Spectris plc Performance in 2018 was slightly ahead of expectations

Spectris plc (LON:SXS), the productivity-enhancing instrumentation and controls company, announces full year results for the twelve months ended 31 December 2018.

Adjusted performance measures: For 2018, and presented on a comparable basis for 2017, restructuring costs of £15.6 million (2017: £15.8 million) including £10.8 million relating to Project Uplift and £4.8 million relating to the new profit improvement programme, have been excluded from adjusted measures. Adjusted profit before tax, adjusted earnings per share and adjusted operating cash flow conversion previously reported in 2017 were £218.4 million, 145.1p and 75%, respectively (2018 on a comparable basis would be £230.6 million, 158.1p and 58%, respectively).

1 Alternative performance measures (‘APMs’) are used consistently throughout this press release and are referred to as ‘adjusted’ or ‘like-for-like’ (‘LFL’). These are defined in full and reconciled to the reported statutory measures in Note 2 to the Financial Statements.

2 The main adjusting items to statutory profit before tax in 2018 and 2017 were profits on disposal of businesses of £56.3 million and £100.5 million, respectively, increasing basic earnings per share by 47.9 pence and 84.3 pence, respectively.

Highlights

· Sales of £1,604.2 million, reflecting a 5% LFL sales increase, building on the progress made in 2017

· Adjusted operating profit of £248.3 million, adjusted operating margin up 0.3pp on a LFL basis

· Adjusted earnings per share up 7%, dividend per share increase of 8%

· New profit improvement programme is anticipated to deliver annualised benefits of more than
£30 million, of which £15-20 million is expected to be realised during 2019

· Strategic review initial conclusions presented:

· Group would benefit from becoming a more focused and simplified business

· Assessing which operating companies can drive the greater shareholder value:

o Scalable, in attractive high growth markets, with strongest capabilities and greatest performance potential

o Identified three platform businesses so far – Malvern Panalytical, HBK, Omega equating to more than 60% of Group sales and adjusted operating profit

Commenting on the results, Andrew Heath, Spectris Chief Executive, said: “I am pleased that our performance in 2018 was slightly ahead of expectations, reflecting the quality of our businesses. We were able to build on the increased momentum across our end markets and delivered good LFL sales growth. We expect sales growth to moderate in 2019, given the more cautious macroeconomic outlook. Consequently, we are focusing on what we can control; increasing productivity and operational efficiency, while driving sales. Our profit improvement programme is expected to deliver benefits of £15-20 million during 2019, helping drive margin expansion. With this focus on improving profitability, we anticipate operating profit to grow ahead of sales, growing our margin in the process.

Since I joined the Group last Autumn, we have taken decisive action to improve Spectris’ performance. This will continue through 2019 as we complete the strategic review and execute our strategy for profitable growth, as the basis for delivering a significant and sustainable increase in shareholder value.

I am convinced that there is significant value creation opportunity here for our customers, shareholders and people. I look forward to setting out in more detail the results of the review and our vision for the Group at our Capital Markets Day in June 2019.”