Spectris plc

Annual Report and Accounts 2022

Cle an e r.

Healthier.

productive.

Spectris harnesses the power of

precision measurement to equip our

customers to make the world cleaner,

healthier and more productive.

Our Purpose

Find out more online

Our website provides a range of

information about Spectris plc

www.spectris.com

2022 Performance

Sales



1,2



£1, 327.4m £222.4m £172.6m

(2021: £1,163.0m)

Change yoy 14%

LFL

change yoy 14%

(2021: £189.6m)

Change yoy 17%

LFL change yoy 14%

(2021: £139.9m)

Change yoy 23%



1,2,4

Adjusted operating margin

1,2,4

Statutory operating margin

74% 16.8% 13%

(2021: 94%)

Change yoy (20 pp)

(2021: 16.3%)

Change yoy 50 bps

LFL

(2021: 12.0%)

Change yoy 100 bps

 Adjusted earnings per share

1,2

Basic earnings per share

75.4p 159.9p 373.1p

(2021: 71.8p)

Change yoy 5%

(2021: 127.4p)

Change yoy 26%

(2021: 305.1p)

Change yoy 22%



Total recordable

incident rate

Employee engagement –

Gallup GrandMean score

1. Following the divestment of the



as a discontinued operation, the



statements have been restated to



2. Alternative performance measures

(‘APMs’) are used consistently

throughout this Annual Report and are

referred to as ‘adjusted’ or ‘like-for-like’



reconciled to the reported statutory

measures in the appendix to the

Consolidated Financial Statements

on page 162.

 

operations.

4. See more in the Key Performance

Indicators section on pages 20 and 21.

0.27 3.86

(2021: 0.32) (2021: 3.72)



(MWh per £m revenue)

CDP score

58.2 B

(2021: 73.7) (2021: B-)

Strategic Report

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 



Financial Statements

 

 

 

 



 



 



 



 

 



 



 

Additional Information

 

Our Strategy

Read more about

our Strategy for

Sustainable Growth

Spectris Foundation

Read a summary of

the impact of the

Spectris Foundation

Sustainability report

Find out more about

how we are delivering

value for today and for

the next generation of

stakeholders

Contents



Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris at a glance

Spectris

in focus

Spectris harnesses the power of precision measurement to equip our

customers to make the world cleaner, healthier and more productive.

We are focusing on where we have competitive and differentiated

offerings, positioned in attractive, structural growth markets with

high barriers to entry.

What we do

We combine precision with purpose,

delivering progress for a better world. We

provide critical insights to our customers

through premium precision measurement,

using technical expertise and deep domain

knowledge to deliver value beyond measure

for all our stakeholders.

How we equip customers

We equip our customers to solve some of

their greatest challenges, harnessing the

power of precision measurement to make the

world cleaner, healthier and more productive.

Our leading, high-tech instruments,

equipment and software accelerate the

reduction of emissions into the environment

and develop technologies that drive our



medicines that cure us and enable our

customers to work faster, better, and



Our go to market model

Customer centricity is core to our business

model. We combine leading instruments and

technologies with deep technical knowledge

and domain expertise, adding value



By going beyond our products to deliver the

services and solutions our customers need,

we build strong partnerships that drive

innovation and growth over the long term.

Our key markets

(2022 percentage of Group sales)

Life sciences/

Pharmaceutical

24% of sales

(2021: 23%)

Technology-led

industrials

13% of sales

(2021: 14%)

Automotive

13% of sales

(2021: 13%)

Electronics and

semiconductor

11% of sales

(2021: 11%)

Metals, minerals,

mining

9% of sales

(2021: 10%)

Academic research

8% of sales

(2021: 9%)

Other

22% of sales

(2021: 20%)

Spectris plc Annual Report and Accounts 2022

Our organisational

structure

Our organisational

structure

Following the refocusing of the Group around premium precision measurement



and Spectris Dynamics – comprising 87% of Group sales.

 Spectris Dynamics

Comprising Malvern Panalytical and

Particle Measuring Systems

Comprising HBK

A leader in advanced sensors and instruments used to





Spectris Dynamics provides differentiated sensing, data

acquisition, analysis modelling and simulation solutions

to help customers accelerate product development and

enhance product performance.

% of Group sales

50%

(2021: 46%)

% of Group sales

37%

(2021: 37%)

LFL sales growth

18%

LFL sales growth

Adjusted operating margin

21.3%

(2021: 21.1%)

Adjusted operating margin

15.0%

(2021: 16.5%)

Employees

3,130

(2021: 2,880)

on pages 22 to 25

Employees

3,510

(2021: 3,260)

on pages 26 to 29

Sales by location (%)

1 Asia 37

2 Europe 30

3 North America 29

4 ROW 4

Sales by business (%)

1  

2 Spectris Dynamics 37

3 Other 13

Group sales

Sales by market (%)

1 Life sciences/pharmaceutical 24

2 Technology-led industrials 13

3 Automotive 13

4 Electronics and semiconductor 11

5 Metals, minerals, mining 9

6 Academic research 8

7 Other 22

Spectris at a glance

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Chairman’s statement

A leading

sustainable

business



in our ability to deliver the next phase of our strategy. Since 2019, Spectris

has been transformed into a more focused and higher quality business,





2022 has been another year of strong



margin expansion, despite the supply chain





for the Group’s products and services, with









and good cash conversion, which alongside

further divestment proceeds from the sale

of Omega, saw the Group ending the year

with a net cash position of £228.0 million















payments based on affordability and

sustainability. In 2022, we also implemented









been completed.

Strategy for Sustainable Growth





spent the last four years refocusing and

simplifying our businesses, creating a strong

foundation on which to build. With the

divestment of Omega, completed in July,



generating more than £1 billion in proceeds

and notably enhancing the quality of the



Sales

£1, 327.4m



Dividend per share

75.4p





an exciting new phase

in our strategy.”

Mark Williamson

Chairman

Spectris plc Annual Report and Accounts 2022

Chairman’s statement





our new Strategy for Sustainable Growth.



sustainable business, with premium









targets were formally presented to investors





the clear articulation of the quality of Spectris

and the transformation of the Group in recent



proposition was welcomed by investors who



our technology and our people.

We will continue to invest in M&A as an

important component of our strategy to

compound growth, enabling us to further





portfolio to add value for our customers.



number of customers, including a site visit



In 2022, we completed several successful

acquisitions and divestments, alongside an

approach for Oxford Instruments, which we

terminated due to a deteriorating economic



pipeline of potential acquisition targets







New performance targets to deliver

long-term stakeholder value





which aligns our remuneration structure







Cathy Turner, Chairman of the Remuneration

Committee, for her stewardship of this new

Policy and our shareholders for their support



engagement process.



metrics into our remuneration structure



have added, covering emissions reduction

and employee engagement, are a clear

demonstration of our ambition to deliver





oversight of our sustainability ambitions, I am

delighted that Alison Henwood has agreed to







our exciting ambitions.

Our people

Our people are critical to the successful

execution of our strategy. I was pleased to visit







employees and to spend time informally with

the wider teams in person.





focus on meeting with employee groups in





these meetings have been pivotal to the



Group’s culture.



Gallup employee engagement survey and



meaningful progress being made in building

employee engagement. Our engagement

score has improved in line with our







continue to build an inclusive and supportive

culture where individuals can thrive and have

the development and opportunity to

meaningfully progress their careers.



talented technical individuals is a core enabler

of our growth ambitions as a Group. I am



science, technology, engineering and maths







including strategic partnerships with the

Society of Hispanic Professional Engineers







education platform supporting students’

development, is an exciting development

which will bring the opportunities available

through a career in Spectris to a new and

wider audience.

Summary and outlook





for their continued dedication in delivering





our strategy, which will advance our ambition

to be a leading sustainable business, delivering



cleaner, healthier and more productive. I am



deliver on this ambition and I strongly believe





Mark Williamson

Chairman



















 



 



 





 





 





 













Section 172 statement

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Market trends











Pharmaceutical investment

continues to grow, driven by

demand for conventional and





underpinned by onshoring

activities, the application of

analytics to improve drug pipeline



regulatory focus on data integrity.

A more connected and automated

world demanding ever more

advanced computing and data is

underpinning growth. In a higher



increased focus on enhancing

processes and assets to drive

improvements in productivity and

yield is also supporting demand.





electric vehicles, as well as new

technologies for autonomous and

increasingly connected vehicles.



software is required to generate

smarter insights early on and to

develop products faster, more



sustainable manner.

Sales 2022

24

Sales 2022

13

Sales 2022

13

  

Expected medium-term

market growth

5–7

Expected medium-term

market growth

5–7

Expected medium-term

market growth

4–6

Read more about



Our portfolio is focused and aligned





underpinned by strong sustainability



healthier and more productive –

aligned with our Purpose.

Cleaner

• Climate change and increasingly scarce

resources require new solutions to solve



the transition to cleaner energy and

mobility solutions.

Healthier

• Ageing populations and a rising

middle class in developing countries

require greater healthcare provision,



sciences / Pharmaceutical space.

• Growing populations increasing the

need for precision agriculture and the

evolution of food production.

More productive

• A more digital and automated world

demanding ever more advanced

computing, smart sensors, software





Accelerating

growth in

our markets

 



 



Spectris plc Annual Report and Accounts 2022





Andrew Heath



Market trends















Rising investment to satisfy



infrastructure and greater

processing power, combined



such as 5G, internet of things and



reshoring activities.

A growing need for sustainable,

responsible and more effective

sourcing to minimise the

environmental impact of mining

activities is leading to a greater

adoption of automation and

digitisation, fuelling demand for

digitally connected instruments

and remote monitoring/analytics.

Continued recovery in research

funding is driving demand for

advanced analytical and test

systems, focused on developing

next generation technologies for



productive world.

Includes other technology driven



and general Industrial Automation/



Sales 2022

11

Sales 2022

9

Sales 2022

8

Sales 2022

22

   

Expected medium-term

market growth

6–8

Expected medium-term

market growth

5–6

Expected medium-term

market growth

5–6

Expected medium-term

market growth

3–5

Read more about Our Strategy



Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Chief Executive’s review

Reshaped,

stronger,

positioned for

sustainable

growth





for our customers, improved our business and supported each other, in a





















A strong performance in 2022







future and continuing to expand operating























sales in 2023.



222.4m





Adjusted operating margin

16.8%





Investment in R&D

7.8%

of sales





performance and strategic

progress in 2022. We continue





people across the Group to

deliver for our customers.”

Andrew Heath



Spectris plc

Chief Executive’s review













































sales from both volume and pricing changes,















and no restructuring charges in the current





than 12.0% reported for 2021.

























enabled the Group to deliver an increased



deliver further, strong progress on margin

expansion in 2023.

We have delivered this robust margin

performance alongside a 24% increase in











strengthening our product pipeline,





continue to see positive momentum

including a strong start to 2023 supported









seeing continued improvement in gross



Our performance in 2022 demonstrates



















sustainable business.

Underpinned by our Purpose and

our people







leaders, deep technical experts, innovative











and the environment around them.



people together behind a common purpose











Organic

sales

growth

Adjusted

Operating

margin

expansion

Adjusted

Cash

conversion ROGCE ESG

Our Targets

(2022 – 2027)

6-7% 20%+ 80-90% Mid-teens % Net zero – Scope 1 and 2 by 2030;

Scope 3 by 2040

Engagement – 4.06 by 2025

2022 14% 16.8% 74% 16.0% Scope 1 and 2* – 17,546.0 tCO

year-on-year reduction of 21.9%

Engagement improved year-on-

year by 0.14 to 3.86

2018 5% 15.5% 59% 13.7% Scope 1 and 2* – 82,861.0 tCO

(Scope 3 and Engagement

not measured in 2018)

 

Five key elements of our Strategy for Sustainable Growth

1. Great businesses

Asset-light businesses focused on premium, precision

measurement solutions and industry-leading domain

expertise, aligned with our Purpose.

2. Structural growth markets

Aligned with attractive, sustainable, structural growth

markets with high barriers to entry.

3. Customer centricity

Solving our customers’ challenges with leading,

differentiated solutions, equipping them to make

the world cleaner, healthier and more productive.

4. Investing in growth



of all stakeholders – investment in growth through

R&D and M&A.

5. Operational excellence

Leveraging the Spectris Business System

business improvement projects and our

high-performance culture.

Read more information on our strategy

on pages 18 and 19

STRATEGIC REPORT





Spectris plc

Chief Executive’s review



businesses.













Strategy for Sustainable Growth





















continuing to expand operating margins,

as a leading sustainable business.













the Group, to deliver:

• 



• 

• 

• 



• 

engagement









and business model is aligned to delivering



1. Great businesses



precision measurement solutions and





2. Structural growth markets





3. Customer centricity



leading, differentiated solutions, equipping



and more productive.

4. Investing in growth







5. Operational excellence







Great businesses focused on premium,

precision measurement solutions





















measurement techniques for materials



















business, a global leader in advanced virtual





leading brands and the breadth and depth





aerospace, electronics and advanced













Aligned with attractive, sustainable,

structural growth markets









fundamentals.







healthcare demand; the climate crisis is





causing customers to optimise production













positions and differentiated products and



















 is focused on the



pharmaceutical, metals, minerals, mining,

electronics and semiconductors, and





measurement, domain expertise and









• 

investment in both small molecule and

biologics drug development, on shoring



compliance.

• 

investments in batteries, additive

manufacturing, responsible resources





• 





semiconductor manufacturing requiring



environments.

• 











Spectris Dynamics is focused on four











customers and combine to offer the









industrial infrastructure and personal audio.













• Our virtual test solutions enable customers









• 







measurement.

Spectris plc

Chief Executive’s review

• Our high performance data acquisition





and manage vast amounts of test and







• 



intelligence at the point of measurement.

Our sensors are being used more and more











through acquisitions, on the most attractive





differentiated positions and a strong



















business more than doubled its revenues in





Customer centricity: leading solutions

to make the world cleaner, healthier and

more productive









adding value throughout our customers



































minimises carbon emissions and supporting

the drive for sustainable mining operations.



leader in delivering photonic innovations,







cleanroom for contamination, ensuring the













expertise helped them to understand the









engineering services provider, in meeting











Investing in growth through R&D

















deliver greater value.





enhanced products.





response to life sciences development and

manufacturing investment, and for the









cleanrooms for aseptic pharmaceuticals,



semiconductor, and other industries.

















of 20nm.











Customers served

67,000

R&D investment

103.8m

Sales, application and

service engineers

2,200

Our 2022 Year



students and

apprentices

representing



the Young









STRATEGIC REPORT





Spectris plc 

Chief Executive’s review





refreshing our existing portfolio of data







to expand our simulation offerings, electrical









supporting enhanced margins. We have





























revenue from products released over the











of total sales.





over the medium term, support and enhance



Investing in growth through M&A





We maintain an active pipeline of potential







We have built up a solid team to execute









• 











• 









• 









• 













• 





strengthen its secure data offering.











our portfolio to add further value for































Operational excellence: Spectris Business

System driving productivity and

competitiveness

We continue to drive operational excellence







from concept to an effective vehicle to deliver

ongoing continuous improvement, both at





























immediate milestone operating margin



target of over 20%.



engineering apprentice at





reached over

21,000 students



to support





education.

Spectris plc 

Chief Executive’s review



on reducing leadtimes to support customer



















processes to enhance our operations, enabling









margin expansion ambitions alongside driving





Leading sustainable business























future:

• 































• 















on mental health, and for future talent are



innovative pipelines, including partnerships









diverse pools of talent.

• 

of living challenges that are impacting















• 

















• 

engineering brighter futures for children













nominated causes.











provide humanitarian aid.

Summary and outlook











around the Group.



remaining vigilant and alert to signs of

















strong progress on expanding margins and



leading sustainable business.

Andrew Heath











“Our performance in 2022







programme in 2019.”

Andrew Heath



STRATEGIC REPORT





Spectris plc

Customer:

Excelitas

Customer:

2bind GmbH

Monitoring Airborne Molecular

Contamination

Accelerating drug discovery

Challenge

One of the most complex technical

challenges for clean room manufacturing



When this occurs, it can be detrimental to

the entire manufacturing processes.

Excelitas, the technology leader in delivering

photonic innovations, is reliant on dedicated

cleanrooms to meet the needs of its global



to start monitoring its cleanroom for AMC



levels of ambient acids and amines. Finding



is of paramount importance.



Particle Measuring Systems’ AirSentry II AMC

Monitoring family of ion mobility spectrometers,

detect small concentrations or changes





point-of-use sensors provide fast response,

increased detection and repeatable

performance. In addition, the AirSentry



customers to map different levels of

contamination around their cleanrooms.







point of use analysers to measure total amines

and total concentrations on a 24x7 basis.

Challenge

Drug discovery has experienced great

modern innovation and advancements over

recent years. However, it is still challenged

and limited by the length of time, high risk

and high development costs – making target



and highly complex.

2bind is one of the world’s leading service

providers of biophysical analytical services.



development of drugs, antibodies, proteins,

RNA, DNA and aptamers by developing



methods and assays.



CreoptixAG (a Malvern Panalytical company)

and 2bind share the same mission of

improving technologies and biophysical



partnership to offer customers the highest

quality research tools to help them



supports 2bind to expand its service portfolio

with the innovative Creoptix WAVE product

and provides Creoptix with a highly



provider and beta-tester for future

technology developments.



accelerate further drug discovery





Customers are at the heart of PMS’

business. Its dedicated team of application

engineers also assisted Excelitas with

on-site startup and calibration. With PMS’



and specialty equipment, to enable defect-

free manufacturing.

interactions due to its exceptionally high

sensitivity and resolution. Sitting adjacent

to the WAVEsystem on the 2bind analytical

bench is Malvern Panalytical’s Microcal ITC –

both working hand in hand in 2bind’s drug



lead generation process, sifting through

molecules at a fast and highly sensitive rate.



during the lead generation and optimization



receive the full picture across a number of

service areas including drug discovery,

fragment-based drug discovery, protein

biophysics, antibody development, aptamer

research and RNA-based drug discovery.

“We are pleased that our production













Deb Casher



Case studies

Cleaner

Healthier

More productive

Cleaner

Healthier

More productive

























Spectris plc 

Customer:

HORIBA MIRA

Reducing automotive environmental

development impact

Case Studies continued

Challenge



and is increasingly reliant on virtual product



the desire and expectation to contribute to

a more sustainable future, but is also a result







development time and cost is driving

engineering teams towards greater use of

virtual models into their development and





comparison of design proposals and

engagement of key suppliers earlier in the

process to accelerate development and

minimize waste.



Leading automotive engineering services

provider, HORIBA MIRA has invested heavily

in the evolution of its engineering capability

and in the development of the MIRA

Technology Park, Europe’s leading mobility

R&D location for developing the latest

automotive technology. To further advance

its existing capabilities, HORIBA MIRA’s

Vehicle Attribute Development team has

added a DiM250 dynamic simulator to its

earlier investment in VI-grade simulators



to driver-centric and qualitative vehicle

attribute engineering.

HORIBA MIRA, is guided by its purpose

to ‘improve lives by making journeys safer,



OEM and key customers with turnkey

engineering services – from the initial

pre-programme phase through to series

production. HORIBA MIRA’s attribute

engineering process is focused on the



development of its new driver-in-the-loop

capability, which incorporates the driver’s

subjective assessments at the earlier, virtual

stage of the design cycle.



reputation as the leading partner of







investment further strengthens our









Graeme Stewart



Cleaner

Healthier

More productive

STRATEGIC REPORT





Spectris plc 

Our Business Model

Our Purpose

We are harnessing the power of

precision measurement to make

the world cleaner, healthier and

more productive.

Our Commitment

to being a sustainable business

partner, investment proposition

and employer.

Our business model is driven by our

Purpose and built on our Values

Underpinned by

Our Values

Be True – we believe in absolute integrity.

It’s how we win for stakeholders, the

environment and each other.

Own It – we believe in teamwork and

keeping our promises. It’s how we build

our brands and businesses.

Aim High – we believe in being bold and

positive. It’s how we perform at our best

and achieve greater success.

Purpose-led

Great businesses

Asset-light businesses focused on

premium, precision measurement

solutions and industry-leading domain

expertise, aligned with our Purpose.

Investing in growth

Disciplined capital allocation for



investment in growth through



Structural growth markets

Aligned with attractive, sustainable,

structural growth markets with high

barriers to entry.

Operational excellence

Leveraging the Spectris Business

System (‘SBS’), business improvement

projects and our high-performance

culture.

Customer centricity

Solving customer challenges with

leading, differentiated solutions,

equipping them to make the world

cleaner, healthier and more productive.

Investing in our People

Global team of talented individuals,

many of them engineers and scientists,

working towards our Purpose.

Delivered through our business model

Spectris plc Annual Report and Accounts 2022

Our Business Model

For more information on our

approach to sustainable growth,

see the Sustainability Report

on pages 40 to 59

Creating value beyond measure for all our stakeholders

Our customers

We build strong,

collaborative

customer relationships,

underpinned by a

deep understanding

of our customers’

businesses.

Our people

We ensure that our



our values and meets

the expectations of



committed to creating

the best possible

working environment

and culture where our

employees feel included,

engaged and can thrive.

Our value chain

We believe that our

suppliers should have

the opportunity to



relationship with us,

working together with





Our society

We are committed to

creating a positive legacy

in our communities and

for the next generation.



will enhance and improve

our charitable giving

to support quality access



Our shareholders

We work to ensure the

long-term success of



enhanced shareholder

value through our



capital distributions and

our focus on long-term

value creation.

Our planet

We recognise that we

have a role to play in

tackling environmental

degradation and climate

change. Our products

and services reduce



environmental impact.

We are also making

strong progress in our

ambition to become



operations by 2030 and

across our Value Chain

by 2040.

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Our Strategy

Our strategy

for sustainable

growth



a greater need to harness the power of

precision measurement to make the world

cleaner, healthier and more productive.

Since 2019, we have repositioned Spectris as a leading

sustainable, compound-growth business, delivering

value beyond measure for all our stakeholders.

In October 2022, we announced our plans and the

outlook for the next stage of our journey – our Strategy

for Sustainable Growth.

Our Performance targets



Organic sales growth

6–7%

through the cycle

Adjusted operating margin expansion

20%+

Adjusted cash conversion

80–90%

Return on Gross Capital Employed

(‘ROGCE’)

mid-teens

Net Zero

Net Zero across our

operations by 2030

Net Zero across our

value chain by 2040

Employee Engagement

Gallup GrandMean Score

of 4.06 by 2025

Spectris plc Annual Report and Accounts 2022

Our strategy

Great

businesses

Structural

growth

markets

Customer

centricity



in growth

Operational

excellence

We are owners of world-class

precision measurement

businesses with industry-

leading domain expertise.



Divisions are fully aligned with

our purpose to make the world

cleaner, healthier and more

productive.

We are concentrated in





structural growth, underpinned

by sustainability themes and



through the cycle, underpinning

our organic growth.

Our focus on solutions





direct relationship drives

customer-backed innovation,

informing our research and

product development strategy

such that we intercept our

customers' needs, allowing



greater value.

We leverage our strong

balance sheet to deliver

growth. We are driving organic

growth through investment

in research and development



and problem solving with the

customer in mind.

We are compounding this

growth through investment in



our portfolio to add value across



We are leveraging the

Spectris Business System to

continuously drive operational

excellence to improve

productivity. We are investing

in new systems to improve

processes and we continue



model to remove structural



margin ambitions.

Read more about

our markets



Read more about

Our People on page 42

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Key Performance Indicators

Measuring our

performance

We monitor progress against the delivery of





Our Strategy for Sustainable Growth is centred on long term



















performance because they exclude foreign exchange













 





Financial

Like-for-like sales growth (%)

022

021

020

019

018

9.7

13.6

-10.7

0.4

5.2

Like-for-like (‘LFL’) sales growth







Performance









Link to strategy and objectives

We are customer focused and



where we are best placed to







Link to remuneration





(%)

2022

2021

2020

2019

2018

141

Cash conversion









Performance









generated from the increased





principally results from an



ensure critical component supply

to support customer deliveries and





spent on the purchase of the new



Link to strategy and objectives

We have an asset-light business



cash generation enables us to

reinvest in our businesses and

provide capital returns to our









Link to remuneration



Adjusted operating margin

(%)

022

021

020

019

018

16.8

13.0

16.3

15.8

15.5

Adjusted operating margin







Performance









the higher sales volumes and a







labour and overheads and



Link to strategy and objectives

Our aim is to deliver strong

operational leverage and drive











Link to remuneration



Growth in adjusted EPS

(%)

2022

2021

2020

2019

2018

-33

Adjusted earnings per share growth



for the year to the weighted average number of ordinary shares



Performance









the lower share count following













Link to strategy and objectives

We are focused on improving



is to achieve year-on-year growth



Link to remuneration



Great Businesses









Link to Strategy

Link to Remuneration

Spectris plc

Key Performance Indicators



Return on gross capital employed

(%)

022

021

020

019

018

9.9

13.2

16.0

13.5

13.7

Return on gross capital employed (‘ROGCE’)







is calculated as net assets excluding net cash and excluding accumulated

amortisation and impairment of acquisition-related intangible assets



Performance















Link to strategy and objectives







both organically and via





Link to remuneration



 (MWh per £m revenue)

022

021

020

019

018

92.2

73.7

58.2

72.0

66.5













Performance









attributable to the initial impact



in place at material operating sites



Link to strategy and objectives

Our sustainability strategy sets





of the sources of energy with the

aim of reducing our carbon

emissions and improving our













Employee engagement (GrandMean)

022

021

3.86

3.72

Employee engagement









Performance



global engagement survey with



implemented a number of



real difference to how our people











Link to strategy and objectives



engagement is a strategic













Link to remuneration



Total recordable incident rate

2022

2021

2020

2019

2018

0.27

0.13

0.32

0.24

0.28

Total recordable incident rate











Performance







to health and safety in each

business and the prioritisation



Link to strategy and objectives

High safety standards protect



sustainable growth through









details of our approach to health



Scope 1 and 2 emissions (tonnes CO

2022

2021

2020

2019

2018

17,546.0

43,111.0

31,703.0

52,740.0

82,861.0

Scope 1 and 2 emissions reduction (market-based)





Performance









Since launching our ambition we



emissions through a combination



employee-led activities and the

transition to renewable energy







of our portfolio of businesses

and also the impact of our



Link to strategy and objectives

We are committed to being a









the delivery of our own emission



Link to remuneration



Great Businesses









Link to Strategy

Link to Remuneration

Spectris plc

STRATEGIC REPORT





Our Businesses

Great businesses: leaders in premium, precision measurement

Making

the invisible...

visible



Advanced measurement

techniques for materials

analysis

Delivering above market growth with

strong sustainable margins



































































Mark Fleiner



Spectris plc

Our businesses











Strongly positioned in high

growth end markets supported by

sustainability trends

















Life Sciences















demand for our facility environmental





Material Sciences – primary materials













and service revenue opportunity in this sector







Material Sciences – advanced materials













for material characterisation and deep









Semiconductor

Sales into semiconductor and electronics

















Academia















Providing critical material insights

and solving customer challenges



































instruments to meet their contamination



















































Sales by location 

1  

2  

3  

4  

Sales by end-user market 

1  

2  

3  

4  

5  

6  

7  

STRATEGIC REPORT





Spectris plc 

Our businesses

Investing for growth: R&D is driving

growth and market share gains

















































an immediate response to detected

contamination and quickly provides key



Investing for growth: compounding

growth through M&A

































Operational Excellence



















Summary























2022 













Statutory sales (£m) 657.8 531.2 24% 18%



(£m) 140.0 112.2 25% 24%

Adjusted operating margin

(%) 21.3% 21.1% 20bps 90bps

 118.3 94.2 26%

Statutory operating margin (%) 18.0% 17.7% 30bps

 



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 Geological Survey of Finland

Accelerating the

green transition to a

carbon-neutral world

Challenge











































composition and environmental conditions.

































































Jouko Nieminen

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STRATEGIC REPORT





Our businesses



the innovators

Spectris Dynamics











process improvement and



Ben Bryson





























































Spectris plc

Our businesses















Well positioned in attractive markets





















Automotive



























innovation and need to accelerate the





the virtual test and physical test domains

























manufacturers of premium electric vehicles

















for advanced driver assistance systems



Industrials and infrastructure



their production processes and deployed



































Aerospace and defence





of the current capital investment cycle in civil

























Consumer electronics and telecoms

















Investing for growth: R&D is driving

growth and market share gains





customer intimacy from our domain





and measurement requirements as their













Investing for growth: compounding

growth through M&A















Sales by location 

1  

2  

3  

4  

Sales by end-user market 

1  

2   

3  

4  

5  

6  

7  

STRATEGIC REPORT





Spectris plc

Our businesses





























in the construction and port equipment





























open standard functionality and commonality









Operational excellence to drive

margin expansion



































Summary



























Spectris Dynamics

2022 













Statutory sales (£m) 492.2 425.5 16% 7%



(£m) 73.6 70.3 5% 

Adjusted operating margin

(%) 15.0% 16.5%  

 46.5 45.6 2%

Statutory operating margin (%) 9.4% 10.7% 



STRATEGIC REPORT





Spectris plc

Norwegian Geotechnical Institute



Ensuring safe and

affordable generation

of green energy for

the future

Challenge







































































































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Spectris plc 

STRATEGIC REPORT





STRATEGIC REPORT





Financial review

“We are innovating for

growth supported by a

strong balance sheet.”

Derek Harding



Financial performance

driven by strategy

execution

Sales

£1, 327.4m

(2021: £1,163.0m)

Change yoy 14%

LFL

change yoy 14%



£222.4m

(2021: £189.6m)

Change yoy 17%

LFL

change yoy 14%

Return on Gross Capital

Employed

16.0%

(2021: 13.2%)

Change yoy 280bps

Strong sales growth of 14% driven by market share gains and pricing.



to £401.5 million and a strengthened order book up 36% year on year.

Financial performance

Sales increased by 14% or £164.4 million to

£1,327.4 million (2021: £1,163.0 million) on a



segment, disposed during the year, is treated

as a discontinued operation in accordance



statement for both 2022 and 2021. LFL sales

increased by £149.7 million (14%), with the

impact of disposals, net of acquisitions,

reducing sales by £38.3 million (-3%) and

foreign exchange movements increasing

sales by £53.0 million (5%).





(2021: £139.9 million). Statutory operating

margin of 13% was 100bps higher than 2021









additional volume.











acquisitions, reducing adjusted operating



exchange movements increasing adjusted



In line with expectations, no restructuring

costs were incurred in 2022 (2021: £10.2 million).

Net transaction-related costs and fair



£19.0 million) relating to the three acquisitions

completed during the year, plus the costs

associated with potential acquisitions which

were not completed in the year.



of process redesign and improvement

enabled by implementing the latest SAP

cloud-based systems across the Divisions,

incurring costs of £21.7 million in the year

(2021: £7.0 million). Consistent with the prior

year, these material SaaS projects are





amortisation of acquisition-related intangible

assets in the year (2021: £13.3 million).

Adjusted operating margins increased by

50bps, while LFL adjusted operating margins



Spectris plc Annual Report and Accounts 2022

Financial review

operating cost improvements offsetting

a decline in gross margins and increased



LFL adjusted gross margins reduced in the

year by 160bps to 56.9% as price increases

implemented during the year were not









during the course of the second half and we

expect further progress during 2023.

LFL adjusted overheads increased by 9.1%



sales, with headcount remaining broadly



limited to supporting growth in the full year.



overheads, amounted to £103.8 million or 7.8%

of sales (2021: £83.8 million or 7.2% of sales).





and discontinued operations after tax of

£401.5 million (2021: £346.9 million) includes



of £286.7 million comprising £10.2 million









2021 included £226.5 million in relation to the



Technologies and other disposals, reported as





value of the debt instrument investment with





charge of £17.3 million (2021: £7.4 million

credit) includes £14.6 million of unrealised

losses on intercompany loan balances (2021:





Dollar and Euro, particularly in the second half





Major Acquisitions

We will maintain a disciplined approach to



with leverage between 1-2x EBITDA through

the cycle. In certain circumstances, we would

be prepared to borrow more than 2x EBITDA



and certain path to de-lever back below this

level within a short period of time.





consideration of £37.0 million, made up of

£37.3 million gross consideration (consisting

of £35.1 million of cash paid and £2.2 million of

contingent consideration) less £0.3 million of

cash acquired. Creoptix has been integrated







consideration of £8.7 million, made up of





contingent consideration recognised on this



into the Red Lion Controls business.



100% of the share capital of Dytran for net

consideration of £69.6 million, made up of

£70.5 million gross consideration in cash less



contingent consideration recognised on this

acquisition. Dytran is being integrated into

the Spectris Dynamics Division.

Disposals





was $529 million (£417.9 million equivalent).



£293.9 million, which has been included in



disposed of any other businesses in the year.

Consistent with IFRS 5, the Omega business









after tax from the discontinued operations



£10.2 million for the six months of ownership

(2021: £11.3 million for the twelve months of





2022

£m

2021

£m

 172.6 139.9

Restructuring costs – 10.2

Net transaction-related costs and fair value adjustments 8.3 19.0

Depreciation of acquisition-related fair value adjustments to property,

plant and equipment 0.2 0.2



on material SaaS projects 21.7 7.0

 19.6 13.3

 222.4 189.6

GFEDCBA

Sales

(£m)

YoY

2021 Change

Disposals (6%)

2021 organic

Currency

LFL 14%

Acquisitions

2022 14%

1,163.0

1,097.1

1,327.4

(65.9)

53.0

149.7

27.6

1,200

1,100

1,000

900

800

1,400

1,300

HGFEDCBA

2021

Disposals

2021 organic

Currency

 

Overheads



2022

189.6

184.1

0.2

222.4

(5.5)

12.5

67.5

(41.9)

120

180

300

240



(£m)





2022

£m

2021

£m

 222.4 189.6

Adjusted depreciation and software amortisation

39.6 34.9





(54.1) (12.9)

Capital expenditure, net of grants related to capital expenditure (44.1) (33.5)

 163.8 178.1

 74% 94%

1. Adjusted depreciation and software amortisation represent depreciation of property, plant and equipment,

software and internal development amortisation, adjusted for depreciation of acquisition-related fair value

adjustments to property, plant and equipment.

STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Financial review

increases were strong across all regions,

especially in North America and China,







offset by higher material and labour costs.

Further details of this disposal are provided







to £163.8 million during the year, resulting in



(2021: 94%).









increase in inventories due to the high order

book and safety stocks required to ensure

critical component supply into 2023 with

increased trade receivables offset by trade









capital expenditure by £15.3 million and

contributing to the net decline in adjusted



Capital expenditure during the year of



to 3.3% of revenue (2021: 2.9%) and was 111%

of adjusted depreciation and software

amortisation (2021: 96%).

During the year ended 31 December 2022,

6,439,493 ordinary shares were repurchased



£300 million share buyback programme

announced on 19 April 2022, resulting in



transaction fees of £1.2 million.

During the year ended 31 December 2021,

5,596,739 ordinary shares were repurchased



£200 million share buyback programme

announced on 25 February 2021, resulting



transaction fees of £1.3 million.



work performed by the Spectris Foundation

by supporting the ongoing running costs

through additional donations of £0.1 million



Financing and treasury



retained earnings and, where appropriate,

from third-party borrowings. Total borrowings

as at 31 December 2022 were £0.1 million

(2021: nil).











£0.1 million, resulting in a net cash position of



from £167.8 million at 31 December 2021.





consisting entirely of a $500 million multi-





at 31 December 2022 (2021: undrawn).



income for covenant purposes of £0.1 million,

resulting in the interest cover ratio being n/a



covenant interest cover requirement is 3.75



interest, tax and amortisation divided by net



earnings before interest, tax, depreciation, and

amortisation divided by net cash) was less

than zero (31 December 2021: less than zero),











revenue across its business and performed



determine the extent of downturn which



breach of banking covenants. Revenue would

have to reduce by 31% over the period under





take into account further mitigating actions



event of a severe and extended revenue

decline, such as cancelling the dividend or





the level of its current facilities, as set out

above, without the need to obtain any





Following this assessment, the Board of





for a period of not less than 12 months from

the date of this report. Accordingly, they

continue to adopt the going concern basis



the Consolidated Financial Statements.

Currency



transactional currency exposures.

Translational exposures arise on the

consolidation 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





denominated trade receivables, trade

payables and cash balances are held.

After matching the currency of revenue with

the currency of costs, wherever practical,

forward exchange contracts are used to

hedge a proportion of the remaining forecast



reasonable certainty of an exposure. At



2022

£m

2021

£m

Tax paid (46.8) (32.2)

 0.5 (2.9)

Dividends paid (78.6) (79.0)

 (191.0) (201.3)

 (114.7) (135.5)

 (2.9) –

Transaction-related costs paid (6.5) (26.5)

Proceeds from disposal of equity investments – 38.3

 365.4 333.7

 (21.7) (5.9)

Lease payments and associated interest (16.4) (14.8)

Restructuring costs paid (7.6) (11.9)

 0.2 0.3

 (120.1) (137.7)

 163.8 178.1

 7.3 22.6

 9.2 (1.3)

Increase in net cash 60.2 61.7

Spectris plc Annual Report and Accounts 2022

Financial review



estimated transactional exposures for 2023



exchange contracts, mainly against the Euro,













shows the average and closing key exchange

rates compared to Sterling.

During the year, currency translation effects



£12.5 million higher (2021: £10.2 million lower)

than it would have been if calculated using

prior year exchange rates.

Transactional foreign exchange gains of



were included in administrative expenses,

whilst sales include a loss of £4.3 million



exchange contracts taken out to hedge

transactional exposures in respect of sales.

Pensions



2022 was £8.9 million, a reduction of

£13.4 million versus the £22.3 million liability



in movements in market discount rates.

Other Non-reportable Operating

Segments





reportable segments are detailed on the

following pages in accordance with IFRS 8.



businesses are reported within the Other

non-reportable operating segments.

On a statutory basis, sales for the segment



(2021: £206.3 million) due to 2021 disposals







increased by 14% resulting from increased

volume and strong price discipline.



was £27.2 million (2021: £26.2 million), an

increase of 4% (16% LFL), with an adjusted

operating margin of 15.3%, an increase of



from the extra sales drop through, the pricing

strategy, a focus on the product portfolio,

improved operational performance and

strong cost control.







and lower transaction-related costs, with



550bps to 14.8%.

Red Lion Controls contributed to the sales

increase with a combination of volume



the volume growth was in North America,







has positively contributed to the operating

margin in 2022.

Servomex had a record year for orders

received in 2022, mainly driven by the growth

in its leading gas analysis products within the

industrial gas and semiconductor markets.







growth and pricing and maintained its level



2022



2021

(average) Change

2022

(closing)

2021

(closing) 

US Dollar (USD) 1.24 1.38 (10%) 1.21 1.35 (10%)

Euro (EUR) 1.17 1.16 1% 1.13 1.19 (5%)

 8.30 8.87 (6%) 8.31 8.57 (3%)

Sustainability at

the core

“As Group Finance Director I am













our net zero commitment.





appropriate accounting judgements









Derek Harding



STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

We recognise that effective management of risk is essential to the

successful delivery of our strategic objectives. As such, risk management

is built into our day-to-day activities and forms an integral part of how

we operate.



which delivers visibility and accountability





internal control framework, as described



Risk management process

Our approach to risk management combines

a granular bottom-up assessment of day-to-

day operational risk (managed by the

businesses) with a top-down assessment of





Committee and reviewed by the Audit and



Business unit risk management



assessment of risk across their markets,

processes and operations, including a

consolidation of any emerging risks that

should be formally evaluated. We operate





quarterly, represent a key component of the

second line of risk management (see page 35)



matters, internal control, risk management,

and other areas of compliance.

Risk management

Our

approach







with each risk assessed in terms of gross and

net impact and likelihood. Key mitigations,



owners and are subject to regular operational

review as well as independent assurance

where appropriate.

Group risk management



strengthened by the establishment of an







is to ensure appropriate management of the







Control function enables the risk management





consistent with the four lines of risk

management model described on the

following page.





a continuous top-down assessment of risk

throughout the year, informed by the

approach established at each of the









against its strategic objectives and/or those

risks that are more suitably assessed,

monitored and mitigated centrally. In

addition, the Board carries out a robust



emerging risks on an annual basis.





assessed in terms of its gross and net severity,















Our risk management approach includes

the consideration of emerging risks, whether



scope, such as climate change and

environmental matters.

In recognition of the importance of climate

change and our increased understanding of



climate change was added as an additional



how climate-related risks will be managed on

an ongoing basis are described on page 56.

During 2022, we have seen an increase in

gross risk in a number of areas, including

political and market risk, cyber threat and





and we continue to review the effectiveness



identify further actions where appropriate in



In terms of the net risk rating, geopolitical risk

has been reassessed from Moderate to High

in view of the increased potential for this risk



whilst in respect of compliance risk the

continued work to strengthen our controls

framework and to further embed the Spectris



reassessment of the net rating from High to







changes to the net risk ratings are required.

Spectris plc

Risk management





risk management model.

First line















Second line







development of a standardised approach







application of business processes and





activities and for taking a holistic view of risk,

to determine which risks are of principal







assurance over the effectiveness of the





undertaken by Internal Audit on behalf of





Fourth line









entire risk management framework, holding

accountable those responsible for all activities

within the three lines of defence.

Fourth line



oversight



Independent assurance





policies, processes and controls

First line





Ownership

and control

Oversight and

independent

assurance

Board

–

Audit and

Risk Committee

–

External Audit

Executive Risk

Committee

–

Internal Audit/Other

Assurance

Business Audit and Risk Committees/

Group Corporate Functions

Employees and Managers in each business

Group Principal Risks

Operational Risks

STRATEGIC REPORT





Spectris plc

Principal risks and uncertainties

Managing our

principal risks

Risk appetite

• Highly cautious

• Cautious

• Balanced

• Opportunistic

• Highly opportunistic

Increase





Decrease



Change in rating

Risk assessment scale*

• 

• 

• Moderate

• High

• 



likelihood of a risk occurring, net

of mitigation activities

Strategic transformation Cyber threat













demands for ransom payments and inadvertent/intentional

electronic leakage of critical data.

Link to strategy

• 

• Aligned to structural growth markets

• Customer centricity

• 

• 

Link to strategy

• Customer centricity

• 

Risk assessment

Moderate

Risk assessment

High

Change in rating



Change in rating



Risk appetite

Balanced

Risk appetite

Cautious

Impact Impact

Our day-to-day activities are inherently aligned to the





managing some of the more transformative elements of



mergers and acquisitions, growth initiatives including capital







constantly changing, becoming more sophisticated and

unpredictable. With the introduction of data privacy regulatory



information security breaches occurring across a wide range



cautious approach to safeguarding its information assets.

Mitigation Mitigation

• 

the strategy

• Deployment of the Spectris Business System

• Continued review of acquisition/merger pipeline, integration

processes and capability

• 

• 

• Information security and data privacy policies and controls

• Cyber risk assurance undertaken by Internal Audit

• 

• 

cyber threat

• 

• 



• Intelligence services to gain a deeper understanding of threat

landscape to Spectris

Spectris plc

Principal risks and uncertainties

Compliance Geopolitical 











Material adverse changes in the geopolitical environment putting





heightened tension between trading parties or blocs.



Material adverse changes in market conditions, such as economic





Link to strategy

• Customer centricity

• 

Link to strategy

• Aligned to structural growth markets

• Customer centricity

• 

Link to strategy

• 

• Aligned to structural growth markets

• Customer centricity

• 

Risk assessment

Moderate

Risk assessment

High

Risk assessment

High

Change in rating Change in rating Change in rating



Risk appetite

Cautious

Risk appetite

Balanced

Risk appetite

Balanced

Impact Impact Impact

We operate in many jurisdictions and, as a consequence, are



controls, data privacy, fair competition and anti-bribery and



representatives could result in civil or criminal liabilities, leading





entire markets.

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



continually monitor the geopolitical landscape and develop

response plans accordingly.

As a public company, and one that conducts business in a large

number of markets, we recognise the global or local impact



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



Mitigation Mitigation Mitigation

• 

• 

• 

procedures and training

• Contract review and approval processes

• 

• 

• Working groups and sub-committees to limit the impact of



Committee

• Operate in a broad spread of geographical markets and

end users

• 

• Maintain a strong balance sheet

• 

• Maintain a strong balance sheet

• Operate in a broad spread of geographical markets and

end users

• 

• 



STRATEGIC REPORT





Spectris plc

Principal risks and uncertainties

Talent and capabilities Business disruption Climate change













region/location, or via a critical supplier.





change risks or failure to identify the associated potential

opportunities in assisting others manage their climate agendas.

Link to strategy

• 

• Customer centricity

• 

• 

Link to strategy

• 

Link to strategy

• Aligned to structural growth markets

• Customer centricity

• 

• 

Risk assessment

Moderate

Risk assessment



Risk assessment

Moderate

Change in rating



Change in rating



Change in rating



Risk appetite

Balanced

Risk appetite

Cautious

Risk appetite

Balanced

Impact Impact Impact



right people to achieve our operational and strategic targets.



delivering our current business requirements and strategic goals,







areas of focus are leadership, engineering and entry level roles.



businesses provides a degree of natural hedging from







importance of proactively ensuring a consistent and effective







success of our business through market regulation and



and the potential physical impact on our operations. We see

the potential for additional sales opportunities as well as

increased costs and investment.

Mitigation Mitigation Mitigation

• Structured recruitment and succession processes for senior



• 

performance and talent management processes

• Annual organisation capability review process

• Appropriate incentives with benchmarking at all levels

• 

• 

development of talent pipeline

• Common policy and enhanced standard for business



• 

• 

• 

• 

• Strategy built around sustainable growth

• 



• 



• 

• Climate physical risks monitored and reported by each business

• Aligning strategy with current and emerging sustainability

thematics

Spectris plc

Viability statement

Longer-term viability of the Group













term prospects and also the viability of the Company over



Analysis of business prospects



over the assessment period based on the strategy, markets

and business model as outlined previously within this report.

In the strategic review of the Company, the Board highlights

a number of factors that underpin its prospects and viability



• Alignment with structural, sustainable growth markets with

high barriers to entry;

• 



• 

generative and with a clear capital allocation process and

access to funding.

Assessment of viability

In determining the appropriate period over which to assess

viability the Board has considered budgeting, forecasting















its business model, future performance, solvency or liquidity.















balance sheet and ongoing support from its banking group,





the same amount and with the same covenant requirements.

As part of their assessment, the Directors have considered











instances, the Directors have included mitigation actions as

part of the assessment, including cost reduction, reduced



from a major disruption.











mitigating actions would be undertaken to reduce overheads

during the period as sales declined and, on that basis, a fall in



assessment period) would be required before such a breach



scenario to be remote and further mitigation, such as

suspension of dividend payments or a reduction in planned



conditions indicated that such an outcome were possible.

Viability Statement

Based on the outcomes of the viability assessment, the



able to withstand the impact of each of these scenarios, in

isolation and in a number of plausible combinations, should





its obligations and liabilities as they fall due over the period to



Scenario modelled Link to Principal Risks

Scenario 1:

Reduction in sales



events that could notably impact

planned sales performance, either in





disruption events similar to but more

severe than the impact of the



• Strategic transformation

• 

• 

• Compliance

• Cyber threat

• Climate change

Scenario 2:









increases cannot be passed on to



which fails to deliver anticipated





privacy laws and regulations.

• Strategic transformation

• Compliance

• 

• 

• Cyber threat

• 

• Business disruption

• Climate change

Scenario 3:

Trading disruption/exclusion

from market





operating companies might be

debarred from or otherwise



as well as a major disruption in a

critical operation caused by, for



• Compliance

• Cyber threat

• 

STRATEGIC REPORT





Spectris plc

Sustainability

Within Spectris, sustainability has a

really simple meaning. It means that in

everything we do we are asking ourselves

– how are we building our company for the

future? By asking this question we create

value, not only for stakeholders today, but

for the stakeholders of tomorrow. In 2022,

we have advanced our ambition to become

a leading sustainable business.

Building a

sustainable

future

Spectris plc Annual Report and Accounts 2022

Total carbon emissions (tonnes CO

17, 546

(2021: 31,703)

Gender diversity in leadership population

20.3%

(2021: 18.6%)

Ethics: number of helpline reports

(2021: 40)

Total number of students reached by the

Spectris Foundation

21,698

Total use of renewable energy

22.6%

(2021: 10.9%)

Total recordable incident rate

0.27

(2021: 0.32)

Supplier spend rated via EcoVadis

36.5%

(2021: not calculated)

Total donations agreed by the

Spectris Foundation

£598,858

Renewable energy in the UK

100%

(2021: 95%)

Safety observations

8,900

(2021: 5,243)

(MWh per £m revenue)

58.2

(2021: 73.7)

Access to an employee assistance

programme

82.2%

(2021: >75%)

Find out more about

Spectris Foundation online

www.spectrisfoundation.com

Sustainability

Our people











development, inclusion and mental health.





Our society





























Our value chain























Our planet







products and services that reduce our



















 

Origional colour way

STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Sustainability continued





























.

















inspire our people towards that shared







Shared Values







Our value Be True





to Own It

Aim High,



the collective efforts of our people.









Connecting

and inspiring

our people

for a healthy, high-performance culture

Spectris plc Annual Report and Accounts 2022

Sustainability continued

Employee turnover

2022 2021 2020 2019 2018

13.5%

15.6% 13.6% 11.4% 14.2%

 



redundancies.

Inspire and Engage













of our people.



























































































Develop





Ascend. Based on our leadership model,















































content.”

Ascend attendee

Total 0,000 0,000

% of total 00 00

Grand total 0,000

2021

2022

3.72

3.86

4 5

Employee engagement (GrandMean)

Case study

Developing our approach

to Talent













from our people that our approach



























out our enhanced approach to talent















Our Leadership Model

Inspire



Strengthen



Grow



STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Sustainability: Connecting and inspiring our people continued

Case study

In my shoes































Inclusion and Belonging

















from those differences. A culture of inclusion



Employees by gender and role



Board Leadership

Community

Total 9

(2021: Men: 7 Women: 3)

Total 60

(2021: Men: 54 Women: 11)

Executive

Committee



Wider employee

population

Total 7

(2021: Men: 5 Women: 3)

5,013

2,595

Total 7,608

(2021: Men: 5,048

Women: 2,657)

Gender pay gap reporting



Bonus pay gap:

Mean

37.2%

(2021: 42.5%)

Gender pay gap:

Mean

21.7%

(2021: 23.2%)

Bonus pay gap:

Median

31.6%

(2021: 19.9%)

Gender pay gap:

Median

18.6%

(2021: 19.0%)

Group Inclusion Framework











Our Vision

Why are we

acting now?

Our promise

Our

organisational

model

Our impact





To ensure all voices are

heard and included











Everyone



Executive working group on inclusion (Chaired by CFO)



Inclusion Group





Managers

































perspectives

Further detail is set out in

the Remuneration Report















































Spectris plc Annual Report and Accounts 2022

Sustainability continued

Read more about

Spectris Foundation



STEM: Developing our

future talent pipeline























































the world cleaner, healthier and more productive.



such as technical research, communication, and critical























were most proud of in their own careers and their advice































Young Professionals  Developing diversity

Underpinned by:

Origional colour way

Our STEM strategy focuses primarily on

A Level and University students and graduates.





improve access to a quality STEM education.









STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Sustainability continued

highest

ethical standards

Ethics

Number of helpline reports received

2022 2021 2020 2019 2018

44 40 37 54 25





and actions we want to see at







underpins our values and sets clear





















Business Ethics was carried out across

























Speak Up





























Reports are assessed and appropriate



commitment to address all concerns made







































improvement plan (1 person)) and termination

with cause (2 people).

Human Rights





consistent with the Core Conventions of























Find out more online

Find out more about Our Code





Read more about our policies on

Human Rights and Modern Slavery at



Spectris plc Annual Report and Accounts 2022

Sustainability continued

Health and Safety















































Read our Group Health and Safety policy here

Prioritising mental health





important that we create an environment











mental health is valued, promoted and





























8,900

Case study

Global deployment of

Benchmark database































improvements. We are proud of the















Case study

Our ISO 45001 journey









































proud of the dedication of the

teams who have led the



Ben Bryson



Total recordable incident rate

2022

2021

2020

2019

2018

0.13

0.32

0.27

0.24

0.28

Read more about our policy and

approach to mental health at

www.spectris.com/mentalhealth

STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Sustainability continued

Our ambition:

Spectris operations



(Scope 1 and 2 emissions)

Our value chain



(Scope 3 emissions)

Reaching

Net Zero











Our roadmap





our current emissions footprint across our value chain and



























committed a minimum of £3 million per annum to fund







1 and 2 roadmap. With the support of Schneider Electric, we







tonnes CO





in 2023.

Key activity in 2022

• 

• 



• 

• 



• 

• 





Planned activity for 2023

• 



(Almelo)

• 





• 

• 













































Mike Proctor,

























Read our full Net

Zero roadmap at

www.spectris.com/netzero

Our progress against our scope 1 and 2 (market-based)

emissions as set out in our roadmap

Scope 1 and 2 – Our Roadmap

100%

50%

0% Net Zero

13%*

45%

16%

14%

* In addition to existing self-generation at Malvern and Eindhoven

100%

Where we

are now

(2020)

Self

generation

at owned

sites

Renewable

energy

procurement

(PPA/tariff)

NeutralisationElectric

vehicles

Biofuels

onsite

Natural

refrigerant

replacement

Energy



employee

engagement

cope 3 – Our Roadmap

22%

26%

100%

Where we

are now

(2020)

43%

0% Net Zero

100%

50%

Supply chain

engagement

plus product

circularity

Air-freight

reduction

Business

travel policy

NeutralisationExternal



Waste

reduction

Product



Achieved Planned Outstanding

54.56% 8.97% 36.47%

Spectris plc Annual Report and Accounts 2022

Sustainability continued

VI-grade driving simulator

avoided emissions





compared to the avoided emissions from production



What is a Life Cycle Assessment?











end of life.

Case study

Maximum potential annual

avoided emissions:

14,000 tCO







avoided operations



Overview







and operate the simulator.

Methodology











production and use.

Source data







medium sized electric or petrol car.



estimate emissions.

Key assumptions:

• 

to produce data for a new vehicle model.

• 



• 



Potential improvements



emissions present in our current solution,





environmental credentials of our solution.















At full reduction, one developed vehicle

model could avoid up to 14,000 tCO

Reduced

prototypes

Save tyresSave hours

Avoided prototypes

Avoided operational time

2,200 hrs

Tyres avoided

3,500

300

600

900

1,200

1,500

VI-grade

impact

Baseline

results

Full

potential

1,474

332

Relative emissions (VI-grade = 100%)

Relative emissions

-3,500

-3,000

-2,500

-2,000

-1,500

-1,000

-500

500

1,000

1,500

Net

avoided

emissions

Prototype

operation

TyresPrototype

production

VI-grade

1,232

-2,450

-1,578

-58

-2,855

Emissions (tCO

Net avoided emissions

STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Sustainability

Environmental

reporting



and our transition towards Net Zero.

Restatement of comparative

environmental data







• 

















• 



• 









Scope 1 emissions













Scope 2 emissions















Scope 3 emissions









impact of procurement in China than the













Streamlined Energy and Carbon Reporting

(‘SECR’)







costs and provide data to inform the adoption







Energy saving opportunities



we partnered with Schneider Electric to











































Environmental performance summary (absolute)

Energy consumption

(MWh)



(MWh per £m revenue)

77,194.3 58.2

(2021: 95,229.9)

(2020: 123,205)

(2021: 73.7)

(2020: 92.2)

Greenhouse gas emissions

(tonnes CO

Total carbon emissions

(tonnes CO

e per £m revenue)

17, 546 13.2

(2021: 31,703)

(2020: 43,111)

(2021: 24.5)

(2020: 32.3)

 



 

Spectris plc Annual Report and Accounts 2022

*Data assurance and methodology











www.spectris.com/environment.

Energy consumption (like-for-like)

3,4

Unit of measurement – MWh Change 2022 2021 2020

Electricity (2.0%) 40,147.6 40,965.8 40,621.8

– of which renewable 90.93% 17,479.6 9,154,9 2,706.2

Natural gas (16.5%) 7,500.4 8,986.0 9,505.0

Fuel oil 0.0% 29.2 29.1 28.4

Steam and other imported energy (11.0%) 15,419.9 17, 318.6 13,801.7

Other fuels (14.8%) 332.6 390.5 64.4

Vehicle energy (16.1%) 13,764.7 16,411.8 19,078.6

Total energy (8.2%) 77,194. 3 84,101.9 83,409.4

– of which UK (13.5%) 9,942.8 11,494.5 12,125.6

Energy Intensity per £m revenue (10.66%) 58.2 65.1 62.4

 

 



Greenhouse gas emissions (tonnes CO

e) (like-for-like)

Unit of measurement – tonnes CO

e Change 2022 2021 2020

Scope 1

(5.8%) 5,523.5* 5,988.4* 7,424. 8

Scope 2 – Location based (7.7%) 17.176.6* 18,599.9* 18,556.4

Scope 2 – Market based (27.0%) 12,022.5* 16,470.9* 18,181.1

Scope 1 & 2 (Location) total (7.7%) 22,700.1* 24,588.3* 25,981.3

– of which UK (6.2%) 2 ,297.9 2,449.2 2,826.6

Scope 1 & 2 (Market) total (21.9%) 17,546.0* 22,459.3* 25,606.0

– of which UK 3.9% 1,303.6 1,254.4 2,802.2

 



Scope 3

(like-for-like)

Change 2022 2021 2020

Category 1 – Purchased goods and services 9.16% 213,419.1 195,515.4 162,408.9

Category 2 – Capital goods 

Category 3 – Fuel & energy related activities (13.3%) 1,834.4* 2,115.1* 2,277.6

Category 4 – Upstream transportation / distribution

(24.7%) 11,822.8* 15,707.1* 17,050.2

Category 5 – Waste

185.3% 292.2 102.4.0 1,211.0

Category 6 – Business travel 99.2% 4,959.9* 2,490.1* 3,565.6

Category 7 – Employee commuting (9.2%) 9,924.0 10,930.7 11,093.3

Category 9 – Downstream transportation / distribution 

Category 11 – Use of sold products

13.9% 263,984.7 231,730.3 210,613.2

Category 12 – End-of-life treatment (6.2%) 51.9 55.3 50.0

Total Scope 3

10.0% 506,288.9 458,514.3 408,114.1

Total gross emissions (Market-based) 8.0% 521,449.3 480,973.6 433,720.1

Total (all scopes) carbon emissions per £m revenue

Like-for-like 6.0% 394.6 372.3 324.6



 







Waste data (like-for-like)

2022 2021 2020

Total waste captured (tonnes) 1,720.9 1,127.4 4,930.7

 616.9 230.3 3, 527. 3

Waste recycling rate

49.0% 61.0% 25.0%

Waste diversion rate

64.0% 80.0% 28.0%

 

 

 

Sustainability

Environmental Performance summary (Absolute)

Indicator 2022

2021

2020

Energy consumption (absolute) (MWh) 77,194. 3 95,229.9 123,205

 58.2 73.7 92.2

Greenhouse gas emissions (tonnes CO

17,546.0 31,703.0 43,111.0

Total carbon emissions (tonnes CO

e per £m revenue) 13.2 24.5 32.3

 



 

STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Taskforce on Climate-related Financial Disclosures ‘TCFD’

Governance











Oversight of climate-related risks

and opportunities







































of Chapter Zero and in 2021 attended













of the Board received updates at scheduled







and the assurance of the metrics utilised





Key activity during 2022

Strategy 









Oversight









Oversight 







environmental data included in the 2021







Oversight 







approval of the Annual Report and









Management 

Corporate Affairs oversaw the inclusion of







Management 

Committee met on three occasions to













Management 









Remuneration 

Remuneration Committee focused on the













Sustainability

Spectris plc Annual Report and Accounts 2022

Sustainability: TCFD

Ownership

and control

Oversight

and independent

assurance

Planned activity in 2023Oversight

Board

level

Executive

level

Management

level

Board

• 

• 

• 

Board





Audit and Risk Committee

• 

Audit and Risk Committee





Executive Committee

• 



Executive Committee





Remuneration Committee

• 





Remuneration Committee







Executive Risk Committee

• 

Executive Risk Committee









Business Risk Committees

• 



software

Business Risk Committees









Sustainability Steering Group

• 



• 



Sustainability Steering Group









STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Sustainability: TCFD

Strategy

























































1 2

Almelo, Netherlands



• 

Zhuhai, China



• 

• Sea level rises

• 

Pennsylvania, US



• 

Darmstadt, Germany



• 

Crowborough, UK



• 

Boulder, US



• 

Suzhou, China



• Sea level rises

• 

Malvern, UK



• 

• 

Virum, Denmark



• 

TCFD online report







Key

 

 

 

Spectris plc Annual Report and Accounts 2022

Sustainability: TCFD

Risk or

opportunity Drivers

Reference

frameworks Scenarios Time horizon  Ongoing activity

Physical







Acute 







Representative

Concentration















emissions continue





scenario)









increase from around

2030 onwards.

• 



impacts.

• 



• 





• 

standard processes.

Chronic







2030 onwards with



• 





• 



• 

implemented under our Net Zero roadmap to





Transition



the transition to a low



Policy and

Legal

 



































the potential for









• 







• 





• 

Market and

Economic

• 







• We will continue to assess the overall impact of





Technology • 









• 









Reputation • 







• 





suppliers and shareholders.

Opportunities







Internal

innovation

and

external

appetite for

change

 















• 



• 







• 



• 



Key

 

 

 

STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Sustainability: TCFD

Resilience and Risk Management













on the nature and speed at which countries act



Resilience





















relationships with customers and suppliers will support our



















Risk management

















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





























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



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

















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















Spectris plc Annual Report and Accounts 2022

Sustainability: TCFD

Metrics and Targets















































to lower our emissions, we disclose our annual emissions























STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Metric Measurement   Our Progress

Electricity  















Emissions 



revenue) (MWh

per £m revenue)

















Waste 

(tonnes)

 







Supply chain 

(tonnes CO

Reduce Scope 3 procurement























Freight 

(tonnes CO













emissions in 2022.

Capital deployment  Commitment to spend at least

£3 million per annum to deliver



















Revenue aligned

to Net Zero

 Revenues from products or

services that support

the

















Remuneration 

reduction in

Scope 1 and 2

emissions



structures with our Net Zero

















Sustainability: TCFD

Metrics and Targets continued

PlannedAchieved Outstanding

54.56% 8.97% 36.47%

Spectris plc Annual Report and Accounts 2022





Rebecca Dunn





Reporting requirement Some of our relevant policies and standards  Page reference

Anti-bribery and corruption Code of Business Ethics Ethics and values standards 46, 72, 73, 81

Culture, integrity and commitment to our values 18 – 19, 44, 72 – 73

Speak Up and Spectris helpline 46

Ethical leadership 46

Principal risk – ‘Compliance’ 36 – 37

Business model Our business model 16 – 17

Environmental matters Environmental policy Environmental management 50 – 51

ISO 14001 Energy performance 50 – 51

Streamlined Energy and Carbon disclosures 50

 52 – 58

 21

Employees

Code of Business Ethics  44

Health and Safety policy Board diversity 75

OHSAS 18001 Employee engagement and Workforce Engagement Director 43 and 71

Gender pay 44

SA 8000 Social Accountability Health, safety and wellbeing at work 47

KPI – Accident incidence rate 21 and 47

Principal risks:

– ‘Compliance’ 37

– ‘Talent and capabilities’ 38

Human rights

Human Rights policy Legal and regulatory compliance 46

Code of Business Ethics Principal risk – ‘Compliance’ 37

  21 and 50

Total recordable incidence rate 21 and 47

Managing our principal risks Risk Management

Principal Risks and Uncertainties



Viability Statement

34 – 35

36 – 38

52 – 58

Social matters Community involvement 45









STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Origional colour way

Spectris Foundation

QUALITY STEM

EDUCATION









foundation supports charities and communities which are of importance to













productive world.

Rebecca Levy



Improving

access to

UN Sustainable development Goals (SDGs)





Read our impact report online



Total number of small grants given

Total impact



Total agreed funding

£598,858

80%





education



20%









Split in

funding

Spectris plc Annual Report and Accounts 2022

Sustainability: Spectris Foundation

Case study

India STEM

Foundation

















transformed an unused room into







the students have completed an





learnt to use a potentiometer.







complete an assessment in the







Case study

Expedition STEM







not respond to traditional classroom











adventure.















adventurer, shares her stories



with students.

Another current project, involves



has supported their annual STEM













adventure.

Total funding agreed

£485,358

Total number of



21,926

Total number of

students reached

21,698

Number of

volunteering hours

340

Total number of educators

supported

228

Total amount donated

£113,500

Total number of small

grants donated

Small grant recipient

locations

• China

• North America

• 

• Brazil

• 

• 

STEM grants





STEM education.

Case study

Saint Francis Hospice –

Organic Garden Project







support, end of life care and emotional















receives allows them to pass in peace and































much to a hospice that helped



Alison



patient

Small grants



.



STRATEGIC REPORT





Spectris plc Annual Report and Accounts 2022

Chairman’s introduction

Continuing

our strategic

progress

As outlined in my letter on pages 4 and 5, macro-economic events have

created new challenges for the Group in 2022. My role, and that of the

Board, has been to successfully guide our way through these varied

challenges, ensuring our continued strategic progress and the maintenance

of focus on long-term value creation in support of all our stakeholders.



our other core duties to oversee the Group’s





section that follows outlines our key activity

during 2022.

Board activity



oversee the continued delivery of the Group’s

strategic objectives and the development of

the Group’s Strategy for Sustainable Growth.

Ahead of the Group’s Capital Markets Day in

October, the Board undertook a deep dive

review of the refreshed strategy with the

Executive Committee. We were pleased to

endorse the strategy, which builds on the



Growth and will further build long-term

sustainable value for all stakeholders.

I have appreciated the opportunity to visit

both the HBK site in Darmstadt, Germany

and the Malvern Panalytical site in Malvern,

UK, meeting directly with employees to see



and to better appreciate their perspective on

the Group’s purpose and strategy. During the

year, the Board and I have also valued several

direct interactions with customers, including



interactions are supporting considered and

well-rounded discussions at the Board to

promote our long-term sustainable success.

A summary of Board discussions and key

stakeholder considerations during the year



s.172(1) statement is available on page 5 and

further information can be found on pages

68 and 69.

Committee focus



work of its Committees, with the following

notable highlights during the year:

• 



aligns our executive remuneration structure

with the Group’s Strategy for Sustainable



endorsement from shareholders with over

95% of votes in favour of its approval in

December 2022;

• 

to continually challenge and support the

work being carried out by management in

respect of the development of the Group’s

internal control framework in response to

expected changes in the requirements for

UK Premium Listed Companies; and

• 

Committee on succession planning for the

Board and its support of the development

of the talent pipeline for Executive and

senior management.

I would also like to particularly recognise the

work undertaken by Kjersti Wiklund, as our

Workforce Engagement Director during the

year in visiting sites and meeting with

employee representatives outside of



found the additional insight brought by Kjersti

to be very helpful to our discussions.

Overseeing the development of the

Group’s culture





We have taken a keen interest in the

development of the Group’s employee

engagement activity and the initial impact



engagement survey results. Beyond this,



wellbeing of our employees at the centre of

our decision making and the Board was

pleased to approve new Group-wide policies

on health and safety and mental health.





the actions proposed by management will

lead to the meaningful development of the

Group’s culture of inclusion and belonging.

Alongside this work, the Board has also

refreshed its own diversity policy and we





towards women comprising 40% of the



2023 Annual General Meeting (AGM)





Directors and employees, we have held a

hybrid AGM. Our preference has always been

to welcome shareholders in person and, for



we will hold a physical meeting at Melbourne





We did consider the merits of holding a

hybrid event again this year but given the

extremely low attendance online, we believe

that shareholders value the personal

interaction of a face-to-face meeting.

All current Directors will be standing for

re-election at the 2023 AGM, and we look

forward to the continued support from



“Our direct stakeholder

interactions during the year

have supported considered and

well-rounded discussions at the

Board to promote our long-term

sustainable success.”

Mark Williamson

Chairman

Spectris plc

Chairman’s introduction continued

I welcome the opportunity to meet with



remind all stakeholders that the Board and

I are available throughout the year to answer

questions or engage on topics of interest

to you.

You can contact us via the Company

Secretary and I would also encourage you



to our webcasts at www.spectris.com

Conclusion



report helpful in understanding our approach

to governance and how we have applied the

principles of the UK Corporate Governance

Code. We believe that our organisational

structure and governance framework enables

our businesses to operate effectively and with

the agility to continue to deliver value beyond

measure for all our stakeholders.



with shareholders and welcome your

comments on this Corporate Governance





Mark Williamson

Chairman



UK Corporate Governance Code



shareholders can evaluate how the Company has applied the principles of the Code and where key content can be found in this report.

Board leadership and Company purpose

Chairman’s introduction to the Corporate Governance Report 62 – 63

Providing oversight of culture 72 – 73

Board engagement with stakeholders 62, 68 – 69 and 71 – 73

Section 172 statement 5 and 68 – 69

Oversight of strategy 67

Assessing opportunities 67

Assessing risks and viability 67 and 80 – 82

Measurement of strategy 67, 68 and 69

Division of responsibilities

Board committees 66

Board attendance 66

Composition, succession and evaluation

Board biographies 64 – 65

Board evaluation 70

Nomination Committee report 74 – 75

Audit, risk and internal control

Audit and Risk Committee report 77 – 83

Principal risks and risk appetite 34 – 35 and 80 – 82

Monitoring of emerging risks 80 – 82

Remuneration

Letter from the Chairman of the Remuneration Committee 84 – 85

Overview of Remuneration Policy 85 – 86

2022 Implementation report 88 – 104

Corporate Governance Code statement

of compliance

As a UK premium listed Company,

Spectris plc is expected to comply or

explain any non-compliance with the



on its website, www.frc.org.uk.



complied fully with the provisions and

principles as set out in the Code throughout

the year ended 31 December 2022, with the

exception of Provision 38. In line with the

Code requirements, in instances that are

considered not compliant with the provision

or principle in the Code, the Company is

required to provide an explanation where



Provision no. 38

Extract from the Code



directors, or payments in lieu, should be

aligned with those available to the workforce.

Explanation





the pension entitlement for Executive

Directors was aligned to the wider UK

workforce, which is currently 10.5%.









GOVERNANCE



Spectris plc

Mark Williamson

Chairman

Andrew Heath

Chief Executive

Derek Harding





skillsexperience

Our directors provide the Board with a broad range

of personal strengths, and experience. Each of their

contributions support the Company in driving forward

with its Strategy for Sustainable Growth, Purpose

and Values.

Board of Directors

Appointed: May 2017, Nationality: British

Skills and expertise









in managing relationships with the investor and



non-executive director and chairman of the audit

committee of Alent plc until December 2021. Mark was

chairman of Imperial Brands plc until 1 January 2020

and was also senior independent director of National

Grid plc until December 2021.

Other appointments

None.

Appointed: September 2018, Nationality: British

Skills and expertise

Andrew joined the Group as Chief Executive in

September 2019, bringing a wide range of executive

and leadership expertise to Spectris, with proven

experience in technology-enabled businesses and



previously served as CEO of Imagination Technologies

Group plc from 2016 to 2018 and before that was CEO



Prior to this, Andrew had a 30-year career with

Rolls-Royce where he held a number of international

and senior management roles, latterly serving as the

President of Energy from 2010 to 2015. Andrew has a

BSc in engineering from Imperial College London and

an MBA from Loughborough University.

Other appointments

None.

Appointed: March 2019, Nationality: British

Skills and expertise





leadership and industrial expertise to Spectris.



operations worldwide, he also leads the operational

management of Group Risk; Group Legal; Investor

Relations; Group IT and the Group’s Capital Allocation



director at Shop Direct. Derek was CFO at Senior plc

from 2013 to 2017 and before that, he was at Wolseley





previously held a number of group roles, including



and investor relations, and head of mergers and



with PwC.

Other appointments

Derek was appointed as a non-executive director of



Committee membership key







Disclosure

Executive

Chairman of a committee

E D

Spectris plc

Ulf Quellmann

Independent



Director

Board of Directors

Alison Henwood

Independent



Director

Cathy Turner

Independent



Ravi Gopinath

Independent



Director

Appointed: September 2021, Nationality: British

Skills and expertise

Alison Henwood has broad technical experience in key



internal control and audit across regional, divisional and

global functional roles. Until 30 June 2022, Alison was





energy-trading business in the world. She has held a

wide variety of roles across Shell throughout her career,



digitisation and Shell’s move towards zero carbon.

Other appointments

Alison is a member of the supervisory board at Umicore,

a global materials technology and recycling group

based in Belgium. She is also a non-executive director





hydrography, specialising in marine geospatial data



Appointed: September 2019, Nationality: British

Skills and expertise

Cathy Turner is an experienced non-executive director







Barclays PLC has included responsibility for strategy,

investor relations, HR, corporate affairs, legal, internal

audit, brand and marketing. She was previously a

non-executive director at Aldermore Group plc.

Other appointments

Cathy is a non-executive director and chair of the

remuneration committee at, Rentokil Initial plc, a

non-executive director at Lloyds Banking Group Plc,

and is a partner at the senior advisory organisation,

Manchester Square Partners.

Appointed: June 2021, Nationality: Singaporean

Skills and expertise

Ravi Gopinath is a highly experienced business leader,

with over 25 years of diverse, global engineering and

software experience, with a proven track record in

setting up, scaling and transforming high-growth and



advisor at AVEVA plc, having previously been chief





Software Business which was merged with AVEVA





operations management and prior to that, was CEO

and managing director of Geometric Limited.

Other appointments

Ravi is a strategic advisor at AVEVA plc and is also



Appointed: January 2017, Nationality: Norwegian

Skills and expertise





a series of senior global roles, including: director, group

technology operations at Vodafone; chief operating







Digi Telecommunications in Malaysia; and executive









(Norway) and Telescience Inc (USA).

Other appointments



Communications plc, Nordea Bank Apb and Evelyn

Partners.

Appointed: January 2015, Nationality: American

Skills and expertise







propulsion systems and special products division and









Automotive.

Other appointments

Bill is senior independent non-executive director and

chair of the remuneration committee of Smiths Group

plc, lecturer at UCLA Anderson School of Management

and director and a member of audit and compliance

committee at ICU Medical Inc.

Appointed: January 2015, Nationality: German

Skills and expertise

Ulf Quellmann has broad general management

experience and considerable knowledge of the metals,

minerals and mining industry, having worked in the

sector for more than 20 years. He was chief executive



listed on the Toronto and New York Stock Exchanges)

until March 2021. Prior to that, he was vice president,

strategic projects of the copper and diamonds product









president, investor relations and media relations,



treasurer, and senior management positions at General



Other appointments

None.

Bill Seeger

Senior Independent

Director

Committee membership key







Disclosure

Executive

Chairman of a committee

A N N R

N RA NA N R

A N R

Kjersti Wiklund

Independent



and Workforce

Engagement Director



GOVERNANCE



Spectris plc

Board and Executive Committee

Board and Executive

Committee structure

Executive

Responsible for the day-to-day management

of the Group’s operations with support from







Disclosure



disclosure of inside information and for

ensuring that announcements comply with

applicable regulatory requirements

Board Committees

Management Committees



























Audit and Risk









the Group’s ethics and





controls and risk

management

Nomination



succession matters and

talent management for the



senior management

Remuneration

Responsible for

recommending the policy for

the remuneration of the









pay and conditions of the

wider workforce

Board and Committee attendance

Board

(scheduled)

Board

(ad hoc)

Audit and Risk

Committee

Nomination

Committee

Remuneration

Committee AGM GM

Ravi Gopinath

7/8

4/5

n/a 3/3 4/4 Y Y

Derek Harding 8/8 5/5 n/a n/a n/a Y Y

Andrew Heath 8/8 5/5 n/a n/a n/a Y Y

Alison Henwood 8/8 5/5 3/3 3/3 n/a Y Y

Ulf Quellmann 8/8 5/5 3/3 3/3 4/4 Y Y

Bill Seeger 8/8 5/5 3/3 3/3 n/a Y Y

Cathy Turner 8/8 5/5 n/a 3/3 4/4 Y Y

Kjersti Wiklund 8/8 5/5 3/3 3/3 4/4 Y Y

Mark Williamson 8/8 5/5 n/a 3/3 n/a Y Y

 





 





 





Spectris plc

Board and Executive Committee

Topic 2022 Activities Stakeholders considered

Strategy • 







• 





• 

• 



• 





• 



• People

• Shareholders

• Community

M&A • 





• 







• 



• 

together with the termination of the transaction due





• People

• Customers

• Shareholders

• Suppliers and partners

Operations

and risk

• 





• 





• 



• 



• 



• People

• Customers

• Shareholders

Leadership

and people

• 



• 



• 





• 







• 

• 



• People

• Shareholders

Finance • 



• 



• 



• 







• Shareholders

• Community

• Suppliers and partners

• People

Governance

and ethics

• 



• 







• 





• 





• People

• Shareholders

• Community

• Suppliers and partners



GOVERNANCE



Spectris plc

Section 172

People



operating in an open and ethical







Community









and sustainable policies which support



Customers













ensuring that our business practices and



Shareholders







ensuring that the Group is a sustainable



Suppliers and partners











Supporting

our Section 172(1)

statement

Building on our understanding





• 

• 



• 

• 

including direct feedback from meetings









• feedback from the chairman of the







• regular and detailed feedback from the





• 





Considering stakeholders in our meetings

and principal decisions

Divestment of Omega

















customers as well as the impact on



for 





focus during the due diligence stage and





challenge and support to management





Management was in the best interests of



















Acquisition of Dytran, Creoptix and

MB Connect









included discussing and ensuring that the

acquisition was aligned with the Group’s

strategy to make synergistic acquisitions to





the acquisition processes and following



ways in which stakeholder interests were









following each acquisition supported the







Supporting employees with the cost

of living









management’s approach to supporting



introduced by management to mitigate the



details are set out in the Remuneration



Customer engagement









between the businesses and the wider









Understanding our stakeholders and what matters most to them



in about the 

Spectris plc

Section 172 continued







simulators operating in a real customer















has engaged with its customers can be found



Shareholder return





details of which are set out on pages 18 and









programme (in addition to the interim and



importance of capital returns to our

shareholders and were pleased to be in a















2022 Capital Markets Day









to the content and framing of the strategy























understanding of the  and the





ad hoc shareholder meetings carried out by









s172 factor Page reference Relevant section of the report

 pages 2 – 3 Our Purpose

Strategy for Sustainable Growth

Business model

pages 18 – 19

pages 16 – 17

Employees pages 42 -45

page 59

pages 43 and 71

pages 62 – 63

pages 72 – 73

Sustainability Report



Workforce engagement

Chairman’s introduction to governance

Oversight of the Group’s culture

Business

relationships –

suppliers and

customer

page 11

pages 14 – 15

Chief Executive’s Review

Case studies

Community and

environment

page 13

pages 60 – 61

pages 48 – 49

pages 52 – 58

Chief Executive’s Review



Net Zero



High standards

of business

conduct

page 46

pages 72 – 73

page 81

pages 52 – 58

Sustainability Report

Monitoring the Group’s Culture

Audit and Risk Committee Report – Ethics & Compliance



Shareholders pages 16 – 17

pages 62 – 63

page 67

Our Business Model

Chairman’s introduction to governance

Board and Executive Committee 2022



GOVERNANCE



Spectris plc

Board evaluation and effectiveness

Board evaluation





annual evaluation

2021 evaluation process and outcomes























• 



• 



and the wider senior leadership population to





• 







• 







• 





• 



interaction with high potential employees



• 





2022 Board evaluation process

































that discussion and that those actions would















Informed

decision-making













responsible for ensuring compliance with appropriate











Access to

the business













the wider leadership team and the opportunity to







Training and

development













other legal and regulatory topics from internal













meetings with key customers to better understand



Spectris plc



Workforce 

activities











meaningful and regular dialogue

with the workforce to capture key

insights and bring the employee















the workforce and is pleased with how the

























• 

• 

• 

• 































intended that the channels of communication





support further understanding of the

















topics that impact our people such as



ethics and the Group’s ‘speak up’



Boulder site visit











meetings with senior management







and dinner with team were also a part



Darmstadt site visit





with a selected group of employees from















feedback was that our employees









GOVERNANCE



Spectris plc



2022 Board highlights

• 





• 

with a detailed progress roadmap



• 

life our Values through the launch of the



• 



• 









Our  and

our culture























commitments we make to customers in















Read more about Our Purpose







maintain a culture where our people



and connected to their work and colleagues



















‘Be true’ is about absolute integrity and

how we focus on doing the right things



necessary and showing care and respect





‘Own it’ 

keeping our promises and how we build



‘Aim high’ encourages our people to be









Spectris plc

continued

Culture and the Board





Group-wide Gallup employee engagement















workstreams and it was reassuring to see









employee sentiment on our Values and







Read more about the results of the survey





monitored culture through a number of













associated trends that had arisen during









further which included how success would







the Group’s planned inclusion and belonging

roadmap was discussed prior to its launch in





and discussions were held on how progress

could be measured and whether targets











the Group or considering a career within the



Read more about the Group Inclusion

Framework and Inclusion and Belonging

on page 44





























Read more about these visits















78

employees participating in Gallup





3.86

Gallup GrandMean employee

engagement score



up programme and reporting from the







of the remediation actions taken for reports





an update on the completion rates of the















strategies for how we can continue to meet







to ensure the culture within the Group









performing business made







GOVERNANCE



Spectris plc 

Nomination Committee report

Nomination

Committee

Report

During 2022, the Committee held three

meetings, the attendance of which can



Nomination Committee has been focused

on the Board’s composition, succession

planning at a Board and Executive level.





current Board and identifying areas of



recruitment. Recognising the tenure of



thought was given to their succession and

ensuring that the Board would continue to



experience following their planned

retirement. More details on the factors the



discussions is included in the activities

section on this page.

In respect of wider succession planning for

the Executive and senior management, the

Committee continues to receive regular

updates from the Chief Executive and the

Group HR Director. Good progress has also



leadership community within the Group,



Leadership Development Programme,





leadership development across the Group

and recognises the need to continually

refresh our talent pipeline and is committed

to continuing to support the activities being

carried out in this area.





recognises the importance of attracting and

retaining talent at an early career stage to

ensure an active and diverse pipeline of

future leaders. Further details of the Group's



Diversity and inclusion remains a core





provided oversight and challenge to the

development of the Group's inclusion and

belonging roadmap. We will continue to

emphasise the value of inclusivity at all levels

of the organisation as we recognise the

importance it has to our colleagues, the

business and society as a whole.

Mark Williamson

Chairman of the Nomination Committee

22 February 2023

Role of the Committee













considers the importance of diversity, in all its

forms, when recruiting new Board members.



out across the Group in respect of diversity



gender balance of those on the Executive





the extension of the Group's diversity metrics

to incorporate race data in countries where

this is legally permissible.



• reviewing the size, structure and

composition of the Board;

• identifying and nominating and

recommending to the Board candidates to

be appointed as Directors;

• reviewing and refreshing the membership

of Board Committees;

• 

Chairman, Executive Directors and senior

management;

• carrying out the annual review of the

independence of Directors;

• assessing whether Directors are able to

commit enough time to discharge their

responsibilities; and

• reviewing the induction and training needs

of Directors.

Full terms of reference for the Committee

can be found at www.spectris.com/

corporategovernance.



as part of the Board’s external evaluation

assessment, which was conducted by



Evaluation. Following the review the

Committee is considered to be operating

effectively. Further details on the evaluation

process are set out on page 70.

Membership and attendees





Committee. Regular attendees at the

meetings also include the Chief Executive

and the Group HR Director. Other attendees

joined for topical discussions, including the



Affairs to discuss the Group's approach to



the members of the Committee can be found



Committee meetings on page 66.

Activities of the Committee

during 2022





• a deep dive into the talent strategy and

priorities being implemented by the Group

HR Director as discussed further on page



• 

employee engagement survey;

• 

different jurisdictions in which the Group

operates;

• a detailed update on the establishment of

the Group's inclusion and belonging

roadmap;

• 

Engagement Director;

• considering the independence of each



commitments;

• 

plans, particularly in light of the pending





(‘AGM’);

• 

Capabilities Matrix; and

• developing a 2022 training programme for



Spectris plc Annual Report and Accounts 2022

Nomination Committee Report continued

Succession planning

As part of the development of the Board’s

succession pipeline, the Committee began





have served nine years on the Board ahead of





and capabilities of the Board in addition to the

Board's Diversity Policy and use this exercise

to guide early discussions with the external

recruitment agency, the Lygon Group, in order



In line with the requirements of the

UK Corporate Governance Code, the



further connection between the Lygon Group

and the Company or individual Directors. In

addition to merit and objective criteria, the

Committee is clear that any external search

consultancy engaged should also ensure that

the selection process followed promotes

diversity of gender, social and ethnic



strengths of the individuals selected.

After considering a shortlist of candidates a

recommendation will be put forward to the





candidates existing appointments and

associated time commitments as well as



recommending their appointment to the





and experience, with a variety of different

lengths of tenures which will provide a good





continues as part of the Committee’s regular

agenda, including the annual review of the



informs the appointment process, but also

the training and development programme



Board composition, as Board members

progress through their tenure, the Committee

continues to consider their independence,













Workforce engagement







that was carried out during 2022. With the

return in international travel, Kjersti was able



representatives in Darmstadt, Malvern and

Crowborough. Key topics discussed at the



sustainability and inclusion. In addition to







later provided to the Committee. Further





out on page 71.

Board Diversity Policy

During the year, the Board’s Diversity Policy

was carefully considered and reviewed in line

with the recommendations issued by the







increase the overall percentage of women on





Independent Director role and/or one woman

in the Chief Executive or Finance Director role



Following a review of the above

recommendations, the Board's Diversity

Policy was updated to include the target





Read our Board Diversity Policy

www.spectris.com/corporategovernance

Our diversity goals

We are committed to externally set goals

on diversity. Beyond this, we recognise the

importance of all forms of diversity and are

striving for further progress.

FTSE Women Leaders Review

(%)

Target

Spectris

Target: 40% women by 2025

Parker Review

Target

Spectris

Target: One Board member from an ethnic

minority background by 2024



GOVERNANCE



Spectris plc Annual Report and Accounts 2022

Nomination Committee Report continued

 



counts as three mandates.

Non-executive Directors' tenure





in exceptional circumstances (see the chart below).

Board tenure

1–3 years 2

3–6 years 1

  

Gender

  

  

Nationality of Directors

  

American 1

German 1

Norwegian 1

  

Overboarding scores

1 mandates 1

2 mandates 2

  

  

  

2013

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Ulf Quellmann

Bill Seeger

Kjersti Wiklund

Mark Williamson

Cathy Turner

Ravi Gopinath

Alison Henwood

External appointments and time

commitments





appointment and are reviewed at least

annually by the Nomination Committee.

Any external appointments are considered

and approved by the Board following

careful consideration of the impact on the

individual Director’s ability to meet the



of interest are recorded and reviewed

together with any evidence of situational



Director’s shareholding in the Company.



of the Board remains uncompromised





Board responsibilities. Details of the Directors

external appointments are included in their



Director election and re-election

In considering the recommendation of the



Nomination Committee considers a number



• the results of the individual evaluation

process;

• the tenure and independence of each of

the Directors; and

• the other external appointments held by

the Directors.









independence. With the support of the

Nomination Committee’s recommendation



executive Directors being recommended for



Spectris plc Annual Report and Accounts 2022

Audit and Risk Committee Report

Audit and Risk

Committee Report

Role of the Committee

Membership and attendees

During 2022 the Committee was comprised

solely of the following independent

Non-executive Directors:

• Bill Seeger

• Kjersti Wiklund

• Ulf Quellmann, and

• Alison Henwood

Bill Seeger is determined by the Committee



experience’ as required by the UK Corporate

Governance Code 2018 (the ‘Code’). In

addition, Alison Henwood, a chartered

management accountant, is also determined



experience’. All members of the Committee

are considered to have competencies that the

Board deems relevant to the sectors in which

the Company operates.

Attendees at meetings normally include the

Chairman, the Chief Executive, the CFO, the

Head of Internal Audit, the Head of Risk and

Control, and the Head of Corporate Affairs.

Representatives from the external auditor,

Deloitte, and the internal auditor, PwC, also

attend meetings.

Read more about the current members of the

Committee on pages 64 and 65. Details of

attendance at Committee meetings is set out

on page 66.

Role and responsibilities





• 

narrative reporting processes, including

advising the Board on the fair, balanced and

understandable assessment of the

information provided;

• reviewing, challenging and approving



page 121) proposed by management;

• reviewing and monitoring the way in which

management ensures and oversees the



and internal controls;

• the appointment, remuneration,

independence and performance of the

Group’s external auditor;

• the independence and performance of the

Group’s internal audit arrangements;

• 

of risk management are appropriately

considered and addressed; and,

• that additional consideration is given to

relevant regulatory developments and

emerging best practice.



activities of the Audit and Risk Committee Terms

of Reference are available at www.spectris.com/

corporategovernance

Audit Committee meetings



Informal discussions on key topics were also



Committee retains time around each meeting

to meet separately without management

present and invites the Head of Internal Audit ,

the PwC internal audit co-source partner and

representatives from the external auditor to

attend for part of this session.



the year



on a comply or explain basis, that the



considered during the year. In 2022, the

Committee considers that the most

important matters were:

• Continuing to support the preparations



document, including receiving updates

from the Head of Risk and Control and PwC

as well as the views of Deloitte as the

external auditor on the enhancements for

the internal controls framework;



activities of the Audit and Risk Committee

which have taken place throughout 2022.



year has been to support the Board in key



internal controls and risk management.



reviewing preparations for changes in the

Group’s audit and corporate governance



internal control regulations for Premium

Listed Companies.



oversight of the transition to a fully

outsourced internal audit function, led by



that PwC have carried out alongside the

Head of Internal Audit in managing this

transfer and is looking forward to developing

their relationship with PwC in 2023. Further

details are set out on page 82 of this report.



person throughout 2022 and Committee

members also attended a site visit to HBK



offered a valuable opportunity to meet key

employees within the HBK business and

was consolidated by a detailed update



December 2022. Dedicated sessions have

also continued to be held at the Board on

the Group’s Principal Risks in 2022, including

on Talent and Market/Financial Risks.



time with the external and internal audit

teams at each meeting without management

present. I have also continued to meet

regularly with members of these teams

outside the Committee cycle, as well as

receiving regular updates from the CFO on

accounting judgements and issues, risk and

internal controls, and the progress against

the internal audit plans.

In 2023, a core focus of the Committee will

be the oversight of the impact from the

ongoing planned changes and reforms to

the governance and audit landscape for

Premium Listed Companies and the Group’s

approach to disclosure against the Taskforce

on Climate Related Financial Disclosures, in

addition to the oversight of the Group’s



Bill Seeger

Chairman of the Audit and Risk Committee

22 February 2023

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

 Annual Report and Accounts 2022



role in supporting the Board in

providing oversight of the Group’s



controls and risk management

processes. During the year, a

particular focus of the Committee

was the oversight of enhancements

to the Group’s internal controls



forward to further supporting

management with this and other

matters throughout 2023.”

Bill Seeger

Chairman of the Audit and Risk Committee

• Consideration and decisions around the

accounting for transactions within the

business, including the completion of the

Omega divestment in July 2022, as well as

the acquisition of Creoptix AG, MB Connect

line GmbH and Dytran Instruments, Inc. in

2022; and

• Providing oversight to the transition from a

co-source internal audit arrangement to a

fully outsourced internal audit function led

by PwC.



During 2022, the Committee’s performance

was assessed externally as part of the wider





of Independent Board Evaluation. As part





individually with each Committee member

and key contributors to the Committee

including Head of the Internal Audit

outsource arrangement and the External

Audit partner. During the year, it was

considered that the Committee had operated

effectively, with further consideration to be

given to holding an additional Committee

meeting each year, bringing the total

scheduled meetings to four. More details on

the Board evaluation process can be found



Activities of the Committee

during 2022



agenda developed from its terms of reference.

Standing items are considered at each





on which the Committee has chosen to focus.



principally split into four key areas:

• 

• Risk management and internal controls;

• Internal audit; and

• External audit.



conjunction with each other given the

importance of each element operating

cohesively. For clarity of reporting, details

of the Committee’s involvement in each of

these areas is set out separately below.





providing assurance to the Board around the

integrity of the half-year and annual Financial





and disclosures. During 2022, as part of its



statements, the Committee has:

• considered the viability assessment and

scenarios, liquidity risk and the basis for

preparing the half-year and annual

Financial Statements on a going concern

basis, and reviewed the related disclosures

in the Annual Report and Accounts, the

provisions of the Code regarding going

concern and viability statements and

reviewed best practice and investor

comment;

• reviewed the areas of key judgements such

as revenue recognition, the Vendor Loan

Note and Eurazeo investment (as part of the

consideration for the sale of Millbrook), and

other acquisitions and disposals;

• reviewed the areas of key judgements in

respect of the Omega disposal and the

acquisitions of Dytran, MB connect, and

Creoptix;

• reviewed the overall drafting and review

processes to assure the integrity of the

Annual Report and Accounts;

• reviewed the management representation

letter to Deloitte as the external auditor and



auditor;

• considered the process designed to

ensure Deloitte is aware of all ‘relevant audit

information’, as required by Sections 418

and 419 of the Companies Act 2006;

• assessed the disclosures in the reports in

relation to internal controls and the work of

the Committee; and

• reviewed the proposed update to the

Group’s tax strategy.



review of the Group’s ongoing litigation

matters and associated provisions.

Having reviewed and considered these

key areas, and following their review of the

process undertaken to ensure that the Annual

Report and Accounts adhered to relevant

legal and regulatory requirements, the

Committee was able to recommend to the

Board that, when taken as a whole, the

Annual Report and Accounts is fair, balanced

and understandable and contains all relevant

information necessary for shareholders

to assess the Company’s position and

performance, business model and strategy.

Audit and Risk Committee Report continued

 Annual Report and Accounts 2022

Audit and Risk Committee Report continued

Key areas of focus in relation to the Financial Statements





Revised segmental reporting Alternative performance measures

(‘APMs’)

Estimation, uncertainty and

judgement





Capital Markets Day held in October 2022 based on a







reporting provided to the Chief Operating Decision Maker

(considered to be the Board) on a regular basis to assist in

making decisions on capital allocated to each segment and



reportable operating segment disclosures for the two



Panalytical and Particle Measuring Systems, and Spectris







remaining businesses (Red Lion Controls and Servomex)



of running the PLC will be disclosed as ‘Group costs’.







operates and decisions are taken and considered the

potential inference to the Group of having ‘Other’ as a



sought views from Deloitte.





is appropriate and will provide clarity to the understanding



comfortable that the new reportable segments were

appropriate and presented in accordance with IFRS 8.





items included as APMs are adjusting in accordance with



in the 2022 Annual Report all added to provide clarity and



APM’s added in 2022 are not adjusting existing statutory

measures, but are added to provide clarity as these cannot

be derived from the reported accounts (adjusted gross



order intake, order book and vitality index).







movements on debt and equity investments’ to allow use

in respect of the revaluation of a debt instrument added in

the prior year.





APM rewording and revised list of APMs.











prominence of statutory measures compared to APMs





During the year, the Committee received reports





judgements applicable to the Group’s Financial Statements

and disclosures.



Financial Statements are in relation to the assumptions



liabilities (Note 19).





that they were not aware of any material or immaterial

misstatements made intentionally to achieve a particular

presentation.



disclosures and sensitivities with respect to the turbulent

macro-economic environment particularly around risk

factors and their impact on discount rates.



management and also questioned Deloitte to understand

whether the external auditor had, to the Committee’s







Following detailed review, challenging the presentations

and reports from management and where necessary,

consulting with the external auditor, the Committee is



address critical judgements and key estimates (both in

respect of the amounts reported and the disclosures).

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

 Annual Report and Accounts 2022

Audit and Risk Committee Report continued

Key areas of focus in relation to the Financial Statements continued

M&A Activity Principal Risks and Uncertainties Going Concern and Viability







business it was determined that the Omega business



in the Consolidated Income Statement being restated



of Omega being disclosed as discontinued operations





comparatives in the 2022 Annual Report and Consolidated

Financial Statements.



arrangement known as ‘Blueberry’, to accelerate aspects





time that such an arrangement has been agreed, and



arrangement is designed to ensure that the parties sharing

joint control and the liabilities of the arrangement are



been determined that the entity will be accounted for as





presented for review.







for the transactions in question. Opinions were sought





Following the Committee’s review of the accounting

treatments proposed by management for the acquisitions

and disposal that took place within the year, the Committee



each transaction.



During 2022, management reassessed the appropriateness

of the Group’s existing Principal Risks and considered any

additional or emerging risks that might need to be

included. As a result of this reassessment no changes were

proposed to the existing categories of Group Principal Risk







2022 and February 2023 meetings and considered the

appropriate disclosure for the Principal Risks and

Uncertainties section and Viability Statement within the

Annual Report.





Group’s Principal Risks, and the respective scenarios

considered in the preparation of the Viability Statement.



Management presented the Committee with an updated

calculation of going concern and an assessment of the



revised forecasts including using the 2023 Budget, and the







management in respect of the assessment of both going

concern and viability and challenged the assumptions

made by management in their assessment.



provide context and further challenge to the assumptions

in the papers.











Committee also concluded, based on the outcomes of the

viability assessment, that it is reasonable to expect that the

Group would be able to continue to operate and meet its

obligations and liabilities as they fall due over the period to



 Annual Report and Accounts 2022

Audit and Risk Committee Report continued

• monthly steering committee meetings and

an agreed project charter, as well as

coordination with the platform risk

committees to track and monitor progress;

• a detailed gap analysis of critical controls

and agreed remediation actions;

• ongoing work alongside the improvements

being undertaken as part of a business-

wide transformation project on the IT

general controls environment;

• 

compliance tracker to provide clearer ways

of tracking, testing and evidencing internal

controls;

• 

control and internal audit which will be



guidance from the UK Government;

• regular updates to the Committee from the

Head of Risk and Control as well as routine

updates from the platform audit and risk

committees; and

• a detailed update at each meeting on the

progress being made to enhance the

internal controls framework.



regular updates and engage closely with

management on any changes that might



internal controls and to ensure compliance

with legislation and best practice as they





monitored the Group’s internal control and

risk management systems and at its meeting



effectiveness of these.



• Work alongside the business

transformation project to embed risk and

internal controls within the business

systems in place across the Group.

• Enhance the risk-based approach taken to

considering other controls improvement



and compliance controls.

• Implement and launch the Group

governance, risk and compliance tracker,

including the introduction of training in the

• considering common control themes





subsequent action has been taken to

minimise the risk; and

• assessing the Group’s responsibilities

relating to regulated exposures of the

Group.

Regular meetings were held between the

Head of Internal Audit and the Audit and



discussions with the Head of Risk and Control.



continued to receive and review risk

management updates from the businesses

by way of reporting from the operating

business audit and risk committee chairmen.

Updates on the business audit and risk

committees will remain as a standing item





respect of risk management and internal

controls systems is to review their

effectiveness and to make recommendations

for possible improvements as appropriate.



the Group’s approach to risk management

and internal controls is designed to manage,

rather than eliminate the risk of failure to

achieve business objectives and can therefore

not provide absolute assurance against

material misstatement or loss.





Developments and enhancements have

continued to be made to the internal control

and risk management processes in 2022,



has been largely in response to the proposals

set out in the BEIS consultation regarding a

strengthened internal-controls reporting



reform within the consultation has not yet



has been pleased with the enhancements

being made to the Group’s internal control



has included:

use of the tracker and general controls

awareness.

• 

control and internal audit and leveraging

the Group governance, risk and compliance

tracker.







formalise and automate controls and



making purposes.







reports raised through the Group’s



the status of associated investigations (further

details of the Group’s Speak-Up policy can be



reviews the control procedures in place to

comply with the Group’s policies on business

ethics, anti-bribery, compliance and fraud,

including the steps being taken to enhance

the Group’s ethics and compliance

programme.

Viability Statement



the 2022 Viability Statement and considered

the following factors which could impact the

duration over which the Viability Statement



• budgeting, forecasting and strategic

planning cycles;

• the time frame over which are risks are

assessed;

• the approach taken by our peers; and

• proposed changes in corporate reporting

requirements regarding long-term

resilience.



statement made regarding the Company’s

viability period continues to be an accurate

assessment of the Company’s viability as at



can be found on page 39.

Risk management and internal

controls



systems

To assist the Board with its responsibilities to

effectively determine the nature and extent



carries out a robust annual assessment of





responsible for monitoring the risk

management and internal controls systems

which mitigate potential impacts on

shareholder investments and the Company’s

assets, and for reviewing the effectiveness of



and recommendations to the Board, the

Committee ensure that its responsibilities as

set out in its Terms of Reference (available at

www.spectris.com) are adequately met.



• evaluating and challenging the results and

recommendations of audits undertaken by

the internal audit team and the external

auditor;

• considering the level of alignment between

the Company’s Principal Risks and internal

audit programme;

• 

control issues to the Group and considering

and challenging as necessary the adequacy

of management’s response to any matters

raised;

• has oversight of the governance and risk

management framework, including a



and principal risk, put in place throughout

the Group;

• appraising the Group’s response to

information security and data protection

risks;

• considering key emerging risks and

management’s approach to the ongoing

oversight and management of those risks;

• considering the Group’s ethics programme

and the anti-bribery and corruption

programme;

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

 Annual Report and Accounts 2022

Audit and Risk Committee Report continued

Internal audit planning

During 2022, the internal audit team has

increasingly been able to return to in-person

audits, albeit this remains challenging in



arrangement with PwC has supported the

businesses in these instances, allowing for

remote and guest auditors to support the



support the provision of effective assurance

during 2022.



from the Head of Internal Audit regarding the

status of the internal audit plan and the



majority of actions raised as part of the 2022

internal audit plan had been implemented to

schedule, with the remaining actions clearly

owned and progressing with management.



also considered the internal audit programme



risk-based approach and has taken into

consideration the organisational objectives

and priorities, as well as possible risks that

may prevent the achievement of those

objectives. Internal audit will continue to work

closely with the risk and control function on

the development of the 2023 internal audit



the 2023 internal audit plan and was

reassured by the integration plan in place to

embed PwC as the outsourced internal audit



updated at each session on the progress

against the plan as well as receiving updates

on the outcomes of these audits and how

promptly actions have been addressed.



As part of its consideration of the

effectiveness of the internal audit function,

the Committee considered the adequacy of

resources and its ability to meet the scope of

the internal audit programme. Whilst the

Committee recognised the success of the

co-source arrangement put in place with

PwC and continued this to be effective, the



outsourced arrangement were also noted.



co-source internal audit function in place

throughout 2022 as operating effectively and

looks forward to working closely with PwC as

part of a fully-outsourced arrangement to

continue to develop and improve the

assurance provided by a strong internal

audit function.



In each of its meetings during the year the

Committee received an update from one of

the businesses in respect of topics discussed

by that business’s audit and risk committee.



which meet quarterly and are chaired by the

business unit CFOs, provide the opportunity

for each business to consider actions from

internal audit reports, to discuss business

risk registers and to receive an ethics and

compliance update from the Chief Ethics and



informed about the process by which the

business audit and risk committees support

the existing internal audit and risk

management framework and received

assurance on the ways in which businesses

track and monitor risk within their functions.



One of the Committee’s key responsibilities is

to manage the relationship with the Group’s

external auditor on behalf of the Board.

Deloitte LLP was appointed as the Company’s



following a competitive tender process, and

has now completed its sixth year as auditor.

Andrew Bond has held the role of lead audit

partner since March 2019.





31 December 2022 has once again, been

carried out with a combination of remote and

in-person work. Document repository sites

have continued to be utilised as an effective

way of reviewing documentation to support



reports from Deloitte at its meetings and

management and the Chairman of the

Committee maintain an ongoing dialogue

with the external audit team outside of the



comfort to the Committee on the steps that

have been put in place to ensure that there

was no adverse effect on the quality or the

timescale for the completion of the audit of



has also:

• considered and approved the audit

approach, the scope of the audit

undertaken by Deloitte as external auditor

and the fees for the same;

• agreed reporting materiality thresholds;

• 

• considered and approved letters of

representation issued to Deloitte.

Internal audit



independent, objective assurance to add

value and improve the Group’s operations. Its

responsibilities include assessing the key risks

of the organisation and examining, evaluating

and reporting on the adequacy and

effectiveness of the systems of internal control

and risk management in place, and the

governance processes in operation

throughout the Group.

During 2022, the Internal Audit function

was led by the Head of Internal Audit, and

supported through a co-source relationship

with PwC, with oversight provided by the



provide assurance to the Board on the

adequacy of the resourcing and internal



monitoring the effectiveness of the internal

audit function.

During 2022, the co-source arrangement

with PwC operated smoothly, with positive

progress made with ways of working, external

quality assessment (‘EQA’) recommendation

activities, risk assurances and subsequent

reporting. Due to the success of the

programme and to better support the new



Spectris Dynamics, the decision was made to

fully outsource the internal audit function,

with the intention being to better utilise the



continuing to embed third-line activities



plan and approach will then be tailored to the

respective needs of each business.

 Annual Report and Accounts 2022



Audit and Risk Committee Report continued



Following the Committee’s consideration of

the effectiveness of Deloitte as the Company’s

external auditor, it is proposed that Deloitte be

reappointed as auditor of the Company at the

next AGM in May 2023 and, if so reappointed,



the next general meeting of the Company at

which accounts are laid. Further details are set

out in the Notice of Meeting, which is available

at: www.spectris.com/AnnualGeneralMeeting

Deloitte was appointed as the Group’s





reappointment was last approved by

shareholders at the 2022 AGM. During the

year, the Committee reviewed the

arrangements with the current external

auditor and considered whether it was



Committee noted that given the knowledge

and standard of services provided by Deloitte

that it would be in the best interests of the

Company and its stakeholders for Deloitte to

continue as auditor. It is the Committee’s

present intention to initiate a competitive

tender process for the external auditor





rotation of the key audit engagement partner



and senior management required to rotate



external auditor’s report to shareholders is set



As detailed above, the Company complied

with the Statutory Audit Services Order 2014

throughout 2022.



of Deloitte and was comfortable Deloitte















Financial Statements.



During the year, the Committee carried







review process included:

• considering the independence of Deloitte;

• the Deloitte Audit Quality Inspection

Report;

• non-audit work undertaken by the external

auditor;

• feedback from a survey targeted at various

stakeholders; and

• the Committee’s own assessment.



the review and it was concluded that the

audit process continued to be effective.

Deloitte’s audit of the Group’s 31 December

2021 year end was selected for review by the

FRC’s AQR team as part of the 2022/2023



met with the AQRt as part of the process and

was kept up to date by Deloitte as the review



receiving a minor improvements required,

with the Chair of the Audit Committee



considered the results of the review, the

actions taken by Deloitte to continue to

enhance audit quality, and following the

Committee’s own assessment of the

performance, independence and

effectiveness of Deloitte, the Committee is



effective in its role as external auditor.

Audit and non-audit fees



2022 Financial Statements was reviewed by

the Committee, and, in accordance with the

authority given to the Committee at the 2022

AGM, the Committee reviewed the proposed



considered the proposed auditor’s

remuneration to be appropriate.



may only be undertaken by the external

auditor in limited circumstances. A

cumulative annual cap is imposed for

non-audit services provided by our external

auditor (save for acquisition due diligence),

above which all engagements are subject to

the Committee’s prior approval.





corporategovernance and is used to

safeguard Deloitte’s independence and

objectivity. Non-audit fees for services

provided by Deloitte for the year amounted to



previous years, a proportion of these fees were

in respect of the half-year review. In addition,

non-audit services in the year included the

engagement of Deloitte to provide assurance

on the data collation and calculations used to

meet the requirements to report on the

Group’s environmental impacts. Non-audit

services in the year also included the

reporting accountant role performed by

Deloitte in respect of the unsuccessful

acquisition of a UK publicly listed company.

Deloitte was considered best placed to

support the Company in this role as a result





independence including non-audit service

fee caps for the Group and the UK. Further

details are included in Note 4 to the

Consolidated Financial Statements.

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

 Annual Report and Accounts 2022



Directors’ Remuneration Report

Directors’

Remuneration

Report

On behalf of the Remuneration Committee

(‘the Committee’), I am pleased to present the

Directors’ Remuneration Report for the year



out the work of the Committee during the

year and provides context for the decisions

taken.



been challenging with the ongoing impact



Despite these challenges, the Group has





progress against key strategic objectives and

communicating ambitious strategic priorities

for the coming years. Against this backdrop,

the Committee has focused on ensuring that

our employees are supported during this

challenging time and that their reward has

been managed responsibly and fairly.



of the structure and scale of our remuneration

framework, its alignment with both the

Group’s strategy and the wider workforce

framework. Additionally, it sets out the

decisions made by the Committee for 2022

and the intended arrangements for 2023.

2023 Remuneration Policy

We appreciated shareholder support and

approval of the Group’s Remuneration Policy

(the ‘Policy’) at the General Meeting in

December 2022. I would like to thank our

2022 and accelerating the 2023 pay

increases for the lowest paid workers.







pension parity across our business as part of

the 2023 Remuneration Policy.

I look forward to continuing the direct

conversations with employees during 2023



ensure that appropriate support is directed



Executive Director salary increases

In 2022, the Committee recommended a







increases were to enable his salary to reach

market median. We received support for this





mitigate concerns around a single large salary

increase by implementing the increase across





Committee with a point of review before

implementing the second increase.





initial recommendation and the ongoing

sensitivity around material salary increases.

Following careful consideration of many

factors, both internal and external, we

unanimously agreed that implementing the

second part of the prior commitment was

appropriate and best serves the interests







We have considered the Group’s performance

under Andrew Heath’s leadership. Andrew

has now led the Group as Chief Executive for

over four years. In that time, the Group has





now has a market capitalisation of £3.1 billion.



current salary remains below the median

shareholders for engaging with us and





1 January 2023.



Policy provides a balance between motivating

and challenging our Executive Directors and

senior management to deliver our business



sustainable success of the Group in the

interests of all our stakeholders.

2022 Remuneration

Wider employee pay arrangements

Following the easing of travel restrictions,



at several facilities during the year and hear

their thoughts on pay as well as broader



to receive, and welcome, regular and detailed

updates during the year relating to the

Group’s wider pay arrangements and in

particular the measures being taken across



challenge. Key actions discussed with the

Committee included:

• 



• 





bonuses also introduced for the lowest paid



• 

Panalytical to those UK employees earning



against his peer group and continue to feel



his vital role in the ongoing transformation of

the Group into a more focused, higher quality,



supported by a very strong balance sheet.



salary of our Executive Directors should be

positioned appropriately to secure the

continuity of our management team, avoid

salary compression below Board level and

support long term succession planning. It is



Andrew’s salary post this increase will fall



Committee discussed and acknowledged this

possibility but feel comfortable,

notwithstanding this risk, that his total

compensation is now well aligned with the

market.





arrangement at the median of the FTSE



Executive’s total remuneration will be to

position it just ahead of median vs the same

peer group. It is expected that any future

salary increase awarded to the Chief Executive

would be no higher than those awarded to

the wider workforce.



arrangements across the Group and the

Executive Management team for 2023. Based

on this review, the Committee agreed that

Derek Harding’s salary is set at a competitive

level against external benchmarks and his



aligned to the wider employee population.

2022 Annual bonus outcome

















Remuneration Committee Chairman’s statement

1. As at 31 December 2022.

Spectris plc Annual Report and Accounts 2022

Directors’ Remuneration Report

bonus opportunity for Derek Harding. A

number of mechanical adjustments have

been made to the annual bonus targets and





disposal of companies throughout the year.



and ensures the bonus outcome accurately





of any outturn from the bonus will be deferred

into shares. No discretion has been applied to

the 2022 annual bonus outcome.

Full details of the 2022 annual bonus

performance outcome are set out



2022 LTIP grant

In March 2022, the Committee granted





Group’s Remuneration Policy.

2020 – 2022 LTIP outcome

Both Executive Directors were granted a









holding period.

EPS and ROGCE performance has been

strong over the performance period and this





However, based on interim results as at



related multiplier did not meet the threshold

performance targets for absolute TSR, despite

the very strong relative TSR performance

against the peer group during the period.







demonstrates the high level of stretch that



No discretion has been applied to the 2020



details of how the Committee assessed

whether windfall gains were in evidence.



performance outcome are set out on



Review of windfall gains

Given the level of market volatility at the start

of 2020, the Committee committed to

reviewing the vesting outcome of the 2020



include a windfall gain. After meaningful

deliberation, the Committee concluded that







decision were:

• 





some shareholders as the point at which



• 

of the maximum opportunity is considered

moderate in the context of the strong

performance of the business over the

performance period and does not result



participants.







operational performance delivered by the

leadership team and the wider participants in



Taking these factors into consideration, the

Committee concluded that the level of

vesting and value delivered under the 2020



performance of the business, and value





vesting has been deemed appropriate.

2023 Remuneration outlook



reviewed by the Committee in February 2023





also reviewed in February 2023 with increases

taking effect from 1 April 2023, with further

details set out on page 97. A summary of the

planned implementation of the Policy in 2023





considerable time deliberating the right

balance between policy, performance and



that the Policy and the proposed



balance and the Committee therefore

recommends this report to shareholders.



contained in the report, I would be happy to

discuss them with you.

Cathy Turner

Chairman of the Remuneration Committee

22 February 2023

Annual bonus

150% of salary

Pension 10.5% of

salary for current

Executive Directors

and new joiners

3 year performance period

2 year holding

period

Performance measures: EPS, ROGCE, ESG and

Absolute TSR (with Relative TSR gateway)

50% deferral of

any bonus earned

3 year deferral period

Key policy changes:

CFO annual bonus set at 150% of salary (from 125%).

CFO shareholding requirement increased to 430% of salary

(from 405%).

Pension aligned with wider workforce.

Additional features:

Shareholding requirement:

430% of salary for all Executive Directors

Two year post cessation shareholding requirement:

200% of salary for all Executive Directors

Cash

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Cash

LTIP

280% of salary

Salary

2023 Remuneration Policy – Our Remuneration Structure



remains consistent with the 2020 Policy.

Key principles of our remuneration strategy:

• Reward delivery of the Group’s strategy in a simple and transparent way that is aligned

to shareholder interests.

• Attract, retain and motivate senior executives with market competitive reward.

• Align performance measures with shareholder returns with stretching targets aligned to

long term value creation.

• 

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Directors’ Remuneration Report

Summary of key changes to the Group's

Remuneration Policy effective 1 January 2023



Full details of the 2023 Remuneration Policy can be found at www.spectris.com/remuneration

Arrangements

under 2020 Policy

Key changes

to 2023 Policy

Planned 2023 implementation

of 2023 Policy



Salary



required skills and expertise to deliver

the Group’s strategic and performance

objectives.

No change to Policy. 







with average increase for UK employees.

Further details are set out on page 84.

Pension

Executive Directors receive an annual

cash allowance in lieu of participation in

a Spectris pension scheme. Maximum

potential payment under Policy of



Allowance for Executive Directors

and new joiners aligned to the

wider UK workforce company











Car and fuel allowances, healthcare,

life and disability assurance with a

maximum total £30,000.

No change to Policy. Provided in line with the

Remuneration Policy.

Executive variable pay

Bonus

Maximum opportunity based on salary.



for three years.

Increase in quantum for the CFO

(maximum opportunity increasing





(maximum opportunity)



opportunity)

Percentage of total opportunity:

Measure weighting

 

Adjusted Cash conversion 

Operational and strategic

measures 

Percentage of total opportunity:

Measure weighting

Adjusted Operating

Margin Growth 

Like-for-Like(“LFL”)

Sales Growth 

Adjusted Cash conversion 

Operational and strategic

measures 

In line with the Remuneration Policy.

Annual bonus payout curve:

Threshold:

Target: 

Maximum: 

Performance targets are not disclosed

in advance due to their commercial

sensitivity. All targets will be disclosed

retrospectively following the end of the

performance period.

No change to Policy. In line with the Remuneration Policy.

Arrangements

under 2020 Policy

Key changes

to 2023 Policy

Planned 2023 implementation

of 2023 Policy

Long Term Incentive Plan (‘LTIP’)



of salary through multiplier of 1.4x base

award with TSR performance conditions.

No changes to Policy. In line with Remuneration Policy.

Performance measures and weightings

















underpin):







Quantum unchanged with

performance measure structure



Strategy for Sustainable Growth.

Base Award: (equal thirds)

• Adjusted Earnings Per Share

(“EPS”) Growth

• 



• 

employee engagement and

Scope 1 and 2 emissions

reduction.

TSR multiplier unchanged.





Return on Gross Capital Employed:





Employee Engagement (GrandMean):

Threshold: 3.94. Target 4.00.



Scope 1 and 2 reduction (2022 baseline):





Other



variable pay to be built up within



No change to Policy. CFO

shareholding requirement increased

due to change in variable pay.







Any Executive Director who leaves the

Company to retain the lower of:

• Actual shareholding at the date of



• 

To be retained by a departing Executive



No change to Policy. In line with Remuneration Policy.

Malus and Clawback

Clawback and malus provisions enable

variable remuneration to be reclaimed

under the following circumstances:

material misstatements of results or







breach of our Code of Business Ethics.

Standard clawback provisions on bonus



end of the relevant performance period.

No change to Policy. In line with Remuneration Policy

Non-executive fees



commitments for the role.



Directors is reviewed annually.

The fee structure was reviewed in



market practice and changes were

approved to take effect from 1 April

2023 to maintain fees at close to

median level.

 

 

Senior Independent Director £13,000

 

(Audit and Risk and

Remuneration)

Workforce

Engagement Director £12,000

Travel supplement

 

Spectris plc Annual Report and Accounts 2022

Directors’ Remuneration Report

Andrew Heath

£2,206,056

2021 £1,404,337

Derek Harding

£1, 574,756

2021: £800,940

2022 Remuneration at a Glance

Business performance



momentum in the business and an order book



making further progress in 2023 towards our

medium term performance objectives,

compounding growth through the cycle,

expanding margins and making Spectris a leading

sustainable business.

Key statistic highlights

• 

• 

• 

• Increasing investment in our R&D programmes



• Sale of Omega completed in July for £418 million.

• £190 million of £300 million share buyback

programme completed.

• 

consistent dividend growth.

2022 Annual Bonus Plan

Performance dimensions

(% weighting) Outcome

 

Adjusted cash conversion (20%) 8.8/20

Strategic and operational (20%) –

Andrew Heath

Derek Harding



17.0/20

Total

Andrew Heath

Derek Harding

78.4/100

79.0/100

Annual Bonus Plan outcome

Andrew Heath £807, 528

Derek Harding £498,453

2020 Long Term Incentive Plan (‘LTIP’)

Performance conditions

(% weighting of max award)

Outcome

(% of maximum award

EPS (35.7%) 29.3%

ROGCE (35.7%) 35.7%

 0.0% (estimated)





Total 65.0%

LTIP Outcome

Estimated

vesting value

Andrew Heath 

Derek Harding 

Performance outcomes Outcomes scenarios

Andrew Heath

£’000

Derek Harding

£’000

100%

38%

24%

22%

18%

25%

27%

51%

21%

25%

50%

61%

4,757

3,251

3,795

841

2,181

Basic Target Maximum Maximum

growth*

Actual

100% 39%

40%

21%

23% 18% 25%

24%

53%

19%

21%

54%

63%

3,349

2,352

2,642

597

1,519

Basic Target Maximum Maximum

growth*

Actual



Key

 

Annual Bonus

 

Each coloured bar shows the percentage of the total comprised by each of the parts

Total remuneration

Andrew Heath

1  

2  

3  

4  

Derek Harding

1  

2  

3  

4  

2022 dividend per share

75.4p

2022 adjusted cash conversion (bonus outcome)

79

£3,250,430

2021: £2,010,233

£2,352,294



Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Directors’ Remuneration Report







of the Report together with the Remuneration Committee Chairman’s Statement, Overview









Executive Directors’ remuneration





as follows:

£’000

Base

salary

Taxable



Pension-



Fixed Pay

and



(sub-total)

Annual

Bonus

LTIP

All-

employee

share plans

Variable

remuneration

(sub-total) Total

Andrew Heath 2022 673 16 135 824 808 1,619 – 2,427 3,251

2021  17 125  925 318 – 1,243 2,010

Derek Harding 2022 501 16 75 592 498 1,261 – 1,759 2,351

2021  17 73  598 248 –  1,422

 



provisions although no further performance conditions are attached to them. Full details of the nominal cost



the deferred element of the Executive Directors’ 2021 bonus entitlement.



for 2021 and 2022 can be found on pages 91 and 93.

• 







the total award vested for both Executive Directors.

• 



was no share price appreciation for the 2019 PSP award.



A. Salary (audited)









expenses insurance (including family cover) and life and disability cover.



Executive Director

Car and fuel

allowances

Medical/

healthcare

cover

Total

Andrew Heath  1,311 16,476

Derek Harding  1,311 16,476









of base salary to align with the terms applicable to the majority of the UK wider workforce.

Due to the pension lifetime allowance and the maximum annual pension contribution

allowance, the Executive Directors are entitled, at their option, to a taxable salary supplement in

lieu of some or all of such pension contributions. Both Executive Directors have chosen this

option and each receives a cash payment in lieu of participation in a Spectris pension scheme.



Remuneration for FY2022

Spectris plc Annual Report and Accounts 2022

Directors’ Remuneration Report

D. 2022 Annual bonus outcome (audited)

















used in determining the level of bonus payable.

Maximum

bonus

opportunity

(% of salary)

Bonus

performance

conditions

(% of

maximum

bonus

opportunity)



(% of

salary)

On-target

(% of

salary)

Maximum

(% of

salary)

Actual Group

performance/

assessment of

personal

objective

performance

Payout

Percentage

maximum

bonus

Andrew

Heath

(Salary –



150% Adj.

Operating





0% 45% 90% 79.7% 547,818 53.2%

Adj. Cash

Conversion

(20%)

0% 15% 30% 13.2% 90,708 8.8%

Strategic

Objectives

(20%)

0% 15% 30%   

Total 0% 75% 150% 117. 5% 807,528 78.4%

Derek

Harding

(Salary –

£505,000)

125% Adj.

Operating



0% 37.5% 75%   53.2%

Adj. Cash

Conversion

(20%)

0% 12.5% 25% 11.0%  8.8%

Strategic

Objectives

(20%)

0% 12.5% 25% 21.3% 107,313 17.0%

Total 0% 62.5% 125% 98.7% 498,453 79.0%

 

Remuneration Policy.

Bonus performance measures



Bonus targets



(0% of max)

Target

(50% of max)

Maximum

(100% of max) Actual

   £212.9m 

Cash conversion 70% 80% 90% 78.8%

1. 2022 bonus targets and actual results are prepared and calculated on standard FX rates so that the bonus outturn

was not impacted (positively or negatively) by exchange rate movements during the bonus year.



the Executive Directors.



any items should be excluded because it gives a distorted view of performance.





As Dytran Instruments Inc. was acquired in September 2022, the Group’s actual operating







support customer demand and production schedules, a decision was taken to forward

purchase key components and inventory. While this policy has been successful in supporting

our customers, it has resulted in a lower cash conversion result than would have otherwise

been the case.







change in purchase opportunity.



Cash Conversion metrics.

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE







cover a range of the Company’s targeted strategic priorities. Each priority is assigned an





Directors and performance against them are summarised in the table below.

As outlined in last year’s Remuneration report, and in line with the treatment of the wider

employee population, the Committee reviewed the Executive Directors’ performance against



and operational objectives, considering not only what was achieved, but how it was achieved.

Andrew Heath

% of salary

target Performance summary

% bonus

awarded

• Grow the

business

8% Successful refresh of the Group's Strategy with the launch

of the Group's Strategy for Sustainable Growth. A strong

emphasis on building out the Group’s Purpose, with a broad

focus on sustainability, our key growth markets and the

investments required to build a world-class business.

Communicated compelling strategy at Capital Markets Day

with strong positive feedback from shareholders.

• Customer 4% On-time delivery improvements budgeted for in 2022 were

not achieved due to supply constraints.

• Portfolio

strategy

5% Successfully executed the divestment of Omega

Engineering. Led a compelling bid for Oxford Instruments

which was hindered by external events.

• Operating

leverage

5% Achieved robust operating leverage, but below target.

Developed the Group’s organisational design to support the

Group’s strategic ambitions.

• Employee

Engagement

and leadership

4% 



Developed and deployed a robust roadmap to build the

Group's approach to inclusion and belonging.

Strengthened business leadership in Red Lion and

Servomex and made good progress in building succession

pipeline.

• ESG 4% Delivered a 21.3% reduction in in-year Scope 1 and 2

emissions and developed the Group's Net Zero Roadmap

moving from estimated to actual data at Red Lion, PMS and

Servomex.

Total 30% 25%

Derek Harding

% of salary

target Performance summary

% of bonus

awarded

• Facilitate a

detailed

understanding

of the Group’s

target operating

model and cost

base. To ensure

a clear and

sustainable path

to increased

operating

margins

7% Achieved and build a new reporting model for the

Group. Deployment delayed until early 2023.



on target operating model.

• Oversee a



investment in

our IT capability

4% Successfully led the ERP transformation project with

appropriate governance and communication

structure in place.

Group consolidation system to be deployed in 2023.

• Strengthen Risk

Management &

Control

5% Delivered the continued improvement of the Group’s

controls environment, including the further

development of the Group’s risk management

structure and internal controls processes.

• Strengthen

Investor

Relations and

the leadership

of Audit

5% Delivered a strong Capital Markets Day and



strategy and performance targets to underpin the

strategy.

Effectively managed the outsourcing of the Group’s

Internal Audit Function to PwC.

• 

improvement

on employee

engagement

scores in the

Finance

function





Provided effective support and guidance to the

development of the Group’s approach to inclusion

and belonging, including leading the launch of the

inclusion roadmap at the Group’s leadership

conference.

Total 25% 21%

Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

E. Long Term Incentive Plan (LTIP')/

Performance Share Plan (‘PSP’) (audited)

PSP awards made under the Spectris

Performance Share Plan (‘PSP’) to the

Executive Directors were structured so that















was made in respect of the Group EPS and



of grant in respect of the TSR measure)



TSR performance condition is measured

independently by Aon Hewitt (‘Aon’). A

holding period of two years applies to all

awards following vesting.

F: All-employee share plans (audited)













Payments to past Directors (audited)





PSP awards vested in March 2022 (audited)





Performance

condition Weighting



(20% vesting)

Maximum

(100% vesting)

Actual

Percentage weighted

performance condition vested

Percentage of total

award vested

Group EPS One-third CPI + 5% c.p.a. CPI + 11% c.p.a. or above CPI – 1.7% c.p.a. 0.0% 0.0%

TSR One-third Median Upper quintile or above

Actual – 48.8%

Median – 15.5%

UQ – 71.3%  25.4%

EP One-third £139.8m   0.0% 0.0%

Total 25.4%

 

 



outcome.

Executive Director

Total number

of shares subject

to PSP option at

date of grant

Face value

at date

of grant

Vesting

percentage of

total award

Vested

award

Reinvested

Dividend

Total

Vested

Award

Share price on

vesting date

(7 March 2022)

Vesting

value

Share price

appreciation as

a % of the total

vested award value

Andrew Heath 45,710 £1,220,000 25.4%  858 12,466 2,557p £318,175 (4)%

Derek Harding 35,593 £949,977 25.4% 9,039  9,707 2,557p £247,756 (4)%

 

 



Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Directors’ Remuneration Report

Remuneration for FY2022 continued

LTIP awards vesting in March 2023 (audited)





(‘ROGCE’) performance conditions. A multiplier (up to a maximum of 1.4 times) will apply to

the base award vesting level but only on achieving stretching absolute and relative Total

Shareholder Return (‘TSR’) targets.











• 



be appropriate.

• 

moderate in the context of the strong performance of the business over the performance



• 







include a windfall gain that resulted in excess value being delivered to the Executive Directors.



vesting position for the TSR Multiplier (based on Aon’s interim report as at 31 December 2022)

are provided below:

Performance

condition

Award

level

(% of salary)  Maximum Actual

Actual/

estimated

percentage

vesting

Actual/

estimated

percentage of

total vested

award

EPS 100% 4% p.a. 10% p.a. 

81.9% 29.3%

ROGCE 100% 13.7%

(2019 ROGCE +1%)

15.7%

(2019 ROGCE+3%)



100.0% 35.7%

TSR

Multiplier

80%

(Up to 1.4X

multiplier)

Multiplier Absolute TSR Relative

TSR Gateway

Estimated

TSR

0.0%

(1.0X multiplier)

0.0%

1.0X 8% p.a. or less Median or

above

Absolute:



Relative:

Above

Upper

Quartile

1.0X to 1.2X 8% –10% p.a.

1.2X 10% p.a.

1.2X to 1.4X 10% – 15% p.a. Upper Quartile

or above

1.4X 15% p.a.

Total 280% Estimated total vesting 65.0%

 

• In order to account for material business divestments which occurred with more than one year remaining of the



base performance condition and outcomes have been adjusted to remove the impact of the disposed entities.

• In order to account for material business divestments which occurred with less than one year remaining





divested business.

Spectris plc Annual Report and Accounts 2022

Directors’ Remuneration Report

Remuneration for FY2022 continued







As at

31 December 2019

pence

As at

31 December 2022

pence

Adjusted EPS (reported)  159.9p

Adjustments relating to disposals

(BTG, EMS, Millbrook, BK Vibro, ESG and NDCT) (27.7p)

Adjustments relating to disposal of Omega 20.0p

Adjusted EPS (excluding disposals) 140.3p 179.9p

Compound annual growth in EPS 8.64%





in the 2021 gross capital employed and is not included in the 2022 closing balance gross capital employed due to

the disposal. As a result the average gross capital employed is skewed due to Omega. To ensure an equitable



approach was agreed by the Committee in December 2021, and is a consistent approach to prior years and prior





31 December 2022

£m

Average gross capital employed (reported) 1,473.4

 222.4

 14.0

 236.4

ROGCE 16.0%

 

based on the position as at 31 December 2022.



Executive

Director

Maximum

vesting

opportunity

under LTIP

option

Face

value of

maximum

LTIP

award

Estimated

vesting % of

maximum

award

Estimated

number of

vesting

Estimated

reinvested

dividend

Estimated

total

number of

vesting

Year-end

three-

month

average

share price

Estimated

vesting

value

Estimated

share price

appreciation

as a % of

vested value

Andrew

Heath  £1,707,972  49,555  53,182 3,049.43p  27%

Derek

Harding 59,395 £1,329,973  38,587 2,824 41,411 3,049.43p  27%

 

 



 





 









sold to meet income tax and national insurance contributions due on exercise, at the Director’s

discretion, and the net balance of shares transferred to the individual. Awards lapse if they do

not vest on the third anniversary of their award.

Deferred Bonus Plan (‘DBP’) awards granted during 2022 (audited)





remain subject to continued employment conditions as well as malus and clawback provisions

although no further performance conditions apply.



Bonus entitlement and calculated according to the average of the closing share price over the



Director Exercise price

Number of shares under

DBP share option

Face value of DBP share

option at date of grant

Andrew Heath 5p 17,4 07 

Derek Harding 5p 11,249 £298,998

 



Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



LTIP awards granted during 2022 (audited)



are subject to the performance conditions detailed below.

Director

Exercise

price

Number of shares under

Base award

(% of salary)

Face value of Base

award at date of grant

(£)

Andrew Heath 5p 

(200% of salary)

£1,259,015

Derek Harding 5p 

(200% of salary)

£980,377

2022 LTIP base award performance conditions

Condition

% of Base award that vests Performance Metric

Performance

Period

Adjusted

EPS Growth

(50% of base

award)

0% Less than 4%

1 Jan 2022

31 Dec 2024

10% 4%

10% to 50%

(straight-line pro-rata basis)

Between

4% and 10%

50% 10% or more

Return on Gross

Capital Employed

(‘ROGCE’)

(50% of base

award)

0% Less than 1% above 2021 ROGCE

1 Jan 2022

31 Dec 2024

10% 1% above 2021 ROGCE

10% to 50% (straight-line

pro-rata basis)

Between 1% and 3% above 2021

ROGCE

50% 3% or more above 2021 ROGCE

 



2. A holding period of two years applies to all awards following vesting.







prior to the date of grant. A multiplier (up to a maximum of 1.4 times) will apply to the base

award vesting level but only on achieving stretching absolute and relative Total Shareholder

Return (‘TSR’) targets.



achievement against the growth condition is presented to and approved by the Committee.

ROGCE is obtained from the audited Financial Statements and is a comprehensive measure of

the effectiveness of all capital deployed by the Group and supports the Group’s key strategic



will monitor outcomes for the EPS and ROGCE measures to ensure that they achieve the

original objectives and may adjust the vesting accordingly. Any exercise of discretion will be



Maximum

TSR

Multiplier

TSR Multiplier 0.4x maximum

additional share opportunity

(shares)

Maximum Opportunity

Base award +

TSR Multiplier (shares)

Face value of Maximum

award at date of grant

(£)

1.4 X

base award



(80% of salary)



(280% of salary)



14,753

(80% of salary)



(280% of salary)

£1,372,511

2022 LTIP TSR Multiplier performance conditions

TSR Multiplier

Absolute TSR

Growth Targets

Relative TSR gateway –assessed against FTSE

250 index (excluding investment trusts)

Performance

Period

1.0 X 8% p.a. or less

Median

or above

17 March 2022

17 March 2025

Between

1.0 X and 1.2 X

Between

8% and 10% p.a.

1.2 X 10% p.a.

Between

1.2 X and 1.4 X

Between

10% and 15% p.a.

Upper quartile

or above

1.4 X 15% p.a. or more









Performance

Level

EPS

Vesting

ROGCE

Vesting

Base award

Vesting

TSR Multiplier

factor

Overall Vesting (as

% of base award)

 10% + 10% = 20% x 1.0 = 20%

Maximum 50% + 50% = 100% x 1.4 = 140%

Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

Total shareholder return performance







Historical Chief Executive remuneration





year as a percentage of the potential maximum.

2013 2014 2015  2017 2018 2018 2019 2020 2021 2022

John

O’Higgins

John

O’Higgins

John

O’Higgins

John

O’Higgins

John

O’Higgins

John

O’Higgins

Andrew

Heath

Andrew

Heath

Andrew

Heath

Andrew

Heath

Andrew

Heath

 2,172 1,122 729 1,388  2,253

324

 1,404 2,010

3,251

Annual bonus (% of maximum) 20% 18% 0%

90% 80% 54%  45% 40% 98% 78%

PSP vesting (% of maximum) 100% 28% 0% 0% 10%  N/A N/A 31% 25%



1. Bonus entitlement waived.

 

 

 

100

150

200

250

Dec-22Dec-21Dec-20Dec-19Dec-18Dec-17Dec-16Dec-15Dec-14Dec-13Dec-12

Value (£) (rebased)

Spectris FTSE 250 (excluding investment trusts) Source: FactSet

Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Percentage change in remuneration of the Directors

















distortion arising from currency and cost of living differences in other geographies in which

Spectris operates.

% change 2021–2022 % change 2020–2021

Executive Directors Salary /Fees



Annual

bonus

Salary /Fees 

Annual

bonus

Andrew Heath 9.1% (3.6%) (12.7%) 3.2% (0.5%) 152.8%

Derek Harding 3.0% (3.6%) (16.7%) 3.2% (0.5%) 151.8%

Chairman and

Non-executive

Directors

Mark Williamson 3.0% n/a n/a 5.5% n/a n/a

Ravi Gopinath 2.4% n/a n/a n/a n/a n/a

Alison Henwood 3.0% n/a n/a n/a n/a n/a

Ulf Quellmann 2.4% n/a n/a 4.3% n/a n/a

Bill Seeger 1.8% n/a n/a 7.8% n/a n/a

Cathy Turner 2.4% n/a n/a 10.8% n/a n/a

Kjersti Wiklund 2.5% n/a n/a 11.1% n/a n/a

Spectris UK-based

employees 6.2% 20.5% (4.1%) 7.0% 0.3% 120.3%

 





part was approved by shareholders as part of the implementation vote on the 2022 Remuneration Report.

 





 





it does for the Executive Directors.

CEO pay ratios





remuneration of Group UK employees.

Financial year Method

25th percentile pay ratio

(lower quartile)

50th percentile pay ratio

(median)

75th percentile pay ratio

(upper quartile)

31 December 2019 Option A 40:1 30:1 21:1

31 December 2020 Option A 47:1  25:1

31 December 2021

Option A  45:1 32:1

31 December 2022 Option A 96:1 70:1 49:1





table and notes below.

Financial year

No. of UK

employees Remuneration

Chief

Executive

25th percentile

employee

(lower quartile)

50th percentile

employee

(median)

75th percentile

employee

(upper quartile)

31 December

2021 1,331 Base salary 

£30,000

FTE base salary

£40,800

FTE base salary

£55,378

FTE base salary

Total

remuneration

£3,250,430

STFR

£33,712

total FTE



total FTE



total FTE

 



 





level as the Chief Executive. Given the complexity of the calculations, such estimated values will not be restated











was chosen as it is considered to be the most statistically accurate way to identify the best









with our pay, reward and progression policies for UK employees. Roles are regularly benchmarked



Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

















highlights the greater volatility in the Chief Executive’s STFR which has a greater emphasis on



with shareholder interests.







policies and practices for our workforce and consideration of shareholders and other stakeholder

views as part of designing the Remuneration Policy and its operation for the Executive Directors.



reward and progression policies across all of the Company’s employees.

Relative importance of spend on pay





payments between the years ended 31 December 2021 and 31 December 2022. Total employee





2022

£m

2021

£m % change

Total employees pay

514.0 484.0 

Dividends paid during the year

78.6 79.0 (0.5%)

Share buyback 191.0 201.3 (5.1%)



1,3

219.7 184.7 18.9%

 

announcement and completion of Omega disposal during 2022 in line with the reporting requirements under



 

Capital caused by the share buyback programme.

 



Non-executive Directors’ remuneration

Chairman and Non-executive Directors’ fees



out below:

2023

£’000

2022

£’000

2021

£’000

Chairman (all-inclusive fee) 250 239 232

Non-executive Director basic fee  60 58

Senior Independent Director (‘SID’) fee 13 10 10

Chairman of the Audit and Risk Committee 15 14 14

Chairman of the Remuneration Committee 15 14 14

Workforce Engagement Director 12 12 12

Annual travel supplement to be paid to overseas-based

Non-executive Directors

15 15 15

 





 



Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE







year is as follows:

Basic

fees

£’000

Additional

fees

£’000

Taxable

expenses

£’000

Total

£’000

Mark Williamson

Non-executive Chairman 2022 237 – – 237

2021 229 – – 229

Ravi Gopinath

2,3

2022 59 15 – 74

2021 34 1 – 35

Alison Henwood

2022 59 – – 59

2021 19 – – 19

Ulf Quellmann

2022 59 15 – 74

2021 57 4 – 

Bill Seeger

SID, Chairman – Audit and Risk 2022 59 38 – 97

2021 57 23 – 80

Cathy Turner

Chairman – Remuneration 2022 59 14 – 73

2021 57 13 – 70

Kjersti Wiklund

Workforce Engagement Director 2022 59 12 – 71

2021 57 11 – 

 

 



3. Ravi Gopinath, Ulf Quellmann and Bill Seeger (all based overseas) receive an additional annual travel supplement







Directors’ shareholdings and share interests (audited)

Each Executive Director is, subject to personal circumstances, required to build a retained









Both Andrew Heath and Derek Harding (appointed on 3 September 2018 and 1 March 2019





the Company’s shares or not.



persons) on 31 December 2022, is:

Interest in share plans

Director

Ordinary

held on

December

2022

LTIP

(share

options)

PSP/

DBP

(share

options)

SIP

Total

Interests

in shares on

31 December

2022

Total shares

counting

towards

shareholding

requirement

Shareholding

as a % of base

salary on

31 December

2022

Shareholding

requirement

met

Andrew Heath 33,397  43,409 345 274,058  249.2% No

Derek Harding 11,234 153,328 24,977  189,835 24,932 148.3% No

 

conditions attached to them.

 





 





forfeiture rules.

4. Based on shareholding plus the net of UK income tax and NI contribution value of share options held without

performance conditions (see below):

• Andrew Heath’s balance includes 20,183 vested PSP share options that are currently subject to an additional





• 





 

Directors’ shareholding in the SIP

No. of shares held

at 1 January 2022

No. of Partnership

shares purchased

during the year

No. of Matching

shares awarded

during the year Dividend shares

Total No. of shares

held within the

SIP as at

31 December 2022

Andrew Heath   12 8 345

Derek Harding 215  13 7 





opportunity to participate in the SIP on the same terms as other Group UK employees. Under

the SIP, Partnership shares may be purchased each month at market value using gross salary



Partnership shares purchased, the Company will award one free Matching share. All shares are



of the date of award.

Between 1 January and 22 February 2023, Andrew Heath and Derek Harding purchased 9 and

10 Partnership shares respectively and both received 2 free Matching shares through the



Remuneration for FY2022 continued

Directors’ Remuneration Report

Spectris plc Annual Report and Accounts 2022

Directors’ share options (audited)

Director

plan

Date

granted

Performance

period end

date

Expiry

date

Exercise

price

(pence)

Market

value per

share at

date of

award

Face value

at date of

grant (£)

No. of

subject to

options at

1 January

2022

Granted

during

the year

Exercised

during

the year

Lapsed

during

the year

No. of

subject to

options at

31 December

2022

Andrew

Heath PSP

2,5

Sept 2018 Sept 2021 Sept 2028 5 2,378.4 508,312 7,221



182

– – 7,403

Mar 2019 Mar 2022 Mar 2029 5  1,220,000 45,710 1,172

– 34,102 12,780

LTIP

3,5

Mar 2020 Mar 2023 Mar 2030 5 2,239.2 1,707,972  – – – 

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 1,707,975 54,318 – – – 54,318

Mar 2022 Mar 2025 Mar 2032 5   – 



– – 

DBP

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 182,973 5,819 – – – 5,819

Mar 2022 Mar 2025 Mar 2032 5   – 17,407 – – 17,407

Total 189,344 85,074 – 34,102 240,316

Derek

Harding PSP

2,5

Mar 2019 Mar 2022 Mar 2029 5  949,977 35,593



913

–  9,952

LTIP

3,5

Mar 2020 Mar 2023 Mar 2030 5 2,239.2 1,329,973 59,395 – – – 59,395

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 1,329,955  – – – 

Mar 2022 Mar 2025 Mar 2032 5  1,372,511 –  – – 

DBP

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 118,733  – – – 

Mar 2022 Mar 2025 Mar 2032 5  298,998 – 11,249 – – 11,249

Total 141,060 63,799 – 26,554 178,305

 



 





 

Employed (‘ROGCE’) target. A multiplier (up to a maximum of 1.4 times) will apply to the base award vesting level but only on achieving both absolute and relative stretching TSR targets. Each





 

 



 





 



Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE



Dilution limits

In line with best practice, the use of new or treasury shares to satisfy the vesting of awards







Chairman and Non-executive Directors’ interest in shares



Company’s incentive schemes nor are they required to build and retain a minimum







year ended 31 December 2022.

Current Non-executive Director

Shares held at

1 January 2022 (or date of

joining)

Shares held at

31 December 2022

(or date of cessation)

Mark Williamson 17,282 17,282

Ravi Gopinath – –

Alison Henwood – 947

Ulf Quellmann 2,341 2,398

Bill Seeger 3,000 3,000

Cathy Turner  2,660

Kjersti Wiklund – 1,500



Directors between 1 January 2023 and 22 February 2023.

Share price







Directors’ service contracts and letters of appointment



either party, or to summary notice in the event of serious breach of the Director’s obligations,

dishonesty, serious misconduct or other conduct bringing the Company into disrepute. All









Governance Code.



Date of contract Expiry date Notice period

Length of service at

22 February 2023

Executive Director

Andrew Heath 3 Sept 2018 Rolling contract with



12 months 4 years 5 months

Derek Harding 1 Mar 2019 Rolling contract with



12 months 3 years 11 months

Non-executive Director

Mark Williamson  Renewable at each AGM  5 years 9 months

Ravi Gopinath 1 Jun 2021 Renewable at each AGM  1 year 8 months

Alison Henwood 1 Sep 2021 Renewable at each AGM  1 year 5 months

Ulf Quellmann 1 Jan 2015 Renewable at each AGM  8 years 1 month

Bill Seeger 1 Jan 2015 Renewable at each AGM  8 years 1 month

Cathy Turner 1 Sep 2019 Renewable at each AGM  3 years 5 months

Kjersti Wiklund 19 Jan 2017 Renewable at each AGM  

Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

100

External appointments – Executive Directors



appointments held. Such appointments are normally limited to one per Director at any time







Summary of shareholder voting on Directors’ remuneration







table below:

Votes for Votes against Votes withheld

Number % Number % Number

2022 General

Meeting

2023 Directors'

Remuneration Policy

 95.50% 4,077,799 4.50% 38,488

2022 AGM 2021 Directors’

Remuneration Report

 97.28%  2.72% 

Directors’ interest in contracts

No Director had, during the year or at the end of the year, any material interest in any contract of



Loans to Directors

During the year, there were no outstanding loans to any Director.

Directors’ Remuneration Report

Remuneration for FY2022 continued

Spectris plc Annual Report and Accounts 2022

101

STRATEGIC REPORT

GOVERNANCE



Role of the Remuneration Committee



Policy, including the remuneration arrangements for the Chairman, the Executive Directors

and members of the Executive Committee, and for the practical operation of the Policy.









of remuneration for senior management and takes into account workforce remuneration,





of reference for the Remuneration Committee are reviewed annually and are available at

www.spectris.com/corporategovernance.

Committee members and attendees







Committee have the right to attend meetings but other individuals and external advisers



During the year, the Committee also invited Andrew Heath (Chief Executive), Derek Harding

(CFO), Andrew Harvey (Group Human Resources Director) and Rebecca Dunn (Head of

Corporate Affairs) to attend certain meetings to provide advice to the Committee to allow it



being discussed.



remuneration advice during the year from the external advisers appointed to support



Committee activities in 2022



in 2022:

January 2022

• 

relating to the 2021 annual bonus plan.

• 

performance measures and personal objectives

relating to the 2022 Annual Bonus Plan.

• Review of the outcomes of the Committee’s

annual self-evaluation exercise.

February 2022

• Review of Executive Director and Executive

Committee salaries and Chairman’s fee.

• Agreement of Executive Directors’ 2022 bonus

arrangements, target performance measures and

personal objectives.

• Review and approval of incentive outcomes for

the 2019 Performance Share Plan (‘PSP’).

• Review and approval of 2022 LTIP grant levels and

target range for performance measures.

• Review and approval of the 2021 Directors’

Remuneration Report.

June 2022

• Review of external market practice and investor

feedback on current remuneration structure.

• Review of potential structures for 2023

Remuneration Policy with the Group's external

remuneration adviser.

July 2022

• Consideration and approval of interim LTIP

awards for new joiners and promotions below

Board level.

• Agreement for the treatment of share awards

granted to Omega employees on the divestment

of the Omega business from the Spectris Group.

• Review of emerging market practice on

remuneration matters, led by the Committee’s

external remuneration adviser.

• Review of the planned structure of the Group's 2023

Remuneration Policy.

December 2022

• A review of the likely formulaic outcomes of the

2022 Bonus and 2020 LTIP awards and a

discussion of the need for the Committee to

consider any upward or downward discretion in

relation to those likely outcomes.

• Review of the wider external remuneration

landscape, including investor body guidelines on

workforce pay and windfall gains.

• Review of the Committee’s Terms of Reference.

Directors’ Remuneration Report

Spectris plc Annual Report and Accounts 2022

102

In line with the requirements of the UK Corporate Governance Code to include explanation of the Company’s approach to investing in and rewarding its workforce, some of the work that





Stakeholder Engagement

Values and culture in remuneration





the foundation for the operational and strategic targets for the Executive Directors and

Executive Committee members for 2022. In assessing performance against these targets, the



engagement survey was also used to obtain feedback from the workforce on remuneration

and this will continue in future surveys.

Stakeholder views













strategies for supporting employees through the cost of living challenges present in key



balanced the interests of all stakeholders. Careful consideration has also been given by the

Committee to the guidance issued by investors and investor bodies on the management of



Employee share ownership

Spectris is a proud advocate of employee share ownership. Due to the Group’s decentralised

structure, particular importance is placed on aligning management in our businesses with the



business to support the alignment of their interests with shareholders. In the UK, the Group





under the SIP, the Company awards one free Matching share.

Directors’ Remuneration Report

Spectris plc Annual Report and Accounts 2022

103

STRATEGIC REPORT

GOVERNANCE



Gender pay gap reporting



gender pay gap data. However, the Committee considers the issue of gender pay to be







Committee elected to use the data collated for the CEO pay ratio to produce a consistent

gender pay gap disclosure which allows the Committee to analyse both key metrics from one

source of data.





for doing the same job and that the imbalance in the number of male and female employees in

similar roles, in the composition of the UK workforce, continues to drive our gender pay gap.



Committee and there have been early signs of it reducing. For example, the percentage of



Non-Management Management Total

Median Mean Median Mean Median Mean

Gender pay gap 18.4%   41.2%  21.7%

Bonus gap  18.8%  53.1%  37.2%

Male Female Male Female Male Female

% receiving a bonus 97.8%  100.0% 100.0% 97.9% 







in 2013, 2018 and 2019 and the provisions of the 2018 UK Corporate Governance Code.

Advisers to the Committee





Russell King, the then Committee Chairman. During 2022, PwC has provided advisory support to

the Committee on various aspects of the Directors’ remuneration, including:

• advice on emerging external market practice and stakeholder expectations relating to the



• 

• advice on the interpretation of investor body guidelines concerning remuneration outcomes.

PwC reports directly to the Committee Chairman. During 2022, PwC also provided certain

project advisory and tax services to the Company.



on the Company’s share plans and TSR performance calculations in relation to the Company’s







Both PwC and Aon are members of the Remuneration Consultants Group and adhere to its

Code of Conduct.





advice during 2022.

Annual performance evaluation





regarding the process followed are set out on page 70. Following this review and the feedback

received, the Committee considered that it had operated effectively during the year.

2023 Remuneration Committee workplan



• 

• 

• monitoring of the Group’s Remuneration Policy against the Group’s strategy, market practice,

changes in the external governance environment and investor guidance.

By order of the Board

Cathy Turner

Chairman of the Remuneration Committee

22 February 2023

Directors’ Remuneration Report

Role of the Remuneration Committee continued

Spectris plc Annual Report and Accounts 2022

104

Directors’ Report









Overview of information required to be disclosed















Disclosure Reported in Page reference

Acquisitions and disposals Strategic Report Page 31

Articles of Association Directors’ Report Page 106

Annual General Meeting Directors’ Report Page 106

Appointment and removal of Directors Governance Page 76

Auditors’ re-appointment and remuneration Directors’ Report Page 83

Authority to allot shares Directors’ Report Page 107

Business model Strategic Report Pages 16 and 17

Branches Directors’ Report Page 106

Change of control Directors’ Report Page 106

Community and charitable giving Strategic Report Pages 60 and 61

Corporate governance Governance Pages 62 to 107

 Directors’ Report Page 106

Directors’ details Governance Pages 64 and 65

Directors’ indemnity Directors’ Report Page 106

Directors’ remuneration and interest Directors’ Report Page 106

Disclosure Reported in Page reference

Directors’ responsibility statement Directors’ Report Page 108

Disclosure of information to auditor Directors’ Report Page 107

Diversity, equality and inclusion Strategic Report Page 44

Employee engagement Strategic Report

Governance

Pages 42 to 44

and 71 to 73

Employee equal opportunities Strategic Report Page 44

Employee share plans Directors’ Report Page 106

Employees with disabilities Strategic Report Page 44

Financial instruments Directors’ Report Page 106

Future developments and strategic priorities Chief Executive Review Pages 8 to 13

Going concern Directors’ Report Page 106

Internal control and risk management systems Governance Page 81

 Strategic Report Page 59

Ongoing director training and development Governance Page 70

Political donations Directors’ Report Page 106

Post balance sheet events Directors’ Report Page 106

Powers of Directors Directors’ Report Page 106

Principal risks and risk management Strategic Report Pages 36 to 38

Purchase of own shares Directors’ Report Page 107

Research and development activities Strategic Report Page 6 – 7

Results and dividends Directors’ Report Page 106

Rights and obligations attaching to shares including

restrictions on transfer of shares and voting rights

Directors’ Report Page 107

Section 172 statement Strategic Report

Governance

Page 5

Pages 68 and 69

Share capital Directors’ Report Page 107

Stakeholder engagement Governance Pages 68 and 69

Streamlined Energy and Carbon disclosures Strategic Report Pages 50 and 51

Substantial share interests Directors’ Report Page 107

Treasury shares Director’s Report Page 107

Viability Statement Strategic Report Page 39



GOVERNANCE



Spectris plc

105

Directors’ Report

Results and dividends 



amounts to £222.4 million (2021: £189.6 million).

An interim dividend of 24.1 pence per share was paid on 11 November





ended 31 December 2022. Together with the interim dividend paid in



total dividends for the year ended 31 December 2022 will amount to

75.4 pence per share.

Dividend details are given in Note 8 to the Consolidated Financial

Statements on page 134.



dividend will be paid on 30 June 2023 to those shareholders on the

Articles of Association (‘Articles’) 

regarding the Company’s powers to borrow money. Powers relating to

pre-emptive rights, allotment of shares and purchase of the Company’s

own shares are also included in the Articles and such authorities are



Articles also give power to the Board to appoint and remove Directors



following their appointment and for annual re-election at subsequent





website: www.spectris.com.

Annual General Meeting (‘AGM’) It is intended that the 2023 AGM will be held at 3:00pm on 26 May 2023





at www.spectris.com/AnnualGeneralMeeting.

Auditor’s re-appointment and

remuneration



auditor and to authorise the Directors, acting through the Audit & Risk

Committee, to agree the remuneration of the auditor are to be proposed

at the 2023 AGM.

Branches 

branches in a number of different countries in which the business

operates.

Change of control 

upon a change of control of the Group following a takeover, such as

bank loan agreements and Company share plans. None of these are



business of the Group as a whole. It is also possible that funding



would need to be enhanced following a change in control if that



not have any agreements with any Director that would provide for



a takeover bid.

Directors Details of the Directors who served during the year are set out on pages

64 – 65 there have been no changes to the Board during the year.

 







Directors’ remuneration and

interest

Details of Directors’ remuneration and their interest in the Company’s

shares are set out in the Directors’ Remuneration Report on pages 84

to 104.

Indemnity provisions 



third-party indemnity, under the Act, which remains in force. Neither the

Company’s indemnity nor insurance provides cover in the event that an



During the year and at the date of this report, the Company has in place



pension plan.

Directors’ powers 

exercise all the powers of the Company subject to the Articles and the Act.

Employee share plans Details of employee share plans are set out in Note 22 to the

Consolidated Financial Statements on page 148 to 151.

Financial instruments 



Statements on pages 156 to 158.

Going concern and Viability

Statement



the Board has a reasonable expectation that the Group has adequate

resources to continue in operational existence for at least 12 months

following the signing of the accounts. For this reason, it continues to

adopt the going concern basis in preparing the Group’s accounts.



Political donations 



Post balance sheet events None.

Spectris plc

106

Purchase of own shares 

purchase in the market ordinary shares with a nominal value of 5 pence

each up to an amount not exceeding 10% of the Company’s issued share

capital, as permitted under the Company’s Articles. During the year

ended 31 December 2022, 6,439,493 ordinary shares were repurchased

and cancelled by the Group, for an average price of 2,948.00 pence per

share, as part of the £300 million share buyback programme announced





launched as a result of our enhanced balance sheet, projections for



for £150 million was launched pursuant to the authority granted by the

Company's shareholders at the 2021 AGM, and the further tranche of

£150 million was launched, pursuant to the authority granted by the





standard authority is renewable annually and the Directors will seek to

renew this authority at the 2023 AGM.

Related party transactions Details of related party transactions are set out in Note 31 to the Financial

Statements on page 161.

Share capital 

each: each share (with the exception of those held by the Company in

Treasury) carries the right to one vote at general meetings of the



share capital by special resolution subject to the Articles and applicable



with movements in the Company’s issued share capital during the year

are shown in Note 21 to the Financial Statements on page 148.

Shareholders’ rights and

obligations attaching to shares



contain provisions governing the ownership and transfer of shares.

All shareholders have equal voting rights with one vote per share and



no restrictions on the transfer of shares or voting rights (under any

agreement or otherwise) beyond those required by applicable law

under the Articles or under any applicable share dealing policy.

Subject to any special rights or restrictions, every shareholder on the



general meeting, will have one vote for every fully-paid share that they

hold. Shareholders may cast votes either personally or by proxy, and a

proxy need not be a shareholder. Details relating to the appointment of

proxies and registration of voting instructions for the 2023 AGM are set

out in the Notice of AGM accompanying this Annual Report.

Substantial shareholders 

of the following holdings in its ordinary shares in accordance with DTR 5:

Shareholding in

Spectris shares

Date of



Percentage of

issued share

capital at date



 8,682,229 01 Jan 2020 7.48%

BlackRock 6,069,049 21 Dec 2020 6.23%

UBS 5,954,961 11 Jan 2021 5.12%

Massachusetts Financial

Services Company

5,178,500 15 Mar 2022 4.67%

Between 31 December 2022 and the date of this report, the Company



shareholders is set out on page 179.

Treasury shares Shares held by the Company in treasury do not have voting rights and are

not eligible to receive dividends.

Disclosures required under





other than in respect of long-term incentive schemes, details of which are

set out in the Directors’ Remuneration Report on pages 84 to 104.

Disclosure of information







• so far as they are each aware, there is no relevant audit information,

which would be needed by the Company’s auditor in connection with

preparing its audit report, of which the Company’s auditor is unaware;

and

• each Director has taken all steps that they ought to have taken as a

Director in order to make themselves aware of any relevant audit

information and to establish that the Company’s auditor is aware of that

information.



Rebecca Dunn







GOVERNANCE



Spectris plc

107











































• 



• 



• 







• 







• 









































Directors’ responsibility statement



• 









• 











• 













Andrew Heath



Derek Harding





Statement of Directors’ responsibilities in respect

of the Annual Report and the Financial Statements

Spectris plc

108

Independent auditor’s

report to the members

of Spectris plc



1. Opinion

In our opinion:

• Spectris plc







• 



• 





• 





• the Consolidated Income Statement;

• the Consolidated Statement of Comprehensive Income;

• the Consolidated and Parent Company Statements of Financial Position;

• the Consolidated and Parent Company Statements of Changes in Equity;

• 

• the Consolidated Notes 1 to 33 and Parent Company Notes 1 to 14.













2. Basis for opinion





















or the Parent Company.



basis for our opinion.

3. Summary of our audit approach

Key audit

matters



• Revenue recognition

 



continuing operations.

 





















• 

intangible asset arising from the acquisition of Concurrent Real Time as a





• 











Spectris plc

109



4. Conclusions relating to going concern









• 

repayment terms and covenants;

• challenging the assumptions used in the forecasts by reference to historical performance,

trading run rate, and other supporting evidence, such as business disposal agreements and

the current macroeconomic environment;

• recalculating and assessing the amount of cash and covenant headroom in the forecasts;

and

• 

based on a reduction in revenue and associated margin.















going concern basis of accounting.



described in the relevant sections of this report.

5. Key audit matters









audit strategy, the allocation of resources in the audit; and directing the efforts of the

engagement team.





on these matters.

 









predominantly through the provision of goods and services accounted for





nature of businesses spanning across numerous countries and industries;

understanding the revenue cycles in each business and their respective



our planned audit procedures.











Note 1 to the Consolidated Financial Statements sets out the Group’s

accounting policy for revenue recognition and notes 2 and 3 include details

of the Group’s revenue by segment and timing of revenue recognition.



















• 



tested the operating effectiveness of these relevant controls;

• 







• 



timing of revenue recognition and the evidence of the performance



• Challenged the appropriateness of accrued income recognised by





and

• 





evidence.













Spectris plc

110

6. Our application of materiality

 













 

  











operations

Parent Company materiality



Company’s net assets. In the prior









materiality.











performance measure for

management, investors and the



important to the users of the



portrays the performance of the

business and hence its ability to

pay a return on investment to the



into account the acquisitive nature







performance of the business.



Consolidated Financial Statements





Performance Measures.

We consider net assets to be the









is to act as a holding company.

 







 







materiality



materiality













• 



• 

individually material error; and

• 

in previous audits.

 

















Spectris plc

111

7. An overview of the scope of our audit

 



















• 



• 

• Changes in the legal entity structure and local statutory requirements;

• 

• 







































 









component that govern the general ledger and transaction accounting balances and also





tested the general IT controls for some operating entities using our IT specialists.



















Management determines their response to these observations and continues to monitor their







alongside these developments in the internal control environment.

 



















posed by climate change, they have assessed that climate change does not create any further















Spectris plc

112

 











component audit closing conference calls and held regular remote meetings to interact on any







an effective and consistent approach to component oversight.

8. Other information











conclusion thereon.















We have nothing to report in this regard.

9. Responsibilities of directors









fraud or error.



and the Parent Company’s ability to continue as a going concern, disclosing as applicable,

matters related to going concern and using the going concern basis of accounting unless the



have no realistic alternative but to do so.

 





auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,













our auditor’s report.

11. Extent to which the audit was considered capable of detecting irregularities,

including fraud









 





• the nature of the industry and sector, control environment and business performance



remuneration, bonus levels and performance targets;

• 





• 



– 



– 

actual, suspected or alleged fraud;

– 

regulations;

• 





potential indicators of fraud.







Spectris plc

113

























 











• 





• 

concerning actual and potential litigation and claims;

• 



• 



• 







the normal course of business.







regulations throughout the audit.



12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly





• 



• 

applicable legal requirements.





misstatements in the strategic report or the directors’ report.

13. Corporate Governance Statement















• 



• 



• the directors’ statement on fair, balanced and understandable set out on page 108;

• 



• 

management and internal control systems set out on page 81; and

• 

14. Matters on which we are required to report by exception

 



• 

• 

adequate for our audit have not been received from branches not visited by us; or

• 

and returns.

We have nothing to report in respect of these matters.

Spectris plc

114





of directors’ remuneration have not been made or the part of the directors’ remuneration report



We have nothing to report in respect of these matters.

15. Other matters which we are required to address

 



















16. Use of our report









assume responsibility to anyone other than the company and the company’s members as a















Andrew Bond, FCA (Senior statutory auditor)

For and on behalf of Deloitte LLP













Spectris plc

115

Consolidated Income Statement

For the year ended 31 December 2022

Note

2022

£m

(Restated)

2021

£m

Continuing operations

Revenue 2,3 1,327.4 1,1 63 .0

Cost of sales (5 76 .6) (4 8 7. 5)

 750. 8 675. 5

Indirect production and engineering expenses (114.1) (92. 6)

Sales and marketing expenses (2 33 .0) (222.2)

Administrative expenses (2 3 1.1) (220. 8)

 2,4 17 2.6 139.9

 27 (4 .1) –

 24 0.3 2 26. 5

Financial income 6 1.9 12. 8

Finance costs 6 (1 9. 2) (5 .4)

 151. 5 373. 8

Taxation charge 7 (3 6 .7) (38. 2)

 114 .8 335 .6

 24 28 6 .7 11 .3



 4 01 . 5 34 6.9





Basic 9 1 0 6 .7p 2 95 . 2p

Diluted 9 10 6.0p 294.1p



Basic 9 3 7 3.1p 30 5 .1p

Diluted 9 3 70 .7p 304.0p





(per share) 8 75 .4p 71. 8p

 8 7 2.9p 69. 5p

 









Consolidated Statement of Comprehensive Income

For the year ended 31 December 2022

Note

2022

£m

2021

£m

 4 01. 5 346 .9







 19 13 .1 (1 .8)





value through other comprehensive income 12 5.0 (1. 8)

 7 (4 . 0) 0 .7

14 .1 (2 .9)







 0.4 (1.9)

Foreign exchange movements on translation of overseas operations 10 5 .1 (2 5.1)



 24 (8 6 .7) (4. 8)

 7 – 0. 3

18.8 (31 . 5)

 32.9 (3 4. 4)



 434.4 3 12. 5

Spectris plc

116

Note





£m



premium

£m



earnings

£m



reserve

£m



reserve

£m

Merger

reserve

£m





reserve

£m





£m

 5.8 2 31.4 9 5 7. 6 66.2 (3 . 5) 3 .1 0.7 1, 261. 3

 – – 401 . 5 – – – – 4 01. 5

Other comprehensive income – – 12 .7 19. 8 0.4 – – 32.9

 – – 414 . 2 19. 8 0.4 – – 434.4



 8 – – (78 .6) – – – – (78. 6)

 21 (0. 3) – (191 .0) – – – 0. 3 (191 .0)

 22 – – 10.6 – – – – 10.6

 – – 0. 2 – – – – 0. 2

 5. 5 23 1.4 1,113.0 86 .0 (3 .1) 3.1 1 .0 1,436.9



Note

capital

£m

premium

£m

Retained

earnings

£m

Translation

reserve

£m

Hedging

reserve

£m

Merger

reserve

£m

Capital

redemption

reserve

£m

Total



£m

 6.0 23 1.4 88 2.6 9 8.0 (1. 9) 3 .1 0. 5 1 , 2 1 9.7

 – – 346 .9 – – – – 34 6.9

Other comprehensive loss – – (1. 0) (3 1. 8) (1 .6) – – (34 .4)

 – – 345 .9 (3 1.8) (1 .6) – – 3 12. 5



 8 – – (79.0) – – – – (79.0)

 21 (0. 2) – (201 . 3) – – – 0.2 (201 . 3)

 22 – – 9.1 – – – – 9.1

 – – 0. 3 – – – – 0. 3

 5.8 2 31.4 9 5 7. 6 66.2 (3 . 5) 3 .1 0 .7 1, 261. 3

Consolidated Statement of Changes in Equity

For the year ended 31 December 2022

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

117

Consolidated Statement of Financial Position

As at 31 December 2022

Note

2022

£m

2021

£m

ASSETS



 10 6 0 6.1 631. 5

 10 18 4 .1 169 .1

 11 16 0 .7 15 0.5

Right-of-use assets 11 5 9.7 60. 5

 12 29. 3 24 . 3

 27 18.9 2 3.0

Investment in associate 12 2 .9 –

 27 0.4 –

 14 4.2 –

Deferred tax assets 20 16 .2 21.2

1,082 . 5 1,080.1

Current assets

Inventories 13 263 . 3 1 8 7. 9

Current tax assets 8.6 5 .7

 14 362. 5 315.9

 27 1. 3 0. 3

Cash and cash equivalents 15 228 .1 1 6 7. 8

Assets held for sale 24 1 .7 10.4

865. 5 688.0

 1,948.0 1 ,76 8 .1

LIABILITIES



 16 (0.1) –

 27 (2 . 3) (1. 2)

 17 (37 3 .7) (33 0. 2)

 (14. 9) (1 6. 6)

 (14 . 2) (2 8.1)

Provisions 18 (12. 8) (1 7. 6)

(41 8 .0) (3 93 .7)

 4 4 7. 5 294. 3

Note

2022

£m

2021

£m



 17 (13 .8) (13. 8)

 27 (0. 2) –

 (5 0. 2) (4 9. 3)

Provisions 18 (4. 4) (4 .7)

 19 (8 .9) (2 2. 3)

 20 (1 5.6) (2 3 .0)

(93 .1) (113 .1)

 (5 11.1) (50 6. 8)

Net assets 1,436.9 1 ,26 1. 3

EQUITY

Share capital 21 5.5 5.8

Share premium 23 1.4 231.4

Retained earnings 1,113.0 9 5 7. 6

Translation reserve 21 8 6.0 66. 2

Hedging reserve 21 (3 .1) (3 . 5)

Merger reserve 21 3 .1 3.1

Capital redemption reserve 21 1.0 0 .7

 1,436.9 1 ,26 1. 3





Derek Harding

 

Spectris plc

118

1. Basis of preparation and summary of significant accounting policies

a) Basis of preparation

Basis of accounting

The Consolidated Financial Statements have been prepared on a historical cost basis except for

items that are required by International Financial Reporting Standards (‘IFRS’) to be measured

at fair value, principally certain financial instruments. The Consolidated Financial Statements

have been prepared in accordance with international accounting standards in conformity with

the requirements of the Companies Act 2006 and UK adopted IFRSs.

The Consolidated Financial Statements set out on pages 116 to 166 have been prepared using

consistent accounting policies. In the current year there are no new standards and

interpretations that have had a material impact on the Group’s Statement of Financial Position.

These Consolidated Financial Statements are presented in millions of Sterling rounded to the

nearest one decimal place.

Basis of consolidation

The Consolidated Financial Statements set out the Group’s financial position as at 31 December

2022 and the Group’s financial performance for the year ended 31 December 2022, which

incorporate the Financial Statements of Spectris plc and its subsidiaries and include its share of

the results of associates using the equity method of accounting. The Group recognises its direct

rights to (and its share of) jointly held assets, liabilities, revenues and expenses of joint

operations under the appropriate headings in the Consolidated Financial Statements.

i. Subsidiaries

A subsidiary is an entity that is controlled by another entity, known as the parent or investor

(such as the Group). An investor controls an investee when the investor is exposed, or has rights,

to variable returns from its involvement with the investee and has the ability to affect those

returns through its power over the investee.

The results of subsidiaries acquired or disposed of during the year are consolidated from and up

to the date of change of control. Where necessary, accounting policies of subsidiaries have been

aligned with the policies adopted by the Group. All intra-group transactions including any gains

or losses, balances, income or expenses are eliminated in full on consolidation.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the

difference between the aggregate of the fair value of the consideration received and the

amount of the assets (including goodwill), and liabilities of the subsidiary and any non-

controlling interests.

All inter-company balances and transactions, including unrealised profits arising from intra-

group transactions, have been eliminated. Unrealised losses are eliminated in the same way as

unrealised gains except that they are only eliminated to the extent that there is no evidence

of impairment.

ii. Associates

An associate is an entity over which the Group has significant influence and that is neither a

subsidiary nor an interest in a joint venture. Significant influence is the power to participate in

the financial and operating policy decisions of the investee but is not control or joint control

over those policies. The results and assets and liabilities of associates are incorporated in these

financial statements using the equity method of accounting, except when the investment is

classified as held for sale, in which case it is accounted for in accordance with IFRS 5.

Note

2022

£m

2021

£m

 25 166. 8 191.6

Net income taxes paid (46.8) (32 .2)

 120.0 159.4



 (4 4 . 9) (3 5. 3)



 13.4 –

 – 0.1

 23 (11 4 .7) (135 . 5)

Purchase of investment in associate 12 (2 .9) –

 12 – 38. 3



 24 36 5.4 333.7

Interest received 1.9 0. 5

 218. 2 201. 8



 (1 .4) (3 .4)

 16 (2. 5) (1. 8)

Dividends paid 8 (78. 6) (7 9.0)

 21 (1 91.0) (201. 3)

Net proceeds from exercise of share options 0. 2 0. 3

 16 (13 .9) (13.0)

 16 326 . 2 70.0

 16 (326 .8) (169. 8)

 (2 8 7. 8) (398 .0)

 50. 4 (36 .8)

 1 6 7. 8 210.9

Effect of foreign exchange rate changes 9.9 (6 . 3)

 15 2 2 8.1 1 6 7. 8

Consolidated Statement of Cash Flows

For the year ended 31 December 2022

Notes to the Accounts

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

119

Going concern

In determining the basis of preparation for the Consolidated Financial Statements, the

Directors have considered the Group’s available resources, current business activities and

factors likely to impact on its future development and performance, including the impact of

COVID-19 and Climate Change on the Group, which are described in the Chief Executive’s

Review, Financial Review and Operating Review.

The Group’s business activities, together with factors likely to affect its future development,

performance and financial position, are set out in the Strategic Report on pages 2 to 59.

The financial position of the Group, its cash flows, liquidity position and borrowing facilities are

described in the Financial Review on pages 30 to 33. In addition, note 26 to the Financial

Statements includes the Group’s objectives, policies and processes for managing its capital; its

financial risk management objectives; details of its financial instruments and hedging activities;

and its exposure to credit risk and liquidity risk.

The Group finances its operations from retained earnings and, where appropriate, from

third-party borrowings. Total borrowings as at 31 December 2022 were £0.1 million (2021: £nil).

As at 31 December 2022, the Group had £414.9 million of committed facilities, consisting entirely

of a $500 million multi-currency revolving credit facility (‘RCF’) maturing in July 2025. The RCF

was undrawn at 31 December 2022 (2021: undrawn).

The RCF has a leverage (covenant defined net debt/EBITDA) covenant of up to 3.5x. The Group

regularly monitors its financial position to ensure that it remains within the terms of its banking

covenants. At 31 December 2022, there was net finance income for covenant purposes of

£0.1 million, resulting in the interest cover ratio being n/a (31 December 2021: 67 times). The

minimum covenant interest cover requirement is 3.75 times (covenant defined earnings before

interest, tax and amortisation divided by net finance charges). Leverage (covenant defined

earnings before interest, tax, depreciation, and amortisation divided by net cash) was less than

zero (31 December 2021: less than zero), due to the Group’s net cash position, against a

maximum permitted leverage of 3.5 times.

In addition to the above, at 31 December 2022, the Group had a cash and cash equivalents

balance of £228.1 million. The Group also had various uncommitted facilities and bank overdraft

facilities available. Gross debt was £0.1 million, resulting in a net cash position of £228.0 million,

an increase of £60.2 million from £167.8 million at 31 December 2021.

The Group has prepared and reviewed cash flow forecasts for the period to 31 December 2027,

which reflect forecasted changes in revenue across its business and performed a reverse stress

test of the forecasts to determine the extent of downturn which would result in insufficient

liquidity or a breach of banking covenants. Revenue would have to reduce by 31% over the

period under review for the Group to run out of liquidity headroom. The reverse stress test does

not take into account further mitigating actions which the Group would implement in the

event of a severe and extended revenue decline, such as cancelling the dividend or reducing

capital expenditure. This assessment indicates that the Group can operate within the level of its

current facilities, as set out above, without the need to obtain any new facilities for a period of

not less than 12 months from the date of this report .



Under the equity method, an investment in an associate is recognised initially in the

Consolidated Statement of Financial Position at cost and adjusted thereafter to recognise the

Group’s share of the profit or loss and other comprehensive income of the associate. When the

Group’s share of losses of an associate exceeds the Group’s interest in that associate, the Group

discontinues recognising its share of further losses. Additional losses are recognised only to the

extent that the Group has incurred legal or constructive obligations or made payments on

behalf of the associate or joint venture.

An investment in an associate is accounted for using the equity method from the date on

which the investee becomes an associate. On acquisition of the investment in an associate,

any excess of the cost of the investment over the Group’s share of the net fair value of the

identifiable assets and liabilities of the investee is recognised as goodwill, which is included

within the carrying amount of the investment. Any excess of the Group’s share of the net fair

value of the identifiable assets and liabilities over the cost of the investment, after reassessment,

is recognised immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 36 are applied to determine whether it is necessary to recognise

any impairment loss with respect to the Group’s investment in an associate. When necessary,

the entire carrying amount of the investment (including goodwill) is tested for impairment in

accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of

value in use and fair value less costs of disposal) with its carrying amount. Any impairment

loss recognised is not allocated to any asset, including goodwill that forms part of the

carrying amount of the investment. Any reversal of that impairment loss is recognised in

accordance with IAS 36 to the extent that the recoverable amount of the investment

subsequently increases.

When a Group entity transacts with an associate of the Group, profits and losses resulting from

the transactions with the associate are recognised in the Group’s Consolidated Financial

Statements only to the extent of interests in the associate or joint venture that are not related to

the Group.

iii. Joint operations

Joint arrangements are contractual arrangements which the Group has entered into with one

or more parties to undertake an economic activity that is subject to joint control. Joint control is

the contractually agreed sharing of control over an economic activity and exists only when

decisions relating to the relevant activities require the unanimous consent of the parties sharing

the control. A joint operation is a joint arrangement whereby the parties that have joint control

of the arrangement have rights to the assets, and obligations for the liabilities, relating to the

arrangement. Joint control is the contractually agreed sharing of control of an arrangement,

which exists only when decisions about the relevant activities require unanimous consent of

the parties sharing control. As a result, the Group recognises its interest in the joint operation,

including its share of any assets, liabilities, revenue and expenses of the joint operation. The

Group accounts for the assets, liabilities, revenue and expenses relating to its interest in a joint

operation in accordance with the IFRS Standards applicable to the particular assets, liabilities,

revenue and expenses. When a Group entity transacts with a joint operation in which a Group

entity is a joint operator (such as a purchase of assets), the Group does not recognise its share of

the gains and losses until it resells those assets to a third party.

Notes to the Accounts 

Spectris plc

120

Notes to the Accounts 

Following this assessment, the Board of Directors are satisfied that the Group has sufficient

resources to continue in operation for a period of not less than 12 months from the date

of this report. Accordingly, they continue to adopt the going concern basis in relation to this

conclusion and preparing the Consolidated Financial Statements. There are no key sensitivities

identified in relation to this conclusion. Further information on the going concern of the Group

can be found on page 39 in the Viability Statement.

Climate risks reflected in the Consolidated Financial Statements

The Consolidated Financial Statements have been prepared with full consideration of both

physical and transition risks resulting from climate change, our journey towards achieving our

net zero ambition and in accordance with our Task Force for Climate Change Related Financial

Disclosures (‘TCFD’) report.

In conjunction with our net zero ambition and TCFD report a review has been performed in the

following areas that are deemed most at-risk of being impacted by climate change:

Going concern – The Group has reviewed sensitivities to future cash flows and discount rates

aligned with our principal risks and uncertainties. The review covered sensitivities with respect

to potential loss of revenue, associated profits and cashflows due to Spectris, its customers and/

or its suppliers making different choices in the achievement of net zero objectives, the potential

impact that moving to a more sustainable supply chain may have on profits and cashflows, and

the cashflows of mitigating potential physical risks, such as potential site moves resulting from

increased water levels.

Intangible assets –The Group has assessed future economic benefits, predominantly

technology related to our product portfolio and the transition risk to our scope 1 and 2 net zero

ambitions. This incorporates any known change or potential change from our customers in our

scope 3 ambitions.

Property, plant & equipment, remeasurement of leases and intangible assets – The Group

has reviewed the useful economic life of these non-current assets with respect to the physical

risk of our sites resulting from flooding and the transition to carbon neutrality and has validated

that all of our property, plant and equipment, lease right of use assets and intangible assets

have been checked to ensure that useful economic lives are in line with current and foreseeable

transition plans.

Inventories and associated provision for obsolescence – The Group has performed reviews

taking into account the potential risks and subsequent impact of transitioning our product

range to the use of sustainable raw materials and having considered the support to our

customers and suppliers in achieving their scope 3 ambitions.

For all the aforementioned climate risks, the Group considers that it is too early to foresee any

adjustment to carrying value for the year ended 31 December 2022 and that the sensitivities

used to test going concern adequately cover foreseeable risks.

New standards and interpretations adopted

In the current year there are no new standards and interpretations that have had a material

impact on the Group’s Statement of Financial Position.

New accounting standards and interpretations not yet adopted

At the date of authorisation of these Consolidated Financial Statements, the Group has not

applied the following new and revised IFRS Standards that have been issued but are not yet

effective:

Amendments to IAS 16 Property, plant and equipment – proceeds before intended use

Annual Improvements to IFRS

Standards 2018-2020 Cycle

Amendments to IFRS 1 first-time adoption of international financial

reporting standards, IFRS 9 financial instruments, IFRS 16 leases,

and IAS 41 agriculture

Amendments to IFR S 3 (May 2020) Reference to the conceptual framework

Amendments to IAS 3 7 (May 2020) Onerous contracts – costs of fulfilling a contract

Amendment to IFRS 16 COVID-19-related rent concessions beyond 30 June 2021

IFRS 17 Insurance contracts

Amendments to IFRS 17 IFRS 17

Amendments to IAS 1 Classification of liabilities as current or non-current

Amendments to IAS 1 Classification of liabilities as current or non-current — deferral of

effective date

Amendments to IFRS 4 Extension of the temporary exemption from applying IFRS 9

Amendments to IAS 1 and IFRS

Practice Statement 2

Disclosure of accounting policies

Amendments to IAS 12 Deferred tax related to assets and liabilities arising from a single

transaction

Amendments to IAS 8 Definition of accounting estimates

Amendments to IFRS 17 Initial application of IFRS 17 and IFRS 9 – comparative information

Amendments to IFRS 16 Lease liability in a sale and leaseback

Amendment to IAS 1 Non-current liabilities with covenants

The Directors do not expect that the adoption of the IFRS Standards listed above will have a

material impact on the Consolidated Financial Statements of the Group in future periods.

Significant accounting judgements and estimates

In determining and applying accounting policies, judgement is often required where the

choice of specific policy, assumption or accounting estimate to be followed could materially

affect the reported amounts of assets, liabilities, income and expenses, should it be determined

that a different choice be more appropriate. Estimates and assumptions are reviewed on an

ongoing basis and are based on historical experience and various other factors that are believed

to be reasonable under the circumstances, including the impact of COVID-19 and climate

change on the Group .

Critical accounting judgements

There are no critical accounting judgements at 31 December 2022.

Key sources of estimation uncertainty

Management considers the following to be the sole key source of estimation uncertainty for the

Group at the end of the current reporting period due to the risk of causing a material change to

the carrying amount of assets and liabilities within the next year.

i) Retirement benefit plans

Accounting for retirement benefit plans under IAS 19 (revised) requires an assessment of the

future benefits payable in accordance with actuarial assumptions. The discount rate and rate of 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

121

Notes to the Accounts 

The estimate of recoverable amount requires significant assumptions to be made and is based

on a number of factors, such as the near-term business outlook for the CGU, including both its

operating profit and operating cash flow performance. Where the recoverable amount of the

CGU is less than the carrying amount, an impairment loss is recognised in the Consolidated

Income Statement. Where goodwill forms part of a CGU and part of the operation within that

unit is disposed of, the goodwill associated with the operation disposed of is included

in the carrying amount of the operation when determining the gain or loss on disposal.

Goodwill disposed of in this circumstance is measured on the basis of the relative values of the

operation disposed of and the portion of the CGU retained.

Intangible assets and amortisation

The cost of acquiring software (including associated implementation costs where applicable)

that is not specific to an item of property, plant and equipment is classified as an intangible

asset. The Group only capitalises costs relating to the configuration and customisation of SaaS

arrangements as intangible assets where control of the software exists.

Self-funded research and development costs are charged to the Consolidated Income

Statement in the year in which they are incurred, unless development expenditure meets

certain strict criteria for capitalisation. These criteria include demonstration of the technical

feasibility, intent of completing a new intangible asset that is separable, the ability to measure

reliably the expenditure attributable to the intangible asset during its development phase and

that the asset will generate probable future economic benefits. From the point where

expenditure meets the criteria, development costs are capitalised and amortised over the

useful economic lives of the assets to which they relate.

Intangible assets arising from a business combination that are separable from goodwill are

recognised initially at fair value at the date of acquisition. Other acquired intangible assets

(including software not specific to an item of property, plant and equipment) are initially

recognised at cost (plus any associated implementation costs where applicable).

Subsequent expenditure is capitalised only when it increases the future economic benefits,

otherwise it is expensed as incurred.

Amortisation of intangible assets is charged to administrative expenses in the Consolidated

Income Statement on a straight-line basis over the shorter of the estimated useful economic

life (determined on an asset-by-asset basis) or underlying contractual life. The estimated useful

life and amortisation method are reviewed at the end of each reporting period, with the effect

of any changes in estimate being accounted for on a prospective basis. The estimated useful

lives are as follows:

> software – three to seven years;

> patents, contractual rights and technology – up to 11 years, dependent upon the nature of the

underlying contractual right; and

> customer-related and trade names – three to 20 years, dependent upon the underlying

contractual arrangements and specific circumstances such as customer retention

experience.

An intangible asset is derecognised on disposal, or when no future economic benefits are

expected from use or disposal .

retail price inflation (‘RPI’) assumptions applied in the calculation of plan liabilities, which are set

out in note 19, represent a key source of estimation uncertainty for the Group. Details of the

related sensitivities are set out on page 146 and the accounting policies applied in respect of

retirement benefit plans are set out on page 126.

Climate change is referred to in the Risk Management and Sustainability sections of the

Strategic Report. Spectris is well placed to face this global challenge and, although we

acknowledge the risks to businesses and trade, we do not consider climate change creates any

further key sources of estimation uncertainty at this time.

b) Summary of significant accounting policies

The accounting policies set out below have been applied consistently by Group entities to all

years presented in these Consolidated Financial Statements.

Business combinations and goodwill

Acquisitions of businesses are accounted for using the acquisition method. The consideration

transferred in a business combination is measured at fair value, which is calculated as the sum

of the acquisition-date fair values of assets transferred by the Group and the liabilities incurred

by the Group to the former owners of the acquiree. The identifiable assets acquired, and the

liabilities assumed are recognised at their fair value at the acquisition date.

Transaction costs on a business combination are expensed as incurred in the Consolidated

Income Statement and treated as an adjusting item for the purposes of alternative

performance measures (see appendix to the Consolidated Financial Statements) .

Goodwill represents the excess of the fair value of the purchase consideration for the interests in

subsidiary undertakings over the net fair value to the Group of the identifiable assets, liabilities

and contingent liabilities acquired. Where the fair value of the Group’s share of identifiable net

assets acquired exceeds the fair value of the consideration, the difference is recognised

immediately in the Consolidated Income Statement. Contingent consideration is initially

recognised as a liability with changes to estimates of contingent consideration reflected in

operating profit unless they occur during the 12-month measurement period, in which situation

the amount of goodwill recognised on the acquisition is adjusted if they are the result of

obtaining additional information about facts and circumstances that existed at the acquisition

date. Adjustments to contingent consideration are treated as an adjusting item for the purposes

of alternative performance measures (see appendix to the Consolidated Financial Statements).

Goodwill arising on the acquisition of a business is tested annually for impairment. Goodwill is

not amortised, and any impairment losses are not subsequently reversed. The net book value of

goodwill at the date of transition to IFRS has been treated as deemed cost. On the subsequent

disposal or discontinuance of a previously acquired business, the relevant goodwill is dealt with

in the Consolidated Income Statement except for the goodwill already charged to reserves.

Goodwill is allocated on acquisition to cash generating units (‘CGUs’) that are anticipated to

benefit from the combination. Goodwill is tested for impairment by assessing the recoverable

amount of the CGU to which the goodwill relates and comparing it against the net book value.

This estimate of recoverable amount is determined annually and additionally when there is an

indication that a CGU may be impaired. The Group’s identified CGUs are equivalent to or smaller

than the reportable operating segments in note 2.

Spectris plc

122

Property, plant and equipment and depreciation

Property, plant and equipment is stated at cost less accumulated depreciation and impairment

losses. The cost comprises the purchase price paid and any costs directly attributable to

bringing it into working condition for its intended use. Tangible assets arising from a business

combination are recognised initially at fair value at the date of acquisition.

Depreciation is recognised in the Consolidated Income Statement on a straight-line basis to

write off the cost, less the estimated residual value (which is reviewed annually) of property,

plant and equipment over its estimated useful economic life. Depreciation commences on the

date the assets are available for use within the business and the asset carrying values are

reviewed for impairment when there is an indication that they may be impaired. The

depreciation charge is revised where useful lives are different from those previously estimated,

or where technically obsolete assets are required to be written down. Where parts of an item of

plant and equipment have separate lives, they are accounted for and depreciated as separate

items. Land is not depreciated. Estimated useful lives are as follows:

> freehold and long leasehold property – 20 to 40 years;

> short leasehold property – over the period of the lease; and

> plant and equipment – three to 20 years.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying

assets that take a substantial period of time to get ready for their intended use are capitalised

as part of the cost of the respective asset.

Impairment of property, plant and equipment and intangible assets excluding goodwill

At each reporting date, the Group reviews the carrying amounts of its intangible assets to

determine whether there is any indication that those assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated to determine the

extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs of disposal and value in use. In

assessing value in use, the estimated future cash flows are discounted to their present value

using a pre-tax discount rate that reflects current market assessment of the time value of

money and the risks specific to the asset for which the estimates of future cash flows have not

been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the

carrying amount of the asset is reduced to its recoverable amount. An impairment loss is

recognised immediately in profit or loss.

Leases

The Group assesses whether a contract is or contains a lease, at inception of the contract. The

Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease

arrangements in which it is the lessee, except for short-term leases (defined as leases with a

lease term of 12 months or less) and leases of low value assets. For these leases, the Group

recognises the lease payments as an operating expense on a straight-line basis over the term

of the lease.

The lease liability is initially measured at the present value of the lease payments that are not

paid at the commencement date, discounted by using the rate implicit in the lease. If this rate

cannot be readily determined, the Group uses its incremental borrowing rate. Lease payments

included in the measurement of the lease liability comprise: fixed lease payments (including in

substance fixed payments), less any lease incentives; variable lease payments that depend on

an index or rate, initially measured using the index or rate at the commencement date; the

amount expected to be payable by the lessee under residual value guarantees; the exercise

price of purchase options, if the lessee is reasonably certain to exercise the options; and

payments of penalties for terminating the lease, if the lease term reflects the exercise of an

option to terminate the lease. The lease liability is subsequently measured by increasing the

carrying amount to reflect interest on the lease liability (using the effective interest method)

and by reducing the carrying amount to reflect the lease payments made. The lease liability is

presented as a separate line in the Consolidated Statement of Financial Position.

The right-of-use assets comprise the initial measurement of the corresponding lease liability,

lease payments made at or before the commencement day and any initial direct costs. They are

subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the

underlying asset. Whenever the Group incurs an obligation for costs to dismantle and remove a

leased asset, restore the site on which it is located or restore the underlying asset to the

condition required by the terms and conditions of the lease, a provision is recognised and

measured under IAS 37. The right-of-use assets are presented as a separate line in the

Consolidated Statement of Financial Position.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related

right-of-use asset) whenever: the lease term has changed or there is a change in the

assessment of exercise of a purchase option, in which case the lease liability is re-measured by

discounting the revised lease payments using a revised discount rate; the lease payments

change due to changes in an index or rate or a change in expected payment under a

guaranteed residual value, in which case the lease liability is re-measured by discounting the

revised lease payments using the initial discount rate; or a lease contract is modified, in which

case the lease liability is re-measured by discounting the revised lease payments using a

revised discount rate.

The interest portion of lease payments is presented under financing activities in the

Consolidated Statement of Cash Flows.

Notes to the Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

123

Notes to the Accounts 

Trade and other payables

Trade and other payables principally comprise amounts outstanding for trade purchases and

ongoing costs. These are recognised at the amounts expected to be paid to counterparties and

subsequently held at amortised cost.

Provisions

A provision is recognised in the Consolidated Statement of Financial Position when the Group

has a present legal or constructive obligation as a result of a past event and it is probable that

an outflow of resources, that can be reliably measured, will be required to settle the obligation.

In respect of warranties, a provision is recognised when the underlying products or services are

sold. Provisions are recognised at an amount equal to the best estimate of the expenditure

required to settle the Group’s liability. A contingent liability is disclosed where the existence of

the obligation will only be confirmed by future events or where the amount of the obligation

cannot be measured with reasonable reliability. Contingent assets are not recognised but are

disclosed where an inflow of economic benefit is probable. Obligations arising from

restructuring plans are recognised when detailed formal plans have been established and

when there is a valid expectation that such a plan will be carried out.

Taxation

Tax on the profit or loss for the year comprises both current and deferred tax. Tax is recognised

in the Consolidated Income Statement, except to the extent that it relates to items recognised

either in other comprehensive income or directly in equity, in which case tax is recognised in

the Consolidated Statement of Comprehensive Income or the Consolidated Statement of

Changes in Equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates

enacted or substantively enacted at the Statement of Financial Position date, and any

adjustments to tax payable in respect of prior years. Tax positions are reviewed to assess

whether a provision should be made based on prevailing circumstances. Tax provisions are

included within current taxation liabilities.

Deferred taxation is provided on taxable temporary differences between the carrying amounts

of assets and liabilities in the Financial Statements and their corresponding tax bases. No

provision is made for deferred tax which would become payable on the distribution of retained

profits by overseas subsidiaries where the timing of the reversal of the temporary difference

can be controlled and it is probable that the temporary difference will not reverse in the

foreseeable future. Deferred tax is measured using the tax rates expected to apply when the

asset is realised, or the liability settled based on tax rates enacted or substantively enacted at

the Consolidated Statement of Financial Position date.

Deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition

of an asset or liability unless the related transaction is a business combination or affects tax or

accounting profit.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits

will be available against which the asset can be utilised. Deferred tax assets are reduced to the

extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current

tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity

and the same taxation authority .

Inventories

Inventories and work in progress are carried at the lower of cost and net realisable value.

Inventory acquired as part of business combinations is valued at fair value less cost to sell.

Cost represents direct costs incurred and, where appropriate, production or conversion costs

and other costs to bring the inventory to its existing location and condition. In the case of

manufacturing inventory and work in progress, cost includes an appropriate share of

production overheads based on normal operating capacity. Inventory is accounted for on a

first-in, first-out basis or, in some cases, a weighted-average basis, if deemed more appropriate

for the business. Provisions are made to write down slow-moving, excess and obsolete items to

net realisable value, based on an assessment of technological and market developments and

on an analysis of historical and projected usage with regard to quantities on hand.

Trade and other receivables

Trade and other receivables are carried at original invoice amount (which is considered a

reasonable proxy for fair value) and are subsequently held at amortised cost less provision

for impairment. The provision for impairment of receivables is based on lifetime expected

credit losses. Lifetime expected credit losses are calculated by assessing historical credit

loss experience, adjusted for factors specific to the receivable and operating company.

The movement in the provision is recognised in the Consolidated Income Statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits held on

call or with maturities of less than three months at inception. Bank overdrafts that are repayable

on demand and form an integral part of the Group’s cash management are included as a

component of cash equivalents for the purposes of the Consolidated Statement of Cash Flows.

Assets and liabilities held for sale

Assets, liabilities and disposal groups classified as held for sale are measured at the lower of

carrying amount and fair value less costs to sell.

Assets, liabilities and disposal groups are classified as held for sale if their carrying amount will

be recovered principally through a sale transaction rather than continuing use. This condition is

regarded as met only when the sale is highly probable, and the asset (or disposal group) is

available for immediate sale in its present condition and when management is committed to

the sale which is expected to qualify for recognition as a completed sale within one year from

the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all the

assets and liabilities of that subsidiary are classified as held for sale when the criteria described

above are met, regardless of whether the Group will retain a non-controlling interest in its

former subsidiary after the sale.

When the Group is committed to a sale plan involving disposal of an investment in an associate

or, a portion of an investment in an associate, the investment, or the portion of the investment

in the associate, that will be disposed of is classified as held for sale when the criteria described

above are met. The Group then ceases to apply the equity method in relation to the portion

that is classified as held for sale. Any retained portion of an investment in an associate that has

not been classified as held for sale continues to be accounted for using the equity method.

Spectris plc

124

Additional income taxes that arise from the distribution of intra-group dividends are recognised 

at the same time as the liability to pay the related dividend.

Foreign currency translation

The functional currency for each entity in the Group is determined with reference to the

currency of the primary economic environment in which it operates. Transactions in currencies

other than the functional currency are initially recorded at the functional currency rate ruling at

the date of the transaction. Monetary assets and liabilities denominated in foreign currencies

are retranslated at the rate of exchange ruling at the Consolidated Statement of Financial

Position date. Exchange gains and losses on settlement of foreign currency transactions are

determined using the rate prevailing at the date of the transactions, or the translation of

monetary assets and liabilities at period end exchange rates and are charged/credited to the

Consolidated Income Statement. Non-monetary assets and liabilities denominated in foreign

currencies that are stated at historical cost are translated to the functional currency at the

foreign exchange rate ruling at the date of the transaction.

On consolidation, the Income Statement items of subsidiaries are translated into Sterling at

average rates of exchange. Statement of Financial Position items are translated into Sterling at

year-end exchange rates. Exchange differences on the retranslation are taken to the translation

reserve within equity. Exchange differences on foreign currency borrowings designated as a

hedge of the net investment in a foreign operation are reported in the Consolidated Statement

of Comprehensive Income. All other exchange differences are charged or credited to the

Consolidated Income Statement in the year in which they arise. On disposal of an overseas

subsidiary, any cumulative exchange movements relating to that subsidiary held in the

translation reserve are transferred to the Consolidated Income Statement.

Derivative financial instruments may be purchased to hedge the Group’s exposure to

changes in foreign exchange rates. The accounting policies applied in these circumstances

are described below.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as

assets and liabilities of the foreign entity and translated at the closing rate. Exchange

differences arising are recognised in other comprehensive income.

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at the fair value of consideration received

less directly attributable transaction costs. Subsequent to initial recognition, interest-bearing

borrowings are measured at amortised cost with any difference between cost and redemption

value being recognised in the Consolidated Income Statement over the period of the

borrowings on an effective-interest basis.

Finance costs and financial income

Finance costs comprise the interest payable on borrowings calculated using the effective

interest method, the unwinding of discount factor on lease liabilities and the unwinding of the

discount factor on deferred or contingent consideration. Financial income comprises interest

income on cash and invested funds, together with interest income from the joint venture,

and is recognised in the Consolidated Income Statement as it accrues. The net gain or loss

on retranslation of short-term inter-company loan balances is also presented within net

finance costs.

Financial instruments

Recognition

The Group recognises financial assets and liabilities on its Consolidated Statement of Financial

Position when it becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, and the net amount is reported in the Consolidated

Statement of Financial Position when there is a legally enforceable right to set off the

recognised amounts and there is an intention to settle on a net basis or realise the asset

and settle the liability simultaneously.

Measurement

When financial assets and liabilities are initially recognised, they are measured at fair value,

being the consideration given or received plus directly attributable transaction costs. In

determining estimated fair value, investments are valued at quoted bid prices on the trade

date. When quoted prices on an active market are not available, fair value is determined by

reference to price quotations for similar instruments traded. In determining fair value for

deferred contingent consideration, the fair value is determined by reference to best estimates

of the likely outcome.

Originated loans and receivables are initially recognised in accordance with the policy stated

above and subsequently re-measured at amortised cost using the effective-interest method.

Allowance for impairment is estimated on a case-by-case basis.

The Group uses derivative financial instruments such as forward foreign exchange contracts to

hedge risks associated with foreign exchange fluctuations. These are designated as cash flow

hedges. At the inception of the hedge relationship, the Group documents the relationship

between the hedging instrument and the hedged item, along with its risk management

objectives and its strategy for undertaking various hedge transactions. Furthermore, at the

inception of the hedge and on an ongoing basis, the Group documents whether the hedging

instrument that is used in a hedging relationship is highly effective in offsetting changes in

cash flows of the hedged item.

The effective portion of changes in the fair value of derivatives that are designated and qualify

as cash flow hedges is deferred in equity. The gain or loss relating to the ineffective portion is

recognised immediately in the Consolidated Income Statement.

Amounts deferred in equity are reclassified to the Consolidated Income Statement in the

periods when the hedged item is recognised in the Consolidated Income Statement, in the

same line of the Consolidated Income Statement as the recognised hedged item. However,

when the forecast transaction that is hedged results in the recognition of a non-financial asset

or a non-financial liability, the gains and losses previously deferred in equity are transferred

from equity and included in the initial measurement of the cost of the asset or liability.

When hedge accounting is discontinued any cumulative gain or loss deferred in equity at that

time remains in equity and is recognised when the forecast transaction is ultimately recognised

in the Consolidated Income Statement. When a forecast transaction is no longer expected to

occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the

Consolidated Income Statement.

Notes to the Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

125

Notes to the Accounts 

Employee benefits

The Group operates defined benefit post-retirement benefit plans and defined contribution

pension plans.

Defined benefit plans

The Group’s net obligation recognised in the Consolidated Statement of Financial Position in

respect of defined benefit plans is calculated separately for each plan as the present value of the

plan’s liabilities less the fair value of the plan’s assets. The operating and financing costs of defined

benefit plans are recognised separately in the Consolidated Income Statement. Operating costs

comprise the current service cost, plan administrative expense, any gains or losses on settlement

or curtailments, and past service costs where benefits have vested. Finance items comprise the

unwinding of the discount on the net asset surplus/deficit. Actuarial gains or losses comprising

changes in plans’ liabilities due to experience and changes in actuarial assumptions are

recognised in the Consolidated Statement of Comprehensive Income.

The amount of any pension fund asset recognised in the Consolidated Statement of Financial

Position is limited to any future refunds from the plan or the present value of reductions in

future contributions to the plan.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays

fixed contributions into a separate entity and will have no legal or constructive obligation to pay

further amounts. Obligations for contributions to defined contribution pension plans are

recognised in the Consolidated Income Statement in the periods during which services are

rendered by employees.

In certain countries, the Group participates in industry-wide defined benefit-type pension

arrangements. In such circumstances, it is not possible to determine the amount of any surplus

or deficit attributable to the Group and the pension costs are accounted for as if the

arrangements were defined contribution plans. These are not material to the Group and,

accordingly, no additional disclosures are provided.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are

expensed as the related service is provided. A liability is recognised for the amount expected to

be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or

constructive obligation to pay this amount as a result of past service provided by the employee,

and the obligation can be estimated reliably.

Share-based payments

Certain employees of the Group receive part of their remuneration in the form of share-based

payment transactions, whereby employees render services in exchange for shares or rights

over shares (equity-settled transactions). The cost of equity-settled transactions with

employees is measured at fair value at the date at which they are granted. The fair value of share

awards with market-related vesting conditions is determined by an external consultant and the

fair value at the grant date is expensed on a straight-line basis over the vesting period based on

the Group’s estimate of shares that will eventually vest. The estimate of the number of awards

likely to vest is reviewed at each Consolidated Statement of Financial Position reporting date up

to the vesting date, at which point the estimate is adjusted to reflect the actual outcome of

awards which have vested. No adjustment is made to the fair value after the vesting date even

if the awards are forfeited or not exercised.

Derecognition

A financial asset is derecognised when the Group loses control over the contractual rights to

the cash flows from the asset. This occurs when the rights are realised, expire or are

surrendered. A financial liability is derecognised when the obligation specified in the contract is

discharged, cancelled or expired. Originated loans and receivables are derecognised on the

date they are transferred by the Group.

Investments in debt instruments

The Group’s investment in debt instruments consists of a Vendor Loan Note Receivable. The

Vendor Loan Note Receivable was initially recognised at fair value, being the consideration

received. The Vendor Loan Note Receivable is measured at fair value at the end of each

reporting period, with any fair value gains or losses recognised in profit or loss.

Investments in equity instruments classified as fair value through other

comprehensive income

On initial recognition, the Group may make an irrevocable election (on an instrument-by-

instrument basis) to designate investments in equity instruments as at fair value through other

comprehensive income. Designation at fair value through other comprehensive income is not

permitted if the equity investment is held for trading or if it is contingent consideration

recognised by an acquirer in a business combination.

An investment in equity instruments is held for trading if:

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group

manages together and has evidence of a recent actual pattern of short-term profit-taking; or

• it is a derivative (except for a derivative that is a financial guarantee contract or a designated

and effective hedging instrument).

Investments in equity instruments at fair value through other comprehensive income are

initially measured at fair value plus transaction costs.

Subsequently, they are measured at fair value with gains and losses arising from changes in fair

value recognised in other comprehensive income and accumulated in the retained earnings

reserve. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity

investments, instead, it is transferred to retained earnings.

Dividends from investments in equity instruments designated as at fair value through other

comprehensive income are recognised in profit and loss in accordance with IFRS 9 unless the

dividends clearly represent a recovery of part of the cost of the investment.

Impairment of financial assets

The Group assesses at each Consolidated Statement of Financial Position reporting date

whether there is any objective evidence that a financial asset, or group of financial assets, is

impaired. A financial asset, or group of financial assets, is deemed to be impaired if, and only if,

there is objective evidence of impairment as a result of one or more events that has occurred

after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an

impact on the estimated future cash flows of the financial asset or group of financial assets that

can be reliably estimated. For trade receivables, the Group recognises impairment provisions

based on lifetime expected credit losses.

Spectris plc

126

Where it is not possible to incentivise managers of the Group’s platforms/operating companies

with equity-settled options, they are issued with cash-settled options. A liability is recognised

for the services acquired, measured initially at the fair value of the liability. The charge for these

awards is adjusted at each reporting date, with any changes in fair value recognised in profit or

loss, to reflect the expected and actual levels of options that vest, and the fair value is based on

either the share price at date of exercise or the share price at the Consolidated Statement of

Financial Position date if sooner.

Own shares

Own equity instruments which are re-acquired (own shares) are recognised at cost and

deducted from equity. No gain or loss is recognised in the Consolidated Income Statement on

the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference

between the carrying amount and the consideration paid to acquire such equity instruments is

recognised within equity.

Dividends

Dividends are recognised as a liability in the period in which they are approved by shareholders .

Revenue

Revenue is measured based on the fair value of the consideration specified in a contract with a

customer, net of returns and discounts, and excludes amounts collected on behalf of third

parties, value added tax and other sales-related taxes. The Group recognises revenue when it

transfers control of a product or service to a customer.

The Group’s major revenue streams are the same as its reportable operating segments

(Spectris Scientific, Spectris Dynamics, and Other non-reportable segments).

The following table provides further details on the nature of each of the major revenue streams.

The table shows where each revenue factor forms more than 10% of the reportable operating

segment’s total revenue:

Revenue stream

% of total

Group sales

2022

Revenue derived from:

Provision of

services

Sale of

goods

without

installation

Sale of

goods with

simple

installation

Sale of

goods with

complex

installation

Spectris Scientific 50%

Spectris Dynamics 37%

Other 13%

Further details of the nature of each major revenue stream are provided in the following

section .

Spectris Scientific

Revenue from the provision of services, including ongoing support, servicing and maintenance,

is recognised in line with the delivery of the service, either at a point in time or, for some

ongoing services, over time.

Revenue from the sale of goods, where the goods are not required to be installed, is recognised

at a point in time when control of the goods has transferred. This may occur, depending on the

individual customer terms, when the product is transferred to a freight carrier, or when the

customer has received the product.

When the sale of goods is combined with installation, revenue recognition depends upon the

nature of the installation. Simple installations are those which the customer perceives as a

separate performance obligation within the overall contract to deliver goods, whereas complex

installations are those for which the installation is an integral part of the delivery of the goods.

Revenue is recognised for simple installations separately from the delivery of goods, and only at

a point in time when the installation has occurred.

For complex installations, revenue is normally deferred until installation is complete. For a small

number of complex installations, revenue is recognised before installation when: a) a significant

period of time has elapsed since completion of the product; b) an installation date has not been

agreed despite multiple attempts to arrange; and c) payment has been received from the

customer. Judgement is required for these installations. Revenue from these arrangements

represents approximately 2% of the segment’s total sales.

Occasionally, the initial contract covers both the supply of goods and ongoing support,

servicing and maintenance. For such contracts, revenue is allocated across each of the

individual components in line with their relative price and value of the performance obligation

and each element is accounted for as described above.

Payment is normally due at the point that the performance obligation is completed.

For some of the segment’s business, the customer may make partial payment in advance.

Such payments are recognised as contract liabilities until the performance obligation has

been satisfied.

Sales-related warranties associated with the products cannot be purchased separately and

they serve as an assurance that the products sold comply with agreed-upon specifications.

Notes to the Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

127

Notes to the Accounts 

2. Operating segments

The Group’s reportable segments are described below. In 2022, the Group’s reportable

operating segments have changed following the reorganisation of the Group’s businesses

announced at the Capital Markets Day in October 2022. The new segmental divisional structure

reflects the current internal reporting provided to the Chief Operating Decision Maker

(considered to be the Board) on a regular basis to assist in making decisions on capital allocated

to each segment and to assess performance. The tables in this note show restated comparative

figures for the reportable operating segments for the year ended 31 December 2021, reflecting

the impact of changes the Group made to its operating segments during the year ended

31 December 2022. The segment results include an allocation of head office expenses, where

the costs are attributable to a segment. Costs of running the PLC are reported separately as

Group costs.

The Omega business, which had previously been disclosed as a reportable segment, has now

been classified as a discontinued operation under IFRS 5, following the completion of its

disposal on 1 July 2022 and therefore excluded from the segmental analysis. As a result, the

financial data for the year ended 31 December 2021 has also been represented to show

continuing operations where required to by IFRS 5, including a reclassification of continuing

head office expenses that had previously been allocated to the Omega reportable segment to

the continuing reportable segments. Further details of discontinued operations are provided in

note 24.

The following summarises the operations in each of the Group’s reportable segments:

• Spectris Scientific provides advanced measurement and materials characterisation,

accelerating innovation and efficiency in R&D and manufacturing. The operating companies

in this segment are Malvern Panalytical and Particle Measuring Systems;

• Spectris Dynamics provides differentiated sensing, data acquisition, analysis modelling and

simulation solutions to help customers accelerate product development and enhance

product performance;

• the Other non-reportable segments are a portfolio of high-value precision in-line sensing

and monitoring businesses. The operating companies in this segment in 2022 are Red Lion

Controls and Servomex. In 2021 Brüel & Kjær Vibro (disposed 1 March 2021), ESG Solutions

(disposed 3 May 2021), Millbrook (disposed 2 February 2021) and NDC Technologies (disposed

1 November 2021) are also included in Other non-reportable segments.

• Group costs consist of costs of running the PLC.

Spectris Dynamics

ongoing services, over time.

customer has received the product.

Simple installations are those which the customer perceives as a separate performance

obligation within the overall contract to deliver goods. Revenue is recognised for simple

installations separately from the delivery of goods, and only at a point in time when the

installation has occurred.

servicing and maintenance. For such contracts revenue is allocated across each of the

For some of the segment’s business the customer may make partial payment in advance.

Such payments are recognised as contract liabilities until the performance obligation has

been satisfied.

Other

customer has received the product.

Payment is normally due at the point that the performance obligation is completed. For some of

the segment’s business, the customer may make partial payment in advance. Such payments

are recognised as contract liabilities until the performance obligation has been satisfied.

Spectris plc

128

Further details of the nature of these segments and the products and services they provide are

contained in the Strategic Report on pages 2 to 59.

Information about continuing reportable

segments

Spectris

 Scientific

£m

Spectris

 Dynamics

£m

Other

£m

Group

costs

£m

2022

Total

£m

Segment revenues 658.0 492.4 177.4 – 1,327.8

Inter-segment revenue (0.2) (0.2) – – (0.4)

External revenue 657.8 492.2 177.4 – 1,327.4

Operating profit 118.3 46.5 26.2 (18.4) 172.6

Fair value through profit and loss

movements on debt investments

(4.1)

Profit on disposal of businesses

0.3

Financial income

1.9

Finance costs

(19.2)

Profit before tax

151.5

Taxation charge

(36.7)

Profit after tax from continuing operations

114.8

 1 Not allocated to reportable segments.

Information about continuing reportable

segments

Spectris

 Scientific

£m

Spectris

 Dynamics

£m

Other

£m

Group

costs

£m

2021

Total

£m

Segment revenues 531.3 425.7 206.5 – 1,163.5

Inter-segment revenue (0.1) (0.2) (0.2) – (0.5)

External revenue 531.2 425.5 206.3 – 1,163.0

Operating profit 94.2 45.6 19.2 (19.1) 139.9

Profit on disposal of businesses

226.5

Financial income

12.8

Finance costs

(5.4)

Profit before tax

373.8

Taxation charge

(38.2)

Profit after tax from continuing operations

335.6

1. Not allocated to reportable segments.

Reportable segment profit is consistent with that presented to the Chief Operating Decision

Maker. Inter-segment revenue includes the movements in internal cash flow hedges with

inter-segment pricing on an arm’s-length basis. Segments are presented on the basis of actual

inter-segment charges made.

Carrying amount of

segment assets

Carrying amount of

segment liabilities

2022

£m

2021

£m

2022

£m

2021

£m

Spectris Scientific 673.8 530.0 (237.7) (191.3)

Spectris Dynamics 766.1 635.9 (193.5) (177.7)

Omega  – 197.4  – (24.0)

Other 202.7 159.9 (31.9) (30.8)

Group-related 2.6 2.6 (6.7) (8.4)

Total segment assets and liabilities  1,645.2 1,525.8 (469.8) (432.2)

Cash and borrowings 228.1 167.8 (0.1) –

Derivative financial instruments 1.7 0.3 (2.5) (1.2)

Investment in debt instruments 18.9 23.0  – –

Investment in equity instruments 29.3 24.3  – –

Retirement benefit liabilities  – – (8.9) (22.3)

Taxation 24.8 26.9 (29.8) (51.1)

Consolidated total assets and liabilities  1,948.0 1,768.1 (511.1) (506.8)

Segment assets comprise: goodwill, other intangible assets, property, plant and equipment,

right of use assets, inventories and trade and other receivables, investments in associates and

assets held for sale that are attributable to the reported operating segment. Segment liabilities

comprise: trade and other payables, provisions, lease liabilities and other payables which can be

reasonably attributed to the reported operating segment. Unallocated items represent all

components of net cash, derivative financial instruments, assets held for sale that are not

allocable to a segment, investment in debt instruments, investment in equity instruments,

retirement benefit liabilities and current and deferred taxation balances.

Additions to non-current

assets from continuing

and non-continuing

operations

Depreciation,

amortisation and

impairment from

continuing operations

2022

£m

2021

£m

2022

£m

2021

£m

Spectris Scientific 68.9 16.2 23.9 20.0

Spectris Dynamics 85.7 200.6 27.9 15.4

Omega 0.7 1.9  – –

Others 18.0 13.6 6.9 5.8

Group-related 0.6 0.5 0.6 0.4

Total segments 173.9 232.8 59.3 41.6

Investment in debt instruments  – 23.0

Investment in equity instruments  – 25.0

Consolidated total 173.9 280.8 59.3 41.6

Notes to the Accounts 

2. Operating segments 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

129

Non-current assets

2022

£m

2021

£m

UK 239.3 239.3

Germany 86.8 74.1

France 7.0 4.1

Rest of Europe

283.4 230.8

USA 406.4 468.5

Rest of North America 16.0 16.1

Japan 5.3 5.6

China 9.7 9.8

South Korea 1.2 0.8

Rest of Asia 8.6 8.1

Rest of the world 2.6 1.7

1,066.3 1,058.9

Deferred tax assets

16.2 21.2

Total non-current assets 1,082.5 1,080.1

1. Principally in Switzerland, Netherlands and Denmark (2021: Denmark and Netherlands).

2. Not allocated to reportable geographic area in reporting to the Chief Operating Decision Maker.

Geographical segments

The Group’s operating segments are each located in several geographical locations and sell on

to external customers in all parts of the world. No individual country amounts to more than 3%

of revenue, other than those noted below. The following is an analysis of revenue from

continuing operations by geographical destination.

Spectris

 Scientific

£m

Spectris

 Dynamics

£m

Other

£m

2022

Total

£m

UK 27.8 18.5 4.9 51.2

Germany 31.5 85.4 6.5 123.4

France 18.2 22.7 3.9 44.8

Rest of Europe 87.8 72.6 12.0 172.4

USA 137.1 133.1 89.7 359.9

Rest of North America 16.6 6.7 6.7 30.0

Japan 36.6 29.9 3.0 69.5

China 132.4 74.8 26.4 233.6

South Korea 42.5 10.6 5.3 58.4

Rest of Asia 85.0 25.8 14.7 125.5

Rest of the world 42.3 12.1 4.3 58.7

657.8 492.2 177.4 1,327.4

Spectris

 Scientific

£m

Spectris

 Dynamics

£m

Other

£m

2021

Total

£m

UK 25.5 15.3 10.4 51.2

Germany 24.6 78.4 8.2 111.2

France 16.2 21.5 3.7 41.4

Rest of Europe 76.1 70.8 19.9 166.8

USA 106.2 95.8 87.4 289.4

Rest of North America 15.1 5.7 7.8 28.6

Japan 34.2 27.1 4.8 66.1

China 100.2 67. 2 33.3 200.7

South Korea 30.1 9.7 5.4 45.2

Rest of Asia 70.5 19.7 18.2 108.4

Rest of the world 32.5 14.3 7.2 54.0

531.2 425.5 206.3 1,163.0

Notes to the Accounts 

2. Operating segments 

Spectris plc

130

3. Revenue

Disaggregation of revenue       

The Group derives its revenue from the provision of goods and services both at a point in time

and over time. Product lines are presented consistent with the revenue information that is

disclosed for each reportable segment under IFRS 8 (see note 2). The tables below show

restated comparative figures for the year ended 31 December 2021, reflecting the impact of the

changes the Group made to its operating segments during the year ended 31 December 2022

(see note 2).

IFRS 15, paragraph 114, requires an entity to disaggregate revenue recognised from contracts

with customers into categories that depict how the nature, amount, timing and uncertainty of

revenue and cash flows are affected by economic factors. This disaggregation will depend on

the entity’s individual facts and circumstances. The Group has assessed that the disaggregation

of revenue by reportable operating segments is appropriate in meeting this disclosure

requirement as this is the information regularly reviewed by the Chief Operating Decision

Maker in order to evaluate the financial performance of the entity. The Group also believes that

presenting a disaggregation of revenue based on the timing of transfer of goods or services

provides users of the Financial Statements with useful information as to the nature and timing

of revenue from contracts with customers.

Timing of revenue recognition from continuing operations

2022

£m

2021

£m

At a point in time:

Spectris Scientific 577.6 458.8

Spectris Dynamics 432.1 370.9

Others 177.4 204.0

 1,187.1 1,033.7

Over time:

Spectris Scientific 80.2 72.4

Spectris Dynamics 60.1 54.6

Others  – 2.3

140.3 129.3

Revenue from continuing operations  1,327.4 1,163.0

The Group’s material revenue streams have an expected duration of one year or less. The Group

has therefore applied the practical expedient in IFRS 15, paragraph 121, to not disclose

information about its remaining performance obligations.

No individual customer accounted for more than 1% of external revenue in 2022 (2021: 1%).

Total revenue for the Group from continuing operations, after including financial income of

£1.9m (2021: £12.8m) (see note 6), was £1,329.3m (2021: £1,175.8m).

4. Operating profit

Operating profit from continuing operations is stated after charging/(crediting):

Note

2022

£m

2021

£m

Net foreign exchange (gains)/losses included in operating profit (0.3) 0.3

Research and development expense 102.9 81.8

Amortisation and other non-cash adjustments made

to intangible assets 10 25.1 20.9

Depreciation of owned property, plant and equipment 11 20.0 18.8

Reversal of impairment of owned property, plant and equipment 11, 24  – (6.0)

Depreciation and impairment of right-of-use assets 11 14.0 11.5

Income from sub-leasing right-of-use assets (0.3) (0.2)

Expenses relating to short-term and low-value leases 0.1 –

Donations to the Spectris Foundation 0.1 15.0

Cost of inventories recognised as expense 351.9 283.0

(Profit)/loss on disposal and re-measurements of property, plant

and equipment and associated lease liabilities (1.5) 0.1

Auditor’s remuneration

2022

£m

2021

£m

Fees payable to the Company's auditor for audit of the Company's

annual accounts 0.7 0.5

Fees payable to the Company's auditor for the audit of the

Company's subsidiaries, pursuant to legislation 1.7 1.8

Total audit-related fees 2.4 2.3

Fees payable to the Company's auditor for other services:

– audit-related assurance services

0.1 0.1

– other non-audit services

0.2 0.1

2.7 2.5

1. Review of the half-year Financial Statements

2. Assurance work over ESG disclosures and the reporting accountant role performed by Deloitte in respect of the

unsuccessful acquisition of a UK publicly listed company.

Notes to the Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

131

Notes to the Accounts 

6. Financial income and finance costs

Financial income from continuing operations

2022

£m

2021

£m

Interest receivable (1.9) (0.5)

Interest credit on release of provision on settlement of EU dividends tax claim

(see note 7)  – (5.1)

Net gain on retranslation of short-term inter-company loan balances  – (7. 2)

(1.9) (12.8)

Finance costs from continuing operations

2022

£m

2021

£m

Interest payable on loans and overdrafts 1.8 3.6

Net loss on retranslation of short-term inter-company loan balances 14.6 –

Unwinding of discount factor on lease liabilities 2.5 1.6

Net interest cost on pension plan obligations 0.3 0.2

19.2 5.4

Net finance costs/(credit) from continuing operations 17.3 (7.4)

Net interest credit of £0.1m (2021: charge of £3.1m), for the purposes of the calculation of interest

cover, comprises interest receivable of £1.9m (2021: £0.5m) and interest payable on loans and

overdrafts of £1.8m (2021: £3.6m).

The net finance charge of £17.3m (2021: £7.4m credit) includes £14.6m of unrealised losses on

intercompany loan balances (2021: gain of £7.2m). This is a consequence of the significant

volatility of Sterling against the US Dollar and Euro, particularly in the second half of 2022.

5. Employee costs and other information

Employee costs, including Directors’ remuneration, comprise:

Continuing operations

Total continuing and

discontinued operations

2022

£m

2021

£m

2022

£m

2021

£m

Wages and salaries 414.4 391.1 433.0 424.8

Social security costs 68.3 67. 3 72.6 74.9

Defined benefit pension plans:

– current service cost (see note 19) 0.4 0.7 0.4 0.7

– past service credit (see note 19) (0.1) (0.3) (0.1) (0.3)

Defined contribution pension plans 20.0 17.2 20.1 17.3

Equity-settled share-based payment expense 10.1 7.1 10.3 7.8

Cash-settled share-based payment expense 0.9 0.9 0.8 1.2

514.0 484.0 537.1 526.4

Average number of employees

Continuing operations

Total continuing and

discontinued operations

2022

Number

2021

Number

2022

Number

2021

Number

Production and engineering  3,642 3,302  3,844 3,682

Sales, marketing and service  2,764 2,906  2,860 3,089

Administrative 870 827 900 888

 7,276 7,035  7,604 7,659

Directors’ remuneration

2022

Number

2021

Number

Short-term benefits 2.8 2.7

Equity-settled share-based payment expense 1.6 0.9

4.4 3.6

Further details of Directors’ remuneration and share options are given in the Directors’

Remuneration Report on pages 84 to 104.

Spectris plc

132

7. Taxation

2022 2021

£m

Overseas

£m

Total

£m

Overseas

£m

Total

£m

Current tax charge/(credit) 4.8 41.2 46.0 (2.4) 45.8 43.4

Adjustments in respect of current tax of

prior years (1.4) (1.4) (2.8) (0.6) (0.4) (1.0)

Deferred tax – origination and reversal of

temporary differences (note 20) (1.3)  (5.2) (6.5) (2.8) (1.4) (4.2)

Taxation charge from continuing operations 2.1 34.6 36.7 (5.8) 44.0 38.2

The standard rate of corporation tax for the year, based on the weighted average of tax rates

applied to the Group’s profits, is 23.8% (2021: 25.4%). The tax charge for the year is higher (2021:

lower) than the tax charge using the standard rate of corporation tax for the reasons set out in

the following reconciliation:

2022

£m

2021

£m

Profit before taxation from continuing operations 151.5 373.8

Corporation tax charge at standard rate of 23.8% (2021: 25.4%) 36.1 94.9

Profit on disposal of business taxed at lower rate (0.1) (46.5)

Other non-deductible expenditure 9.1 4.4

Release of provision on settlement of EU dividend claim  – (8.0)

Tax credits and incentives (7.6) (6.0)

Adjustments to prior year current and deferred tax charges (0.8) (0.6)

Taxation charge 36.7 38.2

The Group’s standard rate of corporation tax of 23.8% is lower than the prior year rate (25.4%),

principally due to profits being made in countries with lower statutory tax rates.

‘Profit on disposal of business taxed at a lower rate’ in the prior year principally refers to the

benefit of tax exemptions for the sale of shares in certain countries.

‘Other non-deductible expenditure’ in the current year includes the £3.4m impact of non-

deductible foreign exchange losses. In 2021 the impact of non-taxable foreign exchange gains

was (£1.1m).

‘Tax credits and incentives’ above, refers principally to research and development tax credits

and other reliefs for innovation, such as the UK Patent Box regime and Dutch Innovation Box

regime, as well as tax reliefs available for Foreign Derived Intangible Income in the US.

Factors that may affect the future tax charge

The Group’s tax charge in future years is likely to be affected by the proportion of profits arising,

and the effective tax rates, in the various territories in which the Group operates, as well as

changes in tax law affecting future periods. Such law changes may affect the future availability

or amount of existing tax reliefs or incentives. Furthermore, future tax or other legal cases or

investigations may result in a re-assessment of the Group’s tax liabilities in respect of prior years.

Tax on items recognised directly in the Consolidated Statement of Comprehensive Income

2022

£m

2021

£m

Tax credit on net gain/(loss) on effective portion of changes in fair value of

forward exchange contracts  – (0.3)

Tax charge on investment in equity instruments designated as at fair value

through other comprehensive income 0.6 0.2

Tax charge/(credit) on re-measurement of net defined benefit obligations, net

of foreign exchange 3.4 (0.9)

Aggregate current and deferred tax charge/(credit) relating to items recognised

directly in the Consolidated Statement of Comprehensive Income 4.0 (1.0)

Tax on items recognised directly in the Consolidated Statement of Changes in Equity

2022

£m

2021

£m

Tax credit in relation to share-based payments (0.2) (1.3)

Aggregate current and deferred tax credit relating to items recognised directly

in the Consolidated Statement of Comprehensive Income (0.2) (1.3)

The following tax charges/(credits) relate to items of income and expense that are excluded

from the Group’s adjusted performance measures.

Tax on items of income and expense that are excluded from

the Group’s adjusted profit before tax

2022

£m

2021

£m

Tax credit on amortisation of acquisition-related intangible assets (4.6) (2.9)

Tax credit on net transaction-related costs and fair value adjustments (0.5) (3.0)

Tax charge on retranslation of short-term inter-company loan balances 0.6 0.3

Tax charge on profit on disposal of businesses  – 14.2

Tax credit on configuration and customisation costs carried

out by third parties on material SaaS projects (5.1) (1.4)

Tax credit on release of provision and deferred tax asset

on settlement of EU dividends tax claim  – (7.0)

Tax (credit)/charge on fair value through profit and loss

movements on debt and equity investments (1.4) 0.9

Tax credit on restructuring costs  – (2.7)

Total tax credit  (11.0) (1.6)

Notes to the Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

133

Notes to the Accounts 

8. Dividends

Amounts recognised and paid as distributions to owners of the Company in the year

2022

£m

2021

£m

Interim dividend for the year ended 31 December 2022 of 24.1p (2021: 23.0p)

per share 25.3 25.4

Final dividend for the year ended 31 December 2021 of 48.8p (2021: 46.5p)

per share 53.3 53.6

78.6 79.0

Amounts arising in respect of the year

2022

£m

2021

£m

per share 25.3 25.4

Proposed final dividend for the year ended 31 December 2022 of 51.3p

(2021: 48.8p) per share 53.6 53.3

78.9 78.7

The proposed final dividend is subject to approval by shareholders at the AGM on 26 May 2023

and has not been included as a liability in these Financial Statements.    

The effective adjusted tax rate for the year was 21.7% (2021: 21.5%) as set out in the reconciliation

below.

Reconciliation of the statutory taxation charge to the adjusted taxation charge

2022

£m

2021

£m

Statutory taxation charge 36.7 38.2

Tax credit on items of income and expense that

are excluded from the Group’s adjusted profit before tax 11.0 1.6

Adjusted taxation charge 47.7 39.8

Management judgement is applied to determine the level of provisions required in respect

of both direct and indirect taxes. The Group is potentially subject to tax audits in many

jurisdictions. By their nature these are often complex and could take a significant period of time

to be agreed with the tax authorities. Judgement is therefore applied based on the

interpretation of country-specific tax legislation and the likelihood of settlement. The Group

estimates and accrues taxes that will ultimately be payable when reviews or audits by tax

authorities of tax returns are completed. These estimates include judgements about the

position expected to be taken by each tax authority.

The Group applies judgement in respect of possible tax audit adjustments primarily in respect

of transfer pricing as well as in respect of financing arrangements and tax credits and

incentives. In respect of transfer pricing, the level of provision is determined by reference to

management judgements of the adjustments that would arise in the event that certain

intra-group transactions are successfully challenged as not being at arm’s length.

Management estimates of the level of risk arising from tax audit may change in the next year

as a result of changes in legislation or tax authority practice or correspondence with tax

authorities during a specific tax audit. It is not possible to quantify the impact that such future

developments may have on the Group’s tax positions. Actual outcomes and settlements may

differ from the estimates recorded in these Consolidated Financial Statements.

Judgement is also applied relating to the recognition of deferred tax assets which are

dependent on an assessment of the generation of future taxable income in the countries

concerned in which temporary differences become deductible or in which tax losses can be

utilised. These estimates may change in the next year if there are changes in the forecast

profitability of the relevant company.

In June 2021, the Group agreed a formal settlement with HMRC to resolve its dispute in relation

to the taxation of dividends received from EU based subsidiaries prior to 2009. The outstanding

liability agreed with HMRC of £0.3m of tax and £0.2m of interest was paid in June 2021. As a

result, £8.0m of provision for current tax liabilities and a deferred tax asset of £1.0m related to

accrued interest liabilities were released to the Consolidated Income Statement in the year

ending 31 December 2021. In addition, as a result of the dispute resolution, £5.1m of accrued

interest liabilities were released to the Consolidated Income Statement in 2021, as disclosed

in note 6.        

7. Taxation 

Spectris plc

134

9. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable

to ordinary shareholders by the weighted average number of ordinary shares outstanding

during the year (excluding treasury shares).

Diluted earnings per share amounts are calculated by dividing the net profit attributable to

ordinary shareholders by the weighted average number of ordinary shares outstanding during

the year but adjusted for the effects of dilutive options. The key features of the Company’s share

option schemes are described in note 22.

Basic earnings per share from continuing operations 2022 2021

Profit after tax from continuing operations (£m) 114.8 335.6

Weighted average number of shares outstanding (millions) 107.6 113.7

Basic earnings per share from continuing operations (pence) 106.7 295.2

Diluted earnings per share from continuing operations 2022 2021

Basic weighted average number of shares outstanding (millions) 107.6 113.7

Weighted average number of dilutive 5p ordinary shares under option (millions) 0.9 0.5

Weighted average number of 5p ordinary shares that would have been issued at

average market value from proceeds of dilutive share options (millions) (0.2) (0.1)

Diluted weighted average number of shares outstanding (millions) 108.3 114.1

Diluted earnings per share (pence) 106.0 294.1

Basic earnings per share from discontinued operations 2022 2021

Profit after tax from discontinued operations (£m) 286.7 11.3

Basic earnings per share from discontinued operations (pence) 266.4 9.9

Diluted earnings per share from discontinued operations 2022 2021

Diluted earnings per share from discontinued operations (pence) 264.7 9.9

The denominators used for diluted earnings per share from discontinued operations are the

same as those used for diluted earnings per share from continuing operations.

10. Goodwill and other intangible assets

Cost Note

Goodwill

£m

Patents,

contractual

rights and

technology

£m

Customer-

related and

trade names

£m

Software

£m

Total

£m

At 1 January 2021 755.6 220.2 261.5 63.4 1,300.7

Additions – separately acquired – – – 2.2 2.2

Additions – internal

development – 4.1 – – 4.1

Additions – business

combinations 23 66.8 26.8 55.2 – 148.8

Reclassifications – – – 0.5 0.5

Disposals – (72.6) (76.6) (7.4) (156.6)

Disposals of business 24 (22.6) (16.4) (13.9) (3.7) (56.6)

Foreign exchange difference (10.9) (0.1) 0.6 (0.7) (11.1)

At 31 December 2021 788.9 162.0 226.8 54.3 1,232.0

Measurement period

adjustments (0.8) – – – (0.8)

Additions – separately acquired – – – 1.0 1.0

Additions – internal

development – 3.4 – – 3.4

Additions – business

combinations 23 49.7 22.9 36.5 – 109.1

Reclassifications – – – 0.3 0.3

Disposals – – – (1.3) (1.3)

Disposals of business 24 (213.4) (36.9) (81.4) (8.0) (339.7)

Foreign exchange difference 57.9 16.9 20.1 2.6 97.5

At 31 December 2022 682.3 168.3 202.0 48.9 1,101.5

Notes to the Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

135

Notes to the Accounts 

Goodwill is not amortised but is tested for impairment annually or whenever there is an

indication that the asset may be impaired. As part of the annual impairment review, the

carrying amount of goodwill has been assessed with reference to its recoverable amount

determined based on value in use. In assessing value in use, the forecast projected cash flows

of each cash-generating unit, which are based on actual operating results, the most recent

budget for the next financial year as approved by the Board, detailed strategic review

projections and an assumed long-term growth rate to perpetuity, are discounted to their

present value using a pre-tax discount rate that reflects the time value of money and the risks

specific to the cash-generating unit.

Key assumptions used in the value in use calculations

The calculation of value in use is most sensitive to the following assumptions:

• CGU specific operating assumptions on business performance over the forecast period to

December 2027 (five years);

• discount rates; and

• projected growth rates used to extrapolate risk adjusted cash flows beyond the forecast period.

CGU specific operating assumptions are applicable to the forecasted cash flows for the forecast

period to December 2027 and relate to revenue forecasts, expected project outcomes and

forecast operating margins in each of the operating companies. The relative value ascribed to

each assumption will vary between CGUs as the forecasts are built up from the underlying

operating companies within each CGU group. A long-term rate is applied to these values for the

year to December 2028 and onwards.

The Group calculates value in use using the strategic plans relevant to each CGU. A long-term

growth rate of 2.0% (2021: 2.0%) has been applied consistently across each CGU. Discount rates

are based on estimations of the assumptions that market participants operating in similar

sectors to Spectris would make, using the Group’s economic profile as a starting point and

adjusting appropriately. The Directors do not currently expect any significant change in the

present base discount rate of 12.9% (2021: 9.3%). The base discount rate, which is pre-tax and is

based on short-term variables, may differ from the Weighted Average Cost of Capital (‘WACC’).

Discount rates are adjusted for economic risks that are not already captured in the specific

operating assumptions for each CGU group. This results in the impairment testing using

discount rates ranging from 13.5% to 15.0% (2021: 9.6% to 11.1%) across the CGU groups. The table

below discloses the discount rates and short-term growth rates for each significant CGU, and

the average across the non-significant CGUs. The Group defines significant as 10% of the total

carrying value of goodwill.

Risk Adjusted

discount rates

Short-term

growth rates

2022

2021

2022

2021

Malvern Panalytical 13.5 9.6 7.6 5.6

Spectris Dynamics 14.1 10.3 8.3 10.0

Omega – 10.9 – 11.6

Non-significant CGUs 15.0 11.1 13.0 13.9

Accumulated amortisation

and impairment Note

Goodwill

£m

Patents,

contractual

rights and

technology

£m

Customer-

related and

trade names

£m

Software

£m

Total

£m

At 1 January 2021 178.6 174.1 207.3 55.9 615.9

Charge for the year – 13.3 8.2 3.0 24.5

Disposals – (72.6) (76.2) (8.1) (156.9)

Disposals of business 24 (19.6) (12.2) (13.9) (3.5) (49.2)

Foreign exchange difference (1.5) (0.1) (0.1) (1.1) (2.8)

At 31 December 2021 157. 5 102.5 125.3 46.2 431.5

Charge for the year – 15.4 7.7 3.2 26.3

Disposals – – – (1.3) (1.3)

Disposals of business 24 (92.1) (36.9) (42.9) (6.6) (178.5)

Foreign exchange difference 10.8 10.2 9.9 2.4 33.3

At 31 December 2022 76.2 91.2 100.0 43.9 311.3

Carrying amount

At 31 December 2022 606.1 77.1 102.0 5.0 790.2

At 31 December 2021 631.4 59.5 101.5 8.1 800.5

Goodwill is allocated to the cash-generating units that are anticipated to benefit from the

acquisition.

The Group’s identified cash-generating units total five, smaller than the three reportable

segments, being the two operating companies in the Spectris Scientific Division (Malvern

Panalytical and Particle Measuring Systems), the Spectris Dynamics Division, and the two

operating companies in the Other non-reportable segment (Red Lion Controls and Servomex)

as at 31 December 2022 (2021: six, including Omega Engineering, which has been disposed of

during 2022). Goodwill arising on a bolt-on acquisition is combined with the goodwill in the

existing Group company and is not considered separately for impairment purposes, since such

acquisitions are quickly integrated.

The most significant amounts of goodwill are as follows:

2022

£m

2021

£m

Malvern Panalytical 234.6 205.2

Spectris Dynamics 290.4 246.2

Omega – 109.3

Non-significant CGUs 81.1 70.8

606.1 631.5

Included within ‘Non-significant CGUs’ in 2022 and 2021 are three – Particle Measuring Systems,

Red Lion Controls and Servomex cash-generating units, in which none of the goodwill balances

are considered to be individually significant. The Group defines significant as 10% of the total

carrying value of goodwill.

10. Goodwill and other intangible assets 

Spectris plc

136

Impairment of goodwill and acquisition-related intangible assets

2022 and 2021

There were no impairments of goodwill and intangible assets recognised in 2022 and 2021.

Sensitivity analysis

For all cash-generating units with goodwill balances at 31 December 2022 the Directors do not

consider that there are any reasonably possible sensitivities for the business that could arise in

the next 12 months that could result in an impairment charge being recognised.

Other intangible assets

Internally generated assets arising from the capitalisation of qualifying development

expenditure typically have a finite expected useful life of four to ten years. Capitalised

development expenditure is amortised on a straight-line basis. All amortisation charges for the

year have been charged against operating profit. The Group has capitalised £3.4m of internally-

generated intangible assets from development expenditure in 2022 (2021: £4.1m). Accumulated

amortisation on internally-generated intangible assets was £5.5m (2021: £2.8m).

The customer-related assets recognised on the acquisition of Concurrent Real Time

(‘Concurrent-RT’) in 2021 and Dytran Instruments Inc (‘Dytran’) in 2022, and included within

the Spectris Dynamics reportable segment, are considered significant by the Directors as they

represent 57% (2021: 54%) and 31% (2021: nil) of the NBV of total customer-related and trade

names respectively. The carrying amount of the Concurrent-RT customer-related intangible

assets at 31 December 2022 is £54.0m (2021: £50.7m) and is being amortised over 20 years

with the remaining amortisation period being 17.5 years. The carrying amount of the Dytran

customer-related intangible assets at 31 December 2022 is £26.0m (2021: nil) and is being

amortised over 20 years with the remaining amortisation period being 19.75 years. The

technology assets recognised on the acquisition of Concurrent-RT in 2021 and Creoptix AG in

2022, and included within the Spectris Dynamics and Spectris Scientific reportable segments

respectively, are considered significant by the Directors. Concurrent-RT represents 24% (2021:

32%) of total NBV of patents, contractual rights and technology. The carrying amount of the

Concurrent-RT technology intangible assets at 31 December 2022 is £18.5m (2021: £18.8m)

and is being amortised over ten years with the remaining amortisation period being seven

and a half years. Creoptix AG represents 24% (2021: nil) of total NBV of patents, contractual

rights and technology. The carrying amount of the Creoptix AG technology intangible assets

at 31 December 2022 is £18.3m (2021: nil) and is being amortised over ten years with the

remaining amortisation period being nine years.

The trade names asset recognised on the acquisition of Omega Engineering in 2011, and

included within the Omega reportable segment, were considered significant by the Directors

in 2021 as they represented 35% of total customer-related and trade names. These assets were

disposed of as part of the sale of the Omega reportable segment in 2022. The carrying amount

of the Omega customer-related and trade name intangible assets at 31 December 2021 was

£35.8m and the assets being amortised over 20 years with the remaining amortisation period

being ten years.

11. Property, plant and equipment

Property, plant and equipment: owned

Cost Note

Freehold

property

£m

Leasehold

property

£m

Plant and

equipment

£m

Total

£m

At 1 January 2021 160.7 17.7 203.6 382.0

Additions – separately acquired 3.5 6.4 19.2 29.1

Additions – business combinations – 2.2 0.5 2.7

Reclassifications (0.8) 1.8 6.2 7. 2

Transfer to assets held for sale (20.5) – (0.2) (20.7)

Disposals (0.2) (1.7) (12.9) (14.8)

Disposal of business (4.5) (1.2) (12.6) (18.3)

Foreign exchange difference (7.1) (0.2) (6.2) (13.5)

At 31 December 2021 131.1 25.0 197.6 353.7

Additions – separately acquired 19.0 2.5 18.9 40.4

Additions – business combinations 23 1.0 0.6 1.4 3.0

Reclassifications  –  – (0.3) (0.3)

Transfers to assets held for sale 24 (3.3)  –  – (3.3)

Disposals (0.6) (0.7) (6.8) (8.1)

Disposal of business 24 (17.3) (1.8) (14.4) (33.5)

Foreign exchange difference 9.2 1.6 11.2 22.0

At 31 December 2022 139.1 27.2 207.6 373.9

Accumulated depreciation and impairment

At 1 January 2021 69.1 12.3 144.6 226.0

Charge for the year 4.1 1.9 14.4 20.4

Reversal of impairment (6.0) – – (6.0)

Reclassifications (0.6) 1.8 6.6 7.8

Transfers to assets held for sale (10.7) – 0.3 (10.4)

Disposals (0.1) (1.7) (12.7) (14.5)

Disposal of business (1.8) (0.8) (9.0) (11.6)

Foreign exchange difference (3.6) (0.4) (4.5) (8.5)

At 31 December 2021 50.4 13.1 139.7 203.2

Charge for the year 3.5 2.5 14.6 20.6

Reclassifications  – 0.1  – 0.1

Transfers to assets held for sale 24 (1.6)  –  – (1.6)

Disposals  – (0.7) (6.0) (6.7)

Disposal of business 24 (3.4) (1.2) (10.2) (14.8)

Foreign exchange difference 3.2 0.8 8.4 12.4

At 31 December 2022 52.1 14.6 146.5 213.2

Carrying amount

At 31 December 2022 87.0 12.6 61.1 160.7

At 31 December 2021 80.7 11.9 57.9 150.5

Notes to the Accounts 

10. Goodwill and other intangible assets 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

137

Notes to the Accounts 

12. Investments in equity instruments, investment in associate and joint operation

Investments in equity instruments

2022

£m

2021

£m

Investments in equity instruments designated as at fair value

through other comprehensive income 29.3 24.3

Total investment in equity instruments at 31 December 29.3 24.3

At 31 December 2022, the Group’s investments in equity instruments designated to be

measured at fair value through other comprehensive income consists of a) 27,752,567 A1

investment units in the EZ Ring FPCI (the fund holding the combined UTAC-Millbrook group),

which has a fair value of £28.6m (2021: £23.1m) b) 10,000,000 shares in Envirosuite Ltd, which

has a fair value of £0.7m (2021: £1.2m).

These investments were not held for trading at initial recognition and were not contingent

consideration. Instead, they are held for medium- to long-term strategic purposes. Accordingly,

the Group elected to designate these investments in equity instruments as at fair value

through other comprehensive income at initial recognition as it believes that recognising

short-term fluctuations in these investments’ fair value in profit and loss would not be

consistent with the Group’s strategy of holding the investment for long-term purposes and

realising its performance potential in the long run.

The Group does not consider that it is able to exercise significant influence over any of the

above investments as its percentage ownership and voting rights of the businesses is small and

it does not have any unusual powers or rights over the businesses.

No dividends have been recognised on investments in equity instruments during the year

(2021: nil).

Investment in associate

On 8 April 2022, the Group acquired 19.4% (17.2% fully diluted) of the shares of CM Labs

Simulations Inc. (‘CM Labs’) for total consideration of CAD4.3m (£2.6m), settled in cash. CM Labs

is a manufacturer of turnkey solutions for operator training simulators in the heavy equipment

industries. These simulators are developed using CM Labs’ proprietary Vortex software, which is

also commercially available as a machinery virtual prototyping software platform for tasks

ranging from product development to creation of custom simulators. Its principal place of

business is Montreal, Quebec, Canada. As a result of the rights and powers attached to the

Group’s shareholding, the Group has concluded that it has significant influence and, as result,

will equity account for its share of CM Labs’ results, as an investment in associate. This

investment in associate is not considered individually material to the Group.

The investment carrying value at 31 December 2022 is £2.9m, consisting of the initial purchase

consideration of £2.6m and transaction costs of £0.3m. The share of profit after taxation was nil.

The Group did not receive dividends from its associate in the year (2021: nil).

Summarised financial information in respect of the Group’s individually immaterial associate is

set out below. The summarised information has been presented in accordance with IFRS (after

adjustments by the Group for equity accounting purposes and to comply with the Group’s

accounting policies).

The amount included in the cost of plant and equipment of assets in the course of construction

was £15.4m (2021: £5.9m).

No borrowing costs were capitalised during either year.

Of the total depreciation charge of £20.6m (2021: £20.4m), the amount attributable to the

depreciation on fair value adjustments to acquisition-related property, plant and equipment

was £0.2m (2021: £0.2m).

There were no additions relating to the receipt of government grants in 2022 (2021: nil).

Property, plant and equipment: right-of-use

Note

Property

£m

Plant and

equipment

£m

Total

£m

At 1 January 2021 25.0 6.1 31.1

Additions 36.8 3.7 40.5

Depreciation and impairment (8.2) (3.8) (12.0)

Disposals (2.3) (0.4) (2.7)

Disposal of business (1.2) (0.3) (1.5)

Additions – business combinations 5.4 – 5.4

Re-measurement – 0.7 0.7

Reclassification 0.1 – 0.1

Foreign exchange difference (0.9) (0.2) (1.1)

At 31 December 2021 54.7 5.8 60.5

Additions 9.2 3.9 13.1

Depreciation and impairment (10.2) (4.0) (14.2)

Disposals (2.2) (0.3) (2.5)

Disposal of business 24 (1.8)  – (1.8)

Additions – business combinations 23 1.0 – 1.0

Re-measurement – 0.2 0.2

Foreign exchange difference 3.1 0.3 3.4

At 31 December 2022 53.8 5.9 59.7

2022

£m

2021

£m

Property, plant and equipment: owned 160.7 150.5

Property, plant and equipment: right-of-use 59.7 60.5

220.4 211.0

11. Property, plant and equipment 

Spectris plc

138

2022

£m

2021

£m

Investment in associate – carrying amount of interests accounted for using the

equity method 2.9 –

Share of associate's profit from continuing operations – –

Share of associate's other comprehensive income – –

Share of associate's total comprehensive income – –

Joint operation

The Group’s joint operation has share capital consisting solely of ordinary shares and is indirectly

held, and principally operates in Slovenia. The financial and operating activities of the operation

are jointly controlled by the participating shareholders and are primarily designed for all but an

insignificant amount of the output to be consumed by the shareholders.

Name of joint operation

Principal

 activity

Country of

 incorporation

or registration

Percentage

 shareholding

Blueberry d.o.o.

Research and

development activities Slovenia 50%

Significant judgement made by Group in determining the nature of its interest

and the type of joint arrangement

Blueberry d.o.o. is a joint arrangement that is primarily designed for the provision of output to

the parties sharing joint control; this indicates that the parties have rights to substantially all the

economic benefits of the assets. The liabilities of the arrangements are in essence satisfied by

cash flows received from both parties; this dependence indicates that the parties in effect have

obligations for the liabilities. It is these facts and circumstances that give rise to the

classification of this entity as a joint operation.

13. Inventories

2022

£m

2021

£m

Raw materials 129.1 76.5

Work in progress 49.0 38.2

Finished goods and goods held for resale 85.2 73.2

263.3 187.9

In the ordinary course of business, the Group makes provision for slow-moving, excess and

obsolete inventory to write it down to its net realisable value based on an assessment of

technological and market developments specific to the relevant business, and an analysis of

historical and projected usage on an individual item or product line basis.

Expenses relating to inventories written down during the year totalled £10.5m (2021: £5.2m) for

the Group.

Finished goods and goods held for resale expected to be utilised after 12 months amounted to

£0.2m (2021: £1.4m) .

14. Trade and other receivables

Current and non-current

2022

£m

(Restated)

2021

£m

Trade receivables 283.3 240.4

Prepayments 31.1 29.1

VAT and similar taxes receivable 27.2 18.6

Research and development credits recoverable 2.9 3.1

Other receivables 12.0 13.9

Contract assets 10.2 10.8

366.7 315.9

1. The Group has performed an analysis to disaggregate the ‘Other Receivables’. As a result, prior year comparatives

have been restated to reflect this realignment. Total trade and other receivables for 2021 remains unchanged.

Non-current trade and other receivables total £4.2m (2021: £2.8m), consisting of £2.3m of

prepayments and £1.9m of other receivables. Other current and non-current receivables

include advances to suppliers of £2.4m and other debtors of £9.6m.

Trade receivables are non-interest bearing. Standard credit terms provided to customers differ

according to business and country, and are typically between 30 and 60 days. Trade receivables

are stated after the provision for impairment of £5.3m (2021: £6.1m).

The fair value of trade and other receivables approximates to its carrying amount due to the

short-term maturities associated with these items. There is no impairment risk identified with

regards to other receivables where no amounts are past due.

The maximum exposure to credit risk for trade receivables at 31 December by geographic

region was:

2022

£m

2021

£m

UK 9.8 16.7

Germany 23.8 17.1

France 16.7 13.7

Rest of Europe 46.1 39.8

USA 77.1 64.4

Rest of North America 9.8 5.5

Japan 15.0 12.4

China 25.0 26.9

South Korea 9.5 7.2

Rest of Asia 37.1 26.4

Rest of the world 13.4 10.3

283.3 240.4

Expected credit losses

The Group measures the loss allowance for trade receivables at an amount equal to lifetime

expected credit losses (‘ECL’). The ECL on trade receivables are estimated using a provision

matrix by reference to past default experience of the debtor and an analysis of the debtor’s

current financial position, adjusted for factors that are specific to the debtor, general economic 

Notes to the Accounts 

12. Investments in equity instruments and investment in associate and joint operation



STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

139

Notes to the Accounts 

conditions of the industry in which the debtor operates and an assessment of both the current

as well as the forecast direction of conditions at the reporting date.

There has been no change in the estimation techniques or significant assumptions made

during the current reporting period.

The Group writes off a trade receivable when there is information indicating that the debtor is in

severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has

been placed under liquidation or has entered into bankruptcy proceedings.

The ageing of trade receivables and related provisions for impairment at 31 December was:

2022 2021

Gross

£m

Impairment

£m

Gross

£m

Impairment

£m

Not past due 199.0 – 159.0 –

One month past due 36.3 – 35.6 –

Two months past due 14.7 – 14.2 –

Three months past due 10.5 – 8.8 –

Four months past due 5.6 – 4.3 –

More than four months past due 22.5 5.3 24.6 6.1

288.6 5.3 246.5 6.1

The movement in the provision for impairment in respect of trade receivables during the year

was as follows:

2022

£m

2021

£m

At 1 January 6.1 7.6

Provision for impairment of receivables 0.2 0.3

Impairment loss utilised (1.1) (1.0)

Disposal of business (0.4) (0.6)

Foreign exchange difference 0.5 (0.2)

At 31 December 5.3 6.1

All of the above impairment losses relate to receivables arising from contracts with customers.

15. Cash and cash equivalents

2022

£m

2021

£m

Cash and cash equivalents 228.1 167.8

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and

liabilities is disclosed in note 27.

16. Borrowings

Current Interest rate

Repayable

date

2022

£m

2021

£m

Bank overdrafts On demand 0.1 –

Bank loans unsecured – £45.0m (2021: £50.0m)

uncommitted facility

Determined

on draw down

On demand  – –

Total current borrowings 0.1 –

Non-current Interest rate

Maturity

date

2022

£m

2021

£m

Bank loans unsecured – $500.0m revolving

credit facilities

Relevant RFR/

IBOR +55bps 31 July 2025  – –

Total non-current borrowings  – –

Total current and non-current borrowings 0.1 –

Total unsecured borrowings 0.1 –

At 31 December 2022, the $500m (£414.9m) revolving credit facilities were undrawn (31

December 2021: the $500m (£370.3m) facilities were undrawn).

Movements in total unsecured borrowings are reconciled as follows:

2022

£m

2021

£m

At 1 January  – 119.8

Notional cash-pooling movements  – (15.0)

Proceeds from borrowings 326.2 70.0

Repayment of borrowings  (326.8) (169.8)

Effect of foreign exchange rates 0.7 (5.0)

At 31 December 0.1 –

14. Trade and other receivables 

Spectris plc

140

Changes in liabilities arising from financing arrangements

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which

cash flows were, or future cash flows will be, classified in the Group’s Consolidated Statement of Cash Flows as cash flow from financing activities.

£m Note

At 31 December

2021

Financing cash

flows

New leases

Acquisitions of

businesses

Disposal of

businesses

Other non-cash

movement

Exchange

movement

At 31 December

2022

Bank overdrafts (including notional cash-pool related bank

overdrafts) – 0.1  –  –  –  –  – 0.1

Debt – (0.7)  – 0.1  – (0.1) 0.7  –

Total borrowings – (0.6)  – 0.1  – (0.1) 0.7 0.1

Lease liabilities 65.9  (16.4) 13.2 1.0  (3.2) 0.3 4.3 65.1

Total liabilities from financing arrangements 65.9  (17.0) 13.2 1.1  (3.2) 0.2 5.0 65.2

£m Note

At 31 December

2020

Financing cash

flows

New leases

Acquisitions of

businesses

Disposal of

businesses

Other non-cash

movement

Exchange

movement

At 31 December

2021

overdrafts and overdrafts classified as held for sale) 15.3 (15.3) – – – – – –

Debt 104.5 (99.5) – – – – (5.0) –

Total borrowings 119.8 (114.8) – – – – (5.0) –

Lease liabilities (including lease liabilities classified as liabilities

held for sale)

50.8 (14.8) 40.5 5.4 (15.2) 0.9 (1.7) 65.9

Total liabilities from financing arrangements 170.6 (129.6) 40.5 5.4 (15.2) 0.9 (6.7) 65.9

1. The cash flows from bank overdrafts (including notional cash-pool related bank overdrafts) and debt make up the net amount of proceeds from borrowings, repayment of borrowings and notional cash-pooling movement in the

Consolidated Statement of Cash Flows.

2. Lease liabilities at 31 December 2022 includes £nil liabilities classified as held for sale (2021: £nil, 2020: £11.9m).

Notes to the Accounts 

16. Borrowings 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

141

2021:

During 2021, £3.9m of contract liability balances were recognised as part of the acquisition of

Concurrent-RT, in the Spectris Dynamics product group. Also, during 2021, £2.3m of contract

liability balances were derecognised on the disposal of ESG and NDC Technologies, part of the

Other non-reportable segments product group.

18. Provisions

Note

Reorganisation

£m

Product

warranty

£m

Legal,

contractual

and other

£m

Total

£m

At 1 January 2022 9.6 6.8 5.9 22.3

Provision during the year 1.3 3.9 2.4 7.6

Disposal of business 24  – (0.2)  – (0.2)

Utilised during the year (7.9) (3.7) (1.4) (13.0)

Released during the year  – (0.2) (0.1) (0.3)

Foreign exchange difference 0.1 0.4 0.3 0.8

At 31 December 2022 3.1 7.0 7.1 17.2

Reorganisation

Reorganisation provisions relate to committed restructuring plans in place within the business.

Costs are mostly expected to be incurred within one year and there is little judgement in

determining the amount.

Product warranty

Product warranty provisions reflect commitments made to customers on the sale of goods in

the ordinary course of business and included within the Group’s standard terms and conditions.

Warranty commitments typically apply for a 12-month period, but can extend to 36 months.

These extended warranties are not individually significant.

Legal, contractual and other

Legal, contractual and other provisions mainly comprise amounts provided against open legal

and contractual disputes arising in the normal course of business. The Group has on occasion

been required to take legal or other actions to protect its intellectual property rights, to enforce

commercial contracts or otherwise and similarly to defend itself against proceedings brought

by other parties. Provisions are made for the expected costs associated with such matters,

based on past experience of similar items and other known factors, taking into account

professional advice received, and represent management’s best estimate of the most likely

outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting the

complexity of issues and the outcome of various court proceedings and negotiations.

Contractual and other provisions represent the Directors’ best estimate of the cost of settling

current obligations.

No provision is made for proceedings which have been or might be brought by other parties

against Group companies unless management, taking into account professional advice

received, assesses that it is probable that such proceedings may be successful. Contingent

liabilities associated with such proceedings have been identified, but the Directors are of the

opinion that any associated claims that might be brought can be defeated successfully and,

therefore, the possibility of any material outflow in settlement is assessed as remote.

Notes to the Accounts 

17. Trade and other payables

Current

2022

£m

Restated

2021

£m

Trade payables 62.8 59.7

Accruals 114.0 108.2

Customer advances 48.5 39.9

Contract liabilities 98.4 77.9

Deferred and contingent consideration on acquisitions 3.3 1.1

VAT and similar taxes payable 27.0 17.5

Goods received not invoiced 14.9 14.9

Other payables 4.8 11.0

373.7 330.2

Non-current

Contract liabilities 3.9 3.4

Deferred and contingent consideration on acquisitions  – 0.4

Accruals 9.9 10.0

13.8 13.8

1. The Group has performed an analysis to disaggregate the ‘Other Payables’. As a result, prior year comparatives

have been restated to reflect this realignment. Total trade and other payables for 2021 remains unchanged.

The fair value of trade and other payables approximates to their carrying amount due to the

short-term maturities associated with these items.

Total contract liabilities relate to the following product groups:

2022

£m

Restated

2021

£m

Spectris Scientific 71.5 53.8

Spectris Dynamics 30.6 27.2

Omega  – 0.1

Others 0.2 0.2

102.3 81.3

2. The table above shows restated comparative figures for the product groups at 31 December 2021, reflecting the

impact of changes the Group made to its operating segments during the year ended 31 December 2022 (see

note 2 for further details).

Significant changes in contract liabilities during the year

2022:

During 2022, £1.4m of contract liability balances were recognised as part of the acquisition of

Creoptix, in the Spectris Scientific product group. The remainder of the increase primarily

reflects increased systems-related orders in Spectris Scientific.

There were no other significant changes in contract liability balances during 2022 .

Spectris plc

142

19. Retirement benefit plans

Spectris plc operates funded defined benefit and defined contribution pension plans for the

Group’s qualifying employees in the UK. At 31 December 2022, 16 overseas subsidiaries (2021: 15)

in six overseas countries (2021: six) provided defined benefit plans. Other UK and overseas

subsidiaries have their own defined contribution plans invested in independent funds.

Defined benefit plans

The UK, German, Dutch, Swiss, French, Italian and Japanese plans provide pensions in

retirement, death in service and, in some cases, disability benefits to members. The pension

benefit is linked to members’ final salary at retirement and their service life. Since 31 December

2009, the UK plan has been closed to all service accruals. The German and Dutch plans are

closed to new members. The Italian plan is a mandatory Trattamento di Fine Rapporto (‘TFR’)

severance plan.

The UK plan is administered by a pension fund, but the Swiss and Dutch plans are held by

insurance companies that are legally separate from the Group. The majority of the overseas

plan assets are insurance policies. The UK plan is managed by a Board of Trustees that

represents both employees and employer, who is required to act in the best interest of the

plan’s participants and is responsible for setting certain policies (e.g. investment, contribution

and indexation policies) of the various funds.

The plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate

risk and market (investment) risk. Inflation and interest rate hedges are taken out to mitigate

against risks arising on the UK plan and some reinsurance exists in respect of the overseas plans.

The overseas plans are funded by the Group’s overseas subsidiaries, and the UK plan has been

funded by both the Group’s UK subsidiaries and the Company. The assets of the UK plan are

invested in accordance with Section 40 of the Pensions Act 1995. Although the Act permits 5%

of the plan’s assets to be invested in ‘employer-related investments’, the Trustee has elected

that none of the plan assets are to be invested directly in Spectris plc shares. The Trustee also

holds interest rate and inflation swaps to help protect against the impact of changes in

prevailing interest rates and price inflation, which in conjunction with the corporate bond

portfolio aims to fully hedge against interest and inflation rate risks on the basis used by the

Trustee to fund the plan. Trustee investment in derivatives is only made in so far as they

contribute to the reduction of investment risks or facilitate efficient portfolio management

and are managed such as to avoid excessive risk exposure to a single counterparty or other

derivative operations.

The Trustee of the UK plan has invested a large proportion of the plan’s assets in a buy and

maintain corporate bond portfolio, designed to move in a similar way to the value of the plan’s

liabilities. The Trustee has also entered into a swaps strategy which seeks to further mitigate

against movement in interest rates and price inflation over time.

The funding requirements are based on the individual fund’s actuarial measurement

framework set out in the funding policies of the various plans.

The Group has determined that, in accordance with the terms and conditions of the defined

benefit plans, and in accordance with statutory requirements (including minimum funding

requirements) of the plans of the respective jurisdictions, the present value of the refunds or

reductions in future contributions is not lower than the balance of the total fair value of the plan

assets less the total present value of obligations. This determination has been made on a 

Notes to the Accounts 

plan-by-plan basis. As such, no decrease in the defined benefit asset was necessary at

31 December 2022.

The last full actuarial valuation for the UK plan was 31 December 2020 and for the overseas

plans was 31 December 2022, where available. Where applicable, the valuations were updated

to 31 December 2022 for IAS 19 (Revised) ‘Employee Benefits’ purposes by qualified

independent actuaries.

The Group’s contributions to defined benefit plans during the year ended 31 December 2022

were £2.0m (2021: £1.1m). Contributions for 2023 are expected to be £1.2m for the UK plan and

£1.1m for the overseas plans.

As a result of the UK plan’s full actuarial valuation at 31 December 2020, it has been agreed that

the Group will make past service deficit recovery payments totaling £1.2m a year for a period

of six years from 1 January 2022 until 31 December 2027. The contribution rates are subject to

review at future valuations and periodic certifications of the schedule of contributions.

The assumptions used by the actuary to value the liabilities of the defined benefit plans were:

2022 2021

UK plan

% p.a.

Overseas

plans

% p.a.

UK plan

% p.a.

Overseas

plans

% p.a.

Discount rate 4.85 2.15 – 3.80 1.8 0.0 – 1.0

Salary increases n/a 1.50 – 3.00 n/a 1.0 – 3.0

Pension increases in payment 2.30 – 3. 41 0.00 – 2.25 2.35 – 3.55 0.0 – 1.75

Pension increases in deferment 2.55 – 3.02 n/a 2.8 – 3.25 n/a

Inflation assumption 2.55 – 3.02 1.25 – 3.50 2.8 – 3.25 1.0 – 2.0

Interest credit rate n/a 1.00 n/a 1.0

The weighted average duration of the defined benefit obligation at 31 December 2022 was

approximately 12 years (2021: 14 years) for the UK plan and 14.3 years (2021: 18.3 years) for the

overseas plans.

Pensioner life expectancy assumed in the 31 December 2022 valuation is based on the

following tables:

UK plan 103% and 106% of the S3PA tables centred in 2013 for males and females respectively.

Future improvements in line with the core CMI_2021 model subject to a long-term

improvement rate of 1.25% per annum, an initial addition of 0.2% and weightings of

7.5% on both 2020 and 2021.

French plans INSEE 2013

German plans Dr K Heubeck pension tables 2018 G

Dutch plans A.G. Prognosetafel 2018 tables

Swiss plan BVG 2020 – CMI 1.50%

Italian plans SI 2019

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

143

Notes to the Accounts 

Samples of the ages which pensioners are assumed to live to across the Group’s defined

benefit plans are as follows:

Male Female

Pensioners aged 65 in 2022 84.9– 87.0 88.1–89.7

Pensioners aged 65 in 2042 82.6–88.9 88.4–91.3

Amounts recognised in the

Consolidated Income Statement

UK plan Overseas plans Total

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

Current service cost – – 0.4 0.7 0.4 0.7

Past service credit – – (0.1) (0.3) (0.1) (0.3)

Administrative cost – 0.7 – – – 0.7

Settlement/curtailment – – (0.1) – (0.1) –

Net interest cost 0.2 0.1 0.1 0.1 0.3 0.2

0.2 0.8 0.3 0.5 0.5 1.3

The current service cost, past service credit, administrative cost and settlement/curtailment are

recognised in administrative expenses in the Consolidated Income Statement. The net interest

cost on the net defined benefit obligation is recognised in finance costs in the Consolidated

Income Statement. Actuarial gains and losses are recognised in the Consolidated Statement of

Comprehensive Income.

During the year, insurance premiums for death-in-service benefits amounting to £0.4m

(2021: £0.3m) were paid.

There was a total return on plan assets in the year of -£32.1m (2021: +£6.7m).

Amounts recognised in the

Consolidated Statement

of Comprehensive Income

UK plan Overseas plans Total

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

Actuarial gains/(losses)

recognised in the current year 9.8 (2.4) 3.3 0.6 13.1 (1.8)

Foreign exchange (losses)/

gains in the current year  – – (0.7) 0.8 (0.7) 0.8

Total gains/(losses) recognised

in the current year 9.8 (2.4) 2.6 1.4 12.4 (1.0)

Amounts recognised in the

Consolidated Statement of

Financial Position

UK plan Overseas plans Total

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

Present value of defined

benefit obligations (90.6) (133.2) (22.4) (26.5) (113.0) (159.7)

Fair value of plan assets 90.4 122.2 13.7 15.2 104.1 137.4

Net deficit in plans (0.2) (11.0) (8.7) (11.3) (8.9) (22.3)

Reconciliation of

movement in net deficit

UK plan Overseas plans Total

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

At 1 January (11.0) (7.8) (11.3) (12.6) (22.3) (20.4)

Balance transferred from other

payables  – –  – (0.2)  – (0.2)

Current service cost  – – (0.4) (0.7) (0.4) (0.7)

Net interest cost (0.2) (0.1) (0.1) (0.1) (0.3) (0.2)

Plan administrative cost  – (0.7)  – –  – (0.7)

Settlement/curtailment  – – 0.1 – 0.1 –

Acquisitions of businesses  – –  (0.5) (0.5) (0.5) (0.5)

Past service credit  – – 0.1 0.3 0.1 0.3

Contributions from sponsoring

company and plan members 1.2 – 0.3 0.4 1.5 0.4

Benefits paid  – – 0.5 0.7 0.5 0.7

Actuarial gains/(losses) 9.8 (2.4) 3.3 0.6 13.1 (1.8)

Foreign exchange difference  – – (0.7) 0.8 (0.7) 0.8

At 31 December (0.2) (11.0) (8.7) (11.3) (8.9) (22.3)



Spectris plc

144

Analysis of movement in the

present value of the defined

benefit obligation

UK plan Overseas plans Total

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

At 1 January 133.2 130.0 26.5 27. 3 159.7 157. 3

Balance transferred from other

payables  – –  – 0.2 0.0 0.2

Current service cost  – – 0.4 0.7 0.4 0.7

Interest cost 2.4 1.8 0.2 0.1 2.6 1.9

Settlement/curtailment  – –  (0.1) –  (0.1) –

Acquisitions of businesses  – – 2.6 0.5 2.6 0.5

Past service credit  – – (0.1) (0.3) (0.1) (0.3)

Contributions from plan

members  – – 0.2 0.2 0.2 0.2

Actuarial (gains)/losses –

financial (44.5) (4.0) (7.7) (2.0) (52.2) (6.0)

Actuarial (gains)/losses –

demographic (1.2) 4.9  – 0.3 (1.2) 5.2

Actuarial (gains)/losses –

experience 6.0 7.5 (0.1) 0.1 5.9 7.6

Benefits paid (5.3) (7.0) (1.4) (0.6) (6.7) (7.6)

Adjustments and balances

transferred to liabilities held for

sale  – –  – 1.7  – 1.7

Foreign exchange difference  – – 1.9 (1.7) 1.9 (1.7)

At 31 December 90.6 133.2 22.4 26.5 113.0 159.7

Analysed as:

Present value of unfunded

defined benefit obligation  – – 5.0 6.2 5.0 6.2

Present value of funded

defined benefit obligation 90.6 133.2 17.4 20.3 108.0 153.5

Reconciliation of movement in

fair value of plan assets

UK plan Overseas plans Total

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

At 1 January 122.2 122.2 15.2 14.7 137.4 136.9

Interest income on assets 2.2 1.7 0.1 – 2.3 1.7

Plan administration cost  – (0.7)  – –  – (0.7)

Acquisitions of businesses  – – 2.1 – 2.1 –

Contributions from sponsoring

company 1.2 – 0.3 0.4 1.5 0.4

Contributions from plan

members  – – 0.2 0.2 0.2 0.2

Actuarial (losses)/gains  (29.9) 6.0  (4.5) (1.0) (34.4) 5.0

Benefits paid  (5.3) (7.0)  (0.9) 0.1 (6.2) (6.9)

Adjustments and balances

transferred to liabilities held for

sale  – –  – 1.7  – 1.7

Foreign exchange difference  – – 1.2 (0.9) 1.2 (0.9)

At 31 December 90.4 122.2 13.7 15.2 104.1 137.4

Fair value of assets

UK plan Overseas plans Total

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

Equity instruments 1.7 7.8  – – 1.7 7.8

Corporate bonds 67.1 92.6  – – 67.1 92.6

Government bonds 12.5 20.2  – – 12.5 20.2

Cash and financial derivatives

and other (net) 9.0 1.5  – – 9.0 1.5

Insurance policies 0.1 0.1 13.7 15.2 13.8 15.3

90.4 122.2 13.7 15.2 104.1 137.4

Asset class

UK plan Overseas plans

2022

£m

2021

£m

2022

£m

2021

£m

i. Government Bonds 13.8 17.2  – –

ii. Corporate Bonds 74.2 76.1  – –

iii. Equity 1.9 5.9  – –

iv. Cash 25.0 6.8  – –

v. Insurance contracts 0.1 0.1 100.0 100.0

vi. Other (15.0) (6.1)  – –

100.0 100.0 100.0 100.0

The UK plan assets are invested in active markets which have a quoted market price. The

overseas plan assets are invested in insurance policies.

Notes to the Accounts 



STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

145

Notes to the Accounts 

20. Deferred tax

The movement in the net deferred tax asset/(liability) is shown below.

Note

2022

£m

2021

£m

At 1 January 1.8 (11.1)

Measurement period adjustments (1.4) –

Foreign exchange difference 2.0 0.8

Acquisition of subsidiary undertakings 23 2.5 17.0

Disposal of businesses (8.6) 0.6

Deferred tax on changes in fair value of forward exchange contracts

recognised in the Consolidated Statement of Comprehensive

Income (0.1) (0.2)

Deferred tax on re-measurement of net defined benefit liability

recognised in the Consolidated Statement of Comprehensive

Income 3.4 (0.9)

Deferred tax on share-based payments recognised in equity (0.1) (1.1)

Deferred tax charge on discontinued operations 6.4 0.9

Credited to the Consolidated Income Statement (6.5) (4.2)

At 31 December (0.6) 1.8

Comprising:

Deferred tax liabilities 15.6 23.0

Deferred tax assets (16.2) (21.2)

(0.6) 1.8

Sensitivity analysis

The table below shows the sensitivity of the Consolidated Statement of Financial Position to

changes in the significant pension assumptions based on a reasonably expected change given

current market conditions:

Impact on plan liabilities as at 31 December 2022

Change in assumption UK plan Overseas plans

Discount rate Increase by 1% Decrease by £9.3m Decrease by £2.5m

Rate of price inflation (RPI) Increase by 1% Increase by £5.9m Increase by £1.1m

Assumed life expectancy at age 65 Increase by 1 year Increase by £2.4m Increase by £0.5m

The sensitivity analysis is approximate and extrapolation beyond the ranges shown may

not be appropriate.

Defined contribution plans

The total cost of the defined contribution plans for the year was £20.1m (2021: £17.3m). There

were no outstanding or prepaid contributions to these plans as at the end of the year.



Spectris plc

146

The movements in deferred tax assets and liabilities during the year are shown below. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and they

relate to income taxes levied by the same taxation authority.

Net deferred tax (assets)/liabilities

Accelerated tax

depreciation

£m

Accruals and

provisions

£m

Tax losses

£m

Unrealised profit

on inter-

company

transactions

£m

Pension plans

£m

Goodwill and

other intangible

assets

£m

Other

£m

2022

Total

£m

At 1 January 2022 0.4 (18.2) (0.3) (7.0) (6.0) 36.1 (3.2) 1.8

Measurement period adjustments  –  – (1.4)  –  –  –  – (1.4)

Foreign exchange difference  –  –  –  –  – 2.0  – 2.0

Acquisition of subsidiary undertakings  – 0.2 (2.2)  – (0.1) 4.6  – 2.5

Disposal of businesses 0.1 0.6  –  –  – (9.3)  – (8.6)

Deferred tax on changes in fair value of forward exchange contracts recognised in

the Consolidated Statement of Comprehensive Income  –  –  –  –  –  – (0.1) (0.1)

Deferred tax on re-measurement of net defined benefit obligation recognised in

the Consolidated Statement of Comprehensive Income  –  –  –  – 3.4  –  – 3.4

Deferred tax on share-based payments recognised in equity  –  –  –  –  –  – (0.1) (0.1)

Discontinued Operations deferred tax charge 0.1 0.4  –  –  – 0.1 5.8 6.4

(Credited)/charged to the Consolidated Income Statement 1.5 (6.4) (0.4)  (3.5)  – 1.6 0.7 (6.5)

At 31 December 2022 2.1 (23.4) (4.3) (10.5) (2.7) 35.1 3.1 (0.6)

Net deferred tax (assets)/liabilities

Accelerated tax

depreciation

£m

Accruals and

provisions

£m

Tax losses

£m

Unrealised profit

on inter-company

transactions

£m

Pension plans

£m

Goodwill and

other intangible

assets

£m

Other

£m

2021

Total

£m

At 1 January 2021 3.4 (19.7) (0.7) (6.7) (5.7) 18.8 (0.5) (11.1)

Foreign exchange difference – – – – – 0.8 – 0.8

Acquisition of subsidiary undertakings – – – – (0.1) 17.1 – 17.0

Disposal of businesses 0.1 0.7 0.4 0.9 0.1 (1.8) 0.2 0.6

the Consolidated Statement of Comprehensive Income – – – – – – (0.2) (0.2)

the Consolidated Statement of Comprehensive Income – – – – (0.9) – – (0.9)

Deferred tax on share-based payments recognised in equity – – – – – – (1.1) (1.1)

Discontinued Operations deferred tax charge (2.7) 0.3 – – – 3.3 – 0.9

(Credited)/charged to the Consolidated Income Statement (0.4) 0.5 – (1.2) 0.6 (2.1) (1.6) (4.2)

At 31 December 2021 0.4 (18.2) (0.3) (7.0) (6.0) 36.1 (3.2) 1.8

Notes to the Accounts 

20. Deferred tax 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

147

market during the year (31 December 2021: 44,440). The costs of funding and administering the

plan are charged to the Consolidated Income Statement in the period to which they relate.

Other reserves

Movements in reserves are set out in the Consolidated Statement of Changes in Equity. The

retained earnings reserve also includes own shares purchased by the Company and treated as

treasury shares. The nature and purpose of other reserves forming part of equity are as follows:

Translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the

translation of the Financial Statements of foreign subsidiaries, including gains or losses arising

on net investment hedges.

Hedging reserve

This reserve records the cumulative net change in the fair value of forward exchange contracts

where they are designated as effective cash flow hedge relationships.

Merger reserve

This reserve arose on the acquisition of Servomex Limited in 1999, a purchase satisfied

substantially by the issue of share capital and therefore eligible for merger relief under the

provisions of Section 612 of the Companies Act 2006.

Capital redemption reserve

This reserve records the repurchase of the Company’s own shares. During the year, as a

result of the share buyback programme, the capital redemption reserve increased by £0.3m

(2021: £0.2m), reflecting the nominal value of the cancelled ordinary shares .

22. Share-based payments

Spectris Long Term Incentive Plan (‘LTIP’) – awards granted from 2020 onwards with

performance conditions attached

The LTIP is used to grant share awards with performance conditions attached to senior

executives and key employees that are settled in either equity or cash.

Both cash and equity-settled LTIP awards are expected to vest, subject to their performance

conditions, after three years. Vested equity-settled awards, which are granted in the form of

nominal share options, must be exercised within the next seven years, whereas vested

conditional share awards and cash-settled awards are paid out on or shortly after the vesting

date. All LTIP awards granted to Executive Directors are subject to an additional two-year

holding period. The Executive Directors’ LTIP awards vest after five years (three-year

performance period plus two-year holding period) and must be exercised within the next

five years.

Subject to the LTIP awards vesting, participants receive additional dividend shares on the

vested shares under the LTIP award. Dividend shares are of equivalent value to the Company’s

dividends paid between the date of grant and the vesting date.

Spectris Performance Share Plan (‘PSP’) – awards granted prior to 2020

The PSP was used to grant share awards to senior executives and key employees that are

settled in either equity or cash, however the only outstanding PSP awards remaining are all

settled in equity.

Both cash and equity-settled PSP awards are expected to vest, subject to their performance

conditions, after three years. Vested equity-settled awards must be exercised within the next

Unrecognised temporary differences

Deferred tax assets have not been recognised on the following temporary differences due

to the degree of uncertainty over both the amount and utilisation of the underlying tax losses

and deductions in certain jurisdictions. £2.0m will expire between 2026 and 2030. There is no

expiry date associated with the remaining tax losses of £23.1m which mainly comprise of UK

capital losses.

2022

£m

2021

£m

Tax losses 25.1 29.0

25.1 29.0

It is likely that the unremitted earnings of overseas subsidiaries would qualify for the UK

dividend exemption such that no UK tax would be due upon remitting these earnings to the

UK. However, £306.6m (2021: £263.7m) of those earnings may still result in a tax liability,

principally as a result of the dividend withholding taxes levied by the overseas tax jurisdictions

in which those subsidiaries operate. These tax liabilities are not expected to exceed £16.3m

(2021: £13.6m), of which only £4.5m (2021: £2.5m) has been provided for as the Group is able to

control the timing of the dividends. It is not expected that further amounts will crystallise in the

foreseeable future.

21. Share capital and reserves

2022 2021

Number of

shares

Millions £m

Number of

Millions £m

Issued and fully paid (ordinary shares of 5p each):

At 1 January and 31 December 109.1 5.5 115.6 5.8

During the year ended 31 December 2022, 6,439,493 ordinary shares were repurchased and

cancelled by the Group as part of the £300m share buyback programme announced on

19 April 2022, resulting in a cash outflow of £191.0m, including transaction fees of £1.2m.

During the year ended 31 December 2021, 5,596,739 ordinary shares were repurchased and

cancelled by the Group as part of the £200m share buyback programme announced on

25 February 2021, resulting in a cash outflow of £201.3m, including transaction fees of £1.3m.

No ordinary shares were issued upon exercise under share option schemes during the year

(2021: nil).

At 31 December 2022, the Group held 4,596,698 treasury shares (2021: 4,767,106). During

the year, 170,408 of these shares were issued to satisfy options exercised by, and SIP Matching

shares awarded to, employees which were granted under the Group’s share schemes

(2021: 167,461).

The Group has an employee benefit trust (‘EBT’), which operates the Spectris Share Incentive

Plan (‘SIP’) to all eligible UK-based employees. The EBT holds shares in Spectris plc for the

purposes of the SIP, further details of which are disclosed in the Directors’ Remuneration

Report. At 31 December 2022, the EBT held 55,570 shares which were purchased from the 

Notes to the Accounts 

20. Deferred tax 

Spectris plc

148

seven years, whereas vested cash-settled awards are paid out on or shortly after the vesting

date. Outstanding PSP awards granted to Executive Directors are subject to an additional

two-year holding period. The Executive Directors’ PSP awards vest after five years (three-year

five years.

Subject to the PSP awards vesting, participants receive additional dividend shares on the

vested shares under the PSP award. For PSP awards granted in or after 2014, the dividend

shares are of equivalent value to the Company’s dividends paid between the date of grant and

the vesting date. For PSP awards granted before 2014, dividend shares were of equivalent value

to the Company’s dividends paid between the date of grant and the date of exercise.

Linked (tax-advantaged) awards

Some PSP and LTIP awards granted to UK employees are linked to a grant of market value

share options under the terms of HMRC’s tax-advantaged Company Share Option Plan (‘Linked

(tax-advantaged) awards’). Linked (tax-advantaged) awards are granted up to an aggregate

value of £30,000, which is HMRC’s limit. The Linked (tax-advantaged) awards have the same

performance and vesting conditions as the PSP/LTIP awards to which they are linked.

When an employee chooses to exercise a PSP/LTIP award which is linked to a Linked (tax-

advantaged) award, both parts are also automatically exercised at the same time. Should there

be a gain on exercise from the Linked (tax-advantaged) award part, then a proportion of the

PSP/LTIP award will lapse to ensure that the overall gross value received from the combined

exercise of these awards is no more than would have been delivered from a stand-alone

equivalent PSP/LTIP award. Should there be no gain on exercise from the Linked (tax-

advantaged) award part, then this part is forfeited and there is no reduction in the remaining

PSP/LTIP award.

LTIP performance conditions

LTIP awards granted to Executive Directors and Executive Committee members are subject

to an adjusted earnings per share growth target (‘EPS’) and a return on gross capital employed

(‘ROGCE’) target. Any vesting under these performance conditions will then be further

assessed against both absolute and relative Total Shareholder Return (‘TSR’) metrics which

can potentially increase the vested award via a multiplier (maximum 1.4 times).

The performance conditions attached to LTIP awards granted to senior managers are one-third

EPS, one-third ROGCE and the remaining one-third solely subject to continuous employment

over the three-year vesting period. LTIP Awards below senior management level are subject to

EPS (50%) and ROGCE (50%).

Normally, LTIP awards granted to participants who leave employment prior to vesting will be

forfeited. In the event a participant leaves due to a qualifying reason, they receive a time

pro-rated entitlement.

PSP performance conditions

Outstanding PSP awards granted to Executive Directors were subject to the following

performance conditions: one-third EPS; one-third economic profit (‘EP’); and one-third relative

TSR. The vesting outcome against the PSP performance conditions have been confirmed and

the Executive Directors’ outstanding PSP awards are currently in the additional two-year

holding period. 

Notes to the Accounts 

22. Share-based payments co d PSP awards granted to other members of the Executive Committee in 2017 and 2018 are

subject to the following performance conditions: one-third subject to EPS; one-third subject to

EP; and one-third solely subject to continuous employment over the three-year vesting period.

In 2019, the same conditions applied for Head Office Executive Committee roles however the

EP target was replaced for an operating company profit target for the Executive Committee

members who are Presidents of an operating company.

PSP awards granted to other senior head office managers were, until 2016, 50% subject to EPS

and 50% subject to TSR. From 2017 onwards, senior head office management have two-thirds

of their PSP awards subject to EPS and the remaining one-third solely subject to continuous

employment over the three-year vesting period.

PSP awards granted to executives and senior managers of the Group’s operating companies

until 2016 had two-thirds subject to an operating company profit target and one-third subject

to EPS. In 2017 and 2018, the performance conditions have been two-thirds operating company

profit targets and one-third continuous employment over the three-year vesting period. In

2019, the performance conditions were one-third operating company profit targets, one-third

EPS and one-third continuous employment over the three-year vesting period.

Normally, PSP awards granted to participants who leave employment prior to vesting will be

pro-rated entitlement.

Spectris Reward Plan (‘SRP’) – awards granted from 2020 onwards with no performance

conditions attached

The SRP is used to grant share awards with no performance conditions attached to key

employees that are settled in equity or, in limited circumstances, in cash. SRP awards cannot be

granted to an Executive Director of Spectris plc.

Both cash and equity-settled SRP awards are expected to vest after three years. Vested

equity-settled awards, which are granted in the form of nominal share options, must be

exercised within the next seven years, whereas vested conditional share awards and cash-

settled awards are paid out on or shortly after the vesting date.

On vesting, participants receive additional dividend shares on the vested shares under the SRP

award. Dividend shares are of equivalent value to the Company’s dividends paid between the

date of grant and the vesting date.

Spectris Deferred Bonus Plan (‘DBP’) – awards granted from 2021 onwards with no

performance conditions attached

The DBP is used to grant share awards with no performance conditions attached to Executive

Directors and are settled in equity. This represents the 50% of the Executive Directors’ annual

bonus that is deferred into shares each year.

DBP awards are expected to vest after three years and must be exercised within the next seven

years. On vesting, the Executive Directors receive additional dividend shares on the vested

shares under the DBP award. Dividend shares are of equivalent value to the Company’s

Spectris Share Incentive Plan (‘SIP’)

The SIP, a UK tax-advantaged share matching plan, was launched after it was approved by

shareholders at the May 2018 AGM. UK employees can invest up to £150 per month to buy

ordinary shares in the Company (‘Partnership shares’) tax efficiently and for every five

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

149

Long Term Incentive Plan,

Spectris Reward Plan and

Performance Share Plan

(equity awards)

2022 2021

Number

thousands

Weighted

average

exercise

price

Weighted

average

fair value at

grant date

Number

thousands

Weighted

average

exercise

price

Weighted

average

fair value at

grant date

At 1 January 1,776 0.05 1,599 0.05

Shares granted 711 0.05 21.13 688 0.05 26.44

Addition of reinvested

dividends 17  – 10 –

Exercised (166) 0.05 (155) 0.05

Forfeited (518) 0.05 (366) 0.05

At 31 December 1,820 0.05 1,776 0.05

Exercisable at 31 December 120 0.05 70 0.05

Long Term Incentive Plan

and Performance Share Plan

(Linked tax-advantaged)

Year of grant

2022 2021

Remaining

contractual

life

of options

Number

thousands

Weighted

average

Exercise

price

Number

thousands

Weighted

average

Exercise

price

2012 PSP –  –  –  – 17. 31

2017 PSP 5 years 1 26.31 2 26.31

2018 PSP 6 years 1 25.80 2 26.03

2019 PSP 7 years 5 26.69 33 26.53

2020 LTIP 8 years 29 22.72 31 22.69

2021 LTIP 9 years 30 31.95 33 31.91

2022 LTIP 10 years 41 26.76  –  –

107 27.11 101 27.05

The weighted average remaining contractual life of the PSP and LTIP (Linked tax-advantaged)

awards is 8.93 years (2021: 8.89 years).

Long Term Incentive Plan

and Performance Share Plan

(Linked tax-advantaged)

2022 2021

Number

thousands

Weighted

average

exercise

price

Weighted

average

fair value at

grant date

Number

thousands

Weighted

average

exercise

price

Weighted

average

fair value at

grant date

At 1 January 101 27.05 106 25.17

Shares granted 45 26.74 5.81 35 31.88 6.51

Exercised (6) 25.99 (9) 26.18

Forfeited (33) 26.62 (31) 26.37

At 31 December 107 27.11 101 27.05

Exercisable at 31 December 7 26.76 3 25.57

Partnership shares purchased, the Company will gift one free ordinary share (‘Matching share’).

Matching shares need to be held in the SIP Trust for at least three years otherwise these shares

are potentially subject to forfeiture. The Company incurs a charge on any Matching shares

awarded under the SIP. The charge in 2022 was £0.1m (2021: £0.1m).

The number of outstanding share incentives are summarised below:

Incentive plan

2022

Number

thousands

2021

Number

thousands

Equity-settled:

Long Term Incentive Plan  1,385 1,023

Performance Share Plan 135 522

Long Term Incentive Plan (Linked tax-advantaged) 99 64

Performance Share Plan (Linked tax-advantaged) 8 37

Spectris Reward Plan 262 221

Deferred Bonus Plan 38 10

Total equity-settled  1,927 1,877

Cash-settled:

Long Term Incentive Plan Cash 71 43

Spectris Reward Plan Cash 15 12

Performance Share Plan (Phantom allocations)  – 12

Total cash-settled 86 67

Total outstanding  2,013 1,944

Share options outstanding at the end of the year (equity settled)

Long Term Incentive Plan,

Performance Share Plan,

Spectris Reward Plan and

Deferred Bonus Plan

Year of grant

2022 2021

Remaining

contractual

life of

options

Number

thousands

Weighted

average

Exercise

price

Number

thousands

Weighted

average

Exercise

price

2012

PSP

–  –  – – 0.04

2013

PSP

1 year  –  – – 0.04

2015

PSP

3 years 1 0.05 1 0.05

2016

PSP

4 years 9 0.05 10 0.05

2017

PSP

5 years 37 0.05 52 0.05

2018

PSP

6 years 26 0.05 38 0.05

2019

PSP

7 years 62 0.05 421 0.05

2020

LTIP/ SRP

8 years 515 0.05 601 0.05

2021

LTIP/ SRP/

DBP

9 years 533 0.05 653 0.05

2022 10 years 637 0.05 – –

 1,820 0.05 1,776 0.05

The weighted average remaining contractual life of these LTIP, SRP and PSP equity settled

awards is 8.85 years (2021: 8.97 years).

Notes to the Accounts 

22. Share-based payments 

Spectris plc

150

Share options outstanding at the end of the year (cash-settled)

Long Term Incentive Plan,

Spectris Reward Plan and

Performance Share Plan

(Phantom allocations)

Year of grant

2022 2021

Weighted

average

remaining

contractual

life of

options

Number

thousands

Weighted

average

Exercise

price

Number

thousands

Weighted

average

Exercise

price

2019 PSP –  –  – 11 0.05

2020 LTIP/SRP 1 year 28 0.05 28 0.05

2021 LTIP/SRP 1.86 years 27 0.05 28 0.05

2022 LTIP/SRP 3 years 31 0.05 – –

86 0.05 67 0.05

The weighted average remaining contractual life of the cash-settled awards is 1.99 years

(2021: 2.18 years).

Long Term Incentive Plan,

Spectris Reward Plan and

Performance Share Plan

(Phantom allocations)

2022 2021

Number

thousands

Exercise

price

Weighted

average

fair value at

grant date

Number

thousands

Exercise

price

Weighted

average

fair value at

grant date

At 1 January 67 0.05 157 0.05

Shares granted 33 0.05 26.93 40 0.05 31.64

Addition of reinvested

dividends –  – 6 –

Exercised (4) 0.05 (92) 0.05

Forfeited (10) 0.05 (44) 0.05

At 31 December 86 0.05 67 0.05

Exercisable at 31 December – – – –

Share-based payment expense

Share options are valued using the stochastic option pricing model (also known as the Monte

Carlo model) in respect of TSR, and the Black-Scholes model for all other options, with support

from an independent remuneration consultant. For options granted in 2022 and 2021, the fair

value of options granted and the assumptions used in the calculation, are as follows:

Equity-settled Cash-settled

Share awards

LTIP & SRP

(Linked tax-advantaged)

LTIP & SRP LTIP Cash & SRP Cash

2022 2021 2022 2021 2022 2021

Weighted average share price

at date of grant (£) 26.94 31.55 26.97 31.81 26.98 31.69

Weighted average exercise

price (£) 0.05 0.05 26.74 31.88 0.05 0.05

Expected volatility 28.41% 29.83% 28.55% 29.38% 28.58% 29.86%

Expected life 3.30 yrs 3.12 yrs 3.07 yrs 3 yrs 3 yrs 2.86 yrs

Risk-free rate 1.37% 0.22% 1.39% 0.21% 1.39% 0.20%

Expected dividends (expressed

as a yield) – – – – – –

Weighted average fair values

at date of grant (£):

TSR condition 10.25 19.12 n/a n/a n/a n/a

ROGCE condition 20.38 23.99 5.81 6.52 26.91 31.73

EPS condition 20.38 23.99 5.81 6.52 26.91 31.73

Service condition 26.48 31.37 5.84 6.50 26.98 31.54

Weighted average fair values

at 31 December (£):

ROGCE condition (cash-

settled) 29.09 35.41

EPS condition (cash-settled) 29.09 35.70

Profit condition (cash-settled) n/a 36.40

Service condition (cash-settled) 29.12 35.52

The expected volatility is based on historical volatility over the expected term. The expected life

is the average expected period to exercise. The risk-free rate of return is the yield on zero-

coupon UK government bonds of a term consistent with the assumed option life.

The weighted average share price at the date of exercise for share options exercised in 2022

was £28.27 (2021: £33.11). The weighted average fair value of cash-settled options outstanding

at 31 December 2022 is £29.10 (2021: £35.57). The Group recognised a total share-based

payment charge from continuing and discontinued operations of £11.1m (2021: £9.0m) in the

Consolidated Income Statement, of which £10.4m (2021: £7.8m) related to equity-settled

share-based payment transactions.

Notes to the Accounts 

22. Share-based payments 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

151

In the Consolidated Income Statement for the year ended 31 December 2022, sales of £4.2m

and statutory operating profit of £0.5m have been included for the acquisition of MB connect.

Group revenue and statutory operating profit from continuing operations for the year ended

31 December 2022 would have been £1,328.6m and £172.6m, respectively, had this acquisition

taken place on the first day of the financial year.

Where appropriate, a detailed exercise has been undertaken to assess the fair value of assets

acquired and liabilities assumed, supported by the use of third-party experts. The valuation of

the above intangible and tangible assets requires the use of assumptions and estimates.

Intangible asset assumptions consist of future growth rates, expected inflation and attrition

rates, discount rates used and useful economic lives. Due to their contractual due dates, the fair

value of receivables approximates to the gross contractual amounts receivable. The amount of

gross contractual receivables not expected to be recovered is immaterial. There are no material

contingent liabilities recognised in accordance with IFRS 3 (Revised).

Acquisition-related costs (included in administrative expenses) amount to £0.1m.

Dytran

On 1 September 2022, the Group acquired 100% of the share capital of Dytran Instruments, Inc

(‘Dytran’) for net consideration of £69.6m, made up of £70.5m gross consideration in cash

less £0.9m net cash acquired. There was no contingent consideration recognised on this

acquisition. Dytran is a leading designer and manufacturer of piezo-electric and MEMS-based

accelerometers and sensors for measuring dynamic force, pressure and vibration, with its largest

market in North America. The transaction is in line with Spectris’ strategy to make synergistic

acquisitions to enhance and grow its businesses. The acquisition strengthens Spectris Dynamics’

piezo electric offering, adds new MEMS capability and expands sales into North America. The

acquisition also allows both companies to leverage complementary capabilities and provide

enhanced customer offerings and solutions to enable accelerated product development. Dytran

will be integrated into the Spectris Dynamics reportable segment and cash generating unit.

The excess of the fair value of consideration paid over the fair value of the net tangible assets

acquired is represented by the following intangible assets: customer-related relationships,

brand, order backlog and goodwill. Goodwill arising is attributable to the assembled workforce,

synergies from cross-selling goods and services and cost synergies.

In the Consolidated Income Statement for the year ended 31 December 2022, sales of £8.3m

and statutory operating profit of £1.3m have been included for the acquisition of Dytran. Group

revenue and statutory operating profit from continuing operations for the year ended 31

December 2022 would have been £1,343.5m and £174.3m, respectively, had this acquisition

taken place on the first day of the financial year.

Acquisition-related costs (included in administrative expenses) amount to £1.9m .

23. Acquisitions

2022

Creoptix

On 7 January 2022, the Group acquired 100% of the share capital of Creoptix AG (‘Creoptix’) for

net consideration of £37.0m, made up of £37.3m of gross consideration (consisting of £35.1m

of cash paid and £2.2m of contingent consideration) less £0.3m of cash acquired. Creoptix

is a bioanalytical sensor company, which provides solutions to accelerate discovery and

development of new pharmaceutical drugs, substances and products. The transaction is in line

with Spectris’ strategy to make synergistic acquisitions to enhance and grow its businesses.

Creoptix will be integrated into the Spectris Scientific reportable segment and the Malvern

Panalytical cash generating unit.

acquired is represented by a technology intangible asset and goodwill. Goodwill arising is

attributable to the assembled workforce, in process research, expected future customer

relationships and synergies from cross-selling goods and services.

and statutory operating loss of £4.2m have been included for the acquisition of Creoptix. As

Creoptix was acquired near to the start of the current reporting period, Group revenue and

statutory operating profit from continuing operations for the year ended 31 December 2022

would be the approximately the same had this acquisition taken place on the first day of the

financial period.

Acquisition-related costs (included in administrative expenses) amount to £2.8m.

MB connect line

On 31 March 2022, the Group acquired 100% of the share capital of MB connect line GmbH

(‘MB connect’) for net consideration of £8.7m, made up of £9.0m gross consideration in cash

less £0.3m net cash acquired. There was no contingent consideration recognised on this

acquisition. MB connect is a leading provider of secure connections between machines and

plants for remote access, data collection, and M2M-communication. The transaction is in line

MB connect will be integrated into Other non-reportable segments and the Red Lion Controls

cash generating unit.

technology, brand and goodwill. Goodwill arising is attributable to the assembled workforce,

Notes to the Accounts 

Spectris plc

152

2021

Concurrent Real-Time

On 9 July 2021, the Group acquired 100% of Concurrent Real-Time (‘Concurrent-RT’) for net

consideration of £123.6m, made up of £135.9m gross consideration in cash less £12.3m cash

acquired. There was no contingent consideration recognised on this acquisition. The

transaction is in line with Spectris’ strategy to make synergistic acquisitions to enhance and

grow its division’s businesses. Concurrent-RT will be integrated into the Spectris Dynamics

reportable segment and cash generating unit. The excess of the fair value of consideration paid

over the fair value of the net tangible assets acquired is represented by the following intangible

assets: customer-related relationships, contractual rights, technology and goodwill. Goodwill

arising is attributable to the acquired workforce, expected future customer relationships and

synergies from cross-selling goods and services.

In the Consolidated Income Statement for the year ended 31 December 2021, sales of £15.4m

and statutory operating profit of £3.7m have been included for the acquisition of Concurrent-

RT. Group revenue and statutory operating profit for the year ended 31 December 2021 would

have been £1,308.1m and £158.0m, respectively, had this acquisition taken place on the first day

of the financial year.

rates, discount rates used and useful economic lives.

Acquisition-related costs (included in administrative expenses) amounted to £2.7m in 2021.

Due to their contractual due dates, the fair value of receivables approximates to the gross

contractual amounts receivable. The amount of gross contractual receivables not expected to

be recovered is immaterial. There are no material contingent liabilities recognised in accordance

with IFRS 3 (Revised).

Software licence and asset purchase agreement with VIMANA

On 24 August 2021, the Group completed a software licence and asset purchase agreement

with VIMANA for gross consideration of £10.2m in cash. There was no contingent consideration

recognised on this acquisition. The transaction advances HBK’s software strategy by bringing

technology to HBK, and will form the basis for a new engineering centre of excellence focused

on data management and connectivity. The fair value of net assets acquired was £7.2m,

consisting of £7.2m of intangible assets (technology). As a result £3.0m of goodwill was

generated, which is attributable to the acquired workforce. There are no material contingent

liabilities recognised in accordance with IFRS 3 (Revised). The fair value of the net assets is

final. The acquisition is included in the Spectris Dynamics reportable segment and cash

generating unit.

In the Consolidated Income Statement for the year ended 31 December 2021, statutory

operating profit included £0.3m of costs relating to the VIMANA business. Group revenue and

statutory operating profit for the year ended 31 December 2021 would have been £1,292.0m

and £154.9m, respectively, had this acquisition taken place on the first day of the financial year.

Acquisition-related costs (included in administrative expenses) amount to £0.6m in 2021.

The fair values included in the table below relate to the acquisition of Creoptix, MB connect and

Dytran during the year:

Creoptix

£m

MB connect

£m

Dytran

£m

2022

Total fair

value

£m

Intangible assets 18.5 5.1 35.8 59.4

Property, plant and equipment 0.1 1.2 1.7 3.0

Right of use assets 1.0 – – 1.0

Inventories 0.6 0.3 5.2 6.1

Trade and other receivables 1.6 0.1 2.9 4.6

Cash and cash equivalents 0.3 0.3 0.9 1.5

Borrowings – (0.1) – (0.1)

Trade and other payables (1.9) (0.1) (2.3) (4.3)

Retirement benefit obligations (0.5) – – (0.5)

Lease liabilities (1.0) – – (1.0)

Current tax liabilities – (0.1) – (0.1)

Deferred tax liabilities (0.9) (1.6) – (2.5)

Net assets acquired 17.8 5.1 44.2 67.1

Goodwill 19.5 3.9 26.3 49.7

Gross consideration 37.3 9.0 70.5 116.8

Adjustment for cash acquired (0.3) (0.3) (0.9) (1.5)

Net consideration 37.0 8.7 69.6 115.3

Analysis of cash outflow in Consolidated

Statement of Cash Flows

2022

£m

2021

£m

Gross consideration in respect of acquisitions during

the year 116.8 146.1

Adjustment for net cash acquired (1.5) (12.3)

Net consideration in respect of acquisitions during

the year 115.3 133.8

Deferred and contingent consideration on acquisitions

included in net consideration during the year to be paid

in future years (2.2) –

Cash paid during the year in respect of acquisitions

during the year 113.1 133.8

Cash paid in respect of prior years’ acquisitions 1.6 1.7

Net cash outflow relating to acquisitions 114.7 135.5

Notes to the Accounts 

23. Acquisitions 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

153

The profit on disposal of the Omega reportable segment was calculated as follows:

2022

Omega

£m

Goodwill 121.3

Other intangible assets 39.9

Property, plant and equipment – owned and right of use assets 20.5

Current tax assets 0.1

Inventories 20.8

Trade and other receivables 18.0

Cash and cash equivalents 7.7

Trade and other payables (19.9)

Lease liabilities (3.2)

Current and deferred tax liabilities (8.6)

Provisions (0.2)

Net assets of disposed businesses 196.4

Consideration received

Settled in cash 417.9

Total consideration received 417.9

Transaction expenses booked to profit on disposal of business (14.3)

Net consideration from disposal of business 403.6

Net assets disposed of (including cash and cash equivalents held by disposal group) (196.4)

Currency translation differences transferred from translation reserve 86.7

Pre-tax profit on disposal of the Omega reportable segment 293.9

Net proceeds recognised in the Consolidated Statement of Cash Flows

Consideration received settled in cash 417.9

Cash and cash equivalents held by disposed business (7.7)

Transaction fees paid (14.3)

Tax paid on current year disposal of business (15.3)

Net proceeds recognised in the Consolidated Statement of Cash Flows in respect of

current year disposals 380.6

Payments made in respect of prior years’ disposal of businesses (2.6)

Tax paid on prior year disposal of businesses (12.6)

Net proceeds recognised in the Consolidated Statement of Cash Flows 365.4

The fair values included in the table below relate to the acquisition of Concurrent-RT and

VIMANA during 2021:

Concurrent-RT

£m

VIMANA

£m

2021

Total fair

value

£m

Intangible assets 74.8 7.2 82.0

Property, plant and equipment 2.7 – 2.7

Right of use assets 5.4 – 5.4

Inventories 1.5 – 1.5

Current tax asset 0.3 – 0.3

Trade and other receivables 5.0 – 5.0

Cash and cash equivalents 12.3 – 12.3

Trade and other payables (6.7) – (6.7)

Retirement benefit obligations (0.5) – (0.5)

Lease liabilities (5.4) – (5.4)

Provisions (0.3) – (0.3)

Deferred tax liabilities (17.0) – (17.0)

Net assets acquired 72.1 7.2 79.3

Goodwill 63.8 3.0 66.8

Gross consideration 135.9 10.2 146.1

Adjustment for cash acquired (12.3) – (12.3)

Net consideration 123.6 10.2 133.8

24. Business disposals and disposal groups held for sale

Business disposals

2022

On 1 July 2022, the Group disposed of the Omega reportable segment. The consideration

received was £417.9m, settled in cash received. This generated a pre-tax profit on disposal of

£293.9m. The divestment was effected to offer a better opportunity to generate returns for

shareholders and further enhance Group margins. 

Notes to the Accounts 

23. Acquisitions 

Spectris plc

154

The Omega reportable segment has been classified as discontinued operations in the

Consolidated Income Statement. The results of these discontinued operations, which have

been included in the profit for the year, were as follows:

2022

£m

2021

£m

Revenue 73.9 129.0

Expenses included in adjusted operating profit (59.9) (109.2)

Adjusted operating profit 14.0 19.8

Other expenses (1.1) (5.0)

Profit before tax 12.9 14.8

Attributable tax expense (2.7) (3.5)

10.2 11.3

Profit on disposal of discontinued operations 293.9 –

Tax expense attributable to profit on disposal of discontinued operations (17.4) –

Profit after tax from discontinued operations for the year attributable to

owners of the Company 286.7 11.3

During the year, discontinued operations contributed £6.5m (2021: £23.5m) to the Group’s net

cash inflow from operating activities, received £379.8m (2021: £1.8m) in respect of investing

activities and paid £0.5m (2021: £0.9m) in respect of financing activities.

2021

On 5 January 2021, the Group disposed of Concept Life Sciences’ legacy food testing business

based in Cambridge, which formed part of the Spectris Scientific Division. The consideration

received was £6.2m, settled in cash received. This generated a profit on disposal of £1.9m.

On 2 February 2021, the Group disposed of 100% of its Millbrook business, which formed part

of the Other non-reportable segments. The consideration received was £119.2m, consisting of

£71.2m of cash received, €27.5m (£25.0m) of investment units in EZ Ring FPCI (the fund

holding the combined UTAC-Millbrook group) and a £23.0m investment in debt instruments.

On 1 March 2021, the Group disposed of 100% of its Brüel & Kjær Vibro business, which formed

part of the Other non-reportable segments. The consideration received was £154.7m, settled in

cash received.

On 3 May 2021, the Group disposed of 100% of its ESG business, which formed part of the Other

non-reportable segments. The consideration received was £3.4m, settled by cash received. This

generated a loss on disposal of £4.8m.

On 1 November 2021, the Group disposed of 100% of its NDC Technologies business, which

formed part of the Other non-reportable segments. The consideration received was £133.0m,

settled by £135.4m cash received less £2.4m estimated completion accounts true-up.

Also included in profit on disposal of businesses in 2021 is a £1.2m credit relating to prior

year disposals.

The total profit on disposal of businesses was £226.5m, calculated as follows:

2021

Brüel & Kjær/

Vibro

£m

2021

Millbrook

£m

2021

NDC

Technologies

£m

2021

Other

disposals

£m

2021

Total

£m

Goodwill 14.9 – 3.0 1.1 19.0

Other intangible assets 1.0 0.5 4.4 0.0 5.9

Property, plant and equipment – owned

and right of use assets 2.8 108.7 4.1 6.2 121.8

Current and deferred tax assets – 1.8 – 1.6 3.4

Inventories 3.4 2.9 9.0 0.5 15.8

Trade and other receivables 8.2 23.9 13.9 2.9 48.9

Cash and cash equivalents 6.2 7.1 5.6 1.7 20.6

Trade and other payables (6.9) (14.0) (15.1) (1.5) (37. 5)

Lease liabilities (1.1) (9.8) (3.2) (1.1) (15.2)

Current and deferred tax liabilities (0.9) – (0.7) – (1.6)

Provisions (0.5) (0.3) (0.6) (0.1) (1.5)

Retirement benefit obligations (0.6) – – – (0.6)

Net assets of disposed businesses 26.5 120.8 20.4 11.3 179.0

Consideration received

Settled in cash 154.7 71.2 135.4 9.6 370.9

Investment in equity instruments – 25.0 – – 25.0

Investment in debt instruments – 23.0 – – 23.0

Estimated completion accounts payable – – (2.4) – (2.4)

Total consideration received 154.7 119.2 133.0 9.6 416.5

Transaction expenses booked to profit/

(loss) on disposal of business (7.1) (3.5) (5.0) (0.2) (15.8)

Net consideration from disposal of

business 147.6 115.7 128.0 9.4 400.7

Net assets disposed of (including

cash and cash equivalents held by

disposal group) (26.5) (120.8) (20.4) (11.3) (179.0)

Currency translation differences

transferred from translation reserve 3.3 0.4 0.9 0.2 4.8

Profit/(loss) on disposal of business 124.4 (4.7) 108.5 (1.7) 226.5

Net proceeds recognised in the

Consolidated Statement of Cash Flows

Consideration received settled in cash 154.7 71.2 135.4 9.6 370.9

Cash and cash equivalents held by

disposed businesses (6.2) (7.1) (5.6) (1.7) (20.6)

Transaction fees paid (7.1) (3.7) (4.6) (1.2) (16.6)

Net proceeds recognised in the

Consolidated Statement of Cash Flows 141.4 60.4 125.2 6.7 333.7

Notes to the Accounts 

24. Business disposals and disposal groups held for sale 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

155

26. Financial risk management

The Group’s multinational operations and debt financing expose it to a variety of financial risks.

In the course of its business, the Group is exposed to foreign currency risk, interest rate risk,

liquidity risk and credit risk. Financial risk management is an integral part of the way the Group

is managed. Financial risk management policies are set by the Board of Directors. These

policies are implemented by a central treasury department that has formal procedures to

manage foreign exchange risk, interest rate risk and liquidity risk, including, where appropriate,

the use of derivative financial instruments. The Group has clearly defined authority and

approval limits. The central treasury department operates as a service centre to the Group and

not as a profit centre.

In accordance with its treasury policy, the Group does not hold or use derivative financial

instruments for trading or speculative purposes. Such instruments are only used to manage

the risks arising from operating or financial assets or liabilities, or highly probable future

transactions. The quantitative analysis of financial risk is included in note 27.

Foreign currency risk

Foreign currency risk arises both where sale or purchase transactions are undertaken in

currencies other than the respective functional currencies of Group companies (transactional

exposures) and where the results of overseas companies are consolidated into the Group’s

reporting currency of Sterling (translational exposures). The Group has operations around

the world which record their results in a variety of different local functional currencies. In

countries where the Group does not have operations, it invariably has some customers or

suppliers that transact in a foreign currency. The Group is therefore exposed to the changes in

foreign currency exchange rates between a number of different currencies, but the Group’s

primary exposures relate to the US Dollar, Euro, Chinese Yuan Renminbi and Japanese Yen.

Where appropriate, the Group manages its foreign currency exposures using derivative

financial instruments.

The Group’s translational exposures to foreign currency risks can relate both to the Consolidated

Income Statement and net assets of overseas subsidiaries. The Group’s policy is not to hedge

the translational exposure that arises on consolidation of the Consolidated Income Statement

of overseas subsidiaries. The Group finances overseas company investments partly through the

use of foreign currency borrowings in order to provide a natural hedge of foreign currency risk

arising on translation of the Group’s foreign currency subsidiaries. The quantitative analysis of

foreign currency risk is included in note 27.

The Group manages its transactional exposures to foreign currency risks through the use of

forward exchange contracts. Forward exchange contracts are used to hedge highly probable

transactions which can be forecast to occur typically up to 18 months into the future. For the

hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional

amount, life and the underlying) of the forward exchange contracts and their corresponding

hedged items are the same, the Group performs a qualitative assessment of effectiveness and

it is expected that the value of the forward contracts and the value of the corresponding

hedged items will systematically change in opposite directions in response to movements in

the underlying exchange rates.

The main potential source of hedge ineffectiveness in these hedging relationships is the effect

of the counterparty and the Group’s own credit risk on the fair value of the forward contracts, 

The disposals in 2021 did not meet the definition of discontinued operations given in IFRS 5

‘Non-Current Assets Held for Sale and Discontinued Operations’ and, therefore, no disclosures

in relation to discontinued operations were made.

Disposal groups held for sale

2022

Assets classified as held for sale at 31 December 2022 consist of the Group’s former

headquarters building in Egham, Surrey, UK. This disposal does not meet the definition of

discontinued operations given in IFRS 5.

2021

Assets held for sale at 31 December 2021 consisted of a freehold property with net book value

of £10.4m, which forms part of the Spectris Dynamics reportable segment. As a result of the

classification as held for sale the impairment of this asset that was recognised in 2020 has

resulted in a £6.0m impairment reversal in 2021. This disposal does not meet the definition of

discontinued operations given in IFRS 5.

25. Cash generated from operations

Note

2022

£m

2021

£m

Cash flows from operating activities

Profit after tax 401.5 346.9

Adjustments for:

Taxation charge 56.8 41.7

Profit on disposal of businesses 24 (294.2) (226.5)

Finance costs 6 19.2 5.6

Financial income 6 (1.9) (12.8)

Depreciation and impairment of property, plant and equipment 11 34.8 26.4

Amortisation, impairment and other non-cash adjustments made

to intangible assets 10 26.3 23.9

Transaction-related fair value adjustments 27 1.0 0.2

Fair value through profit and loss movements on debt investments 27 4.1 –

Equity-settled share-based payment expense 5 10.4 7.8

Operating cash flow before changes in working capital and

provisions 256.5 213.3

Increase in trade and other receivables (47.9) (40.2)

Increase in inventories (75.6) (30.3)

Increase in trade and other payables 40.9 50.3

Decrease in provisions and retirement benefits (7.1) (1.5)

Cash generated from operations 166.8 191.6

Notes to the Accounts 

24. Business disposals and disposal groups held for sale 

Spectris plc

156

which is not reflected in the fair value of the hedged item attributable to changes in foreign

exchange rates. No other sources of ineffectiveness emerged from these hedging relationships.

The following tables detail the foreign currency forward contracts outstanding at the end of the

reporting period, as well as information regarding their related hedged items. Foreign currency

forward contract assets and liabilities are presented in the line ‘Derivative financial instruments’

(either as assets or liabilities) within the Consolidated Statement of Financial Position.

Hedging instruments – outstanding contracts

Change in fair value for

recognising hedge

ineffectiveness

Carrying amount

of the hedging

instruments

2022

£m

2021

£m

2022

£m

2021

£m

Cash flow hedges

Currency risk – forward exchange contracts

Less than 6 months (0.8) (0.3) (0.8) (0.3)

6 to 12 months (0.1) (0.6) (0.1) (0.6)

12 to 18 months 0.1 – 0.1 –

(0.8) (0.9) (0.8) (0.9)

Hedging instruments – hedged items

Change in value used for

calculating hedge

effectiveness

Balance in cash flow

hedge reserve/foreign

currency translation

reserve for

continuing hedges

2022

£m

2021

£m

2022

£m

2021

£m

Currency risk

Forecast sales 0.8 0.9 0.8 0.9

Interest rate risk

Interest rate risk comprises both the interest rate price risk that results from borrowing at fixed

rates of interest and also the interest cash flow risk that results from borrowing at variable rates.

Where appropriate, interest rate swaps are used to manage the Group’s interest rate profile.

Liquidity risk

Liquidity risk represents the risk that the Group will not be able to meet its financial obligations

as they fall due. The Group’s approach to managing this risk is to ensure, as far as possible, that it

will always have sufficient liquidity to meet its liabilities when due, under both normal and

stressed conditions, without incurring unacceptable losses or risking damage to the Group’s

reputation. The Group manages this risk through the use of regularly updated cash flow and

covenant compliance forecasts and a liquidity headroom analysis which is used to determine

funding requirements. Adequate committed lines of funding are maintained from high-quality

investment grade lenders. The facilities committed to the Group as at 31 December 2022 are set

out in note 16 .

Credit risk

Credit risk arises because a counterparty may fail to perform its obligations. The Group is

exposed to credit risk on financial assets such as cash balances, derivative financial instruments

and trade and other receivables.

The Group’s credit risk is primarily attributable to its trade receivables. The amounts recognised

in the Consolidated Statement of Financial Position are net of appropriate allowances for

doubtful receivables, estimated by the Group’s management based on whether receivables are

past due based on contractual terms, payment history and other available evidence of

collectability. Trade receivables are subject to credit limits and control and approval procedures

in the operating companies. Due to its large geographical base and number of customers, the

Group is not exposed to material concentrations of credit risk on its trade receivables. The

quantitative analysis of credit risk relating to receivables is included in note 14.

Credit risk associated with cash balances and derivative financial instruments is managed

centrally by transacting with existing relationship banks with strong investment grade ratings,

with a Moody’s LT Counterparty Risk ratings range of A1(cr) to Baa2(cr). Accordingly, the Group’s

associated credit risk is limited. The Group has no significant concentration of credit risk.

The Group’s maximum exposure to credit risk is represented by the carrying amount of each

financial asset, including derivative financial instruments, as shown in note 27 .

Capital management

The Board considers equity shareholders’ funds, together with undrawn committed debt

facilities, as capital for the purposes of funding the Group’s operations.

Total managed capital at 31 December is:

2022

£m

2021

£m

Equity shareholders’ funds  1,436.9 1,261.3

Undrawn committed debt facilities 414.9 370.3

 1,851.8 1,631.6

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue

of ordinary shares and share options are recognised as a deduction from equity, net of any

tax effects.

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and

market confidence and to sustain the future development of the business. The Board of

Directors monitors both the geographic spread of shareholders and the level of dividends to

ordinary shareholders.

The Board encourages employees to hold shares in the Company. This is carried out through

the Spectris Share Incentive Plan in the UK, as well as Long Term Incentive, Performance and

Restricted Share Plans. Full details of these schemes are given in note 22.

The main financial covenants in the Company’s debt facilities are the ratio of net debt to

adjusted earnings before interest, tax, depreciation and amortisation, and the ratio of finance

charges to adjusted earnings before interest, tax, amortisation and impairment. Covenant

testing is completed twice a year based on the half-year and year-end Financial Statements. At

31 December 2022, the Company had, and is expected to continue to have, significant

headroom under these financial covenant ratios.

Notes to the Accounts 

26. Financial risk management 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

157

From time to time the Group purchases its own shares in the market; the timing of these

purchases depends on market prices. Buy and sell decisions are made on a specific transaction

basis by the Board. During the year ended 31 December 2022, 6,439,493 ordinary shares were

repurchased and cancelled by the Group as part of the £300m share buyback programme

announced on 19 April 2022, resulting in a cash outflow of £191.0m. During the year ended

31 December 2021 5,596,739 shares were repurchased and cancelled by the Group as part of the

£200m share buyback programme announced on 25 February 2021, resulting in a cash outflow

of £201.3m, including transaction fees of £1.2m (see note 21).

There were no changes to the Group’s approach to capital management during 2022 and 2021.

Neither the Company nor any of its subsidiaries is subject to externally imposed capital

requirements.

27. Financial instruments

The following tables show the fair value measurement of financial instruments by level

following the fair value hierarchy:

> Level 1: quoted listed stock exchange prices (unadjusted) in active markets for identical assets;

> Level 2: inputs other than quoted prices included within level 1 that are observable for the

asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

> Level 3: inputs for assets and liabilities derived from valuation techniques that include inputs

for the asset or liability that are not based on observable market data.

Fair value and carrying amount of financial instruments

Level 1

fair value

£m

Level 2

fair value

£m

Level 3

fair value

£m

2022

Carrying

amount

£m

Trade and other receivables excluding prepayments

and contract assets  –  –  – 327. 3

Trade and other payables excluding contract liabilities

and customer advances  –  –  (3.3)  (236.8)

Investments in equity instruments designated at initial

recognition at fair value through other comprehensive

income (see note 12) 0.7  – 28.6 29.3

Investment in debt instruments  –  – 18.9 18.9

Forward exchange contract assets  – 1.7  – 1.7

Cash and cash equivalents  – 228.1  – 228.1

Forward exchange contract liabilities  –  (2.5)  –  (2.5)

366.0

Fair value and carrying amount of financial instruments

Level 1

fair value

£m

Level 2

fair value

£m

Level 3

fair value

£m

2021

Carrying

amount

£m

Trade and other receivables excluding prepayments

and contract assets – – – 277.0

and customer advances – – (1.5) (222.7)

recognition at fair value through other comprehensive

income (see note 12) 1.2 – 23.1 24.3

Investment in debt instruments – – 23.0 23.0

Forward exchange contract assets – 0.3 – 0.3

Cash and cash equivalents – 167.8 – 167.8

Forward exchange contract liabilities – (1.2) – (1.2)

268.5

There were no movements between the different levels of the fair value hierarchy in the year.

The fair value of cash and cash equivalents, receivables and payables approximates to the

carrying amount because of the short maturity of these instruments.

The fair value of floating rate borrowings approximates to the carrying amount because

interest rates are at floating rates where payments are reset to market rates at intervals of less

than one year.

The fair value of fixed rate borrowings is estimated by discounting the future contracted cash

flow, using appropriate yield curves, to the net present values.

The fair value of forward exchange contracts is determined using discounted cash flow

techniques based on readily available market data.

The fair value of forward exchange contracts outstanding as at 31 December 2022 is a net

liability of £0.8m (2021: £0.9m), of which £3.0m has been credited to the hedging reserve (2021:

£3.4m) and £3.7m debited from the Consolidated Income Statement (2021: £2.1m credited).

These contracts mature over periods typically not exceeding 18 months. A summary of the

movements in the hedging reserve during the year is presented below. All of the cash flow

hedges in 2022 and 2021 were deemed to be effective.

The level 1 £0.7m (2021: £1.2m) of investments in equity instruments is calculated using quoted

market prices in an active market at the balance sheet date.

The level 3 £28.6m (2021: £23.1m) of investment in equity instruments consists of the

investment units in EZ Ring FPCI, the fund holding the combined UTAC-Millbrook group (see

note 24). This investment is recognised at fair value, using the income approach, with the key

input being a discounted cash flow.

The level 3 £18.9m (2021: £23.0m) of investment in debt instruments consists of a vendor loan

note receivable received as part of the sales proceeds from the Millbrook business disposal in

2021. This investment is recognised at fair value by establishing an appropriate market yield. The

key inputs used were synthetic credit ratings and market interest rates.

Notes to the Accounts 

26. Financial risk management 

Spectris plc

158

Analysis of movements in hedging reserve, net of tax

2022

£m

2021

£m

At 1 January (3.5) (1.9)

Amounts removed from the Consolidated Statement of Changes in Equity

and included in the Consolidated Income Statement during the year 3.7 (2.1)

Amounts recognised in the Consolidated Statement of Changes in Equity

during the year (3.3) 0.5

At 31 December (3.1) (3.5)

The amount included in the Consolidated Income Statement is split between revenue and

administrative expenses depending on the nature of the hedged item.

Reconciliation of level 3 fair value for deferred and contingent consideration payable

on acquisitions

2022

£m

2021

£m

At 1 January  (1.5) (3.1)

Deferred and contingent consideration arising from current year acquisitions

payable in future years  (2.2) –

Deferred and contingent consideration paid in the current year relating to

previous years' acquisitions 1.6 1.7

Costs charged to the Consolidated Income Statement:

Subsequent adjustments on acquisitions and disposals  (1.0) (0.2)

Foreign exchange difference  (0.2) 0.1

At 31 December (3.3) (1.5)

Reconciliation of level 3 fair value for investment in equity instruments

2022

£m

2021

£m

At 1 January 23.1 –

Investment in equity instruments recognised on disposal of business  – 25.0

Fair value movement on level 3 investment in equity instruments 4.1 –

Foreign exchange difference 1.4 (1.9)

At 31 December 28.6 23.1

Reconciliation of level 3 fair value for investment in debt instruments

2022

£m

2021

£m

At 1 January 23.0 –

Vendor loan note receivable recognised on disposal of business (see note 24) – 23.0

Fair value movement on level 3 investment in debt instruments (4.1) –

At 31 December 18.9 23.0

The fair value of deferred and contingent consideration is determined by considering the

performance expectations of the acquired or disposed entity or the likelihood of non-financial

integration milestones whilst applying the entity-specific discount rates. The unobservable

inputs are the projected forecast measures that are assessed on an annual basis. Changes in

the fair value of deferred and contingent consideration relating to updated projected forecast

performance measures are recognised in the Consolidated Income Statement within

administrative expenses in the Consolidated Income Statement in the period that the

change occurs.

Deferred and contingent consideration relates to financial (2022: £0.7m, 2021: £1.2m) and

non-financial (2022: £2.6m, 2021: £0.3m) milestones on current and prior year acquisitions.

The financial milestones are mainly sensitive to annual future revenue targets.

The following table shows the total outstanding contractual forward exchange contracts

hedging designated transactional exposures split by currencies which have been sold back into

the functional currency of the underlying business. These contracts typically mature in the next

18 months and, therefore, the cash flows and resulting effect on the Consolidated Income

Statement are expected to occur within this time period.

Forward exchange contracts at 31 December 2022 2021

Foreign currency sale amount (£m) 117.2 96.1

Percentage of total:

US Dollar 36% 38%

Chinese Yuan Renminbi 25% 18%

Euro 15% 11%

Japanese Yen 15% 23%

Other 9% 10%

Notes to the accounts 

27. Financial instruments 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

159

A maturity profile of the gross cash flows related to financial liabilities is:

Maturity of financial liabilities

2022 2021

Derivative

financial

liabilities

Overdrafts

£m

Unsecured

loans

£m

Total

£m

Derivative

financial

liabilities

Overdrafts

£m

Unsecured

loans

£m

Total

£m

Due within one year 2.3 0.1 – 2.4 1.1 – – 1.1

Due between one and two years 0.2 – – 0.2 0.1 – – 0.1

2.5 0.1 – 2.6 1.2 – – 1.2

Trade and other payables (note 17) are substantially due within one year.

It is not expected that the cash flows described above could occur significantly earlier or at substantially different amounts.

Interest rate exposure of financial assets and liabilities by currency

Financial assets Financial liabilities

Fixed Rate

£m

Floating Rate

£m

Non interest

bearing

£m

Total

£m

Fixed rate

£m

Floating rate

£m

Total

£m

2022

Net financial

assets

£m

Sterling 90.2 13.7 8.2 112.1  –  –  – 112.1

Euro 0.1 0.5 21.9 22.5  –  –  – 22.5

US Dollar 1.4 5.1 19.6 26.1  (0.1)  –  (0.1) 26.0

Other 0.2 36.2 31.0 67.4  –  –  – 67.4

91.9 55.5 80.7 228.1  (0.1)  –  (0.1) 228.0

Interest rate exposure of financial assets and liabilities by currency

Financial assets Financial liabilities

Fixed Rate

£m

Floating Rate

£m

Non interest

bearing

£m

Total

£m

Fixed rate

£m

Floating rate

£m

Total

£m

2021

Net financial

assets/

(liabilities)

£m

Sterling 2.4 60.1 5.0 67.5 – – – 67. 5

Euro 0.3 1.1 16.6 18.0 – – – 18.0

US Dollar 0.3 10.6 20.8 31.7 – – – 31.7

Other 0.1 26.9 23.6 50.6 – – – 50.6

3.1 98.7 66.0 167.8 – – – 167.8

Notes to the Accounts 

27. Financial instruments 

Spectris plc

160

Transactions with key management personnel

The remuneration of key management personnel during the year was as follows:

2022

£m

2021

£m

Short-term benefits 7.2 8.0

Post-employment benefits 0.1 0.1

Equity-settled share-based payment expense 3.1 1.9

10.4 10.0

In accordance with IAS 24 ‘Related Party Disclosures’, key management personnel are those

having authority and responsibility for planning, directing and controlling the activities of the

Group, directly or indirectly. Key management personnel comprise the Directors and the other

members of the Executive Management Committee.

Further details of the Executive Directors’ remuneration are included in the Directors’

Remuneration Report on pages 84 to 104. 

Transactions with associate

There were no related party transactions and no balance payables/receivable with the Group’s

associate, CM Labs, in 2022 (2021: nil). See note 12 for details of the 19.4% (17.2% fully diluted)

shareholding acquired in CM Labs during 2022.

There were no other related party transactions in either 2022 or 2021.

32. Subsidiary undertakings

The table below lists the Group’s principal subsidiary undertakings at 31 December 2022. They

operate mainly in the countries of incorporation. All of the subsidiaries are involved in the

manufacture and sale of highly-specialised measuring instruments and controls, together with

the provision of services.

Spectris plc holds 100% of the ordinary share capital of all the subsidiaries either directly or

indirectly through intermediate holding companies.

Name Country of incorporation

Malvern Panalytical Limited England & Wales

Servomex Group Limited England & Wales

Hottinger Brüel & Kjær GmbH Germany

Particle Measuring Systems, Inc. USA

Red Lion Controls Inc USA

A full list of subsidiaries is given in note 14 of the Company Financial Statements on pages 175

to 177.

33. Events after the balance sheet date

There were no material post balance sheet events.

Sensitivity analysis

The tables below show the Group’s sensitivity to foreign exchange rates and interest rates.

The US Dollar, Euro, Danish Krone and Chinese Yuan Renminbi represent the main foreign

exchange translational exposures for the Group.

Impact on foreign exchange translational exposures

against Sterling

2022 2021

Decrease/

(increase) in

equity

£m

Decrease/

(increase)

in profit

before tax

from

continuing

operations

£m

Decrease/

(increase) in

equity

£m

Decrease/

(increase)

in profit

before tax

from

continuing

operations

£m

10% weakening in the US Dollar 130.2 6.9 88.3 5.5

10% weakening in the Euro/Danish Krone 78.0 4.8 67.5 6.4

10% weakening in the Chinese Yuan Renminbi 5.5 3.6 5.3 2.5

Impact of interest rate movements

1pp increase in interest rates  (0.6)  (0.6) (1.0) (1.0)

28. Contingent liabilities

In the normal course of business, Group companies have provided bonds and guarantees

through local banking arrangements amounting to £20.4m (2021: £14.1m). Contingent liabilities

in respect of taxation are disclosed in note 7 .

29. Lease liabilities

Undiscounted lease liability

maturity analysis under IFRS 16

2022 2021

Property

£m

Plant and

equipment

£m

Total

£m

Property

£m

Plant and

equipment

£m

Total

£m

Less than one year 10.8 3.1 13.9 10.8 3.3 14.1

One to five years 25.0 3.9 28.9 24.8 3.4 28.2

More than five years 34.9 0.1 35.0 38.2 – 38.2

Total undiscounted lease

liabilities at 31 December 70.7 7.1 77.8 73.8 6.7 80.5

The total cash outflow on lease liabilities made in the year was £16.4m (2021: £14.8m).

30. Capital commitments

At 31 December 2022, the Group had entered into contractual commitments for the purchase

of property, plant and equipment and software amounting to £1.7m (2021: £6.2m) and nil

(2021: £0.4m) respectively which have not been accrued.

31. Related party transactions

The Group has related party relationships with its subsidiaries (a list of all related undertakings is

shown in note 14 of the Company Financial Statements) on pages 175 to 177, with its associate

and with its Executive Directors and members of the Executive Management Committee.

Notes to the Accounts 

27. Financial instruments 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

161



































































Appendix – Alternative performance measures





































• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 















LFL measures











Notes to the Accounts 

Spectris plc

162

















£m





£m



£m

2022



£m

Sales 657.8 492.2 177.4  

Constant exchange rate adjustment to 2021 exchange

rates    

Acquisitions    

LFL adjusted sales 629.4 457.1 160.3 



Spectris



£m

Spectris



£m

Other

£m

2021

Total

£m

Sales 531.2 425.5 206.3 1,163.0

 – – (65.9) (65.9)

LFL adjusted sales 531.2 425.5 140.4 1,097.1











£m





£m



£m

Group



£m

2022



£m

 118.3 46.5 26.2  172.6

Net transaction-related costs and fair value

adjustments 5.1 2.8 0.4  8.3

Depreciation of acquisition-related fair



equipment 0.2    0.2





projects 8.7 13.0   21.7

Amortisation of acquisition-related

 7.7 11.3 0.6  19.6

 140.0 73.6 27.2  222.4

Constant exchange rate adjustment to 2021

exchange rates     

Acquisitions 4.2    

 138.7 65.4 24.0  209.7



Spectris



£m

Spectris



£m

Other

£m

Group

costs

£m

2021

Total

£m

 94.2 45.6 19.2 (19.1) 139.9

Restructuring costs 2.4 4.6 3.2 – 10.2

Net transaction-related costs and fair value

adjustments 8.2 7.8 3.0 – 19.0

Depreciation of acquisition-related fair



equipment 0.2 – – – 0.2





projects 1.6 4.6 0.8 – 7.0

Amortisation and impairment of

 5.6 7.7 – – 13.3

 112.2 70.3 26.2 (19.1) 189.6

 – – (5.5) – (5.5)

 112.2 70.3 20.7 (19.1) 184.1

2022 operating margin











2022





18.0 9.4 14.8 13.0

Adjusted operating margin

21.3 15.0 15.3 16.8

LFL adjusted operating margin

22.0 14.3 15.0 16.8

2021 operating margin

Spectris



Spectris



Other

2021

Total



17.7 10.7 9.3 12.0

Adjusted operating margin

21.1 16.5 12.7 16.3

LFL adjusted operating margin

21.1 16.5 14.7 16.8

 

 

 









2022



£m

 750.8

Constant exchange rate adjustment to 2021 exchange rates 

Acquisitions 

 710.0

Notes to the Accounts 

Appendix – Alternative performance measures 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

163



2021

Total

£m

 675.5

 (32.9)

 642.6

2022 gross margin

2022





56.6

LFL adjusted gross margin

56.9

2021 gross margin

2021

Total



58.1

LFL adjusted gross margin

58.5

 

 









2022



£m

 

 

 

Total overheads 

Net transaction-related costs and fair value adjustments 8.3

 0.2

 21.7

 19.6

Constant exchange rate adjustment to 2021 exchange rates 12.1

Acquisitions 16.1

LFL adjusted overheads 

2021 LFL adjusted overheads

2021

Total

£m

 (92.6)

 (222.2)

 (220.8)

Total overheads (535.6)

Restructuring costs 10.2

Net transaction-related costs and fair value adjustments 19.0

 7.0

 13.3

Acquisitions 27.4

LFL adjusted overheads (458.5)



2022



LFL adjusted overheads as a percentage of sales

40.1

2021 LFL adjusted overheads as a percentage of sales

2021

Total

LFL adjusted overheads as a percentage of sales

41.8

 







Note

2022

£m

2021

£m

 6   7.4



 6 14.6 (7.2)

Interest credit on release of provision on settlement of EU

dividends tax claim 6  (5.1)

  (4.9)



Note

2022

£m

2021

£m

  222.4 189.6

 2c  (4.9)

 219.7 184.7

Notes to the Accounts 

Appendix – Alternative performance measures 

Spectris plc

164



 Note

2022

£m

2021

£m

 114.8 335.6



Restructuring costs  10.2

Net transaction-related costs and fair value adjustments 8.3 19.0

Depreciation of acquisition-related fair value adjustments to

 11 0.2 0.2



on material SaaS projects 21.7 7.0

 10 19.6 13.3

 27 4.1 –

 24  (226.5)

Interest credit on release of provision on settlement of EU dividends

tax claim 6  (5.1)



 6 14.6 (7.2)

 7  (1.6)

Adjusted earnings from continuing operations 172.0 144.9

 2022 2021

 9 107.6 113.7

Adjusted earnings per share from continuing operations (pence) 159.9 127.4





h) Net cash

Note

2022

£m

2021

£m

Bank overdrafts 16  –

  –

Cash and cash equivalents 15 228.1 167.8

Net cash 228.0 167.8









2022

£m

2021

£m

 50.4 (36.8)

  (70.0)

 326.8 169.8

Effect of foreign exchange rate changes 9.2 (1.3)

Movement in net cash 60.2 61.7

 167.8 106.1

 228.0 167.8





2022

£m

2021

£m

Cash generated from operations (from continuing and discontinued operations) 166.8 191.6

Net income taxes paid  (32.2)

 120.0 159.4

Transaction-related costs paid 6.5 26.6

 7.6 11.9

Net income taxes paid 46.8 32.2



continuing and discontinued operations)  (35.3)

SaaS-related cash expenditure 21.7 5.9

 13.4 –

   (22.6)

 163.8 178.1



74% 94%

 

















Notes to the Accounts 

Appendix – Alternative performance measures 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

165

Note

2022

£m

2021

£m

ASSETS



 4 0.1 0.2

 5 0.9 2.2

 6  1,126.1

 0.6 

Deferred tax assets 3.6 5.0

 1,133.5

Current assets

Current tax assets 13.8 13.5

 7 196.6 178.3

 3.6 2.3

Cash and cash equivalents 117.9 75.6

Assets held for sale 5 1.7 –

333.6 269.7

  1,403.2

LIABILITIES



  (2.4)

 9  (597.4)

 (599.8)

  (330.1)



  –

 9  (151.5)

 11  (11.0)

 (162.5)

  (762.3)

Net assets 761.8 640.9

EQUITY

Share capital 10 5.5 5.8

Share premium 231.4 231.4

Retained earnings 486.7 365.8

Merger reserve 10 3.1 3.1

Capital redemption reserve 10 1.0 0.7

Special reserve 10 34.1 34.1

 761.8 640.9







Derek Harding





Notes to the Accounts 

Spectris plc Statement of Financial Position

As at 31 December 2022



2022

£m



2021

£m



2020

£m

Net cash (see APM h)  (167.8) (104.6)

 76.2 157. 5 178.6

Accumulated amortisation and impairment

 185.7 225.0 407.6

  1,261.3 1,219.7

  1,476.0 1,701.3



 1,588.7



 222.4 189.6



operations (see note 24) 14.0 19.8



 236.4 209.4

 16.0% 13.2%

 



















l) Order intake and order book











m) Vitality index









Spectris plc

166

Note



£m



£m



earnings

£m

Merger reserve

£m





reserve

£m



£m



£m

 5.8 231.4 365.8 3.1 0.7 34.1 640.9

   373.1    373.1



   7. 3    7.3

   380.4    380.4

 10     0.3  

 13       

   5.6    5.6

   4.3    4.3

   0.2    0.2

 5.5 231.4 486.7 3.1 1.0 34.1 761.8



Note

Share capital

£m

Share premium

£m

Retained

earnings

£m

Merger

reserve

£m

Capital

redemption

reserve

£m

Special

reserve

£m

Total



£m

 6.0 231.4 437.2 3.1 0.5 34.1 712.3

 – – 202.9 – – – 202.9



 – – (1.3) – – – (1.3)

 – – 201.6 – – – 201.6

 –

 10 (0.2) – (201.3) – 0.2 – (201.3)

 13 – – (79.0) – – – (79.0)

 – – 5.6 – – – 5.6

 – – 1.4 – – – 1.4

 – – 0.3 – – – 0.3

 5.8 231.4 365.8 3.1 0.7 34.1 640.9

Spectris plc Statement of Changes in Equity

For the year ended 31 December 2022

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

167

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

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























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





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• 



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• 

• 

• 

• 









• 

• 



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Intangible assets

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

• 









Property, plant and equipment







Notes to the Company Accounts

Spectris plc

168

Notes to the Company Accounts 









Taxation











































Foreign currency translation



















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













• 

• 

• 

Investments





Assets held for sale















Trade and other receivables











Cash and cash equivalents





Trade and other payables





Provisions

















STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

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







































































Share-based payments

















Financial instruments















Measurement



































































Notes to the Company Accounts 

Spectris plc

170

Notes to the Company Accounts 



















4. Intangible assets

Cost



£m

 4.6

 4.6



 4.4

 0.1

 4.5



 0.1

 0.2





























Dividends



Treasury shares









2. Auditor’s remuneration







3. Employee costs and other information



2022



2021



Administrative 67 67



2022

£m

2021

£m

Wages and salaries 11.6 15.2

 2.6 3.4

 0.7 0.6

 4.4 0.9

 0.1 0.1

19.4 20.2

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

171

6. Investments in subsidiary undertakings



Investment in





£m

 

 2.8

 



7. Other receivables

Current

2022

£m

2021

£m

 9.0 2.1

 44.6 31.4

 3.5 2.7

 0.7 3.0

57.8 39.2

Non-current

2021

£m

2020

£m

 138.0 138.0

 0.8 1.1

138.8 139.1

 196.6 178.3











5. Property, plant and equipment

Cost





£m



Improvements

£m



PPE

£m





£m



£m

 3.4 0.1  1.5 5.0

Additions  0.3 0.3 0.3 0.9

Transfers to assets held for sale     

Disposals     

  0.4 0.3 1.5 2.2



impairment

 1.6   1.2 2.8

  0.1 0.1 0.1 0.3

Transfers to assets held for sale     

Disposals    

  0.1 0.1 1.1 1.3



  0.3 0.2 0.4 0.9

 1.8 0.1 – 0.3 2.2









Notes to the Company Accounts 

Spectris plc

172

8. Borrowings

Current Interest rate 

2022

£m

2021

£m

Bank overdrafts on demand  –

Bank loans unsecured – £45.0m



determined on

 on demand  –

  –

Non-current Interest rate 

2022

£m

2021

£m

  –

  –

  –





9. Other payables

Current

2022

£m

2021

£m

 7.3 0.8

 547.4 583.1

Accruals 14.4 13.5

569.1 597.4

Non-current

2022

£m

2021

£m

 132.4 151.5









10. Share capital and reserves

2022 2021





 £m



millions £m



 109.1 5.5 115.6 5.8







































Notes to the Company Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

173

12. Contingent liabilities



















13. Dividends



2022

£m

2021

£m



per share 25.3 25.4



per share 53.3 53.6

78.6 79.0



2022

£m

2021

£m



share 25.3 25.4



 53.6 53.3

78.9 78.7













Merger reserve







































Notes to the Company Accounts 

Spectris plc

174

14. Related undertakings











Name Registered address 

Aquila Biomedical Limited  Scotland

Hottinger Bruel & Kjaer Poland Sp z.o.o.  Poland

  Slovenia

Bruel & Kjaer UK Limited

 England & Wales

Bruel & Kjaer VTS Limited

 England & Wales

  England & Wales

CAS Clean-Air-Service AG  

  Canada

  England & Wales

  England & Wales

Concept Life Sciences (Environmental Consulting) Limited  England & Wales

Concept Life Sciences (Holdings) Limited

 England & Wales

  England & Wales

Concept Life Sciences (Midco) Limited  England & Wales

  England & Wales

Concept Life Sciences Limited  England & Wales

Concurrent High Performance Solutions Europe S.A.  France

Concurrent Nippon Corporation  Japan

Concurrent Real-Time Asia, Inc. 1209 Orange Street, Wilmington, DE 19081 USA

Concurrent Real-Time, Inc. 1209 Orange Street, Wilmington, DE 19081 USA

  England & Wales

Creoptix AG  

Creoptix Inc.  USA

CXR Biosciences Limited  Scotland

  

DYTRAN Instruments, Inc 

 Rua Vasconcelos Costa 277, Moreira, Maia Portugal

Hottinger Bruel & Kjaer Solutions LLC2 100 Research Blvd, Starkville, Mississippi USA

HBM Prenscia s.p. z.o.o.  Poland

Hottinger Bruel & Kjaer Inc.  USA

Hottinger Brüel & Kjær AS  Denmark

  Austria

Hottinger Bruel & Kjaer Benelux B.V.  Netherlands

Hottinger Bruel & Kjaer Co., Ltd  China

Hottinger Bruel & Kjaer France SAS  France

Notes to the Company Accounts 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

175

Name Registered address 

 Im Tiefen See 45, Darmstadt, D-64293 

  Spain

 Milano (MI), Via Pordenone 8, Milan 20132 

 Rosenholmveien 25, Trollasen, 1414 

Hottinger Bruel & Kjaer UK Limited 

Rotherham, South Yorkshire, S60 5WG

England & Wales

  



5210 E Williams Cir, 2nd Floor, Suite 240, Tucson Arizona 85711 USA



Kumitehtaankatu, 5 04260, Kerava, Asianajotoimisto OY Finland

  Netherlands

  

  USA

  England & Wales

 Vallongatan 1, 752 28 Uppsala 

  France

  

  South Africa

Malvern-Aimil Instruments Pvt Limited  India

  

Nanosight Limited  England & Wales

Novisim Limited  England & Wales



 England & Wales

 Im Tiefen See 45, Darmstadt, D-64293 

 Via di Grotte Portella, Frascati, Rome, 34-00044 

 5475 Airport Boulevard, Boulder, Colorado 80301 USA

  England & Wales

Peakdale Inc  USA

Peakdale Molecular Limited  England & Wales

RealTime Acquisition Co. 1209 Orange Street, Wilmington, DE19081 USA

RealTime Holdco, LLC

1209 Orange Street, Wilmington, DE19081 USA

Red Lion Controls B.V.  Netherlands

Red Lion Controls, Inc. 1750 Fifth Avenue, York, PA 17403 USA

ReliaSoft India Private Limited  India

RightHook Inc 45 Jackson Street, San Jose, CA 95112-5102 USA

Servomex B.V.  Netherlands

  USA

 Im Tiefen See 45, Darmstadt, D-64293 

Servomex Group Limited  England & Wales

Servomex Middle East L.L.C.2  

Servomex S.A. 23 Rue de Roule, Paris, 75001 France

  USA

14. Related undertakings 

Notes to the Company Accounts 

Spectris plc

176

Name Registered address 

  Australia

Spectris Canada Inc.  Canada

Spectris China Limited  Hong Kong

Spectris Co., Ltd.  Japan

Spectris Denmark ApS  Denmark

Spectris Do Brasil Instrumentos Eletronicos Ltda. Rua Laguna 276, Santo Amaro, CEP 04728-000, Sao Paulo SP Brazil

Spectris Funding B.V.  Netherlands

 Im Tiefen See 45, Darmstadt, D-64293 

Spectris Group Holdings Limited

1, 4

 England & Wales

Spectris Holdings Inc.  USA

Spectris Inc.  USA

 Bldg 9,No. 88, Lane 2888, HuaNing Road, MingHang District, Shanghai, 201108 China

Spectris Korea Ltd. 





Spectris Mexico, S. De R.L. De C.V. Av. Pedro Ramirez Vazquez No. 200–13, Nivel 1, Col. Valle Oriente, San Pedro Garza Garcia, C.P. 66269 Mexico

Spectris Netherlands B.V.  Netherlands

Spectris Netherlands Cooperatief W.A.

1, 2

 Netherlands

Spectris Pension Trustees Limited

Spectris Pte Ltd  Singapore

  

Spectris Technologies Private Limited  India

Spectris UK Holdings Limited

Spectris US Holdings Limited  England & Wales

Starlight USA Inc  United States

 75 East Santa Clara St., Suite 900, San Jose, CA 95113 United States

VI-grade AG Neustrasse 2, 8590 Romanshorn 

 Im Tiefen See 45, Darmstadt, D-64293 

VI-grade Japan Ltd.  Japan

VI-grade Limited  England & Wales

VI-grade s.r.l. Via Galileo Galilei 42, 33010 Tavagnacco (Udine) 

Vintage Star Inc  United States

Viscotek Europe Limited  England & Wales

 



China

 

 

 

 

 

Notes to the Company Accounts 

14. Related undertakings 

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

177

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 27 April 2023

 

 

Annual General Meeting 

 9 June 2023

 30 June 2023

 

Company Secretary



























Auditor



Banker



Solicitor



Brokers





Financial PR adviser



Registrar

















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





14. Related undertakings 

UK registered subsidiaries exempt from audit













Name 

Aquila Biomedical Limited SC393914

Bruel & Kjaer VTS Limited 1539186

Bruel & Kjaer UK Limited 04066051

 1522736

 12699842

 02345676

 9046575

Concept Life Sciences (Environmental Consulting) Limited 9046580

Concept Life Sciences (Holdings) Limited 9046553

 9046586

Concept Life Sciences (Midco) Limited 9046568

CXR Biosciences Limited SC211745

Hottinger Bruel & Kjaer UK Limited 1589921

Novisim Limited 5269664

Spectris UK Holdings Limited 4451903

Spectris US Holdings Limited 4451883

VI-grade Limited 8245242

Additional Information

Notes to the Company Accounts 

Spectris plc

178

Additional Information 

Major shareholders as at 31 December 2022

Shareholding in

Spectris shares







 8,567,102 8.19%

BlackRock 7,869,873 7. 53%

UBS Asset Management 7,819,357 7.48%

Liontrust Asset Management 5,168,632 4.94%

Sprucegrove Investment Management 4,972,450 4.76%

Vanguard Group 4,966,842 4.75%

Wellington Management 3,782,547 3.62%

 3,540,706 3.39%

Artemis Investment Management 3,360,582 3.21%

Evenlode Investment 2,543,648 2.43%

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



Cautionary statement

































STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Spectris plc

179

Spectris plc

180



and UPM Fine Offset.

Both stocks are made of FSC



and other controlled material.





















pass it on to other interested readers





Design and production



Melbourne House

5th floor

44–46 Aldwych

London

WC2B 4LL

