Spectris plc

Annual Report and Accounts 2023

Cle an e r.

Healthier.

productive.

We harness the power of

precision measurement to

equip our customers to make

the world cleaner, healthier

and more productive.

Our Purpose Contents

We are focusing on where we have competitive and differentiated offerings,

positioned in attractive, structural growth markets with high barriers to entry,

to deliver value beyond measure for all our stakeholders.

Find out more about us online

at www.spectris.com

Principal risks

Find out about how we manage risk in our

day-to-day activities.

The Spectris Foundation

Explore how we are championing

equal opportunities and global access to

quality STEM education.

Sustainability

Discover how we are building our business

for the future in our Sustainability report.

Governance

See how the Board and its committees

manage the governance of the Group.

2022 Performance

102

Remuneration

See how our remuneration framework

aligns with the Group’s strategy and the

wider workforce.

Strategic Report

2 Spectris in focus

6 Chairman’s statement

10 Market overview

12 Chief Executive’s review

20 Our Business Model

22 Our Strategy

24 Investing in growth

26 Key Performance Indicators

28 Division reviews

40 Financial review

44 Operational excellence

46 Risk management

48 Principal risks and uncertainties

51 Viability Statement

52 Sustainability Report

66 TCFD disclosure

77 Non-financialandsustainability

information statement and index

78 TheSpectrisFoundation

Governance

80 Board of Directors

82 Chairman’s introduction to

corporate governance

84 Reporting in accordance

with the 2018 UK Corporate

Governance Code

85 Board and Executive Committees

86 Section 172 statement

88 Board evaluation and effectiveness

89 Workforce engagement

90 Our Purpose and our culture

92 Nomination and Governance

Committee Report

95 Audit and Risk Committee Report

102 Directors’ Remuneration Report

120 Directors’ Report

128 Directors’ Responsibility Statement

Financial Statements

129 Independent auditor’s report

to the members of Spectris plc

136 Consolidated Income Statement

136 Consolidated Statement of

Comprehensive Income

137 Consolidated Statement of

Changes in Equity

138 Consolidated Statement of

Financial Position

139 Consolidated Statement of

Cash Flows

139 Notes to the Accounts

190 Spectris plc Statement of

Financial Position

191 Spectris plc Statement of

ChangesinEquity

192 Notes to the Company Accounts

Additional Information

185 Appendix – Alternative performance

measures

203 Additional Information

Sales Adjusted operating profit

Statutory operating profit

£1,449.2m £262.5m £188.6m

(2022: £1,327.4m)

Change yoy 9%

LFL

change yoy 10%

(2022: £222.4m)

Change yoy 18%

LFL

change yoy 18%

(2022: £172.6m)

Change yoy 9%

Adjusted cash flow conversion

1,2

Adjusted operating margin

1,2

Statutory operating margin

103% 18.1% 13.0%

(2022: 74%)

Change yoy 29pp

(2022: 16.8%)

Change yoy 130bps

LFL1 change yoy 130bps

(2022: 13.0%)

Change yoy flat

Dividend per share Adjusted earnings per share

1,2

Basic earnings per share

79.2p 199.7p 140.3p

(2022: 75.4p)

Change yoy 5%

(2022: 159.9p)

Change yoy 25%

(2022: 106.7p)

Change yoy 31%

Non-financial highlights

Total recordable

incident rate2

Employee engagement –

Gallup GrandMean score2

1. Alternative performance measures

(APMs) are used consistently throughout

this Annual Report and are referred to as

‘adjusted’ or ‘like-for-like’ (LFL). These are

defined in full and reconciled to the

reported statutory measures in the

appendix to the Consolidated Financial

Statements on page 185.

2. See more in the Key Performance

Indicators section on pages 26 and 27.

0.34 3.92

(2022: 0.27) (2022: 3.86)

Energy efficiency2

(MWh per £m revenue)

CDP score

48.9 A-

(2022: 58.2) (2022: B)

Financial highlights

2023 performance

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

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.

We leverage our domain expertise alongside

our market leading instruments, software

and solutions to help our customers develop

the technologies to drive the energy

transition, the medicines that cure us, the

materials we build with, the devices that

connect us and the machines that help us

work faster, better and more efficiently.

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 throughout our customers’ workflows.

By going beyond the measurement we

deliver the services and solutions our

customers need, building strong

partnerships that drive innovation and

growth over the long term.

Our key markets

(2023 percentage of Group sales)

Life sciences/

Pharmaceutical

18% of sales

(2022: 24%)

Technology-led

industrials

1, 2

16% of sales

(2022: 16%)

Electronics and

semiconductor

12% of sales

(2022: 11%)

Automotive

10% of sales

(2022: 10%)

Materials

10% of sales

(2022: 9%)

Academic research

10% of sales

(2022: 8%)

Other

24% of sales

(2022: 22%)

1. 2022 has been represented following a recategorisation of marine and rail from Automotive to

Technology-led industrials

2. Image: Blue Origin

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 20232

Spectris at a glancecontinued

Our organisational

structure

Our organisational

structure

Following the refocusing of the Group over the last few years around premium precision

measurement businesses, Spectris is organised around two key divisions – Spectris Scientific

andSpectris Dynamics – comprising 86% of Group sales.

Spectris Scientific Spectris Dynamics

Comprising Malvern Panalytical and

Particle Measuring Systems

Comprising HBK

Spectris Scientific is a leader in advanced material

measurement and characterisation.

Spectris Dynamics is a leader in advanced, integrated virtual

and physical test and measurement.

% of Group sales

49%

(2022: 50%)

% of Group sales

37%

(2022: 37%)

Reported sales growth

10%

LFL sales growth

12%

LFL sales growth

Adjusted operating margin

22.0%

(2022: 21.3%)

Adjusted operating margin

17.2%

(2022: 15.0%)

Employees

2,997

(2022: 2,793)

Read moreon pages 34 to 39

Sales by location (%)

1 Asia 36

2 Europe 31

3 North America 29

4 ROW 4

Sales by business (%)

1 Spectris Scientific 49

2 Spectris Dynamics 37

3 Other 14

Group sales

Sales by market (%)

1 Life sciences/Pharmaceutical 18

2 Technology-led industrials 16

3 Electronics and semiconductor 12

4 Automotive 10

5 Metals, minerals, mining 10

6 Academic research 10

7 Other 24

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 3

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Spectris at a glancecontinued

Spectris Scientific

Leader in material measurement and characterisation

Leader in material measurement and characterisation, through the

provision of high-precision instruments, workflow solutions, data

science and services

World leader in micro-contamination monitoring solutions for

ultra-clean manufacturers

Customer needs

• Precise, accurate and reliable measurements

• Application-specific solutions matched to

customer workflows

• Instrument configurability and ease-of-use

• Expertise and bespoke analytics

• Maximum yield & instrument uptime

• Portfolio breadth

Customer needs

• Highest sensitivity

• Maximum yield and uptime

• Sterility assurance and regulatory compliance

• Faster contamination identification

• Predictive analytics

Competitive strengths

• Best-in-class solutions

• Precision and accuracy of measurement

• Domain expertise

• Predictive maintenance, remote diagnostics

• Automation and in-line/at-line monitoring

• A dynamic, evolving portfolio

Competitive strengths

• Highest sensitivity and quality

• Reliability and ease of use

• Regulatory knowledge and expertise

• Data integrity

• Complete sterility assurance solutions

• Customer service orientation

Capability Analytical technique End markets

X-ray

Fluorescence

Elemental Analysis

• Elemental composition

• Layer thickness

• Building Materials,

• Mining & Minerals

• Semiconductors

• Chemicals &

Coatings

• Advanced

Manufacturing

X-ray

Diffraction

Structural Analysis

• Crystal structure

• Thin film metrology

• Residual stress

• Academia

• Pharmaceuticals

• Semiconductors

• Building Materials

• Batteries

• Mining & Minerals

• Advanced

Manufacturing

Laser

Diffraction

Particle Analysis

• Particle size distribution

• Pharmaceuticals

• Batteries

• Chemicals and

Coatings

• Food

• Advanced

Manufacturing

• Mining & Minerals

• Pharmaceuticals

Nanometrics

Particle/Molecular Analysis

• Particle size distribution

• Molecular size/structure

• Zeta potential

• Mobility

• Pharmaceuticals

• Academia

• Chemicals &

Coatings

Biophysical

Interaction and Stability

Analysis

• Binding affinity

• Binding kinetics

• Higher order structure

• Pharmaceuticals • Academia

Capability Analytical technique End markets

ظ Airborne

particle

monitoring

ظ Gas particle

monitoring

ظ Ultra-pure

water

• Monitoring airborne

particulates to provide critical

data on the environment’s

filtration systems

• Ensuring ultra-high purity

in gases for semiconductor

manufacturing and

production of electronics

• Ensuring ultra-pure water for

critical cleaning/rinsing steps

in semiconductor processing

• Semiconductor

ظ Aerosol

particle

monitoring

ظ Microbial

monitoring

ظ Facility

monitoring

systems

• Monitoring airborne particles

in critical environments

ensuring aseptic control of

manufacturing processes

• Continuous air sampling

solutions to provide risk

management against

microbial contaminations

• FacilityPro environmental

monitoring systems

combines the sampling,

reporting, and data retention

of particle, microbial and

environmental data, meeting

data integrity requirements.

• Life sciences /

Pharmaceutical

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 20234

Spectris at a glancecontinued

Life-cycle

stage

Design Optimisation Virtual testing Physical testing Production Operation/in-use

Capability • Fatigue analysis

• Failure mode analysis

• Structural durability

• Driver experience

simulation

• Real-time computing

• X-in-the-loop testing/

simulation

• Structural durability

• Vibrational durability

• Energy efficiency testing

• Noise emissions testing

• End-of-line testing

• Production quality

• Production efficiency

• Structural health

monitoring

• Noise monitoring

• Enhancing asset

performance

End

market

• Automotive

• Aerospace & defence

• Automotive

• Aerospace & defence

• Automotive

• Aerospace & Defence

• Commercial space

• Electronics

• Other

• Machine manufacturing

• Electronics

• High-value assets

• Commercial space

• Medical

Solutions • nCode DesignLife software

• nCode Aqira software

• Multi-attribute simulators

• COMPACT Full Spectrum

Simulator

• AUTOHAWK hardware-

in-the-loop

• Real-time operating system

• Sensors: Force/Torque/

Strain/Accelerometers

• Data acquisition hardware

and software

• Analytical software

• Torque sensors

• Force sensors

• Production test systems

• Microphones

• Industrial data acquisition

• Load cells

• Accelerometers

• Fibre-optic strain sensors

• Sound-level meters

• Built-in OEM strain sensors

Software solutions for integrated data management and analysis

Virtual testing

Accelerated R&D In-process testing

Physical testing

Experts in the provision of advanced integrated physical and virtual testing and measurement. The Division is focused on four premium product lines:

virtual test, software, data acquisition and high-precision sensors with high growth prospects, where we have leading market positions. These products

are complementary for customers and combine to offer the broadest test and measurement solutions in the market.

Spectris Dynamics

World leader in advanced integrated physical and virtual testing and measurement

Customer needs

ظ Accuracy and precision of

measurement

ظ Quality and reliability of product

ظ Usability and increased efficiency

ظ Insights through data

ظ Accelerated development at

lower cost

ظ Increased production quality

and output

ظ Increased asset performance

Competitive strengths

ظ Complete test and simulation

offering

ظ Class-leading reliability and

durability software offering

ظ Highest accuracy sampling

rate and ease of use of data

acquisition hardware and software

ظ Broadest range and sophistication

of analytic capabilities, ease of use

and flexibility

ظ Complete virtual test solution

including software, simulators and

hardware-in-the-loop

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 5

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Chairman’s statement

Delivering our

Strategy for

Sustainable

Growth

“I am excited about the

opportunities that lie

ahead for the Group.”

Mark Williamson

Chairman

Introduction

2023 has been another year of strong LFL

sales growth, building on our recent track

record and demonstrating the quality and

strength of the Group. As a result of supply

chains becoming more reliable and the

associated easing of inflationary pressures,

alongside our focus on operational efficiency,

we delivered strong progress on margins.

Demand for the Group’s products remained

strong with LFL sales growth of 10% (2022:

14%) with a 130bps improvement in adjusted

operating margins to 18.1% (2022: 16.8%)

(statutory operating margin 13.0% (2022:

13.0%)) resulting in adjusted operating profit

growth of 18%. The Group remains highly cash

generative with adjusted cash conversion of

103% resulting in the Group ending the year

with a net cash position of £138.8 million

(2022: £228.0million).

Strategy for Sustainable Growth

2023 was the first full year of our Strategy

for Sustainable Growth, following its

announcement alongside new

performance targets, in October

2022. As can be seen from our

results, our Strategy is really

workingfor us, delivering growth,

improving profitability and

generating strong cash flow. As a

result, we are well on our way to

delivering our adjusted operating

margin target of at least 20% over

the medium-term.

Our commitment to invest in R&D,

which was 7.5% of Group sales in 2023

(2022: 7.8%), represents an important

part of maintaining strong levels of organic

growth. I am pleased to see anumber of new

products launched during the year and the

strength of the pipeline. This investment

ensures our best-in-class product portfolio

remains at the forefront, helping us outgrow

our end markets and maintain leading

market positions and competitive advantage,

key to driving volumes and improving

margins.

During the year, we made progress on

another key pillar of our Strategy, to

compound growth through targeted M&A,

completing a number of acquisitions,

investing a total of £60 million. As well as

bringing new talent into the Group, these

additions provide access to new technologies

and customers as well as broadening our

product offering. We have a healthy pipeline

of potential acquisitions, focused on

technologies closely related to our core

markets and existing expertise.

The announcement in December of the

divestment of Red Lion Controls, also marks

the end of the portfolio rationalisation

programme envisaged in 2019. In Spectris

Scientific and Spectris Dynamics, we now

have two high-quality, premium precision

measurement Divisions with attractive

growth characteristics.

We have also made progress with our

transformation initiatives, with our businesses

on track to commence a phased rollout of a

single ERP system in 2024. The adoption of

the system alongside new, more efficient

business processes, represents a key part of

our journey towards meeting our medium-

term targets.

Spectris delivered a strong performance in 2023. As well as generating

record profits and a third successive year of double-digit LFL sales and

profit growth, we continued to lay the foundations for sustainable

furthersuccess by investing in our people, new products, digital services,

and targeted acquisitions. As I look to the future, I am excited about

theopportunities that lie ahead for the Group and confident in our ability

tocontinue to deliver against our strategic priorities, benefiting all

ourstakeholders.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 20236

Chairman’s statementcontinued

Sales

£1,449.2m

(2022: £1,327.4m)

Dividend per share

79.2p

(2022: 75.4p)

Adjusted earnings per share

199.7p

(2022: 159.9p)

The Group has a good track record of

delivering operational efficiencies and

reducing costs, reflecting our lean culture.

TheSpectris Business System (SBS), delivered

further incremental benefits in 2023 and

continues to make a meaningful contribution

to margin expansion. The Board saw,

first-hand, during its visit to the Malvern

Panalytical site in Almelo, the Netherlands,

anumber of examples of how the SBS is

bringing tangible benefits to our businesses

and I am delighted to see that a number of

sites were awarded Bronze certification

during 2023, as part of our ‘Going for Gold’

programme.

Leading sustainable business

Sustainability continues to be at the heart

ofour strategy. How we do business is as

important as what we do. I am delighted with

our continued progress towards our Net Zero

ambition, including a further 27.0% reduction

in scope 1 and 2 emissions on a like-for-like

basis during the year, as set out on page 64.

Building on our membership of the UN

Global Compact, this year we launched our

new Supplier Code. The code sets out the key

expectations we have for suppliers working

with us to ensure that our value chain is

aligned with our ambition to create a cleaner,

healthier and more productive world. More

details are set out on page 59.

Read more about our approach to sustainability

on pages 52 to 79

Capital allocation

Ensuring the appropriate allocation of

capitalremains a key area of focus for the

Board, striking the right balance between

generating strong returns for shareholders

and investing for growth.

The Board remains committed to driving

sustainable organic growth, with significant

continued investment in R&D, while

continuing to use our strong balance sheet to

compound growth through value-enhancing

acquisitions. Our M&A pipeline ranges from

early-stage technologies, through bolt-ons,

tolarger acquisitions, where we continue to

maintain an active pipeline of opportunities.

In 2023, we advanced this strategy through

the successful acquisition of MicroStrain

Sensing Systems Business, EMS, the purchase

of the x-ray diffraction line from Freiberg

Instruments and a minority investment

inLumaCyte.

In November, we completed a £300 million

share buyback programme. Following the

divestment of Red Lion, and having

considered the future acquisition pipeline,

wecommenced a further share buyback

programme of £150 million, with the first

tranche, of £50 million, commencing in

December 2023. This latest programme,

oncecompleted, will take the total amount

ofcash returned through buybacks since

2019to£650 million. The Board is confident

that ourbuyback strategy will support the

maintenance of a strong and effective

balance sheet, whilst providing the optionality

to advance the Group’s strategy through

inorganic growth.

The Board is proposing a final dividend of

53.9pence per share which, when combined

with the interim dividend of 25.3 pence per

share, gives a total of 79.2 pence per share

forthe year.This equates to a 5% increase, in

line with our policy of making progressive

dividend payments based on affordability

and sustainability. We are proud that Spectris

has an established track record of increasing

the dividend every year for the past 34 years.

Looking ahead, the Group’s strong cash

generation and robust balance sheet

continues to provide flexibility and agility to

pursue further value-creating opportunities

as they arise.

Our people and culture

Our people are critical to the success of the

Group, with an engaged and motivated

workforce key to building and maintaining a

sustainable business. During the year, I was

pleased to visit Malvern Panalytical in

Almelo,the Netherlands, with the Board,

which included the opportunity to meet

Section 172 statement

The Board of Directors confirm that during the year

ended 31 December 2023, it has acted to promote the

long-term success of the Company forthe benefit of

shareholders, whilst having due regard to the matters set

out in section 172(1) of the Companies Act 2006, being:

(a) the likely consequences of any decision in the

longterm

(b) the interests of the Company’s employees

relationships with suppliers, customers and others

(d) the impact of the Company’s operations on the

community and the environment

(e) the desirability of the Company maintaining a

reputation for high standards of business conduct

(f) the need to act fairly between members of the

Company

Read more about how the Board supports its Section 172

statement throughout the Corporate Governance section

with specific exampleson pages 86 and 87

1. Alternative performance

measures (APMs) are used

consistently throughout this

Annual Report and are referred

to as ‘adjusted’ or ‘like-for-like’

(LFL). These are defined in full

and reconciled to the reported

statutory measures in the

appendix to the Consolidated

Financial Statements on

page185.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 7

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Chairman’s statementcontinued

representatives from the Almelo early careers

network as well as to see the emphasis placed

on safety and SBS across the site.

Kjersti Wiklund, our Workforce Engagement

Director, has remained instrumental in

providing the Board with valuable oversight

of the development of the Group’s culture,

having held a number of face-to-face

engagement sessions throughout the year

with our people in Korea, Denmark and

theNetherlands.

Now in its third year, the scores from our

global Gallup employee engagement survey

improved once again, increasing to a

GrandMean of 3.92 (2022: 3.86), which is

testament to the work being done to

promote a strong, inclusive culture

underpinned by Our Values. During the year,

the Board received regular updates on the

development of the Group’s culture and

continued to seek ways of further developing

and advancing the Values-led, healthy

high-performance culture of our business.

We remain committed to ensuring that we

are building a diverse and inclusive workforce,

recognising that a diverse workforce makes

us more innovative, creative and competitive.

I am pleased to see the increased gender

diversity in our senior leadership community

and our ambition to increase the number of

women in leadership roles to at least 40%

by2030. In support of this ambition, I am

delighted that we are partnering with peer

companies in our sector to support the 25x25

initiative. In line with the Parker Review, we

have set a target to increase ethnic diversity

across our UK-based leadership population

and we are progressing work to define our

global ambition on ethnic diversity. Further

details are set out on page 56.

Read more about our People strategy

on page 54

Board changes

Bill Seeger will retire from the Board at the

conclusion of the 2024 Annual General

Meeting (AGM), having served since January

2015. On behalf of the Board and the wider

Group, I would like to extend my sincere

thanks and appreciation to Bill for his

immeasurable contribution to the Group as

Senior Independent Director and Chairman

of the Audit and Risk Committee. Cathy

Turner succeeded Bill as Senior Independent

Director in May 2023 and Mandy Gradden will

assume the role of Chairman of the Audit and

Risk Committee at the conclusion of the

2024AGM.

A succession process has been initiated for

UlfQuellmann, who will also have served on

the Board for nine years at the 2024 AGM.

Reflecting on the loss of experience in the

departure of Ulf and Bill, it is proposed that Ulf

remain on the Board for one further year to

provide continuity and support to the Group

before retiring ahead of the 2025 AGM.

Further details are set out on page 82. Mandy

Gradden joined the Board, and Audit & Risk

Committee in October 2023, and will be

appointed as Chairman of the Audit and Risk

Committee at the conclusion of the 2024

AGM. In her current position as Chief Financial

Officer of Ascential plc, Mandy brings a

wealth of financial experience as well as a

strong background in strategy, investor

relations, digital and software, and I am

delighted that she has joined the Board.

Read more about our approach to Corporate

Governanceon page 82

The Spectris Foundation

The Spectris Foundation has continued

to build on its early impact in 2023, with

£1.61 million donated to charities to date

to encourage greater inclusion and access

to science, technology, engineering and

mathematics (STEM). In addition, the

Foundation has approved 53 donations to

employee-nominated causes since its launch

in 2021. Iam delighted that we are supporting

our employees to give back to their local

communities. Recognising its impact, I am

proud that the Board has agreed to increase

our ambition for the Foundation making a

further contribution of £1 million in 2023 with

the ambition to contribute an additional

£5million by 2030.

Summary and outlook

The Board is very aware of the evolving

legislative and regulatory requirements

impacting the Group, notably in relation to

sustainability, over the coming years. We will

ensure these regulations remain front of

mind. As we oversee the Group’s strategy,

weare committed to coordinating the

implementation of new workstreams aligned

to the new regulations in an efficient and

proportionate way.

On behalf of the Board, I would like to thank

all our employees for their continued

dedication and hard work in delivering

another strong performance in 2023. We have

made a great start on the next phase of our

development to advance our ambition to be

aleading sustainable business, delivering on

our Purpose to make the world cleaner,

healthier and more productive.

As we look ahead to 2024 and beyond,

Iamconfident that we remain well

positioned to continue to execute our

Strategy for Sustainable Growth and deliver

another year of progress.

Mark Williamson

Chairman

28 February 2024

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 20238

The Spectris Foundation

The Spectris Foundation is a

registered charity working across

the globe.

The Foundation was established with the

belief that every person should have an

equalright to quality Science, Technology,

Engineering and Mathematics (STEM)

education. The Foundation’s mission is to

support charitable initiatives through

grant-making, with a particular focus on

enhancing and improving access to

qualityeducation in STEM; to empower

students from all backgrounds.

Read more about The Spectris Foundation

on pages 78 to 79

£16m

£15 million endowed in 2021 by Spectris plc to

create the Spectris Foundation with a further

£1 million contribution in 2023.

Since inception:

The Spectris Foundation has awarded

£1,365,799

(STEM and Employee nominations)

with £1,161,299 committed to STEM education

Spotlight

Grant awarded

£50,000

Timescale

1 year 2023 – 2024

Location

UK-wide

Apps for Good

Giving young people the skills to

shape their future.

In a world transitioning towards digital transformation, many

young people are being left behind, as they lack the necessary

knowledge and skills to thrive in our digital world, due to adversity

or disadvantage. The number of students pursuing IT courses in

the UK at various levels (GCSE, A-Level, further education courses,

and apprenticeships) is declining at an alarming rate.

Apps for good believe that all young people should be empowered.

They provide free tech innovation courses to schools, giving

teachers ready-made education content, so young people from all

backgrounds can develop computing and essential skills to create

a brighter future through technology.

The Spectris Foundation are partnering with Apps for Good to

launch and expand their new project, Apps for Social Action (ASA).

ASA is a solution-focused tech course focusing on young people,

who are facing adversity, disadvantage, or are part of a minority

group. The courses equip them with the essential skills to tackle

pressing societal issues, empowering young people to use digital

technology to positively influence the world they are living in.

Technovation

Empowering girls to become leaders,

creators and problem-solvers.

Technovation are a global technology education not-for-profit

organisation that empowers girls to become leaders, creators and

problem-solvers. Their innovative program equips young women

with the support of volunteer mentors and parents. Girls work in

teams to code mobile apps that address real-world problems and

help them develop into our future entrepreneurs and leaders.

In the dynamic world of technology, a striking gender gap persists,

with just a 25% representation of women in the sector. Amidst this

global challenge, Technovation has emerged as a beacon of hope,

dedicated to empowering young women through technology in

their communities.

The Spectris Foundation is supporting Technovation to impact

1,426 young women’s lives through Technovation Girls.

Total awarded

£267,000

Timescale

2 years 2023 – 2025

Location

USA & Global

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 9

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Market trends

Life sciences/

Pharmaceutical

Technology-led

industrials

1,2

Electronics and

semiconductor

Pharmaceutical investment

continues to grow, driven by

demand for conventional and

innovative biologics-based

therapies. This growth is

underpinned by onshoring

activities, the application of

analytics to improve drug pipeline

efficiency and an increased

regulatory focus on data integrity.

A more connected and automated

world demanding ever more

advanced computing and data is

underpinning growth. In a higher

inflationary environment, an

increased focus on enhancing

processes and assets to drive

improvements in productivity and

yield is also supporting demand.

Rising investment to satisfy

amplified demand for digital

infrastructure and greater

processing power, combined

withfast-evolving technologies

such as 5G, internet of things,

artificial intelligence and

machinelearning; supported by

reshoring activities.

Sales 2023

18%

Sales 2023

16%

Sales 2023

12%

(2022: 24%) (2022: 16%) (2022: 11%)

Expected medium-term

market growth

5–7%

Expected medium-term

market growth

5–7%

Expected medium-term

market growth

6–8%

Read more about Our Markets 

on pages 10 and 11

Our portfolio is focused and aligned

toattractive, technology-driven,

structural growth markets,

underpinned by strong sustainability

themes to make the world cleaner,

healthier and more productive –

aligned with our Purpose.

Cleaner

• Climate change and increasingly scarce

resources require new solutions to solve

theglobal environmental crisis; including

the transition to cleaner energy and

mobility solutions.

Healthier

• Ageing populations and a rising

middle class in developing countries

require greater healthcare provision,

driving innovation across the Life

sciences / Pharmaceutical space.

• Growing populations are 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

andsimulation; compounded by the

needof our customers to improve yield,

productivity and competitiveness.

Accelerating

growth in

our markets

• We have simplified our portfolio, with increased focus

on core activities in attractive end markets.

• We have differentiated positions, supported by sustainable

growth trends and a strong market share opportunity.

1. 2022 has been represented following a recategorisation of marine and rail from automotive to technology-led industrials

2. Image: Blue Origin

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202310

“Spectris today is a higher quality business, with a clear strategy and

strong positions in attractive, sustainable, structural growth markets.”

Andrew Heath, Chief Executive

2023

Market trendscontinued

Automotive

Materials Academic

research

Other

Investment in automotive R&D

isbeing driven by new platforms

and a focus on electric vehicles, as

well as new technologies for

autonomous and increasingly

connected vehicles. Agrowing use

of simulation and software is

required to generate smarter

insights early on and to develop

products faster, more efficiently

and in a more sustainable manner.

Demand for new battery and

catalyst materials to drive the

energy transition and increasing

focus on green metals and mining

to minimise the environmental

impact of production activities.

This is leading to greater adoption

of new technologies, automation

and digitisation, fuelling demand

for digitally connected instruments

and remote monitoring/analytics.

Demand for advanced analytical

and test systems, is being

drivenby the development of

next-generation advanced

materials and technologies for

acleaner, healthier and more

productive world.

Includes other technology-driven

markets such as Energy & Utilities

and general Industrial Automation/

Industry 4.0.

Sales 2023

10%

Sales 2023

10%

Sales 2023

10%

Sales 2023

24%

(2022: 10%) (2022: 9%) (2022: 8%) (2022: 22%)

Expected medium-term

market growth

4–6%

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

on pages 22 and 23

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 11

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Chief Executive’s review

A healthy, high-

performance

culture

“With thanks for the hard work of

my colleagues, we made further,

excellent progress in 2023,

delivering another year of double-

digit sales growth, record

profit and an operating

margin in excess of 18%.”

Andrew Heath

Chief Executive

2023 was an excellent year for Spectris, reflecting the strength of the

business and the strong execution of our Strategy for Sustainable Growth.

Our people have continued to aim high, delivering a third successive year of

double-digit sales growth and record profitability. Our strong performance

is consistent with the ambitious, medium-term targets we laid out in

October 2022 and provides further evidence of how we have improved the

quality and resilience of our business.

Double-digit LFL sales growth with

strongmargin expansion and record

operating profit

I would like to thank all my colleagues across

Spectris for their commitment to delivering

positive outcomes for our customers, working

hard for each other and driving great results

for the Group. Thank you for living our Values

and inspiring a bold, high-performing

culturethat continually goes beyond and

embraces our Purpose to make the world

cleaner, healthier and more productive.

Despite the return of more normal customer

ordering patterns in 2023, following the

easing of global supply chains, our order book

remains robust, providing good levels of

visibility as we entered 2024. Order cover of

between 4 and 5 months is higher than

where the Group has been historically

pre-pandemic, is in line with our expectations

and consistent with where we expect order

cover to settle over the medium-term.

We maintained strong sales momentum,

with LFL sales growth of 10% which was

ahead of our end markets, reflecting the

introduction of exciting new products and

the excellent conversion of our record order

book at the start of the year. LFL sales

exceeded the expected medium-term

market growth rates in each of our major end

markets with the exception of life sciences/

pharmaceutical, where sales were 9% lower.

This reflects the earlier normalisation of

demand in this market after strong growth

in 2022 and 2021.

We also continue to deliver higher quality,

more profitable growth, with Spectris

Dynamics producing a particularly

impressive performance, delivering on the

targets they set at the start of the year and

carrying good momentum into 2024. Our

focus on operational excellence, positive net

pricing and a more benign input cost

environment resulted in a 130bps increase in

adjusted operating margins. The improved

productivity and competitiveness is being

driven through the Spectris Business System

(SBS), which once again delivered significant,

incremental benefits in 2023, materially

contributing to the increase in profitability.

The Group delivered a record adjusted

operating profit in 2023 – above our previous

high in 2019, even after our divestment

programme. Our adjusted operating margin

of 18.1% fulfils a pledge we made when I joined

Spectris in 2018, to restore Spectris to its

previous margin highs. It is evidence of the

progress made and the strength of our

businesses, that we now see this as a stepping

stone, on our way to margins in excess of 20%.

We are highly cash generative, with cash

conversion over 100% on an adjusted basis,

enabling us to maintain very strong balance

sheet optionality and flexibility to invest

ingrowth.

During the year we invested £108 million in

R&D to ensure the future pipeline remains

strong. We continue to have significant

success in commercialising our technology

with a number of new products launched in

the year with additional exciting launches

planned for 2024. We made four acquisitions/

investments to bolster our capabilities and

continued to develop further acquisition

opportunities which we will work hard to

realise in 2024. And in accordance with our

capital allocation priorities, we completed the

£300 million share buyback programme

announced in April 2022 and commenced

the first tranche of the £150 million share

buyback programme announced in

December 2023.

Towards the end of the year, we announced

the sale of Red Lion Controls which, when

completed, will mark the conclusion of the

portfolio rationalisation envisaged in 2019. This

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202312

Chief Executive’s reviewcontinued

programme has simplified and focused the

Group through the divestment of eight

businesses, at attractive valuations,

generating £1.4 billion in gross proceeds,

allowing us to reinvest in our future, as well

asunderpinning returns to shareholders.

The SBS represents a key building block to

meeting our medium-term adjusted operating

margin target of 20% plus. I have been

impressed with the commitment to the SBS

and the tangible progress I have seen across

our sites during my visits throughout 2023.

During the year, we commenced our ‘Bronze,

Silver, Gold’ certification programme to drive

lean operations across our core operational

metrics, with seven of our sites achieving

Bronze certification by the end of the year.

And we have enhanced our credentials as a

leading sustainable business making strong

progress towards our Net Zero ambition with

a 27% reduction in our like-for-like scope 1

and2 emissions, and achieving an ‘A-’ in our

recent CDP rating. I am also very pleased

withthe progress we are making to ensure

Spectris continues to be a great place to work

with our engagement scores increasing again

in 2023, rising to 3.92 (out of 5.00), up from

3.86 in 2022 and 3.72 in 2021.

Our performance in 2023 provides further

evidence of the renewed strength of the

business and demonstrates the benefit of

thebreadth of our portfolio, with exposure to

both early-cycle and late-cycle end markets,

with broad geographic exposure. Our

high-quality, focused business, along with our

strong self-help story, provides confidence in

our outlook for 2024 and beyond.

Significant opportunities lie ahead for

theGroup

Spectris today is a very different business

than it was five years ago. We have carefully

and systematically refocused the Group

around premium precision measurement

businesses with attractive financial

characteristics and long-term sustainable

growth prospects, where we are solving some

of our customers’ toughest challenges.

We have already seen the impact on our

performance, delivering strong levels of

We are committed to creating

a healthy, high-performance

culture underpinned by Our

Values of Aim High, Own It, Be

True. We continue to make

encouraging progress on our

journey and driving high levels

of engagement across the

Group.

GrandMean

3.92

(2022: 3.86)

The strength and resilience

ofour businesses and their

competitive positions is

beingfurther enhanced

by increased investment in

R&D as well as adding new

capabilities through

acquisitions and investment

innew technologies.

Investment in R&D

£108.1m

(2022: £103.8m)

We are making strong progress

towards delivering our

ambition to become NetZero

across our own operations

(scope 1 and 2) by 2030 and

across our value chain (scope 3)

by 2040.

Scope 1 and 2 emissions

12,144 tonnes CO

(2022: 17,546 tonnes CO

Investing in our people

Driven by innovation

Committed to sustainability

Sales

£1,449.2m

(2022: £1,327.4m)

Change yoy 9%

LFL

change yoy 10%

Adjusted operating profit

£262.5m

(2022: £222.4m)

Change yoy 18%

Adjusted operating margin

18.1%

(2022: 16.8%)

Change yoy 130bps

Investment in R&D

7.5%

(2022: 7.8% of sales)

organic growth and increased operating

margins. We have also significantly

strengthened our financial position, while

increasing investment in future growth

through higher levels of R&D and targeted

M&A. And alongside this, we have steadily

increased shareholder returns through our

progressive dividend and share buyback

programmes.

But we are far from done. We are working to

truly unlock the Group’s full potential. With

great people united behind a clear Strategy

and common Purpose, I have never been

more excited about the future for Spectris as

Iam today.

Spectris today is a higher quality business.

The progress and investments we have made

have created a stronger platform and a

business with a clear Purpose. I have often

said that we are a business blessed with

opportunities, and we now more focused in

our pursuit of them than ever before.

In 2024 and beyond, we will build on these

strong foundations. We cannot remove the

uncertainty from some of our end markets,

but there are a number of levers we control

todrive further progress in the years ahead.

These ‘self-help’ opportunities include the

implementation of a programme to

transform our business processes, via the

rollout of a single, cloud-based ERP solution,

in addition to the SBS. The new system will

provide a number of benefits, improving

thevisibility we have across the business,

increasing our efficiency and making us more

agile. Once complete, the new system will

contribute an additional 150bps of margin, an

important building block towards our target

of at least 20%.

We are focused on creating shareholder

valuethrough a balanced approach to

capitalallocation. Our strong balance sheet

provides the flexibility to maintain high levels

of investment in R&D. We have a strong

pipeline of new products and services that

wewill bring to market over the coming

years,improving the vitality of our portfolio

and helping us maintain our competitive

advantage.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 13

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Chief Executive’s reviewcontinued

Compounding growth through targeted

acquisitions remains a top priority and we

would like to build on the 12 acquisitions and

investments we have made since 2019. We

have strengthened our teams within the

business, generating leads, evaluating

opportunities and maintaining a healthy

pipeline of potential acquisitions, ranging

from small bolt-ons to larger acquisitions.

And, as we have demonstrated, we will

returnexcess cash to shareholders if

opportunities to make acquisitions do not

crystallise in a reasonable time-period. When

completed, our latest £150 million share

buyback programme will increase the total

amount of cash returned to shareholders

through buyback programmes to

£650million since 2019.

We will also continue to build on the great

progress we have made by reducing our

impact on the planet through our

sustainability initiatives, to meet our Net Zero

goals by 2030 and 2040. And we are building

a lasting legacy for future generations

through our work with the Spectris

Foundation, with a plan to contribute an

additional £6 million between 2023 and 2030,

to support access to quality education in

STEM for people across all backgrounds.

Delivering on these initiatives and

opportunities is only made possible by the

determination of our people, working for each

other, and with our customers, to help solve

some of their most critical challenges. I am

proud of the work we have done to create a

healthy, high-performance culture, a critical

ingredient in our recent and future success.

We will continue to invest in our people to

drive even higher levels of engagement as we

execute our Strategy.

Despite the near-term macroeconomic

environment, I am more confident than

everin the future for Spectris, as a leading

sustainable business, capable of

compounding growth through the cycle

andcontinuing to expand margins.

Strategy for Sustainable Growth

Our Strategy for Sustainable Growth is

delivering compound growth and increased

profitability, along with strong cash flow and

returns on invested capital. This is reflected in

our medium-term performance targets for

the Group to deliver:

• Organic sales growth of 6-7% through

thecycle

• Adjusted operating margin of 20%+

• Cash conversion of 80-90%

• Return on gross capital employed (ROGCE)

in the mid-teens %

• Net Zero and increased employee

engagement

The achievement of these performance

objectives will materially enhance the value

ofthe Group and deliver significant benefits

to all of Spectris’ stakeholders. The Group’s

Strategy and business model is aligned to

delivering this framework, through six

keyelements:

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

Disciplined capital allocation for the benefit

ofall stakeholders – investment in growth

through R&D and M&A.

5. Operational excellence

Leveraging the SBS business improvement

projects and our high-performance culture.

6. People and Culture

Purpose-led, healthy, high-performance

culture with a clear ambition to create a

positive and lasting impact to the planet

andsociety.

Great businesses focused on premium,

precision measurement solutions

Spectris is built around Spectris Scientific

and Spectris Dynamics, two world class,

asset-light businesses focused on premium,

precision measurement solutions with

industry-leading domain expertise and

strong IP. Together, the two Divisions

represented 86% of Group revenue in 2023

with the Other Division (consisting of Red

Lion Controls and Servomex) representing

the remainder.

Spectris Scientific is a leader in advanced

material measurement and characterisation,

for the high growth end markets of

pharmaceuticals & food, primary materials,

advanced materials, semiconductors and

academic research. We are well positioned in

high-value, premium areas where our domain

expertise and analytics are valued by customers

throughout the workflow. Our customers

need the best measurement, and can’t, and

won’t, compromise. The Division is made up

of two businesses today: Malvern Panalytical

and Particle Measuring Systems (PMS).

Malvern Panalytical is a world leader in

materials analysis and characterisation, where

we compete based on the precision and

accuracy of measurement, our best-in-class

solutions, our applications knowledge as well

as a dynamic and evolving product portfolio.

Our PMS business is a world leader in

delivering micro-contamination monitoring

solutions for ultra-clean manufacturing

environments, where we win on the basis of

having technology with the highest sensitivity

and quality, our regulatory expertise, data

integrity and the provision of complete

sterility assurance solutions.

As announced in December 2023, the

divestment of Red Lion Controls marks an end

to our portfolio rationalisation programme

envisaged in 2019. On completion of the sale,

which is expected in the second quarter of

2024, we anticipate Servomex moving from

our Other Division and being reported as part

of Spectris Scientific. As a world leader in the

provision of specialist premium gas and

moisture analysis, Servomex is a great

business that fits well with Spectris Scientific’s

focus on premium precision measurement

instruments and solutions. Servomex serves

many of the same end markets with exciting

new technology in the pipeline and strong

potential to address customer needs in the

energy transition, particularly in areas such as

carbon capture and hydrogen.

Spectris Dynamics is a world leader in the

provision of advanced integrated physical and

virtual testing and measurement. The Division

is focused on four premium product lines

with high growth prospects, where we have

leading market positions: virtual test;

software; data acquisition; and high-precision

sensors. These products are complementary

for customers and combine to offer the

broadest test and measurement solutions in

the market.

Organic

sales

growth

Adjusted

operating

margin

Adjusted

cash

conversion ROGCE ESG

Our medium-

term targets

6-7% 20%+ 80–90% Mid-teens % Net Zero – Scope 1 and 2 by 2023;

Scope 3 by 2040

Engagement – 4.06 by 2025

2023 10% 18.1% 103% 19% Scope 1 and 2* – 12,144.1 tCO

e year-on-year

reduction of 27.0%.

Engagement improved year-on-year

by 0.06 to 3.92

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

(Scope 3 and Engagement not measured

in2018)

* Market-based emissions

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202314

Chief Executive’s reviewcontinued

In virtual test we provide a complete solution

including software, simulators and hardware-

in-the-loop; in data acquisition (DAQ) our

strength lies in the accuracy and sampling

rate as well as the ease of use of our DAQ

hardware and software; our software offering

is known for its range and sophistication of

analytic capabilities, ease of use and flexibility;

and our sensors win on the back of their

accuracy, reliability, durability and the breadth

of our offering.

Spectris Dynamics supports customers in

thelong-term growth markets of automotive,

aerospace and defence, machine

manufacturing and personal electronics.

These end markets are requiring greater test

and measurement functionality and fidelity

to accelerate the time to market for new

products, reduce cost and manage

increasingly sophisticated measurements for

automated manufacturing and in-process

applications.

Aligned with attractive, sustainable,

structural growth markets

As a result of the rationalisation of our

portfolio over the last four years, additional

investment in R&D and enhanced capabilities

through acquisition, Spectris today is a more

focused, streamlined, and resilient business

positioned in markets benefiting from a

number of structural growth drivers and

sustainability trends:

• Life sciences/pharmaceutical (18% of

Group sales) – growth is driven by demand

for both conventional and innovative

biologics-based therapies, supported by

onshoring activities, the application of

analytics to improve drug pipeline

efficiency and an increased regulatory

focus. We play in three main areas, with the

first two serviced by our Malvern

Panalytical business: (1) Small molecule

drug discovery, development and

manufacturing – where we are a market

leader in stability, affinity and structure

analysis; (2) Biologics drug discovery,

development and manufacturing – where

we have built a strong position in affinity

and stability analysis; and (3) Aseptic

manufacturing – our PMS business is a

market leader in the provision of

instruments and services to support

micro-contamination monitoring in

pharmaceutical cleanrooms.

• Technology-led industrials (16% of Group

sales) – a more connected and automated

world demanding ever more advanced

computing, sensing and data is

underpinning growth. In a higher

inflationary environment, an increased

focus on enhancing processes and assets

to drive improvements in productivity

andyield is also supporting demand. We

generate revenue from two main areas

both of which contribute around half of

thetotal revenue for this end market: (1)

providing our leading smart and OEM

sensor capability to machine

manufacturers and OEMs; and (2) from

aerospace and defence where our leading

real-time computation systems, sensors,

data acquisition systems and software

provide customers with leading test and

measurement technology in a number of

critical applications.

• Electronics and semiconductor (12% of

Group sales) – growth is being driven by

rising investment to satisfy higher chip

demand for digital infrastructure and

greater processing power, combined with

fast evolving technologies such as 5G,

internet of things and machine learning;

supported by reshoring activities and the

construction of new fabrication plants

across the world. Demand for our high

sensitivity particle counters for

semiconductor cleanrooms and particle

characterisation instruments for silicon

wafer structural analysis accounts for the

majority of revenue for this end market,

with the remainder coming from consumer

electronics, including precision

microphones, speakers and voice-control

systems.

• Automotive (10% of Group sales) –

investment in automotive R&D is being

driven by electric vehicles and the rapid

expansion of new manufacturers and

platforms, as well as new technologies for

autonomous and increasingly connected

vehicles. A growing use of simulation and

Six 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

Disciplined capital allocation for the benefit of all

stakeholders – investment in growth through

R&D and M&A.

5. Operational excellence

Leveraging the SBS business improvement projects

and our high-performance culture.

6. People and Culture

Purpose-led, healthy, high-performance culture with

a clear ambition to create a positive and lasting impact

to the planet and society.

Read more information on our Strategy on pages 22 and 23

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 15

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Customer centricity: leading solutions to

make the world Cleaner, Healthier and

More Productive

Customer centricity is core to our business

model. Over the last four years we have

shifted from transactional selling of hardware

to concentrating on solutions, where we add

value throughout our customers’ workflows

and processes. We serve over 67,000

customers globally and having reshaped

theportfolio, our retained businesses

predominantly go to market directly with

over80% of sales being direct to customers

supported by over 2,200 sales, service and

application engineers reflecting our high-

touch approach. Our domain expertise is

highly valued, with over 60% repeat

customers annually and class-leading net

promoter scores.

Our large and growing installed base has

allowed us to build a strong aftermarket

annuity, with recurring and service revenues

now accounting for around a third of

Groupsales with software accounting for

approximately a third of that. And through

newinnovations such as SMART Manager,

which enables connections to customers’

instruments in the field, we are expanding the

range of aftermarket services that we provide.

During 2023, we continued to work across

theworld with customers using our expertise to

help them solve their most critical and complex

challenges. Two such examples include:

• At Spectris Scientific, we are delighted

thatthe team at MIP Discovery, a leading

developer of solutions for a range of

diagnostics and healthcare applications in

the UK, chose our particle characterisation

technology. MIP is deploying our recently

launched NanoSight Pro nanoparticle

tracking analyser along with our Zetasizer

system in the development of innovative

alternatives to biosensor-based testing

devices for drugs and also diseases,

including coronaviruses and many cancers.

MIP identified a number of key benefits of

the NanoSight Pro including easy

installation, alignment of software, faster

results analysis, accuracy and a reduction in

the use of expensive samples.

software is being used to generate smarter

insights earlier during product development

to bring products to market faster, more

efficiently and in a more sustainable

manner. Around two-thirds of our revenue

from this end market is derived from EV

development and production with our

offering centred around virtual simulators,

hardware-in-the-loop, sensing and data

acquisition capabilities and end-of-line

testing.

• Materials (10% of Group sales) – 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, closer to the point of

extraction. This is also fuelling demand for

digitally connected instruments and

remote monitoring/analytics. The energy

transition is also driving significant demand

for new chemistries and materials for

batteries and power electronics along with

catalyst development and advanced gas

analysis for carbon capture and the

hydrogen economy. Advanced

manufacturing and the drive for efficiency

and weight saving also required the

development of new materials. The bulk of

our revenue in this end market is currently

derived from material characterisation in

mining, metals, petrochemical and building

materials production, with the remainder

from analysis to support the production of

advanced materials such as batteries.

• Academia (10% of Group sales) – recovery

in research funding is driving demand for

advanced analytical and test systems,

focused on developing next generation

technologies for a cleaner, healthier and

more productive world.

• In 2023, LFL sales exceeded the expected

medium-term market growth rates in

eachour major end markets with the

exception of life sciences/pharmaceutical,

where sales were 9% lower. This reflects

theearlier normalisation of demand in

thismarket after strong growth in 2022

and2021.

• At Spectris Dynamics, EDAG Group, one of

the world’s largest independent

engineering partners for vehicles and smart

factories, announced that our leading

driving simulator and hardware-in-the-loop

technology will feature at its Zero Prototype

Lab at its development centre in Wolfsburg,

Germany. Our state-of-the-art simulator

offering will provide key tools in the centre,

with EDAG investing in our DiM500, our

largest simulator, along with the COMPACT

Full Spectrum Simulator ( COMPACT FSS)

and an additional AutoHawk hardware-in-

the-loop platform. The provision of a

comprehensive suite of simulation tools will

empower EDAG Group in pushing the

boundaries of engineering services and

also provide an excellent reference point for

other automotive customers.

Investing in growth through R&D

The strength and resilience of our businesses

and their competitive positions is being

further enhanced by increased investment

inR&D as well as adding new capabilities

through acquisitions and investment in new

technologies.

We invested £108.1 million in R&D in 2023

(2022: £103.8 million) representing 7.5% of sales

(2022: 7.8%) in line with our stated guidance.

Our direct sales approach enhances customer

intimacy and fosters an environment of

customer-back innovation with our strong

innovation pipeline fuelling future organic

growth and market share gains. We continue

to see strong interest from customers and are

having significant success in commercialising

our technology with a number of new

products launched in the period.

In Spectris Scientific we launched: our

ParticleSeeker product, a smart aerosol

manifold used to monitor air quality in

semiconductor manufacturing; the

Nanosight Pro which provides the quickest,

most accurate, easy to use and install

nanoparticle tracking analysis instrument;

theSERVOPRO DF760E NanoTrace, a dual

moisture and oxygen analyser for ultra-high

purity bulk gases used in the semiconductor

industry; and the FORJ

fusion instrument,

the world’s fastest, safest and most accurate

fusion instrument for sample preparation. In

addition, we made strong progress on our

digital strategy, with around 2,500 customer

instruments now connected to our SMART

Manager cloud-based platform for remote

and proactive instrument monitoring.

In Spectris Dynamics new product launches

included: our COMPACT FSS to further

augment our simulator offering for

automotive customers; a number of major

upgrades to our leading reliability and

durability software; and a record number of

prototypes for our global OEM sensor

customers including: force sensors for

batteries and brakes applications; strain

sensors for fuel cells and electric vehicles; and

torque sensors for robotics and mechatronics.

Our simulation technology continues to gain

recognition with our DiM300 simulator

selected as the 2023 Development Tool of the

Year by Vehicle Dynamics International.

Chief Executive’s reviewcontinued

End market sales and growth rates

Sales

2023

(£m)

Sales as

% of total

Group

LFL sales

Growth

Expected

medium-term

market growth

Life sciences / pharmaceutical 267 18% -9% 5–7%

Technology-led industrials 233 16% 8% 5–7%

Electronics and semiconductor 175 12% 19% 6-8%

Automotive 149 10% 8% 4-6%

Materials 142 10% 16% 5–6%

Academia 142 10% 29% 5–6%

Other 341 24% 19% 3–5%

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202316

Looking ahead, we expect R&D spend to

remain at around 8% of sales, with all our R&D

investments expected to return an internal rate

of return of at least 15%. In 2022, we introduced

our vitality index for the first time. This measures

current year revenue from products released

over the previous five years as a percentage of

total revenue in the current period.

The vitality index was 22% by the end of 2023

(2022:25%) with the decline reflecting a

combination of two factors. First, our decision

to divert engineering resource to redesign

products to navigate input shortages

delaying some of our new product

introduction timescales and second, strong

sales of our established core product portfolio,

which is testament to the strength and

longevity of our technology and leading

market positions. We expect the vitality index

to improve beyond 2022’s level in 2024.

Investing in growth through M&A

We continue to maintain an active pipeline

ofpotential acquisition targets from early-

stage technologies to bolt-on acquisitions

ofvarying sizes, through to larger-scale

opportunities. This is an important

component of our Strategy to compound

growth, with acquisitions adding £23 million

of additional sales (2%) in 2023. During the

year, we invested a total of £60 million on

fouracquisitions.

In September, Spectris Dynamics completed

the acquisition of MicroStrain Sensing

Systems Business, a leading developer of

inertial and wireless sensing systems, serving

the industrial and aerospace sensing systems

market, to further strengthen our overall

sensor offering.

Spectris Scientific made three investments

tobroaden its offering: the x-ray diffraction

product line from Freiberg Instruments

providing complementary solutions to our

existing semiconductor portfolio; a minority

investment in LumaCyte providing further

exposure and deeper insights into the

high-growth cell & gene therapy and vaccine

markets; and the acquisition of Particle

Measuring Technique Ireland Limited (EMS),

along-established partner and exclusive

distributor of PMS products in the UK and

Ireland, which further strengthens our

regional services offering.

Looking ahead, our strong balance sheet

andactive M&A pipeline provide us with

considerable flexibility to continue to

compound growth through targeted

acquisitions.

Operational excellence: the SBS driving

productivity and competitiveness

The deployment of the SBS continues to

expand, delivering operational excellence

andthe adoption of a lean mindset across the

Group, as a key productivity component of

our journey towards our medium-term

adjusted operating margin target of over 20%.

I have been particularly delighted to witness

the commitment to the SBS and the progress

we have made across our sites during my

visits throughout the year.

The main objectives of the SBS are to remove

waste, drive efficiency and strengthen

competitiveness as we grow the business.

These activities not only deliver hard financial

benefits, but they also strengthen our

capabilities and create additional capacity,

including investment in innovation and areas

like automation. As reported at the half year,

our focus during 2023 has been to drive

maturity in lean operations across our sites

while continuing to meet our commitments to

customers. In particular, this has meant a focus

on expanding our existing capacity efficiently,

to convert orders into sales, while at the same

time reducing costs and lead times.

During the year, the SBS continued to make a

meaningful contribution to the profitability of

the Group, with benefits realised from

operational excellence initiatives in 2023 in

excess of £10 million. These benefits are

derived from a combination of gross profit

improvement and overhead reduction,

delivered through a range of projects

including: improvements to workflow; layout

and capacity utilisation; freight optimisation;

and increased use of automation.

We commenced our ‘Bronze, Silver, Gold’

certification programme in the year to drive

lean operations across our core operational

metrics of Safety, Quality, Delivery, Inventory,

Productivity. I am pleased to report that at the

end of the year, seven of our sites (out of a

total of 14 priority sites) had achieved Bronze

certification.

Looking ahead, in 2024 we expect a number

of additional sites to achieve Bronze status

and others to make progress towards their

Silver accreditation. We will also continue to

broaden the focus of the SBS to encompass

R&D as well as the enabling functions such as

IT, Finance, HR and Legal.

We have made good progress on the

implementation of our business

transformation programme, enabled by

SAPS/4HANA, focusing on four key areas:

people, process, technology and data. The

programme will deliver simplified and

standardised processes, helping us more

efficiently scale our business, through:

simpler working practices; better customer

experience; enhanced interaction with

suppliers; and a more globally connected and

scalable business. Our approach has been to

adopt the standard SAP configuration

wherever possible, adjusting our business

processes to the system, thereby limiting

customisation and reducing complexity.

Implementation is scheduled to take place in

2024 through a phased rollout with benefits

starting to be realised from 2025.

We made excellent progress on the build out

of our new strain gauge production site in

Porto. The new site, which will become

operational in the second quarter of 2024, will

provide additional capacity to supply OEM

sensors to European and US markets from

Portugal, while our existing site in Suzhou

supports customers across Asia.

Work on the project to build a new, state-of-

the-art facility for our PMS business in

Colorado is progressing well. The new facility

will allow us to continue developing,

manufacturing and servicing products in

Colorado, while providing increased capacity,

improved operational efficiency and a

modern working environment for employees.

Underpinned by our Purpose and our

people

At Spectris, we believe that the way that we

deliver our results is just as important as the

results themselves. We are committed to

creating a sustainable business for all our

stakeholders, ensuring that we prioritise a

culture of long-term growth set on solid

foundations.

For our employees, this means creating a

great place to work, where their safety and

wellbeing is a priority and where they feel that

they belong, are seen and can develop and

grow. For our suppliers and customers this

means shared ethical business practices and

a joint commitment to making the world

cleaner, healthier and more productive.

Chief Executive’s reviewcontinued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 17

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

towards the voluntary reporting of ethnic

diversity data and we have set a target to

ensure that 10% of our UK-based leadership

population is ethnically diverse by 2027. While

this is an important first step, with employees

in over 30 countries, our wider ambition is to

ensure that our leadership community fully

reflects and represents our employee base

and the geographies where we operate.

Our healthy, high-performance culture is also

being supported by our global leadership

development programme, Ascend. The

programme is founded on the principles of

inspiring our people, strengthening our

teams and growing our business,

underpinned by our Values and Purpose. We

expect our leaders to cast a strong shadow,

demonstrating the right behaviours and

fostering a culture in their teams of

accountability, aspiration and doing the right

thing, by creating an engaging and inclusive

environment, where people can flourish.

The health, safety and wellbeing of our people

is our priority. We prioritise a safety-first

approach, to our operations, aligned to our

Values. In, 2023 we saw a slight increase in the

number of recordable incidents, with our

Total Recordable Incident Rate (TRIR)

increasing to 0.34 (2022: 0.27). While the

absolute number of incidents remains very

low, these incidents have been thoroughly

investigated by the Group’s Health and Safety

Committee and are attributable to an

increase in minor incidents and the

embedding of our global health and safety

reporting structure. Our goal remains to

reduce our TRIR to below 0.2, which would

represent a truly world-class performance.

We also continue to place great emphasis on

ensuring the wellbeing and mental health of

our people. This includes equipping our

leaders with the know-how to support their

teams in a holistic way through our ‘Time to

Talk’ programme and increasing access to our

Employee Assistance programmes, with over

86% of employees now having access to a

programme.

The positive development of our culture is

visible in the progress made in our annual

Our people are at the heart of our Purpose

and we are committed to developing our

healthy, high-performance culture. Across

Spectris, we have exceptional leaders, deep

technical experts and visionary thinkers, who

collectively create a diverse and innovative

global team who are passionate about

serving our customers and supporting each

other. I passionately believe that bringing

brilliant people together behind our common

Purpose, underpinned by our Values is the

key to our continued success.

Nurturing a diverse and inclusive working

environment is key to ensuring that our

people thrive. To achieve our full potential, we

need our people to bring their different

backgrounds, experiences and perspectives

to the fore in their work, supported by an

inclusive leadership culture that ensures

everyone feels they belong. Our people are

guiding our approach and we have

developed a number of inclusion groups

across our Spectris Dynamics business

covering areas such as late careers, gender

diversity, parents and our Advocates and

Allies Group, based in the US which support

and promote the views of employees from

diverse backgrounds. The views and feedback

from these inclusion groups is helping to form

and shape our approach to inclusion.

We are proud of the progress we have made

in 2023 to build further gender diversity into

our senior leadership team, increasing the

percentage of women to 28.7% and setting

our ambition to ensure this rises to at least

40% by 2030. In support of this, I am

delighted that Spectris has joined the 25x25

initiative to provide a collective focus on the

development of a diverse talent pipeline in

our industry. We also remain a proud sponsor

of International Women in Engineering Day

which his year, was celebrated in conjunction

with The Spectris Foundation, Young

Professionals and Techgirlz involving over 275

young women from across the UK and US

exploring different career paths in technology

and engineering.

We recognise the importance of developing

ethnic diversity, and other forms of

representation. In 2023, we took early steps

Gallup engagement survey. Our engagement

score increased again in 2023, rising to 3.92

(out of 5.00), up from 3.86 in 2022 and 3.72 in

2021. I am very pleased with the progress we

are making and, in particular, the

commitment I can see across the Group to

make engagement an intentional core of our

culture, making Spectris a great place to work.

Our Purpose guides our actions. We are

harnessing the power of precision

measurement to make the world cleaner,

healthier and more productive. In 2021 we

setchallenging targets to become Net Zero

across our own operations by 2030 and

acrossour value chain by 2040. In 2023, we

continued to make strong progress towards

our Net Zero ambition with a like-for-like

reduction of 27% in our scope 1 and 2

emissions, driven through the application of

the SBS principles to energy reduction and

the cost-effective deployment of onsite

renewable energy.

We have also made excellent progress in the

measurement and reduction of our scope 3

emissions, through the expanded use of

EcoVadis to build supplier-specific data and

the development of our product life cycle

assessment protocol at Servomex and PMS.

This progress has allowed us to measure and

report additional supplier specific data for

thefirst time. This level of granularity is

supporting targeted action, resulting in a 9.5%

reduction in our scope 3 emissions on a LFL

basis compared with 2022.

We are very conscious that one of the biggest

sustainable impacts we can have is through

our supply chain. In 2023, we launched the

new Spectris Supplier Code, which underlines

our commitment to the UN Global Company,

ethical business practices and sustainable

supply chains. The Supplier Code serves as

the foundation of our operations, outlining

the minimum standards we expect from our

valued supply chain partners and how we

would like them to work with us to fulfil our

wider sustainability ambitions.

Beyond our business we are also proud to be

building a legacy. We created the Spectris

Foundation in 2021 through an endowment

of £15 million. The Spectris Foundation

believes that every person should have an

equal right to quality STEM education. To

date, the Foundation has committed over

£1.1million to STEM education, supporting

over 430 teachers and 43,000 students in 11

countries. The involvement of Spectris

employees in Foundation activities amplifies

the impact of the charitable grants, with over

2,940 hours donated in 2023 and plans in

place to extend volunteering in 2024. Spectris

is committed to the long-term impact of the

Foundation contributing an additional

£1million in 2023 with plans for a further

£5million by 2030.

Summary and outlook

The Group’s resilience, leading product

portfolio and broad end market exposure,

combined with a strong self-help story,

provides confidence in the Group’s ability to

navigate an uncertain macroeconomic

environment this year.

We expect to deliver another year of further

progress in 2024, including margin expansion,

after taking into account the impact of the

Red Lion disposal. Progress is expected to be

weighted towards the second half reflecting

the strong performance of the Group in the

first half of 2023, and an improving outlook in

a number of key end markets.

Andrew Heath

Chief Executive

28 February 2024

Chief Executive’s reviewcontinued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202318

Customer:

CPH2 / SGS

Servomex 2200 Oxygen Analyzer

plays important role in

green hydrogen production

Global demand for Hydrogen is expected to

increase from 87 million metric tons (MT) in

2020 to over 600 MT by 2050. Within this

market, the green hydrogen (ultra-low CO

emissions) sub-sector is forecast to expand at

a compound annual growth rate (CAGR) of

39.5% from 2022 to 2030 as the world seeks

cleaner and sustainable energy alternatives.

Servomex is playing a crucial role in the

expansion of green hydrogen through the

development of advanced gas analysis

technologies that enhance the efficiency and

reliability of hydrogen production processes.

With economies of scale and the reducing

cost of electrolysis—the production process

by which green hydrogen is produced is

rapidly improving.

This transformation in the economic viability

of green hydrogen, is making it increasingly

competitive with conventional hydrogen

production methods. Through precise

monitoring and control of gas composition,

Servomex aids the optimisation of the

electrolysis process, ensuring a high purity of

green hydrogen output. This not only

improves the overall efficiency of hydrogen

production but also aligns with the industry’s

commitment to reducing carbon emissions

as the demand for green hydrogen continues

to rise.

Servomex was pleased to supply the versatile

Servomex 2200 Oxygen Analyzer to our

customer CPH2 via our Channel Partner SGS.

This analyzer is an excellent addition to their

state-of-the-art and green hydrogen

production system.

CPH2, who manufactures the unique 1 MWatt

Membrane-Free Electrolyser, selected the

Servomex 2200 Analyzer for its class-leading

specification for measuring oxygen in

hydrogen to enhance their technology’s

efficiency and safety processes.

The Servomex 2200 analyser is approved for

the measurement of oxygen, including

enriched oxygen (>21%), in hydrogen in

hazardous areas. The CPH2 electrolysers are

used to decarbonise energy systems,

replacing diesel back-up systems and using

excess wind and solar energy to generate

hydrogen to power equipment, machinery

and transportation (forklift trucks, buses,

airport ground support equipment).

Servomex is playing a crucial role in

the expansion of green hydrogen

through the development of

advanced gas analysis technologies

that enhance the efficiency and

reliability of hydrogen production

processes.

Case Study

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

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 Delivered through our business model

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 the

benefit of all stakeholders – investment

ingrowth through R&D andM&A.

Read more about our people

on pages 54 to 57

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202320

Our Business Modelcontinued

For more information on our

approach to sustainable growth,

see the Sustainability Report

on pages 52 to 77

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

culture openly reflects

our values and meets

the expectations of

ourpeople. We are

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

benefit from their

relationship with us,

working together with

ashared purpose

andValues.

Our society

We are committed to

creating a positive legacy

in our communities and

for the next generation.

The Spectris Foundation

will enhance and

improve our charitable

giving to support quality

access to a STEM

education.

Our shareholders

We work to ensure the

long-term success of

theGroup to deliver

enhanced shareholder

value through our

financial performance,

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

ourcustomers’

environmental impact.

We are also making

strong progress in our

ambition to become

NetZero across our own

operations by 2030 and

across our value chain

by2040.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 21

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Our strategy

Our Strategy

for Sustainable

Growth

There has never been a better time,

or 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

(2022 – 2027)

Organic sales growth

6–7%

through the cycle

Adjusted operating margin expansion

20%+

Adjusted cash conversion

80–90%

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 202322

Great businesses Structural growth markets Customer centricity

We are owners of world-class precision measurement

businesses with industry-leading domain expertise.

OurScientific and Dynamics Divisions are fully aligned

withour Purpose to make the world cleaner, healthier

andmore productive.

We are concentrated in high-growth end markets.

Ourend markets demonstrate structural growth,

underpinned by sustainability themes and assuch

havestrong CAGRs through the cycle, underpinning our

organic growth.

Our focus on solutions addsvalue throughout our

customers’ workflows. Our direct relationship drives

customer-backed innovation, informing our research

andproduct development strategy such that we

interceptour customers' needs, allowing usto move

fasterand deliver greater value.

Read more about Our People

on pages 54 to 57

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 23

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Investing in growth

Nanosight Pro – Nanoparticle

Tracking Analysis instrument

• Quickest, most accurate, easy to

use and install, Nanoparticle

Tracking Analysis instrument

• Powered by machine learning,

enables automated

measurements, and provides the

highest quality size and

concentration data for both the

light scatter and fluorescence

analysis

COMPACT Full Spectrum

Simulator (COMPACT FSS)

• Broadens and strengthens our

simulator portfolio

• Powered by a VI-grade AutoHawk

real-time computer

• Provides highly accurate motion,

vibration and sound in a small

footprint

• Enables human-in-the-loop

simulation

NanoAirTM10 Particle Counter

and Particle Seeker

• Condensation particle counter and

seeker

• Used in ultra-clean environments

inside semiconductor process

tools and equipment

• 83% smaller than competitor

products

• Provides 24/7, 365-day continuous

operation without the need for

maintenance or user intervention

OEM Sensors

• Delivered 55 OEM customer

prototypes including: force sensors

for batteries and brakes

applications; strain sensors for fuel

cells and electric vehicles; torque

sensors for robotics; and

mechatronics

• Provides strong foundation for

future sales growth

FORJ™ fusion instrument for

sample preparation

• FORJ is designed to meet the

highest material quality standards

for elemental analysis

• Delivers the highest levels of

robustness, productivity, and

superior-quality results

• User-friendly instrument is suitable

for full laboratory integration

New smart sensors

• Introduced newly developed

smart force sensors linked to a

standard industrial interface

• Enabling simplified machine

design and decisions to be made

at the point of measure

• Improved efficiency and simplified

machine operation

Examples of latest product launches in 2023

Research & development

High levels of customer intimacy

drives customer-back innovation,

informing our research and product

development strategy such that we

intercept our customer needs for

the future.

Our recent strong growth has been

underpinned by new and enhanced products

which have helped deliver market share

gains. We employ over 1,300 engineers,

approximately half of which are in software.

Over the last three years we have increased

our R&D investment as a percentage of sales

from 6% to around 8% with the proportion of

engineering time now spent on new

products increasing to around 60%. Going

forward, we plan to maintain investment at

orabove 8% of revenue.

R&D investment

£108.1m

R&D investment as a percentage

of sales

7. 5%

(2022: 7.8%)

Spectris Scientific

• Maintaining leadership in XRF

• Strengthening XRD offering

• Expanding semiconductor

metrology offering

• Next generation particle

analysers and counters <10nm

• Remote monitoring

• Integrated cloud services and

analytics

• Combining AI with

instruments

Spectris Dynamics

• Enhanced virtual test

solutions

• Simulation and data

management software

• Software/hardware-in-

the-loop

• Reliability and durability

software

• Electric powertrain testing

• Data acquisition ecosystem

• Smart and OEM sensors

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202324

Investing in growthcontinued

Acquisition

Dytran

2022: £70.5 million

Leading designer and

manufacturer of piezo-electric

and MEMS-based

accelerometers and sensors for

measuring dynamic force,

pressure and vibration

Benefits of acquisition

• Strengthens piezo-electric and

MEMS offering

• Expands North American

presence

• Enhances customer offering

• Accelerates product

development

End markets and

applications served

• Space, aerospace, industrial

and automotive industries

• Product development testing

and embedded monitoring

solutions

Investing in growthcontinued

Mergers & acquisitions

Compounding growth through M&A is a key part

of our strategy. We maintain an active pipeline

ofacquisition targets across the spectrum, from

early-life technologies, to bolt-ons of varying sizes,

through to larger-scale opportunities.

We take a disciplined approach – ensuring there is a clear

industrial logic and financial rationale, consistent with our

capital allocation policy. Since 2018, we have acquired 12

businesses for a total net consideration of £360 million.

We are targeting opportunities in pharmaceutical & life

sciences, advanced materials, metrology, sensors,

electrification, software and advisory services.

Acquisition

Creoptix

2022: £37.3 million

Provides cutting-edge tools for

molecular interaction analysis

through its WAVE system of

next-generationbioanalytical

instruments

Benefits of acquisition

• Expands instrumentation

and services capabilities

• Strengthens position in small

molecule pharmaceutical

development

• Grows capabilities in

biopharmaceuticals

End markets and

applications served

• Pharmaceutical/

life sciences

• Discovery and development of

new drug products

Product-line acquisition from

Freiberg Instruments

2023: £13.0 million

Acquisition of the x-ray

diffraction product line and

crystal orientation metrology

tools

Benefits of acquisition

• Complements existing

semiconductor portfolio

• Helps respond to the industry

requirement to improve yield

and performance

End markets and

applications served

• Semiconductors

• Wafer metrology/crystal

orientation

Investment

LumaCyte

2023: £7.8 million

Minority investment in a

bioanalytic instrumentation

company producing label-free,

single cell analysis and sorting

instrumentation

Benefits of acquisition

• Provides Spectris with further

exposure into the high growth

cell & gene therapy and vaccine

markets

• Allows LumaCyte to build sales

and applications teams and

enhance its manufacturing

capabilities and technology base

End markets and

applications served

• Life sciences/pharmaceuticals

• Cell and gene therapy and

vaccine markets

Acquisition

MicroStrain

2023: £29.1 million

Leading developer of inertial and

wireless sensing systems

supporting industrial

automation and development of

new robotics, logistics,

unmanned vehicles and mobility

applications

Benefits of acquisition

• Strengthens sensor offering

• Helps penetrate rapidly growing

automation and smart

manufacturing markets

• Expands North American

presence

End markets and

applications served

• Aerospace and defence

• Industrial automation

• Robotics, logistics,

autonomous vehicles

Image credit: Blue Origin

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 25

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Key Performance Indicators

Measuring our

perfo rmance

We monitor progress against the delivery of

our strategic goals using both financial and

non-financial key performance indicators (KPIs).

Our Strategy for Sustainable Growth is centred on long-term

value creation. Seven of our KPIs are directly linked to

remuneration under the 2023 Remuneration Policy. For

furtherdetails, see the Directors’ Remuneration Report on

pages102 to 123.

A number of the KPIs are adjusted operating metrics, as

webelieve these provide a more representative view of our

underlying performance because they exclude foreign

exchange movements and the impact of acquisitions and

disposals. Seethe appendix to the Consolidated Financial

Statements fora reconciliation between adjusted and

statutory items.

The Directors’ Report (pages 124 to 127) contains the statement

on non-financial information and provides an indexfor where

information relating to non-financial matters can be found.

1. In 2022, following the divestment of the Omega business and its

classification as a discontinued operation, 2022 and 2021 data

has been restated to only show continuing operations.

Financial

Like-for-like sales growth (%)

023

022

021

020

019

13.6

10.1

9.7

-10.7

0.4

LFL sales growth

LFL sales growth is a measure of how our R&D and other investments

help to grow our business organically, i.e. excluding the effects of

currency translation and acquisitions or divestments.

Performance

In 2023, sales were £1,449.2 million,

a 10% increase on a LFL basis

compared with 2022, driven from

1.5% volume and 8.0% pricing.

Link to strategy and objectives

We are customer focused and

target attractive end markets

where we are best placed to

drivecompound growth and

profitability. Our aim is to achieve

through-cycle growth of 6-7%.

Link to remuneration

30% of annual bonus opportunity.

Adjusted cash ﬂow conversion

(%)

023

022

021

020

019

103

141

Cash conversion

Adjusted cash conversion represents an effective measure of the quality

of our earnings after investments in capital expenditure. Adjusted cash

conversion is defined as adjusted cash flow as a percentage of adjusted

operating profit.

Performance

Adjusted cash conversion was

103%in 2023, an increase of 29pp

compared to 2022. With greater

adjusted cash flow being

generated from the increased

adjusted operating profit, the

improvement in adjusted cash

conversion principally results from

a favourable working capital

movement, mainly attributable to a

reduction in trade receivables, and

lower capital expenditure.

Link to strategy and objectives

We have an asset-light business

model and our strong adjusted

cash generation enables us to

reinvest in our businesses and

provide capital returns to our

shareholders. Our aim is to deliver

a high level of adjusted cash

conversion every year, in the

range of 80-90%.

Link to remuneration

20% of annual bonus opportunity.

Adjusted operating margin

(%)

023

022

021

020

019

18.1

16.3

16.8

13.0

15.8

Adjusted operating margin

Adjusted operating margin is the primary measure of improving

profitability of our business and is defined as adjusted operating profit

as a percentage of sales.

Performance

In 2023, the adjusted operating

margin improved to 18.1%, an

increase of 130bps from 16.8% in

2022. This reflected the higher

sales volumes and a progressive

pricing policy that remained

ahead of inflationary cost

pressures on materials, labour

andoverheads, and improved

productivity.

Link to strategy and objectives

Our aim is to deliver strong

operational leverage and drive

operating margin expansion. As

we grow, our immediate target is

to achieve an adjusted operating

margin of 18% in the near-term

and >20% in the medium-term.

Link to remuneration

30% of annual bonus opportunity.

Growth in adjusted EPS

(%)

023

022

021

020

019

-33

Adjusted EPS growth

Adjusted EPS is the ratio of adjusted earnings for the year to the

weighted average number of ordinary shares outstanding during the

year, excluding certain items.

Performance

Adjusted EPS increased 25%

to199.7p, primarily reflecting an

improvement in adjusted profit

before tax, and as a result of

thelower share count following

the Group’s £300 million share

buyback programme completed

in 2023 and the commencement

of the £150 million share buyback

programme on 13December 2023.

Link to strategy and objectives

We are focused on improving

profitability as we grow. Our aim is

to achieve year-on-year growth in

adjusted EPS.

Link to remuneration

33.3% of base LTIP award.

Great businesses

Structural growth markets

Customer-centricity

Investing in growth

Operational excellence

Link to Strategy

Link to remuneration

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202326

Key Performance Indicatorscontinued

Non-financial

ROGCE

(%)

023

022

021

020

019

13.2

16.0

18.5

9.9

13.5

ROGCE

ROGCE calculated as adjusted operating profit from continuing and

discontinued operations for the last 12 months divided by the average

opening and closing gross capital employed. Gross capital employed is

calculated as net assets excluding net cash and excluding accumulated

amortisation and impairment of acquisition-related intangible assets

including goodwill.

Performance

ROGCE was 18.5% in 2023, a

notable increase from 16.0% in

2022, primarily reflecting the

increase in adjusted operating

profit, as well as a reduction in

theGroup’s capital base as a

resultof the divestments.

Link to strategy and objectives

ROGCE measures how efficiently

we generate profits from

investment in our businesses,

both organically and via

acquisition. Our aim is to improve

ROGCE year-on-year.

Link to remuneration

33.3% of base LTIP award.

Energy efﬁciency (MWh per £m revenue)

023

022

021

020

019

73.7

58.2

48.9

92.2

72.0

Energy efficiency

Energy efficiency makes a significant contribution to environmental

sustainability and helps us to reduce our operating costs. This KPI

measures the evolution of the energy efficiency of the Group, including

the impact of portfolio changes on our efficiency and therefore we do

not restate prior year emissions for divestments here.

Performance

In support of our Net Zero

ambition, Energy efficiency

improved to 48.9 in 2023, from

58.2 in 2022. The decrease is

attributable to the ongoing

impact ofenergy efficiency

measures put in place at material

operating sites combined with

higher revenue.

Link to strategy and objectives

Our sustainability strategy sets

out key commitments around the

environment. We monitor our use

of the sources of energy with the

aim of reducing our carbon

emissions and improving our

energy efficiency to support our

Net Zero ambition ‒ an 85%

absolute reduction in scope 1 and

2 emissions and a 42% absolute

reduction in scope 3 emissions

by2030.

Employee engagement (GrandMean)

023

022

021

3.92

3.86

3.72

Employee engagement

An engaged workforce has a significant positive effect on individual and

team performance. We are committed to building a culture where our

people feel inspired to Aim High and work together to deliver strong

business performance.

Performance

We launched our first annual

global engagement survey with

Gallup in 2021 . We have since

implemented a number of

high-impact initiatives to make a

real difference to how our people

connect with their work and with

each other. This has seen our

GrandMean score improve from

an initial score of 3.72 out of 5.00

in 2021 to 3.92 out of 5.00 in 2023.

Link to strategy and objectives

Improving employment

engagement is a strategic

priorityand we are committed

tomaking Spectris a truly

inspiring place to work. Our aim

isto improve our engagement

score by >0.14 every year, in line

with Gallup best practice.

Link to remuneration

16.65% of base LTIP award.

Total recordable incident rate (TRIR)

023

022

021

020

019

0.34

0.32

0.27

0.13

0.24

Total recordable incident rate

We are committed to ensuring the health, safety and wellbeing of

our people. We measure our progress against the TRIR, a standardised

safety calculation defined by the US Occupational Safety and Health

Administration which provides a clear measure of a company’s safety

performance.

Performance

In 2023, the TRIR was 0.34, an

increase from 0.27 in 2022. This

increase has been thoroughly

investigated and is attributable

tothe increased use of reporting

tools and a slight increase in

minor incidents such as slips,

tripsand falls.

Link to strategy and objectives

High safety standards protect

ourpeople and help drive

sustainable growth through

operational excellence. Our aim

is to reduce accidents and injuries

atour sites to as low a level as

reasonably practical. Further

details of our approach to health

and safety are set out on page 60.

Scope 1 and 2 emissions (tonnes CO

023

022

021

020

019

12,144.1

31,703.0

17,546.0

43,111.0

52,740.0

Scope 1 and 2 emissions reduction (market-based)

We are committed to our ambition to reach Net Zero across our scope 1

and 2 emissions by 2030.

Performance

in 2021, we launched our ambition

to become Net Zero across our

own operations by 2030 and across

our value chain by 2040. Since

launching our ambition we have

worked to address our own

emissions through a combination

of energy efficiency assessments,

employee-led activities and the

transition to renewable energy

sources. The reduction in our

emissions since 2019 reflects

changes to the energy efficiency of

our portfolio of businesses and the

impact of our Net Zero strategy.

Link to strategy and objectives

We are committed to being a

leading sustainable business.

Tobuild our relevance to all our

stakeholders we must support

their Net Zero ambition through

the delivery of our own emission

reduction targets.

Link to remuneration

16.65% of base LTIP award.

Great businesses

Structural growth markets

Customer-centricity

Investing in growth

Operational excellence

Link to Strategy

Link to Remuneration

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 27

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Our Businesses

Making

the invisible...

visible

“We are well positioned to

outperform in high-growth

end markets, aligned to clear

sustainability trends.”

Mark Fleiner

President, Spectris Scientific

Spectris Scientific

Leader in advanced material measurement and characterisation.

Continued strong growth and sustainable

margin performance

Spectris Scientific delivered a strong financial

performance in 2023, with sales growth of 7%

to £704.2 million (2022: £657.8 million) and a

double-digit increase in adjusted operating

profit. LFL sales growth was 12% after taking

into account the £17 million (+3%) net impact

of acquisitions and disposals (primarily the

disposal of the remaining element of CLS and

adverse foreign exchange movements of

£13million (+2%).

We saw strong sales growth across all key end

markets, with the exception of life sciences,

which was impacted by the earlier

normalisation in customer demand after

strong growth in prior periods. Sales grew

across all regions with growth strongest in

Asia, including China.

Orders were 6% lower (3% lower on a LFL

basis) than the prior year, with good demand

growth in materials and academia, offset

byboth life sciences and semiconductor.

Regionally, order growth in the US and flat

demand in Europe was offset by lower orders

in Asia.

Adjusted operating profit increased by

11%(13% LFL) to £155.2 million (2022:

£140.0million) reflecting the strong sales

growth and good operational performance,

with adjusted operating margin improving by

70bps to 22.0% (2022: 21.3%). On a LFL basis,

the increase in adjusted operating margin

was 10bps, with higher sales volumes largely

offset by cost inflation.

Statutory operating profit was 5% higher

at£124.4 million (2022: £118.3 million) after

including £10.7 million of additional costs

related to the investment in our new

ERPsystem, as part of the business

transformation project. Statutory operating

margin was 17.7% (2022: 18.0%).

Strongly positioned in high-growth end

markets supported by sustainability

trends

We are well positioned in high-value,

critical-to-quality areas where precision

measurement, domain expertise and

analytics are valued by our customers

throughout the workflow. We are market

leaders reflecting our broad solution portfolio,

strong domain knowledge for material

analysis and characterisation, as well as our

deep customer relationships. We are a key

facilitator of customer innovation, supporting

opportunities across the material life cycle

from extraction, through functional

performance, sustainability, and recycling.

Spectris Scientific is focused on the high-

growth end markets of life sciences, material

sciences (primary and advanced materials),

semiconductors and academia, that are

benefiting from a number of structural

growth trends:

1. Life sciences – ageing populations,

population growth, personalised medicines

and reshoring.

28 SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Our businessescontinued

2. Primary materials – minerals for the energy

transition, lower carbon building materials

and increased recycling.

3. Advanced materials – batteries and power

electronics for the energy transition, supply

chain security and advanced manufacturing

technologies.

4. Semiconductors – electrification of

mobility, reshoring of manufacturing

including US and EU Chips Act, increase use

of personal devices.

Life Sciences

LFL sales during the period were somewhat

lower than the prior year, reflecting the earlier

normalisation of customer ordering patterns

through the year after an exceptionally strong

performance in 2021 and 2022.

In particle characterisation, we saw good

salesgrowth in laser diffraction driven by

smallmolecule research and development,

particularly in the US and India. This was more

than offset by lower sales in nanometrics into

Biologics, after a very strong performance

overthe last two years. Sales into aseptic

pharmaceutical manufacturing were broadly

flat in our PMS business, with strong demand

in Europe offset by other regions. We have

been encouraged by growth in our advisory

services driven by our strong offering and

recent changes in the regulatory environment.

After a period of demand normalisation in

2023 where order intake was lower than the

prior year, we anticipate demand to remain

broadly flat in the first half of 2024, returning

to growth in the second half.

The outlook over the medium-term remains

positive, with growth in life sciences

underpinned by a number of structural

trends including ageing and expanding

populations, the onshoring of manufacturing

and the need to develop new medicines and

treatments.

Materials

Primary materials

LFL sales grew across all regions, with

particularly strong growth in Asia

predominantly driven by mining and

minerals. We saw strong sales of our x-ray

systems into our petrochemical, polymer and

building material customers, driven by their

need to become carbon neutral, with our

products providing solutions in areas like

production efficiency and recycling. Our XRF

and XRD systems, including our Zetium,

Epsilon, Aeris, and Empyrean product lines

are used by customers to analyse materials

for elemental properties and structural

characteristics.

We saw continued order momentum in

2023,growing the order book to record levels,

providing a positive outlook for 2024.

Advanced materials

We delivered very good LFL sales growth in

2023 reflecting our strong order book as we

entered the year and robust demand, driven

by a number of structural growth trends.

We support our customers to meet their

challenges through a range of solutions,

including our laser diffraction products for

researching and developing the next

generation of battery materials as well as

quality control, and we have also seen

increased interest in our online process

solutions, both for batteries and hydrogen

fuel cells. Similarly, we saw an increase in our

x-ray diffraction sales, especially in China,

partly driven by the government investment

schemes supporting universities and research

laboratories in the first half of 2023.

Looking ahead, the outlook for advanced

materials remains positive with continued

investment in new energy sources such as

hydrogen, the enhanced electrification of

mobility, growing applications for power

electronics and the onshoring of

manufacturing, all of which underpin the

development of new technologies and

customer R&D.

Semiconductor

Sales into semiconductor and electronics

customers grew strongly across all regions,

reflecting the strength of our order book at

the start of the year and solid underlying

demand. Within semiconductor

contamination monitoring, we saw strong

sales growth in our aerosol, liquid, and gas

particle counters to customers in support of

the buildout of new semiconductor

fabrication plants.

We saw good sales growth in our MRD XL

products in the compound semiconductor

market, especially power electronics. The

acquisition of the XRD product line assets

from Freiberg Instruments in the second half

of 2023 further enhances our capabilities and

solutions in this area.

While order intake was lower in 2023 against

a strong comparator as demand normalised,

our pipeline remains robust. In 2024, we

expect order levels to pick up in the second

half as the industry returns to a more normal

business cycle.

The multi-year outlook for semiconductor

remains positive, driven by fabrication plant

expansion and technology advancements

driven by a number of sectors such as

automotive, artificial intelligence and

compound semiconductors. We are also

encouraged by positive customer feedback in

relation to recent product launches including

our NanoAir 10 particle counter for use in

ultra-clean environments.

Academia

We are well positioned to take advantage

ofthe academic research that feeds into

ourend markets, with a strong brand built

onhigh-precision measurement and

scientific credibility.

Sales by location (%)

1 Asia 46

2 Europe 25

3 North America 22

4 ROW 7

Sales by end market (%)

1 Life sciences/pharmaceutical 34

2 Materials 19

3 Electronics and semiconductor 18

4 Academic research 14

5 Other 15

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 29

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Our businessescontinued

in China, with a significant order for our

Mastersizer and Zetasizer products across

multiple sites. As well as being recognised for

our leading particle characterisation

technology, this order reflects our strong

applications expertise and aftermarket

support including superior service support

and product training.

Investing for growth: R&D is driving

growth and market share gains

To drive growth, we have increased

investment in R&D to both enhance the

performance of existing products and

develop new platforms, along with software,

services and analytics being key areas of

focus. In 2023, we introduced a number of

new products to the market.

The Nanosight Pro provides a best-in-class,

simple and rapid solution for nano and

biomaterials characterisation for use in life

sciences and pharmaceutical development.

The combination of advanced engineering

and a blend of smart features ensures

measurements are efficient, quick and

accessible. Powered by machine learning,

ourXplorer software enables automated

measurements and provides the highest

quality size and concentration data while

connection to SMART Manager assures

robustness and minimises downtime.

Our ParticleSeeker product, a smart aerosol

manifold used to monitor air quality in

semiconductor manufacturing used in

conjunction with the NanoAir10 nanoparticle

counter, provides multiple sample locations

ideal for applications requiring broad

contamination monitoring in the cleanest

and most confined spaces in a

semiconductor manufacturing facility.

And in the FORJ™ fusion instrument, we

have developed the world’s fastest, safest and

most accurate fusion instrument for sample

preparation for x-ray fluorescence supporting

elemental analysis. Based on our expertise in

x-ray fluorescence, inductively coupled

plasma analysis, sample preparation, and the

entire analytical chain, FORJ is designed to

meet the highest material quality standards

for elemental analysis.

In 2023, we delivered very strong LFL orders

and sales growth driven by North America

and Asia. We have benefited from strong

demand from universities and research

organisations for our XRD systems, to support

materials research and analysis for batteries,

and our MicroCal product range used in a

number of applications from research to the

discovery and development of small molecule

drugs, biotherapeutics and vaccines.

Helping solve customer challenges

Spectris Scientific provides critical

insightsand domain expertise to help our

customers find solutions to their most

complex challenges. Our customer value

proposition extends far beyond supplying

ourleading products.

In advanced materials, the increased focus on

energy transition and battery development is

creating a number of opportunities. With

energy systems fuelling every aspect of our

modern life, from cell phones to electric cars

and even space travel, achieving energy that

is clean, renewable and reliable, requires the

development of better batteries and fuel cells.

A collaboration in the US between the

University of Pittsburgh and Spectris is

enabling researchers to do just that. Using

data and insights drawn from our Empyrean

x-ray diffraction technology, the team at

Pittsburgh are working towards a series of

ambitious goals to improve the power,

efficiency and cost-effectiveness of batteries.

In primary materials, we secured a major

order from a leading building materials

producer in Asia for a measurement and

analysis solution based on our leading XRF

Zetium and XRD Aeris technology comprising

30 separate systems. This order reflects our

proven technology and application expertise

demonstrated in previous projects with

oursystems providing better measurement,

speed and greater operational stability as

wellas a better user experience than

thecompetition.

In pharmaceuticals, we continued to

strengthen our partnership with QILU

Pharmaceutical, a leading manufacturer of

finished formulations and active ingredients

M&A

During the year, we completed three

acquisitions/investments to augment our

capabilities and compound growth in

thefuture.

We acquired the x-ray diffraction product

linefrom Freiberg Instruments for a total

consideration of up to £13.0 million. The

acquisition of crystal orientation metrology

tools provides complementary solutions to

our existing semiconductor portfolio

allowingus to further respond to the

industryrequirement to improve yields

andperformance.

We took a minority investment of £7.8 million

in LumaCyte Incorporated, a bioanalytic

instrumentation company, providing

furtherexposure and deeper insights into

thehigh growth cell & gene therapy and

vaccine markets.

The acquisition of Particle Measuring

Technique Ireland Limited, a long-established

partner and exclusive distributor in the UK

and Ireland of Particle Measuring System’s

micro-contamination products for £6.4

million, further strengthens our regional

services and aftermarket offering.

Operational excellence

We continue to leverage SBS to improve

productivity and drive operational excellence

across the Division. During the year we

completed a number of projects delivering

tangible financial benefits as well as

promoting increased engagement across

oursites.

In Malvern Panalytical, our ‘Land and

Expand’upselling programme drove

additional sales of £4 million to existing

customers. A project to extend the life of

akeycomponent in our x-ray diffraction

instruments delivered £0.3million of benefits

in the year and improved cleanroom

capacityand layout atour Almelo site in the

Netherlands delivered a 20% increase in

output and £0.5million of benefits.

During the year we adopted the ‘Bronze,

Silver, Gold’ certification programme to drive

lean operations as measured by a number of

core metrics, with two of our sites, Zhuhai,

China and Malvern, UK achieving Bronze

certification in 2023.

We have made good progress in our

businessprocess transformation programme.

In 2024 we will implement a series of

moresimple, common and scalable global

processes supported by the introduction of

anew ERP solution. The new solution will

provide improved visibility and deliver a

number of significant benefits to be realised

from 2025 onwards.

Summary

Spectris Scientific is an excellent business.

Weprovide critical materials insights

throughour instruments, data science and

technical expertise. We are well positioned

tooutperform in high-growth end markets,

aligned to clear sustainability trends. In

2024,we will continue to work closely

withcustomers to innovate and solve

theirchallenges.

Spectris Scientific

2023 2022 Change LFL

change

Statutory sales (£m) 704.2 657. 8 7% 12%

Adjusted operating profit

(£m) 155.2 140.0 11% 13%

Adjusted operating margin

(%) 22.0% 21.3% 70bps 10bps

Statutory operating profit (£m) 124.4 118.3 5%

Statutory operating margin (%) 17.7% 18.0% (30bps)

1. This is an alternative performance measure (APM). APMs are defined in full and reconciled to the reported statutory

measures in the Appendix to the Consolidated Financial Statements.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Our businessescontinued

Case Study

“The NanoSight Pro is quick, easy to use, and

gives us the guidance we need to make sure that

we’re getting the right results first time. This also

means we’re wasting less sample because we

don’t have to play around with concentrations

and get the right thing after 5 or 6 runs – it’s right

the first time we measure it.”

Oliver Huseyin

Research Scientist, MIP Discovery, Bedford, UK

Customer:

MIP Discovery

NanoSight Pro

Early detection of illnesses including cancers

and infectious diseases like COVID-19 enables

us to prioritise critical care for those most at

risk. Easy, point-of-care monitoring and

diagnosis help reduce community spread

and strengthen public health measures.

Revenue generated from the point-of-care

diagnostics market reached $45.4 billion in

2022, is growing at a CAGR of 10.7%, and is

expected to reach $75.5 billion by 2027

At MIP Discovery in Bedford, UK, Research

Scientist Oliver Huseyin and his colleagues

are using Malvern Panalytical technologies

including the new NanoSight Pro

Nanoparticle Tracking Analyzer to develop

innovative alternatives to biosensor-based

testing devices, with Molecularly Imprinted

Polymers (MIPs) at their core. NanoMIPs

are ‘smart’ polymers, often around 40 nm –

50 nm in size, created to specifically target

proteins, peptides, and small molecules of

interest, including viral particles, antigens on

the surface of tumour cells, or markers for

particular conditions including heart failure.

As MIP Discovery moves into Cell & Gene

Therapy applications, these biosensors will

help improve the quality of advanced

therapies, further demonstrating their utility.

Biosensors currently contained in traditional

diagnostic devices require a constant supply

of effective antibodies – often hampered

bytime, cost, instability, and often ethical

considerations. MIP Discovery is leaving

behind biological systems and using

polymerchemistry to build synthetic sensor

molecules for use in innovative new

diagnostic devices. This should also help

enable continuous biosensors deployed over

a number of hours or days.

The MIP Discovery Team meets the

NanoSight Pro

A key challenge for the MIP Discovery team is

measuring the size of the nanoMIPs they are

developing – this is where the NanoSight Pro

comes in.

The NanoSight Pro has delivered many

advantages to the team. These benefits relate

to the robustness of the hardware, and the

alignment of the instrument’s software with

that of their other key Malvern Panalytical

instrument, the Zetasizer. The similarities

between the two mean that users can

transfer easily between both systems, saving

time and expanding the skillset of the team.

In addition, Oliver was positively surprised by

the ease of delivery, installation and first

measurements, all enabled by the Malvern

Panalytical Self-Install Program. The team

hasseen a dramatic uplift in the speed of

results analysis with the NanoSight Pro – this

time-consuming work has been reduced up

to tenfold, freeing up valuable scientist

timeand enabling more hands-on time at

thelab bench.

Bringing speed and simplicity

to analytical workflows

1. www.marketsandmarkets.com/Market-Reports/

point-of-care-diagnostic-market-106829185.html

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

PMS: playing

a pivotal

advisory role

Particle Measuring Systems offers specialised advisory

services focused on contamination control, designed to

assist with diverse operational challenges. The team are

equipped with a wealth of background, education, and

industry expertise and are able to provide guidance at

every stage of a customers process.

Whether it involves addressing

non-compliance issues, establishing

new policies, or training employees,

the advisory services aim to

navigateand enhance customers’

contamination control efforts.

The team engage in ongoing

dialogue with global regulatory

agencies, to ensure that customers

stay informed about the latest

requirements, aligning operations

with industry standards.

These two case studies spotlight

specific instances where Particle

Measuring Systems advisory services

have played a pivotal role in resolving

contamination control issues and

illustrate the practical application

andimpact of the advisory service

expertise in supporting customers

across different scenarios.

Case Study

32 SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Case Studycontinued

Customer:

Manufacturer of next-generation vaccines

Customer:

PSM Pharma

Providing high-level expertise to

meet compliance requirements

Solving challenges and advising

on best practices

Challenge

The COVID-19 crisis has launched a

manufacturer of next generation vaccines

into the spotlight, transforming it from a

company that was pioneering research into

mRNA technology into a large-scale drug

manufacturer that is mostly managed

through Contract Manufacturing

Organizations (CMOs). The company was

inundated by the enormous amount of data

generated by CMOs and requested by

regulatory authorities, and they needed

expert and specific knowledge about

handling data and a large number of people.

PMS offer

Particle Measuring Systems (PMS) has been

offering consultancy support on a global

scale since 2019, and its team is comprised of

pharmaceutical manufacturing process

experts with direct experience in the field.

Theservices offered by PMS contribute to

their positioning as a leader in contamination

monitoring, ranging from sterility assurance

and quality and control assurance to

improving production processes. In short, the

PMS Advisory Team provides high-level

expertise to help its customers meet

compliance requirements.

Creating a customer-win situation

The collaborative relationship between the

vaccine manufacturer and PMS was born

thanks to the team’s reputation, high

professional level, and proven experience. Key

personnel contacted the team directly to

request urgent Quality and Control support to

assess that critical phase. What started as an

arrangement to support vaccine

manufacturer for a few months subsequently

became a collaboration started in 2022 that

the customer renewed again this year.

How does this apply to other customers?

The successful experience with a global

vaccine manufacturer in the spotlight

demonstrates how a high level of

competence and knowledge increases PMS’s

reputation by building a solid bond of trust

over time. More and more clients have

requested consultancy services thanks to

recently hired key people who introduced

PMS because they have collaborated with us

successfully in previous work experience and

trust us.

comprehensive end-to-end customer

support, maximum flexibility for different

batch sizes, and top performance in the small

to medium batch size range.

Benefits to the customer

The customer has access to the complete

range of environmental monitoring

knowledge of PMS. The advisory group was

able to help with knowledge on particle

transportation, risk assessments in rooms and

machines, and microbial collection in water, in

air, and on surfaces. Even the data collection

and the use of the data for trending later are

being worked on by PMS personnel. The

environmental monitoring specialists of PMS

have helped to solve challenges, advised on

best practices, and gave feedback on the

process and the facility design. With up-to-

date knowledge of current regulations, PMS

has helped PSM to build a state-of-the-art,

world-leading, fill-finish facility.

“We have been using the services of the PMS advisory

group over the past years and are working on several

projects together at the moment. They have shown

great expertise with environmental monitoring

knowledge and are very helpful to us as an external

consultant. The fact that the PMS advisory team knows

about current regulations worldwide helps us build the

best facility for all the needs of our customers.”

Bianca Bohrer

CEO, PSM Pharma

Challenge

PSM Pharma, a PMS customer, requested

help on how to best install a particle counter

in a cleanroom where they planned to

manufacture aseptically filled injectables,

which need the highest purity of air quality in

the pharma industry for manufacturing. One

of our international Advisors from the USA

helped with this relatively easy task on short

notice. During this consultancy, it became

clear that the end customer had several

further projects on which our Advisory group

could assist.

About the customer

PSM Pharma is a contract manufacturer

(CDMO) for pharmaceutical manufacturers

around the world that offers aseptic fill &

finish as well as final packaging services for

clinical and commercial phases. The company

is a powerful partner that offers its customers

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Our Businesses

Empowering

the innovators

“We have made excellent

progress in 2023, expanding

margins and delivering

strong profit growth through

a number of initiatives.”

Ben Bryson

President, Spectris Dynamics

Spectris Dynamics

Leader in advanced, integrated virtual and physical test and

measurement.

A very strong financial performance

underpinned by significant margin

expansion

Spectris Dynamics delivered a very strong

financial performance in 2023, delivering

double digit-growth in sales and operating

profit, underpinned by particularly strong

margin expansion. These results reflect the

successful re-organisation of the Division at

the start of the year into three customer-

aligned sectors of virtual test, physical test

and in-process, alongside a number of

specific actions to improve gross margins

andoverheads.

Sales increased by 10% to £542.8 million

(2022: £492.2 million). After taking into

account £21 million (4%) sales growth from

the acquisition of Dytran and MicroStrain

and£1.9 million (0%) for foreign exchange

movements, LFL sales grew by 6%. Sales grew

across all key end markets, with particularly

strong growth in aerospace & defence and

academia and on a regional basis, our largest

market, Europe.

Orders were 3% lower (6% lower on LFL basis)

than the comparative period with strong

double-digit order growth in aerospace &

defence (A&D) and academia more than

offset by the expected softening in order

intake across machine manufacturing and

automotive. On a regional basis, good levels

of order growth in the US were more than

offset by Europe and Asia with these two

regions having the largest exposure to softer

end markets.

Adjusted operating profit of £93.1 million was

significantly ahead of the comparative period,

up 26%, (24% on a LFL basis), with a significant

increase in adjusted operating margin which

ended the year 220bps higher (240bps higher

on a LFL basis) at 17.2% (2022: 15.0%). This

increase reflects the anticipated strong

increase in gross margins resulting from our

focus on operational excellence alongside the

successful execution of a margin expansion

plan comprising pricing, re-organisation,

product design cost outs, supply chain

optimisation and rationalisation of our

product portfolio.

Statutory operating profit increased by 21% to

£56.2 million (2022: £46.5 million) reflecting

growth in the underlying business, which was

partially offset by £7.6 million of additional

costs related to the investment in our new

ERP system, as part of the business

transformation project. As a result, statutory

operating margin increased 100bps to 10.4%

(2022: 9.4%).

Well positioned in attractive markets

We are a world leader in the provision of

advanced integrated physical and virtual

testing and measurement. The Division is

focused on four premium product lines:

virtual test; software; data acquisition; and

high-precision sensors with high growth

prospects, where we have leading market

positions. These products are complementary

for customers and combine to offer the

34 SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Our businessescontinued

broadest test and measurement solutions in

the market. We are well positioned in

attractive growth markets that are benefiting

from a number of structural growth trends:

• increased adoption of Virtual Test

particularly in automotive and defence to

accelerate the innovation cycle;

• digitisation and the increased use of digital

tools to design and test, lowering the cost

of new innovations and to process large

amounts of more complex data;

• electrification and the transformation of

mobility and energy; and

• automation to enhance productivity in a

more connected world.

These four key growth trends are aligned with

our Purpose to Empower the Innovators for a

cleaner, healthier, and more productive world

and are supporting higher levels of growth

within our market segments.

Automotive

LFL sales were ahead of a tough comparator,

with a strong performance in Europe partially

offset by North America and Asia.

We saw very good sales growth for our

electric powertrain testing solutions in

Physical Test leveraging our high-speed data

acquisition systems, sensors and software.

And in In-process, demand for our end-of-line

testing solution for electric drive systems

continued on a positive trend during the year.

In Virtual Test, while sales were lower

compared with 2022, we made good

progress selling our hardware-in-the-loop

solutions and secured a number of new

orders for our multi-attribute simulators

including our COMPACT FSS which was

launched during the year. Our Virtual Test

offering also gained recognition through a

Supplier of the Year award from Pirelli and an

innovation award for our DiM 300 simulator

as the 2023 Development Tool of the Year by

Vehicle Dynamics International.

As reported at the half year, we have seen a

softening in demand with LFL orders lower

than the prior year, as customers adjusted

their order patterns, reflecting a combination

of easing supply chains as lead times have

shortened and a reduction in the speed of

rollout of new EV programmes among

leading automotive manufacturers.

Over the medium-term, we continue to

expect growing demand for automotive R&D,

driven by the development and adoption of

electric and software-defined vehicles and

the need to reduce development time. With

our broad product offering across Virtual Test,

Physical Test and In-Process we are extremely

well placed to benefit from this growth.

Machine manufacturing

Sales to customers wanting to monitor their

production processes and deployed assets

were slightly ahead of 2022 on a LFL basis,

with growth in North America and Europe

largely offset by Asia.

In our OEM sensor business, where

customers incorporate our custom sensor

solutions into their end products, we

delivered 55 customer prototypes, setting a

new record in the process. These projects

which provide strong foundations for future

sales growth were broad-based covering a

range of sensing capabilities and end uses

including: force sensors for batteries and

brakes applications; strain sensors for fuel

cells and electric vehicles; torque sensors for

robotics; and mechatronics.

We were also successful selling our

high-precision accelerometers into the

semiconductor industry to control machine

vibration. During the year, we strengthened our

In-process offering combining structural health

monitoring, optical sensing and software to

create a turnkey solution forcustomers.

Against a strong comparator, order intake in

machine manufacturing for the full year was

lower on a LFL basis, particularly in Asia,

which more than offset demand growth in

North America.

We believe that over the medium to longer-

term, the move towards greater levels of

automation driven by the scarcity of labour

and the need for greater efficiency, will

continue to drive demand from machine

manufacturing customers and in turn, our

smart and OEM sensor offering. Sales to this

sector continue to be helped by our focus on

selected high-value end markets, where

customers are focused on improving the

productivity of high-value assets. This has

driven demand for our weighing technologies,

including for smart OEM-type solutions in

medical and healthcare applications, where

accurate and reliable sensors are critical.

Aerospace and defence

We saw strong LFL orders and sales growth

in2023 in Europe and North America

underpinned by the continued investment in

new and existing propulsion technologies, as

well as increased spending in commercial

space and defence.

In civil aerospace, we are seeing strong

demand for our expertise to support the

development of alternative propulsion

technologies including electrification and

hydrogen-based solutions. We secured a

large order from a major engine manufacturer

for our latest Fusion DAQ product and

sound& vibration software to support

thedevelopment of its next generation

gasturbine.

We saw strong growth in our leading

real-time computation software that provides

critical simulations in defence applications

enabling pinpoint accuracy and used in

systems such as threat detection. Also, during

the year we secured a major order from BAE

systems to supply hull vibration monitoring

equipment for the UK Royal Navy’s

shipbuilding programme. Our solution

includes transducers, data acquisition, and

vibration measurement and analysis software.

Sales by location (%)

1 Europe 44

2 North America 28

3 Asia 26

4 ROW 2

Sales by end market (%)

1 Technology-led industrials 40

2 Automotive 27

3 Academic research 8

4 Electronics and semiconductor 6

5 Other 19

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 35

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

leverage growth and customer intimacy

from our domain expertise. These three

sectors align with our customers’ test and

measurement requirements, as their

products are conceived, developed, then

manufactured and maintained.

By focusing on our customers’ needs, through

their product lifecycle, we are able to accelerate

innovation, save costs and reduce time to

market for their products, with key R&D focus

areas including: enhanced virtual test solutions;

simulation and analytic software; electric power

testing; data acquisition ecosystem; and smart

and OEM sensors.

During 2023, we launched a number of new

products. In Virtual Test, the launch of our

COMPACT FSS broadened and strengthened

our simulator portfolio. Powered by a

VI-grade AutoHawk real-time computer, the

FSS provides highly accurate and immersive

motion, vibration, and sound simulation in a

small footprint. It also enables human-in-the-

loop simulation, which is the vital connection

between objective physical characteristics

with subjective human perception.

As well as delivering 55 OEM customer

prototypes, we introduced newly developed

smart force sensors that link to a standard

industrial interface enabling simplified

machine design and point of measure

decision-making, ensuring improved

efficiency and simplified machine operation.

We continue to develop our new Fusion and

Advantage data acquisition offering with

additional products expected to be launched

in 2024. And in our software business, which

represents around 15% of Spectris Dynamics

sales, we released a number of major updates

to our market-leading nCode durability and

Reliasoft reliability products and updated our

perception software for EPT.

Investing for growth: compounding

growth through M&A

The acquisition of MicroStrain for £29.1 million,

which completed in September, represents

an excellent addition to Spectris Dynamics,

bringing complementary technology and

strengthening our sensor offering, particularly

in the fast-growing autonomous mobility,

And in civil space, a market which is growing

quickly, with significant future potential, we

are seeing continued growth in demand for

our piezo-electric vibration sensing systems,

which have been used in a number of

customer applications.

We were proud to provide Dynetics with

a solution to evaluate the capabilities of its

United Launch Alliance Vulcan Centaur

booster to ensure it can cope with extreme

forces during space flight. Our solution,

basedon proven and precise structural

testing tools, comprised a data acquisition

system to acquire data from more than

3,000strain gauges and over 300 full-bridge

pressure transducers, along with additional

sensors. As a result of deploying the solution,

Dynetics improved the efficiency and

accuracy of testing enabling it to provide

better services to its customers and

commercial space projects.

We remain well placed to support long-term

innovation projects. OEMs continue to invest

in sustainable fuels, efficiency gaining

technologies, especially weight saving and

power improvements. We also see demand

increasing for energy transition related

projects, including electric aircraft and those

running on alternative lower-carbon fuels.

Our sound and vibration and EPT solutions

are well placed to capture this.

Academia

LFL sales into universities and research

institutes grew strongly with orders also up on

the prior year, underpinned by the same core

trends that underpin the Division, notably

growth in virtual testing, digitalisation and

electrification, with initiatives to reduce carbon

emissions and deliver Net Nero ambitions.

Consumer electronics and telecoms

LFL sales and demand in consumer

electronics and telecoms, which represented

6% of Dynamics sales were lower than the

comparative period, reflecting reduced levels

of customer investment in end-of-line-testing.

Investing for growth: R&D is driving

growth and market share gains

The organisation of the division around Virtual

Test, Physical Test and In-Process allows us to

industrial and robotics markets. It also

enables further penetration into the rapidly

growing automation and smart manufacturing

markets, while increasing our presence in

North America.

September 2023 marked the first anniversary

of the acquisition of Dytran, a leading

designer and manufacturer of piezo-electric

and MEMS-based accelerometers and

sensors for measuring dynamic force,

pressure, and vibration. Integration has gone

extremely well, including a significant

increase in productivity under our ownership.

The business has also made a meaningful

and positive contribution to the Division

including securing a number of customers

orders in commercial space.

Operational excellence to drive margin

expansion

We are driving operational excellence to

improve productivity and increase operating

margin towards the Group target level. The

ongoing roll out of SBS alongside our actions

on pricing, product redesign to lower cost

solutions and portfolio rationalisation have all

made a contribution to the substantial

220bps improvement in adjusted operating

margin in the year.

In 2023, we embedded our ‘Bronze, Silver,

Gold’ certification programme to drive lean

operations across our core operations with

three of our sites, Porto, Suzhou and

Marlborough achieving Bronze certification

by the end of the year.

At our Suzhou facility, through numerous

kaizen events and increased automation we

delivered 30% reduction in lead time as well

as labour and inventory cost savings of over

40% for a key product family with a total cost

reduction from improvement projects of

£0.8million. Through optimisation of sea /air

and courier strategies we also delivered a

significant reduction in freight costs in excess

of £2.1 million and our Net Zero improvement

projects across our facilities, resulted in

£0.3million in energy savings.

Alongside this we have made good

progresspreparing for the further operational

transformation through a new CRM and ERP

solution which is being introduced in 2024

across the whole Division, creating a simpler,

common and more scalable set of processes.

Benefits from the new solution will start to be

realised from 2025 and it also represents a key

building block in driving further margin

expansion in the Division.

Summary

Spectris Dynamics is an established leader

inhigh performance virtual and physical

test,design software, data acquisition and

sensing. We are well positioned in strong

end-markets supported by sustainable trends

for a digitising and de-carbonising world.

We are executing and expanding on strong

fundamentals – integrated virtual and

physical test solutions, more software-

oriented R&D, operational excellence, and

strategic value-creating M&A. Having

delivered a strong performance in 2023, we

remain focused on margin expansion

through strategic growth initiatives, business

process improvement and benefiting from

our lean culture.

Spectris Dynamics

2023 2022 Change LFL

change

Statutory sales (£m) 542.8 492.2 10% 6%

Adjusted operating profit

(£m) 93.1 73.6 26% 24%

Adjusted operating margin

(%) 17.2% 15.0% 220bps 240bps

Statutory operating profit (£m) 56.2 46.5 21%

Statutory operating margin (%) 10.4% 9.4% 100bps

1. This is an alternative performance measure (APM). APMs are defined in full and reconciled to the reported

statutory measures in the Appendix to the Consolidated Financial Statements.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Case Study

Image: NIO ET5T demonstrates innovative body engineering (image copyright NIO)

Example NIO body structure

Customer:

NIO / AMCT / nCode DesignLife

NIO, a global automobile manufacturer

headquartered in Shanghai, is a pioneer and

a leading company in the premium smart

electric vehicle market. NIO differentiates

itself through its continuous technological

breakthroughs and innovations, such as its

industry-leading, battery swapping

technologies.

HBK’s Advanced Material Characterisation

and Testing facility (AMCT), near Sheffield, UK,

hashelped accelerate NIO’s capabilities for

fatigue simulation through a unique

combination of custom testing solutions to

provide high quality material fatigue data and

the power of nCode software.

Challenge

Performing accurate virtual failure prediction

in innovative BIW (Body-in-White) structures

requires new material fatigue properties.

Comparison of design proposals and

engagement of key suppliers earlier in the

process to accelerate development and

minimise waste.

Solution

NIO selected HBK’s AMCT facility to carry out

material characterisation testing due to its

testing expertise and the ability to deliver a

materials database that could be used

directly and easily in nCode software.

Result

A standardised materials database for fatigue

and common processes enabling higher

quality results from which engineering design

decisions can be made. This enables NIO to

develop efficient and robust structures for

durability performance, reducing weight and

energy consumption to maximise range.

Developing improved

durability simulations

“There is nothing like HBK’s AMCT

lab that provides the entire package

both in terms of the available

testing expertise but also the ability

to deliver a materials database that

could be used directly and easily in

nCode software.”

Artur Tarasek

Durability CAE Expert, NIO

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Case Study

HBK: empowering

rapid audio

advancements

Sound and vibration are critical to our quality of life.

They affect us every day, from the smartphones we use

and the cars we drive to the aircraft we fly in and the

environment in which we all live. At Spectris Dynamics,

we produce the world’s most accurate and advanced

technology for measuring and managing the quality of

sound and vibration.

These two examples show the breadth of our expertise and

applications. We’re empowering rapid advancements in

ways as diverse as improving the lives of people with

hearing loss to equipping modern naval combat ships to

manage their acoustic signature.

38 SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Case Studycontinued

Customer:

Leading global healthcare company

Customer:

BAE Systems

Revolutionising hearing aid

development

Ensuring the acoustic stealth of

modern naval combat ships

Challenge

Recent reports indicate that approximately

1.5 billion people worldwide experience some

form of hearing impairment. This widespread

issue is fuelled by factors such as an aging

population and a significant surge in hearing

loss among younger individuals, often

attributed to excessive exposure to loud noise.

Consequently, the market for audiology

devices is witnessing significant growth.

At a leading global healthcare company ,

hearing aid developers and test engineers

face a formidable challenge of staying at the

forefront of technological advancements,

while meeting user expectations for natural,

comfortable sound quality and seamless

communication. Additionally, they must

address the increasing demand for

personalised solutions and designs tailored

to individual inner and outer ear conditions.

Benefits to the customer

Having robust systems in place that

enablethis company’s engineers to test,

benchmark, ensure quality, and enhance

product design is paramount. These systems

must prioritise high-quality hearing

reproduction while accommodating both

traditional, standardised electroacoustic

measurements and flexible, open processes

that support the development of innovative

hearing aid technologies and features.

Challenge

To maintain a naval vessel’s acoustic

discretion, design engineers need to identify

and assess all noise sources. Permanently

installed systems monitor noise levels during

operation and advise the crew when the

acoustic signature of the vessel has exceeded

limits in many operational modes.

From modal testing and analysis of models

and prototypes to permanently installed

noise monitoring systems, HBK offers

best-in-class acoustic and structural testing

and monitoring solutions throughout a

vessel’s lifecycle , including underwater

acoustic measurements.

To meet these requirements, the healthcare

company employs a HBK Head and Torso

Simulator (HATS) for both R&D and the

complex task of testing hearing aid features.

Optimised for the evaluation of audio devices

placed in, on or near the ear, it provides an

accurate representation of the experience

realised in an average human ear. With a pair

of hearing aids mounted on a HATS, the

acoustic properties of the hearing aids can be

measured from various directions, and in a

range of background noise environments..

The healthcare company has recently

acquired the latest high-frequency

incarnation of HATS, extending the evaluation

potential to encompass the full audio range

and anthropomorphic ear canal to allow

refinement of product geometry. High-

frequency HATS represents the culmination

of more than ten years of research into

human ear geometry and acoustic response

and is the first major advance of HATS

technology in 30 years. It’s recognised in the

market as the state-of-the-art for evaluating

human hearing perception.

The development of intelligent hearing aids

that seamlessly adapt to the user’s sound

environment is an immensely complex

undertaking. Nevertheless, leveraging HBK

solutions, the hearing healthcare engineers,

working at the edge of what is technically

possible, remain committed to their ongoing

pursuit of enhancing speech comprehension

for people with hearing loss and providing a

life-changing solution for those in need.

Benefits to the customer

We are providing Hull Vibration Monitoring

Equipment (HVME) to BAE Systems for the

UK Type 26 Global Combat Ship programme,

currently being built for the Royal Navy. All

eight Type 26 frigates will be equipped with

the latest self-noise monitoring software to

ensure that they can accurately manage their

own acoustic signature.

One of the tasks of the Type 26 is to protect

against potential intruding submarines; it is

vital they can monitor and keep their own

acoustic signature – the noise and vibration

avessel and its on-board equipment and

systems project into the water – as low

aspossible.

The HVME comprises commercial off-the-

shelf equipment that includes transducers,

data acquisition, vibration measurement

andanalysis capabilities. The kit is tailored

toeach vessel’s layout, enabling location-

specific alarms to be triggered in the event

ofexcessive noise or vibration, so the crew

cantake action to reduce it.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Financial review

Selling, General & Administration (SG&A)

expenses increased by £71.3 million, resulting

from higher staff costs including salaries, an

increase in travel costs reflecting a return to

more normal levels of customer interaction,

and foreign exchange impacts from

translation and revaluation.

Included within SG&A are configuration

andcustomisation costs carried out by third

parties on material software-as-a-service

(SaaS) project costs of £40.0 million (2022:

£21.7 million), to support the implementation

of a new SAP cloud-based ERP system. This

isa significant multi-year programme that

will continue in 2024. Investment in R&D

increased by £4.3 million to £108.1 million

representing 7.5% of sales (2022: £103.8 million

or 7.8% of sales).

Headcount increased by 1.4% versus the

comparative period, with increases to support

growth offset by efficiencies from SBS

andstructural changes, mainly within

Spectris Dynamics.

Statutory operating profit was £188.6 million,

an increase of £16.0 million (2022: £172.6 million).

Statutory operating margin of 13.0% was in

line with 2022 (13.0%).

Net transaction-related costs and fair

valueadjustments were £14.0 million

(2022:£8.3 million) primarily relating to the

acquisitions completed during both the

current and prioryears.

In 2023, the Group made an additional

contribution of £1.0 million to the Spectris

Foundation (2022: £nil). Consistent with the

prior year, material SaaS project costs of

£40.0million (2022: £21.7 million) are excluded

from adjusted operating profit, as are

amortisation of acquisition-related intangible

assets £18.9million (2022: £19.6 million).

Our adjusted operating margin of 18.1% was

130bps higher than the comparative period

(2022: 16.8%) resulting in a record level of

adjusted operating profit of £262.5 million

(2022: £222.4 million) an increase of 18%

(18%on a LFL basis). As a result of this

excellent performance, which is testament to

the hard work of our colleagues, we are well

on our way to meeting our medium-term

target to deliver margins in excess of 20%.

Statutory operating profit to profit

beforetax

Statutory profit before tax for the period

of£185.6 million (2022: £151.5 million) is

calculated after net finance income of

£6.9million (2022: £17.3 million cost) and

£12.6million loss on disposal of businesses,

predominantly related to the divestment

ofConcept Life Sciences (CLS) (2022:

£0.3million profit).

The £24.2 million improvement in net finance

income was mainly due to retranslation of

short-term intercompany loan balances that

moved from a £14.6 million loss in 2022 to a

£5.7 million gain in 2023. This reflects the

strengthening of Sterling against both the

Euro and US Dollar over the last 12 months,

compared with 2022 where Sterling

weakened markedly against both currencies.

Bank interest receivable was £3.8 million

higher, due to a higher average cash balance

and the significant increase in Sterling

interest rates during the year. There have

been no drawings against our loan facilities

during the year, with interest payable solely

relating to the commitment fee on the

Revolving Credit Facility (RCF) and the

amortisation of capitalised loan fees relating

to this facility.

On 31 March 2023, the Group disposed of

theremaining part of CLS, which formed

partof the Spectris Scientific Division. The

Sales increased by 9% or £121.8 million to £1,449.2 million (2022: £1,327.4 million)

on a continuing basis. Gross profit increased by £87.3 million driven by a

combination of pricing, increased volumes, a more benign input cost

environment and cost efficiencies derived from SBS.

“We are on track

to deliver our 20%

margin target.”

Derek Harding

Chief Financial Officer

A year of strong

margin progression

and record

profitability

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202340 SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202340

Financial reviewcontinued

consideration received of £15.5 million

wassettled in cash, resulting in a loss on

disposal of £10.3 million. Further details

areprovided inNote 24. Also included in the

£12.6 million loss on disposal of businesses is

£2.3 million oftransaction costs relating to

prior year disposals.

Tax

The effective tax rate on adjusted profit

before tax for 2023 was 21.5% (2022: 21.7%).

Theeffective tax rate on statutory profit

before tax was 21.7% (2022: 24.2%).

Earnings per share

Adjusted earnings per share grew by 25% to

199.7 pence (2022: 159.9 pence). Statutory

earnings per share of 140.3 pence were 31%

ahead of the prior year (2022: 106.7 pence).

LFL movements

After very strong order intake growth of 9%

on a LFL basis in 2022, the easing of global

supply chains has led to the return of more

normal customer ordering patterns in 2023

with order intake 5% lower on a LFL basis for

the full year. On a LFL basis, orders in North

America and Europe were down 0.5% and 3%

respectively, with Asia 10% lower largely driven

by China where demand has been slower

torecover.

LFL sales increased by £132.4 million (10%),

reflecting the excellent conversion of our

record order book at the start of the year

andthe easing of global supply chains.

Acquisitions, net of disposals, increased sales

by £5.4 million (0%) and foreign exchange

movements decreased sales by £16.0 million

(1%). The relative contribution of the drivers of

sales growth reversed in 2023 as expected,

with LFL sales growth of 10% comprising 8%

price and 2% volume.

Strong sales growth, alongside positive

netpricing and a more benign input cost

environment as supply chains improved

resulted in a 120bps increase in adjusted

grossmargins. Within this, Spectris Dynamics

delivered a particularly impressive performance,

delivering on the target they set at the start of

the year. LFL adjusted gross margins increased

by 90bps to 57.6%.

Cash flow

Adjusted cash flow from continuing

operations increased by £107.3 million to

£271.1 million compared to 2022, resulting in

an adjusted cash conversion rate from

continuing operations of 103% (2022: 74%).

The Group generated a substantial increase

inadjusted cash flow from continuing

operations driven by the increase in adjusted

operating profit, a significantly lower net

outflow in working capital and lower levels

ofcapital expenditure.

Capital expenditure of £24.7 million

(2022:£44.1 million) equated to 1.7% of sales,

compared to 3.3% in 2022. The lower level of

expenditure in 2023 reflects the phasing of

spend relating to the new PMS facility in

Colorado that is planned to complete in

2024.Capital expenditure was 64% of

adjusted depreciation and software

amortisation (2022: 111%).

During the year ended 31 December 2023,

3,382,896 ordinary shares were repurchased

and cancelled by the Group, representing

thefinal tranches of the £300 million share

buyback programme announced on 19 April

2022 and part of the first tranche of the

£150million share buyback announced on

11December 2023. This resulted in a cash

outflow of £114.9 million, including transaction

fees of £1.2 million.

During the year ended 31 December 2022,

6,439,493 ordinary shares were repurchased

and cancelled by the Group as part of the

£300 million share buyback programme

announced on 19 April 2022, resulting in a

cash outflow of £191.0 million, including

transaction fees of £1.2 million.

Financing and treasury

The Group finances its operations from

retainedearnings and, where appropriate, from

third-party borrowings. Total borrowings as at

31 December 2023 were £nil (2022: £0.1 million).

At 31 December 2023, the Group had a

cashand cash equivalents balance of

£138.8million of which £0.3 million related

toassets held for sale. The Group also had

various uncommitted facilities and bank

Sales

£1,449.2m

(2022: £1,327.4m)

Change yoy 9%

LFL change yoy 10%

Adjusted operating profit

£262.5m

(2022: £222.4m)

Change yoy 18%

LFL change yoy 18%

ROGCE

18.5%

(2022: 16.0%)

Change yoy 250bps

Continuing operations

2023

£m

2022

£m

Statutory operating profit 188.6 172.6

Net transaction-related costs and fair value

adjustments 14.0 8.3

Spectris Foundation Contribution 1.0 –

Depreciation of acquisition-related fair value

adjustments to property, plant and equipment – 0.2

Configuration and customisation costs carried out

by third parties on material SaaS projects 40.0 21.7

Amortisation of acquisition-related intangible

assets 18.9 19.6

Adjusted operating profit 262.5 222.4

Continuing operations

2023

£m

2022

£m

Statutory operating profit 188.6 172.6

Fair value through profit and loss movements on

debt instruments 2.8 (4.1)

Share of post-tax results of associates (0.1) –

(Loss)/profit on disposal of businesses (12.6) 0.3

Finance income 11.0 1.9

Finance costs (4.1) (19.2)

Statutory profit before tax 185.6 151.5

GFEDCBA

Sales

(£m)

YoY

2022 Change

Disposals (6%)

2022 organic

Currency

LFL 14%

Acquisitions

2023 14%

1,327.4

1,309.7

1,449.2

(17.7)

(16.0)

132.4

23.1

1,200

1,100

1,000

900

800

1,500

1,300

1,400

HGFEDCBA

2022

Disposals

2022 organic

Currency

Gross proﬁt

Overheads

Acquisitions

2023

222.4

221.7

2.6

262.5

(0.7)

(1.9)

88.2

(48.1)

120

160

320

200

240

280

Adjusted operating proﬁt

(£m)

Financial highlights

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 41

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Financial reviewcontinued

overdraft facilities available but undrawn.

Gross debt was £nil, resulting in a net

cashposition of £138.8 million, compared

toanet cash position of £228.0 million at

31 December 2022, representing an

£89.2million year-on-year decrease in

netcash.

As at 31 December 2023, the Group had

£393.1million of committed facilities,

consisting entirely of a $500 million multi-

currency RCF maturing in July 2025. The

RCFwas undrawn at 31 December 2023

(2022: undrawn).

For the 12 months ended 31 December 2023,

there was net finance income for covenant

purposes of £3.9 million, resulting inthe

interest cover ratio being n/a (31December

2022: n/a). The minimum covenant interest

cover requirement is 3.75times (covenant

defined earnings before interest, tax and

amortisation divided by net finance charges).

Leverage (covenant defined earnings before

interest, tax, depreciation, and amortisation

divided by net cash) was less than zero

(31December 2022: less than zero) due to

theGroup’s net cash position, against a

maximum permitted leverage of 3.5times.

The Group has prepared and reviewed cash

flow forecasts for the period to 31 December

2028, which reflect forecasted changes in

revenue across its business and performed

areverse stress test of the forecasts to

determine the extent of downturn which

would result in insufficient liquidity or a

breach of banking covenants. Revenue would

have to reduce by 38% over the period under

review for the Group to run out of liquidity

headroom. The reverse stress test does not

take into account further mitigating actions

which the Group would implement in the

event of a severe and extended revenue

decline, such as cancelling the dividend or

reducing capital expenditure. This assessment

indicates that the Group can operate within

the level of its current facilities, as set out

above, without the need to obtain any new

facilities for a period of not less than

12months from the date of this report.

Following this assessment, the Board of

Directors are satisfied that the Group has

sufficient resources to continue in operation

for a period of not less than 12 months from

the date of this report. Accordingly, it

continues to adopt the going concern basis

inrelation to this conclusion and preparing

the Consolidated Financial Statements.

Currency

The Group has both translational and

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

accounts. The transactional exposures

includesituations where foreign currency

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

net transaction cash flows where there is

reasonable certainty of an exposure. At

31December 2023, approximately 65% of

theestimated transactional exposures of

£269.4million for the next 18 months were

hedged using forward exchange contracts,

mainly against the Euro, US Dollar, Chinese

Yuan Renminbi and Japanese Yen.

The largest translational exposures during the

year were to the US Dollar, Euro and Chinese

Yuan Renminbi. Translational exposures are

not hedged. The table below shows the

average and closing key exchange rates

compared to Sterling.

During the year, currency translation effects

resulted in adjusted operating profit being

£1.9 million lower (2022: £12.5 million higher)

than it would have been if calculated using

prior year exchange rates.

Other cash flows and foreign exchange

2023

£m

2022

£m

Tax paid (50.3) (46.8)

Net interest received on cash and borrowings 4.4 0.5

Dividends paid (79.7) (78.6)

Share buyback (114.9) (191.0)

Acquisition of businesses, net of cash acquired (49.5) (114.7)

Acquisition of investment in associates (7.8) (2.9)

Transaction-related costs paid (5.8) (6.5)

Proceeds from disposal of businesses, net of tax paid of £5.9 million

(2022: £27.9 million) 3.3 365.4

SaaS-related cash expenditure (40.0) (21.7)

Lease payments and associated interest (15.6) (16.4)

Restructuring costs paid (1.4) (7.6)

Net proceeds from exercise of share options 0.6 0.2

Total other cash flows (356.7) (120.1)

Adjusted cash flow from continuing operations 271.1 163.8

Adjusted cash flow from discontinued operations – 7.3

Foreign exchange (3.6) 9.2

(Decrease)/increase in net cash (89.2) 60.2

2023

(average)

2022

(average) Change

2023

(closing)

2022

(closing) Change

US Dollar (USD) 1.24 1.24 0% 1.27 1.21 5%

Euro (EUR) 1.15 1.17 (2%) 1.15 1.13 2%

Chinese Yuan Renminbi (CNY) 8.81 8.30 6% 9.03 8.31 9%

Adjusted cash flow from continuing operations

2023

£m

2022

£m

Adjusted operating profit 262.5 222.4

Adjusted depreciation and software amortisation

38.8 39.6

Working capital and other non-cash movements (5.5) (54.1)

Capital expenditure (24.7) (44.1)

Adjusted cash flow from continuing operations 271.1 163.8

Adjusted cash flow conversion from continuing operations 103% 74%

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.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202342 SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202342

Financial reviewcontinued

Transactional foreign exchange losses of

£5.8million (2022: £nil) were included in

administrative expenses, whilst sales include

a gain of £4.5 million (2022: £4.3 million loss)

arising on forward exchange contracts taken

out to hedge transactional exposures in

respect of sales.

Other non-reportable operating segment

The financial and operating performance of

the Spectris Scientific and Spectris Dynamics

reportable segments are provided in

accordance with IFRS 8. The Red Lion

Controls and Servomex businesses are

reported within the Other non-reportable

operating segment.

On a statutory basis, sales for the Other

non-reportable operating segment of

£202.2million increased by 14% compared

to2022 (2022: £177.4 million) with LFL sales

also up 14%. Adjusted operating profit for

thesegment was £38.4 million (2022:

£27.2million), an increase of 41% (40% LFL),

with an adjusted operating margin of 19.0%,

an increase of 370bps on 2022 (350bps LFL).

Statutory operating profit rose 27% to

£33.2million (2022: £26.2 million), primarily

due to improved gross margins from pricing

and volume drop through, with the statutory

operating margin improving 160bps to 16.4%.

Red Lion Controls had a very strong year,

continuing the trends we saw in the first half,

with both sales and profitability benefiting

from a combination of volume growth and

revised pricing. Volume growth was driven by

easing supply chains and increased capacity

due to operational improvements leveraging

the SBS, with the latter also contributing to

strong margin improvement.

On 11 December 2023, the Group announced

that agreement had been reached for the

sale of the Red Lion Controls business. As a

result, the Red Lion Controls business has

been classified as a disposal group held for

sale and presented separately in the

Consolidated Statement of Financial Position.

The required regulatory approvals were

received in January and February 2024 and

the completion of the sale is expected to take

place during the second quarter of 2024.

In 2023, Red Lion had sales of £101.8 million

and adjusted operating profit of £21.9 million.

Servomex also delivered a very good

performance with sales growth driven by

higher demand and a strong operational

performance. Higher contribution margins

due to price increases and easing material

cost inflation drove a strong increase in

profitability.

Derek Harding

Chief Financial Officer

Capital allocation priorities

Ensuring the appropriate allocation of capital remains a key area of focus for the

Board and within that, striking the right balance between generating strong returns

for shareholders and investing for growth.

A balanced approach to capital allocation

1. Organic growth

• Maintenance capex

– In line with depreciation

• R&D > 8% of sales improving vitality

• Growth capex projects

2. Progressive dividend

• Sustainable progressive dividend policy

• Strong track record of dividend growth

3. M&A growth

• Deployment of capital to drive growth

• Technology

• End markets

• Customers

4. Additional shareholder returns

• Return excess capital, not used for profitable

growth, via appropriate mechanisms

Dividend per share

(pence)

[XX]

11.7

12.3

12.8

13.4

14.5

15.8

17.5

21.0

23.4

24.3

28.0

33.6

39.0

42.8

46.5

49.5

52.0

56.5

61.0

65.1

68.4

71.8

75.4

79.2

202320222021202020192018201720162015201420132012201120102009200820072006200520042003200220012000

Working

capital

Sources and uses of cash 2019 – 2023

(£m)

Capex/SaaS

Cashﬂow

from

operations

Disposals

492

296

385

361

507

982

Sources Uses

1,853

340

436

R&D

Dividends

M&A

Buyback

Other*

Debt reduction

Cash

balance

139

* Other comprises: tax payments, lease payments, interest, other

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 43

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Operational excellence

Business transformation

We have made good progress on the

implementation of our business

transformation program, enabled by SAP

S/4HANA, focusing on four key areas:

people; process; technology; and data.

The programme will deliver simplified and

standardised processes, helping us deliver

our growth objectives and a number of

benefits including: simpler working

practices; better customer experience;

enhanced interaction with suppliers;

andamore globally connected and

scalable business.

Our approach has been to adopt the

standard SAP configuration wherever

possible, adjusting our business processes

to the system, thereby limiting

customisation and reducing complexity.

Implementation is scheduled to take place

in 2024 through a phased rollout, with

benefits generating an additional 150bps

inadjusted operating margin.

Embedding a lean mindset

across the Group

Deploying the SBS to improve and

simplify our business processes,

and creating a healthy, high-

performance culture, are key

elements of our Strategy for

Sustainable Growth. These provide

a series of building blocks on our

journey towards delivering

operating margins of 20%+.

SBS

The main objectives of the SBS are to remove

waste, drive efficiency and strengthen

competitiveness as we grow the business,

with each of our global sites driving a number

of continuous improvement activities. These

activities not only deliver hard financial

benefits, but they also strengthen our

capabilities and create additional capacity

toinvest in innovation and areas like

automation.

• During the year, the SBS continued to

makea meaningful contribution to the

profitability of the Group, with benefits

realised in 2023 from operational excellence

initiatives amounting to over £10 million.

• Benefits derived from a combination of

gross profit improvement, through sales

volume drop-through, and overhead

reduction.

• In 2023, we embedded our ‘Bronze,

Silver,Gold’ certification programme to

drive lean operations across our core

operational metrics.

• At the end of the year, seven of our sites

hadachieved Bronze certification.

• In 2024 we expect additional sites to

achieve Bronze status and others to

makeprogress towards Silver.

• We are also broadening the SBS to

encompass innovation as well as the

enabling functions including IT, Finance,

HRand Legal.

Benefits derived from the SBS in 2023:

> £10m

Grow Foundation

2020–2021

• One language

• Eight core

methods

• Training

Expand Impact

2022–2023

• Clear expectations

• Deliver value

• SBS investment

Go for Gold

2023–2024

• Bronze, Silver

Gold

• Expand SBS

framework

• SBS capability

building

Embed

2024 >

• Value stream

flow

• Lean culture

shift

• Sustainable

systems

2023

Preparation, design and test

2024

Phased implementation

across Spectris

2025

Benefits realisation begins

SBS delivers tangible and sustainable value and is embedded in our DNA

so that continuousimprovement is owned by everyone

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202344 SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Case Study

Find out more online

Revolutionising Energy Storage and Conversion:

Collaboration with the University of Pittsburgh

Customer:

University of Pittsburgh

Delivering sustainable solutions

to current challenges in energy

storage and conversion

Energy systems drive every aspect of our

modern life, from cell phones to electric cars

and even space travel. But to achieve energy

that is clean, renewable and reliable, we need

better batteries and fuel cells. If scientists

could see inside energy storage and

conversion systems while they operate, they

could not only identify where changes are

needed, but also develop new materials to

enhance their performance. A unique

collaboration in the US between University

ofPittsburgh’s Kumta Lab and Malvern

Panalytical is enabling researchers to do

justthat.

Dr. Prashant N. Kumta and his team aim to

deliver improvements in two key areas:

• Energy storage

The lithium-sulfur battery is viewed as an

attractive replacement for the rechargeable

lithium-ion batteries currently used in

applications such as electric vehicles, cell

phones and laptops. Kumta Lab is targeting

improvements to its safety, cost and

efficiency.

• Energy conversion

The lab’s primary focus is water electrolysis

and hydrogen fuel cells. These are clean,

renewable and low carbon energy sources

that could help to achieve Net Zero goals,

but they are currently very costly.

Using data and insights drawn from Malvern

Panalytical’s Empyrean X-ray diffraction

technology, Dr. Kumta and his team are

working towards achieving a series of

ambitious goals:

400%

growth in the watt

hours per kilogram a

rechargeable battery

delivers

300%

increase in the miles

an electric car can

travel between

charges

100%

reduction in the

volume of precious

metals used in water

electrolysis and

hydrogen fuel cells

50%

reduction in the price

tag of an electric

vehicle

“If we can create a battery pack

system that can be charged or

recharged on a continuous basis

using wind and solar power – for

example, a car that charges while

you drive – we will eliminate the

current reliance on carbon and

fossil fuels almost entirely.”

Dr. Prashant N. Kumta

University of Pittsburgh

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Risk management

Our

approach

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.

The Group has a well-established process,

which delivers visibility and accountability for

risk management across our businesses. This

process forms part of the Group’s overall

internal control framework, as described on

page 47.

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

those risks that are most significant at the

Group level (managed by the Executive Risk

Committee and reviewed by the Audit and

Risk Committee).

Business unit risk management

Each business undertakes a detailed

assessment of risk across their markets,

processes and operations, including a

consolidation of any emerging risks that

should be formally evaluated. We operate

Audit and Risk Committees for each of our

businesses. These Committees, which meet

quarterly, represent a key component of the

second line of risk management (see page

100) in respect of Internal and External Audit

matters, internal control, risk management,

and other areas of compliance.

A formal risk register is reviewed and finalised

in each respective business Audit and Risk

Committee and submitted to the Group, with

each risk assessed in terms of gross and net

impact and likelihood. Key mitigations, both

planned and existing, have formal owners

and are subject to regular operational review

as well as independent assurance where

appropriate.

Group risk management

Group oversight of risk management is

conducted through the Executive Risk

Committee whose purpose is to ensure

appropriate management of the Group

Principal Risks and to oversee the operation

of the Group’s Enterprise Risk Management

framework. The Executive Risk Committee is

supported by the Risk and Control function,

who enable the risk management process

and act as a centre of excellence as part of the

Group’s second line activities, consistent with

the four lines of risk management model

described on the following page.

The Executive Risk Committee, together with

the Audit and Risk Committee, performs a

continuous top-down assessment of risk

throughout the year, informed by the

approach established at each of the

businesses. The aim of this process is to

identify those Group Principal Risks that

represent the most significant threat to the

achievement of the Group’s performance

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

assessment of the Group’s principal and

emerging risks on an annual basis.

An owner is assigned to each Group Principal

Risk, which is formally assessed in terms of its

gross and net severity, a risk appetite is

defined, and mitigations are identified within

the four lines of defence framework. Each risk

is subject to a formal assessment by the

Executive Risk Committee during the year

and the suite of Group Principal Risks is

reviewed twice yearly by the Audit and Risk

Committee.

Our risk management approach includes the

consideration of emerging risks, whether they

be operation-specific or broader in scope,

such as climate change and environmental

matters or developments in artificial

intelligence. Further details on how climate-

related risks are managed are provided on

page 66.

During 2022, we saw an increase in gross risk

in a number of areas, including geopolitical

and market risk, cyber threat and business

disruption. We consider that across our

Principal Risks the level of gross risk remains

heightened, with a further increase in respect

of market/financial shock as a result of greater

uncertainty in external markets . All of these

risks are subject to Executive oversight and

formal assessment, and we continue to

review the effectiveness of existing controls

over those risks and to identify and execute

further actions where appropriate in order to

manage our net exposure.

In 2022 the net risk rating for geopolitical risk

was reassessed from moderate to high in

view of the increased potential for this risk to

have an adverse impact on the Group, whilst

in respect of compliance risk the continued

work to strengthen our controls framework

and to further embed the Spectris Code of

Business Ethics resulted in a reassessment of

the net rating from high to moderate. The

Board considers that, after taking into

account existing controls, no changes to the

net risk ratings are required in 2023, although

we continue to monitor developments and to

keep our assessment of both gross and net

risk under review.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202346

Risk management continued

Four lines of risk management

The Group has in place a four lines

risk management model

First line

The first line is responsible for the

identification of all risks in the ‘risk

universe’ of each business unit. This risk

awareness informs the control

environment (the first line is primarily

responsible for the execution of key

controls), specific mitigations and is a key

consideration in driving business decisions.

Second line

The second line is responsible for the risk

management framework that the first

lineoperates within. This includes the

development of a standardised approach

to identifying and reporting risk, an

internal control framework aligned to

those risks, and a suite of policies to ensure

the consistent application of business

processes and controls. The second line is

also responsible for monitoring the

performance of first line activities and for

taking a holistic view of risk, to determine

which risks are of principal importance to

the Group.

Third line

The third line is responsible for providing

assurance over the effectiveness of the

Group’s risk management and internal

control framework. This is most commonly

undertaken by Internal Audit on behalf of

the Audit and Risk Committee and Board

of Directors.

Fourth line

The fourth line is the Audit and Risk

Committee, Board of Directors and

External Audit, providing independent,

external, and/or non-executive oversight

across the entire risk management

framework, holding accountable those

responsible for all activities within the

three lines of defence.

Fourth line

External/Non-executive

oversight

Third line

Independent assurance

Second line

Risk management framework,

policies, processes and controls

First line

Risk identification and control

execution

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

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 47

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Principal risks and uncertainties

Managing our

principal risks

Risk appetite

• Highly cautious

• Cautious

• Balanced

• Opportunistic

• Highly opportunistic

Increase

No change

Decrease

New risk

Change in rating

Risk assessment scale*

• Very low

• Low

• Moderate

• High

• Very high

* The combined impact and

likelihood of a risk occurring, net

of mitigation activities

Strategic transformation Cyber threat

Definition

Failure to successfully deliver the Group Strategy for

Sustainable Growth.

Definition

Failure to appropriately protect critical information and other

assets from cyber threats, including external hacking, cyber

fraud, demands for ransom payments and inadvertent/intentional

electronic leakage of critical data.

Link to strategy

• Great businesses

• Aligned to structural growth markets

• Customer centricity

• Investing in growth

• Operational excellence

Link to strategy

• Customer centricity

• Operational excellence

Risk assessment

Moderate

Risk assessment

High

Change in rating

Risk appetite

Balanced

Risk appetite

Cautious

Impact Impact

Our day-to-day activities are inherently aligned to the

successful achievement of the Group’s strategic objectives.

Nevertheless, we recognise the importance of specifically

managing some of the more transformative elements of

strategic execution as a Principal Risk. These elements include

mergers and acquisitions, business transformation

programmes and other growth initiatives, R&D, technology

and digitising our offering.

Our businesses face an ever-evolving landscape of information

security threats, both internal and external, that are

continuously growing in sophistication and unpredictability. In

light of the persistence of high-profile information security

breaches occurring across a wide range of businesses, the

Group takes a necessarily proactive and cautious approach to

safeguarding its information assets. Geopolitical tensions, the

ever-changing regulatory landscape and technology advances

such as generative AI introduce new and evolving risks that

necessitate constant vigilance.

Mitigation Mitigation

• Remuneration policy aligned to incentivise delivery of the

strategy

• Deployment of the SBS

• Continued review of acquisition/merger pipeline, integration

processes and capability

• Regular reviews to track strategy execution

• Introduction of Vitality Index to track R&D effectiveness

• Structured approach to delivering business transformation

• Business Audit and Risk Committees

• Information security and data privacy policies and a well-

defined security controls framework

• Cyber risk assurance undertaken by Internal Audit

• Continued focus on ‘cyber fitness’ training across the Group

• Regular Board, and Audit and Risk Committee reviews

• Continued strengthening of IT systems

• Regular cyber-attack simulation exercises and penetration tests

• Systems in place to immediately isolate identified threats

• Cyber threat intelligence services and brand monitoring

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202348

Principal risks and uncertaintiescontinued

Compliance Geopolitical Market/financial shock

Definition

Failure to comply with laws and regulations, leading to

reputational damage, substantial fines and potential

market exclusion.

Definition

Material adverse changes in the geopolitical environment putting

at risk our ability to execute our strategy. Includes trade

protectionism, punitive tax/regulatory regimes, and general

heightened tension between trading parties or blocs.

Definition

Material adverse changes in market conditions, such as economic

recession, inflation, increased interest rates, sudden negative

investor sentiment and currency fluctuation.

Link to strategy

• Customer centricity

• Operational excellence

Link to strategy

• Aligned to structural growth markets

• Customer centricity

• Investing in growth

Link to strategy

• Great businesses

• Aligned to structural growth markets

• Customer centricity

• Investing in growth

Risk assessment

Moderate

Risk assessment

High

Risk assessment

High

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

subject to wide-ranging laws and regulations, including export

controls, data privacy, fair competition and anti-bribery and

corruption. Any compliance failure by the Group or its

representatives could result in civil or criminal liabilities, leading

to significant fines and penalties or the disqualification of the

Group from participation in government-related contracts or

entire markets.

We operate in a range of end markets around the world and

may be affected by political or regulatory developments in any

of these countries. Material adverse changes in the political

environment in the countries in which we operate have the

potential to put at risk our ability to execute our strategy. We

continually monitor the geopolitical landscape, de-risk our

strategies 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 that a recession or period of instability could have on

the Group. As with political risk, we are limited in our ability to

reduce the likelihood of such events, but with careful

monitoring and response planning we can ensure that the

potential impact is restricted.

Mitigation Mitigation Mitigation

• Strong cultural alignment to the Spectris Value of ‘Be true’

• Global implementation of new Code of Business Ethics

• Formal compliance programme including policies,

procedures and training

• Contract review and approval processes

• Investment in experienced compliance professionals

• Event monitoring and horizon scanning

• Working groups and sub-committees to limit the impact of

materialising risks, including Executive Export Controls

Committee

• Operate in a broad spread of geographical markets and end

users

• De-risking of relevant strategies

• Response planning

• Maintain a strong balance sheet

• Market monitoring and horizon scanning

• Maintain a strong balance sheet

• Operate in a broad spread of geographical markets and end

users

• Response planning

• Cost saving opportunities identified by SBS and regular

review of pricing to mitigate impacts of cost inflation

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 49

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Principal risks and uncertaintiescontinued

Talent and capabilities Business disruption Climate change

Definition

Failure to attract, retain, and deploy the necessary talent to deliver

Group strategy.

Definition

Failure to appropriately prepare for and respond to a crisis or

major disruption to key operations either across the Group, in a

key region/location, or via a critical supplier.

Definition

Failure to respond appropriately, and sufficiently, to climate

change risks or failure to identify the associated potential

opportunities in assisting others to manage their climate agendas.

Link to strategy

• Great businesses

• Customer centricity

• Investing in growth

• Operational excellence

Link to strategy

• Operational excellence

Link to strategy

• Aligned to structural growth markets

• Customer centricity

• Investing in growth

• Operational excellence

Risk assessment

Moderate

Risk assessment

Low

Risk assessment

Moderate

Change in rating

Risk appetite

Balanced

Risk appetite

Cautious

Risk appetite

Balanced

Impact Impact Impact

The Group needs to attract, develop, motivate and retain the

right people to achieve our operational and strategic targets.

Effective talent management is essential to successfully

delivering our current business requirements and strategic

goals, and to realising the full potential of our businesses.

Therefore, failure to leverage talent and capabilities could

significantly impact the successful execution of our strategy.

The three broad areas of focus are leadership, engineering and

entry level roles.

The nature of our geographically diverse and segmented

businesses provides a degree of natural hedging from

Group-wide disruption arising from a major event, be it a

physical disaster at a major site, or a global external event, such

as the COVID-19 pandemic. However, we acknowledge the

importance of proactively ensuring a consistent and effective

business continuity management process across the Group.

The transition and physical risks present in climate change

have the potential to impact the medium- and long-term

success of our business through market regulation and

additional taxes, the changing macroeconomic landscape and

the potential physical impact on our operations. We see the

potential for additional sales opportunities as well as increased

costs and investment.

Mitigation Mitigation Mitigation

• Structured recruitment and succession processes for senior

Group talent

• Full deployment of Workday HR system with recruitment,

performance and talent management processes extended

to top 600 leaders and managers

• Annual organisation capability review process

• Appropriate incentives with benchmarking at all levels

• Global employee engagement programme

• Leadership development programmes to ensure

development of talent pipeline

• Common policy and enhanced standard for business

continuity planning across the Group in progress

• IT disaster recovery plans

• Testing plans

• Risk identification and monitoring

• Effective internal and external communications

• Strategy built around sustainable growth

• Agreed action plan to meet Net Zero targets validated by the

Science Based Targets initiative

• Board and Executive oversight of sustainability performance

as well as progress against Net Zero roadmap

• Geographical diversity of businesses and supply chain

• Climate physical risks monitored and reported by each

business

• Aligning strategy with current and emerging sustainability

thematics

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202350

Viability Statement

Longer-term viability of the Group

In accordance with section 4, provision 31 of the 2018 UK

Corporate Governance Code (the Code), the Directors have

assessed the viability of the Company over a five-year period,

taking into account the Group’s current position and the

assessment of the Principal Risks and Uncertainties as set out

on pages 48 to50. The assessment considers both the

Company’s long-term prospects and also the viability of the

Company over that period.

Analysis of business prospects

The Board has considered the prospects of the Company 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

over this period. These include:

• alignment with structural, sustainable growth markets with

high barriers to entry ;

• leading, differentiated solutions for solving customer

challenges and continued investment in R&D; and

• our financial model which is asset light, highly cash

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 and

strategic planning cycles, the time frame within which we

assess our risks, the maturation of the Group’s credit facilities

and the approach taken by our peers. The assumptions and

forecasts used throughout the viability period are consistent

with those used in other areas involving future forecast. Taking

into account all these factors the Board continues to be of the

view that a five-year period is appropriate.

The Directors carried out a robust assessment of the Principal

Risks facing the Group, considering those that could threaten

its business model, future performance, solvency or liquidity.

In assessing the viability of the Group, the Board has reviewed

the future prospects of the business as outlined by the

Group’s strategy and considered the financial/liquidity impact

that a number of scenarios might have on those prospects.

The Board has also considered the Group’s RCF, which is due

to expire in July 2025 as part of its assessment. On the basis of

the Group’s continuing strong balance sheet and ongoing

support from its banking group, the Directors have assumed

for the purposes of the Group’s viability assessment that this

will be renewed before expiry in the same amount and with

the same covenant requirements.

As part of their assessment, the Directors have considered

thenatural hedging that occurs across the broad spread of

markets, products and customers maintained by the Group.

Assumptions have also been made in terms of the Group’s

ongoing ability to raise finance, deploy capital, and re-finance

debt in order to maintain sufficient headroom. In certain

instances, the Directors have included mitigation actions as

part of the assessment, including cost reduction, reduced

capital expenditure, and tactical recovery processes following

from a major disruption.

Reverse stress testing has also been applied to determine the

level of fall in sales that would be required before the Group

would be at risk of breaching its existing financial covenants

or current liquidity headroom during the assessment period.

The reverse stress test was conducted on the basis that

mitigating actions would be undertaken to reduce overheads

during the period as sales declined and, on that basis, a fall in

forecast sales of 38% (applied uniformly across the five-year

assessment period) would be required before such a breach

occurred. The Board considers the possibility of such a

scenario to be remote and further mitigation, such as

suspension of dividend payments or a reduction in planned

capital expenditure, should be available if future trading

conditions indicated that such an outcome were possible.

Viability Statement

Based on the outcomes of the viability assessment, the

Boardhas a reasonable expectation that the Group would be

able to withstand the impact of each of these scenarios, in

isolation and in a number of plausible combinations, should

they occur in the course of the five-year assessment period. In

each event the Group would continue to operate and meet its

obligations and liabilities as they fall due over the period to

31December 2028.

Scenario modelled Link to Principal Risks

Scenario 1:

Reduction in sales

The Board considered a number of

events that could notably impact

planned sales performance, either in

a specific country or across the

entire Group. This included global

disruption events.

The level of severity tested ranged

from c.1% to c.20% decline in sales to

a 100% decline in a specific country.

• Strategic transformation

• Geopolitical

• Market/financial shock

• Compliance

• Cyber threat

• Climate change

Scenario 2:

Significant costs or expenses

Large, one-time or recurring costs or

expenses were considered,

including the impact of inflation

where cost increases cannot be

passed on to customers, a

significant acquisition which fails to

deliver anticipated benefits, or fines

arising from a breach of export

control or data privacy laws and

regulations or climate impacts.

The level of severity tested ranged

from c.6% cost increases, with

further cost inflation of 10% to

one-off costs of c.£200 million

relating to a significant acquisition

which fails.

• Strategic transformation

• Compliance

• Geopolitical

• Market/financial shock

• Cyber threat

• Talent and capabilities

• Business disruption

• Climate change

Scenario 3:

Trading disruption/exclusion from market

The Board considered certain

instances in which the Group or

itsoperating companies might

bedebarred from or otherwise

excluded from a particular market,

as well as a major disruption in a

critical operation caused by, for

example, a critical system outage.

The level of severity tested ranged

from c.£10 million to £30 million

costs of resolving the issues to a

decline in annual sales of

c.£20million.

• Compliance

• Cyber threat

• Geopolitical

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 51

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report

Building our

business for

the future

We are evolving our approach to doing business

to meet the demands of a changing world. Our

stakeholders are at the heart of this evolution.

We are creating a strong foundation for our

future based on our stakeholders’ needs and

expectations. In 2023, we have advanced our

ambition to become a leading sustainable business.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202352

Sustainability Report continued

Our planet

We recognise and embrace our role in

tackling environmental degradation and

climate change. We do this through providing

products and services that reduce our

customers’ environmental impact and by the

active management and mitigation of the

impact of our own operations. We continue to

make very strong progress in our ambition to

become Net Zero across our own operations

by 2030 and across our value chain by 2040.

Read more the progress of the

SpectrisFoundation on pages 78 and 79

Total number of

students reached by

Spectris Foundation

43,099

2022: 21,698

Total donations agreed by

Spectris Foundation

£1,365,000

2022: £551,800

1. Absolute scope 1 and 2 (Market-based) emissions.

Find out more about the

Spectris Foundation online

www.spectrisfoundation.com

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 53

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report continued

We are focused on ensuring that our

people have the rights skills to build

meaningful, long-term careers and to

build the collective capabilities that we

need to achieve our strategic ambitions.

We are proud of the progress made on

our people strategy. Our Values, our

approach to engagement and our

leadership model have formed a distinct

and strong foundation to develop our

employee value proposition.

We are committed to continuous

improvement and regularly review the

effectiveness of our people practices

within the context of the ever-changing

external environment and the evolving

world of work. Our approach is

underpinned by the development of

our people data and diagnostics

through the active use of Workday to

enable smarter and more agile

decision-making, and to help us

predict the talent we need in the future

so that we put the right plans in place

today.

Boosting our Values

Our Values are an integral part of our

cultural DNA. They define how we act

and what we expect from each other.

Our three Values Be True (integrity),

Own It (accountability), and Aim High

(ambition) reflect who we are as

employees of Spectris.

We want our people to be happy, to be fulfilled by what they do,

and to have the right skills for success. We are committed to

creating a values-driven, healthy high-performance culture. A

workplace with engaged, highly skilled teams that are

recognised and rewarded for their contribution accelerates our

Purpose to make the world cleaner, healthier and more

productive.

A values-driven

culture of

healthy high-

performance

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202354

Sustainability Report continued

Developing leadership

Building a values-based healthy high-

performance culture requires a leadership

population equipped with the right

behaviours, skills and knowledge. Being a

leader at Spectris means knowing how to

build great teams; enabling them to play

to their strengths, modelling our Values

and inspiring them to do great things. We

continue to build future leaders through

various management programmes across

our businesses.

In 2022 we launched our global leadership

programme, Ascend, and our first cohort

graduated in May 2023. This 100% virtual

and highly interactive course is built

around the themes of our leadership

model, helping leaders inspire their

people, strengthen their teams and grow

the business. The programme has received

really positive feedback from participants

and those who work with them, with

nearly 90% of participants’ managers

agreeing that they have become better

leaders because of what they learned.

Our Values are an integral part of the Spectris

culture. They are woven naturally into

everything we do and bring us together as a

community. They are also the core of our

leadership development programmes. But

we don’t just assume the work is done, and

through structured interventions we keep our

Values real, ensuring they remain fresh and

have an ongoing relevance to our people.

In 2023, we rolled out a Values Booster

programme across our teams in Asia to bring

our Values even more to life, ensuring the

right behaviours are recognised and the

wrong behaviours are called out. This

interactive programme presented managers

with a number of challenging scenarios and

encouraged an honest exchange of views

and the sharing of real-life experiences. As a

result of the programme, 95% of participants

agreed that they are now better equipped to

bring the Values to life in their teams.

95%

of participants in the Values Booster

programme agreed that they were now

better equipped to bring the Values to life

in their teams

Putting real value on talent

Having the right people, with the right skills in

the right role at the right time is critical to

achieving our operational and strategic

priorities. We’ve made major enhancements

to how we manage talent over recent years

and are continuing to review how we can

maximise the strategic value of our most

important resource: our people.

We are concentrating on identifying the

talent we need, building our capabilities to

deliver our strategic ambitions. We identify

the roles most vital to developing these

capabilities and ensure appropriate plans are

in place to create a sustainable talent pipeline

for those roles.

In 2023, we have made enhancements to

how we evaluate potential through the

organisation. We have improved our

approach to succession planning to ensure

we look deeper into the business to identify

talent and offer opportunities to grow.

We continue to build greater dialogue across

the organisation to break down any functional

and geographical barriers to talent

development. Our approach is creating

transparency and helping us match the right

people to the right jobs at the right time;

ensuring that we build our strategic

capabilities whilst further opening up

opportunities for our people.

Building manager accountability for

employee engagement

We continue to make encouraging progress

on our journey to creating a high-

engagement culture. The results from our

third Gallup annual employee engagement

survey demonstrate the success of our

approach while also highlighting the

opportunities for further improvement.

In 2023, a key focus has been supporting

people managers to take accountability for

action-planning based on their survey results.

We measured the difference in engagement

scores for teams whose managers undertook

active action planning with their teams and

highlighted the real difference this makes to

how connected people feel to the company

culture, their work and their colleagues.

All managers are required to take

accountability for driving engagement in

their teams. Every manager is expected to

have open and honest discussions about

what’s working well, and what could be

better. Action plans are agreed and driven at a

team level with leaders encouraged to

regularly review progress and course-correct

when needed.

We are recognising and celebrating

managers who have built highly engaged

teams, while providing targeted coaching and

support to those who need help to improve

engagement. In this focus, we recognise that

great managers are the key ingredient for

success in our engagement journey and we

are focusing on helping our managers to

become role models of engagement.

Spotlight

“A truly remarkable leadership

course. Really well planned,

structured, organised and

delivered. It was a joy to attend

and so much of the content

will stay with me. I feel

privileged to have been

in the first cohort.”

Anna-Lisa Miller

Group CIO

VOICES OF EXPERTISE

The second cohort of leaders began their

Ascend programme in September 2023.

Many of the graduates from the first cohort

are acting as mentors – providing practical

guidance on how best to apply the learnings

from the programme in their leadership roles

and wider day-to-day life.

90%

of participants’ managers agreed that they

have become better leaders following their

participation in the Ascend programme.

Employee turnover

2023 2022 2021 2020 2019

10.6%1 13.5% 15.6% 13.6% 11.4%

1. Of the total labour turnover, 58% of leavers were

resignations, 14% were retirements and 8% were

redundancies with the remaining 20% leaving for a

variety of other reasons.

2021

2023

3.72

3.92

2022 3.86

4 5

Employee engagement (GrandMean)

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 55

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report continued

To build our business for the future, we

need the best team, a diverse mix of

people and skills, where different ideas

can grow, and where everyone can

succeed. Our ambition to reflect the

full diversity of the communities in

which we operate and trade is

therefore essential - but we also

recognise that creating true diversity is

challenging and building an inclusive

culture is a continuous journey.

In 2023, we reached the milestone of 40% of our

Board being comprised of women, reflecting

the target set by the FTSE Women Leaders’

review. This year we also made good progress

inimproving gender diversity in our senior

leadership population, attracting, promoting

and retaining more diverse talent. As at the

endof 2023, 28.7% of our senior leadership

population are women (2022: 22%). In

recognition of the importance of growing the

gender diversity in our leadership population,

we have set an ambition that by 2030 40% of

our senior leadership population will be

women. To reach our ambition, we are taking

targeted action, including:

• embedding tailored diversity, inclusion and

belonging dashboards in our Organisation

Capability Review process which is reviewed

annually by the Group Executive and Board;

• commencing the review of Group-wide

policies to support gender-neutral parental

leave and caregiver leave;

gender, age, sexual orientation, marital status,

disability, or any other characteristic protected

by applicable laws. Where existing employees

become disabled, our policy is to engage

anduse reasonable accommodations or

adjustments to enable continued employment.

• the active development of inclusion groups

across the Spectris Dynamics Division;

• reviewing the Group’s recruitment practices

to ensure they contain suitable safeguards to

avoid unconscious bias; and

• joining the 25x25 initiative, working with

like-minded peer companies to explore the

pathways to developing diverse talent.

At the same time, we recognise the importance

of developing ethnic diversity, and wider forms

of representation, across our leadership

population and wider workforce. In 2023, we

took early steps towards voluntary reporting of

ethnic diversity data in compliance with the

requirements of the Parker Review. Our Board

composition is compliant with the Review and

as requested by the Review, we have set a

target to ensure that 10% of our UK leadership

population is ethnically diverse by 2027.

While we agree with the spirit of the Parker

Review, setting this target does not fully reflect

the challenge the Group must overcome to

create an ethnically diverse senior leadership

community across the world. With employees

in over 30 countries, our ambition is to ensure

our leadership community fully reflects and

represents our employee base and the

geographies in which we operate. In particular,

we recognise the need to develop leadership

pathways for our employees based in Asia. We

believe that, by fully reflecting the geographic

diversity of the Group in our leadership

community, we will be building authentic

ethnic diversity, that truly reflects the necessary

diversity of thought and experience the Group

needs to build a sustainable future. Building a

fuller picture of our existing diversity, to create a

baseline to measure progress, is challenging

and we are cognisant of the varying laws and

regulations that limit, and in some cases

prohibit, us requesting diversity data, and

notably ethnic diversity data from employees.

Developing our baseline data within these

constraints is a key focus for the Group in 2024.

We are evolving our culture to encourage a

mindset and behavioural shift on inclusion

andbelonging at all levels of our organisation.

Beginning with the rollout of the PwC

immersive virtual reality experience, ‘In My

Shoes’, to the global senior leadership

population and head office employees. We

have developed a programme of work to

ensure that we build a future-focused inclusive

organisation where every employee can feel

that they belong. During the year, our Divisions

progressed the establishment of employee

resource groups to complement our Group-

wide work. These resource groups have been

instrumental in advising regional management

on a range of topics to help deliver real change

in our employee experience.

Our ambition to build a more diverse company

and a more inclusive culture is underpinned by

the commitments set out in our Code of

Business Ethics. We have a zero-tolerance

policy in place for any form of discrimination or

harassment and we are committed to

embracing diversity and inclusion across the

Group. We aim to provide equal opportunity in

recruitment, career development, promotion,

training and reward for all employees –

regardless of ethnicity, national origin, religion,

We are committed to building a

diverse and inclusive business

Gender diversity in senior leadership

28.7%

(2022: 22%)

Percentage of women on the Board

40%

(2022: 33%)

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202356

Sustainability Report continued

Employees by gender and role

as at 31 December 2023

Board Leadership community

Total 10

(2022: Male: 6 Female: 3)

71%

29%

Total 100%

(2022: Male: 80% Female: 20%)

Executive Committee

(Incl. Executive Directors)

Wider employee population

Total 7

(2022: Male: 5 Female: 2)

67.14%

32.86%

Total 100%

(2022: Male: 65.99% Female: 34.01%)

Data required under the UK Listing Rules on gender and

ethnic diversity can be found on page 125.

Gender pay gap reporting

for the year ended 31 December 2023

Bonus pay gap: Mean

11.7%

(2022: 37.2%)

Gender pay gap: Mean

11.5%

(2022: 21.7%)

Bonus pay gap: Median

11.2%

(2022: 31.6%)

Gender pay gap: Median

15%

(2022: 18.6%)

“25x25 resonates deeply with our Values of

equity and inclusion. By working with our peers,

we aim to drive positive change within Spectris,

across our industry, and through the entire

business community.”

Andrew Heath

Chief Executive

Our Board Diversity Policy sets out our ambition for building

and maintaining diversity in our senior leadership population.

Find out more about our diversity policy online

www.spectris.com/buiding-a-sustainable-business/people/

diversity-and-inclusion/

In December 2023, the Group was proud to join the 25x25

initiative, joining other UK listed industrial peers to create

new and defined pathways for women to reach the role

ofCEO. The initiative recognises that the concept that

talented women will ‘bubble-up’ into senior positions by

virtue of volume is unproven and a clearer focus is needed

on the early identification of talent and the formation of

clear progress routes. We are pleased to be working with

peer companies in our sector who are managing similar

demographics, career disciplines and geographies to

enhance gender diversity across the industrials sector.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 57

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report continued

Living by our Values

Ethics

Number of helpline reports received

2023 2022 2021 2020 2019

84 44 40 37 54

At Spectris, we uphold our Values

ofBe True, Own It, and Aim High,

which embody the traits and

behaviours we strive for when

conducting our business.

The foundation of our ethical standards is

reflected in our Code of Business Ethics which

sets out the expectations and responsibilities

for all employees to act with absolute

integrity. This is embedded through annual

Code of Business Ethics refresher training,

with 96% of employees completing this

refresher training in 2023.

We are committed to maintaining high

ethical standards in all our global operations,

and we expect our suppliers and other

business partners to adhere to the same

principles. Our third-party risk management

processes require export controls and

sanctions screening, and regular assurance

activities, the effectiveness of which is

overseen by the Board and Executive

Committee.

Speak Up

We are dedicated to fostering a culture of

‘speak up’, encouraging individuals to freely

voice their concerns and to call out

behaviours that do not align with our Values.

We acknowledge the significance of ensuring

that those who speak up feel supported and

at ease and provide assurance through tone

from the top and our network of business

ethics officers. We offer multiple routes to

speak up including an independent helpline

(www.spectrishelpline.com) that employees,

stakeholders and third parties can use to

raiseethics and compliance questions and

concerns. Our Spectris helpline cases are

reviewed and triaged appropriately to ensure

sufficient investigation, reporting and

remediation activities are carried out.

TheAudit and Risk Committee receives

regular updates on the Group risks identified

through our helpline cases with the Board

undertaking an annual review.

During 2023, the total number of reports

received by the Spectris helpline was 84

(2022: 44) and, after investigation, 29 of

thereports were substantiated. This is a

significant increase from the case numbers

reported in 2022 and reflects both the

emphasis placed on encouraging employees

to raise concerns and the heightened

awareness and willingness among employees

to speak up. Disciplinary action was taken

against 26 individuals based on the severity

ofthe misconduct identified: final warning

(1person): verbal feedback (6 people); written

warning (7 people); resignation in lieu of

notice (2 people); suspension (1 person);

performance improvement plan (1 person);

termination mutual agreement (2 people);

termination with cause (4 people); warning

(1person) and verbal warning (1 person).

Employees completing refresher training

in 2023

96%

Spectris Ethics Week:

Nurturing a culture of

integrity, transparency

and respect

In an initiative to reinforce its commitment

to ethical practices, Spectris organised

anEthics Week, which involved a

dedicated series of events and discussions

across ourGroup that delved into crucial

topics such as organisational culture,

theethical implications of AI, and the

importance of fostering a culture of open

communication through the ‘speak up’

ethos. The week also provided an

opportunity for our businesses to

recognise individuals whowere nominated

for their exceptional efforts in exemplifying

our Values through their dedication to

ethics and compliance initiatives.

Spotlight

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.

Our Values

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202358

Sustainability Report continued

Committed to sustainable

supply chains

We are committed to doing

business in the right way, mindful

ofour impact on the communities

in which we operate and wider

society. This commitment is

underpinned by our membership

ofthe UN Global Compact.

We are very conscious that one of the biggest

sustainable impacts we can have is through

our supply chain. In 2023, we have taken

meaningful steps forward in managing that

impact through the publication of our new

Global Supplier Code of Conduct.

This Supplier Code underpins our

commitment to ethical business practices

and sustainable supply chains. The Supplier

Code serves as the foundation of our

operations, outlining the minimum

standardswe expect from our valued

supplychain partners and how we would

likethem to work with us to fulfil our wider

sustainability ambitions.

The Supplier Code outlines our commitment

to integrity, transparency, and responsibility

and it provides a comprehensive framework

that guides our interactions with suppliers

and reinforces our core values of Be True, Own

It and Aim High. The Supplier Code works in

tandem with Our Code of Business Ethics,

creating a robust foundation for our business

practices. We require that all suppliers

commit to the highest standards of ethical

conduct when dealing with their workers,

suppliers and customers.

Suppliers are expected to support and

respect all internationally recognised human

rights in any part of its supply chain. These

arethose expressed in the International

BillofHuman Rights and the principles

concerning fundamental rights set out in

theInternational Labour Organization’s

Declaration of Fundamental Principles and

Rights at Work from time to time in force.

Suppliers must actively identify and address

potential violations across their own

operations and throughout their value chain.

We are confident that by collectively

embracing the standards in our Supplier

Code with our supply chain, we will

strengthen our global impact and reinforce

our position as a leading, sustainable business.

Read more about our Global Supplier

Code of Conduct

www.spectris.com/buiding-a-sustainable-

business/ethical-business/supplier-code-of-

conduct/

Malvern Panalytical supplier spend rated

via EcoVadis

66.7%

HBK supplier spend rated via EcoVadis

24.2%

Monitoring supplier

performance

We are committed to monitoring the

environmental, social, and ethical

performance of our supply chain. We

manage this through the EcoVadis

platform with 66.7% of Malvern Panalytical

and 24.2% of HBK spend currently

assessed. In 2024, we will extend the

EcoVadis platform to Servomex and PMS.

The annual external verification of our

supplier data provided by sustainability

experts and reporting dashboards

provided through the EcoVadis platform

allow us to take informed decisions on the

use of suppliers and to build an ongoing

dialogue to ensure our sustainability

ambitions, including our Net Zero

ambition, are reflected in our supply chain.

Spotlight

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 59

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report continued

A safety-first culture

highlighted the challenge of low-risk events

leading to recordable incidents, such as cuts

and grazes. The development of a clear and

consistent approach to reporting health and

safety incidents is also considered by the

Committee to be a contributory factor to

therise in recordable incidents. We are

committed to creating a culture in which

ourpeople are empowered and encouraged

to challenge their environment and take

action for improvement and as we build

awareness, we do expect some increase in

recordable incidents as employees better

understand reporting processes. We expect

that this trend will be reversed as we

challenge the root causes of these incidents

through the continued reinforcement of our

safety principles.

Safety observations

The Group continues to also measure the

leading indicator of safety observations as a

core value driver across the Group. Creating

aculture where everyone is responsible for

their own safety and the safety of those

around them aligns with our Values and is

thefoundation of a safety-first culture. In

2023, our safety observations increased to

9,528 (2022: 8,900), with observations

recorded through the Global Benchmark

system andacted on locally, with thematic

reviews undertaken by the Group’s Health

and SafetyCommittee.

To further support the development of the

Group’s safety-first culture, the Committee

leveraged the experience of members and

the findings from incident investigations

tocreate a guide of best practice that has

been shared across the Group. A further

keysuccess was the introduction and

endorsement of a suite of online training

modules focused on specific needs at key

sites with the intention of addressing localised

safety gaps and placing health and safety at

the centre of daily decision-making.

The Group is committed to the

highest standards of health and

safety and maintaining a proactive

safety culture. We adhere to all laws

and regulations governing safe

working practices and often go

beyond local legal requirements

toensure that the policies and

practices at our sites and the

behaviours of our people are

drivingtowards a zero-accident

safety culture.

Total recordable incidents

There were no work-related fatalities of

employees or contractors in 2023 (2022: nil).

Our key performance indicator is our Total

Recordable Incident Rate (TRIR) as defined

bythe US Occupational Safety and Health

Administration. The TRIR increased in 2023 to

0.34 (2022: 0.26). All events were thoroughly

investigated at a site level, and corrective

actions shared and implemented across

theGroup.

The Group’s Health and Safety Committee

has taken time to review and assess the

increase in recordable incidents. In 2023,

there was a marked increase in recordable

incidents caused by non-routine tasks,

representing around 20% of total recordables

in the year. The variation in the mix of

incidents compared to the prior year has

Safety observations

9,528

(2022: 8,900)

Total recordable incident rate

2023

2022

2021

2020

2019

0.32

0.27

0.34

0.13

0.24

Safety-first culture

aligned to our Values

As an integral aspect of our safety-first

culture, a key focus for 2023 was the

implementation of a comprehensive

Group-wide Health and Safety Policy. The

Policy is aligned with the Group’s values

and was supported by a Group-wide video

communication, reaffirming the Group’s

commitment to a safety-first culture. The

Policy was launched by Andrew Heath and

Ben Bryson, in his capacity as leader of

theHealth and Safety Committee, and

confirmed that of all our ambitions as a

Group, our first priority is the health,

safetyand wellbeing of our people. The

communication also highlighted that

every safety observation made is a

reminder that we all have a responsibility

to call out risks and intervene when we

seesomething is unsafe.

Spotlight

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202360

Sustainability Report continued

We are committed to creating a

positive and open culture around

mental health.

It is crucial that we cultivate an environment

where mental health is a continuous and

open topic of discussion, where seeking

support is encouraged, and where there is

always a network of individuals and

programmes that are ready to provide help

and guidance. This focus underpins the

development of our healthy, high-

performance culture.

The Group’s culture is formed by the

behaviour of our leaders. In October, we

invited David Beeney to our Leadership

Conference for a second year to speak with

the leadership community on the importance

of creating a healthy culture to deliver high

performance. Leaders were reminded about

the key techniques to open discussions and

their important role in creating a safe space to

talk about mental health.

In October we also marked the third year of

our celebration of World Mental Health Day.

During this time, we organised global

wellbeing sessions in several languages,

aligned to our ‘Time to Talk’ campaign. These

sessions addressed various aspects of

well-being and mental health, including the

important aspect of financial wellbeing,

resilience and support for working parents.

In 2023, we worked with HSBC to provide

financial wellbeing seminars and advice to

employees, and in 2024 financial wellbeing

will be a continued focus across the Group.

By collectively prioritising positive mental

health, we are building stronger, more

resilient, and more compassionate teams.

Prioritising mental health

Spotlight

A healthy high-performance culture in action

During 2023, we continued to drive our

Group-wide mental health campaign ‘Time

to Talk’. Significant strides were made across

the Group to focus on the mental wellbeing

of our workforce, ensuring our people both

receive support and recognise their role in

creating our culture. Some highlights and

achievements were:

• Spectris China was awarded the status of a

Gold Standard Certified Company through

the 2023 China Corporate Health

Management Forum, organised by the HR

Excellence Center – one of the China’s

largest and most influential membership-

based networks for HR professionals.

• Malvern Panalytical launched a new

Employee Assistance Programme which

provided support in geographies not

previously covered ensuring that all

employees now have access to

independent, confidential and

professional support.

• Employee Assistance Programme

coverage in Asia reached 100% of

employees, including all manufacturing

plants.

• Servomex were awarded the Gold

Wellbeing at Work Award through East

Sussex Public Health.

Access to an Employee Assistance

Programme

86%

2022: 82.2%

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 61

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report continued

Reaching

Net Zero

Our ambition:

Spectris operations

Net Zero by 2030

(scope 1 and 2 emissions)

Our value chain

Net Zero by 2040

(scope 3 emissions)

Our Net Zero commitment is ambitious and is

supported by our targets which are validated by

the Science Based Targets initiative against a

1.5°C warming scenario. We have made

meaningful progress towards our ambition,

reflected in our A- CDP scoreawarded in 2023.

Our roadmap

Since setting our Net Zero ambition in 2021, the Group has

focused on identifying and implementing emissions and

energy-saving initiatives in our operations, guided by the

Schneider Electric-led emissions and energy efficiency

assessments completed in 2022. Our approach is clearly

detailed in our Roadmap to Net Zero, with nominated leaders

within each of the businesses responsible for introducing

initiatives aligned to their bespoke roadmaps. In scopes 1 and 2,

energy efficiency measures have been introduced at many of

our manufacturing sites, supported by the installation of on-site

solar generation. Meanwhile, on scope 3, we have focused on

building supplier engagement through the use of EcoVadis, as

well as developing our approach to product sustainability

through life cycle assessments. We have committed a

minimum of £3 million per annum to fund our ambition,

spending £3.2 million in 2023.

In 2023, initiatives introduced across our largest global

manufacturing sites have enabled a 27% like-for-like reduction

in scope 1 and 2 (market-based) emissions since 2022. The

case study on the following page highlights some of the key

successes towards achieving this reduction from across the

Group. In 2023 we also took steps to improve the quality of

data used for tracking electricity and natural gas consumption

through the commencement of the installation of real-time

energy monitoring leading to emissions reductions through

more granular energy management.

Key activity in 2023

• Solar generation capacity installed at Malvern, Royston and

Crowborough

• HBK’s Darmstadt and Suzhou achieved 11.2% year-on-year savings

in energy consumption largely through optimisation and upgrade

of HVAC

• Installation of real-time energy monitoring at Almelo and

Eindhoven

• Installation of intelligent lighting and LED at Eindhoven, Almelo

and Crowborough

• PMS has now transitioned 38% of its fleet to electric and hybrid

Planned activity for 2024

• Continued roll-out of renewable energy generation at key

manufacturing sites, including Darmstadt, Marlborough, Almelo,

and Malvern

• Continued roll-out of real-time energy monitoring at key

manufacturing sites

• Expansion of electric vehicle and hybrid vehicle use in line with our

EV100 commitment

In 2023, we have continued to focus on progressing supply

chain and product sustainability as the two key levers of our

scope 3 roadmap across the Group.

For supply chain, our partnership with EcoVadis has enabled

us to capture actual emissions data from suppliers. In 2022,

webegan this work in Malvern Panalytical, which has now

captured 66.7% of its purchasing spend within the EcoVadis

supplier engagement programme (2022: 43.1%). In 2023, we

expanded the programme in HBK, which has now captured

24.2% of supplier spend. This data has supported the move

toa supplier-specific methodology for calculating supplier-

related emissions in our scope 3 reporting, as set out on

page64.

For product sustainability, Servomex has completed the

design of a sustainable product taxonomy with the support of

Finch and Beak, the results of which have been used to inform

Servomex’s product roadmap. The results have also been

incorporated into our scope 3 emissions reporting with the

support of EcoAct, to allow us to move some of our reporting

to the supplier-specific method, the most accurate method of

reporting. In 2023, the approach has now been expanded to

PMS, which has designed its own sustainable product

taxonomy with Finch and Beak for two representative

products: Airnet II, and Chem 20.

Planned activity for 2024

• Expand EcoVadis programme to PMS and Servomex

• Commence a supplier engagement programme with key suppliers

based on the outcome of the EcoVadis programme

• Expand product lifecycle assessments across the remainder of the

Group

• Completion of zero-waste-to-landfill audits at key sites

cope 1 and 2 – Our Roadmap

00%

% 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

efﬁciency/

employee

engagement

cope 3 – Our Roadmap

22%

26%

100%

Where we

are now

(2020)

43%

0% Net Zero

00%

Supply chain

engagement

plus product

circularity

Air-freight

reduction

Business

travel policy

Neutralisation

External

inﬂuence

Waste

reduction

Product

efﬁciency

10k

20k

30k

40k

50k

Reaching Net Zero

100% 44%

25%

13%

18%

Baseline Divestments

and

Adjustments

RemainingPlanned

Savings

Achieved

to date

Read our full

Net Zero roadmap

www.spectris.com/assets/

Uploads/Documents/

Roadmap-to-Net-Zero/

Roadmap-to-Net-Zero.pdf

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Sustainability continuedSustainability continuedSustainability Report continued

In 2023, we have seen progress across our

businesses as Net Zero has increasingly

become embedded into our operations and

culture. This has included implementing

some of the outcomes of the Schneider

Electric energy and emissions efficiency

assessments. The adjacent case study

presents some of the main highlights from

2023 from each of our businesses, focusing

on the successes at some of our key

manufacturing sites. In 2024, we will be

continuing to build on the success of 2023,

guided by the development of our Net Zero

Transition Plan, and sharing learnings across

the Group as we transition to Net Zero.

HBK

Darmstadt and Suzhou, representing 56.8%

of HBK's total 2023 carbon emissions, both

have local energy management teams

working with the site lead and Net Zero

focal point to create and implement a raft of

energy-saving ideas. These ideas include

changing lightbulbs for LED and motion-

sensing replacements, and upgrading

air-conditioning units, to adjusting

production processes involving ovens for

heating to optimise energy use whilst

maintaining, and enhancing, product

quality. In 2023, Darmstadt was awarded

‘Site Energy Saver Of the Year’ at HBK due to

achieving the largest reduction in emissions

of all of HBK’s sites in the previous year.

Suzhou has also managed to reduce its

electricity and steam consumption by 10%

year-on-year. HBK has saved around

£0.3million at Darmstadt and Suzhou

compared to 2022 through these initiatives.

“The site-based teams at HBK are

making a huge difference to our

energy consumption and CO

emissions – it's a real honour to

guide and support them.”

Lawrence Grasty

Director – Net Zero, HBK

Servomex

In 2023, our Crowborough site made

significant improvements in energy efficiency

through the installation of a new high

efficiency cleanroom HVAC, expected to

save3% of its electricity consumption per year,

and the installation of LED lighting (expected

to save 3.5% of electricity consumption per

year). In addition, they have installed solar

panels on the roof which is estimated to

provide 15% of the site’s electricity demand.

This progress has helped it towards achieving

an EcoVadis gold award for the second year

running, and being shortlisted for two awards

at the Energies Industries Council 2023

National Awards Dinner.

Particle Measuring Systems

PMS has been powered by 100% renewable

electricity since 2022, and has successfully

transitioned more than one-third of its fleet to

electric and hybrid vehicles. The team in

Boulder has reduced waste generated in

operations by 40% year-on-year driven by

better measurement and monitoring of

waste and identifying recycling opportunities.

In 2023, PMS also made progress in

developing sustainable packaging for their

products, including eliminating unnecessary

packaging and using recycled materials

where possible.

Malvern Panalytical

In 2023 Malvern Panalytical have worked

to embed multidisciplinary approaches

further into its approach to sustainability.

Teams across R&D, facilities, HR, finance,

and IT came together to hold kaizens to

identify sustainability solutions at Almelo

and Eindhoven for reducing scope 1, 2 and

3 emissions against the Group's Net Zero

ambition. The kaizens led to around 90

projects being identified ranging from

LED and intelligent lighting installations to

IT waste reduction initiatives. The projects

are now being distributed to different

teams and the work so far has contributed

to a 17.1% reduction in energy consumed at

Almelo in 2023.

Estimated annual future savings made

by HBK

£0.3 million

through energy-saving initiatives at

Darmstadt and Suzhou

Red Lion Controls

Red Lion Controls led a literature reduction

project to reduce the number of pages

included in its product boxes, which will

also help their customers to reduce their

own waste. Thanks to the expertise of the

working groups at Red Lion Controls,

spanning the regulatory, product,

management, engineering, legal and

technical documentation teams, it was

able to reduce the number of pages

included in product boxes by over 90%,

saving 1.3 million printed sheets of paper

per year.

Case study

% of suppliers by spend captured by

Malvern Panalytical in EcoVadis

66.7%

Year-on-year energy savings achieved at

HBK Darmstadt and Suzhou

11.2%

Net Zero success from around the Group

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 63

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report continued

Environmental

reporting

We are committed to transparent reporting of our carbon footprint

and our transition towards Net Zero.

Restatement of comparative

environmental data

Comparative data disclosed on page 65 has

been restated to reflect the following

changes:

• Removal of data relating to the divestments

of Concept Life Sciences which took place

on 31 March 2023, and addition of data

relating to the acquisitions of MicroStrain

and EMS which took place during

September 2023 and October 2023, to

support a fair comparison of the Group’s

in-year environmental performance. This

approach, in line with Greenhouse Gas

Protocol (GHG Protocol) guidelines and

consistent with reporting in 2020, will be

followed for all future material acquisitions

and divestments

• Replacing estimated data with actual data

where available for prior years

Scope 1 emissions

Scope 1 emissions have decreased by 5.4% on

a like-for-like basis during 2023. This is

primarily due to energy efficiency activities

across a number of our manufacturing sites,

including at Boulder, Almelo and Eindhoven.

Scope 2 emissions

Market-based scope 2 emissions have

decreased during 2023 by 35.3% like-for-like.

This has been primarily driven by the green

electricity secured at Suzhou. Energy

efficiency improvements across our

manufacturing sites have also contributed to

reducing our emissions from electricity and

steam. HBK in particular has achieved

significant emissions savings by increasing

the efficiency of steam and district heating

used at Darmstadt, Suzhou, and Virum.

Scope 3 emissions

This is the third year of reporting against all

relevant scope 3 categories, which in 2023 has

included category 15 (Investments) for the

first time as it is now considered material

following the investment in LumaCyte

in2023.

In 2023, we further improved scope 3 data

quality by accelerating our move away from

aspend-based methodology to one that

usessupplier-specific emissions data, by

introducing more primary data for our

calculations of categories 1, 2, 11 and 12.

For our suppliers, we have used EcoVadis to

collect primary carbon emissions data which

is being used to calculate categories 1 and 2.

As of 2023, Malvern Panalytical has captured

66.7% of supplier spend in EcoVadis, and HBK

has captured 24.2% of supplier spend in

EcoVadis. EcoVadis use will be expanded to

PMS and Servomex in 2024.

For our products, Servomex and PMS have

developed life cycle assessments of their

product portfolios, with Servomex's results

now being incorporated into our calculations

of categories 11 and 12. The life cycle

assessments undertaken to date have

enabled the identification of emissions and

energy-saving opportunities through product

design and supplier engagement. This

approach will be expanded to Malvern

Panalytical and HBK in 2024.

Geopolitical challenges affected our ability to

move goods by ocean rather than air, whilst

business travel has continued to shift to

pre-pandemic levels, affecting our emissions

performance for logistics and business travel.

Streamlined Energy and Carbon Reporting

(SECR)

This is our fourth year of reporting in

compliance with the SECR regulations which

are designed to increase awareness of energy

costs and provide data to inform the adoption

of energy efficiency measures. In 2023, 3.8%

of our scope 1 and 2 (market-based) emissions

were generated in the UK.

Environmental performance summary (absolute)

Energy consumption

(MWh)

Energy efficiency

(MWh per £m revenue)

70,878 48.9

(2022: 77,194)

(2020: 123,205)

(2022: 58.2)

(2020: 92.2)

Greenhouse gas emissions

(tonnes CO

Total carbon emissions

(tonnes CO

e per £m revenue)

12,144 8.4

(2022: 17,546)

(2020: 43,111)

(2022: 13.2)

(2020: 32.3)

1. Numbers stated reflect in-year reported emissions to measure the evolution of the energy efficiency of the

Group, including the impact of portfolio changes on our efficiency.

2. Scope 1 and 2 (market-based) absolute emissions.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Sustainability Report continued

*Data assurance and methodology

Deloitte has provided independent third-party limited assurance in accordance with the International

Standard for Assurance Engagements 3000 (ISAE 3000) and Assurance Engagements on Greenhouse

Gas Statements (ISAE 3410) issued by the International Auditing and Assurance Standards Board (IAASB)

over selected metrics, identified with *, within Spectris’ energy consumption and greenhouse gas (GHG)

emission disclosure. Deloitte’s full unqualified assurance opinion, which includes details of the metrics

assured, can be found at www.spectris.com/environment

Energy consumption (like-for-like)

3,4

Unit of measurement – MWh Change 2023 2022

Base year

2020

Electricity -5.5% 38,389.4 40,639.6 39,268.5

– of which renewable 16.9% 22,596.9 19,323.8 2,966.0

Natural gas 1.7% 5,503.3 5,408.9 6,049.7

Fuel oil -0.4% 17.7 17.8 28.4

Steam and other imported energy -12.3% 13,047.5 14,879.8 13,930.2

Other fuels -18.5% 288.8 354.3 64.4

Vehicle energy -0.8% 13,630.9 13 ,744.5 18,165.9

Total energy* -5.6% 70,877.6 75,044.8 77, 507.1

– of which UK* -25.7% 6,101.5 8,212.4 5,761.7

3. All like-for-like numbers have been restated to reflect the divestment of Concept Life Sciences, and the

acquisitions of EMS and MicroStrain during the year.

4. 11% of scope 1 & 2 (location-based) emissions and 11% of total energy data has been accrued or estimated as per

the methodology detailed in the basis of reporting document available at www.spectris.com/environment.

Greenhouse gas emissions (tonnes CO

e) (like-for-like)3

Unit of measurement – tonnes CO

e Change 2023 2022

Base year

2020

Scope 1

-5.4% 4,373.6 4,623.2 6,393.5

Scope 2 – Location-based* -4.2% 16,103.8 16,814.0 17,832.0

Scope 2 – Market-based* -35.3% 7,770.5 12,011.1 17,413.4

Scope 1 & 2 (Location) total -4.5% 20,477.4 21,437.2 24,225.5

– of which UK -12.0% 1,144.6 1,300.9 1,391.5

Scope 1 & 2 (Market) total7 -27.0% 12,144.1 16,634.3 23,806.9

– of which UK -30.2% 461.1 660.7 1, 367.1

7. 11% of scope 1 & 2 (location-based) emissions and 11% of total energy data has been accrued or estimated as per

the methodology detailed in the basis of reporting document available at www.spectris.com/environment.

Scope 3

(like-for-like)

Change 2023 2022

Base year

2020

Category 1 – Purchased goods and services -21.1% 168,313.7 213,441.8 162,104.6

Category 2 – Capital goods (Included in Category 1)

Category 3 – Fuel & energy related activities*

-8.3% 1,759.3

1,917.8 2,159.4

Category 4 – Upstream transportation / distribution*

9,10

42.6% 22,243.9 15,595.5 20,822.9

Category 5 – Waste

139.2% 208.4 87.1 1,177.4

Category 6 – Business travel*

95.7% 9,707.3 4,959.9 3,565.6

Category 7 – Employee commuting 24.6% 12,369.4 9,924.0 11,093.3

Category 9 – Downstream transportation / distribution (Included in Category 4)

Category 11 – Use of sold products

-6.7% 246,422.3 263,984.7 210,613.2

Category 12 – End-of-life treatment 170.8% 140.5 51.9 50.0

Category 15 – Investments 0.9% 3,946.6 3,911.7 68.8

Total scope 3

-9.5% 465,111.4 513,874.3 411,655.1

Total gross emissions (Market-based) -10.0% 477,255.5 530,508.6 435,462.1

3. All like-for-like numbers have been restated to reflect the divestment of Concept Life Sciences, and the

acquisitions of EMS and MicroStrain during the year.

8. Scope 3 categories 8, 10, 13, 14 are not included as not relevant to the Group’s business model.

9. In 2022, Deloitte provided independent third-party limited assurance against scope 1 and 2 emissions and scope

3 (categories 3, 4 and 6). Those assured figures have been restated to reflect the divestment of CLS, and the

acquisitions of EMS and MicroStrain and have not been subject to further assurance in 2023.

10. Category 4 2022 emissions have been restated to reflect new data becoming available relating to our logistics.

Waste data (like-for-like)3

2023 2022

Base year

2020

Total waste captured (tonnes) 4,083.8 1,649.4 4,824.6

– of which landfill 249.7 122.4 3,4 47.9

Waste recycling rate

85.8% 78.9% 25.9%

Waste diversion rate

93.9% 92.6% 28.5%

3. All like-for-like numbers have been restated to reflect the divestment of CLS, and the acquisitions of EMS and

MicroStrain during the year.

5. Proportion of waste recycled, including that of composted organic matter.

6. Proportion of waste diverted from landfill via recycling, composting or incineration.

Environmental performance summary (absolute)

Indicator 2023

2022

Base year

2020

Energy consumption (absolute) (MWh) 70,877.6 7 7,194. 3 123,205.0

Energy efficiency (MWh per £m revenue) 48.9 58.2 92.2

Greenhouse gas emissions (tonnes CO

12,144.1 17, 5 46 .0 43,111.0

Total carbon emissions (tonnes CO

e per £m revenue)2 8.4 13.2 32.3

1. Numbers stated reflect in-year reported emissions, to measure the evolution of the energy efficiency of the

Group, including the impact of portfolio changes on our efficiency.

2. Scope 1 and 2 (market-based) emissions.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 65

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Reportcontinued

Taskforce on Climate-related

Financial Disclosures (TCFD)

Governance

We have undertaken a comprehensive

programme of work to support our considered

view of the risks and opportunities present in

climate change. We have set out below our

Climate-related Financial Disclosures consistent

with all of the TCFD recommendations and

recommended disclosures in compliance with

Listing Rule 9.8.6R.

Oversight of climate-related risks and opportunities

The Board oversees the delivery of the Group’s Strategy for

Sustainable Growth, a key priority of which is the

management of climate-related risks and opportunities.

Andrew Heath, Chief Executive, is the Executive Board

Director responsible for implementation and delivery of the

Group’s Strategy for Sustainable Growth and is supported in

this by the Head of Corporate Affairs and Company Secretary,

Rebecca Dunn, a member of the Group Executive Committee.

The Board is supported in the oversight of climate-related risks

and opportunities by Alison Henwood who is the designated

Non-executive Director with oversight of sustainability matters.

The Board Committee structure also includes groups

specifically formed to manage climate-related and wider

sustainability risks and opportunities.

A summary of the roles and responsibilities in relation to climate

change is set out in the diagram on page 67.

During 2023, the Board and the Committees of the Board

received updates at five scheduled meetings on the progress

of the Group’s adaption to climate change through the lenses

of strategy, acquisitions, budget, risk and the assurance of the

metrics utilised by the Group to monitor progress towards

NetZero. This included a deep-dive review of the Group’s

approach to the identification and mitigation of climate

change risk as part of an ongoing series of deep-dive reviews

of the Group’s Principal Risks.

Key activity during 2023

Strategy

The Board received its annual update on the progress of the

Group’s sustainability strategy.

Governance

The Board undertook a deep-dive review of climate change as

a Group Principal Risk, including a review of the quantitative

analysis on physical risks from the interactive physical

climate risk dashboard, and the findings of qualitative and

quantitative analysis on transition risks and opportunities.

Governance

The Board met with sustainability experts from Goldman

Sachs to discuss climate and sustainability trends in the

context of increasing regulatory and investor requirements.

Governance

The Executive Committee received a monthly report on the

progress of the Group’s sustainability strategy, including

updates on climate risk and opportunity and the Group’s

progress towards Net Zero. A summary update of progress

was also regularly provided to the Board.

Strategy

The Executive Committee approved capital and operational

expenditure plans for 2024 to progress the Group’s Net Zero

ambition, including installation of solar panels at Malvern,

Royston, and Crowborough.

Governance

The Audit and Risk Committee reviewed the findings of the

second limited assurance engagement performed by Deloitte

over selected environmental data included in the 2022 Annual

Report and Accounts against International Standard on

Assurance Engagements (ISAE) 3000.

Governance

The remit of the Nomination and Governance Committee

was updated to include oversight of the Group’s response

to ESG regulation, and the Committee received updates on

regulatory developments in 2023.

Governance

The Board undertook a site tour of the Almelo facility, which

included a review of local energy efficiency activities.

Governance

The Nomination and Governance Committee reviewed the

efficacy of the non-executive oversight role undertaken by

Alison Henwood and agreed that the role continued to provide

effective additional support to the Board’s understanding and

oversight of the Group’s approach to sustainability.

Feb

May

Jun

Jul

Oct

Nov

Dec

Governance

At every scheduled meeting, the Executive Risk Committee

reviewed progress against the Group’s action plans to

minimise the Group’s exposure to physical and transition risks.

Management

The Head of Sustainability oversaw the development of

a sustainable product impact taxonomy at Servomex for

integrating sustainability design criteria into R&D.

Strategy

The Group worked with PwC to devise and launch a physical

climate risk dashboard for the Group’s material sites with

ongoing use overseen by the Business Audit and Risk

Committees.

Strategy

The Head of Corporate Affairs and Head of Sustainability

attended several site visits, which included attending kaizens

at key manufacturing sites in the Netherlands to identify

energy-saving opportunities.

Strategy

The Head of Sustainability coordinated global working

groups to assess transition risks and opportunities

focused on logistics, raw materials and product.

Risk management

A new cross-functional ESG Regulatory Steering Group was

formed by the Head of Corporate Affairs to monitor emerging

ESG regulations relevant to the Group.

Through-

out 2023

1. The climate-related financial disclosures made by Spectris Group plc

comply with the requirements of the Companies Act 2006 as amended

by the Companies (Strategic Report) (Climate-related Financial

Disclosure) Regulations 2022.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202366

Sustainability Report: TCFDcontinued

Ownership and control

Oversight

and independent

assurance

Planned activity in 2024Oversight

Board

level

Executive

level

Board

• Oversee the development of the Group’s Net Zero Transition

Plan

• Deep-dive reviews on the progress on the Group’s product

sustainability workstreams and sustainable freight

workstreams

Board

Responsible for setting the Group’s strategy for mitigating the risks and

delivering on the opportunities presented by climate change.

Audit and Risk Committee

• Oversee the Group’s reporting of climate risk and the

approach to the inclusion of financial data.

• Oversee the Group’s approach to the implementation of

the Corporate Sustainability Reporting Directive

Audit and Risk Committee

Comprised of independent Non-executive Directors and oversees the

identification, assessment, management, and reporting of risks, including

climate-related risks.

Executive Risk Committee

Reviews effectiveness of existing risk management strategies

and processes in relation to individual Group Principal Risks

and the cumulative risk profile of the Group, and reviews

outputs from the Business Audit and Risk Committees.

Remuneration Committee

• Review progress of LTIP measures relating to the Group’s Net

Zero strategy and setting a new target for the 2024 LTIP to

support the Group’s Net Zero ambition

Remuneration Committee

Comprised of independent Non-executive Directors and

oversees the Group’s Remuneration Policy to ensure that

metrics and targets align with our Strategy and Purpose and

wider stakeholder interests.

Business Audit and Risk Committees

Operating in each Division, formed of a broad set

of internal stakeholders to provide their expertise

and perspectives on business risks, including

climate risks. The Committees identify and report

local risks each quarter which are assessed by a

designated risk owner. The risk owner implements

actions as appropriate and reviews the progress of

these actions each quarter. The outputs of the

Committee are reported to the Executive Risk

Committee.

Nomination and Governance Committee

• Consider the emerging legislative and regulatory

environment regarding climate change and wider

sustainability issues

• Review the optimal approach to ensuring the Board has

sufficient oversight of the Group's sustainability agenda

Nomination and Governance Committee

Comprised of independent Non-executive Directors and

reviews the governance mechanisms in place to support the

Board’s effective oversight of sustainability risks, including

climate-related risks and emerging regulation.

Sustainability Steering Group

A sub-committee of the Executive Committee, comprising

leaders from across the Group providing governance,

strategic leadership and execution support to the Group’s

management of climate risk, reporting to the Board and

Executive Committee monthly. It leads identifying

Group-level climate risks by keeping up to date with

external developments, supported by inputs from both

internal and external experts.

Executive Committee

• Oversee the outcomes identified based on the

transition risk and opportunity workstream, including

the Net Zero Transition Plan

Executive Risk Committee

• Oversee the risks identified in the physical climate risk

dashboard

• Implement risk management initiatives based on the

transition risk and opportunity analysis completed in 2023

Business Audit and Risk Committees

• Review of physical risk mapping of owned sites using the

interactive physical climate risk dashboard

• Identification and management of climate-related risks

Sustainability Steering Group

• Develop the Group’s Net Zero Transition Plan

• Oversee progress in developing product life cycle

assessments (LCAs) and assessing supply chain emissions

• Oversee a feasibility study into the implementation of an

internal carbon price

• Facilitate global progress towards the Group's Net Zero

ambition

Executive Committee

Supports the Chief Executive in devising and executing the

Group’s strategy on climate change and determining the

relevant budgets.

Management

level

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Sustainability Report: TCFDcontinued

In 2023, we have applied quantitative and

qualitative methodologies to develop our

understanding of our exposure to physical and

transition risks and opportunities and reassessed

the key strategic implications for the Group.

This year, we have increased the granularity of our climate

scenario analysis within each Division, including site-level

physical risk assessments and Division-level transition risk

andopportunity analysis, with the key findings described in

this disclosure. A summary table of identified physical

andtransitionrisks and opportunities is set out on pages 72

and 73.

Physical risks

In our 2021 TCFD disclosure, we first reported on physical

risksat material sites. This work helped the Group to identify

which physical risks could impact our sites. In 2023, we have

built an interactive physical climate risk dashboard on the

Jupiter Intelligence platform to better understand and

monitor these risks at site level aligned to the latest climate

projections. The dashboard gives site-specific information

onlong-term (up to 2050) exposure to acute (wildfires,

precipitation, thunderstorms, flooding), and chronic (extreme

heat, drought) climate risks under three climate change

scenarios, as well as potential financial losses.

The scenarios used are produced by the Intergovernmental

Panel on Climate Change (IPCC) and represent three possible

futures dictated by different levels of global warming,

described in the adjacent table.

These scenarios have been selected because they represent

leading public data sources on future climate change, are

widely used by governments, academia and companies and

are a key recommended public source of scenario data by the

TCFD. The range of scenarios represents a suitable breadth of

possible future outcomes to allow the comparability of effects

of scenarios on physical risk at the site level.

Climate Strategy

Impacts

We have quantified the inherent financial magnitude of

potential physical impacts associated with flooding, heat,

wind and wildfires driven by damage, disruption, and

heat-related productivity loss.

Flooding: Under a >4°C (SSP5-8.5) scenario average

annualised loss risk per year increases by 16% from 2020 (~£14

million) by 2050 (~£16 million). HBK Suzhou, and MP Zhuhai

are most at risk from flooding impacts due to their proximity

to the coast, and exposure to tropical storms and precipitation

which could lead to flash flooding. For these sites, the

estimated increase in risk of a 1-in-50 year flood event is 10%.

Heat: Several sites are exposed to an increasing number of

days exceeding 35°C, and this is most pronounced for MP

Zhuhai, HBK Suzhou and HBK Porto. In a >4°C scenario

(SSP5-8.5), by 2050, MP Zhuhai, HBK Suzhou and HBK Porto

would see a >30% increase in number of days exceeding 35°C.

In the very unlikely scenario that cooling systems should not

be functioning, the temperature rise could lead to productivity

losses of on average ~£14 million per year by 2050 under a

>4°C scenario.

The scenario analysis has indicated minimal difference in

financial impact between a <2°C (SSP1-2.6) scenario and a

2-3°C (SSP2-4.5) scenario and the greatest change in impact

comes in a >4°C scenario (SSP5-8.5). Across all scenarios, there

is minimal change between the short- and medium-term,

with the greatest effects occurring in the long-term (by 2050).

The potential costs that could be incurred under a >4°C

scenario are also not considered to be material due to our

decentralised operating structure allowing for flexibility in site

configuration over the medium- and long- term preventing

possible long-term financial impacts. Mitigating actions are

also widely understood and already being taken; for example,

in 2023, key sites have focused on installation of solar energy

to reduce exposure to potential energy price shocks and

power outages caused by excess cooling demand with

increasing high heat days; see page 72 for more detail.

The interactive physical climate risk dashboard has now been

adopted by each Business Audit and Risk Committee to

enable continuous monitoring of physical climate change risk,

with the ability to add new sites as needed. In 2024, we will

embed the dashboard into our M&A due diligence process.

Physical risk scenarios

Scenario

alignment

Warming

by 2100 Terminology definitions

SSP 5 – RCP 8.5 IPCC (CMIP-6) >4°C

‘Shared socioeconomic pathways’ (SSPs) are scenarios of projected

socioeconomic global changes up to 2100 to derive greenhouse gas

emissions with different climate policies.

‘Representative Concentration Pathways’ (RCP) are GHG

concentration trajectories describing possible climate futures driven

by the volumes of greenhouse gases emitted.

The IPCC’s ‘6th Coupled Model Intercomparison Project’ (CMIP-6) uses

models which incorporate significant scientific advances aligned with

the most recent IPCC report (AR6).

SSP 2 – RCP 4.5 IPCC (CMIP-6) 2-3°C

SSP 1 – RCP 2.6 IPCC (CMIP-6) <2°C

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Sustainability Report: TCFDcontinued

Climate hazard exposure at our main manufacturing sites

The results of the >4°C scenario (SSP5-8.5)

analysis can be seen in the figure on the

left. The >4ºC scenario is where the greatest

exposure to physical risks arises so this

scenario has been used to assess climate

hazard exposure at the Group's main

manufacturing sites. Each bubble

represents one manufacturing site, and the

size of the bubble indicates the relative

value of the site.

The analysis combines the results of all the

physical risk hazards assessed into two

main scores: a present day hazard score

(x-axis) and a 2020-2050 change score

(y-axis).

The results show that the majority of the

Group’s manufacturing sites included in the

analysis are subject to a relatively low level

of present and future climate-related

exposure e.g. Servomex UK, MP Malvern,

MP Eindhoven, HBK Virum.

Higher present day hazard scores and

2020-2050 change scores are largely driven

by exposure to flooding (HBK Suzhou, MP

Zhuhai) and heat (HBK Suzhou, MP Zhuhai,

HBK Porto). Flooding and heat have

therefore been identified as our greatest

potential risk exposures in terms of physical

risk due to climate change for the Group's

manufacturing sites.

Transition risks and opportunities

Following the work completed in 2021, this year we conducted

a more detailed assessment of transition risks and

opportunities incorporating both qualitative and quantitative

methodologies supported by consultancy ERM

(Environmental Resources Management). Risks and

opportunities relating to our products, input materials and

logistics were considered by global working groups across the

Divisions as the areas of greatest potential risk or opportunity.

Our 2022 disclosure recognised the potential for an increase in

operating costs due to government policy and regulation of

carbon, including carbon pricing and tax. This risk has now

been reviewed and understood in further detail in the context

of our products, input materials and logistics. The transition

risk scenarios applied are summarised on page 70.

Deep-dive: Input materials

The analysis identified the risk of increasing input material

costs leading to higher direct costs, driven by carbon pricing

impacts and demand for critical materials. In all scenarios, all

materials assessed were, to some extent, at risk from carbon

pricing. Steel and aluminium are the materials most exposed

to carbon pricing cost impacts, and are already subject to

carbon pricing schemes in some locations.

In all scenarios, demand for materials will also grow with the

Net Zero transition leading to cost impacts, which are

expected to be greatest up until 2030, aligned to the Group’s

medium-term time horizon. Our programme to increase

coverage of suppliers on EcoVadis, and our Net Zero roadmap,

will enable us to mitigate risks associated with climate-related

cost burdens from input materials.

Deep-dive: Logistics

The analysis identified the risk of increasing climate costs

within the logistics network. A financial impact was

considered possible through pass-through costs from

logistics providers associated with their own decarbonisation

costs and increasing carbon pricing burden for their owned

fleets. In all scenarios, a quantitative scenario analysis

demonstrated that the majority of the additional financial

impact is seen by 2030.

This cost profile is largely driven by supply side decarbonisation

costs for logistics increasing significantly out to 2030, with

technology maturity effects decreasing this cost burden post

2030. This could lead to increased logistics costs of around

50% over the next 5 to 6 years if no action is taken. To mitigate

this risk, the Group is already progressing to transition its

logistics network to lower carbon modes of transport, aligned

to our Net Zero roadmap.

Key

Present day hazard score

Measures the absolute potential hazard level according to the selected climate change

scenario (SSP5-8.5) by 2050 (long-term time horizon), based on potential exposure. A combined

score is used for all hazards analysed (flood, wind, heat, precipitation, cold, hail, drought and

wildfire), normalised between 1 and 100.

Each bubble represents a manufacturing site. The size

of the bubble indicates total site value, with HBK

Darmstadt representing the site with the highest

overall value.

2020-2050 change score

Measures the level of change in hazard score between 2020 and 2050 (long-term time horizon),

normalised between 1 and 100.

Relative risk

Low

Medium

High

Very high

2020 – 2050 change score

Present day hazard score

0 20

40 60 80 100 120

HBK Porto

MP Zhuhai

HBK Darmstadt

MP Eindhoven

Malvern

HBK

Suzhou

RLC Willow

Springs

MP Almelo

HBK Virum

VI-grade Udine

PMS Boulder

Servomex

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 69

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report: TCFDcontinued

Deep-dive: Products

The analysis identified the opportunity for further

development and repositioning of products within growing

customer markets benefiting from the Net Zero and energy

transition. The period up until 2030 is a key period for growth

for Net Zero-aligned technologies in all scenarios (medium-

term), particularly relating to electrification of vehicles and

battery storage. Other trends with strong alignment to the

Group’s products include carbon capture and hydrogen,

however both will require significant additional external policy

support or technological innovation before being scaled up,

even in the high ambition Net Zero scenario.

In responding to this opportunity, the results reinforce the

focus of the Group’s Strategy for Sustainable Growth and

demonstrate the opportunity for the Group to drive growth

inmarkets aligned to decarbonisation.

Strategic response

Whilst physical risks are not considered material in our direct

operations, transition risks and opportunities are likely to incur

increasing costs over time, particularly between now and

2030 if not subject to appropriate mitigation and adaption

activity. Our Net Zero roadmap provides our main mitigation

mechanism to transition risks and opportunities and applies

to all business operations; in 2023 we spent £3.2 million on

delivering this ambition. The ESG Regulatory Steering Group

was created to support our response to such risks. In 2023, this

included actions to review EU Carbon Border Adjustment

Mechanism (CBAM) implications. In 2024 the Group will

develop a Net Zero Transition Plan aligned to the Transition

Plan Taskforce (TPT) framework. This will include:

• Considering the implementation of an internal carbon

price, upon completion of a feasibility assessment at

Servomex in 2023

• Continued focus on product and supply chain sustainability

through product life cycle assessments and building

supplier engagement with EcoVadis

• Continuing to reduce reliance on air freight in our supply

chain where possible aligned to our target to reduce

airfreight (long and short haul) by 50% by 2030

A summary of the physical and transition risks and

opportunities identified to have the possibility of being

material, and the strategic response for each, are outlined in

the table on pages 72 and 73. Where we have assessed the

risk or opportunity under different climate scenarios, we have

indicated the scenarios applied. Whilst the scenario analysis

has shown that impacts from these risks and opportunities

could arise across all scenarios and time horizons, the scenario

and time horizons found to have the greatest potential

impacts are identified in the table. We will continue to assess

the benefit of conducting further scenario analysis on other

risks and opportunities.

Spend in 2023 to deliver our Net Zero ambition

£3.2 million

Transition risk scenarios

The scenarios used are produced by the International Energy Agency (IEA) and represent three possible future outcomes

relating to the energy transition. These scenarios have been selected because the IEA is highlighted by the TCFD as a leading

source for conducting climate scenario analysis on transition risks and opportunities, with IEA sources also being used widely

by governments, academics and industry. The scenarios selected represent a range of different policy outcomes, all of which

could lead to differing impacts on the Group.

Scenario

alignment

Warming

by 2100 Scenario descriptions

Current

policy (Low)

IEA WEO STEPS

(Stated Policies

Scenario)

~3ºC A scenario which reflects a ‘base case’ level of climate ambition, aligned with

‘current stated and implemented’ policies, such as the Paris Agreement,

whilst also taking into account manufacturing capacity for clean energy

technologies.

Medium

ambition

IEA WEO APS

(Announced

Pledges

Scenario)

<2ºC A scenario which reflects a ‘medium’ level of climate ambition aligned with

‘current stated and implemented’ policies in addition to pledges without

specific policy action, e.g. UK 2050 Net Zero targets. This scenario assumes

that national energy and climate targets made by governments are met in

full and on time.

High

ambition

IEA WEO NZE

(Net Zero Energy

Scenario)

NGFS Net Zero

scenario

<1.5ºC A scenario which reflects a ‘high’ level of climate ambition, aligned with the

global economy reaching Net Zero by 2050. This includes policies on top of

those included in the low and medium ambition scenarios. It requires a

transformation of the global energy system, clean energy investment and

innovation, and a rapid shift away from fossil fuels.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Customer:

International banana-growers

Sustainably boosting production

and productivity in agriculture

Malvern Panalytical Smart Return

Agriculture

Smart Return Agriculture is an innovative

solution that combines a Vis-NIR sensor and

acloud-based platform that uses artificial

intelligence to provide real-time predictive

measurements in the field for leaf nitrogen

levels, soils, disease, and fruit maturity.

Nitrogen Mapping uses the proven Trek

Product, for nitrogen analysis based on assay

analysis in the field.

Challenge

Nitrogen is a vital nutrient for plant growth,

but can also pose challenges for farmers and

the environment. Applying too much

nitrogen can lead to water pollution and

greenhouse gas emissions, while applying too

little can compromise crop yield and quality.

Solution

Smart Return Agriculture allows crop

producers to measure the nitrogen content

inplant leaves, and then generate a map

thatindicates the amount and location of

nitrogen fertilizer levels for each field. By

using advanced algorithms and data

analytics, Smart Return provides data to

make customised recommendations for the

optimal amount, timing, and frequency of

nitrogen applications. It also monitors crop

health and performance throughout the

growing season and alert crop producers to

any potential risks enabling producers to

reduce their costs, improve their income,

andminimise their environmental impact.

Our work with one of our banana growers

over the last two years has shown that they

can save at least 20 to 30% on nitrogen

fertilizer by using Smart Return Agriculture for

real-time monitoring which allows them to

make frequent adjustments to their fertilizer

application plans.

The market and potential for Smart Return

Agriculture is vast and promising. Smart

Return Agriculture is currently geared toward

high value crop applications, such as cereals,

oilseeds, pulses, fruits and vegetables, and

can target any crop.

The main drivers for the potential

growthofSmart Return Agriculture are the

increasing demand for high-quality crops,

therising adoption of precision agriculture

practices, and the growing awareness of

environmental issues.

Benefits

Smart Return Agriculture leverages its unique

features and benefits to capture a significant

share of the high value crop market and

differentiate itself from competitors by

expanding its potential through integration

with other digital platforms and services,

enhancing its value proposition. Smart Return

Agriculture creates a loyal customer base by

providing consistent and reliable results,

enabling long-term relationships with the

crop producers.

Smart Return Agriculture is also enhancing

the sustainability of farming practices, by

minimizing greenhouse gas emissions and

water pollution associated with excessive

nitrogen use, therefore contributing to the

global goals of food security, climate action,

and environmental protection.

Case Study

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Sustainability Report: TCFDcontinued

Risk or

opportunity

Risk description and

potential financial impact

Methodology*

Scenarios

considered

Main

scenario

Main scenario

time horizon

Strategic response

Physical risk:

Acute

PR1

Flooding at our sites could lead to water

damage to sites or equipment, interruption

to business due to travel disruption, and

capital expenditure required to increase

resilience of sites. Estimated financial

impact from flooding is <1% of operating

profit per year up until 2050.

Quantitative analysis of

estimated financial losses

due to damage and

disruption using financial

input data and scenario

data with support by PwC

and Jupiter Intelligence.

<2ºC SSP1-2.6

2-3ºC SSP2-4.5

>4ºC SSP5-8.5

>4ºC SSP5-8.5 Medium-term

• Local review of flood defence initiatives

• Introduction of interactive physical climate risk dashboard at

sites to enable effective monitoring of physical climate risks

• In 2024, we will include the results of the climate modelling

into our standard M&A processes

Physical risk:

Chronic

PR2

Extreme heat can reduce worker

productivity or impact the performance of

machinery without proper cooling

equipment. Increased capital expenditure

may be necessary to account for increasing

high temperature (>35

C) days. Estimated

financial impact from heat is <1% of operating

profit per year up until 2050.

Quantitative analysis of

estimated financial losses

due to productivity losses,

using data from Jupiter

Intelligence.

<2ºC SSP1-2.6

2-3ºC SSP2-4.5

>4ºC SSP5-8.5

>4ºC SSP5-8.5 Long-term

• Review of current HVAC capacity and building insulation

capabilities

• Installation of onsite-renewables generation to increase

resilience to demand-side shocks on the grid from extreme

heat

• Introduction of interactive physical climate risk dashboard at

sites to enable effective monitoring and management of

physical climate risks

• In 2024, we will include the results of the climate modelling

into our standard M&A processes

Opportunity:

Products and

services

Development of products within growing

‘low carbon’ customer markets such as the

electrification of vehicles and battery

storage, in particular for Spectris Dynamics.

Qualitative analysis based

on product groupings

compared to Net Zero

trends identified in each

climate scenario.

~3ºC IEA STEPS

<2ºC IEA APS

<1.5ºC IEA NZE

<1.5ºC IEA NZE Medium-term

• Continued focus on Net Zero-aligned markets, in particular

relating to transformation of mobility for Spectris Dynamics

Opportunity:

Products and

services

Increasing demand for products that help

customers reduce the emissions and energy

intensity of their own production processes

leading to higher revenues through

demand for lower-emission products

andservices.

Scenario agnostic

qualitative assessment of

potential impact and

likelihood.

Scenarios have not yet been

considered for this opportunity

assessment

Medium-term

• Continued rollout of product impact life cycle assessments

(LCA) to embed sustainability criteria into R&D decision-

making, currently underway at Servomex and PMS

• Targets to be Net Zero in scopes 1 and 2 by 2030, and by

scope 3 in 2040, with a commitment to spend £3 million per

annum towards our Net Zero ambition

Transition risk:

Market

TR1

Increasing input material costs driven by

increasing impacts of carbon pricing (e.g. on

materials such as steel and aluminium

linked to CBAM) and increasing demand for

materials directly linked to the Net Zero

transition (e.g. lithium), leading to an

increase in operational expenditure.

Qualitative analysis based

on known purchased input

materials compared to

carbon pricing and

demand impacts in each

climate scenario.

~3ºC IEA STEPS

<2ºC IEA APS

<1.5ºC IEA NZE

<1.5ºC IEA NZE Medium-term

• Use of EcoFact to provide ongoing overview of changes in

global sustainability legislation and regulation

• ESG Regulatory Steering Group will continue to oversee

emerging regulations relating to carbon pricing e.g. the EU’s

Carbon Border Adjustment Mechanism (CBAM)

• Feasibility review of implementing an internal carbon price

Key

Short-term – 5 years (aligned to the 2023 Viability Statement)

Medium-term – to 2030 (aligned to Group 2030 Net Zero target and Science Based Targets)

Long-term – to 2050 (aligned to the Paris Climate Change Agreement)

* Note on methodology: We have undertaken quantitative and qualitative analysis using climate change scenarios for risks

and opportunities where; (1) data availability is sufficient; and (2) potential magnitude or likelihood deems further analysis

appropriate. For the remaining risks and opportunities, a scenario agnostic methodology has been applied.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Sustainability Report: TCFDcontinued

Risk or

opportunity

Risk description and

potential financial impact

Methodology*

Scenarios

considered

Main

scenario

Main scenario

time horizon

Strategic response

Transition risk:

Market

TR2

Reduced customer demand for ‘higher

carbon’ products, particularly in a low-

carbon scenario, driven by customer choice

and regulatory pressure.

Scenario agnostic

qualitative assessment of

potential impact and

likelihood.

Scenarios have not yet been

considered for this risk

assessment

Medium-term

• Continued rollout of product impact life cycle assessments

(LCA) to embed sustainability criteria into R&D decision-

making, currently underway at Servomex and PMS

• Targets to reach Net Zero across scopes 1 and 2 by 2030, and

scope 3 by 2040, with a commitment to spend a minimum

of £3 million per annum towards our Net Zero ambition

Transition risk:

Technology

TR3

Required investment to decarbonise direct

operations leading to an increase in capital

expenditure.

Scenario agnostic

qualitative assessment of

potential impact and

likelihood.

Scenarios have not yet been

considered for this risk

assessment

Short-term

• Targets to reach Net Zero across scope 1 and 2 by 2030 and

across scope 3 by 2040

• Net Zero Transition Plan to be developed in 2024 aligned to

the Transition Plan Taskforce (TPT) Framework

Transition risk:

Technology

TR4

Required investment to decarbonise

logistics network and transition towards

‘lower carbon’ modes of transport, for

example through the expansion of the

EU-ETS into shipping. Logistics costs for

Spectris could increase by up to 50% in a

1.5

C scenario as logistics partners invest in

decarbonisation and are impacted by

carbon pricing mechanisms. Quantitative

analysis was conducted for Malvern

Panalytical only, so a Group-level financial

impact is not available.

Quantitative analysis

considering current

logistics costs and carbon

pricing and pass-through

costs in climate scenarios.

~3ºC IEA STEPS

<2ºC IEA APS

<1.5ºC IEA NZE

<1.5ºC IEA NZE Medium-term

• Continuing our progress to reduce airfreight (long and short

haul) by 50% by 2030, see more on page 76

Opportunity:

Technology

Use of lower emission sources of energy

andswitching to renewable energy sources

in operations leading to lower operating

costs, increase energy security, and reduced

exposure to energy taxes. Projected

impactis < 1% operating profit per year

upuntil 2050.

Scenario agnostic

qualitative assessment of

potential impact and

likelihood.

Scenarios have not yet been

considered for this opportunity

assessment

Short-term

• Installation of renewable electricity generation at Malvern,

Royston and Crowborough in 2023

• Introduction of energy saving measures at key sites

• Targets to reach Net Zero across scope 1 and 2 by 2030 and

across scope 3 by 2040

• Net Zero Transition Plan to be developed in 2024 aligned to

the TPT Framework

Key

Short-term – 5 years (aligned to the 2023 Viability Statement)

Medium-term – to 2030 (aligned to Group 2030 Net Zero target and Science Based Targets)

Long-term – to 2050 (aligned to the Paris Climate Change Agreement)

* Note on methodology: We have undertaken quantitative and qualitative analysis using climate change scenarios for risks

and opportunities where; (1) data availability is sufficient; and (2) potential magnitude or likelihood deems further analysis

appropriate. For the remaining risks and opportunities, a scenario agnostic methodology has been applied.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 73

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report: TCFDcontinued

Resilience and Risk Management

The scenario analysis we have undertaken shows

that without any action, climate change will

impact our businesses to a varying degree in

terms of both transition and physical factors. Up

to 2030, our most significant risks are likely to be

transition risks driven by increasing costs over

time. These risks can vary significantly depending

on the nature and speed at which countries act

to align to a Paris Agreement trajectory and the

subsequent development of Net Zero-aligned

markets and technologies.

Resilience

Physical risks, which have limited impacts today, will present a

growing challenge beyond 2030 as warming of the planet

continues, particularly in a >4

C scenario. However, our

decentralised operating structure allows for flexibility in site

configuration over the medium- and long-term, preventing

possible long-term financial impacts. Mitigating actions

already in place also do not make these risks material to our

operations. The addition of the interactive physical climate risk

dashboard empowers our sites to incorporate climate

resilience into their own operational decision-making.

By delivering on our Net Zero roadmap, we can mitigate many

of the transition risks we face due to climate change. Our

roadmap has been incorporated into our financial planning,

which includes our commitment to spend £3 million per

annum towards our Net Zero ambition. This will be further

supported through the development of our Net Zero

Transition Plan in 2024. Our focus on product and supply chain

sustainability in 2023 and into 2024 will help to foster greater

resilience to many of the transition risks identified as well as

helping us to harness relevant opportunities. Read more

about our Net Zero roadmap on page 62.

We are committed to working closely with all our stakeholders

in taking action to combat climate change. Our focus on

innovation and strong relationships with customers

andsuppliers will support our swift response to changing

priorities to mitigate the risks present in the transition to a

lowcarbon economy.

The challenges that we face on climate change are matched

and potentially outpaced by opportunity. We recognise that

the greatest difference we can make to a Net Zero world

isthrough our products and solutions which support

ourcustomers to make the world cleaner, healthier and

moreproductive.

Read more about our Strategy to maximise this opportunity

on pages 22 and 23

Risk management

Our approach to identifying, assessing and managing the

risks in our business is set out in the Principal Risks and

uncertainties section on page 48. In 2021, climate change was

designated a Group Principal Risk for the first time as a result

of the scenario analysis undertaken to implement TCFD.

Risks are identified on an ongoing basis throughout the year.

They are assessed and reported on a quarterly basis at a

business level, via individual Business Risk Registers,

maintained by Business Audit and Risk Committees, and

viathe Group Principal Risk Register at Group level.

The climate change Group Principal Risk is under the

executive ownership of the Head of Corporate Affairs and

Company Secretary and is underpinned by a series of controls

and actions designed to mitigate risks from climate change

which are aligned to our Net Zero roadmap. As a Group

Principal Risk, key indicators and mitigation strategies relevant

to climate change are reviewed three times a year by the

Executive Risk Committee.

During 2023, the Executive Risk Committee has reviewed

theprogress against our Net Zero targets, alongside planned

mitigation activity for the Group’s other Principal Risks to

ensure that our action plan is proportionate to the short-,

medium- and long-term risk posed by climate change.

In 2023, focus has been on building a more detailed and

quantified understanding of the impacts of transition risks,

considering longer time horizons than our typical risk

management processes, up to 2050. Division-level working

groups were established who are now focused on

determining key mitigating actions to addressing the

resultsof the climate scenario analysis.

To support these efforts, in 2023, the ESG Regulatory Steering

Group was established to aid our response to emerging

regulations and use of the EcoFact database to support early

understanding of the materiality of regulatory and reporting

changes to the Group.

At Division level, each Business Audit and Risk Committee

added relevant physical risks to their risk registers, informed

by the physical climate risk dashboard which uses the latest

climate projections to assess the materiality of physical

climate risks at our sites up to 2050; this provides an accurate

assessment of the risk currently posed by climate change to

the Group. Any changes in risk profile are considered by the

Sustainability Steering Group and material changes will then

be escalated to the Executive Risk Committee.

In 2024, further planned risk management activity includes

developing our Net Zero Transition Plan aligned to the

Transition Plan Taskforce (TPT) framework.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

Sustainability Report: TCFDcontinued

Metrics and Targets

In 2023, we continued to progress against the

metrics and targets set to support our Net Zero

ambition and aligned to our Strategy for

Sustainable Growth. We will continue to review

the metrics and targets set to ensure their

effectiveness at providing our businesses and

ourstakeholders with meaningful indicators of

our progress, as well as addressing material risks

and opportunities identified.

We have set a clear ambition to reach Net Zero across our

ownoperations (scope 1 and 2) by 2030 and across our

valuechain (scope 3) by 2040, set against a 2020 base year.

The 2030 targets accompanying this ambition have been

validated by the Science Based Targets initiative (SBTi) against

a 1.5ºC warming scenario.

Read more about our progress against this

ambitionon pages 62 and 63

The Group’s 2023 Remuneration Policy also incorporates

specific targets relating to the reduction in scope 1 and 2

emissions.

Read more about the alignment of our remuneration strategy

with our Net Zero ambitionon pages 102 to 123

As part of our commitment to transparency in our progress to

lower our emissions, we disclose our annual emissions against

all relevant categories of scope 1, 2 and 3. We also obtain

limited assurance over scope 1 and 2 and selected categories

of scope 3.

Full disclosure for 2023 and comparative disclosures are set

outon pages 64 and 65

In support of our Net Zero ambition, we have agreed

several‘input’ metrics which are focusing action across our

businesses. All are measured against a base year of 2020.

A summary of cross-industry metrics from TCFD that are

relevant to us are set out on page 76. The alignment of the

metrics and targets to risks and opportunities identified has

been updated to reflect the climate scenario analysis

completed in 2023.

In 2024, we will be exploring additional metrics and targets

through the development of our Net Zero Transition Plan,

whilst we continue to embed sustainability within our

operations across the Group. We will also consider the

feasibility and effectiveness of the introduction of internal

carbon pricing.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 75

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Sustainability Report: TCFDcontinued

Metric Measurement Definition Risk/opp ID Our progress

Electricity Absolute (MWh)

100% renewable electricity across

our operations by 2030.

TR3, O3

31.9% of the Group is now powered by renewable energy (2022: 22.6%). Our UK operations are

also powered by 100% renewable electricity for the second year running. Our progress in the

reduction of scope 1 and 2 (market-based) emissions against the 2020 base target in our Net

Zero roadmap can be seen on page 62.

Emissions

Intensity-based

(against revenue)

(MWh per £m revenue)

Reducing emissions at our

manufacturing sites through

energy efficiencies by 20% by 2030.

TR3, O3

Waste Absolute (tonnes) Zero waste to landfill by 2030. TR3, O3

We are working to improve the accuracy of waste data in and targeting improvements at

allsites. In 2024, we will be undertaking waste audits at some of our key manufacturing

sitesto support the development of our waste strategy. Our metrics on waste are reported

on page 65.

Supply chain

Absolute

(tonnes CO

Reduce procurement emissions

through a 60% reduction in input

material-related emissions by 2030.

TR1, TR4

We are engaging with our supply chain with the support of EcoVadis. For Malvern Panalytical,

66.7% of spend is captured (2022: 43.1%), and for HBK, this figure is 24.2% (2022: 0%). For our

2023 scope 3 emissions reporting, we have also begun to incorporate supplier emissions data

from EcoVadis to calculate our Category 1 – Purchased Goods and Services and Category 2 -

Capital Goods emissions. We will be expanding the EcoVadis supplier assessment

programme to Servomex and PMS in 2024.

% of supplier spend

100% of suppliers to be rated in

EcoVadis.

Freight

Absolute

(tonnes CO

Reduce airfreight (long and short

haul) by 50% by 2030.

TR4

A concentrated programme by procurement teams has been established to move from air

freight to ocean freight. In 2023, geopolitical challenges affected our ability to move goods by

ocean rather than air, whilst business travel has continued to shift to pre-pandemic levels,

affecting our emissions performance for logistics and business travel.

Capital

deployment

Pounds sterling

Commitment to spend a minimum

of £3 million per annum to deliver

our Net Zero ambition.

TR3, O3

In 2023, the Group invested in onsite solar generation at HBK in Royston and Marlborough,

atServomex in Crowborough and at Malvern Panalytical in Malvern. Further projects to

introduce energy efficiency measures on sites are also underway. In total in 2023, £3.2 million

was spent to decarbonise our operations. This is the first year we have reported this figure.

Revenue aligned

to Net Zero

Pounds sterling

Revenues from products or services

that support the transition to a low

carbon economy.

O1, O2, TR2

Scenario analysis completed with Spectris Dynamics in 2023 has identified specific

alignment of our product lines with key Net Zero trends including electrification of vehicles

and battery storage. We are working to align our sales reporting with relevant revenue

streams that support the transition to a low carbon economy considering the EU Taxonomy.

Remuneration

Absolute reduction in

scope 1 and 2

emissions

Align Group remuneration

structures with our Net Zero

ambitions.

TR3, O3

The Group’s Long term Incentive Plan (LTIP), under the 2023 Remuneration Policy includes a

target for the absolute reduction in scope 1 and 2 emissions. Further details are set out on

pages 102 to 123.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023

The Strategic Report was approved by the Board on 28 February 2024.

By order of the Board

Rebecca Dunn

Head of Corporate Affairs and Company Secretary

28 February 2024

Reporting requirement Some of our relevant policies and standards Where to find out more information Page reference

Anti-bribery and corruption Code of Business Ethics Ethics and Values standards 58, 90-91, 99

Culture, integrity and commitment to our Values 22-23, 54-58, 90-91

Speak Up and Spectris helpline 58 and 99

Ethical leadership 58

Principal Risk – Compliance 48-49

Business model Our business model 20-21

Environmental matters Environmental Policy Environmental management 64-65

ISO 14001 Energy performance 64-65

Streamlined Energy and Carbon disclosures 64-65

Climate-related Financial Disclosures 66-76

KPI – Energy efficiency 27

Employees

Code of Business Ethics Fair employment and diversity 56 -57, 125

Health and Safety Policy Board diversity 56-57, 84, 92, 94

OHSAS 18001 Employee engagement and Workforce Engagement Director 27, 55, 89-91, 93

Gender pay 57 and 123

SA 8000 Social Accountability Health, safety and wellbeing at work 60

KPI – Accident incidence rate 27 and 60

Principal Risks:

– Compliance 49

– Talent and capabilities 50

Human rights

Human Rights Policy Legal and regulatory compliance 59

Code of Business Ethics Principal Risk – Compliance 49

Non-financial KPIs Energy efficiency 27, 53, 64-65

Total recordable incident rate 27, 60

Managing our Principal Risks Risk Management

Principal risks and uncertainties

TCFD (Climate-related Financial Disclosures)

Viability Statement

46-47

48-50

66-76

Social matters Community involvement 53, 78-79

Non-financial and sustainability information

statement and index

This statement is made in compliance with the Companies Act 2006 and is intended to provide

an understanding of our development, performance and position on key non-financial matters.

The table below sets out where information relating to non-financial matters can be located.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 77

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

The Spectris Foundation was established in

July 2021 with the mission of providing equal

opportunities and global access to quality STEM

education. Our grants champion diversity and

inclusion and we are actively addressing the

gender and socioeconomic gap in science,

technology, engineering and mathematics. In

addition, the Foundation supports charities and

communities that are important to Spectris

employees; and a proportion of funding is set

aside to aid these projects.

In 2023, the Foundation has successfully secured new and

existing funding partnerships. We currently have ten STEM

charitable partners based in the UK, America, India and Ghana

which have a direct impact in their communities and a wider

international reach.

To enhance our impact and our ties with the Spectris Group,

this year, the Foundation recruited 19 global volunteer

ambassadors from Spectris employees to represent the

Foundation to our different businesses and in our different

locations. The involvement of Spectris employees in

Foundation activities is essential to aid and complement

theimpact of the charitable grants. Early volunteering

opportunities in 2023 included judging for the Engineering

Education Scheme Wales FIRST Lego League competition

and mentoring students with TechGirlz and Technovation.

Wehave ambitious plans to build global volunteering

opportunities for employees in 2024.

Rebecca Levy

Foundation Director

UN Sustainable Development Goals (SDGs)

We support the UN SDGs and have identified these goals

as goals for the Foundation:

Our mission is to give

equal access to STEM

education globally

Read our impact report online

www.spectrisfoundation.com/our-impact

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202378

Spectris Foundationcontinued

Spotlight

Since inception:

The Spectris Foundation has awarded

£1,365,799

(STEM and employee nominations) with

£1.61m committed to STEM education

Funding awarded to employee nominations

£204,500

Local, smaller charities nominated by Spectris

employees – each grant has a value no

greater than £5,000

Total grants

Across 11 countries (UK, USA, Canada,

Germany, Spain, Portugal, Mexico, Brazil,

China, India, Ghana)

Grants awarded to employee nominations

In 2023:

Donations

£91,000

To employee nominations with 23 different

causes

STEM grants

Awarded in 2023 to existing and new

partners

Volunteering hours

2,560

“Dealing with the

daily challenges of

my disability has

given me a lifetime

of experience of

determination and

problem solving to

succeed when things

are tough. This has

developed over time into

a confidence and a ‘can

do’ attitude.”

Dr Chris Bailey

Research Scientist

Servomex

Find out more about Lightyear Foundation online

www.lightyearfoundation.org

Dr Chris Bailey, Research Scientist at Servomex, has had

a significant impact on the activities of the Foundation

in 2023, both through his employee-nominated donation

and his work with one of our key STEM grants.

The Foundation was proud to support Chris’s

nomination of Retina UK for a grant of £2,500 to help

support people affected by inherited progressive sight

loss. Chris has received personal support from the

charity for his untreatable eye condition named Retinitis

Pigmentosa. He explains:

“The charity is so friendly, caring and helpful to those in

need and I have recently started volunteering for them!”

Separately, in 2023, the Foundation approved a three-

year funding agreement with a new charitable partner,

The Lightyear foundation. The Foundation is proud to

besupporting Lightyear’s crucial work to break down

barriers to disabled children taking part in STEM. Chris is

further enhancing the Foundation’s funding through his

appointment as a role model. The Lightyear Foundation

provides experience and guidance from real-life role

models who are working in a STEM field. Chris’s profile,

experience and top tips are shared with students living

with similar disabilities.

Chris is a brilliant example of how Spectris employees

are truly enhancing the work of the Foundation.

Breaking down barriers to

disabled children taking part

inSTEM

£2,500

Grant awarded to Retina UK

to help support people

affected by inherited

progressive sight loss

Type of causes supported through employee nominations:

1. Education 8%

2. Health and wellbeing 32%

3. Children and young people 11%

4. Alleviating poverty 2%

5. Disability 13%

6. Homelessness 7%

7. Isolation and loneliness 4%

8. Sports 9%

9. Theatre 2%

10. Emergency response 2%

11. Climate action 4%

12 Research 6%

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 79

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Board of Directors

Sharing our expertise

Our directors contribute a broad range of personal strengths and experience to guide and oversee the Group’s delivery

of its Strategy for Sustainable Growth.

Committee membership key

Audit and Risk

Nomination and Governance

Remuneration

Disclosure

Executive

Chairman of a committee

Retiring

Mark Williamson

Chairman

Appointed: May 2017

Nationality: British

Skills and expertise

Mark is a qualified accountant with a strong

financial background combined with

considerable managerial experience. He was

CFO ofInternational Power plc until 2012 and is

experienced in managing relationships with

the investor and financial communities. Until

December 2021, he was senior independent

director of National Grid plc. Mark also served

as chairman of Imperial Brands plc until

January 2020 and as senior independent

non-executive director and chairman of the

audit committee of Alent plc until its sale

in2015.

Other appointments

None.

Andrew Heath

Chief Executive

Appointed: September 2018

Nationality: British

Skills and expertise

Andrew joined the Group as Chief Executive in

September 2018, bringing a wide range of

executive and leadership expertise to Spectris,

with proven experience in technology-enabled

businesses and a track record of delivering

shareholder value. He previously served as

CEO of Imagination Technologies Group plc

from 2016 to 2018 and before that was CEO of

Alent plc.

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.

Derek Harding

Chief Financial Officer

Appointed: March 2019

Nationality: British

Skills and expertise

Derek joined the Group as CFO in March 2019

and brings a wide range of financial leadership

and industrial expertise to Spectris. In addition

to his responsibility for Group finance

operations worldwide, he also leads the

operational management of Group Risk;

Group Legal; Investor Relations; Group IT and

the Group’s Capital Allocation process. He

most recently served as group finance director

at Shop Direct. Derek was CFO at Senior plc

from 2013 to 2017 and before that he was at

Wolseley plc for 11 years in a number of

financial leadership roles, most recently as

finance director of Wolseley UK. He previously

held a number of group roles, including group

financial controller, director of group strategy

and investor relations, and head of mergers

and acquisitions. Derek qualified as a

chartered accountant with PwC.

Other appointments

Derek was appointed as a non-executive

director of The Sage Group plc in March 2021.

Cathy Turner

Independent Non-executive

Director and Senior Independent

Director from 26 May 2023

Appointed: September 2019

Nationality: British

Skills and expertise

Cathy is an experienced non-executive

director with significant business leadership

experience plus a deep knowledge of HR and

remuneration matters. Her executive career at

executive committee level at Barclays PLC has

included responsibility for strategy, investor

relations, HR, corporate affairs, legal, internal

audit, brand and marketing.

Other appointments

Cathy is a non-executive director and chair of

the remuneration committee at Rentokil Initial

plc, senior independent director and chair of

the remuneration committee at Lloyds

Banking Group plc, and is a partner at the

senior advisory organisation, Manchester

Square Partners.

Mandy Gradden

Independent Non-executive

Director

Appointed: October 2023

Nationality: British

Skills and expertise

Mandy brings to the Board significant

experience in finance, investor relations,

strategy, digital and software and is currently

CFO of Ascential plc.

Before joining Ascential plc in 2013 as CFO,

Mandy held a variety of financial roles,

including CFO at the FTSE 250 technology

business, Detica Group plc, CFO at Torex, the

private equity-owned retail technology firm,

director of corporate development at Telewest

and group financial controller at Dalgety plc. In

addition to her executive career, Mandy was

also previously a non-executive director and

chair of the audit committee at SDL plc. She

began her career at Price Waterhouse, where

she spent eight years and where she qualified

as a chartered accountant.

Other appointments

In addition to her role as CFO of Ascential plc,

Mandy is also chair of the UK Financial

Conduct Authority’s Listing Authority

AdvisoryPanel.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202380

Board of Directors continued

Notice of AGM

Please scan QR code

to read the Notice of AGM

Committee membership key

Audit and Risk

Nomination and Governance

Remuneration

Disclosure

Executive

Chairman of a committee

Retiring

Kjersti Wiklund

Independent Non-executive

Director and Workforce

Engagement Director

Appointed: January 2017

Nationality: Norwegian

Skills and expertise

Kjersti has held a series of senior global

positions, leading technology enterprises and

managing varied international business

environments effectively. She is an experienced

non-executive director with deep technology

and software experience.

Kjersti has held a variety of executive roles

including; director, global technology

operations at Vodafone; chief operating officer

of VimpelCom Russia; deputy chief executive

officer and chief technology officer of Kyivstar

in Ukraine; executive vice-president and chief

technology officer of Digi Telecommunications

in Malaysia; and executive vice-president and

chief information officer at Telenor in Norway.

Kjersti was previously a non-executive director

of Zegona Communications plc, Babcock

International Group plc (UK), Trainline plc (UK),

Laird plc (UK), Cxense ASA and Fast Search &

Transfer ASA (Norway) and Telescience Inc (USA)

as well as Chair at Saga Robotics (Norway).

Other appointments

Kjersti is a non-executive director at AutoStore

Holdings (Norway), Evelyn Partners (UK), and

Nordea Bank Apb (Finland).

Alison Henwood

Independent

Non-executive Director

Appointed: September 2021

Nationality: British

Skills and expertise

Alison has broad technical experience in key

finance areas including treasury, risk

management, internal control and audit

across regional, divisional and global

functional roles. Until June 2022, Alison was

executive vice president of finance, trading

and supply at Shell plc (‘Shell’), leading finance

for the largest energy-trading business in

theworld. She has held a wide variety of

rolesacross Shell throughout her career,

contributing to finance transformation, culture

change, digitisation and Shell’s move towards

zero carbon. From January 2017 to July 2023,

she also served as a non-executive director

and audit committee chair at the UK

Hydrographic Office, a world-leading centre

for hydrography, specialising in marine

geospatial data to support safe, secure and

thriving oceans.

Other appointments

Alison is a member of the supervisory board at

Umicore which is a global materials

technology and recycling group based in

Belgium. She is also chair of the audit

committee, and a member of the

sustainability committee at Umicore.

Dr Ravi Gopinath

Independent

Non-executive Director

Appointed: June 2021

Nationality: Singaporean

Skills and expertise

Ravi 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 profitable

technology businesses. Ravi’s last executive

role was with AVEVA plc where he held the

roles of chief product and strategy officer and

chief operating officer in the period from 2018

to 2022. Prior to that he was the executive vice

president of Schneider Electric Software which

was merged with AVEVA in 2018. He previously

held roles at Invensys plc as president,

software and president, Asia Pacific from

2009to 2014 when Invensys was acquired by

Schneider Electric. Ravi started his career in

India with Tata Consultancy Services and

subsequently was CEO and MD at Geometric

Ltd. He holds a PhD in chemical engineering

from Rensselaer Polytechnic Institute and a

masters in chemical engineering from the

Indian Institute of Technology Bombay.

Other appointments

Ravi is currently a strategic advisor at

Schneider Electric and is a non-executive

director at Thermax Ltd.

Ulf Quellmann

Independent

Non-executive Director

Appointed: January 2015

Nationality: German

Skills and expertise

Ulf 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 CEO of Turquoise Hill Resources

Limited (a company 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

group at Rio Tinto plc and, before that, CFO of

the copper and diamonds product group. He

was also group treasurer from 2008 to 2016.

He has held senior positions at Alcan Inc.

including vice president, investor relations and

media relations, and chief pension investment

officer and assistant treasurer, and senior

management positions at General Motors in

both the USA and the UK.

Other appointments

None.

Bill Seeger

Independent Non-executive

Director

Appointed: January 2015

Nationality: American

Retiring:

23 May 2024

Skills and expertise

Bill was Senior Independent Director of

Spectris plc until May 2023 and will be

Chairman of the Audit and Risk Committee

until he steps down following the conclusion

of the 2024 AGM, as part of a planned

succession process. Bill has significant

corporate finance and accounting

experience. Bill was group finance director

of GKN plc and, prior to that, president and

CEO of the propulsion systems and special

products division and CFO in the aerospace

division of GKN. He spent most of his career

at TRW, latterly in senior finance roles,

including as vice-president, financial

planning and analysis, and vice-president,

finance, of TRW Automotive.

Other appointments

Bill is senior independent non-executive

director of Smiths Group plc, lecturer at

UCLA Anderson School of Management

anda director and a member of the

audit and compliance committee at

ICUMedical Inc.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 81

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Chairman’s introduction

Continuing

our strategic

progress

and performance of the Group. The Board

also welcomes regular interaction with the

senior leadership team and key experts from

across the business and has enjoyed wide-

ranging discussions during 2023 with

representatives from every business and

aligned to every end market.

Our culture

The Group’s Values of Be True, Own It and Aim

High are central to the Group’s organisational

culture. That culture is underpinned by our

Code of Business Ethics, which establishes

our basic standards for all individuals with

whom we engage or collaborate. It serves as a

guide for making excellent decisions and

symbolises our dedication to acting with

integrity in all that we do. The Board closely

observes, and supports, the work of the senior

leadership team to further enhance and

develop the Group’s Values and culture and

further details of this work are set out on

pages 90 and 91. The Board receives a

quarterly update on the development of the

Group’s culture, including key leading and

lagging indicators of progress. In addition,

theBoard, through the Nomination and

Governance Committee undertakes an

annual deep-dive review of the Group’s

employee engagement survey results.

Board succession planning

Bill Seeger and Ulf Quellmann will both reach

their nine-year tenure on the Board ahead of

the 2024 Annual General Meeting (2024

AGM). Recognising his length of service and

the selection and appointment of his

successor, Bill Seeger will retire from the

Board at the 2024 AGM. On behalf of the

Board, I would like to sincerely thank Bill for

his advice, challenge and the deployment of

his deep executive and financial experience in

his role as Senior Independent Director and

Chairman of the Audit and Risk Committee.

Recognising Bill’s tenure, Cathy Turner

succeeded him as Senior Independent

Director in May 2023 and it is intended that

Mandy Gradden assume the role of Chairman

of the Audit and Risk Committee following

the conclusion of the 2024 AGM.

The search for a suitable successor to Ulf

Quellmann has been initiated. As part of a

managed Board succession process, and in

recognition of the significant experience that

both Bill and Ulf bring to Board discussions

and the relevant balance of tenure of the

Non-executive directors, with three directors

within their first three years of appointment, it

is intended that Ulf be retained as a Non-

executive director for an additional year to

On behalf of the Board, I am pleased to present Spectris’s Corporate

Governance Report for the financial year ended 31 December 2023.

“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

2023 was a very strong year for the Group,

with excellent progress towards meeting our

ambitions set out in our Strategy for

Sustainable Growth. The Board’s 2023

strategy review was held at our Malvern

Panalytical site in Almelo, the Netherlands,

enabling the Directors to see first-hand

howour focused investment in R&D was

supporting the Group to refresh and develop

our product and services aligned to our

Purpose to make the world cleaner, healthier

and more productive. The Board and I were

encouraged to see both the development of

the relationship between PMS and Malvern

Panalytical within the Spectris Scientific

Division and also the clear development of

the digital profile of our existing and new

customer offerings. During the visit we

alsomet with a key customer to better

understand their relationship with Malvern

Panalytical and their views on our products

and services.

This year, the Board has focused on

supporting and challenging management on

the early delivery of the Group’s strategy and

has spent time with customers, employees,

beneficiaries of the Spectris Foundation, our

Brokers and wider advisers to ensure that we

are reflecting the needs of all our stakeholders

in the Board’s decision-making processes.

I strongly believe in the importance of an

engaged Board to drive the strategy through

a close working relationship with

management. As a Board we are mindful of

modern governance pressures and the risk

that this evolving landscape distracts the

Board from its core oversight role. One way

that we ensure that the Board remains

engaged with the business is through an

active workforce engagement programme,

led by Kjersti Wiklund. Under Kjersti’s

stewardship additional site visits have taken

place to Korea and Denmark, and Alison

Henwood, Ravi Gopinath and Cathy Turner

have joined Kjersti in meeting with

employees from all our businesses, with

different specialisms and at different points in

their careers. These interactions are proving

extremely valuable in supporting the Board’s

wider considerations of the strategic priorities

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202382

Chairman’s introduction continued

ensure continuity while we continue to search

for asuitable replacement with the necessary

strategic and executive leadership experience.

The Board continues to consider Ulf as an

independent director, however, recognising

the spirit of the Code and to avoid any

perception of non-independence, Ulf will

stepdown from his roles on the Audit and

Risk Committee, the Nomination and

Governance Committee and the Remuneration

Committee at the 2024 AGMand it is

intended that he will retire ahead of the

2025AGM.

The Board was delighted to welcome Mandy

Gradden to the Board in October 2023.

Mandy has significant financial acumen and

experience as a FTSE 250 CFO and I look

forward to working with Mandy in her new

role as Chairman of the Audit and Risk

Committee, with effect from the conclusion

of the 2024 AGM.

Balancing our leadership pipeline

Building a diverse and inclusive company

isakey priority for the Board. The Board

comprises 40% women in line with the

ambition set out in the Board’s Diversity

Policy. Following Cathy Turner’s appointment

as Senior Independent Director, Spectris is

now fully compliant with the UK Listing Rules

and aligned to the ambition set out in the

FTSE Women Leaders Review.

In 2023, the Board was proud to support

management in setting the ambition that by

2030, 40% of the Group’s senior leadership

population will be women. I am pleased that

the Group has joined peer companies in the

25x25 initiative which will allow us to work

across our industry to shift the gender

balance in our leadership pipeline.

The Board firmly supports the ambitions of

UK Listing Rules and the Parker Review and

meets with the ethnic diversity requirement

at a Board level. We have complied with the

request by the Parker Review to set an

ambition to develop ethnic diversity in our UK

leadership population, while also recognising

the importance of building ethnic diversity in

a global business. More information on the

work undertaken during the year can be

found on pages 18, 56 and 57.

2024 AGM

The 2024 AGM will be held in person at

Melbourne House, 5th Floor, 44-46 Aldwych,

London, WC2B 4LL at 3:00pm on Thursday

23 May 2024.

With the exception of Bill Seeger, all Directors

will be standing for election or re-election at

the 2024 AGM, and we look forward to the

continued support from our shareholders.

The Board and I appreciate our interactions

with shareholders and welcome your

comments on this Corporate Governance

Report and on the 2023 Annual Report and

Accounts. We look forward to meeting our

shareholders at the 2024 AGM and would also

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

Mark Williamson

Chairman

28 February 2024

UK Corporate Governance Code

The Code sets out the Company’s approach to

governance. This table shows the pages where

shareholders can evaluate how the Company has

applied the principles of the Code and where key

content can be found in this report.

Chairman’s introduction to the

Corporate Governance Report

82 – 83

Providing oversight of culture 90 – 91

Board engagement with

stakeholders

85 – 87, 89

Section 172 statement 7, 86 – 87

Oversight of strategy 85

Assessing opportunities 85

Assessing risks and viability 85, 98 – 100

Measurement of strategy 85 – 87

Division of responsibilities

Board Committees 84

Board attendance 84

Composition, succession and evaluation

Board biographies 80 – 81

Board evaluation 88

Nomination and Governance

Committee Report

92 – 94

Audit, risk and internal control

Audit and Risk Committee Report 95 – 101

Principal Risks and risk appetite 46 – 50

98 – 100

Monitoring of emerging risks 46, 90 – 100

Remuneration

Letter from the Chairman of the

Remuneration Committee

102 – 103

Overview of Remuneration Policy 105

2023 Implementation report 102 – 123

Our Values

Be True

is about absolute integrity and how we

focus on doing the right things in the

right way, speaking up when necessary

and showing care and respect for others.

This supports our stakeholders, the

environment and each other.

Own It

provides a focus on teamwork, keeping

our promises and how we build our

brands and businesses.

Aim High

encourages our people to be bold and

positive, striving for greater success. This

helps support a culture of continuous

improvement, keeping an open mind,

and helping others succeed.

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.

UK Corporate Governance Code

Statement of compliance

As a UK listed company, Spectris plc is expected

to comply or explain any non-compliance with

the Code, published by the UK Financial

Reporting Council and available on its website,

www.frc.org.uk. The Board considers that the

Company complied fully with the provisions

and principles as set out in the Code throughout

the year ended 31 December 2023.

Read more about Board discussions and key

stakeholder considerationson page 85

Read more about the Company’s s172(1)

statementon pages 7, 86 and 87

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 83

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Governance at a glance

Audit and Risk

Responsible for overseeing the

financial reporting process,

significant accounting

judgements and estimates, the

Group’s ethics and compliance

programme, financial and

compliance controls and risk

management

Nomination and

Governance

Responsible for advising on talent

management and succession

for the Board, Executive and

senior management and

oversight of the Board’s

governance structures

Remuneration

Responsible for recommending

the policy for the remuneration

of the Chairman, the Executive

Directors and the Executive

Committee members, in the

context of considering the

pay and conditions of the

wider workforce

Executive

Responsible for the day-to-day management of the

Group’s operations with support from specific

forums on SBS, Health and Safety, Risk

Management, Export Controls and Sustainability

Disclosure

Responsible for the identification and disclosure of

inside information and for ensuring that

announcements comply with applicable laws

and regulations

Board structure

The Board

Responsible for defining the Company’s purpose, setting a strategy to deliver it,

and overseeing values and behaviours that shape the Group’s culture and the way

it conducts its business. The Board has several matters reserved specifically for its consideration and

delegates other responsibilities to the Board and Management Committees as appropriate

Board Committees

Management Committees

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

2023 Board and Committee attendance

Board

(scheduled)

Audit and Risk

Committee

Nomination and

Governance

Committee

Remuneration

Committee AGM

Ravi Gopinath 7/8

N/A 3/3 5/5 1/1

Mandy Gradden

2/2 2/2 1/1 N/A N/A

Derek Harding 8/8 N/A N/A N/A 1/1

Andrew Heath 8/8 N/A N/A N/A 1/1

Alison Henwood 8/8 4/4 3/3 N/A 1/1

Ulf Quellmann 8/8 4/4 3/3 5/5 1/1

Bill Seeger 8/8 4/4 3/3 N/A 1/1

Cathy Turner 8/8 N/A 3/3 5/5 1/1

Kjersti Wiklund 8/8 4/4 3/3 5/5 1/1

Mark Williamson 8/8 N/A 3/3 N/A 1/1

1. There were no ad hoc Board meetings held during 2023.

2. Due to the timing of the scheduled Board meeting in October 2023 to approve the Group’s Q3 results, Ravi

Gopinath was unable to attend. Dr Gopinath received papers and provided his detailed comments to the

Chairman ahead of the meeting and feedback was provided on the discussion held at the meeting.

3. Mandy Gradden joined the Board on 16 October 2023.

Key highlights

January

The Board approved the 2023 budget,

reviewed early trading results for 2022 and

agreed supporting remuneration matters.

March

The Board received a detailed update

on analyst and investor feedback

following the announcement of the

2022 full-year results.

May

The Board met with shareholders at

the AGM.

July

The Board held a deep-dive discussion

with Goldman Sachs on investor views

on sustainability.

September

The Board oversaw the completion of the

acquisition of the MicroStrain business.

October

The Board met with representatives

from Ketjen, a key customer of

Malvern Panalytical at its site in

the Netherlands.

January

The Board reviewed the early trading

results for 2023 and agreed supporting

remuneration matters.

October

The Board undertook its annual deep-

dive review of the Group’s strategy.

February

The Board approved the Group’s full-year

results and undertook a deep-dive review

of the Group’s Health and Safety

performance and supporting activity.

April

Kjersti Wiklund and Ravi Gopinath

undertook a three-day visit to

the Group’s operations in Korea

as part of the Board’s workforce

engagement agenda.

August

Kjersti Wiklund and Alison Henwood

visited the HBK facility in Virum,

Denmark as part of the Board’s

workforce engagement programme.

October

The Board visited the Malvern Panalytical

site in Almelo, the Netherlands, met

withemployees, a customer, and

undertook a daily Gemba Walk.

December

The Board approved the divestment of

Red Lion and undertook a detailed review

of the Group’s capital allocation strategy

supported by the Group’s Brokers.

February

The Board approved the Group’s

full-year results and supporting

release to the market.

2024

2023

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202384

Board and Committees

Responsible oversight

and management

The Board and a series of its committees oversee and manage the

governance of the Group. These bodies provide a mechanism to approve,

review, challenge and monitor the strategies and policies under which the

Group operates. The structure and responsibilities of the Board and these

management committees, and a summary of their responsibilities, are

illustrated on this page.

Strategy

Stakeholders considered

2023 activities

• Provided oversight of the early progress and

delivery of the Group’s Strategy for Sustainable

Growth and the progress towards the financial

and non-financial targets that accompanied

the strategy.

• Received updates from the Group’s Brokers and

economists on the developing geopolitical and

economic environment in which the Group was

delivering against its strategy.

• Reviewed progress against the 2022–27 Financial

Plan.

• Carried out detailed strategy reviews of the

Divisions.

• Oversaw deep-dive reviews into the Group’s

digital strategy.

• Received a detailed update on the progression of

the Group’s sustainability strategy.

Leadership and people

Stakeholders considered

2023 activities

• Undertook reviews of the people strategies within

each Division and at a Group level.

• Continued to focus on employee wellbeing,

reviewing the Group’s approach to mental health

and health and safety.

• Reviewed the results of the Group’s annual

employee engagement surveys and key trends

underpinning the overall increase in employee

engagement.

• Further developed and expanded the role of the

Workforce Engagement Director.

• Approved the development of the Board’s

Diversity Policy and the Group’s ambition that

by 2023, 40% of the Group’s senior leaders would

be women.

• Approved the Group’s approach to compliance

with the Parker Review and the setting of a target

for building ethnic diversity in the senior

management population in the UK.

• Reviewed succession planning for the Board,

the Executive and the senior management

population.

M&A

Stakeholders considered

2023 activities

• Received updates on the progress made

with the divestment strategy and ensured that

the Group’s stakeholders were considered during

the process.

• Considered and assessed each of the M&A

activities where Board approval was required,

including the divestments of Concept Life

Sciences and Red Lion, the acquisitions of

MicroStrain and EMS, and investment in a

minority interest in LumaCyte.

• Received updates on the ongoing M&A activities

and the Group’s pipeline of opportunities.

• Reviewed key integration metrics of the Group’s

acquisitions since 2020.

• Undertook a deep-dive review of the acquisition

of Dytran Instruments with the Divisional

management team, reviewing both financial and

non-financial factors to determine the success of

the acquisition and key lessons learned.

Finance

Stakeholders considered

2023 activities

• Considered and approved the 2024 budget

following review of progress against the

2023 budget.

• Approved the Annual Report, interim results and

full- and half-year results presentations.

• Approved the Group’s going concern and viability

statements.

• Considered and assessed the efficacy of the

Group’s capital allocation model, including

approving the completion of the remaining

£110 million of the £300 million share buyback in

February and a further £150 million share buyback

in December, together with planned M&A

expenditure.

Governance and ethics

Stakeholders considered

2023 activities

• Monitored progress against the evaluation actions

from the 2022 externally led Board evaluation.

• Received updates on the Ethics and Compliance

programme, and the impact of the Values Booster

programme in Asia.

• Approved the Committee Terms of Reference,

the Matters Reserved to the Board and Board

Role Profiles.

• Received updates on ongoing litigation matters,

corporate governance and key legal and

regulatory topics.

• Approved the Group’s new Supplier Code

of Conduct.

Our key stakeholders

People

Customers

Community

Shareholders

Suppliers and partners

Matters Reserved to the Board, Committee Terms of Reference and Role Profiles are available at

www.spectris.com

Operations and risk

Stakeholders considered

2023 activities

• Received presentations from members of the

leadership team on health and safety, cyber

security, climate risk and the ethics and

compliance programme.

• Carried out deep-dive reviews of a Principal Risk

at each meeting to ensure continued alignment

with the strategy, including geopolitical risks,

compliance and climate change.

• Reviewed the Group’s takeover defence approach

as part of a planned annual review.

• Carried out in-depth sessions with each Division

to discuss strategic direction and risks and

opportunities. Reviewed the Group’s operations at

the Almelo site and joined the daily Gemba Walk

to understand more about the Group’s daily

activities under the SBS.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 85

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Section 172

Supporting our

section 172(1) statement

Building on our understanding

Bringing the voice of stakeholders into the

Boardroom through:

• employee interactions during site visits;

• deep-dive sessions with the Divisions and

their leadership teams;

• meetings with customers;

• regular reviews of shareholder interactions,

including direct feedback from meetings

held with shareholders by the Chairman,

Executive Directors , Head of Investor

Relations and Head of Corporate Affairs

and feedback from the Group’s brokers;

• regular and detailed feedback from the

engagement activities carried out by the

Workforce Engagement Director; and

• contextual feedback from key leaders on

the Group’s employee engagement survey

results.

Considering stakeholders in our meetings

and principal decisions

Divestment of Red Lion Controls

The Board carefully considers the impacts of

the divestments on employees, customers

and shareholders. In December 2023, the

Board approved the divestment of Red Lion

with 403 employees. As part of their

considerations, the Board reviewed the

potential buyers’ intentions for employees,

how a sale might impact the service for

customers as well as the impact on

shareholder value following the divestment

for Spectris investors. The cultural fit

of the buyers involved in the process was

also considered. These topics were a key

focus during the process stage and

management provided regular updates to

the Board, and the Board provided ongoing

challenge and support to management.

Following review, it was concluded that the

sale to HMS Networks was in the best

interests of the Group’s stakeholders as a

whole, with a particular benefit to the future

prospects for the Red Lion business which

was in the interests of Red Lion’s employees

and customers. In addition, the divestment

improved the financial profile of the Group as

a whole for the benefit of the wider Group’s

employees, shareholders and customers.

Understanding our stakeholders

and what matters most to them

The Board has identified the key

stakeholders of Spectris and the

areas they are interested in about

the Spectris Group:

People

Culture, values, diversity and inclusion,

operating in an open and ethical

environment, health and safety,

progression and personal development

opportunities, remuneration and

workforce engagement.

Community

Economic and operational impact of

Group businesses on local communities,

environmental impact of operations (direct

and indirect), demonstrate clear and

sustainable policies which support our

Values and how these are measured.

Customers

Operational strength, ability to meet

customer needs, remaining competitive

with a strong differentiated value

proposition, high-quality instruments and

technical expertise and advice, ensuring

service levels meet expectations and

ensuring that our business practices and

supply chain accord with their values.

Shareholders

Financial performance of the Group,

capital distributions, our Strategy for

Profitable Growth, long-term viability and

ensuring that the Group is a sustainable

investment proposition.

Suppliers and partners

Ensuring that our supply chain reflects the

Group’s Values, potential supply chain

disruption, competitiveness, financial

performance, research and development

investment.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202386

Section 172 continued

Acquisition of MicroStrain, EMS , XRD

product line from Freiberg Instruments

and the investment in LumaCyte

In considering the acquisition of MicroStrain

in 2023, the Board gave particular focus to the

interests of the Group’s shareholders and

customers. This included discussing and

ensuring that the acquisition was aligned

with the Group’s strategy to acquire

complementary businesses which

strengthen the Group’s offering and expand

the Group’s footprint to build long-term value

for shareholders. Having considered the

projected financials, growth prospects,

cultural alignment and employee retention

plan, the Board concluded the acquisition

was in the best interest of the Group’s

stakeholders as a whole.

The Board also received regular updates from

Management on:

• EMS, which enables PMS to be an exclusive

distributor of PMS products in the UK;

• XRD product line from Freiberg

Instruments, which broadens Spectris

Scientific’s semiconductor metrology

offering; and

• LumaCyte, through a minority investment,

which coupled with Creoptix amplifies

Spectris Scientific’s pharmaceutical offering.

Given the strategic synergies, enhanced

customer offering and projected financial

and market growth expected, it was agreed

that the acquisitions would benefit a broad

range of stakeholders.

Supporting employees with the cost

of living

Inflationary pressures and the increased cost

of living continued to impact employees in

many locations across the Group in 2023. The

Remuneration Committee has supported

management’s approach to supporting

employees and reviewed key measures

introduced by management to mitigate the

impact for key employee groups. Further

details are set out in the Remuneration

Report on page 102 to 123.

Customer engagement

The Board met directly with two key

customers in 2023. In May 2023, the Board

met with the chief technology officer of

Schenck Process, who provided an overview

of their long-standing and collaborative

partnership with Spectris Dynamics. The

briefing outlined the synergies between

Spectris Dynamics and Schenck Process and

the alignment value in both businesses

sharing a similar purpose to deliver premium

services and quality products whilst making

the world cleaner, healthier and more

productive. The Board found the perspective

very helpful to its ongoing review of the

operational performance of Spectris Dynamics.

In October, the Board visited Ketjen, a

customer of Malvern Panalytical in

Amsterdam, the Netherlands. During the visit,

Board members saw the strong reliance the

customer places on the accuracy and

reliability of our products and the support our

teams provides to them. The visit provided

invaluable context for strategic decisions that

supported the approval of the Group’s

Strategy for Sustainable Growth.

Further details of how the Group as a whole

has engaged with its customers can be found

in the case studies within the Strategic Report.

Shareholder return

The Board understands the importance of its

investment case to shareholders, more details

of which are set out on pages 22 and 23.

Following the divestment of Red Lion, as well

as a strong performance at the end of 2023,

the Board considered and approved a

£150million share buyback programme.

TheBoard also approved the final dividend

inFebruary 2024.

The Board recognises the importance of

capital returns to our shareholders and was

pleased to be in a position to be able to make

this decision. The Board also considered that

the share buyback would not have an adverse

impact on any of its other stakeholders,

including its ability to invest in organic and

inorganic growth, and that it had sufficient

cash reserves available for the share buyback

programme.

2023 Spectris Dynamics Capital

MarketsDay

A focused investor day was held at VI-grade in

Udine, Italy, in June 2023, to provide greater

insight into the outlook and prospects for the

Spectris Dynamics Division. The presentations

highlighted the unique breadth of Dynamics’

offering; its plans to drive continued organic

growth from strong positions in attractive,

high-growth markets; and its focus on

delivering sustainable profitable growth and

further margin expansion.

Further information on the ways in which section 172 has become embedded in how the

Company operates can be found throughout the report, some of which are indicated below:

s172 factor Page reference Relevant section of the report

The long-term pages 2 – 3

pages 22 – 23

pages 20 – 21

• Our Purpose

• Strategy for Sustainable Growth

• Business model

Employees pages 54 – 58

page 77

pages 89

pages 82 – 83

pages 90 – 91

• Sustainability report

• Non-financial reporting table

• Workforce engagement

• Chairman’s introduction to governance

• Oversight of the Group’s culture

Business relationships –

suppliers and

customers

page 16

pages 19, 31 – 39, 45 and 71

page 51

• Chief Executive’s review

• Case studies

• Monitoring supplier performance

Community and

environment

page 18

pages 78 – 79

pages 62 – 63

pages 66 – 76

• Chief Executive’s review

• The Spectris Foundation

• Net Zero

• TCFD report

High standards of

business conduct

page 58

pages 90 – 91

page 99

pages 66 – 76

• Sustainability report

• Monitoring the Group’s Culture

• Audit and Risk Committee Report – Ethics

and Compliance

• TCFD report

Shareholders pages 20 – 21

pages 82 – 83

pages 80 – 81

• Our Business Model

• Chairman’s introduction to governance

• Board of Directors

The Board recognises the importance of

engagement opportunities for investors and

future investors to gain a better understanding

of the Group and the strength of its

investment case. These engagement

activities are in addition to the ad hoc

shareholder meetings carried out by the

Chairman and Executive Management, as

well as the AGM.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 87

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Informed

decision-making

The Chairman is supported by the Head of

Corporate Affairs and Company Secretary in

ensuring the dissemination of accurate, timely

and clear information to the Board, allowing it

tofunction effectively and efficiently. The Head

of Corporate Affairs and Company Secretary

isresponsible for ensuring compliance with

appropriate laws and regulations and is available

to support all of the Directors. Directors may

solicit independent, professional advice at

theCompany’s expense where specific expertise

may be required to effectively discharge

theirduties.

Access to

the business

The Board undertakes a deep-dive review with

the leadership of each Division at least annually.

Additionally, each year the Board meets on-site

at one Division. Board visits include a tour of the

relevant facility, overviews of key products with

their developers, a deep-dive review of the

business with the wider leadership team and

theopportunity to meet informally with

employees. During 2023, the Board visited

Malvern Panalytical in Almelo, the Netherlands.

Further details are set out on page 89.

Training and

development

New Directors receive a formal, tailored and

comprehensive induction programme on joining

the Board, and further training and development

needs are reviewed by the Chairman and agreed

at least annually. The Board receives detailed

technical updates in relation to corporate

governance and other legal and regulatory

topics from internal and external specialists.

Anexternal speaker programme brings thought

leadership to Board discussions on a variety

ofemerging themes and topics. In 2023

thesetopics included a discussion on the

macroeconomic environment relevant to

theGroup’s key markets, led by Barclays, a

discussion with Goldman Sachs on investor

views on sustainability and discussions with key

customers to better understand their

perspective on global trends.

The effectiveness of the Board is monitored through annual evaluation

Board evaluation

As required by the Code, the Board undertakes an annual evaluation of its effectiveness.

2022 Board evaluation process and outcomes

The 2022 Board evaluation was externally

facilitated by Lisa Thomas from Independent

Board Evaluation and the process took place

between December 2022 and February 2023.

Neither Lisa Thomas nor Independent Board

Evaluation have any other connection with the

Company or individual Directors.

The 2022 evaluation built on the outcomes of

the 2021 evaluation and considered the Board’s

composition, diversity and effectiveness. Each

Board Committee was also reviewed as part of

the external evaluation process and a review of

the Chairman’s performance was led by the

Senior Independent Director. Initial feedback

and recommendations from the external

evaluation were presented to the Board for

discussion in February 2023 and were subject to

active action planning and review by the Board

during 2023.

The Board reviewed the findings of the 2022

evaluation at key junctures during 2023 and

built actions arising from the evaluation process

intothe annual Board planner to ensure that

progress was made. Key activities undertaken

inresponse to the outcomes of the Board

evaluation process included:

• Increasing the number of Audit and Risk

Committee meetings to four per year,

supporting an increased focus on risk and

internal audit.

• Extending the remit of the Nomination and

Governance Committee to include oversight

of the Board’s governance structures,

including the structures supporting oversight

of the Group’s sustainability agenda.

• Returning to impactful in-person

engagement which included face-to-face

meetings for all major Board and Committee

meetings, in-person site visits and workforce

engagement sessions attended by the

Workforce Engagement Director with a

rotation of Non-executive Directors.

• Reviewing peer group best practice for Board

inductions which has helped shape the

induction process for Mandy Gradden.

• Extending the length of Board meetings and

introducing more informal discussion time

and external thought leadership.

• Enabling the ongoing oversight of the

development of the Group’s healthy high-

performance culture.

2023 Board evaluation process

The 2023 evaluation process commenced in

October 2023 and has been internally

conducted and overseen by the Head of

Corporate Affairs and Company Secretary. The

evaluation involved the Board and its

Committees completing a comprehensive

review of their effectiveness, incorporating any

key themes identified during the 2022

evaluation process. In addition, the Chairman

has met separately with each Non-executive

Director to assess their performance.

The outcomes and responses were collated and

discussed by the Board at its meetings in

February 2024 and it was concluded that the

Board and its Committees continue to operate

effectively. The Senior Independent Director led

the Non-executive Directors in their annual

review of the performance of the Chairman.

Details of the outcome of the evaluation and the

progress of actions agreed will be reported in

the 2024 Annual Report and Accounts.

Board evaluation and effectiveness

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202388

Workforce engagement

Workforce

engagement activities

Kjersti plays an integral role in supporting

thelinks between the workforce and the

Board. The Board recognises the importance

of creating and maintaining clear lines of

communication with the workforce. The role

of the Workforce Engagement Director is

pivotal to maintaining these direct links with

the workforce. The open forums led by

Kjerstiprovide employees with the

opportunity to express their opinions in

anopen environment without direct

management present.

The workforce engagement schedule for

2023 was extended to include the attendance

of a rotation of other Non-executive Directors

to provide additional perspectives on the

discussions. This approach has added further

content and depth to Board discussions. For

the second year, four themes were used to

structure the sessions with employees:

• engagement;

• leadership;

• sustainability; and

• diversity and inclusion.

The workforce engagement activities are

supported by the Group HR Director and in

2023 included visits to the Group’s operations

in Spectris Korea, the HBK facility in Virum,

Denmark and the Malvern Panalytical facility

at Almelo, the Netherlands.

Kjersti has met regularly with theGroup

HRDirector and the Division HR Directors

toreview the development ofthe Group’s

employee proposition. The feedback from

these discussions has supported wider Board

insight into the employee experience and

provided additional context for the outcomes

of the employee engagement survey.

During 2024, it is planned that engagement

activities will continue in a similar structure,

focused on sites and countries not visited in

2023. Kjersti will continue to provide regular

feedback to the Nomination and Governance

Committee and the Board to support their

active consideration of the experience of

employees as part of their wider focus on

business performance.

The workforce engagement programme supports the Board having

meaningful and regular dialogue with the workforce to capture key

insights and to bring the employee voice to the boardroom.

Kjersti Wiklund

was appointed as the

Board’s first Workforce

Engagement Director

in 2019.

Korea site visits

In April 2023, Kjersti and Ravi Gopinath visited

the Group’s operations inKorea for three days.

Their visit included meetings with senior

management for Spectris Asia and the

leadership team basedin Korea. They also met

with employee groups from PMS, Servomex

and Spectris without management present.

In addition, Kjersti and Ravi received a

presentation fromthe Spectris Asia HR team

on the ValuesBooster programme and an

overview of employee engagement activity for

Spectris Asia.

HBK Virum site visit

In September 2023, Kjersti and Alison

Henwood held workforce engagement

discussions with a selected group of

employees from HBK based in Virum,

Denmark. The sessions focused on employee

feedback on the early impact of the Legato

project, the strategic direction and the

leadership of the business. Employees

appreciated being given the opportunity to

express their opinions on current priorities

within the business and Kjersti and Alison

were impressed by the engagement and

talent within the employee groups.

Almelo site visit

As part of the full Board site visit to Almelo in

October 2023, Kjersti and Cathy Turner met

privately with a group of employees without

management present. The employee group

comprised of a diverse mix of experience, tenure

and gender diversity. The open discussion

focused on the employee experience,

engagement, diversity and remuneration at

Almelo, and provided Kjersti and Cathy with a

holistic overview of the employee experience at

that site and further context for the summary

engagement results reviewed by the

Nomination and Governance Committee.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 89

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Purpose and Culture highlights

Employee engagement

(GrandMean)

Percentage of employees

taking part in the survey

3.92 80%

Monitoring the Group’s culture

Our Values inspire a culture that enables a bold,

high-performing business made great by our people,

delivering value beyond measure.

2023

2022

3.72

3.86

2021

3.92

4 5

Employee engagement (GrandMean)

2023

2022

64%

78%

2021

80%

20 40 60 80

100

Monitoring the Group’s cultu

Our

Purpose and

our culture

Our Purpose is to harness the power of

precision measurement to make the world

cleaner, healthier and more productive,

delivering value beyond measure for all our

stakeholders. We are committed to creating

asustainable business proposition for all our

stakeholders, ensuring that we prioritise a

culture of long-term growth set on solid

foundations. The Code of Business Ethics and

the Spectris Values – Be True, OwnIt and Aim

High – provide the framework within which

we operate.

The Spectris Values focus on encouraging the

right behaviours to support our Purpose. For

our employees this means creating a great

place to work, where their safety and

wellbeing is a priority and where they feel that

they belong, are seen and can develop and

The Board is committed to the continued development of a healthy high-

performance culture and believes that this is pivotal to the future success of

the Group.

grow. For our suppliers and customers this

also means shared ethical business practices

and a joint commitment to making the world

cleaner, healthier and more productive.

Our Code of Business Ethics underpins

ourapproach. We recognise that continually

nurturing and developing the ethical

cultureof our organisation and demanding

the same high standards from our partners

and suppliers, helps to build trust with all

ourstakeholders, and supports our business

model and the successful execution

ofourstrategy to realise long-term,

sustainable growth.

Read more about Our Code of Business Ethics 

on page 58

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202390

Monitoring the Group’s culture continued

Culture and the Board

In 2023, to assess the development of the

Group’s culture, we undertook our third

Group-wide Gallup employee engagement

survey. The Board was pleased to see that

participation continued on an upward trend,

with 80% of employees participating in the

survey (2022: 78%, 2021: 64%). The Board was

encouraged by the 3.92 engagement score,

which was an increase from the 3.86 in 2022

and 3.72 in 2021.

As in previous years, we included four

questions on ethics, diversity, equity, inclusion

and belonging to better understand

employee sentiment on our Values and

culture. Overall, the Board was pleased to see

that the results globally showed an

encouraging improvement in all metrics

compared with the previous two years.

Read more about the results of the survey

on pages 54 and 55

In 2023, the Board discussed and monitored

culture through a number of mechanisms. In

May 2023, the Group HR Director, presented

to the Board a culture dashboard, created to

bring together the key metrics considered to

provide a consistent and measurable

overview of the development of the Group’s

culture. This enables the Board to review the

Group’s progress in achieving a Values-based,

healthy, high performing culture. The Board

will review the dashboard in detail annually,

with quarterly updates also being received by

the Nomination and Governance Committee

to monitor the Group’s progress.

The Board, through the Nomination and

Governance Committee also undertook an

annual deep-dive review of employee

engagement. This review, presented by the

Group HR Director, summarised the latest

Gallup research on external engagement

trends, the internal engagement trends at

Spectris between 2021 and 2023 and outlined

future engagement plans.

As part of the Board annual strategy

reviews,the Group HR Director provided

anupdate onthe progress made against the

HR strategy, with particular focus on culture

and engagement, talent and leadership,

andorganisational effectiveness. The

Boardalso received an update on the key

developments in the external landscape

andinternal developments since the 2022

strategy reviews.

Detailed discussions were also held

throughout the year on diversity, inclusion

and belonging, and the Board approved the

setting of a public ambition that by 2030, 40%

of the Group’s senior leadership community

would be women. The Group has also joined

peer companies in the 25x25 initiative which

will allow us to work across our industry to

shift the gender balance in our leadership

pipeline. The Board also broadened its

understanding of the ethnic diversity present

within senior leadership and the processes in

place to request further data from employees.

In line with the Parker Review, the Board

approved an ambition to develop ethnic

diversity in our UK leadership population,

while also recognising the importance of

building ethnic diversity in a global business.

More information on the Group’s ambition

can be found on pages 56 to 57.

The Board also discussed the progress made

against the Group’s inclusion and belonging

roadmap which was launched in October

2022. The roadmap focuses on policy, action

and communication to openly develop the

Group’s commitment to fostering a diverse

and inclusive workforce with the aim of

ensuring that everyone within the Group or

considering a career within the Group feels

that they belong. Particular highlights during

the year have included progressing the

development of employee resource groups

within the Divisions and developing global

policies on gender-neutral parental and

caregiver leave.

Read more about these visits

on page 89

There are formal and informal channels for

all employees to raise concerns, with any

significant concerns and insights being

shared with the Audit and Risk Committee

through the Group Ethics and Compliance

Programme. Regular updates on the Speak

Up programme and reporting from the

confidential Spectris helpline are provided to

the Audit and Risk Committee, alongside a

formal annual review, including consideration

of the remediation actions taken for reports

received through the Helpline.

The Audit and Risk Committee also

receivesan update on the completion rates

ofthe ethics and compliance programme,

which includes the Code of Business Ethics

refresher training, completed by the Board

and employees.

Key customers have also continued to be

invited to Board meetings, which provides a

valuable and unique insight and allows the

Board to better oversee and challenge

strategies for how we can continue to meet

and adapt to our customers’ needs.

The Board believes that the mechanisms

reported above provide an effective oversight

to ensure the culture within the Group

remains aligned with the Purpose, strategy

and Values of Spectris.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 91

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Nomination and Governance Committee Report

Succession planning

The Committee spent considerable time

reviewing the skills and capabilities of the

current Board and identifying areas of focus

for future Non-executive Director recruitment.

Recognising the tenure of Bill Seeger and Ulf

Quellmann, particular thought was given to

their succession and ensuring the Board

would continue to comprise an appropriate

mix of skills and experience following their

retirement. The key outcome of this work

during the year was the appointment of

Mandy Gradden who joined the Board in

October 2023. Mandy brings to the Board

significant experience in finance, investor

relations, strategy, digital and software, and

will be appointed Chairman of the Audit and

Risk Committee following Bill Seeger’s

retirement from the Board at the 2024 AGM.

During 2023, the Committee has been focused on the Board’s composition,

succession planning at a Board and Executive level, the development of the

Group’s approach to Diversity, Inclusion and Belonging, and the widening

of the Committee’s remit to incorporate the review of Board oversight and

governance activities.

The Committee also oversaw the initiation of

the succession process for Ulf Quellmann,

which remains ongoing at the time of this

report. In recognition of the significant

strategic experience that Ulf brings to the

Board, the Committee recommended to the

Board that Ulf continue in role for one further

year to support the continuation of the

thorough process to select his successor and

to ensure the continued depth of Group-

related experience following the retirement of

Bill. As part of this recommendation it was

highlighted that Ulf would not continue his

role on any Committee following the 2024

AGM reflecting the Code best practice.

In respect of wider succession planning for

the Executive and senior management, the

Committee continued to receive regular

updates from the Chief Executive and the

Group HR Director. Good progress has also

been made to develop the skills of the

Read our Board Diversity Policy

www.spectris.com/corporategovernance

“The Committee spent considerable

time reviewing the skills and

capabilities of the current Board and

identifying areas of focus for future

Non-executive Director recruitment.”

Mark Williamson

Chairman of the Nomination and Governance

Committee

leadership community within the Group,

including the commencement of the

secondcohort of the Spectris Leadership

Development Programme, Ascend. The

Committee is pleased with the progress

being made in respect of leadership

development across the Group and

recognises the need to continually refresh

theGroup’s talent pipeline. During the year

the Committee members spent time with

senior leaders below Executive level in various

formal and informal settings to ensure they

maintained a good understanding of the

depth of senior talent and potential within

theGroup.

Diversity, Inclusion and Belonging

The Committee and I strongly believe that

Board members should bring a blend of

expertise and skills with a variety of

perspectives, to facilitate constructive

discussions and effective, balanced decision-

making. This underpins the FTSE Women

Leaders Review and the Parker Review, which

emphasise the importance of ensuring

Boards are diverse in gender, as well as ethnic

and social background. The Committee fully

endorses this view and is focused on ensuring

that diversity is central to its work on

succession planning. The composition of the

Board is fully compliant with both the FTSE

Women Leaders Review and the Parker

Review. In 2023, the Committee was proud to

oversee the development of the Group’s

Diversity, Inclusion and Belonging

workstream and to endorse the setting of a

target of 40% of senior leaders across the

Group to be women by 2030. The Committee

also oversaw the progress made by the Group

to develop an understanding of the ethnic

diversity present at a senior management

level in the business with the aim of setting

an ambition to increase representation across

the Group. Further details of the activity

undertaken by the Group during the year are

set out on pages 56 and 57.

A refreshed remit

As a key outcome of the 2022 external Board

evaluation exercise, during the year the

Committee’s remit was refreshed to formally

include oversight of the Group’s governance

structures. This change was made to reflect

the growing importance of wider governance

structures at Board level to oversee the

Group’s approach to environmental, social

and governance (ESG) matters. This wider

oversight role now formally includes

workforce engagement activities overseen by

Kjersti Wiklund and the work undertaken by

Alison Henwood to oversee the Group’s

sustainability strategy. To support this work,

the Committee received regular updates

from the Head of Corporate Affairs on the

emerging ESG regulatory landscape to

ensure that the Group’s governance

structures remained appropriate.

Mark Williamson

Chairman of the Nomination and Governance

Committee

28 February 2024

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202392

Nomination and Governance Committee Report continued

Role of the Committee

The Committee leads the process for Board

appointments and makes recommendations

to the Board in this regard. In fulfilling this

role, the Committee evaluates the balance

ofskills, experience, independence and

knowledge onthe Board. The Board values

diversity and considers the importance of

diversity, in all its forms, when recruiting new

Board members. In 2023, the role of the

Committee was extended to include the

review of the overview of the Group’s

governance structures and processes, which

includes those structures put in place to

support the Board’s oversight of the Group’s

sustainability strategy and approach to

workforce engagement.

Full terms of reference for the Committee

can be found at 

www.spectris.com/corporategovernance

The Committee’s performance was assessed

as part of the Board’s internally conducted

annual effectiveness review and is considered

to be operating effectively. Further details on

the evaluation process are set out on page 88.

Membership and attendees

Throughout 2023 all Non-executive Directors

were members of the Committee. Regular

attendees at the meetings also include the

Chief Executive and the Group HR Director.

Other attendees joined for topical

discussions, including the Chief Financial

Officer and Head of Corporate Affairs to

discuss the Group's approach to Diversity,

Inclusion and Belonging. The biographies of

the members of the Committee can be found

on pages 80 and 81 and attendance at

Committee meetings on page 84.

Activities of the Committee

during 2023

During the year, the Committee’s key

activities included:

• a deep dive into the Group’s talent strategy

and priorities;

• an in-depth review of the results and

emerging trends from the Group’s third

annual employee engagement survey;

• reviewing and recommending to the Board

the ambition that at least 40% of senior

leadership roles would be filled by women

by 2030;

• reviewing and recommending to the

Board, the Group’s approach to developing

a target on ethnic diversity aligned to the

requirements of the Parker Review;

• regular updates from Kjersti Wiklund as

Workforce Engagement Director;

• considering the independence of each

Non-executive Director and their time

commitments;

• reviewing relevant legal and regulatory

requirements and the Group’s proposed

response;

• receiving regular updates from Alison

Henwood, as the Non-executive Director

responsible for sustainability oversight on

the progress of the Group’s sustainability

strategy; and

• the annual review of the Board’s skills and

capabilities matrix; and succession

planning.

During 2023, the Committee placed

considerable focus on the Board’s succession

pipeline, recognising that both Bill Seeger and

Ulf Quellmann would have served nine years

on the Board ahead of the 2024 AGM. In

addition to merit and objective criteria, the

Committee ensured that the selection process

followed promoted diversity of gender, social

and ethnic background, and fully considered

the cognitive and personal strengths of the

candidates and how their skills, experience

and approach would complement the Board.

The process also considered the candidates’

existing appointments and associated time

commitments as well as any actual or potential

conflicts prior to their recommendation to the

Board. In support of their considerations, the

Committee reviewed the existing skills and

capabilities of the Board, the future skill set

required and the Board’s Diversity Policy. The

Committee was supported by the external

recruitment agency, the Lygon Group, in the

selection process for Bill’s successor.

Following a thorough process, the Committee

oversaw the selection and recommendation

ofMandy Gradden as an Independent

Non-executive Director to the Board.

Following Mandy’s successful appointment

and on-boarding, the Committee further

recommended Mandy’s appointment as

Chairman of the Audit and Risk Committee

following Bill’s retirement from the Board at

the 2024 AGM.

At the same time, the Committee also

undertook a high-level market search for a

suitable successor to Ulf. However, it was

considered important to first secure a

suitable successor for Bill, with the necessary

skill set to assume the role of Chairman of the

Audit and Risk Committee and then

reconsider the skills and capabilities present

on the Board to ensure that the

appointments were complementary.

Following the appointment of Mandy, the

Committee then engaged Egon Zehnder to

support the active search for a Non-executive

Director with complementary skills, focused

on Ulf’s significant experience and skill in

strategy development and implementation.

At the date of this report, the search remains

in progress.

In line with the requirements of the Code,

theCommittee can confirm that there is no

further connection between the Lygon

Groupand the Company or individual

Directors. Egon Zehnder has also supported

the Group with senior leadership recruitment

in addition to its role in the Non-executive

search process.

Recognising the ongoing nature of the search

for Ulf’s successor, the Committee has

recommended to the Board that Ulf be

recommended for re-appointment as a

Non-executive Director at the 2024 AGM to

serve up to one further year on the Board to

ensure continuity of experience and skills.

Recognising the spirit of the Code, Ulf will

retire from the Remuneration, Audit and Risk

and Nomination and Governance Committee

at the 2024 AGM.

The Committee feels that the Board’s overall

composition has a broad range of skills and

experience, with a variety of different lengths

of tenures which will provide a good basis for

any short-term succession challenges. To

maintain this position, ongoing succession

planning continues to form an ongoing part

ofthe Committee’s regular agenda, including

the annual review of the skills and capabilities

matrix (which not only informs the

appointment process, but also the training

and development programme for the Board).

In respect of the longer-term Board

composition, as Board members progress

through their tenure, the Committee

continues to consider their independence, the

role they play within the boardroom and how

itmay need to plan for the departure of

Directors. This includes having clear succession

pipelines for the key roles on the Board, as well

as the Executive Director positions.

Workforce engagement

The Committee has continued to receive

regular updates from Kjersti Wiklund as the

Workforce Engagement Director on

engagement meetings that took place during

2023. Building on previous engagements,

in2023, Kjersti was accompanied on key

workforce engagement interactions by other

Non-executive Directors. In April, Ravi

Gopinath joined Kjersti on a three-day

engagement deep-dive visit to Korea, during

which they met with senior management and

groups of employees from each business. In

September, Alison Henwood joined Kjersti at

the HBK facility in Virum where they met with

groups of employees based at the site. During

the planned Board visit to the Malvern

Panalytical facility in Almelo, Cathy Turner

joined Kjersti for employee engagement

meetings. All meetings took place without

senior management present and further

details are set out on page 89. In addition to

these in-person meetings, Kjersti also met

separately with the HR Director of each

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 93

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Nomination and Governance Committee Report continued

Non-executive Directors’ tenure

The Committee monitors a schedule of the Non-executive Directors’ tenure

and reviews potential departure dates assuming the relevant Directors are not

permitted to serve more than three three-year terms (nine years) from their

appointment date, unless in exceptional circumstances (see the chart below).

* Bill Seeger completed nine years’ of service on the Board in January 2024 and he will retire

from the Board at the conclusion of the 2024 AGM. More information on succession planning

can be found on page 92.

Board skills and experience

Very experienced Experienced

Non-Executive

Directors

Ravi Gopinath

Mandy Gradden

Alison Henwood

Ulf Quellmann

Bill Seeger*

Cathy Turner

Kjersti Wiklund

Mark Williamson

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

Division and with the Group HR Director to

review the trends in employee engagement

and key people-related activities.

Board Diversity Policy

During the year, the Board’s Diversity Policy was

reviewed and extended to include the ambition

that by 2030, 40% of the Group’s senior

leadership community would be women.

External appointments and time

commitments

External directorships and conflicts of

interestare declared by Directors on

appointment and are reviewed at least

annually by the Committee. Any external

appointments are carefully considered,

including the impact on the individual

Director’s ability to meet the necessary

timecommitments. Conflicts of interest are

recorded and reviewed together with any

evidence of situational or transactional

conflicts, as well as each Director’s

shareholding in the Company. This helps

toensure that the judgement of the Board

remains uncompromised and independent.

The Board considers all Directors have

sufficient time to meet their Board

responsibilities. Details of the Directors

external appointments are included in

theirbiographies on pages 80 and 81.

Director election and re-election

In considering the recommendation of the

election and re-election of Directors, the

Committee considers a number of factors.

These include: 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.

Any potential conflicts of interest are also

considered. This review allows the Board to

consider any circumstances that are likely to,

or could, impair a Non-executive Director’s

independence. With the support of the

Committee’s recommendation, the Board

has concluded that all Non-executive Directors

being recommended for re-election are

considered to be independent.

Mark

Williamson

Andrew

Heath

Derek

Harding

Cathy

Turner

Ravi

Gopinath

Bill

Seeger

Ulf

Quellmann

Kjersti

Wiklund

Alison

Henwood

Mandy

Gradden

Strategy and M&A

Finance and accounting

Risk management/

regulation/governance

Digital and technology

(including cyber and AI)

Science and engineering

Sustainability

Operating model/change

management

Talent and remuneration

International business

experience

Listed CEO/CFO

Board tenure

1–3 years 3

3–6 years 3

6 years+ 4

Gender

Male 60%

Female 40%

Nationality of Directors

British 6

American 1

German 1

Norwegian 1

Singaporean 1

Overboarding scores

1 mandate 1 Director

2 mandates 1 Directors

3 mandates 5 Directors

4 mandates 3 Directors

5 mandates No Directors

Board overview

1 Based on 2024 ISS Guidance, which classifies any person with more than

5 mandates at a listed company as overboarded. A Non-executive

Directorship counts as 1, a Non-executive chairmanship counts as 2 and

an Executive Director position (or comparable role) counts as 3.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202394

Audit and Risk Committee Report

I am proud of the oversight structures

developed by the Committee and the

strength of our relationship with our

externaland internal auditors and with the

management team. I have also been pleased

to see the development of the strength of the

finance community within the Group under

the guidance of Derek Harding.

In October 2023, Mandy Gradden joined the

Board and the Committee, and she will

succeed me as Chairman of the Committee

in May 2024. I have been very impressed with

Mandy’s experience and approach in our early

meetings and feel confident that she will

further develop the role and remit of

theCommittee.

This report sets out the key activities of the

Committee during 2023. During the year, the

Committee’s core duties remained largely

unchanged and our usual cadence of

activities relating to financial reporting, risk,

assurance, and internal controls continued.

However, in recognition of the importance of

a continuous focus on risk management we

formalised the inclusion of an additional

Committee meeting each year focused on

the oversight of risk and internal control. The

Committee and I were pleased to oversee

the continued strengthening of the Group’s

internal audit provision under PwC.

In 2023, the Committee also focused on the

development of its oversight of the Group’s

ESG reporting and assurance processes,

supported by Alison Henwood, who in

addition to her Committee responsibilities

provides oversight of the Group’s

sustainability programme. The Group’s ESG

reporting is supported by limited assurance

provided by Deloitte in addition to its role as

external auditor and the Committee has

benefited from the experience, wider market

context and rigour that Deloitte has brought

to the review of the Group’s ESG reporting.

The Committee members benefited from

the Board’s visit to the Malvern Panalytical

site in Almelo, the Netherlands in October

2023. This visit offered a valuable opportunity

to meet key employees within the Malvern

Panalytical business and review the

development of the Group’s strategy. While

in Almelo I was pleased to join Derek

Harding in meeting with the team leading

the ERP transformation project for Malvern

Panalytical. We heard more about the

progress of work against the stage gate

review process being followed prior to

launch and the collaboration with HBK to

share lessons learned to help mitigate

against potential risks, as it also progresses

towards its ERP launch.

The Committee as a whole continues to

have dedicated 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

finance team on accounting judgements

and issues, risk and internal controls, and the

progress against the internal audit plans.

In 2024, a key focus of the Committee will be

overseeing the transition to the new external

audit partner, Rob Knight, as he transitions

into role following the completion of the

2023 year-end process. Beyond these

changes the Committee will focus on

adopting the changes in the revised UK

Corporate Governance Code released in

January 2024 (2024 Code) by further

developing the Group’s risk management

and internal control structures alongside the

launch of the new ERP system at Malvern

Panalytical and HBK, and the Group’s

further response to the developing

landscape of ESG regulations.

I do hope you find this report useful in

reviewing the work undertaken by the

Committee in 2023.

Bill Seeger

Chairman of the Audit and Risk Committee

28 February 2024

Role of the Committee

Membership and attendees

During 2023 the Committee was comprised

solely of the following independent

Non-executive Directors:

• Bill Seeger

• Kjersti Wiklund

• Ulf Quellmann

• Alison Henwood; and

• Mandy Gradden (from October 2023)

Bill Seeger, Mandy Gradden and Alison

Henwood are determined by the Committee

to have ‘recent and relevant financial

experience’ as required by the Code. 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 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 80 and 81

Details of attendance at Committee meetings is

set outon page 84

Roles and responsibilities

The Committee supports the Board in

fulfilling its responsibilities in respect of:

• overseeing the Company’s financial and

narrative reporting processes, including

advising the Board on the fair, balanced

and understandable assessment of the

information provided;

• reviewing, challenging and approving

significant accounting judgements (see

pages 97 and 98) proposed by

management;

This is my final report to you as Chairman of the Audit and Risk

Committee as I will retire from the Board following completion of my nine

years’ tenure at the 2024 AGM. The Group has evolved immeasurably

during my tenure and the responsibilities and focus of the Committee

has evolved successfully to mirror this change.

“The Group has evolved immeasurably

during my tenure and the

responsibilities and focus of the

Committee has evolved successfully

to mirror this change.”

Bill Seeger

Chairman of the Audit and Risk Committee

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 95

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Audit and Risk Committee Report continued

• reviewing and monitoring the way in which

management ensures and oversees the

adequacy of financial, risk management

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;

• ensuring that relevant and significant areas

of risk management are appropriately

considered and addressed; and

• that additional consideration is given to

relevant regulatory developments and

emerging best practice.

The full Terms of Reference setting

out the activities of the Audit and Risk

Committee are available at

www.spectris.com/corporategovernance

Audit Committee meetings

In response to the 2022 external Board

evaluation outcomes and investor feedback,

the Committee made the decision to

schedule an additional meeting each year,

bringing the total scheduled meetings to four.

The additional meeting held in October 2023

focused on the effectiveness of the Group’s

current risk and controls framework and the

work undertaken during the year by the

external auditor, Deloitte, and the internal

auditor, PwC. The Terms of Reference for the

Committee were amended to include a

minimum of four meetings per year. Informal

discussions on key topics were also held

outside of meetings when required. The

Committee retained time around each

meeting to meet separately without

management present and invites the PwC

internal audit co-source partner and

representatives from the external auditor to

attend for part of this session.

Significant matters considered during

the year

The Code requires, on a comply or explain

basis, that the Committee report on the

significant matters considered during the

year. In 2023, the Committee considers that

the most important matters were:

• continuing to support preparations in

response to the planned UK regulatory

changes on internal control provisions,

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 to the internal controls

framework;

• consideration and decisions around the

accounting for transactions within the

business, including the completion of the

Concept Life Sciences divestment in March

2023, the planned divestment of Red Lion

and the acquisition of MicroStrain, EMS, the

XRD product line from Freiberg

Instruments and the investment in

LumaCyte; and

• providing oversight of the Group’s ESG

reporting and assurance processes,

supported by Alison Henwood.

In July 2023, the Group received a letter from

the FRC asking us to explain how our

accounting policy to recognise revenue for

some installations prior to the performance of

any installation service complied with IFRS 15

‘Revenue from Contracts with Customers’.

In response, the Committee oversaw the

clarification that this component of revenue

was not material to the Group’s financial

statements for the year under review and the

explanation of the circumstances under

which this revenue had previously been

recognised in advance of performing an

installation service. The relevant disclosures

inthis annual report have been updated.

Annual performance evaluation

During 2023, the Committee’s performance

was assessed as part of the Board’s internally

conducted annual effectiveness review. The

Committee is considered to be operating

effectively. Further details on the evaluation

process are set out on page 88.

Activities during 2023

The Committee has an annual forward

agenda developed from its Terms of

Reference. Standing items are considered at

each meeting, in addition to any specific

matters arising, and topical business or

financial items on which the Committee has

chosen to focus. The work of the Committee

in 2023 was principally split into four key areas:

• Accounting, tax and financial reporting;

• Risk management and internal controls;

• Internal audit; and

• External audit.

These topics are regularly considered in

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.

Accounting, tax and financial reporting

The Committee plays an integral role in

providing assurance to the Board around the

integrity of the half-year and annual Financial

Statements and the associated significant

financial reporting judgements, estimates

and disclosures. During 2023, as part of its

review of the half-year and annual financial

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 accounting

judgements such as revenue recognition

and the Vendor Loan Note and Eurazeo

investment (which formed part of the

consideration for the sale of Millbrook in

2021);

• reviewed the areas of accounting

judgements in respect of the Concept Life

Sciences disposal and the consolidation

requirements relating to the acquisition of

EMS, XRD product line from Freiberg

Instruments, MicroStrain and the minority

interest investment in LumaCyte

Incorporated;

• 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

the findings and opinions of the external

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;

• reviewed the effectiveness of the external

auditor;

• assessed the disclosures in the 2023 Annual

Report and Accounts in relation to internal

controls and the work of the Committee;

and

• reviewed the proposed update to the

Group’s tax strategy.

The Committee also carried out a regular

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 2023

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

2023 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.

The accounting policies are included in the

relevant notes to the Consolidated Financial

Statements. These are presented on pages

136 to 198. With the support of Deloitte, as

external auditor, the Committee has reviewed

the suitability of the accounting policies

which have been adopted and whether

management has made appropriate

estimates and judgements.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202396

Audit and Risk Committee Report continued

Key areas of focus in relation to the Financial Statements

The Committee has reviewed the key judgements applied to the following significant issues in the preparation of the Financial Statements. The table below sets out the issue, its significance,

how the Committee considered it and any comments and conclusions reached.

Segmental reporting Alternative performance measures (APMs) Estimation, uncertainty and judgement

Issues and significance

The Group reports its operating segments and reportable

operating segments in accordance with IFRS 8. The

segmental platform structure reflects the current internal

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 to assess performance. The structure for 2023 remains

consistent with the prior year.

The role of the Committee

The Committee assessed whether the signed agreement

to dispose of Red Lion would impact the Group having

‘Other’ as a non-reportable operating segment. The

Committee also sought views from Deloitte.

Comments and conclusions

The Committee concluded that for the 2023 Annual

Reportand Accounts in accordance with IFRS 5 Assets

Held for Sale accounting in agreement with Deloitte that

the ‘Other’ non-reportable operating segment would

remain. The Committee agreed to review the segmental

reporting structure should the Red Lion sale process

complete in 2024.

Issues and significance

The Group continues to monitor and consider whether the

items adjusted in the APMs are appropriate in accordance

with the Group’s policies. The Board has approved a

potential additional £6 million contribution to the Spectris

Foundation, subject to strong financial performance up to

2030. As part of this, the first £1 million contribution has

been approved and included in 2023. Given the one-off

nature of this campaign, this amount has been disclosed as

a new separate APM.

The role of the Committee

The Committee reviewed and considered the list of items

adjusted for within the APMs as well as the explanation and

disclosure of the APMs.

Comments and conclusions

The Committee was satisfied with the list of items adjusted

for within the APMs, including the addition of the £1 million

contribution, as well as the explanation and disclosure of

the APMs and supports that these add clarity to the

understanding of the Company’s financial performance.

The Committee reviewed and concluded that the relative

prominence of statutory measures compared to APMs

remains balanced.

Issues and significance

During the year, the Committee received reports and

recommendations from management to consider the

significant accounting issues, estimates and judgements

applicable to the Group’s Financial Statements and

disclosures.

The key sources of estimation uncertainty disclosed in the

Group’s 2023 Financial Statements are in relation to the

assumptions applied in the calculation of retirement

benefit plan assets and liabilities (note 19).

The role of the Committee

The Committee received confirmation from management

that they were not aware of any material or immaterial

misstatements made intentionally to achieve a particular

presentation.

The Committee considered the appropriateness of

disclosures and sensitivities with respect to the turbulent

macroeconomic environment particularly around risk

factors and their impact on discount rates.

The Committee reviewed and challenged presentations by

management and also questioned Deloitte to understand

whether the external auditor had, to the Committee’s

satisfaction, fulfilled its responsibilities with diligence and

professional scepticism and in a sufficiently robust manner.

Comments and conclusions

Following detailed review, challenging the presentations

and reports from management and where necessary,

consulting with the external auditor, the Committee is

satisfied that the Financial Statements appropriately

address critical judgements and key estimates (both in

respect of the amounts reported and the disclosures).

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 97

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

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

Issues and significance

Concept Life Sciences (CLS) was divested on 31 March 2023.

CLS was not classified as held for sale at the 2022 financial

year end as the sale process was not sufficiently advanced

at that time.

The divestment of Red Lion was agreed in December 2023.

Red Lion is included in the ‘Other’ non-reportable

operating segment. Due to size and significance of the

business it was determined that Red Lion should be

treated as an Asset Held for Sale in accordance with IFRS 5.

The Group completed four acquisitions during the year.

12.2% of the share capital of LumaCyte was acquired in

August 2023. The Committee concluded that the Group

has a significant but not controlling interest and will

account for the investment and associated transaction

costs as an investment on the balance sheet, via the equity

method. A purchase agreement was signed in June 2023

to acquire MicroStrain and the acquisition was completed

in September 2023. MicroStrain forms part of the Spectris

Dynamics operating segment.

EMS was wholly acquired in October 2023 and will form

part of the Spectris Scientific operating segment and the

PMS cash generating unit. In October 2023, the Group

acquired Intellectual Property and know-how of the XRD

product line from Freiberg Instruments.. This will form part

of the Spectris Scientific operating segment.

The accounting implications of all the above were

presented for review.

The role of the Committee

The Committee reviewed the papers provided to the Board

and considered the relevant accounting judgements for

the transactions in question. Opinions were sought from

Deloitte.

Comments and conclusions

Following the Committee’s review of the accounting

treatments proposed by management for the four

acquisitions and one disposal that took place within the

year, the Committee was satisfied that the treatments

used were appropriate for each transaction.

Issues and significance

During 2023, 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

and no new emerging risks were identified for inclusion.

The role of the Committee

The Committee reviewed this process during its December

2023 and February 2024 meetings and considered the

appropriate disclosure for the Principal Risks and

uncertainties section and Viability Statement within the

Annual Report.

Comments and conclusions

The Committee endorsed the assessment of the Group’s

Principal Risks, and the respective scenarios considered in

the preparation of the Viability Statement.

Issues and significance

Management presented the Committee with an updated

calculation of going concern and an assessment of the

viability of the Group over a five-year period. This included

revised forecasts including using the latest Strategic Plan

which looked forward to 2027 plus an extrapolation of the

results to 2028 to cover the five-year period.

This year further consideration has been given to the

impact resulting from the Group’s Principal Risks and

uncertainties including the impacts from climate change.

The role of the Committee

The Committee reviewed the papers received from

management in respect of the assessment of both going

concern and viability and challenged the assumptions

made by management in their assessment.

The views of the external auditor were also sought to

provide context and further challenge to the assumptions

in the papers.

Comments and conclusions

The Committee concluded that, given the cash profile and

strength of the financial forecast, the position of the Group

remained strong and that the financial statements could

continue to be prepared on a going concern basis. The

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

31 December 2028.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 202398

Audit and Risk Committee Report continued

proportionate Code revision and more time

for implementation.

The Group has continued to develop and

enhance its internal control and risk

management processes in 2023 in readiness

for these changes. This work has included, in

particular, working alongside critical business

transformation projects to ensure adequate

controls have been designed, tested and

documented as part of the system

implementation, and building a group

governance, risk and compliance tracker

which can track and report on risks,

associated controls and further risk mitigation

actions as well as on actions arising from

internal audit findings.

During the year the Committee received

regular updates from the Head of Risk and

Control as well as routine updates from the

business audit and risk committees. It also

received a detailed update at each meeting

on the proposed legislative and Code

changes and the progress being made to

enhance the internal controls framework.

The Committee will continue to receive

regular updates and engage closely with

management on any changes that might

benefit the Group’s existing approach to

internal controls and to ensure compliance

with legislation and best practice as they

areupdated.

Throughout the year, the Committee has

monitored the Group’s internal control and

risk management systems and at its meeting

in February, specifically reviewed the

effectiveness of these.

Key areas of focus for 2024

• continue to work alongside business

transformation projects 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

work, specifically for financial, operational

and compliance controls;

• oversee the Group’s approach to

compliance with the Corporate

Sustainability Reporting Directive.

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

RiskCommittee Chairman, who also held

discussions with the Head of Risk and Control.

Throughout 2023, the Committee has

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 on its agenda

for future meetings.

The Committee’s primary responsibility in

respect of risk management and internal

controls systems is to review their

effectiveness and to make recommendations

for possible improvements as appropriate.

The Board notes that, as with all such systems,

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.

Preparation for changes in audit and

governance reform

In May 2023, the Financial Reporting Council

(FRC) launched a public consultation on

proposed revisions to the Code, following the

UK Government’s response to the White

Paper on ‘Restoring Trust in Audit and

Corporate Governance’. Draft legislation

setting out additional reporting requirements

for companies was also issued in July 2023,

which proposed to introduce further

disclosures, including the requirement for the

publication of an Audit and Assurance Policy.

In 2024 the Committee will focus on ensuring

that the Group’s compliance strategy and

methodology for evaluating and concluding

on the adequacy and effectiveness of internal

controls as required by the 2024 Code. This

includes proceeding with changes to the

reporting requirements regarding internal

controls, albeit with a more targeted and

• refine the target operating model for risk,

control and internal audit and leveraging

the Group governance, risk and compliance

tracker; and

• continue to oversee the Group’s

compliance with the implementation of the

Corporate Sustainability Reporting

Directive.

The ongoing work to further enhance internal

controls will lead to better assurance and

efficiencies through the opportunities to

formalise and automate controls and gain

better quality of information for decision-

making purposes.

Ethics and compliance and the Spectris

confidential helpline

The Committee receives updates on any

reports raised through the Group’s

independent and confidential helpline, and the

status of associated investigations (further

details of the Group’s Speak Up Policy can be

found on page 58). The Committee also 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.

2023 Viability Statement

The Committee reviewed the preparation of

the 2023 Viability Statement and considered

the following factors which could impact the

duration over which the Viability Statement

ismade:

• 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.

The Committee remains of the view that the

statement made regarding the Company’s

viability period continues to be an accurate

assessment of the Company’s viability as at

the date of the report.

Read more about the 2023 Viability Statement 

on page 51

Risk management and internal

controls

Internal control and risk management

systems

To assist the Board with its responsibilities to

effectively determine the nature and extent of

the Group’s significant risks, the Committee

carries out a robust annual assessment of the

Principal Risks and uncertainties facing the

Group. The Board remains ultimately

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

those systems. Before reporting its findings

and recommendations to the Board, the

Committee ensures that its responsibilities as

set out in its Terms of Reference (available at

www.spectris.com) are adequately met.

Thisincludes:

• 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 Group’s Principal Risks and internal

audit programme;

• reviewing reports received on significant

control issues to the Group and considering

and challenging as necessary the adequacy

of management’s response to any matters

raised;

• overseeing the governance and risk

management framework, including a

definition of risk appetite by risk category

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;

• considering common control themes

identified throughout the business and

where themes are identified, ensures that

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 99

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Audit and Risk Committee Report continued

Internal audit

The purpose of internal audit is to provide

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 2023, the Internal Audit function

continued to be led through an outsource

arrangement by PwC, with a lead internal

audit partner as the Head of Internal Audit,

with oversight provided by the Committee.

The Committee is required to provide

assurance to the Board on the adequacy of

the resourcing and internal audit planning.

Itis also responsible for monitoring the

effectiveness of the internal audit function.

During 2023, the outsource arrangement

with PwC operated smoothly, with positive

progress made in the delivery of risk-based

reviews, engagement with the business,

recommendation activities, and subsequent

reporting. The outsource function works

closely with the divisional structure of Spectris

Scientific and Spectris Dynamics, to better

utilise the capability and flexibility of PwC,

focusing on the key risks across the Group

and in each business. The internal audit

planand approach is then tailored to the

respective needs of each business.

Internal audit planning

The Committee has received regular reports

from the Head of Internal Audit regarding the

status of the internal audit plan and the

reports generated from these audits. The

majority of actions raised as part of the 2023

internal audit plan have been implemented,

with the remaining actions clearly owned and

progressing with management.

At its final meeting in 2023, the Committee

also considered the internal audit plan for

2024. The plan was developed using a

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 to

monitor the 2024 internal audit plan and

ensure that it remains relevant and responds

to any changes in the risk profile of the

business. The Committee was pleased to

approve the 2024 internal audit plan. The

Committee will continue to be 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.

Effectiveness of internal audit

Following the transition from a co-source

internal audit arrangement during 2022, the

Group progressed to a fully-outsourced

arrangement with PwC at the start of 2023.

The Committee reviewed the work

performed by PwC throughout 2023 and

concluded that the transition to the fully

outsourced model was effective, and the

assurance provided by the internal audit

function remained strong.

Business audit and risk committees

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.

These business audit and risk committees,

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 review updates in respect

ofethics and compliance matters. The

Committee was 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.

External auditor

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

auditor in 2016, with effect from 1 January

2017, following a competitive tender process,

and has now completed its seventh year as

auditor. Andrew Bond has held the role of

lead audit partner since March 2019. Rob

Knight will become our new audit partner

following the completion of the 2023

year-end process.

External audit process

The external audit for the year ended 31

December 2023 has 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 the audit. The

Committee receives regular 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 usual meeting cycle. This

has provided 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 the financial

statements. Andrew Bond has been present

in every Committee meeting during the year.

Rob Knight, who will become our new audit

partner following the completion of the 2023

year-end process, attended a number of

meetings as part of the transition into this

role. The Committee 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;

• reviewed reports on audit findings; and

• considered and approved letters of

representation issued to Deloitte.

Audit and non-audit fees

The engagement letter for the audit of the

2023 Financial Statements was reviewed by

the Committee, and, in accordance with the

authority given to the Committee at the 2023

AGM, the Committee reviewed the proposed

remuneration of Deloitte. The Committee

considered the proposed auditor’s

remuneration to be appropriate.

The Committee reviewed

the work performed by

PwC throughout 2023 and

concluded that the transition

to the fully outsourced

model was effective, and the

assurance provided by the

internal audit function

remained strong.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023100

Audit and Risk Committee Report continued

External auditor re-appointment

The Committee reviews annually the

appointment of the external auditor, taking

into account the auditor’s effectiveness and

independence, and makes a recommendation

to the Board accordingly. Any decision to open

the external audit to tender is taken on the

recommendation of the Committee.

Following the Committee’s consideration of

the effectiveness of Deloitte as the Company’s

external auditor, it is proposed that Deloitte be

re-appointed as auditor of the Company at the

next AGM in May 2024 and, if so re-appointed,

that it will hold office until the conclusion of

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 external

auditor for the 2017 audit following a formal

tender process and their reappointment was

last approved by shareholders at the 2023

AGM. During the year, the Committee

reviewed the arrangements with the current

external auditor and considered whether it

was appropriate to initiate a tender process.

The Committee noted that given the

knowledge and standard of services provided

by Deloitte, 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 in 2026.

The Group will continue the practice of the

rotation of the key audit engagement partner

at least every five years, with all other team

members required to rotate at least every

seven years. In support of this practice, Rob

Knight will succeed Andrew Bond as audit

engagement partner in 2024. As detailed

above, the Group complied with the Statutory

Audit Services Order 2014 throughout 2023.

Read more about the independent

external auditor’s report to shareholders

on pages 129 to 135

• reports highlighting key items that arose

during the course of the audit.

During the year, the Committee carried out

the annual effectiveness review of the

external auditor. The findings of this review

were reported in detail to the Board. The

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 stakeholder survey was refreshed

duringthe year in light of achieving higher

standards of audit quality, and the increased

government and regulatory focus on audit/

auditor effectiveness in line with the Code,

and the planned introduction by the FRC on

the minimum standard for audit committees.

The resulting assessment was more

comprehensive than in previous years.

There were no significant findings following

the review and it was concluded that the

audit process continued to be effective. Minor

findings from the stakeholder survey have

been actioned during the year by Deloitte

and incorporated into its 2024 work plan.

To fulfil its responsibility for oversight of the

external audit process, the Committee is

responsible for reviewing:

• the terms, areas of responsibility, associated

duties and scope of the audit as set out in

the external auditor’s engagement letter;

• the overall work plan and fee proposal;

• any significant issues that arose during the

course of the audit and their resolution;

• key accounting and audit judgements;

• the level of errors identified during the

audit; and

• the content of, and any recommendations

made by the external auditor in, their

management letters and the adequacy of

management’s response.

The Committee believes that non-audit work

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.

The Committee’s Non-audit Services Policy is

available at

www.spectris.com/corporategovernance

The Committee’s Non-audit Services Policy

isused to safeguard Deloitte’s independence

and objectivity. Non-audit fees for services

provided by Deloitte for the year amounted

to£0.1million (3.7% of the total audit fee). As

in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

produce an interim review of the Group’s

Danish subsidiary in accordance with

ISRS4400 for the DPA filing. Deloitte was

considered best placed to support the

Company in this role as a result of its unique

knowledge of the Group, having considered

the threats to auditor independence

including non-audit service fee caps for the

Group and the UK. The work was deemed

incidental to the audit service. Further details

are included in note 4 to the Consolidated

Financial Statements.

The Committee considered the engagement

of Deloitte and was comfortable that the

engagement did not adversely impact the

independence of the external auditor and was

in line with the Group’s Non-audit Services

Policy. Further details are included in note 4

tothe Financial Statements.

Effectiveness of the external auditor

To assess the effectiveness of the external

auditor the Committee reviewed:

• the external auditor’s fulfilment of the

agreed audit plan and variations from it

(including changes in perceived audit risks

and the work undertaken by the external

auditors to address those risks); and

Following the Committee’s

own assessment of the

performance, independence

and effectiveness of Deloitte,

the Committee is satisfied

that Deloitte continues to

remain effective in its role as

external auditor.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 101

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Report

Remuneration Committee Chairman’s statement

This report provides a comprehensive picture

of the structure and scale of our remuneration

framework, its alignment with both the

Group’s strategy and the wider workforce.

Thereport sets out the decisions made by

theCommittee as a result of business

performance for this year and the intended

arrangements for 2024.

2023 Remuneration policy

Shareholders approved the Group’s

Remuneration Policy (the Policy) at a General

Meeting on 13 December 2022. The Policy

received over 95% of votes in favour of its

approval and came into effect on 1 January

2023. The Committee remains confident that

the Policy supports the Group’s Strategy for

Sustainable Growth and provides a balance

between motivating and challenging our

Executive Directors and senior management

to deliver our business priorities and also

driving the long-term sustainable success of

the Group.

The context of remuneration in 2023

Our performance

In 2023, the Group delivered an excellent

performance, delivering on the commitments

set out at our Capital Markets Day in 2022.

Adjusted operating profit grew by 18% and

adjusted earnings per share increased by 25%.

The delivery of higher quality, more profitable

growth is evidenced by continued margin

expansion resulting in an 18.1% adjusted

operating margin. This strong performance

reflected the Group’s successful navigation of

challenging markets, geopolitical uncertainty

and the continuing conflict in Ukraine and

the resulting energy crisis, demonstrating the

resilience of our strategy and business model.

This continued performance has delivered a

further year of dividend per share growth.

Over the last year, we delivered continued

high returns and strong growth.

Our people

The Group’s employees are at the heart of our

delivery against our Strategy for Sustainable

Growth. The Committee is focused on

ensuring that our people are rewarded

appropriately based on their experience,

location and contribution to the Group.

TheCommittee reviews various aspects of

thewider workforce’s remuneration and

considers such information when

determining the approach to executive pay.

In2023, the Committee received regular

updates relating to the Group’s wider pay

arrangements.

As part of the Board’s commitment to

workforce engagement, I was also pleased

tojoin Kjersti Wiklund in meeting with

employees at our Almelo site where we

discussed remuneration alongside other

aspects of employee engagement. I look

forward to taking part in further discussions

with employees in 2024.

2023 annual bonus outcome

As highlighted above, the Group’s

performance in 2023 was excellent, with

increases in both like-for-like sales and

profit.This contributed to bonus outcomes

for2023 of 95.6% of the maximum bonus

opportunity for Andrew Heath and 96.2%

ofthe maximum bonus opportunity for

DerekHarding.

Only formulaic adjustments have been made

to the annual bonus targets in line with plan

rules, to reflect the disposal of companies

throughout the year. This approach is

consistent with prior years and ensures the

bonus outcome accurately reflects the

underlying performance of the business. In

accordance with the Policy, 50% of any

outturn from the bonus will be deferred into

shares. No discretion has been applied to the

2023 annual bonus outcome. Full details of

the 2023 annual bonus performance

outcome are set out on page 107.

2023 LTIP grant

In March 2023, the Committee granted

awards under the Long Term Incentive Plan

(LTIP) to both Executive Directors in line with

the Group’s Remuneration Policy.

2021 LTIP outcome

Both Executive Directors were granted an

LTIP award in March 2021 that will vest at 71%

of the total maximum opportunity on 17

March 2024 and is thereafter subject to a

further two-year vesting period. Earnings Per

Share (EPS) and Return on gross capital

employed (ROGCE) performance has been

strong over the period. This has resulted in the

award subject to both performance

conditions vesting in full. However, based on

interim results as at 31 December 2023, the

Total Shareholder Return (TSR) performance

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. This

element of the award is therefore not

expected to payout (the final measurement

of TSR will be at 16 March 2024). This

demonstrates the high level of stretch that is

built into the TSR component of the LTIP. No

discretion has been applied to the 2021 LTIP

outcome. Full details of the estimated 2021

LTIP performance outcome are set out on

pages 110 and 111.

2024 remuneration outlook

The Executive Directors salaries were

reviewed by the Committee in February 2024

with a 3.0% increase agreed with effect from 1

April 2024 in line with the average pay

increase across the wider Spectris employee

population. The fee structure for the

Chairman and Non-Executive Directors was

also reviewed in February 2024 with increases

taking effect from 1 April 2024.

“I remain confident that the Group’s

Remuneration Policy supports the

delivery of the Group’s Strategy for

Sustainable Growth.”

Cathy Turner

Chairman of the Remuneration

Committee

On behalf of the Board, I am pleased to present my report as Chairman of

the Remuneration Committee for the year ended 31 December 2023.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023102

Directors’ Remuneration Reportcontinued

Chairman’s fee

The Committee reviewed the Chairman’s

feein the context of the current size and

complexity of the business which has

materially increased since his appointment in

2017. This review showed that the Chairman’s

current fee of £250,000 is significantly below

the market levels expected in the FTSE

50-150, which Spectris currently sits around

the middle of on a market capitalisation basis.

Therefore, the Committee has agreed to

increase the Chairman’s fee from 1 April 2024

to £350,000. This change reflects the size and

complexity of the Chairman’s role and aligns

with the appropriate fee levels at the median

of our peer group. The Chairman’s fee will

remain subject to review and possible

inflationary increases in future years as

normal, however no further material changes

are expected in the near term.

A summary of the planned implementation

of the Policy in 2024 is set out on page 104.

The Committee continues to spend

considerable time deliberating the right

balance between policy, performance and

fairness to all stakeholders. We are confident

that the Policy and the proposed

implementation of the Policy reflects this

balance and the Committee therefore

recommends this report to shareholders.

Closing remarks

The Committee’s performance was assessed

as part of the annual Committee evaluation.

Iam pleased to report that the Committee is

regarded as operating effectively and that the

Board takes assurance from the quality of the

Committee’s work.

I would like to thank the Committee for

itswork during the year and our shareholders

for their support. Thanks also to our executive

team for their decisive leadership and

continued efforts to deliver value to our

stakeholders.

I hope that you will find this report useful in

understanding the reward structure in place

to support strong and sustainable results and

will support the judgements made by the

Committee this year. If required I would be

happy to discuss any matters contained in

this report.

Cathy Turner

Chairman of the Remuneration Committee

28 February 2024

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.

• Reflect and underpin the Group’s Purpose, our Values and wider stakeholder experience.

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

The diagram depicts our remuneration structure for the year ended 31 December 2023.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 103

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Remuneration arrangements for 2024

Salary/fees

Andrew Heath and Derek Harding will both receive a 3.0%

increase in salary for 2024 which is in line with the average

increase for Spectris employees.

With effect from 1 April 2024, the salaries for the Executive

Directors will be:

Andrew Heath – £772,500

Derek Harding – £546,250

The Chairman’s fee will increase to £350,000 with effect

from 1 April 2024. The basic fee for the Non-executive

Directors’ will increase in line with the average increase for

Spectris employees.

Further details of these increases are set out in the

statement from the Remuneration Committee Chairman

on pages 102 and 103.

Annual Bonus Plan

The maximum annual bonus opportunity for the Executive

Directors remains at 150% of salary.

The performance measures for the 2024 award are in line

with the 2023 Remuneration Policy and will be as follows:

Like-for-like Sales Growth (30%)

Adjusted Operating Margin (30%)

Adjusted Cash Conversion (20%)

Strategic and Operational Objectives (20%)

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.

Long Term Incentive Plan

The maximum LTIP opportunity for each of the Executive

Directors remains at 280% of salary.

The performance measures for the 2024 LTIP will be as

follows:

Base Conditions

Condition Weighting Threshold (20%) Maximum (100%)

EPS growth 33.33% 4% p.a. 10% p.a.

ROGCE 33.33% 14% 17%

Employee

engagement

16.67% 4.00 4.08

Scope 1 & 2

emission

reduction

16.67% 27. 5% 35.5%

Multiplier

Up to 1.4 x base award – Absolute TSR with Relative TSR

gateway

Absolute range:

0% (8% per annum) to 100% (15% per annum).

Relative TSR gateway:

A minimum of median relative TSR required for payout

between threshold (1x) and target (1.2x).

A minimum of upper quartile relative TSR required for

payout between target (1.2x) and maximum (1.4x)).

Pension

The pension contribution for Andrew Heath and Derek

Harding for 2024 will remain at 10.5% of base salary which

aligns with the wider UK workforce.

All employee share plans

The Spectris Share Incentive Plan (SIP) partnership and

matching schemes will continue to be operated for 2024.

Both Executive Directors are members of the SIP.

Other benefits

No changes will be made to other benefits operated for

2024.

For full details on our Remuneration policy please visit

www.spectris.com/our-approach/corporate-governance/

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023104

Andrew Heath

£2,206,056 2021

£1,404,337

Derek Harding

£1, 574,756 2021:

£800,940

Directors’ Remuneration Reportcontinued

2023 Remuneration at a Glance

Business performance

A strong performance providing confidence in Spectris as a leading sustainable business. Key highlights

include:

• Strong like-for-like sales growth of 10%.

• Adjusted operating margin increased to 18.1%

• Adjusted operating profit increase of 18%

• Adjusted earnings per share up 25%

• Dividend per share increase of 5.0%, 34 years of consistent dividend growth

Executive Directors’ shareholdings (% of salary)

2023 Annual Bonus Plan

Performance conditions

(% weighting)

Outcome

(% of maximum award)

Like-for-like sales growth (30%) 30.0/30

Adjusted operating profit (30%) 30.0/30

Adjusted cash conversion (20%) 20.0/20

Strategic and operational (20%) –

Andrew Heath

Derek Harding

15.6/20

16.2/20

Total

Andrew Heath

Derek Harding

95.6/100

96.2/100

Annual Bonus Plan outcome

Andrew Heath £1,075,500

Derek Harding £765,151

2021 LTIP

Performance conditions

(% weighting of max award)

Outcome

(% of maximum award)

EPS (35.7%) 35.7%

ROGCE (35.7%) 35.7%

TSR Multiplier (28.6%) 0.0% (estimated)

final vesting to be

confirmed in March 2024

Total 71.4%

LTIP outcome

Estimated

vesting value

Andrew Heath £1, 387,040

Derek Harding £1,080,061

Performance outcomes

Outcomes scenarios

Andrew Heath (£’000) Derek Harding (£’000)

100%

37%

39%

24%

21%

17%

25%

28%

51%

22%

33%

42%

61%

5,120

3,291

4,070

845

2,308

Basic Target Maximum Maximum

growth*

Actual

100% 37%

39%

24%

21% 17% 25%

28%

51%

22%

31%

44%

61%

3,625

2,441

2,883

603

1,637

Basic Target Maximum Maximum

growth*

Actual

* Maximum with 50% share price growth

Key

Total fixed pay

Annual Bonus

LTIP/PSP

Each coloured bar shows the percentage of the total comprised by each of the parts

Total remuneration

Andrew Heath

1 Salary and benefits 22.8%

2 Retirement benefits 2.3%

3 Annual bonus 32.7%

4 Long-term Incentives 42.2%

Derek Harding

1 Salary and benefits 22.1%

2 Retirement benefits 2.3%

3 Annual bonus 31.3%

4 Long-term Incentives 44.3%

£3,290,576

2022: £3,674,110

£2,440,852

2022: £2,682,185

Shares owned

Share awards no longer subject to performance conditions (net of tax)

2021 LTIP + 50% DBP part of 2023 Annual Bonus (2023 single total figure of remuneration (SFTR) values net of tax)

0 160 320 480 640 800

430% of salary

shareholding requirement

Andrew Heath

Derek Harding

224% 290%

83% 300% 146%

136%

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 105

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

This section of the Report sets out the details of the implementation of the 2023 Remuneration

Policy during the 2023 financial year. Details of how the Remuneration Committee intends to

implement the 2023 Remuneration Policy during2024 are summarised on page 104. This part

of the Report together with the Remuneration Committee Chairman’s Statement, the 2023

Remuneration Policy structure and its implementation, and the information on the

Remuneration Committee form the Annual Report on Remuneration which issubject to an

advisory shareholder vote at the 2024 AGM and contains both unaudited and audited

information. The audited sections of this Report are clearly identified.

Executive Directors’ remuneration

Single total figure of remuneration (audited)

The single total figure of remuneration of each Executive Director who served during the year is

as follows:

£’000

Base

salary

Taxable

benefits

Pension-

benefits

Fixed

Pay and

benefits

(sub-total)

Annual

Bonus

LTIP

All-

employee

share plans

Variable

remuneration

(sub-total) Total

Andrew Heath 2023 734 17 77 828 1,076 1,387 – 2,463 3,291

2022 673 16 135 824 808 2,043 – 2,851 3,675

Derek Harding 2023 524 17 55 596 765 1,080 – 1,845 2,441

2022 501 16 75 592 498 1,591 – 2,089 2,681

1. With effect from 1 January 2023, the Executive Directors’ pension entitlement reduced to 10.5% of base salary in

line with the majority of the UK workforce.

2. In line with the 2023 Remuneration Policy, 50% of the bonus paid to Executive Directors is deferred in shares for

three years. These deferred share awards remain subject to continued employment conditions and malus/

clawback provisions although no further performance conditions are attached to them. Full details of the

nominal cost share options granted under the Deferred Bonus Plan (DBP) on 16 March 2023 can be found on

page 111 which satisfies the deferred element of the Executive Directors’ 2022 bonus entitlement.

3. A breakdown of how the LTIP values have been determined by year is shown below. Further details of the values

for 2022 and 2023 can be found on pages 109 and 111.

• The 2023 figures relate to the 2021 LTIP awards which are due to vest on 17 March 2024 and are based on

estimated vesting levels as at 31 December 2023. The value attributed to share price appreciation in respect of

the 2021 award (based on the three-month average share price at 31 December 2023 of 3,346.86 pence per

share) was £84,023 and £65,427 for Andrew Heath and Derek Harding respectively. This equates to 6% of the

total award vested for both Executive Directors.

• The 2022 figures have been restated to reflect the actual vesting outcomes for Andrew Heath’s and Derek

Harding’s 2020 LTIP award. The value attributed to share price appreciation in respect of the 2020 award

(based on a final share price at vesting of 3,497 pence per share) was £735,788 and £572,928 for Andrew Heath

and Derek Harding respectively. This equates to 36% of the total award vested for both Executive Directors.

Notes to the single total figure of remuneration table

A. Salary (audited)

Andrew Heath received a 9.2% and Derek Harding a 5.0% salary increase with effect from 1 April

2023. The average salary review increase for employees of Spectris plc in 2023 was 5.0%.

B. Taxable benefits (audited)

Taxable benefits include allowances paid in lieu of company cars and private fuel, medical

expenses insurance (including family cover) and life and disability cover.

Details of the taxable benefits paid in 2023 are set out in the table below:

Executive Director

Car and fuel

allowances

Medical/

healthcare

cover

Total

Andrew Heath 15,165 1,524 16,689

Derek Harding 15,165 1,524 16,689

C. Retirement benefits (audited)

Executive Directors are entitled to a defined contribution pension contribution.

With effect from 1 January 2023 and as stated in the 2023 Remuneration Policy, both Andrew

Heath and Derek Harding receive a 10.5% of base salary entitlement which aligns with the

terms applicable to the majority of the UK wider workforce. Prior to 2023, Andrew Heath and

Derek Harding received a pension entitlement of 20% and 15% of base salary respectively.

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.

No Executive Director participated in a defined benefit pension plan during the year.

Remuneration for 2023

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023106

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

D. 2023 Annual bonus outcome (audited)

The maximum bonus opportunity for the Executive Directors is 150% of base salary. This is

unchanged for Andrew Heath, Chief Executive but has increased from 125% to 150% of base

salary for Derek Harding, Chief Financial Officer. The on-target bonus for each Executive

Director is 50% of the maximum bonus opportunity. The table below sets outs the annual

bonus earned by the Executive Directors in respect of the 2023 financial year including the

financial trigger points used in determining the level of bonus payable.

Maximum

bonus

opportunity

(% of salary)

Bonus

performance

conditions

(% of

maximum

bonus

opportunity)

Payout (% of salary)

Actual Group

performance/

assessment

of personal

objective

performance

Payout

Bonus

outcome

(% of

maximum) Threshold On-target Maximum

Andrew

Heath

(Salary –

£750,000)

150% LFL sales

growth

(30%)

0% 22.5% 45% 45.0% 337,500 30.0%

Adjusted

operating

margin

growth

(30%)

0% 22.5% 45% 45.0% 337,500 30.0%

Adjusted

cashflow

conversion

(20%)

0% 15% 30% 30.0% 225,000 20.0%

Strategic

objectives

(20%)

0% 15% 30% 23.4% 175,500 15.6%

Total 0% 75% 150% 143.4% 1,075,500 95.6%

Derek

Harding

(Salary –

£530,250)

150% LFL sales

growth

(30%)

0% 22.5% 45% 45.0% 238,613 30.0%

Adjusted

operating

margin

growth

(30%)

0% 22.5% 45% 45.0% 238,612 30.0%

Adjusted

cashflow

conversion

(20%)

0% 15% 30% 30.0% 159,075 20.0%

Strategic

objectives

(20%)

0% 15% 30% 24.3% 128,051 16.2%

Total 0% 75% 150% 144.3% 765,151 96.2%

1. 50% of the Executive Directors’ 2023 bonus will be deferred into shares for three years in line with the 2023

Remuneration Policy.

Bonus performance measures

The performance against the 2023 bonus financial metrics was as follows:

Bonus targets

Threshold

(0% of max)

Target

(50% of max)

Maximum

(100% of max) Actual

LFL sales growth

3.5% 6.0% 8.0% 10.1%

Adjusted operating margin growth

17.0% 17. 5% 18.0% 18.1%

Adjusted cashflow conversion

70% 80% 90% 103%

1. 2023 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.

2. LFL sales growth, adjusted operating margin growth and adjusted cashflow conversion are defined and

reconciled to the reported statutory measures. The definitions are provided in the appendix to the Consolidated

Financial Statements.

The Committee has not exercised any discretion in relation to the outcome of bonus awards to

the Executive Directors.

When reviewing performance against the financial metrics, the Committee considers whether

any items should be excluded because it gives a distorted view of performance.

For the 2023 bonus, the bonus targets reflect the disposal of Concept Life Sciences during the

year to ensure a fair like-for-like comparison with the actual results.

The Committee approved the maximum payout for the LFL sales growth, adjusted operating

margin growth and cash conversion metrics.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 107

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

The 2023 operational and strategic objectives for the current Executive Directors, which were

set at the beginning of the year and account for 20% of the maximum bonus opportunity,

cover a range of the Company’s targeted strategic priorities. Each priority is assigned an

individual weighting and performance against each of the defined targets was assessed by the

Remuneration Committee with input from the Chairman. The objectives for both Executive

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

the Group’s Values as part of the evaluation of the outcome of performance under the strategic

and operational objectives, considering not only what was achieved, but how it was achieved.

Andrew Heath

Weighting

% Performance summary

achieved

• Grow the

business

18% In aggregate, all growth initiatives performing at, or above,

business case. Vitality index dropped due to the diversion of

engineers to address supply chain shortages in late 2022 and

higher sales of older products than expected.

10%

• Grow the

business

18% Strong and considered strategy agreed with the Board to

mitigate the Group’s exposure to geopolitical tensions.

18%

• Capital

allocation

16% Successfully executed the divestment of Red Lion Controls.

Further progress on the population of M&A pipeline, but key

acquisition targets not secured due to external competition.

Deployed c£60 million of capital on acquisitions and

investments while maintaining discipline in line with the

Group’s capital allocation framework.

• Dynamics

Division

performance

16% New organisation and operating model implemented.

Significant improvement in sales growth (up 10.8%).

Delivered an improvement in adjusted operating margin by

220bps.

16%

• Investor

engagement

16% Delivered a targeted programme to drive US share

ownership with strong progress made in strengthening

US-based share register.

15%

• Leadership 16% Strengthened succession pipelines for the executive

management team.

Significant development of the gender diversity present in

the senior leadership community from 20% to 29% and the

establishment of the Group’s target to ensure 40% of senior

leadership roles are held by women by 2030.

13%

Total 100% 78%

1. This represent a bonus payment of 23.4% of salary (maximum 30%) for the strategic objectives part of Andrew

Heath’s 2023 annual bonus.

Derek Harding

Weighting

% Performance summary

achieved

• Operating

model

24% Actively supported the improvement in performance

in the Spectris Dynamics Division, delivering

budgeted cost-reduction activity.

21%

• Operating

model

16% Introduced an improved financial performance

management process including a new, more detailed

P&L structure to enable more dynamic reporting of

the drivers of cost.

Oversaw the streamlining of the monthly business

review process.

• Process

transformation

30% Oversaw Project Legato, the project to implement the

Group’s ERP system in HBK and Malvern Panalytical,

delivering the project in accordance with the agreed

timeline.

Led the implementation of the new Group financial

consolidation reporting system.

Developed a plan to reduce IT operating costs.

22%

• Governance, risk

controls and

internal audit

10% Significant progress on the implementation of a new

risk management system.

• Leadership 10% Strengthened investor relations capability and

streamlined and improved effectiveness of Group

legal structure.

10%

• Diversity and

inclusion

10%

Championed work on developing Group approach to

diversity and inclusion.

10%

Total 100% 81%

1. This represent a bonus payment of 24.3% of salary (maximum 30%) for the strategic objectives part of Derek

Harding’s 2023 annual bonus.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023108

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

E. Long Term Incentive Plan (LTIP)

(audited)

Awards granted under the LTIP to the

Executive Directors between 2020 to 2022

were structured so that 50% of the base

award was subject to a GroupEPS target,

andthe remaining 50% to a ROGCE target.

Amultiplier (up to a maximum of 1.4 times)

can potentially be applied to the base award

vesting but only on achieving stretching

absolute and relative Total Shareholder return

(TSR) targets.

Each condition operated over a fixed

three-year period (beingthe three financial

years commencing with the financial year in

which an award was made in respect of the

Group EPS and ROGCE measures; and three

years from the date of grant in respect of the

absolute and relative TSR measures) with

noopportunity for re-testing. The 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)

There were no payments during the year

toExecutive Directors under the Spectris

all-employee share plans.

Payments for loss of office (audited)

There were no payments for loss of office

in2023.

Payments to past Directors (audited)

There were no payments to past Directors

in2023.

LTIP awards vested in March 2023 (audited)

The 2020 LTIP awards granted to Andrew Heath and Derek Harding matured in March 2023. 71.5% of the total award vested on 25 March 2023

(see table below) and is now subject to the additional two-year holding period. The balance of the award lapsed.

Performance

condition

Award level

(% of salary)

Threshold

(20%)

Maximum

(100%) Actual

Percentage weighted

vesting

Percentage of total

vested award

EPS 100% 4% p.a. 10% p.a. 8.64% p.a. 81.9% 29.3%

ROGCE 100% 13.7%

(2019 ROGCE +1%)

15.7%

(2019 ROGCE+3%)

16.0% 100.0% 35.7%

TSR multiplier 80%

(Up to 1.4X multiplier)

Multiplier Absolute TSR Relative

TSR gateway

TSR

Actual

22.7%

(1.10 X multiplier)

6.5%

1.0X 8% p.a. or less Median or above Absolute:

9.0% p.a.

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% 71.5%

The 2022 single total figure of remuneration for Andrew Heath and Derek Harding has been restated as shown below to reflect the final vesting

outcome.

Executive Director

Total number

of shares subject

to LTIP 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

(25 March 2023)

Vesting

value

Share price

appreciation as

a % of the total

vested award value

Andrew Heath 76,276 £1,707,972 71.5% 54,510 3,988 58,498 3,497p £2,042,950 36%

Derek Harding 59,395 £1,329,973 71.5% 42,445 3,105 45,550 3,497p £1,590,761 36%

1. The face value is based on the average of the closing share price over the five days immediately prior to the date of grant of 2,239.2 pence.

2. The value attributed to share price appreciation, based on a final share price at vesting of 3,497 pence per share, was £735,788 and £572,928 for Andrew Heath and Derek

Harding respectively. The Committee determined that the 71.5% partial vesting position together with the share price appreciation provided an appropriate level of award

fairly representing how the Company had performed over the 2020 LTIP’s vesting period.

On vesting, the Committee gave appropriate consideration to the possibility of a windfall gain in respect of the 2020 LTIP, which was granted

when the share price was subject to significant market volatility at the start of the COVID-19 pandemic. After meaningful deliberation, the

Committee concluded that a discretionary adjustment to the 2020 LTIP was not appropriate.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 109

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

LTIP awards vesting in March 2024 (audited)

Both Andrew Heath and Derek Harding were granted LTIP awards in 2021, which will mature in

March 2024. The Committee determined that the 2021 LTIP vesting outcome has not been

subject to windfall gains.

The final vesting position of the EPS and ROGCE conditions as well as the best estimate of the

vesting position for the TSR Multiplier (based on Aon’s interim report as at 31 December 2023)

are provided below:

Performance

condition

Award

level

(% of salary)

Threshold

(20%)

Maximum

(100%) Actual

Actual/

estimated

percentage

vesting

Actual/

estimated

percentage of

total vested

award

EPS 100% 4% p.a. 10% p.a. 26.5% p.a.

100.0% 35.7%

ROGCE 100% 10.9%

(2020 ROGCE +1%)

12.9%

(2020 ROGCE+3%)

18.5%

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:

6.2% p.a.

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 71.4%

1. The EPS outcome figure has been calculated on the following basis:

• In order to account for material business divestments which occurred with more than one year remaining of the

performance period of the 2021 LTIP (namely the Millbrook, BK Vibro, ESG, NDCT and Omega disposals), 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 of the

performance period of the 2021 LTIP (namely the Concept Life Sciences disposal), no changes have been

made to the base calculation, but the final outturn has been adjusted to reflect a full year’s contribution from

the divested business.

• These adjustments ensure that the targets remained as stretching as originally intended and the outcomes

are not influenced by the impact of divestments that occurred during the performance period.

• This approach was agreed by the Committee in December 2019, and has been applied consistently to date. A

full reconciliation of this outcome from the Adjusted EPS figure (as set out in the appendix to the Consolidated

Financial Statements on page 188) is provided below:

As at

31 December

2020

pence

As at

31 December

2023

pence

Adjusted EPS (reported) 112.1p 199.7p

Adjustments relating to disposals (Millbrook, BK Vibro, ESG, NDCT and Omega) (12.7p)

Adjustments relating to disposal of Concept Life Sciences 1.4p

Adjusted EPS (excluding disposals) 99.4p 201.1p

Compound annual growth in EPS 26.5%

2. The Committee determined that the 2023 ROGCE outcome as calculated below is a true reflection of the

Company’s performance:

31 December

2023

£m

Average gross capital employed (reported) 1,419.2

Adjusted operating profit (reported) 262.5

ROGCE 18.5%

3. TSR performance, both absolute and relative to the FTSE 250 (excluding investment trusts), has been estimated

based on the position as at 31 December 2023.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023110

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

The vesting estimates as at 31 December 2023 are detailed in the table below:

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 54,318 £1,707,975 71.4% 38,799 2,702 41,501 3,346.86p 1, 387,040 6%

Derek

Harding 42,296 £1,329,955 71.4% 30,212 2,104 32,316 3,346.86p 1,080,061 6%

1. The maximum vesting opportunity under the LTIP award equals the base award times a 1.4 TSR multiplier.

2. The face value is based on the average closing share price over the five days immediately prior to the date of

grant (17 March 2021) of 3,144.4 pence.

3. The estimated dividend shares are based on dividends paid over the three-year performance period. Dividend

shares will accrue from date of grant to the end of the holding period (fifth year anniversary from date of grant)

which is the first opportunity the award can be exercised.

4. The estimated value attributed to share price appreciation, based on the three-month average share price at

31December 2023 of 3,346.86 pence per share, was £84,023 and £65,427 for Andrew Heath and Derek Harding

respectively. These values are only estimates, however, the Committee has determined that no discretionary

adjustment will be made to the final LTIP vesting position.

Vested awards are satisfied in shares (normally treasury shares) with sufficient shares being

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 2023 (audited)

50% of each Executive Director’s pre-tax annual bonus is compulsorily deferred under the

terms of the DBP in the form of a nominal cost share option grant. The DBP share options

remain subject to continued employment conditions as well as malus and clawback provisions

although no further performance conditions apply.

The DBP share options granted to the Executive Directors on 16 March 2023, based on their

2022 Bonus entitlement and calculated according to the average of the closing share price over

the five days immediately prior to the date of grant, are summarised in the table below:

Director Exercise price

Number of shares under

DBP share option

Face value of DBP share

option at date of grant

Andrew Heath 5p 11,666 £403,737

Derek Harding 5p 7,201 £249,212

1. The face value is based on the average closing share price over the five days immediately prior to date of grant

(16 March 2023) of £3,460.8 pence.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 111

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

Director

Exercise

price

Number of shares under

base award (% of salary)

Face value of base

award at date of grant

(£)

Andrew Heath 5p 39,701

(200% of salary)

£1,373,972

Derek Harding 5p 29,184

(200% of salary)

£1,010,000

2023 LTIP base award performance conditions

Vesting (% of base award) Performance targets Performance period

Adjusted EPS

Growth

(33.33% of

base award)

0% Less than 4%

1 January 2023

31 December 2025

6.7% 4%

6.7% to 33.3%

(straight line pro-rata basis)

Between

4% and 10%

33.3% 10% or more

ROGCE

(33.33% of

base award)

0% Less than 14% p.a.

1 January 2023

31 December 2025

6.7% 14% p.a.

6.7% to 33.3%

(straight line pro-rata basis)

Between 14% p.a.

and 17% p.a.

33.3% 17% p.a. or more

Net Zero

emissions

(16.67% of

base award)

0% Less than 27.5% reduction

1 January 2023

31 December 2025

3.3% 27.5% reduction

3.3% to 16.7%

(straight line pro-rata basis)

Between 27.5% and

35.5% reduction

16.7% 35.5% reduction or more

Gallup employee

engagement

(16.67% of

base award

0% Gallup score of 3.94 or less

1 January 2023

31 December 2025

3.3% Gallup score of 3.94

3.3% to 16.7%

(straight line pro-rata basis)

Gallup score between

3.94 and 4.06

16.7% Gallup score of 4.06 or more

1. Face value of base and maximum award based on the average of the closing share price over five days

immediately prior to date of grant – £34.608.

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

(£)

1.40 x

base award

15,880

(80% of salary)

55,581

(280% of salary)

£1,923,547

11,673

(80% of salary)

40,857

(280% of salary)

£1,413,979

2023 LTIP TSR multiplier performance conditions

TSR multiplier

Absolute TSR

growth targets

Relative TSR gateway –assessed against FTSE

250 index (excluding investment trusts)

Performance

period

1.00 X 8% p.a. or less

Median

or above

16 March 2023

15 March 2026

Between

1.00 X and 1.20 X

Between

8% and 10% p.a.

1.20 X 10% p.a.

Between

1.20 X and 1.40 X

Between

10% and 15% p.a.

Upper quartile

or above

1.40 X 15% p.a. or more

The above table details LTIP share options granted to Executive Directors during 2023, in line with

the 2023 Remuneration Policy. The base level of award is 200% of base salary, calculated according

to the average of the closing share price over the five days immediately 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 both absolute and relative stretching TSR targets.

The EPS figure is obtained from the audited Consolidated Financial Statements and the calculation

of achievement against growth condition is presented to and approved by the Committee. ROGCE

isa comprehensive measure of the effectiveness of all capital deployed by the Group and

supportsthe Group’s key strategic intention to improve its overall return on capital invested in the

medium-term.

The Net Zero emissions condition is aligned to the Company’s Net Zero roadmap to 2030 and a key

driver for sustainable growth. Improving employee engagement score is key to unlocking

workforce productivity, which in turn supports our ability to retain and attract the talent we need to

execute the strategy successfully and drive value for all of our stakeholders.

LTIP awards granted during 2023 (audited)

The 2023 LTIP awards to Andrew Heath and Derek Harding were granted on 16 March 2023 and are subject to the performance conditions detailed below.

An additional vesting period of two years applies to all awards following the three-year performance period.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023112

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

The Committee will monitor outcomes for the LTIP performance conditions to ensure that they achieve the original objectives and may adjust the vesting accordingly.

Any exercise of discretion will be justified in the relevant Directors’ Remuneration Report.

The multiplier condition requires the achievement of both relative and absolute TSR metrics which means that any additional payout from the multiplier would only

occur when shareholders benefit from a material increase in share value which outperforms the FTSE 250 comparator group.

Threshold and maximum vesting (as a % of the 2023 LTIP base award)

Performance Level EPS Vesting ROGCE Vesting Net Zero Vesting

Employee

Engagement Vesting Base award Vesting TSR Multiplier factor

Overall Vesting (as

% of base award)

Threshold 6.7% + 6.7% + 3.3% + 3.3% = 20% x 1.0 = 20%

Maximum 33.3% + 33.3% + 16.7% + 16.7% = 100% x 1.4 = 140%

Total shareholder return performance

This graph shows the value, by 31 December 2023, of £100 invested in Spectris on 31 December 2013, compared with the value of £100 invested in the FTSE 250

(excluding investment trusts) on the same date. This index has been chosen because it is a widely recognised performance benchmark for large UK companies

and Spectris is a constituent of the FTSE250. The other points plotted are the values at intervening financial year ends.

Historical Chief Executive remuneration

The table below shows the total remuneration figure for the Chief Executive for the current year and over the previous nine years. The total remuneration figure

includes the annual bonus and LTIP awards that vested based on performance in those years. The annual bonus and LTIP percentages show the payout for each

year as a percentage of the potential maximum.

2014 2015 2016 2017 2018 2018 2019 2020 2021 2022 2023

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

Andrew

Heath

Single total figure of remuneration (£’000) 1,122 729 1,388 1,611 2,253

324

1,163 1,404 2,010 3,675

3,291

Annual bonus (% of maximum) 18% 0%

90% 80% 54% 60% 45% 40% 98% 78% 96%

PSP/LTIP vesting (% of maximum) 28% 0% 0% 10% 68% N/A N/A 31% 25% 71%

71%

1. Bonus entitlement waived.

2. Pro-rated figures based on time served as Chief Executive during 2018 (nine months for John O’Higgins and three months for Andrew Heath).

3. Restated figure to reflect actual vesting of 2020 LTIP award.

4. Based on estimated vesting for 2021 LTIP award.

100

150

200

250

Dec-23Dec-22Dec-21Dec-20Dec-19Dec-18Dec-17Dec-16Dec-15Dec-14Dec-13

Value (£) (rebased)

Spectris FTSE 250 (excluding investment trusts)

Source: FactSet

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 113

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

Percentage change in remuneration of the Directors

The table below shows the percentage change in the salary/fees, and benefits of each Executive Director, the Chairman and the Non-executive Directors

compared with the change in the Group’s employees between the year ended 31December 2022 and 31 December 2023. The Group-wide 2023 annual bonus

payments will be confirmed in March 2024 and therefore estimated figures for Group employees have been used in the comparison.

% change 2022–2023 % change 2021–2022 % change 2020–2021

Executive Directors Salary/fees

Benefits Annual bonus

Salary/fees Benefits Annual bonus Salary/fees Benefits Annual bonus

Andrew Heath 9.2% 1.6% 33.2% 9.1% (3.6%) (12.7%) 3.2% (0.5%) 152.8%

Derek Harding 5.0% 1.6% 53.5% 3.0% (3.6%) (16.7%) 3.2% (0.5%) 151.8%

Chairman and Non-executive Directors

Mark Williamson 4.6% n/a n/a 3.0% n/a n/a 5.5% n/a n/a

Ravi Gopinath 4.3% n/a n/a 2.4% n/a n/a n/a n/a n/a

Mandy Gradden n/a n/a n/a n/a n/a n/a n/a n/a n/a

Alison Henwood 5.4% n/a n/a 3.0% n/a n/a n/a n/a n/a

Ulf Quellmann 4.3% n/a n/a 2.4% n/a n/a 4.3% n/a n/a

Bill Seeger (5.8%)

n/a n/a 1.8% n/a n/a 7.8% n/a n/a

Cathy Turner 23.4%

n/a n/a 2.4% n/a n/a 10.8% n/a n/a

Kjersti Wiklund 4.5% n/a n/a 2.5% n/a n/a 11.1% n/a n/a

Spectris employees

6.8% 13.5% 27.1% 6.6%

14.9%

(2.6%)

7.0% 0.3% 120.3%

1. The change in the Executive Directors’ salaries plus the Chairman and Non-executive Directors’ fees reflects the increases disclosed in the 2022 Remuneration Report. The Chief Executive’s 9.2%

pay increase was the second part of a two-year structured increase to bring his salary to the median position for the FTSE 50 – 150 peer group.

2. The financial metrics were fully met for the 2023 bonus, whereas they were partially met for the 2022 comparative. The greater percentage increase in Andrew Heath’s and Derek Harding’s

bonus compared to the average Spectris employee reflects that when the financial metrics are only partially met a greater portion of the Executive Directors’ bonus opportunity is missed than

is the case for the average Spectris employee. The 2022-23 percentage change in annual bonus was greater for Derek Harding, compared to Andrew Heath, because his maximum bonus

opportunity increased from 125% to 150% of salary.

3. On 26 May 2023, Cathy Turner took over from Bill Seeger as Senior Independent Director as part of a planned succession process. This is the reason for the reduction in Bill Seeger’s fee and the

substantial increase in Cathy Turner’s fee compared to 2022 levels.

4. The percentage change figures for Spectris employees has been restated to include all Spectris Group employees. Previously these figures only related to UK Spectris Group employees.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023114

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

CEO pay ratios

The table below sets out the 2019, 2020, 2021 2022 and 2023 pay ratios of the Chief Executive’s

total remuneration to the 25th, median (50th), and 75th percentile full-time equivalent (FTE)

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 36:1 25:1

31 December 2021 Option A 64:1 45:1 32:1

31 December 2022

Option A 109:1 79:1 55:1

31 December 2023 Option A 86:1 60:1 41:1

1. Restated figures to reflect actual vesting of 2020 LTIP award.

Further details on the 2023 total pay figures used for each quartile employee are set out in the

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

2023 1,027 Base salary £734,250

£32,740

FTE base salary

£46,688

FTE base salary

£64,922

FTE base salary

Total

remuneration

£3,290,576

STFR

£38,360

total FTE

£54,669

total FTE

£79,518

total FTE

1. The components of the Chief Executive and UK employees’ STFR figure comprises base salary, taxable benefits,

pension-related benefits, annual bonus and LTIPs, where applicable.

2. The total remuneration for UK employees is calculated on the same basis as the STFR for Executive Directors. The

only exception to this is the personal element of the annual bonus for UK employees which is not known as at the

date of this report. Bonus estimations are based on the same performance level as the Chief Executive. Given the

complexity of the calculations, such estimated values will not be restated next year to reflect the actual

outcomes.

The Chief Executive’s total remuneration as calculated is reported in the table on page 106. The

remuneration of the lower, median and upper quartile employees is calculated on FTE data for

the full year, run on 30 November, with estimated figures forthe annual bonus and LTIP vesting.

Option A methodology was chosen as it is considered to be the most statistically accurate way to

identify the best equivalents of the 25th, median and 75th percentile figures used to calculate

the pay ratios each year, and it is aligned with best practice and investor expectations. The

Committee is satisfied that the individuals identified within each relevant percentile

appropriately reflect the employee pay profiles at those quartiles, and that the overall picture

presented by the ratios is consistent with our pay, reward and progression policies for UK

employees. Roles are regularly benchmarked against PwC’s benchmarking report of FTSE

50–150 companies.

The reduction in this year’s pay ratio compared to 2022 levels is predominantly the result of the

Chief Executive’s 2022 LTIP value which was 47.3% higher than his estimated 2023 LTIP value.

Consequently there has been a 10.4% reduction in the Chief Executive’s 2023 STFR on last year.

In comparison, the lower quartile, median and upper quartile of the Group UK employees’

SFTR compared to 2022 is higher by 13.8%, 17.7% and 20.0% respectively.

The Chief Executive’s 2023 remuneration (excluding LTIP values) is 16.7% higher than it was in

2022 which aligns with similar equivalent percentage increases for the lower quartile, median

and upper quartile of Group UK employees of 13.8%, 18.0% and 19.4%. The Chief Executive’s 2023

remuneration (excluding LTIP values) has increased due to the 9% pay increase and near

maximum bonus payout although these increases are partially offset by a reduction in his

pension cash allowance to 10.5% of salary to align with the majority of the UK workforce. For

Group UK employees, the average increase in salary and bonus payout were lower than the

Chief Executive, however their benefits increased with the change in pension entitlements.

Overall the reduction in the CEO pay ratio reflects the greater volatility in the Chief Executive’s

STFR which has a greater emphasis on variable remuneration to ensure his pay reflects the

Group’s performance and is better aligned with shareholder interests.

The reward policies and practices for our employees broadly follow those set for the Executive

Directors, including the Chief Executive. The Committee has responsibility for setting and

making any changes in remuneration for the senior management. This includes the reviewing of

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.

On this basis, the Committee is satisfied that the median pay ratio is consistent with the pay,

reward and progression policies across all of the Company’s employees.

Relative importance of spend on pay

The table below shows the relative expenditure of the Group on the pay of its employees in

comparison to adjusted profit before tax and distributions to shareholders by way of dividend

payments between the years ended 31 December 2022 and 31 December 2023. Total employee

pay is the total pay cost for all Group employees. Adjusted profit before tax is used as this is a key

financial metric which the Board considers when assessing the Group’s financial performance.

2023

£m

2022

£m % change

Total employees pay 569.2 514.0 10.7%

Dividends paid during the year

79.7 78.6 1.4%

Share buyback during the year 114.9 191.0 (39.8%)

Adjusted profit before tax

263.6 219.7 20.0%

1. The dividend per share during the year increased by 5.1% however the dividends paid during the year only

increased by 1.4% because of the reduction in the Company’s Issued Share Capital caused by the share buyback

programme.

2. Adjusted profit before tax is calculated as being statutory profit before tax adjusted to exclude certain items

defined in the appendix to the Consolidated Financial Statements on page 188.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 115

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

Non-executive Directors’ remuneration

Chairman and Non-executive Directors’ fees

The fee structure for the Non-executive Directors is set out below:

2024

£’000

2023

£’000

2022

£’000

Chairman (all-inclusive fee) 350 250 239

Non-executive Director basic fee 65 63 60

Senior Independent Director (SID) fee 15 13 10

Chairman of the Audit and Risk Committee 17 15 14

Chairman of the Remuneration Committee 17 15 14

Workforce Engagement Director 12 12 12

Non-executive responsible for sustainability oversight 12 – –

Annual travel supplement to be paid to overseas-based Non-executive Directors 15 15 15

1. A fee review to take effect from 1 April 2024 was undertaken against externally available market data on

Non-executive fee structures in the FTSE 50-150, the wider Group pay review process and the Group’s position in

the FTSE50-150 peer group. The Chairman’s fee will increase to £350,000 to align more closely with the market

levels expected for our peer group. Further details explaining the rationale for this fee increase can be found on

page 103. The Non-executive Directors’ basic fee will increase in line with the average salary review for Spectris plc

employees.

Single total figure of remuneration (audited)

The single total figure of remuneration for each Non-executive Director who served during the

year is as follows:

Basic fees

£’000

Additional fees

£’000

Taxable

expenses

£’000

Total

£’000

Mark Williamson

Non-executive Chairman

2023 247 – – 247

2022 237 – – 237

Ravi Gopinath

2023 62 15 – 77

2022 59 15 – 74

Mandy Gradden

2023 13 – – 13

2022 – – – –

Alison Henwood 2023 62 – – 62

2022 59 – – 59

Ulf Quellmann

2023 62 15 – 77

2022 59 15 – 74

Bill Seeger

2,4

Chairman – Audit and Risk

SID (until May 2023)

2023 62 34 – 96

2022 59 38 – 97

Cathy Turner

Chairman – Remuneration

SID (from May 2023)

2023 62 23 – 85

2022 59 14 – 73

Kjersti Wiklund

Workforce Engagement Director

2023 62 12 – 74

2022 59 12 – 71

1. Mark Williamson’s fee is all-inclusive.

2. Ravi Gopinath, Ulf Quellmann and Bill Seeger all receive an additional annual travel supplement of £15,000. The

travel supplement was not paid during the COVID-19 pandemic from April 2020 until impacted directors were

required to travel for their roles. For Bill Seeger, his annual travel supplement was not reinstated until February

2022 so his 2022 fees reflect a pro-rated annual travel supplement for that year.

3. Mandy Gradden joined the Board on 16 October 2023. Her 2023 fees are pro-rated to reflect her date of joining.

4. On 26 May 2023, Cathy Turner took over from Bill Seeger as SID as part of a planned succession process. Their

2023 fees include a pro-rated SID fee.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023116

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

Directors’ shareholdings and share interests (audited)

Each Executive Director is, subject to personal circumstances, required to build a retained

shareholding in Spectris plc of at least one-year maximum variable pay in value (430% of salary)

within five years of appointment and is required to retain shares with the post-tax benefit of

any vested PSP, LTIP or DBP awards until this shareholding requirement is achieved. Andrew

Heath has met this shareholding requirement and it is anticipated that Derek Harding

(appointed in March 2019) will achieve the shareholding requirement in March 2024.

There is no such requirement in respect of the Chairman or Non-executive Directors, who have

discretion as to whether to hold the Company’s shares or not.

The beneficial share interest of each Executive Director (including their closely associated

persons) on 31 December 2023, is:

Interest in share plans

Director

Ordinary

held on

31 December

2023

LTIP

(subject to

performance

conditions)

LTIP/PSP/

DBP

(not subject to

performance

conditions)

SIP

Total

Interests

in shares on

31 December

2023

Total shares

counting

towards

shareholding

requirement

Shareholding

as a % of base

salary on

31 December

2023

Shareholding

requirement

met

Andrew

Heath 44,057 176,212 107,701 418 328,388 102,000 513.9% Yes

Derek

Harding 11,234 134,790 78,921 366 225,311 53,680 382.6% No

1. These LTIP awards are all nominal cost share options of 5 pence and all currently have outstanding performance

conditions attached to them.

2. These LTIP, PSP and DBP awards are all nominal cost share options of 5 pence but are no longer subject to

performance conditions. The LTIP/PSP awards are post the application of the respective performance conditions

but are now subject to an additional two-year vesting period.

3. Includes Partnership shares purchased through, and Matching shares held in, the Company’s all-employee Share

Incentive Plan (SIP). The Matching shares may be subject to forfeiture within three years of the award. As at 31

December 2023, Andrew Heath and Derek Harding held 34 and 33 Matching shares respectively, which were still

subject to forfeiture rules.

4. This is 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 72,809 vested LTIP/PSP share options that are currently subject to an

additional two-year vesting period and 34,892 unvested DBP share options with no performance conditions

attached. Net of UK income tax and NI contributions, these represent 38,348 and 19,177 shares respectively;

and

• Derek Harding’s balance includes 56,695 vested LTIP/PSP share options that are currently subject to an

additional two-year vesting period and 22,226 unvested DBP share options with no performance conditions

attached. Net of UK income tax and NI contributions, these represent 29,862 and 12,218 shares respectively.

5. Based on the closing price on 31 December 2023 of 3,779 pence per share.

Directors’ shareholding in the SIP

No. of shares held

at 1 January 2023

No. of Partnership

shares purchased

during the year

No. of Matching

shares awarded

during the year

Dividend

Total no. of shares held

within the SIP as at

31 December 2023

Andrew Heath 345 53 11 9 418

Derek Harding 296 53 10 7 366

The SIP was approved by shareholders at the 2018 AGM. This scheme is an HMRC tax favoured

share purchase scheme open to all UK employees. The Executive Directors have the

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

up to a maximum monthly value set by HMRC (currently £150 per month). For every five

Partnership shares purchased, the Company will award one free Matching share. All shares are

held in trust by the SIP Trustees. The Matching shares are subject to forfeiture within three years

of the date of award.

Between 1 January and 28 February 2024, Andrew Heath and Derek Harding both purchased

eight Partnership shares with Andrew Heath and Derek Harding receiving one and two free

Matching shares respectively through the Company’s SIP. There were no other movements in

share interests during thisperiod.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 117

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

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

2023

Granted

during

the year

Exercised

during

the year

Lapsed

during

the year

No. of

subject to

options at

31 December

2023

Andrew

Heath

PSP

2,5

Sept 2018 Sept 2021 Sept 2028 5 2,378.4 508,312 7,403

100

7,503 – –

Mar 2019 Mar 2022 Mar 2029 5 2,669.0 1,220,000 12,780 275

– – 13,055

LTIP

3,5

Mar 2020 Mar 2023 Mar 2030 5 2,239.2 1,707,972 76,276 5,244

– 21,766 59,754

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 1,707,975 54,318 – – – 54,318

Mar 2022 Mar 2025 Mar 2032 5 2,658.0 1,762,600 66,313

– – – 66,313

Mar 2023 Mar 2026 Mar 2033 5 3,460.8 1,923,547 – 55,581 – – 55,581

DBP

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 182,973 5,819 – – – 5,819

Mar 2022 Mar 2025 Mar 2032 5 2,658.0 462,678 17,407 – – – 17,407

Mar 2023 Mar 2026 Mar 2033 5 3,460.8 403,757 – 11,666 – – 11,666

Total 240,316 72,866 7,503 21,766 283,913

Derek

Harding

PSP

2,5

Mar 2019 Mar 2022 Mar 2029 5 2,669.0 949,977 9,952

214

– – 10,166

LTIP

3,5

Mar 2020 Mar 2023 Mar 2030 5 2,239.2 1,329,973 59,395 4,084

– 16,950 46,529

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 1,329,955 42,296 – – – 42,296

Mar 2022 Mar 2025 Mar 2032 5 2,658.0 1,372,511 51,637

– – – 51,637

Mar 2023 Mar 2026 Mar 2033 5 3,460.8 1,413,979 – 40,857 – – 40,857

DBP

Mar 2021 Mar 2024 Mar 2031 5 3,144.4 118,733 3,776 – – – 3,776

Mar 2022 Mar 2025 Mar 2032 5 2,658.0 298,998 11,249 – – – 11,249

Mar 2023 Mar 2026 Mar 2033 5 3,460.8 249,212 – 7,201 – – 7,201

Total 178,305 52,356 – 16,950 213,711

1. Shareholders approved the current PSP rules at the AGM held on 24 May 2017 and approved the LTIP and DBP rules at the General Meeting held on 4 December 2019. The PSP, LTIP and DBP

awards are conditional rights to acquire shares and are nominal cost options. The exercise price is the nominal value of a Spectris ordinary share, which is 5 pence.

2. PSP awards granted to the Executive Directors were structured so that one-third of the award is subject to an EPS target, one-third is subject to a TSR target and one-third is subject to an

Economic Profit (EP) target. Each condition operated over a fixed three-year period (being the three financial years commencing with the financial year in which an award was made in respect

of the EPS and EP conditions; and three years from the date of grant in respect of the TSR condition) with no opportunity for re-testing.

3. LTIP awards granted to the Executive Directors are currently structured so that one-third of the base award is subject to an EPS target, one third is subject to a ROGCE target and the final third is

subject to an economic, social and governance (ESG) target. Prior to the 2023 grant, the base award was 50% subject to the EPS target and 50% subject to the 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 condition operates over a fixed three-year period

(being the three financial years commencing with the financial year in which an award is made in respect of the EPS, ROGCE and ESG conditions; and three years from the date of grant in

respect of the TSR condition) with no opportunity for retesting.

4 DBP awards represent the 50% of each Executive Director’s pre-tax annual bonus that is compulsorily deferred into shares. No further performance conditions apply to these DBP awards.

5. PSP and LTIP awards are subject to an additional two-year holding period following the initial three-year performance period. These awards will become available to exercise at the end of the

holding period (which will be the fifth anniversary of the date of grant).

6. These PSP and LTIP awards are linked to a grant of market value share options (Linked Awards). Such Linked Awards are granted up to the applicable HMRC’s limit as at the date of grant

(£30,000 for these awards), and have the same performance and vesting conditions as the PSP and LTIP awards to which they are linked. Noadditional gross value can be delivered from the

exercise of the Linked Awards. Further details are set out in note 22 to the Consolidated FinancialStatements.

7. These are additional share awards for the dividend equivalent shares that would be received on the vested share award between the date of grant and the date the award becomes exercisable.

These additional dividend share awards are structured as nil cost options (i.e. exercise price is nil).

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023118

Directors’ Remuneration Reportcontinued

Remuneration for 2023 continued

Dilution limits

In line with best practice, the use of new or treasury shares to satisfy the vesting of awards

made under the Company’s share plans is restricted to 10% in any ten-year rolling period.

Afurther restriction applies to discretionary share plans (PSP, LTIP and DBP) of 5% over the

same period of which 3.22% has been utilised.

Chairman and Non-executive Directors’ interest in shares

The Chairman and Non-executive Directors are not permitted to participate in any of the

Company’s incentive schemes nor are they required to build and retain a minimum

shareholding in the Company. They have discretion as to whether to hold the Company’s

shares or not. The table below sets out the beneficial interests in the ordinary shares of the

Company of each current Non-executive Director (including their closely associated persons)

during the year ended 31 December 2023.

Current Non-executive Director

Shares held at

1 January 2023 (or date of

joining)

Shares held at

31 December 2023

(or date of cessation)

Mark Williamson 17, 282 18,718

Ravi Gopinath – –

Mandy Gradden – –

Alison Henwood 947 947

Ulf Quellmann 2,398 2,477

Bill Seeger 3,000 3,000

Cathy Turner 2,660 2,660

Kjersti Wiklund 1,500 1,500

There has been no change in the interests in shares of the Chairman and Non-executive

Directors between 1 January and 28 February 2024.

Share price

At 31 December 2023, the mid-market closing share price on the London Stock Exchange of a

Spectris ordinary share was 3,779 pence per share. The highest mid-market closing share price

in the year was 3,841 pence per share and the lowest was 2,935 pence per share.

Directors’ service contracts and letters of appointment

The Executive Directors have rolling contracts subject to 12 months’ notice of termination by

either party, or to summary notice in the event of a serious breach of the Director’s obligations,

dishonesty, serious misconduct or other conduct bringing the Company into disrepute. All

letters of appointment in respect of the Non-executive Directors are renewable at each AGM,

subject to review prior to proposal for re-election, and provide for a notice period of six months.

Ordinarily, appointments do not continue beyond nine years after first election, at which time

Non-executive Directors cease to be presumed independent under the Code.

The table below summarises the current Directors’ service contracts or terms of appointment.

Date of contract Expiry date Notice period

Length of service at

28 February 2024

Executive Director

Andrew Heath 3 Sept 2018 Rolling contract with no

fixed expiry date

12 months 5 years 5 months

Derek Harding 1 Mar 2019 Rolling contract with no

fixed expiry date

12 months 4 years 11 months

Non-executive Director

Mark Williamson 26 May 2017 Renewable at each AGM 6 months 6 years 10 months

Ravi Gopinath 1 Jun 2021 Renewable at each AGM 6 months 2 year 8 months

Mandy Gradden 16 Oct 2023 Renewable at each AGM 6 months 4 months

Alison Henwood 1 Sep 2021 Renewable at each AGM 6 months 2 year 5 months

Ulf Quellmann 1 Jan 2015 Renewable at each AGM 6 months 9 years 1 month

Bill Seeger 1 Jan 2015 Renewable at each AGM 6 months 9 years 1 month

Cathy Turner 1 Sep 2019 Renewable at each AGM 6 months 4 years 5 months

Kjersti Wiklund 19 Jan 2017 Renewable at each AGM 6 months 7 years 1 month

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 119

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

External appointments – Executive Directors

Executive Directors may retain any payments received in respect of external non-executive

appointments held. Such appointments are normally limited to one per Director at any time

and are subject to the approval of the Board. Derek Harding became a Non-executive Director

of Sage Group plc in March 2021. During 2023, he received £70,000 (2022: £65,833) in fees for

that role. AndrewHeath did not hold any external non-executive appointments during 2023.

Summary of shareholder voting on Directors’ remuneration

The 2022 Directors’ Remuneration Report was approved by 95.90% of the votes cast at the

2023AGM held on 26 May 2023. The 2023 Remuneration Policy was approved by shareholders

ata General Meeting held on 13 December 2022 by 95.50% of the votes cast, as detailed in the

table below:

Votes for Votes against Votes withheld

Number % Number % Number

2022 General

Meeting

2023 Directors’

Remuneration Policy

86,543,504 95.50% 4,077,799 4.50% 38,488

2023 AGM 2022 Directors’

Remuneration Report

84,047,913 95.90% 3,595,264 4.10% 38,929

Directors’ interest in contracts

No Director had, during the year or at the end of the year, any material interest in any contract

of significance to the Group’sbusiness.

Loans to Directors

During the year, there were no outstanding loans to any Director.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023120

Directors’ Remuneration Reportcontinued

Role of the Remuneration Committee

The Committee is responsible for recommending to the Board the Group’s Remuneration

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.

It regularly reviews the balance between fixed and variable pay and the performance

conditions that attach to both short-term and long-term incentives. In 2023, the Committee

oversaw the setting of the first ESG targets under the Group’s long-term incentive arrangements

as part of the implementation of the 2023 Remuneration Policy. The Committee monitors the

level and structure of remuneration for senior management and takes into account workforce

remuneration, related policies and the alignment of incentives and rewards with the Group’s

culture.

The remuneration of Non-executive Directors is a matter reserved for the Board. The full

terms of reference for the Remuneration Committee are reviewed annually and are available

at www.spectris.com/corporategovernance

Committee members and attendees

All members of the Committee are independent Non-executive Directors. During 2023, the

members were Cathy Turner (Chairman), Ravi Gopinath, Ulf Quellmann and KjerstiWiklund.

Details of each member’s attendance are disclosed on page 84. Only members of the

Committee have the right to attend meetings but other individuals and external advisers

mayattend by invitation. The Chairman is invited to attend all meetings of the Committee.

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

tomake informed decisions. No individual was present when their own remuneration was

being discussed.

The Committee also meets without management present and has received independent

remuneration advice during the year from the external advisers appointed to support

theCommittee.

Committee activities in 2023

The Committee addressed the following key agenda items during its five formal meetings in 2023:

• Reviewed and approved incentive

outcomes relating to the 2022 annual

bonus plan.

• Reviewed and approved outcomes

for the 2020 LTIP.

• Reviewed and considered the

possibility of a windfall gain in

respect of the 2020 LTIP and agreed

that no adjustments be made.

• Approved CEO salary increase.

• Approved CFO and Executive

Committee salaries and Chairman’s

fee following annual review.

• Approved Executive Directors’ and

Executive Committee’s 2023 bonus

arrangements, target performance

measures and personal objectives.

• Approved 2023 LTIP grant levels and

target range for performance

measures.

• Reviewed Executive Directors and

Executive Committee current and

projected shareholdings against the

requirements set out in the

Remuneration Policy.

• Reviewed and approved the 2022

Directors’ Remuneration Report.

• Reviewed projected outturn of 2021,

2022 and 2023 LTIP.

• Considered and approved interim

LTIP awards for new joiners and

current employees below Board level.

• Approved minor changes to LTIP

Rules to reflect changes in UK tax

regulation.

• Reviewed external market practice

on remuneration matters with the

Committee’s external remuneration

adviser.

• Considered potential increase to

Chairman’s fee.

• Reviewed likely formulaic outcomes

of the 2023 bonus and 2021 LTIP

awards and discussed the need for

the Committee to consider any

upward or downward discretion in

relation to those likely outcomes.

• Review of projected outturn of 2022

and 2023 LTIP.

• Reviewed Executive Directors’ and

Executive Committee members’

shareholdings against the guidelines

set out in the Remuneration Policy.

• Reviewed the wider external

remuneration landscape, focusing on

executive pay, with the Committee’s

remuneration adviser.

• Review of the Committee’s Terms of

Reference.

January February July October December

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 121

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Remuneration Reportcontinued

Role of the Remuneration Committee continued

In line with the requirements of the Code to include explanation of the Company’s approach to

investing in and rewarding its workforce, some of the work that theCommittee has carried out

in this area is set out below. The Committee has taken time during the year to review the

remuneration of the wider workforce, related policies and the alignmentof incentives and

rewards with culture as part of its implementation of the 2023 Remuneration Policy.

Stakeholder Engagement

Values and culture in remuneration

The Group’s Values – Be True, Own It and Aim High are built into the Group’s performance

management framework. The Remuneration Committee has used this framework as the

foundation for the operational and strategic targets for the Executive Directors and Executive

Committee members for 2023. In assessing performance against these targets, the

Committee has also considered wider stakeholder experience during 2023. The employee

engagement survey was also used to obtain feedback from the workforce on remuneration

and this will continue in future surveys.

Stakeholder views

Recognising the inflationary pressures on the global workforce, the Committee has

workedclosely with the Executive team to review the Group’s wider pay policies and particular

strategies for supporting employees through the cost of living challenges present in key

jurisdictions. The Committee focused on ensuring the approach taken to remuneration

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

remuneration during this inflationary period.

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

Group. Awards under the Spectris LTIP are granted to each management team within each

business to support the alignment of their interests with shareholders. In the UK, the Group

also manages a successful all-employee SIP to allow all UK-based employees to build a

shareholding in Spectris. For every five shares purchased by an employee under the SIP, the

Company awards one free Matching share.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023122

Directors’ Remuneration Reportcontinued

Role of the Remuneration Committee continued

This Directors’ Remuneration Report for the year ended 31 December 2023 complies with the

requirements of the Listing Rules of the UK Listing authority, Schedule 8 of the Large- and

Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as

amended in 2013, 2018 and 2019 and the provisions of the 2018 UK Corporate Governance Code.

Gender pay gap reporting

Spectris plc employs fewer than 250 people in the UK and is therefore not required to publish

gender pay gap data. However, the Committee considers the issue of gender pay to be

important and therefore voluntarily calculates and discloses the Group’s gender pay gap. The

detailed disclosure is set out below and key metrics relating to the disclosure are included in

the Sustainability Report on page 57. As in previous years, the 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.

The median and mean gender pay gap have reduced by 19.4% and 47.0% respectively

compared to 2022 levels. This reduction further validates the Committee’s belief that men and

women are being paid equally 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. This imbalance is gradually improving but continues to be a core

focus of time and attention as we strive towards our commitment that 40% of the senior

leadership community will be comprised of women by 2030.

Non-management Management Total

Median Mean Median Mean Median Mean

Gender pay gap 15.5% 13.0% 10.3% 22.0% 15.0% 11.5%

Bonus gap 14.2% 10.1% 12.1% 28.7% 11.2% 11.7%

Male Female Male Female Male Female

% receiving a bonus 96.9% 94.8% 100.0% 100.0% 97.1% 95.3%

Advisers to the Committee

PwC was first appointed as independent remuneration adviser in January 2018. This

appointment took place following a competitive tender process. During 2023, 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

executive remuneration;

• analysis on all elements of the implementation of the 2023 Remuneration Policy; and

• advice on the interpretation of investor body guidelines concerning remuneration outcomes.

PwC reports directly to the Committee Chairman. During 2023, PwC also provided certain

project advisory and tax services to the Company.

Aon separately supports the Company in relation to the Company’s share plans including

compiling IFRS 2 ‘Share-based Payment’ reporting on the Company’s share plans and

providing LTIP TSR performance calculations. Aon does not provide any other services to the

Company. Total fees paid during the financial year to these advisers were: PwC £87,250 (2022:

£153,081), and Aon £39,360 (2022: £32,760). These fees were charged on the basis of each firm’s

standard terms of business.

Both PwC and Aon are members of the Remuneration Consultants Group and adhere to its

Code of Conduct.

The Committee reviews the objectivity and independence of the advice it receives from its

advisers each year and is satisfied that both PwC and Aon provided credible and professional

advice during 2023.

Annual performance evaluation

The performance of the Committee was reviewed as part of the wider Board evaluation

process, led by the Company Secretary. Further details regarding the process followed are set

out on page 88. Following this review and the feedback received, the Committee considered

that it had operated effectively during the year.

2024 Remuneration Committee workplan

The Committee intends to focus on the following key areas during 2024:

• setting LTIP and bonus performance targets aligned to the 2023 Remuneration Policy;

• wider workforce remuneration structures and key policies; and

• 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

28 February 2024

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 123

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Report

This section sets out the information required to be disclosed by the Company and the

Group in the Directors’ Report in compliance with the Companies Act 2006 (the Act), the

Listing Rules of the UK Listing Authority (Listing Rules) and the Disclosure Guidance and

Transparency Rules (DTR).

Overview of information required to be disclosed

Certain matters that would otherwise be disclosed in this Directors’ Report have been reported

elsewhere in this Annual Report. This report should therefore be read in conjunction with the

Strategic Report on pages 2 to 77 and the Governance section 80 to 127 which are incorporated

by reference into this Directors’ Report. The Strategic Report and this Directors’ Report,

together with other sections of this Annual Report and Accounts including the Governance

section on pages 80 to 127 are incorporated by reference, and when taken as a whole, form the

Management Report as required under Rule 4.1.5R of the DTR.

Disclosure Reported in Page reference

Acquisitions and disposals Strategic Report Pages 40 and 41

Articles of Association Directors’ Report Page 126

Annual General Meeting Directors’ Report Page 126

Appointment and removal of Directors Governance Page 94

Auditors’ re-appointment and remuneration Directors’ Report Page 126

Authority to allot shares Directors’ Report Page 127

Business model Strategic Report Pages 20 and 21

Branches Directors’ Report Page 126

Change of control Directors’ Report Page 126

Community and charitable giving Strategic Report Pages 78 and 79

Corporate governance Governance Pages 80 to 127

Directors’ conflicts of interest Directors’ Report Page 126

Directors’ details Governance Pages 80 and 81

Directors’ indemnity Directors’ Report Page 126

Directors’ remuneration and interest Governance Pages 102 to 123

Directors’ responsibility statement Directors’ Report Page 128

Disclosure of information to auditor Directors’ Report Page 127

Diversity, equity and inclusion Strategic Report Pages 56 and 57

Employee engagement Strategic Report

Governance

Pages 54 and 55

and 89 to 91

Disclosure Reported in Page reference

Employee equal opportunities Strategic Report Pages 56 and 57

Employee share plans Directors’ Report Page 126

Employees with disabilities Strategic Report Page 56

Financial instruments Directors’ Report Page 126

Future developments and strategic priorities Chief Executive Review Pages 12 to 18

Going concern Directors’ Report Page 126

Internal control and risk management systems Governance Page 99

Non-financial information statement and index Strategic Report Page 77

Ongoing director training and development Governance Page 88

Political donations Directors’ Report Page 126

Post balance sheet events Directors’ Report Page 126

Powers of Directors Directors’ Report Page 126

Principal Risks and risk management Strategic Report Pages 46 to 50

Purchase of own shares Directors’ Report Page 127

Research and development activities Strategic Report Page 10 and 11

Results and dividends Directors’ Report Page 126

Rights and obligations attaching to shares including

restrictions on transfer of shares and voting rights

Directors’ Report Page 127

Section 172 statement Strategic Report

Governance

Page 7

Pages 86 and 87

Share capital Directors’ Report Page 127

Stakeholder engagement Governance Pages 86 and 87

Streamlined Energy and Carbon disclosures Strategic Report Pages 64 and 65

Substantial share interests Directors’ Report Page 127

Treasury shares Director’s Report Page 127

Viability Statement Strategic Report Page 51

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023124

Directors’ Reportcontinued

Gender diversity of the Board

and the Group’s employees as at 31 December 2023

Gender

diversity

Board

members

% of

the Board

Senior

positions

on the Board

(CEO, CFO,

SID and

Chairman)

Executive

Committee

% of

Executive

Committee

Leadership

community

% of

Leadership

community

wider

employee

population

% of wider

employee

population

Men 6 60% 3 5 71.43% 144 71.3% 4589 67.14%

Women 4 40% 1 2 28.57% 58 28.7%

2390 32.86%

Not specified

prefer not to say 0 0 0 0 0 0 0 0 0

1. The Chief Executive and CFO are members of the Board and the Executive Committee and have been included in both the Board and Executive Committee gender data.

2. 2022: 20% of Leadership community.

3. 2022: 34.01% of wider employee population.

Ethnic diversity of the Board

and Executive Committee as at 31 December 2023

Ethnic diversity Board members % of the Board

Senior positions

on the Board

(CEO, CFO, SID

and Chairman) Executive Committee

% of Executive

Committee

White British or other White

(including minority-white groups) 9 90% 4 7 100%

Asian/Asian British 1 10% 0 0 0

Mixed/Multiple Ethnic Groups 0 0 0 0 0

Black/African/Caribbean/Black British 0 0 0 0 0

Other ethnic group including Arab 0 0 0 0 0

Not specified prefer not to say 0 0 0 0 0

1. The Chief Executive and CFO are members of the Board and the Executive Committee and have been included in both the Board and Executive Committee ethnicity data.

Reporting on Diversity and inclusion

The following data sets out the range of gender and ethnic diversity on our Board and Executive Committee as at 31 December 2023. The data

also sets out the range of gender diversity for our Leadership community and employees as at 31 December 2023. We continue to consider the

most appropriate way to request and capture ethnicity data for these populations.

The gender and ethnic diversity data for our Board members was collected through a questionnaire which asked each Director how they

identified themselves using the categorisations set out in the Listing Rules. Where we already held gender and ethnicity data for the Executive

Committee through Workday, we have used that data, which already has consents in place to use it for reporting purposes on an anonymous

basis. The gender diversity data for our Leadership community and employees was also collected through Workday.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 125

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Directors’ Reportcontinued

Results and dividends The financial results for the financial year ended 31 December 2023 are

set out on pages 136 to 203. Adjusted operating profit for the year

amounts to £262.5 million (2022: £222.4 million).

An interim dividend of 25.3 pence per share was paid on 10 November

2023 in respect of the half year ended 30 June 2023. The Board is

recommending a final dividend of 53.9 pence per share for the year

ended 31 December 2023. Together with the interim dividend paid in

November 2023, subject to shareholder approval of the final dividend,

total dividends for the year ended 31 December 2023 will amount to

79.2pence per share.

Dividend details are given in note 8 to the Consolidated Financial

Statements on page 154.

Subject to the approval of shareholders at the 2024 AGM, the final

dividend will be paid on 28 June 2024 to those shareholders on the

Articles of Association (‘Articles’) The Company’s Articles contain specific provisions and restrictions

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

renewed by shareholders each year at the Annual General Meeting. The

Articles also give power to the Board to appoint and remove Directors

and require Directors to submit themselves for election at the first AGM

following their appointment and for annual re-election at subsequent

AGMs. The Articles may be amended by special resolution of the

shareholders. The Company’s Articles are available on the Company’s

website: www.spectris.com.

Annual General Meeting (‘AGM’) It is intended that the 2024 AGM will be held at 3:00pm on Thursday

23May 2024 at Melbourne House, 5th floor, 44-46 Aldwych, London

WC2B 4LL. The Notice of the AGM accompanies this Annual Report and

is available at www.spectris.com/AnnualGeneralMeeting.

Auditor’s re-appointment and

remuneration

Resolutions for the re-appointment of Deloitte LLP as the Company’s

auditor and to authorise the Directors, acting through the Audit and

Risk Committee, to agree the remuneration of the auditor are to be

proposed at the 2024 AGM.

Branches The Spectris Group, through various subsidiaries, has established

branches in a number of different countries in which the business

operates.

Change of control There are a number of agreements that take effect, alter or terminate

upon a change of control of the Group following a takeover, such as

bank loan agreements and Company share plans. None of these are

deemed to be significant in terms of their potential impact on the

business of the Group as a whole. It is also possible that funding

arrangements for the Group’s defined benefit pension arrangements

would need to be enhanced following a change in control if that

resulted in a weakening of the employer covenant. The Company does

not have any agreements with any Director that would provide for

enhanced compensation for loss of office or employment following

a takeover bid.

Directors Details of the Directors who served during the year are set out on pages

80 and 81. Mandy Gradden was appointed to the Board on 16 October

2023. Directors are appointed and replaced in accordance with the

Articles, the Act and the Code.

Directors’ conflicts of interest The Board has an established process to review at least annually, and, if

appropriate, authorise conflicts of interest. Any transactional conflicts

are reviewed as they arise. Directors are asked to review and confirm

reported conflicts of interest as part of the year-end process.

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 102

to 123.

Indemnity provisions The Spectris Group maintains liability insurance for its Directors and

officers. The Directors and Company Secretary have also been granted

a third-party indemnity, under the Act, which remains in force. Neither

the Company’s indemnity nor insurance provides cover in the event

that an indemnified individual is proven to have acted fraudulently

ordishonestly.

During the year and at the date of this report, the Company has in place

Pension Trustee Liability Insurance for the Trustees of the Spectris

pension plan.

Directors’ powers The business of the Company is managed by the Board, which may

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 169 to 173.

Financial instruments Details of the Group’s financial risk management in relation to its

financial instruments are given in note 27 to the Consolidated Financial

Statements on pages 181 to 184.

Going concern and Viability

Statement

Having reviewed the Group’s plans and available financial facilities, 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. The

Company’s Viability Statement can be found on page 51.

Political donations The Group’s policy is not to make any political donations and none were

made during the financial year ended 31 December 2023 (2022: nil).

Post balance sheet events None.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023126

Directors’ Reportcontinued

Purchase of own shares The Company was authorised by shareholders at the 2023 AGM to

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 2023, 3,382,896 ordinary shares

were repurchased and cancelled by the Group, in the final tranches of

the £300 million share buyback programme announced on 19 April

2022 and part of the first tranche of the £150 million share buyback

announced on 11 December 2023. This resulted in a cash outflow of

£114.9 million, including transaction fees of £1.2 million. The shares

repurchased in 2023 represented 3.33 % of the Company’s issued share

capital, excluding the shares held in treasury, on 31 December 2023.

The £150 million share buyback programme which commenced on

13December 2023 was launched having considered the future

acquisition pipeline of the Group alongside its balance sheet position.

The initial tranche for £50 million was launched pursuant to the

authority granted by the Company’s shareholders at the 2023 AGM

andis expected to be completed by 31 May 2024.

This standard authority is renewable annually and the Directors will

seekto renew this authority at the 2024 AGM in order to complete the

remaining £100 million of the share buyback programme.

Related party transactions Details of related party transactions are set out in note 31 to the

Financial Statements on page 184.

Share capital The share capital of the Company comprises ordinary shares of 5 pence

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

Company. The Company may reduce or vary the rights attaching to its

share capital by special resolution subject to the Articles and applicable

laws and regulations. The issued share capital of the Company together

with movements in the Company’s issued share capital during the year

are shown in note 21 to the Financial Statements on page 169.

Shareholders’ rights and

obligations attaching to shares

The Articles (available on the Company’s website www.spectris.com)

contain provisions governing the ownership and transfer of shares.

Allshareholders have equal voting rights with one vote per share and

there are no special control rights attaching to the shares. There are

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 2024 AGM are set

out in the Notice of AGM accompanying this Annual Report.

Substantial shareholders As at 31 December 2023, the Company had received formal notifications of

the following holdings in its ordinary shares in accordance with DTR 5:

Shareholding

in Spectris

Date of

notification

Percentage of

issued share

capital at date

of notification

FMR LLC 8,682,229 01 Jan 2020 7.48%

BlackRock 6,409,477 19 June 2023 6.12%

UBS 5,954,961 11 Jan 2021 5.12%

Massachusetts Financial

Services Company 5,178,500 15 Mar 2022 4.67%

Between 31 December 2023 and the date of this report, the Company

received the following notifications from:

• BlackRock, on 8 January 2024, of a holding of 4.89% of voting rights

attached to shares + 1.75% of voting rights through financial instruments

held totalling 6.64% (6,764,388).

• BlackRock, on 11 January 2024, of a holding of 5.12 % voting rights

attached to shares + 1.60% voting rights through financial instruments

held totalling 6.72% (6,836,308).

A list of the Company’s major shareholders is set out on page 203.

Treasury shares Shares held by the Company in treasury do not have voting rights and are

not eligible to receive dividends.

Disclosures required under

UKListing Rule 9.8.4

There are no disclosures required to be made under UK Listing Rule 9.8.4

other than in respect of long-term incentive schemes, details of which are

set out in the Directors’ Remuneration Report on pages 102 to 123.

Disclosure of information

toauditor

The Directors who held office at the date of approval of the Directors’

Report confirm that:

• 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.

On behalf of the Board

Rebecca Dunn

Head of Corporate Affairs and Company Secretary

28 February 2024

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 127

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report, Directors’ Remuneration Report

and the Group and Company Financial Statements in accordance with applicable law and

regulations.

Company law requires Directors to prepare the Group Financial Statements in accordance with

the UK Adopted International Financial Reporting Standards. Under company law, Directors

must prepare Group and Company Financial Statements for each financial year and must not

approve the Financial Statements unless they are satisfied that they give a true and fair view of

the state of affairs of the Group and Company and of their profit or loss for that period.

In preparing each of the Group and Company Financial Statements, the Directors are required to:

• select accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• for the Group Financial Statements, state whether they have been prepared in conformity

with the requirements of UK Adopted International Financial Reporting Standards;

• for the Company Financial Statements, state whether applicable UK Accounting Standards

have been followed, subject to any material departures disclosed and explained in the

Company Financial Statements; and

• prepare the Financial Statements on the going concern basis unless it is inappropriate to

presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to

show and explain the Company’s transactions and disclose with reasonable accuracy at any

time the financial position of the Company and enable them to ensure that its Financial

Statements comply with the Companies Act 2006. They have general responsibility for taking

such steps as are reasonably open to them to safeguard the assets of the Group and to prevent

and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a

Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance

Statement that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial

information included on the Company’s website. Legislation in the UK governing the

preparation and dissemination of financial statements may differ from legislation in other

jurisdictions.

Directors’ responsibility statement

We confirm that to the best of our knowledge:

• the Financial Statements, prepared in accordance with the applicable set of accounting

standards, give a true and fair view of the assets, liabilities, financial position and profit or loss

of the Company and the undertakings included in the consolidation taken as a whole;

• the Strategic Report on pages 2 to 77 and the Directors’ Report on pages 80 to 127 include a

fair review of the development and performance of the business and the position of the

Group and the undertakings included in the consolidation taken as a whole, together with a

description of the Principal Risks and uncertainties that they face; and

• the Annual Report and Accounts taken as a whole, is fair, balanced and understandable, and

provides the information necessary for shareholders to assess the Group’s performance,

business model and strategy.

The Strategic Report and the Directors’ Report were approved by the Board on 28 February 2024.

By order of the Board

Andrew Heath

Chief Executive

Derek Harding

Chief Financial Officer

28 February 2024

Statement of Directors’ responsibilities in respect

of the Annual Report and the Financial Statements

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023128

Independent auditor’s

report to the members

of Spectris plc

Report on the audit of the financial statements

1. Opinion

In our opinion:

• the financial statements of Spectris Plc (the Parent Company) and its subsidiaries

(theGroup) give a true and fair view of the state of the Group’s and of the Parent

Company’s affairs as at 31 December 2023 and of the Group’s profit for the year then

ended;

• the Group financial statements have been properly prepared in accordance with United

Kingdom adopted international accounting standards;

• the Parent Company financial statements have been properly prepared in accordance

with United Kingdom Generally Accepted Accounting Practice, including Financial

Reporting Standard 101 ‘Reduced Disclosure Framework’; and

• the financial statements have been prepared in accordance with the requirements of

the Companies Act 2006.

We have audited the financial statements which comprise:

• 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 Statement of Cash Flows;

• the Notes to the Consolidated Accounts 1 to 33 and Notes to the Parent Company Accounts

1to 14.

The financial reporting framework that has been applied in the preparation of the Group

financial statements is applicable law and United Kingdom adopted international accounting

standards. The financial reporting framework that has been applied in the preparation of the

Parent Company financial statements is applicable law and United Kingdom Accounting

Standards, including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally

Accepted Accounting Practice).

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK)

(ISAs(UK)) and applicable law. Our responsibilities under those standards are further described

in the auditor’s responsibilities for the audit of the financial statements section of our report.

We are independent of the Group and the Parent Company in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the

Financial Reporting Council’s (the FRC’s) Ethical Standard as applied to listed public interest

entities, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. The non-audit services provided to the Group and Parent Company for the

yearare disclosed in note 4 to the financial statements. We confirm that we have not

providedany non-audit services prohibited by the FRC’s Ethical Standard to the Group or the

Parent Company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion.

3. Summary of our audit approach

Key audit

matters

The key audit matter that we identified in the current year was:

• Revenue recognition

Materiality The materiality that we used for the Group financial statements was

£13.1million which equates to 5% of adjusted profit before tax.

Scoping Full scope audit work was completed on 36 components and specified

audit procedures were undertaken on a further 4 components. Our full

scope and specified audit procedures represent 76% of total Group revenue

and 70% of Group adjusted profit before tax.

Significant

changes in

our approach

Our audit approach is consistent with the previous year with the exception

of the change in the number of components in full scope audits and

specified audit procedures. This change reflects the developments in the

business relating to the Group’s acquisitions and disposals in the year.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 129

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Independent auditor’s report to the members of Spectris plccontinued

4. Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going

concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to

continue to adopt the going concern basis of accounting included:

• evaluating the financing facilities available to the Group including the nature of facilities,

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

• performing a sensitivity analysis to consider specific scenarios, including a reverse stress test

based on a reduction in revenue and associated margin.

Based on the work we have performed, we have not identified any material uncertainties

relating to events or conditions that, individually or collectively, may cast significant doubt on

the Group’s and Parent Company’s ability to continue as a going concern for a period of at least

twelve months from when the financial statements are authorised for issue.

In relation to the reporting on how the Group has applied the UK Corporate Governance Code,

we have nothing material to add or draw attention to in relation to the directors’ statement in

the financial statements about whether the directors considered it appropriate to adopt the

going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are

described in the relevant sections of this report.

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most

significance in our audit of the financial statements of the current period and include the

mostsignificant assessed risks of material misstatement (whether or not due to fraud) that

weidentified. These matters included those which had the greatest effect on: the overall

auditstrategy, the allocation of resources in the audit; and directing the efforts of the

engagement team.

These matters were addressed in the context of our audit of the financial statements as a

whole, and in forming our opinion thereon, and we do not provide a separate opinion on

thesematters.

5.1. Revenue recognition

Key audit

matter

description

The Group recognised revenue of £1,449 million (2022: £1,327 million)

predominantly through the provision of goods and services accounted for

under IFRS 15 Revenue from Contracts with Customers. Given the number

of businesses in the Group, the variety of revenue streams and the bespoke

nature of businesses spanning across numerous countries and industries;

understanding the revenue cycles in each business and their respective

control environments underpinned our risk assessment and the basis for

our planned audit procedures.

We identified a key audit matter relating to a risk of material misstatement

in relation to cut-off for revenue recognition. The risk relates to the potential

overstatement of revenue within certain components where a significantly

higher-than-average value of revenue is recognised in December 2023

compared to the rest of the year.

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.

How the

scope of

our audit

responded to

the key audit

matter

We designed our audit procedures to be specific to each operating

company to which the cut-off risk has been identified. Consequently,

wehave performed a combination of the following audit procedures

asrelevant:

• Obtained an understanding of the relevant controls over the revenue

recognition process, specifically in relation to cut-off and in one instance

tested the operating effectiveness of these relevant controls;

• Assessed a sample of revenue recognised in December 2023 and

January 2024 against third-party supporting evidence to determine

when the performance obligations had been satisfied and whether the

appropriate cut-off was applied;

• Considered material contracts with multiple performance obligations

and assessed the identification of separate performance obligations, the

timing of revenue recognition and the evidence of the performance

obligations being satisfied;

• Challenged the appropriateness of accrued income recognised by agreeing

a sample to supporting evidence and assessing whether the performance

obligation had been met or partially met (as appropriate); and

• Obtained a schedule of adjusting and manual journals posted in

December 2023 with a credit impact on revenue; and on a sample basis,

assessed the adjustments and manual journals against supporting

evidence.

Key

observations

We consider that revenue across the Group has been appropriately

recognised and that the year-end cut-off is materially accurate. We concur

with management’s accounting policies and their application across

theGroup.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023130

Independent auditor’s report to the members of Spectris plccontinued

6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that

makes it probable that the economic decisions of a reasonably knowledgeable person would

be changed or influenced. We use materiality both in planning the scope of our audit work

andin evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements

as a whole as follows:

Group financial statements Parent Company financial statements

Materiality £13.1 million (2022: £10.9 million) £8.3 million (2022: £6.7 million)

Basis for

determining

materiality

5% (2022: 5%) of adjusted profit

before tax.

1% (2022: 1%) of the Parent

Company’s net assets.

Rationale

for the

benchmark

applied

Adjusted profit before tax is a

keyperformance measure for

management, investors and the

analyst community. This metric is

important to the users of the

financial statements because it

portrays the performance of the

business and hence its ability to

pay a return on investment to the

investors. Likewise, this metric takes

into account the acquisitive nature

of the Group which results in

adjusting items needing to be

considered when determining the

performance of the business.

Refer to the Appendix to the

Consolidated Financial Statements

for the Group’s definition and

calculation of Alternative

Performance Measures.

We consider net assets to be the

most appropriate benchmark as

the Parent Company is a non-

trading entity, whose primary

function within the Spectris Group

is to act as a holding company.

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that,

in aggregate, uncorrected and undetected misstatements exceed the materiality for the

financial statements as a whole.

Group financial statements Parent Company financial statements

Performance

materiality

70% (2022: 70%) of Group

materiality

70% (2022: 70%) of Parent

Company materiality

Basis and

rationale for

determining

performance

materiality

In determining performance materiality, we considered the following factors:

• Our risk assessment, including our assessment of the Group’s overall

control environment and our past experience of the audit;

• The disaggregated nature of the Group which reduces the likelihood of

an individually material error; and

• The low number of corrected and uncorrected misstatements identified

in previous audits.

6.3. Error reporting threshold

We agreed with the Audit and Risk Committee that we would report to the Committee all

audit differences in excess of £0.6 million (2022: £0.5 million), as well as differences below that

threshold that, in our view, warranted reporting on qualitative grounds. We also report to the

Audit and Risk Committee on disclosure matters that we identified when assessing the overall

presentation of the financial statements.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 131

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Independent auditor’s report to the members of Spectris plccontinued

7. An overview of the scope of our audit

7.1. Identificationandscopingofcomponents

The Group operates in more than 30 countries spread across five continents with the largest

footprint being in North America, Asia and Europe. Our Group audit was scoped by obtaining

an understanding of the Group and its environment, including Group-wide controls, and

assessing the risks of material misstatement at the Group and component level.

Within the Group, financial information is reported through individual reporting entities, which

combine to make up the segments reported externally to the market. We have defined each

component to be at the reporting entity level. In determining the audit scope, we have

considered the following at the component level to obtain sufficient coverage over the risks of

material misstatement and for the Group as a whole:

• Qualitative and quantitative risk factors which are risk driven and based on the component

materiality range of £3.4 million to £8.3 million;

• The importance of the divisional businesses as part of the overall Group strategy;

• Changes in the legal entity structure and local statutory environment;

• Changes in finance systems and control environment; and

• The ability to centralise audit effort into fewer locations.

Given the highly disaggregated nature of the Group’s components, we have also considered

coverage over key benchmarks, being revenue and adjusted profit before tax when

determining the appropriateness of the audit scope to support the Group audit opinion.

Wehave scoped the Group in a way that allows us to obtain sufficient coverage not only at a

Group level but also across the Group’s two divisions and other businesses. This is consistent

with previous years in both methodology and quantum of expected coverage. Full scope

auditwork was completed on 36 (2022: 44) components and specified audit procedures were

undertaken on a further four (2022: two) components.

Our full scope and specified audit procedures represent 76% (2022: 73%) of total Group revenue

and 70% (2022: 83%) of Group adjusted profit before tax. The Parent Company is located in the

UK and is audited directly by the Group audit team. Our work on the components, including

the Parent Company, was executed at levels of materiality applicable to each individual

component, which were lower than Group materiality and ranged from £3.4 million to £8.3

million (2022: £3.3 million to £6.7 million).

At the Group level we also tested the consolidation process and carried out analytical

procedures to obtain further assurance that there were no significant risks of material

misstatement of the aggregated financial information of the remaining components not

subject to audit or specified audit procedures.

7.2. Our consideration of the control environment

The Group operates a range of IT systems which underpin the financial reporting process.

Thiscan vary by geography and/or reporting entity. For certain components subject to full

scope audits, we identified relevant IT systems for the purpose of our audit work. These were

typically the principal Enterprise Resource Planning (ERP) systems for each relevant

component that govern the general ledger and transaction accounting balances and also

included the Group’s consolidation system. Our approach was principally designed to inform

our risk assessment and, as such, we obtained an understanding of relevant IT controls and

tested the general IT controls for some operating entities using our IT specialists.

In the current year we did not plan to rely on the operating effectiveness of controls.

Thisstrategy reflected our historic knowledge of the control environment, which we

reconfirmed in the current year, as well as our understanding of the Group’s business

transformation programme. This programme seeks to enhance the internal control framework

and has both IT and business control aspects. Therefore, in addition to the audit work on IT

controls described above, additional audit work on controls was limited to obtaining an

understanding of the relevant controls in key financial reporting process cycles to inform our

risk assessment.

The Group continues to invest time in responding to and addressing our observations.

Management determines their response to these observations and continues to monitor their

resolution with reporting to and oversight from the Audit and Risk Committee as explained in

the Audit and Risk Committee report on pages 95 to 101. As management develops and

completes the business transformation project, we expect our audit approach to evolve in

future years alongside these developments in the internal control environment.

7.3. Our consideration of climate-related risks

In planning our audit, we have considered the potential impact of climate change on the

Group’s business and its financial statements.

The Group has assessed the risk and opportunities relevant to climate change and this remains

a principal risk for the Group. The risk has also been considered and embedded into the

businesses as explained in the Strategic Report.

As part of our audit procedures, we have obtained management’s climate-related risk

assessment and held discussions with those charged with governance to understand the

process of identifying climate-related risks, the determination of mitigating actions and the

impact on the Group’s financial statements. While management has acknowledged the risks

posed by climate change, they have assessed that climate change does not create any further

key sources of estimation uncertainty in the financial statements as at 31 December 2023 as

explained in note 1 on page 139.

We performed our own qualitative risk assessment of the potential impact of climate change

on the Group’s account balances and classes of transactions and did not identify any additional

risks of material misstatement. Our procedures include reading disclosures included in the

Strategic Report to consider whether they are materially consistent with the financial

statements and our knowledge obtained in the audit.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023132

Independent auditor’s report to the members of Spectris plccontinued

7.4. Working with other auditors

Our oversight of component auditors focussed on the planning of their audit work and

understanding of their risk assessment process to identify key areas of estimates and

judgements, as well as the execution of their audit work. We sent our component teams

detailed instructions, reviewed and challenged the related component inter-office reporting

and findings from their work, reviewed relevant documents in underlying audit files, attended

component audit closing conference calls and held regular remote meetings to interact on any

related audit and accounting matters which arose. We also visited and were visited by some

component audit teams and held in-person discussions.

Dedicated members of the Group audit team were assigned to each component to facilitate

an effective and consistent approach to component oversight.

8. Other information

The other information comprises the information included in the annual report (including the

Strategic Report, Governance, Appendix – Alternative Performance Measures, and Additional

Information), other than the financial statements and our auditor’s report thereon. The

directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to

the extent otherwise explicitly stated in our report, we do not express any form of assurance

conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other

information is materially inconsistent with the financial statements, or our knowledge obtained

in the course of the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are

required to determine whether this gives rise to a material misstatement in the financial

statements themselves. If, based on the work we have performed, we conclude that there

isamaterial misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9. Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible

for the preparation of the financial statements and for being satisfied that they give a true and

fair view, and for such internal control as the directors determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to

fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s

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

directors either intend to liquidate the Group or the Parent Company or to cease operations, or

have no realistic alternative but to do so.

10. Auditor’sresponsibilitiesfortheauditofthefinancialstatements

Our objectives are to obtain reasonable assurance about whether the financial statements as

awhole are free from material misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but

is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located

on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of

our auditor’s report.

11. Extent to which the audit was considered capable of detecting irregularities,

including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations.

Wedesign procedures in line with our responsibilities, outlined above, to detect material

misstatements in respect of irregularities, including fraud. The extent to which our procedures

are capable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including

fraud and non-compliance with laws and regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance

including the design of the Group’s remuneration policies, key drivers for directors’

remuneration, bonus levels and performance targets;

• results of our enquiries of management, internal audit, the directors and the Audit and Risk

Committee about their own identification and assessment of the risks of irregularities,

including those that are specific to the Group’s sector;

• any matters we identified having obtained and reviewed the Group’s documentation of their

policies and procedures relating to:

– identifying, evaluating and complying with laws and regulations and whether they were

aware of any instances of non-compliance;

– detecting and responding to the risks of fraud and whether they have knowledge of any

actual, suspected or alleged fraud;

– the internal controls established to mitigate risks of fraud or non-compliance with laws

and regulations;

• the matters discussed among the audit engagement team including significant component

audit teams and relevant internal specialists, including tax, valuation, pension and IT

specialists regarding how and where fraud might occur in the financial statements and any

potential indicators of fraud.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 133

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Independent auditor’s report to the members of Spectris plccontinued

As a result of these procedures, we considered the opportunities and incentives that may exist

within the organisation for fraud and identified the greatest potential for fraud in the following

area: revenue recognition. In common with all audits under ISAs (UK), we are also required to

perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the Group

operates in, focusing on provisions of those laws and regulations that had a direct effect on the

determination of material amounts and disclosures in the financial statements. The key laws

and regulations we considered in this context included the UK Companies Act, Listing Rules,

pensions legislation and tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct

effect on the financial statements but compliance with which may be fundamental to the

Group’s ability to operate or to avoid a material penalty.

11.2. Auditresponsetorisksidentified

As a result of performing the above, we identified revenue recognition as a key audit matter

related to the potential risk of fraud. The key audit matters section of our report explains the

matter in more detail and also describes the specific procedures we performed in response to

that key audit matter.

In addition to the above, our procedures to respond to risks identified included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to

assess compliance with provisions of relevant laws and regulations described as having a

direct effect on the financial statements;

• enquiring of management, the Audit and Risk Committee and in-house legal counsel

concerning actual and potential litigation and claims;

• performing analytical procedures to identify any unusual or unexpected relationships that

may indicate risks of material misstatement due to fraud;

• reading minutes of meetings of those charged with governance, reviewing internal audit

reports and reviewing correspondence with HMRC; and

• in addressing the risk of fraud through management override of controls, testing the

appropriateness of journal entries and other adjustments; assessing whether the

judgements made in making accounting estimates are indicative of a potential bias; and

evaluating the business rationale of any significant transactions that are unusual or outside

the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all

engagement team members including internal specialists and significant component audit

teams, and remained alert to any indications of fraud or non-compliance with laws and

regulations throughout the audit.

Report on other legal and regulatory requirements

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

prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for

which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with

applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Parent Company and

their environment obtained in the course of the audit, we have not identified any material

misstatements in the strategic report or the directors’ report.

13. Corporate Governance Statement

The Listing Rules require us to review the directors’ statement in relation to going concern,

longer-term viability and that part of the Corporate Governance Statement relating to the

Group’s compliance with the provisions of the UK Corporate Governance Code specified for

ourreview.

Based on the work undertaken as part of our audit, we have concluded that each of the

following elements of the Corporate Governance Statement is materially consistent with the

financial statements and our knowledge obtained during the audit:

• the directors’ statement with regards to the appropriateness of adopting the going concern

basis of accounting and any material uncertainties identified, set out on page 126;

• the directors’ explanation as to its assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate, set out on page 126;

• the directors’ statement on fair, balanced and understandable, set out on page 128;

• the board’s confirmation that it has carried out a robust assessment of the emerging and

Principal Risks, set out on page 48;

• the section of the annual report that describes the review of effectiveness of risk

management and internal control systems, set out on page 99; and

• the section describing the work of the Audit and Risk Committee, set out on page 95.

14. Matters on which we are required to report by exception

14.1. Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Parent Company, or returns

adequate for our audit have not been received from branches not visited by us; or

• the Parent Company financial statements are not in agreement with the accounting records

and returns.

We have nothing to report in respect of these matters.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023134

Independent auditor’s report to the members of Spectris plccontinued

14.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures

of directors’ remuneration have not been made or the part of the directors’ remuneration report

to be audited is not in agreement with the accounting records and returns.

15. Other matters which we are required to address

15.1. Auditor tenure

Following the recommendation of the Audit and Risk Committee, we were appointed by the

Board of Directors on 28 July 2016 to audit the financial statements for the year ending 31

December 2017 and subsequent financial periods. The period of total uninterrupted

engagement including previous renewals and reappointments of the firm is seven years,

covering the years ending 31 December 2017 to 31 December 2023.

15.2. Consistency of the audit report with the additional report to the Audit and Risk

Committee

Our audit opinion is consistent with the additional report to the Audit and Risk Committee we

are required to provide in accordance with ISAs (UK).

16. Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3

of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might

state to the company’s members those matters we are required to state to them in an auditor’s

report and for no other purpose. To the fullest extent permitted by law, we do not accept or

assume responsibility to anyone other than the company and the company’s members as a

body, for our audit work, for this report, or for the opinions we have formed.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency

Rule (DTR) 4.1.15R – DTR 4.1.18R, these financial statements will form part of the Electronic

Format Annual Financial Report filed on the National Storage Mechanism of the FCA in

accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over

whether the Electronic Format Annual Financial Report has been prepared in compliance with

DTR 4.1.15R – DTR 4.1.18R.

Andrew Bond, FCA (Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

London UK

28 February 2024

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 135

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Consolidated Income Statement

For the year ended 31 December 2023

		2023	2022
	Note	£m	£m
Continuing operations
Revenue	2,3	1 ,4 49. 2	1,327.4
Cost of sales		(611 .1)	(576 . 6)
Gross profit		83 8.1	75 0. 8
Indirect production and engineering expenses		(1 26 .9)	(1 14.1)
Sales and marketing expenses		(249. 6)	(2 33 .0)
Administrative expenses		(27 3. 0)	(2 3 1 .1)
Operating profit	2,4	188 .6	17 2. 6
Fair value through profit and loss movements on debt investments	27	2 .8	(4. 1)
Share of post-tax results of associates	2	(0.1)	–
(Loss)/profit on disposal of businesses	24	(12 .6)	0. 3
Financial income	6	11 .0	1.9
Finance costs	6	(4 .1)	(19. 2)
Profit before tax		185 .6	151 .5
Taxation charge	7	(4 0. 2)	(3 6 .7)
Profit for the year from continuing operations		145 . 4	114 . 8
Profit for the year from discontinued operations	24	–	2 8 6 .7
Profit for the year from continuing and discontinued operations
attributable to owners of the Company		145 .4	401 . 5
Earnings per share
From continuing operations
Basic	9	140. 3p	1 0 6 .7p
Diluted	9	139.4p	106.0p
From continuing and discontinued operations
Basic	9	140. 3p	3 73 .1p
Diluted	9	139.4p	3 70 .7p
Dividends – amounts arising in respect of the year
Interim dividend paid and final dividend proposed/paid for the year
(per share)	8	79. 2p	75.4p
Dividends paid during the year (per share)	8	76 .6p	72.9p

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2023

		2023	2022
	Note	£m	£m
Profit for the year attributable to owners of the Company		145 .4	401 . 5
Other comprehensive (loss)/income:
Items that will not be reclassified to the Consolidated Income
Statement:
Re-measurement of net defined benefit obligation	19	(0. 6)	13 .1
Fair value (loss)/gain and foreign exchange movements on translation
of investment in equity instruments designated as at fair value through other comprehensive income	12	(5.0)	5.0
Tax credit/(charge) on items above	7	0. 2	(4 . 0)
		(5 . 4)	1 4.1
Items that are or may be reclassified subsequently to the Consolidated Income Statement:
Net gain on effective portion of changes in fair value of forward
exchange contracts on cash flow hedges		6 .1	0.4
Foreign exchange movements on translation of overseas operations		(4 2.5)	1 05 .1
Currency translation differences transferred to profit on disposal of business	24	–	(8 6 .7)
Tax charge on items above	7	(1.1)	–
		(3 7. 5)	18 .8
Total other comprehensive (loss)/income		(42 . 9)	32.9
Total comprehensive income for the year attributable to owners of the Company		10 2.5	434.4

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023136

								Capital
		Share	Share	Retained	Translation	Hedging	Merger	redemption	Total
		capital	premium	earnings	reserve	reserve	reserve	reserve	equity
	Note	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2023		5.5	231.4	1 ,113 .0	86 .0	(3 .1)	3 .1	1.0	1,436. 9
Profit for the year		–	–	14 5. 4	–	–	–	–	14 5. 4
Other comprehensive (loss)/income		–	–	(4 . 9)	(4 3 . 0)	5 .0	–	–	(4 2 . 9)
Total comprehensive income/(loss) for the year		–	–	140 . 5	(4 3 . 0)	5.0	–	–	1 0 2.5
Transactions with owners recorded directly in equity:
Equity dividends paid by the Company	8	–	–	(7 9.7)	–	–	–	–	(7 9.7)
Own shares acquired for share buyback programme	21	(0. 2)	–	(160. 8)	–	–	–	0. 2	(160 .8)
Share-based payments, net of tax	22	–	–	16 .4	–	–	–	–	16.4
Proceeds from exercise of equity-settled options		–	–	0.6	–	–	–	–	0.6
At 31 December 2023		5.3	2 31.4	1,030.0	4 3.0	1.9	3 .1	1.2	1, 315. 9
For the year ended 31 December 2022								Capital
		Share	Share	Retained	Translation	Hedging	Merger	redemption	Total
		capital	premium	earnings	reserve	reserve	reserve	reserve	equity
	Note	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2022		5.8	2 31.4	9 5 7. 6	66.2	(3. 5)	3.1	0 .7	1,26 1. 3
Profit for the year		–	–	4 01. 5	–	–	–	–	4 01. 5
Other comprehensive income		–	–	1 2 .7	19. 8	0.4	–	–	32.9
Total comprehensive income for the year		–	–	41 4. 2	19.8	0.4	–	–	434.4
Transactions with owners recorded directly in equity:
Equity dividends paid by the Company	8	–	–	(78. 6)	–	–	–	–	(78. 6)
Own shares acquired for share buyback programme	21	(0. 3)	–	(191.0)	–	–	–	0. 3	(191 .0)
Share-based payments, net of tax	22	–	–	10.6	–	–	–	–	10. 6
Proceeds from exercise of equity-settled options		–	–	0. 2	–	–	–	–	0.2
At 31 December 2022		5.5	2 31.4	1 ,113.0	86 .0	(3 .1)	3 .1	1.0	1,436.9

Consolidated Statement of Changes in Equity

For the year ended 31 December 2023

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 137

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Consolidated Statement of Financial Position

As at 31 December 2023

		2023	2022
	Note	£m	£m
ASSETS
Non-current assets
Goodwill	10	56 5. 5	6 06 .1
Other intangible assets	10	167 .1	18 4 .1
Property, plant and equipment	11	136 . 2	16 0 .7
Right-of-use assets	11	58 .1	5 9 .7
Investments in equity instruments	12	24. 3	29. 3
Investment in debt instruments	27	2 1 .7	18 .9
Investment in associates	12	10.8	2.9
Derivative financial instruments	27	0.4	0.4
Other receivables	14	5.9	4.2
Deferred tax assets	20	26 .6	16 .2
Retirement benefit assets	19	2 .4	–
		1,01 9.0	1,0 82. 5
Current assets
Inventories	13	231. 8	26 3. 3
Current tax assets		7. 2	8.6
Trade and other receivables	14	3 1 7. 9	362. 5
Derivative financial instruments	27	5.8	1. 3
Cash and cash equivalents	15	138 . 5	2 28 .1
Assets held for sale	24	9 7. 5	1 .7
		7 98 .7	865. 5
Total assets		1 , 8 1 7. 7	1,948 .0
LIABILITIES
Current liabilities
Borrowings	16	–	(0 .1)
Derivative financial instruments	27	(0.1)	(2. 3)
Trade and other payables	17	(36 9. 4)	(3 7 3 .7)
Lease liabilities		(14 . 4)	(14 .9)
Current tax liabilities		(12 .6)	(14 . 2)
Provisions	18	(8 . 5)	(12 .8)
Liabilities held for sale	24	(1 7. 8)	–
		(42 2 . 8)	(4 18 . 0)
Net current assets		375. 9	4 4 7. 5

		2023	2022
	Note	£m	£m
Non-current liabilities
Other payables	17	(1 5 .1)	(13 .8)
Derivative financial instruments	27	(0.1)	(0. 2)
Lease liabilities		(4 8 . 3)	(5 0. 2)
Provisions	18	(2. 6)	(4 . 4)
Retirement benefit obligations	19	(11 .6)	(8 .9)
Deferred tax liabilities	20	(1. 3)	(15 .6)
		(7 9.0)	(9 3.1)
Total liabilities		(501 .8)	(5 11 .1)
Net assets		1, 315.9	1,436.9
EQUITY
Share capital	21	5.3	5.5
Share premium		231.4	2 31.4
Retained earnings		1,030.0	1,113.0
Translation reserve	21	4 3.0	8 6.0
Hedging reserve	21	1.9	(3 .1)
Merger reserve	21	3 .1	3 .1
Capital redemption reserve	21	1.2	1.0
Total equity attributable to owners of the Company		1, 315.9	1,436.9

The Financial Statements on pages 136 to 189 were approved by the Board of Directors on 28

February 2024 and were signed on its behalf by:

Derek Harding

Chief Financial Officer Company Registration No. 02025003

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023138

		2023	2022
	Note	£m	£m
Cash generated from operations	25	245. 5	166.8
Net income taxes paid		(5 0. 3)	(46.8)
Net cash inflow from operating activities		195. 2	120.0
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets		(24 .7)	(4 4 . 9)
Proceeds from disposal of property, plant and equipment and software		3.1	13.4
Acquisition of businesses, net of cash acquired	23	(49. 5)	(1 14 .7)
Purchase of investment in associates	12	(7. 8)	(2 .9)
Proceeds from disposal of businesses, net of tax paid of £5.9m
(2022: £27.9m)	24	3.3	36 5.4
Interest received		5.4	1.9
Net cash (used in)/inflow from investing activities		(70 . 2)	218 .2
Cash flows used in financing activities
Interest paid on borrowings		(1.0)	(1 .4)
Interest paid on lease liabilities	16	(0. 2)	(2. 5)
Dividends paid	8	(7 9.7)	(78. 6)
Share buyback purchase of shares	21	(114 . 9)	(191 .0)
Net proceeds from exercise of share options		0.6	0. 2
Payments on principal portion of lease liabilities	16	(15 . 4)	(13. 9)
Proceeds from borrowings	16	–	326 . 2
Repayment of borrowings	16	(0.1)	(3 26. 8)
Net cash outflow used in financing activities		(21 0 .7)	(2 8 7. 8)
Net (decrease)/increase in cash and cash equivalents		(8 5 .7)	5 0.4
Cash and cash equivalents at beginning of year		2 28 .1	1 6 7. 8
Effect of foreign exchange rate changes		(3 .6)	9.9
Cash and cash equivalents at end of year	15	138.8	22 8.1

Consolidated Statement of Cash Flows

For the year ended 31 December 2023

Notes to the Accounts

1. Basis of preparation and summary of material accounting policies

a) Basis of preparation

Basis of accounting

The Consolidated Financial Statements have been prepared on a historical cost basis except for

items that are required by International Financial Reporting Standards (IFRS) to be measured

at fair value, principally certain financial instruments. The Consolidated Financial Statements

have been prepared in accordance with international accounting standards in conformity with

the requirements of the Companies Act 2006 and UK adopted IFRSs.

The Consolidated Financial Statements set out on pages 136 to 189 have been prepared

using consistent accounting policies. In the current year there are no new standards and

interpretations that have had a material impact on the Group’s Statement of Financial Position.

These Consolidated Financial Statements are presented in millions of Sterling rounded to the

nearest one decimal place.

Basis of consolidation

The Consolidated Financial Statements set out the Group’s financial position as at 31 December

2023 and the Group’s financial performance for the year ended 31 December 2023, which

incorporate the Financial Statements of Spectris plc and its subsidiaries and include its share

of the results of associates using the equity method of accounting. The Group recognises its

direct rights to (and its share of) jointly held assets, liabilities, revenues and expenses of joint

operations under the appropriate headings in the Consolidated Financial Statements.

i. Subsidiaries

A subsidiary is an entity that is controlled by another entity, known as the parent or investor

(such as the Group). An investor controls an investee when the investor is exposed, or has rights,

to variable returns from its involvement with the investee and has the ability to affect those

returns through its power over the investee.

The results of subsidiaries acquired or disposed of during the year are consolidated from and

up to the date of change of control. Where necessary, accounting policies of subsidiaries have

been aligned with the policies adopted by the Group. All intra-group transactions including any

gains or losses, balances, income or expenses are eliminated in full on consolidation.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the

difference between the aggregate of the fair value of the consideration received and the

amount of the assets (including goodwill), and liabilities of the subsidiary and any non-

controlling interests.

All inter-company balances and transactions, including unrealised profits arising from intra-

group transactions, have been eliminated. Unrealised losses are eliminated in the same way

as unrealised gains except that they are only eliminated to the extent that there is no evidence

of impairment.

ii. Associates

An associate is an entity over which the Group has significant influence and that is neither a

subsidiary nor an interest in a joint venture. Significant influence is the power to participate in

the financial and operating policy decisions of the investee but is not control or joint control

over those policies. The results and assets and liabilities of associates are incorporated in these

financial statements using the equity method of accounting, except when the investment is

classified as held for sale, in which case it is accounted for in accordance with IFRS 5.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 139

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

Going concern

In determining the basis of preparation for the Consolidated Financial Statements, the

Directors have considered the Group’s available resources, current business activities and

factors likely to impact on its future development and performance, including the impact of

current macroeconomic factors and Climate Change on the Group, which are described in

the Chief Executive’s Review, Financial Review and Operating Review.

The Group’s business activities, together with factors likely to affect its future development,

performance and financial position, are set out in the Strategic Report on pages 2 to 77. The

financial position of the Group, its cash flows, liquidity position and borrowing facilities are

described in the Financial Review on pages 40 to 43. In addition, note 26 to the Financial

Statements includes the Group’s objectives, policies and processes for managing its capital;

its financial risk management objectives; details of its financial instruments and hedging

activities; and its exposure to credit risk and liquidity risk.

The Group finances its operations from retained earnings and, where appropriate, from

third-party borrowings. Total borrowings as at 31 December 2023 were £nil (2022: £0.1m).

As at 31 December 2023, the Group had £393.1m of committed facilities, consisting entirely

of a $500m multi-currency revolving credit facility (RCF) maturing in July 2025. The RCF was

undrawn at 31 December 2023 (2022: undrawn).

The RCF has a leverage (covenant defined net debt/EBITDA) covenant of up to 3.5 times. The

Group regularly monitors its financial position to ensure that it remains within the terms of its

banking covenants. At 31 December 2023, there was net finance income for covenant purposes

of £3.9m, resulting in the interest cover ratio being n/a (31 December 2022: n/a). The minimum

covenant interest cover requirement is 3.75 times (covenant defined earnings before interest,

tax and amortisation divided by net finance charges). Leverage (covenant defined earnings

before interest, tax, depreciation, and amortisation divided by net cash) was less than zero

(31 December 2022: less than zero), due to the Group’s net cash position, against a maximum

permitted leverage of 3.5 times.

In addition to the above, after adjusting for £0.3m of cash and cash equivalents included in the

‘assets held for sale’ line of the Consolidated Statement of Financial Position, at 31 December

2023, the Group had a cash and cash equivalents balance of £138.5m. The Group also had

various uncommitted facilities and bank overdraft facilities available which were all undrawn,

resulting in a net cash position of £138.8m, including cash in ‘assets held for sale’, a decrease of

£89.2m from £228.0m at 31 December 2022.

The Group has prepared and reviewed cash flow forecasts for the period to 31 December 2028,

which reflect forecasted changes in revenue across its business and performed a reverse stress

test of the forecasts to determine the extent of downturn which would result in insufficient

liquidity or a breach of banking covenants. Revenue would have to reduce by 38% over the

period under review for the Group to breach covenants on its debt facility. The reverse stress

test does not take into account further mitigating actions which the Group would implement

in the event of a severe and extended revenue decline, such as cancelling the dividend or

reducing capital expenditure. This assessment indicates that the Group can operate within the

level of its current facilities, as set out above, without the need to obtain any new facilities for

a period of not less than 12 months from the date of this report.

Under the equity method, an investment in an associate is recognised initially in the

Consolidated Statement of Financial Position at cost and adjusted thereafter to recognise the

Group’s share of the profit or loss and other comprehensive income of the associate. When the

Group’s share of losses of an associate exceeds the Group’s interest in that associate, the Group

discontinues recognising its share of further losses. Additional losses are recognised only to the

extent that the Group has incurred legal or constructive obligations or made payments on

behalf of the associate or joint venture.

An investment in an associate is accounted for using the equity method from the date on

which the investee becomes an associate. On acquisition of the investment in an associate,

any excess of the cost of the investment over the Group’s share of the net fair value of the

identifiable assets and liabilities of the investee is recognised as goodwill, which is included

within the carrying amount of the investment. Any excess of the Group’s share of the net

fair value of the identifiable assets and liabilities over the cost of the investment, after

reassessment, is recognised immediately in profit or loss in the period in which the investment

is acquired.

The requirements of IAS 36 are applied to determine whether it is necessary to recognise any

impairment loss with respect to the Group’s investment in an associate. When necessary, the

entire carrying amount of the investment (including goodwill) is tested for impairment in

accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of

value in use and fair value less costs of disposal) with its carrying amount. Any impairment

loss recognised is not allocated to any asset, including goodwill that forms part of the

carrying amount of the investment. Any reversal of that impairment loss is recognised in

accordance with IAS 36 to the extent that the recoverable amount of the investment

subsequently increases.

When a Group entity transacts with an associate of the Group, profits and losses resulting

from the transactions with the associate are recognised in the Group’s Consolidated Financial

Statements only to the extent of interests in the associate or joint venture that are not related

to the Group .

iii. Joint operations

Joint arrangements are contractual arrangements which the Group has entered into with one

or more parties to undertake an economic activity that is subject to joint control. Joint control

is the contractually agreed sharing of control over an economic activity and exists only when

decisions relating to the relevant activities require the unanimous consent of the parties

sharing the control. A joint operation is a joint arrangement whereby the parties that have joint

control of the arrangement have rights to the assets, and obligations for the liabilities, relating

to the arrangement. Joint control is the contractually agreed sharing of control of an

arrangement, which exists only when decisions about the relevant activities require unanimous

consent of the parties sharing control. As a result, the Group recognises its interest in the

joint operation, including its share of any assets, liabilities, revenue and expenses of the joint

operation. The Group accounts for the assets, liabilities, revenue and expenses relating to its

interest in a joint operation in accordance with the IFRS Standards applicable to the particular

assets, liabilities, revenue and expenses. When a Group entity transacts with a joint operation in

which a Group entity is a joint operator (such as a purchase of assets), the Group does not

recognise its share of the gains and losses until it resells those assets to a third party .

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023140

Notes to the Accounts continued

New accounting standards and interpretations not yet adopted

At the date of authorisation of these Consolidated Financial Statements, the Group has not

applied the following new and revised IFRS Standards that have been issued but are not

yet effective:

Amendments to IFRS 16	Lease liability in a sale and leaseback
Amendments to IAS 7 and IFRS 17	Supplier finance arrangements
Amendment to IAS 1	Non-current liabilities with covenants
Amendments to IAS 1	Classification of liabilities as current or non-current
Amendments to IAS 1	Classification of liabilities as current or non-current –
	Deferral of effective date
Amendments to IAS 21	Lack of exchangeability
IFRS S1 General Requirements for Disclosure of	General requirements for disclosure of
Sustainability-related Financial Information	Sustainability-related Financial Information
IFRS S2 – Climate-related Disclosures	Climate-related disclosures

The Directors do not expect that the adoption of the IFRS Standards listed above will have a

material impact on the Consolidated Financial Statements of the Group in future periods.

Significant accounting judgements and estimates

In determining and applying accounting policies, judgement is often required where the

choice of specific policy, assumption or accounting estimate to be followed could materially

affect the reported amounts of assets, liabilities, income and expenses, should it be

determined that a different choice be more appropriate. Estimates and assumptions are

reviewed on an ongoing basis and are based on historical experience and various other factors

that are believed to be reasonable under the circumstances, including the impact current

macroeconomic factors and climate change on the Group.

Critical accounting judgements

There are no critical accounting judgements at 31 December 2023.

Key sources of estimation uncertainty

Management considers the following to be the sole key source of estimation uncertainty for

the Group at the end of the current reporting period due to the risk of causing a material

change to the carrying amount of assets and liabilities within the next year.

i) Retirement benefit plans

Accounting for retirement benefit plans under IAS 19 (revised) requires an assessment of the

future benefits payable in accordance with actuarial assumptions. The discount rate and rate of

retail price inflation (RPI) assumptions applied in the calculation of plan liabilities, which are set

out in note 19, represent a key source of estimation uncertainty for the Group. Details of the

related sensitivities are set out on page 167 and the accounting policies applied in respect of

retirement benefit plans are set out on page 146.

Climate change is referred to in the Risk Management and Sustainability sections of the

Strategic Report. Spectris is well placed to face this global challenge and, although we

acknowledge the risks to businesses and trade, we do not consider climate change creates any

further key sources of estimation uncertainty at this time.

Following this assessment, the Board of Directors are satisfied that the Group has sufficient

resources to continue in operation for a period of not less than 12 months from the date of

this report. Accordingly, they continue to adopt the going concern basis in relation to this

conclusion and preparing the Consolidated Financial Statements. There are no key sensitivities

identified in relation to this conclusion. Further information on the going concern of the Group

can be found on page 51 in the Viability Statement.

Climate risks reflected in the Consolidated Financial Statements

The Consolidated Financial Statements have been prepared with full consideration of both

physical and transition risks resulting from climate change, our journey towards achieving our

Net Zero ambition and in accordance with our Task Force for Climate Change Related Financial

Disclosures (TCFD) report.

In conjunction with our Net Zero ambition and TCFD report a review has been performed in

the following areas that are deemed most at risk of being impacted by climate change:

Going concern – The Group has reviewed sensitivities to future cash flows and discount rates

aligned with our Principal Risks and uncertainties. The review covered sensitivities with respect

to potential loss of revenue, associated profits and cash flows due to Spectris, its customers

and/or its suppliers making different choices in the achievement of Net Zero objectives, the

potential impact that moving to a more sustainable supply chain may have on profits and cash

flows, and the cash flows of mitigating potential physical risks, such as potential site moves

resulting from increased water levels.

Intangible assets – The Group has assessed future economic benefits, predominantly

technology related to our product portfolio and the transition risk to our scope 1 and 2 Net Zero

ambitions. This incorporates any known change or potential change from our customers in our

scope 3 ambitions.

Property, plant and equipment, remeasurement of leases and intangible assets – The Group

has reviewed the useful economic life of these non-current assets with respect to the physical

risk of our sites resulting from flooding and the transition to carbon neutrality and has validated

that all property, plant and equipment, lease right-of-use assets and intangible assets have

been checked to ensure that useful economic lives are in line with current and foreseeable

transition plans.

Inventories and associated provision for obsolescence – The Group has performed reviews

taking into account the potential risks and subsequent impact of transitioning our product

range to the use of sustainable raw materials and having considered the support to our

customers and suppliers in achieving their scope 3 ambitions.

For all the aforementioned climate risks, the Group considers that it is too early to foresee any

adjustment to carrying value for the year ended 31 December 2023 and that the sensitivities

used to test going concern adequately cover foreseeable risks.

New standards and interpretations adopted

In the current year there are no new standards and interpretations that have had a material

impact on the Group’s Statement of Financial Position.

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 141

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

Intangible assets and amortisation

The cost of acquiring software (including associated implementation costs where applicable)

that is not specific to an item of property, plant and equipment is classified as an intangible

asset. The Group only capitalises costs relating to the configuration and customisation of SaaS

arrangements as intangible assets where control of the software exists.

Self-funded research and development costs are charged to the Consolidated Income

Statement in the year in which they are incurred, unless development expenditure meets

certain strict criteria for capitalisation. These criteria include demonstration of the technical

feasibility, intent of completing a new intangible asset that is separable, the ability to measure

reliably the expenditure attributable to the intangible asset during its development phase

and that the asset will generate probable future economic benefits. From the point where

expenditure meets the criteria, development costs are capitalised and amortised over the

useful economic lives of the assets to which they relate.

Intangible assets arising from a business combination that are separable from goodwill are

recognised initially at fair value at the date of acquisition. Other acquired intangible assets

(including software not specific to an item of property, plant and equipment) are initially

recognised at cost (plus any associated implementation costs where applicable).

Subsequent expenditure is capitalised only when it increases the future economic benefits,

otherwise it is expensed as incurred.

Amortisation of intangible assets is charged to administrative expenses in the Consolidated

Income Statement on a straight-line basis over the shorter of the estimated useful economic

life (determined on an asset-by-asset basis) or underlying contractual life. The estimated useful

life and amortisation method are reviewed at the end of each reporting period, with the effect

of any changes in estimate being accounted for on a prospective basis. The estimated useful

lives are as follows:

> software – three to seven years;

> patents, contractual rights and technology – up to 11 years, dependent upon the nature of the

underlying contractual right; and

> customer-related and trade names – three to 20 years, dependent upon the underlying

contractual arrangements and specific circumstances such as customer retention

experience.

An intangible asset is derecognised on disposal, or when no future economic benefits are

expected from use or disposal .

Property, plant and equipment and depreciation

Property, plant and equipment is stated at cost less accumulated depreciation and impairment

losses. The cost comprises the purchase price paid and any costs directly attributable to

bringing it into working condition for its intended use. Tangible assets arising from a business

combination are recognised initially at fair value at the date of acquisition.

b) Summary of significant accounting policies

The accounting policies set out below have been applied consistently by Group entities to all

years presented in these Consolidated Financial Statements.

Business combinations and goodwill

Acquisitions of businesses are accounted for using the acquisition method. The consideration

transferred in a business combination is measured at fair value, which is calculated as the sum

of the acquisition-date fair values of assets transferred by the Group and the liabilities incurred

by the Group to the former owners of the acquiree. The identifiable assets acquired, and the

liabilities assumed are recognised at their fair value at the acquisition date.

Transaction costs on a business combination are expensed as incurred in the Consolidated

Income Statement and treated as an adjusting item for the purposes of alternative

performance measures (see appendix to the Consolidated Financial Statements).

Goodwill represents the excess of the fair value of the purchase consideration for the interests

in subsidiary undertakings over the net fair value to the Group of the identifiable assets,

liabilities and contingent liabilities acquired. Where the fair value of the Group’s share of

identifiable net assets acquired exceeds the fair value of the consideration, the difference is

recognised immediately in the Consolidated Income Statement. Contingent consideration is

initially recognised as a liability with changes to estimates of contingent consideration reflected

in operating profit unless they occur during the 12-month measurement period, in which

situation the amount of goodwill recognised on the acquisition is adjusted if they are the

result of obtaining additional information about facts and circumstances that existed at the

acquisition date. Adjustments to contingent consideration are treated as an adjusting item

for the purposes of alternative performance measures (see appendix to the Consolidated

Financial Statements).

Goodwill arising on the acquisition of a business is tested annually for impairment. Goodwill

is not amortised, and any impairment losses are not subsequently reversed. The net book

value of goodwill at the date of transition to IFRS has been treated as deemed cost. On the

subsequent disposal or discontinuance of a previously acquired business, the relevant goodwill

is dealt with in the Consolidated Income Statement except for the goodwill already charged

to reserves. Goodwill is allocated on acquisition to cash generating units (CGUs) that are

anticipated to benefit from the combination. Goodwill is tested for impairment by assessing

the recoverable amount of the CGU to which the goodwill relates and comparing it against the

net book value. This estimate of recoverable amount is determined annually and additionally

when there is an indication that a CGU may be impaired. The Group’s identified CGUs are

equivalent to or smaller than the reportable operating segments in note 2.

The estimate of recoverable amount requires significant assumptions to be made and is based

on a number of factors, such as the near-term business outlook for the CGU, including both its

operating profit and operating cash flow performance. Where the recoverable amount of the

CGU is less than the carrying amount, an impairment loss is recognised in the Consolidated

Income Statement. Where goodwill forms part of a CGU and part of the operation within that

unit is disposed of, the goodwill associated with the operation disposed of is included

in the carrying amount of the operation when determining the gain or loss on disposal.

Goodwill disposed of in this circumstance is measured on the basis of the relative values of

the operation disposed of and the portion of the CGU retained.

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023142

Notes to the Accounts continued

The lease liability is initially measured at the present value of the lease payments that are not

paid at the commencement date, discounted by using the rate implicit in the lease. If this rate

cannot be readily determined, the Group uses its incremental borrowing rate. Lease payments

included in the measurement of the lease liability comprise: fixed lease payments (including in

substance fixed payments), less any lease incentives; variable lease payments that depend on

an index or rate, initially measured using the index or rate at the commencement date; the

amount expected to be payable by the lessee under residual value guarantees; the exercise

price of purchase options, if the lessee is reasonably certain to exercise the options; and

payments of penalties for terminating the lease, if the lease term reflects the exercise of an

option to terminate the lease. The lease liability is subsequently measured by increasing the

carrying amount to reflect interest on the lease liability (using the effective interest method)

and by reducing the carrying amount to reflect the lease payments made. The lease liability is

presented as a separate line in the Consolidated Statement of Financial Position.

The right-of-use assets comprise the initial measurement of the corresponding lease liability,

lease payments made at or before the commencement day and any initial direct costs. They

are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the

underlying asset. Whenever the Group incurs an obligation for costs to dismantle and remove

a leased asset, restore the site on which it is located or restore the underlying asset to the

condition required by the terms and conditions of the lease, a provision is recognised and

measured under IAS 37. The right-of-use assets are presented as a separate line in the

Consolidated Statement of Financial Position.

The Group remeasures the lease liability (and makes a corresponding adjustment to the

related right-of-use asset) whenever: the lease term has changed or there is a change in the

assessment of exercise of a purchase option, in which case the lease liability is re-measured by

discounting the revised lease payments using a revised discount rate; the lease payments

change due to changes in an index or rate or a change in expected payment under a

guaranteed residual value, in which case the lease liability is re-measured by discounting the

revised lease payments using the initial discount rate; or a lease contract is modified, in which

case the lease liability is re-measured by discounting the revised lease payments using a

revised discount rate.

The interest portion of lease payments is presented under financing activities in the

Consolidated Statement of Cash Flows.

Inventories

Inventories and work in progress are carried at the lower of cost and net realisable value.

Inventory acquired as part of business combinations is valued at fair value less cost to sell.

Cost represents direct costs incurred and, where appropriate, production or conversion costs

and other costs to bring the inventory to its existing location and condition. In the case of

manufacturing inventory and work in progress, cost includes an appropriate share of

production overheads based on normal operating capacity. Inventory is accounted for on a

first-in, first-out basis or, in some cases, a weighted-average basis, if deemed more appropriate

for the business. Provisions are made to write down slow-moving, excess and obsolete items to

net realisable value, based on an assessment of technological and market developments and

on an analysis of historical and projected usage with regard to quantities on hand.

Depreciation is recognised in the Consolidated Income Statement on a straight-line basis to

write off the cost, less the estimated residual value (which is reviewed annually) of property,

plant and equipment over its estimated useful economic life. Depreciation commences on

the date the assets are available for use within the business and the asset carrying values

are reviewed for impairment when there is an indication that they may be impaired. The

depreciation charge is revised where useful lives are different from those previously estimated,

or where technically obsolete assets are required to be written down. Where parts of an item of

plant and equipment have separate lives, they are accounted for and depreciated as separate

items. Land is not depreciated. Estimated useful lives are as follows:

> freehold and long leasehold property – 20 to 40 years;

> short leasehold property – over the period of the lease; and

> plant and equipment – three to 20 years.

Borrowing costs directly attributable to the acquisition, construction or production of

qualifying assets that take a substantial period of time to get ready for their intended use are

capitalised as part of the cost of the respective asset.

Impairment of property, plant and equipment and intangible assets excluding goodwill

At each reporting date, the Group reviews the carrying amounts of its intangible assets to

determine whether there is any indication that those assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated to determine the

extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs of disposal and value in use. In

assessing value in use, the estimated future cash flows are discounted to their present value

using a pre-tax discount rate that reflects current market assessment of the time value of

money and the risks specific to the asset for which the estimates of future cash flows have not

been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the

carrying amount of the asset is reduced to its recoverable amount. An impairment loss is

recognised immediately in profit or loss.

Leases

The Group assesses whether a contract is or contains a lease, at inception of the contract.

The Group recognises a right-of-use asset and a corresponding lease liability with respect to all

lease arrangements in which it is the lessee, except for short-term leases (defined as leases

with a lease term of 12 months or less) and leases of low value assets. For these leases, the

Group recognises the lease payments as an operating expense on a straight-line basis over the

term of the lease.

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 143

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

Provisions

A provision is recognised in the Consolidated Statement of Financial Position when the Group

has a present legal or constructive obligation as a result of a past event and it is probable that

an outflow of resources, that can be reliably measured, will be required to settle the obligation.

In respect of warranties, a provision is recognised when the underlying products or services are

sold. Provisions are recognised at an amount equal to the best estimate of the expenditure

required to settle the Group’s liability. A contingent liability is disclosed where the existence of

the obligation will only be confirmed by future events or where the amount of the obligation

cannot be measured with reasonable reliability. Contingent assets are not recognised but are

disclosed where an inflow of economic benefit is probable. Obligations arising from

restructuring plans are recognised when detailed formal plans have been established and

when there is a valid expectation that such a plan will be carried out.

Taxation

The Group has adopted the amendments to IAS 12 for the first time in the current year. The

International Accounting Standards Board (IASB) amended the scope of IAS 12 to clarify that

the Standard applies to income taxes arising from tax law enacted or substantively enacted to

implement the Pillar Two model rules published by the Organisation for Economic Co-

operation and Development (OECD), including tax law that implements qualified domestic

minimum top up taxes described in those rules. The amendments introduce a temporary

exception, which the Group has applied, to the accounting requirements for deferred taxes in

IAS 12, so that an entity would neither recognise nor disclose information about deferred tax

assets and liabilities related to Pillar Two income taxes.

Following the amendments, the Group will be required to disclose that it has applied the

exception and to disclose separately its current tax expense (income) related to Pillar Two

income taxes.

Tax on the profit or loss for the year comprises both current and deferred tax. Tax is recognised

in the Consolidated Income Statement, except to the extent that it relates to items recognised

either in other comprehensive income or directly in equity, in which case tax is recognised in

the Consolidated Statement of Comprehensive Income or the Consolidated Statement of

Changes in Equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates

enacted or substantively enacted at the Statement of Financial Position date, and any

adjustments to tax payable in respect of prior years. Tax positions are reviewed to assess

whether a provision should be made based on prevailing circumstances. Tax provisions are

included within current taxation liabilities.

Deferred taxation is provided on taxable temporary differences between the carrying amounts

of assets and liabilities in the Financial Statements and their corresponding tax bases. No

provision is made for deferred tax which would become payable on the distribution of retained

profits by overseas subsidiaries where the timing of the reversal of the temporary difference

can be controlled and it is probable that the temporary difference will not reverse in the

foreseeable future. Deferred tax is measured using the tax rates expected to apply when the

asset is realised, or the liability settled based on tax rates enacted or substantively enacted at

the Consolidated Statement of Financial Position date.

Deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition

of an asset or liability unless the related transaction is a business combination or affects tax or

accounting profit.

Trade and other receivables

Trade and other receivables are carried at original invoice amount (which is considered a

reasonable proxy for fair value) and are subsequently held at amortised cost less provision for

impairment. The provision for impairment of receivables is based on lifetime expected credit

losses. Lifetime expected credit losses are calculated by assessing historical credit loss

experience, adjusted for factors specific to the receivable and operating company. The

movement in the provision is recognised in the Consolidated Income Statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits

held on call or with maturities of less than three months at inception. Bank overdrafts that

are repayable on demand and form an integral part of the Group’s cash management are

included as a component of cash equivalents for the purposes of the Consolidated Statement

of Cash Flows.

Assets and liabilities held for sale

Assets, liabilities and disposal groups classified as held for sale are measured at the lower of

carrying amount and fair value less costs to sell.

Assets, liabilities and disposal groups are classified as held for sale if their carrying amount will

be recovered principally through a sale transaction rather than continuing use. This condition is

regarded as met only when the sale is highly probable, and the asset (or disposal group) is

available for immediate sale in its present condition and when management is committed to

the sale which is expected to qualify for recognition as a completed sale within one year from

the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all the

assets and liabilities of that subsidiary are classified as held for sale when the criteria described

above are met, regardless of whether the Group will retain a non-controlling interest in its

former subsidiary after the sale.

When the Group is committed to a sale plan involving disposal of an investment in an associate

or a portion of an investment in an associate, the investment, or the portion of the investment

in the associate, that will be disposed of is classified as held for sale when the criteria described

above are met. The Group then ceases to apply the equity method in relation to the portion

that is classified as held for sale. Any retained portion of an investment in an associate that has

not been classified as held for sale continues to be accounted for using the equity method.

Trade and other payables

Trade and other payables principally comprise amounts outstanding for trade purchases and

ongoing costs. These are recognised at the amounts expected to be paid to counterparties and

subsequently held at amortised cost.

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023144

Notes to the Accounts continued

Finance costs and financial income

Finance costs comprise the interest payable on borrowings calculated using the effective

interest method, the unwinding of discount factor on lease liabilities and the unwinding of the

discount factor on deferred or contingent consideration. Financial income comprises interest

income on cash and invested funds, and is recognised in the Consolidated Income Statement

as it accrues. The net gain or loss on retranslation of short-term inter-company loan balances is

also presented within net finance costs.

Financial instruments

Recognition

The Group recognises financial assets and liabilities on its Consolidated Statement of Financial

Position when it becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, and the net amount is reported in the Consolidated

Statement of Financial Position when there is a legally enforceable right to set off the

recognised amounts and there is an intention to settle on a net basis or realise the asset and

settle the liability simultaneously.

Measurement

When financial assets and liabilities are initially recognised, they are measured at fair value,

being the consideration given or received plus directly attributable transaction costs. In

determining estimated fair value, investments are valued at quoted bid prices on the trade

date. When quoted prices on an active market are not available, fair value is determined by

reference to price quotations for similar instruments traded. In determining fair value for

deferred contingent consideration, the fair value is determined by reference to best estimates

of the likely outcome.

Originated loans and receivables are initially recognised in accordance with the policy stated

above and subsequently re-measured at amortised cost using the effective-interest method.

Allowance for impairment is estimated on a case-by-case basis.

The Group uses derivative financial instruments such as forward foreign exchange contracts to

hedge risks associated with foreign exchange fluctuations. These are designated as cash flow

hedges. At the inception of the hedge relationship, the Group documents the relationship

between the hedging instrument and the hedged item, along with its risk management

objectives and its strategy for undertaking various hedge transactions. Furthermore, at the

inception of the hedge and on an ongoing basis, the Group documents whether the hedging

instrument that is used in a hedging relationship is highly effective in offsetting changes in

cash flows of the hedged item.

The effective portion of changes in the fair value of derivatives that are designated and qualify

as cash flow hedges is deferred in equity. The gain or loss relating to the ineffective portion is

recognised immediately in the Consolidated Income Statement.

Amounts deferred in equity are reclassified to the Consolidated Income Statement in the

periods when the hedged item is recognised in the Consolidated Income Statement, in the

same line of the Consolidated Income Statement as the recognised hedged item. However,

when the forecast transaction that is hedged results in the recognition of a non-financial asset

or a non-financial liability, the gains and losses previously deferred in equity are transferred

from equity and included in the initial measurement of the cost of the asset or liability.

A deferred tax asset is recognised only to the extent that it is probable that future taxable

profits will be available against which the asset can be utilised. Deferred tax assets are reduced

to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current

tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity

and the same taxation authority.

Additional income taxes that arise from the distribution of intra-group dividends are

recognised at the same time as the liability to pay the related dividend.

Foreign currency translation

The functional currency for each entity in the Group is determined with reference to the

currency of the primary economic environment in which it operates. Transactions in currencies

other than the functional currency are initially recorded at the functional currency rate ruling at

the date of the transaction. Monetary assets and liabilities denominated in foreign currencies

are retranslated at the rate of exchange ruling at the Consolidated Statement of Financial

Position date. Exchange gains and losses on settlement of foreign currency transactions are

determined using the rate prevailing at the date of the transactions, or the translation of

monetary assets and liabilities at period end exchange rates and are charged/credited to the

Consolidated Income Statement. Non-monetary assets and liabilities denominated in foreign

currencies that are stated at historical cost are translated to the functional currency at the

foreign exchange rate ruling at the date of the transaction.

On consolidation, the Income Statement items of subsidiaries are translated into Sterling at

average rates of exchange. Statement of Financial Position items are translated into Sterling at

year-end exchange rates. Exchange differences on the retranslation are taken to the translation

reserve within equity. Exchange differences on foreign currency borrowings designated as a

hedge of the net investment in a foreign operation are reported in the Consolidated Statement

of Comprehensive Income. All other exchange differences are charged or credited to the

Consolidated Income Statement in the year in which they arise. On disposal of an overseas

subsidiary, any cumulative exchange movements relating to that subsidiary held in the

translation reserve are transferred to the Consolidated Income Statement.

Derivative financial instruments may be purchased to hedge the Group’s exposure to changes

in foreign exchange rates. The accounting policies applied in these circumstances are

described below.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as

assets and liabilities of the foreign entity and translated at the closing rate. Exchange

differences arising are recognised in other comprehensive income.

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at the fair value of consideration received

less directly attributable transaction costs. Subsequent to initial recognition, interest-bearing

borrowings are measured at amortised cost with any difference between cost and redemption

value being recognised in the Consolidated Income Statement over the period of the

borrowings on an effective-interest basis.

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 145

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

Impairment of financial assets

The Group assesses at each Consolidated Statement of Financial Position reporting date

whether there is any objective evidence that a financial asset, or group of financial assets, is

impaired. A financial asset, or group of financial assets, is deemed to be impaired if, and only if,

there is objective evidence of impairment as a result of one or more events that has occurred

after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an

impact on the estimated future cash flows of the financial asset or group of financial assets

that can be reliably estimated. For trade receivables, the Group recognises impairment

provisions based on lifetime expected credit losses.

Employee benefits

The Group operates defined benefit post-retirement benefit plans and defined contribution

pension plans.

Defined benefit plans

The Group’s net obligation recognised in the Consolidated Statement of Financial Position

in respect of defined benefit plans is calculated separately for each plan as the present value

of the plan’s liabilities less the fair value of the plan’s assets. The operating and financing

costs of defined benefit plans are recognised separately in the Consolidated Income

Statement. Operating costs comprise the current service cost, plan administrative expense,

any gains or losses on settlement or curtailments, and past service costs where benefits have

vested. Finance items comprise the unwinding of the discount on the net asset surplus/deficit.

Actuarial gains or losses comprising changes in plans’ liabilities due to experience and

changes in actuarial assumptions are recognised in the Consolidated Statement of

Comprehensive Income.

The amount of any pension fund asset recognised in the Consolidated Statement of Financial

Position is limited to any future refunds from the plan or the present value of reductions in

future contributions to the plan.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays

fixed contributions into a separate entity and will have no legal or constructive obligation to

pay further amounts. Obligations for contributions to defined contribution pension plans are

recognised in the Consolidated Income Statement in the periods during which services are

rendered by employees.

In certain countries, the Group participates in industry-wide defined benefit-type pension

arrangements. In such circumstances, it is not possible to determine the amount of any

surplus or deficit attributable to the Group and the pension costs are accounted for as if the

arrangements were defined contribution plans. These are not material to the Group and,

accordingly, no additional disclosures are provided.

When hedge accounting is discontinued any cumulative gain or loss deferred in equity at

that time remains in equity and is recognised when the forecast transaction is ultimately

recognised in the Consolidated Income Statement. When a forecast transaction is no longer

expected to occur, the cumulative gain or loss that was deferred in equity is recognised

immediately in the Consolidated Income Statement.

Derecognition

A financial asset is derecognised when the Group loses control over the contractual rights to

the cash flows from the asset. This occurs when the rights are realised, expire or are

surrendered. A financial liability is derecognised when the obligation specified in the contract

is discharged, cancelled or expired. Originated loans and receivables are derecognised on the

date they are transferred by the Group.

Investments in debt instruments

The Group’s investment in debt instruments consists of a Vendor Loan Note Receivable. The

Vendor Loan Note Receivable was initially recognised at fair value, being the consideration

received. The Vendor Loan Note Receivable is measured at fair value at the end of each

reporting period, with any fair value gains or losses recognised in profit or loss.

Investments in equity instruments classified as fair value through other comprehensive

income

On initial recognition, the Group may make an irrevocable election (on an instrument-by-

instrument basis) to designate investments in equity instruments as at fair value through other

comprehensive income. Designation at fair value through other comprehensive income is not

permitted if the equity investment is held for trading or if it is contingent consideration

recognised by an acquirer in a business combination.

An investment in equity instruments is held for trading if:

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group

manages together and has evidence of a recent actual pattern of short-term profit-taking; or

• it is a derivative (except for a derivative that is a financial guarantee contract or a designated

and effective hedging instrument).

Investments in equity instruments at fair value through other comprehensive income are

initially measured at fair value plus transaction costs.

Subsequently, they are measured at fair value with gains and losses arising from changes in fair

value recognised in other comprehensive income and accumulated in the retained earnings

reserve. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity

investments, instead, it is transferred to retained earnings.

Dividends from investments in equity instruments designated as at fair value through other

comprehensive income are recognised in profit and loss in accordance with IFRS 9 unless the

dividends clearly represent a recovery of part of the cost of the investment.

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023146

Notes to the Accounts continued

Further details of the nature of each major revenue stream are provided in the following

section.

Spectris Scientific

Revenue from the provision of services, including ongoing support, servicing and maintenance,

is recognised in line with the delivery of the service, either at a point in time or, for some

ongoing services, over time when the performance obligation is satisfied.

Revenue from the sale of goods, where the goods are not required to be installed, is recognised

at a point in time when control of the goods has transferred. This may occur, depending on the

individual customer terms, when the product is transferred to a freight carrier, or when the

customer has received the product.

For contracts where the sale of goods is combined with a complex installation, revenue is

recognised at a point in time when installation is complete as the installation is not distinct,

since the customer would not expect it to be readily available.

Occasionally, the initial contract covers both the supply of goods and ongoing support,

servicing, and maintenance. For such contracts, revenue is allocated across each of the

individual components in line with their relative price and value of the performance obligation

and each element is accounted for as described above.

Payment is normally due at the point that the performance obligation is completed. For

some of the segment’s business, the customer may make partial payment in advance.

Such payments are recognised as contract liabilities until the performance obligation has

been satisfied.

Sales-related warranties associated with the products cannot be purchased separately and

they serve as an assurance that the products sold comply with agreed-upon specifications.

These are accounted for under IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’

in note 18.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are

expensed as the related service is provided. A liability is recognised for the amount expected to

be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or

constructive obligation to pay this amount as a result of past service provided by the employee,

and the obligation can be estimated reliably.

Share-based payments

Certain employees of the Group receive part of their remuneration in the form of share-based

payment transactions, whereby employees render services in exchange for shares or rights

over shares (equity-settled transactions). The cost of equity-settled transactions with

employees is measured at fair value at the date at which they are granted. The fair value of

share awards with market-related vesting conditions is determined by an external consultant

and the fair value at the grant date is expensed on a straight-line basis over the vesting period

based on the Group’s estimate of shares that will eventually vest. The estimate of the number of

awards likely to vest is reviewed at each Consolidated Statement of Financial Position reporting

date up to the vesting date, at which point the estimate is adjusted to reflect the actual

outcome of awards which have vested. No adjustment is made to the fair value after the

vesting date even if the awards are forfeited or not exercised.

Where it is not possible to incentivise managers of the Group’s platforms/operating companies

with equity-settled options, they are issued with cash-settled options. A liability is recognised

for the services acquired, measured initially at the fair value of the liability. The charge for these

awards is adjusted at each reporting date, with any changes in fair value recognised in profit or

loss, to reflect the expected and actual levels of options that vest, and the fair value is based on

either the share price at date of exercise or the share price at the Consolidated Statement of

Financial Position date if sooner.

Own shares

Own equity instruments which are re-acquired (own shares) are recognised at cost and

deducted from equity. No gain or loss is recognised in the Consolidated Income Statement on

the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference

between the carrying amount and the consideration paid to acquire such equity instruments

is recognised within equity.

Dividends

Dividends are recognised as a liability in the period in which they are approved by shareholders.

Revenue

Revenue is measured based on the fair value of the consideration specified in a contract with a

customer, net of returns and discounts, and excludes amounts collected on behalf of third

parties, value added tax and other sales-related taxes. The Group recognises revenue when it

transfers control of a product or service to a customer.

The Group’s major revenue streams are the same as its reportable operating segments

(Spectris Scientific, Spectris Dynamics, and Other non-reportable segments) .

1. Basis of preparation and summary of material accounting policies continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 147

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

Spectris Dynamics

Revenue from the provision of services, including ongoing support, servicing and maintenance,

is recognised in line with the delivery of the service, either at a point in time or, for some

ongoing services, over time when the performance obligation is satisfied.

Revenue from the sale of goods, where the goods are not required to be installed, is recognised

at a point in time when control of the goods has transferred. This may occur, depending on the

individual customer terms, when the product is transferred to a freight carrier, or when the

customer has received the product.

Contracts where the sale of goods are combined with a simple installation are those which the

customer perceives as a separate performance obligation within the overall contract to deliver

goods. Revenue is recognised for these installations separately from the delivery of goods, and

only at a point in time when the installation has occurred.

Occasionally, the initial contract covers both the supply of goods and ongoing support,

servicing and maintenance. For such contracts revenue is allocated across each of the

individual components in line with their relative price and value of the performance obligation

and each element is accounted for as described above.

Payment is normally due at the point that the performance obligation is completed. For

some of the segment’s business the customer may make partial payment in advance.

Such payments are recognised as contract liabilities until the performance obligation has

been satisfied.

Sales-related warranties associated with the products cannot be purchased separately and

they serve as an assurance that the products sold comply with agreed-upon specifications.

These are accounted for under IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’

in note 18.

Other

Revenue from the sale of goods, where the goods are not required to be installed, is recognised

at a point in time when control of the goods has transferred. This may occur, depending on the

individual customer terms, when the product is transferred to a freight carrier, or when the

customer has received the product.

Occasionally, the initial contract covers both the supply of goods and ongoing support,

servicing and maintenance. For such contracts, revenue is allocated across each of the

individual components in line with their relative price and value of the performance obligation

and each element is accounted for as described above.

1. Basis of preparation and summary of material accounting policies continued Payment is normally due at the point that the performance obligation is completed. For

some of the segment’s business, the customer may make partial payment in advance.

Such payments are recognised as contract liabilities until the performance obligation has

been satisfied.

Sales-related warranties associated with the products cannot be purchased separately and

they serve as an assurance that the products sold comply with agreed-upon specifications.

These are accounted for under IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’

in note 18.

2. Operating segments

The Group’s reportable segments are described below. The segmental divisional structure

reflects the current internal 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 to assess performance. The segment results include an

allocation of head office expenses, where the costs are attributable to a segment. Costs of

running the PLC are reported separately as Group costs.

The following summarises the operations in each of the Group’s reportable segments:

• Spectris Scientific provides advanced measurement and materials characterisation,

accelerating innovation and efficiency in R&D and manufacturing. The operating companies

in this segment are Malvern Panalytical and Particle Measuring Systems;

• Spectris Dynamics provides differentiated sensing, data acquisition, analysis modelling and

simulation solutions to help customers accelerate product development and enhance

product performance;

• the Other non-reportable segments are a portfolio of high-value precision in-line sensing

and monitoring businesses. The operating companies in this segment in are Red Lion

Controls and Servomex; and

• Group costs consist of costs of running the PLC.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023148

Notes to the Accounts continued

		Carrying amount of	Carrying amount of
		segment assets	segment liabilities
	2023	2022	2023	2022
	£m	£m	£m	£m
Spectris Scientific	655.0	673.8	(217.6)	(237.7)
Spectris Dynamics	746.8	766.1	(210.4)	(193.5)
Other	188.3	202.7	(32.5)	(31.9)
Group-related	0.4	2.6	(8.9)	(6.7)
Total segment assets and liabilities	1,590.5	1,645.2	(469.4)	(469.8)
Cash and borrowings	138.5	228.1	–	(0.1)
Derivative financial instruments	6.2	1.7	(0.2)	(2.5)
Assets and liabilities held for sale that are not allocable
to a segment	0.3	–	(6.7)	–
Investment in debt instruments	21.7	18.9	–	–
Investment in equity instruments	24.3	29.3	–	–
Retirement benefit assets and liabilities	2.4	–	(11.6)	(8.9)
Taxation	33.8	24.8	(13.9)	(29.8)
Consolidated total assets and liabilities	1,817.7	1,948.0	(501.8)	(511.1)

Segment assets comprise: goodwill, other intangible assets, property, plant and equipment,

right-of-use assets, inventories and trade and other receivables, investments in associates and

assets held for sale that are attributable to the reported operating segment. Segment liabilities

comprise: trade and other payables, provisions, lease liabilities and other payables which can

be reasonably attributed to the reported operating segment. Unallocated items represent all

components of net cash, derivative financial instruments, assets held for sale that are not

allocable to a segment, investment in debt instruments, investment in equity instruments,

retirement benefit assets and liabilities and current and deferred taxation balances.

				Depreciation,
				amortisation and
		Additions to non-current		impairment from
		assets from continuing		continuing and
		and non-continuing		non-continuing
		operations		operations
	2023	2022	2023	2022
	£m	£m	£m	£m
Spectris Scientific	45.7	68.9	18.5	23.9
Spectris Dynamics	45.7	85.7	30.8	27.9
Omega	–	0.7	–	–
Others	5.0	18.0	7.9	6.9
Group-related	–	0.6	0.5	0.6
Consolidated total	96.4	173.9	57.7	59.3

Further details of the nature of these segments and the products and services they provide are

contained in the Strategic Report on pages 2 to 79.

	Spectris	Spectris		Group	2023
Information about continuing reportable	Scientific	Dynamics	Other	costs	Total
segments	£m	£m	£m	£m	£m
Segment revenues	704.4	542.8	202.2	–	1,449.4
Inter-segment revenue	(0.2)	–	–	–	(0.2)
External revenue	704.2	542.8	202.2	–	1,449.2
Operating profit	124.4	56.2	33.2	(25.2)	188.6
Share of post-tax results of associates	(0.4)	0.3	–	–	(0.1)
Fair value through profit and loss
movements on debt investments					2.8
Loss on disposal of businesses					(12.6)
Financial income					11.0
Finance costs 1					(4.1)
Profit before tax					185.6
Taxation charge					(40.2)
Profit after tax from continuing operations					145.4

1. Not allocated to reportable segments.

	Spectris	Spectris		Group	2022
Information about continuing reportable	Scientific	Dynamics	Other	costs	Total
segments	£m	£m	£m	£m	£m
Segment revenues	658.0	492.4	177.4	–	1,327.8
Inter-segment revenue	(0.2)	(0.2)	–	–	(0.4)
External revenue	657.8	492.2	177.4	–	1,327.4
Operating profit	118.3	46.5	26.2	(18.4)	172.6
Fair value through profit and loss
movements on debt investments					(4.1)
Profit on disposal of businesses					0.3
Financial income					1.9
Finance costs 1					(19.2)
Profit before tax					151.5
Taxation charge					(36.7)
Profit after tax from continuing operations					114.8

1. Not allocated to reportable segments.

Reportable segment profit is consistent with that presented to the Chief Operating Decision

Maker. Inter-segment revenue includes the movements in internal cash flow hedges with

inter-segment pricing on an arm’s-length basis. Segments are presented on the basis of actual

inter-segment charges made.

2. Operating segments continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 149

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

	Non-current assets
	2023	2022
	£m	£m
UK	218.8	239.3
Germany	70.5	86.8
France	7.1	7.0
Rest of Europe	301.2	283.4
USA	355.1	406.4
Rest of North America	13.2	16.0
Japan	4.7	5.3
China	9.7	9.7
South Korea	0.9	1.2
Rest of Asia	8.3	8.6
Rest of the world	2.9	2.6
	992.4	1,066.3
Deferred tax assets	26.6	16.2
Total non-current assets	1,019.0	1,082.5

1. Principally in Switzerland, Netherlands and Denmark (2022: Switzerland, Netherlands and Denmark).

2. Not allocated to reportable geographic area in reporting to the Chief Operating Decision Maker.

Geographical segments

The Group’s operating segments are each located in several geographical locations and sell on

to external customers in all parts of the world. No individual country amounts to more than 3%

of revenue, other than those noted below. The following is an analysis of revenue from

continuing operations by geographical destination.

	Spectris	Spectris		2023
	Scientific	Dynamics	Other	Total
	£m	£m	£m	£m
UK	27.8	21.8	6.5	56.1
Germany	31.6	103.7	6.3	141.6
France	20.5	27.0	3.6	51.1
Rest of Europe	96.0	86.8	14.5	197. 3
USA	133.6	145.7	98.2	377. 5
Rest of North America	21.7	7.6	7.8	37.1
Japan	41.3	30.1	6.9	78.3
China	149.5	73.9	26.4	249.8
South Korea	36.6	11.2	4.7	52.5
Rest of Asia	98.7	22.8	21.2	142.7
Rest of the world	46.9	12.2	6.1	65.2
	704.2	542.8	202.2	1,449.2

	Spectris	Spectris		2022
	Scientific	Dynamics	Other	Total
	£m	£m	£m	£m
UK	27.8	18.5	4.9	51.2
Germany	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
Rest of the world	42.3	12.1	4.3	58.7
	657.8	492.2	177.4	1,327.4

2. Operating segments continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023150

Notes to the Accounts continued

3. Revenue

Disaggregation of revenue

The Group derives its revenue from the provision of goods and services both at a point in time

and over time. Product lines are presented consistent with the revenue information that is

disclosed for each reportable segment under IFRS 8 (see note 2).

IFRS 15, paragraph 114, requires an entity to disaggregate revenue recognised from contracts

with customers into categories that depict how the nature, amount, timing and uncertainty of

revenue and cash flows are affected by economic factors. This disaggregation will depend on

the entity’s individual facts and circumstances. The Group has assessed that the

disaggregation of revenue by reportable operating segments is appropriate in meeting this

disclosure requirement as this is the information regularly reviewed by the Chief Operating

Decision Maker in order to evaluate the financial performance of the entity. The Group also

believes that presenting a disaggregation of revenue based on the timing of transfer of goods

or services provides users of the Financial Statements with useful information as to the nature

and timing of revenue from contracts with customers.

	2023	2022
Timing of revenue recognition from continuing operations	£m	£m
At a point in time:
Spectris Scientific	642.4	577.6
Spectris Dynamics	483.4	432.1
Others	202.2	177.4
	1,328.0	1,187.1
Over time:
Spectris Scientific	61.8	80.2
Spectris Dynamics	59.4	60.1
	121.2	140.3
Revenue from continuing operations	1,449.2	1,327.4

The Group’s material revenue streams have an expected duration of one year or less. The Group

has therefore applied the practical expedient in IFRS 15, paragraph 121, to not disclose

information about its remaining performance obligations.

No individual customer accounted for more than 1% of external revenue in 2023 (2022: 1%).

Total revenue for the Group from continuing operations, after including financial income of

£11.0m (2022: £1.9m) (see note 6), was £1,460.2m (2022: £1,329.3m).

4. Operating profit

Operating profit from continuing operations is stated after charging/(crediting):

		2023	2022
	Note	£m	£m
Net foreign exchange losses/(gains) included in operating profit		5.8	(0.3)
Research and development expense		108.4	102.9
Amortisation and other non-cash adjustments made to intangible assets	10	24.9	25.1
Depreciation of owned property, plant and equipment	11	19.4	20.0
Depreciation and impairment of right-of-use assets	11	13.4	14.0
Income from sub-leasing right-of-use assets		(0.5)	(0.3)
Expenses relating to short-term and low-value leases		0.1	0.1
Donations to the Spectris Foundation		1.1	0.1
Cost of inventories recognised as expense		361.2	351.9
Profit on disposal and re-measurements of property, plant and equipment
and associated lease liabilities		(0.5)	(1.5)

The Group’s operating profit in the current year includes £1.6m spend on climate-related

transition risk activities. These costs include all the activities disclosed in the Sustainability

section of the Strategic Report.

	2023	2022
Auditor’s remuneration	£m	£m
Fees payable to the Company’s auditor for audit of the Company’s annual accounts	0.8	0.7
Fees payable to the Company’s auditor for the audit of the Company’s subsidiaries, pursuant to legislation	1.7	1.7
Total audit-related fees	2.5	2.4
Fees payable to the Company’s auditor for other services:
– audit-related assurance services	0.1	0.1
– other non-audit services	0.1	0.2
	2.7	2.7

1. Review of the half-year Financial Statements.

2. Assurance work over ESG disclosures.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 151

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

5. Employee costs and other information

Employee costs, including Directors’ remuneration, comprise:

				Total continuing and
		Continuing operations		discontinued operations
	2023	2022	2023	2022
	£m	£m	£m	£m
Wages and salaries	453.0	414.4	453.0	433.0
Social security costs	78.5	68.3	78.5	72.6
Defined benefit pension plans:
– current service cost (see note 19)	0.7	0.4	0.7	0.4
– past service credit (see note 19)	(0.1)	(0.1)	(0.1)	(0.1)
Defined contribution pension plans	22.9	20.0	22.9	20.1
Equity-settled share-based payment expense	13.1	10.1	13.1	10.3
Cash-settled share-based payment expense	1.1	0.9	1.1	0.8
	569.2	514.0	569.2	537.1

				Total continuing and
		Continuing operations		discontinued operations
	2023	2022	2023	2022
Average number of employees	Number	Number	Number	Number
Production and engineering	3,569	3,642	3,569	3,844
Sales, marketing and service	2,767	2,764	2,767	2,860
Administrative	930	870	930	900
	7,266	7,276	7,266	7,604

	2023	2022
Directors’ remuneration	£m	£m
Short-term benefits	3.1	2.8
Equity-settled share-based payment expense	2.0	1.6
	5.1	4.4

Further details of Directors’ remuneration and share options are given in the Directors’

Remuneration Report on pages 102 to 123.

6. Financial income and finance costs

	2023	2022
Financial income from continuing operations	£m	£m
Interest receivable	(5.3)	(1.9)
Net gain on retranslation of short-term inter-company loan balances	(5.7)	–
	(11.0)	(1.9)

	2023	2022
Finance costs from continuing operations	£m	£m
Interest payable on loans and overdrafts	1.4	1.8
Net loss on retranslation of short-term inter-company loan balances	–	14.6
Unwinding of discount factor on lease liabilities	2.4	2.5
Net interest cost on pension plan obligations	0.3	0.3
	4.1	19.2
Net finance (credit)/costs from continuing operations	(6.9)	17. 3

Net interest credit of £3.9m (2022: credit of £0.1m), for the purposes of the calculation of interest

cover, comprises interest receivable of £5.3m (2022: £1.9m) and interest payable on loans and

overdrafts of £1.4m (2022: £1.8m).

The net finance credit of £6.9m (2022: £17.3m charge) includes £5.7m of unrealised gains on

inter-company loan balances (2022: losses of £14.6m).

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023152

Notes to the Accounts continued

7. Taxation

			2023			2022
	UK	Overseas	Total	UK	Overseas	Total
	£m	£m	£m	£m	£m	£m
Current tax charge	5.3	54.3	59.6	4.8	41.2	46.0
Adjustments in respect of current tax of prior years	(0.5)	(0.3)	(0.8)	(1.4)	(1.4)	(2.8)
Deferred tax – origination and reversal of temporary
differences (note 20)	(1.9)	(16.7)	(18.6)	(1.3)	(5.2)	(6.5)
Taxation charge from continuing operations	2.9	37.3	40.2	2.1	34.6	36.7

The standard rate of corporation tax for the year, based on the weighted average of tax rates

applied to the Group’s profits, is 24.2% (2022: 23.8%). The tax charge for the year is lower (2022:

higher) than the tax charge using the standard rate of corporation tax for the reasons set out in

the following reconciliation.

	2023	2022
	£m	£m
Profit before taxation from continuing operations	185.6	151.5
Corporation tax charge at standard rate of 24.2% (2022: 23.8%)	44.9	36.1
Permanent tax differences on loss/(profit) on disposal of businesses	2.8	(0.1)
Other non-deductible expenditure	4.5	9.1
Tax credits and incentives	(9.9)	(7.6)
Adjustments to prior year current and deferred tax charges	(2.1)	(0.8)
Taxation charge	40.2	36.7

The Group’s standard rate of corporation tax of 24.2% is marginally higher than the prior year

rate (23.8%), principally due to profits being made in countries with higher statutory tax rates.

‘Permanent tax differences on loss/(profit) on disposal of businesses’ in the current year

relates to the restriction of tax deductions for losses on the sale of shares in certain countries.

‘Other non-deductible expenditure’ in the prior year includes the £3.4m impact of non-deductible

foreign exchange losses.

‘Tax credits and incentives’ above, refers principally to research and development tax credits

and other reliefs for innovation, such as the UK Patent Box regime and Dutch Innovation Box

regime, as well as tax reliefs available for Foreign Derived Intangible Income in the US.

Factors that may affect the future tax charge

The Group’s tax charge in future years is likely to be affected by the proportion of profits arising,

and the effective tax rates, in the various territories in which the Group operates, as well as

changes in tax law affecting future periods. Such law changes may affect the future availability

or amount of existing tax reliefs or incentives. Furthermore, future tax or other legal cases or

investigations may result in a re-assessment of the Group’s tax liabilities in respect of prior years.

	2023	2022
Tax on items recognised directly in the Consolidated Statement of Comprehensive Income	£m	£m
Tax charge on net gain on effective portion of changes in fair value of forward
exchange contracts	1.1	–
Tax (credit)/charge on investment in equity instruments designated as at fair value through other comprehensive income	(0.1)	0.6
Tax (credit)/charge on re-measurement of net defined benefit obligations, net of foreign exchange	(0.1)	3.4
Aggregate current and deferred tax charge relating to items recognised directly
in the Consolidated Statement of Comprehensive Income	0.9	4.0

	2023	2022
Tax on items recognised directly in the Consolidated Statement of Changes in Equity	£m	£m
Tax credit in relation to share-based payments	(3.2)	(0.2)
Aggregate current and deferred tax credit relating to items recognised directly
in the Consolidated Statement of Changes in Equity	(3.2)	(0.2)

The following tax (credits)/charges relate to items of income and expense that are excluded

from the Group’s adjusted performance measures.

Tax on items of income and expense that are excluded	2023	2022
from the Group’s adjusted profit before tax	£m	£m
Tax credit on amortisation of acquisition-related intangible assets and impairment
of other property, plant and equipment	(4.7)	(4.6)
Tax credit on net transaction-related costs and fair value adjustments	(1.7)	(0.5)
Tax charge on retranslation of short-term inter-company loan balances	0.3	0.6
Tax credit on loss on disposal of businesses	(0.2)	–
Tax credit on configuration and customisation costs carried out by third parties on material SaaS projects	(10.8)	(5.1)
Tax charge/(credit) on fair value through profit and loss movements on debt and equity investments	0.6	(1.4)
Total tax credit	(16.5)	(11.0)

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 153

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

7. Taxation continued

The effective adjusted tax rate for the year was 21.5% (2022: 21.7%) as set out in the reconciliation

below.

	2023	2022
Reconciliation of the statutory taxation charge to the adjusted taxation charge	£m	£m
Statutory taxation charge	40.2	36.7
Tax credit on items of income and expense that are excluded from the Group’s
adjusted profit before tax	16.5	11.0
Adjusted taxation charge	56.7	47.7

The Group has applied the temporary exception included in IAS 12 ‘Income Taxes’ from

recognising or disclosing information about deferred tax related to ‘Pillar Two’ income taxes.

This mandatory temporary exception was included in the narrow scope amendments to IAS 12

published by the IASB in May 2023.

The UK legislation to implement the OECD BEPS ‘Pillar Two’ or ‘GloBE’ minimum tax rules was

substantively enacted in June 2023. The rules will apply to Spectris from 1 January 2024. We

anticipate that these legislative changes could give rise to limited upward pressure on the

Group’s adjusted effective tax rate from 2024. We currently estimate that the GloBE rules could

increase the Group’s adjusted effective tax rate by in the region of 1 percentage point for 2024.

The impact is expected to arise due to the Group receiving tax incentives for innovation under

local laws in certain countries which, in limited circumstances, can reduce effective tax rates

below 15%. The Group is continuing to assess the impact of Pillar Two income tax legislation.

Management judgement is applied to determine the level of provisions required in respect

of both direct and indirect taxes. The Group is potentially subject to tax audits in many

jurisdictions. By their nature these are often complex and could take a significant period of

time to be agreed with the tax authorities. Judgement is therefore applied based on the

interpretation of country-specific tax legislation and the likelihood of settlement. The Group

estimates and accrues taxes that will ultimately be payable when reviews or audits by tax

authorities of tax returns are completed. These estimates include judgements about the

position expected to be taken by each tax authority.

The Group applies judgement in respect of possible tax audit adjustments primarily in

respect of transfer pricing as well as in respect of financing arrangements and tax credits and

incentives. In respect of transfer pricing, the level of provision is determined by reference to

management judgements of the adjustments that would arise in the event that certain

intra-group transactions are successfully challenged as not being at arm’s length.

Management estimates of the level of risk arising from tax audit may change in the next year

as a result of changes in legislation or tax authority practice or correspondence with tax

authorities during a specific tax audit. It is not possible to quantify the impact that such future

developments may have on the Group’s tax positions. Actual outcomes and settlements may

differ from the estimates recorded in these Consolidated Financial Statements.

Judgement is also applied relating to the recognition of deferred tax assets which are

dependent on an assessment of the generation of future taxable income in the countries

concerned in which temporary differences become deductible or in which tax losses can be

utilised. These estimates may change in the next year if there are changes in the forecast

profitability of the relevant company.

8. Dividends

	2023	2022
Amounts recognised and paid as distributions to owners of the Company in the year	£m	£m
Interim dividend for the year ended 31 December 2023 of 25.3p (2022: 24.1p)
per share	26.0	25.3
Final dividend for the year ended 31 December 2022 of 51.3p (2022: 48.8p) per share	53.7	53.3
	79.7	78.6

	2023	2022
Amounts arising in respect of the year	£m	£m
Interim dividend for the year ended 31 December 2023 of 25.3p (2022: 24.1p)
per share	26.0	25.3
Proposed final dividend for the year ended 31 December 2023 of 53.9p (2022: 51.3p)
per share	54.8	53.6
	80.8	78.9

The proposed final 2023 dividend is subject to approval by shareholders at the AGM on 23 May

2024 and has not been included as a liability in these Consolidated Financial Statements.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023154

Notes to the Accounts continued

9. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable

to ordinary shareholders by the weighted average number of ordinary shares outstanding

during the year (excluding treasury shares).

Diluted earnings per share amounts are calculated by dividing the net profit attributable to

ordinary shareholders by the weighted average number of ordinary shares outstanding during

the year but adjusted for the effects of dilutive options. The key features of the Company’s share

option schemes are described in note 22.

Basic earnings per share from continuing operations	2023	2022
Profit after tax from continuing operations (£m)	145.4	114.8
Weighted average number of shares outstanding (millions)	103.6	107.6
Basic earnings per share from continuing operations (pence)	140.3	106.7

Diluted earnings per share from continuing operations	2023	2022
Profit after tax from continuing operations (£m)	145.4	114.8
Basic weighted average number of shares outstanding (millions)	103.6	107.6
Weighted average number of dilutive 5p ordinary shares under option (millions)	0.9	0.9
Weighted average number of 5p ordinary shares that would have been issued at average market value from proceeds of dilutive share options (millions)	(0.2)	(0.2)
Diluted weighted average number of shares outstanding (millions)	104.3	108.3
Diluted earnings per share from continuing operations (pence)	139.4	106.0

Basic earnings per share from discontinued operations	2023	2022
Profit after tax from discontinued operations (£m)	–	286.7
Weighted average number of shares outstanding (millions)	103.6	107.6
Basic earnings per share from discontinued operations (pence)	–	266.4

Diluted earnings per share from discontinued operations	2023	2022
Profit after tax from discontinued operations (£m)	–	286.7
Diluted weighted average number of shares outstanding (millions)	104.3	108.3
Diluted earnings per share from discontinued operations (pence)	–	264.7

The denominators used for diluted earnings per share from discontinued operations are the

same as those used for diluted earnings per share from continuing operations.

10. Goodwill and other intangible assets

			Patents,	Customer-
			contractual	related and
			rights and	trade
		Goodwill	technology	names	Software	Total
Cost	Note	£m	£m	£m	£m	£m
At 1 January 2022		788.9	162.0	226.8	54.3	1,232.0
Measurement period
adjustments		(0.8)	–	–	–	(0.8)
Additions – separately
acquired		–	–	–	1.0	1.0
Additions – internal
development		–	3.4	–	–	3.4
Additions – business
combinations	23	49.7	22.9	36.5	–	109.1
Reclassifications		–	–	–	0.3	0.3
Disposals		–	–	–	(1.3)	(1.3)
Disposals of business	24	(213.4)	(36.9)	(81.4)	(8.0)	(339.7)
Foreign exchange
difference		57.9	16.9	20.1	2.6	97. 5
At 31 December 2022		682.3	168.3	202.0	48.9	1,101.5
Additions – separately
acquired		–	–	–	0.8	0.8
Additions – internal
development		–	3.2	–	–	3.2
Additions – business
combinations	23	24.6	6.9	14.8	–	46.3
Reclassifications		–	–	–	1.9	1.9
Transfers to assets held for sale	24	(46.0)	(11.0)	(3.1)	(2.8)	(62.9)
Disposals		–	–	(0.4)	(7. 3)	(7.7)
Disposals of business	24	(38.6)	(11.8)	(40.6)	(0.1)	(91.1)
Foreign exchange
difference		(16.2)	(4.6)	(8.0)	(0.9)	(29.7)
At 31 December 2023		606.1	151.0	164.7	40.5	962.3

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 155

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

10. Goodwill and other intangible assets continued

			Patents,	Customer-
			contractual	related and
			rights and	trade
Accumulated amortisation and		Goodwill	technology	names	Software	Total
impairment	Note	£m	£m	£m	£m	£m
At 1 January 2022		157.5	102.5	125.3	46.2	431.5
Charge for the year		–	15.4	7.7	3.2	26.3
Disposals		–	–	–	(1.3)	(1.3)
Disposals of business	24	(92.1)	(36.9)	(42.9)	(6.6)	(178.5)
Foreign exchange difference		10.8	10.2	9.9	2.4	33.3
At 31 December 2022		76.2	91.2	100.0	43.9	311.3
Charge for the year		–	15.1	7. 2	2.6	24.9
Reclassifications		–	–	–	0.1	0.1
Transfers to assets held for sale	24	–	(4.5)	(0.7)	(2.8)	(8.0)
Disposals		–	–	(0.4)	(7.3)	(7.7)
Disposals of business	24	(35.1)	(9.7)	(38.7)	–	(83.5)
Foreign exchange difference		(0.5)	(3.4)	(2.8)	(0.7)	(7.4)
At 31 December 2023		40.6	88.7	64.6	35.8	229.7
Carrying amount
At 31 December 2023		565.5	62.3	100.1	4.7	732.6
At 31 December 2022		606.1	77.1	102.0	5.0	790.2

Goodwill is allocated to the cash-generating units that are anticipated to benefit from the

acquisition.

The Group’s identified cash-generating units total five, smaller than the three reportable

segments, being the two operating companies in the Spectris Scientific Division (Malvern

Panalytical and Particle Measuring Systems), the Spectris Dynamics Division, and the two

operating companies in the Other non-reportable segment (Red Lion Controls and Servomex)

as at 31 December 2023 (2022: five). Goodwill arising on a bolt-on acquisition is combined with

the goodwill in the existing Group company and is not considered separately for impairment

purposes, since such acquisitions are quickly integrated.

The most significant amounts of goodwill are as follows:

	2023	2022
	£m	£m
Malvern Panalytical	235.8	234.6
Spectris Dynamics	294.9	290.4
Non-significant CGUs	34.8	81.1
	565.5	606.1

Goodwill at 31 December 2023 excludes balances transferred to assets held for sale totalling

£46.0m (2022: £nil).

Included within ‘Non-significant CGUs’ are two – Particle Measuring Systems and Servomex

(2022: three – Particle Measuring Systems, Red Lion Controls and Servomex) cash-generating

units, in which none of the goodwill balances are considered to be individually significant.

The Group defines significant as 10% of the total carrying value of goodwill.

Goodwill is not amortised but is tested for impairment annually or whenever there is an

indication that the asset may be impaired. As part of the annual impairment review, the

carrying amount of goodwill has been assessed with reference to its recoverable amount

determined based on value in use. In assessing value in use, the forecast projected cash flows

of each cash-generating unit, which are based on actual operating results, the most recent

budget for the next financial year as approved by the Board, detailed strategic review

projections and an assumed long-term growth rate to perpetuity, are discounted to their

present value using a pre-tax discount rate that reflects the time value of money and the risks

specific to the cash-generating unit.

Key assumptions used in the value in use calculations

The calculation of value in use is most sensitive to the following assumptions:

• CGU specific operating assumptions on business performance over the forecast period to

December 2028 (five years);

• discount rates; and

• projected growth rates used to extrapolate risk adjusted cash flows beyond the forecast

period.

CGU specific operating assumptions are applicable to the forecasted cash flows for the

forecast period to December 2028 and relate to revenue forecasts, expected project

outcomes and forecast operating margins in each of the operating companies. Impact of

macroeconomic trends such as rising inflation rates has been applied to CGUs. The relative

value ascribed to each assumption will vary between CGUs as the forecasts are built up from

the underlying operating companies within each CGU group. A long-term rate is applied to

these values for the year to December 2028 and onwards.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023156

Notes to the Accounts continued

10. Goodwill and other intangible assets continued

The Group has considered the potential impact of climate change on future cash flows in the

impairment test. This took into consideration the quantification of the risks and opportunities

identified in the TCFD disclosures outlined in the Sustainability section of the Strategic Report

on pages 52 to 77, as well as the commitments made in our journey towards achieving our Net

Zero ambition. This included assessing the impact and likelihood of climate change as set out

in the Principal Risks and uncertainties on pages 48 to 50. In terms of physical risk, this could

result in a reduction of our ability to conduct business operations from certain locations on a

temporary or permanent basis or risk of harm to employees or physical assets. In terms of

transition risk this could lead to increased costs through market regulation or additional taxes.

After taking into account the potential impact of climate change, significant headroom

remained in the model.

The Group calculates value in use using the strategic plans relevant to each CGU. A long-term

growth rate of 2.0% (2022: 2.0%) has been applied consistently across each CGU. Discount rates

are based on estimations of the assumptions that market participants operating in similar

sectors to Spectris would make, using the Group’s economic profile as a starting point and

adjusting appropriately. The Directors do not currently expect any significant change in the

present base discount rate of 14.1% (2022: 12.9%). The base discount rate, which is pre-tax and is

based on short-term variables, may differ from the Weighted Average Cost of Capital (WACC).

Discount rates are adjusted for economic risks that are not already captured in the specific

operating assumptions for each CGU group. This results in the impairment testing using

discount rates ranging from 14.6% to 15.9% (2022: 13.5% to 15.0%) across the CGU groups. The

following table discloses the discount rates and short-term growth rates for each significant

CGU, and the average across the non-significant CGUs. Red Lion Controls has been included in

our assessment.

		Risk Adjusted		Short-term
		discount rates		growth rates
	2023	2022	2023	2022
	%	%	%	%
Malvern Panalytical	14.6	13.5	9.8	7.6
Spectris Dynamics	14.7	14.1	9.4	8.3
Non-significant CGUs	15.9	15.0	10.1	13.0

Impairment of goodwill and acquisition-related intangible assets

2023 and 2022

There were no impairments of goodwill and intangible assets recognised in 2023 and 2022.

Sensitivity analysis

For all cash-generating units with goodwill balances at 31 December 2023 the Directors do not

consider that there are any reasonably possible sensitivities for the business that could arise in

the next 12 months that could result in an impairment charge being recognised.

Other intangible assets

Internally generated assets arising from the capitalisation of qualifying development

expenditure typically have a finite expected useful life of four to ten years. Capitalised

development expenditure is amortised on a straight-line basis. All amortisation charges for

the year have been charged against operating profit. The Group has capitalised £3.2m of

internally-generated intangible assets from development expenditure in 2023 (2022: £3.4m).

Accumulated amortisation on internally-generated intangible assets was £8.6m (2022: £5.5m).

The customer-related assets recognised on the acquisition of Concurrent Real Time

(Concurrent-RT) in 2021, Dytran Instruments Inc (Dytran) in 2022, and MicroStrain Sensing

Systems Business (MicroStrain) in 2023, and included within the Spectris Dynamics reportable

segment, are considered significant by the Directors as they represent 50% (2022: 57%), 28%

(2022: 31%) and 12% (2022: nil) of the NBV of total customer-related and trade names

respectively. The carrying amount of the Concurrent-RT customer-related intangible assets at

31 December 2023 is £48.4m (2022: £54.0m) and is being amortised over 20 years with the

remaining amortisation period being 16.5 years. The carrying amount of the Dytran customer-

related intangible assets at 31 December 2023 is £23.4m (2022: 26.0m) and is being amortised

over 20 years with the remaining amortisation period being 18.75 years. The carrying amount of

the MicroStrain customer-related intangible assets at 31 December 2023 is £7.3m (2022: nil) and

is being amortised over 14.7 years with the remaining amortisation period being 14.45 years.

The technology assets recognised on the acquisition of Concurrent-RT in 2021 and Creoptix AG

in 2022, and included within the Spectris Dynamics and Spectris Scientific reportable

segments respectively, are considered significant by the Directors. Concurrent-RT represents

22% (2022: 24%) of total NBV of patents, contractual rights and technology. The carrying

amount of the Concurrent-RT technology intangible assets at 31 December 2023 is £15.3m

(2022: £18.5m) and is being amortised over ten years with the remaining amortisation period

being six and a half years. Creoptix AG represents 25% (2022: 24%) of total NBV of patents,

contractual rights and technology. The carrying amount of the Creoptix AG technology

intangible assets at 31 December 2023 is £16.9m (2022: £18.3m) and is being amortised over

ten years with the remaining amortisation period being eight years.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 157

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

11. Property, plant and equipment

Property, plant and equipment: owned

		Freehold	Leasehold	Plant and
		property	property	equipment	Total
Cost	Note	£m	£m	£m	£m
At 1 January 2022		131.1	25.0	197.6	353.7
Additions – separately acquired		19.0	2.5	18.9	40.4
Additions – business combinations	23	1.0	0.6	1.4	3.0
Reclassifications		–	–	(0.3)	(0.3)
Transfer to assets held for sale	24	(3.3)	–	–	(3.3)
Disposals		(0.6)	(0.7)	(6.8)	(8.1)
Disposal of business	24	(17.3)	(1.8)	(14.4)	(33.5)
Foreign exchange difference		9.2	1.6	11.2	22.0
At 31 December 2022		139.1	27.2	207.6	373.9
Additions – separately acquired		2.7	1.9	16.0	20.6
Additions – business combinations	23	–	–	0.7	0.7
Reclassifications		(4.5)	4.7	(2.1)	(1.9)
Transfers to assets held for sale	24	(6.3)	(1.4)	(9.2)	(16.9)
Disposals		(3.9)	(1.0)	(21.9)	(26.8)
Disposal of business	24	(4.1)	(0.3)	(13.5)	(17.9)
Foreign exchange difference		(3.7)	(1.0)	(5.5)	(10.2)
At 31 December 2023		119.3	30.1	172.1	321.5
Accumulated depreciation and impairment
At 1 January 2022		50.4	13.1	139.7	203.2
Charge for the year		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)
Disposal of business	24	(3.4)	(1.2)	(10.2)	(14.8)
Foreign exchange difference		3.2	0.8	8.4	12.4
At 31 December 2022		52.1	14.6	146.5	213.2
Charge for the year		3.4	2.3	13.7	19.4
Reclassifications		(1.0)	1.0	(0.1)	(0.1)
Transfers to assets held for sale	24	(0.3)	(1.3)	(7.0)	(8.6)
Disposals		(3.5)	(0.9)	(21.4)	(25.8)
Disposal of business	24	(1.7)	(0.1)	(4.7)	(6.5)
Foreign exchange difference		(1.4)	(0.8)	(4.1)	(6.3)
At 31 December 2023		47.6	14.8	122.9	185.3
Carrying amount
At 31 December 2023		71.7	15.3	49.2	136.2
At 31 December 2022		87.0	12.6	61.1	160.7

The amount included in the cost of plant and equipment of assets in the course of construction

was £15.4m (2022: £15.4m).

No borrowing costs were capitalised during either year.

Of the total depreciation charge of £19.4m (2022: £20.6m), the amount attributable to the

depreciation on fair value adjustments to acquisition-related property, plant and equipment

was £nil (2022: £0.2m).

There were no additions relating to the receipt of government grants in 2023 (2022: £nil).

Of the total additions of £20.6m the amount attributable to climate-related capital expenditure

is £1.6m that has been counted towards achieving our Net Zero ambition. These costs include

all the activities disclosed in the Sustainability section of the Strategic Report.

Property, plant and equipment: right-of-use

			Plant and
		Property	equipment	Total
	Note	£m	£m	£m
At 1 January 2022		54.7	5.8	60.5
Additions		9.2	3.9	13.1
Depreciation and impairment		(10.2)	(4.0)	(14.2)
Disposals		(2.2)	(0.3)	(2.5)
Disposal of business	24	(1.8)	–	(1.8)
Additions – business combinations	23	1.0	–	1.0
Re-measurement		–	0.2	0.2
Foreign exchange difference		3.1	0.3	3.4
At 31 December 2022		53.8	5.9	59.7
Additions		10.6	5.4	16.0
Depreciation and impairment		(9.5)	(3.9)	(13.4)
Disposals		(0.1)	(0.4)	(0.5)
Disposal of business	24	(3.2)	–	(3.2)
Transfers to assets held for sale	24	(0.8)	–	(0.8)
Additions – business combinations	23	1.1	–	1.1
Re-measurement		–	0.4	0.4
Foreign exchange difference		(1.1)	(0.1)	(1.2)
At 31 December 2023		50.8	7.3	58.1

	2023	2022
	£m	£m
Property, plant and equipment: owned	136.2	160.7
Property, plant and equipment: right-of-use	58.1	59.7
	194.3	220.4

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023158

Notes to the Accounts continued

12. Investments in equity instruments, investment in associates and joint operation

Investments in equity instruments

	2023	2022
	£m	£m
Investments in equity instruments designated as at fair value through other comprehensive income	24.3	29.3
Total investment in equity instruments at 31 December	24.3	29.3

At 31 December 2023, the Group’s investments in equity instruments designated to be

measured at fair value through other comprehensive income consists of a) 27,752,567 A1

investment units in the EZ Ring FPCI (the fund holding the combined UTAC-Millbrook group),

which has a fair value of £23.9m (2022: £28.6m) b) 10,000,000 shares in Envirosuite Ltd, which

has a fair value of £0.4m (2022: £0.7m).

These investments were not held for trading at initial recognition and were not contingent

consideration. Instead, they are held for medium- to long-term strategic purposes. Accordingly,

the Group elected to designate these investments in equity instruments as at fair value

through other comprehensive income at initial recognition as it believes that recognising

short-term fluctuations in these investments’ fair value in profit and loss would not be

consistent with the Group’s strategy of holding the investment for long-term purposes and

realising its performance potential in the long run.

The Group does not consider that it is able to exercise significant influence over any of the

above investments as its percentage ownership and voting rights of the businesses is small

and it does not have any unusual powers or rights over the businesses.

No dividends have been recognised on investments in equity instruments during the year

(2022: £nil).

Investment in associates

The Group’s investments in associates at 31 December 2023 were as follows:

		Country of incorporation	Percentage
Name of associates	Principal activity	or registration	shareholding
CM Labs Simulations Inc.	Manufacturer of turnkey solutions	Canada	19.4%
LumaCyte Incorporated	Bioanalytic instrumentation	United States	12.2%

Summarised financial information in respect of the Group’s immaterial associates are set out

below. The summarised information has been presented in accordance with IFRS (after

adjustments by the Group for equity accounting purposes and to comply with the Group’s

accounting policies).

	2023	2022
	£m	£m
At 1 January	2.9	–
Arising on acquisition of associates	7.8	2.9
Share of loss of associates	(0.1)	–
Foreign exchange difference	0.2	–
At 31 December	10.8	2.9

There was no other comprehensive income or dividends received from associates in the year

(2022: £nil).

2023

On 21 August 2023, the Group acquired 12.2% (10.9% fully diluted) of the shares of LumaCyte

Incorporated (LumaCyte) for total consideration of USD10.0m (£7.8m), settled in cash. LumaCyte

is an advanced bioanalytic instrumentation company based in Virginia, United States, and will

provide Spectris with further exposure and deeper insights into the high growth and disruptive

area of Cell and Gene Therapy and vaccine markets. As a result of the rights and powers attached

to the Group’s shareholding, the Group has concluded that it has significant influence and, as a

result, will equity account for its share of LumaCyte’s results, as an investment in associate. This

investment in associate is considered immaterial to the Group on an individual basis.

2022

On 8 April 2022, the Group acquired 19.4% (17.2% fully diluted) of the shares of CM Labs

Simulations Inc. (CM Labs) for total consideration of CAD4.3m (£2.6m), settled in cash. CM Labs

is a manufacturer of turnkey solutions for operator training simulators in the heavy equipment

industries. These simulators are developed using CM Labs’ proprietary Vortex software, which is

also commercially available as a machinery virtual prototyping software platform for tasks

ranging from product development to creation of custom simulators. Its principal place of

business is Montreal, Quebec, Canada. As a result of the rights and powers attached to the

Group’s shareholding, the Group has concluded that it has significant influence and, as a result,

will equity account for its share of CM Labs’ results, as an investment in associate. This

investment in associate is considered immaterial to the Group on an individual basis.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 159

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

Joint operation

The Group’s immaterial joint operation has share capital consisting solely of ordinary shares and is

indirectly held, and principally operates in Slovenia. The financial and operating activities of the

operation are jointly controlled by the participating shareholders and are primarily designed for

all but an insignificant amount of the output to be consumed by the shareholders.

		Country of incorporation	Percentage
Name of joint operation	Principal activity	or registration	shareholding
Blueberry d.o.o.	Research and development activities	Slovenia	50%

Significant judgement made by Group in determining the nature of its interest and the

type of joint arrangement

Blueberry d.o.o. is a joint arrangement that is primarily designed for the provision of output to

the parties sharing joint control; this indicates that the parties have rights to substantially all the

economic benefits of the assets. The liabilities of the arrangements are in essence satisfied by

cash flows received from both parties; this dependence indicates that the parties in effect have

obligations for the liabilities. It is these facts and circumstances that give rise to the

classification of this entity as a joint operation.

13. Inventories

	2023	2022
	£m	£m
Raw materials	110.3	129.1
Work in progress	43.5	49.0
Finished goods and goods held for resale	78.0	85.2
	231.8	263.3

In the ordinary course of business, the Group makes provision for slow-moving, excess and

obsolete inventory to write it down to its net realisable value based on an assessment of

technological and market developments specific to the relevant business, and an analysis of

historical and projected usage on an individual item or product line basis.

Expenses relating to inventories written down during the year totalled £12.9m (2022: £10.5m)

for the Group.

Finished goods and goods held for resale expected to be utilised after 12 months amounted to

£0.3m (2022: £0.2m).

14. Trade and other receivables

	2023	2022
Current	£m	£m
Trade receivables	239.5	283.3
Prepayments	27.6	28.8
VAT and similar taxes receivable	32.2	27.2
Research and development credits recoverable	1.6	2.9
Deferred and contingent consideration on acquisitions	0.5	–
Other receivables	8.6	10.1
Contract assets	7.9	10.2
	317.9	362.5

	2023	2022
Non-current	£m	£m
Prepayments	3.7	2.3
Other receivables	2.2	1.9
	5.9	4.2

Other current and non-current receivables include advances to suppliers of £4.1m (2022:

£2.4m) and other debtors of £6.7m (2022: £9.6m).

Trade receivables are non-interest bearing. Standard credit terms provided to customers differ

according to business and country, and are typically between 30 and 60 days. Trade receivables

are stated after the provision for impairment of £7.5m (2022: £5.3m).

The fair value of trade and other receivables approximates to its carrying amount due to the

short-term maturities associated with these items. There is no impairment risk identified with

regards to other receivables where no amounts are past due.

The maximum exposure to credit risk for trade receivables at 31 December by geographic

region was:

	2023	2022
	£m	£m
UK	9.1	9.8
Germany	19.0	23.8
France	15.7	16.7
Rest of Europe	43.9	46.1
USA	55.3	77.1
Rest of North America	8.3	9.8
Japan	14.8	15.0
China	20.2	25.0
South Korea	8.6	9.5
Rest of Asia	30.5	37.1
Rest of the world	14.1	13.4
	239.5	283.3

12. Investments in equity instruments, investment in associates and joint operation

continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023160

Notes to the Accounts continued

Expected credit losses

The Group measures the loss allowance for trade receivables at an amount equal to lifetime

expected credit losses (ECL). The ECL on trade receivables are estimated using a provision

matrix by reference to past default experience of the debtor and an analysis of the debtor’s

current financial position, adjusted for factors that are specific to the debtor, general economic

conditions of the industry in which the debtor operates and an assessment of both the current

as well as the forecast direction of conditions at the reporting date.

There has been no change in the estimation techniques or significant assumptions made

during the current reporting period.

The Group writes off a trade receivable when there is information indicating that the debtor is

in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor

has been placed under liquidation or has entered into bankruptcy proceedings.

The ageing of trade receivables and related provisions for impairment at 31 December was:

		2023		2022
	Gross	Impairment	Gross	Impairment
	£m	£m	£m	£m
Not past due	161.4	–	199.0	–
One month past due	33.6	–	36.3	–
Two months past due	15.6	–	14.7	–
Three months past due	7. 3	–	10.5	–
Four months past due	5.7	–	5.6	–
More than four months past due	23.4	7.5	22.5	5.3
	247.0	7. 5	288.6	5.3

The movement in the provision for impairment in respect of trade receivables during the year

was as follows:

	2023	2022
	£m	£m
At 1 January	5.3	6.1
Provision for impairment of receivables	2.9	0.2
Impairment loss utilised	(0.5)	(1.1)
Disposal of business	(0.1)	(0.4)
Foreign exchange difference	(0.1)	0.5
At 31 December	7.5	5.3

All of the above impairment losses relate to receivables arising from contracts with customers.

Significant changes in contract assets during the year

2023

There were no significant movements in contract assets in 2023.

2022

There were no significant movements in contract assets in 2022.

15. Cash and cash equivalents

		2023	2022
	Note	£m	£m
Cash and cash equivalents included in current assets		138.5	228.1
Cash and cash equivalents included in assets held for sale	24	0.3	–
Cash and cash equivalents		138.8	228.1

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and

liabilities is disclosed in note 27.

Included in Cash and Cash Equivalents is restricted cash of £4.1m (2022: £2.4m) held in India.

There are controls in place over the cross-border transfer of Indian Rupees, meaning that the

Group cannot readily access these funds.

16. Borrowings

			2023	2022
Current	Interest rate	Repayable date	£m	£m
Bank overdrafts		On demand	–	0.1
Bank loans unsecured – £45.0m	Determined on
(2022: £45.0m) uncommitted facility	draw down	On demand	–	–
Total current borrowings			–	0.1

			2023	2022
Non-current	Interest rate	Maturity date	£m	£m
Bank loans unsecured – $500.0m	Relevant RFR/
revolving credit facilities	IBOR +55bps	31 July 2025	–	–
Total non-current borrowings			–	–
Total current and non-current borrowings			–	0.1
Total unsecured borrowings			–	0.1

At 31 December 2023, the $500m (£393.1m) revolving credit facilities were undrawn

(31 December 2022: the $500m (£414.9m) facilities were undrawn).

Movements in total unsecured borrowings are reconciled as follows:

	2023	2022
	£m	£m
At 1 January	0.1	–
Proceeds from borrowings	–	326.2
Repayment of borrowings	(0.1)	(326.8)
Effect of foreign exchange rates	–	0.7
At 31 December	–	0.1

14. Trade and other receivables continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 161

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

16. Borrowings continued

Changes in liabilities arising from financing arrangements

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for

which cash flows were, or future cash flows will be, classified in the Group’s Consolidated Statement of Cash Flows as cash flow from financing activities.

		At 31 December	Financing cash		Acquisitions of	Disposal of	Other non-cash	Exchange	At 31 December
£m	Note	2022	flows	New leases	businesses	businesses	movement	movement	2023
Bank overdrafts (including notional cash-pool related bank overdrafts)	15	0.1	(0.1)	–	–	–	–	–	–
Total borrowings		0.1	(0.1)	–	–	–	–	–	–
Lease liabilities (including lease liabilities classified as liabilities held for sale)		65.1	(15.6)	16.1	1.0	(3.6)	2.1	(1.6)	63.5
Total liabilities from financing arrangements		65.2	(15.7)	16.1	1.0	(3.6)	2.1	(1.6)	63.5

		At 31 December	Financing cash		Acquisitions of	Disposal of	Other non-cash	Exchange	At 31 December
£m	Note	2021	flows	New leases	businesses	businesses	movement	movement	2022
Bank overdrafts (including notional cash-pool related bank overdrafts)	15	–	0.1	–	–	–	–	–	0.1
Debt		–	(0.7)	–	0.1	–	(0.1)	0.7	–
Total borrowings		–	(0.6)	–	0.1	–	(0.1)	0.7	0.1
Lease liabilities		65.9	(16.4)	13.2	1.0	(3.2)	0.3	4.3	65.1
Total liabilities from financing arrangements		65.9	(17.0)	13.2	1.1	(3.2)	0.2	5.0	65.2

1. The cash flows from bank overdrafts (including notional cash-pool related bank overdrafts) and debt make up the net amount of proceeds from borrowings, repayment of borrowings and notional cash-pooling movement in the

Consolidated Statement of Cash Flows.

2. Lease liabilities at 31 December 2023 includes £0.8m of liabilities classified as held for sale (2022: £nil, 2021: £nil).

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023162

Notes to the Accounts continued

17. Trade and other payables

	2023	2022
Current	£m	£m
Trade payables	42.8	62.8
Accruals	114.9	114.0
Customer advances	31.8	48.5
Contract liabilities	85.5	98.4
Deferred and contingent consideration on acquisitions	10.6	3.3
VAT and similar taxes payable	27.6	27.0
Goods received not invoiced	7.9	14.9
Share buyback accrual	45.9	–
Other payables	2.4	4.8
	369.4	373.7

	2023	2022
Non-current	£m	£m
Contract liabilities	4.0	3.9
Accruals	11.1	9.9
	15.1	13.8

See note 21 in the Consolidated Financial Statements for further details on the Group’s share

buyback accrual.

The fair value of trade and other payables approximates to their carrying amount due to the

short-term maturities associated with these items.

Total contract liabilities relate to the following product groups:

	2023	2022
	£m	£m
Spectris Scientific	58.0	71.5
Spectris Dynamics	31.4	30.6
Others	0.1	0.2
	89.5	102.3

Revenue recognised in 2023 that was included in the contract liabilities balance at the

beginning of the year amounts to £48.1m (2022: £57.2m).

Significant changes in contract liabilities during the year

2023

The decrease in contract liabilities reflects decrease in systems-related orders in Spectris

Scientific.

2022

During 2022, £1.4m of contract liabilities balances were recognised as part of the acquisition of

Creoptix, in the Spectris Scientific product group. The remainder of the increase primarily

reflects increased systems-related orders in Spectris Scientific.

There were no other significant changes in contract liabilities balances during 2022.

18. Provisions

				Legal,
			Product	contractual
		Reorganisation	warranty	and other	Total
	Note	£m	£m	£m	£m
At 1 January 2023		3.1	7.0	7.1	17. 2
Balance transferred to Defined Benefit
Obligation Plans		–	–	(1.4)	(1.4)
Provision during the year		0.5	5.2	1.5	7.2
Disposal of business	24	–	–	(0.4)	(0.4)
Utilised during the year		(2.8)	(4.4)	(2.2)	(9.4)
Released during the year		(0.1)	(0.2)	(0.4)	(0.7)
Transfer to liabilities held for sale		–	(0.7)	(0.2)	(0.9)
Foreign exchange difference		(0.1)	(0.2)	(0.2)	(0.5)
At 31 December 2023		0.6	6.7	3.8	11.1

Reorganisation

Reorganisation provisions relate to committed restructuring plans in place within the business.

Costs are mostly expected to be incurred within one year and there is little judgement in

determining the amount.

Product warranty

Product warranty provisions reflect commitments made to customers on the sale of goods

in the ordinary course of business and included within the Group’s standard terms and

conditions. Warranty commitments typically apply for a 12-month period, but can extend to

36 months. These extended warranties are not individually significant.

Legal, contractual and other

Legal, contractual and other provisions mainly comprise amounts provided against open legal

and contractual disputes arising in the normal course of business. The Group has on occasion

been required to take legal or other actions to protect its intellectual property rights, to enforce

commercial contracts or otherwise and similarly to defend itself against proceedings brought

by other parties. Provisions are made for the expected costs associated with such matters,

based on past experience of similar items and other known factors, taking into account

professional advice received, and represent management’s best estimate of the most likely

outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting the

complexity of issues and the outcome of various court proceedings and negotiations.

Contractual and other provisions represent the Directors’ best estimate of the cost of settling

current obligations.

No provision is made for proceedings which have been or might be brought by other parties

against Group companies unless management, taking into account professional advice

received, assesses that it is probable that such proceedings may be successful. Contingent

liabilities associated with such proceedings have been identified, but the Directors are of the

opinion that any associated claims that might be brought can be defeated successfully and,

therefore, the possibility of any material outflow in settlement is assessed as remote.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 163

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

19. Retirement benefit plans

Spectris plc operates funded defined benefit and defined contribution pension plans for the

Group’s qualifying employees in the UK. At 31 December 2023, 17 overseas subsidiaries (2022:

16) in six overseas countries (2022: six) provided defined benefit plans. Other UK and overseas

subsidiaries have their own defined contribution plans invested in independent funds.

Defined benefit plans

The UK, German, Dutch, Swiss, French, Italian and Japanese plans provide pension benefits in

and at retirement, death in service and, in some cases, disability benefits to members. The

pension benefits are linked to members’ final salary at retirement and their service life. Since

31 December 2009, the UK plan has been closed to all service accruals. The German and

Dutch plans are closed to new members. The Italian plan is a mandatory Trattamento di Fine

Rapporto (TFR) severance plan, whilst the Japanese and French plans provide lump sum

benefits to members on retirement.

The UK plan is administered by a pension fund, but the Swiss and Dutch plans are held by

insurance companies that are legally separate from the Group. The majority of the overseas

plan assets are insurance policies. The UK plan is managed by a Board of Trustees that

represents both employees and employer, who is required to act in the best interest of the

plan’s participants and is responsible for setting certain policies (e.g. investment, contribution

and indexation policies) of the various funds.

The plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest

rate risk and market (investment) risk. Inflation and interest rate hedges are taken out to

mitigate against risks arising on the UK plan and some reinsurance exists in respect of the

overseas plans.

The overseas plans are funded by the Group’s overseas subsidiaries, and the UK plan has been

funded by both the Group’s UK subsidiaries and the Company. The assets of the UK plan are

invested in accordance with Section 40 of the Pensions Act 1995. Although the Act permits 5%

of the plan’s assets to be invested in ‘employer-related investments’, the Trustee has elected

that none of the plan assets are to be invested directly in Spectris plc shares. The Trustee also

holds interest rate and inflation swaps to help protect against the impact of changes in

prevailing interest rates and price inflation, which in conjunction with the corporate bond

portfolio aims to fully hedge against interest and inflation rate risks on the basis used by the

Trustee to fund the plan. Trustee investment in derivatives is only made in so far as they

contribute to the reduction of investment risks or facilitate efficient portfolio management

and are managed such as to avoid excessive risk exposure to a single counterparty or other

derivative operations.

The Trustee of the UK plan has invested a large proportion of the plan’s assets in a buy and

maintain corporate bond portfolio, designed to move in a similar way to the value of the plan’s

liabilities. The Trustee has also entered into a swaps strategy which seeks to further mitigate

against movement in interest rates and price inflation over time.

The funding requirements are based on the individual fund’s actuarial measurement

framework set out in the funding policies of the various plans.

The Group has determined that, in accordance with the terms and conditions of the defined

benefit plans, and in accordance with statutory requirements (including minimum funding

requirements) of the plans of the respective jurisdictions, the present value of the refunds or

reductions in future contributions is not lower than the balance of the total fair value of the plan

assets less the total present value of obligations. This determination has been made on a

plan-by-plan basis. As such, no decrease in the defined benefit asset was necessary

at 31 December 2023.

The last full actuarial valuation for the UK plan was 31 December 2020 and for the overseas

plans was 31 December 2022, where available. Where applicable, the valuations were updated

to 31 December 2023 for IAS 19 (Revised) ‘Employee Benefits’ purposes by qualified

independent actuaries.

The Group’s contributions to defined benefit plans during the year ended 31 December 2023

were £2.5m (2022: £2.0m). Contributions for 2024 are expected to be £1.2m for the UK plan and

£1.3m for the overseas plans.

As a result of the UK plan’s full actuarial valuation at 31 December 2020, it has been agreed that

the Group will make past service deficit recovery payments totalling £1.2m a year for a period of

six years from 1 January 2022 until 31 December 2027. The contribution rates are subject to

review at future valuations and periodic certifications of the schedule of contributions.

The assumptions used by the actuary to value the liabilities of the defined benefit plans were:

		2023		2022
		Overseas		Overseas
	UK plan	plans	UK plan	plans
	% p.a.	% p.a.	% p.a.	% p.a.
Discount rate	4.54	1.35–3.30	4.85	2.15–3.80
Salary increases	n/a	1.50–3.00	n/a	1.50–3.00
Pension increases in payment	1.95 –3.62	0.00–2.25	2.30–3.41	0.00–2.25
Pension increases in deferment	2.52–2.95	n/a	2.55–3.02	n/a
Inflation assumption	2.52–2.95	1.25–3.5	2.55–3.02	1.25–3.50
Interest credit rate	n/a	1.00	n/a	1.00

The weighted average duration of the defined benefit obligation at 31 December 2023 was

approximately 11 years (2022: 12 years) for the UK plan and 15.2 years (2022: 14.3 years) for the

overseas plans.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023164

Notes to the Accounts continued

Pensioner life expectancy assumed in the 31 December 2023 valuation is based on the

following tables:

UK plan	103% and 106% of the S3PA tables centred in 2013 for males and females respectively.
	Future improvements in line with the core CMI_2022 model subject to a long-term
	improvement rate of 1.25% per annum, an initial addition of 0.2% and a 25% weighting on
	2022 mortality experience.
French plans	INSEE tables (2013, 2017-2019 or 2018-2020 depending on plan)
German plans	Dr K Heubeck pension tables 2018 G
Dutch plans	A.G. Prognosetafel 2018 tables
Swiss plan	BVG 2020 – CMI 1.50%
Italian plans	SI 2019

Samples of the ages which pensioners are assumed to live to across the Group’s defined

benefit plans are as follows:

	Male	Female
Pensioners aged 65 in 2023	85.8 –87.0	88.6–89.2
Pensioners aged 65 in 2043	87.6 –89.0	90.0–91.4

		UK plan		Overseas plans		Total
Amounts recognised in the	2023	2022	2023	2022	2023	2022
Consolidated Income Statement	£m	£m	£m	£m	£m	£m
Current service cost	–	–	0.7	0.4	0.7	0.4
Past service credit	–	–	(0.1)	(0.1)	(0.1)	(0.1)
Administrative cost	–	–	0.1	–	0.1	–
Settlement/curtailment	–	–	–	(0.1)	–	(0.1)
Net interest cost	–	0.2	0.3	0.1	0.3	0.3
	–	0.2	1.0	0.3	1.0	0.5

The current service cost, past service credit, administrative cost and settlement/curtailment are

recognised in administrative expenses in the Consolidated Income Statement. The net interest

cost on the net defined benefit obligation is recognised in finance costs in the Consolidated

Income Statement. Actuarial gains and losses are recognised in the Consolidated Statement of

Comprehensive Income.

During the year, insurance premiums for death-in-service benefits amounting to £0.4m

(2022: £0.4m) were paid.

There was a total return on plan assets in the year of £8.0m (2022: -£32.1m).

Amounts recognised in the		UK plan	Overseas plans			Total
Consolidated Statement	2023	2022	2023	2022	2023	2022
of Comprehensive Income	£m	£m	£m	£m	£m	£m
Actuarial gains/(losses) recognised in the current year	1.4	9.8	(2.0)	3.3	(0.6)	13.1
Foreign exchange gains/(losses) in the current year	–	–	0.2	(0.7)	0.2	(0.7)
Total gains/(losses) recognised in the current year	1.4	9.8	(1.8)	2.6	(0.4)	12.4

Amounts recognised in the		UK plan	Overseas plans			Total
Consolidated Statement of	2023	2022	2023	2022	2023	2022
Financial Position	£m	£m	£m	£m	£m	£m
Present value of defined benefit obligations	(91.0)	(90.6)	(27.0)	(22.4)	(118.0)	(113.0)
Fair value of plan assets	93.4	90.4	15.4	13.7	108.8	104.1
Net surplus/(deficit) in plans	2.4	(0.2)	(11.6)	(8.7)	(9.2)	(8.9)

		UK plan	Overseas plans			Total
Reconciliation of	2023	2022	2023	2022	2023	2022
movement in net deficit	£m	£m	£m	£m	£m	£m
At 1 January	(0.2)	(11.0)	(8.7)	(11.3)	(8.9)	(22.3)
Balance transferred from other operating
provisions	–	–	(1.4)	–	(1.4)	–
Current service cost	–	–	(0.7)	(0.4)	(0.7)	(0.4)
Net interest cost	–	(0.2)	(0.3)	(0.1)	(0.3)	(0.3)
Plan administrative cost	–	–	(0.1)	–	(0.1)	–
Settlement/curtailment	–	–	–	0.1	–	0.1
Acquisitions of businesses	–	–	–	(0.5)	–	(0.5)
Past service credit	–	–	0.1	0.1	0.1	0.1
Contributions from sponsoring company
and plan members	1.2	1.2	0.7	0.3	1.9	1.5
Benefits paid	–	–	0.6	0.5	0.6	0.5
Actuarial gains/(losses)	1.4	9.8	(2.0)	3.3	(0.6)	13.1
Foreign exchange difference	–	–	0.2	(0.7)	0.2	(0.7)
At 31 December	2.4	(0.2)	(11.6)	(8.7)	(9.2)	(8.9)

19. Retirement benefit plans continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 165

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

Analysis of movement in the		UK plan		Overseas plans		Total
present value of the defined benefit	2023	2022	2023	2022	2023	2022
obligation	£m	£m	£m	£m	£m	£m
At 1 January	90.6	133.2	22.4	26.5	113.0	159.7
Balance transferred from other operating
provisions	–	–	1.3	–	1.3	–
Current service cost	–	–	0.7	0.4	0.7	0.4
Interest cost	4.3	2.4	0.7	0.2	5.0	2.6
Settlement/curtailment	–	–	–	(0.1)	–	(0.1)
Acquisitions of businesses	–	–	–	2.6	–	2.6
Past service credit	–	–	(0.1)	(0.1)	(0.1)	(0.1)
Contributions from plan members	–	–	0.4	0.2	0.4	0.2
Actuarial losses/(gains) – financial	1.9	(44.5)	1.8	(7.7)	3.7	(52.2)
Actuarial (gains)/losses – demographic	(0.9)	(1.2)	–	–	(0.9)	(1.2)
Actuarial losses/(gains) – experience	0.5	6.0	0.5	(0.1)	1.0	5.9
Benefits paid	(5.4)	(5.3)	(0.8)	(1.4)	(6.2)	(6.7)
Foreign exchange difference	–	–	0.1	1.9	0.1	1.9
At 31 December	91.0	90.6	27.0	22.4	118.0	113.0
Analysed as:
Present value of unfunded defined benefit
obligation	–	–	8.9	5.0	8.9	5.0
Present value of funded defined benefit
obligation	91.0	90.6	18.1	17.4	109.1	108.0

		UK plan	Overseas plans			Total
Reconciliation of movement	2023	2022	2023	2022	2023	2022
in fair value of plan assets	£m	£m	£m	£m	£m	£m
At 1 January	90.4	122.2	13.7	15.2	104.1	137.4
Interest income on assets	4.3	2.2	0.4	0.1	4.7	2.3
Plan administration cost	–	–	(0.1)	–	(0.1)	–
Acquisitions of businesses	–	–	–	2.1	0.0	2.1
Contributions from sponsoring company	1.2	1.2	0.7	0.3	1.9	1.5
Contributions from plan members	–	–	0.4	0.2	0.4	0.2
Actuarial gains/(losses)	2.9	(29.9)	0.4	(4.5)	3.3	(34.4)
Benefits paid	(5.4)	(5.3)	(0.2)	(0.9)	(5.6)	(6.2)
Foreign exchange difference	–	–	0.1	1.2	0.1	1.2
At 31 December	93.4	90.4	15.4	13.7	108.8	104.1

		UK plan	Overseas plans			Total
	2023	2022	2023	2022	2023	2022
Fair value of assets	£m	£m	£m	£m	£m	£m
Equity instruments	3.0	1.7	–	–	3.0	1.7
Corporate bonds	71.5	67.1	–	–	71.5	67.1
Government bonds	14.0	12.5	–	–	14.0	12.5
Cash and financial derivatives and other (net)	4.8	9.0	–	–	4.8	9.0
Insurance policies	0.1	0.1	15.4	13.7	15.5	13.8
	93.4	90.4	15.4	13.7	108.8	104.1

		UK plan	Overseas plans
	2023	2022	2023	2022
Asset class	%	%	%	%
i. Equity	3.2	1.9	–	–
ii. Corporate Bonds	76.6	74.2	–	–
iii. Government Bonds	15.0	13.8	–	–
iv. Cash and financial derivatives and other (net)	5.1	10.0	–	–
v. Insurance contracts	0.1	0.1	100.0	100.0
	100.0	100.0	100.0	100.0

The UK plan assets are invested in active markets which have a quoted market price. The

overseas plan assets are invested in insurance policies.

19. Retirement benefit plans continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023166

Notes to the Accounts continued

Sensitivity analysis

The table below shows the sensitivity of the Consolidated Statement of Financial Position to

changes in the significant pension assumptions based on a reasonably expected change given

current market conditions:

	Impact on plan liabilities as at 31 December 2023
	Change in	UK plan	Overseas plans
	assumption	£m	£m
Discount rate	+1.00%	(9.2)	(3.0)
Rate of price inflation (RPI)	+1.00%	3.0	1.6
Assumed life expectancy at age 65	+1 year	2.5	0.7

The sensitivity analysis is approximate and extrapolation beyond the ranges shown may not

be appropriate.

Defined contribution plans

The total cost of the defined contribution plans for the year was £22.9m (2022: £20.1m). There

were no outstanding or prepaid contributions to these plans as at the end of the year.

20. Deferred tax

The movement in the net deferred tax (assets)/liability is shown below.

		2023	2022
	Note	£m	£m
At 1 January		(0.6)	1.8
Measurement period adjustments		–	(1.4)
Foreign exchange difference		0.3	2.0
Acquisition of subsidiary undertakings	23	0.6	2.5
Disposal of businesses		(0.6)	(8.6)
Transfer of liabilities held for sale		(6.0)	–
Deferred tax on changes in fair value of forward exchange contracts
recognised in the Consolidated Statement of Comprehensive Income		0.9	(0.1)
Deferred tax on re-measurement of net defined benefit liability
recognised in the Consolidated Statement of Comprehensive Income		0.3	3.4
Deferred tax on share-based payments recognised in equity		(1.6)	(0.1)
Deferred tax charge on discontinued operations		–	6.4
Credited to the Consolidated Income Statement	7	(18.6)	(6.5)
At 31 December		(25.3)	(0.6)
Comprising:
Deferred tax liabilities		1.3	15.6
Deferred tax assets		(26.6)	(16.2)
		(25.3)	(0.6)

The movements in deferred tax assets and liabilities during the year are shown on the following

table. Deferred tax assets and liabilities are only offset where there is a legally enforceable right

of offset and they relate to income taxes levied by the same taxation authority.

19. Retirement benefit plans continued

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 167

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

20. Deferred tax continued

				Unrealised profit		Goodwill and
	Accelerated tax	Accruals and		on inter-company		other intangible		2023
	depreciation	provisions	Tax losses	transactions	Pension plans	assets	Other	Total
Net deferred tax (assets)/liabilities	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2023	2.1	(23.4)	(4.3)	(10.5)	(2.7)	35.1	3.1	(0.6)
Foreign exchange difference	–	–	–	0.6	–	(0.3)	–	0.3
Acquisition of subsidiary undertakings	–	–	–	–	–	0.6	–	0.6
Disposal of businesses	–	–	–	–	–	(0.6)	–	(0.6)
Transfer of liabilities held for sale	(0.8)	2.2	–	–	–	(7.4)	–	(6.0)
Deferred tax on changes in fair value of forward exchange contracts recognised in the Consolidated Statement of Comprehensive Income	–	–	–	–	–	–	0.9	0.9
Deferred tax on re-measurement of net defined benefit obligation recognised in the Consolidated Statement of Comprehensive Income	–	–	–	–	0.3	–	–	0.3
Deferred tax on share-based payments recognised in equity	–	–	–	–	–	–	(1.6)	(1.6)
(Credited)/charged to the Consolidated Income Statement	–	(8.4)	(0.4)	0.5	0.2	(2.6)	(7.9)	(18.6)
At 31 December 2023	1.3	(29.6)	(4.7)	(9.4)	(2.2)	24.8	(5.5)	(25.3)

				Unrealised profit		Goodwill and
	Accelerated tax	Accruals and		on inter-company		other intangible		2022
	depreciation	provisions	Tax losses	transactions	Pension plans	assets	Other	Total
Net deferred tax (assets)/liabilities	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2022	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
Acquisition of subsidiary undertakings	–	0.2	(2.2)	–	(0.1)	4.6	–	2.5
Disposal of businesses	0.1	0.6	–	–	–	(9.3)	–	(8.6)
Deferred tax on changes in fair value of forward exchange contracts recognised in the Consolidated Statement of Comprehensive Income	–	–	–	–	–	–	(0.1)	(0.1)
Deferred tax on re-measurement of net defined benefit obligation recognised in the Consolidated Statement of Comprehensive Income	–	–	–	–	3.4	–	–	3.4
Deferred tax on share-based payments recognised in equity	–	–	–	–	–	–	(0.1)	(0.1)
Discontinued Operations deferred tax charge	0.1	0.4	–	–	–	0.1	5.8	6.4
Charge/(credited) to the Consolidated Income Statement	1.5	(6.4)	(0.4)	(3.5)	–	1.6	0.7	(6.5)
At 31 December 2022	2.1	(23.4)	(4.3)	(10.5)	(2.7)	35.1	3.1	(0.6)

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023168

Notes to the Accounts continued

20. Deferred tax continued

Unrecognised temporary differences

Deferred tax assets have not been recognised on the following temporary differences due to

the degree of uncertainty over both the amount and utilisation of the underlying tax losses

and deductions in certain jurisdictions. £2.0m will expire between 2026 and 2030. There is no

expiry date associated with the remaining tax losses of £19.0m which mainly comprise of UK

capital losses.

	2023	2022
	£m	£m
Tax losses	21.0	25.1
	21.0	25.1

It is likely that the unremitted earnings of overseas subsidiaries would qualify for the UK

dividend exemption such that no UK tax would be due upon remitting these earnings to the

UK. However, £287.1m (2022: £306.6m) of those earnings may still result in a tax liability,

principally as a result of the dividend withholding taxes levied by the overseas tax jurisdictions

in which those subsidiaries operate. These tax liabilities are not expected to exceed £14.9m

(2022: £16.3m), of which only £3.2m (2022: £4.5m) has been provided for as the Group is able to

control the timing of the dividends. It is not expected that further amounts will crystallise in the

foreseeable future.

21. Share capital and reserves

		2023		2022
	Number of		Number of
	shares		shares
	Millions	£m	Millions	£m
Issued and fully paid (ordinary shares of 5p each):
At 1 January and 31 December	105.8	5.3	109.1	5.5

During the year ended 31 December 2023, 3,382,896 ordinary shares were repurchased

and cancelled by the Group, in the final tranches of the £300m share buyback programme

announced on 19 April 2022 and part of the first tranche of the £150m share buyback

announced on 11 December 2023. This resulted in a cash outflow of £114.9m, including

transaction fees of £1.2m. The Consolidated Statement of Financial Position also includes an

accrual of £45.9m for the share buyback accrual as at 31 December 2023.

During the year ended 31 December 2022, 6,439,493 ordinary shares were repurchased and

cancelled by the Group as part of the £300m share buyback programme announced on

19 April 2022, resulting in a cash outflow of £191.0m, including transaction fees of £1.2m.

No ordinary shares were issued upon exercise under share option schemes during the year

(2022: nil).

At 31 December 2023, the Group held 4,128,036 treasury shares (2022: 4,596,698). During

the year, 468,662 of these shares were issued to satisfy options exercised by, and SIP

Matching shares awarded to, employees which were granted under the Group’s share schemes

(2022: 170,408).

The Group has an employee benefit trust (EBT), which operates the Spectris Share Incentive

Plan (SIP) to all eligible UK-based employees. The EBT holds shares in Spectris plc for the

purposes of the SIP, further details of which are disclosed in the Directors’ Remuneration

Report. At 31 December 2023, the EBT held 51,807 shares which were purchased from the

market during the year (31 December 2022: 55,570). The costs of funding and administering the

plan are charged to the Consolidated Income Statement in the period to which they relate.

Other reserves

Movements in reserves are set out in the Consolidated Statement of Changes in Equity.

The retained earnings reserve also includes own shares purchased by the Company and

treated as treasury shares. The nature and purpose of other reserves forming part of equity

are as follows:

Translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the

translation of the Financial Statements of foreign subsidiaries, including gains or losses arising

on net investment hedges.

Hedging reserve

This reserve records the cumulative net change in the fair value of forward exchange contracts

where they are designated as effective cash flow hedge relationships.

Merger reserve

This reserve arose on the acquisition of Servomex Limited in 1999, a purchase satisfied

substantially by the issue of share capital and therefore eligible for merger relief under the

provisions of Section 612 of the Companies Act 2006.

Capital redemption reserve

This reserve records the repurchase of the Company’s own shares. During the year, as a

result of the share buyback programme, the capital redemption reserve increased by

£0.2m (2022: £0.3m), reflecting the nominal value of the cancelled ordinary shares.

22. Share-based payments

Spectris Long Term Incentive Plan (LTIP) – awards granted from 2020 onwards with

performance conditions attached

The LTIP is used to grant share awards with performance conditions attached to senior

executives and key employees that are settled in either equity or cash.

Both cash and equity-settled LTIP awards are expected to vest, subject to their performance

conditions, after three years. Vested equity settled awards, which are granted in the form

of nominal share options, must be exercised within the next seven years, whereas vested

conditional share awards and cash-settled awards are paid out on or shortly after the vesting

date. All LTIP awards granted to Executive Directors are subject to an additional two-year

holding period. The Executive Directors’ LTIP awards vest after five years (three-year

performance period plus two-year holding period) and must be exercised within the next

five years.

Subject to the LTIP awards vesting, participants receive additional dividend shares on the

vested shares under the LTIP award. Dividend shares are of equivalent value to the Company’s

dividends paid between the date of grant and the vesting date.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 169

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

22. Share-based payments continued

Spectris Performance Share Plan (PSP) – awards granted prior to 2020

The PSP was used to grant share awards to senior executives and key employees that are

settled in either equity or cash, however the only outstanding PSP awards remaining are all

settled in equity.

Both cash and equity-settled PSP awards are expected to vest, subject to their performance

conditions, after three years. Vested equity settled awards must be exercised within the next

seven years, whereas vested cash-settled awards are paid out on or shortly after the vesting

date. Outstanding PSP awards granted to Executive Directors are subject to an additional

two-year holding period. The Executive Directors’ PSP awards vest after five years (three-year

performance period plus two-year holding period) and must be exercised within the next

five years.

Subject to the PSP awards vesting, participants receive additional dividend shares on the

vested shares under the PSP award. For PSP awards granted in or after 2014, the dividend

shares are of equivalent value to the Company’s dividends paid between the date of grant and

the vesting date. For PSP awards granted before 2014, dividend shares were of equivalent value

to the Company’s dividends paid between the date of grant and the date of exercise.

Linked (tax-advantaged) awards

Some PSP and LTIP awards granted to UK employees are linked to a grant of market value

share options under the terms of HMRC’s tax-advantaged Company Share Option Plan (Linked

(tax-advantaged) awards). Linked (tax-advantaged) awards are granted up to an aggregate

value of the HMRC’s limit at time of grant (£30,000 up to 5 April 2023, £60,000 from 6 April 2023

onwards). The Linked (tax-advantaged) awards have the same performance and vesting

conditions as the PSP/LTIP awards to which they are linked.

When an employee chooses to exercise a PSP/LTIP award which is linked to a Linked (tax-

advantaged) award, both parts are also automatically exercised at the same time. Should there

be a gain on exercise from the Linked (tax-advantaged) award part, then a proportion of the

PSP/LTIP award will lapse to ensure that the overall gross value received from the combined

exercise of these awards is no more than would have been delivered from a stand-alone

equivalent PSP/LTIP award. Should there be no gain on exercise from the Linked (tax-

advantaged) award part, then this part is forfeited and there is no reduction in the remaining

PSP/LTIP award.

LTIP performance conditions

From 2023 onwards, the LTIP base awards granted to Executive Directors and Executive

Committee members are subject to an adjusted earnings per share growth target, a return on

gross capital employed (ROGCE) target and an Environmental, Social and Governance (ESG)

target. Any vesting under these performance conditions will then be further assessed against

both absolute and relative Total Shareholder Return (TSR) metrics which can potentially

increase the vested award via a multiplier (maximum 1.4 times).

The performance conditions attached to LTIP awards granted to senior managers are two-

ninths EPS, two-ninths ROGCE, two-ninths ESG and the remaining one-third solely subject

to continuous employment over the three-year vesting period. LTIP awards below senior

management level are subject to one-third EPS, one-third ROGCE and one third ESG.

Prior to 2023, LTIP awards did not have any ESG condition so the performance related part

of the LTIP base award was evenly split between the EPS and ROGCE targets and the

TSR multiplier still being applied to Executive Directors and Executive Committee members’

awards.

PSP performance conditions

Outstanding PSP awards granted to Executive Directors were subject to the following

performance conditions: one-third EPS; one-third economic profit (EP); and one-third relative

TSR. The vesting outcome against the PSP performance conditions have been confirmed and

the Executive Directors’ outstanding PSP awards are currently in the additional two-year

holding period.

PSP awards granted to other members of the Executive Committee in 2017 and 2018 were

subject to the following performance conditions: one-third subject to EPS; one-third subject to

EP; and one-third solely subject to continuous employment over the three-year vesting period.

In 2019, the same conditions applied for Head Office Executive Committee roles, however the

EP target was replaced for an operating company profit target for the Executive Committee

members who are Presidents of an operating company.

PSP awards granted to other senior head office managers were, until 2016, 50% subject to EPS

and 50% subject to TSR. From 2017 onwards, senior head office management have two-thirds

of their PSP awards subject to EPS and the remaining one-third solely subject to continuous

employment over the three-year vesting period.

PSP awards granted to executives and senior managers of the Group’s operating companies

until 2016 had two-thirds subject to an operating company profit target and one-third subject

to EPS. In 2017 and 2018, the performance conditions were two-thirds operating company

profit targets and one-third continuous employment over the three-year vesting period.

In 2019, the performance conditions were one-third operating company profit targets,

one-third EPS and one-third continuous employment over the three-year vesting period.

Normally, PSP awards granted to participants who leave employment prior to vesting will be

forfeited. In the event a participant leaves due to a qualifying reason, they receive a time

pro-rated entitlement.

Spectris Reward Plan (SRP) – awards granted from 2020 onwards with no performance

conditions attached

The SRP is used to grant share awards with no performance conditions attached to key

employees that are settled in equity or, in limited circumstances, in cash. SRP awards cannot

be granted to an Executive Director of Spectris plc.

Both cash and equity-settled SRP awards are expected to vest after three years. Vested equity

settled awards, which are granted in the form of nominal share options, must be exercised

within the next seven years, whereas vested conditional share awards and cash-settled awards

are paid out on or shortly after the vesting date.

On vesting, participants receive additional dividend shares on the vested shares under the SRP

award. Dividend shares are of equivalent value to the Company’s dividends paid between the

date of grant and the vesting date.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023170

Notes to the Accounts continued

22. Share-based payments continued

Spectris Deferred Bonus Plan (DBP) – awards granted from 2021 onwards with no

performance conditions attached

The DBP is used to grant share awards with no performance conditions attached to Executive

Directors and are settled in equity. This represents the 50% of the Executive Directors’ annual

bonus that is deferred into shares each year.

DBP awards are expected to vest after three years and must be exercised within the next seven

years. On vesting, the Executive Directors receive additional dividend shares on the vested

shares under the DBP award. Dividend shares are of equivalent value to the Company’s

dividends paid between the date of grant and the vesting date.

Spectris Share Incentive Plan (SIP)

The SIP, a UK tax-advantaged share matching plan, was launched after it was approved by

shareholders at the May 2018 AGM. UK employees can invest up to £150 per month to buy

ordinary shares in the Company (Partnership shares) tax efficiently and for every five

Partnership shares purchased, the Company will gift one free ordinary share (Matching share).

Matching shares need to be held in the SIP Trust for at least three years otherwise these shares

are potentially subject to forfeiture. The Company incurs a charge on any Matching shares

awarded under the SIP. The charge in 2023 was £0.1m (2022: £0.1m).

The number of outstanding share incentives are summarised below:

	2023	2022
	Number	Number
Incentive plan	thousands	thousands
Equity-settled:
Long Term Incentive Plan	1,423	1,385
Performance Share Plan	76	135
Long Term Incentive Plan (Linked tax-advantaged)	92	99
Performance Share Plan (Linked tax-advantaged)	3	8
Spectris Reward Plan	183	262
Deferred Bonus Plan	57	38
Total equity-settled	1,834	1,927
Cash-settled:
Long Term Incentive Plan Cash	64	71
Spectris Reward Plan Cash	13	15
Total cash-settled	77	86
Total outstanding	1,911	2,013

Share options outstanding at the end of the year (equity settled)

Long Term Incentive Plan,				2023		2022
Performance Share Plan,				Weighted		Weighted
Spectris Reward Plan and		Remaining		average		average
Deferred Bonus Plan		contractual		exercise		exercise
		life of	Number	price	Number	price
Year of grant		options	thousands	£	thousands	£
2015	PSP	2 years	1	0.05	1	0.05
2016	PSP	3 years	6	0.05	9	0.05
2017	PSP	4 years	10	0.05	37	0.05
2018	PSP	5 years	11	0.05	26	0.05
2019	PSP	6 years	48	0.05	62	0.05
2020	LTIP/ SRP	7 years	170	0.05	515	0.05
2021	LTIP/ SRP/DBP	8 years	428	0.05	533	0.05
2022	LTIP/ SRP/DBP	9 years	583	0.05	637	0.05
2023	LTIP/ SRP/DBP	10 years	482	0.05	–	–
			1,739	0.05	1,820	0.05

The weighted average remaining contractual life of these LTIP, SRP and PSP equity settled

awards is 8.68 years (2022: 8.85 years).

			2023			2022
		Weighted	Weighted		Weighted	Weighted
Long Term Incentive Plan,		average	average		average	average
Spectris Reward Plan and		exercise	fair value at		exercise	fair value at
Performance Share Plan	Number	price	grant date	Number	price	grant date
(equity awards)	thousands	£	£	thousands	£	£
At 1 January	1,820	0.05		1,776	0.05
Shares granted	508	0.05	30.22	711	0.05	21.13
Addition of reinvested
dividends	38	–		17	–
Exercised	(436)	0.05		(166)	0.05
Forfeited	(191)	0.05		(518)	0.05
At 31 December	1,739	0.05		1,820	0.05
Exercisable at 31 December	128	0.05		120	0.05

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 171

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

22. Share-based payments continued

				2023		2022
Long Term Incentive Plan				Weighted		Weighted
and Performance Share Plan		Remaining		average		average
(Linked tax-advantaged)		contractual		exercise		exercise
		life of	Number	price	Number	price
Year of grant		options	thousands	£	thousands	£
2017	PSP	4 years	1	26.31	1	26.31
2018	PSP	5 years	–	26.77	1	25.80
2019	PSP	6 years	2	26.69	5	26.69
2020	LTIP	7 years	4	22.39	29	22.72
2021	LTIP	8 years	27	32.01	30	31.95
2022	LTIP	9 years	38	26.77	41	26.76
2023	LTIP	10 years	23	34.54	–	–
			95	29.99	107	27.11

The weighted average remaining contractual life of the PSP and LTIP (Linked tax-advantaged)

awards is 8.77 years (2022: 8.93 years).

			2023			2022
		Weighted	Weighted		Weighted	Weighted
		average	average		average	average
Long Term Incentive Plan and		exercise	fair value at		exercise	fair value at
Performance Share Plan	Number	price	grant date	Number	price	grant date
(Linked tax-advantaged)	thousands	£	£	thousands	£	£
At 1 January	107	27.11		101	27.05
Shares granted	28	34.55	7.84	45	26.74	5.81
Exercised	(28)	23.60		(6)	25.99
Forfeited	(12)	29.86		(33)	26.62
At 31 December	95	29.99		107	27.11
Exercisable at 31 December	7	24.13		7	26.76

Share options outstanding at the end of the year (cash-settled)

Long Term Incentive Plan,				2023		2022
Spectris Reward Plan and				Weighted		Weighted
Performance Share Plan		Remaining		average		average
(Phantom allocations)		contractual		exercise		exercise
		life of	Number	price	Number	price
Year of grant		options	thousands	£	thousands	£
2020	LTIP/SRP	–	–	–	28	0.05
2021	LTIP/SRP	1 year	22	0.05	27	0.05
2022	LTIP/SRP	2 years	28	0.05	31	0.05
2023	LTIP/SRP	3 years	27	0.05	–	–
			77	0.05	86	0.05

The weighted average remaining contractual life of the cash-settled awards is 2.06 years

(2022: 1.99 years).

			2023			2022
			Weighted			Weighted
Long Term Incentive Plan,			average			average
Spectris Reward Plan and			fair value at			fair value at
Performance Share Plan	Number	Exercise	grant date	Number	Exercise	grant date
(Phantom allocations)	thousands	£	£	thousands	£	£
At 1 January	86	0.05		67	0.05
Shares granted	30	0.05	34.64	33	0.05	26.93
Addition of reinvested
dividends	2	–		–	–
Exercised	(31)	0.05		(4)	0.05
Forfeited	(10)	0.05		(10)	0.05
At 31 December	77	0.05		86	0.05
Exercisable at 31 December	–	–		–	–

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023172

Notes to the Accounts continued

22. Share-based payments continued

Share-based payment expense

Share options are valued using the stochastic option pricing model (also known as the Monte

Carlo model) in respect of TSR, and the Black-Scholes model for all other options, with support

from an independent remuneration consultant. For options granted in 2023 and 2022, the fair

value of options granted and the assumptions used in the calculation, are as follows:

				Equity-settled		Cash-settled
		Share awards		(Linked tax-advantaged)
		LTIP & SRP		LTIP & SRP		LTIP Cash & SRP Cash
	2023	2022	2023	2022	2023	2022
Weighted average share
price at date of grant (£)	34.68	26.94	34.60	26.97	34.69	26.98
Weighted average exercise
price (£)	0.05	0.05	34.55	26.74	34.61	0.05
Expected volatility	26.67%	28.41%	26.61%	28.55%	26.67%	28.58%
Expected life	3.36 yrs	3.30 yrs	3 yrs	3.07 yrs	3 yrs	3 yrs
Risk-free rate	3.31%	1.37%	3.40%	1.39%	3.31%	1.39%
Expected dividends
(expressed as a yield)	–	–	–	–	–	–
Weighted average fair values at date of grant (£):
TSR condition	25.19	10.25	n/a	n/a	n/a	n/a
ESG condition	29.49	n/a	7.84	n/a	34.64	n/a
ROGCE condition	29.49	20.38	7.84	5.81	34.64	26.91
EPS condition	29.49	20.38	7.84	5.81	34.64	26.91
Service condition	33.83	26.48	7.83	5.84	34.64	26.98
Weighted average fair values at 31 December (£):
ROGCE condition (cash- settled)					36.86	29.09
ESG condition (cash-settled)					36.09	n/a
EPS condition (cash-settled)					36.86	29.09
Service condition
(cash-settled)					36.81	29.12

The expected volatility is based on historical volatility over the expected term. The expected life

is the average expected period to exercise. The risk-free rate of return is the yield on zero-

coupon UK government bonds of a term consistent with the assumed option life.

The weighted average share price at the date of exercise for share options exercised in 2023 was

£35.50 (2022: £28.27). The weighted average fair value of cash-settled options outstanding at

31 December 2023 is £36.79 (2022: £29.10). The Group recognised a total share-based payment

charge from continuing and discontinued operations of £14.2m (2022: £11.1m) in the

Consolidated Income Statement, of which £13.1m (2022: £10.4m) related to equity-settled

share-based payment transactions.

23. Acquisitions

2023

MicroStrain

On 19 September 2023, the Group acquired the MicroStrain Sensing Systems business

(MicroStrain) for a gross consideration of £29.1m (consisting of £29.6m of cash paid and

£0.5m estimated completion true-up receivable included in deferred consideration).

MicroStrain is an OEM and retailer of inertial and wireless sensor systems serving industrial and

tactical applications across different industries. The transaction is in line with Spectris’ strategy

to make synergistic acquisitions to enhance and grow its businesses. MicroStrain will be

integrated into the Spectris Dynamics reportable segment and cash generating unit.

The fair value of the assets and liabilities acquired have been provisionally determined based on

the information available at the time. The excess of the fair value of consideration paid over the

fair value of the net tangible assets acquired is represented by the following intangible assets:

customer-related relationships, order book and goodwill. Goodwill arising is attributable to the

assembled workforce, synergies from cross-selling goods and services and cost synergies.

In the Consolidated Income Statement for the year ended 31 December 2023, sales of £3.9m

and statutory operating loss of £0.8m have been included for the acquisition of MicroStrain.

Group revenue and statutory operating profit from continuing operations for the year ended

31 December 2023 would have been £1,461.0m and £189.9m, respectively, had this acquisition

taken place on the first day of the financial year.

Where appropriate, a detailed exercise has been undertaken to assess the fair value of assets

acquired and liabilities assumed, supported by the use of third-party experts. The valuation of

the above intangible and tangible assets requires the use of assumptions and estimates.

Intangible asset assumptions consist of future growth rates, expected inflation and attrition

rates, discount rates used and useful economic lives. Due to their contractual due dates, the fair

value of receivables approximates to the gross contractual amounts receivable. The amount of

gross contractual receivables not expected to be recovered is immaterial. There are no material

contingent liabilities recognised in accordance with IFRS 3 (Revised).

Acquisition-related costs (included in administrative expenses) amount to £1.5m.

EMS

On 2 October 2023, the Group acquired 100% of the share capital of Particle Measuring

Technique Ireland Limited (EMS) and its subsidiaries for net consideration of £6.4m, made up

of £9.0m gross consideration in cash less £2.6m net cash acquired. There was £0.4m deferred

consideration recognised on this acquisition, which is payable at a future date subject to no

unexpected disputes relating to the acquisition arising. EMS is a long-established partner and

exclusive distributor of Spectris Scientific’s PMS products in the UK and Ireland. The transaction

is in line with Spectris’ strategy to make synergistic acquisitions to enhance and grow its

businesses. EMS will be integrated into the Spectris Scientific reportable segment and the PMS

cash generating unit.

The excess of the fair value of consideration paid over the fair value of the net tangible assets

acquired is represented by the following intangible assets: customer-related relationships,

order book and goodwill. Goodwill arising is attributable to the assembled workforce, synergies

from cross-selling goods and services and cost synergies.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023 173

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

Notes to the Accounts continued

23. Acquisitions continued

In the Consolidated Income Statement for the year ended 31 December 2023, sales of £0.4m

and statutory operating loss of £0.2m have been included for the acquisition of EMS. Group

revenue and statutory operating profit from continuing operations for the year ended

31 December 2023 would have been £1,453.9m and £189.6m, respectively, had this acquisition

taken place on the first day of the financial year.

Where appropriate, a detailed exercise has been undertaken to assess the fair value of

assets acquired and liabilities assumed. The valuation of the above intangible and tangible

assets requires the use of assumptions and estimates. Intangible asset assumptions consist

of future growth rates, attrition rates, discount rates used and useful economic lives. Due to

their contractual due dates, the fair value of receivables approximates to the gross contractual

amounts receivable. The amount of gross contractual receivables not expected to be

recovered is immaterial. There are no material contingent liabilities recognised in accordance

with IFRS 3 (Revised).

Acquisition-related costs (included in administrative expenses) amount to £0.3m.

XRD product line

On 27 October 2023, the Group completed a technology and asset purchase agreement with

Freiberg Instruments to acquire the technology to the product line for six X-ray diffraction

(XRD) products for gross consideration of £13.0m. There was £2.6m deferred consideration

recognised on this acquisition. The transaction strengthens Spectris Scientific portfolio in the

semiconductor market. There are no material contingent liabilities recognised in accordance

with IFRS 3 (Revised). The fair value of the net assets is final. The acquisition is included in the

Spectris Scientific reportable segment and the Malvern Panalytical cash generating unit.

The excess of the fair value of consideration paid over the fair value of the net tangible assets

acquired is represented by a technology intangible asset and goodwill. Goodwill arising is

attributable to the synergies from cross-selling goods and services and cost synergies.

In the Consolidated Income Statement for the year ended 31 December 2023, statutory

operating profit included £0.1m of costs relating to the XRD product line. Group revenue and

statutory operating profit for the year ended 31 December 2023 would have been £1,452.0m

and £188.9m, respectively, had this acquisition taken place on the first day of the financial year.

Acquisition-related costs (included in administrative expenses) amounted to £0.8m in 2023.

The fair values included in the table below relate to the acquisition of MicroStrain, EMS and XRD

product line during the year:

				2023
			XRD	Total fair
	MicroStrain	EMS	product line	value
	£m	£m	£m	£m
Intangible assets	11.2	4.5	6.0	21.7
Property, plant and equipment	0.7	–	–	0.7
Right-of-use assets	1.0	0.1	–	1.1
Inventories	2.8	0.2	–	3.0
Trade and other receivables	0.2	1.4	–	1.6
Cash and cash equivalents	–	2.6	–	2.6
Trade and other payables	(1.0)	(1.5)	–	(2.5)
Lease liabilities	(1.0)	–	–	(1.0)
Current tax liabilities	–	(0.1)	–	(0.1)
Deferred tax liabilities	–	(0.6)	–	(0.6)
Net assets acquired	13.9	6.6	6.0	26.5
Goodwill	15.2	2.4	7.0	24.6
Gross consideration	29.1	9.0	13.0	51.1
Adjustment for cash acquired	–	(2.6)	–	(2.6)
Net consideration	29.1	6.4	13.0	48.5

	2023	2022
Analysis of cash outflow in Consolidated Statement of Cash Flows	£m	£m
Gross consideration in respect of acquisitions during the year	51.1	116.8
Adjustment for net cash acquired	(2.6)	(1.5)
Net consideration in respect of acquisitions during the year	48.5	115.3
Deferred and contingent consideration on acquisitions included in net
consideration during the year to be paid in future years	(2.5)	(2.2)
Cash paid during the year in respect of acquisitions during the year	46.0	113.1
Cash paid in respect of prior years’ acquisitions	3.5	1.6
Net cash outflow relating to acquisitions	49.5	114.7

2022

Creoptix

On 7 January 2022, the Group acquired 100% of the share capital of Creoptix AG (Creoptix) for

net consideration of £37.0m, made up of £37.3m of gross consideration (consisting of £35.1m

of cash paid and £2.2m of contingent consideration) less £0.3m of cash acquired. Creoptix is

a bioanalytical sensor company, which provides solutions to accelerate discovery and

development of new pharmaceutical drugs, substances and products. The transaction is in line

with Spectris’ strategy to make synergistic acquisitions to enhance and grow its businesses.

Creoptix is included in the Spectris Scientific reportable segment and the Malvern Panalytical

cash generating unit.

SPECTRIS PLC ANNUAL REPORT AND ACCOUNTS 2023174

Notes to the Accounts continued

23. Acquisitions continued

The excess of the fair value of consideration paid over the fair value of the net tangible assets

acquired is represented by a technology intangible asset and goodwill. Goodwill arising is

attributable to the assembled workforce, in process research, expected future customer

relationships and synergies from cross-selling goods and services.

In the Consolidated Income Statement for the year ended 31 December 2022, sales of £3.9m

and statutory operating loss of £4.2m have been included for the acquisition of Creoptix. As

Creoptix was acquired near to the start of the current reporting period, Group revenue and

statutory operating profit from continuing operations for the year ended 31 December 2022

would be the approximately the same had this acquisition taken place on the first day of the

financial period.