REG - Spirent Comms. PLC Keysight Technologs. - Spirent FY2024 Results
04/03/2025 07:15
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250304:nRSD1853Za&default-theme=true
RNS Number : 1853Z Spirent Communications PLC 04 March 2025
SPIRENT COMMUNICATIONS PLC
Full year results for the year ended 31 December 2024
Good momentum building in the second half of the year
despite challenging environment
$ million 2024 2023 Change (%)
Orderbook(1) 312.1 293.7 6.3
Order intake(2) 479.0 477.0 0.4
Revenue 460.2 474.3 (3.0)
Gross margin (%) 72.0 72.4 (0.4pp)
Adjusted operating profit(3) 46.2 45.2 2.2
Adjusted profit before tax(4) 49.7 49.7 -
Adjusted basic earnings per share(5) (cents) 7.75 7.55 2.6
Reported operating profit 10.3 18.4 (44.0)
Reported profit before tax 13.8 22.9 (39.7)
Basic earnings per share (cents) 2.25 4.30 (47.7)
Closing cash 141.8 108.1 31.2
Commenting on today's announcement, Eric Updyke, Chief Executive Officer,
said:
"The results in 2024 speak to the dedication of the whole global Spirent team
who have yet again demonstrated their commitment and operational resilience in
the face of a challenging market environment, while also working with Keysight
to conclude their acquisition of the Group. It has been a very busy year, in
which we delivered a good performance, and I would like to personally thank
all of Spirent staff for their hard work."
"Despite ongoing challenging market conditions, momentum picked up in the
latter part of the financial year. Our continuing investment in product
development has meant that we have been able to support our customers as they
progress their 5G related roll out programmes. Good progress was made in
customer diversification, and the recent launch of new products has started to
achieve traction. We are well positioned for 2025, with a robust balance
sheet, an innovative portfolio and a growing order book."
Outlook
Notwithstanding the challenging market conditions, we are pleased to have
started the new financial year with a growing orderbook. We are well
positioned to deliver strategic and operational progress, with opportunities
emerging across our end customer markets whilst we continue to invest in our
leading technology solutions across our portfolio. This will position us well
in our key markets as they continue to recover. The Group is well-placed for
the year ahead.
Notes
1. Orderbook is an alternative performance measure as defined in the
appendix on page 25.
2. Order intake represents commitments from customers in the period to
purchase goods and/or services that will ultimately result in recognised
revenue.
3. Before acquired intangible asset amortisation, share-based payment
and other adjusting items amounting to $35.9 million in total (2023 $26.8
million).
4. Before items set out in note 4.
5. Adjusted basic earnings per share is based on adjusted earnings as
set out in note 6.
- ends -
Enquiries
Eric Updyke, Chief Executive Officer Spirent Communications plc +44 (0)1293 767676
E: investor.relations@spirent.com (mailto:investor.relations@spirent.com)
Paula Bell, Chief Financial & Operations Officer
James Melville-Ross/Humza Vanderman DGA Group +44 (0)20 7664 5095
E: spirent@dgagroup.com
About Spirent Communications plc
Spirent Communications plc (LSE: SPT) is a leading global provider of
automated test and assurance solutions for networks, cybersecurity, and
positioning. The Company provides innovative products, services and managed
solutions that address the test, assurance, and automation challenges of a new
generation of technologies, including 5G, AI, cloud, autonomous vehicles and
beyond. From the lab to the real world, Spirent helps companies deliver on
their promise to their customers of a new generation of connected devices and
technologies. Further information about Spirent Communications plc can be
found at https://corporate.spirent.com/ (https://corporate.spirent.com/) .
Spirent Communications plc Ordinary Shares are traded on the London Stock
Exchange (ticker: SPT;
LEI: 213800HKCUNWP1916L38). The Company operates a Level 1 American Depositary
Receipt (ADR) programme with each ADR representing four Spirent Communications
plc Ordinary Shares. The ADRs trade in the US over-the-counter (OTC) market
under the symbol SPMYY and the CUSIP number is 84856M209. Spirent ADRs are
quoted on the Pink OTC Markets electronic quotation service which can be found
at https://www.otcmarkets.com/marketplaces/otc-pink
(https://www.otcmarkets.com/marketplaces/otc-pink) .
Spirent and the Spirent logo are trademarks or registered trademarks of
Spirent Communications plc. All other trademarks or registered trademarks
mentioned herein are held by their respective companies. All rights reserved.
Cautionary statement regarding forward-looking statements
This document may contain forward-looking statements which are made in good
faith and are based on current expectations or beliefs, as well as assumptions
about future events. You can sometimes, but not always, identify these
statements by the use of a date in the future or such words as "will",
"anticipate", "estimate", "expect", "project", "intend", "plan", "should",
"may", "assume" and other similar words. By their nature, forward-looking
statements are inherently predictive and speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future performance
and are subject to factors that could cause our actual results to differ
materially from those expressed or implied by these statements. The Company
undertakes no obligation to update any forward-looking statements contained in
this document, whether as a result of new information, future events or
otherwise.
Operating and financial review
Group overview
Despite the industry-wide slowdown and continued challenging market
conditions, we saw early signs of market recovery, particularly in the final
quarter of the year which saw a good uptick in order growth.
As previously stated, the telecommunications sector continued to be very
challenging in 2024. By continuing to invest in our leading products, we have
been able to support our customers as they continue to progress their 5G
related roll out programmes focusing on targeted network expansions and
improved quality and coverage. We saw good growth in EMEA across the year, and
some recovery in North America in the second half, offset by a reduction in
China, due to ongoing economic challenges which resulted in full year revenue
of $460.2 million, compared to $474.3 million for 2023. Adjusted operating
profit grew to $46.2 million from $45.2 million. Effective supply chain
management and robust customer pricing meant gross margin was maintained at 72
per cent. The orderbook closed up 6 per cent at $312.1 million (2023 $293.7
million), providing a solid base as we move into 2025.
Other adjusting items were $21.1 million (2023 $14.2 million) comprising
mainly of adviser costs of $18.2 million (2023 nil) relating to the
acquisition of Spirent, the majority of the remainder being restructuring and
strategic evaluation costs of $2.5 million (2023 $13.5 million). Adjusting
items are further detailed on page 6.
The effective tax rate remained flat at 10.7 per cent in 2024 (2023 10.8 per
cent). Adjusted basic earnings per share increased by 2.6 per cent, up from
7.55 cents last year to 7.75 cents for 2024.
Our approach to strong financial management and focus on our balance sheet
remains in place. Cash increased to $141.8 million (2023 $108.1 million).
Revenue
2024 % of total 2023 % of total
$ million
Revenue by segment
Lifecycle Service Assurance 181.0 39.3 199.1 42.0
Networks & Security 279.2 60.7 275.2 58.0
460.2 100.0 474.3 100.0
Revenue by geography
Americas 273.3 59.4 268.1 56.5
Asia Pacific 126.3 27.4 153.9 32.5
Europe, Middle East and Africa 60.6 13.2 52.3 11.0
460.2 100.0 474.3 100.0
Overall Group revenue declined by 3 per cent, with Lifecycle Service Assurance
down 9 per cent and Networks & Security up 2 per cent, respectively,
compared to the prior year.
Revenue in Lifecycle Service Assurance was lower in the first half of the year
due to the continued customer spending delays particularly in the
telecommunications market. We have a growing orderbook for our test assurance
solutions. We experienced decline from legacy products such as the channel
emulator whilst we are seeing momentum in new customer segments for our test
and assurance solutions. Nonetheless, progress was made in the fourth quarter
of the year and Lifecycle Service Assurance has continued to expand its
capabilities, allowing a move to adjacent enterprise markets, with multiple
new orders from Financial Services organisations.
Networks & Security's growth was boosted by a good performance from our
High-Speed Ethernet products and growing order pipeline in Positioning, which
was supported by positive take up of a new product line.
Revenue in the regions saw growth in the Americas and EMEA compared to the
prior year, and a decline in Asia Pacific, which was principally as a result
of macroeconomic factors in China.
Gross margin
2024 % 2023 %
$ million
Lifecycle Service Assurance 133.3 73.6 147.8 74.2
Networks & Security 198.2 71.0 195.8 71.1
331.5 72.0 343.6 72.4
Gross margin remained steady at 72 per cent (2023 72 per cent) driven by
effective supply chain management and robust customer pricing.
Operating costs
Adjusted(1) Reported Adjusted(1) Reported
$ million 2024 2024 2023 2023
Product development 99.0 99.0 102.4 102.4
Selling and marketing 126.3 126.3 133.9 133.9
Administration 60.0 95.9 62.1 88.9
Operating costs 285.3 321.2 298.4 325.2
Lifecycle Service Assurance 118.7 119.9 130.8 136.9
Networks & Security 153.3 154.6 156.9 164.2
Corporate 13.3 46.7 10.7 24.1
Operating costs 285.3 321.2 298.4 325.2
Note
1. Before acquired intangible asset amortisation, share-based payment
and other adjusting items amounting to $35.9 million in total (2023 $26.8
million).
The continued close management of our cost base, and the result of initiatives
implemented at the end of 2023, resulted in adjusted operating costs savings
which was offset by higher incentive accruals (2023 nil). Actual reported
costs increased in 2024 due to acquisition related costs.
We have continued to protect our technical leadership and ongoing investment
in product development. Costs decreased year-on-year from $102.4 million to
$99.0 million, driven by initiatives mainly taken in late 2023 as we
transferred activities to lower-cost regions. Our investment has led to
promising new launches - a new PNT X solution has been welcomed by new
customers and our Wi-Fi 7 solution is seeing early momentum. Our new AI
High-Speed Ethernet solution and a new Automation solution are winning new
customers in Communications and Financial Services.
Sales and marketing costs decreased by $7.6 million, from $133.9 million to
$126.3 million, due to a successful reorganisation of our EMEA sales model
which now includes more channel partners and less staff. The reorganisation
drove increased orders from this region.
Operating profit
$ million 2024 Adjusted operating margin(1, 2) 2023 Adjusted operating margin(1, 2)
% %
Lifecycle Service Assurance 14.6 8.1 16.9 8.5
Networks & Security 44.9 16.1 39.0 14.2
Corporate (13.3) (10.7)
Adjusted operating profit(1) 46.2 10.0 45.2 9.5
Adjusting items:
Acquired intangible asset amortisation (5.2) (5.0)
Share-based payment (9.6) (7.6)
Other adjusting items (21.1) (14.2)
Reported operating profit 10.3 18.4
Notes
1. Before acquired intangible asset amortisation, share-based payment
and other adjusting items amounting to $35.9 million in total (2023 $26.8
million).
2. Adjusted operating profit as a percentage of revenue in the period.
Adjusted operating profit increased to $46.2 million (2023 $45.2 million).
Total adjusting items of $35.9 million in 2024 increased from $26.8 million in
2023, mainly due to the increase in acquisition related transaction costs
relating to the acquisition of the Group by Keysight.
Therefore, reported operating profit declined to $10.3 million (2023 $18.4
million), reflecting the adviser costs relating to the acquisition of Spirent.
Acquired intangible asset amortisation and share-based payment
The acquired intangible asset amortisation charge increased slightly over the
prior year to $5.2 million (2023 $5.0 million) due to the amortisation of the
intangible assets recognised on the acquisition of the NetScout business
carve-out in September 2023.
Share-based payment increased to $10.1 million in 2024 (2023 $7.7 million), of
which $9.6 million (2023 $7.6 million) has been treated as an adjusting item.
Other adjusting items
$ million 2024 2023
Restructuring 2.5 13.5
Acquisition related costs 18.6 0.7
21.1 14.2
Restructuring
$ million 2024 2023
R&D engineering plan - 0.7
Finance transformation 1.2 1.1
Organisational restructure 0.8 8.8
Facilities downsize 0.5 2.9
2.5 13.5
Restructuring
We concluded our R&D engineering site plan to relocate activities from
North America to lower cost regions for our High-Speed Ethernet business in
2023. No further significant costs are expected in relation to this project.
In 2023, to embed standardised global finance processes, we moved certain
accounting activities from North America to the UK, incurring $1.1 million of
costs including $0.5 million of consultancy costs. In 2024, we moved into the
next phase of the initiative, incorporating the review of key global process
and/or control enhancements, incurring further consultancy costs of $0.9
million.
Strategic actions were taken to review the cost base and facility footprint in
the second half of 2023 and we exited and downsized three of our North
American facilities which gave rise to a non-cash $2.9 million impairment of
assets in 2023. The 2024 amounts relate to moving, relocating and downsizing
costs directly attributable to this project.
Acquisition related costs
In March 2024, Keysight announced its intention to purchase Spirent.
Therefore, the costs of $18.2 million recognised in 2024 relate mainly to
professional advisory charges due to this acquisition. We expect further deal
related charges, the majority of which are expected to be incurred when the
deal is closed.
On 8 September 2023, the Group completed the asset purchase of a small Test
Lab Automation business carve-out from NetScout Inc. Retention costs of $0.4
million were incurred during 2024 (2023 $0.7 million).
The tax effect of other adjusting items is a credit of $0.8 million (2023 $2.5
million).
The total cash outflow in respect of other adjusting items is reported within
cash flows from operating activities in the consolidated cash flow statement.
Currency impact
The Group's revenue and costs are primarily denominated in US Dollars or US
Dollar-linked currencies. Currency exposures arise from trading transactions
undertaken by the Group in foreign currencies and on the retranslation of the
operating results and net assets of overseas subsidiaries.
The Group's income statement includes a foreign exchange loss, included in
administration costs, of $0.5 million (2023 $0.9 million loss) arising from
transacting in foreign currencies, primarily US Dollars, in the United
Kingdom, and the translation of foreign currency cash balances.
Forward foreign currency exchange contracts are entered into to manage the
exposure arising from transacting in currencies other than US Dollars.
Although the most significant currency exposure arises in relation to
movements in Pound Sterling against the US Dollar, there are other less
significant currency exposures, notably the Euro and Chinese Yuan.
Finance income and costs
Interest income of $4.1 million was earned from bank interest (2023 $4.8
million) and $0.4 million (2023 $0.6 million) of interest income was
recognised in relation to the UK defined benefit pension plans. Surplus funds
are held principally in the United Kingdom and United States on short-term or
overnight deposits and earn market rates of interest.
Finance costs in 2024 were $1.0 million (2023 $0.9 million), relating to
interest on lease liabilities.
Tax
The adjusted effective tax rate, being the adjusted tax charge expressed as a
percentage of adjusted profit before tax shown on the face of the consolidated
income statement, was 10.7 per cent in 2024, compared with 10.8 per cent in
2023.
Spirent's effective tax rate continues to benefit from the United Kingdom
Patent Box Scheme, the United States R&D Tax Credit, and the US
foreign-derived intangible income deduction.
Earnings per share
Adjusted basic earnings per share was up 2.6 per cent to 7.75 cents (2023 7.55
cents). Basic earnings per share was 2.25 cents (2023 4.30 cents). There were
574.6 million (2023 586.7 million) weighted average Ordinary Shares in issue.
See note 6 for the calculation of earnings per share.
Financing and cash flow
Cash flow from operations was $57.0 million in 2024 (2023 $45.8 million)
driven by strong focus on working capital, which saw reductions in our
inventory levels partially offset by an increase in receivables arising from
our strong fourth quarter trading. Cash flow from operations is detailed in
note 9 (page 23). An explanation on free cash flow as an alternative
performance measure can be found on page 26.
Free cash flow is set out below:
$ million 2024 2023
Cash flow from operations 57.0 45.8
Tax paid (5.1) (13.9)
Net cash inflow from operating activities 51.9 31.9
Interest received 4.5 5.4
Net capital expenditure (7.3) (6.1)
Capitalised development costs (4.5) -
Payment of lease liabilities, principal and interest (9.2) (8.8)
Lease payments received from finance leases 0.3 0.6
Acquisition related other adjusting items (note 4) 18.6 0.7
Free cash flow 54.3 23.7
Net capital expenditure of $7.3 million was broadly similar to the same period
last year (2023 $6.1 million) and was predominantly related to equipment and
leasehold improvements.
No dividend was paid in 2024 (2023 $46.5 million) and no shares were purchased
or placed into the Employee Share Ownership Trust (ESOT) in 2024 and 2023.
Cash closed at $141.8 million at year end (2023 $108.1 million). There
continues to be no bank debt.
Defined benefit pension plans
The Group operates two funded defined benefit pension plans in the United
Kingdom which are closed to new entrants.
In October 2022, the Trustees of the Staff Plan, with the Group's support,
purchased a bulk annuity insurance (buy-in) policy from the UK insurer Pension
Insurance Corporation (PIC) covering all members. The premium was paid from
the plan's assets, and sufficient assets remain to meet the plan's ongoing
costs. This buy-in effectively transferred the investment, inflation,
longevity and demographic risks to PIC, meaning the Group no longer bears
these risks. Following the buy-in, the Group does not expect to make any
further cash contributions to the Staff Plan. Cash contributions for 2024 were
nil (2023 nil).
Following a detailed data cleansing process and payment of the final top-up
premium to PIC, the wind-up of the Staff Plan was initiated in November 2024.
The Group has determined that following this step it no longer has an
unequivocal right to the surplus, as the Trustees have discretion to use part,
or all, of the surplus to enhance members' benefits without requiring Group
approval. As a result, for the purposes of these disclosures, the Staff Plan
surplus has been restricted to nil at the year-end (2023 $6.7 million). The
Trustees are currently in the process of informing members of the wind up and
the Group's expectation is that the Trustees will pay the bulk of the surplus
to the Group, net of any tax due, once all wind-up expenses have been met.
The accounting valuation of the funded defined benefit pension plans at 31
December 2024 was a net surplus of $0.5 million (31 December 2023 net surplus
of $6.7 million).
There is also a liability for an unfunded plan in the UK of $0.5 million (31
December 2023 $0.5 million).
The Group operates an unfunded deferred compensation plan for employees in the
United States. At 31 December 2024, the deficit on this deferred compensation
plan amounted to $10.5 million (31 December 2023 $9.2 million).
Balance sheet
The consolidated balance sheet is set out on page 12.
Net assets increased by $16.7 million to $392.5 million at 31 December 2024,
from $375.8 million at 31 December 2023.
Overall, the increase in net assets is a result of positive levels of cash
generated from operations, offset by the reduction in pension surplus of $7.3
million (due to the initiation of the wind-up of the Staff Plan) and an
increase in trade and other payables of $12.8 million, primarily due to
increase in incentive accruals compared to the previous year.
Liquidity and dividend policy
The Board's intention is to maintain a cash positive balance sheet over the
medium to long term. This should allow the Company to maintain a strong
capital position in the face of business risks, trading fluctuations and
working capital demands.
The cash generation of the Group allows continued investment into R&D to
maintain our market-leading positions and inorganic investments where
opportunities support growth plans. If and when it is considered appropriate,
the Company may take on modest gearing to fund inorganic investments.
The Board will regularly review the Company's balance sheet in light of
current and expected trading performance and cash generation, working capital
requirements and expected organic and inorganic investments. To the extent the
Company has excess cash, it will consider returning such cash to shareholders.
The Board will consider from time to time the appropriate mechanism for
returning surplus cash to shareholders.
Dividend
As indicated in the Scheme Document published on 25 April 2024 in relation to
the offer for the Company by Keysight, the Board intends and expects to
declare a dividend of 2.5 pence per share, payable prior to the Effective Date
(as defined in the Scheme Document). Payment of this dividend is not
conditional upon the Effective Date occurring.
In addition, if the Effective Date has not occurred by 30 June 2025, the Board
will be entitled to declare and approve the payment of a further dividend of
up to 1.0 pence per share. If declared, this additional dividend will be
payable at any time thereafter and before the Effective Date.
Consolidated income statement
Year ended 31 December 2024 Year ended 31 December 2023
$ million Notes Adjusted Adjusting Reported Adjusted Adjusting Reported
items(1) items(1)
Revenue 3 460.2 - 460.2 474.3 - 474.3
Cost of sales (128.7) - (128.7) (130.7) - (130.7)
Gross profit 331.5 - 331.5 343.6 - 343.6
Product development 3 (99.0) - (99.0) (102.4) - (102.4)
Selling and marketing (126.3) - (126.3) (133.9) - (133.9)
Administration (60.0) (35.9) (95.9) (62.1) (26.8) (88.9)
Operating profit 46.2 (35.9) 10.3 45.2 (26.8) 18.4
Adjusting items:
Acquired intangible asset amortisation - (5.2) (5.2) - (5.0) (5.0)
Share-based payment - (9.6) (9.6) - (7.6) (7.6)
Other adjusting items 4 - (21.1) (21.1) - (14.2) (14.2)
- (35.9) (35.9) - (26.8) (26.8)
Finance income 4.5 - 4.5 5.4 - 5.4
Finance costs (1.0) - (1.0) (0.9) - (0.9)
Profit before tax 49.7 (35.9) 13.8 49.7 (26.8) 22.9
Tax (charge)/credit 5 (5.2) 4.3 (0.9) (5.4) 7.7 2.3
Profit for the year attributable to owners of the parent Company 44.5 (31.6) 12.9 44.3 (19.1) 25.2
Earnings per share (cents) 6
Basic 7.75 2.25 7.55 4.30
Diluted 7.67 2.22 7.50 4.26
Note
1. Adjusting items comprise amortisation of acquired intangible
assets, share-based payment, other adjusting items, tax on adjusting items and
any over/under provision in respect of prior year tax.
The performance of the Group is assessed using a variety of non-GAAP
alternative performance measures which are presented to provide additional
financial information that is regularly reviewed by management. Adjusting
items are identified and excluded by virtue of their size, nature or incidence
as they do not reflect management's evaluation of the underlying trading
performance of the Group. The alternative performance measures are presented
in the appendix. The reported GAAP measures give the complete measure of
financial performance.
Consolidated statement of comprehensive income
Year ended 31 December
$ million Note 2024 2023
Profit for the year attributable to owners of the parent Company 12.9 25.2
Other comprehensive (loss)/income
Items that may subsequently be reclassified to profit or loss:
- Exchange differences on retranslation on foreign operations (2.7) 2.8
Items that will not subsequently be reclassified to profit or loss:
- Re-measurement of the net defined benefit pension asset 8 (4.5) (4.1)
- Income tax effect of re-measurement of the net defined benefit pension (0.6) (0.1)
asset
- Re-measurement of the deferred compensation liability 8 - (0.6)
(5.1) (4.8)
Other comprehensive loss (7.8) (2.0)
Total comprehensive income for the year attributable to owners of the parent 5.1 23.2
Company
Consolidated balance sheet
At 31 December
$ million Notes 2024 2023
Assets
Non-current assets
Intangible assets 203.5 206.6
Property, plant and equipment 14.7 15.8
Right-of-use assets 17.5 17.2
Trade and other receivables 6.7 5.0
Assets recognised from costs to obtain a contract 0.7 0.3
Defined benefit pension plan surplus 8 0.5 8.4
Deferred tax asset 54.7 43.2
298.3 296.5
Current assets
Inventories 35.5 43.5
Trade and other receivables 134.9 133.7
Assets recognised from costs to obtain a contract 1.9 1.0
Current tax asset 1.8 1.0
Cash and cash equivalents 141.8 108.1
315.9 287.3
Total assets 614.2 583.8
Liabilities
Current liabilities
Trade and other payables (78.7) (65.9)
Contract liabilities (68.7) (66.6)
Lease liabilities (7.6) (10.7)
Other financial liabilities (0.1) -
Current tax liability (6.5) (0.8)
Provisions (3.7) (5.0)
(165.3) (149.0)
Non-current liabilities
Trade and other payables (0.2) (0.2)
Contract liabilities (29.2) (33.7)
Lease liabilities (12.7) (10.7)
Defined benefit pension plan deficit 8 (11.0) (11.4)
Provisions (3.3) (3.0)
(56.4) (59.0)
Total liabilities (221.7) (208.0)
Net assets 392.5 375.8
Capital and reserves
Share capital 24.2 24.6
Share premium account 25.3 25.7
Capital redemption reserve 17.9 18.2
Other reserves 18.6 17.5
Translation reserve 2.8 5.5
Retained earnings 303.7 284.3
Total equity attributable to owners of the parent Company 392.5 375.8
Consolidated statement of changes in equity
Attributable to the equity holders of the parent Company
$ million Notes Share Share Capital Other Translation Retained Total
capital premium redemption reserves reserve earnings equity
account reserve
At 1 January 2023 (audited) 24.7 24.4 16.0 20.9 2.6 376.6 465.2
Profit for the year - - - - - 25.2 25.2
Other comprehensive income/(loss)(1) - - - - 2.8 (4.8) (2.0)
Total comprehensive income - - - - 2.8 20.4 23.2
Share-based payment - - - - - 6.8 6.8
Tax credit on share incentives - - - - - (1.7) (1.7)
Equity dividends 7 - - - - - (46.5) (46.5)
Share repurchase 13 (1.4) - 1.4 - - (71.6) (71.6)
Exchange adjustment 1.3 1.3 0.8 (3.4) 0.1 0.3 0.4
At 1 January 2024 24.6 25.7 18.2 17.5 5.5 284.3 375.8
Profit for the year - - - - - 12.9 12.9
Other comprehensive income/(loss)(2) - - - - (2.7) (5.1) (7.8)
Total comprehensive income - - - - (2.7) 7.8 5.1
Share-based payment - - - - - 10.3 10.3
Tax charge on share incentives - - - - - 1.3 1.3
Equity dividends 7 - - - - - - -
Exchange adjustment (0.4) (0.4) (0.3) 1.1 - - -
At 31 December 2024 24.2 25.3 17.9 18.6 2.8 303.7 392.5
Notes
1. The amount included in other comprehensive income/(loss) for 2023
of $4.8 million represents re-measurement losses on the net defined benefit
pension asset of $4.1 million, a tax charge of $0.1 million and re-measurement
losses on the deferred compensation liability of $0.6 million. The amount
included in the translation reserve of $2.8 million represents other
comprehensive gain related to the translation of foreign operations.
2. The amount included in other comprehensive loss for 2024 of $5.1
million represents re-measurement losses on the net defined benefit pension
asset of $4.5 million, and a tax charge of $0.6 million. The amount included
in the translation reserve of $2.7 million represents other comprehensive loss
related to the translation of foreign operations.
Consolidated cash flow statement
Year ended 31 December
$ million Notes 2024 2023
Cash flows from operating activities
Cash flow from operations 9 57.0 45.8
Tax paid (5.1) (13.9)
Net cash inflow from operating activities 51.9 31.9
Cash flows from investing activities
Interest received 4.5 5.4
Capitalised development costs (4.5) -
Purchase of property, plant and equipment (7.3) (6.5)
Proceeds from the sale of property, plant and equipment - 0.4
Lease payments received from finance leases 0.3 0.6
Acquisition of subsidiary, net of cash acquired 10 - (7.8)
Net cash used in investing activities (7.0) (7.9)
Cash flows from financing activities
Lease liability principal repayments (8.2) (7.9)
Lease liability interest paid (1.0) (0.9)
Dividend paid 7 - (46.5)
Share purchase into Employee Share Ownership Trust 12 - -
Share repurchase 13 - (71.6)
Net cash used in financing activities (9.2) (126.9)
Net increase/(decrease) in cash and cash equivalents 35.7 (102.9)
Cash and cash equivalents at the beginning of the year 108.1 209.6
Effect of foreign exchange rate changes (2.0) 1.4
Cash and cash equivalents at the end of the year 141.8 108.1
Notes to the full year consolidated financial statements
1 Financial information presented
The financial information contained in this document does not constitute the
Group's statutory accounts for the years ended 31 December 2024 or 2023, but
is derived from those accounts. Statutory accounts for the year ended 31
December 2024 will be delivered to the registrar in due course.
The Group financial statements have been prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006 and United Kingdom adopted International Accounting
Standards. The comparative financial information is based on the statutory
accounts for the year ended 31 December 2023 which have been delivered to the
Registrar of Companies. The report of the auditors on the 2023 and 2024
accounts was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement made under Section 498 of the
Companies Act 2006.
The full year announcement was approved by the Board of Directors on 4 March
2025.
2 Accounting policies
The accounting policies adopted and methods of computation used are consistent
with those applied in the consolidated financial statements for the year ended
31 December 2024.
New accounting standards
There have been no applicable new standards, amendments to standards and
interpretations effective from 1 January 2024 that have been applied by the
Group which have resulted in a significant impact on its consolidated results
or financial position.
Going concern
In adopting the going concern basis for preparing the consolidated financial
statements, the Directors have considered the Group's principal risks and
uncertainties.
The Directors have also considered sensitivities in respect of potential
downside scenarios, including stress testing the latest cash flow projections
that cover a period of 12 months from the date of approval of these
consolidated financial statements. In these scenarios, the Group has more than
sufficient headroom in its available resources.
At 31 December 2024, the Group had cash balances of $141.8 million and
external debt only in relation to its lease liabilities.
The Directors have reviewed the detailed financial projections for the period
ending 31 December 2025, as well as the business plan and cash flows for the
three months ending 31 March 2026. The Directors have also considered the
period to the end of 2027 which forms part of the Group's longer-term
viability assessment. It is the Directors opinion that the most likely
scenario is that the Keysight acquisition will conclude within the going
concern period. In addition, they have considered the principal risks faced by
the Group including the Keysight acquisition, the sensitivity analysis and the
Group's significant financial headroom and are satisfied that the Group has
adequate financial resources to continue in operational existence for the
foreseeable future, a period of at least 12 months from the date of approval
of this report. Accordingly, the going concern basis of accounting continues
to be used in the preparation of the consolidated financial statements.
3 Operating segments
The Group's organisational structure is based on differences in the products
and services offered by each segment and information regularly reviewed by the
Group's Chief Executive Officer, its chief operating decision maker, is
presented on this basis. The Group's operating segments follow this structure.
The Group's reportable operating segments are Lifecycle Service Assurance and
Networks & Security. The Group evaluates adjusted operating profit before
acquired intangible asset amortisation, share-based payment and other
adjusting items. Finance income and finance costs are not allocated to the
reportable segments. Corporate is not an operating segment and costs are
separately reported and not allocated to the reportable segments. Information
on segment assets and segment liabilities is not regularly provided to the
Group's Chief Executive Officer and is therefore not disclosed below. There is
no aggregation of operating segments.
The Group disaggregates revenue from contracts with customers by nature of
products and services and primary geographical markets as this best depicts
how the nature, amount, timing and uncertainty of the Group's revenue and cash
flows are affected by economic factors.
2024 $ million
$ million Lifecycle Service Assurance Networks & Security Corporate Total
2024
Revenue
Nature of products and services
Sale of hardware and software 78.0 205.9 - 283.9
Maintenance and support services 103.0 73.3 - 176.3
181.0 279.2 - 460.2
Primary geographical markets
Americas 127.6 145.7 - 273.3
Asia Pacific 33.8 92.5 - 126.3
Europe, Middle East and Africa 19.6 41.0 - 60.6
181.0 279.2 - 460.2
Profit before tax
Adjusted operating profit 14.6 44.9 (13.3) 46.2
Other adjusting items note 4 (1.2) (1.3) (18.6) (21.1)
Total reportable segment profit 13.4 43.6 (31.9) 25.1
Unallocated amounts:
- Acquired intangible asset amortisation (5.2)
- Share-based payment (9.6)
Operating profit 10.3
Finance income 4.5
Finance costs (1.0)
Profit before tax 13.8
Other information
Product development 46.5 52.5 - 99.0
Depreciation of property, plant and equipment 3.2 5.2 0.1 8.5
Depreciation of right-of-use assets 2.5 3.9 0.3 6.7
2023 $ million
$ million Lifecycle Service Assurance Networks & Security Corporate Total
2023
Revenue
Nature of products and services
Sale of hardware and software 86.7 203.6 - 290.3
Maintenance and support services 112.4 71.6 - 184.0
199.1 275.2 - 474.3
Primary geographical markets
Americas 133.1 135.0 - 268.1
Asia Pacific 49.3 104.6 - 153.9
Europe, Middle East and Africa 16.7 35.6 - 52.3
199.1 275.2 - 474.3
Profit before tax
Adjusted operating (loss)/profit 16.9 39.0 (10.7) 45.2
Other adjusting items note 4 (6.1) (7.3) (0.8) (14.2)
Total reportable segment (loss)/profit 10.8 31.7 (11.5) 31.0
Unallocated amounts:
- Acquired intangible asset amortisation (5.0)
- Share-based payment (7.6)
Operating profit 18.4
Finance income 5.4
Finance costs (0.9)
Profit before tax 22.9
Other information
Product development 52.0 50.4 - 102.4
Intangible asset amortisation - other 0.1 - - 0.1
Depreciation of property, plant and equipment 4.4 6.0 0.1 10.5
Depreciation of right-of-use assets 3.2 3.4 0.3 6.9
Inter-segment revenue is eliminated in the above periods. All of the Group's
revenue arose from contracts with customers.
Generally, revenue from the sale of hardware and software is recognised at a
point in time and revenue from maintenance and support services is recognised
over time.
Europe, Middle East and Africa includes United Kingdom revenue of $14.6
million (2023 $9.1 million).
Americas includes United States revenue of $257.0 million (2023 $250.4
million).
Asia Pacific includes China revenue of $53.5 million (2023 $76.3 million).
Revenues are attributed to regions and countries based on customer location.
No one customer accounted for 10 per cent or more of total Group revenue in
either 2024 or 2023.
4 Other adjusting items
$ million 2024 2023
Restructuring 2.5 13.5
Acquisition related costs 18.6 0.7
Total charge in the income statement 21.1 14.2
Restructuring
$ million 2024 2023
R&D engineering plan - 0.7
Finance transformation 1.2 1.1
Organisational restructure 0.8 8.8
Facilities downsize 0.5 2.9
2.5 13.5
Restructuring
We concluded our R&D engineering site plan to relocate activities from
North America to lower cost regions for our High-Speed Ethernet business in
2023. No further significant costs are expected in relation to this project.
In 2023, to embed standardised global finance processes, we moved certain
accounting activities from North America to the UK, incurring $1.1 million of
costs including $0.5 million consultancy. In 2024, we moved into the next
phase of the initiative, incorporating the review of key global process and/or
control enhancements, incurring further consultancy costs of $0.9 million.
Strategic actions were taken to review the cost base and facility footprint in
the second half of 2023 and we exited and downsized three of our North
American facilities which gave rise to a non-cash $2.9 million impairment of
assets in 2023. The 2024 amounts relate to moving, relocating and downsizing
costs directly attributable to this project.
Acquisition related costs
In March 2024, Keysight announced its intention to purchase Spirent.
Therefore, the costs of $18.2 million recognised in 2024 relates mainly to
professional advisory charges due to this acquisition. We expect further deal
related charges, the majority of which are expected to be incurred when the
deal is closed.
On 8 September 2023, the Group completed the asset purchase of a small Test
Lab Automation business carve-out from NetScout Inc. Retention costs of $0.4
million were incurred during 2024 (2023 $0.7 million).
The tax effect of other adjusting items is a credit of $0.8 million (2023 $2.5
million).
The total cash outflow in respect of other adjusting items is reported within
cash flows from operating activities in the consolidated cash flow statement.
5 Tax
$ million 2024 2023
Current income tax
UK tax 2.4 3.9
Foreign tax 8.7 6.4
Amounts underprovided in prior years 0.7 (0.8)
Total current income tax charge 11.8 9.5
Deferred tax
Recognition of deferred tax assets - (0.2)
Reversal of temporary differences (10.1) (10.8)
Adjustments in respect of prior years (0.8) (0.8)
Total deferred tax credit (10.9) (11.8)
Tax charge/(credit) in the income statement 0.9 (2.3)
The tax charge for the year ended 31 December 2024 was $0.9 million (2023 $2.3
million tax credit). This was after a prior year tax credit of $0.1 million
and a tax credit on the adjusting items of $4.3 million (2023 prior year
credit of $0.8 million and tax credit on adjusting items of $6.1 million).
Excluding the prior year charge and tax credit on adjusting items, the
effective tax rate was 10.7 per cent (2023 10.8 per cent).
6 Earnings per share
Basic
Earnings per share is calculated by dividing the profit for the year
attributable to owners of the parent Company by the weighted average number of
Ordinary Shares outstanding during the year.
Diluted
Diluted earnings per share is calculated by dividing the profit for the year
attributable to owners of the parent Company by the weighted average number of
Ordinary Shares outstanding during the year plus the weighted average number
of Ordinary Shares that would be issued on the conversion of all dilutive
potential Ordinary Shares into Ordinary Shares.
$ million 2024 2023
Profit for the year attributable to owners of the parent Company 12.9 25.2
Number million
Weighted average number of Ordinary Shares in issue - basic 574.6 586.7
Dilutive potential of employee share incentives 5.0 4.1
Weighted average number of Ordinary Shares in issue - diluted 579.6 590.8
Cents
Earnings per share
Basic 2.25 4.30
Diluted 2.22 4.26
Adjusted
The Group is disclosing adjusted earnings per share attributable to owners of
the parent Company in order to provide a measure to enable period-on-period
comparisons to be made of its performance. The following items are excluded
from adjusted earnings:
- acquired intangible asset amortisation;
- share-based payment;
- other adjusting items; and
- tax effect on the above items.
A reconciliation is provided below:
2024 2023
$ million EPS $ million EPS
cents cents
Profit for the year attributable to owners of the parent Company 12.9 2.25 25.2 4.30
Acquired intangible asset amortisation 5.2 5.0
Share-based payment 9.6 7.6
Other adjusting items costs note 4 21.1 14.2
Tax effect on the above items (4.2) (6.1)
Prior year tax (credit)/charge (0.1) (1.6)
Adjusted basic 44.5 7.75 44.3 7.55
Adjusted diluted 7.67 7.50
There were no Ordinary Share transactions that occurred after 31 December that
would have significantly changed the number of Ordinary Shares or potential
Ordinary Shares outstanding at the period end if those transactions had
occurred before the end of the reporting period in either year.
7 Dividends paid and proposed
$ million 2024 2023
Equity dividend on Ordinary Shares
No final or interim dividends declared or paid for 2024 - 31.1
Interim dividend 2023 of 2.76 cents (2.14 pence) per Ordinary Share - 15.4
- 46.5
Intended and expected and/or may be declared by the Spirent Board (not 25.4 18.4
recognised as a liability at 31 December) on or before 31 December 2025
Permitted dividend of 2.50 pence (approximately equivalent to 3.15 cents at
current prevailing FX rates) and Additional Dividend of 1.00 pence
(approximately equivalent to 1.26 cents at current prevailing FX rates) per
Ordinary Share
As part of the offer for Spirent by Keysight Technologies, a permitted
dividend of 2.5 pence (approximately equivalent to 3.15 cents at current
prevailing FX rates) per Spirent share is intended and expected to be
declared, prior to the Effective Date (as defined in the Scheme Document
published on 25 April 2024). The payment of this permitted dividend is not
conditional upon the Effective Date occurring and will be payable to Spirent
shareholders on the Register of Members at the relevant record date.
In addition to the permitted dividend, the Spirent Board will be entitled (if
it sees fit) to declare and approve the payment of a dividend to Spirent
shareholders of up to 1.0 pence per Spirent share if the Effective Date has
not occurred by 30 June 2025 (the "Additional Dividend"). If declared, the
Additional Dividend will be payable at any time thereafter and before the
Effective Date.
The exchange rate used to determine the approximate equivalent amount of the
permitted and additional dividends referred to above was $1.26: £1.
8 Defined benefit pension plans
The Group operates two funded defined benefit pension plans in the United
Kingdom which are closed to new entrants.
In October 2022, the Trustees of the Staff Plan, with the Group's support,
purchased a bulk annuity insurance (buy-in) policy from the UK insurer Pension
Insurance Corporation (PIC) covering all members. The premium was paid from
the plan's assets, and sufficient assets remain to meet the plan's ongoing
costs. This buy-in effectively transferred the investment, inflation,
longevity and demographic risks to PIC, meaning the Group no longer bears
these risks. Following the buy-in, the Group does not expect to make any
further cash contributions to the Staff Plan. Cash contributions for 2024 were
nil (2023 nil).
Following a detailed data cleansing process and payment of the final top-up
premium to PIC, the wind-up of the Staff Plan was initiated in November 2024.
The Group has determined that following this step it no longer has an
unequivocal right to the surplus, as the Trustees have discretion to use part,
or all, of the surplus to enhance members' benefits without requiring Group
approval. As a result, for the purposes of these disclosures, the Staff Plan
surplus has been restricted to nil at the year-end. The Trustees are
currently in the process of informing members of the wind up and the Group's
expectation is that the Trustees will pay the bulk of the surplus to the
Group, net of any tax due, once all wind-up expenses have been met.
There is also a liability for an unfunded plan in the United Kingdom and a
deferred compensation plan in the United States.
The assets and liabilities on the balance sheet are as follows:
$ million 2024 2023
Schemes in net asset position
UK defined benefit pension plan - Cash Plan 0.5 -
UK defined benefit pension plan - Staff Plan - 12.9
Withholding tax payable - (4.5)
0.5 8.4
Schemes in net liability position
UK defined benefit pension plan - Cash Plan - (1.7)
UK unfunded plan (0.5) (0.5)
US deferred compensation plan (10.5) (9.2)
(11.0) (11.4)
Net pension plan deficit on the balance sheet (10.5) (3.0)
The assets and liabilities in the funded defined benefit pension plans were as
follows:
$ million 2024 2023
Fair value of defined benefit pension plans' assets 177.7 187.2
Present value of defined benefit pension plans' obligations (167.8) (174.3)
Surplus in the plans 9.9 12.9
Impact of asset ceiling (9.4) -
Withholding tax payable - (4.5)
Net UK funded defined benefit pension plan surplus on the balance sheet 0.5 8.4
The key financial assumptions in respect of the funded plans are as follows:
% 2024 2023
Inflation - RPI 3.2 3.1
Inflation - CPI (pre-2030) RPI less 1.0% pa RPI less 1.0% pa
Inflation - CPI (post-2030) RPI less 0.1% pa RPI less 0.1% pa
Rate of increase in pensionable salaries CPI CPI
Rate of increase for pensions in payment:
- Pre-2001 service 3.7 3.6
- 2001 to 5 April 2005 service 3.1 3.0
- Post-5 April 2005 service 2.1 2.1
Rate of increase in deferred pensions CPI CPI
Rate used to discount plan liabilities 5.4 4.5
There was no service cost charged to operating costs (2023 nil) and finance
income of $0.4 million (2023 $0.6 million) has been recognised.
The Group also operates a deferred compensation plan for employees in the
United States. The plan has elements of a defined benefit pension retirement
obligation and therefore is required to be valued in accordance with IAS 19
'Employee Benefits'. At 31 December 2024, the deferred compensation deficit
amounted to $10.5 million (2023 $9.2 million). During the year, there was nil
re-measurement gain or loss recognised (2023 $0.6 million re-measurement loss
recognised directly in the statement of other comprehensive income).
9 Reconciliation of profit before tax to cash generated from operations
$ million 2024 2023
Profit before tax 13.8 22.9
Adjustments for:
Finance income (4.5) (5.4)
Finance costs 1.0 0.9
Intangible asset amortisation 5.2 5.1
Depreciation of property, plant and equipment 8.5 10.5
Depreciation of right-of-use assets 6.7 6.9
Impairment of property, plant and equipment - 0.4
Impairment of right-of-use assets - 2.5
Share-based payment 10.1 7.7
Changes in working capital:
Decrease/(increase) in inventories 7.8 (2.0)
(Increase)/decrease in receivables (5.2) 27.7
Increase/(decrease) in payables 16.2 (29.9)
(Decrease)/increase in contract liabilities (1.8) (0.7)
(Decrease)/increase in provisions (1.0) (0.4)
Defined benefit pension plan employer contributions net of plan administration 0.9 (1.7)
expenses paid by the plan
Deferred compensation plan 0.8 1.9
Non-cash movements (1.5) (0.6)
Cash flow from operations 57.0 45.8
10 Business combinations
There were no business combinations in 2024.
On 8 September 2023, the Group completed the asset purchase of a small test
lab automation business carve-out from NetScout Inc. for a final cash
consideration of $7.8 million. The transaction was funded by surplus cash in
the Group. The business carve-out from NetScout acquired by Spirent is a
US-based technology business that develops and manufactures Layer-1 switches
and control software.
$ million 2023
Book value Fair value adjustment Fair value
Intangible assets - 4.3 4.3
Property, plant and equipment 0.2 - 0.2
Inventories 1.4 - 1.4
Contract liabilities (2.0) - (2.0)
Total identifiable net assets (0.4) 4.3 3.9
Goodwill acquired on acquisition 3.9
Total consideration 7.8
Satisfied by
Cash consideration 7.8
Cash flows
Cash consideration 7.8
The fair values of the identifiable net assets acquired are set out in the
table above. The fair value adjustments arose in relation to the recognition
of acquired intangible assets. The intangible assets acquired represent
current technology and customer relationships. These intangible assets have
been assigned a useful life of six years. The goodwill arising of $3.9 million
consists largely of the synergies and commercial opportunities expected from
the combination, together with intangible assets not qualifying for separate
recognition, such as workforce in place. Direct acquisition related costs of
$0.4 million and $0.3 million of integration costs have been expensed to other
adjusting items within the income statement in 2023 (note 4). From the date of
acquisition to 31 December 2023, NetScout acquired business contributed $4.1
million of revenue and $2.1 million of profit before tax to the results of the
Group before charging $0.4 million of direct acquisition related costs, $0.3
million of integration costs and $0.2 million of acquired intangible asset
amortisation.
11 Fair value
The Directors consider that the carrying amounts of the financial instruments
included within trade and other receivables, trade and other payables and
contractual provisions approximates their fair value.
12 Employee Share Ownership Trust
No shares were purchased and placed into the Employee Share Ownership Trust in
2024 and 2023. 4.3 million shares were transferred from the Employee Share
Ownership Trust in the year to satisfy options exercised under the Spirent
employee share plans (2023 2.7 million shares transferred).
13 Share Buyback Programme
On 3 April 2023, the Company commenced a Share Buyback Programme of $71.6
million (£56.0 million) which was successfully completed on 24 August 2023.
These 33 million shares, representing circa 5.4 per cent of the Company's
issued share capital, have been cancelled as at 31 December 2023.
Appendix
Alternative Performance Measures
The performance of the Group is assessed using a variety of alternative
performance measures (APMs) which are presented to provide users with
additional financial information that is regularly reviewed by management. The
APMs presented are not defined under IFRS and therefore may not be directly
comparable with similarly identified measures used by other companies.
In management's view, the APMs reflect the underlying performance of the Group
and provide an alternative basis for evaluating how the Group is managed and
measured on a day-to-day basis. Such APMs are non-GAAP measures and should not
be viewed in isolation or as an alternative to the equivalent GAAP measure.
The APMs and key performance indicators are aligned to the Group's strategy
and collectively are used to measure the performance of the Group and form the
basis of the metrics for Director and management remuneration. The Group's key
performance indicators are presented within the Strategic Report of its 2024
Annual Report.
Order intake
Order intake represents commitments from customers to purchase goods and/or
services from Spirent that will ultimately result in recognised revenue. Where
there can reasonably be changes to the scope or duration of an order, the
Group exercises judgement on the amount of the order that is booked.
Order intake is a measure of operating performance used by management to
assess whether future activity levels are increasing or slowing and therefore
how effective we have been in the execution of our strategy. Order intake is a
key performance indicator used to measure Group, operating segment and
regional performance for internal reporting purposes.
Orderbook
Orderbook comprises the value of all unsatisfied orders from customers and
provides an indication of the amount of revenue that has been secured and will
be recognised in future periods. Orderbook represents the transaction price
allocated to wholly and partially unsatisfied performance obligations,
including amounts held in contract liabilities at the period end. There is no
comparable IFRS measure.
Adjusted operating profit
Adjusted operating profit is reported operating profit excluding amortisation
of acquired intangible assets, share-based payment and other adjusting items,
including restructuring. Management uses adjusted operating profit, in
conjunction with other GAAP and non-GAAP financial measures, to evaluate the
overall operating performance of the Group as well as each of the operating
segments and believes that this measure is relevant to understanding the
Group's financial performance, as specific items (adjusting items) are
identified and excluded by virtue of their size, nature or incidence, as they
are not considered part of the Group's normal ongoing operations and therefore
can lead to period-on-period fluctuations that can make it difficult to assess
financial performance.
Specifically, items are excluded from adjusted operating profit if they are
acquisition related in nature, including acquired intangible asset
amortisation which is dependent on being able to identify intangible assets
and assessing their useful economic lives, or if their exclusion allows for
more meaningful comparisons with peer companies such as share-based payment
which can fluctuate from period to period. The exclusion of adjusting items
from adjusted operating profit is consistent from period to period.
Adjusted operating profit is also used in setting Director and management
remuneration targets and in discussions with the investment analyst community.
Adjusted operating margin
Adjusted operating margin is adjusted operating profit as a percentage of
revenue. It is a measure of the Group's overall profitability and how
successful we are in executing on our overall strategy, and demonstrates our
ability to improve margin through efficient operations and cost management,
whilst being mindful of the need to invest for the future.
Effective tax rate
Effective tax rate is the adjusted tax charge, before tax on adjusting items,
expressed as a percentage of adjusted profit before tax. The adjusted tax
charge is the reported tax charge excluding the tax effect on adjusting items
and adjustments made to provisions in respect of prior year tax.
Adjusted basic earnings per share
Adjusted basic earnings per share (EPS) is adjusted earnings attributable to
owners of the parent Company divided by the weighted average number of
Ordinary Shares outstanding during the year. Adjusted earnings is reported
profit before tax excluding amortisation of acquired intangible assets,
share-based payment, other adjusting items, tax on adjusting items and
over/under provisions in respect of prior year tax.
Adjusted basic EPS is a measure of how successful we are in executing on our
strategy and ultimately delivering increased value for shareholders. Adjusted
basic EPS is also used in setting Director and management remuneration targets
and in discussions with the investment analyst community. The Group sets out
the calculation of adjusted basic EPS in note 6 of Notes to the consolidated
financial statements.
Product development costs as a percentage of revenue
Product development as a percentage of revenue in the year. It is a measure of
how much the Group is investing to support further organic growth initiatives
in line with the strategic objectives, whilst driving improved productivity
and effectiveness.
Free cash flow
Free cash flow is cash flow generated from operations, less tax and net
capital expenditure, lease liability principal repayments and lease liability
interest paid, add interest received and lease payments received from finance
leases, excluding acquisition related other adjusting items and one-off
employer contributions to the UK pension scheme.
Free cash flow is a measure of the quality of the Group's earnings and
reflects the ability to convert profits into cash and ultimately to generate
funds for future investment. It gives us financial strength and flexibility
and the ability to pay sustainable dividends to our shareholders. Free cash
flow is an important indicator of overall operating performance as it reflects
the cash generated from operations after capital expenditure, financing and
tax which are significant ongoing cash flows associated with investing in the
business and financing operations.
Free cash flow excludes corporate level cash flows that are independent of
ongoing trading operations such as dividends, acquisitions and disposals and
share repurchases and therefore is not a measure of the funds that are
available for distribution to shareholders.
A reconciliation of cash generated from operations, the closest equivalent
GAAP measure, to free cash flow is provided within the Financial review on
page 8.
Free cash flow conversion
Free cash flow conversion is the ratio of free cash flow to adjusted earnings,
presented as a percentage.
Free cash flow conversion is a measure used in conjunction with free cash flow
to assess the Group's ability to convert profit into cash and ultimately to
generate funds for future investment.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR JJMBTMTJMTJARecent news on Keysight Technologies
See all newsREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Keysight Technologs. Spirent Comms. PLC - Further update re: Acquisition of Spirent
Announcement