Annual Financial Report

RNS Number : 0619G

Spectris PLC

25 March 2022

 

Spectris plc: Annual Report and Accounts 2021

Following the release of the Company's final results for the year ended 31 December 2021, the Company's Annual Report and Accounts for the year ended 31 December 2021 (the "Annual Report") and Notice of Annual General Meeting to be held on 27 May 2022 have been published on the Company's website at www.spectris.com and have been posted to shareholders who have elected to receive hard copy communications.

Pursuant to UK Listing Rule 9.6.1, the following documents have also been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

-	The Annual Report;
-	The Notice of Annual General Meeting;
-	Form of Proxy; and
-	The Notice of Availability for documents on the Company's website.

The final results for the year ended 31 December 2021, released by the Company on 24 February 2022, include the information required pursuant to Rules 4.1 and 6.3.5 of the UK Disclosure Guidance and Transparency Rules, excepting publication of the responsibility statement of the Directors in respect of the 2021 Accounts, and a description of the principal risks and uncertainties facing the Company, which are detailed below:

Directors Responsibility Statement

We confirm that to the best of our knowledge:

•	the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;
•	the Strategic Report on pages 1 to 59 and the Directors' Report on pages 60 to 101 include a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
•	the Annual Report and Accounts taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.

Andrew Heath - Chief Executive

Derek Harding - Chief Financial Officer

Principal Risks and Uncertainties

Strategic transformation
Definition:	Failure to successfully deliver the Group strategy, including business transformation and key mergers, acquisitions and divestments activity.
Link to Strategy:	• Customer focus • Operating leverage • Portfolio management • Spectris Business System ('SBS') • Perform and grow
Risk Appetite:	Balanced
Assessment:	Moderate
Change in Risk Level:	Decrease
Impact	Our day-to-day activities are inherently aligned to the successful achievement of the Group's strategic objectives. Nevertheless, we recognise the importance of specifically managing some of the more transformative elements of strategic execution as a Principal Risk. These elements include mergers, divestments and acquisitions, growth initiatives including capital investment, R&D, technology and digitising our offering.
Mitigation	• Remuneration policy aligned to incentivise delivery of the strategy • Deployment of the SBS • Continued review of acquisition/ merger pipeline, integration processes and capability • Regular reviews to track strategy execution • Platform Audit and Risk Committees

Cyber threat
Definition:	Failure to appropriately protect critical information and other assets from cyber threats, including external hacking, cyber fraud, demands for ransom payments and inadvertent/ intentional electronic leakage of critical data
Link to Strategy:	• Customer focus • Operating leverage • Ethics, HSE and sustainability
Risk Appetite:	Cautious
Assessment:	High
Change in Risk Level:	No change
Impact	Our businesses face both internal and external information security risks, the nature and complexity of which are constantly changing, becoming more sophisticated and unpredictable. With the introduction of data privacy regulatory requirements, and a continuing trend of high-profile information security breaches occurring across a wide range of businesses, the Group takes a necessarily proactive and cautious approach to safeguarding its information assets.
Mitigation	• Information security and data privacy policies and controls • Cyber risk assurance undertaken by Internal Audit • Online and face-to-face awareness and 'cyber fitness' training • Regular Board and Audit and Risk Committee reviews on cyber threat • Continued strengthening of IT systems • Cyber-attack simulation exercise undertaken at the Executive level

Compliance
Definition:	Failure to comply with laws and regulations, leading to reputational damage, substantial fines and potential market exclusion.
Link to Strategy:	• Ethics, HSE and sustainability • Customer focus
Risk Appetite:	Highly cautious
Assessment:	High
Change in Risk Level:	No change
Impact	We operate in many jurisdictions and, as a consequence, are subject to wide-ranging laws and regulations, including export controls, data privacy, fair competition and anti-bribery and corruption. Any compliance failure by the Group or its representatives could result in civil or criminal liabilities, leading to significant fines and penalties or the disqualification of the Group from participation in government-related contracts or entire markets.
Mitigation	• Strong cultural alignment to the Spectris value of 'Be true' • Global implementation of new Code of Business Ethics • Formal compliance programme including policies, procedures and training • Contract review and approval processes • Investment in experienced compliance professionals

Political
Definition:	Material adverse changes in the geopolitical environment putting at risk our ability to execute our strategy. Includes trade protectionism, punitive tax/regulatory regimes, and general heightened tension between trading parties or blocs.
Link to Strategy:	• Customer focus • Operating leverage • Perform and grow • Ethics, HSE and sustainability
Risk Appetite:	Balanced
Assessment:	Moderate
Change in Risk Level:	No change
Impact:	We operate in a range of end markets around the world and may be affected by political or regulatory developments in any of these countries. Material adverse changes in the political environment in the countries in which we operate have the potential to put at risk our ability to execute our strategy. We continually monitor the geopolitical landscape and develop response plans accordingly
Mitigation:	• Event monitoring and horizon scanning • Working groups and sub-committees to limit the impact of materialising risks, including Executive Export Controls Committee • Operate in a broad spread of geographical markets and end users • Response planning • Maintain a strong balance sheet

Market/financial shock
Definition:	Material adverse changes in market conditions, such as economic recession, inflation, sudden negative investor sentiment and currency fluctuation.
Link to Strategy:	• Customer focus • Operating leverage
Risk Appetite:	Balanced
Assessment:	High
Change in Risk Level:	No change
Impact	As a public company, and one that conducts business in a large number of markets, we recognise the global or local impact that a recession or period of instability could have on the Group. As with political risk, we are limited in our ability to reduce the likelihood of such events, but with careful monitoring and response planning we can ensure that the potential impact is restricted.
Mitigation	• Market monitoring and horizon scanning • Maintain a strong balance sheet • Operate in a broad spread of geographical markets and end users • Response planning • Cost saving opportunities identified by SBS and regular review of pricing to mitigate impacts of cost inflation

Talent and capabilities
Definition:	Failure to attract, retain, and deploy the necessary talent to deliver Group strategy.
Link to Strategy:	• Leadership and talent; SBS
Risk Appetite:	Balanced
Assessment:	Moderate
Change in Risk Level:	No change
Impact	The Group needs to attract, develop, motivate and retain the right people to achieve our operational and strategic targets. Effective talent management is essential to successfully delivering our current business requirements and strategic goals, and to realising the full potential of our businesses. Therefore, failure to leverage talent and capabilities could significantly impact the successful execution of our strategy. The three broad areas of focus are leadership, engineering and entry level roles.
Mitigation	• Structured recruitment and succession processes for senior Group talent • Full deployment of Workday HR system with recruitment, performance and talent management processes • Annual organisation capability review process • Appropriate incentives with benchmarking at all levels • Global employee engagement programme • Leadership development programmes for senior and middle management and high potentials

Business disruption
Definition:	Failure to appropriately prepare for and respond to a crisis or major disruption to key operations either across the Group, in a key region/location, or via a critical supplier.
Link to Strategy:	• Customer focus • Operating leverage • Perform and grow
Risk Appetite:	Cautious
Assessment:	Low
Change in Risk Level:	No change
Impact	The nature of our geographically diverse and segmented businesses provides a degree of natural hedging from Group-wide disruption arising from a major event, be it a physical disaster at a major site, or a global external event, such as the COVID-19 pandemic. However, we acknowledge the importance of proactively ensuring a consistent and effective business continuity management process across the Group.
Mitigation	• Common policy and enhanced standard for business continuity planning across the Group in progress • IT disaster recovery plans • Testing plans • Risk identification and monitoring • Effective internal and external communications

Climate Change
Definition:	Failure to respond appropriately, and sufficiently, to climate change risks or failure to identify the associated potential opportunities in assisting others manage their climate agendas.
Link to Strategy:	• Ethics, HSE and sustainability • Customer focus • Perform and grow
Risk Appetite:	Balanced
Assessment:	Moderate
Change in Risk Level:	New risk
Impact	The transition and physical risks present in climate change have the potential to impact the medium and long-term success of our business through market regulation and additional taxes, the changing macroeconomic landscape and the potential physical impact on our operations. We see the potential for additional sales opportunities as well as increased costs and investment.
Mitigation	• Agreed action plan to meet Net Zero targets validated by the Science Based Targets initiative • Head of Sustainability appointed to Executive to coordinate sustainability activity globally • Board and Executive oversight of sustainability performance as well as progress against Net Zero roadmap • Geographical diversity of businesses and supply chain • Climate physical risks monitored and reported by each business • Aligning strategy with current and emerging sustainability thematics

Name of contact and telephone number for queries:

Eliza Unwin

Deputy Company Secretary

[phone]

LEI Number: 213800Z4CO2CZO3M3T10

For and on behalf of Spectris plc

 

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