Spectris supplies productivity-enhancing instrumentation and controls to improve processes and products for end-user customers. Our products and applications help customers to improve product quality and performance, increase productivity and yield and reduce downtime and waste. Spectris products are generally small-ticket items, typically £10-20k, but bring real benefits, with rapid payback. Our instrumentation and control businesses are leaders in their specialist markets and serve a range of industries around the world.
Spectris was founded in 1915 as The Fairey Aviation Company Limited. The company changed its name to Spectris plc in May 2001.
The company was listed on the stock exchange in 1988 as Fairey Group plc.
Fairey Group changed its name to Spectris following approval by shareholders at the AGM in May 2001.
Fairey Group acquired the four instrumentation and controls businesses of the German company Spectris AG in June 2000. The reshaping of the group into a specialist technology-based instrumentation and electronic controls company, which has 90% of its business outside the UK, made it an appropriate time to adopt a name which more closely reflected the company’s focus. Fairey Group subsequently changed its name to Spectris as this name already had recognition and provided the opportunity to adopt a name which, along with trademarks and website domains, the company already owned.
At the end of 2011, the last full year for which accounts are available, reported sales were £1,106.2m (2010: £901.9m), with adjusted operating profit of £201.5m (2010: £142.1m). Adjusted earnings per share were 124.1p (86.6p).
Spectris’ dividend policy is progressive with dividend increases being based upon affordability and sustainability. Other factors taken into consideration when determining the dividend are the pay-out ratio and the yield. The dividend for 2011 was 33.6p (2010: 28.0p).
As at the end of December 2011, the company’s net debt amounted to £356.2m and interest, excluding the financing charge ariding from IAS 19, was covered by adjusted operating profit 20 times, providing significant headroom over and above banking covenants which require a minimum of 3.75 times cover.
Strong cash generation is a key company objective, with a 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 2011, cash conversion was 89% (2010: 112%).
Spectris invests significantly in the development of new products and technologies, with an annual spend of around 7% of sales on the development of new products and technologies. In 2011, expenditure on R&D was 7% of sales, or £75.8m. Many of our core technologies are protected by patents and process know-how.
The nature of the business is not capital intensive. Capital expenditure during the 2011 financial year equated to 2.6% of sales (2010: 2.1%) and, at £29.2 million (2010: £18.9 million), was 162% of depreciation and software amortisation (2010: 115%). The majority of manufacturing is outsourced and premises are mainly leased.
Owing to the company’s diversity, it is difficult to identify exact comparable trading companies, however, broker research reports have identified a number of peer companies in the US against which to compare valuations. These are: Roper Industries, Danaher, PerkinElmer, Mettler-Toledo, and Thermo Fisher Scientific. Whilst a number of these companies are significantly larger than Spectris and only part of their business is in instrumentation, there is significant overlap.
Spectris is listed on the London Stock Exchange in the Electronics sector under the ticker symbol SXS.
Spectris shares cannot be purchased over the counter outside the UK, however they can be bought and sold via a registered intermediary.
As an alternative to receiving dividends in cash, shareholders can use their dividend payments to buy additional Spectris shares using the Dividend Reinvestment Plan (DRIP). New applications to participate in the DRIP must be received at least 15 working days before the date of the next dividend payment.
Full details of the Plan are set out on the Spectris website here http://investors.spectris.com/spectris/en/investors/shareholder-information/dividends/ or, alternatively, contact the registrars, Equiniti on 0871 384 2586 (UK) or +44 121 415 7047 (overseas)
Share certificates in the name of Fairey Group plc remain valid. However, if you would like a replacement certificate bearing the name of Spectris plc, please write to our registrars stating this request and enclosing your existing certificate. Our registrar’s details are as follows:- Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
To change any details on your share certificate, contact the registrars:- Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA. A range of shareholder services are also provided on-line at www.shareview.co.uk
The company’s head office is at Station Road, Egham, Surrey, TW20 9NP, UK and the main telephone number is +44 (0)1784 470470. The e-mail address is headoffice@spectris.com