• Spectris at a glance
• Financial highlights
• Chairman's statement
• Business review
  • Business overview
  • Strategy and objectives
  • Review of operations
  • Financial review
  • Principal risks and uncertainties
  • Resources
  • Corporate social responsibility
• Corporate social responsibility statement
• Board of directors
• Directors report
• Directors remuneration report
• Auditors' report
• Consolidated financial statements
• Notes to the consolidated financial statements
• Company balance sheet
• Notes to the company's accounts
• Shareholder information
• PDF download

Strategy and objectives

Strategy

Our strategy is to focus on delivering sustainable growth in attractive markets via a portfolio of core businesses with market–leading products which add value for our customers. A key element of this strategy is to increase the scale and enhance the growth potential of this portfolio by pursuing an active but disciplined approach to bolt-on and larger stand-alone acquisitions. Our businesses are strong players in specific application areas where there are significant barriers to entry. Experienced engineers in the businesses develop solutions which are tailored to the customer's specific requirements, based on standard platforms customised through high added value applications engineering. This understanding of our customers' processes brings significant competitive advantage. In addition, much of our technology is proprietary and protected by patents or process know-how.We outsource manufacturing and non–core activities where possible in order to reduce fixed costs and speed up response times.

Business model

We organise our businesses in a way that provides the best structure to deliver against our strategy, combining the benefits of a multinational group with the best aspects of entrepreneurial capability. Our business model is based on a flat structure of semi-autonomous operating companies, whose management teams have a high degree of responsibility whilst operating within a framework of group management and control. Central to our philosophy is a small corporate centre which sets the strategy and drives and monitors its implementation. In addition to setting and monitoring the group's overall policies and values, the centre provides knowledge, advice and selective support services such as legal, tax and treasury, establishing a control framework within which an entrepreneurial environment can thrive. The businesses operate as individual units, with their own name, brand and management structure, enabling them both to meet their customers' demands and deliver against commitments. The key benefit of this results-driven structure is that management teams have local ownership and can focus on their priorities and react quickly to changing customer and market needs. High calibre employees, including qualified scientists, applications engineers and technicians, have direct contact with users to develop applications which deliver tangible benefits. Stand-alone acquisitions must share these business characteristics and have the management strength to operate as an autonomous unit within the Spectris group.

Objectives

We operate in measurement and control markets where we can provide productivity-enhancing solutions to customers around the world. In 2006, Europe represented 43% of sales in continuing businesses,Asia 28% and North America 24%. Industrialising markets in the rest of the world (5%), such as South America, Russia and the Middle East, present opportunities to increase sales in these regions.

We aim to maintain our market-leading positions through a programme of investment in the research and development of new products and applications.We invest around 6-7% of sales each year in R&D (6.5% in 2006). New products and applications may be developed in house, by acquiring bolt-on product lines or by collaboration and licensing agreements for proprietary technology in partnership with universities and other institutions.

Our primary objective is to deliver sustainable profitable growth.We are focusing on three priorities which will enable us to achieve this objective:

• Maintain growth both organically and through acquisitions. Our primary focus is on providing new products and value–added services, for example consultancy services, aftermarket and consumables, to customers in established markets. We also focus on attracting new customers in industrialising markets as well as following our existing customers as they migrate their production facilities to new markets. All of our businesses are pursuing opportunities for further growth in these areas. Bolt-on and stand-alone acquisitions to strengthen our business portfolio are pursued actively where these make sense and fit our business model. In addition, licensing technology from third parties brings further capabilities to our new product development.
• Focus on improving margins through business excellence and efficiency. Actions include value pricing, optimising the business mix, cost competitiveness, product design for low-cost production, reducing inventory, internal process efficiency and improving supply chain management.
• Maintain the focus on cash generation, with the target of delivering high cash conversion of operating profit in the financial year.More efficient treasury processes have helped to reduce interest costs and exposure to currency exchange rates.

Key performance indicators

The following key performance indicators show how we have progressed against our priorities.