Final Results

Renishaw PLC 26 July 2006 26th July 2006 Renishaw plc and subsidiary undertakings Preliminary announcement of results for the year ended 30th June 2006 CONSOLIDATED INCOME STATEMENT 2006 2005 £'000 £'000 Revenue 175,835 154,799 Cost of sales (90,901) (80,912) --------- --------- Gross profit 84,934 73,887 --------- --------- Distribution costs (30,782) (26,815) Administration costs (18,684) (17,765) --------- --------- Operating profit 35,468 29,307 Financial income 6,507 5,732 Financial expenses (3,873) (3,306) --------- --------- Profit before tax 38,102 31,733 Income tax expense (7,621) (6,297) --------- --------- Profit for the year 30,481 25,436 --------- --------- ************************* Earnings per share (basic and diluted) 41.9p 34.9p Dividends per share 21.78p 19.80p CONSOLIDATED BALANCE SHEET at 30th June 2006 2005 £'000 £'000 Assets Property, plant and equipment 69,081 64,337 Intangible assets 12,543 7,192 Investment in associates 908 - Deferred tax assets 10,606 10,556 --------- --------- Total non-current assets 93,138 82,085 --------- --------- Current assets Inventories 28,359 27,396 Trade receivables 37,717 34,594 Current tax 183 310 Other receivables 6,320 2,790 Cash and cash equivalents 30,728 30,072 --------- --------- Total current assets 103,307 95,162 --------- --------- Total assets 196,445 177,247 --------- --------- Equity Issued capital 14,558 14,558 Share premium 42 42 Currency translation reserve 265 655 Cash flow hedging reserve 2,007 - Retained earnings 125,864 110,202 --------- --------- Total equity 142,736 125,457 --------- --------- Liabilities Employee benefits 18,838 20,700 Deferred tax liabilities 11,745 9,955 --------- --------- Total non-current liabilities 30,583 30,655 --------- --------- Current liabilities Trade payables 10,692 9,473 Current tax 1,402 2,572 Provisions 793 632 Other payables 10,239 8,458 --------- --------- Total current liabilities 23,126 21,135 --------- --------- Total liabilities 53,709 51,790 --------- --------- --------- --------- Total equity and liabilities 196,445 177,247 --------- --------- CONSOLIDATED STATEMENT OF CASH FLOW 2006 2005 £'000 £'000 Cash flows from operating activities Profit for the year 30,481 25,436 --------- --------- Adjustments for: Amortisation of development costs 1,397 1,376 Amortisation of other intangibles 703 673 Depreciation 7,840 7,001 Profit on sale of fixed assets (51) (61) Financial income (6,507) (5,732) Financial expenses 3,873 3,306 Tax expense 7,621 6,297 --------- --------- 14,876 12,860 --------- --------- Increase in inventories (963) (5,108) Increase in trade and other receivables (4,289) (4,222) Increase in trade and other payables 2,664 2,057 Difference between pension charge and (1,261) (190) contributions Increase in provisions 161 86 --------- --------- (3,688) (7,377) --------- --------- Income taxes paid (7,605) (4,487) --------- --------- --------- --------- Cash flows from operating activities 34,064 26,432 --------- --------- Investing activities Purchase of tangible fixed assets (12,816) (15,370) Development costs capitalised (3,227) (1,959) Purchase of other intangibles (4,217) (1,020) Investment in associates (928) - Sale of tangible fixed assets 399 325 Interest received 1,911 2,235 --------- --------- Cash flows from investing activities (18,878) (15,789) --------- --------- Financing activities Interest paid (15) (106) Dividends paid (14,853) (13,459) --------- --------- Cash flows from financing activities (14,868) (13,565) --------- --------- Net increase/(decease) in cash and cash 318 (2,922) equivalents Cash and cash equivalents at beginning of the year 30,072 32,833 Effect of exchange rate fluctuations on cash held 338 161 --------- --------- Cash and cash equivalents at end of the year 30,728 30,072 --------- --------- REVENUE ANALYSIS 2006 2006 at 2005 £'000 2005 exchange £'000 rates £'000 Continental Europe 58,945 58,026 57,665 Far East, including Japan & 53,130 53,239 43,092 Australia North & South America 46,708 43,890 39,605 Rest of World 5,539 5,518 4,076 UK and Ireland 11,513 11,513 10,361 --------- --------- --------- Total Group revenue 175,835 172,186 154,799 --------- --------- --------- ************************* NOTES: 1. The group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group') and equity account the Group's interest in associates. The group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ('adopted IFRS'). 2. The financial information set out above does not constitute the Company's statutory financial statements for the years ended 30th June 2006 or 30th June 2005 but is derived from those financial statements. Statutory financial statements for 2005 have been delivered to the Registrar of companies, whereas those for 2006 will be delivered following the Company's annual general meeting. The auditors have reported on those financial statements; their reports were unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 3. The proposed final dividend of 15.07 net per share for the year ended 30th June 2006 will be paid on 16th October 2006 to shareholders on the register on 15th September 2006. ************************** The Chairman's statement to be included in the 2006 Annual report and financial statements: I am pleased to report record results for the year ended 30th June 2006, both in revenue and profitability. These results and comparatives for the prior year have been prepared under the International Financial Reporting Standards (IFRS), as adopted by the EU. Revenue and Trading Revenue has increased by 13.6% to £175.8m (2005 £154.8m) with growth in all geographical regions, particularly notable being the Far East and North & South America increasing by 23% and 18% respectively. Revenue in all product lines grew with the sole exception of digitising where a large initial stock of dental demonstration products were delivered in the first half of 2005. Products reflecting significant growth include laser scale, machine tool, encoder and spectroscopy. Group revenue has benefited during the year to the extent of £2.9m due to more favourable currency exchange rates compared with the previous year and £1.4m (previous year £0.7m) currency hedging contracts. Profit Operating profit for the year has increased by 21% to £35.5m (2005 £29.3m). Profit before tax rose by 20% to £38.1m (2005 £31.7m) resulting in earnings per share up 20% at 41.9p (2005 34.9p). Manufacturing The group's production facilities in the UK have again undergone significant expansion. The manufacturing plant and machinery were successfully moved from New Mills to the company's facilities at Stonehouse with minimal disruption. The old machine hall at New Mills is now currently undergoing refurbishment to provide a pre-production machining and assembly facility, with completion scheduled for the end of July. At our Woodchester facility, 27,000 sq feet is being refurbished to provide both additional assembly space and a new automated storage facility for finished goods and components. The recently purchased facility in Pune, India, is currently being refurbished to provide additional and complementary production facilities and is due to be operational in September. Research and Development The group continues to expand its product range and a number of very promising new products have been introduced during the last 12 months, including the SiGNUMTM Intelligent Encoder with Fanuc serial output and RELM from our encoder product line.The GYROTM range of heads to complement the very well received REVOTM and RENSCAN5TM, were introduced at EMO held in Hannover in September 2005 by our co-ordinate measuring machine product line. The machine tool product line introduced the OMP400 high accuracy strain gauge probe and Productivity+TM Active Editor Pro for the graphical measurement cycle design environment. Further exciting developments have taken place in the dental field with the launch of the inciseTM scanning system for use by dental laboratories who are now being offered precision frameworks for crowns and bridges from the company's new dental manufacturing facility at Stonehouse. Total research and development expenditure during the year including engineering costs amounted to a record £29.3m (2005 £25.4m), of which £1.8m (2005 £0.5m) net of amortisation has been capitalised as an intangible asset in accordance with IFRS. Marketing The group continues its drive into developing markets with further sales and marketing representation, particularly in the growth markets of the Far East and India. In China, new offices have been established in Chengdu, Guangzhou and Shenyang, with an office in Qingdao about to open.There is now a representative office established in Thailand, with Malaysia to follow in the near future. A liaison office has also been established in Turkey. In India, additional staff have been recruited in Kolkatta, Punjab, Gujarat, Coimbatore, Hyderabad and Chennai and in Bangalore the staff have moved into larger premises. Investments In addition to the acquisition of a 50% interest in both PulseTeq Ltd and Metrology Software Products Ltd, reported at the half-year, the company purchased itp GmbH in May 2006. This is a German manufacturer of high quality styli and accessories, based in Volklingen, close to Saarbrucken on the German/ French border. itp GmbH designs and manufactures styli for touch trigger probe applications on co-ordinate measuring machines and CNC machine tools, plus styli for gear measurement systems and will further add to the company's market penetration of styli products. Queen's Award I am delighted to report that the company was granted a Queen's Award for Enterprise in the Innovations Category in respect of its NC1 and NC4 non-contact tool setting systems; these are used for the automatic setting of cutting tool parameters within the harsh environment of CNC machine tools, together with tool breakage detection. This is the eleventh Queen's Award in the company's history. Balance Sheet The group aims to operate with a strong balance sheet including good liquidity. Total capital expenditure for the year on tangible fixed assets amounted to £13.2m (2005 £14.9m), of which £3.5m (2005 £6.0m) was property. Net cash balances at the 30th June 2006 were £30.7m compared with £30.1m at June 2005. Pension Fund The Board has for some time been discussing the future of the company pension fund with its trustees and has proposed the closure of the current defined benefit scheme to new employees and the establishment of a defined contribution category within the existing trust. The contribution rates for existing members would also be increased. A consultation process is being undertaken with a view to the changes becoming effective from 1st November 2006. The pension fund liability as at 30th June 2006 measured under the rules for IAS19, net of deferred tax, has decreased to £13.4m (2005 £14.8m). Personnel The number of staff employed in the group at the end of the year increased by 7% to 2,004 (2005 1,865). Recruitment has principally been in overseas marketing, UK manufacturing and engineering. I would like to thank all staff worldwide for their contribution to yet another demanding but very successful year. Prospects and Dividend The current year has again started well. We continue to invest in the research and development of new products and new market areas as well as manufacturing processes to improve efficiency. Providing there are no major adverse currency movements or a significant downturn in world economies, we are confident of continuing growth, both for the current year and the longer-term future. Your board proposes a final dividend of 15.07p per share, giving a total for the year of 21.78p (2005 19.8p). Sir David R McMurtry, CBE, RDI, CEng, FIMechE, FREng Chairman & Chief Executive 26th July 2006 Enquiries: B R Taylor 01453 524445 A C G Roberts 01453 524445 Registered office: New Mills, Wotton-under-Edge, Gloucestershire. GL12 8JR Telephone: 01453 524524 This information is provided by RNS The company news service from the London Stock Exchange

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