Interim Results

Spectris PLC
14 September 2004


Date:        Embargoed until 7.00am, Tuesday 14 September 2004

Contact:     Hans Nilsson, Chief Executive, Spectris plc      Tel: [phone]
             Richard Mountain, Financial Dynamics             Tel: [phone]


                                2004 INTERIM RESULTS

Spectris plc, the precision instrumentation and controls company, announces its
interim results for the six months to 30 June 2004.


£m                                                     2004              2003           Change
                                                    Half year          Half year

Turnover                                               282.8             264.7              +7%
Operating profit *                                      21.0              22.0              -5%
Profit before tax *                                     14.2              17.0             -16%
Profit after tax                                         4.4               6.4             -31%
Basic earnings per share                                3.6p              5.3p             -32%
Earnings per share *                                    8.9p             10.4p             -14%
Dividend                                               4.25p             4.05p              +5%

* before exceptional items and goodwill amortisation



Key points:

•        Strong demand leading to order growth of 12% (19% before currency
         impact)

•        Sales up by 7% (14% before currency impact)

•        Growing demand and specific supplier issues resulted in unusually large
         order book build of £22m

•        Gross margins maintained

•        Adverse currency impact on profit of £4m

•        Dividend increased by 5%




Commenting on the results, Hans Nilsson, Chief Executive, said:

'These results are in line with the guidance we gave in July. First half orders
were comfortably ahead of the same period in 2003, reflecting growth in demand
and good market response to new product introductions. Sales grew less strongly,
due to delays in some shipments as a result of specific supplier issues.
Consequently, sales and profits are expected to be disproportionately weighted
towards the second half. After a satisfactory performance during the summer
months, we maintain our expectations of positive progress for the full year.'



CHAIRMAN'S STATEMENT

The first half of 2004 saw a substantial improvement in demand compared with the
corresponding period in 2003, with order growth of 12%. However, sales increased
by a more modest 7%. A combination of good demand and lagging shipments, the
latter partly caused by the failure of certain suppliers to deliver on time,
resulted in an unusually large order book increase of £22.0m. These factors,
plus the impact of adverse exchange rates and an increase in borrowing costs,
led to a decline in profit before tax of £2.8m compared with the same period in
2003.



Sales in the first half of the year increased by 7% to £282.8m  (2003: £264.7m)
as a result of organic growth of 3% and a £9.7m contribution from bolt-on
acquisitions.  Operating profit (before exceptional items and goodwill
amortisation) decreased to £21.0m (£22.0m) after a £4.0m change attributable to
exchange rates, primarily in respect of the US dollar. Interest costs rose by
£1.8m, largely as a result of higher rates. Profit before tax (before
exceptional items and goodwill amortisation) decreased from £17.0m to £14.2m and
earnings per share by 14% from 10.4p to 8.9p on a tax rate of 24% (26%).



As a consequence of the sales shortfall, inventories increased, with 43% (40%)
of operating profit converted into cash. Debt was £177.5m at the half year
compared with £163.4m at the prior year end. Annualised interest cover was
unchanged at 4.7 times. The Board proposes to pay an interim dividend of 4.25p
(4.05p), an increase of 5%.

The dividend will be paid on 19 November 2004 to shareholders on the register at
22 October 2004.



Board change

The Board announces the resignation of Graham Zacharias, Group Finance Director.
Graham will, however, remain with the company for a period long enough to ensure
an orderly succession and to complete certain key assignments. The Board would
like to take this opportunity to thank Graham for his considerable contribution
over the last nine years and expects that an announcement regarding a successor
will be made in the near future.



Outlook

With a satisfactory performance during the summer months and a substantial
portion of the order book scheduled for delivery by the end of the second half,
the outlook, given current levels of demand, is positive. It is anticipated that
the bolt-on acquisitions made in the first half will contribute to profits in
the second half and interest costs will be comparable.  If current exchange
rates prevail, the adverse effect in the second half will be less than in the
first six months.



Overall, therefore, we maintain our expectations of positive progress for the
year.



CHIEF EXECUTIVE'S REVIEW


Demand improved substantially in the first half of 2004 compared with the prior
year. This growth in demand was the result of recovery in North America,
continued growth in Asia, some improvement in Europe, and a significant
contribution from new product introductions and sales initiatives.



Orders exceeded sales by £22.0m. This was due to an expected growth-related
increase (£8.0m), typical recovery-driven longer customer and supplier leadtimes
(£7.0m) and two specific supplier issues in the period affecting the Bruel &
Kjaer Sound & Vibration and Bruel & Kjaer Vibro businesses (£7.0m). These
factors resulted in sales being £7.0m lower than anticipated at the time of the
AGM statement in May. Given the group's high contribution margins, a significant
proportion of these sales would have translated into profits. The supplier
issues have improved since the end of June and actions are in place to mitigate
further effects; the situation will be largely resolved by the year end.



Bolt-on acquisitions contributed £9.7m in sales but recorded a loss of £0.3m
after re-organisation costs of £0.8m. These acquisitions will start contributing
to profits in the second half.



Gross margins were maintained. Overhead costs remained under tight control with
a modest increase in headcount, excluding acquisitions, of 1%, mostly in Asia,
reflecting the increased sales coverage and HBM's output growth in the region.



Sector performance

Electronic controls generated sales growth of 8% from £62.2m to £67.2m and
operating profit growth of 12% from £6.9m to £7.7m. Orders exceeded sales.
Performance improved particularly at HBM and Microscan, and Arcom and Red Lion
also delivered a year-on-year improvement. Currency effects in this sector were
less of a factor than elsewhere but nevertheless had an adverse impact on sales
and operating profits of approximately £4.4m and £0.3m respectively. Sales
growth was achieved by the introduction of innovative products, resulting in
higher orders from original equipment manufacturers for Microscan, HBM and
Arcom. The continued drive towards improving geographic coverage was also a
positive factor for HBM, Microscan and Red Lion.



In-line instrumentation achieved sales growth of 8% from £86.8m to £93.9m with
operating profits down by 10% from £8.7m to £7.8m. Currency impacted sales and
profits by £5.7m and £1.6m respectively. In this sector, too, orders exceeded
sales. The growth in sales was helped in particular by a complementary
acquisition for Loma in the first half. Loma's first half performance reflected
the acquisition-related one-off restructuring costs. BTG achieved another solid
performance in the pulp and paper market and Beta LaserMike improved
year-on-year, despite no material improvement in their largest
telecommunications-related market. The aggregate gains in the remaining
companies were offset by the impact of currency. Significant new products
introduced included a remote wind turbine monitoring solution from Bruel & Kjaer
Vibro, a portable gas analyser from Servomex and a new high performance paper
coating blade from BTG.



Process technology achieved sales growth of 5% from £115.7m to £121.7m with
operating profits down 14% to £5.5m (£6.4m) due to the significant currency
impact, which affected sales and profits by £7.5m and £2.1m respectively. Demand
in this sector saw significant growth with orders exceeding sales by £15m as a
result of both natural growth and shipment delays due to supplier issues. A
significant part of this order book build was due to a specific supplier issue
impacting deliveries. The remainder reflects customer projects with longer
leadtimes, in particular for semiconductor equipment at Particle Measuring
Systems and coating lines for flat panel displays at Fusion UV Systems.



The strong growth in demand was a result of significant improvements at all five
companies. PANalytical introduced a number of new products which resulted in
market share gains. Particle Measuring Systems continued its penetration into
pharmaceutical applications and saw improved demand from its semiconductor
customers. Demand for Fusion's products improved, particularly for coatings for
the flat panel display market. Bruel & Kjaer Sound & Vibration saw broadly-based
improvements in demand, despite being significantly impacted by the supplier
issues mentioned above. The company also acquired its distributor in Japan, its
second-largest market, and introduced a number of significant new products,
including a proprietary coin-sized flat microphone. Malvern Instruments improved
performance in its laboratory markets and increased its sales and geographic
coverage by establishing a direct sales presence in China.



Going forward

The immediate priority is to resolve the supplier-related shipment issues and
convert the backlog of orders into sales and corresponding profits. Also key is
maintaining the momentum that is fuelling much of the growth from new product
and application development. The competitive positions of our businesses have
improved over the past couple of years and further progress on sales coverage in
the rapidly growing economies, together with a continued focus on improving
operating margins, remain key priorities going forward.


                                   -  ENDS  -


A table of results is attached.

The company will broadcast the meeting with analysts in a live Webcast
commencing at 08:15 AM on the company's website at www.spectris.com

Copies of this notice are available to the public from the registered office:
Station Road, Egham, Surrey TW20 9NP and on the company's website at
www.spectris.com



Group Results

For the half year to 30 June 2004
                                                                              2004             2003          2003
                                                             Notes       Half year        Half year     Full year
                                                                                £m               £m            £m

Turnover                                                         3           282.8            264.7         568.0

Operating profit before goodwill amortisation
and exceptional items                                            3            21.0             22.0          59.8

Goodwill amortisation                                                        (6.4)            (6.2)        (12.4)

Operating profit                                                              14.6             15.8          47.4

Loss on sale of business                                                         -                -         (0.4)

Profit before interest and taxation                                           14.6             15.8          47.0

Net interest payable                                                         (6.8)            (5.0)        (10.9)

Profit before taxation                                                         7.8             10.8          36.1

Taxation                                                         4           (3.4)            (4.4)        (10.1)


Profit after taxation                                                          4.4              6.4          26.0

Dividends                                                                    (5.1)            (4.9)        (16.1)

Retained (loss)/profit                                                       (0.7)              1.5           9.9



Average number of shares in issue (millions)                                 120.9            120.4         120.5

Earnings per ordinary share                                      5            3.6p             5.3p         21.6p

Diluted earnings per share                                       5            3.6p             5.3p         21.6p

Earnings per share before goodwill amortisation                  5
and exceptional items                                                         8.9p            10.4p         32.1p

Dividends per ordinary share                                                 4.25p            4.05p        13.35p


Operating profit before goodwill amortisation                                 21.0             22.0          59.8
and exceptional items

Net interest payable                                                         (6.8)            (5.0)        (10.9)



Profit before taxation and before goodwill amortisation
and exceptional items                                                         14.2             17.0          48.9


The results in the profit and loss account above relate entirely to continuing
operations.



Balance Sheet Summary

                                                                   2004              2003             2003
                                                                30 June           30 June      31 December
                                                                              (restated)*      (restated)*
                                                                     £m                £m               £m

Intangible assets                                                 221.1             222.4            227.0
Tangible fixed assets                                              90.1              95.1             92.4
Fixed asset investments                                             0.5               0.5              0.6
Working capital                                                   102.1             102.6             94.5
Taxation and deferred taxation                                   (27.9)            (14.5)           (27.1)
Dividends payable                                                 (5.1)             (4.9)           (11.2)
Provisions (excluding deferred taxation)                         (10.9)            (16.8)           (11.4)
Net pension liabilities                                          (12.0)             (9.0)           (12.0)
                                                                  357.9             375.4            352.8
Net borrowing                                                   (177.5)           (191.5)          (163.4)
                                                                 
Net assets                                                        180.4             183.9            189.4

Share capital                                                       6.2               6.2              6.2
Reserves                                                          174.2             177.7            183.2

                                                                  

Equity shareholders' funds                                        180.4             183.9            189.4

Reconciliation of movements in shareholders' funds

Retained (loss)/profit                                            (0.7)               1.5              9.9
Foreign exchange adjustments                                      (8.5)               8.9              8.1
New share capital subscribed                                        0.2               0.1              0.8
Decrease in own shares held                                           -                 -              0.3
Actuarial revaluation of pension funds                                -                 -            (3.1)
Net (decrease)/increase                                           (9.0)              10.5             16.0
Opening shareholders' funds                                       189.4             173.4            173.4
Closing shareholders' funds                                       180.4             183.9            189.4





* The comparative balance sheets at 30 June 2003 and 31 December 2003 have been
restated to reflect the adoption of UITF 38 (Accounting for ESOP trusts). This
has had the effect of presenting the shares held by the Spectris plc Employee
Benefit Trust within reserves rather than fixed asset investments.



Cash Flow Summary

                                                                       2004             2003            2003
                                                                  Half year        Half year       Full year
                                                                         £m               £m              £m

Cash inflow from operating activities                                  15.7             15.8            64.8

Net capital expenditure                                               (6.7)            (6.9)          (14.1)
Net interest paid                                                     (7.0)            (5.2)           (8.9)
Tax paid                                                              (3.3)            (1.5)           (2.5)

Free cash flow                                                        (1.3)              2.2            39.3

Dividends paid                                                       (11.2)           (10.7)          (15.5)

(Purchase)/sale of subsidiaries                                       (8.8)              0.5           (8.2)

Cash (outflow)/inflow before financing                               (21.3)            (8.0)            15.6

Share issues                                                            0.2              0.1             0.8

Exchange adjustment                                                     7.0            (6.1)           (2.3)

Movement in net debt in the period                                   (14.1)           (14.0)            14.1

Net debt at the beginning of the period                             (163.4)          (177.5)         (177.5)

Net debt at the end of the period                                   (177.5)          (191.5)         (163.4)


Reconciliation of operating profit to cash inflow from operating activities

Operating profit                                                     14.6            15.8            47.4
Depreciation                                                          6.4             6.5            13.0
Goodwill amortisation                                                 6.4             6.2            12.4
Profit on sale of tangible fixed assets                                 -               -           (0.3)
Increase in working capital                                        (11.3)          (10.6)           (3.9)
Utilisation in provisions                                           (0.4)           (2.1)           (3.8)

Cash inflow from operating activities                                15.7            15.8            64.8




Notes to the Accounts

1.   Principal accounting policies and basis of preparation

The interim report has been prepared on the basis of the accounting policies set
out in the Group's 2003 statutory accounts except for the impact of adoption of
UITF 38 (Accounting for ESOP trusts); this has had the effect of presenting own
shares held within reserves rather than within fixed asset investments. The
interim report was approved by the Board on 14 September 2004. This report does
not constitute statutory accounts for the company. The interim figures for 30
June 2004 and 30 June 2003 are unaudited. The results for 2003 are not the
statutory accounts but an abridged version of the full accounts which have
received an unqualified report by the auditors and have been filed with the
Registrar of Companies.

2.   Taxation

Full provision is made for deferred tax assets and liabilities arising from
timing differences that have originated but not reversed by the balance sheet
date, except as otherwise required by FRS 19. Deferred tax assets are recognised
to the extent that it is regarded as more likely than not that they will be
recoverable.

3.   Segmental analysis

a)  Analysis by class of business
                                                                       2004            2003            2003
                                                                  Half year       Half year       Full year
                                                                         £m              £m              £m
Turnover

Electronic controls                                                    67.2            62.2           132.1
In-line instrumentation                                                93.9            86.8           182.0
Process technology                                                    121.7           115.7           253.9

Total turnover                                                        282.8           264.7           568.0


Operating profit

Electronic controls                                                     7.7             6.9            15.8
In-line instrumentation                                                 7.8             8.7            22.3
Process technology                                                      5.5             6.4            21.7

Total operating profit                                                 21.0            22.0            59.8

Goodwill amortisation                                                 (6.4)           (6.2)          (12.4)

Operating profit                                                       14.6            15.8            47.4


The operating businesses are grouped as follows:

Electronic controls: Arcom Control Systems, HBM, Microscan, Red Lion Controls

In-line instrumentation: Beta LaserMike, Bruel & Kjaer Vibro, BTG, Ircon, Loma
Systems, NDC Infrared Engineering, Servomex

Process technology: Bruel & Kjaer Sound & Vibration, Fusion UV Systems, Malvern
Instruments, PANalytical, Particle Measuring Systems.

b)   Analysis of turnover by geographical destination


                                                              2004            2003            2003
                                                         Half year       Half year       Full year
                                                                £m              £m              £m

UK                                                            20.3            17.6            36.1
Continental Europe                                           110.0           106.7           223.5
North America                                                 74.4            73.9           156.1

Japan                                                         19.8            19.1            40.7
China                                                         21.1            14.8            36.0
Rest of Asia Pacific                                          23.3            22.3            48.6
Rest of the world                                             13.9            10.3            27.0
Total                                                        282.8           264.7           568.0



4.   Tax on profit on ordinary activities

The taxation charge for the six months to 30 June 2004 is based on an estimate
of the effective rate of taxation for the current year. The effective rate of
taxation applied for the half year is 24% (half year 2003: 26%).

The tax charge is analysed as follows:


                                                                                        2004             2003
                                                                                          £m               £m

UK                                                                                         -              0.8
Overseas                                                                                 3.4              3.6
Tax charge for the half year                                                             3.4              4.4




5.   Earnings per share

Earnings per share before goodwill amortisation and exceptional items is
calculated as follows:


                                                        Earnings                   Earnings per share
                                                          2004          2003          2004         2003
                                                     Half year     Half year     Half year    Half year
                                                            £m            £m             p            p

Earnings and earnings per share                            4.4           6.4           3.6          5.3


Earnings and earnings per share attributable to:
   Goodwill amortisation                                   6.4           6.2           5.3          5.1


Earnings and earnings per share before goodwill
amortisation and exceptional items                        10.8          12.6           8.9         10.4



The weighted average number of 5p ordinary shares in issue during the period was
120.9 million (2003: 120.4 million).

The calculation of diluted earnings per share is based upon the group profit of
£4.4m (2003: £6.4m) and on the diluted weighted average number of shares in
issue during the period of 121.1 million (2003: 120.4 million).



6.   Pension schemes

The net pension liability of the group at 31 December 2003 was £12.0m (30 June
2003: £9.0m). The company's actuaries have estimated that at 30 June 2004 the
net pension liability was £12.4m (30 June 2003: £12.0m).



7.   Interim report

Copies of the interim report, which will be posted to shareholders on 16
September, may be obtained from the registered office at Station Road, Egham,
Surrey TW20 9NP. The interim report will also be available on the company's
website at www.spectris.com.




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