REG - Spectris PLC - Annual Financial Report

SpectrisAnnouncement

25/03/2022 09:45

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RNS Number : 0619G  Spectris PLC  25 March 2022

Spectris plc: Annual Report and Accounts 2021

 

Following the release of the Company's final results for the year ended 31
December 2021, the Company's Annual Report and Accounts for the year ended 31
December 2021 (the "Annual Report") and Notice of Annual General Meeting to be
held on 27 May 2022 have been published on the Company's website at
www.spectris.com (http://www.spectris.com) and have been posted to
shareholders who have elected to receive hard copy communications.

 

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 https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)

 

  -   The Annual Report;
 -    The Notice of Annual General Meeting;
 -    Form of Proxy; and
  -   The Notice of Availability for documents on the Company's website.

The final results for the year ended 31 December 2021, released by the Company
on 24 February 2022, 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
2021 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:

 

 •    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;
 •    the Strategic Report on pages 1 to 59 and the Directors' Report on pages 60 to
      101 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
 •    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

 

 Strategic transformation
 Definition:            Failure to successfully deliver the Group strategy, including business
                        transformation and key mergers, acquisitions and divestments activity.
 Link to Strategy:      • Customer focus • Operating leverage • Portfolio management •
                        Spectris Business System ('SBS') • Perform and grow
 Risk Appetite:         Balanced
 Assessment:            Moderate
 Change in Risk Level:  Decrease
 Impact                 Our day-to-day activities are inherently aligned to the successful achievement
                        of the Group's strategic objectives. Nevertheless, we recognise the importance
                        of specifically managing some of the more transformative elements of strategic
                        execution as a Principal Risk. These elements include mergers, divestments and
                        acquisitions, growth initiatives including capital investment, R&D,
                        technology and digitising our offering.
 Mitigation             • Remuneration policy aligned to incentivise delivery of the strategy

                        • Deployment of the SBS

                        • Continued review of acquisition/ merger pipeline, integration processes
                        and capability

                        • Regular reviews to track strategy execution

                        • Platform Audit and Risk Committees

 

 Cyber threat
 Definition:            Failure to appropriately protect critical information and other assets from
                        cyber threats, including external hacking, cyber fraud, demands for ransom
                        payments and inadvertent/ intentional electronic leakage of critical data
 Link to Strategy:      • Customer focus • Operating leverage • Ethics, HSE and sustainability
 Risk Appetite:         Cautious
 Assessment:            High
 Change in Risk Level:  No change
 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.
 Mitigation             • Information security and data privacy policies and controls

                        • Cyber risk assurance undertaken by Internal Audit

                        • Online and face-to-face awareness and 'cyber fitness' training

                        • Regular Board and Audit and Risk Committee reviews on cyber threat

                        • Continued strengthening of IT systems

                        • Cyber-attack simulation exercise undertaken at the Executive level

 

 Compliance
 Definition:            Failure to comply with laws and regulations, leading to reputational damage,
                        substantial fines and potential market exclusion.
 Link to Strategy:      • Ethics, HSE and sustainability • Customer focus
 Risk Appetite:         Highly cautious
 Assessment:            High
 Change in Risk Level:  No change
 Impact                 We operate in many jurisdictions and, as a consequence, 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
                        contracts or entire markets.
 Mitigation             • Strong cultural alignment to the Spectris value of 'Be true'

                        • Global implementation of new Code of Business Ethics

                        • Formal compliance programme including policies, procedures and training

                        • Contract review and approval processes

                        • Investment in experienced compliance professionals

 

 Political
 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.
 Link to Strategy:      • Customer focus • Operating leverage • Perform and grow • Ethics, HSE
                        and sustainability
 Risk Appetite:         Balanced
 Assessment:            Moderate
 Change in Risk Level:  No change
 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
 Mitigation:            • Event monitoring and horizon scanning

                        • Working groups and sub-committees to limit the impact of materialising
                        risks, including Executive Export Controls Committee

                        • Operate in a broad spread of geographical markets and end users

                        • Response planning

                        • Maintain a strong balance sheet

 

 Market/financial shock
 Definition:            Material adverse changes in market conditions, such as economic recession,
                        inflation, sudden negative investor sentiment and currency fluctuation.
 Link to Strategy:      • Customer focus • Operating leverage
 Risk Appetite:         Balanced
 Assessment:            High
 Change in Risk Level:  No change
 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.
 Mitigation             • Market monitoring and horizon scanning

                        • Maintain a strong balance sheet

                        • Operate in a broad spread of geographical markets and end users

                        • Response planning

                        • Cost saving opportunities identified by SBS and regular review of pricing
                        to mitigate impacts of cost inflation

 

 Talent and capabilities
 Definition:            Failure to attract, retain, and deploy the necessary talent to deliver Group
                        strategy.
 Link to Strategy:      • Leadership and talent; SBS
 Risk Appetite:         Balanced
 Assessment:            Moderate
 Change in Risk Level:  No change
 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. The three broad areas of
                        focus are leadership, engineering and entry level roles.
 Mitigation             • Structured recruitment and succession processes for senior Group talent

                        • Full deployment of Workday HR system with recruitment, performance and
                        talent management processes

                        • Annual organisation capability review process

                        • Appropriate incentives with benchmarking at all levels

                        • Global employee engagement programme

                        • Leadership development programmes for senior and middle management and
                        high potentials

 

 

 Business disruption
 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.
 Link to Strategy:      • Customer focus • Operating leverage • Perform and grow
 Risk Appetite:         Cautious
 Assessment:            Low
 Change in Risk Level:  No change
 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 a global external event,
                        such as the COVID-19 pandemic. However, we acknowledge the importance of
                        proactively ensuring a consistent and effective business continuity management
                        process across the Group.
 Mitigation             • Common policy and enhanced standard for business continuity planning
                        across the Group in progress

                        • IT disaster recovery plans

                        • Testing plans

                        • Risk identification and monitoring

                        • Effective internal and external communications

 

 Climate Change
 Definition:            Failure to respond appropriately, and sufficiently, to climate change risks or
                        failure to identify the associated potential opportunities in assisting others
                        manage their climate agendas.
 Link to Strategy:      • Ethics, HSE and sustainability • Customer focus • Perform and grow
 Risk Appetite:         Balanced
 Assessment:            Moderate
 Change in Risk Level:  New risk
 Impact                 The transition and physical risks present in climate change have the potential
                        to impact the medium and long-term success of our business through market
                        regulation and additional taxes, the changing macroeconomic landscape and the
                        potential physical impact on our operations. We see the potential for
                        additional sales opportunities as well as increased costs and investment.
 Mitigation             • Agreed action plan to meet Net Zero targets validated by the Science Based
                        Targets initiative

                        • Head of Sustainability appointed to Executive to coordinate sustainability
                        activity globally

                        • Board and Executive oversight of sustainability performance as well as
                        progress against Net Zero roadmap

                        • Geographical diversity of businesses and supply chain

                        • Climate physical risks monitored and reported by each business

                        • Aligning strategy with current and emerging sustainability thematics

 

 

Name of contact and telephone number for queries:

 

Eliza Unwin

Deputy Company Secretary

+44 77 8542 1875

LEI Number: 213800Z4CO2CZO3M3T10

For and on behalf of Spectris plc

 

 

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