Renishaw plc – Annual report – 30 June 2019
Risk and risk management (extract)
As with many other companies across the UK, the continuing political process has meant the full implications of Brexit for all aspects of our business still remain uncertain. In 2018 we formally established a Brexit steering group to try to evaluate the potential impact of the UK’s departure from the EU on the Group, make recommendations where required and implement agreed actions.
As a result, we have put in place measures to attempt to mitigate potential impacts of a no-deal Brexit as set out on page 9. Further changes may need to be made in aspects of the Group’s operations as the situation moves forward. However, with a strong direct presence in the EU, Renishaw is well placed to respond to changes in future trading arrangements between the UK and the EU. Developments will be monitored closely to assess required actions as the exit and trading negotiations become clearer in 2019.
Chief Executive’s review (extract page 9)
The Board continues to oversee the work of the Brexit steering group in identifying the key risks arising from a no-deal Brexit scenario and implementing mitigation plans. These activities significantly increased in the period leading up to the original Brexit deadline of March 2019 and included the following:
• the establishment of a new distribution warehouse in Ireland which, if required, would significantly reduce the number of direct shipments between the UK and the EU post Brexit;
• a general increase in inventory of certain components and finished goods held at our various sites within the EU and the UK; and
• continued ongoing assessment and updating of other key issues arising from Brexit and the mitigations against any possible negative impacts.
The steering group will continue to carefully monitor ongoing developments in the Brexit process and consider the impact of these against our current plans as the situation develops in the coming months.
The Group is in a strong financial position, despite a challenging year, 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. With the ongoing uncertainty surrounding Brexit, weaker economic indicators, exchange rate volatility and trade tensions between the USA and China, we expect market conditions to remain difficult throughout this financial year.
Your Directors remain confident in the long-term prospects for the Group due to the high quality of our people, our innovative product pipeline, extensive global sales and marketing presence and relevance to high-value manufacturing.
Principal risks and uncertainties (extracts referring to Brexit)