Renishaw's performance continued to improve throughout the first six months of year ended 31st December 2007. Operating profit rose 9.5% to £13.2m (2006 £12.0m).
I am pleased to report Renishaw's results for the first six months of the current year ended 31st December 2007.
As anticipated at the AGM last October, performance has continued to improve throughout the first six months with revenue increasing by 5% to £91.6m (2006 £87.1m). At constant exchange rates, revenue would have been £1.9m higher, an increase of 7% reflecting good progress in our major geographic markets, particularly the Far East. Within the product mix, there was above-average growth in laser and calibration, machine tool and styli products, if partly offset by lower revenue from spectroscopy and dental products.
Operating profit rose 9.5% to £13.2m (2006 £12.0m). At constant exchange rates the operating profit would have increased to approximately £15.0m, an increase of 25%. Profit before tax increased 11.4% to £15.1m (2006 £13.5m). Profit after tax amounted to £12.1m (2006 £10.8m), resulting in earnings per share up 11.4% to 16.6p (2006 14.9p).
A high level of research and development remains integral to Renishaw's progress; research and development, including associated engineering costs, during the period amounted to £15.6m (2006 £14.8m). During this half year we have particularly focussed on the large number of new products recently introduced.
The recent and very positive response to REVOTM from the aerospace and automotive sectors has reinforced our belief in the Group's current approach to the market. In addition to new sales, the opportunity for significant growth of the retrofit market for REVOTM is currently being discussed with our OEM customers, with a view to maximising the market potential.
Net cash balances at 31st December 2007 were £16.4m (30th June 2007 £20.8m). Policies have been revised to reduce the level of investment in Group inventory, which at 31st December 2007 stood at £35.1m (30th June 2007 £36.2m). Capital expenditure during the six months reduced to £2.7m (2006 £5.5m).
Management is continuing to concentrate on the Group's cost base and operating margins.
Whilst performance has improved during the first half, we still expect continuing and improved performance in the second half, aided by resumed orders from a major Japanese customer for its own export sales, growing orders for new products especially the REVOTM and the current weakness of sterling. The principal risks remain substantially the same as those referred to in last year's Annual report.
An interim dividend of 7.76p (2007 7.05p) per share, an increase of 10%, will be paid on 7th April 2008 to shareholders on the register on 7th March 2008.
Sir David R McMurtry, CBE, RDI, CEng, FIMechE, FREng
Chairman & Chief Executive
23rd January 2008