CHAIRMAN'S STATEMENT
I am pleased to report our 2018 annual results. We achieved a record turnover for the second successive year of £611.5m (2017: £536.8m) with revenue growth of 18% at constant exchange rates. We are also reporting a record adjusted* profit before tax of £145.1m (2017: £109.1m), an increase of 33%. Our total shareholder return during the year was 48%, ranking Renishaw 18th in the FTSE 250.
During the year, I took the decision to hand over my Chief Executive responsibilities. The Board and I were delighted to appoint Will Lee as Chief Executive from 1st February 2018. Will has demonstrated significant leadership capabilities in his time at Renishaw having joined in 1996 and having been appointed to the Board as Sales and Marketing Director in 2016. We have confidence that Will can inspire the next generation to build on Renishaw's heritage. The Board has prepared and agreed written statements of the key responsibilities of the Chief Executive and the Executive Chairman and they are available on our website at www.renishaw.com/corporategovernance.
Other Board changes
Kath Durrant is stepping down from the Board with effect from 31st July 2018. Kath, who was appointed to the Board in 2015 and is Chair of the Remuneration Committee, has made a considerable contribution to the Board and Renishaw and I would like to thank her and wish her well for the future with her senior executive role with Dublin based CRH plc.
We are pleased to announce the appointment of Catherine Glickman as an independent non-executive director with effect from 1st August 2018. Catherine will be a member of the Audit and Nomination Committees and Chair of the Remuneration Committee. She is an independent non-executive director and chair of the remuneration committee at Marston's plc. She is also a non-executive director at TheWorks.co.uk plc where she is chair of its remuneration committee and a member of its audit and nomination committees. Catherine brings extensive experience with her strong HR background having previously been Group HR Director at Genus plc and Tesco plc and will be a valuable addition to the Company's resources at Board level and particularly as chair of the Remuneration Committee.
In February 2018, we further strengthened our Executive Board with the appointment of Gareth Hankins, Director, Group Manufacturing Services Division, and Mark Moloney, Director and General Manager, Renishaw (Ireland) DAC. Both have over thirty years' experience with Renishaw focused on our significant investments in manufacturing processes to support increased volumes and developing capabilities for specific product lines.
Innovation
Throughout Renishaw's history, innovation has been at the heart of our business, from the generation of new technologies to new manufacturing processes. As announced in January, having stepped down as Chief Executive, I will now focus on Group innovation and product strategy, supporting our engineering teams. During the year, we continued to invest in developing future technologies, with total engineering costs of £83.6m (before net capitalised development costs and the R&D tax credit), amounting to 14% of total revenue.
Employees, diversity and corporate governance
On behalf of the Board, I would like to thank all our employees for their professionalism and dedication during
the year.
The Board is committed to the highest standards of corporate governance to protect our business and its long-term success. We note the newly published Corporate Governance Code 2018 and will consider how to address the changes that it has introduced in the coming year. Further details will be provided in the 2018 Annual report and accounts in the Directors' corporate governance report. This culture is embedded in our Group Business Code and other policies.
We are also focused on gender diversity at all levels and published our Gender Pay Gap report on the Group's website. We recognise this industry still has much work to do in this area and we will continue to build upon our education outreach programmes.
Investor communications
Our fifth investor day was held on 10th May 2018, for existing and potential investors. This event included presentations on Group strategy, business segments and product lines as well as tours covering the Group's activities and an opportunity to meet the Board and senior management. There was also a Q&A session with the Board. The event was very well attended, and provided shareholders with another opportunity, in addition to the AGM, half-year and full-year webcasts, to learn more about Renishaw's business and strategy.
Dividend
A final dividend of 46.0p net per share will be paid on 23rd October 2018, to shareholders on the register on 21st September 2018, giving a total dividend of 60.0p for the year, an increase of 15% over last year's 52.0p.
Outlook
The Group is in a strong financial position and continues to invest in the development of new products and applications, along with targeted investment in production, and sales and marketing facilities around the world. We have experienced strong growth in 2018 and, whilst noting ongoing uncertainty surrounding Brexit and currency exchange rate volatility, your directors remain confident in the long-term prospects for the Group due to our innovative product base, extensive global sales and marketing presence and relevance to high-value manufacturing. At this early stage in the year, we anticipate growth in both revenue and profits in the current financial year.