productivity
annual report and accounts 2007
enhancing contents
1 financial highlights
2 chairman’s statement
3 chief executive’s statement
4 business review
24 corporate social responsibility
28 board of directors
30 directors’ report
35 directors’ remuneration report
42 auditors’ report
43 consolidated income statement
43 consolidated statement of recognised
income and expense
44 consolidated balance sheet
45 consolidated cash flow statement
46 notes to the accounts
78 company balance sheet
79 notes to the company’s accounts
85 shareholder information
our businesses are leaders in their specialised
markets with strong brands and marketleading
products we work with multinational bluechip
customers in a diverse range of end markets with
metals minerals and mining pharmaceuticals
pulp and paper and transportation primarily
automotive and aerospace the principal 
industry sectors
our solutions and services are increasingly applied
to help our customers use energy and resources
more efficiently this enables them to both
improve their productivity and limit the impact of
their products or processes on the environment
spectris at a glance
our businesses are organised into four segments
which reflect the applications and end user
industries we serve 
materials analysis
test and measurement
inline instrumentation
industrial controls
for more information about our companies our
technologies and the markets we serve see the
business review on page 4
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 spectris plc annual report and accounts 2007 1
dividend per
share pence
1335
145
158
175
210
07 06 05 04 03
adjusted earnings 
per share pence
321
316
362
437
581
07 06 05 04 03
adjusted operating
profit £m
598
646
735
857
1048
07 06 05 04 03
 
sales
£m
5680
6141
6559
6845
6684
07 06 05 04 03
strong performance – sales profits and cash flow all increase
growth across all sectors and major geographies
operating margins of 158
business groupings aligned with applications and 
end user industries
strategic focus on platforms for growth
change
2007 2006 change at cer
sales from continuing businesses

£m 6598 6426 27 65
adjusted operating profit from 1043 832 25 35
continuing businesses

£m

adjusted operating profit £m

1048 857 22
adjusted profit before tax £m

980 763 28
adjusted earnings per share pence

581 437 33
dividend pence 210 175 20
statutory
sales £m 6684 6845 24
profit before tax £m 1181 856 38
basic earnings per share pence 709 494 44
financial highlights
 continuing businesses exclude businesses divested  
 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 related tax effects and other tax items which do not form part of the underlying tax rate
 constant exchange rates 2 spectris plc annual report and accounts 2007
spectris performed well in 2007 with sales profits and 
earnings per share all increasing compared with the prior 
year after adjusting for disposals and acquisitions t otal group
sales were £6684 million compared with £6845 million in the
prior year excluding the effect of disposals during the first 
half of 2007 sales from continuing businesses increased by 
27 to £6598 million 2006 £6426 million or 65 at
constant currencies
t otal group adjusted operating profit increased by 
22 to £1048 million 2006 £857 million operating
margins increased by 29 percentage points to 158 of
sales profit before tax increased by 28 to £980 million 
2006 £763 million and earnings per share increased by 33
to 581p 2006 437p operating cash conversion was strong
with 99 of operating profit converted to operating cash
net proceeds from disposals were £298 million the buyback 
of 89 million shares during 2007 absorbed £792 million with
the result that net debt at the end of the year was £773 million
compared with £717 million at the end of december 2006
net interest costs were £67 million giving an annualised cover
of 156 times
the board proposes to pay a final dividend of 1525p which
combined with the interim dividend of 575p gives a total of
210p 2006 175p an increase of 20 the dividend will be
paid on 20 june 2008 to shareholders on the register at 
30 may 2008
board changes
as previously announced andrew given retired at the may 2007
agm and john hughes joined the board as a nonexecutive
director in june stephen harris business group director
resigned from the board on 31 january 2008 i shall be standing
chairman’s statement
down at the may 2008 agm as announced in november 2006
after twenty years with the company and will be succeeded as
chairman by john hughes t o him to the rest of the board and
to everyone at spectris i convey my thanks and best wishes for
continuing success and prosperity
outlook
2007 was a successful year in which the company delivered 
a return on sales in excess of 15 our broad spread of
geographies and end user markets and strong product offering
ensure that we are well placed to maintain good progress despite
an economic outlook which is less certain the current year has
started well with encouraging prospects across the multiple
industries and regions we serve
john poulter
chairman
“2007 was a successful year in which the
company delivered a return on sales in
excess of 15”
 unless otherwise stated all sales and operating profit figures in the narrative are on a
continuing businesses basis and exclude the businesses divested 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 spectris plc annual report and accounts 2007 3
spectris delivered a strong performance in 2007 with sales
profits operating margins and cash flow from continuing
businesses all improving compared with the prior year
at constant currencies sales increased by 65 including 
1 from acquisitions and operating profit increased by 35
the major geographic regions again showed growth during
2007 the strongest growth was seen in asia where sales
increased by 7 at constant currencies led by china sales in
europe increased by over 3 at constant currencies sales in
north america increased by 6 helped by the acquisition of
the ipi business acquired in 2006 sales in the rest of the world
increased by 32 reflecting the growing importance of
industrialising markets such as russia south america and africa
operating margins improved to 158 2006 129 as the
restructuring and other business improvement actions taken in
prior years continued to deliver results
strategy
our objective is to deliver shareholder value over the long term
by supplying productivityenhancing solutions for our
customers our strategy is based on five elements strengthening
market positions through innovation increasing regional
expansion with the focus on emerging markets growing existing
businesses through acquisition focusing on operational
excellence building our presence in key strategic growth areas
in order to give better clarity to our operations we have 
realigned the activities of our business segments to reflect 
more closely the applications and end user industries we serve
going forward our businesses will be reported in four segments
these are materials analysis t est and measurement inline
instrumentation and industrial controls figures for prior 
years have been restated accordingly figures at group level
and key performance indicators are not affected by these
changes for comparative purposes the key results for 
the group based upon the prior segmentation are shown 
in note 3 the segments are described in detail in the 
business review
two acquisitions were made during the second half of
the year on 2 july particle measuring systems acquired the
distribution activities of quest t echnologies in singapore giving
it an increased presence in asia on 1 november servomex
acquired contrôle analytique a leading provider of specialist 
gas analysis products based in canada the acquisition enables
servomex to increase its product offering in the global industrial
gas market and also provides opportunities for the company 
to meet the needs of customers in the semiconductor market
research and development expenditure increased to
£452 million which represents 7 of group sales enabling the
businesses to maintain their leading market positions and
continue to meet the productivity challenges their customers face
looking ahead
over the longer term we are well positioned both in terms 
of geographic exposure and end user markets we have a 
clearly defined strategy which will deliver both topline and
bottomline performance
john o’higgins 
chief executive
chief executive’s statement
“over the longer term we are well
positioned both in terms of geographic
exposure and end user markets” 4 spectris plc annual report and accounts 2007
group overview
spectris designs develops and markets productivity
enhancing instrumentation and controls our products
applications and services help customers to improve
product quality and performance improve manufacturing
processes reduce downtime and wastage and reduce
time to market 
we operate on a global scale 
with sales and service offices
around the world
we operate across a diverse
range of markets
business review contents
group overview 4
strategy and objectives 5
key performance indicators 7
operating review 8
 materials analysis 10
 test and measurement 12
 inline instrumentation 14
 industrial controls 16
financial review 18
principal risks and uncertainties 21
resources 23
corporate social responsibility 23
business review
metals  mining
transport
pulp  paper
pharma life sciences
machine building
semicon telecoms
 electronics
rd
distribution
other
12
11
11
9
9
8
8
6
21
energy 
utilities
5
stability through the cycle
2007 approximate sales by end user market 
continuing businesses
uk
europe
north america
asia
rest of world
4
39
23
28
6
geographic diversity 
2007 sales by destination 
continuing businesses spectris plc annual report and accounts 2007 5
we operate across a diverse range of markets
our businesses are leaders in their specialised markets with
strong brands and marketleading products our customers 
are multinational bluechip customers in a diverse range of
end markets with no individual market representing more than
12 of sales and no individual customer representing more than
1 metals minerals and mining pharmaceuticals pulp and
paper and transportation primarily automotive and aerospace
are the principal industry sectors 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
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 industrialising
regions in the rest of the world we also add value for customers
by providing aftermarket services for example supplying
consumables calibration consultancy and support services
this area is increasing in importance and currently accounts 
for around one quarter of our business
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
our strategy is based on five key elements
strengthening market positions through innovation
we invest around 67 of sales each year in rd 7 in 2007
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 the focus on 
emerging markets
we seek to grow our businesses around the world with
particular emphasis on industrialising markets such as china
india and south 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 business
by pursuing an active but disciplined approach to bolton
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
strategy and objectives
our objective is to deliver shareholder value over the 
long term by supplying productivityenhancing solutions 
for our customers 6 spectris plc annual report and accounts 2007
building our presence in key strategic growth areas
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
t o meet the challenge of delivering successfully across a diverse
range of customers markets and geographies 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 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 needs high calibre employees including
qualified scientists applications engineers and technicians
in november servomex acquired contr

ole
analytique a leading provider of specialist
gas analysis products based in canada
in july particle measuring systems
acquired the distribution activities 
of quest technologies in singapore
business review continued
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
sets the strategy and drives and monitors its implementation
in addition to setting and monitoring the group’s overall policies
and values the centre provides 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 spectris plc annual report and accounts 2007 7
1 sales 
we aim to achieve yearonyear growth in sales which excludes
the effects of currency translation and divestments
in 2007 total sales for continuing businesses were £6598 million
2 return on sales
return on sales is defined as adjusted operating profit as a
percentage of sales from continuing businesses our aim is
to sustain or improve margins over time
in 2007 return on sales for continuing businesses was 158
4 earnings per share 
we aim to achieve growth in adjusted earnings per share
adjusted earnings per share in 2007 was 581p
3 cash conversion
we continue to focus on cash generation with the target of
delivering 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
in 2007 cash conversion was 99
key performance indicators
we monitor progress against our objectives 
via four key performance indicators
05
06
07
59
80
65
sales growth continuing businesses 
at constant currencies 
05
06
07
362
437
581
eps pence
05
06
07
107
107
99
cash conversion as reported 
05
06
07 158
129
119
return on sales continuing businesses  8 spectris plc annual report and accounts 2007
sales
32
profit 
34
sales
32
profit 
25
sales
30
profit 
33
sales 6
profit 
8
materials analysis provides a wide range of analytical instrumentation and
systems for particle and material characterisation applications are typically
in batch process manufacturing industries and research and development
laboratories industries served include semiconductor pharmaceuticals and
life sciences with applications also in metals minerals and mining
materials analysis
industrial controls supplies automation and controls for general
manufacturing processes products include bar code scanners panel
meters human machine interfaces industrial controllers and networking
products
industrial controls
inline instrumentation provides process analytical solutions asset
monitoring and control gauging and online controls for both primary
processing industries oil and gas energy generation petrochemicals pulp
and paper and the converting markets plastics rubber film
inline instrumentation
test and measurement supplies test and measuring equipment for research
and development principally to the aerospace and automotive industries
further applications are in consumer electronics and the environmental
monitoring market
test and measurement
business review continued
operating review
spectris comprises four business segments which reflect
the applications and end user industries we serve spectris plc annual report and accounts 2007 9
malvern
instruments
analytical systems 
for materials
characterisation from
bulk powders to
nanomaterials and
macromolecules
panalytical
xray analytical
equipment for
industrial and
scientific applications
particle measuring
systems
microcontamination
monitoring systems
for ultraclean
environments and
manufacturing
processes
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
beta lasermike
noncontact laser
based dimensional
measuring and flaw
detection ultrasonic
dimensional gauging
brüel  kjær vibro
machine condition
monitoring systems
and maintenance
services
btg group
instruments coating
and creping
technology for 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
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
our businesses are leaders in the markets they serve
with strong brands and marketleading products 10 spectris plc annual report and accounts 2007
overview
materials analysis provides a wide range of analytical
instrumentation and systems for particle and material
characterisation the companies in this segment are malvern
instruments panalytical and particle measuring systems
these businesses generally sell directly to global end user
customers and provide aftermarket services such as technical
support instrument calibration and replacement consumables
applications are typically in batch process manufacturing
industries and research and development laboratories
industries served include semiconductor pharmaceuticals
and life sciences with applications also in metals minerals
and mining the total market for materials analysis
instrumentation is estimated to be around £9 billion
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 demand from the growth in new
molecular and material sciences where the equipment is used
to analyse and characterise materials and structures in the
development of new products
malvern’s zetasizer nano particle measurement system is being
used by speciality chemical manufacturers to develop innovative
lacquers for the paints and coatings industry incorporating
nanosized ceramic particles these lacquers offer greater scratch
resistance and improved gloss compared with conventional
paints and are particularly attractive to the automotive
industry the zetasizer nano measures both particle size and
zeta potential particle size correlates directly with the visual
aspects of paint performance such as hue gloss and opacity
and zeta potential is a critical variable when determining
product stability as the performance of paints can be affected
by sedimentation during storage 
improving product performance
business review continued
materials analysis
metals minerals
 mining
pharmaceuticals 
life sciences
rd
semicon telecoms
  electronics
33
22
17
10
18
2007 approximate sales by end user market 
other
europe
north america
asia
rest of world
2007 sales by destination 
35
23
34
8 spectris plc annual report and accounts 2007 11
review of operations
sales in materials analysis increased by 4 in 2007 to 
£2138 million and by 8 at constant currencies operating
profit increased by 15 to £348 million and operating 
margins improved by 16 percentage points to 163
restructuring charges were £01 million compared with 
£05 million in the prior year
the metals and mining industries continued to grow
particularly in australia south america and southern africa
benefiting malvern and panalytical malvern’s inline particle
characterisation products saw strong growth in areas such as
cement and print toners as the productivity benefits achieved by
existing customers led them to extend the use of these products
into their other facilities
demand from the pharmaceutical industry continued to be
strong malvern’s recently launched morphologi g3 product
an automated particle characterisation system has been
positively received by large pharmaceutical manufacturers
with a significant number of orders already placed particle
characterisation is critical to the pharmaceutical industry from
protein size and conformation analysis at the discovery stage
through to online analysis during manufacture both malvern
and panalytical have seen good growth for their
instrumentation from emerging regions such as india and
china where the establishment of rd and production centres
by leading pharmaceutical manufacturers is increasing as is the
production of drugs by generic manufacturers at particle
measuring systems good growth in contamination detection
systems for the pharmaceutical industry compensated for
cyclically weaker demand in the semiconductor industry
investment in research and development continued in the
semiconductor industry benefiting panalytical during the year
particle measuring systems launched the airsentry ii product
for contamination monitoring in the semiconductor and
electronics industries this product features a patented ion
mobility spectrometry technique and is used for realtime
monitoring of airborne molecular contamination a critical
factor in semiconductor processing and hard disk drive and
liquid crystal display manufacturing
antarctica is often thought of as the world’s last unspoilt wilderness
but unfortunately this is no longer the case contaminated waste
sites left behind from abandoned research stations are spreading
into environmentally sensitive areas in a major programme of
remediation the australian antarctic program is using panalytical’s
minipal spectrometer at the abandoned casey station to detect soil
contaminants mainly heavy metals polluting the soil and melt
water the data obtained has classified around 1000 tonnes of waste
soil for disposal and validated the satisfactory clean up of the site
reducing environmental impact  12 spectris plc annual report and accounts 2007
overview
t est and measurement supplies test and measuring equipment
for research and development principally to the aerospace
and automotive industries further applications are in consumer
electronics and the environmental monitoring market the
companies in this segment are brüel  kjær sound and
vibration and hbm products include sensors and controls for
noise vibration weight and stress measurement data acquisition
hardware and software and advanced data analysis applications
services such as consultancy and instrument calibration and
repair are also offered the general industrial test and
measurement market is estimated at around £2 billion
market drivers
product testing and quality control are the principal drivers
for demand in the t est and measurement segment 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 that everincreasing
environmental safety and efficiency targets are complied with
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
as portable audio devices become increasingly popular concern 
is growing over potential damage to people’s hearing particularly 
in children from loud noise through headphones or earphones
european standard en 50332 sets a limit for the maximum sound
output allowed brüel  kjær’s head and torso simulator is used 
by manufacturers to measure the full volume level from the audio
player at the eardrum with the help of ear simulators this ensures
that their products comply with the standard reducing the risk of 
ear damage
business review continued
test and measurement
europe
north america
asia
rest of world
58
12
24
6
2007 sales by destination 
transportation
machine building
environment
semicon telecoms
 electronics
rd
other
32
24
8
11
7
18
2007 approximate sales by end user market 
developing new products review of operations
sales in test and measurement increased by 3 in 2007 to 
£2075 million and by 5 at constant currencies operating
profit increased by 39 to £262 million and operating 
margins improved by 33 percentage points to 126
restructuring charges were £01 million compared with 
£21 million in the prior year
demand from the automotive industry continued to grow
particularly in europe as manufacturers maintained their new
model development programmes and endeavoured to meet the
challenge of testing prototypes in ever shorter time frames
brüel  kjær increased sales to the leading automotive
manufacturers and also grew their support and calibration
services offering in september hbm launched the quantumx
data acquisition system for test and measurement markets
particularly the automotive and aerospace markets and a
significant order has already been received from the bmw
group for the new engine gearbox and power train test 
stands being developed at their research and innovation 
center in munich
in the aerospace industry the increased use of new carbon
fibre composite materials in lightweight aerospace structures is
setting new demands for structural testing and stress analysis
benefiting hbm
in environmental monitoring brüel  kjær’s airport 
noise monitoring system was selected by the metropolitan
washington airports authority serving reagan national
airport and washington dulles international airport the
company also installed an airport noise and flight track
monitoring system at zurich airport and noise monitoring
systems in several cities in china 14 spectris plc annual report and accounts 2007
overview
inline instrumentation provides process analytical solutions
asset monitoring and control gauging and online controls for
both primary processing industries oil and gas energy
generation petrochemicals pulp and paper and the converting
markets plastics rubber film the companies in this segment
are beta lasermike brüel  kjær vibro btg fusion uv
systems ndc infrared engineering and servomex these
businesses sell directly to global end user customers and systems
integrators and the majority of sales are for new and upgraded
production facilities all businesses provide aftermarket services
the global market for inline instrumentation is estimated to be
in excess of £1 billion
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 higher oil prices have resulted in energy
generation expansion and efficiency to meet the global demand
for refining and petrochemical products at the same time
increasing power costs have led energyintensive industries 
such as pulp and paper to install new instrumentation as they
seek production efficiencies
catastrophic machine failure was avoided at a major liquefied
natural gas plant in the middle east when brüel  kjær vibro’s
remote surveillance service successfully diagnosed a fault on a
turbine whilst the plant monitoring specialists were on holiday over
christmas the plant uses brüel  kjær vibro’s compass system with
a remote connection for predictive maintenance the high vibrations
on the machine spotted by an engineer at the plant were
investigated remotely and a developing fault was identified just 
one day before the sensors were overloaded
business review continued
inline instrumentation
reducing downtime  
pulp  paper
converting
energy
other
36
29
12
23
2007 approximate sales by end user market 
europe
north america
asia
rest of world
39
28
27
6
2007 sales by destination  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 with the requirement to monitor gas emissions
and other harmful substances in order to comply with increased
health and safety regulation
review of operations
sales in inline instrumentation increased by 2 in 2007 to
£2002 million and by 6 at constant currencies operating
profit increased by 32 to £347 million and operating margins
improved by 39 percentage points to 173 restructuring
charges were £07 million in 2007 compared with £51 million
in the prior year
investment in capitalintensive facilities in the continuous
process industries was strong in the pulp and paper industry
the need to reduce production costs and become more energy
efficient has led to a shift in production facilities from the west
to regions such as south america and asia this has benefited
btg particularly the duroblade business where in response to
the industry focus on paper quality the company has moved
from producing ceramic blades to developing blades tailored for
advansa is europe’s largest manufacturer of pure terephthalic acid
pta a key constituent of polyester and an intermediate in the
production of plastics to meet increased global demand the uk
plant has recently been upgraded and annual production of pta has
increased by around 100000 tonnes a servomex 2200 process
oxygen analyser has been installed as part of a functional safety
system to monitor the oxygenenriched air used in the reactor to
increase production of pta if the level is too high it could cause an
explosive atmosphere to form
improving productivity   
different types of paper applications in the past two years
btg has launched a number of new products for metering 
and doctoring solutions for specific coating processes and is 
a recognised innovator in this market
good demand in the energy and petrochemical markets
benefited brüel  kjær vibro and servomex as producers
expanded their processing facilities in the light of higher oil
prices brüel  kjær vibro received a number of high value
orders from oil and gas customers for its condition monitoring
systems at servomex demand for gas analysers was strong in
the hydrocarbon business in north america and canada and in
the industrial gas business in europe and the middle east on 
1 november servomex acquired contrôle analytique a leading
provider of specialist gas analysis products based in canada
enabling the company to increase its product offering in the
global industrial gas market
in the converting industry fusion uv systems ndc and
beta lasermike all saw good sales growth fusion uv systems
benefited from continued growth in the flat panel display
market one of the fastestgrowing sectors in the electronics
industry as the quality and size of flat panel televisions increases
fusion’s uv technology is used to cure the antireflective
functionalised film applied to the screen good demand from
the converting market in china benefited both beta lasermike
and ndc in their respective markets
spectris plc annual report and accounts 2007 15 16 spectris plc annual report and accounts 2007
overview
industrial controls supplies automation and controls for general
manufacturing processes the companies in this segment are
microscan and red lion controls which supply bar code
scanners panel meters human machine interfaces industrial
controllers and networking products this segment sells
indirectly to end users via distributors as well as directly to
original equipment manufacturers oems with a significant
proportion of repeat business from existing customers the total
market for industrial controls is estimated to be in excess of
£10 billion
market drivers
manufacturing automation is growing in importance as
customers compete in an increasingly global environment where
improving efficiency and reducing unit costs is key to survival
another significant factor in the demand for 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 bar codes is a
regulatory requirement
the hoover dam is one of north america’s largest hydroelectric
facilities generating more than 4 billion kilowatthours a year –
enough to serve 13 million people the control room which runs 
a 24hour operation is critical to the efficient functioning of the
facility red lion’s panel meters are used on a recentlyinstalled
dynamic mapboard to monitor generators water levels and
additional system components replacing the previous video
monitoring system which was not sufficiently reliable the 77
integrated panel meters deliver realtime readouts providing
“systems at a glance” status information which allows operators 
to monitor power flow and perform preventative maintenance 
when needed
improving performance
business review continued
industrial controls
distribution
semicon electronics
 telecoms 
pharmaceuticals
other
82
7
4
7
2007 approximate sales by end user market 
europe
north america
asia
1 rest of world 
23
63
13
2007 sales by destination  spectris plc annual report and accounts 2007 17
review of operations
sales in industrial controls were £383 million in 2007
compared with £389 million in 2006 sales increased by 6 
at constant currencies operating profit increased by 10 to 
£86 million and operating margins improved by 24 percentage
points to 225
microscan saw strong sales growth in europe and asia
in part due to the increasing move of electronics assembly
operations to asia particularly china taiwan and korea
the company launched the quadrus mini velocity scanner
the world’s fastest mini imager which can read up to 45 bar
codes per second
red lion controls also grew sales internationally with its
human machine interface and data station products proving
particularly successful human machine interfaces are being
used increasingly in industrial applications displacing
traditional analogue displays due to the increased operational
data and better interfacing with other plant systems they are 
able to provide 18 spectris plc annual report and accounts 2007
financial review
introduction
spectris uses adjusted figures as key performance measures in
addition to those reported under ifrs adjusted figures are
stated before 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
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
the spectrum and ircon businesses were divested in
february 2007 and june 2007 respectively as described further
below the results of these two businesses are not considered to
be sufficiently material to be presented as discontinued
operations under ifrs however in order to aid understanding
of the results for the ongoing business references below to the
sales and operating profit results for “continuing businesses”
exclude the results of these two businesses and the business sold
in april 2006 arcom
operating performance
2007 2006 increase
decrease
total group
sales £m 6684 6845 24
operating profit £m 1048 857 22
operating margin 157 125 32pp
continuing businesses
sales £m 6598 6426 27
operating profit £m 1043 832 25
operating margin 158 129 29pp
t otal group sales decreased by 24 13 increase at
constant currencies and sales in continuing businesses increased
by 27 65 at constant currencies the yearonyear impact 
on sales from acquisitions acquired in 2006 and 2007 was
approximately £68 million or 1 of sales
adjusted operating profit rose by 22 overall 32 at
constant currencies and by 25 35 at constant currencies 
in continuing businesses with operating margins improving
from 125 to 157 overall and from 129 to 158 on a
continuing businesses basis this growth in operating profit was
driven by the increase in sales an increase in restructuring
benefits a decrease in restructuring costs and good cost control
the yearonyear impact on profits from acquisitions was
approximately £13 million or 1 of profits
net interest costs including ias 19 pension charges but
excluding derivative fair value movements reduced from 
£94 million to £68 million after taking account of lower
interest costs adjusted profit before tax increased by 28 
from £763 million to £980 million
unadjusted operating profit after including goodwill
impairment charges of £nil 2006 £12 million and acquisition
related intangible asset amortisation of £19 million 
2006 £18 million increased by 24 from £827 million to
£1029 million
unadjusted profit before tax increased by 38 from 
£856 million to £1181 million in addition to goodwill
impairment charges acquisitionrelated intangible asset
amortisation charges and profit on disposal of businesses
the 2007 unadjusted result includes an unrealised gain of
£30 million on the group’s crosscurrency interest rate swaps
2006 unrealised gain of £28 million
acquisitions and disposals
during the year two of the group’s businesses made acquisitions
the total consideration including acquisition expenses and net
debt acquired as well as deferred and contingent consideration
expected to be paid in future years was £66 million the largest
of these acquisitions took place close to the end of 2007 these
acquisitions contributed £06 million of sales during the year
prior year acquisitions contributed £62 million
in february 2007 spectris sold the spectrum business to
illinois t ools works inc and in june 2007 the ircon business to
fluke electronics corporation for total net proceeds after
taking account of transaction costs of £298 million giving rise
to a profit on disposal of £190 million 2006 £95 million
t axation
the effective tax rate on profits was 280 2006 288
compared with the weighted average statutory tax rate of 323
2006 321 the group benefited from utilising brought
forward tax losses which had not previously been recognised on
the balance sheet and from the favourable closure of prior year
tax returns the weighted average statutory tax rate is expected
to reduce in future by approximately two percentage points in
line with reduced corporate tax rates on profits in several
countries where the group operates principally germany
business review continued 2007 2006
nonoperating cash flow £m £m
tax paid 238 215
net interest paid 63 112
dividends paid 222 202
acquisitions 60 136
disposals 298 133
share buyback 792 –
exercise of share options 41 53
purchasesale of own shares by employee 16 09
benefit trust
exchangeother 41 37
total nonoperating cash flow 1093 433
operating cash flow 1037 915
movement in net debt 56 482
cash conversion of operating profit to operating cash was
99 2006 107 this was achieved mainly through continued
control of working capital the year end working capital
expressed as a percentage of sales reduced from 148 to 142
average working capital expressed as a percentage of sales
reduced from 137 to 135
capital expenditure during the year equated to 19 of sales
2006 15 and at £127 million 2006 £105 million was
97 of depreciation 2006 80
the level of tax paid in 2007 was higher than in 2006 due
primarily to the increase in profits
overall net debt increased by £56 million 2006 reduction
of £482 million from £717 million to £773 million interest
cost excluding the financing charge arising from ias 19 was
covered by adjusted operating profit 156 times 2006 94 times
providing significant headroom over and above banking
covenants which require a minimum of 3 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
the group’s principal borrowings relate to its 2000 and 
2003 us private placement loan notes the 100 million 2003
us private placement has been swapped into eurodenominated
borrowings using a crosscurrency interest rate swap
at the year end 96 of group borrowings were at fixed
interest rates 2006 97 the ageing profile at the year 
end showed that 3 of debt is due to mature within one year
2006 4 31 of debt is due to mature in between one and
five years 2006 31 and the remaining 66 in more than 
five years 2006 65
whilst the effective tax rate is expected to move closer to the
weighted average rate over time it is not expected to increase
substantially in the near future
earnings per share
adjusted earnings per share increased by 33 from 437p to
581p reflecting the net impact of a 28 increase in adjusted
profit before tax and the reduced tax rates
basic earnings per share increased by 44 from 494p to
709p the differences between the two measures are shown in
the table below
2007 2006
pence pence
basic earnings per share 709 494
goodwill impairment charges and acquisition 16 24
related intangible asset amortisation
profit on disposal of businesses 156 76
unrealised changes in fair value of 24 23
financial instruments
tax effect of the above and other tax items that 36 18
do not form part of the underlying tax rate
adjusted earnings per share 581 437
the weighted average number of shares outstanding 
during the year decreased from 1243 million to 1216 million
this decrease arose largely as a result of the share buyback
programme
cash flow
2007 2006
operating cash flow £m £m
adjusted operating profit 1048 857
add back depreciation 131 132
working capital movementother 15 31
net cash flow from operating activities before 1164 1020
capital expenditure
capital expenditure 127 105
operating cash flow 1037 915
cash conversion 99 107
spectris plc annual report and accounts 2007 19 20 spectris plc annual report and accounts 2007
share buyback
during 2007 the group purchased 89 million shares for a total
cash consideration of £792 million and after the year end
acquired a further 14 million shares for a total consideration 
of £93 million before announcing its intention to stop the 
buyback on 22 february 2008
currency
the group has both translational and transactional currency
exposures translational exposures arise on the translation 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 the euro and the
danish krone the table below shows the key average exchange
rates during 2007 and 2006 translational currency exposures are
not hedged
2007 2006
average average
us  200 184
euro 146 147
yen 236 214
t o demonstrate the currency exposures faced by the group
the chart opposite shows the differences between the group’s
consolidated revenues and costs for each of the major currencies
forward exchange contracts are used to hedge forecast sale
transactions where there is reasonable certainty of an exposure
at 31 december 2007 approximately 61 of the estimated 
us dollar and japanese yen exposures for 2008 were hedged
using forward exchange contracts
defined benefit pension schemes
operating profit includes a defined benefit pension scheme
current service charge of £09 million 2006 £08 million
the net pension liability in the balance sheet before taking
account of the related deferred tax asset has reduced to 
£111 million 2006 £188 million largely as a consequence of
cash contributions into the schemes and actuarial gains on the
scheme assets during 2007 the group made cash contributions
into the defined benefit pension scheme amounting to 
£31 million 2006 £33 million
clive w atson
group finance director
business review continued
  dollareuro categories include tracking currencies
 costs include interest
 euro £ yen other
244
261
173
249
58
75
48
20
57
53
total sales £668m
total costs £570m
pbt £98m
sales
costs  spectris plc annual report and accounts 2007 21
•
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
•
there is a group accounting and policies manual which 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
the necessary actions are taken by the audit committee to
remedy any failings or weaknesses identified by its review 
of the internal control system
•
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 thus 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 is limited 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
principal risks and uncertainties
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
following publication in october 2005 by the financial
reporting council of the updated guidance for directors on
internal control “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 an
experienced internal auditor assists the head of internal audit
with internal control reviews across the group
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
•
risk assessment and evaluation for each business unit takes
place as an integral part of the annual strategic planning cycle
having identified the principal risks to achievement of their
strategic business objectives each business unit is required to
document the management and mitigating actions in place
and proposed
•
the principal risks identified during the annual strategic
planning cycle and the effectiveness of the management and
mitigating actions in place are 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 22 spectris plc annual report and accounts 2007
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 we endeavour to reduce this risk
by ensuring that the development of new products 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 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 however 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 customers’ product delivery and
service requirements the company is also exposed to the risk
that some of the components it sources particularly for custom
built 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 inter
company 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
in order to ensure adequate liquidity the group maintains
sufficient lines of credit to cover expected cash requirements
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
business review continued spectris plc annual report and accounts 2007 23
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 head of internal audit
resources
the company’s key resources include
• the skills and expertise of our people
• our technology
• our relationships with customers
people
spectris employs around 5500 people in 150 offices throughout
the world the success of the company is dependent upon the
abilities of its employees we recruit high calibre people with 
a high proportion of employees qualified at or above degree
level and are committed to providing them with the resources
and working environment they require to achieve the highest
standards in 2007 on average 3000 people were employed in
production and engineering with 2000 in sales and marketing
and 500 in administrative functions further information on 
our employees and on their recruitment training and
development is set out in the corporate social responsibility
statement on page 24
t echnology
as mentioned above we invest significantly in research and
development to develop new products and applications we have
technology centres and applications laboratories around the
world and our businesses are leaders in their markets providing
customised solutions to customers in all locations
customers
we sell productivityenhancing instrumentation and services 
to a large number of customers around the world we have
developed close working relationships with many of our
customers and in many instances involve them in the
development of new products
corporate social responsibility
spectris is committed to creating business growth whilst
ensuring that the impact on the environment is minimised
the company’s products are used to help customers reduce 
their use of resources such as energy water and raw materials
during the manufacturing process for further details of
spectris’ policies on the environment health and safety ethics
and human rights refer to the corporate social responsibility
statement on page 24 24 spectris plc annual report and accounts 2007
spectris operates from 150 offices 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 is committed to creating business growth
through adding value for its customers whilst ensuring that its
impact on the environment is minimised
spectris continues to be a member of the ftse4good uk
index which measures and benchmarks the performance of
companies that meet globally recognised corporate responsibility
standards with particular emphasis on the environment 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 individual operating units 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
spectris policies and procedures are communicated to all
business units via the spectris group manual conformity is
monitored by a process of selfassessment with the managing
directors and finance directors of each operating company
required to certify on an annual basis compliance with these
policies and procedures and report on any noncompliance
events this 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
environment
many spectris products and technologies have positive
environmental benefits by providing customers with the ability
to reduce energy consumption or 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 the european directive on 
the restriction of hazardous substances further examples of
the use of spectris products having a direct beneficial
contribution to the environment are shown on our website
our environmental policy is published on our website at
wwwspectriscomaboutuscorporatephp
spectris aims to reduce the environmental impact of its
operations by developing products which are energyefficient
and avoid the use of harmful substances the design processes
take into account the operational lifetime of every product and
endoflife removal or disposal consideration is given to the
recyclability of materials energy consumption environment
friendly production packaging and shipping products have
our employees are key to our success we employ high
calibre people and provide them with a creative
environment with scope for individual responsibility 
and achievement
making a difference
corporate social responsibility spectris plc annual report and accounts 2007 25
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 this legislation has not had a material impact
on the company’s operations and in fact has brought benefits 
to businesses such as panalytical which has developed xray
instrumentation specifically for customers to analyse their
products to ensure that no traces of the prohibited substances
are present
climate change
the nature of our activities means that spectris’ operations have
very little impact on the environment as our products do not
require capitalintensive manufacturing processes nevertheless
we are committed to adopting environmentally responsible
policies wherever our companies operate due to the nature of
the group both in terms of geographical locations 5500 staff in
150 offices in more than 28 countries around the world and the
characteristics of our business the majority of manufacturing is
outsourced to third parties with spectris providing design
assembly and test operations and the way that we are organised
autonomous companies with only limited resources at the
corporate centre spectris does not require its companies to
measure greenhouse gas emissions or the use of other resources
such as water and waste and the low power consumption of
our operations means that spectris is not required to participate
in the european emissions trading scheme nevertheless all
businesses are conscious of the need to conserve energy and
resources and local initiatives are in place at many sites to reduce
energy usage and minimise wastage these include recycling 
of waste paper cardboard plastic cups 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
spectris complies with the uk producer responsibility
obligations packaging waste regulations which set targets 
for the recovery and recycling of packaging waste
spectris businesses also work with their suppliers to help
them to reduce their impact on the environment and to ensure
that their products meet the relevant legislation supplier audits
and surveys are regularly undertaken by operating company
managements and the strategic purchasing teams
environmental management systems
malvern instruments achieved certification to iso14001 during
2007 bringing the total of spectris’ operations covered by this
environmental standard to approximately 50 by turnover
other companies are working towards accreditation where this 
is deemed beneficial for their customers 26 spectris plc annual report and accounts 2007
during 2007 no significant environmental incidents 
were recorded
health and safety
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
wwwspectriscomaboutuscorporatephp
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
any serious health and safety incidents are reported by the
managing director of the business in an accident report to the
company secretary who reports on this issue 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
employees
spectris’ employees are key to the success of the company we
employ a large number of highlyqualified people who work in 
a creative environment with scope for individual responsibility
and achievement 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 and development opportunities to enable them to meet
their full potential
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 human rights employment and ethics 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 wwwspectriscomaboutuscorporatephp
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
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 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
corporate social responsibility continued spectris plc annual report and accounts 2007 27
values
spectris has established a core set of behavioural values which 
all of our employees abide by
•
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
these values define who we are and how we do business both 
as individuals and as a company
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
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
the company’s human rights policy which can be viewed at
wwwspectriscomaboutuscorporatephp 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 general manager of asia is responsible for ensuring that
the highest ethical standards are maintained in all of our asia
based 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
ethics
all employees are expected to behave with honesty and integrity
and demonstrate appropriate business behaviour the ethical
standards we expect each employee to meet are set out in our
ethics policy which is communicated to all employees this
policy prohibits bribery 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
spectris operates a confidential “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
suppliers
spectris has no significant suppliers who are dependent 
upon the company’s business suppliers are paid in line with
contractual and legal obligations outsourcing of products
particularly in asia is to qualityapproved organisations only
which are regularly inspected by the strategic sourcing teams 
and local managements
community involvement
in line with the way the group operates community 
activity is organised by individual companies at a local level
spectris operating companies worldwide support local 
charities and participate in a range of local community 
activities and educational initiatives examples of
community activities are described on our website at
wwwspectriscomaboutuscorporatephp donations 
to charities and community causes in 2007 totalled £28000 
of which £10400 were in the uk 2006 £22000 of which 
£9500 in uk 28 spectris plc annual report and accounts 2007
john poulter
chairman
john poulter joined spectris in 1988 and 
was chief executive from 1992 until he became
nonexecutive chairman in 2001 he is chairman
of the nomination committee his earlier career
was with btr plc and cambridge instruments
he has been a nonexecutive director of a
number of public companies including rac plc
and kidde plc he is nonexecutive chairman of
filtronic plc and a nonexecutive director of
smaller companies value trust plc and several
private companies
john o’higgins
chief executive
john o’higgins joined spectris in 2006
he is a member of the nomination committee
john was previously with honeywell most
recently as president of automation and control
solutions asia pacific prior to this he was based
in brussels and germany in a series of
management roles in the automation and
controls division of the company before joining
honeywell he worked with daimler benz in
stuttgart john has engineering degrees from
university college dublin and purdue university
and an mba from insead
clive w atson
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 ltd and before 
that group finance director europe with 
black  decker clive holds a bachelors degree 
in commerce  accounting from the university
of birmingham
jim w ebster
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
john poulter john o’higgins clive w atson jim w ebster
board of directors spectris plc annual report and accounts 2007 29
peter chambré
nonexecutive director
peter chambré was appointed to the board 
in 2006 he is a member of the audit committee
and the remuneration committee he is
chairman of 7tm pharma a private danish
biopharmaceutical company a nonexecutive
director of btg plc and an advisor to private
equity and venture capital company 3i
peter was formerly chief executive officer of
cambridge antibody t echnology group plc 
and prior to that was chief operating officer 
of celera genomics group and chief executive 
of bespak plc
john hughes
nonexecutive director
john hughes was appointed to the board in 
june 2007 he is a member of the audit
committee and 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
t elecom systems plc and t elecity group plc
nonexecutive deputy chairman of parity group
plc a nonexecutive director of barco nv  a
company quoted on the brussels stock exchange
and a nonexecutive director of nice systems
limited an israeliheadquartered business listed
on nasdaq
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 anthony was previously a director 
of t omkins plc and chairman of t omkins
corporation usa and a nonexecutive director
of george wimpey plc he is a nonexecutive
director of the laird group plc taylor
wimpey plc and e2v technologies plc
john w arren
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 
nonexecutive 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
peter chambré john hughes anthony r eading mbe roger stephens john w arren
roger stephens
head of commercial  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 30 spectris plc annual report and accounts 2007
the directors present their report and accounts for the year
ended 31 december 2007
principal activities
spectris designs develops and markets productivityenhancing
instrumentation and controls for 2007 reporting purposes the
businesses were grouped into four segments materials analysis
t est and measurement inline instrumentation and industrial
controls further details of the trading companies can be found
in the business review page 4 developments in the group’s
business activities are discussed in the chairman’s statement
page 2 and the business review
acquisitions
during the year two of the group’s businesses particle 
measuring systems and servomex made acquisitions the 
total consideration including acquisition expenses and net 
debt acquired as well as deferred and contingent consideration
expected to be paid in future years was £66 million deferred
consideration paid and working capital adjustments made
during the year in respect of prior year acquisitions amounted 
to £08 million
disposals
in february 2007 the company completed the sale of its
spectrum inspection systems business to illinois t oolworks inc
after taking account of transaction costs net proceeds were 
£143 million
in june 2007 the company completed the sale of its ircon
business to fluke electronics corporation after taking account
of transaction costs net proceeds were £155 million
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 71 the articles of association of the company
available on the company’s website contain provisions governing
the ownership and transfer of shares
at the 2007 annual general meeting shareholders authorised
the directors to make market purchases of the company’s
ordinary shares up to a maximum number of 12495000 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 this authority has been used to make market
purchases of the company’s shares during the 2007 financial year
and subsequently at the close of business on 21 february 2008
the company had 125005123 ordinary shares in issue of
which 9633384 were held in treasury during the year 593642
shares were transferred out of treasury to meet the company’s
obligations under its share plans and no shares were cancelled
out of treasury it is proposed that 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 2008 annual
general meeting are proposals to renew the directors’ authority
to allot shares up to prescribed limits further details are given 
in the notice of annual general meeting
at 21 february 2008 interests notified to the company in
accordance with chapter 5 of the disclosure and transparency
rules comprised
standard life investments 
8412921 shares 702 material interest
axa sa
6463755 shares 557 material interest
barclays global investors
5811524 shares 502 material interest
legal  general group plc
4932445 shares 418 material interest
deutsche bank ag
4536286 shares 389 material interest
t akeovers 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
directors’ report spectris plc annual report and accounts 2007 31
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
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 38 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 43 and in the supporting notes a final
dividend of 1525p per ordinary share is proposed for the year 
to 31 december 2007 2006 125p with the interim dividend
this makes a total for the year of 210p 2006 175p the final
dividend will be paid on 20 june 2008 to shareholders on the
register on 30 may 2008
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 2007 amounts
expensed totalled £452 million 2006 £447 million and no
expenditure met the criteria for capitalisation 2006 £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 2006 £05 million
directors
the directors of the company are named on pages 28 and 29
john hughes was appointed to the board on 1 june 2007
andrew given retired from the board following the 2007 
annual general meeting john poulter chairman will retire
from the board following the 2008 agm and be succeeded 
in that position by john hughes stephen harris resigned 
from the board on 31 january 2008
john hughes having been appointed since the 2007 
annual general meeting retires from the board under the 
terms of the articles of association and being eligible offers
himself for election all other directors of the company were
either appointed or reappointed at the 2006 or 2007 annual
general meetings therefore in accordance with article 106 
of the company’s articles of association no director is 
required to submit themselves for reelection at the 2008 
annual general meeting
the directors’ total remuneration for the year and their
interests in the shares of the company and its subsidiaries at 
31 december 2007 are disclosed in the directors’ remuneration
report on pages 35 to 41
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 friday 16 may 2008 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 2007 32 spectris plc annual report and accounts 2007
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
•
between 16 may and 1 june 2007 comprising the period
between the retirement of andrew given and the appointment
of john hughes at least half the board excluding the
chairman did not comprise independent nonexecutive
directors as required by provision a32
•
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 business
group directors exercise supervision all directors receive
detailed progress reports one week prior to each board meeting
the board currently comprises the chairman three
executive directors and four nonexecutive directors the board
considers all its nonexecutive directors peter chambré john
hughes anthony reading and john warren to be independent
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 chairman of
filtronic plc and as a nonexecutive director of smaller
companies value trust plc and certain unlisted companies
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
•
procedure for taking independent professional advice
board and committee meeting attendance 2007
remuneration audit nomination
board committee committee committee
total meetings during year 16531
j w poulter chairman 16 na na 1
a j reading 16 5 3 na
senior independent director
p a chambré 15 5 3 na
j l m hughes 8 3 1 na
j a warren 16 5 3 na
j e o’higgins chief executive 16 na na 1
c g watson 16 na na na
j c webster 16 na na na
s c harris 16 na na na
a given 6221
a given and j l m hughes held office for part of the year only a given
attended six of the seven board meetings and all of the remuneration 
audit and nomination committee meetings which he was eligible to 
attend j l m hughes attended eight of the nine board meetings and all 
of the remuneration and audit committee meetings which he was eligible 
to attend
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
directors’ report continued spectris plc annual report and accounts 2007 33
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 2007 by 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 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 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 non
executive 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 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
•
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 an internal auditor 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 34 spectris plc annual report and accounts 2007
internal controls 
the group’s system of internal controls is described on page 21
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 234 zzb of the companies 
act 1985 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 page 2
•
group at a glance on pages 8 and 9
•
operating review on pages 8 to 17 which includes a 
review of the external environment
•
key strategic aims and performance measures are described 
on pages 5 to 7
•
principal risks and uncertainties are described on 
pages 21 to 23
•
details of the principal operating subsidiaries are set out 
on pages 8 and 9
•
financial review on pages 18 to 20
•
corporate citizenship on pages 24 to 27 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
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
by order of the board
r j stephens
secretary
22 february 2008
directors’ report continued spectris plc annual report and accounts 2007 35
the directors present their remuneration report for the year
ended 31 december 2007
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 nonexecutive
directors who are all independent these being at the date 
of this report anthony reading chairman peter chambré
john hughes and john warren andrew given was a member 
of the remuneration committee until his retirement from 
the board at the 2007 annual general meeting john poulter
chairman of the board is in attendance at most meetings 
save during discussions relating to his own remuneration
the chief executive may also on occasions 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 new bridge street consultants
llp to advise on various aspects of the chairman’s and executive
directors’ remuneration this firm did not provide any other
services to the company during the year
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 managers
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 the relative importance
of the annual and longerterm variable incentives is to be
enhanced following a review during the year this review
highlighted that the annual bonus potential and the base award
level for longterm incentive awards were both below the market
median accordingly for 2008 the bonus potential and the level
of base award were revised upward to bring them into line with
the market median concurrent with these increases the
performance targets for full bonus vesting have been increased
full details of the changes are set out below
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 in december
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
bonuses
t o align remuneration with shareholders’ interests a significant
proportion of executive directors’ potential total remuneration 
is related to annual corporate performance and it is intended
that this emphasis should be enhanced in the future
under the 2007 arrangements bonuses of up to 75 of
base salary were achievable upon the attainment of demanding
profitability and personal targets set in relation to carefully
considered business plans going forward the committee 
has determined following receipt of advice from new bridge
street consultants llp  that the bonus potential should be
raised to 100 consistent with median levels for comparable
public companies bonus payments commence only at a 
level which shows an acceptable degree of financial progress
yearonyear 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 this level remaining unchanged
notwithstanding the increase in maximum bonus potential
bonuses are not pensionable
bonuses achieved in respect of 2007 performance were as
follows as a percentage of salary at 31 december 2007
j e o’higgins 70 s c harris 65
c g watson 73 j c webster 6833
directors’ remuneration report 36 spectris plc annual report and accounts 2007
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 committee’s general policy from 2008 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
formerly the reference level for a base award of shares was 67
of salary this has been revised upwards by the committee
following advice from new bridge street consultants llp 
consistent with median levels for comparable public companies
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 2006 and 2007
are summarised in the tables below
 of award that vests expressed as 
company a percentage of onehalf of the total 
eps performance number of shares subject to an award
consumer prices index “cpi” 100
 10 compound per annum
“cpa”
between cpi  5 and 10 cpa prorata straight line between 25
and 100
cpi  5 cpa 25
less than cpi  5 cpa 0
company tsr performance  of award that vests expressed as 
relative to the ftse 250 a percentage of onehalf of the total 
excluding investment trusts number of shares subject to an award
upper quartile or above 100
between upper quartile and median prorata straight line 
between 25 and 100
median 25
below median 0
in conjunction with the increase in the normal level of
award described above it is intended that for awards in 2008
the upper end of each vesting scale should be increased to 
a cpi  12 cpa and b upper quintile or above thereby
requiring more stretching performance for achievement of
the increased potential
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 prorata straight line vesting
from this lower point up to 100 of the award
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 new
bridge street consultants llp and the eps condition will be
verified by the company’s auditors
it is the intention of the committee that all future share
based incentives granted to senior managers or executive
directors are made under the plan and that no further grants 
are made under the remaining 1999 executive share option
scheme no share option grants were made during 2007 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
mr poulter has exercised all share option grants received
during his previous service as an executive director he did 
not receive share option grants after being appointed chairman
in 2001 and does not receive awards under the plan
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 ahead of the increase in the retail prices index “rpi”
this condition has now been met for all 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 formerly the expectation was for
each executive director to build a retained shareholding of one
times salary but this was revised upwards by the committee in
conjunction with the 2008 enhancements to bonus and share
based incentives described in this report executive directors are
directors’ remuneration report continued spectris plc annual report and accounts 2007 37
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 and none of these benefits are pensionable
the executive directors have defined contribution pension
arrangements to which the company contributes at a rate 
of 25 of 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 employment
related 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 t ermination
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
the chairman john poulter is retained on a contract of
employment subject to six months’ notice and terminating at the
2008 agm
no compensation payments on termination of employment
were made during the year
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
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 €160000 and €260000 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 c 30 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 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
t otal shareholder return
the following graph indicates the value by the end of 2007 of
£100 invested in spectris plc 5p ordinary shares on 31 december
2002 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
0
50
100
150
200
250
300
350
31dec07 31dec06 31dec05 31dec04 31dec03 31dec02
spectris
ftse 250 excluding investment trusts
source datastream
this graph shows the value by 31 december 2007 of £100 invested in spectris plc 
on 31 december 2002 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
value £ 38 spectris plc annual report and accounts 2007
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 expiry notice length of service at
contract date period 22 february 2008
executive directors
j e o’higgins 1106 3229 12 months 2 years 1 month
c g watson 11006 4223 12 months 1 year 4 months
j c webster 27398 21615 12 months 14 years 4 months
nonexecutive directors
p a chambré 1806 16510 6 months 1 year 6 months
j l m hughes 1607 16511 6 months 8 months
j w poulter 17202 16508 6 months 19 years 9 months
a j reading 10304 16510 6 months 3 years 11 months
j a warren 7306 16509 6 months 1 year 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 
mr poulter will retire from the board and his service contract will terminate with effect from the date of the 2008 agm 16 may
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
benefits taxable 2007 2006
salary andor fees bonus in kind expenses total total
executive directors
j e o’higgins 380 266 14 3 663 647
c g watson 250 183 11 3 447 128
j c webster 238 163 20 – 421 416
s hare –––– – 161
s c harris 234 152 17 – 403 412
nonexecutive directors
p a chambré 35––– 35 15
j l m hughes 23––– 23 –
j w poulter 125 – 1 – 126 126
a j reading 40––– 40 40
j a warren 40––– 40 29
a f given 15––– 15 40
m j lamb –––– – 15
l g murray –––– – 15
1380 764 63 6 2213 2044
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
during the year mr harris received £37500 in respect of his appointment as a nonexecutive director of brixton plc and mr webster received £35000 in
respect of his appointment as a nonexecutive director of raymarine plc 
directors’ remuneration report continued spectris plc annual report and accounts 2007 39
b directors’ pensions 
company contributions to defined contribution plans
2007 2006
£’000 £’000
j e o’higgins 95 65
c g watson 63 –
j c webster 60 57
s hare – 38
s c harris 59 56
the company contributes at the rate of 25 of salary 
c directors’ total remuneration
2007 2006
£’000 £’000
aggregate emoluments 2213 2044
company pension contributions to defined contribution schemes 277 216
gains made on exercise of share options 1561 344
4015 2604
d directors’ interests in options to purchase ordinary shares
options granted exercised share price lapsed options
date held during exercise during the at date of during the held date expiry
granted 1 jan 07 the year price p year exercise p year 31 dec 07 exercisable date
j w poulter mar 1999 20518 3216533 20518 846628 mar 2002 mar 2009
mar 2000 48715 5131832 48715 846628 mar 2003 mar 2010
mar 2001 30550 49850 30550 846628 mar 2004 mar 2011
99783 99783 0 
j e o’higgins
saye oct 2006 1529 618 1529 dec 2009 jun 2010
1529 1529
s c harris sep 2003 40000 4685 40000 9202944 sep 2006 sep 2013
mar 2004 40000 462 40000 9202944 mar 2007 mar 2014
oct 2004 35000 40625 35000 7177011 oct 2007 oct 2014
sep 2005 85000 589 85000 sep 2008 sep 2015
200000 115000 85000 
c g watson
saye oct 2007 1146 837 1146 dec 2010 jun 2011
1146 1146
j c webster mar 2000 30202 5131832 30202 884505 mar 2003 mar 2010
mar 2001 18839 49850 18839 884505 mar 2004 mar 2011
sep 2003 44000 46850 44000 884505 sep 2006 sep 2013
mar 2004 40000 462 40000 884505 mar 2007 mar 2014
oct 2004 35000 40625 35000 9041659 oct 2007 oct 2014
sep 2005 85000 589 85000 sep 2008 sep 2015
253041 168041 85000 
total 552824 382824 172675  40 spectris plc annual report and accounts 2007
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 36 for further explanation 
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 
j w poulter exercised 99783 options under the unapproved 1996 executive share plan during the year the gain on exercise was £376505
s c harris exercised 6403 options under the approved 1999 executive share option scheme and 108597 options under the unapproved 1996 executive
share plan during the year he exercised on 19 april 2007 80000 options and the gain on exercise was £364036 he subsequently exercised on 
20 november 2007 35000 options retaining 15124 shares and selling 19876 shares at a gain of £109008 remaining options granted to s harris 
lapsed on his leaving employment on 31 january 2008
j c webster exercised 168041 options under the unapproved 1996 executive share plan during the year he exercised 133041 options on 22 march 2007
and the gain on exercise was £536910 he subsequently exercised on 12 october 2007 35000 options at a gain of £174271
the aggregate gains on exercise for all directors were thus £1560730 2006 £343748
e  directors’ share awards under the spectris performance share plan
number of number of market
shares shares value of
subject to granted exercised lapsed subject to each share
award at during during during award at at date of date expiry
1 jan 07 the year the year the year 31 dec 07 award p exercisable date
j e o’higgins 56000 56000 6225 may 2009 may 2010
35500 35500 865 mar 2010 mar 2011
91500
s c harris 24000 24000 6225 may 2009 may 2010
20500 20500 865 mar 2010 mar 2011
44500
c g watson 6500 6500 6400 oct 2009 oct 2010
21500 21500 865 mar 2010 mar 2011
28000
j c webster 24500 24500 6225 may 2009 may 2010
20500 20500 865 mar 2010 mar 2011
45000
total 11100098000 209000 
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 2007 awards for each of 
mr o’higgins mr harris mr watson and mr webster the value of the award was equivalent to 80 75 75 and 75 respectively of his base salary 
at the date of grant following satisfaction in whole or part of the performance criteria attaching to the award as summarised on page 36 the directors
may call for the release to them of the vested shares during the above shown exercise periods 
the awards granted to mr harris lapsed on his leaving employment on 31 january 2008 
directors’ remuneration report continued spectris plc annual report and accounts 2007 41
f directors’ interests
the following directors or their families had beneficial interests in the ordinary shares of the company
shareholdings
2007 2007
31 dec 1 jan
or date of or date of
resignation appointment
j w poulter 85315 142687
j e o’higgins 15000 15000
p a chambré 5000 5000
j l m hughes 4000 –
a j reading 10000 10000
j a warren 3000 3000
c g watson 8832 –
j c webster 100126 100126
a f given 5000 5000
s c harris 19924 1000
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 2007 the middle market closing share price on the london stock exchange was 680p the highest share price in the
year was 9885p and the lowest was 657p at 31 december 2007 each of the executive directors was deemed to have a nonbeneficial
interest in 20780 2006 67491 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
22 february 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 2007 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 34 
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 operating and financial review 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 2007 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 2007 
• 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
22 february 2008 
42 spectris plc annual report and accounts 2007 consolidated income statement
for the year ended 31 december 2007
2007 2006
note £m £m
continuing operations
revenue 6 6684 6845
cost of sales 2838 2887
gross profit 3846 3958
indirect production and engineering expenses 574 608
sales and marketing expenses 1580 1716
administrative expenses 663 807
operating profit 7 1029 827
profit on disposal of businesses 28 190 95
financial income 10 96 90
finance costs 10 134 156
profit before tax 1181 856
taxation – uk 11 26 05
taxation – overseas 11 293 237
total taxation 319 242
profit after tax for the year from continuing operations attributable to equity shareholders 862 614
basic earnings per share 13 709 494
diluted earnings per share 13 706 492
interim dividends paid and final dividends proposed for the year per share 12 210p 175p
dividends paid during the year per share 12 183p 162p
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 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
2007 2006
note £m £m
net lossgain on effective portion of changes in fair value of forward exchange contracts 21 11 17
associated deferred tax on changes in fair value of forward exchange contracts 03 05
net lossgain on changes in fair value of effective portion of net investment hedges 63 76
actuarial gains arising on pension schemes 9 59 22
current and deferred tax on actuarial gains on pension schemes 37 06
foreign exchange movements on translation of overseas operations 260 199
current and deferred tax on foreign exchange movements recognised directly in equity 06 01
net incomeexpense recognised in equity in respect of year 205 96
profit for the year 862 614
total recognised income and expense for the year attributable to equity shareholders 1067 518
spectris plc annual report and accounts 2007 43 consolidated balance sheet
as at 31 december 2007
2007 2006
note £m £m
assets
noncurrent assets
goodwill 14 2231 2074
other intangible assets 15 122 80
property plant and equipment 16 877 832
deferred tax asset 24 257 376
3487 3362
current assets
inventories 17 928 816
taxation recoverable – 05
trade and other receivables 18 1537 1454
derivative financial instruments 21 01 13
cash and cash equivalents 19 514 510
assets held for sale 5 12 173
2992 2971
total assets 6479 6333
liabilities
current liabilities
shortterm borrowings 20 44 43
trade and other payables 22 1417 1242
current tax liabilities 328 329
provisions 23 215 218
liabilities held for sale 5 – 60
2004 1892
net current assets 988 1079
noncurrent liabilities
medium and longterm borrowings 20 1081 1086
derivative financial instruments 21 161 128
other payables 22 84 88
retirement benefit obligations 9 111 188
deferred tax liability 24 10 10
1447 1500
total liabilities 3451 3392
net assets 3028 2941
equity
issued share capital 25 62 62
share premium 26 2314 2311
retained earnings 26 638 740
translation reserve 26 21 218
hedging reserve 26 01 12
merger reserve 26 31 31
capital redemption reserve 26 03 03
equity shareholders’ funds 3028 2941
total equity and liabilities 6479 6333
the financial statements on pages 43 to 77 were approved by the board of directors on 22 february 2008 and were signed on its behalf by
clive watson
director
44 spectris plc annual report and accounts 2007 consolidated cash flow statement
for the year ended 31 december 2007
2007 2006
note £m £m
cash flows from operating activities
profit after tax 862 614
adjustments for
tax 11 319 242
profit on disposal of businesses 28 190 95
finance costs 10 134 156
financial income 10 96 90
depreciation 16 131 132
amortisation of intangible assets 15 20 19
goodwill reduction 14 – 12
gainloss on sale of property plant and equipment 06 05
equity settled sharebased payment expense 27 09 06
operating profit before changes in working capital and provisions 1183 1001
increase in trade and other receivables 20 89
increase in inventories 69 10
increase in trade and other payables 101 44
decreaseincrease in provisions and employee benefits 45 74
corporation tax paid 238 215
net cash from operating activities 912 805
cash flows from investing activities
purchase of property plant and equipment 127 105
proceeds from sale of property plant and equipment 14 –
acquisition of businesses net of cash acquired 31 60 136
disposal of businesses 298 133
interest received 19 20
net cash flows used in investing activities 144 88
cash flows from financing activities
interest paid 82 132
dividends paid to equity holders of the parent 12 222 202
share options exercised by issue of share capital 02 15
share options exercised from shares held by employee benefit trust 10 38
share options exercised from treasury shares 29 –
purchasesale of own shares by employee benefit trust 16 09
purchase of own shares – treasury shares 792 –
cancellation of crosscurrency swap – 29
repayment of borrowings – 659
decrease in finance lease liabilities 01 04
net cash flows used in financing activities 1072 964
net decrease in cash and cash equivalents 16 247
cash and cash equivalents at beginning of year 470 761
effect of foreign exchange rate changes 20 44
cash and cash equivalents at end of year 19 474 470
2007 2006
reconciliation of changes in cash and cash equivalents to movements in net debt as defined in note 20 note £m £m
net decrease in cash and cash equivalents 16 247
repayment of borrowings – 659
decrease in finance lease liabilities 01 04
effect of foreign exchange rate changes 41 66
movement in net debt 56 482
net debt at start of year 20 717 1199
net debt at end of year 20 773 717
spectris plc annual report and accounts 2007 45 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 78 to 84
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 assets classified as held for sale are
stated at the lower of carrying amount and fair value less costs to sell
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 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 the estimates and
assumptions that have a significant effect on the carrying amount of assets
and liabilities are noted within specific accounting policies below 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
• goodwill note 14
• retirement benefit schemes note 9
• provisions and contingent liabilities notes 23 and 32
• valuation of financial instruments note 21
the financial statements comply with ifrs 7 financial instruments
disclosures the adoption of this standard by the group in the current
year has no impact on the group results and relates solely to disclosures
the business segments for which information has been included in
these accounts are different from those disclosed in prior years the new
disclosures for business segments reflect the manner in which the
business is currently managed by the board of directors prior year
comparatives have been restated accordingly
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 which are not yet effective for the year ended 31 december 2007
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
basis of consolidation
the group financial statements include the results of the company and all
of its subsidiary undertakings 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
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 interest
bearing 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 
46 spectris plc annual report and accounts 2007 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 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 and eurodenominated borrowings 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
usdenominated private placement borrowings the swaps have the
effect of converting fixed rate us borrowings into “synthetic” fixed 
rate eurodenominated borrowings the portion of the swap that locks
interest payments at a fixed euro interest rate changes as us 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 cashgenerating 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 cashgenerating 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
the business segments for which information has been included in
these accounts are different from those disclosed in prior years the new
disclosures for business segments reflect the manner in which the
business is currently managed by the board of directors prior year
comparatives have been restated accordingly notes 3 and 4
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 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
spectris plc annual report and accounts 2007 47 notes to the accounts continued
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 trademarks 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 part of
such items when there are future economic benefits all other costs are
recognised in the income statement as an expense as they are incurred
depreciation is provided 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 cash
generating 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
trade and other receivables
trade and other receivables are stated at their amortised cost as reduced
by appropriate allowances for estimated irrecoverable amounts
inventories
inventories and work in progress are carried at the lower of cost and 
net realisable value cost represents direct costs incurred and where
appropriate a proportion of attributable overheads to bring the inventory
to its present location and condition inventory is accounted for on a 
firstin firstout basis provision is made to write down slow moving 
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 amortised cost
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 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 
48 spectris plc annual report and accounts 2007 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 for contracts which 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 dividend income is
recognised in the income statement when the right to receive payment 
is established
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 income 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 liability 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
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
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 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 eighteen months into the future
spectris plc annual report and accounts 2007 49 notes to the accounts continued
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
at this time 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 by maintaining
adequate committed lines of funding from high quality lenders the
facilities committed to the group as at 31 december 2007 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 by transacting with financial institutions with
high quality credit ratings 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
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
50 spectris plc annual report and accounts 2007 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 related tax effects and other tax items which do not form part of the underlying tax
rate see note 11
the business segments for which information has been included in these accounts are different from those disclosed in prior years the results of the
group based upon the 2006 segmentation are shown at the end of this note the new disclosures for business segments reflect the manner in which
the business is currently managed by the board of directors prior year comparatives have been restated accordingly
the adjusted performance measures are derived from the reported figures under adopted ifrs as follows
2007 2006
adjusted sales note £m £m
sales as reported under adopted ifrs 4 6684 6845 
divested businesses 86 419
adjusted sales for continuing businesses 6598 6426
2007
materials inline test and industrial total
adjusted sales by segment – 2007 note analysis instrumentation measurement controls £m
sales as reported under adopted ifrs 4 2138 2088 2075 383 6684
divested businesses – 86 – – 86
adjusted sales for continuing businesses 2138 2002 2075 383 6598
2006
materials inline test and industrial total
adjusted sales by segment – 2006 restated note analysis instrumentation measurement controls £m
sales as reported under adopted ifrs 4 2057 2345 2015 428 6845
divested businesses – 380 – 39 419
adjusted sales for continuing businesses 2057 1965 2015 389 6426
2007 2006
adjusted operating profit note £m £m
operating profit as reported under adopted ifrs 1029 827
amortisation of acquisitionrelated intangible assets 15 19 18
goodwill reduction 14 – 12
adjusted operating profit 1048 857
divested businesses 05 25
adjusted operating profit for continuing businesses 1043 832
restructuring charges for continuing businesses 09 77
adjusted operating profit for continuing businesses before restructuring charges 1052 909
2007
materials inline test and industrial total
adjusted operating profit by segment – 2007 note analysis instrumentation measurement controls £m
segment result under adopted ifrs 4 335 348 260 86 1029
amortisation of acquisitionrelated intangible assets 13 04 02 – 19
adjusted operating profit 348 352 262 86 1048
divested businesses – 05 – – 05
adjusted operating profit for continuing businesses 348 347 262 86 1043
restructuring charges for continuing businesses 01 07 01 – 09
adjusted operating profit for continuing businesses before restructuring charges 349 354 263 86 1052
spectris plc annual report and accounts 2007 51 notes to the accounts continued
52 spectris plc annual report and accounts 2007
3 adjusted performance measures continued
2006
materials inline test and industrial total
adjusted operating profit by segment – 2006 restated note analysis instrumentation measurement controls £m
segment result under adopted ifrs 4 282 281 184 80 827
amortisation of acquisitionrelated intangible assets 11 01 06 – 18
goodwill impairment charge 12––– 12
adjusted operating profit 305 282 190 80 857
divested businesses – 23 – 02 25
corporate cost reallocation 02 04 02 – –
adjusted operating profit for continuing businesses 303 263 188 78 832
restructuring charges for continuing businesses 05 51 21 – 77
adjusted operating profit for continuing businesses before restructuring charges 308 314 209 78 909
the adjustment for corporate cost reallocation is a consequence of the adjustment for divested businesses and reallocates all corporate costs to the
continuing businesses
2007 2006
adjusted profit before tax note £m £m
profit before tax as reported under adopted ifrs 1181 856
amortisation of acquisitionrelated intangible assets 15 19 18
goodwill reduction 14 – 12
profit on disposal of businesses 28 190 95
unrealised change in fair value of crosscurrency interest rate swaps 21 30 28
adjusted profit before tax 980 763
2007 2006
operating cash flow £m £m
net cash from operating activities under adopted ifrs 912 805
corporation tax paid 238 215
purchase of property plant and equipment 127 105
proceeds from sale of property plant and equipment 14 –
operating cash flow for management purposes 1037 915
2007 2006
adjusted earnings per share note £m £m
profit after tax as reported under adopted ifrs 862 614
adjusted for
amortisation of acquisitionrelated intangible assets 15 19 18
goodwill reduction 14 – 12
profit on disposal of businesses 28 190 95
unrealised change in fair value of crosscurrency interest rate swaps 10 30 28
tax effect of the above 11 45 34
other tax items not forming part of the underlying tax rate 11 – 12
adjusted earnings 706 543
weighted average number of shares outstanding millions 13 1216 1243
adjusted earnings per share pence 581p 437p
adjusted diluted earnings per share note 2007 2006
adjusted earnings as above £m 706 543
diluted weighted average number of shares outstanding millions 13 1221 1247
adjusted diluted earnings per share pence 578 435
basic and diluted earnings per share in accordance with ias 33 are disclosed in note 13 3 adjusted performance measures continued
2007 2006
analysis of net debt for management purposes £m £m
bank overdrafts 40 40
bank loans – secured 25 27
unsecured loan notes 1060 1061
crosscurrency interest rate swaps – currency portion see note 21 162 98
finance lease liabilities – 01
total borrowings 1287 1227
cash balances see note 19 514 510
net debt 773 717
2007 2006
analysis of revenue by geographical destination £m £m
uk 285 286
continental europe 2546 2445
north america 1525 1570
japan 536 555
china 550 490
rest of asia pacific 731 747
rest of the world 425 333
total continuing businesses 6598 6426
divested businesses 86 419
group total 6684 6845
process technology inline instrumentation electronic controls total
11111111111111 11111111111111 11111111111111 11111111111111
results of the group
2007 2006 2007 2006 2007 2006 2007 2006
based upon the 2006 segmentation £m £m £m £m £m £m £m £m
sales 3523 3436 1777 2022 1384 1387 6684 6845
divested businesses – – 86 380 – 39 86 419
sales for continuing businesses 3523 3436 1691 1642 1384 1348 6598 6426
operating profit 520 426 297 229 212 172 1029 827
amortisation of intangibles 15 17 04 01 – – 19 18
goodwill reduction – 12 – – – – – 12
adjusted operating profit 535 455 301 230 212 172 1048 857
divested businesses – – 05 23 – 02 05 25
corporate cost reallocation – 03 – 04 – 01 – – 
adjusted operating profit for continuing businesses 535 452 296 211 212 169 1043 832
restructuring charges for continuing businesses 02 19 07 51 – 07 09 77
adjusted operating profit for continuing 
businesses before restructuring charges 537 471 303 262 212 176 1052 909
return on sales after restructuring 152 132 175 129 153 125 158 129
return on sales before restructuring 152 137 179 160 153 131 159 141
 reallocates corporate costs from divested businesses to continuing businesses
spectris plc annual report and accounts 2007 53 notes to the accounts continued
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 on pages 8 and 9
the business segments for which information has been included in these accounts are different from those disclosed in prior years the new disclosures 
for business segments reflect the manner in which the business is currently managed by the board of directors prior year comparatives have been
restated accordingly
external 
a business segments segment revenue intersegment revenue customer revenue segment result
11111111111111 11111111111111 11111111111111 11111111111111
2007 2006 2007 2006 2007 2006 2007 2006
restated restated restated restated
£m £m £m £m £m £m £m £m
materials analysis 2141 2060 03 03 2138 2057 335 282
test and measurement 2081 2022 06 07 2075 2015 260 184
inline instrumentation 2093 2352 05 07 2088 2345 348 281
industrial controls 383 428 – – 383 428 86 80
eliminate intersegment sales 14 17 14 17 – – – –
total continuing operations 6684 6845 – – 6684 6845 1029 827
profit on disposal of businesses 190 95
financial income 96 90
finance costs 134 156
profit before tax 1181 856
tax 319 242
profit after tax 862 614
intersegment pricing is on an arm’s length basis segments are presented on the basis of actual intersegment charges made as noted in note 28 profit
on disposal of businesses of £190m 2006 £95m relates to the inline instrumentation segment 2006 electronic controls segment
segment assets segment liabilities
11111111111111 11111111111111
2007 2006 2007 2006
restated restated
£m £m £m £m
materials analysis 1998 1846 678 591
test and measurement 1919 1798 536 506
inline instrumentation 1692 1670 461 454
industrial controls 98 99 41 52
total segment assets and liabilities 5707 5413 1716 1603
cash and borrowings 514 510 1125 1129
derivative financial instruments 01 13 161 128
net pension liability – – 111 188
taxation including amounts disclosed within assets and liabilities held for sale 257 397 338 344
consolidated total assets and liabilities 6479 6333 3451 3392
additions to depreciation 
noncurrent assets and amortisation impairment charges
11111111111111 11111111111111 11111111111111
2007 2006 2007 2006 2007 2006
restated restated
£m £m £m £m £m £m
materials analysis 42 61 43 36 – –
test and measurement 35 58 63 68 – –
inline instrumentation 108 55 42 44 – –
industrial controls 04 03 03 03 – –
189 177 151 151 – –
54 spectris plc annual report and accounts 2007 4 segmental information continued
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
total
11111111111111
materials test and inline industrial
analysis measurement instrumentation controls 2007 2006
£m £m £m £m £m £m
uk 94 86 102 15 297 363
continental europe 662 1124 707 72 2565 2535
north america 500 235 589 242 1566 1764
japan 189 165 179 04 537 558
china 187 144 212 11 554 501
rest of asia pacific 339 190 173 34 736 769
rest of the world 167 131 126 05 429 355
2138 2075 2088 383 6684 6845
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 of additions to 
segment assets noncurrent assets
11111111111111 11111111111111
2007 2006 2007 2006
£m £m £m £m
uk 584 631 39 18
continental europe 3856 3556 55 59
north america 845 842 78 77
japan 150 139 01 01
china 105 101 06 03
rest of asia pacific 120 116 09 13
rest of the world 47 28 01 06
5707 5413 189 177
5 assets and liabilities held for sale
as described in note 28 the two businesses that were held for sale at 31 december 2006 were sold during 2007
2007 2006
assets held for sale £m £m
goodwill – 29
property plant and equipment 12 37
deferred tax assets – 07
taxation recoverable – 09
inventory – 34
trade and other receivables – 57
12 173
the £12m above relates to the building in niles illinois usa
2007 2006
liabilities held for sale £m £m
trade and other payables – 48
current tax liabilities – 05
provisions – 07
– 60
spectris plc annual report and accounts 2007 55 notes to the accounts continued
6 revenue
an analysis of the group’s revenue is as follows
2007 2006
£m £m
sale of goods 5957 6153
services rendered 727 692
revenue 6684 6845
7 operating profit
operating profit has been arrived at after charging
2007 2006
£m £m
net foreign exchange losses 04 22
research and development expenditure 452 447
depreciation of property plant and equipment 131 132
amortisation of intangible assets 20 19
goodwill reduction – 12
gainloss on sale of property plant and equipment 06 05
2007 2006
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 06 06
– tax services 07 05
– other assurance services – 01
17 16
8 employee costs
employee costs including directors’ remuneration comprise
2007 2006
£m £m
wages and salaries 1808 1918
social security costs 281 299
defined benefit pension plans current service cost see note 9 09 08
defined contribution pension plans see note 9 72 73
sharebased payment expense 09 06
2179 2304
2007 2006
directors’ remuneration £m £m
shortterm benefits 23 20
postemployment benefits 03 02
sharebased payment expense 06 06
32 28
further details of directors’ remuneration and share options are given in the directors’ remuneration report on pages 35 to 41
2007 2006
average number of employees number number
production and engineering 3149 3261
sales and marketing 1974 2106
administrative 454 480
5577 5847
56 spectris plc annual report and accounts 2007 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 eight 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 2007 was £72m 2006 £73m there were no
outstanding or prepaid contributions to these plans as at 31 december 2007 or at 31 december 2006
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 31 december 2006
hottinger baldwin messtechnik gmbh 31 december 2006
spectris gmbh sensoren und systeme 31 december 2006
btg mütek gmbh 31 december 2006
brüel  kjær gmbh 31 december 2006
panalytical gmbh 1 april 2006
brüel  kjær instruments inc retirement plan 31 december 2006
servomex inc pension plan 31 december 2006
the valuations were updated to 31 december 2007 for ias 19 purposes by qualified independent actuaries
the total company contributions made to the defined benefit plans during the year ended 31 december 2007 were £31m 2006 £33m contributions
for the whole of 2008 are expected to be as follows
plan name expected 2008 contributions £m
spectris pension plan £26m
brüel  kjær vibro gmbh –
hottinger baldwin messtechnik gmbh £04m
spectris gmbh sensoren und systeme –
btg mütek gmbh –
brüel  kjær gmbh –
panalytical gmbh –
brüel  kjær instruments inc retirement plan £18m
servomex inc pension plan –
the above contribution rates are subject to review at future valuations and periodical certifications of the schedule of contributions 
the spectris pension plan is a closed scheme and hence under the projected unit method used to calculate the service cost under ias 19 the current
service cost will increase when expressed as a percentage of pensionable pay as the members of the plan approach retirement
the major assumptions used by the actuary to value the liabilities of the defined benefit plans were
2007 2006
uk plans  pa  pa
discount rate 580 510
salary increases 480 450
pension increases in payment
rpi max 5 lpi 310 280
rpi max 3 280 250
rpi max 25 250 230
rpi min 3 max 5 330 320
pension increases in deferment 330 300
inflation assumption 330 300
lpi is limited price indexation retail price indexation of a maximum of 5
spectris plc annual report and accounts 2007 57 notes to the accounts continued
9 retirement benefit schemes continued
mortality rate assumptions
pensioner life expectancy assumed in the 31 december 2007 update is based on the following tables
current and future pensioners pxa92 tables with medium cohort projections and a 1 year age rating
samples of the ages which pensioners are assumed to live to are as follows males females
pensioner aged 65 in 2007 859 881
pensioner aged 65 in 2020 867 888
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
2007 2006
german plans  pa  pa
discount rate 550 450
salary increases 250 250
pension increases in payment 200 150
inflation assumption 250 250
mortality rate assumptions
pensioner life expectancy assumed in the 31 december 2007 update 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 2007 824 870
pensioner aged 60 in 2020 843 888
different rates of pension increases apply to some members of the spectris pension plan the liabilities have been valued at the appropriate rates
2007 2006
us plans  pa  pa
discount rate 575 575
inflation assumption 300 300
mortality rate assumptions
pensioner life expectancy assumed in the 31 december 2006 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
uk plans german and us plans total
11111111111111 11111111111111 11111111111111
2007 2006 2007 2006 2007 2006
amounts recognised in the income statement £m £m £m £m £m £m
current service cost 09 08 – – 09 08
interest cost 43 40 06 05 49 45
expected return on scheme assets 46 40 02 02 48 42
06 08 04 03 10 11
the current service cost is recognised in administrative expenses in the income statement the interest cost and expected return on scheme assets are
both 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 2006 £02m
the actual return on scheme assets in the period was £59m 2006 £66m
58 spectris plc annual report and accounts 2007 9 retirement benefit schemes continued
uk plans german and us plans total
11111111111111 11111111111111 11111111111111
amounts recognised in the statement of
2007 2006 2007 2006 2007 2006
recognised income and expense £m £m £m £m £m £m
actuarial gains and losses recognised in the current period 59 33 04 08 55 41
cumulative actuarial gains and losses since 1 january 2004 223 282 08 04 231 286
 inclusive of exchange rate differences
uk plans german and us plans total
11111111111111 11111111111111 11111111111111
2007 2006 2007 2006 2007 2006
amounts recognised in the balance sheet £m £m £m £m £m £m
present value of defined benefit obligations 832 863 105 104 937 967
fair value of scheme assets 784 737 42 42 826 779
net deficit in scheme 48 126 63 62 111 188
uk plans german and us plans total
11111111111111 11111111111111 11111111111111
2007 2006 2007 2006 2007 2006
reconciliation of movement in net deficit £m £m £m £m £m £m
at 1 january 126 176 62 50 188 226
inclusion of us plan in disclosure – – – 25 – 25
expected return on plan assets 46 40 02 02 48 42
contributions from sponsoring company 25 25 06 08 31 33
current service cost 09 08 – – 09 08
interest cost 43 40 06 05 49 45
actuarial gains 59 33 – 04 59 37
exchange difference – – 03 04 03 04
at 31 december 48 126 63 62 111 188
uk plans german and us plans total
11111111111111 11111111111111 11111111111111
analysis of movement in the present value of the
2007 2006 2007 2006 2007 2006
defined benefit obligation £m £m £m £m £m £m
at 1 january 863 857 104 61 967 918
inclusion of us plan in disclosure – – – 55 – 55
current service cost 09 08 – – 09 08
interest cost 43 40 06 05 49 45
actuarial gains 48 11 – 02 48 13
exchange difference – – 04 06 04 06
contributions from scheme members 03 03 – – 03 03
benefits paid 38 34 09 09 47 43
at 31 december 832 863 105 104 937 967
uk plans german and us plans total
11111111111111 11111111111111 11111111111111
2007 2006 2007 2006 2007 2006
analysis of defined benefit obligation £m £m £m £m £m £m
present value of unfunded defined benefit obligation – – 46 45 46 45
present value of funded defined benefit obligation 832 863 59 59 891 922
uk plans german and us plans total
11111111111111 11111111111111 11111111111111
2007 2006 2007 2006 2007 2006
reconciliation of movement in fair value of plan assets £m £m £m £m £m £m
at 1 january 737 681 42 11 779 692
inclusion of us plan in disclosure – – – 30 – 30
expected return on plan assets 46 40 02 02 48 42
actuarial gains 11 22 – 02 11 24
exchange difference – – 01 02 01 02
contributions from sponsoring company 25 25 06 08 31 33
contributions from scheme members 03 03 – – 03 03
benefits paid 38 34 09 09 47 43
at 31 december 784 737 42 42 826 779
spectris plc annual report and accounts 2007 59 notes to the accounts continued
9 retirement benefit schemes continued
analysis of the scheme assets and expected rate of return
expected return fair value of assets
11111111111111 11111111111111
2007 2006 2007 2006
uk plans   £m £m
equity instruments 78 78 369 340
debt instruments 55 49 371 370
other assets 47 49 44 27
65 63 784 737
expected return fair value of assets
11111111111111 11111111111111
2007 2006 2007 2006
german plans   £m £m
insurance policies 55 45 12 11
expected return fair value of assets
11111111111111 11111111111111
2007 2006 2007 2006
us plans   £m £m
equity instruments 90 90 13 13
debt instruments 60 60 16 17
other assets 70 70 01 01
total 74 73 30 31
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
2007 2006 2005 2004 2003
history of experience adjustments £m £m £m £m £m
present value of defined benefit obligations 937 967 918 801 741
fair value of scheme assets 826 779 692 594 564
deficit in the scheme 111 188 226 207 177
experience adjustment on scheme liabilities
amount £m 48 13 102 45 72
percentage of scheme liabilities  51 13 111 56 97
experience adjustment on scheme assets
amount £m 11 24 61 11 27
percentage of scheme assets  13 31 88 19 48
 the history of experience for 2005 and earlier excludes the us plans that were not previously disclosed due to materiality
10 finance costs and financial income
2007 2006
financial income £m £m
bank interest receivable 18 20
change in fair value of crosscurrency interest rate swaps 30 28
expected return on pension scheme assets 48 42
96 90
2007 2006
finance costs £m £m
interest payable on bank loans and overdrafts 82 05
interest payable on other loans 03 106
total interest payable 85 111
interest cost on pension scheme liabilities 49 45
134 156
net interest costs of £67m 2006 £91m for the purposes of the calculation of interest cover comprise of bank interest receivable of £18m 
2006 £20m and interest payable on bank and other loans and overdrafts of £85m 2006 £111m
60 spectris plc annual report and accounts 2007 11 taxation
2007 2006
uk overseas total uk overseas total
£m £m £m £m £m £m
current tax charge – 278 278 09 214 223
adjustments in respect of current tax of prior years 03 36 39 01 05 06
deferred tax – origination and reversal of temporary differences 29 51 80 03 28 25
26 293 319 05 237 242
the standard rate of corporation tax for the year based on the weighted average of tax rates applied to the group’s profits is 323 2006 321
the tax charge for the year is lower than the standard rate of corporation tax for the reasons set out in the following reconciliation
2007 2006
£m £m
profit before taxation 1181 856
corporation tax at standard rate of 323 2006 321 382 275
nontaxable income and gains 41 17
nondeductible expenditure 17 12
movements on unrecognised deferred tax assets – 06
other current year tax items 01 01
taxation on other dividend flows 01 –
change in tax rates 05 –
other adjustments to prior year current and deferred tax charges 44 21
total taxation 319 242
the aggregate current and deferred tax charge relating to items that are charged directly to equity is as follows
2007 2006
£m £m
40 12
the following tax charges relate to items of income and expense that are excluded from the group’s adjusted performance measures
2007 2006
tax on items of income and expense that are excluded from the group’s adjusted profit before tax £m £m
tax charge on unrealised change in fair value of crosscurrency interest rate swaps 09 08
tax credit on amortisation of intangible assets and goodwill impairment charge 05 06
tax charge on disposal of businesses 41 32
total tax charge 45 34
2007 2006
other tax items not forming part of the underlying tax rate £m £m
material transfers from unrecognised tax assets – 12
total tax credit – 12
the effective adjusted tax rate for the period was 280 2006 288 as set out in the reconciliation below
2007 2006
reconciliation of total tax charge on adopted ifrs basis to adjusted tax charge £m £m
total tax charge on adopted ifrs basis 319 242
tax charge on items of income and expense that are excluded from the group’s adjusted profit before tax 45 34
other tax items not forming part of the underlying tax rate – 12
adjusted tax charge 274 220
adjusted profit before tax 980 763
adjusted effective tax rate 280 288 
spectris plc annual report and accounts 2007 61 notes to the accounts continued
12 dividends
2007 2006
amounts recognised and paid as distributions to equity holders in the year £m £m
final dividend for the year ended 31 december 2006 of 125p 2005 112p per share 154 140
interim dividend for the year ended 31 december 2007 of 575p 2006 50p per share 68 62
222 202
2007 2006
amounts arising in respect of the year £m £m
interim dividend for the year ended 31 december 2007 of 575p 2006 50p per share 68 62
proposed final dividend for the year ended 31 december 2007 of 1525p 2006 125p per share 175 156
243 218
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 2007 2006
profit after tax £m 862 614
weighted average number of shares outstanding millions 1216 1243
basic earnings per share pence 709 494
diluted earnings per share 2007 2006
profit after tax per income statement £m 862 614
basic weighted average number of shares outstanding millions 1216 1243
weighted average number of dilutive 5p ordinary shares under option millions 10 16
weighted average number of 5p ordinary shares that would have been issued at
average market value from proceeds of dilutive share options millions 05 12
diluted weighted average number of shares outstanding millions 1221 1247
diluted earnings per share pence 706 492
14 goodwill
cost £m
at 1 january 2006 2487
recognised on acquisitions 76
reduction in goodwill associated with recognition of deferred tax asset 12
assets reclassified as held for sale 92
exchange differences 67
at 31 december 2006 2392
exchange differences 167
at 31 december 2007 2559
62 spectris plc annual report and accounts 2007 14 goodwill continued
accumulated amortisation and impairment losses £m
at 1 january 2006 392
assets reclassified as held for sale 63
exchange differences 11
at 31 december 2006 318
exchange differences 10
at 31 december 2007 328
carrying amount £m
at 31 december 2007 2231
at 31 december 2006 2074
at 1 january 2006 2095
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 £2231m at 31 december 2007 are allocated
to panalytical £847m btg £506m hbm £362m and brüel  kjær sound  vibration £230m each cashgenerating unit is assessed for
impairment annually and whenever there is an indication of impairment there have been no indications of impairment in 2007 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 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 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 12 no impairment charge has been recognised in either 2007 or 2006 to write goodwill down to its estimated recoverable amount
15 other intangible assets
patents customer
trademarks related
and technology intangibles total
cost £m £m £m
at 1 january 2006 71 24 95
recognised on acquisitions 15 50 65
exchange differences 04 03 07
at 31 december 2006 82 71 153
recognised on acquisitions 52 04 56
exchange differences 04 02 06
at 31 december 2007 138 77 215
accumulated amortisation and impairment losses
at 1 january 2006 43 11 54
charge for the year 11 08 19
at 31 december 2006 54 19 73
charge for the year 14 06 20
at 31 december 2007 68 25 93
carrying amount
at 31 december 2007 70 52 122
at 31 december 2006 28 52 80
at 1 january 2006 28 13 41
of the total amortisation charge of £20m 2006 £19m the amount attributable to the amortisation of acquisitionrelated intangible assets 
was £19m 2006 £18m
spectris plc annual report and accounts 2007 63 notes to the accounts continued
16 property plant and equipment
freehold leasehold plant and 
property property equipment total
cost £m £m £m £m
at 1 january 2006 706 76 1366 2148
additions 12 01 91 104
recognised on acquisitions – – 04 04
disposals – 02 79 81
assets reclassified as held for sale 30 – 71 101
transfers 10 02 12 04
exchange differences 25 05 57 87
at 31 december 2006 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
accumulated depreciation and impairment
at 1 january 2006 180 50 990 1220
charge for the year 20 06 106 132
disposals – 02 74 76
depreciation on assets reclassified as held for sale 06 – 58 64
transfers – 01 03 04
exchange differences 10 04 43 57
at 31 december 2006 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
carrying amount
at 31 december 2007 524 18 335 877
at 31 december 2006 469 21 342 832
at 1 january 2006 526 26 376 928
the amount recognised in the carrying amount of items of plant and equipment in the course of its construction was £18m 2006 £22m
the carrying amount of the group’s plant and equipment includes an amount of £nil 2006 £02m in respect of assets held under finance leases
the group has pledged land and buildings having a carrying amount of approximately £25m 2006 £27m to secure bank loans granted to the group
64 spectris plc annual report and accounts 2007 17 inventories
2007 2006
£m £m
raw materials 323 283
work in progress 195 167
finished goods 410 366
928 816
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 £29m 2006 £32m and crediting reversals of previous impairments of £12m 2006 £28m
impairments and reversals of impairments are included within operating profit
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
18 trade and other receivables
2007 2006
£m £m
trade receivables 1372 1295
prepayments and accrued income 115 104
other receivables 50 55
1537 1454
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 2006 £02m trade receivables and other
receivables are stated after recognising impairments during the year of £13m 2006 £12m and reversals of impairments of £09m 2006 £07m
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
2007 2006
£m £m
uk 63 62 
continental europe 609 535 
north america 245 293 
japan 146 149 
china 65 48 
rest of asia pacific 143 127 
rest of the world 101 81 
1372 1295
impairment losses
the ageing of trade receivables at the reporting date was
2007 2006
11111111111111 11111111111111
gross impairment gross impairment
£m £m £m £m
not past due 1063 – 998 –
1 month past due 189 – 181 03
2 months past due 56 02 59 01
3 months past due 31 01 31 06
over 3 months past due 70 34 64 28
total 1409 37 1333 38
spectris plc annual report and accounts 2007 65 notes to the accounts continued
18 trade and other receivables continued
the movement in the allowance for impairment in respect of trade receivables during the year was as follows
2007 2006
£m £m
balance at 1 january 38 37
impairment loss recognised 13 12
impairment loss utilised 06 04
impairment loss released 09 06
exchange differences 01 01
balance at 31 december 37 38
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 
19 cash and cash equivalents
2007 2006
analysis of balances of cash and cash equivalents £m £m
cash balances 514 510
bank overdrafts note 20 40 40
cash and cash equivalents in the statement of cash flows 474 470
the group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 21
20 borrowings
earlier of repricing date 2007 2006
current effective interest rate or maturity date £m £m
bank loans – secured see below see below 04 02
bank overdrafts 330 on demand 40 40
finance lease liabilities – see below – 01
44 43
earlier of repricing date 2007 2006
noncurrent effective interest rate or maturity date £m £m
bank loans – secured see below see below 21 25
unsecured loan notes – 2000 75m 823 13 september 2010 376 382
unsecured loan notes – 2003 100m 608 15 october 2013 502 511
unsecured loan notes – 2003 €25m 556 15 october 2013 182 168
total unsecured loan notes 1060 1061
total noncurrent borrowings 1081 1086
at 31 december 2007 the group had available £658m 2006 £554m of undrawn committed borrowing facilities in respect of which all conditions
precedent had been met
secured bank loans
bank loans are secured by fixed charges over property at three of the group’s subsidiaries of these £15m is denominated in chinese renminbi and is
repayable by instalments until december 2012 with a fixed interest rate of 75 £06m 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 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
66 spectris plc annual report and accounts 2007 20 borrowings continued
under adopted ifrs where crosscurrency interest rate swaps are used the value of the underlying us 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 borrowings into euro borrowings is viewed as part of the
group’s net debt as analysed below
2007 2006
analysis of net debt £m £m
bank overdrafts 40 40
bank loans – secured 25 27
unsecured loan notes 1060 1061
crosscurrency interest rate swaps – currency portion see note 21 162 98
finance lease liabilities – 01
total borrowings 1287 1227
cash balances see note 19 514 510
net debt 773 717
2007 2006
1111111111111111111 1111111111111111111
minimum minimum
lease lease
payments interest principal payments interest principal
finance lease liabilities £m £m £m £m £m £m
less than one year ––– 01 – 01
––– 01 – 01
21 financial instruments
2007 2006
carrying fair carrying fair
amount value amount value
fair value and carrying amount of financial instruments £m £m £m £m
trade and other receivables 1537 1537 1454 1454
trade and other payables 1501 1501 1330 1330
cash deposits 514 514 510 510
floating rate borrowings 50 50 41 31
fixed rate borrowings 1237 1176 1185 1289
finance lease liabilities –– 01 01
forward exchange contracts 01 01 13 13
crosscurrency interest rate swaps 161 161 128 128
2105 2166 1952 1858
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 appropriate
yield curves to the net present values
the fair value of forward exchange contracts outstanding as at 31 december 2007 is an asset of £01m 2006 asset of £13m of which £01m has
been credited to the hedging reserve 2006 credit of £12m and £nil credited to the income statement 2006 credit of £01m these contracts mature
over periods not exceeding 12 months a summary of the movements in the hedging reserve during the year is presented below
2007 2006
analysis of movements in hedging reserve £m £m
at 1 january 12 05
amounts removed from equity and included in income statement during the year 12 05
amounts recognised in equity during the year 01 12
at 31 december 01 12
the fair value of forward exchange contracts is determined using discounted cash flow techniques based on readily available market data
spectris plc annual report and accounts 2007 67 notes to the accounts continued
21 financial instruments continued
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 2007 2006
foreign currency sale amount £m 527 591
percentage of total
us dollar 59 53
euro 4 18
japanese yen 37 29
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
usdenominated borrowing liability into a €denominated 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 interest payments into fixed rate € interest payments the 
interest portion – the value of this portion of the swap changes as us variable interest rates € variable interest rates and foreign currency exchange 
rates change
under adopted ifrs the underlying us 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 2006 160 87 247
cash settled on cancellation of swap in july 2006 145 29 174
change in fair value recognised in reserves 83 – 83
change in fair value recognised in income statement – 28 28
as at 31 december 2006 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 
the combination of the underlying us 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 borrowings in reserves and the
change in value of the interest portion of the swap is recognised in the income statement within financing costs
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
2007 2006
1111111111111111111111111111 111111111111111111111111111
bank bank
loans secured cross loans secured cross
and bank unsecured currency and bank unsecured currency
overdrafts loans loans swap total overdrafts loans loans swap total
maturity of financial liabilities £m £m £m £m £m £m £m £m £m £m
due within one year 40 04 72 07 123 40 02 72 04 118
due between one and two years – 02 72 07 81 – 01 72 04 77
due between two and five years – 17 530 22 569 – 03 567 11 581
due in more than five years – 02 727 169 898 – 21 760 106 887
40 25 1401 205 1671 40 27 1471 125 1663
trade and other payables are due within one year
68 spectris plc annual report and accounts 2007 21 financial instruments continued
financial assets financial liabilities 2007
1111111111111111111 1111111111111111111
net financial
floating noninterest floating assets
interest rate exposure of financial assets
rate bearing total fixed rate rate total liabilities
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
financial assets financial liabilities 2006
1111111111111111111 1111111111111111111
net financial
floating noninterest floating assets
interest rate exposure of financial assets
rate bearing total fixed rate rate total liabilities
and liabilities by currency £m £m £m £m £m £m £m
sterling 210 – 210––– 210
euro 91 – 91 782 – 782 691
us dollar 03 02 05 387 22 409 404
japanese yen 11 11 22 – 16 16 06
other 139 43 182 17 03 20 162
454 56 510 1186 41 1227 717
sensitivity analysis
at 31 december 2007 it is estimated that a general increase of one percentage point in interest rates would increase the group’s profit before tax by
approximately £03m 2006 £04m
for the year ended 31 december 2007 it is estimated that a one percentage point weakening in the value of the us dollar against £ sterling would 
have decreased the group’s profit before tax by approximately £07m 2006 £08m a one percentage point weakening in the value of the eurodanish
krone against £ sterling would have decreased the group’s profit before tax by approximately £01m 2006 £01m and a one percentage point
weakening in the value of the japanese yen against £ sterling would have decreased the group’s profit before tax by approximately £03m 2006 £03m
22 trade and other payables
2007 2006
current £m £m
trade payables 610 460
nontrade payables accruals and deferred income 807 782
1417 1242
2007 2006
noncurrent £m £m
nontrade payables accruals and deferred income 84 88
the fair value of trade and other payables approximates to book value due to the shortterm maturities associated with these items 
spectris plc annual report and accounts 2007 69 notes to the accounts continued
23 provisions
product
reorganisation warranty other total
£m £m £m £m
at 1 january 2007 49 57 112 218
additional provision in the year 10 29 36 75
utilised during the year 38 21 11 70
released during the year 01 02 13 16
exchange adjustments 02 03 03 08
at 31 december 2007 22 66 127 215
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 
the provision represents the directors’ best estimate of the group’s liability based on past experience 
other
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
24 deferred tax
deferred tax is calculated in full on temporary differences under the liability method using the current corporate tax rate in the relevant local jurisdiction
the movement on the deferred tax account is shown below
2007 2006
£m £m
at 1 january 373 438
exchange adjustments 05 27
disposal of businesses 10 02
transfer from current taxation 02 05
deferred tax on changes in fair value of forward exchange contracts recognised in equity 03 05
deferred tax on actuarial gains and losses on pension schemes recognised in equity 42 11
charged to income statement in the year see note 11 80 25
at 31 december 247 373
comprising
deferred tax liabilities 10 10
deferred tax assets including £20m attributable to the pension scheme deficit 2006 £62m 257 376
deferred tax asset held for sale – 07
247 373
70 spectris plc annual report and accounts 2007 24 deferred tax continued
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
accelerated profit on goodwill 
tax accruals  intercompany pension intangible 2007
depreciation provisions tax losses transactions schemes assets other total
net deferred tax assets £m £m £m £m £m £m £m £m
at 31 december 2006 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
unrealised
accelerated profit on goodwill 
tax accruals  intercompany pension intangible 2006
depreciation provisions tax losses transactions schemes assets other total
net deferred tax assets £m £m £m £m £m £m £m £m
at 31 december 2005 27 112 38 28 73 137 23 438
exchange adjustments – 12 01 01 – 13 – 27
disposal of businesses – 02––––– 02
transfer from current taxation – 05 ––––– 05
deferred tax on changes in fair value of forward 
exchange contracts recognised in equity –––––– 05 05
deferred tax on actuarial gain on pension 
schemes recognised in equity –––– 11–– 11
chargedcredited to income statement 01 18 04 02 – 30 10 25
at 31 december 2006 26 121 33 29 62 94 08 373
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
2007 2006
£m £m
tax losses 206 360
other temporary differences 65 60
271 420
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 £380m 2006 £344m
25 share capital and reserves
2007 2006
11111111111111 11111111111111
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 1246 62
issued for cash on exercise of share options –– 04 –
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 38500 2006 04 million ordinary shares were issued upon exercise under share option schemes giving rise to net proceeds 
of £02m 2006 £15m see note 27 for a summary of potential issues of ordinary shares under existing share option schemes
spectris plc annual report and accounts 2007 71 notes to the accounts continued
25 share capital and reserves continued
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
26 reconciliation of movement in capital and reserves
for the year ended 31 december 2007
capital
share share retained translation hedging merger redemption total
capital premium earnings reserve reserve reserve reserve equity
£m £m £m £m £m £m £m £m
equity at 1 january 2006 restated 62 2291 268 95 05 31 03 2555
gains and losses – year ended 31 december 2006
total recognised income and expense – – 624 123 17 – – 518
distributions to and transactions with shareholders
equity dividends paid – – 202 –––– 202
sharebased payments – – 06–––– 06
share options exercised from shares held by
employee benefit trust – – 38–––– 38
sale of own shares by employee benefit trust – – 09–––– 09
exercise of equity share options – 20 03 –––– 17
equity at 31 december 2006 restated 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
 an amount of £67m has been transferred from the translation reserve to retained earnings as at 1 january 2006 this reflects the cumulative
translation gain that should have been recycled into financial income and expense prior to that date
72 spectris plc annual report and accounts 2007 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 are subject to performance criteria 50 
of the award being based on fulfilment of earnings growth targets and 50 subject to a total shareholder return target 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
share options outstanding at the end of the period
exercise exercise 2007 2006
price period number number
saye – year of grant £ thousands thousands
2003 469 2007 – 1
2004 408 2008 12 97
2005 589 2009 26 32
2006 618 2010 58 64
2007 837 2011 54 –
150 194
exercise exercise 2007 2006
price period number number
executive share option scheme – year of grant £ thousands thousands
1997 539 – 661 2000 – 2007 – 40
1998 239 – 551 2001 – 2008 34 94
1999 322 – 396 2002 – 2009 18 54
2000 513 – 525 2003 – 2010 131 321
2001 358 – 499 2004 – 2011 122 240
2003 469 2006 – 2013 – 114
2004 406 – 462 2007 – 2014 12 240
2005 589 2008 – 2015 261 273
578 1376
exercise exercise 2007 2006
price period number number
performance share plan – year of grant £ thousands thousands
2006 005 2009 – 2010 186 197
2007 005 2010 – 2011 487 –
673 197
movements in the year
2007 2006
1111111111111111111 1111111111111111111
weighted weighted
average average
exercise value of exercise value of
number price shares number price shares
saye thousands £ £m thousands £ £m
at 1 january 194 498 10 202 447 09
granted 54 837 04 64 618 04
exercised 81 412 04 49 461 02
lapsed 17 518 01 23 464 01
at 31 december 150 733 11 194 498 10
exercisable at 31 december 12 408 005 1469 –
spectris plc annual report and accounts 2007 73 notes to the accounts continued
27 sharebased payments continued
2007 2006
1111111111111111111 1111111111111111111
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 1376 484 67 3034 461 140
granted –– – –––
exercised 768 460 35 1219 416 51
lapsed 30 500 02 439 518 23
at 31 december 578 519 30 1376 484 67
exercisable at 31 december 317 452 14 863 464 40
2007 2006
1111111111111111111 1111111111111111111
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 197 005 001 –––
granted 494 005 002 198 005 001
lapsed 18 005 – 1 005 –
at 31 december 673 005 003 197 005 001
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 was included in the calculation of fair value under the performance share plan for options granted in 2007 and
2006 the fair value per option granted and the assumptions used in the calculation are as follows
executive share performance
saye option scheme share plan
1111111111111 1111111111111 11111111111111111111
2007 2006 2007 2006 2007 2006
weighted average share price pence 889 6425 – – 865899 620 – 640
weighted average exercise price pence 837 618 – – 5 5
expected volatility 220 235 – – 206 – 224 227 – 238
expected life 325 yrs 325 yrs – – 30 yrs 30 yrs
riskfree rate 51 49 – – 495 – 519 47 – 48
expected dividends expressed as a yield 21 25 – – – –
fair value per option 215 201 – – – –
fair value per award – tsr condition 597 – 656 428 – 511
fair value per award – profit condition 995 –
fair value per award – eps condition 995 993
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 in 2007 or 2006 under the executive share option scheme
the group recognised total expenses of £09m related to equity settled sharebased payment transactions in 2007 2006 £06m 
74 spectris plc annual report and accounts 2007 28 disposal of businesses
during the year the group divested the ircon and the spectrum businesses which were previously included in the inline instrumentation segment 
the spectrum business was divested on 28 february 2007 and the ircon business was divested on 15 june 2007 these businesses were classified 
as held for sale in the 31 december 2006 financial statements the total consideration was £298m net of transaction expenses the disposals gave rise 
to a profit of £190m
the assets and liabilities disposed of by the group are as follows
2007 2006
£m £m
goodwill 29 –
property plant and equipment 24 01
inventories 37 26
trade and other receivables 55 30
cash and cash equivalents 01 02
taxation 12 03
trade and other payables 52 26
provisions 07 01
net assets disposed of 97 35
consideration received satisfied in cash 334 150
overdraft disposed of 01 02
transaction expenses 35 19
net cash inflow 298 133
cash received net of transaction expenses and cash disposed of 298 133
net assets disposed of 97 35
accruals and provisions 11 03
profit on disposal of businesses 190 95
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
2007 2006
£m £m
balance at 1 january 03 50
disposals 01 47
at 31 december 02 03
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 20780 shares at 31 december 2007 2006 01 million at a cost of £02m 2006 £03m the market value of the
ebt’s shares at 31 december 2007 was £01m 2006 £05m
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 89 million shares 2006 nil for a consideration of £792m 2006 £nil 06 million 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 2006 nil
spectris plc annual report and accounts 2007 75 notes to the accounts continued
31 acquisitions
during the year the group acquired contrôle analytique on 1 november 2007 and a distributor in singapore on 2 july 2007 the assets and liabilities
acquired together with the aggregate purchase consideration are summarised below the profit contribution of the acquired businesses to the group’s
result for the year was not significant had the acquisitions taken place at the start of the year the impact on group revenue and profit would not have
been materially different certain elements of the purchase consideration are contingent on future events
the following table provides an analysis of the assets and liabilities acquired and the related fair value adjustments 
2007 2006
1111111111111111111 1111111111111111111
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 56 – 56 – 65 65
tangible fixed assets 02 – 02 04 – 04
inventories 04 – 04 09 02 11
trade and other receivables 04 – 04 16 – 16
trade and other payables ––– 07 – 07
cash ––– 02 – 02
net assets acquired 66 – 66 24 67 91
goodwill – 76
total consideration 66 167
adjustment for cash acquired – 02
net consideration 66 165
analysis of cash outflow in consolidated cash flow statement
total consideration 66 167
deferred and contingent consideration to be paid in future years 14 34
cash paid including directly attributable costs 52 133
prior year acquisitions
purchase price adjustment re prior year acquisition 02 –
deferred consideration in relation to prior year acquisitions 06 05
08 05
total cash outflow relating to acquisitions 60 138
cash acquired on acquisition – 02
net cash outflow relating to acquisitions 60 136
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 £37m 2006 £36m was outstanding at 31 december 2007
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 £06m 2006 £10m was outstanding at 31 december 2007
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
£67m 2006 £60m was outstanding at 31 december 2007
other banks
group companies have in the normal course of business provided bonds and guarantees through local banking arrangements amounting to £31m 
2006 £36m
legal
please refer to note 23 – ’other’
76 spectris plc annual report and accounts 2007 33 operating lease arrangements 
2007 2006
111111111111 111111111111
property other property other
total commitments under noncancellable operating leases £m £m £m £m
within one year 32 23 29 23
in the second to fifth years 117 49 133 52
after five years 85 – 146 02
234 72 308 77
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 £83m 2006 £95m was recognised in the income statement in respect of operating lease rental payments 
34 capital commitments
at 31 december 2007 the group had entered into contractual commitments for the acquisition of property plant and equipment amounting 
to £69m 2006 £08m 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 35 to 41 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
spectris plc annual report and accounts 2007 77 2007 2006
note £m £m
fixed assets
tangible fixed assets 39 01 01
fixed asset investments 40 1963 2874
1964 2875
current assets
debtors 41 6689 3873
cash at bank 126 229
6815 4102
creditors due within one year
shortterm borrowing 42 26 32
other creditors 42 3644 1743
3670 1775
net current assets 3145 2327
total assets less current liabilities 5109 5202
creditors due after more than one year
medium and longterm borrowing 43 1060 1061
derivative financial instruments 44 161 128
1221 1189
provisions for liabilities and charges 45 12 16
net assets 3876 3997
capital and reserves
called up share capital 46 62 62
share premium account 47 2314 2311
merger reserve 47 31 31
capital redemption reserve 47 03 03
special reserve 47 341 341
profit and loss account 47 1125 1249
equity shareholders’ funds 3876 3997
the financial statements on pages 78 to 84 were approved by the board of directors on 22 february 2008 and were signed on its behalf by
clive watson
director
78 spectris plc annual report and accounts 2007
company balance sheet 37 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
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 usdenominated private placement borrowings the swaps
have the effect of converting fixed rate us borrowings into fixed rate 
€denominated borrowings 
the underlying us 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
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
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
spectris plc annual report and accounts 2007 79
notes to the company’s accounts notes to the company’s accounts continued
38 employee costs and other information
employee costs including directors’ remuneration comprise
2007 2006
£m £m
wages and salaries 46 38
social security costs 07 06
defined benefit pension plans 17 17
defined contribution pension plans 04 03
sharebased payment expense 06 06
80 70
2007 2006
number number
average number of employees 29 30
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 35 to 41
auditors’ fees
fees paid to the group auditors in respect of audit services provided to the company amounted to £02m 2006 £02m
39 tangible fixed assets
leasehold office
improvements equipment total
cost £m £m £m
at 1 january 2007 03 07 10
additions –––
disposals –––
at 31 december 2007 03 07 10
depreciation
at 1 january 2007 03 06 09
charge for the year –––
disposals –––
at 31 december 2007 03 06 09
net book value
at 31 december 2007 – 01 01
at 31 december 2006 – 01 01
80 spectris plc annual report and accounts 2007 40 fixed asset investments
investments
in subsidiary
undertakings
cost £m
at 1 january 2007 3335
additions 03
disposals 684
at 31 december 2007 2654
provision for impairment
at 1 january 2007 461
charge for the year 230
disposals –
at 31 december 2007 691
net book value
at 31 december 2007 1963
at 1 january 2007 2874
further details regarding the investments in subsidiaries are given in note 36 to the consolidated financial statements
the impairment charge of £230m arose as a consequence of dividends being received from a subsidiary company
41 debtors
2007 2006
amounts falling due within one year £m £m
amounts owed by group undertakings 6669 3802
other debtors 03 02
prepayments and accrued income 02 07
corporation tax 11 47
deferred tax asset 04 15
6689 3873
42 creditors due within one year
2007 2006
£m £m
shortterm borrowing
bank loans and overdraft 26 32
trade creditors – 05
amounts owed to group undertakings 3594 1699
other taxation and social security 05 05
accruals and deferred income 45 34
3644 1743
total 3670 1775
further details regarding the company’s borrowings are set out in note 20 of the consolidated financial statements
spectris plc annual report and accounts 2007 81 notes to the company’s accounts continued
43 creditors due after more than one year
2007 2006
£m £m
medium and longterm borrowing
unsecured loan notes 1060 1061
further details regarding the company’s borrowings are set out in note 20 of the consolidated financial statements
44 derivative financial instruments
2007 2006
£m £m
crosscurrency interest rate swaps 161 128
further details regarding the company’s crosscurrency interest rate swaps are set out in note 21 of the consolidated financial statements
45 provisions for liabilities and charges
£m
at 1 january 2007 16
transfer from group company 03
utilised during the year 07
at 31 december 2007 12
provisions represent the directors’ best estimate of settling various potential claims against the company arising in the ordinary course of business
46 share capital
2007 2006
111111111111 111111111111
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 1246 62
issued for cash on exercise of share options –– 04 –
at 31 december 1250 62 1250 62
during the year 38500 2006 04 million ordinary shares were issued upon exercise under share option schemes
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 are contained in note 27 to the
consolidated financial statements
the company recognised total expenses of £06m related to equitysettled sharebased payment transactions in 2007 2006 £06m in addition 
the company recognised £03m 2006 £nil related to equitysettled sharebased transactions for certain employees of other group companies
82 spectris plc annual report and accounts 2007 47 reserves
share capital profit and
premium merger redemption special loss
account reserve reserve reserve account total
£m £m £m £m £m £m
at 1 january 2007 2311 31 03 341 1249 3935
profit for the year –––– 859 859
dividends paid –––– 222 222
sharebased payment expense –––– 09 09
own shares treasury purchased –––– 792 792
own shares ebt 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 ––––––
sale of own shares by employee benefit trust –––– 10 10
at 31 december 2007 2314 31 03 341 1125 3814
further details of the employee benefit trust are set out in note 29 of the consolidated financial statements
the purpose of the merger reserve and capital redemption reserve is detailed in note 26 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
48 reconciliation of movement in equity shareholders’ funds
2007 2006
£m £m
profit for the year 859 997
dividends paid in the year 222 202
sharebased payment expense 09 06
own shares treasury purchased 792 –
own shares ebt purchased 16 –
share options exercised from own shares treasury purchased 29 –
share options exercised by issue of share capital 02 –
premium on issues of shares – 20
sale of own shares by employee benefit trust – 09
share options exercised from shares held by employee benefit trust 10 38
net increase in equity shareholders’ funds 121 868
opening equity shareholders’ funds 3997 3129
closing equity shareholders’ funds 3876 3997
49 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 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 2007 employer contributions of 13 pa of pensionable salaries plus £1712000 pa
were due the actuary certified in 2006 that this level of contributions was adequate for the purposes of the minimum funding requirement
contributions paid in 2007 to the spectris pension plan were £17m 2006 £17m and the amounts outstanding at the year end were £01m 
2006 £01m contributions paid in 2007 to defined contribution plans were £04m 2006 £03m
spectris plc annual report and accounts 2007 83 notes to the company’s accounts continued
50 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
51 commitments
land and buildings
111111111111
2007 2006
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 2006 £nil
52 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 £37m 2006 £36m was outstanding at 31 december 2007
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 £06m 2006 £10m was outstanding at 31 december 2007
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 £67m 2006 £60m was outstanding at 31 december 2007
84 spectris plc annual report and accounts 2007 shareholder information
financial calendar
annual general meeting 16 may 2008
record date for 2007 final dividend 30 may 2008
2007 final dividend payable 20 june 2008
2008 first half trading update 10 july 2008 
2008 interim results 22 august 2008
2008 preliminary results february 2009
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
hoare govett limited
merrill lynch
corporate finance advisers
merrill lynch
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
designed by tor pettersen  partners
printed in england by the colourhouse a carbon neutral company
acknowledgements the case study on page 11 is abridged from an
article in the september 2007 issue of awe international by dr gary
pritchard panalytical and dr scott c stark australian antarctic division
aad photography on page 17 courtesy of the bureau of reclamation
lower colorado region    
this report is printed on revive special silk which is
produced using at least 30 deinked postconsumer
recovered fibre with the remainder being wood fibre from
wellmanaged forests independently certified according to
the rules of the forest stewardship council the paper is
manufactured at a mill that has been awarded the iso14001
certificate for environmental management and the pulp is bleached using
either totally chlorine free or elemental chlorine free processes
© spectris plc february 2008 spectris plc annual report and accounts 2007 85 malvern
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spectris plc
station road egham
surrey tw20 9np england
tel 44 01784 470470
fax 44 01784 470848
wwwspectriscom


Summary:
 2 spectris plc annual report and accounts 2007
spectris performed well in 2007 with sales profits and 
earnings per share all increasing compared with the prior 
year after adjusting for disposals and acquisitions t otal group
sales were £6684 million compared with £6845 million in the
prior year excluding the effect of disposals during the first 
half of 2007 sales from continuing businesses increased by 
27 to £6598 million 2006 £6426 million or 65 at
constant currencies
t otal group adjusted operating profit increased by 
22 to £1048 million 2006 £857 million operating
margins increased by 29 percentage points to 158 of
sales profit before tax increased by 28 to £980 million 
2006 £763 million and earnings per share increased by 33
to 581p 2006 437p operating cash conversion was strong
with 99 of operating profit converted to operating cash
net proceeds from disposals were £298 million the buyback 
of 89 million shares during 2007 absorbed £792 million with
the result that net debt at the end of the year was £773 million
compared with £717 million at the end of december 2006
net interest costs were £67 million giving an annualised cover
of 156 times
the board proposes to pay a final dividend of 1525p which
combined with the interim dividend of 575p gives a total of
210p 2006 175p an increase of 20 the dividend will be
paid on 20 june 2008 to shareholders on the register at 
30 may 2008
board changes
as previously announced andrew given retired at the may 2007
agm and john hughes joined the board as a nonexecutive
director in june stephen harris business group director
resigned from the board on 31 january 2008 i shall be standing
chairman’s statement
down at the may 2008 agm as announced in november 2006
after twenty years with the company and will be succeeded as
chairman by john hughes t o him to the rest of the board and
to everyone at spectris i convey my thanks and best wishes for
continuing success and prosperity
outlook
2007 was a successful year in which the company delivered 
a return on sales in excess of 15 our broad spread of
geographies and end user markets and strong product offering
ensure that we are well placed to maintain good progress despite
an economic outlook which is less certain the current year has
started well with encouraging prospects across the multiple
industries and regions we serve
john poulter
chairman
“2007 was a successful year in which the
company delivered a return on sales in
excess of 15”
 unless otherwise stated all sales and operating profit figures in the narrative are on a
continuing businesses basis and exclude the businesses divested 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