REG - Spirent Comms. PLC - Notice of AGM

Spirent CommunicationsAnnouncement

21/05/2025 13:30

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RNS Number : 4539J  Spirent Communications PLC  21 May 2025

SPIRENT COMMUNICATIONS PLC

ANNUAL REPORT FY 2024 AND ASSOCIATED DOCUMENTS

 

London, UK - 21 May 2025: Spirent Communications plc (the "Company") (LSE:
SPT), the leading provider of automated test and assurance solutions for
next-generation devices and networks, today announces that its Annual General
Meeting will be held on Thursday 26 June 2025 at 9.30am at the offices of DGA
Group, One Fleet Place, London, EC4M 7RA.

 

In compliance with Listing Rule 9.6.1R, the following documents will be
submitted to the National Storage Mechanism and available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)

 

·          Annual Report FY 2024

·          Notice of 2025 Annual General Meeting

·          Form of Proxy for 2025 Annual General Meeting

 

The Annual Report FY 2024 and Notice of 2025 Annual General Meeting will also
be available in the Investors section of the Spirent Communications plc
website at http://corporate.spirent.com/investors
(http://corporate.spirent.com/investors) .

 

A condensed set of the financial statements for the year ended 31 December
2024 together with information on important events that occurred during that
financial year and their impact on the financial statements were contained in
the Preliminary Results announcement made on 4 March 2025.  That information,
together with the information set out in the appendices to this announcement,
which is extracted from the Annual Report, constitute the material required by
Disclosure Guidance & Transparency Rule 6.3.5R which is required to be
communicated to the media in full unedited text through a Regulatory
Information Service.  This announcement is not a substitute for reading the
Annual Report.

 

- ends -

 

 

Enquiries

 Angus Iveson        Spirent Communications plc  +44 (0)1293 767676

 Company Secretary

 

About Spirent Communications plc

Spirent Communications plc (LSE: SPT) is the 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, SD-WAN, 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.

 

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.

 

Appendices

 

Appendix A: Directors' Responsibility statement

 

The Annual Report and consolidated financial statements are the responsibility
of, and have been approved by, the Directors. Each of the Directors confirms
that, to the best of their knowledge:

 

·    the consolidated financial statements of the Group and parent Company
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 Annual Report, including the Strategic Report, includes a fair
review of the development and performance of the business and the position of
the Company 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 financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.

 

By Order of the Board

 

Paula Bell

Chief Financial & Operations Officer

4 March 2025

 

Appendix B: Related party transactions

 

Remuneration of key management personnel - The remuneration of the directors,
who are the key management personnel of the Group, is disclosed in the Report
on directors' remuneration. There were no other material related party
transactions during the year ended 31 December 2024.

 

Appendix C: Principal risks and uncertainties

 

A - Macroeconomic change

 

Spirent is a global business exposed to current world economic conditions and
political and trade embargo uncertainties over which it has no control. We saw
good growth in EMEA and some recovery in North America in the second half of
2024 offset by a decline in Asia Pacific, which was principally as a result of
macroeconomic factors in China.

 

We have navigated regulatory changes throughout the year and continue to work
closely with our customers. Trade compliance issues continue to remain a
focus, particularly with China.

 

The business is also exposed to government spending priorities, principally in
the United States.

 

The residual effects of the COVID-19 crisis, the war in Ukraine, inflationary
pressures, and a higher interest rate environment have combined to create
uncertainty to current world economic conditions and government spending
priorities. The Group continues to monitor the impact to the global economy
and possibility of a prolonged recession in the organisation's key markets.

 

Potential impact

 

Deterioration in economic conditions and a change to the terms of conventional
international trade and embargoing of specific customers may lead to a
reduction in the level of demand for Spirent's products and services and cause
customers to delay their purchasing decisions.

 

Mitigating actions

 

The Group closely monitors both market and geographic trends in order to
respond to changes in demand and be in a position to take timely actions to
protect profitability where possible.

 

In addition, Spirent has a large number of geographically diverse customers,
which may mitigate the impact of issues in any one area.

 

B - Technology change

 

Spirent sells complex solutions in industries that can be subject to rapid and
somewhat cyclical technological changes. Testing new technologies drives our
business, but the opportunity also brings high risk since keeping at the
forefront of these key future technologies is critical to our success and to
ensuring that we remain competitive in our markets.

 

It is critical that our product development investment is directed at the
right areas in order to deliver the solutions that our customers need when
they need them.

Spirent's success is dependent in part on proprietary technology which may be
infringed by others.

 

Open-source tools remain prevalent in providing some of the functionality of
our products.

 

Potential impact

If product development investment does not keep pace with the speed of change
in technologies, or if it is not directed at the right key areas, our
competitive position and financial performance will suffer.

 

If Spirent's solutions take longer to develop than anticipated or longer to
develop than our competitors, then our competitive position and financial
performance will also suffer.

 

Changes in technologies and increasing scrutiny on compliance, security and
privacy may lead to a short-term pause by our customers investing in our
solutions.

Intellectual property claims can result in significant defence costs and may
affect Spirent's ability to market its products.

 

Customers may choose to use open-source tools instead of some Spirent products
to meet part of their testing needs.

 

Mitigating actions

 

All Spirent's businesses work very closely with customers and remain focused
on their requirements.

 

Each business makes investment decisions specifically related to its solutions
portfolio based on market needs.

 

Spirent continues to focus its investment into areas that offer the most
potential for sustainable earnings growth. In 2024 the product development
investment was $99.0 million (2023 $102.4 million).

 

Spirent has active intellectual property protection programmes in place to
obtain appropriate protection in a cost-effective manner.

 

C - Business continuity

 

Operational risks are present in the Group's businesses, including the risk of
failed internal and external processes and systems, human error, and external
events, such as a natural disaster, climate change, a global pandemic or
cybersecurity attacks. For example, a significant portion of our operations
are located in California which has in the past experienced natural disasters,
including earthquakes and wildfires that could potentially disrupt our
operations there. The January 2025 Los Angeles wildfires did not reach our
Calabasas facility and, therefore, our operations there were not materially
impacted.

 

Our TCFD-related analysis has considered the potential of increasing intensity
and frequency of storms and concentrated rainfall events, and frequency of
wildfires, and we have assessed that these risks would possibly cause some
disruption to operations. The understanding of climate change-related risks is
incorporated into the risk management framework.

 

The Group has therefore taken steps to manage the increase to business
continuity risk, including invoking business continuity plans in each
location, closely monitoring the impact to the supply chain with additional
inventory procured on key components and by adding alternate suppliers, making
last time buys as necessary, re-engineering products as required, and by
boosting the global Spirent information technology systems to enable the
workforce to work remotely.

 

Contract manufacturers manufacture a substantial amount of Spirent's products
and have experienced a reduction in orders from Spirent, cost increases, end
of life notices and some elevated lead time challenges, leading to a limited
number of component shortages but primarily increased costs during 2024.
Spirent's major contract manufacturer is located in Thailand, with others in
US and UK.

 

The incidence of cybercrime continues to rise. Spirent is dependent on its
information technology systems for both internal and external communications,
maintaining our reputation as well as for day-to-day operations.

 

Potential impact

 

A significant natural disaster or global pandemic could disrupt the Group's
ability to conduct business and adversely impact revenue and operating
results.

 

Higher peak and average temperatures could lead to increased capital
expenditure to expand or upgrade cooling equipment across multiple Spirent
sites.

 

The shift towards renewables and away from fossil fuels may result in
associated increased costs. Starting in the short term, energy costs are
likely to continue to increase due to higher investment requirements in low
carbon technology and expected additional carbon-related levies. We also
expect additional administrative burden on the business, likely increasing the
costs for resource to deliver and report. We do not estimate the impact to be
material to Spirent.

 

In the medium to long term, our TCFD climate-related analysis has highlighted
the risks of site damage to building and infrastructure, lost time and
productivity and any associated increased cost of insurance. Additionally, a
major supplier disruption event is a possible key risk, causing an outage for
a period of time which we assess as causing possible delays to customer
shipments and the timing of revenue recognition. Disruption, financial
problems of contract manufacturers or limitations in their manufacturing
capacity could limit supply and/or increase cost.

Failed internal and external processes, systems or human error could lead to
compliance issues.

 

If a cyberattack were to be successful it could result in loss of data,
reputation and confidential information as well as damage to Spirent's
intellectual property, causing major disruption to the business. Any security
vulnerabilities in our products could also adversely impact our customers.
There would also be a potential impact on Spirent's credibility in the
security market.

 

Mitigating actions

 

An important component of Spirent's corporate governance is its risk
management strategy. IT disaster recovery plans are in place for all core
business systems and ensure that the wider operations are all fully covered.
In 2024, we performed the annual refresh and test of the Group Business
Continuity and Disaster Recovery Policy and Procedure.

 

Spirent has mitigation plans for each of the TCFD physical risks identified,
that have been developed as part of longstanding business continuity and
disaster recovery plans. Spirent engineering centres are situated across the
globe, allowing flexibility and agility should one site become affected. Where
possible we have second source component supply to assist with the mitigation
of interruptions in supply and regular meetings are held with contract
manufacturers. In addition, the Group's largest manufacturing subcontractor
has multiple worldwide sites and comprehensive business continuity plans.

 

The Group has appropriate business interruption insurance in place.

We are working closely with our contract manufacturers and are in frequent
direct consultation with key component suppliers worldwide to mitigate the
impact of any supply chain challenges. The situation is dynamic and we will
take appropriate action to mitigate the supply chain risk including the
careful management of planning and fulfilment.

 

During 2024, we continued with a programme of work to enhance technical
controls, processes and procedures in the area of cybersecurity. Third party
providers are used in both the testing and monitoring of our security profile.

 

D - Customer dependence/customer investment plan

 

The Group sells its products and services to a wide range of companies and
continually seeks to expand its customer base. In 2024, no one customer
accounted for more than 10 per cent of Group revenue, although the top ten
customers represented 34.1 per cent of Group revenue (2023 34.4 per cent).

 

In some of our markets certain customers have a dominant market share, which
makes doing business with these customers and their suppliers critical to the
success of our business.

 

In addition, many of the companies with which we do business are some of the
largest global telecommunications corporations. Therefore, meeting our
development obligations, producing high-quality products and being on time are
vital to Spirent's reputation and success.

 

Changes in our major customers' priorities in technology investments can also
have a significant impact on their spending on Spirent products and on those
in the customers' supply chain.

 

The industry continues to experience consolidation which does disrupt the
spending patterns of affected customers.

 

As a result of the current macroeconomic uncertainty, customer spending
patterns remain uncertain, particularly in our telecommunications markets. The
Group is taking steps to evolve its go-to-market strategy in order to
strengthen relationships with customers and diversify its customer base.

 

Potential impact

 

Loss of one or more of Spirent's major customers could have a significant
impact on Spirent's financial results.

 

Spend on Spirent's products is often capital in nature and so customer spend
can fluctuate significantly from year-to-year.

 

Significant failings in either quality or being able to deliver in the
appropriate timescale could cause long-lasting damage to Spirent's reputation
and relationships.

Over recent years there has been significant consolidation in our customer
base amongst service providers and network equipment manufacturers. This trend
continues and often results in delays in spending, thereby reducing demand for
Spirent's solutions and services. It also reduces the potential number of
customers to which those solutions and services could be sold.

 

Changes in our customers' technology investments can result in reduced
spending on our existing solutions before customers and those in the
customers' supply chains increase spending on new technologies.

 

Mitigating actions

 

Strong customer relationships are critical to Spirent. We aim to provide
innovative solutions which address our customers' larger business problems
with products and services and we place great emphasis on providing
professional service and support.

One of the Group's strategic objectives is to invest in deepening our customer
relationships and our key account management initiatives assist to ensure
robust relationships with our largest customers. We place engineers on site
with our customers and undertake site surveys of intended plans for the use of
test solutions in their business.

 

We seek to establish thought leadership in our industry through participation
in standards bodies and industry forums, which in turn creates additional
links with customers. Our approach is to play a key part in the wider supply
chain to our key service provider customers by aligning with early adopters of
technology.

 

We also seek to broaden our customer base to mitigate customer concentration
risk, investing in digital marketing, inside sales, field sales and our
partner ecosystem to expand the number of new customers that we win.

 

E - Competition

 

Spirent operates in a range of highly competitive niche markets which
experience rapid technological change. In order to compete effectively, it is
necessary to establish and maintain technological differentiation in our
solutions.

 

The Group faces competition from new market start‑ups as well as more
established and well-resourced companies.

 

Industry consolidation amongst our direct competitors may bring about a shift
in competitive advantage.

 

Potential impact

 

Actions by competitors and increased competition can bring about pressure on
Spirent's gross margin. These factors could also affect Spirent's competitive
position, thereby reducing revenue and consequently affecting financial
results.

 

Consolidation continues within our sector, including the ongoing sale process
of the organisation to Keysight. The consolidation of competitors may bring
opportunities for Spirent but can also change the competitive landscape as
competitors are able to leverage product capabilities or sales channels.

 

Mitigating actions

 

The Group's broad solution portfolio, market-leading capabilities and customer
focus continue to address this risk.

Spirent aims to maintain market-leading positions through significant
investment in the development of differentiated products. We also seek
opportunities for attractive inorganic investments that can strengthen our
competitive advantage.

 

Competitor activity is closely monitored with a view to maintaining clear
differentiation based on Spirent's products, services, and global reach.

 

F - Employee skill base

 

Employees are crucial to the success of our business. Attracting and retaining
highly qualified and skilled employees is essential to enable the Group to
deliver on its strategy and to the success of the business. Due to the ongoing
Keysight sale process challenges are being experienced with retention in some
areas of the business and additional steps have been taken to mitigate this
risk.

 

Potential impact

 

Competition for personnel is faced from other companies and organisations and
the loss of key employees, the failure to attract and retain other highly
skilled employees, or the failure to adequately plan for succession may impair
Spirent's ability to run and expand the business effectively.

 

Mitigating actions

 

Investing in people is at the core of the Group's strategy. The aim is to
find, keep and engage the highest calibre of employees and encourage their
contribution and development. An environment that fosters innovation and
collaboration is critical to Spirent's success, as is ensuring incentive plans
are competitive.

 

We have refined our employee value proposition and continue to make Spirent a
more inclusive, diverse and engaging place to work to attract and retain
talent.

Succession planning for senior posts in the Company is reviewed periodically
by the Board.

 

Appropriate career paths, professional development plans, and internal
recognition programmes are developed for both technical and non-technical
staff.

 

Regular reviews are performed to ensure equitable pay practices and that all
elements of compensation across the Group are competitive with the market.

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