Interim Results

Renishaw PLC 26 January 2006 26th January 2006 Renishaw plc and subsidiary undertakings Interim results 2006 Interim results for the half year ended 31st December 2005 Income statement 6 months to 6 months to December December 2005 2004 Â£'000 Â£'000 Revenue 81,625 72,453 Cost of sales (43,341) (38,950) ----------- ----------- Gross profit 38,284 33,503 ----------- ----------- Distribution costs (14,785) (13,411) Administrative expenses (9,617) (9,045) ----------- ----------- Operating profit 13,882 11,047 Financial income 3,330 2,953 Financial expenses (1,872) (1,612) ----------- ----------- Profit before tax 15,340 12,388 Income tax expense (3,068) (2,413) ----------- ----------- Profit for the period 12,272 9,975 ----------- ----------- Earnings per share (basic and diluted) 16.9p 13.7p Proposed dividend per share 6.71p 6.10p Consolidated statement of recognised income and expense 6 months to 6 months to December December 2005 2004 Â£'000 Â£'000 Foreign exchange translation differences 326 210 Actuarial loss in the pension schemes (2,660) - Changes in fair value of cash flow hedges (83) - Deferred tax on items recognised on income and expense 825 - ----------- ----------- (Loss)/profit recognised in equity (1,592) 210 Profit for the year 12,272 9,975 ----------- ----------- Total recognised income and expense for the period 10,680 10,185 ----------- ----------- Opening adjustment on adoption of IAS 32 and IAS 39 2,234 ----------- 12,914 ----------- Consolidated balance sheet At December At December 2005 2004 Â£'000 Â£'000 Assets Property, plant and equipment 67,615 63,250 Intangible assets 7,530 6,660 Investments in associates 928 - Deferred tax assets 10,940 7,047 ----------- ----------- Total non-current assets 87,013 76,957 ----------- ----------- Inventories 28,195 25,760 Trade receivables 33,134 29,450 Current tax 360 367 Other receivables 6,109 3,161 Cash and cash equivalents 25,708 23,211 ----------- ----------- Total current assets 93,506 81,949 ----------- ----------- ----------- ----------- Total assets 180,519 158,906 ----------- ----------- Equity Issued capital 14,558 14,558 Share premium 42 42 Currency translation reserve 981 210 Currency hedging reserve 2,176 - Retained earnings 110,642 105,971 ----------- ----------- Total equity 128,399 120,781 ----------- ----------- Liabilities Employee benefits 22,200 11,290 Deferred tax liabilities 10,481 8,065 Provisions 642 624 ----------- ----------- Total non-current liabilities 33,323 19,979 ----------- ----------- Trade payables 9,444 8,640 Current tax 2,064 2,335 Other payables 7,289 7,171 ----------- ----------- Total current liabilities 18,797 18,146 ----------- ----------- Total liabilities 52,120 38,125 ----------- ----------- Total equity and liabilities 180,519 158,906 ----------- ----------- Consolidated statement of cash flow 6 months to 6 months to December December 2005 2004 Â£'000 Â£'000 Cash flows from operating activities Profit for the period 12,272 9,975 ----------- ----------- Adjustments for: Amortisation of development costs 724 686 Amortisation of other intangibles 302 315 Depreciation 3,743 3,453 Profit on sale of fixed assets (14) (8) Financial income (3,330) (2,953) Financial expenses 1,872 1,612 Tax expense 3,068 2,413 ----------- ----------- 6,365 5,518 ----------- ----------- Increase in inventories (799) (3,472) Decrease/(increase) in trade and other receivables 1,830 428 Decrease/(increase) in trade and other payables (1,169) (194) Difference between pension charge and contributions (720) (320) Increase in provisions 10 78 ----------- ----------- (848) (3,480) ----------- ----------- Income taxes paid (3,637) (1,890) ----------- ----------- Cash flows from operating activities 14,152 10,123 ----------- ----------- Investing activities Purchase of tangible fixed assets (7,082) (10,226) Development costs capitalised (1,177) (912) Purchase of other intangibles (187) (490) Investment in associates (928) - Sale of tangible fixed assets 313 59 Interest received 1,040 1,164 ----------- ----------- Cash flows from investing activities (8,021) (10,405) ----------- ----------- Financing activities Interest paid (12) (22) Dividends paid (9,972) (9,019) ----------- ----------- Cash flows from financing activities (9,984) (9,041) ----------- ----------- Net decrease in cash and cash equivalents (3,853) (9,323) Cash and cash equivalents at beginning of period 30,072 32,833 Effect of exchange rate fluctuations on cash held (511) (299) ----------- ----------- Cash and cash equivalents at end of period 25,708 23,211 ----------- ----------- Revenue analysis 6 months to 6 months to First half December December revenue at 2005 2004 previous year exchange rates Â£'000 Â£'000 Â£'000 Continental Europe 26,884 28,196 26,517 Far East, including Japan & Australia 25,029 18,931 24,677 North & South America 22,095 18,444 20,771 Other overseas regions 2,593 1,937 2,576 UK and Ireland 5,024 4,945 5,024 ----------- ----------- ----------- Revenue 81,625 72,453 79,565 ----------- ----------- ----------- ************************* NOTES: 1. The Interim report was approved by the directors on 26th January 2006. It should be read in conjunction with the 2005 International Financial Reporting Standards ('IFRS') restated accounts announced on 14th October 2005, which contain the accounting policies adopted under IFRS and a reconciliation of the 2005 income statement and opening and closing balance sheets from UK Generally Accepted Accounting Principles ('UK GAAP') to IFRS.The financial information for the six months to 31st December 2005 and the comparative figures for the six months to 31st December 2004 are unaudited and have been prepared on the basis of the accounting policies set out in the Group's IFRS restated accounts announced on 14th October 2005 for the year ended 30th June 2005, which are also unaudited. The directors have assumed that the amendments to IAS 39 - Financial instruments: recognition and measurement, will be adopted by the EU in sufficient time that they will be available for use in the IFRS financial statements for the year ending 30th June 2006. In addition, the adopted IFRSs that will be effective (or available for early adoption) in the financial statements are still subject to change and to additional interpretations and therefore cannot be determined with certainty. Accordingly, the accounting policies for the year ending 30th June 2006 will be determined finally only when the financial statements for that year are prepared.As permitted by IFRS 1, the following standards: IAS 32 - Financial instruments: Disclosure and presentation and IAS 39 - Financial instruments: Recognition and measurement have not been applied until 1st July 2005 and accordingly, no adjustment has been made to the 31st December 2004 figures. 2. The interim dividend of 6.71p net per share for the year ended 30th June 2006 will be paid on 10th April 2006 to shareholders on the register on 10th March 2006. ************************** Chairman's statement I am pleased to report the Company's results for the first six months of the current financial year. These are our first interim results produced under the new International Financial Reporting Standards. Revenue in this period increased by 13% over the comparable period in 2004 to Â£81.6m. There was particular growth in the Far East, an increase of 32%, and in North and South America, an increase of 20%. There was a small net reduction in our revenue in Continental Europe of 5%, primarily due to shipment of a large initial stocking order of a dental product launched in the first half of 2004/ 05. With the exception of digitising (including dental), there was good growth in all product lines, especially spectroscopy. Revenue benefited by Â£2.0m from currency exchange differences compared with the previous year's actual exchange rates. Operating profit for the six months grew by 26% to Â£13.9m compared with Â£11.0m in 2004. Profit before tax rose to Â£15.3m (2004: Â£12.4m), resulting in earnings per share of 16.9p, an increase of 23%. Net cash balances at 31st December 2005 were Â£25.7m (2004: Â£23.2m). During the period a representative office has been established in Turkey and the sales force has been substantially increased in India and the Far East, including Japan. Research and development remains key to group strategy. As I stated at the Annual General Meeting in October, a number of new products have been introduced at recent exhibitions, in particular, at EMO held in Hannover in September. The GYRO™ range of heads, to complement REVO™ and RENSCAN5™ introduced in April last year in our co-ordinate measuring machine ('CMM') product line were very well received and we anticipate that they will make a valuable contribution in our next financial year. Also introduced were the OMP400 high accuracy strain gauge probe and on-machine verification software launched by our machine tool product line. Total research and development expenditure, including associated engineering costs, amounted to Â£13.8m (2004: Â£12.1m). The Group is currently establishing a software product development team at our Pune premises in India. As recently announced, the Company has acquired a 50% interest in PulseTeq Limited, a small UK company, specialising in radio frequency coil electronics and other enhancements to magnetic resonance scanners for medical purposes. This investment illustrates our intention to exploit opportunities in the medical field by applying our in-house metrology expertise to this important new area of activity. We have also acquired a 50% interest in Metrology Software Products Limited, another small UK-based company, to strengthen the development programmes for our CMM and machine tool product lines. We are very pleased with the developments at these two associates since acquisition. The new anodising plant has been successfully commissioned at our Stonehouse factory in Gloucestershire and the manufacturing plant and machinery are now being transferred to the new location. In India, a manufacturing facility is being established at our recently acquired premises in Pune to complement Renishaw's existing manufacturing facilities in the UK and Ireland and to facilitate the introduction of new technologies into the worldwide organisation. Total capital expenditure in the UK and overseas during the six months was Â£7.2m (2004: Â£10.4m). Our product range and in particular our recently introduced new generation of products such as the REVO™ and RENSCAN5™ are being increasingly well received in their markets. As reported at our last annual general meeting, held in October 2005, the Board is currently undertaking a review of the Company's pension arrangements, the results of which are expected to be known during the second half. We confidently expect continuing progress in the Group's business in the remainder of the financial year. An interim dividend of 6.71p (2004: 6.10p per share) will be paid on 10th April 2006 to shareholders on the register on 10th March 2006. Sir David R McMurtry, CBE, RDI, CEng, FIMechE, FREng Chairman & Chief Executive 26th January 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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