Annual Report 2007
www.renold.com
Renold plc, Renold House, Styal Road, Wythenshawe, Manchester, England M22 5WL
Tel: +44 (0)161 498 4500   Fax: +44 (0)161 437 7782 E-mail: enquiry@renold.com
www.renold.com
Annual Report 2007
72903 COVER  19/6/07  11:59  Page 1 Contents
Renold plc - Consolidated
Financial Statements
1 Performance at a glance
2 Financial Highlights
3 Chairman’s Statement
5 Chief Executive’s Review
7 Operations Review
11 Financial Review
13 Directors’ Biographies
14 Directors and Officers
15 Report of the Directors
17 Corporate Governance
20 Directors’ Remuneration Report
24 Statement of Directors’ Responsibilities
25 Report of the Independent Auditors
26 Accounting Policies
30 Consolidated Income Statement
30 Consolidated Statement of 
Recognised Income and Expense
31 Consolidated Balance Sheet
32 Consolidated Cash Flow Statement
33 Notes to the Consolidated Financial
Statements
58 Group Five Year Financial Review
59 Principal Subsidiary Companies
Renold plc - Company 
Financial Statements
60 Report of the Independent Auditors
61 Accounting Policies
63 Company Balance Sheet
64 Notes to the Company Financial
Statements
68 Notice of Annual General Meeting
70 Financial Calendar
Front cover, left: Couplings used in power generation in Azerbaijan.
Front cover, centre: Chain used on offshore cable-laying ship.
Front cover, right: Gearboxes supplied to steel mill.
Above, left: Hi-Tec Couplings helping to power diesel engined ships.
Above, centre: Chain used in printing industry ensuring performance with little lubrication.
Above, right: Chain supplied to oil industry where specification makes all the difference.
72903 COVER  19/6/07  11:59  Page 3 1
Renold plc is an international engineering
group, producing a wide range of precision
engineering products, operating in nineteen
countries worldwide.
The principal activities of the Group are the
manufacture and sale of industrial chains 
and related power transmission products.
9.8m 6.2%
6.8m 4.4%
4.6m 3.2%
Return on Sales* Operating Profit*
2006-07 2006-07
2005-06 2005-06
2004-05 2004-05
14.9%
7.7%
4.7%
Return on
Capital Employed*
2006-07
2005-06
2004-05
138p
57p
69p
Share Price
2006-07
2005-06
2004-05
Performance at a glance
Principal Activities
*Based on pre-exceptional operating profit from continuing operations.
72903 PRE  18/6/07  21:32  Page 1 Financial Highlights for the year ended 31 March 2007
United Kingdom
Germany
Rest of Europe
Americas
Other countries
19%
9%
24%
36%
12%
2007 2006
£m £m
Continuing operations:
Turnover 159.3 155.0
Operating profit 3.9 5.4
Operating profit before exceptional items 9.8 6.8
Profit before tax and exceptional items 7.3 3.2
Profit before tax 1.4 1.8
Discontinued operations:
(Loss) for the year from discontinued operations (13.5) (13.9)
Other information:
Basic loss per share – Group (18.3)p (19.6)p
Basic earnings per share – continuing operations 1.2p 0.4p
Adjusted earnings per share (adjusting for the after tax
effects of exceptional items) – continuing operations 8.4p 1.7p
Capital expenditure 5.8 6.6
Net debt 19.4 20.7
Turnover analysis - continuing operations
Geographical Products
21%
49%
30%
T ransmission Chain
Engineered Chain
Gears and Couplings
72903 PRE  19/6/07  14:04  Page 2 It is a great pleasure in my first statement to shareholders, 
as the Chairman of your Board, to report a year of excellent
delivery against our strategic objectives, and the prospect
of further progress in the coming years.
Our strategy has been to focus on our main Industrial Chain
business and to give that business the operating and financial
structure its needs to succeed – both in the mature markets
where we are a leader, and in key new developing markets.
We have made significant progress in executing this strategy
during the last year. We have disposed of the Automotive 
and Machine Tool businesses, reduced Group borrowings and
refinanced them under much more favourable terms. These
steps, combined with improved profit and cash generation, 
many years. 
At constant exchange rates our sales have grown in all
overseas regions where the company is represented; China, in
particular, represented a small but very fast growing segment.
The Profit and Cash Enhancement (PACE) programme we
presented in March 2007 is on schedule. One third of the
Chain direct labour is now in China and other low cost
territories which is well ahead of plan. We opened greenfield
manufacturing facilities in Malaysia and China during the
year, and these have shipped products in time and on budget.
In May we announced the acquisition of a 90% interest in 
a manufacturing business in China, which significantly
enhances our worldwide capacity, and reduces our capex
requirements this year by £4 million. Further manufacturing
volume was transferred to our Polish facility, which opened
the previous year. The PACE programme is already providing
superior returns from our established markets and building 
a competitive basis for our growth in developing regions.
Sales growth, a stronger and more efficient company, and the
tangible benefits of the PACE programme served to boost
profit before tax and exceptional items from continuing
operations to £7.3 million an increase of 2.3 times on the
previous year. Part of the focus of PACE is the continued
strengthening of the balance sheet and a reduction in the
volatility of earnings. Net debt reduced slightly in the year
to £19.4 million from £20.7 million last year and further
progress is expected. The net pension deficit on UK funded
liabilities also fell from £23.0 million down to £19.7 million
with considerable progress having been made late in the year
on the asset management activities and work continuing 
on liability management. Arrangements have been made to
appropriately hedge on-going foreign exchange exposure
which had some negative impact during the year and also 
to manage steel price changes which were relatively benign
during the year. 
The Board believe it is prudent to recommend that no dividend
will be paid this year. The Board will consider future dividend
policy in light of the results from the business going forward.
Bob Davies and his team have stretching targets for PACE in
the coming year, and I am confident they will continue to
meet and exceed those targets, as they have done over the
past year.
Finally, I would also like to welcome David Shearer to 
the Company, he joined the Board on 1 May 2007 as a 
non-executive director. David has served as the senior partner
of Deloitte & Touche in Scotland and Northern Ireland and 
on the Main Board of HBOS plc. He brings us a wealth of
experience from these senior roles.
At Renold, we have always been proud of our leadership in
the specialised industrial markets we serve. We are now also
very committed to a strategy that is both delivering financial
results in the short term and building a platform for long
term profitable growth. My Board colleagues and I look
forward to another year of taking this strategy forward 
with confidence.
Matthew Peacock
Chairman
3
Chairman’s Statement
72903 PRE  19/6/07  11:30  Page 3
have given the company its strongest financial position for Huge chain drives offshore application
Renold in Action
A huge length of chain, weighing in at over 
11 tonnes and measuring 225 feet in length, has
been designed and manufactured in the UK by
Renold. It is used to drive a 3,000 tonne capacity
carousel for the laying of undersea pipe and
umbilical cable for the offshore oil industry.
The carousel, dubbed Colossus, is 24 metres 
in diameter and weighs, when empty, some 
450 tonnes. When fully wound it is capable 
of storing up to 120 kilometres of cable for 
such things as connecting land to offshore 
rigs and wellheads.
Designed and built by The Engineering Business
for Subsea 7 the giant carousel is positioned on
its side on an offshore support vessel for the
winding and subsequent laying of cable. The
design team at The Engineering Business
considered a variety of drive options for turning
the carousel but eventually opted for a chain
drive system with four AC motors positioned
around the carousel like points of the compass.
The chain has an expected life span of more
than 20 years despite the harsh environments
in which it will be operating. It is secured
around the circumference of the carousel where
it engages with sprockets attached to the
electric motors. As the sprockets turn, the teeth,
designed with a special rack tooth form, drive
the chain which turns the carousel. A special
feature of the chain is its extended pins, to allow
for up to 30mm of lateral movement. The whole
reel structure sits atop a series of uniquely
designed sprung roller units that are depressed
when the reel is fully loaded. As the carousel is
unwound it is slowly pushed up by the rollers
and the chain’s extended pins allow for this
lateral movement.
The equipment was commissioned just
36 weeks after the initial kick off meeting 
and, according to Subsea 7’s equipment
manager, Brian O’Neill, it’s working 
very well.
72903 PRE  18/6/07  21:32  Page 4 Overview
The year was notable for the successful delivery of a number
of significant initiatives. The sale of the Automotive and
Machine Tool businesses followed by refinancing with The
Royal Bank of Scotland, enhanced the financial stability of the
Group. The opening of manufacturing facilities in Malaysia
and China, and the increased output from Poland helped 
drive down the cost base.
The operating profit before exceptional items from continuing
operations improved to £9.8 million, representing a 44%
increase over the previous year. This improvement is despite 
a weaker US dollar resulting in a £1.2 million adverse impact
compared with the previous year.
This improved operating result from continuing operations
reflects sales growth in all overseas regions where the
Company is represented with Group sales increasing 6% at
constant exchange rates to £159.3 million.  Europe recovered
well from the weaker markets of the past few years.  Some
softening was seen in the USA, particularly in the second half.
The additional resources in China have borne fruit, sales
doubling again albeit from a relatively low base.  This sales
growth, along with numerous cost reduction initiatives,
boosted profit before tax and exceptional items from
continuing operations to £7.3 million, a 128% increase 
on the previous year.
T echnology Leadership
The Industrial Chain business provides 70% of Renold’s sales.
By market share, we are the number 2 global player operating
in over 90 countries with direct sales teams in 18 of these.
Renold maintains a technology leadership in Industrial Chain.
This is evidenced by our Synergy product range, which carries
a significant price premium to all competing brands. Customers
are willing to pay this premium because the products wear
and maintenance characteristics can significantly lower their
cost of ownership. Applications such as the Thames Barrier,
theme park rides and certain continuous process industry
applications demonstrate the high integrity reputation that
Renold Chain has. It is our intention to increasingly invest in
engineering and product development to maintain this
technology leadership and reputation.
PACE
The Profit and Cash Enhancement plan, which was presented
in March 2007, encapsulated a number of the cost reduction
initiatives into a single coherent plan.  The main thrust of the
cost reduction is the migration of product manufacturing
from relatively high cost manufacturing sites in the UK 
and Germany, to lower cost sites in Poland and China. The
funds required for these transfers are to be generated by an
inventory reduction programme and sales of surplus property.
I am pleased to report that the PACE plan was on schedule at
the year-end and continues to be so.
Renold Hangzhou
In May, we announced the agreement for the acquisition 
of a 90% interest in the business of HangZhou ShanShui
(“HZSS”), a Chain manufacturer based in Hangzhou, China
200 kilometres west of Shanghai. This acquisition is consistent
with the PACE plan by providing a well established chain
manufacturing facility into which certain products currently
made in the UK and Germany can be relocated. Renold
reviewed over 70 separate Chain companies in China and
performed limited due diligence on 10 of these. HZSS was
selected because of the strength of its engineering resource
and its focus on product quality. A good working relationship
at several levels has been developed between existing HZSS
and Renold staff over the past two years. This acquisition will
reduce the execution risk of the PACE programme. Measured
by the tonnage of steel used, Renold Hangzhou is currently
larger than the UK facility in Bredbury but smaller than the
German facility in Einbeck.
In addition, Renold Hangzhou will provide a platform for 
sales growth within China and other low cost countries.
Renold can now offer a product range from exceptional high
performance to products that are cost competitive with 
those originating from any part of the world.
Service
In addition to excellence in design and competitive pricing,
our customers demand outstanding levels of service. 
A number of initiatives are in place to drive further
improvements in meeting customer expectations.
In recognition of the success of these initiatives, I am proud to
report that Renold were awarded ‘Supplier of Year’ by A.I.T., the
second largest Power Transmission Distributor in the USA and
our largest customer. This award was judged on the level of
sales support, quality of the product, technology innovation
and profitability. This award was clearly a team effort but in
particular, I would like to recognise the determination of the
efforts of our Sales Team in the USA, our Manufacturing teams
in the UK and Germany and our Global Engineering team.
Further recognition for our customer service came from
Kinecor, the largest Canadian distributor who identified
Renold as a ‘Top 5 Supplier’.
Robert Davies
Chief Executive
5
Chief Executive’s Review
72903 PRE  19/6/07  13:25  Page 5 Renold in Action
High-tech gearbox repairs 
return units that are better than before
Renold Gears’ gearbox-repair service was put to
the test just recently when it won the contract
from steel maker Corus to refurbish the massive
dog-bar gearboxes at its Teesside Beam Mill. 
The gearboxes are amongst the biggest Renold
has ever repaired, standing over five feet high
and weighing in at around ten tons each.
They are over 40 years old and now require
re-engineering to a very high standard. 
Renold’s ability to repair old gearboxes and
improve on the original specification was one
of the key factors that helped the company
win the prestigious contract.
Corus’ Beam Mill manufactures a range of steel
sections for the construction industry at its
large plant on Teesside, measuring around one
kilometre.  The sections are produced from ten
ton steel blooms or larger slabs weighing up to
30 tons, following which they are cut to length
and then stacked in cooling banks where they
are allowed to cool to ambient temperature
prior to despatch. It is here, in pits beneath the
floor of the cooling banks that the dog-bar
gearboxes are found. Cam arms attached to the
output shafts of the gearboxes rise up when
rotated and transfer the hot sections over to
the cooling banks.
The gearboxes were originally manufactured
in 1964 by Crofts Engineers, of Bradford, a
company that was acquired by Renold just
three years later in 1967. The original blueprints
were found in the company’s archives and
so components for the gearboxes could be
manufactured to their original specifications,
but modified for enhanced performance.
The gearboxes are being refurbished one at
a time and the first of four was returned to
its Teesside home in May 2006. Renold’s
repair team improved the original specification
in several ways so that the repaired unit
was better than when it was new. The team
redesigned and upgraded the material 
of the output shaft and fitted an internal
pumping system to feed lubrication directly
to the gears and bearings. The case was
also ultrasonically tested for leaks prior to
reassembly with the new gears, shafts,
bearings and the new pumping system. 
The second gearbox is due to be installed
during the plant’s July shutdown when the next
gearbox will be taken away for repair.
72903 PRE  18/6/07  21:32  Page 6 The Group going forward is focused on its Industrial Power
Transmission business, which forms one business segment.
The activities of the segment include the manufacture and
sale of chain, gear and coupling products, which are sold
through the Group’s worldwide sales operations to a broad
range of original equipment manufacturers and distributors.
The key performance indicators which are used to monitor
performance are financial, including rate of sales growth,
margin, material costs (particularly steel), payroll costs,
working capital performance and net debt.  The Group’s
performance against certain of these key indicators is noted
in this Operations Review and the Financial Review.  Other
non-financial performance indicators are used but vary on a
business by business basis.
Chain
The Industrial Chain business continued its profit
improvement driven by a 6% growth in sales and continuing
cost reductions. Some small increases in steel prices were
seen towards the end of the year, but these were more than
compensated for by price increases and cost reductions. 
Europe
Renold maintained its market leadership position in Europe.
Sales, which have been flat for a number of years, increased
by 7% at constant exchange rates. Good growth came from
each of the selling companies in Europe except France, where
sales were flat.
The factory in Poland continued to expand and will end this
year with a total of 200 employees necessitating a move in
June to a new, larger 6,000 sq m facility where there is the
opportunity for further expansion. This new facility is less
than a mile from the existing facility and minimal disruption
is expected. 
The final phase of the closure of the Burton manufacturing
plant was made during the year. Products have been
transferred to Renold factories in Poland, Malaysia and
Manchester. We have a contract to sell the Burton property 
to a developer for £6.4 million, subject to planning permission.
A second planning application by developers for the Burton
site is expected to be submitted by the end of June. Renold
intend to have a custom built and developed office for the UK
sales team, as part of the redevelopment of the site. This will
retain approximately 40 professional jobs in the Burton area.
The implementation of the European Distribution project
made good progress during the year in improving customer
service through the more efficient management of finished
goods stock. A common software platform has been installed
in all our European sales companies (except Switzerland) and
direct shipments from the Distribution Centres to the end
customers have started. It is expected that two of the existing
warehouse properties will be available for sale by the end of
this year. 
Americas
Sales in local currency of roller transmission chain to
distributors and OEMs increased by 10% with further
significant increases to A.I.T. and Motion, the two largest
USA distributors. 
The award of ‘Supplier of the Year’ from A.I.T. affirms the
improvements in our position with the major US distributors.
Sales of Synergy, the world’s leading transmission chain 
and Syno (lubrication free/dry to the touch chain) continued
to grow. Technical innovations such as these helped to gain 
the Supplier of the Year award. A further new product
development, XXL, directly led to the winning of a $4.5 million
contract from a major OEM, displacing an incumbent
competitor. Initial trials suggest that this new product has 
3 to 6 times the life of the chain it replaced.
Sales of engineering/conveyor chain manufactured in
Tennessee were below last year’s level, driven by weak
demand from OEMs in the middle of the year. This resulted 
in a redundancy of 14 people in Tennessee. Demand recovered
strongly towards the end of the year.
Sales into South America grew by 26% following the addition
of dedicated sales resource. The potential in the region is high
but much of the demand is for lower cost products. The new
facility in Hangzhou should provide an appropriate product
for these markets.
Asia Pacific
Sales into China doubled again during the year and orders
were up over 60%. This is a reflection of the increased 
sales resources within China. A member of the Group’s
Executive team is now based in Shanghai to support the
continued growth.
7
Operations Review
72903 PRE  18/6/07  21:32  Page 7 Blue-Chip engine manufacturer Wärtsilä
gives new couplings the thumbs up
Renold in Action
Renold Hi-Tec’s innovative new DCB-GS rubber-
in-compression couplings have been given the
thumbs up by the highly respected, blue-chip
engine manufacturer Wärtsilä. Not only has the
company specifically featured Renold Hi-Tec’s
products in its house magazine, Energy News,
but Wärtsilä Vaasa, of Finland, has given further
backing to Renold innovation by recently placing
an order for no less than 52 of the new
DCB-GS couplings.
Launched in 2004 the new DCB-GS couplings
are low maintenance, zero backlash units
designed for use in diesel and gas engine
driven applications. The DCB-GS is based on
the industry-proven DCB range and offers
considerable advantages over the standard
product, including a 30 per cent reduction
in weight, and a reduction in overall length.
On top of its fail-safe, long-life design, a
significant feature of the DCB-GS coupling is
its ability to control resonant torsional
vibration, resulting in low vibratory loads in the
driveline components.
The couplings were used by Wärtsilä Vaasa to
connect their Wärtsilä 20V34SG gas engines
to alternators, as part of a contract to supply
generator sets to AzerEnergi, the national power
company of Azerbaijan. Each coupling transmits
9000kW at 750rpm. The generator sets will be
located at five power plants in Azerbaijan —
Astara, Baku, Khachmaz, Nakhivan and Sheki.
Together they will have a total power output
of 450Mwe. Wärtsilä selected the DCB-GS
rubber-in-compression coupling as it ensures
there are no resonances at operating speed
and the coupling’s fail-safe nature will ensure
continuous operation of the generator sets
at all times.
72903 PRE  18/6/07  21:32  Page 8 This rate of progress is expected to continue into the new year
as the greenfield Beicai facility starts to increase production
and through the purchase of HZSS. Three years ago, Renold
had no employees in China. By the end of June, China will be
second only to the UK by number of Renold employees. The
combination of Renold technology and market knowledge,
combined with the low cost base and manufacturing
capability of HZSS, will provide a significant number of 
new opportunities within China, elsewhere within the 
region and globally.
The new facility in Malaysia started to deliver products to
customers in August. These products had previously been
made in Burton and without the move, a significant part
of this business would have been lost on price. During the
year, two new product lines were launched opening up new
markets in Malaysia and Singapore. These products could 
not have been made competitively in Burton.
Australia, which accounts for nearly 10% of Renold’s Chain
sales, grew by 18% during the year and had its most
profitable year on record.
Gears
Sales of the Gears business grew by 8% with orders up by
11%. The Loose Gears product line was relocated from the
adjacent Machine Tools and Rotor Division, prior to the
divestment. Following this move, the award of a major
contract from the USA led to the need to double capacity 
of this manufacturing cell. The UK Gears business provides
engineered solutions for specific customer challenges. Its
major markets are in the UK, USA, China and Germany.
Sales in South Africa grew by 20%, leading to an improvement
in profitability. This growth came from an increase in demand
from the mining and metal industries. The South African
facility is predominantly a maintenance and overhaul facility,
but does have a design facility.
Couplings
It was another good year for the Couplings business. Double
digit sales growth and return on sales were achieved during
the year. Sales are underpinned by a multi-year Mass Transit
contract with Alstom, which runs until 2008. No new Mass
Transit contract orders were won during the year, but a
number of bids are outstanding. Orders increased by 25%,
which will require an increase in capacity this year. The capital
expenditure required to increase capacity is within the normal
annual level of spend. This increased level of orders positions
this business well for another strong year.
9
Operations Review continued
72903 PRE  18/6/07  21:32  Page 9 Renold Jeffrey named 
Vendor of the Year 2006 by AIT
Renold in Action
It has been announced that Renold Jeffrey 
has been named Vendor of the Year by 
Applied Industrial Technologies (AIT), a leading
North American distributor of industrial products 
and services. This tremendous achievement is 
an acknowledgement of the hard work by all
members of Renold’s US team as well as those
providing support from European facilities.
AIT honoured Renold Jeffrey for a series of
accomplishments, including building partnerships
at field and corporate levels that establish the
groundwork for success.
The range of performance chain products
supplied through AIT’s branches have helped 
to forge a strong partnership between the two
organisations bringing significant benefits to
companies across the United States.
T om Armold, Vice President – Product
Management and Marketing for AIT said, 
“Renold Jeffrey has provided Applied with
excellent support in servicing our customers and
field organization. They are a partner that listens
and responds to the needs of our customers and
to opportunities that bring us mutual benefits
and growth.”
Renold Jeffrey received the overall top ranking
among 35 to 40 of Applied's core vendors through
and in-depth review process performed each 
year. Vendors are rated by various departments
throughout the organization based on a number
of criteria, including value of line, product quality,
sales impact, responsiveness, and reliability of
quoted delivery. Vendors meet with the review
board in person at Applied's corporate
headquarters in Cleveland to analyze results. 
"It is a great honour for our company to 
receive this award from one of our most valued
partners," said George Graham, President of
Renold Jeffrey. "We are committed to achieving
continued success as our partnership continues 
to grow."
72903 PRE  18/6/07  21:32  Page 10 Overview
The financial statements of the Group have been prepared 
in accordance with International Financial Reporting
Standards (IFRS). 
The financial statements of the parent company,
Renold plc, have been prepared under UK Generally
Accepted Accounting Principles (UK GAAP) and are included
on pages 63 to 67.
Continuing Operations
Revenue
The revenue of continuing operations increased by 3% to
£159.3 million, at constant exchange rates the increase was
6%. Sales in the second half-year, at £80.0 million were 1%
higher than the first half.
Operating Profit
Operating profit before exceptional items was £9.8 million 
up 44% on 2005/06. Return on sales for the year before
exceptionals was 6.2% compared with 4.4% for last year. This
demonstrates a continuing recovery in margins, which now
extends for five consecutive half-year periods and we expect
to continue.
Exceptional costs were £5.9 million, compared with 
£1.4 million in 2005/06. £3.2 million related to redundancy
and restructuring costs incurred mainly in the European chain
operations, and £2.7 million related to inventory provisions
precipitated by the reorganisation of distribution facilities
under the PACE project.
Further details of the exceptional costs are given in Note 2(c) 
to the financial statements.
Financing Costs
Total net financing costs reduced to £2.5 million (2005/06 –
£3.6 million).
Net bank interest cost rose to £2.4 million (2005/06 – 
£2.2 million) and there was no significant fair value gain 
or loss on derivatives (2005/06 – gain £0.3 million). Costs
associated with our re-banking were £0.2 million (2005/06 –
£0.7 million). The net interest cost on pension plan balances
and the expected return on pension plan assets was a credit
of £0.1 million (2005/06 – charge £1.0 million).
This change is principally the result of the increased expected
return on the higher value of plan assets.
Profit before Tax
Profit before tax and before exceptional items was 
£7.3 million compared with £3.2 million last year. 
Profit before tax after exceptional items was £1.4 million
compared with a profit of £1.8 million in 2005/06.
Taxation
The tax charge on continuing operations of £0.6 million
(2005/06 – £1.5 million) represented an effective rate of
approximately 40%, nearly half the rate reported in 2005/06.
Discontinued Operations
The Automotive business was divested on 3 August 2006; 
a loss before tax of £1.3 million was reported for the period 
and losses on disposal of £6.2 million.
The Machine Tools business was divested on 6 December
2006; a loss of £0.7 million was reported for the period 
and losses on disposal of £4.6 million.
The results of these businesses are reported as discontinued
operations on one line in the income statement.
Details of the results of the discontinued operations are 
given in Note 5 to the financial statements.
Group Results for the Financial Period
The loss for the year was £12.7 million compared with 
£13.6 million in 2005/06; the basic loss per share was 18.3p
(2005/06 – 19.6p loss) and the diluted loss per share was
Balance Sheet
Net assets at 31 March 2007 were £23.9 million (2005/06 –
£40.6 million). The liability for retirement benefit obligations
was £48.0 million (2005/06 – £53.9 million) before allowing 
for a net deferred tax asset of £11.1 million (2005/06 – 
Cash Flow and Borrowings
Cash inflow from continuing operations was £10.3 million
(2005/06 – £4.7 million).
Cash outflow from discontinued operations was £4.7 million
(2005/06 – £1.7 million inflow).
Payment for purchase of property, plant and equipment was
£6.0 million (2005/06 – £6.7 million), of which £1.5 million
(2005/06 – £2.9 million) related to discontinued activities.
Proceeds of disposals of property, plant and equipment
were £0.2 million (2005/06 – £3.2 million). Proceeds from
disposal of Automotive and Machine Tools businesses 
totalled £5.4 million.
Group net borrowings at 31 March 2007 were £19.4 million
(2006 – £20.7 million) comprising cash and cash equivalents
£20.3 million (2006 – £17.8 million) and borrowings, including
preference shares, of £39.7 million (2006 – £38.5 million).
11
Financial Review
72903 PRE  18/6/07  21:32  Page 11
£12.7 million). Of the £48.0 million obligation, £18.0 million
arises in respect of unfunded schemes which do not require
to be prefunded (see pensions below).
18.1p (2005/06 – 19.6p). The basic adjusted earnings per
share (from continuing operations before exceptional items)
was 8.4p (2005/06 – 1.7p). Treasury and Financial Instruments
During the year the Group entered into a new syndicated
bank facility led by The Royal Bank of Scotland plc, with Fortis
Bank S.A./N.V. as a participant. This facility is significantly
larger and materially less expensive than the facilities which
it replaced.
The Group treasury policy, approved by the directors, is to
manage its funding requirements and treasury risks without
undertaking any speculative risks. Note 26 to the financial
statements provides details of financial instruments. 
The Group maintains a mix of short and medium-term
facilities to ensure that it has sufficient available funds 
for ongoing operations.
A major exposure of the Group earnings and cash flows
relates to currency risk on its sales and purchases made in
foreign (non-functional) currencies, and to reduce such risks
these transactions are covered primarily by forward foreign
exchange contracts. Such commitments generally do not
extend more than 12 months beyond the balance sheet date,
although exceptions can occur where longer-term projects 
are entered into.
To manage foreign currency exchange risk on the translation
of net investments, certain dollar denominated borrowings
taken out in the UK to finance US acquisitions have been
designated as a hedge of the net investment in US subsidiaries,
the carrying value of these borrowings at 31 March 2007 was
£6.4 million (31 March 2006 – £5.4 million).
Borrowings issued at variable rates expose the Group to cash
flow interest rate risk and borrowings issued at fixed rates
expose the Group to fair value interest rate risk. The Group
reviews the mix of fixed and floating debt and has interest
rate swaps to manage part of this exposure.
At 31 March 2007 the Group had 19% (31 March 2006 – 31%)
of its gross debt at fixed interest rates. Cash deposits are
placed short-term with banks where security and liquidity 
are the primary objectives.
The Group has no significant concentrations of credit risk with
sales made to a wide spread of customers, industries and
geographies. Policies are in place to ensure that credit risk 
on individual customers is kept to a minimum.
Pensions
Information on the Group's pension schemes is set out
in Note 19 to the financial statements, including the key
assumptions used by the actuary in arriving at the IAS 19
funding position.
The gross pension assets and liabilities and deficits are 
as follows:
2007 2006
Assets Liabilities Deficit Assets Liabilities Deficit
£m £m £m £m £m £m
UK Schemes
– funded 164.4 (192.5) (28.1) 162.7 (195.6) (32.9)
Overseas 
Schemes
– funded 15.1 (17.0) (1.9) 15.5 (17.9) (2.4)
– unfunded – (18.0) (18.0) – (18.6) (18.6)
179.5 (227.5) (48.0) 178.2 (232.1) (53.9)
Deferred 
Tax Asset 11.1 12.7
Net (36.9) (41.2)
During the year the assets of the funded schemes rose by
£1.3 million. The funding deficit improved further, however,
as liabilities decreased by £4.6 million reflecting actuarial
gains due primarily from increased bond rates, with the rate
used for discounting UK liabilities rising from 5.0% to 5.4%.
The overseas deficit comprises £1.9 million in respect
of defined benefit schemes, and £18.0 million relating
principally to the unfunded German scheme which, as is
common in Germany, is a "pay as you go" scheme which 
does not require to be pre-funded. There is no obligation 
for deficit funding payments for this type of scheme. 
There are three UK defined benefit pension schemes, the
main scheme which is the Renold Group Pension Scheme
(RGPS), the Renold Supplementary Pension Scheme (RSPS),
and the Jones & Shipman Retirement Benefit Scheme (J&S).
The status of these schemes at 31 March 2007 is summarised
below:
As at 31 March 2007 RGPS RSPS J&S Total
£m £m £m £m
IAS 19 liabilities 125.2 30.7 36.6 192.5
Market value of assets 104.2 23.9 36.3 164.4
Deficit on IAS 19 basis 21.0 6.8 0.3 28.1
Annual deficit reduction 
payment (based on 
funding valuations) 2.2 0.7 0.2 3.1
Total members (approx) 6,038 119 1,059 7,216
of which active are 472 13 1 486
Further details on the Group’s pension schemes are given in
Note 19 to the financial statements. 
Peter Bream
Finance Director
Financial Review continued
12
72903 PRE  18/6/07  21:32  Page 12 Directors’Biographies
Matthew Peacock (age 45)
Chairman
was appointed to the Board and became Chairman in September 2006. He is the 
co-founder of Hanover Investors, a specialist turnaround investment firm based in
London. Prior to Hanover, Matthew ran the International M&A team in London at
Barclays De Zoete Wedd in 1989, having previously worked in New York for Credit
Suisse First Boston. Matthew is also a non-executive Director of Elementis plc, 
SMG plc and Cosalt plc.
Bob Davies (age 53)
Chief Executive
joined the Group in March 2004 and was appointed Chief Executive in April 2004. 
A Member of the Institute of Electronic Engineers, he was previously Chief Executive
of Druck Holdings plc and prior to that held a number of senior management
positions in the Lucas Group and at General Electric, holding posts in the UK 
and USA.
Peter Bream (age 40)
Finance Director
joined the Group in July 2006 and was appointed Finance Director in September
2006. He was formerly Finance Director of Provalis plc, a UK listed company, for 
three years until March 2006. Prior to joining Provalis, Peter was a Divisional Finance
Director for API Group plc. Peter is a chartered accountant and has an engineering
degree from Cambridge University.
Rod Powell (age 59)
Non-Executive Director
was appointed to the Board in September 2006. A chartered management
accountant, and partner in R J Investments, Rod was formerly Chief Executive 
of the Control Systems Division of Invensys.
Barbara Beckett (age 53)
Non-Executive Director
was appointed to the Board in March 2005. She is the Group Marketing Director 
of BAA Ltd and has extensive experience throughout the retail/service industries 
and has had operations management experience with several major companies
including BT plc.
David Shearer (age 48)
Non-Executive Director
was appointed to the Board in May 2007 as the Senior Independent Non-Executive
Director. A corporate financier and former senior partner in Deloitte & Touche, where
he was latterly a UK Board member, David is Chairman of Castle Topco Limited which
recently acquired house-builder Crest Nicholson plc and a Non-Executive Director of
SMG plc, Superglass Holdings Limited, Aberdeen New Dawn Investment Trust plc,
Scottish Financial Enterprise and an Advisory Board member of Martin Currie Limited.
He is also a Governor of the Glasgow School of Art and was previously a 
Non-Executive Director of HBOS plc.
72903 PRE  19/6/07  13:06  Page 13 Chairman
M R Peacock
Executive Directors
R J Davies Chief Executive
P E Bream Executive Director
Non-Executive Directors
D J B Shearer (Senior Independent non-executive Director)
B A Beckett
R H E Powell
Composition of Board Committees
Audit Committee Nomination Committee Remuneration Committee
M R Peacock (Chairman) M R Peacock (Chairman) B A Beckett (Chairman)
D J B Shearer D J B Shearer M R Peacock
R H E Powell R H E Powell D J B Shearer
B A Beckett B A Beckett R H E Powell
Company Secretary
K Brown
Registered Office Broker and Financial Adviser
Renold House Kaupthing Singer & Friedlander Capital Markets Limited
Styal Road
Wythenshawe
Manchester M22 5WL Financial PR Consultants
Registered No. 249688 College Hill Associates Limited
Telephone: +44 (0)161 498 4500
Fax: +44 (0)161 437 7782
e-mail: enquiry@renold.com Registrar
Website: www.renold.com Capita Registrars
Northern House
Woodsome Park
Auditors Fenay Bridge
Ernst & Young LLP Huddersfield HD8 0LA
Manchester Telephone: 0870 162 3131
E-mail: shareholder.services@capitaregistrars.com
Website: www.capitaregistrars.com 
Registrar’s Share Portal: www.capitashareportal.com 
Directors and Officers
14
72903 PRE  18/6/07  21:33  Page 14 To be presented to the seventy-seventh Annual General
Meeting of RENOLD plc to be held at Renold House, Styal Road,
Wythenshawe, Manchester M22 5WL on Thursday, 26 July
2007 at 11.30 a.m.
The Notice of Meeting is given, together with explanatory
notes, on pages 68 and 69.
Business review and future developments
A review of the business and the future developments of 
the Group is presented in the Chairman’s Statement on page 3,
Review on pages 7 to 9.
Group results
The profit for the year before tax from continuing operations
was £1.4 million compared with a profit of £1.8 million for the
previous year. 
The announcements in August and December 2006, relating to
the conclusion of the disposal of the Group’s Automotive and
Machine Tool businesses, are in line with the Board’s strategy
to focus the Group on the core activities of the manufacture
and sale of industrial power transmission products being the
principal continuing activity of the Group. 
A review of the Group’s operations, principal activities, future
developments, together with a description of the principal
risks and uncertainties affecting the business and key
performance indicators can be found in the Chairman’s
Statement on page 3, the Chief Executive’s Review on page 5,
the Operations Review on pages 7 to 9 and the Financial
Review on pages 11 and 12, which are incorporated into this
report by references, as well as within this report.
Dividends
No final dividend per ordinary share is recommended.
Preference dividend payments were made on 1 July 2006 and 
1 January 2007.
Directors
The present constitution of the Board and of the Audit,
Nomination and Remuneration Committees at the date of this
Report is set out on page 14. All these Directors were Directors
throughout the year except for Mr P E Bream, who was
appointed 1 July 2006, Mr M R Peacock and Mr R H E Powell who
were appointed on 21 September 2006, and Mr D J B Shearer
who was appointed on 1 May 2007, and all of whom 
will be standing for election at the forthcoming Annual 
General Meeting.
In addition to the Directors listed above, Mr R F Leverton, 
Mr M A Smith and Mr D A Brown were Directors until their
retirement in September 2006.
The Company maintained liability insurance for its Directors
and officers throughout the year.
Biographical details of the Directors are on page 13.
Directors’ interests
The interests of the Directors and their families in the share
capital of Renold plc and in options held under share option
schemes are given in the Directors’ Remuneration Report on
pages 20 to 23. No Director had any interests in contracts 
of significance in relation to the Company’s business during
the year.
Share capital 
Changes in share capital during the year are set out in Note 20
to the financial statements on page 51.
Major shareholders
As at the close of business on 31 May 2007, the Company had
been notified of the following interests in voting rights
attached to shares under Disclosure and Transparency Rule 5.
Number of % of total
voting number of 
rights voting rights
Hanover Investors Group 11,032,500 15.83
Prudential plc 8,910,240 12.78
SVG Investment Managers 5,571,000 8.00
Henderson Global Investors 4,950,000 7.10
Lowland Investment Company 4,650,000 6.67
Aberforth Partners LP 4,562,800 6.55
Strategic Equity Capital 2,950,415 4.23
Employment policies
Arrangements for consulting and involving employees on
matters affecting their interests at work, and informing them
of the performance of their employing business and the Group,
are developed in ways appropriate to each business. A variety
of approaches is adopted aimed at encouraging the
involvement of employees in effective communication and
consultation, and the contribution of productive ideas at
all levels.
Employment policies are designed to provide equal
opportunities irrespective of race, caste, national origin,
religion, age, disability, gender, marital status, sexual
orientation or political affiliation.
The policy of the Company and its UK subsidiaries is to ensure
that disabled applicants for employment are given full and 
fair consideration, and that existing disabled employees 
are given equal access to training, career development
and promotion opportunities. In the event of existing
employees becoming disabled, all reasonable means are
explored to achieve retention in employment in the same or 
an alternative capacity.
Environmental policy
The Board has overall responsibility for the environmental
policy and the Chief Executive is the Director with specific
responsibility for health, safety and environmental matters.
The Company is committed to managing its activities so as to
provide proper levels of care and safety for the environment,
and for its customers and employees. In particular, the
Company seeks to develop and manufacture products so as to
minimise their environmental impact as far as practicable; to
co-operate with industry, government bodies, suppliers and
customers to develop and achieve improved standards of
environmental care; and to conduct its operations in
compliance with relevant statutory provisions concerning
environmental matters.
15
Report of the Directors
for the financial year ended 31 March 2007
72903 PRE  18/6/07  21:33  Page 15
the Chief Executive’s Review on page 5 and in the Operations In line with this policy, local management is responsible for
ensuring that appropriate systems and organisations are
implemented, maintained and monitored in the areas for
which they are responsible. Each business has issued a local
environmental statement which complies with Group policy
and local legislation.
Employees
At 31 March 2007 the Renold Group employed 2,041 people,
including 746 in the UK and 593 in the rest of Europe.
UK pension schemes
The UK pension schemes are largely defined benefit type
schemes with assets held separately from those of 
the Group in trustee administered funds, managed 
by independent managers. Under the terms of their
management agreements the investment managers of the
schemes’ assets are not permitted to invest in the securities of
Renold plc. The Boards of Trustees of the principal schemes
include employee representatives.
In April 2002 the Renold Group Pension Scheme and the Jones
& Shipman plc Retirement Benefits Plan (1971) were closed to
new entrants subject to appropriate transitional arrangements
for existing eligible employees and a defined contribution
scheme was established as from that date. 
Neither the Chairman nor the Chief Executive is a Trustee of
the defined benefit or the defined contribution schemes. An
independent Trustee Company has been appointed to provide
a Chairman of the Board of Trustees of the principal schemes.
Research and development
The research and development activities of the Group continue
to be principally directed towards the development of new
products and manufacturing methods, and the improvement
of performance and cost effectiveness of existing products.
Financial instruments
The Group’s financial risk management objectives and policies
and its exposure to risks, including credit risk, are discussed 
in the Financial Review on pages 11 and 12 and in the Notes 
to the Accounts.
Policy on payment of suppliers
Individual operating businesses are responsible for agreeing
the terms and conditions under which transactions with their
suppliers are conducted, including the terms of payment. It is
the Group’s policy that payments to suppliers are made in
accordance with these terms, provided that the supplier
complies with all relevant terms and conditions.
At 31 March 2007 trade creditors of the Group’s businesses in
the UK and overseas represented 65 days’ purchases, compared
with 72 last year.
Donations
During the year there were no contributions to UK
organisations for charitable purposes nor any contributions
made to political parties.
Auditors
In November 2006, PricewaterhouseCoopers LLP were replaced
as auditors by Ernst & Young LLP . A resolution will be proposed
at the Annual General Meeting to appoint Ernst & Young LLP 
as auditors and to authorise the Directors to fix their
remuneration.
Special business at the Annual General Meeting
At the Annual General Meeting on 26 July 2007, resolutions 1
to 6 are termed ordinary business, while resolutions 7 and 8
will be special business. The special business covers Directors’
authority to allot shares and the partial disapplication of 
pre-emption rights as explained below and set out in the
Resolution 7 gives authority to the Directors to allot shares up
to a maximum nominal amount of £5,804,983 representing
approximately one third of the current issued share capital.
The authority will expire on 25 October 2008 or, if earlier, on
the date of the next Annual General Meeting of the Company
after the passing of the resolution, and replaces a similar
authority granted on 19 September 2006, which expires on 
18 December 2007. Save for any options granted under the
share option schemes, the Directors have no present intention
of exercising the authority conferred by this resolution.
Resolution 8 will permit the Directors to make issue of equity
securities for cash either by way of rights issue or in any other
way, provided that the shares issued other than by way of
rights issue, open offer or other pre-emptive offer or under the
various 2004 schemes of the Company, be limited to shares
with a nominal value of £870,747, being equal to 5% of the
aggregate nominal amount of the Company’s ordinary share
capital currently in issue.
In the opinion of the Directors, the passing of these resolutions
is in the best interests of the shareholders.
Directors’ statement as to disclosure of information to auditors
The Directors who were members of the Board at the time of
approving the Report of the Directors are listed on page 14.
Having made enquiries of fellow Directors and of the
Company’s auditors, each of those Directors confirms that:
● to the best of each Director’s knowledge and belief, there
is no information relevant to the preparation of their
reports of which the Company’s auditors are unaware; and 
● each Director has taken all the steps a Director might
reasonably be expected to have taken to be aware of
relevant audit information and to establish that the
Company’s auditors are aware of that information.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
By order of the Board
K Brown
Secretary
25 June 2007
Report of the Directors continued
for the financial year ended 31 March 2007
16
72903 PRE  18/6/07  21:33  Page 16
Notice of Annual General Meeting on pages 68 and 69. The Company remains committed to high standards of
corporate governance and as such the Board acknowledges its
contribution to achieving management accountability,
improving risk management and ultimately to creating
shareholder value. This statement describes how the principles
of corporate governance, contained in the Combined Code
issued by the Financial Services Authority as an appendix to its
Listing Rules, have been applied by the Company.
Statement by the Directors on compliance with the 
Combined Code
The Board considers that the Company has complied
throughout the year ended 31 March 2007 with the provisions
of the Combined Code, with the exception of the matters
referred to below.
Board
The Board presently comprises a non-executive Chairman,
three non-executive Directors and two executive Directors. 
The roles of Chairman and Chief Executive are separated 
with a clear division of responsibilities agreed by 
the Board. The Chairman’s primary role is to ensure the
effectiveness of the Board in setting the direction of the
Company. The Chief Executive has the responsibility for
managing the business and implementing the strategy 
agreed by the Board. Biographical details of the Directors
appear on page 13.
The Board has approved a schedule of matters reserved for
decision by the Board ensuring that the Board takes all major
strategy, policy and investment decisions affecting the Group;
in addition, it is responsible for business planning and risk
management policies and the development of Group policies
for areas such as safety, health and environmental policies,
Directors’ and senior managers’ remuneration, and ethical issues.
New Directors are provided with an appropriate induction
programme. A formal process for evaluating the performance of
the Board and its committees is conducted annually with the aid
of detailed questionnaires and the Board reviews the outcome.
Following the acquisition by Hanover Investors Group
(“Hanover”) in September 2006 of 14.05% of the ordinary
share capital of the Company, and following consultation 
by the Board with leading institutional shareholders, 
the Company’s then Chairman, Mr R F Leverton, and then
senior independent Director and Chairman of the Audit
Committee, Mr M A Smith, both retired from the Board 
on 21 September 2006. After due enquiry and consultation
with other major shareholders, Mr M R Peacock was 
appointed as non-executive Chairman of the Company and 
Mr R H E Powell as a non-executive Director of the Company.
Since that date, Mr Peacock has been interim senior
independent Director and interim Chairman of the Audit
Committee. As a result, the Company has not been in
compliance with paragraph A.3.3 of the Combined Code (which
states that one of the independent Directors should be
appointed as the senior independent Director) nor with
paragraph C.3.1 of the Combined Code (which states that all
members of the Audit Committee should be independent non-
executive Directors): however, as announced by the Company
on 8 March 2007, Mr D J B Shearer took up appointment as the
senior independent Director with effect from 1 May 2007; in
addition, the Company is actively seeking to appoint a further 
non-executive Director to replace Mr Peacock as Chairman of
the Audit Committee, and has appointed Mr Shearer, in place
of Mr Peacock, to the Remuneration Committee.
The Chairman, Mr M R Peacock, is a principal of a significant
shareholder, Hanover, which now holds 15.83% of the ordinary
share capital of the Company: the Board considers that, whilst
the Company is not in compliance with paragraph A.2.2 of the
Combined Code (which states that the Chairman should on
appointment meet the independence criteria set out in
paragraph A.3.1 of the Combined Code) nor with paragraph
C.3.1 of the Combined Code (as stated above) Mr Peacock (who
receives no annual fee from the Company) acts with complete
independence of character and judgement. 
Mr R HEPowell is associated with Hanover: the Board
considers that, whilst Mr Powell does not meet the
independence criteria set out in paragraph A.3.1 of the
Combined Code, Mr Powell acts with complete independence
of character and judgement.
The Board considers that each of the other non-executive
Directors is independent and free from any business or other
relationship which could affect their judgement.
Board members are able to seek independent legal or other
professional advice in respect of their duties as they may
require at the Company’s expense and have access to the
advice and services of the Company Secretary.
The Board initially appoints all new Directors upon
recommendation from the Nomination Committee. All
Directors are subject to election by shareholders at the first
opportunity following their appointment and to re-election
thereafter at intervals of no more than three years.
The Board meets on a regular basis with an agenda and
necessary papers for discussion distributed in advance of 
each meeting. The following table shows the number of
meetings of the Board and its committees during the year and
individual attendance by Board and committee members at
those meetings.
Board Audit Nomination Remuneration Risk
Number held 9 3 2 2 2
Number attended
M R Peacock 4 2 – 1 –
R J Davies 9 – – – 2
B A Beckett 8 3 2 2 –
P E Bream 8 – – – 1
D A Brown 5 – – – 1
R F Leverton 5 1 2 1 –
R H E Powell 4 2 – 1 –
M A Smith 5 1 2 1 –
17
Corporate Governance
72903 PRE  19/6/07  16:37  Page 17 All Directors in office at the time of the Annual General
Meeting held on 19 September 2006 were in attendance for
the meeting.
Mr M R Peacock, Mr R J Davies, Mr P E Bream, Mr D A Brown, 
Mr R F Leverton, Mr R H E Powell and Mr M A Smith attended
all meetings they were eligible to attend during their time 
as Directors.
Board Committees
The Board delegates specific responsibility to committees, all
of which have written terms of reference and these are
available on the Company’s website. The Company Secretary
acts as secretary to all these committees. The principal Board
committees are described below.
Audit Committee
The Audit Committee is a committee of the Board comprised 
of the Chairman of the Company, Mr M R Peacock, who is
interim Chairman of the Committee, and the non-executive
Directors. The Committee normally meets three times a 
year. The Board is satisfied that, as well as the Chairman of 
the Committee, at least one other member of the Audit
Committee has recent and relevant financial experience. The
Chief Executive, Finance Director and other managers
(including the internal audit function) attend meetings from
time to time at the invitation of the Committee. Its terms 
of reference include the review of the Group’s financial
statements, internal financial control systems, whistleblowing
policies and internal audit reports and the conduct of the
external audit. The external auditors, who attend by 
invitation, are invited by the Committee to advise them of 
any matters which they consider should be brought to the
Committee’s attention without the executive management
present.
A formal process for evaluating the independence of the
external auditors and the performance of the Committee and
the internal audit function is conducted annually with the aid
of a detailed questionnaire, and the Board reviews the
outcome. Additionally, to safeguard the independence and
objectivity of the auditors, the Committee has approved a
policy on non-audit services provided by the auditors in line
with professional practice.
The Committee has met three times during the year; in the
course of these meetings, the Committee considered the
following matters:
Internal controls: Reports from the internal audit function
summarising work planned and undertaken, recommending
improvements and describing actions taken by management.
The Committee also sought the views of the external 
auditors in making its assessment of the internal control
environment.
Internal Audit Function: The Committee evaluated the
performance of the internal audit function and assessed the
work planned and undertaken.
Whistleblowing: The Committee reviewed the procedures for
staff to raise concerns in confidence about possible financial
reporting or other misconduct.
Financial Reporting: The Committee reviewed draft annual and
interim reports before recommending their publication to the
Board. The Committee discussed with the Chief Executive,
Finance Director and external auditors the significant
accounting policies, estimates and judgements applied in
preparing these reports.
Appointment of the external auditors: The Committee
recommended that the Board present a resolution to
shareholders at the 2007 Annual General Meeting for the
appointment of the external auditors. This followed an
assessment of the quality of service provided, including the
qualification of the external auditors, the expertise and
resources made available to the Group, auditor independence
and the effectiveness of the audit process.
Nomination Committee
The Nomination Committee is a committee of the Board
comprised of the Chairman of the Board, Mr M R Peacock, who
is Chairman of the Committee, and the non-executive
Directors. The Committee meets as required and its terms of
reference are to select and recommend to the Board new
appointments of executive and non-executive Directors. The
of the Code (which set out the procedure for the appointment
of Chairman of the Company): the procedure was not applied
to the Board appointments that were made in September
2006, as the circumstances giving rise to those appointments,
as announced by the Company on 22 September 2006, made it
impractical to do so.
Remuneration Committee
The Remuneration Committee is a committee of the Board
comprised of Mr D J B Shearer, non-executive Director and
replacing Mr M R Peacock, Mr R H E Powell, non-executive
Director, and is chaired by Ms B A Beckett. The Chief Executive,
Mr R J Davies, and the Group Human Resources Officer, 
Mrs M Hurt, attend meetings from time to time at the
invitation of the committee. This committee determines the
terms and conditions of employment including remuneration
and benefits of the executive Directors and senior managers as
well as performance related bonus schemes and pension
rights. The main Board determines the remuneration of the
non-executive Directors and individual non-executive
Directors are not present when their own remuneration is
being discussed.
Although the Company is not in compliance with paragraph
B.2.1 of the Combined Code (which states that all members of
the Remuneration Committee should be independent), the
Board considers that the presence of Mr M R Peacock (who
receives no annual fee from the Company) on the
Remuneration Committee brings valuable and independent
judgement to all remuneration decisions.
The Directors Remuneration Report is set out on pages 20 to 23.
Corporate Governance continued
18
72903 PRE  18/6/07  21:33  Page 18
Company is not in compliance with paragraphs A.4.3 and A.4.6 Risk Monitoring Committee
The Risk Monitoring Committee is a committee of the Board
comprised of the executive Directors, the Company Secretary
and the Group Human Resources Officer, and is chaired by the
Chief Executive. Its role is to oversee risk management and to
ensure that appropriate internal controls are in place.
Internal control
The Directors have overall responsibility for the Group’s system
of internal control and for reviewing internal control
effectiveness. Management is accountable to the Directors for
implementing Board policies on risk and control and for
monitoring and reporting to the Board that it has done 
so. The review of the system of internal controls by the
Directors has been completed for the year ended 31 March
2007 and up to the date of approval of the Annual Report
Authority and in accordance with the guidance issued by the
Turnbull Committee.
Internal controls are designed to manage rather than eliminate
the risk of failure to achieve business objectives and can
provide only reasonable and not absolute assurance against
material misstatement or loss.
The key features of the Group’s internal control system are
● a Risk Monitoring Committee which ensures, on behalf of
the Board, that appropriate policies are implemented to
identify and evaluate risks, and to design, operate and
monitor a suitable system of internal control;
● an Internal Audit Function which assists management and
the Audit Committee in the fulfilment of the Board’s
responsibility of ensuring that the Group’s financial and
accounting systems provide accurate and up-to-date
information about its current financial position;
● risk assessments completed by senior management at
each operating unit as part of a continuous process and
reporting of these which is reviewed by the Risk
Monitoring Committee;
● an organisation structure which supports clear lines of
communication and tiered levels of authority;
● a schedule of matters reserved for the Board’s approval to
ensure it maintains control over appropriate strategic,
financial, organisational and compliance issues;
● the preparation of detailed annual financial plans covering
profit and cash flow, which are approved by the Board; the
review of detailed regular reports comparing actual
performance with plans, and of updated financial
forecasts;
● procedures for the appraisal, approval and control of
capital investment proposals including acquisitions and
disposals;
● monitoring procedures which include a system of key
financial controls questionnaires supported by internal
audit reviews. The results of this work are reported to the
Audit Committee.
Communications with shareholders
Communications with shareholders are given high priority. The
Board is accountable to the Company’s shareholders and as
such it is important for the Board to appreciate the
requirements of shareholders and equally that shareholders
understand how the actions of the Board and short-term
financial performance relate to the achievement of the
Company’s long-term goals.
The reporting calendar is dominated by the publication of
interim and final results each year, in which the Board reports
to shareholders on its stewardship of the Company. The
Operations Review on pages 7 to 9 and the Financial Review on
pages 11 and 12 comment on the Group’s financial
performance in the context of the business risks faced and
objectives and plans for the future. At other times during the
year, presentations to analysts and updates to the London
Stock Exchange are made available to all shareholders via the
Company’s website. In addition the Chairman, Chief Executive
and Finance Director meet with major shareholders to 
discuss governance and Group strategy. The Group’s largest
shareholder has a representative on the Board.
The Chairman ensures that the Chief Executive and Finance
Director provide feedback to the Board following presentations
to investors and meetings with shareholders.
The Annual General Meeting provides an opportunity for
communication with private and institutional investors and
the Board encourages shareholders to attend and welcomes
their participation.
At the Annual General Meeting, the Chairman of the Board and
of the Audit, Remuneration, Nomination and Risk Monitoring
Committees, together with the executive Directors, will be
available to answer questions. Notice of the Annual General
Meeting is sent to shareholders at least 20 working days before
the meeting. Details of the proxy votes lodged on each
resolution are available after the result of the votes of the
members present. Shareholders are invited to talk informally
to the Directors after the formal proceedings.
The Company’s website at www.renold.com presents
additional information about the Group, is regularly updated
and includes the posting of the interim and final preliminary
results, and interim management statements, on the day they
are announced.
If you wish to advise a change of name, address, or dividend
mandate, please contact the registrar, Capita Registrars whose
contact details appear on page 14. Alternatively, you can view
up to date information and manage your shareholding
through the registrar’s Share Portal where you will be able to
access and maintain your holding at your own convenience.
You will require your unique investor code, which can be found
on your share certificate or dividend tax voucher. The URL for
the portal is www.capitashareportal.com.
19
Corporate Governance continued
72903 PRE  18/6/07  21:33  Page 19
and financial statements, as required by the UK Listing This report is submitted to shareholders by the Board for
approval at the forthcoming Annual General Meeting on 
26 July 2007 although the vote is advisory only and no
entitlement of a person to remuneration is made conditional
on the resolution being passed. 
Remuneration Committee
The Committee is comprised of the independent non-
executive Directors and the Chairman of the Company and has
been chaired by Ms B A Beckett since 21 July 2005. The
Committee operates under the terms of reference agreed by
the Board.
The members of the Committee during the year were 
Ms B A Beckett, Mr R F Leverton (until his retirement from the
Board in September 2006), Mr M A Smith (until his retirement
from the Board in September 2006) and, since September
2006, Mr M R Peacock and Mr R H E Powell. The Chief Executive
attends meetings at the request of the Chairman to assist the
Committee in their deliberations but does not take part in the
Committee’s recommendations on his own remuneration.
The non-executive Directors do not have service agreements
and have no automatic right of re-appointment. They do not
participate in the Company pension or share option schemes
and apart from their fees and expenses do not receive any
benefits from the Company. The determination of the
remuneration of non-executive Directors is the responsibility
of the whole Board.
The Committee determines the terms and conditions of
employment, including remuneration, for the executive
Directors. Over a number of years the total remuneration
package of the Directors has been reviewed annually with the
help of salary survey information provided by Monks
Partnership. Monks Partnership were appointed by the
Remuneration Committee and have no other connection with
the Company. The Committee is also responsible for the
allocation of options under the Company’s Executive Share
Option Scheme. 
Executive Directors’ remuneration policy
The aim of the Committee is to ensure that the remuneration
package for Directors is competitive and will attract and retain
Directors of the right calibre and qualifications to meet the
requirements of the Company. 
Base salary and benefits
The basic salary of each executive Director is determined by
taking into account the responsibilities and performance of the
individual and having regard to the external market for
manufacturing companies of a similar size and international
complexity and the aim for executive Directors’ pay is for basic
salary to reflect the relevant market median and for benefits to
reflect market practice. Above median levels of pay may be
agreed for outstanding performance or to attract executives of
the right calibre.
Benefits in kind incorporate all assessable tax benefits from
each Director’s employment and comprise mainly the
provision of a fully expensed company car or an equivalent
cash allowance and private medical insurance. Neither the
benefits in kind nor bonus payments are pensionable.
Performance Related Pay
The Company operates incentive arrangements for the
Executive Directors as approved at the Annual General
Meeting in July 2004. These comprise the following:
● A discretionary performance related annual bonus scheme
a maximum of 100% of basic salary with the approval 
of the Remuneration Committee. A proportion of this
bonus is based on group profit targets and the balance 
on personal objectives. For 2006/07 a bonus was awarded
to Mr R J Davies of approximately 80% and to Mr P E Bream
of approximately 50%.
● A deferred annual bonus scheme (“DABS”) invites
Directors to use all or part of their performance related
cash bonus (net of tax) for the preceding financial year to
purchase shares in the Company which must be held as
“Lodged Shares” i.e. cannot be sold during the three year
vesting period. In return the executive Directors receive a
conditional award of matching shares up to a maximum of
150% of the bonus invested. The matching shares are 
only receivable if performance targets are met. The
performance targets require growth in the Company’s
adjusted earnings per share over the three year period
from the commencement of the financial year in which
the DABS award is made to exceed the percentage growth
in the Consumer Price Index (“CPI”) over the same period
by a minimum of 3% per annum compounded which will
trigger 40% of the matching shares to vest and increasing
to 100% on a straight line basis until the percentage
growth in the CPI is exceeded by 6% per annum
compounded. No re-testing of the performance criteria
will occur. No award was made in 2006/07.
● An annual Performance Share Plan (“PSP”) provides
conditional awards to acquire free shares up to a
maximum of 60% of basic salary. At the time of grant
of a PSP performance conditions and target levels will 
be set which are stretching and will use measures the
participants can, by their actions, influence, in order 
to provide effective motivation. The performance 
target will be set such that 40% of the award will vest if
the total shareholder return (“TSR”) performance over a
three year period from the commencement of the
financial year in which the award is made is equal to the
median TSR of a group of companies in the engineering
and machinery index. If the Company’s TSR performance
would place it in the upper quartile of the TSR of the
comparator group of companies, 100% of the award will
vest. The award will vest proportionately between 40%
and 100%. No PSP award will vest below median
performance and no re-testing of the performance criteria
will occur. No award was made in 2006/07.
Share option schemes
The Committee believes that share options remain an
important motivational aspect of remuneration for executive
Directors and senior executives who are encouraged to build
up a holding of shares in the Company. 
Directors’Remuneration Report
20
72903 PRE  18/6/07  21:33  Page 20
which has a norm of 60% of basic salary, and a  The Company operates a discretionary executive share 
option scheme (“the Executive Scheme”) under which the
Committee considers whether to invite executive Directors 
and other senior executives to apply for executive share
options which are exercisable after the third anniversary of the
date of grant. Options granted under the Renold (1995)
Executive Share Option Scheme are only exercisable if the
performance condition, set by the Committee at the time of
grant, is met. This performance condition has been reviewed
from time to time by the Committee and options granted
under this scheme prior to June 2001 require the Group’s
earnings per share to grow from the year preceding the date of
grant, over three or more financial years, at a rate greater than
1.5 times the percentage increase in the UK Retail Prices Index
over the same period. Options granted from June 2001 have a
performance condition that requires the Group’s earnings per
share, before exceptional items, to increase from the year
preceding the date of grant, over three or more financial 
years, at a rate greater than the percentage increase in the UK
Retail Prices Index over the same period plus 3% per annum.
Under the Renold plc 2004 Inland Revenue Approved 
Company Share Option Plan and the Renold plc 2004 
Non Inland Revenue Approved Company Share Option 
Plan (together “the 2004 Executive Scheme”) the 
maximum annual value of shares that may be awarded 
cannot normally exceed 100% of the participant’s basic 
salary. However, in exceptional circumstances this limit
can be raised to 200% at the discretion of the 
Remuneration Committee. 
The performance targets under the 2004 Executive Scheme are
the same as for the DABS award set out above. No re-testing of
the performance criteria will occur and, in addition, no option
will be granted under the 2004 Executive Scheme in the same
year an award is made under the Renold plc 2004 Performance
Share Plan.
In addition, the Company operates a savings-related Share
Option Scheme (“SAYE Scheme”) in which the executive
Directors are eligible to participate on the same terms as all UK
employees. Options granted under this scheme have been
exercisable on completion of either a three-year or five-year
savings contract. No options were granted during the year
under the SAYE Scheme. 
Details of Directors’ interests in shares including options
granted to executive Directors under the 1995 and 2004
Executive Schemes and the SAYE Schemes are set out below. 
Directors’ pensions
Mr D A Brown, who retired from the Board in September 2006,
participated in the Renold Supplementary Pension Scheme
1967, which is a contributory defined benefits plan, until
leaving the Company on 31 October 2006. Members’
contributions are 7
1
⁄ 2% of pensionable pay up to the shadow
earnings cap (£112,800 in 2006/07). This provides for a
pension at age 62 of two-thirds of final pensionable salary up
to the shadow earnings cap, where applicable, after 20 years’
service. On death in retirement, a dependant’s pension of 
two-thirds of the member’s pension is payable and, on death in
service, a dependant’s pension of 50% of the member’s
potential pension is payable together with a lump sum of 
four times salary. Early retirement can be taken from age 50
onwards but is subject to Company consent until age 60 and
actuarial adjustment where appropriate. A member’s accrued
pension is available from age 60 without any actuarial
reduction. Pensions in payment are guaranteed to increase by
the lesser of 5% per annum and the rate of increase in the
Retail Price Index.
In addition, where Inland Revenue limits apply, an additional
benefit is provided. The Company accumulates 25% of the
shortfall between projected final pensionable salary and the
earnings cap. This amount is payable from the Company’s own
resources on retirement and approximates to the cost to the
Company of providing an uncapped pension under the
applicable defined benefit scheme.
Only basic salary is pensionable.
Mr R J Davies is not a member of the Company pension scheme
and has made his own independent pension arrangements
into which the Company made payments of £26,400 in
2006/07 (£26,400 in 2005/06). Similarly, Mr P E Bream is not a
member of a Company pension scheme; the Company
provided £16,300 in respect of his independent pension
arrangements in the year. The Company has no liability beyond
making these annual contributions. On death in service a lump
sum of four times salary is payable.
Service contracts
The policy is for executive Directors to have rolling notice
periods no greater than one year in line with current corporate
governance best practice.
The executive Directors have service contracts as follows:
Date of Contract Notice Period
by Company
R J Davies 2 March 2004 12 months
P E Bream 29 June 2006 12 months
In determining the amount of compensation payable on
termination of a service contract, it is the Committee’s policy to
apply normal principles of mitigation. In these circumstances,
steps would be taken to ensure that poor performance was 
not rewarded. None of the service contracts provide for
compensation payable on early termination of the contract.
The letters of appointment of the non-executive Directors
confirm that the appointment in each case is for a specified
term and that reappointment is not automatic.
External appointments
The Board recognises that invitations to executive Directors to
become non-executive Directors of other companies can
broaden their knowledge and benefit the Group. The policy is
to allow executive Directors, if so authorised by the Board, to
accept one such appointment with fees normally paid to the
Company unless otherwise approved by the Committee.
21
Directors’Remuneration Report continued
72903 PRE  18/6/07  21:33  Page 21 Directors’ interests
The beneficial interests of the Directors, who held office at 31 March 2007, in the ordinary shares of the Company, as appearing in
the Register of Directors’ Interests maintained under the Companies Act 1985, were as follows:
31 March 2007 31 March 2006
Shares Options Shares Options
M R Peacock 11,032,500(a) nil 9,757,500(b) nil(b)
R J Davies 145,000 810,744 85,000 610,744
B A Beckett nil nil nil nil
P E Bream 20,000 210,000 nil(c) nil(c)
R H E Powell 62,012 nil nil(b) nil(b)
(a) Mr M R Peacock is indirectly interested in 11,032,500 shares of which: 3,588,190 through Hanover I Fund LP/Vidacos Nominees,
and 7,444,310 through Hanover I Master Fund LP/Vidacos Nominees.
(b) as at date of appointment on 21 September 2006.
(c) as at date of appointment on 1 July 2006.
There were no non-beneficial interests held by the Directors in the ordinary shares of Renold plc at the end of the year or at
the date of this report.
At 31 March 2007 the only interest of the Directors in the share capital of the Company was in the ordinary shares as stated above.
There have been no other changes in the interests of Directors in the share capital of the Company between the end of the financial
year and the date of this report.
Performance graph
The graph illustrates the performance of a hypothetical holding of
ordinary shares in the Company measured by total shareholder
return (share price growth plus dividends) against a “broad equity
market index” over the past five years. As the Company has been
within the FTSE Engineering and Machinery sectoral index over
this period, the Directors consider that this is the most
appropriate index against which the total shareholder return of
the Company should be measured.
The auditors are required to report on the information contained in the remaining sections of this report.
Directors’ emoluments
2007 2006
Salaries Annual Benefits
& fees bonus Cash Non-cash Total T otal
£000 £000 £000 £000 £000 £000
Executive Directors
R J Davies 278 190 – 29 497 345
P E Bream (from 1.7.06) 111 57 8 – 176 N/A
D A Brown (retired 19.9.06) 80 – 5 1 86 218
469 247 13 30 759 563
Non-executive Directors
M R Peacock – Chairman (from 21.9.06) – – – – – N/A
B A Beckett 30 – – – 30 29
R H E Powell (from 21.9.06) 42 – – – 42 N/A
R F Leverton (retired 21.9.06) 43 – – – 43 43
M A Smith (retired 21.9.06) 16 – – – 16 32
600 247 13 30 890 667
The Company has provided pension contributions of £26,400 (2005/06 – £26,400) and £16,300 to Mr R J Davies and
Mr P E Bream, respectively.
Directors’Remuneration Report continued
22
0
50
100
150
200
250
Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07
Renold plc FTSE Engineering & Machinery
72903 PRE  18/6/07  21:33  Page 22
Rebased to 100 on 31 March 2002  Directors’ pension entitlements
Details of pension benefits earned by Mr D A Brown under the defined benefits scheme, and the cost to the Company of amounts
in respect of unfunded pension obligations provided for but not paid for the period up to his retirement as a director, are set
out below:
Amounts
Accumulated provided in
Increase in Transfer total Increased the period
Years’ accrued value of the accrued Transfer Transfer transfer but not paid
service pension in increase pension at value at value at value in in respect of
at year the period in accrued 19.9.06 19.9.06 31.3.06 the period unfunded
end (a) pension (b) (c) (c) (d)obligations
£000 £000 £000 £000 £000 £000 £000
D A Brown (retired 19.9.06) 16 4 28 60 1,006 932 70 62
(a) the increase in accrued pension during the period, including inflation.
(b) the accumulated total accrued pension at 19.9.06 is the pension that would be paid annually on retirement based on service to
the end of the year but before any adjustment for actuarial reduction for early retirement.
(c) transfer values have been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GNII. The
transfer value represents a liability of the pension fund and not a sum due to the Director and cannot therefore meaningfully
be added to annual remuneration.
(d) the increase in the transfer value of the accrued benefits during the period is after deducting the Director’s personal
contributions to the scheme.
Share options
Number of share options Option Date 
price from
At At (pence which Expiry
31.3.06 Exercised Granted Lapsed 31.3.07 per share) exercisable Date
R J Davies
Executive scheme (a)100,000 100,000 114.20 2.1.10 1.1.17
(a)100,000 100,000 61.60 26.7.09 25.7.16
475,000 475,000 88.00 2.9.07 1.9.14
125,000 125,000 76.50 11.3.07 10.3.14
Savings related scheme 10,744 10,744 54.30 1.3.09 31.8.09
D A Brown (retired 19.9.06) 30,000 (d)30,000 83.50 27.11.06 26.11.13
Executive (c)45,000(45,000) 58.5027.11.0526.11.12
scheme (c)45,000 (45,000) 67.34 28.11.04 27.11.11
20,000 (d)20,000 118.50 19.7.03 18.7.10
10,000 (d)10,000137.8316.7.0215.7.09
10,000 (d)10,000 237.33 17.7.01 16.7.08
Savings related scheme 6,115 6,115 293.83 16.7.99 15.7.06
10,744 10,744 54.30 1.3.09 31.8.09
4,735 4,735 55.08 1.2.06 31.7.06
P E Bream (a)60,000 60,000 114.20 2.1.10 1.1.17
(from 1.7.06) (b)150,000 150,000 61.60 26.7.09 25.7.16
(a) Options granted under the Renold plc 2004 Non Inland Revenue Approved Company Share Option Plans.
(b) Options granted under the Renold plc 2004 Inland Revenue Approved and Non Inland Revenue Approved Company Share 
Option Plans.
(c) At the date of exercise (being options from the Renold (1995) Executive Share Option Scheme) on 7 December 2006, the
Company’s share price was 113.5p per share, giving rise to a gain against the option price.
(d) At date of cessation as a Director.
The middle market price of ordinary shares at 31 March 2007 was 138 pence and the range of prices during the year was 51.50 pence
to 143 pence.
On behalf of the Board
B A Beckett
Chairman of Remuneration Committee
25 June 2007
23
Directors’Remuneration Report continued
72903 PRE  19/6/07  14:41  Page 23 The following statement, which should be read in conjunction
with the Independent Auditors’ Reports, shown on page 25 and
page 60, is made with a view to distinguishing for shareholders
the respective responsibilities of the Directors and of the
auditors in relation to the financial statements of both the
Group and the Company.
The Directors are required to prepare Group and Parent
Company financial statements for each financial year. The
Group financial statements are required to be prepared in
accordance with IFRSs as adopted by the European Union and
also to present fairly the financial position and performance of
the Group. The Directors have elected to prepare the Parent
Company financial statements in accordance with UK
Accounting Standards and, under the Companies Act 1985,
these statements are required to give a true and fair view of
the state of affairs of the Parent Company. 
In preparing the Group and Parent Company financial
statements, the Directors are required to:
(1) select appropriate accounting policies and apply them
consistently;
(2) make judgements and estimates that are reasonable and
prudent;
(3) for the Group financial statements, state whether they
have been prepared in accordance with IFRSs as adopted
by the European Union;
(4) for the Parent Company financial statements, state
whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the Parent Company financial statements.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The Directors are responsible for ensuring that proper
accounting records are maintained which disclose with
reasonable accuracy at any time the financial position of the
Company and of the Group and to enable them to ensure that
the financial statements comply with the Companies Act 1985
and Article 4 of the IAS Regulation. They are also responsible for
taking reasonable steps to safeguard the assets of the
Company and the Group and, in that context, to have proper
regard to the establishment of the appropriate systems of
internal control with a view to the prevention and detection of
fraud and other irregularities.
The Directors are required to provide the auditors with every
opportunity to take whatever steps and undertake whatever
inspections the auditors consider to be appropriate for the
purpose of enabling them to give their audit report on the
financial statements.
The Directors intend to publish the financial statements on 
the Group’s website, www.renold.com. The Directors are
responsible for the maintenance and integrity of the website in
accordance with UK legislation governing the preparation and
dissemination of financial statements. Access to the website is
available from outside the UK, where comparable legislation
may be different.
Statement of Directors’Responsibilities
24
72903 PRE  18/6/07  21:33  Page 24 To the members of Renold plc
We have audited the Group financial statements of Renold plc
for the year ended 31 March 2007 which comprise the Group
Income Statement, the Group Balance Sheet, the Group Cash
Flow Statement, the Group Statement of Recognised Income
and Expense and the related notes 1 to 27. These Group
financial statements have been prepared under the accounting
policies set out therein. 
We have reported separately on the Parent Company financial
statements of Renold plc for the year ended 31 March 2007,
and on the information in the Directors’ Remuneration Report
that is described as having been audited.
This report is made solely to the Company’s members, as a
body, in accordance with Section 235 of the Companies Act
1985. 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 auditors’ 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.
Respective responsibilities of Directors and Auditors
The Directors’ responsibilities for preparing the Annual Report
and the Group financial statements in accordance with
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union are set out in the
Statement of Directors’ Responsibilities.
Our responsibility is to audit the Group financial statements in
accordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the Group financial
statements give a true and fair view and whether the Group
financial statements have been properly prepared in
accordance with the Companies Act 1985 and Article 4 of the
IAS Regulation. We also report to you whether in our opinion
the information given in the Report of the Directors is
consistent with the financial statements. The information
given in the Report of the Directors includes that specific
information presented in the Chairman’s Statement, The Chief
that is cross referenced from the Group results section of the
Report of the Directors.
In addition we report to you if, in our opinion, we have not
received all the information and explanations we require for
our audit, or if information specified by law regarding
Directors’ remuneration and other transactions is not disclosed.
We review whether the Corporate Governance Statement
reflects the Company’s compliance with the nine provisions of
the 2003 Combined Code specified for our review by the Listing
Rules of the Financial Services Authority, and we report if it
does not. We are not required to consider whether the Board’s
statements on internal control cover all risks and controls, or
form an opinion on the effectiveness of the Group’s corporate
governance procedures or its risk and control procedures.
We read other information contained in the Annual Report and
consider whether it is consistent with the audited Group
financial statements. The other information comprises only
the Report of the Directors, the Directors’ Remuneration
Report, the Chairman’s Statement, the Chief Executive’s
Review, the Financial Review, the Operations Review and the
Corporate Governance Statement. We consider the
implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the Group
financial statements. Our responsibilities do not extend to any
other information.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the
Group financial statements. It also includes an assessment of
the significant estimates and judgments made by the Directors
in the preparation of the Group financial statements, and of
whether the accounting policies are appropriate to the Group’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary
in order to provide us with sufficient evidence to give
reasonable assurance that the Group financial statements are
free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of
information in the Group financial statements.
Opinion
In our opinion:
● the Group financial statements give a true and fair view, in
accordance with IFRSs as adopted by the European Union,
of the state of the Group’s affairs as at 31 March 2007 and
of its loss for the year then ended;
● the Group financial statements have been properly
prepared in accordance with the Companies Act 1985 and
Article 4 of the IAS Regulation; and
● the information given in the Report of the Directors is
consistent with the Group financial statements.
Ernst & Young LLP
Registered Auditor
Manchester
25 June 2007
25
Report of the Independent Auditors
72903 PRE  19/6/07  15:37  Page 25
Executive’s Review, Operations Review and Financial Review, Basis of preparation – The consolidated financial statements
for the year ended 31 March 2007 have been prepared in
accordance with International Financial Reporting Standards
(IFRS), and International Financial Reporting Interpretations
Committee (IFRIC) interpretations. These include standards
and interpretations endorsed by the European Union (EU). In
addition, the financial statements have been prepared in
accordance with those parts of the Companies Act 1985
applicable to groups reporting under IFRS. The financial
statements have been prepared using historical cost principles
except that certain items, including derivatives, are measured
at fair value.
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on
management’s best knowledge of current events and actions,
actual results ultimately may differ from those estimates.
Basis of consolidation –The consolidated financial statements
incorporate the financial statements of Renold plc (“the
Company”) and enterprises controlled by the Company (its
subsidiaries). Subsidiaries, which are those entities in which
the Group has an interest of more than one half of the voting
rights or otherwise has power to govern the financial and
operating policies, are consolidated. Under the transitional
options of IFRS 1 business combinations that occurred prior to
the transition date have not been restated.
Subsidiaries are consolidated from the date on which control 
is transferred to the Group and are no longer consolidated 
from the date that control ceases. The purchase method 
of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given up, shares issued
or liabilities undertaken at the date of acquisition plus costs
directly attributable to the acquisition. The excess of the cost
of acquisition over the fair value of the net assets of the
subsidiary acquired is recorded as goodwill. Inter-company
transactions, balances and unrealised gains on transactions
between Group companies are eliminated; unrealised losses
are also eliminated unless the cost cannot be recovered. 
Foreign currency translation – Items included in the financial
statements of each entity in the Group are measured using the
currency that best reflects the economic substance of the
underlying events and circumstances relevant to that entity
(“the functional currency”). The consolidated financial
statements are presented in sterling, which is the functional
and presentation currency of the parent.
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at the
date of the transaction or average rates where applicable.
Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies, are recognised in the
income statement.
Assets and liabilities of overseas subsidiaries are translated
into sterling at the exchange rates ruling at the end of the
financial year. Income statements and cash flows are
translated at the appropriate average rates of exchange for the
year. Differences on exchange arising on the retranslation of
net assets in overseas subsidiaries at the beginning of the year,
borrowings used to finance or provide a hedge against those
investments and from the translation of the results at average
rates are taken directly to reserves. When a foreign entity is
sold related exchange differences previously taken to reserves,
are recognised in the income statement as part of the gain or
loss on sale.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquired
entity over the fair value of the Group’s share of the net
identifiable assets of the acquired entity at the date of
acquisition. Goodwill arising on the acquisition of an
entity is included as an intangible asset. Goodwill is not
amortised but is tested at least annually for impairment
and carried at cost less accumulated impairment losses.
Any impairment charge is recognised immediately in the
income statement.
In circumstances where the fair value of the interest
acquired in an entity’s assets, liabilities and contingent
liabilities exceeds the consideration paid (“negative
goodwill”), the excess is recognised immediately as a gain
in the income statement.
As permitted by IFRS 1, the Group elected not to apply 
IFRS 3 “Business Combinations” to business acquisitions
that occurred before 4 April 2004. Therefore, the carrying
amount of goodwill (being cost less accumulated
amortisation) included under UK GAAP forms the “cost” of
goodwill recognised under IFRS at the date of transition.
Goodwill that was written-off directly to reserves under
former UK GAAP will not be taken into account when
determining the gain or loss on disposal of previously
acquired businesses after 4 April 2004.
(b) Computer software
Computer software that is not integral to an item of plant
and equipment is recognised separately as an intangible
asset. Amortisation is charged on a straight line basis so as
to charge the cost of software to the income statement
over its expected useful life which is between three 
and five years. Costs associated with developing 
or maintaining computer software programmes are
recognised as an expense as incurred.
(c) Research and development
Research expenditure is recognised as an expense as
incurred. Costs incurred on development projects (relating
Accounting Policies
26
72903 PRE  18/6/07  21:33  Page 26 to the design and testing of new or improved products) are
only recognised as intangible assets in circumstances
where certain strict criteria are satisfied. These include the
expectation that it is probable that the project will be a
success, considering its commercial and technological
feasibility, and that all associated costs can be measured
reliably. Otherwise development expenditure is
recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised 
as an asset in a subsequent period. Development costs
that have been capitalised are amortised from the
commencement of the commercial production of the
product on a straight-line basis over the period of its
expected benefit, not exceeding five years.
Property, plant and equipment are stated at cost, being
purchase cost plus any incidental costs of acquisition, less
accumulated depreciation. 
Depreciation is calculated on a straight-line basis so as to
charge the depreciable amount of the respective asset to the
income statement over its expected useful life. The useful lives
of assets are as follows:-
Freehold buildings – 50 years
Leasehold properties – 50 years or the period of the lease if less
Plant and equipment – various according to type of asset, the
principal categories being:
General plant and equipment 10
Fixtures 10
Precision cutting and grinding machines 7
Motor vehicles 3
Where the carrying amount of an asset is greater than its
estimated recoverable amount, it is written down immediately
to its recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount and are included in operating
profit.
As permitted by IFRS 1, at 4 April 2004, the Group has
measured its freehold properties on a fair value basis and used
that value as deemed cost at the transition date.
Asset impairment – Intangible assets and property, plant and
equipment are reviewed, at least annually, to ensure that
assets are not carried above their recoverable amounts. Where
some indication of impairment exists, calculations are made 
of the discounted cash flows resulting from continued use of
the assets (value in use) or from their disposal (fair value less
costs to sell). Where these values are less than the carrying
amount of the assets, an impairment loss is charged to the
income statement.
Leases – Tangible assets held under finance leases, which are
those where substantially all the risks and rewards of
ownership of the asset have passed to the Group, are
capitalised in the balance sheet at the lower of the fair value of
the leased asset or the present value of the minimum lease
payments. Assets acquired under finance leases are
depreciated over the shorter of the useful life of the asset or
the lease term. The corresponding liability to the leasing
company, net of finance charges, is included as an obligation
under finance leases in creditors. The interest element of the
lease payment is charged to the income statement on a basis
which produces a constant rate of charge over the period of 
the liability. 
Leases where a significant portion of the risk and reward of
ownership is retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the income
statement on a straight-line basis over the period of the lease.
Investment property – One of the Group’s properties is
classified as an investment property on the basis that it will 
be held for the long-term, earning a rental income. This is a
contractual arrangement arising from the disposal of a former
business segment.
The investment property was previously a manufacturing
facility of the Group but owner-occupation ceased upon
disposal of the Automotive business. On the date of disposal a
transfer was made from property to investment property. The
cost model has been applied since that date and depreciation
charged at 2% straight line.
Inventories are stated at the lower of cost and estimated net
realisable value, after due allowance for obsolete or slow
moving items. Cost includes all direct expenditure and
attributable overhead expenditure incurred in bringing goods
to their current state under normal operating conditions. The
first in, first out or an average method of valuation is used. Net
realisable value is the estimated selling price in the ordinary
course of business, less the costs of completion and selling
expenses. In the Group accounts, unrealised profit on sales
within the Group is deducted from inventories.
Taxation – The tax charge comprises current tax payable and
deferred tax.
The Group is subject to taxes in numerous jurisdictions. The
current tax charge represents an estimate of the amounts
payable to tax authorities in respect of taxable profits. It is
based on tax rates and laws that have been enacted, or
substantively enacted, by the balance sheet date.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. Currently enacted, or
substantively enacted, tax rates as at the balance sheet date
are used in the determination of deferred income tax.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
27
Accounting Policies continued
72903 PRE  18/6/07  21:33  Page 27 which the temporary differences can be utilised or taxable
profit will be available against which unused tax losses can be
utilised before they expire.
Deferred income tax is provided on temporary differences
arising on investments in subsidiaries except where the timing
of the reversal of the temporary difference can be controlled by
the Group and it is probable that the temporary difference will
not reverse in the foreseeable future.
to external customers after deducting value added tax or other
sales related taxes and trade discounts. Revenue from the sale
of goods is recognised when significant risks and rewards of
ownership of goods are transferred to the buyer which is
normally the point of despatch. 
Trade receivables – Trade receivables are recognised and
carried at the original invoice amount less an allowance for 
any identified impairment. The impairment allowance is
established when there is objective evidence that the Group
will not collect all amounts due under the original terms of 
the transaction. The impairment is charged to the income
statement and represents the difference between the carrying
amount and the recoverable amount.
Employee benefits
(a) Pension obligations
Group companies have various pensions plan
arrangements matching the local conditions and practices
in the countries in which they operate. 
The Group operates a number of defined benefit plans
around the world. The cost is calculated by independent
actuaries using the projected unit credit method. Any past
service costs resulting from enhanced benefits are
recognised immediately in income, unless the changes are
conditional on the employees remaining in service for a
specified period of time (the “vesting period”). In this case,
the past service costs are amortised on a straight-line basis
over the vesting period.
Actuarial gains and losses, which represent differences
between the expected and actual returns on plan assets
and the effect of changes in actuarial assumptions, are
recognised in the Statement of Recognised Income and
Expense in the period in which they occur.
The defined benefit liability or asset recognised in 
the balance sheet represents the net total for each plan 
of the present value of the benefit obligation at the
balance sheet date, less any past service costs not
yet recognised, less the fair value of plan assets (for 
funded schemes) at the balance sheet date. If a plan
records a surplus, the asset recognised is limited to the
amount of any unrecognised past service cost and 
the present value of any amount expected to be
recoverable by the Group by way of refunds or reduction 
in future contributions.
For defined contribution plans, the Group’s contributions
are charged to the income statement in the period in
which they fall due. Once the contributions have been paid
the Group has no further payment obligation.
(b) Share-based compensation
The Group operates equity-settled, share-based
compensation plans. The fair value of the employee
services received in exchange for the grant of the options
is recognised as an expense in the income statement, with
the corresponding amount being recognised in equity. 
The total amount to be expensed over the vesting period 
is determined by reference to the fair value of the 
options granted, excluding the impact of any non-market
vesting conditions, using a Black-Scholes pricing model.
Non-market vesting conditions are included in
assumptions about the number of options that are
expected to become exercisable. At each balance sheet
date, the Group revises its estimates of the number of
options that are expected to become exercisable. It
recognises the impact of the revision of original estimates,
if any, in the income statement, and a corresponding
adjustment to equity over the remaining vesting period.
As permitted by IFRS 1 the Group has applied IFRS 2
“Share-based Payment” only to equity-settled awards
granted after 7 November 2002 and which vested on or
after 1 January 2005.
Exceptional items are items in the profit from operations
which individually or, if of a similar type, in aggregate, are
relevant to an understanding of the Group’s financial
performance. These items are separately disclosed as
memorandum information on the face of the Income
Statement with additional information provided in the notes
to the financial statements.
Financial instruments – In accordance with the options
available under IFRS 1 the Group has elected to apply IAS 32
“Financial Instruments: Disclosure and Presentation” and 
IAS 39 “Financial Instruments: Recognition and Measurement”
prospectively from 1 April 2005.
The principal derivative financial instruments used by the
Group are forward foreign currency exchange contracts and
interest rate swaps, used to manage the exposure to exchange
rate and interest rate movements. Derivative financial
instruments are recognised as assets and liabilities measured
at their fair values at the balance sheet date. Changes in their
fair values are recognised in the income statement where not
part of an effective hedging relationship which has been
designated and documented.
Hedge accounting, as specified by IAS 39, is not generally
applied to transactional hedging relationships, such as hedges
on forecast or committed transactions. However, if it is
deemed appropriate, the Group retains the option to apply
hedge accounting and take the necessary steps to satisfy the
specific requirements of IAS 39. 
Accounting Policies continued
28
72903 PRE  18/6/07  21:33  Page 28
Revenue – Revenue comprises the fair value of goods provided For cash flow hedges, the effective portion of the gain or loss
on the hedging instrument is recognised directly in equity,
while the ineffective portion is recognised in profit or loss.
Amounts taken to equity are transferred to the income
statement when the hedged transaction affects profit or loss,
such as when a forecast sale or purchase occurs. Where the
hedged item is the cost of a non-financial asset or liability, the
amounts taken to equity are transferred to the initial carrying
amount of the non-financial asset or liability.
If a forecast transaction is no longer expected to occur,
amounts previously recognised in equity are transferred to
profit or loss. If the hedging instrument expires or is sold,
terminated or exercised without replacement or rollover, or if
its designation as a hedge is revoked, amounts previously
recognised in equity remain in equity until the forecast
transaction occurs and are transferred to the income
statement or to the initial carrying amount of a non-financial
asset or liability as above. If the related transaction is not
expected to occur, the amount is taken to profit or loss.
Derivatives embedded in other financial instruments or other
host contracts are treated as separate derivatives when their
risks and characteristics are not closely related to those of 
the host contract and the host contract is not stated at its 
fair value with changes in its fair value recognised in the
income statement.
From 1 April 2005 the Group’s Preference Shares have been
classified as liabilities. Dividends payable on the Preference
shares are included within net finance costs. Under UK GAAP
the shares were included as part of Shareholders’ funds and
the dividends payable on the shares were regarded as an
appropriation of profit.
Cash and cash equivalents – Cash and cash equivalents are
carried in the balance sheet at cost. For the purposes of the
cash flow statement, cash and cash equivalents comprise cash
on hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three
months or less, and bank overdrafts. Bank overdrafts are
included within borrowings in current liabilities on the balance
sheet to the extent that there is no right of offset nor intention
to settle net, with cash balances.
Borrowing costs – Borrowing costs are recognised in the
income statement in the period in which they are incurred. 
Provisions – Provisions are recognised when the Group has a
present legal or constructive obligation as a result of past
events; it is more likely than not that an outflow of resources
will be required to settle the obligation; and a reliable estimate
of the amount can be made. Where the Group expects a
provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset
but only when the reimbursement is virtually certain.
Costs related to ongoing activities of the Group are not
provided in advance.
Assets held for sale and discontinued operations – In
accordance with IFRS 5, assets are classified as held for sale if
their carrying amount will be recovered by sale rather than by
continuing use in the business and where the sale is highly
probable. For this to be the case, the asset must be available for
immediate sale in its present condition, management must be
committed to and have initiated a plan to sell the asset which,
when initiated, was expected to result in a completed sale
within a year. Assets that are classified as held for sale are
measured at the lower of their carrying amount or fair value
less costs to sell.
A discontinued operation is a component of the business that
has either been disposed of, or satisfies the criteria to be
classified as held for sale, and represents a separate major line
of business or geographical area of operations (“disposal
group”) and is part of a single co-ordinated plan to achieve
such a disposal. The post-tax profit or loss on a discontinued
operation is shown as a single amount on the face of the Group
Income Statement, separate from the continuing results of the
Group; prior year amounts are restated on a comparable basis.
In the Balance Sheet the assets relevant to the “disposal group”
are reported as a separate line item within current assets;
liabilities associated with the disposal group are similarly
disclosed as a line item below current liabilities. Comparative
balance sheet amounts are not restated.
Dividend distribution to the Company’s shareholders is
recognised as a liability in the Group’s financial statements in
the period in which the dividends are paid or approved by the
Company’s shareholders.
Accounting pronouncements not yet adopted
The following accounting pronouncements have been issued
but are not mandatory for the 31 March 2007 financial
statements:
International Accounting Standards
IFRS 7 – Financial Instruments: Disclosures
IFRS 8 – Operating Segments
IAS 1 – Amendment – Presentation of Financial
Statements: Capital Disclosures
IAS 23 – Amendment – Borrowing Costs
International Financial Reporting Interpretations Committee
(“IFRIC”)
IFRIC 8 – Scope of IFRS 2
IFRIC 9 – Reassessment of Embedded Derivatives
IFRIC 10 – Interim Financial Reporting and Impairment
IFRIC 11 – IFRS 2 “Group and Treasury Share Transactions”
Management does not expect that these standards and
interpretations will have a material impact on the Group’s
results or financial position but IFRS 7 and IFRS 8 will affect the
disclosure of information in the Group’s financial statements.
29
Accounting Policies continued
72903 PRE  18/6/07  21:33  Page 29 2007 2006
Note £m £m
Continuing operations:
Revenue 1 159.3 155.0
Operating costs 2 (155.4) (149.6)
Operating profit 3.9 5.4
Operating profit before exceptional items 9.8 6.8
Exceptional items 2 (5.9) (1.4)
Operating profit 3.9 5.4
Financial costs (13.9) (14.1)
Financial revenue 11.4 10.5
Net financing costs 3 (2.5) (3.6)
Profit before tax 1.4 1.8
T axation 4 (0.6) (1.5)
Profit for the financial year from continuing operations 0.8 0.3
Discontinued operations:
(Loss) for the financial year from discontinued operations 5 (13.5) (13.9)
(Loss) for the financial year (12.7) (13.6)
Earnings per share 6
Basic (loss) per share (18.3)p (19.6)p
Diluted (loss) per share (18.1)p (19.6)p
Basic and diluted earnings per share from continuing operations 1.2p 0.4p
8.4p 1.7p
8.3p 1.7p
Consolidated Statement of Recognised Income and Expense
for the financial year ended 31 March 2007
2007 2006
£m £m
(Loss) for the year (12.7) (13.6)
Net income/(expense) recognised directly in equity:
Foreign exchange translation differences (4.8) 1.1
Gains on fair value of hedging net investments in foreign operations 0.9 1.1
Actuarial gains/(losses) on retirement benefit obligations 0.9 (5.3)
Tax on items taken directly to equity (1.2) 1.7
Total expense recognised directly in equity (4.2) (1.4)
Total recognised income and expense for the year (16.9) (15.0)
Change in equity following adoption of IAS 39 – (0.2)
Total recognised income and expense (16.9) (15.2)
The notes on pages 33 to 57 form part of these financial statements.
Consolidated Income Statement
for the financial year ended 31 March 2007
30
72903 PRE  18/6/07  21:33  Page 30
*Adjusted for the after tax effects of exceptional items
Adjusted earnings per share from continuing operations*
Diluted adjusted earnings per share from continuing operations* 2007 2006
Note £m £m
Assets
Non-current assets
Goodwill 8 15.2 17.1
Other intangible assets 8 0.6 0.2
Property, plant and equipment 9 34.0 38.2
Investment property 10 1.6 –
Other non-current assets 12 0.4 0.3
Deferred tax assets 18 17.4 18.4
69.2 74.2
Current assets
Inventories 11 33.1 36.5
Trade and other receivables 12 30.1 25.8
Derivative financial instruments 26 – 0.2
Cash and cash equivalents 13 20.3 17.8
83.5 80.3
Asset held for sale 14 3.4 3.4
Assets of discontinued operations 5 – 37.1
86.9 120.8
Total assets 156.1 195.0
Liabilities
Current liabilities
Borrowings 15 (7.8) (12.4)
Trade and other payables 16 (36.1) (31.3)
Derivative financial instruments 26 (0.1) –
Provisions 17 (5.2) (0.4)
Current tax liabilities (0.6) (0.7)
(49.8) (44.8)
Liabilities directly associated with discontinued operations 5 – (28.1)
(49.8) (72.9)
Net current assets 37.1 47.9
Non-current liabilities
Borrowings 15 (31.4) (25.6)
Derivative financial instruments 26 – (0.1)
Preference shares 15 (0.5) (0.5)
Trade and other payables 16 (1.2) (0.7)
Deferred tax liabilities 18 (1.3) (0.7)
Retirement benefit obligations 19 (48.0) (53.9)
(82.4) (81.5)
Total liabilities (132.2) (154.4)
Net assets 23.9 40.6
Equity
Issued share capital 20 17.4 17.4
Share premium account 22 6.1 6.0
Other reserves 22 (1.2) 2.7
Retained earnings 22 1.6 14.5
Total shareholders’ equity 23.9 40.6
The notes on pages 33 to 57 form part of these financial statements.
Approved by the Board on 25 June 2007 and signed on its behalf by:
Matthew Peacock Robert Davies
Director Director
31
Consolidated Balance Sheet
as at 31 March 2007
72903 PRE  18/6/07  21:33  Page 31 2007 2006
£m £m
Cash flows from operating activities (Note 25)
Cash generated from operations – continuing 10.3 4.7
Cash (absorbed)/generated by operations – discontinued (4.7) 1.7
5.6 6.4
Income taxes paid (1.4) (1.7)
Net cash from operating activities 4.2 4.7
Cash flows from investing activities
Proceeds from disposal of businesses (net of cash transferred) 5.4 –
Purchase of property, plant and equipment (6.0) (6.7)
Purchase of intangible assets (0.6) (0.2)
Proceeds on disposal of property, plant and equipment 0.2 3.2
Interest received 0.2 –
Net cash from investing activities (0.8) (3.7)
Cash flows from financing activities
Financing costs paid (3.0) (3.3)
Increase in borrowings 6.1 6.9
Issue of ordinary shares 0.1 0.1
Payment of finance lease liabilities (0.4) (0.1)
Net cash from financing activities 2.8 3.6
Net increase in cash and cash equivalents 6.2 4.6
Net cash and cash equivalents at beginning of year 9.6 4.8
Effects of exchange rate changes (0.4) 0.2
Net cash and cash equivalents at end of year (Note 13) 15.4 9.6
The notes on pages 33 to 57 form part of these financial statements.
Consolidated Cash Flow Statement
for the financial year ended 31 March 2007
32
72903 PRE  18/6/07  21:33  Page 32 1. Segmental information
Primary reporting format – business segment
The Group’s continuing activities are in one class of business, Industrial Power Transmission. The consolidated income statement
for continuing operations therefore relates wholly to the Industrial Power Transmission business.
Segment assets and liabilities
Shown below is a summary of the assets and liabilities of Industrial Power Transmission:
2007 2006
£m £m
Assets
Industrial Power Transmission 113.4 116.6
Unallocated assets (see below) 39.3 37.9
Asset held for sale 3.4 3.4
Assets of discontinued operations – 37.1
T otal assets 156.1 195.0
Liabilities
Industrial Power Transmission (90.5) (86.3)
Borrowings (Note 15) (39.7) (38.5)
Derivative financial instruments (0.1) (0.1)
Current and deferred tax (1.9) (1.4)
Liabilities of discontinued operations – (28.1)
(132.2) (154.4)
Secondary reporting format – geographical segments
The operations of the Group are based in five main geographical areas. The UK is the home country of the parent. The main
operations in the principal territories are as follows:
United Kingdom
Germany
Rest of Europe
United States and Canada
Other countries
The sales analysis in the table below is based on the location of the customer; the analysis of assets and capital expenditure is
based on the location of the assets:
Revenue Assets Capital expenditure
2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m
United Kingdom 19.6 20.4 26.6 29.5 2.0 1.6
Germany 14.9 14.6 16.4 19.5 0.6 1.7
Rest of Europe 37.5 35.6 16.8 12.6 0.6 0.2
North America 56.7 57.2 38.3 41.2 0.4 0.8
Other countries 30.6 27.2 15.3 13.8 0.7 0.2
159.3 155.0 113.4 116.6 4.3 4.5
Unallocated assets – – 39.3 37.9 – –
Asset held for sale – – 3.4 3.4 – –
Discontinued operations – – – 37.1 1.5 2.1
159.3 155.0 156.1 195.0 5.8 6.6
Unallocated assets comprise:
Deferred tax asset 17.4 18.4
Cash and cash equivalents 20.3 17.8
Investment property 1.6 –
Property (reclassified in 2007 as an investment property) – 1.7
39.3 37.9
As explained in Note 10, the investment property was transferred from property, plant and equipment during the year.
33
Notes to the Consolidated Financial Statements
72903 ACCOUNTS  18/6/07  21:43  Page 33
(Continuing) 2. Operating costs and exceptional items (continuing operations)
(a) Operating profit is stated after charging/(crediting):
2007 2006
£m £m £m £m
Change in inventory of finished goods and work in progress (1.8) (1.1)
Own work capitalised – (0.1)
Other operating income (1.3) (0.8)
Raw materials and consumables 60.1 58.8
Other external charges 22.8 21.9
Employee costs
Gross wages and salaries 51.4 52.3
Social security costs 7.1 6.2
Pension costs – Defined benefit 2.7 2.6
– Defined contribution 0.7 0.5
Cost of share-based incentive plans 0.1 0.2
–––––– ––––––
62.0 61.8
Depreciation of property, plant and equipment
–  owned assets 4.6 5.1
–  leased assets 0.1 0.1
Amortisation of intangible assets 0.2 0.1
Operating leases – minimum lease payments
–  plant and machinery 0.4 0.3
–  property 1.4 1.6
–––––– ––––––
1.8 1.9
Loss/(profit) on disposal of property, plant and equipment 0.1 (0.1)
Research and development expenditure 0.4 0.2
Remuneration of auditors for audit work 0.3 0.4
Trade receivables impairment charge 0.1 –
Foreign exchange 0.1 –
Exceptional items (Note 2(c)) 5.9 1.4
155.4 149.6
(b) Auditors’remuneration
During the year Ernst & Young replaced PricewaterhouseCoopers as Group auditor. Fees payable to the auditors of the Group
comprise the following:
2007 2006
£000 £000 £000 £000
PwC E&Y Total PwC
Fees payable to the Company’s auditors for the audit of the 
Group’s annual financial statements (i) 45 56 101 169
Fees payable to the Company’s auditors and their associates 
for other services:
Audit of the Company’s subsidiaries pursuant to legislation 22 193 215 258
Taxation services 87 105 192 93
Recruitment and remuneration services 3–3 11
Corporate finance services 5–5 –
All other services –2323 19
117 321 438 381
Notes to the Consolidated Financial Statements continued
34
72903 ACCOUNTS  18/6/07  21:43  Page 34 2. Operating costs and exceptional items (continuing operations) continued
In 2005/06 the Group auditor also received fees of £19,000 and its associates also received £2,000 for audit services provided
to Group pension schemes. In 2006/07 fees of £19,000 are also payable to the Group auditor for audit services to Group
pension schemes. These were the only services provided to the pension schemes. 
(i) The Group audit fee amount shown above for PwC in 2007 (£45,000) represents charges in respect of the audit
for the year ended 31 March 2006.
(c) Exceptional items
2007 2006
£m £m
UK Burton conveyor chain factory restructuring 0.3 0.3
Other redundancy and restructuring charges – 1.1
Profit and cash enhancement restructuring initiatives (“PACE”):
Reorganisation and redundancy costs 2.9 –
Exceptional inventory provision 2.7 –
5.9 1.4
Following the disposal of the Automotive and Machine Tool operations, the PACE strategic initiative has resulted in
exceptional costs associated with the commencement of the restructuring of the continuing Group’s manufacturing 
and distribution facilities. The reorganisation and redundancy costs have originated mainly in the UK (£1.5 million) 
and Germany (£1.0 million). Exceptional inventory write-offs have been charged in the UK (£1.4 million), Germany 
(£0.9 million), the Rest of Europe (£0.2 million) and other countries (£0.2 million).
Additional costs were incurred earlier in the year linked to the reorganisation of the Burton factory. Of the £1.1 million
redundancy and restructuring costs reported in 2006, the principal amounts were incurred in Germany (£0.3 million) 
and Rest of Europe (£0.5 million).
(d) Employees and key management compensation
Employee costs, including Directors, are set out in 2(a) above. Key management personnel is represented by the Board of
Directors and their aggregate emoluments were as follows:
2007 2006
£m £m
Aggregate emoluments 890 741
Further details of the remuneration of Directors are provided in the auditable part of the Remuneration Report on pages 20
to 23 under the headings “Directors’ emoluments” and “Directors’ pension entitlements”.
The average number of persons employed by the Group during the year was:
2007 2006
Continuing Discontinued Continuing Discontinued
United Kingdom 743 179 778 239
Germany 369 12 361 24
Rest of Europe 264 235 201 550
North America 395 9 414 16
Other countries 285 – 254 –
2,056 435 2,008 829
35
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 35 3. Net financing costs
2007 2006
£m £m £m £m
Financial costs:
Interest payable on bank loans and overdrafts (2.6) (2.3)
Interest cost on pension plan balances (11.1) (11.1)
Costs associated with refinancing (0.2) (0.7)
(13.9) (14.1)
Financial revenue:
Interest receivable on bank deposits and cash equivalents 0.2 0.1
Expected return on pension plan assets 11.2 10.1
Fair value gains on derivative instruments – 0.3
11.4 10.5
Net financing costs (2.5) (3.6)
4. Taxation
Analysis of tax charge in the year
2007 2006
£m £m
United Kingdom
UK corporation tax at 30% (2006 – 30%) 1.0 0.5
Less: double taxation relief (1.0) (0.5)
– –
Overseas taxes
Corporation taxes 1.3 1.3
T otal current tax 1.3 1.3
Deferred tax
United Kingdom – origination and reversal of temporary differences – 0.3
Overseas – origination and reversal of temporary differences – (0.4)
T otal deferred tax – (0.1)
Tax charge on loss on ordinary activities 1.3 1.2
Analysed as:
Continuing 0.6 1.5
Discontinued 0.7 (0.3)
1.3 1.2
2007 2006
£m £m
Tax on items taken directly to equity
Deferred tax on pension plan balances (1.1) 1.6
Deferred tax on other direct movements on reserves (0.1) 0.1
(1.2) 1.7
Notes to the Consolidated Financial Statements continued
36
72903 ACCOUNTS  18/6/07  21:43  Page 36 4. Taxation continued
Factors affecting the Group tax charge for the year
The Group’s tax charge in future years will be affected by the profit mix, effective tax rates in the different countries where the
Group operates and utilisation of tax losses. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries.
The tax assessed for the year is higher (2006 – higher) than the standard rate of corporation tax in the UK (30%). The differences
are explained below:
2007 2006
Profit/(loss) on ordinary activities before tax £m £m
Continuing operations 1.4 1.8
Discontinued operations (2.0) (1.4)
(0.6) 0.4
Tax on ordinary activities at 30% (2006 – 30%) (0.2) 0.1
Effects of:
Permanent differences 0.9 0.1
Overseas tax rate differences (0.3) 0.3
Unrelieved tax losses 3.4 1.6
Utilisation of brought forward tax losses (0.7) (0.4)
Depreciation and other temporary differences (1.8) (0.2)
Adjustments in respect of prior periods – (0.3)
T otal tax charge 1.3 1.2
During March 2007 the UK government announced Budget tax changes which, if enacted in the proposed manner, will have an
effect on the future tax position.  These changes are not reflected in the balance sheet at 31 March 2007.  However, it is proposed
that the rate of UK corporation tax will reduce from 30% to 28% from 1 April 2008 and this rate change will affect the amount of
deferred tax recognised in the balance sheet.  Further proposals include a reduction in the rate of capital allowances applicable to
plant and machinery expenditure from 25% to 20% per annum on a reducing basis, along with other changes impacting the
allowances applicable to certain long life assets.  The effect of these proposed changes to the UK tax system will be reflected in
the financial statements for the year ending 31 March 2008. 
5. Discontinued operations
On 3 August 2006 and 6 December 2006 respectively, the Group announced the completion of the sale of certain assets and
financial statements to 31 March 2006 and had accordingly been classified as held for sale in last year’s balance sheet. It was
explained last year that these transactions were in line with the Board’s strategy to focus on the Group’s core activity of
manufacture and sale of Industrial Power Transmission products.
The major classes of assets and liabilities sold and the associated consideration are analysed below:
Assets and liabilities disposed other than cash:
Machine
Automotive T ools T otal
£m £m £m
Property, plant and equipment 6.2 0.5 6.7
Inventories 7.2 7.8 15.0
Trade and other receivables 6.6 5.3 11.9
Trade and other payables (9.2) (6.1) (15.3)
Provisions (0.5) – (0.5)
Retirement benefit obligations (0.6) – (0.6)
T otal net assets disposed 9.7 7.5 17.2
Cash and cash equivalents relating to the disposals:
Net cash consideration 3.4 3.7 7.1
Consideration outstanding (1.0) – (1.0)
Cash transferred with business – (0.7) (0.7)
Net cash inflow relating to disposals 2.4 3.0 5.4
Deferred consideration of £1.5 million on the Machine Tools disposal has not been recognised in these financial statements and
will only be recognised when there is greater certainty of recovery.
37
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 37
liabilities of the Automotive and Machine Tools businesses. Both businesses had been treated as discontinued operations in the 5. Discontinued operations continued
The results attributable to the discontinued operations are set out below. The operating results for 2006 are for a 12 month period;
for 2007 the results are for the periods up to the respective dates of disposal.
2007 2006
Machine Total Machine T otal
Automotive tools discontinued Automotive tools discontinued
£m £m £m £m £m £m
External revenue 16.3 12.8 29.1 49.3 20.8 70.1
Operating (loss)/profit before exceptional items (2.2) (1.3) (3.5) (1.6) 0.1 (1.5)
Redundancy, restructuring and 
other exceptional items 1.0 0.7 1.7 0.7 (0.2) 0.5
Operating (loss) (1.2) (0.6) (1.8) (0.9) (0.1) (1.0)
Bank interest (0.1) (0.1) (0.2) (0.3) (0.1) (0.4)
(Loss) before tax (1.3) (0.7) (2.0) (1.2) (0.2) (1.4)
T axation ––– 0.5 (0.2) 0.3
(Loss) after tax (1.3) (0.7) (2.0) (0.7) (0.4) (1.1)
Adjustments to fair value less costs to sell 
and losses on disposal (6.2) (4.6) (10.8) (9.1) (3.7) (12.8)
Taxation (Note 4) (0.7) – (0.7) –––
(6.9) (4.6) (11.5) (9.1) (3.7) (12.8)
(Loss) for the year on discontinued operations (8.2) (5.3) (13.5) (9.8) (4.1) (13.9)
Discontinued exceptional items:
Within Automotive the exceptional item of £1.0 million represents the release of provisions that were effectively extinguished as
a result of the disposal transaction. In Machine T ools the £0.7 million represents curtailment gains attributed to operations in the
UK (see employment costs below). In the prior year the exceptional amounts represented the release of surplus provisions and
redundancy costs respectively.
Discontinued employment costs comprise:
2007 2006
£m £m
Gross wages and salaries 8.8 18.1
Social security costs 2.2 4.8
Gain arising on pension curtailment (0.7) (0.3)
10.3 22.6
The cash flows attributed to discontinued operations comprise:
2007 2006
£m £m
From operating activities (4.7) 1.7
From investing activities (1.7) (2.8)
From financing activities (1.6) (0.5)
Notes to the Consolidated Financial Statements continued
38
72903 ACCOUNTS  18/6/07  21:43  Page 38 5. Discontinued operations continued
Set out below is a summary of the net assets of the discontinued operations at 31 March 2006:
Machine 2006
Automotive T ools T otal
£m £m £m
Non-current assets
Property, plant and equipment 4.7 0.5 5.2
Current assets
Inventory 7.2 7.4 14.6
Trade and other receivables 10.7 6.6 17.3
22.6 14.5 37.1
The net liabilities directly associated with assets of the discontinued operations were:
Machine 2006
Automotive T ools T otal
£m £m £m
Current liabilities
Trade and other payables (16.2) (6.7) (22.9)
Provisions (2.9) – (2.9)
Non-current liabilities
Trade and other payables (0.4) – (0.4)
Retirement benefit obligations (1.7) – (1.7)
Deferred tax liabilities – (0.2) (0.2)
(21.2) (6.9) (28.1)
6. Earnings per share
Earnings per share is calculated by reference to the earnings for the year and the weighted average number of shares in issue
during the year as follows:
2007 2006
Weighted Weighted 
average average 
number Per-share number Per-share
Earnings of shares amount Earnings of shares amount
£m Thousands Pence £m Thousands Pence
Basic EPS
Earnings attributed to ordinary 
shareholders (12.7) 69,501 (18.3) (13.6) 69,350 (19.6)
Effect of dilutive securities:
Employee share options – 569 0.2 –63 –
Diluted EPS (12.7) 70,070 (18.1) (13.6) 69,413 (19.6)
Earnings per share from continuing operations:
Basic EPS (12.7) 69,501 (18.3) (13.6) 69,350 (19.6)
Post tax loss/(profit) from discontinued 
operations (Note 5) 2.0 2.9 1.1 1.6
Adjustments to fair value less costs to sell 
11.5 16.6 12.8 18.4
Basic EPS from continuing operations 0.8 69,501 1.2 0.3 69,350 0.4
Inclusion of the dilutive securities shown above does not change the amount shown for basic EPS from continuing operations.
39
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 39
and losses on disposal (Note 5) 6. Earnings per share continued
2007 2006
Weighted Weighted 
average average 
number Per-share number Per-share
Earnings of shares amount Earnings of shares amount
£m Thousands Pence £m Thousands Pence
Earnings per share from discontinued operations
Basic EPS
Post tax (loss)/profit from discontinued 
operations (Note 5) (2.0) 69,501 (2.9) (1.1) 69,350 (1.6)
Adjustments to fair value less costs to sell 
(11.5) (16.6) (12.8) (18.4)
Basic EPS from discontinued operations (13.5) 69,501 (19.5) (13.9) 69,350 (20.0)
Inclusion of the dilutive securities, shown above, changes the amounts shown for basic EPS for discontinued operations to (19.3p)
(2006 – unchanged at (20.0p)).
Adjusted EPS for continuing activities
Basic EPS from continuing operations 0.8 69,501 1.2 0.3 69,350 0.4
Effect of exceptional items, after tax:
PACE restructuring initiatives 4.7 6.8
Redundancy and restructuring costs 0.3 0.4 0.9 1.3
Adjusted EPS 5.8 69,501 8.4 1.2 69,350 1.7
Inclusion of the dilutive securities, shown above, in the calculation of adjusted EPS changes the amount shown to 8.3p 
(2006 – unchanged at 1.7p).
The adjusted earnings per share numbers have been provided in order to give a useful indication of underlying performance 
by the exclusion of exceptional items.
7. Dividends
No ordinary dividend payments were paid or proposed in either the current or prior year.
8. Intangible assets
Computer
Goodwill software Total
£m £m £m
Cost
At 1 April 2006 17.1 1.8 18.9
Exchange adjustment (1.9) (0.1) (2.0)
Additions – 0.5 0.5
At 31 March 2007 15.2 2.2 17.4
Accumulated amortisation
1 April 2006 – 1.6 1.6
Exchange adjustment – 0.1 0.1
Amortisation charge – (0.1) (0.1)
At 31 March 2007 – 1.6 1.6
Net book amount at 31 March 2007 15.2 0.6 15.8
Net book amount at 31 March 2006 17.1 0.2 17.3
Notes to the Consolidated Financial Statements continued
40
72903 ACCOUNTS  18/6/07  21:43  Page 40
and losses on disposal (Note 5) 8. Intangible assets continued
Computer
Goodwill software Total
£m £m £m
Cost
At 1 April 2005 18.3 2.4 20.7
Exchange adjustment 1.4 – 1.4
Additions – 0.2 0.2
Relating to disposal groups (2.6) (0.8) (3.4)
At 31 March 2006 17.1 1.8 18.9
Accumulated amortisation and impairment
1 April 2005 2.6 1.9 4.5
Amortisation charge – 0.3 0.3
Relating to disposal groups (2.6) (0.6) (3.2)
At 31 March 2006 – 1.6 1.6
Net book amount at 31 March 2006 17.1 0.2 17.3
Net book amount at 31 March 2005 15.7 0.5 16.2
“ Amortisation charge” in 2005/06 includes £0.2 million in respect of discontinued operations.
At 31 March 2007 and 31 March 2006 the amount of goodwill retained in the balance sheet as an intangible asset relates to the
acquisition of Jeffrey Chain. This business is defined as a cash generating unit (CGU) for impairment testing purposes. Goodwill is
tested for impairment at least annually and following that exercise in 2006/07 no impairment charge has been recognised in the
period (2006 – nil).
The recoverable amount of the CGU has been determined on a value in use basis. Value in use is calculated as the net present value
of cash flows derived from detailed financial plans for the next financial period and strategic forecasts thereafter for a total period
of five years. A terminal value is recognised based on a constant cash flow into perpetuity. The most significant assumptions
relevant to the determination of the recoverable amount are the growth rate and discount rate. The cash flows are extrapolated
from the approved plan at a growth rate of 3.1% (2006 – 3.1%) which is the long-term growth rate published by the OECD for the
territory in which Jeffrey Chain is based. A discount rate of 11.1% (2006 – 10.2%) has been used representing the Group’s estimated
weighted average cost of capital.
9. Property, plantand equipment
Land and Plant and
buildings equipment Total
£m £m £m
Cost
At 1 April 2006 21.0 89.2 110.2
Exchange adjustment (0.7) (2.7) (3.4)
Additions 
(1)
0.1 5.2 5.3
Transfer to investment property (Note 10) (1.7) – (1.7)
Disposals 
(1)
– (4.1) (4.1)
Reclassification 0.1 (0.1) –
Transfers 
(2)
– 1.0 1.0
At 31 March 2007 18.8 88.5 107.3
Aggregate depreciation
At 1 April 2006 1.8 70.2 72.0
Exchange adjustment – (2.0) (2.0)
Charge for the year 0.3 4.4 4.7
Transfer to investment property (Note 10) (0.1) – (0.1)
Disposals – (2.3) (2.3)
Transfers 
(2)
– 1.0 1.0
At 31 March 2007 2.0 71.3 73.3
Net book amount at 31 March 2007 16.8 17.2 34.0
Net book amount at 31 March 2006 19.2 19.0 38.2
(1) 
Additions includes £1.5 million in respect of discontinued operations. Following the sale of the discontinued businesses, this
amount is also recorded as a component of disposals.
(2)
Prior to sale of discontinued businesses, plant and equipment with a net book amount of £nil (cost £1 million; depreciation 
£1 million) was transferred from amounts previously classified within assets of discontinued operations.
41
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  19/6/07  16:09  Page 41 9. Property, plantand equipment continued
Land and Plant and
buildings equipment Total
£m £m £m
Cost
At 1 April 2005 30.9 134.8 165.7
Exchange adjustment 0.4 2.0 2.4
Additions 
(1)
0.2 6.2 6.4
Disposals (3.1) (8.9) (12.0)
Reclassified as asset held for sale (3.5) – (3.5)
Relating to disposal groups (3.9) (44.9) (48.8)
At 31 March 2006 21.0 89.2 110.2
Aggregate depreciation
At 1 April 2005 3.5 98.0 101.5
Exchange adjustment – 1.5 1.5
Charge for the year 
(2)
0.4 7.8 8.2
Disposals (1.9) (7.0) (8.9)
Reclassified as asset held for sale (0.1) – (0.1)
Relating to disposal groups (0.1) (30.1) (30.2)
At 31 March 2006 1.8 70.2 72.0
Impairment
Impairment at 1 April 2005
Impairment losses recognised in the period – 0.8 0.8
Relating to disposal groups – (0.8) (0.8)
At 31 March 2006 –––
Total depreciation and impairment:
At 31 March 2006 1.8 70.2 72.0
At 31 March 2005 3.5 98.0 101.5
Net book amount at 31 March 2006 19.2 19.0 38.2
Net book amount at 31 March 2005 27.4 36.8 64.2
(1) 
“ Additions” includes £2.0 million in respect of discontinued operations.
(2) 
“Charge for the year” includes £3.0 million in respect of discontinued operations.
Net book amount for plant and equipment includes £0.4 million (2006 – £0.5 million) in respect of assets acquired under 
finance leases.
Under the options available within IFRS 1 (“First-time adoption of IFRS”), the Group chose to measure its freehold land and
buildings on a fair value basis and has adopted this valuation as deemed cost as at the date of transition, 4 April 2004. The
valuation was undertaken by Colliers CRE, Chartered Surveyors, and resulted in an uplift of £15.2 million against the previous
carrying value.
Future capital expenditure
At 31 March 2007 capital expenditure contracted for but not provided for in these accounts amounted to £0.1 million 
(2006 – £0.1 million).
Notes to the Consolidated Financial Statements continued
42
72903 ACCOUNTS  18/6/07  21:43  Page 42 10. Investmentproperty
£m
Cost
Transferred from property, plant and equipment (Note 9) 1.7
As at 31 March 2007 1.7
£m
Aggregate depreciation
Transferred from property, plant and equipment (Note 9) 0.1
Charge for the year –
As at 31 March 2007 0.1
Net book amount at 31 March 2007 1.6
Under the terms of the Sale and Purchase Agreement, related to the disposal of the Automotive business, the ownership of the
former Automotive property in Calais, France, has been retained by the Group. With effect from the date of disposal of the
Automotive business on 3 August 2006, the Calais property was transferred from “property” to “investment property”. Under the
respective Agreement the Group and the purchaser have entered into a rental arrangement that enables the purchaser to
continue manufacturing operations at that facility. 
There are two rental agreements, the first for one year from the date of disposal and the second for the subsequent nine years but
this later agreement is terminable by the tenant at the end of each three year period. The rental income recognised in the period
was £0.2 million. The total future minimum lease payments under the non-cancellable term amount to £0.8 million and of this
£0.2 million is due in the next financial year and £0.6 million is due in the period after one year but not later than five years from
the balance sheet date.
In view of this specific arrangement, the property has been accounted for on a cost model basis. The most recent valuation of the
Calais property was conducted in June 2005 by Colliers CRE, Chartered Surveyors and International Property Consultants. At that
date the fair value of the property was assessed at £1.7 million. The directors are not aware of any circumstances that have arisen
to materially alter that external valuation.
11. Inventories
2007 2006
£m £m
Materials 5.2 6.6
Work in progress 6.8 8.1
Finished products 21.1 21.8
33.1 36.5
Inventories pledged as security for liabilities amounted to £17.0 million (2006 – £21.3 million).
Write-offs taken to the income statement amount to £1.1 million (2006 – £0.5 million). In addition an exceptional charge of 
£2.7 million has been made in the year as described in Note 2(c). 
12. Trade and other receivables
2007 2007 2006 2006
Current Non-current Current Non-current
£m £m £m £m
Trade receivables 26.7 – 24.6 –
Less: provision for impairment of receivables (0.5) – (0.6) –
Trade receivables – net 26.2 – 24.0 –
Other receivables 2.5 0.2 0.8 0.2
Prepayments and accrued income 1.4 0.2 1.0 0.1
30.1 0.4 25.8 0.3
The Group has recognised a loss of £0.1 million (2006 – £0.1 million) for the impairment of its trade receivables during the year.
The Group has no significant concentration of credit risk.
43
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 43 13. Cash and cash equivalents
2007 2006
£m £m
Cash at bank and in hand 15.2 8.7
Short-term bank deposits 5.1 4.8
Cash equivalents – 4.3
Cash and cash equivalents 20.3 17.8
Cash equivalents comprise highly liquid investments with original maturities of three months or less.
In the Group cash flow statement, net cash and cash equivalents are shown after deducting bank overdrafts, as follows:
2007 2006
£m £m
Cash and cash equivalents (as shown above) 20.3 17.8
Less: Overdrafts (Note 15) (4.9) (8.2)
Net cash and cash equivalents 15.4 9.6
14. Asset held for sale
2007 2006
£m £m
Property 3.4 3.4
The asset held for sale is the former chain manufacturing facility located at Burton-upon-Trent. In the interim statement it was
noted that the initial planning application for the redevelopment of the Burton site was rejected. A revised application has been
submitted and a planning decision is expected early in the next financial period. 
15. Borrowings
2007 2006
£m £m
Amounts falling due within one year:
Overdrafts 4.9 8.2
Bank loans 2.8 4.1
Obligations under finance leases 0.1 0.1
7.8 12.4
Amounts falling due after more than one year:
Bank loans 31.2 25.2
Obligations under finance leases 0.2 0.4
31.4 25.6
Preference shares 0.5 0.5
31.9 26.1
T otal borrowings (Note 26(e)) 39.7 38.5
Secured borrowings:
Included in Group borrowings are secured borrowings of £38.1 million (2006 – £31.6 million). Security is provided by fixed and
floating charges over UK assets and the assets of certain overseas subsidiaries.
Notes to the Consolidated Financial Statements continued
44
72903 ACCOUNTS  18/6/07  21:43  Page 44 15. Borrowings continued
Finance leases:
2007 2006
£m £m
Obligations under finance lease
Minimum payments under finance leases are as follows:
Amounts payable within one year 0.1 0.1
Amounts payable between two and five years 0.3 0.5
T otal gross payments 0.4 0.6
Less: Finance charges allocated to future periods (0.1) (0.1)
0.3 0.5
Allocated as:
Current obligations 0.1 0.1
Non-current obligations 0.2 0.4
0.3 0.5
There is no significant difference between the carrying value of financial liabilities and their equivalent fair values.
Preference shares:
All payments of dividends on the 6% cumulative preference shares have been paid on the due dates. The preference shares have
the following rights:
(i) a fixed cumulative preferential dividend at the rate of 6% per annum payable half yearly on 1 January and 1 July in 
each year;
(ii) they rank both with regard to dividend (including any arrears to the commencement of a winding up) and return of capital
in priority to all other stock or shares of the Company but with no further right to participate in profits or assets;
(iii) there is no right to attend or vote, either in person or by proxy, at any General Meeting of the Company or to have notice of
any such meeting, unless the dividend on the preference stock is in arrears for six calendar months;
(iv) there is no redemption entitlement. 
16. Trade and other payables
2007 2007 2006 2006
Current Non-current Current Non-current
£m £m £m £m
Trade payables 20.3 – 17.8 –
Other tax and social security 2.7 – 2.9 –
Other payables 3.6 – 3.5 –
Accruals and deferred income 9.5 1.2 7.1 0.7
36.1 1.2 31.3 0.7
45
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 45 17. Provisions
PACE
restructuring Business Other T otal
initiative restructuring provisions provisions
£m £m £m £m
At beginning of year – 0.4 – 0.4
Amount previously reported within liabilities associated 
with discontinued operations – – 0.7 0.7
Net charge to income statement 2.9 0.3 2.4 5.6
Utilised in year (1.2) (0.3) – (1.5)
At end of year 1.7 0.4 3.1 5.2
PACE restructuring initiatives
As explained in Note 2(c) the Group is reorganising its manufacturing and distribution facilities. This initiative includes significant
changes in the manufacturing footprint, through the migration to low cost countries, and associated changes in the direct
labour headcount. The process is under way and the substantial part of the provision remaining at 31 March 2007 will be
expended in 2007/08.
Business restructuring
This provision relates to the reorganisation and restructuring of a UK based business and will be completed within the next
financial year.
Other provisions
Provisions have been retained in respect of former discontinued operations, including environmental reinstatement works and
employment related liabilities. Whilst it is anticipated that the provisions will be utilised within the following year, the actual
timing remains uncertain pending agreement of remedial actions with the purchaser.
18. Deferred tax
Assets Liabilities Net
2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m
Continuing operations
Accelerated capital allowances 2.8 2.3 (1.8) (0.9) 1.0 1.4
Pension plans 11.0 12.6 0.1 0.1 11.1 12.7
Tax losses 3.8 3.2 0.2 0.2 4.0 3.4
Other temporary differences (0.2) 0.3 0.2 (0.1) – 0.2
Tax asset/(liabilities) 17.4 18.4 (1.3) (0.7) 16.1 17.7
Net off (liabilities)/assets (1.3) (0.7) 1.3 0.7 – –
Net tax assets 16.1 17.7 – – 16.1 17.7
Discontinued operations
Other temporary differences – – – (0.2) – (0.2)
Net tax liabilities – – – (0.2) – (0.2)
T otal net tax assets 16.1 17.7 – (0.2) 16.1 17.5
The net deferred tax asset recoverable after more than one year is £16.1 million (2006 – £17.5 million).
Notes to the Consolidated Financial Statements continued
46
72903 ACCOUNTS  18/6/07  21:43  Page 46 18. Deferred tax continued
The movement in the net deferred tax asset is as follows:
2007
Recognised Recognised
Opening Exchange in income directly Closing
balance adjustments statement in equity balance
£m £m £m £m £m
Accelerated capital allowances 2.3 – 0.5 – 2.8
Pension plans 12.6 (0.1) (0.4) (1.1) 11.0
Tax losses 3.2 (0.1) 0.7 – 3.8
Other temporary differences 0.3 – (0.4) (0.1) (0.2)
18.4 (0.2) 0.4 (1.2) 17.4
2006
Deferred tax
arising on Recognised Recognised
Opening adoption of in income directly Closing
balance IAS 32/39 statement in equity balance
£m £m £m £m £m
Accelerated capital allowances 2.7 – (0.4) – 2.3
Pension plans 13.5 – (2.5) 1.6 12.6
Tax losses 2.3 – 0.9 – 3.2
Other temporary differences (1.5) 0.1 1.6 0.1 0.3
17.0 0.1 (0.4) 1.7 18.4
The movement in the net deferred tax liability in the year is as follows:
2007
Recognised
Opening in income Closing
balance statement balance
£m £m £m
Accelerated capital allowances (0.9) (0.9) (1.8)
Pension plans 0.1 – 0.1
Tax losses 0.2 – 0.2
Other temporary differences (0.3) 0.5 0.2
(0.9) (0.4) (1.3)
2006
Recognised
Opening in income Closing
balance statement balance
£m £m £m
Accelerated capital allowances (2.7) 1.8 (0.9)
Pension plans 0.8 (0.7) 0.1
Tax losses 0.5 (0.3) 0.2
Other temporary differences – (0.3) (0.3)
(1.4) 0.5 (0.9)
During the year the Group has reported an operating profit of £9.8 million, before exceptional items, from continuing operations.
The businesses in all jurisdictions where deferred tax assets have been recognised will, more likely than not, generate suitable
profits from which the future reversal of the underlying timing differences can be deducted.
A deferred tax asset amounting to £8.0 million (2006 – £6.1 million) has not been recognised in respect of losses in certain
subsidiaries where, based on available evidence, it is considered unlikely that the losses will be recovered within the 
foreseeable future.
47
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 47 19. Pensions
The Group operates a number of pension plans throughout the world covering many of its employees. The principal funds are
those in the United Kingdom: the Renold Group Pension Scheme (‘RGPS’); the Jones & Shipman plc Retirement Benefits Plan
(1971) and the Renold Supplementary Pension Scheme 1967 (‘RSPS’). These three plans are funded plans of the defined benefit
type with assets held in separate trustee administered funds. The Renold Group Money Purchase Pension Scheme is a defined
contribution type plan and membership is available to all new employees, the main defined benefit plans having been closed to
new employees in 2002. As a result of the Plans’ closure the age profile of the active membership is increasing, and consequently
current service cost is likely to increase, as members of the Plans approach retirement.
Overseas employees participate in a variety of different pension arrangements of the defined contribution or defined benefit type,
funded in accordance with local practice.
The most recent actuarial valuations of the Renold Group Pension Scheme and the Renold Supplementary Pension Scheme 1967
were at 5 April 2004. The valuations of both plans used the projected unit method and were carried out by Barnett Waddingham,
professionally qualified actuaries. The last valuation of the Jones & Shipman plc Retirement Benefits Plan (1971) was in April 2003,
by William M Mercer Limited, who were the former actuarial advisers to the Group.
For all defined benefit plans operated by the Group the disclosures in the accounts are based on the most recent actuarial
valuations. Where material, these have been updated to the balance sheet date by qualified independent actuaries. The
disclosures provided below are presented on a weighted average basis where appropriate.
The principal financial assumptions used to calculate plan liabilities as at 31 March 2007 are presented below. The assumptions
adopted by the plans’ actuaries represent the best estimates chosen from a range of possible actuarial assumptions which, due
to the timescale covered, may not necessarily be borne out in practice.
UK Overseas
2007 2006 2007 2006
Rate of increase in pensionable salaries 3.6% 3.4% 3.8% 2.9%
Rate of increase in pensions in payment and deferred pensions 3.0% 2.8% 2.4% 1.8%
Discount rate 5.4% 5.0% 5.8% 5.2%
Inflation assumption 3.1% 2.9% 2.7% 2.2%
Expected return on plan assets 6.5% 6.3% 8.0% 8.0%
Plan assets are stated at their market values at the respective balance sheet dates and overall expected rates of return are
established by applying published brokers’ forecasts to each category of plan assets.
The predominant defined benefit obligation for funded plans within the Group resides in the UK (£192.5 million of the 
£209.5 million Group obligation for funded plans). In addition to the assumptions shown above, mortality assumptions 
have a significant bearing on the calculated obligation. The assumed life expectations for the Renold Group Pension Scheme 
on retirement at age 65 are as follows (different rates apply for the Renold Supplementary Pension Scheme 1967 and the 
Jones & Shipman Retirement Benefit Scheme (1971)).
2007 2006
Retiring today
Males 17.0 17.0
Females 20.5 20.5
Retiring in 20 years
Males 19.1 19.1
Females 22.0 22.0
The post-retirement mortality tables used for the plan are the PA92 series tables published by the UK Actuarial Profession. 
The mortality rates for the Renold Group Pension Scheme (which represents approximately 2/3rds of the UK defined 
benefit obligation) are based on projections to calendar year 2020 for non-pensioners and 2004 for current pensioners. 
However, the mortality rates used are 110% of the standard rates for non-pensioners and female pensioners and 120% for male
pensioners. The effect of this adjustment is to reduce life expectancy in line with the results of a mortality experience review
carried out at the time of the last valuation. It can be noted that the assumed life expectancy is longer for the other two UK defined
benefit plans.
Notes to the Consolidated Financial Statements continued
48
72903 ACCOUNTS  18/6/07  21:43  Page 48 19. Pensions continued
Sensitivity analysis
Assumption Change in assumption Impact on plan liabilities
Discount rate Increase/decrease by 0.5% Decrease/increase by 7.5%
Rate of inflation* Increase/decrease by 0.5% Increase/decrease by 5.5%
Rate of salary growth Increase/decrease by 0.5% Increase/decrease by 1.6%
Rate of mortality Increase by 1 year** Increase by 3.8%
* Assuming assumption for real salary growth unchanged.
** Calculated using a reduction to assumed mortality rates of 12.5% at all ages. This is broadly equivalent to an increase in life
expectancy of 1 year at age 65.
The expected long-term rates of return and market values of assets of the principal defined benefit plans of the Group, together
with the present value of plan liabilities, are shown below. It should be noted that the market values of the plans’ assets are stated
as at the Group’s year end. It is not intended to realise the assets in the short-term and the value may therefore be subject to
significant change before being realised. The present values of the plans’ liabilities are derived from cash flow projections over long
periods and are thus inherently uncertain.
The fair values of plan assets were:
UK Overseas T otal
2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m
Equities 78.6 78.2 7.5 9.2 86.1 87.4
Bonds 85.8 84.5 3.8 3.8 89.6 88.3
Other – – 3.8 2.5 3.8 2.5
T otal market value of assets 164.4 162.7 15.1 15.5 179.5 178.2
Present value of plan liabilities (192.5) (195.6) (35.0) (36.5) (227.5) (232.1)
Deficits in plans (28.1) (32.9) (19.9) (21.0) (48.0) (53.9)
Pension commitments
Pension obligations:
The movement in the present value of the defined benefit obligation is as follows:
2007 2006
UK Overseas Total UK Overseas T otal
£m £m £m £m £m £m
Opening obligation (195.6) (36.5) (232.1) (177.2) (30.8) (208.0)
Current service cost (2.1) (0.7) (2.8) (2.1) (0.7) (2.8)
Interest cost (9.6) (1.5) (11.1) (9.5) (1.7) (11.2)
Contributions by plan participants (0.7) (0.2) (0.9) (0.8) (0.2) (1.0)
Actuarial gains and losses 4.5 (0.9) 3.6 (15.2) (6.3) (21.5)
Gains on curtailments 0.7 0.1 0.8 0.1 0.3 0.4
Liabilities extinguished on settlements ––– 1.0 – 1.0
Benefits paid 10.3 1.7 12.0 8.1 2.3 10.4
Exchange adjustment – 3.0 3.0 – (1.1) (1.1)
Relating to disposal groups ––– – 1.7 1.7
Closing obligation (192.5) (35.0) (227.5) (195.6) (36.5) (232.1)
In 2006 “Interest cost” included £0.1 million in respect of discontinued operations.
The total defined benefit obligation can be analysed as follows:
Obligations related to funded 
pension plans (192.5) (17.0) (209.5) (195.6) (17.9) (213.5)
Obligations related to unfunded 
pension plans – (18.0) (18.0) – (18.6) (18.6)
(192.5) (35.0) (227.5) (195.6) (36.5) (232.1)
49
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 49 19. Pensions continued
Pension assets:
The movement in the present value of the defined benefit plan assets is as follows:
2007 2006
UK Overseas Total UK Overseas T otal
£m £m £m £m £m £m
Opening assets 162.7 15.5 178.2 142.4 12.4 154.8
Expected return on plan assets 10.1 1.1 11.2 9.1 1.0 10.1
Actuarial gains and losses (3.5) 0.8 (2.7) 14.5 1.7 16.2
Assets distributed on settlement ––– (0.9) – (0.9)
Contributions by the employer 4.7 0.7 5.4 4.9 0.6 5.5
Contributions by plan participants 0.7 0.2 0.9 0.8 0.2 1.0
Benefits paid (10.3) (0.8) (11.1) (8.1) (1.3) (9.4)
Exchange adjustment – (2.4) (2.4) – 0.9 0.9
Closing assets 164.4 15.1 179.5 162.7 15.5 178.2
Balance sheet reconciliation:
Plan obligations (192.5) (35.0) (227.5) (195.6) (36.5) (232.1)
Plan assets 164.4 15.1 179.5 162.7 15.5 178.2
Retirement benefit obligation (28.1) (19.9) (48.0) (32.9) (21.0) (53.9)
The net amount of actuarial gains and losses taken to the statement of recognised income and expense is as follows:
2007 2006
£m £m
Actuarial gains and (losses) arising on plan obligations 3.6 (21.5)
Actuarial gains and (losses) arising on plan assets (2.7) 16.2
Net actuarial gains and losses 0.9 (5.3)
In 2006 “ Actuarial gains and losses arising on plan obligations” included a gain of £0.1 million relating to discontinued operations.
An analysis of amounts charged to operating costs is set out below:
2007 2006
£m £m
Operating costs – continuing
Current service cost (2.8) (2.8)
Gains on curtailments 0.1 0.1
Liabilities extinguished on settlements – 1.0
Assets distributed on settlements – (0.9)
(2.7) (2.6)
Amounts relating to discontinued operations
Gains on curtailments 0.7 0.3
T otal cost of retirement benefits (2.0) (2.3)
Notes to the Consolidated Financial Statements continued
50
72903 ACCOUNTS  18/6/07  21:43  Page 50
The actual return on plan assets was £8.5 million (2006 – £26.3 million). 19. Pensions continued
History of experience gains and losses
UK
2007 2006 2005
Experience adjustments arising on plan assets
Amount (£m) (3.5) 14.5 3.3
Percentage of plan assets 2.1% 8.9% 2.3%
Experience adjustments arising on plan liabilities
Amount (£m) 4.5 (15.2) (20.4)
Percentage of present value of plan liabilities 2.3% 7.8% 11.5%
Present value of plan liabilities (£m) (192.5) (195.6) (177.2)
Fair value of plan assets (£m) 164.4 162.7 142.4
Deficit (£m) (28.1) (32.9) (34.8)
Overseas
2007 2006 2005
Experience adjustments arising on plan assets
Amount (£m) 0.8 1.7 1.2
Percentage of plan assets 5.3% 11.0% 9.7%
Experience adjustments arising on plan liabilities
Amount (£m) (0.9) (6.3) –
Percentage of present value of plan liabilities 2.6% 17.3% –
Present value of plan liabilities (£m) (35.0) (36.5) (30.8)
Fair value of plan assets (£m) 15.1 15.5 12.4
Deficit (£m) (19.9) (21.0) (18.4)
Total
2007 2006 2005
Experience adjustments arising on plan assets
Amount (£m) (2.7) 16.2 4.5
Percentage of plan assets 1.5% 9.1% 2.9%
Experience adjustments arising on plan liabilities
Amount (£m) 3.6 (21.5) (20.4)
Percentage of present value of plan liabilities 1.6% 9.3% 9.8%
Present value of plan liabilities (£m) (227.5) (232.1) (208.0)
Fair value of plan assets (£m) 179.5 178.2 154.8
Deficit (£m) (48.0) (53.9) (53.2)
The cumulative amount of actuarial losses recognised in equity since 4 April 2004 was £20.3 million (2006 – £21.2 million). 
Of this amount £nil (2006 – £nil) related to discontinued operations. The Group expects to contribute approximately £5.3 million
(2006 – £5.7 million) to defined benefit plans in the year to 31 March 2008.
As a result of the deficits in the main UK plans, it has been agreed with the actuaries and trustees that, under existing
arrangements, annual lump sum payments of £2.2 million will be paid to the RGPS plan, £0.7 million to the RSPS plan and 
£0.2 million to the Jones & Shipman plan over the average remaining service lives of members, being fifteen, twelve and 
fifteen years respectively.
The Group operates a number of defined contribution plans. The cost for the period was £0.7 million (2006 – £0.5 million). 
There were outstanding contributions in creditors of £nil (2006 – £nil) at the balance sheet date.
20. Called up share capital
Authorised Issued
2007 2006 2007 2006
Equity interests
Ordinary shares of 25p each 23.1 23.1 17.4 17.4
At 31 March 2007 the issued Ordinary Share Capital comprised 69,659,807 (2006 – 69,429,220) ordinary shares of 25p each.
During the year the Company issued 230,587 (2006 – 93,810) ordinary shares of 25p each for a cash consideration of £138,192
(2006 – £51,671) by the exercise of options under the Executive and the Savings Related Share Option Schemes.
51
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 51 21. Share-based payments
Details of the share-based payment arrangements are provided in the Remuneration Report on pages 20 to 23.
Share options have been granted under the Executive Share Option Schemes and the Savings Related Share Option Schemes. 
At 31 March 2007 unexercised options for ordinary shares amounted to 3,698,762 (2006 – 3,591,299).
The fair value per option granted in the period and the assumptions used in the calculation are as follows:
2007 2006
Savings 
Executive Share Option Related 
Scheme Scheme
Grant date 26.7.06 30.11.06 2.1.07 24.1.2006
Share price at date of grant 62p 106.5p 119p 62.0p
Exercise price 61.6p 100.1p 114.2p 54.3p
Number of employees 1219 198
Shares under option 535,000 120,000 360,000 999,779
Vesting period (years) 333 3
Expected volatility 29.1% 29.5% 30.3% 29.9%
Option life (years) 10 10 10 3.5
Expected life (years) 666 3.1
Risk free interest rate 4.7% 4.9% 5.2% 4.2%
Assumed dividends expressed as a dividend yield 1.7% 0.9% 0.9% 4.0%
Possibility of ceasing employment before vesting 8% zero zero 3%
Fair value per option 19.4p 39.8p 44.9p 14.6p
The expected volatility is based on historical volatility over the last three years. The expected life is the average expected period 
to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed
option life. Dividend yields indicated above are an expression of assumed dividends over the respective periods included in 
the calculation. These assumptions may not be borne out in practice. A reconciliation of option movements over the year to 
31 March 2007 is shown below:
Executive share option scheme
2007 2006
Weighted Weighted
average average
exercise exercise
Number price Number price
Outstanding at 1 April 2,186,849 98.68p 2,653,678 99.14p
Granted 1,015,000 84.81p ––
Lapsed (127,307) 155.19p (383,829) 105.48p
Forfeited (98,000) 82.14p (83,000) 74.00p
Exercised (145,000) 63.07p ––
Outstanding at 31 March 2,831,542 93.79p 2,186,849 98.98p
Exercisable at 31 March 223,202 128.71p 90,000 62.67p
Savings related share option scheme
2007 2006
Weighted Weighted
average average
exercise exercise
Number price Number price
Outstanding at 1 April 1,404,450 54.53p 672,594 61.31p
Granted –– 999,779 54.30p
Lapsed (222,088) 55.06p (146,208) 83.76p
Forfeited (229,555) 54.35p (27,905) 83.76p
Exercised (85,587) 54.61p (93,810) 55.08p
Outstanding at 31 March 867,220 54.43p 1,404,450 54.53p
Exercisable at 31 March 36,090 54.54p 238,473 55.08p
Notes to the Consolidated Financial Statements continued
52
72903 ACCOUNTS  18/6/07  21:43  Page 52 21. Share-based payments continued
Executive share option scheme
2007 2006
Weighted Weighted
Range of average Weighted average average Weighted average
exercise exercise Number remaining life exercise Number remaining life
prices price of shares Expected Contractual price of shares Expected Contractual
58.5p to 74.3p 63.34p 1,055,000 4.5 7.5 64.35p 813,000 2.7 6.7
76.5p to 94.5p 84.89p 890,000 4.1 7.1 84.87p 905,000 4.1 8.1
100.1p to 120.0p 112.0p 577,500 5.7 8.7 118.5p 97,500 0.3 4.3
137.83p to 242.67p 189.36p 309,042 – 1.7 204.03p 371,349 – 2.3
Savings related share option scheme
2007 2006
Weighted Weighted
Range of average Weighted average average Weighted average
exercise exercise Number remaining life exercise Number remaining life
prices price of shares Expected Contractual price of shares Expected Contractual
54.3p to 89.36p 54.43p 867,220 2.8 3.1 54.53p 1,404,450 2.4 2.6
The weighted average share price during the period for options exercised over the year was 111.07p (2006 – 59.14p). 
The total charge for the year relating to employee share-based payment plans was £110,000 (2006 – £158,000), all of which
related to equity-settled share-based transactions. After deferred tax, the total charge was £110,000 (2006 – £180,000).
22. Analysis of changes in shareholders’ equity
Share Currency
Share premium Retained translation T otal
capital account earnings reserve equity
£m £m £m £m £m
At 1 April 2005 17.3 6.0 31.5 0.5 55.3
Loss for the year – – (13.6) – (13.6)
Foreign exchange translation difference – – – 1.1 1.1
Actuarial gains and losses – – (5.3) – (5.3)
Gains on fair value of hedging net
investments in foreign operations – – – 1.1 1.1
Tax on items recognised directly in equity – – 1.7 – 1.7
Employee share options:
– value of employee services – – 0.2 – 0.2
– proceeds from shares issued 0.1––– 0.1
As at 31 March 2006 17.4 6.0 14.5 2.7 40.6
Loss for the year – – (12.7) – (12.7)
Foreign exchange translation differences – – – (4.8) (4.8)
Actuarial gains and losses – – 0.9 – 0.9
Gains on fair value of hedging net
investments in foreign operations – – – 0.9
Tax on items recognised directly in equity – – (1.2) – (1.2)
Share premium – 0.1 – – 0.1
Employee share options:
– value of employee services – – 0.1 – 0.1
At 31 March 2007 17.4 6.1 1.6 (1.2) 23.9
The currency translation reserve is used to record exchange differences arising from the translation of financial statements of
foreign operations and the proportion of the gains or losses on hedging instruments used to hedge against movements in net
investments in foreign operations that are determined to be effective.
Cumulative goodwill written off directly to Group reserves at 31 March 2007, subsequent to the capital reorganisation in 
January 1985, amounted to £2.0 million (2006 – £2.0 million).
Included in retained earnings is an amount of £10.3 million (net of tax) (2006 – £11.0 million) relating to the revaluation of
freehold property that was undertaken at the date of IFRS adoption. The amount is not distributable until it is realised.
53
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 53
0.9 23. Operating lease obligations
At the end of the year there were the following minimum rental commitments under non-cancellable operating leases:
2007 2006
Properties Equipment Properties Properties Equipment
Continuing Continuing Continuing Discontinued Continuing
(restated)
£m £m £m £m £m
Within one year 2.1 0.4 1.7 0.2 0.4
Between two and five years 6.5 0.7 5.6 0.7 0.7
Over five years 17.2 – 17.8 0.2 0.1
25.8 1.1 25.1 1.1 1.2
Certain of the leased properties have been sublet and the future minimum sublease payments expected to be received under 
non-cancellable sublease agreements is £0.8 million (2006 – £0.9 million). The 2006 comparative amount has been restated to
show an existing property lease not previously included.
24. Contingent liabilities
Performance guarantees given to third parties in respect of Group companies were £3.9 million (2006 – £2.9 million).
25. Additional cash flow information
Reconciliation of profit/(loss) before tax to net cash flows from operations:
2007 2006
£m £m
Cash generated from operations:
Continuing operations:
Profit before taxation 1.4 1.8
Depreciation and amortisation 4.9 5.4
Loss on plant and equipment disposals 0.1 –
Equity share plans 0.1 0.2
Net finance costs 2.5 3.6
Decrease/(increase) in inventories 1.2 (1.8)
(Increase) in receivables (2.3) (0.4)
Increase in payables 4.1 2.7
Increase/(decrease) in provisions 1.7 (2.7)
Movement on pension plans (3.5) (3.8)
Movement in derivative financial instruments 0.1 (0.3)
Cash generated from continuing operations 10.3 4.7
Discontinued operations
(Loss) before taxation (2.0) (1.4)
Depreciation and amortisation – 3.1
Plant and equipment impairment – 0.8
Loss/(gain) on plant and equipment disposals 0.2 (0.1)
Net finance costs 0.2 0.4
(Increase) in inventories (0.3) (0.6)
Decrease in receivables 2.2 0.2
(Decrease)/increase in payables (2.0) 5.3
(1.2) (5.7)
Movement on pension plans (1.8) (0.3)
Cash (absorbed)/generated by discontinued operations (4.7) 1.7
Cash generated from operations 5.6 6.4
Notes to the Consolidated Financial Statements continued
54
72903 ACCOUNTS  18/6/07  21:43  Page 54
(Decrease) in provisions 25. Additional cash flow information continued
Reconciliation of net increase in cash and cash equivalents to movement in net debt:
2007 2006
£m £m
Increase in cash and cash equivalents 6.2 4.6
Change in net debt resulting from cash flows (6.1) (6.9)
Finance lease inception (0.2) –
Foreign currency translation differences 1.4 (0.9)
Change in net debt during the period 1.3 (3.2)
Net debt at start of year (20.7) (17.5)
Net debt at end of year (19.4) (20.7)
Net debt comprises:
Cash and cash equivalents 20.3 17.8
T otal borrowings (Note 15) (39.7) (38.5)
(19.4) (20.7)
26. Financial instruments
These notes should be read in conjunction with the narrative disclosures in the Financial Review on pages 11 and 12.
(a) The balance sheet position on financial instruments is set out below:
2007 2006
£m £m
Current assets:
Forward foreign currency contracts – cash flow hedge – 0.2
Current liabilities:
Forward foreign currency contracts – cash flow hedge (0.1) –
Non-current liabilities:
Interest rate swaps – (0.1)
(b) Short-term receivables and payables
The carrying amount of short-term receivables and payables (being those with a remaining life of less than one year) 
is deemed to approximate to their fair value.
(c) Interest rate swap
The notional principal amount of the outstanding interest rate swap contracts at 31 March 2007 was $9.4 million and 
£Nil (1 April 2006 – $14.4 million and £0.5 million).
At 31 March 2007 the fixed interest rate was 7.0% (1 April 2006 – rates varied from 8.3% to 11.0%) and floating rate was 6.6%
(US LIBOR plus 125 basis points).
(d) Hedge of net investment in foreign entity
The Group has dollar denominated borrowings which it has designated as a hedge of the net investment in its subsidiaries
in the USA. The carrying value of the dollar borrowings at 31 March 2007 was £6.4 million (1 April 2006 – £5.4 million). A
foreign exchange gain of £0.9 million (2006 – loss of £0.5 million) on translation of the borrowings into sterling is included
as a part of the hedging reserve movement. Gains or losses on the retranslation of this borrowing are transferred to equity
to offset any gains or losses on translation of the net investment in the USA subsidiaries.
55
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 55 26. Financial instruments continued
(e) Currency and interest rate profile of financial liabilities of the Group
Weighted
Weighted average
average period for
interest which rate Fixed Floating
rate is fixed rate rate T otal
Currency % Years £m £m £m
2007
Sterling
– Financial liabilities 7.1 4.0 0.3 14.2 14.5
– Preference shares 6.0 * 0.5 – 0.5
US Dollar 7.0 2.8 6.6 3.6 10.2
Euro – – – 12.6 12.6
Other 8.1 0.3 0.2 1.7 1.9
7.6 32.1 39.7
2006
Sterling
– Financial liabilities 11.0 0.5 0.5 14.8 15.3
– Preference shares 6.0 * 0.5 – 0.5
US Dollar 8.3 1.5 8.8 5.7 14.5
Euro 4.3 2.0 1.7 4.4 6.1
Other 8.1 1.3 0.5 1.6 2.1
12.0 26.5 38.5
* Preference shares have no fixed repayment date.
The sterling and US dollar fixed rate financial liabilities take into account interest rate swaps.
Floating rate financial liabilities bear interest at rates, based on relevant national base rate equivalents, which can fluctuate
on a daily basis.
The other financial instruments of the Group that are not included in the above tables are non-interest bearing and are
therefore not subject to interest risk.
(f) Currency and interest rate profile of financial assets at 31 March 2007
Currency 2007 2006
Cash at Cash at
bank and Short-term bank and Short-term
in hand deposits Total in hand deposits T otal
£m £m £m £m £m £m
Sterling 6.5 – 6.5 1.6 – 1.6
Euro 3.3 5.1 8.4 5.5 4.8 10.3
Other 5.4 – 5.4 5.9 – 5.9
15.2 5.1 20.3 13.0 4.8 17.8
Cash balances and short-term deposits are held with the Group’s bankers. These deposits are held largely in France and
Germany and earn interest at bank deposit interest rates for periods of up to three months.
Notes to the Consolidated Financial Statements continued
56
72903 ACCOUNTS  18/6/07  21:43  Page 56 26. Financial instruments continued
(g) Maturity of financial liabilities
The maturity profile of the carrying amount of the Group’s financial liabilities, other than short-term payables such as trade
payables and accruals, was as follows:
2007 2006
Total T otal
debt debt
£m £m
In one year or less, or on demand 7.8 12.3
In more than one year but not more than two years 2.2 21.7
In more than two years but not more than five years 27.9 2.1
In more than five years 1.8 2.4
39.7 38.5
Debt due in more than five years includes £0.5 million at 31 March 2007 (2006 – £0.5 million) in respect of Renold plc’s 
preference shares.
(h) Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at the year end date in respect of which all
conditions precedent had been met at that date: 
2007 2006
£m £m
Expiring within one year or less, or on demand 8.4 17.7
The facilities expiring in one year or less, or on demand, are primarily annual facilities subject to review at various dates
during the year ending 31 March 2008.
27. Post balance sheet acquisition
As further described in the Chief Executive’s Review, the Group has acquired, for the agreed price of US$4 million, a 90% interest
in HangZhou ShanShui, an industrial chains manufacturing business in China. Due to the recent date of this transaction and 
the publication date of the financial statements, it is impracticable to provide additional disclosure information associated with
this transaction.
57
Notes to the Consolidated Financial Statements continued
72903 ACCOUNTS  18/6/07  21:43  Page 57 Prepared under Prepared under 
IFRS UK GAAP
2007 2006 2005 2004 2003
£m £m £m £m £m
Group revenue 188.4 225.1 197.0 192.1 187.4
Less discontinued operations (29.1) (70.1) (53.8) – –
Revenue from continuing operations 159.3 155.0 143.2 192.1 187.4
Operating profit before exceptional items 
(and goodwill amortisation under UK GAAP) – continuing 9.8 6.8 4.6 7.6 9.2
Operating profit 3.9 5.4 0.4 8.6 6.8
Profit/(loss) before tax 1.4 1.8 (1.8) 4.7 4.2
T axation (0.6) (1.5) 1.5 – (1.7)
0.8 0.3 (0.3) 4.7 2.5
Discontinued operations:
(Loss)/profit from discontinued operations (13.5) (13.9) 0.2 – –
(Loss)/profit for the year (12.7) (13.6) (0.1) 4.7 2.5
Net assets employed
Property, plant and equipment, intangible 
software and investment property 36.2 38.4 64.7 47.0 50.0
Working capital and other net assets 26.2 30.7 43.0 41.2 38.8
Operating assets 62.4 69.1 107.7 88.2 88.8
Assets of discontinued operations – 37.1–––
Liabilities of discontinued operations – (28.1) – – –
Properties held for sale 3.4 3.4 – – 2.3
Goodwill 15.2 17.1 15.7 18.8 22.6
Net debt (19.4) (20.7) (17.0) (19.2) (20.9)
Dividends – – – (2.1) (2.1)
Deferred and current taxation 15.5 17.0 14.6 12.8 2.3
Provisions (5.2) (0.4) (11.7) (1.2) (10.9)
Net assets excluding pension obligations 71.9 94.5 109.3 97.3 82.1
Pension obligations (48.0) (53.9) (53.2) (39.4) –
T otal net assets 23.9 40.6 56.1 57.9 82.1
Other data and ratios
Operating return on average operating assets %
1
14.9 7.7 4.7 8.6 9.9
Operating profit on turnover %
1
6.2 4.4 3.2 4.0 4.9
Capital expenditure £m 5.8 6.6 7.6 7.2 5.7
Basic (loss)/earnings per share p (18.3) (19.6) (0.1) 6.8 3.5
Dividends per ordinary share p – – 4.5 4.5 4.5
Employees at year end (continuing) 2,041 2,008 2,015 2,656 2,686
1
Based on operating profit before exceptional items (and goodwill amortisation under UK GAAP).
Figures presented for 2004 under UK GAAP include pension liabilities and associated deferred tax assets assessed in accordance
with FRS 17 “Retirement Benefits”. Years prior to 2004 have not been adjusted.
Had IFRS been adopted in 2003 to 2004 the main adjustments to the UK GAAP figures as presented above would have been in
respect of pension obligations, the revaluation of freehold properties and non-amortisation of goodwill.
Group Five Y ear Financial Review 
(unaudited)
58
72903 ACCOUNTS  18/6/07  21:43  Page 58 UNITED KINGDOM
Renold Power Transmission Limited* FACTORIES: BREDBURY, CARDIFF, HALIFAX, MILNROW 
REST OF EUROPE
Austria Renold GmbH 
Belgium Renold Continental Limited (incorporated in the United Kingdom)
Denmark Renold A/S
France Brampton Renold SA FACTORY: LILLE
– Renold SAF SAS: ST SIMEON DE BRESSIEUX
Germany Renold Holding GmbH
– Renold GmbH FACTORY: EINBECK
– Renold Automotive Systems LLC
Holland Renold Continental Limited (incorporated in the United Kingdom)
Poland Renold Polska sp.z o.o.
Sweden Renold T ransmission AB
Switzerland Renold (Switzerland) GmbH
NORTH AMERICA
Canada Renold Canada Limited
USA Renold Holdings Inc
– Renold Inc FACTORY: WESTFIELD, NY
– Jeffrey Chain LP FACTORY: MORRISTOWN, TN
OTHER COUNTRIES
Australia Renold Australia Proprietary Limited FACTORY: MELBOURNE
China – Renold Transmission (Shanghai) Company Limited and
– Renold Technologies (Shanghai) Company Limited: FACTORY: BEICAI
Malaysia Renold (Malaysia) Sdn Bhd
New Zealand Renold New Zealand Limited FACTORY: AUCKLAND
Singapore Renold Transmission Limited (incorporated in the United Kingdom )
South Africa Renold Crofts (Pty) Limited FACTORY: BENONI
* Direct subsidiary of Renold plc
Subsidiary companies listed above are those which, in the opinion of the Directors, principally contributed to the results and assets
of the Group. Companies of minor importance are omitted by virtue of Section 231 and Schedule 5 of the Companies Act 1985.
All companies are direct or indirect subsidiaries of Renold plc, the parent company ultimately holding a 100% interest in the equity
shares and voting rights. Renold Power Transmission Limited and Renold Continental Limited are registered in England and Wales.
Overseas companies are incorporated in the countries in which they operate except where otherwise stated.
59
Principal Subsidiary Companies
as at 31 March 2007
72903 ACCOUNTS  18/6/07  21:43  Page 59 To the members of Renold plc
We have audited the Parent Company financial statements of
Renold plc for the year ended 31 March 2007 which comprise
the balance sheet and the related notes (i) to (x). These Parent
Company financial statements have been prepared under the
accounting policies set out therein. We have also audited the
information in the Directors’ Remuneration Report that is
described as having been audited.
We have reported separately on the Group financial
statements of Renold plc for the year ended 31 March 2007.
This report is made solely to the Company’s members, as a
body, in accordance with Section 235 of the Companies Act
1985. 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 auditors’ 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.
Respective responsibilities of Directors and Auditors
The Directors’ responsibilities for preparing the Annual Report,
including the Directors’ Remuneration Report and the Parent
Company financial statements in accordance with applicable
United Kingdom law and Accounting Standards (United
Kingdom Generally Accepted Accounting Practice) are set out
in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the Parent Company financial
statements and the part of the Directors’ Remuneration Report
to be audited in accordance with relevant legal and regulatory
requirements and International Standards on Auditing (UK 
and Ireland). 
We report to you our opinion as to whether the Parent
Company financial statements give a true and fair view and
whether the Parent Company financial statements and the
part of the Directors’ Remuneration Report to be audited have
been properly prepared in accordance with the Companies 
Act 1985. We also report to you whether in our opinion 
the information given in the Report of the Directors is
consistent with the Parent Company financial statements. The
information given in the Report of the Directors includes that
specific information presented in the Chairman’s Statement,
Review, that is cross referenced from the Group results section
of the Report of the Directors.
In addition we report to you if, in our opinion, the Company 
has not kept proper accounting records, if we have not received
all the information and explanations we require for our audit,
or if information specified by law regarding Directors’
remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and
consider whether it is consistent with the audited Parent
Company financial statements. The other information
comprises only the Report of the Directors, the unaudited 
part of the Directors’ Remuneration Report, the Chairman’s
Statement, the Chief Executive’s Review, the Financial Review,
the Operations Review and the Corporate Governance
Statement. We consider the implications for our report if we
become aware of any apparent misstatements or material
inconsistencies with the Parent Company financial statements.
Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the
Parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited. It also includes
an assessment of the significant estimates and judgements
made by the Directors in the preparation of the Parent
Company financial statements, and of whether the accounting
policies are appropriate to the Company’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary
in order to provide us with sufficient evidence to give
reasonable assurance that the Parent Company financial
statements and the part of the Directors’ Remuneration Report
to be audited are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming our
opinion we also evaluated the overall adequacy of the
presentation of information in the Parent Company financial
statements and the part of the Directors’ Remuneration Report
to be audited.
Opinion
In our opinion:
● the Parent Company financial statements give a true and
fair view, in accordance with United Kingdom Generally
Accepted Accounting Practice, of the state of the
Company’s affairs as at 31 March 2007; 
● the Parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited have
been properly prepared in accordance with the Companies
Act 1985; and
● the information given in the Report of the Directors is
consistent with the Parent Company financial statements.
Ernst & Young LLP
Registered Auditor
Manchester
25 June 2007
Report of the Independent Auditors
60
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 60
The Chief Executive’s Review, Operations Review and Financial A summary of the principal Company accounting policies is set
out below. These have been applied on a consistent basis
unless otherwise indicated.
As permitted by Section 230 of the Companies Act 1985 
the Parent Company has not presented its own profit and 
loss account.
Basis of accounting – The accounts have been prepared 
in compliance with the Companies Act 1985 and in 
accordance with UK Generally Accepted Accounting Principles
(UK GAAP). They have been prepared under the historical cost
convention, as modified to include fixed asset investments 
at net asset value.
Foreign currencies – Foreign currency transactions are
translated into the functional currency using the exchange
rates prevailing at the date of the transaction. Foreign
exchange gains and losses resulting from the settlement of
such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated
in foreign currencies, are recognised in the income statement.
Financial instruments and risk management – The accounting
policies of the Company in respect of financial instruments are
consistent with those of the Group, and are detailed in the
consolidated financial statements. In accordance with
paragraph 3(c) of FRS 25, the Company is exempt from the
disclosure requirements of paragraphs 51 to 95 of FRS 25. 
The Company’s financial instruments are consolidated with
those of the Group and are incorporated into the disclosures 
in note 26.
Tangible fixed assets represented by properties and equipment
are stated at cost, being purchase cost plus any incidental costs
of acquisition, less accumulated depreciation. The book values
of certain assets which were the subject of past revaluations
have been retained as permitted by the transitional
arrangements of FRS 15 ‘Tangible Fixed Assets’. Depreciation is
calculated by reference to original cost at fixed percentages
assuming effective useful lives as follows:–
Leasehold properties – the period of the lease
Equipment and fixtures – 5 to 10 years
Motor vehicles – 25% per annum for 3 years leaving 25%
residual value
Where appropriate, adjustments are made to the remaining
effective useful lives of assets to reflect changes in
circumstances to those envisaged when the asset was brought
into use.
Leases – annual rentals in respect of operating leases are
charged against the profit of the year in which they are
incurred.
Investments – Shares in subsidiary companies are stated at
their net asset value at the end of the year. This basis has been
adopted because it is considered that it more fairly represents
the value of the investment to Renold plc.
Deferred tax is recognised on all timing differences that have
originated but not reversed at the balance sheet date, where
transactions or events that result in an obligation to pay more,
or a right to pay less, tax in the future have occurred at the
balance sheet date, with the following exceptions:
● Provision is not made for tax that would arise on the
remittance of retained earnings of overseas subsidiaries
unless the dividends have been accrued as receivable at
the balance sheet date.
● Deferred tax assets are recognised only to the extent that,
based on all available evidence, it is considered more likely
than not that there will be suitable taxable profits from
which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is measured on a non-discounted basis at the tax
rates that are expected to apply in the periods in which the
timing differences are expected to reverse, based on tax rates
and laws enacted or substantively enacted by the balance
sheet date.
Pension costs – Employees of the Company participate in the
pension plans operated by the Renold plc Group in the UK.
These include pension plans of the defined benefit and defined
contribution types. However, the contributions paid by the
Company are accounted for as defined contribution plans in all
cases. This is because the Company is unable to identify its
share of the underlying assets and liabilities in the respective
plans, as required by Financial Reporting Standard 17
(Retirement Benefits). Therefore, contributions paid to the
respective pension plans are charged to the profit and loss
account as incurred. Disclosures associated with the Renold
Group defined benefit plans are provided in the Renold plc
Group Accounts.
61
Accounting Policies – Company
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 61 Share-based compensation – The Company operates equity-
settled share-based compensation plans as detailed in the
Group financial statements. The fair value of Company
employee services received in exchange for the grant of the
options is recognised as an expense in the income statement,
with the corresponding amount being recognised in equity.
The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options
granted, excluding the impact of any non-market vesting
conditions, using a Black-Scholes pricing model. Non-market
vesting conditions are included in assumptions about the
number of options that are expected to become exercisable. 
At each balance sheet date, an update is made of the estimates
of the number of options that are expected to become
exercisable. The impact of the revision of original estimates, 
if any, is recognised in the income statement, and a
corresponding adjustment made to equity over the remaining
vesting period.
As permitted under the transitional provisions of FRS 20, the
Company has applied the standard only to equity-settled
awards granted after 7 November 2002 and which vested on or
after 1 January 2005.
Dividends – Final dividend distributions to the Company’s
shareholders are recognised as a liability in the financial
statements in the period in which the dividends are approved
by the Company’s shareholders, while interim dividend
distributions are recognised in the period in which the
dividends are declared and paid. Dividends receivable from
subsidiary undertakings are similarly recognised on this basis.
Cash flow statement – As permitted by Financial Reporting
Standard 1 (Cash Flow Statements (revised 1996)), the
financial statements do not contain a cash flow statement as
the financial statements of the Group, which are publicly
available, contain a cash flow statement.
Related party transactions – The Company has taken
advantage of the exemption not to disclose related party
transactions with other members of the Group under Financial
Reporting Standard 8 (Related Party Disclosures) as these
transactions are fully eliminated on consolidation.
Accounting Policies – Company continued
62
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 62 2007 2006
Note £m £m
Fixed assets
Tangible assets i 0.2 0.2
Investments in subsidiary undertakings ii 44.3 55.7
44.5 55.9
Current assets
Debtors iii 2.3 2.0
Cash and short-term deposits 11.8 21.9
14.1 23.9
Creditors – amounts falling due within one year
Other creditors iv (2.5) (2.1)
Bank borrowings v (2.8) (2.5)
Net current assets 8.8 19.3
Total assets less current liabilities 53.3 75.2
Creditors – amounts falling due after more than one year
Bank borrowings v (15.8) (20.8)
Preference shares v (0.5) (0.5)
Derivative financial instruments vi – (0.1)
Net assets 37.0 53.8
Capital and reserves
Called up share capital viii 17.4 17.4
Share premium account ix 6.1 6.0
Profit and loss account ix 13.5 30.4
Shareholders’ funds 37.0 53.8
Approved by the Board on 25 June 2007 and signed on its behalf by:
Matthew Peacock Robert Davies
Director Director
The balance sheet should be read in conjunction with the notes on pages 64 to 67.
63
Company Balance Sheet
as at 31 March 2007
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 63 (i) Tangible assets
Properties Equipment T otal
£m £m £m
Cost
At beginning of year 0.1 0.9 1.0
Additions at cost –––
At end of year 0.1 0.9 1.0
Depreciation
At beginning of year – 0.8 0.8
Depreciation for the year – – –
At end of year – 0.8 0.8
Net book value at end of year 0.1 0.1 0.2
Net book value at beginning of year 0.1 0.1 0.2
(ii) Investments in subsidiary undertakings
Shares Advances T otal
£m £m £m
Subsidiary companies
Cost or valuation
At beginning of year 23.2 32.5 55.7
Advances  – 5.0 5.0
Deficit on revaluation (16.4) – (16.4)
At end of year 6.8 37.5 44.3
The principal subsidiary companies of Renold plc at 31 March 2007 are set out on page 58.
(iii) Debtors
2007 2006
£m £m
Amounts owed by Group undertakings 1.4 1.5
Deferred tax asset 0.3 0.3
Other debtors 0.4 0.1
Prepayments and accrued income 0.2 0.1
2.3 2.0
The analysis of the deferred tax asset is as follows:
2007 2006
£m £m
Accelerated capital allowances 0.1 0.1
Other temporary differences 0.2 0.2
0.3 0.3
Notes to the Company Financial Statements 
64
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 64 (iv) Other creditors
2007 2006
£m £m
Amounts falling due within one year:
Trade creditors 0.7 0.5
Amounts owed by Group undertakings – 0.1
Other taxation and social security 0.1 0.3
Other creditors 1.3 0.9
Accruals 0.4 0.3
2.5 2.1
(v) Borrowings
2007 2006
£m £m
Amounts falling due within one year:
Bank overdrafts 0.9 –
Bank loans 1.9 2.5
2.8 2.5
Amounts falling due after one year:
Bank loans 15.8 20.8
Repayable:
In more than one year but not more than two years 1.9 20.8
In more than two years but not more than five years 13.9 –
15.8 20.8
Summary of total borrowings:
Bank overdrafts 0.9 –
T otal bank loans 17.7 23.3
Preference shares 0.5 0.5
T otal borrowings 19.1 23.8
Bank borrowings are secured by fixed and floating charges over the assets of UK subsidiaries.
All payments of dividends on the 6% cumulative preference shares have been paid on the due dates. The preference shares have
the following rights:
(i) a fixed cumulative preferential dividend at the rate of 6% per annum payable half yearly on 1 January and 1 July in each year;
(ii) they rank both with regard to dividend (including any arrears to the commencement of a winding up) and return of capital
in priority to all other stock or shares of the Company but with no further right to participate in profits or assets;
(iii) there is no right to attend or vote, either in person or by proxy, at any General Meeting of the Company or to have notice of
any such meeting, unless the dividend on the preference stock is in arrears for six calendar months;
(iv) there is no redemption entitlement. 
(vi) Derivative financial instrument
2007 2006
£m £m
Interest rate swap contract – 0.1
65
Notes to the Company Financial Statements continued
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 65 (vii) Pensions
Employees of Renold plc include members of the principal UK defined benefit schemes. However, the contributions paid by the
Company are accounted for as a defined contribution scheme, as the Company is unable to identify its share of the underlying
assets and liabilities in the respective schemes. As a consequence, the deficit in the UK defined benefit schemes is only recognised
as a liability in the Group Balance Sheet.
(viii) Called up share capital
Authorised Issued
(nominal value)
2007 2006 2007 2006
£m £m £m £m
Ordinary shares of 25p each 23.1 23.1 17.4 17.4
6% Cumulative Preference Stock 0.6 0.6 0.5 0.5
T otal 23.7 23.7 17.9 17.9
At 31 March 2007 the issued Ordinary Share Capital comprised 69,659,807 (2006 – 69,429,220) ordinary shares of 25p each. 
During the year the Company issued 230,587 (2006 – 93,810) ordinary shares of 25p each for a cash consideration of £138,192
(2006 – £51,671) by the exercise of options under the Executive and the Savings Related Share Option Schemes.
Share options have been granted under the Executive Share Option Schemes and the Savings Related Share Option Schemes. 
At 31 March 2007 unexercised options for ordinary shares amounted to 3,698,762 (2006 – 3,591,299) made up as follows:
Option price Number Number
(pence per of shares of shares
Date normally exercisable share) 2007 2006
Executive Share Option Schemes
Within seven years from:
16 July 1999 (1995 Scheme) 293.83 – 52,307
18 July 2000 (1995 Scheme) 242.67 19,042 19,042
17 July 2001 (1995 Scheme) 237.33 140,000 145,000
16 July 2002 (1995 Scheme) 137.83 150,000 155,000
19 July 2003 (1995 Scheme) 118.50 97,500 97,500
22 December 2003 (1995 Scheme) 94.50 10,000 10,000
28 November 2004 (1995 Scheme) 67.34 202,000 297,000
27 November 2005 (1995 Scheme) 58.50 213,000 381,000
28 July 2006 (1995 Scheme) 80.84 50,000 50,000
27 November 2006 (1995 Scheme) 83.50 230,000 245,000
11 March 2007 (1995 Scheme) 76.50 125,000 125,000
2 September 2007 (2004 Scheme) 88.00 475,000 475,000
22 November 2007 (2004 Scheme) 74.30 105,000 135,000
26 July 2009 (2004 Scheme) 61.60 535,000 –
30 November 2009 (2004 Scheme) 100.10 120,000 –
2 January 2010 (2004 Scheme) 114.20 360,000 –
2,831,542 2,186,849
Savings Related Share Option Schemes
Within six months from:
1 February 2006 (1995 Scheme) 55.08 – 238,473
1 February 2008 (1995 Scheme) 55.08 141,204 167,919
1 March 2009 (2004 Scheme) 54.30 726,016 998,058
867,220 1,404,450
Further details of share-based payment schemes operated by the Company are provided in the Directors’ Remuneration Report
and Note 21 of the consolidated financial statements.
Notes to the Company Financial Statements continued
66
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 66
Details of the preference shares are set out in Note (v). (ix) Reserves
Profit
and loss Share T otal
account premium reserves
£m £m £m
At beginning of year 30.4 6.0 36.4
Loss for the year (17.0) – (17.0)
Employee share option schemes – value of employee services 0.1 – 0.1
Share premium – 0.1 0.1
At end of year 13.5 6.1 19.6
As permitted by Section 230 of the Companies Act 1985, no profit and loss account is presented in these financial statements. 
The Company’s loss for the financial year was £(17.0) million (2006 – loss £8.8 million).
Total fees payable by the Company to Ernst & Young LLP for work in respect of the audit of the Company were £27,000 
(2006 – Payable to PwC £30,000). Fees paid to the Company Auditors for non audit services to the Company are not disclosed 
in these accounts because the Company’s consolidated financial statements are required to disclose such fees on a 
consolidated basis.
(x) Contingent liabilities
The Company has guaranteed borrowings by subsidiary undertakings of £13.5 million (2006 – £6.0 million). Performance
guarantees given to third parties in respect of Group Companies were £3.0 million (2006 – £0.2 million).
67
Notes to the Company Financial Statements continued
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 67 Notice is hereby given that the seventy-seventh Annual General Meeting of Renold plc (the “Company”) will be held at Renold
House, Styal Road, Wythenshawe, Manchester M22 5WL on Thursday 26 July 2007 at 11.30 am for the following purposes:
As Ordinary Business
1. To receive and adopt the accounts for the year ended 31 March 2007, together with the Reports of the Directors and of 
the Auditors.
2. To elect Mr M R Peacock as a Director.
3. To elect Mr R H E Powell as a Director.
4. To elect Mr D J B Shearer as a Director.
5. To appoint Ernst & Young LLP as auditors of the Company, to hold office until the conclusion of the next General Meeting 
at which accounts are laid before the Company and to authorise the Directors to fix their remuneration.
6. To approve the Directors’ Remuneration Report for the year ended 31 March 2007.
As Special Business
T o consider and, if thought fit, pass the following resolutions of which Resolution 7 will be proposed as an Ordinary Resolution, and
Resolution 8 as a Special Resolution:-
7. THAT, subject to and in accordance with Article 15 of the Articles of Association of the Company, the Directors be generally and
unconditionally authorised in accordance with section 80 of the Companies Act 1985 (the “ Act”) (in substitution for any existing
authority to allot relevant securities) to exercise all the powers of the Company to allot relevant securities (within the meaning
of section 80 of the Act 1985) up to a maximum nominal amount of £5,804,983 (being approximately one third of the current
issued share capital) provided that such authority shall expire on 25 October 2008 or, if earlier, on the date of the next Annual
General Meeting of the Company after the passing of this resolution, but so that the Company may before such expiry make an
offer or agreement which would or might require relevant securities to be allotted after such expiry, and the Directors may allot
relevant securities in pursuance of such offer or agreement as if the authority conferred by this resolution had not expired.
8.
of Association of the Company, the Directors be empowered pursuant to Section 95 of the Act to allot equity securities (within
the meaning of Section 94 of the Act) for cash pursuant to the authority conferred by the said Ordinary Resolution, as if 
sub-section (1) of Section 89 of the Act did not apply to any such allotment provided that this power shall be limited to
allotments of equity securities:
(a) in connection with or pursuant to an offer by way of rights, open offer or other pre-emptive offer to the holders of shares
in the Company and other persons entitled to participate therein, in proportion (as nearly as may be) to their holdings of
such shares (or, as appropriate, to the number of ordinary shares which such other persons are for these purposes deemed
to hold) subject only to such exclusions or other arrangements as the Directors may feel necessary or expedient to deal with
fractional entitlements or legal or practical problems under the laws of any territory or the regulations or requirements of
any regulatory authority or any stock exchange in any territory;
(b) under the Renold plc 2004 Performance Share Plan, the Renold plc 2004 Deferred Annual Bonus Scheme, the Renold plc
Inland Revenue Approved Company Share Option Plan, the Renold plc 2004 Non Inland Revenue Approved Company Share
Option Plan, the Renold plc 2004 Inland Revenue Approved SAYE Share Option Scheme; and
Notice of Annual General Meeting
68
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 68
THAT, subject to the passing of the Ordinary Resolution numbered 7 above, and in accordance with Article 16 of the Articles  (c) the allotment of equity securities (otherwise than pursuant to paragraphs (a) and (b) above) up to an aggregate nominal
amount of £870,747 (being equal to 5% of the aggregate nominal amount of the Company’s ordinary share capital
currently in issue at the date of passing this resolution) and such power shall expire on 25 October 2008 or, if earlier, on the
date of the next Annual General Meeting of the Company after the passing of this resolution save that the Company may
before such expiry make an offer or agreement which would or might require equity securities to be allotted after such
expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred
hereby had not expired.
By Order of the Board
K Brown Registered Office:
Secretary Renold House
Styal Road
25 June 2007 Wythenshawe
Manchester M22 5WL
Notes:
Any member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies (who need not be a
member of the Company) to attend and, on a poll, to vote instead of the member. Completion and return of a form of proxy will not
preclude a member from attending and voting at the meeting in person, should he subsequently decide to do so.
In order to be valid, any form of proxy and power of attorney or other authority under which it is signed, or a notarially certified or office
copy of such power or authority, must reach the Company’s Registrars, Capita Registrars, of Northern House, Woodsome Park, Fenay
Bridge, Huddersfield HD8 0LA not less than 48 hours before the time of the meeting or of any adjournment of the meeting.
As permitted by Regulation 41 of the Uncertificated Securities Regulations 2001, shareholders who hold shares in uncertificated form
must be entered on the Company’s share register at 2.30 pm on 24 July 2007 in order to be entitled to attend and vote at the Annual
General Meeting. Such shareholders may only cast votes in respect of shares held at such time. Changes to entries on the relevant
register after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
Copies of the service contracts of each of the Directors, the register of Directors’ interests in shares of the Company kept pursuant to
section 325 of the Companies Act 1985, the articles of association of the Company and copies of any qualifying third party indemnity
will be available for inspection at the registered office of the Company and the offices of Eversheds, Senator House, 85 Queen Victoria
Street, London EC4V 4JL during usual business hours on any weekday (Saturdays and public holidays excluded) from the date of this
notice until the date of the Annual General Meeting and at the place of the Annual General Meeting from at least 15 minutes prior to
and until the conclusion of the Annual General Meeting.
Biographical details of each Director who is being proposed for election or re-election by shareholders, including their membership of
Board committees, are set out at page 13 of the Annual Report.
Holders of shares who are not entitled to vote are sent a copy of this notice only by way of information.
69
Notice of Annual General Meeting continued
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 69 2007
Annual General Meeting 26 July
Interim Management Statement (first) by mid August
Half year end 2007/08 30 September
Half year 2007/08 results published mid November
2008
Interim Management Statement (second) by mid February
Year end 2007/08 31 March
Preliminary announcement of annual results 2007/08 mid June
Preference dividends 1 July and 1 January
Financial Calendar
70
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 70
Dividend payments 71
Shareholder Notes
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 71 Shareholder Notes
72
72903 COMPANY ACCOUNTS  18/6/07  21:45  Page 72 Contents
Renold plc - Consolidated
Financial Statements
1 Performance at a glance
2 Financial Highlights
3 Chairman’s Statement
5 Chief Executive’s Review
7 Operations Review
11 Financial Review
13 Directors’ Biographies
14 Directors and Officers
15 Report of the Directors
17 Corporate Governance
20 Directors’ Remuneration Report
24 Statement of Directors’ Responsibilities
25 Report of the Independent Auditors
26 Accounting Policies
30 Consolidated Income Statement
30 Consolidated Statement of 
Recognised Income and Expense
31 Consolidated Balance Sheet
32 Consolidated Cash Flow Statement
33 Notes to the Consolidated Financial
Statements
58 Group Five Year Financial Review
59 Principal Subsidiary Companies
Renold plc - Company 
Financial Statements
60 Report of the Independent Auditors
61 Accounting Policies
63 Company Balance Sheet
64 Notes to the Company Financial
Statements
68 Notice of Annual General Meeting
70 Financial Calendar
Front cover, left: Couplings used in power generation in Azerbaijan.
Front cover, centre: Chain used on offshore cable-laying ship.
Front cover, right: Gearboxes supplied to steel mill.
Above, left: Hi-Tec Couplings helping to power diesel engined ships.
Above, centre: Chain used in printing industry ensuring performance with little lubrication.
Above, right: Chain supplied to oil industry where specification makes all the difference.
72903 COVER  19/6/07  11:59  Page 3 Annual Report 2007
www.renold.com
Renold plc, Renold House, Styal Road, Wythenshawe, Manchester, England M22 5WL
Tel: +44 (0)161 498 4500   Fax: +44 (0)161 437 7782 E-mail: enquiry@renold.com
www.renold.com
Annual Report 2007
72903 COVER  19/6/07  11:59  Page 1