 |
||
|
The directors present their report and accounts for the year ended 31 December 2006.
Principal activities
Spectris is engaged in the development and marketing of precision instrumentation and controls. For 2006 reporting purposes, the businesses were grouped into three sectors: Electronic Controls, In-line Instrumentation and Process Technology. Further details of the trading companies can be found in the Business Review. Developments in the group's business activities are discussed in the Chairman's statement and the Business review.
Acquisitions
During the year a number of acquisitions were made. Spectral Dimensions Inc., an infrared-based chemical imaging instrumentation business, was acquired by Malvern. IPI LLC, a supplier of metering rods, rod beds and headbox sheets to the pulp and paper industry, was acquired by BTG. PANalytical acquired its Mexican, Brazilian and Korean distributors. The total consideration was £16.5 million, including acquisition expenses, debt acquired and deferred or contingent consideration payable in future years.
Disposals
In April 2006, the company completed the sale of its Arcom Control Systems business to Eurotech S.p.A. for net proceeds (after transaction costs) of £13.3 million.
An agreement for the sale of the Spectrum Inspection Systems business to Illinois Tool Works Inc. was executed on 22 February 2007 for completion on 28 February 2007. The total consideration is £16 million on a debt and cash-free basis and subject to a working capital adjustment.
Share capital
The issued share capital at the year end consisted of 124,966,620 5p ordinary shares.
At the 2007 Annual General Meeting resolutions will be proposed for the renewal of the authorities granted to the directors to allot shares, to allot shares on a non pre-emptive basis for cash and to purchase the company's own shares (either to be cancelled or to be held in treasury), all within specified limits.
At 23 February 2007 interests notified to the company in accordance with Chapter 5 of the Disclosure and Transparency Rules comprised:
Aegon Asset Management
6,258,884 shares (5.00% material interest)
Standard Life Investments
6,142,541 shares (4.92% material interest)
Legal & General Investment Management Limited
4,088,072 shares (3.27% material interest)
Zurich Financial Services Group
3,793,606 shares (3.04% material interest)
Dividends
Results for the group are set out in the consolidated income statement and in the supporting notes. A final dividend of 12.5p per ordinary share is proposed for the year to 31 December 2006 (2005: 11.2p).With the interim dividend, this makes a total for the year of 17.5p (2005: 15.8p). The final dividend will be paid on 22 June 2007 to shareholders on the register on 1 June 2007.
The terms of the Spectris plc Employee Benefit Trust provide that dividends payable on shares held within the Trust are waived to 0.01p.
Research and development
Expenditure committed to research and development is focused on new product development, applications engineering and process integration. Costs are expensed as incurred, except where the expenditure meets certain strict criteria for capitalisation. In the year to 31 December 2006, amounts expensed totalled £44.7 million (2005: £44.9 million), and no expenditure met the criteria for capitalisation (2005: £nil).
Fixed assets
Whilst the market values of some properties differ from book values, the directors believe that the differences are not material.
Payment of suppliers
The group's policy on payment of suppliers is to ensure that terms of payment accord with contractual and legal obligations. The company had £0.5 million of trade creditors at the year end (2005: £0.1 million).
Directors
The directors of the company are named on pages 22 and 23. Peter Chambré, John O'Higgins, John Warren and Clive Watson were appointed to the Board on 1 August 2006, 1 January 2006, 7 March 2006 and 1 October 2006 respectively. Steve Hare resigned from the Board on 21 July 2006. Martin Lamb and Leo Murray retired from the Board following the 2006 AGM. Andrew Given will retire from the Board following the 2007 AGM.
John Poulter, Stephen Harris, Anthony Reading and Jim Webster retire from the Board by rotation in accordance with the Articles of Association and, being eligible, offer themselves for re-election. Peter Chambré and Clive Watson, having been appointed since the 2006 AGM, retire from the Board under the terms of the Articles of Association and, being eligible, offer themselves for election.
The directors' total remuneration for the year and their interests in the shares of the company and its subsidiaries at 31 December 2006 are disclosed in the Directors' Remuneration Report.
In accordance with Section 309C of the Companies Act 1985 the directors disclose a qualifying third party indemnity provision entered into between the company and its directors and officers on 31 October 2006 which was in force at the date of approval of this report. This indemnity gives contractual force to the Indemnity of Officers provision contained in the company's Articles which were approved by shareholders in May 2005.
Auditors
Separate resolutions to re-appoint KPMG Audit Plc as auditors and to authorise the directors to agree their remuneration will be proposed at the Annual General Meeting.
Annual General Meeting
The Notice of Annual General Meeting to be held at the company's offices on Wednesday 16 May 2007 at 11.30 a.m. is contained in a separate letter from the Chairman.