Renishaw plc

Annual Report 2024

Transforming Tomorrow Together

About us

What we do

We are a world leader in measuring and

manufacturing systems. Our products give

high accuracy and precision, gathering

datato provide customers and end users

with traceability and confidence in what

they’re making. This technology also helps

our customers to innovate their products

andprocesses.

Why we do it

We are guided by our purpose:

TransformingTomorrow Together

Thismeans working with our customers

tomake the products, create the materials,

and develop the therapies that are going

tobe needed for the future.

We believe that our purpose is incredibly

relevant in today’s environment where the

pace of change 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 of these

resources. Our expertise can help deliver this.

Where we operate

We are a global business. We work closely

withour customers around the world to solve

complex engineering and science challenges

and improve their products and processes.

We have two business segments:

Manufacturing technologies, and Analytical

instruments and medical devices. You can

findan overview of these on pages 29 to 34.

We operate in three regions: the Americas,

APAC and EMEA. Most of our R&D and

manufacturing takes place in the UK,

andwehave other major manufacturing

sitesin Ireland and India.

Sales locations Revenue

Americas

7 £164.4m

(FY2023: £161.5m)

APAC

30 £318.8m

(FY2023: £310.6m)

EMEA

22 £208.0m

(FY2023: £216.5m)

How we do it

Our vision is to innovate and transform the

capabilities of our customers and end users

through unparalleled levels of:

Precision Productivity Practicality

While our vision sets our direction, our

strategyis our route to getting there.

We set out our strategy on pages 7 to 9.

Ourstrategy supports our sustainable

long-term growth by ensuring we have

theagility and resources to identify and

respond to opportunities in our markets.

Our purpose, vision and strategy are

supported by our values of innovation,

inspiration, integrity and involvement.

Thesevalues guide the way we behave

andthedecisions we make, both as

abusiness and as individual employees.

Our business in numbers

£691.3m

Revenue

(FY2023: £688.6m)

£122.6m

Adjusted

profit before tax

(FY2023: £141.0m)

£122.6m

Statutory profit before tax

(FY2023: £145.1m)

76.2p

Total dividend per share for the year

(FY2023: 76.2p)

£71.1m

R&D expenditure

(FY2023: £72.5m)

Key locations

5,256

Worldwide employees

366

Graduates and apprentices employed

(FY2023: 343)

Contents

Strategic report

02 Chairman’s statement

04 Chief Executive’s review

07 Our strategy for long-term valuecreation

10 Our business model

11 Risk management

19 Viability statement

20 Our key performance indicators

23 How we engage with stakeholders

26 Financial review

29 Review of product groups

35 ESG review

46 Climate-related Financial Disclosures statement

52 Non-financial and sustainability

informationstatement

Governance report

54 Directors’ Corporate Governance Report

56 Board of Directors

58 Executive Committee

64 Section 172 statement

70 Nomination Committee Report

76 Audit Committee Report

82 Directors’ Remuneration Report

95 Other statutory and regulatory disclosures

99 Directors’ responsibilities

Financial statements

102 Independent Auditor’s Report

113 Financial statements contents

114 Consolidated income statement

115 Consolidated statement of comprehensive

income and expense

116 Consolidated balance sheet

117 Consolidated statement of changes in equity

118 Consolidated statement of cash flow

119 Notes (forming part of the Consolidated

financialstatements)

155 Company balance sheet

156 Company statement of changes in equity

157 Notes to the Company financial statements

Shareholder information

167 10-year financial record

168 Glossary

169 Shareholder information

We use abbreviations and trademarks within this document.

Forbrevity, we don’t define or identify these every time they

areused; please refer to the glossary on page 168 for this

information. In our narrative commentaries in this report,

asanexample, FY2024 means the financial year ended

30 June2024. Other dates in our narrative commentary,

suchas2024, refer to the calendar year.

1 Note 29, Alternative performance measures, defines

howeach of these measures is calculated. Alternative

performance measures (APMs) are non-IFRS measures that

webelieve give readers additional useful and comparable

views of our underlying performance. They should be

considered in addition to statutory measures, and not

asasubstitute for or as superior to them.

2 As at 30 June 2024.

STRATEGIC REPORT

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Chairman’s statement

It’s been another busy year for Renishaw, in which

weachieved record sales despite a challenging

trading environment. We continued to make solid

progress against our long-term strategy, which

includes delivering innovative new products

anddeveloping our sales and manufacturing

infrastructure to support future growth. While profit

islower this year, we propose to maintain our dividend.

We remain committed to our growth strategy and

areconfident in our future prospects.

Our progress this year was once again due to the

talent and dedication of our people, and I would

liketo thank them all for their hard work.

I am inspired by their passion and have always

beenimpressed with their pioneering spirit. And I am

also proud that our collective determination to push

technological boundaries and help our customers

solve problems is driven by our purpose of

Transforming Tomorrow Together, and built on

ourvalues of innovation, inspiration, integrity and

involvement. Our employees demonstrate these

values every day, as shown again this year by

theexcellententries in our annual global values

competition, described on page 23.

At the end of our financial year, Sir David McMurtry

informed the Board that he was stepping down from

his role asExecutive Chairman. On behalf of all Board

members, employees, customers, shareholders,

indeed all stakeholders, I would like to thank him

forhis exceptional leadership of the Company.

Sinceco-founding Renishaw in 1973, he has been

instrumental in building what is today a world-class

business, and we are delighted that we will retain the

benefit of hisvast knowledge and experience as he

remains ontheBoard as a Non-executive Director.

Recognising the huge achievements of Sir David and

John Deer, our founders, I am honoured to have been

asked to take on the role ofInterim Chairman of the

Board from 1 July 2024 while we search for a new

independent Non-executive Chair. We also welcomed

Richard McMurtry to the Board as a Non-executive

Director, also with effect from 1 July 2024. Richard

isa highly experienced director and investor who

supports start-ups committed to developing the

future of innovation in the UK. He trained as an

engineer with significant involvement in product

development and robotic systems.

Innovation: thinking creatively, and

sparking new ideas

We put innovation at the heart of everything we do.

It’s what sparks new ideas and leads to new products.

That’s why we continue to invest in research and

development and engineering, with total expenditure

rising 6% this year to £106.8m. We introduced a range

of new products, many of them showcased at the

EMO Hannover and Formnext exhibitions.

Havingseen Sir David McMurtry work alongside

ourAdditive Manufacturing (AM) team this year,

Iwasespecially pleased to see the launch of our

TEMPUS technology, which helps significantly

reducebuild times. This is a big step forward in

anincreasingly important market for us. SirDavid

hastold me how it has been apleasure towork

alongside our AM team, and, in particular, to help

ourgraduates and apprentices develop theirideas

andcreative thinking.

Inspiring the next generation

ofengineers

I am also pleased to see the progress our Early

Careers team is making in their work toencourage

and support the next generation of engineers and

scientists. Our company and the sector as a whole

rely on a strong pipeline of talent, and we need to

help ensure that pipeline is filled fromas wide a pool

as possible, since diversity ofthought is essential for

creativity and innovation. Sothis year, our team has

focused particularly on working with all-girls’ and

special education needs and disability (SEND)

schools, as well as schools located in socio-

economically disadvantaged areas.Meanwhile,

ournew STEM Centre at our headquartersin

Gloucestershire and established STEM Centre at our

site in Miskin, Wales, give us more opportunities to

engage with young people from underrepresented

groups. The feedback we receive from schools

demonstrates why this work matters, with one teacher

telling us that her students are too often underestimated

and that their visit to the Centre had helped them

“tolook to their future and what they can achieve.”

A responsible business that acts

withintegrity

We are committed to acting with integrity and doing

the right thing – for our people, customers, suppliers,

shareholders and society. In November 2023, we

reinforced that commitment with the global launch

ofour new Code of Conduct. Called ‘Doing Business

Responsibly’, the Code is a guide to help our

employees and business partners to do business

inline with our values. Weprovide more details of

ourCode on page 45.

Acting with integrity includes complying withall the

relevant laws and regulations wherever wework.

Withthat in mind, the Board welcomes the publication

of the 2024 UK Corporate Governance Code and is

now working on plans to apply this new Code from

FY2026, except for provision 29, which will apply to

us from 1 July 2026.

Find out more

about how we

support SEND

schools and

colleges.

Renishaw plc Annual Report 2024

Strategic report

I am also delighted that we have a new environmental,

social and governance (ESG) strategy,and an

ESGSteering Committee to oversee progress.

Thestrategy has three overarching goals: to work

withourcustomers and suppliers towards NetZero;

develop a diverse and inclusive team that isinspired

to work for a responsible business; and ensure we

have the appropriate governance arrangements in

place to provide accountability, transparency,

compliance and integrity as aresponsible business.

We’ve structured our sustainability-related information

in this year’s AnnualReport around our new strategy

in our ESG review on pages 35 to 45. We also provide

further details on our goals and progress.

Involving our stakeholders to create

astronger company

One of the most important aspects of our ESG

strategy is its focus on our people. Our employees

are our most valuable asset and it is essential that

they feel able to share their views and are confident

that we will respond.

As a Board, we regularly hear from employees,

including through Catherine Glickman, as our

employee engagement ambassador. We also use

sitevisits to hear what’s on people’s minds and

ourengagement with some of our senior leaders

providesfurther opportunities to understand what

employees think.

We are a growing, global organisation, and I was

pleased to seethe response to our first global

employee engagement survey in April 2024 (see

page 43). Our overall engagement score of 74%

places us above the global average recorded by

oursurvey provider. We intend to use this as our

benchmark infuture surveys and will respond to

feedback over the coming year to ensure we continue

to attract and retain the most talentedindividuals.

That includes attracting diverse and experienced

talent to support our Board. So I am pleased to also

welcome our newest independent Non-executive

Director, Professor Dame Karen Holford, who brings

key engineering and research and development

skillsto the Board.

Succession is an important topicfor us, and following

a review of our Board composition, we’ve now begun

work to identify and recruit a new independent

Non-executive Director, inaddition to the

independent Chair that I mentioned earlier.

One of the best ways we can retain people is with

asupportive, inclusive working environment, which

iswhy we are focusing particularly on inclusion in

ourESG strategy. This year, we have continued

todevelop our equality, diversity and inclusion

programme including the launch of new UK

employee-led resource groups to support our

neurodiverse and disabled colleagues and new

workshops for our growing network of ‘allies’.

We’vealso marked key events to build a sense of

global community, such as Deaf Awareness Week

andvarious religious festivals.

Effective leadership is critical to employee engagement

and our long-term success. This year,our Senior

Leadership Team worked with aspecialist consultancy

to strengthen their leadershipand teamwork skills.

They also set ambitious internal targets to make

changes in areas like product innovation and

employee productivity across the whole organisation,

and are developing anew framework to drive strategy

delivery across theGroup.

The views of all our stakeholder groups inform our

decision-making. This year, following feedback

fromshareholders, we made important changes

inour Investor Relations Policy to allow for more

engagement about our strategy for growth with

keyshareholders and potential investors. We also

appointed Peel Hunt as our new joint corporate

broker to work alongside our existing broker, UBS,

tohelp us strengthen our links with the wider

investment community. We aim to provide attractive

returns for our shareholders and pursue a progressive

dividend policy.

A strategy for the long term

Our business has always been focused on

sustainable, long-term value creation. The Board

isconfident that our strategy of organically growing

inexisting markets, increasing the value of our

technology and extending into adjacent markets will

continue tomaximise the potential of our sensors

andsoftware-enabled systems, and deliver further

growth. Itisan ambitious strategy for a pioneering

company. Our success will depend on all our

stakeholders, and our continuing determination

toinnovate in everything we do.

Sir David Grant

Interim Non-executive Chairman

11 September 2024

Renishaw plc Annual Report 2024

STRATEGIC REPORT

This has been a year of solid strategic progress,

despite challenging conditions in the semiconductor

manufacturing equipment markets and currency

headwinds. We maintained our investments for

long-term success and achieved record revenue of

£691.3m, boosted by a strong fourth quarter, with

0.4% annual growth at actual exchange rates and

underlying annual growth of 3.7% at constant

currency*. Adjusted* profit before tax of £122.6m was

13% lower than last year, while statutory profit before

tax of £122.6m was 16% lower, with both measures

primarily affected by currency movements and

increased employee pay.

Achieving these results in a challenging environment

is testament to the skill and efforts of our teams and

Iam fortunate to meet many of them during my travels

around the Group. I am always inspired by their

passion, energy and commitment to our purpose,

andwould like to thank them for their contributions

toour progress.

We again delivered good growth in systems sales –

one of our strategic priorities (see pages 7 to 9) –

including our Additive Manufacturing (AM) products

and record salesfor our Spectroscopy product line.

While wesaw a gradual recovery in our optical

encoder sales as the year progressed, weaker

demand from thesemiconductor sector affected

sales of our laser encoder and calibration products.

At the end of the year, we announced some changes

to the Board, including the decision by Sir David

McMurtry to step down from his role as Executive

Chairman. Since founding Renishaw with John Deer

over 50 years ago, he has been instrumental in

driving the success of our business. Sir David has

been a constant inspiration throughout my own

career, which is why I am delighted that he is

remaining on the Board as a Non-executive Director

and that he will continue to share his expertise in

product innovation with us. I would like to thank

SirDavid Grant for taking on the role of Interim

Non-executive Chairman while we appoint

apermanent successor.

Group performance

Total revenue for the year was £691.3m, compared

with £688.6m in FY2023. Revenue at constant

exchange rates, excluding the impact of forward

contracts, was £25.4m higher than the previous year.

At actual and constant currency rates we had growth

in our APAC region, with growth in Manufacturing

technologies revenue, boosted by sales from the

Industrial Metrology (IM) product group. We continue

to see pricing pressures in China from emerging

localcompetitors. The Americas also achieved

growth at both actual and constant currency rates.

This followed a very strong second half ofthe year,

with constant currency growth from Manufacturing

technologies, most notably from the AM product

group and shop-floor gauging and co-ordinate

measuring machine (CMM) systems product line.

OurEMEA region had lower revenue atboth actual

and constant currency rates, with lower Manufacturing

technologies revenue than FY2023. This was due

toreduced sales from the IM, AM and Position

Measurement (PM) product groups, which offset

strong growth in the Analytical instruments and

medical devices segment.

Revenue for our Manufacturing technologies segment

was £648.1m, with no growth over the previous year,

but 3.4% higher at constant currency rates. All our

IMproduct lines grew, with record revenue for our

shop-floor gauging and CMM systems product line

boosted by demand from the consumer electronics

sector. Our AM systems also had good growth, with

astrong second half for sales from keycustomers in

the medical sector. PM revenue was lower compared

to FY2023, with weaker demand for laser encoders,

which are supplied into front-end semiconductor

applications. Revenue was also lower in calibration

products, which saw lower demand from

manufacturers of machine tools and semiconductor

equipment. However, during the year we saw four

quarters of sequential growth from PM, with signs

ofrecovery indemand for our position encoders

fromsemiconductor equipment builders.

Meanwhile, our Analytical instruments and medical

devices segment achieved record revenue of

£43.2m, delivering 7.2% growth at both actual and

constant currency. We have once again achieved

record Spectroscopy revenue, with a general market

improvement within EMEA for sales of Raman

spectrometers, where we have expanded our sales

team, and growing sales for our Virsa Raman

Analyser. This product, which is used for in-situ

analysis, is being adopted for a wide range of

applications, from chemical processing to art

restoration. We are seeing increasing sales of our

inLux interface, used inside scanning electron

microscopes (SEMs). Sales of our Neurological

products also grew, including sales of our neuromate

surgical robot in EMEA, driven by its use in

stereoelectroencephalography (SEEG) procedures

todiagnose patients with epilepsy. For more

information about our products and market drivers

see pages 29 to 34.

This year’s Adjusted profit before tax was £122.6m,

compared with £141.0m last year. Adjusted* earnings

per share was 133.2p, compared with 155.1p last

year. Adjusted measures are the ones weuse as a

Board to measure our underlying tradingperformance.

Chief Executive’s review

*Note 29, Alternative performance measures, defines how each of these measures is calculated.

Renishaw plc Annual Report 2024

This reduction in profit primarily relates to the impact

of currency and increased employee pay, including

£2.1m of severance costs. Statutory profit before tax

was £122.6m, compared with £145.1m lastyear,

leading to Statutory earnings per share of 133.2p,

compared with 159.7p last year. For more details,

seethe Financial review on pages 26 to 28.

A strategy underpinned by our purpose

andambition

Our purpose of Transforming Tomorrow Together

underpins our business. By working closely with our

customers to help them to achieve their goals, weare

well positioned to meet our growth ambitions, pursuing

attractive opportunities arising from global trends

such as industrial automation and decarbonisation.

For example, our products, such as Equator gauges,

position encoders and AM systems, support our

customers to create the factories and products of

thefuture, helping them to automate repetitive tasks

and useenergy and materials more efficiently.

We are a manufacturing technology powerhouse,

developing and expanding into new, close-adjacent

markets. We are solving customer problems with

innovative products, delivered through world-class

in-house manufacturing and global service. Our

portfolio includes market-leading sensors, which we

are augmenting with a growing range of high-value

systems products, enabled by innovative software.

In financial terms, our goal is to continue our

trackrecord of long-term organic revenue growth.

Weoperate in cyclical markets and are targeting

highsingle-digit average growth through these cycles,

combined with Adjusted* operating profit margins in

excess of 20% (see our key performance indicators

onpages 20 to 22). Our track record of through-cycle

growth over several decades gives us the confidence

that we have both the opportunity and the capability

tocontinue to deliver at this rate in the future.

Our long-term value creation model, detailed as

partof the strategy (see pages 7 to 9), explains

ourthree areas of strategic focus, and the technical

and commercial activities that willdrive our growth.

Theseare:

1. growing our existing markets;

2. increasing the value to Renishaw of the

technology that wesell; and

3. extending into new, high-growth markets.

As I explain in the next sections, we have made good

progress against each of these during the year.

Growing our existing markets

Here, we are aiming to increase revenue by driving

up probe fitment levels, offering higher value sensors,

and by winning more customers that build machinery.

This requires strong, ongoing investment in research

and development to keep creating the products that

will differentiate us from our competitors and help us

to make the most of new opportunities as they arise.

This year, that continued investment led to the launch

of the RMP24-micro, the world’s smallest wireless

machine tool probe.This allows us to target compact

machine tools, used tomake high-precision miniature

components for the medical, watchmaking and

micro-mechanics sectors, where probe fitment wasn’t

previously possible. This compact probe is the first of

anew generation of smart factory sensors to use our

RMI-QE radio transmission technology. Introduced

inFY2022, this technology allows the use of much

smaller batteries due to its lower power consumption.

We continued to grow revenue from our FORTiS

enclosed position encoders, where we see significant

opportunities. We also won new business for our

position encoders from machine builders in awide

range of sectors.

Increasing the value of the technology

we sell

Our second strategic focus is designed to help

usincrease revenue by providing our end-user

customers with complete solutions to capture

agreater proportion of their investment. In IM,

forexample, we are focused ongrowing our sales

ofsystems like our AGILITY CMMs and Equator

gauges and expanding our metrology software

offering. We are also developing our Renishaw

Central smart factory software platform,which helps

users identify trends in their measurement data and

provides intelligent feedback to machining processes.

As I mentioned earlier, we had a good year for

systems sales, with above-market rates of growth

insome areas. Given our relatively low market share

in our newer markets, we see significant opportunities

tocontinue this growth. The strong growth we’re

seeing in our Equator gaugesales is helped by the

continuing trend for greater automation of process

control on shop-floor machinery.

£691.3m

Revenue

(FY2023: £688.6m)

£122.6m

Adjusted profit before tax

(FY2023: £141.0m)

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Chief Executive’s review continued

During the year, we began rolling out our new

generation of metrology software, MODUS IM Gauge

& Control, which aims to widen the process control

market for our Equator gauging system through

simpler programming. A number of customers

havebeen trialling the software, and their feedback

has reinforced our confidence in the significant

benefits that it delivers and helped us further

refineitscapabilities. One US-based subcontract

manufacturer has been impressed with the ease with

which it could quickly develop its own programmes

for gauging its precision bearings.

We’ve also seen some early market interest in

Renishaw Central, which we launched in FY2023.

Thisis a conservative market that takes time to adopt

new ways of working, so early customer feedback is

helping us learn the right way to position and market

this product.

It was a good year for AM systems sales growth,

witha strong second half, thanks to repeat business

with key customers within the medical sector. We also

took an important step forward with the launch of our

new TEMPUS technology for our RenAM 500 series

products, which allows a machine’s lasers to continue

to operate, even while a new layer of metal powder

isbeing laid down. As a result, the technology can

reduce the time it takes to build a component

byupto 50%, helping our customers to improve

productivity and reduce cost per part. Historically

thatcost has been a significant barrier to AM

adoption, so we see substantial opportunities for

TEMPUS technology to broaden AM’s application,

particularly since it is both a standard fitment on the

new RenAM 500 Ultra machine and available as

apaid upgrade.

Extending into new, high-growth markets

Our third strategic focus is to diversify into close-

adjacent markets where we have strong market

understanding and brand awareness. Our new

industrial automation products, which we launched

atthe end of FY2023, are a good example. We have

seen a positive response from customers during the

first year, and we are confident that we have an

effective range of products to enhance robot precision.

That confidence was boosted when FANUC, one of

the world’s largest manufacturers of industrial robots,

chose to include our products in a demonstration at

Automatica, the world’s leading trade show for smart

automation and robotics. Our current focus is to

expand our regional sales teams, continue tobuild

relationships and develop routes to market.

For more information on our strategy and business

model, seepages 7 to 10.

Sustainability

We will only achieve our ambition, and deliver on our

strategy and purpose, by supporting our stakeholders,

all of whom have arole to play in our continuing

success. You can read more about how we engage

with our key stakeholder groups on pages23 to 25.

Increasingly, that engagement includes discussions

on the part Renishaw can play in supporting the

transition to a more sustainable future. So, I was

verypleased to become Chairof our new ESG

Steering Committee. This formalises our management

of sustainability-related issues, including our climate-

related financial disclosures. One of the Committee’s

first tasks was to oversee the development of a new,

comprehensive ESG strategy, with support from

specialist advisers, which we explain in more detail

inour new ESG review on pages 35 to 45.

We have continued to make strong progress towards

our target of Net Zero for Scope 1 and 2 emissions

by2028. And we see significant commercial

opportunities as decarbonisation is one of the

structural drivers that underpin our markets,

withmoreof our customers pursuing their own

NetZero goals.

Outlook for the next 12 months

The start of FY2025 has seen continuing

improvement in demand for our encoder products

from the semiconductor manufacturing sector,

primarily in the APAC region. This, together with

arange of growth opportunities that we are pursuing,

especially for metrology and additive manufacturing

systems, means that we are expecting to achieve

solid revenue growth in the year ahead.

We continue to focus on improving productivity in all

areas. We expect these efforts, together with higher

sales volumes, to drive our operating profit margin

towards our target, although inflationary pressures,

especially people costs, will affect the rate of

improvement in the near term.

The progress we’ve made against our three key

strategic focus areas this year gives me confidence

inour organic growth strategy, and we continue

toinvest for long-term success.

Will Lee

Chief Executive

11 September 2024

Renishaw plc Annual Report 2024

Our strategy for long-term

valuecreation

We are a manufacturing technology powerhouse, and our strategy aimsto fulfil

our purpose of Transforming Tomorrow Together by creating long-term value

forall our stakeholders. We pursue leading positions inan expanding range of

high-growth markets for our portfolio of sensor- and software-enabled systems

products. We target high single-digit average through-cycle organic growth

and more than 20% Adjusted operating profit margin while delivering onour

ESG strategy, including our commitment to Net Zero. For more information,

seeour key performance indicators (KPIs) on page 20 to 22.

Our strategy: driving consistent

outperformanceseepage 9

Growing in

existing markets

Increasing

technology value

Extending into

new markets

STRATEGIC

PRIORITIES

Fitment levels,

cross sales and

new customers

Systems, software

and smart

factorysolutions

Robotics

andindustrial

automation

CAPITAL

ALLOCATION

Commercial

focus

Innovation

In-house

manufacturing

Our ESG strategy see pages 35 to 45

Our strategy is underpinned by a robust

risk management framework.

See pages 11 to 18.

We measure our progress against 10 KPIs

thatreflect financial and non-financial

performance. See pages 20 to 22.

Manufacturing

machine

performance

Electrification

anddigitalisation

Industrial

automation

Decarbonisation

Our opportunity: well positioned in markets

growing at more than 5%

per annum see page 8

£6bn

Total addressable

market

Future

R&D in

attractive

close-adjacent

markets

Emerging

Rapid share

gain to grow

profit %

Established

Number 1 or 2

market share

Profitable and

growing

PORTFOLIO

GROWTH

1 Estimated weighted average through-cycle demand growth of Renishaw’s addressable markets.

2 Unaudited management estimates from a combination of external market research and Company market knowledge.

3 Emerging portfolio products operate in more fragmented markets with significant opportunity to gain market share; they are typically below the scale

needed to generate our target level of return.

4 Established portfolio products have a strong, profitable market position (Number 1 or 2 market share) in growing markets.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Strategic report

STRATEGIC REPORT

Our strategy for long-term value creation continued

Our opportunity

We pursue innovation-led growth in both emerging and established markets with

acombined addressable value of £6bn, and where manufacturing and societal

trends contribute to attractive through-cycle growth rates of at least 5%. We are well

positioned to grow market share infast-moving emerging markets, while building on

our first- or second-place positions inmany established markets, wherewe average

a more than 20%share.

MANUFACTURING TRENDSCHANGES IN WIDER SOCIETY

Manufacturing machine performance

A relentless drive to improve the precision,

speedand capability of manufacturing

equipment to make the advanced products

ofthe future.

Industrial automation

Industrial processes are becoming more

automated as manufacturers grapple

with skilled labour shortages and aim

tobecome more productive.

Electrification and digitalisation

As the world becomes more electrified

andconnected, we are seeing sweeping

changes in the transportation, electronics

and semiconductor industries.

Decarbonisation

The drive to decarbonise is forcing

manufacturers to rethink how they design,

make and support future products to

minimise environmental impact.

Established

products:

Metrology

sensors and styli

Open encoders

Calibration

Spectroscopy

Emerging

products:

Metrology

systems and

software

Additive

manufacturing

Enclosed

encoders

Industrial

automation

£6bn

Total addressable

market

Our opportunity: well positioned in marketsgrowing

at more than 5%perannum

Renishaw plc Annual Report 2024

Our three strategic focus areas

To make the most of the opportunities presented by our attractive growth markets,

we’ve identified six strategic priorities, grouped in three core areas, to help drive

market growth and help us grow market share ahead of our competition.

Our focus on these areas is set within a rigorous risk management framework,

whichincludes our approach to climate risk (see page 11), and is underpinned

byour ESG strategy.

Our ESG goals and objectives are set out on pages35 to 45.

Our strategy: driving consistent outperformance

Growing in existing markets Increasing technology value

Extending into

new markets

STRATEGIC PRIORITY

Increase

revenue per

machine tool

Win new

machine

builder

customers

Build

systems

sales

Expand

software

offering

Smart

factory

solutions

Diversify into

close-adjacent

markets

WHY IT DRIVES PERFORMANCE

We can drive value

by capturing more

‘share of wallet’

frommachine tool

builders by driving

up probing fitment

levels and offering

higher-value

sensors.

New accounts

contribute

significantly to our

growth rate, so we

continue to focus

onacquiring more

customers that

buildmachinery,

particularly in

position encoders.

We capture a greater

proportion of end-user

investment by

providing a complete

systems solution.

We have the

opportunity to grow

from our current

lowmarket share,

accessing long-term

service revenues.

Software is both an

enabler for systems

sales – making

themeasier to use

and sell– and

arevenue stream

initsown right.

Smart factory

solutions can drive

recurring software

revenue streams

byhelpingusers

identifyand respond

to trends in their

measurement data.

We aim to add to

ourportfolio of

businesses over

time, seeking

opportunities where

we have market

understanding

andbrand traction.

HIGHLIGHTS FROM FY2024

Launch of the

RMP24-micro, the

world’s smallest

wireless machine

tool probe. This

allows us to target

compact machine

tools, where probe

fitment wasn’t

previously possible.

Grew revenue

fromour FORTiS

enclosed position

encoders.

We won business

from new machine

builder customers

ina wide range of

sectors for our laser,

optical and magnetic

encoders.

Grew sales of

systems including

REVO 5-axis CMM

inspection systems

andEquator gauges

driven by the trend

for measurement

closer to shop-floor

machining processes.

Launch of our new

TEMPUS technology

for our RenAM 500

series, which will

broaden the

applications forAM.

Started the roll-out of

our new generation

of metrology

software, MODUS

IMGauge & Control.

This aims to simplify

programming and

increase sales of our

Equator gauging

system.

Early market interest

in Renishaw Central,

launched in FY2023,

which allows users

tocapture actionable

data for process

control.

Positive customer

response to our new

industrial automation

line, launched at the

end of FY2023.

Earlysuccess with

amajor aerospace

company that will

beequipping 12

worldwide facilities

with our kits to

ensure consistency

of robot operation.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Our business model

We work with our customers to understand their technological challenges, then design,

manufacture and sell innovative products and processes to solve them.

Our business model helps us focus our resources and make the most of our strengths

to deliver value for all our stakeholders.

Customer relationships

We’re able to invest in long-term relationships with our

customers. This helps us to understand their needs and

design solutions to solve their challenges.

People

Our 5,256* talented people around the world are

committedto delivering our purpose, vision and strategy.

Supplier relationships

Our global and local suppliers provide us with the

high-quality components and materials we need,

aswellassupporting our infrastructure and operations.

Research and 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.

Our customers

— £106.8m spent on developing new products and improving our

existingproducts.

— 67 key locations worldwide providing local customer support and

technical expertise. We recently opened a new technology centre

inBangalore to support our growing customer base in India.

Our shareholders

— Total dividends of £55.5m for the year, in line withFY2023.

Our people

— £288.5m in salaries, bonuses, social security and pension contributions.

— Introduced a new job architecture allowing us to align jobs globally

based on types of work. This will provide our employees with clearer

career pathways and improve retention and development.

Our suppliers

— £42.5m committed to global capital expenditure projects.

— 503 global suppliers for direct goods and services to UK

manufacturingoperations.

Our communities

— Ongoing education outreach programme reached around

12,000students.

— £0.3m in charitable donations during the year.

Our planet

— 14% reduction in our market-based statutory greenhouse gas emissions

compared to FY2023.

— Self-generating 9% of our global electricity consumption

throughrenewable sources.

Our resources Delivering value for...

Innovative

engineering

Using this understanding from

ourcustomers andworld-class

engineering, wedesign

innovative products that solve

these problems andprovide

precision, productivity

andpracticality.

Routes to market

We have local support and

technical experts based in

ourmain markets, helping

ustorespond quickly to

ourcustomers’ and

endusers’needs.

High-quality

manufacturing

We then manufacture

theseproducts ourselves.

This gives us control

overtheir quality,

costanddelivery.

Customer needs

We work closely with our

customers to understand

the challenges they face in

manufacturing, materials

analysis and healthcare.

*As at 30 June 2024

Renishaw plc Annual Report 2024

Overview of the year

Effective risk management is fundamental to achieving our

strategic goals and supports long-term value creation for all

ourstakeholders. Considering both risks and opportunities

isanessential part of our operations and decision-making.

This year, we have conducted a robust assessment of the risks

to our business, including those associated with the worsening

geopolitical environment, caused by continuing war in Ukraine

and conflict in the Middle East, and the tightening regulatory

environment. Additionally, we experienced increasing competition

in some of our overseas markets, which we continue to monitor.

Building on our work last year, we have continued to

implementour people strategy and have seen the results

inapositive engagement score in our first global employee

engagement survey.

Risk movement

Our risk assessment process helps us identify the principal

riskswe face and allows us to monitor the potential impact and

likelihood of a risk occurring, as these can fluctuate from year

toyear depending on a range of internal and external factors.

Here, we describe the most significant changes in risks in FY2024.

Increased risks

Economic and political uncertainty: the deteriorating

geopolitical landscape has increased this risk. We are seeing

some disruption to trade routes, which could significantly

influence our strategy and our ability to implement it.

Non-compliance with laws and regulations: the geopolitical

landscape means that the laws and regulations we must abide

by as an international business are increasingly complex.

Competitor activity: increasing competitor activity in some

ofouroverseas sales markets has the potential to affect

pricing,margins and volumes. For example, we continue to

seepricing pressures in China from emerging local competitors.

To combat this threat, we plan to strengthen our direct sales

activities in China.

Decreased risks

People: our HR team has continued to implement our people

strategy as part of its work to achieve our Social goal under our

new ESG strategy. That includes strengthening our learning and

development programmes and developing core competencies

(see pages 42 to 44 for more information). During the year,

weconducted our first global employee engagement survey,

with results indicating above-average engagement across the

Group. While People remains a principal risk, and we continue

tomonitor our performance indicators related to our people,

webelieve that the risk has reduced.

Supply chain dependencies: this risk has further decreased

this year as the external environment has improved and we

continue to have effective mitigations in place, such as a risk

dashboard for our key manufacturing sites and adapting stock

levels for high-risk items.

Risk environment considerations in FY2024

This year, we continued to focus on risk oversight, identification

and management, as well as the processes we have in place

tosupport risk management. To help refine our risk procedures,

we have refocused our attention on what we consider to be

Renishaw’s principal risks, which we set out in the tables on

pages 15 to 18. We continue to monitor other risks, including

fivethat no longer sit within our principal risks but that we have

reported on in the past. They are:

— Capital and resource allocation;

— Loss of manufacturing output;

— Product failure;

— Climate change; and

— Pensions.

Meanwhile, we have also paid particular attention to two key

topics, given the challenges we face inboth:cyber security

anddata protection, and our IT transformation programme.

Climate change

The global threat of climate change is rising and we

acknowledge that, without any mitigating actions, it poses

ariskto our ability to achieve our strategic growth objectives.

That’s why we have continued to integrate climate-related risks

and opportunities into our risk management framework.

At the same time, our approach to key environmental, social and

governance (ESG) issues is maturing, with a new ESG strategy

that includes strategic objectives to help us make progress towards

our commitment to reaching Net Zero across all Scopes by 2050.

In developing our ESG strategy, we have found that many of

ourclimate-related risks and opportunities are closely related to

some of our other principal risks. So, this year we have decided

to remove climate change from our list of principal risks and

instead have begun incorporating specific elements of this risk

into the way we assess and manage other principal risks.

OurRisk Committee and Audit Committee have reviewed

andapproved this revised approach to our principal risks.

See our Climate-related Financial Disclosures on pages 46 to 51

to understand our materiality methodology for our physical and

transitional climate-related risks and opportunities.

See our ESG review on pages 37 to 41 for more information

onour ESG strategy.

Cyber security and data protection

We deploy a comprehensive set of controls to manage various

risks, including cyber and data security threats. Here are some

key examples of our approach:

— Building resilience and back-up: we ensure substantial

resilience and back-up are incorporated into our systems,

continuously updating them to mitigate current threats and

align with good industry practice. This includes duplication

ofhardware, dual and diverse connections, and regular back-

up schedules.

— Board and Audit Committee oversight: cyber, security and privacy

risks are regularly discussed at Board and/or Audit Committee

meetings to assess the strength of our control environment.

Risk management

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Risk management continued

— Physical and logical control measures: we deploy physical

and logical control measures to protect our information and

systems, including alerting, monitoring, and automated

containment and remediation. We also rehearse real-life

restores of data and services.

— Security awareness and training: we conduct regular security

awareness training, including phishing simulation exercises.

We also perform external penetration testing as appropriate,

and we continue to evaluate additional security solutions.

These cyber security controls have served us well in FY2024.

We are committed to maintaining high standards of compliance

with the General Data Protection Regulation (GDPR) and other

data protection laws in the countries where we operate. That’s

why, this year, we hired a dedicated Privacy Manager who is

responsible for the Group’s privacy-related policies, procedures,

training and other compliance requirements, and for championing

the importance of privacy within the Group.

Mitigating the risk of IT transformation failure

With further work in the year to configure and implement

Microsoft Dynamics 365 (D365), we’ve focused on understanding

whether our expected controls are working asintended, and

reflecting on whether we need to make any changes. Our main

types of controls are:

— user acceptance tests, performed ahead of go-live to ensure

the system is fit for purpose;

— automated testing, developed by our software teams in India,

allowing us to feel confident in adopting new releases

fromMicrosoft;

— testing interfaces with existing internal and external systems,

such as:

• logistical – shipping company, declarations for export;

• data – internal Group-wide reporting to include

D365data; and

• MRP system;

— data migration, reviewing our requirements and checking the

accuracy and completeness of data before and after the

switch to D365; and

— overall IT transformation management. In managing the risk

of IT transformation failure, we maintain good engagement

with Microsoft and our system integrator, work to a clear,

risk-elimination-based roadmap, and strengthen our

deployment team with targeted recruitment. We also

focusonupskilling the team and learning from our first

deployments to inform future plans.

Our 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.

As part of our risk management process, we maintain a dynamic

approach to monitoring emerging risks. This includes regular

consideration at Risk Committee, Audit Committee and Board

meetings. For example, we continue to monitor the effect that

changing work patterns, including hybrid working, have on our

principal risks (including People, Innovation strategy, and Cyber).

We continue to look at ways to manage this so that our people

can collaborate and innovate, and this year we introduced hybrid

working guidelines in the UK, which set out our expectations of

our employees.

We only consider one of the emerging risks that we have identified

as part of our risk review process as significant – the impact of

artificial intelligence (AI). The use of AI is developing rapidly

andits potential impact on businesses could be fundamental.

Wesee AI as both an opportunity and a threat forour business.

For example, controlled use could enhance productivity through

the automation of certain repetitive tasks. However, its use could

pose a security threat where technical controls are not sufficient

or policies not robust enough to promote safe use. Additionally,

our competitors’ use of AI in design or manufacturing processes

may give them an advantage. We continue to monitor the use of

AI and are looking at ways to carefully incorporate its use into our

own production processes.

Renishaw plc Annual Report 2024

How we govern risk

Our Board retains overall responsibility for risk management

andis supported by our Audit Committee and Risk Committee.

At least once a year the Board, with support from the Audit

Committee, assesses the Company’s principal risks and

uncertainties and identifies any emerging risks. This includes

reviewing risks that have the capacity to threaten our business

model, future performance, solvency or liquidity. The Board

alsosets risk appetite and considers the Company’s principal

and emerging risks.

Our Audit Committee (comprising independent Non-executive

Directors) monitors our risk management and internal control

framework, which is designed to manage rather than eliminate

the risk of failure in achieving our strategic objectives. The

Committee is provided with regular reports on financial and

non-financial risk matters, such as compliance and financial

controls, as well as receiving internal audit reports andhaving

discussions with the external auditor.

The Audit Committee has helped Renishaw develop its control

framework over a number of years and reviews its effectiveness

at least once a year. Where necessary, we adapt the framework

to ensure it aligns with any changes in our strategic objectives

orwhere we see opportunities to improve our approach.

Our Risk Committee reports into the Executive Committee, with

the Audit Committee overseeing the discussion of financial risks

and other matters, including cyber, data protection, compliance

and climate change. The Risk Committee meets approximately

five times a year to discuss risk management and internal control

matters, perform deep dives into some of our principal risks, and

identify emerging risks.

During FY2024, the Risk Committee considered improvements

toour risk management framework and documentation, which

we will implement during FY2025 and report against in the

FY2025 Annual Report.

See page 14 for more information on how we identify and

governrisk.

Our risk review process

Our risk review process is designed to ensure we consider both

internal risks (those associated with operating our business)

andexternal risks (risks associated with the global environment).

We identify those risks in two ways:

1. Top-down process

The Chair of the Risk Committee conducts risk interviews with

senior managers, focusing on the risks that are most significant

for us. The aim of each interview is to discuss and assess the

changing risk landscape as it affects the Company, any changes

within the identified principal risks and associated controls,

inaddition to identifying any emerging risks. The anonymised

output from these interviews is aggregated to identify key themes

and trends, as well as any new or emerging risks.

2. Bottom-up process

Regional and product group managers complete risk registers

for each of their business areas, with a 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 are submitted to the Risk

Committee for discussion. The Risk Committee then assesses

the proposed principal risks before presenting them to our

AuditCommittee and, ultimately, the Board for approval.

We assign an owner to each principal risk who is responsible

forthe controls to support the effective management of that risk.

TheRisk Committee oversees management of the principal

risksand invites some of our risk owners to discuss latest

developments or issues, and to provide updates and assurance

on risk mitigations and the specific controls in place to manage

that risk. The Chair of the Risk Committee consults with each

principal risk owner regarding the wording for the risk table on

pages 15 to 18.

As well as identifying our principal risks and their anticipated

impact and likelihood, we conduct a formal risk appetite

assessment. These results are also shown in the table on pages

15 to18. This enables us to assess whether the level of risk we

are taking is right for our business and to consider opportunities

to improve our approach, as well as the level and effectiveness

of our controls.

Priorities for the year ahead

As well as continuing our usual risk identification and monitoring

activities throughout FY2025, we will:

— roll out the improved risk documentation, and gather risk

assessments from additional parts of the business;

— conduct in-depth reviews of principal risks that are not

withinthe risk appetite set by the Board; and

— continue to monitor and assess emerging risks.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Risk management continued

How we identify and govern risk

Governance

Top-down

Board

— Overarching responsibility for risk management.

— Determines risk appetite and identifies principal

risks and opportunities.

— Evaluates proposed strategies against risk appetite.

— Directs external reporting of risk and viability.

— Regularly discusses cyber risk and the IT

transformation failure risk, including regular

discussions regarding the risks associated with the

roll out of D365.

Audit Committee

— All members are independent Non-executive Directors.

— Assesses the changing status of various principal risks.

— Reviews the effectiveness of our risk management and

internal control framework.

— Helps the Board monitor and assess risk exposure and makes

recommendations to the Board on proposed principal risks

and risk appetite.

— Approves and considers viability assessment scenarios.

— Oversees cyber and IT risk as part of its general risk

management responsibilities.

— Oversees matters discussed by the Risk Committee, including

reviewing minutes from all Risk Committee meetings.

— Oversees key areas, including internal controls,

riskmanagement, and Internal Audit.

— Reviews the risk sections of our external reporting.

Operational risk management

Bottom-up

Risk Committee

— Members include representatives from our Executive

Committee (including our Group Finance Director)

and senior management.

— Manages our risk identification process.

— Collects and aggregates risk information.

— Helps senior management govern, identify, manage

and report on principal and emerging risks.

— Manages a central repository of risk data from across

our product groups and regions in terms of their

respective principal risks.

— Responsible for monitoring and reviewing financial

and non-financial risks.

— Receives biannual updates from Responsible

Renishaw Forum, Speak Up and Internal Audit.

— Receives annual updates on business continuity

andcrisis management, and insurance cover.

Operational managers

— Carry out effective day-to-day risk management using local

specialist knowledge.

— Design and implement key controls.

— Identify risks at an early stage.

— Embed risk management and controls.

— Monitor risks and controls, mitigating or escalating risks

asappropriate, and respond appropriately.

— Provide updates to the Risk Committee.

Ethics Committee

— Comprises four members of our Senior Leadership Team,

whosit on the Risk Committee as well.

— Considers matters that are referred to it, usually by internal

stakeholders.

— Considers particular ethical issues and recommends next steps

to the Executive Committee.

— Most matters referred to the Ethics Committee involve

adecision about risk appetite – for example, where aproposed

course of action is lawful but may involve some reputational risk.

Independent oversight

Internal Audit

— Provides input on the effectiveness of our risk and control framework.

— Assesses the effectiveness of controls as part of the Internal

Auditprogramme.

— Holds scheduled audits of our largest Group companies every

year, and of other Group companies every two years, and shares

executive summaries with the Audit and Risk Committees.

Significant shortcomings are discussed and acted upon promptly.

The Audit Committee monitors outstanding actions.

— Facilitates process and control enhancements.

— Requires all operating companies to complete annual self-

certification questionnaires to confirm they comply with key

policies and procedures.

External Audit

— The Audit Committee also receives regular reports and updates

on the work carried out by the external auditor.

Oversight from the Audit Committee

This year, the Audit Committee:

— received regular reports from the Risk Committee, specifically

before the half-year and full-year results where it considered

our principal risks and approved their ranking;

— monitored management’s programme of work on internal

control and risk management. The minutes from all Risk

Committee meetings are shared with the Audit Committee

toinform their review of the risk and control framework;

— received specific updates on certain risk areas, including

updates on legal and compliance risk throughout the business,

which the Committee receives at least twice a year; and

— approved improvements toour risk management framework

and documentation, which we will implement during FY2025.

Renishaw plc Annual Report 2024

Principal risks and uncertainties

Appetite

LOW

Minimal risk exposure is considered the safest approach, which may mean

lower returns.

MEDIUM

A balanced approach that carefully considers the risks and rewards.

HIGH

Greater risk tolerance, which may involve maximum risk for maximum return.

Economic and political uncertainty

Appetite

HIGH

Link to strategy

All

Risk owner

Chief Executive

Risk description

As an international business, we may be affected by global political, economic or regulatory developments.

Thiscould include a global recession, changes in USA-China trade relations, or the ongoing war in Ukraine and

conflict in the Middle East. This risk can also drive industry fluctuations.

Potential impact

— Loss of financial and physical

assets in aregion.

— Supply issues leading to

failures to meet contractual

obligations.

— Reduced revenue, profit and

cash generation.

— Increased risk to credit,

liquidity and currency.

What we are doing to manage this risk

— Monitoring external economic and commercial environments and

marketsin which we operate, and identifying relevant headwinds.

— Maintaining sufficient headroom in our cash balances.

— Maintaining appropriate levels of buffer inventory.

— Resilient business model and clear strategy, both of which are

subjecttoregular scrutiny.

— Our internationally diverse business helps to spread risk.

Innovation strategy

Appetite

HIGH

Link to strategy

All

Risk owners

Directors of

Industrial

Metrology,

Position

Measurement

andAdditive

Manufacturing

Risk description

Our success depends on innovation to create new, cutting-edge, sustainable and high-quality products. Failure to

make these products or protect the intellectual property that underpins them could affect our ability to differentiate

ourselves from our competitors. There is also a higher risk associated with venturing outside our traditional field of

expertise, where the science and engineering are less proven.

Potential impact

— Failure to lead the market with

innovative products in our core

and adjacent sectors.

— Loss of market share.

— Reduced revenue, profit and

cash generation.

— Failure to recover investment

inR&D.

What we are doing to manage this risk

— Continuing to invest in new product development and

intheinnovationtalent we need.

— Regular reviews of flagship projects and key technologies with

afocusonstrategic fit and improving time to market.

— Designing sustainability into our products. To help, we’re aiming to

implement a methodology to quantify the sustainability benefits from

allaspects of our products (see pages 37 and 40 for more information).

— Continuing to drive incremental development and more open customer

collaboration in the early stages of our R&D projects to ensure our

innovations are successful in the market.

Industry fluctuations

Appetite

HIGH

Link to strategy

G, I

Risk owner

Chief Executive

Risk description

We’re exposed to the cyclical nature of demand in some of our key markets, including aerospace, automotive,

semiconductor and consumer electronics, which can affect our profitability. That impact could be more severe

ifdowncycles in these key industries coincided. Economic and political uncertainty can also affect these markets

and our business.

Potential impact

— Reduced revenue, profit and

cash generation.

— Increased pricing competition.

— Loss of market share if unable

to meet rapid increases

indemand.

What we are doing to manage this risk

— Closely monitoring market developments.

— Expanding our product range to serve different industry sectors and markets.

— Identifying and meeting the needs of rapidly growing markets, for example

in robotic automation.

— Maintaining a strong balance sheet and strategic inventories with the ability

to adapt our manufacturing resource levels.

Risk movement

Increased risk

Decreased risk

Stable risk

Link to strategy

Growth in existing markets

Increasing technology value

Extending into new markets

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Risk management continued

Capital products growth (formerly Route to market/customer satisfaction model)

Appetite

MEDIUM

Link to strategy

Risk owner

Chief Executive

Risk description

Our growth opportunities could be restricted if we fail to implement appropriate and efficient sales and support

processes relating to systems integration and the sale of capital goods.

Potential impact

— Low capital efficiency –

highpeople costs and

lowproductivity.

— High engineering and

distribution costs.

— Adverse impact on customer

satisfaction levels, revenue

andprofits.

What we are doing to manage this risk

— Focusing on key customers to generate repeat business andrevenue.

— Closely monitoring customer feedback so that we can keep adapting our

approach according to their needs.

— Collaborating with complementary third parties to make our CMM and

gauging systems compatible with a range of metrology software.

— Improving the usability of our own metrology software to streamline

application development times.

Competitor activity

Appetite

LOW

Link to strategy

G, I

Risk owner

Chief Executive

Risk description

Failure to adapt to market and/or technological changes, including those associated with growing demand for

products with sustainability benefits, could mean losing customers to competitors who have adapted their approach.

Potential impact

— Reduced revenue, profit and

cashgeneration.

— Loss of market share,

particularly as morecustomers

set sustainability goals.

— Price erosion.

— Loss of reputation as a leader

ininnovation.

What we are doing to manage this risk

— Ensuring we are diversified across a range of products, industries

andgeographies.

— Closely monitoring market developments, including the emergence

ofnewcompetitors.

— Strengthening our local sales and engineering support in China,

whereweare seeing emerging competitors.

— Continuing to build our product portfolio through our ongoing commitment

to R&D (see Note 4 totheFinancial statements for details of R&D expenditure).

— Continuing to monitor and understand our customers’ sustainability and

NetZero goals to deliver products that meetthese needs.

Cyber

Appetite

LOW

Link to strategy

All

Risk owner

Group Operations

Director

Risk description

The number of sophisticated external phishing attacks against our business is rising and we also face the risk

ofinternal cyber and data security threats. A successful external or internal attack could severely affect our ability

tooperate, or lead to the loss of personal and commercial data.

Potential impact

— Loss of intellectual property

and/or commercially sensitive

and/or personal data.

— Reduced customer service

due to disruption or a lack of

access to our systems.

— Financial loss and reputational

damage.

— Adverse impact on business

decision-making due to lack

ofclear and accurate data, or

disruption caused by the lack

of service.

What we are doing to manage this risk

— Ensuring we build substantial resilience and back-up into our systems.

Wealso continuously update our systems to mitigate current threats

andalign with good industry practice. This includes regular back-up

schedules and, where possible, duplication of hardware and diverse/

dualconnections.

— Regularly discussing cyber, security and privacy risks at Board and/or

Audit Committee meetings, including the strength of our control environment.

— Deploying physical and logical control measures to protect our information

and systems. This includes alerting, monitoring, and automated

containment and remediation. We regularly rehearse real-life restores

ofdata and services.

— Conducting regular security awareness training, including phishing

simulation exercises. We also conduct external penetration testing

asappropriate, and continue to evaluate additional security solutions.

Renishaw plc Annual Report 2024

People

Appetite

MEDIUM

Link to strategy

All

Risk owner

Group Human

Resources

Director

Risk description

Our people are fundamental to the success of our business. Failure to attract, retain and develop key talent at all

levels of the organisation, as well as ensure we have appropriate succession plans in place, could adversely affect

our ability to deliver our strategic objectives.

Potential impact

— Delays in product delivery

andability to deliver

strategicobjectives due

tolossofexpertise and

specialist talent.

— Failure to develop future

leaders and insufficient talent

progression to support

Renishaw’s future.

— Loss of market share, reduced

revenue, poor customer

service and reduced profit.

What we are doing to manage this risk

— Continuing to focus on attracting, rewarding and retaining ourpeople

globally. This includes building a more inclusive working environment

aspart of our new ESG strategy.

— Using the results of our first global employee engagement survey

inFY2024 to inform the next stages of our people strategy.

— Continuing to invest in our education outreach and early careers

programmes, talent development and succession planning.

— Promoting an inclusive culture by growing our network of employee-led

resource groups and allyship training to help employees connect with and

support each other.

— Identifying ‘critical’ roles that have a high impact on our business resilience,

and that require skills and knowledge thatare either scarce or hard to

develop, to help us build continuity plans.

— Succession plans in place for management grades and key critical roles

globally and we intend to use anine-box approach to talent management

(see page 43 formore information on this approach).

— Promoting our new ESG strategy to help attract and retain adiverse pool

oftalent within the business.

Non-compliance with laws and regulations

Appetite

LOW

Link to strategy

All

Risk owners

Group General

Counsel &

Company

Secretary and

Managing Director

– Renishaw

Medical

Risk description

As a global business working in some highly regulated sectors, we are subject to a wide variety of laws and

regulations, including anti-bribery, anti-money laundering, human rights, sanctions and export control, competition

law, privacy, health and safety, sustainability and climate change, and product safety and medical devices. Failure

to comply could result in criminal or civil liabilities and/or individual or corporate fines, and could affect our reputation.

Potential impact

— Damage to reputation and

lossof future business.

— Potential penalties and fines,

and cost of investigations.

— Management time and

attention diverted to deal

with reports of non-

compliance.

— Inability to attract and

retaintalent.

What we are doing to manage this risk

— Maintaining our Speak Up whistleblowing hotline, available to all employees

and third parties who provide services for or on behalf of the Group.

— Improving global compliance programmes for all high-risk areas, including

policies, key controls (including ‘Know Your Customer’ procedures) and

effective communication, including refreshing our mandatory anti-bribery

andanti-corruption training modules.

— Maintaining our global compliance brand ‘Responsible Renishaw’, raising

awareness and making it easier for our people to find compliance information.

— Launching our new Code of Conduct.

— Maintaining our global privacy programme.

— Establishing our ESG Steering Committee, which oversees our Sustainability

team in their responsibility for assessing and complying with ESG regulations.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Risk management continued

IT transformation failure

Appetite

LOW

Link to strategy

All

Risk owner

Group Operations

Director

Risk description

We need a modern IT system to support a more integrated global business. However, technical issues associated

with upgrading our Sage CRM and Sage ERP systems to D365, or poor integration with existing systems, could

negatively affect our ability to operate. This risk could also result in problems if there are significant delays to the

programme or an increase in the cost of implementing D365.

Potential impact

— Major systems disruption

causing operational delays.

— Delays in processing

orissuing invoices

andcustomer orders,

orinprocuring goods

andservices.

— Increased costs, including

costs to fix technical issues

and restore or upgrade other

affected systems.

What we are doing to manage this risk

— Maintaining good engagement between ourselves, Microsoftand our

systemintegrator.

— Working to a clear, risk-elimination-based roadmap with measurable milestones.

— Strengthening the deployment team to accelerate roll out, with commitment

from the Board to invest in targeted recruitment of technical, functional and

project management roles.

— Upskilling the team, transferring knowledge from our system integrator,

andtaking on more configuration and customisation tasks ourselves.

Risksreduced through learning valuable lessons from our first deployments

regarding data migration, role permissions, user training and system

integration. These are informing our future deployment plans.

Supply chain dependencies

Appetite

LOW

Link to strategy

All

Risk owner

Group

Manufacturing

Director

Risk description

We rely on a range of components to make our products, some of them critical to our operations and some that we

can only source from specific parts of the world. A shortage of critical components, or a change in the geopolitical

landscape or availability of single-sourced components, could make us vulnerable to supply interruptions.

Potential impact

— 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.

What we are doing to manage this risk

— Maintaining a risk dashboard for our key manufacturing sites, to help us

prioritise and determine stock levels.

— Adapting stock levels for high-risk items, to account for supply lead times and

time to redesign in the event of loss of supply. We seek cost-effective alternative

sources of supply (including in-house manufacturing), to reduce dependency

on single-source suppliers, with continued focus on key components.

— Ongoing collaboration with product groups to review risks and, where

appropriate, review and update specifications to facilitate alternative sourcing

or redesign.

— Assessing our supply chain for potential supply interruptions due to climate

change risks or geopolitical factors.

Exchange rate fluctuations

Appetite

MEDIUM

Link to strategy

G, I

Risk owner

Group Finance

Director

Risk description

We report our results and pay dividends in Sterling and, with more than 90% of our revenue generated outside the

UK, we’re exposed to volatility in exchange rates that could have a significant impact on our results. Movements of

Sterling against our major trading currencies cause cash flow, currency translation, and intercompany balance

translation risks.

Potential impact

— Significant variations

inprofit.

— Reduced cash generation.

— Increased competition on

product prices.

— Increased costs.

What we are doing to manage this risk

— Maintaining rolling forward contracts for cash-flow hedges in accordance with

Board-approved policy, and one-month forward contracts to manage risks on

intercompany balances.

— Tracking overseas net assets value compared to the market capitalisation.

— Obtaining input from external sources, including our banks.

Renishaw plc Annual Report 2024

The Directors have assessed our prospects and viability

inaccordance with the 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 as follows.

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 and cash equivalents and bank deposits at the

startofthe viability assessment period of £217.8m. We have

astrong history of creating cash for the business. The only

external source of finance included in the viability assessment

isfinancing for a property in Japan (see Note 20 on page138),

therepayments for which are not material. 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 29 to 34.

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 pages 11 to 14. 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

2027, to make 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 and a short order book, and can adapt

our manufacturing to meet demand in months rather than years.

Principal risks

The Directors reviewed our principal risks and considered which

could have a significant effect on the Group’s financial position,

business model and/or future performance if they were to

crystallise within the period to September 2027. Financial models,

described below, were used to assess the potential impact.

Financial modelling

Each of our scenarios used the same starting point, being the

pessimistic version of our five-year business plan (with the

revenue in this pessimistic forecast also referred to as the

‘highlyprobable’ revenue forecast for hedge accounting).

Forcontext, revenue in the first year of this pessimistic base

scenario is similar to FY2024 revenue of £691.3m, while costs

and other cash outflows still reflect ambitious growth plans.

The three scenarios then took this same starting point and

revised the forecasts to reflect:

Scenario Summary

A significant reduction in revenue, incorporating:

— a worsening of the global economy;

— a disruptive event that causes both a short-term

Group-wide disruption of trade and a sustained

significant loss of revenue from key customers

aftertheevent;

— increasing competition in China from emerging

localcompetitors

— a strengthening of Sterling;

— a delay in launching key new products; and

— no revenue growth from emerging capital equipment.

A significant increase in costs, incorporating:

— a significant fine or penalty;

— a sustained increase in inflation;

— additional professional fees;

— reduced operating profit margins on the sale of

capital equipment; and

— additional costs to respond to a one-off

disruptiveevent.

A combined reduction in profitability, incorporating:

— a reduction in revenue less significant than scenario

one and an increase in costs less significant than

scenario two.

We incorporated appropriate, realistic mitigating actions into

each scenario, such as reducing capital expenditure, bonuses

and dividends relative to the revised financial performance and

position inthese scenarios.

This modelling showed that cash and cash equivalents balances

remained positive inall three scenarios and exceeded £87m

atthe end of the assessment period (30 September 2027)

ineach scenario.

We also performed a ‘reverse stress test’, identifying the

reduction in profit, after mitigating actions, needed to exhaust

cash in the assessment period. This identified a trading level

solow that the Directors felt that the events that could trigger

thiswould be highly unlikely. The Directors also concluded that

aone-off cash outflow that would exhaust the Group’s cash

andcash equivalents in the assessment period was also

highlyunlikely.

Outcomes, mitigating actions and upsides

The financial modelling demonstrated that should the Group

experience ‘severe but plausible’ conditions in the period to

September 2027, positive cash and cash equivalents 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.

Conclusion

Based on this assessment, incorporating a review of the current

position, the scenarios, and our principal risks and mitigation,

theDirectors have a reasonable expectation that we will be able

to continue operating and meet our liabilities as they fall due over

the period to 30 September 2027.

Viability statement

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Through-cycle revenue growth %

-4

-2

-2.4

-1.5

9.5

3.8

2.4

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

Our ambition is to achieve sustainable long-term revenue growth

through cycles in our key markets, driving shareholder returns.

Our target is high single-digit average growth.

How we measure this

Compound annual revenue growth rate over a rolling five-

yearperiod.

How we performed

Five-year average revenue growth is currently 3.8%, with both

business segments having delivered through-cycle revenue

growth. The cyclical nature of our markets means that our five-year

average growth can be quite volatile and we are targeting

improvements in this metric as key markets recover. Our long-term

value creation strategy (pages 7 to 9) explains how we aim to meet

our long-term growth ambition.

Through-cycle growth rate Target range

Revenue £m

691.3

688.6

671.1

565.6

510.2

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

Revenue growth helps us assess the relevance of our products

forsolving customer problems and the growth in our market share.

It also helps increase profits, which we reinvest in the business

todeliver long-term growth 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 £691.3m, an increase of 0.4% from FY2023.

Growth was 3.7% at constant currency*. We saw good growth in

sales of AM machines, and CMM and gauging systems, offset by

weaker demand for position encoders and calibration systems

from the semiconductor manufacturing sector.

Our key performance indicators

We use financial and non-financial key performance indicators (KPIs)

tomeasure progress against our strategy.

This year, to reflect our focus on long-term value creation, wereport four

additional key performance indicators (KPIs) – Through-cycle revenue

growth,Adjusted* operating profit margin, Return* on invested capital and

Adjusted* cashflow conversion from operating activities. The rationale for

thesenew metrics is included in the respective charts below.

We have also introduced targets for these new metrics and weareshowing

past performance against these new targets, eventhough they were not

beingmeasured at that time.

We now only report on one profit before tax KPI, focusing on Adjusted*

profit before tax, as this is the measure that the Board reviews throughout

the year to understand the underlying trading performance of thebusiness.

*Note 29, Alternative performance measures, defines how each of these measures is calculated.

Renishaw plc Annual Report 2024

Strategic report

Adjusted cash flow conversion* from operating activities %

120

115

103

100

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

This ratio assesses our efficiency in converting our operating

profitbefore tax into cash and cash equivalents. Our target is

toexceed 70%.

How we measure this

Adjusted cash flow from operating activities as a percentage

ofAdjusted operating profit. These are defined in note 29 on

page152.

How we performed

This metric has improved significantly this year, rising from 26%

inFY2023 to 70% in FY2024. This improvement has been driven

by lower working capital, most notably a £23.8m reduction in

inventories this year, in contrast to a £23.3m increase last year,

andalso by lower capital expenditure this year.

Adjusted cash flow conversion from operating activities ratio

Target range

Return on invested capital %

6.5

17.5

23.5

16.1

12.3

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

Return on invested capital (ROIC) assesses our efficiency in

allocating capital to profitable investments. Our target is to

exceed15%.

How we measure this

Adjusted profit after tax before bank interest receivable,

asapercentage of invested capital. ROIC is defined in note 29

onpage 152.

How we performed

This metric has reduced to 12.3% this year, in line with lower

pre-tax profit, a higher tax rate and an increase in our non-current

asset base. Overthe last two years, we have invested significant

capital in ourmanufacturing facilities to enable us to pursue future

growthopportunities.

Return on invested capital Target range

Adjusted profit before tax £m

FY2020

FY2021

FY2022

FY2023

FY2024

122.6

141.0

163.7

119.7

48.6

Why we measure this

Profit shows how our strategy delivers value for stakeholders.

Adjusted profit before tax is the measure that the Board reviews

throughout the year to understand the underlying trading

performance ofthe business.

How we measure this

Adjusted profit before tax is defined in note 29 on page 152.

How we performed

As a result of increased costsandadverse currency impact in

ayear of marginal revenue growth, Adjusted profit before tax has

decreased by 13%. Labour, marketing expenses and maintenance

contracts have been the main drivers behind thehigher costs.

Adjusted operating profit margin %

10.1

21.0

24.1

18.9

15.7

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

Profitability demonstrates the efficiency of our strategy in delivering

value for shareholders. Our target is to exceed 20%.

How we measure this

Adjusted* operating profit (see note 29 on page 152), expressed

as a percentage of revenue.

How we performed

This metric has reduced this year, with operating costs increasing

at a greater rate than revenue growth. We have continued to invest

in our people to attract and retain employees to drive our future

growth. We are focusing on productivity to control future cost

growth, aiming to drive this metric back above our target.

Adjusted operating profit margin Target range

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Our key performance indicators (KPIs) continued

Global voluntary employee turnover %

6.2

6.8

10.7

8.0

7.0

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

The success of our strategies relies on our people feeling that

Renishaw is a great place to work, grow and contribute.

How we measure this

The number of voluntary leavers (excluding voluntary redundancy

and mutually agreed severance, if applicable) intheyear,

asapercentage of our average total headcount during the year.

How we performed

After investing heavily in pay and reward over the last two years,

our turnover rate has improved and stabilised at a lower level.

Wecontinue to engage in a range of activities to promote employee

engagement. More information can be found on page23.

Total engineering costs, including R&D £m

106.8

98.1

100.6

90.2

85.8

78.6

76.6

72.0

82.4

87.3

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

Investing in engineering is fundamental to our growth, helping

usto develop innovative new products and evolve our existing

products to maintain their competitiveness.

How we measure this

Annual expenditure on engineering, including R&D that has been

capitalised in the year, net of amortisation on capitalised R&D.

How we performed

Gross engineering expenditure increased by 6% to £106.8m.

Thisincrease mostly reflects higher pay, helping us to retain and

develop engineers to develop new technologies for future growth.

Included in Consolidated income statement Gross expenditure

Dividend per share in respect of the year pence

76.2

72.6

66.0

0.0

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

To track the underlying performance of the business and measure

how profit growth translates into 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 16.8 pence per share in FY2024

and the Directors propose a final dividend of 59.4 pence per

share. This would bring the overall dividend per share to

76.2 pence, equal to the total dividend for FY2023.

Despite lower profit this year, the Directors have considered the

Company’s future growth plans and strong cash reserves, and

sohave proposed to maintain the dividend per share this year.

Statutory GHG emissions tCO

e per £m revenue

6.4

7.5

9.9

11.9

13.3

FY2020

FY2021

FY2022

FY2023

FY2024

Why we measure this

This helps us ensure that we are doing business responsibly and

tracks our progress against our Net Zero targets.

How we measure this

Tonnes of Scope 1 and 2 (‘Statutory’) carbon dioxide equivalent

(CO

e) emissions from our operations, per £m of revenue, using

the market-based method. See How we calculate our data on

page 41.

How we performed

Our climate transition plans continue to reduce our greenhouse

gas (GHG) emissions per £m. Progress this year includes: 99% of

our purchased electricity is now from certified renewable sources,

we have increased solar electricity self-generation at several buildings,

and we continue to convert our vehicle fleet to low-carbon fuels.

Renishaw plc Annual Report 2024

The success of our business relies on good

relationships with our stakeholders. We rely on

different groups to help us run our business and

achieve our strategic goals. We recognise that our

operations can have a significant impact – both

positive and negative – on many of them. It’s essential,

therefore, that we consider their views when making

business decisions.

Over the following pages, we summarise our

stakeholder groups and provide a snapshot of how

weengage with them, as well as actions we’ve taken

this year in response to what they’ve told us. Notable

actions include a focus on our channel partner

programme (see Our customers on page 24 for more

information) and evolving the way we engage with our

investor community. Our aim is to help both groups

better understand the story of our business and how

our products create value. We also launchedour first

global employee engagement survey this year.

For more information on how we considered our

stakeholders in some of our principal decisions

thisyear, see our Section 172 statement on

pages64to 66.

Our employees

We aim to attract and retain people with the right skills

tohelp ussucceed, including designing and making the

products our customers need. And since diversity of

thought is one of the best ways of encouraging innovation

and creativity, we also want to create an inclusive working

culture where people feel able to sharetheir views and

achieve their full potential.

How we engage with our employees

We want our people to tell us what we’re doing well and

where wecan improve, and we are committed to ensuring

we have the channels in place to help them do that. These

channels also enable us to communicate the steps we’re

taking to respond to their feedback and provide greater

clarity about our strategic objectives. They include:

— employee briefing sessions and equality, diversity

andinclusion (EDI) forums;

— a new global employee engagement survey,

launchedinApril 2024 in 23 languages. In all, 63%

ofpeople responded. We also run Q&As, townhalls

andpulse surveys;

— regular engagement between employees and their

managers, such as discussions about performance,

supporting career development and identifying

opportunities for coaching;

— multiple meetings between our Board member and

employee engagement ambassador, Catherine Glickman,

and employees at different sites around the UK. This

included meeting Early Careers graduates and leaders

of our manufacturing division;

— our growing network of UK employee resource groups,

which provide a platform for employees to give feedback

to the business on a range of topics;

— internal social media and video channels and roadshows;

— Works Forums consultations for UK sites, with

representation from different business areas; and

— one-to-one engagement between Board members

andsome of our senior leaders to help the Board

stayconnected with employee views and support

ongoing work to develop clear career paths and

succession planning.

Outcomes from the year

— Achieved an engagement score of 74% in our first global

employee survey and scored well in areas like wellbeing

and intent to stay. Our employees also told uswe have

room to improve in areas like inclusion, teamwork and

collaboration, and strategy. We’ll use the results of this

survey to inform ourpeople strategy and internal

communications in the comingyear.

— Continued to build a more inclusive environment with our

new employee resource groups organising and hosting

agrowing number of activities, including new groups for

neurodiverse and disabled colleagues.

— Ran our second annual values competition. We received

37 entries from around the world, with our equality,

diversity and inclusion group and Early Careers team

among the winners.

Learn more about our first global employee survey and the

steps we’re already taking to address areas for improvement

on pages 42 to 44.

How we engage with stakeholders

Renishaw plc Annual Report 2024

STRATEGIC REPORT

How we engage with stakeholders continued

Our shareholders

Our shareholders are the owners of our business.

Werecognise the trust they place in us and in return we

aim to provide sustainable, long-term growth. It is essential,

therefore, that our Board and Senior Leadership Team

understand and consider the views of our shareholders

when making key strategic decisions.

How we engage with our shareholders

We are strengthening the way we engage with our

shareholders, and are committed to providing opportunities

for them to share their feedback. Some of the key events

inour Investor Relations calendar include:

— our annual Capital Markets Day, held this year

inJune2024 and attended by our Directors;

— new one-to-one meetings with key shareholders and

potential investors; and

— our biannual webcast presentations to discuss our

interim and annual results, including Q&A sessions

forparticipants.

Outcomes from the year

— Held formal and informal conversations with institutional

investors to discuss the changes to our Board,

including Sir David McMurtry’s decision to step down

as Executive Chairman and our plans to appoint a new

independent Non-executive Chair.

— Following feedback from investors, our Board approved

modifications to our Investor Relations Policy to help

usevolve our shareholder engagement. Once again,

SirDavid Grant, then our Senior Independent Director,

invited our largest institutional investors who voted

against re-electing our founders to the Board at our

2023 AGM to discuss their concerns. In all, five

institutional investors met with Sir David and Karen

Atterbury, our Interim Company Secretary, in March

andApril 2024. The meetings focused on a range

oftopics, including the absence of a relationship

agreement between the founders and the Company

(see more information on page 60), governance,

business and strategy, and our approach to ESG.

Keyissues raised related to Board composition,

diversity and succession planning. The Board and

relevant Committees discussed each key theme as

appropriate. The Board has made progress in these

areas over the past few years, as explained in this

year’s ESG review on pages 35 to 45 and the relevant

sections of the Governance report on pages 70 to 75.

However, theBoard recognises that there is more work

to do, specifically in achieving its diversity objectives.

— Appointed Peel Hunt as our new joint corporate

brokerto work alongside our existing corporate broker,

UBS, to help us strengthen our links and share our

investment case with the wider investment community.

Learn more about how we engaged with shareholders

during the year on pages 60 to 61.

Our customers

We work closely with our customers to understand their

production processes and the challenges they face so

thatwe can make the precise, productive and practical

products they need. The fact that many customers have

been with us for decades is testament to our team’s

expertise and ability to speak their language.

How we engage with our customers

We have three different types of customers – machine

builders who fit our products, end users who buy from

usdirectly, and distributors/channel partners who sell

ourproducts. We carefully select the latter based on

theirsector-specific experience. While we tailor our

engagement to suit the specific needs of each

customergroup, our approach also includes:

— our channel partner programmes in India and the

EMEA sales region. The programmes aim to make

iteasier for end users to access our products and to

strengthen our customer service and product support.

Our EMEA programme has three different levels of

commercial partnership and a dedicated partner portal

that includes up-to-date technical, marketing and sales

support materials;

— our global technology centres, which enable us to

directly support customers where they are based;

— customer visits to our UK manufacturing facilities

toshow how we use our own technologies to support

efficient, high-quality production processes; and

— gathering feedback via face-to-face and digital

sessions, and events.

Outcomes from the year

— Continued growing our channel partner programmes,

including adding our industrial automation product

lineto the programme and announcing our first official

channel partner for these products. In response to

feedback from our EMEA Sales Channel Partners

asking for greater opportunities for mutual learning,

weheld our first dedicated conference at our UK

headquarters, attended by 60 partners from

16countries.

— Attended EMO Hannover, the largest international

metalworking trade show, in September 2023, where

our product experts engaged with exhibiting machine

builders and visitors from 130 countries.

— Following requests to see how we use our own

products to be more efficient, we hosted customers

from Finland, Germany, Japan, the Netherlands,

Poland, South Korea, Spain, Sweden, the UK and the

USA at our UK manufacturing facilities.

Learn more about how we are working with customers to

help them meet their sustainability goals on page 40.

Renishaw plc Annual Report 2024

Our suppliers

We aim to build effective long-term relationships with

oursuppliers to access the goods and services we

needtomanufacture our products (direct suppliers),

runouroperations (indirect suppliers) and support new

productdevelopment.

How we engage with our suppliers

While we buy most of our materials in the UK, we have

teams in the countries where our suppliers are based so we

can regularly engage with them in their local time zone and

language. And because we rely on tens of thousands of

different raw materials and components from thousands

ofsuppliers, we can’t take a ‘one-size-fits-all’ approach.

Instead, we prioritise our engagement based on certain

criteria, including how much we spend with a supplier, their

risk profile and quality. We have also begun work to map

suppliers’ credentials against our sustainability and

compliance requirements. We focus the majority of our

day-to-day relationship management on around 250 key

suppliers. Some of the ways that we engage include:

— self-assessments for all new direct – and selected

indirect – suppliers;

— regular communication via our procurement and

engineering teams to ensure consistent, timely supply

ofquality goods and services. When a problem

occurs,we work with a supplier to ensure they have

improvement programmes and training in place;

— compliance audit and risk management policies

andprocesses, including our new Code of Conduct

(seepage 45 for more information on our Code);

— campaigns about compliance topics, such as

humanrights, health and safety, conflict minerals

andsanctions; and

— frequent discussions with suppliers about the

challenges and supply chain risks they face. Our Board

also receives updates on significant matters that could

affect our supply chain.

Outcomes from the year

— Invested in a new supplier relationship management

platform to help monitor performance, identify high-risk

suppliers against our key criteria, and work

collaboratively on sustainability challenges.

— Introduced new training to help our buyers embed

sustainability into their everyday thinking. To date,

90%of our buyers have completed the training.

— Engaged collaboratively with a select group of suppliers

on the topic of sustainability, with the aim of working with

them to reduce carbon emissions associated with the

manufacture and supply of goods and services we use.

This was in response to our materiality assessment

(seepage 35) and feedback from some suppliers,

particularly small and medium-sized businesses, who

arekeen to learn more and make progress. Thesessions

looked at key sustainability issues, ourexpectations of

suppliers, and the actions they’re taking to address their

Scope 1 and 2 carbon emissions. Initial feedback has

been positive and we are now reviewing ways to roll out

the programme to more suppliers.

Learn more about how we are working with suppliers to

create a more sustainable value chain on page 40.

Our communities

We are committed to conducting business in a socially

responsible way and aim to be open, honest and

consistent in our approach to community relationships.

Meanwhile, our education outreach programme supports

our broader work to build a pipeline of talent that will

support Renishaw’s future success.

How we engage with our communities

While each country tailors its approach to community

engagement to suit the local area’s culture and needs,

wefocus our efforts on three key areas:

— delivering science, technology, engineering and

mathematics (STEM) education through our global

education outreach programme;

— participating in local community and business initiatives;

and

— financial and communications support for charities and

not-for-profit organisations.

Outcomes from the year

— Continued to deliver our education outreach

programme by:

• participating in more than 170 STEM events in

Walesand Gloucestershire, engaging with around

12,000 students. We also opened the Renishaw

Room at the Bristol Beacon concert hall to support

music education in south west UK; and

• engaging with diverse student groups. Around 25%

of our engagements were with all-female groups,

SEND (special educational needs and disabilities)

schools and schools from socio-economically

deprived areas.

— Participated in a range of community and business

initiatives, including:

• sponsoring the second Slovenia Conference on

Chips and Semiconductors in January 2024 to

support the EU semiconductor community and

share our own knowledge in chip development;

• supporting UK Government campaigns on

violenceagainst women and girls, and blood

andorgan donation;

• sponsoring music, arts and professional sports

organisations in key UKlocations;

• as part of Black History Month, our sites across

theUK celebrated influential Black engineers; and

• joining the new Gloucestershire LGBTQ+ Inclusion

and Diversity for Employers (GLIDE) consortium.

— Through our technical partnerships, provided British

Cycling and INEOS Britannia with expertise and

components for a new track bike for the Paris Olympics

and a race boat for the 37th Americas Cup.

— Donated £0.3m to more than 280 charitable and

not-for-profit organisations. This included £116,000

from our India charities committee to support local

organisations, and £20,000 related to our global

valuescompetition. We also promoted fundraisers and

requests for volunteers, including trustees, fromseveral

UK charities via our internal communication channels.

Learn more about how our STEM outreach programme

supports our talent pipeline on page 42.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Following a strong final quarter, we have achieved record

revenue for the year of £691.3m (FY2023: £688.6m). We have

continued to invest in our people, increasing employee pay,

which together with adverse currency effects, isthe main reason

for the reduction in Adjusted* profit before taxto £122.6m

(FY2023: £141.0m).

We have maintained our strong financial position, withcash

andcash equivalents and bankdeposit balances at the

year endof £217.8m (30 June 2023: £206.4m), and net current

assets of£485.7m (30 June 2023:£470.8m). Our inventory

holding has been afocus area in working capital this year,

whichwe reduced by£23.8m over the year, as explained in

more detail below.

We’ve continued to invest incapital expenditure that supports

our long-term growth plans, with additions to property, plant and

equipment this year of £65.2m (FY2023: £73.8m), and continued

to apply our treasury strategy to mitigate near-term market risk.

Revenue

As Will has explained in the Chief Executive’s review, we achieved

0.4% growth in our revenue to £691.3m (FY2023: £688.6m).

Despite challenging market conditions at the beginning of

theyear, wehave seen recovering demand from our key

semiconductor market towards the end of the year, and

goodgrowth in our systems sales.

This year’s gross margin (excluding engineering costs),

asapercentage of revenue, was 61%, compared with 64%

lastyear. Thischange is mostly due to the adverse impact of

currency on revenue, combined with higher labour pay rates.

Wehave made targeted price rises, although this has been

offsetby pricing pressures, particularly in the APAC region.

Supporting our strategy of delivering growth by developing

innovative and patented products, weinvested £71.1m in research

and development expenditure, compared with £72.5mlast year

(see Note 4 to the Financial statements). Wealso incurred £35.7m

(FY2023: £28.1m) of other engineering expenditure, to support

existing products and technologies. Netengineering spend

alsoincludes a £2.7m reduction in capitalised development

expenditure, net of amortisation and impairments, as explained

in Note 12. This is partly offset by a£1.1m year-on-year increase

in the R&D tax credit, totalling £7.7m for FY2024, which is

primarily as a result of the rate applicable to qualifying spend

increasing from 13% to 20% inApril 2023.

In distribution and administrative expenses, we have also spent

an additional £4.7m in consultancy and software this year,

notably on our new global ERP system and an upgraded

e-commerce platform, as part of our initiative to improve

productivity across the business. We deployed the first instance

of the new ERP system during the year and have developed

in-house expertise to reduce third-party costs as we deploy

thisglobally over the next few years.

Profit and tax

As a result of the increased costs and impact of currency in

ayearof marginal revenue growth, Adjusted* operating profit was

16.7% lower this year at £108.7m (FY2023: £130.4m). At constant

exchange rates*, Adjusted operating profit would have been

8.8%lower than the previous year.

Adjusted* operating profit in our Manufacturing technologies

segment was £103.2m, compared with £125.5m last year. In our

Analytical instruments and medical devices segment, Adjusted*

operating profit was £5.5m, compared with £4.9m last year.

Financial income for the year was £12.3m, compared with £9.7m

last year, and includes a £2.8m increase in interest on bank

deposits mainly due to higher interest rates.

Adjusted profit before tax was £122.6m, compared with £141.0m

in FY2023. Statutory profit before tax was also £122.6m, compared

with £145.1m in the previous year.

Certain infrequent events can sometimes affect our financial

statements, prepared according to applicable International

Financial Reporting Standards. We exclude these events from

adjusted profit and earnings measures to give the Board and

other stakeholders another useful metric to understand and

compare our underlying performance. This year, there were no

items excluded from Adjusted profit before tax, while additional

items excluded in the previous year are detailed in Note 29 on

pages 152 to 154.

The FY2024 effective tax rate has increased to 21.0% (FY2023:

20.0%) mostly as a result of an increase in the effective UK tax

rate from 20.5% to 25.0%. Note 7 provides further analysis of the

effective taxrate.

Financial review

At constant exchange rates*, revenue would have been

3.7%higher than the previous year. This is mostly as a result

ofan appreciation of GBP relative to USD, from an average of

1.21 in FY2023 to 1.26 inFY2024. The effect of currency has

been partly mitigated by our treasury strategy. Without our

forward cash flow hedging contracts, revenue wouldhave

reduced by 0.7% year-on-year.

Operating costs

As noted last year, our labour costs are our largest cost

andthisyear we’ve focused on striking the right balance of

investingin our people to retain, reward and motivate while

seeking sustainable profit growth. Salary increases, in addition

toan increase in average headcount of 77, are the main drivers

for total labour costs (excluding bonuses) increasing by 4%

to£279.5m from £268.2m last year. This also includes

severancecosts of £2.1m, which mostly related to a mutually

agreed severance scheme in the UK, and a £4.6m currency

translation benefit.

Region

FY2024

revenue at

actual

exchange

rates

£m

FY2023

revenue at

actual

exchange

rates

£m

Actual FX

variance

Constant FX

variance

APAC 318.8 310.6 +3 +8

EMEA 208.0 216.5 -4 -1

Americas 164.4 161.5 +2 +2

Total Group revenue 691.3 688.6 0 +4

Renishaw plc Annual Report 2024

Strategic report

Consolidated balance sheet

We have invested £65.2m (FY2023: £73.8m) in capital

expenditure, which mostly relates to new production plant and

equipment, and the expansion of our Miskin production facility

inWales, UK. The Miskin project will ultimately increase our

global manufacturing floorspace by 50%, with the first of the two

new halls becoming operational during the year. Iwould like to

thank the project team who were responsible for delivering the

first phase of this project on time and within budget. We have

also purchased a distribution facility in the United Arab Emirates

and completed the construction of adistribution facility in Brazil.

As I mentioned earlier, we’ve focused this year on reducing our

inventory holding. Whilst we continue to recognise the importance

to our current and potential customers of holding sufficient

finished products to meet their needs, we have reduced both

finished good and component inventories following the easing

ofsupply chain challenges experienced in recent years. This has

meant we’ve reduced inventory from £185.8m at the start of the

year to £161.9m.

Trade receivables increased from £123.4m to £134.1m due to

increased trading in the fourth quarterof FY2024 relative to the

previous year. Withgood creditmanagement practices across

the Group, debtor days remained constant year-on-year at

63days. We continue to experience low levels of defaults,

andhold a provision for expected credit losses at 0.5% of

tradereceivables (FY2023: 0.4%).

Total equity at the end of the year was £902.8m, compared with

£896.7m at 30 June 2023. This is primarily a result of profit for

the year of £96.9m, less dividends paid of £55.4m and the

remeasurement of defined benefit (DB) pension scheme

liabilities of£36.3m.

Cash flow and liquidity

We continue to have a strong liquidity position, withcash and

cash equivalents and bank deposit balances at 30 June 2024

of£217.8m (30 June 2023: £206.4m). This is a result of our

cashflows from operating activities of £124.1m, partly offset

byour previously noted capital investments and dividends

paidof £55.4m.

We have introduced a new key performance indicator (KPI)

thisyear relating to cash flow. Adjusted cash flow conversion*

from operating activities assesses our efficiency at converting

operating profit into cash. We achieved our target of 70% this

year, which was asignificant improvement from the previous

year(FY2023: 26%). See page 21 for more details.

Pensions

At the end of the year, our defined benefit pension schemes

showed a net surplus of £10.8m, compared with £57.4m at

30 June 2023.

During the year, the Trustee of the UK defined benefit pension

scheme (‘UK scheme’) undertook a buy-in and insured around

99% ofthe UK scheme’s liabilities bypurchasing an insurance

policy. This contract was effective from 19 October 2023 and

thevalue of the contract is recognised as a UK scheme asset.

For a buy-in insurance contract such as this, where the income

received fromthe policy matches exactly the benefit payments

due to themembers it is covering, the value attributable to the

contract recognised as an asset is the equivalent IAS 19 value

ofthe corresponding liabilities.

The IAS 19 liabilities in respect of the buy-in policy were

lowerthan the transaction price of the insurance contract.

Consequently, the value attributable to the insurance

contractreduced from the actual price paid, and the resulting

remeasurement loss of £31.9m was recognised in the

remeasurement of defined benefit pension scheme liabilities

element in the Consolidated Statement of Comprehensive

Income and Expense. See Note 23 for further detail.

150.0

140.0

130.0

110.0

120.0

100.0

Change in

revenue less

change in

production

costs

FY2023

FY2024

Engineering

costs

Distribution

costs

Administration

expenses

Financial

income and

expenses

Share of

proﬁts of joint

ventures

Adjusted proﬁt before tax bridge

141.0

-11.4

-7.9

-2.2

-0.2

2.2

1.1

122.6

Increase Decrease Total

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Financial review continued

Treasury strategy

Our treasury policies are designed to manage the financial

risksthat arise from operating in multiple foreign currencies.

Themajority of sales are made inthese currencies, while

mostmanufacturing and engineering is carried out in the UK,

Ireland and India.

We use forward exchange contracts to hedge both 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 over a two-year

forward period, where our forward rate cap policy allows, and

tooffset movements on Renishaw plc’s Euro, US Dollar and

Japanese Yen intercompany balances. We do not speculate

withderivative financial instruments.

Our treasury policies are also designed to maximise interest

income on our cash and bank deposits and to ensure that

appropriate funding arrangements are available for each

ofourcompanies.

Sustainability

We continue to progress with our transition to Net Zero,

asoutlined on pages 37 to 41. Our five-year financial plan

includes estimates of the capital expenditure needed to deliver

this plan, and at this stage we have not identified a material

effectof other climate-related matters on our financial statements.

Capital allocation strategy

Our Board regularly reviews the capital requirements of the

Group, to maintain a strong financial position toprotect the

business and provide flexibility to fund future growth. We’ve

consistently applied our capital allocation strategy for many

years. Organic growth isour first priority and we’re committed

toR&D investment for new products, manufacturing processes

and global support infrastructure to generate growth in future

returns and improve productivity, as well as committing to the

investment needed to transition to Net Zero. We demonstrated

this during the year through our capital expenditure and

investments inR&D.

We introduced Return on invested capital* as a new KPI

thisyear. This assesses our efficiency in allocating capital to

profitable investments. We achieved 12.3% this year, which

waslower than last year (FY2023: 16.1%), due to a combination

of lower pre-tax profits, higher tax rates and recent increases in

ournon-current asset base. We expect to drive this metric back

towards our target of 15% with higher profits and lower levels

offuture capitalexpenditure.

We may supplement organic growth with acquisitions in current

and adjacent market niches that are aligned to our strategy.

We have always valued having cash in the bank toprotect the

core business from downturns, and wemonitor our cash against

a minimum holding according to forecast overheads and revenue

downturn scenarios. This cash also allows us to reactswiftly as

investment or market capture opportunities arise. Actual and

forecast returns, alongwith our strong financial position, support

our progressive dividend policy, which aims to increase the

dividend per share while maintaining a prudent level of

dividendcover.

Earnings per share and dividend

Adjusted* earnings per share is 133.2p, compared with 155.1p

last year, while Statutory earnings per share is 133.2p, compared

with 159.7p last year. Wepaid an interim dividend of 16.8 pence

per share (FY2023: 16.8 pence) on 9 April 2024 and are pleased

to propose a final dividend of 59.4 pence per share inrespect

ofthe year (FY2023: 59.4 pence). This would bring the overall

dividend per share to 76.2 pence, equal to the total dividend for

FY2023. Despite lower profit this year, we have considered the

Company’s future growth plans and strong cash reserves,

andsohave proposed to maintain the dividend per share

thisyear.

Looking forward

We remain committed to our organic growth strategy

andwillcontinue to invest in our people, infrastructure

andproduct innovation.

In recent years we have made significant investments in our

manufacturing capacity and our global ERP system to position

the business for long-term growth and improved productivity.

Weexpect these investments to drive a higher return on invested

capital in the years ahead.

As we reduce capital expenditure from its recent exceptional

levels and continue to focus on controlling working capital,

weaim to further improve cash flow conversion.

With the infrastructure in place to deliver growth, we are targeting

an improved Adjusted operating profit margin this year.

Allen Roberts

Group Finance Director

11 September 2024

* Note 29, ‘Alternative performance measures’, defines how each of these measures is calculated.

Renishaw plc Annual Report 2024

Review of product groups

Our five product groups pursue innovation-led growth in both established and

emerging markets. These markets have a combined addressable value of £6 billion,

where structural drivers and global trends contribute to attractive through-cycle growth

rates of at least 5%. Overthe following pages we provide more detail on our structure

and explain how each product group supports customers in their respective markets,

while looking to capture the opportunities and manage the risks associated with these

trends. Our strategy for long-term value creation is described on pages 7 to 9.

Business segment: Manufacturing technologies

Our technologies help customers optimise their manufacturing processes and capabilities. Our products and software help

to create more efficient, sustainable and innovative factories. We provide our Manufacturing technologies customers with:

Precision – giving customers accurate and precise production processes to deliver higher performance and sustainability.

Productivity – offering manufacturers higher process yields, faster cycle times and more automation.

Practicality – products that are easier to use and have embedded knowledge and data analytics.

Our product groups Our established products Our emerging products Our key markets

Industrial Metrology

Measurement and control

ofprecision component

manufacturingprocesses.

— CMM sensors

— Machine tool probes

— Styli and fixturing

— CMM and gauging systems

— Metrology software

— Smart factory software

platform

— Automotive

— Electronics

— Semiconductors

— Aerospace and defence

— Precision manufacturing

Position Measurement

Precision motion control of robots,

machinery and factory automation.

— Open optical encoders

— Laser encoders

— Magnetic encoders

— Calibration

— Enclosed optical encoders

— Industrial automation

forrobots

Additive Manufacturing

Production of intricate metal

components from a digital model.

— Industrial metal 3Dprinters

— Build preparation and

process monitoring

software

Business segment: Analytical instruments and medical devices

Customers in this segment tend to be end users of our technologies working in healthcare and academia. Our innovative Spectroscopy

(S) products help our customers improve their materials analysis, while our Neurological (N) solutions support cutting-edge therapies

and enable research into previously untreatable conditions. Customer engagement and support is a key differentiator and we can

configure our products according to different needs. Ourproductsdeliver:

Precision – high-resolution sampling (S); accurate and precise device delivery and improved procedure safety (N).

Productivity – automated analysis and rapid, reliable results (S); fast planning, automated placement and shorter surgeries (N).

Practicality – configurable products to suit customer needs (S); support for image-guided surgical planning to help create

morepredictable patient outcomes (N).

Our product groups Our established products Our emerging products Our key markets

Spectroscopy

Materials analysis instruments.

— Laboratory Raman

spectrometers

— Industrial process Raman

spectrometers

— Academia

— Healthcare

— High-tech manufacturing

— Pharmaceutical

Neurological

Central nervous system surgical

anddrug delivery solutions.

— Neurosurgical robot

— Surgical planning software

— Drug delivery system

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Review of product groups continued

Manufacturing technologies

What we do

We make sensors, measurement systems and

software that allow customers to precisely measure

machined parts, generate inspection reportsand

control the performance of their production machines.

Our products are used throughout production – either

directly on metal-cutting machines, on the shop floor

nearby, or in aseparate quality lab.

Industrial Metrology is the most established part of

our business and we have customers across almost

every sector of manufacturing. And because of our

long track record in this area, some of them have

been working with us for decades.

Our markets and the trends that

affectthem

Some of our biggest markets include aerospace,

automotive, consumer electronics and defence,

which all rely on highly repeatable, efficient

processes to make increasingly complex parts

withtighter tolerances.

We’re seeing a general trend towards more

automation and ‘smart’ factories across all our

sectors. We make products that support this trend,

like our Renishaw Central software platform, which

connects measurement machines and computer

numerically controlled (CNC) machines to improve

the automation of process control. We’re seeing our

measurement systems, such as our AGILITY range

ofco-ordinate measuring machines (CMMs) and our

Equator range of shop-floor gauges, becoming more

prevalent, as measurement becomes more about

controlling active processes.

Sustainability is a growing issue for our customers

too, as they develop their own goals and targets

tolower their impact on the world. Our automated

measurement tools can help here, since they improve

manufacturing efficiency, which reduces both waste

material and energy use.

Meanwhile, the combination of supply chain

disruption during the COVID-19 pandemic and rising

geopolitical tensions has pushed security of supply

up the agenda, with more customers looking to

diversify their supply chains into other regions.

AllourManufacturing technologies product groups

benefit from this because our well-respected global

subsidiary network gives us the opportunity torapidly

transfer engineering knowledge and experience

around the world.

Our priorities for the future

Looking ahead, we see continued demand for

betterefficiency, flexibility and reduced wastage

inmanufacturing processes, which is driving the

trend towards shop-floor automation of process

control. This benefits our Additive Manufacturing

product group as well.

We also want to continue expanding our customer

relationships to help us prioritise future investment

inresearch and development. These longstanding

relationships have been particularly helpful in

definingour future product roadmaps. As our

measurement technologies become more advanced,

process control becomes more integrated into

manufacturing processes, and we provide more

holistic solutions, we expect to work even more

closely with our customers.

For more information on this year’s business

performance, see our Chief Executive’s review

onpages 4 to 6.

Industrial Metrology

Find out more

about our

Industrial

Metrology

solutions in

our Virtual-

Expo.

Renishaw plc Annual Report 2024

What we do

Renishaw’s Position Measurement products help

customers build, calibrate, control and check

precision machines in a wide variety of applications.

Our position encoders provide electronic feedback

on machine motion to ensure accuracy and enable

automated operation, while our calibration systems

are used to fine-tune the set-up and check the

continued operation of those machines. These

systems are used at all stages of the machine

construction and operation process, so we focus

heavily on practicality and usability to ensure easy

deployment and low cost of ownership. That

includescontinuous development of our CARTO

calibration software for efficient machine set-up

andmaintenance.

Our business is very collaborative and we encourage

our engineers and designers to visit our customers

tohelp develop precise, reliable tools that meet their

specific needs. Many of our experts have worked for

Renishaw for a long time and their knowledge has

helped us build a reputation for deep, longstanding

relationships. That reputation is reinforced by the

factwe use many of our Precision Measurement

products in our own processes as well as within some

of our Industrial Metrology, Additive Manufacturing

and Spectroscopyproducts.

Our markets and the trends that

affectthem

This is a highly demanding sector that requires

speed, precision and reliability, and our products

areused in a range of applications, including

semiconductor chip production, flat panel display

manufacture and robotics.

Semiconductors and microelectronics are some

ofour biggest markets. Our encoders are used

atallstages of the production process, from

manufacturing silicon wafers to packaging and

testing individualdevices. While the general outlook

for semiconductors remains positive, demand for

ourproducts has been lower this year, due to customer

overstocking, driven in large part by huge demandfor

consumer electronics during the COVID-19 pandemic

and ongoing supply chain uncertainty.

However, we are already seeing a return to growth

over the longer term, caused partly by changes in

global trading relations. Many major industrialised

nations are keen to reduce their reliance on dominant

geographical sources of supply and have announced

plans to invest in their own semiconductor production

facilities. That investment will take time tofilter through.

We also expect continuous improvements in the

technology that underpins everyday items, like

smartphones, televisions and both internal combustion

engine and electric vehicles. Growth inthe use of

artificial intelligence and robotics should also drive

demand. For example, someour newest products are

helping customers introducehighly efficient, accurate

robots into theirindustrial manufacturing and

warehouse management processes.

Our priorities for the future

Given the wider societal trends towards

automationand robotics, we see continued

potentialfor growth for our Position Measurement

products. Our combination of deep market

knowledge and longstanding customer

relationshipswill remain essential in helping us

realisethat potential. And while we will continue

toinvest a significant proportion of our revenue in

research and development, we will ensure we do so

in the areas where we can make the most impact,

and help our customers achieve their goals as cost

effectively as possible.

For more information on this year’s business

performance, see our Chief Executive’s review

onpages 4 to 6.

Position Measurement

Find out more

about our

encoders for

position and

motion control.

Find out more

about our

machine

calibration and

optimisation

products.

Find out more

about our

industrial

automation

solutions.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Review of product groups continued

What we do

Additive Manufacturing (AM) – also known as 3D

printing – is the process of making 3D components

by building up layers of material. Our AM machines

use high-powered lasers to selectively melt sections

of fine metal powder. This process is repeated,

layerby layer, to build high-strength, complex

components that often can’t be made using

traditional manufacturing techniques.

AM has historically been used exclusively for

rapidprototyping, one-off parts and small batch

production. Our focus is on developing solutions

thataccelerate AM use for high-volume manufacturing

applications, helping customers scaleup application

– from proof of concept to serial production – by

providing market-leading productivity for cost-

effective manufacture.

Our software solutions mean our AM machines

canbe integrated with other ‘smart’ manufacturing

technologies, including third-party manufacturing

execution systems (MES) and design tools, which

make the most of 3D printing’s strengths to create

designs with enhanced functional performance.

Like our other Manufacturing technologies products,

we use AM in our own processes, so we understand

the challenges of AM volume production. This includes

the cultural shift needed in theway engineers optimise

product designs for AM rather than subtractive

manufacturing. Our applications engineers work

closely with our key customers to help them make

that shift, and our track record as a trusted partner

translates into repeat system sales. The fact that

many of our target manufacturing customers

alreadyuse our Industrial Metrology and Position

Measurement products also helps this process.

Our markets and the trends that

affectthem

We see enormous growth potential in AM, with the

aerospace and medical sectors as early adopters.

Inaerospace, which is a long-established market for

our Manufacturing technologies products, lighter AM

components are helping to increase fuel efficiency

and reduce greenhouse gas emissions. In healthcare,

as ageing populations drive demand for orthopaedic

implants, AM enables designs that include lattice

structures, which encourage bone integration and

improve patient recovery.

As with any disruptive technology, there are several

barriers to widespread adoption, with cost-per-part

the biggest barrier. With machine time the biggest

contributor to the cost of making AM parts, our

newest machines and software are tackling that

challenge head on, reducing build times by up to

50%, without compromising quality. This makes AM

economically viable to agreater range ofsectors,

andwe’re seeing increased interest in defence

andconsumer electronics applications, drivenby

underlying globaltrends that also benefit our Industrial

Metrology andPosition Measurement products.

Our priorities for the future

We’re excited about AM’s disruptive potential to

change the way a wide range of products are

madeand our focus is on continuing to deepen our

customer relationships to support their applications

as they scale up. At the same time, we are pursuing

further innovations to boost productivity and lower

costs. We see collaboration with the wider AM

industry as important for driving adoption, so we’ll

continue to work closely with international committees

to standardise AM processes and software partners

to maximise the value of digital tools.

For more information on this year’s business

performance, see our Chief Executive’s review

onpages 4 to 6.

Additive Manufacturing

Find out more

about our

Additive

Manufacturing

systems.

Renishaw plc Annual Report 2024

What we do

We make Raman spectrometers that help customers

analyse the chemical and structural properties

ofmaterials.

Our flexible, high-performance devices can be used

in a wide range of applications, from research and

development into new materials and healthcare,

toforensics and cultural heritage. Today, we are

oneofthe top three global Raman spectrometer

manufacturers by market share.

We design our products to be highly modular,

allowing our customers to configure a spectrometer

totheir specific needs. We also focus on making it

easier to integrate our systems with other analytical

techniques, such as scanning electron microscopes,

to enable our customers to conduct ‘multimodal’

imaging. Meanwhile, our robust, transportable

VirsaRaman analyser enables customers to carry

outlab-quality analysis in the field or in a factory.

Thisyear, our Virsa Raman spectrometer was

usedtoanalyse stones at Stonehenge in the UK.

Our markets and the trends that

affectthem

Academia is our biggest, most mature market, where

Raman spectrometry is widely used in research and

development. While demand remains strong for

flexible and powerful systems, the sector can be

affected by geopolitical events since it relies heavily on

government funding. This year, for example, wesaw

reduced demand as attention turned to the upcoming

US presidential election in November 2024. However,

we have a strong reputation in the sector and plenty

of experience in planning ahead tomanage these

cycles to ensure that we are well placed to win

business when funding is released.

Other growing sectors include healthcare, where

spectrometers support studies for early cancer

detection, diagnosing diseases and drug discovery,

and industrial research, particularly in areas like

battery development for electric vehicles. Here, the

precise chemical information provided by our Raman

spectrometers enables manufacturers to fine tune the

quantities of materials to make batteries more efficient

and cost effective.

Meanwhile, we are well placed to benefit from the

continuing trend among customers looking to

incorporate materials analysis into the shop floor

tohelp them better understand their products and

processes, and solve problems more quickly. As the

technology is more widely adopted and this market

matures, we expect demand for systems like the

Virsaanalyser to grow significantly.

Our priorities for the future

The number of applications for Raman spectrometers

is growing, as is their maturity, representing a significant

opportunity to expand our existing portfolio into

adjacent markets. For example, we see significant

growth potential in the bioprocessing sector.

Here,Raman spectrometers can measure the

concentrations of nutrients in bioreactors, ensuring

the user can maintain an optimum condition for the

culture, and allowing more efficient production of end

product. While we already have a strong network in

academia, we work closely with our sales colleagues

to develop the connections we need to make the

most of new opportunities. It is critical that we

continue to innovate, investing in the next generation

of products, adding new features and functionality

tosupport our longstanding academic customers,

who remain key to our future success.

For more information on this year’s business

performance, see our Chief Executive’s review

onpages 4 to 6.

Spectroscopy

Analytical instruments and medical devices

Find out more

about our

Spectroscopy

products.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Review of product groups continued

What we do

We design and make products that help clinicians

deliver therapies and treatments for patients with

neurological diseases in a safe, effective and

predictable way. Those products include our

neuromate surgical robot, and navigation and

planning software, which help surgeons with

precision tool positioning and implant placement.

Wealso supply accessories that support procedures

like deep-brain stimulation and biopsy.

Our drug delivery system is used to deliver therapies

or drugs directly to a patient’s brain. It can be used for

gene therapies, which are usually delivered in a single

dose (acute), or for drugs that need to be administered

repeatedly over time (chronic). Our chronic system is

the only one of its kind and is enabling research into

previously untreatable neurological conditions and

diseases, including brain tumours.

Trust is an essential part of our business and we have

a reputation for building deep relationships with our

customers, based on openness, honesty and integrity.

Our markets and the trends that

affectthem

Our two main markets are healthcare and

pharmaceutical. Healthcare providers and hospitals

are looking for faster, more precise surgical therapies

to increase procedure efficiency and improve patient

outcomes. Demand is growing for more economical

and patient-specific treatments, as well as

technologies to reduce the potential for human error.

Our neuromate surgical robot and planning software

helps on both fronts, enabling surgeons to plan

aprocedure ahead of surgery, saving time in the

operating theatre. We continue to see new competition

emerging in the area of surgical robotics, but we are

well established in brain surgery.

Meanwhile, we’re working with pharmaceutical

customers to create innovative products that help

develop new treatments for neurological diseases.

This is an exciting, challenging market that has

beenparticularly affected by the macroeconomic

landscape in the past few years. Drug trials have

always been expensive to run and inflationary

pressures, caused by global economic uncertainty,

have driven costs up further and slowed investment.

However, we’re seeing early signs of recovery and

remain confident in the future of this market. Rising

global life expectancy and ageing populations mean

we expect pharmaceutical customers will need

moreinnovation to treat the increasing prevalence

inlate-onset diseases such as Parkinson’s and

dementia. Our products position us at the centre

ofthe research that is needed today to develop the

treatments and delivery systems that will address

those increases in the future.

Our priorities for the future

Inflation across the sector has increased our

costsand those of our customers in recent years,

sowe willcontinue to prudently manage our costs.

Atthe same time, we need to invest carefully in

areassuch as drug delivery and range-extending

neurosurgical applications, so that we are ready for

the rapid growth we expect in our main markets.

Accelerating our new product development

programmes and market approvals will also be

afocus for us.

For more information on this year’s business

performance, see our Chief Executive’s review

onpages 4 to 6.

Neurological

Find out more

about our

neurosurgery

and drug

delivery

solutions.

Renishaw plc Annual Report 2024

Introducing our ESG strategy

Developed using the United Nations Sustainable

Development Goals (UN SDGs) as a guide, our ESG

strategy sets out three environmental, social and

governance goals. These are supported by a series

of strategic objectives intended to help us address

theareas where we can havethe biggest impact.

Our goals and objectives go beyond the Net Zero

greenhouse gas (GHG) emissions targets that we set

in FY2021, since we know that creating a sustainable

future requires more than reducing emissions.

Byraising and broadening our ambitions, we also

want to empower our people to make a positive

difference to our business, stakeholders and planet.

Using our materiality assessment to inform

our strategy

To develop our ESG strategy, we needed toknow

what our stakeholders care about and identify the

topics that are most significant to our business. Todo

that, we completed a double materiality assessment,

with support from external sustainability experts.

Wealso carried out a series of interviews and surveys

with internal andexternal stakeholders, including

employees, customers, suppliers andinvestors.

As well as helping us better understand how our

operations affect people and the environment, we

used the assessment to review the ESG factors that

affect our performance, reputation and longevity as

an organisation. As a result of this initial materiality

assessment we have focused our ESG strategy on

the topics below:

Environment

— Energy use and GHG emissions.

— Low-carbon transition and climate risk.

— Product design and life cycle management.

— Innovation to support customers’ sustainabilitygoals.

— Environmentally responsible procurement.

Social

— Talent attraction, development and retention.

— Human rights.

— Diversity, inclusion and equal opportunities.

Governance

— Business conduct and ethics.

Our ESG goals

Environment

Innovate with our customers and suppliers to achieve more

with less, working towards Net Zero carbon emissions while

minimising all environmental sustainability impacts.

Social

Develop a diverse and inclusive team who are inspired

towork for a responsible business.

Governance

Ensure appropriate governance arrangements are in place

toprovide accountability, transparency, compliance and

integrity as a responsible business.

Introduction from our Chief Executive

We have always been proud of our role in helping our

customers create products, materials and therapies that

touchbillions of lives. It’s why we articulate our purpose

as‘Transforming Tomorrow Together’.

That purpose has never been more relevant. As a responsible

business that believes in acting with integrity, we strive to help

create a more sustainable future. That means making our own

products in ways that minimise our impact on people and the

planet, and helping our customers and suppliers achieve their

own sustainability goals.

So, I am delighted that we have reached a significant

milestone in our approach to sustainability, launching our

firstenvironmental, social and governance (ESG) strategy.

Builton our core values and commitment to doing business

responsibly, our ESG strategy includes a set of goals and

strategic objectives to help us make tangible progress.

These goals provide a roadmap to help our talented people

continue to develop the products that will help solve global

challenges. This includes reducing waste and increasing

energy efficiency, while ensuring that we maintain diverse

andinclusive workplaces where people are inspired to work

for aresponsible business. Importantly, our strategy also

aligns with our business strategy and model, which aim

tocreate long-term value for all our stakeholders (see pages

7to 9 for more information).

And because we need everyone at Renishaw to play their

part, I am also pleased to be chairing our new ESG Steering

Committee. As well as overseeing progress of our ESG

strategy, the Committee will provide the support our people

need to help accelerate and enhance our contribution to

amore sustainable future.

Will Lee

Chief Executive and Chair of the ESG Steering Committee

Our approach to ESG

ESG review

A strategy guided by the UN SDGs

We have aligned our ESG strategy

with thethree UN SDGs thatare

most material toour business.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

ESG review continued

Governing our approach to sustainability

Our commitment to doing business responsibly underpins

everything we do. That starts at the very top of Renishaw,

whichis why we have also established a new ESG Steering

Committee to support our ESG strategy and strengthen our

governance framework (see illustration below). Chaired by our

Chief Executive, WillLee, members include our Independent

Non-executive Director Stephen Wilson and representatives

fromour key product divisions and commercial functions,

sustainability teams, HR and Finance.

See our Section 172 statement on pages 64 to 66 for more

information on how the Board considered our stakeholders

before approving our ESG Steering Committee and strategy.

Reporting

Informing

Our sustainability governance framework

Renishaw plc Board

Oversees all sustainability matters including strategies, goals and targets, policies,

procedures, performance, disclosures and risk.

ESG Steering Committee

Responsible for developing and overseeing the Group’s

ESG strategy and reporting. It is accountable for our

goals and strategic objectives and regularly reviews and

scrutinises our progress against them. The Committee

also defines actions needed to mitigate climate-related

risks and make the most of potential opportunities.

Risk Committee

Ensures that our climate-related

risks are effectively managed

through our risk management

and internal controls.

Environmental Sustainability Committee

Oversees the implementation of the environmental

aspects of our ESG strategy and monitors progress

against our goals and key performance indicators (KPIs).

The Committee also recommends strategy improvements

or changes to the ESG Steering Committee.

Audit Committee

Reviews the effectiveness of our

risk management and climate-

related assurance.

Executive Committee

Responsible for achieving sustainability

targets in the business functions each

Committee member represents.

Remuneration Committee

Sets the remuneration policy in

alignment with strategic objectives

including sustainability.

How we report on ESG matters

This year we have aligned our sustainability reporting with

ournew ESG strategy, creating an ESG review that replaces the

Managing our resources and relationships section ofprevious

reports. We provide details of the strategic objectivesthat we

have set tohelp achieve our three ESG goals within their relevant

sections. Our ESG information is nowstructured as follows:

— How we engage with our stakeholders – providesdetails on

our key stakeholder groups, and why and how we engage

with them. Seepages 23 to 25.

— Environment – provides details on how we are addressing

GHG emissions in our own operations as well as working

withour customers and suppliers to tackle their sustainability

challenges. See pages 37 to 41. We report our Climate-related

Financial Disclosures on pages 46 to 51.

— Social – here we review the work we’re doing to create amore

inclusive workplace and develop clear career progression

plans. We also provide details of our first global employee

survey, our health and safety performance, andwork to

strengthen our approach to human rights. See pages 42 to 44.

— Governance – provides more information on the steps we’re

taking to strengthen our approach to key governance topics,

including the launch of our new Code of Conduct. TheBoard’s

role in overseeing our corporate governance isdiscussed

throughout the Governance report, pages 54to69.

Renishaw plc Annual Report 2024

Developing products for a more

sustainablefuture

For more than 50 years, our products and solutions have

helpedcustomers solve technological and scientific challenges.

Increasingly, our commitment to providing unparalleled levels

ofprecision, productivity and practicality means that many of

ourproducts also play an important role in helping our

customers achieve their sustainability goals.

To truly play our part in creating a more sustainable future,

weneed to ensure that we make those products in ways

thatlower our own impact on the environment. That means

addressing the direct Scope 1 and 2 GHG emissions in our

operations and working across our value chainto address our

indirect Scope 3 emissions. Our new environment goal, and

theseries of strategic objectives (seeabove) that support it,

aredesigned to help us do that.

Environment

Our environment goal

Innovate with our customers and suppliers

toachieve more with less, working towards

Net Zero carbon emissions while minimising

allenvironmental impacts.

Our strategic objectives are:

Climate

— Reduce GHG emissions associated with

product design, service and use.

— Achieve more than 50% reduction in GHG

emissions from our operations, purchased

energy and supply chain by 2030, as part

ofprogress towards Net Zero.

— Continue to ensure strategic business

decisions reflect theclimate-related financial

risks and impacts for ourbusiness.

Customer solutions

— Progressively achieve growth from sales of

new and existing products with quantifiable

sustainability benefits for our customers over

the period 2025-2028.

Responsible procurement

— Reduce sustainability impacts and potential

risks from purchased goods and services

across Renishaw’s globalsupply chain over

the period 2024-2028.

Tackling our greenhouse gas emissions

toreachNet Zero

While our ESG strategy is new, our commitment to tackling our

emissions is not, and we have had an active emissions reduction

programme for almost adecade. In 2021, we formalised that

work by committing to reach Net Zero by FY2050 through

aseries of specific GHG emissions targets, which were later

approved bythe Science Based Targets initiative (SBTi).

These targets commit the Company to:

Overall Net Zero target – reach Net Zero GHG emissions

across our value chain by FY2050.

Near-term targets – reduce absolute Scope 1 and 2 GHG

emissions by 90% by FY2028 from a FY2020 base year.

Wealsocommit to reduce absolute Scope 3 emissions by

50%byFY2030 from a FY2020 base year.

Long-term targets – maintain a minimum of 90% absolute

reduction in Scope 1 and 2 GHG emissions from FY2028

through to FY2050, from a FY2020 base year.

We estimate that our Scope 3 emissions represent 97% of

ourtotal GHG emissions and our largest sources come from

theenergy our products use, the materials, services and

equipment needed to make them, and then delivering them

toour customers. These emissions account for more than 89%

ofour total Scope 3 emissions.

Our climate transition plans

While our new ESG strategy sets out two strategic objectives

built around reducing our GHG emissions, ourclimate transition

plans are our roadmap for achieving ourscience-based Net Zero

targets. The plans address the Scope 1 and 2 emissions caused

by our business, and the Scope 3 emissions embedded within

our value chain (see page 39).

Our Scope 1 and 2 climate transition plan

Scope 1 and 2 make up 3% of our total GHG emissions and

represent the emissions associated with running our business.

We have madefurther progress over the past 12 months,

reducing these emissions by 14% compared toour previous

financial year. The majority of that reduction hasbeen achieved

in Scope 2 by ensuring an almost global coverage of renewable

electricity contracts or certificates, and our continued investment

in renewable self-generation capacity. Our Scope 1 emissions

have increased compared to our previous financial year but our

transition plan shows how we intend to effectively reduce them to

meet our targets.

In the table on the next page we provide asnapshot of this year’s

main activities, as well as our plans for the future.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

ESG review continued

Key activities for reducing our Scope 1 and 2 emissions

Actions in FY2024 What we’re aiming to do next

Using lower-carbon

sources of energy

to run our facilities

— Invested another £8m into projects that support

our work to achieve our science-based Scope 1

and 2 emissions reduction target.

— Matched 99% of the grid electricity that we use in

our buildings with electricity added to the grid from

renewable sources.

— Opened our new site in Brazil, which is LEED

(Leadership in Energy and Environmental Design)

Gold certified. The site was built using thermally

efficient materials and includes solar panels and

electric vehicle charging.

— Increased solar power generation capacity at our

manufacturing sites in India and Ireland and

self-generated 9% of our total electricity use.

— Replacing heating oil at two of our European sites

–onein Germany in 2025 and one in Switzerland

in2027 – with lower-carbon alternative systems.

— Replacing all natural gas systems with lower-carbon

alternatives at our UK and Ireland manufacturing sites

by the end of 2027.

Switching to

lower-carbon

formsof transport

— Ordered 36 ultra-low emission vehicles to replace

fossil fuel vehicles in our fleet in 10 locations, including

Germany, France, China, India, Mexico and Canada.

— Started using lower-carbon bioethanol fuel in all

our company vehicles in Brazil, where possible.

— Developing plans to make annual incremental changes

to our vehicle fleets by replacing traditional internal

combustion engines with ultra-low emission vehicles.

1 Our use of renewable electricity is facilitated in part by obtaining renewable electricity certificates (RECs). These certificates verify that electricity has been

contributed to the grid from renewable energy sources, including wind, solar and hydropower.

Key external factors that affect our plan

Successfully achieving these next steps will depend on certain

external factors beyond our control. For example, while we are

increasing the quantity of renewable electricity that we generate

ourselves at our own sites, our plan relies on the continued

availability of renewable electricity contracts backed by renewable

energy certificates. One way we can minimise this dependency

could be to set up a power purchase agreement, which would

allow us to directly source electricity from arenewable generator.

Meanwhile, reducing our transport emissions relies on the

availability of ultra-low emission vehicles, adequate charging

infrastructure and a low-carbon electricity grid. At the moment,

itis not viable to use ultra-low emission vehicles in some of the

countries where we operate. We are prioritising flexibility in

ourvehicle fleets in these locations so that we can react to

improvements and source lower-carbon vehicles when they

become a viable option.

Scope 1 and 2 transition plan

500

1,500

1,000

2,500

2,000

3,000

3,500

4,000

4,500

FY2020

Baseline year

FY2021 FY2022 FY2023

FY2024

FY2025 FY2026 FY2027

FY2028

Scope 1 emissions (tCO

e)tCO

e Market-based Scope 2 (tCO

Projection to FY2028 Projection to FY2028

Net Zero

in Scope 1

and 2 by

FY2028

Renishaw plc Annual Report 2024

Key activities for reducing our Scope 3 emissions

Actions in FY2024 What we’re aiming to do next

Procurement

— Invested in a supplier relationship platform so that we can

collect sustainability data from our suppliers and monitor their

decarbonisation progress.

— Engaged with 22 of our most emissions-intensive suppliers

andsupported them to establish their emissions sources,

collectand calculate emissions data, create an emissions

baseline, setemissions targets and develop emissions

reduction plans.

— Changed our raw aluminium supply from a primary grade

toaluminium with a minimum recycled content of 75%.

— Use our new platform to gather specific

product carbon footprint data from suppliers

and extend our supplier selection criteria for

both existing and new suppliers to include

climate considerations.

— Expand our sustainability engagement to

cover suppliers that account for the majority of

our spend on goods and services. We intend

to support them in reducing GHG emissions,

committing to science-based climate targets

and delivering their decarbonisation plans.

Product materials

— Calculated the embodied GHG emissions in metals, electronics

and other raw materials we use to make our products across

ourfour largest product divisions. We’ve used this information

toidentify and prioritise projects that will help us redesign

products so that we can make them with lower-carbon materials

and processes.

— Collaborated with our manufacturing teams to introduce a new

way to make our encoder bodies. This reduces our metal

wastage by between 33% and 56% depending on the type

ofencoder body.

— Develop our systems and processes

toinclude more emissions-related

information that can support low-carbon

decision-making in our design and

manufacturing stages.

— Use additive manufacturing techniques

tofurther reduce our waste and emissions,

and support our customers to make

emissions savings by reducing the weight

ofour products.

Product

distribution

— Started investigating our options to calculate emissions

consistently across all our logistics carriers around the world

tohelp identify new opportunities to reduce emissions and

continue developing our transition plan.

— Innovate our global logistics practices to

support more use of lower-carbon modes

oftransport such as ocean and rail freight.

Our Scope 3 climate transition plan

Scope 3 emissions represent a significant proportion of our GHG

emissions, and, since they are embedded within our value chain,

they are also the trickiest to address.

This year, we changed the financial modelling methodology

thatwe use to calculate emissions from our purchased goods

and services back to our baseline year. This is because the

previous methodology is no longer available. We have also, for

the first time, quantified the emissions from the use of our sold

10,000

30,000

20,000

40,000

50,000

60,000

70,000

FY2020

Baseline year

FY2021 FY2022 FY2023

FY2024 FY2030 FY2050

Category 1 and 2 – Purchased goods and services/Capital goods

Category 11 – Use of sold products

Category 4 – Upstream transportation and distribution

Other Scope 3 categories

Target

50% reduction

by FY2030

Net Zero

by FY2050

tCO

Scope 3 transition plan

products back to our baseline year. As a result, the source and

quantity ofour Scope 3 emissions back to our baseline year are

different, but more comprehensive, than previously stated.

Our Scope 3 emissions have been increasing since our baseline

year, largely driven by the 35% growth in revenue since FY2020,

which directly influences our most significant Scope 3 emissions

sources. However, we have taken important steps this year to

enable reductions in our Scope 3 emissions in those significant

areas, as we explain in the key activities table below.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

ESG review continued

Key activities for reducing our Scope 3 emissions

Actions in FY2024 What we’re aiming to do next

Product use

— Calculated the energy consumption of all our major product

lines and assessed the potential GHG emissions associated

with our products across their lifetimes. This is helping us

prioritise projects to design products with reduced energy

consumption and lower emissions.

— Help our customers reduce their own

emissionsby providing lower-carbon

products and providing clear, meaningful

and credible information thatdemonstrates

this positive impact.

Product service,

repair and

end-of-life

— Enhanced the onboard logging software of our Equator gauges

toprovide more remote support for our customers and reduce

our travel emissions.

— Design our products to maximise their

serviceability and repairability and, where

notpossible, ensure they can be repurposed

orrecycled.

— Develop more localised support for repair,

maintenance and analysis of products to

reduce travel distances.

Other initiatives

— Completed GHG emissions baselines at our major UK

manufacturing sites to identify opportunities to reduce

emissions inareas like purchased materials, energy use,

machine waste, scrap and factory consumables.

— Introduce carbon pricing and carbon

budgets across all our business functions

tohelp prioritise emissions reduction

projects and contextualise potential

trade-offs with other business needs.

Contributing to

aneconomy-wide

transition

— Joined the Confederation of British Industry’s Sustainability

Committee, which brings together business leaders to find

practical solutions to common challenges to deliver

decarbonisation and broader environmental goals.

— Hosted a roundtable session with one of our largest

customersto collaborate and share knowledge in areas like

emissions reduction plans, product carbon footprint analysis,

setting science-based targets, supply chain engagements,

andstrategy development.

— Identify other opportunities to support

collective action and collaboration in our

value chain and beyond, to intensify the

action needed to create systematic change

where it is needed.

lifetime. We also intend to continue identifying and capitalising

on opportunities to provide solutions to sectors that support

alow-carbon economy, such as electric vehicle manufacturing.

Webelieve doing this is an essential part of how we will innovate

and transform our customers’ capabilities with world-leading

solutions that maximise efficiency, productivity andpracticality.

Developing a climate-resilient approach

toprocurement

Like many businesses, a large proportion of our Scope 3

emissions and climate-related risks are located within our

supplychain. Our new responsible procurement strategic

objective is designed to help us support our suppliers to

implement their own emissions reduction plans and build

theirresilience to climate-related risks.

To achieve our Net Zero targets we also need to establish

low-carbon supply chains. We plan to help our procurement

team strengthen their knowledge and skills so that they can

educate and support our suppliers in calculating their

emissionsand creating their own net zero plans and targets.

We are also developing our understanding of our exposure

toclimate risks in our supply chain and our aim is to produce

aclimate-informed procurement strategy with effective risk

assessment and mitigation.

As well as our climate transition plans, we provide more detail

onwhat we’ve achieved so far in our Climate-related Financial

Disclosures statement on pages 46 to 51.

Key external factors that affect our plan

As with our Scope 1 and 2 emissions, there are many external

factors that could affect our ability to achieve our aims. For

example, the electricity that our products use over their lifetime is

a significant part of our Scope 3 emissions, soachieving our Net

Zero targets relies on decarbonising theglobal electricity grid.

We are also dependent on our suppliers and their wider

industries sharing our commitment to Net Zero and setting their

own targets and climate transition plans. Equally, we will need

more accurate customer and supplier emissions data if we are

toeffectively quantify and report on our progress towards our

Scope 3 targets.

Finally, we need structural changes globally and new technological

advances to fully decarbonise in areas like employee commuting,

business travel and transportation of ourproducts.

Designing sustainable products our

customersneed

Our products support our customers in increasing their energy

efficiency and reducing waste. We see this as a big part of how

wecan meaningfully contribute to the transition to a low-carbon

economy, and is why we have set a customer-focused

strategicobjective.

To support this, we are aiming to implement a methodology

toquantify the sustainability benefits from all aspects of our

products, including how they are made, perform, are packaged,

and how they can be serviced and repaired throughout their

Renishaw plc Annual Report 2024

about our

commitment

to Net Zero on

our website.

Our emissions and energy data

The Companies Act 2006 (Strategic Report and

Directors’ Report) Regulations 2013 introduced

changes to require quotedcompanies to report

theirannual emissions and anintensity ratio in their

Directors’ Report. The 2018 Regulationsbring in

additional disclosure requirements todisclose

annualenergy use and GHG emissions,and

relatedinformation.

How we calculate our data

In line with our Group Environmental Data Policy,

we calculate our GHG emissions using the GHG

Protocol Corporate Accounting and Reporting

Standard (revised edition) and the GHG Protocol

Corporate Value Chain (Scope 3) Accounting and

Reporting Standard.

We use the latest IPCC GWP 100-year horizon

conversion factors, DESNZ, GHG Protocol,

supplier-specific and factors taken from

arespective country’s National Inventory Report

ornational government/agency/regulator to

calculate our emissions. We base as much data

as we can on direct sources, such as meter

readings and utility bills. We use estimated figures

for June’s Scope 1 and 2 emissions each year to

ensure timely data capture, then update this 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 emissions 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. All our emissions data for

FY2023and FY2024 has been externally

assuredand received limited assurance – which

means our data has been deemed as accurate,

materially correct and a fair representation

ofGHGdata and information – againstthe

ISO14064-1:2019 standard.

Total statutory emissions tCO

FY2024

4.3k 0.09k 4.39k

FY2023

3.8k 1.4k 5.2k

FY2022

3.7k 2.9k 6.6k

FY2021

3.6k 3.1k 6.7k

FY2020

Scope 1 Scope 2

3.7k 3.1k 6.8k

Group energy consumption kWh

FY2024

41.3m 19.0m

60.3m

FY2023

38.5m 20.1m 58.6m

FY2022

39.2m 19.6m 58.8m

FY2021

35.7m 19.5m 55.2m

FY2020

33.9m 19.6m 53.5m

UK Non-UK

Total measured Scope 2 GHG emissions tCO

e location-based

FY2024

9.0k

FY2023

8.5k

FY2022

8.8k

FY2021

8.2k

FY2020

8.0k

Energy source kWh

FY2024

42.7m 17.6m

60.3m

FY2023

37.9m 20.7m 58.6m

FY2022

35.5m 23.3m 58.8m

FY2021

32.2m 23.0m 55.2m

FY2020

Renewable Non-renewable

30.1m 23.4m 53.5m

Statutory GHG emissions tCO

e per £m revenue

FY2024

6.4

FY2023

7.5

FY2022

9.9

FY2021

11.9

FY2020

13.3

Renishaw plc Annual Report 2024

STRATEGIC REPORT

ESG review continued

Maturing approach to our people strategy

Our people have always been our greatest asset and their talent

and commitment to Renishaw is an essential part of our success.

To help us continue to achieve our strategic and sustainability

goals, we need policies and processes to recognise and reward

our people appropriately and the right frameworks to help them

build thriving careers at Renishaw. We need to ensure that all

ofthis is underpinned by an inclusive working environment and

acommitment to protecting the human rights of everyone who

works with and for us.

We’ve designed our new social goal and strategic objectives

tohelp us do that.

Creating a more inclusive workplace

Creating an environment where we can embrace diversity

ofthought is one of the best ways to encourage the innovation

and creativity we need to realise our ambitions. As a responsible

engineering and manufacturing business that operates in

atraditionally male-dominated industry and is headquartered

ina part of the UK where the population is predominantly white

British, fostering greater diversity is also the right thing to do.

We continue to monitor our turnover levels (see page 22), and

the proportion of employees just starting their careers is growing

and now represents 7% ofourtotal workforce. We are also

making progress at Board level, with women now representing

30% of our Board following Professor Dame Karen Holford’s

appointment in September 2023.

However, we recognise that diversity among our senior leadership

does not yet meet today’s expectations of a FTSE 250 company.

To help change that, we have set a target to have women

represent 40% of our Senior Management by December 2027.

And, in line with the Parker Review recommendations, wehave

also set a target to have people from ethnic minorities represent

10% of our UK-based Senior Management by the same date.

See our Nomination Committee report on pages 70 to 75 for

more information.

Top talent and colleagues from marginalised communities

canonly thrive if a company has a truly inclusive culture that

enables people to be their best selves, so our initial focus is

tobuild on Renishaw’s existing strengths to create a deeper

sense of inclusion.

Our growing network of employee-led resource groups (ERGs)

isan important part of our focus on creating that deeper sense

ofinclusion, and this year we were pleased to launch a new

group to support neurodiverse colleagues. We’re also building

anetwork of allies and ran allyship workshops for more than

150employees in the UK and Ireland to encourage them to

support one another. Meanwhile, our Early Careers Network

committee, run by apprentices and graduates, created

aplatform for their early careers colleagues to network

andsocialise across Renishaw’s UK facilities.

We also run a range of cultural and religious awareness days

tobuild a sense of global community, including Deaf Awareness

Week, Black History Week and various religious festivals.

Our events are sponsored by members of our Executive

Committee, so our senior leaders are helping to set the tone

fromthe top and demonstrate the behaviours we need to

createa more inclusive culture.

Our gender diversity statistics*

Women % Men % Undisclosed %

Board

3 33 6 67 n/a –

Executive Committee

1 14 6 86 n/a –

Senior managers

and

subsidiary directors

13 17 64 83 n/a –

All employees 1,302 24.5 3,933 75 21 0.5

*All figures as at 30 June 2024.

1 Including the Executive Directors.

2 Including the Executive Directors.

3 As defined by the Companies Act 2006.

4 Means statutory directors.

Social

Our social goal

Develop a diverse and inclusive team who are

inspired to work for a responsible business.

Our strategic objectives are:

— Attract, develop and retain a diverse and highly

engaged team of talent.

— Develop and maintain a strong, diverse

pipeline of future succession for management

and key critical roles.

— Implement a human rights assessment process

across our business operations and allpotential

higher risk Tier 1 suppliers globally by 2028.

Supporting STEM education in the UK

Our UK education outreach programme, which

focuses on encouraging young people to consider

science, technology, engineering and mathematics

(STEM) careers, is an important partof how we

can build a diverse talent pipeline. This year, our

programme included visits to local all-girls’ and

special education needs and disability (SEND)

schools, as well as schools located in socio-

economically disadvantaged areas. The programme

is also a key part of our broader community

engagement. For more information, see page 25.

Renishaw plc Annual Report 2024

Continuing work to develop and reward our people

An inclusive culture that attracts a diverse range of talent has

tobe supported by the right career development and reward

structures to encourage people to build long-term careers

withus. In turn, this helps us create strong succession plans

toensure our future success as a business.

These are areas where our employees asked for more clarity

inour 2019 UK engagement survey, and since then we have

taken significant steps to benchmark and modernise our

approach. That includes a simplified performance review

process and more transparent job grading system, and the most

comprehensive salary review in our history, following global

benchmarking reviews of all our roles. We’ve also identified

‘critical’ roles that have a high impact on our business resilience

and which require skills and knowledge that are either scarce

orhard to develop.

To keep improving our approach, this year we introduced

fourGroup-wide core competencies and continued to develop

ourfunctional competency frameworks for our job family groups.

Wehave completed this for manufacturing, engineering, product

management and quality management. We aim to coverthe

remaining job family groups in FY2025.

Having these frameworks will enable our managers to review

individual performance on an equal basis and help us build

diverse leadership teams. The steps we’re taking are also

intended to help people understand what is expected of

themtodo their jobs, working in more agile ways with

greateraccountability.

And to help us continue to strengthen our approach to

talentmanagement, we are introducing a ‘nine-box’ talent

management tool that provides a framework to help managers

evaluate their team members based on their performance and

potential. We will use this information to support individual

careerroutes and development plans.

Effective leadership is critical to employee engagement

andourlong-term success. This year, our Senior Leadership

Team worked with a specialist consultancy to strengthen

theirleadership and teamwork skills. They also set ambitious

internaltargets to make change in areas like product innovation

and productivity across the whole organisation. We intend to

incorporate these targets into our senior leadership incentive

plans. Meanwhile, the team is developing a new framework to

drive strategy delivery across the Group.

Having successfully completed phase one of our UK benefits

review, as set out in last year’s Annual Report, we have revised

our approach to phase two. In the coming year, to achieve

amore equitable approach for our benefits globally, we aim to

define aset of global principles. We’re also aiming to identify

andbegin implementing a platform to allow people to see their

benefits in one place, and roll out a financial wellbeing campaign

in the UK.

A good result in our first global employee

engagementsurvey

While much of our focus has been drivenby employee feedback

from our 2019 UK engagement survey, itis essential that we

continue to hear from employees ona regular basis. We were

particularly pleased, therefore, torun our first ever global

engagement survey in April 2024. Inall, 63% of employees

responded in 23 different languages. We received anengagement

score of 74% – 1% above the global average recorded by our

survey provider. This is a good result, but we’d like to improve and

will use this year’s score as our baseline to track future progress.

More broadly, we scored well in areas like ‘intent to stay’,

‘trustand respect’, and ‘wellbeing’, but still have room for

improvement in areas like ‘inclusion’, ‘reward’ and ‘career

progression’. We’ve shown since 2019 that we’re committed

toresponding to employee feedback, and in the next year,

wewillrefresh our people strategy based on these results.

Our survey is just one of the ways that we engage with our

employees. Our Board member and employee engagement

ambassador Catherine Glickman also spends time meeting

employees to hear what’s on their mind and shares their

feedback with her fellow Board members.

This year, Catherine met with a variety of employees,

includingleaders of our manufacturing division and Early

Careers graduates. She also visited some of our product teams

and accompanied our Director of Additive Manufacturing,

LouiseCallanan, to visit the AM team. Catherine reported key

themes back to the Board, including the need to keep investing

in employee pay, particularly in areas of short talent supply,

helping people better understand the job opportunities and

career routes available, and encouraging more women into

engineering and careers at Renishaw. Catherine will continue

toengage with employees during the coming financial year.

For more details on some of our other key employee

engagement channels, see How we engage with stakeholders

on pages 23 to 25.

74%

of employees told us they

arehighly engaged

75%

consider Renishaw an

inclusive place to work

69%

said they were highly likely

tostay with Renishaw

83%

believe Renishaw cares

abouttheir wellbeing

Highlights from our employee engagement survey

The figures below provide a snapshot of some of the key results from our first ever global employee engagement survey.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

ESG review continued

Keeping people safe in our operations

We recognise the importance of providing and promoting safe

and healthy working practices and we integrate health and safety

into our daily activities through a robust management system.

Weare also committed to identifying potential hazards and

making sure we have effective controls to minimise their risk.

We review our high-risk areas every year and low-risk areas

every two. Every site, regardless of activity, is assessed against

our occupational health and safety policy. We also monitor

incident and accident data to identify and address trends.

This year, we recorded 194 accidents (FY2023: 182) against

ayear-end headcount of 5,256 (FY2023: 5,175), giving us

anaccident frequency rate of 19.89 per million hours worked

(FY2023: 20.68). This remains very low compared to the

averagefor the UK manufacturing sector of 198.8 per million

hours worked.

We had two reportable accidents under the UK RIDDOR

reporting requirements during the year. This equates to a rate

of0.023 per 100,000 workers and is significantly lower than the

UK manufacturing sector, which has an average rate of 480.

Oneaccident related to manual handling operations and the

other involved contact with machinery. Despite this, wesaw

amarked fall in our manual handling injuriesthis year, thanks

toour new manual handling refresher training in the UK.

Therewere zero reportable accidents elsewhere globally.

Proactive reporting of near misses remains an important

wayinwhich we can address issues before they become

accidents and this year our people reported 264 near misses

(FY2023:220).

We also continued to develop our wellbeing strategy, training

anadditional 32 mental health first aiders to support employees

in the UK and overseas, and investing in additional training for

managers to help them support their teams.

Strengthening our approach to human rights

We are committed to respecting human rights standards in

oursupply chain, including identifying and managing the risks

we face in areas like modern slavery, child labour and conflict

minerals. To date, we have largely focused on modern slavery,

communicating our expectations to our suppliers on managing

this important risk.

We want to expand our approach, so we have set a new strategic

objective to implement a human rights assessment process

across our business operations and all potential higher risk Tier 1

suppliers globally by 2028.

We have started putting the foundations in place to meet

thisobjective. This includes introducing a new global supplier

relationship management platform to provide a single source

ofsupplier performance data and help us better identify and

manage our human rights risks. We will report more on this area

of work in future.

For information on some of the other ways that this platform

ishelping us engage with suppliers, see our climate transition

plans in the Environment section on pages 37 to 40 and

Governance section on page 45.

Priorities for the coming year

A lot of the work we’re doing will take several years to complete,

so our focus for the next 12 months is largely unchanged.

Havingimplemented our core competencies this year, they

willnow be the key drivers we use to model our desired

organisational behaviours. Other key areas of focus in the

coming year include:

— using the results of our first global employee survey to

prioritise the next steps in our people strategy;

— developing our functional competency frameworks to help

our people understand potential career pathways;

— incorporating inclusive leadership principles in our leadership

and management development programmes;

— helping our managers to strengthen their inclusive

leadershipskills;

— ongoing work to modernise our benefits programme; and

— improving the checks we have in place – in line with our

integrity value – to ensure the safeguarding of human rights

for our employees and supply chains. We will complete these

improvements in the UK by the end of December 2024, and

by the end of December 2025 for the wider Group.

Renishaw plc Annual Report 2024

We need to have the right framework, policies and processes

inplace to ensure that we work towards our environment and

social goals in a responsible and ethical manner. That’s why,

aspart of our ESG strategy, we have set a specific governance

goal and supporting strategic objective. And, as we explain

onpage 36 we have also established a new ESG Steering

Committee todevelop and oversee the strategy and our

progress against its implementation.

Launching our new Code of Conduct

As well as our new ESG Steering Committee, we also

launchedour new Code of Conduct (the Code). It sets out

ourexpectations of anyone who works for and with Renishaw.

Translated into 14 languages, it explains what we mean by ‘doing

business responsibly’, and provides guidance on how to make

good decisions, report concerns and non-compliant actions,

behaviours to watch out for, and our supporting policies. It also

includes ‘what if’ scenarios to bring different ethical issues to life.

We officially launched the Code in October 2023, with an

internalcommunications campaign that included introductory

videos from our Chief Executive, Will Lee, and our Group Human

Resources Director, Diane Canadine. We also held a series of

webinars with senior managers to raise awareness of the Code

and encourage them tolead by example.

Making sure all our employees are aware of the Code is

achallenge, since many of our sales team travel regularly andour

colleagues working in manufacturing facilities don’t always have

regular access to computers. We have therefore used various

communication channels to ensure that all our employees are

aware of the principles within the Code and have access to it.

We asked employees to acknowledge that they were aware

ofthe Code by completing a formal acknowledgment of the

Code in our Workday HR platform.

While our commitment to doing business responsibly won’t

change, the world around us is evolving rapidly. So, to ensure

our Code remains fit for purpose, we will review the document

every three years and update as needed.

Helping people raise concerns

Having set out our expectations, we want to ensure all our

stakeholders feel able to speak up if they witness unlawful or

unethical behaviour, and that, crucially, they know how to do that.

Our new Code, therefore, shares information on how to raise

aconcern, including details of our Speak Up Policy and

whistleblowing channels.

Our confidential Speak Up online portal and global hotline are

available to current and former employees, including temporary

employees, as well as external stakeholders, including suppliers,

distributors, agents, resellers and collaboration partners. This

year, we logged 31 cases – an increase of 13 cases from the

previous year. We have undertaken significant work to promote

the availability of our Speak Up Policy and are encouraged by

the improved use of whistleblowing channels. Wealso continue

to strengthen the way we investigate concerns, which this year

included new training for people involved in aninvestigation,

andan update of our Speak Up standard operating procedure.

For more information on how we govern our Speak Up Policy and

investigate concerns, see page 61 in our Governance report.

Strengthening our approach to ESG governance

The work we’ve done in the past couple of years to prepare the

Code is all part of our maturing approach to managing important

sustainability and compliance issues. This supports our

commitment to strengthening our global compliance brand

‘Responsible Renishaw’, launched in FY2022. Our compliance

teams continue to meet regularly at the Responsible Renishaw

Forum to improve the maturity of our control environment and

promote good practice and knowledge sharing.

Our investment in a new global supplier relationship

management platform is a good example of our more

coordinated approach in action. It provides a standardised

approach for onboarding new suppliers and will help our

procurement teams map supply chain risk through sustainability

and compliance lenses. In future, it will also enable us to track

and analyse key supplier data so we can demonstrate progress

against our supplier-related ESG strategy objectives.

See our Environment section on pages 37 to 41 and Social

section on pages 42 to 44 for more information on these

objectives and what we’ve done this year.

Priorities for the coming year

Over the next year we will continue to communicate our Code to

our stakeholders and begin work to develop an internal training

programme to ensure employees understand how to use it.

Wewill use our new supplier relationship management platform

tocontinue building on our approach to supplier engagement,

and will begin rolling out an update to our ‘Know Your Customer’

processes and procedures with a new Group policy and

procedure. This will strengthen the way weonboard new

customers and suppliers, and outline our expectations on

keycompliance issues, such as anti-bribery andcorruption,

anti-money laundering and trade compliance.

Governance

Our governance goal

To ensure appropriate governance

arrangementsare in place to provide

accountability, transparency, compliance

andintegrity as a responsible business.

Our strategic objective:

— Ensure compliance with our Code of Conduct

and demonstrate responsible business practices.

Download

ourCode of

Conduct via

our website.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Climate-related Financial

Disclosuresstatement

We have continued to build upon the significant work we completed last year in identifying, assessing and managing our

climate-related risks and opportunities through our climate-related governance, strategy, risk management, and metrics

and targets. Wehavealigned our disclosures with the requirements of UK Listing Rule 9.8.6R(8) and the requirements

ofthe IFRS S2 Climate-relatedDisclosures. The disclosures listed below meet these regulatory requirements. They include

references to our website and other documents that provide further information without making any of the core disclosures

listed here less understandable.

Governance

Recommendation

Disclose the organisation’s governance around climate-related risks and opportunities.

Recommended disclosure

A) Describe the board’s oversight ofclimate-related risks and opportunities.

Summary Reference

— Our Board maintains overall responsibility for setting our corporate strategy, which now includes

clear links to our ESGstrategy. This year, our Board delegated oversight of ourESG strategy to

ournew ESG Steering Committee. The strategy includes objectives to minimise our exposure

toclimate-related risks and maximise our climate-related opportunities.

— Our ESG Steering Committee is chaired by our Chief Executive, Will Lee, and members are chosen

to provide the skills and experience we need to effectively oversee our ESG strategy.

OurIndependent Non-executive Director Stephen Wilson is also amember andprovides an

independent perspective.

— Our Board has reviewed and approved the transitional climate-related risks and opportunities that

wefinancially quantified and incorporated into our five-year plan along with capital expenditure

estimates related to achieving our Scope 1 and 2 Net Zero target.

More detail on the relationship

between our corporate strategy

and climate issues can be found

on pages 7 and 8.

B) Describe management’s role in assessing and managing climate-related risks and opportunities.

Summary Reference

— Our governance structure ensures that we assess and manage our climate-related risks and

opportunities at the appropriate levels. Each of the following committees has been delegated

responsibility by our Board for climate-related matters and meets at least four times a year:

• Our newly established ESG Steering Committee oversees the delivery of our ESG strategy,

which includes reviewing progress against our climate-related goals and targets. It is also

responsible for sharing information and expertise with our Audit Committee and Risk Committee

to support them with their climate-related responsibilities.

• Our Audit Committee reviews the effectiveness of our risk management and our climate-related

assurance across the Group.

• Our Risk Committee supports the Group in identifying and managing climate-related risks

andopportunities.

• Our Remuneration Committee aligns our remuneration policies with our strategic objectives.

Ourstrategic objectives, which form 20% of the incentive opportunity for our Executive Directors

and Senior Leadership Team, include a specific objective on sustainability.

Our sustainability and climate

governance framework is shown

on page 36.

See our Directors’ Remuneration

Report on pages 82to 94

formore information onour

Executive Directors’ incentive

opportunity.

Renishaw plc Annual Report 2024

Strategic report

Strategy

Recommendation

Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy,

andfinancial planning where such information is material.

Recommended disclosure

A) Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term.

Summary Reference

— We have continued to use these timeframes: short (FY2024-FY2029), medium (FY2030-FY2049)

and long term(FY2050+) toassess our climate-related risks and opportunities. Ourshort-term

period aligns with our five-year plan. Our medium- and long-term time periods align withour ESG

strategy, which includes Net Zero emissions targets and our climate transitionplans.

— Our FY2023 climate modelling identified our manufacturing and major inventory-holding sites that

areconsidered at ‘high’ risk of physical climate-related risks under varying warming scenarios and

timescales. Regardless of warming scenario or timescale, therisk of river flooding was ‘high’ at four

of our sites. Four of oursites in the APAC region are also considered ‘highly’ exposed to chronic

climate risks.

— This year, we used the same modelling to improve our understanding of climate-related risks in our

supply chain, reviewing 130 of our suppliers. Themodelling showed that 32%ofthose suppliers

areconsidered at ‘high’ riskfor atleast one of the climate-related physical risks that we assessed.

— In FY2023, we completed transitional climate scenario analysis withall our product divisions using

the International Energy Agency 1.5 ºC warming pathway. This helped us identify several climate-

related technology and legal trends that we believe represent opportunities for our business in the

medium tolong term: the shift from ICE vehicle production to EVs, growth in the use of additive

manufacturing technologies, and increasing carbontaxation.

— This year, we worked with representatives from our three sales regions to enhance our processes

for identifying climate-related risks and opportunities. We considered the impact that the identified

risks and opportunities could havein their specific geographies and sectors. We concluded that

therisks andopportunities already identified were representative across their regions and shared

insights with our Group functions to help them continue to develop our strategic response.

— In FY2023, we completed transitional climate scenario analysis forall our product divisions using

the International Energy Agency 1.5 ºC warming pathway. This helped us identify several climate-

related technology and legal trends that we believe represent opportunities for our business in the

medium to long term. These are explained in the table below with further detail on our website.

For more information on the

assumptions included in our

transitional climate scenario

analysis pathway, see

www.iea.org/reports/net-zero-

roadmap-a-global-pathway-to-

keep-the-15-0c-goal-in-reach.

An expanded table covering

ourclimate-related risks and

opportunities and our definition

of ‘high’ risk for the physical risks

assessed are available onour

website at www.renishaw.com/

en/climate-related-risks-and-

opportunities--48236.

Find more information on

theprocesses we use to

identifyclimate-related risks

andopportunities in our

Riskmanagement report

onpages11to 18.

Key: the percentage of the Group’s revenue associated with climate-related trends

Low: < 3%

Medium: 3-10%

High: >10%

Climate-related trend

Technology – development of Additive Manufacturing (AM)

We believe that AM is becoming a more mainstream option for volume manufacturing. External forecasts predict a 20% growth in the AM market by

2030 and we believe that environmental sustainability will be a key driver for this growth.

Potential velocity under a 1.5 ºC pathway

Current state FY2024-FY2029 (short term) FY2030-FY2049 (medium term) FY2050+ (long term)

Technology – transaction from manufacturing internal combustion engine (ICE) vehicles to electric vehicles (EVs)

The transition to EVs is creating new processes, assembly plants, supply chains, research and customers, which offers significant opportunities for

all our relevant products.

Potential velocity under a 1.5 ºC pathway

Current state FY2024-FY2029 (short term) FY2030-FY2049 (medium term) FY2050+ (long term)

Policy and legal – increasing carbon taxation

Carbon taxation will affect us globally. In the short-term, we have had to dedicate time to reporting under the European Union’s (EU) Carbon Border

Adjustment Mechanism (CBAM). While our exposure has been low, CBAM could create risks by increasing costs in our supply chains, which may

be passed on to us. However, we believe that carbon taxation could ultimately create more opportunity for us. Itmay act as a driving force for

increased use of metrology to reduce manufacturing process variation and scrap, driven by the high cost and carbon impact of materials.

Potential velocity under a 1.5 ºC pathway

Current state FY2024-FY2029 (short term) FY2030-FY2049 (medium term) FY2050+ (long term)

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Climate-related Financial Disclosures statement continued

Strategy continued

Recommendation

Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy,

andfinancial planning where such information is material.

Recommended disclosure

B) Describe the impact ofclimate-related risks andopportunities on the organisation’s businesses, strategy, and financialplanning.

Summary Reference

— In FY2023, we identified that 37% of the ‘asset value’

of our manufacturing and major inventory-

holding sites is considered at‘high’ risk of flooding and that 8% of ‘asset value’ has ‘high’ exposure

to various chronic climate risks.

— To demonstrate the impact of these risks and how we are managing them in our strategic and

financial planning, we reviewed the financial costs to our business of an actual flood thataffected

our manufacturing site in Woodchester, UK, in 2007. The factory was inundated with 100 mm of

flood water and our insurance claim was more than £0.3m for building repairs and stock loss.

Thesite returned to full production within five days and during that time we were able to redirect

stock held in our subsidiaries to cover the shortfall in production.

— We also assessed the impact of losing our manufacturing site in Pune, India, as a result of wildfire,

because it is our site with the greatest asset value that currently faces ‘high’ exposure to various

chronic climate risks. In this scenario, our immediate ability to produce the volume of cables and

tool-setting arms we need would be affected. We would mitigate this potential impact through our

stock contingency, ramping up sourcing from our other established supply chains and drawing on

our experiences during the COVID-19 pandemic to quickly reinstate production in our other

manufacturing locations.

— We have begun considering climate risk within our procurement strategy, focusing on assessing

suppliers that are more at risk ofdisrupting our supply of goods due to factors such as weak

financial health, political uncertainty, or exclusive sourcing status, and that would also have

asignificant effect on business revenue in the event of supply chain failure. Ifthese suppliers are

also rated as ‘high’ risk for physical climate risks, we will investigate the best mitigation actions with

them to ensure continuity of supply.

— Our transitional climate-related risk and opportunity analysis informed this year’s work to refresh

ourfive-year plan. We have also included capital expenditure estimates related to achieving our

NetZero targets in the plan.

— Our assessment of transitional climate risks and opportunities shows that we are well positioned

tobenefit from a transition toalow-carbon economy. While we have identified risks to ourbusiness,

our financial analysis indicates these risks are outweighed significantly by the opportunities that

wecan capitalise on.

— We have continued to develop our climate transition plans, whichdescribes our Net Zero targets

and our strategy for successfully transitioning to the low-carbon economy. The plans include the

dependencies that their success rely on that are outside of our control.

See our climate transition plans

on pages 37 to 40.

An expanded table covering

ourclimate-related risks and

opportunities and our strategic

response is available on our

website at www.renishaw.com/

en/climate-related-risks-and-

opportunities--48236.

1 ‘Asset value’ includes i) land and buildings (with buildings included at insured reinstatement value), ii) other fixed assets (at net book value),

iii)inventory(atGroup cost), at 31 March 2023.

Renishaw plc Annual Report 2024

Strategy continued

Recommendation

Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy,

andfinancial planning where such information is material.

Recommended disclosure

C) Describe the resilience of the organisation’s strategy, taking intoconsideration different climate-related scenarios,

includinga 2°C orlower scenario.

Summary Reference

— We have assessed physical climate risks at our manufacturing and major inventory-holding sites

aswell as 130 of our important suppliers using climate modelling that covered 1.5 ºC, 2 ºC to 3ºC

and 4 ºC warming pathways across current day, 2030, 2050 and 2100 time horizons. We included

multiple warming pathways to address the inherent uncertainty created by climate modelling over

those time horizons.

— For our own sites, the climate modelling indicated that the sites at ‘high’ physical risk remained

mostly static when compared to our current risk exposure. Only one further site was considered

at‘high’ risk for river flooding under the various time horizons, warming pathways and risk factors.

— We believe we have the capacity to adjust our business strategy ifthese physical risks become

more extreme and frequent. Wehave invested in flood defences and early warning systems

atour‘high’ flood risk UK manufacturing sites and are also duplicating important parts of our

manufacturing processes atlower flood risk sites. Two of our ‘high’ risk sites in APAC have short-

term leases (three to five years), which gives us the flexibility to change where we are based

ifclimate change has asignificant adverse effect on our business at these locations. For the

remaining ‘high’ risk site that we own in Shanghai, China, we have a significant physical network

ofsites established in other areas ofthe country that could serve our markets in the event of

adisruption.

— For the suppliers assessed, there is little variation in risk exposure across warming scenarios or

timescales. Most suppliers identified as being ‘high’ risk in these instances are already considered

to be ‘high’ risk currently.

— We believe we have resilient supplier risk management processes that would minimise the impacts of

supply chain disruption caused by climate-related risks. We are incorporating the climate modelling

outputs into our supplier risk assessment process, which means that climate risks are considered

as part of our overall assessment of supplier risk. For suppliers who are considered ‘high’ risk in this

assessment, we maintain a proportionate level of safety stock andwhere appropriate establish

reliable secondary supplier relationships. Our ability to adapt these controls has been successfully

tested in recent years due to the COVID-19 pandemic and helped ensure overall business continuity.

— In FY2023, we analysed our transitional risks and opportunities using a 1.5 ºC warming pathway

toassess potential likelihood andfinancial/strategic impact. We continued this work in FY2024 to

expand our understanding of risks and opportunities, but we continue to believe that each climate-

related trend disclosed represents an opportunity for our business, and could be associated with

3-10% of our potential revenue by FY2029. Thiscould increase to more than 10% for each climate-

related trend in the medium to long term under a 1.5 ºC pathway.

— We believe our corporate strategy is robust and considers the potential impacts of these climate-

related trends. Our strategy willcontinue to be informed by the work we are doing to identify,

assessand manage our climate-related risks and opportunities.

More information on how we

complete our climate scenario

analysis is available at

www.renishaw.com/en/

climate-related-risks-and-

opportunities--48236.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

Climate-related Financial Disclosures statement continued

Risk management

Recommendation

Disclose how the organisation identifies, assesses, and manages climate-related risks.

Recommended disclosure

A) Describe the organisation’s processes foridentifying and assessing climate-related risks.

Summary Reference

— We use a combination of ‘top-down’ and ‘bottom-up’ processes, which includes our physical and

transitional climate scenario analysis to assess our climate-related risks and opportunities across

our value chain.

— Our Risk Committee has reviewed and challenged the output of these processes to help us

estimate the likelihood and potential impact of the risks and opportunities identified.

— Our ESG Steering Committee is responsible for assessing our climate-related risks and

opportunities and recommending actions to the wider business to help mitigate our risks and

capitalise on our opportunities.

— We have expanded our climate-related risk assessment processes to cover our supply chain and

have engaged with more of our regional colleagues to get a broader assessment of our climate-

related risks and opportunities.

We explain how we identify

andmanage our risks in our

Riskmanagement report on

pages 11 to 18.

More information on how we

have identified and assessed

our transitional risks and

opportunities and physical risks

is available on our website

www.renishaw.com/en/

climate-related-risks-and-

opportunities--48236.

B) Describe the organisation’s processes formanaging climate-relatedrisks.

Summary Reference

— This year, we improved the way we manage our climate-related risks and opportunities by

creatinga climate risk register that details our controls and how they link to our principal risks

andESG strategy.

— We have identified owners for each of these controls who are accountable for ensuring that the

controls are relevant and maintained, and that related actions are completed by the deadlines set

out in the climate risk register.

More information on how we

manage our climate-related risks

and opportunities can be found

on page 11 to 13 and on our

website www.renishaw.com/en/

climate-related-risks-and-

opportunities--48236.

C) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the

organisation’s overall risk management.

Summary Reference

— We have integrated our management of specific elements related to climate risk within the

relevantprincipal risks including innovation strategy, competitor activity, non-compliance with

lawsand regulations.

— We have continued to integrate climate-related risks and opportunities into our risk management

framework, with our Risk Committee and Audit Committee reviewing the proposed principal risks

and recommending these to the Board for approval.

Read our Risk management

report on pages 11 to 18.

Find more information on how

weare integrating climate change

risks and opportunities into other

principal risks on page 11.

Renishaw plc Annual Report 2024

Metrics and targets

Recommendation

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information

ismaterial.

Recommended disclosure

A) Disclose the metrics usedby the organisation to assess climate-related risks and opportunities in line with its strategy and

risk management process.

Summary Reference

— We have disclosed cross-industry TCFD metrics used to manage our climate-related risks and

opportunities. These metrics cover:

• Scope 1, 2 and 3 GHG emissions (pages 38 to 39);

• energy use (page 41);

• climate-related executive management remuneration (page89);

• potential revenue associated with climate-related trends (page47);

• assets and suppliers considered at ‘high’ risk to physical climate-related risks (pages 48); and

• capital expenditure towards achieving Net Zero for Scope 1 and 2 emissions (page 38).

— While we have not yet introduced a carbon price into our business, we are taking steps towards it.

To date, we have established a financial modelling process and obtained more supplier-specific

and industry-average data for almost all our purchased goods and services and calculated

emissions from the use of sold products.

We explain how we identify

andmanage our risks in our

Riskmanagement report

onpages 11 to 18.

More information on how we

have identified and assessed

our transitional risks and

opportunities and physical risks

is available on our website

www.renishaw.com/en/

climate-related-risks-and-

opportunities--48236.

B) Disclose Scope 1, Scope2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.

Summary Reference

— Our emissions this year have been externally assured by the British Standards Institute as accurate,

materially correct andafair representation of GHG data and information. Ouremissions were:

• Scope 1: 4,347 tCO

• Scope 2 (market-based): 90 tCO

• Scope 2 (location-based): 9,035 tCO

• Scope 3: 131,870 tCO

A more detailed breakdown of

our Scope 3 emissions into the

15 GHG Protocol emission

categories and their calculation

methodologies and our ISO

14064 external assurance

opinion are available on our

website www.renishaw.com/en/

our-emissions--48235.

C) Describe the targets usedby the organisation tomanage climate-related risks and opportunities and performance

againsttargets.

Summary Reference

— Our Net Zero targets have been validated by the Science Based Targets initiative (SBTi) as in line

with the 2015 Paris Agreement tolimit global temperature rise to well-below 2 ºC. The targets,

allsetagainst our FY2020 baseline, are to:

• achieve Net Zero in Scope 1 and 2 GHG emissions, which is an absolute 90% reduction

compared to baseline emissions by FY2028;

• achieve an absolute 50% reduction in Scope 3 GHG emissions by FY2030; and

• achieve Net Zero across all Scopes by 2050, which is an absolute 90% reduction compared

tobaseline GHG emissions.

— We will also invest in credible nature-based or technological carbon removal programmes to

address the remaining 10% of ourGHG emissions.

— The strategic objectives for the FY2024 annual incentive opportunity for our Executive Directors

andSenior Leadership Team included:

• submitting our Net Zero targets to SBTi; and

• publishing goals and creating a five-to-ten-year plan using the SBTi framework, and tracking first

year of progress.

Our climate transition plans

demonstrate our roadmap for

achieving our Net Zero targets

on pages 37 to 40.

Our Directors’ Remuneration

Policy and strategic objectives

are expanded further on

page89.

Renishaw plc Annual Report 2024

STRATEGIC REPORT

We are required by sections 414CA and 414CB of the Companies Act 2006 to include in our Annual Report certain non-financial

andsustainability information. The table below shows where this information can be found in this Report.

Our business model is set out on page 10 and our non-financial KPIs are disclosed on page 22.

Reporting

requirement(s) Further information Policies Related principal risk(s)

Climate-related

financial

disclosures

— Climate-related Financial Disclosures

statement (pages46 to 51)

— n/a — Innovation strategy (page15)

— Competitor activity (page 16)

— Non-compliance with laws

and regulations (page 17)

— Supply chain dependencies

(page 18)

Environmental

matters

— ESG review – Environment

(pages37to41)

— Section 172 statement (page 65)

— Group Environmental DataPolicy

— Group Management of WastePolicy

— Code of Conduct

— Innovation strategy (page15)

— Competitor activity (page 16)

— Non-compliance with laws

and regulations (page 17)

— Supply chain dependencies

(page 18)

Our employees

— How we engage with stakeholders

(page23)

— ESG review – Social (pages 42 to 44)

— Directors’ Corporate Governance

Report (page 61)

— Section 172 statement (pages 65 to 66)

— Other statutory and regulatory

disclosures (page 96)

— Equality, Diversity and

InclusionPolicy

— Speak Up Policy

— Group Occupational Health

andSafetyPolicy

— Code of Conduct

— People (page 17)

Social matters

— How we engage with stakeholders

(pages 23 to 25)

— ESG review – Social (pages42 to 44)

— Directors’ Corporate Governance

Report (pages 60 to 61)

— Section 172 statement (pages 65 to66)

— Other statutory and regulatory

disclosures (page 97)

— Equality, Diversity and

InclusionPolicy

— Speak Up Policy

— Group Occupational Health

andSafetyPolicy

— Code of Conduct

— People (page 17)

— Supply chain dependencies

(page 18)

Respect for

human rights

— How we engage with stakeholders

(page25)

— ESG review – Social (page44)

— Directors’ Corporate Governance

Report (page 61)

— Group Modern Slavery and

HumanTrafficking Policy

— Equality, Diversity and

InclusionPolicy

— Speak Up Policy

— Code of Conduct

— People (page 17)

— Non-compliance with laws

and regulations (page 17)

Anti-corruption

and anti-bribery

— ESG – Governance (page 45)

— Directors’ Corporate Governance

Report (page 61)

— Section 172 statement (page 66)

— Group Anti-Bribery and

CorruptionPolicy

— Gifts and Hospitality Policy

— Code of Conduct

— Non-compliance with laws

and regulations (page 17)

Section 172 statement

Our Section 172 statement on pages 64 to 66 describes how the Directors have had regard to stakeholders’ interests and other

matters when discharging Directors’ duties set out in Section 172 of the Companies Act 2006. Itincludes examples of how

stakeholders’ interests were considered during principal decisions taken during the year. Details of our engagement with

stakeholders are in the How we engage with stakeholders section on pages 23 to 25.

The Strategic Report on pages 2 to 52 was approved by the Board on 11 September 2024 and signed on its behalf by:

Sir David Grant

Interim Non-executive Chairman

Renishaw plc Annual Report 2024

Non-financial and sustainability information statement

54 Directors’ Corporate Governance Report

56 Board of Directors

58 Executive Committee

64 Section 172 statement

70 Nomination Committee Report

76 Audit Committee Report

82 Directors’ Remuneration Report

95 Other statutory and regulatory disclosures

99 Directors’ responsibilities

Governance Report

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Renishaw plc Annual Report 2024

The Board and the Executive Committee have worked hard to

maintain and build upon a resilient and sustainable governance

framework, which we believe makes us stronger and better

placed to take sound decisions in the interests of the Company

and its stakeholders. We introduced a new Code of Conduct in

November 2023, and a global implementation programme is

being rolled out as we continue to embed an appropriate culture;

see more on page 45.

With sustainability becoming increasingly important across

Renishaw in the past few years, I am particularly pleased to

seeour plans maturing during FY2024. That includes approving

our new ESG strategy and establishing a new ESG Steering

Committee to oversee progress and ensure the appropriate

levelof governance. We provide more details in our ESG review

on pages 35 to 45.

A summary of the Board’s activities during the year and its

principal decisions can be found on pages 64 to 66.

Risk management and sustainability

Regular reporting has provided the Board and its Committees

with information to help guide management in responding to

theevents of the year, as well as to monitor our principal risks.

These are more fully described on pages 11 to 18.

Stakeholders

I was pleased to be able to speak with a number of our largest

institutional investors on the subject of the significant votes

against, received at the 2023 AGM. These conversations

provided us with a better understanding of our shareholders’

priorities and we held constructive discussions regarding our

corporate governance arrangements; see more in the How we

engage with stakeholders section of the Strategic Report on

page 23.

You will read on pages 64 to 66 about how we consider the

views of our stakeholders in our decision-making process.

Ourengagement with stakeholders, including our people,

provides the Board with enhanced context and background

when making decisions. Further information on our stakeholder

engagement can be found on pages 23 to 25 and in our

Section172 statement on pages 64 to 66.

We held our Board strategy day in March 2024 at our

Woodchester, UK, site. To supplement our strategy discussions,

we took the opportunity to meet many of our people based on

the site and the visit provided us with valuable insights into the

experiences of our manufacturing colleagues.

The year in review

I am pleased to introduce the Directors’ Corporate Governance

Report for the year ended 30 June 2024. This section focuses

onthe Company’s governance structures, the work of the

Boardand its Committees and how we comply with the UK’s

Corporate Governance Code 2018 (Governance Code), and

other regulatory requirements. The Board welcomes and supports

the publication of the 2024 UK Corporate Governance Code

andis working towards reflecting the revisions it contains into

itsprocesses and procedures.

Our Committee responsibilities are clear and well managed

byindividual Committee Chairs, and we are in the process

ofupdating and refreshing terms of reference and standing

agendas for all Committees. Some of these changes are in

anticipation of changes in UK governance standards; for

example, we are updating and refreshing our approach to risk

management. You can read about this in more detail in the

AuditCommittee Report (see pages 76 to 81). Such changes

arean essential partofmaintaining a robust governance

framework onan ongoing basis.

A significant change to the Company’s governance

arrangements took place with effect from 1 July 2024, with

SirDavid McMurtry stepping down from his role as Executive

Chairman. I would like to thank Sir David for his strong leadership

of the Company andwe are delighted that we will retain the

benefit of his vast knowledge and experience with him remaining

on the Board asaNon-executive Director. I assumed the role of

Interim Non-executive Chairman of the Board from that date. We

were also pleased to welcome Richard McMurtry to the Board

asaNon-executive Director, alsowith effect from 1 July 2024.

Richard trained as an engineer,with significant experience

inproduct development and robotic systems.

The Board’s focus on supporting management’s disciplined

delivery of our strategy has remained strong in an environment

ofinternational geopolitical challenges which the Board has

recognised and responded to throughout the year.

A key Board focus area was a review of our long-term strategic

ambition and value creation model, and the annual review of our

five-year plan in this context. To support our strategy and help

strengthen our links with the investment community, we also

appointed Peel Hunt as joint corporate broker; please see

page65 for more information.

Directors’ Corporate

GovernanceReport

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Looking forward

Looking ahead, the Board’s priorities in FY2025 will focus upon

the following:

— continuing to support the Group’s growth plans by oversight

of its three key strategic focus areas;

— appointing a new independent Non-executive Chair and

continuing to consider succession plans, including Non-

executive Director recruitment;

— increased engagement with investors;

— keeping the talent pipeline under review at Executive

Committee level and one level below;

— ESG and climate change;

— the UK government’s audit and governance reforms and

ensuring compliance with the new Governance Code. We will

continue to oversee management’s key activities and timeline

in this area; and

— improving our diversity across all levels of the business.

The progress we have made this year has provided us with

asound platform from which we look forward with confidence.

The 2024 AGM will be held on 27 November 2024 and I look

forward to meeting many of you then.

Sir David Grant

Interim Non-executive Chairman

11 September 2024

Board composition

We have also continued to progress succession planning

withmore appointments to add to those made in FY2022.

Wewelcomed Professor Dame Karen Holford as an

IndependentNon-executive Director on 1 September 2023.

Dame Karen’s appointment further enhances the breadth of

experience of the Board, with her background in engineering

and research and development, and higher education, as well

asher strong interest in broadening the diversity of people who

have engineering careers. From 1 July 2024, we also welcomed

Richard McMurtry as an additional Non-executive Director.

Richard is a highly experienced director of various businesses

and an investor who supports start-up companies committed to

developing the future of innovation in the UK. He trained as an

engineer with significant involvement in product development

and robotic systems. Further information on our Board’s skills

and experience can be found on pages 56 to 57.

Board performance review

This year, we conducted an internal Board and Committee

performance review. The Board and Committees continue to

perform effectively with clear terms of reference, appropriate

agendas and a good balance of support and challenge.

Detailsof the performance review, including the areas identified

for improvement and the progress made against last year’s

actions, can be found in the Nomination Committee Report

onpages 70 to 75.

Diversity and inclusion

The diversity of background, skills and experience of our

Boardis key to its strong performance. As reported in FY2022,

inOctober 2021 the Board approved our global Equality,

Diversity and Inclusion (EDI) Policy. We updated this inFY2023 to

include, in particular, the responsibilities of the Board in relation

to EDI, and to reflect the Financial Conduct Authority’s (FCA)

requirements in terms ofthe diversity considerations that should

apply at Board and Board Committee level. The appointment of

Professor Dame Karen Holford increases the diversity on the Board,

in line with the Company’s ambitions outlined in the EDI Policy.

GOVERNANCE REPORT

Directors’ Corporate GovernanceReport continued

Sir David McMurtry

Non-executive Director

John Deer

Non-executive Deputy Chairman

Sir David Grant

Interim Non-executive Chairman

Date appointed to the Board

September1975 (Executive Chairman

fromSeptember 1975 to June 2024)

Date appointed to the Board

July 1974 (Executive Deputy Chairman

from July 1974 to January 2020)

Date appointed to the Board

April 2012 (Senior Independent Director from

October2013 toJune 2024)

Areas of expertise

Strategy, product development,

engineering, science/technology

Areas of expertise

Manufacturing, strategy, international

development and operations

Areas of expertise

Engineering, people, science/technology

Contribution, skills and experience

— Co-founder of Renishaw, has provided

strong leadership to the Board, and

been responsible for Group innovation,

product strategy and Group technology.

— Significant contribution to the long-term,

sustainable success of the Company

and all aspects of the business.

— Strategic vision, and technical and

industry knowledge.

Contribution, skills and experience

— Co-founder of Renishaw, contributes

toBoard leadership and strategic

decisions for growing the business.

— Extensive manufacturing and quality

experience contributes to the delivery

ofefficient, high-quality manufacturing.

— Strategic vision, and commercial and

international experience.

Contribution, skills and experience

— Various previous leadership positions

atinternational engineering companies

and government-related science and

technology bodies.

— Extensive engineering experience

andrecognised for his contributions

toindustry.

— Contributes to talent recruitment,

increasing diversity and development

ofworkforce.

External appointments

None

External appointments

None

External appointments

None

Will Lee

Chief Executive

Allen Roberts

Group Finance Director

Catherine Glickman

Independent Non-executive Director

Date appointed to the Board

August 2016 (Group Sales and Marketing

Director from August 2016 to February 2018)

Date appointed to the Board

October 1980

Date appointed to the Board

August 2018

Areas of expertise

Sales and marketing, strategy,

engineering,operations

Areas of expertise

Finance, strategy, internal controls,

operations, compliance

Areas of expertise

People, remuneration, pensions, strategy

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 business.

— Joined the Renishaw graduate scheme

in1996 and since then has held various

senior management positions in

engineering, operations, and sales

andmarketing, resulting in an in-depth

understanding of the Group’s business,

products and markets.

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 Renishaw operates.

— Experienced in the management of

financial risks, reporting and planning.

Contribution, skills and experience

— Breadth of human resources experience

inother listed companies is particularly

valued by the Board.

— Skilled at developing reward structures

that align leadership motivation with

Group strategy.

— Extensive HR, remuneration and

pensionsexperience, as well as previous

international experience withGenus plc

and Tesco plc.

External appointments

None

External appointments

None

External appointments

— Non-executive director and remuneration

committee chair of TheWorks.co.uk plc

— Non-executive director of East of England

Ambulance Service NHS Trust.

Board of Directors

Renishaw plc Annual Report 2024

Juliette Stacey

Independent Non-executive Director

Stephen Wilson

Independent Non-executive Director

Professor Dame Karen Holford

Independent Non-executive Director

Date appointed to the Board

January2022

Date appointed to the Board

June 2022

Date appointed to the Board

September2023

Areas of expertise

Finance, M&A, strategy, corporate

governance, internal controls, compliance

Areas of expertise

Software, finance, strategy, business

development, IT transformation,

internationaldevelopment

Areas of expertise

Engineering, research and development,

science/technology, people and diversity

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 in both listed and

non-listed company environments.

— Roles as chair of audit committees at

other listed companies brings a wider

industry perspective.

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

inglobal businesses.

— Executive and non-executive roles

inlisted company environments.

Contribution, skills and experience

— Engineering experience across industry

and higher education.

— Leadership and strategic advisory

positions, including within government-

related science and technology bodies.

— Skilled at advancing diversity in

theworkforce.

External appointments

— Senior independent director and audit

committee chair of Fuller, Smith & Turner plc.

— Non-executive director and audit

committee chair of Sanderson Design

Group plc.

— Non-executive director of Hardwicke

Investments Limited.

— Non-executive director and audit

committee chair of Willmott Dixon

Holdings Limited.

External appointments

— Non-executive director and

auditcommittee chair of Canonical

Holdings Ltd.

External appointments

— Chief executive and vice chancellor

ofCranfield University.

Richard McMurtry

Non-executive Director

Kasim Hussain

Group General Counsel &

CompanySecretary

Date appointed to the Board

July 2024

Appointed

July 2024

Areas of expertise

Engineering, robotics, product development

Areas of expertise

Risk, compliance, corporate

governance and M&A

Contribution, skills and experience

— Highly experienced director of

variousbusinesses.

— Career experience in overseeing and

developing the future of innovation.

— Trained as an engineer with significant

involvement in product development

androbotic systems.

Contribution, skills and experience

— Adviser to the Board and senior

leadership on all matters of risk

andgovernance.

— Responsible for leading the global

Legal, Compliance and Company

Secretarial teams.

— Specialist in M&A and strategy.

— Substantial experience in

alistedenvironment.

External appointments

None

External appointments

None

Audit Committee

Nomination Committee

Remuneration Committee

Committee Chair

Board of Directors as at 11 September 2024

Read more extensive Board biographies

onlineat www.renishaw.com/directors

Former officers who held office during FY2024

Jacqueline Conway

General Counsel & CompanySecretary

Appointed November 2019 (onsabbaticalfrom

April to October2023) Resigned October 2023

Karen Atterbury

Interim Company Secretary

Appointed April 2023 Resigned July 2024

1 Sir David McMurtry was a member and chair of the

Nomination Committee until 30 June 2024 when he

stepped down from his role as Executive Chairman.

2 Sir David Grant was a member of both the Audit

andRemuneration Committees until 30 June 2024

when he assumed the role of Interim Non-Executive

Chairman.

3 On 1 August 2024, Catherine Glickman announced

herintention to step down from her position at

TheWorks.co.uk plc, which will be effective from

31 October 2024.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Directors’ Corporate GovernanceReport continued

Executive Committee

Dave Wallace

Group Operations Director

Gareth Hankins

Group Manufacturing Director

Diane Canadine

Group Human Resources Director

Appointed January 2008 Appointed February 2018 Appointed October 2023

Contribution, skills and experience

— Responsible for Group Operations,

withoversight of our centralised Group

Commercial Development teams,

Group Quality, Group Compliance, our

centralised Group Engineering teams,

Group IT and Security, and Group

Intellectual Property.

— 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 as Director and

General Manager for the CMM Products

Division, and previously held Executive

Committee responsibility for the

Industrial Metrology business.

Contribution, skills and experience

— Responsible for manufacturing

operations, procurement, facilities

management and sustainability 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.

Contribution, skills and experience

— Responsible for overseeing the

implementation of our wide-reaching

people strategy and developing our

network of overseas HR teams.

— Experienced leader of HR transformation.

— Previous senior roles across retail and

healthcare sectors.

Marc Saunders

Director of Group Strategic Development

Appointed April 2024

Contribution, skills and experience

— Responsible for Group strategy,

financial planning and analysis,

investorrelations and communications

to internal and external stakeholders.

— Experienced leader of strategic

planning processes for listed

businesses.

— Has worked in various technical,

commercial and corporate functions

atRenishaw, including leadership of

Additive Manufacturing applications,

UKSales and Group Marketing.

Will Lee* (Chair)

Chief Executive

See page 56 for biography

Allen Roberts*

Group Finance Director

See page 56 for biography

Kasim Hussain

Group General Counsel & Company

Secretary

See page 57 for biography

* These members of the Executive

Committee werealso Board Directors

during FY2024.

Renishaw plc Annual Report 2024

Former Executive Committee members

who held office duringFY2024

Jacqueline Conway

General Counsel & Company Secretary

Resigned October 2023

Leo Somerville

President, Americas

Resigned January 2024

Sir David McMurtry*

Non-executive Director

Resigned June 2024

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 apply

the principles and comply with the 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 23, 60

Workforce engagement 23, 43, 61

Other stakeholder engagement 24 to 25

Strategy and business model 7 to 10

Effective controls 68 to 69

Sustainability 35 to 52

Capital allocation 28

Workforce policies and practices 42 to 44, 52

Risk management 11 to 18

Scope of disclosures

In this Corporate Governance Report, we have incorporated:

— the Audit Committee Report (page 76);

— the Nomination Committee Report (page 70); and

— the Directors’ Remuneration Report (page 82).

This report is structured in accordance with the five sections of

the 2018 UK Corporate Governance Code (Governance Code)

and we describe how we have applied its principles.

TheGovernance Code can be viewed at www.frc.org.uk.

We report on the operation of our business in the following ways:

The Group’s business and likely future developments

The Chairman’s statement (pages 2 to 3), the Chief Executive’s

review (pages 4 to 6) and other sections of the Strategic Report

give a review of the Group’s business and likely future

developments. Results are also reported by operating segment

in Note 2 to the Financial statements, together with ananalysis of

revenue by geographical market.

Management Report

The Strategic Report includes a management 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 as set out on pages 95 to 97 together

form the Directors’ Report. The Company has chosen toinclude

matters in the Strategic Report that are required to be included in

the Directors’ Report. These are cross-referred to in the Directors’

Corporate Governance Report and Other statutory and regulatory

disclosures as applicable, and are incorporated by reference

into the Directors’ Report.

Corporate Governance Report

The Company’s corporate governance practices are set out in

the Directors’ Corporate Governance Report (on pages 54 to69),

which forms part of the Directors’ Report, as required bythe DTR.

Shareholder information

Certain information, which the FCA’s UK Listing Rules (UKLR)

require that the Company provides to its shareholders,

iscontained in the Directors’ Corporate Governance

Report(pages 54 to 69), the Directors’ Remuneration

Report(pages 82 to 94), and Other statutory and regulatory

disclosures (pages 95 to 97). This includes information

relatingtoarrangements with controlling shareholders.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Directors’ Corporate GovernanceReport continued

Stakeholder engagement, including the AGM

Shareholders

The AGM takes place at the Company’s headquarters or one of

its other main sites, and we send our shareholders appropriate

advance notice of the meeting. The Chief Executive and other

nominated presenters give presentations on the business,

andthe Chairs of the Audit, Remuneration and Nomination

Committees are available for questions during and after

themeeting.

At our 2023 AGM, we were pleased to see higher attendance

numbers again compared to our 2022 AGM, and the Board

greatly appreciated the opportunity to speak with more of the

Company’s shareholders. Due to positive feedback from the

wider investor community, we have kept the Q&A facility,

whichwas first introduced at the 2020 AGM. This allows the

Company’sshareholders to submit questions via email before

the proxy voting deadline and also helps them to 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

AnnualGeneral Meeting.

Each year, different 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 the 2023 AGM, the Board was again pleased that the

majorityof resolutions were passed with a high level of support

from the Company’s shareholders. In accordance with the

Governance Code, the Board considered the votes against

resolutions 5, the re-election of Sir David McMurtry (31.27%)

and6, the re-election of John Deer (28.48%). In order to better

understand the reasons for these votes against, the Board

reviewed the voting recommendations of relevant proxy voting

agencies, where these had been made available. Following the

AGM, Sir David Grant wrote to the Company’s largest

institutionalshareholders which voted against these resolutions

and those proxy advisory firms which recommended doing so,

inviting them to discuss their concerns with him in his then role

as Senior Independent Director.

The Board was pleased that more responses to this invitation

were received this year than last year, and constructive

discussions were held between Sir David Grant, Karen Atterbury,

then Interim Company Secretary, and five of our largest

institutional shareholders. These discussions provided the Board

with a greater insight into shareholders’ concerns, as well as

providing shareholders with agreater appreciation of Renishaw’s

position. From these discussions, it was clear that although many

of our stakeholders have an understanding and appreciation of

Renishaw’s unique history and culture, some of the Company’s

governance arrangements do not reflect the expectations of some

investors. Particular matters of note included the absence of a

relationship agreement between the founders and the Company,

diversity and succession planning. Sir David provided feedback

on these conversations to the Board. The Company published

anupdate as required under the Governance Code inMay 2024.

1 Board leadership and

Companypurpose

Purpose, values and culture

Renishaw’s purpose of Transforming Tomorrow Together, as well

as its values of innovation, inspiration, integrity and involvement,

help guide the Board and our people when making decisions.

These principles will help Renishaw grow and evolve without

losing focus on what is important.

A strong culture is needed to ensure Renishaw can achieve

itspurpose. The Board is responsible for monitoring and

assessing culture. The Chairman sets the culture for the Board,

promoting openness and debate. This informs the culture that

the Chief Executive embeds throughout the business with the

support of the Directors.

In November 2023, we launched our new Code of Conduct

(Code). This is a global guide on how to do business

responsibly,addressing issues that might arise for our

stakeholders. It is aligned with our core values, acts as atop-

level summary of our key policies, and sets out how we expect

our employees, and other key stakeholders, to act in their daily

working lives. See page 45 for more information about the

Codeand its implementation.

The Code provides a foundation for ‘Responsible Renishaw’,

theGroup’s global compliance brand, which guides employees

on doing business responsibly in line with Renishaw’s culture

and core values, fostering alignment. Throughout FY2024, the

Board received updates covering all aspects of Responsible

Renishaw, and communications took place around the Group

toengage andeducate employees on Responsible Renishaw

topics. Employees are also invited to share their feedback on

compliance through an annual survey, the feedback from

whichis shared with senior leadership and used to shape

futurecommunications.

Engagement with employees underlies the Board’s understanding

of Renishaw’s culture. One of the ways the Board has been

engaging with our people is through our global values competition,

which aims to recognise and celebrate examples ofour values in

action across the business. Other ways in which the Board has

engaged with employees are set out on page 23. The Board

waspleased to receive updates from our HR colleagues on the

steps we are taking as a business to attract and retain women

inengineering.

Renishaw plc Annual Report 2024

TheBoard continues to monitor the situation and engage with

shareholders to understand their views on this issue and any

other significant matters.

In addition to the AGM, we also hold an annual Capital

MarketsDay for current and potential shareholders, analysts,

brokers and financial advisers. All of the Directors usually

attend,and selected representatives from across the Group

givepresentations and answer questions from participants

during the day. At this year’s Capital Markets Day, most of the

Directors were available to speak to stakeholders. Information

about our 2025 Capital Markets Day will be published in due

course. We also hold online Q&A sessions with the Chief

Executive and Group Finance Director as part of the full and

half-year results webcasts.

The Board continues to monitor progress with engagement

mechanisms and regularly reviews our Investor Relations Policy.

The Company’s overall approach to shareholder engagement

isset out on page 24.

Other stakeholders

The Board remains committed to engaging effectively with other

stakeholders to ensure we continue delivering value for them.

Catherine Glickman, Independent Non-executive Director,

remains our designated employee engagement ambassador.

Catherine has extensive HR and remuneration experience and

theBoard believes her background and expertise make her

ideally suited for this role, ensuring our employees’ views reach

the boardroom. Catherine gives the Board helpful feedback

fromworkforce engagement activities, including joining

employee briefings and through her attendance at EDI forums.

She provides regular briefings to the Board on recruitment,

retention, and the progress of our key people projects. In light

ofthis, the Board considers that this engagement mechanism

remains the most appropriate for Renishaw. Further information

on Catherine’s engagement activities can be found on pages

23and 43.

The Board also takes a close interest in the Group’s customers,

the challenges they face, and how best Renishaw can support

them. The Board receives regular updates on conversations

thatWill Lee, Chief Executive, and senior colleagues have with

our customers.

More details on the above engagements, and other activities,

can be found in the How we engage with stakeholders section

onpages 23 to 25. How the Board has considered stakeholders in

discussions and decision-making can be foundon pages 64 to 66.

Anti-bribery and corruption

Renishaw is committed to acting professionally, fairly and with

integrity in all its business dealings and relationships wherever

we operate, and to implementing and enforcing effective

systemsto counter bribery and corruption. Renishaw’s policy

isto conduct all its business in an honest and ethical manner.

Wetake a zero-tolerance approach to bribery and corruption

thatis communicated to third parties with whom we do business.

Our Group Anti-Bribery and Corruption Policy prohibits the

offering, paying, solicitation and receipt of bribes in any form.

In addition, Renishaw’s Gifts and Hospitality Policy requires any

giving or receipt of gifts, benefits or hospitality to be reasonable

and proportionate. We maintain a Gifts and Hospitality Register

and have in place a straightforward process for employees to

seek approval when required.

We require third parties to sign up and adhere to anti-bribery

andcorruption clauses, and to comply with anti-bribery and

corruption laws, in all relevant Group companies’ standard terms

and conditions, standard form and negotiated agreements

(including relationship agreements such as agency, distribution

and consultancy agreements). Anti-bribery and corruption

training is mandatory for all employees.

The Group has due diligence procedures for the onboarding

ofthird-party agents and distributors designed to address

briberyand corruption risks, which includes third-party

screening. We are currently reviewing our approach to

‘KnowYour Customer’ matters, to enhance our customer-related

due diligence.

Employee whistleblowing

The Board encourages our people to raise concerns about

suspected unlawful or unethical behaviour and has outlined its

expectations in our whistleblowing policy, our Speak Up Policy.

The Group’s confidential global hotline service, ‘Speak Up’, is

there for people to raise any concerns about suspected unlawful

or unethical behaviour. The service is also available to officers,

suppliers, customers, consultants, contractors, volunteers and

job applicants, and any third parties who provide services for

oron behalf of the Group. This year we logged 31 cases,

compared with 18 in FY2023, all of which were promptly

followedup.

All cases are reviewed by our triage coordinators (currently

theHead of Group Finance and the Group General Counsel &

Company Secretary), unless the matter is about them, 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 issue that

falls under our Grievance Policy). Regular meetings are held with

key stakeholders to track the progress ofinvestigations to help

ensure cases are closed in a timely manner. The Board monitors

the operation of this Policy and concerns raised, with the Audit

Committee reviewing significant incidents and their outcomes.

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). The

Board reviews all authorisations granted, and their associated

terms, every year. New disclosures are made where applicable.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Directors’ Corporate GovernanceReport continued

Board and Committee meetings

The table below shows the number of meetings of the Board

andits Committees, alongside Directors who attended and the

number of meetings they were eligible to attend, during FY2024.

Director Board

Audit

Committee

Nomination

Committee

Remuneration

Committee

Sir David McMurtry 12/12 N/A 5/5 N/A

John Deer 11/12

N/A N/A N/A

Sir David Grant 12/12 6/6 5/5 6/6

Will Lee 12/12 N/A N/A N/A

Allen Roberts 12/12 N/A N/A N/A

Catherine Glickman

11/12 6/6 4/5 6/6

Juliette Stacey 12/12 6/6 5/5 6/6

Stephen Wilson 12/12 6/6 5/5 6/6

Professor Dame

Karen Holford

11/11 4/4 4/4 4/4

1 John Deer was absent from the Board meeting on 7 September 2023 due

to a pre-existing commitment.

2 Catherine Glickman was absent from the Board meeting and Nomination

Committee meeting on 19 March 2024 due to a pre-existing commitment.

3 Professor Dame Karen Holford was appointed with effect from 1 September

2023, and so was not eligible to attend any meetings held between 1 July

2023 and 31 August 2023.

The table below sets out the Board and Committee meetings

thatoccurred in FY2024.

Key

Board

Audit Committee

Nomination Committee

Remuneration Committee

Unscheduled meeting

2 Division of responsibilities

Governance structure

While the Board has overall responsibility for governance across

the Group, it delegates certain matters to its three formally

constituted Committees: the Audit Committee, the Remuneration

Committee, and the Nomination Committee.

Our Executive Committee is responsible for the executive

management of our businesses. It usually meets once a month

and is chaired by the Chief Executive. Members also include the

Executive Directors and senior managers, as noted on page 58.

It considers the performance and strategic direction of our

operating segments, performance against objectives, and

othermatters of general importance to the Group.

A chart showing the governance structure is set out below.

The formal schedule of matters reserved for the Board includes:

— the approval of full-year and half-year 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;

— maintaining a sound and effective system of internal control

and risk management;

— forecasts, business plans and budgets;

— material agreements;

— director and company secretary appointments and removals;

— patent-related disputes and other material litigation; and

— major product development projects.

The formal schedule of matters reserved for the Board and the

terms of reference for each of the Audit Committee, Nomination

Committee and Remuneration Committee are available on

ourwebsite at www.renishaw.com/corporategovernance.

TheCommittees reviewed their terms in July and August 2024.

A framework of delegated authorities maps out the structure

below the Board and includes the matters reserved to the

Executive Committee. It also includes the level of authorities

given to management below the Executive Committee.

Board

Executive

Committee

Risk Committee, ESG Steering Committee, product groups

andsubsidiary undertakings

Audit

Committee

Nomination

Committee

Remuneration

Committee

Renishaw plc Annual Report 2024

July 2023

August 2023

September 2023

October 2023

November 2023

December 2023

January 2024

February 2024

March 2024

April 2024

May 2024

June 2024

Subjects discussed by the Board during the year

Below is a high-level summary of the subjects the Board discussed during the year.

Foran in-depth look into some key decisions made by the Board in FY2024, see our

Section 172 statement on pages 64 to 66.

Strategy

— Reviewed and updated our five-year financial plan.

— Reviewed and approved our strategic objectives.

— Received regular updates from Executive Committee and product groups regarding

progress towards FY2024 objectives.

— Considered sales strategy.

Operational/commercial

— Received regular flagship project updates from product groups.

— Received regular regional sales updates.

— Considered cyber risk and received an update on the threat landscape and mitigations.

Financial

— Approved our full- and half-year results, as well as our interim and final dividends.

— Reviewed and approved our tax strategy.

— Reviewed trading updates.

— Approved forecast revenue and profit ranges.

Leadership and people

— Reviewed plans for Board-level succession planning.

— Received an update on EDI strategy.

— Considered the results of our global employee engagement survey.

— Reviewed the employee pay increase and bonus proposal for FY2024.

Internal control and risk management

— Approved our 2024 principal risks.

— Considered reports on compliance with financial, regulatory, corporate responsibility,

and sustainability commitments.

Governance and stakeholders

— Participated in the FY2024 Board performance review and reviewed the resulting report.

— Received updates on key governance matters at every meeting.

— Reviewed our registers of Directors’ situational conflicts and related parties.

— Considered investor relations practices.

— Approved our Modern Slavery Statement.

— Approved policy for the composition of subsidiary boards.

Sustainability and the environment

— Approved the membership and terms of reference of the ESG Steering Committee.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Directors’ Corporate GovernanceReport continued

How did the Directors discharge their

Section172 duty during the year?

The Directors recognise that the decisions they make today

willaffect the business in the long term. It is acknowledged that

different stakeholders have different needs, so the Board tries

tounderstand these needs and priorities through engagement

toinform its decision-making. This, together with considering

thelong-term consequences of decisions and maintaining

ourvalues and reputation for high standards of business

conduct, underpins the way the Board operates and its

governance framework.

In understanding the needs and priorities of stakeholders,

theBoard also acknowledges that situations may arise where

stakeholder groups have conflicting priorities. When this

happens, the Board considers the priorities of each group.

TheBoard assesses them individually and collectively from

theperspective of the strategic objectives and the continued

long-term sustainable success of the business.

This statement explains how the Directors:

— have engaged with employees, shareholders, customers,

suppliers, communities and others; and

— have considered employees’ interests, the need to act

fairlybetween members of the Company, the need to

fosterbusiness relationships with suppliers, customers

andcommunities, the impact of Renishaw’s operations

onthecommunity and environment, its reputation for high

standards of business conduct, and the outcomes of those

considerations on the principal decisions taken during the

financial year.

In this statement, principal decisions of the Board are defined

asthose taken in this financial year, which relate to matters

ofkeystrategic importance, and which are significant to any

ofRenishaw’s key stakeholders.

Principal decisions in FY2024

Set out on the following pages are examples of how key

stakeholders, Section 172 duties, and other matters were

considered by the Board when making its principal decisions

inFY2024.

Renishaw plc Annual Report 2024

Section 172 statement

Directors are required by Section 172 of the Companies Act

2006 to act in a way that they consider, in good faith, is most

likely to promote the success of the Company for the benefit

ofits members as a whole. In doing so, they must also have

regard to wider responsible business behaviour, including the

following factors:

— the likely consequences of any decision in the long term;

— the interests of the Company’s employees;

— the need to foster the Company’s business relationships

withsuppliers, customers and others;

— the impact of the Company’s operations on the community

and the environment;

— the desirability of the Company maintaining a reputation

forhigh standards of business conduct; and

— the need to act fairly between members of the Company.

Not only is this the Directors’ statutory duty, but it is also the

rightway to conduct business to achieve long-term, sustainable

success. Effective and inclusive decision-making is at the heart

of Renishaw’s governance structures and is a foundation for

effective value creation over the longer term. During this financial

year, with continuing global economic uncertainty, geopolitical

conflicts and inflationary pressure, balancing the needs and

expectations of stakeholders continues to be an important

andchallenging task.

The Board takes its role of ensuring that it fulfils its obligations

tothose affected by Renishaw’s business in its stakeholder

consideration and engagement very seriously. It has ensured

that such consideration is embedded throughout the business,

with the Executive Committee and senior management actively

engaged in communication and engagement initiatives.

How has the Board had regard to Section

172matters?

Engagement with employees, suppliers, and customers during

the year is explained in the How we engage with stakeholders

section on pages 23 to 25. Details of how the Board operates

and matters considered by the Board are set out in the Directors’

Corporate Governance Report from page 54. 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 local communities and the environment. It is critical to

Renishaw’s success that high standards of business conduct

arepromoted.

The Group Legal and Company Secretariat and Quality,

Compliance, HR and Sustainability teams also report regularly

tothe Board. The Non-financial and sustainability information

statement on page 52 identifies policies and guidelines

governing Renishaw’s approach to climate-related financial

disclosures, environmental matters, people, anti-corruption

andanti-bribery, social matters and human rights. Considering

the long-term effect of the decisions made by the Board is an

integral part of the approval of strategy, and strategic progress

this year is disclosed on page 9.

Appointing Peel Hunt

What was the principal decision? Which matters were considered?

Appointment of Peel Hunt as joint corporate broker, alongside

theexisting corporate broker, UBS.

Shareholders (existing and potential), employees, customers,

suppliers, the UK listed company regulator (the FCA), proxy

voting agencies and the long-term sustainable success of

theCompany.

How were the above matters considered?

The Board considered a revised Investor Relations Policy in which the Company would seek to have more engagement with key

shareholders and potential investors. It also considered whether appointing a joint broker to work with UBS would be beneficial

to develop Renishaw’s investor relations strategy, messaging, and to facilitate increased investor engagement with market

participants generally. Past market participant feedback and proxy voting reports were also considered in this context,

aswellas the new 2024 Governance Code and associated guidance.

What was the outcome?

The outcome was the appointment of Peel Hunt announced in January 2024 and the following next steps:

— communication of a new long-term value creation model to explain market growth and Renishaw’s strategy for

outperformance, see more on page 7;

— planned evolution of Renishaw’s regular results announcements, an in-person analyst presentation/Q&A in London and

one-to-one meetings with key shareholders and potential investors;

— development of the Capital Markets Day; and

— meetings on governance matters offered with Sir David Grant to top 20 institutions who voted against the re-election of the

founders as Directors. Meetings were held with five shareholders who took up the offer.

For more information, see page 24.

ESG Steering Committee

What was the principal decision? Which matters were considered?

Establishment of an ESG Steering Committee. Employees, customers, suppliers, the environment and

communities, shareholders, regulators and the government,

thelong-term sustainable success of the Company, and

maintaining high standards of business conduct.

How were the above matters considered?

As part of a wider governance review of ESG activities in the Group, the Board decided to establish a new ESG Steering

Committee (Committee) to oversee the Group’s ESG priorities and conduct as a responsible and ethical corporate operator.

TheBoard believed it was in the best interests of stakeholders for the oversight of these responsibilities to be delegated to

acommittee dedicated to ESG matters, as it would allow such matters, including stakeholder views on them, to be considered

in greater detail. In addition to the Directors, Will Lee (Committee Chair), Allen Roberts, and Stephen Wilson, being appointed

members of the Committee, it was important to the Board that the remaining members included representatives from various

areas of the Group’s business. These include the product groups, sales regions, manufacturing and procurement, and corporate

functions, to ensure a wide range of internal stakeholder voices are represented. The creation of the Committee has also

resulted in increased oversight and accountability of ESG-related matters throughout the Group, and provided a platform for

ESG matters to be considered by senior management.

What was the outcome?

Earlier this year the Committee approved an ESG strategy for the Group. The priorities of this strategy, including its goals

andtargets, are the result of a double materiality assessment that considered feedback from interviews with stakeholder

representatives, and then ranked matters based on their importance to stakeholders. The materiality assessment was then

analysed by the Committee to determine which specific ESG areas the strategy should focus on. The format and content of

theESG strategy, including the associated goals and strategic objectives, were also developed to support the Group’s wider

business strategy of long-term sustainable growth.

As a result of this methodology, the ESG strategy reflects those matters that are considered to be the most important to the

Group and key stakeholders. Going forward, the Committee will regularly monitor performance against the strategy’s goals and

targets. The strategy as a whole will also be reviewed on an annual basis by the Committee to ensure it remains appropriate

and continues to reflect the ESG matters considered most important by stakeholders. As part of this review, stakeholder

representatives will again be engaged to determine if their views and priorities have changed. This feedback willthen be

considered to determine if and how the strategy needs to change.

For more information, see pages 35 to 45.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Directors’ Corporate GovernanceReport continued

Renishaw Code of Conduct (Code)

What was the principal decision? Which matters were considered?

Approval of the new Renishaw Code of Conduct. Customers, shareholders, suppliers and agents and

distributors, the environment and communities, regulators

andthe government, the long-term sustainable success

oftheCompany, and maintaining high standards of

businessconduct.

How were the above matters considered?

The Board considered the policies currently in place within the Group covering ethical and legal requirements. It also assessed

the culture it aspires to embed globally with all stakeholders versus the existing culture, in the context of the increasing

regulatory requirements on listed multinational companies. The Board considered the territories in which the Group operates,

itsbusiness model and strategy, as well as its principal risks.

What was the outcome?

The outcome was the implementation in November 2023 of a new Code, as a global guide on how to do business responsibly.

Itis aligned with the Group’s core values, acts as a top-level summary of key policies, and sets out how employees, and other

key stakeholders, are expected to act in their daily working lives.

The Code is designed to be the go-to guide on how to comply with laws, regulations and policies. The Code also provides

details on how to report any suspected wrongdoing via the Speak Up service.

The Code acts as a guide for any issues that might arise during stakeholders’ day-to-day work on Renishaw’s behalf.

Eachsection contains:

— examples of common ethical situations;

— advice on what to watch out for;

— do’s and don’ts;

— links to relevant policies and resources; and

— contact details for further guidance.

The Code has been translated into 14 languages and the following implementation programmes have been carried out during

the year:

— a global communication launch of the Code to all employees of Renishaw throughout November 2023; and

— employee acknowledgment of the Code integrated within the Human Resources Management System (Workday).

A roadshow of presentations to employees throughout the UK to embed the principles of the Code and to acknowledge FAQs

in relation to the Code.

There are also ongoing plans to do the following:

— introduce a global Code of Conduct training programme; and

— continue to reinforce the Code in all aspects of our business practice.

For more information, see page 45.

Update regarding FY2023

principal decision – Proposals

relating to the UK defined benefit

(DB) pension scheme

In FY2023, the Board approved

aproposal to seek to insure the

liabilities of the UK DB pension

scheme. This insurance was secured

inFY2024, completing this transaction.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

2 Division of responsibilities

continued

Composition and commitment of the Board

The Governance Code recommends that at least half of a board,

excluding the chairman, should comprise independent non-

executive directors. During the financial year, the Board comprised

nine Directors: two Executive Directors in addition to the Executive

Chairman and six Non-executive Directors, five of whom are

considered to be independent. With effect from 1July 2024,

theBoard comprises 10 Directors: two Executive Directors,

theInterim Non-executive Chairman and seven Non-executive

Directors, four of whom are considered to be independent.

Catherine Glickman, Juliette Stacey, Stephen Wilson and

Professor Dame Karen Holford are the Non-executive Directors

considered to be independent in character and judgement,

andthere are no relationships or circumstances that are likely

toaffect their judgement. Sir David Grant was considered to be

independent in character and judgement with no relationships

orcircumstances likely to affect his judgement throughout the

financial year prior to him taking on the role of Interim Non-

executive Chairman.

Sir David Grant’s tenure

During the year, the Nomination Committee undertook

arigorous review of Sir David Grant’s independence,

effectiveness and commitment given his service as an

Independent Non-executive Director for more than 12 years.

Sir David did not participate in these discussions. Following

recommendation by the Nomination Committee, the Board

concluded that Sir David continued to be independent in

character and judgement, and there were no relationships

orcircumstances that are likely to affect, or could appear to

affect, his judgement. The Board also noted the benefits of

hisextensive knowledge of the Company and expertise in

engineering. When Sir David McMurtry informed the Board

ofhis intention to step down as Executive Chairman of the

Company, the Board concluded that it was in the best

interests of the Company for Sir David Grant to remain on

theBoard to provide continuity and facilitate succession

planning. Sir David Grant was therefore considered to be

independent on appointment as Interim Non-executive

Chairman for the purposes of provision 9 of the

GovernanceCode.

In addition to the searches for a new Chair of the Board and

Independent Non-executive Director, the Board continues to

actively consider succession plans more generally, building on

the appointments in recent years that have increased the range

of skills and backgrounds on the Board, helping with diversity

ofthought and constructive challenge of management.

This year’s internal Board evaluation concluded that the Board

remains effective. More details about the Board evaluation can

be found on pages 73 to 74.

The terms of appointment of the Non-executive Directors set

outthe expected time commitment, as well as the requirement

todiscuss any changes to other significant commitments with

the Chairman and Chief Executive in advance. They are available

for inspection at the Company’s AGM and its registered office

upon written request.

None of the Executive Directors holds a directorship in

aFTSE100 company.

The Board considers that all Renishaw’s Non-executive

Directorsdemonstrate commitment to their roles and

dedicatesufficient time to their Company duties. Each of the

Independent Non-executive Directors provides support to the

Board particularly on areas related to their skills and experience,

which for Catherine Glickman is HR matters, for Juliette Stacey

isfinance, for Stephen Wilson is the software sector, global

business and investor relations, and for Professor Dame Karen

Holford is engineering and research and development.

Furtherdetails of their contribution, skills and experience

aresummarised in their biographies on pages 56 to 57.

Senior Independent Director and

Non-executiveDirectors

Sir David Grant was the Senior Independent Director prior

totaking on the role of Interim Non-executive Chairman on

1 July2024. The Board believes it is not in the interests of

shareholders or the Company to appoint an interim Senior

Independent Director and that this matter should be left to the

new Chairtodo so once they are appointed. In the meantime,

SirDavid remains available to discuss material concerns

withshareholders, or,where this channel has failed to resolve

concerns or this contact is inappropriate, the Company

Secretary who will direct them totheappropriate Director.

During the year, the Non-executive Directors and Executive

Chairman met without the other Executive Directors present to

discuss performance, corporate governance, and other matters.

The Independent Non-executive Directors also regularly met

without the Executive Directors, Executive Chairman or other

Directors present.

Division of responsibilities

There was a clear division of responsibilities at Board level

throughout FY2024. 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

Chairman’s key responsibilities, which also detail the key

responsibilities of the Senior Independent Director, on our

website at www.renishaw.com/corporategovernance.

GOVERNANCE REPORT

Directors’ Corporate GovernanceReport continued

Renishaw plc Annual Report 2024

Development

The Company offers its Directors the opportunity to attend

formaltraining courses regarding their duties. The Company also

provides them with guidance notes, papers and presentations on

changes to law and regulations, as appropriate. Non-executive

Directors are invited to attend internal events, which are a great

way to keep up to date with product development and marketing

initiatives. These events are also an opportunity for the Non-

executive Directors to engage with business units and functions.

This year, members of the Board received two external training

sessions. The first, from Herbert Smith Freehills LLP, covered

updates on audit and corporate governance, reformstothe

UKlisting regime, and recent developments indirectors’ duties.

The second training session was led by UBSand covered

relevant updates on the takeover code andother updates.

Business leaders (including from the finance and legal functions,

product groups, and sales regions) give regular presentations

atBoard meetings, to update the Directors on their areas of

responsibility, including updates regarding products and

business strategies. These also give the Directors the chance

todiscuss latest developments, and current and future initiatives.

As a new Director that has joined us this year, we gave

ProfessorDame Karen Holford a tailored induction pack and

bespoke induction programme. This induction included site

visitsand briefings by both senior managers and external

advisers to help her to 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. Asimilar induction programme

forRichard McMurtry is underway.

Information and support

Board members receive business updates, financial information,

and forecasts with relevant commentaries in advance of each

Board meeting. These allow the Directors to review financial

performance, current trading, and key business initiatives.

Directors also have access to the Company Secretary, who

advises the Board on all governance matters. Where necessary,

the Directors have access to independent professional advice,

atthe Company’s expense, to discharge their responsibilities

asDirectors. The Company maintains liability insurance for

theDirectors and officers and has entered into indemnities

asdisclosed in Other statutory and regulatory disclosures

onpage95.

3 Composition, succession

andevaluation

Nomination Committee

A description of the membership and activities of the Nomination

Committee, as well as the Board’s commitment to diversity,

canbe found on pages 70 to 75.

Re-election

In accordance with the Governance Code, all of the Directors

retire from the Board at each AGM and offer themselves for

re-election and re-appointment or, in the case of any Director

who was first appointed to the Board since the last AGM,

election to office.

4 Audit, risk and internal control

Audit Committee

A description of the membership and activities of the Audit

Committee is set out on pages 76 to 81.

Financial and business reporting

The respective responsibilities of the Directors and auditor

inconnection with the Financial statements are set out in

theDirectors’ responsibilities section on page 99 and the

Independent Auditor’s Report on pages 102 to 112.

Risk management and internal control

The Board is responsible for risk management and internal

control, and for reviewing the effectiveness of these systems.

The Group has an established process for the review of business

risks throughout the Group, which includes the Risk Committee.

Further information on Renishaw’s risk management and internal

controls can be found in the Risk management section on pages

11 to 18. 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 Board has conducted a robust assessment of the principal

and emerging risks that Renishaw faces, including those that

would threaten the Group’s business model, future performance,

solvency, or liquidity. Renishaw’s principal risks and uncertainties

can be found on pages 15 to 18. The Board is satisfied that there

is an ongoing process for identifying, evaluating, and managing

the significant risks that the Group faces. 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 any significant failings

orweaknesses identified from its review.

The Group has defined lines of responsibility and delegation

ofauthorities. The Group also has established and centrally

documented control procedures, including approvals of capital

and other expenditure, information and technology security,

andlegal and regulatory compliance.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

The Internal Audit function helps to give independent and

objective assurance on the operation of the controls it tests.

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.

The Board ensures 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. The Internal Audit function reviews financial controls and

management accounts.

The Board reviews the effectiveness of the system of internal

controls, including via the Audit Committee. It receives regular

reports from the 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,

andrisk management systems.

The Audit Committee has regularly received updates on the UK

government’s audit and governance reforms, and management’s

work to respond to these changes. During the year, management

have focused on improving and standardising risk and controls

documentation, and performing an updated fraud risk

assessment that also considers the new corporate criminal

offence of the failure to prevent fraud.

Going concern

The Directors have assessed the Group’s position as a going

concern, and updated the assessment before signing this report.

The Board considered the Group’s forecast profits and cash

flows for the period from the date of approval of the Annual

Report to 30 September 2025. The Board is 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.

Viability statement

The Board approved the Company’s viability statement

onpage19.

5 Remuneration

The methods used to apply the Governance Code

principlesrelating to remuneration are set out in the Directors’

Remuneration Report. A description of the membership

andactivities of the Remuneration Committee is set out on

pages84to 85.

Compliance statement

The Board considers that it has complied with the provisions of

the Governance Code throughout FY2024 except in relation to

the following matter:

— Provision 19 (that the chair should not remain in post beyond

nine years from the date of their first appointment). Sir David

McMurtry, who co-founded Renishaw together with John Deer

in 1973, was appointed to the Board in September 1975 and

held the position of Executive Chairman from the Company’s

listing in 1984, during which time the Board’s view was that

Sir David’s service as Executive Chairman remained in the

best interests of the Company and its shareholders. This is

inpart because of his unique history as a co-founder of

Renishaw and continued effective leadership of the Board,

but equally importantly his contribution to the Group’s

long-term, sustainable success from his role and

responsibilities for innovation and product strategy. Sir David

McMurtry stepped down from the role of Executive Chairman

on 30 June 2024 and Sir David Grant took on the role of

Interim Non-executive Chairman with effect from 1 July 2024.

Sir David Grant has served on the Board of the Company

since April 2012 and the Board concluded that it was in the

best interests of the Company for Sir David Grant take on the

role of Interim Non-executive Chairman to provide continuity

and facilitate succession planning.

In light of the changes to the composition of the Board which

took effect on 1 July 2024, the Company ceased to be compliant

with provision 11 of the Governance Code (that at least half the

Board, excluding the Chairman, should be Non-executive

Directors whom the Board considers to be independent).

Asnoted in the Nomination Committee Report, searches for

botha new Chair of the Board and a new independent Non-

executive Director are underway.

Sir David Grant

Interim Non-executive Chairman

11 September 2024

GOVERNANCE REPORT

Board diversity

We have seen an improvement in Board-level diversity in FY2024,

with the percentage of female directors increasing from 25% to

33% (as at 30 June 2024). However, we are aware that this falls

short of the UK Listing Rules target of 40% female directors.

Aspart of our searches for both a new Independent Chair and

Independent Non-executive Director, we will ensure candidates

from broad and diverse backgrounds are included in shortlists

while continuing to appoint on merit against objective criteria.

Succession planning

Succession planning has been another important activity for

theCommittee this year, in particular for key members of the

Senior Leadership Team. As outlined in the Social section of

ourESG review, we believe that attracting and retaining the right

people with the right skills iskey to our success and therefore

weare working hard to retain and develop our internal talent.

TheCommittee oversees the development of succession plans

for our senior management roles and seeks to ensure that

adiversity oftalent is available, developed and retained in the

business. Further information on succession planning can be

found later inthis report.

Priorities for FY2025

Over the coming year, in addition to our searches for a new

Independent Chairof the Board and Independent Non-executive

Director, ourfocus will be to continue progress on Board and key

role succession, including the oversight of individual development

plans for identified successors. In doing so, we will ensure

thatthe development plans contain a sufficient diversity of

candidates and that policies and processes are in place

tosupport thatdiversity.

Sir David Grant

Chair of the Nomination Committee

11 September 2024

Introduction

I am pleased to present the Nomination Committee Report for

the year ended 30 June 2024. I took over as interim Chair of

theCommittee in July 2024, after Sir David McMurtry stepped

down from the Committee in conjunction with him stepping down

as the Company’s Executive Chairman. I would like to thank

SirDavid for his strong leadership of the Committee and the

Committee’s focus in the near term is continuing the process to

appoint a permanent successor to Sir David McMurtry in the role

of Chair of the Board as well as further strengthening the Board

through the appointment of an additional Independent Non-

executive Director.

The Nomination Committee continues to play a vital role in the

stewardship of the Company by identifying and recommending

Board members and succession planning for Board and senior

management positions. Underpinning the way we fulfil this role

isour thorough review and understanding of the skills and

experience required to support the business and foster long-

term strategic success.

Strengthening the Board

We were delighted to welcome Professor Dame Karen Holford

tothe Board with effect from 1 September 2023. In her first year,

Dame Karen has already made a significant contribution to the

Board and strategic discussions, her engineering experience

proving to be a significant asset. Additionally, she has played

animportant role in our discussions on diversity. Dame Karen

was appointed following a process that straddled FY2023 and

FY2024 and is outlined on page 75. Following Dame Karen’s

appointment, afurther Board skills and experience exercise was

carried out, which mapped the strategic needs of the business

with the Board’s strengths. This is discussed more fully later in

this report. The results of this exercise will help to inform our

succession discussions.

As announced in June 2024, I am also pleased to welcome

SirDavid McMurtry’s son, Richard McMurtry, as an additional

Non-executive Director. Richard is a highly experienced director

of various businesses and an investor who supports start-up

companies committed to developing the future of innovation in

the UK. He trained as an engineer with significant involvement

inproduct development and robotic systems.

Following Sir David McMurtry stepping down as Executive

Chairman, we are continuing to make good progress with the

search for his successor and will make an announcement on this

in due course. I will continue to serve as Interim Non-executive

Chairman until this time to provide some continuity, help facilitate

the recruitment process, and ensure an effective handover.

Nomination Committee Report

Renishaw plc Annual Report 2024

Key activities

The Committee’s key areas of focus during FY2024 included:

Skills assessment and succession planning

— Conducted a skills and experience assessment of the Board.

— Reviewed the structure, size and composition of the Board

andits Committees.

— Oversaw the recruitment and induction of Professor Dame

Karen Holford.

— Considered the appointment of Richard McMurtry as

a Non-executive Director.

— Initiated searches for a new Independent Chair of the Board

and additional Independent Non-executive Director.

— Recommended the reappointment of Catherine Glickman for

anadditional three-year term.

— Considered succession planning for both the Executive and

Non-executive Directors.

— Reviewed talent and succession plans for key senior

operational and executive roles.

Governance

— Reviewed and updated the Committee’s terms of reference.

— Reviewed the time commitment required of the Non-executive

Directors and evaluated whether sufficient time was being

committed to deliver their duties.

— Assessed the independence of each Non-executive Director,

agreeing that all Non-executive Directors (excluding John Deer)

were independent.

— Recommended the re-election of each Director due to retire

atthe AGM.

Board performance review

— Monitored the implementation of the improvement plan arising

out of the FY2023 external Board performance review.

— Arranged the FY2024 internal Board performance review.

— Reviewed the results of the performance review in relation

tothe Committee’s own performance, and any items relating

tothe composition of the Board and succession planning.

— Recommended an action plan arising out of the FY2024 Board

performance review to the Board for approval.

Role and responsibilities

The Committee operates under written terms of reference,

whichwere reviewed and updated this year, and published on

Renishaw’s website at www.renishaw.com/corporategovernance.

The Committee is primarily responsible for:

— reviewing the size, structure and composition – including the

balance of skills, knowledge, experience and diversity – of the

Board and its Committees (taking into consideration the

outcome of the Board performance review), and

recommending changes to the Board, as appropriate;

— overseeing succession planning for the Board and other

senior management. In doing so, it considers how to create

apipeline for succession that promotes diversity, inclusion

and equal opportunity. The Committee also takes into

account the leadership skills and expertise required in the

future to achieve the Group’s strategic goals;

— recommending to the Board its policy on equality, diversity

and inclusion (EDI) as it applies to the Board and its

Committees, its objectives, appointments and nominating

candidates for appointment, and its link to strategy;

— leading the process for new Board appointments and

nominating candidates for appointment; and

— reviewing the performance of, and making recommendations

to the Board on, the re-election of Directors at the AGM.

Members and attendance

The Committee was chaired by Sir David McMurtry for the

entirety of FY2024. Sir David Grant now chairs the Committee

and has done since 1 July 2024. The other four members are

theIndependent Non-executive Directors. Only Committee

members are entitled to attend meetings, although the

Committee Chair regularly invites Will Lee to attend, unless

discussions are due totake place on his role. The Committee

met on five occasions during FY2024. Attendance for each of

themembers at these meetings is set out in the table below:

Committee member Attended

Sir David McMurtry (Chair, to 30 June 2024) 5/5

Sir David Grant (Chair, from 1 July 2024) 5/5

Catherine Glickman¹ 4/5

Juliette Stacey 5/5

Stephen Wilson 5/5

Professor Dame Karen Holford² 4/4

1 Catherine Glickman was absent from the meeting on 19 March due to

apre-existing commitment.

2 Professor Dame Karen Holford was appointed with effect from 1 September

2023 and was therefore not eligible to attend the first meeting scheduled

inFY2024.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Nomination Committee Report continued

Board diversity

As shown in the table below, as at 30 June 2024 the proportion

ofwomen on the Board was 33%, meaning the Company

hasnotyet met the UK Listing Rules’ targets of 40% female

Directors, of having one of the senior Board positions (Chairman,

Chief Executive, Senior Independent Director or Group Finance

Director) held by a woman, and for having a director on the

Board from a minority ethnic background. The Board recognises

that thismeans Renishaw does not yet meet the targets of the

UK Listing Rules.

During the year, Professor Dame Karen Holford was appointed

as an additional female director on the Board, further increasing

the gender diversity. However, following the changes to the

composition of the Board that took place on 1 July 2024, the

proportion of women on the Board became 30%. The Committee

believes the current Directors bring a diverse range of

perspectives, and that they continue to fulfil their roles effectively

considering their experience, skills and competencies. The

Committee remains committed to ensuring candidates from

broad and diverse backgrounds (including candidates who

maynot have prior listed-company experience) are included

inshortlists in current and future recruitment searches, while

continuing to appoint on merit against objective criteria.

Thishelps ensure the Board has the right skills, knowledge,

experience and diversity of perspective that enable it to

effectively discharge its responsibilities and achieve the

Company’s strategic targets. By ensuring a diverse range of

candidates are included on shortlists for Board appointments,

the Committee is hopeful that the Board will align with the UK

Listing Rules’ targets in due course.

Diversity

The Committee understands the benefits that diversity can bring

to the discussions and decision-making of the Board and its

Committees by bringing wide-ranging perspectives and

experience. Increasing the diversity of the Board is therefore

something the Committee remains committed to. The Group’s

EDI Policy and standards are applied when reviewing the

composition of the Board and its Committees, overseeing

succession planning, recommending changes to the Board

andSenior Leadership Team, and nominating candidates for

appointment. Recruitment consultants hired by the Company

forsenior positions are chosen on the basis that they will present

a diverse list of candidates, including female candidates and

those from ethnic minority backgrounds.

Under Renishaw’s EDI Policy, the Board has responsibility

fordeveloping a diverse pipeline for succession to senior

management roles, which it does with the help of the

Committee,and for targeting greater diversity at Board level,

having regard to the three targets set out in the UK Listing Rules.

The Committee recognises that for the engineering sector to

achieve its full potential, it is important that it mirrors the society

in which it operates. The Committee will continue to focus on

improving allforms of diversity at senior management level

across the Group and ensure that policies are in place to

supporta diverse intake into the industry. Renishaw’s approach

to diversity across the Group more widely, including the EDI

Policy and diversity initiatives undertaken throughout the year,

are set out on page42.

Ethnic representation of the Board and executive management as at 30 June 2024

Ethnic background

Number

of Board

members

Percentage of

the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage of

executive

management

White British or other White

(includingminority-white groups) 9 100 4 7 100

Mixed/Multiple ethnic groups – – – – –

Asian/Asian British – – – – –

Black/African/Caribbean/Black British – – – – –

Other ethnic group

Not specified/prefer not to say – – – – –

Gender representation of the Board and executive management as at 30 June 2024

Gender identity

Number

of Board

members

Percentage of

the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage of

executive

management

Men 6 67 4 6 86

Women 3 33 – 1 14

Not specified/prefer not to say – – – – –

Renishaw plc Annual Report 2024

Gender and ethnic representation on the Board and the

executive management

For the purposes of the UK Listing Rules, the gender identity

andethnic background of the Board and executive management

(as at 30 June 2024) is reported in the tables on page 72.

Thedata was collected by a combination of pre-existing internal

records and asking each member of the Board and executive

management to indicate their gender and ethnicity according to

the categories presented in the tables. References to executive

management include the members of the Executive Committee

(including the Executive Directors). The terms used in the UK

Listing Rules map to the Company’s roles as follows: CEO is the

Chief Executive, CFO is the Group Finance Director and SID is

the Senior Independent Director.

Board performance review

The Board undertakes a review of its performance and

effectiveness annually to identify opportunities for improvement.

After conducting an external review last year, the review has this

year been conducted internally with support from the Interim

Company Secretary. As outlined by the Governance Code,

thenext external review will take place no later than 2026.

Key findings from the FY2023 review

The 2023 Annual Report reported on the FY2023 external Board

performance review. Progress on the main outcomes is outlined

in the table below:

Senior Management diversity

As shown in the table on page 72, as at 30 June 2024, the

proportion of women on the Executive Committee was 14%.

Following the appointment of Kasim Hussain on 29 July 2024,

the ethnicity representation on the Executive Committee has

increased to 14%.

Senior Management, being the Executive Committee (including

Executive Directors) and their direct reports (excluding those in

administrative or non-managerial roles), is made up of 39 men

and 14 women (26%). Unfortunately, this means that the

Company has not yet met the FTSE Women Leaders Review

target of 40%. In an effort to help increase gender diversity

atthis level a target of 40% women in Senior Management by

December 2027 has been set this year. In line with the new

Parker Review recommendations, an ethnic minority target of

10% of UK-based Senior Management to be met by December

2027 has also been set. As at 30 June 2024, UK-based Senior

Management consisted of 46 people, of whom none self-

identified as being of an ethnic minority. With the new ESG

Steering Committee monitoring these targets, the Nomination

Committee will have access to this data when considering

succession plans and any recruitment activities for Senior

Management. It is hoped that with this increased focus and

accountability, the diversity of Senior Management will increase.

Strategic planning Succession planning Relationship with investors

FY2023

outcomes

To enhance the Board’s oversight of

strategy by taking a higher-level view

for the Group as a whole.

To continue focusing on identifying

successors for Directors and

seniorleaders, considering future

skills requirements.

Increase interaction with investors to

gain a better understanding of their

views of the Company and its markets.

Actions for

FY2024

Increase Board time dedicated to

items of strategic importance. Develop

ongoing oversight mechanisms for

achievement of targets.

Update and refresh the succession

plans for the Board and senior

leaders.

Establish an investor relations

programme with regular updates

tothe Board.

Progress made

inFY2024

Time spent on operational matters

has decreased and dashboards are

now used to monitor progress against

strategic objectives.

Contingency succession plans are

now in place and longer-term

succession plans for the Executive

Directors have been considered

andrefreshed.

A more active investor engagement

programme has been implemented

and Peel Hunt appointed as joint

corporate brokers. Refreshed investor

relations reporting is provided to the

Board monthly.

Role Gender Tenure Nationality

Executive

Non-executive

Female

Male

0-3 years

4-8 years

9+ years

B r i t i s h

Irish

Information regarding Board members (as at 11 September 2024)

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Nomination Committee Report continued

Succession planning

During the year, the Committee further developed the

succession plans for the Board, Executive Committee and key

roles of the Senior Leadership Team. A focus at the start of the

year was contingency planning, ensuring the business is

prepared for any sudden absence of a Director or a member

ofthe Senior Leadership Team. Renishaw has a strong track

record of promoting from within, so the Committee was able

toidentify suitable candidates who could take on additional

responsibilities to cover for the absent person until they could

return or a permanent replacement found. The Committee also

looked at the long-term succession plans during the year to

identify potential successors for the Senior Leadership Team,

evaluate their readiness in the short, medium and long term,

suggest development plans for internal candidates and consider

the need for external candidates.

In reviewing the length of tenure of each Director, the Committee

was mindful that a number of Directors had held their positions

for significant periods of time. This was taken into consideration

when looking at the succession plan. Further information is set

out in the Directors’ Corporate Governance Report on page 67.

It is important for the long-term sustainable success of the Group

that the future leadership and stewardship of the business is

carried out by individuals with the right mix of skills, experience

and backgrounds. Not only will this help ensure a wide variety

ofperspectives leading to balanced decision-making, it will also

ensure the business is well placed to take advantage of future

opportunities, including changing environments, technological

disruptions, regulatory changes and social trends. All of this

helps the Company achieve its strategic goals. The Committee

therefore undertook a skills assessment this year to better

understand the balance of skills, experiences and attributes that

are on the Board and where it could strengthen. The table on the

following page sets out those skills present on the Board.

The Committee has used the outcome of the skills assessment

as a guide for which skills to focus on when preparing role

specifications and assessing potential candidates for both the

replacement Independent Chair of the Board and additional

Independent Non-executive Director, and will take account of it

for additional recruitment activities in the future. The Committee

will continue toassess the balance of skills and experience on

the Board going forward.

FY2024 Board performance review

Having conducted an external performance review last year,

theBoard decided to undertake an internal performance review

for FY2024, with support from the Interim Company Secretary.

The performance review covered the Board and its Committees

in addition to the Chairman’s effectiveness. The Committee

reviews were conducted at Committee meetings, with the

respective Chairs then reporting the recommendations into

theBoard review.

The first part of the performance review consisted of a written

questionnaire completed by each Director and certain members

of the Senior Leadership Team. The questions related to the

effectiveness of the Board and its Committees; they were

basedon last year’s questions and answers to highlight areas

ofimprovement, and also included some additional topical

matters.Answers to the questionnaires were then anonymised

and aggregated before forming the basis of a facilitated

roundtable discussion.

To help ensure the performance review was as effective, formal

and rigorous as possible, each Director was given the option

tohave a pre-meeting with the Interim Company Secretary to

airconcerns they may have been uncomfortable raising in the

roundtable discussion. Any such concerns were then raised

anonymously by the Interim Company Secretary during the

roundtable discussion.

The agenda, which was set by reference to the outcomes of the

pre-meetings and questionnaire, was circulated in advance

ofthe discussion, where comprehensive minutes were taken.

Theoutcomes of the performance review were discussed at

aBoard meeting later in the year, where it was concluded that

the Board remains effective. The areas noted in the table

abovewere highlighted as opportunities to further enhance

Board performance.

An action plan was compiled and agreed by the Board in August

2024 based on the performance review’s recommendations.

TheGroup General Counsel & Company Secretary is responsible

for tracking these actions and reporting back to the Board

periodically on progress made.

Succession planning

and diversity

Board interaction with senior

management Investor relations

Actions for

FY2025

Continue succession planning

fortheBoard with a focus on

improvingdiversity.

Create opportunities for senior

management to engage more

formally with the Board.

Continue to build understanding with

institutional investors and receive

more regular updates from brokers.

Renishaw plc Annual Report 2024

Board appointment process

The Board has an established process for identifying and

evaluating candidates for appointment to the Board and Senior

Management roles. Equally, Board and Senior Management

appointments are subject to the principles set out in the EDI

Policy, which formalises the Group’s commitment to diversity

atall levels (more information on this Policy is set out on

page72). The EDI principles, as set out in the Policy, are

discussedwith the recruitment consultant to ensure they

takeaccount of its provisions when preparing a longlist of

candidatesfor discussion.

These established processes, and in particular the use of

Kingsley Gate as external search consultants to support

therecruitment process, were used inconnection with

theappointment of Professor Dame Karen Holford as an

Independent Non-executive Director of the Company.

KingsleyGate has no other connection with the Company

orwithindividual Directors. Anexternal search consultancy

wasnot used in connection withthe appointment of Richard

McMurtry as a Non-executive Director of the Board. The

Nomination Committee carefully considered Richard McMurtry’s

prospective appointment and concluded that his judgement and

experience would add value to the Board and its discussions.

Information regarding the induction process for Professor Dame

Karen Holford and Richard McMurtry is set out on page 68.

AllNon-executive Directors are appointed to the Board for an

initial three-year period subject to annual performance review

and re-election by shareholders at the AGM.

Engaging external recruitment consultants to assist

with the recruitment

Agreeing role specifications for the proposed

appointment

Consultants reviewing a longlist of candidates and

reducing to a shortlist*

Reviewing a shortlist of diverse candidates provided

by the consultants

Inviting the preferred candidate to meet the

wholeBoard

Recommending the preferred candidate to

the Board

Preparing a bespoke induction programme based on

the individual’s role and experience

Interviewing the candidate or candidates who best fit

the role specification against objective criteria, with

due regard to the benefits of diversity on the Board

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 required of the candidates

The Committee’s procedure for Board

appointments includes the following steps

* In respect of the recent appointment of Professor Dame Karen

Holford, the Committee reviewed the longlist of candidates and

created its own shortlist.

Board skills

— Strategy

— Financial performance

— Risk and compliance oversight

— Information technology strategy and governance

— Executive management

— ESG

— Board experience

— Commercial experience

— Mergers & acquisitions experience

— International business experience

— Research & development

— Engineering – electrical, mechanical and optical

— Software development

— Manufacturing

— Global sales via multiple channels

Sir David Grant

Chair of the Nomination Committee

11 September 2024

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

The Group’s Internal Audit team was strengthened this year

andthe Committee welcomed the opportunity this brings to

increase the team’s scope of work and face-to-face activity with

the Group’s subsidiary teams. We also saw a change in the

external audit team this year, with a new lead audit engagement

partner following the previous partner’s mandatory rotation off

the audit. Working with the new audit partner has been a priority

for the Committee this year and we welcome the different

perspectives that new members of the external audit team

bringto the process.

Looking ahead to FY2025, the above changes in the second

andthird lines of defence, together with a recent restructure in

Group Finance and further implementations of Microsoft D365,

provide good opportunities for the business to further strengthen

its control environment and provide integrated reporting to

theCommittee.

I will be attending the AGM on 27 November 2024 and look

forward to answering any questions about the work of the

AuditCommittee.

Juliette Stacey

Chair of the Audit Committee

11 September 2024

Renishaw plc Annual Report 2024

Introduction

On behalf of the Board, I am pleased to present the Audit

Committee Report for FY2024.

This year brought some significant activities and change

acrossour main areas of responsibility: financial reporting,

riskmanagement and internal controls, and overseeing the

internal and external audit processes. A financial reporting

focusarea this year has been the review of management’s

workon the purchase of an insurance buy-in scheme for the

UKdefined benefit pension scheme (‘the Scheme’) and its

subsequent accounting and reporting. The buy-in is designed

toreduce thefunding risk, with the insurance policy covering

most of the Scheme’s liabilities.

Another area of focus has been the review of management’s

change inapproach to determining inventory provisions (the

estimate of the net realisable value of inventory at the year-end).

Wediscussed the proposed approach before the year-end,

challenged the rationale for the new basis, and alsoreviewed

thenew estimate at the year-end. Our conclusion was that

management’s change in approach was appropriate, and that

ithad been correctly applied to inventory atthe year-end.

Our work on risk management and internal controls involved

discussion throughout the year on management’s progress

instrengthening the internal control framework. We have

concluded that the framework is effective overall, while

supporting the areas of improvement identified by management,

such as greater standardisation of controls and consistency

indocumentation. The Committee has had constructive

discussions with management on the prioritisation of this work

and the resourcing changes that may be necessary across the

Group. This will remain a focus area in FY2025.

Audit Committee Report

Committee meetings

Committee member Attended

Juliette Stacey (Chair) 6/6

Catherine Glickman 6/6

Sir David Grant 6/6

Professor Dame Karen Holford* 4/4

Stephen Wilson 6/6

* Professor Dame Karen Holford was appointed with effect from 1 September

2023 and attended all Committee meetings from that date onwards.

Committee effectiveness

The effectiveness of the Audit Committee formed part of the

Board performance review described in the Nomination

Committee Report on page 73 and 74.

The role of the Committee and how it works

The Audit Committee has an important role in providing

assurance of effective internal controls and financial reporting

onbehalf of the Board and shareholders. The Committee fulfils

thisrole by focusing on the following key areas:

— external reporting, including the Annual Report;

— the risk management and internal control framework;

— the internal audit process; and

— the external audit process.

The Committee’s relationship with the Board is an important

partof how it fulfils its responsibilities, and the Board receives

regular and timely reports from the Committee Chair on the

above activities.

An overview of the Committee’s work in these areas during

theyear is set out above and the terms of reference can be

found at www.renishaw.com/corporategovernance.

Committee membership

The Committee members are the Independent Non-executive

Directors. The Board considers that, as a whole, the Committee

has competencies relevant to Renishaw’s sector and finance

tofulfil its responsibilities, including relevant professional

qualifications and experience in senior finance roles.

TheIndependent Non-executive Director biographies can

befound on pages 56 to 57.

The Audit Committee has been advised internally this year by the

Interim Company Secretary, and the Deputy Company Secretary

acts as secretary to the Committee.

Key activities

External reporting,

includingthe Annual Report

Risk management and

internalcontrol Internal audit External audit

— Reviewing the Annual

Report, Interim Report,

andtrading updates

beforepublication.

— Discussing management’s

assessment of significant

judgements, estimates

andfinancial reporting

topics (asexplained in

moredetail on the next

twopages) and challenging

management’s view.

— Assessing whether the

Annual Report is fair,

balanced and

understandable.

— Reviewing the assumptions

and financial modelling for

the viability and going

concern assessments.

— Reviewing the Risk

Committee’s assessment of

principal and emerging risks.

— Assessing and approving

management’s updated risk

management framework

andapproach to improving

documentation.

— Reviewing the effectiveness

of internal controls.

— Reviewing management’s

work on improving the

design and operation

offinancial controls,

includingthe introduction

ofMicrosoft D365.

— Monitoring management’s

progress in preparing for

thenew ‘failure to prevent

fraud’ offence.

— Agreeing the scope and

resourcing of Internal

Audit’s work.

— Evaluating Internal Audit’s

findings and monitoring

theresponses from

management and

discussing these with

theGroup Internal

AuditManager.

— Conducting a review on

theeffectiveness of

InternalAudit.

— Interviewing and assessing

EY’s candidates for the

newaudit engagement

partner role.

— Reviewing EY’s audit plan,

including their scope and

methodology, ahead of the

FY2024 audit.

— Discussing with EY their

progress and findings

throughout the audit.

— Conducting a review on the

effectiveness of EY and their

audit process.

— Reviewing any non-audit

services and the

corresponding policy.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

External reporting

The Committee reviews significant financial reporting issues and judgements made in preparing the financial statements, preliminary

announcements and trading updates. The Committee also reviews related information in the Annual Report regarding the audit and

risk management.

The Committee’s work this year on these areas of external reporting is set out below.

Significant accounting judgements and estimates

Cash flow hedges

Description Our review and conclusions

Most of the Group’s sales are generated outside of the UK.

Thismeans most invoices to, and payments from, customers are

inforeign currency. Forward currency contracts are therefore used

tomanage the effect on Revenue of movements in the Group’s three

most significant trading currencies.

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 these contracts would be recognised

through the Consolidated income statement, rather than Other

comprehensive income and expense.

Revenue forecasts, including ‘more likely than not’ and ‘highly

probable’ levels were presented by management at 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 used these Board-

approved forecasts to support the hedge accounting treatment, and

agreed with management’s conclusion that the contracts designated

as hedges of future cash flows were eligible for hedge accounting.

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 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

an impairment of £3.3m was needed for three projects due to

reductions in their expected future cash flows.

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 2024

goodwill totalled £11.2m.

There are three main cash-generating units (CGUs) for which

goodwill is recognised, relating to the acquisitions of itp GmbH,

Renishaw Mayfield S.A. and Renishaw Fixturing Solutions LLC.

We reviewed the discounted future cash flows for these CGUs, and

the key assumptions behind these forecasts. Included in this was

areview of management’s previous forecasts and how they

compared to actual results.

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.

Audit Committee Report continued

Renishaw plc Annual Report 2024

Inventories

Description Our review and conclusions

The Group holds a significant amount of inventory (£161.9m at

30 June 2024). 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.

During the year, management changed the basis for this estimate,

as described in more detail on page 137.

At 30 June 2024, the inventory provision was £29.6m.

We sought explanations from management on the rationale for the

change in approach to determining the inventory provision, their

considerations, and alternative options. Following this discussion

andchallenge we agreed with management’s revised approach.

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 also asked Internal Audit to confirm that during the year they had

reviewed the inventory provision workings prepared by subsidiaries,

confirming that there were no significant issues with the demand

forecasts prepared by these teams.

Overall, we concluded that the provision was appropriate.

Intercompany receivables (Renishaw plc as an entity)

Description Our review and conclusions

At the year-end, Renishaw plc (as an entity) had material

receivables due from other Group companies. Due to uncertainty

about the near-term cash flows in one of these Group companies,

management have applied a significant level of judgement in

determining the carrying value of the corresponding

intercompany receivable in the Company balance sheet.

Therewas no impact on the Consolidated financial statements.

During the year, Renishaw plc recognised an impairment of

£9.1mfor intercompany receivables.

We reviewed management’s assessment, discussing and challenging

the assumptions and key considerations. We discussed with

management the range of outcomes they had considered.

Overall, we concluded that the impairment was reasonable.

Defined benefit (DB) pension scheme

Description Our review and conclusions

To determine the value of the defined benefit pension schemes

liabilities, 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.

Management also need to determine the appropriate accounting

treatment for past service costs.

We revised the assumptions of discount rates, inflation rates and

mortality rates, including the movement in these since FY2023.

Wealso confirmed with management that these assumptions had

been determined in consultation with independent actuaries.

We also reviewed management’s accounting treatment for matters

thatmay affect past service costs, including discussing professional

advice obtained by management. We agreed with management’s

conclusion on the following:

— that a contingent liability should be disclosed relating to a recent

court case in the UK relating to contracted-out DB rights; and

— that a contingent liability should be disclosed relating to the

potential liabilities arising from a defined contribution-underpin

drafting issue in the UK DB scheme trust deed.

Going concern and viability

The Committee reviewed the financial modelling undertaken

bymanagement and which the Board used in making their

goingconcern and viability assessments. This review included

assessing the basis of the severe but plausible downside

scenarios and how they addressed the principal risks, and the

key assumptions and main mitigating actions included in each

scenario. We confirmed with management that cash balances

were positive in each month in the assessment period. We also

reviewed the reverse stress tests that management had prepared

for the period to 30 September 2025 and 30 September 2027

forgoing concern and viability respectively, noting that the

sustained falls in revenue (and therefore profit and operating

cash flows) in the reverse stress tests are so low as to be

highly unlikely.

The Committee also considered the other elements of the

going concern and viability assessments, including the lack

of significant external borrowing, the absence of covenants,

and the current trading performance of the Group. Overall,

the Committee concluded that the use of the going concern

basis for preparing the financial statements is appropriate,

and supported the viability assessment reviewed and

authorised by the Board.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

The Risk Committee combines this work with identifying trends

and any new emerging risks, to draft the Group’s principal risks.

During the year, the Audit Committee has considered and

endorsed these principal risks presented by the Risk Committee.

Internal controls

The Group’s systems and processes are designed to provide

reasonable but not absolute assurance of:

— reduced risk of material misstatements, errors or losses;

— mitigation of risk that might cause a failure of business

objectives;

— safeguarding assets against unauthorised use or disposal;

— maintenance of proper accounting records and the reliability

of financial information used within the business for

publication; and

— compliance with applicable laws and regulations.

Internal controls are embedded throughout the business’s

systems, and the Code of Conduct 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 the 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 values.

On a day-to-day basis, management is responsible for

implementing internal controls. The Group Internal Control

Manual sets out key financial processes and controls, mainly

aimed at financial management and financial reporting. The

manual is available to all employees and the Internal Audit team

test subsidiary compliance with these controls during its audit

work. Self-assessment of compliance with the Group’s policies

and high-level controls is certified by each Group company on

an annual basis, and this year we have also introduced more

in-depth self-assessments on key financial controls.

During the year, management has continued to develop the

financial controls framework, focusing on standardisation and

documentation, and also focusing on plans to address the root

cause of common themes. These plans include resourcing and

training needs, as well as opportunities for Microsoft D365 to

standardise and streamline internal processes and controls.

The Committee oversees the effectiveness of other material

controls, including operational and compliance controls, by

receiving regular updates from our Responsible Renishaw Forum

on compliance topics, including its assessment of the maturity of

the control environment. In addition, principal risk owners provide

confirmation to the Committee that they are not aware of any

significant deficiencies in the key controls for their respective risks.

Further work was performed by the Financial Controls team

within Group Finance this year, which helped to enhance

reporting to the Committee on the effectiveness of financial

controls. This culminated in a clearer summary to the Committee

of assurance, outcomes, and mitigation, and confirmed that the

controls over financial reporting were effective overall in the year.

Accounting policies and disclosures

The Committee reviewed significant accounting policies, and as

noted earlier reviewed management’s change in approach to the

estimate of the net realisable value of inventory. The Committee

also reviewed management’s approach to presentation and

disclosures, including the appropriateness of the Alternative

Performance Measures (APMs).

Climate risk and Climate-related Financial Disclosures

The Committee reviewed this year’s Climate-related Financial

Disclosures reporting, including reviewing an update from the

Sustainability Reporting Manager on the drafting process and

how management review this work, and we also received an

update from the ESG Committee onitsreview process. The

Committee also reviewed management’s work in assessing

theimpact of climate changeon the financial statements.

Fair, balanced and understandable assessment

The Audit Committee reviewed whether the FY2024 Annual

Report, taken as a whole, was fair, balanced and understandable

and also whether it provided the information necessary for

shareholders to assess the Company’s position and performance,

business model and strategy. In making its assessment the

Committee took into account:

— agreeing a suitable timetable for the production of the

FY2024 Annual Report, agreed between the Finance team

and the external auditors;

— using corporate reporting specialists to support the

development of the Strategic Report and Corporate

Governance 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.

Following its review, the Audit Committee confirmed to the

Boardthat the FY2024 Annual Report was fair, balanced and

understandable, and the Board’s statement is set out on page 99.

Risk management and internal controls

The Board has overall responsibility for the Group’s approach to

risk management and internal control. The 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.

Risk management

The Risk Committee identifies risks in two ways. Using atop-

down approach, the Chair of the Risk Committee interviews

senior managers from across the Group, focusing on the most

significant risks. The bottom-up approach involves reviewing

theresults from aggregating risk registers prepared by regional

and product group managers.

Audit Committee Report continued

Renishaw plc Annual Report 2024

The Group has a non-audit services policy, which was reviewed

during the year to confirm its continued appropriateness. Some

non-audit work is permitted by the policy in line with the FRC’s

Guidance on Audit Committees and the requirements of the

FRC’s Revised Ethical Standard 2019.

EY requires non-audit work to be approved by the Group’s lead

audit partner before the work starts; approval is not granted if the

lead audit partner concludes there is a risk to the independence

and objectivity of the audit. Separation of EY’s specialist teams

also ensures that members of the audit team do not perform

non-audit work for the Group.

This year, EY’s fees for non-audit work were £27,000. This was

for three engagements: Wotton Travel Limited’s annual ABTA

reporting, a tax assurance engagement for Renishaw Metrology

Systems Limited as required by local law, and a limited

assurance for Renishaw AG.

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.

The FRC’s ‘Audit Committees and the External Audit: Minimum

Standard’ (‘the Standard’) sets out how the Committee should

assess the effectiveness of the external audit, in the context

ofthe Group’s circumstances. The Committee’s review of the

effectiveness of the FY2024 external audit reflects the points

thata Committee should undertake per the Standard, and took

into account:

— the quality and scope of EY’s audit plan, and an evaluation

ofdelivery and performance against the plan;

— EY’s identified risks to audit quality and how these had

beenaddressed;

— the skills, mindset, efficiency and performance of the audit team;

— the communication between the Group and EY;

— EY’s understanding of the Group’s business and industry

sector; and

— the FRC’s Audit Quality Inspection and Supervision report

into EY, published in July 2024.

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 27 November 2024.

The Committee also confirms that it has met all the relevant

requirements of the Standard in FY2024.

Juliette Stacey

Chair of the Audit Committee

11 September 2024

Whistleblowing

The Committee has oversight of the Group’s whistleblowing

process. This is set out in more detail on page 61, with the

Committee reviewing significant whistleblowing incidents

andtheir outcomes.

Internal audit

Internal Audit work is performed in-house, led by the Group

Internal Audit Manager. The Audit Committee agrees the

InternalAudit team’s work plan at the start of each financial

yearand checks their progress against this plan during

Committee meetings.

The team was expanded this year with the addition of a new

team member in APAC, which allowed for additional in-person

visits to some subsidiaries with multiple locations, in addition to

the regular programme of scheduled overseas subsidiary visits.

The team also performed a review of our Canadian subsidiary,

following its implementation of Microsoft D365.

The Committee receives periodic reports on audit work

completed and discusses areas of significance in the audit

findings. At each Committee meeting, the Group Internal Audit

Manager provides updates on the responses to the findings

fromlocal teams.

At the end of each financial year, the Committee assesses

Internal Audit’s effectiveness, considering if its work was

effective by reviewing the volume, age and severity of findings,

and then provides feedback to the Group Finance Director.

TheAudit Committee also reviews the responses to

questionnaires completed by those teams audited in the year.

Overall, the Committee agreed that this year’s Internal Audit

workwas consistent and comprehensive, but should be

tailoredin FY2025 to increase the focus and depth of work

onhigh-risk matters.

External audit

Appointment, reappointment and tendering

EY was first appointed as our auditor at our 2016 AGM, and

there have been two audit engagement partner rotations since

then. We consider that the Company has complied with the

Competition and Markets Authority’s Statutory Audit Services

Order for the financial year under review.

We currently expect to carry out our next audit tender process

in2026 for the FY2027 audit. As noted in the following

sections,the Committee is satisfied with the external auditor’s

independence, objectivity and effectiveness, and so considers

this proposed tender timeline to be in the best interests of the

Company’s shareholders.

Independence and objectivity

Both the Group and EY take action to ensure that EY are

independent and objective. The previous lead audit partner

rotated off the engagement following the conclusion of last

year’saudit, and so this is the first year of the Committee

workingwith the new lead audit partner, Helen McLeod-Jones.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

FY2024 employee bonus awards

As is our usual practice, a percentage of our annual profit

hasbeen set aside to invest in bonus awards for eligible

Renishaw employees. Awards are dependent on seniority

andperformance, with the UK minimum award this year being

£850 (pro-rated). Due to our Adjusted PBT for FY2024 being

lower than FY2023, the average employee bonus award this

yearis less than it was last year.

Employee engagement

I act as the employee engagement ambassador and have

attended meetings with HR and membersof the Senior

Leadership Team during the year to hearfeedback received

fromconsultations and engagement onreward initiatives.

Ihavealso benefited from reviewing the results of ouremployee

engagement survey, and spent time with our people at our New

Mills, UK site to discuss outcomes and collect further feedback.

This engagement has provided me with the background and

context required to help shape thereward framework for the

Executive Directors and senior management.

Our approach to remuneration for FY2025

Remuneration in FY2025 will be based on the Policy as

approved by shareholders in November 2023.

Base salary

The Executive Directors received a pay increase of 5% (slightly

belowthe average of the wider workforce at 6.7%) effective

1 January 2024. Will Lee and Allen Roberts therefore receive

salaries of £738,680 and £470,060 respectively. Sir David

McMurtry's salary was increased to £804,500 from 1 January

2024 to 30 June 2024. The Deputy Chairman and other Non-

executive Directors also received fee increases of 5% as set

outon page 87. Basesalaries will be reviewed in November/

December 2024, with any increase effective from January 2025,

in line with pay reviews forour employees.

Annual incentive opportunity

We continue to operate a simple remuneration framework that

was widely supported by 95% of our shareholders at the 2023

AGM. However, we are mindful that the absence of a separate

long-term incentive plan means that the overall value of the

totalpackage for Executive Directors at Renishaw is modest

compared with businesses of similar size and complexity.

ThePolicy includes flexibility to increase the annual incentive

opportunity to up to 225% of salary to ensure we can continue

toattract and retain high calibre executives and continue to offer

an appropriately competitive overall package that is aligned to

performance and good stewardship of the business. In light of

the recent changes to the Board (Sir David McMurtry stepping

down as Executive Chair, and Sir David Grant becoming

Non-executive Chair) we recognise that there will be an increase

in the responsibilities of Will Lee, our Chief Executive. We are

fortunate to have Will leading the business. He brings strong

direction, deep Renishaw and industry experience coupled with

technical expertise. The Committee reviewed his incentive

opportunity and decided that it wanted to recognise the impact of

the Board changes and make a distinction between the incentive

opportunity for the Chief Executive and Group FinanceDirector.

Introduction

On behalf of the Board, I present our Directors’ Remuneration

Report for FY2024. The Directors’ Remuneration Report,

excluding the Policy summary, is subject to an advisory

shareholder vote at our November 2024 AGM.

I would like to take this opportunity to personally thank

SirDavidMcMurtry for his long and distinguished contribution

asan Executive Director. I am looking forward to working with

him in his new capacity as a Non-executive Director, and am

delighted to welcome Richard McMurtry to the Board.

Remuneration in context of performance for

FY2024 and the wider workforce

We have achieved solid strategic progress in a challenging trading

environment, including weaker demand in the semiconductor

market and adverse currency effects. Despite taking a more

cautious approach to recruitment, we havecontinued to invest in

our people and our innovative new products tocreate stronger

market positions and support our growth objectives, while

managing costs carefully and focusing on productivity.

The way in which the Committee took into account remuneration

for the wider workforce is described on page 85.

FY2024 annual incentive opportunity for

Executive Directors

Our Executive Directors have continued to work closely with

customers developing products that meet current and future

needs, while making progress on our strategic objectives.

This year’s annual incentive was made up of two elements:

afinancial element worth 80% awarded against Adjusted profit

before tax (PBT) targets and 20% against strategic objectives.

The strategic objectives are set based on the targets agreed for

the Executive Committee as a whole and these include matters

relating to ESG, operational excellence, people and innovation.

They are all linked to the strategy and values of the Group,

whichunderpin our culture and drive behaviours consistent

withour purpose. When setting targets, the Committee is aware

of thepossibility ofinadvertently motivating irresponsible

behaviourand sets the target framework with this in mind.

Forthe Executive Directors, the strategic objectives element

onlypays out if the financial target is met.

Unfortunately, this year the threshold Adjusted PBT was not met.

As a result, there is no award under the financial element of the

annual incentive. In light of this, there will also be no award under

the strategic objectives despite significant progress having been

made. The full details of the targets and performance against

thestrategic objectives are explained in the Annual Report

onremuneration. The Committee considered the formulaic

outcome of the annual incentive opportunity and was satisfied

that it was appropriate; accordingly, no discretion was exercised.

The bonus for the Senior Leadership Team is determined

byperformance against the same metrics as the Executive

Directors. However, in their case, where the financial targets are

not met, they have the opportunity to earn an award based on

the achievement against the strategic objectives. For FY2024

thisaward will be 15.8% of total bonus opportunity.

Directors’ Remuneration Report

Committee Chair’s statement

Renishaw plc Annual Report 2024

In line with the Policy, for achieving an appropriately stretching

level of threshold performance 10% of the bonus based on

Adjusted PBT will be earned.

In his new role as a Non-executive Director, Sir David McMurtry

will not participate in the FY2025 annual incentive opportunity.

Looking ahead – key focus areas for

theCommittee

During FY2025 our key focus will be on ensuring that the Policy

continues to support success, specifically that we achieve the

targeted profit number and the strategic objectives drive the right

behaviours and outcomes for the longer term. We will also focus

on ensuring we retain talented people by:

— implementing a workplan following the feedback from our

employee engagement survey;

— further reviewing incentives throughout the Group; and

— continuing to deliver leadership and management

development programmes that capitalise on our strength

ofoffering early responsibility and interesting work.

In implementing our Policy, our aim is to always consider our

stakeholders, including our people and shareholders, 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.

For FY2025, we have decided to utilise some, but not all,

oftheadditional variable pay headroom for Will, increasing

hismaximum opportunity from 150% of salary to 200%.

Anyadditional award will be delivered in deferred shares.

Thiswill ensure retention and strong alignment with the

experience of shareholders. As stated in the Policy, the increase

will be accompanied by an enhancement of the deferral and

recovery provisions: half of the deferred shares will be subject to

enhanced recovery provisions, specifically satisfactory personal

performance together with financial performance and strategic

progress as judged by the Committee exercising its discretion

over the period of the deferral. The annual incentive opportunity

for our Group Finance Director will remain at 150% of salary

(i.e.unchanged from FY2024). The table below summarises

theoperation of the FY2025 annual incentive arrangements.

Metrics for FY2025 will be materially the same, but specific

targets for the strategic element of the incentive opportunity for

FY2025 will include new product development against gated

milestones, product launches meeting sales and financial

targets, delivery of environmental targets, corporate initiatives,

and retention of employees. The Senior Leadership Team will

have the same Adjusted PBT targets and strategic objectives

asthe Executive Directors to ensure everyone is working to the

same targets. The strategic objectives for FY2025 represent

20%of the annual incentive opportunity, to align executive

remuneration with delivery of the Group strategy and are linked

to the values of the Group which underpin our culture and drive

behaviours. The strategic alignment of each element of pay

issetout in the full Policy and summarised on pages 86 and 87.

Executive Directors’ FY2025 annual incentive arrangements

Maximum opportunity % of bonus paid in cash % of bonus deferred into shares for three years

Will Lee

200% of salary. 37.5% of the bonus

earned (i.e. up to 75%

ofsalary) paid in cash.

62.5% of the bonus earned (i.e. up to 125% of salary) paid in deferred shares.

The deferred shares would be subject to a three-year deferral period. Half of

the deferred shares would be subject to continued employment, while the other

half would be subject to continued employment and the enhanced recovery

provisions set out above.

Allen

Roberts

150% of salary. 50% of the bonus

earned (i.e. up to 75%

ofsalary) paid in cash.

50% of the bonus earned (i.e. up to 75% of salary).

The deferred shares have a three-year deferral period and are subject to

continued employment.

On behalf of the Committee, thank you for your continued

support. 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

11 September 2024

Renishaw plc Annual Report 2024

GOVERNANCE REPORTGOVERNANCE REPORT

GOVERNANCE REPORT

During FY2024, Karen Atterbury, Interim Company Secretary,

acted as secretary to the Committee. From 29 July 2024,

KasimHussain, Group General Counsel & Company Secretary,

has acted as secretary to the Committee. Executive Directors

may attend Committee meetings by invitation (to advise on the

remuneration and performance of senior management and

totake part in specific discussions), although they do not take

part in any specific discussions that directly relate to their

ownremuneration.

Advisers

The Committee uses independent advisers as needed and our

current adviser is Deloitte LLP (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. The Committee

hasundertaken a review and continues to believe that the

advicereceived from Deloitte is objective and independent.

Total professional fees and expenses paid to Deloitte for advice

received was £29,900.

Deloitte was appointed by the Committee in March 2021

following a competitive tender process and has provided

otherremuneration advice during FY2024.

Key activities

Governance

— Reviewed the output from the FY2023 effectiveness evaluation.

— Took part in the FY2024 effectiveness evaluation.

— Reviewed and approved the Directors’ Remuneration Report.

Remuneration Policy and its operation

— Approved the Executive Directors’ and Senior Leadership

Teamsalaries.

— Considered the achievement of the financial and strategic

objectives for FY2024 and approved the outcomes for FY2024.

— Approved the wider employee pay review.

— Approved the structure of the annual bonus plan for FY2025

and associated targets.

— Considered the Directors’ Remuneration Policy, agreeing that

no changes were required for FY2025 following the approval by

the Company’s shareholders of the Policy in November 2023.

People

— Conducted a wide review of the elements of remuneration

available to the wider workforce.

— Reviewed employee turnover statistics.

— Approved people objectives for FY2024.

— Reviewed the operation of the Leadership and Management

Development programmes.

— Reviewed and approved the questions to be circulated as part

of the employee engagement survey.

— Reviewed the gender pay gap statistics.

— Approved the employee bonus proposal for FY2024.

What does the Committee do?

The Committee is responsible for setting competitive

remuneration arrangements and incentive structures that

attract,retain and motivate talented people. These responsibilities

are set by the Board and formally recorded in the terms of

reference, which are available on the Company’s website at

www.renishaw.com/corporategovernance.

Specifically, the Committee is responsible for:

— designing the framework and policy for executive

remuneration;

— determining the remuneration for each of the Executive

Directors and other senior management;

— ensuring that suitable financial and strategic objectives

underpin reward structures and encourage strong

performance; and

— reviewing workforce remuneration and related policies.

To avoid duplication, the table below cross refers to

disclosuresgiven elsewhere of how we have sought to

complywith Provision 41 of the UK Corporate Governance Code.

Topic Page(s)

An explanation of the strategic rationale for Executive

Directors’ remuneration policies, structures and any

performance metrics.

82-83,

86-87

Reasons why the remuneration is appropriate using

internal and external measures, including pay ratios

andpay gaps.

A description, with examples, of how the Remuneration

Committee has addressed the factors in Provision 40.

Whether the Remuneration Policy operated as

intended in terms of company performance and

quantum, and, ifnot, what changes are necessary.

What engagement has taken place with shareholders

and the impact this has had on Remuneration Policy

andoutcomes.

What engagement with the workforce has taken place

toexplain how executive remuneration aligns with

wider company pay policy.

43, 82,

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: Catherine Glickman (Chair), Juliette Stacey, Stephen

Wilson, and Professor Dame Karen Holford (with effect from

1 September 2023). Sir David Grant was a member of the

Committee in FY2024, although he stepped down from the

Committee on 30 June 2024 as a result of his appointment as

Interim Non-executive Chairman. The Committee met six times

inFY2024 and we set out on this page a summary of the topics

discussed in those meetings.

Directors’ Remuneration Report continued

Committee members, advisers and meetings

Renishaw plc Annual Report 2024

ofthe UK workforce as set out on page 86. By 1 January 2025,

these will be fully aligned with that available to the UK workforce

asa whole.

Statement of consideration of shareholderviews

The Committee values the insight received from its engagement

activities with our shareholders and takes all feedback received

seriously. In FY2024, on behalf of the Board, Sir David Grant

engaged with some of our largest institutional shareholders and

proxy voting agencies (as detailed on page 24). A number of

these discussions included aspects of remuneration, which

SirDavid Grant reported back to the Board.

Principles underlying our remuneration

framework

The Committee has reviewed our Executive Director Remuneration

Policy and practices in the context of the Governance Code,

particularly Provision 40, as follows:

Factor How did we address this factor?

Clarity and

simplicity

We operate simple and transparent reward

mechanisms that are well understood by our

investors and workforce. We consulted with

investors in relation to the Policy and engage

withthe workforce on remuneration as described

on pages 43, 82, 85.

Risk

There is an appropriate mix of fixed and variable

pay, and financial and strategic objectives.

Thenew Policy maintains robust measures

tomanage risk and to ensure alignment with

long-term shareholder interests including:

(i)discretion to override formulaic outcomes;

(ii)malus and clawback provisions; (iii)minimum

shareholding requirement and bonus deferral

intoshares; and (iv) in-employment and post-

employment shareholding requirements.

Predictability

The charts on page 87 clearly show the amounts

that could be earned by the Executive Directors

inthe next financial year.

Proportionality

There is a clear link between individual awards,

delivery of strategy and Group performance.

Payoutsfrom the annual bonus require

performance against stretching targets. 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. TheCommittee

has full discretion to alter the payout levels to

ensure payments are appropriately aligned with the

underlying Company and individual performance.

Alignment

withculture

The Committee ensures that targets for

performance-based remuneration are linked to

the KPIs set atBoard level.

The strategic objectives for FY2024 are set out

onpage 89 and are all linked to our strategy and

values, which underpin our culture. The weighting

of the FY2025 strategic objectives (20%) further

encourages the successful implementation of

ourstrategy and drives behaviours consistent

withour purpose, values and culture.

Committee meeting attendance record

Committee member Attended

Catherine Glickman (Chair) 6/6

Sir David Grant 6/6

Professor Dame Karen Holford

4/4

Juliette Stacey 6/6

Stephen Wilson 6/6

* Professor Dame Karen Holford was appointed with effect from 1 September

2023, and so was not eligible to attend the first two meetings in FY2024.

Statement of consideration of employment

conditions elsewhere in the Group

When the Committee makes decisions on Executive Director

pay, it also takes into account the policies and practices in

placefor the wider workforce.

When considering the annual salary review, the average base

salary increase awarded to UK employees provides a guide

when determining the salaries of the Executive Directors.

TheCommittee also reviews the remuneration policies and,

thisyear, undertook a broad review of each element of

remuneration available to the wider UK workforce. This allows

theCommittee to ensure sufficient alignment between the

remuneration policies of the wider workforce and the Executive

Directors, and to satisfy itself that the approach taken is fair and

reasonable based onmarket conditions and practice, and the

best interests of shareholders. It also gives additional context

formaking informed decisions on executive pay, and ensures

performance objectives are aligned with our culture and strategy.

The Committee found that the broader framework was operating

welland that there was a clear, progressive approach at all

seniority levels.

To reward and recognise performance this financial year,

eligibleemployees received an annual bonus paying out

aUKminimum of £850 (pro-rated). During FY2024 we

continuedworking on our goal to reach our targets for pay by

aligning pay to market-competitive rates. The Chair and Group

Human Resources Director also regularly update the Committee

about feedback from engagement activities, turnover rates and

reasons for leaving so that it remains vigilant and can make

informed decisions. Further details of the work carried out on

payin FY2024 and priorities for FY2025 are onpages 82 and 83.

While the Executive Directors’ remuneration package is more

heavily weighted towards variable and share-based payments

compared to our wider workforce, the Committee has increased

the alignment of our Senior Leadership Team remuneration

toshareholder interests through our Senior Leadership Team

Annual Bonus Plan. The bonus for the Senior Leadership Team

isdetermined byperformance against the same metrics as the

Executive Directors. However, in their case, where the financial

targets are not met, they have the opportunity to earn an award

based on the achievement against the strategic objectives.

TheCommittee is also involved in setting the remuneration

forour Senior Leadership Team.

The pension arrangements for the Executive Directors are

currently aligned to those available to longer-serving members

Renishaw plc Annual Report 2024

GOVERNANCE REPORTGOVERNANCE REPORT

GOVERNANCE REPORT

Directors’ Remuneration Report continued

Purpose and link to strategy Implementation in FY2024 Implementation in FY2025

Base salary

To provide a competitive

remuneration package to

motivate and retain Executive

Directors of the required

calibre to help the Group

meetits objectives to deliver

the Group’s strategy.

Salaries were reviewed in November 2023 and increases

of 5% were effective from 1 January 2024: Will Lee

therefore receives £738,680, Allen Roberts £470,060

andSir David McMurtry £804,500 (until 30 June 2024,

when he stepped down as Executive Chairman). This

was slightly lower than the average increase effective

January 2024 for the wider workforce at 6.7%.

Salaries will be reviewed in November/

December 2024 and any changes will be

effective as of 1 January 2025.

Sir David McMurtry was appointed

asaNon-executive Director from 1 July

2024, and so for FY2025 he willreceive the

same fee as other Non-executive Directors.

Benefits

To provide market-competitive

benefits that motivate and

retain Executive Directors and

enable them to give maximum

attention totheir role.

Benefits provided this year included a car allowance and

private medical insurance. The total values are set out in

the Annual Report on remuneration on page 88.

No changes are anticipated for FY2025.

As he is no longer an Executive Director,

SirDavid McMurtry will notreceive benefits

in FY2025.

Pension

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.

Will Lee and Allen Roberts received pension

contributions or cash equivalents equal to contributions

available to long-serving employees.

Sir David McMurtry receives no pension contribution

orallowance in lieu.

Pension contributions for Executive

Directors will be aligned to those available

to the majority of the UK wider workforce

(currently9% of salary) with effect from

1 January 2025.

Annual incentive opportunity (comprising cash bonus and deferred equity awards)

To incentivise and reward

execution of the Group’s

objectives, reward

outperformance and

encourageExecutive

Directorshare ownership.

— The maximum opportunity for FY2024 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 will be deferred into shares and any award

made to SirDavid McMurtry will be made in cash.

— For FY2024 the incentive was made up of two

elements: a financial element worth 80% awarded

against Adjusted profit before tax (PBT) targets and

20% against strategic objectives. The weighting

haddoubled from FY2023 (10%) to ensure an

appropriate and meaningful proportion of the bonus

was based on the achievement of specific strategic

drivers of sustainable value creation.

— Unfortunately, this year the threshold Adjusted PBT

was not met. As a result, there is no award under the

financial element of the annual incentive. In light of

this, there will also be no award under the strategic

objectives despite significant progress having been

made (see page 89 fordetails).

No change in maximum opportunity or

deferral forAllen Roberts. The maximum

opportunity for Will Lee will be 200% of

salary and 62.5% of any bonus earned

willbe deferred into shares (furtherdetails

on page 83).

The measures will continue to be 80%

awarded against Adjusted PBT and

20%against strategic objectives, which

relate toinnovation, environment and

social, andgovernance and operations.

These drive long-term growth, new

productdevelopment and our work on

sustainability, specifically on our

environmental targets, and are all linked

tothe strategy and values of the Group,

which underpin our culture and drive

behaviours consistent with our purpose.

Remuneration Policy: Implementation in FY2024 and Plan for FY2025

Ahead of the Annual Report on remuneration, we have summarised below the key remuneration outcomes for FY2024,

thekeyelements of the Remuneration Policy approved at the 2023 AGM and how we intend to implement the Policy in FY2025.

TheCommittee confirms that the Policy operated as intended throughout FY2024. The full Remuneration Policy can be found at

www.renishaw.com/en/financial-reports--22583.

The 2023 Policy was determined by the Committee after reviewing the impact of the 2020 Policy, key governance factors,market

practice, and after taking account of shareholderfeedback arising out of the consultation undertakenin June 2023. The Committee

further reviewed thePolicy against the six themes set out in Provision 40 of the UK Corporate Governance Code as described

onpage 85.

To ensure conflicts of interest are managed, the Committee ensures no Director determines the Policy regarding their

ownremuneration.

Summary of the Remuneration Policy and its implementation

Renishaw plc Annual Report 2024

Purpose and link to strategy Implementation in FY2024 Implementation in FY2025

Minimum shareholding guideline

Supports the alignment of

Executive Director and

shareholder interests.

Each Executive Director is expected to build up and

maintain a level of share ownership of at least 200%of

base salary. Will Lee and Allen Roberts have not yet met

the minimum shareholding guideline (asshown below).

Nochanges are anticipated for FY2025.

Executive Directors’ shareholdings (as of 30 June 2024)

The table below shows the Executive Directors’ shareholdings against the minimum shareholding guidelines for Executive Directors

(2xsalary). In line with the Policy approved at the 2023 AGM, shares subject to Deferred Annual Equity Incentive Plan (DAEIP) awards

(which are subject to continued employment but not to any further performance conditions) count towards the guidelines on a net of

assumed tax basis, resulting in an increase in the extent to which Will Lee and Allen Roberts have met the guideline compared to the

position at the end of FY2023. Sir David McMurtry has achieved his minimum shareholding guidelines, and Will Lee and Allen Roberts

are in the process of building towards theirs.

Executive Directors (as of 30 June 2024)

Sir David McMurtry Will Lee Allen Roberts

Shares 26, 377, 2 91 7,6 9 5 6,840

Shares subject to DAEIP awards (net of assumed tax) n/a 11,967 8,085

Actual (× salary) 1,213.1 0.985 1.175

Post-employment shareholding policy

Supports the principle of

long-term share ownership

andalignment of interests

withshareholders.

Executive Directors (in FY2024, excluding Sir David McMurtry) will be required to maintain apersonal

shareholding in Renishaw 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.

Non-executive Director fees

To provide a competitive fee

toattract and retain Non-

executive Directors of the

required calibre tomeet the

Group’s objectives.

Basic fees were subject to the aggregate limit set in

accordance with the Company’s Articles of Association,

asamended by shareholder approval from time to time.

Fees were reviewed in November 2023 and increased

by5% to £78,750 with effect from 1 January 2024.

Noneofthe Non-executive Directors received any

additionalfees or bonuses.

Fees will be reviewed in November/

December 2024 and any changes willbe

effective as of 1 January 2025. As of 1 July

2024, Sir David McMurtry's and Richard

McMurtry’s basic fees werealigned with

those of theother Non-executive Directors

and Sir David Grant’s fee is now £325,000.

Minimum

100%

834

On-target

53%

47%

1,572

Maximum

36%

64%

2,311

Minimum

100%

538

On-target

60%

40%

891

Maximum

43%

57%

1,243

Annual incentive opportunity Minimum remuneration

Will Lee Allen Roberts

0 200 400 600 800 1,000

£’000

Base salary Taxable beneﬁts Pension

2023

2024

Allen Roberts Group Finance Director

2023

2024

Will Lee Chief Executive

2023

2024

Sir David McMurtry Executive Chairman

Total remuneration

Bar chart A below shows

acomparison of the

Executive Directors’

totalremuneration

(includingabreakdown

ofthe components)

forFY2024 and FY2023.

Illustrations of application of Remuneration Policy in FY2025 (£’000)

The bar charts labelled B below for each Executive Director show remuneration for the financial year ending

30 June 2025 under different performance scenarios: (i) the minimum remuneration payable in respect of

salary, benefits and pension; (ii) the remuneration payable if performance is on target and in line with the

Company’s expectations; and (iii) the remuneration payable if the maximum cash bonus and deferred annual

equity incentive is payable.

Note that deferred equity incentive plan awards granted in a year will not normally vest until the third

anniversary of the date of grant, and the projected value excludes the impact of share price movement.

AstheExecutive Directors are not in receipt of a long-term incentive, the fourth scenario under the reporting

regulations (requiring the impact on the value of long-term incentives of 50% share price growth over the

performance period) is not shown; this is unchanged from the third scenario above.

Renishaw plc Annual Report 2024

GOVERNANCE REPORTGOVERNANCE REPORT

GOVERNANCE REPORT

Directors’ Remuneration Report continued

This section of the report sets out the remuneration of the Directors in FY2024. Details of how the Committee intends to implement

the Remuneration Policy for FY2025 are set out on pages 86 and 87. During FY2024, the Policy operated as intended in terms of

performance and quantum. The information on pages 88 to 94 has been audited where required under the regulations and is

indicated as audited where applicable.

This Remuneration Report has been prepared in accordance with Schedule 8 to the Large and Medium-sized Companies and

Groups (Accounts and Reports) Regulations 2008 (asamended), UKLR 6.6 of the UK Listing Rules and the GovernanceCode.

Single total figure table (audited) – Executive Directors

Salary Benefits Pension Bonus

Total fixed

remuneration

Total variable

remuneration

Total

remuneration

2024

£’000

2023

£’000

2024

£’000

2023

£’000

2024

£’000

2023

£’000

2024

£’000

2023

£’000

2024

£’000

2023

£’000

2024

£’000

2023

£’000

2024

£’000

2023

£’000

Sir David McMurtry 785 766 3 3 n/a n/a 0 0 788 769 0 0 788 769

Will Lee 721 704 21 21 79 77 0 0 821 802 0 0 821 802

Allen Roberts 459 448 20 20 50 49 0 0 529 517 0 0 529 517

Total 1,965 1,918 44 44 129 126 0 0 2,138 2,088 0 0 2,138 2,088

Single total figure table (audited) – Non-executive Directors

Fees Expenses Total remuneration

FY2024

£’000

FY2023

£’000

FY2024

£’000

FY2023

£’000

FY2024

£’000

FY2023

£’000

John Deer 77 75 0 0 77 75

Catherine Glickman 77 75 0 0 77 75

Sir David Grant 77 75 0 0 77 75

Juliette Stacey 77 75 0 0 77 75

Stephen Wilson 77 75 0 0 77 75

Professor Dame Karen Holford 64

n/a 0 n/a 64 n/a

Total 449 375 0 0 449 375

1 The Non-executive Directors are not eligible for any variable remuneration and only receive fixed remuneration.

2 Professor Dame Karen Holford was appointed as a Non-executive Director on 1 September 2023. Therefore, these figures reflect remuneration received

during the period from 1 September 2023 to 30 June 2024.

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 1

Allen Roberts 20 0

Annual Report on remuneration

Renishaw plc Annual Report 2024

Annual incentive outcomes for FY2024

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 financial objective, based on stretching Adjusted PBT targets, comprised 80% of the award; the strategic objectives comprised20%.

The threshold Adjusted PBT target was not met, and therefore the strategic objectives did not pay out. Thus, there will be no award

under the annual incentive programme for FY2024.

Full details of the financial objectives, strategic objectives and performance against them are set out in the following tables.

Financial objectives

Threshold Stretch Maximum Achieved in FY2024

Adjusted PBT £140.0m £165.0m £175.0m £122.6m

% of bonus payable for Adjusted PBT performance 20% 60% 80% 0%

The Adjusted PBT for FY2024 was £122.6m. This result is less than the threshold target set by the Committee and therefore no

bonus was payable in FY2024. In assessing the bonus payouts, the Committee considered the experience of other stakeholders

and the wider workforce and determined that no discretion would be applied.

Strategic objectives

Performance against the strategic targets is set out in the table below:

Strategic objective Outcome of objective

% of bonus

payable

% of bonus

paid out

Group strategic direction

Deliver the Group strategic

plan for FY2024

— Engaged with analysts, shareholders and potential investors on

aregular basis.

— Grew AGILITY and Equator sales to target customers.

— Leadership review of strategic objectives and refocus on 4 key areas.

20%

Out-turn

assessed

as79% of

maximum

understrategic

element of

bonus.

0% earned as

threshold level

offinancial

performance

notmet.

Innovation

Drive innovation with

afocus on new product

development and disruptive

technology

— Improved R&D productivity.

— Achieved specific milestones for key flagship products.

— Monitored external disruptive technologies and potential

opportunities.

People and culture

Develop our people’s

leadership, development

andcapability

— Implemented an employee engagement survey, set base line

employeeengagement score and started to develop a plan to

improve it.

— Implemented core competencies and now developing functional

competencies across our global roles.

— Implemented succession plans across the Group for our

management and key critical roles.

Sustainability

Deliver our sustainability

plan, developing the

Scope3 reduction plan and

delivering Scope 1 and 2

emissions reductions

— Published goals and created a five-to-ten-year plan using the

Science-based Targets initiative (SBTi) framework and tracked first

year ofprogress.

— We are on track with our Scope 1 and 2 emissions reduction targets.

Productivity

Increase capacity

andproductivity

ofmanufacturing

facilitiesand progress

implementation of

Microsoft Dynamics 365

— In relation to manufacturing, developed both our procurement and

logistics strategy.

— Established a disaster recovery process map with an associated rota

of scheduled rehearsals to check their validity.

— Established our software subscription sales infrastructure.

— Delivered the first iterations of Microsoft Dynamics 365 in the

business, learning lessons on implementation.

— Miskin expansion progressing within budget and meeting agreed

deadlines. The first additional building is fully commissioned and

operational as a dedicated assembly facility. The second building

structure is complete, and will be commissioned when the additional

space is needed.

Renishaw plc Annual Report 2024

GOVERNANCE REPORTGOVERNANCE REPORT

GOVERNANCE REPORT

Directors’ Remuneration Report continued

Annual Report on remuneration continued

Total pension entitlements

Will Lee is a member of our closed UK defined benefit scheme. The normal retirement age is 65. On death, pension benefits would

pass to that member’s dependants.

Since the closure of the defined benefit scheme, contributions have been made to a defined contribution scheme or paid in cash.

At 30 June 2024

Value of defined benefit

pension entitlement

£’000 per year

Pension

contributions in

respect of FY2024*

Will Lee 11 Paid in cash

*As disclosed in the single figure table.

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. The Committee believes this 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2014.

TSR performance

100

150

200

250

300

350

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

RenishawValue of £100 invested on 30 June 2014 FTSE 250 Financial year ended 30 June

Renishaw plc Annual Report 2024

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

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Will Lee (from 1 February 2018)

Single figure of total remuneration (£’000) 594 653 601 1,488 1,770 802 821

Annual incentive payout (includes annual cash bonus

and deferred equity incentive) % of maximum 95 0 0 100 100 0 0

Long-term incentive vesting % of maximum n/a n/a n/a n/a n/a n/a n/a

Sir David McMurtry (until 31 January 2018)

Single figure of total remuneration (£’000)

1,298 668 1,207 818

Annual bonus payout % of maximum 100 0 77 100

Long-term incentive vesting % of maximum n/a n/a n/a n/a

1 The remuneration shown is on a pro-rated basis for the period when Sir David McMurtry stepped down and Will Lee took office to the end of the financialyear.

2 Represents the total remuneration received by Sir David McMurtry in relation to this role.

Chief Executive pay ratio

The table below sets out the Chief Executive pay ratios as at 30 June in the financial years 2020 to 2024. 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.

Option B has been selected as this method of calculation is considered to be the most robust method of identifying the individual

reference points in a Group, such as Renishaw, with multiple operating segments.

Total remuneration

Financial year Employee remuneration Pay ratio

P25 P50 P75 P25 P50 P75

FY2024 £36,152 £46,499 £67,426 22.7 17.7 12.2

FY2023 £27,484 £45,554 £55,940 29.2 17.6 14.3

FY2022 £31,099 £42,246 £48,457 56.9 41.9 36.5

FY2021 £28,438 £37,720 £45,170 52.3 39.4 32.9

FY2020 £27,476 £35,619 £51,563 21.9 16.9 11.6

Base salary

Financial year Employee remuneration Pay ratio

P25 P50 P75 P25 P50 P75

FY2024 £32,000 £40,323 £58,015 22.5 17.9 12.4

FY2023 £24,134 £39,10 0 £48,205 2 9.1 18.0 14.6

FY2022 £27,213 £36,276 £41,331 24.6 18.5 16.2

FY2021 £24,420 £32,670 £42,480 23.0 17.2 13.2

FY2020* £24,650 £32,634 £47,0 92 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 5% in January 2024. This was lower than the average for the wider workforce.

The base salary pay ratios for P25, P50 and P75 have all reduced this year compared with the FY2023 ratios, primarily reflecting

higher average pay increases for employees compared with the Chief Executive. The P25 ratio shows the most significant reduction,

reflecting our approach of targeting higher pay increases for those employees in the lower quartile.

The ratios for total remuneration have followed a similar trend to the base salary ratios, with the Chief Executive receiving no bonus

in either FY2023 or FY2024.

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.

Renishaw plc Annual Report 2024

GOVERNANCE REPORTGOVERNANCE REPORT

GOVERNANCE REPORT

Directors’ Remuneration Report continued

Annual Report on remuneration continued

Statement of Directors’ shareholding and share interests

The interests of Directors and their connected persons in the Company’s ordinary shares as at 30 June 2024 are set out below.

There have been no changes to those interests between 30 June 2024 and the date of signing of this Annual Report.

Number of ordinary

shares of 20p each

beneficially owned

(as at 30 June 2024)

Unvested and

subject to continued

employment

(awarded under the DAEIP)

Minimum

shareholding

guideline

Current

shareholding*

Minimum

shareholding

guideline met

Sir David McMurtry 26,377, 2 91 n/a 2× salary 1,213.1× salary Yes

Will Lee 7,6 95 22,580 2× salary 0.985× salary Building

Allen Roberts 6,840 15,255 2× salary 1.175× salary Building

John Deer 12,076,790 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

Juliette Stacey – n/a n/a n/a n/a

Stephen Wilson 1,500 n/a n/a n/a n/a

Professor Dame Karen Holford – n/a n/a n/a n/a

* Current shareholdings for comparison with the shareholding requirements for Executive Directors are calculated based on annualised salary as at

30 June2024 and by reference to the closing share price on 30 June 2024 (3,700p) and, in line with the Policy, include the net of assumed tax shares

subjectto DAEIP awards.

DAEIP awards granted during the year

No DAEIP awards were granted during the year.

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 Renishaw plc employees from FY2019 to FY2024. 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 and all references to

years are to the financial years. Where appropriate, footnotes to the equivalent table in reports for previous years provide further

information in relation to the changes for those years.

Salaries/Fees Benefits/Expenses Annual bonus

2023

/24

2022

/23

2021

/22

2020

/21

2019

/20

2023

/24

2022

/23

2021

/22

2020

/21

2019

/20

2023

/24

2022

/23

2021

/22

2020

/21

2019

/20

Sir David McMurtry 3 5 n/a n/a -23 0 0 0 0 0 n/a n/a 2 n/a 0

Will Lee 2 5 19 11 -8 0 5 0 0 0 n/a n/a 19 n/a 0

Allen Roberts 3 5 2 5 -2 0 0 0 0 0 n/a n/a 2 n/a 0

John Deer 3 7 n/a n/a -38 12.9 -21 -37 -94 -43 n/a n/a n/a n/a 0

Catherine Glickman 3 7 25 5 6 n/a n/a 0 0 0 n/a n/a n/a n/a n/a

Sir David Grant 3 7 25 5 -4 n/a n/a 0 0 0 n/a n/a n/a n/a n/a

Juliette Stacey 3 114 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Stephen Wilson 3 1,186 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Professor Dame Karen Holford n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Renishaw plc employee (average) 8 11 9 1 3 11 4 4 1 1 -10.9 -15 22 n/a n/a

Renishaw plc Annual Report 2024

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 of any other company.

Relative importance of spend on pay

The following table sets out the total amount spent in FY2024 and FY2023 on remuneration to all Group employees and on

dividendsto shareholders:

FY2024

£’000

FY2023

£’000

Change

Employee remuneration 288,516 278,847 3

Shareholder dividends paid* 55,412 53,407 4

*Does not include dividends declared but not yet paid.

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.

Executive Director service contracts

The Executive Directors’ service contracts are for an indefinite period and require 12 months’ notice of termination by either party.

There are no obligations in any Executive Director’s service contract that 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 their 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. Executive Directors’ service contracts are available for inspection at our registered office upon written request to the

Company Secretary.

Executive Director

Date of service contract

duringFY2024

Sir David McMurtry 18 October 2018*

Will Lee 1 June 2020

Allen Roberts 20 April 2021

* Sir David McMurtry stepped down as Executive Chairman on 30 June 2024.

Non-executive Director letters of appointment

The Non-executive Directors’ letters of appointment require one month’s notice of termination by either party. There are no

obligations in any Non-executive Director’s letter of appointment that would require the Company to pay a specific amount of

compensation for loss of office.

Non-executive Directors’ letters of appointment are available for inspection at our registered office upon written request to the

Company Secretary.

Non-executive Director Date first appointed to the Board Expiry date of current term of office

John Deer 1 July 1974 31 January 2025

Catherine Glickman 1 August 2018 1 August 2027

Sir David Grant 25 April 2012 25 April 2025

Professor Dame Karen Holford 1 September 2023 1 September 2026

Juliette Stacey 1 January 2022 1 January 2025

Stephen Wilson 1 June 2022 1 June 2025

Renishaw plc Annual Report 2024

GOVERNANCE REPORTGOVERNANCE REPORT

GOVERNANCE REPORT

Directors’ Remuneration Report continued

Statement of voting at general meeting

At the AGM held on 29 November 2023, votes cast in respect of the Directors’ Remuneration Policy and the Directors’ Remuneration

Report were as follows:

Resolution Votes for % for Votes against % against Total votes cast Votes withheld

Approval of Remuneration Policy 61,006,328 95.50 2,875,973 4.50 63,882,301 15,204

Resolution Votes for % for Votes against % against Total votes cast Votes withheld

Approval of Remuneration Report 61,923,884 97.05 1,879,562 2.95 63,803,446 94,059

This report was approved by the Board and has been signed on its behalf by:

Catherine Glickman

Chair of the Remuneration Committee

11 September 2024

Annual Report on remuneration continued

Renishaw plc Annual Report 2024

Dividends

The Directors propose a final dividend of £43,236,395 or

59.4pper share, which, together with the interim dividend of

£12,228,475 or 16.8p per share, gives a total dividend for the

year of £55,464,870 or 76.2p pershare. Last year the Board

agreed a total dividend for the year of £55,464,870 or 76.2p

pershare.

As at 30 June 2024, 67,481 shares were held by the Renishaw

plc Employee Benefit Trust (EBT). These shares may be used

tosatisfy awards made to employees under the Company’s

employee share plan – namely, the Renishaw 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 who served on the Board during the year are listed

on pages 56 and 57. 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 Wednesday,

27 November 2024. Details of these Directors are shown on

pages 56 and 57 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 the

Company’s Articles of Association. There are no powers given

tothe Directors that are regarded as unusual.

The Directors’ interests in our share capital (with the equivalent

number of voting rights), as notified to the Company, are listed

onpage 92. There has been no change in the holdings shown

onpage 92 in the period 1 July 2024 to 11 September 2024.

All the interests were beneficially held, except for 2,278,161

shares (2023: 2,278,161 shares) that were non-beneficially

heldby John Deer but in respect of which he has voting rights.

There is a voting agreement in place between Sir David

McMurtry, as one party, and John Deer and Mrs M E Deer,

asthe other party. As announced on 12 July 2023, this voting

agreement was renewed for a period of five years (unless it

terminates earlier in accordance with its terms). 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.

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.

The principal activities of the Company are the design,

manufacture, sale, distribution and service of manufacturing

technologies products and services, and analytical instruments

and medical devices, as outlined on pages 29 to 34 of the

Strategic Report. The Group has overseas subsidiaries to

manufacture, market and distribute some of the Group’s

products and to 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, Finland, France, Germany,

Hungary, Ireland, Israel, Italy, the Netherlands, Poland, Spain,

Sweden, Switzerland, Turkey and UAE.

There are also representative offices in Indonesia, Slovakia,

Thailand and Vietnam.

In addition, in Slovenia the Group has a joint venture, RLS

Merilna tehnika d.o.o. (RLS), and a subsidiary that designs

andarranges the procurement of application-specific

integratedcircuits.

Further information is available on our website:

www.renishaw.com.

Research and development

The Group continues to invest significantly in developing future

technologies, with R&D activities located primarily in the UK.

Wedevelop technologies that lead to patented products and

methods to help deliver our segmental strategies. Further

information on R&D expenditure is contained in Note 4 to

theFinancial statements. The amount of R&D expenditure

capitalised, the amount amortised and impairment charges

inthe year are given in Note 12.

Other statutory and

regulatorydisclosures

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Other statutory and regulatory disclosures continued

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 in the Company,

asat30 June 2024. Please note that these holdings may

havechanged since being notified to the Company. 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 2024 to

11 September 2024.

Employees

The retention of our highly skilled people is essential to our future.

The Directors place great emphasis on the continuation of our

training programmes and competitive rewards. Health and safety

matters are another key area of focus, and well-established

systems of safety management are in place throughout the

Group to safeguard employees, customers and others.

Employment policies are designed to provide equal

opportunities irrespective of race, religion, gender, age,

socio-economic background, disability or sexual orientation.

TheCompany gives full and fair consideration to applications

foremployment from people with disabilities, where suitable,

forappropriate vacancies. Employees who become disabled

while with the Company will be given every opportunity to

continue their employment through reasonable adjustments

totheir working conditions and equipment. Where this is not

possible, the Company offers retraining for other positions.

Theywill also be afforded opportunities to continue training

andgain promotion on the same basis as any other employee.

Details on how the Directors have engaged with employees and

had regard to their interests are set out in various sections of this

Annual Report, including pages 43 and 61. Information provided

to employees on the performance of the business, consultation

with employees and performance incentives is set out in various

sections of the Annual Report, including page 85.

There are no agreements with employees providing for

compensation for any loss of employment that may occur

because of a takeover bid.

Directors’ and officers’ indemnity insurance

andDirectors’ indemnities

Subject to the provisions of the Companies Act 2006, the

Company’s Articles of Association provide for the Directors

andofficers of the Company to be appropriately indemnified.

Inaccordance with the Company’s 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 the Company’s

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 the Company’s registered office.

The Company also maintains insurance for its 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 (FCA)

Disclosure Guidance and Transparency Rules, a statement

made by the Board regarding the preparation of the Financial

statements is set out on page 99.

Share capital and change of control

Details of the Company’s share capital, including rights and

obligations, is given in Note 26 to the Financial statements.

TheCompany is not a party to any significant agreements

thatmight terminate upon a change of control.

A shareholder authority for the purchase by the Company of

amaximum of 10% of its own shares was in existence during

FY2024. However, the Company did not purchase any of its

ownshares during that time.

Auditor

A resolution to reappoint Ernst & Young LLP as the auditor

oftheCompany will be proposed at the forthcoming AGM.

Disclosure of information to auditor

The Directors who held office at the date of approval of this

statement confirm that, so far as they are each aware, there is

norelevant audit information of which the Company’s auditor

isunaware. 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

The notice convening the AGM is enclosed with an explanation

of our proposed resolutions. At the meeting, the Company will

beseeking shareholder approval for, among other things, the

ability to make market purchases of its ordinary shares, up to

atotal of 10% of the issued share capital.

Renishaw plc Annual Report 2024

For the purposes of UKLR 6.6.1(13), the Board confirms that the

Company continues to carry on the business that it carries out

asits main activity independently from its controlling

shareholders at all times.

Greenhouse gas emissions and

energyconsumption

Disclosures concerning GHG emissions and energy

consumption are set out on page 41.

Suppliers, customers and other stakeholders

Details on how the Directors have had regard to the need to

promote the Group’s relationships with suppliers, customers

andothers is set out on pages 64 to 66. The effect of that

consideration on the Directors’ principal decisions during

FY2024 is also contained in the same section.

Political donations

No political donations were made during the year.

Events after the balance sheet date

There have been no material events affecting the Company

sincethe year end.

Financial risk management, objectives

andpolicies

Descriptions of the following can be found in Note 25 to the

Consolidated financial statements on pages 144 to 149:

— the use of financial instruments;

— the Group’s financial risk management objectives

andpolicies;

— policies in relation to hedge accounting; and

— exposure to market risk, including credit and liquidity risk.

Controlling shareholders

The UK Listing Rules (UKLR) contain certain requirements for

listed companies with controlling shareholders. 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. As such, Sir David McMurtry

(Non-executive Director, 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 longstanding voting agreement

between him (and his wife) and Sir David McMurtry.

One of the requirements for companies with controlling

shareholders is that the election or re-election of independent

directors at the Annual General Meeting is subject to a dual

voteof: (i) the shareholders as a whole; and (ii) the independent

shareholders, being any person entitled to vote on the election

ofdirectors who is not a controlling shareholder of the Company.

Another requirement is that the listed company is able to

carryon the business that it carries out as its main activity

independently from its controlling shareholders at all times.

Following recent changes to the UK Listing Rules, there is

nolonger a requirement that listed companies with controlling

shareholders enter into a relationship agreement containing

specific independence provisions (and the Company has stated

previously, there is no relationship agreement in place with its

controlling shareholders). There is no longer the associated

enhanced oversight regime as a result of not entering into

arelationship agreement and the related party transaction

provisions contained in UKLR 8 apply.

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

Disclosure of information under UKLR 6.6.1R

The information that fulfils the reporting requirements under this rule can be found on the pages identified in the tablebelow.

Section Topic Location

(1) Interest capitalised Not applicable

(2) Publication of unaudited financial information Not applicable

(3) Details of long-term incentive schemes Not applicable

(4) Waiver of emoluments by a director Not applicable

(5) Waiver of future emoluments by a director Not applicable

(6) Non-pre-emptive issues of equity for cash Not applicable

(7) As item (6), in relation to major subsidiary undertakings Not applicable

(8) Parent participation in a placing by a listed subsidiary Not applicable

(9) Contracts of significance Not applicable

(10) Provision of services by acontrolling shareholder Directors’ Remuneration Report, starting onpage 82

(11) Shareholder waivers of dividends Other statutory and regulatory disclosures, starting on page 95

(12) Shareholder waivers of future dividends Other statutory and regulatory disclosures, starting on page 95

(13) Statement in relation to controlling shareholders Other statutory and regulatory disclosures, starting on page 95

Signed on behalf of the Board.

Kasim Hussain

Group General Counsel & Company Secretary

11 September 2024

Renishaw plc

Registered number 01106260

England and Wales

Renishaw plc Annual Report 2024

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 56 and 57, 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

11 September 2024

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.

Directors’ responsibilities

Renishaw plc Annual Report 2024

GOVERNANCE REPORT

102 Independent Auditor’s Report

113 Financial statements contents

114 Consolidated income statement

115 Consolidated statement of comprehensive

income and expense

116 Consolidated balance sheet

117 Consolidated statement of changes in equity

118 Consolidated statement of cash flow

119 Notes (forming part of the financial statements)

155 Company balance sheet

156 Company statement of changes in equity

157 Notes to the Company financial statements

Financial statements

FINANCIAL STATEMENTS

101

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

Independent Auditor’s Report to the members of

Renishawplc

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 2024 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 2024 which comprise:

Group Parent company

Consolidated balance sheet as at 30 June 2024 Balance sheet as at 30 June 2024

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.30 to C.48 to the financial statements,

includingmaterial accounting policy information

Consolidated statement of changes in equity for the year

thenended

Consolidated statement of cash flows for the year then ended

Related notes 1 to 29 to the financial statements,

includingmaterial accounting policy information

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

abasis 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.

102

Renishaw plc Annual Report 2024

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 the following procedures:

— We understood the process undertaken by management to perform the going concern assessment including the evaluation

ofthe ongoing impact of current global macro-economic factors

— We obtained management’s going concern assessment, including the cash flow forecasts for the going concern period, which

covers the period from approval of the 2024 financial statements through to 30 September 2025. We verified these forecasts

were consistent with the Board approved forecasts ensuring the operating profit, working capital adjustments and resultant

cashflows in the going concern assessment matched those in the forecasts. The Group has modelled a base scenario, based

onthe pessimistic version of the business plan; and three ‘severe but plausible’ downside scenarios linked to the principal risks

identified by management reflecting: a significant reduction in revenue; a significant increase in costs; and a combined reduction

in profitability. The Group has also modelled 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 cash and cash equivalents and bank deposit balances.

— We assessed the appropriateness of the duration of the going concern assessment period being the period to 30 September 2025.

— 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 to search 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 assessed the historical accuracy of management’s forecasting for the past 10 years, by comparing the Group’s actual

resultsto Board approved budgets and re-forecasts to further challenge the prospective financial information included in the

going concern assessment;

— We tested the clerical accuracy of the model used to prepare the Group’s going concern assessment and the appropriateness

ofthe model for this purpose; and

— We assessed the appropriateness of the Group’s disclosures regarding the going concern basis of preparation.

We observed that the Group held cash and cash equivalents and bank deposits of £217.8m and had borrowings of £3.5m

at30 June 2024 which are not subject to financial covenants. Revenue for FY2024 increased by 0.4% to £691.3m compared

toFY2023 (2023: £688.6m) and the Group generated a statutory profit before tax of £122.6m for the year ended 30 June 2024

(2023: £145.1m). Management’s reverse stress test indicated the Group would have to suffer a trading level so low, before it

depletedits cash and cash equivalents and bank deposit balances, that the Directors consider that the events that could trigger

thiswould be remote. The Directors also concluded that the risk of a one-off cash outflow, that would exhaust the Group’s cash

andcashequivalents and bank deposit balances in the assessment period, was also remote.

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 2025. 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 5 components and audit procedures

onspecific balances for a further 8 components.

— The components where we performed full, specific or specified audit procedures accounted for 97%

ofadjusted profit before tax, 89% of Revenue and 91% of Total assets.

Key audit matters Group

— Revenue recognition - the risk of management override through inappropriate manual journals to revenue

— Valuation of the defined benefit pension liabilities

— Accounting treatment for pension buy-in transaction

Parent Company

— Carrying value of intercompany receivables

Materiality

— Overall Group materiality of £6.1m which represents 5% of Adjusted profit before tax

103

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

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, the potential impact of climate change 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 15 components

covering entities within United Kingdom, Ireland, Japan, Germany, Hong Kong, China, Italy, India, South Korea, France, Mexico and

United States of America which represent the principal business units within the Group.

Of the 15 components selected, we performed an audit of the complete financial information of five components (“full scope

components”) which were selected based on their size or risk characteristics. We performed audit procedures on eight components

(“specific scope components”) 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. We also performed specified audit procedures

on two components (“specified procedure components”) over revenue and trade receivable accounts.

The reporting components where we performed audit procedures accounted for 97% (2023: 96%) of the Group’s Adjusted profit

before tax, 89% (2023: 88%) of the Group’s Revenue and 91% (2023: 93%) of the Group’s Total assets. For the current year, the full

scope components contributed 84% (2023: 94%) of the Group’s Adjusted profit before tax, 53% (2023: 79%) of the Group’s Revenue

and 70% (2023: 85%) of the Group’s Total assets. The specific scope component contributed 12% (2023: 2%) of the Group’s

Adjusted profit before tax, 33% (2023: 9%) of the Group’s Revenue and 19% (2023: 8%) 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. The specified procedures were performed over revenue and trade

receivables which contributed 1% (2023: Nil) of the Group’s Adjusted profit before tax, 3% (2023: Nil) of the Group’s Revenue

and2%(2023: Nil) of the Group’s Total assets.

Of the 40 components that together represent 3% of the Group’s Adjusted profit before tax, none are individually greater than

0.9%of the Group’s Adjusted profit before tax. For these components, we performed other procedures including, analytical review,

testing of consolidation journals and intercompany eliminations, foreign currency translation recalculations and cash confirmation

procedures to respond to any potential risks of material misstatement to the Group financial statements.

The table below illustrates the coverage obtained from the work performed by our audit teams.

Components Adjusted Profit before tax Revenue Total assets

2024 2023 2024 2023 2024 2023 2024 2023

Full scope 5 8 84% 94% 53% 79% 70% 85%

Specific scope 8 6 12% 2% 33% 9% 19% 8%

Full and specific scope

procedurescoverage 13 14 96% 96% 86% 88% 89% 93%

Specified procedures 2 – 1% – 3% – 2% –

Full, specific, and specified

procedures coverage 15 14 97% 96% 89% 88% 91% 93%

Remaining components considered

under ‘Other procedures’ 40 40 3% 4% 11% 12% 9% 7%

Overall coverage 55 54 100% 100% 100% 100% 100% 100%

Changes from the prior year

The audit scope for some components has been changed during the year. Certain entities have moved scope as a result of their

relative contribution to the Group’s key metrics and/or given our ability based on past experience to refine the procedures performed

on accounts or at certain components. As a result, scoping of three components has been changed from full scope to specific

scope. Similarly, one specific scope component has been moved to specified procedures and one component has moved from

previously being part of the population of components covered by “other procedures” to being scoped as specified procedures.

Independent Auditor’s Report to the members of Renishawplc continued

104

Renishaw plc Annual Report 2024

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 five full scope components, audit procedures were performed on two of these directly by the primary

audit team. Of the eight specific scope components, audit procedures were performed on five of these directly by the primary team.

For the three full scope and three specific scope components, 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.

The Group audit team continued to follow a programme of planned visits that has been designed to ensure that the Senior Statutory

Auditor visits key locations on a rotational basis. During the current year’s audit cycle, visits were undertaken by a combination of

theSenior Statutory Auditor and/or other senior members of the primary audit team to component teams in the following locations:

China, Ireland, United States, Hong Kong, India and Germany. These visits involved discussing the audit approach with the component

team and any issues arising from their work, meeting with local management, attending closing meetings and reviewing relevant

audit working papers on risk areas. The primary team interacted regularly with the component teams as appropriate during various

stages of the audit 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

Stakeholders are increasingly interested in 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 extreme weather events, technological developments

of additive manufacturing and from transition to electric vehicles and increasing carbon taxation. These are explained on pages 46

to 51 in the required Task Force On Climate Related Financial Disclosures and on pages 11 to 18 in Risk management and principal

risks and uncertainties. The Group has also explained its climate commitments on pages 36 to 41. All of these disclosures form part

ofthe “Other information,” rather than the audited financial statements. Our procedures on these unaudited 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, in line with our responsibilities on “Other information”.

In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any

consequential material impact on its financial statements.

The Group has explained in Note 1 of the financial statements how they have reflected the impact of climate change including how

this aligns with their commitment to the aspirations of the Paris Agreement to achieve net zero emissions by 2050. The Group has

concluded that climate change did not have a material effect on the accounting judgements and estimates, nor on the carrying value

of assets and liabilities for the year ended 30 June 2024, but recognises that climate change may pose a greater risk to the Group

over time. Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating

management’s assessment of the impact of climate risk, physical and transition, their climate commitments and the effects of

material climate risks disclosed on pages 46 to 51. We also evaluated management’s assessment of the impact of climate change

on the significant judgements and estimates disclosed in Note 1 on asset values, including goodwill, capitalised development costs

and deferred tax assets, where these are impacted by future cash flows, and the effect on inventories and right-of-use assets, and

theuseful economic lives and residual values of property, plant andequipment following the requirements of the UK-adopted

International Accounting Standards. As part ofthis evaluation, we performed our own risk assessment, supported by our climate

change internal specialists, to determine the risks of material misstatement in the financial statements from climate change which

needed to be considered in our audit.

We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability

andassociated disclosures.

Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or

toimpact a key audit matter.

105

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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

of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Risk

Revenue recognition – the risk of management override through inappropriate manual journals to revenue

(2024:£691.3 million,2023: £688.6 million)

Refer to the Accounting policies (page 122); and Note 2 of the Consolidated Financial Statements (page 122)

As revenue is a key performance indicator for external communication and an input into management’s earnings considerations; 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.

The risk level is consistent with prior year.

Our response to the risk

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, we performed the following audit procedures:

— We used data analytics on all in scope components 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.

— For all in scope components we obtained and reviewed breakdowns of all manual journals and for all material revenue journals and

asample of non-material revenue journals we agreed the journal entries to underlying documentation to verify the appropriateness

ofthe revenue being recognised.

— We assessed for evidence of management bias by testing all material manual journals either side of the year end and agreeing

journalentries to appropriate supporting evidence.

— For in scope components we performed analytical procedures to compare revenue recognised with our expectations,

management’sforecasts and, where possible, external market data.

— We used data analytics to identify potential instances of management override, by performing searches for:

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 agreed to underlying supporting documentation and business rationale, selecting those journals based

onrisk and materiality considerations.

Revenue at these in scope components represents 89% of the total revenue balance.

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.

Key observations communicated to the Audit Committee

Based on the procedures performed, revenue recognised in the period is appropriate. Our procedures performed did not identify

anyunsupported manual adjustments to revenue nor any unexplained anomalies from our revenue analytics.

Our procedures did not identify instances of inappropriate management override across the Group.

Independent Auditor’s Report to the members of Renishawplc continued

106

Renishaw plc Annual Report 2024

Valuation of the defined benefit pension liability (2024: £142.3 million, 2023: £139.0 million)

Refer to the Audit Committee Report (page 79); Accounting policy (page 140); and Note 23 of the Consolidated Financial Statements (page 140)

There is an increased risk of material misstatement due to the size of the pension liability, the level of judgement involved in estimating

the key assumptions to calculate the liability and the fact that relatively small movements in these assumptions can result in a material

impact to the financial statements.

At the time of the pension buy-in transaction for the UK scheme, a drafting error was identified in the 2015 trust deed in relation

tothedefined contribution underpin which requires evaluation as to any impact on the current and prior year valuation of the defined

benefit liabilities.

Our response to the risk

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.

— 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 changes to the participants in the year and performing an analytical

review of the year-on-year movements in the data.

— Evaluated the legal advice obtained by management in relation to the drafting error in the trust deed related to the defined contribution

underpin. We challenged management’s assessment regarding the potential impact, if any, of this matter in relation to the value of the

pension liability recorded in the financial statements. This included obtaining legal confirmation directly from management’s specialist.

— Involved 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 2023 to 30 June 2024 and independently reconcile

theoutput to the amounts calculated by management’s external actuarial specialist.

— Evaluating whether the disclosures in the Group financial statements are in accordance with those required by IAS 19.

In addressing this key audit matter, audit procedures were performed by the Primary Team.

Key observations communicated to the Audit Committee

Our audit procedures did not identify evidence of material misstatement regarding the valuation of the defined benefit pension liability.

We concluded that the disclosures provided in Note 23 to the Group financial statements are in accordance with those required by IAS 19.

107

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FINANCIAL STATEMENTS

Accounting treatment for pension buy-in transaction

Refer to the Audit Committee Report (page 76); Accounting policy (page 140); and Note 23 of the Consolidated Financial Statements (page 141)

During the period, the Company completed a pension buy-in transaction for the UK scheme. Considering the potential complexity

inaccounting for pension buy in transactions, we identified this to be a new risk in the current year.

There is a high level of judgement involved in evaluating if a buy-in transaction is considered in substance a buy-out which depends on

facts and circumstances of the transaction and requires evaluation of whether accounting treatment as a settlement should be applied.

i.e., whether the re-measurement gain/(loss) on the pension asset should be recognised in the Income Statement or in the Statement of

Other Comprehensive Income.

Our response to the risk

We performed the following audit procedures over these pension related matters in current year:

— We reviewed management’s accounting paper regarding the pension buy-in transaction.

— Reviewed the underlying agreements for the pension buy-in and evaluated whether the Company retained a legal and/or constructive

obligation to pay scheme members.

— Reviewed the asset portfolio and price lock-in mechanism of the assets that were purchased as part of the transaction.

— Assessed if there is additional buy-out risk i.e., settlement as a transaction that eliminates all further legal or constructive obligations

for part or all of the benefits provided under a defined benefit plan and concluded that there is no such buy out risk.

— Assessed the completeness and accuracy of the member data used by the actuaries to estimate the scheme liabilities as at the date

of pension buy-in through testing the clerical accuracy of the member data schedules and performing an analytical review of the

movements in the data.

— Involved EY actuarial specialists as part of our team to:

i. independently estimate an acceptable range for each of the significant assumptions used in estimating the scheme liabilities at

the date of pension buy-in, which included the discount rate; rate of inflation; and mortality assumptions

ii. perform a roll forward of the UK scheme liabilities from 30 June 2023 to the date of pension buy-in transaction and independently

reconcile the output to the amounts calculated by management’s external actuarial specialist

— Evaluated whether the disclosures in the Group financial statements related to the pension buy-in transaction are in accordance with IAS 19.

These audit procedures were completed by the primary team.

Key observations communicated to the Audit Committee

Based on the procedures performed, we concluded the accounting treatment in relation to pension buy-in transactions is appropriate

andthe impact has been correctly recognised in Statement of Other Comprehensive Income.

The disclosures related to the buy-in transaction as provided in Note 23 to the Group financial statements are in accordance with those

required by IAS 19.

Parent Company only: Carrying value of intercompany receivables

Refer to the Audit Committee Report (page 79) and Note C.30 and C.36 of the Company Financial Statements (pages 157 and 161

respectively)

Given the inherent uncertainty in forecast cash flows and/or the carrying value of the net assets of a subsidiary held by the Parent, there

is a risk that the valuation of receivables due from a subsidiary to the Parent is overstated.

Our response to the risk

— We made enquiries with management to obtain an understanding of the judgements made in estimating the recoverability of

intercompany receivable balances.

— We reviewed management’s assessment explaining their rationale for the conclusion to impair certain intercompany receivables.

— We obtained management’s calculations over the valuation of impairment and challenged the assumptions used along with ensuring

the arithmetical accuracy.

— Where possible, we obtained appropriate third-party supporting evidence used by management to arrive at the key judgements

assessed in management’s paper.

— We reviewed the disclosures made by management in the Company’s financial statements and ensured these are in line with the

applicable accounting standards.

These audit procedures were completed by the primary team.

Key observations communicated to the Audit Committee

Based on the procedures performed, we concluded the carrying value of the intercompany receivables is not materially misstated.

We consider the disclosure in relation to this matter to be in line with the requirements of IFRS 9.

In the current year, the pension buy-in transaction which occurred within the period has been considered a new key audit matter

forthe Group as a whole. For the Parent Company, given changes in the underlying forecasts and/or carrying values for certain

subsidiaries, a new key audit matter related to the carrying value of intercompany receivables has been identified. These matters

have been considered key audit matters considering the inherent risk and level of estimation and judgement involved in auditing

these items, resulting in a higher level of audit effort being expended.

Independent Auditor’s Report to the members of Renishawplc continued

108

Renishaw plc Annual Report 2024

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 £6.1 million (2023: £7.1 million), which is 5% (2023: 5%) of Adjusted profit before tax.

We believe that Adjusted profit before tax is the metric which is used most prevalently by Group management in their internal and

external reporting and the most relevant performance measure to the stakeholders of the Group. In the current year, there is no

difference between adjusted profit before tax and profit before tax so no adjustments needed to be considered.

We determined materiality for the Parent Company to be £8.1 million (2023: £8.9 million), which is 1% (2023: 1%) of Equity.

During the course of our audit, we updated our planning materiality to reflect actual results being different to the forecast used

tocalculate planning materiality and performed our testing at this revised level.

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% (2023: 75%) of our planning materiality, namely £4.6m (2023: £5.3m). We have set

performance materiality at this percentage due to our expectation of misstatements being low.

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 £0.3m to £3.1m (2023: £0.4m to £3.7m).

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 £0.3m (2023: £0.4m),

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.

109

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

Other information

The other information comprises the information included in the Annual Report including the Strategic Report set out on pages

2to52, the Governance Report set out on Pages 54 to 100 and Shareholders’ information set out on pages 169 to 170 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 UK 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 69;

— 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 page 69;

— Directors’ 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 page 69;

— Directors’ statement on fair, balanced and understandable set out on page 100;

— Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 14 to 18;

— The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems

setout on page 80; and;

— The section describing the work of the Audit Committee set out on page 76 to 81.

Independent Auditor’s Report to the members of Renishawplc continued

110

Renishaw plc Annual Report 2024

Responsibilities of directors

As explained more fully in the Directors’ responsibilities statement set out on page 100, 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, United Kingdom

Generally Accepted Accounting Practice ,the Companies Act 2006, 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 as well as, for the Group’s overseas components,

thenon-UK equivalent of these legislative frameworks.

— 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 risk of

management override, related to revenue recognition, is 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.

Ourprocedures involved: making enquires of management, including the Group’s internal and external legal counsel, internal

audit and 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. Our procedures also included reading investigation

reports from management and management’s legal specialist and involving our internal forensics and legal specialists to support

our assessment of the conclusions reached in the reports. We also completed procedures to conclude on the compliance

ofsignificant disclosures in the Annual Report and Accounts with the requirements of the relevant accounting standards,

UKlegislation and the UK Corporate Governance Code. We communicated regularly with the full scope and specific 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 www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

111

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

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 eight years, covering the

yearsending 30 June 2017 to 30 June 2024.

— 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.

Helen McLeod-Jones (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

Bristol

11 September 2024

Independent Auditor’s Report to the members of Renishawplc continued

112

Renishaw plc Annual Report 2024

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 99.

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.

Financial statements contents

Consolidated financial statements

Primary statements

114 Consolidated income statement

115 Consolidated statement of comprehensive income and expense

116 Consolidated balance sheet

117 Consolidated statement of changes in equity

118 Consolidated statement of cash flow

Notes (forming part of the financial statements)

119 1. Accounting policies

122 2. Revenue disaggregation and segmental analysis

124 3. Employee costs

125 4. Cost of sales

125 5. Financial income and expenses

126 6. Profit before tax

126 7. Ta xation

129 8. Earnings per share

129 9. Property, plant and equipment

130 10. Right-of-use assets

131 11. Investment properties

132 12. Intangible assets

135 13. Investments in joint ventures

136 14. Leases (as lessor)

136 15. Cash and cash equivalents and bank deposits

137 16. Inventories

137 17. Provisions

138 18. Contract liabilities

138 19. Other payables

138 20. Borrowings

139 21. Leases (as lessee)

140 22. Changes in liabilities arising from financing activities

140 23. Employee benefits

143 24. Share-based payments

144 25. Financial instruments

150 26. Share capital and reserves

151 27. Capital commitments

152 28. Related parties

152 29. Alternative performance measures

Company financial statements

Primary statements

155 Company balance sheet

156 Company statement of changes in equity

Notes to the Company financial statements

157 C.30. Accounting policies

159 C.31. Property, plant and equipment

160 C.32. Right-of-use assets

160 C.33. Intangible assets

160 C.34. Investments in subsidiaries

160 C.35. Investments in joint ventures

161 C.36. Long-term loans to Group undertakings

161 C.37. Deferred tax

161 C.38. Inventories

161 C.39. Trade receivables

162 C.40. Provisions

162 C.41. Leases (as lessee)

162 C.42. Other payables

162 C.43. Employee benefits

164 C.44. Share capital

164 C.45. Related parties

164 C.46. Capital commitments

164 C.47. Subsidiary undertakings

166 C.48. Joint ventures

Financial statements

113

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

		2024	2023
from continuing operations	notes	£’000	£’000
Revenue	2	6 9 1, 3 0 1	688, 5 73
Cost of sales	4	(367 ,658)	(337 ,908)
Gross profit		323,64 3	35 0,6 65
Distribution costs		(1 3 9 , 9 0 1)	(137,744)
Administrative expenses		(75,075)	(74 , 8 9 4)
US defined benefit pension scheme past service cost	23	–	(2 ,1 3 9)
Losses from the fair value of financial instruments	25	–	(1, 3 9 9)
Operating profit		10 8 , 6 6 7	1 34, 489
Financial income	5	12,336	9,6 6 9
Financial expenses	5	(2 , 2 8 9)	(1, 8 6 1)
Share of profits of joint ventures	13	3, 880	2 ,76 8
Profit before tax		122 , 5 9 4	1 4 5,0 65
Income tax expense	7	(2 5,7 0 5)	(2 8 , 9 6 3)
Profit for the year		96,889	11 6 ,1 0 2
Profit attributable to:
Equity shareholders of the parent company		96,889	11 6 ,1 0 2
Non-controlling interest	26	–	–
Profit for the year		96,889	11 6 ,1 0 2
		pence	pence
Dividend per share arising in respect of the year	26	76 .2	76. 2
Dividend per share paid in the year	26	76 .2	73.4
Earnings per share (basic and diluted)	8	13 3 . 2	15 9 .7

Adjusted profit before tax for the year was £122, 59 4,0 0 0 (2023: £1 4 0,9 8 3,0 0 0). See Note 29 Alternative performance measures for

more details.

Consolidated income statement

for the year ended 30 June 2024

114

Renishaw plc Annual Report 2024

		2024	2023
	notes	£’000	£’000
Profit for the year		96,889	11 6 ,1 0 2
Other items recognised directly in equity:
Items that will not be reclassified to the Consolidated income statement:
Remeasurement of defined benefit pension scheme assets/liabilities	23	(4 8 , 6 8 8)	13 , 6 12
Deferred tax on remeasurement of defined benefit pension scheme assets/liabilities		12 , 4 2 4	(3 , 0 7 1)
Total for items that will not be reclassified		(36 , 2 6 4)	1 0 , 5 41
Items that may be reclassified to the Consolidated income statement:
Exchange differences in translation of overseas operations	26	(4 , 0 3 8)	(8, 000)
Exchange differences in translation of overseas joint venture	26	(3 11)	–
Current tax on translation of net investments in overseas operations	26	57	313
Effective portion of changes in fair value of cash flow hedges, net of recycling	26	5 , 812	2 3 ,16 7
Deferred tax on effective portion of changes in fair value of cash flow hedges	7, 26	(1, 4 5 3)	(5 ,6 9 2)
Total for items that may be reclassified		67	9,7 8 8
Total other comprehensive income and expense, net of tax		(36, 1 97)	20, 329
Total comprehensive income and expense for the year		60,692	13 6 , 4 31
Attributable to:
Equity shareholders of the parent company		6 0,692	13 6 ,4 31
Non-controlling interest	26	–	–
Total comprehensive income and expense for the year		60,692	13 6 , 4 31

Consolidated statement of comprehensive

incomeandexpense

for the year ended 30 June 2024

115

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

		2024	2023*
	notes	£’000	£’000
Assets
Property, plant and equipment	9	325,040	286, 085
Right-of-use assets	10	14 , 74 6	8 ,4 02
Investment properties	11	10 , 2 8 5	10 , 32 3
Intangible assets	12	47,343	46 , 468
Investments in joint ventures	13	25,4 85	2 2 , 414
Finance lease receivables	14	11, 9 4 4	9, 93 5
Employee benefits	23	1 0,845	5 7, 4 1 6
Deferred tax assets	7	17, 6 9 0	19, 9 4 4
Derivatives	25	1, 3 8 7	9,4 4 3
Total non-current assets		464, 765	47 0 ,4 3 0
Current assets
Inventories	16	161, 9 2 8	18 5 ,75 7
Trade receivables	25	134,073	12 3 ,4 2 7
Finance lease receivables	14	3 ,8 61	3 ,76 4
Current tax		2 1, 2 9 8	19, 5 5 8
Other receivables	25	34,076	28,840
Derivatives	25	13 , 5 4 7	5 ,373
Bank deposits	15	95,542	1 25 ,000
Cash and cash equivalents	15, 25	122,293	8 1 ,388
Total current assets		5 8 6 , 618	5 7 3 ,1 0 7
Current liabilities
Trade payables	25	21 ,330	2 1 , 5 51
Contract liabilities	18	10 , 8 8 0	9 , 9 71
Current tax		1,7 6 7	7,11 8
Provisions	17	2,9 97	2 ,75 8
Derivatives	25	448	5,0 89
Lease liabilities	21	3, 960	3,0 0 9
Amounts payable to joint venture	13	8, 475	–
Borrowings	20	74 7	4,69 4
Other payables	19	50,344	4 8 ,13 0
Total current liabilities		10 0 , 9 4 8	10 2, 3 2 0
Net current assets		48 5,670	47 0 ,78 7
Non-current liabilities
Lease liabilities	21	11 , 0 6 2	5, 6 24
Borrowings	20	2 ,7 75	–
Employee benefits	23	–	45
Deferred tax liabilities	7	33,600	3 8 ,7 70
Derivatives	25	17 7	12 0
Total non-current liabilities		4 7, 6 1 4	4 4,5 59
Total assets less total liabilities		902,8 2 1	8 96 ,65 8
Equity
Share capital	26	14 , 5 5 8	14, 5 5 8
Share premium		42	42
Own shares held	26	(2,963)	(2, 9 6 3)
Currency translation reserve	26	2,4 80	6 ,7 72
Cash flow hedging reserve	26	1 0 , 9 11	6 ,552
Retained earnings		876 ,99 0	87 1 , 777
Other reserve	26	1, 3 8 0	4 97
Equity attributable to the shareholders of the parent company		903, 398	89 7 ,235
Non-controlling interest	26	(57 7)	(5 7 7)
Total equity		902,8 2 1	8 96 ,65 8

*2023 Other receivables have been reclassified to include Contract assets. See Note 25.

These financial statements were approved by the Board of Directors on 11 September 2024 and were signed on its behalf by:

Sir David Grant Allen Roberts

Interim Non-executive Chair Group Finance Director

Consolidated balance sheet

for the year ended 30 June 2024

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Renishaw plc Annual Report 2024

			Own	Currency	Cash flow			Non-
	Share	Share	shares	translation	hedging	Retained	Other	controlling
	capital	premium	held	reserve	reserve	earnings	reserve	interest	Total
Year ended 30 June 2023	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Balance at 1 July 2022	14 , 5 5 8	42	(75 0)	14 , 4 5 9	(1 0,923)	798,54 1	(18 0)	(5 77)	8 1 5 ,1 7 0
Profit for the year	−	−	−	−	−	11 6 ,1 0 2	−	−	11 6 ,1 0 2
Other comprehensive income andexpense
(net of tax)
Remeasurement of defined benefit pension
schemeassets/liabilities	−	−	−	−	−	10 , 5 41	−	−	1 0 , 5 41
Foreign exchange translation differences	−	−	−	(7, 6 8 7)	−	−	−	−	(7, 6 8 7)
Changes in fair value of cash flow hedges	−	−	−	−	1 7, 4 7 5	−	−	−	1 7, 4 7 5
Total other comprehensive income
and expense	−	−	−	(7, 6 8 7)	1 7, 4 7 5	1 0 , 5 41	−	−	20,32 9
Total comprehensive income
and expense	−	−	−	(7, 6 8 7)	1 7, 4 7 5	12 6 , 6 4 3	−	−	13 6 , 4 3 1
Share-based payments charge	−	−	−	−	−	−	677	−	677
Own shares purchased	−	−	(2 , 2 13)	−	−	−	−	−	(2 , 2 13)
Dividends paid	−	−	−	−	−	(53 , 4 07)	−	−	(5 3 ,4 0 7)
Balance at 30 June 2023	14 , 5 5 8	42	(2, 963)	6,7 72	6 ,552	871 , 777	4 97	(5 7 7)	896,658
Year ended 30 June 2024
Profit for the year	–	–	–	–	–	9 6,88 9	–	–	96,8 89
Other comprehensive income andexpense
(net of tax)
Remeasurement of defined benefit pension
schemeassets/liabilities	–	–	–	–	–	(3 6 , 2 6 4)	–	–	(3 6 , 2 6 4)
Foreign exchange translation differences	–	–	–	(3 , 9 8 1)	–	–	–	–	(3 , 9 8 1)
Foreign exchange related to joint venture	–	–	–	(3 11)	–	–	–	–	(3 11)
Changes in fair value of cash flow hedges	–	–	–	–	4,359	–	–	–	4,359
Total other comprehensive income
and expense	–	–	–	(4 , 2 9 2)	4,359	(3 6 , 2 6 4)	–	–	(3 6 ,1 9 7)
Total comprehensive income
and expense	–	–	–	(4 , 2 9 2)	4,359	60,625	–	–	6 0,692
Share-based payments charge	–	–	–	–	–	–	88 3	–	883
Dividends paid	–	–	–	–	–	(5 5 , 41 2)	–	–	(5 5 , 41 2)
Balance at 30 June 2024	14 , 5 5 8	42	(2, 963)	2 ,48 0	1 0 , 9 11	876, 99 0	1, 3 8 0	(57 7)	902,8 2 1

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

Consolidated statement of changes in equity

for the year ended 30 June 2024

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FINANCIAL STATEMENTS

		2024	2023
	notes	£’000	£’000
Cash flows from operating activities
Profit for the year		96,889	11 6 ,1 0 2
Adjustments for:
Depreciation of property, plant and equipment, right-of-use assets, and investment properties	9,10,11	2 4 ,1 9 5	24,105
(Profit)/loss on sale of property, plant and equipment	9	(1 ,1 9 9)	155
Amortisation and impairment of intangible assets	12	8,633	7, 7 7 3
Loss on disposal of intangible assets		–	550
Share of profits from joint ventures	13	(3, 8 8 0)	(2,76 8)
Defined benefit pension schemes past service and administrative costs	23	9 07	2,4 37
Financial income	5	(12,336)	(9 ,6 6 9)
Financial expenses	5	2,28 9	1, 8 61
Gains from the fair value of financial instruments	25	–	(5 , 5 0 4)
Share-based payment expense	24	883	677
Tax expense	7	2 5 ,70 5	28,9 63
		4 5 ,1 9 7	4 8,580
Decrease/(increase) in inventories		23,829	(2 3 , 2 75)
Increase in trade, finance lease and other receivables		(23 ,719)	(12,379)
Increase/(decrease) in trade and other payables		3,5 57	(15 , 0 1 3)
Increase/(decrease) in provisions		239	(1 ,486)
		3,90 6	(52,153)
Defined benefit pension scheme contributions	23	(16 1)	(2 , 3 41)
Income taxes paid		(2 1, 7 5 2)	(2 5 , 8 9 1)
Cash flows from operating activities		1 24,079	8 4, 2 97
Investing activities
Purchase of property, plant and equipment, and investment properties	9,11	(6 5 ,518)	(74 , 0 2 4)
Sale of property, plant and equipment		4, 475	7, 9 4 8
Development costs capitalised	12	(9 , 2 8 1)	(1 0 , 4 4 8)
Purchase of other intangibles	12	(24 6)	(37 9)
Decrease/(increase) in bank deposits	15	29,458	(25 , 000)
Interest received	5	9 ,11 0	6,302
Dividends received from joint ventures	13	498	9 24
Cash flows from investing activities		(3 1 ,504)	(94,67 7)
Financing activities
Repayment of borrowings	20	(7 9 9)	(9 14)
Amounts received as deposit from joint venture	13	8, 475	–
Interest paid	5	(6 0 8)	(6 5 6)
Repayment of principal of lease liabilities	22	(4 , 3 5 9)	(4 , 2 0 6)
Own shares purchased	26	–	(2 , 213)
Dividends paid	26	(55,4 1 2)	(5 3 ,4 0 7)
Cash flows from financing activities		(52 ,7 0 3)	(61,3 9 6)
Net decrease in cash and cash equivalents		39, 872	(71,7 76)
Cash and cash equivalents at the beginning of the year		81, 3 8 8	1 53, 162
Effect of exchange rate fluctuations on cash held		1, 0 3 3	2
Cash and cash equivalents at the end of the year	15	1 22,293	81 ,388

Cash and cash equivalents and bank deposits at the end of the year were £217 .8m (2023: £2 0 6.4m). See Note 15 for more details.

Consolidated statement of cash flow

for the year ended 30 June 2024

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Renishaw plc Annual Report 2024

1. Accounting policies

This section sets out our principal accounting policies that relate to the financial statements as a whole, along with the

critical accounting judgements and estimates that management has identified as having a potentially material impact on

the Group’s consolidated financial statements. Where an accounting policy is applicable to a specific note in the financial

statements, the policy is described within that note.

Basis of preparation

Renishaw plc (the Company) is a company incorporated in England and Wales. The Group financial statements consolidate those

of the Company and its subsidiaries (together referred to as the Group, and ‘we’) and equity account the Group’s interest in 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 and estimates with a significant risk of material adjustment in the next year are noted on page 121.

Basis of consolidation

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns

from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control,

the Group takes into consideration potential voting rights that are exercisable. The acquisition date is the date on which control is

transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the

date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary

are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Joint ventures are accounted for using the equity method (equity-accounted investees) and are initially recognised at cost.

The Group’s investments includes goodwill identified on acquisition, net of any accumulated impairment losses.

The consolidated financial statements include the Group’s share of the total comprehensive income and equity movements of equity

accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the

Group’s share of losses exceeds its interest in an equity accounted investee, the Group’s carrying amount is reduced to nil and

recognition of further losses is discontinued (except to the extent that the Group has incurred legal obligations or made payments

on behalf of an investee).

Intragroup balances and transactions, and any unrealised income and expenses arising from intragroup transactions, are eliminated

on consolidation. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment

to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only

to the extent that there is no evidence of impairment.

Foreign currencies

On consolidation, overseas subsidiaries’ results are translated into Sterling at weighted average exchange rates for the year

by translating each overseas subsidiary’s monthly results at exchange rates applicable to 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.

Notes (forming part of the consolidated financial statements)

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FINANCIAL STATEMENTS

Notes continued

1. Accounting policies continued

New, revised or changes to existing accounting standards

The following accounting standards and amendments became effective as at 1 January 2023 and have been adopted in the

preparation of these financial statements, with effect from 1 July 2023:

— IFRS 17 Insurance Contracts;

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

— amendments to IAS 1, Classification of Liabilities as Current or Non-current;

— amendments to IAS 8, Definition of Accounting Estimates;

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

— amendments to IAS 12, International Tax Reform Pillar Two Model Rules.

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

At the date of these financial statements, the following standards and amendments that are potentially relevant to the Group,

and which have not been applied in these financial statements, were in issue but not yet effective:

— IFRS 18 Presentation and Disclosures in Financial Statements (not yet endorsed by the UK);

— amendments to IAS 7 and IFRS 7, Supplier Finance Arrangements; and

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

The adoption of these standards and interpretations in future periods is not expected to have a material impact on the financial

statements of the Group.

The Finance (No 2) Bill 2023, that includes Pillar Two legislation, was substantively enacted on 20 June 2023 for IFRS purposes.

The Group has performed an analysis of the potential exposure to Pillar Two income taxes, which is presented in Note 7 Taxation.

As permitted by the amendments to IAS 12 International Tax Reform Pillar Two Model Rules, the Group has applied the exemption

from recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.

Alternative performance measures

The financial statements are prepared in accordance with adopted IFRS and applied in accordance with the provisions of the

Companies Act 2006. In measuring our performance, the financial measures that we use include those which have been derived

from our reported results, to eliminate factors which distort year-on-year comparisons.

These are considered non-GAAP financial measures. We believe this information, along with comparable GAAP measurements,

is useful to stakeholders in providing a basis for measuring our operational performance. The Board uses these financial measures,

along with the most directly comparable GAAP financial measures, in evaluating our performance (see Note 29).

Separately disclosed items

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

Gains and losses from the fair value of financial instruments are therefore separately disclosed in the Consolidated income

statement, where these gains and losses relate to certain forward currency contracts that are not effective for hedge accounting.

Restructuring costs are also separately disclosed where significant costs have been incurred in rationalising and reorganising our

business as part of a Board-approved initiative, and relate to matters that do not frequently recur.

In the previous period, a change to the US defined benefit pension scheme rules resulted in a significant non-recurring amount

being recognised in the Consolidated income statement. This was also 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.

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1. Accounting policies continued

Critical accounting judgements and estimation uncertainties

The preparation of financial statements in conformity with UK-adopted IAS requires management to make judgements, estimates

and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable

under the circumstances. The results of this form the basis of making 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 critical accounting judgements and estimation uncertainties that have a significant risk of causing a material adjustment

to the carrying amount of assets and liabilities in the next financial year are summarised below, with further details included within

accounting policies as indicated.

Item	Key judgements (J) and estimates (E)	Page
Research and development costs	J – Whether a project meets the criteria for capitalisation	132
Goodwill and capitalised development costs	E – Estimates of future cash flows for impairment testing	132
Inventories	E – Determination of net realisable value	137
Defined benefit pension schemes	E – Valuation of defined benefit pension schemes’ liabilities	140
Defined benefit pension schemes	J – Whether past service costs need to be recognised	140
Cash flow hedges	E – Estimates of highly probable forecasts of the hedged item	144

Climate change

We have considered the potential effect of physical and transitional climate change risks when preparing these consolidated

financial statements and have also considered the effect of our own Net Zero commitments. Our consideration of the potential effect

of climate change on these consolidated financial statements included reviewing:

— discounted cash flow forecasts, used in accounting for goodwill, capitalised development costs, and deferred tax assets;

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

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

— expected demand for inventories.

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

Overall, we do not believe that climate change has a material effect on our accounting judgements and estimates, nor in the carrying

value of assets and liabilities in the consolidated financial statements for the year ended 30 June 2024. We will continue to review the

effect of climate change on financial statements in the future, and update our accounting and disclosures as the position changes.

Going concern

In preparing these financial statements, the Directors have adopted the going concern basis. The decision to adopt the going

concern basis was made after considering:

— the Group’s strategy and business model, as set out on pages 7 to 10;

— the Group’s risk management processes and principal risks, disclosed on pages 11 to 18;

— the Group’s financial resources and strategies (pages 26 to 28); and

— the process undertaken to review the Group’s viability, including scenario testing, as set out on page 19.

The financial models for the viability review were based on the pessimistic version of the five-year business plan, but covering

a period to 30 September 2027. For context, revenue in the first year of this pessimistic base scenario is similar to FY2024 revenue

of £691.3m, while costs and other cash outflows still reflect ambitious growth plans. In the going concern assessment, the Directors

reviewed this same version of the plan but to 30 September 2025, as well as the ‘severe but plausible’ scenarios used in the viability

review, again to 30 September 2025. These scenarios reflected a significant reduction in revenue, a significant increase in costs,

and a third scenario incorporating both a reduction to revenue and an increase in costs but to a lesser degree than the first two

scenarios. In each scenario the Group’s cash balances remained positive throughout the period to 30 September 2025.

The Directors also reviewed a reverse stress test for the period to 30 September 2025, identifying what would need to happen

in this period for the Group to deplete its cash and cash equivalents and bank deposit balances. This identified a trading level

so low that the Directors feel that the events that could trigger this would be remote. The Directors also concluded that the risk of

a one-off cash outflow that would exhaust the Group’s cash and cash equivalents and bank deposits balances in the assessment

period was also remote.

Based on this assessment, incorporating a review of the current position, the scenarios, the principal risks and mitigation, the

Directors have a reasonable expectation that the Group will be able to continue operating and meet its liabilities as they fall due

over the period to 30 September 2025.

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FINANCIAL STATEMENTS

Notes continued

2. Revenue disaggregation and segmental analysis

We manage our business by segment, comprising Manufacturing technologies and Analytical instruments and medical

devices, and by geographical region. The results of these segments and regions are regularly reviewed by the Board to

assess performance and allocate resources, and are presented in this note.

Accounting policy

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

and together.

a) Sale of goods, capital equipment and services

The Group’s contracts with customers consist both of contracts with one performance obligation and contracts with multiple

performance obligations.

For contracts with one performance obligation, revenue is measured at the transaction price, which is typically the contract value

except for customers entitled to volume rebates, and recognised at the point in time when control of the product transfers to the

customer. This point in time is typically when the products are made available for collection by the customer, collected by the

shipping agent, or delivered to the customer, depending upon the shipping terms applied to the specific contract.

Contracts with multiple performance obligations typically exist where, in addition to supplying products, we also supply services

such as user training, servicing and maintenance, and installation. Where the installation service is simple, does not include

a significant integration service and could be performed by another party then the installation is accounted for as a separate

performance obligation. Where the contracts include multiple performance obligations, the transaction price is allocated to each

performance obligation based on the relative stand-alone selling prices. The revenue allocated to each performance obligation is

then recognised when, or as, that performance obligation is satisfied. For installation, this is typically at the point in time in which

installation is complete. For training, this is typically the point in time at which training is delivered. For servicing and maintenance,

the revenue is recognised evenly over the course of the servicing agreement except for ad-hoc servicing and maintenance which

is recognised at the point in time in which the work is undertaken.

b) Sale of software

The Group provides software licences and software maintenance to customers, sold both on their own and together with

associated products. For software licences, where the licence and/or maintenance is provided as part of a contract that provides

customers with software licences and other goods and services then the transaction price is allocated on the same basis as

described in a) above.

The Group’s distinct software licences provide a right of use, and therefore revenue from software licences is recognised at the

point in time in which the licence is supplied to the customer. Revenue from software maintenance is recognised evenly over the

term of the maintenance agreement.

c) Extended warranties

The Group provides standard warranties to customers that address potential latent defects that existed at point of sale and

as required by law (assurance-type warranties). In some contracts, the Group also provides warranties that extend beyond the

standard warranty period and may be sold to the customer (service-type warranties).

Assurance-type warranties are accounted for by the Group under IAS 37 ‘Provisions, Contingent Liabilities and Contingent

Assets’. Service-type warranties are accounted for as separate performance obligations and therefore a portion of the transaction

price is allocated to this element, and then recognised evenly over the period in which the service is provided.

d) Contract balances

Contract assets represent the Group’s right to consideration in exchange for goods, capital equipment and/or services that have

been transferred to a customer, and mainly includes accrued revenue in respect of goods and services provided to a customer

but not yet fully billed. Contract assets are distinct from receivables, which represent the Group’s right to consideration that

is unconditional.

Contract liabilities represent the Group’s obligation to transfer goods, capital equipment and/or services to a customer for which

the Group has either received consideration or consideration is due from the customer.

e) Disaggregation of revenue

The Group disaggregates revenue from contracts with customers between: goods, capital equipment and installation, and

aftermarket services; reporting 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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Renishaw plc Annual Report 2024

2. Revenue disaggregation and segmental analysis continued

Within the Manufacturing technologies business there are multiple product offerings with similar economic characteristics, similar

production processes and similar customer bases. Our Manufacturing technologies business consists of industrial metrology,

position measurement and additive manufacturing (AM) product groups. Analytical instruments and medical devices represents all

other operating segments within the Group, which, business consists of spectroscopy and neurological product lines. More details

of the Group’s products and services are given in the Strategic Report.

	Manufacturing	Analytical instruments
	technologies	and medical devices	Total
Year ended 30 June 2024	£’000	£’000	£’000
Revenue	648,063	43,238	691,301
Depreciation, amortisation and impairment	31,374	1,454	32,828
Operating profit	103,181	5,486	108,667
Share of profits of joint ventures	3,880	–	3,880
Net financial income/(expense)	–	–	10,047
Profit before tax	–	–	122,594

	Manufacturing	Analytical instruments
	technologies	and medical devices	Total
Year ended 30 June 2023	£’000	£’000	£’000
Revenue	648,240	40,333	688,573
Depreciation, amortisation and impairment	28,431	3,447	31,878
Operating profit, before losses from fair value of financial instruments and US defined benefit pension scheme past service cost	132,843	5,184	138,027
Share of profits of joint ventures	2,768	–	2,768
Net financial income/(expense)	–	–	7,808
US defined benefit pension scheme past service cost	–	–	(2,139)
Losses from the fair value of financial instruments	–	–	(1,399)
Profit before tax	–	–	145,065

There is no allocation of assets and liabilities to the segments identified above. Depreciation, amortisation and impairments are

allocated to segments on the basis of the level of activity.

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

by geographical region:

	2024	2023
	£’000	£’000
UK	268,027	231,619
Overseas	166,816	152,008
Total non-current assets	434,843	383,627

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:

	2024	2023
	£’000	£’000
Goods, capital equipment and installation	624,491	624,992
Aftermarket services	66,810	63,581
Total Group revenue	691,301	688,573

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.

123

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

2. Revenue disaggregation and segmental analysis continued

The analysis of revenue by geographical market was:

	2024	2023
	£’000	£’000
APAC total	318,836	310,637
UK (country of domicile)	37,956	38,899
EMEA, excluding UK	170,077	177,582
EMEA total	208,033	216,481
Americas total	164,432	161,455
Total Group revenue	691,301	688,573

Revenue in the previous table has been allocated to regions based on the geographical location of the customer. Countries with

individually significant revenue figures in the context of the Group were:

	2024	2023
	£’000	£’000
China	177,155	155,360
USA	138,836	138,721
Germany	54,572	61,565
Japan	49,329	67,915

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

3. Employee costs

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

this note.

The aggregate employee costs for the year were:

	2024	2023
	£’000	£’000
Wages and salaries	233,536	226,126
Compulsory social security contributions	27,130	26,579
Contributions to defined contribution pension schemes	27,851	26,142
Share-based payment charge	883	677
Total payroll costs	289,400	279,524

Wages and salaries and compulsory social security contributions include £10.0m (2023: £11.3m) relating to performance bonuses.

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

	2024	2023
	Number	Number
UK	3,400	3,332
Overseas	1,813	1,804
Average number of employees	5,213	5,136

Key management personnel have been assessed to be the Directors of the Company and the Senior Leadership Team (SLT), which

was an average of 22 people (2023: 21 people).

The total remuneration of the Directors and the SLT was:

	2024	2023
	£’000	£’000
Short-term employee benefits	6,139	5,659
Post-employment benefits	529	511
Share-based payment charge	883	677
Total remuneration of key management personnel	7,5 51	6,847

Short-term employee benefits include £0.2m (2023: nil) relating to performance bonuses payable in cash.

The share-based payment charge relates to share awards granted in previous years, not yet vested. Shares equivalent to £0.2m

(2023: nil) are to be awarded in respect of FY2024 (see Note 24).

Further details of Directors’ remuneration are given in the Directors’ Remuneration Report.

Notes continued

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Renishaw plc Annual Report 2024

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:

	2024		2023
	£’000		£’000
Production costs	269,562	247,	66 5
Research and development expenditure	71,060		72,500
Other engineering expenditure	35,723		28,063
Gross engineering expenditure	106,783		100,563
Development expenditure capitalised (net of amortisation)	(4,287)		(5,298)
Development expenditure impaired	3,299		1,611
Research and development tax credit	(7,699)		(6,633)
Total engineering costs	98,096		90,243
Total cost of sales	367,658		337,908

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 relating to new products or processes. Other engineering expenditure includes the payroll costs, material costs and

allocated overheads attributed to projects identified as relating to existing products or processes.

5. Financial income and expenses

Financial income mainly arises from bank interest on our deposits. We are also 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:

	2024	2023
Financial income	£’000	£’000
Bank interest receivable	9,110	6,302
Interest on pension schemes’ assets	2,908	1,639
Fair value gains from one-month forward currency contracts	318	1,728
Total financial income	12,336	9,669

	2024	2023
Financial expenses	£’000	£’000
Interest on pension schemes’ liabilities	–	29
Currency losses	1,645	1,130
Lease interest	537	348
Interest payable on amounts owed to joint ventures	55	–
Interest payable on borrowings	36	46
Other interest payable	16	308
Total financial expenses	2,289	1,861

Currency losses relate to revaluations of foreign currency-denominated balances using latest reporting currency exchange rates.

The losses recognised in FY2023 and FY2024 largely related to an appreciation of Sterling relative to the US dollar affecting US

dollar-denominated intragroup balances in the Company.

Rolling one-month forward currency contracts are used to offset currency movements on certain intragroup balances, with fair value

gains and losses being recognised in financial income or expenses. See Note 25 for further details.

125

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

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):

		2024	2023
	notes	£’000	£’000
Depreciation of property, plant and equipment, right-of-use assets, and investment properties	9,10,11	24,195	24,105
(Profit)/loss on sale of property, plant and equipment	9	(1,199)	155
Amortisation and impairment of intangible assets	12	8,633	7,773
Grant income	–	(2,816)	(3,017)

These costs/(income) can be found within cost of sales, distribution costs and administrative expenses in the Consolidated income

statement. Further detail on each element can be found in the relevant notes.

Grant income relates to government grants, for R&D activities, which are recognised in the Consolidated income statement as

a deduction against expenditure. Where grants are received in advance of the related expenses, they are initially recognised in

the Consolidated balance sheet and released to match the related expenditure. Where grants are expected to be received after

the related expenditure has occurred, and there is reasonable assurance that we will comply with the grant conditions, amounts

are recognised to offset the expenditure and an asset recognised. Research and development tax credit (RDEC) is accounted for

in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.

Costs within Administrative expenses relating to auditor fees included:

	2024	2023
	£’000	£’000
Audit of these financial statements	873	707
Audit of subsidiary undertakings pursuant to legislation	606	576
Other assurance	27	6
All other non-audit fees	–	–
Total auditor fees	1,506	1,289

7. Taxation

The Group tax charge is affected by our geographic mix of profits and other factors explained in this note. Our expected

future tax charges and related tax assets are also set out in the deferred tax section, together with our view on whether

we will be able to make use of these in the future.

Accounting policy

Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the Consolidated income statement except

to the extent that it relates to items recognised directly in Other comprehensive income, in which case it is recognised in the

Consolidated statement of comprehensive income and expense. Current tax is the expected tax payable on the taxable income

for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in

previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:

— the initial recognition of goodwill;

— the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business

combination; and

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

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of

assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

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.

Notes continued

126

Renishaw plc Annual Report 2024

7. Taxation continued

The following table shows an analysis of the tax charge:

	2024	2023
	£’000	£’000
Current tax:
UK corporation tax on profits for the year	3,748	5,814
UK corporation tax – prior year adjustments	(693)	(1,307)
Overseas tax on profits for the year	14,497	14,161
Overseas tax – prior year adjustments	105	291
Total current tax	17,657	18,959
Deferred tax:
Origination and reversal of temporary differences	8,613	9,140
Prior year adjustments	(473)	(1,052)
Derecognition of previously recognised tax losses and excess interest	427	439
Recognition of previously unrecognised tax losses and excess interest	(519)	(591)
Effect on deferred tax of changes in tax rates	–	2,068
	8,048	10,004
Tax charge on profit	25,705	28,963

The tax for the year is lower (2023: lower) than the UK standard rate of corporation tax of 25.0% (2023: 20.5% weighted).

The differences are explained as follows:

	2024	2023
	£’000	£’000
Profit before tax	122,594	145,065
Tax at 25.0% (2023: 20.5%)	30,649	29,738
Effects of:
Different tax rates applicable in overseas subsidiaries	(4,866)	(1,695)
Permanent differences	1,028	1,595
Companies with unrelieved tax losses	93	292
Share of profits of joint ventures	(970)	(567)
Tax incentives (patent box and capital allowances super-deduction)	–	(679)
Prior year adjustments	(1,061)	(2,068)
Effect on deferred tax of changes in tax rates	–	2,068
Recognition of previously unrecognised tax losses and excess interest	(519)	(591)
Derecognition of previously recognised tax losses and excess interest	427	439
Irrecoverable withholding tax	447	609
Deferred tax on unremitted earnings	425	–
Other differences	52	(178)
Tax charge on profit	25,705	28,963
Effective tax rate	21.0%	20.0%

We operate in many countries around the world and the overall effective tax rate (ETR) is a result of the combination of the varying

tax rates applicable throughout these countries. The FY2024 ETR has increased mainly due to the increase in the UK tax rate from

19.0% to 25.0% in April 2023. The UK standard rate of corporation tax applicable to Renishaw is 25% (2023: 20.5% weighted).

The Group’s future ETR largely depends on the geographic mix of profits and whether there are any changes to tax legislation in the

Group’s most significant countries of operations.

The Finance (No 2) Bill 2023, that includes Pillar Two legislation, was substantively enacted on 20 June 2023 for IFRS purposes.

The Group has performed an analysis of the potential exposure to Pillar Two income taxes based on the Country by Country Report

for the constituent entities in the Group for the financial year ended 30 June 2023. The analysis indicates the transitional safe

harbour relief should apply in respect of the majority of jurisdictions in which the Group operates. The Group expects Pillar Two

income taxes to arise in Ireland due to its statutory tax rate on trading income being lower than the global minimum tax rate of

15%. Based on the FY2023 analysis and initial assessment for FY2024, the impact of the Pillar Two rules is not expected to exceed

a 0.7% increase to the Group’s Effective Tax Rate in FY2025.

127

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

7. Taxation continued

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 £15.9m liability (2023: £18.8m liability) is presented as

a £17.7m deferred tax asset (2023: £19.9m asset) and a £33.6m deferred tax liability (2023: £38.8m 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.

Deferred tax balances at the end of the year were:

		2024			2023
	Assets	Liabilities	Net	Assets	Liabilities		Net
	£’000	£’000	£’000	£’000	£’000		£’000
Property, plant and equipment	549	(29,946)	(29,397)	735	(25,124)		(24,389)
Intangible assets	–	(4,067)	(4,067)	–	(3,922)		(3,922)
Intragroup trading (inventories)	15,147	–	15,147	16,765	–		16,765
Intragroup trading (fixed assets)	1,101	–	1,101	1,770	–		1,770
Defined benefit pension schemes	–	(2,445)	(2,445)	6	(14,354)		(14,348)
Derivatives	–	(3,637)	(3,637)	–	(2,184)	(2,18	4)
Tax losses	1,823	–	1,823	2,281	–		2,281
Other	6,895	(1,330)	5,565	5,894	(693)		5,201
Balance at the end of the year	25,515	(41,425)	(15,910)	27,4 51	(46,277)		(18,826)

Other deferred tax assets include temporary differences relating to inventory provisions totalling £2.9m (2023: £2.3m), other

provisions (including bad debt provisions) of £1.0m (2023: £0.9m), and employee benefits relating to Renishaw plc of £1.1m

(2023: £0.8m) and Renishaw KK of £0.8m (2023: £0.8m), with the remaining balance relating to several other smaller

temporary differences.

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

	2024	2023
	£’000	£’000
Balance at the beginning of the year	(18,826)	78
Movements in relation to property, plant and equipment	(5,008)	(4,940)
Movements in relation to intangible assets	(145)	(942)
Movements in relation to intragroup trading (inventories)	(1,618)	(3,393)
Movements in relation to intragroup trading (fixed assets)	(669)	313
Movements in relation to defined benefit pension schemes	(521)	(229)
Movements in relation to tax losses	(458)	(1,612)
Movements in relation to other	371	799
Movements in the Consolidated income statement	(8,048)	(10,004)
Movements in relation to the cash flow hedging reserve	(1,453)	(5,692)
Movements in relation to the defined benefit pension scheme assets/liabilities	12,424	(3,071)
Movements in the Consolidated statement of comprehensive income and expense	10,971	(8,763)
Currency adjustment	(7)	(137)
Balance at the end of the year	(15,910)	(18,826)

Deferred tax assets of £1.8m (2023: £2.3m) in respect of losses are recognised where it is considered likely that the business will

generate sufficient future taxable profits. Deferred tax assets have not been recognised in respect of tax losses carried forward

of £6.1m (2023: £6.6m), due to uncertainty over their offset against future taxable profits and therefore their recoverability. These

losses are held by Group companies in Brazil, Australia, Canada, UAE and the US, where for 77% of losses there are no time

limitations on their utilisation.

In determining profit forecasts for each Group company, the key variable is the revenue forecasts, which have been estimated using

consistently applied external and internal data sources. Sensitivity analysis indicates that a reduction of 5% to relevant revenue

forecasts would result in an impairment to deferred tax assets recognised in respect of losses and intragroup trading (inventories)

of around £0.3m. An increase of 5% to relevant revenue forecasts would result in additions to deferred tax assets in respect of tax

losses not recognised of around £0.5m.

It is likely that the majority of unremitted earnings of overseas subsidiaries would qualify for the UK dividend exemption. However,

£68.3m (2023: £65.6m) 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. These tax liabilities are not expected to exceed £4.3m (2023: £4.3m),

of which £0.4m (2023: nil) has been provided on the basis that the Group expects to remit these amounts.

Notes continued

128

Renishaw plc Annual Report 2024

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 £96,889,000 (2023: £116,102,000) and on 72,719,565 shares

(2023: 72,719,565 shares), being the number of shares in issue. The number of shares excludes 68,978 (2023: 68,978) shares

held by the Employee Benefit Trust (EBT). On this basis, earnings per share (basic and diluted) is calculated as 133.2 pence

(2023: 159.7 pence).

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

There is no difference between statutory and adjusted earnings per share in FY2024. For the calculation of adjusted earnings per

share in FY2023, per Note 29, earnings of £116,102,000 were adjusted by post-tax amounts for:

— fair value (gains)/losses on financial instruments not eligible for hedge accounting (reported in Revenue), which represented the

amount by which revenue would change had all the derivatives qualified as eligible for hedge accounting, £5,488,000 gain;

— fair value (gains)/losses on financial instruments not eligible for hedge accounting (reported in Gains/(losses) from the fair value

of financial instruments), £1,133,000 loss;

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

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

9. Property, plant and equipment

The Group makes significant investments in distribution and manufacturing infrastructure. During the year we have

completed the expansion of our production facility in Wales, UK, invested in our manufacturing equipment,

and purchased distribution facilities in Brazil and the United Arab Emirates.

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 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; building infrastructure, 10 to 50 years; plant

and equipment, 3 to 25 years; and vehicles, 3 to 4 years .

	Freehold				Assets in the
	land and		Plant and	Motor	course of
	buildings		equipment	vehicles	construction	Total
Year ended 30 June 2024	£’000		£’000	£’000	£’000	£’000
Cost
At 1 July 2023	213,385		273,156	7,112	53,469	547,122
Reclassification	3,669		(3,669)	–	−	–
Additions	2,412		10,615	308	51,912	65,247
Transfers	42,637		6,151	–	(48,788)	–
Disposals	(2,916)		(6,810)	(1,245)	–	(10,971)
Currency adjustment	(3,651)		(1,254)	(76)	–	(4,981)
At 30 June 2024	255,536		278,189	6,099	56,593	596,417
Depreciation
At 1 July 2023	45,647		209,546	5,844	–	261,037
Reclassification	540		(540)	–	–	–
Charge for the year	4,378		14,526	382	–	19,286
Disposals	(658)		(5,951)	(1,086)	–	(7,695)
Currency adjustment	(447)		(743)	(61)	–	(1,251)
At 30 June 2024	49,460		216,838	5,079	–	271,377
Net book value
At 30 June 2024	206,076		61,351	1,020	56,593	325,040
At 30 June 2023	167,73	8	63,610	1,268	53,469	286,085

Profit/loss on disposals of Property, plant and equipment amounted to £1.2m profit (2023: £0.2m loss).

Additions to assets in the course of construction comprise £36.5m (2023: £42.6m) for land and buildings and £15.4m (2023: £11.4m)

for plant and equipment.

At 30 June 2024, properties with a net book value of £45.9m (2023: £88.8m) were subject to a fixed charge to secure the

UK defined benefit pension scheme liabilities.

129

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FINANCIAL STATEMENTS

9. Property, plant and equipment continued

		Freehold			Assets in the
		land and	Plant and	Motor	course of
		buildings	equipment	vehicles	construction	Total
Year ended 30 June 2023		£’000	£’000	£’000	£’000	£’000
Cost
At 1 July 2022	217,8	2 0	263,557	7,520	7,481	496,378
Additions		1,730	16,934	1,033	54,075	73,772
Transfers		3,240	4,847	–	(8,087)	–
Disposals		(5,383)	(9,681)	(1,369)	–	(16,433)
Currency adjustment		(4,022)	(2,501)	(72)	–	(6,595)
At 30 June 2023		213,385	273,156	7,112	53,469	547,122
Depreciation
At 1 July 2022		43,816	202,214	6,495	–	252,525
Charge for the year		4,175	14,891	576	–	19,642
Disposals		(1,619)	(5,544)	(1,167)	–	(8,330)
Currency adjustment		(725)	(2,015)	(60)	–	(2,800)
At 30 June 2023		45,647	209,546	5,844	–	261,037
Net book value
At 30 June 2023		167,738	63,610	1,268	53,469	286,085
At 30 June 2022		174,004	61,343	1,025	7,4 81	243,853

10. Right-of-use assets

The Group leases mostly properties and cars from third parties and recognises an associated right-of-use asset where

we are afforded control and economic benefit from the use of the asset.

Accounting policy

At the commencement date of a lease arrangement the Group recognises a right-of-use asset for the leased item and a lease

liability for any payments due. Right-of-use assets are initially measured at cost, being the present value of the lease liability plus

any initial costs incurred in entering the lease and less any incentives received. See Note 21 for further detail on lease liabilities.

Right-of-use assets are subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end

of the useful life or the end of the lease term.

	Leasehold	Plant and	Motor
	property	equipment	vehicles	Total
Year ended 30 June 2024	£’000	£’000	£’000	£’000
Net book value
At 1 July 2023	5,069	89	3,244	8,402
Additions	7,320	51	3,843	11,214
Reductions	–	–	(3)	(3)
Depreciation	(2,434)	(73)	(2,146)	(4,653)
Currency adjustment	(56)	(1)	(157)	(214)
At 30 June 2024	9,899	66	4,781	14,746

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

Notes continued

130

Renishaw plc Annual Report 2024

11. Investment properties

The Group’s investment properties consist of five properties in the UK, Ireland and India, which are occupied by

rent-paying third parties.

Accounting policy

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

as investment property.

Where a property is part-occupied by the Group, portions of the property are recognised as investment property if they meet the

above description and if these portions could be sold separately and reliably measured. If the portions could not be sold separately,

the property is recognised as an investment property only if a significant proportion is held for rental or appreciation purposes.

The Group has elected to value investment properties on a cost basis, initially comprising an investment property’s purchase price

and any directly attributable expenditure. Depreciation is provided to write off the cost of assets on a straight-line basis over their

estimated useful economic lives, being 50 years. Amounts relating to freehold land is not depreciated.

	2024	2023
	£’000	£’000
Cost
Balance at the beginning of the year	11,896	11,905
Additions	271	252
Currency adjustment	(64)	(261)
Balance at the end of the year	12,103	11,896
Depreciation
Balance at the beginning of the year	1,573	1,337
Charge for the year	256	240
Currency adjustment	(11)	(4)
Balance at the end of the year	1,818	1,573
Net book value	10,285	10,323

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:

	2024	2023
	£’000	£’000
Rental income derived from investment properties	829	915
Direct operating expenses (including repairs and maintenance)	247	258
Profit arising from investment properties	582	657

The fair value of the Group’s investment properties totalled £14.7m at 30 June 2024 (2023: £14.7m). Fair values of each investment

property have been determined within the last three years 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. These valuations

have been assessed to be materially appropriate at 30 June 2024.

131

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FINANCIAL STATEMENTS

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 of whether 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 at cost less amortisation and impairment losses. Amortisation is charged to the Consolidated income statement on

a straight-line basis over the estimated useful lives of the intangible assets. The estimated useful lives of the intangible assets

included in the Consolidated balance sheet reflect the benefit derived by the Group and vary from five to 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 and sufficient resources to complete development; future economic benefits are probable; and the Group can

measure reliably the expenditure attributable to the intangible asset during its development.

Development activities involve a plan or design for the production of new or substantially improved products or processes.

The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads.

Other development expenditure is recognised in the Consolidated income statement as an expense as incurred.

Capitalised development expenditure is amortised over 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 of money 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, being the point at which

the product has passed testing to demonstrate it meets the technical specifications of the project and it satisfies all applicable

regulations. Judgements is required to assess whether the new product development has reached the appropriate point for

capitalisation of costs to begin. These costs are subsequently amortised over their useful economic life once ready for use.

Should a product become obsolete, 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 and capitalised development costs are impaired requires an estimation of the value-in-use of

cash-generating units (CGUs) to which goodwill has been allocated. To calculate the value-in-use we need to estimate the future

cash flows of each CGU and select the appropriate discount rate for each CGU.

Notes continued

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Renishaw plc Annual Report 2024

12. Intangible assets continued

		Internally		Intellectual
		generated		property and
		development	Software	other intangible
	Goodwill	costs	licences	assets	Total
Year ended 30 June 2024	£’000	£’000	£’000	£’000	£’000
Cost
At 1 July 2023	20,261	178,660	11,978	4,875	215,774
Additions	–	9,281	246	–	9,527
Currency adjustment	(3)	–	(27)	(11)	(41)
At 30 June 2024	20,258	187,941	12,197	4,864	225,260
Amortisation
At 1 July 2023	9,028	146,221	11,605	2,452	169,306
Charge for the year	–	5,011	165	158	5,334
Impairment	–	3,299	–	–	3,299
Currency adjustment	–	–	(19)	(3)	(22)
At 30 June 2024	9,028	154,531	11,751	2,607	177,917
Net book value
At 30 June 2024	11,230	33,410	446	2,257	47,	34 3
At 30 June 2023	11,233	32,439	373	2,423		46,468

		Internally		Intellectual
		generated		property and
		development	Software	other intangible
	Goodwill	costs	licences	assets	Total
Year ended 30 June 2023	£’000	£’000	£’000	£’000	£’000
Cost
At 1 July 2022	20,475	168,212	22,379	4,629	215,695
Additions	–	10,448	125	254	10,827
Disposals	–	–	(10,518)	–	(10,518)
Currency adjustment	(214)	–	(8)	(8)	(230)
At 30 June 2023	20,261	178,660	11,978	4,875	215,774
Amortisation
At 1 July 2022	9,028	139,460	20,749	2,240	171,477
Charge for the year	–	5,150	833	179	6,162
Impairment	–	1,611	–	–	1,611
Disposals	–	–	(9,969)	–	(9,969)
Currency adjustment	–	–	(8)	33	25
At 30 June 2023	9,028	146,221	11,605	2,452	169,306
Net book value
At 30 June 2023	11,233	32,439	373	2,423	46,468
At 30 June 2022	11,447	28,752	1,630	2,389	44,218

133

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FINANCIAL STATEMENTS

12. Intangible assets continued

Goodwill

Goodwill has arisen on the acquisition of several 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), as set out below. This is the lowest level in the Group at which goodwill is monitored for impairment.

The analysis of goodwill according to business acquired is:

	2024	2023
	£’000	£’000
itp GmbH	2,934	2,985
Renishaw Mayfield S.A.	2,089	2,089
Renishaw Fixturing Solutions, LLC	5,497	5,454
Other smaller acquisitions	710	705
Total goodwill	11,230	11,233

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, to reflect the uncertainties over forecasting beyond

five years.

The following pre-tax discount rates have been used in discounting the projected cash flows:

		2024	2023
Business acquired	CGU	Discount rate	Discount rate
itp GmbH	itp GmbH entity (‘ITP’)	13.6%	13.2%
Renishaw Fixturing Solutions, LLC	Renishaw plc (‘PLC’)	14.6%	14.3%
Renishaw Mayfield S.A.	Renishaw Mayfield S.A. entity (‘Mayfield’)	24.6%	26.3%

The Group post-tax weighted average cost of capital, calculated at 30 June 2024, is 10.7% (2023: 10.7%). Pre-tax discount rates for

Manufacturing technologies CGUs (ITP and PLC) 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.

CGU specific five-year business plans have been used in determining cash flow projections. Within these plans, revenue forecasts are

calculated with reference to external market data, 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 in the PLC, ITP or Mayfield CGUs, the discount rate would need to increase to at least 17%,

23% and 42% respectively, or there would need to be a reduction to forecast cash flows of 16%, 44% and 43% respectively.

Internally generated development costs

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 10.7% (2023: 10.7%).

There were impairments of internally generated development costs in the year of £3.3m (2023: £1.6m). This includes a £2.0m

impairment for Renishaw Central, our smart manufacturing data platform for industrial process control, where the near-term cash

flows are uncertain in a market new to Renishaw. The remaining £1.3m covers two lower value impairments where revenue growth

is now expected to be lower than previously forecast.

For the largest projects, comprising 94% of the net book value at 30 June 2024, a 10% reduction to forecast unit sales,

or an increase in the discount rate by 5%, would result in an impairment of less than £0.4m.

Notes continued

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Renishaw plc Annual Report 2024

13. Investments in joint ventures

Where we make an investment in a company which gives us significant influence but not full control, we account for our

share of their post-tax profits in our financial statements. We have joint venture arrangements with two companies,

RLS and MSP.

The Group’s investments in joint ventures (all investments being in the ordinary share capital of the joint ventures), whose accounting

years end on 30 June, were:

	Country of incorporation and	2024	2023
	principal place of business	Ownership %	Ownership %
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

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 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 plc 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:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	22,414	20,570
Dividends received	(498)	(924)
Share of profits of joint ventures	3,880	2,768
Currency adjustment	(311)	–
Balance at the end of the year	25,485	22,414

During FY2024, Renishaw International Limited (‘RIL’) entered into a 14-day notice deposit agreement with RLS. Interest is payable

by RIL to RLS at a market rate on a monthly basis. As at 30 June 2024, according to this agreement RIL had received EUR 10.0m

(£8.5m equivalent), which is recognised as ‘amounts payable to joint venture’ in the Consolidated balance sheet.

Summarised financial information for joint ventures:

	RLS			MSP
	2024	2023		2024	2023
	£’000	£’000		£’000	£’000
Assets	49,295	43,168		5,470	4,539
Liabilities	(6,167)	(4,969)		(442)	(378)
Net assets	43,128	38,199		5,028	4,161
Group’s share of net assets	21,564	19,10	0	3,520	2,913
Revenue	38,548		35,764	2,947	2,554
Profit for the year	6,546		5,162	867	264
Group’s share of profit for the year	3,273		2,583	607	185

For the nature of the activities, see note C.48.

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.

135

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FINANCIAL STATEMENTS

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:

		2024			2023
	Gross		Net	Gross		Net
	investment	Interest	investment	investment	Interest	investment
	£’000	£’000	£’000	£’000	£’000	£’000
Receivable in less than one year	4,761	900	3,861	4,375	611	3,764
Receivable between one and two years	5,903	765	5,138	3,600	447	3,153
Receivable between two and three years	4,038	347	3,691	3,283	289	2,994
Receivable between three and four years	2,072	138	1,934	2,478	151	2,327
Receivable between four and five years	1,264	83	1,181	1,502	41	1,461
Total future minimum lease payments receivable	18,038	2,233	15,805	15,238	1,539	13,699

Finance lease receivables are presented as £11.9m (2023: £9.9m) non-current assets and £3.9m (2023: £3.8m) current assets in the

Consolidated balance sheet.

The total of future minimum lease payments receivable under non-cancellable operating leases were:

	2024	2023
	£’000	£’000
Receivable in less than one year	1,042	1,394
Receivable between one and four years	707	1,569
Total future minimum lease payments receivable	1,749	2,963

During the year, £1.2m (2023: £1.0m) of operating lease income was recognised in revenue.

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 cash equivalents and bank deposits,

mostly in the UK and spread across several 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:

	2024	2023
	£’000	£’000
Bank balances and cash in hand	75,090	80,196
Short-term deposits	47, 20 3	1,192
Balance at the end of the year	122,293	81,388

Short-term deposits includes a short-term bank deposit in Renishaw plc of £47.1m which matured on 8 July 2024.

Bank deposits

Bank deposits at the end of the year amounted to £95.5m (2023: £125.0m), of which £50.0m matures in December 2024, and

£43.0m matures in May 2025.

Notes continued

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Renishaw plc Annual Report 2024

16. Inventories

We have reduced our inventories in the year, as global supply challenges faced during the previous year have eased,

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 generates

an estimate of future demand for individual inventory items (capped at 3 years) based upon the higher of 12 months of historic

usage or 12 months of demand from customer orders and manufacturing build plans. A 50% provision is calculated where actual

holdings represent between 3 to 5 years’ worth of future demand, and 100% is calculated where actual holdings represent over

5 years’ worth of future demand. Adjustments are made where needed, for example where it is highly likely that there will be an

increase in sales beyond the 12-month demand period or where there are obsolescence programmes.

This reflects a change from our previous accounting estimate, whereby up to 18 months was used as an initial estimate of future

demand for the majority of products. This change to 3 years has been based on our experience of previously recognising

significant exceptions to the initial calculation, our obsolescence programmes are typically planned at least three years in

advance, and our inventories are not perishable. We have not disclosed the effect of this change in estimate, as it is not practical

to calculate a provision on the previous basis at 30 June 2024, due to the level of adjustments which varies based on the nature

of inventory on-hand at each year-end.

An analysis of inventories at the end of the year was:

	2024	2023
	£’000	£’000
Raw materials	53,542	66,210
Work in progress	32,840	35,354
Finished goods	75,546	84,193
Balance at the end of the year	161,928	185,757

At the end of the year, the gross cost of inventories which had provisions held against them totalled £29.6m (2023: £24.5m).

During the year, the amount of write-down of inventories recognised as an expense in the Consolidated income statement was

£6.2m (2023: £8.2m).

Inventories in Renishaw plc account for 63% of the total Inventories of the Group. A 10% reduction in the estimate of future demand

for all Renishaw plc inventory items would result in an increase in the write-down of inventories of £0.6m.

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. The main provision we hold relates 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:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	2,758	4,244
Created during the year	2,633	2,382
Unused amounts reversed	–	(717)
Utilised in the year	(2,394)	(3,151)
	239	(1,486)
Balance at the end of the year	2,997	2,758

The warranty provision has been calculated on the basis of historical return-in-warranty information and other internal reports.

It is expected that most of this expenditure will be incurred in the next financial year and all expenditure will be incurred within three

years of the balance sheet date.

137

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

18. Contract liabilities

Contract liabilities represent the Group’s obligation to transfer goods, capital equipment and/or services to a customer

for which the Group has either received consideration or consideration is due from the customer. Our balances mostly

comprise advances received from customers and payments for services yet to be completed.

Balances at the end of the year were:

	2024	2023
	£’000	£’000
Goods, capital equipment and installation	210	615
Aftermarket services	6,955	4,793
Deferred revenue	7,165	5,408
Advances received from customers	3,715	4,563
Balance at the end of the year	10,880	9,971

The aggregate amount of the transaction price allocated to performance obligations that are unsatisfied at the end of the year is

£10.9m (2023: £10.0m). Of this, £1.4m (2023: £2.2m) 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:

	2024	2023
	£’000	£’000
Payroll taxes and social security	6,477	6,677
Performance bonuses	9,990	11,338
Holiday pay and retirement accruals	9,397	7,38	3
Indirect tax payable	5,163		4,486
Other creditors and accruals	19,317		18,246
Total other payables	50,344		48,130

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 a number of other individually smaller accruals.

20. 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 FY2019.

Third-party borrowings at 30 June 2024 consist of a 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 for the first five years. This loan was extended for an additional five years in May 2024, with a fixed interest rate

of 1.41% payable for the remaining term, at which time the principal will have been repaid in full. There are no covenants attached

to this loan.

Movements during the year were:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	4,694	6,079
Interest	36	46
Repayments	(799)	(914)
Currency adjustment	(409)	(517)
Balance at the end of the year	3,522	4,694

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.

Notes continued

138

Renishaw plc Annual Report 2024

21. Leases (as lessee)

The Group leases distribution properties and cars from third parties and recognises an associated lease liability for the

total present value of payments the lease contracts commit 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:

	Leasehold	Plant and	Motor
	property	equipment	vehicles	Total
2024	£’000	£’000	£’000	£’000
Due in less than one year	2,396	36	2,161	4,593
Due between one and two years	2,137	22	1,816	3,975
Due between two and three years	1,862	7	1,035	2,904
Due between three and four years	1,549	1	205	1,755
Due between four and five years	1,001	–	8	1,009
Due in more than five years	4,454	–	–	4,454
Total future minimum lease payments payable	13,399	66	5,225	18,690
Effect of discounting	(3,311)	(2)	(355)	(3,668)
Lease liabilities	10,088	64	4,870	15,022

	Leasehold	Plant and	Motor
	property	equipment	vehicles	Total
2023	£’000	£’000	£’000	£’000
Due in less than one year	1,737	21	1,520	3,278
Due between one and two years	691	13	1,192	1,896
Due between two and three years	510	13	858	1,381
Due between three and four years	351	6	387	744
Due between four and five years	110	1	66	177
Due in more than five years	3,481	–	–	3,481
Total future minimum lease payments payable	6,880	54	4,023	10,957
Effect of discounting	(1,566)	(1)	(756)	(2,324)
Lease liabilities	5,314	53	3,267	8,633

Lease liabilities are also presented as a £4.0m (2023: £3.0m) current liability and a £11.1m (2023: £5.6m) non-current liability in the

Consolidated balance sheet.

Amounts recognised in the Consolidated income statement relating to leases were:

	2024	2023
	£’000	£’000
Depreciation of right-of-use assets	4,653	4,223
Interest expense on lease liabilities	537	348
Expenses relating to short-term and low-value leases	138	471
Total expense recognised in the Consolidated income statement	5,328	5,042
Total cash outflows for leases	5,034	5,025

139

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

22. Changes in liabilities arising from financing activities

		1 July 2023	Cash flows	Other	Currency	30 June 2024
Lease liabilities		8,633	(4,359)	10,967	(219)	15,022
Borrowings		4,694	(799)	36	(409)	3,522
		13,327	(5,158)	11,0 03	(628)	18,544
		1 July 2022	Cash flows	Other	Currency	30 June 2023
Lease liabilities	10,18	0	(4,206)	2,918	(259)	8,633
Borrowings		6,079	(914)	46	(517)	4,694
		16,259	(5,120)	2,964	(776)	13,327

See Notes 20 and 21 for further details on borrowing and leasing activities.

23. Employee benefits

The Group operates contributory pension schemes, largely for UK and Ireland employees, which were of the defined

benefit type up to 5 April 2007 and 31 December 2007 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. For buy-in insurance contracts, where the income received from a policy matches exactly the benefit payments

due to the members it is covering, the value attributable to the contract to be recognised as an asset is the equivalent IAS 19

value of the corresponding liabilities.

Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high-

quality corporate bond of equivalent term and currency to the liability. Remeasurements arising from defined benefit schemes

comprise actuarial gains and losses, the return on scheme assets (excluding interest) and the effect of the asset ceiling (if any,

excluding interest). The Company recognises them immediately in Other comprehensive income and all other expenses related

to defined benefit 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.

For defined contribution schemes, the amount charged to the Consolidated income statement represents the contributions

payable to the schemes in respect of the accounting period.

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. These include future mortality, discount rate and inflation. Management makes these estimates in consultation

with independent actuaries.

Key judgement – Whether past service costs need to be recognised

Management also need to determine the appropriate accounting treatment for past service costs, and do so in consultation with

independent legal advisors and actuaries.

The total pension cost of the Group for the year was £27.9m (2023: £26.1m), of which £0.1m (2023: £0.1m) related to Directors and

£6.5m (2023: £6.2m) related to overseas schemes.

The latest full actuarial valuation of the UK defined benefit pension scheme (‘UK scheme’) was carried out as at 30 September 2021

and updated to 30 June 2024 by a qualified independent actuary. The mortality assumption used for FY2024 is the S3PxA base tables

and CMI 2023 model, with long-term improvements of 1% per annum. Adjustments have been made to both the core base tables and

CMI 2023 model to allow for the scheme’s membership profile and best estimate assumptions of future mortality improvements.

Notes continued

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Renishaw plc Annual Report 2024

23. Employee benefits continued

Major assumptions used by actuaries for the UK and Ireland schemes were:

		30 June 2024		30 June 2023
	UK scheme	Ireland scheme	UK scheme	Ireland scheme
Rate of increase in pension payments	2.95%	2.50%	3.05%	2.70%
Discount rate	5.10%	3.75%	5.10%	3.60%
Inflation rate (RPI)	3.25%	2.50%	3.25%	2.70%
	2.25% 1		2.25%
Inflation rate (CPI)	3.25%	2.50%	3.25%	2.70%
Retirement age	64	65	64	65

1. Pre-2030 2. Post-2030

The life expectancies from the retirement age of 65 for the UK scheme implied by the mortality assumption at age 65 and 45 are:

	2024	2023
	years	years
Male currently aged 65	21.1	21.1
Female currently aged 65	23.5	23.5
Male currently aged 45	21.8	21.8
Female currently aged 45	24.4	24.3

The weighted average duration of the UK scheme obligation is around 17 years (2023: 17 years).

The assets and liabilities in the defined benefit pension schemes were:

	30 June	% of	30 June	% of
	2024	total	2023	total
	£’000	assets	£’000	assets
Market value of assets:
Insurance contract	129,207	84	–	–
Credit and fixed income funds	9,268	6	54,656	28
Equities	6,861	4	5,729	3
Multi-asset funds	5,869	4	26,966	14
Index linked gilts	1,269	1	55,183	28
Fixed interest gilts	–	–	13,219	7
Cash and other	660	–	40,576	21
	153,134	100	196,329	100
Actuarial value of liabilities	(142,289)	–	(138,958)	–
Surplus in the schemes	10,845	–	57,371	–
Deferred tax thereon	(2,445)	–	(14,348)	–

Note C.43 gives the analysis of the UK scheme. For the other schemes, the market value of assets at the end of the year was £14.0m

(2023: £14.6m) and the actuarial value of liabilities was £11.9m (2023: £14.7m). The UK scheme was in a net surplus position at

30 June 2024 totalling £8.7m (2023: surplus £57.4m), and is therefore presented in non-current assets in the Consolidated balance

sheet. The Ireland scheme was in a net asset position at 30 June 2024 totalling £2.1m (2023: £0.1m deficit), and is therefore also

presented in non-current assets.

During FY2024, the Trustee of the UK scheme undertook a buy-in and insured around 99% of the UK scheme’s liabilities by

purchasing an insurance policy. This contract was effective from 19 October 2023 and is held in the name of the Trustee. The value

of the contract is recognised as a UK scheme asset for the purposes of IAS 19. In line with IAS 19.115, for a buy-in insurance contract

such as this, where the income received from the policy matches exactly the benefit payments due to the members it is covering, the

value attributable to the contract to be recognised as an asset is the equivalent IAS 19 value of the corresponding liabilities.

The value of the corresponding IAS 19 liabilities for the members covered by the buy-in contract was calculated based on individual

member data as at 27 January 2023, allowing for known deaths and transfer-outs between 27 January 2023 and 19 October 2023.

The IAS 19 liabilities in respect of the buy-in policy were lower than the transaction price of the insurance contract. Consequently,

the value attributable to the insurance contract has reduced from the actual price paid, and the resulting remeasurement loss is

recognised in the ‘Return on plan assets’ item in the Consolidated statement of comprehensive income and expense. The IAS 19

liabilities as at 19 October 2023 were £118.5m. The final premium paid for the buy-in was £150.4m, and therefore a loss of £31.9m

has been reflected in the Consolidated statement of comprehensive income and expense .

141

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

23. Employee benefits continued

Equities are held in externally-managed funds and primarily relate to UK and US equities. Credit and fixed income funds, 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. Cash and other at 30 June 2024 mostly comprises amounts held in a Sterling bank

account, in which the principal is preserved and same day liquidity is available.

No scheme assets are directly invested in the Group’s own equity.

The movements in the schemes’ assets and liabilities were:

	Assets	Liabilities	Total
Year ended 30 June 2024	£’000	£’000	£’000
Balance at the beginning of the year	196,329	(138,958)	57,371
Contributions paid	161	–	161
Interest on pension schemes	9,581	(6,673)	2,908
Remeasurement gain/(loss) under IAS 19	(45,054)	(3,634)	(48,688)
Scheme administration expenses	(907)	–	(907)
Benefits paid	(6,976)	6,976	–
Balance at the end of the year	153,134	(142,289)	10,845

	Assets		Liabilities	Total
Year ended 30 June 2023	£’000		£’000	£’000
Balance at the beginning of the year	216,749		(174,504)	42,245
Contributions paid	2,341		–	2,341
Interest on pension schemes	7,74	5	(6,135)	1,610
Remeasurement loss from augmentation of members’ benefits (US)		–	(1,930)	(1,930)
Remeasurement gain/(loss) under IAS 19		(16,722)	30,334	13,612
Scheme administration expenses		(398)	–	(398)
(Loss)/gain on settlements		(1,098)	989	(109)
Benefits paid		(12,288)	12,288	–
Balance at the end of the year		196,329	(138,958)	57,371

The analysis of the amount recognised in the Consolidated statement of comprehensive income and expense was:

	2024	2023
	£’000	£’000
Actuarial gain/(loss) arising from:
Changes in demographic assumptions	35	2,028
Changes in financial assumptions	863	37,318
Experience adjustment	(4,532)	(9,012)
Return on plan assets excluding interest income	(45,054)	(16,722)
Total amount recognised in the Consolidated statement of comprehensive income and expense	(48,688)	13,612

The cumulative amount of actuarial gains and losses recognised in the Consolidated statement of comprehensive income and

expense was a loss of £57.5m (2023: loss of £8.8m).

The net surplus of the Group’s defined benefit pension schemes, on an IAS 19 basis, has decreased from £57.4m at 30 June 2023

to £10.8m at 30 June 2024, primarily as a result of the buy-in remeasurement loss.

For the UK scheme, the latest actuarial report prepared in September 2021 shows a deficit of £52.8m, which is based on funding

to self-sufficiency and uses prudent assumptions. IAS 19 requires best estimate assumptions to be used, resulting in the IAS 19 net

surplus being higher than the actuarial deficit.

The existing deficit funding plan for the UK scheme is in place until 30 June 2031, at which time any outstanding deficit will be paid.

The agreement will end sooner if the actuarial deficit (calculated on a self-sufficiency basis) is eliminated in the meantime. The net

book value of properties subject to fixed charges under this agreement at 30 June 2024 was £45.9m (2023: £88.8m).

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.

Notes continued

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Renishaw plc Annual Report 2024

23. Employee benefits continued

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.

Benefits in the UK scheme are subject to a DC underpin at the point of retirement or transfer out. Historically, this has been allowed

for in the accounts in a consistent manner to current administrative practice and the triennial funding valuations. During the buy-in

process, it was identified that the drafting of the DC underpin in the UK scheme Rules may require that the DC underpin is applied in

a manner which is different to the administrative practice which has been applied. The Trustee and Company are currently seeking

legal clarification and advice on this issue, with the intention of correcting the Rules to match administrative practice. No allowance

for this matter has been made at 30 June 2024, as management have assessed it to be unlikely that there will be an increase in

liabilities, and due to the uncertainty of legal treatment and therefore any potential impact on liabilities.

In June 2023, the High Court ruled that certain historic amendments made to the rules of the Virgin Media pension scheme were

invalid without the scheme’s actuary having provided the associated Section 37 certificates. This judgment was upheld by the

Court of Appeal in July 2024, which has implications on other schemes that were contracted-out on a salary-related basis, and

made amendments between April 1997 and April 2016. The UK scheme was contracted out until 5 April 2007 and amendments

were made during the relevant period and as such the ruling could have implications for the UK scheme. The Directors sought

initial professional advice on this after June 2023 and our expectation is that proper procedures would have been undertaken at

the time of changes by the Trustees, actuaries and administrators. However, as of the date of approving these financial statements,

the possible implications, if any, for the UK scheme not having all Section 37 certificates have not been investigated in detail.

The Trustee and Company will now seek further legal advice on this matter and will act appropriately. Accordingly, no amendments

for this matter have been included in the IAS 19 actuarial valuation as the impact, if any, cannot be reliably assessed.

For the UK 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%	-£9.2m/+£10.3m
UK – future inflation	Increase/decrease by 0.5%	+£7.7m/-£6.6m
UK – mortality	Increased/decreased life by one year	+£4.0m/-£4.1m

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 DAEIP). 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 DAEIP 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 DAEIP 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 FY2024 Consolidated income statement in respect of the DAEIP was £0.9m (2023: £0.7m).

See Note 26 for reconciliations of amounts recognised in Equity.

In accordance with the DAEIP, shares equivalent to £0.2m (2023: nil) are to be awarded in respect of FY2024. See the Directors’

Remuneration Report for further details of the DAEIP.

143

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FINANCIAL STATEMENTS

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. 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.

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 the Consolidated 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 the

contracts are 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.

Notes continued

144

Renishaw plc Annual Report 2024

25. Financial instruments continued

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. Risk is spread across

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:

						Cash and cash equivalents
		Trade and finance lease receivables	Other receivables			and bank deposits
	2024	2023	2024	2023	2024	2023
Currency	£’000	£’000	£’000	£’000	£’000	£’000
Pound Sterling	17,258	17, 5 30	24,807	20,592	168,781	161,489
US Dollar	57,209	49,609	1,613	814	8,261	12,465
Euro	30,699	28,418	2,320	1,433	10,532	6,481
Japanese Yen	13,135	16,555	144	137	3,358	6,481
Other	31,577	25,014	5,192	5,003	26,903	19,472
	149,878	137,126	34,076	27,979	217,835	206,388

The above Trade and finance lease receivables, Other receivables and Cash and cash equivalents and bank deposits are

predominantly held in the functional currency of the relevant entity, with the exception of £21.3m (2023: £19.7m) of US Dollar-

denominated trade receivables being held in Renishaw (Hong Kong) Limited and £1.6m (2023: £1.7m) 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:

	2024	2023
	£’000	£’000
Past due zero to one month	13,250	11,808
Past due one to two months	7,763	3,880
Past due more than two months	13,041	9,732
Balance at the end of the year	34,054	25,420

Movements in the provision for impairment of trade receivables during the year were:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	3,438	2,540
Changes in amounts provided	2,264	1,784
Amounts used	(1,223)	(886)
Balance at the end of the year	4,479	3,438

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.

145

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FINANCIAL STATEMENTS

25. Financial instruments continued

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.

	Risk category 1	Risk category 2	Risk category 3	Risk category 4	Risk category 5	2024	Total
Year ended 30 June 2024	£’000	£’000	£’000	£’000	£’000		£’000
Gross trade receivables	14,215	38,781	84,049	1,508	–		138,553
Expected credit loss rate	0.46%	0.50%	0.54%	0.58%	–		0.52%
Expected credit loss allowance	65	193	447	9	–		714
Specific loss allowance	–	4	3,440	322	–		3,766
Total expected credit loss	65	197	3,887	331	–		4,480
Net trade receivables	14,150	38,584	80,162	1,177	–		134,073

	Risk category 1	Risk category 2	Risk category 3	Risk category 4	Risk category 5	2023	Total
Year ended 30 June 2023	£’000	£’000	£’000	£’000	£’000		£’000
Gross trade receivables	3,126	60,826	57,991	4,922	–		126,865
Expected credit loss rate	0.34%	0.38%	0.41%	0.44%	–		0.39%
Expected credit loss allowance	11	228	240	22	–		501
Specific loss allowance	–	219	1,313	1,405	–		2,937
Total expected credit loss	11	447	1,553	1,427	–		3,438
Net trade receivables	3,115	60,379	56,438	3,495	–		123,427

Finance lease receivables are subject to the same approach as noted above for trade receivables.

Derivative assets are assessed based on the credit risk of the banks counterparty to the forward contracts.

Other receivables include mostly prepayments and indirect tax receivables. Prepayment balances are reviewed at each reporting

date to confirm that prepaid goods or services are still expected to be received, while tax balances are reviewed for recoverability.

Other receivables at the year end comprised:

	2024		2023*
	£’000		£’000
Indirect tax receivable	7,	20 6	9,304
Software maintenance		7,816	5,857
Grants		875	1,426
Research and development tax credit recoverable		4,969	351
Contract assets		309	861
Other prepayments		12,901	11,041
Total other receivables		34,076	28,840

The maximum exposure to credit risk is £416.7m (2023: £387.2m*), comprising the Group’s trade, finance and other receivables,

cash and cash equivalents and bank deposits and derivative assets.

The maturities of non-current other receivables, being only derivatives, at the year end were:

	2024	2023
	£’000	£’000
Receivable between one and two years	1,387	9,443
Receivable between two and five years	–	–
	1,387	9,443

*2023 other receivables have been reclassified to include Contract assets, given the relatively low value of this line item.

Notes continued

146

Renishaw plc Annual Report 2024

25. Financial instruments continued

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 Cash and cash equivalents and bank deposits at 30 June 2024 totalling £217.8m and £124.1m cash flows generated from

operating activities in the period, the Group remains in a strong liquidity position.

In respect of Cash and cash equivalents 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. A decrease of 1% in interest rates would result in a reduction in interest income

of approximately £2m.

The contractual maturities of financial liabilities at the year end were:

				Contractual cash flows
	Carrying	Effect of	Gross
	amount	discounting	maturities	Up to 1 year	1-2 years	3-5 years
Year ended 30 June 2024	£’000	£’000	£’000	£’000	£’000	£’000
Trade payables	21,330	–	21,330	21,330	–	–
Other payables	50,344	–	50,344	50,344	–	–
Borrowings	3,522	138	3,660	756	745	2,159
Forward exchange contracts	625	–	625	448	177	–
	75,821	138	75,959	72,878	922	2,159

					Contractual cash flows
	Carrying	Effect of	Gross
	amount	discounting	maturities	Up to 1 year	1-2 years	3-5 years
Year ended 30 June 2023	£’000	£’000	£’000	£’000	£’000	£’000
Trade payables	21,551	–	21,551	21,551	–	–
Other payables	48,130	–	48,130	48,130	–	–
Borrowings	4,694	36	4,730	4,730	–	–
Forward exchange contracts	5,209	–	5,209	5,089	120	–
	79,584	36	79,620	79,500	120	–

Market risk

As noted in the Strategic Report under Principal risks and uncertainties, the Group operates in several foreign currencies with the

majority of sales 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; and

ii. 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.

147

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FINANCIAL STATEMENTS

25. Financial instruments continued

The amounts of foreign currencies relating to these forward contracts and options are, in Sterling terms:

	2024		2023
	Nominal value	Fair value	Nominal value	Fair value
	£’000	£’000	£’000	£’000
US Dollar	332,679	7,388	345,010	5,009
Euro	173,089	4,661	179,992	1,389
Japanese Yen	15,581	2,260	30,318	3,209
	521,349	14,309	555,320	9,607

The following are the exchange rates which have been applicable during the financial year:

		2024			2023
	Average	Year end	Average	Average	Year end	Average
	forward	exchange	exchange	forward	exchange	exchange
Currency	contract rate	rate	rate	contract rate	rate	rate
US Dollar	1.25	1.27	1.26	1.24	1.27	1.21
Euro	1.13	1.18	1.17	1.13	1.16	1.15
Japanese Yen	140	203	189	141	183	166

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.

No contracts have become ineffective during the period. A decrease of 10% in the highly probable forecasts would result in around

£0.5m nominal value of forward contracts becoming ineffective.

Notes continued

148

Renishaw plc Annual Report 2024

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 147:

	2024			2023
	Nominal value	Fair value		Nominal value	Fair value
	£’000	£’000		£’000	£’000
Forward currency contracts in a designated cash flow hedge (i)
Non-current derivative assets	140,109	1,387		268,908	9,443
Current derivative assets	245,577	13,338		118,271	4,461
Current derivative liabilities	790	–		109,434	(5,048)
Non-current derivative liabilities	54,852	(177)		21,148	(120)
	441,328	14,548		517,761	8,736
Amounts recognised in the Consolidated statement of comprehensive income and expense	–	5,812		–	23,167
Forward currency contracts ineffective as a cash flow hedge (i)
Current derivative liabilities	–	–		–	–
Amounts recognised in Losses from the fair value of financial
instruments in the Consolidated income statement	–	–		–	(1,399)
Forward currency contracts not in a designated cash flow hedge (ii)
Current derivative assets	17,614	209	17,13	4	912
Current derivative liabilities	62,407	(448)		20,425	(41)
	80,021	(239)		37,559	871
Amounts recognised in Financial income/(expense) in the Consolidated income statement	–	318		–	1,728
Total forward contracts and options
Non-current derivative assets	140,109	1,387		268,908	9,443
Current derivative assets	263,191	13,547		135,405	5,373
Current derivative liabilities	63,197	(448)		129,859	(5,089)
Non-current derivative liabilities	54,852	(177)		21,148	(120)
	521,349	14,309		555,320	9,607

The total recognised in Revenue in the Consolidated income statement relating to cash flow hedges previously recognised through

Other comprehensive income amounted to £0.1m gain (2023: £7.7m loss).

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 £21.0m and increase profit before tax by £3.8m, while a depreciation

of 5% would decrease pre-tax equity by £23.2m and decrease profit before tax by £4.2m.

149

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

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, ensuring the security of the Group,

and to maintain a balance between returns to shareholders, with a progressive dividend policy. 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

	2024	2023
	£’000	£’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.

Dividends paid

Dividends paid comprised:

	2024		2023
	£’000		£’000
FY2023 final dividend paid of 59.4p per share (2022: 56.6p)	43,195	41,19	0
Interim dividend paid of 16.8p per share (2023: 16.8p)	12,217		12,217
Total dividends paid	55,412		53,407

A final dividend of 59.4p per share is proposed in respect of FY2024, which will be payable on 5 December 2024 to shareholders on

the register on 1 November 2024.

Own shares held

The EBT is responsible for purchasing shares on the open market on behalf of the Company to satisfy the DAEIP 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:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	(2,963)	(750)
Acquisition of own shares	–	(2,213)
Balance at the end of the year	(2,963)	(2,963)

In 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 2024.

In November 2022, 54,582 shares were purchased on the open market by the EBT at a price of £40.24, costing a total of

£2,212,831. The fair value of these awards at the grant date, being 26 October 2022, was £1,915,000. These shares will vest

on 26 October 2025, with no forfeitures expected at 30 June 2024.

Other reserve

The other reserve relates to share-based payments charges according to IFRS 2 in relation to the DAEIP, along with historical

amounts relating to investments in subsidiary undertakings not eliminated on consolidation.

Movements during the year were:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	497	(180)
Share-based payments charge in respect of shares vesting in 2024	245	245
Share-based payments charge in respect of shares vesting in 2025	638	432
Balance at the end of the year	1,380	497

Notes continued

150

Renishaw plc Annual Report 2024

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:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	6,772	14,459
Loss on net assets of foreign currency operations	(3,811)	(5,905)
Loss on intragroup loans classified as net investments in foreign operations	(227)	(2,095)
Tax on translation of net investments in foreign operations	57	313
Loss in the year relating to subsidiaries	(3,981)	(7,687)
Currency exchange differences relating to joint ventures	(311)	–
Balance at the end of the year	2,480	6,772

See Note 5 for further information on intragroup loans classified as net investments.

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:

	2024	2023
	£’000	£’000
Balance at the beginning of the year	6,552	(10,923)
Losses on contract maturity recognised in revenue during the year	133	(21,553)
Revaluations during the year	5,679	44,720
Deferred tax movement	(1,453)	(5,692)
Balance at the end of the year	10,911	6,552

Non-controlling interest

Movements during the year were:

	2024	2023
	£’000	£’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. In FY2022, we committed to the expansion of one of our production facilities in Wales,

UK, which is expected to cost an additional £12.4m over the next year. We have recently committed £11.4m to renovating

and expanding our warehousing operation in Germany, which includes expenditure on sustainability initiatives.

Authorised and committed capital expenditure at the end of the year were:

	2024	2023
	£’000	£’000
Freehold land and buildings	26,199	35,607
Plant and equipment	16,206	11,423
Motor vehicles	135	14
Total committed capital expenditure	42,540	47,04 4

151

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

28. Related parties

We report our two joint venture companies, RLS and MSP, as related parties.

Joint ventures and other related parties had the following transactions and balances with the Group:

	2024	2023
	£’000	£’000
Purchased goods and services from the Group during the year	250	117
Sold goods and services to the Group during the year	23,026	24,271
Paid dividends to the Group during the year	498	924
Amounts owed to the Group at the year end	243	35
Amounts owed by the Group at the year end	11,422	2,837

Amounts owed by the Group include a 14-day notice deposit agreement with RLS for EUR 10.0m (£8.5m equivalent) (2023: nil),

see Note 13 for further details. There were no bad debts relating to related parties written off during FY2024 or FY2023.

By virtue of their longstanding voting agreement, Sir David McMurtry (Non-executive Director, 36.23% shareholding) and John Deer

(Non-executive Deputy Chairman, together with his wife, 16.59%), are the ultimate controlling party of the Group. See page 95

of the 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

In accordance with Renishaw’s alternative performance measures (APMs) policy and ESMA Guidelines on Alternative

Performance Measures (2015), this section defines non-IFRS measures that we believe give readers additional useful and

comparable views of our underlying performance.

We continue to report Revenue at constant exchange rates, Adjusted profit before tax, Adjusted earnings per share and Adjusted

operating profit (including by segment) as APMs, which are calculated consistently with previous years. In addition, this year we

have added Adjusted operating profit at constant exchange rates, Adjusted cash flow conversion from operating activities, and

Return on invested capital. Aside from Revenue at constant exchange rates, all other APMs exclude infrequently occurring events

which impact our financial statements, recognised according to applicable IFRS, that we believe should be excluded from these

APMs to give readers additional useful and comparable views of our underlying performance.

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.

	2024	2023
Revenue at constant exchange rates:	£’000	£’000
Statutory revenue as reported	691,301	688,573
Adjustment for forward contract (gains)/losses	(133)	7,815
Adjustment to restate current year at previous year exchange rates	30,664	–
Revenue at constant exchange rates	721,832	696,388
Year-on-year revenue growth at constant exchange rates	3.7%	–

Year-on-year revenue growth at constant exchange rates for FY2023 was -1.1%.

Adjusted profit before tax, Adjusted profit after 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 FY2020 relating to restructuring (a);

— a US defined benefit pension scheme past service cost (b); and

— gains and losses in fair value from forward currency contracts which did not qualify for hedge accounting and which have yet

to mature (c).

a) 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 FY2022, a revised estimate

of a warranty provision relating to restructuring in FY2020 resulted in a reduction to this provision of £1,688,000, then in FY2023

a further revision resulted in a reduction of £717,000. As this provision was initially excluded from adjusted measures, the revised

estimates have also been excluded.

b) In FY2023, a termination of the US plan (other than distribution of surplus) was completed, with most members opting for lump

sum payments. It was agreed that the surplus will be distributed to qualifying scheme members. Accordingly, the surplus of

£2,139,000 has been treated as an augmentation to member benefits, reported separately in the Consolidated income statement

and excluded from adjusted profit measures.

c) Gains and losses which recycle through the Consolidated income statement as a result of contracts deemed ineffective during

FY2020 are also excluded from adjusted profit measures, on the basis that all forward contracts were still expected to be effective

hedges for Group revenue. This is classified as ‘Fair value (gains)/losses on financial instruments not eligible for hedge

accounting (ii)’ in the following reconciliations.

Notes continued

152

Renishaw plc Annual Report 2024

29. Alternative performance measures continued

	2024	2023
Adjusted profit before tax:	£’000	£’000
Statutory profit before tax	122,594	145,065
Revised estimate of FY2020 restructuring provisions	–	(717)
US defined benefit pension scheme past service cost	–	2,13	9
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue	–		(6,903)
– reported in losses from the fair value of financial instruments	–		1,399
Adjusted profit before tax	122,594		140,983

	2024	2023
Adjusted earnings per share:	pence	pence
Statutory earnings per share	133.2	159.7
Revised estimate of FY2020 restructuring provisions	–	(0.8)
US defined benefit pension scheme past service cost	–	2.2
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue	–	(7.5)
– reported in losses from the fair value of financial instruments	–	1.5
Adjusted earnings per share	133.2	15 5.1

	2024	2023
Adjusted operating profit:	£’000	£’000
Statutory operating profit	108,667	134,489
Revised estimate of FY2020 restructuring provisions	–	(717)
US defined benefit pension scheme past service cost	–	2,13	9
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue	–		(6,903)
– reported in losses from the fair value of financial instruments	–		1,399
Adjusted operating profit	108,667		130,407

Adjustments to the segmental operating profit:

	2024	2023
Manufacturing technologies	£’000	£’000
Operating profit before losses from fair value of financial instruments and UK and US defined benefit
pension schemes’ past service cost	103,181	132,843
Revised estimate of FY2020 restructuring provisions	–	(717)
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue	–	(6,644)
Adjusted manufacturing technologies operating profit	103,181	125,482

	2024	2023
Analytical instruments and medical devices	£’000	£’000
Operating profit before losses from fair value of financial instruments and UK and US defined benefit
pension schemes’ past service cost	5,486	5,184
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue	–	(259)
Adjusted analytical instruments and medical devices operating profit	5,486	4,925

Adjusted operating profit at constant exchange rates is defined as Adjusted operating profit recalculated using the same rates as

applied to the previous year and excluding forward contract gains and losses.

	2024	2023
Adjusted operating profit at constant exchange rates:	£’000	£’000
Adjusted operating profit	108,667	130,407
Adjustment for forward contract (gains)/losses	(133)	14,649
Adjustment to restate current year at previous year exchange rates	23,725	–
Adjusted operating profit at constant exchange rates	132,259	145,056
Year-on-year adjusted operating profit reduction at constant exchange rates	-8.8%	–

153

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

29. Alternative performance measures continued

Adjusted cash flow conversion from operating activities is calculated as Adjusted cash flow from operating activities as a proportion

of Adjusted operating profit. This is useful for the Board to measure how efficient we are at converting operating profit into cash.

	2024	2023
Adjusted cash flow conversion from operating activities:	£’000	£’000
Cash flows from operating activities	124,079	84,297
Income taxes paid	21,752	25,891
Purchase of property, plant and equipment and intangible assets	(74,774)	(84,599)
Proceeds from sale of property, plant and equipment and intangible assets	4,475	7,9 48
Adjusted cash flow from operating activities	75,532	33,537
Adjusted cash flow conversion from operating activities	69.5%	25.7%

Return on invested capital is the Adjusted profit after tax before bank interest receivable as a percentage of the Average invested

capital in the year. This is useful for the Board to measure our efficiency in allocating capital to profitable activities.

Adjusted profit after tax before bank interest receivable is calculated as follows:

	2024	2023
	£’000	£’000
Statutory profit after tax	96,889	116,102
Revised estimate of FY2020 restructuring provisions (net of tax)	–	(570)
US defined benefit pension scheme past service cost (net of tax)	–	1,626
Fair value (gains)/losses on financial instruments not eligible for hedge accounting (ii):
– reported in revenue (net of tax)	–	(5,488)
– reported in losses from the fair value of financial instruments (net of tax)	–	1,13	3
Adjusted profit after tax	96,889		112,803
Bank interest receivable (net of tax)	(6,832)		(5,010)
Adjusted profit after tax before bank interest received	90,057		107,793

	2024	2023	2022
Return on invested capital (ROIC):	£’000	£’000	£’000
Total non-current assets	464,765	470,430	402,254
Total current assets	586,618	573,107	590,513
Total current liabilities	(100,948)	(102,320)	(132,697)
Less cash and cash equivalents	(122,293)	(81,388)	(153,162)
Less bank deposits	(95,542)	(125,000)	(100,000)
Invested capital	732,600	734,829	606,908
Average invested capital	733,715	670,869	–
Return on invested capital	12.3%	16 .1%	–

Average invested capital in the year is the average of the invested capital at the beginning of the year and at the end of the year.

Notes continued

154

Renishaw plc Annual Report 2024

notes

2024

£’000

2023

£’000

Assets

Property, plant and equipment C.31 213,180 177,288

Right-of-use assets C.32 2,850 2,151

Investment properties 5,863 5,758

Intangible assets C.33 34,860 34,137

Investments in subsidiaries C.34 298,174 29 8,174

Investments in joint ventures C.35 1,453 1,453

Long-term loans to Group undertakings C.36 26,249 74,173

Employee benefits C.43 8,717 57,416

Derivatives 25 1,387 9,443

Total non-current assets 592,733 659,993

Current assets

Inventories C.38 104,838 122,905

Trade receivables C.39 48,690 35,675

Current tax 17,582 16,087

Other receivables 18,646 19,490

Derivatives 25 13,452 5,373

Bank deposits 15 71,000 125,000

Cash and cash equivalents 45,963 16,267

Total current assets 320,171 340,797

Current liabilities

Trade payables 13,267 13,810

Provisions C.40 2,266 2,130

Lease liabilities C.41 330 15

Derivatives 25 24 5,089

Other payables C.42 44,862 47,620

Total current liabilities 60,749 68,664

Net current assets 259,422 272,133

Non-current liabilities

Deferred tax liabilities C.37 35,596 41,875

Lease liabilities C.41 2,621 2,152

Long-term loans from Group undertakings 58 100

Derivatives 25 177 120

Total non-current liabilities 38,452 44,247

Total assets less total liabilities 813,703 887,879

Equity

Share capital C.44 14,558 14,558

Share premium 42 42

Own shares held 26 (2,963) (2,963)

Cash flow hedging reserve 26 10,911 6,552

Retained earnings 789,315 868,733

Other reserve 1,840 957

Total equity 813,703 887,879

The Company reported a profit for the financial year ended 30 June 2024 of £14,024,000 (2023: £27,559,000).

These financial statements were approved by the Board of Directors on 11 September 2024 and were signed on its behalf by:

Sir David Grant Allen Roberts

Directors

Company balance sheet

at 30 June 2024

Financial statements

155

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

Year ended 30 June 2023

capital

£’000

premium

£’000

Own

held

£’000

Cash flow

hedging

reserve

£’000

Retained

earnings

£’000

Other

reserve

£’000

Total

£’000

Balance at 1 July 2022 14,558 42 (750) (10,923) 884,077 280 887,284

Profit for the year − − − − 27,559 − 27,559

Other comprehensive income andexpense (net of tax)

Remeasurement of defined benefit pension scheme

assets/liabilities − − − − 10,504 − 10,504

Changes in fair value of cash flow hedges − − − 17,475 − − 17,475

Total other comprehensive income andexpense − − − 17,475 10,504 27,979

Total comprehensive income andexpense − − − 17,475 38,063 − 55,538

Share-based payments charge − − − − − 677 677

Own shares purchased − − (2,213) − − − (2,213)

Dividends paid − − − − (53,407) − (53,407)

Balance at 30 June 2023 14,558 42 (2,963) 6,552 868,733 957 887,879

Year ended 30 June 2024

Profit for the year − − − − 14,024 − 14,024

Other comprehensive income andexpense (net of tax)

Remeasurement of defined benefit pension scheme

assets/liabilities − − − − (38,030) − (38,030)

Changes in fair value of cash flow hedges − − − 4,359 − − 4,359

Total other comprehensive income andexpense − − − 4,359 (38,030) − (33,671)

Total comprehensive income andexpense − − − 4,359 (24,006) − (19,647)

Share-based payments charge − − − − − 883 883

Dividends paid − − − − (55,412) − (55,412)

Balance at 30 June 2024 14,558 42 (2,963) 10,911 789,315 1,840 813,703

Company statement of changes in equity

for the year ended 30 June 2024

156

Renishaw plc Annual Report 2024

C.30. 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 inthenext financial year for the Company are consistent with those

oftheGroup, assummarised on page 121, excluding in relation to goodwill and in addition to those described below.

Expected credit loss

In accordance with IFRS 9, an expected credit loss model is used to determine a credit loss provision against the carrying value

ofcertain trade receivables. Application of this model to the loans to Group undertakings within the Company requires estimation

bymanagement. The provision has been calculated based on the size of the loan, the probably of default and the loss estimated

toarise if a default occurred.

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 121.

Having considered the impact on the Company of the same factors set out on page 121, 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 2025. 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, and building infrastructure, 10 to 50 years;

— plant and equipment, 3 to 25 years;

— motor vehicles, 3 to 4 years; and

— no depreciation is provided on freehold land.

Notes to the Company financial statements

157

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

C.30. Accounting policies continued

Right-of-use assets

At the commencement date of a lease arrangement the Company 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. 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

Lease liabilities

At the commencement date of a lease arrangement the Company 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. 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 Company’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 Company 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. The same treatment applies to low-value assets, which are typically IT equipment

and office equipment

Inventories

Inventories are valued at the lower of actual cost on a first-in, first-out (FIFO) basis and net realisable value. Cost comprises direct

materials and labour plus overheads applicable to the stage of manufacture reached.

Intangible assets

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. 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.

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.

For the defined contribution scheme, the amount charged as an expense represents the contributions payable to the scheme in

respect of the accounting period.

The scheme is administered by trustees who are independent of the Company’s 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.

Notes to the Company financial statements continued

158

Renishaw plc Annual Report 2024

C.30. Accounting policies continued

Other financial instruments

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

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.

C.31. Property, plant and equipment

Year ended 30 June 2024

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 2023 108,375 212,215 3,302 49,461 373,353

Reclassification 3,669 (3,669) − − −

Additions 355 2,547 − 48,090 50,992

Transfers of assets in the course of construction 38,193 5,446 − (43,639) −

Disposals (2,708) (2,125) (560) − (5,393)

At 30 June 2024 147,88 4 214,414 2,742 53,912 418,952

Depreciation

At 1 July 2023 26,217 166,703 3,145 − 196,065

Reclassification 540 (540) − − −

Charge for the year 2,477 10,291 104 − 12,872

Released on disposals (506) (2,107) (552) − (3,165)

At 30 June 2024 28,728 174,347 2,697 − 205,772

Net book value

At 30 June 2024 119,156 40,067 45 53,912 213,180

At 30 June 2023 82,158 45,512 157 49,461 177,288

At 30 June 2024, properties with a net book value of £45.9m (2023: £88.8m) were subject to a fixed charge to secure the

UKdefined benefit pension scheme liabilities. See Note 23 for additional information.

Additions to assets in the course of construction comprise:

2024

£’000

2023

£’000

Freehold land and buildings 32,769 37,474

Plant and equipment 15,321 10,788

48,090 48,262

159

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

C.32. Right-of-use assets

Year ended 30 June 2024

Leasehold

property

£’000

Plant and

equipment

£’000

Motor

vehicles

£’000

Total

£’000

Net book value

At 1 July 2023 1,752 36 363 2,151

Additions 115 − 909 1,024

Depreciation (25) (36) (264) (325)

At 30 June 2024 1,842 − 1,008 2,850

Year ended 30 June 2023

Leasehold

property

£’000

Plant and

equipment

£’000

Motor

vehicles

£’000

Total

£’000

Net book value

At 1 July 2022 1,771 43 − 1,814

Additions − 54 395 449

Depreciation (19) (61) (32) (112)

At 30 June 2023 1,752 36 363 2,151

C.33. Intangible assets

Year ended 30 June 2024

Goodwill

£’000

Internally

generated

development

costs

£’000

Software

licences,

intellectual

property and

other intangible

assets

£’000

Total

£’000

Cost

At 1 July 2023 9,305 172,832 16,469 198,606

Additions − 9,281 28 9,309

Disposals (9,305) − − (9,305)

At 30 June 2024 − 182 ,113 16,497 198,610

Depreciation

At 1 July 2023 9,305 142,377 12,787 164,469

Charge for the year − 4,939 346 8,584

Impairment − 3,299 − −

Released on disposals (9,305) − 2 (9,303)

At 30 June 2024 − 150,615 13,135 163,750

Net book value

At 30 June 2024 − 31,498 3,362 34,860

At 30 June 2023 − 30,455 3,682 3 4,137

There were impairments of internally generated development costs in the year of £3.3m (2023: nil), see Note 12 for further details.

C.34. Investments in subsidiaries

Movements during the year were:

2024

£’000

2023

£’000

Balance at the beginning of the year 298,174 288,174

Additions − 10,000

Balance at the end of the year 298,174 298,174

During the year, the Company made additional investments of nil (2023: £10.0m). Details of the Company’s subsidiaries are given in

note C.47.

C.35. Investments in joint ventures

Investments in joint ventures at 30 June 2024 were £1,453,000 (2023: £1,453,000). There were no movements during the year.

Details of the Company’s joint ventures are given in note C.48.

Notes to the Company financial statements continued

160

Renishaw plc Annual Report 2024

C.36. Long-term loans to Group undertakings

Amounts owed by Group undertakings at 30 June 2024 amounted to £26.2m (2023: £74.2m).

This included expected credit loss provisions of £32.4m (2023: £23.5m).

These amounts are unsecured and accrue variable interest.

C.37. Deferred tax

Balances at the end of the year were:

2024 2023

Assets

£’000

Liabilities

£’000

Net

£’000

Assets

£’000

Liabilities

£’000

Net

£’000

Property, plant and equipment − (27,174) (27,174)

− (22,506) (22,506)

Intangible assets − (3,751) (3,751)

− (3,592) (3,592)

Defined benefit pension scheme − (2,179) (2,179)

− (14,354) (14,354)

Derivatives − (3,637) (3,637)

− (2,184) (2,18 4)

Other 1,145 − 1,145 761 − 761

Balance at the end of the year 1,145 (36,741) (35,596) 761 (42,636) (41,875)

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 £35.6m liability (2023: £41.9m 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 taxable profits in current and future years make it more likely than notthat

these assets will be recovered.

Movements during the year were:

2024

£’000

2023

£’000

Balance at the beginning of the year (41,875) (24,944)

Movements during the year 6,279 (16,931)

Balance at the end of the year (35,596) (41,875)

C.38. Inventories

An analysis of inventories at the end of the year was:

2024

£’000

2023

£’000

Raw materials 38,382 52,193

Work in progress 31,784 35,303

Finished goods 34,672 35,409

Balance at the end of the year 104,838 122,905

C.39. Trade receivables

An analysis of trade receivables at the end of the year was:

2024

£’000

2023

£’000

Trade receivables 50 37

Amounts owed by Group undertakings 48,640 35,638

Balance at the end of the year 48,690 35,675

161

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

C.40. Provisions

Warranty provision movements during the year were:

2024

£’000

2023

£’000

Balance at the beginning of the year 2,130 3,727

Created in the year 2,473 2,253

Unused amounts reversed − (717)

Used in the year (2,337) (3,133)

136 (1,597)

Balance at the end of the year 2,266 2,13 0

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.

C.41. Leases (as lessee)

Lease liabilities are analysed as below:

Year ended 30 June 2024

Leasehold

property

£’000

Plant and

equipment

£’000

Motor

vehicles

£’000

Total

£’000

Total future minimum lease payments payable

3,799 − 1,154 4,953

Effect of discounting (1,897) − (105) (2,002)

Lease liability 1,902 − 1,049 2,951

Year ended 30 June 2023

Leasehold

property

£’000

Plant and

equipment

£’000

Motor

vehicles

£’000

Total

£’000

Total future minimum lease payments payable 3,603 − 405 4,008

Effect of discounting (3,240) 36 1363 (1,841)

Lease liability 363 36 1,768 2,167

C.42. Other payables

An analysis of other payables due within one year at the end of the year was:

2024

£’000

2023

£’000

Amounts owed to Group undertakings 24,274 24,075

Amounts owed to joint ventures − –

Other taxes and social security 3,753 3,902

Other creditors and accruals 16,835 19,643

Balance at the end of the year 44,862 47,620

Other creditors and accruals includes £6.0m (2023: £7.0m) relating to performance bonus accruals.

C.43. Employee benefits

The Company operated a defined benefit pension scheme, which, at 5 April 2007, ceased any future accrual for current members

andwas closed to new members. Employees of the Company now participate in a defined contribution scheme.

The total pension cost of the Company for the year was £20.2m (2023: £18.9m), of which £0.1m (2023: £0.1m) related toDirectors.

The latest full actuarial valuation of the scheme was carried out at 30 September 2021 and updated to 30 June 2024 by a qualified

independent actuary.

The major assumptions used by the actuary for the scheme are disclosed in Note 23, along with relevant sensitivities.

Notes to the Company financial statements continued

162

Renishaw plc Annual Report 2024

C.43. Employee benefits continued

The assets and liabilities in the scheme were:

30 June 2024

£’000

% of total

assets

30 June 2023

£’000

% of total

assets

Market value of assets:

Insurance contract 129,207 93 − −

Credit and fixed income funds 9,268 7 54,656 30

Cash and other 656 − 38,642 21

Index linked gilts − − 53,738 30

Multi-asset fund − − 21,432 12

Fixed interest gilts − − 13,219 7

139,131 100 181,687 100

Actuarial value of liabilities (130,414) − (124,271) −

Surplus in the scheme 8,717 − 57,416 −

Deferred tax thereon (2,179) − (14,354) −

During FY2024, the Trustee of the defined benefit pension scheme undertook a buy-in and insured around 99% of the Scheme’s

liabilities by purchasing an insurance policy. Further detail of the buy-in is contained in Note 23.

The movements in the scheme were:

Year ended 30 June 2024

Assets

£’000

Liabilities

£’000

Total

£’000

Surplus in scheme at the beginning of the year

181,687 (124,271) 57,416

Interest on pension scheme 9,124 (6,216) 2,908

Remeasurement gain/(loss) under IAS 19 (45,944) (4,763) (50,707)

Scheme administration expenses (900) − (900)

Benefits paid (4,836) 4,836 −

Surplus in scheme at the end of the year 139,131 (130,414) 8,717

Year ended 30 June 2023

Assets

£’000

Liabilities

£’000

Total

£’000

Surplus in scheme at the beginning of the year

193,862 (153,531) 40,331

Contributions 2,177 − 2,177

Interest on pension scheme 6,962 (5,443) 1,519

Remeasurement gain/(loss) under IAS 19 (16,432) 30,119 13,687

Scheme administration expenses (298) − (298)

Benefits paid (4,584) 4,584 −

Surplus in scheme at the end of the year 181,687 (124,271) 57,416

The analysis of the amount recognised in Other comprehensive income and expense was:

2024

£’000

2023

£’000

Actuarial gain/(loss) arising from:

Changes in demographic assumptions 31 1,802

Changes in financial assumptions (433) 36,137

Experience adjustment (4,361) (7,820)

Return on plan assets excluding interest income (45,944) 16,432)

Total recognised in the Other comprehensive income and expense (50,707) 13,687

163

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

C.44. Share capital

2024

£’000

2023

£’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.

C.45. Related parties

During the year, related parties, these being the Group’s joint ventures, see Note 13, had the following transactions and balances

with the Company:

2024

£’000

2023

£’000

Purchased goods and services from the Company during the year 117 81

Sold goods and services to the Company during the year 2,318 2,138

Amounts owed by the Company at the year end 121 154

Amounts owed to the Company at the year end 49 –

C.46. Capital commitments

Capital commitments at the end of the year, for which no provision has been made in the financial statements, were £26.5m

(FY2023: £43.7m).

C.47. Subsidiary undertakings

The following are the subsidiary undertakings of Renishaw plc as at 30 June 2024, 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 unless otherwise stated.

The principal activities for all the subsidiary undertakings are those of the Company, as set out in the Other statutory and regulatory

disclosures, except as indicated below:

Dormant company * 31 March year-end

Finance company

31 December year-end

Holding company

†

Ordinary-A shares

Travel agency

‡

Ordinary-C shares

Company Registered Office

Owned by Renishaw plc

MTT Investments Limited

New Mills, Wotton-under-Edge, Gloucestershire, GL12 8JR

United Kingdom

Renishaw Advanced Materials Limited

Renishaw International Limited

Renishaw Medical Limited

Renishaw PT Limited

Renishaw Software Limited

Renishaw Transducer Systems Limited

Renishaw UK Sales Limited

Wotton Travel Limited

Measurement Devices Limited

Research Park North, Riccarton, Edinburgh, Scotland, EH14 4AP

United Kingdom

Renishaw Diagnostics Limited

†‡

(92.4%) New Mills, Wotton-under-Edge, Gloucestershire, GL12 8JR

United Kingdom

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, GL128SP

United Kingdom

Notes to the Company financial statements continued

164

Renishaw plc Annual Report 2024

Company Registered Office

Owned by MTT Investments Limited

MTT Technologies Limited

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

(not actively trading) 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, KwaiChung

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 Benelux BV Nikkelstraat 3, 4823 AE, Breda

Netherlands

Renishaw GmbH (5.1% owned by Renishaw plc) Karl-Benz Straße 12, 72124, Pliezhausen

Germany

Renishaw Gulf Measuring & Control Systems

Trading LLC

Office 501, 5th Floor, Block B, Business Village, Port Saeed, Deira, Dubai

United Arab Emirates

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

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

C.47. Subsidiary undertakings continued

165

Renishaw plc Annual Report 2024

FINANCIAL STATEMENTS

Company Registered Office

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.

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

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 Medical Limited

Renishaw Medical AM Solutions Limited

New Mills, Wotton-under-Edge, Gloucestershire, GL12 8JR

United Kingdom

Owned by Renishaw Neuro Solutions Limited

Renishaw Mayfield SARL 31 Rue Ampère, 69680, Chassieu

France

C.48. Joint ventures

The following are the joint ventures of Renishaw plc at 30 June 2024. The country in which each entity has its registered/principal

office is its domicile and country of incorporation. The accounting year-end for each joint venture is 30 June unless otherwise stated.

The shareholdings are in the ordinary share capital of those undertakings unless otherwise stated. The principal activities for the

joint ventures are those of the Company, as set out in the Other statutory and regulatory disclosures.

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, 1218 Slovenia

C.47. Subsidiary undertakings continued

Notes to the Company financial statements continued

166

Renishaw plc Annual Report 2024

Results

note

2024

£’000

note

2023

£’000

note

2022

£’000

note

2021

£’000

note

2020

£’000

note

2019

£’000

note

2018

£’000

note

2017

£’000

note

2016

£’000

2015

£’000

Overseas revenue 653,345 649,674 639,540 538,636 482,784 539,915 580,940 509,212 404,472 469,221

UK and Ireland revenue 37,956 38,899 31,536 26,923 27,431 34,044 30,567 27,595 22,752 25,499

Total revenue 691,301 688,573 671,076 565,559 510,215 573,959 611,507 536,807 427,2 24 494,720

Adjusted operating profit 108,667 130,407 161,406 118,568 51,700 93,711 143,045 108,733 86,952 143,924

Adjusted profit before tax 122,594 140,983 163,742 119,666 48,614 103,862 145,081 109,079 87,475 144,19 6

Taxation (excluding

adjusted items) 25,705 28,126 28,685 23,611 11,547 16,557 20,942 12,819 14,880 22,850

Profit for the year

(excluding adjusted items

and tax on adjusted items) 96,889 112,857 135,057 96,055 37,0 67 87,305 124,139 96,260 72,595 121,346

Capital employed

2024

£’000

2023

£’000

2022

£’000

2021

£’000

2020

£’000

2019

£’000

2018

£’000

2017

£’000

2016

£’000

2015

£’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 888,221 882,058 800,570 688,730 532,264 568,677 533,994 429,214 366,785 413,918

Total equity 902,821 896,658 815,170 703,330 546,864 583,277 548,594 443,814 381,385 428,518

Statistics 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015

Overseas revenue

as a percentage of

total revenue 94.5% 94.4% 95.3% 95.2% 94.6% 94.1% 95.0% 94.9% 94.7% 94.8%

Adjusted earnings

pershare 133.2p 155.1p 185.5p 132.0p 51.0p 119.9p 170.5p 132.4p 100.4p 167.5p

Proposed dividend 76.2p 76.2p 72.6p 66.0p 0.0p 60.0p 60.0p 52.0p 48.0p 46.5p

Note

The results and adjusted earnings per share for the years 2016, 2017, 2018, 2019, 2020, 2021, 2022 and 2023 exclude certainitems. These were:

− 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) and 2023 (£5.5m pre-tax gain) gains and losses from financial instruments not effective for cash

flow hedging;

No years prior to 2016 have been adjusted for gains and/or losses from financial instruments not effective for cash flow hedging.

− 2020 (£23.8m loss), 2022 (£1.7m gain) and 2023 (£0.7m) restructuring costs;

− 2021 (£3.2m loss) and 2022 (£0.2m gain) third-party FSP costs;

− 2022 (£11.7m loss) UK defined benefit pension scheme past service cost;

− 2023 (£2.1m loss) US defined benefit pension scheme past service cost.

10-year financial record

167

Renishaw plc Annual Report 2024

SHAREHOLDER INFORMATION

FINANCIAL STATEMENTS

AGM

Annual General Meeting

additive manufacturing (3D printing)

APAC

Asia Pacific

APM(s)

alternative performance measure(s)

ASIC

Application-specific integrated circuit

Governance

Code

UK Corporate Governance Code 2018

carbon dioxide equivalent

Company

Renishaw plc

CMM

co-ordinate measuring machine

CNC

computer numerically controlled

CPI

consumer price index

DESNZ

Department for Energy Security and Net Zero

DTR

the FCA’s Disclosure Guidance and

Transparency Rules

EBT

Employee Benefit Trust

EDI

equality, diversity and inclusion

EMEA

Europe, Middle East and Africa

EPS

earnings per share

ERP

enterprise resource planning

ESG

Environment, social and governance

European Union

EUR

Euro

electric vehicle

Ernst & Young LLP

FCA

Financial Conduct Authority

FRC

Financial Reporting Council

FSP

formal sale process

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

headquarters

human resources

ICE

internal combustion engine

IFRIC

International Financial Reporting Interpretations

Committee

IFRS

International Financial Reporting Standards

intellectual property

IPCC International Panel on Climate Change

JPY

Japanese Yen

Glossary

KPI(s)

key performance indicator(s)

kilowatt – an amount of power equal to 1,000 watts

kWh

Kilowatt hour – an amount of energy equivalent

todelivering 1kW of power for an hour

M&A

mergers and acquisitions

MRP

Material Requirements Planning

NCI

non-controlling interest

OCI

other comprehensive income

OEM

original equipment manufacturer

P&L

profit and loss account

PBT

profit before tax

RIS

Regulatory Information Service

R&D

research and development

RIDDOR

Reporting of Injuries, Diseases and Dangerous

Occurrences Regulations 2013

SBTi

Science Based Targets initiative

Scope 1

direct GHG emissions occur from sources that

are owned or controlled by the company. For

example, emissions from combustion in owned

or controlled 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 that occur from

sources not owned or controlled by the Company

SEEG

stereoelectroencephalography

SEM

Scanning electron microscopy

SME

small and medium-sized enterprise

STEM

science, technology, engineering and

mathematics

tCO

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

UAE

United Arab Emirates

ULEV

ultra-low emission vehicle

The United Kingdom of Great Britain and

Northern Ireland

UKLR

The FCA’s UK Listing Rules

UN SDG

United Nations Sustainable Development Goal

USA

United States of America

USD

Unites States Dollar

Trademarks

The following registered and unregistered trademarks, which are owned by Renishaw plc and its subsidiaries, appear throughout

this Annual Report.

AGILITY

CARTO

™

Equator

™

FORTiS

™

inLux

™

MODUS

™

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168

Renishaw plc Annual Report 2024

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: +44 (0)371 384 2169

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 2024 AGM will be held on Wednesday 27 November

2024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. 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 a Regulatory 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.

Shareholder information

Financial calendar

Annual General Meeting

27 November 2024

Half year

31 December 2024

Half-year results

February 2025

Trading update

May 2025

Final dividend

Ex-div date 31 October 2024

Record date 1 November 2024

Payment date 5 December 2024

Interim dividend (provisional)

Ex-div date 6 March 2025

Record date 7 March 2025

Payment date 8 April 2025

Registration details and Company Secretary

Group General Counsel & Company Secretary

Kasim Hussain

Registered office

New Mills

Wotton-under-Edge

Gloucestershire

GL12 8JR

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 brokers

UBS

Peel Hunt

Principal bankers

Lloyds Bank

BNP Paribas

HSBC

169

Renishaw plc Annual Report 2024

SHAREHOLDER INFORMATION

FINANCIAL STATEMENTS

Shareholder profile

Shareholdings %

1 1 – 5,000 1.07

2 5,001 – 25,000 1.97

3 25,001 – 50,000 2.18

4 50,001 – 100,000 3.90

5 100,001 – 500,000 16.78

6 500,001 – 1,000,000 6.22

7 1,000,001 – 3,000,000 12.47

8 more than 3,000,000 55.41

Shareholdings %

1 Directors 52.85

2 Individuals 0.94

3 Institutions 46.21

Shareholder information continued

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/consumers/protect-yourself-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.

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.

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.

170

Renishaw plc Annual Report 2024

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If you have finished with this document and no longer wish to retain it, please pass it on to other interested

readers or dispose of it in your recycled paper waste. Thank you.

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: