Spectris plc: Annual Report and Accounts 2019
The Company's Annual Report and Accounts for the year ended 31 December 2019 (the "Annual Report") has been published on the Company's website at www.spectris.com and has been posted to shareholders who have elected to receive hard copy communications.
The Annual General Meeting is scheduled to be held on 22 May 2020. The Notice of Annual General Meeting (the "Notice of Meeting") will be circulated to shareholders no later than 21 clear days before the AGM, in line with the requirements of section 307 of the Companies Act 2006. A separate announcement will be made when the Notice of Meeting and the Form of Proxy are available.
Pursuant to UK Listing Rule 9.6.1, the following documents have also been submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.morningstar.co.uk/uk/nsm
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The Annual Report; and |
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The Notice of Availability. |
The final results for the year ended 31 December 2019, released by the Company on 20 February 2020, include the information required pursuant to Rules 4.1 and 6.3.5 of the UK Disclosure Guidance and Transparency Rules, excepting publication of the responsibility statement of the Directors in respect of the 2019 Accounts, and a description of the principal risks and uncertainties facing the Company, which are detailed below:
Directors Responsibility Statement
We confirm that to the best of our knowledge:
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the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; |
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the Strategic Report on pages 1 to 53 and the Directors' Report on pages 54 to 95 include a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and |
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the Annual Report and Accounts taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group's performance, business model and strategy. |
Andrew Heath - Chief Executive
Derek Harding - Chief Financial Officer
Principal Risks and Uncertainties
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Strategic transformation |
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Definition: |
Failure to successfully deliver the Group strategy, including business transformation and key mergers and acquisitions activity. |
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Link to Strategy: |
Customer focus; Operating leverage; Portfolio management; Spectris Business System ('SBS'); Perform and grow |
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Risk Appetite: |
Balanced |
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Assessment: |
High |
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Change in Risk Level: |
New risk |
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Impact |
Our day-to-day activities are aligned to the successful achievement of the Group's strategic objectives. Nevertheless, we recognise the importance of managing some of the more transformative elements of strategic activation as a Principal Risk. These elements include divestments and acquisitions, incorporating effective cost management tools into the SBS, capital investment and the ongoing digitisation of our offerings and infrastructure. |
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Mitigation |
• Embedding profit improvement into business as usual supported by the SBS • Enhanced acquisition/merger integration processes and capability • Regular reviews to track activation • A framework of physical and logical control measures |
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Cyber threat |
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Definition: |
Failure to appropriately protect critical information/physical assets from cyber threats, including external hacking, cyber fraud, and inadvertent/ intentional electronic leakage of critical data. |
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Link to Strategy: |
Customer focus; Operating leverage; Ethics and HSE |
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Risk Appetite: |
Cautious |
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Assessment: |
High |
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Change in Risk Level: |
Increase |
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Impact |
Our businesses face both internal and external information security risks, the nature and complexity of which are constantly changing, becoming more sophisticated and unpredictable. With the introduction of data privacy regulatory requirements, and a continuing trend of high-profile information security breaches occurring across a wide range of businesses, the Group takes a necessarily proactive and cautious approach to safeguarding its information assets. |
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Mitigation |
• Information security and data privacy policies and minimum expected controls • Cyber risk assurance undertaken by Internal Audit • Online and face-to-face awareness training • Regular Board and Audit and Risk Committee sessions on cyber threat • Continued strengthening of IT systems |
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Compliance |
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Definition: |
Failure to comply with laws and regulations, leading to reputational damage, substantial fines and potential market exclusion. |
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Link to Strategy: |
Ethics and HSE; Customer focus |
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Risk Appetite: |
Highly cautious |
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Assessment: |
High |
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Change in Risk Level: |
No change |
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Impact |
We operate in many jurisdictions and, consequently, are subject to wide-ranging laws and regulations including export controls, data privacy, fair competition and anti-bribery and corruption. Any compliance failure by the Group or its representatives could result in civil or criminal liabilities, leading to significant fines and penalties or the disqualification of the Group from participation in government-related contacts or entire markets. |
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Mitigation |
• Strong cultural alignment to the Spectris value of 'Absolute Integrity' • Investment in experienced compliance professionals • Formal compliance programme including policies, procedures and training • Contract review and approval processes |
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Political |
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Definition: |
Material adverse changes in the geopolitical environment putting at risk our ability to execute our strategy. Includes trade protectionism, punitive tax/regulatory regimes, and general heightened tension between trading parties or blocs. |
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Link to Strategy: |
Customer focus; Operating leverage; Perform and grow |
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Risk Appetite: |
Balanced |
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Assessment: |
Moderate |
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Change in Risk Level: |
Increase |
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Impact: |
We operate in a range of end markets around the world and may be affected by political or regulatory developments in any of these countries. Material adverse changes in the political environment in the countries in which we operate have the potential to put at risk our ability to execute our strategy. We continually monitor the geopolitical landscape and develop response plans accordingly. |
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Mitigation: |
• Event monitoring and horizon scanning • Working groups to limit the impact of materialising risks • Maintain a strong balance sheet • Operate in a broad spread of geographical markets and end users • Response planning |
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Market/financial shock |
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Definition: |
Material adverse changes in market conditions, such as economic recession, sudden negative investor sentiment and currency fluctuation. |
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Link to Strategy: |
Customer focus; Operating leverage |
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Risk Appetite: |
Balanced |
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Assessment: |
Moderate |
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Change in Risk Level: |
No change |
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Impact |
As a public company, and one that conducts business in a large number of markets, we recognise the global or local impact that a recession or period of instability could have on the Group. As with political risk, we are limited in our ability to reduce the likelihood of such events, but with careful monitoring and response planning we can ensure that the potential impact is restricted. |
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Mitigation |
• Market monitoring and horizon scanning • Maintain a strong balance sheet • Operate in a broad spread of geographical markets and end users • Response planning |
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Talent and capabilities |
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Definition: |
Failure to attract, retain and deploy the necessary talent to deliver Group strategy. |
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Link to Strategy: |
Leadership and talent; SBS |
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Risk Appetite: |
Balanced |
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Assessment: |
Moderate |
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Change in Risk Level: |
No change |
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Impact |
The Group needs to attract, develop, motivate and retain the right people to achieve our operational and strategic targets. Effective talent management is essential to successfully delivering our current business requirements and strategic goals, and to realising the full potential of our businesses. Therefore, failure to leverage talent and capabilities could significantly impact the successful execution of our strategy. |
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Mitigation |
• Structured recruitment and succession processes for senior Group talent • Global HR information systems implementation underway • Annual organisation capability review process |
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Intellectual property |
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Definition: |
Infringement of third-party rights, and failure to appropriately protect our intellectual property and infringement of the Group's intellectual property rights by a third-party. |
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Link to Strategy: |
Customer focus; Portfolio management |
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Risk Appetite: |
Highly cautious |
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Assessment: |
Low |
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Change in Risk Level: |
Increase |
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Impact |
It is important that we have measures in place to reduce the likelihood that we may inadvertently infringe third-party rights. Our information assets, know-how and products provide the Group with a wealth of intellectual property, and we have a proactive approach towards protection and management of that property. The Group owns and registers patents and trademarks, maintains trade secrets, confidential information and copyright, and exploits intellectual property through licensing. |
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Mitigation |
• Monitoring third-party applications and competitor activity • Protection, including patent registration • Freedom-to-operate technical reviews in advance of new product development, acquisitions and licensing • Policies, procedures and training |
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Business disruption |
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Definition: |
Failure to appropriately prepare for and respond to a crisis or major disruption to key operations either across the Group, in a key region/location, or via a critical supplier. |
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Link to Strategy: |
Customer focus; Operating leverage; Perform and grow |
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Risk Appetite: |
Cautious |
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Assessment: |
Low |
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Change in Risk Level: |
New risk |
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Impact |
The nature of our geographically diverse and segmented businesses provides a degree of natural hedging from Group-wide disruption arising from a major event, be it a physical disaster at a major site, or an in-region external event, such as the recent coronavirus outbreak in China. However, we acknowledge the importance of proactively ensuring a consistent and effective business continuity management process across the Group. |
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Mitigation |
• Business continuity plans • IT disaster recovery plans • Testing plans • Risk identification and monitoring • Crisis management |
Name of contact and telephone number for queries:
Rebecca Dunn
Deputy Company Secretary
01784 470 470
LEI Number: 213800Z4CO2CZO3M3T10
For and on behalf of Spectris plc
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