Final Results
Spectris PLC
22 February 2008
Embargoed until 07.00, Friday 22 February 2008
2007 PRELIMINARY RESULTS
Spectris plc, the productivity-enhancing instrumentation and controls company,
announces preliminary results for the year ended 31 December 2007.
2007 2006 Change Change at
CER**
Sales from continuing businesses (£m)# 659.8 642.6 +2.7% +6.5%
Adjusted operating profit from 104.3 83.2 +25% +35%
continuing businesses (£m)# *
Adjusted operating profit (£m) * 104.8 85.7 +22%
Adjusted profit before tax (£m)* 98.0 76.3 +28%
Adjusted earnings per share (pence)* 58.1 43.7 +33%
Dividend (pence) 21.0 17.5 +20%
Statutory
Sales (£m) 668.4 684.5 -2.4%
Profit before tax (£m) 118.1 85.6 +38%
Basic earnings per share (pence) 70.9 49.4 +44%
# Continuing businesses exclude businesses divested
* Adjusted figures are stated before amortisation of acquisition-related intangible assets, goodwill
impairment charges, profits or losses on termination or disposal of businesses or major fixed assets,
unrealised changes in the fair value of financial instruments, related tax effects and other tax items
which do not form part of the underlying tax rate
**Constant exchange rates
Highlights
• Strong performance - sales, profits and cash flow all increase
• Growth across all sectors and major geographies
• Operating margins of 15.8%
• Business groupings aligned with applications and end user industries
• Strategic focus on platforms for growth
Commenting on the results, John O'Higgins, Chief Executive, said:
'2007 was a successful year, in which the company delivered a return on sales in
excess of 15%. Our broad spread of geographies and end user markets, and strong
product offering, ensure that we are well placed to maintain good progress
despite an economic outlook which is less certain. The current year has started
well, with encouraging prospects across the multiple industries and regions we
serve.'
CHAIRMAN'S STATEMENT
Overview
Spectris performed well in 2007, with sales, profits and earnings per share all
increasing compared with the prior year, after adjusting for disposals and
acquisitions. Total group sales were £668.4 million compared with £684.5 million
in the prior year. Excluding the effect of disposals during the first half of
2007, sales from continuing businesses increased by 2.7% to £659.8 million
(2006: £642.6 million), or 6.5% at constant currencies.
Total group adjusted operating profit increased by 22% to £104.8 million (2006:
£85.7 million)(S). Group operating margins increased by 2.9 percentage points to
15.8% of sales. Profit before tax increased by 28% to £98.0 million (2006: £76.3
million) and earnings per share increased by 33% to 58.1p (2006: 43.7p).
Operating cash conversion was strong, with 99% of operating profit converted to
operating cash. Net proceeds from disposals were £29.8 million. The buy-back of
8.9 million shares during 2007 absorbed £79.2 million, with the result that net
debt at the end of the year was £77.3 million, compared with £71.7 million at
the end of December 2006. Net interest costs were £6.7 million, giving an
annualised cover of 15.6 times.
The Board proposes to pay a final dividend of 15.25p which, combined with the
interim dividend of 5.75p, gives a total of 21.0p (2006: 17.5p), an increase of
20%. The dividend will be paid on 20 June 2008 to shareholders on the register
at 30 May 2008.
Board changes
As previously announced, Andrew Given retired at the May 2007 AGM and John
Hughes joined the Board as a non-executive director in June. Stephen Harris,
Business Group Director, resigned from the Board on 31 January 2008. I shall be
standing down at the May 2008 AGM, as announced in November 2006, after twenty
years with the company and will be succeeded as Chairman by John Hughes. To him,
to the rest of the Board, and to everyone at Spectris, I convey my thanks and
best wishes for continuing success and prosperity.
Outlook
2007 was a successful year, in which the company delivered a return on sales in
excess of 15%. Our broad spread of geographies and end user markets, and strong
product offering, ensure that we are well placed to maintain good progress
despite an economic outlook which is less certain. The current year has started
well, with encouraging prospects across the multiple industries and regions we
serve.
John Poulter
Chairman
(S)Unless otherwise stated, all sales and operating profit figures in the
narrative are on a continuing businesses basis and exclude the businesses
divested. Figures for operating profit, profit before tax and earnings per
share are adjusted measures - for explanation of adjusted figures and
reconciliation to the statutory reported figures see Note 2.
CHIEF EXECUTIVE'S STATEMENT
Overview
Spectris delivered a strong performance in 2007, with sales, profits, operating
margins and cash flow from continuing businesses all improving compared with the
prior year. At constant currencies, sales increased by 6.5%, including 1% from
acquisitions, and operating profit increased by 35%.
The major geographic regions again showed growth during 2007. The strongest
growth was seen in Asia, where sales increased by 7% at constant currencies, led
by China. Sales in Europe increased by over 3% at constant currencies. Sales in
North America increased by 6%, helped by the acquisition of the IPI business
acquired in 2006. Sales in the rest of the world increased by 32%, reflecting
the growing importance of industrialising markets such as Russia, South America
and Africa.
Operating margins improved to 15.8% (2006: 12.9%), as the restructuring and
other business improvement actions taken in prior years continued to deliver
results.
Strategy
Our objective is to deliver shareholder value over the long term by supplying
productivity-enhancing solutions for our customers. Our strategy is based on
five elements: strengthening market positions through innovation; increasing
regional expansion with the focus on emerging markets; growing existing
businesses through acquisition; focusing on operational excellence; building our
presence in key strategic growth areas.
In order to give better clarity to our operations, we have re-aligned the
activities of our business segments to reflect more closely the applications and
end user industries we serve. Going forward, our businesses will be reported in
four segments. These are: Materials Analysis, Test & Measurement, In-line
Instrumentation and Industrial Controls. Figures for prior years have been
restated accordingly. Figures at group level and key performance indicators are
not affected by these changes. For comparative purposes, the key results for the
group based upon the prior segmentation are shown in Note 2.
Two acquisitions were made during the second half of the year. On 2 July,
Particle Measuring Systems acquired the distribution activities of Quest
Technologies in Singapore, giving it an increased presence in Asia. On 1
November, Servomex acquired Controle Analytique, a leading provider of
specialist gas analysis products based in Canada. The acquisition enables
Servomex to increase its product offering in the global industrial gas market
and also provides opportunities for the company to meet the needs of customers
in the semiconductor market.
Research and development expenditure increased to £45.2 million, which
represents 7% of group sales, enabling the businesses to maintain their leading
market positions and continue to meet the productivity challenges their
customers face.
Operating review
Materials Analysis
Materials Analysis provides a wide range of analytical instrumentation and
systems for particle and material characterisation. The companies in this
segment are Malvern Instruments, PANalytical and Particle Measuring Systems.
These businesses generally sell directly to global end user customers and
provide aftermarket services such as technical support, instrument calibration
and replacement consumables. Applications are typically in batch process
manufacturing industries and research and development laboratories. Industries
served include semiconductor, pharmaceuticals and life sciences, with
applications also in metals, minerals and mining. The total market for materials
analysis instrumentation is estimated to be around £9 billion.
Sales in Materials Analysis increased by 4% to £213.8 million, and by 8% at
constant currencies. Operating profit increased by 15% to £34.8 million and
operating margins improved by 1.6 percentage points to 16.3%. Restructuring
charges were £0.1 million, compared with £0.5 million in the prior year. Sales
to the metals, minerals and mining industries represented 33% of total sales in
2007, with pharmaceuticals and life sciences representing 22%, research and
development applications 17%, semiconductors and electronics 10%, and other
industries 18%.
The metals and mining industries continued to grow, particularly in Australia,
South America and southern Africa, benefiting Malvern and PANalytical. Malvern's
in-line particle characterisation products saw strong growth in areas such as
cement and print toners as the productivity benefits achieved by existing
customers led them to extend the use of these products into their other
facilities.
Demand from the pharmaceutical industry continued to be strong. Malvern's
recently launched Morphologi G3 product, an automated particle characterisation
system, has been positively received by large pharmaceutical manufacturers, with
a significant number of orders already placed. Particle characterisation is
critical to the pharmaceutical industry, from protein size and conformation
analysis at the discovery stage through to on-line analysis during manufacture.
Both Malvern and PANalytical have seen good growth for their instrumentation
from emerging regions such as India and China, where the establishment of R&D
and production centres by leading pharmaceutical manufacturers is increasing, as
is the production of drugs by generic manufacturers. At Particle Measuring
Systems good growth in contamination detection systems for the pharmaceutical
industry compensated for cyclically weaker demand in the semiconductor industry.
Investment in research and development continued in the semiconductor industry,
benefiting PANalytical. During the year, Particle Measuring Systems launched the
AirSentry II product for contamination monitoring in the semiconductor and
electronics industries. This product features a patented ion mobility
spectrometry technique and is used for real-time monitoring of airborne
molecular contamination, a critical factor in semiconductor processing and hard
disk drive and liquid crystal display manufacturing.
Test and Measurement
Test and Measurement supplies test and measuring equipment for research and
development, principally to the aerospace and automotive industries. Further
applications are in consumer electronics and the environmental monitoring
market. The companies in this segment are Bruel & Kjaer Sound and Vibration and
HBM. Products include sensors and controls for noise, vibration, weight and
stress measurement, data acquisition hardware and software, and advanced data
analysis applications. Services such as consultancy and instrument calibration
and repair are also offered. The general industrial test and measurement market
is estimated at around £2 billion.
Sales in Test and Measurement increased by 3% to £207.5 million, and by 5% at
constant currencies. Operating profit increased by 39% to £26.2 million and
operating margins improved by 3.3 percentage points to 12.6%. Restructuring
charges were £0.1 million compared with £2.1 million in the prior year. Sales to
the transportation industry (primarily automotive and aerospace) represented 32%
of total sales in 2007, with machine builders representing 24%, environmental
monitoring 11%, semiconductor, telecoms and electronics 8%, research and
development 7% and other industries 18%.
Demand from the automotive industry continued to grow, particularly in Europe,
as manufacturers maintained their new model development programmes and
endeavoured to meet the challenge of testing prototypes in ever shorter time
frames. Bruel & Kjaer increased sales to the leading automotive manufacturers
and also grew their support and calibration services offering. In September HBM
launched the QuantumX data acquisition system for test and measurement markets,
particularly the automotive and aerospace markets, and a significant order has
already been received from the BMW Group for the new engine, gearbox and power
train test stands being developed at their Research and Innovation Center in
Munich.
In the aerospace industry, the increased use of new carbon fibre composite
materials in lightweight aerospace structures is setting new demands for
structural testing and stress analysis, benefiting HBM.
In environmental monitoring, Bruel & Kjaer's airport noise monitoring system was
selected by the Metropolitan Washington Airports Authority, serving Reagan
National Airport and Washington Dulles International Airport. The company also
installed an airport noise and flight track monitoring system at Zurich airport
and noise monitoring systems in several cities in China.
In-line Instrumentation
In-line Instrumentation provides process analytical solutions, asset monitoring
and control, gauging, and on-line controls for both primary processing
industries (oil and gas, energy generation, petrochemicals, pulp and paper) and
the converting markets (plastics, rubber, film). The companies in this segment
are Beta LaserMike, Bruel & Kjaer Vibro, BTG, Fusion UV Systems, NDC Infrared
Engineering and Servomex. These businesses sell directly to global end user
customers and systems integrators and the majority of sales are for new and
upgraded production facilities. All businesses provide aftermarket services. The
global market for in-line instrumentation is estimated to be in excess of £1
billion.
Sales in In-line Instrumentation increased by 2% to £200.2 million, and by 6% at
constant currencies. Operating profit increased by 32% to £34.7 million and
operating margins improved by 3.9 percentage points to 17.3%. Restructuring
charges were £0.7 million in 2007, compared with £5.1 million in the prior year.
Sales to the pulp and paper industry represented 36% of total sales in 2007,
with the converting businesses representing 29%, energy generation 12% and other
industries 23%.
Investment in capital-intensive facilities in the continuous process industries
was strong. In the pulp and paper industry, the need to reduce production costs
and become more energy-efficient has led to a shift in production facilities
from the west to regions such as South America and Asia. This has benefited BTG,
particularly the Duroblade business where, in response to the industry focus on
paper quality, the company has moved from producing ceramic blades to developing
blades tailored for different types of paper applications. In the past two
years, BTG has launched a number of new products for metering and doctoring
solutions for specific coating processes and is a recognised innovator in this
market.
Good demand in the energy and petrochemical markets benefited Bruel & Kjaer
Vibro and Servomex, as producers expanded their processing facilities in the
light of higher oil prices. Bruel & Kjaer Vibro received a number of high value
orders from oil and gas customers for its condition monitoring systems. At
Servomex, demand for gas analysers was strong in the hydrocarbon business in
North America and Canada and in the industrial gas business in Europe and the
Middle East. On 1 November, Servomex acquired Controle Analytique, a leading
provider of specialist gas analysis products based in Canada, enabling the
company to increase its product offering in the global industrial gas market.
In the converting industry, Fusion UV Systems, NDC and Beta LaserMike all saw
good sales growth. Fusion UV Systems benefited from continued growth in the flat
panel display market, one of the fastest-growing sectors in the electronics
industry, as the quality and size of flat panel televisions increases. Fusion's
UV technology is used to cure the anti-reflective functionalised film applied to
the screen. Good demand from the converting market in China benefited both Beta
LaserMike and NDC in their respective markets.
Industrial Controls
Industrial Controls supplies automation and controls for general manufacturing
processes. The companies in this segment are Microscan and Red Lion Controls,
which supply bar code scanners, panel meters, human machine interfaces,
industrial controllers and networking products. This segment sells indirectly to
end users via distributors as well as directly to original equipment
manufacturers (OEMs), with a significant proportion of repeat business from
existing customers. The total market for industrial controls is estimated to be
in excess of £10 billion.
Sales in Industrial Controls were £38.3 million, compared with £38.9 million in
2006. Sales increased by 6% at constant currencies. Operating profit increased
by 10% to £8.6 million and operating margins improved by 2.4 percentage points
to 22.5%. Sales through distributor channels represented 82% of total sales in
2007, with the semiconductor, electronics and telecoms industries representing
7%, pharmaceuticals 4% and other industries 7%.
Microscan saw strong sales growth in Europe and Asia, in part due to the
increasing move of electronics assembly operations to Asia, particularly China,
Taiwan and Korea. The company launched the Quadrus MINI Velocity scanner, the
world's fastest mini imager, which can read up to 45 bar codes per second.
Red Lion Controls also grew sales internationally, with its human machine
interface and data station products proving particularly successful. Human
machine interfaces are being used increasingly in industrial applications,
displacing traditional analogue displays, due to the increased operational data
and better interfacing with other plant systems they are able to provide.
Looking ahead
Over the longer term we are well positioned, both in terms of geographic
exposure and end user markets. We have a clearly defined strategy which will
deliver both top- line and bottom-line performance.
John O'Higgins
Chief Executive
FINANCIAL REVIEW
Introduction
Spectris uses adjusted figures as key performance measures in addition to those
reported under IFRS. Adjusted figures are stated before amortisation of
acquisition-related intangible assets, goodwill impairment charges, profits or
losses on the termination or disposal of businesses or major fixed assets,
unrealised changes in the fair value of financial instruments, related tax
effects and other tax items which do not form part of the underlying tax rate.
Unless otherwise stated all profit and earnings figures referred to below are
adjusted measures.
The Spectrum and Ircon businesses were divested in February 2007 and June 2007
respectively (as described further below). The results of these two businesses
are not considered to be sufficiently material to be presented as discontinued
operations under IFRS. However, in order to aid understanding of the results for
the ongoing business, references below to the sales and operating profit results
for 'continuing businesses' exclude the results of these two businesses and the
business sold in April 2006 (Arcom).
Operating performance
2007 2006 Increase/
(Decrease)
Total group
Sales (£m) 668.4 684.5 (2.4%)
Operating profit (£m) 104.8 85.7 22%
Operating margin 15.7% 12.5% 3.2pp
Continuing businesses
Sales (£m) 659.8 642.6 2.7%
Operating profit (£m) 104.3 83.2 25%
Operating margin 15.8% 12.9% 2.9pp
Total group sales decreased by 2.4% (1.3% increase at constant currencies) and
sales in continuing businesses increased by 2.7% (6.5% at constant currencies).
The year-on-year impact on sales from acquisitions (acquired in 2006 and 2007)
was approximately £6.8 million or 1% of sales.
Adjusted operating profit rose by 22% overall (32% at constant currencies) and
by 25% (35% at constant currencies) in continuing businesses, with operating
margins improving from 12.5% to 15.7% overall, and from 12.9% to 15.8% on a
continuing businesses basis. This growth in operating profit was driven by the
increase in sales, an increase in restructuring benefits, a decrease in
restructuring costs, and good cost control. The year-on-year impact on profits
from acquisitions was approximately £1.3 million or 1% of profits.
Net interest costs, including IAS 19 pension charges but excluding derivative
fair value movements, reduced from £9.4 million to £6.8 million. After taking
account of lower interest costs, adjusted profit before tax increased by 28%
from £76.3 million to £98.0 million.
Unadjusted operating profit, after including goodwill impairment charges of nil
(2006: £1.2 million) and acquisition-related intangible asset amortisation of
£1.9 million (2006: £1.8 million), increased by 24% from £82.7 million to £102.9
million.
Unadjusted profit before tax increased by 38% from £85.6 million to £118.1
million. In addition to goodwill impairment charges, acquisition-related
intangible asset amortisation charges, and profit on disposal of businesses, the
2007 unadjusted result includes an unrealised gain of £3.0 million on the
group's cross-currency interest rate swaps (2006: unrealised gain of £2.8
million).
Acquisitions and disposals
During the year, two of the group's businesses made acquisitions. The total
consideration, including acquisition expenses and net debt acquired, as well as
deferred and contingent consideration expected to be paid in future years, was
£6.6 million. The largest of these acquisitions took place close to the end of
2007. These acquisitions contributed £0.6 million of sales during the year.
Prior year acquisitions contributed £6.2 million.
In February 2007, Spectris sold the Spectrum business to Illinois Tools Works
Inc and in June 2007 the Ircon business to Fluke Electronics Corporation for
total net proceeds (after taking account of transaction costs) of £29.8 million,
giving rise to a profit on disposal of £19.0 million (2006: £9.5 million).
Taxation
The effective tax rate on profits was 28.0% (2006: 28.8%) compared with the
weighted average statutory tax rate of 32.3% (2006: 32.1%). The group benefited
from utilising brought forward tax losses which had not previously been
recognised on the balance sheet, and from the favourable closure of prior year
tax returns. The weighted average statutory tax rate is expected to reduce in
future by approximately two percentage points in line with reduced corporate tax
rates on profits in several countries where the group operates, principally
Germany. Whilst the effective tax rate is expected to move closer to the
weighted average rate over time, it is not expected to increase substantially in
the near future.
Earnings per share
Adjusted earnings per share increased by 33% from 43.7p to 58.1p, reflecting the
net impact of a 28% increase in adjusted profit before tax and the reduced tax
rates.
Basic earnings per share increased by 44% from 49.4p to 70.9p. The differences
between the two measures are shown in the table below.
2007 2006
Pence Pence
Basic earnings per share 70.9 49.4
Goodwill impairment charges and acquisition-related intangible 1.6 2.4
asset amortisation
Profit on disposal of business (15.6) (7.6)
Unrealised changes in fair value of financial instruments (2.4) (2.3)
Tax effect of the above and other tax items that do not form part 3.6 1.8
of the underlying tax rate
____ ____
Adjusted earnings per share 58.1 43.7
The weighted average number of shares outstanding during the year decreased from
124.3 million to 121.6 million. This decrease arose largely as a result of the
share buy-back programme.
Cash Flow
2007 2006
Operating cash flow £m £m
Adjusted operating profit 104.8 85.7
Add back: depreciation 13.1 13.2
Working capital movement/other (1.5) 3.1
Net cash flow from operating activities before capital expenditure 116.4 102.0
Capital expenditure (12.7) (10.5)
Operating cash flow 103.7 91.5
Cash conversion 99% 107%
Non-operating cash flow
Tax paid (23.8) (21.5)
Net interest paid (6.3) (11.2)
Dividends paid (22.2) (20.2)
Acquisitions (6.0) (13.6)
Disposals 29.8 13.3
Share buy-back (79.2) -
Exercise of share options 4.1 5.3
(Purchase)/sale of own shares by Employee Benefit Trust (1.6) 0.9
Exchange/other (4.1) 3.7
Total non-operating cash flow (109.3) (43.3)
Operating cash flow 103.7 91.5
Movement in net debt (5.6) 48.2
Cash conversion of operating profit to operating cash was 99% (2006: 107%). This
was achieved mainly through continued control of working capital. The year end
working capital expressed as a percentage of sales reduced from 14.8% to 14.2%.
Average working capital expressed as a percentage of sales reduced from 13.7% to
13.5%.
Capital expenditure during the year equated to 1.9% of sales (2006: 1.5%) and,
at £12.7 million (2006: £10.5 million), was 97% of depreciation (2006: 80%).
The level of tax paid in 2007 was higher than in 2006 due primarily to the
increase in profits.
Overall, net debt increased by £5.6 million (2006: reduction of £48.2 million)
from £71.7 million to £77.3 million. Interest cost, excluding the financing
charge arising from IAS 19, was covered by adjusted operating profit 15.6 times
(2006: 9.4 times), providing significant headroom over and above banking
covenants which require a minimum of 3 times cover.
Financing and Treasury
The group finances its operations from both retained earnings and third-party
borrowings, the majority of which are currently at fixed rates of interest.
The group's principal borrowings relate to its 2000 and 2003 US Private
Placement loan notes. The $100 million 2003 US Private Placement has been
swapped into euro-denominated borrowings using a cross-currency interest rate
swap.
At the year end, 96% of group borrowings were at fixed interest rates (2006:
97%). The ageing profile at the year end showed that 3% of debt is due to
mature within one year (2006: 4%), 31% of debt is due to mature in between one
and five years (2006: 31%) and the remaining 66% in more than five years (2006:
65%).
Share buy-back
The group completed the £75 million share buy-back programme announced in
February 2007 in November 2007, and subsequently extended the programme by
additional share repurchases up to the limit granted by the shareholders at the
2007 AGM.
Currency
The group has both translational and transactional currency exposures.
Translational exposures arise on the translation of overseas company results
into sterling. Transactional exposures arise where the currency of sale or
purchase invoices differs from the functional currency in which each company
prepares its local accounts. The transactional exposures include situations
where foreign currency denominated trade debtor, trade creditor and cash
balances are held.
The largest transactional exposures are to the US dollar and, to a lesser
extent, the euro and the Japanese yen. The largest translational exposures are
to the US dollar, the euro and the Danish krone. The table below shows the key
average exchange rates during 2007 and 2006. Translational currency exposures
are not hedged.
2007 2006
(average) (average)
US $ 2.00 1.84
Euro 1.46 1.47
Yen 236 214
Forward exchange contracts are used to hedge forecast sale transactions where
there is reasonable certainty of an exposure. At 31 December 2007, approximately
61% of the estimated US dollar and Japanese yen exposures for 2008 were hedged
using forward exchange contacts.
Defined benefit pension schemes
Operating profit includes a defined benefit pension scheme current service
charge of £0.9 million (2006: £0.8 million). The net pension liability in the
balance sheet (before taking account of the related deferred tax asset) has
reduced to £11.1 million (2006: £18.8 million), largely as a consequence of cash
contributions into the schemes and actuarial gains on the scheme assets. During
2007, the group made cash contributions into the defined benefit pension scheme
amounting to £3.1 million (2006: £3.3 million).
Clive Watson
Group Finance Director
Contact: John O'Higgins, Chief Executive, Spectris plc Tel: 01784 470470
Clive Watson, Group Finance Director, Spectris plc Tel: 01784 470470
Richard Mountain, Financial Dynamics Tel: 020 7269 7186
A table of results is attached.
The meeting with analysts will be available as a live webcast on the company's
website at www.spectris.com, commencing at 08.30, and a recording will be posted
on the website shortly after the meeting.
Copies of this notice are available to the public from the registered office at
Station Road, Egham, Surrey TW20 9NP, and on the company's website at
www.spectris.com.
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2007
Notes 2007 2006
£m £m
Continuing operations
3 Revenue 668.4 684.5
Cost of sales (283.8) (288.7)
Gross profit 384.6 395.8
Indirect production and engineering expenses (57.4) (60.8)
Sales and marketing expenses (158.0) (171.6)
Administrative expenses (66.3) (80.7)
102.9 82.7
3 Operating profit
Profit on disposal of businesses 19.0 9.5
4 Financial income 9.6 9.0
4 Finance costs (13.4) (15.6)
Profit before tax 118.1 85.6
5 Taxation - UK (2.6) (0.5)
5 Taxation - Overseas (29.3) (23.7)
Total taxation (31.9) (24.2)
Profit after tax for the year from continuing operations 86.2 61.4
attributable to equity shareholders
7 Basic earnings per share 70.9p 49.4p
7 Diluted earnings per share 70.6p 49.2p
6 Interim dividends paid and final dividends proposed for the 21.0p 17.5p
year (per share)
6 Dividends paid during the year (per share) 18.3p 16.2p
Spectris uses adjusted figures as key performance measures in addition to those
reported under adopted IFRS. Adjusted figures are stated before amortisation of
acquisition-related intangible assets, goodwill impairment charges, profits or
losses on termination or disposal of businesses or major fixed assets,
unrealised changes in the fair value of financial instruments, related tax
effects and other tax items which do not form part of the underlying tax rate.
Reconciliations showing how the adjusted performance measures are derived from
those reported under adopted IFRS are set out in Note 2.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 December 2007
2007 2006
£m £m
Net (loss)/gain on effective portion of changes in fair value of (1.1) 1.7
forward exchange contracts
Associated deferred tax on changes in fair value of forward exchange 0.3 (0.5)
contracts
Net (loss)/gain on changes in fair value of effective portion of net (6.3) 7.6
investment hedges
Actuarial gains arising on pension schemes 5.9 2.2
Current and deferred tax on actuarial gains on pension schemes (3.7) (0.6)
Foreign exchange movements on translation of overseas operations 26.0 (19.9)
Current and deferred tax on foreign exchange movements recognised (0.6) (0.1)
directly in equity
Net income/(expense) recognised in equity in respect of year 20.5 (9.6)
Profit for the year 86.2 61.4
Total recognised income and expense for the year attributable to 106.7 51.8
equity shareholders
CONSOLIDATED BALANCE SHEET
At 31 December 2007
2007 2006
£m £m
Assets
Non-current assets
Goodwill 223.1 207.4
Other intangible assets 12.2 8.0
Property, plant & equipment 87.7 83.2
Deferred tax asset 25.7 37.6
348.7 336.2
Current assets
Inventories 92.8 81.6
Taxation recoverable - 0.5
Trade and other receivables 153.7 145.4
Derivative financial instruments 0.1 1.3
Cash and cash equivalents 51.4 51.0
Assets held for sale 1.2 17.3
299.2 297.1
Total assets 647.9 633.3
Liabilities
Current liabilities
Short-term borrowings (4.4) (4.3)
Trade and other payables (141.7) (124.2)
Current tax liabilities (32.8) (32.9)
Provisions (21.5) (21.8)
Liabilities held for sale - (6.0)
(200.4) (189.2)
Net current assets 98.8 107.9
Non-current liabilities
Medium and long-term borrowings (108.1) (108.6)
Derivative financial instruments (16.1) (12.8)
Other payables (8.4) (8.8)
Retirement benefit obligations (11.1) (18.8)
Deferred tax liability (1.0) (1.0)
(144.7) (150.0)
Total liabilities (345.1) (339.2)
Net assets 302.8 294.1
Equity
Issued share capital 6.2 6.2
Share premium 231.4 231.1
Retained earnings 63.8 74.0
Translation reserve (2.1) (21.8)
Hedging reserve 0.1 1.2
Merger reserve 3.1 3.1
Capital redemption reserve 0.3 0.3
Equity shareholders' funds 302.8 294.1
Total equity and liabilities 647.9 633.3
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2007
Notes 2007 2006
£m £m
Cash flows from operating activities
Profit after tax 86.2 61.4
Adjustments for:
5 Tax 31.9 24.2
Profit on disposal of businesses (19.0) (9.5)
4 Finance costs 13.4 15.6
4 Financial income (9.6) (9.0)
Depreciation 13.1 13.2
Amortisation of intangible assets 2.0 1.9
Goodwill reduction - 1.2
(Gain)/loss on sale of property, plant & equipment (0.6) 0.5
Equity settled share-based payment expense 0.9 0.6
Operating profit before changes in working capital and 118.3 100.1
provisions
Increase in trade and other receivables (2.0) (8.9)
Increase in inventories (6.9) (1.0)
Increase in trade and other payables 10.1 4.4
(Decrease)/increase in provisions and employee benefits (4.5) 7.4
Corporation tax paid (23.8) (21.5)
Net cash from operating activities 91.2 80.5
Cash flows from investing activities
Purchase of property, plant & equipment (12.7) (10.5)
Proceeds from sale of property, plant & equipment 1.4 -
Acquisition of businesses, net of cash acquired (6.0) (13.6)
Disposal of businesses 29.8 13.3
Interest received 1.9 2.0
Net cash flows used in investing activities 14.4 (8.8)
Cash flows from financing activities
Interest paid (8.2) (13.2)
6 Dividends paid to equity holders of the parent (22.2) (20.2)
Share options exercised by issue of share capital 0.2 1.5
Share options exercised from shares held by Employee 1.0 3.8
Benefit Trust
Share options exercised from treasury shares 2.9 -
(Purchase)/sale of own shares by Employee Benefit Trust (1.6) 0.9
Purchase of own shares - treasury shares (79.2) -
Cancellation of cross-currency swap - (2.9)
Repayment of borrowings - (65.9)
Decrease in finance lease liabilities (0.1) (0.4)
Net cash flows used in financing activities (107.2) (96.4)
Net decrease in cash and cash equivalents (1.6) (24.7)
Cash and cash equivalents at beginning of year 47.0 76.1
Effect of foreign exchange rate changes 2.0 (4.4)
Cash and cash equivalents at end of year 47.4 47.0
Reconciliation of changes in cash and cash equivalents to movements in net debt
2007 2006
£m £m
Net decrease in cash and cash equivalents (1.6) (24.7)
Repayment of borrowings - 65.9
Decrease in finance lease liabilities 0.1 0.4
Effect of foreign exchange rate changes (4.1) 6.6
Movement in net debt (5.6) 48.2
Net debt at start of year (71.7) (119.9)
Net debt at end of year (77.3) (71.7)
RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES
For the year ended 31 December 2007
Capital
Share Share Retained Translation Hedging Merger redemption Total
capital premium earnings reserve reserve reserve reserve equity
£m £m £m £m £m £m £m £m
Equity at 1 January 2006 (restated)* 6.2 229.1 26.8 (9.5) (0.5) 3.1 0.3 255.5
Gains and losses - year ended
31 December 2006
Total recognised income and expense - - 62.4 (12.3) 1.7 - - 51.8
Distributions to and transactions with
shareholders
Equity dividends paid - - (20.2) - - - - (20.2)
Share-based payments - - 0.6 - - - - 0.6
Share options exercised from shares - - 3.8 - - - - 3.8
held by Employee Benefit Trust
Sale of own shares by Employee - - 0.9 - - - - 0.9
Benefit Trust
Exercise of equity share options - 2.0 (0.3) - - - - 1.7
Equity at 31 December 2006 6.2 231.1 74.0 (21.8) 1.2 3.1 0.3 294.1
(restated)*
Gains and losses - year ended
31 December 2007
Total recognised income and expense - - 88.1 19.7 (1.1) - - 106.7
Distributions to and transactions with
shareholders
Equity dividends paid - - (22.2) - - - - (22.2)
Share-based payments - - 0.9 - - - - 0.9
Own shares (treasury) purchased - - (79.2) - - - - (79.2)
Own shares (Employee Benefit Trust) - - (1.6) - - - - (1.6)
purchased
Share options exercised from own shares - - 2.9 - - - - 2.9
(treasury) purchased
Share options exercised by issue of - 0.3 (0.1) - - - - 0.2
share capital
Share options exercised from shares
held by Employee Benefit Trust - - 1.0 - - - - 1.0
Equity at 31 December 2007 6.2 231.4 63.8 (2.1) 0.1 3.1 0.3 302.8
* An amount of £6.7m has been transferred from the Translation reserve to
Retained earnings as at 1 January 2006. This reflects the cumulative translation
gain that should have been recycled into Financial income and expense prior to
that date.
NOTES TO THE ACCOUNTS
1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PREPARATION
Spectris plc is a limited company incorporated and domiciled in the United
Kingdom under the Companies Act 1985, whose shares are publicly traded on the
London Stock Exchange.
The group's financial statements have been prepared and approved by the
directors in accordance with International Financial Reporting Standards as
adopted by the EU (adopted IFRS).
The financial statements are prepared rounded to the nearest hundred thousand on
the historical cost basis except that derivative financial instruments are
stated at fair value and assets classified as held for sale are stated at the
lower of carrying amount and fair value less costs to sell.
The preparation of financial statements in conformity with adopted IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amount of assets and liabilities,
income and expenses. The estimates and associated assumptions are continually
evaluated and are based on historical experience and various other factors that
are believed to be reasonable under the circumstances. Actual results may differ
from these estimates. The estimates and assumptions that have a significant
effect on the carrying amount of assets and liabilities are noted within
specific accounting policies. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the revision
affects both current and future periods.
The accounting policies have been applied consistently by group entities to all
periods presented in these financial statements.
The financial statements were authorised for issue by the directors on 22
February 2008.
2. ADJUSTED PERFORMANCE MEASURES
Spectris uses adjusted figures as key performance measures in addition to those
reported under adopted IFRS. Adjusted figures are stated before amortisation of
acquisition-related intangible assets, goodwill impairment charges, profits or
losses on termination or disposal of businesses or major fixed assets,
unrealised changes in the fair value of financial instruments, related tax
effects and other tax items which do not form part of the underlying tax rate
(see Note 5).
The business segments for which information has been included in these accounts
are different from those disclosed in prior years. The results of the group
based upon the 2006 segmentation are shown at the end of this Note. The new
disclosures for business segments reflect the manner in which the business is
currently managed by the Board of Directors. Prior year comparatives have been
restated accordingly.
The adjusted performance measures are derived from the reported figures under
adopted IFRS as follows:
Adjusted sales 2007 2006
£m £m
Sales as reported under adopted IFRS 668.4 684.5
Divested businesses (8.6) (41.9)
Adjusted sales for continuing businesses 659.8 642.6
Adjusted sales by segment - 2007
Materials Test & In-line Industrial 2007
Analysis Measurement Instrumentation Controls Total
£m £m £m £m £m
Sales as reported under adopted IFRS 213.8 207.5 208.8 38.3 668.4
Divested businesses - - (8.6) - (8.6)
Adjusted sales for continuing businesses 213.8 207.5 200.2 38.3 659.8
Adjusted sales by segment - 2006
restated
Materials Test & In-line Industrial 2006
Analysis Measurement Instrumentation Controls Total
£m £m £m £m £m
Sales as reported under adopted IFRS 205.7 201.5 234.5 42.8 684.5
Divested businesses - - (38.0) (3.9) (41.9)
Adjusted sales for continuing businesses 205.7 201.5 196.5 38.9 642.6
Adjusted operating profit 2007 2006
£m £m
Operating profit as reported under adopted IFRS 102.9 82.7
Amortisation of acquisition-related intangible 1.9 1.8
assets
Goodwill reduction - 1.2
Adjusted operating profit 104.8 85.7
Divested businesses (0.5) (2.5)
Adjusted operating profit for continuing businesses 104.3 83.2
Restructuring charges for continuing businesses 0.9 7.7
Adjusted operating profit for continuing businesses
before restructuring charges 105.2 90.9
Adjusted operating profit by segment - Materials Test & In-line Industrial 2007
2007 Analysis Measurement Instrumentation Controls Total
£m £m £m £m £m
Segment result under adopted IFRS 33.5 26.0 34.8 8.6 102.9
Amortisation of acquisition-related
intangible assets 1.3 0.2 0.4 - 1.9
Adjusted operating profit 34.8 26.2 35.2 8.6 104.8
Divested businesses - - (0.5) - (0.5)
Adjusted operating profit for continuing
businesses 34.8 26.2 34.7 8.6 104.3
Restructuring charges for continuing
businesses 0.1 0.1 0.7 - 0.9
Adjusted operating profit for continuing
businesses before restructuring charges 34.9 26.3 35.4 8.6 105.2
Adjusted operating profit by segment - Materials Test & In-line Industrial 2006
2006 restated Analysis Measurement Instrumentation Controls Total
£m £m £m £m £m
Segment result under adopted IFRS 28.2 18.4 28.1 8.0 82.7
Amortisation of acquisition-related
intangible assets 1.1 0.6 0.1 - 1.8
Goodwill impairment charge 1.2 - - - 1.2
Adjusted operating profit 30.5 19.0 28.2 8.0 85.7
Divested businesses - - (2.3) (0.2) (2.5)
Corporate cost reallocation (0.2) (0.2) 0.4 - -
Adjusted operating profit for continuing
businesses 30.3 18.8 26.3 7.8 83.2
Restructuring charges for continuing
businesses 0.5 2.1 5.1 - 7.7
Adjusted operating profit for continuing
businesses before restructuring charges 30.8 20.9 31.4 7.8 90.9
The adjustment for corporate cost reallocation is a consequence of the
adjustment for divested businesses and reallocates all corporate costs to the
continuing businesses.
Adjusted profit before tax 2007 2006
£m £m
Profit before tax as reported under adopted IFRS 118.1 85.6
Amortisation of acquisition-related intangible assets 1.9 1.8
Goodwill reduction - 1.2
Profit on disposal of businesses (19.0) (9.5)
Unrealised change in fair value of cross-currency interest (3.0) (2.8)
rate swaps
Adjusted profit before tax 98.0 76.3
Operating cash flow 2007 2006
£m £m
Net cash from operating activities under adopted IFRS 91.2 80.5
Corporation tax paid 23.8 21.5
Purchase of property, plant & equipment (12.7) (10.5)
Proceeds from sale of property, plant & equipment 1.4 -
Operating cash flow for management purposes 103.7 91.5
Adjusted earnings per share 2007 2006
£m £m
Profit after tax as reported under adopted IFRS 86.2 61.4
Adjusted for:
Amortisation of acquisition-related intangible 1.9 1.8
assets
Goodwill reduction - 1.2
Profit on disposal of businesses (19.0) (9.5)
Unrealised change in fair value of cross-currency interest rate swaps (3.0) (2.8)
Tax effect of the above 4.5 3.4
Other tax items not forming part of the underlying tax rate - (1.2)
Adjusted earnings 70.6 54.3
Weighted average number of shares outstanding (millions) 121.6 124.3
Adjusted earnings per share (pence) 58.1 43.7
Adjusted diluted earnings per share 2007 2006
Adjusted earnings (as above) (£m) 70.6 54.3
Diluted weighted average number of shares outstanding (millions) 122.1 124.7
Adjusted diluted earnings per share (pence) 57.8 43.5
Analysis of net debt for management purposes 2007 2006
£m £m
Bank overdrafts 4.0 4.0
Bank loans - secured 2.5 2.7
Unsecured loan notes 106.0 106.1
Cross-currency interest rate swaps - currency portion 16.2 9.8
Finance lease liabilities - 0.1
Total borrowings 128.7 122.7
Cash balances (51.4) (51.0)
Net debt 77.3 71.7
Analysis of revenue by geographical destination 2007 2006
for continuing businesses £m £m
UK 28.5 28.6
Continental Europe 254.6 244.5
North America 152.5 157.0
Japan 53.6 55.5
China 55.0 49.0
Rest of Asia Pacific 73.1 74.7
Rest of the world 42.5 33.3
Total continuing businesses 659.8 642.6
Divested businesses 8.6 41.9
Group total 668.4 684.5
Results of the group based upon the 2006 segmentation
Process In-line Electronic Total Total
Technology Instrumentation Controls
2007 2006 2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m £m £m
Sales 352.3 343.6 177.7 202.2 138.4 138.7 668.4 684.5
Divested businesses - (8.6) (38.0) (3.9) (8.6) (41.9)
- -
Sales for continuing 352.3 343.6 169.1 164.2 138.4 134.8 659.8 642.6
businesses
Operating profit 52.0 42.6 29.7 22.9 21.2 17.2 102.9 82.7
Amortisation of intangibles 1.5 1.7 0.4 0.1 - - 1.9 1.8
Goodwill reduction - 1.2 - - - - - 1.2
Adjusted operating profit 53.5 45.5 30.1 23.0 21.2 17.2 104.8 85.7
Divested businesses - - (0.5) (2.3) - (0.2) (0.5) (2.5)
Corporate cost reallocation* - (0.3) - 0.4 - (0.1) - -
Adjusted operating profit for 53.5 45.2 29.6 21.1 21.2 16.9 104.3 83.2
continuing businesses
Restructuring charges for 0.2 1.9 0.7 5.1 0.7 0.9 7.7
continuing businesses -
Adjusted operating profit for 53.7 47.1 30.3 26.2 21.2 17.6 105.2 90.9
continuing businesses before
restructuring charges
Return on sales after 15.2% 13.2% 17.5% 12.9% 15.3% 12.5% 15.8% 12.9%
restructuring
Return on sales before 15.2% 13.7% 17.9% 16.0% 15.3% 13.1% 15.9% 14.1%
restructuring
* Reallocates corporate costs from divested businesses to continuing businesses.
3. SEGMENTAL INFORMATION
The group's primary reporting format is business segments and its secondary
format is geographical segments. The companies within each business segment are
detailed in the Operating Review section of the preliminary statement.
The business segments for which information has been included in these accounts
are different from those disclosed in prior years. The new disclosures reflect
the manner in which the business is currently managed by the Board of Directors.
Prior year comparatives have been restated accordingly.
a) Business segments
Segment revenue Inter-segment External customer Segment result
revenue revenue
2007 2006 2007 2006 2007 2006 2007 2006
Restated Restated Restated Restated
£m £m £m £m £m £m £m £m
Materials Analysis 214.1 206.0 (0.3) (0.3) 213.8 205.7 33.5 28.2
Test & Measurement 208.1 202.2 (0.6) (0.7) 207.5 201.5 26.0 18.4
In-line Instrumentation 209.3 235.2 (0.5) (0.7) 208.8 234.5 34.8 28.1
Industrial Controls 38.3 42.8 - - 38.3 42.8 8.6 8.0
Eliminate inter-segment (1.4) (1.7) 1.4 1.7 - -
sales - -
Total continuing operations 668.4 684.5 - - 668.4 684.5 102.9 82.7
Profit on disposal of 19.0 9.5
businesses
Financial income 9.6 9.0
Finance costs (13.4) (15.6)
Profit before tax 118.1 85.6
Tax (31.9) (24.2)
Profit after tax 86.2 61.4
Inter-segment pricing is on an arm's length basis. Segments are presented on the
basis of actual inter-segment charges made. Profit on disposal of business of
£19.0m (2006: £9.5m) relates to the In-line Instrumentation segment (2006:
Electronic Controls segment).
Segment assets Segment liabilities
2007 2006 2007 2006
Restated Restated
£m £m £m £m
Materials Analysis 199.8 184.6 (67.8) (59.1)
Test & Measurement 191.9 179.8 (53.6) (50.6)
In-line Instrumentation 169.2 167.0 (46.1) (45.4)
Industrial Controls 9.8 9.9 (4.1) (5.2)
Total segment assets and liabilities 570.7 541.3 (171.6) (160.3)
Cash and borrowings 51.4 51.0 (112.5) (112.9)
Derivative financial instruments 0.1 1.3 (16.1) (12.8)
Net pension liability - - (11.1) (18.8)
Taxation (including amounts disclosed within 25.7 39.7 (33.8) (34.4)
assets and liabilities held for sale)
Consolidated total assets and liabilities 647.9 633.3 (345.1) (339.2)
Additions to Depreciation and Impairment
non-current assets amortisation charges
2007 2006 2007 2006 2007 2006
Restated Restated
£m £m £m £m £m £m
Materials Analysis 4.2 6.1 4.3 3.6 - -
Test & Measurement 3.5 5.8 6.3 6.8 - -
In-line Instrumentation 10.8 5.5 4.2 4.4 - -
Industrial Controls 0.4 0.3 0.3 0.3 - -
18.9 17.7 15.1 15.1 - -
b) Geographical segments
The group's business operations are each located in several geographical
locations and sell on to external customers in all parts of the world.
The following is an analysis of revenue by geographical destination:
Materials Test & In-line Industrial Total Total
Analysis Measurement Instrumentation Controls 2007 2006
£m £m £m £m £m £m
UK 9.4 8.6 10.2 1.5 29.7 36.3
Continental Europe 66.2 112.4 70.7 7.2 256.5 253.5
North America 50.0 23.5 58.9 24.2 156.6 176.4
Japan 18.9 16.5 17.9 0.4 53.7 55.8
China 18.7 14.4 21.2 1.1 55.4 50.1
Rest of Asia Pacific 33.9 19.0 17.3 3.4 73.6 76.9
Rest of the world 16.7 13.1 12.6 0.5 42.9 35.5
213.8 207.5 208.8 38.3 668.4 684.5
The following is an analysis of the carrying amount of segment assets, and
additions to property, plant and equipment and intangible assets, analysed by
the geographical area in which the assets are located.
Carrying amount of Additions to
segment assets non-current assets
2007 2006 2007 2006
£m £m £m £m
UK 58.4 63.1 3.9 1.8
Continental Europe 385.6 355.6 5.5 5.9
North America 84.5 84.2 7.8 7.7
Japan 15.0 13.9 0.1 0.1
China 10.5 10.1 0.6 0.3
Rest of Asia Pacific 12.0 11.6 0.9 1.3
Rest of the world 4.7 2.8 0.1 0.6
570.7 541.3 18.9 17.7
4. FINANCE COSTS AND FINANCIAL INCOME
2007 2006
Financial income £m £m
Bank interest receivable 1.8 2.0
Change in fair value of cross-currency interest rate swaps 3.0 2.8
Expected return on pension scheme assets 4.8 4.2
9.6 9.0
2007 2006
Finance costs £m £m
Interest payable on bank loans and overdrafts 8.2 0.5
Interest payable on other loans 0.3 10.6
Total interest payable 8.5 11.1
Interest cost on pension scheme liabilities 4.9 4.5
13.4 15.6
Interest costs of £6.7m (2006: £9.1m) for the purposes of the calculation of
interest cover comprise of bank interest receivable of £1.8m (2006: £2.0m) and
interest payable on bank and other loans and overdrafts of £8.5m (2006: £11.1m).
5. TAXATION
UK Overseas 2007 UK Overseas 2006
Total Total
£m £m £m £m £m £m
Current tax charge - 27.8 27.8 0.9 21.4 22.3
Adjustments in respect of (0.3) (3.6) (3.9) (0.1) (0.5) (0.6)
current tax of prior years
Deferred tax - origination and 2.9 5.1 8.0 (0.3) 2.8 2.5
reversal of temporary
differences 2.6 29.3 31.9 0.5 23.7 24.2
The standard rate of corporation tax for the year, based on the weighted average
of tax rates applied to the group's profits, is 32.3% (2006: 32.1%). The tax
charge for the year is lower than the standard rate of corporation tax for the
reasons set out in the following reconciliation:
2007 2006
£m £m
Profit before taxation 118.1 85.6
Corporation tax at standard rate of 32.3% (2006: 32.1%) 38.2 27.5
Non-taxable income and gains (4.1) (1.7)
Non-deductible expenditure 1.7 1.2
Movements on unrecognised deferred tax assets - (0.6)
Other current year items (0.1) (0.1)
Taxation on other dividend flows 0.1 -
Change in tax rates 0.5 -
Other adjustments to prior year current and deferred tax (4.4) (2.1)
charges
Total taxation 31.9 24.2
The aggregate current and deferred tax charge relating to items that are charged
directly to equity is as follows:
2007 2006
£m £m
4.0 1.2
The following tax charges relate to items of income and expense that are
excluded from the group's adjusted performance measures.
Tax on items of income and expense that are excluded from the 2007 2006
group's adjusted profit before tax £m £m
0.9 0.8
Tax charge on unrealised change in fair value of
cross-currency interest rate swaps
Tax credit on amortisation of intangible assets and goodwill (0.5) (0.6)
impairment charge
Tax charge on disposal of subsidiary undertakings 4.1 3.2
Total tax charge 4.5 3.4
Other tax items not forming part of the underlying tax rate 2007 2006
£m £m
Material transfers from unrecognised tax assets - (1.2)
Total tax credit - (1.2)
The effective adjusted tax rate for the period was 28.0% (2006: 28.8%) as set
out in the reconciliation below:
Reconciliation of total tax charge on adopted IFRS basis to adjusted tax 2007 2006
charge £m £m
Total tax charge on adopted IFRS basis 31.9 24.2
Tax charge on items of income and expense that are excluded from the group's (4.5) (3.4)
adjusted profit before tax
Other tax items not forming part of the underlying tax rate - 1.2
Adjusted tax charge 27.4 22.0
Adjusted profit before tax 98.0 76.3
Adjusted effective tax rate 28.0% 28.8%
6. DIVIDENDS
2007 2006
Amounts recognised and paid as distributions to equity holders in the £m £m
year
Final dividend for the year ended 31 December 2006 of 12.5p 15.4 14.0
(2005: 11.2p) per share
Interim dividend for the year ended 31 December 2007 of 5.75p 6.8 6.2
(2006: 5.0p) per share
22.2 20.2
Amounts arising in respect of the year 2007 2006
£m £m
Interim dividend for the year ended 31 December 2007 of 6.8 6.2
5.75p (2006: 5.0p) per share
Proposed final dividend for the year ended 31 December 2007 of 15.25p
(2006: 12.5p) per share 17.5 15.6
24.3 21.8
The proposed final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial
statements.
7. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity shareholders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the year but adjusted for the effects of dilutive
options.
Basic earnings per share 2007 2006
Profit after tax (£m) 86.2 61.4
Weighted average number of shares outstanding (millions) 121.6 124.3
Basic earnings per share (pence) 70.9 49.4
Diluted earnings per share 2007 2006
Profit after tax per income statement (£m) 86.2 61.4
Basic weighted average number of shares outstanding (millions) 121.6 124.3
Weighted average number of dilutive 5p ordinary shares under option 1.0 1.6
(millions)
Weighted average number of 5p ordinary shares that would have been (0.5) (1.2)
issued at average market value from proceeds of dilutive share options
(millions)
Diluted weighted average number of shares outstanding (millions) 122.1 124.7
Diluted earnings per share (pence) 70.6 49.2
8. COMPANY INFORMATION
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2007 or 2006 but is derived
from those accounts. Statutory accounts for 2006 have been delivered to the
Registrar of Companies. The auditors have reported on those accounts; their
report was unqualified and did not contain statements under section 237(2) or
(3) of the Companies Act 1985. The statutory accounts for 2007 will be delivered
following the company's Annual General Meeting.
9. ANNUAL REPORT
Copies of the annual report, which will be posted to shareholders on 20 March
2008, may be obtained from the registered office at Station Road, Egham, Surrey
TW20 9NP. The report will also be available on the company's website at
www.spectris.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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