Spectris plc - 2024 half year
results
30 July 2024 - Spectris plc (SXS:
LSE), the expert in providing insight through precision
measurement, announces half year results for the six months ended
30 June 2024.
Step change in strategic execution to drive long-term growth
in the face of softer end markets
·
Acquisition of SciAps Incorporated (SciAps) and
Micromeritics Instrument Corporation (Micromeritics) strengthens
our leadership in materials characterisation for advanced materials
analysis
·
Our commitment to R&D and innovation is
delivering a record level of new products to drive organic growth
and market share gains
·
Returning cash to shareholders through
continuation of £150 million share buyback, with £100 million
remaining
·
As announced in June, our first half performance
reflects a tough comparator, softer conditions in some end markets
and the rephasing of £22 million sales and £15 million operating
profit into the second half relating to our new ERP
system
·
Order book of £532 million at the end of the
period provides good visibility into the second half
·
Excluding any incremental profit associated with
the acquisition of SciAps and Micromeritics, we expect to deliver
adjusted operating profit for the full year in line with current
market expectations[1]
Andrew Heath, CEO, said:
"In 2019, we set out to evolve our portfolio to increase the
quality, growth, margin profile and resilience of the Group. The
combination of our disposal programme and the redeployment of
capital to acquire and build a world-class business, means we have
truly reshaped the portfolio in the last five years, providing a
high-quality platform from which to drive sustainable growth well
into the future. This has structurally increased our ability to
deliver against our medium-term financial targets. And as I look
ahead, I have never been as excited about the future potential of
the Group as I am today.
We have been very active across the Group over the last six
months. We have launched a record number of exciting products,
completed our portfolio rationalisation programme with the sale of
Red Lion in April, and in July announced the acquisition of two
highly complementary businesses. I am delighted with the addition
of SciAps and Micromeritics and look forward to them joining the
Group. Both are high-quality, high-growth businesses, that will
further strengthen our customer offering.
As a result of our financial performance in the first half we
will be taking action to accelerate further self-help measures in
the second half. With a portfolio of great businesses, a clear
strategy to deliver growth and expand margins, we are well placed
and in a strong position as we look ahead to 2025 and
beyond."
|
|
Adjusted1
H1 2024
|
Adjusted1
H1
2023
|
LFL
change1
|
Statutory
H1 2024
|
Statutory
H1
2023
|
Statutory change
|
|
Sales (£m)
|
589.7
|
702.5
|
(10%)
|
589.7
|
702.5
|
(16%)
|
|
Operating profit (£m)
|
61.1
|
102.1
|
(35%)
|
24.0
|
70.5
|
(66%)
|
|
Operating margin (%)
|
10.4%
|
14.5%
|
(400bps)
|
4.1%
|
10.0%
|
(590bps)
|
|
Profit before tax (£m)
|
62.8
|
103.4
|
|
235.3
|
68.5
|
244%
|
|
Basic earnings per share
(pence)
|
47.9p
|
77.2p
|
|
179.6p
|
50.0p
|
259%
|
|
Cash generated from
operations
|
|
|
|
57.4
|
108.9
|
(47%)
|
|
Adjusted cash flow conversion
(%)
|
111%
|
117%
|
|
|
|
|
|
Return on gross capital employed
(%)
|
16.8%
|
16.7%
|
|
|
|
|
|
Dividend per share
(pence)
|
|
|
|
26.6p
|
25.3p
|
5%
|
1.
Alternative performance measures
(APMs) are used consistently throughout this press release
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 Condensed Consolidated Interim
Financial Statements.
Chief Executive's Review
Summary
Over the last five years, we have
simplified the Group and created a faster-growing, more profitable
business and transformed our offering through the creation of two,
world class divisions of scale in Spectris Scientific and Spectris
Dynamics. And in doing so we have deployed all aspects of our
capital allocation framework. Since 2018 we have sold nine
businesses redeploying that capital in 13 acquisitions; we have
returned close to £1 billion through a combination of share
buybacks and our progressive dividend; and we are on a journey to
drive operational excellence across the Group through our
enterprise-wide ERP system and SBS. As a result, we have
increased ROGCE from 13.5% (FY 2019) to 18.5% (FY 2023) over the
same period.
The strategic progress we have
made, and the portfolio of world class businesses that we have
today, mean that I have never been more excited about the
opportunities for Spectris, and have even greater confidence in
delivering our medium-term objectives of 6-7% through cycle growth,
with our self-help initiatives supporting our progress towards
margins of at least 20%+.
The sale of our Red Lion Controls
business during the first half concluded the portfolio
transformation envisaged in 2019, with Spectris now focused on high
growth, high value premium precision measurement businesses. In
2024 we have significantly strengthened the Spectris Scientific
Division, creating a world leader in advanced materials analysis,
focused on high-growth end markets. It is home to Malvern
Panalytical, PMS and now the Servomex business. The two
strategically complementary acquisitions of high-quality,
high-growth businesses in SciAps and Micromeritics, announced
shortly after the period end, will significantly strengthen our
leadership position and expand our offering to customers, while
delivering material synergies. This is entirely consistent with our
on-going portfolio strategy to build a higher-quality,
higher-growth, business.
This year is set to be a record
year for innovation, supporting organic growth and market share
gains. Our commitment to innovation and solving our customers most
complex challenges, means we have launched a number of exciting,
new products, across both divisions, already this year, with a
strong pipeline to come.
We successfully completed the
first phase of the rollout of our new ERP system, which together
with the Spectris Business System (SBS), represent key building
blocks towards Group operating margins of at least 20%. The new
system is working very well overall, although some of the cut-over
issues that have occurred, while typical with the complexity of a
change of this magnitude, impacted our results in the period. This
is simply a timing issue and we expect the impact to be fully
recovered over the course of the second half. We can already see
the opportunity to significantly improve operating effectiveness
and efficiency through the deployment of the new system.
We are
continuing the £150 million share buyback programme, with £100
million remaining. On completion, this
will take the total amount of cash returned to shareholders through
share buybacks to £650 million over the last 5
years.
After three years of strong growth
and against the backdrop of ongoing macroeconomic uncertainty, we
always expected 2024 to be a slower year, before returning to
growth in 2025 and 2026. Our first half
performance compares with a particularly strong comparative period
last year (LFL sales growth of 19%). As noted in our trading update
on 19 June, our first half performance has been impacted by two
factors:
· First, softer underlying trading driven by weaker demand in
China, a significant reduction in battery development - associated
with the slowdown in sales of electric vehicles - and continued,
subdued trading in pharmaceuticals. This reduced sales and
operating profit by around £15 million and £10 million respectively
in the first half. As such, we will be taking action to accelerate
further self-help measures in the second half.
· In
addition, the anticipated disruption to operations associated with
the global implementation of our new ERP system across Malvern
Panalytical in April, lasted longer than expected, resulting in the
rephasing of £ 22 million of sales and £15 million of operating
profit to the second half. While the quantum is slightly higher
than originally estimated at the time of our June update, we
continue to expect to recover all of these sales in the second
half, with no impact on the full year.
Notwithstanding softer trading in
the first half, we are encouraged by signs that market conditions
will improve in the second half, albeit the timing remains
uncertain. Our order book of £532 million at the end of the period
provides good visibility into the second half.
Outlook
Excluding any incremental profit
associated with the acquisition of SciAps and Micromeritics, we
expect to deliver adjusted operating profit for the full year in
line with current market expectations[2].
Financial performance
After adjusting for Red Lion, our
order book at the end of June at £532 million was higher than the
December year-end, providing good visibility into the second
half. Order intake of £613.9 million in
the first half was 6% lower than the comparative period on a LFL
basis with continuing strong demand and order growth in both
A&D and Automotive, more than offset by softer demand in other
end markets, particularly Academia. On a
LFL basis, demand in both North America and Europe was solid with
orders 3% lower in both regions, with Asia down 12% driven by
continuing softer markets in China.
LFL sales were 10% lower, down 16%
on a reported basis, reflecting a 3pp net impact from disposals and
acquisitions and 3pp from adverse foreign exchange. On a regional
basis, sales were 9% lower in both North America and Europe with
sales 11% lower in Asia on a LFL basis.
LFL sales performance across our
end markets is set out in the table below with further information
on end market trends contained in the reviews for the Scientific
and Dynamics divisions.
|
End market
|
Sales
H1 2024
(£m)
|
Sales
H1 2024
% of total
Group
|
LFL sales
Growth
|
Expected medium-term market
growth
|
|
Life sciences /
pharmaceutical
|
102
|
17%
|
(22%)
|
5-7%
|
|
Technology-led
industrials
|
109
|
19%
|
(2%)
|
5-7%
|
|
Electronics and
semiconductor
|
74
|
12%
|
4%
|
6-8%
|
|
Automotive
|
69
|
12%
|
0%
|
4-6%
|
|
Materials
|
59
|
10%
|
(8%)
|
5-6%
|
|
Academic research
|
51
|
9%
|
(21%)
|
5-6%
|
|
Other
|
126
|
21%
|
(12%)
|
3-5%
|
The lower sales and product mix
resulted in a 210bps decrease in adjusted gross margins. Adjusted
operating margin of 10.4%, was 410bps lower than the comparative
period (H1 2023: 14.5%) resulting in adjusted operating profit of
£61.1 million (H1 2023: £102.1 million) a decrease of 35% on a LFL
basis (40% on a reported basis).
Adjusted earnings per share was
38% lower at 47.9 pence (H1 2023: 77.2 pence). Statutory operating
profit of £24.0 million (H1 2023: £70.5 million) was 66% lower.
This gave a 4.1% statutory operating margin (H1 2023: 10.0%).
Cash conversion was 111% on an adjusted basis in the first half (H1
2023: 117%), with our strong balance sheet providing the Group with
significant flexibility.
Strategic progress
We continue to make strong
progress against the framework set out in October 2022, in our
Strategy for Sustainable Growth, driven by our business
model.
Under Spectris Scientific, we have
brought together three complementary precision instruments
businesses: Malvern Panalytical, Particle Measuring Systems and
Servomex. Each of these businesses has leading positions at
the premium end of common markets, where their deep domain
knowledge is essential and drives high levels of customer
centricity, where their depth of capability and expertise play a
vital role in making the invisible visible for our customers. The
acquisitions of Micromeritics and SciAps are both highly
complementary and will further add to these strengths.
Additionally, as one division of scale, this provides real
opportunities to collaborate, sharing best practice in areas like
operational effectiveness, including common IT systems and SBS as
well as R&D.
In Spectris Dynamics we are
pleased with the acquisition of
MicroStrain which completed at the end of last year, adding to the
highly successful acquisition of Dytran in 2022.
We invested £52.9 million
(H1 2023: £52.2
million) in R&D in the first half and launched a number of
exciting, new products with more detail contained in the divisional
review sections. The initial customer response to these products
and others launched during the period has been extremely positive,
and with a strong pipeline and further launches to come over the
coming months, we expect 2024 to be a record year for new product
introductions for the Group, which will support future organic
growth and market share gains.
We continue to leverage SBS to
drive operational excellence and deliver tangible cost savings,
remaining on track to deliver another c.£10 million in savings in
2024. We have continued to develop and promote our 'Go For Gold'
programme with seven Bronze sites pursuing Silver and an additional
five sites targeting Bronze by the end of this year, with the aim
to have all operational sites certified Bronze by the end of
2025.
In April, we successfully
completed the first phase of the rollout of our new ERP system with
the implementation covering the entire Malvern Panalytical
business. In the second half we will begin a phased roll out of the
new system across Spectris Dynamics which is expected to complete
in 2025. The new system replaces a number of legacy ERP systems and
helps standardise, simplify and automate processes to enhance our
operations, enabling our businesses to become more efficient and
scalable.
We remain on track to meet our Net
Zero ambition and a full update will be provided at the year-end as
we progress our Net Zero Transition Plan. At Spectris, we recognise the
importance of creating the right environment for our people to
thrive and develop and I am pleased to say that the work we have
done in this area has once again resulted in an increase in
engagement levels as measured by our annual employee engagement
survey. In 2024, our engagement scores increased to 4.00,
increasing for the third successive year and up from 3.92 in 2023
(2022: 3.86).
The strategic progress we have
made in the first half is due to the hard work of my colleagues and
the continued execution of our Strategy for Sustainable Growth, and
I want to thank everyone across the Group for what we have
delivered.
Capital allocation
We had net cash position at the
period end (30 June 2024) of £292.5 million (30 June 2023: £214.3
million). This, together with good cash generation, provides us
with the flexibility to pursue our organic growth investment,
return capital to shareholders and execute our targeted M&A
strategy.
On 4 July, we announced the
acquisition of SciAps for consideration of up to $260 million (£205
million), including a deferred element of $60 million, which will
be integrated into Malvern Panalytical within Spectris Scientific.
SciAps has a proven track record of growth and will add
laser-induced, backscatter spectroscopy (LIBS) technology to Malvern Panalytical's portfolio and
provide access to the adjacent hand-held XRF market.
It will create a highly
synergistic combination, with SciAps handheld portfolio used in the
field, complementing Malvern Panalytical's range of laboratory and
benchtop equipment. When combined, we will provide a comprehensive
suite of technology offerings in attractive end markets,
particularly mining, NDT and product circularity/recycling, while
also providing the ability to rapidly expand our digital offering
to these customers.
On 16 July, we announced an
agreement to acquire Micromeritics
Instrument Corporation (Micromeritics) for upfront consideration of
$630 million (£485 million) plus a deferred element up to $53
million (£41 million). Micromeritics is a
proven, high-margin, high-growth business which, together with
Malvern Panalytical will create the leading particle
characterisation business for advanced materials analysis, with a
highly differentiated and fully integrated offering. The addition
of Micromeritics' technologies alongside Malvern Panalytical's
capabilities will enable the comprehensive characterisation of
particles by detailing their size, count, surface properties and
behaviour, thus supporting the entire customer workflow from
R&D to QC/QA applications. With highly complementary product
portfolios, the combination will also strengthen Spectris' offering
in the rapidly growing, clean tech markets and will deliver
significant synergies.
These acquisitions will be funded
through a combination of our cash resources and new external debt,
with the strong free cash flow generation of the Group expected to
bring leverage down to around 1.3x by the end of 2025 and below
1.0x beyond that.
We recognise the importance of a
growing dividend to our shareholders and are committed to a
progressive dividend policy. The Board is declaring an interim
dividend of 26.6 pence per share, growth of 5% on last year (H1
2023: 25.3 pence). The interim dividend will be payable on 8
November to shareholders on the register on 4 October 2024. The
ex-dividend date is 3 October.
We completed the first £50 million
tranche of our £150 million share buyback during the period with
£100 million remaining.
Board update
On 19 June, we announced that
Derek Harding will take up a new role as President of our enlarged
Spectris Scientific Division from 1
September 2024. Derek will remain on the Board as an Executive
Director of the Company in his new role and will continue to report
to Andrew Heath, Chief Executive.
Angela Noon will join the company
as an Executive Director and Chief Financial Officer on 1 September
2024. Angela is currently CFO at Royal Mail and was previously CFO
for Siemens UK & Ireland.
Contacts:
Spectris plc
Andrew Heath, Chief Executive
Officer
Derek Harding, Chief Financial
Officer
Mathew Wootton, Director of
Investor Relations
Teneo
Martin Robinson / Giles
Kernick
+44 20 7353 4200
Analyst meeting and live webcast
A presentation to analysts and
investors will take place at Bank of America, 2 King Edward Street,
London, EC1A 1HQ begin at 08:00hrs BST, hosted by Andrew Heath,
Chief Executive and Derek Harding, Chief Financial Officer to
discuss this statement. The presentation will be broadcast live via
the following link:
https://www.investis-live.com/spectris/668d52cb99bcb24a0007c9c7/lkei
Dial-In: United Kingdom
(Local): +44 20 3936 2999; United Kingdom (Toll-Free): +44 800 358
1035
Global Dial-In Numbers
Access Code: 485405
Copies of this press release are
available to the public from the registered office at Melbourne
House, 44-46 Aldwych, London, WC2B 4LL and on the Company's website
at www.spectris.com.
About Spectris
Spectris combines precision with
purpose, delivering progress for a more sustainable world. We
provide critical insights to our customers through premium
precision measurement solutions combined with technical expertise
and deep domain knowledge. Precision is at the heart of what we do
- our leading, high-tech instruments and software equip our
customers to solve some of their greatest challenges to make the
world cleaner, healthier and more productive. We are focused on two
key divisions - Spectris Scientific and Spectris Dynamics, which
are placed in technology-driven end markets, with strong
fundamentals and attractive growth trajectories. We have leading
market positions in premium segments and employ 7,000 people
located in more than 30 countries, all united behind our purpose to
deliver value beyond measure for all our stakeholders. For more
information, visit www.spectris.com.
Divisional reviews
Summary
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
Group
Costs
|
Total
|
|
|
H1 2024
|
H1
2023
|
H1 2024
|
H1
2023
|
H1 2024
|
H1
2023
|
H1 2024
|
H1
2023
|
H1 2024
|
H1
2023
|
|
Sales (£m)
|
320.0
|
381.1
|
249.4
|
264.5
|
20.3
|
56.9
|
|
|
589.7
|
702.5
|
|
LFL sales growth (%)
|
(12%)
|
|
(5%)
|
|
(28%)
|
|
|
|
(10%)
|
|
|
Statutory operating profit
(£m)
|
16.4
|
53.8
|
10.7
|
18.3
|
3.5
|
11.1
|
(6.6)
|
(12.7)
|
24.0
|
70.5
|
|
Statutory operating margin
(%)
|
5.1%
|
14.1%
|
4.3%
|
6.9%
|
17.2%
|
19.5%
|
|
|
4.1%
|
10.0%
|
|
Adjusted operating profit
(£m)
|
33.4
|
65.7
|
30.6
|
35.8
|
3.7
|
13.3
|
(6.6)
|
(12.7)
|
61.1
|
102.1
|
|
LFL adjusted operating profit
change (%)
|
(49%)
|
|
(11%)
|
|
(46%)
|
|
|
|
(35%)
|
|
|
Adjusted operating margin
(%)
|
10.4%
|
17.2%
|
12.3%
|
13.5%
|
18.2%
|
23.4%
|
|
|
10.4%
|
14.5%
|
|
LFL adjusted operating margin
change (bps)
|
(740bps)
|
|
(80bps)
|
|
(600bps)
|
|
|
|
(400bps)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales % of Group sales
|
54%
|
54%
|
42%
|
38%
|
4%
|
8%
|
|
|
100%
|
100%
|
Spectris Scientific
|
|
|
H1 2024
|
H1
2023
|
Change
|
LFL
change
|
|
Statutory sales (£m)
|
|
320.0
|
381.1
|
(16%)
|
(12%)
|
|
Adjusted operating
profit1 (£m)
|
|
33.4
|
65.7
|
(49%)
|
(49%)
|
|
Adjusted operating
margin1 (%)
|
|
10.4%
|
17.2%
|
(680bps)
|
(740bps)
|
|
Statutory operating profit
(£m)
|
|
16.4
|
53.8
|
(70%)
|
|
|
Statutory operating margin
(%)
|
|
5.1%
|
14.1%
|
(900bps)
|
|
1. This is
an APM. APMs are defined in full and reconciled to the reported
statutory measures in the Appendix to the Condensed Consolidated
Interim Financial Statements.
First half performance
Against a strong comparative
period, Spectris Scientific sales were 16% lower in the period at
£320.0 million (H1 2023: £381.1 million) with adjusted operating
profit of £33.4 million (H1 2023: £65.7 million). LFL sales
were 12% lower after taking into account the £4 million (1%) impact
of acquisitions net of disposals (primarily the disposal of the
remaining element of CLS) and adverse foreign exchange movements of
£12 million (3%). Lower sales of £22 million and £15 million
profit from the impact of delays associated with the implementation
of the new ERP system in Malvern Panalytical are expected to be
fully recovered in the second half.
While sales grew in electronics
and semiconductor, this was offset by lower sales in other end
markets, particularly pharmaceuticals and academia. Sales
were lower across all regions. Orders intake was 15% lower
(10% lower on a LFL basis) with lower demand across all end markets
particularly academia and China.
Adjusted operating margin
decreased by 680bps to 10.4% (H1 2023: 17.2%) reflecting the
negative drop through impact of lower sales volumes. On a LFL
basis, the decrease in adjusted operating margin was
740bps.
Statutory operating profit was 70%
lower at £16.4 million (H1 2023: £53.8 million) after including
£8.9 million of costs related to the investment in our new ERP
system, as part of the business transformation project. Statutory
operating margin was 5.1% (H1 2023: 14.1%).
Strongly positioned in high growth end markets supported by
sustainability trends
Spectris Scientific is focused on
high growth end-markets: life sciences, material sciences (primary
and advanced materials), semiconductors and academia. 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.
Life sciences
LFL sales were significantly lower
reflecting a continuation of overall subdued conditions in this
market with lower sales in all regions. In terms of demand, order
intake was more encouraging, down mid-single digits against the
comparative period. We continue to see strong demand and order
growth for our particle counters and advisory solutions for aseptic
manufacturers reflecting the production of new drugs to address
areas like weight loss, and the development of new facilities
linked to onshoring.
Demand for instruments to support
R&D and drug development remain subdued particularly in small
molecule, with the exception of the Indian market where we saw
growth across both small molecule and biologics during the
period. Our leading indicators are showing signs of
improvement with an increase in qualified leads which represent the
earliest signs of customer demand.
Growth over the medium-term in life
sciences is underpinned by a number of key drivers including ageing
populations, the onshoring of manufacturing and the need to develop
new treatments. We continue to maintain a healthy pipeline of
customer opportunities.
Materials
Primary materials
We saw a reduction in LFL sales and
orders during the first half with a robust performance from
building materials more than offset by lower demand in mining,
against a strong comparator in 2023. Customers in this end market
rely on our leading X-ray products as they seek to make their
extraction and processing greener and more sustainable.
Advanced materials
Against a very strong comparator
last year, LFL sales in advanced materials were down in the first
half, notably sales of our laser diffraction instruments to support
battery development, linked to the slowdown in EV sales and the
associated reduction in battery production and development.
Our particle analysers are used by customers to assess the quality
and character of particles to assess reactivity of raw
materials.
While we are experiencing a
slowdown in the short-term, the outlook for advanced materials
remains positive driven by the secular growth trends of clean
technologies and advanced manufacturing. We have a broad solution portfolio and strong domain
knowledge for material characterisation and deep customer
relationships which enables us to be a key facilitator of customer
innovation, supporting opportunities in the functional performance
and QA/QC, through to the sustainability and recycling of
materials.
Semiconductor
Sales into semiconductor and
electronics customers saw solid growth in the period against a
strong comparative period, with strong growth in Asia partially
offset by Europe and North America.
While the level of order intake was
lower in the first half, we expect demand to pick up in the second
half and continue into 2025 and beyond driven by the strong secular
trends including onshoring, the rise of AI and increased
penetration of software-defined vehicles, as outlined in our
teach-in on our Particle Measuring Systems business at the start of
June.
Academia
Against a very strong performance
in the first half last year, where sales increased by 45%,
benefiting from a number of government incentives in China, LFL
sales and orders were significantly lower in the first half.
While the Chinese government has announced a similar package of
incentives in the first half, we are yet to see this feed through
into customer demand as we did in 2023.
We remain 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.
Other end markets
Sales and order intake across other
end markets, which predominantly comprises energy, were lower than
the comparative period. Our offering
across Spectris Scientific means that we are well placed to address
customer needs in the energy transition over the medium-term,
particularly in areas such as carbon capture and hydrogen and
growth in the adoption of clean technologies.
Research and development
In Malvern Panalytical we launched
a number of exciting products during the period. The Mastersizer
3000+, is a revolutionary step in particle sizing with artificial
intelligence-driven solutions for data evaluation providing robust
and confident results in what is our best-selling, market leading,
laser diffraction instrument. We also launched the Revontium
X-ray fluorescence analyser, representing a huge step in elemental
analysis, providing the same data quality as floor-standing
instruments, significantly reducing operating cost in a number of
applications. And in March, Malvern Panalytical were the proud
winners of the Microsoft Intelligent Manufacturing Award 2024, in
the 'Scale' category, for their Smart Return Agriculture
technology.
At Servomex, we have been ushering
in the next generation of ultra-trace measurements for moisture,
contaminants and ultra-high-purity electronic grade gases, with the
Gen 7 DF-500 Series delivering crystal clear insights, powered by
industry-leading sensors and setting the standard for accuracy and
reliability. And with the SERVOTOUGH SpectraExact 2500F, we have
brought a new level of precision to liquid measurements with its
rugged design ideal for hazardous areas, able to provide the most
reliable data on even the harshest of liquids.
At Particle Measuring Systems, the
BioCapt Single-Use AutoM Microbial Impactor represents the ideal
choice for automated filling in sterile environments,
revolutionising microbial air sampling with a plug-and-play design
to enhance cost efficiency and productivity.
Spectris Dynamics
|
|
|
H1 2024
|
H1
2023
|
Change
|
LFL
change
|
|
Statutory sales (£m)
|
|
249.4
|
264.5
|
(6%)
|
(5%)
|
|
Adjusted operating
profit1 (£m)
|
|
30.6
|
35.8
|
(15%)
|
(11%)
|
|
Adjusted operating
margin1 (%)
|
|
12.3%
|
13.5%
|
(120bps)
|
(80bps)
|
|
Statutory operating profit
(£m)
|
|
10.7
|
18.3
|
(42%)
|
|
|
Statutory operating margin
(%)
|
|
4.3%
|
6.9%
|
(260bps)
|
|
1. This is
an APM. APMs are defined in full and reconciled to the reported
statutory measures in the Appendix to the Condensed Consolidated
Interim Financial Statements.
First half performance
Spectris Dynamics sales were 6%
lower at £249.4 million (H1 2023: £264.5 million). On a LFL
basis, sales were 5% lower after taking into account the net impact
of £9 million (3%) of adverse foreign exchange movements, and the
£7 million (2%) sales contribution from the acquisition of
MicroStrain. Sales were lower across all regions.
Order intake was in line with the
comparative period on a LFL basis with double-digit growth in both
A&D and Automotive offset by softer demand in machine
manufacturing, academia and other markets. Slightly higher
sales in both A&D and Automotive were more than offset by lower
sales to machine manufacturing, academia and other
markets.
Adjusted operating profit of £30.6
million was 15% lower than the £35.8 million achieved in the first
half last year, (11% on a LFL basis), with adjusted operating
margin 120bps lower (80bps lower on a LFL basis) at 12.3% (H1 2023:
13.5%). The lower margins reflect the drop through impact of lower
sales and product mix effects partially offset by actions to manage
the division's overhead costs.
Statutory operating profit
decreased by 42% to £10.7 million (H1 2023: £18.3 million) after
including £13.1 million of costs related to the investment in our
new ERP system. Statutory operating margin was 4.3% (H1 2023:
6.9%).
Well positioned in attractive markets
We are well positioned in
attractive growth markets that are benefiting from a number of
global mega trends: increased adoption of Virtual Test particularly
in automotive to accelerate the innovation cycle; digitisation and
the increased use of software to design, test 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 the Division's 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 slightly ahead of
the comparative period, with modest growth in Europe offset by
North America where sales were down. LFL Sales in Asia were
slightly lower than the comparative period.
On the demand side, order intake
was strong, particularly in Asia and Europe, largely driven by our
virtual test business, where our market-leading offering continues
to attract new customers with a number of large orders for our
simulators booked during the period. Demand was softer in the US
reflecting the slowdown in demand for, and adoption of, electric
vehicles and the knock-on impact on battery development and
electric power testing. Demand from Chinese automotive
manufacturers for our in-process solutions for end of line testing
of electric motors was encouraging.
Over the medium-term, we continue
to expect growing demand for automotive testing, driven by growth
in R&D and increased adoption of virtual test to support new
platform launches and increasing demand for software-defined
vehicles and advanced driver assistance systems (ADAS)
capabilities.
Machine manufacturing
LFL sales were lower in Europe and
Asia reflecting ongoing soft industrial output in the key markets
in each region, namely Germany and China.
Orders were only slightly lower on
a LFL basis, with softer demand in Europe and North America which
more than offset strong growth in Asia. While we have seen signs of
a modest recovery in weighing technology, a broader recovery is
expected to occur in late 2024 and into the first half of 2025, as
interest rate ease and customer confidence returns to support
capital investment decisions.
2023 was a record year in our OEM
sensor business delivering 55 customer prototypes during the year.
This strong trend has continued in the first half of this year
where we have delivered a similar number of prototypes on a run
rate basis across a number of sub-segments including medical,
agricultural and robotics.
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 the focus on selected high value
end-markets, which 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
Sales were slightly ahead of the
very strong comparative period, supported by continued investment
in commercial space and defence spending and the ongoing growth in
civil aerospace. LFL orders were well ahead of the
comparative period driven by strong demand in the US.
Demand has been particularly
strong in commercial space, where our leading sensing solutions, in
particular accelerometers, are used by customers to monitor vehicle
system and structural performance during the flight
envelope. Our Dytran business has
performed particularly well post-acquisition due to the growth of,
and attractiveness of its offering to, the commercial space
market. In civil aerospace, we have seen
good demand for our physical testing solutions where our customers
rely on the reliability, precision and consistency provided by our
sound and vibration and design software. In defence, we see a
lot of opportunities to support customers on a number of naval
programmes and on a regional basis, strong demand in Japan.
We remain well placed to support
long-term innovation projects. OEMs continue to invest in
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.
Consumer electronics and telecoms
While LFL sales were down in
consumer electronics and telecoms, which represented 6% of Dynamics
sales in the first half, order intake was up. Demand in this market
is being shaped by the onshoring of manufacturing and the
development of the next generation of sound technology, including
immersive, dynamic sound quality for personal equipment.
Research and development
During the first half we launched
the award-winning Driver-in-Motion Full Spectrum Dynamic
Simulator (DiM FSS) and Hyperdock, which together provide a quantum
leap in realism, and the first simulator that is capable of full
vehicle motion, vibration, and sound for an integrated
experience. We also introduced the T100 / T110 torque sensor,
building on market leading accuracy, that offers
new possibilities in demanding applications, such
as powertrain development for electric vehicles.
We also released major updates to
our simulation and durability/reliability software with key
functionality enhancements. One example is the latest upgrade of
Concurrent Real Time's (CCRT) FPGA Workbench suite, which
represents a complete development environment for
Hardware-in-the-loop solutions and other simulators, enabling users
to use the full potential of the latest CCRT hardware.
Financial review
Financial performance
|
|
|
H1 2024
|
H1 2023
|
|
|
|
£m
|
£m
|
|
Sales
|
|
589.7
|
702.5
|
|
Cost of sales
|
|
(265.7)
|
(302.0)
|
|
Gross profit
|
|
324.0
|
400.5
|
|
|
|
|
|
|
Indirect production and
engineering expenses
|
|
(59.5)
|
(63.0)
|
|
Sales and marketing
expenses
|
|
(115.1)
|
(129.0)
|
|
Administrative expenses
|
|
(125.4)
|
(138.0)
|
|
Operating profit
|
|
24.0
|
70.5
|
Sales decreased by 16% or £112.8
million to £589.7 million (H1 2023: £702.5 million). Gross profit
decreased by £76.5 million driven by the lower sales volumes,
partly offset by pricing effects. Selling, General &
Administration (SG&A) expenses decreased by £30.0 million,
benefiting from prior period restructuring activities, the sale of
Red Lion, foreign exchange impacts from retranslation and
revaluation, plus lower performance incentives.
Included within SG&A are
configuration and customisation costs carried out by third parties
on material software-as-a-Service (SaaS) project costs of £22.0
million (H1 2023: £17.8 million), which represents the continuation
of the implementation of the new SAP cloud-based ERP system.
Investment in R&D increased by £0.7 million to £52.9 million
representing 9.0% of sales (H1 2023: £52.2 million, 7.4% of sales).
Statutory operating profit was £24.0 million, a
decrease of £46.5 million (H1 2023: £70.5 million). Statutory
operating margin was 4.1% (H1 2023: 10.0%).
Statutory to adjusted operating profit
|
|
H1 2024
|
H1
2023
|
|
|
£m
|
£m
|
|
Statutory operating profit
|
24.0
|
70.5
|
|
Net transaction-related costs and
fair value adjustments
|
7.4
|
4.0
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects
|
22.0
|
17.8
|
|
Amortisation of
acquisition-related intangible assets
|
7.7
|
9.8
|
|
Adjusted operating profit
|
61.1
|
102.1
|
Net transaction-related costs and
fair value adjustments were £7.4 million (H1 2023: £4.0 million)
primarily relating to the acquisitions of SciAps Incorporated and
Micomeritics Instruments announced in July 2024. Consistent with
the prior period, material SaaS project costs of £22.0 million (H1
2023: £17.8 million) are excluded from adjusted operating profit,
as is amortisation of acquisition-related intangible assets of £7.7
million (H1 2023: £9.8 million).
Our adjusted operating margin of
10.4% was 410bps lower than the comparative period (H1 2023: 14.5%)
driven by the drop through impact of lower sales and product mix,
resulting in an adjusted operating profit of £61.1 million (H1
2023: £102.1 million), a decrease of 40% (35% on a LFL
basis).
Statutory operating profit to profit before
tax
Statutory profit before tax for
the period of £235.3 million (H1 2023: £68.5 million) is calculated
after a £210.6 million profit on disposal of businesses,
predominantly related to the divestment of Red Lion (H1 2023: £11.0
million loss, which reflected the divestment of Concept Life
Sciences), and a net finance income of £5.3 million (H1 2023: £8.2
million income).
|
|
H1 2024
|
H1
2023
|
|
|
£m
|
£m
|
|
Statutory operating profit
|
24.0
|
70.5
|
|
Share of post-tax results of
associates
|
(0.4)
|
0.1
|
|
Fair value through profit and loss
movements on debt instruments
|
(4.2)
|
0.7
|
|
Profit/(loss) on disposal of
businesses
|
210.6
|
(11.0)
|
|
Finance income
|
8.2
|
10.3
|
|
Finance costs
|
(2.9)
|
(2.1)
|
|
Statutory profit before tax
|
235.3
|
68.5
|
On 3 April 2024, the Group
disposed of its Red Lion Controls business. The consideration
received was £280.9 million settled in cash, resulting in a profit
on disposal of £210.9 million. Further details are provided in note
8. Red Lion Controls contributed £20.3 million of sales and
operating profit of £3.7 million in 2024, up to the date of
disposal (H1 2023: £56.9 million sales and £13.3 million operating
profit, reflecting full six months contribution).
Net finance income of £5.3 million
(H1 2023: £8.2 million) was £2.9 million lower, mainly as a result
of a £3.7 million lower gain from retranslation of short-term
intercompany loan balances driven by a smaller intercompany loan
balance and lower levels of currency volatility than in
2023.
Bank interest received was £4.9
million for the period (H1 2023: £3.3 million), mainly due to cash
held on account from the proceeds of the Red Lion disposal and
higher Sterling interest rates. There have been no drawings against
our loan facilities during the first half, with interest payable
comprising the commitment fee on the Revolving Credit Facility
(RCF) and the amortisation of capitalised loan fees relating to
this facility.
Tax
The effective tax rate on adjusted
profit before tax for was 23% (H1 2023: 22%), with the adjusted
effective tax rate for the full year also expected to be 23%. The
effective tax rate on statutory profit before tax was 23.1% (H1
2023: 23.8%).
Earnings per share
Adjusted earnings per share was
47.9 pence (H1 2023: 77.2 pence). Statutory earnings per share was
179.6 pence (H1 2023: 50.0 pence), with most of the increase
attributable to the £210.9 million profit on disposal of the Red
Lion Controls business.
LFL movements
Order intake was 6% lower on a LFL
basis for the first half of 2024. On a LFL basis, orders in North
America and Europe were both down 3%, with Asia 12% lower largely
driven by China where demand remains subdued.
LFL sales decreased by £66.6
million (10%), comprising 12% volume, partially offset by a 2%
positive price impact. Disposals, net of acquisitions,
reduced sales by £24.7 million (3%) and foreign exchange movements
decreased sales by £21.5 million (3%), which together with the LFL
sales movement resulted in a 16% reduction in reported sales.
The sales decline resulted in a
210bps decrease in adjusted gross margins.
Cash flow
Adjusted cash flow decreased by
£51.8 million to £67.9 million (H1 2023: £119.7 million), resulting
in an adjusted cash conversion rate of 111% (H1 2023: 117%).
Statutory cash generated from operations was £57.4 million (H1
2023: £108.9 million).
The decrease in adjusted cash flow
was largely driven by the decrease in adjusted operating profit,
with a slightly lower net inflow in working capital and higher
levels of capital expenditure also contributing.
|
|
H1 2024
|
H1
2023
|
|
Adjusted cash flow
|
£m
|
£m
|
|
Adjusted operating
profit
|
61.1
|
102.1
|
|
Adjusted depreciation and software
amortisation1
|
17.7
|
19.6
|
|
Working capital and other non-cash
movements
|
4.9
|
9.7
|
|
Capital expenditure
|
(15.8)
|
(11.7)
|
|
Adjusted cash flow
|
67.9
|
119.7
|
|
Adjusted cash flow conversion
|
111%
|
117%
|
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.
Capital expenditure of £15.8
million (H1 2023: £11.7 million) equated to 2.7% of sales, compared
to 1.7% in H1 2023. The higher level of expenditure in 2024
reflects the phasing of spend relating to the new PMS facility in
Colorado. Capital expenditure was 89% of adjusted depreciation and
software amortisation (H1 2023: 60%).
|
|
H1 2024
|
H1
2023
|
|
Other cash flows and foreign exchange
|
£m
|
£m
|
|
Tax paid
|
(26.8)
|
(30.0)
|
|
Net interest received on cash and
borrowings
|
2.4
|
2.9
|
|
Dividends paid
|
(54.2)
|
(53.7)
|
|
Share buyback
|
(46.0)
|
(26.7)
|
|
Acquisition of businesses, net of
cash acquired
|
(0.8)
|
(2.8)
|
|
Transaction-related costs
paid
|
(2.8)
|
(1.0)
|
|
Spectris Foundation Contribution
paid
|
(1.0)
|
-
|
|
Proceeds from disposal of
businesses, net of tax paid of £25.2 million (H1 2023: £1.0
million)
|
248.8
|
9.2
|
|
SaaS-related cash
expenditure
|
(22.0)
|
(17.8)
|
|
Lease payments and associated
interest
|
(7.3)
|
(7.1)
|
|
Restructuring costs
paid
|
(0.1)
|
(0.8)
|
|
Net proceeds from exercise of
share options
|
0.5
|
0.4
|
|
Total other cash flows
|
90.7
|
(127.4)
|
|
Adjusted cash flow
|
67.9
|
119.7
|
|
Foreign exchange
|
(4.9)
|
(6.0)
|
|
Increase/(decrease) in net cash
|
153.7
|
(13.7)
|
During the six months ended 30
June 2024, 1,313,979 ordinary shares were repurchased and cancelled
by the Group as part of the first tranche of the £150 million share
buyback programme announced on 11 December 2023, resulting in a
cash outflow of £46.0 million, including transaction fees of £0.2
million. We expect to complete the remaining £100
million of the current buyback programme by the end of this
financial year.
Financing and treasury
The Group finances its operations
from retained earnings and, where appropriate, from third-party
borrowings. Total borrowings as at 30 June 2024 were £nil (H1 2023:
£nil).
At 30 June 2024, the Group had a
cash and cash equivalents balance of £292.5 million (H1 2023:
£214.3 million) representing a £78.2 million year-on-year increase
in net cash. The Group also had various uncommitted credit lines
and bank overdraft facilities available that remained
undrawn.
On 7 May 2024, the $500m
multi-currency facility (RCF) due to expire in July 2025 was
replaced by a £400 million multi-currency facility to reflect the
base currency of the Group. The new facility has an initial
five-year maturity with two one-year extension options, which would
take the final maturity to May 2031. As at 30 June 2024, the
Group's committed facilities consisted entirely of the £400 million
RCF, which was undrawn. (H1 2023: $500 million
undrawn).
The Group regularly monitors its
financial position to ensure that it remains within the terms of
its RCF covenants. The minimum permitted interest cover (i) is
3.75x; the covenant result was N/A for the twelve-month period
ended 30 June 2024 due to net interest income during the period (30
June 2023: N/A; 31 December 2023: N/A). The maximum permitted
leverage (ii) is 3.5x; as at 30 June 2024, leverage was less than
zero (30 June 2023: less than zero; 31 December 2023: less than
zero) due to the Group's net cash position.
(i) Covenant defined
earnings before interest, tax and amortisation divided by net
finance charges; and
(ii) Covenant-defined
net debt / EBITDA
The Group has prepared and
reviewed cash flow forecasts for the period to 31 December 2028,
which reflect forecasted changes in sales 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. The Group's cash flow forecast
reflects the acquisitions announced recently and includes securing
additional external finance. The group has sourced sufficient
bridge financing and is working with lenders to finalise terms on
long term financing. This assessment indicates that the Group can
operate within the level of its current facilities, without the
need to obtain any new facilities for a period of not less than 12
months from the date of this report. 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 Condensed
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 30 June 2024, approximately 65% of the
estimated transactional exposures of £250.9 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.
|
|
H1 2024
|
H1
2023
|
|
H1 2024
|
H1
2023
|
|
|
|
(average)
|
(average)
|
Change
|
(closing)
|
(closing)
|
Change
|
|
US Dollar (USD)
|
1.26
|
1.23
|
2%
|
1.26
|
1.27
|
(1%)
|
|
Euro (EUR)
|
1.17
|
1.14
|
3%
|
1.18
|
1.16
|
2%
|
|
Chinese Yuan Renminbi
(CNY)
|
9.12
|
8.55
|
7%
|
9.18
|
9.22
|
0%
|
During the period, currency
translation effects resulted in adjusted operating profit being
£1.4 million lower (H1 2023: £2.8 million higher) than it would
have been if calculated using prior year exchange rates.
Transactional foreign exchange
losses of £1.2 million (H1 2023: £4.6 million loss) were included
in administrative expenses, whilst sales include a gain of £3.2
million (H1 2023: £0.9 million gain) arising on forward exchange
contracts taken out to hedge transactional exposures in respect of
sales.
Derek Harding
Chief Financial Officer
Principal Risks and Uncertainties
A number of potential risks and
uncertainties exist which could have a material impact on the
Group's performance over the second half of the financial year and
could cause actual results to differ materially from expected and
historical results. The Group has processes in place for
identifying, evaluating and managing the key risks which could have
an impact upon the Group's performance.
The current risks, together with a
description of how they relate to the Group's strategy and the
approach to managing them, are set out on pages 46-50 of the 2023
Annual Report and Accounts which is available on the Group's
website at www.spectris.com.
The Group has conducted a review and concluded that these risks, as
defined in the 2023 Annual Report, will continue to remain relevant
for the second half of the financial year and that our assessment
of the severity of these risks on both a gross and a net basis is
unchanged. The potential impact of these risks on our
strategy and financial performance, together with details of our
specific mitigation actions, are set out in the 2023 Annual
Report.
The full list of principal risks
relevant as at the half year comprises:
· Strategic
transformation. Failure to
successfully deliver the Group strategy, including business
transformation and key mergers, acquisitions and divestment
activity.
· Cyber threat.
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.
· Compliance.
Failure to comply with laws and regulations,
leading to reputational damage, substantial fines and potential
market exclusion.
· Geopolitical.
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.
· Market/financial
shock. Material adverse changes in
market conditions, such as economic recession, inflation, sudden
negative investor sentiment and currency fluctuation.
· Talent and
capabilities. Failure to attract,
retain, and deploy the necessary talent to deliver Group
strategy.
· Business
disruption. 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.
· Climate
change. Failure to respond
appropriately, and sufficiently, to climate change risks or failure
to identify the associated potential opportunities in assisting
others manage their climate agendas.
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 further actions where appropriate in order to manage
our net exposure.
Condensed Consolidated Income Statement
For the six months ended 30 June 2024
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
Note
|
£m
|
£m
|
£m
|
|
Revenue
|
2
|
589.7
|
702.5
|
1,449.2
|
|
Cost of sales
|
|
(265.7)
|
(302.0)
|
(611.1)
|
|
Gross profit
|
|
324.0
|
400.5
|
838.1
|
|
|
|
|
|
|
|
Indirect production and
engineering expenses
|
|
(59.5)
|
(63.0)
|
(126.9)
|
|
Sales and marketing
expenses
|
|
(115.1)
|
(129.0)
|
(249.6)
|
|
Administrative expenses
|
|
(125.4)
|
(138.0)
|
(273.0)
|
|
Operating profit
|
2
|
24.0
|
70.5
|
188.6
|
|
|
|
|
|
|
|
Share of post-tax results of
associates
|
|
(0.4)
|
0.1
|
(0.1)
|
|
Fair value through profit and loss
movements on debt investment
|
|
(4.2)
|
0.7
|
2.8
|
|
Profit/(loss) on disposal of
businesses
|
8
|
210.6
|
(11.0)
|
(12.6)
|
|
Financial income
|
3
|
8.2
|
10.3
|
11.0
|
|
Finance costs
|
3
|
(2.9)
|
(2.1)
|
(4.1)
|
|
Profit before tax
|
|
235.3
|
68.5
|
185.6
|
|
|
|
|
|
|
|
Taxation charge
|
4
|
(54.3)
|
(16.3)
|
(40.2)
|
|
Profit for the period
|
|
181.0
|
52.2
|
145.4
|
|
Attributable to:
|
|
|
|
|
|
Equity holders of the
parent
|
|
181.0
|
52.2
|
145.4
|
|
Non-controlling
interest
|
|
-
|
-
|
-
|
|
|
|
181.0
|
52.2
|
145.4
|
|
|
|
|
|
|
|
Earnings per share for profit attributable to the ordinary
equity holders of the Company
|
|
|
|
|
|
Basic
|
6
|
179.6p
|
50.0p
|
140.3p
|
|
Diluted
|
6
|
178.7p
|
49.7p
|
139.4p
|
|
|
|
|
|
|
|
Dividends attributable to the ordinary equity holders of the
Company
|
|
|
|
|
|
Interim and final dividends
proposed/paid for the period (per share)
|
5
|
26.6p
|
25.3p
|
79.2p
|
|
Dividends paid during the period
(per share)
|
5
|
53.9p
|
51.3p
|
76.6p
|
Condensed Consolidated Statement of Comprehensive
Income
For the six months ended 30 June 2024
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
Note
|
£m
|
£m
|
£m
|
|
Profit for the period attributable
to owners of the Company
|
|
181.0
|
52.2
|
145.4
|
|
Other comprehensive income:
|
|
|
|
|
|
Items that will not be reclassified to the Condensed
Consolidated Income Statement:
|
|
|
|
|
|
Re-measurement of net defined
benefit obligation
|
|
0.1
|
(0.4)
|
(0.6)
|
|
Fair value loss and foreign
exchange movements translation on investment in equity instruments
designated as at fair value through other comprehensive
income
|
|
(0.8)
|
(3.0)
|
(5.0)
|
|
Tax (charge)/credit on items
above
|
|
(0.1)
|
0.1
|
0.2
|
|
|
|
(0.8)
|
(3.3)
|
(5.4)
|
|
Items that are or may be reclassified subsequently to the
Condensed Consolidated Income Statement:
|
|
|
|
|
|
Net (loss)/gain on effective
portion of changes in fair value of forward exchange contracts on
cash flow hedges
|
|
(2.6)
|
6.7
|
6.1
|
|
Foreign exchange movements on
translation of overseas operations
|
|
(19.1)
|
(52.2)
|
(42.5)
|
|
Currency translation differences
transferred to profit on disposal of businesses
|
8
|
(17.9)
|
-
|
-
|
|
Tax credit/(charge) on items
above
|
|
0.4
|
(1.6)
|
(1.1)
|
|
|
|
(39.2)
|
(47.1)
|
(37.5)
|
|
Total other comprehensive loss
|
|
(40.0)
|
(50.4)
|
(42.9)
|
|
Total comprehensive income for the period
|
|
141.0
|
1.8
|
102.5
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
Equity holders of the
parent
|
|
141.0
|
1.8
|
102.5
|
|
Non-controlling
interest
|
|
-
|
-
|
-
|
|
|
|
141.0
|
1.8
|
102.5
|
Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 June 2024
|
|
Share
capital
|
Share
premium
|
Retained
earnings
|
Translation
reserve
|
Hedging
reserve
|
Merger
reserve
|
Capital redemption
reserve
|
Total
|
Non-controlling
interest
|
Total
equity
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
At 1 January 2024
|
5.3
|
231.4
|
1,030.0
|
43.0
|
1.9
|
3.1
|
1.2
|
1,315.9
|
-
|
1,315.9
|
|
Profit for the period
|
-
|
-
|
181.0
|
-
|
-
|
-
|
-
|
181.0
|
-
|
181.0
|
|
Other comprehensive
loss
|
-
|
-
|
(0.2)
|
(37.4)
|
(2.4)
|
-
|
-
|
(40.0)
|
-
|
(40.0)
|
|
Total comprehensive income/(loss) for the
period
|
-
|
-
|
180.8
|
(37.4)
|
(2.4)
|
-
|
-
|
141.0
|
-
|
141.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners recorded
directly in equity:
|
|
|
|
|
|
|
|
|
|
|
|
Equity dividends paid by the
Company (note 5)
|
-
|
-
|
(54.2)
|
-
|
-
|
-
|
-
|
(54.2)
|
-
|
(54.2)
|
|
Own shares acquired for share
buyback programme (note 10)
|
(0.1)
|
-
|
(0.2)
|
-
|
-
|
-
|
0.1
|
(0.2)
|
-
|
(0.2)
|
|
Share-based payments, net of
tax
|
-
|
-
|
4.8
|
-
|
-
|
-
|
-
|
4.8
|
-
|
4.8
|
|
Proceeds from exercise of
equity-settled share options
|
-
|
-
|
0.5
|
-
|
-
|
-
|
-
|
0.5
|
-
|
0.5
|
|
Acquisition of a subsidiary (note
7)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.4
|
0.4
|
|
At 30 June 2024 (Unaudited)
|
5.2
|
231.4
|
1,161.7
|
5.6
|
(0.5)
|
3.1
|
1.3
|
1,407.8
|
0.4
|
1,408.2
|
For the six months ended 30 June 2023
|
|
Share
capital
|
Share
premium
|
Retained
earnings
|
Translation
reserve
|
Hedging
reserve
|
Merger
reserve
|
Capital redemption
reserve
|
Total
equity
|
|
|
£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 period
|
-
|
-
|
52.2
|
-
|
-
|
-
|
-
|
52.2
|
|
Other comprehensive
(loss)/income
|
-
|
-
|
(2.5)
|
(53.0)
|
5.1
|
-
|
-
|
(50.4)
|
|
Total comprehensive income/(loss) for the
period
|
-
|
-
|
49.7
|
(53.0)
|
5.1
|
-
|
-
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners recorded
directly in equity:
|
|
|
|
|
|
|
|
|
|
Equity dividends paid by the
Company (note 5)
|
-
|
-
|
(53.7)
|
-
|
-
|
-
|
-
|
(53.7)
|
|
Own shares acquired for share
buyback programme (note 10)
|
(0.1)
|
-
|
(40.0)
|
-
|
-
|
-
|
0.1
|
(40.0)
|
|
Share-based payments, net of
tax
|
-
|
-
|
10.0
|
-
|
-
|
-
|
-
|
10.0
|
|
Proceeds from exercise of
equity-settled share options
|
-
|
-
|
0.4
|
-
|
-
|
-
|
-
|
0.4
|
|
At 30 June 2023 (Unaudited)
|
5.4
|
231.4
|
1,079.4
|
33.0
|
2.0
|
3.1
|
1.1
|
1,355.4
|
For the year ended 31 December 2023
|
|
Share
capital
|
Share
premium
|
Retained
earnings
|
Translation
reserve
|
Hedging
reserve
|
Merger
reserve
|
Capital redemption
reserve
|
Total
equity
|
|
|
£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
|
-
|
-
|
145.4
|
-
|
-
|
-
|
-
|
145.4
|
|
Other comprehensive
(loss)/income
|
-
|
-
|
(4.9)
|
(43.0)
|
5.0
|
-
|
-
|
(42.9)
|
|
Total comprehensive income/(loss) for the
year
|
-
|
-
|
140.5
|
(43.0)
|
5.0
|
-
|
-
|
102.5
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners recorded
directly in equity:
|
|
|
|
|
|
|
|
|
|
Equity dividends paid by the
Company (note 5)
|
-
|
-
|
(79.7)
|
-
|
-
|
-
|
-
|
(79.7)
|
|
Own shares acquired for share
buyback programme (note 10)
|
(0.2)
|
-
|
(160.8)
|
-
|
-
|
-
|
0.2
|
(160.8)
|
|
Share-based payments, net of
tax
|
-
|
-
|
16.4
|
-
|
-
|
-
|
-
|
16.4
|
|
Proceeds from exercise of
equity-settled share options
|
-
|
-
|
0.6
|
-
|
-
|
-
|
-
|
0.6
|
|
At 31 December 2023 (Audited)
|
5.3
|
231.4
|
1,030.0
|
43.0
|
1.9
|
3.1
|
1.2
|
1,315.9
|
Condensed Consolidated Statement of Financial
Position
As at 30 June 2024
|
|
|
30 June
|
30
June
|
31
December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
Note
|
£m
|
£m
|
£m
|
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Goodwill
|
|
566.7
|
583.6
|
565.5
|
|
Other intangible assets
|
|
158.0
|
162.3
|
167.1
|
|
Property, plant and
equipment
|
|
140.0
|
142.8
|
136.2
|
|
Right-of-use assets
|
|
56.1
|
57.5
|
58.1
|
|
Investment in equity
instruments
|
|
23.5
|
26.3
|
24.3
|
|
Investment in debt
instruments
|
|
17.5
|
19.6
|
21.7
|
|
Investment in
associates
|
|
10.4
|
2.9
|
10.8
|
|
Derivative financial
instruments
|
|
0.1
|
0.7
|
0.4
|
|
Other receivables
|
|
7.7
|
4.4
|
5.9
|
|
Deferred tax assets
|
|
28.6
|
20.1
|
26.6
|
|
Retirement benefit
assets
|
|
2.2
|
-
|
2.4
|
|
|
|
1,010.8
|
1,020.2
|
1,019.0
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
238.0
|
261.4
|
231.8
|
|
Current tax assets
|
|
12.9
|
11.9
|
7.2
|
|
Trade and other
receivables
|
|
287.6
|
316.6
|
317.9
|
|
Derivative financial
instruments
|
|
4.0
|
6.3
|
5.8
|
|
Cash and cash
equivalents
|
|
292.5
|
214.3
|
138.5
|
|
Assets held for sale
|
|
-
|
-
|
97.5
|
|
|
|
835.0
|
810.5
|
798.7
|
|
Total assets
|
|
1,845.8
|
1,830.7
|
1,817.7
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Derivative financial
instruments
|
|
(0.5)
|
(0.3)
|
(0.1)
|
|
Trade and other
payables
|
|
(309.1)
|
(355.2)
|
(369.4)
|
|
Lease liabilities
|
|
(12.5)
|
(12.1)
|
(14.4)
|
|
Current tax liabilities
|
|
(23.7)
|
(9.3)
|
(12.6)
|
|
Provisions
|
|
(8.7)
|
(12.2)
|
(8.5)
|
|
Liabilities held for
sale
|
|
-
|
-
|
(17.8)
|
|
|
|
(354.5)
|
(389.1)
|
(422.8)
|
|
Net current assets
|
|
480.5
|
421.4
|
375.9
|
|
Non-current liabilities
|
|
|
|
|
|
Other payables
|
|
(19.7)
|
(13.7)
|
(15.1)
|
|
Derivative financial
instruments
|
|
(0.2)
|
-
|
(0.1)
|
|
Lease liabilities
|
|
(49.0)
|
(50.3)
|
(48.3)
|
|
Provisions
|
|
(2.7)
|
(3.0)
|
(2.6)
|
|
Retirement benefit
obligations
|
|
(10.2)
|
(8.1)
|
(11.6)
|
|
Deferred tax
liabilities
|
|
(1.3)
|
(11.1)
|
(1.3)
|
|
|
|
(83.1)
|
(86.2)
|
(79.0)
|
|
Total liabilities
|
|
(437.6)
|
(475.3)
|
(501.8)
|
|
Net assets
|
|
1,408.2
|
1,355.4
|
1,315.9
|
|
EQUITY
|
|
|
|
|
|
Share capital
|
|
5.2
|
5.4
|
5.3
|
|
Share premium
|
|
231.4
|
231.4
|
231.4
|
|
Retained earnings
|
|
1,161.7
|
1,079.4
|
1,030.0
|
|
Translation reserve
|
|
5.6
|
33.0
|
43.0
|
|
Hedging reserve
|
|
(0.5)
|
2.0
|
1.9
|
|
Merger reserve
|
|
3.1
|
3.1
|
3.1
|
|
Capital redemption
reserve
|
|
1.3
|
1.1
|
1.2
|
|
Total equity attributable to equity holders of the
parent
|
|
1,407.8
|
1,355.4
|
1,315.9
|
|
Non-controlling
interest
|
7
|
0.4
|
-
|
-
|
|
Total equity
|
|
1,408.2
|
1,355.4
|
1,315.9
|
|
|
|
|
|
|
|
|
| |
Condensed Consolidated Statement of Cash
Flows
For the six months ended 30 June 2024
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
Note
|
£m
|
£m
|
£m
|
|
Cash generated from operations
|
9
|
57.4
|
108.9
|
245.5
|
|
Net income taxes paid
|
|
(26.8)
|
(30.0)
|
(50.3)
|
|
Net cash inflow from operating activities
|
|
30.6
|
78.9
|
195.2
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchase of property, plant and
equipment and intangible assets
|
|
(15.8)
|
(11.7)
|
(24.7)
|
|
Proceeds from disposal of
property, plant and equipment and software
|
|
0.4
|
2.9
|
3.1
|
|
Acquisition of businesses, net of
cash acquired
|
|
(0.8)
|
(2.8)
|
(49.5)
|
|
Acquisition of investment in an
associates
|
|
-
|
-
|
(7.8)
|
|
Inflow from disposal of
businesses, net of tax paid of £25.2m (H1 2023: £1.0m and FY 2023:
£5.9m)
|
|
248.8
|
9.2
|
3.3
|
|
Interest received
|
|
5.0
|
3.4
|
5.4
|
|
Net cash flows from/(used in) investing
activities
|
|
237.6
|
1.0
|
(70.2)
|
|
|
|
|
|
|
|
Cash flows (used in)/from financing
activities
|
|
|
|
|
|
Interest paid on
borrowings
|
|
(2.6)
|
(0.5)
|
(1.0)
|
|
Interest paid on lease
liabilities
|
|
(1.4)
|
(1.2)
|
(0.2)
|
|
Dividends paid to equity holders
of the parent
|
5
|
(54.2)
|
(53.7)
|
(79.7)
|
|
Share buyback purchase of
shares
|
10
|
(46.0)
|
(26.7)
|
(114.9)
|
|
Net proceeds from exercise of
share options
|
|
0.5
|
0.4
|
0.6
|
|
Payments on principal portion of
lease liabilities
|
|
(5.9)
|
(5.9)
|
(15.4)
|
|
Repayment of borrowings
|
|
-
|
(0.1)
|
(0.1)
|
|
Net cash flows used in financing activities
|
|
(109.6)
|
(87.7)
|
(210.7)
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
|
158.6
|
(7.8)
|
(85.7)
|
|
Cash and cash equivalents at
beginning of period
|
|
138.8
|
228.1
|
228.1
|
|
Effect of foreign exchange rate
changes
|
|
(4.9)
|
(6.0)
|
(3.6)
|
|
Cash and cash equivalents at end of
period1
|
|
292.5
|
214.3
|
138.8
|
1. Cash
and cash equivalents in the Condensed Consolidated Statement of
Cash Flows at 31 December 2023 consisted of £138.5 million of cash
and cash equivalents included in current assets and £0.3 million of
cash and cash equivalents included in assets held for
sale.
Notes to the condensed set of financial
statements
Six months ended 30 June 2024
1. Basis of preparation and accounting
policies
a) Basis of accounting
The Condensed Consolidated Interim
Financial Statements of the Company for the six months ended 30
June 2024 comprise the Company and its subsidiaries, together
referred to as the 'Group'. These Condensed Consolidated Interim
Financial Statements are presented in millions of Sterling rounded
to the nearest one decimal place, which is the Group's
presentational currency. The Consolidated Financial Statements of
the Group for the year ended 31 December 2023 are available upon
request from the Company's registered office at Melbourne House,
44-46 Aldwych, London, WC2B 4LL, and on the Company's website
at www.spectris.com.
These Condensed Consolidated
Interim Financial Statements have been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim Financial Reporting', as
adopted by the United Kingdom. They do not include all of the
information required for full annual financial statements and
should be read in conjunction with the Consolidated Financial
Statements of the Group for the year ended 31 December
2023.
The Condensed Consolidated
Financial Statements have been prepared using consistent accounting
policies with those of the previous financial year except for the
adoption of new accounting standards and interpretations noted
below.
The Condensed Consolidated Interim
Financial Statements for the six-month period ended 30 June 2024
are unaudited but have been subject to an independent review by the
auditor. They do not constitute statutory financial statements as
defined in section 434 of the Companies Act 2006. The comparative
figures for the financial year ended 31 December 2023 are derived
from the Company's statutory accounts for that financial year.
Those accounts have been reported on by the Company's auditor and
delivered to the Registrar of Companies. The Report of the auditor
was (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498(2) or 498(3) of the Companies Act
2006.
The Group's financial risk
management objectives and policies are consistent with those
disclosed in the Consolidated Financial Statements of the Group for
the year ended 31 December 2023. These Condensed Consolidated
Interim Financial Statements were approved by the Board of
Directors on 29 July 2024.
New standards and interpretations applied for the first
time
There were no new standards,
amendments or interpretations applied for the first time that had a
material impact for the Group.
New standards and interpretations not yet
applied
There were no new or revised
IFRSs, amendments or interpretations in issue but not yet effective
that are potentially material for the Group and which have not yet
been applied.
b) Going concern
In determining the basis of
preparation for the Condensed 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
economic factors such as rising interest rates and inflation as
well as climate change on the Group, which are described in the
Chief Executive's Review, Financial Review and Operating
Review.
The Group finances its operations
from retained earnings and, where appropriate, from third-party
borrowings. Total borrowings as at 30 June 2024 were £nil (H1 2023:
£nil; FY 2023 £nil).
On 7 May 2024, the $500m
multi-currency facility (RCF) due to expire in July 2025 was
replaced by a £400m multi-currency facility, to reflect the base
currency of the Group. The new facility has an initial five-year
maturity with two one-year extension options, which would take the
final maturity to May 2031. The facility continues to consist
of 8 members in the banking group, however two existing banks (JP
Morgan and Santander) left the banking group, and two new banks
(Bank of America and Citizens) joined. As at 30 June 2024 the
Group's committed facilities consisted entirely of the £400m RCF,
which was undrawn. (H1 2023: $500 million undrawn; FY 2023: $500
million undrawn).
The Group regularly monitors its
financial position to ensure that it remains within the terms of
its RCF covenants. The minimum permitted interest cover (i) is
3.75x; the covenant result was N/A for the twelve month period
ended 30 June 2024 due to net interest income during the period (30
June 2023: N/A; 31 December 2023: N/A). The maximum permitted
leverage (ii) is 3.5x; as at 30 June 2024, leverage was less than
zero (30 June 2023: less than zero; 31 December 2023: less than
zero) due to the Group's net cash position.
(i) Covenant defined
earnings before interest, tax and amortisation divided by net
finance charges; and
(ii) Covenant-defined
net debt / EBITDA
At 30 June 2024, the Group had a
cash and cash equivalents balance of £292.5 million. The Group also
had various uncommitted credit lines and bank overdraft facilities
available.
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
compared these to a reverse stress test of the forecasts to
determine the extent of downturn which would result in a breach of
covenants. The reverse stress test does not take into account any
mitigating actions which the Group would implement in the event of
a severe and extended revenue decline, which would increase the
headroom further. The Group's cash flow forecast reflects the
acquisitions announced recently and includes securing additional
external finance. The group has sourced sufficient bridge
financing and is working with lenders to finalise terms on long
term financing. 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.
c) Seasonality
The Group's financial results and
cash flows have, historically, been subject to seasonal trends
between the first and second half of the financial year.
Historically, the second half of the financial year sees higher
revenue and profitability. There is no assurance that this trend
will continue in the future.
d) Critical accounting judgments and key sources
of estimation uncertainty update
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.
The Group's critical accounting
judgments and other key sources of estimation uncertainty remain
the same as those as set out in the Group's Consolidated Financial
Statements for the year ended 31 December 2023.
2. Operating segments
The Group's reportable segments
are described below. Following the completion of the sale of
the Red Lion Controls business in April 2024, the Servomex business
reporting moved to form part of the Spectris Scientific division.
The new segmental divisional structure reflects the way the
business is managed as well as 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 tables below show restated
comparative figures for the reportable operating segments for the
six months ended 30 June 2023 and the year ended 31 December 2023,
reflecting the impact of changes the Group made to its operating
segments during the period.
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, Particle Measuring Systems and
Servomex;
· Spectris Dynamics provides differentiated sensing, data
acquisition, analysis modelling and simulation solutions to help
customers accelerate product development and enhance product
performance;
· The
Red Lion Controls segment is a high value precision in-line sensing
and monitoring business.
· Group
costs consist of the cost of running the PLC.
Information about reportable segments
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
Group
costs
|
Total
|
|
Six months ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Segment revenues
|
320.0
|
249.4
|
20.3
|
-
|
589.7
|
|
Inter-segment revenue
|
-
|
-
|
-
|
-
|
-
|
|
External revenue
|
320.0
|
249.4
|
20.3
|
-
|
589.7
|
|
|
|
|
|
|
|
|
Operating profit
|
16.4
|
10.7
|
3.5
|
(6.6)
|
24.0
|
|
Share of results of
associates
|
(0.5)
|
0.1
|
-
|
-
|
(0.4)
|
|
Fair value through profit and loss
movements on debt investments1
|
|
|
|
|
(4.2)
|
|
Profit on disposal of
businesses1
|
|
|
|
|
210.6
|
|
Financial
income1
|
|
|
|
|
8.2
|
|
Finance
costs1
|
|
|
|
|
(2.9)
|
|
Profit before
tax1
|
|
|
|
|
235.3
|
|
Taxation
charge1
|
|
|
|
|
(54.3)
|
|
Profit after
tax1
|
|
|
|
|
181.0
|
1. Not
allocated to reportable segments
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
Group
costs
|
Total
|
|
Six months ended 30 June 2023
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Segment revenues
|
381.3
|
264.5
|
56.9
|
-
|
702.7
|
|
Inter-segment revenue
|
(0.2)
|
-
|
-
|
-
|
(0.2)
|
|
External revenue
|
381.1
|
264.5
|
56.9
|
-
|
702.5
|
|
|
|
|
|
|
|
|
Operating profit
|
53.8
|
18.3
|
11.1
|
(12.7)
|
70.5
|
|
Share of results of
associates
|
-
|
0.1
|
-
|
-
|
0.1
|
|
Fair value through profit and loss
movements on debt investments1
|
|
|
|
|
0.7
|
|
Loss on disposal of
businesses1
|
|
|
|
|
(11.0)
|
|
Financial
income1
|
|
|
|
|
10.3
|
|
Finance
costs1
|
|
|
|
|
(2.1)
|
|
Profit before
tax1
|
|
|
|
|
68.5
|
|
Taxation
charge1
|
|
|
|
|
(16.3)
|
|
Profit after
tax1
|
|
|
|
|
52.2
|
1. Not
allocated to reportable segments
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
Group
costs
|
Total
|
|
Year ended 31 December 2023
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Segment revenues
|
804.8
|
542.8
|
101.8
|
-
|
1,449.4
|
|
Inter-segment revenue
|
(0.2)
|
-
|
-
|
-
|
(0.2)
|
|
External revenue
|
804.6
|
542.8
|
101.8
|
-
|
1,449.2
|
|
|
|
|
|
|
|
|
Operating profit
|
140.4
|
56.1
|
17.3
|
(25.2)
|
188.6
|
|
Share of results of
associates
|
(0.4)
|
0.3
|
-
|
-
|
(0.1)
|
|
Fair value through profit and loss
movements on debt investments1
|
|
|
|
|
2.8
|
|
Loss on disposal of
businesses1
|
|
|
|
|
(12.6)
|
|
Financial
income1
|
|
|
|
|
11.0
|
|
Finance
costs1
|
|
|
|
|
(4.1)
|
|
Profit before
tax1
|
|
|
|
|
185.6
|
|
Taxation
charge1
|
|
|
|
|
(40.2)
|
|
Profit after
tax1
|
|
|
|
|
145.4
|
1. Not
allocated to reportable segments
Geographical segments
The Group's operating segments are
each located in several geographical locations and sell to external
customers in all parts of the world. No individual country amounts
to more than 3% of revenue by location of customer, other than
those noted below. The following is an analysis of revenue from
continuing operations by geographical destination.
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
UK
|
|
20.7
|
28.9
|
56.1
|
|
Germany
|
|
60.3
|
70.8
|
141.6
|
|
France
|
|
22.6
|
23.1
|
51.1
|
|
Rest of Europe
|
|
86.4
|
93.8
|
197.3
|
|
USA
|
|
151.7
|
188.0
|
377.5
|
|
Rest of North America
|
|
13.7
|
19.2
|
37.1
|
|
Japan
|
|
30.1
|
39.8
|
78.3
|
|
China
|
|
97.5
|
116.8
|
249.8
|
|
South Korea
|
|
14.5
|
23.9
|
52.5
|
|
Rest of Asia
|
|
65.2
|
65.5
|
142.7
|
|
Rest of the world
|
|
27.0
|
32.7
|
65.2
|
|
|
|
589.7
|
702.5
|
1,449.2
|
3. Financial income and finance
costs
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
Financial income
|
|
£m
|
£m
|
£m
|
|
Interest receivable
|
|
(4.9)
|
(3.3)
|
(5.3)
|
|
Net gain on retranslation of
short-term inter-company loan balances
|
|
(3.3)
|
(7.0)
|
(5.7)
|
|
|
|
(8.2)
|
(10.3)
|
(11.0)
|
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
Finance costs
|
|
£m
|
£m
|
£m
|
|
Interest payable on loans and
overdrafts
|
|
1.3
|
0.7
|
1.4
|
|
Unwinding of discount factor on
lease liabilities
|
|
1.4
|
1.2
|
2.4
|
|
Net interest cost on pension plan
obligations
|
|
0.1
|
0.2
|
0.3
|
|
Unwinding of discount factor on
redemption liability
|
|
0.1
|
-
|
-
|
|
|
|
2.9
|
2.1
|
4.1
|
|
|
|
|
|
|
|
Net finance credit
|
|
(5.3)
|
(8.2)
|
(6.9)
|
4. Taxation
The tax charge for the six months
to 30 June 2024 has been calculated using the effective tax rate
which is expected to apply to the Group for the full year, using
tax rates substantively enacted at 30 June 2024. The effective tax
rate applied to adjusted profit before tax for the half year is
23.0% (H1 2023: 22.0%; FY 2023: 21.5%). The effective tax rate has
been estimated using full year projections of adjusted profit
before tax by territory and the tax rates applying in those
territories. The tax rates applied to adjusting items are
established on an individual basis for each adjusting
item.
A reconciliation of the tax charge
on adjusted profit to the actual tax charge is presented
below:
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Tax charge on adjusted profit
before tax
|
14.5
|
22.7
|
56.7
|
|
Tax credit on amortisation of
acquisition-related intangible assets
|
(1.9)
|
(2.4)
|
(4.7)
|
|
Tax credit on net
transaction-related costs and fair value adjustments
|
(0.8)
|
(0.4)
|
(1.7)
|
|
Tax charge/(credit) on
profit/(loss) on disposal of businesses
|
49.2
|
(0.1)
|
(0.2)
|
|
Tax charge on retranslation of
short-term inter-company loan balances
|
0.2
|
0.5
|
0.3
|
|
Tax credit on configuration and
customisation costs carried out by third parties on material SaaS
projects
|
(5.9)
|
(4.2)
|
(10.8)
|
|
Tax (credit)/charge on fair value
through profit and loss movements on debt investments
|
(1.0)
|
0.2
|
0.6
|
|
Total tax charge
|
54.3
|
16.3
|
40.2
|
The UK legislation to implement
the OECD BEPS 'Pillar Two' or 'GloBE' minimum tax rules was
substantively enacted in June 2023. The rules apply to Spectris
from 1 January 2024. We anticipate that these legislative changes
will give rise to limited upward pressure on the Group's adjusted
effective tax rate from FY2024. The expected impact has been
factored into the effective tax rate applied to the Group's profits
for H1 2024. The charge is expected to primarily 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 has applied the
temporary exception included in IAS 12 'Income Taxes' from
recognising or disclosing information about deferred taxes 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.
5. Dividends
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
2024
|
2023
|
2023
|
|
Amounts recognised and paid as distributions to owners of the
Company in the period
|
£m
|
£m
|
£m
|
|
Final dividend for the year ended
31 December 2023 of 53.9p per share
|
54.2
|
-
|
-
|
|
Final dividend for the year ended
31 December 2022 of 51.3p per share
|
-
|
53.7
|
53.7
|
|
Interim dividend for the year
ended 31 December 2023 of 25.3p per share
|
-
|
-
|
26.0
|
|
|
54.2
|
53.7
|
79.7
|
An interim 2024 dividend of 26.6p
per share has been declared and will be payable on 8 November 2024
to ordinary shareholders on the register at the close of business
on 4 October 2024.
6. Earnings per share
Basic earnings per share amounts
are calculated by dividing net profit for the period attributable
to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period (excluding treasury
shares).
Diluted profit 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 period but adjusted for the effects of
dilutive options. This additional adjustment is not made when there
is a net loss attributable to ordinary shareholders.
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
Basic earnings per share
|
|
2024
|
2023
|
2023
|
|
Profit after tax (£m)
|
|
181.0
|
52.2
|
145.4
|
|
Non-controlling
interest
|
|
-
|
-
|
-
|
|
Profit attributable to ordinary equity holders of the parent
for basic earnings
|
|
181.0
|
52.2
|
145.4
|
|
Weighted average number of shares
outstanding (millions)
|
|
100.8
|
104.5
|
103.6
|
|
Basic earnings per share (pence)
|
|
179.6
|
50.0
|
140.3
|
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
Diluted earnings per share
|
|
2024
|
2023
|
2023
|
|
Profit after tax (£m)
|
|
181.0
|
52.2
|
145.4
|
|
Non-controlling
interest
|
|
-
|
-
|
-
|
|
Profit attributable to ordinary equity holders of the parent
for diluted earnings
|
|
181.0
|
52.2
|
145.4
|
|
Basic weighted average number of
shares outstanding (millions)
|
|
100.8
|
104.5
|
103.6
|
|
Weighted average number of
dilutive 5p ordinary shares under option (millions)
|
|
0.7
|
0.7
|
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)
|
(0.2)
|
|
Diluted weighted average number of shares outstanding
(millions)
|
|
101.3
|
105.0
|
104.3
|
|
Diluted earnings per share (pence)
|
|
178.7
|
49.7
|
139.4
|
7. Acquisitions
On 25 April 2024, the Group
acquired 5.74% of the share capital of Dimer Instruments Inc
(Dimer), together with various rights for a total purchase
consideration of £7.7 million. These rights include a series
of call and put options that trigger when certain developmental
milestones are achieved, this will increase the Group's holding
over time to 40.11%. Dimer is an analytical instruments company,
which supports the development of protein screening technology to
assist in drug discovery. The transaction is in line with Spectris'
strategy to make synergistic acquisitions to enhance and grow its
businesses. Dimer will be integrated into the Spectris Scientific
reportable segment and Malvern Panalytical cash generating
unit.
The Group has provisionally
allocated £6.9 million of deferred consideration (equal to the
total discounted future payments) to the milestone call and put
options. The remaining £0.8 million purchase consideration is
primarily allocable to the 5.74% initial shareholding, together
with a call option to purchase the remaining shareholding at any
time in the next seven years at a pre-set price.
Having evaluated the options and
other rights attached to the acquisition, the Group has concluded
that, on balance, they are able to substantively exercise control
over Dimer and as such its results are fully consolidated from the
acquisition date, with a corresponding non-controlling interest
(NCI) being recognised in equity in accordance with IFRS 10. The
NCI has been calculated with reference to the 40.11% in-substance
ownership of Dimer at the acquisition date.
The excess of the provisional fair
value of consideration paid over the fair value of the net assets
acquired is represented by goodwill. Goodwill arising is
attributable to the assembled workforce, in process research,
expected future customer relationships and synergies from
cross-selling goods and services.
The call option to purchase the
remaining share capital of Dimer and the right of first refusal if
a third party makes an offer to acquire some or all of Dimer's
other shareholders equity have been provisionally assessed to have
an immaterial value.
Dimer did not contribute to the
Group's revenue and operating loss for the six months ended 30 June
2024. Group revenue and statutory operating profit for the
six months ended 30 June 2024 would be the same had this
acquisition taken place on the first day of the financial
period.
Acquisition-related costs
(included in administrative expenses) amount to £0.2
million.
The accounting has only been
provisionally determined at 30 June 2024, with amounts recognised
in respect of the estimated fair value of identifiable assets
acquired and liabilities assumed in respect of this acquisition
provided below:
|
|
|
30 June
|
|
|
|
2024
|
|
|
|
£m
|
|
Other receivables
|
|
0.8
|
|
Trade and other
payables
|
|
(0.1)
|
|
Net assets acquired
|
|
0.7
|
|
Non-controlling interest measured
at provisional fair value
|
|
(0.4)
|
|
Provisional Goodwill
|
|
7.4
|
|
Gross consideration
|
|
7.7
|
|
|
|
|
|
Analysis of cash outflow in Condensed Consolidated Statement
of Cash Flows
|
|
|
|
Gross consideration in respect of
acquisitions during the period
|
|
7.7
|
|
Deferred and contingent
consideration on acquisitions included in net consideration during
the period to be paid in future periods
|
|
(6.9)
|
|
Cash paid during the year in respect of acquisitions during
the period
|
|
0.8
|
|
Cash paid in respect of prior
periods' acquisitions
|
|
-
|
|
Net cash outflow relating to acquisitions
|
|
0.8
|
8. Business disposals
On 3 April 2024, the Group
disposed of its Red Lion Controls business, which formed the Red
Lion Controls operating segment. The consideration received was
£280.9 million, settled in cash. This generated a pre-tax profit on
disposal of £210.9 million. The divestment was effected to offer a
better opportunity to generate returns for shareholders and further
enhance Group margins.
The profit on disposal of the Red
Lion Controls business was calculated as follows:
|
|
|
30 June
|
|
|
|
2024
|
|
|
|
£m
|
|
Goodwill
|
|
46.5
|
|
Other intangible assets
|
|
8.9
|
|
Property, plant and equipment -
owned and right of use assets
|
|
9.4
|
|
Current tax assets
|
|
0.1
|
|
Inventories
|
|
22.0
|
|
Trade and other
receivables
|
|
10.8
|
|
Cash and cash
equivalents
|
|
2.0
|
|
Trade and other
payables
|
|
(8.3)
|
|
Lease liabilities
|
|
(0.6)
|
|
Provisions
|
|
(0.8)
|
|
Deferred tax
liabilities
|
|
(6.5)
|
|
Net assets of disposed businesses
|
|
83.5
|
|
|
|
|
|
Consideration received
|
|
|
|
Settled in cash
|
|
280.9
|
|
Total consideration received
|
|
280.9
|
|
Transaction expenses booked to
profit on disposal of business
|
|
(4.4)
|
|
Net consideration from disposal of business
|
|
276.5
|
|
Net assets disposed of (including
cash and cash equivalents held by disposal group)
|
|
(83.5)
|
|
Currency translation differences
transferred from translation reserve
|
|
17.9
|
|
Pre-tax profit on disposal of business
|
|
210.9
|
|
|
|
|
|
Net proceeds recognised in the Condensed Consolidated
Statement of Cash Flows
|
|
|
|
Consideration received settled in
cash
|
|
280.9
|
|
Cash and cash equivalents held by
disposed business
|
|
(2.0)
|
|
Transaction fees paid
|
|
(4.4)
|
|
Tax paid on current period
disposal of business
|
|
(25.2)
|
|
Net proceeds recognised in the Condensed Consolidated
Statement of Cash Flows in respect of current period
disposal
|
|
249.3
|
|
Payment made in respect of prior
year's disposals of businesses
|
|
(0.5)
|
|
Net proceeds recognised in the Condensed Consolidated
Statement of Cash Flows
|
|
248.8
|
Also included in profit on
disposal of business in the Condensed Consolidated Income Statement
is £0.3m of transaction costs relating to prior year
disposals.
9. Cash generated from
operations
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
Note
|
£m
|
£m
|
£m
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit after tax
|
|
181.0
|
52.2
|
145.4
|
|
Adjustments for:
|
|
|
|
|
|
Taxation charge
|
|
54.3
|
16.3
|
40.2
|
|
Share of post-tax results of
associates
|
|
0.4
|
(0.1)
|
0.1
|
|
(Profit)/loss on disposal of
businesses
|
8
|
(210.6)
|
11.0
|
12.6
|
|
Finance costs
|
3
|
2.9
|
2.1
|
4.1
|
|
Financial income
|
3
|
(8.2)
|
(10.3)
|
(11.0)
|
|
Depreciation and impairment of
property, plant and equipment
|
|
15.5
|
16.6
|
32.8
|
|
Amortisation, impairment and other
non-cash adjustments made of intangible assets
|
|
9.9
|
12.8
|
24.9
|
|
Transaction-related fair value
adjustments
|
|
0.2
|
1.7
|
7.5
|
|
Fair value through profit and loss
movements on debt investments
|
|
4.2
|
(0.7)
|
(2.8)
|
|
Profit on disposal and
re-measurement of property, plant and equipment and associated
lease liabilities
|
|
(0.1)
|
(0.7)
|
(0.5)
|
|
Equity-settled share-based payment
expense
|
|
6.3
|
7.4
|
13.1
|
|
Operating cash flow before changes in working capital and
provisions
|
|
55.8
|
108.3
|
266.4
|
|
Decrease in trade and other
receivables
|
|
25.6
|
24.9
|
16.0
|
|
(Increase)/decrease in
inventories
|
|
(6.9)
|
(9.5)
|
1.5
|
|
Decrease in trade and other
payables
|
|
(15.2)
|
(12.1)
|
(33.0)
|
|
Decrease in provisions and
retirement benefits
|
|
(1.9)
|
(2.7)
|
(5.4)
|
|
Cash generated from operations
|
|
57.4
|
108.9
|
245.5
|
10. Share buyback, treasury shares and employee benefit trust
shares
During the six months ended 30
June 2024, 1,313,979 ordinary shares were repurchased and cancelled
by the Group as part of the first tranche of the £150 million share
buyback programme announced on 11 December 2023, resulting in a
cash outflow of £46.0 million, including transaction fees of £0.2
million.
During the six months ended 30
June 2023, 729,423 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 £26.7
million, including transaction fees of £0.1
million.
At 30 June 2024, the Group held
3,806,195 treasury shares (H1 2023: 4,205,234; FY 2023: 4,128,036).
During the period, 321,841 (H1 2023: 390,662; FY 2023: 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.
11. Financial instruments
The following tables show the fair
value measurement of financial instruments by level following the
fair value hierarchy:
· Level
1: quoted listed stock exchange prices (unadjusted) in active
markets for identical assets;
· Level 2: inputs other than quoted prices within level 1 that
are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e. derived from prices); and
· Level
3: inputs for assets and liabilities derived from valuation
techniques that include inputs for the assets or liability that are
not based on observable market data.
The fair value measurement
methodology of all financial instruments remains consistent with
the approach disclosed in the Consolidated Financial Statements for
the year ended 31 December 2023.
|
|
Level 1 fair
value
|
Level 2 fair
value
|
Level 3 fair
value
|
Carrying
amount
|
|
Six months ended 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
|
Fair value hierarchy categorisation of financial instruments
measured at fair value
|
|
|
|
|
|
Deferred and contingent
consideration receivable on acquisitions
|
-
|
-
|
0.5
|
0.5
|
|
Deferred and contingent
consideration payable on acquisitions
|
-
|
-
|
(17.7)
|
(17.7)
|
|
Investment in equity instruments
designated at initial recognition at fair value through other
comprehensive income
|
0.3
|
-
|
23.2
|
23.5
|
|
Investment in debt
instruments
|
-
|
-
|
17.5
|
17.5
|
|
Cash and cash
equivalents
|
-
|
292.5
|
-
|
292.5
|
|
Forward exchange contract
assets
|
-
|
4.1
|
-
|
4.1
|
|
Forward exchange contract
liabilities
|
-
|
(0.7)
|
-
|
(0.7)
|
|
|
|
|
|
319.7
|
|
|
Level 1
fair value
|
Level 2
fair value
|
Level 3
fair value
|
Carrying
amount
|
|
Six months ended 30 June 2023
|
£m
|
£m
|
£m
|
£m
|
|
Fair value hierarchy categorisation of financial instruments
measured at fair value
|
|
|
|
|
|
Deferred and contingent
consideration payable on acquisitions
|
-
|
-
|
(2.2)
|
(2.2)
|
|
Investment in equity instruments
designated at initial recognition at fair value through other
comprehensive income
|
0.5
|
-
|
25.8
|
26.3
|
|
Investment in debt
instruments
|
-
|
-
|
19.6
|
19.6
|
|
Cash and cash
equivalents
|
-
|
214.3
|
-
|
214.3
|
|
Forward exchange contract
assets
|
-
|
7.0
|
-
|
7.0
|
|
Forward exchange contract
liabilities
|
-
|
(0.3)
|
-
|
(0.3)
|
|
|
|
|
|
264.7
|
|
|
Level 1
fair value
|
Level 2
fair value
|
Level 3
fair value
|
Carrying
amount
|
|
Year ended 31 December 2023
|
£m
|
£m
|
£m
|
£m
|
|
Fair value hierarchy categorisation of financial instruments
measured at fair value
|
|
|
|
|
|
Deferred and contingent
consideration receivable on acquisitions
|
-
|
-
|
0.5
|
0.5
|
|
Deferred and contingent
consideration payable on acquisitions
|
-
|
-
|
(10.6)
|
(10.6)
|
|
Investment in equity instruments
designated at initial recognition at fair value through other
comprehensive income
|
0.4
|
-
|
23.9
|
24.3
|
|
Investment in debt
instruments
|
-
|
-
|
21.7
|
21.7
|
|
Cash and cash equivalents included
in assets held for sale
|
-
|
0.3
|
-
|
0.3
|
|
Cash and cash
equivalents
|
-
|
138.5
|
-
|
138.5
|
|
Forward exchange contract
assets
|
-
|
6.2
|
-
|
6.2
|
|
Forward exchange contract
liabilities included in assets held for sale
|
-
|
(0.1)
|
-
|
(0.1)
|
|
Forward exchange contract
liabilities
|
-
|
(0.1)
|
-
|
(0.1)
|
|
|
|
|
|
180.7
|
There were no movements between
the different levels of the fair value hierarchy in the
period.
The fair value of floating rate
borrowings approximates to the carrying amount because interest
rates are at floating rates where payments are reset to market
rates at intervals of less than one year.
The fair value of fixed rate
borrowings is estimated by discounting the future contracted cash
flow, using appropriate yield curves, to the net present
values.
The level 1 £0.3 million (H1 2023:
£0.5 million, FY 2023: £0.4 million) of investments in equity
instruments is calculated using quoted market prices in an active
market at the balance sheet date.
The level 2 fair value of forward
exchange contracts is determined using discounted cash flow
techniques based on readily available market data.
The level 2 and level 3 fair value
of cash and cash equivalents approximates to the carrying amount
because of the short maturity of these instruments.
The level 3 fair value of deferred
and contingent consideration is determined by considering the
performance expectations of the acquired or disposed entity or the
likelihood of non-financial integration milestones whilst applying
the entity-specific discount rates. The unobservable inputs are the
projected forecast measures that are assessed on an annual basis.
Changes in the fair value of deferred and contingent consideration
relating to updated projected forecast performance measures are
recognised in the Condensed Consolidated Income Statement within
administrative expenses in the Condensed Consolidated Income
Statement in the period that the change occurs.
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
Reconciliation of level 3 fair value for deferred and
contingent consideration payable on acquisitions
|
|
|
|
|
|
At 1 January
|
|
(10.1)
|
(3.3)
|
(3.3)
|
|
Deferred and contingent
consideration arising from current period acquisitions payable in
future periods
|
|
(6.9)
|
-
|
(3.0)
|
|
Deferred and contingent
consideration arising from current period acquisitions receivable
in future periods
|
|
-
|
-
|
0.5
|
|
Deferred and contingent
consideration paid in the current period relating to previous
periods' acquisitions
|
|
-
|
2.8
|
1.9
|
|
Deferred and contingent
consideration transferred to liabilities held for sale
|
|
-
|
-
|
1.3
|
|
Costs charged to the Condensed
Consolidated Income Statement:
|
|
|
|
|
|
Subsequent adjustment on
acquisitions and disposals
|
|
(0.2)
|
(1.7)
|
(7.5)
|
|
At end of period
|
|
(17.2)
|
(2.2)
|
(10.1)
|
The level 3 £23.2 million (H1
2023: £27.4 million, FY 2023: £23.9 million) of investment in
equity instruments consists of the investment units in EZ Ring
FPCI, the fund holding the combined UTAC-Millbrook group. This
investment is recognised at fair value, using the income approach,
with the key input being a discounted cash flow. A 1% to 5%
decrease in net asset value per share would cause a £0.2 million to
£1.2 million decrease in the fair value.
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
Reconciliation of level 3 fair value for investment in equity
instruments
|
|
|
|
|
|
At 1 January
|
|
23.9
|
28.6
|
28.6
|
|
Fair value loss
|
|
(0.1)
|
(2.0)
|
(4.2)
|
|
Foreign exchange
difference
|
|
(0.6)
|
(0.8)
|
(0.5)
|
|
At end of period
|
|
23.2
|
25.8
|
23.9
|
The level 3 £17.5 million (H1
2023: £19.6 million, FY 2023: £21.7 million) of investment in debt
instruments consists of a vendor loan note receivable. This
investment is recognised at fair value by establishing an
appropriate market yield. The key inputs used were synthetic credit
ratings and market interest rates. The Group has performed
sensitivity analysis of reasonable possible changes in key inputs.
A 1% decrease in market interest rates would cause a £0.5 million
increase in the fair value and 1% increase would cause a £0.5
million decrease in the fair value.
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
Reconciliation of level 3 fair value for investment in debt
instruments
|
|
|
|
|
|
At 1 January
|
|
21.7
|
18.9
|
18.9
|
|
Fair value movement on level 3
investment in debt instruments
|
|
(4.2)
|
0.7
|
2.8
|
|
At end of period
|
|
17.5
|
19.6
|
21.7
|
12. Post balance sheet events
On 4 July 2024, the Group
announced that it had agreed to acquire SciAps Incorporated
(SciAps) for headline consideration of up to $260 million (£205
million), comprising up-front consideration of $200 million (£157
million) plus a deferred element of up to $60 million (£47 million)
payable on the delivery of agreed financial metrics. This amount is
subject to potential adjustment through a completion accounts
process. The transaction is in line with Spectris' strategy to make
synergistic acquisitions to enhance and grow its platform and
potential platform businesses. SciAps will be integrated into the
Spectris Scientific reportable segment.
On 16 July 2024, the Group
announced that it had agreed to acquire Micromeritics Instrument
Corporation (Micromeritics) for headline consideration of up to
$683 million (£526 million), comprising up-front consideration of
$630 million (£485 million) plus a deferred element of up to $53
million (£41 million) based on agreed financial performance metrics
in 2024 and 2025. The transaction is in line with Spectris'
strategy to make synergistic acquisitions to enhance and grow its
platform and potential platform businesses. Micromeritics will be
integrated into the Spectris Scientific reportable
segment.
The Group has sourced sufficient
bridge financing and is working with lenders to finalise terms on
long term financing.
These acquisitions are expected to
complete in the third quarter.
Appendix - Alternative performance measures
Policy
Spectris uses adjusted and
underlying figures as key performance measures in addition to those
reported under IFRS, as management believe these measures enable
management and stakeholders to assess the underlying performance of
the businesses as they exclude certain items that are considered to
be significant in nature or quantum, foreign exchange movements and
the impact of acquisitions and disposals.
The alternative performance
measures (APMs) are consistent with how the businesses' performance
is planned and reported within the internal management reporting to
the Board and Operating Committees. Some of these measures are used
for the purpose of setting remuneration targets. The key APMs that
the Group uses include like-for-like (LFL) organic performance
measures and adjusted measures for the income statement together
with adjusted financial position and cash flow measures.
Explanations of how they are calculated and how they are reconciled
to an IFRS statutory measure are set out below.
Adjusted measures
The Group's policy is to exclude
items that are considered to be significant in nature or quantum
and where treatment as an adjusted item provides stakeholders with
additional useful information to better assess the period-on-period
trading performance of the Group.
Some of these items are material
in nature and the costs are expected to be incurred over more than
one reporting period.
The Group excludes such items
which management have defined for 2024 and 2023 as:
|
|
|
|
Amortisation of
acquisition-related intangible assets
|
Nature
|
|
Depreciation of
acquisition-related fair value adjustments to property, plant and
equipment
|
Nature
|
|
Transaction-related costs,
deferred and contingent consideration fair value
adjustments
|
Nature
|
|
Spectris Foundation
contribution1
|
Nature
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects1
|
Quantum
|
|
Profits or losses on termination
or disposal of businesses
|
Nature
|
|
Unrealised changes in the fair
value of financial instruments
|
Nature
|
|
Fair value through profit and loss
movements on debt investments
|
Nature
|
|
Gains or losses on retranslation
of short-term inter-company loan balances
|
Nature
|
|
Related tax effects on the above
and other tax items which do not form part of the underlying tax
rate
|
Dependent on above classification
|
1 Multi-year project, where the cost is expected to continue
beyond the current reporting period.
LFL measures
Reference is made to LFL and
organic measures throughout this document. LFL and organic have the
same definition, as set out below.
The Board reviews and compares
current and prior period segmental sales and adjusted operating
profit at constant exchange rates and excludes the impact of
acquisitions and disposals during the period
The constant exchange rate
comparison uses the current period segmental information, stated in
each entity's functional currency, and translates the results into
its presentation currency using the prior period's monthly exchange
rates, irrespective of the underlying transactional
currency.
The incremental impact of business
acquisitions is excluded for the first twelve months of ownership
from the month of purchase. For business disposals, comparative
figures for segmental sales and adjusted gross profit, overheads
and operating profit (adjusted results) are adjusted to reflect the
comparable periods of ownership.
On 1 April 2024, the Red Lion
Controls business was disposed of and, as a result, the segmental
LFL adjusted results for the Red Lion Controls segment for 2023
exclude the trading results of the Red Lion Controls business for
the period from April 2023 to June 2023.
On 31 March 2023, the Concept Life
Sciences business was disposed of and, as a result, the segmental
LFL adjusted results for the Spectris Scientific segment for 2023
exclude the trading results of the Concept Life Sciences business
for the period from January 2023 to March 2023.
The tables on the following pages
show restated comparative figures for the reportable operating
segments for the six months ended 30 June 2023 and the year ended
31 December 2023, reflecting the impact of changes the Group made
following the completion of the sale of the Red Lion Controls
business in April 2024, the Servomex business reporting moved to
form part of the Spectris Scientific division.
The LFL measure is presented as a
means of eliminating the effects of exchange rate fluctuations on
the period-on-period statutory results as well as allowing the
Board to assess the underlying trading performance of the
businesses on a LFL basis for sales, gross profit, overheads and
operating profit.
Based on the above policy, the
adjusted performance measures are derived from the statutory
figures as follows:
Income statement measures
a) LFL adjusted sales
by segment
H1 2024 LFL adjusted sales versus
H1 2023 LFL adjusted sales
|
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
H1 2024
Total
|
|
Six months ended 30 June 2024 sales by
segment
|
|
£m
|
£m
|
£m
|
£m
|
|
Sales
|
|
320.0
|
249.4
|
20.3
|
589.7
|
|
Constant exchange rate adjustment
to H1 2023 exchange rates
|
|
11.8
|
8.8
|
0.9
|
21.5
|
|
Acquisitions
|
|
(1.6)
|
(6.6)
|
-
|
(8.2)
|
|
LFL adjusted sales
|
|
330.2
|
251.6
|
21.2
|
603.0
|
|
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
H1 2023
Total
|
|
Six months ended 30 June 2023 sales by
segment
|
|
£m
|
£m
|
£m
|
£m
|
|
Sales
|
|
381.1
|
264.5
|
56.9
|
702.5
|
|
Disposal of businesses
|
|
(5.5)
|
-
|
(27.4)
|
(32.9)
|
|
LFL adjusted sales
|
|
375.6
|
264.5
|
29.5
|
669.6
|
b) Adjusted operating
profit and adjusted operating margin
H1 2024 LFL adjusted operating
profit versus H1 2023 LFL adjusted operating profit
|
Six months ended 30 June 2024 adjusted operating
profit
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
Group
costs
|
H1 2024
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Statutory operating
profit
|
16.4
|
10.7
|
3.5
|
(6.6)
|
24.0
|
|
Net transaction-related costs and
fair value adjustments
|
5.5
|
1.7
|
0.2
|
-
|
7.4
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects
|
8.9
|
13.1
|
-
|
-
|
22.0
|
|
Amortisation of
acquisition-related intangible assets
|
2.6
|
5.1
|
-
|
-
|
7.7
|
|
Adjusted operating
profit
|
33.4
|
30.6
|
3.7
|
(6.6)
|
61.1
|
|
Constant exchange rate adjustment
to H1 2023 exchange rates
|
0.3
|
1.0
|
0.2
|
-
|
1.5
|
|
Acquisitions
|
(0.1)
|
0.3
|
-
|
-
|
0.2
|
|
LFL adjusted operating
profit
|
33.6
|
31.9
|
3.9
|
(6.6)
|
62.8
|
|
Six months ended 30 June 2023 adjusted operating
profit
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
Group
costs
|
H1 2023
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Statutory operating
profit
|
53.8
|
18.3
|
11.1
|
(12.7)
|
70.5
|
|
Net transaction-related costs and
fair value adjustments
|
0.6
|
1.6
|
1.8
|
-
|
4.0
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects
|
8.6
|
9.2
|
-
|
-
|
17.8
|
|
Amortisation of
acquisition-related intangible assets
|
2.7
|
6.7
|
0.4
|
-
|
9.8
|
|
Adjusted operating
profit
|
65.7
|
35.8
|
13.3
|
(12.7)
|
102.1
|
|
Disposal of businesses
|
0.5
|
-
|
(6.1)
|
-
|
(5.6)
|
|
LFL adjusted operating
profit
|
66.2
|
35.8
|
7.2
|
(12.7)
|
96.5
|
|
Year ended 31 December 2023 adjusted operating
profit
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
Group
costs
|
2023 Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Statutory operating
profit
|
140.4
|
56.1
|
17.3
|
(25.2)
|
188.6
|
|
Net transaction-related costs and
fair value adjustments
|
7.1
|
3.1
|
3.8
|
-
|
14.0
|
|
Spectris Foundation
Contribution
|
-
|
-
|
-
|
1.0
|
1.0
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects
|
19.4
|
20.6
|
-
|
-
|
40.0
|
|
Amortisation of
acquisition-related intangible assets
|
5.0
|
13.2
|
0.7
|
-
|
18.9
|
|
Adjusted operating
profit
|
171.9
|
93.0
|
21.8
|
(24.2)
|
262.5
|
|
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
H1 2024
Total
|
|
Six months ended 30 June 2024 operating
margin
|
|
%
|
%
|
%
|
%
|
|
Statutory operating
margin1
|
|
5.1
|
4.3
|
17.2
|
4.1
|
|
Adjusted operating
margin2
|
|
10.4
|
12.3
|
18.2
|
10.4
|
|
LFL adjusted operating
margin3
|
|
10.2
|
12.7
|
18.4
|
10.4
|
|
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
H1 2023
Total
|
|
Six months ended 30 June 2023 operating
margin
|
|
%
|
%
|
%
|
%
|
|
Statutory operating
margin1
|
|
14.1
|
6.9
|
19.5
|
10.0
|
|
Adjusted operating
margin2
|
|
17.2
|
13.5
|
23.4
|
14.5
|
|
LFL adjusted operating
margin3
|
|
17.6
|
13.5
|
24.4
|
14.4
|
|
|
|
Spectris
Scientific
|
Spectris
Dynamics
|
Red Lion
Controls
|
2023 Total
|
|
Year ended 31 December 2023 operating
margin
|
|
%
|
%
|
%
|
%
|
|
Statutory operating
margin1
|
|
17.4
|
10.3
|
17.0
|
13.0
|
|
Adjusted operating
margin2
|
|
21.4
|
17.1
|
21.4
|
18.1
|
1.
Statutory operating margin is calculated as statutory operating
profit divided by sales
2. Adjusted
operating margin is calculated as adjusted operating profit divided
by sales
3. LFL
adjusted operating margin is calculated as LFL adjusted operating
profit divided by LFL adjusted sales. Refer to the tables above for
a reconciliation of the nearest GAAP measure (sales/operating
profit respectively) to LFL adjusted sales/LFL adjusted operating
profit.
c) Adjusted gross
profit and adjusted gross margin
H1 2024 LFL adjusted gross profit
versus H1 2023 LFL adjusted gross profit
|
|
|
H1 2024
|
|
|
|
Total
|
|
Six months ended 30 June 2024 adjusted gross
profit
|
|
£m
|
|
Statutory gross profit
|
|
324.0
|
|
Constant exchange rate adjustment
to H1 2023 exchange rates
|
|
9.3
|
|
Acquisitions
|
|
(3.4)
|
|
LFL adjusted gross
profit
|
|
329.9
|
|
|
|
H1 2023
|
|
|
|
Total
|
|
Six months ended 30 June 2023 LFL adjusted gross
profit
|
|
£m
|
|
Statutory gross profit
|
|
400.5
|
|
Disposal of businesses
|
|
(17.4)
|
|
LFL adjusted gross
profit
|
|
383.1
|
|
|
|
H1 2024
|
|
|
|
Total
|
|
Six months ended 30 June 2024 gross margin
|
|
%
|
|
Statutory gross
margin1
|
|
54.9
|
|
LFL adjusted gross
margin2
|
|
54.7
|
|
|
|
H1 2023
|
|
|
|
Total
|
|
Six months ended 30 June 2023 gross margin
|
|
%
|
|
Statutory gross
margin1
|
|
57.0
|
|
LFL adjusted gross
margin2
|
|
57.2
|
1.
Statutory gross margin is calculated as statutory gross profit
divided by sales
2. LFL
adjusted gross margin is calculated as LFL adjusted gross profit
divided by LFL adjusted sales. Refer to the tables above for a
reconciliation of the nearest GAAP measure (sales/gross profit
respectively) to LFL adjusted sales/LFL adjusted gross
profit.
d) LFL Adjusted
overheads
|
|
|
H1 2024
Total
|
|
Six months ended 30 June 2024 LFL adjusted
overheads
|
|
£m
|
|
Statutory indirect production and
engineering expenses
|
|
(59.5)
|
|
Statutory sales and marketing
expenses
|
|
(115.1)
|
|
Statutory administrative
expenses
|
|
(125.4)
|
|
Total overheads
|
|
(300.0)
|
|
Net transaction-related costs and
fair value adjustments
|
|
7.4
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects
|
|
22.0
|
|
Amortisation of
acquisition-related intangible assets
|
|
7.7
|
|
Constant exchange rate adjustment
to H1 2023 exchange rates
|
|
(7.8)
|
|
Acquisitions
|
|
3.6
|
|
LFL adjusted overheads
|
|
(267.1)
|
|
|
|
H1 2023
Total
|
|
Six months ended 30 June 2023 LFL adjusted
overheads
|
|
£m
|
|
Statutory indirect production and
engineering expenses
|
|
(63.0)
|
|
Statutory sales and marketing
expenses
|
|
(129.0)
|
|
Statutory administrative
expenses
|
|
(138.0)
|
|
Total overheads
|
|
(330.0)
|
|
Net transaction-related costs and
fair value adjustments
|
|
4.0
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects
|
|
17.8
|
|
Amortisation of
acquisition-related intangible assets
|
|
9.8
|
|
Disposal of businesses
|
|
11.8
|
|
LFL adjusted overheads
|
|
(286.6)
|
|
|
|
H1 2024
Total
|
|
Six months ended 30 June 2024 LFL adjusted overheads as a
percentage of sales
|
|
%
|
|
LFL adjusted overheads as a
percentage of sales1
|
|
44.3
|
|
|
|
H1 2023
Total
|
|
Six months ended 30 June 2023 LFL adjusted overheads as a
percentage of sales
|
|
%
|
|
LFL adjusted overheads as a
percentage of sales1
|
|
42.8
|
1. LFL
overheads as a percentage of sales is calculated as LFL adjusted
overheads divided by LFL adjusted sales. Refer to the tables above
for a reconciliation of the nearest GAAP measure (sales/total
overheads respectively) to LFL adjusted sales/LFL adjusted
overheads.
e) Adjusted net
finance credit
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
Statutory net finance
credit
|
|
5.3
|
8.2
|
6.9
|
|
Net gain on retranslation of
short-term inter-company loan balances
|
|
(3.2)
|
(7.0)
|
(5.7)
|
|
Adjusted net finance
credit
|
|
2.1
|
1.2
|
1.2
|
f) Adjusted
profit before taxation
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
Adjusted operating
profit
|
|
61.1
|
102.1
|
262.5
|
|
Share of post-tax results of
associates
|
|
(0.4)
|
0.1
|
(0.1)
|
|
Adjusted net finance
credit
|
|
2.1
|
1.2
|
1.2
|
|
Adjusted profit before
taxation
|
|
62.8
|
103.4
|
263.6
|
g) Adjusted earnings
per share
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
Adjusted earnings
|
|
£m
|
£m
|
£m
|
|
Statutory profit after
tax
|
|
181.0
|
52.2
|
145.4
|
|
Adjusted for:
|
|
|
|
|
|
Net transaction-related costs and
fair value adjustments
|
|
7.4
|
4.0
|
14.0
|
|
Spectris Foundation
Contribution
|
|
-
|
-
|
1.0
|
|
Configuration and customisation
costs carried out by third parties on material SaaS
projects
|
|
22.0
|
17.8
|
40.0
|
|
Amortisation of
acquisition-related intangible assets
|
|
7.7
|
9.8
|
18.9
|
|
Fair value through profit and loss
movements on debt investments
|
|
4.2
|
(0.7)
|
(2.8)
|
|
(Profit)/loss on disposal of
businesses
|
|
(210.6)
|
11.0
|
12.6
|
|
Net gain on retranslation of
short-term inter-company loan balances
|
|
(3.2)
|
(7.0)
|
(5.7)
|
|
Tax effect of the above and other
non-recurring items
|
|
39.8
|
(6.4)
|
(16.5)
|
|
Adjusted earnings
|
|
48.3
|
80.7
|
206.9
|
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
Adjusted earnings per share
|
|
£m
|
£m
|
£m
|
|
Weighted average number of shares
outstanding
(millions)
|
|
100.8
|
104.5
|
103.6
|
|
Adjusted earnings per share
(pence)
|
|
47.9
|
77.2
|
199.7
|
Basic earnings per share in
accordance with IAS 33 'Earnings Per Share' are disclosed in note
6.
Financial position measures
h) Net cash
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
Cash and cash equivalents included
in current assets
|
292.5
|
214.3
|
138.5
|
|
Cash and cash equivalents included
in assets held for sale
|
-
|
-
|
0.3
|
|
Net cash
|
292.5
|
214.3
|
138.8
|
Net cash excludes lease
liabilities arising under IFRS 16 as this aligns with the
definition of net cash under the Group's bank covenants.
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
Reconciliation of changes in cash and cash equivalents to
movements in net cash
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Net increase/(decrease) in cash
and cash equivalents
|
|
158.6
|
(7.8)
|
(85.7)
|
|
Repayment of borrowings
|
|
-
|
0.1
|
0.1
|
|
Effect of foreign exchange rate
changes
|
|
(4.9)
|
(6.0)
|
(3.6)
|
|
Movement in net cash
|
|
153.7
|
(13.7)
|
(89.2)
|
|
Net cash at beginning of
period
|
|
138.8
|
228.0
|
228.0
|
|
Net cash at end of period
|
|
292.5
|
214.3
|
138.8
|
Cash flow measures
i) Adjusted cash
flow
|
|
|
Six months ended 30
June
|
Year
ended 31 December
|
|
|
|
2024
|
2023
|
2023
|
|
|
|
£m
|
£m
|
£m
|
|
Cash generated from
operations
|
57.4
|
108.9
|
245.5
|
|
Net income taxes paid
|
(26.8)
|
(30.0)
|
(50.3)
|
|
Net cash inflow from operating activities
|
30.6
|
78.9
|
195.2
|
|
Transaction-related costs
paid
|
2.8
|
1.0
|
5.8
|
|
Spectris Foundation Contribution
paid
|
1.0
|
-
|
-
|
|
Restructuring cash
outflow
|
0.1
|
0.8
|
1.4
|
|
Net income taxes paid
|
26.8
|
30.0
|
50.3
|
|
Purchase of property, plant and
equipment and intangible assets
|
(15.8)
|
(11.7)
|
(24.7)
|
|
SaaS-related cash
expenditure
|
22.0
|
17.8
|
40.0
|
|
Proceeds from disposal of
property, plant and equipment and software
|
0.4
|
2.9
|
3.1
|
|
Adjusted cash flow
|
67.9
|
119.7
|
271.1
|
|
Adjusted cash flow conversion1
|
111%
|
117%
|
103%
|
1.
Adjusted cash flow conversion is calculated as adjusted cash flow
as a proportion of adjusted operating profit.
Other measures
j) Return on
gross capital employed ('ROGCE')
The ROGCE is calculated as
adjusted operating profit for the last 12 months divided by the
average of 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.
|
|
30 June
2024
|
30 June
2023
|
31
December 2023
|
|
|
£m
|
£m
|
£m
|
|
Net cash (see APM h)
|
(292.5)
|
(214.3)
|
(138.8)
|
|
Accumulated impairment losses on
goodwill including items transferred to assets held for
sale
|
39.5
|
40.1
|
40.6
|
|
Accumulated amortisation and
impairment of acquisition-related intangible assets including items
transferred to assets held for sale
|
155.9
|
140.5
|
149.9
|
|
Shareholders equity
|
1,408.2
|
1,355.4
|
1,315.9
|
|
Gross capital employed
|
1,311.1
|
1,321.7
|
1,367.6
|
|
Average gross capital employed (current and prior
period)1
|
1,316.4
|
1,508.4
|
|
|
|
|
|
|
|
Adjusted operating profit for six months to June 2024 and
2023
|
61.1
|
102.1
|
|
|
Adjusted operating profit for six months to December 2023 and
2022
|
160.4
|
150.1
|
|
|
Total adjusted operating profit for last 12
months
|
221.5
|
252.2
|
|
|
|
|
|
|
|
Return on gross capital employed
|
16.8%
|
16.7%
|
|
1. Average
gross capital employed is calculated as current period gross
capital employed divided by comparative period gross capital
employed.
k) Net
transaction-related costs and fair value adjustments
Net transaction-related costs and
fair value adjustments comprise transaction costs of £7.2
million
(H1 2023: £2.3 million; FY 2023:
£6.5 million) that have been recognised in the Condensed
Consolidated Income Statement under IFRS 3 (Revised) 'Business
Combinations' and other fair value adjustments relating to deferred
and contingent consideration comprising a charge of £0.2 million
(H1 2023: charge of £1.7 million; FY 2023: charge of £7.5
million).
Net transaction-related costs and
fair value adjustments are included within administrative expenses.
Transaction-related costs have been excluded from the adjusted
operating profit and transaction costs paid of £2.8 million (H1
2023: £1.0 million; FY 2023: £5.8 million) have been excluded from
the adjusted cash flow.
l) Order intake,
order book and book-to-bill
Order intake is defined as the
monetary value of contractual commitments towards future product
fulfilment recorded within the financial period. The order book is
defined as the volume of outstanding contractual commitments for
future product fulfilment measured at period end.
Book-to-bill is defined as the ratio of order intake to sales
within the financial period. These measures cannot be
reconciled because they do not derive from the Condensed
Consolidated Financial Statements and are presented because they
are indicative of potential future revenues.
Responsibility statement of the Directors in respect of the
Interim report
We confirm that to the best of our
knowledge:
a) the condensed set
of financial statements has been prepared in accordance with IAS 34
'Interim Financial Reporting' and give a
true and fair view of the undertakings included in the
consolidation as a whole, as required by DTR
4.2.4R;
b) the interim
management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events and their
impact during the first six months and description of the principal
risks and uncertainties for the remaining six months of the year);
and
c) the interim
management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions
and changes therein).
By order of the Board
Andrew Heath
Derek Harding
Chief Executive
Chief Financial Officer
29 July 2024
Independent review report to Spectris plc
Conclusion
We have been engaged by the
company to review the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2024
which comprises the Condensed Consolidated Income Statement, the
Condensed Consolidated Statement of Comprehensive Income, the
Condensed Consolidated Statement of Changes in Equity, the
Condensed Consolidated Statement of Financial Position, the
Condensed Consolidated Statement of Cash Flows, and the related
notes 1 to 12.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for
the six months ended 30 June 2024 is not prepared, in all material
respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410 "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual
financial statements of the Group are prepared in accordance with
United Kingdom adopted international accounting standards. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately
disclosed.
This Conclusion is based on the
review procedures performed in accordance with ISRE (UK) 2410;
however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
Group'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 company or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly
financial report, we are responsible for expressing to the company
a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the
company in accordance with ISRE (UK) 2410. Our work has been
undertaken so that we might state to the company those matters we
are required to state to it in an independent review 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,
for our review work, for this report, or for the conclusions we
have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
29 July 2024
Dividend timetable - H1 2024 interim
dividend
|
Event
|
Date - 2024
|
|
Ex-dividend date
|
3 October 2024
|
|
Record date
|
4 October 2024
|
|
Payment date
|
8 November 2024
|
Cautionary statement
This press release may contain
forward-looking statements. These statements can be identified by
the fact that they do not relate only to historical or current
facts. Without limitation, forward-looking statements often use
words such as anticipate, target, expect, estimate, intend, plan,
goal, believe, will, may, should, would, could or other words of
similar meaning. These statements may (without limitation) relate
to the Company's financial position, business strategy, plans for
future operations or market trends. No assurance can be given that
any particular expectation will be met or proved accurate and
shareholders are cautioned not to place undue reliance on such
statements because, by their very nature, they may be affected by a
number of known and unknown risks, uncertainties and other
important factors which could cause actual results to differ
materially from those currently anticipated. Any forward-looking
statement is made on the basis of information available to Spectris
plc as of the date of the preparation of this press release. All
forward-looking statements contained in this press release are
qualified by the cautionary statements contained in this section.
Other than in accordance with its legal and regulatory obligations,
Spectris plc disclaims any obligation to update or revise any
forward-looking statement contained in this press release to
reflect any change in circumstances or its expectations.