300
Annual Report 2022
Transforming
Tomorrow
Together
About us
We’re a world leading supplier of measuring systems and productionsystems.
Our products give high accuracy and precision, gatheringdatato provide
customers and end users with traceability and confidencein what
they’remaking. This technology also helps ourcustomers to innovate
theirproducts and processes.
We are guided by our purpose: Transforming Tomorrow Together. Thismeans
workingwithourcustomersto make the products, createthematerials,
anddevelop the therapies thataregoing tobeneededforthefuture.
We believe that our purpose is incredibly relevant in today’s environment
wherethepace ofchange in technology is faster than ever.We also know
that the future will be a world of scarce resources, needing high-performance,
intelligent, personalised solutions that make the best use ofthese resources,
andour expertise can help deliver this.
Our vision is to innovate and transform the capabilities of our customers
andendusers through unparalleled levelsof:
How we do it
While our vision sets our direction, our strategy is our route to getting there,
and we set this out on pages 18 to 21.
Our purpose, vision and strategy are supported by our values. Ourvalues
guide the way we behave and the decisions we make, bothas a business
and as individual employees. Opposite, we explain each of our values and
hear what they mean to some of our people.
Precision Productivity Practicality
What we do and why
Strategic Report
Our values
We encourage our people to be
innovative andchallenge convention.
Innovation is a mindset, of continually
challengingprocesses, products and systems,
professionally and in everyday life.”
Joel Canty
UK
Innovation goes beyond our products. In my team,
wealways look to improve the way we do things
andthe processes we use every day.”
Faye Blackmore
UK
We should aim to inspire each other,
ourcustomers andthepeople we
workwithoutside of the business.
Inspiration works both ways; sometimes each of
usis a source of inspiration, and we can draw it from
our colleagues and customers, getting ideas and
motivation from them.”
Enrico Orsi
Italy
I really think that it’s very important to get ideas from
your colleagues and to learn from other cultures.”
Ariadna Herrojo
Spain
We should act with integrity at all times.
When we hold each other to account, we value the
commitments we make to each other, and wekeep
ourselves collectively on track. Integrity can be hard
but it’s worth it.”
Greg Nixon
UK
During last year’s formal sale process Isawa very
strong drive to make sure that wecommunicated –
within the rules – to employees about some of the
keydevelopments. That, to me, was also a real sign
of integrity because some companies would not
havefeltcompelled to do that, but Renishaw did.”
Jacqueline Conway
UK
We encourage everyone to be fully
involvedand to supporteachother
in contributing to the success of
ourbusiness and the communities
weoperate in.
Whichever part of Renishaw you work in,
you’reinvolved. We allmake a difference.”
Steve Oakes
UK
I think that everyone’s opinion counts and is valuable.”
Roberta Capano
Spain
Inspiration Involvement
Innovation Integrity
Renishaw plc Annual Report 2022 1
Strategic Report Governance Financial statements Shareholder information
Sales and marketing regions Group including
manufacturing and R&D
APAC
Sales and marketing locations
28
Total revenue
£317.0m
Key locations
65
Total revenue
£671.1m
Americas
Sales and marketing locations
7
Total revenue
£148.3m
EMEA
Sales and marketing locations
21
Total revenue
£205.8m
Rainer Lotz
President,
EMEA
Andy Buttrey
President,
APAC
Will Lee
Chief Executive
Leo Somerville
President,
Americas
Renishaw at a glance
Global
business,
local service
Where we operate
We work closely with our customers to solve
complex engineering and science challenges
andimprove products and processes.
We’reaglobal business, with three sales
regions;the Americas, EMEA, and APAC.
Mostofour R&D work takes place in the UK,
withour largestmanufacturing sites located
intheUK, Ireland and India.
We have two operating segments:
Manufacturing technologies, and Analytical
instruments and medical devices.
Opposite is a summary of what each segment
does, and you can find more detailson pages
28 to 38.
Renishaw plc Annual Report 20222
Strategic Report
Position Measurement
Our encoders are devices which give fast feedback
on linear and rotary positions of machines.
Our calibration products help manufacturers know
whether their machines are working as intended.
Additive Manufacturing (AM)
Our Additive Manufacturing machines use laser
powder bed fusion to create metal 3D parts from
digital files. Thin layers of material are used to
create complex shapes that cannot be produced
by traditional manufacturing such as casting,
forging and machining.
Industrial Metrology
Products include our measurement systems for
co-ordinate measuring machines (CMMs), gauging
systems, and probes for use on machine tools
such as lathes and milling machines. We also sell
styli, thepart of the measuring system that makes
contact with the measured parts, and fixtures that
help secure those parts in place.
Manufacturing technologies
This segment helps improve and automate high-tech
manufacturing operations.
Analytical instruments andmedicaldevices
This segment uses our innovative technologies to bring
precision, productivity and practicality to materials analysis
andneurological therapies.
A
-
9
4
0
5
-
4
0
5
0
Spectroscopy
Our Raman spectroscopy systems analyse
materials in the laboratory and in the field.
The systems help gather chemical and structural
information, which customers use to identify the
materials in a sample.
Neurological
Products include our drug delivery system, which
helps treat neurological conditions, and our
stereotactic robot that’s usedin neurosurgery.
InVia Ramen microscope
You can find more information aboutManufacturing technologies
onpages 28 to 34.
You can find more information aboutAnalytical instruments and
medical devices on pages 35 to 38.
Renishaw plc Annual Report 2022 3
Strategic Report Governance Financial statements Shareholder information
Financial and operational highlightsContents
IFC About us
2 Renishaw at a glance
4 Financial and operational highlights
Strategic Report
6 Chairman’s statement
8 Chief Executive’s review
11 Our investment case
12 Our history
14 Our markets
16 Our business model
18 Our strategy for creating long-term value
22 Key performance indicators
24 Financial review
28 Performance review
39 Risk management
42 Principal risks and uncertainties
50 Viability statement
52 Managing our resources and relationships
66 Section 172 statement
69 Non-financial information statement
Governance
72 Directors’ Corporate Governance Report
74 Board of Directors
76 Executive Committee
82 Nomination Committee Report
85 Audit Committee Report
92 Directors’ Remuneration Report
111 Other statutory and
regulatory disclosures
114 Directors’ responsibilities
115 Independent Auditor’s Report
Financial statements
128 Financial statements contents
129 Consolidated income statement
130 Consolidated statement of
comprehensive income and expense
131 Consolidated balance sheet
132 Consolidated statement of changes
in equity
133 Consolidated statement of cash flow
134 Notes (forming part of the
financial statements)
169 Company balance sheet
170 Company statement of changes in equity
171 Notes to the Company
financial statements
Shareholder information
181 10-year financial record
182 Glossary
183 Shareholder information
Revenue
£ 6 7 1.1m
(2021: £565.6m)
Adjusted* profit before tax
£ 1 6 3 . 7 m
(2021: £119.7m)
Statutory profit before tax
£145.6m
(2021: £139.4m)
Total dividend for the year
7 2 . 6 p
(2021: 66.0p)
Graduates and apprentices employed
296
(2021: 223)
Research and development investment
£ 5 9 . 4 m
(2021: £58.6m)
* Note 29, Alternative performance measures, defines how Adjusted profit before tax is calculated.
We use abbreviations and trade marks within this document. For brevity, we don’t define or identify
these every time they are used; please refer to the glossary on page 182 for this information.
We’ve changed how we refer to years in our narrative commentaries in this report. As an example,
FY2022 means the financial year ended 30 June 2022. Other dates in our narrative commentary, such
as 2022, means the 2022 calendar year.
Renishaw plc Annual Report 20224
Strategic Report
Precision
British Cycling
racesahead with
precision technology
Wanting to improve the performance
of their new Olympic track bike, British
Cycling turned to Renishaw to support
Lotus Engineering and Hope Technology
inproducing additively manufactured parts.
We initially used our AM expertise to quickly
produce prototype parts for aerodynamic
testing of the new design. This helped to
ensure that parts were light, geometrically
correct and strong enough to endure the
strain from riders. After proof of concept,
wethen made aluminium and titanium parts,
such as handlebars, for the competition
bikes, with these parts being customised
foreach cyclist.
“When you do something new and brave
you have lots of difficulties to overcome and
that is where Renishaw has been fantastic.
The Renishaw team has worked with the
engineers to do the refinement at break-neck
speed. In the past it would take months to go
from the drawing board to a piece that you
could try in the test rig or in the velodrome,
and now we can do it in weeks.”
Great Britain Cycling Team (UK)
Scan the QR code
towatch the video
Strategic
Report
6 Chairman’s statement
8 Chief Executive’s review
11 Our investment case
12 Our history
14 Our markets
16 Our business model
18 Our strategy for creating long-term value
22 Key performance indicators
24 Financial review
28 Performance review
39 Risk management
42 Principal risks and uncertainties
50 Viability statement
52 Managing our resources and relationships
66 Section 172 statement
69 Non-financial information statement
Renishaw plc Annual Report 2022 5
Strategic Report Governance Financial statements Shareholder information
Achieving
record results
Introduction
I’m delighted to report a record year for both revenue and
Adjusted* profit before tax. Our revenue for FY2022 was
£671.1m. This was 19% higher than FY2021 revenue of £565.6m
and was achieved against a backdrop of a global recovery in
all our key markets. Adjusted profit before tax was £163.7m
(FY2021: £119.7m), an increase of 37%. Statutory profit before
tax was £145.6m (FY2021: £139.4m). Both revenue and
Adjusted profit before tax are consistent with the trading update
we provided in May.
Our performance has been built on years of strategic focus.
We’ve developed the innovative products required to meet
thechallenges faced by manufacturers in growing markets,
while ensuring that we have the global infrastructure and
skilledpeople to deliver those opportunities. The right products,
theright place and the right people – all helping us to deliver
onour purpose of Transforming Tomorrow Together.
What is clear to me is that these record results couldn’t have
been achieved without the huge commitment of our employees,
who have faced enormous personal and professional challenges
over the course of the pandemic. They worked tirelessly
during the year to serve our customers in the face of strong
demand for our products and considerable supply chain
challenges. They have made me very proud, and I would like
to convey my thanks and that of the Board, for everything that
they’ve achieved.
After the end of the formal sale process (FSP) in July 2021,
John Deer and I made it clear to the Board and our employees
that we remain committed to Renishaw. I do not doubt that the
process caused some uncertainty among our employees, and
we are very grateful for the commitment they’ve demonstrated
to Renishaw. As a Board, we were encouraged with how well
everyone delivered ‘business as usual’ during the process,
andIfeel this excellent set of results demonstrates this, as well
as underlining the strength of our business.
Board changes bring new experience to Renishaw
A strong and experienced Board is essential to the success
ofa complex, global business like Renishaw and I’m delighted
with the new appointments that were made during the year.
I would firstly like to thank Carol Chesney and John Jeans,
who, during the year, stepped down from the Board as Non-
executive Directors after nine years’ service. In their place
we’ve appointed Juliette Stacey, currently Senior Independent
Director at Fuller, Smith & Turner plc, and Stephen Wilson,
currently ChiefExecutive of Genus plc. Juliette brings extensive
experience with her strong finance and leadership background,
while Stephen brings strategic, financial and business
development experience in the software sector.
Chairman’s statement
Sir David McMurtry
Executive Chairman
Renishaw plc Annual Report 20226
Strategic Report
Sir David McMurtry talks to attendees at our Investor Day in May 2022.
We remain committed to high standards of corporate
governance. We always consider key stakeholders when making
decisions, in the belief this will protect our business and its
long-term sustainable success. Further details are provided in
the Directors’ Corporate Governance Report on pages 72–81
andour Section 172 statement on pages 66–68.
Responding positively to a new world
Last year I wrote about the profound changes to our society,
trading environment and business practices brought about by
the pandemic. We have positively embraced those changes
and the opportunities that they have presented for growth and
to increase focus on employee welfare. It seems to me that our
vision of transforming capabilities in manufacturing, science
and healthcare through precision, productivity and practicality
is absolutely relevant to helping meet societal needs in the
coming years.
We’ve also responded positively to the global challenges of
climate change. We have achieved significant reductions in
ourcarbon emissions in recent years (see page 57) but as
alarge business with a global footprint, we want to make a step
change in our efforts.
This year, the Board approved significant commitments to help
deliver this step change, and Will Lee explains our Net Zero
commitment in more detail on page 9. I am acutely aware that
society has high expectations of companies like ours when it
comes to setting environmental targets, and I’m pleased to see
that we’ve made this commitment. The Board is determined
to ensure that we make meaningful, measurable progress.
That’s why we will have our targets verified by the independent
Science Based Targets initiative, and we will not succumb to
‘greenwashing’.
As part of our sustainability commitments, our new Sustainability
Committee identified three of the UN’s Sustainable Development
Goals (SDGs) that are most relevant to our business. The Board
agreed that we should link our sustainability commitments and
targets to these goals, demonstrating our support for decent
work and economic growth, responsible consumption and
production, and climate action. We’re now developing a plan
onhow we will measure our progress against these SDGs.
Continuing to embed our values to support our culture
As I mentioned in my introduction, our employees have
continued to demonstrate resilience throughout the pandemic.
This has highlighted the importance of our strong working
culture, underpinned by our core values of innovation,
inspiration, integrity and involvement.
This year we’ve continued to actively communicate and embed
these values across the business, from policy documents
and training materials, to the careers pages of our corporate
website. These values embody our culture, where our people
are encouraged:
– to be innovative and challenge convention;
– to always inspire each other, our customers and our
wider communities;
– to act with integrity; and
– to be fully involved and support each other in contributing
tothe success of Renishaw and our communities.
Ensuring these values were well communicated and understood
was particularly important to the Board. We listened to feedback
from workshops across the business, and Will helped launch the
communications campaign.
Recognition and reward is an important way that a company
canembed its values. That’s why, towards the end of the year,
we launched a global competition encouraging teams to share
how they demonstrate our values in action. Our Executive
Committee will select one winning team per value, with each
team choosing a charity to receive a £5,000, or local currency
equivalent, donation.
As part of our value of involvement, we are committed to equality
and diversity at all levels of the Company. Our UK Diversity
& Inclusion group continued to produce thought-provoking
awareness campaigns throughout the year, including a focus
on sexuality and gender, disability, and how inclusion drives
understanding in the workplace.
Looking ahead
While there continues to be some global uncertainties due to
the geopolitical environment and rising costs for consumers
and manufacturers, the last two years have demonstrated the
great resilience of our business and people. I therefore feel
that whatever challenges and opportunities we may face in the
coming years, we’ll be able to respond positively and continue
todeliver on our purpose.
Sir David McMurtry
Executive Chairman
15 September 2022
* Note 29, Alternative performance measures, defines how Adjusted profit
before tax is measured.
Renishaw plc Annual Report 2022 7
Strategic Report Governance Financial statements Shareholder information
Will Lee
Chief Executive
Global
success from
asolid strategy
Last year I spoke about the strong position that we were in to
take advantage of the many opportunities presented by the
global recovery in our markets. We’ve capitalised well on those
opportunities this year, delivering the best set of financial results
in our history. It wasn’t easy, however, and our people around
the world have had to work incredibly hard to deliver these
record results given the huge challenges we have faced.
The rapid upturn in the global economy placed supply chains
under great stress, with serious shortages of electronic
components. Combined with strong demand and a highly
competitive labour market, we faced significant challenges in
meeting our customers’ needs. Our teams responded brilliantly,
increasing output and re-engineering certain products when
components weren’t available. Our work over the past few
years to build our inventory levels also helped us overcome
these problems.
This record set of results also clearly demonstrates that our
business is in an even stronger position than when we launched
the FSP last year, andwe continue to be confident in our
strategic direction.
Having introduced our new purpose, vision and strategy
last year, I’m encouraged by how well we’ve embedded
these in the business this year. Our purpose of Transforming
Tomorrow Together has helped guide us this year, reinforcing
theimportance of working with our customers to help them make
the products, create the materials, and develop the therapies
that will be needed for the future.
A record set of results driven by strong revenue growth
As Sir David has said, we’ve achieved a record set of results.
We had strong revenue growth in all regions, with the strongest
growth in our Manufacturing technologies segment. This has
been driven by increased investments in the semiconductor and
electronics sectors, and demand for industrial automation due to
skills shortages and labour costs. In our Analytical instruments
and medical devices segment, our spectroscopy products also
achieved record revenue with growing research and industrial
applications for Raman microscopy.
Chief Executive’s review
Renishaw plc Annual Report 20228
Strategic Report
Our revenue for the year ended 30 June 2022 was £671.1m,
compared with £565.6m last year. This is a direct result of our
new strategy, that builds from our existing strength in working
closely with our customers to develop the products they need
to grow. Our ability to make these products in-house to tight
timescales, while offering local support as a global business,
has been essential to our success this year.
We achieved record Adjusted* profit before tax of £163.7m
compared with £119.7m last year, and this means Adjusted*
earnings per share was 185.5p compared with 132.0p last year.
Adjusted measures are the ones we use as a Board to measure
our underlying trading performance, and we’re pleased with
our improvements given that we’ve faced significant increases
in some production costs and made investments in pay
and reward.
Statutory profit before tax for the year was £145.6m compared
with £139.4m last year, leading to Statutory earnings per share
of 165.4p compared with 153.2p last year. Allen Roberts, our
Group Finance Director, provides more detail of our financial
performance on pages 24 to 27.
Excellent progress in our customer-focused strategy
Our strategy is designed to deliver sustainable, profitable growth
by ensuring we have the agility and resources to identify and
respond to opportunities in our markets. I’m really encouraged
with the progress our two segments have made here this year,
and in the four strategic pillars (see pages 18 to 20) that support
our segments.
As I mentioned above, our teams have gone above and beyond
this year to support our customers. Many of the markets we
work in have experienced a rapid and significant recovery
from the economic effects of the pandemic, and our approach
of providing local support to our customers has helped us to
respond to this.
We’ve continued to launch new products, such as an
ultrasonic probe for REVO (our market-leading multi-sensor
system for CMMs). Ultrasonic probes offer an advantage over
traditional tactile probes for parts where it’s hard to access
internal features, such as drive shafts and hollow aerospace
blades. This is a great example of what we already do so well;
understanding the problems our customers are having and then
using our expertise to make a product that helps them solve
the issue.
We’ve also continued to improve our existing products.
When itlaunched last year, our NC4+ Blue set the standard
for non-contact tool setting, thanks to its industry-first blue
laser. We’ve since launched the next generation product this
year. Both this and the RUP ultrasonic probe demonstrate
how we can grow ourbusiness by developing products in our
existing markets.
This innovation, and our approach of building a long-term
relationship with customers, is helping us to gain new
customers and outperform market growth. I’m particularly
proud of the success of our Encoder business this year, gaining
key customer accounts in recent months and not just in the
semiconductor sector.
As part of how we’re moving into new markets we’ve also
expanded our offer to customers this year. We’ve been working
on making more of our products compatible with third-party
software, such as our popular Equator gauging system.
Doing this helps us open new opportunities in areas where
customers and end users may already be using adifferent
software system.
Our design and engineering teams have made good progress
this year with our flagship product projects. These are the ones
we prioritise because the products are most important to our
long-term growth, or where we expect them to bring significant
revenue growth quickly. One of our first flagship products to
launch last year was FORTiS, our enclosed encoder for use
in machine tools. One of our strategic priorities is to develop
non-substitutional products in adjacent markets, and FORTiS is
exactly this. It’s been really well received by our customers and
again shows how we can grow our business within new markets.
The skills and flexibility of our manufacturing teams have been
central to achieving this success. We’ve recruited around 300
people into these teams this year, and significantly increased
our productive hours ahead of this rise in headcount. This in-
house manufacturing expertise means we’ve been able to
meet the rising demand this year while still maintaining our
exacting standards, and have kept our gross profit margin at
53% (FY2021: 52%) despite the global rise in costs, such as raw
materials, gas and electricity.
Sustainable, responsible business
We’re committed to being a responsible business in everything
we do, and want to ensure that our people understand their
role in achieving this. This year we introduced ‘Responsible
Renishaw’, our global umbrella brand for compliance matters,
guiding our people to do business responsibly in line with our
value of integrity. We launched the new brand with a week of
focused communications, and ‘Responsible Renishaw Week’
willnow be an annual event.
Following the Russian invasion of Ukraine in February 2022,
weimmediately stopped the supply of goods from the Group
to Russia and certain parts of Ukraine. We have now ceased
our operations in Russia. Although we’ve spent many years
growing our business in Russia and were conscious of the effect
this would have on our employees in Moscow and Perm, it was
the right decision to make. We are also actively managing any
attempts to procure our products through alternative routes.
Sustainability is an integral part of our business. It’s at the heart
of our purpose of Transforming Tomorrow Together, working with
our people, customers, suppliers and communities to create
a more sustainable world. This year, we’ve committed to a
science-based Net Zero emissions target of no later than 2050
for our entire business and a target of 2028 for Scope 1 and
2 emissions.
For us, Net Zero means achieving a 90% reduction in
greenhouse gas (GHG) emissions compared to our FY2020
baseline emissions. For the remaining 10% of emissions, we will
invest in credible carbon offsetting and removal programmes.
Although we’ve set an overall target of achieving Net Zero by
2050, we expect we can do more. We’ve therefore set ourselves
a target of measuring our Scope 3 emissions by March 2023,
with the aim of then setting an earlier target year for achieving
Net Zero for all our emissions.
The move to Net Zero also represents many opportunities for
our business, since our products positively contribute to our
customers’ own sustainability ambitions, by reducing energy
consumption and minimising waste.
* Note 29, Alternative performance measures, defines how Adjusted profit
before tax is measured.
Renishaw plc Annual Report 2022 9
Strategic Report Governance Financial statements Shareholder information
Our success is testament to our people
Sir David has already acknowledged the huge contribution of
our employees during another highly challenging year. I’d also
like to add my own thanks for everything that they did to help
achieve this record year for the business. With such significant
sales growth and supply chain pressures, we’ve been stretched
in many operational areas. Nonetheless, I’ve been inspired by
the resilience, skill, dedication and innovation shown by our
people this year.
We’ve made excellent progress this year on responding to
feedback from our people, and have focused on modernising
our approach to pay and reward, improving our performance
reviews, and supporting career progression. The Group-wide
pay benchmarking review is a major part of this. As a result
of the reviews to date, and excluding other factors such as
headcount growth, we expect our labour costs to increase by
around £19m in FY2023 compared with FY2022.
To support our growth, we welcomed over 400 additional
people into our business, ending the year with around 5,100
people across the world. We continue to take a long-term view
and plan for the future success of the Group, so this year we
recruited nearly 150 apprentices and graduates, and also took
on more than 40 industrial placements. Having started here as a
sponsored student myself, I know we’ve always been committed
to developing our people to both build and retain their skills
within the business. This includes supporting people through
further study, with more than 200 colleagues currently enrolled
on apprenticeship programmes.
COVID-19 update
We continue to monitor the impact of COVID-19 on our people
and business, and retain some measures designed to minimise
the risk of in-company transmissions. However, most of our
operations are now operating on a more normal basis. We were
affected by the spring lockdowns in China, with our local
headquarters in Shanghai closed for two months, but were able
to respond well to this. For example, we used technical webinars
to stay in touch with customers, and used our extensive network
of offices and employees across the country to supply key
customers and satisfy urgent orders.
I’d like to recognise the huge efforts made by colleagues in
China throughout this challenging period.
Although the pandemic has clearly been a difficult time for so
many people, I think it’s important to reflect on what we’ve learnt
from it. We’ve demonstrated our resilience, and the ability and
dedication of our people to respond to rapid changes. We’ve
been able to make better use of digital technology to work with
each other, our customers and our suppliers, meaning we can
work in a more environmentally conscious way by travelling less.
More digital engagement with customers is also opening up
more sales opportunities, and our online sales are growing too.
Outlook
We have made a positive start to FY2023 and our order book
remains strong. We have, however, recently seen a weakening
in order intake from the semiconductor and electronics sectors,
and general market sentiment is becoming more cautious.
In light of this, we are managing costs carefully and focusing
on productivity.
Having strong cash reserves also helps us take a long-term view
and weather shorter-term challenges. We believe our markets
offer very positive long-term growth opportunities, and that we’re
making the right investments to benefit from them. We have
some innovative new products in the pipeline to support our
growth in new and adjacent markets with both machine builders
and end users.
The work I noted above on retaining, rewarding, and developing
our people to fulfil their potential is a critical part of delivering
our growth plans. Having seen what our people have already
achieved this year, I know this potential is enormous.
Overall, I’m confident in our strategy and the actions we’re taking
to deliver sustainable, long-term growth, and I look forward to
the year ahead.
Will Lee
Chief Executive
15 September 2022
Chief Executive’s review continued
We launched the
second generation
of our innovative
FORTiS enclosed
encoders this year.
Renishaw plc Annual Report 202210
Strategic Report
Our investment case
We’re a leading provider
in our markets and
believe that global trends
offer significant growth
opportunities.
Innovation has always
been at the heart of what
we do, andwe have a
substantial IPportfolio
that supports our growth
and builds barriers that
competitors cannot easily
overcome. Wetake a
long-term approach,
integrating our innovative
products into a range of
machines. By supporting
machine builders and
end users we develop
trusted relationships and
recurring business.
Global
presence
We base ourselves close to our
customers, giving us good access to
local markets and ensuring that we can
provide local support for customers and
end users and build trusted relationships
with them. Our global presence means
we’re well placed to satisfy demand
wherever it arises. This mitigates the risk
of changing global trends while allowing
us to make the most of the opportunities
that these trends offer.
With our main manufacturing sites in the
UK, Ireland, and India, and purchasing
teams spread across the globe, we’re
also well positioned to respond to global
supply challenges.
Strong financial
record
Our approach of in-house innovation and
manufacturing, to sell market-leading
products and services, allows us to
generate high margins and then reinvest.
We’ve primarily grown organically
and financed this growth with our
own reserves.
We have a robust balance sheet,
with significant cash reserves to fund
future growth.
This solid financial base has also meant
that we can focus on taking a long-term
view and helps us to weather shorter-term
economic challenges. It also supports our
progressive dividend policy.
Market
opportunities
All our product groups are underpinned
by strong market opportunities.
These product groups have some
common long-term growth drivers,
such as the need for more automation
as skills shortages bite, and the
need for more efficient and higher
performance products.
More specific growth drivers provide
further opportunity for specific product
lines, such as:
– the increasing demand for more
powerful and rapidly upgraded
consumer electronics products.
– the need for innovative new
therapies in healthcare for a growing
global population.
– the reshoring of manufacturing.
Proven
innovators
Innovation is part of our heritage and
culture, and we’ve been transforming
technology since our inception in 1973.
We’ve always understood the value of
our IP, now holding nearly 1,800 patents,
and we reinvest a significant proportion
ofour revenue into R&D.
Our technology is focused on delivering
precision, productivity and practicality
to customers, which, in turn, helps them
to innovate and transform capabilities in
manufacturing and healthcare. We also
apply innovation to our own processes,
with our RAMTIC system being an
example of transformative quality and
productivity in manufacturing, ensuring
we can manufacture high-quality
products with high profit margins.
Sustainable
business
As a business that has always taken
the long-term view, we’ve worked hard
to develop sustainable operations.
For example, we’ve invested in self-
generation of electricity at our larger sites
and purchase most of our remaining
electricity from renewable sources.
Our Net Zero commitment promises that
we’ll go even further.
Our products improve manufacturing
efficiencies and reduce waste for our
customers, supporting them to build a
more sustainable future. This provides
us with strong growth opportunities as
other businesses adopt a more concerted
approach to sustainability.
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Our history
Pioneers since 1973
12
1973
Starting our business
Having invented the first touch-trigger
probe while working on Concorde
engines at Rolls Royce, David
McMurtry joins forces with John
Deer to establish Renishaw. Our first
commercial probe, the TP1 for CMMs
launches this year. Early production
took place at John’shome, with dust
seals made from the underlay of
David’s carpets.
1992
RAMTIC
Applying innovation to our
own processes as well as
our products, 1992 sees the
introduction of Renishaw’s
Automated Milling, Turning and
Inspection Centre (RAMTIC).
We still use this revolutionary
system today, enabling milling,
turning and inspection on
a single machine, together
with automated loading
andunloading ofmaterials
and tools.
1991
Moving into spectroscopy
Having made several metrology innovations over the past few years, Renishaw
branches out into materials analysis with its first Raman microscope. Today, we
produce a wide range of Raman spectroscopy products, providing fast, accurate
and non-invasive analysis. Our Raman technology has been used to analyse
materials as diverse as biological samples, pigments of historical manuscripts,
microplastics in water, and gemstones.
1981
Our first overseas company
Recognising our potential and the
importance of local service, John
pushes for international expansion,
and Renishaw Inc is established in
Chicago, USA, as the first overseas
subsidiary. Sales in 1981 reach
£2.9mand we now employ more
than100 people. The photo on the
right shows the demonstration area
atour current Renishaw Inc building.
1976
First commercial premises
As demand for our products grows,
production moves from John’s home
to our first commercial premises,
a former ice cream factory in the
centre of Wotton-under-Edge,
UK. At this point, we have just
nine employees but are already
supplying probes to most major
CMM manufacturers.
1 987
Motorised and automated
probe heads
We launch the PH10, the second of
our motorised heads to allow probes
to inspect all faces of a part by
enabling the automated, repeatable
re-orientation of probes. The PH10
transforms the capability of CMMs,
and is a major factor in our growth
atthis point.
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InVia Ramen microscope
300
2000
Advances in machine
tool probes
We launch the OMP40 in 2001,
building on our expertise in machine
tool probes developed over the
past two decades. Machine tool
probes help users to inspect parts
and set up machine tools, vital
for helping manufacturers reduce
scrap and improve productivity.
Its outstanding performance means
the OMP40 is still a popular choice
for customers today.
2022
A record year for graduates
and apprentices
Having launched our apprenticeship
and sponsored student programmes
in 1979 and 1984 respectively, we
have a proud history of developing
people from within the business.
This year we’ve welcomed 60
apprentices and 85 graduates,
representing a record year.
2 0 11
Equator
We introduce the Equator in 2011
– the world’s first flexible gauge
and a category creator. It combines
super-fast scanning with arobust
comparison process. This delivers
highly repeatable, thermally insensitive,
versatile, andreprogrammable gauging
to the shop floor.
2 0 1 8
Additive manufacturing
We launch the RenAM 500Q
metal 3D printer in 2018. It is the
smallest quad-laser powder bed
fusion machine on the market.
This enables high productivity and
lower costs per part, plus a new
level of build quality with its novel
gas flow.
2 0 1 2
RESOLUTE
Our RESOLUTE encoder delivers
a huge leap forward in absolute
encoder performance, enabling
nanometre resolution at 100 m/s.
It has since proved a great success
in many different motion control
applications. Our recently-
launched FORTiS enclosed
encoder takes this a step further,
extending this performance into
harsh environments, such as
machine tools.
2005
REVO
We launch the REVO 5-axis
head – a breakthrough
innovation. The REVO
enables a 10x increase
in tactile measurement
speeds, to significantly
reduce inspectiontimes, and
simplifiedstylus set-up and
calibration. Today, we are
adding other sensor types to
reduce the range of different
quality assurance equipment
needed by customers to fully
inspect complex parts.
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Our markets
Our customers rely on our products and
processes to help them solve complex
engineering and scientific challenges.
They help make everything from
smartphones to solar panels, jet engines
todental implants.
Like every global business, demand for our products is affected
by a range of global economic trends:
– rising energy costs – businesses want products that help
them both maximise production and lower costs;
– global competitiveness and greater efficiency – customers
are looking for cost-effective products that improve
manufacturing efficiency and reduce scrap/rework;
– global pandemic, skill shortages and rising labour costs –
customers are increasingly interested in automation, robotics and
easy-to-use technology to help them manage these challenges;
– near-shoring and reshoring – global politics, trade tensions
and supply chain concerns are pushing up investment in new
localised manufacturing facilities. In markets with high labour
costs, these issues are also driving interest in automation and
robotics; and
– Net Zero commitments/sustainable manufacturing
– morecustomers are setting sustainability targets and
looking for products that maximise efficiency, while reducing
emissions and waste. This is also driving interest in digital
tools and data to create more sustainable ‘smart’ factories.
Here, we outline our principal markets and the specific issues
driving demand for our products.
Aerospace
and defence
We were born out of the aerospace business. The industry
has changed a lot since then, but the twin drivers of
efficiency and safety remain key. Customers are looking
for greater fuel efficiency, lighter components and ways
toreduce costs. Research into more sustainable aviation
isalso growing.
More recently, geopolitical tensions, including the war
inUkraine, are prompting increases in defence spending,
aswell as shortages in titanium, a significant proportion of
which aircraft manufacturers source from Russia.
Despite the ongoing impact of COVID-19, we expect long-
term growth in the civil aviation market, particularly in short-
haul aircraft in Asia. The current geopolitical environment is
likely to trigger higher global defence spending.
Our products are used throughout the aerospace and
defence sector. Aircraft are highly complex structures with
exacting safety standards. Key assemblies, from engines to
wings to control systems and landing gear, rely on process
control and post-process inspection using our products.
This enables manufacturers to undertake repeatable,
traceable and efficient work to the finest tolerances.
Automotive
Although investment in internal combustion engine (ICE)
vehicles is reducing, research and production of hybrid and
electric vehicles is rising. Like the ICE industry, customers
in this relatively new sector rely on precision parts and
automated processes throughout the supply chain to help
them achieve ever more demanding performance targets.
These customers are also looking for products that help
drivedown their manufacturing costs.
Meanwhile, vehicle design life cycles are falling, driving
demand for more flexible manufacturing processes and
precision measurement tools.
Many key components in domestic and commercial ICE
vehicles are subject to process control that relies on
our products.
We expect demand in this market to fall over time as more
governments introduce bans on ICEs. However, we see
multiple opportunities to counteract that decline with higher
value products as the hybrid and electric vehicle (EV) market
grows. These are used throughout EV manufacture, including
inspecting electric motors using our REVO and gauging
systems, and Raman spectroscopy is used for battery
research to increase vehicle range.
Electronics
The fast-paced consumer electronics market demands
flexible manufacturing systems that can adapt to shorter life
cycles, yet still deliver high-quality, high-volume components.
We are also seeing growing need for more complex
integrated circuits and changes in the types of materials
used. For example, smartphone manufacturers are
switching from metal, to glass and ceramic, to improve 5G
signal reception.
Rising labour costs are pushing up demand for automation,
and supply chains are adapting rapidly to cope with
emerging demand in new markets. This is also a response to
supply uncertainty – particularly in semiconductors – caused
by the COVID-19 pandemic and trade sanctions.
Consumer electronics is one of our largest sectors.Our
encoders can be found inside equipment at all stages of
semiconductor chip manufacturing – a highly demanding
sector that relies on speed, precision and reliability.
Despite short-term uncertainty, we expect long-term
growth for our encoder products with the introduction
of new generations of electronic devices, localisation of
semiconductor production, and the relentless increase in
digitalisation. For example, in March 2022 Intel announced
itwould invest €80bn in Europe over the next decade.
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Precision
manufacturing
Customers who make products that are used across a range
of industries, such as robotics, laser-based manufacturing
systems and steam energy systems, alongside the
subcontracted manufacturers that support them, are faced
with common challenges.
These include the increased demand for innovative new
products with more complex parts, a shortage of skilled
operators, tighter part tolerances to meet performance,
aesthetics and safety requirements, and shorter
product lifecycles.
This is one of our largest markets. Our Manufacturing
technologies products are used throughout a host of
production processes, including machinery calibration
duringbuild, process control and component measurement.
Demand for our Additive Manufacturing products is also
rising as more customers are finding ways to use the
technology to improve machinery performance.
We are also helping our customers to implement smart
manufacturing and automation into their current operations
using our technologies.
Heavy industry
Customers are looking to increase agricultural yield to
helpfeed a growing global population. They also want
toolsthat will help them reduce their environmental footprint.
Both are driving investment and demand for new machinery
and ‘smart’ farming technologies, such as geo-mapping
and automation.
Meanwhile, the construction industry is investing more
in sustainable infrastructure to address its environmental
impact. Equipment manufacturers are looking for increased
automation to counteract skills shortages.
Many key components that end up in high-end
agricultural equipment rely on process control using
Renishaw’s products.
We also make products that are used in high-value
construction components, such as chassis in heavy
earthmoving equipment, and that help design more reliable
power plants with lower emissions. Our Raman spectroscopy
systems support the identification of materialsin
geological samples.
Healthcare
As global life expectancy rises, we are expecting
pharmaceutical customers to need more, highly efficient
products to help develop new treatments for neurological
diseases and other age-related health issues. We therefore
see opportunities for our drug delivery system which is being
used in trials to develop drug therapies for neurological
conditions, including Parkinson’s disease.
In industrialised nations, rising obesity rates are pushing
up demand for orthopaedic procedures. This provides
opportunities for our Additive Manufacturing business,
asAMproduces lightweight, custom implants.
Meanwhile, the medical profession is looking for faster,
more precise surgical therapies to reduce waiting times.
Demand isalso growing for more economical, patient-
specific treatments, as well as medical robots and precision
tool positioning to reduce human error. Our neurosurgical
robot and planning software for brain surgery, which
assist surgeons with precision tool positioning and implant
placement, can benefit from this.
Our Spectroscopy products are also being used within
the healthcare sector, including studies into early cancer
detection. Our dedicated pharmaceutical analyser is also
being used to formulate drugs more efficiently by speeding
up the analysis of tablet composition and structure.
Power generation and
resource extraction
Whether fossil fuels, nuclear or renewable, the energy
sectorrelies on key components, such as power
transmission systems, generators and pumps, to efficiently
deliver the power the world needs.
In wind and solar, customers are increasingly looking to
maximise machinery efficiency, and are spending more on
energy storage research, especially for electric vehicles.
Our Spectroscopy business is well-placed to benefit
from this, and our products are already being used for
battery research.
Oil and gas equipment, meanwhile, must be manufactured
tostringent safety standards, requiring accurate, cost-
effective and traceable processes. The sector is also looking
to improve the efficiency of large diesel engines typically
used for transport and other production processes, which
requires greater component accuracy.
Renishaw’s products are used to control the production
of many key components in this sector. The manufacture
of large components for wind turbines, including blades
and bearings, all require the use of our Industrial
Metrology products, including probes on machine tools.
Our optical encoders are also being used to control solar
panel manufacture.
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Our business model
We have a simple business model.
We work with our customers to understand their challenges and then design and
manufacture products to solve them. Here’s an overview of how our business model
helps us focus our resources and strengths to deliver value for all our stakeholders.
Our customers
– £85.8m spent on developing new products
and improving our existing products.
– Live and on-demand webinars available in
up to 13 languages.
Our people
– £254.4m in salaries, bonuses, social
security and pension contributions.
– More than 200 new roles or vacancies
filled by internal candidates this year.
Our suppliers
– £166.5m spent on materials
and services.
– £88.4m committed to capital
expenditure projects.
Our planet
– 5% reduction of our market-based
statutory greenhouse gas
(GHG)emissions.
– 10% increase in use of
renewable energy.
Our communities
– £0.3m in charitable donations
inthe year.
– 11,000 students taking part in our
STEM outreach programmes
Our shareholders
– 37% increase in Adjusted profit
before tax.
– Total dividends of £52.8m for the year.
Our resources
Delivering value for...
Customer
relationships
Our trusted
relationships with
customers help us to
understand their needs
and design solutions to
solve their challenges.
People
Our 5,100 talented
people around the
world are committed to
delivering our purpose,
vision and strategy.
Suppliers
Our global suppliers
provide us with the high-
quality components
and materials we need,
as well as supporting
our infrastructure
and operations.
Research &
development
Our strong IP portfolio
and significant
commitment to
R&D expenditure
helps set us apart
from competitors
and delivers long-
term value.
Financial
resources
We’ve funded our growth
and infrastructure by
reinvesting our profits.
We also have a strong
cash position, helping
us to fund future
development and deliver
our strategy.
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Customer needs
We work with our customers to
understandthechallenges they face
inmanufacturing, materialsanalysis,
and healthcare.
High-quality manufacturing
We then manufacture these products
ourselves. This gives us control over
the quality, cost anddelivery of
our products.
Innovative engineering
Using this understanding,
wedesign innovative products
that solve these problems and
provide precision, productivity
and practicality.
Routes to market
We have local teams
based in our main
markets, helpingus
torespond quickly to
ourcustomers’and
end-users’needs.
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People and culture
Sales &
Marketing
Manufacturing
Engineering
Support
Services
Manufacturing technologies
Analytical instruments
and medical devices
A
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9
4
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0
5
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InVia Ramen microscope
Our sustainability commitment
Our strategy for creating long-term value
Our strategy is designed to deliver sustainable, profitable growth that benefits all our
stakeholders by ensuring we have the agility and resources to identify and respond to
opportunities in our markets. We do this by focusing on four key strategic pillars: sales
and marketing, engineering, manufacturing, and support services. Thesepillars are
underpinned by our people and culture, and our commitment to sustainability, including
our Net Zero commitment.
On the next three pages we explain the progress we’ve made in these areas this year.
On pages 28 to 38 you’ll find more detail about our segmentstrategies.
Our strategy
Renishaw plc Annual Report 202218
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Sales & Marketing
What we do
Support our customers’ success,
allround the world
Our priorities
– Ensuring we can provide quality, quick, global
customer support.
– Maximising our opportunities in high-growth markets,
suchas semiconductors and electronics manufacturing.
– More integration with third-party software, to open up
new markets.
– Moving into close-adjacent markets with our non-
substitutional products, such as enclosed encoders
formachine tools.
Our progress
– Exceeded our sales targets in all regions, with particularly
strong growth in semiconductor and consumer
electronics markets.
– Made our Equator gauging system available for use with a
range of third-party software.
– Received positive feedback from our long-standing
machine tool builder customers for the FORTiS range of
enclosed encoders.
Link to KPIs
Revenue (£m)
Adjusted profit before tax (£m)
Statutory profit before tax (£m)
Link to risks
Our relevant principal risks for this area are marked SM on
pages 42 to 49.
Engineering
What we do
Deliver innovative products
andprocesses
Our priorities
– Completing our flagship product projects on time.
These are products that either bring faster revenue benefits
or are strategically important to the Group.
– Continuing to invest in new and disruptive technologies.
– Expanding our research teams, particularly in materials
science, artificial intelligence and ASIC design.
Our progress
– Launched the REVO ultrasonic probe, the latest addition
toour market-leading range of products for CMMs
(seepage 29 for more detail).
– Launched the second generation of our innovative NC4+
Blue non-contact tool setter.
– Four new ASICs now in full production, and used in
both our Industrial Metrology and Position Measurement
product groups.
– Redesigned current products when certain components
weren’t available due to supply chain disruption.
Link to KPIs
Total engineering costs (£m)
Adjusted profit before tax (£m)
Statutory profit before tax (£m)
Link to risks
Our relevant principal risks for this area are marked E on
pages 42 to 49.
Read more on pages 22–23 Read more on pages 22–23
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Support Services
What we do
Enable an efficient, intelligent,
andresponsible business
Our priorities
– Working as business partners to make sure that other parts
of the business have the information and advice they need
to make the right strategic decisions.
– Improving our IT systems to help our people to work
more efficiently.
– Helping the Group meet its legal, regulatory and
ethical obligations.
– Helping the Group manage its risks, to make the best use
of our risk appetite and focus on sustainable growth.
Our progress
– Launched ‘Responsible Renishaw’, our global umbrella
brand for compliance matters, including a central policy
portal helping our people to find the information they need
more easily.
– Provided virtual training on core IT topics and applications,
helping people to work more efficiently and make better
use of data.
– Created a Sustainability Committee to help deliver our
Net Zero commitment and sustainability responsibilities
in an efficient way. The Committee brings together
representatives from across the business to work on
our priorities.
Link to KPIs
Adjusted profit before tax (£m)
Statutory profit before tax (£m)
Link to risks
Our relevant principal risks for this area are marked SS on
pages 42 to 49.
Manufacturing
What we do
Provide quality products through
cost-effective manufacturing
Our priorities
– Maintaining our quality standards.
– Responding to significant growth in demand.
– Improving our productivity to make better use of existing
resources and maintain gross profit margins.
– Investing in our factories, to support long-term growth.
Our progress
– 40% increase in productive hours, from a 19% increase in
production labour and overheads expense.
– Maintained production costs at 35% of revenue, despite
well-publicised cost increases for raw materials,
components and labour.
– Maintained ‘safety stock’ for certain critical components.
– Approved investment of around £64m to expand our site in
Miskin, Wales. This will increase our global manufacturing
floorspace by 55%.
Link to KPIs
Revenue (£m)
Adjusted profit before tax (£m)
Statutory profit before tax (£m)
Link to risks
Our relevant principal risks for this area are marked M on
pages 42 to 49.
Our strategy for creating long-term value continued
Read more on pages 22–23 Read more on pages 22–23
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Our sustainability
commitment
As a responsible business, it’s up to us to act in a sustainable
way so that we can achieve long-term revenue and profit
growth while improving the social and physical environments
that we work in.
This year we agreed a new Net Zero commitment to reduce
our GHG emissions by 90% compared to our FY2020
baseline. We have committed to achieving this reduction
in our Scope 1 and 2 emissions by 2028 and in our Scope
3 emissions by 2050 at the latest. We will address the
remaining 10% of emissions through credible carbon
offsetting and removal programmes.
While this commitment is new, we’ve been working to reduce
our emissions for many years. Our largest manufacturing
sites already have solar panels installed, for example, and we
self-generate around 10% of the electricity we use.
As part of our broader commitment to sustainability, we also
know we need to treat people fairly. As an employer, we want
to ensure we create a working environment where everyone
feels included. Our aim is to promote a culture that embraces
our people’s differences and our new Equality, Diversity
and Inclusion Policy supports this. We’re also committed to
ensuring that the human rights of people working within our
supply chains are protected. We do this by risk-assessing
our suppliers and working with them to understand how
they mitigate the risk of modern slavery and other rights-
related issues.
This year we’ve selected three of the UN’s Sustainable
Development Goals (SDGs) as being the most relevant to our
business, and where we believe we can make the greatest
impact. These are Goal 8 – Decent work and economic
growth, Goal 12 – Responsible consumption and production,
and Goal 13 – Climate action.
Within the next year we’ll create objectives and targets to
meet the aspirations of these goals and report publicly on
our progress.
Link to KPIs
Statutory emissions (tCO
2
e per £m revenue)
Link to risks
Our relevant principal risks for this area are marked S on
pages 42 to 49.
People and culture
What we do
Provide a great place to work, grow and
contribute, to drive Renishaw’s success
Our priorities
– Modernising our pay and benefits, to attract, retain,
andmotivate our people.
– Supporting career progression, to foster growth for
our people.
– Simplifying our performance review process, to encourage
better engagement and help people understand how their
contributions support our strategy.
– Creating an inclusive culture with a diverse workforce
inanenvironment that supports our people’s wellbeing.
Our progress
– Launched our global salary benchmarking exercise in
the UK. We expect to complete this across the rest of the
Group by December 2022.
– Formed a career progression working group and started
developing a new job grading framework.
– Introduced a simpler way for people to review their
performance with their managers, with clearer
overall gradings.
– Introduced more Diversity & Inclusion Champions across
the Group, and approved an Equality, Diversity & Inclusion
Lead role.
Link to KPIs
Global voluntary employee turnover (%)
Adjusted profit before tax (£m)
Statutory profit before tax (£m)
Link to risks
Our relevant principal risks for this area are marked P on
pages 42 to 49.
Read more on pages 22–23 Read more on pages 22–23
Renishaw plc Annual Report 2022 21
Strategic Report Governance Financial statements Shareholder information
Key performance indicators
Our KPIs are used by the Board to track
and measure performance progress.
Ourmanagement teams also use
other metrics to monitor and assess
performance at more granular levels.
Key
F Financial NF Non-financial
Why we measure this
Sustainable long-term growth is a key part of our strategy.
Revenue growth helps increase our profits, which we reinvest
in our business to deliver that strategy and use to pay
dividends to our shareholders.
How we measure this
Revenue generated from operations, at actual rates
of exchange.
How we performed
Revenue grew to £671.1m, an increase of 19% from FY2021,
with growth in all regions.
This was driven by our Manufacturing technologies segment,
with strong demand for our encoder products. We also
experienced good growth in demand for our machine tool
and co-ordinate measuring machine products.
Why we measure this
Profit demonstrates how our strategy is delivering value for
our stakeholders.
How we measure this
This is the Statutory profit before tax as reported on
page 129.
How we performed
This has increased by 4%, a lower increase than our
Adjusted profit measure. This year includes an £11.7m
charge relating to changes to the UK defined benefit pension
scheme. Other year-on-year movements are explained further
in note 29.
Why we measure this
This helps demonstrate the underlying trading performance
of the business.
How we measure this
We adjusted Statutory profit before tax for: fair value gains
and losses from forward currency contracts that did not
qualify for hedge accounting and which have yet to mature;
third-party costs relating to the FSP; a one-off past service
cost for the UK DB pension scheme; and restructuring costs.
How we performed
This has increased by 37%, mainly as a result of our
increased revenue this year. We are pleased with the
improvements here given the significant increase in some
production costs and the investments we’ve made in pay
and reward.
611.5
574.0
510.2
565.6
671.1
20192018 2020
2022
2021
F
Revenue £m
156.2
109.9
3.2
139.4
145.6
20192018 2020
2022
2021
F
Statutory profit before tax £m
145.1
103.9
48.6
119.7
163.7
20192018 2020
2022
2021
F
Adjusted profit before tax £m
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Strategic Report
Why we measure this
To track the underlying performance of the business and
measure whether profit growth translates into improving
shareholder returns.
How we measure this
Interim dividend paid in the year, plus the proposed
final dividend.
How we performed
We paid an interim dividend of 16 pence per share in April
2022 and the Directors propose a final dividend of 56.6
pence per share. If approved, this would bring the overall
dividend per share to 72.6 pence, an increase of 10% per
share from the total dividend for FY2021.
This growth is a result of the improved profitability this year.
Why we measure this
Investment in engineering is fundamental to our growth,
helping us to develop innovative new products and support
our existing products.
How we measure this
Annual expenditure on engineering, including R&D that
has been capitalised in the year, and net of amortisation on
capitalised R&D.
How we performed
Gross expenditure increased significantly. The overall
expenditure is consistent with our plans, but we spent more
than originally planned on existing product support, needing
to redesign some existing products due to supply chain
disruption. As a result, our R&D expenditure was broadly the
same as FY2021.
Included in the Consolidated income statement
Gross expenditure
Why we measure this
This helps us measure whether we are doing business
responsibly and how we are performing against our Net
Zero commitment.
How we measure this
Tonnes of Scope 1 and 2 (‘statutory’) CO
2
emissions from
our operations, per £m of revenue, using the market-
based method.
How we performed
We’re pleased to have again reduced our statutory GHG
emissions as a proportion of revenue. We’ve also decreased
them in absolute terms, mainly by fitting solar panels to our
buildings in Ireland and Mexico.
Why we measure this
The success of our strategy relies on our talented people and
we consider their skills a source of great strength.
How we measure this
The number of voluntary leavers (excluding voluntary
redundancy, if applicable) in the year, as a percentage of our
total headcount.
How we performed
The lifting of COVID-19 restrictions in many markets has
led to a very active labour market. As a result, our leaver
numbers have risen this year. We’re already addressing this,
investing heavily in pay and reward this year as explained in
more detail on pages 54–56.
60.0
60.0
0.0
66.0
72.6
20192018 2020
2022
2021
F
Dividend per share in respect
of the year
pence
77.4
83.6
89.8
97.9
87.3
82.4
72.0
76.6
78.6
85.8
20192018 2020
2022
2021
F
Total engineering costs
includingR&D
£m
15.6
15.6
16.2
14.3
11.6
20192018 2020
2022
2021
NF
Statutory GHG emissions
tCO
2
e per £m revenue
8.0
5.5
7.0
8.0
10.7
20192018 2020
2022
2021
NF
Global voluntary
employee turnover
%
Renishaw plc Annual Report 2022 23
Strategic Report Governance Financial statements Shareholder information
Financial review
Revenue analysis
We’ve seen strong revenue growth in all our regions this
year. Our APAC region was the first to recover in the previous
financial year, but recent growth has been more evenly spread.
This rapid upturn has placed supply chains under great stress
in many sectors, most notably semiconductor and electronics,
where substantial investments are in progress to ease
capacity constraints.
Manufacturing technologies revenue grew by 19.6% to
£634.6m this year, and we have seen increased demand
for all our product lines. The most notable growth was in our
Position Measurement business, with our encoder product
line benefitting from significant global investments in the
electronics capital equipment market, including semiconductor
manufacture. This has been driven by an increase in both
consumer and commercial demand for electronic products.
Magnetic encoders designed and manufactured by our
associate company, RLS, also experienced strong growth
due to increased demand for industrial automation products.
All our Industrial Metrology product lines grew due to a recovery
in investments in metal cutting machinery and the need to
measure the outputs from those processes, including increased
investments in shopfloor metrology.
Revenue from our Analytical instruments and medical devices
business grew by 4.0% to £36.5m this year. Our Spectroscopy
business achieved growth across our three regions, delivering
record revenue, driven by customers releasing funds on
capital expenditure projects. Despite a challenging year for
our neurological business, we still see many opportunities
to grow this business and have a strong pipeline for drug
delivery revenue.
Operating costs
Our extensive in-house manufacturing operations, proactive
inventory management and continual assessment of alternative
components has allowed us to mitigate continued supply chain
constraints, caused, in large part, by the global shortage of
electronic components.
Against this backdrop, we’re pleased to have maintained our
production costs (see note 4) at 35% of revenue. Like many
businesses, we’ve experienced cost increases, but by improving
our efficiency through increasing production volumes and
making process improvements we’ve been able to mitigate this.
The Group headcount increased during the financial year,
reaching 5,097 at the end of June 2022. This compares to
4,664 at the end of June 2021. We have recruited additional
manufacturing staff to ensure we have sufficient capacity
to meet demand, as well as targeting headcount growth to
support product development, and expanding our future talent
programmes. The average headcount during the year was
4,931, an increase of 11% compared with last year. Total labour
costs (including bonuses) for the year were £254.4m compared
with £223.9m last year.
A strong
performance
with record
results
Allen Roberts
Group Finance Director
I’m delighted to report record revenue for the year amounting to
£671.1m, an increase of 19% compared with £565.6m last year.
Further details of our performance by segment can be found on
pages 28 to 38.
We’ve also achieved record Adjusted
1
profit before tax of
£163.7m, an increase of 37% compared with £119.7m last year.
Statutory profit before tax was £145.6m. We continue to be
in a strong financial position, with net cash and bank deposit
balances of £253.2m at 30 June 2022 (FY2021: £215.0m).
Revenue by region
2022
revenue
at actual
exchange
rates
£m
Change
from
2021
%
2021
revenue
at actual
exchange
rates
£m
Underlying
change at
constant
exchange
rates
%
APAC 317.0 +15 274.8 +16
EMEA 205.8 +22 169.1 +22
Americas 148.3 +22 121.7 +18
Total Group revenue 671.1 +19 565.6 +18
Renishaw plc Annual Report 202224
Strategic Report
The cost increase results mainly from the headcount increase,
pay reviews for our employees and increased performance
related bonuses.
As part of our reward and retention programmes, we have
carried out extensive salary benchmarking exercises in
certain parts of the business, including all our UK employees.
Our intention is to benchmark all Group employees by the end
of this calendar year. As a result of benchmarking and other pay
reviews already completed (and excluding other factors such as
headcount growth), we expect annual labour costs to increase
by around £19m in FY2023 compared with FY2022.
Certain other operating costs, such as travel and exhibitions,
are higher this year compared to last year as some pandemic-
related restrictions have been lifted. We have also experienced
a notable increase in utilities costs, caused by increasing energy
prices and usage.
During the financial year, £3.7m (FY2021: nil) of expenditure on
services relating to the implementation of a Group-wide ERP
software has been recognised in Administrative expenses in the
Consolidated income statement.
Following the Russian invasion of Ukraine in February 2022,
weimmediately stopped the supply of goods from the Renishaw
Group to Renishaw Russia and by 30 June 2022 we had
ceased our operations in Russia. Typically, combined sales
to Russia and Belarus have represented around 1% of total
Group revenue. We recorded £2.1m of impairments against
our assets in Russia, and we do not anticipate any further costs
or impairments.
No other significant asset impairments have been recognised
this year, as a result of upward demand trends across most of
our geographic areas and business units. In the previous year,
we recognised impairments of £4.7m in Administrative expenses
relating to an associate company.
Research and development
We remain committed to our long-term strategy of delivering
growth through the development and introduction of innovative
and patented products.
During the year, we incurred research and development
expenditure of £59.4m, compared with £58.6m last year (see
note 4). We also incurred £26.4m (FY2021: £18.0m) on other
engineering expenditure, to support existing products and
technologies. There has been an increased focus on existing
products and technologies during the year due to global supply
chain issues, which have, in some instances, required product
or process redesigns.
Profit and tax
Adjusted profit before tax amounted to £163.7m compared with
£119.7m in FY2021, an increase of 37%. Statutory profit before
tax was £145.6m compared with £139.4m in the previous year.
There are sometimes infrequently occurring events which
impact on our financial statements, recognised according
to applicable IFRSs, that we believe should be excluded
from adjusted performance measures in order to give
readers a more understandable and comparable view of our
underlying performance.
Items excluded from Adjusted profit before tax include: losses
of £8.3m from forward contracts deemed ineffective for cash
flow hedging (FY2021: £23.0m gain); third-party fees relating to
the FSP of £0.2m gain (FY2021: £3.2m loss); a revised estimate
of FY2020 restructuring provisions of £1.7m gain (FY2021: nil);
and a defined benefit (DB) pension scheme remeasurement loss
relating to augmentation of members’ benefits totalling £11.7m
(FY2021: nil). These have not affected cash flow during the
financial year.
Adjusted profit before tax bridge
110
200
130 140 150 160 170 180
190
120£m
2021
Engineering costs
Distribution costs
Administration expenses
Financial income
and expenses
Share of profits of associates
and joint ventures
2022
119.7
-12.4
-6.6
-3.9
-1.4
2.7
65.6
163.7
Change in revenue less
change in production costs
Increase Decrease Total
Adjusted profit before tax:
2022
£’000
2021
£’000
Adjusted profit before tax 163,742 119,666
Revised estimate of 2020
restructuringprovisions 1,688 –
Third-party FSP costs 200 (3,222)
UK defined benefit pension
scheme past service cost (11,695) –
Fair value (losses)/gains on
financialinstruments (8,349) 22,995
Statutory profit before tax 145,586 139,439
Renishaw plc Annual Report 2022 25
Strategic Report Governance Financial statements Shareholder information
Adjusted operating profit¹ in our Manufacturing technologies
segment was £158.6m compared with £114.1m last year
2
, while
in our Analytical instruments and medical devices segment,
Adjusted operating profit was £2.8m compared with £4.5m
last year
2
.
The overall effective rate of tax was 17.3% (FY2021: 20.1%).
We operate 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 addition, the tax
rate has benefited from tax incentives (patent box and capital
allowances super-deduction) and higher profits from associates
and joint ventures. Note 7 provides further analysis of the
effective tax rate.
Consolidated balance sheet
We have invested £31.0m in property, plant and equipment
and vehicles during the year, of which £6.7m was spent on
property and £24.3m on plant and machinery, IT equipment
and infrastructure, and vehicles. Property expenditure in the
year included the completion of a new distribution facility in
South Korea, amounting to £3.8m, while plant and equipment
expenditure mostly comprised manufacturing equipment in
the UK.
Within working capital, we have increased our inventories to
£162.5m from £113.6m at the beginning of the year. This is in
line with increases in global demand and reflecting planned
increases in certain component safety stock levels to mitigate
global supply shortages. We continue to focus on inventory
management whileremaining committed to our policy of
holding sufficient finished goods to ensure customer delivery
performance, givenour short order book.
Trade receivables increased from £114.7m to £127.6m due to
increased revenue and a currency translation gain of £5.3m.
Debtor days remained constant year-on-year at 61 days.
We continue to experience low levels of defaults, and hold a
provision for expected credit losses at 0.2% of trade receivables
(FY2021: 0.3%).
Total equity at the end of the year was £815.2m, compared
with £703.3m at 30 June 2021. This is primarily a result of profit
for the year of £120.4m and gains from the remeasurement of
defined benefit pension scheme liabilities of £53.1m, offset by
dividends paid of £49.5m.
Cash and liquidity
We have further improved our liquidity position this year,
with net cash and bank deposit balances at 30 June 2022 of
£253.2m (FY2021: £215.0m). This is a result of our strong trading
performance, offset by our previously noted investments and
working capital movements, and dividends paid of £49.5m.
In line with our capital allocation strategy, the chart below
summarises our sources and uses of cash for the year.
We disclose details of ‘severe but plausible’ scenario forecasts
used in our going concern and viability assessments on pages
50–51 and 135 and conclude that we have a reasonable
expectation that we will retain a liquid position and be able to
continue in operation for at least the next three years.
Capital allocation strategy
Our Board regularly reviews the capital requirements of the
Group, in order to maintain a strong financial position to protect
the business and provide flexibility to fund future growth.
We’ve consistently applied our capital allocation strategy for
many years. We’re committed to R&D investment for new
products, manufacturing processes and global support
infrastructure to generate growth in future returns and improve
productivity while managing expenditure appropriate to
trading conditions. This is evidenced in the year by our capital
expenditure and investments in R&D.
Financial review continued
Sources and uses of cash
0
£m
Cash and bank deposits b/fd
Working capital
Research and development costs
Capital expenditure
Dividends paid
Operating profit, before non-
cash items and research and
development costs
Tax paid
Pension contributions
Other
Cash and bank deposits c/fd
215.0
255.1
-49.9
-59.4
-31.0
-49.5
-23.4
-8.9
5.2 253.2
Sources of cash Capital allocation strategy Other uses of cash
100.0
200.0
300.0
500.0
400.0
Renishaw plc Annual Report 202226
Strategic Report
Actual and forecast returns, along with our strong financial
position, support our progressive dividend policy, which aims
to increase the dividend per share while maintaining a prudent
level of dividend cover.
Pensions
The Company and trustees have successfully implemented a
number of changes to the UK Defined Benefit Pension scheme
during the year.
Following the Queen’s Counsel opinion received in FY2021,
primarily in respect of the periods over which revaluation and
late retirement factors are applied, the liabilities of the scheme
reduced by £14.3m last year with the credit reported in other
comprehensive income and expense.
This year the scheme rules have been changed to align with the
historic administrative method for calculating the revaluations
and early retirement factors. The resulting increase in liabilities,
totalling £11.7m, has been recognised as a past service cost in
the Consolidated income statement. This cost has been excluded
from Adjusted profit before tax (see note 29 for further details).
We also agreed that the Company will have the unconditional
right to a refund of any surplus on wind-up of the scheme,
allowing for the recognition of the IAS 19 scheme surplus this
year. Following the agreement of the September 2021 actuarial
valuation, the £10.6m held in escrow as security has now been
released from charge and the net book value of UK properties
subject to charge has reduced from £81.7m last year to £54.2m
this year.
At the end of the year, our defined benefit pension schemes,
now closed for future accrual, showed a surplus of £42.2m,
compared with a deficit of £23.7m at 30 June 2021. Our defined
benefit pension schemes’ assets at 30 June 2022 decreased
to £216.7m from £231.4m at 30 June 2021, primarily reflecting
investment performance during the period.
Pension scheme liabilities decreased from £255.1m to £174.5m,
on an IAS 19 basis. This primarily reflects the net effect of:
– an increase in the discount rates of the UK and Ireland schemes;
– changes to the UK scheme rules which allows recognition
ofasurplus position; and
– the change in the UK scheme rules relating to members’
benefits discussed above.
See note 23 for further details on employee benefits.
Treasury policies
Our treasury policies are designed to manage the financial
risksthat arise from operating in a number of foreign currencies,
with the majority ofsales made in these currencies, but with
most manufacturing and engineering carried out in the UK,
Ireland and India.
We use forward exchange contracts to hedge a proportion of
anticipated foreign currency cash inflows and the translation
of foreign currency denominated intercompany balances.
There are forward contracts in place to hedge against our
Euro, US Dollar and Japanese Yen cash inflows, and to offset
movements on Renishaw plc’s Euro, US Dollar and Japanese
Yen intercompany balances. We do not speculate with derivative
financial instruments.
Most of these forward contracts are subject to hedge accounting
under IFRS 9 ‘Financial Instruments’. The hedged item in
these contracts is the revenue forecasts of Renishaw plc and
Renishaw UK Sales Limited, and during the year these forecasts
were increased due to the improved economic conditions.
This means that all forward contracts have passed hedge
effectiveness testing in the year. Gains and losses, which
recycle through the Consolidated income statement as a
result of contracts previously found to be ineffective, are
excluded from adjusted profit measures. See note 25 for further
details on financial instruments and note 29 on alternative
performance measures.
Our treasury policies are also designed to maximise interest
income on our cash and bank deposits and to ensure that
appropriate funding arrangements are available for each of
our companies.
We have always valued having cash in the bank to protect
the core business from downturns, and we monitor our cash
against a minimum holding according to forecast overheads and
revenue downturn scenarios. This cash also enables us to react
swiftly as investment or market capture opportunities arise, while
we expect to significantly increase our investments in capital
expenditure in the coming years.
Earnings per share and dividend
Adjusted earnings per share is 185.5p, compared with 132.0p
last year, while statutory earnings per share is 165.4p, compared
with 153.2p last year.
170.5
119.9
51.0
132.0
185.5
20192018 2020
2022
2021
Adjusted earnings per share
1
85.5p
(
2021: 132.0p)
We paid an interim dividend of 16.0 pence per share
(FY2021: 14.0p) on 11 April 2022 and are pleased to propose
a final dividend of 56.6 pence per share in respect of the year
(FY2021: 52.0p).
Looking forward
While there remains some global economic uncertainty, we have
many drivers in our key markets to deliver long-term revenue
growth and we continue to invest in the infrastructure required
to meet the expected future demand. Supported by our strong
balance sheet, we have committed around £64m to increasing
the footprint of our production facilities at Miskin, Wales, and
are investing in production equipment to increase both capacity
and productivity, with a focus on automation. Where possible,
we are mitigating cost inflation by increasing the sale price
of our products and are focused on delivering productivity
improvements across the business.
Allen Roberts
Group Finance Director
15 September 2022
1
Note 29, ‘Alternative performance measures’, defines how revenue at
constant exchange rates, Adjusted profit before tax, Adjusted operating
profit and Adjusted earnings per share are calculated.
2
Results relating to sales of additive manufacturing machines to medical and
dental customers are no longer recognised in the Analytical instruments
and medical devices operating segment. Comparative figures have been
reclassified accordingly, see note 2.
Renishaw plc Annual Report 2022 27
Strategic Report Governance Financial statements Shareholder information
Performance review
Manufacturing technologies
Aerospace
Read more on page 14
www.renishaw.com/aerospace
Automotive
Read more on page 14
www.renishaw.com/automotive
Position Measurement
Electronics
Read more on page 14
www.renishaw.com/electronics
Precision manufacturing
Read more on page 15
www.renishaw.com/precision-manufacturing
A
-
9
4
0
5
-
4
0
5
0
Industrial Metrology
Our productsOur markets
Our key markets include aerospace and defence, automotive,
consumer electronics and precision manufacturing.
Blending precision, productivity, and practicality
The global manufacturing industry is being transformed by
multiple powerful business trends. These include:
– skills shortages and rising labour costs driving
increased automation;
– Net Zero commitments and the transition to
sustainable transport;
– digitilisation of factories for traceability and efficiency;
– ever-tighter dimensional tolerances (the amount by which
a dimension is permitted to vary), needing more precise
production processes;
– new generations of semiconductors to support rising demand
for electronics; and
– shorter product life cycles demanding flexible
manufacturing equipment.
Our Manufacturing technologies products are positioned to take
advantage of these trends. In a world of scarce resources, our
high-tech solutions help create more efficient, sustainable, and
innovative factories.
Our vision is to innovate and transform manufacturing
capabilities with our unique blend of precision, productivity
and practicality. We work closely with our customers, using our
technologies and expertise to provide:
– precision through products that give them accurate, intricate
production processes to deliver higher performance
and sustainability;
– productivity through products that give them higher process
yields, faster cycle times and more automation; and
– practicality through products that are easy to use and have
embedded knowledge and data analytics.
Market conditions and performance
We’ve seen increased demand for all our Manufacturing
technologies product lines this year, most notably within our
Position Measurement business. The APAC region was the
first to begin its economic recovery from the pandemic in the
previous financial year. However, this year’s growth has been
more evenly spread, with EMEA and the Americas also seeing
rising demand. This rapid upturn has placed supply chains
under great stress in many sectors, most notably semiconductor
and electronics, where substantial investments are in progress to
ease capacity constraints.
Across all our Manufacturing technologies businesses we have
faced significant challenges to meet customer needs against
a backdrop of increasing demand and serious shortages of
electronic components. However, we’ve coped well due to our
in-house manufacturing and proactive inventory management,
including assessing alternative components. We’ve also re-
engineered some products. Being able to supply products
faster than many of our competitors means we’ve also gained
new customers.
As mentioned, overcoming these supply chain challenges
has meant diverting some of our design engineers to redesign
products to incorporate alternative components. While this
has delayed some of our work to improve existing products,
we’ve maintained our focus on flagship product projects.
These develop the products we expect to be most strategically
and commercially important.
Additive Manufacturing
Renishaw plc Annual Report 202228
Strategic Report
SERVO PROBE
REVO-2
R
R
Industrial Metrology
Manufacturers of hollow components, such as aircraft engine
blades and long tubular sections of aircraft landing gear,
facea challenging problem – how to measure difficult to
reachor inaccessible features that are critically important to
the component’s safety and performance. Our REVO ultrasonic
probe tackles this problem, allowing manufacturers to measure
wall thicknesses with access to only one side. Launched in
October 2021, we’ve already seen much interest from the
aerospace industry and other sectors, including defence, oil
andgas, and automotive.
Charlie Wallis, Co-Director of Industrial Metrology explains:
“The REVO multi-sensor system enables manufacturers
to simultaneously reduce measurement cycle times while
also measuring features that previously required additional
equipment. This results in reduced overall footprint, higher
automation, and lower overall capital expenditure.
The addition of the REVO ultrasonic probe allows manufacturers
to combine single-sided material thickness measurements into
their existing CMM measurement programs. This removes
the need for large, specialised water tanks with robotic
measuring tools, which involve significant upfront investment
and ongoing maintenance costs.”
Ultrasonic thickness
measurement
Charlie Wallis
Co-Director of Industrial Metrology
Scan the QR code
tovisit the website
Renishaw plc Annual Report 2022 29
Strategic Report Governance Financial statements Shareholder information
Industrial Metrology
Charlie Wallis
Co-Director of Industrial Metrology
Derek Marshall
Co-Director of Industrial Metrology
What we do
Our Industrial Metrology business provides dimensional
measurement solutions that help manufacturers in a wide
range of industries automate their production of precision
components. We offer a market-leading range of sensors
forCMM and CNC machine tools, as well as a growing
rangeof measurement systems and metrology software.
We’re also driving the Industry 4.0 agenda, focusing on
metrology, CNC connectivity and process control.
Manufacturers are increasingly using metrology to control
machining processes, with measurements either performed
on the machine tool itself, or on a shopfloor measuring
machine. As well as growth in conventional applications
for process set-up, we are seeing more customers using
metrology to compensate for natural process changes during
longer production runs. This reduces variation and waste at
source and minimises downstream problems, such as poor
component fit, which are expensive to rectify.
We lead the way in shopfloor metrology. We continue to
develop our range of probing systems and software for
machine tools, working closely with machine tool builders
to steadily increase fitment levels. Our range of Equator
shopfloor flexible gauges is now compatible with several
leading metrology software brands, making them an option
for more customers. Our revolutionary REVO 5-axis multi-
sensor system enables comprehensive inspection of the
mostcomplex components in a single automated process.
Software forms an important part of our strategy. We’re
broadening the appeal of our CMM and gauging systems
byintegrating our hardware with popular third-party
metrology software packages. In parallel, we’re heavily
investing in developing our own software, including mobile
and on-machine apps, with a strong emphasis on ease
of use.
To make our systems available to a wider base of customers,
we’re also broadening our third-party distribution network for
certain products, including the Equator gauging system.
Performance
All our Industrial Metrology product lines grew, due to a
recovery in the market for metal cutting machinery and the
need to measure the outputs from increased metal cutting
activities. This resulted in increased customer investments
inshopfloor metrology.
We have seen good growth across all our regions, based on
general demand across multiple sectors. There is significant
continued investment in the production of hybrid and electric
vehicles (EV), where there are multiple applications for our
products. Customers and end users are also upgrading
existing production capabilities for internal combustion
engines (ICE), to improve the efficiency of these engines.
Labour and skills shortages have increased interest in
automation. We’re seeing more sales of our Equator gauges
within manufacturing lines with automated part handling.
This product also benefits from a trend towards very flexible
machining lines where fixed gauges and fixturing is no
longer suitable.
At the Control exhibition, in Stuttgart, Germany, we announced
that we’re making our Equator gauging products available
with third-party software including competitor products.
This signifies market acceptance of the Equator system, and
increases the opportunities for product sales into businesses
that are already using a particular metrology software platform.
It was a good year for product launches and we were pleased
to introduce many of them at the EMO Milano exhibition in
October, including:
– an upgraded version of our NC4+ Blue laser tool setting
system for machine tools;
– a new radio transmission probe system that improves
product sustainability by delivering significant increases in
battery life for machine tool probe operation; and
– the new ultrasonic probe for the REVO measurement system
for CMMs, as explained on the previous page.
Performance review
Manufacturing technologies continued
Renishaw plc Annual Report 202230
Strategic Report
FORTiS-S ™
FORTiS-S ™
2CX733
FS100B054SC36BX010X www.renishaw.com
MADE IN UK
ML540 / 10nm / 2CX732
Position Measurement
Optical encoders are important instruments that help customers
accurately measure machine position and motion. However,
when used in machine tools, grinders, and wafer dicers, the
encoder is exposed to particles, swarf, and coolant, which can
obscure or damage the measurement optics. To help combat
this problem, we launched the FORTiS encoder last year, our
first optical encoder that’s sealed and enclosed to protect it from
these contaminants.
Steve Oakes, Director of Position Measurement explains:
“The FORTiS encoder takes things that we know work well, looks
at a problem in a new way and delivers a solution that doesn’t
just give better performance, but is also easier to install and
more reliable than competitor products, which haven’t changed
much in years.
“We’ve taken proven technology and used that as a platform to
create a new way of solving an old problem – how do you get an
optical encoder system to work reliably inside an environment
that’s full of contaminants?
“It’s a tricky problem, but by approaching it from a fresh
perspective we’ve been able to find new angles in both the
metrology technology and the fundamentals of how to set up
and use the system. All of which means the FORTiS encoder’s
performance is way ahead of any other product. ”
Enclosed optical encoders
Steve Oakes
Director of Position Measurement
Scan the QR code
tovisit the website
Renishaw plc Annual Report 2022 31
Strategic Report Governance Financial statements Shareholder information
Position Measurement
Steve Oakes
Director of Position Measurement
What we do
Our Position Measurement business is at the heart of high-
performance industrial equipment. It enables precise motion
control of machinery in many applications, such as semiconductor
processing, assembly and the manufacture of flat panel displays
for TVs and computer monitors. This precision motion control is
also needed in robotics, industrial automation, machine tools,
and metrology equipment. Our calibration systems provide the
foundation for accuracy, while our encoders deliver immediate
position information for motion control.
We provide a comprehensive range of calibration products,
optical encoders, laser encoders and magnetic encoders.
The latter are manufactured by our joint venture, RLS. All these
products span a broad range of prices and performance to meet
the evolving needs of equipment builders.
While precision and productivity are critical considerations,
we also focus heavily on the practicality of our Position
Measurement products. We compete by making our innovative
devices easy to deploy, combining exceptional performance
with low total cost of ownership.
For instance, our position encoders feature generous set-
up tolerances, easy adjustment and improved diagnostic
capabilities, which minimise installation costs. We continue to
improve the usability and features of our CARTO calibration
software for quicker machine set-up and maintenance. We’re
also expanding our R&D investments to develop the next
generation of high-performance optical and laser encoders
to meet market demands for ever higher resolution, accuracy
and speed.
A key strategic objective is to move into close-adjacent markets
with non-substitutional new products to grow our market share.
Last year, we entered the machine tool sector with our innovative
FORTiS range of enclosed encoders. A winning combination
of exceptional measurement performance, robust design and
easy installation has been very positively received by our long-
standing machine tool builder customers.
Performance
Our encoder business achieved record sales for the second
year running, primarily due to significant global investments
in the electronics capital equipment market, including
semiconductor manufacture. This has been driven by an
increase in both consumer and commercial demand for
electronic products. Magnetic encoders also experienced
strong growth due to increased demand for industrial
automation products.
Semiconductor chip demand remains very high. Home and hybrid
working have become the norm for many businesses, creating
significant demand for IT products and infrastructure, aspeople
replicate their office-based set-ups. The automotive industry is
also driving demand, using more sensors and electronics for
vehicle control, plus ‘infotainment’ and digital dashboard systems.
Rising demand for EVs is accelerating this.
Sales of our optical and laser encoders continued to benefit
from investments made by semiconductor manufacturers.
They’re investing in manufacturing technologies to increase
bothproduction volumes and the number of transistors in
a chip.This transistor density produces smaller, faster, and
more power-efficient chips, which are essential for the global
implementation of 5G telecoms.
It was a particularly good year for our FORTiS range.
Introduced in FY2021, this product is an example of our strategy
of entering close-adjacent markets with non-substitutional
products. Market demand was stronger than expected and
having increased our manufacturing capacity, we’re excited
about the sales prospects for FY2023.
Our encoders, especially our magnetic range, continue
to benefit from the ongoing global drive towards industrial
automation. As well as a desire for increased capacity and
flexibility, manufacturers also wish to mitigate the impact of
potential future lockdowns by automating more processes.
Performance review
Manufacturing technologies continued
Renishaw plc Annual Report 202232
Strategic Report
Additive Manufacturing
Louise Callanan
Director of Additive Manufacturing
What we do
Additive Manufacturing (AM) – also known as 3D printing
– creates complex components direct from a digital file.
We focus on laser powder bed fusion technology, which
produces high-strength metal components from fine
metal powder.
Our family of RenAM machines provide a market-leading
combination of multi-laser productivity in a compact footprint.
This supports manufacturers in the transition from lab to
pre-production to volume manufacture.
AM has huge growth potential as product designers
increasingly identify more opportunities to create efficient
new products. Because of this potential, our vision is to
accelerate adoption of metal AM as a viable high-volume
production process.
We continue to develop our next generation of AM machines
to keep reducing AM part costs so that this technology can
beused in more applications.
Our end-to-end software suite covers computer-aided
manufacturing (CAM), control, process and production
monitoring, enabling innovations in all aspects of the
AM process. It’s also vital that AM systems can be easily
integratedwith other manufacturing technologies as
part ofasmart manufacturing/Industry 4.0 environment.
We therefore adopt an open systems approach, where our
hardware and software platforms can easily connect with
third-party design and production planning packages.
Our sales efforts remain concentrated on customers who
needmultiple system installations for volume production,
targeting repeat purchases.
Performance
Sales of AM machines for both industrial and medical/dental
applications were ahead of last year and we continue to enjoy
a strong order book. The RenAM 500Q multi-laser system
continues to be our flagship product and is proving to be one
of the best machines on the market for productivity and the
quality of manufactured parts. As a result, we’re seeing repeat
orders for the system.
Our new Flex range of machines, introduced this year, has
further enhanced our sales opportunities. These systems
are a derivative of the RenAM 500Q, designed for easy
changes between different powder types when developing
manufacturing processes.
This year, we’ve also seen growing acceptance of additive
manufacturing as a standard production process for volume
manufacture. Our strategy of working closely with businesses
who have adopted AM for this purpose has proved to be
successful, resulting in multiple machine sales.
The aerospace sector, which was an early adopter of AM
technologies, continues to face challenging conditions.
However, attractive multiple machine sales opportunities in
new markets, including consumer electronics and precision
manufacturing, are compensating for this.
AM is also highly suited to patient-specific dental prosthetics,
and orthopaedic implants. This means that the medical and
dental sector continues to be one of our strongest areas for
revenue growth, despite our decision at the start of the year to
stop making medical and dental devices in-house. This decision
has allowed us to concentrate on machine sales and means
that we’re no longer in competition with companies in the sector,
some of whom are now our leading multiple machine customers.
With more machines being used for volume production, we
are starting to see more repeat revenue from maintenance
contracts and software licences. This year, we’ve also seen
more customers wanting operating leases for our AMmachines.
This is an attractive way for new customers to adopt AM
technology due to lower upfront costs.
With wider adoption of AM technology, we’re confident that the
metal AM market is set to grow at a strong pace over thecoming
years. With our current portfolio of machines, wearewell placed
to benefit from this growth.
Outlook for Manufacturing technologies
Despite shorter-term concerns about the global economy,
we expect to see continued strong long-term demand
across our key markets, driven by the need for automation,
digitalisation, sustainability and the efficient use of energy.
The trend towards national and regional self-sufficiency in
semiconductor manufacturing will further boost electronics
and industrial automation, and we expect a strong order
backlog of new aircraft to service increase demand in Asia to
aid recovery in the aerospace market.
Our Industrial Metrology business is well placed to take
advantage of these trends, as these products are used
throughout our key markets.
Our Position Measurement business is more focused on
electronics and semiconductor manufacturing and has
benefitted from the strong growth in this market this year.
We continue to invest in the development of innovative
new products that will help us to maximise the long-term
opportunities in this market.
We believe that our focus on key accounts in Additive
Manufacturing continues to be the right approach and is
allowing us to benefit from repeat business. These customers
span our key markets, across which AM becomes a more
mainstream option for volume manufacturing.
Renishaw plc Annual Report 2022 33
Strategic Report Governance Financial statements Shareholder information
Additive Manufacturing
While AM was initially seen by users as a prototyping tool, we’re
passionate about its adoption in high-volume applications.
We specialise in metal Laser Powder Bed Fusion (LPBF)
technologies, in which a thin layer of powder is spread and
precision lasers melt sections into solid metal, before another
layer of powder is spread on top. The process repeats until a
complete part is created. The lasers only melt material where
it’s needed, meaning customers can create highly optimised
designs. This method also reduces waste, as any powder that
isn’t melted can be used in future builds.
Our RenAM 500 series deliver what’s needed for each step of
the part development process, including material trials, part
validation and finally volume manufacture. With a common
platform across the series, customers can confidently develop
their application on our machines, without risk of invalidating
their test data.
Louise Callanan, Director of Additive Manufacturing explains:
“With the benefits of AM now well established, we’re seeing
more uptake in mainstream volume production. Our customers
are looking for the additional benefits that AM bring in terms
of design freedom, light-weighting, and cost-effective, fast
turnaround. This is without compromising on what they’re
already used to in terms of structural repeatability, reliability
and accuracy. Our expertise in these areas means we’re well
placed to support our customers’ adoption of AM and help
them move seamlessly from a development environment to
volume production.”
Scale from lab to volume
production with the
RenAM500series of additive
manufacturing machines
Louise Callanan
Director of Additive Manufacturing
Scan the QR code
tovisit the website
Performance review
Manufacturing technologies continued
Renishaw plc Annual Report 202234
Strategic Report
Performance review
Analytical instruments and medical devices
Market conditions
While our Spectroscopy business achieved good growth and
record revenue, it was a disappointing year for our Neurological
line. In our Spectroscopy business, we saw good sales across
our three regions, with capital expenditure projects releasing
funds. We also continue to see a good recovery in industrial
and academic research budgets. Lockdowns in China initially
caused some issues for our Spectroscopy business, but there
were more shipments to this important market at the end of the
year. Despite a challenging year for our Neurological business,
we still see many opportunities to grow and have a strong focus
on drug delivery revenue.
Like our Manufacturing technologies segment, we have faced
challenges to meet customer demands due to shortages of
electronic components, although not at the same level. Some of
our design engineers were reallocated to work on redesign and
testing work for current products, but the greater impact has
been on projects for new product development. Recruitment is
also presenting challenges for all our product lines, and we have
had to prioritise key projects.
Neurological
Rupert Jones
Managing Director – Renishaw Medical
What we do
We deliver neurosurgical precision to enable innovative, life-
enhancing therapies for increasingly prevalent neurological
conditions. We do this by giving our customers:
– precision through products that give accurate device delivery
and improved procedure safety;
– productivity through products that enable fast planning,
automated placement and shorter surgeries; and
– practicality through products that support image-guided
planning and predictable outcomes.
InVia Ramen microscope
Materials analysis
Raman spectroscopy systems for advanced materials
analysis, including biochemical changes associated
withdisease formation and progression.
www.renishaw.com/raman
Neurosurgery (brain surgery)
Neurosurgical robots, surgery planning software, drug
delivery devices, and a range of consumable medical
devices for a variety of diagnostic and treatment
procedures related to the brain.
www.renishaw.com/neuro
Neurological
Spectroscopy
Our productsOur markets
Our key markets include healthcare providers, pharmaceutical
companies and research institutes.
We aim to develop a common platform for drug delivery and
deep brain stimulation (DBS), complete regulatory approval for
drug delivery hardware and software, and help our customers
toprogress multiple drug delivery clinical trials.
Our key commercial objective is to simplify our approach
and focus on strategic growth opportunities. That’s why we’re
mainly focused on a service and support model that helps
pharmaceutical companies develop a delivery strategy for trials
that meets requirements for patients and candidate drugs.
We’ve chosen this route because each therapy development
and delivery programme needs a bespoke approach.
This model of working with pharmaceutical companies from
pre-clinical testing to full market approval is proving to be the
best way to achieve a successful trial outcome and a market-
approved therapy. It is also a great example of our purpose in
action, working with our customers in the healthcare sector to
transform tomorrow’s medical therapies.
Performance
Revenue was significantly lower than expected this year, for two
main reasons.
The first was lower sales of our neuromate stereotactic robot.
This was a result of needing to wait for new regulatory approval,
that we have now received.
Revenue was also hit by the end of a programme with a major
pharmaceutical company that was using our drug delivery
system to trial its candidate drug. The programme ended
because of an issue with the drug.
We’re talking to a number of pharmaceutical businesses,
key international clinics and funding organisations about
future programmes that could use our drug delivery system.
These conversations mean we are more optimistic about
revenues in FY2023.
Renishaw plc Annual Report 2022 35
Strategic Report Governance Financial statements Shareholder information
Crossing the
blood-brainbarrier
Delivering therapies to the brain, by bypassing the blood-
brain barrier, is one of medicine’s biggest challenges today.
The barrier is highly effective in protecting the brain against
pathogens, butindoing so it also makes it difficult to administer
medicines to the brain. Finding practical ways around that barrier
could transform treatments for certain neurological conditions.
We’reparticularly excited, therefore, about our neuroinfuse drug
delivery system – an innovative, precision-engineered product
that allows direct delivery of therapies tothe brain, and is currently
in the clinical investigation phase of development.
Rupert Jones, Managing Director – Renishaw Medical explains:
“We’ve been working with clinical experts to provide a solution
for intermittent drug delivery to the central nervous system
(CNS). Implantation can be performed outside of an MRI,
reducing the need for costly equipment and radiologists. It’s
patient specific, and can be used to deliver single, one-off
doses of a therapy or for repeat administrations of the chosen
drug without the need for additional surgeries. This reduces the
inherent risk and cost of repeated surgery.
“We’ve been working with pharmaceutical companies to test the
product, using it only in approved clinical trials. The system shows
great promise and could be a step change in treating neurological
conditions such as Parkinson’s disease and brain cancer.
“By using our products and working with our experts as early
aspossible, we can help pharmaceutical companies ensure
new therapies suitable for CNS delivery are introduced into
clinical studies as effectively and cost efficiently as possible.”
Performance review
Analytical instruments and medical devices continued
Neurological
Rupert Jones
Managing Director – Renishaw Medical
Scan the QR code
tovisit the website
Renishaw plc Annual Report 202236
Strategic Report
Spectroscopy
Tim Batten
Director – Spectroscopy
What we do
Our vision is to advance materials identification to help our
customers gain a deeper understanding of materials and
theirinteraction at a molecular level.
We do this by creating:
– precision spectroscopy products that give high-resolution
sampling with sensitivity and specificity;
– productivity through systems that give automated analysis
andrapid, reliable results; and
– practicality through products that are easy to set up and
combine well with other analytical tools.
More specifically, we’re making it easier to integrate Raman
spectrometers with other analytical techniques, including
scanning electron microscopy (SEM). We’re also expanding into
new markets beyond the laboratory with portable products for
remote sample analysis, including production environments for
process monitoring. An example of this is our Virsa analyser that
offers customers a portable product for use in the field. You can
read more about this on the following page.
Our aim is also to produce easy-to-use, compact benchtop
systems for dedicated application areas such as early disease
detection and pharmaceutical quality control. These systems
don’t need specialist Raman knowledge, giving users consistent
results without the complexity.
We continue to expand our range of regular educational
webinars, which we introduced during the pandemic. These are
good commercial opportunities and have helped us reach new
prospects. Registrations have grown significantly from 50 people
for the first seminar to now over 1,000 registrants for our most
recent events.
Performance
We saw good growth in our Spectroscopy business, with
record revenue and strength in all regions. We had some
challenges with sales in China – an important market for Raman
spectrometers - due to the local lockdowns introduced by the
Chinese government as part of its zero-COVID policy. However,
we’ve entered the new financial year with a strong order backlog
which gives us confidence for FY2023.
As reported last year, the applications for industrial use of
Ramanspectroscopy continue to grow due to increasingly
complex chemical formulations in everyday products, including
polymer laminates in household products.
As demand for EVs rises, so too does research into battery
technology, which offers strong opportunities for Raman
systems. Our customers are using these spectrometers to
research new materials, such as graphene, that will improve
performance, enable faster charging and extend battery life.
This year, we sold multiple additional inVia Raman spectrometers
to a manufacturer in APAC that is developing the next generation
of lithium-ion batteries, demonstrating the growing interest in our
technology in this sector.
Last year we focused on developing new sector opportunities
for our Raman systems by working closely with customers who
are developing innovative biological detection techniques.
As a result, this year we received orders for our RA816
Biological Analyser from a company that is developing a cancer
screening test based on the Raman analysis of blood plasma.
This product is a compact, easy-to-use benchtop Raman
imaging system that enables the rapid collection of information
from biological samples, such astissue and biofluids. It is an
ideal tool for developing diseasediagnostic methods using
Raman spectroscopy.
We also continued to see strong system sales for a broad
range of applications including environmental, green energy
and heritage. This validates our approach of taking Raman
technology away from laboratory-only use and into field
applications where sampling can take place in-situ.
Outlook for Analytical instruments and
medicaldevices
Life expectancy is rising in both developed and developing
countries. This increases the need for faster procedures
(toreduce waiting times), more economical treatments,
andsafer, more automated procedures to reduce human
error. Our Analytical instruments and medical devices
product lines are well placed to support these needs.
Increased life expectancy also means greater incidences of
degenerative neurological diseases, which will need surgical
therapies that our neurological products can support.
In developing markets, levels of wealth are rising at a national
and individual level, which is driving demand for higher-
quality medical treatments that require more technologically
advanced products.
We see the market for Raman spectroscopy continuing
to grow, with an increasing range of applications in those
sectors already mentioned above, plus biomedical and 2D
materials. We have the products to meet these opportunities.
While robots in neurosurgery are still an emerging market,
we continue to see general underlying demand for our
technology. For example, we expect to see significant
increase in our delivery device for potential gene therapy
treatments for neurological diseases and disorders .Our
strong patent portfolio and many years of experience in
neurosurgery mean that we are well positioned to capture
opportunities in drug delivery. Despite a challenging year,
weremain optimistic about the future growth of this business.
Renishaw plc Annual Report 2022 37
Strategic Report Governance Financial statements Shareholder information
Tim Batten
Director – Spectroscopy
Scan the QR code
tovisit the website
Spectroscopy
For many years we’ve made precision-engineered Raman
spectroscopy instruments, such as microscopes and benchtop
analysers, that scientists rely on to help them chemically analyse
materials. Increasingly, though, our customers are looking
for that same quality and precision in a more flexible format.
So we’ve launched the Virsa analyser, a portable system that
allows customers to analyse samples outside of the laboratory.
Tim Batten, Director – Spectroscopy, explains:
“The Virsa system allows users to analyse samples in their
nativeenvironment. It’s perfect for measuring large or immovable
samples that can’t be placed under a microscope, such as
testing materials used in a painting.
“Using our proven technology, the system gives customers the
accurate results they need and since it’s portable, people using
the Virsa analysers aren’t confined to the lab to perform their
testing. We have a range of probes for different needs, such
as immersion probes for analysing liquids, high-temperature,
high-pressure probes for monitoring reaction processes, and
biological probes for analysing biological systems.
“Virsa is already being used in a range of applications,
such as studying the reasons for poor performance in solar
panel modules and analysing the specialist coatings on
turbine blades.”
High performance
Ramanspectroscopy,
wherever it’sneeded
Performance review
Analytical instruments and medical devices continued
Renishaw plc Annual Report 202238
Strategic Report
Risk management
Effective risk management has become very topical following
the COVID-19 pandemic, evidence of a highly competitive
labour market, and supply chains under stress. All of these
issues feature in our principal risks, but the one area that has
stood out this year has been the People risk and the need to
work on retaining, rewarding, and developing our people in
order to support our growth and meet our customers’ demands.
It has been encouraging to see our senior managers engage
so strongly with risk management, which is also driven by the
heightened awareness of how many risks are interconnected
and influenced by global forces.
Our approach – risk management and risk appetite
Our annual risk review process starts with our strategic
objectives. We take into account external risks and the global
environment, as well as internal risks across our business.
Our risk identification process aims to identify those risks that
represent the most significant threat to achieving our strategic
objectives. This, combined with both global changes and
internal shifts, resulted in some key changes to our principal
risks this year. Each principal risk has an owner, who is invited
to Risk Committee meetings during the year to discuss their risk,
latest developments or issues, and the work they’re doing to
mitigate it. This year, we again carried out a formal risk appetite
assessment, the results of which are shown in the table on pages
42–49. This lets us assess if we’re taking the right amount of risk,
and consider opportunities as well as mitigation strategies.
Our now well-established process of risk identification and
management means we can see risk management being
embedded in the way we do business. This culture shift has
meant that our people recognise that risk is inherent in our
operations. They also consider both the upside and downside of
potential risks in their business practices and decision making.
This is critical in helping us achieve our strategic objectives.
This year, we also formed an Ethics Committee. This Committee
comprises four members of the Senior Leadership Team (all
of whom also sit on the Risk Committee), including myself as
Chair. The Committee meets on an ad hoc basis to consider
matters that are referred to it, usually by internal stakeholders.
The Ethics Committee considers the ethical issue and makes a
recommendation to the Executive Committee on how to proceed.
Most matters referred to the Ethics Committee involve a risk
appetite decision, for example where the proposed course
of conduct is lawful but may involve some reputational risk.
Matters referred have included dealing with Russian-related
entities based outside of Russia.
How do we identify risks?
Our risk identification process comprises two stages:
1. Top-down process
I conduct risk interviews with senior managers, focusing on the
risks that are most significant for us as a whole. The anonymised
output from these interviews is aggregated to identify key
themes, trends, and any new or emerging risks.
2. Bottom-up process
Risk reports are received from regional and product line
managers, who are asked to focus on key day-to-day operational
risks. These results are aggregated to identify trends and any
new principal or emerging risks.
The results from both processes shape our principal risks.
The proposed principal risks are assessed by the Committee
and then reviewed by our Executive Committee, Audit
Committee, and Board.
Our risk
identification
and
management
processes
have come
into their own
this year
Jacqueline Conway
Chair of the Risk Committee
Renishaw plc Annual Report 2022 39
Strategic Report Governance Financial statements Shareholder information
Risk management continued
The table below sets out some of the key risk management activities undertaken throughout the year:
January/February March/April May/June July–December
Risk identification:
– Top-down interviews
conducted with
senior managers.
– Bottom-up risk reports
refreshed by regional and
product line managers.
– Consolidated outputs from
the bottom-up and top-
down process are shared
with and considered by
theRisk Committee.
– Risk Committee agrees
draftprincipal risks.
– Draft principal risks
are reviewed by the
Executive Committee/
Audit Committee/Board.
Risk oversight:
– Risk appetite is considered
by the Risk Committee.
– Risk Committee agrees a
schedule of in-depth risk
reviews for the year ahead.
– Composition, membership
and effectiveness of the Risk
Committee is considered.
Risk reporting:
– Consultation with each
principal risk owner to
prepare draft wording
forthe Annual Report.
– ‘Severe but plausible
scenarios’ are identified
forour Viability statement.
Risk monitoring:
– In-depth reviews by the
Risk Committee, risk owners
give an update on their
principal risks.
– ‘Severe but plausible
scenarios’ are modelled
todetermine our viability
over three years.
GovernanceOperational risk management
Top-downBottom-up
Board
– Overarching responsibility for risk management.
– Determines our risk appetite and identifies our
principal risks and opportunities.
Executive Committee
– Reviews and approves revised principal risks.
– Assesses the status of various principal risks
throughout the year (e.g. risks relating to technology,
people, finances, and our systems and processes).
– Evaluates proposed strategies against risk appetite.
Risk Committee
– Comprises executive members (including our
Group Finance Director) and senior management
from across the business.
– Creates our risk framework.
– Collects and aggregates risk information.
– Helps senior management govern, identify,
manage, and report on principal and
emerging risks.
– Manages central repository of risk data from
acrossthe business divisions and the regions
interms of their respective principal risks.
Operational managers
– Effective day-to-day risk management.
– Design and implement key controls.
– Identify risks at an early stage.
– Embed risk management.
– Monitor risks – mitigating or escalating as appropriate
– and respond to manage those risks.
– Give updates to the Risk Committee.
Oversight
Independent oversight
Audit Committee
– Reviews the effectiveness of our risk management and internal control processes.
– Supports the Board in monitoring risk exposure and advises the Board on principal risks that may threaten solvency or liquidity.
Internal Audit
– Provides input on the effectiveness of the risk programme.
– Assesses the effectiveness of controls for key risks, particularly financial risks.
– Holds scheduled audits of some Group companies, and gives executive summaries to Audit Committee meetings.
Any significant shortcomings are discussed and acted upon promptly.
– Facilitates process enhancements.
– Requires all operating companies to complete annual self-certification questionnaires regarding compliance with our policies,
procedures and requirements.
Renishaw plc Annual Report 202240
Strategic Report
Key themes this year
Once again, risk management has been at the top of the
agenda this year. It has been encouraging to see some of the
changes we have made in this area making a difference in the
way we have responded to a challenging external environment.
Risk Movement
New risk
This year, we added a new risk: Climate change. We recognised
this theme as an emerging risk in 2021, and this year
raised it to a principal risk because of its significant impact.
We acknowledge that climate change, without any mitigating
actions, poses a risk to our ability to achieve our strategic
growth objectives.
Our Net Zero commitment also contributes to our decision to
upgrade this from an emerging risk to a principal risk, as our
commitment will take significant effort and management focus.
Increased risks
– People – this risk has increased due to a very active
labour market. Leaver numbers have increased and we
are competing for top talent. Our people are central to
everything we do, and we recognise the potential negative
impact on our strategic objectives if we do not have the
necessary resources.
– Innovation strategy – this risk has increased due to the
current competitive market and our focus on our flagship
products and disruptive technology.
– Cyber – activity in this area (including attempted attacks)
has increased with the shift to remote working. We continue
to focus on maintaining a strong control environment but
recognise that it would only take one successful attack to
have a significant impact on our operations.
Decreased risks
– Industry fluctuations – as we emerge from the pandemic,
it’s clear that our mitigating strategies have protected us from
being severely affected by this risk.
– Loss of manufacturing output – our responses to the
challenges of the past 24 months have demonstrated that
wemanage this risk well, therefore reducing its impact.
Geopolitical matters
Following the Russian invasion of Ukraine in February 2022,
weimmediately stopped the supply of goods to our Russian
offices. Instead, they continued to fulfil orders from local
stock where possible and where customers were not subject
to sanctions. We have since taken the decision to end our
operations in Russia, including closing our offices in Moscow
and Perm. Although we have been able to transfer some
colleagues to other subsidiaries, regrettably this has meant
theloss of jobs within Russia, and we have offered support
tothose affected colleagues.
Combined sales to Russia and Belarus have typically
represented around 1% of total Group revenue. As a result of
ourdecision, we recorded an impairment of £2.1m relating to
assets held in Russia. The Board keeps a watching brief on
risksin relation to this and other geopolitical issues.
Cyber security
We maintain our high level of vigilance against cyber security
threats. We continually monitor and adopt good industry
practices. This includes investing in training and technologies
tomitigate, detect, and respond to this risk. We continue to meet
ongoing requirements for remote and hybrid working across
many locations. Through training and communications, we
continue to promote awareness among our people.
COVID-19
Since the first half of FY2021, the impact of the COVID-19
pandemic has significantly decreased. Many of our mitigations
proved effective, and we have developed an enhanced
approach to risk mitigation (as noted in my introduction).
As westart to see the longer-term effects on the macroeconomic
environment, the impact of the pandemic on our principal risks
has been much less significant than anticipated.
Data protection
We have made an ongoing commitment to achieving high
standards of compliance with the General Data Protection
Regulation (GDPR) and other data protection laws. As part of
this, we have a privacy team that keeps policies, procedures,
training, and other compliance requirements under review.
Looking ahead
Emerging risks
We continue to assess our emerging risks. These are uncertain
in nature and have the potential to develop over time and affect
our performance. While they may increase the impact and
likelihood of our principal risks occurring, we do not currently
expect them to become future principal risks.
To identify these risks, we review the outcomes from our
bottom-up reports to assess any emerging themes at regional
and product group levels. As these may develop over time,
we maintain a dynamic approach in monitoring these risks.
This includes regular consideration at Risk Committee, Audit
Committee, and Board meetings. For example, in FY2021 we
identified changing work patterns as an emerging risk and we
continue to monitor its effect on our principal risks. We now
better understand the impact that hybrid working has had on our
People risk, particularly productivity, innovation, and recruitment.
We continue to look at ways to manage this so that our people
can collaborate and innovate. Changing working patterns have
increased our People risk overall, as well as our Innovation
strategy risk.
Priorities for the year ahead
– Ongoing enhanced focus on reward, recruitment
and retention.
– Increase focus on the potential impact of geopolitical crises.
– Continue to assess the Climate change risk, particularly
in relation to our TCFD disclosure work, and strengthen
responses to a potential climate event.
– Conduct in-depth reviews on all our internal principal risks
(namely those linked to our internal control environment).
– Ongoing focus on the long-term impact of COVID-19 on our
people and innovation.
– Ongoing consideration of data protection and cyber security
risks, particularly in light of the shift to hybrid working.
– Continue to monitor and assess emerging risks.
Renishaw plc Annual Report 2022 41
Strategic Report Governance Financial statements Shareholder information
Principal risks and uncertainties
Risk movement
Increased risk
Decreased risk
Stable risk
Link to strategy
SM Sales & Marketing E Engineering P People and culture
M Manufacturing SS Support Services S Sustainability
People
Appetite
MEDIUM
Link to strategy
P
Risk owner
Head of Group HR
Risk description
Our people are fundamental to the success of our business.
Inability to attract, retain, and develop key talent at all levels of the organisation could mean we fail to successfully deliver
onour strategic objectives.
Potential impact What we are doing to manage this risk
– Loss of expertise, skills, and specialist talent could affect
delivery of objectives.
– Poor retention and engagement could slow the delivery
ofour strategic objectives and product delivery.
– Failure to develop future leaders, insufficient
talent progression.
– Loss of market share, reduced revenue, poor customer
service, and reduced profit.
– Targeted approach to attract, reward, and retain our talent
globally, including the roll out of a new benchmarking
programme for annual salary reviews and major investment
in reward to ensure our pay is competitive.
– Continued investment in our STEM and Early Career
programmes, as well as talent development and
succession planning.
– Advancing our employee engagement through multi-media
communications, promoting wellbeing, evolving feedback
mechanisms, and further developing our inclusion strategy.
– Establishing continuity plans to enable rapid adaptation
tochanging circumstances.
Innovation strategy
Appetite
HIGH
Link to strategy
E
Risk owner
Product Group Directors
Risk description
Failure to create new cutting-edge, high-quality products, or failing to protect the intellectual property that underpins these
products, which allows us to differentiate ourselves from our competitors.
As a business driven by innovation, there is a higher risk with new ventures outside our traditional field of expertise where the
science and engineering are less proven.
Potential impact What we are doing to manage this risk
– Failing to meet customer needs for high-quality and
complex products.
– Loss of market share.
– Reduced revenue, profit and cash generation.
– Failing to recover investment in R&D.
– Increasing focus on presenting and understanding
technology development and commercialisation
roadmaps. R&D and flagship projects are prioritised and
regularly reviewed against milestones. Medium to long-
term R&D strategies are monitored regularly by the Board
and Executive Committee.
– All Board meetings now have a standing agenda item to
review disruptive technology.
– Market developments are closely monitored and product
development is based on input from customers.
– Patent and intellectual property protection are core to
new product development, with management and review
integrated into the Product Innovation Process (PIP)
procedure.
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Strategic Report
Appetite
LOW Minimal risk exposure is considered the safest approach, which may mean lower returns.
MEDIUM A balanced approach which carefully considers the risks and rewards.
HIGH Greater risk tolerance, which may involve maximum risk for maximum return.
Supply chain dependencies
Appetite
LOW
Link to strategy
M
Risk owner
Head of Group Manufacturing
Risk description
We’re exposed to the risk that critical components, or some components that we buy from single-source suppliers, make us
vulnerable to an interruption in supply.
Potential impact What we are doing to manage this risk
– Inability to fulfil customer orders, leading to a reduction in
revenue and profits, and damage to reputation.
– Failure to meet contractual requirements.
– Increased cost of alternative sourcing or redesign.
– Loss of market share.
– Continued focus on, and review of, sourcing of
key components.
– Increase in buffer inventory.
– Cost-effective alternative sources of supply actively sought
(including in-house manufacturing) to reduce dependency
on single-source suppliers.
– Specifications are reviewed and updated where necessary
to facilitate alternative sourcing.
Industry fluctuations
Appetite
HIGH
Link to strategy
SM, M, E
Risk owner
Chief Executive
Risk description
We’re exposed to the cyclical nature of demand from aerospace, automotive and consumer electronics industries, which may
be more severe if downcycles in these key industries coincide.
Potential impact What we are doing to manage this risk
– Increased competition on prices.
– Loss of market share.
– Reduced revenue, profit and cash generation.
– Closely monitoring market developments.
– Expanding our range in order to meet the demands of
anumber of different industry sectors and markets.
– Identifying and meeting the needs of emerging markets,
for example in robotic automation.
– Maintaining a strong balance sheet with the ability to flex
manufacturing resource levels.
Renishaw plc Annual Report 2022 43
Strategic Report Governance Financial statements Shareholder information
Principal risks and uncertainties continued
Economic and political uncertainty
Appetite
HIGH
Link to strategy
All
Risk owner
Chief Executive
Risk description
As a global business, we may be affected by political, economic or regulatory developments in countries that we operate in.
This could include a global recession, US/China trade relations, or the current war in Ukraine.
Potential impact What we are doing to manage this risk
– Loss of financial and physical assets in a region.
– Supply issues leading to failures to meet
contractual obligations.
– Reduced revenue, profit and cash generation.
– Monitoring external economic and commercial
environments, and identifying relevant headwinds.
– Maintaining sufficient headroom in our cash balances.
– Increase in buffer inventory.
– Closely monitoring all markets in which we operate.
Route to market/customer satisfaction model
Appetite
MEDIUM
Link to strategy
SM
Risk owner
Chief Executive
Risk description
Inherent complexity in the move to systems integration and the sale of capital goods.
Potential impact What we are doing to manage this risk
– Low capital efficiency – high people costs and
low productivity.
– Higher engineering and distribution costs.
– Adversely affects customer satisfaction levels, revenue,
and profits.
– Closely monitoring customer feedback.
– Collaborating with complementary third parties.
– Adopting new approaches to the sale of capital goods.
Risk movement
Increased risk
Decreased risk
Stable risk
Link to strategy
SM Sales & Marketing E Engineering P People and culture
M Manufacturing SS Support Services S Sustainability
Renishaw plc Annual Report 202244
Strategic Report
Capital allocation
Appetite
MEDIUM
Link to strategy
E
Risk owner
Group Finance Director
Risk description
This risk could be triggered by a failure to properly allocate budget between core and emerging activities.
Potential impact What we are doing to manage this risk
– Investing in declining or less profitable areas at the expense
of more profitable and strategically important areas.
– Reduced profits.
– Loss of market share.
– Impact on innovation.
– Defining, prioritising, and developing strategies for all
coreand emerging areas of the business.
– Scrutinising all expenditure, including regular reporting
onlabour costs and capital expenditure.
– Regular reporting of cash balances.
– Tracking of performance objectives including regular
reporting on flagship project progress.
Competitive activity
Appetite
LOW
Link to strategy
All
Risk owner
Chief Executive
Risk description
Failure to adapt to market and/or technological changes.
Potential impact What we are doing to manage this risk
– Reduced revenue, profits and cash generation.
– Loss of market share.
– Erosion of prices.
– Loss of reputation as a leader in innovation.
– We are diversified across a range of products, industries,
and geographies.
– Closely monitoring market developments, particularly
across our core product areas.
– Local sales and engineering support to quickly identify
changing local needs.
– Strong historic and ongoing commitment to R&D
investment to continue to build our product portfolio
(seenote 4 onpage 140 for details of R&D expenditure).
Appetite
LOW Minimal risk exposure is considered the safest approach, which may mean lower returns.
MEDIUM A balanced approach which carefully considers the risks and rewards.
HIGH Greater risk tolerance, which may involve maximum risk for maximum return.
Renishaw plc Annual Report 2022 45
Strategic Report Governance Financial statements Shareholder information
Principal risks and uncertainties continued
Risk movement
Increased risk
Decreased risk
Stable risk
Link to strategy
SM Sales & Marketing E Engineering P People and culture
M Manufacturing SS Support Services S Sustainability
Cyber
Appetite
LOW
Link to strategy
All
Risk owner
Director of Group Operations
Risk description
External and internal threat which could result in a loss of data including intellectual property, or our ability to operate our
systems which could severely affect our business.
Potential impact What we are doing to manage this risk
– Loss of intellectual property and/or commercially
sensitive data.
– Inability to access, or disruption to, our systems leading
toreduced service to customers.
– Financial loss and reputational damage.
– Impact on decision-making due to lack of clear and
accurate data, or disruption caused by the lack of service.
– Substantial resilience and back-up built into our systems,
which are continuously updated for current threats and
good industry practice.
– Regularly discuss cyber and security risks at
Board meetings, including the strength of our
control environment.
– Deploy physical, logical, and control measures to protect
our information and systems, and external penetration
testing is conducted as appropriate.
– Conduct regular security awareness training, including
phishing simulation exercises, which are proving effective.
IT transformation failure
Appetite
LOW
Link to strategy
All
Risk owner
Director of Group Operations
Risk description
The upgrade of our IT systems to Microsoft Dynamics 365, to remove legacy systems and ensure our business is better
integrated, could affect our business if there are major technical issues, or it is poorly integrated. This risk could also result in
problems if there are significant delays to the programme or it runs significantly over budget.
Potential impact What we are doing to manage this risk
– Major disruption to our systems, causing delay to
our operations.
– Affect our ability to process or issue invoices and customer
orders, or to procure goods and services.
– Increased costs, including to fix technical issues and
restore or upgrade other affected systems.
– Project delay would leave us supporting legacy systems
forlonger than desired.
– Risk assessments carried out for all key systems likely to
be affected by the upgrade.
– A clear roadmap with measurable milestones, and
planning to implement lower risk companies first.
– Assigning project managers who have clear oversight of
the project and any issues.
– Promptly identifying and dealing with any
significant issues.
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Appetite
LOW Minimal risk exposure is considered the safest approach, which may mean lower returns.
MEDIUM A balanced approach which carefully considers the risks and rewards.
HIGH Greater risk tolerance, which may involve maximum risk for maximum return.
Loss of manufacturing output
Appetite
LOW
Link to strategy
M
Risk owner
Head of Group Manufacturing
Risk description
Manufacturing output can be adversely affected by factors including environmental hazards, technical delays or outages,
plant or equipment failure, inadequate resourcing levels, or factors affecting the workforce, such as a pandemic.
Potential impact What we are doing to manage this risk
– Inability to fulfil customer orders leading to a reduction
in revenue, failure to meet contractual requirements and
damage to reputation.
– Increased costs of alternative sourcing or redesign.
– Impact on maintenance of buffer inventory.
– Loss of market share.
– Duplication of high-dependency processes, such as
component manufacturing and finishing, electronic printed
circuit board assembly, and microelectronics assembly,
across multiple manufacturing locations.
– Ensuring we have flexible manufacturing capacity and
sufficient resilience across our manufacturing sites.
– Standardised approaches to assembly, annual risk
assessments, and business continuity planning.
– Reviewing and maintaining business interruption and
otherinsurance cover.
Exchange rate fluctuations
Appetite
MEDIUM
Link to strategy
SM
Risk owner
Group Finance Director
Risk description
Due to the global nature of our operations, with over 90% of the revenue generated outside the UK, we’re exposed to volatility
in exchange rates that could have a significant impact on our results.
We’re exposed to exchange rate risks, including the strengthening of Sterling against our major trading currencies, currency
cash flow, currency translation risk, and the currency risk on intercompany balances.
Potential impact What we are doing to manage this risk
– Significant variations in profit.
– Reduced cash generation.
– Increased competition on product prices.
– Increased costs.
– Rolling forward contracts for cash flow hedges in accordance
with Board-approved policy, and one-month forward
contracts to manage risks on intercompany balances.
– Tracking of overseas net assets value compared to the
market capitalisation.
– Obtaining input from external sources including our banks.
Renishaw plc Annual Report 2022 47
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Principal risks and uncertainties continued
Risk movement
Increased risk
Decreased risk
Stable risk
Link to strategy
SM Sales & Marketing E Engineering P People and culture
M Manufacturing SS Support Services S Sustainability
Climate change New risk
Appetite
LOW
Link to strategy
All
Risk owner
General Counsel & Company Secretary
Risk description
We could be exposed to physical risks, potentially triggering an inability to operate, and other transition risks regarding our
plans to achieve Net Zero. We could fail to react adequately to new climate-related legislation, technology or market factors.
Failure to respond to large-scale natural hazards, such as hurricanes, floods, fires or pandemics, could result in
operations failure.
Potential impact What we are doing to manage this risk
– Increased costs – potentially costly and uncertain supplies
of renewable energy certificates and/or offsetting schemes
to achieve Net Zero commitment, and underestimating Net
Zero costs.
– Damage to reputation and loss of future business.
– Impact on macroeconomic landscape.
– Disruption to operations caused by natural hazards.
– Sustainability and climate change are regularly discussed
at Board and Executive Committee meetings.
– Our Sustainability team supports the Risk Committee
in evaluating and understanding the possible effect of
climate-related risks and opportunities.
– Reviewing and maintaining business interruption and other
insurance cover to minimise any financial loss that may
occur in the event of disruption caused by climate events.
Pensions
Appetite
MEDIUM
Link to strategy
P
Risk owner
Group Finance Director
Risk description
Investment returns and actuarial assumptions of our defined benefit pension schemes are subject to economic and social
factors outside our control.
Potential impact What we are doing to manage this risk
– Any deficit may need additional funding in the form of
supplementary cash payments to the plans or the provision
of additional security.
– Significant management time.
– External support costs.
– Damage to reputation.
– Implemented recovery plan for the UK defined benefit
scheme in June 2019 with the aim of funding to self-
sufficiency by 2031.
– Appointed a corporate Trustee in June 2022, with the
previous Trustees stepping down. This will help reduce
management time and support costs.
– Active engagement with the Trustee(s) on
investment strategy.
– The Trustee(s) work to a statement of investment
principles, and the Company and Trustee(s) seek
appropriate independent professional advice if needed.
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Appetite
LOW Minimal risk exposure is considered the safest approach, which may mean lower returns.
MEDIUM A balanced approach which carefully considers the risks and rewards.
HIGH Greater risk tolerance, which may involve maximum risk for maximum return.
Non-compliance with laws and regulations
Appetite
LOW
Link to strategy
All
Risk owners
General Counsel & Company Secretary/Director of Renishaw
Neuro Solutions
Risk description
We operate in a large number of territories and in some highly-regulated sectors. We are subject to a wide variety of laws and
regulations, including those relating to anti-bribery, anti-money laundering, sanctions, competition law, privacy, health and
safety, product safety, and medical devices.
There is a risk that somewhere in the Group we may not be fully compliant with these laws and regulations.
Potential impact What we are doing to manage this risk
– Damage to reputation and loss of future business.
– Potential penalties and fines, and cost of investigations.
– Management time and attention in dealing with reports
ofnon-compliance.
– Inability to attract and retain talent.
– Whistleblowing hotline available for use by all employees
which means that our people can make us aware of any
potential non-compliance issues.
– Global compliance programmes in place for all high
risk areas, which includes policies, key controls, and
effective communication. Training also includes refreshed
mandatory anti-bribery and anti-corruption modules.
– Promotion of all compliance functions under the umbrella
brand ‘Responsible Renishaw’. This helps to raise
awareness about compliance, and makes it easier for our
people to find the information they need to comply.
– Implementing a global privacy programme.
Product failure
Appetite
LOW
Link to strategy
E, M
Risk owners
Group Quality Manager/Renishaw Neuro Solutions
Quality Manager
Risk description
The quality of our products could be adversely affected by internal threats, such as inadequate quality management
procedures. Product quality could also be affected by external threats, such as substandard resourcing from third-
party suppliers.
This risk is particularly notable in our neurological products, where failure could result in significant personal injury claims.
Potential impact What we are doing to manage this risk
– Damage to reputation.
– Claims, including personal injury.
– Potential penalties and fines, and cost of investigations.
– Inability to fulfil customer orders leading to a reduction
in sales.
– Rigorous internal product development and testing
procedures (during development, manufacturing, and
release) to international standards where applicable,
toensure high levels of quality assurance.
– Extensive interaction with customers and regulators
toobtain and address feedback.
– Regular monitoring of third-party suppliers to
ensure incoming parts and sub-contracted activity
meet requirements.
– Liability is limited by our terms and conditions of sale
andwe have liability insurance. For clinical studies,
wehave separate trial insurance.
Renishaw plc Annual Report 2022 49
Strategic Report Governance Financial statements Shareholder information
Viability statement
The Directors have assessed our
prospects and viability, in accordance
withthe UK Corporate Governance Code.
This assessment took account of our
current position and principal risks, and
the details of the assessment and the
conclusion reached are set out opposite.
Context
In making the assessment, the Directors considered the
following factors that they felt provided important context.
Financial resources – we have significant financial resources,
with cash balances and bank deposits at the start of the
viability assessment period of £253.2m. We have a strong
history of creating cash for the business. The only external
source of finance included in the viability assessment is the
existing property mortgage in Japan (see note 21 on page
154), which is assumed to be repaid in full in the assessment
period. We have no debt covenants.
Business model and markets – our business model includes
designing and manufacturing products ourselves, giving
us the flexibility to respond to customers’ needs and control
over where we direct our manufacturing resources. We can
also direct our sales and marketing resources where needed,
should market trends and conditions change. In addition, we
are also diversified over a range of markets, as explained on
pages 14-15.
Business planning – our business planning process uses a
top-down approach (the ‘corporate view’) as well as detailed
forecasts from both our product groups and our sales regions,
to ensure we consider a range of perspectives. We also use
external sources of information, such as market trends and
economic growth rates, in our business planning process.
Risk management – we have a robust risk assessment and
management process, as set out on page 39. As we explain in
the scenarios section below, the crystallisation of our principal
risks has been considered in the viability assessment.
Assessment period
The Directors used a three-year period, to the end of September
2025, in making their viability assessment. While a five-year
business plan has been prepared, the Directors feel that a
three-year period is more suitable for this assessment and better
reflects our business model, where we typically have short-term
contracts with customers, a short order book, and can adapt our
manufacturing to demand in months rather than years.
Principal risks
The Directors reviewed our principal risks and considered which
would have a significant financial effect on the Group in the
next three years if that risk were to crystallise. For risks such as
People, Innovation strategy, and Capital allocation, the Directors
felt that if these risks crystallised they would result in the
restriction of longer-term growth rather than having a significant
financial effect in the medium term. We therefore didn’t include
these risks in the scenarios. For other principal risks, the
Directors considered that the scenarios sufficiently modelled a
range of outcomes, including what would happen if multiple risks
crystallised at the same time, and that the outcomes of other
risks crystallising would be no worse than the existing scenarios.
Seven of our principal risks were taken forward into ‘severe but
plausible’ scenarios, as explained in the table opposite.
Financial modelling
Each scenario used the same starting point, taking the revenue
forecast as the pessimistic view in our five-year business plan
(which we also refer to as the ‘highly probable’ revenue forecast
for hedge accounting). The starting point for overheads, capital
expenditure, and other cash outflows was then taken from
optimistic revenue forecast from this same plan. Together, this
means that the scenarios started by assuming that revenue
growth is at the lowest end of our corporate view while still
incurring the costs in the next three years that are needed to
achieve revenue growth in later years. For context, revenue
in the first year of this starting point is a small increase from
FY2022’s revenue of £671.1m.
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The seven scenarios then took this same starting point and added in the following elements:
Scenario Relevant principal risk Financial modelling
A Supply chain dependencies Reduction in revenue if we were unable to buy certain critical
ASIC chips for 12 months.
B Industry fluctuations As demand of our encoder products can be cyclical, the
pessimistic revenue forecast already includes a reduction
in revenue for this part of our business. Scenario B both
increasesthis encoder downturn and adds in a significant
reduction in demand for CMM and machine tool products
fromJanuary 2024 onwards.
C Economic and political uncertainty This risk could cause both a reduction in revenue and an
increase in costs as inflation rises. The modelling for this
scenario therefore combined:
– a reduction in sales from the start of the assessment period;
– an increase in labour costs, starting in FY2023; and
– an increase in materials, heat and power, and logistics costs.
These cost increases are in addition to those already expected
by management andthat are therefore reflected in the base plan
for each scenario.
D Cyber This scenario modelled a cyber-attack causing a loss of
networks and systems forthree weeks (management’s
assessment of a worst-case scenario for total network loss).
E Loss of manufacturing output This risk was modelled as the effect on our business if we lost
the use of our main hall at Miskin, Wales – our largest factory –
for six months.
F Exchange rate fluctuations This scenario modelled the effect of a further 10% and 15%
strengthening in Sterling, compared to management’s existing
assumptions.
G Climate change In this scenario, Net Zero capital expenditure estimates increase
by 50%.
This modelling showed positive cash and bank deposit
balances throughout the assessment period for all scenarios.
These balances remained above £100m throughout the viability
assessment period, except for scenario C where cash and bank
deposits became negative in November 2024. We therefore
remodelled scenario C with mitigating actions. These were to
reduce the performance-related bonus, and dividend, to levels
appropriate for the reduced trading performance. In this revised
scenario, cash and bank deposit balances remained above
£60m throughout the assessment period.
Outcomes, mitigating actions and upsides
As explained above, the financial modelling demonstrated that
should the Group experience ‘severe but plausible’ conditions
in the period to September 2025, positive cash and bank
deposit balances can be maintained throughout. As a vertically
integrated business that typically funds future growth through
cash reserves, we have a good degree of control on how we use
cash, and a range of mitigating actions we can take to respond
to challenging conditions.
In making their viability assessment, the Directors also
considered the strong demand we are currently experiencing
and how well we’ve responded to challenges such as the
pandemic and global supply chain disruption.
Conclusion
Based on this assessment, incorporating a review of the current
position, the scenarios, our principal risks and mitigation, the
Directors have a reasonable expectation that we’ll be able to
continue operating and meet our liabilities as they fall due over
the period to 30 September 2025.
Renishaw plc Annual Report 2022 51
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Managing our resources and relationships
How we engage with our stakeholders
We’ve summarised our stakeholder relationships below, and on pages 66–68 set out how we have considered ourstakeholders
when making important decisions (our ‘Section 172 statement’).
Read more on pages 54–56
Our stakeholders
Read more on page 62 Read more on page 57–61
Our people
Why we engage
Attracting, retaining and motivating our
people is vital to our success, so that we
have the right skills and knowledge in
our business.
We also need to hear how our people
are feeling in terms of wellbeing, and
to ensure that we are providing a safe
place to work.
How we engage
– Works Forums, attended by
members of the HR team and
employee representatives.
– HR Business Partners and their work
with line managers and leaders in
their areas of the business.
– Diversity and Inclusion group.
– Updates on Channel R, our in-house
video channel.
Actions
– Began a global salary benchmarking
review, intended to move our entire
pay range fully into the upper half of
the market range.
– New performance review process.
– New job grading structure.
Planet
Why we engage
To deliver long-term value in a world of
increasingly scarce resources, we need
to minimise the impact our business has
on the environment.
Stakeholders also tell us that this topic is
important to them.
How we engage
– Discussions with customers on their
sustainability requirements.
– Reviewing and monitoring our
emissions, waste output and
energy consumption.
Actions
– Agreed Net Zero targets – by 2028 for
Scope 1 and 2 emissions, and no later
than 2050 for Scope 3.
– Created a Sustainability Committee
and brought four new people into our
Sustainability team.
– Launched a salary sacrifice scheme
for ultra-low emission vehicles (ULEV),
starting in the UK.
Customers
Why we engage
To give our customers the products and
services they need, we must understand
their needs and the problems they’re
trying to solve.
How we engage
– Visits to customer sites to understand
their manufacturing challenges.
– Visits to Renishaw sites
for demonstrations.
– Meetings and discussions at trade
shows and conferences.
– Live webinars and online workshops.
– Smart Manufacturing Ambassador
programme on social media.
Actions
– Restarted attendance at global trade
exhibitions and customer open houses.
– Created more live and on-demand
webinars which are available in up to
13 languages.
– Restarted visits to local
demonstration facilities.
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Our stakeholders
Read more on page 63 Read more on page 64 Read more on page 65
Communities
Why we engage
Acting in a responsible way is important
to us, and we want to make sure that
we have a positive influence on the
communities close to where we operate.
How we engage
– Educational outreach work, including
virtual workshops, led by four full-time
members of our outreach team.
– Employee volunteering.
– Donations, including providing
IT equipment.
– Active membership of trade
associations and research centres.
Actions
– Donated £0.3m to over 190 charitable
and not-for-profit organisations.
– Engaged with 11,000 students through
our schools outreach programmes in
the UK.
– Supported the UK’s Homes for Ukraine
scheme and sponsored two Ukrainian
families to settle in Gloucestershire.
Shareholders
Why we engage
We recognise the trust that our minority
shareholders have placed in us, and aim
to provide sustainable long-term growth
in return.
How we engage
– Reintroduced our Investor Day in
May 2022.
– Webcasts to present our interim and
annual results, including Q&A sessions.
– Feedback received at and after
the AGM.
– Dedicated email inbox for shareholders
to submit questions before the AGM.
Actions
– Interim dividend of 16.0p per share,
paidin April.
– Final dividend proposed of 56.6p
per share.
– Hosted 49 investors at this year’s
Investor Day.
Suppliers
Why we engage
Having a secure supply of high-
quality, safe and ethical raw materials
is important to our success as
a manufacturer.
We also need to have strong
relationships with our suppliers to help
us meet our customers’ evolving needs.
How we engage
– Regular calls and meetings
between our purchasing teams and
our suppliers.
– Purchasing teams located in key
locations for working with suppliers,
including China.
– Supplier audits and
performance reviews.
Actions
– £166.5m spent with suppliers during
the year.
– £88.4m committed to capital
expenditure projects.
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Managing our resources and relationships continued
Our people
We have had another busy year, prioritising key activities
and welcoming more than 1,000 people into our business.
The pandemic has continued to cause some challenges, but
we’ve turned these into opportunities and focused on three key
topics; improving our performance reviews, supporting career
progression and developing our reward and benefits offer.
Developing and motivating our people
We needed to improve our performance review process, to
promote transparency, consistency and fairness, and to encourage
more regular conversations between people and their managers.
In FY2021, we began rolling out a new process, including a new
rating system. Following performance reviews in that period,
we asked people to share their experience of that process.
They told us that they found the rating system complex and had
difficulty completing their reviews within the required timescales.
We set up a working group to address this. While the overarching
principles remain the same – we review performance based on a
combination of objectives and attributes – we wanted to simplify
the process. This year, we’ve made the following improvements:
– process – reduced the number of steps required to complete
the performance review;
– scoring – replaced our itemised objective and attribute
scoring system with a simpler description-based
rating system;
– accessibility – extended the amount of time managers can
access team reviews; and
– timetable – shortened timescales to complete the process, so
it didn’t become protracted.
Following these changes, our focus for FY2023 will be to evolve
and refine the process further.
This year, we have also focused on ways to strengthen
career progression at Renishaw. This is following feedback
from existing employees, and leavers in their exit interviews,
telling us that they didn’t understand career progression
pathways. Some people also felt they lacked access to
development training.
We set up a working group to address this topic, with
representatives from across the business. We also shared
a survey with all UK employees in January 2022 to gather
feedback. This told us that:
– most employees feel that progression should recognise their
personal development in terms of skills and knowledge;
– career progression and increasing responsibility, aligned with
pay increases, is very important to them, particularly as they
develop their careers in their 20s and 30s;
– some people want to expand their role and become more
influential at work, and this is most common at office-
based sites;
– some employees are satisfied in their current position and are
not looking for promotion at the moment;
– job title changes are highly valued by people in the early-to-
mid stages of their career;
– people wanted clearer information on competencies, grades,
salary and career paths;
– younger employees would prefer more frequent promotion
with smaller increments of responsibility and pay, over less
frequent/bigger steps.
Respondents also told us that while competitive pay is a key
factor for retention, we also need to improve the way we support
our people to build their skills and develop their careers.
We’re currently working on a new job grading structure, using an
industry-wide framework, which will help us to benchmark our
pay and benefits across the Group. Once the revised grading
structure is in place we’ll create competency frameworks for all
our roles. This will make progression pathways more transparent
and link them to relevant training/resources to better support
personal development. Our HR Business Partners (HRBPs) also
continue to develop succession plans within their business units
to safeguard key skill sets.
These changes will take some time to implement but we’re
committed to making them to give our people greater clarity
and understanding.
Our Workday Learning system currently offers almost 1,200
training courses on subjects such as technical skills, project
management and engineering change management, and we
provided more people management training this year.
Our Early Career pathways continue to be popular and we
welcomed 160 students during the academic year for work
experience on a project-based scheme. We currently have
209 apprentices, 87 graduates, and 42 industrial placements
across various disciplines, meaning we have around 340 people
currently on these programmes.
Rewarding and recognising our people
We know that reward is an important topic for our employees,
which is why this year we have reviewed our approach.
Previous annual salary reviews have included an inflationary
salary review based on CPI and linked to performance review,
plus a bonus based on Group results. This had promoted
a focus on monetary review rather than on performance
or progression.
We aim to create a reward programme that is transparent,
applied fairly and consistent with market forces to help us
remain competitive. So we will continue to carry out periodic
benchmarking to maintain competitive salaries and limit
employee turnover. This is intended to move our entire pay
range fully into the upper half of the market range, and has
resulted in pay increases significantly above inflation for many
people. We are aiming to introduce benchmarking globally by
December 2022 using market data sourced from WTW.
Our goal is to ensure that pay is set at an appropriate level, in
line with both the wider employment market, and our reward
programme. We have made significant progress on this from the
benchmarking work we’ve done this year, however there is still
further work to do to reach our target position.
Nurturing an inclusive culture
We are committed to creating a work environment where
everyone feels included. Our aim is to promote a culture that
embraces our people’s differences and improves engagement,
helping them perform to the best of their ability.
We’re recruiting an Equality, Diversity and Inclusion Lead who
will help us to develop, implement and monitor our diversity and
inclusion programme going forward. This year we;
Renishaw plc Annual Report 202254
Strategic Report
– published a more detailed report for our employees to explain
what we are doing to reduce our gender pay gap;
– increased the number of Diversity and Inclusion Champions;
– started an inclusive leadership training programme for
our managers;
– reviewed our recruitment processes for due diligence on
diversity and inclusion measures;
– reintroduced stress awareness training for our managers;
– promoted our values to support a culture in which diverse
skillsets, combined with a strong collaborative approach,
create an environment where both personal and business
objectives can be met.
All employee gender
d
iversity ratio
74% (3,810) Male
25% (1,262) Female
1% (25) Not disclosed
74%
25%
1%
Senior management
team diversity
83% (15) Male
17% (3) Female
83%
(15)
17%
(3)
75%
(6)
25%
(2)
Board diversity
75% (6) Male
25% (2) Female
At 30 June 2022 our gender diversity split was:
Management level Male
Male
% Female
Female
%
Board 6 75 2 25
Executive Committee 6 86 1 14
Senior managers
1
15 83 3 17
Subsidiary directors
2
40 95 2 5
1
As defined by the Companies Act 2006.
2
Means statutory directors.
Engaging with our people
The ongoing effects of the pandemic have highlighted the
importance of engagement to ensure that our people continue
tofeel supported through challenging times. Returning to normal
after lockdown has given everyone the opportunity to return to
collaborating onsite more frequently, which our people have
welcomed. Employees have welcomed our new hybrid working
policy, which adds further flexibility to our working practices.
The labour market has been particularly challenging in all
regions. As a result, we have taken a more dynamic approach
toattracting and retaining talent, including incentivising our
existing employees to make referrals for key roles.
We hope that our focus on performance review, career
progression and reward will also improve employee
engagement. More generally, we continue to share news and
information about Renishaw through a number of channels, to
help our people stay engaged in our Group.
During the next year, we will continue to achieve our objectives
for reward and career progression. We also intend to review our
benefits package to identify where improvements can be made.
Supporting wellbeing
The health, safety and wellbeing of our people remains a priority.
Once again, our people rose to the ongoing challenges during
the pandemic this year. We took a cautious but structured
approach to relaxing measures when lockdowns were lifted,
demonstrating our commitment to keeping our people and our
communities safe.
Of course, wellbeing has remained a critical issue for everyone,
even as restrictions have started to ease. As a result, we’ve
introduced additional measures to support our people’s health
and wellbeing:
– Added mental health cover to our subsidised private medical
scheme (UK only).
– Introduced a free flu voucher programme (UK only).
– Increased our wellbeing materials on SharePoint.
– Shared further guidance for managers on handling
difficult conversations.
– Piloted mental health awareness training for managers
(UK only).
Providing a safe working environment
We’ve continued to work hard managing COVID-19 risks and the
associated changes in legislation and guidance, protecting our
employees’ health and safety with minimal business disruption.
We’ve reviewed our COVID-19 control measures throughout the
year, and some measures remain in place such as providing
free lateral flow tests for site-based employees. With the rules on
wearing of face coverings and social distancing relaxing, we’re
back to a relatively normal way of working.
With a new Group Health and Safety manager joining us in the
year, we’ve introduced a new H&S strategy and have three
further new members of the team. We also developed and
delivered a ‘near miss’ reporting campaign, which is helping
us to better understand these events and take remedial action.
Our H&S team also discuss these near misses with managers
in the relevant business areas. This should help reduce our
accident rate in the future.
This year we experienced 145 accidents (2021: 124) against
a year-end headcount of 5,097 (2021: 4,664). This gives an
accident frequency rate of 24.27 per million hours worked
(2021: 17.40), with the increase reflecting that we have more
people working onsite this year.
There were six reportable accidents under the UK RIDDOR
reporting requirements. This is equivalent to a lost time injury
rate of 1.0 per million hours worked, compared with a UK
manufacturing average for RIDDOR-reportable accidents of
2.3per million hours worked.
Gender pay gap Health and safety
22.0%
mean
22.8%
median
1.0
injury rate per million
2.3
injury rate per million
(2021: 23.7%) (2021: 23.2%) hours worked (Group) hours worked
(average for UK
manufacturing sector)
Renishaw plc Annual Report 2022 55
Strategic Report Governance Financial statements Shareholder information
I started the embedded
electronics degree apprenticeship
programme in 2017 and since
then have rotated through various
roles in the business. I’ve been
working on the embedded
software in our next generation
of radio probes, and am
looking forward to developing
my own skills and Renishaw’s
future products.”
Jack Chapman
Design/Development
Engineer
I joined as an apprentice 10 years
ago, moving into manufacturing
to work on CMM products. I’ve
since completed my degree
in mechanical engineering
and am now a Senior Process
Improvement Engineer, leading
a team of technicians and
engineers to support the
production of our styli and
encoder products.”
Beth Low
Senior Process
Improvement Engineer
I wanted to explore options related to
my medical engineering degree but
outside of a pure engineering role,
so I joined the graduate programme
as a Project Co-ordinator, delivering
product development projects for
encoders. I then moved to Group
Engineering as a Senior Project
Manager, streamlining business
processes, project reporting
and business change initiatives.
In March 2021, I became our Head
of Compliance Transformation,
supporting the business to better
align our compliance activities.”
Lily Joyce
Head of Compliance
Transformation
I started working as a summer placement student in
Renishaw Ireland while studying engineering at Trinity College
Dublin, before joining the UK graduate programme in 1997.
Since then, I’ve held several technical, operational and
corporate roles, including in design, production and project
engineering, as well as key operational roles.
A particular highlight was working
closely with Will Lee and the Executive
Committee on key strategic and
operational projects. More recently,
I’ve been appointed Director of
Additive Manufacturing, working
closely with a dedicated team,
including Sir David McMurtry, to
shape Renishaw’s future direction in
this exciting area. I combine my role at
Renishaw with that of mother to three
young children.”
Louise Callanan
Director of Additive Manufacturing
We are proud of our track record of developing
people from within the business. We offer them
opportunities to progress through different levels
and into other parts of the Group. Our Early Careers
programme is really popular, and many of our
senior leaders have been with us since the start of
their career; Will Lee, our Chief Executive, was part
of our graduate intake in 1996. Here, a few of our
people talk about how they developed their career
at Renishaw.
Louise’s journey
Promoting from within
Opportunities to progress
Managing our resources and relationships continued
Our people
I’m a third-year apprentice and joined the
programme after completing my GCSEs.
From day one, Renishaw offered me a
secure platform to develop my education
and hands-on skills in an enjoyable
environment. As an ambitious global
business, Renishaw is continuing to invest
in my potential as an engineer.”
Seb Hobbs
Manufacturing Apprentice
Renishaw plc Annual Report 202256
Strategic Report
Our approach to sustainability
Sustainability is an integral part of our purpose to transform
tomorrow together. It’s our ambition to become a sustainability
leader, working in partnership with our customers, suppliers
and local communities to create positive change. This year,
we developed a new sustainability delivery plan, guided
by our values, which sets out our targets for reducing our
emissions and how we’ll contribute to the three UN Sustainable
Development Goals (SDGs) that are most relevant to
our business.
One of the most important ways in which we can have an impact
is by reducing our emissions. Our new Net Zero commitment,
approved by the Board in April 2022, sets out how we will
prioritise that work.
In order to achieve our commitment, we will need to reduce our
GHG emissions by 90%, compared to our FY2020 baseline.
So, we have committed to reaching Net Zero across all our
Scope 1 and 2 emissions by 2028 and in our Scope 3 emissions
by 2050, at the latest.
To address the remaining 10% of emissions, we’ll invest in
credible carbon capture and removal programmes, such as
reforestation and carbon capture technologies. This way we can
ensure that we’re removing at least as many GHGs as we emit.
We intend to submit our targets and plans for verification and
approval by the Science Based Target initiative (SBTi).
Addressing our Scope 1 and 2 emissions
Scope 1 and 2 emissions are those that we release directly into
the atmosphere, either by burning fuel to run our vehicles and
buildings or through the electricity we buy.
To tackle these emissions and reach our 2028 target, we have
developed a phased action plan, which includes:
– moving our sites to low-carbon heating systems;
Managing our resources and relationships continued
Our planet
– installing more renewable sources of energy at our sites, such
as solar panels and wind turbines;
– continuing to move our sites to purchased renewable
electricity; and
– upgrading our vehicle fleet to ultra-low emissions.
Scope 3 is a broader category covering indirect emissions
associated with making our products. For example, emissions
associated with moving our products around the world, or from
the goods and services we buy.
Calculating Scope 3 emissions is a complex process because it
involves measuring the GHGs from our whole value chain. So we
have set ourselves a deadline to quantify these emissions by
March 2023. We’re already making progress in several areas,
including:
– introducing an ultra-low emission vehicle (ULEV) leasing
scheme for UK employees; and
– carrying out life cycle assessments (LCAs) for key products to
determine their environmental impact.
We realise that becoming a sustainable business requires a lot
more than achieving Net Zero emissions. That’s why we’ve also
assessed the SDGs and identified three that are most relevant to
our business:
– Goal 8 – Decent work and economic growth;
– Goal 12 – Responsible consumption and production; and
– Goal 13 – Climate action.
Within the next year we’ll create objectives and targets for our
contribution to these goals and report publicly on our progress.
To help us deliver our sustainability plans, we have set up a
new Sustainability team, which includes four new roles that will
work alongside our Head of Sustainability. We’ve also created
a sustainability governance structure (see overleaf) to manage
and direct our approach.
We’ve made significant progress in the last 12 months and are
excited to continue working towards achieving our sustainability
commitment. On the following two pages you can read more
about our plans to reach Net Zero and what we’ve achieved
this year.
20192018 2020
2022
2021
Total statutory emissions
tCO
2
e
Scope 1
Scope 2
5.4k
4.1k
4.5k
4.4k
4.4k
4.4k
3.9k
3.7k
3.9k
3.9k
20192018 2020
2022
2021
Statutory GHG emissions
tCO
2
e per £m revenue
15.6 15.6
16.2
14.3
11.6
20192018 2020
2022
2021
Group energy consumption
kWh
UK
Non-UK
18.7m
37.3m
19.6m
18.0m
17.6m
36.5m
33.3m
35.4m
38.7m
18.2m
We calculate our GHG emissions using the GHG Protocol Corporate Accounting and Reporting Standard (revised edition). We base as much data as we can
on direct sources, such as meter readings and utility bills. We use estimated figures for June each year to ensure timely data capture, but we'll update June
2022’s data in the next Annual Report. Data for previous years has been subject to a ‘true up’ due to improvements in data capture methodologies, official
retrospective updates to carbon emission factors and the correction of historical data errors. Our 'statutory emissions' mean our Scope 1 and 2 emissions and
we use the market-based methodology to account for our efforts in generating and purchasing low-carbon energy. The location-based method is provided for
disclosure only.
Renishaw plc Annual Report 2022 57
Strategic Report Governance Financial statements Shareholder information
Managing our resources and relationships continued
Our planet
To achieve Net Zero, we need to make changes throughout the business, which is why we’ve aligned our Net Zero commitment
with our business model. To successfully deliver on a commitment of this scale, it will be crucial for us to measure our progress,
report to relevant stakeholders and take meaningful action in response. The graphic below shows the key actions that we’ve
identified so far and how they relate to our business model:
R
e
p
o
r
t
R
e
s
p
o
n
d
M
e
a
s
u
r
e
Routes to
market
Customer needs
Innovative
engineering
High-quality
manufacturing
Developing a sustainable travel
policy to reduce our emissions from
travelling to customers.
Quantifying our Scope 3 emissions by March 2023,
to givecustomers the information they need on the full
carbon footprints of our products.
Moving our vehicle fleet to ULEV, to reduce emissions
whentravellingto customers.
Starting work to ensure our new facilities at Miskin, Wales,
are built to Net Zero operational standards and in ways that
minimise construction-related emissions.
Replacing heating oil at our Swiss and German siteswith
low-carbonheating systems.
Moving our biggest emitting
manufacturing sites to certified renewable
energy contracts.
Working with our
transport and
distribution partners
to develop GHG
reduction initiatives
and improvements
indata quality.
Supporting our
joint ventures to
collate data.
Performing LCAs for
16 initial products.
Embedding
sustainable design
principles intoour
Product Innovation
Process.
Using an LCA
tool to help make
decisions about
sustainable
product design.
Our Net Zero commitment
Renishaw plc Annual Report 202258
Strategic Report
R
e
s
p
o
n
d
Our progress this year
In addition to agreeing our Net Zero commitments this year,
we’ve continued to make good progress in our existing work to
reduce emissions, minimise waste, and support our customers
in their sustainability journeys. We’ve also introduced a new
sustainability governance structure to help direct and oversee
this work:
Sustainability
team
Responsible for
the day-to-day
management of
the Sustainability
Delivery Plan.
MSD
Sustainability
team
Implements
sustainability
projects within
manufacturing.
Design for
Circularity forum
Implements
more sustainable
design across our
product groups.
Sustainability Steering Committee
Members of the Executive Committee and senior managers
provide oversight of our sustainability approach and share regular
updates with the Board.
Sustainability Committee
Representatives across the Group who guide our sustainability
approach. The Chair of this Committee provides updates to the
Sustainability Steering Committee.
Sustainability governance structure
Life cycle assessments to help our customers
We know our customers value the way in which our products
reduce waste and improve efficiency. We also know that they
want to understand the product’s environmental performance.
That’s why we’re starting to carry out a series of LCAs on
a mixture of popular and new products. This will help us
understand and quantify their environmental impact, so that we
can share this with our customers. We plan to start integrating
LCAs into our Product Innovation Process (PIP) this coming year.
Once fully integrated into the PIP, it will ensure that new products
are designed with sustainability as a key requirement.
We also want to find ways to design more sustainable options
for our products once they reach their end of use. To help us
do that, we set up a new Design for Circularity forum this year,
which includes representatives from every product group.
We also provide recycling guidance for our products which
helps end users dispose of them responsibly.
Lowering our emissions
Once again, we’re pleased to have reduced our statutory GHG
emissions by 293 tCO
2
e this year. We have mainly achieved this
by fitting solar panels to our buildings in Dublin, Ireland, and
Apodaca, Mexico, and moving more of our sites to renewable
electricity contracts. Our overall measured GHG emissions have
increased this year because we’ve started measuring more of
our Scope 3 emissions. As mentioned, we intend to fully quantify
our Scope 3 emissions by March 2023, but already report more
GHG data for:
– shipping and distributing our products;
– employee commuting;
– our joint venture companies; and
– the raw materials we use.
Our air travel emissions increased by662tonnes CO
2
e versus
last year, as COVID-19 travel restrictions eased. However, we
haven’t returned to our pre-pandemic levels, thanks to our
new hybrid ways of working. To keep making progress, we’re
developing new sustainable travel principles, which will help
embed sustainability ineveryday business decisions.
Minimising our waste
Due to a record year of trading, our waste levels rose to 2,616
tonnes this year (2021: 2,438 tonnes). However, we diverted
87% of our waste away from landfill, by finding ways to reuse,
recycle and compost, as well as energy from waste recovery.
For example, we began successfully reusing our transit crates,
which has reduced the number of new crates we needed to buy.
We know that a significant proportion of our waste is created
from our manufacturing processes. So, our new Design for
Circularity forum is working with our manufacturing waste
champions to continue looking at ways to minimise the amount
of waste we generate, while maximising options to reuse, recycle
and compost.
20192018 2020
2022
2021
Energy source
kWh
Renewable
Non-renewable
34.3m
21.7m
23.8m
21.6m
21.2m
32.3m
29.7m
31.8m
35.0m
21.8m
20192018 2020
2022
2021
Total measured GHG emissions
tCO
2
e
Scope 1
Scope 2
35.6k
4.1k
5.4k
35.3k
4.5k
24.9k
4.4k
28.8k
4.4k
4.4k 3.9k 3.7k 3.9k
30.9k
3.9k
Scope 3
20192018 2020
2022
2021
Total measured scope 2 GHG emissions
tCO
2
e, location-based
14.3k
12.2k
10.3k
10.0k 10.0k
Renishaw plc Annual Report 2022 59
Strategic Report Governance Financial statements Shareholder information
Managing our resources and relationships continued
Our planet
Governance
2022 position 2023 priorities 2022 progress
– We have identified climate change as a principal
risk (see page 48). This means our Board now
oversees the Group’s management of climate-
related matters, which are discussed regularly
at our Board meetings. Allen Roberts, Group
Finance Director and Board member continues
to hold executive responsibility for sustainability.
Our Audit Committee, with input from the Risk
Committee, oversees risk management including
climate-related risks. More detail on how the Board
are updated on principal risks can be found on
page 40.
– The Board has considered climate-related issues
when reviewing and guiding strategy, and in
April 2022 it approved our Net Zero commitment.
As part of this commitment the Board considered
climate-related issues when they agreed a major
plan of works and significant capital expenditure
to reach Net Zero in our Scope 1 and 2 GHG
emissions by 2028. It made clear that the budget
for the Sustainability team should be increased to
cover four new specialist sustainability roles.
– Our Sustainability Steering Committee provides
strategic oversight of our sustainability approach
and our full sustainability governance structure is
on page 59. The Committee includes members of
the Executive Committee and senior managers.
It gives monthly climate-related updates to the
Board and wider Executive Committee.
– This Committee also supports our Board in making
strategic decisions on climate-related matters,
such as our Net Zero commitment.
– We’ll establish a consistent and regular review
of climate-related risk and opportunities so our
Board can oversee progress towards related goals
and targets.
– We’ll also start a training programme on carbon
literacy and climate risk and opportunities for our
senior managers and wider Group.
Task Force on Climate-related Financial Disclosures
Progress
Improvement No change
The table below shows our position relating to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations
and recommended disclosures, in compliance with Listing Rule 9.8.6(8). This year, we’ve taken steps to comply with these
recommendations and disclosures, including establishing our Sustainability Steering Committee to oversee our sustainability
approach. We haven’t yet been able to take all the necessary actions to comply fully with the recommended strategy disclosures
a), b) and c), or risk management disclosures a), b). However, below, we set out what we have achieved this year, as well as
explaining how we’re working towards full compliance in our next Annual Report.
Renishaw plc Annual Report 202260
Strategic Report
Strategy
2022 position 2023 priorities 2022 progress
– Although we have identified climate change as
a principal risk, our Risk Committee has agreed
that we need to better understand exactly what
climate-related risks and opportunities we face.
– We are already aware of some of those risks
and opportunities. For example, the rapid rise in
energy prices is both a risk and opportunity since
it increases costs but reduces the payback period
on renewable energy generation projects. As a
result, more of our sites have become viable for
renewable energy generation projects. However,
we have not yet completed a full assessment of
all our climate-related risks and opportunities, and
this will be a priority before we publish our next
Annual Report.
– We’ll carry out climate scenario analysis to better
understand our resilience to climate change. We’ll
focus on our own operations first but understand
the importance of assessing resilience across our
whole value chain.
– We’ll identify the climate risks and opportunities
we face over the short, medium and long-term
and determine their effect on our strategy and
financial planning.
Risk management
2022 position 2023 priorities 2022 progress
– Our risk identification and management process
has identified our Climate change risk, as
explained on page 48.
– Our risk oversight for climate issues is located
on page 39. This includes both a ‘top down’ and
‘bottom up’ risk identification process.
– We’ll establish a consistent and regular review
of climate-related risk and opportunities using a
‘bottom-up’ approach.
– We’ll start to engage with other stakeholders like
customers, suppliers and investors as we recognise
their involvement is necessary to effectively manage
our climate risk and opportunities.
Metrics and targets
2022 position 2023 priorities 2022 progress
– Our recently agreed Net Zero commitment means
that we are now working towards Scope 1, 2 and
3 emissions targets. More detail can be found on
page 57.
– We continue to disclose GHG data as well as other
environmental metrics such as renewable energy
generation and waste.
More detail can be found on pages 57 and 59.
– We’ll quantify our Scope 3 emissions by
March 2023.
– We’ll seek external assurance for our
sustainability data.
– We’ll use relevant cross-industry TCFD metrics
infuture disclosures.
Renishaw plc Annual Report 2022 61
Strategic Report Governance Financial statements Shareholder information
Managing our resources and relationships continued
Customers
Delivering our purpose means working closely with our global
customers to help them solve complex challenges. It also means
helping them increase innovation, product quality, production
and operational efficiencies in their own businesses.
Building long-term relationships
When working with customers, we have four key aims:
– build long-term, trusted relationships to maximise customer
satisfaction and return on investment. It is not just about a
sale, but supporting and helping our customers develop their
processes and improving the quality of their products;
– bring high levels of integration to our customers’
manufacturing environments. We are especially focused on
businesses that are looking to introduce connectivity and
intelligent use of data into their processes;
– deliver excellent support no matter where in the world our
customers are based. Supporting our customers, wherever
their machines are located, builds their trust and confidence;
and
– provide innovative services to support changing customer
expectations and market requirements throughout the
life cycle of all our product ranges. We are flexible in our
approach and support customer needs from initial purchase,
right through to end of product life.
We have always understood the importance of providing
excellent support at a local level. We achieve this through our
subsidiary network and long-term distributors. This allows us to
assure our customers that whatever their needs, we can support
and assist them, resulting in a positive return on their investment.
While the application of our products is common worldwide,
business practices, customs and levels of technical expertise
and language can vary. That’s why our local teams are so
important. This approach costs more than relying solely on third-
party distributors, but it means our teams are readily available
to provide support and advice. By using the strength of our UK
operations to develop new products, this local approach means
teams are free to make faster decisions and tailor their sales and
marketing, and their solutions, to specific customer needs.
Establishing feedback
The ongoing success of our business relies on customers
continuing to buy our products. To ensure our existing and
future products continue to serve their requirements, we
work hard to understand their needs. We do this in several
ways, such as gathering regular feedback while testing new
products and working with them to design world-class customer
support programmes.
Due to the highly technical nature of our customers’
requirements and our products, we prefer to do all this through
direct contact. For example, the voices of our customers are
represented at numerous forums, including regional sales and
marketing conferences, product line conferences attended
by representatives from our sales regions, and service
conferences. Members of our Board and Executive Committee,
and our Regional Presidents, also regularly engage with
machine builders and end users across our key sales regions.
They receive feedback on our performance as a supplier and
how we can continue to help our customers improve their own
products and operational performance. Our membership of
trade associations and other industry bodies (see ‘Communities’)
gives us the opportunity to network with our peers and learn
more about the challenges our industry faces.
As more customers set their own sustainability targets, it is more
important than ever that we work with them to understand their
challenges and goals. Understandably, customers are also
interested in our own commitments and this year we received
more questions than ever before, including queries about
embedded emissions within our products.
This year we also started to attend global trade exhibitions and
customer open houses, possible once again now that pandemic
restrictions in many parts of the world are easing. These are very
important opportunities to talk to our customers in a way that
simply isn’t possible using digital platforms. For example, our
Chief Executive, Will Lee, attended exhibitions in EMEA, APAC
and the Americas during the year, meeting key customers,
as well as our sales and applications colleagues who have
daily interactions with customers and prospects. These events
are, once again, generating thousands of enquiries giving
us valuable intelligence into market trends, as well as
sales opportunities.
Despite the return of trade exhibitions, we continue to develop
our use of digital marketing technologies. These have proven an
invaluable way to interact with our wider industry and introduce
them to our technologies and expertise. We’ve further developed
our webinar programme during the year, with a range of topics
such as CMM productivity and Raman spectroscopy of carbon
materials. These are available live and on-demand in up to
13 languages. This has been particularly successful for our
Spectroscopy business, whose live webinars now regularly
attract more than 1,000 participants. We’re continuing to use
automated marketing to coordinate our messages, and deliver
more tailored customer experiences.
Social media, especially LinkedIn, continues to be an important
channel for us. Our Smart Manufacturing Ambassadors
programme, which gives social media training and support
to customer-facing employees, has increased our online
engagement and support for customers. This channel makes
us a more accessible business and our experts’ ‘How to?’
style posts generate good levels of engagement, with queries
answered directly by our employees.
The return of in-person events also means we can, once
again, host customers from around the world at our local
demonstration facilities and our manufacturing sites in the UK.
As a manufacturer and heavy user of machine tools and our own
products, we understand how to talk to our customers. Site visits
give customers the chance to discuss mutual challenges, peer-
to-peer, with our manufacturing teams.
Our stand at the EMO Milano exhibition in October 2021.
Renishaw plc Annual Report 202262
Strategic Report
Communities
We strive to be open, honest and consistent in our relationships
with the communities that live near our operations, and we
are guided by our values of integrity and involvement. As a
large organisation we recognise the impact we have on the
communities we work in and aim to make a positive difference.
We aim to achieve this by:
– supporting community sustainability initiatives;
– providing financial support for charities and other not-for-
profit organisations;
– engaging with local and national governments and
elected representatives;
– working with trade and general business organisations;
– running extensive education outreach initiatives and large
work experience programmes;
– supporting employee fundraising and volunteering;
– offering free use of our facilities for educational and other
community events; and
– sponsoring community sports clubs and festivals for science,
music and the arts.
Education outreach
Our science, technology, engineering and maths (STEM)
education outreach programme is designed to excite, interest
and engage young people in a range of engineering activities.
We do this to encourage them to consider studying STEM
subjects and, further down the line, a career in engineering.
Our programme includes virtual and physical workshops
at our longstanding education centre at our site in Miskin,
Wales. We’re also opening a new education centre at our New
Mills headquarters this autumn, following a delay caused by
the pandemic.
During the 2021-22 academic year our programmes reached
around 11,000 UK students, with most events held online.
Our interactive virtual workshops on 3D printing and coding
proved particularly popular. We also ran work experience weeks
and our four full-time education outreach employees, supported
by more than 120 STEM ambassadors, also delivered talks and
workshops at local schools.
We were particularly pleased that 49 of our events took place
at schools with an above-average number of students claiming
free school meals. We believe this is a good demonstration
of our commitment to supporting diversity in engineering
careers. We also worked with Gloucestershire Local Enterprise
Partnership to give activity packs to special educational needs
and disabilities (SEND) schools, supported by virtual interactive
workshops. To mark International Women in Engineering Day
2022 we also hosted a weekend of STEM workshops for 130
Girl Guides.
In April we sponsored a WorldSkills event during the UK’s
MACH exhibition, which held competitions for students across
Europe. In the USA, Renishaw Inc has relationships with several
universities and colleges, including Greenville College, South
Carolina, and Davis Technical College, Utah. This gives students
access to our latest measurement technology and support from
our engineers.
Charitable giving
We support charities and not-for-profit organisations within
our communities via formal charities committees, individual
employee fundraising and one-off fundraising events.
The committees are focused on supporting organisations local
to Renishaw offices. In the UK, we run an additional fund that
donates monies to support the victims of global disasters.
In FY2022, we made direct donations totalling £292,000 to more
than 190 different organisations around the world. This included
donating £40,000 to charities supporting the crises in
Afghanistan, Madagascar and Ukraine. Among our donations
in the UK was £5,000 towards a baby transport incubator for
the neo-natal intensive care unit at St Michael’s Hospital in
Bristol. In India, we gave grants of £105,000 to support projects
focusing on healthcare, female empowerment, environmental
protection, and child welfare. This included a £33,000 donation
to the Ashwin Medical Foundation’s Moraya Charitable
Hospital in Pune, to help it operate its own oxygen plant during
the pandemic.
In the US, our Social and Wellness Initiatives Towards Collective
Health (SWITCH) committee focuses on the idea that one small
switch can make a big difference to your overall wellbeing.
This year, the committee ran a number of fundraising events,
including a ‘One Warm Coat Drive’ to purchase winter coats for
people in need, a local blood drive and a sweet collection to
send to US troops serving overseas.
Following the Russian invasion of Ukraine, we also made some
of our accommodation that is normally used by employees
available to the UK’s Homes for Ukraine programme.
We also sponsored two Ukrainian families to help them settle
in Gloucestershire.
Community engagement
We support a wide range of arts, music and sports organisations
in the West of England and South Wales where our main UK
sites are located. During the year, this included Lechlade and
Wychwood music festivals, and sponsoring Scarlets Women’s
rugby team, as well as several national and international male
players. We’re also long-term sponsors of Bristol Beacon concert
hall, where we are sponsoring an education room that will be
located within its refurbished building in the heart of Bristol.
We continue to support initiatives that aim to create more
sustainable communities. For example, we are members
of Stroud District Action on Plastic, which aims to remove
unnecessary plastic in the area. We also take part in a project,
which is using some of our land to help realise its aim to provide
a traffic-free route that connects our New Mills headquarters site
with local towns, villages and a proposed train station.
We support our wider business community through active
membership of trade associations and industry research centres,
such as Canada Makes; the European Society for Precision
Engineering & Nanotechnology; Global 3D Printing Hub (Spain);
and the Additive Manufacturing Users Group (USA).
Lucy Spiteri-Beale, one of our Early Careers STEM Outreach Tutors.
Renishaw plc Annual Report 2022 63
Strategic Report Governance Financial statements Shareholder information
Managing our resources and relationships continued
Shareholders
Shareholders
With around 53% of our shares held by our founders, Sir
David McMurtry and John Deer (our Executive Chairman and
Non-executive Deputy Chairman respectively), our investor
profile is quite different to most other large, listed companies.
We recognise the trust that our minority shareholders have
placed in us, and aim to provide sustainable long-term growth
in return.
Engaging with shareholders
We were pleased to welcome shareholders back in person at
ourNovember 2021 AGM. Due to positive feedback from the
wider investor community, we have kept the Q&A facility, which
we first introduced at our closed doors AGM in 2020. This allows
our shareholders to submit questions via email before the
meeting and to submit proxy instructions electronically. It also
helps them engage with the Board even when they are not able
to attend the AGM. Details of this year’s AGM can be found
in the Notice of Meeting, which will be provided separately to
shareholders in due course.
During the year, we held open webcasts for the FY2021 full-
year results and FY2022 interim results (which also included
Q&A sessions). Recordings of these are made available on
our website.
With COVID-19 restrictions lifted, we were also pleased to
welcome back current and potential shareholders, analysts,
brokers and financial advisors in person at our Investor
Day in May. During the day, we gave presentations on our
strategy and commitment to sustainability, including our
journey to Net Zero. We also held smaller workshops, which
focused on topics including finance, strategy and individual
product groups. This helped investors to gain more in-depth
understanding about our products and business, and to ask
detailed questions. The Board considered investor feedback
on the day via our broker UBS, and intends to implement
appropriate enhancements.
Record revenue and adjusted profit before tax
We’re pleased to have achieved record revenue and adjusted
profit in a year where we have seen strong revenue growth
in all of our regions as the recovery from the effects of the
pandemic continues. Adjusted profit before tax increased to
£163.7m this year from £119.7m last year, and statutory profit
before tax increasing to £145.6m this year from £139.4m last
year. Our cash and bank deposit balances have increased to
£253.2m at 30 June 2022, from £215.0m at 30 June 2021.
We have always valued having cash in the bank to protect
the core business from downturns, and we monitor our cash
against a minimum holding according to forecast overheads
and revenue downturn scenarios. This cash also enables us to
react swiftly where investment or market capture opportunities
arise, while we expect to significantly increase our investments
in capital expenditure in the coming years to meet expected
future demand.
Investing for the future
To deliver sustainable long-term growth, we have continued to
invest in research and development this year, spending £85.8m
on engineering costs in the year. As explained on page 19,
we’ve continued to concentrate on our flagship product projects
this year, focusing on products that we believe offer the best
return on ourinvestment and fit with our longer-term strategy.
With further improved profits and cash, we increased our interim
dividend to 16.0 pence per share, and the Board proposes a
final dividend of 56.6 pence per share.
Shareholdings
Directors
52.85%
Individuals
1.0 4%
Institutions
4 6 .11 %
Product demonstration at our May 2022 Investor Day.
Renishaw plc Annual Report 202264
Strategic Report
Suppliers
Developing relationships
Our purchasing teams in the UK, Ireland, India, China, the USA,
and various European countries work hard to develop strong,
effective relationships with our suppliers. By having teams based
close to many of our suppliers we can have regular and direct
communications while addressing differences in culture, time
zone and language.
We also aim to build long-term relationships with suppliers.
We do this by embedding buyers within our New Product
Innovation teams so that we work with the right suppliers
from the initial product design stage. This helps us to ensure
that we’re receiving the components and materials we need
from suppliers with the high standards we’re looking for, while
supporting their growth too. As a result, our overall number
of suppliers hasn’t significantly changed as our business has
grown; instead many of our suppliers have grown with us.
We use tens of thousands of individual raw materials and
components, and so we recognise that we can’t take a ‘one
size fits all’ approach to these supplier relationships. For some
suppliers we’ll be a relatively small part of their business,
while for others, particularly small businesses located near
our manufacturing sites, we could be their major customer.
This reinforces the importance of working with our suppliers
from the early design stages, to help identify what matters most
to them.
Overcoming challenges in the year
Like many businesses, we’ve experienced supply chain
challenges this year. For many of the raw materials and
components we buy, global demand has outstripped supply,
and this has been a particular challenge with electronic
components. Some lingering effects of pandemic-related local
shutdowns and Brexit have exacerbated these issues.
Our long-term approach to working with suppliers, and the
quality of the relationships we’ve built, has helped us meet
this challenge. Our purchasing teams’ responsiveness and
rapid decision-making means we have responded quickly to
changes in supply and pricing. Having teams based close to
main sources of supply has also helped us to identify alternative
suppliers where needed. As some of our customers are
manufacturers of electronic components themselves, insome
instances we’ve used those relationships to strengthen our
position with suppliers to secure supply of critical parts.
Being clear on priorities has also helped us to mitigate much of
the supply disruption. Giving our suppliers clarity on our demand
requirements, including over the medium-term, has been
important to them. In turn, we’ve needed accurate delivery dates
from them to help revise our production plans as necessary.
As a result of our work with our suppliers, and our investment
in buying safety stock of critical components, we’ve seen no
significant disruption to manufacturing this year.
We remain grateful to our suppliers for their support in working
with us in this challenging period.
Working with high-quality and ethical suppliers
The need to protect the interests of our employees, customers,
and shareholders is important to us, and we do this by ensuring
that our supply chains are as risk-free as possible. We use a risk
management process that regularly assesses supply chain risk
and, where possible, looks to introduce secondary sources for
all key outsourced requirements.
We actively involve suppliers in our supplier performance
programme. Existing suppliers are assessed on a regular basis
to ensure that they meet expectations in the areas of delivery,
quality, corrective actions, and responsiveness. Where we
find shortcomings, we engage with suppliers to ensure they
are trained in good practice and that appropriate ongoing
improvement programmes are put in place.
Our supply chain and engineering teams put great emphasis
on ensuring that suppliers have the ability to meet our high
standards of quality by engaging with them as early as possible.
Where necessary, we work closely with suppliers to ensure that
they have the controls in place to ensure the ongoing supply of
quality goods and services. We share known good practices
and our knowledge and experience.
We are committed to conducting our business with honesty and
integrity; suppliers are no exception to this policy. All suppliers
we engage with are required to comply with our trading terms
and Group Business Code, covering areas such as modern
slavery, conflict minerals, human rights, anti-bribery, tax evasion,
data protection and dangerous goods.
Expenditure on goods and services:
£166.5m
Committed to capital expenditure projects:
£88.4m
AM assembly at our factory in Miskin, Wales.
Renishaw plc Annual Report 2022 65
Strategic Report Governance Financial statements Shareholder information
Section 172 statement
How has the Board had regard to Section 172 matters?
We explain how our Board engaged with employees, suppliers,
and customers during the year in the Managing our resources
and relationships section on pages 52–65. The Directors
regularly consider reports on health and safety, environment,
and security. This supports the Directors in their decision-
making, helping them understand the impact those decisions
have on our local communities and the environment. It is critical
to our success that we promote and ensure high standards
of business conduct. Further information can be found on
pages 41, 49, 55, and 57–59. The Group Legal and Company
Secretariat, Quality, Compliance, HR, and Sustainability teams
also report regularly to the Board. Our Non-financial information
statement on page 69 identifies policies and guidelines
governing our approach to anti-corruption, anti-bribery, social
matters, and human rights. Considering the long-term impact
of the decisions made by the Board is an integral part of the
approval of strategy, and our strategic progress this year is
disclosed on pages 18–21.
How did the Directors discharge their Section 172 duty
when taking the principal decisions during the year?
Our Board takes the interests of our stakeholders into account
when making decisions. We’ve identified key stakeholders on
pages 52–53. Different stakeholders have different needs, so
our Board tries to understand these needs and priorities during
its discussions. This, together with considering the long-term
consequences of decisions and maintaining our reputation for
high standards of business conduct, has always been integral to
the way we operate. This statement explains how our Directors:
– have engaged with our employees, shareholders, customers,
suppliers, our communities and others; and
– have considered our employees’ interests, the best interests
of our shareholders, the need to foster business relationships
with suppliers, customers and our communities, and the
outcomes of those considerations on the following principal
decisions taken during the financial year.
In this statement, we define principal decisions of our Board
as those taken in this financial year, which relate to matters of
key strategic importance and which are significant to any of our
key stakeholders.
Employee retention commitments
What was the principaldecision? Which stakeholders were considered?
How to ensure that the remuneration of our people remained competitive and
that we are well positioned to attract and retain talent.
Employees, shareholders
How did we engage with or consider our stakeholders?
We established working groups across the business to review our reward processes and make recommendations.
We gathered employee feedback through a pulse survey and exit interviews to help identify key areas for improvement.
We considered the expectations of, and verbal feedback received from, our shareholders.
What was the outcome of our engagement/consideration?
The Board approved a significant benchmarking budget for the UK and some overseas roles. It then implemented
package changes or identified employees in two phases during the year. We intend to roll out benchmarking globally by
December 2022.
During phase one, we engaged an external provider – WTW – to benchmark salaries in the UK, India, and parts of
Europe. The benchmarking exercise involved the analysis of our pay distribution relative to the wider market, as well as the
consideration of the pay of each employee, relative to what they might earn elsewhere, to ensure their pay is competitive.
Around 1,400 companies contribute their data anonymously to the wider market element of this exercise.
Our reward strategy is now focused on improving our pay positioning by continuing to benchmark going forward.
The Board also agreed to simplify our performance review process (including the rating system), which has shortened
timescales and given our people greater flexibility to complete their reviews.
In the main, our people have reacted positively to the changes in both the performance review process and benchmarking.
We are now in the process of putting a new job grading structure in place, and work is underway to develop competency
frameworks to support career progression.
For more information, see pages 54–55
Renishaw plc Annual Report 202266
Strategic Report
Sustainability commitments
What was the principaldecision? Which stakeholders were considered?
Whether to set sustainability targets and, if so, how to achieve them. Shareholders, employees, customers,
suppliers, environment, and communities
How did we engage with or consider those stakeholders?
Employee-led groups such as the Sustainability Committee and Design for Circularity forum gave our people the opportunity
to help shape the main actions and target dates of our Net Zero commitment and targets.
In setting these targets, developing our emission reduction plans, and acknowledging climate change as a new principal
risk, our Board specifically considered investor expectations, acknowledging that many of our shareholders are similarly
concerned about climate change and want to see companies take action.
The Board’s consideration included reviewing the potential costs to the Group and our stakeholders (including our customers
and suppliers) against the wider benefits of the commitment, including the benefits to our planet and communities in which
we operate.
What was the outcome of our engagement/consideration?
Following engagement with stakeholders, the Board acknowledged that taking action on climate change is the right thing to
do; from a global perspective, it is the responsible approach for both our planet and society.
Our Board agreed to set specific Net Zero targets to address our Scope 1, 2 and 3 emissions. To reach Net Zero, we aim to
reduce our Scope 1 and 2 emissions, by 90% of our FY2020 baseline emissions, no later than 2028. And we aim to do the
same in our Scope 3 emissions by 2050 at the latest. Our Board also agreed that climate change should be included within
our principal risks.
Involving our employees in the process of setting our Net Zero commitment has helped to ensure it genuinely reflects
our business and represents realistic and achievable goals. It also helped us consider the interests of our people.
We communicated our Net Zero commitment across the Group through a series of webinars where employees could provide
feedback and ask questions. A video was also posted on Channel R, our internal communications channel available on the
employee intranet.
One of our larger institutional investors asked us to explain what our Net Zero commitment is, to help them understand how it
aligned with their investment requirements. This has helped us to better understand what matters to our shareholders. We also
gave a presentation on our Net Zero commitments at our Investor Day this year, and attendees had the opportunity to ask
questions during a Q&A session.
As part of our sustainability commitments we have also identified three of the UN’s Sustainable Development Goals which are
most relevant to our business. Our Board have approved this selection since the year-end, and we will now develop targets
and plans for how we can best contribute to these SDGs in FY2023.
For more information, see pages 57–61
Renishaw plc Annual Report 2022 67
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 202267
Section 172 statement continued
Our values
What was the principaldecision? Which stakeholders were considered?
How to communicate and embed our values – innovation, integrity,
inspiration, and involvement – which underpin our purpose of Transforming
Tomorrow Together.
Employees
How did we engage with or consider those stakeholders?
We held values workshops with regional representatives, with attendees from all levels of the business. This included
dedicated workshops for senior managers to involve them in the communication of the values and to understand how they are
perceived in different areas. This ensured that all parts of the business were considered.
Involving employees in values workshops before they were more widely communicated and embedded ensured we
understood how the values were perceived by different employee groups and that they genuinely reflected our business.
What was the outcome of our engagement/consideration?
We ran a global communications campaign for our updated values, which included an introductory video from our Chief
Executive, Will Lee. Other materials to support this campaign, such as videos from employees from different parts of the
business and in multiple languages, were available on our employee intranet.
Having communicated our values to the Group, we launched a global values competition as a tangible way to recognise
values-led behaviours and celebrate employees who exemplify them.
For more information, see pages 6–7
Cessation of trade in Russia
What was the principaldecision? Which stakeholders were considered?
Following the Russian invasion of Ukraine in February 2022, we immediately
stopped the supply of goods to our Russian offices. These offices continued
to fulfil orders from local stock when possible and where customers were not
subject to sanctions. The Board had to consider how to deal with operations
in Russia going forward.
Employees, customers, suppliers,
shareholders, and communities
How did we engage with or consider those stakeholders?
We consulted affected employees, distributors and regional management. We gave serious consideration to our people living
and working in Russia, as our Board acknowledged that any interruption to, or cessation of, trade would have a significant
effect on their lives. We issued regular guidance and published an FAQ document to address concerns. We listened to our
people throughout the Group, who voiced their opinion that the right thing to do would be to end trade in Russia.
We also needed to consider our suppliers, as sanctions have been introduced against Russian and Russian-affiliated
companies. As part of this, we reviewed our global supplier base and assessed potential effects of the decision. Our Group
purchasing processes include assessing suppliers against current export controls and sanctions and conducting appropriate
due diligence. We have talked to key suppliers around the world to identify any potential disruption within their own supply
chains and will take mitigating actions where necessary.
What was the outcome of our engagement/consideration?
Following our stakeholder engagement, we decided to stop trade operations of our Russian subsidiary, including closing our
offices in Moscow and Perm. Although we have been able to transfer some colleagues to other subsidiaries, regrettably this
has meant job losses within Russia, and we have offered support to affected colleagues. The decision to end trade operations
in Russia has also led us to make a provision for a possible £2.1m loss on the value of our Russian assets. Despite this, we
do not expect to see major financial issues as a result of our decision. Combined sales to Russia and Belarus have typically
represented around 1% of total Group revenue.
For more information, see page 41
Renishaw plc Annual Report 202268
Strategic Report
Non-financial information statement
We need to include in our Annual Report certain non-financial information, as required under sections 414CA and 414CB of the
Companies Act 2006. The table below shows where this information can be found in this Report.
Our business model is set out on pages 16–17 and our non-financial KPIs are disclosed on page 23.
Reporting
requirements(s) Where you can find this Our policies Related principal risks
Climate-related
financial disclosures
TCFD statement (pages 60–61) n/a Climate change (page 48)
Environmental
matters
Managing our resources and relationships
–ourplanet (pages 57–59)
Group Business Code,
Group Environment Policy
Climate change (page 48)
Our employees Managing our resources and relationships
–ourpeople (pages 54–55)
Group Business Code,
Equality, Diversity and
Inclusion Policy
People (page 42)
Social matters Managing our resources and relationships –
ourpeople (pages 54–55) and our communities
(page 63)
Group Business Code People (page 42)
Respect for
humanrights
Managing our resources and relationships
–ourpeople (pages 54–55) and our suppliers
(page 65)
Group Business Code,
Modern Slavery and
Human Trafficking
Statement
People (page 42)
Non-compliance with laws
and regulations (page 49)
Anti-corruption
andanti-bribery
Principal risks – non-compliance with laws and
regulations (page 49)
Group Business Code,
Group Anti-Bribery Policy
Non-compliance with laws
and regulations (page 49)
Allen Roberts
Group Finance Director
The Strategic Report on pages 1 to 69 was approved by the Board on 15 September 2022 and signed on its behalf by:
Sir David McMurtry
Executive Chairman
Renishaw plc Annual Report 2022 69
Strategic Report Governance Financial statements Shareholder information
Renishaw
XR20
Governance
Governance
Renishaw plc Annual Report 202270
Renishaw
XR20
72 Directors’ Corporate Governance Report
74 Board of Directors
76 Executive Committee
82 Nomination Committee Report
85 Audit Committee Report
92 Directors’ Remuneration Report
111 Other statutory and
regulatory disclosures
114 Directors’ responsibilities
115 Independent Auditor’s Report
Scan the QR code
to watch the video
Productivity
BOST reduces
machine set-up
time by 50%
BOST Machine Tools Company (BOST),
awell-established manufacturer of
machine tools in Spain, has used our
calibration solutions to support the
verification and testing of their machines
before they leave their factory.
With an increasingly demanding market,
BOST was faced with the need to verify,
and improve the precision of rotary axes
but due to the design of the rotary heads
itwasn’t possible to mount equipment to the
centre of these axes to verify performance.
Our engineers demonstrated our XR20-W
rotary axis calibrator on various machines
at BOST, and this gave complete flexibility
with test method set-up. Tests could be
configured with the capture intervals and
measurement ranges needed to suit the
different axes being tested. Our off-axis
rotary software also allows the XR20-W to
be mounted away from the centre of axis
rotation, providing a simple solution for the
calibration of the rotary axes.
Our XL-80 laser interferometer has also
been used to provide a stabilised laser
source and environmental compensation,
resulting in linear measurement accuracy
within ±0.5 ppm, and reducing calibration
time by up to 50%.
BOST also uses the XL-80 to carryout
precision checks on positioning performance
of angular and straightness errors.
Together, these products have provided
BOST with the accuracy and ease that they
need, improving their own productivity and
helping them to provide their customers
with high-quality, verified machine tools.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 71
Directors’ Corporate Governance Report
This year, we further developed our strategy in the context of
global challenges and opportunities, Board changes, and a
focus on succession planning. We made good progress in
launching our Net Zero commitment, and have focused on our
employees, ensuring we remain a competitive and attractive
employer. Importantly, we have continued to embed our values
in all that we do.
Board changes
We renewed our work on Board succession planning this year.
We welcomed Juliette Stacey as a Non-executive Director
and Chair of the Audit Committee with effect from 1 January
2022. Juliette also joined the Nomination and Remuneration
Committees. We appointed Stephen Wilson as a Non-executive
Director from 1 June 2022. He also joins the Audit, Nomination
and Remuneration Committees. These appointments have
brought new perspectives and experience to our Board.
While Juliette brings a strong finance and leadership
background, Stephen has extensive business leadership
experience, including strategic, financial, and business
development experience in sectors relevant to Renishaw.
We look forward to their contribution to the Board and the Group
as a whole. I would also like to take this opportunity to thank
John Jeans and Carol Chesney, who stepped down this year
having served as very effective Non-executive Directors for a
number of years.
Sustainability commitments
With climate change and environmental sustainability becoming
increasingly prevalent concerns, I am particularly pleased to
see that we have set ourselves a new Net Zero commitment.
To achieve that commitment, we will need to reduce our
emissions by 90% compared to our FY2020 baseline. To that
end, we are aiming to achieve Net Zero for Scope 1 and 2 by
2028 and in Scope 3 by 2050 at the latest. We also accepted
the Risk Committee’s recommendation to elevate climate change
from an emerging risk to a new principal risk.
Embedding our values
Our values underpin our purpose of Transforming Tomorrow
Together. These principles guide the way we behave
and the decisions we make, both as a business and
individual employees.
In order to embed our values across the business and ensure
our employees understand what they mean for them, Will Lee
launched our global communications campaign. We also held
anumber of values workshops in different global regions.
These helped us to understand how our values would be
perceived by our employees, and to ensure that everyone’s
views were considered. We engaged with a wide spectrum
of employees and also gave our senior managers separate
workshops to help them communicate our values to their teams.
Alongside the campaign and workshops, we provided our
employees with supporting materials on our employee intranet.
A culture driven by our purpose
We are strongly committed to ensuring everyone at Renishaw
acts with integrity. To help them do that, it is vital that we
maintain a strong culture which aligns with our purpose,
strategy, and values. Our culture and ethics are enshrined
in our Group Business Code and Anti-Bribery Policy, which
can be found at: www.renishaw.com/businesscode and
www.renishaw.com/en/renishaw-anti-bribery-policy--16236.
We plan to introduce a new Code of Conduct next year,
to support our growing business in light of the latest laws
and regulations.
Effective
leadership for
all stakeholders
Sir David Grant
Senior Independent Director
Governance
Renishaw plc Annual Report 202272
We continue to work on robustly assessing and mitigating our
principal risks via our Risk Committee, with a particular focus
this year on our people in light of the enhanced level of this risk.
See pages 39–49 for more information.
Our confidential global hotline service, ‘Speak Up’, is there
for people to raise any concerns about suspected unlawful or
unethical behaviour. The Board monitors the operation of our
whistleblowing policy and we consider every concern raised
through the service. See page 78 for more information.
Further developing our relationships with stakeholders
As a Board, we’re mindful of our many stakeholders and we
endeavour to consider all of them in our discussions. Travel and
communication constraints during the pandemic restricted some
of our regular stakeholder engagements. However, as pandemic
constraints eased, we have enjoyed increasingly helpful
engagements – and more frequently face-to-face. Here are
some of our highlights:
– People: Non-executive Director and designated employee
engagement ambassador, Catherine Glickman, gives the
Board helpful feedback from workforce engagement activities.
Catherine brings our employees’ views into the boardroom
through her attendance at meetings with employee groups.
This year, Catherine mentored members of the Senior
Leadership Team and provided anonymous feedback to the
Board on a variety of topics, including career development.
Diane Canadine, our Head of Group HR, also regularly
updates the Board. We’ve created working groups, which
are looking at how we reward and retain our people, how we
review performance, and how we support career progression.
These groups are facilitated by up-to-date information from an
external pay review provider. Further information on workforce
engagement can be found on pages 52–55.
– Customers: As always, we take a particularly close interest
in our customers, the challenges they face and how best
we can support them. The Board receives regular updates
on conversations that Will Lee and senior colleagues have
with our customers. This year, these reports have helped us
understand how well we managed through the pandemic and
various global events from the perspective of our customers.
– Shareholders: Despite the continuing uncertainty around
COVID-19, we were glad to welcome shareholders back for
our 2021 AGM. To safeguard our shareholders, employees,
the Board, and the wider community, only shareholders and
their proxies were allowed to attend, with socially distanced
seating arrangements. At our May 2022 Investor Day, our
leaders gave presentations on our strategy and commitment
to sustainability, including our journey to Net Zero. We also
held workshops on a range of topics including finance
and individual flagship product development projects.
These workshops gave opportunities for investors to gain
more in-depth understanding of the business and to ask
detailed questions. Feedback on the event was very positive,
and we look forward to welcoming our shareholders back for
our 2022 AGM. Further details are on page 64.
Our effectiveness
As detailed in the Nomination Committee report, we conducted
an internal evaluation of our Board and its Committees.
This allowed us to reflect on how we’ve improved over the last
year, but also highlighted areas which we can develop further
over the next year. I have particularly appreciated the high
quality of Board papers this year, and look forward to increasing
the breadth of stakeholders in attendance at Board meetings to
help us continue to improve our focus on strategic matters.
Diversity and inclusion
Diversity and inclusion remains and important area of
focus for us, and we have grown a network of more than
70 diversity and inclusion champions across the UK.
We have also committed to the UK government’s Disability
Confident scheme. The purpose of this scheme is to
encourage organisations like Renishaw to think differently
about disability and take steps to improve the recruitment,
retention, and development of disabled people. As part of
our commitment, we are ensuring recruitment processes
are inclusive and accessible, as well as developing current
procedures to support existing employees.
Supported by the Board, members of our Senior Leadership
Team attended Inclusive Leadership training, hosted by
the Employers Network for Equality & Inclusion (enei).
This created an opportunity for more of the business to
develop a broader understanding and education on diversity,
inclusion, and related matters.
As a Board, we’ve engaged with diversity and inclusion
throughout the year in several ways, including:
– after the success of the 2020 National Inclusion Week (an
external awareness event run by Inclusive Employers,
dedicated to celebrating inclusion and taking action to
create inclusive workplaces), we supported the ’Continue
the Conversation’ theme for 2021. We hosted several
awareness days, and shared videos of employees and
senior leaders discussing protected characteristics and
topics such as disability, LGBTQIA+, racial discrimination,
women in engineering, and mental health. In 2022,
we have supported the focus on how inclusion drives
understanding in the workplace;
– approving the Group’s membership to enei and WISE
– external professional diversity and inclusion networks –
tofurther demonstrate our commitment and develop our
awareness on diversity and inclusion externally; and
– approving the recruitment of a diversity and inclusion
advisor, who will look to grow our diversity and inclusion
strategy and network globally, to ensure we are fit for
the future.
We have noted the recent amendments to the Listing Rules
and Disclosure Guidance and Transparency Rules regarding
increased diversity disclosures on boards and executive
management, and will report against these new requirements
in next year’s Annual Report. In the meantime, we continue
our support of the aspirations of gender and ethnic diversity
as set out in the FTSE Women Leaders Review and Parker
Review respectively, with our search underway for a further
independent Non-executive Director; succession planning
continues to be a key activity for the Board, with a focus
on diversity.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 73
Directors’ Corporate Governance Report continued
Board of Directors
1. Sir David McMurtry
N*
Executive Chairman
Appointed September 1975
Areas of expertise
Strategy, product development, engineering, science/
technology
Contribution, skills and experience
– Co-founder of Renishaw, provides strong leadership to
the Board, and responsible for Group innovation, product
strategy, and Group technology.
– Significant contribution to the long-term sustainable success
of theCompany and all aspects of the business.
– Strategic vision, and technical and industry knowledge.
External appointments
– None
2. John Deer
Non-executive Deputy Chairman
Appointed July 1974
Areas of expertise
Manufacturing, strategy, international
Contribution, skills and experience
– Co-founder of Renishaw, contributes to Board leadership
andstrategic decisions for growing the business.
– Extensive manufacturing and quality experience contributes
tothedelivery of efficient, high-quality manufacturing.
– Strategic vision, and commercial and international experience.
External appointments
– None
Read more extensive Board biographies online.
Visit www.renishaw.com/directors.
3. Will Lee
Chief Executive
Appointed August 2016 as Group Sales and Marketing Director,
February 2018 as Chief Executive
Areas of expertise
Sales and marketing, strategy, engineering,operations
Contribution, skills and experience
– Effective and strong leadership and management, both
technical and commercial, with an acute awareness of the
industry and its opportunities and challenges.
– Maintains a wide breadth of knowledge, as well as strong
stakeholder relationships that continue to develop the
Renishaw business.
– Joined the Renishaw graduate scheme in 1996 and since
thenhas held various senior management positions in
engineering, operations, and sales and marketing, resulting
inan in-depth understanding of the Group’s business,
products and markets.
External appointments
– None
4. Allen Roberts
Group Finance Director
Appointed October 1980
Areas of expertise
Finance, strategy, internal controls, operations, compliance
Contribution, skills and experience
– Chartered accountant, with an invaluable contribution to
financial planning and strategy, including adept management
of financial risks and business development.
– Deep understanding of the Group’s businesses, products,
relationships and the sectors in which we operate.
– Experienced in the management of financial risks, reporting
and planning.
External appointments
– None
Committees
A
Audit Committee
N
Nomination Committee
R
Remuneration Committee
*
Chair of Committee
Former Directors who held office during FY2022
Carol Chesney
A* N R
Independent Non-executive
Director
Appointed October 2012
Resigned December 2021
John Jeans
A N R
Independent Non-executive
Director
Appointed April 2013
Resigned February 2022
1. 2. 3. 4.
Governance
Renishaw plc Annual Report 202274
5. Sir David Grant
A N R
Senior Independent Director
Appointed April 2012
Areas of expertise
Engineering, people, science/technology
Contribution, skills and experience
– Contributes to talent recruitment, increasing diversity and
development of workforce.
– Extensive engineering experience and recognised for his
contributions to industry.
– Various previous leadership positions at international
engineering companies and government-related science
andtechnology bodies.
External appointments
– None
6. Catherine Glickman
A N R*
Independent Non-executive Director
Appointed August 2018
Areas of expertise
People, remuneration, pensions, strategy
Contribution, skills and experience
– Breadth of human resources experience in other listed
companies andas a non-executive director is particularly
valued by the Board.
– Skilled at developing reward structures that align leadership
motivation with Group strategy.
– Extensive HR, remuneration and pensions experience,
aswellas previous international experience with Genus plc
and Tesco PLC.
External appointments
– Non-executive director and remuneration committee
chairofTheWorks.co.uk plc.
7. Juliette Stacey
A* N R
Independent Non-executive Director
Appointed January 2022
Areas of expertise
Finance, M&A, strategy, corporate governance,
internalcontrols,compliance
Contribution, skills and experience
– Chartered accountant with an in-depth understanding of
finance, M&A,and strategy.
– Career experience in finance, as well as executive roles
inboth listedand non-listed company environments.
– Roles as chair of audit committees at other listed companies
brings awider industry perspective.
External appointments
– Senior independent director and audit committee chair
ofFuller, Smith& Turner P.L.C.
– Non-executive director and audit committee chair of
Sanderson Design Group plc.
8. Stephen Wilson
A N R
Independent Non-executive Director
Appointed June 2022
Areas of expertise
Software, finance, strategy, business development,
ITtransformation,international
Contribution, skills and experience
– Extensive experience in the software sector, including
strategic, financial and business development and
IT transformation.
– Career experience in finance and business development,
including inglobal businesses.
– Executive and non-executive roles in listed
company environments.
External appointments
– Chief Executive and nomination committee member of
Genus plc.
9. Jacqueline Conway
General Counsel & Company Secretary
Appointed November 2019
Areas of expertise
Corporate governance, risk and compliance
Contribution, skills and experience
– Responsible for providing legal and governance advice to
the Boardand senior management, as well as leading the
legal function.
– Specialised in corporate governance, risk and compliance.
– Substantial experience of operating in a listed environment.
5. 6. 7. 8. 9.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 75
Directors’ Corporate Governance Report continued
Executive Committee
1. Gareth Hankins
Head of Group Manufacturing
Appointed February 2018
Contribution, skills and experience
– Responsible for manufacturing operations, procurement
andfacilities management across the Group.
– Skilled leader with acute insight into operations
and manufacturing.
– Experience in engineering, production, and operations and
business management, including previous role as operations
manager for styli and custom products.
2. Leo Somerville
President, Americas
Appointed March 2004
Contribution, skills and experience
– Responsible for development of the Americas region.
– Strong leadership and business development skills, combined
with in-depth market and product knowledge.
– Experience as project manager for machine tool probing in
the UK, and as business manager for machine tool probing
and calibration products at Renishaw Inc.
3. Dave Wallace
Director of Group Operations
Appointed January 2008
Contribution, skills and experience
– Responsible for Group Operations, with oversight of Group
Commercial Development, Group Quality, Group Compliance,
our centralised Group Engineering teams, Group Business
Systems, and Group Commercial Services and Marketing.
– Deep insight into Renishaw’s products, markets, and product
development, as well as strong management skills.
– Has worked in various functions of the business, including
asDirector and General Manager for the CMM Products
Division and previously held Executive Committee
responsibility for the Industrial Metrology business.
4. Will Lee
*
(Chair)
Chief Executive
See page 74 for biography
5. Sir David McMurtry
*
Executive Chairman
See page 74 for biography
6. Allen Roberts
*
Group Finance Director
See page 74 for biography
7. Jacqueline Conway
General Counsel & Company Secretary
See page 75 for biography
* These members of the Executive Committee were also plc
BoardDirectors during FY2022.
Further information on the ExecutiveCommittee can be found
onpage 79.
Former Executive Committee members who held office
during FY2022
Geoff McFarland
Director of Group Technology
Appointed July 2001
Retired September 2021
1. 2. 3.
Governance
Renishaw plc Annual Report 202276
Scope of disclosures
In our Corporate Governance Report, we have incorporated:
– the Audit Committee Report (page 85);
– the Nomination Committee Report (page 82); and
– the Directors’ Remuneration Report (page 92).
We’ve structured this report in accordance with the five
sections of the Governance Code and describe how we’ve
applied its principles. You can find the Governance Code at:
www.frc.org.uk.
We report on the operation of our business in the following ways:
– Our business and likely future developments
Our Executive Chairman (on pages 6–7) and Chief Executive
(on pages 8–10) have given a review of our business and likely
future developments. We’ve also reported on these aspects in
our Strategic Report. We set out our results by operating segment
in note 2 to the Financial statements, together with an analysis of
revenue by geographical market.
– Management Report
We include a management report in our Strategic Report,
as required by the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules (DTR).
– Directors’ Report
The Directors’ Corporate Governance Report and Other
statutory and regulatory disclosures set out on pages 111–113
together form the Directors’ Report.
– Corporate Governance Report
We set out our corporate governance practices in the Directors’
Corporate Governance Report (on pages 70–114), which forms
part of the Directors’ Report, as required by the DTR.
– Shareholder information
We set out certain information, which is required by the FCA’s
Listing Rules (LR) to be provided to our shareholders, in the
Directors’ Corporate Governance Report (pages 70–114),
the Directors’ Remuneration Report (pages 92–110), and
Other statutory and regulatory disclosures (pages 111–113).
This includes information relating to arrangements with
controlling shareholders.
1. Board leadership and Company purpose
Engagement with shareholders and other stakeholders
Global challenges, such as supply chain disruption, have required
us to continue monitoring the business extremely carefully in
FY2022, to safeguard our future. We aim to engage effectively
with our shareholders and other stakeholders, especially with
respect to key Board decisions. The Managing our resources
and relationships section on pages 52–65 sets out examples of
engagement, and the table on pages 66–68 demonstrates how
the Board has considered Section 172 obligations in discussions
and decision-making. We continue to monitor progress with
engagement mechanisms and regularly review our investor
relations policy. Our overall approach to shareholder engagement
is set out on page 64.
Our AGM takes place at our headquarters or one of our other
sites, and we send our shareholders advance notice of the
meeting. Our Chief Executive and other nominated presenters
give presentations on the business, and the Chairs of our Audit,
Remuneration, and Nomination Committees are available for
questions during and after the meeting.
Despite the continuing uncertainty around COVID-19, we were
glad to welcome shareholders back in person at our November
2021 AGM. To safeguard our shareholders, employees, the
Board, and the wider community, only shareholders and
their proxies were allowed to attend, with socially distanced
seating arrangements. Due to positive feedback from the wider
investor community, we have kept the Q&A facility, which was
first introduced at our September 2020 AGM. This allows our
shareholders to submit questions via email before the meeting
and to submit proxy instructions electronically. This helps our
shareholders engage with the Board even when they are not
able to attend the AGM. Details of this year’s AGM can be found
in the Notice of Meeting, which will be provided to shareholders
separately in due course.
Separate resolutions are proposed for each substantially separate
issue, and all resolutions are taken on a poll. We report on the
number of votes lodged in respect of each resolution, the balance
for and against each resolution, and the number of votes withheld.
This information is published via a Regulatory Information Service
(RIS) and on our website following the meeting.
At our November 2021 AGM, we were again pleased that the
majority of resolutions were passed with a high level of support
from our shareholders. We engaged in correspondence with our
top 20 shareholders in connection with our Executive Director
bonus awards, as disclosed in last year’s Annual Report on
remuneration. This engagement resulted in the resolution to
approve the Annual Report on remuneration being passed
with a 97.15% vote in favour. We considered the votes against
resolutions 4, the re-election of Sir David McMurtry (22.68%)
and 5, the re-election of John Deer (24.56%). In order to
better understand the reasons for these votes against, we
Reporting against the Governance Code
To avoid duplication in this report, the table below cross-references explanations given elsewhere of how we have sought to comply
with the principles and provisions of the Governance Code. We report against other relevant Governance Code principles and
provisions within this Directors’ Corporate Governance Report.
Topic Page(s)
Company purpose IFC
Values and culture 1, 7
Workforce engagement 52–55
Other stakeholder engagement 52–64
Strategy and business model 16–21
Effective controls 81
Sustainability 57–61
Capital allocation 26–27, 45
Workforce policies and practices 52–55, 69, 112
Risk management 39–49
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 77
Directors’ Corporate Governance Report continued
considered the views of our shareholders, including through
engagement with the General Counsel & Company Secretary
or via the Senior Independent Director. We also reviewed the
voting recommendations of proxy voting agencies, where
these had been made available to us, for the November 2021
AGM. We continue to engage with shareholders to understand
their views on this issue and any other significant matters.
We published an update as required under the Governance
Code at www.theia.org/public-register.
We also hold an annual Investor Day aimed at current and
potential shareholders, analysts, brokers, and financial advisers.
All our Directors usually attend, and we give a range of
presentations, along with opportunities for participants to ask
questions throughout the day. Details of our May 2022 Investor
Day can be found on page 64, and information about our 2023
Investor Day will be published in due course.
We also hold Q&A sessions with our Executive Chairman, Chief
Executive and Group Finance Director as part of our full- and
half-year results webcasts.
Employee whistleblowing
We encourage our people to raise concerns about suspected
unlawful or unethical behaviour, and outline our expectation
in our Whistleblowing Policy. One important way in which
people can raise concerns is via Speak Up, our confidential
global hotline service. The service is also available to officers,
suppliers, customers, consultants, contractors, volunteers, job
applicants, and any third parties who provide services for or
on behalf of the Group. Between our launch of the Speak Up
hotline in July 2020 to 30 June 2022, we logged 29 cases, all
of which were promptly followed up. All cases are reviewed
by our triage coordinators (our General Counsel & Company
Secretary and Director & General Manager of SFPD) and are
then allocated to an appropriate investigator. Every matter
reported is investigated, unless it is considered outside of the
scope of Speak Up (for example, if someone raises an IT issue).
Regular meetings are held with key stakeholders to track the
progress of investigations to help ensure cases are closed in
a timely manner. As a Board, we monitor the operation of our
Policy and this service.
Conflicts of interest
The Board has a conflicts of interest policy and a register
of situational conflicts. This includes procedures for the
disclosure and review of any conflicts and potential conflicts,
and authorisation by the Board (if considered appropriate).
We review all authorisations granted, and their associated terms,
every year. New disclosures are made where applicable.
Cautionary note and safe harbour: 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.
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.
2. Division of responsibilities
Governance structure
Board
Remuneration
Committee
Nomination
Committee
Audit
Committee
Executive
Committee
Risk Committee, product groups
and subsidiary undertakings
Composition of the Board
The Governance Code recommends that at least half of a
board, excluding the chairman, should comprise independent
non-executive directors. Our Board currently comprises two
Executive Directors in addition to the Executive Chairman
and five Non-executive Directors, four of whom are
considered independent.
Sir David Grant, Catherine Glickman, Juliette Stacey, and
Stephen Wilson are considered by the Board to be independent
in character and judgement, and there are no relationships or
circumstances that are likely to affect their judgement. Sir David
Grant has served as an Independent Non-executive Director for
more than 10 years. As such, we carried out a rigorous review
to assess his independence, effectiveness, and commitment.
We consider that Sir David Grant continues to be independent
in character and judgement. We also assessed that there are
no relationships or circumstances that are likely to affect, or
could appear to affect, his judgement. We agree that it is in the
best interests of the Company for Sir David Grant to remain as
Senior Independent Director. Given the recent changes to the
composition of the Board, Sir David Grant is able to provide
some stability, and the Board benefits from his extensive
knowledge of the Company and expertise in engineering.
We consider that all our Non-executive Directors demonstrate
commitment to their roles and dedicate sufficient time to their
Company duties. Their contribution, skills and experience are
summarised in their biographies on pages 74–75.
Sir David McMurtry has held the position of Executive Chairman
since we listed in 1984. Following careful consideration of
Provision 19 of the Governance Code (relating to a chairman’s
tenure), we concluded that Sir David’s continued service
as Executive Chairman remains in the best interests of the
Company and our shareholders. This is in part because of
his unique history as a co-founder of Renishaw, but more
importantly his contribution to our long-term sustainable
success. The latter is a direct result of his role and
responsibilities for innovation and product strategy, and his
continued effective leadership of our Board.
Governance
Renishaw plc Annual Report 202278
Senior Independent Director and
Non-executiveDirectors
Sir David Grant is the Senior Independent Director. He is
available to discuss material concerns with shareholders,
including if the normal channels of the Executive Chairman,
theChief Executive, or the Group Finance Director fail to resolve
any shareholders’ concerns. Our Non-executive Directors and
Executive Chairman meet without the other Executive Directors
present, to discuss performance, corporate governance,
and other matters. Our independent Non-executive Directors
also regularly meet without the Executive Directors, Executive
Chairman, or other Directors present.
Division of responsibilities
We agreed that there was a clear division of responsibilities at
Board level throughout FY2022. This ensured that there was an
appropriate balance of power and authority, so there is no one
person with unfettered powers of decision-making. The Board
and Executive Committee each meet on a regular basis to make
decisions of significance to our business segments and review
management actions.
You can find written statements of our Chief Executive’s and
Executive Chairman’s key responsibilities, which also detail the
key responsibilities of the Senior Independent Director, on our
website at: www.renishaw.com/corporategovernance.
The Board of Directors
You can find the biographies of our current Directors on pages
74–75. More extensive biographies are available online at:
www.renishaw.com/directors.
There is a formal schedule of matters reserved for the Board.
These include:
– the approval of annual and interim results, and
trading statements;
– company and business acquisitions and disposals;
– major capital expenditure;
– borrowing facilities;
– reviewing the effectiveness of workforce
engagement mechanisms;
– reviewing whistleblowing policy and processes;
– ensuring maintenance of a sound and effective system of
internal control and risk management;
– business plans and budgets;
– material agreements;
– director and company secretary appointments and removals;
– patent-related disputes and other material litigation;
– forecasts; and
– major product development projects.
In FY2022, we met for seven scheduled meetings and two
unscheduled meetings (relating to the FSP and Non-executive
Director recruitment). Our attendance record at Board and
Committee meetings is set out in this report, on page 80.
You can find a high-level summary of the subjects we discussed
during the year on page 80.
We have three formally constituted Committees – the Audit
Committee, the Remuneration Committee, and the Nomination
Committee. There is also our Executive Committee, which is
responsible for the executive management of our businesses.
It is chaired by our Chief Executive and includes our
Executive Directors and senior managers, as noted on page
76. The Executive Committee usually meets every month.
It considers the performance and strategic direction of our
operating segments, performance against objectives, and other
matters of general importance to the Group.
A framework of delegated authorities maps out the structure
below the Board and includes the matters reserved to our
Executive Committee. It also includes the level of authorities
given to management below the Executive Committee.
The formal schedule of matters specifically reserved for the
Board and the terms of reference for each of the Nomination
Committee, Audit Committee, and Remuneration Committee
are available on our website at:
www.renishaw.com/corporategovernance. We reviewed and
updated the Remuneration Committee’s terms during FY2022,
and carried out the same process for the Audit and Nomination
Committees in August 2022.
Scheduled Board and Committee meetings in the year
July 2021 August 2021
B*
A
R B
N
September 2021 October 2021
B
A B
A*
N
R
November 2021 December 2021
B*
N*
January 2022 February 2022
B
A
R
March 2022 April 2022
B
R
N
May 2022 June 2022
B
A
R
B
R
* Unscheduled meeting
Key
B
Board
A
Audit Committee
N
Nomination Committee
R
Remuneration Committee
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 79
Directors’ Corporate Governance Report continued
Summary of subjects discussed by the Board
duringtheyear
For an in-depth look into some key decisions made by the
Board in FY2022, please see our Section 172 statement on
pages 66–68.
Strategy
– FSP closure
– Purpose, vision, and strategy
– Segmental and regional strategies, objectives
and productivity
– Products and intellectual property
– Five-year plan
Risk
– Principal risks for FY2022
Governance
– Board effectiveness review
– Draft Annual Report
– AGM preparation
– Competition law
– Sanctions and trade controls
– Modern Slavery and Human Trafficking statement
– Privacy
– Whistleblowing
– Anti-bribery
– Formation of Ethics Committee
– Committees’ Terms of Reference and Matters Reserved to
the Board
Finance
– Dividend policy
– Forecasts, objectives, targets, budgets, and costs
– Financial performance across the Group
– Overseeing preparation and management of the
financial statements
– Tax strategy and updates
– Trading statements
Shareholder engagement
– AGM and other shareholder feedback
– Communications with shareholders
– Investor Day planning and feedback
People
– Health and safety programme, and updates
– Diversity and inclusion
– Launch of Responsible Renishaw
– Talent and succession planning
– Non-executive director recruitment
– Salary reviews, bonus awards and share awards
– Performance against financial and strategic objectives
Climate
– Our Net Zero commitment
Board and Committee meeting attendance record
The table below shows the number of scheduled and
unscheduled meetings of the Board and its Committees,
alongside Directors who attended and the number of meetings
they were eligible to attend, during FY2022.
Director Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Sir David McMurtry
9/9 n/a 4/4 n/a
Will Lee
9/9 n/a n/a n/a
Allen Roberts
9/9 n/a n/a n/a
John Deer
9/9 n/a n/a n/a
Carol Chesney
1
5/5 3/3 3/3 2/2
Catherine Glickman
9/9 5/5 4/4 6/6
Sir David Grant
9/9 5/5 4/4 6/6
John Jeans
2
6/6 4/4 3/3 3/3
Juliette Stacey
3
4/4 2/2 1/1 4/4
Stephen Wilson
4
1/1 n/a n/a 1/1
1
Carol Chesney’s resignation took effect on 31 December 2021, so the
Board meeting on 16 December 2021 was her final Board meeting and the
Committee meetings on 20 October 2021 were her final Committee meetings.
2
John Jean’s resignation took effect on 28 February 2022, so the meetings on
1 February 2022 were his final Board and Committee meetings.
3
Juliette Stacey’s appointment took effect on 1 January 2022, so the meetings
on 1 February 2022 were her first Board and Committee meetings.
4
Stephen Wilson’s appointment took effect on 1 June 2022, so the meetings on
22 June 2022 were his first Board and Committee meetings.
Commitment
The terms of appointment of our Non-executive Directors set out
the expected time commitment, as well as the requirement to
discuss any changes to other significant commitments with our
Executive Chairman and Chief Executive in advance. They are
available for inspection at our AGM and our registered office
upon written request.
None of our Executive Directors holds a directorship in a FTSE
100 company.
Development
We offer our Directors the opportunity to attend formal training
courses regarding their duties. We also provide them with
guidance notes, papers, and presentations on changes to law
and regulations, as appropriate. Non-executive Directors are
invited to attend internal conferences, which are a great way
to keep up to date with product development and marketing
initiatives. These conferences are also an opportunity for
our Non-executive Directors to meet with business units and
functions. Business leaders (including from the finance and
legal functions, product lines, and sales regions) give regular
presentations at Board meetings, to update our Directors on
products and business strategies. These also give our Directors
the chance to discuss latest developments, and current and
future initiatives.
As new Directors that have joined us this year, we gave both
Juliette Stacey and Stephen Wilson tailored induction packs
and bespoke induction programmes. These inductions included
site visits and briefings by both senior managers and external
advisers to help them better understand what we do. As part
of our continuing development programme, we also offer
opportunities to attend external trade shows as well as overseas
subsidiary visits.
Governance
Renishaw plc Annual Report 202280
Information and support
Board members receive business updates, financial information,
and forecasts with relevant commentaries in advance of each
Board meeting. These allow us to review financial performance,
current trading, and key business initiatives. We have access
to the General Counsel & Company Secretary, who advises
the Board on all governance matters. Where necessary, our
Directors have access to independent professional advice, at
the Company’s expense, to discharge their responsibilities as
Directors. We maintain liability insurance for our Directors and
officers and have entered into indemnities as disclosed in Other
statutory and regulatory disclosures on page 111.
3. Composition, succession and evaluation
Nomination Committee
We set out a description of the structure and activities of the
Nomination Committee, as well as our commitment to diversity,
in the Nomination Committee Report on pages 82–84.
Re-election
In accordance with the Governance Code, all our Directors
retirefrom the Board at each AGM and offer themselves for
re-election.
4. Audit, risk and internal control
Audit Committee
We set out a description of the membership and activities of the
Audit Committee in the Audit Committee Report on pages 85–91.
Financial and business reporting
We explain the respective responsibilities of the Directors
and auditor in connection with the financial statements in
the Directors’ responsibilities section on page 114 and the
Independent Auditor’s Report on pages 115–125.
Risk management and internal control
The Board is responsible for risk management and internal
control, and for reviewing the effectiveness of these systems.
Further information on our risk management and internal controls
can be found in the Risk Management section on pages 39–41.
Any system of internal control is designed to manage rather than
eliminate the risk of failure to achieve business objectives and
can only give reasonable, but not absolute, assurance against
material misstatement or loss.
The Group has defined lines of responsibility and delegation of
authorities. We have also established and centrally documented
control procedures, including approvals of capital and other
expenditure, information and technology security, and legal and
regulatory compliance.
Our Internal Audit function helps to give independent and
objective assurance that the control procedures are appropriate
and effectively applied. The Group Internal Audit Manager
attends Audit Committee meetings to present annual internal
audit plans and the results of such audits. The Audit Committee
monitors actions on an ongoing basis. Further information can
be found in the Audit Committee Report on pages 85–91.
We have an established process for the review of business
risks throughout the Group, which includes our Risk Committee.
You can find more information on this in the Risk Management
section on pages 39–41.
We ensure that the Group has effective internal controls
over the financial reporting and consolidation processes.
Monthly accounts and forecasts are presented to the Board
for review. Our Internal Audit function carries out a review
of our subsidiaries’ accounting processes and financial
statements to give assurance to the Board on the integrity
oftheinformation supplied.
The Board reviews the effectiveness of our system of internal
controls, including via our Audit Committee. It receives regular
reports from our Internal Audit function, external auditors, and
other advisers, and carries out an updated risk and controls
analysis every year. The review covers material controls,
including financial, operational, and compliance controls,
andrisk management systems.
We’ve conducted a robust assessment of the principal and
emerging risks that we face, including those that would threaten
our business model, future performance, solvency, or liquidity.
Our principal risks and uncertainties can be found on pages
42–49. The Board is satisfied that there is an ongoing process
for identifying, evaluating, and managing the significant risks
that we face. This is regularly reviewed and accords with the
FRC Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting. The Board verifies
that necessary action has been or is being taken to remedy
anysignificant failings or weaknesses identified from its review.
Going concern
As Directors, we’ve assessed the Group’s position as a going
concern, and updated the assessment before signing this
report. We considered the Group’s forecast profits and cash
flows for the period from the date of approval of the Annual
Report to 30 September 2023. We are satisfied that the
Group has adequate resources to continue operating as a
going concern for the foreseeable future, and that no material
uncertainties exist with respect to this assessment. More detail
isprovided on page 135.
Viability statement
We approved the Company’s viability statement on pages
50–51.
5. Remuneration
In the Directors’ Remuneration Report, we explain how we
apply the Governance Code principles relating to remuneration.
We include a description of the membership and activities of the
Remuneration Committee on page 95.
Compliance statement
The Board considers that it has complied with the provisions
of the Governance Code throughout FY2022 except in
relation to the following matters:
– Provision 19 (that the chair should not remain in post
beyond nine years from the date of their first appointment).
A full explanation of the reasons for this is given on page
84; and
– Provision 21 (that the chair should consider having a
regular externally facilitated board evaluation at least every
three years). A full explanation of the reasons for this is
given on page 83.
Sir David Grant
Senior Independent Director
15 September 2022
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 81
Nomination Committee Report
Succession
planning for our
future growth
continues to
be a key area
of focus
Introduction
Three key issues have occupied the Nomination Committee this
year – succession planning, our annual Board effectiveness
review, and diversity.
Board succession planning
Succession planning is an important process for any company,
as it ensures a board has an appropriate balance of experience,
skills, and diversity to help a company achieve its strategy.
We’ve focused on succession planning this year, and welcomed
two new independent Non-executive Directors to the Board –
Juliette Stacey and Stephen Wilson. Their appointments are
the result of a thorough recruitment process (set out below)
led by the Senior Independent Director, Sir David Grant, and
supported by Catherine Glickman, as Chair of the Remuneration
Committee, which we launched in light of the tenure of Carol
Chesney, John Jeans, and Sir David Grant. Carol and John have
subsequently stepped down from the Board, and I would like to
thank them for their support over the past 10 years.
While we began this recruitment progress in July 2020, we
delayed it following the launch of the FSP in March 2021.
Following the conclusion of the FSP in July 2021, we re-started
the recruitment process in the autumn of 2021. We hired external
recruitment consultants Kingsley Gate in connection with these
appointments. Kingsley Gate has no connection with Renishaw
or individual directors of Renishaw.
Our search for a third Non-executive Director to replace Sir
David Grant continues. In the meantime, he has agreed to
oversee the recruitment process and will remain on the Board
until that process is concluded.
Board appointment process
The Board has an established process for identifying and
evaluating candidates for appointment to the Board and
senior management. Board appointments are also subject to
the principles in our Equality, Diversity and Inclusion Policy,
which formalises our commitment to diversity at all levels.
The Committee’s procedures, which were followed in respect of
the recent appointments of both Juliette and Stephen, included
the following steps:
– engaging external recruitment consultants, Kingsley Gate;
– appointing a sub-committee of the Board to oversee
the process;
– evaluating the balance of skills, knowledge, experience, and
diversity on the Board – including considering the skills and
experience of outgoing Directors, Carol and John;
– agreeing role specifications for the proposed appointment, we
agreed three role specifications with the consultants, one of
which has yet to be filled;
– reviewing a long list of candidates provided by
the consultants;
– reviewing candidate profiles and preparing a shortlist of
diverse candidates for interview – we did this for both Juliette’s
role (as Chair of the Audit Committee) and for Stephen’s;
– interviewing a shortlist of candidates who we reviewed
against objective criteria, with due regard to the benefits of
diversity on the Board – we conducted two separate interview
processes for the two roles; and
– recommending the preferred candidates to the Board
in December 2021 in respect of Juliette Stacey’s
appointment and in March 2022 in respect of Stephen
Wilson’s appointment.
Sir David McMurtry
Executive Chairman
Governance
Renishaw plc Annual Report 202282
Board effectiveness review
The Board undertakes an annual evaluation of its performance
and effectiveness to identify opportunities for improvement.
Our last external, independent review took place in FY2019
and was carried out by Equity Communications Limited. In the
following two years, our company secretarial team ran internal
reviews using questionnaires. We had planned to conduct
an external review in FY2022, but in view of the recent Board
changes I’ve already mentioned, the Board decided to delay
this process until FY2023. Please see page 81, which sets out
the Compliance Statement, regarding non-compliance with
provision 21.
By deferring the external process to FY2023, the next external
evaluation will provide an opportunity for a more robust
assessment and more useful insight into the effectiveness of
the Board and its Committees. We will begin the tender process
for this next external review in autumn 2022, with the evaluation
anticipated to take place in the third quarter of FY2023.
After that, we will return to the more typical three-year cycle,
withthe FY2024 review being conducted internally.
Internal review process
While we did not carry out an external assessment this year,
ourcompany secretarial team did, once again, carry out an
internal review during April and May 2022.
The questionnaire-based process covered several areas,
suchas strategy, succession, talent, conduct of Committees,
and content and effectiveness of Board meetings. The questions
were partly based on the output from the 2021 review,
together with feedback from the Board on that process.
Questionnaires were distributed to the Board in April, and
all (then) seven Directors responded by the deadline in May
2022. The responses were consolidated and anonymised,
and the results and key themes set out in a summary report.
Recommendations were set out in an action plan based on the
responses. Both the report and the proposed action plan were
reviewed and discussed by the Board at its meeting in June.
The outcome of the evaluation confirmed that the Board and its
Committees continued to operate effectively.
Key findings from the FY2022 review
It was noted that the following areas had improved as a result
ofthe FY2021 review:
– tracking by the Board of the Group’s objectives – which
has been achieved through clearer reporting in the Board
papers and regular updates from the Senior Leadership Team.
I and the rest of the Board have been appreciative of this
increase in focus on the objectives which helps to promote
aculture of accountability and strong performance;
– timeliness of the agendas and papers in advance of each
meeting – I know that all of the Directors appreciate the
efforts of our General Counsel & Company Secretary and
other team members in continually seeking to improve the
timely circulation of Board packs, which is an essential part
ofeffective Board meeting preparation; and
– focus on talent management – the Board has achieved
this through the introduction of the mentoring scheme by the
Non-executive Directors of the Senior Leadership Team. I and
the other Executive Directors really appreciate the time and
commitment that our colleagues on the Board have dedicated
to this scheme, which has been very well received by many
ofthe Senior Leadership Team.
The main recommendations from the evaluation included:
– continued focus on timeliness and conciseness of papers
– which the Board will achieve through working closely with
the General Counsel & Company Secretary and the Senior
Leadership Team;
– continued focus on strategic matters – as part of this, the
Board will ensure that the relevant Senior Leadership Team
members are invited to participate in discussions on key
strategic matters and that the focus is on addressing key
questions through engagement and interaction with the Board,
rather than on one-sided formal presentations which simply
reiterate the material in the pre-read; and
– continued focus on talent management - and also
succession planning. To address this, we will extend the
mentoring scheme by the Non-executive Directors of the
Senior Leadership team, review succession plans for all
critical roles, and aim to complete the recruitment of a third
new Non-executive Director in the year ahead.
Boardroom diversity
We recognise the importance and value of all forms of diversity,
including gender, age, ethnicity, and background, as well as the
importance of creating a culture of inclusion. Our aim is for the
Board to have a diverse range of skills, experience, and thought
from individuals who can really add value to the business and
help us to develop and achieve our strategic goals.
The proportion of women on the Board is currently 25%.
The Board supports the aspiration of gender diversity, and best
practices in this area, as set out in the FTSE Women Leaders
Review (with a target of 40%), as well as the aspiration of ethnic
diversity set out in the Parker Review (with a target of at least
one director from a minority ethnic group by 2024). With the
search currently underway for a further independent Non-
executive Director, succession planning continues to be a key
activity for the Board, with a focus on diversity.
In October 2021, the Board approved a new Equality, Diversity
and Inclusion Policy which applies to the Group and the
Board. The new policy supports the work of the diversity and
inclusion working group. The policy confirms our commitment to
develop, maintain, and support an equal and diverse workforce
both in the UK and internationally, including at Board and
senior management level. The main objective of the policy
is to establish an inclusive culture, free from discrimination,
harassment, and victimisation. The policy was applied during the
year in respect of the recruitment process for two independent
Non-executive Directors. The principles of the policy were
discussed with the recruitment consultant at Kingsley Gate
and helped in crafting the role profile, preparing a long list of
candidates, and in the criteria used to assess the short list
of candidates.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 83
The policy continues to also help us in achieving some of our
strategic objectives, including creating an inclusive culture with
a diverse workforce and Board, and building on our reputation
as a responsible business.
Senior management diversity
The Executive Committee consists of six men and one woman
(14% women). For the purposes of the Governance Code, the
Executive Committee and their direct reports (excluding those in
administrative or non-managerial roles), is made up of 34 men
and eight women (19% women). The gender split for both the
Executive Committee and senior management is included in the
table set out below. We have also included the gender split for
the Senior Leadership Team this year, which is a wider team than
the Executive Committee.
Management level Male Male % Female Female %
Board 6 75 2 25
Executive Committee 6 86 1 14
Senior Leadership Team
1
12 86 2 14
Executive Committee
and direct reports
2
34 81 8 19
1
Designated group which includes Executive Committee attendees, Heads
oflarger Product Divisions and Regional Presidents.
2
As required by the Governance Code.
For the engineering sector to reach its full potential, it is
important that it reflects the society in which it operates.
The Committee will continue to focus on improving all forms
ofdiversity at senior management level across the Group.
Committee composition
Our Committee comprises myself, as Chairman, and the
four independent Non-executive Directors, Sir David Grant,
Catherine Glickman, Juliette Stacey, and Stephen Wilson
(Carol Chesney and John Jeans having stepped down during
the year). Only Committee members are entitled to attend
meetings, although Will Lee is a regular attendee (excluding
when we discuss his role). Details of attendance at meetings
areshown below.
Director Attended
Sir David McMurtry (Chair)
4/4
Sir David Grant
4/4
Carol Chesney (stepped down on 31 December 2021)
3/3
John Jeans (stepped down on 28 February 2022)
3/3
Catherine Glickman
4/4
Juliette Stacey (appointed on 1 January 2022)
1/1
Stephen Wilson (appointed on 1 June 2022) n/a
Nomination Committee Report continued
5
3
Board composition
Executive
Non-executive
6
2
Gender
Female
Male
7
1
Nationality
British
Irish
Age
1
2
2
2
1
40–49
50–59
60–69
70–79
80–89
Tenure
2
4
2
0–3 years
3–6 years
9+ years
Our role and responsibilities
We’re appointed by the Board and operate under the terms
of reference published on our website at www.renishaw.com/
corporategovernance, which we review annually.
Our primary duties are:
– reviewing the size, structure, and composition – including
thebalance of skills, knowledge, experience, and diversity
– oftheBoard and its Committees, and recommending
changesto the Board, as appropriate;
– overseeing succession planning for the Board and other
senior executives;
– leading the process for new Board appointments and
nominating candidates for appointment to the Board;
– reviewing the independence and requirements of Non-
executive Directors every year; and
– monitoring the leadership needs of the Group, including for
Directors and other senior executives.
Sir David McMurtry
Chair of the Nomination Committee
15 September 2022
Tenure of the Chairman
The Governance Code issued by the FRC in July 2018 sets
out the governance principles that applied to the Company
during FY2022. Provision 19 recommends that the Chairman
should not remain in post beyond nine years from the date
of his first appointment to the Board. This Provision was
introduced for the first time for accounting periods beginning
on or after 1 January 2019.
Our Executive Chairman, Sir David McMurtry, co-founded
Renishaw together with John Deer in 1973. Sir David was
appointed to the Board in September 1975 and has been
Executive Chairman since the Company listed in 1984.
He also served as Chief Executive from 1975 to 2018,
whenWill Lee was appointed.
While Sir David’s tenure exceeds the nine years
recommended under the Code, his length of service
reflects that he continues to be a major driver of innovation
and growth in the business. He is focusing on the next-
generation project for additive manufacturing which will
help to ensure Renishaw becomes a technical leader for
selected applications within this field. Sir David’s unique
skills, experience, and knowledge of the industry explain
therationale for his lengthy tenure and the unanimous
support of the rest of the Board for him remaining in post.
Governance
Renishaw plc Annual Report 202284
Audit Committee Report
I’m pleased to present the report of the Audit Committee for
FY2022, which explains what we do, how we work, and where
we focused our attention this year. This is my first report since I
was appointed in January 2022, after Carol Chesney stepped
down from the Board on completion of nine years’ service. I’d
like to thank Carol for her contributions as Chair during her time
with Renishaw.
Despite some ongoing effects of the COVID-19 pandemic
and the broader economic uncertainty this year, the Group
has performed very strongly. Significant revenue, profit, and
headcount growth supports our longer-term ambitions and
also emphasises the importance of a good control environment
and fair scrutiny of the Group’s reporting, to give you as
stakeholders the information you need. As a Committee, wework
with management, the internal audit team, and our external
auditors to ensure the integrity of this reporting. We’ve reviewed
the critical judgements and estimates that management
use in preparing the financial statements, and we’ve
considered whether this Annual Report is fair, balanced, and
understandable. With climate change becoming a principal risk
this year and TCFD reporting now being mandatory, we’ve also
spent time assessing how climate change has been reported in
the Annual Report and reflected in the financial statements.
We also focused this year on the Group’s internal control
environment, in light of the Department for Business, Energy
and Industrial Strategy (BEIS) consultation on ‘Restoring trust
in audit and corporate governance’, with the outcomes of
these proposals being announced by BEIS towards the end
of our financial year. Management undertook a readiness
assessment in the year to compare our current internal controls
over financial reporting (ICFR) against the expectations of
‘SOX-lite’ requirements, and we reviewed their work and that
of management’s external advisors. We’re pleased that this
identified no major issues. Looking ahead, we’ll oversee how
management respond to the ongoing announcements from the
FRC and BEIS and will agree the scope of this work in FY2023.
We continued to monitor EY’s work and were pleased that the
lifting of social distancing meant that more of the audit was
performed on-site this year. The easing of COVID-19 restrictions
also helped the Internal Audit team this year, who had to perform
all of last year’s overseas work remotely but were able to visit 17
of our overseas subsidiaries this year.
The role of our Committee and how we work
The Committee members are the independent Non-executive
Directors, and each Committee member attended all of the
meetings held during their respective tenures.
We support the Board in ensuring both the integrity of the
Group’s financial reporting and the adequacy of the Group’s
internal controls. Our terms of reference, which are updated
annually, detail the following key areas of oversight:
– Internal control and risk management
– Internal audit
– Financial reporting
– External audit
An overview of our work in these areas during the year
is set out opposite and our terms of reference can be
found on our website at www.renishaw.com/en/corporate-
governance--21975.
Fair scrutiny
and oversight
Juliette Stacey
Chair of the Audit Committee
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 85
Key activities
Our main activities this year were:
Internal control and risk assessment
– Reviewing this year’s assessment of principal and
emerging risks, and their mitigating actions, presented
to us by the Chair of the Risk Committee.
– Discussing the expected impact of the BEIS
‘Restoring trust in audit and corporate governance’
consultation and reviewing management’s initial
readiness assessment.
– Monitoring the effectiveness of internal controls,
including receiving updates on focus areas such as
‘know your customer’ policies.
Internal audit
– Agreeing the scope and resourcing of Internal
Audit’s work for FY2022, including the plan for
subsidiary reviews.
– Approving the expansion of Internal Audit’s work to
include certain principal risks.
– Reviewing Internal Audit’s reports and monitoring the
responses from management, and discussing these
with the Group Internal Audit Manager.
Financial reporting
– Reviewing the Annual Report, Half-year Report, and
trading updates before publication.
– Discussing management’s assessment of significant
judgements, estimates, and financial reporting topics,
asexplained in more detail on the next page.
– Challenging management on these areas.
– Assessing whether the Annual Report is fair, balanced,
and understandable.
– Reviewing the assumptions and financial modelling for
the viability and going concern assessments.
External audit
– Reviewing EY’s audit plan, including their scope and
methodology, ahead of the FY2022 audit.
– Discussing with EY their progress and findings
throughout the audit.
– Discussing their remediation to the findings from the
FRC’s Audit Quality Review of the FY2020 audit (see
page 91 for more details).
More detail on the above work follows on pages 87 to 91.
The Board considers that, as a whole, the Committee has
competencies relevant to Renishaw’s sector to fulfil its
responsibilities, including relevant professional qualifications and
experience in senior finance roles. The Non-executive Director
biographies can be found on pages 74 to 75.
Committee meetings
The Committee met a total of five times during FY2022, with
a further three meetings held since the year-end that mainly
focused on the Annual Report. We’re provided with written
updates and discussion papers by management and our
external auditors before each meeting, and receive relevant
verbal updates at each meeting. We invite the following people
to attend each Committee meeting:
– Chief Executive;
– Group Finance Director;
– Head of Group Finance;
– Group Financial Controller;
– Technical & Development Finance Manager;
– Group Internal Audit Manager;
– General Counsel and Company Secretary; and
– External Audit Partner and Manager.
We invite other people to attend the Committee and provide
updates when needed. After each meeting, I provide an update
to the Board on the matters we discussed.
Committee members Attended
Juliette Stacey
1
(Chair)
2/2
Catherine Glickman
5/5
Sir David Grant
5/5
Stephen Wilson
2
n/a
Carol Chesney
3
(Chair until December 2021)
3/3
John Jeans
4
3/3
1
Juliette Stacey has been Chair of the Committee since 1 January 2022.
2
Stephen Wilson has been a member of the Committee since 1 June 2022.
Stephen has attended each of the three Committee meetings held since the
year-end.
3
Carol Chesney was Chair of the Committee until 31 December 2021.
4
John Jeans’s resignation took effect on 28 February 2022.
Committee effectiveness
Our effectiveness as a Committee is reviewed each year.
Last year, we identified that we wanted to focus on improving
the timeliness of the reports we receive, and also to invite other
senior people from the business to the Committee to discuss
matters pertinent to our Committee’s work. Earlier distribution
of the Committee packs has improved this year, and two of
our regional presidents have also attended a Committee
meeting this year, to provide updates and insight for their
respective region.
This year’s review was carried out by the company secretarial
team, and concluded that overall we remain effective.
Audit Committee Report continued
Governance
Renishaw plc Annual Report 202286
Financial reporting, and critical judgements and estimates
We consider the issues below as the most significant in relation to this year’s financial statements. Each of these has been discussed
with management and the external auditors. Management’s work on these areas has been reviewed, and challenged where relevant.
Cash flow hedges
Description Our review and conclusions
– Most sales are generated overseas and therefore most
invoices to, and payments from, customers are in foreign
currency. Forward currency contracts are therefore used
to manage the effect of movements in exchange rate
on revenue.
– Where these contracts are designated as hedges of
future cash flows, and therefore intended by management
to be eligible for hedge accounting, the hedged item
is a layer component of forecast sales transactions.
Management needs to estimate both ‘more likely than not’
and ‘highly probable’ revenue forecasts to determine the
correct accounting treatment.
– If contracts are no longer eligible for hedge accounting,
future movements in the fair value of the forward contracts
would be recognised through the Consolidated income
statement, rather than Other comprehensive income
and expense.
– Revenue forecasts, including ‘highly probable’ and ‘more
likely than not’ levels had been presented by management
at plc Board meetings. We discussed the rationale for
the ‘highly probable’ and ‘more likely than not’ levels,
and the assumptions used in generating the forecasts.
We also confirmed with management that they’d used
these Board-approved forecasts to support the hedge
accounting treatment.
Defined benefit pension schemes
Description Our review and conclusions
– To determine the value of the defined benefit pension
liability, management need to estimate the present value
of the future obligations. Assumptions of discount rates,
inflation rates and mortality rates are used in this estimate,
and are determined by management in consultation with
independent actuaries.
– With a gross defined benefit pension liability of £174.5m
at 30 June 2022, small errors in these assumptions could
have a material effect on the value of the liability.
– In addition to the above assumptions, which are a
‘critical accounting estimate’ each year, there have also
been changes to the UK DB pension scheme this year.
The trustees and the Company agreed to augment
members’ benefits, as explained in more detail on page
157. The changes to the scheme also involved allowing a
surplus to be recognised.
– We reviewed the assumptions of discount rates, inflation
rates and mortality rates, including the movement in
these assumptions since FY2021. We also confirmed with
management that these assumptions had been determined
in consultation with independent actuaries.
– We confirmed with management that the independent
actuaries had reflected the changes to the UK scheme
when estimating the liabilities at 30 June 2022.
– We also reviewed how management had accounted
for these changes, and agreed that substantially all of
the increase in liabilities for these changes should be
treated as past service cost, and therefore charged to the
Consolidated income statement.
– Finally, we also confirmed that the Company now has an
unconditional right to a refund of the scheme surplus, and
can therefore recognise the surplus arising this year.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 87
Research and development projects
Description Our review and conclusions
– The Group undertakes a significant amount of R&D work
each year, and two key decisions are needed to determine
the appropriate accounting treatment for related costs.
– The first decision is a judgement as to whether expenditure
during the year on R&D activities meets the requirement for
this expenditure to be capitalised.
– The second decision, for projects that have met the criteria
for capitalisation, is to estimate the discounted future cash
flows of the project and compare this to its capitalised
development costs. If the future cash flows are lower than
the capitalised development cost, an impairment should
be recognised.
– We reviewed the costs of the projects capitalised in the
year, and agreed that they had been capitalised at the
appropriate point in their development.
– We also reviewed the discounted future cash flows for
both these projects and the ones that had previously been
capitalised, together with the key assumptions behind
these forecasts. We then reviewed the headroom between
the capitalised costs and the discounted future cash
flows, and agreed with management’s assessment that no
impairment was needed.
Goodwill
Description Our review and conclusions
– Where the Group recognises goodwill from the acquisition
of a business, an estimate of the discounted future cash
flows of this business (representing a ‘cash-generating
unit’) is needed. This is compared to the carrying value
of goodwill, to identify whether an impairment to goodwill
is needed.
– At 30 June 2022, goodwill totalled £11.4m.
– There are three main cash-generating units (CGUs) for
which goodwill is recognised (itp GmbH and Renishaw
Mayfield S.A. entities, and the fixturing product line).
We reviewed the discounted future cash flows for these
CGUs, and the key assumptions behind these forecasts.
– We then reviewed the headroom between the capitalised
costs and the discounted future cash flows, and agreed
with management’s assessment that no impairment
was needed.
Inventories
Description Our review and conclusions
– The Group holds a significant amount of inventory
(£162.5m at 30 June 2022). Estimates of future demand
are used to determine the provision needed for slow-
moving and potentially obsolete inventory, so that
inventory is appropriately valued at the lower of actual cost
and net realisable value.
– Management generates an estimate of the next 12 months’
demand for individual inventory items based upon historic
usage levels, demand from existing customer orders, and
manufacturing build plans. Adjustments to this estimate
are made where needed, for example where significant
purchases of critical components have been made for
‘safety stock’.
– At 30 June 2022, the inventory provision was £17.5m.
– We reviewed the year-end provision in both absolute terms
and as a proportion of gross inventory, and also compared
this to previous periods. We discussed the rationale for the
movements with management.
– We also asked Internal Audit to confirm that during the
year they had reviewed the inventory provision workings
prepared by subsidiaries, confirming that there had been
no change in how this estimate is prepared.
– Overall, we concluded that the provision was reasonable.
Audit Committee Report continued
Governance
Renishaw plc Annual Report 202288
Taxation
Description Our review and conclusions
– At the year-end, some of our Group companies had the
potential to recognise deferred tax assets, relating to
unused tax losses and other temporary timing differences.
Management prepares forecasts of probable taxable
profits for each of these companies and uses these
forecasts to determine the value of the deferred tax asset
that can be recognised. When management think it’s
probable that a company will have enough taxable profit
to use its tax losses, a deferred tax asset can then be
recognised. This deferred tax asset represents the value
of the tax loss that is expected to be used in the future to
offset future taxable profits.
– With deferred tax assets at 30 June 2022 of £22.9m, the
estimates supporting the recognition of these assets are a
key estimate.
– We reviewed management’s assessment, discussing with
them the assumptions made in generating taxable profit
forecasts for the relevant companies. We also reviewed
how these company-level forecasts tied into the Group’s
overall business plan.
– We were satisfied with how management have accounted
for deferred tax, and with the disclosures made in the
financial statements.
Fair, balanced, and understandable assessment
As an Audit Committee, we have reviewed management’s
process for ensuring that this Annual Report is fair, balanced,
and understandable. This process involved:
– using corporate reporting specialists to support the revised
structure and content in the Strategic Report;
– ensuring that the fair, balanced and understandable
requirements were a key part of the Annual Report project
team’s focus;
– involving senior management and the Board in preparing and
reviewing the Annual Report, and explicitly asking whether
they felt that the Annual Report was fair, balanced, and
understandable; and
– engaging our remuneration and legal advisers, and corporate
reporting specialists, in reviewing the Annual Report.
With the increased focus on climate change, and with TCFD
reporting being mandatory this year, management also focused
on ensuring that climate-change related activities were fairly
reflected in the report and that these activities were reflected
where appropriate in the financial statements. Management also
engaged an external review on this year’s TCFD reporting.
We received updates on this work from management,
including a paper setting out the key activities and how they’d
been reported.
We were satisfied with management’s process, and following
discussions at our September 2022 Committee meeting we
advised the Board that the Annual Report, taken as a whole,
isfair, balanced, and understandable.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 89
Internal controls and risk management
The Board has overall responsibility for the Group’s
approach to risk management and internal control.
Our Risk Committee has operational responsibility for risk
management, and the Board has delegated responsibility
to the Audit Committee for the oversight of this work and the
effectiveness of internal controls.
This section of our report explains our role in risk
management and the Group’s internal control environment.
It also summarises the work of Internal Audit, and how we
assess the effectiveness of this function.
Risk management
The Risk Committee has a well-established process to
identify and manage risks. Using a top-down approach,
Jacqueline Conway as Chair of the Risk Committee
interviews senior managers from across the Group, to
identify the more prevalent and strategic topics to be
considered. In addition, detailed risk reports are received
from regional and product line managers, focusing on key
operational risks. Each principal risk owner is invited to Risk
Committee meetings to provide updates and present risk
mitigation action plans.
The Risk Committee combines this work with identifying
trends and any new emerging risks, to draft the Group’s
principal risks. The Audit Committee has considered and
endorsed these principal risks presented to us by the
Risk Committee.
As an Audit Committee, we also review management’s work
in preparing the viability assessment, which considers the
potential impact of the Group’s principal risks over a three
year period. We report our work on this topic to the Board,
and the Board’s viability review is described in more detail
on pages 50 to 51.
Internal controls
The Group’s uses systems and processes that reduce the
risk of material error or loss, while acknowledging that these
risks cannot be eliminated entirely.
Internal controls are embedded throughout the business’s
systems, and our Group Business Code explains how we
expect our people to behave with honesty and integrity and
provides specific requirements on topics such as trade
controls and legal compliance. Everyone in our business
undertakes relevant training and assessment within
three months of joining Renishaw. We further embed our
expectation of people’s behaviour by having Integrity as one
of our core values.
On a day-to-day basis management are responsible for
implementing internal controls. The Group Internal Control
Manual sets out all key processes and controls, mainly
aimed at financial management and financial reporting.
This is available to all employees and the Internal Audit team
test subsidiary compliance with these controls during their
audit work. Self-assessment of compliance is certified by
each Group company on an annual basis.
This year management assessed the impact of the potential
outcome of the BEIS whitepaper on ‘Restoring trust in audit
and corporate governance’. The final response from BEIS
was published in May 2022, and is broadly consistent with
our expectations. In readiness for the expected increase in
ICFR assurance to be provided to stakeholders, management
undertook a readiness assessment on the Group’s current
ICFR position, with support from an external accountancy
firm independent of EY. This review did not find any critical
weaknesses in our ICFR environment but did confirm
that management would need to better document their
existing processes and controls to support a ‘SOX-lite’
controls attestation in the future. This work also highlighted
that our ICFR environment would be more effective if we
increase the emphasis on preventative controls. This will be
reflected in the implementation plan for Microsoft Dynamics
365, to ensure appropriate controls are embedded in our
new system.
Internal audit
Internal Audit work is performed in-house, led by the Group
Internal Audit Manager. As a Committee, we agree the
Internal Audit team’s plan of work at the start of each financial
year and check their progress against this plan during our
committee meetings.
With travel restrictions lifting in many countries this year the
team were able to travel to 17 of their scheduled overseas
subsidiary visits, with the remaining nine audits undertaken
remotely from the UK. In these instances, the team held video
calls with the subsidiary teams to perform tests and complete
their audit work.
We’re provided with reports after each audit, grading the
audited entity and summarising the number and significance
of the audit findings. At each committee meeting, the Group
Internal Audit Manager updates on how these findings are
being addressed, as well as any other observations from
the team.
At the end of each financial year, we assess Internal Audit’s
effectiveness. We do this by discussing their work with the
Group Finance Director and by reviewing the responses
to questionnaires completed by teams audited in the year.
These questionnaires cover topics such as how they planned
each audit and how they communicated and prioritised
their findings.
We also consider whether their work was effective by
reviewing the volume, age, and severity of findings.
This year has seen an improvement in how audit findings
are responded to. Overall,we agreed that this year’s Internal
Audit work was effective.
Audit Committee Report continued
Governance
Renishaw plc Annual Report 202290
External audit
Appointment, reappointment and tendering
We appointed EY as our auditors at our October 2016 AGM,
and their first audit was for FY2017. Paul Mapleston stepped
down after last year’s audit having served five years as our lead
audit partner. There was an unforeseen change in our lead audit
partner during FY2022, and Anup Sodhi took on this role in July
2022. All other members of the external audit team this year
have remained in place.
In line with regulation, the audit will be put out to tender at least
every 10 years. As we have no current plans to bring the tender
forward, the next tender is likely to take place in FY2026.
We consider that the Company has complied with the
Competition & Markets Authority’s Statutory Audit Services Order
for the financial year under review.
Quality and effectiveness
The external auditors are invited to attend our Audit Committee
meetings, and report their plan for the full year audit and interim
results review. I meet with the lead audit partner on a regular
basis, and the Committee meets with them at least annually,
without management present, to allow both Committee members
and the external auditors to raise any issues directly. We also
discuss their remit during these meetings.
We reviewed the effectiveness of EY’s performance of the
external audit process, taking into account:
– the quality and scope of their audit plan, and the delivery and
performance against this plan;
– the qualifications, efficiency, and performance of their
audit team;
– the communication between management and EY;
– EY’s understanding of the Group’s business and industry
sector; and
– the results of the FRC’s Audit Quality Inspection Report on EY.
After considering these matters, our Committee was
satisfied with the effectiveness of the year-end process and
recommended to the Board that EY be reappointed at the
Company’s AGM on 30 November 2022.
The FRC’s Audit Quality Review team (AQRT) reviewed EY’s
FY2020 audit, and this year we received the findings of that
review. The AQRT reached a conclusion of ‘Improvements
Required’, with three key findings relating to EY’s oversight of
component audit teams, their testing of capitalised development
costs, and their testing of cash balances. The findings from the
FRC report were addressed by EY in the FY2021 audit. None of
the AQRT’s findings indicated that the financial statements were
materially misstated.
With the points being addressed in the FY2021 audit, and noting
that the audit mainly took place in July and August 2020 and
was therefore in the early stages of audit firms responding to
COVID-19 disruption, we are satisfied that the external audit
is effective.
Independence and objectivity
Both the Group and EY take action to ensure that EY are
independent and objective. As noted earlier, Paul Mapleston
rotated off the audit after five years as our lead audit partner.
The Group has a non-audit services policy, and as a
Committee we check how this policy is applied. This policy
prevents our external auditors from doing certain types of
work for us, such as material or highly-sensitive valuations,
or advising on legal and regulatory matters. Some non-audit
work is permitted by the policy, but with safeguards in place
such as prior authorisation and the use of a competitive
tender process, depending on the level of expected fees.
For EY’s own policies, they require non-audit work to be
approved by our lead audit partner before the work starts;
approval is not granted if the lead audit partner concludes
there’s a risk to the independence and objectivity of the audit.
Separate teams also have to be used by EY, so that members
of the audit team don’t perform non-audit work for us.
This year, EY’s fees for non-audit work were £32,000. This was
for five engagements; Wotton Travel Limited’s annual ATOL
and ABTA reporting, tax compliance for Renishaw SAS, and
review procedures for VAT s56A certification of Renishaw UK
Sales Limited and Renishaw Ireland (DAC).
Juliette Stacey
Chair of the Audit Committee
15 September 2022
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 91
Directors’ Remuneration Report
Committee Chair’s statement
Introduction
On behalf of the Board, I present our Remuneration Report
for FY2022.
Before I write about this year, on behalf of the Board, I would
like to thank shareholders for the strong vote in favour of last
year’s Remuneration Report and specifically their support
for the increase to Will Lee’s salary. It ensured that Will was
rewarded fairly and competitively for his role as Chief Executive
of Renishaw. We look forward to consulting shareholders during
FY2023, when developing our new Remuneration Policy, and to
receiving both their input and support.
Performance for FY2022
FY2022 has been a year of strong growth, building on the
momentum we saw in FY2021. Significant progress in key
strategic areas underpins that growth, with record results from
products already in the market and strong progress in the
development of our flagship product projects (see pages 28–38
for more information).
Our markets recovered quickly, and we have experienced strong
demand for our encoder product lines which has largely been
driven by increased investments in industrial automation and
the semiconductor and electronics capital equipment markets.
We also experienced good growth in demand for our machine
tool and CMM product lines, where we have benefited from a
recovery in investments in metal cutting machinery and the need
to measure the outputs from those processes.
Despite supply chain challenges, we have focused on
increasing capacity to meet demand. During the year, we grew
our manufacturing headcount by 20% and continue to work
closely with suppliers to increase stocks of critical components
and materials.
Remuneration in context
This year we, like many other companies and sectors, have
worked hard to ensure that we can recruit, develop, and retain
our people. As noted in our Risk Management section on
pages 39–49, this year both domestic and global competition
for talent has meant this risk has risen to become a key area of
management focus.
We have traditionally been able to meet our staffing needs, with
a strong reputation for internal development, innovation, low staff
turnover and a positive, open culture. The growth of the business
both in the UK and internationally, coupled with competition for
talent, means that recruitment and retention have become a
priority for the leadership team. Working at the leading edge of
engineering innovation means it is vital that we attract and retain
highly qualified, motivated and productive employees. In regions
of full employment, this is a challenge all employers are facing,
with particular issues in technical engineering, IT (specifically
software development), and manufacturing.
Our approach
to remuneration
is responsive to
our people and
the market
Catherine Glickman
Chair of the Remuneration Committee
Governance
Renishaw plc Annual Report 202292
As noted on pages 54–55, we have set up cross-functional
working groups to focus on three key areas of people
development, responding to issues we are identifying through
leaver analysis and employee feedback. The three key
areas are:
– improving our performance management;
– developing career progression pathways, together with
structured learning and development programmes; and
– benchmarking and investing in reward and benefits.
I will comment on the reward project which is completely aligned
with our decisions on executive remuneration, and with which
we’ve made major progress this year. Market benchmarking
exercises were completed in the UK, and a clear pay policy was
agreed. This enabled management to identify where base pay
investments would move us towards our target pay position in
the market, subject to good performance. Where benchmarked
outcomes rated existing salaries in line with our pay positioning,
individuals received a lump sum payment in recognition of
contribution, instead of an uplift to base salary.
We have also started benchmarking exercises in India
and Europe, and have made investment in key skill areas,
specifically technical, engineering, software, and manufacturing
roles. You will have seen in our trading updates this year of our
major investments in rewards for our people; these will continue
to ensure that our pay remains competitive, so that we can
retain and attract talented people. In FY2023, we will continue
to monitor the market to maintain our competitive position, and
will acquire benchmarking data for all roles during FY2023,
with the aspiration that pay across all areas of operation will be
locally competitive.
FY2022 annual incentive opportunity for
ExecutiveDirectors
Our Executive Directors have successfully led us through
another year of profitable growth, with 19% growth in revenue
and 37% growth in Adjusted profit before tax (PBT).
As in previous years, the metrics for the Executive Directors’
Deferred Annual Equity Incentive Plan (DAEIP) were
predominantly financial, with 90% paying out on Adjusted PBT
and the remaining 10% on non-financial, strategic objectives,
subject to the threshold Adjusted PBT being met. The maximum
award for Will Lee and Allen Roberts is 150%, and for Sir David
McMurtry it is 100%. We defer 50% of any earned pay-out into
shares for three years for Will and Allen, and any award for Sir
David is paid as cash.
We set a stretching Adjusted PBT increase for FY2022
as follows:
– Threshold – £122m
– On-target – £141m
– Stretch – £146m
– Maximum – £152m
We set our strategic objectives around the following headings:
– Group strategic direction – covering software strategy,
Group structure, associates and joint ventures, and planning;
– Innovation – focusing on new product delivery, specifically of
flagship products, and inorganic growth;
– People and culture – covering delegation and accountability,
productivity, values, and leadership; and
– Sustainability – focusing on the plan to achieve our Net
Zero commitment.
On Adjusted PBT, I am delighted to confirm that we have far
exceeded the maximum for the profit range this year, with a
full year Adjusted PBT result of £163.7m. This means that this
element pays out in full.
With regard to the non-financial element, the Committee
considered performance against the strategic objectives in
detail and agreed that they had been met in full; a detailed
breakdown of performance against each strategic objective is
given on page 104.
This has resulted in a maximum bonus award for FY2022
to each of the Executive Directors. When considering the
outcomes, the Committee has taken a holistic view, including
in relation to the employee and wider stakeholder experience,
in addition to performance relative to the targets and
objectives set. The Committee believes that the outcomes are
an appropriate reflection of wider performance and has not
exercised any discretion in relation to remuneration outcomes for
Executive Directors.
Senior Leadership Team bonus plan
Following discussion by the Executive Directors, and with strong
approval from the Committee, we aligned the metrics for the
incentive scheme for the Senior Leadership Team with those of
the Executive Directors’ DAEIP for FY2022. Awards are based on
90% Adjusted PBT and 10% strategic objectives.
Any award will be made half in cash and half in deferred shares,
held for three years, subject to a minimum award. For the first
time, the incentive is aligned with the Executive Directors’
reward, working to common profit and strategic targets. This is
also the first time that our Senior Leadership Team have been
rewarded in Renishaw shares. The plan has been extremely
well received by our Directors and Senior Leadership Team,
with clarity on what is required for the incentive to pay out and a
shared sense of ownership.
FY2022 employee bonus awards
As is our policy, a proportion of our annual profit has been set
aside to invest in bonus awards for our people. After a strong
performance this year, bonus awards – which depend on
seniority and performance – increased compared to last year,
with a UK minimum award of £1,000 (pro-rated).
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 93
Looking ahead – key focus area for the Committee
Our Remuneration Policy was approved by shareholders at the
30 September 2020 AGM, receiving a high level of shareholder
support at 92.78%. During the course of this year we will be
reviewing our Directors’ Remuneration Policy, in advance of
its renewal at our 2023 AGM, to ensure that it continues to
support our strategic priorities and provides an appropriate
level of reward to attract and retain high-calibre individuals in an
increasingly competitive market. Our aim is to always consider
the wider workforce, our shareholders, and other stakeholders,
and to remunerate executives fairly and responsibly. We remain
committed to a responsible approach to executive pay, as I trust
this Directors’ Remuneration Report demonstrates.
On behalf of the Board, I would like to thank all those who
attended our AGM and Investor Day, and thank you again for
your continued support and feedback. As always, I am happy
to answer questions or receive feedback; please contact me at
CompanySecretary@Renishaw.com.
Catherine Glickman
Chair of the Remuneration Committee
15 September 2022
Our approach to Executive Director remuneration for
FY2023
In line with the wider workforce, our approach to reward is
focused on competitive pay positioning across the Group,
driving accountability and performance. For our Executive
Directors, we continue to operate our conservative approach,
balancing the needs and experience of employees,
shareholders and other stakeholders.
Our Executive Directors – Sir David McMurtry, Will Lee and Allen
Roberts – will receive increases of 5% this year. This is lower
than the average increase for the wider workforce at 6.2%.
FY2023 annual incentive plan for Executive Directors
The Committee has discussed the DAEIP design for our
Executive Directors and agreed that it remains appropriate for
FY2023. It will continue to be predominantly financial, based on
Adjusted PBT, worth 90%, with strategic objectives worth 10%.
As in FY2022, the FY2023 strategic objectives will be grouped
under driving innovation, people and culture, sustainability with
a focus on progress on our environmental targets, improving
productivity, continued embedding of our vision and values, and
evolving our strategy.
The Adjusted PBT targets and strategic objectives will also
apply to the Senior Leadership Team to ensure collective
accountability and responsibility.
Non-executive Director remuneration
The Board has reviewed the fees for the Non-executive Directors
and has agreed that they should increase to £75,000 for FY2023.
This represents a second year of increase and aligns the fees
closer to the median point in the market for a business of our
size. At the 2022 AGM we are seeking shareholder approval
for a minor amendment to the Directors’ Remuneration Policy
to remove the requirement that all Non-executive Directors are
paid the same fee in order to provide flexibility, in particular as
consideration is given to the future composition of the Board
and the appointment of further Non-executive Directors, and
to bring the Policy into line with market practice in this regard.
Further details are set out on page 100.
Engaging with our people
The Committee continues to support the growing focus on
employee engagement. We use various methods to engage with
the wider workforce, including:
– my role as employee engagement ambassador;
– meetings with the Senior Leadership Team and our people,
joining employee briefings, receiving company updates
through Channel R, attendance at the diversity and inclusion
forums, and regular updates on business progress;
– regular virtual and face-to-face meetings with the Senior
Leadership Team by members of the Committee; and
– regular briefings to the Board and Committee on recruitment
(particularly in relation to early careers and technical
employees), the progress of our key people projects
on performance management during the year, career
development and reward, and regular updates on retention.
Directors’ Remuneration Report
Committee Chair’s statement continued
Governance
Renishaw plc Annual Report 202294
Committee members, advisers and meetings
What does the Committee do?
Our Committee helps attract, retain and motivate talented
executives by ensuring Renishaw offers competitive
remuneration and motivating incentives. These incentives are
linked to our overall performance and, in turn, the interests of
all shareholders.
We are responsible for:
– deciding our framework for executive remuneration;
– determining the remuneration for each of the Executive
Directors and other senior management;
– ensuring that suitable financial and non-financial objectives are
in place to reward and encourage strong performance; and
– overseeing and reviewing the structure and operation of the
Remuneration Policy.
Our Committee terms of reference are published on
www.renishaw.com/corporategovernance.
To avoid duplication, the table below cross refers to disclosures
given elsewhere of how we have sought to comply with Provision
41 of the Governance Code.
Topic Page(s)
– an explanation of the strategic rationale for
executive directors’ remuneration policies,
structures and any performance metrics
93, 98–99
– reasons why the remuneration is appropriate using
internal and external measures, including pay ratios
and pay gaps
106
– a description, with examples, of how the
Remuneration Committee has addressed the
factors in Provision 40
102
– whether the Remuneration Policy operated as
intended in terms of company performance and
quantum, and, if not, what changes are necessary
98–100
– what engagement has taken place with
shareholders and the impact this has had on
Remuneration Policy and outcomes
101–102
– what engagement with the workforce has taken
place to explain how executive remuneration aligns
with wider company pay policy
101
– to what extent discretion has been applied to
remuneration outcomes and the reasons why
n/a
Members
All members of the Committee are Independent Non-executive
Directors: myself, as Chair; Sir David Grant; Juliette Stacey
(from 1 January 2022); and Stephen Wilson (from 1 June 2022).
During FY2022 Carol Chesney was a member of the Committee
from 1 July 2021 to 31 December 2021 and John Jeans was a
member of the Committee from 1 July 2021 to 28 February 2022.
The Committee met six times in FY2022, and we set out on this
page a summary of the topics discussed in those meetings.
Jacqueline Conway, our General Counsel & Company Secretary,
acts as Secretary to the Committee. Executive Directors may
attend our meetings by invitation (to advise on the remuneration
and performance of senior management and to take part in
specific discussions), although they are not present for any
discussions that directly relate to their own remuneration.
Advisers
We use independent advisers as needed and our current
adviser is Deloitte.
Deloitte is a founder member of the Remuneration Consultants
Group and, as such, voluntarily operates under the code of
conduct in relation to executive remuneration consulting in
the UK. We believe that the advice received from Deloitte is
objective and independent.
Total professional fees and expenses paid to Deloitte for advice
received was £26,200.
Deloitte was appointed by the Committee and has provided
other remuneration advice during FY2022.
Committee meeting attendance record
Committee members Attended
Catherine Glickman (Chair)
6/6
Sir David Grant 6/6
Carol Chesney
1
2/2
John Jeans
2
3/3
Juliette Stacey
3
4/4
Stephen Wilson
4
1/1
1
During FY2022, Carol Chesney was a member of the Committee from 1 July
2021 until 31 December 2021.
² During FY2022, John Jeans was a member of the Committee from 1 July
2021 until 28 February 2022.
3
Juliette Stacey was a member of the Committee from 1 January 2022.
4
Stephen Wilson was a member of the Committee from 1 June 2022.
Meetings
Date Topic
6 July 2021 – Group financial and non-financial
objectives for FY2022
20 October 2021 – Employee salaries and bonus proposals
for FY2022
– FY2022 bonus update
– HR objectives for FY2022
– Executive Directors’ DAEIP awards
for FY2021
1 February 2022 – Senior Leadership Team bonus scheme
– Senior management salary review
– Employee salaries adjustment budget
30 March 2022 – Senior Leadership Team bonus scheme
– Amendments to Committee’s terms
of reference
9 May 2022 – Employee bonus for FY2022
– Salary benchmarking
– Proposed financial and non-financial
objectives for FY2023
22 June 2022 – Employee bonus proposal for FY2022
– Salary benchmarking
– Changes to the DAEIP
– Achievement of financial and non-financial
objectives for FY2022
– Financial and non-financial objectives
for FY2023
– Executive Directors’ salary review
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 95
Executive Director remuneration in 2022 vs 2021
The graph shows a comparison of the Executive Directors’ total remuneration (including a breakdown of the components) for FY2022
and FY2021.
Executive Directors: shareownership
The Remuneration Policy approved by the shareholders at the AGM in September 2020 includes a minimum shareholding guideline
for Executive Directors only. Current shareholdings for comparison with the shareholding requirements are calculated based on
annualised salary as at 30 June 2022 and by reference to the closing share price on 30 June 2022 (3,568p).
Current Executive Directors
Sir David McMurtry Will Lee Allen Roberts
Number of ordinary shares of 20p each beneficially owned as
at 30 June 2022
26,377,291 7,695 6,840
Actual (× salary) 1,289.7 0.410* 0.572
Requirement (× salary) 0.5 2.0 0.5
* Will Lee is in the process of building towards his minimum shareholding guidelines. He has increased his proportionate shareholding since FY2021.
Total shareholder return (TSR)
Alignment of Executive Director and shareholder interests is reinforced by the significant shareholding of our Executive
Chairman, and for non-founder Executive Directors through DAEIP awards being denominated in shares and the minimum
shareholding guidelines.
To demonstrate alignment of performance alongside shareholder interests, the chart below shows our strong TSR performance over
the last 10 years, illustrating that we have outperformed the FTSE 250 index consistently over the last five years. TSR performance
was rebased to 100 at 30 June 2012.
FTSE 250Renishaw
Value of £100 invested on 30 June 2012
202220212012 2013 2014 2015 2016 2017 202020192018
0
150
100
50
250
200
350
450
400
Financial year ended 30 June
300
2022
2021
W
ill Lee,
Chief Executive
2022
2021
S
ir David McMurtry,
Executive Chairman
2022
2021
Base salary Taxable benefitsBase salary waived Annual cash bonus Deferred equity incentivePension
0 225 450 675 900 1,125 1,350 1,575 1,800
A
llen Roberts,
Group Finance Director
Remuneration at a glance
Governance
Renishaw plc Annual Report 202296
Adjusted profit before tax (£m)
Financial year ended 30 June
£119.7m
100%
£163.7m
100%
2022
2021
£200
£100
£150
£50
£0
150%
0%
75%
100%
Threshold Maximum
Threshold
StretchOn-target
Payout (% of salary)
Maximum
Stretch
On-target
50% cash 50% shares
Annual incentive opportunity
The Committee sets Group performance
targets, including a threshold below
which no annual incentive is earned.
This increases from zero to a target
at which 75% of salary (equivalent
to 50% of the maximum opportunity
for non-founder Executive Directors)
would be earned, and to a cap at which
the maximum opportunity of 150% of
salary could be earned. The targets for
pay-outs of between 100% of salary
(‘Stretch’) to 150% of salary (‘Maximum’)
will incentivise and reward even
greater outperformance of profit growth
expectations for any year.
Sir David McMurtry participates in
the annual bonus plan: his incentive
opportunity is capped at a maximum of
100% of salary, to be paid in cash.
Our financial performance for FY2022 has resulted in the following awards:
Executive Director
Cash bonus
£’000
Deferred
into shares
£’000
Total
£’000
Sir David McMurtry 730 0 730
Will Lee 503 503 1,006
Allen Roberts 320 320 640
How is performance reflected in our incentives?
Our incentive opportunity is based on financial and strategic objectives, although the award is only payable if the threshold
Adjusted* PBT target is met.
Financial objectives
Adjusted PBT is a key measure of Renishaw’s financial performance.
In FY2022, Adjusted PBT was weighted 90% in the annual incentive opportunity.
The Adjusted PBT targets for 2022 were:
– Threshold £122m;
– On-target £141m;
– Stretch £146m; and
– Maximum £152m.
* Note 29 (Alternative performance measures) defines how Adjusted PBT is calculated.
Non-financial objectives
The remaining 10% of our annual incentive opportunity was this year subject to the achievement of our non-financial
objectives,including:
– Group strategic direction – covering software strategy, Group structure, associates and joint ventures, and planning;
– Innovation – focusing on new product delivery, specifically of flagship products, and inorganic growth;
– People and culture – covering delegation and accountability, productivity, values, and leadership; and
– Sustainability – focusing on the plan to achieve our Net Zero commitment.
Adjusted PBT
The percentages in this bar chart refer to the total of the maximum awards that could
be made to the Executive Directors. In both FY2021 and FY2022, the Executive
Directors received the maximum bonus available under our annual incentive
opportunity as both the financial and non-financial objectives were met.
KPI – performance snapshot
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 97
Directors’ Remuneration Policy
Remuneration principles – total Remuneration Policy
Delivering the strategy
To attract, motivate
and retain talented
Executive Directors to
support the delivery
of Renishaw’s strategy
and maximise long-term
shareholder value
Simple and aligned
Executive Director
remuneration is designed
to be simple, conservative,
and aligned with
shareholder interests
Proportionate
A cap on total remuneration
at the upper quartile of
the relevant market for the
position in question
Linked to performance
Performance measures are
defined for each constituent
element of remuneration
Base salary
Policy – Renishaw aims to pay base salaries between median and upper quartile, reflecting that its variable
pay opportunities remain significantly below market.
– Maximum: upper quartile of the relevant market.
– Measured by: continued good performance.
Link to strategy To provide a competitive remuneration package to motivate and retain Executive Directors of the
required calibre to help the Group deliver its strategic objectives.
Benefits
Policy – Benefits provided on an ongoing basis include: a car or car allowance; private medical insurance;
and long-term disability cover. We may provide new Executive Directors with reasonable and
proportionate support if they need to move closer to their place of work.
– Maximum: capped at £50,000 a year (excluding accommodation and relocation costs).
– Measured by: not applicable.
Link to strategy To provide market-competitive benefits to motivate and retain Executive Directors and to support them
to give maximum attention to their role.
Pension
Policy – To provide a pension contribution/allowance in line with the wider workforce of the home country of
the Executive Director and to motivate and retain Executive Directors of the required quality to meet
the Group’s objectives.
– As from 1 August 2020, Executive Directors who joined Renishaw before 2007 will receive pension
contributions into our UK defined contribution scheme, or all or part as an allowance paid in lieu,
at 11% of salary, in alignment with other long-serving employees. Executive Directors who joined
Renishaw after 2007 will receive the same annual contributions as other more recent joiners in the
wider workforce (currently 9% of salary).
– The allowance will be made into our defined contribution scheme or all or part as a cash allowance
in lieu, as agreed by the Committee.
– Maximum: 11% of base salary for Executive Directors who joined Renishaw before 2007 and 9% of
base salary for those who joined after 2007.
– Measured by: not applicable.
Link to strategy To provide a pension contribution/allowance in line with the wider workforce of Executive Director’s
home country, and to motivate and retain Executive Directors of the required quality to meet the
Group’s objectives.
The Remuneration Policy approved at the 30 September 2020 AGM underpins the implementation of our strategic objectives.
A summary of the key elements can be found below, and the full Policy is available at www.renishaw.com/en/financial-
reports-22583. During FY2022, the Remuneration Policy operated as intended in terms of our performance and quantum.
Governance
Renishaw plc Annual Report 202298
Annual incentive opportunity
(cash bonus and deferred equity awards)
Policy – The Committee sets Group performance targets, including a threshold below which no annual
incentive is earned, increasing from zero on a straight-line basis to a target at which 75% of salary
(equivalent to 50% of the maximum opportunity for non-founder Executive Directors) would be
earned, to a cap at which the maximum opportunity of 150% of salary could be earned.
– Part or all of any annual incentive payment (whether paid in cash or deferred into shares) may
be subject to repayment in the event of any: material financial misstatement; error in calculation;
misconduct; corporate failure; material loss; and/or reputational damage.
– Maximum: 150% of salary for non-founder Executive Directors and 100% of salary for Sir David
McMurtry (the award for whom is paid in cash only).
– Measured by: primarily by Adjusted PBT, together with financial and non-financial metrics. Any non-
financial metrics shall not form more than 25% of the overall bonus opportunity.
Link to strategy To incentivise and reward the execution of the Group’s objectives, reward outperformance and
encourage Executive Director share ownership.
Minimum shareholding
Policy – Chief Executive is expected to build up and maintain a level of share ownership of at least 200% of
base salary.
– All other Executive Directors are expected to build up and maintain a level of share ownership of
at least 50% of base salary. Any future Executive Director appointments will need to build up and
maintain a level of share ownership of at least 200% of base salary.
– 50% of any net vested share awards (after disposals to meet tax liabilities) must be retained until
the minimum shareholding guideline is met.
– The required level of shareholding is expected to be achieved within five years of an Executive
Director’s appointment.
– Maximum: not applicable.
– Measured by: not applicable.
Link to strategy Supports the alignment of Executive Director and shareholder interests.
Post-employment shareholding
Policy – Executive Directors (excluding Sir David McMurtry) will need to maintain a personal shareholding
in Renishaw plc at a level of at least the lower of their actual shareholding and the level of their
minimum shareholding guideline for one year after they step down from the Board, and 50% of that
level for a further year.
– This applies to shares awarded after October 2020.
– The Committee retains the discretion to modify the post-employment shareholding requirement in
certain exceptional circumstances. For example, on a change of control or if a conflict of interest
arises with an Executive Director’s next appointment.
– Maximum: not applicable.
– Measured by: not applicable.
Link to strategy Supports the principle of long-term share ownership that is promoted by the Governance Code.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 99
Non-executive Director Remuneration
As set out in the Committee Chair’s statement, we are seeking shareholder approval for a minor amendment to the Policy at our
2022 AGM in so far as it applies to Non-executive Directors. Under the current Policy, all Non-executive Directors are paid the
same fee, irrespective of their responsibilities – for example membership of, or their chairing of, Board committees.
However, we recognise the benefit of greater flexibility, in particular as consideration is given to the future composition of the
Board and the appointment of further Non-executive Directors. Therefore, in order bring the Policy into line with market practice in
this regard, the proposed amended Policy, which is set out below, removes the current limitation. This would enable the Company
to provide fees within a market competitive range, taking into account the responsibilities of the Non-executive Director’s role and
the expected time commitment.
Non-executive Directors’ policy table
The fees for any Non-executive Chair would be determined by the Committee and the fees for other Non-executive Directors are
determined by the Chairman and the Executive Directors. Set out below is a table summarising the approach to fees for Non-
executive Directors.
The Non-executive Directors are appointed for an initial three-year period subject to annual performance review and re-elections
at AGMs, unless terminated earlier by either party on one month’s written notice. Appointments will not normally continue beyond
nine years in office, although there may be exceptions where a certain skillset is difficult to replace and/or to allow Renishaw to
conduct a comprehensive recruitment exercise.
Board fees
Operation – Fees are set taking into account the responsibilities of the role, the expected time commitment and
prevailing market rates.
– The Non-executive Directors are currently all paid a single all-inclusive fee. A basic fee with
additional fees paid for the chairing of Committees and assuming the role of Senior Independent
Director may be introduced in the future. Additional fees may also be paid for other Board
responsibilities or roles if this is considered appropriate.
– Fees are reviewed at appropriate intervals, usually on an annual basis, with reference to fees
payable to non-executive directors of companies of a similar size and complexity.
– Non-executive Directors do not receive incentive pay or share awards and do not currently receive
any benefits or pension arrangements.
– Travel and other reasonable expenses (including fees incurred in obtaining professional advice in
the furtherance of their duties) incurred in the course of performing their duties are reimbursed to
Non-executive Directors (including any associated tax liability).
– Performance measures are not applicable.
– Maximum: basic fees are subject to the aggregate limit set in accordance with the Company’s
Articles of Association, as amended by shareholder approval from time to time.
Link to strategy To provide a competitive fee to attract and retain Non-executive Directors of the required calibre to
meet the Group’s objectives.
Directors’ Remuneration Policy continued
Governance
Renishaw plc Annual Report 2022100
Approach to remuneration and consideration of stakeholders
Introduction
We consider a variety of stakeholder views when determining
executive pay, including those of our shareholders, colleagues,
and external bodies. See pages 52–65 for more information
onhow we consider our stakeholders’ views more generally.
Employee engagement
Our Committee continues to focus on employee engagement.
As Chair, I also act as employee engagement ambassador
and have attended meetings with HR, members of the Senior
Leadership Team, and our Diversity and Inclusion Committee
during the year. This has helped me gain insights on employee
views around a variety of topics.
In FY2023, I look forward to further personal engagement with
our people through various forums, which will help inform where
our priorities lie on future engagement initiatives.
Further information on how we have engaged with our people
can be found on pages 52, 54 and 55. We did not specifically
consult with employees on our current Executive Director
Remuneration Policy.
Consideration of employment conditions
We are involved in setting the remuneration for our Senior
Leadership Team. We also review the remuneration and related
policies of our wider workforce, with particular reference to the
UK since it is the market in which the Executive Directors are
based. This allows us to ensure sufficient alignment between
the remuneration policies of the wider workforce and the
Executive Directors. It also gives additional context for making
informed decisions on executive pay, and ensures performance
objectives are aligned with our culture and strategy. The pension
arrangements for the Executive Directors are aligned to those
available to our workforce as set out on page 98.
Employee pay
To reward and recognise the record performance achieved
inthis financial year, eligible employees received an annual
bonus paying out a UK minimum of £1,000 (pro-rated).
In 2021, we announced that we would conduct benchmarking
exercises periodically to ensure that Renishaw’s remuneration
and salaries remain competitive, and during FY2022 we
continued working on our goal to reach our targets for pay.
Our approach to reward, which was based on increases linked
to inflation and performance, has been replaced by aligning pay
to market competitive rates. We carry out detailed benchmarking
of our pay and benefits using global, industry-wide comparisons.
We believe that this approach will improve attraction, retention,
and our gender pay gap figures. The major investment in reward
this year has seen an improvement in the competitiveness of our
pay, and has been well received by our people. We will continue
to work towards our target position.
Our benchmarking activities will complement the implementation
of our new job grading structure. Here, too, we developed this
structure using an industry-wide framework that will allow us to
benchmark our pay and benefits globally. Once we have fully
introduced our reviewed structure, we will shift our focus to
creating competency frameworks for all our roles.
We have focused on these priority projects in direct response
to feedback from our people about a lack of transparency on
pay and career progression. These processes will help define
relevant training and resources to support further personal
development, backed by our global HR system which will
support implementation and access.
It is crucial that our employee pay is correctly and competitively
positioned within the wider employment market to ensure we
retain our talented people while attracting new employees to
join our business. Benchmarking not only takes account of
inflationary rises but also considers other factors such as:
– demand for specific skills, e.g. engineering or
software development;
– fluctuating salaries in geographical locations; and
– ensuring fairness and consistency, demonstrating to our
people that they are competitively rewarded.
While variable and share-based payments are more heavily
weighted elements of remuneration for our Executive Directors
compared to our wider workforce, we have further aligned the
pay of our Senior Leadership Team, who are now participants in
our Senior Leadership Team Annual Bonus Plan.
This operates on the same basis as the Executive Directors’
DAEIP. See page 93 for more information on the Senior
Leadership Team Annual Bonus Plan.
Consideration of shareholder views
We engage with shareholders when making decisions about
changes to the Directors’ Remuneration Policy. We considered
shareholder feedback when drawing up the current Policy.
We consulted the top 20 external shareholders as well as
proxy voting agencies in May and June 2020 regarding our
proposed changes.
We are grateful for feedback from shareholders as part of this
process, which indicated broad support for the initial proposals.
While no substantive changes were made to the Policy as a
result of the feedback before we published our 2020 Annual
Report, a number of shareholders and proxy voting agencies
raised questions and concerns following its publication.
We took into account these questions and, following further
discussion, announced the following clarifications to the
proposed Remuneration Policy in September 2020:
– minimum in-post shareholding requirement: future
Executive Directors will have to build and maintain a
shareholding of at least 200% of their salary over time (the
same as our current Chief Executive); and
– recruitment remuneration: the maximum award opportunity
under any long-term incentive for a new Executive Director,
during the current Policy (three years), is 200% of salary.
We were pleased that the Remuneration Policy received 92.78%
votes in favour when proposed to the shareholders at the AGM
in 2020.
We continued to engage with shareholders in FY2022, including
regarding the implementation of the Remuneration Policy in
relation to Executive Directors’ salary increases effective for
FY2022. This included an initial written communication, followed
by one-to-one telephone conversations with me where requested.
We received constructive feedback from shareholders who
appreciated the context and were supportive of the rationale,
which encouraged us to proceed with the proposed increases.
This support was reflected in the voting results at the 2021 AGM,
with the Annual Report on Remuneration passing with 97.15%
votes in favour.
We will continue to monitor trends and developments in corporate
governance and market practice to ensure the structure of
executive remuneration remains appropriate. We intend to
consult with shareholders when developing our new Policy in
FY2023, and look forward to receiving their input and support.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 101
Alignment with strategy
The strategic alignment of each element of pay is set out in the
summary of the Remuneration Policy on pages 98–100. The non-
financial objectives for FY2022 were:
– Group strategic direction – covering software strategy,
Group structure, associates and joint ventures, and planning;
– Innovation – focusing on new product delivery, specifically of
flagship products, and inorganic growth;
– People and culture – covering delegation and accountability,
productivity, values, and leadership; and
– Sustainability – focusing on the environment and our plan to
achieve our Net Zero commitment.
These are all linked to the strategy and values of our Group,
which underpin our culture and drive behaviours consistent with
our purpose.
Our non-financial objectives for next year will similarly be linked
to our strategy, further embedding the alignment between
executive remuneration and strategy. We set out our FY2023
non-financial objectives on page 94 and will expand on these
further in our FY2023 Annual Report.
With 50% of the non-founder Executive Directors’ variable pay
deferred into shares with a three-year vesting period, combined
with minimum shareholding guidelines (both in and after
employment), this helps ensure the interests of executives and
their behaviours are aligned with shareholders. Expanding the
annual incentive plan to our Senior Leadership Team further
aligns the interests of management and shareholders, and
encourages managers to behave in the long-term interests of
the Group.
Approach to remuneration and consideration of stakeholders
continued
The Committee has considered our Executive Director Remuneration Policy and practices in the context of the UK Corporate
Governance Code, particularly Provision 40, as follows:
Factor How did we address this factor?
Clarity A summary of the Remuneration Policy approved at the 2020 AGM has been set out with the full Policy
available on our website. The Annual Report on Remuneration clearly explains how we have implemented
the Policy in FY2022, including the incentive outcomes. We have engaged with stakeholders as explained in
detail on page 101 and are committed to consultation; we will consult with shareholders later this year when
we review our Policy during FY2023.
Simplicity We operate a simple and conservative reward Policy with only the annual incentive plan and no long-term
incentive plan, making it much easier to understand for participants, employees and shareholders.
Risk There is an appropriate mix of fixed and variable pay, and financial and strategic objectives, and there are
robust measures in place to manage different kinds of risk, including:
– the post-vesting retention period;
– minimum shareholding requirement (including post-cessation);
– bonus deferral into shares;
– malus and clawback provisions; and
– Committee discretion to override formulaic outcomes.
Predictability We set out the range of possible pay opportunities under different performance scenarios (threshold,
on-target, stretch and maximum) within the Remuneration Policy as set out on page 97 of this Report. This
allows shareholders to consider such aspects before voting on the Remuneration Report (and Policy when
proposed) at our AGM.
Proportionality Executive Directors are incentivised to achieve annual stretching targets and the Committee assesses
performance holistically at the end of the period, taking into account performance against the financial and
strategic objectives. There is no payout if the threshold financial objectives are not met and our outcomes do
not reward poor performance. The strategic alignment of each element of pay has also been clearly laid out
in the Remuneration Policy. The Committee may exercise discretion to ensure that payouts are appropriate.
Alignment with
culture
Our strategic objectives for this financial year are set out on page 93 and are all linked to our strategy and
values, which underpin our culture.
Governance
Renishaw plc Annual Report 2022102
This section of the report sets out the remuneration of the Directors in FY2022 and also contains details of how we intend to
implement the Remuneration Policy for FY2023. The information on pages 103 to 110 has been audited where required under the
regulations and is indicated as audited where applicable.
We have prepared this Remuneration Report in accordance with Schedule 8 of the Large and Medium sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2008 (as amended in 2013, 2018 and 2019), LR 9.8 of the Listing Rules and the
Governance Code.
Single total figure table (audited) – Executive Directors
Salary Benefits Pension Bonus
1
Total fixed
remuneration
Total variable
remuneration
Total
remuneration
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Sir David McMurtry 730 0
2
3 3 n/a n/a 730 715 733 3 730 715 1,463 718
Will Lee 670 562 20 20 74 64 1,006 842 764 646 1,006 842 1,770 1,488
Allen Roberts 426 418 20 20 47 47 640 626 493 485 640 626 1,133 1,111
Single total figure table (audited) – Non-executive Directors
Fees Expenses Total remuneration
3
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
John Deer 70 0
4
0 1 70 1
Carol Chesney
5
35 56 0 0 35 56
Catherine Glickman 70 56 0 0 70 56
Sir David Grant 70 56 0 0 70 56
John Jeans
6
47 56 0 0 47 56
Juliette Stacey
7
35 n/a 0 n/a 35 n/a
Stephen Wilson
8
6 n/a 0 n/a 6 n/a
1
The value of the bonus includes both the value of the annual cash bonus and the face value of shares to be awarded under the DAEIP in respect of the relevant
financial year. Deferred shares will normally vest on the third anniversary of grant, subject to continued employment.
2
Sir David McMurtry waived his salary from 1 July 2020 to 30 June 2021.
3
The Non-executive Directors are not eligible for any variable remuneration and only receive fixed remuneration.
4
John Deer waived his fee from 1 July 2020 to 30 June 2021.
5
Carol Chesney resigned as a Non-executive Director on 31 December 2021. Therefore, these figures reflect remuneration received during the period from 1 July
2021 to 31 December 2021.
6
John Jeans resigned as a Non-executive Director on 28 February 2022. Therefore, these figures reflect remuneration received during the period from 1 July 2021
to 28 February 2022.
7
Juliette Stacey was appointed as a Non-executive Director on 1 January 2022. Therefore, these figures reflect remuneration received during the period from
1 January 2022 to 30 June 2022.
8
Stephen Wilson was appointed as a Non-executive Director on 1 June 2022. Therefore, these figures reflect remuneration received during the period from 1 June
2022 to 30 June 2022.
Benefits
Car
allowance
£’000
Private medical cover applies to all Executive Directors and
insurance on personal cars apply to some Directors
£’000
Sir David McMurtry 0 3
Will Lee 20 0
Allen Roberts 20 0
Incentive outcomes for FY2022
Under the Remuneration Policy approved at the 2020 AGM, the Executive Directors were eligible in FY2022 for an annual incentive
opportunity (as set out on page 104).
The incentive opportunity is based on financial and strategic objectives, although the award is only payable provided the financial
threshold is met (irrespective of performance against the strategic objectives). The Committee established stretching targets for the
financial element of the award.
The financial objectives, based on Adjusted PBT, comprise 90% of the award, and the non-financial or strategic objectives comprise
the remaining 10% of the award. The targets and achievement against these targets are set out in the tables overleaf. The Committee
considers that the level of pay-out is reflective of the overall performance of the Group in the year and is appropriate.
Annual Report on remuneration
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 103
Financial objectives
Threshold On-target Stretch Maximum
Adjusted PBT (£m) £122m £141m £146m £152m
% of bonus payable for Adjusted PBT performance 0% 45% 60% 90%
The Adjusted PBT for FY2022 was £163.7m. This result exceeds the maximum target set by the Committee.
Strategic objectives
All of the strategic, or non-financial, targets were also satisfied, as shown in the table below:
Strategic objective Outcome of objective
% of bonus
payable
% of bonus
paid out
Deliver the Group
strategic plan for
FY2022
– Significant progress with key customers on implementing third party software on our
products and devices, together with development of a subscription revenue model
andinvestment to deliver this new venture, including marketing.
– Actions to align associate and joint venture businesses with strategy, with divestment
ofHiETA shareholding and a new distribution model agreed with RLS.
– The Committee also took into account the high quality of the strategic planning and
budgeting undertaken.
10% 10%
Drive innovation
with a focus on
new product
development
and disruptive
technology
– Focus on flagship products has produced the first two successes: our FORTiS
enclosed absolute encoder; and NC4+ Blue (industry first in blue laser technology).
– Significant progress during year on next flagship products in pipeline, meeting targets
and key milestones on products from all major product groups.
– Disruptive technology projects classified and ranked: high-potential projects launched
or accelerated. Specific details regarding these projects are commercially sensitive.
Develop our
people –
leadership and
capability
– Implementation of simplified, revised performance management, with focus on
high performance.
– Targeted reward investment to support recruitment and retention, and to address
market competitiveness; focus on technical engineering and software development
markets to ensure we have sufficient resources.
– Significant productivity improvements across the Group, particularly in manufacturing
through efficiencies and engineering improvements. This includes a 40% increase in
productive hours with only a 19% increase in production labour and overheads (from
a combination of efficiencies and engineering improvements), and a 32% increase in
revenue over two years with minimal change in our sales and marketing headcount.
Further opportunities identified to be implemented in FY2023.
– Values launched and embedded, including through the use of an introductory video
from Will Lee, together with videos from the Senior Leadership Team, and a global
values competition.
Determine our
approach to
sustainability
– Approved an ambitious and detailed plan to achieve Net Zero for Scope 1 and 2
GHGemissions by 2028.
– Agreed methodology to measure Scope 3 emissions, with a target date to complete
thiswork by March 2023.
Incentive opportunity outcome
The maximum opportunity for FY2022 was 150% of salary for non-founder Executive Directors and 100% of salary for Sir David
McMurtry. For the non-founder Executive Directors, 50% of any bonus earned is to be deferred into shares for three years; any
award to Sir David McMurtry will be made in cash.
Our financial performance for FY2022 has resulted in the following awards:
Executive Director
Cash bonus
£’000
Deferred into shares
£’000
Total
£’000
Sir David McMurtry 730 0 730
Will Lee 503 503 1,006
Allen Roberts 320 320 640
When considering the outcomes, the Committee has taken a holistic view, including in relation to the employee and wider
stakeholder experience, in addition to performance relative to the targets and objectives set. The Committee believes that the
outcomes are an appropriate reflection of wider performance. The Committee has not exercised any discretion in relation to
remuneration outcomes for Executive Directors.
Annual Report on remuneration continued
Governance
Renishaw plc Annual Report 2022104
Total pension entitlements
Will Lee is a member of our closed defined benefit scheme. The normal retirement age is 65. On death, pension benefits would pass
to that member’s dependents.
Since the closure of the defined benefit scheme, contributions have been made to a defined contribution scheme or paid in cash.
At 30 June 2022:
Value of defined benefit
pension entitlement
£’000 per year
Pension
contributions
Will Lee 10 Paid in cash
Payments to past Directors
No payments were made to past Directors during the year.
Loss of office payments
There were no loss of office payments during the year.
Performance graph
The graph below shows our TSR performance, compared with the FTSE 250 index, which the Committee believes is the most appropriate
broad index for comparison, as Renishaw is a member of this index. TSR performance was rebased to 100 at 30 June 2012.
TSR performance
FTSE 250Renishaw
Value of £100 invested on 30 June 2012
202220212012 2013 2014 2015 2016 2017 202020192018
0
150
100
50
250
200
350
450
400
Financial year ended 30 June
300
Chief Executive total remuneration
The table below sets out information relating to the remuneration of the Chief Executive for each of the years in question:
Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Will Lee (from 1 February 2018)
Single figure of total remuneration
(£’000) 594 653 601 1,488 1,770
Annual bonus payout (includes
annual cash bonus and deferred
equity incentive) % of maximum 95 0 0 100 100
Long-term incentive vesting %
ofmaximum n/a n/a n/a n/a n/a
Sir David McMurtry
(until31January 2018)
Single figure of total remuneration
(£’000)* 663 632 1,298 668 1,207 818
Annual bonus payout % of maximum 10 0 100 0 77 100
Long-term incentive vesting
% of maximum n/a n/a n/a n/a n/a n/a
*
Represents the total remuneration received by Sir David McMurtry in relation to this role.
Chief Executive pay ratio
The table on page 106 sets out the Chief Executive pay ratios as at 30 June 2022, 30 June 2021 and 30 June 2020. The report will
build up over time to show a rolling 10-year period. The ratios compare the single total figure of remuneration of the Chief Executive
with the equivalent figures for the lower quartile (P25), median (P50) and upper quartile (P75) employees. Ratios are also presented
using base salary only.
We have used the ‘Option B’ methodology (based on gender pay reporting), as the most robust way to identify the individual
reference points within an organisation with multiple operating segments.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 105
Chief Executive pay ratio
Total remuneration
FY2022 Employee remuneration Pay ratio
Chief Executive P25 P50 P75 P25 P50 P75
£1,769,183 £31,099 £42,246 £48,457 56.9 41.9 36.5
FY2021 Employee remuneration
Chief Executive P25 P50 P75 P25 P50 P75
£1,487,487 £28,438 £37,720 £45,170 52.3 39.4 32.9
FY2020
*
Employee remuneration Pay ratio
Chief Executive P25 P50 P75 P25 P50 P75
£601,241 £27,476 £35,619 £51,563 21.9 16.9 11.6
Base salary
FY2022 Employee remuneration Pay ratio
Chief Executive P25 P50 P75 P25 P50 P75
£670,000 £27,213 £36,276 £41,331 24.6 18.5 16.2
FY2021 Employee remuneration Pay ratio
Chief Executive P25 P50 P75 P25 P50 P75
£561,500 £24,420 £32,670 £42,480 23.0 17.2 13.2
FY2020
*
Employee remuneration Pay ratio
Chief Executive P25 P50 P75 P25 P50 P75
£505,350 £24,650 £32,634 £47,092 20.5 15.5 10.7
* Where necessary, adjustments were made to the underlying data to reflect a reduction in working hours during April 2020 to June 2020 in connection with the
COVID-19 pandemic. The reductions in salary and employer pension contributions during this time have been added back to give a full-time equivalent figure.
No other adjustments were made to the underlying data.
The base salary for the Chief Executive increased by 19.3% in July 2021. When Will Lee was appointed Chief Executive in February
2018, being an internal promotion, his salary was positioned below the normal market rate, with the stated intention that the
Committee would make staged increases to bring the salary into line with the market, subject to performance and experience gained
in the role. Since this appointment, Will had received one base salary increase, effective 1 July 2019, of circa 2%, in line with the
wider workforce. We considered Will to be operating very effectively in the role, adding substantial value to the Company and its
stakeholders, and we wished to position his base pay accordingly. The Committee was also aware of the importance of retention,
and given that there is no long-term incentive, was keen to ensure that Will felt fairly rewarded as Chief Executive.
The base salaries for employees at P25, P50 and P75 have moved, primarily as a result of significant investment in employee pay,
benchmarked to market pay rates. A large proportion of the funds have been allocated to lower paid employees (below P50),
as evidenced by the increases to P25 and P50, which has meant that the distribution of pay amounts has shifted year-on-year.
Furthermore, we have seen a significant increase in recruitment of employees below P25, which has contributed to the reduction of
the P75 figure. The total remuneration ratios also increased slightly during the year.
Taking into account the above, the Committee considers the median pay ratio consistent with the Company’s approach to pay and
reward. The Committee will continue to monitor the ratios on an annual basis.
Executive Directors serving as non-executive directors of other companies
During the year none of the Executive Directors were paid to serve as a non-executive director for any other company.
Annual Report on remuneration continued
Governance
Renishaw plc Annual Report 2022106
Statement of Directors’ shareholding and share interests
During the year, none of the Directors were required to own shares in the Company, although the Remuneration Policy approved by
the shareholders at the AGM in 2020 includes a minimum shareholding guideline for Executive Directors. As at 30 June 2022 (and
unchanged as at the date of this report) the share interests (including the interests of connected persons) of the Directors who have
served on the Board at any time during the year are:
Number of ordinary
shares of 20p each
beneficially owned
(as at 30 June 2022)
Unvested and
subject to continued
employment
(awarded under the
DAEIP)
Minimum
shareholding
guideline
Current
shareholding
1
Minimum
shareholding
guideline met
Sir David McMurtry 26,377,291 n/a 0.5× salary 1,289.7× salary Yes
Will Lee 7,695 8,256 2× salary 0.410× salary Building
Allen Roberts 6,840 6,140 0.5× salary 0.572× salary Yes
John Deer 12,076,790 n/a n/a n/a n/a
Carol Chesney
2
1,000 n/a n/a n/a n/a
Catherine Glickman 675 n/a n/a n/a n/a
Sir David Grant – n/a n/a n/a n/a
John Jeans
3
440 n/a n/a n/a n/a
Juliette Stacey
4
– n/a n/a n/a n/a
Stephen Wilson
5
– n/a n/a n/a n/a
1
Current shareholdings for comparison with the shareholding requirements for Executive Directors are calculated based on annualised salary as at 30 June 2022
and by reference to the closing share price on 30 June 2022 (3,568p).
2
Carol Chesney resigned as a Non-executive Director on 31 December 2021 so the number of ordinary shares of 20p each beneficially owned is shown as at
31 December 2021 and not 30 June 2022.
3
John Jeans resigned as a Non-executive Director on 28 February 2022 so the number of ordinary shares of 20p each beneficially owned is shown as at
28 February 2022 and not 30 June 2022.
4
Juliette Stacey was appointed as a Non-executive Director on 1 January 2022.
5
Stephen Wilson was appointed as a Non-executive Director on 1 June 2022.
DAEIP awards granted during the year
Will Lee and Allen Roberts were eligible to receive an award under the DAEIP for performance over the year under review.
The details of these awards – which at the date of this Directors’ Remuneration Report have yet to be granted – will be reflected in
the above table in next year’s Remuneration Report.
On 28 October 2021, the Executive Directors, excluding Sir David McMurtry, were granted awards of shares under the DAEIP for
performance over FY2021. The details of these awards are summarised below and reflected in the above table.
Executive Director Number of shares
Face value
£’000
1
Face value
% of salary² Vesting date
Will Lee 8,256 421 75 28 October 2024
Allen Roberts 6,140 313 75 28 October 2024
1
Based on the five-day average share price of 5,100p preceding the award date.
2
Expressed as a percentage of salary at 30 June 2021.
In line with our Remuneration Policy, awards normally vest on the third anniversary of the award date, subject to continued
employment only.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 107
Percentage change in remuneration of the Directors
The following table sets out the percentage change in the Directors’ remuneration, compared with the percentage change in average
remuneration to UK employees in FY2019 to FY2022. The figures shown in the table below refer to the base salary actually received
by each Director, therefore these figures do not include the fees (whether all or part) that were waived for any financial years.
Where an item is not relevant for that Director or where it has changed from or to a zero figure in the timeframe, the change is shown
as not applicable. All percentages in the table are rounded to the nearest whole number.
Sir David McMurtry
1
Salary Benefits Annual bonus
2019 to 2020 -23% 0% 0%
2020 to 2021 n/a 0% n/a
2021 to 2022 n/a 0% 2%
Will Lee Salary Benefits Annual bonus
2019 to 2020 -8% 0% 0%
2020 to 2021 11% 0% n/a
2021 to 2022 19% 0% 19%
Allen Roberts Salary Benefits Annual bonus
2019 to 2020 -2% 0% 0%
2020 to 2021 5% 0% n/a
2021 to 2022 2% 0% 2%
John Deer
2
Fees Expenses Annual bonus
2019 to 2020 -38% -43% 0%
2020 to 2021 n/a -94% n/a
2021 to 2022 n/a -37% n/a
Carol Chesney Fees Expenses Annual bonus
2019 to 2020 -4% 0% n/a
2020 to 2021 5% 0% n/a
2021 to 2022
3
-38% 0% n/a
Catherine Glickman Fees Expenses Annual bonus
2019 to 2020 6% 0% n/a
2020 to 2021 5% 0% n/a
2021 to 2022 25% 0% n/a
Sir David Grant Fees Expenses Annual bonus
2019 to 2020 -4% 0% n/a
2020 to 2021 5% 0% n/a
2021 to 2022 25% 0% n/a
John Jeans Fees Expenses Annual bonus
2019 to 2020 -4% 100% n/a
2020 to 2021 5% n/a n/a
2021 to 2022
4
-17% 0% n/a
Juliette Stacey Fees Expenses Annual bonus
2019 to 2020 n/a n/a n/a
2020 to 2021 n/a n/a n/a
2021 to 2022
5
n/a n/a n/a
Stephen Wilson Fees Expenses Annual bonus
2019 to 2020 n/a n/a n/a
2020 to 2021 n/a n/a n/a
2021 to 2022
6
n/a n/a n/a
UK employee (average) Salary Benefits Annual bonus
2019 to 2020 3% 1% n/a
2020 to 2021 1% 1% n/a
2021 to 2022 9% 4% 22%
1
Sir David McMurtry waived his salary from 1 July 2020 to 30 June 2021. As disclosed in our FY2021 Annual Report, Sir David’s base salary increased by 2.1%
from £714,700 (for the year ended 30 June 2021) to £729,709 (for the year ended 30 June 2022).
2
John Deer stepped down as an Executive Director on 29 January 2020 (becoming a Non-executive Director). Therefore, the FY2020 figure was calculated on
the basis of the salary received as Executive Director during the period from 1 July 2019 to 29 January 2020 and the fees received as Non-executive Director
during the period from 30 January 2020 to 30 June 2020. John Deer waived his fee from 1 July 2020 to 30 June 2021. He did not waive his fee for the year ended
30 June 2022 and therefore was paid a fee of £70,000 in line with the other Non-executive Directors.
3
Carol Chesney resigned as a Non-executive Director on 31 December 2021. Therefore, these figures reflect remuneration received during the period from 1 July
2021 to 31 December 2021.
Annual Report on remuneration continued
Governance
Renishaw plc Annual Report 2022108
4
John Jeans resigned as a Non-executive Director on 28 February 2022. Therefore, these figures reflect remuneration received during the period from 1 July 2021
to 28 February 2022.
5
Juliette Stacey was appointed as a Non-executive Director on 1 January 2022. Therefore, these figures reflect remuneration received during the period from
1 January 2022 to 30 June 2022.
6
Stephen Wilson was appointed as a Non-executive Director on 1 June 2022. Therefore, these figures reflect remuneration received during the period from 1 June
2022 to 30 June 2022.
Relative importance of spend on pay
The following table sets out the total amount spent in FY2022 and FY2021 on remuneration to all Group employees and on dividends
to shareholders:
FY2022
£’000
FY2021
£’000
Change
%
Employee remuneration 254,268 224,760 13.1
Shareholder dividends paid 49,494 10,189 385.8
Except as shown above, no other distributions have been made to shareholders or other payments or uses of profit or cash flow that
affect the understanding of the relative importance of spend on pay.
Statement of implementation of Remuneration Policy in the next year
Base salary
Executive Directors received salary increases of 5%, effective 1 July 2022. This is lower than the average increase for the wider
workforce, as set out in the Committee Chair’s statement on page 94.
Annual cash bonus and deferred annual equity incentive
As set out in the Remuneration Policy approved at the 2020 AGM, the annual cash bonus and deferred annual equity incentive
have been combined into a single award opportunity. The maximum opportunity for FY2023 will be 150% of salary for non-founder
Executive Directors and 100% of salary for Sir David McMurtry. For the non-founder Executive Directors, 50% of any bonus earned
will be deferred into shares for three years; any award to Sir David McMurtry will be made in cash. Measures will continue to be
Adjusted PBT and non-financial strategic objectives, with targets set by the Committee in line with our stated Policy. The FY2023
strategic objectives will be grouped under driving innovation, people and culture, sustainability, improving productivity, continued
embedding of our vision and values, and evolving our strategy. Further details (including the targets) will be disclosed in next
year’s Remuneration Report. Any awards are subject to the achievement of both financial and strategic objectives, as well as the
Committee’s discretion.
Pension and benefits
No changes will be made to the implementation of the pension and benefits elements of the Policy approved at our 2020 AGM.
Non-executive Directors
The fees payable for each Non-executive Director for FY2023 will increase to £75,000. This increase was approved by the Executive
Directors in June 2022. The increase was considered to be appropriate given the substantial support provided by all of the Non-
executive Directors, and the need to ensure that the Company continues to attract high-calibre Non-executive Directors with the
appropriate skills and experience. No additional fees are paid, for example, for chairing Board committees.
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 Committee for this purpose were Catherine Glickman, Carol Chesney from 1 July 2021 to 31 December 2021, Sir
David Grant, John Jeans from 1 July 2021 to 28 February 2022, Juliette Stacey from 1 January 2022, and Stephen Wilson from 1 June 2022.
Deloitte assisted the Committee in reviewing and benchmarking the Executive Director remuneration arrangements, as well as
providing other remuneration-related advice to the Committee during FY2022. Further information is set out on page 95.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 109
Executive Director service contracts
The Executive Directors’ service contracts require 12 months’ notice of termination by either party. There are no obligations in any
Executive Director’s service contract, or Non-executive Director’s letter of appointment, which would require the Company to pay a
specific amount of compensation for loss of office.
The Executive Directors’ service contracts reflect our policy regarding notice periods. No payment will be made for a termination by
the Company for a breach by the Executive Director of his or her service contract. In other cases, payment in lieu of notice will be
considered up to the 12 months’ notice period to cover base salary, benefits and pension contributions. If additional compensation
must be considered, such as on a settlement agreement, the Committee will consider all relevant commercial factors affecting that
case. Directors’ service contracts are available for inspection at our registered office upon written request to the Company Secretary.
Executive Director Date of current service contract
Sir David McMurtry 18 October 2018
Will Lee 1 June 2020
Allen Roberts 20 April 2021
Non-executive Director letters of appointment
Non-executive Director Date of current service contract
John Deer 3 February 2020
Carol Chesney
1
4 October 2012
Catherine Glickman 20 July 2018
Sir David Grant 13 April 2012
John Jeans
2
8 April 2013
Juliette Stacey 20 December 2021
Stephen Wilson 31 March 2022
1
Carol Chesney resigned as a Non-executive Director with effect from 31 December 2021.
2
John Jeans resigned as a Non-executive Director with effect from 28 February 2022.
Statement of voting at general meeting
At the AGM held on 30 September 2020, votes cast in respect of the Directors’ Remuneration Policy were as follows:
Resolution Votes for % for Votes against % against Total votes cast Votes withheld
Approval of Remuneration Policy 59,462,931 92.78 4,627,677 7.22 64,090,608 894,466
At the AGM held on 24 November 2021, votes cast in respect of the Directors’ Remuneration Report were as follows:
Resolution Votes for % for Votes against % against Total votes cast Votes withheld
Approval of Remuneration Report 61,720,584 97.15 1,812,708 2.85 63,533,292 476,411
This report was approved by the Board and has been signed on its behalf by:
Catherine Glickman
Chair of the Remuneration Committee
15 September 2022
Annual Report on remuneration continued
Governance
Renishaw plc Annual Report 2022110
Other statutory and regulatory disclosures
Review of the business
A review of the business and likely future developments is
given in the Chairman’s statement, the Chief Executive’s
review and the other sections of the Strategic Report.
Segmental information by geographical market is given in note 2
to the Financial statements.
manufacturing, marketing, and distribution subsidiaries to
manufacture some of our products and support customers in the
following major markets outside the UK:
– Americas: Brazil, Canada, Mexico and USA;
– APAC: Australia, China, Hong Kong, India, Japan, Malaysia,
Singapore, South Korea and Taiwan; and
– EMEA: Austria, Czech Republic, Denmark, Finland, France,
Germany, Hungary, Ireland, Israel, Italy, Netherlands, Poland,
Romania, Spain, Sweden, Switzerland and Turkey.
We also have representative offices in Indonesia, Slovakia,
Thailand and Vietnam.
In addition, in Slovenia we have a joint venture, RLS Merilna
tehnika d.o.o. (RLS) and a subsidiary which designs
and arranges the procurement of application-specific
integrated circuits.
Further information is available on our website:
www.renishaw.com.
Research and development
We continue to invest significantly in developing future
technologies, with R&D activities located primarily in the UK.
We develop technologies which lead to patented products
and methods to help deliver our segmental strategies. You can
find further information on R&D expenditure in note 4 on page
140. The amount of R&D expenditure capitalised, the amount
amortised, and impairment charges in the year are given in note
12 on page 148.
Dividends
The Directors propose a final dividend of £41,198,315 or
56.6p per share which, together with the interim dividend of
£11,646,167 or 16.0p per share, gives a total dividend for the
year of £52,844,482 or 72.6p per share. In comparison, last year
the Board agreed a total dividend for the year of £48,040,438 or
66.0p per share.
As at 30 June 2022, 14,396 shares were held by the Renishaw
plc Employee Benefit Trust (EBT). These shares may be used
to satisfy awards made to employees under our employee
share plan - our Deferred Annual Equity Incentive Plan (DAEIP).
Under the terms of the EBT, any dividends payable on these
shares are waived.
Directors and their interests
The Directors at the end of the year are listed on pages 74
and 75. Carol Chesney and John Jeans served as Directors
until 31 December 2021 and 28 February 2022 respectively.
In accordance with the provisions of the Governance Code,
all Directors will retire and, being eligible, offer themselves for
re-election to office - or, in the case of any Director who was first
appointed to the Board since the last AGM, election to office -
at the AGM to be held on 30 November 2022. Details of these
Directors are shown on pages 74 and 75 and full biographical
details are available at www.renishaw.com/directors.
The rules on appointment, reappointment, and retirement
by rotation of the Directors and their powers are set out in
our Articles of Association. There are no powers given to the
Directors that are regarded as unusual.
We have listed the Directors’ interests in our share capital (with
the equivalent number of voting rights), as notified to us, on
page 107. There has been no change in the holdings shown on
page 107 in the period 1 July 2022 to 15 September 2022.
All the interests were beneficially held, except for 2,278,161
shares (2021: 2,278,161 shares) which were non-beneficially
held by John Deer but in respect of which he has voting rights.
Sir David McMurtry, as one party, and John Deer and Mrs M E
Deer, as the other party, have entered into a voting agreement.
Under this agreement the parties agree that: (i) John Deer and
Mrs M E 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 2018 for a further
period of five years and will terminate on the earlier of 25 May
2023 or the deaths of both Sir David McMurtry and John Deer.
Directors’ and officers’ indemnity insurance and
Directors’ indemnities
Subject to the provisions of the Companies Act 2006, our
Articles of Association provide for our Directors and officers to
be appropriately indemnified. In accordance with our Articles
of Association and to the extent permitted by law, Directors
(excluding the founders) have been granted an indemnity in
respect of loss and liability incurred as a result of their office.
Neither our indemnity nor insurance provides cover in the event
that a Director is proven to have acted dishonestly, fraudulently
or negligently. Copies of all indemnities granted are available for
inspection at our registered office.
We also maintain insurance for our Directors and officers in
respect of their acts and omissions during the performance of
their duties.
Responsibility statement
As required under the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules, a statement made by the
Board regarding the preparation of the financial statements is set
out on page 114.
Share capital and change of control
Details of our share capital, including rights and obligations,
is given in note 26 to the Financial statements. We are not a
party to any significant agreements that might terminate upon a
change of control.
A shareholder authority for the purchase of a maximum of 10%
of our own shares was in existence during FY2022. However, we
did not purchase any of our own shares during that time.
Auditor
A resolution to reappoint Ernst & Young LLP as our auditor will
be proposed at the forthcoming AGM.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 111
Other statutory and regulatory disclosures continued
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 our auditor is unaware.
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 our auditor is
aware of that information.
Annual General Meeting
Shareholders will receive the notice convening our AGM and
an explanation of our proposed resolutions separately. At our
meeting, we will be seeking shareholder approval for, among
other things, the ability to make market purchases of our own
ordinary shares, up to a total of 10% of the issued share capital.
Substantial shareholdings
Apart from the shareholdings (and corresponding voting rights)
of Sir David McMurtry and John Deer (36.23% and 16.59%
respectively), the table below discloses the voting rights that
have been notified to the Company under the requirements
of the Financial Conduct Authority’s Disclosure Guidance and
Transparency Rules DTR 5. These represent 3% or more of the
voting rights attached to issued shares, as at 30 June 2022.
Please note that these holdings may have changed since being
notified to us. However, notification of any change is not required
until an applicable threshold is crossed.
Substantial shareholdings
% of issued
share capital
Number of
shares
BlackRock, Inc. 4.92% 3,578,133
Capital Research and
Management Company 4.76% 3,465,738
Standard Life Investments Limited 4.99% 3,631,612
There have been no changes notified to the Company, in
the holdings shown above, in the period 1 July 2022 to
15 September 2022.
Employees
The retention of our highly skilled people is essential to our
future. Our Directors place great emphasis on the continuation of
our training programme. Health and safety matters are another
key area of focus, and well-established systems of safety
management are in place to safeguard our people, customers
and others.
Our employment policies are designed to provide equal
opportunities irrespective of race, religion, gender, age, socio-
economic background, disability or sexual orientation. We give
full and fair consideration to applications for employment
from people with disabilities, where suitable for appropriate
vacancies. Any of our people who become disabled while with
us will be given every opportunity to continue their employment
through reasonable adjustment to their working conditions
and equipment. Where this is not possible, we offer retraining
for other positions. They will also be afforded opportunities to
continue training and gain promotion on the same basis as any
of our employees.
We set out details on how the Directors have engaged with our
people and had regard to their interests in various sections
of this Annual Report, including pages 54–56. You can also
find information provided to our people on the performance of
the business, consultation with employees and performance
incentives in various sections of the Annual Report, including
pages 101 and 102.
There are no agreements with employees providing for
compensation for any loss of employment that may occur
because of a takeover bid.
Suppliers, customers and other stakeholders
We have set out details on how the Directors have had regard to
the need to promote our relationships with suppliers, customers,
and others on pages 67 and 68. In this same section, we also
set out the effect of that consideration on the Directors’ principal
decisions during FY2022.
Political donations
We did not make any political donations during the year.
Events after the balance sheet date
There have been no material events affecting us since the
year end.
Financial risk management, objectives and policies
We have set out descriptions of the following in note 25 to the
Consolidated financial statements on pages 158–163:
– the use of financial instruments;
– our financial risk management objectives and policies;
– policies in relation to hedge accounting; and
– exposure to market risk, including credit and liquidity risk.
Controlling shareholders’ arrangements
The LR require that premium listed companies with ‘controlling
shareholders’ must enter into a relationship agreement
containing specific independence provisions. A controlling
shareholder is a shareholder who individually or with any of their
concert parties exercises or controls 30% or more of the votes
that may be cast on all, or substantially all, the matters at a
company’s general meeting.
The independence provisions required by the LR 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
LR; 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 LR.
Governance
Renishaw plc Annual Report 2022112
Sir David McMurtry (Executive Chairman, 36.23% shareholder)
is a controlling shareholder. John Deer (Non-executive Deputy
Chairman, together with his wife, 16.59% shareholder) is
also a controlling shareholder by virtue of a long-standing
voting agreement between him (and his wife) and 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 LR. We have notified the FCA of this, as required by
the LR.
The controlling shareholders have informed the Board that they
are not willing to enter into a relationship agreement. They are
of the view that the requirement to enter into a relationship
agreement infringes upon their rights as shareholders and their
track record demonstrates that they act in the best interests of
the Company.
As there is no relationship agreement in place, the LR provide
that certain enhanced oversight measures will apply.
This means, unless and to the extent the FCA agrees
otherwise, all transactions with the controlling shareholders
must be approved by our shareholders (excluding the
controlling shareholders) in accordance with the related party
transaction requirements of the LR, and none of the normal
exemptions apply.
The FCA has given us guidance about the application of the
enhanced oversight measures to the remuneration and benefits
received by the controlling shareholders in their capacity
as Directors (in accordance with the Company’s approved
remuneration policy). The FCA has also advised on other
ordinary course corporate matters, such as the payment of
dividends to all of our shareholders. The FCA has confirmed
that either: (i) these are not transactions or arrangements that
fall within the enhanced oversight measures; or (ii) they will
permit a modification of the enhanced oversight measures so
these will not apply, provided the arrangements remain in the
ordinary course of business and, in the case of salary reviews
and bonuses, they fall within the small transaction exemption in
the Annex to LR 11. This guidance continues to apply in respect
of remuneration awarded under our existing remuneration policy
(see pages 98–100).
Greenhouse gas emissions and energy consumption
Disclosures concerning GHG emissions and energy
consumption are set out on pages 57 and 59.
Disclosure of information under LR 9.8.4R
The information that fulfils the reporting requirements under this rule can be found on the pages identified below.
Section Topic Location
(1) Interest capitalised Not applicable
(2) Publication of unaudited financial information Not applicable
(4) Details of long-term incentive schemes Not applicable
(5) Waiver of emoluments by a director Not applicable
(6) Waiver of future emoluments by a director Not applicable
(7) Non pre-emptive issues of equity for cash Not applicable
(8) As item (7), in relation to major subsidiary undertakings Not applicable
(9) Parent participation in a placing by a listed subsidiary Not applicable
(10) Contracts of significance Not applicable
(11) Provision of services by a controlling shareholder Directors’ Remuneration Report, starting on page 92
(12) Shareholder waivers of dividends Other statutory and regulatory disclosures, starting on page 111
(13) Shareholder waivers of future dividends Other statutory and regulatory disclosures, starting on page 111
(14) Agreements with controlling shareholders Other statutory and regulatory disclosures, starting on page 111
Signed on behalf of the Board.
Jacqueline Conway
General Counsel & Company Secretary
15 September 2022
Renishaw plc
Registered number 01106260
England and Wales
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 113
Directors’ responsibilities
Statement of Directors’ responsibilities in respect of the
Annual Report and Financial statements
The Directors are responsible for preparing the Annual
Report and the Group and Company Financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and
Company Financial statements for each financial year.
Under that law the Directors are required to prepare the
Group financial statements in accordance with UK-adopted
international accounting standards, and have elected to prepare
the parent Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable
law) including Financial Reporting Standard 101, ‘Reduced
Disclosure Framework’.
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 the
Company and of their profit or loss for that period.
In preparing each of the Group and Company Financial
statements, the Directors are required to:
– select suitable accounting policies and then apply
them consistently;
– make judgements and accounting estimates that are
reasonable and prudent;
– state whether they have been prepared in accordance with
applicable accounting standards; and
– prepare the Financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Group and the Company, and
enable them to ensure that the Financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and the Company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
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.
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 comply with the relevant laws and regulations.
Directors’ confirmations
Each of the Directors, whose names and functions can be
found on pages 74–75, confirms that, to the best of his or
her 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 Group and of the Company and the undertakings
included in the consolidation taken as a whole; and
– the Strategic Report and the Directors’ Report include a fair
review of the development and performance of the business
during the year and the position of the Group and of the
Company at the year end, together with a description of the
principal risks and uncertainties that they face.
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
position and performance, business model and strategy.
Signed on behalf of the Board.
Allen Roberts
Group Finance Director
15 September 2022
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Opinion
In our opinion:
– Renishaw plc’s Group financial statements and Parent Company financial statements (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 30 June 2022 and of the Group’s profit for the year
then ended;
– the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
– the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Renishaw plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 30 June 2022 which comprise:
Group Parent Company
Consolidated balance sheet as at 30 June 2022 Balance sheet as at 30 June 2022
Consolidated income statement for the year then ended Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income and
expense for the year then ended
Related notes C.31 to C.46 to the financial statements including
a summary of significant accounting policies
Consolidated statement of changes in equity for the year
thenended
Consolidated statement of cash flow for the year then ended
Related notes 1 to 30 to the financial statements, including
asummary of significant accounting policies
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the
Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
abasis for our opinion.
Independence
We are independent of the Group and Parent in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we
remain independent of the Group and the Parent Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and Parent
Company’s ability to continue to adopt the going concern basis of accounting included:
– We understood the process undertaken by management to perform the going concern assessment.
– We obtained management’s going concern assessment, including the cash flow forecasts for the going concern period to
30 September 2023. The Group has modelled a base scenario; seven ‘severe but plausible’ downside scenarios linked to the
principal risks identified by management including supply chain dependencies, reductions to revenue due to industry fluctuations,
increase in costs and reduction in revenue as a result of economic and political uncertainty, impact of a cyber-attack, loss of
manufacturing output, exchange rate fluctuations, and climate change; and a reverse stress test based on liquidity in order
to determine how much additional downside in trading could be absorbed before the Group exhausted its net cash and bank
deposit balances;
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– We assessed the appropriateness of the duration of the going concern assessment period to 30 September 2023;
– We evaluated the key assumptions underpinning the Group’s base case forecast. In particular we compared the revenue growth
projections to external industry forecasts and latest economic data for indicators of contradictory information;
– We considered the results of management’s reverse stress test, assessing whether such a scenario was remote with reference to
management’s forecasts, the Group’s historic trading and other information obtained throughout the audit, such as how the Group
has responded to market challenges;
– We analysed management’s historic revenue and profit forecasting accuracy;
– We tested the clerical accuracy of the models used to prepare the Group’s going concern assessment and the appropriateness
ofthe model for this purpose; and
– We assessed the appropriateness of the Group’s disclosures concerning the going concern basis of preparation.
We observed that the Group held net cash and bank deposits of £253 million and had borrowings of £6 million at 30 June 2022
which are not subject to financial covenants. Revenue increased by 18.9% to £671 million (2021: £566 million) and the Group
generated a statutory profit before tax of £146 million for the year ended 30 June 2022 (2021: £139 million). Management’s reverse
stress test indicated the Group would have to suffer a significant decline in revenue, to £19 million per month, a level worse than at
any point during FY2021 and FY2022, before it exhausted its available liquidity.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern for
the period to 30 September 2023.
In relation to the Group and Parent company’s reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the
Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope – We performed an audit of the complete financial information of eight components and audit procedures
on specific balances for a further five components.
– The components where we performed full or specific audit procedures accounted for 98% of Adjusted
profit before tax (as defined in Note 29 of the financial statements), 88% of Revenue and 93% of
Total assets.
Key audit matters – Management override via revenue recognition through the posting of manual journals.
– Assessment of hedge effectiveness of forward currency contracts.
– Valuation of the defined benefit pension liability and impact of amendment to the UK Trust Deed.
Materiality – Overall Group materiality of £8.2m which represents 5% of Adjusted profit before tax.
An overview of the scope of the Parent Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope
for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements.
We take into account size, risk profile, the organisation of the Group and effectiveness of Group-wide controls, changes in the
business environment and other factors such as recent internal audit results when assessing the level of work to be performed at
each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, of the 55 reporting components of the Group, we selected 13
components covering entities within the UK, Ireland, USA, Japan, Germany, Hong Kong, China, India, Spain, Italy and South Korea
which represent the principal business units within the Group.
Of the 13 components selected, we performed an audit of the complete financial information of eight components (“full scope
components”) which were selected based on their size or risk characteristics. For the remaining five components (“specific scope
components”), we performed audit procedures on specific accounts within that component that we considered had the potential
for the greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their
risk profile.
The reporting components where we performed audit procedures accounted for 98% (2021: 95%) of the Group’s Adjusted profit
before tax, 88% (2021: 89%) of the Group’s Revenue and 93% (2021: 93%) of the Group’s Total assets. For the current year, the full
scope components contributed 94% (2021: 90%) of the Group’s Adjusted profit before tax, 80% (2021: 80%) of the Group’s Revenue
and 86% (2021: 86%) of the Group’s Total assets. The specific scope components contributed 4% (2021: 5%) of the Group’s
Adjusted profit before tax, 8% (2021: 9%) of the Group’s Revenue and 7% (2021: 7%) of the Group’s Total assets. The audit scope
of these components may not have included testing of all significant accounts of the component but will have contributed to the
coverage of significant accounts tested for the Group.
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Renishaw plc Annual Report 2022116
Adjusted profit before tax
94% Full scope components
4% Specific scope components
2% Other procedures
Revenue
80% Full scope components
8% Specific scope components
12% Other procedures
Total assets
86% Full scope components
7% Specific scope components
7% Other procedures
Of the remaining 42 components that together represent 2% of the Group’s Adjusted profit before tax, none are individually greater
than 0.7% of the Group’s Adjusted profit before tax. For these components, we performed other procedures, including analytical
review of revenue for eight review scope components where revenue exceeded Group performance materiality, aggregated overall
analytical review for the remaining components, testing of consolidation journals and intercompany eliminations to respond to any
potential risks of material misstatement to the Group financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Changes from the prior year
There was no change in our scoping of full and specific scope components compared to the prior year. Two review scope
components were added, and one review scope component was removed from our scope, resulting in an increase from seven
review scope components in the prior year to eight in the current year.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating
under our instruction. Of the eight full scope components, audit procedures were performed on three of these directly by the Primary
Team. Of the five specific scope components, audit procedures were performed on four of these directly by the Primary Team.
For the five full scope components and one specific scope component where the work was performed by component auditors, we
determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a
basis for our opinion on the Group as a whole.
As a result of travel restrictions caused by the COVID-19 pandemic, full scope locations were last physically visited by the Primary
Team during the 30 June 2019 audit cycle. Following easing of certain travel restrictions, during the current year’s audit cycle,
visits were undertaken by the Primary Team to the full scope components in Ireland, Germany and the USA. These visits involved
meeting with local management and touring the Group’s sites in these locations. The Primary Team were unable to visit China, Hong
Kong and Japan during the current year’s audit cycle due to continued travel restrictions in the region. The Primary Team had also
planned to visit India in August 2022 however this visit was not undertaken due to an unforeseen change in Senior Statutory Auditor
in July 2022. Audit procedures for the remaining full and specific scope components were performed directly by the Primary Team in
the UK.
For those component teams in locations not physically visited in the year, the Senior Statutory Auditor and other members of the
Primary Team completed their reviews remotely. We held video conference meetings with component teams to discuss audit
issues arising from their work and used our global audit software to complete virtual reviews of our local audit teams’ working
papers, particularly focusing on the Group’s audit risk areas. The Senior Statutory Auditor or Primary Team delegates attended
closing meetings with component teams and local management via video conferencing. The Senior Statutory Auditor was also
able to leverage his prior knowledge of components obtained through his previous role on the audit as the Engagement Quality
Control Reviewer.
The Primary Team interacted regularly with the component teams where appropriate during various stages of the audit, reviewed
relevant working papers and were responsible for the scope and direction of the audit process. This, together with the additional
procedures performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact Renishaw plc. The Group has
determined that the most significant future impacts from climate change on their operations will be from transition risks impacting
plans to achieve Net Zero commitments and from large-scale natural hazards. These are explained on pages 60–61 in the required
Task Force for Climate-related Financial Disclosures and on page 48 in the principal risks and uncertainties, which form part of the
“Other information,” rather than the audited financial statements. Our procedures on these disclosures therefore consisted solely
of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the
audit or otherwise appear to be materially misstated.
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As explained in Note 1 to the financial statements on critical accounting judgements and estimation uncertainties, management
considered the effect of climate change, including their own Net Zero commitment and concluded that climate change did not have
a material effect on the key judgements and estimates for the year ended 30 June 2022, but recognise that climate change may
pose a greater risk to the Group over time. Governmental and societal responses to climate change risks are still developing, and
are interdependent upon each other, and consequently financial statements cannot capture all possible future outcomes as these
are not yet known. The degree of uncertainty over these changes may also mean that they cannot be taken into account when
determining asset and liability valuations and the timing of future cash flows under the requirements of UK adopted international
accounting standards.
Our audit effort in considering climate change was focused on evaluating management’s assessment of the impact of climate risk,
on the areas of key estimation uncertainties and critical accounting judgements and the adequacy of the Group’s disclosures in the
financial statements. We also challenged the Directors’ considerations of climate change in their assessment of going concern and
viability andassociated disclosures.
Whilst the Group has stated its commitment to the aspirations of the Paris Agreement to achieve net zero emissions by 2050, the
Group are currently unable to determine the full future economic impact on their business model, operational plans and customers
toachieve this and therefore as set out above the potential impacts are not fully incorporated in these financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit
ofthe financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
In the prior year, our auditor’s report included a key audit matter in relation to management override of controls through manual
journal entries posted through the consolidation process to misstate financial performance. In the current year, we concluded this
risk has decreased due to the reduced level of manual intervention required to be made by management through the consolidation
process as a result of increased automation. As a result, this matter did not require significant direction of efforts of the engagement
team in the current year.
The key audit matter in relation to the defined benefit pension liability has been expanded in the current year to address the
accounting impact of the amendment to the UK Trust Deed. This element of the key audit matter is not expected to recur in
future periods
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Renishaw plc Annual Report 2022118
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Management override via revenue
recognition through the posting of
manual journals (£671.1 million, 2021:
£565.6 million)
Risk direction
Refer to the Accounting policy (page
137); and Note 2 of the Consolidated
Financial Statements (page 138)
There is an incentive for management
to manipulate the revenue recognised
through manual journals posted
throughout the year, to improve financial
performance
We consider that the vast majority of
the Group’s revenue transactions are
non-complex by nature, with revenue
recognised at a point in time with no
significant judgement required to be
exercised by management.
We obtained an understanding of the processes and
assessed the design and implementation of key controls for
each of the material revenue streams.
To test the appropriateness of revenue recognition throughout
the period, our audit procedures included:
– For components contributing 87% of total Group revenue,
we used data analytics to analyse 100% of the revenue
transactions recorded in the year, testing the correlation
between revenue, trade receivables and cash and
performing tests of detail over non-correlated transactions.
– We verified that cash receipts that correlate to trade
receivables are recorded accurately and relate to revenue,
through testing a sample of cash journal entries to cash
received during the period, and testing a sample of trade
receivable balances at year end to debtor confirmations
or cash received post year end or evidence of delivery of
goods to the customer.
– We used data analytics to identify potential instances of
management override, including:
i) manual journals based on the transaction type
ii) journals recorded outside of normal working hours
iii) journals posted by inappropriate individuals
– These journals were then tested to supporting evidence,
selecting those exceeding 10% of performance materiality
for manual journals.
– We performed representative sampling for the one
remaining in-scope component where we did not use data
analytics, tracing revenue transactions recorded throughout
the year to cash receipts. We also performed the same
procedures, as listed above, for manual journal entries to
test for potential instances of management override.
In addressing this key audit matter, audit procedures were
performed by a combination of the Primary Team and each of
the component audit teams under our supervision.
We performed full and specific scope audit procedures over
components, which covered 88% of total consolidated Group
revenue, of which components contributing 53% of Group
revenue were tested by overseas component teams under our
supervision.
Based on the procedures
performed, revenue
recognised in the period
is appropriate.
We noted a strong
correlation between
revenue, trade
receivables and cash
across the Group.
Our procedures did
not identify instances
of inappropriate
management override
across the Group.
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Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Assessment of hedge effectiveness
of forward currency contracts
(£19.9 million liability,
2021: £15.4 million asset)
Risk direction
Refer to the Audit Committee Report
(page 87); Accounting policy (page
158); and Note 25 of the Consolidated
Financial Statements (page 162)
At 30 June 2022, the Group had
designated cash flow hedges for
forward currency contracts with a net
fair value liability of £19.9 million (2021:
asset of £15.4 million).
Of these forward currency contracts at
30 June 2022, a net fair value liability of
£5.5 million (2021: asset of £1.4 million)
related to forward currency contracts
deemed ineffective as a cash flow
hedge.
As more fully described in Note 25 to
the Financial Statements, the Group
uses forward currency contracts to
manage risks arising from changes
in foreign currency exchange rates
relating to forecast sales.
The Group designates certain
derivatives as hedges of future
cash flows. Hedge accounting is
discontinued when the hedging
instrument expires or is sold,
terminated or exercised, or no longer
qualifies for hedge accounting.
Changes in the fair value of foreign
currency derivatives which are
ineffective or do not meet the criteria
for hedge accounting in IFRS 9
‘Financial Instruments’ are recognised
in the income statement. For those
instruments which are effective and
meet the criteria for hedge accounting,
the change in fair value is recognised
in other comprehensive income.
The complexity of applying
hedge accounting and measuring
hedge effectiveness could result
in amisstatement between the
incomestatement and other
comprehensive income.
The risk of hedge ineffectiveness
has decreased in the current year
due to improvements in global
macroeconomic conditions and
business performance, as markets
recover from the COVID-19 pandemic,
resulting in increases to the ‘highly
probable’ revenue forecasts of the
hedged items.
We obtained an understanding of management’s process
and assessed the design and implementation of key
controls for applying hedge accounting and estimating
hedge effectiveness.
To test the appropriateness of applying hedge accounting
and the assessment of hedge effectiveness, our audit
procedures included:
– Selecting a sample of hedge accounting relationships with
each counterparty, for each individual currency, as we
determined the population is homogenous.
– For our selected sample of hedge accounting relationships,
involving EY treasury specialists as part of our audit
team to:
i) assess the appropriateness of the methodology used by
management to apply hedge accounting. We inspected
management’s hedge documentation and assessed the
economic relationship to ensure compliance with the
requirements of IFRS 9; and
ii) independently re-perform the ineffectiveness
measurement. We compared the result of our
assessment to management’s, to evaluate whether there
were any additional ineffective hedges at 30 June 2022.
– Assessing management’s revenue forecasts, including
the extent to which these have been deemed to be
‘highly probable’, by evaluating management’s historical
forecasting accuracy and comparing the revenue growth
assumptions to third party industry forecasts; and
– Evaluating the disclosures in the Group financial statements
are in accordance with IFRS 7 ‘Financial Instruments:
Disclosures’.
In addressing this key audit matter, audit procedures were
performed by the Primary Team.
We concluded that the
Group’s application
of hedge accounting
for forward currency
contracts and the
measurement of hedge
effectiveness were in
accordance with the
requirements of IFRS 9.
We agreed with
management’s
assessment that, based
on the ‘highly probable’
revenue forecast, there
are no additional hedges
that have become
ineffective at 30 June
2022.
The disclosures provided
in Note 25 to the Group
financial statements
are in accordance with
IFRS7.
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Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Valuation of the defined benefit
pension liability and impact of the
amendment to the UK Trust Deed
(£174.5 million, 2021: £255.1 million)
Risk direction
Refer to the Audit Committee Report
(page 87); Accounting policy (page
155); and Note 23 of the Consolidated
Financial Statements (page 155)
A total defined benefit pension liability
of £174.5 million was recognised at
30 June 2022 (2021: £255.1 million)
in respect of the Group’s schemes in
the UK, USA and Ireland. There is an
increased risk of material misstatement
due to the size of the liability, the level
of judgement involved in estimating
the key assumptions to calculate the
liability, and the fact that relatively small
movements in assumptions can result
in a material impact to the financial
statements.
As more fully described in Note 23
of the Group Financial Statements,
during the year a Deed of Amendment
was effected to the Trust Deed and
Rules governing the UK Scheme. The
changes included:
i) Augmenting members’ benefits,
resulting in the recognition of
an £11.7 million past service
cost in the Consolidated income
statement
ii) Granting the Company the
unconditional right to a refund
of a scheme surplus. This has
resulted in gains recognised
in the Consolidated statement
of comprehensive income and
expense of £3.3 million for the
removal of the asset ceiling
restriction and £19.6 million for the
reversal of the additional liability
for minimum funding requirements
recognised in the prior year under
IFRIC 14 ‘IAS 19 – The Limit on a
Defined Benefit Asset, Minimum
Funding Requirements and their
Interaction.’
The complexity in accounting for the
change in scheme rules could result in
a misstatement of the defined benefit
liability.
As a result, the risk has increased due
to the complexity of these changes in
the current year.
We obtained an understanding of the processes and assessed
the design and implementation of key controls for estimating
the defined benefit pension liability.
To test the appropriateness of the defined benefit pension
liability, our audit procedures included:
– Evaluating the competence and objectivity of management’s
external actuarial specialists and assessing the
completeness and accuracy of the member data used by
the actuaries to estimate the scheme liabilities by testing the
clerical accuracy of the member data schedules, checking
there were no additions to the participants in the year,
and performing an analytical review of the year-on-year
movements in the data.
– Involving EY actuarial specialists as part of our audit team to:
i) Independently estimate an acceptable range for each
of the significant assumptions used in estimating the
UK and Irish scheme liabilities, which included the
discount rate; rate of inflation; and mortality assumptions.
We compared each of the significant assumptions used
by management’s actuarial specialist to our independent
acceptable range;
ii) Perform a roll forward of the UK and Irish scheme liabilities
from 30 June 2021 to 30 June 2022 and independently
reconcile the output to the amounts calculated by
management’s external actuarial specialist.
– Comparing the key assumptions used in the estimate of
the US scheme liability to appropriate market data and
performing an analytical review of the change in each key
assumption compared to the previous period. This approach
is applied given the smaller size of the US scheme liability.
– Inspecting the Deed of Amendment to the Trust Deed and
Rules and confirming the changes to the scheme were
consistent with our understanding.
– Involving our EY actuarial specialists to determine whether
the augmentation of benefits had been correctly calculated in
line with the amended rules.
– Assessing whether the augmentation of benefits met the
definition of a past service cost under IAS 19 ‘Employee
Benefits’ and evaluating whether the cost was appropriately
recognised in the Consolidated income statement as
opposed to other comprehensive income.
– Inspecting management’s paper and their legal advice
obtained in relation to whether the amended rules granted
the Company the unconditional right to a refund of surplus
under IFRIC 14.
– Evaluating the disclosures in the Group financial statements
are in accordance with IAS 19.
In addressing this key audit matter, audit procedures were
performed by the Primary Team
We concluded
management’s external
actuarial specialists
were competent, the
key assumptions used
to estimate the defined
benefit pension liability
are within our acceptable
range and the movement
in the liability from the
prior year to current year
is reasonable.
The scheme
augmentation has been
correctly accounted
for, under IAS 19, as a
past service cost in the
Consolidated income
statement.
The accounting treatment
for the impact of the
change in scheme
rules on the Company’s
unconditional right to
a refund of surplus
is appropriate and in
accordance with IAS 19
and IFRIC 14.
The disclosures provided
in Note 23 to the Group
financial statements
are in accordance with
IAS19.
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• Profit before taxation – £145.6m
Adjustments (refer to Note 29) – increase basis by £18.1m
• Fair value loss on financial instruments £8.3m
• Pension past service cost £11.7m
• Third-party FSP costs (£0.2m)
• Revised estimate of restructuring provision (£1.7m)
• Total adjusted profit before tax £163.7m
• Materiality of £8.2m (5% of materiality basis)
Adjustments
Materiality
Starting basis
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
We determined materiality for the Group to be £8.2 million (2021: £6.0 million), which is 5% (2021: 5%) of Adjusted profit before
tax. We believe that Adjusted profit before tax is the most relevant performance measure to the stakeholders of the Group.
Adjusted profit before tax excludes fair value gains and losses on financial instruments that are not effective for hedge accounting.
These instruments are significantly impacted by the volatility in valuation and this is outside the Group’s control and is not reflective of
the Group’s recurring performance. A significant past service cost arising from a change to the UK defined benefit pension scheme
rules in the year has also been excluded from Adjusted profit before tax, along with smaller adjustments for the revised estimate of a
restructuring related provision and final third-party FSP (formal sale process) costs. We consider these costs to be non-recurring by
nature and therefore not reflective of the Group’s recurring or underlying performance.
We determined materiality for the Parent Company to be £8.9 million (2021: £8.0 million), which is 1% (2021: 1%) of equity.
Our initial planning materiality was calculated at £7.9 million based on management’s FY2022 forecast of Adjusted profit before tax.
During the course of our audit, we reassessed initial materiality, considering the performance of the business and our final planning
materiality, based on actual results for the year ended 30 June 2022, is £8.2 million (2021: £6.0 million).
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement
was that performance materiality was 75% (2021: 75%) of our planning materiality, namely £6.2m (2021: £4.5m). We have set
performance materiality at this percentage due to the past history of few misstatements indicating a lower risk of misstatement in the
financial statements.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based
on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that
component. In the current year, the range of performance materiality allocated to components was £0.4m to £3.7m (2021: £0.3m to
£2.9m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.4m
(2021: £0.3m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
Governance
Renishaw plc Annual Report 2022122
Other information
The other information comprises the information included in the Annual Report set out on pages 1 to 184, including the Strategic
Report set out on pages 1 to 69, Governance set out on pages 70 to 114, and Shareholder information set out on pages 181 to 184,
other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information contained
within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– 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; and
– the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us 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
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 81;
– Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is
appropriate set out on pages 50 and 51;
– Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its
liabilities set out on pages 50 and 51;
– Directors’ statement on fair, balanced and understandable set out on page 114;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 39 to 49;
– The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set
out on page 81; and
– The section describing the work of the audit committee set out on pages 85 to 91.
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 123
Independent Auditor's Report
to the members of Renishaw plc continued
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set out on page 114, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
Company and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that
the most significant are those that relate to the reporting framework (UK adopted international accounting standards, FRS 101
and the Companies Act 2006, and the UK Corporate Governance Code) and the relevant tax compliance regulations in the UK
and overseas jurisdictions in which the Group operates. In addition, we concluded that there are certain significant laws and
regulations which may have an effect on the determination of the amounts and disclosures in the financial statements being the
Listing Rules of the London Stock Exchange, the Bribery Act 2010, Occupational Health and Safety Regulations, General Data
Protection Regulation and export controls.
– We understood how Renishaw plc is complying with those frameworks by reading internal policies and codes of conduct and
assessing the entity level control environment, including the level of oversight of those charged with governance. We made
enquiries of management, internal audit, the Group’s legal counsel and those responsible for legal and compliance procedures.
We corroborated our enquiries through our review of board minutes and papers provided to the Audit Committee and noted that
there was no contradictory evidence.
– We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by
considering the programs and controls that the Group has established to address risks identified by the entity, or that otherwise
prevent, deter and detect fraud; how senior management monitor those programs and controls, evaluating conditions in the
context of incentive and/or pressure to commit fraud, considering the opportunity to commit fraud and the potential rationalisation
of the fraudulent act, and by making enquiries of senior management, including the Group Finance Director, Head of Group
Finance, Group Internal Audit Manager and Chair of the Audit Committee. We planned our audit to identify risks of management
override, tested higher risk journal entries and performed audit procedures to address the potential for management bias,
particularly over areas involving significant estimation. Further discussion of our approach to address the identified risks of
management override are set out in the key audit matters section of our report.
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations
identified above. Our procedures involved: making enquires of management, including the Group’s legal counsel, internal audit
and full scope component management, of known instances of non-compliance or suspected non-compliance with laws and
regulations; attendance at audit committee meetings; review of committee and board meeting minutes, including board meeting
minutes for full scope components to identify any non-compliance with laws and regulations; journal entry testing, with a focus on
journals meeting our defined risk criteria based on our understanding of the business; and, review of the volume and nature of
complaints received by the whistleblowing hotline during the year. We also completed procedures to conclude on the compliance
of significant disclosures in the Annual Report with the requirements of the relevant accounting standards, UK legislation and the
UK Corporate Governance Code.
– We communicated regularly with the full scope component teams and attended key meetings with the component audit teams
and local management in order to identify and communicate any instances of non-compliance with laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Governance
Renishaw plc Annual Report 2022124
Other matters we are required to address
– Following the recommendation from the audit committee we were appointed by the Parent Company on 13 October 2016 to audit
the financial statements for the year ending 30 June 2017 and subsequent financial periods.
– The period of total uninterrupted engagement including previous renewals and reappointments is six years, covering the years
ending 30 June 2017 to 30 June 2022. Paul Mapleston was replaced as Senior Statutory Auditor for the year ending 30 June
2022 due to partner rotation requirements. However, there was a subsequent unforeseen change in Senior Statutory Auditor
midway through the current year audit cycle. As this change was made in July 2022, the new Senior Statutory Auditor, Anup
Sodhi, retrospectively reviewed and agreed the audit strategy, in order to be satisfied the planned audit approach appropriately
addressed the risk of material misstatement to the Group financial statements. The new Senior Statutory Auditor was previously
involved in the audit as Engagement Quality Control Reviewer and is therefore required to rotate subsequent to the year ending
30 June 2023.
– The audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Anup Sodhi
(Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Luton
15 September 2022
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 125
Renishaw plc Annual Report 2022
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Financial statements
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Renishaw plc Annual Report 2022126
Renishaw plc Annual Report 2022
128 Financial statements contents
129 Consolidated income statement
130 Consolidated statement of comprehensive
income and expense
131 Consolidated balance sheet
132 Consolidated statement of changes in equity
133 Consolidated statement of cash flow
134 Notes (forming part of the
financial statements)
169 Company balance sheet
170 Company statement of changes in equity
171 Notes to the Company financial statements
Governance Financial statements Shareholder information
127
Strategic Report Governance Financial statements Shareholder information
Renishaw plc Annual Report 2022 127
Renishaw plc Annual Report 2022
Introduction
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with
applicable law and regulations. The full statement of Directors’ responsibilities can be found on page 114.
The notes (forming part of the financial statements) provide additional information required by statute, accounting standards or other
regulations to assist in a more detailed understanding of the primary financial statements.
Consolidated financial statements
Primary statements
129 Consolidated income statement
130 Consolidated statement of comprehensive income and expense
131 Consolidated balance sheet
132 Consolidated statement of changes in equity
133 Consolidated statement of cash flow
Notes (forming part of the financial statements)
134 1. Accounting policies
137 2. Revenue disaggregation and segmental analysis
139 3. Personnel expenses
140 4. Cost of sales
140 5. Financial income and expenses
141 6. Profit before tax
141 7. Taxation
144 8. Earnings per share
144 9. Property, plant and equipment
145 10. Right-of-use assets
146 11. Investment properties
147 12. Intangible assets
150 13. Investments in associates and joint ventures
151 14. Leases (as lessor)
151 15. Cash and cash equivalents and bank deposits
152 16. Inventories
152 17. Provisions
153 18. Contract liabilities
153 19. Other payables
153 20. Leases (as lessee)
154 21. Borrowings
154 22. Changes in liabilities arising from financing activities
155 23. Employee benefits
158 24. Share-based payments
158 25. Financial instruments
164 26. Share capital and reserves
165 27. Capital commitments
166 28. Related parties
166 29. Alternative performance measures
168 30. Cessation of operations in Russia
Company financial statements
Primary statements
169 Company balance sheet
170 Company statement of changes in equity
Notes to the Company financial statements
171 C.31. Accounting policies
173 C.32. Property, plant and equipment
173 C.33. Intangible assets
174 C.34. Investments in subsidiaries
174 C.35. Investments in associates and joint ventures
174 C.36. Deferred tax
174 C.37. Inventories
175 C.38. Trade receivables
175 C.39. Provisions
175 C.40. Other payables
175 C.41. Employee benefits
176 C.42. Share capital
177 C.43. Related parties
177 C.44. Capital commitments
177 C.45. Subsidiary undertakings
180 C.46. Associated undertakings and joint ventures
Financial statements contents
Financial statements
128
Renishaw plc Annual Report 2022
from continuing operations notes
2022
£’000
2021
£’000
Revenue 2 671,076 565,559
Cost of sales 4 (313,527 ) (269,852 )
Gross profit 357,549 295,707
Distribution costs (122,455 ) (110,087 )
Administrative expenses (69,736 ) (69,257 )
UK defined benefit pension scheme past service cost 23 (11,695 ) −
(Losses)/gains from the fair value of financial instruments 25 (10,413 ) 21,978
Operating profit 143,250 138,341
Financial income 5 932 3,406
Financial expenses 5 (2,938 ) (3,991 )
Share of profits of associates and joint ventures 13 4,342 1,683
Profit before tax 145,586 139,439
Income tax expense 7 (25,235 ) (27,980 )
Profit for the year 120,351 111,459
Profit attributable to:
Equity shareholders of the parent company 120,351 111,459
Non-controlling interest 26 – –
Profit for the year 120,351 111,459
pence pence
Dividend per share arising in respect of the year 26 72.6 66.0
Dividend per share paid in the year 26 68.0 14.0
Earnings per share (basic and diluted) 8 165.4 153.2
Consolidated income statement
for the year ended 30 June 2022
Strategic Report Governance Financial statements Shareholder information
129
Renishaw plc Annual Report 2022
Consolidated statement of comprehensive income andexpense
for the year ended 30 June 2022
notes
2022
£’000
2021
£’000
Profit for the year 120,351 111,459
Other items recognised directly in equity:
Items that will not be reclassified to the Consolidated income statement:
Current tax on contributions to defined benefit pension schemes 1,653 1,653
Deferred tax on contributions to defined benefit pension schemes (1,653 ) (1,653 )
Remeasurement of defined benefit pension scheme liabilities 23 69,078 33,285
Deferred tax on remeasurement of defined benefit pension scheme liabilities (15,997 ) (6,052 )
Total for items that will not be reclassified 53,081 27,233
Items that may be reclassified to the Consolidated income statement:
Exchange differences in translation of overseas operations 26 12,151 (14,752 )
Exchange differences in translation of overseas joint venture 26 118 (728 )
Current tax on translation of net investments in foreign operations 26 (1,529 ) 735
Deferred tax on translation of net investments in foreign operations 26 – 735
Effective portion of changes in fair value of cash flow hedges, net of recycling 26 (28,423 ) 51,590
Deferred tax on effective portion of changes in fair value of cash flow hedges 7,26 6,155 (9,790 )
Total for items that may be reclassified (11,528 ) 27,790
Total other comprehensive income and expense, net of tax 41,553 55,023
Total comprehensive income and expense for the year 161,904 166,482
Attributable to:
Equity shareholders of the parent company 161,904 166,482
Non-controlling interest 26 – –
Total comprehensive income and expense for the year 161,904 166,482
Financial statements
130
Renishaw plc Annual Report 2022
notes
2022
£’000
2021
£’000
Assets
Property, plant and equipment 9 243,853 246,242
Right-of-use assets 10 9,950 12,429
Investment properties 11 10,568 −
Intangible assets 12 44,218 43,795
Investments in associates and joint ventures 13 20,570 16,634
Finance lease receivables 14 6,961 6,241
Employee benefits 23 43,241 −
Deferred tax assets 7 22,893 21,292
Derivatives 25 – 12,484
Total non-current assets 402,254 359,117
Current assets
Inventories 16 162,482 113,563
Trade receivables 25 127,551 114,661
Finance lease receivables 14 3,348 1,763
Contract assets 578 332
Short-term loans to associates and joint ventures 302 598
Current tax 8,901 1,600
Other receivables 25 27,068 30,021
Derivatives 25 7,121 9,639
Pension scheme cash escrow account 23 – 10,578
Bank deposits 15 100,000 120,000
Cash and cash equivalents 15,25 153,162 95,008
Total current assets 590,513 497,763
Current liabilities
Trade payables 25 30,947 24,715
Contract liabilities 18 12,956 6,120
Current tax 10,078 4,680
Provisions 17 4,244 6,259
Derivatives 25 17,890 5,594
Lease liabilities 20 3,714 3,904
Borrowings 21 919 992
Other payables 19 51,949 51,716
Total current liabilities 132,697 103,980
Net current assets 457,816 393,783
Non-current liabilities
Lease liabilities 20 6,466 8,658
Borrowings 21 5,160 6,457
Employee benefits 23 996 23,698
Deferred tax liabilities 7 22,815 10,402
Derivatives 25 9,463 355
Total non-current liabilities 44,900 49,570
Total assets less total liabilities 815,170 703,330
Equity
Share capital 26 14,558 14,558
Share premium 42 42
Own shares held 26 (750 ) (404 )
Currency translation reserve 26 14,459 3,719
Cash flow hedging reserve 26 (10,923 ) 11,345
Retained earnings 798,541 674,603
Other reserve 26 (180 ) 44
Equity attributable to the shareholders of the parent company 815,747 703,907
Non-controlling interest 26 (577 ) (577 )
Total equity 815,170 703,330
These financial statements were approved by the Board of Directors on 15 September 2022 and were signed on its behalf by:
Sir David McMurtry Allen Roberts
Directors
Consolidated balance sheet
at 30 June 2022
Strategic Report Governance Financial statements Shareholder information
131
Renishaw plc Annual Report 2022
Consolidated statement of changes in equity
for the year ended 30 June 2022
Year ended 30 June 2021
Share
capital
£’000
Share
premium
£’000
Own
shares
held
£’000
Currency
translation
reserve
£’000
Cash flow
hedging
reserve
£’000
Retained
earnings
£’000
Other
reserve
£’000
Non-
controlling
interest
£’000
Total
£’000
Balance at 1 July 2020 14,558 42 (404 ) 17,729 (30,455 ) 546,100 (129 ) (577 ) 546,864
Profit for the year − − − − − 111,459 − − 111,459
Other comprehensive income
andexpense (net of tax)
Remeasurement of defined benefit pension
schemeliabilities – – – – – 27,233 – – 27,233
Foreign exchange translation differences – – – (13,282 ) – – – – (13,282 )
Relating to associates and joint ventures – – – (728 ) – – – – (728 )
Changes in fair value of cash flow hedges – – – – 41,800 – – – 41,800
Total other comprehensive income
and expense – – – (14,010 ) 41,800 27,233 – – 55,023
Total comprehensive income
and expense – – – (14,010 ) 41,800 138,692 – – 166,482
Share-based payments charge – – – – – – 173 – 173
Dividends paid – – – – – (10,189 ) – – (10,189 )
Balance at 30 June 2021 14,558 42 (404 ) 3,719 11,345 674,603 44 (577 ) 703,330
Year ended 30 June 2022
Profit for the year – – – – – 120,351 – – 120,351
Other comprehensive income
andexpense (net of tax)
Remeasurement of defined benefit pension
schemeliabilities – – – – – 53,081 – – 53,081
Foreign exchange translation differences – – – 10,622 – – – – 10,622
Relating to associates and joint ventures – – – 118 – – – – 118
Changes in fair value of cash flow hedges – – – – (22,268 ) – – – (22,268 )
Total other comprehensive income
and expense – – – 10,740 (22,268 ) 53,081 – – 41,553
Total comprehensive income
and expense – – – 10,740 (22,268 ) 173,432 – – 161,904
Share-based payments charge – – – – – – 180 – 180
Own shares transferred on vesting – – 404 – – – (404 ) – –
Own shares purchased – – (750 ) – – – – – (750 )
Dividends paid – – – – – (49,494 ) – – (49,494 )
Balance at 30 June 2022 14,558 42 (750 ) 14,459 (10,923 ) 798,541 (180 ) (577 ) 815,170
More details of share capital and reserves are given in note 26.
Financial statements
132
Renishaw plc Annual Report 2022
Consolidated statement of cash flow
for the year ended 30 June 2022
notes
2022
£’000
2021
£’000
Cash flows from operating activities
Profit for the year 120,351 111,459
Adjustments for:
Depreciation of property, plant and equipment, and investment properties 9,11 25,898 24,317
Loss on sale of property, plant and equipment 9 157 31
Impairment of property, plant and equipment 9 1,259 −
Depreciation of right-of-use assets 10 4,205 4,463
Impairment of right-of-use assets 10 1,837 −
Amortisation of development costs 12 4,698 9,019
Amortisation of other intangibles 12 1,225 1,205
Impairment of development costs 12 – 1,092
Write-off of intangible assets 12 3,510 −
Share of profits from associates and joint ventures 13 (4,342 ) (1,683 )
Profit on disposal of investment in associate 13 (582 ) −
Impairment of investment in associate – 1,674
Impairment of long-term loan to associate – 2,633
Write-off of lease liabilities 20 (1,985 ) −
UK defined benefit pension scheme past service cost 23 11,695 78
Financial income 5 (932 ) (3,406 )
Financial expenses 5 2,938 3,991
Losses/(gains) from the fair value of financial instruments 25 8,349 (22,995 )
Share-based payment expense 24 180 173
Tax expense 7 25,235 27,980
Increase in inventories (48,919 ) (8,066 )
Increase in trade and other receivables (11,301 ) (25,703 )
Increase in trade and other payables 12,288 27,216
(Decrease)/increase in provisions (2,015 ) 668
(49,947 ) (5,885 )
Defined benefit pension scheme contributions 23 (8,866 ) (8,866 )
Income taxes paid (23,410 ) (9,991 )
Cash flows from operating activities 121,473 135,289
Investing activities
Purchase of property, plant and equipment, and investment properties 9,11 (30,960 ) (10,873 )
Sale of property, plant and equipment 687 33
Development costs capitalised 12 (7,966 ) (9,844 )
Purchase of other intangibles 12 (929 ) (3,000 )
Decrease/(increase) in bank deposits 15 20,000 (110,000 )
Interest received 5 834 625
Dividends received from associates and joint ventures 13 525 −
Purchase of additional shareholding in joint venture – (749 )
Proceeds from sale of shares in associate 13 582 −
Payments from pension scheme cash escrow account 23 10,578 −
Cash flows from investing activities (6,649 ) (133,808 )
Financing activities
Increase in borrowings 21 – 636
Repayment of borrowings 21 (974 ) (3,477 )
Interest paid 5 (591 ) (386 )
Repayment of principal of lease liabilities 22 (4,081 ) (4,815 )
Own shares purchased 26 (750 ) −
Dividends paid 26 (49,494 ) (10,189 )
Cash flows from financing activities (55,890 ) (18,231 )
Net increase in cash and cash equivalents 58,934 (16,750 )
Cash and cash equivalents at the beginning of the year 95,008 110,386
Effect of exchange rate fluctuations on cash held (780 ) 1,372
Cash and cash equivalents at the end of the year 15 153,162 95,008
Strategic Report Governance Financial statements Shareholder information
133
Renishaw plc Annual Report 2022
Notes (forming part of the financial statements)
1. Accounting policies
This section sets out our significant accounting policies that relate to the financial statements as a whole, along with the critical
accounting judgements and estimates that management has identified as having a potentially material impact on the Group’s
consolidated financial statements. Where an accounting policy is applicable to a specific note in the financial statements, the policy
is described within that note.
Basis of preparation
the Company and its subsidiaries (together referred to as the Group, and ‘we’) and equity account the Group’s interest in associates
and joint ventures. The parent company financial statements present information about the Company as a separate entity and not
about the Group.
The Group financial statements have been prepared and approved by the Directors in accordance with UK adopted International
Accounting Standards (IAS). The parent company financial statements have been prepared in accordance with Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’.
The consolidated financial statements are presented in Sterling, which is the Company’s functional currency and the Group’s
presentational currency, and all values are rounded to the nearest thousand (£’000).
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these Group financial statements. Judgements made by the Directors, in the application of these accounting policies, that have
a significant effect on the financial statements andestimates with a significant risk of material adjustment in the next year are
noted below.
Critical accounting judgements and estimation uncertainties
The preparation of financial statements in conformity with 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 this form the basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may therefore differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis.
The areas of key estimation uncertainty and critical accounting judgement that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities inthenext financial year are summarised below, with further details
included within accounting policies as indicated.
Item Key judgements (J) and estimates (E) Page
Taxation E – Estimates of future profits to use deferred tax assets 141
Research and development costs J – Whether a project meets the criteria for capitalisation 147
Goodwill and capitalised development costs E – Estimates of future cash flows for impairment testing 147
Inventories E – Determination of net realisable value 152
Defined benefit pension schemes E – Valuation of defined benefit pension schemes’ liabilities 155
Cash flow hedges E – Estimates of highly probable forecasts of the hedged item 159
When reviewing the above critical judgements and estimates, management also considered the effect of climate change, including
our own Net Zero commitment. For the year ended 30 June 2022 we concluded that climate change did not have a material effect on
any of the above judgements and estimates. The Directors reached the same conclusion when reviewing the Group’s going concern
and viability assessment.
While the Group could benefit significantly from changing demand as customers and end-users make progress with their own Net
Zero targets, we recognise that climate change may pose a greater risk to the Group over time. We will continue to review the effect
of climate change on financial statements in the future, and update our accounting and disclosures as the position changes.
New, revised or changes to existing accounting standards
The following accounting standard amendments became effective as at 1 January 2021 and have been adopted in the preparation
of these financial statements, with effect from 1 July 2021:
– amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 and IAS 39, Interest Rate Benchmark Reform Phase 2; and
– amendments to IFRS 16, COVID-19-Related Rent Concessions.
These have not had a material effect on these financial statements.
Financial statements
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Renishaw plc Annual Report 2022
1. Accounting policies (continued)
Going concern
In preparing these financial statements, the Directors have adopted the going concern basis. The decision to adopt the going
concern basis was made after considering:
– the Group’s business model and key markets, as set out on pages 16 - 17;
– the Group’s risk management processes and principal risks, disclosed on pages 39 - 49;
– the Group’s financial resources and strategies (pages 24 - 27); and
– the process undertaken to review the Group’s viability, including scenario testing, as set out on pages 50 - 51.
In the viability review the Directors assessed the period to 30 September 2025, using the ‘highly probable’ revenue forecasts used
by the Group for hedge accounting, and ‘severe but plausible’ downside scenarios. In making the going concern assessment, the
Directors used the same forecasts but assessed the period to 30 September 2023.
Each scenario used the same starting point, taking the revenue forecast as the pessimistic view in our five-year business plan
(which we also refer to as the ‘highly probable’ revenue forecast for hedge accounting). The starting point for overheads, capital
expenditure, and other cash outflows was taken from the optimistic plan. Together, this means that the scenarios started by
assuming that revenue growth is at the lowest end of our corporate view while still incurring the costs in the next three years that are
needed to achieve revenue growth in later years. For context, revenue in the first year of this starting point is a small increase from
FY2022’s revenue of £671.1m.
The seven scenarios then took this same starting point and then added in the following elements:
A – Reduction in revenue if we were unable to buy certain critical ASIC chips for twelve months.
B – Reduction in revenue from encoder, CMM, and machine tool products.
C – Economic and political uncertainty, causing a reduction in revenue, an increase in labour costs, and an increase in materials,
utilities, and logistics costs.
D – A cyber-attack causing a loss of networks and systems for three weeks (management’s assessment of a worst-case scenario for
total network loss).
E – The effect on our business if we lost the use of our main hall at Miskin, our largest factory, for six months.
F – The effect of a further 10% and 15% strengthening in Sterling, compared to management’s existing assumptions.
G – A 50% increase in our estimated Net Zero capital expenditure.
For risks such as People, Innovation strategy, and Capital allocation, the Directors felt that if these risks crystallised they would result
in the restriction of longer-term growth rather than having a significant financial effect in the medium term. We therefore didn’t include
these risks in the scenarios above.
We also performed reverse stress testing to identify what would need to happen in the period to 30 September 2023 to result in the
Group having negative bank deposit and cash balances. We found that this would occur if revenue fell to £19m per month before
mitigating actions were taken; this is considerably lower than forecast.
In making their going concern assessment, the Directors also considered the strong demand currently being experienced and how
well we’ve responded to challenges such as the pandemic and global supply chain disruption.
Based on this assessment, incorporating a review of the current position, the scenarios, our principal risks and mitigation, the
Directors have a reasonable expectation that we’ll be able to continue operating and meet our liabilities as they fall due over the
period to 30 September 2023.
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1. Accounting policies (continued)
Basis of consolidation
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to or has rights to variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control,
theGroup takes into consideration potential voting rights that are exercisable. The acquisition date is the date on which control is
transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are
allocated to the non-controlling interests even if doing so causes the non-controlling interests to have adeficit balance.
Associates and joint ventures are accounted for using the equity method (equity-accounted investees) and are initially recognised at
cost. The Group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses.
The consolidated financial statements include the Group’s share of the total comprehensive income and equity movements of equity
accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the
Group’s share of losses exceeds its interest in an equity accounted investee, the Group’s carrying amount is reduced to nil and
recognition of further losses is discontinued except to the extent that the Group has incurred legal obligations or made payments on
behalf of an investee.
Intragroup balances and transactions, and any unrealised income and expenses arising from intragroup transactions, are eliminated
on consolidation. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment
to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only
tothe extent that there is no evidence of impairment.
Foreign currencies
On consolidation, overseas subsidiaries’ results are translated into Sterling at weighted average exchange rates for the year by
translating each overseas subsidiary’s monthly results at exchange rates applicable to each of the respective months. Assets and
liabilities denominated in foreign currencies at the balance sheet date are translated into Sterling at the foreign exchange rates
prevailing at that date. Differences on exchange resulting from the translation of overseas assets and liabilities are recognised in
Other comprehensive income and are accumulated in equity.
Monetary assets and liabilities denominated in foreign currencies are reported at the rates prevailing at the time, with any gain or
loss arising from subsequent exchange rate movements being included as an exchange gain or loss in the Consolidated income
statement. Foreign currency differences arising from transactions are recognised in the Consolidated income statement.
Separately disclosed items
The Directors consider that certain items should be separately disclosed to aid understanding of the Group’s performance.
Gains and losses from the fair value of financial instruments are therefore separately disclosed in the Consolidated income
statement, where these gains and losses relate to certain forward currency contracts that are not effective for hedge accounting.
Restructuring costs are also separately disclosed where significant costs have been incurred in rationalising and reorganising our
business as part of a Board-approved initiative, and relate to matters that do not frequently recur.
During the period, a change to the UK defined benefit pension scheme rules, per note 23, resulted in a significant non-recurring
amount being recognised in the Consolidated income statement. This has also been separately disclosed.
These items are also excluded from Adjusted profit before tax, Adjusted operating profit and Adjusted earnings per share measures,
as explained in note 29 Alternative performance measures.
Alternative performance measures
The financial statements are prepared in accordance with adopted IFRS and applied in accordance with the provisions of the
Companies Act 2006. In measuring our performance, the financial measures that we use include those which have been derived
from our reported results, to eliminate factors which distort year-on-year comparisons.
These are considered non-GAAP financial measures. We believe this information, along with comparable GAAP measurements,
isuseful to stakeholders in providing a basis for measuring our operational performance. The Board use these financial measures,
along with the most directly comparable GAAP financial measures, in evaluating our performance (see note 29).
Notes continued
Financial statements
136
Renishaw plc Annual Report 2022
2. Revenue disaggregation and segmental analysis
We manage our business by segment, comprising Manufacturing technologies and Analytical instruments and medical devices, and
by geographical region. The results of these segments and regions are regularly reviewed by the Board to assess performance and
allocate resources, and are presented in this note.
Accounting policy
The Group generates revenue from the sale of manufacturing technologies and analytical instruments and medical devices
goods, capital equipment and services. These can be sold both on their own and together.
a) Sale of goods, capital equipment and services
The Group’s contracts with customers consist both of contracts with one performance obligation and contracts with multiple
performance obligations.
For contracts with one performance obligation, revenue is measured at the transaction price, which is typically the contract value
except for customers entitled to volume rebates, and recognised at the point in time when control of the product transfers to the
customer. This point in time is typically when the products are made available for collection by the customer, collected by the
shipping agent, or delivered to the customer, depending upon the shipping terms applied to the specific contract.
Contracts with multiple performance obligations typically exist where, in addition to supplying product, we also supply services
such as user training, servicing and maintenance, and installation services. Where the installation service is simple, does not
include a significant integration service and could be performed by another party then the installation is accounted for as a
separate performance obligation. Where the contracts include multiple performance obligations, the transaction price is allocated
to each performance obligation based on the relative stand-alone selling prices. The revenue allocated to each performance
obligation is then recognised when, or as, that performance obligation is satisfied. For installation, this is typically at the point in
time in which installation is complete. For training, this is typically the point in time at which training is delivered. For servicing
and maintenance, the revenue is recognised evenly over the course of the servicing agreement except for ad-hoc servicing and
maintenance which isrecognised at the point in time in which the work is undertaken.
b) Sale of software
The Group provides software licences and software maintenance to customers, sold both on their own and together with
associated products. For software licences, where the licence and/or maintenance is provided as part of a contract that provides
customers with software licences and other goods and services then the transaction price is allocated on the same basis as
described in a) above.
The Group’s distinct software licences provide a right of use, and therefore revenue from software licences is recognised at the
point in time in which the licence is supplied to the customer. Revenue from software maintenance is recognised evenly over the
term of the maintenance agreement.
c) Extended warranties
The Group provides standard warranties to customers that address potential latent defects that existed at point of sale and as
required by law (assurance-type warranties). In some contracts, the Group also provides warranties that extend beyond the
standard warranty period and may be sold to the customer (service-type warranties).
Assurance-type warranties are accounted for by the Group under IAS 37 ‘Provisions, Contingent Liabilities and Contingent
Assets’. Service-type warranties are accounted for as separate performance obligations and therefore a portion of the transaction
price is allocated to this element, and then recognised evenly over the period in which the service is provided.
d) Contract balances
Contract assets represent the Group’s right to consideration in exchange for goods and services that have been transferred to a
customer, and mainly includes accrued revenue in respect of goods and services provided to a customer but not yet fully billed.
Contract assets are distinct from receivables, which represent the Group’s right to consideration that is unconditional.
Contract liabilities represent the Group’s obligation to transfer goods or services to a customer for which the Group has either
received consideration or consideration is due from the customer.
e) Disaggregation of revenue
The Group disaggregates revenue from contracts with customers between: goods, capital equipment and installation, and
aftermarket services; operating segment; and geographical location.
Management believe these categories best depict how the nature, amount, timing and uncertainty of the Group’s revenue is
affected by economic factors.
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2. Revenue disaggregation and segmental analysis (continued)
Within the two operating segments there are multiple product offerings with similar economic characteristics, similar production
processes and similar customer bases. Our Manufacturing technologies business consists of industrial metrology, position
measurement and additive manufacturing (AM) product lines, while our Analytical instruments and medical devices business
consists of spectroscopy and neurological product lines. More details of the Group’s products and services are given in the
Strategic Report.
Year ended 30 June 2022
Manufacturing
technologies
£’000
Analytical instruments
and medical devices
£’000
Total
£’000
Revenue 634,588 36,488 671,076
Depreciation, amortisation and impairment 36,552 2,570 39,122
Operating profit before losses from fair value of financial instruments
and UK defined benefit pension scheme past service cost 162,549 2,809 165,358
Share of profits from associates and joint ventures 4,342 – 4,342
Net financial expense – – (2,006)
UK defined benefit pension scheme past service cost – – (11,695)
Losses from the fair value of financial instruments – – (10,413)
Profit before tax – – 145,586
Year ended 30 June 2021*
Manufacturing
technologies
£’000
Analytical instruments
and medical devices
£’000
Total
£’000
Revenue 530,445 35,114 565,559
Depreciation, amortisation and impairment 37,909 2,187 40,096
Operating profit before gains from fair value of financial instruments 111,978 4,385 116,363
Share of profits from associates and joint ventures 1,683 − 1,683
Net financial expense − − (585)
Gains from the fair value of financial instruments − − 21,978
Profit before tax − − 139,439
*In previous years, we reported the results of additive manufacturing machines marketed and sold to medical and dental
customers within Analytical instruments and medical devices (formerly Healthcare), reflecting how we managed this business.
The management of this now sits within the AM product line, with a similar customer base and risk profile to this product line, with
results and operational matters reported to the Executive Committee and Chief Operating Decision Maker accordingly. We now
therefore report the medical and dental results within Manufacturing technologies rather than Analytical instruments and medical
devices. Comparative figures have been reclassified accordingly. For the year ended 30 June 2021, revenue of £4,254,000,
depreciation and amortisation of £993,000, and operating profit before gains from fair value of financial instruments of £1,480,000
have been reclassified from Analytical instruments and medical devices to Manufacturing technologies.
There is no allocation of assets and liabilities to operating segments. Depreciation, amortisation and impairments are included within
certain other overhead expenditure which is allocated to segments on the basis of the level of activity.
The following table shows the analysis of non-current assets, excluding deferred tax, derivatives and employee benefits, by
geographical region:
2022
£’000
2021
£’000
UK 181,530 179,039
Overseas 155,725 146,393
Total non-current assets 337,255 325,432
No overseas country had non-current assets amounting to 10% or more of the Group’s total non-current assets.
The following table shows the disaggregation of Group revenue by category:
2022
£’000
2021
£’000
Goods, capital equipment and installation 615,641 513,675
Aftermarket services 55,435 51,884
Total Group revenue 671,076 565,559
Aftermarket services include repairs, maintenance and servicing, programming, training, extended warranties, and software licences
and maintenance. There is no significant difference between our two operating segments as to their split of revenue by type.
Notes continued
Financial statements
138
Renishaw plc Annual Report 2022
2. Revenue disaggregation and segmental analysis (continued)
The analysis of revenue by geographical market was:
2022
£’000
2021
£’000
APAC total 317,023 274,765
EMEA, excluding UK 174,290 142,219
EMEA total 205,826 169,142
Americas total 148,227 121,652
Total Group revenue 671,076 565,559
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:
2022
£’000
2021
£’000
China 152,772 141,690
USA 128,531 103,850
Japan 69,829 51,523
Germany 58,636 51,095
There was no revenue from transactions with a single external customer which amounted to more than 10% of the Group’s
total revenue.
3. Personnel expenses
The remuneration costs of our people account for a significant proportion of our total expenditure, which are analysed in this note.
The aggregate payroll costs for the year were:
2022
£’000
2021
£’000
Wages and salaries 207,783 183,235
Compulsory social security contributions 24,497 21,766
Contributions to defined contribution pension schemes 21,988 19,759
Government grants – employment support – (989)
Share-based payment charge 180 173
Total payroll costs 254,448 223,944
Wages and salaries and compulsory social security contributions include £16,179,000 (2021: £13,208,000) relating to
performance bonuses.
The average number of persons employed by the Group during the year was:
2022
Number
2021
Number
UK 3,132 2,742
Overseas 1,799 1,695
Average number of employees 4,931 4,437
Key management personnel have been assessed to be the Directors of the Company.
The total remuneration of the Directors was:
2022
£’000
2021
£’000
Short-term employee benefits 3,763 2,697
Post-employment benefits 121 111
Share-based payment charge 180 173
Total remuneration of the Directors 4,064 2,981
Full details of Directors’ remuneration are given in the Directors’ Remuneration Report.
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Renishaw plc Annual Report 2022
4. Cost of sales
Our cost of sales includes the costs to manufacture our products and our engineering spend on existing and new products, net of
capitalisation and research and development tax credits.
Included in cost of sales are the following amounts:
2022
£’000
2021
£’000
Production costs 234,919 197,805
Research and development expenditure 59,415 58,618
Other engineering expenditure 26,356 18,019
Gross engineering expenditure 85,771 76,637
Development expenditure capitalised (net of amortisation) (3,268) (825)
Development expenditure impaired – 1,092
Research and development tax credit (3,895) (4,857)
Total engineering costs 78,608 72,047
Total cost of sales 313,527 269,852
Production costs includes the raw material and component costs, payroll costs and sub-contract costs, and allocated overheads
associated with manufacturing our products.
Research and development expenditure includes the payroll costs, material costs and allocated overheads attributed to projects
identified as being related to new products or processes. Other engineering expenditure includes the payroll costs, material costs
and allocated overheads attributed to projects identified as being related to existing products or processes.
5. Financial income and expenses
Financial income mainly arises from bank interest on our deposits, while we are exposed to realised currency gains and losses on
translation of foreign currency denominated intragroup balances and offsetting financial instruments.
Included in financial income and expenses are the following amounts:
Financial income notes
2022
£’000
2021
£’000
Fair value gains from one-month forward currency contracts 25 98 2,781
Bank interest receivable 834 625
Total financial income 932 3,406
Financial expenses notes
2022
£’000
2021
£’000
Net interest on pension schemes’ assets/liabilities 23 306 876
Currency losses 1,414 2,660
Realised currency reserve losses from discontinuation of foreign operation 30 575 −
Lease interest 20 481 335
Interest payable on borrowings 21 52 69
Other interest payable 110 51
Total financial expenses 2,938 3,991
Currency losses relate to revaluations of foreign currency-denominated balances using latest reporting currency exchange rates.
The losses recognised in 2021 and 2022 largely related to an appreciation of Sterling relative to the US dollar affecting US dollar-
denominated intragroup balances in the Company.
Certain intragroup balances are classified as ‘net investments in foreign operations’, such that revaluations from currency
movements on designated balances accumulate in the Currency translation reserve in Equity. Rolling one-month forward currency
contracts are used to offset currency movements on remaining intragroup balances, with fair value gains and losses being
recognised in financial income or expenses. See note 25 for further details.
At 30 June 2022, the Group’s trading operations in Russia had ceased and the net assets of OOO Renishaw were written down to
nil (see note 30). In accordance with IAS 21, cumulative translation losses relating to the company totalling £575,000 have been
removed from the currency translation reserve and realised in the Consolidated income statement.
Notes continued
Financial statements
140
Renishaw plc Annual Report 2022
6. Profit before tax
Detailed below are other notable amounts recognised in the Consolidated income statement.
Included in the profit before tax are the following costs/(income):
notes
2022
£’000
2021
£’000
Depreciation and impairment of property, plant and equipment, and investment properties (a) 9,11 27,157 24,317
Loss on sale of property, plant and equipment (a) 157 31
Depreciation and impairment of right-of-use assets (a) 10 6,042 4,463
Amortisation, impairment and write-off of intangible assets (a) 12 5,923 11,316
Impairment of investment in associates and joint ventures (c) – 1,674
Impairment of long-term loans to associates and joint ventures (c) – 2,633
Profit from sale of shares in associate (c) 13 582 –
Impairment of net assets of foreign operation (b) 30 2,126 –
Grant income (a) (2,840) (1,421)
These costs/(income) can be found under the following headings in the Consolidated income statement: (a) within cost of sales,
distribution costs and administrative expenses, (b) within distribution costs, and (c) within administrative expenses. Further detail on
each element can be found in the relevant notes.
Grant income relates to government grants, which are recognised in the Consolidated income statement as a deduction against
expenditure. Where grants are received in advance of the related expenses, they are initially recognised in the Consolidated balance
sheet and released to match the related expenditure. Where grants are expected to be received after the related expenditure has
occurred, and there is reasonable assurance that the entity will comply with the grant conditions, amounts are recognised to offset
the expenditure and an asset recognised.
Costs within Administrative expenses relating to auditor fees included:
2022
£’000
2021
£’000
Audit of these financial statements 718 403
Audit of subsidiary undertakings pursuant to legislation 526 458
Other assurance 32 12
All other non-audit fees – –
Total auditor fees 1,276 873
7. Taxation
The Group tax charge is affected by our geographic mix of profits and other factors explained in this note. Our expected future tax
charges and related tax assets are also set out in the deferred tax section, together with our view on whether we will be able to make
use of these in the future.
Accounting policy
Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the Consolidated income statement except
tothe extent that it relates to items recognised directly in Other comprehensive income, in which case it is recognised in the
Consolidated statement of comprehensive income and expense. Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in
previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial
recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a
business combination; and differences relating to investments in subsidiaries, to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
Key estimate – Estimates of future profits to support the recognition of deferred tax assets
Deferred tax assets are recognised to the extent it is probable that future taxable profits (including the future release of deferred
tax liabilities) will be available, against which the deductible temporary differences can be used, based on management’s
assumptions relating to the amounts and timing of future taxable profits. Estimates of future profitability on an entity basis are
required to ascertain whether it is probable that sufficient taxable profits will arise to support the recognition of deferred tax assets
relating to the corresponding entity.
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7. Taxation (continued)
The following table shows an analysis of the tax charge:
2022
£’000
2021
£’000
Current tax:
UK corporation tax on profits for the year 9,288 7,535
UK corporation tax – prior year adjustments (28) (4,376)
Overseas tax on profits for the year 16,734 13,237
Overseas tax – prior year adjustments (176) 27
Total current tax 25,818 16,423
Deferred tax:
Origination and reversal of temporary differences (1,372) 7,692
Prior year adjustments 166 4,438
Derecognition of previously recognised tax losses and excess interest 623 −
Recognition of previously unrecognised tax losses and excess interest – (3,909)
Effect on deferred tax for changes in tax rates – 3,336
(583) 11,557
Tax charge on profit 25,235 27,980
The tax for the year is lower (2021: higher) than the UK standard rate of corporation tax of 19% (2021: 19%). The differences are
explained as follows:
2022
£’000
2021
£’000
Profit before tax 145,586 139,439
Tax at 19% (2021: 19%) 27,661 26,493
Effects of:
Different tax rates applicable in overseas subsidiaries (1,834) (150)
Permanent differences 978 1,431
Companies with unrelieved tax losses – 100
Share of profits of associates and joint ventures (825) (320)
Tax incentives (patent box and capital allowances super-deduction) (1,400) −
Prior year adjustments (38) 89
Effect on deferred tax for changes in tax rates – 3,336
Recognition of previously unrecognised tax losses and excess interest – (3,909)
Derecognition of previously recognised tax losses and excess interest 623 −
Use of unrecognised losses (25) (162)
Irrecoverable withholding tax 2 1,052
Other differences 93 20
Tax charge on profit 25,235 27,980
Effective tax rate 17.3% 20.1%
We operate in many countries around the world and the overall effective tax rate (ETR) is a result of the combination of the varying
tax rates applicable throughout these countries. In addition, the 2022 tax rate has benefited from patent box and capital allowances
super-deduction tax incentives and higher profits from associates and joint ventures.
The Group’s future ETR will mainly depend on the geographic mix of profits and whether there are any changes to tax legislation in
the Group’s most significant countries of operations.
Deferred tax
Deferred tax assets and liabilities are offset where there is a legally enforceable right of offset and there is an intention to net settle
the balances. After taking these offsets into account, the net position of £78,000 asset (2021: £10,890,000 asset) is presented as a
£22,893,000 deferred tax asset (2021: £21,292,000 asset) and a £22,815,000 deferred tax liability (2021: £10,402,000 liability) in the
Consolidated balance sheet.
Where deferred tax assets are recognised, the Directors are of the opinion, based on recent and forecast trading, that the level of
profits in current and future years make it more likely than not that these assets will be recovered.
Notes continued
Financial statements
142
Renishaw plc Annual Report 2022
7. Taxation (continued)
Deferred tax balances at the end of the year were:
2022 2021
Assets
£’000
Liabilities
£’000
Net
£’000
Assets
£’000
Liabilities
£’000
Net
£’000
Property, plant and equipment 517 (19,966) (19,449) 425 (17,546) (17,121)
Intangible assets – (2,980) (2,980) − (2,609) (2,609)
Intragroup trading (inventories) 20,158 – 20,158 14,539 − 14,539
Intragroup trading (fixed assets) 1,457 – 1,457 1,252 − 1,252
Defined benefit pension schemes 125 (11,173) (11,048) 4,548 (201) 4,347
Derivatives 3,508 – 3,508 − (2,930) (2,930)
Tax losses 3,893 – 3,893 8,365 − 8,365
Other 4,953 (414) 4,539 5,083 (36) 5,047
Balance at the end of the year 34,611 (34,533) 78 34,212 (23,322) 10,890
Other deferred tax assets include timing differences relating to inventory provisions totalling £1,774,000 (2021: £2,001,000), other
provisions (including bad debt provisions) of £975,000 (2021: £683,000), and employee benefits relating to Renishaw KK of
£853,000 (2021: £668,000), with the remaining balance relating to a number of other temporary differences.
The movements in the deferred tax balance during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 10,890 39,142
Movements in the Consolidated income statement 583 (11,557)
Movement in relation to the cash flow hedging reserve 6,155 (9,790)
Movement in relation to the currency translation reserve – 902
Movement in relation to the defined benefit pension scheme liabilities (17,650) (7,705)
Total movement in the Consolidated statement of comprehensive income and expense (11,495) (16,593)
Currency translation 100 (102)
Balance at the end of the year 78 10,890
The deferred tax movement in the Consolidated income statement is analysed as:
2022
£’000
2021
£’000
Property, plant and equipment (2,328) (3,193)
Intangible assets (371) (1,345)
Intragroup trading (inventories) 5,619 579
Intragroup trading (fixed assets) 205 (819)
Defined benefit pension schemes 2,255 156
Derivatives 284 (2,185)
Tax losses (4,472) (5,712)
Other (609) 962
Total movement for the year 583 (11,557)
The Company has fully used the tax losses incurred in 2020, reducing the deferred tax asset in respect of losses from £3,299,000
at 30 June 2021 to nil at 30 June 2022. Deferred tax assets of £3,893,000 in respect of losses are recognised across other Group
companies where it is considered likely that the business will generate sufficient future taxable profits.
Deferred tax assets have not been recognised in respect of tax losses carried forward of £4,815,000 (2021: £4,459,000), due to
uncertainty over their offset against future taxable profits and therefore their recoverability. These losses are held by Group companies
in France, Switzerland, Brazil, Australia and the US, where for 95% of the losses there are no time limitations on their utilisation.
In determining profit forecasts for each Group company, revenue forecasts have been estimated using consistently applied external
and internal data sources, which is the key variable in the profit forecasts. Sensitivity analysis indicates that a reduction of 5% to
relevant revenue forecasts would result in an impairment to deferred tax assets recognised in respect of losses and intragroup
trading (inventories) of less than £100,000, while an increase of 5% would result in additions to deferred tax assets in respect of tax
losses not recognised of less than £200,000.
It is likely that the majority of unremitted earnings of overseas subsidiaries would qualify for the UK dividend exemption. However,
£61,204,000 (2021: £43,858,000) of those earnings may still result in a tax liability principally as a result of withholding taxes levied
by the overseas jurisdictions in which those subsidiaries operate. The tax liabilities for the earnings for which management intend to
repatriate in the foreseeable future are not material and consequently no deferred tax liability has been recognised.
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Renishaw plc Annual Report 2022
8. Earnings per share
Basic earnings per share is the amount of profit generated in a financial year attributable to equity shareholders, divided by the
weighted average number of shares in issue during the year.
Basic and diluted earnings per share are calculated on earnings of £120,351,000 (2021: £111,459,000) and on 72,774,147 shares
(2021: 72,778,904 shares), being the number of shares in issue. The number of shares excludes 14,396 (2021: 9,639) shares
held by the Employee Benefit Trust (EBT). On this basis, earnings per share (basic and diluted) is calculated as 165.4 pence
(2021: 153.2 pence).
There is no difference between the weighted average earnings per share and the basic and diluted earnings per share.
For the calculation of adjusted earnings per share, per note 29, earnings of £120,351,000 (2021: £111,459,000) are adjusted by
post-tax amounts for:
– fair value (gains)/losses on financial instruments not eligible for hedge accounting (reported in Revenue), which represents the
amount by which revenue would change had all the derivatives qualified as eligible for hedge accounting, £1,672,000 gain;
– fair value (gains)/losses on financial instruments not eligible for hedge accounting (reported in Gains/(losses) from the fair value of
financial instruments), £8,435,000 loss;
– a revised estimate of 2020 restructuring costs, £1,367,000 gain;
– a UK defined benefit pension scheme past service cost, £9,473,000 loss; and
– costs relating to the 2021 formal sales process, £200,000 gain.
9. Property, plant and equipment
The Group makes significant investments in distribution and in-house manufacturing infrastructure. During the year we completed a
new distribution facility in South Korea and invested in our manufacturing equipment in the UK. We expect to significantly increase
our investments in property, plant and equipment in the next few years.
Accounting policy
Freehold land is not depreciated. Other assets are stated at cost less accumulated depreciation and accumulated impairment
losses, if any. Depreciation is provided to write offthe 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 25 years; and
– vehicles, 3 to 4 years.
Year ended 30 June 2022
Freehold
land and
buildings
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Assets in the
course of
construction
£’000
Total
£’000
Cost
At 1 July 2021 216,783 242,432 7,421 7,109 473,745
Additions 5,715 16,756 1,150 7,144 30,765
Transfers of assets in the course of construction 2,800 3,972 – (6,772) –
Transfers to Investment properties (11,563) – – – (11,563)
Disposals 97 (3,587) (1,269) – (4,759)
Currency adjustment 3,988 3,984 218 – 8,190
At 30 June 2022 217,820 263,557 7,520 7,481 496,378
Depreciation
At 1 July 2021 38,530 182,557 6,416 – 227,503
Charge for the year 4,623 20,029 1,056 – 25,708
Impairment 1,259 – – – 1,259
Transfers to Investment properties (1,222) – – – (1,222)
Disposals 81 (2,837) (1,180) – (3,936)
Currency adjustment 545 2,465 203 – 3,213
At 30 June 2022 43,816 202,214 6,495 – 252,525
Net book value
At 30 June 2022 174,004 61,343 1,025 7,481 243,853
At 30 June 2021 178,253 59,875 1,005 7,109 246,242
During the year, a third-party valuation of one of our properties in the US resulted in an impairment of £1,259,000.
See note 11 for detail on the reclassification of Property, plant and equipment to Investment properties.
Notes continued
Financial statements
144
Renishaw plc Annual Report 2022
9. Property, plant and equipment (continued)
Year ended 30 June 2021
Freehold
land and
buildings
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Assets in the
course of
construction
£’000
Total
£’000
Cost
At 1 July 2020 225,556 247,986 8,526 6,363 488,431
Additions 194 6,930 143 3,606 10,873
Transfers 345 2,515 − (2,860) −
Disposals (136) (9,628) (951) − (10,715)
Currency adjustment (9,176) (5,371) (297) − (14,844)
At 30 June 2021 216,783 242,432 7,421 7,109 473,745
Depreciation
At 1 July 2020 35,842 175,864 6,676 − 218,382
Charge for the year 4,084 19,407 826 − 24,317
Disposals (124) (9,658) (858) − (10,640)
Currency adjustment (1,272) (3,056) (228) − (4,556)
At 30 June 2021 38,530 182,557 6,416 − 227,503
Net book value
At 30 June 2021 178,253 59,875 1,005 7,109 246,242
At 30 June 2020 189,714 72,122 1,850 6,363 270,049
Additions to assets in the course of construction comprise £826,000 (2021: £817,000) for land and buildings and £6,318,000
(2021: £2,789,000) for plant and equipment.
Losses on disposals of Property, plant and equipment amounted to £157,000 (2021: £31,000).
At 30 June 2022, properties with a net book value of £54,208,000 (2021: £81,679,000) were subject to a fixed charge to secure the
UKdefined benefit pension scheme liabilities. The number of properties on fixed charge has decreased in the year, see note 23.
10. Right-of-use assets
The Group leases properties and cars from third parties and recognises an associated right-of-use asset where we are afforded
control and economic benefit from the use of the asset.
Accounting policy
At the commencement date of a lease arrangement the Group recognises a right-of-use asset for the leased item and a lease
liability for any payments due. Right-of-use assets are initially measured at cost, being the present value of the lease liability plus
any initial costs incurred in entering the lease and less any incentives received. See note 20 for further detail on lease liabilities.
Right-of-use assets are subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end
of the useful life or the end of the lease term.
Year ended 30 June 2022
Leasehold
property
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Total
£’000
Net book value
At 1 July 2021 10,297 102 2,030 12,429
Additions 1,293 115 1,058 2,466
Depreciation (2,805) (102) (1,298) (4,205)
Impairment (1,837) – – (1,837)
Currency adjustment 1,107 2 (12) 1,097
At 30 June 2022 8,055 117 1,778 9,950
Year ended 30 June 2021
Leasehold
property
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Total
£’000
Net book value
At 1 July 2020 10,287 − 2,385 12,672
Additions 3,548 232 1,234 5,014
Depreciation (2,903) (121) (1,439) (4,463)
Currency adjustment (635) (9) (150) (794)
At 30 June 2021 10,297 102 2,030 12,429
An impairment of £1,837,000 was recognised in the period relating to a leased property in Russia. See note 30 for further detail.
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145
Renishaw plc Annual Report 2022
11. Investment properties
The Group’s investment properties consist of four facilities in the UK, Ireland and India. During the year, we have transferred these to
investment properties, from property, plant and equipment, following a change in use of the UK and India properties. This includes
the occupation of these properties by rent-paying third parties during the year.
Accounting policy
Where property owned by the Group is deemed to be held to earn rentals or for long-term capital appreciation it is recognised
asinvestment property.
Where a property is part-occupied by the Group, portions of the property are recognised as investment property if they
meet the above description and if these portions could be sold separately and reliably measured. If the portions could not
be sold separately, the property is recognised as an investment property only if a significant proportion is held for rental or
appreciation purposes.
The Group has elected to value investment properties on a cost basis, initially comprising an investment property’s purchase
price and any directly attributable expenditure. Depreciation is provided to write offthe cost of assets on a straight-line basis
overtheir estimated useful economic lives, being 50 years. Amounts relating to freehold land is not depreciated.
Year ended 30 June 2022
Total
£’000
Cost
At 1 July 2021 –
Transfers from Property, plant and equipment 11,563
Additions 195
Disposals (102)
Currency adjustment 249
At 30 June 2022 11,905
Depreciation
At 1 July 2021 –
Transfers from Property, plant and equipment 1,222
Charge for the year 190
Disposals (81)
Currency adjustment 6
At 30 June 2022 1,337
Net book value
At 30 June 2022 10,568
At 30 June 2021 –
The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or
develop investment properties.
Amounts recognised in the Consolidated income statement relating to investment properties:
2022
£’000
Rental income derived from investment properties 453
Direct operating expenses (including repairs and maintenance) 105
Profit arising from investment properties 348
The fair value of the Group’s investment properties totalled £14,626,000 at 30 June 2022. Fair values of each investment property
have been determined by independent valuers who hold recognised and relevant professional qualifications and have recent
experience in the location and category of each investment property being valued.
Notes continued
Financial statements
146
Renishaw plc Annual Report 2022
12. Intangible assets
Our Consolidated balance sheet contains significant intangible assets, mostly in relation to goodwill, which arises when we acquire
a business and pay a higher amount than the fair value of its net assets, and capitalised development costs. We make significant
investments into the development of new products, which is a key part of our business model, and some of these costs are initially
capitalised and then expensed over the lifetime of future sales of that product.
Accounting policy
Goodwill arising on acquisition represents the difference between the cost of the acquisition and the fair value of the net
identifiable assets acquired, net of deferred tax. Identifiable intangibles are those which can be sold separately or which arise
from legal rights regardless ofwhether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. It is not amortised but is tested annually for impairment or
earlier if there are any indications of impairment. The annual impairment review involves comparing the carrying amount to the
estimated recoverable amount and recognising an impairment loss if the recoverable amount is lower. Impairment losses are
recognised in the Consolidated income statement.
Intangible assets such as customer lists, patents, trade marks, know-how and intellectual property that are acquired by the Group
are stated atcost less amortisation and impairment losses. Amortisation is charged to the Consolidated income statement on
a straight-line basis over theestimated useful lives of the intangible assets. The estimated useful lives of the intangible assets
included in the Consolidated balance sheet reflect the benefit derived by the Group and vary from five to 10 years.
Expenditure on research activities is recognised in the Consolidated income statement as an expense as incurred.
Expenditure on development activities is capitalised if: the product or process is technically and commercially feasible; the Group
intends and has the technical ability andsufficient 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.
Theexpenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads.
Other development expenditure is recognised in the Consolidated income statement as an expense as incurred.
Capitalised development expenditure is amortised over the useful economic life appropriate to each product or process,
ranging from five to 10 years, and is stated at cost less accumulated amortisation and less accumulated impairment losses.
Amortisation commences when a product or process is available for use as intended by management. Capitalised development
expenditure is removed from the balance sheet 10 years after being fully amortised.
All non-current assets are tested for impairment whenever there is an indication that their carrying value may be impaired.
An impairment loss is recognised in the Consolidated income statement to the extent that an asset’s carrying value exceeds its
recoverable amount, which represents the higher of the asset’s fair value less costs to sell and its value-in-use. An asset’s value-
in-use represents the present value of the future cash flows expected to be derived from the asset or from the cash-generating
unit to which it relates. The present value is calculated using a discount rate that reflects the current market assessment of the
time value ofmoney and the risks specific to the asset concerned.
Goodwill and capitalised development costs are subject to an annual impairment test.
Key judgement – Whether a project meets the criteria for capitalisation
Product development costs are capitalised once a project has reached a certain stage of development and these costs are
subsequently amortised over their useful economic life once ready for use. Costs are capitalised from the point the product
has passed testing to demonstrate it meets the technical specifications of the project and it satisfies all applicable regulations.
Judgements are required to assess whether the new product development has reached the appropriate point for capitalisation of
costs to begin. Should a product be subsequently obsoleted, the accumulated capitalised development costs would need to be
immediately written off in the Consolidated income statement.
Key estimate – Estimates of future cash flows used for impairment testing
Determining whether goodwill 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. Similarly, determining whether
capitalised development costs are impaired requires an estimation of their value-in-use which involves significant judgement.
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147
Renishaw plc Annual Report 2022
12. Intangible assets (continued)
Year ended 30 June 2022
Goodwill
£’000
Other
intangible
assets
£’000
Internally
generated
development
costs
£’000
Software
licences and
intellectual
property
£’000
Total
£’000
Cost
At 1 July 2021 19,533 15,783 177,291 24,962 237,569
Additions – 53 7,966 876 8,895
Write-off – – – (3,510) (3,510)
Disposals – (11,211) (17,045) – (28,256)
Currency adjustment 942 4 – 51 997
At 30 June 2022 20,475 4,629 168,212 22,379 215,695
Amortisation
At 1 July 2021 9,028 13,254 151,807 19,685 193,774
Charge for the year – 201 4,698 1,024 5,923
Disposals – (11,211) (17,045) – (28,256)
Currency adjustment – (4) – 40 36
At 30 June 2022 9,028 2,240 139,460 20,749 171,477
Net book value
At 30 June 2022 11,447 2,389 28,752 1,630 44,218
At 30 June 2021 10,505 2,529 25,484 5,277 43,795
Year ended 30 June 2021
Goodwill
£’000
Other
intangible
assets
£’000
Internally
generated
development
costs
£’000
Software
licences and
intellectual
property
£’000
Total
£’000
Cost
At 1 July 2020 20,518 15,829 167,447 22,063 225,857
Additions − − 9,844 3,000 12,844
Currency adjustment (985) (46) − (101) (1,132)
At 30 June 2021 19,533 15,783 177,291 24,962 237,569
Amortisation
At 1 July 2020 9,028 13,105 141,696 18,664 182,493
Charge for the year − 101 9,019 1,104 10,224
Impairment − − 1,092 − 1,092
Currency adjustment − 48 − (83) (35)
At 30 June 2021 9,028 13,254 151,807 19,685 193,774
Net book value
At 30 June 2021 10,505 2,529 25,484 5,277 43,795
At 30 June 2020 11,490 2,724 25,751 3,399 43,364
Disposals of internally generated development costs have been recognised during the year in accordance with the Group’s
accounting policy to remove capitalised development expenditure from the balance sheet 10 years after being fully amortised.
Goodwill
Goodwill has arisen on the acquisition of a number of businesses and has an indeterminable useful life. It is therefore not amortised
but is instead tested for impairment annually and at any point during the year when an indicator of impairment exists. Goodwill is
allocated to cash generating units (CGUs), which are either the statutory entities acquired or the group-wide product line. This is the
lowest level in the Group at which goodwill is monitored for impairment and is at a lower level than the Group’s operating segments.
The analysis of goodwill is:
2022
£’000
2021
£’000
itp GmbH 2,985 2,959
Renishaw Mayfield S.A. 2,055 1,873
Renishaw Fixturing Solutions, LLC 5,677 5,018
Other smaller acquisitions 730 655
Total goodwill 11,447 10,505
Notes continued
Financial statements
148
Renishaw plc Annual Report 2022
12. Intangible assets (continued)
The recoverable amounts of acquired goodwill are based on value-in-use calculations. These calculations use cash flow projections
based on the financial business plans approved by management for the next five financial years. The cash flows beyond this
forecast are extrapolated to perpetuity using a nil growth rate on a prudent basis, toreflect the uncertainties over forecasting beyond
five years.
The following pre-tax discount rates have been used in discounting the projected cash flows:
Business acquired CGU
2022
Discount rate
2021
Discount rate
itp GmbH itp GmbH entity (‘ITP’) 11.3% 10.6%
Renishaw Fixturing Solutions, LLC Renishaw fixturing product line (‘RFS’) 11.5% 10.2%
Renishaw Mayfield S.A. Renishaw Mayfield S.A. entity (‘Mayfield’) 22.9% 21.4%
The Group post-tax weighted average cost of capital, calculated at 30 June 2022, is 9% (2021: 8%). Pre-tax discount rates for
Manufacturing technologies CGUs (ITP and RFS) are calculated from this basis, given that they are aligned with the wider Group’s
industries, markets and processes. The Analytical instruments and medical devices CGU (Mayfield) has a higher risk weighting,
reflecting the less mature nature of this segment. This risk weighting is unchanged from 2021.
For there to be an impairment in the RFS, ITP or Mayfield CGUs the discount rate would need to increase to at least 11.7%, 26%
and 29% respectively. An increase of 5% in the discount rates would result in an impairment of around £1.2m in the RFS CGU.
At 30 June 2022, there was headroom of £151,000 for the RFS CGU.
The following bases have been used in determining cash flow projections:
CGU
2022
Basis of forecast
2021
Basis of forecast
itp GmbH entity five-year business plan five-year business plan
Renishaw fixturing product line five-year business plan five-year business plan
Renishaw Mayfield S.A. entity five-year business plan five-year business plan
These five-year business plans are considered prudent estimates based on management’s view of the future and experience of
past performance of the individual CGUs, and are calculated at a disaggregated level. Within these plans, revenue forecasts are
calculated with reference to external market data, Renishaw past outperformance, and new product launches, consistent with
revenue forecasts across the Group. Production costs, engineering costs, distribution costs and administrative expenses are
calculated based on management’s best estimates of what is required to support revenue growth and new product development.
Estimates of capital expenditure and working capital requirements are also included in the cash flow projections.
The key estimate within these business plans is the forecasting of revenue growth, given that the cost bases of the businesses can
be flexed in line with revenue performance. Given the average revenue growth assumptions included in the five-year business plans,
management’s sensitivity analysis involves modelling a reduction in the forecast cash flows utilised in those business plans and
therefore into perpetuity. For there to be an impairment there would need to be a reduction to these forecast cash flows of 60% for
ITP, 2% for RFS and 24% for Mayfield. Management deems the likelihood of these reductions to be unlikely.
Internally generated development costs
During the period, management reassessed the useful economic life of certain capitalised projects from five to 10 years, to align with
latest expectations of product lifecycles. As a result, amortisation during the period was £2,211,000 less than under the previous
useful economic life.
The key assumption in determining the value-in-use for internally generated development costs is the forecast unit sales over the
useful economic life, which is determined by management using their knowledge and experience with similar products and the
sales history of products already available in the market. Resulting cash flow projections over five to 10 years, the period over which
product demand forecasts can be reasonably predicted and internally generated development costs are written off, are discounted
using pre-tax discount rates, which are calculated from the Group post-tax weighted average cost of capital of 9% (2021: 8%).
There were no impairments of internally generated development costs in the year (2021: £1,092,000).
For the largest projects, comprising over 95% of the net book value at 30 June 2022, a 10% reduction to forecast unit sales, or an
increase in the discount rate by 5%, would result in an impairment of less than £100,000.
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149
Renishaw plc Annual Report 2022
13. Investments in associates and joint ventures
Where we make an investment in a company which allows us significant influence but not full control, we account for our share
of their post-tax profits in our financial statements. Following a full divestment in HiETA during the year, we now have joint venture
arrangements with two companies, RLS and MSP.
The Group’s investments in associates and joint ventures (all investments being in the ordinary share capital of the associate and
joint ventures), whose accounting years end on 30 June, except where noted otherwise, were:
Country of incorporation and
principal place of business
Ownership %
2022
Ownership %
2021
RLS Merilna tehnika d.o.o. (‘RLS’) – joint venture Slovenia 50.0 50.0
Metrology Software Products Limited (‘MSP’) – joint venture England & Wales 70.0 70.0
HiETA Technologies Limited (‘HiETA’) (31 December) – associate England & Wales nil 33.3
In January 2022 an agreement was reached between Renishaw plc and Meggitt plc for the sale of Renishaw’s 33.33% shareholding
in HiETA Technologies Limited to Meggitt plc. This resulted in a net gain on disposal of £582,000, which was recognised in the
Manufacturing technologies operating segment.
Although the Group owns 70% of the ordinary share capital of MSP, this is accounted for as a joint venture as the ‘control’
requirements of IFRS 10 are not satisfied. This is primarily because the shareholders agreement includes that for so long as the
Group’s holding is less than 75% of the total shares of MSP, Renishaw agrees to exercise its voting rights such that it only votes as if
it has the same aggregate shareholding as the remaining Management Shareholders.
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 16,634 16,604
Additions – 749
Dividends received (525) −
Share of profits of associates and joint ventures 4,342 1,683
Impairment – (1,674)
Exchange differences 119 (728)
Balance at the end of the year 20,570 16,634
Summarised financial information for joint ventures:
RLS MSP
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Assets 42,308 31,535 4,601 4,211
Liabilities (7,422) (3,719) (963) (1,056)
Net assets 34,886 27,816 3,638 3,155
Group’s share of net assets 17,443 13,908 2,547 2,209
Revenue 35,247 25,145 2,492 2,239
Profit/(loss) for the year 7,886 4,800 570 (182)
Group’s share of profit/(loss) for the year 3,943 2,400 399 (91)
For the nature of the activities, see note C.46.
The financial statements of RLS have been prepared on the basis of Slovenian Accounting Standards.
The financial statements of MSP have been prepared on the basis of FRS 102.
Notes continued
Financial statements
150
Renishaw plc Annual Report 2022
14. Leases (as lessor)
The Group acts as a lessor for Renishaw-manufactured equipment on finance and operating lease arrangements. This is principally
for high-value capital equipment such as our additive manufacturing machines.
Accounting policy
Where the Group transfers the risks and rewards of ownership of lease assets to a third party, the Group recognises a receivable
in the amount of the net investment in the lease. The lease receivable is subsequently reduced by the principal received, while an
interest component is recognised as financial income in the Consolidated income statement. Standard contract terms are up to
five years and there is a nominal residual value receivable at the end of the contract.
Where the Group retains the risks and rewards of ownership of lease assets, it continues to recognise the leased asset in
Property, plant and equipment. Income from operating leases is recognised on a straight-line basis over the lease term and
recognised as Revenue rather than Other revenue as such income is not material. Operating leases are on one to five year terms.
The total future lease payments are split between the principal and interest amounts below:
2022 2021
Gross
investment
£’000
Interest
£’000
Net
investment
£’000
Gross
investment
£’000
Interest
£’000
Net
investment
£’000
Receivable in less than one year 3,703 355 3,348 1,919 156 1,763
Receivable between one and two years 2,882 252 2,630 2,641 215 2,426
Receivable between two and three years 2,015 148 1,867 2,129 173 1,956
Receivable between three and four years 1,779 70 1,709 1,365 111 1,254
Receivable between four and five years 770 15 755 696 91 605
Total future minimum lease payments receivable 11,149 840 10,309 8,750 746 8,004
The total of future minimum lease payments receivable under non-cancellable operating leaseswere:
2022
£’000
2021
£’000
Receivable in less than one year 1,246 361
Receivable between one and four years 2,365 306
Total future minimum lease payments receivable 3,611 667
During the year, £1,184,000 (2021: £582,000) was recognised in Revenue from operating leases.
15. Cash and cash equivalents and bank deposits
We have always valued having cash in the bank to protect the Group from downturns and enable us to react swiftly to investment or
market capture opportunities. We currently hold significant cash and bank deposits, which is mostly in the UK and spread across a
number of banks with high credit ratings.
Accounting policy
Cash and cash equivalents comprise cash balances, and deposits with an original maturity of less than three months or with an
original maturity date of more than three months where the deposit can be accessed on demand without significant penalty for
early withdrawal and where the original deposit amount is recoverable in full.
Cash and cash equivalents
An analysis of cash and cash equivalents at the end of the year was:
2022
£’000
2021
£’000
Bank balances and cash in hand 141,208 93,514
Short-term deposits 11,954 1,494
Balance at the end of the year 153,162 95,008
At 30 June 2021, the Company held a pension scheme escrow account amounting to £10,578,000 as part of the security given for
the UK defined benefit pension scheme. Following agreement by the Company and Trustees in 2022 (see note 23), this amount
is no longer subject to a registered floating charge, and is recognised in short-term deposits in cash and cash equivalents at
30 June 2022.
Bank deposits
Bank deposits at the end of the year amounted to £100,000,000 (2021: £120,000,000), of which £50,000,000 matured on 30 August
2022 and £50,000,000 is on a 90-day notice account.
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151
Renishaw plc Annual Report 2022
16. Inventories
We have increased our inventories in the year, in line with increases in global demand and reflecting planned increases in certain
component safety stock levels to mitigate global supply shortages, and remain committed to high customer delivery performance.
Accounting policy
Inventory and work in progress is valued at the lower of actual cost on a first-in, first-out (FIFO) basis and net realisable value.
In respect of work in progress and finished goods, cost includes all production overheads and the attributable proportion of
indirect overhead expenses that are required to bring inventories to their present location and condition. Overheads are absorbed
into inventories on the basis of normal capacity or on actual hours if higher.
Key estimate – Determination of net realisable inventory value
Determining the net realisable value of inventory requires management to estimate future demand, especially in respect of
provisioning for slow moving and potentially obsolete inventory. When calculating an inventory provision, management use
historic usage levels (capped at 18 months), demand from customer orders and manufacturing build plans as a basis for
estimating the future annual demand of individual stock items, except in the following instances:
– for key products and their components, provisions are typically made for quantities held in excess of three years’ demand.
A demand basis lower than three years is used for those key products and related components where the sales history is more
volatile; and
– where strategic purchases of critical components have been made, an outlook beyond three years is considered
where appropriate.
An analysis of inventories at the end of the year was:
2022
£’000
2021
£’000
Raw materials 56,034 38,973
Work in progress 31,002 21,750
Finished goods 75,446 52,840
Balance at the end of the year 162,482 113,563
During the year, the amount of inventories recognised as an expense in the Consolidated income statement was £211,209,000
(2021: £177,963,000) and the amount of write-down of inventories recognised as an expense in the Consolidated income statement
was £481,000 (2021: £269,000). At the end of the year, the gross cost of inventories which had provisions held against them totalled
£17,520,000 (2021: £17,389,000).
17. Provisions
A provision is a liability recorded in the Consolidated balance sheet, where there is uncertainty over the timing or amount that
will be paid, and is therefore often estimated. The main provisions we hold are in relation to warranties provided with the sale of
our products.
Accounting policy
The Group provides a warranty from the date of purchase, except for those products that are installed by the Group where the
warranty starts from the date of completion of the installation. This is typically for a 12-month period, although up to three years is
given for a small number of products. A warranty provision is included in the Group financial statements, which is calculated on
the basis of historical returns and internal quality reports.
Warranty provision movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 6,259 5,591
Created during the year 1,975 2,500
Unused amounts reversed (1,688) –
Utilised in the year (2,302) (1,832)
(2,015) 668
Balance at the end of the year 4,244 6,259
The warranty provision has been calculated on the basis of historical return-in-warranty information and other internal reports. It is
expected thatmost of this expenditure will be incurred in the next financial year and all expenditure will be incurred within three
years of the balance sheetdate.
Included within the warranty provision is £1,912,000 (2021: £4,200,000) where the warranty cost has been reassessed to be the
cost of replacing certain AM machines where the business will not have the capability to honour the warranty on these machines
going forward as a result of restructuring activities in 2020. As we will not have the ability to repair or maintain these machines, the
warranty cost reflects the cost of replacing these machines. It was expected that these warranty costs would be incurred in 2021,
however this is now expected to be in 2023. During 2022, a revised estimate of the number of machines we are more-likely-than-not
to replace, in addition to a revision to the cost of replacement, resulted in a net reduction to this provision of £1,688,000.
Notes continued
Financial statements
152
Renishaw plc Annual Report 2022
18. Contract liabilities
Contract liabilities relate to where we have obligations to transfer goods or services to a customer, where we have already received
consideration. Our balances mostly comprise advances received from customers and payments for services yet to be completed.
Balances at the end of the year were:
2022
£’000
2021
£’000
Goods, capital equipment and installation 1,470 1,431
Aftermarket services 4,471 4,689
Deferred revenue 5,941 6,120
Advances received from customers 7,015 –
Balance at the end of the year 12,956 6,120
Advances received from customers have increased this year. As the balance at 30 June 2022 was material, we have included these
within Contract liabilities. In previous years, they were included within Other payables, and amounted to £3,922,000 in 2021.
The aggregate amount of the transaction price allocated to performance obligations that are unsatisfied at the end of the year is
£12,956,000 (2021: £6,120,000). Of this, £1,620,000 (2021: £1,682,000) is not expected to be recognised in the next financial year.
19. Other payables
Separate to our trade payables and contract liabilities, which directly relate to our trading activities, our Other payables mostly
comprises amounts payable to employees, or relating to employees.
Balances at the end of the year were:
2022
£’000
2021
£’000
Payroll taxes and social security 6,823 7,924
Performance bonuses 16,179 13,208
Holiday pay and retirement accruals 7,810 7,200
Indirect tax payable 1,762 200
Other creditors and accruals 19,375 23,184
Total other payables 51,949 51,716
Holiday pay accruals are based on a calculation of the number of days’ holiday earned during the year, but not yet taken.
Other creditors and accruals includes £1,312,000 (2021: £3,365,000) of receivables in payable positions where there is no right of
offset, and a number of other smaller accruals.
20. Leases (as lessee)
The Group leases mostly distribution properties and cars from third parties and recognises an associated lease liability for the total
present value of payments the lease contracts commits us to.
Accounting policy
At the commencement date of a lease arrangement the Group recognises a right-of-use asset for the leased item and a lease
liability for any payments due. Lease liabilities are initially measured at the present value of the lease payments that are not
paid at the commencement date, discounted using the incremental borrowing rate of the applicable entity. The lease liability is
subsequently measured at amortised cost using the effective interest method and is remeasured if there is a change in future
lease payments arising from a change in an index or rate (such as an inflation-linked increase) or if there is a change in the
Group’s assessment of whether it will exercise an extension or termination option. When this happens there is a corresponding
adjustment to the right-of-use asset. Where the Group enters into leases with a lease term of 12 months or less, these are treated
as ‘short-term’ leases and are recognised on a straight-line basis as an expense in the Consolidated income statement. The same
treatment applies to low-value assets, which are typically IT equipment and office equipment.
Lease liabilities are analysed as below:
2022
Leasehold
property
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Total
£’000
Due in less than one year 2,916 33 930 3,879
Due between one and two years 1,857 18 523 2,398
Due between two and three years 805 10 278 1,093
Due between three and four years 624 9 78 711
Due between four and five years 553 3 7 563
Due in more than five years 3,611 – – 3,611
Total future minimum lease payments payable 10,366 73 1,816 12,255
Effect of discounting (1,993) (1) (81) (2,075)
Lease liabilities 8,373 72 1,735 10,180
Strategic Report Governance Financial statements Shareholder information
153
Renishaw plc Annual Report 2022
20. Leases (as lessee) (continued)
2021
Leasehold
property
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Total
£’000
Due in less than one year 3,022 42 1,110 4,174
Due between one and two years 2,497 15 591 3,103
Due between two and three years 1,638 9 249 1,896
Due between three and four years 728 5 55 788
Due between four and five years 571 4 1 576
Due in more than five years 5,026 − − 5,026
Total future minimum lease payments payable 13,482 75 2,006 15,563
Effect of discounting (2,936) (2) (63) (3,001)
Lease liabilities 10,546 73 1,943 12,562
Lease liabilities are also presented as a £3,714,000 (2021: £3,904,000) current liability and a £6,466,000 (2021: £8,658,000) non-
current liability in the Consolidated balance sheet.
Amounts recognised in the Consolidated income statement relating to leases were:
2022
£’000
2021
£’000
Depreciation expense of right-of-use assets 4,205 4,463
Impairment of right-of-use assets 1,837 –
Derecognition of lease liabilities (1,985) –
Interest expense on lease liabilities 481 335
Expenses relating to short-term and low-value leases 51 139
Total expense recognised in the Consolidated income statement 4,589 4,937
Total cash outflows for leases 4,613 5,289
During the year we decided to withdraw from Russia, including moving out of a leased property by August 2022. We have therefore
derecognised amounts relating to the leased property totalling £1,985,000, with a corresponding impairment to the right-of-use asset
of £1,837,000. See note 30 for further detail.
21. Borrowings
The Group’s only source of external borrowing is a fixed interest loan facility in our Japanese subsidiary, entered into to directly
finance the purchase of a new distribution facility in Japan in 2019.
Third party borrowings at 30 June 2022 consist of a five year loan entered into on 31 May 2019 by Renishaw KK, with original
principal of JPY 1,447,000,000 (£10,486,000). Principal of JPY 12,000,000 is repayable each month, with a fixed interest rate of
0.81% also paid on monthly accretion. The residual principal at 31 May 2024 of JPY 739,000,000 can either be repaid in full at that
time, or extended for another five years. All covenants have been complied with during the year.
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 7,449 11,543
Additions – 636
Interest 52 69
Repayments (974) (3,477)
Currency adjustment (448) (1,322)
Balance at the end of the year 6,079 7,449
Borrowings are also presented as a £919,000 (2021: £992,000) current liability and a £5,160,000 (2021: £6,457,000) non-current
liability in the Consolidated balance sheet. Borrowings are held at amortised cost.
There is no significant difference between the book value and fair value of borrowings, which is estimated by discounting contractual
future cash flows, which represents level 2 of the fair value hierarchy defined in note 25.
22. Changes in liabilities arising from financing activities
1 July 2021 Cash flows Other Currency 30 June 2022
Lease liabilities 12,562 (4,081) 513 1,186 10,180
Borrowings 7,449 (974) 52 (448) 6,079
20,011 (5,055) 565 738 16,259
1 July 2020 Cash flows Other Currency 30 June 2021
Lease liabilities 13,166 (4,815) 4,815 (604) 12,562
Borrowings 11,543 (2,841) 69 (1,322) 7,449
24,709 (7,656) 4,884 (1,926) 20,011
See notes 20 and 21 for further details on borrowing and leasing activities.
Notes continued
Financial statements
154
Renishaw plc Annual Report 2022
23. Employee benefits
The Group operates contributory pension schemes, largely for UK, Ireland and USA employees, which were of the defined benefit
type up to 5 April 2007, 31 December 2007 and 30 June 2012 respectively, at which time they ceased any future accrual for existing
members and were closed to new members. The Group’s largest defined benefit scheme is in the UK.
Accounting policy
Defined benefit pension schemes are administered by trustees who are independent of the Group finances. Investment assets of
the schemes are measured at fair value using the bid price of the unitised investments, quoted by the investment manager, at the
reporting date. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate ofreturn
onahigh-quality corporate bond of equivalent term and currency to the liability. Remeasurements arising from defined benefit
schemes comprise actuarial gains and losses, the return on scheme assets (excluding interest) and the effect of the asset ceiling
(ifany, excluding interest). The Company recognises them immediately in Other comprehensive income and all other expenses
related to defined benefit schemes are included in the Consolidated income statement.
The pension schemes’ surpluses, to the extent that they are considered recoverable, or deficits are recognised in full and
presented on the face of the Consolidated balance sheet under Employee benefits. Where a guarantee is in place in relation to
a pension scheme deficit, liabilities are reported in accordance with IFRIC 14 ‘The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction’. To the extent that contributions payable will not be available as a refund after they
are paid into the plan, a liability is recognised at the point the obligation arises, which is the point at which the minimum funding
guarantee is agreed. Overseas-based employees are covered by a combination of state, defined benefit and private pension
schemes in their countries of residence. Actuarial valuations of overseas pension schemes were not obtained, apart from Ireland
and USA, because of the low number of members.
For defined contribution schemes, the amount charged to the Consolidated income statement represents the contributions
payable to the schemes inrespect of the accounting period.
Key estimate – Valuation of defined benefit pension schemes’ liabilities
Determining the value of the future defined benefit obligation requires estimation in respect of the assumptions used to determine
the present values. Theseinclude future mortality, discount rate and inflation. Management makes these estimates in consultation
with independent actuaries.
The total pension cost of the Group for the year was £21,988,000 (2021: £19,759,000), of which £121,000 (2021: £111,000) related to
Directors and £5,292,000 (2021: £5,256,000) related to overseas schemes.
The latest full actuarial valuation of the UK defined benefit pension scheme was carried out as at 30 September 2021 and updated
to 30 June 2022 by aqualified independent actuary. The mortality assumption used for 2022 is the S3PxA base tables and CMI
2021 model, with long-term improvements of 1% per annum. Adjustments have been made to both the core base tables and CMI
2021 model to allow for the scheme’s membership profile and best estimate assumptions of future mortality improvements.
Major assumptions used by actuaries for the UK, Ireland and US schemes were:
30 June 2022 30 June 2021
UK scheme Ireland scheme US scheme UK scheme Ireland scheme US scheme
Rate of increase in pension payments 3.05% 2.45% – 3.10% 1.70% −
Lump sum – assumed settlement rate – – 4.50% − − 0.75%
Discount rate 3.60% 3.20% 4.50% 1.85% 1.10% 2.85%
Inflation rate (RPI) 3.10% 2.45% – 3.20% 1.70% −
Inflation rate (CPI)
2.10%
pre-2030
3.10% post-2030 – –
2.20%
pre-2030
3.10% post-2030 − −
Retirement age 64 65 65 64 65 65
The life expectancies for the UK scheme implied by the mortality assumption at age 65 and 45 are:
2022
years
2021
years
Male currently aged 65 21.5 22.0
Female currently aged 65 23.8 23.9
Male currently aged 45 22.2 22.7
Female currently aged 45 24.7 24.9
The weighted average duration of the UK defined benefit obligation is around 22 years.
Strategic Report Governance Financial statements Shareholder information
155
Renishaw plc Annual Report 2022
23. Employee benefits (continued)
The assets and liabilities in the defined benefit pension schemes were:
30 June
2022
£’000
% of
total
assets
30 June
2021
£’000
% of
total
assets
Market value of assets:
Equities 111,025 51 140,717 61
Multi-asset funds 82,442 38 63,017 27
Credit and fixed income funds 19,489 9 18,833 8
Fixed interest gilts 1,502 1 1,457 1
Index linked gilts 1,489 1 1,843 1
Property – – 802 –
Cash and other 802 – 4,686 2
216,749 100 231,355 100
Actuarial value of liabilities (174,504) – (255,053) −
Surplus/(deficit) in the schemes 42,245 – (23,698) −
Deferred tax thereon (11,048) – 4,347 −
Note C.41 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 £22,888,000 (2021: £26,396,000) and the actuarial value of liabilities was £20,973,000 (2021: £30,930,000).
The UK and US schemes were both in net surplus positions at 30 June 2022 (2021: both net deficit positions), totalling £43,241,000,
and are therefore presented in non-current assets in the Consolidated balance sheet. The Ireland scheme was in a net deficit
position at 30 June 2022 (2021: net deficit position), totalling £996,000, and is therefore presented in non-current liabilities.
Equities are held in externally-managed funds and primarily relate to UK and US equities. Credit and fixed income funds, fixed
interest gilts, and index linked gilts relate to UK, US and Eurozone government-linked securities, again held in externally-managed
funds. The fair values of these equity and fixed income instruments are determined using the bid price of the unitised investments,
quoted by the investment manager, at the reporting date and therefore represent ‘Level 2’ of the fair value hierarchy defined in note
25. Multi-asset funds are also held in externally-managed funds, with active asset allocation to diversify growth across asset classes
such as equities, bonds and money-market instruments. The fair value of these funds is determined on a comparable basis to the
equity and fixed income funds, and therefore are also ‘Level 2’ assets.
The UK scheme is closed for future accrual and is expected to mature over the coming years, and therefore while the focus of the
investment strategy remains on growth the trustees are gradually de-risking the investment portfolio when appropriate.
The agreed target investment strategy for the UK scheme as at 30 June 2022 was to hold 54% of investment assets in equities,
30% in diversified growth funds, 10% in multi-asset credit and 6% in defensive fixed income (government and corporate bonds).
Contributions over the year were predominantly invested in multi-asset credit, which in combination with a disinvestment from
equities has brought the mandate up to the target allocation of 10% of assets. Post 30 June 2022, the Trustees and Company have
agreed to disinvest 10% of assets from the diversified growth fund allocation, with a view to making a new investment into a Liability
Driven Investment mandate that looks to hedge the sensitivities of the liabilities to interest rates and inflation, thereby reducing the
volatility of the funding position. No scheme assets are directly invested in the Group’s own equity.
The movements in the schemes’ assets and liabilities were:
Year ended 30 June 2022
Assets
£’000
Liabilities
£’000
Total
£’000
Balance at the beginning of the year 231,355 (255,053) (23,698)
Contributions paid 8,866 – 8,866
Interest on pension schemes 4,337 (4,643) (306)
Remeasurement loss from augmentation of members’ benefits – (11,695) (11,695)
Remeasurement gain/(loss) under IAS 19, the asset ceiling and IFRIC 14 (17,264) 86,342 69,078
Benefits paid (10,545) 10,545 –
Balance at the end of the year 216,749 (174,504) 42,245
Year ended 30 June 2021
Assets
£’000
Liabilities
£’000
Total
£’000
Balance at the beginning of the year 188,619 (253,514) (64,895)
Contributions paid 8,866 − 8,866
Interest on pension schemes 2,933 (3,809) (876)
Remeasurement loss from GMP equalisation – (78) (78)
Remeasurement gain/(loss) under IAS 19, the asset ceiling and IFRIC 14 36,824 (3,539) 33,285
Benefits paid (5,887) 5,887 −
Balance at the end of the year 231,355 (255,053) (23,698)
Notes continued
Financial statements
156
Renishaw plc Annual Report 2022
23. Employee benefits (continued)
The analysis of the amount recognised in the Consolidated statement of comprehensive income and expense was:
2022
£’000
2021
£’000
Actuarial gain/(loss) arising from:
Changes in demographic assumptions 3,860 (2,669)
Changes in financial assumptions 67,442 4,643
Experience adjustment (7,818) 2,631
Adjustment related to the application of revaluation and late retirement factors – 14,300
Return on plan assets excluding interest income (17,264) 36,823
Adjustment for the asset ceiling 3,280 (3,280)
Adjustment to liabilities for IFRIC 14 19,578 (19,163)
Total amount recognised in the Consolidated statement of comprehensive income and expense 69,078 33,285
The cumulative amount of actuarial gains and losses recognised in the Consolidated statement of comprehensive income and
expense was a loss of £22,419,000 (2021: loss of £91,497,000).
The net surplus of the Group’s defined benefit pension schemes, on an IAS 19 basis, has increased from a £23,698,000 liability at
30 June 2021 to a £42,245,000 asset at 30 June 2022, primarily reflecting the net effect of:
– an increase in the discount rates of the UK and Irish schemes, based on increases in corporate bond yields;
– changes to the UK scheme rules which allows recognition of a surplus position; and
– an adjustment for changes in the UK scheme rules relating to members’ benefits, which is discussed further below.
For the UK scheme, the latest actuarial report prepared in September 2021 shows a deficit of £52,800,000, which is based on
funding to self-sufficiency and uses prudent assumptions. IAS 19 requires best estimate assumptions to be used, resulting in the
IAS19 net surplus being higher than the actuarial deficit.
For the UK defined benefit scheme, a guide to the sensitivity of the value of the respective liabilities is as follows:
Variation Approximate effect on liabilities
UK – discount rate Increase/decrease by 0.5% -£12.9m/+£14.6m
UK – future inflation Increase/decrease by 0.5% +£11.5m/-£11.3m
UK – mortality Increased/decreased life by one year +£5.9m/-£5.9m
In October 2020, the Trustees of the Renishaw Pension Fund (‘the UK defined benefit scheme’) notified the Company of a difference
between the calculated estimate of liabilities in the scheme for administration purposes and for accounting purposes. Specifically,
this discrepancy related to the application of revaluation and early and late retirement factors. In May 2021, following joint instruction
from the Trustees and Company, a Queen’s Counsel (QC) opinion was given on the correct interpretation of the Trust Deed and
Rules of the Fund in relation to this matter. The most significant part of QC’s opinion was that no revaluation increases should be
applied between ages 60 and 65 (or earlier retirement). The 2021 financial statements reflected the impact that would arise from
correcting the benefits in payment and the valuation of future benefits to be in line with QC’s opinion, with a gain of £14,300,000
recognised in the Consolidated statement of comprehensive income and expense.
In 2022, the Company agreed to an augmentation of members’ benefits to reflect current and historic administrative revaluation
practice. The augmentation is a change to the benefits provided in the UK scheme, which has been effected in the Rules through a
Deed of Amendment to the Trust Deed and Rules, signed by the Trustees and Company on 20 June 2022. The impact on liabilities
of this plan amendment, totalling £11,695,000, has been recognised as a past service cost in the Consolidated income statement.
This amount has been excluded from adjusted profit measures, see note 29 for further detail.
The deficit funding plan for the UK defined benefit pension scheme is unaffected by the changes to the Rules. Under the plan, the
Company is paying £8,700,000 per annum into the scheme for five years with effect from 1 October 2018. However, the Deed of
Amendment granted the Company the unconditional right to a refund of any surplus on wind-up of the UK scheme. IFRIC 14 is an
interpretation of IAS 19 which requires consideration of minimum funding commitments a company has made to its pension scheme
and whether this gives rise to additional liabilities. In particular, whether a company has an unconditional right to a refund of surplus
from a scheme dictates whether there is an impact on the accounting. As a result of the change to the Rules to allow recognition of
a surplus, a gain of £3,280,000 has been recognised in the year in respect of the removal of the asset ceiling restriction in place in
2021, and a gain of £19,578,000 recognised in respect of not needing to recognise an additional liability in consideration of minimum
funding considerations.
The Company and Trustees also agreed reductions to the charges the scheme has on the Company’s assets. An escrow bank
account with a balance of £10,578,000 at 30 June 2021 is no longer subject to a registered floating charge, while the number of UK
properties owned by the Company subject to registered fixed charges has decreased. The net book value of properties subject to
fixed charges at 30 June 2022 was £54,208,000 (2021: £81,679,000).
Strategic Report Governance Financial statements Shareholder information
157
Renishaw plc Annual Report 2022
23. Employee benefits (continued)
The current agreement will continue until 30 June 2031 and any outstanding deficit paid at that time. The agreement will end sooner
if the actuarial deficit (calculated on a self-sufficiency basis) is eliminated in the meantime.
The charges may be enforced by the Trustees if one of the following occurs: (a) the Company does not pay funds into the scheme in
line with the agreed plan; (b) an insolvency event occurs in relation to the Company; or (c) the Company does not pay any deficit at
30 June 2031.
Under the Ireland defined benefit pension scheme deficit funding plan, a property owned by Renishaw Ireland (DAC) is subject to a
registered fixed charge to secure the Ireland defined benefit pension scheme’s deficit.
24. Share-based payments
The Group provides share-based payment arrangements to certain employees in accordance with the Renishaw plc deferred annual
equity incentive plan. The Governance section provides information of how these awards are determined.
Accounting policy
Renishaw shares are granted in accordance with the Renishaw plc deferred annual equity incentive plan (the Plan). The share
awards are subject only to continuing service of the employee and are equity settled. The fair value of the awards at the date
of grant, which is estimated to be equal to the market value, is charged to the Consolidated income statement on a straight-
line basis over a three-year vesting period, with appropriate adjustments made to reflect expected or actual forfeitures.
The corresponding credit is to Other reserve.
The number of shares to be awarded is calculated by dividing the relevant amount of annual bonus under the Plan by the
average price of a share during a period determined by the Remuneration Committee of not more than five dealing days ending
with the dealing day before the award date. These shares must be purchased on the open market and cannot be satisfied by
issuance of new shares or transfer of existing treasury shares.
The Renishaw Employee Benefit Trust (EBT) is responsible for purchasing shares on the open market on behalf of the Company
to satisfy the Plan awards. These are held by the EBT until transferring to the employee, which will normally be on the third
anniversary of the award date, subject to continued employment. Malus and clawback provisions can be operated by the
Committee within five years of the award date. During the vesting period, no dividends are payable on the shares. However, upon
vesting, employees will be entitled to additional shares or cash, equivalent to the value of dividends paid on the awarded shares
during this period. This amount is accrued over the vesting period.
Own shares held are recognised as an element in equity until they are transferred at the end of the vesting period, and such
shares are excluded from earnings per share calculations.
The total cost recognised in the 2022 Consolidated income statement in respect of the Plan was £180,000 (2021: £173,000).
See note 26 for reconciliations of amounts recognised in Equity.
In accordance with the Plan, amounts equivalent to £1,915,000 (2021: £734,317) of shares are to be awarded in respect of 2022.
See the Directors’ Remuneration Report for further details of the Plan and awards granted.
25. Financial instruments
The Group has exposure to credit risk, liquidity risk and market risk arising from its use of financial instruments. This note presents
information about the Group’s exposure to these risks, along with the Group’s objectives, policies and processes for measuring and
managing the risks.
Accounting policy
The Group measures financial instruments such as forward exchange contracts at fair value at each balance sheet date in
accordance with IFRS 9 ‘Financial Instruments’. Fair value, as defined by IFRS 13 ‘Fair Value Measurement’, is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. This note provides detail on the IFRS 13 fair value hierarchy.
Trade and other current receivables are initially recognised at fair value and are subsequently held at amortised cost less any
provision for bad and doubtful debts and expected credit losses according to IFRS 9. Loans to associates and joint ventures
are initially recognised at fair value and are subsequently held at amortised cost. Trade and other current payables are initially
recognised at fair value and are subsequently held at amortised cost.
Financial liabilities in the form of loans are initially recognised at fair value and are subsequently held at amortised cost.
Financial liabilities are assessed for embedded derivatives and whether any such derivatives are closely related. If not closely
related, such derivatives are accounted for at fair value in the Consolidated income statement.
Notes continued
Financial statements
158
Renishaw plc Annual Report 2022
25. Financial instruments (continued)
Foreign currency derivatives are used to manage risks arising from changes in foreign currency rates relating to overseas sales
and foreign currency-denominated assets and liabilities. The Group does not enter into derivatives for speculative purposes.
Foreign currency derivatives are stated at their fair value, being the estimated amount that the Group would pay or receive to
terminate them at the balance sheet date, based on prevailing foreign currency rates.
Changes in the fair value of foreign currency derivatives which are designated and effective as hedges of future cash flows are
recognised in Other comprehensive income and in the Cash flow hedging reserve, and subsequently transferred to the carrying
amount of the hedged item or the Consolidated income statement. Realised gains or losses on cash flow hedges are therefore
recognised in the Consolidated income statement within revenue in the same period as the hedged item.
Hedge accounting is discontinued when the hedging instrument expires or when the hedging instrument or hedged item no
longer qualify for hedge accounting. If the forecast transaction is still expected to occur, but is no longer highly probable,
the cumulative gain or loss in the cash flow hedge reserve remains in that reserve until the transaction occurs. If the forecast
transaction is no longer expected to occur, the cumulative gain or loss in the cash flow hedge reserve is immediately reclassified
to the Consolidated income statement.
Changes in fair value of foreign currency derivatives, which are ineffective or do not meet the criteria for hedge accounting in
IFRS 9, are recognised in the Consolidated income statement within Gains/losses from the fair value of financial instruments.
In addition to derivatives held for cash flow hedging purposes, the Group uses short-term derivatives not designated as hedging
instruments to offset gains and losses from exchange rate movements on foreign currency-denominated assets and liabilities.
Gains and losses from currency movements on underlying assets and liabilities, realised gains and losses on these derivatives,
and fair value gains and losses on outstanding derivatives of this nature are all recognised in Financial income and expenses in
theConsolidated income statement.
Key estimate – Estimates of highly probable forecasts of the hedged item
Derivatives are effective for hedge accounting to the extent that the hedged item is ‘highly probable’ to occur, with ‘highly
probable’ indicating a much greater likelihood of occurrence than the term ‘more likely than not’. Determining a highly probable
sales forecast for Renishaw plc and Renishaw UK Sales Limited, being the hedged item, over a multiple year time period,
requires judgement of the suitability of external and internal data sources and estimations of future sales.
Fair value
There is no significant difference between the fair value of financial assets and financial liabilities and their carrying value in the
Consolidated balance sheet. All financial assets and liabilities are held at amortised cost, apart from the forward foreign currency
exchange contracts, which are held at fair value, with changes going through the Consolidated income statement unless subject to
hedge accounting.
The fair values of the forward foreign currency exchange contracts have been calculated by a third-party expert, discounting
estimated future cash flows on the basis of market expectations of future exchange rates, representing level 2 in the IFRS 13 fair
value hierarchy. The IFRS 13 level categorisation relates to the extent the fair value can be determined by reference to comparable
market values. The classifications are: level 1 where instruments are quoted on an active market; level 2 where the assumptions
used to arrive at fair value have comparable market data; and level 3 where the assumptions used to arrive at fair value do not have
comparable market data.
Credit risk
The Group’s liquid funds are substantially held with banks with high credit ratings and the credit risk relating to these funds is
therefore limited. The Group carries a credit risk relating to non-payment of trade receivables by its customers. The Group’s policy is
that credit evaluations are carried out on all new customers before credit is given above certain thresholds. 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:
Trade & finance lease receivables Other receivables Cash and bank deposits
Currency
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Pound Sterling 21,391 16,915 19,565 23,752 201,668 174,905
US Dollar 45,433 39,603 867 815 13,965 9,511
Euro 28,314 23,476 1,568 1,144 8,712 8,118
Japanese Yen 19,480 16,568 457 173 5,720 3,786
Other 23,242 26,103 4,611 4,137 23,097 18,688
137,860 122,665 27,068 30,021 253,162 215,008
Short-term loans to associates and joint ventures and contract assets are mostly denominated in Pound Sterling.
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159
Renishaw plc Annual Report 2022
25. Financial instruments (continued)
The above trade receivables, finance lease receivables, other receivables and cash are predominately held in the functional
currency of the relevant entity, with the exception of £21,271,000 of US Dollar-denominated trade receivables being held in Renishaw
(Hong Kong) Limited and £1,852,000 of Euro-denominated trade receivables being held in Renishaw UK Sales Limited, along with
some foreign currency cash balances which are of a short-term nature.
The ageing of trade receivables past due at the end of the year was:
2022
£’000
2021
£’000
Past due zero to one month 9,548 10,537
Past due one to two months 3,879 2,704
Past due more than two months 5,252 6,283
Balance at the end of the year 18,679 19,524
Movements in the provision for impairment of trade receivables during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 3,826 5,965
Changes in amounts provided (834) (1,994)
Amounts used (452) (145)
Balance at the end of the year 2,540 3,826
The Group applies the simplified approach when measuring the expected credit loss for trade receivables, with a provision matrix
used to determine a lifetime expected credit loss.
For this provision matrix, trade receivables are grouped into credit risk categories, with category 1 being the lowest risk and category
5 the highest. Risk scores are allocated to the customer’s country of operation, their type (such as distributor, end-user and OEM),
their industry and the proportion of their debt that was past due at the year-end. These scores are then weighted to produce an
overall risk score for the customer, with the lowest scores being allocated to category 1 and the highest scores to category 5.
The matrix then applies an expected credit loss rate to each category, with this rate being determined by adjusting the Group’s
historic credit loss rates to reflect forward-looking information.
Where certain customers have been identified as having a significantly elevated credit risk these have been provided for on a
specific basis. Both elements of expected credit loss are shown in the matrix below and have been shown separately so as not to
distort the expected credit loss rate.
Year ended 30 June 2022
Risk category 1
£’000
Risk category 2
£’000
Risk category 3
£’000
Risk category 4
£’000
Risk category 5
£’000
2022 Total
£’000
Gross trade receivables 2,742 51,598 70,298 5,453 – 130,091
Expected credit loss rate 0.19% 0.20% 0.22% 0.24% – 0.21%
Expected credit loss allowance 5 104 154 13 – 276
Specific loss allowance – – 1,502 762 – 2,264
Total expected credit loss 5 104 1,656 775 – 2,540
Net trade receivables 2,737 51,494 68,642 4,678 – 127,551
Year ended 30 June 2021
Risk category 1
£’000
Risk category 2
£’000
Risk category 3
£’000
Risk category 4
£’000
Risk category 5
£’000
2021 Total
£’000
Gross trade receivables 9,154 38,759 65,870 3,806 898 118,487
Expected credit loss rate 0.28% 0.31% 0.31% 0.36% 0.39% 0.31%
Expected credit loss allowance 26 119 205 14 3 367
Specific loss allowance − − 2,080 1,138 241 3,459
Total expected credit loss 26 119 2,285 1,152 244 3,826
Net trade receivables 9,128 38,640 63,585 2,654 654 114,661
Finance lease receivables are subject to the same approach as noted above for trade receivables, while contracts assets and short-
term loans to associates and joint ventures are not material to the Group.
Derivative assets are assessed based on the credit risk of the banks counterparty to the forward contracts.
Other receivables include mostly prepayments, a proportion of the R&D tax credit receivable, and indirect tax receivables.
Prepayment balances are reviewed at each reporting period to confirm that prepaid goods or services are still expected to be
received, while tax balances are reviewed for recoverability.
Notes continued
Financial statements
160
Renishaw plc Annual Report 2022
25. Financial instruments (continued)
Other receivables at the year end comprised:
2022
£’000
2021
£’000
Indirect tax receivable 9,010 7,458
Software maintenance 7,430 4,917
Grants 1,250 624
R&D tax credit recoverable 442 8,352
Other prepayments 8,936 8,670
Total other receivables 27,068 30,021
The total R&D tax credit recoverable has reduced from £8,352,000 at 30 June 2021 to £4,337,000 at 30 June 2022. As the Company
can now offset the tax credit against its corporation tax liability, £3,895,000 of the total balance at 30 June 2022 has been recognised
in current tax assets, with £442,000 remaining in Other receivables at 30 June 2022.
The maximum exposure to credit risk is £425,211,000 (2021: £389,817,000), comprising the Group’s trade, finance and other
receivables, cash and cash equivalents and derivative assets.
The maturities of non-current other receivables, being only derivatives, at the year end were:
2022
£’000
2021
£’000
Receivable between one and two years – 12,484
Receivable between two and five years – −
– 12,484
Liquidity risk
Our approach to managing liquidity is to ensure, as far as possible, that we will always have sufficient liquidity to meet our liabilities
when due, without incurring unacceptable losses or risking damage to the Group’s reputation. We use monthly cash flow forecasts
on a rolling 12-month basis to monitor cash requirements.
With net cash and bank deposits at 30 June 2022 totalling £253,162,000, an increase of £38,154,000 from 30 June 2021, the Group’s
liquidity has improved in the period.
In respect of net cash and bank deposits, the carrying value is materially the same as fair value because of the short maturity of the
bank deposits. Bank deposits are affected by interest rates that are either fixed or floating, which can change over time, affecting
the Group’s interest income. An increase of 1% in interest rates would result in an increase in interest income of approximately
£1,000,000.
The contractual maturities of financial liabilities at the year end were:
Contractual cash flows
Year ended 30 June 2022
Carrying
amount
£’000
Effect of
discounting
£’000
Gross
maturities
£’000
Up to 1 year
£’000
1–2 years
£’000
2–5 years
£’000
Trade payables 30,947 – 30,947 30,947 – –
Other payables 51,949 – 51,949 51,949 – –
Borrowings 6,079 82 6,161 926 5,235 –
Forward exchange contracts 27,353 – 27,353 17,890 9,463 –
116,328 82 116,410 101,712 14,698 –
Contractual cash flows
Year ended 30 June 2021
Carrying amount
£’000
Effect of
discounting
£’000
Gross
maturities
£’000
Up to 1 year
£’000
1–2 years
£’000
2–5 years
£’000
Trade payables 24,715 − 24,715 24,715 − −
Other payables 51,716 − 51,716 51,716 − −
Borrowings 7,449 144 7,593 992 6,601 −
Forward exchange contracts 5,949 − 5,949 5,594 355 −
89,829 144 89,973 83,017 6,956 −
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161
Renishaw plc Annual Report 2022
25. Financial instruments (continued)
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 ofsales being made in these non-Sterling currencies, but with most manufacturing being undertaken in the UK, Ireland
and India.
A large proportion of sales are made in US Dollar, Euro and Japanese Yen, therefore the Group enters into US Dollar, Euro and
Japanese Yen derivative financial instruments to manage its exposure to foreign currency risk, including:
i. forward foreign currency exchange contracts to hedge a significant proportion of the Group’s forecasted US Dollar, Euro and
Japanese Yen revenues over the next 24 months;
ii. foreign currency option contracts, entered into alongside the forward contracts above until May 2018 as part of the Group hedging
strategy, are ineffective for cash flow hedging purposes. Note 29, ‘Alternative performance measures’, gives an adjusted measure
of profit before tax to reflect the original intention that these derivatives were entered into for hedging purposes. The final option
contract matured in November 2021; and
iii. one-month forward foreign currency exchange contracts to offset the gains/losses from exchange rate movements arising from
foreign currency-denominated intragroup balances of the Company.
The amounts of foreign currencies relating to these forward contracts and options are, in Sterling terms:
2022 2021
Nominal value
£’000
Fair value
£’000
Nominal value
£’000
Fair value
£’000
US Dollar 306,270 (26,249) 399,065 4,192
Euro 129,799 1,711 146,120 6,040
Japanese Yen 37,941 4,306 68,938 5,942
474,010 (20,232) 614,123 16,174
The following are the exchange rates which have been applicable during the financial year:
2022 2021
Currency
Average
forward
contract rate
Year end
exchange
rate
Average
exchange
rate
Average
forward
contract rate
Year end
exchange
rate
Average
exchange
rate
US Dollar 1.34 1.22 1.33 1.37 1.38 1.36
Euro 1.12 1.16 1.18 1.09 1.17 1.14
Japanese Yen 132 165 156 136 154 145
Hedging
In relation to the forward currency contracts in a designated cash flow hedge, the hedged item is a layer component of forecast
sales transactions. Forecast transactions are deemed highly probable to occur and Group policy is to hedge around 75% of net
foreign currency exposure for USD, EUR and JPY. The hedged item creates an exposure to receive USD, EUR or JPY, while the
forward contract is to sell USD, EUR or JPY and buy GBP. Therefore, there is a strong economic relationship between the hedging
instrument and the hedged item. The hedge ratio is 100%, such that, by way of example, £10m nominal value of forward currency
contracts are used to hedge £10m of forecast sales. Fair value gains or losses on the forward currency contracts are offset by
foreign currency gain or losses on the translation of USD, EUR and JPY based sales revenue, relative to the forward rate at the date
the forward contracts were arranged. Foreign currency exposures in HKD and USD are aggregated and only USD forward currency
contracts are used to hedge these currency exposures. Sources of hedge ineffectiveness according to IFRS 9 Financial Instruments
include: changes in timing of the hedged item; reduction in the amount of the hedged sales considered to be highly probable; a
change in the credit risk of Renishaw or the bank counterparty to the forward contract; and differences in assumptions used in
calculating fair value.
During 2020, global macroeconomic uncertainty resulted in a reduction to the ‘highly probable’ revenue forecasts of Renishaw
plc and Renishaw UK Sales Limited, being the hedged item, which resulted in proportions of forward contracts failing hedge
effectiveness testing, with nominal value amounting to £247,547,000. Following maturities during 2021 and 2022, the remaining
nominal value of ineffective forward contracts at 30 June 2022 totalled £63,045,000 (2021:£153,585,000), with fair value losses of
£11,551,000 (2021: £22,824,000 gain) recognised in the Consolidated income statement relating to movements in the mark-to-
market valuations of these outstanding contracts.
In 2021 and 2022, improvements in global macroeconomic conditions and business performance have resulted in subsequent
increases to the ‘highly probable’ revenue forecasts of the hedged item, such that no additional contracts have become ineffective.
A decrease of 10% in the highly probable forecasts would result in no additional forward contracts becoming ineffective.
Notes continued
Financial statements
162
Renishaw plc Annual Report 2022
25. Financial instruments (continued)
For both the Group and the Company, the following table details the fair value of these forward foreign currency derivatives
according to the categorisations of instruments noted on page 162:
2022 2021
Nominal value
£’000
Fair value
£’000
Nominal value
£’000
Fair value
£’000
Forward currency contracts in a designated cash flow hedge (i)
Non-current derivative assets – – 172,165 9,865
Current derivative assets 77,460 7,077 127,548 7,512
Current derivative liabilities 128,950 (12,046) 74,652 (3,063)
Non-current derivative liabilities 179,149 (9,463) 34,245 (322)
385,559 (14,432) 408,610 13,992
Amounts recognised in the Consolidated statement of
comprehensive income and expense – 28,423 − 51,590
Forward currency contracts ineffective as a cash flow hedge (i)
Non-current derivative assets – – 56,357 2,619
Current derivative assets – – 31,011 428
Current derivative liabilities 63,045 (5,504) 59,529 (1,653)
Non-current derivative liabilities – – 6,687 (33)
63,045 (5,504) 153,585 1,361
Amounts recognised in Gains/(losses) from the fair value of financial
instruments in the Consolidated income statement – (11,551) − 22,824
Foreign currency options ineffective as a cash flow hedge (ii)
Non-current derivative assets – – − −
Current derivative assets – – − 1,699
Current derivative liabilities – – − (216)
Non-current derivative liabilities – – − −
– – − 1,483
Amounts recognised in Gains/(losses) from the fair value of financial
instruments in the Consolidated income statement – 1,138 − (846)
Forward currency contracts not in a designated cash flow hedge (iii)
Current derivative assets 4,880 44 − −
Current derivative liabilities 20,526 (340) 51,929 (662)
25,406 (296) 51,929 (662)
Amounts recognised in Financial income/(expense) in the
Consolidated income statement – 98 − 2,781
Total forward contracts and options
Non-current derivative assets – – 228,522 12,484
Current derivative assets 82,340 7,121 158,559 9,639
Current derivative liabilities 212,521 (17,890) 186,110 (5,594)
Non-current derivative liabilities 179,149 (9,463) 40,932 (355)
474,010 (20,232) 614,123 16,174
For the Group’s foreign currency forward contracts at the balance sheet date, if Sterling appreciated by 5% against the US Dollar,
Euro and Japanese Yen, this would increase pre-tax equity by £18,360,000 and increase profit before tax by £4,212,000, while a
depreciation of 5% would decrease pre-tax equity by £20,293,000 and decrease profit before tax by £4,655,000.
Strategic Report Governance Financial statements Shareholder information
163
Renishaw plc Annual Report 2022
26. Share capital and reserves
The Group defines capital as being the equity attributable to the owners of the Company, which is captioned on the Consolidated
balance sheet. The Board’s policy is to maintain a strong capital base and to maintain a balance between significant returns to
shareholders, with a progressive dividend policy, while ensuring the security of the Group is 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. This note presents figures relating to this capital management, along with an analysis of all elements of Equity
attributable to shareholders and non-controlling interests.
Share capital
2022
£’000
2021
£’000
Allotted, called-up and fully paid 72,788,543 ordinary shares of 20p each 14,558 14,558
The ordinary shares are the only class of share in the Company. Holders of ordinary shares are entitled to vote at general meetings
of the Company and receive dividends as declared. The Articles of Association of the Company do not contain any restrictions on
the transfer ofshares nor on voting rights.
Dividends paid
Dividends paid comprised:
2022
£’000
2021
£’000
2021 final dividend paid of 52.0p per share (2020: nil) 37,850 −
Interim dividend paid of 16.0p per share (2021: 14.0p) 11,644 10,189
Total dividends paid 49,494 10,189
A final dividend of 56.6p per share is proposed in respect of 2022, which will be payable on 5 December 2022 to shareholders on
the register on 4 November 2022.
Own shares held
The EBT is responsible for purchasing shares on the open market on behalf of the Company to satisfy the Plan awards, see note 24
for further detail. Own shares held are recognised as an element in equity until they are transferred at the end of the vesting period.
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year (404) (404)
Disposal of own shares on vesting of awards 404 −
Acquisition of own shares (750) −
Balance at the end of the year (750) (404)
On 10 December 2018, 9,639 shares were purchased on the open market by the EBT at a price of £41.66, costing a total of
£404,348. The fair value of these awards at the grant date, being 2 August 2018, was £519,542. These shares vested during the
period on 2 August 2021 with no forfeitures.
On 25 November 2021, 14,396 shares were purchased on the open market by the EBT at a price of £52.10, costing a total of
£750,017. The fair value of these awards at the grant date, being 28 October 2021, was £734,317. These shares will vest on
28 October 2024, with no forfeitures expected at 30 June 2022.
Other reserve
The other reserve relates to additional investments in subsidiary undertakings and share-based payments charges according to
IFRS 2 in relation to the Plan.
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 44 (129)
Share-based payments charge in respect of shares vesting in 2022 16 –
Transfer of own shares on vesting of awards (404) –
Share-based payments charge in respect of shares vesting in 2024 164 173
Balance at the end of the year (180) 44
Further explanations for these movements can be found in the above Own shares held section and note 24.
Notes continued
Financial statements
164
Renishaw plc Annual Report 2022
26. Share capital and reserves (continued)
Currency translation reserve
The currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of
the overseas operations and currency movements on intragroup loan balances classified as net investments in overseas operations.
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 3,719 17,729
Gain/(loss) on net assets of foreign currency operations 3,529 (7,009)
Transfer of accumulated loss relating to net assets of Russian operation 575 –
Gain/(loss) on intragroup loans classified as net investments in foreign operations 8,047 (7,743)
Tax on translation of net investments in foreign operations (1,529) 1,470
Gain/(loss) in the year relating to subsidiaries 10,622 (13,282)
Currency exchange differences relating to associates and joint ventures 118 (728)
Balance at the end of the year 14,459 3,719
See notes 5 and 30 for further information on intragroup loans classified as net investments and the cessation of activities in Russia.
Cash flow hedging reserve
The cash flow hedging reserve, for both the Group and the Company, comprises all foreign exchange differences arising from the
valuation of forward exchange contracts which are effective hedges and mature after the year end. These are valued on a mark-to-
market basis, are accounted for in Other comprehensive income and expense and accumulated in Equity, and are recycled through
the Consolidated income statement and Company income statement when the hedged item affects the income statement, or when
the hedging relationship ceases to be effective. See note 25 for further detail.
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 11,345 (30,455)
Losses on contract maturity recognised in revenue during the year (3,385) (608)
Revaluations during the year (25,038) 52,198
Deferred tax movement 6,155 (9,790)
Balance at the end of the year (10,923) 11,345
Non-controlling interest
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year (577) (577)
Share of profit for the year – −
Balance at the end of the year (577) (577)
The non-controlling interest represents the minority shareholdings in Renishaw Diagnostics Limited – 7.6%.
27. Capital commitments
At the end of a financial year, we typically have obligations to make payments in the future, for which no provision is made in the
financial statements. This year, we have committed to the expansion of one of our production facilities in Wales, UK, which is
expected to cost around £64m over the next three years.
Authorised and committed capital expenditure at the end of the year were:
2022
£’000
2021
£’000
Freehold land and buildings 65,328 412
Plant and equipment 22,760 3,255
Motor vehicles 319 79
Software licences and intellectual property – 68
Total committed capital expenditure 88,407 3,814
Strategic Report Governance Financial statements Shareholder information
165
Renishaw plc Annual Report 2022
28. Related parties
We report our two joint venture companies, RLS Merilna tehnika d.o.o. and Metrology Software Products Limited, as related parties.
A previous associate company, HiETA Technologies Limited, was entirely sold to a third party during the year.
Associates, joint ventures and other related parties had the following transactions and balances with the Group:
Joint ventures Associate
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Purchased goods and services from the Group during the year 553 711 711 642
Sold goods and services to the Group during the year 29,355 22,175 – −
Paid dividends to the Group during the year 525 − – −
Amounts owed to the Group at the year end 1 146 – 2,747
Amounts owed by the Group at the year end 3,950 2,556 – −
Loans owed to the Group at the year end 350 598 – −
There were no bad debts relating to related parties written off during 2022. Loans and finance leases owed to the Group by an
associate totalling £3,030,000 were impaired in 2021.
By virtue of their long-standing voting agreement, Sir David McMurtry (Executive Chairman 36.23% shareholder) and John Deer
(Non-executive Deputy Chairman, together with his wife, 16.59%), are the ultimate controlling party of the Group. See page 112
ofthe Governance Report for further details in relation to this. The only significant transactions between the Group and these parties
are in relation to their respective remuneration, as detailed in the Governance Report.
29. Alternative performance measures
There are sometimes infrequently occurring events which impact on our financial statements, recognised according to applicable
IFRS, that we believe should be excluded from adjusted performance measures in order to give readers a more understandable and
comparable view of our underlying performance.
In accordance with Renishaw’s alternative performance measures (APMs) policy and ESMA Guidelines on Alternative Performance
Measures (2015), APMs are defined as - Revenue at constant exchange rates, Adjusted profit before tax, Adjusted earnings per
share and Adjusted operating profit.
Revenue at constant exchange rates is defined as revenue recalculated using the same rates as were applicable to the previous
year and excluding forward contract gains and losses.
Revenue at constant exchange rates:
2022
£’000
2021
£’000
Statutory revenue as reported 671,076 565,559
Adjustment for forward contract gains (744) (1,427)
Adjustment to restate current year at previous year exchange rates (2,682) –
Revenue at constant exchange rates 667,650 564,132
Year-on-year revenue growth at constant exchange rates +18.3% –
Year-on-year revenue growth at constant exchange rates for 2021 was +13.0%.
Adjusted profit before tax, Adjusted earnings per share and Adjusted operating profit are defined as the profit before tax, earnings
per share and operating profit after excluding costs relating to a revision to a provision made in 2020 relating to restructuring, third-
party costs relating to the formal sales process (‘FSP’), a UK defined benefit pension scheme past service cost, and gains and
losses in fair value from forward currency contracts which did not qualify for hedge accounting and which have yet to mature.
Restructuring costs, where applicable during a year, are reported separately in the Consolidated income statement and excluded
from adjusted measures on the basis that they relate to matters that do not frequently recur. During 2022, a revised estimate of a
warranty provision relating to restructuring in 2020 resulted in a reduction to this provision of £1,688,000. As this provision was initially
excluded from adjusted measures, the revised estimate has also been excluded.
Third-party legal and advisory costs relating to the 2021 FSP were excluded from adjusted measures in 2021. During 2022, £200,000
was released from an accrual made in respect of these costs relating to indirect tax, which has been excluded this year.
In 2022, the Company agreed to an augmentation of UK defined benefit pension scheme members’ benefits. This was effected in
the scheme Rules through a Deed of Amendment to the Trust Deed and Rules, signed by the Trustees and Company on 20 June
2022, therefore relates to a matter which is not expected to frequently recur. The impact on liabilities of this plan amendment, totalling
£11,695,000, have therefore been recognised as a past service cost, reported separately in the Consolidated income statement and
excluded from adjusted profit measures. See note 23 for further detail.
Notes continued
Financial statements
166
Renishaw plc Annual Report 2022
29. Alternative performance measures (continued)
From 2017, the gains and losses from the fair value of financial instruments not effective for cash flow hedging have been excluded
from statutory profit before tax, statutory earnings per share and statutory operating profit in arriving at Adjusted profit before tax,
Adjusted earnings per share and Adjusted operating profit to reflect the Board’s intent that the instruments would provide effective
hedges. This is classified as ‘Fair value (gains)/losses on financial instruments not eligible for hedge accounting (i)’ in the following
reconciliations. The amounts shown as reported in revenue represent the amount by which revenue would change had all the
derivatives qualified as eligible for hedge accounting.
Gains and losses which recycle through the Consolidated income statement as a result of contracts deemed ineffective during 2020,
as described in note 25, are also excluded from adjusted profit measures, on the basis that all forward contracts are still expected
to be effective hedges for Group revenue, while the potentially high volatility in fair value gains and losses relating to these contracts
will otherwise cause confusion for users of the financial statements wishing to understand the underlying trading performance
of the Group. This is classified as ‘Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii)’ in the
following reconciliations.
The Board considers these alternative performance measures to be more relevant and reliable in evaluating the
Group’s performance.
Adjusted profit before tax:
2022
£’000
2021
£’000
Statutory profit before tax 145,586 139,439
Revised estimate of 2020 restructuring provisions (1,688) −
Third-party FSP costs (200) 3,222
UK defined benefit pension scheme past service cost 11,695 −
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (i):
– reported in revenue 2,621 1,882
– reported in (gains)/losses from the fair value of financial instruments (1,138) 846
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue (4,685) (2,899)
– reported in (gains)/losses from the fair value of financial instruments 11,551 (22,824)
Adjusted profit before tax 163,742 119,666
Adjusted earnings per share:
2022
pence
2021
pence
Statutory earnings per share 165.4 153.2
Revised estimate of 2020 restructuring provisions (0.3) −
Third-party FSP costs (1.9) 4.4
UK defined benefit pension scheme past service cost 13.0 −
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (i):
– reported in revenue 2.9 2.1
– reported in (gains)/losses from the fair value of financial instruments (1.3) 0.9
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue (5.2) (3.2)
– reported in (gains)/losses from the fair value of financial instruments 12.9 (25.4)
Adjusted earnings per share 185.5 132.0
Adjusted operating profit:
2022
£’000
2021
£’000
Statutory operating profit 143,250 138,341
Revised estimate of 2020 restructuring provisions (1,688) −
Third-party FSP costs (200) 3,222
UK defined benefit pension scheme past service cost 11,695 −
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (i):
– reported in revenue 2,621 1,882
– reported in (gains)/losses from the fair value of financial instruments (1,138) 846
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue (4,685) (2,899)
– reported in (gains)/losses from the fair value of financial instruments 11,551 (22,824)
Adjusted operating profit 161,406 118,568
Strategic Report Governance Financial statements Shareholder information
167
Renishaw plc Annual Report 2022
29. Alternative performance measures (continued)
Adjustments to the segmental operating profit:
Manufacturing technologies
2022
£’000
2021*
£’000
Operating profit before losses from fair value of financial instruments and
UK defined benefit pension scheme past service cost 162,549 111,978
Revised estimate of 2020 restructuring provisions (1,688) −
Third-party FSP costs (197) 3,061
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (i):
– reported in revenue 2,576 1,797
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue (4,605) (2,734)
Adjusted manufacturing technologies operating profit 158,635 114,102
Analytical instruments and medical devices
2022
£’000
2021*
£’000
Operating profit before losses from fair value of financial instruments and
UK defined benefit pension scheme past service cost 2,809 4,385
Third-party FSP costs (3) 161
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (i):
– reported in revenue 45 86
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue (80) (166)
Adjusted analytical instruments and medical devices operating profit 2,771 4,466
* Results relating to sales of additive manufacturing machines to medical and dental customers are no longer recognised in the
Analytical instruments and medical devices operating segment. Comparative figures have been reclassified accordingly, see note 2.
30. Cessation of operations in Russia
The Group has now ceased all operations in Russia, which were previously carried out through our wholly owned subsidiary, OOO
Renishaw. This has not been classified as a discontinued operation as the results of the company were not material to the Group.
Following the start of the Russian invasion of Ukraine in February 2022, the Group immediately took measures to reduce its
operations in Russia through its wholly owned subsidiary, OOO Renishaw. This included:
– stopping the supply of goods from the Renishaw Group to OOO Renishaw;
– returning advanced payments to customers where local stock was not available to fulfil orders;
– giving notice on the leased office property in Moscow, which was vacated in August 2022; and
– relocating or offering redundancy to all employees of OOO Renishaw.
By 30 June 2022, all trading operations had ceased, and by August 2022 the subsidiary was effectively wound up. The following
amounts were recognised in 2022 accordingly:
– cash held locally, with an equivalent value of £1,392,000, was unable to be repatriated and has been fully impaired;
– outstanding amounts relating to the leased property equivalent to £1,985,000 were released from lease liabilities, with a
corresponding impairment to the right-of-use asset of £1,837,000;
– fixed assets mostly relating to fit-out and furnishings of the leased property were impaired, totalling £636,000;
– remaining net assets of the subsidiary equivalent to £98,000 were impaired; and
– cumulative translation losses relating to the company on consolidation, totalling £575,000, were removed from the currency
translation reserve and realised in the Consolidated income statement, according to IAS 21.
The net impact on the Consolidated income statement in 2022 totalled £2,553,000, and net assets and equity relating to OOO
Renishaw totalled nil at 30 June 2022. There is not expected to be any impact of operations in Russia on future financial statements.
Notes continued
Financial statements
168
Renishaw plc Annual Report 2022
notes
2022
£’000
2021
£’000
Assets
Property, plant and equipment C.32 133,171 136,091
Right-of-use assets 1,814 1,828
Investment property 5,657 −
Intangible assets C.33 28,442 29,228
Investments in subsidiaries C.34 288,174 288,548
Investments in associates and joint ventures C.35 1,453 1,453
Long-term loans to Group undertakings 95,919 89,621
Employee benefits C.41 40,331 −
Derivatives 25 − 12,484
Total non-current assets 594,961 559,253
Current assets
Inventories C.37 100,034 68,462
Trade receivables C.38 81,864 68,309
Short-term loans to Group undertakings 774 725
Short-term loans to associates and joint ventures 302 598
Current tax 7,501 674
Other receivables 18,437 22,409
Derivatives 25 7,121 9,639
Pension scheme cash escrow account 23 − 10,578
Bank deposits 15 100,000 120,000
Cash and cash equivalents 111,162 53,921
Total current assets 427,195 355,315
Current liabilities
Trade payables 21,618 16,408
Short-term loans from Group undertakings 1,026 5,956
Provisions C.39 3,727 5,795
Lease liabilities 15 8
Derivatives 25 17,890 5,594
Other payables C.40 54,046 51,176
Total current liabilities 98,322 84,937
Net current assets 328,873 270,378
Non-current liabilities
Employee benefits C.41 − 19,163
Deferred tax liabilities C.36 24,944 11,687
Lease liabilities 1,797 1,806
Long-term loans to Group undertakings 346 313
Derivatives 25 9,463 355
Total non-current liabilities 36,550 33,324
Total assets less total liabilities 887,284 796,307
Equity
Share capital C.42 14,558 14,558
Share premium 42 42
Own shares held 26 (750) (404)
Cash flow hedging reserve 26 (10,923) 11,345
Retained earnings 884,077 770,262
Other reserve 280 504
Total equity 887,284 796,307
The Company reported a profit for the financial year ended 30 June 2022 of £115,520,000 (2021: £149,434,000).
These financial statements were approved by the Board of Directors on 15 September 2022 and were signed on its behalf by:
Sir David McMurtry Allen Roberts
Directors
Company balance sheet
at 30 June 2022
Strategic Report Governance Financial statements Shareholder information
169
Renishaw plc Annual Report 2022
Year ended 30 June 2021
Share
capital
£’000
Share
premium
£’000
Own
shares
held
£’000
Cash flow
hedging
reserve
£’000
Retained
earnings
£’000
Other
reserve
£’000
Total
£’000
Balance at 1 July 2020 14,558 42 (404) (30,455) 605,137 331 589,209
Profit for the year − − − − 149,434 − 149,434
Other comprehensive income andexpense (net of tax)
Remeasurement of defined benefit pension scheme liabilities − − − − 25,880 − 25,880
Changes in fair value of cash flow hedges − − − 41,800 − − 41,800
Total other comprehensive income andexpense − − − 41,800 25,880 − 67,680
Total comprehensive income andexpense − − − 41,800 175,314 − 217,114
Share-based payments charge − − − − − 173 173
Dividends paid − − − − (10,189) − (10,189)
Balance at 30 June 2021 14,558 42 (404) 11,345 770,262 504 796,307
Year ended 30 June 2022
Profit for the year − − − − 115,520 − 115,520
Other comprehensive income andexpense (net of tax)
Remeasurement of defined benefit pension scheme liabilities − − − − 47,789 − 47,789
Changes in fair value of cash flow hedges − − − (22,268) − − (22,268)
Total other comprehensive income andexpense − − − (22,268) 47,789 − 25,521
Total comprehensive income andexpense − − − (22,268) 163,309 − 141,041
Share-based payments charge − − − − − 180 180
Own shares transferred on vesting − − 404 − − (404) −
Own shares purchased − − (750) − − − (750)
Dividends paid − − − − (49,494) − (49,494)
Balance at 30 June 2022 14,558 42 (750) (10,923) 884,077 280 887,284
Company statement of changes in equity
for the year ended 30 June 2022
Financial statements
170
Renishaw plc Annual Report 2022
Notes to the Company financial statements
C.31. 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 were prepared in accordance with the Companies Act 2006 and Financial Reporting Standard 101
‘Reduced Disclosure Framework’ (FRS 101).
The Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
– a cash flow statement and related notes;
– comparative period reconciliations for share capital, tangible fixed assets and intangible fixed assets;
– disclosures in respect of transactions with wholly-owned subsidiaries;
– disclosures in respect of capital management;
– the effects of new but not yet effective IFRS; and
– disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements of the Company include the equivalent disclosures, the Company has also taken the
exemptions under FRS 101 available in respect of certain disclosures required by IFRS 13 ‘Fair Value Measurement’ and the
disclosures required by IFRS 7 ‘Financial Instruments: Disclosures’.
The financial statements have been prepared on the historical cost basis, except for the fair value of financial instruments.
Historical cost is based on the fair value of the consideration given in exchange for the assets. The principal accounting policies are
set out below.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and
loss account.
Critical accounting judgements and estimation uncertainties
The areas of key estimation uncertainty and critical accounting judgement that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities inthenext financial year for the Company are consistent with those of the
Group, as summarised on page 134.
Going concern
In preparing these financial statements, the Directors have adopted the going concern basis. The decision to adopt the going
concern basis was made as part of the assessment of the Group’s going concern status, details of which are set out on page 135.
Having considered the impact on the Company of the same factors set out on page 135, and the Company’s business model, risk
management and principal risks, and significant financial resources and cash balances, the Directors have a reasonable expectation
that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to 30 September 2023.
Accordingly, they continue to adopt the going concern basis in preparing these financial statements.
Investments
Investments in subsidiary and associated undertakings are stated at cost less any provision for permanent impairment losses.
Property, plant and equipment, and depreciation
Property, plant and equipment 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 25 years;
– motor vehicles, 3 to 4 years; and
– no depreciation is provided on freehold land.
Inventories
Inventories are valued at the lower of actual cost (on a FIFO basis) and net realisable value. Cost comprises direct materials and
labour plus overheads applicable to the stage of manufacture reached.
Research and development
Expenditure on research activities is recognised in the 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 Company intends and has the
technical ability and sufficient resources to complete development, future economic benefits are probable and the Company can
measure reliably the expenditure attributable to the intangible asset during its development.
Strategic Report Governance Financial statements Shareholder information
171
Renishaw plc Annual Report 2022
Notes to the Company financial statements continued
C.31. Accounting policies (continued)
Taxation
The charge for taxation is based on the Company’s profit for the year. 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.
Deferred tax assets are recognised to the extent that it is regarded as probable that they will be recovered.
Employee benefits
The Company operated a contributory pension scheme, of the defined benefit type up to 5 April 2007, after which this scheme was
closed for future accruals to existing members and was closed to new members. Since 5 April 2007, the Company has operated a
defined contribution scheme.
The scheme is administered by trustees who are independent of the Company finances.
Pension scheme assets in the defined benefit scheme are measured at fair value 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. Where a guarantee is in place in relation to a pension scheme deficit, liabilities are reported in accordance
with IFRIC 14. To the extent that contributions payable will not be available as a refund after they are paid into the plan, a liability is
recognised at the point the obligation arises, which is the point at which the minimum funding guarantee is agreed.
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 performance bonuses, if applicable.
Derivative financial instruments
In accordance with its treasury policy, the Company does not hold or issue derivative financial instruments for speculative 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 at fair value, being the estimated amount that the Company
would pay or receive to terminate them at the balance sheet date based on prevailing foreign currency rates. Changes in the fair
value of foreign currency derivatives which are designated and effective as hedges of future cash flows are recognised in Other
comprehensive income and in the currency hedging reserve, and subsequently transferred to the carrying amount of the hedged
item or the income statement. The ineffective part of any gain or loss is recognised in the income statement immediately.
Other financial instruments
Loans to associates and joint ventures are initially recognised at fair value and are subsequently held at amortised cost.
Loans to Group undertakings are initially recognised at fair value and are subsequently held at amortised cost using the effective
interest rate method. Where such intercompany loans are repayable on demand the Company determines whether any impairment
provision is required by assessing the company’s ability to repay the loan. Where it is determined that a recipient company does
not have the capacity to repay the loan at the balance sheet date, or the loan is not repayable on demand, an expected credit loss
model is used to calculate the impairment provision required.
Trade and other current receivables are initially recognised at fair value and are subsequently held at amortised cost less any
provision for bad and doubtful debts. Trade and other current payables are initially recognised at fair value and are subsequently
held at amortised cost.
Warranty on the sale of products
The Company provides a warranty from the date of purchase, except for those products that are installed by the Company where
the warranty starts from the date of completion of the installation. This is typically for a 12-month period, although up to three years is
given for a small number of products. A warranty provision is included in the accounts, which is calculated on the basis of historical
returns and internal quality reports.
Foreign currencies
Transactions in foreign currencies are translated at the rate of exchange prevailing 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
prevailing at that date. Foreign exchange differences arising on such translation are recognised in the income statement.
Financial statements
172
Renishaw plc Annual Report 2022
C.32. Property, plant and equipment
Year ended 30 June 2022
Freehold
land and
buildings
£’000
Plant and
equipment
£’000
Motor
vehicles
£’000
Assets in the
course of
construction
£’000
Total
£’000
Cost
At 1 July 2021 112,744 183,637 3,582 5,020 304,983
Additions 726 13,437 828 6,804 21,795
Transfers of assets in the course of construction 134 4,308 − (4,442) −
Transfers to Investment property (6,490) − − − (6,490)
Disposals − (413) (567) − (980)
At 30 June 2022 107,114 200,969 3,843 7,382 319,308
Depreciation
At 1 July 2021 22,500 143,175 3,217 − 168,892
Charge for the year 2,473 15,589 832 − 18,894
Transfers to Investment property (723) − − − (723)
Released on disposals − (359) (567) − (926)
At 30 June 2022 24,250 158,405 3,482 − 186,137
Net book value
At 30 June 2022 82,864 42,564 361 7,382 133,171
At 30 June 2021 90,244 40,462 365 5,020 136,091
At 30 June 2022, properties with a net book value of £54,208,000 (2021: £81,769,000) were subject to a fixed charge to secure the
UKdefined benefit pension scheme liabilities. See note 23 for additional information.
Additions to assets in the course of construction comprise:
2022
£’000
2021
£’000
Freehold land and buildings 826 220
Plant and equipment 5,978 2,423
6,804 2,643
C.33. Intangible assets
Year ended 30 June 2022
Goodwill
£’000
Internally
generated
development
costs
£’000
Software
licences,
intellectual
property and
other intangible
assets
£’000
Total
£’000
Cost
At 1 July 2021 9,305 172,026 28,181 209,512
Additions − 7,661 584 8,245
Write-off − − (3,510) (3,510)
Disposals − (17,303) − (17,303)
At 30 June 2022 9,305 162,384 25,255 196,944
Depreciation
At 1 July 2021 9,305 150,358 20,621 180,284
Charge for the year − 4,430 1,091 5,521
Disposals − (17,303) − (17,303)
At 30 June 2022 9,305 137,485 21,712 168,502
Net book value
At 30 June 2022 − 24,899 3,543 28,442
At 30 June 2021 − 21,668 7,560 29,228
Disposals of internally generated development costs have been recognised during the year in accordance with the Company’s
and Group’s accounting policy to remove capitalised development expenditure from the balance sheet 10 years after being
fully amortised.
Strategic Report Governance Financial statements Shareholder information
173
Renishaw plc Annual Report 2022
Notes to the Company financial statements continued
C.34. Investments in subsidiaries
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 288,548 288,548
Additions − −
Impairment (374) −
Balance at the end of the year 288,174 288,548
Details of the Company’s subsidiaries are given in note C.45.
C.35. Investments in associates and joint ventures
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 1,453 2,999
Additions − 749
Impairment − (2,295)
Balance at the end of the year 1,453 1,453
Details of the Company’s associates and joint ventures are given in note C.46.
In January 2022 an agreement was reached between the Company and Meggitt plc for the sale of the Company’s 33.33%
shareholding in HiETA Technologies Limited to Meggitt plc. The investment had a value of nil at 30 June 2022.
C.36. Deferred tax
Balances at the end of the year were:
2022 2021
Assets
£’000
Liabilities
£’000
Net
£’000
Assets
£’000
Liabilities
£’000
Net
£’000
Property, plant and equipment − (15,792) (15,792) − (14,295) (14,295)
Intangible assets − (2,311) (2,311) − (1,986) (1,986)
Defined benefit pension scheme − (10,474) (10,474) 3,877 − 3,877
Derivatives 3,508 − 3,508 − (2,930) (2,930)
Losses − − − 3,299 − 3,299
Other 125 − 125 348 − 348
Balance at the end of the year 3,633 (28,577) (24,944) 7,524 (19,211) (11,687)
Deferred tax assets and liabilities are offset where there is a legally enforceable right of offset and there is an intention to net settle
the balances. After taking these offsets into account, the net position of £24,944,000 liability (2021: £11,687,000 liability) is presented
as a deferred tax liability in the Company’s balance sheet. Where deferred tax assets are recognised, the Directors are of the
opinion, based on recent and forecast trading, that the level of profits in current and future years make it more likely than not that
these assets will be recovered.
Movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year (11,687) 18,509
Movements during the year (13,257) (30,196)
Balance at the end of the year (24,944) (11,687)
C.37. Inventories
An analysis of inventories at the end of the year was:
2022
£’000
2021
£’000
Raw materials 43,845 28,463
Work in progress 30,672 21,406
Finished goods 25,517 18,593
Balance at the end of the year 100,034 68,462
Financial statements
174
Renishaw plc Annual Report 2022
C.38. Trade receivables
An analysis of trade receivables at the end of the year was:
2022
£’000
2021
£’000
Trade receivables 13 46
Amounts owed by Group undertakings 81,851 68,263
Balance at the end of the year 81,864 68,309
C.39. Provisions
Warranty provision movements during the year were:
2022
£’000
2021
£’000
Balance at the beginning of the year 5,795 1,681
Created in the year 1,860 5,881
Unused amounts reversed (1,688) −
Used in the year (2,240) (1,767)
(2,068) 4,114
Balance at the end of the year 3,727 5,795
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. See note 17 for further detail.
C.40. Other payables
An analysis of other payables due within one year at the end of the year was:
2022
£’000
2021
£’000
Amounts owed to Group undertakings 26,373 28,384
Amounts owed to associated undertakings and joint ventures 150 130
Other taxes and social security 3,849 3,235
Other creditors and accruals 23,677 19,427
Balance at the end of the year 54,049 51,176
Other creditors and accruals includes £10,054,000 (2021: £8,361,000) relating to performance bonus accruals.
C.41. Employee benefits
The Company operated a defined benefit pension scheme, which, at 5 April 2007, ceased any future accrual for current members
andwas closed to new members. Employees of the Company are now covered by a defined contribution scheme. See note 23
regarding details of charges relating to the UK defined benefit pension scheme liabilities.
The total pension cost of the Company for the year was £15,891,000 (2021: £13,768,000), of which £121,000 (2021: £111,000)
related toDirectors. The latest full actuarial valuation of the scheme was carried out at 30 September 2021 and updated to 30 June
2022 by a qualified independent actuary.
The major assumptions used by the actuary for the scheme were:
30 June 2022 30 June 2021
Rate of increase in pension payments 3.05% 3.10%
Discount rate 3.60% 1.85%
Inflation rate (RPI) 3.10% 3.20%
Inflation rate (CPI) 2.10% 2.20%
Retirement age 64 64
The mortality assumption used for 2022 is the S3PxA base tables and CMI 2021 model, with long-term improvements of 1% per
annum. Adjustments have been made to both the core base tables and CMI 2021 model to allow for the scheme’s membership
profile and best estimate assumptions of future mortality improvements. The weighted average duration of the defined benefit
scheme obligation is around 22 years. See note 23 for further details of mortality assumptions and sensitivities.
Strategic Report Governance Financial statements Shareholder information
175
Renishaw plc Annual Report 2022
Notes to the Company financial statements continued
C.41. Employee benefits (continued)
The assets and liabilities in the scheme were:
30 June
2022
£’000
% of
total
assets
30 June
2021
£’000
% of
total
assets
Market value of assets:
Equities 102,859 53 127,456 62
Multi-asset fund 79,613 41 60,220 29
Credit and fixed income funds 9,147 5 10,758 5
Index linked gilts 1,489 1 1,843 1
Cash and other 754 0 4,682 3
193,862 100 204,959 100
Actuarial value of liabilities (153,531) − (224,122) −
Surplus/(deficit) in the scheme 40,331 − (19,163) −
Deferred tax thereon (10,474) − 3,877 −
All equities have quoted prices in active markets in the UK, North America, Europe, Asia Pacific, Japan and emerging markets.
The movements in the scheme were:
Year ended 30 June 2022
Assets
£’000
Liabilities
£’000
Total
£’000
Deficit in scheme at the beginning of the year 204,959 (224,122) (19,163)
Contributions 8,702 − 8,702
Interest on pension scheme 3,812 (4,086) (274)
Remeasurement loss from augmentation of members’ benefits − (11,695) (11,695)
Remeasurement gain/(loss) under IAS 19, the asset ceiling and IFRIC 14 (16,809) 79,570 62,761
Benefits paid (6,802) 6,802 −
Surplus in scheme at the end of the year 193,862 (153,531) 40,331
Year ended 30 June 2021
Assets
£’000
Liabilities
£’000
Total
£’000
Deficit in scheme at the beginning of the year 162,940 (221,566) (58,626)
Contributions 8,702 − 8,702
Interest on pension scheme 2,471 (3,286) (815)
Remeasurement loss from GMP equalisation − (78) (78)
Remeasurement gain/(loss) under IAS 19, the asset ceiling and IFRIC 14 35,970 (4,316) 31,654
Benefits paid (5,124) 5,124 −
Deficit in scheme at the end of the year 204,959 (224,122) (19,163)
The analysis of the amount recognised in Other comprehensive income and expense was:
2022
£’000
2021
£’000
Actuarial gain/(loss) arising from:
Changes in demographic assumptions 3,987 (2,839)
Changes in financial assumptions 59,797 4,045
Experience adjustment (7,072) 2,621
Adjustment related to the application of revaluation and late retirement factors − 14,300
Return on plan assets excluding interest income (16,809) 35,970
Adjustment for the asset ceiling 3,280 (3,280)
Adjustment to liabilities for IFRIC 14 19,578 (19,163)
Total recognised in the Other comprehensive income and expense 62,761 31,654
C.42. Share capital
2022
£’000
2021
£’000
Allotted, called-up and fully paid 72,788,543 ordinary shares of 20p each 14,558 14,558
The ordinary shares are the only class of share in the Company. Holders of ordinary shares are entitled to vote at general meetings
of the Company and receive dividends as declared. The Articles of Association of the Company do not contain any restrictions on
the transfer of shares nor on voting rights.
Financial statements
176
Renishaw plc Annual Report 2022
C.43. Related parties
During the year, related parties, these being the Group’s associates and joint ventures (see note 13), had the following transactions
and balances with the Company:
Joint ventures Associate
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Purchased goods and services from the Company during the year 76 99 209 78
Sold goods and services to the Company during the year 3,898 3,618 − −
Paid dividends to the Company during the year − − − −
Amounts owed by the Company at the year end 150 130 − −
Loans owed to the Company at the year end 350 598 − –
C.44. Capital commitments
Capital commitments at the end of the year, for which no provision has been made in the financial statements, were:
2022
£’000
2021
£’000
Authorised and committed 87,299 2,555
C.45. Subsidiary undertakings
The following are the subsidiary undertakings of Renishaw plc as at 30 June 2022, all of which are wholly-owned and held by
a subsidiary undertaking, unless otherwise stated. The country in which each subsidiary has its registered/principal office is its
domicile and country of incorporation. The accounting year-end for each subsidiary undertaking is 30 June unless otherwise stated.
The shareholdings in all the subsidiary undertakings are in the ordinary share capital of those undertakings. The principal activities
for all the subsidiary undertakings are those of the Company, as set out in the Other statutory and regulatory disclosures on page
111, except as indicated below:
D
Dormant company
^
31 December year end
H
Holding company
†
Ordinary-A shares
T
Travel agency
‡
Ordinary-C shares
* 31 March year end
Company Registered Office
Owned by Renishaw plc
MTT Investments Limited
D
New Mills, Wotton-under-Edge, Gloucestershire, GL12 8JR
United Kingdom
Renishaw Advanced Materials Limited
D
Renishaw International Limited
H
Renishaw Medical Limited
D
Renishaw PT Limited
D
Renishaw Software Limited
D
Renishaw Transducer Systems Limited
D
Renishaw UK Sales Limited
Wotton Travel Limited
T
Measurement Devices Limited
D
Research Park North, Riccarton, Edinburgh, Scotland, EH14 4AP
United Kingdom
Renishaw Diagnostics Limited
†‡
(92.4%)
Renishaw Tehnicni Inženiring d.o.o. 4th Floor, Faculty of Electrical Engineering, University of Ljubljana,
Tržaška cesta 25, Ljubljana, 1000
Slovenia
Renishaw Neuro Solutions Limited Wotton Road, Charfield, Wotton-under-Edge, Gloucestershire,
GL128SP
United Kingdom
Strategic Report Governance Financial statements Shareholder information
177
Renishaw plc Annual Report 2022
Notes to the Company financial statements continued
Company Registered Office
Owned by MTT Investments Limited
MTT Technologies Limited
D
New Mills, Wotton-under-Edge, Gloucestershire, GL12 8JR
United Kingdom
Owned by Renishaw International Limited
itp GmbH Rathausstraße 75-79, 66333, Völklingen
Germany
OOO Renishaw
^
Kantemirovskaya Ulitsa, 58, 115477, Moskva,
Russian Federation
Renishaw (Austria) GmbH Industriestraße 9, Top 4.2, 2353, Guntramsdorf
Austria
Renishaw (Canada) Limited 2196 Dunwin Drive, Mississauga, Ontario, L5L 1C7
Canada
Renishaw (Hong Kong) Limited Ever Gain Plaza Tower 2, 28/F, 88 Container Port Road, KwaiChung
Hong Kong
Renishaw (Ireland) DAC Swords Business Park, Mountgorry, Swords, County Dublin,
K67 FX67
Ireland
Renishaw (Israel) Limited HaTnufa Street 3, Kraytek Building, PO Box 4, Yokne’am Illit, 2069204
Israel
Renishaw (Korea) Limited RM#1314, Woolim e-Biz Center, 28 Digital-ro 33-gil, Guro-gu, Seoul
Republic of Korea
Renishaw AB Biskop Henriks väg 2, 176 76, Järfälla
Sweden
Renishaw AG Stachelhofstrasse 2, 8854, Siebnen, Schübelbach
Switzerland
Renishaw ApS c/o Azets Insight A/S, Lyskær 3CD, Lyskær 3, 2730, Herlev
Denmark
Renishaw Benelux BV Nikkelstraat 3, 4823 AE, Breda
Netherlands
Renishaw GmbH (5.1% owned by Renishaw plc) Karl-Benz Straße 12, 72124, Pliezhausen
Germany
Renishaw Healthcare, Inc. c/o C T Corporation System (Chicago), 208 South LaSalle Street,
Suite 814, Cook County, Chicago IL 60604
United States
Renishaw Hungary Kft Gyár utca 2, Budaörs, 2040
Hungary
Renishaw Ibérica S.A.U. Gavà Park, Carrer de la Recerca, 7, Gavà, 08850, Barcelona
Spain
Renishaw K.K. 4 Chome-29-8 Yotsuya, Shinjuku-ku, Tokyo, 160-0004
Japan
Renishaw Latino Americana Ltda.
^
Calçada dos Cravos, 141, Alphaville Comercial, Barueri,
São Paulo, 06453-053
Brazil
Renishaw Metrology Systems Limited* S.No.283, Hissa no.2, S.No.284, Hissa no.2 & 3A, Raisoni Industrial
Estate, Village Mann, Taluka Mulshi, Pune, 411057
India
Renishaw México S. de R.L. de C.V.
^
(0.001% owned by
Renishaw, Inc.)
Iridium 5004, Parque Industrial Milenium, Apodoca, Nuevo León,
66600
Mexico
C.45. Subsidiary undertakings (continued)
Financial statements
178
Renishaw plc Annual Report 2022
Company Registered Office
Renishaw Oceania Pty Limited c/o KPMG, Tower Two, Collins Square, 727 Collins Street, Docklands
VIC 3008
Australia
Renishaw Oy c/o WaBuCo Oy, Energiakuja 3, Helsinki, 00180
Finland
Renishaw S.A.S. 15 Rue Albert Einstein, 77420, Champs-sur-Marne
France
Renishaw S.p.A. Via dei Prati 5, 10044 Pianezza, Torino
Italy
Renishaw s.r.o. Olomoucká 1164/85, Brno-Černovice, Brno, 627 00
Czech Republic
Renishaw Sp. z o.o. ul. Osmańska 12, 02-823, Warszawa
Poland
Renishaw SRL (0.1% owned by Renishaw UK Sales Limited) Section A.2.13, 2nd Floor, Building A, Central Business Park,
Calea Șerban Vodă 133, București, 040205
Romania
Renishaw Teknoloji Çözümleri LŞ Turgut Özal Blv. No:193, Şerifali Mahallesi, Dudullu Osb, Ümraniye,
İstanbul, 34775
Turkey
Renishaw US Holdings, Inc.
H
c/o The Corporation Trust Company, 1209 Orange Street -
Corporation Trust Center, New Castle County,
Wilmington DE 19801
United States
Renishaw, Inc. c/o C T Corporation System (Chicago), 208 South LaSalle Street,
Suite 814, Cook County, Chicago IL 60604
United States
Owned by Renishaw (Hong Kong) Limited
Renishaw (Malaysia) Sdn. Bhd. Upper Penthouse, Wisma RKT, 2, Jalan Raja Abdullah, Chow Kit,
50300 Kuala Lumpur, Wilayah Persekutuan
Malaysia
Renishaw (Shanghai) Management Company Limited
^
288 Jiang Chang San Lu, Zhabei Qu, Shanghai, 20436
China
Renishaw (Shanghai) Trading Company Limited
^
286 Jiang Chang San Lu, Zhabei Qu, Shanghai, 20436
China
Renishaw (Singapore) PTE Limited 988 Toa Payoh North, #06-07/08, 319002
Singapore
Renishaw (Taiwan) Inc 2F. No. 2, Jingke 7th Road, Nantun District, Taichung, 40852
Taiwan
C.45. Subsidiary undertakings (continued)
Strategic Report Governance Financial statements Shareholder information
179
Renishaw plc Annual Report 2022
Company Registered Office
Owned by Renishaw US Holdings, Inc.
Renishaw Fixturing Solutions, LLC c/o The Corporation Company, 40600 Ann Arbor Road East,
Suite 201, Plymouth, MI, 48170
United States
Renishaw Properties, Inc. c/o The Corporation Trust Company, 1209 Orange Street -
Corporation Trust Center, New Castle County, Wilmington DE 19801
United States
Owned by Renishaw (Ireland) DAC
Renishaw Mayfield SA Stachelhofstrasse 2, 8854, Siebnen, Schübelbach
Switzerland
Owned by Renishaw Mayfield SA
Renishaw Mayfield SARL 31 Rue Ampère, 69680, Chassieu
France
Owned by Renishaw Medical Limited
Renishaw Medical AM Solutions Limited
D
New Mills, Wotton-under-Edge, Gloucestershire, GL12 8JR
United Kingdom
C.46. Associated undertakings and joint ventures
The following are the associated undertakings and joint ventures of Renishaw plc at 30 June 2022. The country in which each
entity has its registered/principal office is its domicile and country of incorporation. The accounting year-end for each associate
undertaking and joint venture is 30 June unless otherwise stated. The shareholdings in all the associated undertakings are in the
ordinary share capital of those undertakings unless otherwise stated. The principal activities for all the associate undertakings and
joint ventures are those of the Company, as set out in the Other statutory and regulatory disclosures on page 111.
Company Registered Office
Owned by Renishaw plc
Metrology Software Products Limited (70%) 6F Greensfield Court, Alnwick, Northumberland, NE66 2DE
United Kingdom
Owned by Renishaw International Limited
RLS Merilna tehnika d.o.o. (50%) Poslovna cona Žeje pri Komendi, Pod vrbami 2, Komenda,
1218Slovenia
C.45. Subsidiary undertakings (continued)
Notes to the Company financial statements continued
Financial statements
180
Renishaw plc Annual Report 2022
Results
note
2022
£’000
note
2021
£’000
note
2020
£’000
note
2019
£’000
note
2018
£’000
note
2017
£’000
note
2016
£’000
2015
£’000
note
2014
£’000
note
2013
£’000
Overseas revenue 639,540 538,636 482,784 539,915 580,940 509,212 404,472 469,221 331,682 326,213
UK and Ireland revenue 31,536 26,923 27,431 34,044 30,567 27,595 22,752 25,499 23,816 20,668
Total revenue 671,076 565,559 510,215 573,959 611,507 536,807 427,224 494,720 355,498 346,881
Adjusted operating profit 161,406 118,568 51,700 93,711 143,045 108,733 86,952 143,924 70,388 79,071
Adjusted profit before tax 163,742 119,666 48,614 103,862 145,081 109,079 87,475 144,196 70,106 79,193
Taxation (excluding
adjusted items) 28,685 23,611 11,547 16,557 20,942 12,819 14,880 22,850 10,720 15,046
Profit for the year
(excluding adjusted items
and tax on adjusted items) 135,057 96,055 37,067 87,305 124,139 96,260 72,595 121,346 59,386 64,147
Capital employed
2022
£’000
2021
£’000
2020
£’000
2019
£’000
2018
£’000
2017
£’000
2016
£’000
2015
£’000
2014
£’000
2013
£’000
Share capital 14,558 14,558 14,558 14,558 14,558 14,558 14,558 14,558 14,558 14,558
Share premium 42 42 42 42 42 42 42 42 42 42
Reserves 800,570 688,730 532,264 568,677 533,994 429,214 366,785 413,918 336,163 262,119
Total equity 815,170 703,330 546,864 583,277 548,594 443,814 381,385 428,518 350,763 276,719
Statistics
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Overseas revenue
as a percentage of
total revenue 95.3% 95.2% 94.6% 94.1% 95.0% 94.9% 94.7% 94.8% 93.3% 94.0%
Adjusted earnings
pershare 185.5p 132.0p 51.0p 119.9p 170.5p 132.4p 100.4p 167.5p 82.3p 88.9p
Proposed dividend 72.6p 66.0p 0.0p 60.0p 60.0p 52.0p 48.0p 46.5p 41.2p 40.0p
Note
The results and adjusted earnings per share for the years 2013, 2014, 2016, 2017, 2018, 2019, 2020, 2021 and 2022 exclude certain items. These were: 2013 –
gain ondeferred consideration settlement (£2.9m); 2014 – profit on disposal of shareholding in Delcam plc (£26.3m); and 2016 (£25.8m pre tax loss), 2017 (£8.0m
pre tax gain), 2018 (£10.1m pre tax gain), 2019 (£6.1m pre tax gain), 2020 (£21.6m pre tax loss), 2021 (£23.0m pre tax gain) and 2022 (£8.3m pre-tax loss) – gains
and losses from financial instruments not effective for cash flow hedging; 2020 (£23.8m loss) and 2022 (£1.7m gain) – restructuring costs; 2021 (£3.2m loss) and
2022 (£0.2m gain) - third-party FSP costs; and 2022 - UK defined benefit pension scheme past service cost (£11.7m loss). No years prior to 2016 have been
adjusted for gains and/or losses from financial instruments not effective for cash flow hedging.
10-year financial record
Strategic Report Governance Financial statements Shareholder information
181
Renishaw plc Annual Report 2022
AGM – Annual General Meeting
AM – additive manufacturing (3D printing)
APAC – Asia Pacific
APMs – alternative performance measures
ASIC – application-specific integrated circuit
BEIS – Department for Business, Energy and
Industrial Strategy
Brexit – UK exit from the EU
Governance
Code
– UK Corporate Governance Code 2018
the Code – Group Business Code
Company – Renishaw plc
CMM – co-ordinate measuring machine
CNC – computer numerically controlled
CPI – consumer price index
DTR – the FCA’s Disclosure Guidance and
Transparency Rules
EBT – Employee Benefit Trust
EMEA – Europe, Middle East and Africa
enei – Employers Network for Equality & Inclusion
EPS – earnings per share
ERP – enterprise resource planning
EU – European Union
EUR – Euro
EY – Ernst & Young LLP
FCA – Financial Conduct Authority
FRC – Financial Reporting Council
FX – foreign exchange
GBP – Great British Pound or Pound Sterling
GHG – greenhouse gas
GMP – Guaranteed minimum pension
Group – Renishaw plc and its subsidiaries
H&S – health and safety
HKD – Hong Kong Dollar
HQ – headquarters
HR – human resources
IFRIC – International Financial Reporting
Interpretations Committee
IFRS – International Financial Reporting Standards
IOSH – Institution of Occupational Safety and Health
IP – intellectual property
IPCC – Intergovernmental Panel on Climate Change
JPY – Japanese Yen
KPI(s) – key performance indicator(s)
kW – kilowatt – an amount of power equal to
1,000 watts
kWh – kilowatt hour – an amount of energy
equivalent to delivering 1 kW of power for
an hour
LR – the FCA’s Listing Rules
M&A – mergers and acquisitions
NCI – non-controlling interest
OCI – other comprehensive income
P&L – profit and loss account
PBT – profit before tax
QA RA – Quality Assurance and Regulatory Affairs
RIS – Regulatory Information Service
R&D – research and development
RCC – Renishaw Charities Committee
RIDDOR – Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations 2013
RNS – Regulatory News Service
Scope 1 – Direct GHG emissions occur from sources
that are owned or controlled by the
Company, for example, emissions from
combustion in owned orcontrolled boilers,
generators, vehicles, etc
Scope 2 – GHG emissions from the generation
of purchased electricity consumed by
the Company
Scope 3 – indirect GHG emissions are a consequence
of the activities of the Company, but occur
from sources not owned or controlled by
the Company
SEEG – stereoelectroencephalography
SEM – scanning electron microscopy
STEM – science, technology, engineering
and mathematics
tCO
2
e – tonnes of carbon dioxide equivalent
TCFD – Task Force on Climate-related
Financial Disclosures
TPR – The Pensions Regulator
TSR – total shareholder return, calculated as
change in share price, assuming dividends
are immediately reinvested
WISE – Women Integrity for Society
Empowerment Organisation
UK – The United Kingdom of Great Britain and
Northern Ireland
USD/US$ – United States Dollar
US – United States of America
Glossary
Trade marks
The following registered and unregistered trade marks, which are owned by Renishaw plc and its subsidiaries, appear throughout
this Annual Report.
FORTiS™ Equator™ neuroinspire™ RESOLUTE™ neuromate
®
REVO
®
Virsa
TM
Shareholder information
182
Renishaw plc Annual Report 2022
Ordinary shares
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:
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Telephone: 0371 384 2169 (UK callers)
+44 121 415 7047 (international callers)
Website: www.shareview.co.uk
Calls are charged at the standard geographic rate.
Calls outside the UK will be charged at the applicable
international rate. Lines are open from 8:30am to 5:30pm
(UK time), Monday to Friday (excluding English and Welsh
public holidays).
AGM
Our 2022 AGM will be held on Wednesday 30 November
2022 at our headquarters at New Mills, Wotton-under-Edge,
Gloucestershire, GL12 8JR at 10am. Further details can be
found in the Notice of Meeting which is set out in a separate
circular to shareholders in due course. 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.
Financial reports
The Annual Report and copies of previous financial reports
are available at www.renishaw.com/investor. The half-year
results and the preliminary announcement of the full-year results
are published on our website promptly after they have been
released through aRegulatory Information Service.
Electronic communications
All shareholder communications, including the Company’s
Annual Report, are made available on the Renishaw website,
and you may opt to receive email notifications informing you
when shareholder communications are available to view and
download rather than receiving paper copies through the post.
Receiving communications electronically provides certain
advantages to shareholders and Renishaw, including accessing
documents more quickly, reducing our environmental impact
and reducing the cost of printing and delivery of documents.
If you would like to sign up for this service, visit Equiniti’s
Shareview Portfolio website. You may change the way you
receive communications at any time by contacting Equiniti.
Dividend mandate
Shareholders can arrange to have their dividends paid directly
into their bank or building society account by completing
a bank mandate form. This is the most secure and efficient
method of payment. A mandate form can be obtained from
Equiniti or you will find one on your last dividend confirmation.
Financial calendar
Annual General Meeting
30 November 2022
Half year
31 December 2022
Half-year results
February 2023
Trading update
May 2023
Interim dividend (provisional)
Ex-div date 9 March 2023
Record date 10 March 2023
Payment date 11 April 2023
Final dividend
Ex-div date 3 November 2022
Record date 4 November 2022
Payment date 5 December 2022
Registration details and CompanySecretary
General Counsel & Company Secretary
Jacqueline Conway
Registered office
Telephone: +44 (0)1453 524524
Email: companysecretary@renishaw.com
Website: www.renishaw.com/investor
Registered number
01106260 (England and Wales)
Auditor and corporate advisers
Auditor
Ernst & Young LLP
Solicitors
Norton Rose Fulbright LLP
Herbert Smith Freehills LLP
Corporate broker
UBS
Principal bankers
Lloyds Bank
BNP Paribas
HSBC
Shareholder information
Strategic Report Governance Financial statements Shareholder information
183
Renishaw plc Annual Report 2022
Shareholder profile
8
1
2
3
4
5
6
7
1
2
3
Share fraud
We are aware some of our shareholders have received
unsolicited calls or correspondence, offering to buy or sell
their shares for a price in excess of the current market price.
The callers can be very persuasive and extremely persistent
and often have professional websites and telephone numbers
to support their activities. These callers will sometimes imply a
connection to Renishaw and provide incorrect or misleading
information. Please be aware this is likely to be a scam – the
safest thing to do is hang up.
You are advised to be wary of unsolicited advice or offers to
buy shares. See www.fca.org.uk/scamsmart/how-avoid-
investment-scams for further advice.
Find out more or report suspected fraud to the FCA on their
consumer helpline 0800 111 6768 (overseas callers dial +44
207 066 1000) or using the share fraud reporting form available
at www.fca.org.uk/consumers/report-scam-us.
If you have already paid money to share fraudsters contact
Action Fraud on 0300 123 2040 (overseas callers dial
+44 300 123 2040) or their online fraud reporting tool at
www.actionfraud.police.uk/reporting-fraud-and-cyber-crime.
Shareholdings %
1 1 – 5,000 1.20
2 5,001 – 25,000 2.67
3 25,001 – 50,000 2.64
4 50,001 – 100,000 2.83
5 100,001 – 500,000 15.72
6 500,001 – 1,000,000 7.17
7 1,000,001 – 3,000,000 12.10
8 more than 3,000,000 55.67
Shareholdings %
1 Directors 52.85
2 Individuals 1.04
3 Institutions 46.11
Shareholder information continued
Shareholder information
184
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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