11
13
14
16
22
14
15
17, 22
18
14
19
15
13
14
20
21
21
21
21
169,592
57,664
3,480
19,536
10,504
260,776
77,673
101,213
1,064
12,809
14,889
14,731
82,171
304,550
21,154
10,775
1,715
764
28,561
62,969
140,922
56,571
2,230
16,173
18,644
234,540
62,979
81,798
1,690
10,847
13,348
9,541
43,634
223,837
18,857
3,941
1,294
–
16,110
40,202
241,581
183,635
48,094
21,991
3,165
589
73,839
43,068
23,444
17
883
67,412
428,518
350,763
14,558
42
(2,714)
17,171
402,559
(460)
431,156
(2,638)
428,518
14,558
42
(2,825)
25,580
315,944
(460)
352,839
(2,076)
350,763
CONSOLIDATED BALANCE SHEET
at 30th June 2015
Assets
Property, plant and equipment
Intangible assets
Investments in associates
Deferred tax assets
Derivatives
Total non-current assets
Current assets
Inventories
Trade receivables
Current tax
Other receivables
Derivatives
Pension scheme cash escrow account
Cash and cash equivalents
Total current assets
Current liabilities
Trade payables
Current tax
Provisions
Derivatives
Other payables
Total current liabilities
Net current assets
Non-current liabilities
Employee benefits
Deferred tax liabilities
Derivatives
Other payables
Total non-current liabilities
Total assets less total liabilities
Equity
Share capital
Share premium
Currency translation reserve
Cash flow hedging reserve
Retained earnings
Other reserve
Equity attributable to the shareholders of the parent company
Non-controlling interest
Total equity
These financial statements were approved by the Board of directors on 29th July 2015 and were signed on its behalf by:
Sir David R McMurtry
A C G Roberts
Directors
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 94
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2015
Year ended 30th June 2014
Balance at 1st July 2013
Profit/(loss) for the year
Other comprehensive income
and expense (net of tax)
Remeasurement of defined benefit pension
liabilities
Foreign exchange translation differences
Changes in fair value of cash flow hedges
Total other comprehensive income
Total comprehensive income
Acquisition of non-controlling interest
Dividends paid
Transactions with owners recorded directly
in equity
Share
capital
£’000
14,558
Share
premium
£’000
Currency
translation
reserve
£’000
Cash flow
hedging
reserve
£’000
Retained
earnings
£’000
Other
reserve
£’000
Non-
controlling
interest
£’000
Total
£’000
42
2,929
(694)
261,607
(389)
(1,334)
276,719
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,754)
–
(5,754)
–
86,215
–
–
26,274
26,274
(2,763)
–
–
(2,763)
(5,754)
26,274
83,452
–
–
–
–
–
–
–
(29,115)
(29,115)
–
–
–
–
–
–
(549)
85,666
–
–
–
–
(2,763)
(5,754)
26,274
17,757
(549)
103,423
(71)
–
(71)
(460)
(193)
(264)
–
(29,115)
(193)
(29,379)
(2,076)
350,763
Balance at 30th June 2014
14,558
42
(2,825)
25,580
315,944
Year ended 30th June 2015
Profit/(loss) for the year
Other comprehensive income
and expense (net of tax)
Remeasurement of defined benefit pension
liabilities
Foreign exchange translation differences
Changes in fair value of cash flow hedges
Total other comprehensive income
Total comprehensive income
Dividends paid
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
121,908
–
111
–
111
–
–
(8,409)
(8,409)
(4,452)
–
–
(4,452)
111
(8,409)
117,456
–
–
(30,841)
–
–
–
–
–
–
–
(562)
121,346
–
–
–
–
(4,452)
111
(8,409)
(12,750)
(562)
108,596
–
(30,841)
Balance at 30th June 2015
14,558
42
(2,714)
17,171
402,559
(460)
(2,638)
428,518
More details of share capital and reserves are given in note 21.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 95
notes
2015
£’000
2014
£’000
121,346
85,666
10
10, 11
9
11
5
5
7
18
10
5
11
5
21
17
10,141
2,990
14,925
(99)
(880)
–
(884)
1,492
22,850
50,535
(14,694)
(21,712)
15,204
421
(20,781)
(2,427)
(16,410)
132,263
(48,387)
(12,975)
(1,207)
(480)
2,408
884
110
–
(5,190)
(64,837)
(43)
(30,841)
(30,884)
36,542
43,634
1,995
82,171
8,345
3,304
11,304
(24)
(950)
(26,280)
(679)
1,736
10,720
7,476
2,289
(19,089)
(2,573)
(336)
(19,709)
(2,275)
(11,407)
59,751
(39,050)
(11,830)
(483)
(808)
704
679
210
32,018
1,441
(17,119)
(176)
(29,115)
(29,291)
13,341
26,605
3,688
43,634
CONSOLIDATED STATEMENT OF CASH FLOW
for the year ended 30th June 2015
Cash flows from operating activities
Profit for the year
Adjustments for:
Amortisation of development costs
Amortisation of other intangibles
Depreciation
Profit on sale of property, plant and equipment
Share of profits from associates
Exceptional gain
Financial income
Financial expenses
Tax expense
(Increase)/decrease in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Defined benefit pension contributions
Income taxes paid
Cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Development costs capitalised
Purchase of other intangibles
Investment in subsidiaries and associates
Sale of property, plant and equipment
Interest received
Dividends received from associates
Exceptional item – sale of shareholding in Delcam plc
Payments (to)/from pension scheme escrow account (net)
Cash flows from investing activities
Financing activities
Interest paid
Dividends paid
Cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 96
NOTES (FORMING PART OF THE FINANCIAL STATEMENTS)
1. Accounting policies
Basis of preparation
Renishaw plc (the “Company”) is a company incorporated in the UK.
The group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”) and equity account
the Group’s interest in associates.
The parent company financial statements present information about the Company as a separate entity and not about the Group. The group
financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as
adopted by the EU (“adopted IFRS”). The Company has elected to prepare its parent company financial statements in accordance with
UK GAAP.
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 accounting
The financial statements have been prepared under the historical cost convention, subject to items referred to in the derivative financial
instruments note below. The accounting policies set out below have been consistently applied in preparing both the 2014 and 2015
financial statements.
Critical accounting judgements
The preparation of financial statements in conformity with adopted IFRS 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 various other factors that are believed to be reasonable under the
circumstances, the results of which 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 differ from these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities
in the next financial year are listed below:
(i) Inventory
Determining the value of inventory requires judgement, especially in respect of provisioning for slow moving and potentially obsolete inventory.
Management consider historic and future forecast sales patterns of individual stock items when calculating inventory provisions.
(ii) Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of cash-generating units (“CGUs”) to which goodwill has
been allocated. The value in use calculation involves an estimation of the future cash flows of CGUs and also the selection of appropriate
discount rates, which involves judgement, to calculate present values (see note 10).
Other estimates and judgements that have been made in these financial statements are as follows:
(i) Defined benefit pension scheme liabilities
Determining the value of the future defined benefit obligation requires judgement in respect of the assumptions used to calculate present values.
These include future mortality, discount rate, inflation and salary increases. Management makes these judgements in consultation with an
independent actuary. Details of the estimates and judgements in respect of the current year are given in note 15.
(ii) Amortisation of intangibles and impairment
The periods of amortisation of intangible assets require judgements to be made on the estimated useful lives of the intangible assets
to determine an appropriate rate of amortisation. Future assessments of impairment may lead to the writing off of certain amounts of intangible
assets and the consequent charge in the Consolidated income statement for the accelerated amortisation.
(iii) Capitalisation of development costs
Product development costs are capitalised once a project has reached a certain stage of development and these costs are subsequently
amortised over a five-year period. Judgements are required to assess whether the new product development has reached the appropriate point
for capitalisation of costs to begin. Should a product be subsequently obsoleted, the accumulated capitalised development costs would need
to be immediately written off in the Consolidated income statement.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 97
1. Accounting policies continued
Revenue
Revenue from the sale of goods is recognised in the Consolidated income statement when the significant risks and rewards of ownership have
been transferred to the buyer, which is the time of despatch. Where certain products require installation, part of the revenue may be deferred
until the installation is complete. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due,
or the possible return of goods.
Revenue from the sale of services is recognised over the period to which the service relates. Where goods and services are sold as a bundle,
the fair value of services is deferred and recognised over the period to which the service relates with the remaining revenue recognised
on despatch.
New, revised or changes to existing accounting standards
The following adopted IFRSs have been applied by the Group for the first time in these financial statements.
(a) IFRS 10 ‘Consolidated Financial Statements’, IFRS 11 ‘Joint Arrangements’, IFRS 12 ‘Disclosures of Interests in Other Entities’, amendment to
IAS 27 ‘Separate Financial Statements’ and amendment to IAS 28 ‘Investments in Associates and Joint Ventures’ are a package of new
standards and amendments that set out the basis for consolidation and the accounting requirements.
The Group holds 50% stakes in RLS merilna tehnika d.o.o. and Metrology Software Products Limited which are currently accounted for as
investments in associates. The Group has assessed whether it has joint control over these companies under IFRS 11 and has determined that
it does not have joint control over these entities as decisions over the relevant activities do not require group consent. These will continue to be
accounted for as associates rather than joint ventures.
(b) Amendments to IAS 32 ‘Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities’. This amendment sets out
the criteria required for offsetting.
(c) Annual improvements 2010-2012, 2011-2013 cycles.
The adoption of these standards has not had a significant effect on the consolidated results or financial position of the Group.
The following standards issued by the International Accounting Standards Board have been adopted by the EU, but only become effective for
accounting periods commencing after 30th June 2015:
(a) IFRS 9 ‘Financial Instruments’.
(b) IFRS 15 ‘Revenue from Contracts with Customers’.
(c) Annual improvements 2012-2014 cycle.
The Group does not currently expect that adoption of these standards will have a significant effect on the consolidated results or financial
position of the Group, but may impact disclosure requirements.
Basis of consolidation
Subsidiaries - 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 currently 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.
Associates - Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.
Application of the equity method to associates - Associates 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 or constructive obligations or made payments on behalf of an investee.
Transactions eliminated on consolidation - Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated. 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.
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 98
NOTES CONTINUED
1. Accounting policies continued
Foreign currencies
Foreign subsidiaries’ results are translated into Sterling at weighted average exchange rates for the year, which is effected by translating each
foreign 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 ruling at that date. Differences on exchange
resulting from the translation of overseas assets and liabilities are recognised directly in equity. Gains and losses arising on currency borrowings
used to hedge the foreign currency exposure on the net assets of the foreign operations are accounted for directly in equity, to the extent that
hedge accounting criteria are met and are included in the Consolidated statement of comprehensive income and expense. See the note on
derivative financial instruments below, for the accounting policies for forward exchange contracts and currency borrowings.
Derivative financial instruments
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the
Consolidated income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends
on the nature of the item being hedged (see below).
Hedge of net investment in foreign operation
The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be
an effective hedge is recognised directly in equity. Any ineffective portion is recognised immediately in the Consolidated income statement.
The effectiveness of the hedging is tested monthly.
Inventory and work in progress
Inventory and work in progress is valued at the lower of cost and net realisable value. In respect of work in progress and finished goods, cost
includes all production overheads and the attributable proportion of indirect overhead expenses which are required to bring inventories to their
present location and condition. Overheads are absorbed into inventories on the basis of normal capacity or on actual hours if higher.
Pension scheme cash escrow account
The Company holds a pension scheme escrow account as part of the security given for the UK defined benefit pension scheme. This account
is shown within current assets in the Consolidated balance sheet as it may be used to settle pension scheme liabilities at any time.
Goodwill and other intangible assets
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred. Deferred
consideration relating to acquisitions is subject to discounting to the date of acquisition and subsequently unwound to the date of the final
payment. Goodwill arising on acquisition represents the difference between the cost of the acquisition and the fair value of the net identifiable
assets acquired, net of deferred tax. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless
of whether those rights are separable.
Where there exists an option to purchase the non-controlling interest of a subsidiary and the option is deemed to have been exercised, the
Group has adopted the anticipated-acquisition method. Any changes to the carrying amount of the liability are recognised in the Consolidated
income statement.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group.
Goodwill is stated at cost less any accumulated impairment losses. It is not amortised but is tested annually for impairment or earlier if there are any
indications of impairment. The annual impairment review involves comparing the carrying amount to the estimated recoverable amount and
recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised through the Consolidated income statement.
Intangible assets such as customer lists, patents, trade marks, know-how and intellectual property that are acquired by the Group are stated
at cost less amortisation and impairment losses. Amortisation is charged to the Consolidated income statement on a straight-line basis over
the estimated useful lives of the intangible assets. The estimated useful lives of the intangible assets included in the Consolidated balance sheet
reflect the benefit derived by the Group and vary from five to ten years.
On a transaction by transaction basis, the Group elects to measure non-controlling interests, which have both present ownership interests and
are entitled to a proportionate share of net assets of the acquiree in the event of liquidation, either at its fair value or at its proportionate interest
in the recognised amount of the identifiable net assets of the acquiree at the acquisition date. All other non-controlling interests are measured
at their fair value at the acquisition date. Where there are changes to the Company’s interests in subsidiaries while retaining control, any
differences between the amount by which non-controlling interests are adjusted and fair value of consideration paid or received is recognised
directly in equity in the “other reserve”.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 99
1. Accounting policies continued
Intangible assets – research and development costs
Expenditure on research activities is recognised in the Consolidated income statement as an expense as incurred. Expenditure on development
activities is capitalised if the product or process is technically and commercially feasible and the Group intends and has the technical ability
and sufficient resources to complete development, future economic benefits are probable and the Group can measure reliably the expenditure
attributable to the intangible asset during its development.
Development activities involve a plan or design for the production of new or substantially improved products or processes. The expenditure
capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is
recognised in the Consolidated income statement as an expense as incurred. Capitalised development expenditure is amortised over five years
and is stated at cost less accumulated amortisation and less accumulated impairment losses. Capitalised development expenditure is removed
from the balance sheet ten years after being fully amortised.
Intangible assets – software licences
Intangible assets comprising software licences, that are acquired by the Group, are stated at cost less accumulated amortisation and
impairment losses. Amortisation is charged on a straight-line basis over the estimated useful life of the assets. The useful life of each of these
assets is assessed on an individual basis and they range from two to ten years.
Property, plant and equipment
Freehold land is not depreciated. Other assets are stated at cost less accumulated depreciation. Depreciation is provided to write off the cost
of assets less their estimated residual value on a straight-line basis over their estimated useful economic lives as follows:
Freehold buildings
Plant and equipment
Vehicles
50 years
3 to 10 years
3 to 4 years
Warranty provisions
The Group provides a warranty from the date of purchase on all its products. This is typically for a 12-month period, although up to three years
is given for a small number of products. A warranty provision is included in the financial statements, which is calculated on the basis of historical
returns and internal quality reports.
Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately declared and
authorised and no longer at the discretion of the Company.
Employee benefits
The Group operates contributory pension schemes, largely for UK, Ireland and USA employees, which were of the defined benefit type up to
5th April 2007, 31st December 2007 and 30th June 2012 respectively, at which time they ceased any future accrual for existing members and
were closed to new members.
The schemes are administered by trustees who are independent of the group finances. Pension scheme assets of the defined benefit schemes
are measured using market value. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate
of return on a high-quality corporate bond of equivalent term and currency to the liability. Remeasurements arising from defined benefit plans
comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest).
The Company recognises them immediately in other comprehensive income and all other expenses related to defined benefit plans are included
in the Consolidated income statement.
The pension schemes’ surpluses, to the extent that they are considered recoverable, or deficits are recognised in full and presented on the face
of the Consolidated balance sheet under employee benefits. Where a guarantee is in place in relation to a pension scheme deficit, liabilities are
reported in accordance with IFRIC 14. Foreign-based employees are covered by state, defined benefit and private pension schemes in their
countries of residence. Actuarial valuations of foreign pension schemes were not obtained, apart from Ireland and USA, because of the limited
number of foreign employees. For defined contribution schemes, the amount charged to the Consolidated income statement represents the
contributions payable to the schemes in respect of the accounting period.
Accruals are made for holiday pay, based on a calculation of the number of days holiday earned during the year, but not yet taken.
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 100
NOTES CONTINUED
1. Accounting policies continued
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term (with an original maturity of less than three months) deposits. Bank
overdrafts that are repayable on demand form part of cash and cash equivalents for the purpose of the Consolidated statement of cash flow.
Exceptional items
Exceptional items are items which due to their size, incidence and non-recurring nature have been classified separately in order to draw them
to the attention of the reader of the accounts and, in management’s judgement, to show more accurately the underlying results of the Group.
Such items are included within the Consolidated income statement caption to which they relate and are disclosed separately on the face of the
Consolidated income statement.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the
Strategic report, where also given are details of the financial and liquidity positions. In addition, note 22 in the financial statements includes the
Group’s objectives and policies for managing its capital, details of its financial instruments and hedging activities and its exposures to credit risk
and liquidity risk. The Group has considerable financial resources at its disposal and the directors have considered the current financial
projections. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully.
After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual report and
accounts.
Cash flow hedges
Forward exchange contracts are recognised at fair value. Where a forward contract is designated as a hedge of the variability in future cash
inflows, the effective part of any gain or loss on the forward contract is recognised directly in equity. Any effective cumulative gain or loss is
removed from equity and recognised in the Consolidated income statement at the same time as the hedged transaction. The ineffective part
of any gain or loss is recognised in the Consolidated income statement immediately. If the hedged transaction is no longer expected to take
place, the cumulative unrealised gain or loss held in equity is recognised in the Consolidated income statement immediately. The effectiveness
of cash flow hedges is tested on a monthly basis by comparing the cash inflows with the hedging amounts.
Taxation
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 equity, 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. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 101
2. Segmental analysis
Renishaw manages its operations in two segments, comprising metrology and healthcare products. The results of these segments are regularly
reviewed by the Board to allocate resources to segments and to assess their performance. The Group evaluates performance of the segments
on the basis of revenue and profits. Within metrology, there are multiple operating segments that are aggregated into a reporting segment for
reportable purposes, where the nature of the products and their customer base are similar. The revenue, depreciation and amortisation, and
operating profit for each reportable segment were:
Year ended 30th June 2015
Revenue
Depreciation and amortisation
Operating profit/(loss)
Share of profits from associates
Net financial expense
Profit before tax
Year ended 30th June 2014
Revenue
Depreciation and amortisation
Operating profit/(loss)
Share of profits from associates
Exceptional gain on disposal of shareholding in Delcam plc
Net financial expense
Profit before tax
Metrology
£’000
467,001
24,055
Healthcare
£’000
27,719
4,001
Total
£’000
494,720
28,056
150,770
(6,846)
143,924
880
–
–
Metrology
£’000
326,633
19,036
74,374
775
26,280
–
–
–
–
–
Healthcare
£’000
28,865
3,917
(3,986)
–
–
–
–
880
(608)
144,196
Total
£’000
355,498
22,953
70,388
775
26,280
(1,057)
96,386
There is no allocation of assets and liabilities to operating segments. Depreciation is included within certain other overhead expenditure which is
allocated to segments on the basis of the level of activity.
The analysis of revenue by geographical market was:
Far East, including Australasia
Continental Europe
North, South and Central America
UK and Ireland
Other regions
Total group revenue
2015
£’000
257,665
103,106
96,284
25,499
12,166
2014
£’000
134,569
100,199
85,562
23,816
11,352
494,720
355,498
Revenue in the previous table has been allocated to regions based on the geographical location of the customer. Countries with individually
material revenue figures in the context of the Group were:
China
USA
South Korea
Germany
Japan
2015
£’000
119,551
82,350
73,113
44,658
43,946
2014
£’000
66,575
71,007
10,523
43,043
39,190
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 102
NOTES CONTINUED
2. Segmental analysis continued
There was revenue from transactions with one external customer which amounted to more than 10% of the Group’s total revenue. This was in
the Metrology segment and amounted to £62,607,000.
The following table shows the analysis of non-current assets by geographical region:
United Kingdom
Overseas
Total non-current assets
No overseas country had non-current assets amounting to 10% or more of the Group’s total non-current assets.
3. Personnel expenses
The aggregate payroll costs for the year were:
Wages and salaries
Compulsory social security contributions
Contributions to defined contribution plans
Total payroll costs
The average number of persons employed by the Group during the year was:
UK
Overseas
Average number of employees
The total remuneration of the directors was:
Salary and fees
Bonus
Benefits
Pension contributions
Total remuneration of the directors
Full details of directors’ remuneration are given in the Directors’ remuneration report.
2015
£’000
166,468
64,268
230,736
2014
£’000
142,079
57,644
199,723
2015
£’000
141,392
16,005
16,347
173,744
2015
Number
2,529
1,282
3,811
2015
£’000
2,376
2,225
79
178
4,858
2014
£’000
119,890
13,714
13,246
146,850
2014
Number
2,221
1,124
3,345
2014
£’000
2,291
–
77
182
2,550
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 103
4. Exceptional item (previous year)
Year ended 30th June 2014
In February 2014, Autodesk Development B.V., a wholly owned subsidiary of Autodesk, Inc. acquired the whole of the issued share capital of
Delcam plc at a price of £20.75 per share. Renishaw held 1,543,032 Delcam shares (19.4%) which resulted in a total consideration of £32.0m.
The investment held in the balance sheet was £5.7m, giving a profit on disposal of £26.3m, which has been disclosed as an exceptional item.
Delcam plc was accounted for as an associate undertaking.
5. Financial income and expenses
Financial income
Interest receivable
Financial expenses
Net interest on pension schemes’ liabilities (note 15)
Bank interest payable
Unwinding of discount on deferred consideration
Total financial expenses
6. Profit before tax
Included in the profit before tax are the following costs/(income):
Depreciation of property, plant and equipment
Amortisation of intangibles
Research and development expenditure
Profit on sale of property, plant and equipment
Foreign currency (gains)/losses
Auditor:
Audit of these financial statements
Audit of subsidiary undertakings pursuant to legislation
Audit assurance
Tax compliance
Tax advisory
Audit of pension schemes
Other services in relation to pension schemes
All other non-audit fees
2015
£’000
884
2015
£’000
1,421
43
28
1,492
2015
£’000
14,925
13,131
42,260
(99)
339
121
181
22
88
167
20
125
48
2014
£’000
679
2014
£’000
1,392
176
168
1,736
2014
£’000
11,304
11,649
36,306
(24)
(86)
121
164
10
113
108
22
52
41
notes
(a)
(a)
(b)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
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 cost of sales; and (c) within administrative expenses.
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report
104
NOTES CONTINUED
7. Income tax expense
Current tax:
UK corporation tax on profits for the year
UK corporation tax – prior year adjustments
Overseas tax on profits for the year
Total current tax
Deferred tax:
Origination and reversal of other temporary differences
Effect on deferred tax for change in UK tax rate to 20%
Tax charge on profit
2015
£’000
2014
£’000
11,526
327
12,131
23,984
(1,134)
–
(1,134)
22,850
3,983
–
8,354
12,337
(99)
(1,518)
(1,617)
10,720
Effective tax rate (based on profit before tax)
15.8%
11.1%
The tax for the year is lower (2014: lower) than the weighted average of the UK standard rate of corporation tax of 20.75% (2014: 22.5%).
The differences are explained as follows:
Profit before tax
Tax at 20.75% (2014: 22.5%)
Effects of:
Different tax rates applicable in overseas subsidiaries
Research and development tax credit and patent box
Expenses not deductible for tax purposes
Companies with unrelieved tax losses
Items with no tax effect
Prior year adjustments
Effect on deferred tax for change in UK tax rate to 20%
Other differences
Tax charge on profit
2015
£’000
144,196
2014
£’000
96,386
29,921
21,687
(2,723)
(5,745)
324
749
(183)
327
–
180
22,850
(911)
(2,923)
345
477
(6,400)
–
(1,518)
(37)
10,720
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1st April 2014) and 20% (effective from 1st April 2015) were
substantively enacted on 2nd July 2013. In the Budget on 8th July 2015, the Chancellor announced additional planned reductions to 18% by
2020. This will reduce the Company’s future current tax charge accordingly. As at 30th June 2015, UK deferred tax has been calculated at the
rate of 20% for all timing differences.
8. Earnings per share
Basic and diluted earnings per share are calculated on earnings after tax of £121,908,000 (2014: £86,215,000) and on 72,788,543 shares, being
the number of shares in issue during both years. There is no difference between the weighted average earnings per share and the basic and
diluted earnings per share.
The adjusted earnings per share figure for 2014 excludes the exceptional item.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 105
Total
£’000
251,169
48,387
–
(6,196)
(4,171)
Motor
vehicles
£’000
8,049
1,550
Assets in the
course of
construction
£’000
13,930
27,286
–
(33,341)
(695)
(329)
8,575
5,181
1,189
(599)
(175)
5,596
–
–
7,875
289,189
–
–
–
–
–
110,247
14,925
(3,887)
(1,688)
119,597
Freehold
land and
buildings
£’000
98,056
7,329
25,495
(1,381)
(2,402)
Plant and
equipment
£’000
131,134
12,222
7,846
(4,120)
(1,440)
127,097
145,642
21,114
2,292
(303)
(495)
22,608
83,952
11,444
(2,985)
(1,018)
91,393
104,489
76,942
54,249
47,182
2,979
2,868
7,875
13,930
169,592
140,922
9. Property, plant and equipment
Year ended 30th June 2015
Cost
At 1st July 2014
Additions
Transfers
Disposals
Currency adjustment
At 30th June 2015
Depreciation
At 1st July 2014
Charge for the year
Released on disposals
Currency adjustment
At 30th June 2015
Net book value
At 30th June 2015
At 30th June 2014
At 30th June 2015, properties with a net book value of £45,033,000 (2014: £37,597,000) were subject to a registered charge to secure the
UK defined benefit pension scheme liabilities.
Additions to assets in the course of construction of £27,286,000 (2014: £24,240,000) comprise £13,556,000 (2014: £13,185,000) for freehold
land and buildings and £13,730,000 (2014: £11,055,000) for plant and equipment.
Year ended 30th June 2014
Cost
At 1st July 2013
Additions
Transfers
Disposals
Currency adjustment
At 30th June 2014
Depreciation
At 1st July 2013
Charge for the year
Released on disposals
Currency adjustment
At 30th June 2014
Net book value
At 30th June 2014
At 30th June 2013
Freehold
land and
buildings
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Assets in the
course of
construction
£’000
92,682
114,451
8,110
1,504
(115)
(4,125)
5,786
14,110
(874)
(2,339)
7,709
1,064
–
(334)
(390)
5,304
24,240
(15,614)
–
–
Total
£’000
220,146
39,200
–
(1,323)
(6,854)
98,056
131,134
8,049
13,930
251,169
20,642
1,502
(78)
(952)
76,825
8,960
(359)
(1,474)
21,114
83,952
4,753
842
(206)
(208)
5,181
–
–
–
–
–
102,220
11,304
(643)
(2,634)
110,247
76,942
72,040
47,182
37,626
2,868
2,956
13,930
5,304
140,922
117,926
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 106
NOTES CONTINUED
10. Intangible assets
Year ended 30th June 2015
Cost
At 1st July 2014
Additions
Transfers
Disposals
Currency adjustment
At 30th June 2015
Amortisation
At 1st July 2014
Charge for the year
Released on disposal
Currency adjustment
At 30th June 2015
Net book value
At 30th June 2015
At 30th June 2014
Year ended 30th June 2014
Cost
At 1st July 2013
Additions
Transfers
Disposals
Currency adjustment
At 30th June 2014
Amortisation
At 1st July 2013
Charge for the year
Released on disposal
Currency adjustment
At 30th June 2014
Net book value
At 30th June 2014
At 30th June 2013
Goodwill on
consolidation
£’000
Other
intangible
assets
£’000
Internally
generated
development
costs
£’000
Software licences
In use
£’000
In the course
of acquisition
£’000
19,873
10,644
–
–
(198)
61
36
–
–
(25)
78,188
12,975
–
(1,688)
–
20,509
994
188
(189)
(12)
19,736
10,655
89,475
21,490
198
–
(198)
–
–
8,631
1,293
–
(10)
50,371
10,141
(1,688)
–
13,479
1,697
(189)
(8)
9,914
58,824
14,979
36
177
(188)
–
–
25
–
–
–
–
–
Total
£’000
129,250
14,182
–
(2,075)
24
141,381
72,679
13,131
(2,075)
(18)
83,717
19,736
19,675
741
2,013
30,651
27,817
6,511
7,030
25
36
57,664
56,571
Internally
generated
development
costs
£’000
Software licences
In use
£’000
In the course
of acquisition
£’000
Goodwill on
consolidation
£’000
20,182
469
–
–
(778)
19,873
198
–
–
–
Other
intangible
assets
£’000
10,768
–
–
–
(124)
66,358
11,830
–
–
–
20,152
394
53
(51)
(39)
10,644
78,188
20,509
7,259
1,397
–
(25)
42,026
8,345
–
–
11,834
1,732
(51)
(36)
198
8,631
50,371
13,479
19,675
19,984
2,013
3,509
27,817
24,332
7,030
8,318
Total
£’000
117,460
12,782
–
(51)
(941)
129,250
61,317
11,474
(51)
(61)
72,679
56,571
56,143
–
89
(53)
–
–
36
–
–
–
–
–
36
–
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 107
10. Intangible assets continued
Goodwill acquired has arisen on the acquisition of a number of businesses and has an indeterminable useful life. Therefore it is not amortised
but is tested for impairment annually and at any point during the year when an indicator of impairment exists. Goodwill is allocated to the CGUs,
which are currently the statutory entities acquired. This is the lowest level in the Group at which goodwill is monitored for impairment and is at a
lower level than the Group’s operating segments. In the table below, only the goodwill relating to the acquisition of R&R Fixtures, LLC is
expected to be subject to tax relief.
The analysis of acquired goodwill on consolidation is:
itp GmbH
Renishaw Diagnostics Limited (92.4%)
Renishaw Mayfield S.A. (75%)
Measurement Devices Limited
Renishaw Software Limited
R&R Fixtures, LLC
Other smaller acquisitions
Total acquired goodwill
2015
£’000
2,456
1,784
1,537
6,661
1,559
4,411
1,328
2014
£’000
2,770
1,784
1,487
6,661
1,559
4,050
1,364
19,736
19,675
The recoverable amounts of acquired goodwill are based on value in use calculations. These calculations use cash flow projections with
assumptions as follows:
• itp GmbH and Renishaw Software Limited (both part of the metrology segment) – actual operating results and an average growth rate of
5% for five years with a nil growth rate to perpetuity (2014: same basis).
• Renishaw Diagnostics Limited, Renishaw Mayfield S.A. (both in the healthcare segment), Measurement Devices Limited and R&R Fixtures,
LLC (both in the metrology segment) – five-year business plans with a nil growth rate to perpetuity (2014: same basis).
These are considered prudent estimates based on management’s view of the future and experience of past performance. The growth rates
used in the business plans vary from 20% to 34%, except for Renishaw Diagnostics Limited, which is in its research and development phase
and thus has negligible revenue to date.
A pre-tax discount rate of 12% has been used in discounting the projected cash flows of itp GmbH, Renishaw Software Limited, Measurement
Devices Limited and R&R Fixtures, LLC (2014: 12%). A pre-tax discount rate of 15% has been used for Renishaw Diagnostics Limited and
Renishaw Mayfield S.A. (2014: 15%). The discount rates have been derived by comparison with rates adopted by other market participants,
adjusted to reflect Group and CGU specific risks. On this basis, no impairment write-downs are required.
There is significant headroom in all except Measurement Devices Limited and for an impairment to arise, there would need to be a significant
material deterioration in business; this is considered to be remote. An increase of 5% in the discount rate would not result in an impairment,
except for Measurement Devices Limited, where, with a headroom of £1.7m, the discount rate would have to increase to 14.5%.
11. Investments in associates
The Group’s investments in associates (all investments being in the ordinary share capital of the associate), whose accounting years end on
30th June, except where noted otherwise, were:
RLS merilna tehnika d.o.o.
Metrology Software Products Limited
HiETA Technologies Limited (31st December)
Country of
incorporation
Slovenia
England & Wales
England & Wales
Ownership
2015
%
Ownership
2014
%
50
50
20
50
50
–
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report
108
NOTES CONTINUED
11. Investments in associates continued
Movements during the year were:
Balance at the beginning of the year
Dividends received
Share of profits of associates
Amortisation of intangibles
Disposal of shareholding in Delcam plc
Additions
Balance at the end of the year
Summarised aggregated financial information for associates:
Revenue
Share of profits for the year
Assets
Liabilities
12. Acquisitions (previous year)
2015
£’000
2,230
(110)
880
–
–
480
3,480
2015
£’000
5,713
880
4,978
2,393
2014
£’000
7,403
(210)
950
(175)
(5,738)
–
2,230
2014
£’000
9,278
950
4,172
2,258
Year ended 30th June 2014
There were no significant acquisitions in the year. In March 2014, the Group purchased Advanced Consulting and Engineering, Inc, which
resulted in goodwill of £469,000.
13. Deferred tax assets and liabilities
Balances at the end of the year were:
Property, plant and equipment
Intangible assets
Intragroup trading (inventory)
Pension schemes
Other
Balance at the end of the year
Assets
£’000
–
–
9,237
9,398
901
19,536
2015
Liabilities
£’000
(5,589)
(8,017)
–
–
(8,385)
(21,991)
Net
£’000
(5,589)
(8,017)
9,237
9,398
(7,484)
(2,455)
Assets
£’000
–
–
7,224
8,141
808
16,173
2014
Liabilities
£’000
(4,439)
(7,724)
–
–
(11,281)
(23,444)
Net
£’000
(4,439)
(7,724)
7,224
8,141
(10,473)
(7,271)
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 109
2014
£’000
(1,756)
1,617
(6,602)
(530)
(7,132)
(7,271)
2014
£’000
239
721
(1,191)
(301)
2,149
1,617
2015
£’000
(7,271)
1,134
2,102
1,580
3,682
(2,455)
2015
£’000
(1,150)
(293)
2,013
(323)
887
1,134
13. Deferred tax assets and liabilities continued
The movements in the deferred tax balance during the year were:
Balance at the beginning of the year
Movements in the Consolidated income statement
Movement in relation to the cash flow hedging reserve
Movement in relation to the pension schemes
Total movement in the Consolidated statement of comprehensive income and expense
Balance at the end of the year
The deferred tax movement in the Consolidated income statement is analysed as:
Property, plant and equipment
Intangible assets
Intragroup trading (inventory)
Pension schemes
Other
Total movement for the year
No deferred tax asset has been recognised in respect of tax losses carried forward of £13,045,000 (2014: £10,675,000) due to the uncertainty
over their recoverability, as a significant proportion held in overseas subsidiaries may only be carried forward for a limited period of time.
14. Derivatives
Derivatives comprising the fair value of outstanding forward contracts with positive fair values are shown within:
Non-current assets
Current assets
Total of derivatives with positive fair values
Derivatives comprising the fair value of outstanding forward contracts with negative fair values are shown within:
Non-current liabilities
Current liabilities
Total of derivatives with negative fair values
2015
£’000
10,504
14,889
25,393
2015
£’000
3,165
764
3,929
2014
£’000
18,644
13,348
31,992
2014
£’000
17
–
17
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 110
NOTES CONTINUED
15. Employee benefits
The Group operates a number of pension schemes throughout the world. As noted in the accounting policies, actuarial valuations of foreign
pension schemes are not obtained for the most part because of the limited number of foreign employees.
The major scheme, which covers the UK-based employees, was of the defined benefit type. This scheme, along with the Ireland and USA
defined benefit schemes, has ceased any future accrual for current members and these schemes are closed to new members. UK, Ireland
and USA employees are now covered by defined contribution schemes.
The total pension cost of the Group for the year was £16,347,000 (2014: £13,246,000), of which £178,000 (2014: £182,000) related to directors
and £5,035,000 (2014: £3,537,000) related to overseas schemes.
The latest full actuarial valuation of the UK defined benefit scheme was carried out as at September 2012 and updated to 30th June 2015 by
a qualified independent actuary. The mortality assumption used for 2015 is S2PMA and S2PFA tables, CMI (core) 2014 model with long-term
improvements of 0.2% per annum.
The major assumptions used by the actuary for the UK and Ireland schemes were:
Rate of increase in pension payments
Discount rate
Inflation rate (RPI)
Inflation rate (CPI)
Retirement age
30th June 2015
30th June 2014
30th June 2013
UK scheme
Ireland scheme
UK scheme
Ireland scheme
UK scheme
Ireland scheme
3.4%
4.0%
3.6%
2.6%
64
1.6%
3.0%
1.6%
–
65
3.5%
4.4%
3.7%
2.7%
64
1.9%
2.7%
1.9%
–
65
3.5%
4.8%
3.7%
2.7%
64
2.5%
3.6%
2.5%
–
65
The assets and liabilities in the defined benefit schemes were:
Market value of assets:
Equities
Bonds and cash
30th June
2015
£’000
% of
total
assets
30th June
2014
£’000
% of
total
assets
30th June
2013
£’000
% of
total
assets
30th June
2012
£’000
% of
total
assets
30th June
2011
£’000
% of
total
assets
138,174
2,325
98
2
127,805
1,950
98
2
117,114
1,653
99
1
93,827
1,409
99
1
99,365
1,684
98
2
140,499
100
129,755
100
118,767
100
95,236
100
101,049
100
Actuarial value of liabilities
Deficit in the schemes
Deferred tax thereon
(188,593)
(48,094)
9,398
–
–
–
(172,823)
(43,068)
8,141
–
–
–
(160,485)
(41,718)
8,973
–
–
–
(137,224)
(41,988)
9,519
–
–
–
(138,713)
(37,664)
9,393
–
–
–
All equities have quoted prices in active markets in the UK, North America, Europe, Asia-Pacific, Japan and emerging markets.
Note C.36 gives the analysis of the UK defined benefit pension scheme. For the other schemes, the market value of assets at the end of the year
was £14,410,000 (2014: £12,752,000) and the actuarial value of liabilities was £16,644,000 (2014: £18,544,000).
The weighted average duration of the defined benefit obligation is around 24 years.
For a sensitivity analysis of certain elements of the UK defined benefit pension scheme, see the financial review section of the Strategic report.
It is expected that contributions to defined benefit schemes for the next financial year will be at a similar level to the current year.
The movements in the schemes’ assets and liabilities were:
Year ended 30th June 2015
Balance at the beginning of the year
Contributions paid
Interest on pension schemes
Remeasurement gain/(loss)
Benefits paid
Balance at the end of the year
Assets
£’000
Liabilities
£’000
Total
£’000
129,755
(172,823)
(43,068)
2,427
5,547
5,028
(2,258)
–
(6,968)
(11,060)
2,258
2,427
(1,421)
(6,032)
–
140,499
(188,593)
(48,094)
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 111
Total
£’000
(41,718)
2,275
(1,392)
(2,233)
–
11,773
12%
(1,521)
(1%)
(1,577)
(1%)
15. Employee benefits continued
Year ended 30th June 2014
Balance at the beginning of the year
Contributions paid
Interest on pension schemes
Remeasurement gain/(loss)
Benefits paid
Balance at the end of the year
Assets
£’000
Liabilities
£’000
118,767
(160,485)
2,275
9,213
1,887
(2,387)
129,755
–
(10,605)
(4,120)
2,387
(172,823)
(43,068)
2015
£’000
2014
£’000
358
(10,095)
672
5,233
(2,200)
(6,032)
(2,632)
(12,242)
3,533
6,808
2,300
(2,233)
The analysis of the amount recognised in the Consolidated statement of comprehensive income and expense was:
Actuarial (loss)/gain arising from:
– Changes in demographic assumptions
– Changes in financial assumptions
– Experience adjustment
Return on plan assets excluding interest income
Adjustment to liabilities for IFRIC 14
Total amount recognised in the Consolidated statement of comprehensive income and expense
The history of experience gains and losses is:
Difference between the expected and actual
return on scheme assets
amount (£’000)
percentage of scheme assets
Experience gains and losses on scheme liabilities
amount (£’000)
percentage of present value of scheme liabilities
Total amount recognised in the Consolidated
statement of comprehensive income and expense
Year ended
30th June 2015
Year ended
30th June 2014
Year ended
30th June 2013
Year ended
30th June 2012
Year ended
30th June 2011
5,905
4%
–
–
6,535
5%
2,828
2%
13,474
11%
1,089
1%
(13,266)
(14%)
–
–
amount (£’000)
percentage of present value of scheme liabilities
(6,032)
(3%)
(2,233)
(1%)
(860)
(1%)
(7,781)
(6%)
The cumulative amount of actuarial gains and losses recognised in the Consolidated statement of comprehensive income and expense was
a loss of £84,788,000 (2014: loss of £78,756,000).
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 112
NOTES CONTINUED
15. Employee benefits continued
The assumptions used for mortality rates for members, medium cohort at the expected retirement age of 65 years are:
Male currently aged 65
Female currently aged 65
Male currently aged 45
Female currently aged 45
2015
years
22.3
24.4
23.6
25.7
2014
years
22.1
24.8
23.4
26.1
Under the UK and Ireland defined benefit pension scheme deficit funding plans, there are certain UK properties, owned by the Company,
and a property owned by Renishaw (Ireland) Limited, which are subject to registered fixed charges to secure the UK and Ireland defined
benefit pension schemes’ deficits respectively. The Company has also established an escrow account, which is subject to a registered
floating charge to secure the UK defined benefit pension scheme liabilities. The balance of this account was £14,731,000 at the end
of the year (2014: £9,541,000).
The Company has given a guarantee relating to recovery plans for the UK defined benefit pension scheme and the trustees have the right
to enforce the charges to recover any deficit up to £48,200,000 if an insolvency event occurs in relation to the Company before 30th September
2016 or if the Company has not made good any deficit up to £48,200,000 by midnight on 30th September 2016. No scheme assets are
invested in the Group’s own equity.
The value of the guarantee discussed above is greater than the value of the pension scheme’s deficit. As such, in line with IFRIC 14,
the UK defined benefit pension scheme’s liabilities have been increased by £10,200,000, to represent the maximum discounted liability
as at 30th June 2015 (2014: £8,000,000).
16. Inventories
An analysis of inventories at the end of the year was:
Raw materials
Work in progress
Finished goods
Balance at the end of the year
2015
£’000
28,344
20,087
29,242
77,673
2014
£’000
22,795
15,338
24,846
62,979
During the year, the amount of inventories recognised as an expense in the Consolidated income statement was £144,547,000
(2014: £114,597,000) and the amount of write-down of inventories recognised as an expense in the Consolidated income statement was
£1,254,000 (2014: £1,017,000).
17. Cash and cash equivalents
An analysis of cash and cash equivalents at the end of the year was:
Bank balances and cash in hand
Short-term deposits
Balance at the end of the year
The UK defined benefit pension scheme cash escrow account is shown separately within current assets.
2015
£’000
77,282
4,889
82,171
2014
£’000
38,930
4,704
43,634
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 113
2015
£’000
1,294
1,518
(1,097)
421
1,715
2014
£’000
1,630
458
(794)
(336)
1,294
18. Provisions
Warranty provision
Movements during the year were:
Balance at the beginning of the year
Created during the year
Utilised in the year
Balance at the end of the year
The warranty provision has been calculated on the basis of historical return-in-warranty information and other internal reports. It is expected
that most of this expenditure will be incurred in the next financial year and all expenditure will be incurred within three years of the balance
sheet date.
19. Other payables
Balances at the end of the year were:
Payroll taxes and social security
Other creditors and accruals
Total other payables
2015
£’000
5,097
23,464
28,561
2014
£’000
4,153
11,957
16,110
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 22.
20. Other payables (non-current)
The deferred consideration of £589,000 is in respect of investments in subsidiaries, which is payable over the next two years (2014: £883,000).
21. Capital and reserves
Share capital
Allotted, called-up and fully paid
72,788,543 ordinary shares of 20p each
2015
£’000
2014
£’000
14,558
14,558
The ordinary shares are the only class of share in the Company. Holders of ordinary shares are entitled to vote at general meetings of the
Company and receive dividends as declared. The Articles of Association of the Company do not contain any restrictions on the transfer
of shares nor on voting rights.
Currency translation reserve
The currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the
foreign operations, offset by foreign exchange differences on bank liabilities which have been accounted for directly in equity on account of
them being classified as hedging instruments. The movement in the year of a gain of £111,000 (2014: loss £5,754,000) comprises a loss on the
net assets of foreign currency operations of £2,390,000 (2014: loss £11,307,000) and a gain on foreign currency overdrafts held for the purpose
of net investment hedging of £2,501,000 (2014: gain £5,553,000).
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 114
NOTES CONTINUED
21. Capital and reserves continued
Cash flow hedging reserve
The cash flow hedging reserve comprises all foreign exchange differences arising from the valuation of forward exchange contracts which are
effective hedges and mature after the year end. These are valued on a mark-to-market basis, are accounted for directly in equity and are
recycled through the Consolidated income statement when the hedged item affects the Consolidated income statement. The forward contracts
mature over the next three and a half years.
Movements during the year were:
Balance at the beginning of the year
Amounts transferred to the Consolidated income statement (within revenue)
Revaluations during the year
Deferred tax movement
Balance at the end of the year
Dividends paid
Dividends paid comprised:
2014 final dividend paid of 29.87p per share (2013: 28.67p)
Interim dividend paid of 12.50p per share (2014: 11.33p)
Total dividends paid
2015
£’000
25,580
(13,348)
2,837
2,102
17,171
2015
£’000
21,742
9,099
30,841
2014
£’000
(694)
(1,565)
34,441
(6,602)
25,580
2014
£’000
20,868
8,247
29,115
A final dividend in respect of the current financial year of £24,748,105 (2014: £21,741,938), at the rate of 34.0p net per share (2014: 29.87p)
is proposed, to be paid on 19th October 2015 to shareholders on the register on 18th September 2015, with an ex-dividend date of
17th September 2015.
Non-controlling interest
Movements during the year were:
Balance at the beginning of the year
Acquisition of further share in subsidiary
Share of loss for the year
Balance at the end of the year
2015
£’000
(2,076)
–
(562)
(2,638)
2014
£’000
(1,334)
(193)
(549)
(2,076)
The non-controlling interest represents the minority shareholdings in Renishaw Diagnostics Limited – 7.6%, Renishaw Mayfield SARL – 25% and
Renishaw Mayfield S.A. – 25%.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 115
22. Financial instruments
The Group has exposure to credit risk, liquidity risk and market risk arising from its use of financial instruments. This note presents information
about the Group’s exposure to these risks, along with the Group’s objectives, policies and processes for measuring and managing the risks.
Credit risk
The Group carries a credit risk, being the risk of non-payment of trade receivables by its customers. Credit evaluations are carried out on all new
customers before credit is given above certain thresholds. There is a spread of risks among a large number of customers with no significant
concentration with one customer or in any one geographical area. The Group establishes an allowance for impairment in respect of trade
receivables where recoverability is considered doubtful.
An analysis by currency of the Group’s financial assets at the year end is as follows:
Currency
Pound Sterling
US Dollar
Japanese Yen
Euro
Other
Trade receivables
Other receivables
2015
£’000
8,029
32,400
10,660
18,701
31,423
101,213
2014
£’000
9,097
30,418
7,093
18,858
16,332
81,798
2015
£’000
8,541
3,882
9,388
14,720
1,671
38,202
2014
£’000
7,863
15,696
13,397
4,055
1,828
42,839
Cash
2015
£’000
146,603
(31,752)
(11,431)
(31,959)
10,710
82,171
2014
£’000
102,113
(22,404)
(9,050)
(30,521)
3,496
43,634
The above trade receivables, other receivables and cash are predominately held in the functional currency of the relevant entity, with the
exception of £3,511,000 of Euro-denominated trade receivables being held in the Company, along with some foreign currency cash balances
which are of a short-term nature. Also, see note below on net assets and associated borrowings, regarding the holding of foreign currency
borrowings by the Company in respect of its hedging activity.
The ageing of trade receivables past due, but not impaired, at the end of the year was:
Past due 0–1 month
Past due 1–2 months
Past due more than 2 months
Balance at the end of the year
Movements in the provision for impairment of trade receivables during the year were:
Balance at the beginning of the year
Changes in amounts provided
Amounts utilised
Balance at the end of the year
2015
£’000
16,636
5,163
2,372
24,171
2015
£’000
2,979
509
(524)
2,964
2014
£’000
13,854
3,122
1,903
18,879
2014
£’000
3,525
(89)
(457)
2,979
Liquidity risk
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group is cash generative and uses monthly cash
flow forecasts to monitor cash requirements.
In respect of net cash, the carrying value approximates to fair value because of the short maturity of the deposits and borrowings. Interest rates
are floating and based on LIBOR/LIBID, which can change over time, affecting the Group’s interest income. An increase of 1% in interest rates
would result in an increase in interest income of approximately £700,000.
The market value of forward exchange contracts is determined by reference to market data.
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 116
NOTES CONTINUED
22. Financial instruments continued
The contractual maturities of financial liabilities at the year end were:
Year ended 30th June 2015
Trade payables
Other payables
Provisions
Forward exchange contracts
Year ended 30th June 2014
Trade payables
Other payables
Provisions
Forward exchange contracts
Carrying amount
£’000
Up to 1 year
£’000
1–2 years
£’000
2–5 years
£’000
Contractual cash flows
21,154
28,561
1,715
3,929
55,359
21,154
27,972
1,715
764
51,605
Carrying amount
£’000
Up to 1 year
£’000
18,857
16,993
1,294
17
37,161
18,857
16,111
1,294
–
36,262
–
589
–
863
1,452
1–2 years
£’000
–
377
–
–
377
–
–
–
2,302
2,302
2–5 years
£’000
–
533
–
17
550
For non-current other receivables of £10,504,000 (2014: £18,644,000), £6,295,000 (2014: £11,884,000) is receivable between 1 and 2 years and
£4,209,000 (2014: £6,760,000) is receivable between 2 and 5 years.
Market risk
As noted in the Strategic report under Principal risks and uncertainties, the Group operates in a number of foreign currencies with the majority
of sales being made in these currencies but with most manufacturing being undertaken in the UK, Ireland and India.
Fair value
There is no significant difference between the fair value of financial assets and financial liabilities and their carrying value in the Consolidated
balance sheet. All financial assets and liabilities are held at amortised cost, apart from the forward exchange contracts, which are held at fair
value, with changes going through the Consolidated income statement unless subject to hedge accounting.
The fair values of the forward exchange contracts have been calculated by a third party expert, discounting estimated future cash flows on the basis
of market expectations of future exchange rates, representing level 2 in the IFRS 13 fair value hierarchy. The IFRS 13 level categorisation relates to
the extent the fair value can be determined by reference to comparable market values. The classifications range from level 1 where instruments are
quoted on an active market through to level 3 where the assumptions used to arrive at fair value do not have comparable market data.
Exchange rates and sensitivity analysis
The Group has hedged a significant proportion of its forecasted US Dollar, Japanese Yen and Euro revenues and hence the impact on the
Group’s results resulting from fluctuations in these exchange rates against Sterling is lessened.
The following are the exchange rates which have been applicable during the financial year. Also noted is the increase in profit that a one US
Dollar cent change, a one Japanese Yen change and a one Euro cent change in exchange rate, where the foreign currency is strengthening
against Sterling, might have on the Group’s results. The method of estimation involves assessing the impact of this currency on the Group’s
transactions assuming all other variables are unchanged.
Currency
US Dollar
Japanese Yen
Euro
Average US Dollar forward contract rates
Average Japanese Yen forward contract rates
Average Euro forward contract rates
2015
2014
Increase in
group profit for
one cent or one
Yen movement
£’000
420
70
60
Year end
exchange
Average
exchange
rate
1.57
192
1.41
rate
1.57
182
1.32
1.54
121
1.17
Year end
exchange
Average
exchange
rate
1.71
173
1.25
rate
1.64
166
1.20
1.57
126
1.17
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 117
22. Financial instruments continued
The Company has US Dollar, Japanese Yen and Euro forward contracts which mature after the balance sheet date. The fair value of these
contracts at the year end resulted in a profit carried forward of £17,171,000 (2014: profit £25,580,000) (see note 21). The nominal amounts of
foreign currencies relating to these forward contracts are, in Sterling terms, £353,044,000 in US Dollars (2014: £245,824,000), £26,042,000 in
Japanese Yen (2014: £47,087,000) and £107,904,000 in Euro (2014: £121,326,000).
The Group classifies these forward contracts as cash flow hedges and states them at fair value. The forward contracts cover monthly revenues
over the next three and a half years. Further details are noted in the treasury policies in the financial review section of the Strategic report.
Net assets and associated borrowings
The Group maintains foreign currency borrowings as a method of providing hedging against the currency translation risk of the net assets of its
overseas subsidiaries. The level of hedging in place at the year end for the major currencies and their relative base borrowing interest
rates, were:
Currency
US Dollar
Japanese Yen
Euro
Net assets of
subsidiary
£’000
44,549
15,912
39,933
Currency
borrowing
£’000
36,875
14,139
35,407
Base borrowing
interest rate
%
0.28
0.09
-0.02
The currency borrowings are short term, with floating interest rates.
For the net assets of the overseas subsidiaries not hedged, a 1% change in exchange rates will affect reserves by approximately £700,000.
Capital management
The Group defines capital as being the equity attributable to the owners of the Company, which is captioned on the Consolidated balance sheet.
The Board’s policy is to maintain a strong capital base and to maintain a balance between significant returns to shareholders, with a progressive
dividend policy, whilst ensuring the security of the Group supported by a sound capital position. The Group may adjust dividend payments due
to changes in economic and market conditions which affect, or are anticipated to affect, group results.
23. Operating leases
The total of future minimum lease payments under non-cancellable operating leases (all of which relate to land and buildings in subsidiaries) were:
Due in less than one year
Due between one and five years
Total future minimum lease payments
Lease payments recognised as an expense during the year were:
Total lease payments for the financial year
2015
£’000
2,309
4,913
7,222
2015
£’000
2,363
2014
£’000
1,745
3,964
5,709
2014
£’000
2,176
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 118
NOTES CONTINUED
24. Capital commitments
Capital commitments at the end of the year, for which no provision has been made in the financial statements, were:
Authorised and committed
25. Contingencies
2015
£’000
7,381
2014
£’000
10,676
The UK banking arrangements are subject to cross-guarantees between the Company and its UK subsidiaries. These accounts are subject
to a right of set-off.
26. Related parties
During the year, associates and other related parties purchased goods and services from the Group to the value of £1,288,000 (2014: £249,000)
and sold goods and services to the Group to the value of £8,648,000 (2014: £6,515,000). At 30th June 2015, associates owed £525,000 to the
Group (2014: £56,000). Associates were owed £499,000 by the Group (2014: £318,000). Dividends of £110,000 were received from associates
during the year (2014: £210,000). Loans to related parties from the Group at 30th June 2015 were £3,048,000 (2014: £2,520,000).
There were no bad debts written off during the year (2014: £nil).
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 119
Notes
C.28
C.29
C.30
C.31
C.32
15
2015
£’000
2014
£’000
120,492
319,257
1,184
440,933
49,740
147,560
14,731
57,395
269,426
98,567
316,772
704
416,043
37,567
144,361
9,541
27,706
219,175
C.33
(79,280)
(126,352)
179,642
10,504
190,146
631,079
(3,754)
(8,541)
618,784
(28,528)
590,256
C.34
C.35
C.36
C.37
14,558
C.38
C.39
42
17,171
558,485
590,256
74,179
18,644
92,823
508,866
(900)
(9,117)
498,849
(23,421)
475,428
14,558
42
25,580
435,248
475,428
COMPANY BALANCE SHEET
at 30th June 2015
Fixed assets
Tangible assets
Investments in subsidiaries
Investments in associates
Current assets
Stock
Debtors
Pension scheme escrow bank account
Cash at bank
Creditors
Amounts falling due within one year
Net current assets
Due within one year
Due after more than one year
Total assets less current liabilities
Creditors
Amounts falling due after more than one year
Provisions for liabilities
Net assets excluding pension liability
Pension liability
Net assets including pension liability
Capital and reserves
Called up share capital
Share premium account
Currency reserve
Profit and loss account
Shareholders’ funds – equity
These financial statements were approved by the Board of directors on 29th July 2015 and were signed on its behalf by:
Sir David R McMurtry
Directors
A C G Roberts
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 120
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
for the year ended 30th June 2015
Profit for the financial year
Dividends paid
Effective portion of changes in fair value of cash flow hedges, net of recycling and deferred tax
Actuarial loss in the pension scheme, net of deferred tax
Increase in shareholders’ funds
Shareholders’ funds at 1st July 2014
Shareholders’ funds at 30th June 2015
2015
£’000
162,185
(30,841)
(8,409)
(8,107)
114,828
475,428
590,256
2014
£’000
83,285
(29,115)
26,274
(5,476)
74,968
400,460
475,428
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 121
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C.27. Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial
statements of the Company.
Basis of preparation
The financial statements have been prepared in accordance with applicable UK GAAP.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.
Under FRS 1 the Company is exempt from the requirement to prepare a cash flow statement on the grounds that the parent undertaking
includes the Company in its own published consolidated financial statements.
Advantage has been taken of FRS 8 “Related party disclosures” not to disclose transactions with subsidiaries on the basis that all transactions
were with members of the Group, 100% of whose voting rights were controlled.
The Company has adopted FRS 29 “Financial Instruments Disclosures”, which came into effect from 1st January 2007. However, the Company
has taken the exemption available to parent companies not to present financial instrument disclosures as the group financial statements contain
disclosures that comply with the standard.
Investments
Investments in subsidiary and associated undertakings are stated at cost less any provision for permanent impairment losses.
Tangible assets and depreciation
Tangible assets are stated at cost less accumulated depreciation. Depreciation is provided to write off the cost 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 10 years
Motor vehicles – 3 to 4 years
No depreciation is provided on freehold land.
Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately declared and
authorised and no longer at the discretion of the Company.
Research and development
Research and development expenditure is charged to profit and loss account in the year in which it is incurred.
Taxation
The charge for taxation is based on the Company’s profit for the year. Deferred tax is recognised, without discounting, in respect of all timing
differences between the treatment of certain items for taxation and accounting purposes, which have arisen but not reversed by the balance
sheet date, except as otherwise required by FRS 19.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
Employee benefits
The Company operated a contributory pension scheme, of the defined benefit type up to 5th April 2007, after which this scheme was closed for
future accruals to existing members and was closed to new members. Since 5th April 2007, the Company has operated a defined contribution
scheme, which is part of the same scheme.
The scheme is administered by trustees who are independent of the company finances.
Pension scheme assets in the defined benefit scheme are measured using market value. Pension scheme liabilities are measured using a
projected unit method and discounted at the current rate of return on a high-quality corporate bond of equivalent term and currency to the
liability. The expected return on the scheme’s assets and the interest on the scheme’s liabilities arising from the passage of time are included in
other finance income.
The pension scheme’s surplus, to the extent that it is considered recoverable, or deficit is recognised in full and presented on the face of the
balance sheet net of the related deferred tax.
Accruals are made for holiday pay, based on a calculation of the number of days holiday earned during the year, but not yet taken and also for
the annual performance bonus.
Stocks
Stocks are valued at the lower of cost and net realisable value. Cost comprises direct materials and labour plus overheads applicable to the
stage of manufacture reached.
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 122
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C.27. Accounting policies continued
Warranty on the sale of products
The Company provides a warranty from the date of purchase on all its products. This is typically for a 12-month period, although up to three
years is given for a small number of products. A warranty provision is included in the accounts, which is calculated on the basis of historical
returns and internal quality reports.
Derivative financial instruments
In accordance with its treasury policy, the Company does not hold or issue derivative financial instruments for trading purposes.
The Company uses forward exchange contracts to hedge its exposure to foreign exchange risk arising from operational and financing activities.
Forward exchange contracts are recognised initially at cost and then subsequently remeasured at fair value. Where a forward contract is
designated as a hedge of the variability in future cash inflows, the effective part of any gain or loss on the forward contract is recognised directly
in equity. Any effective cumulative gain or loss is removed from equity and recognised in the profit and loss account at the same time as the
hedged transaction. The ineffective part of any gain or loss is recognised in the profit and loss account immediately.
However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
Foreign currencies
Transactions in foreign currencies are translated at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated into Sterling at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on such translation are recognised in the profit and loss account.
Going concern
The Company’s business activities, together with the factors likely to affect its future development, performance and position are set out in the
Strategic report, where also given are details of the financial and liquidity positions. In addition, note 22 in the financial statements includes the
Company’s objectives and policies for managing its capital, details of its financial instruments and hedging activities and its exposures to credit
risk and liquidity risk.
The Company has considerable financial resources at its disposal and the directors have considered the current financial projections.
As a consequence, the directors believe that the Company is well placed to manage its business risks successfully.
After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual report
and accounts.
C.28. Tangible fixed assets
Year ended 30th June 2015
Cost
At 1st July 2014
Additions
Transfers
Disposals
At 30th June 2015
Depreciation
At 1st July 2014
Charge for the year
Released on disposals
At 30th June 2015
Net book value
At 30th June 2015
At 30th June 2014
Freehold
land and
buildings
£’000
53,546
1,315
25,495
(1,381)
78,975
11,315
1,276
(300)
12,291
66,684
42,231
Plant and
equipment
£’000
Motor
vehicles
£’000
Assets in the
course of
construction
£’000
122,316
6,062
8,034
(2,818)
133,594
80,930
10,195
(2,241)
88,884
44,710
41,386
3,220
724
–
(246)
3,698
2,236
515
(251)
2,500
1,198
984
Total
£’000
193,048
35,564
–
(4,445)
224,167
94,481
11,986
(2,792)
103,675
13,966
27,463
(33,529)
–
7,900
–
–
–
–
7,900
13,966
120,492
98,567
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 123
C.28. Tangible fixed assets continued
At 30th June 2015, properties with a net book value of £45,033,000 (2014: £37,597,000) were subject to a registered charge to secure the
UK defined benefit pension scheme liabilities. The trustees have the right to enforce the charge to recover any deficit up to £48,200,000 if an
insolvency event occurs in relation to the Company before 30th September 2016 or if the Company has not made good any deficit up to
£48,200,000 by midnight on 30th September 2016.
Additions to assets in the course of construction of £27,463,000 (2014: £24,329,000) comprise £13,556,000 (2014: £13,185,000) for freehold
land and buildings and £13,907,000 (2014: £11,144,000) for plant and equipment.
C.29. Investments in subsidiaries
Movements during the year were:
Balance at the beginning of the year
Investments made during the year
Balance at the end of the year
2015
£’000
316,772
2,485
319,257
2014
£’000
316,476
296
316,772
The following are the subsidiary undertakings of Renishaw plc as at 30th June 2015, all of which are wholly-owned, unless otherwise stated.
The country of incorporation and registration is England and Wales unless otherwise stated. The country of incorporation is also the country of
operation. The accounting year end for each subsidiary undertaking is 30th June unless otherwise stated. The shareholdings in all the subsidiary
undertakings are in the ordinary share capital of those undertakings.
Company
Principal activities
Renishaw International Limited
Overseas holding and investment company.
Renishaw (Ireland) Limited (Republic of Ireland)*
Renishaw S.A.S. (France)*
itp GmbH (Germany)*
Manufacture and sale of advanced precision metrology and
inspection equipment.
Service, distribution, research and development of group products.
Manufacture and sale of advanced precision metrology and
inspection equipment.
Wotton Travel Limited
Travel agency.
Renishaw Diagnostics Limited (92.4%) (Scotland)
Design, manufacture and sale of molecular diagnostics and surface-
enhanced Raman spectroscopy products.
Renishaw Mayfield S.A. (75%) (Switzerland)*
Marketing of surgical robots for neurosurgical applications.
Renishaw Mayfield SARL (75%) (France)*
Renishaw Metrology Systems Limited (India)* (31st March)
MTT Technologies Limited
Manufacture and sale of surgical robots for
neurosurgical applications.
Design, manufacture and sale of advanced precision metrology and
inspection equipment.
Design, manufacture and sale of additive manufacturing and rapid
prototyping systems.
Renishaw Software Limited
Development and sale of software solutions.
R&R Fixtures, LLC (USA)* (31st December)
Manufacture and sale of fixturing products.
Advanced Consulting & Engineering, Inc. (USA)* (31st December)
Supply of dimensional measurement products and services.
Renishaw Tehnicni Inženiring d.o.o. (Slovenia)
Design and procurement of application-specific integrated
circuits (ASICs).
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report
124
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C.29. Investments in subsidiaries continued
Company – principal activity is the service and distribution of group products
Renishaw, Inc. (USA)*
Renishaw GmbH (Germany)*
Renishaw Ibérica S.A.U. (Spain)*
Renishaw KK (Japan)*
Renishaw S.p.A. (Italy)*
Renishaw AG (Switzerland)*
Renishaw (Hong Kong) Limited (Hong Kong)*
Renishaw Latino Americana Ltda. (Brazil)* (31st December)
Renishaw Benelux BV (Netherlands)*
Renishaw s.r.o. (Czech Republic)*
Renishaw Sp. z.o.o. (Poland)*
Renishaw AB (Sweden)*
Renishaw Oceania Pty Limited (Australia)*
Renishaw Healthcare Inc. (USA)*
OOO Renishaw (Russia)* (31st December)
Renishaw (Austria) GmbH (Austria)*
Renishaw (Korea) Limited (South Korea)*
Renishaw (Canada) Limited (Canada)*
Renishaw (Israel) Limited (Israel)*
Renishaw (Singapore) Pte Limited (Singapore)*
Renishaw (Shanghai) Trading Company Limited (People’s Republic
of China)* (31st December)
Renishaw (Shanghai) Management Company Limited (People’s
Republic of China)* (31st December)
Renishaw (Taiwan) Inc. (Taiwan)*
Renishaw México, S. de R.L. de C.V. (Mexico)*
Company – non-trading (holding or dormant companies)
MTT Investments Limited
MTT Technologies srl (Italy)*
MTT Technologies Inc. (USA)*
Measurement Devices Limited (Scotland)
Measurement Devices US LLC (USA)*
Renishaw R&R Inc. (USA)*
Renishaw Metrology Limited
Renishaw PT Limited
Measurement Devices (Australia) Pty Limited (Australia)*
*Equity held by a subsidiary undertaking.
C.30. Investments in associates
Movements during the year were:
Balance at the beginning of the year
Disposal of shareholding in Delcam plc
Additions
Balance at the end of the year
Renishaw Transducer Systems Limited
Renishaw Advanced Materials Limited
Thomas Engineering and Construction Limited (Canada)*
(31st December)
2015
£’000
704
–
480
1,184
2014
£’000
6,888
(6,184)
–
704
The following are the associated undertakings of Renishaw plc at 30th June 2015. The country of incorporation and registration is England and
Wales unless otherwise stated. The country of incorporation is also the country of operation. The accounting year end for each associate
undertaking is 30th June unless otherwise stated. The shareholdings in all the associated undertakings are in the ordinary share capital of those
undertakings unless otherwise stated.
Company
Principal activities
RLS merilna tehnika d.o.o. (50%) (Slovenia)*
Manufacture and sale of angular magnetic encoder ICs, rotary and
linear encoders, interpolator ICs, and photodiode arrays.
Metrology Software Products Limited (50%)
Design and sale of fixturing solutions and machine diagnostics.
HiETA Technologies Limited (20%, Ordinary-A shares) (31st December)
Design and provision of additive manufacturing solutions and
heat exchangers.
*Equity held by a subsidiary undertaking.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 125
2015
£’000
19,124
19,122
11,494
49,740
2014
£’000
14,731
14,551
8,285
37,567
2015
£’000
2014
£’000
11,908
101,221
3,573
5,465
14,889
137,056
10,504
147,560
2015
£’000
14,623
5,337
43,138
297
2,639
12,482
764
79,280
2015
£’000
589
3,165
3,754
13,551
90,992
2,576
5,250
13,348
125,717
18,644
144,361
2014
£’000
13,938
2,100
105,126
214
2,346
2,628
–
126,352
2014
£’000
883
17
900
C.31. Stock
An analysis of stock at the end of the year was:
Raw materials
Work in progress
Finished goods
Balance at the end of the year
C.32. Debtors
An analysis of debtors at the end of the year was:
Debtors due within one year
Trade debtors
Amounts owed by group undertakings
Amounts owed by associated undertakings
Prepayments and other receivables
Fair value of forward exchange contracts
Debtors due after more than one year
Fair value of forward exchange contracts
Balance at the end of the year
C.33. Creditors
Amounts falling due within one year
An analysis of creditors due within one year at the end of the year was:
Trade creditors
Corporation tax
Amounts owed to group undertakings
Amounts owed to associated undertakings
Other taxes and social security
Other creditors
Fair value of forward exchange contracts
Balance at the end of the year
C.34. Creditors
Amounts falling due after more than one year
An analysis of creditors due after more than one year was:
Deferred consideration
Fair value of forward exchange contracts
Total creditors due after more than one year
The deferred consideration of £589,000 is in respect of investments in subsidiaries, which is payable over the next two years (2014: £883,000).
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 126
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C.35. Provisions for liabilities and charges
An analysis of provisions for liabilities and charges was:
Warranty provision
Deferred tax
Total provisions for liabilities and charges
Warranty provision
Movements during the year were:
Balance at the beginning of the year
Created in the year
Utilised in the year
Balance at the end of the year
2015
£’000
1,294
7,247
8,541
2015
£’000
948
1,202
(856)
346
1,294
2014
£’000
948
8,169
9,117
2014
£’000
1,260
392
(704)
(312)
948
The warranty provision has been calculated on the basis of historical return-in-warranty information and other quality reports. It is expected
that most of this expenditure will be incurred in the next financial year and all expenditure will be incurred within three years of the balance
sheet date.
Deferred tax
Movements during the year were:
Balance at the beginning of the year
Movements during the year
Balance at the end of the year
The deferred tax asset is represented by:
Difference between accumulated depreciation and capital allowances
Other timing differences
Deferred tax on pension scheme liability (note C.36)
Balance at the end of the year
The movements in the deferred tax balance were:
Balance at the beginning of the year
Amount charged to the profit and loss account
Amount reflected through the statement of total recognised gains and losses
Balance at the end of the year
2015
£’000
8,169
(922)
7,247
2015
£’000
2,973
4,274
7,247
(7,132)
115
2015
£’000
2,314
1,262
(3,461)
115
2014
£’000
1,366
6,803
8,169
2014
£’000
1,824
6,345
8,169
(5,855)
2,314
2014
£’000
(4,675)
863
6,126
2,314
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 127
C.36. Pension scheme
The Company operated a defined benefit pension scheme, which, in April 2007, ceased any future accrual for current members and was closed
to new members. Employees of the Company are now covered by a defined contribution scheme. See note 15 regarding details of registered
charges relating to the UK defined benefit pension scheme liabilities.
The total pension cost of the Company for the year was £11,146,000 (2014: £9,330,000), of which £178,000 (2014: £182,000) related
to directors.
The latest full actuarial valuation of the scheme was carried out at September 2012 and updated to 30th June 2015 on an FRS 17 basis by a
qualified independent actuary.
The major assumptions used by the actuary for the scheme were:
Rate of increase in pension payments
Discount rate
Inflation rate (RPI)
Inflation rate (CPI)
Expected return on assets
Retirement age
30th June 2015
30th June 2014
30th June 2013
3.4%
4.0%
3.6%
2.6%
6.7%
64
3.5%
4.4%
3.7%
2.7%
7.3%
64
3.5%
4.8%
3.7%
2.7%
7.3%
64
The mortality assumption adopted for 2015 is S2PMA and S2PFA tables, CMI (core) 2014 model with long-term improvements of 0.2% per annum.
The assets and liabilities in the scheme were:
Market value of assets:
Equities
Bonds and cash
Actuarial value of liabilities
Deficit in the scheme
Deferred tax thereon
Pension liability
30th June
2015
£’000
% of
total
assets
30th June
2014
£’000
% of
total
assets
30th June
2013
£’000
% of
total
assets
30th June
2012
£’000
% of
total
assets
30th June
2011
£’000
% of
total
assets
125,769
100
116,805
100
106,117
100
89,653
100
94,941
100
320
–
198
–
301
–
154
–
362
–
126,089
100
117,003
100
106,418
100
89,807
100
95,303
100
(161,749)
(35,660)
7,132
(28,528)
–
–
–
–
(146,279)
(29,276)
5,855
(23,421)
–
–
–
–
(132,685)
(26,267)
6,041
(20,226)
–
–
–
–
(126,946)
(37,139)
8,913
(28,226)
–
–
–
–
(130,008)
(34,705)
9,023
(25,682)
–
–
–
–
The history of experience gains and losses is:
Difference between the expected and actual
return on scheme assets
amount (£’000)
percentage of scheme assets
Experience gains and losses on scheme liabilities
amount (£’000)
percentage of present value of scheme liabilities
Total amount recognised in the statement of
total recognised gains and losses
amount (£’000)
percentage of present value of scheme liabilities
Year ended
30th June 2015
Restated
Year ended
30th June 2014
Year ended
30th June 2013
Year ended
30th June 2012
Year ended
30th June 2011
939
1%
–
–
3,245
3%
2,828
2%
10,707
10%
(13,168)
(15%)
–
–
–
–
(10,169)
(6%)
(5,952)
(4%)
(1,230)
(1%)
(5,836)
(5%)
11,650
12%
(1,521)
(1%)
(2,588)
(2%)
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 128
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
C.36. Pension scheme continued
The movements in the scheme were:
Year ended 30th June 2015
Deficit in scheme at the beginning of the year
Contributions
Expected return on pension scheme assets
Interest on pension scheme liabilities
Actuarial gain/(loss)
Benefits paid
Deficit in scheme at the end of the year
Year ended 30th June 2014
Deficit in scheme at the beginning of the year
Contributions
Expected return on pension scheme assets
Interest on pension scheme liabilities
Actuarial gain/(loss)
Benefits paid
Deficit in scheme at the end of the year
Assets
£’000
Liabilities
£’000
Total
£’000
117,003
(146,279)
(29,276)
1,649
8,528
–
939
(2,030)
–
–
(6,392)
(11,108)
2,030
1,649
8,528
(6,392)
(10,169)
–
126,089
(161,749)
(35,660)
Assets
£’000
Liabilities
£’000
Total
£’000
106,418
(132,685)
(26,267)
1,513
7,753
–
3,245
(1,926)
117,003
–
–
(6,323)
(9,197)
1,926
(146,279)
1,513
7,753
(6,323)
(5,952)
–
(29,276)
2014
£’000
3,245
2,828
(12,025)
(5,952)
2015
£’000
939
–
(11,108)
(10,169)
2015
£’000
2014
£’000
14,558
14,558
All equities have quoted prices in active markets in the UK, North America, Europe, Asia-Pacific, Japan and emerging markets.
The weighted average duration of the defined benefit obligation is around 24 years.
The analysis of the amount recognised in the statement of total recognised gains and losses was:
Actual return less expected return on scheme assets
Experience gain arising on scheme liabilities
Changes in financial assumptions
Total recognised in the statement of total recognised gains and losses
C.37. Share capital
Allotted, called-up and fully paid
72,788,543 ordinary shares of 20p each
The ordinary shares are the only class of share in the Company. Holders of ordinary shares are entitled to vote at general meetings of the
Company and receive dividends as declared. The Articles of Association of the Company do not contain any restrictions on the transfer of
shares nor on voting rights.
Renishaw plc Annual report and accounts 2015FINANCIAL STATEMENTS 129
C.38. Currency reserve
The currency reserve comprises all foreign exchange differences arising from the valuation of forward exchange contracts which are effective
hedges and mature after the year end. These are valued on a mark-to-market basis, are accounted for directly in equity and are recycled
through the profit and loss account when the hedged item affects the profit and loss account.
The unrealised currency gain/(loss) on foreign exchange forward contracts outstanding at the year end has been recognised net of deferred tax.
Movements during the year were:
Balance at the beginning of the year
Amounts recycled into the profit and loss account in the year
Revaluations during the year
Deferred tax movement
Balance at the end of the year
C.39. Profit and loss account
Movements in the profit and loss account during the year were:
Balance at the beginning of the year
Profit for the year
Dividends paid in the year
Actuarial loss in the pension scheme
Deferred tax thereon
2015
£’000
25,580
(13,348)
2,837
2,102
17,171
2015
£’000
435,248
162,185
(30,841)
(10,169)
2,062
(8,107)
2014
£’000
(694)
(1,565)
34,441
(6,602)
25,580
2014
£’000
386,554
83,285
(29,115)
(5,952)
476
(5,476)
Balance at the end of the year
558,485
435,248
Profit for the year includes dividends received of £83,610,000 (2014: £27,210,000) from associates and a subsidiary undertaking.
C.40. Related parties
During the year, related parties, these being Renishaw Diagnostics Limited, Renishaw Mayfield S.A. and the Group’s associates (see note 11),
purchased goods and services from the Company to the value of £1,513,000 (2014: £331,000) and sold goods and services to the Company
to the value of £3,145,000 (2014: £2,579,000).
At 30th June 2015, related parties owed £525,000 (2014: £56,000) to the Company. Related parties were owed £297,000 (2014: £214,000)
by the Company. Dividends of £110,000 were received from related parties during the year (2014: £210,000). Loans to related parties from
the Company at 30th June 2015 were £12,653,000 (2014: £10,373,000).
All transactions were on an arm’s length basis. There were no bad debts written off during the year (2014: £nil).
C.41. Capital commitments
Capital commitments at the end of the year, for which no provision has been made in the financial statements, were:
Authorised and committed
2015
£’000
6,328
2014
£’000
7,612
Financial statementsGovernanceShareholder informationRenishaw plc Annual report and accounts 2015Strategic report 130
10 YEAR FINANCIAL RECORD
Results
2015
£’000
note
2014
£’000
note
2013
£’000
2012
£’000
note
2011
£’000
note
2010
£’000
note
2009
£’000
note
2008
£’000
note
2007
£’000
2006
£’000
Overseas revenue
469,221
331,682
326,213
313,007
273,989
170,957
159,988
189,137
169,094
164,322
UK and Ireland revenue
25,499
23,816
20,668
18,885
14,761
10,650
11,259
12,020
11,789
11,513
494,720
355,498
346,881
331,892
288,750
181,607
171,247
201,157
180,883
175,835
143,924
70,388
79,071
83,188
79,286
28,095
144,196
22,850
70,106
10,720
79,193
86,046
80,410
28,725
15,046
17,008
16,345
5,745
5,991
8,843
2,105
6,738
37,335
29,729
35,468
41,715
32,672
38,102
8,309
6,532
7,621
33,406
26,140
30,481
Profit for the year
121,346
59,386
64,147
69,038
64,065
22,980
Total revenue
Operating profit
Profit before tax
Taxation
Capital employed
Share capital
Share premium
Reserves
Total equity
Statistics
Overseas revenue
as a percentage of
total revenue
Adjusted earnings
per share
Proposed dividend
Note
2015
£’000
2014
£’000
2013
£’000
2012
£’000
2011
£’000
2010
£’000
2009
£’000
2008
£’000
2007
£’000
2006
£’000
14,558
14,558
14,558
14,558
14,558
14,558
14,558
14,558
14,558
14,558
42
42
42
42
42
42
42
42
42
42
413,918
336,163
262,119
227,799
187,118
144,021
129,162
151,725
153,400
128,136
428,518
350,763
276,719
242,399
201,718
158,621
143,762
166,325
168,000
142,736
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
94.8%
93.3%
94.0%
94.3%
94.9%
94.1%
93.4%
94.0%
93.5%
93.5%
167.5p
46.5p
82.3p
41.2p
88.9p
40.0p
95.6p
38.5p
88.5p
35.0p
32.3p
17.6p
9.6p
45.9p
35.9p
41.9p
7.76p
25.39p
22.87p
21.78p
The results and adjusted earnings per share for the years 2007 to 2011, 2013 and 2014 exclude the exceptional items. These were: 2007 and 2008 – pension
curtailment credits (2007: £19.5m; 2008: £1.3m); 2009 – redundancy costs (£4.1m); 2010 – impairment write-down (£1.7m); 2011 – reversal of impairment write-
down (£1.7m); 2013 – gain on deferred consideration settlement (£2.9m); and 2014 – profit on disposal of shareholding in Delcam plc (£26.3m).
Renishaw plc Annual report and accounts 2015SHAREHOLDER INFORMATION 131
SHAREHOLDER INFORMATION
Ordinary shares
Financial reports
The Company has one class of ordinary 20p shares listed on
the London Stock Exchange under code RSW, ISIN number
GB0007323586.
Registrars
For all enquiries about shareholders’ holdings, transfer and
registration of shares and changes of name and address, contact the
Company’s registrars, Equiniti Limited, or use www.shareview.co.uk:
Registrars and transfer office
Equiniti Limited,
Aspect House,
Spencer Road,
Lancing,
West Sussex UK
BN99 6DA
Telephone: 0871 384 2169 (UK callers)
+44 121 415 7047 (international callers)
Website: www.shareview.co.uk
UK calls cost 8p per minute plus network extras. Lines open 8.30am
to 5.30pm, Monday to Friday.
AGM
The AGM is held at the Company’s offices and is open for attendance
by all shareholders. The 2015 AGM will be held on Thursday
15th October at the Company’s headquarters at New Mills, Wotton-
under-Edge, Gloucestershire GL12 8JR at 12 noon. The Notice of
meeting is set out in a separate circular to shareholders. Shareholders
holding shares in the Company through a nominee service should
arrange to be appointed as a corporate representative or a proxy
in respect of their shareholding in order to attend and vote at
the meeting.
The Annual report, together with copies of previous financial reports,
is available at www.renishaw.com. The interim results and the
preliminary announcement of the full year’s results are published
on our website promptly after they have been released through a
Regulatory Information Service.
Financial calendar
Annual general meeting
15th October 2015
Half year
31st December 2015
Half year results
January 2016
Trading update
May 2016
Final dividend
Ex-div date 17th September 2015
Record date 18th September 2015
Payment date 19th October 2015
Interim dividend (provisional)
Ex-div date 3rd March 2016
Record date 4th March 2016
Payment date 7th April 2016
Shareholder informationGovernanceFinancial statementsRenishaw plc Annual report and accounts 2015Strategic report 132
SHAREHOLDER NOTES
Registration details and company secretary
Share fraud
Company secretary and registered office
Norma Tang,
New Mills,
Wotton-under-Edge,
Gloucestershire UK
GL12 8JR
Registered number: 1106260
England and Wales
Telephone: +44 (0)1453 524524
Facsimile: +44 (0)1453 524401
email: companysecretary@renishaw.com
For the latest investor information and news,
visit www.renishaw.com/investor
Auditor and corporate advisors
Auditor
KPMG LLP
Solicitors
Norton Rose Fulbright LLP
Burges Salmon LLP
Stockbrokers
UBS
Principal bankers
Lloyds Bank plc
Renishaw has received reports that our shareholders have received
unsolicited calls from overseas firms offering to purchase their shares
for a price in excess of the current market price in order to mount a
hostile takeover bid. Please be aware that this is likely to be a scam,
with the intention of obtaining payment from shareholders of a bond
or legal fee in order to secure the share transaction, which never
materialises or obtaining an option to purchase shares with no fixed
transfer date. There are other types of share fraud or “boiler room
scams” and therefore if you receive any unsolicited investment advice
the Financial Conduct Authority (FCA) advises the following:
• make sure you get the correct name of the person and organisation
and make a record of any other information they give;
• check that they are properly authorised by the FCA before getting
involved by visiting www.fca.org.uk/register and contacting the firm
using the details on the register;
• the FCA also maintains a list of unauthorised overseas firms who are
targeting or have targeted UK investors and any approach from
such firms should be reported to the FCA so that the information
can be kept updated;
• report the matter to the FCA on their consumer helpline 0800 111 6768
or using the share fraud reporting form on the FCA website (search
for “share fraud” to find the relevant pages); and
• you could also contact the police via the national fraud reporting
centre Action Fraud on 0300 123 2040 or email@actionfraud.org.uk.
Action Fraud will be particularly interested if you sent money to a
bank account or other type of money transfer.
Shareholder profile
Shareholdings
1 – 5,000
5,001 – 25,000
25,001 – 50,000
50,001 – 100,000
%
2.4
3.0
1.9
3.2
100,001 – 500,000 15.9
500,001 – 1,000,000
6.9
1,000,001 – 3,000,000 13.7
more than 3,000,000 53.0
1
2
3
4
5
6
7
8
8
7
6
5
4
3
2
1
Shareholdings
1 Directors
2 Individuals
3 Institutions
2
%
53.1
1.9
45.0
3
1
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Renishaw plc
New Mills, Wotton-under-Edge,
Gloucestershire GL12 8JR
United Kingdom
T +44 (0) 1453 524524
F +44 (0) 1453 524401
E uk@renishaw.com
For more information visit:
www.renishaw.com