enhancing  
productivity
annual report and accounts
2008
spectris plc annual report and accounts 2008
spectris plc
station road
egham
surrey
tw20 9np
england
tel  44 01784 470470
fax 44 01784 470848
infospectriscom
wwwspectriscom spectris designs develops and 
markets productivityenhancing 
instrumentation and controls 
our products applications 
and services help customers 
to improve product quality 
and performance improve 
core manufacturing processes 
reduce downtime and wastage 
and reduce time to market
the purpose of the annual report is to provide information to the shareholders of spectris plc the 
company its directors employees agents and advisers do not accept or assume responsibility to 
any other person to whom this document is shown or into whose hands it may come and any such 
responsibility or liability is expressly disclaimed the annual report contains certain forwardlooking 
statements with respect to the operations performance and financial condition of the company 
by their nature these statements involve uncertainties since future events and circumstances can 
cause actual results to differ materially from those anticipated and no reliance should be placed on 
them the forwardlooking statements reflect knowledge and information available at the date 
of preparation of this annual report and the company undertakes no obligation to update these 
forwardlooking statements nothing in this annual report should be construed as a profit forecast
front cover image
the kinexus rheometer is a new platform for analysing the 
flow properties of materials designed for ease of use its 
adaptive intelligence guides users on how to operate the 
system quickly leaving them more time to investigate ways in 
which to characterise and optimise a material’s performance  
a global presence
we operate from over 160 offices around the world the map below 
shows the location of our principal group offices in the key regions 
directory of companies
materials analysis
malvern instruments 
analytical systems for materials 
characterisation from bulk powders to 
nanomaterials and macromolecules
panalytical
analytical xray equipment for industrial 
and scientific applications
particle measuring systems
microcontamination monitoring  
systems for ultraclean environments  
and manufacturing processes
test and measurement
brüel  kjær sound  vibration 
transducers sound level meters and 
analysers for sound and vibration 
measurement
hbm 
load cells transducers strain gauges 
signal conditioning and data acquisition 
systems test and measurement software 
and services
inline instrumentation
beta lasermike
noncontact laserbased dimensional 
measuring and flaw detection ultrasonic 
dimensional gauging
brüel  kjær vibro
machine condition monitoring systems 
and maintenance services
btg group 
high performance blades rods and 
equipment for metering and doctoring 
lab and online analysers and sensors  
for process control in the pulp and  
paper industry
fusion uv systems 
ultraviolet light processing technology  
for curing photosensitive inks coatings 
and adhesives
ndc infrared engineering
infrared xray isotopic and microwave 
sensors for online measurement of 
moisture composition film thickness  
and coat weight
servomex 
gas analysers gas analysis systems  
and transducers
£ 7871 m
sales from continuing businesses
£ 1183m
adjusted operating profit from continuing 
businesses
728p
adjusted earnings per share
microscan 
high speed industrial bar code scanning 
and decoding instruments
red lion controls 
operator interfaces signal conditioners 
temperature controllers counters rate 
indicators and panel meters
industrial controls 01
spectris plc annual report and accounts 2008
overview business review governance financial statements
highlights
contents
overview
01 highlights
02 chairman’s statement
04 chief executive’s statement
business review
06 group overview
08 strategy and objectives
09 key performance indicators
10 operating review
20 financial review
23 principal risks and uncertainties
25 corporate social responsibility
26 employees
governance
30 board of directors
32 directors’ report
37  directors’ remuneration report
financial statements 
44 auditors’ report 
45 consolidated income statement
45  consolidated statement of recognised 
income and expense
46 consolidated balance sheet
47  consolidated cash flow statement
48 notes to the accounts
85 company balance sheet
86  notes to the company’s accounts
92 shareholder information
all major regions grew sales at constant 
currencies 
good progress on delivery of strategy 
acquisitions increase presence in key markets 
strong balance sheet interest covered 14 times 
dividend increased by 11
financial highlights
     change at   
 2008 2007 change cer
key operational indicators
sales from continuing businesses £m

 7871  6598  19  7
adjusted operating profit from 
continuing businesses £m

 1183  1043  13  2 
adjusted profit before tax £m 1101  980  12   
adjusted earnings per share pence  728   581 25  
dividend pence 234   210 11  
statutory 
total group sales £m 7871  6684  18  
total group operating profit £m 1137  1029 10  
profit before tax £m
† 
1061  1181 –10
basic earnings per share pence  703  709 –1    
  continuing businesses exclude businesses divested 
  adjusted figures exclude certain nonoperational items as defined in note 3
  constant exchange rates
† profit before tax in 2007 included a gain of £19m from the businesses divested 02
spectris plc annual report and accounts 2008
chairman’s statement
john hughes chairman
introduction
spectris achieved a good performance in 2008 in spite of an 
economic environment which deteriorated during the second 
half of the year sales for the full year increased by 19 to  
£7871 million compared with £6598 million in 2007 on  
a constant currency basis sales increased by 7 of which 
approximately 4 was from acquisitions 
operating profit increased by 13 to £1183 million 2007 
£1043 million on a constant currency basis operating profit 
increased by 2 of which approximately 3 was from 
acquisitions operating margins were 150 compared with 
158 in the prior year increased expenditure on research  
and development led to a reduction of 04 percentage points  
pp in operating margins acquisitions resulted in a reduction 
of 02pp and the dilutive effect of foreign exchange reduced 
margins by 01pp profit before tax increased by 12 to  
£1101 million 2007 £980 million and earnings per share 
increased by 25 to 728 pence 2007 581 pence the effective 
tax rate reduced by 4pp to 24 as a result of a taxefficient 
intercompany financing structure and the recognition of tax 
losses brought forward in the uk
cash conversion was strong with 86 of operating profit 
converted to operating cash capital investment was in excess  
of depreciation due to investment in a new technical centre for 
one of our businesses in the uk and investment in it system 
upgrades net debt at the end of the period was £1621 million 
compared with £773 million at the end of december 2007 the 
increase is due to the cost of acquisitions capital expenditure 
and the weakening of sterling net interest costs were  
£82 million giving an annualised cover of 144 times
the group’s financial position is strong at 31 december 2008 
the group had cash of £64 million committed facilities of 
£257 million of which £217 million was utilised and 
uncommitted facilities of £41 million of which £10 million  
was utilised since the year end an additional £50 million 
fiveyear loan facility has been secured
“ the group is in a strong financial and 
strategic position and we consider that the 
actions we are taking are appropriate in the 
near term whilst retaining in our businesses 
the resources to support growth as market 
demand recovers”
  two businesses were divested in 2007 in order to aid understanding of the 
results for the ongoing business references in the chairman’s statement chief 
executive’s statement operating review and financial review to the sales and 
operating profit results in the 2007 comparatives exclude the results of these 
two businesses unless otherwise stated figures for operating profit profit 
before tax and earnings per share are adjusted measures – for explanation of 
adjusted figures and reconciliation to the statutory reported figures see note 3 03
spectris plc annual report and accounts 2008
business review governance financial statements overview
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
financial highlights
the board proposes to pay a final dividend of 170 pence which 
combined with the interim dividend of 64 pence gives a total  
of 234 pence 2007 210 pence an increase of 11 the dividend 
will be paid on 26 june 2009 to shareholders on the register on  
5 june 2009
outlook
the current market conditions continue to be challenging and  
offer very limited visibility we have taken and continue to take 
timely actions to reduce operating costs and should the outlook 
deteriorate further we will not hesitate to take additional steps as 
a result of the phasing of restructuring costs and their associated 
benefits the balance between first and second half year profitability 
is expected to be materially different from past years the group is 
in a strong financial and strategic position and we consider that  
the actions we are taking are appropriate in the near term whilst 
retaining in our businesses the resources to support growth as 
market demand recovers
john hughes
chairman
lasair iii
with its larger infrared touchscreen 
simpler user interface and quieter 
operation than competitive 
instruments the lasair iii portable 
particle counter also enables faster 
detection of particle contamination in 
cleanrooms improving productivity for 
customers in the semiconductor and 
pharmaceutical industries 04
spectris plc annual report and accounts 2008
chief executive’s statement
“ we are pleased with the strategic and 
operational progress we made in 2008  
we have grown sales and profits and  
have made good progress on delivering  
against our strategy”
john o’higgins chief executive
introduction
spectris delivered a good performance in 2008 with sales and 
profits from continuing businesses improving compared with  
the prior year at constant currencies sales increased by 7 and 
operating profit increased by 2 sales growth in the second  
half of the year was slower than in the first half as tougher 
economic conditions led to demand reducing in some of our 
markets however this weakening was offset to some extent  
by the contribution from acquisitions made in the year and  
by continuing good demand in markets such as energy and 
pharmaceuticals
strategy
we continued to deliver against our strategy
strengthening market positions through innovation •	
 increasing regional expansion with a focus on  •	
emerging markets
growing existing businesses through acquisition •	
focusing on operational excellence •	
 building our presence in key strategic growth areas  •	
both organically and through acquisition
strengthening market positions through innovation
in late 2007 we took the decision to make strategic growth 
investments in research and development and during 2008 we 
increased expenditure on rd by over £12 million to £57 million 
or 72 of sales 2007 68 the increased investment was 
targeted primarily at speeding up time to market for selective 
product development programmes particularly in the materials 
analysis segment examples of the new products and applications 
launched during the year are described in the operating review 
which follows 
increasing regional expansion with a focus on emerging 
markets
total group sales at constant currencies increased in all major 
regions sales in asia grew by 8 with china continuing to see 
good growth of 14 however sales in japan declined by 7 due  
to a slowdown in the electronics automotive and semiconductor 
industries sales in north america increased by 8 in europe 
sales increased by 3 with germany up 10 sales in industrialising 
markets such as latin america russia the middle east and africa 
increased by 24 reflecting the continuing growth in these regions 
asia and the other industrialising countries now comprise 35 of 
total group sales
we continued to invest in initiatives to expand our direct sales 
presence in key markets in january 2008 hbm acquired its 
distributors in the nordic countries in may panalytical and 
malvern instruments opened a new joint headquarters in north 
america extending their applications laboratories and training 
facilities in august particle measuring systems acquired its 
distributor in china increasing its direct sales presence in the key 
market of electronics in asia service and consumables account for 
around 24 of sales reflecting the importance of the aftermarket 
business particularly as customers look to outsource this area of 
their business in order to reduce their own costs  05
spectris plc annual report and accounts 2008
business review governance financial statements overview
growing existing businesses through acquisition
during the year we invested a total of £888 million in acquisitions 
to strengthen our existing businesses in addition to the 
distributors described above we acquired viscotek corporation  
a leading provider of chromatography solutions during the first 
quarter during the third quarter we acquired ncode a leading 
supplier of durability test and analysis software and data 
acquisition instruments and the siemens machine vision 
business an industry leader in automatic identification and  
data capture in december the acquisition of lds test and 
measurement was completed lds is a leading provider of data 
acquisition and instrumentation products and vibration test 
systems and is an excellent fit with the existing businesses in the 
test and measurement segment since the year end we have 
completed a further acquisition for the test and measurement 
segment to strengthen our position in the global noise 
management market the companies acquired and their strategic 
fit to our businesses are described in more detail in the operating 
review which follows 
focusing on operational excellence
the emphasis on operational excellence continued our focus on 
improving purchasing efficiency resulted in growth of 22 in the 
volume of components purchased in asia and eastern europe  
our gas analysis business completed the relocation of its system 
build activities to shanghai china in order to be closer to its key 
customers in asia and develop a more competitive cost base in this 
region many of our operating companies are investing in lean 
manufacturing initiatives aimed at increasing quality reducing 
inventories and improving supply chain efficiencies
conclusion
in summary we are pleased with the strategic and operational 
progress we made in 2008 we have grown sales and profits and 
have made good progress on delivering against our strategy as 
evidenced by the increased investment in both acquisitions  
and research and development to accelerate our new product 
development programmes which lay the foundations for future 
growth the current market conditions continue to be challenging 
and offer very limited visibility we consider that the actions we  
are taking to reduce operating costs are appropriate in the near 
term whilst retaining in our businesses the resources to support 
growth as market demand recovers
john o’higgins
chief executive
£57m
expenditure on rd
35
of group sales are to asia and other 
expanding regions
24
of group sales are from service and 
consumables
lds test and measurement
in december we completed the acquisition of the lds test 
and measurement business lds is a market leader in vibration 
testing equipment for applications in the aerospace defence 
automotive machinery electrical and electronics markets  
the business is an excellent fit with our test and measurement 
segment adding capability in complete excitation systems and 
enabling customers to purchase the complete test system for 
both structural analysis and vibration testing from a single 
source to enhance productivity in their research and 
development cycles  06
spectris plc annual report and accounts 2008
we serve our clients  
through our global presence
2008 sales by destination
continuing businesses
uk – 4
continental 
europe – 38
north america – 23
asia – 28
rest of world – 7
business review
group overview
we operate on a global scale
our sales and service offices are located around the 
world supporting customers in the key regions of europe 
asia and the americas and with a growing presence in 
other expanding regions in the rest of the world 
we enable our customers to achieve rapid 
payback on their investment
our products generally involve low capital expenditure 
and bring significant and rapid payback for customers in 
terms of increased productivity a typical example is the 
installation of a btg mütek system at a large producer  
of recycled fibrebased carton board which by cutting 
chemical additives and boosting productivity paid for 
itself in just three months in another example a uk 
mineral processing company has increased throughput  
by around 60 following the installation of a malvern 
inline particle size analyser the majority of our sales  
are to customers who are looking to upgrade existing 
processes at modest cost
this business review forms part of and should be read in conjunction with the 
directors’ report
spectris designs develops  
and markets productivity 
enhancing instrumentation  
and controls our products 
applications and services help 
customers to
improve product quality and performance
improve core manufacturing processes
reduce downtime and wastage 
reduce time to market 07
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
and operate in a balanced  
range of end markets
2008 approximate sales by end user market
continuing businesses
metals minerals and mining – 13
transport – 12
pulp and
 paper – 11
machine building – 10
pharma life sciences – 9 
other – 18
energy and 
utilities – 4
rd – 7
distribution – 9
semicon 
telecoms 
electronics – 7
we operate across a diverse range of markets
our customers are multinational bluechip customers in  
a diverse range of end markets with no individual market 
representing more than 13 of total group revenues 
metals minerals and mining pharmaceuticals pulp  
and paper and transportation primarily research and 
development for the automotive and aerospace 
industries are the principal end markets our core 
business is the design assembly and testing of our 
products and we outsource manufacturing and noncore 
activities where possible in order to reduce fixed costs 
and speed up response times 
our businesses have resilient qualities and 
operate in niche markets
our businesses are leaders in their specialised markets 
with strong brands and marketleading products  
many of their activities are focused on markets which 
demonstrate resilient growth drivers these include 
increasing environmental health and safety legislation 
which drives demand for our products in areas such as 
environmental noise monitoring and emissions control 
restricting hazardous substances in product manufacture 
and food safety in addition consumables product and 
software upgrades replacement parts and calibration 
services form a significant part of our business providing 
a degree of protection from wider economic trends
contents
06 group overview
08 strategy and objectives
09 key performance indicators
10 operating review
20 financial review
23 principal risks and uncertainties
25 corporate social responsibility
26 employees
6057
employees worldwide
29
countries in which we have offices 08
spectris plc annual report and accounts 2008
business review
strategy and objectives
our objective is to deliver shareholder value  
over the long term by supplying productivity
enhancing solutions for our customers 
our strategy is based on five key elements
strengthening market positions through innovation •	
we invest around 67 of sales each year in rd 72 in 
2008 with the aim of developing and delivering advanced 
products and applications to our customers working closely 
with customers experienced engineers 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 much of our 
technology is proprietary and protected by patents or process 
knowhow new products and applications may be developed in 
house by acquiring bolton product lines or by collaboration 
and licensing agreements for proprietary technology in 
partnership with universities and other institutions
 increasing regional expansion with a focus  •	
on emerging markets  
we seek to grow our businesses around the world with 
particular emphasis on industrialising markets such as china 
india and latin america we continue to establish sales and 
support facilities in these regions so that we are able to support 
our global customers wherever they are based 
 growing existing businesses through acquisition •	
we seek to enhance the growth potential of our businesses by 
pursuing an active but disciplined approach to acquisitions 
focusing on businesses which are strong players in specific 
application areas where there are significant barriers to entry
 focusing on operational excellence •	
we continue to focus on improving all aspects of our business 
through a range of actions including process efficiencies value 
pricing optimising the business mix cost competitiveness 
designing products for lowcost production reducing inventory 
and improving supply chain management 
 building our presence in key strategic growth areas  •	
both organically and through acquisition  
we aim to grow our existing businesses organically by 
developing new products as well as pursuing opportunities for 
growth in new markets such as nanotechnology and life 
sciences our investment in rd enables us to maintain our 
leading market positions and acquisitions are targeted at both 
existing and new markets 
business model
in order to deliver our strategy successfully we organise our 
businesses in a way that combines the benefits of a multinational 
group with the best aspects of entrepreneurial capability our 
business model is based on a flat organisational structure of four 
segments each comprising a number of autonomous operating 
companies with management teams who have a high degree of 
responsibility and accountability operating within a framework 
of group management and control within each business segment 
the companies operate with their own brands sales and service 
channels tailored to meet individual customer requirements 
enabling them to meet their customers’ demands the key benefit 
of this resultsdriven structure is that management teams have 
local ownership and can focus on their priorities and react  
quickly to changing customer and market demand high calibre 
employees including qualified scientists applications engineers 
and technicians have direct contact with users to develop solutions 
that deliver tangible benefits standalone acquisitions must share 
these business characteristics and have the management strength 
to operate as autonomous units within the spectris group 
central to our philosophy is a small corporate centre which 
determines the strategy and drives and monitors its 
implementation in addition to setting and monitoring the group’s 
overall policies and values the centre provides advice and selective 
support services such as legal tax and treasury establishing a 
control framework within which entrepreneurial cultures can 
thrive and knowledge can be shared between businesses
servopro multiexact   
the servopro multiexact is an innovative multigas 
analyser specifically developed to meet the latest 
industry requirements for air separation plants it 
provides exceptional levels of accuracy stability and 
reliability for all required gas measurements whilst 
offering unparalleled easeofuse and minimising 
maintenance and cost of ownership 09
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
sales
£m
6845 6684 7871
19 3 7
6559
08
6141
05 06 07 04
728 581 437
3 6 8 25 33 21
150 158 129 86 99 107
total sales growth continuing businesses 
08 06
07
adjusted eps pence
08 06 07
organic sales growth continuing businesses 
at constant currencies 
08 06 07
growth 
08 06 07
08 06 07
cash conversion  return on sales continuing businesses 
08 06 07
sales
£m
6845 6684 7871
19 3 7
6559
08
6141
05 06 07 04
728 581 437
3 6 8 25 33 21
150 158 129 86 99 107
total sales growth continuing businesses 
08 06
07
adjusted eps pence
08 06 07
organic sales growth continuing businesses 
at constant currencies 
08 06 07
growth 
08 06 07
08 06 07
cash conversion  return on sales continuing businesses 
08 06 07
sales
£m
6845 6684 7871
19 3 7
6559
08
6141
05 06 07 04
728 581 437
3 6 8 25 33 21
150 158 129 86 99 107
total sales growth continuing businesses 
08 06
07
adjusted eps pence
08 06 07
organic sales growth continuing businesses 
at constant currencies 
08 06 07
growth 
08 06 07
08 06 07
cash conversion  return on sales continuing businesses 
08 06 07
sales
£m
6845 6684 7871
19 3 7
6559
08
6141
05 06 07 04
728 581 437
3 6 8 25 33 21
150 158 129 86 99 107
total sales growth continuing businesses 
08 06
07
adjusted eps pence
08 06 07
organic sales growth continuing businesses 
at constant currencies 
08 06 07
growth 
08 06 07
08 06 07
cash conversion  return on sales continuing businesses 
08 06 07
sales
£m
6845 6684 7871
19 3 7
6559
08
6141
05 06 07 04
728 581 437
3 6 8 25 33 21
150 158 129 86 99 107
total sales growth continuing businesses 
08 06
07
adjusted eps pence
08 06 07
organic sales growth continuing businesses 
at constant currencies 
08 06 07
growth 
08 06 07
08 06 07
cash conversion  return on sales continuing businesses 
08 06 07
sales
£m
6845 6684 7871
19 3 7
6559
08
6141
05 06 07 04
728 581 437
3 6 8 25 33 21
150 158 129 86 99 107
total sales growth continuing businesses 
08 06
07
adjusted eps pence
08 06 07
organic sales growth continuing businesses 
at constant currencies 
08 06 07
growth 
08 06 07
08 06 07
cash conversion  return on sales continuing businesses 
08 06 07
key performance indicators
we monitor progress against the delivery of 
our strategic goals via four key performance 
indicators
1 sales 
sales growth is a measure of how we are growing our 
business organically we aim to achieve yearonyear 
growth in sales on a likeforlike basis which excludes 
the effects of currency translation and acquisitions 
or divestments
in 2008 total sales for continuing businesses were  
£7871 million
4 cash conversion
we focus on cash generation and use cash conversion as  
a performance measure as we believe cash represents an 
effective measure of the quality of our earnings our target 
is to deliver high cash conversion of operating profit in 
each financial year cash conversion is defined as operating 
cash flow as a percentage of adjusted operating profit 
capital investment was 162 of depreciation 2007 97 
due to an investment in a technical centre in the uk and 
investments in it systems upgrades excluding the excess 
of capital investment expenditure over depreciation cash 
conversion in 2008 would have been 93 in 2008 cash 
conversion as reported was 86
2 return on sales
return on sales is a measure of improving profitability  
in our business return on sales is defined as adjusted 
operating profit as a percentage of sales in 2005 we 
announced our intention to achieve a midteens return  
on sales margin this was achieved in 2007 our aim is 
now to sustain or improve margins over time
in 2008 return on sales for continuing businesses was 150
3 earnings per share 
earnings per share is a commonly used measure of financial 
performance for shareholders we aim to achieve growth in 
adjusted earnings per share adjusted earnings per share in 
2008 was 728p adjusted earnings excludes certain 
nonoperational items as defined by management in note 3 
adjusted earnings per share is defined as the ratio of 
adjusted net profit for the year to the weighted average 
number of ordinary shares outstanding during the year 10
spectris plc annual report and accounts 2008
business review
operating review
the group comprises four 
business segments which 
reflect the applications and 
end user industries we serve
laboratoryoffline
our products help customers to 
improve accuracy and speed of 
materials analysis in the laboratory 
and in process manufacturing 
applications we also provide test 
and measuring equipment for 
research and development 
applications
processmanufacturing
our products and applications 
provide precision measurement and 
control in challenging operating 
environments ensuring process 
quality asset uptime safety and 
improved yield we also provide 
automation and control products 
for the discrete manufacturing 
industries
business segment
business segment
business segment
business segment
materials analysis provides a wide range 
of analytical instrumentation and systems 
for particle and material characterisation
test and measurement supplies test and 
measuring equipment for research and 
development principally to the aerospace 
and automotive industries and for 
environmental monitoring
inline instrumentation provides process 
analytical solutions asset monitoring and 
online controls for both primary 
processing and the converting industries
industrial controls supplies automation  
and control products for the discrete 
manufacturing industries 11
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
applications industries
applications industries
applications industries
applications industries
sales 
sales 
sales
sales
profit
profit 
profit 
profit
material characterisation
contamination detection
quality control
measurement
data acquisition
simulation
quality control
process technology
safety
product tracking
machine interface
industrial networking
pharmalife sciences
miningmetals
semiconductor
research institutes
32 32
automotive
aerospace
electronics
environmental
32 25
process industries
pulp  paper
energy
converting
30 36
general manufacturing
original equipment 
manufacturers
distributors
6 7
sales and profit as  of group total 12
spectris plc annual report and accounts 2008
business review
operating review continued
zetasizer aps
the zetasizer aps is the most advanced dynamic 
light scattering system available for investigating 
protein behaviour in the biotechnology and 
pharmaceutical industries it enables accurate 
reliable measurement of protein stability over a 
wide range of developmental conditions with 
minimal user intervention
materials analysis
good demand for new products from 
pharmaceutical and life sciences industries
metals minerals and mining slowing but  
need for efficiency and cost reductions  
sustains demand
semiconductor weakens due to reduced  
investment in capital equipment
environmental legislation boosts demand  
for xray analysis
overview
materials analysis provides a wide range of analytical 
instrumentation and systems for material characterisation  
to the metals and mining pharmaceutical and life sciences  
and semiconductor industries our products help customers  
to improve accuracy and speed of materials analysis in the 
laboratory and in process manufacturing applications  
the operating companies in this segment are malvern 
instruments panalytical and particle measuring systems
market drivers
in addition to the need to improve process manufacturing 
productivity a key factor in the demand for this segment’s 
products is the requirement for certification to comply with 
regulation for example for quality control in the manufacture 
of drugs in the pharmaceutical industry and detection of 
materials such as lead and cadmium to meet legislation on  
the use of hazardous substances another driver for materials 
analysis instrumentation is the growth in new molecular and 
material sciences where our equipment is used to analyse  
and characterise materials and structures in the development  
of new products 
£2532m
sales
£375m
operating profit
1534
employees 13
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
segment performance
sales in materials analysis increased by 18 8 at constant 
currencies to £2532 million operating profit increased by  
8 to £375 million operating margins declined from 163  
to 148 approximately 09pp of this reduction was due to a 
34 increase in research and development expenditure in this 
segment from 75 to 84 of sales and 06pp was due to the 
dilutive effects of foreign exchange rates 
malvern launched a number of new products aimed at the 
pharmaceutical and life sciences industry with particular 
emphasis on the characterisation of proteins these included 
two additions to the highly successful zetasizer family the 
zetasizer aps and the zetasizer µv both of which are used  
for measuring the particle size and distribution of proteins  
and nanoparticles in drug development these products  
utilise technology developed by viscotek the business  
malvern acquired in january particle measuring systems 
continued to focus on contamination monitoring products  
for the pharmaceutical industry and extended its capabilities  
for counting aerosol particle concentrations in the nano
particulate range down to one nanometre of diameter  
through the acquisition of a 312 investment in naneum 
limited a company supplying instruments for nano 
technology applications
panalytical saw continuing demand from the metals minerals 
and mining industry despite the sector slowing in the second 
half of the year as the need for greater efficiency and cost 
reduction sustained demand for analytical instruments the 
company extended its range of products specifically designed 
for materials applications one example is the minipal 4 sulfur 
based on the highly successful minipal compact spectrometer 
designed for petrochemical analysis this product helps 
industrial customers demonstrate amongst other things 
compliance with new european legislation on sulphur in fuel 
xray fluorescence spectroscopy has also emerged as an optimal 
solution for the screening of toxic heavy metals regulated by  
the eu directives rohs restriction of hazardous substances 
and weee waste electrical and electronic equipment and 
panalytical’s equipment is helping customers to ensure their 
products meet these standards
in the semiconductor industry with a few notable exceptions 
there was a decline in investment in capital equipment and the 
industry is beginning to see some consolidation the reduction 
in demand for productionrelated equipment was offset to some 
extent by continued demand from universities and government
funded institutions for research and development solutions  
for the analysis of new materials and complex structures 
particularly in the fields of material sciences which benefited 
panalytical
outlook
we expect that consolidation in the pharmaceutical sector will 
continue to be a feature of the industry however our operating 
companies with the new products and applications they have 
recently introduced together with those they have acquired are 
well placed to capture the opportunities in this sector particularly 
in the increasingly important fields of life sciences and 
biotechnology demand in the metals minerals and mining 
industry fell sharply towards the end of 2008 as capital expenditure 
was reined in however service and consumables are a major 
feature in this sector and we expect the demand for these to 
continue although demand in the semiconductor industry is not 
expected to improve in 2009 this market represents less than 5 
of revenues in this segment and is thus not expected to have a 
significant impact 
minipal 4 sulfur
the minipal 4 sulfur compact spectrometer is 
designed for accurate and precise petrochemical 
analysis its improved sensitivity and lower limits 
of detection provide reliable and costeffective 
analysis of elements and also help to ensure 
compliance with environmental regulations  
for example legislation to reduce sulphur  
levels in fuel 14
spectris plc annual report and accounts 2008
business review
operating review continued
£2549m
sales
£297m
operating profit
2653
employees
test and measurement
ncode acquisition brings software  
simulation capabilities for fatigue and  
durability testing
lds acquisition adds vibration test  
systems and data acquisition products  
for new model development 
capabilities in environmental noise  
monitoring services expanded
lanxi
lanxi data acquisition 
hardware provides increased 
flexibility from a single system for 
sound and vibration 
measurement used as a 
standalone module or as part of 
a multirack distributed system 
lanxi can be configured to 
measure from two to over 1000 
channels depending on the 
user’s requirements
overview
test and measurement supplies test and measuring equipment 
for research and development principally to the aerospace and 
automotive industries for customers in these industries our 
products and applications help them to design safer more 
fuelefficient environmentallyfriendly vehicle platforms whilst 
reducing time to market further applications are in consumer 
electronics and the environmental monitoring market  
the operating companies in this segment are brüel  kjær  
sound  vibration and hbm
market drivers
product testing and quality control are the principal drivers of 
demand in the test and measurement sector prototype testing is 
a costly but unavoidable stage in the development of many 
consumer durable products rd engineers must ensure not only 
that consumer requirements are met within shorter development 
cycle times but also compliance with everincreasing 
environmental safety and efficiency targets in addition to 
product development increasing legislation and regulation on 
noise levels for example eu directives on noise regulation for 
airports cities and workplace noise is also driving demand for 
our test and measurement applications
segment performance
sales in test and measurement increased by 23 8 at constant 
currencies to £2549 million operating profit increased by 13 
to £297 million an increase in rd expenditure from 72 of 
sales to 78 led to operating margins at 117 being lower than 
the prior year figure of 126 
automotive industry investment is focused on research and 
development of new models with the emphasis on bringing 
smaller more fuelefficient vehicles to market as quickly as 
possible shorter development cycles result in higher volumes of 
data requiring rapid analysis and manufacturers are now using 
software modelling to assess new vehicle designs before the 
prototype is built this reduces the number of tests required and 
thus shortens the development time helping to cut costs and 
reduce time to market the acquisition of ncode extends our  15
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
software capabilities in this area providing customers with the 
technology to carry out fatigue and durability testing and life 
prediction as well as noise and vibration analysis and accelerated 
testing the acquisition of the lds test and measurement business 
broadens our portfolio of data acquisition instruments and adds 
worldleading capability in vibration testing enabling us to 
provide customers with complete test systems
materials testing is increasingly being used in applications such as 
construction mechanical engineering and the energy industry 
orders were received for a number of new projects in the field of 
renewable energies including supplying and installing test and 
measurement equipment for a research project in germany to 
minimise material usage in the main stem of wind turbines which 
are made of expensive steel and commonly weigh around 350 
tonnes the research focuses on materials assembly processes and 
new manufacturing methods for these critical support structures 
hbm’s systems are being used in onshore research to test the 
stresses which would result from the wind waves and salt water  
to which the materials will be subjected when used offshore  
we also received significant orders from leading commercial 
aircraft manufacturers for testing applications on new  
development programmes
as regulation increases particularly in the area of noise pollution 
from airports and cities demand for environmental monitoring  
is growing this has benefited brüel  kjær who supply noise 
monitoring and analysis solutions to customers around the world 
in february 2009 we extended our capabilities in environmental 
monitoring systems to offer customers an increased range of 
products including a suite of noise management solutions and 
innovative webbased services 
outlook
the automotive industry is facing a challenging year the focus  
for new vehicle development will continue to be on building smaller 
more fuelefficient cars which meet increasingly stringent legislation 
on noise emissions and pollution control and the products acquired 
in 2008 give our companies greater capabilities to capture the 
opportunities available in the aerospace industry ongoing 
programmes for new aircraft offer good prospects for this segment 
additionally good demand is expected for data acquisition and 
measurement applications in environmental monitoring 
the acquisition of ncode extends our software 
capabilities for research and development programmes  
in the automotive and aerospace industries ncode’s 
products enable customers to carry out fatigue and 
durability simulation providing them with the full  
testing cycle from virtual to physical test this helps 
manufacturers to cut test and prototype cycles saving 
time and money and speeding up time to market
 ncode acquisition
quantumx
quantumx is the first universal 
data acquisition instrument 
with advanced plug and 
measure technology which 
enables precise and immediate 
results even in difficult 
conditions its compact design 
allows for centralised or 
distributed high speed data 
acquisition for performance 
testing in development 
programmes for the 
automotive aerospace  
and railway industries
  16
spectris plc annual report and accounts 2008
business review
operating review continued
drt5500
the drt5500 freeness inline is the fastest smallest 
and most flexible drainage rate transmitter on the 
market it improves control during refining of the 
pulp and stabilises the drainage rate which affects 
paper properties such as composition and strength 
improved drainage leads to lower energy 
consumption reducing costs for pulp and  
paper manufacturers 
inline instrumentation
continued demand for oil and gas  
strong growth in industrial gas business 
demand for tissue products sustains  
pulp and paper market
good growth in asia middle east  
and africa
converting and packaging sectors  
reduced capital investment
overview
inline instrumentation provides process analytical measurement 
asset monitoring and online controls for both primary processing 
and the converting industries our products and applications 
provide precision measurement in challenging operating 
environments ensuring process quality asset uptime safety and 
improved yield the operating companies in this segment are beta 
lasermike brüel  kjær vibro btg group fusion uv systems 
ndc infrared engineering and servomex 
market drivers
the growing requirement to improve process manufacturing 
productivity and drive down costs in an increasingly competitive 
global environment has led to greater demand for process 
instrumentation end user markets are facilities with critical plant 
assets such as paper mills and converting plants where downtime 
and lost production are costly environmental issues are also key 
drivers for process instrumentation in these industries the oil and 
gas industry continues to focus on enhancing productivity and is 
seeing growing demand from the industrialising economies 
increasing power costs have led energyintensive industries such as 
pulp and paper to install new instrumentation as they seek 
production efficiencies investment in infrastructure is also driving 
demand for process control solutions worldwide the growth in 
demand for renewable resources for example alternative energy 
sources such as hydroelectric and wind power as well as the need 
to meet regulations on reducing emissions has led to an increase 
in demand for process control solutions safety is also a priority in 
these industries where it is a requirement to monitor gas emissions 
and other harmful substances in order to comply with increased 
health and safety regulation
segment performance
sales in inline instrumentation increased by 17 5 at constant 
currencies to £2333 million operating profit increased by 23 to 
£427 million and operating margins increased by 1pp to 183 
the favourable effects of foreign exchange rates and rd 
expenditure growing at a slower rate than sales contributed to the 
increase in operating margins
£2333m
sales
£427m
operating profit
1406
employees 17
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
the high price of oil in the first half of 2008 led to rapid 
development of natural gas production and transportation  
and process efficiencies in existing plants resulting in good  
growth for servomex in this sector particularly in the  
americas the company also saw strong growth in the industrial 
gas business and in june signed a global supply agreement with  
air liquide to supply industrial gas analysers to their operations 
worldwide the aftermarket business is also showing good growth 
as customers look to outsource their service and maintenance 
work in november servomex opened a new technical centre in 
crowborough england merging the production management and 
rd facilities under one roof for the first time in the last quarter 
the company launched two new gas analysers the servotough
oxy and servopromultiexact which set new industry 
benchmarks in flexible accurate and reliable gas measurement 
brüel  kjær vibro continued to see good demand for its condition 
monitoring products for oil and gas installations and for remote 
monitoring systems for wind turbines
in the pulp and paper industry although some capacity was taken 
out of the industry over the summer the falling price of energy in 
the second half of the year helped paper manufacturers to improve 
margins however temporary shutdowns were implemented at 
many mills at the end of the year to reduce inventories certain 
grades of paper have remained unaffected with the market for 
tissue products growing in all regions of the world this benefited 
btg who saw increased demand for high performance creping 
blades as a replacement for traditional steel blades in addition  
the company secured an order to supply its new blades to a major 
tissue manufacturer for production of a new product during the 
year btg launched a number of new products which help to reduce 
pulp and papermaking costs including a drainage rate transmitter 
which provides improved control during refining of the pulp and 
reduces energy consumption 
customer investment in alternative energy sources continued to 
create demand for products from ndc and fusion ndc received 
orders for the online measurement of proprietary coatings used in 
solar panel production and fusion also saw increasing demand for 
its uv curing equipment from the solar energy market fusion’s 
equipment is used for the curing of adhesives layers and coatings 
on a variety of solar energygenerating platforms
demand from the converting industry was strong in the first  
half of the year but orders slowed towards the end of the year  
as the difficult economic environment became evident at ndc 
speciality markets such as lithium ion battery production continue 
to generate good demand the company introduced a new online 
web measurement and control system the pronet tdi which 
features a ‘total distributed intelligence’ architecture breaking 
down complex gauging tasks to their simplest components the 
system uses operator interfaces supplied by another spectris 
operating company red lion controls red lion’s operator 
interfaces are also being used on ndc’s newlylaunched 710e 
series of ethernetenabled online gauging systems for process 
control these systems measure critical parameters such as  
coat weight and moisture in the converting and papermaking 
industries as well as moisture fat and protein for a wide range of 
applications in the food industry beta lasermike saw good sales  
of its products to the metals industry which is now the company’s 
second largest market after cable with increasing sales into new 
applications rather than cold mill operations the company also 
launched the laserspeed 4000 gauge which provides noncontact 
length and speed measurement in nonmetals applications such as 
plastics and film 
demand for optical fibre continued to grow driven by oceanic 
undersea cables and for fibretothehome applications 
particularly in the asia pacific region this has resulted in fibre 
producers recommissioning ‘mothballed’ production equipment 
andor adding new equipment to increase volumes and production 
speeds this has benefited beta lasermike who supply a variety of 
process control systems to address the different stages in the 
manufacture and quality control of optical fibre and fusion 
whose equipment is used to cure the barrier coatings that are 
required to protect the glass fibre prior to its incorporation into the 
transmission cables
outlook
customer investment in the energy market is expected to continue 
despite the falling oil price the focus on alternative energy sources 
continues in particular the use of wind turbines where spectris 
has a growing presence in both development of new materials for 
the turbine structures and in remote monitoring of power 
generation the outlook for the pulp and paper market remains 
uncertain in the short term although demand for tissue is 
expected to continue to grow the converting industry is slowing 
in some areas particularly in china but speciality markets in 
converting and high technology especially lithium ion battery 
production are still doing well in this region
series 710e 
the series 710e is a new range of 
online gauging systems featuring 
highspeed digital processing 
technology and ethernet 
connectivity the systems provide 
realtime measurement of critical 
parameters such as coat weight 
and moisture in the converting and 
papermaking industries as well as 
moisture fat and protein for a 
wide range of applications in the 
food industry 18
spectris plc annual report and accounts 2008
business review
operating review continued
universal signal conditioners 
the new iams series of universal signal conditioners 
feature a detachable lcd displayprogramming 
module this provides simple pushbutton 
programming which allows the signal conditioner  
to be easily set up and can be used to programme 
multiple units in the same way greatly reducing 
configuration time when not being used for 
programming it can remain attached to the unit  
to indicate the input parameters in the same way  
as a panel meter
industrial controls
good demand from general manufacturing 
applications but weakness in second half
continued growth in industrialising economies 
acquisition of siemens’ machine vision business 
expands tracking and traceability solutions 
overview
industrial controls supplies automation and control products  
for the discrete manufacturing industries our products provide 
identification and tracking solutions during the manufacturing 
process displays for process monitoring and control and data 
interfaces for a broad range of manufacturing industries sales  
are indirectly to end users via distributors as well as directly to 
original equipment manufacturers with a significant proportion  
of repeat business the operating companies in this segment are 
microscan and red lion controls 
market drivers
manufacturing automation is growing in importance as customers 
compete in an increasingly global environment where improving 
efficiency and reducing unit costs are key to survival another 
significant factor driving automation and control equipment is  
the demand for increased operational data regarding product 
manufacture and the need to improve processes to reduce  
rework and scrap for example by tracking products through the 
manufacturing process and beyond so that they can be traced  
in the event of a product recall in some industries such as the 
aerospace and pharmaceutical industries product tracking  
by means of barcodes is a regulatory requirement
segment performance
sales in industrial controls increased by 19 9 at constant 
currencies to £457 million operating profit was £84 million 
compared with £86 million in the prior year operating margins 
were 184 2007 225 changes in the product mix an increase 
in research and development expenditure and acquisition 
integration costs resulted in margins being lower than in the 
previous year
£457m
sales
£84m
operating profit
365
employees 19
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
the acquisition of the siemens machine vision business expands 
microscan’s range of vision and smart camera products for 
tracking and traceability applications from basic barcode reading 
to complex inspection and measurement the acquisition has 
added ten product lines and over 60 technology patents microscan 
saw good success for its products in the life sciences and electronics 
manufacturing sectors particularly for the quadrus mini 
velocity mini imager for general factory automation and launched 
the qx830 the first in a series of products with the new qx 
platform technology this compact laser scanner combines the 
‘quick connect’ system of cabling and easy networking with 
‘xmode’ symbol technologies to deliver high performance 
barcode reading with simplified connectivity and networking  
in industrial automation environments 
red lion controls continued to expand sales of its human machine 
interface and data station products internationally particularly in 
china and india a number of new products were launched in the 
second half of the year including large plant floor marquee 
displays for factory floors the g3 kadet series of operator interface 
panels with touchscreen displays for process machinery and 
universal signal conditioners with detachable lcd display and 
programming modules 
outlook
whilst the longerterm demand drivers for general automation 
continue to be positive this segment is particularly sensitive to 
general manufacturing and industrial output the acquisition of 
the siemens machine vision business has enabled us to increase 
the served market within the broader industrial controls space 
estimated to be in the region of £10 billion particularly in the  
area of product tracking
the acquisition of the siemens machine vision business 
strengthens the industrial controls segment by expanding 
our range of vision and smart camera products an 
industry leader in automatic identification and data 
capture aidc the company specialises in machine 
vision and inspection systems used in a broad array of 
manufacturing packaging and traceability applications 
the acquisition enables us to provide full track trace and 
control solutions from basic barcode reading to complex 
inspection and measurement to leading industrial 
markets particularly in the medical electronics 
manufacturing and automotive sectors the acquisition 
has added ten product lines and over 60 technology 
patents to the industrial controls portfolio
g3 kadet 
based on the g3 series with many of 
the same capabilities the g3 kadet 
series of touchscreen operator 
interfaces offer the ideal balance of 
advanced features and value for 
process machinery applications
 siemens’ machine vision business 20
spectris plc annual report and accounts 2008
business review
financial review
clive watson group finance director
introduction
spectris uses adjusted figures as key performance measures in 
addition to those reported under ifrs adjusted figures exclude 
certain nonoperational items which management has defined as 
amortisation of acquisitionrelated intangible assets goodwill 
impairment charges profits or losses on the termination or disposal 
of businesses or major fixed assets unrealised changes in the fair 
value of financial instruments net gains or losses on retranslation  
of shortterm intercompany loan balances related tax effects and 
other tax items which do not form part of the underlying tax rate 
unless otherwise stated all profit and earnings figures referred to 
below are adjusted measures – for explanation of adjusted figures 
and reconciliation to the statutory reported figures see note 3
operating performance
   increase 
 2008 2007 decrease
continuing businesses   
sales £m 7871 6598 19
operating profit £m 1183 1043 13
operating margin 150 158 08pp
   
statutory basis   
sales £m 7871 6684 18
operating profit £m 1137 1029 10
operating margin 144 154 10pp
reported sales in continuing businesses increased by 19 to  
£7871 million favourable movements in foreign currency 
exchange rates had an impact of approximately £817 million  
or 12 on sales meaning that sales in continuing businesses 
increased by approximately 7 on a constant currency basis the 
yearonyear impact on sales from acquisitions was approximately 
£281 million or 4 of sales in continuing businesses
adjusted operating profit rose by 13 in continuing businesses to 
£1183 million with operating margins declining from 158 to 
150 the decrease in margins can largely be explained by an 
increase in research and development expenditure 04pp and the 
dilutive effect of foreign exchange 01pp and acquisitions 02pp 
favourable movements in foreign currency exchange rates had an 
impact of approximately £121 million or 12 on operating profits 
and profits in continuing businesses increased by approximately 
2 on a constant currency basis the yearonyear impact on 
profits from acquisitions was approximately £34 million or 3 
of profits in continuing businesses
the yearonyear increase in interest costs is £14 million from 
£68 million to £82 million this includes £10 million relating  
to foreign exchange and the balance is due to the extra cost of 
additional borrowing in the year adjusted profit before tax 
increased by 12 from £980 million to £1101 million 
statutory operating profit after including acquisitionrelated 
intangible asset amortisation of £46 million 2007 £19 million 
increased by 10 from £1029 million to £1137 million
statutory profit before tax decreased by 10 from £1181 million 
to £1061 million 
19
increase in sales from continuing businesses
13
increase in adjusted operating profit from 
continuing businesses
86
cash conversion 21
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
the differences between statutory and adjusted profit before tax are 
shown in the table below
  2008 2007 
  £m £m
statutory profit before tax  1061 1181
profit on disposal of businesses  03 190
goodwill charges and acquisitionrelated  
intangible asset amortisation  46 19
unrealised changes in fair value of  
financial instruments  09 30
net losses on retranslation of shortterm  
intercompany loan balances  06 –
adjusted profit before tax  1101 980
acquisitions
the total cost of acquisitions made in the year was £888 million 
including acquisition expenses as well as a small amount of deferred 
and contingent consideration expected to be paid in future years 
and excluding cash acquired the largest of these acquisitions took 
place close to the end of 2008 these acquisitions contributed  
£281 million of sales and £34 million of profits during the year
taxation
the effective tax rate on profits was 237 2007 280 a decrease 
of 43pp the effective tax rate continues to be below the weighted 
average statutory tax rate of 297 2007 323 primarily as a 
consequence of the tax effects of a tax efficient intercompany 
financing structure and the recognition of tax assets from tax 
losses arising in prior years in the uk
the underlying tax charge is expected to remain approximately 
3pp below the weighted average statutory tax rate for the 
foreseeable future
earnings per share
adjusted earnings per share increased by 25 from 581 pence to 
728 pence reflecting the net impact of a 12 increase in profit 
before tax a reduction in the average number of shares in issue 
and the reducing tax charge
basic earnings per share decreased by 1 from 709 pence to 
703 pence the differences between the two measures are shown in 
the table below 
  2008 2007 
  pence pence
basic earnings per share  703 709
goodwill charges and acquisitionrelated  
intangible asset amortisation  40 16
profit on disposal of businesses  03 156
unrealised changes in fair value of  
financial instruments  08 24
net losses on retranslation of shortterm  
intercompany loan balances  05 –
tax effect of the above and other tax items that  
do not form part of the underlying tax rate  09 36
adjusted earnings per share  728  581
the weighted average number of shares outstanding during the 
year decreased from 1216 million to 1154 million this decrease 
arose as a result of the share buyback programme that was 
completed in february 2008 partially offset by the exercise of 
share options in the year
cash flow
  2008 2007 
  £m £m
operating cash flow
adjusted operating profit  1183 1048
add back depreciation and software  
amortisation  135 131
working capital movementother  78 15
net cash flow from operating activities  
before capital expenditure  1240 1164
capital expenditure   219 127
operating cash flow  1021 1037
cash conversion  86 99
 
nonoperating cash flow  
tax paid  240 238
interest paid  85 63
dividends paid  250 222
acquisitions  878 60
disposals  15 298
share buyback  93 792
exercise of share options  03 41
purchasesale of own shares by  
employee benefit trust  02 16
exchange  339 41
total nonoperating cash flow  1869 1093
operating cash flow   1021  1037
movement in net debt   848 56
cash conversion of operating profit to operating cash was 86 
2007 99 the lower cash conversion was a result of a 
combination of capital expenditure £219 million net of disposals 
£09 million being £75 million higher than depreciation and a 
build in working capital towards the second half of the year 
average working capital expressed as a percentage of sales reduced 
to 134 whereas yearend working capital expressed as a 
percentage of sales increased from 144 to 184 29pp of this 
increase is attributable to the yearend on yearend foreign 
exchange rate movement with the us dollar strengthening by 28 
against sterling and the euro appreciating by 24 at constant 
exchange rates the yearend working capital ratio would have been 
155 still 11pp higher than the prior year reflecting the build up 
of working capital towards the end of the year 
capital expenditure during the year equated to 27 of sales  
2007 19 and at £219 million 2007 £127 million was 162 
of depreciation 2007 97  22
spectris plc annual report and accounts 2008
business review
financial review continued 
overall net debt increased by £848 million 2007 increase of 
£56 million from £773 million to £1621 million interest cost 
excluding the financing charge arising from ias 19 was covered by 
adjusted operating profit 144 times 2007 156 times providing 
significant headroom over and above banking covenants which 
require a minimum of 375 times cover
financing and treasury 
the group finances its operations from both retained earnings and 
thirdparty borrowings the majority of which are currently at 
fixed rates of interest 
as at 31 december 2008 the group had £257 million of committed 
facilities which consists of £164 million of private placements 
maturing between september 2010 and october 2013 £90 million  
of revolving credit facilities of which £50 million matures on  
31 december 2009 and £3 million of bank loans secured on 
property of three of our businesses £40 million of revolving credit 
facilities were undrawn at the year end in addition the group  
had a cash balance of £644 million and has £405 million of 
uncommitted facilities mainly in the form of overdraft facilities 
for our local operations £96 million of these facilities were drawn 
at the year end
at the year end 73 of group borrowings were at fixed interest 
rates 2007 96 the ageing profile at the year end showed that 
15 of debt is due to mature within one year 2007 3 and 85  
of debt is due to mature in between one and five years 2007 31 
since the year end an additional £50 million fiveyear term facility 
was secured in january 2009 under covenant conditions  
in line with existing facilities 
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 debtor trade creditor and 
cash balances are held
the largest transactional exposures are to the us dollar and  
to a lesser extent the euro and the japanese yen the largest 
translational exposures are to the us dollar euro and danish 
krone the table below shows the key average exchange rates 
during 2008 and 2007 
  2008 2007 
  average average
us  185 200
euro  126 146
yen  192 236
translational currency exposures are not hedged
forward exchange contracts are used to hedge forecast sale 
transactions where there is reasonable certainty of an exposure  
at 31 december 2008 approximately 65 of the estimated  
us dollar and japanese yen exposures for 2009 were hedged using 
forward exchange contracts
to demonstrate the currency exposure faced by the group the table 
below shows the differences between the group’s consolidated 
revenues and costs for each of the major currencies in 2008 before 
reflecting the effect of transactional hedges taken out in the year
    € £  yen other total
total sales £m 273 322 63 56 73 787
 of sales 35 41 8 7 9 
total costs £m 195 295 70 26 91 677
pbt by currency £m 78 27 7 30 18 110
 of pbt 71 24 6 27 16  
  dollareuro categories include tracking currencies
   costs include interest of £33 million in  £52 million in € and income of 
£03 million in gbp
 
in 2009 the currency exposure is expected to change significantly 
following the decision to change the currency of invoicing in 
certain countries in asia from us dollars to euros in order to 
better balance our euro cost base if this decision had been fully 
effective at the beginning of 2008 the us dollar sales revenues 
would have been reduced by approximately £30 million and the 
euro sales revenues increased by a corresponding amount
defined benefit pension schemes
operating profit includes a defined benefit pension scheme  
current service charge of £17 million 2007 £09 million the  
net pension liability in the balance sheet before taking account  
of the related deferred tax asset has reduced to £85 million  
2007 £111 million largely as a consequence of the buyout of the 
liability on the brüel  kjær pension scheme in full in the usa 
during the year and actuarial gains on the scheme liabilities 
during 2008 the group made cash contributions into the  
defined benefit pension scheme amounting to £54 million  
2007 £31 million
principal risks and uncertainties
the group has identified the key potential strategic operational 
and financial risks and uncertainties which could have a material 
impact on the group’s longterm performance these potential 
risks and the actions to manage and mitigate them are described 
in detail on the following pages the directors do not foresee any 
further specific risks in 2009
clive watson 
group finance director 23
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
business review
principal risks and uncertainties
the necessary actions are taken by the audit committee to 
remedy any failings or weaknesses identified by its review of the 
internal control system and
 the executive directors report to the board on changes in the •	
business and external environment which present significant 
risks the group finance director provides the board with 
monthly financial information which includes key performance 
indicators regular reports on significant legal issues and 
insurance matters are received from the company secretary
the key potential risks and uncertainties which could have a 
material impact on the group’s longterm performance are 
described below
strategic risk
spectris has a broad spread of markets products and customers  
as described previously in this review and this limits to a large 
extent any specific risk to the ability to implement our strategy  
due to changes in the political and economic environments in the 
countries in which we operate this broad spread of markets also 
provides a good averaging of individual sector investment cycles 
our products typically involve low capital outlay but provide 
significant and rapid payback these benefits become even more 
attractive to customers as they seek to reduce their own costs 
of production 
a key element of spectris’ strategy is to grow the business portfolio 
through acquisition of standalone or bolton businesses which 
complement or extend the range of products and applications 
spectris can provide potential risks exist in successfully 
integrating acquisitions however spectris believes that its track 
record of carefully selecting businesses which fulfil its acquisition 
criteria and rigorous financial assessment of the potential 
acquisition’s ability to contribute to growth will continue to ensure 
that any businesses acquired will be successfully integrated 
operational risk
in order to sustain competitive advantage the group invests 
significantly in research and development the development of all 
new technologies and products involves risk including the product 
being more expensive or taking longer to develop than originally 
planned that the market for the product is smaller than originally 
envisaged or that the product fails to reach the production stage 
however we endeavour to reduce this risk by ensuring that new 
product development is carried out in conjunction with customers 
to ensure that the products meet expectations of the market all 
businesses are exposed to risk from competitive activity however 
the diversity of spectris’ products and markets and the high 
barriers to entry limits the overall risk from any single competitor 
although the majority of our business is to supply products only 
there may be instances where spectris companies enter into 
complex longterm or multisite contracts with customers spectris 
has a strict approval process for such contracts in order to manage 
any risks they may present potential risk from loss of a key 
customer is limited as no single customer accounts for more than 
1 of turnover and credit control procedures limit the risk from 
nonpayment by customers group operating companies also 
monitor customer satisfaction to ensure they are meeting 
the process for identifying evaluating and 
managing any significant risks forms part of  
the group’s system of internal controls 
internal controls 
the board is ultimately responsible for the group’s system of 
internal controls and for reviewing its effectiveness however such 
a system is designed to manage rather than eliminate risk of failure 
to meet business objectives and can provide only reasonable and 
not absolute assurance against material misstatement or loss
consistent with the guidance provided for directors on internal 
control by the financial reporting council ‘internal control 
guidance for directors on the combined code’ the board 
confirms that there is an ongoing process for identifying 
evaluating and managing assessed significant risks faced by the 
group that this has been in place for the year under review and up 
to the date of approval of the annual report and accounts that this 
process has been reviewed by the board during the year and that 
the group accords with the guidance the board affirms the 
importance it attaches to the continuous review and application of 
the guidance the regular and systematic assessment of the risks 
facing the group and the value of embedding risk management and 
internal control systems within its business processes the group 
has an internal audit function which reviews the design and 
effectiveness of internal controls across the group’s operations
the processes which the board and the audit committee have 
applied in reviewing the effectiveness of the group’s system of 
internal controls are summarised below
 an established process is in place whereby each business unit •	
regularly assesses evaluates and reports risks of group 
significance each business unit is required to document the 
management and mitigating actions in place and proposed
 regular review of the status of risks and corresponding •	
mitigating actions ensure that risk management is embedded  
in daytoday management processes and decisionmaking as 
well as in the annual strategic planning cycle 
 the effectiveness of risk management and mitigating actions is •	
reviewed regularly by the executive directors and twice yearly 
by the audit committee
 additionally the executive directors consider those risks to the •	
group’s strategic objectives which are not addressed within the 
business units and develop appropriate approaches to managing 
and mitigating these risks
 annual financial plans for each business unit significant  •	
capital investments or contractual commitments and major 
acquisitions or divestments are all subject to review and 
approval by the board
 a group accounting and policies manual sets out the minimum •	
standards and procedures to be applied in relation to those  
risk areas which are regarded as significant in a group context
 a process of selfassessment of compliance with the manual  •	
and reporting thereon has been established providing for  
a documented trail of accountability from business unit 
presidents and finance directors to the audit committee   24
spectris plc annual report and accounts 2008
business review
principal risks and uncertainties continued 
customers’ product delivery and service requirements the 
company is also exposed to the risk that some of the components it 
sources particularly for custombuilt items or older components 
are provided by a single supplier and are vulnerable to interruption 
of supply the group seeks to address this risk by finding alternative 
sources to reduce dependency on singlesource suppliers and 
building sufficient safety stock of critical components 
spectris’ operations are characterised by short lead times and 
seasonal fluctuations in sales with some businesses exhibiting  
a greater trend towards sales in the second half of the year this 
limited forward visibility and the potential for delays in the 
shipment of orders exposes the company to the potential risk  
that it may not meet its sales forecast for the year 
financial risk 
the principal financial risks managed by the group are foreign 
currency interest and liquidity the group’s exposure to 
commodity risk is perceived to be small by virtue of the nature  
of the businesses
foreign exchange transaction risk is managed principally through 
forward contracts covering up to 75 of forecast forward 
exposures for up to eighteen months ahead foreign exchange 
translation risk which results from converting foreign currency  
to sterling is not hedged but is actively managed through natural 
hedging by matching invoicing and purchasing currencies as far as 
is commercially practical in addition it is the aim where possible 
to hedge foreign currency investments with borrowings in the 
same currency in order to minimise interest cost and maximise 
interest income companies are required to pass surplus funds to 
group treasury through intercompany loans where possible 
zero balance pools are in place to centralise cash automatically
the longterm aim with regard to interest rate risk is to have a 
balance between fixed and floating rate debt interest rate swaps 
are considered to achieve this balance
the group manages its liquidity risk through the use of regularly 
updated cash flow forecasts and liquidity headroom analysis to 
determine its funding requirements the group maintains 
sufficient lines of credit from high quality investment grade 
lenders to cover expected cash requirements and provide 
reasonable headroom the facilities are described in detail  
in the financial review 
intellectual property risk
spectris’ business is focused on the design and manufacture of 
technologically advanced products and applications and the group 
makes significant investment in research and development as a 
consequence the group owns and protects patents trademarks 
trade secrets copyright information and intellectual property 
licenses although these are important to growth as a whole no 
single patent trade secret or trademark is sufficiently important to 
present a material risk to the success of the company appropriate 
measures are taken to protect the company’s intellectual property 
rights and to minimise the risk of infringement by third parties 
spectris is prepared to initiate legal action if necessary to safeguard 
its interests inadvertent infringement of thirdparty rights also 
presents a risk and spectris has procedures in place requiring its 
operating companies to maintain a watching brief on new 
applications and to undertake specific reviews prior to 
commencing new product development programmes acquisitions 
or licenses
information technologybusiness interruption risk
spectris depends on timely and reliable information from key 
software applications to aid daytoday operational management 
and to provide accurate financial information for its head office 
whilst the company endeavours to ensure the continuous 
availability and operation of these systems and software any 
disruption could delay or otherwise impact daytoday decision 
making disaster recovery plans to maintain businesscritical 
processes and activities in the event of a significant interruption to 
the normal course of business are in place throughout the group 
and are regularly tested
hazardous risk 
assessment of risk to the business is carried out on a continuous 
basis to determine any potential effects on the environment 
resulting both from product manufacture and operation of our 
products at the customer’s site each operating company is 
required to produce a risk register which identifies possible 
hazardous risks to their business for each risk the likelihood  
of the occurrence is documented together with the possible 
consequences the actions required to minimise the probability  
of the event occurring and responsibility assigned to a member  
of the company’s management team the risk register is reviewed 
regularly by the group’s internal audit function
contractual arrangements
the company has no contractual or other arrangements which are 
essential to the business of the company nor any key customers or 
major suppliers upon which it is dependent 25
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
business review
corporate social responsibility
spectris is committed to creating business 
growth through adding value for its customers 
whilst ensuring that its impact on the 
environment is minimised
spectris operates from 160 offices in 29 countries around the 
world the company’s products are used to monitor and control 
processes for enhancing productivity for customers in a wide range 
of industries 
spectris continues to meet the criteria for membership of the 
ftse4good uk index which measures and benchmarks the 
performance of companies that meet globally recognised corporate 
responsibility standards the criteria are assessed on a regular basis 
by the independent research organisation eiris with increasing 
emphasis on ethics and human rights
the policies and information described below apply to all 
spectris operations 
policy setting and monitoring
overall responsibility for developing corporate policies on 
environmental social ethical and health and safety matters and 
for reviewing their effectiveness lies with the spectris board the 
policies are communicated to all business units via the spectris 
group manual the individual operating companies are then 
responsible for ensuring that these policies are communicated and 
applied within their particular business taking account of local 
legislation and regulation all policies and procedures are reviewed 
periodically and any updates are communicated to the 
operating companies
reporting and compliance
conformity with these policies is monitored by selfcertification 
on an annual basis by the managing director and finance 
director of each operating company that their business has 
complied in full any instances of noncompliance must 
be reported 
such certification forms an integral part of the company’s risk 
management and corporate governance processes and is regularly 
reviewed by the group’s internal audit function and the company’s 
external auditors compliance testing is a formal part of internal 
audit reviews through a structured review process the internal 
audit function undertakes visits to group locations on a rotational 
basis these visits involve an assessment of the business’ key 
internal controls as well as compliance with the group’s policies 
and procedures the results of internal audits and any non
compliance events are reported to the audit committee
risk assessment
the key potential risks and uncertainties which could have a 
material impact on the group’s longterm performance are 
described elsewhere in this business review potential social and 
environmental risks to the business may arise within product 
manufacture or operation of a product at the customer’s site 
where a significant risk is identified procedures for storage 
normal operating conditions and emergency situations are 
documented and regularly monitored for compliance with the 
relevant regulations a nominated individual is responsible for 
safety compliance and all employees are informed and trained in 
safety procedures depending upon the extent of their involvement 
with the product presenting the risk documented processes are in 
place to reduce the likelihood of an occurrence material risk 
processes and procedures are regularly reviewed by the group 
internal audit function
potential social and environmental risk in spectris’ operations is 
limited however the panalytical business which supplies 
instrumentation for xray analysis makes limited use of beryllium 
in detector windows and xray tubes whilst certain ndc infrared 
engineering products utilise lowlevel sealed radioactive sources 
in all cases the legal requirements for the correct handling and 
labelling of such products are documented and regularly audited 
for compliance procedures also exist for the disposal of 
contaminated waste and for recovering used products from 
customers and disposing of them safely the servomex gas analysis 
business includes the storage of flammable and toxic gases at its 
testing facility operating procedures for the movement and use of 
cylinders containing such gases are in accordance with the 
appropriate legal requirements and are inspected annually by an 
independent authority chemical and hazardous waste is disposed 
of in accordance with written procedures
environment
many spectris products and technologies have positive 
environmental benefits by providing customers with the ability  
to reduce energy consumption or material wastage or to control 
emissions our curing lamps for example use ultraviolet light to 
cure or ‘dry’ environmentallyfriendly inks and coatings replacing 
conventional heat treatment of traditional materials which  
is energyintensive and emits toxic solvent vapours our 
instrumentation helps wind farm operators to keep their turbines 
running by using remote predictive monitoring to detect and 
prevent faults our products can also help customers to meet 
environmental legislation for example we supply instrumentation 
which can measure low levels of materials such as lead and cadmium 
to meet legislation on the restriction of hazardous substances we 
also supply systems which analyse the amount of sulphur in fuel to 
ensure compliance with regulations on the levels permitted further 
examples of the use of spectris products having a direct beneficial 
contribution to the environment are shown on our website
we are also committed to adopting environmentally responsible 
policies wherever our companies operate we aim to reduce the 
environmental impact of our operations by developing products 
which are energyefficient and avoid the use of harmful substances 
design processes take into account the operational lifetime of every 
product and endoflife removal or disposal consideration is also 
given to environmentfriendly production packaging and shipping 
products have been developed which meet the new european 
regulations on the restriction of hazardous substances rohs and 
waste electrical and electronic equipment weee for example 
printed circuit boards used in instrumentation sold to customers in 
this region no longer use leadbased solder in their manufacture  26
spectris plc annual report and accounts 2008
all businesses are conscious of the need to conserve energy and 
resources and local initiatives are in place at many sites to reduce 
energy consumption and minimise wastage these include 
recycling of items such as waste paper cardboard aluminium cans 
batteries toner cartridges and mobile phones reducing energy 
consumption through the use of timers and sensors to control hot 
water air conditioning and lighting reducing water consumption 
and reuse of packaging and filling materials the new technical 
centre for servomex in crowborough england which was opened 
in november 2008 has been designed and built to the latest 
environmental standards including the use of heat exchangers to 
maximise heating efficiency and motion sensor lighting to reduce 
power wastage at ndc’s facility in the us remote control units 
for the lighting system have been installed to enable the company 
to achieve energy and cost savings at panalytical in the 
netherlands despite a doubling of production volumes over the 
past ten years the company’s overall energy consumption has 
decreased by around 10 
spectris complies with the uk producer responsibility obligations 
packaging waste regulations which set targets for the recovery 
and recycling of packaging waste 
our environmental policy is published on our website at  
wwwspectriscom the nature of our manufacturing activities 
means that spectris’ operations have very little impact on the 
environment as our products do not require energyintensive 
manufacturing processes and we endeavour to employ non
polluting technology wherever possible although we have four 
production facilities in the uk their low power consumption 
means that the amount of greenhouse gas emissions produced is 
not significant and hence spectris is not required to participate in 
the second round of the european emissions trading scheme nor 
is it expected that the company will be included in the uk’s 
carbon reduction commitment plan
environmental management systems
approximately half of spectris’ operations by turnover have 
received accreditation to the environmental standard iso14001 
other companies are working towards accreditation where this is 
deemed beneficial for their customers 
during 2008 no significant environmental incidents were recorded 
employees
spectris’ employees are key to the success of the company  
we employ around 6000 people in 160 offices throughout the 
world with a high proportion of employees qualified at or  
above degree level we are committed to providing our people 
with a creative working environment with plenty of scope for 
individual responsibility and achievement in 2008 on average 
3000 employees were employed in production and engineering  
with 2220 in sales and marketing and 500 in administrative 
functions compensation and benefits which are in line with  
other leading companies in the sector are designed to reward  
the achievement of objectives annual reviews provide feedback  
on employees’ performance set objectives and identify training 
business review
corporate social responsibility continued 
and development opportunities to enable them to meet their  
full potential
employment 
policy
spectris operates mainly in europe and the us but with a growing 
presence in asia although different social and employment 
conditions exist in different locations spectris places high priority 
on compliance with the legislative and ethical requirements of the 
countries in which we operate particularly with respect to 
employment practices labour rights and equal opportunities the 
company secretary has overall responsibility for employment 
policies but responsibility for implementation is delegated to 
individual business units with operational policies and procedures 
tailored to suit local needs the company’s employment policy is 
available at wwwspectriscom 
overall hr policies are set at the centre and implemented by each 
operating business taking account of local conditions spectris 
retains a diverse workforce valuing the different perspectives of its 
employees and the company is committed to equal opportunities 
for all employees in terms of recruitment and employment 
training and development and promotion we strive to create a 
culture of honesty respect and professional excellence whilst 
maintaining a healthy balance between working and personal lives 
with initiatives such as parttime and job share opportunities 
providing familyfriendly working conditions employee surveys 
are carried out in a number of companies to measure the views of 
employees on company issues and action plans agreed to address 
the issues raised
staff turnover is dependent to a large extent upon local market 
conditions but is generally low particularly at senior management 
level and amongst technicalrd staff where indepth technical 
knowledge brings loyalty and commitment to the company whilst 
data on employee turnover is not collated centrally it is monitored 
by individual businesses 
graduate recruitment programmes and student work placements 
exist in several companies providing opportunities for young 
people particularly scientists to be introduced to the 
business environment
reporting
it is the responsibility of the managing directors in each operating 
company to ensure that all employees are fully aware of spectris’ 
hr policies the group monitors compliance through various 
processes including confirmation in writing by each business unit 
annually and consolidated equal employment opportunities 
commission returns which are produced in the us
training and development
spectris’ commitment to training and personal development 
emphasises the importance of retaining staff throughout the group 
and ensuring that all employees are encouraged to realise their full 
potential annual appraisals and performance reviews are carried 
out to determine training and development needs for individual  27
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
as part of their commitment to activities that 
stimulate interest in the sciences panalytical 
sponsored two students in the 2008 ‘expedition 
greenhouse world’ – an initiative run by utrecht 
university in the netherlands on the weeklong 
expedition in october to spitsbergen norway the 
students visited longyearbyen glacier where they 
collected rocks full of 40–60 million year old fossils  
of the plants that caused the greenhouse effect at 
that time they investigated core samples where  
the ancient carbon layers demonstrated the high 
concentrations of atmospheric co
2
 these climate 
changes devastated the palaeocene animal population 
and during a trip that took them 4km underground 
the students saw 55million year old footprints made 
by extinct hippopotamuslike mammals
expedition greenhouse world
employees malvern and servomex our two principal uk 
businesses have received the investors in people award for their 
programmes of training appraisal employee development and 
skills recognition
financial participation in the group is encouraged through the 
savings related share option scheme available to all uk 
employees and through grants under the group’s performance 
share plan made to senior management across the group
employee communications
the company has a policy of encouraging its operating companies 
to provide information to their employees on a regular basis this 
information includes matters relating to their company’s 
performance its prospects in the markets it serves and the future 
outlook for its business in addition to regular staff briefings most 
companies have intranets where news bulletins are posted 
health and safety
policy
the chief executive has overall responsibility for environment 
health and safety matters senior executives in each of the business 
units are responsible for implementing the company’s health and 
safety policy at local level and ensuring compliance with local 
legislation and regulations the company’s health and safety policy 
can be viewed on our website at wwwspectriscom 
spectris is committed to providing a working environment at all  
of its sites which so far as is possible is safe and without risk to 
health each operating company is responsible for ensuring that 
the highest standards of health and safety are achieved by its 
employees and by subcontractors and suppliers
 
reporting
any serious health and safety incidents are required to be reported 
by the managing director of the business in an accident report to 
the company secretary who reports on such issues to the board 
all accidents are thoroughly investigated and appropriate 
corrective and preventative actions put in place no serious injuries 
or deaths have been reported in the last ten years although minor 
incidents are monitored locally statistics for these are not 
compiled for the group as a whole audits of health and safety 
policies and procedures are undertaken at all major locations by 
external assessors acting on behalf of the group’s insurers on an 
annual basis and recommendations are made for improving 
practices where appropriate
human rights 
spectris believes in the fundamental rights of people in all parts of 
the world and is committed to adopting internationally recognised 
human rights standards wherever it operates  28
spectris plc annual report and accounts 2008
policy
the company’s human rights policy which can be viewed at  
wwwspectriscom is consistent with the principles of human  
rights as set out in the international labour organization’s core 
conventions and includes policies on nondiscrimination 
harassment pay and forced labour the policy is reviewed periodically 
and any updates are communicated to the operating companies the 
chief executive has overall responsibility for human rights 
spectris takes its commitments to human rights seriously and our 
operating companies are required to ensure that all employees are 
aware of the policy and understand it in most of the operating 
companies new employees are provided with an employee 
handbook which includes sections on employee responsibilities  
with regard to equal opportunities nondiscrimination harassment 
bullying disciplinary practices etc and new employees must sign  
to say that they have read and understood this 
in asia the general manager is responsible for ensuring that the 
highest ethical standards are maintained in all of our asiabased 
operations spectris has a number of sales offices in china and also 
owns a factory which supplies high quality weighing components 
this comprises a modern facility located in a business park along 
with other western companies the factory employs skilled 
workers adopts employment conditions consistent with best local 
practice and pays wages that are higher than average for the area
spectris considers human rights as part of its due diligence process 
for acquisitions ensuring that the core labour rights including 
nondiscrimination equal opportunities and freedom of 
association of the company to be acquired are taken into account
reporting
the managing director and finance director of each operating 
company are required to certify on an annual basis compliance 
with all spectris policies any noncompliance is investigated by 
local human resources managers or by spectris management or the 
internal audit function if it is serious pay practices are monitored 
to ensure they are nondiscriminatory 
circumstances may also come to light via the company’s 
whistleblowing policy via which employees may report to the 
business’s management team or any board member via a 
confidential email address any concerns they may have over 
unethical business practices or conduct dangers to health and 
safety or breach of company policies any such disclosures are 
appropriately investigated in addition spectris is committed to 
protecting the career and reputation of employees who report 
wrongdoing in accordance with established procedures so long as 
their disclosures are delivered in good faith and seek to safeguard 
the best interests of the group
some individual operating companies also have their own 
whistleblowing processes whereby employees can anonymously 
report concerns over discrimination harassment etc
training
in the us awareness training on harassment and discrimination is 
carried out with companies providing regular refresher training 
on harassment and nondiscrimination to all employees in some 
companies there are worldwide programmes on corporate values 
and desired behaviour with employees being measured against 
these values in their annual performance appraisals
ethics
all employees are expected to behave in accordance with the 
company’s behavioural values which are shown opposite  
these values define who we are and how we do business both  
as individuals and as a company
policy
the ethical standards we expect each employee to meet are set out 
in our ethics policy which is communicated to all employees the 
ethics policy can be viewed on our website at wwwspectriscom 
the policy prohibits bribery corruption and similar facilitation 
payments donations to political parties or similar organisations 
are also prohibited any allegations of misconduct are thoroughly 
investigated all operating companies are required to comply with 
export control regulations governing shipment of products and the 
appropriate compliance procedures are in place
reporting
as with all spectris policies conformity is monitored by self
certification on an annual basis by the managing director and 
finance director of each operating company that they have 
complied with the policy any instances of noncompliance must 
be reported in particular any known instances of fraud including 
bribery and corruption must be specifically disclosed 
certification forms an integral part of the company’s risk 
management and corporate governance processes and is regularly 
reviewed by the group’s internal audit function and the company’s 
external auditors compliance testing is a formal part of internal 
audit reviews through a structured review process the internal 
audit function undertakes visits to group locations on a rotational 
basis these visits involve an assessment of the business’s key 
internal controls as well as compliance with the group’s policies 
and procedures the scope of the work performed during internal 
audit visits includes testing to confirm compliance with the 
group’s overall position and policy regarding antibribery and 
corruption measures 
the results of internal audits and any noncompliance events are 
reported to the audit committee
the company operates a ‘whistleblowing’ policy described above 
through which known instances of fraud including bribery and 
corruption may be reported confidentially this will be 
strengthened in 2009 to include a telephone hotline and an online 
reporting system which employees will be able to access 
in anonymity
training
currently a number of spectris companies provide training to 
employees however spectris intends to formalise this with a 
groupwide ethics programme which will be introduced during 
business review
corporate social responsibility continued  29
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
2009 this formal programme will ensure that the group’s ethics 
policy which includes statements on antibribery and corruption 
is communicated to and acknowledged by all employees in local 
language and will make training compulsory in all companies 
either via the hr department or online training modules all 
companies will be required to nominate an ethics compliance 
officer compliance with the ethics policy and training within each 
company will be monitored by the internal audit function as part 
of the risk assessment process
customers
spectris sells productivityenhancing instrumentation and services 
to a large number of customers around the world we have 
developed close working relationships with our customers and in 
many instances involve them in the development of new products 
to ensure they meet their requirements surveys of customer 
satisfaction are conducted on a regular basis
suppliers
spectris has no significant suppliers who are dependent upon the 
company’s business suppliers are paid in line with contractual and 
legal obligations spectris businesses work with their suppliers to 
help them to reduce their impact on the environment and to ensure 
that their products meet the relevant legislation outsourcing of 
products particularly in asia is to qualityapproved organisations 
only which are regularly inspected and audited by the strategic 
purchasing teams and local managements appropriate procedures 
are taken where practicable to ensure that the company’s policies 
in particular in relation to human rights and ethics are applied 
to suppliers
local communities
spectris companies worldwide participate in a range of local 
activities and educational initiatives in support of their local 
communities for example as part of its sponsorship of activities 
that stimulate interest in the sciences panalytical sponsored two 
students on a weeklong expedition to spitsbergen norway in the 
2008 ‘expedition greenhouse world’ to explore the climate change 
that took place 55 million years ago in the uk malvern has 
sponsored scientists attending key scientific conferences  
servomex has five apprentices on a scheme and brüel  kjær are 
participating in the ‘working with engineering education scheme’ 
which links teams of students and their teachers with local 
companies to work on real scientific engineering and technical 
problems
donations to charities and community causes in 2008 totalled 
£44000 of which £22400 were in the uk 2007 £28000 of which 
£10400 in uk this included donations to charities following the 
earthquake in china cancer research the red cross heifer 
international and to local arts and educational projects
honesty
acting with absolute integrity in all that we do
empowerment
creating an environment of autonomy in our operating 
companies where people are expected to take the 
initiative and to succeed
ownership
taking personal ownership of the responsibility of  
our roles
delivery
performing to the highest standards against the 
commitments we make both internally and especially 
externally to our customers
speed
ensuring that our business decisions are made and 
actions executed with a sense of urgency
our values 30
spectris plc annual report and accounts 2008
board of directors
01 john hughes chairman
john hughes was appointed to the board in 2007 and became 
chairman in may 2008 he is chairman of the nomination 
committee and a member of the remuneration committee john 
was previously executive vicepresident and chief operating officer 
of defence aerospace and electronic systems company thales group 
and is currently nonexecutive chairman of intec telecom systems 
plc and telecity group plc nonexecutive deputy chairman of 
parity group plc and a nonexecutive director of chloride group 
plc and barco nv a company quoted on the brussels stock 
exchange
02 john o’higgins chief executive
john o’higgins joined spectris in 2006 he is a member of the 
nomination committee prior to joining spectris he was with 
honeywell most recently as president of automation and control 
solutions asia pacific he began his career with daimler benz in 
stuttgart john has engineering degrees from university college 
dublin and purdue university and an mba from insead 
03 clive watson group finance director
clive watson joined spectris in 2006 he was previously at borealis 
a leading provider of plastics solutions where he was chief financial 
officer and executive vice president for business support prior to 
this he was group finance director at thorn lighting group and 
before that group finance director europe with black  decker 
clive is a member of the institute of chartered accountants in 
england and wales and the chartered institute of tax and holds a 
bachelors degree in commerce  accounting from the university 
of birmingham 
04 jim webster business group director
jim webster a metallurgy graduate joined spectris in 1993 he is 
responsible for the operational supervision of a number of the 
group’s trading companies he was previously general manager of 
the european wire and cable division of raychem corporation 
he is a nonexecutive director of raymarine plc 
05 peter chambré nonexecutive director
peter chambré was appointed to the board in 2006 he is a member 
of the audit committee and remuneration committee he is 
chairman of axellia pharmaceuticals apatech and 7tm pharma 
all private companies and a nonexecutive director of btg plc he 
is also an adviser to private equity company 3i peter was formerly 
chief executive officer of cambridge antibody technology group 
plc and prior to that was chief operating officer of celera genomics 
group and chief executive of bespak plc
06 anthony reading mbe nonexecutive director 
anthony reading was appointed to the board in 2004 he is 
chairman of the remuneration committee and a member of the 
audit committee and the nomination committee and is the senior 
independent director tony was previously a director of tomkins 
plc and chairman of tomkins corporation usa and a non
executive director of george wimpey plc he is a nonexecutive 
director of laird plc taylor wimpey plc and e2v technologies plc 
07 john warren nonexecutive director
john warren was appointed to the board in 2006 he is chairman 
of the audit committee and a member of the remuneration 
committee from 2000 to 2005 john was group finance director at 
wh smith plc prior to that he was with united biscuits plc for 19 
years latterly as group finance director he has been a non
executive director of rexam plc and rac plc and is currently a 
nonexecutive director of the rank group plc bovis homes group 
plc bpp holdings plc and uniq plc
08 roger stephens head of commercial and company secretary
roger stephens is an economics graduate and chartered company 
secretary prior to joining spectris in 1997 he held commercial 
roles in the power and construction sectors specialising in contract 
negotiation claims resolution ip exploitation and property 
development 31
spectris plc annual report and accounts 2008
overview financial statements governance business review overview
01 02
03 04
05 06
07 08
01
03
05
07
02
04
06
08 32
spectris plc annual report and accounts 2008
directors’ report
the directors present their report and accounts for the year ended 
31 december 2008
principal activities
spectris designs develops and markets productivityenhancing 
instrumentation and controls for 2008 reporting purposes the 
businesses were grouped into four segments materials analysis 
test and measurement inline instrumentation and industrial 
controls further details of the trading companies can be found in 
the business review page 6 developments in the group’s business 
activities are discussed in the chairman’s statement page 2 the 
chief executive’s statement page 4 and the business review
acquisitions
during the year a number of acquisitions were made malvern 
instruments acquired viscotek corporation a usbased provider 
of chromatography solutions for the characterisation of natural and 
synthetic polymers and proteins hbm and particle measuring 
systems acquired their distributors in respectively the nordic 
countries and china hbm acquired ncode international a 
supplier of durability test and analysis software and mobile data 
acquisition instruments microscan acquired siemens’ machine 
vision business a leader in automatic identification and data 
capture aidc specialising in machine vision and inspection 
systems used in a broad array of manufacturing packaging and 
traceability applications finally the lds test  measurement 
business was acquired and integrated with brüel  kjær sound  
vibration and hbm lds is a leader in integrated vibration test  
and measurement equipment and software for applications in  
the aerospace defence automotive machinery electrical and 
electronics markets the total consideration including acquisition 
expenses and net debt acquired as well as deferred and contingent 
consideration expected to be paid in future years for the above 
acquisitions was £888 million deferred consideration paid and 
working capital adjustments made during the year in respect of 
prior year acquisitions amounted to £13 million
disposals
there were no disposals during the year
share capital
the share capital of the company comprises ordinary shares of 5p 
each each share carries the right to one vote at general meetings  
of the company the authorised and issued share capital of the 
company together with movements in the company’s issued share 
capital during the year are shown in note 25 on page 77 the 
articles of association of the company available on the company’s 
website contain provisions governing the ownership and transfer  
of shares
at the 2008 annual general meeting shareholders authorised the 
directors to make market purchases of the company’s ordinary 
shares up to a maximum number of 12500000 shares representing 
approximately 10 of the issued share capital of the company and 
to either cancel the shares or hold them as treasury shares which 
may then be cancelled sold for cash or transferred for the purposes 
of the company’s share plans depending on the best interests of  
the company’s shareholders at the time at the close of business on 
23 february 2009 the company had 125005123 ordinary shares  
in issue of which 9694495 were held in treasury during the year 
21363 shares were transferred out of treasury to meet the 
company’s obligations under its share plans and no shares were 
cancelled out of treasury an authority to make further market 
purchases of the company’s ordinary shares if believed appropriate 
will be sought at the forthcoming annual general meeting 
although the board has no present intention of so doing
also included in the special business of the 2009 annual general 
meeting are proposals to renew the directors’ authority to allot 
shares up to prescribed limits
the company is introducing a dividend reinvestment plan 
providing shareholders with the option of using their dividend 
payments to buy additional spectris plc shares further details are 
given in the notice of annual general meeting
at 23 february 2009 interests notified to the company in 
accordance with chapter 5 of the disclosure and transparency 
rules comprised
standard life investments 
10490369 shares 910 material interest
axa sa
6160607 shares 534 material interest
ameriprise financial inc
5747326 shares 498 material interest
legal  general group plc
4997437 shares 399 material interest
barclays global investors
3483251 shares 302 material interest
takeovers directive
pursuant to s992 of the companies act 2006 which implements the 
eu takeovers directive the company is required to disclose certain 
additional information such disclosures which are not covered 
elsewhere in this annual report include the following
the company’s articles of association ‘articles’ give power to the 
board to appoint directors but require directors to submit 
themselves for election at the first annual general meeting 
following their appointment and for reelection where they have 
been a director at each of the preceding two annual general 
meetings and were not appointed or reappointed by the company 
at or since either such meeting the articles may be amended by 
special resolution of the shareholders and are available to view on 
the company’s website
the board of directors is responsible for the management of the 
business of the company and may exercise all the powers of the 
company subject to the provisions of the relevant statutes the 
company’s memorandum of association and the articles the 
articles contain specific provisions and restrictions regarding the 
company’s power to borrow money powers relating to the issuing 
and buying back of shares are also included in the articles and such 
authorities are renewed by shareholders each year at the annual 
general meeting  33
spectris plc annual report and accounts 2008
financial statements governance business review overview
there are a number of agreements that take effect alter or terminate 
upon a change of control of the group following a takeover such as 
bank loan agreements and company share plans none of these are 
deemed to be significant in terms of their potential impact on the 
business of the group as a whole in addition there is a service 
contract between the company and one of its directors which 
provides for compensation for loss of office or employment 
following a change of control of the group please refer to the 
directors’ remuneration report on page 40 for further explanation 
it is also possible that funding arrangements for the group’s defined 
benefit pension arrangements would need to be enhanced following 
a change of control if that resulted in a weakening of the relevant 
employer covenant
dividend
results for the group are set out in the consolidated income 
statement on page 45 and in the supporting notes a final  
dividend of 17p per ordinary share is proposed for the year to  
31 december 2008 2007 1525p with the interim dividend this 
makes a total for the year of 234p 2007 21p the final dividend 
will be paid on 26 june 2009 to shareholders on the register on 
5 june 2009
the terms of the spectris plc employee benefit trust provide that 
dividends payable on shares held within the trust are waived to 
001p no dividends are payable on shares held in treasury
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 2008 amounts expensed totalled £570 million 
2007 £452 million and no expenditure met the criteria for 
capitalisation 2007 £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 no trade creditors at the year end 2007 £nil
directors
the directors of the company are named on pages 30 and 31 
stephen harris resigned from the board on 31 january 2008  
john poulter retired from the board following the 2008 annual 
general meeting
john o’higgins and john warren retire from the board by rotation 
in accordance with the articles of association and being eligible 
offer themselves for reelection
the directors’ total remuneration for the year and their  
interests in the shares of the company and its subsidiaries  
at 31 december 2008 are disclosed in the directors’ remuneration 
report on pages 37 to 43
in accordance with section 309c of the companies act 1985 the 
directors disclose a qualifying thirdparty indemnity provision 
entered into between the company and its directors and officers 
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 reappoint 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 tuesday 19 may 2009 at 1130 am is contained in a 
separate letter from the chairman accompanying this report
corporate governance
combined code statement of compliance
spectris plc is subject to the combined code on corporate 
governance ‘the combined code’ that is appended to the listing 
rules of the uk listing authority the combined code sets out 
principles and provisions relating to the good governance of 
companies 
corporate governance has been and remains the responsibility of 
the whole board this statement describes how the company applied 
the principles and complied with the provisions of the combined 
code during 2008 the board considers that it was throughout the 
year and continues to be in full compliance with the provisions set 
out in section 1 of the combined code save that
 a majority of the members of the nomination committee are not •	
independent nonexecutive directors as required by provision 
a41 the committee consists of the chairman the senior 
independent director and the chief executive and the board 
considers this to be the most appropriate composition for the 
sensitive issues addressed by the committee
board composition and procedures
the board meets formally at regular intervals throughout the year 
to consider developments in relation to the company’s strategy and 
longterm objectives and to review trading results and operational 
and business issues in particular it deals with those matters 
reserved to it for decision including the acquisition and disposal of 
businesses major capital expenditure the appointment and where 
necessary removal of directors and board and senior management 
succession planning additional meetings are convened as required 
to consider specific topics requiring immediate decision usually 
two meetings each year are held at operating locations and 
encompass a detailed review of the relevant business operational 
decisions are delegated by the board to senior management at 
trading company level over which the executive directors exercise 
supervision all directors receive detailed progress reports one 
week prior to each board meeting 34
spectris plc annual report and accounts 2008
directors’ report continued
the board currently comprises the chairman three executive 
directors and three nonexecutive directors the board considers  
its nonexecutive directors peter chambré anthony reading and 
john warren to be independent in that none of them are or have 
ever been holders of an executive office with the company the 
positions of chairman chief executive and senior independent 
director are held by separate individuals and in accordance with 
the combined code the board has adopted written profiles for the 
first two of these the nonexecutive directors have all had senior 
experience in other organisations and offer independent judgement 
on board matters the chairman’s other significant interests are as 
nonexecutive chairman of intec telecom systems plc and telecity 
group plc nonexecutive deputy chairman of parity group plc and 
nonexecutive director of chloride group plc and barco nv the 
board believes that the chairman’s obligations to the company are 
unaffected by these directorships
there are procedures for individual board members to receive 
induction and training as appropriate and to solicit independent 
professional advice at the group’s expense where specific expertise is 
required in the course of exercising their duties all directors have 
access to the company secretary who is responsible for ensuring 
compliance with appropriate statutes and regulations
all directors are subject to reelection by shareholders at the first 
annual general meeting after their appointment and thereafter at 
intervals of no more than three years
the board delegates specific responsibilities to board committees 
notably the nomination remuneration and audit committees the 
terms of reference of these committees are published on the 
company’s website and the following additional documents are 
available to shareholders on application to the company secretary
schedule of matters reserved for decision by the board •	
 responsibilities of the chairman the chief executive and the •	
nonexecutive directors
relations with shareholders •	
performance evaluation and •	
procedure for taking independent professional advice •	
board and committee meeting attendance 2008
     
  remuneration audit nomination 
 board committee committee committee
total meetings during year 13 4 3 1
j l m hughes chairman 13 4 2 na
a j reading senior  
independent director 13 4 3 1
p a chambré  11 4 3 na
j a warren 12 4 3 na
    
j e o’higgins  
chief executive 13 na na 1
c g watson 13 na na na
j c webster 13 na na na
     
s c harris  2 na na na
j w poulter 4 na na –
s c harris and j w poulter held office for part of the year only  
s c harris attended both of the two board meetings which he  
was eligible to attend j w poulter attended four of the five board 
meetings he was eligible to attend and did not attend the 
nomination committee meeting he was eligible to attend as  
its subject matter concerned his succession as chairman 
board appointments and performance evaluation
the nomination committee consists of the chairman the senior 
independent director and the chief executive and is chaired by the 
chairman save in the event of discussions relating to his succession 
when the senior independent director takes the chair
following a decision of the board that the appointment of a new 
director is appropriate the duty of the committee is to present for 
board consideration suitably qualified candidates in making such 
recommendations the committee evaluates the balance of skills 
knowledge and experience on the board and develops a description 
of the role and required capabilities candidates are then identified 
for interview external search consultants being engaged as part of 
this process the committee also makes recommendations to the 
board regarding the reelection andor reappointment of any 
director similar selection processes apply for the appointment  
of a chairman
the nomination committee meets as the need arises its terms of 
reference can be found on the company’s website
the operation of the board and its committees is reviewed by the 
board as a whole annually the executive directors’ and company 
secretary’s performances are appraised annually against objectives 
established for the prior year the contributions of the chairman 
and nonexecutive directors are reviewed in advance of the 
conclusion of their initial threeyear term by the senior 
independent director and the chairman respectively prior to their 
being proposed to shareholders for reelection additionally the 
chairman holds periodic meetings with the nonexecutive directors 
only and led by the senior independent director the nonexecutives 
have the opportunity to meet at least annually without the 
chairman present
an evaluation of the operation and performance of the board was 
conducted in 2008 the process included submissions from all 
board members in response to a structured questionnaire covering 
a range of issues which were considered by the chairman and  
the senior independent director and then reviewed by the board  
as a whole
shareholder relations
spectris conducts regular dialogue with institutional shareholders 
and divulges such information as is permitted within the guidelines 
of the listing rules the content of presentations made after results 
announcements may be accessed by individual investors on the 
group website wwwspectriscom
all shareholders are invited to participate in the annual general 
meeting where the chairman the chief executive and the 
chairmen of the audit remuneration and nomination committees 
are available to answer questions the results of proxy votes are  35
spectris plc annual report and accounts 2008
financial statements governance business review overview
declared at the annual general meeting after each resolution has 
been dealt with on a show of hands these are then published on the 
group website 
the board is kept informed of the views of major shareholders 
through periodic reports from the chief executive the company’s 
joint brokers merrill lynch and rbs hoare govett and the 
company’s shareholder relations adviser makinson cowell the 
chairman and nonexecutive directors have the opportunity to 
attend the biannual analyst presentations
shareholders representing in excess of 3 of the company’s issued 
share capital receive a standing invitation to meet the chairman 
the senior independent director or new nonexecutive directors 
such meetings would supplement if necessary but not replace  
the regular meetings with the chief executive and group  
finance director
audit committee
the audit committee comprises the nonexecutive directors and  
is chaired by john warren who has recent and relevant financial 
experience as the former group finance director of wh smith plc 
the committee meets at least twice each year to consider the 
effectiveness of the group’s internal controls policies and 
procedures the process of internal audit and the outcome of the 
external audit its meetings are normally attended by the chairman 
the chief executive the group finance director the company 
secretary and the external auditor all executive directors attend 
the year end final audit review meeting and processes requiring the 
disclosure of relevant information by individual directors to the 
auditor have been adopted the committee regularly confers with 
the auditor without the attendance of executive directors its terms 
of reference can be found on the company’s website
the committee is responsible for making recommendations to the 
board in relation to the appointment of the external auditor and 
then for approving the external auditor’s remuneration terms of 
engagement and scope of work
the committee has also adopted procedures governing and 
restricting the appointment of the external auditor for nonaudit 
services the following services are precluded
 bookkeeping or other services related to the accounting records •	
or financial statements of spectris plc
financial information systems design and implementation •	
 appraisal or valuation services fairness opinions or contribution •	
in kind reports
actuarial services •	
internal audit outsourcing services •	
management functions or human resources •	
 broker or dealer investment adviser or investment banking •	
services and
legal services and expert services unrelated to the audit •	
a cumulative annual cap of £200000 is established for all other 
nonaudit services save for acquisition due diligence and taxation 
services above which all engagements are subject to prior approval 
by the audit committee
the head of internal audit is employed by the group to perform 
internal control reviews across the group according to a work 
programme agreed by the committee the head of internal audit is 
assisted in this by two further internal auditors and by other group 
finance personnel the nature and scope of the group’s internal 
control review resources is reviewed by the audit committee 
annually the audit committee receives reports twice a year on the 
results of internal control reviews the head of internal audit has 
direct access to the chairman of the audit committee and may meet 
with him in the absence of executive management
internal controls 
the group’s system of internal controls is described on page 23 of 
the business review 
 
going concern
having reviewed the group’s plans and available financial facilities 
the board has a reasonable expectation that the group has adequate 
resources to continue in operational existence for the foreseeable 
future for this reason it continues to adopt the going concern basis 
in preparing the group’s accounts
business review
the information that fulfils the requirements of the business 
review as required by section 417 of the companies act 2006 and 
which should be treated as forming part of this report by reference 
is included in the following sections of the annual report
chairman’s statement on pages 2 and 3 •	
chief executive’s statement on pages 4 and 5 •	
group overview on pages 6 and 7 •	
 operating review on pages 10 to 19 which includes a review of •	
the external environment 
 key strategic aims and performance measures are described on •	
pages 8 and 9
 principal risks and uncertainties are described on pages 23  •	
and 24
 details of the principal operating subsidiaries are set out on •	
pages 12 to 19
financial review on pages 20 to 22 •	
 corporate citizenship on pages 25 to 29 which includes the •	
company’s policy on treatment of its employees 
statement of directors’ responsibilities in respect of the 
directors’ report and the financial statements
the directors are responsible for preparing the directors’ report 
and the group and parent company financial statements in 
accordance with applicable law and regulations 
company law requires the directors to prepare group and parent 
company financial statements for each financial year under that 
law they have elected to prepare the group financial statements in 
accordance with international financial reporting standards 
ifrs as adopted by the eu and applicable law and have elected to 
prepare the parent company financial statements in accordance 
with uk accounting standards and applicable law uk generally 
accepted accounting practice  36
spectris plc annual report and accounts 2008
directors’ report continued
the group financial statements are required by law and ifrs as 
adopted by the eu to present fairly the financial position and 
performance of the group the companies act 1985 provides in 
relation to such financial statements that references in the relevant 
part of that act to financial statements giving a true and fair view 
are references to their achieving a fair presentation 
the parent company financial statements are required by law to give 
a true and fair view of the state of affairs of the parent company 
in preparing each of the group and parent company financial 
statements the directors are required to 
 select suitable accounting policies and then apply them •	
consistently 
 make judgements and estimates that are reasonable and prudent •	
 for the group financial statements state whether they have been •	
prepared in accordance with ifrs as adopted by the eu 
 for the parent company financial statements state whether •	
applicable uk accounting standards have been followed subject 
to any material departures disclosed and explained in the parent 
company financial statements and
 prepare the financial statements on the going concern basis •	
unless it is inappropriate to presume that the group and the 
parent company will continue in business 
the directors are responsible for keeping proper accounting records 
that disclose with reasonable accuracy at any time the financial 
position of the parent company and enable them to ensure that its 
financial statements comply with the companies act 1985 they 
have general responsibility for taking such steps as are reasonably 
open to them to safeguard the assets of the group and to prevent 
and detect fraud and other irregularities 
the directors are responsible for the maintenance and integrity of 
the corporate and financial information included on the company’s 
website legislation in the uk governing the preparation and 
dissemination of financial statements may differ from legislation in 
other jurisdictions 
under applicable law and regulations the directors are also 
responsible for preparing a directors’ report directors’ 
remuneration report and corporate governance statement  
that comply with that law and those regulations
the directors who held office at the date of approval of this 
directors’ report confirm that so far as they are each aware there 
is no relevant audit information of which the company’s auditors 
are unaware and each director has taken all the steps that he ought 
to have taken as a director to make himself aware of any relevant 
audit information and to establish that the company’s auditors are 
aware of that information
responsibility statement of the directors in respect  
of the annual report 
we the directors of the company confirm that to the best  
of our knowledge 
a  the financial statements of the group have been prepared in 
accordance with ifrs as adopted by the eu and for the 
company under uk gaap in accordance with applicable 
united kingdom law and give a true and fair view of the assets 
liabilities financial position and profit or loss of the group and
b the information that is crossreferenced from the business 
review section of the directors’ report includes a fair review  
of the development and performance of the business and the 
position of the group together with a description of the principal 
risks and uncertainties that face the group
by order of the board
r j stephens
secretary
24 february 2009 37
spectris plc annual report and accounts 2008
financial statements governance business review overview
directors’ remuneration report
the directors present their remuneration report for the year ended 
31 december 2008
remuneration committee
the remuneration committee is responsible for recommending to 
the board the broad policy for the remuneration of the chairman 
the chief executive the executive directors and the company 
secretary the remuneration of nonexecutive directors is a matter 
reserved to the chairman and executive directors
within the terms of the agreed policy the committee determines
 the total individual remuneration package including where •	
appropriate bonuses and sharebased incentives
the targets for any performancerelated incentives •	
the scope of any pension arrangements •	
 contractual terms of engagement and any payments to be made •	
on termination and
 the policy for authorising claims for expenses from the •	
chairman or chief executive
the committee also monitors the level and structure of 
remuneration for business unit presidents or managing directors 
and the head of corporate development 
the remuneration committee consists of the chairman and the 
nonexecutive directors all of whom are independent these being 
at the date of this report anthony reading chairman peter 
chambré john hughes and john warren the chief executive  
may be in attendance by invitation and the committee takes into 
consideration his recommendations regarding the remuneration  
of his executive colleagues the chief executive is not involved in 
discussions concerning his own remuneration 
the committee has appointed hewitt new bridge street a trading 
name of hewitt associates limited which acquired new bridge 
street consultants llp to advise on various aspects of the 
chairman’s and executive directors’ remuneration hewitt new 
bridge street did not provide any other services to the company 
during the year however hewitt associates limited provided 
benchmark data on selected management roles during the  
year hewitt new bridge street operates separately from the  
rest of hewitt 
the terms of reference of the remuneration committee can be found 
on the company’s website and are available on request 
remuneration policy
the board in considering the recommendations of the remuneration 
committee complied throughout the year with the provisions of the 
combined code including the principles for performancerelated 
remuneration set out in schedule a the policy objective is to ensure 
that the high calibre individuals required at board level are fairly and 
competitively remunerated and incentivised in a manner consistent 
with the group’s strategic objectives
the remuneration committee also regularly reviews the balance 
between fixed and variable pay 
salaries and fees
base salaries and fees are established by reference to surveys of the 
terms offered by comparable uk quoted companies the starting 
point for comparative surveys is the scope of the position and 
associated performance of the chairman each executive director 
and the company secretary excluding his own position and 
performance the chief executive is responsible for the definition of 
the scope of positions and assessment of the performance of each 
executive director for approval by the remuneration committee 
salaries are reviewed at the beginning of each year and are set at 
competitive levels typically based around the market median 
although the remuneration committee reserves the flexibility to 
respond to individual circumstances which may cause salaries to be 
set at a level higher or lower than market median market ranges are 
reviewed on a regular basis 
salary levels for all board members were not subject to any increase 
at the review date of 1 january 2009
bonuses
to align remuneration with shareholders’ interests a significant 
proportion of executive directors’ potential total remuneration is 
related to annual corporate performance
under the 2008 arrangements bonuses of up to 100 of base salary 
were achievable upon the attainment of demanding profitability 
75 potential and personal 25 potential targets set in relation 
to carefully considered business plans bonus payments commence 
only at a level which shows an acceptable financial result in the 
context of economic circumstances and market expectations with 
an ‘onplan’ performance yielding a payment of approximately half 
the maximum potential targets for maximum outturn are set at 
highly stretching albeit attainable levels there is no change to the 
bonus potential or performance measures for 2009 bonuses 
achieved in respect of 2008 performance based on targets set at the 
start of the financial year were as follows as a percentage of salary 
at 31 december 2008
j e o’higgins 8110
c g watson 7565
j c webster 7790
sharebased incentives
the remuneration committee keeps under review the company’s 
sharebased incentive arrangements and takes advice on market 
practice the committee is of the view that offering senior 
management the opportunity to be awarded and then retain shares 
in the company is an important part of motivating and rewarding 
key employees so that they may participate in the future growth in 
value of the company the spectris performance share plan ‘the 
plan’ approved by shareholders at the 2006 agm is intended to 
support this objective and to facilitate the retention of senior 
management over the longer term 
under the plan annual awards of shares may be made which vest  
at the end of a threeyear period subject to continued employment 
and the satisfaction of challenging performance conditions the 
maximum award of performance shares that can be made to any 
participant in any financial year is limited to shares with a market 
value equal to 125 of the participant’s salary although the  38
spectris plc annual report and accounts 2008
directors’ remuneration report continued
committee’s general policy is to determine awards by reference to  
a base award over shares worth 100 of salary which may then be 
flexed up or down from year to year depending on corporate and 
personal performance 
awards are currently structured so that 50 of the award is subject 
to an earnings per share ‘eps’ target and 50 subject to a total 
shareholder return ‘tsr’ target each condition operates over a 
fixed threeyear period with no opportunity for retesting
the performance criteria for grants made in 2008 are summarised 
in the tables below 
 
company 
eps performance
 of award that vests expressed as a 
percentage of onehalf of the total 
number of shares subject to an award
consumer prices index ‘cpi’  
12 compound per annum 
‘cpa’
100
between cpi 5 and  
12 cpa 
pro rata straight line between 25 
and 100
cpi 5 cpa 25
less than cpi  5 cpa 0
company tsr performance  
relative to the ftse 250 excluding 
investment trusts
 of award that vests expressed as a 
percentage of onehalf of the total 
number of shares subject to an award
upper quintile or above 100
between upper quintile and 
median
pro rata straight line between 25 
and 100
median 25
below median 0
the above criteria will continue to apply to performance share plan 
awards to be made in 2009
for grants made in 2006 and 2007 the upper end of each vesting 
scale was set at a cpi  10 cpa and b upper quartile the 
reference level for a base award of shares in 2006 and 2007 was  
67 of salary
if awards in excess of 100 of salary were to be granted the 
committee has also undertaken that the percentage of an award  
that will vest for threshold performance will be limited to 25 of a 
participant’s base salary rather than 25 of the number of shares 
subject to an award with pro rata straight line vesting from this 
lower point up to 100 of the award there is no intention to make 
awards in excess of 100 of salary during 2009
the committee considers the above performance conditions to be 
an appropriate means of aligning the interests of participants with 
those of longerterm shareholders the tsr performance condition 
will be measured independently by hewitt new bridge street and 
the eps condition will be verified by the company’s auditors 
it is the intention of the committee that all future sharebased 
incentives granted to senior managers or executive directors are 
made under the plan no share option grants were made during 
2008 or the year to date nor are any grants envisaged executive 
directors may however continue to participate in grants made 
under the spectris savings related share option scheme which is 
applicable to all uk employees
 
exercise of share options granted under the 1996 executive share 
plan which was not renewed on expiry or the 1999 executive share 
option scheme were subject to prior achievement of performance 
conditions requiring compound annual growth in earnings per 
share before exceptional items and amortisation of goodwill ‘eps’ 
over three financial years to be between 3 and 5 per annum 
ahead of the increase in the retail prices index ‘rpi’ this 
condition has now been met for all outstanding option grants eps 
growth was selected as the appropriate precondition to exercise in 
order to ensure that share option gains would only be received if the 
company’s performance for shareholders had been enhanced 
share retention
it is intended that each executive director should subject to 
personal circumstances build a retained shareholding in spectris 
plc greater than two times base salary in value within a fiveyear 
period from appointment executive directors are required to apply 
the posttax benefit of any vested plan awards or bonus payments 
exceeding 60 of base salary to the acquisition of shares until this 
level of shareholding is achieved 
benefits
company car and health insurance benefits are subject to income 
tax the executive directors have defined contribution pension 
arrangements to which the company contributes at a rate of 25 of 
base salary
contractual terms
all executive directors have rolling contracts subject to  
12 months’ notice 
the committee has determined that contracts of employment 
should going forward contain a contractual best endeavours 
obligation to seek alternative employment in the event of serving  
of notice of termination by the company and that full mitigation 
reflective of any earnings from a new position should apply so as to 
reduce the payments otherwise due from the company during the 
notice period additionally in these circumstances it is the current 
intention that bonus entitlements should be calculated to the date  
of notice of termination only and that a phased payment provision 
subject to reduction as explained above and equivalent to 165 times 
monthly salary should apply in lieu of all remuneration and 
benefits otherwise payable during the notice period and in full and 
final settlement of all employmentrelated claims mr o’higgins’ 
and mr watson’s contracts of employment reflect these terms
mr webster’s contract concluded in 1998 provides for a 
predetermined compensation payment in lieu of notice equivalent 
to total notice period remuneration – salary bonus and benefits  
in the event of termination by the employer within 12 months of  
a change in control of the group termination payments in other 
circumstances would be a matter for negotiation and remain at the 
discretion of the committee subject to mitigation andor reduction 
for accelerated payment 
no compensation payments on termination of employment were 
made during the year 39
spectris plc annual report and accounts 2008
financial statements governance business review overview
0
50
value £
100
150
200
250
31 dec 04 31 dec 03 31 dec 05 31 dec 06
ftse 250 excluding investment trusts
spectris
31 dec 07 31 dec 08
source datastream
external appointments
executive directors may retain any payments received in respect  
of external nonexecutive appointments such appointments are 
limited to one per director at any time and are subject to the 
approval of the board mr webster is a nonexecutive director of 
raymarine plc and was paid a fee of £35000 per annum no other 
external directorships are held by the executive directors
remuneration below board level
remuneration for presidents of the group’s trading companies is set 
at competitive levels to reflect the size complexity and geographic 
locations of these businesses base salaries for presidents of the 
group’s european operations fall within a range between €130000 
and €340000 base salaries for presidents of the group’s us 
operations fall within a range between 220000 and 300000 
additionally the group’s presidents participate in share awards 
under the spectris performance share plan typically over 60 of 
base salary and in profitrelated bonus arrangements linked to base 
salary and payable against their business annual operating profit 
after exchange plus or minus a financing chargecredit arising from 
changes in working capital over the year on plan performance 
delivers a c30 of base salary bonus with the upper limit of the 
payment range delivering 50 of base salary
nonexecutive directors
nonexecutive directors’ fees are agreed by the chairman and 
executive directors by reference to market practice the base fee is 
supplemented by allowances for chairmanship of the audit and 
remuneration committees and the pension scheme trustee board 
there is no participation in bonus share option or pension 
arrangements and no participation in the spectris performance 
share plan all nonexecutive directors’ conditions of appointment 
provide for a sixmonth period of notice within an initial term of 
three years from election by shareholders at the director’s first 
agm the appointment may be renewed by mutual agreement for  
a further threeyear period 
total shareholder return
the following graph indicates the value by the end of 2008 of £100 
invested in spectris plc 5p ordinary shares on 31 december 2003 
compared with the value of £100 invested in the ftse 250 index 
excluding investment trusts over the same period the graph was 
selected as the most appropriate comparison measure because the 
company is a constituent member of the ftse 250 index and the 
members of the ftse 250 excluding investment trusts form the 
comparator group for the purposes of the tsr performance test 
under the spectris performance share plan 
this graph shows the value by 31 december 2008 of £100 invested 
in spectris on 31 december 2003 compared with the value of  
£100 invested in the ftse 250 index excluding investment trusts 
the other points plotted are the values at intervening financial 
yearends 40
spectris plc annual report and accounts 2008
directors’ remuneration report continued
service contracts
the following table sets out a summary of the directors’ service contracts or terms of appointment directors’ service contracts provide for 
termination on the director reaching the age of 65 
  date of  notice length of service 
  contract expiry date period at 23 february 2009
executive directors 
j e o’higgins  1106 3229 12 months 3 years 1 month
c g watson  11006 4223 12 months 2 years 4 months
j c webster  27398 21615 12 months 15 years 4 months
nonexecutive directors
p a chambré  1806 16510 6 months 2 years 6 months
j l m hughes  1607 16511 6 months 1 year 8 months
a j reading  10304 16510 6 months 4 years 11 months
j a warren  7306 16509 6 months 2 years 11 months
mr webster’s contract provides for a predetermined compensation payment in lieu of notice equivalent to total notice period 
remuneration – salary bonus and benefits in the event of termination by the employer within 12 months of a change in control  
of the group 
mr o’higgins’ and mr watson’s contracts provide subject to a duty of mitigation for phased monthly payments equivalent to 165 times 
monthly salary in lieu of all remuneration and benefits otherwise payable during the notice period in full and final settlement of all 
employmentrelated claims 
directors’ remuneration and interests
the auditors are required to report on the information contained in the following sections a to e
a emoluments of directors excluding pension contributions £000
   salary   benefits taxable 2008 2007 
   andor fees bonus in kind  expenses total total
executive directors
j e o’higgins   420 341 15 4 780 663
c g watson   275 208 11 4 498 447
j c webster   250 195 21 – 466 421
      
s c harris   46 – 2 – 48 403
      
nonexecutive directors
p a chambré   39 – – – 39 35
j l m hughes   102 – – – 102 23
a j reading   45 – – – 45 40
j a warren   56 – – – 56 40
      
a f given   – – – – – 15
j w poulter   53 – – – 53 126
   1286 744 49 8 2087 2213
1 benefits in kind include company cars private fuel and medical expenses insurance taxable expenses relate to allowances paid in lieu 
of company cars and private fuel
2 the chairman’s fees are £140000 pa fees paid to mr hughes in 2008 reflect his appointment as chairman in may 2008 
3 for mr reading and mr warren their base fee of £38500 pa is increased by an additional fee of £6500 pa for their chairmanship of 
respectively the remuneration and audit committees additionally mr warren receives a fee of £15000 pa for his chairmanship of 
spectris pension trustees limited following his appointment to that position in april 2008
4 during the year mr webster received £35000 in respect of his appointment as a nonexecutive director of raymarine plc  41
spectris plc annual report and accounts 2008
financial statements governance business review overview
b directors’ pensions 
company contributions to defined contribution plans
       2008 2007 
       £000 £000
j e o’higgins       105 95
c g watson       69 63
j c webster       63 60
s c harris       10 59
the company contributes at the rate of 25 of salary 
c directors’ total remuneration
       2008 2007 
       £000 £000
aggregate emoluments       2087 2213
company pension contributions to defined contribution schemes      247 277
gains made on exercise of share options       – 1561
       2334 4051
d  directors’ interests in options to purchase ordinary shares
        options held 
        31 dec 08 
        or date of 
   granted  exercised share price lapsed cessation of 
  options held during exercise during at date of during the employment date  
 date granted 1 jan 08 the year price p the year exercise p  year if earlier exercisable expiry date
j e o’higgins          
saye oct 2006 1529  618    1529 dec 2009 jun 2010
  1529      1529  
          
s c harris sep 2005 85000  589   85000 0 na na
  85000     85000 0  
          
c g watson          
saye oct 2007 1146  837    1146 dec 2010 jun 2011
  1146      1146  
          
j c webster sep 2005 85000  589    85000 sep 2008 sep 2015
  85000      85000   
total  172675     85000 87675  
shares other than those marked saye relate to executive share option grants entitlement to exercise grants under the unapproved 1996 
executive share plan is conditional upon a performance criterion requiring compound growth in normalised earnings per share eps over 
three years up to 5 per annum in excess of the increase in the retail prices index please refer to the directors’ remuneration report on  
page 38 for further explanation this condition has been met for all outstanding option grants no consideration was paid by any recipient  
in relation to the grant of an option and there were no changes to the conditions on which any option was granted during the year 
no director exercised share options during the year the remaining options granted to s c harris lapsed on his leaving employment on 
31 january 2008  42
spectris plc annual report and accounts 2008
directors’ remuneration report continued
e  directors’ share awards under the spectris performance share plan
     number of  
     shares subject  
     to award at  
     31 dec 08 market  
 number of     or date of value of 
 shares subject  granted exercised lapsed cessation of each share 
 to award at  during during during the employment at date of date 
 1 jan 08 the year the year year if earlier award p exercisable expiry date
j e o’higgins 56000    56000 6225 may 2009 may 2010
 35500    35500 8650 mar 2010 mar 2011
  53400   53400 7865 mar 2011 mar 2012
 91500    144900   
        
s c harris 24000   24000 0 6225 na na
 20500   20500 0 8650 na na
 44500   44500 0   
        
c g watson 6500    6500 6400 oct 2009 oct 2010
 21500    21500 8650 mar 2010 mar 2011
  34900   34900 7865 mar 2011 mar 2012
 28000    62900   
        
j c webster 24500    24500 6225 may 2009 may 2010
 20500    20500 8650 mar 2010 mar 2011
  31700   31700 7865 mar 2011 mar 2012
 45000    76700   
total 209000 120000  44500 284500   
the above awards were made as conditional rights to acquire shares structured as nominal cost options and the number of shares 
awarded were based on the midmarket closing price of the company’s shares on the business day prior to the date of grant in respect of 
the 2008 award for each of mr o’higgins mr watson and mr webster the value of the award was equivalent to 100 of their base salaries 
at the date of grant following satisfaction in whole or part of the performance criteria attaching to the awards as summarised on page 
38 the directors may call for the release to them of the vested shares during the aboveshown exercise periods 
the awards granted to mr harris lapsed on his leaving employment on 31 january 2008 43
spectris plc annual report and accounts 2008
financial statements governance business review overview
f directors’ interests
the following directors or their families had beneficial interests in the ordinary shares of the company
        shareholdings
       2008  2008 
       31 dec   1 jan 
       or date of or date of 
       resignation appointment
j l m hughes       8000 4000
j e o’higgins       27000 15000
p a chambré       5000 5000
a j reading       11000 10000
j a warren       3000 3000
c g watson       12500 8832
j c webster       105942 100126
  
s c harris       19924 19924
j w poulter       85315 85315
there were no changes to the above interests between the year end and the date of this report 
no director had during the year or at the end of the year any material interest in any contract of significance to the group’s business
at 31 december 2008 the middle market closing share price on the london stock exchange was 535p the highest share price in the year 
was 8305p and the lowest was 400p at 31 december 2008 each of the executive directors was deemed to have a nonbeneficial interest in 
10765 2007 20780 ordinary shares held by the trustees of the spectris plc employee benefit trust of which the directors are among the 
class of discretionary beneficiaries
by order of the board
a j reading
chairman of the committee
24 february 2009 44
spectris plc annual report and accounts 2008
independent auditors’ report to the members of spectris plc
we have audited the group and parent company financial 
statements the ‘financial statements’ of spectris plc for  
the year ended 31 december 2008 which comprise the 
consolidated income statement the consolidated and parent 
company balance sheets the consolidated cash flow statement 
the consolidated statement of recognised income and expense 
and the related notes these financial statements have been 
prepared under the accounting policies set out therein we have 
also audited the information in the directors’ remuneration 
report that is described as having been audited
this report is made solely to the company’s members as a body 
in accordance with section 235 of the companies act 1985 our 
audit work has been undertaken so that we might state to the 
company’s members those matters we are required to state to 
them in an auditors’ report and for no other purpose to the 
fullest extent permitted by law we do not accept or assume 
responsibility to anyone other than the company and the 
company’s members as a body for our audit work for this  
report or for the opinions we have formed
respective responsibilities of directors and auditors 
the directors’ responsibilities for preparing the annual report 
and the group financial statements in accordance with 
applicable law and international financial reporting standards 
ifrs as adopted by the eu and for preparing the parent 
company financial statements and the directors’ remuneration 
report in accordance with applicable law and uk accounting 
standards uk generally accepted accounting practice are set 
out in the statement of directors’ responsibilities on page 35 
our responsibility is to audit the financial statements and the 
part of the directors’ remuneration report to be audited in 
accordance with relevant legal and regulatory requirements  
and international standards on auditing uk and ireland 
we report to you our opinion as to whether the financial 
statements give a true and fair view and whether the financial 
statements and the part of the directors’ remuneration report 
to be audited have been properly prepared in accordance with 
the companies act 1985 and as regards the group financial 
statements article 4 of the ias regulation we also report to 
you whether in our opinion the information given in the 
directors’ report is consistent with the financial statements  
the information given in the directors’ report includes that 
specific information presented in the annual report that is 
crossreferred from the business review section of the  
directors’ report
in addition we report to you if in our opinion the company has 
not kept proper accounting records if we have not received all 
the information and explanations we require for our audit or if 
information specified by law regarding directors’ remuneration 
and other transactions is not disclosed
we review whether the corporate governance statement 
reflects the company’s compliance with the nine provisions of 
the 2006 frc combined code specified for our review by the 
listing rules of the financial services authority and we report if 
it does not we are not required to consider whether the board’s 
statements on internal control cover all risks and controls or 
form an opinion on the effectiveness of the group’s corporate 
governance procedures or its risk and control procedures 
we read other information contained in the annual report and 
consider whether it is consistent with the audited financial 
statements we consider the implications for our report if we 
become aware of any apparent misstatements or material 
inconsistencies with the financial statements our responsibilities 
do not extend to any other information 
basis of audit opinion 
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the auditing 
practices board an audit includes examination on a test basis 
of evidence relevant to the amounts and disclosures in the 
financial statements and the part of the directors’ remuneration 
report to be audited it also includes an assessment of the 
significant estimates and judgements made by the directors in 
the preparation of the financial statements and of whether the 
accounting policies are appropriate to the group’s and 
company’s circumstances consistently applied and adequately 
disclosed 
we planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary in 
order to provide us with sufficient evidence to give reasonable 
assurance that the financial statements and the part of the 
directors’ remuneration report to be audited are free from 
material misstatement whether caused by fraud or other 
irregularity or error in forming our opinion we also evaluated 
the overall adequacy of the presentation of information in the 
financial statements and the part of the directors’ remuneration 
report to be audited 
opinion 
in our opinion 
 the group financial statements give a true and fair view in •	
accordance with ifrs as adopted by the eu of the state of 
the group’s affairs as at 31 december 2008 and of its profit 
for the year then ended 
 the group financial statements have been properly prepared •	
in accordance with the companies act 1985 and article 4 of 
the ias regulation 
 the parent company financial statements give a true and fair •	
view in accordance with uk generally accepted accounting 
practice of the state of the parent company’s affairs as at  
31 december 2008 
 the parent company financial statements and the part of the •	
directors’ remuneration report to be audited have been 
properly prepared in accordance with the companies act 
1985 and
 the information given in the directors’ report is consistent •	
with the financial statements
kpmg audit plc
chartered accountants
registered auditor
8 salisbury square
london ec4y 8bb
24 february 2009 45
spectris plc annual report and accounts 2008
financial statements governance business review overview
consolidated income statement
for the year ended 31 december 2008
       2008 2007 
      note £m £m
continuing operations
revenue      6 7871 6684
cost of sales       3345 2838
gross profit       4526 3846
indirect production and engineering expenses       711 574
sales and marketing expenses       1917 1580
administrative expenses       761 663
operating profit      7 1137 1029
profit on disposal of businesses      28 03 190
financial income      10 78 96
finance costs      10 157 134
profit before tax       1061 1181
taxation – uk      11 15 26
taxation – overseas      11 265 293
total taxation       250 319
profit after tax for the year from continuing operations attributable to equity shareholders  811 862
basic earnings per share pence       13 703 709
diluted earnings per share pence       13 698 706
interim dividends paid and final dividends proposed for the year per share    12 234p 210p
dividends paid during the year per share      12 217p 183p
    
spectris uses adjusted figures as key performance measures in addition to those reported under adopted ifrs adjusted figures are 
stated before amortisation of acquisitionrelated intangible assets goodwill impairment charges profits or losses on termination  
or disposal of businesses or major fixed assets unrealised changes in the fair value of financial instruments gains or losses on 
retranslation of shortterm intercompany loan balances related tax effects and other tax items which do not form part of the 
underlying tax rate
reconciliations showing how the adjusted performance measures are derived from those reported under adopted ifrs are set out in 
note 3
consolidated statement of recognised income and expense
for the year ended 31 december 2008
       2008 2007 
      note £m £m
net loss on effective portion of changes in fair value of forward exchange contracts   21 82 11
foreign exchange movements on translation of overseas operations     1365 260
net loss on changes in fair value of effective portion of hedges of net investment in 
overseas operations       414 63
actuarial gains arising on pension schemes      9 23 59
inclusion of swiss pension plan      9 05 –
tax on items recognised directly in equity      11 30 40
net income recognised in equity in respect of year       917 205
profit for the year       811 862
total recognised income and expense for the year attributable to equity shareholders   1728 1067 46
spectris plc annual report and accounts 2008
consolidated balance sheet
as at 31 december 2008
       2008 2007 
      note £m £m
assets
noncurrent assets
goodwill      14 3426 2231
other intangible assets      15 439 122
property plant and equipment      16 1182 877
equity accounted investment      31 06 –
deferred tax asset      24 307 257
       5360 3487
current assets
inventories      17 1480 928
taxation recoverable       14 –
trade and other receivables      18 2078 1537
derivative financial instruments      21 – 01
cash and cash equivalents      19 644 514
assets held for sale      5 – 12
       4216 2992
total assets       9576 6479
liabilities
current liabilities
shortterm borrowings      20 350 44
derivative financial instruments      21 92 –
trade and other payables      22 1979 1417
current tax liabilities       384 328
provisions      23 231 215
       3036 2004
net current assets       1180 988
noncurrent liabilities
medium and longterm borrowings      20 1736 1081
derivative financial instruments      21 169 161
other payables      22 101 84
retirement benefit obligations      9 85 111
deferred tax liability      24 17 10
       2108 1447
total liabilities       5144 3451
net assets       4432 3028
equity
issued share capital      25 62 62
share premium      26 2314 2314
retained earnings      26 1173 638
translation reserve      26 930 21
hedging reserve      26 81 01
merger reserve      26 31 31
capital redemption reserve      26 03 03
equity shareholders’ funds       4432 3028
total equity and liabilities       9576 6479
the financial statements on pages 45 to 84 were approved by the board of directors on 24 february 2009 and were signed on its 
behalf by
clive watson
director 47
spectris plc annual report and accounts 2008
financial statements governance business review overview
consolidated cash flow statement
for the year ended 31 december 2008
       2008 2007 
      note £m £m
cash flows from operating activities
profit after tax       811 862
adjustments for
tax      11 250 319
profit on disposal of businesses      28 03 190
finance costs      10 157 134
financial income      10 78 96
depreciation       16 104 131
amortisation of intangible assets      15 77 20
lossgain on sale of property plant and equipment      7 01 06
equity settled sharebased payment expense      27 18 09
operating profit before changes in working capital and provisions     1337 1183
decreaseincrease in trade and other receivables       78 20
increase in inventories       101 69
decreaseincrease in trade and other payables       14 101
decrease in provisions and employee benefits       69 45
corporation tax paid       240 238
net cash from operating activities       991 912
cash flows from investing activities
purchase of property plant and equipment       219 127
proceeds from sale of property plant and equipment       09 14
acquisition of businesses net of cash acquired      31 872 60
acquisition of an associate undertaking      31 06 –
disposal of businesses       15 298
interest received       16 19
net cash flows used ingenerated by investing activities      1057 144
cash flows from financing activities
interest paid       101 82
dividends paid to equity holders of the parent      12 250 222
share options exercised by issue of share capital       – 02
share options exercised from shares held by employee benefit trust     01 10
share options exercised from treasury shares       02 29
purchase of own shares by employee benefit trust       02 16
purchase of own shares – treasury shares       93 792
proceeds from borrowings       500 –
decrease in finance lease liabilities       – 01
net cash flows generated byused in financing activities      57 1072
net decrease in cash and cash equivalents       09 16
cash and cash equivalents at beginning of year       474 470
effect of foreign exchange rate changes       83 20
cash and cash equivalents at end of year      19 548 474
reconciliation of changes in cash and cash equivalents      2008 2007 
to movements in net debt as defined in note 20     note £m £m
net decrease in cash and cash equivalents       09 16
decrease in finance lease liabilities       – 01
proceeds from borrowings      20 500 –
effect of foreign exchange rate changes       339 41
movement in net debt       848 56
net debt at start of year      20 773 717
net debt at end of year      20 1621 773 48
spectris plc annual report and accounts 2008
notes to the accounts
1 accounting policies
general information
spectris plc is a limited company incorporated and domiciled in 
the united kingdom under the companies act 1985 whose 
shares are publicly traded on the london stock exchange 
these financial statements are presented in pounds sterling 
foreign operations are included in accordance with the policies 
set out below 
statement of compliance and basis of preparation
the group financial statements have been prepared and 
approved by the directors in accordance with international 
financial reporting standards as adopted by the eu adopted 
ifrs the company has elected to prepare its parent company 
financial statements in accordance with uk generally accepted 
accounting practice these are presented on pages 85 to 91 
the financial statements are prepared rounded to the nearest 
hundred thousand on the historical cost basis except that 
derivative financial instruments are stated at fair value
the group’s business activities together with factors likely to 
affect its future development performance and position are  
set out in the business review on pages 6 to 29 the financial 
position of the group its cash flows liquidity position and 
borrowing facilities are described in the financial review on 
pages 20 to 22 in addition note 2 to the financial statements 
includes the group’s objectives policies and processes for 
managing its capital its financial risk management objectives 
details of its financial instruments and hedging activities and  
its exposure to credit risk and liquidity risk
the directors have considered the group’s forecasts and 
projections and reasonably possible changes in trading 
performance taking account of the financing position at  
31 december 2008 and the new facility secured from the 
european investment bank note 20 the directors consider  
that the group will be able to operate within the level of its 
committed facilities even should the facility maturing at the  
end of 2009 not be renewed no matters have been drawn  
to the group’s attention to suggest that renewal of this facility 
might not be forthcoming on acceptable terms should the  
group seek renewal in due course
after making enquiries the directors have a reasonable 
expectation that the company and the group have adequate 
resources to continue in operational existence for the 
foreseeable future accordingly they continue to adopt  
the going concern basis in preparing the annual report  
and accounts
the preparation of financial statements in conformity with 
adopted ifrs requires management to make judgements 
estimates and assumptions that affect the application of policies 
and reported amounts of assets and liabilities income and 
expenses the key judgements made in respect of the 
appropriateness of the group accounting policies relate to
 the timing of revenue recognition where the group has some •	
responsibility for installation activity
 the classification of financial instruments in relation to hedge •	
accounting
 the classification of retirement benefit arrangements •	
between defined benefit and defined contribution and
 the point at which development activity meets the cost •	
capitalisation threshold
the directors do not consider the practical application of these 
judgements to involve significant subjectivity or uncertainty
the estimates and associated assumptions are continually 
evaluated and are based on historical experience and various 
other factors that are believed to be reasonable under the 
circumstances actual results may differ from these estimates 
revisions to accounting estimates are recognised in the period  
in which the estimate is revised if the revision affects only that 
period or in the period of the revision and future periods if the 
revision affects both current and future periods estimates that 
have the most significant effect on the amounts recognised in 
the financial statements are recognised in the following areas
 business combinations in relation to the determination of the •	
fair value of acquired assets and liabilities note 31
 goodwill in relation to the assumptions underpinning •	
impairment testing note 14
 retirement benefit schemes in relation to the assumptions •	
used to value plan assets and liabilities note 9
 provisions and contingent liabilities in relation to determining •	
the quantum and timing of management’s best estimate of 
outflows notes 23 and 32
the accounting policies set out below have been applied 
consistently by group entities to all periods presented in these 
financial statements
new standards and interpretations not yet adopted
a number of new ifrs standards and ifric interpretations have 
been issued and endorsed which are not yet effective for the 
year ended 31 december 2008 although these have not been 
applied in preparing these consolidated financial statements  
it is not expected that they will have a significant impact on  
the group’s reported results when they come into force with  
the exception of those noted below
revised ifrs 3 business combinations 2008 incorporates  
the following changes that are likely to be relevant to the 
group’s operations
 contingent consideration will be measured at fair value with •	
subsequent changes therein recognised in profit or loss
 transaction costs other than share and debt issue costs will •	
be expensed as incurred
 any preexisting interest in the acquiree will be measured at •	
fair value with the gain or loss recognised in profit or loss and
 any noncontrolling minority interest will be measured at •	
either fair value or at its proportionate interest in the 
identifiable assets and liabilities of the acquiree on a 
transactionbytransaction basis 49
spectris plc annual report and accounts 2008
financial statements governance business review overview
revised ifrs 3 which becomes mandatory for the group’s 2010 
consolidated financial statements will be applied prospectively 
and therefore there will be no impact on prior years in the 
group’s 2010 consolidated financial statements
ifrs 8 operating segments introduces the ‘management 
approach’ to segment reporting ifrs 8 which becomes 
mandatory for the group’s 2009 consolidated financial 
statements requires presentation and disclosure of segment 
information based on the internal reports regularly reviewed by 
the group’s chief operating decision maker in order to assess 
each segment’s performance and to allocate resources to them 
the group has analysed the impact of ifrs 8 and it is not 
expected to have any impact on the presentation and disclosure 
of the segment information disclosed
revised ias 23 borrowing costs removes the option to expense 
all borrowing costs and requires the group to capitalise 
borrowing costs directly attributable to the acquisition 
construction or production of a qualifying asset as part of the 
cost of that asset the revised ias 23 will become mandatory  
for the group’s 2009 consolidated financial statements and will 
constitute a change in accounting policy for the group in 
accordance with the transitional provisions the group will apply 
the revised ias 23 to qualifying assets for which expenditure 
commences on or after the effective date therefore there will 
be no impact on prior periods in the group’s 2009 consolidated 
financial statements
revised ias 1 presentation of financial statements 2007 
introduces the term ‘total comprehensive income’ which 
represents changes in equity during a period other than those 
changes resulting from transactions with owners in their 
capacity as owners total comprehensive income may be 
presented in either a single statement of comprehensive income 
effectively combining both the income statement and all 
nonowner changes in equity in a single statement or in an 
income statement and a separate statement of comprehensive 
income revised ias 1 which becomes mandatory for the 
group’s 2009 consolidated financial statements is expected  
to have a significant impact on the presentation of the 
consolidated financial statements
basis of consolidation
the group financial statements include the results of the 
company and all of its subsidiary undertakings and associates 
equity accounted investment
a subsidiary is an entity controlled by the group control is the 
power to govern the financial and operating policies of the entity 
so as to obtain benefits from its activities the financial statements 
of subsidiaries are included in the consolidated financial 
statements from the date that control commences until the date 
that control ceases
associates are those entities in which the group has significant 
influence but not control over the financial and operating 
policies significant influence is presumed to exist when the 
group holds between 20 and 50 of the voting power of 
another entity associates are accounted for using the equity 
method of accounting and are recognised initially at cost
intragroup balances and any unrealised gains and losses or 
income and expenses arising from intragroup transactions are 
eliminated in preparing the consolidated financial statements
the assets and liabilities of foreign operations including 
goodwill and fair value adjustments arising on consolidation are 
translated into sterling at exchange rates ruling at the balance 
sheet date the revenues and expenses of foreign operations  
are translated into sterling at average annual exchange rates 
foreign exchange differences arising on retranslation are 
recognised directly in a separate translation reserve within 
equity
foreign currency transactions
transactions in foreign currencies are translated at the foreign 
exchange rate ruling at the date of the transaction monetary 
assets and liabilities denominated in foreign currencies at the 
balance sheet date are translated at the exchange rate ruling at 
that date with any exchange differences arising on retranslation 
being recognised in the income statement nonmonetary assets 
and liabilities that are measured in terms of historical cost in a 
foreign currency are translated using the exchange rate at the 
date of the transaction
derivative financial instruments may be purchased to hedge the 
group’s exposure to changes in foreign exchange rates the 
accounting policies applied in these circumstances are described 
under the heading ‘derivative financial instruments and hedge 
accounting’ below
interestbearing borrowings
interestbearing borrowings are recognised initially at fair value 
less attributable transaction costs subsequent to initial 
recognition interestbearing borrowings are stated at amortised 
cost with any difference between cost and redemption value 
being recognised in the income statement over the period of the 
borrowings on an effective interest basis
derivative financial instruments and hedge accounting
the group uses derivative financial instruments to hedge its 
exposure to foreign exchange and interest rate risks arising  
from operating and financing activities in accordance with  
its treasury policy it does not hold or use derivative financial 
instruments for trading or speculative purposes
cash flow hedge accounting
derivative financial instruments may be transacted to hedge the 
variability in cash flows of a recognised asset or liability or of 
highly probable forecast transactions caused by changes in 
exchange rates
derivative financial instruments are carried in the balance  
sheet at fair value where a derivative financial instrument is 
designated in a cash flow hedge relationship with a highly 
probable forecast transaction the effective part of any gain or 
loss arising is recognised directly in equity the ineffective part 
of any gain or loss is recognised in the income statement when 
the forecast transaction subsequently occurs and results in the 
recognition of a financial asset or liability that impacts on the 
income statement the associated cumulative gain or loss is 
removed from equity and presented within the income   50
spectris plc annual report and accounts 2008
1 accounting policies continued
statement when the forecast transaction subsequently occurs 
and results in the recognition of a nonfinancial asset or liability 
the associated cumulative gain or loss is removed from equity 
and included within the initial cost of the nonfinancial asset  
or liability 
hedge accounting is discontinued when the hedging instrument 
expires or is either sold terminated or exercised without 
replacement or rollover or the group revokes the designation  
or the hedging instrument no longer qualifies for hedge 
accounting
if a derivative financial instrument is not formally designated  
in a cash flow hedge relationship any change in fair value is 
recognised in the income statement
net investment hedge accounting
the group uses us dollar and eurodenominated borrowings 
and derivative financial instruments as a hedge against the 
translation exposure on the group’s net investment in overseas 
companies where the hedge is fully effective at hedging the 
variability in the net assets of such companies caused by 
changes in exchange rates the changes in value of the 
borrowings are recognised in equity the ineffective part  
of any change in value caused by changes in exchange  
rates is recognised in the income statement
the group takes advantage of crosscurrency swaps for some  
of its us dollardenominated private placement borrowings  
the swaps have the effect of converting fixed rate us dollar 
borrowings into ‘synthetic’ fixed rate eurodenominated 
borrowings the value of the element of the swap that locks 
interest payments at a fixed euro interest rate changes as us 
dollar variable interest rates euro variable interest rates and 
foreign currency exchange rates change under ias 39’s rules 
such changes in value are considered to be ineffective as a net 
investment hedge and accordingly they are recognised in the 
income statement
business combinations and goodwill
all business combinations are accounted for by applying the 
purchase method goodwill represents the excess of the fair 
value of the purchase consideration for the interests in 
subsidiary undertakings over the fair value to the group of the 
net assets and any contingent liabilities acquired in respect of 
acquisitions prior to 1 january 2004 goodwill is included on the 
basis of its deemed cost which represents the amount recorded 
previously under uk gaap prior to 1 january 1998 goodwill 
was written off to reserves in the year of acquisition 
goodwill arising on acquisitions is stated at cost less any 
accumulated impairment losses from 1 january 2004 goodwill 
is allocated on acquisition to cashgenerating units that are 
anticipated to benefit from the combination and is no longer 
amortised but is tested annually for impairment impairment is 
determined by assessing the recoverable amount of the cash
generating unit to which the goodwill relates this estimate of 
recoverable amount is performed at each balance sheet date
the estimate of recoverable amount requires significant 
judgement and is based on a number of factors such as the 
nearterm business outlook for the cash generating unit 
including both its operating profit and operating cash flow 
performance where the recoverable amount of the cash 
generating unit is less than the carrying amount an impairment 
loss is recognised where goodwill forms part of a cash
generating unit and part of the operation within that unit  
is disposed of the goodwill associated with the operation 
disposed of is included in the carrying amount of the operation 
when determining the gain or loss on disposal goodwill 
disposed of in this circumstance is measured on the basis of the 
relative values of the operation disposed of and the portion of 
the cashgenerating unit retained
noncurrent assets held for sale
noncurrent assets and disposal groups classified as held for sale 
are measured at the lower of carrying amount and fair value less 
costs to sell
noncurrent assets and disposal groups are classified as held for 
sale if their carrying amount will be recovered through a sale 
transaction rather than through continuing use this condition is 
regarded as met only when the sale is highly probable and the 
asset or disposal group is available for immediate sale in its 
present condition management must be committed to the sale 
and an active programme to locate a buyer and complete the 
sale must have been initiated ordinarily the sale should be 
expected to qualify for recognition as a completed sale within 
one year from the date of the classification as held for sale
segmental analysis
a segment is a distinguishable component of the group that is 
engaged in providing products or services business segment  
or in providing products or services within a particular economic 
environment geographical segment which is subject to risks 
and rewards that are different from those of other segments
segmental information is based on two segment formats the 
primary format represents the group’s business segments whereas 
the secondary format reflects the geographical segments
segment result represents operating profits including intangible 
asset amortisation and goodwill impairment charges and 
includes an allocation of head office expenses segment result 
excludes tax and financing items
segment assets comprise goodwill other intangible assets 
property plant and equipment inventories trade and other 
receivables and assets held for sale segment liabilities comprise 
trade and other payables provisions held for sale liabilities  
and other payables unallocated items represent corporate and 
deferred taxation balances defined benefit scheme liabilities 
and all components of net debt
intangible assets
selffunded research and development costs are charged to  
the income statement in the year in which they are incurred 
unless development expenditure meets certain strict criteria  
for capitalisation these criteria include demonstration of the 
technical feasibility of completing a new intangible asset that 
notes to the accounts continued 51
spectris plc annual report and accounts 2008
financial statements governance business review overview
will be available for sale and that the asset will generate 
probable future economic benefits where expenditure meets 
the criteria development costs are capitalised and amortised 
over their useful economic lives
other intangible assets that are acquired by the group are stated 
at cost less accumulated amortisation and impairment losses 
subsequent expenditure is capitalised only when it increases the 
future economic benefits otherwise it is expensed as incurred 
amortisation of intangible assets is charged to administrative 
expenses in the income statement on a straightline basis over 
the estimated useful lives of intangible assets the estimated 
useful lives are as follows
patents and trademark – up to 5 years
other intangible assets – 3 to 10 years
property plant and equipment
property plant and equipment is stated at cost less accumulated 
depreciation and impairment losses the group recognises in 
the carrying amount of property plant and equipment the 
additions that are appropriate to capitalise and the subsequent 
costs of replacing the parts of such items when there are future 
economic benefits that will flow to the group and its cost can be 
measured reliably cost includes expenditure that is directly 
attributable to the acquisition of the asset cost all other costs 
are recognised in the income statement as an expense as they 
are incurred
depreciation is recognised in the income statement on a 
straightline basis to write off the cost less the estimated 
residual value of property plant and equipment over its 
estimated useful life the depreciation charge is revised where 
useful lives are different from previously estimated or where 
technically obsolete assets are required to be written down 
where parts of an item of plant and equipment have separate 
lives they are accounted for and depreciated as separate items 
land is not depreciated estimated useful lives are as follows
freehold and long leasehold property – 20 to 40 years
short leasehold property –  over the period  
of the lease
plant machinery and other equipment – 5 to 20 years
motor vehicles – 4 years
tooling computer hardware – 3 to 5 years
impairment of tangible and intangible assets  
excluding goodwill
the carrying amount of the group’s assets is reviewed at each 
balance sheet date to determine whether there is any indication 
of impairment if any such indication exists the asset’s 
recoverable amount is estimated where the asset does not 
generate cash flows that are independent from other assets the 
group estimates the recoverable amount of the cashgenerating 
unit to which the asset belongs an intangible asset with an 
indefinite useful life is tested for impairment annually and 
whenever there is an indication that the asset may be impaired
recoverable amount is the higher of fair value less costs to sell 
and value in use in assessing value in use the estimated future 
cash flows are discounted to their present value using a pretax 
discount rate that reflects current market assessments of the 
time value of money and the risks specific to the asset for which 
the estimates of future cash flows have not been adjusted
if the recoverable amount of an asset or cashgenerating unit is 
estimated to be less than its carrying amount the carrying 
amount is reduced to its recoverable amount an impairment 
loss is recognised as an operating expense immediately
where an impairment loss subsequently reverses the carrying 
amount of the asset is increased to the revised estimate of its 
recoverable amount but so that the increased carrying amount 
does not exceed the carrying amount that would have been 
determined had no impairment loss been recognised for the 
asset in prior years a reversal of an impairment loss is 
recognised as income immediately
impairment losses on goodwill are not reversed
trade and other receivables
trade and other receivables are stated at their fair value as 
reduced by appropriate allowances for estimated irrecoverable 
amounts discounting is applied where it is expected to have a 
material impact
inventories
inventories and work in progress are carried at the lower of cost 
and net realisable value inventories acquired as part of business 
combinations are valued at fair value cost represents direct 
costs incurred and where appropriate production or conversion 
costs and other costs to bring the inventory to its existing 
location and condition in the case of manufacturing inventory 
and work in progress cost includes an appropriate share of 
production overheads based on normal operating capacity 
inventory is accounted for on a firstin firstout basis provision 
is made to write down slowmoving and obsolete items to net 
realisable value based on an assessment of technological and 
market developments and on an analysis of historic and 
projected usage
cash and cash equivalents
cash and cash equivalents comprises cash balances and call 
deposits bank overdrafts that are repayable on demand and 
form an integral part of the group’s cash management are 
included as a component of cash equivalents for the purposes  
of the statement of cash flows
trade and other payables
trade and other payables are stated at fair value
provisions
a provision is recognised in the balance sheet when the group 
has a present legal or constructive obligation as a result of a 
past event and it is probable that an outflow of economic 
benefits will be required to settle the obligation in respect  
of warranties a provision is recognised when the underlying 
products or services are sold provisions are recognised at an 
amount equal to the best estimate of the expenditure required 
to settle the group’s liability obligations arising from 
restructuring plans are recognised when detailed formal plans  52
spectris plc annual report and accounts 2008
1 accounting policies continued
have been established and when there is a valid expectation 
that such a plan will be carried out
postretirement benefits
the group operates pension schemes providing benefits based 
on final pensionable pay the assets of the schemes are held 
separately from those of the group the group’s net obligation 
in respect of defined benefit pension plans is calculated 
separately for each plan by estimating the amount of future 
benefit that employees have earned in return for their service  
in the current and prior periods that benefit is discounted to 
determine its present value and the fair value of any plan assets 
is deducted the discount rate is determined by reference to 
market yields at the balance sheet date on high quality 
corporate bonds that have maturity dates approximating to the 
terms of the group’s obligations
the calculation is performed by a qualified actuary using the 
projected unit method actuarial gains and losses are recognised 
in full in the period in which they arise in the statement of 
recognised income and expense
when the benefits of a plan are improved the portion of  
the increased benefit relating to past service by employees  
is recognised as an expense in the income statement on a 
straightline basis over the average period until the benefits 
become vested to the extent that the benefits vest immediately 
the expense is recognised immediately in the income statement
for defined contribution schemes the assets are held separately 
from those of the group in independently administered funds 
payments to defined contribution schemes are charged to the 
income statement as they fall due 
in certain countries the group participates in industrywide 
defined benefittype pension arrangements in such 
circumstances it is not possible to determine the amount of any 
surplus or deficit attributable to the group and the pension costs 
are accounted for as if the arrangements were defined 
contribution schemes
sharebased payments
the fair value of equitysettled employee share option grants  
is calculated at grant date the resulting cost is charged to the 
income statement over the vesting period of the plans the 
value of the charge is adjusted to reflect expected and actual 
levels of options that vest except where forfeiture is only due  
to share prices not achieving the threshold for vesting
revenues
revenues comprise sales to outside customers after discounts 
and excluding value added tax
revenue from the sale of goods is recognised in the income 
statement when the significant risk and rewards of ownership of 
the goods have been transferred to the customer which is 
typically on delivery for contracts that involve a significant 
element of installation or testing of equipment revenue is 
recognised at the point of customer acceptance revenue from 
services rendered is recognised in the income statement in 
proportion to the measurement of the stage of completion of 
services rendered as at the balance sheet date this is generally 
assessed by reference to the amount of time incurred in 
proportion to the total expected time to be taken to deliver  
the service revenue is not recognised if there are significant 
uncertainties regarding recovery of the consideration due
interest payable and receivable
interest payable comprises the interest payable on borrowings 
calculated using the effective interest method 
interest receivable and payable is recognised in the income 
statement as it accrues using the effective interest method 
leasing
leases are classified as finance leases whenever the terms of the 
lease transfer substantially all the risks and rewards of ownership 
to the lessee all other leases are classified as operating leases
assets held under finance leases are recognised as assets of the 
group at their fair value or if lower at the present value of the 
minimum lease payments each determined at the inception of 
the lease the corresponding liability to the lessor is included in 
the balance sheet as a finance lease obligation lease payments 
are apportioned between finance charges and reduction of the 
lease obligation so as to achieve a constant rate of interest on 
the remaining balance of the liability finance charges are 
charged directly against income
rentals payable under operating leases are charged to the 
income statement on a straightline basis over the term of the 
relevant lease benefits received and receivable as an incentive  
to enter into an operating lease are also spread on a straightline 
basis over the lease term
taxation
tax on the profit or loss for the year comprises both current and 
deferred tax tax is recognised in the income statement except 
to the extent that it relates to items recognised directly in equity 
in which case it is recognised in equity
current tax is the expected tax payable on the taxable income 
for the year using tax rates enacted or substantively enacted  
at the balance sheet date and any adjustments to tax payable  
in respect of previous years
deferred tax is provided using the balance sheet method 
providing for temporary differences between the carrying 
amounts of assets and liabilities for financial reporting purposes 
and the amounts used for taxation purposes a deferred tax 
asset is recognised only to the extent that it is probable that 
future taxable profits will be available against which the asset 
can be utilised
additional income taxes that arise from the distribution of 
intragroup dividends are recognised at the same time as the 
liability to pay the related dividend
notes to the accounts continued 53
spectris plc annual report and accounts 2008
financial statements governance business review overview
2 financial risk management
the group’s multinational operations and debt financing expose 
it to a variety of financial risks in the course of its business the 
group is exposed to foreign currency risk interest rate risk 
liquidity risk and credit risk financial risk management is an 
integral part of the way the group is managed financial risk 
management policies are set by the board of directors these 
policies are implemented by a central treasury department that 
has formal procedures to manage foreign exchange risk interest 
rate risk and liquidity risk including where appropriate the use 
of derivative financial instruments the group has clearly defined 
authority and approval limits 
in accordance with its treasury policy the group does not hold 
or use derivative financial instruments for trading or speculative 
purposes such instruments are only used to manage the risks 
arising from operating or financial assets or liabilities or highly 
probable future transactions the quantitative analysis of 
financial risk is included in note 21 
a foreign currency risk
foreign currency risk arises both where sale or purchase 
transactions are undertaken in currencies other than the 
respective functional currencies of group companies 
transactional exposures and where the results of overseas 
companies are consolidated into the group’s reporting currency 
of £ sterling translational exposures the group has operations 
around the world which record their results in a variety of 
different local functional currencies in countries where the 
group does not have operations it invariably has some 
customers or suppliers that transact in a foreign currency the 
group is therefore exposed to the changes in foreign currency 
exchange rates between a number of different currencies but 
the group’s primary exposures relate to the us dollar and to a 
lesser extent the euro danish krone and japanese yen where 
appropriate the group manages its foreign currency exposures 
using derivative financial instruments
the group manages its transactional exposures to foreign 
currency risks through the use of forward exchange contracts 
forward exchange contracts are typically used to hedge  
highly probable forecast sale transactions which can be  
forecast to occur from anything between one and 18 months  
into the future
the group’s translational exposures to foreign currency risks can 
relate both to the income statement and net assets of overseas 
subsidiaries the group’s policy is not to hedge the translational 
exposure that arises on consolidation of the income statements 
of overseas subsidiaries the group finances overseas company 
investments partly through the use of foreign currency 
borrowings in order to provide a natural hedge of foreign 
currency risk arising on translation of the group’s net investment
b interest rate risk
interest rate risk comprises both the interest rate price risk that 
results from borrowing at fixed rates of interest and also the 
interest cash flow risk that results from borrowing at variable 
rates where appropriate interest rate swaps are used to 
manage the group’s interest rate profile
currently the majority of the group’s borrowings attract fixed 
rates of interest payments and therefore the group’s principal 
interest rate risk is a price risk
c liquidity risk
liquidity risk represents the risk that the group will not be able 
to meet its financial obligations as they fall due the group’s 
approach to managing this risk is to ensure as far as possible 
that it will always have sufficient liquidity to meet its liabilities 
when due under both normal and stressed conditions without 
incurring unacceptable losses or risking damage to the group’s 
reputation the group manages this risk through the use of 
regularly updated cash flow forecasts and a liquidity headroom 
analysis which is used to determine funding requirements 
adequate committed lines of funding are maintained from high 
quality investment grade lenders the facilities committed to the 
group as at 31 december 2008 are set out in note 20
d credit risk
credit risk arises because a counterparty may fail to perform  
its obligations the group is exposed to credit risk on financial 
assets such as cash balances derivative financial instruments 
trade and other receivables
the group’s credit risk is primarily attributable to its trade 
receivables the amounts recognised in the balance sheet  
are net of appropriate allowances for doubtful receivables 
estimated by the group’s management based on prior 
experience and their assessment of the current economic 
environment trade receivables are subject to credit limits and 
control and approval procedures in the operating companies 
due to its large geographic base and number of customers the 
group is not exposed to material concentrations of credit risk on 
its trade receivables
credit risk associated with cash balances and derivative financial 
instruments is managed centrally by transacting with an existing 
relationship bank with strong investment grade rating 
accordingly the group’s associated credit risk is limited the 
group has no significant concentration of credit risk
the group’s maximum exposure to credit risk is represented by 
the carrying amount of each financial asset including derivative 
financial instruments in the group balance sheet
capital management
ordinary shares are classified as equity incremental costs directly 
attributable to the issue of ordinary shares and share options are 
recognised as a deduction from equity net of any tax effects 
the board’s policy is to maintain a strong capital base so as to 
maintain investor creditor and market confidence and to sustain 
future development of the business the board of directors 
monitors both the demographic spread of shareholders and the 
level of dividends to ordinary shareholders
the board encourages employees to hold shares in the 
company this is carried out through a save as you earn option 
scheme in the uk as well as performance share plans full 
details of these schemes are given in the sharebased payments 
note note 27 of these accounts 54
spectris plc annual report and accounts 2008
notes to the accounts continued
2 financial risk management continued
the board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the 
advantages and security afforded by a sound capital position
from time to time the group purchases its own shares in the market the timing of these purchases depends on market prices buy 
and sell decisions are made on a specific transaction basis by the board
there were no changes to the group’s approach to capital management during the year
neither the company nor any of its subsidiaries are subject to externally imposed capital requirements
3 adjusted performance measures
spectris uses adjusted figures as key performance measures in addition to those reported under adopted ifrs adjusted figures are 
stated before amortisation of acquisitionrelated intangible assets goodwill impairment charges profits or losses on termination  
or disposal of businesses or major fixed assets unrealised changes in the fair value of financial instruments gains or losses on 
retranslation of shortterm intercompany loan balances related tax effects and other tax items which do not form part of the 
underlying tax rate see note 11
the adjusted performance measures are derived from the reported figures under adopted ifrs as follows
       2008 2007 
adjusted sales   note    £m £m
sales as reported under adopted ifrs   4    7871 6684
divested businesses       – 86
adjusted sales for continuing businesses       7871 6598
    materials test and inline industrial 2008 
    analysis measurement instrumentation controls total 
adjusted sales by segment – 2008   note £m £m £m £m £m
sales as reported under adopted ifrs   4 2532  2549  2333  457  7871
divested businesses    –  –  –  – –
adjusted sales for continuing businesses    2532  2549  2333  457  7871
    materials test and inline industrial 2007 
    analysis measurement instrumentation controls total 
adjusted sales by segment – 2007   note £m £m £m £m £m
sales as reported under adopted ifrs   4 2138 2075 2088 383  6684 
divested businesses     –  –  86  – 86
adjusted sales for continuing businesses    2138 2075 2002 383 6598
       2008 2007 
adjusted operating profit   note    £m £m
operating profit as reported under adopted ifrs      1137 1029
amortisation of acquisitionrelated intangible assets  15    46 19
adjusted operating profit       1183 1048
divested businesses       – 05
adjusted operating profit for continuing businesses      1183 1043
restructuring charges for continuing businesses      12 09
adjusted operating profit for continuing businesses  
before restructuring charges       1195 1052 55
spectris plc annual report and accounts 2008
financial statements governance business review overview
    materials test and inline industrial 2008 
    analysis measurement instrumentation controls total 
adjusted operating profit by segment – 2008  note £m £m £m £m £m
segment result under adopted ifrs   4 349  286  420  82  1137
amortisation of acquisitionrelated intangible assets   26  11  07  02  46
adjusted operating profit     375  297  427  84  1183
divested businesses    – – – – –
adjusted operating profit for continuing businesses   375  297  427  84  1183
restructuring charges for continuing businesses   03 09 01 01 12
adjusted operating profit for continuing businesses  
before restructuring charges    378  306  426  85  1195 
    materials test and inline industrial 2007 
    analysis measurement instrumentation controls total 
adjusted operating profit by segment – 2007  note £m £m £m £m £m
segment result under adopted ifrs   4 335 260 348 86 1029
amortisation of acquisitionrelated intangible assets   13 02 04  – 19
adjusted operating profit     348 262 352 86 1048
divested businesses     –  –  05  – 05
adjusted operating profit for continuing businesses   348 262 347 86 1043
restructuring charges for continuing businesses   01 01 07  – 09
adjusted operating profit for continuing businesses  
before restructuring charges    349 263 354 86 1052
      2008 2007 
adjusted profit before tax  note    £m £m
profit before tax as reported under adopted ifrs       1061 1181
amortisation of acquisitionrelated intangible assets 15     46 19
net losses on retranslation of shortterm intercompany loans 10     06 –
profit on disposal of businesses  28     03 190
unrealised change in fair value of crosscurrency interest  
rate swaps  21     09 30
adjusted profit before tax       1101 980
       2008 2007 
operating cash flow       £m £m
net cash from operating activities under adopted ifrs      991 912
corporation tax paid       240 238
purchase of property plant and equipment       219 127
proceeds from sale of property plant and equipment       09 14
operating cash flow for management purposes       1021 1037
      2008 2007 
adjusted earnings per share  note    £m £m
profit after tax as reported under adopted ifrs       811 862
adjusted for
amortisation of acquisitionrelated intangible assets  15     46 19
profit on disposal of businesses  28     03 190
unrealised change in fair value of crosscurrency interest  
rate swaps  21     09 30
net losses on retranslation of shortterm intercompany loans 10     06 –
tax effect of the above   11     11 45
adjusted earnings       840 706
weighted average number of shares outstanding millions 13     1154 1216
adjusted earnings per share pence       728 581 56
spectris plc annual report and accounts 2008
notes to the accounts continued
3 adjusted performance measures continued
adjusted diluted earnings per share   note    2008 2007
adjusted earnings as above £m       840 706
diluted weighted average number of shares outstanding millions 13    1162 1221
adjusted diluted earnings per share pence       722 578
basic and diluted earnings per share in accordance with ias 33 are disclosed in note 13
       2008 2007 
analysis of net debt for management purposes   note    £m £m
bank overdrafts       96 40
bank loans – secured       31 25
bank loans – unsecured       500 –
unsecured loan notes       1459 1060
crosscurrency interest rate swaps – currency portion   21    179 162
total borrowings       2265 1287
cash balances   19    644 514
net debt       1621 773
       2008 2007 
analysis of revenue by geographical destination       £m £m
uk       303 285
continental europe       3019 2546
north america       1780 1525
japan       601 536
china       688 550
rest of asia pacific       903 731
rest of the world       577 425
total continuing businesses       7871 6598
divested businesses       – 86
group total       7871 6684
4 segmental information
the group’s primary reporting format is business segments and its secondary format is geographical segments the companies 
within each business segment together with the significant products made by each are detailed within the additional information 
section of this annual report see the inside back cover
a business segments
 segment revenue 

 intersegment revenue 

 external customer revenue 

 segment result
 2008 2007 2008 2007 2008 2007 2008 2007 
 £m £m £m £m £m £m £m £m
materials analysis 2535 2141 03  03 2532 2138 349 335
test and measurement 2558 2081 09  06 2549 2075 286 260
inline instrumentation 2339 2093 06  05 2333 2088 420 348
industrial controls 459 383 02  – 457 383 82 86
eliminate intersegment sales 20  14 20 14 –  – –  –
total continuing operations 7871 6684 –  – 7871 6684 1137 1029
profit on disposal of businesses       03 190
financial income       78 96
finance costs       157 134
profit before tax       1061 1181
tax       250 319
profit after tax       811 862
intersegment pricing is on an arm’s length basis segments are presented on the basis of actual intersegment charges made profit 
on disposal of businesses of £03m 2007 £190m relates to the inline instrumentation segment see note 28 57
spectris plc annual report and accounts 2008
financial statements governance business review overview
 carrying amount carrying amount 
 of segment assets

 of segment liabilities
     2008 2007 2008 2007 
     £m £m £m £m
materials analysis     2531 1998 897 678
test and measurement     3540 1919 879 536
inline instrumentation     2322 1692 467 461
industrial controls     218 98 68 41
total segment assets and liabilities     8611 5707 2311 1716
cash and borrowings     644 514 2086 1125
derivative financial instruments     – 01 261 161
net pension liability     –  – 85 111
taxation     321 257 401 338
consolidated total assets and liabilities     9576 6479 5144 3451
  additions to  depreciation and 
  noncurrent assets

 amortisation

 impairment charges
   2008 2007 2008 2007 2008 2007 
   £m £m £m £m £m £m
materials analysis   122 42 57 43 –  –
test and measurement   245 35 76 63 –  –
inline instrumentation   96 108 43 42 –  –
industrial controls   44 04 05 03 –  –
   507 189 181 151 –  –
b geographical segments
the group’s business operations are each located in several geographical locations and sell on to external customers in all parts of 
the world 
the following is an analysis of revenue by geographical destination
      
   materials  test and inline industrial 2008 2007 
   analysis measurement instrumentation controls total total 
   £m £m £m £m £m £m
uk   114 97 76 16 303 297
continental europe   788 1387 764 80 3019 2565
north america   569 314 617 280 1780 1566
japan   164 211 222 04 601 537
china   231 159 265 33 688 554
rest of asia pacific   422 230 215 36 903 736
rest of the world   244 151 174 08 577 429
   2532 2549 2333 457 7871 6684
the following is an analysis of the carrying amount of segment assets and additions to property plant and equipment and 
intangible assets analysed by the geographical area in which the assets are located
   carrying amount  additions to 
   of segment assets

 noncurrent assets
     2008 2007 2008 2007 
     £m £m £m £m
uk     1193 584 223 39
continental europe     5011 3856 96 55
north america     1741 845 167 78
japan     227 150 02 01
china     178 105 15 06
rest of asia pacific     172 120 02 09
rest of the world     89 47 02 01
     8611 5707 507 189 58
spectris plc annual report and accounts 2008
notes to the accounts continued
5 assets and liabilities held for sale
during 2008 the building in niles illinois usa was sold
       2008 2007 
assets held for sale   note    £m £m
property plant and equipment   28    – 12
       – 12
6 revenue
an analysis of the group’s revenue is as follows
       2008 2007 
       £m £m
sale of goods       7006 5957
services rendered       865 727
revenue       7871 6684
7 operating profit
operating profit has been arrived at after charging
       2008 2007 
       £m £m
net foreign exchange gainslosses       06 04
research and development expenditure       570 452
depreciation of property plant and equipment       104 131
amortisation of intangible assets       77 20
lossgain on sale of property plant and equipment       01 06
       2008 2007 
auditors’ remuneration       £m £m
fees payable to the company’s auditor for audit of the group’s annual accounts    04 04
fees payable to the company’s auditor and its associates for other services   
– the audit of the company’s subsidiaries pursuant to legislation      10 06
– tax services       02 07
       16 17 59
spectris plc annual report and accounts 2008
financial statements governance business review overview
8 employee costs
employee costs including directors’ remuneration comprise
       2008 2007 
   note    £m £m
wages and salaries       2112 1808
social security costs       353 281
defined benefit pension plans current service cost   9    17 09
defined contribution pension plans   9    76 72
sharebased payment expense       18 09
       2576 2179
       2008 2007 
directors’ remuneration       £m £m
shortterm benefits       21 23
postemployment benefits       02 03
sharebased payment expense       05 06
       28 32
further details of directors’ remuneration and share options are given in the directors’ remuneration report on pages 37 to 43
       2008 2007 
average number of employees       number number
production and engineering        3007 3149
sales and marketing       2219 1974
administrative       491 454
       5717 5577
9 retirement benefit schemes
spectris plc operates funded defined benefit ‘final salary’ and defined contribution pension plans for the group’s qualifying 
employees in the uk in addition eleven overseas subsidiaries provide defined benefit plans other uk and overseas subsidiaries 
have their own defined contribution plans invested in independent funds and the group operates a defined contribution plan in the 
usa for its us subsidiaries
defined contribution plans
the total cost to spectris plc of the defined contribution plans for the year ended 31 december 2008 was £76m 2007 £72m 
there were no outstanding or prepaid contributions to these plans as at 31 december 2008 or at 31 december 2007
defined benefit plans
the last full actuarial valuations were carried out as at the following dates
plan name      date of last full actuarial valuation
spectris pension plan      31 december 2005
brüel  kjær vibro gmbh      1 october 2008
hottinger baldwin messtechnik gmbh      1 october 2008
spectris gmbh sensoren und systeme      1 october 2008
btg mütek gmbh      1 october 2008
brüel  kjær gmbh      1 october 2008
panalytical gmbh      1 april 2006
lds test and measurement gmbh german      31 december 2007
brüel  kjær instruments inc retirement plan      31 december 2007
servomex inc pension plan      31 december 2007
lds test and measurement dutch      31 december 2007
btg eclépens sa      31 december 2007
the valuations were updated to 31 december 2008 for ias 19 purposes by qualified independent actuaries 60
spectris plc annual report and accounts 2008
notes to the accounts continued
9 retirement benefit schemes continued
the total company contributions made to the defined benefit plans during the year ended 31 december 2008 were £54m  
2007 £31m contributions for the whole of 2009 are expected to be as follows
plan name      expected 2009 contributions £m
spectris pension plan        25
brüel  kjær vibro gmbh        –
hottinger baldwin messtechnik gmbh        05
spectris gmbh sensoren und systeme        –
btg mütek gmbh        –
brüel  kjær gmbh        –
panalytical gmbh        –
lds test and measurement gmbh german        –
brüel  kjær instruments inc retirement plan        –
servomex inc pension plan        05
lds test and measurement dutch        01
btg eclépens sa        09
the above contribution rates are subject to review at future valuations and periodic certifications of the schedule of contributions  
 
following legal rulings in switzerland the swiss institute of certified accountants has issued revised guidance that redesignates 
certain swiss pension arrangements as defined benefit previously defined contribution accordingly management has included  
its btg swiss pension plan as a defined benefit plan as at 1 january 2008 management does not consider there has been any 
substantive change in its risks in relation to this plan
the major assumptions used by the actuary to value the liabilities of the defined benefit plans were
       2008 2007 
uk plans        pa  pa
discount rate       640 580
salary increases       430 480
pension increases in payment       
rpi max 5 lpi       270 310
rpi max 3       250 280
rpi max 25       230 250
rpi min 3 max 5       310 330
pension increases in deferment       280 330
inflation assumption       280 330
 lpi is limited price indexation retail price indexation of a maximum of 5
mortality rate assumptions
pensioner life expectancy assumed in the 31 december 2008 valuation is based on the following tables   
current and future pensioners  pxa92 tables with medium cohort projections and a 1 year  
  age rating and a 1 underpin to future improvements 61
spectris plc annual report and accounts 2008
financial statements governance business review overview
samples of the ages which pensioners are assumed to live to are as follows
       males females
pensioner aged 65 in 2008       864 888
pensioner aged 65 in 2020       876 899
pensioner life expectancy assumed in the 31 december 2005 valuation is based on the following tables
current pensioners pxa92 tables projected to calendar year 2005
future pensioners pxa92 tables projected to calendar year 2020
       2008 2007 
german plans        pa  pa
discount rate       650 550
salary increases       300 250
pension increases in payment       200 200
inflation assumption       200 250
mortality rate assumptions
pensioner life expectancy assumed in the 1 october 2008 valuation is based on the following tables
current pensioners and future pensioners dr k heubeck pension tables 2005 g
samples of the ages which pensioners are assumed to live to are as follows 
       males females
pensioner aged 60 in 2008       825 871
pensioner aged 60 in 2020       843 888
       2008 2007 
us plans        pa  pa
discount rate       550 575
inflation assumption       300 300
mortality rate assumptions
pensioner life expectancy assumed in the 31 december 2007 valuation is based on the following tables
current pensioners and future pensioners      rp2000 tables with aa scale
samples of the ages which pensioners are assumed to live to are as follows
       males females
pensioner aged 65 in 2005       839 860
pensioner aged 65 in 2020       851 867
       2008 2007 
dutch plans        pa  pa
discount rate       650  –
salary increases       300  –
inflation assumption       200  –
mortality rate assumptions
pensioner life expectancy assumed in the 31 december 2007 valuation is based on the following tables
current pensioners and future pensioners      prognostetafel 2005–2050 tables
samples of the ages which pensioners are expected to live to are not available but the table covers life expectancies and is the 
general standard in the netherlands 62
spectris plc annual report and accounts 2008
notes to the accounts continued
9 retirement benefit schemes continued
       2008 2007 
swiss plans        pa  pa
discount rate       325  –
salary increases       200  –
inflation assumption       150  –
mortality rate assumptions
pensioner life expectancy assumed in the 31 december 2007 valuation is based on the following tables
current pensioners and future pensioners        evk 2000 tables
samples of the ages which pensioners are expected to live to are not available
  uk plans

 overseas plans

 total
   2008 2007 2008 2007 2008 2007 
amounts recognised in the income statement   £m £m £m £m £m £m
current service cost   10 09 07  – 17 09
interest cost   47 43 06 06 53 49
expected return on scheme assets   51 46 02  02 53 48
settlement credit – bk instruments inc retirement plan  – – 01  – 01 –
   06 06 10 04 16 10
the current service cost is recognised in administrative expenses in the income statement the interest cost and expected return  
on scheme assets are recognised in finance costs and finance income respectively in the income statement actuarial losses are 
recognised in the statement of recognised income and expense
during the year insurance premiums for deathinservice benefits were paid amounting to £02m 2007 £02m
the actual return on scheme assets in the period was a loss of £27m 2007 £59m gain
  uk plans

 overseas plans

 total
amounts recognised in the statement   2008 2007 2008 2007 2008 2007 
of recognised income and expense   £m £m £m £m £m £m
actuarial gains and losses recognised in the current period  21 59 02 04 23 55
loss on inclusion of swiss plan   – – 05 – 05 –
total gains and losses recognised in the current period  21 59 03 04 18 55
cumulative actuarial gains and losses since 1 january 2004  202 223 11 08 213 231
  uk plans

 overseas plans

 total
   2008 2007 2008 2007 2008 2007 
amounts recognised in the balance sheet   £m £m £m £m £m £m
present value of defined benefit obligations   754 832 231 105 985 937
fair value of scheme assets   747 784 153 42 900 826
net deficit in scheme    07 48 78 63 85 111 63
spectris plc annual report and accounts 2008
financial statements governance business review overview
  uk plans

 overseas plans

 total
   2008 2007 2008 2007 2008 2007 
reconciliation of movement in net deficit   £m £m £m £m £m £m
at 1 january    48 126 63 62 111 188
expected return on plan assets   51 46 02 02 53 48
contributions from sponsoring company   26 25 28 06 54 31
current service cost   10 09 07 – 17 09
interest cost   47 43 06 06 53 49
actuarial gains    21 59 02 – 23 59
exchange difference   – – 14 03 14 03
settlement of bk instruments inc retirement plan   – – 01 – 01 –
acquisition lds test  measurement   – – 16 – 16 –
inclusion of swiss plan   – – 05 – 05 –
at 31 december   07 48 78 63 85 111
  uk plans

 overseas plans

 total
analysis of movement in the present value   2008 2007 2008 2007 2008 2007 
of the defined benefit obligation   £m £m £m £m £m £m
at 1 january   832 863 105 104 937 967
current service cost   10 09 07 – 17 09
interest cost   47 43 06 06 53 49
actuarial gains   98 48 05 – 103 48
exchange difference   – – 23 04 23 04
contributions from scheme members   03 03 – – 03 03
benefits paid   40 38 09 09 49 47
settlement of bk instruments inc retirement plan   – – 35 – 35 –
acquisition lds test  measurement   – – 24 – 24 –
inclusion of swiss plan   – – 115 – 115 –
at 31 december   754 832 231 105 985 937
  uk plans

 overseas plans

 total
   2008 2007 2008 2007 2008 2007 
analysis of defined benefit obligation   £m £m £m £m £m £m
present value of unfunded defined benefit obligation   – – 65 46 65 46
present value of funded defined benefit obligation   754 832 166 59 920 891
  uk plans

 overseas plans

 total
   2008 2007 2008 2007 2008 2007 
reconciliation of movement in fair value of plan assets   £m £m £m £m £m £m
at 1 january    784 737 42 42 826 779
expected return on plan assets   51 46 02 02 53 48
actuarial lossesgains   77 11 03 – 80 11
exchange difference   – – 09 01 09 01
contributions from sponsoring company   26 25 28 06 54 31
contributions from scheme members   03 03 – – 03 03
benefits paid   40 38 09 09 49 47
settlement of bk instruments inc retirement plan   – – 34 – 34 –
acquisition lds test  measurement   – – 08 – 08 –
inclusion of swiss plan   – – 110 – 110 –
at 31 december   747 784 153 42 900 826
analysis of the scheme assets and expected rate of return    expected return

 fair value of assets
     2008 2007 2008 2007 
uk plans       £m £m
equity instruments     83 78 271 369
debt instruments     62 55 349 371
other assets     43 47 127 44
     66 65 747 784 64
spectris plc annual report and accounts 2008
notes to the accounts continued
9 retirement benefit schemes continued
     expected return

 fair value of assets
     2008 2007 2008 2007 
german plans       £m £m
insurance policies     65 55 16 12
     expected return

 fair value of assets
     2008 2007 2008 2007 
us plans       £m £m
equity instruments     90 90 07 13
debt instruments     60 60 04 16
other assets     70 70 01 01
     78 74 12 30
     expected return

 fair value of assets
     2008 2007 2008 2007 
dutch plan       £m £m
insurance policies     65 55 08 06
     expected return

 fair value of assets
     2008 2007 2008 2007 
swiss plan       £m £m
insurance policies     28 – 110 –
the overall expected return on assets is calculated as the weighted average of the expected return on each individual asset class 
the expected return on equities is the sum of inflation dividend yield and economic growth less investment expenses the return 
on gilts and bonds is the current market yield on longterm gilts and bonds the expected return on other assets is the current 
interest rate set by the bank of england
    2008  2007 ✝ 2006  2005 2004  
history of experience adjustments    £m £m £m £m £m
present value of defined benefit obligations    985 937 967 918 801
fair value of scheme assets    900 826 779 692 594
deficit in the scheme    85 111 188 226 207
experience adjustment on scheme liabilities       
amount £m    100 48 13 102 45
percentage of scheme liabilities     102 51 13 111 56
experience adjustment on scheme assets       
amount £m    80 11 24 61 11
percentage of scheme assets     90 13 31 88 19
 the history of experience for 2005 and earlier excludes the us plans that were not previously disclosed due to materiality
✝ the history of experience for 2007 and earlier excludes the german and dutch lds test  measurement plans as they were  
new acquisitions in 2008 it also excludes the swiss plan that has not previously been disclosed
10 finance costs and financial income
       2008 2007 
financial income       £m £m
bank interest receivable       16 18
change in fair value of crosscurrency interest rate swaps      09 30
expected return on pension scheme assets       53 48
       78 96 65
spectris plc annual report and accounts 2008
financial statements governance business review overview
       2008 2007 
finance costs       £m £m
interest payable on bank loans and overdrafts       97 82
interest payable on other loans        01 03
total interest payable        98 85
net losses on retranslation of shortterm intercompany loan balances     06  –
interest cost on pension scheme liabilities       53 49
       157 134
net interest costs of £82m 2007 £67m for the purposes of the calculation of interest cover comprise of bank interest receivable 
of £16m 2007 £18m and interest payable on bank and other loans and overdrafts of £98m 2007 £85m
11 taxation
 2008

 2007
   uk overseas total uk overseas  total 
   £m £m £m £m £m £m
current tax charge   10 242 252  – 278 278
adjustments in respect of current tax of prior years   01  09  10 03  36 39
deferred tax – origination and reversal of temporary differences  24 32 08 29 51 80
   15 265 250 26 293 319
the standard rate of corporation tax for the year based on the weighted average of tax rates applied to the group’s profits is 
297 2007 323 the tax charge for the year is lower than the standard rate of corporation tax for the reasons set out in the 
following reconciliation
       2008 2007 
       £m £m
profit before taxation       1061 1181
corporation tax at standard rate of 297 2007 323      315 382
nontaxable income and gains       31 41
nondeductible expenditure       11 17
movements on unrecognised deferred tax assets       01  –
other current year tax items       03 01
taxation on other dividend flows       – 01
change in tax rates       01 05
revision of recognition of opening deferred tax assets      30 –
other adjustments to prior year current and deferred tax charges     16 44
total taxation       250 319
       2008 2007 
       £m £m
aggregate current and deferred tax creditcharge relating to items that are charged directly to equity  30 40
the following tax charges relate to items of income and expense that are excluded from the group’s adjusted performance 
measures
tax on items of income and expense that are excluded       2008 2007 
from the group’s adjusted profit before tax       £m £m
tax charge on unrealised change in fair value of crosscurrency interest rate swaps    03 09
tax credit on amortisation of intangible assets and goodwill impairment charge    14 05
tax charge on disposal of businesses       01 41
tax credit on retranslation of shortterm intercompany loan balances     01 –
total tax creditcharge       11 45 66
spectris plc annual report and accounts 2008
notes to the accounts continued
11 taxation continued
the effective adjusted tax rate for the period was 237 2007 280 as set out in the reconciliation below
       2008 2007 
reconciliation of total tax charge on adopted ifrs basis to adjusted tax charge    £m £m
total tax charge on adopted ifrs basis       250 319
tax creditcharge on items of income and expense that are excluded from the group’s adjusted profit before tax 11 45
adjusted tax charge       261 274
adjusted profit before tax       1101 980
adjusted effective tax rate        237 280
12 dividends
       2008 2007 
amounts recognised and paid as distributions to equity holders in the year     £m £m
final dividend for the year ended 31 december 2007 of 1525p 2006 125p per share   176 154
interim dividend for the year ended 31 december 2008 of 64p 2007 575p per share   74 68
       250 222
       2008 2007 
amounts arising in respect of the year       £m £m
interim dividend for the year ended 31 december 2008 of 64p 2007 575p per share   74 68
proposed final dividend for the year ended 31 december 2008 of 170p 2007 1525p per share   196 175
       270 243
the proposed final dividend is subject to approval by shareholders at the annual general meeting and has not been included as a 
liability in these financial statements 
13 earnings per share
basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity shareholders of the 
parent by the weighted average number of ordinary shares outstanding during the year
diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders by the weighted 
average number of ordinary shares outstanding during the year but adjusted for the effects of dilutive options the key features of 
share option contracts are described in note 27
basic earnings per share       2008 2007
profit after tax £m       811 862
weighted average number of shares outstanding millions      1154 1216
basic earnings per share pence       703 709
diluted earnings per share       2008 2007
profit after tax per income statement £m       811 862
basic weighted average number of shares outstanding millions      1154 1216
weighted average number of dilutive 5p ordinary shares under option millions    12 10
weighted average number of 5p ordinary shares that would have been issued  
at average market value from proceeds of dilutive share options millions     04 05
diluted weighted average number of shares outstanding millions     1162 1221
diluted earnings per share pence       698 706 67
spectris plc annual report and accounts 2008
financial statements governance business review overview
14 goodwill
cost        £m
at 1 january 2007        2392
exchange differences        167
at 31 december 2007        2559 
recognised on acquisitions        541
exchange differences         741
at 31 december 2008        3841
accumulated amortisation and impairment losses        £m
at 1 january 2007        318
exchange differences        10
at 31 december 2007        328
exchange differences        87
at 31 december 2008        415
carrying amount        £m
at 31 december 2008        3426
at 31 december 2007        2231
at 1 january 2007        2074
in accordance with the requirements of ias 36 impairment of assets goodwill is allocated to the group’s cashgenerating units 
represented by each of the group’s major businesses the most significant elements of the group’s total consolidated goodwill of 
£3426m at 31 december 2008 are allocated to panalytical £1059m btg £638m hbm £719m and brüel  kjær sound  
vibration £622m each cashgenerating unit is assessed for impairment annually and whenever there is an indication of 
impairment there have been no indications of impairment in 2008 as part of the annual impairment test review the carrying  
value of goodwill has been assessed with reference to value in use to perpetuity reflecting the projected cash flows of each 
cashgenerating unit based on actual operating results and the most recent budgets for the next financial year 
the key assumptions on which the cash flow projections are based relate to growth rates and discount rates there are no 
individually significant assumptions in respect of any business that materially impacts the impairment testing growth rates for the 
period not covered by the budgets do not exceed 25 the cash flow projections have been discounted on the group’s pretax 
weighted average cost of capital estimated at 13 no impairment charge has been recognised in either 2008 or 2007 to write 
goodwill down to its estimated recoverable amount 
the directors have considered the following individual sensitivities
a 2 increase in the pretax discount rate to 15 would result in an impairment of £60m •	
if the longterm growth rate assumption was reduced to 1 no impairment would arise and •	
if the cash flow projections of all businesses were reduced by 25 in 2009 and 2010 no impairment would arise •	
the goodwill impairment testing performed by management is based on plan data updated in february 2009 68
spectris plc annual report and accounts 2008
notes to the accounts continued
15 other intangible assets
    patents customer software  
    trademarks  related related  
    and technology  intangibles and other total 
cost    £m £m £m £m
at 1 january 2007     82  71   – 153 
recognised on acquisitions     52  04   – 56 
exchange differences     04  02   – 06 
at 31 december 2007     138  77  – 215 
additions     – – 12 12
recognised on acquisitions     174 50 28 252
transfer from property plant and equipment     – – 190 190
exchange differences     32 26 43 101
at 31 december 2008     344 153 273 770
accumulated amortisation and impairment losses 
at 1 january 2007      54  19  – 73 
charge for the year     14  06   – 20 
at 31 december 2007     68  25   – 93 
transfer from property plant and equipment     – – 114 114
charge for the year     20 26 31 77
exchange differences     10 07 30 47
at 31 december 2008     98 58 175 331
carrying amount     
at 31 december 2008     246 95 98 439
at 31 december 2007     70  52   – 122 
at 1 january 2007     28  52  – 80 
of the total amortisation charge of £77m 2007 £20m the amount attributable to the amortisation of acquisitionrelated 
intangible assets was £46m 2007 £19m
the transfer from property plant and equipment to softwarerelated and other intangible assets relates to identifiable software assets 69
spectris plc annual report and accounts 2008
financial statements governance business review overview
16 property plant and equipment
     freehold leasehold  plant and  
     property property equipment total 
cost     £m £m £m £m
at 1 january 2007     653 72 1266 1991
additions     43 05 79 127
recognised on acquisitions     01  – 01 02
disposals      –  01  158 159
transfers     01  –  01  –
exchange differences     52  02  68  122
at 31 december 2007     750  78  1255  2083 
additions     59 03 146 208
recognised on acquisitions     – 16 19 35
disposals     27 08 101 136
transfers to intangible fixed assets     – – 190 190
exchange differences     238 22 360 620
at 31 december 2008     1020 111 1489 2620
accumulated depreciation and impairment      
at 1 january 2007     184 51 924 1159
charge for the year     21 10 100 131
disposals     – 01 150 151
exchange differences     21 – 46 67
at 31 december 2007     226  60  920  1206 
charge for the year     20  06  78  104
disposals     25 06 95 126 
transfers to intangible fixed assets     –  – 114 114
exchange differences     92 17 259 368
at 31 december 2008     313 77 1048 1438
carrying amount    
at 31 december 2008     707 34 441 1182
at 31 december 2007     524  18  335  877 
at 1 january 2007     469 21 342 832
the amount recognised in the carrying amount of items of plant and equipment in the course of its construction was £16m 
2007 £18m
the group has pledged land and buildings having a carrying amount of approximately £31m 2007 £25m to secure bank loans 
granted to the group
17 inventories
       2008 2007 
       £m £m
raw materials       560 323
work in progress       297 195
finished goods       623 410
       1480 928
in the ordinary course of business the group makes provision for slowmoving excess and obsolete inventory as appropriate 
inventory is stated after charging impairments of £46m 2007 £29m and crediting reversals of previous impairments of £19m 
2007 £12m impairments and reversals of impairments are included within operating profit
inventory carried at fair value less cost to sell is £65m 2007 £nil
the amount of inventory recognised as an expense during both the current and prior year is equal to the amount recognised within 
the cost of sales 70
spectris plc annual report and accounts 2008
notes to the accounts continued
18 trade and other receivables
       2008 2007 
       £m £m
trade receivables       1802 1372
prepayments and accrued income       112 115
other receivables       164 50
       2078 1537
trade receivables are noninterest bearing standard credit terms provided to customers differ according to business and country 
and are typically between 30 and 60 days included within the above are amounts receivable in more than one year of £01m  
2007 £01m trade receivables and other receivables are stated after recognising impairments during the year of £10m  
2007 £13m and reversals of impairments of £08m 2007 £09m impairments and reversals of impairments are included  
within operating profit        
the maximum exposure to credit risk for trade receivables at the reporting date by geographic region was
       2008 2007 
       £m £m
uk       79 63
continental europe       763 609
north america       352 245
japan       233 146
china       79 65
rest of asia pacific       199 143
rest of the world       97 101
       1802 1372
impairment losses
the ageing of trade receivables at the reporting date was
 2008

 2007
     gross impairment gross impairment 
     £m £m £m £m
not past due     1359 – 1063 –
1 month past due     290 02 189 –
2 months past due     68 01 56 02
3 months past due     51 07 31 01
over 3 months past due     83 39 70 34
total     1851 49 1409 37
the movement in the allowance for impairment in respect of trade receivables during the year was as follows
       2008 2007 
       £m £m
balance at 1 january       37 38
impairment loss recognised       10 13
impairment loss utilised       – 06
impairment loss released       08 09
exchange differences       10 01
balance at 31 december       49 37
based on past experience the group believes that no impairment allowance is necessary in respect of trade receivables not  
past due and an impairment has been recorded against the trade receivables that the group believes may not be recoverable
the fair value of trade and other receivables approximates to book value due to the shortterm maturities associated with  
these items 71
spectris plc annual report and accounts 2008
financial statements governance business review overview
19 cash and cash equivalents
       2008 2007 
analysis of balances of cash and cash equivalents   note    £m £m
cash balances        644 514
bank overdrafts    20    96 40
cash and cash equivalents in the statement of cash flows      548 474
the group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 21
20 borrowings
   effective earlier of repricing 2008 2007 
current   interest rate date or maturity date £m £m
bank loans – secured   see below see below 04 04
bank overdrafts   375 on demand 96 40
bank loans – unsecured    310  31 december 2009 250  –
     350 44
   effective earlier of repricing 2008 2007 
noncurrent   interest rate date or maturity date £m £m
bank loans – secured   see below see below 27 21
bank loans – unsecured   326  9 october 2011 250  –
unsecured loan notes – 2000 75m   823  13 september 2010 522 376
unsecured loan notes – 2003 100m   608  15 october 2013 695 502
unsecured loan notes – 2003 €25m    556  15 october 2013 242 182
total unsecured borrowings       1709 1060
total noncurrent borrowings       1736 1081
at 31 december 2008 the group had available £400m 2007 £658m of undrawn committed borrowing facilities in respect of 
which all conditions precedent had been met
after the year end a £50m fiveyear term facility was secured from the european investment bank in january 2009 under covenant 
conditions in line with existing facilities
secured bank loans
bank loans are secured by fixed charges over property at three of the group’s subsidiaries of these £20m is denominated in 
chinese renminbi and is repayable by instalments until december 2012 with a fixed interest rate of 75 £07m is denominated  
in us dollars and is repayable by instalments until december 2014 with a variable interest rate of libor plus a small margin and 
£04m is denominated in euros and is repayable by instalments until december 2012 with a variable interest rate of libor plus a 
small margin
unsecured loan notes
the interest rates on the unsecured loan notes are those contracted on the underlying borrowings before taking into account any 
crosscurrency interest rate swaps and remain fixed until redemption on issue of the us100m loan notes in october 2003 the 
group entered into a crosscurrency interest rate swap which has the effect of converting this us dollar borrowing into fixed interest 
eurodenominated debt the combined effect of the borrowing and swap arrangement results in euro debt of €905m with a fixed 
interest rate of 564 this interest rate remains fixed until redemption  72
spectris plc annual report and accounts 2008
20 borrowings continued
under adopted ifrs where crosscurrency interest rate swaps are used the value of the underlying us dollar borrowing is presented in 
this borrowings note and the value of the related crosscurrency interest rate swaps is presented separately within derivative financial 
instruments in note 21 for management purposes the value attributed to the portion of the swap arrangements that converts  
us dollar borrowings into euro borrowings is viewed as part of the group’s net debt as analysed below
       2008 2007 
analysis of net debt   note    £m £m
bank overdrafts       96 40
bank loans – secured       31 25
bank loans – unsecured       500 –
unsecured loan notes       1459 1060
crosscurrency interest rate swaps – currency portion   21    179 162
total borrowings       2265 1287
cash balances   19    644 514
net debt       1621 773
21 financial instruments
 2008
 
2007
     carrying fair carrying fair 
     amount value amount value 
fair value and carrying amount of financial instruments    £m £m £m £m
trade and other receivables     2078 2078 1537 1537
trade and other payables     2080  2080 1501 1501
cash deposits     644 644 514 514
floating rate borrowings     607 607  50 50
fixed rate borrowings     1479 1718  1237 1176
forward exchange contracts     92 92 01 01
crosscurrency interest rate swaps     169 169 161 161
     1705 1944 897 836
the fair value of floating rate borrowings approximates to the carrying value 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 and derivative financial instruments is estimated by discounting the future contracted cash 
flow using approporiate yield curves to the net present values
the fair value of forward exchange contracts outstanding as at 31 december 2008 is a liability of £92m 2007 asset of £01m of 
which £81m has been debited to the hedging reserve 2007 credit of £01m £08m debited to the translation reserve 2007 £nil 
and £01m debited to the income statement 2007 £nil these contracts mature over periods not exceeding 12 months a summary 
of the movements in the hedging reserve during the year is presented below
       2008 2007 
analysis of movements in hedging reserve       £m £m
at 1 january       01 12
amounts removed from equity and included in income statement during the year    01 12
amounts recognised in equity during the year       81 01
at 31 december       81 01
notes to the accounts continued 73
spectris plc annual report and accounts 2008
financial statements governance business review overview
the fair value of forward exchange contracts is determined using discounted cash flow techniques based on readily available  
market data
 
the amount included in the income statement is split between revenue and administrative expenses
the following table shows the contractual forward exchange contracts hedging designated transactional exposures these contracts 
mature in the next 12 months therefore the cash flows and resulting effect on profit and loss are expected to occur within the next 
12 months
forward exchange contracts at 31 december       2008 2007
foreign currency sale amount £m       605 527
percentage of total        
us dollar        43 59
euro        6 4
japanese yen        50 37
crosscurrency interest rate swaps
the value of the group’s crosscurrency interest rate swaps can effectively be split into two components a portion that is 
attributable to converting a us dollardenominated borrowing liability into a eurodenominated borrowing liability the currency 
portion – the value of this portion changes as currency exchange rates change and a portion that is attributable to converting fixed 
rate us dollar interest payments into fixed rate euro interest payments the interest portion – the value of this portion of the swap 
changes as us dollar variable interest rates euro variable interest rates and foreign currency exchange rates change
under adopted ifrs the underlying us dollar borrowings are required to be presented separately in the balance sheet from the 
crosscurrency interest rate swaps in addition the fair value of the crosscurrency interest rate swaps is required to be recognised  
in full on the balance sheet
the table below shows the movements in the total value of the crosscurrency interest rate swap during the year and also how it is 
attributed to its currency and interest portions
      currency interest total 
      portion portion value 
fair value of crosscurrency interest rate swap      £m £m £m
as at 1 january 2007       98  30 128
change in fair value recognised in reserves       63  – 63
change in fair value recognised in income statement       – 30 30
as at 31 december 2007       161  – 161
change in fair value recognised in reserves      17  – 17 
change in fair value recognised in income statement      – 09 09
as at 31 december 2008      178 09 169
the combination of the underlying us dollar borrowings and crosscurrency interest rate swap has been designated as a net 
investment hedge of the group’s net investment in its european businesses however the interest portion of the swap is ineffective 
in this hedging relationship accordingly the change in value of the currency portion of the swap is recognised together with the 
change in value of the underlying us dollar borrowings in reserves and the change in value of the interest portion of the swap is 
recognised in the income statement within financing costs 74
spectris plc annual report and accounts 2008
21 financial instruments continued
the fair value of crosscurrency interest rate swaps is determined using discounted cash flow techniques based on readily available 
market data the principal borrowing amounts match exactly with the related unsecured loan note borrowings as described in  
note 20
   2008

     2007
 bank secured  cross  bank secured  cross 
 loans and bank unsecured currency  loans and bank unsecured currency  
maturity of overdrafts loans loans swap total overdrafts loans loans swap total 
financial liabilities £m £m £m £m £m £m £m £m £m £m
due within one year 96 05 349 08 458 40 04 72 07 123
due between one  
and two years – 04 620 08 632 – 02 72 07 81
due between two  
and five years – 22 1354 202 1578 – 17 530 22 569
due in more than 
five years – 01 – – 01 – 02 727 169 898
 96 32 2323 218 2669 40 25 1401 205 1671
trade and other payables are due within one year
 financial assets

 financial liabilities 2008
        net financial 
   noninterest     assets  
interest rate exposure of financial fixed rate floating rate bearing total fixed rate floating rate total  liabilities 
assets and liabilities by currency £m £m £m £m £m £m £m £m
sterling 207 20 02 229  –  514  514 285 
euro 06 120 19 145  1116  04  1120 975 
us dollar 02 93 14 109  522  08  530 421 
japanese yen 02 06 21 29  –  30  30 01 
other 43 51 38 132  20  51  71 61
 260 290 94 644  1658  607  2265 1621
 financial assets

 financial liabilities 2007
        net fi nancial 
   noninterest     assets  
interest rate exposure of financial  floating rate  bearing total fixed rate floating rate total liabilities 
assets and liabilities by currency  £m £m £m £m £m £m £m
sterling  37  – 37  –  –  – 37
euro  119 31 150  847  05  852 702
us dollar  76 18 94  376  07  383 289
japanese yen  05 15 20  –  22  22 02
other  128 85 213  15  15  30 183
  365 149 514  1238  49  1287 773
sensitivity analysis
at 31 december 2008 it is estimated that a general increase of one percentage point in interest rates would decrease the group’s 
profit before tax by approximately £03m 2007 increase of £03m
for the year ended 31 december 2008 it is estimated that a ten percentage point weakening in the value of the us dollar against  
£ sterling would have decreased the group’s profit before tax by approximately £43m 2007 £69m a ten percentage point 
weakening in the value of the eurodanish krone against £ sterling would have decreased the group’s profit before tax by 
approximately £41m 2007 £11m and a ten percentage point weakening in the value of the japanese yen against £ sterling would 
have decreased the group’s profit before tax by approximately £18m 2007 £26m
notes to the accounts continued 75
spectris plc annual report and accounts 2008
financial statements governance business review overview
22 trade and other payables
       2008 2007 
current       £m £m
trade payables       828 610
nontrade payables accruals and deferred income       1151 807
       1979 1417
noncurrent
nontrade payables accruals and deferred income       101 84
the fair value of trade and other payables approximates to book value due to the shortterm maturities associated with these items 
23 provisions
      product   
     reorganisation warranty other total 
     £m £m £m £m
at 1 january 2008     22  66  127  215 
additional provision in the year     15  15  31  61
acquired on acquisition     – 06  02  08
utilised during the year     21 19 52 92
released during the year     – – 01 01
exchange adjustments     04  19  17  40
at 31 december 2008     20  87  124  231
provisions are all presented as current liabilities
provisions are discounted to reflect the time value of money where the effect is significant generally only where it is anticipated that 
a liability will crystallise in more than one year 
reorganisation
reorganisation provisions relate to committed restructuring plans in place within the business and represent the directors’ best 
estimate of the cost to complete the restructuring
product warranty
product warranty provisions reflect commitments made to customers on the sale of goods in the ordinary course of business and 
included within the group’s standard terms and conditions warranty commitments typically apply for a 12month period with the 
occasional extension up to 36 months these extended warranties are not significant and the provision represents the directors’ best 
estimate of the group’s liability based on past experience 
other
other comprises legal propertyrelated and other provisions propertyrelated and other provisions represent the directors’ best 
estimate of the cost of settling future obligations over varying time periods the company has on occasion been required to take 
legal action to protect its intellectual property rights to enforce commercial contracts or otherwise and similarly to defend itself 
against proceedings brought by other parties provisions are made for the expected costs associated with such matters based on 
past experience of similar items and other known factors taking into account professional advice received and represent 
management’s best estimate of the likely outcome the timing of utilisation of these provisions is uncertain pending the outcome  
of various court proceedings and negotiations but is expected to be within one to three years 
however no provision is made for proceedings which have been or might be brought by other parties unless management  
taking into account professional advice received assesses that it is more likely than not that such proceedings may be successful 
contingent liabilities associated with such proceedings have been identified but the directors are of the opinion that any associated 
claims that might be brought can be resisted successfully and therefore the possibility of any outflow in settlement is assessed  
as remote 76
spectris plc annual report and accounts 2008
24 deferred tax
deferred tax is calculated in full on temporary differences under the balance sheet method using the current corporate tax rate in 
the relevant local jurisdiction
the movement on the deferred tax account is shown below
       2008 2007 
      note £m £m
at 1 january       247 373
exchange adjustments       78 05
disposal of businesses       – 10
acquisition of subsidiary undertakings       44 –
transfer from current taxation       01 02
deferred tax on changes in fair value of forward exchange contracts recognised in equity   17 03
deferred tax on actuarial gains and losses on pension schemes recognised in equity    16 42
tax on foreign exchange in reserves        04 –
other credit to reserves       13 –
charged to income statement in the year      11 08 80
at 31 december        290 247
comprising
deferred tax liabilities       17 10
deferred tax assets including £03m attributable to the pension scheme deficit 2007 £20m   307 257
       290 247
the movements in deferred tax assets and liabilities during the period are shown below deferred tax assets and liabilities are only 
offset where there is a legally enforceable right of offset and they relate to income taxes levied by the same taxation authority
    unrealised 
    profit on  goodwill  
 accelerated  accruals   intercompany pension intangible  2008 
 tax depreciation provisions tax losses transactions schemes assets other total 
net deferred tax assets £m £m £m £m £m £m £m £m
at 1 january 2008 16 96 02 35 20 74 04 247
exchange adjustments 02 40 03 09 01 13 10 78 
acquisition of subsidiary undertakings – – – – – 44 – 44 
transfer from current taxation – 01 – – – – – 01 
deferred tax on changes in fair value of forward 
exchange contracts recognised in equity – – – – – – 17 17
deferred tax on actuarial gain on pension 
schemes recognised in equity – – – – 16 – – 16
other amounts credited to reserves – 04 – – – 13 – 17 
chargedcredited to income statement 06 04 26 02 06 22 06 08
at 31 december 2008 12 135 31 42 11 34 25 290
    unrealised 
    profit on  goodwill  
 accelerated  accruals   intercompany pension intangible  2007 
 tax depreciation provisions tax losses transactions schemes assets other total 
net deferred tax assets £m £m £m £m £m £m £m £m
at 1 january 2007 26 121 33 29 62 94 08 373
exchange adjustments 02 – – 02 – 01 – 05
disposal of businesses 04 03 03 – – – – 10
transfer from current taxation – 02 – – – – – 02
deferred tax on changes in fair value of forward 
exchange contracts recognised in equity – – – – – – 03 03
deferred tax on actuarial gain on pension  
schemes recognised in equity – – – – 42 – – 42
chargedcredited to income statement 08 20 28 04 – 21 07 80
at 31 december 2007 16 96 02 35 20 74 04 247
notes to the accounts continued 77
spectris plc annual report and accounts 2008
financial statements governance business review overview
unrecognised temporary differences
deferred tax assets have not been recognised on the following temporary differences due to the degree of uncertainty over both 
the amount and utilisation of the underlying tax losses and deductions in certain jurisdictions there is no associated expiry date in 
respect of tax losses
       2008 2007 
       £m £m
tax losses       312 206
other temporary differences       69 65
       381 271
no deferred tax liabilities have been provided in respect of the unremitted earnings of the nonuk subsidiaries the amount of such 
unremitted earnings is estimated to be a retained profit of £610m 2007 £380m
25 share capital and reserves
     2008

 2007
     number of  number of  
     shares  shares 
     millions £m millions £m
authorised
ordinary shares of 5p each     2100 105 2100 105
issued and fully paid
at 1 january     1250 62 1250 62
at 31 december     1250 62 1250 62
the group has one class of ordinary voting shares which carry no right to fixed income
during the year no ordinary shares were issued upon exercise under share option schemes 2007 38500 giving rise to  
net proceeds of £nil 2007 £02m see note 27 for a summary of potential issues of ordinary shares under existing share  
option schemes
other reserves
movements in reserves are set out in the reconciliation of movement in capital and reserves in note 26 the retained earnings 
reserve includes own shares held by the employee benefit trust see note 29 the retained earnings reserve also includes own 
shares purchased by the company and treated as treasury shares see note 30 the nature and purpose of other reserves forming 
part of equity are as follows
translation reserve 
the foreign currency translation reserve is used to record exchange differences arising from the translation of the financial 
statements of foreign subsidiaries including gains or losses arising on net investment hedges
hedging reserve
this reserve records the cumulative net change in the fair value of forward exchange contracts where they are designated as 
effective cash flow hedge relationships
merger reserve
this reserve arose on the acquisition of servomex limited in 1999 a purchase satisfied substantially by the issue of share capital  
and therefore eligible for merger relief under the provisions of section 131 of the companies act 1985
capital redemption reserve
this reserve records the historical repurchase of the group’s own shares 78
spectris plc annual report and accounts 2008
26 reconciliation of movement in capital and reserves
for the year ended 31 december 2008
       capital 
 share  share retained translation hedging merger redemption 
 capital premium earnings reserve reserve reserve reserve total equity 
 £m £m £m £m £m £m £m £m
equity at 1 january 2007 62 2311 740  218 12 31 03 2941
gains and losses – year ended 31 december 2007       
total recognised income and expense  –  – 881 197  11  –  – 1067
distributions to and transactions with shareholders         
equity dividends paid  –  –  222  –  –  –  – 222
sharebased payments  –  – 09  –  –  –  – 09
own shares treasury purchased –  –  792  –  –  –  – 792
own shares employee benefit trust purchased –  –  16  –  –  –  – 16
share options exercised from own shares  
treasury purchased –  – 29  –  –  –  – 29
share options exercised by issue of share capital  – 03  01  –  –  –  – 02
share options exercised from shares held by  
employee benefit trust  –  – 10  –  –  –  – 10
equity at 31 december 2007 62 2314 638  21 01 31 03 3028
gains and losses – year ended 31 december 2008   
total recognised income and expense –  – 859 951  82  –  – 1728
distributions to and transactions with shareholders
equity dividends paid –  –  250  –  –  –  – 250
sharebased payments –  – 18  –  –  –  – 18
own shares treasury purchased –  –  93  –  –  –  – 93
own shares employee benefit trust purchased –  –  02  –  –  –  – 02
share options exercised from own shares 
treasury purchased – – 02  –  –  –  – 02
share options exercised from shares held by 
employee benefit trust – – 01  –  –  –  – 01
equity at 31 december 2008 62 2314 1173 930  81 31 03 4432
27 sharebased payments
the executive share option scheme and save as you earn share option schemes were set up in order to provide executives and 
selected employees with options to purchase ordinary shares in the company under the executive share option scheme exercise 
prices are determined according to the midmarket closing share price prevailing on the day before the date of grant share options 
granted under the executive share option scheme are also subject to performance criteria being the fulfilment of earnings growth 
targets options vest after a period of three years and have a maximum term of ten years 
under the performance share plan the exercise price is the nominal cost of the company’s shares awards to spectris plc executives 
and senior managers are subject to performance criteria 50 of the award being based on fulfilment of earnings growth targets 
eps and 50 subject to a total shareholder return target tsr for executives and senior managers of the group’s operating 
companies the performance criteria is subject to eps in respect of 50 of the award and operating company targets in respect  
of 50 of the award for operating company managers the award is entirely subject to operating company profitability targets 
awards vest after a period of three years and must be exercised during the twelvemonth period following vesting
under the save as you earn scheme equity shares are issued following a vesting period of three years options may be exercised 
during a sixmonth period following the vesting date and exercise prices are determined according to the midmarket closing share 
price prevailing on the day before the date of grant there are no performance criteria associated with options granted under the 
save as you earn scheme
notes to the accounts continued 79
spectris plc annual report and accounts 2008
financial statements governance business review overview
share options outstanding at the end of the period
   2008 2007 
 exercise price exercise number number 
saye – year of grant £ period thousands thousands
2004  408  2008  –  12
2005  589  2009  24  26
2006  618  2010  48  58
2007  837  2011  40  54
2008  766  2012  46  –
      158  150
   2008 2007 
 exercise price exercise number number 
executive share option scheme – year of grant £ period thousands thousands
1998 239–551 2001–2008 – 34
1999 322–396 2002–2009 16 18
2000 513–525 2003–2010 130 131
2001 358–499 2004–2011 115 122
2004 406–462 2007–2014 12 12
2005 589 2008–2015 172 261
      445  578
   2008 2007 
 exercise price exercise number number 
performance share plan – year of grant £ period thousands thousands
2006 005 2009–2010 160 186
2007 005 2010–2011 463 487
2008 005 2011–2012 789 –
      1412  673
movements in the year 2008 

 2007
    weighted    weighted 
    average    average 
    exercise value of  exercise value of 
   number price shares number price shares 
saye   thousands £ £m thousands £ £m
at 1 january    150 733 11 194 498 10
granted   49 766 04 54 837 04
exercised   12 424  01 81 412 02
lapsed   29 728  02 17 518 01
at 31 december    158 712 12 150 733 11
exercisable at 31 december   24 589  014 12 408  005 
 2008 

 2007
    weighted    weighted 
    average    average 
    exercise value of  exercise value of 
   number price shares number price shares 
executive share option scheme   thousands £ £m thousands £ £m
at 1 january    578 519 30 1376 484 67
exercised   39 385 02 768 460 35
lapsed   94 582 05 30 500 02
at 31 december    445 511 23 578 519 30
exercisable at 31 december   445 511 23 317 452 14 80
spectris plc annual report and accounts 2008
27 sharebased payments continued
 2008 

 2007
    weighted    weighted 
    average    average 
    exercise value of  exercise value of 
   number price shares number price shares 
performance share plan   thousands £ £m thousands £ £m
at 1 january    673 005 003 197 005 001
granted   829 005 004 494 005 002
lapsed   90 005  – 18 005 –
at 31 december    1412 005 007 673 005 003
exercisable at 31 december   – –  –  –  –  –
sharebased payment expense
share options are valued using a stochastic option pricing model with support from an independent remuneration consultant  
the total shareholder return tsr performance condition and the operating company profit condition have been included in the 
calculation of fair value under the performance share plan for options granted in 2008 and 2007 the fair value per option granted 
and the assumptions used in the calculation are as follows
  executive share performance 
 saye

 option scheme

 share plan
  2008 2007 2008 2007 2008 2007
weighted average share price pence  549 889  –  – 654–789 865–899
weighted average exercise price pence  766 837  –  – 5 5
expected volatility  267 220  –  – 230–282 206–224
expected life  325 yrs 325 yrs  –  – 30 yrs 30 yrs
riskfree rate  38 51  –  – 109–521 495–519
expected dividends expressed as a yield  39 21  –  – – –
fair value per option  70 215  –  – – –
fair value per award – tsr condition      650–740 597–656
fair value per award – operating company profit condition     991–994 995
fair value per award – eps condition      991–994 995
the expected volatility is based on historical volatility over the expected term the expected life is the average expected period to 
exercise the riskfree rate of return is the yield on zerocoupon uk government bonds of a term consistent with the assumed 
option life
 no options were granted under the executive share option scheme
the group recognised total expenses of £18m related to equity settled sharebased payment transactions in 2008 2007 £09m
notes to the accounts continued 81
spectris plc annual report and accounts 2008
financial statements governance business review overview
28 disposal of businesses
during the year the group did not divest any businesses
the assets and liabilities disposed of by the group are as follows 
       2008 2007 
       £m £m
goodwill       – 29
property plant and equipment       12 24
inventories       – 37
trade and other receivables       – 55
cash and cash equivalents       – 01
taxation       – 12
trade and other payables       – 52
provisions       – 07
net assets disposed of       12 97
consideration received satisfied in cash       15 334
overdraft disposed of       – 01
transaction expenses       – 35
net cash inflow       15 298
cash received net of transaction expenses and cash disposed of      15 298
net assets disposed of       12 97
accruals and provisions       – 11
profit on businesses disposed       03 190
29 own shares held by employee benefit trust
the own shares reserve forms part of retained earnings and represents the cost of shares in spectris plc purchased in the market 
and held by the spectris plc employee benefit trust ‘ebt’ to satisfy options under the group’s share option schemes see note 27
       2008 2007 
       £m £m
at 1 january        02 03
disposals       01 01
at 31 december        01 02
the ebt holds ordinary 5p shares in spectris plc for the purpose of satisfying obligations under the 1996 executive share option 
plan for the benefit of the group’s employees the ebt held 10765 shares at 31 december 2008 2007 20780 at a cost of  
£01m 2007 £02m the market value of the ebt’s shares at 31 december 2008 was £01m 2007 £01m
the purchase of the shares on the open market is funded by loans directly from spectris plc dividend income in excess of 001p  
per share on the shares held by the ebt has been waived by the trust and is therefore not included in the group’s profit and loss 
account interest and administration costs of the ebt are charged to the profit and loss account of the company for the year
30 treasury shares
during the year the group repurchased 14 million shares 2007 89 million for a consideration of £93m 2007 £792m 21363 of 
these shares were issued to satisfy options exercised by employees which were granted under the group’s share scheme no shares 
were cancelled during the year 2007 nil 82
spectris plc annual report and accounts 2008
31 acquisitions
during the period the group acquired 100 of the share capital of viscotek corporation effective on 1 january 2008 ncode 
international effective on 1 august 2008 and the lds test and measurement business effective on 1 december 2008 the group  
also acquired the assets and liabilities of siemens’ machine vision business on 19 september 2008 and in addition a number  
of distributors in markets where a direct presence was sought the assets and liabilities acquired together with the aggregate 
purchase consideration is summarised below the profit contribution of the acquired businesses to the group’s result for the  
period was £34m group revenue and operating profit would have been £8331m and £1168m respectively had the acquisitions 
taken place on the first day of the year fair values attached to certain provisions acquired in connection with the lds business  
are provisional at the balance sheet date pending finalisation of the alignment with group policy no material changes 
are anticipated
reflecting the proximity of the lds acquisition to the year end the allocation of the residual balance of goodwill between goodwill 
and the fair value of intangible assets is yet to be finalised where the fair value of acquired intangible assets has been identified 
the residual goodwill represents the synergies that can be achieved through the integration into the group the future potential to 
develop new technology and the potential future relationships and contracts
 2008

 2007
    fair value   fair value 
   book value adjustments fair value book value adjustments fair value 
net assets acquired   £m £m £m £m £m £m
intangible fixed assets   28 224 252 56  – 56
tangible fixed assets   40  05 35 02  – 02
inventories   120 09 129 04  – 04
trade and other receivables   170  21 149 04  – 04
trade and other payables   141  33 174 –  – –
deferred tax liabilities   –  44 44 – – –
cash   41 – 41 –  – –
net assets acquired   258 130 388 66  – 66
goodwill     541   –
total consideration     929   66
adjustment for cash acquired     41   –
net consideration     888   66
analysis of cash outflow in consolidated cash flow statement
total consideration     929   66
deferred and contingent consideration to be paid in future years    29   14
cash paid including directly attributable costs     900   52
prior year acquisitions
purchase price adjustment re prior year acquisition     –   02
deferred consideration in relation to prior year acquisitions    13   06
     13   08
total cash outflow relating to acquisitions     913   60
cash acquired on acquisition     41   –
net cash outflow relating to acquisitions     872   60
notes to the accounts continued 83
spectris plc annual report and accounts 2008
financial statements governance business review overview
net assets acquired for significant 2008 acquisitions
        2008
       fair value 
      book value adjustments fair value 
net assets acquired for lds test and measurement      £m £m £m
intangible fixed assets      – 27 27 
tangible fixed assets      33  03 30 
inventories      88 14 102 
trade and other receivables      112  15 97 
trade and other payables      131 29 102 
cash      09 – 09
net assets acquired      111 52 163 
goodwill        400
total consideration        563 
adjustment for cash acquired        09
net consideration        554
acquisition of minority interest
on 21 october 2008 the group acquired a 312 investment in naneum limited for £06m in cash the group’s share of profit 
since the date of acquisition was £nil
32 contingent liabilities
royal bank of scotland
spectris plc and its uk subsidiaries are party to a cross guarantee arrangement to support trade finance facilities provided by  
the bank they also are party to a cross guarantee arrangement that allows individual subsidiaries to borrow from the bank  
on overdraft within the overall borrowing limit agreed with the bank an amount of £41m 2007 £37m was outstanding at  
31 december 2008
jp morgan chase na
spectris plc has provided a parent company guarantee to jp morgan chase na to support trade finance facilities provided by the 
bank to its subsidiaries in the usa an amount of £17m 2007 £06m was outstanding at 31 december 2008
abn amro bank nv
spectris plc has provided a parent company guarantee to abn amro bank nv to support trade finance facilities provided by the 
bank to its subsidiaries in various countries outside of the uk and usa spectris plc has also provided a parent company guarantee 
to abn amro bank nv to support overdraft and intraday facilities provided by the bank to its subsidiaries who participate in the 
crossborder euro zero balance pooling arrangement an amount of £130m 2007 £67m was outstanding at 31 december 2008
other banks
group companies have in the normal course of business provided bonds and guarantees through local banking arrangements
amounting to £52m 2007 £31m
legal
see note 23 other
33 operating lease arrangements 
      2008

  2007
     property other property other 
total commitments under noncancellable operating leases     £m £m £m £m
not later than one year     47 28 32 23
later than one year and not later than five years     109 66 117 49
later than five years     92 – 85 –
     248 94 234 72 84
spectris plc annual report and accounts 2008
notes to the accounts continued
33 operating lease arrangements continued
group companies are party to a number of operating leases mainly for plant and machinery including motor vehicles and property 
rentals the arrangements do not impose any significant restrictions on the group
during the year £91m 2007 £83m was recognised in the income statement in respect of operating lease rental payments
34 capital commitments
at 31 december 2008 the group had entered into contractual commitments for the acquisition of property plant and equipment 
amounting to £17m 2007 £69m for which provision has not been made
35 related party transactions
details of directors’ remuneration being the key management personnel are summarised in note 8 and shown in detail in the 
directors’ remuneration report on pages 37 to 43 there were no other related party transactions requiring disclosure
36 subsidiary undertakings
the following are the group’s principal subsidiary undertakings they operate mainly in the countries of incorporation all the 
subsidiaries other than intermediate holding companies are involved in the manufacture and sale of materials analysis systems  
test and measurement equipment inline instrumentation and industrial controls
spectris plc holds 100 of the ordinary share capital of the subsidiaries incorporated in the uk subsidiaries incorporated overseas 
are 100 owned through intermediate holding companies
      country of 
      incorporation
malvern instruments limited       uk
servomex group limited       uk
spectris china limited       china
brüel  kjær sound  vibration measurement as       denmark
brüel  kjær vibro as       denmark
hottinger baldwin messtechnik gmbh       germany
spectris company limited japan       japan
btg eclépens sa       switzerland
panalytical bv       the netherlands
beta lasermike inc       usa
fusion uv systems inc       usa
microscan systems inc       usa
ndc infrared engineering inc       usa
particle measuring systems inc       usa
red lion controls inc       usa
spectris inc       usa
37 post balance sheet events
after the year end a £50m fiveyear term facility was secured from the european investment bank in january 2009 under covenant 
conditions in line with existing facilities
on 6 february 2009 spectris acquired 100 of the share capital of lochard limited which extends the group’s capabilities in 
environmental monitoring systems for a consideration of aud 41m with a threeyear conditional earn out 85
spectris plc annual report and accounts 2008
financial statements governance business review overview
company balance sheet
       2008 2007 
      note £m £m
fixed assets
intangible fixed assets      40 24 –
tangible fixed assets      41 – 01
fixed asset investments      42 1980 1963
       2004 1964
current assets
debtors      43 4529 6689
cash at bank       250 126
       4779 6815
creditors due within one year
shortterm borrowing      44 260 26
other creditors      44 924 3644
       1184 3670
net current assets       3595 3145
debtors due after more than one year
debtors      45 2127 –
   
total assets less current liabilities       7726 5109
creditors due after more than one year
medium and longterm borrowing      46 3925 1060
derivative financial instruments      47 171 161
       4096 1221
provisions for liabilities and charges      48 09 12
net assets       3621 3876
capital and reserves
called up share capital      49 62 62
share premium account      50 2314 2314
merger reserve      50 31 31
capital redemption reserve      50 03 03
special reserve      50 341 341
hedging reserve      50 13 –
profit and loss account      50 883 1125
equity shareholders’ funds       3621 3876
the financial statements on pages 85 to 91 were approved by the board of directors on 24 february 2009 and were signed on its 
behalf by
clive watson
director 86
spectris plc annual report and accounts 2008
notes to the company’s accounts
38 accounting policies
the separate financial statements of the company are presented 
as required by the companies act 1985 as permitted by that 
act the separate financial statements have been prepared in 
accordance with applicable accounting standards in the united 
kingdom in accordance with the exemption provided by 
section 230 of the companies act 1985 the company has not 
presented its own profit and loss account
the company has taken the exemption available in respect of 
the requirements of frs 29 financial instruments disclosures
basis of accounting
the accounts are prepared on the historical cost basis except 
that derivative financial instruments are stated at fair value as 
described below
derivative financial instruments
the company uses derivative financial instruments to hedge the 
group’s exposure to foreign exchange and interest rate risks 
arising from operating and financing activities in accordance 
with its treasury policy it does not hold or use derivative 
financial instruments for trading or speculative purposes
crosscurrency interest rate swaps
the company takes advantage of crosscurrency interest rate 
swaps for some of its us dollardenominated private placement 
borrowings the swaps have the effect of converting fixed rate us 
dollar borrowings into fixed rate eurodenominated borrowings
the underlying us dollar borrowings are required to be presented 
separately in the balance sheet from the crosscurrency interest 
rate swaps in addition the fair value of the crosscurrency interest 
rate swap is required to be recognised in full on the balance sheet 
all changes in value are recognised in the profit and loss account
financial guarantees
where the company enters into financial guarantee contracts to 
guarantee the indebtedness of other companies within its group 
the company considers these to be insurance arrangements and 
accounts for them as such in this respect the company treats 
the guarantee contract as a contingent liability until such time as 
it becomes probable that the company will be required to make 
a payment under the guarantee
foreign currencies
transactions in foreign currencies are translated at the foreign 
exchange rate ruling at the date of the transaction monetary 
assets and liabilities denominated in foreign currencies at the 
balance sheet date are translated at the exchange rate ruling at 
that date with any exchange differences arising on retranslation 
being recognised in the profit and loss account nonmonetary 
assets and liabilities that are measured in terms of historical cost 
in a foreign currency are translated using the exchange rate at 
the date of the transaction
tangible fixed assets and depreciation
tangible fixed assets are stated at historic cost
depreciation is calculated to write off the difference between 
the cost or valuation of fixed assets and their residual value over 
their estimated useful lives on a straightline basis at the 
following rates per annum
leasehold improvements 5 years
office equipment 3 years
intangible fixed assets and amortisation
intangible fixed assets purchased by the company are capitalised 
at their cost
amortisation of intangible assets is charged to administrative 
expenses in the income statement on a straightline basis over 
the estimated useful lives of intangible assets the estimated 
useful lives are as follows
software costs 5 years
fixed asset investments
investments in subsidiaries are stated at cost less where 
appropriate provisions for impairment
trade and other receivables
trade and other receivables are stated at their amortised cost as 
reduced by appropriate allowances for estimated irrecoverable 
amounts
trade and other payables
trade and other payables are stated at amortised cost
taxation
the charge for taxation is based on the profit for the year and 
takes into account taxation deferred because of timing 
differences between the treatment of certain items for taxation 
and accounting purposes deferred tax is recognised without 
discounting in respect of all timing differences between the 
treatment of certain items for taxation and accounting purposes 
which have arisen but not reversed by the balance sheet date 
except as otherwise required by frs 19
leasing
annual payments under operating leases are charged to the 
profit and loss account on an accruals basis
postretirement benefits
the company participates in group operated defined 
contribution and defined benefit pension schemes the assets  
of the schemes are held separately from those of the company 
in independently administered funds the company is unable to 
identify its share of the group defined benefit scheme’s 
underlying assets and liabilities and therefore accounts for it  
as a defined contribution scheme the amounts charged against 
profits represent contributions payable to the schemes in respect 
of the accounting period 87
spectris plc annual report and accounts 2008
financial statements governance business review overview
sharebased payments
the fair value of equitysettled employee share option grants is calculated at grant date the resulting cost for company employees 
is charged to the income statement over the vesting period of the plans the company has also offered share options to key 
management in other group companies and this cost has been included as part of the company’s investment in subsidiaries  
the value of the charge is adjusted to reflect expected and actual levels of options that vest except where forfeiture is only due  
to share prices not achieving the threshold for vesting
cash flow statement
the company has not presented a separate cash flow statement in accordance with the exemption provided by frs 1 revised  
as its cash flows are included within the cash flows of the group as set out elsewhere in this annual report
39 employee costs and other information
employee costs including directors’ remuneration comprise
       2008 2007 
       £m £m
wages and salaries       45 46
social security costs       08 07
defined benefit pension plans       17 17
defined contribution pension plans        04 04
sharebased payment expense       08 06
       82 80
       2008 2007 
       number number
average number of employees       30 29
directors’ remuneration
further details of directors’ remuneration and share options are given in note 8 to the group financial statements and in the 
directors’ remuneration report on pages 37 to 43
auditors’ fees
fees paid to the group auditors in respect of audit services provided to the company amounted to £02m 2007 £02m
40 intangible fixed assets
         
        software 
        costs 
cost        £m
at 1 january 2008        –
additions        25
disposals        –
at 31 december 2008        25
         
amortisation        
at 1 january 2008        –
charge for the year        01
disposals        –
at 31 december 2008        01
         
net book value        
at 31 december 2008        24
at 31 december 2007        – 88
spectris plc annual report and accounts 2008
41 tangible fixed assets
      leasehold  office  
      improvements equipment total 
cost      £m £m £m
at 1 january 2008      03 07 10
additions      – – – 
disposals      – – –
at 31 december 2008      03 07 10
depreciation       
at 1 january 2008      03 06 09
charge for the year      – 01 01
disposals      – – –
at 31 december 2008      03 07 10
net book value        
at 31 december 2008      – – –
at 31 december 2007      – 01 01
42 fixed asset investments
        investments 
        in subsidiary 
        undertakings 
cost        £m
at 1 january 2008        2654
additions        17
disposals        –
at 31 december 2008        2671
provision for impairment
at 1 january 2008        691
charge for the year        –
disposals        –
at 31 december 2008        691
net book value
at 31 december 2008        1980
at 1 january 2008        1963
further details regarding the investments in subsidiaries are given in note 36 to the group’s consolidated financial statements
43 debtors
       2008 2007 
amounts falling due within one year       £m £m
amounts owed by group undertakings       4474 6669
other debtors       09 03
prepayments and accrued income       03 02
corporation tax       – 11
deferred tax asset       43 04
       4529 6689
notes to the company’s accounts continued 89
spectris plc annual report and accounts 2008
financial statements governance business review overview
44 creditors due within one year
       2008 2007 
       £m £m
shortterm borrowing    
bank overdraft       10 26
unsecured bank loans       250 –
       260 26
amounts owed to group undertakings       854 3594
other taxation and social security       02 05
corporation tax       09 –
accruals and deferred income       59 45
       924 3644
total       1184 3670
further details regarding the company’s borrowings are set out in note 20 of the group’s consolidated financial statements
45 debtors due after more than one year
       2008 2007 
       £m £m
medium and longterm debtors          
amounts owed by group undertakings       2127 –
46 creditors due after more than one year
       2008 2007 
       £m £m
medium and longterm borrowing
amounts owed to group undertakings       2216 – 
unsecured bank loans       250 –
unsecured loan notes       1459 1060
       3925 1060
further details regarding the company’s borrowings are set out in note 20 of the group’s consolidated financial statements
47 derivative financial instruments
       2008 2007 
       £m £m
crosscurrency interest rate swaps       169 161
forward exchange contracts       02 –
       171 161
further details regarding the company’s crosscurrency interest rate swaps and forward exchange contracts are set out in note 21 of 
the group’s consolidated financial statements
48 provisions for liabilities and charges
 
        £m
at 1 january 2008        12
utilised during the year        03
at 31 december 2008        09
provisions represent the directors’ best estimate of settling various potential claims against the company arising in the ordinary 
course of business 90
spectris plc annual report and accounts 2008
49 share capital
       2008
 
 2007
     number of  number of 
     shares  shares 
     million £m million £m
authorised
ordinary shares of 5p each     2100 105 2100 105
issued and fully paid
at 1 january     1250 62 1250 62
at 31 december     1250 62 1250 62
during the year no ordinary shares were issued upon exercise under share option schemes 2007 38500
share options have been granted to subscribe for ordinary shares of spectris plc full details of share options currently in issue 
including those issued during the year together with information regarding the basis of calculation of the sharebased payment 
expense is contained in note 27 to the group’s consolidated financial statements
the company recognised total expenses of £08m related to equitysettled sharebased payment transactions in 2008 
2007 £06m in addition the company recognised £10m 2007 £03m related to equitysettled sharebased transactions  
for certain employees of other group companies
50 reserves
  share  capital   profit and  
  premium merger redemption special hedging loss  
  account reserve reserve reserve reserve account total 
  £m £m £m £m £m £m £m
at 1 january 2008  2314 31 03 341 – 1125 3814
profit for the year  – – – – 13 82 69
dividends paid  – – – – – 250 250
sharebased payment expense  – – – – – 18 18
own shares treasury purchased  – – – – – 93 93
own shares ebt purchased  – – – – – 02 02
share options exercised from own shares treasury purchased – – – – – 02 02
share options exercised from shares held by employee 
benefit trust  – – – – – 01 01
at 31 december 2008  2314 31 03 341 13 883 3559
further details of the employee benefit trust are set out in note 29 of the group’s consolidated financial statements
the purpose of the merger reserve and capital redemption reserve is detailed in note 25 of the consolidated financial statements 
the special reserve was created historically following the cancellation of an amount of share premium for the purpose of writing off 
goodwill the special reserve is not distributable
notes to the company’s accounts continued 91
spectris plc annual report and accounts 2008
financial statements governance business review overview
51 reconciliation of movement in equity shareholders’ funds
       2008 2007 
       £m £m
profit for the year       69 859
dividends paid in the year       250 222
sharebased payment expense       18 09
own shares treasury purchased       93 792
own shares ebt purchased       02 16
share options exercised from own shares treasury purchased      02 29
share options exercised by issue of share capital       – 02
share options exercised from shares held by employee benefit trust     01 10
net increase in equity shareholders’ funds       255 121
opening equity shareholders’ funds       3876 3997
closing equity shareholders’ funds       3621 3876
52 pensions
certain of the company’s employees participate in the spectris pension plan a uk multiemployer defined benefit scheme  
further details of the group’s scheme are contained in note 9 to the group’s consolidated financial statements the company is 
unable to identify its share of the plan’s underlying assets and liabilities and therefore accounts for the scheme as a defined 
contribution scheme in accordance with the schedule of contributions in place for the spectris pension plan for the financial year 
ending 31 december 2008 employer contributions are 13 pa of pensionable salaries the actuary certified in 2006 that this level 
of contributions was adequate for the purposes of the minimum funding requirement contributions paid in 2008 to the spectris 
pension plan were £17m 2007 £17m and the amounts outstanding at the year end were £01m 2007 £01m contributions paid 
in 2008 to defined contribution plans were £04m 2007 £04m
53 related party disclosures
the company has taken advantage of the exemption under frs 8 related party disclosures not to disclose related party 
transactions between subsidiaries
there are no material transactions with directors and other related parties of the company except those relating to remuneration 
and share dealing disclosed in the directors’ remuneration report enclosed within this annual report
54 commitments
       land and buildings
       2008 2007 
annual commitments for operating leases expiring       £m £m
after five years       02 02
at the balance sheet date the company had no capital commitments for which provision has not been made 2007 £nil
55 contingent liabilities
there are no contingent liabilities as at the year end the cross guarantee arrangements to support trade finance facilities are stated 
in note 32 of the group’s consolidated financial statements
56 post balance sheet events
after the year end a £50m fiveyear term facility was secured from the european investment bank in january 2009 under covenant 
conditions in line with existing facilities 92
spectris plc annual report and accounts 2008
shareholder information
financial calendar
annual general meeting and interim management statement 19 may 2009
record date for 2008 final dividend 5 june 2009
2008 final dividend payable 26 june 2009
2009 interim results 25 august 2009
interim management statement 5 november 2009
2009 preliminary results  february 2010 
shareholder relations advisers
makinson cowell
financial pr advisers
fd
registrars
equiniti limited
aspect house
spencer road
lancing
west sussex
bn99 6da
the registrars provide a range of shareholder services online at
wwwshareviewcouk
share price information
the company’s ordinary shares are listed on the london stock
exchange the latest share price is available via the company’s
website at wwwspectriscom
email news service
to receive details of press releases and other announcements
as they are issued register with the email alert service on the
company’s website at wwwspectriscom
company secretary
r j stephens fcis
registered office
spectris plc
station road
egham
surrey
tw20 9np
england
tel 44 01784 470470
email infospectriscom
company registered in england no 2025003
auditors
kpmg audit plc
bankers
royal bank of scotland plc
solicitors
ashurst
brokers
rbs hoare govett ltd
merrill lynch
designed by emperor design consultants ltd
printed in england by miter press
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ecomanagement  audit scheme international standards 
minimising impacts on the environment
© spectris plc february 2009 spectris designs develops and 
markets productivityenhancing 
instrumentation and controls 
our products applications 
and services help customers 
to improve product quality 
and performance improve 
core manufacturing processes 
reduce downtime and wastage 
and reduce time to market
the purpose of the annual report is to provide information to the shareholders of spectris plc the 
company its directors employees agents and advisers do not accept or assume responsibility to 
any other person to whom this document is shown or into whose hands it may come and any such 
responsibility or liability is expressly disclaimed the annual report contains certain forwardlooking 
statements with respect to the operations performance and financial condition of the company 
by their nature these statements involve uncertainties since future events and circumstances can 
cause actual results to differ materially from those anticipated and no reliance should be placed on 
them the forwardlooking statements reflect knowledge and information available at the date 
of preparation of this annual report and the company undertakes no obligation to update these 
forwardlooking statements nothing in this annual report should be construed as a profit forecast
front cover image
the kinexus rheometer is a new platform for analysing the 
flow properties of materials designed for ease of use its 
adaptive intelligence guides users on how to operate the 
system quickly leaving them more time to investigate ways in 
which to characterise and optimise a material’s performance  
a global presence
we operate from over 160 offices around the world the map below 
shows the location of our principal group offices in the key regions 
directory of companies
materials analysis
malvern instruments 
analytical systems for materials 
characterisation from bulk powders to 
nanomaterials and macromolecules
panalytical
analytical xray equipment for industrial 
and scientific applications
particle measuring systems
microcontamination monitoring  
systems for ultraclean environments  
and manufacturing processes
test and measurement
brüel  kjær sound  vibration 
transducers sound level meters and 
analysers for sound and vibration 
measurement
hbm 
load cells transducers strain gauges 
signal conditioning and data acquisition 
systems test and measurement software 
and services
inline instrumentation
beta lasermike
noncontact laserbased dimensional 
measuring and flaw detection ultrasonic 
dimensional gauging
brüel  kjær vibro
machine condition monitoring systems 
and maintenance services
btg group 
high performance blades rods and 
equipment for metering and doctoring 
lab and online analysers and sensors  
for process control in the pulp and  
paper industry
fusion uv systems 
ultraviolet light processing technology  
for curing photosensitive inks coatings 
and adhesives
ndc infrared engineering
infrared xray isotopic and microwave 
sensors for online measurement of 
moisture composition film thickness  
and coat weight
servomex 
gas analysers gas analysis systems  
and transducers
£ 7871 m
sales from continuing businesses
£ 1183m
adjusted operating profit from continuing 
businesses
728p
adjusted earnings per share
microscan 
high speed industrial bar code scanning 
and decoding instruments
red lion controls 
operator interfaces signal conditioners 
temperature controllers counters rate 
indicators and panel meters
industrial controls enhancing  
productivity
annual report and accounts
2008
spectris plc annual report and accounts 2008
spectris plc
station road
egham
surrey
tw20 9np
england
tel  44 01784 470470
fax 44 01784 470848
infospectriscom
wwwspectriscom


Summary:
 02
spectris plc annual report and accounts 2008
chairman’s statement
john hughes chairman
introduction
spectris achieved a good performance in 2008 in spite of an 
economic environment which deteriorated during the second 
half of the year sales for the full year increased by 19 to  
£7871 million compared with £6598 million in 2007 on  
a constant currency basis sales increased by 7 of which 
approximately 4 was from acquisitions 
operating profit increased by 13 to £1183 million 2007 
£1043 million on a constant currency basis operating profit 
increased by 2 of which approximately 3 was from 
acquisitions operating margins were 150 compared with 
158 in the prior year increased expenditure on research  
and development led to a reduction of 04 percentage points  
pp in operating margins acquisitions resulted in a reduction 
of 02pp and the dilutive effect of foreign exchange reduced 
margins by 01pp profit before tax increased by 12 to  
£1101 million 2007 £980 million and earnings per share 
increased by 25 to 728 pence 2007 581 pence the effective 
tax rate reduced by 4pp to 24 as a result of a taxefficient 
intercompany financing structure and the recognition of tax 
losses brought forward in the uk
cash conversion was strong with 86 of operating profit 
converted to operating cash capital investment was in excess  
of depreciation due to investment in a new technical centre for 
one of our businesses in the uk and investment in it system 
upgrades net debt at the end of the period was £1621 million 
compared with £773 million at the end of december 2007 the 
increase is due to the cost of acquisitions capital expenditure 
and the weakening of sterling net interest costs were  
£82 million giving an annualised cover of 144 times
the group’s financial position is strong at 31 december 2008 
the group had cash of £64 million committed facilities of 
£257 million of which £217 million was utilised and 
uncommitted facilities of £41 million of which £10 million  
was utilised since the year end an additional £50 million 
fiveyear loan facility has been secured
“ the group is in a strong financial and 
strategic position and we consider that the 
actions we are taking are appropriate in the 
near term whilst retaining in our businesses 
the resources to support growth as market 
demand recovers”
  two businesses were divested in 2007 in order to aid understanding of the 
results for the ongoing business references in the chairman’s statement chief 
executive’s statement operating review and financial review to the sales and 
operating profit results in the 2007 comparatives exclude the results of these 
two businesses unless otherwise stated figures for operating profit profit 
before tax and earnings per share are adjusted measures – for explanation of 
adjusted figures and reconciliation to the statutory reported figures see note 3 03
spectris plc annual report and accounts 2008
business review governance financial statements overview
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
sales from continuing businesses
£m
6426 6598 7871 5992
08
6141
05 06 07 04
adjusted operating proﬁt from 
continuing businesses
£m
832 1043 1183 715
08
646
05 06 07 04
adjusted earnings per share 
pence
437 581 728 362
08
316
05 06 07 04
dividend per share
pence
175 210 234 158
08
145
05 06 07 04
financial highlights
the board proposes to pay a final dividend of 170 pence which 
combined with the interim dividend of 64 pence gives a total  
of 234 pence 2007 210 pence an increase of 11 the dividend 
will be paid on 26 june 2009 to shareholders on the register on  
5 june 2009
outlook
the current market conditions continue to be challenging and  
offer very limited visibility we have taken and continue to take 
timely actions to reduce operating costs and should the outlook 
deteriorate further we will not hesitate to take additional steps as 
a result of the phasing of restructuring costs and their associated 
benefits the balance between first and second half year profitability 
is expected to be materially different from past years the group is 
in a strong financial and strategic position and we consider that  
the actions we are taking are appropriate in the near term whilst 
retaining in our businesses the resources to support growth as 
market demand recovers
john hughes
chairman
lasair iii
with its larger infrared touchscreen 
simpler user interface and quieter 
operation than competitive 
instruments the lasair iii portable 
particle counter also enables faster 
detection of particle contamination in 
cleanrooms improving productivity for 
customers in the semiconductor and 
pharmaceutical industries