The positive start to the year, indicated in our AGM statement in May, has been maintained. Performance in the first half improved, compared with a weak result for the same period in the previous year. The company achieved organic growth in orders of 5%. However, sales lagged, partly as a consequence of the SARS outbreak in Asia which resulted in travel restrictions leading to delays in both orders and sales. Sales activities in Asia have now returned to normal levels.

Turnover (excluding operations disposed) increased by 21% to £264.7m (£219.1m), largely as a result of the contribution from PANalytical, acquired last September, which achieved sales of £41m in the first half. Profit before tax rose from £14.2m to £17.0m, an increase of 20%. Timing issues, which are expected to reverse in the second half, resulted in cash generation being lower than is typical, with 40% of operating profit converted into cash. Earnings per share increased by 12% to 10.4p (9.3p), on a tax rate of 26%.

Currency effects on individual companies differed, with PANalytical being the most affected. The spread of businesses and customers around the world provides a degree of operational hedging against exchange rate movements. The weakening of the pound against the euro was largely offset by the strengthening of the pound against the dollar, with the net effect of currency movements in the period being marginally adverse for the group as a whole.

The Board proposes to pay an interim dividend of 4.05p, an increase of 4%. The dividend will be paid on 14 November to shareholders on the register on 17 October 2003.

Stephen Harris, who previously held senior executive positions at Powell Duffryn and APV, was appointed Business Group Director and joined the Board in June.

In the current hesitant industrial environment customers remain reluctant to make commitments. However, Spectris will continue its emphasis on sales and market penetration, whilst maintaining a tight focus on cost control. The growth in orders is supported by the investment which the company has made in sales resources in countries such as China and Mexico which have an expanding manufacturing base. A full year’s contribution from PANalytical, together with the traditional Spectris bias towards the second half, leads us to reiterate expectations of progress for the full year.