1. apply innovation TM efg 2007 Interim results 24th January 2007

2. apply innovation TM I report the Company’s results for the first six months of the current financial year ended 31st December 2006. Revenue in this period increased 7% to £87.1m (2005: £81.6m), representing growth of 12% at constant exchange rates and demonstrating good progress in all our major geographic markets. There was above average growth in dental, styli, machine tool and encoder products which offset a softening in the market for co-ordinate measuring machine (CMM) products. Operating profit for the period was £12.0m (2005: £13.9m).The adverse impact of the strong pound on the profit for the period, which was highlighted at the AGM in October, is estimated to be £3.1m. Profit before tax amounted to £13.5m (2005: £15.3m). Profit after tax was £10.8m resulting in earnings per share of 14.9p (2005: 16.9p). Net cash balances at 31st December 2006 were £26.5m (2005: £25.7m). We remain committed to a high level of research and development which, including associated engineering costs, amounted to £14.8m (2005: £13.8m), an increase of 7%. New products introduced include the UCClite controller from our CMM product line, an optical toolsetter (OTS) and optical interface (OMI-2T) from our machine tool product line and the REXM high accuracy angle encoder. Capital expenditure during the six months amounted to £5.5m (2005: £7.2m). The refurbishment at Woodchester is complete and equipment for the new automated stores is being commissioned. The laser and calibration product line has been successfully relocated to Woodchester. At New Mills, the former machine shop has been refurbished and now provides pre-production machining and assembly facilities with further investment being made in the Group’s rapid prototyping facility. Chairman’s statement

3. apply innovation TM In India, we have expanded our sales and procurement activities and the production facility at Pune is now operational and the software development team has been established. The Company has continued to strengthen its worldwide marketing representation, in particular a new subsidiary has been established in Singapore and two additional regional offices in Brazil. The Company announced on 19th January 2007 that agreement had been reached with the Trustees of the Company’s defined benefit pension scheme to cease future accrual for current members of the scheme and future employees. The pension fund liability as at 31st December 2006, measured under the rules for IAS19 accounting purposes, has increased to £32.1m (30th June 2006: £18.8m) reflecting the latest triennial valuation undertaken by the scheme actuary on 29th September 2006. This valuation resulted in a £41m funding deficit on an ongoing basis which reduces to £24m after the proposed changes. This change should reduce the reported deficit at the end of our financial year and reduce the Group’s exposure to future volatility. The Company and Trustees are now in the process of consultation with members to establish a new defined contribution scheme (with a Company contribution of 11%) within the existing pension scheme trust to take effect from 6th April 2007. Although we remain very confident for the longer term, at this stage it appears likely that the adverse effects of currency exchange rates, together with the softening of demand for our products in the CMM market (with some development delays in delivering certain of our new and in-demand products, in particular the REVO™ and GYRO™), will result in profits for the full year being below those for last year. An interim dividend of 7.05p per share (2006: 6.71p per share) will be paid on 9th April 2007 to shareholders on the register on 9th March 2007. Sir David R McMurtry CBE, RDI, CEng, FIMechE, FREng Chairman and Chief Executive 24th January 2007 Chairman’s statement

4. apply innovation TM 2007 2006 change £m £m % Sales At actual exchange rates 87.1 81.6 +7% At constant exchange rates 91.6 81.6+12% Operating profit At actual exchange rates 12.0 13.9 -13% At constant exchange rates 15.1 13.9 +9% Profit before tax At actual exchange rates 13.5 15.3 -12% At constant exchange rates 16.6 15.3 +8% Earnings per share 14.9p 16.9p -12% Dividend per share 7.05p 6.71p +5% % of sales Notes Profit before tax £m Financial highlights

5. apply innovation TM 2007 2006 change £m % £m % % Sales 87.1 100 81.6 100 +7% Cost of sales 33.3 38 29.5 36+13% R&D (incl Engineering) 14.8 17 13.8 17 +7% Gross profit 39.0 45 38.3 47 +2% Distribution costs 16.4 19 14.8 18+11% Administration costs 10.6 12 9.6 12+10% Operating profit 12.0 14 13.9 17 -13% Financial income (net) 1.5 2 1.4 2 - Profit before tax 13.5 16 15.3 19 -12% £m% of sales Notes Profit and loss account

6. apply innovation TM Notes £m Engineering costs (including R&D): 20072006 Total spend £16.0m£14.3m Less capitalised £1.2m£0.5m Remaining in P&L £14.8m£13.8m Gross increase 13% Expansion on marketing resources in India and the Far East, mainly China Subsidiary company opened in Singapore More offices being opened in Brazil £m% of sales Profit and loss account

7. apply innovation TM Notes Headcount now 2,106 (June 2006 2,004), an increase of 102 people UK & Ire 1,606+44 overseas 500+58 Operating profit No adjustments made to periods prior to 2005 for IFRS in any of the figures and graphs in this presentation Adverse currency effect of £3.1m at the operating profit level, when comparing current year’s results at previous year’s exchange rates This year’s operating profit at last year’s exchange rates would have been £15.1m compared with £13.9m, an increase of 9% £m% of sales £m% of sales Profit and loss account

8. apply innovation TM Notes Earnings per share Increase +5% +8% +10% +10% +5% (int) cover 1.2 1.2 1.8 1.9 Profit and loss account

9. apply innovation TM Notes Record first half year revenue Sales up 7% at actual exchange rates, 12% at previous year’s exchange rates Sales adversely affected by exchange rates compared with the previous year, sales would have been £4.5m higher at previous year exchange rates Changes in geographic areas: At act fxAt p/y fx Europe+18% +19% UK & Ireland +4% +4% Far East +3% +13% Americas level +7% £m Sales analysis

10. apply innovation TM Notes Growth in all product lines, except Co-ordinate measuring machine Above-average growth in the product lines: Dental Styli Machine tool Encoders Calibration Growth in Styli assisted by the acquisition of itp GmbH in May 2006 (33%) (6%) (27%) (31%) (3%) Sales analysis

11. apply innovation TM Notes 2007 2006 change at p/y fx change adverse £m £m % £m % fx effect (£m) Continental Europe 31.7 26.9 +18% 31.9 +19% 0.2 EUR Far East 25.8 25.0 +3% 28.3 +13% 2.5 JPY/USD America (North & South) 22.0 22.1 -0% 23.7 +7% 1.7 USD ROW 2.4 2.6 -6% 2.5 -2% 0.1 UK & Ireland 5.2 5.0 +4% 5.2 +4% Total 87.1 81.6 +7% 91.6 +12% 4.5 Group sales

12. apply innovation TM Notes Total capital spend £5.9m (2006 £7.2m), of which £1.8m spent on property, £3.8m on plant and £0.3m on vehicles Property additions – - India factory and offices (0.6m) - refurbishment of Woodchester for automated stores (£0.8m) Pre-production, machining and assembly equipment at New Mills Rapid prototyping equipment and further IT investment £m Capital expenditure

13. apply innovation TM Notes India facility development 28,500 sq ft building on 4.5 acre site Headcount in India now 72 (51 in June 2006) Manufacturing facility now operational Expansion of sales and marketing resource ongoing Software development team in place Manufacturing facility, Pune Capital expenditure

14. apply innovation TM REXM high accuracy angle encoder Twin probe system, with new OTS tool setting probe and OMI-2T/OMI-2H interface Productivity+ v1.3 with GibbsCAM plug-in UCClite cmm controller 13-bit magnetic sensor for rotary and angular positioning control, named 'Product of the Month' for November 2006 by NASA Tech Briefs magazine (product from RLS d.o.o., an associate company) New product releases

15. apply innovation TM Dental – remedial and cosmetic work, including manufacture of frameworks for bridges and crowns, using the incise™ dental scanner after before New product releases

16. apply innovation TM Notes Dec June 2006 2006 change £m £m % Fixed assets 69.8 69.1 +1% Intangible assets 14.5 13.4 +8% Deferred tax assets 14.6 10.6 +38% Total non-current assets 98.9 93.1 +6% Stock 31.0 28.4 +9% Debtors 40.8 44.2 -8% Cash 26.5 30.7 -14% Creditors (20.4) (23.1) -12% Current assets less current liabilities 77.9 80.2 -3% Deferred tax liability (11.7) (11.8) - Pension liability (gross) (32.1) (18.8) +70% Net assets 133.0 142.7 -7% Balance sheet

17. apply innovation TM Notes £m 2007 2006 £m £m Operating profit 12.1 13.9 Depreciation 4.3 4.0 Capitalisation of development costs (1.2) (0.5) Additional pension contributions 0.2 (0.7) Increase in stock (2.6) (0.8) Decrease in debtors 2.4 1.8 (Decrease)/increase in creditors (2.9) (1.2) Total movement in working capital (3.1) (0.2) Cash from operating activities 12.3 16.5 Cash flow from operating activities

18. apply innovation TM Notes 2007 2006 £m £m Cash from operating activities 12.3 16.5 Interest received 0.8 1.0 Tax paid (2.0) (3.6) Dividends paid (11.0) (10.0) Fixed assets purchased (net) (6.2) (6.9) Investments in associates - (0.9) Fx changes 1.9 (0.5) Total cash movement (4.2) (4.4) Cash at 1st July 30.7 30.1 Cash at 31st December 26.5 25.7 £m Cash flow

19. apply innovation TM Notes Renishaw continues to develop key technologies and processes in each of its business areas to support continued sales growth and to remain the market leader. These include further growth in our traditional markets as well as continued emphasis in the fields of dental/medical equipment and systems for semiconductor/electronic production. Improvement in manufacturing and assembly efficiencies Continued development and investment in - new product development geographic markets Future business plans

20. apply innovation TM Notes Renishaw believes that success fundamentally comes from innovative and patented products and processes, low cost, high quality manufacturing and the ability to provide excellent local customer support in all our markets. Key objectives