28th Feb 2008 07:02
Spirent Communications PLC28 February 2008 SPIRENT COMMUNICATIONS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 LONDON, UK - 28 February 2008: Spirent Communications plc ("Spirent" or the "Group") (LSE: SPT), a leading communications technology company, today announces its preliminary results for the financial year ended 31 December 2007. Group highlights • Adjusted earnings per share from continuing operations up 141 per cent at 3.57 pence (2006: 1.48 pence) after charging 0.38 pence (2006: 0.62 pence) for share-based payment and amortisation of intangibles. • Earnings per share up 220 per cent in the second half of 2007 at 2.72 pence (second half 2006: 0.83 pence) after share-based payment and amortisation of intangibles of 0.22 pence, due to restructuring actions implemented in the first half. • Strategic Review completed delivering expected annualised cost savings of £29.0 million, ahead of initial £21.5 million target. • Adjusted operating profit from continuing operations up over 200 per cent at £25.5 million (2006: £8.4 million). • Strong free cash generation of £50.2 million (2006: outflow of £6.4 million) with closing net cash of £79.0 million. • Total of £75.0 million returned through share repurchases since 1 January 2007, including £8.7 million returned since the year end. • At this stage the outlook for 2008 is encouraging. Divisional highlights • Performance Analysis: strong second half profit growth with adjusted operating return on sales increased to 20 per cent. - Contributed 87 per cent of Group operating profit before exceptionals for the year; adjusted operating profit of £22.3 million (2006: £10.6 million). - Returned to revenue growth in constant currencies in the second half of 5 per cent over the second half of 2006, with growth across all major product areas. - Passed key inflection point with new broadband products' order intake growth of £14.3 million in the second half of 2007 now outpacing the decline in that for legacy products of £11.0 million. - Order book increased substantially compared to 2006 resulting in enhanced sales visibility. • Service Assurance: stabilised with marked improvement in profitability in the second half. • Systems: gradually diversifying while continuing to generate 11 per cent return on sales. Edward Bramson, Chairman, commented: "It is very pleasing to see that Spirent has delivered on all our statedobjectives, including increasing the Group's profitability and predictability,as well as its financial flexibility. "We finished the year with the Group restructuring completed, having exceededour initial cost saving targets. However, these strong results, with theperformance in the second half ahead of original expectations, reflect more thana successful restructuring and cost reduction exercise. Operationally, thebusiness is in a much better position with new products, improved manufacturingprocesses and a clear focus on key areas such as the wireless market which offersignificant potential opportunities. "The year also saw an increasing trend of winning orders, enhancing visibilityand in turn providing additional confidence around the prospects for the Group.In addition, our strong free cash flow performance has enabled us to continueour share repurchase programme, reaching a total of 12 per cent of the openingissued Ordinary share capital during the year. "At this stage the outlook for 2008 is encouraging." Results summary Underlying change at constant£ million 2007 2006 Change (%) currency (%)---------------------------------------------------------------------------------------------------------------ReportedContinuing operationsRevenue 237.0 258.9 (8) (2)Profit/(loss) before tax 17.8 (22.3)Basic earnings/(loss) per share (pence) 2.97 (2.45)AdjustedContinuing operationsOperating profit1 25.5 8.4 204 260Profit before tax2 32.2 14.4 124 157Adjusted earnings3 per share (pence) 3.57 1.48 141 177--------------------------------------------------------------------------------------------------------------- Notes 1 Before exceptional items and goodwill impairment. 2 Before exceptional items, goodwill impairment and costs associated with therepayment of loan notes. 3 Adjusted earnings per share is based on adjusted earnings as set out in note 6. - ends - EnquiriesEdward Bramson, Executive Chairman Spirent Communications plc +44 (0)1293 767676Eric Hutchinson, Chief Financial Officer Andrew Dowler/Harriet Keen Financial Dynamics +44 (0)20 7831 3113 About Spirent Communications plc Spirent Communications plc is a leading communications technology companyfocused on delivering innovative systems and services to meet the needs ofcustomers worldwide. We are a global provider of performance analysis andservice assurance solutions that enable the development and deployment ofnext-generation networking technologies such as broadband services, Internettelephony, 3G wireless and web applications and security testing. The Systemsgroup develops power control systems for specialist electrical vehicles in themobility and industrial markets. Further information about SpirentCommunications plc can be found at www.spirent.com. Spirent Communications plc Ordinary shares are traded on the London StockExchange (ticker: SPT). The Company operates a Level 1 American DepositaryReceipt ("ADR") programme with each ADR representing four Spirent Communicationsplc Ordinary shares. The ADRs trade in the US over-the-counter ("OTC") marketunder the symbol SPMYY and the CUSIP number is 84856M209. Spirent and the Spirent logo are trademarks or registered trademarks of SpirentCommunications plc. All other trademarks or registered trademarks mentionedherein are held by their respective companies. All rights reserved. This document may contain forward-looking statements which are made in goodfaith and are based on current expectations or beliefs, as well as assumptionsabout future events. You can sometimes, but not always, identify thesestatements 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-lookingstatements are inherently predictive and speculative and involve risk anduncertainty because they relate to events and depend on circumstances that willoccur in the future. You should not place undue reliance on theseforward-looking statements, which are not a guarantee of future performance andare subject to factors that could cause our actual results to differ materiallyfrom those expressed or implied by these statements. The Company undertakes noobligation to update any forward-looking statements contained in this document,whether as a result of new information, future events or otherwise. PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 EXECUTIVE CHAIRMAN'S STATEMENT I am pleased to report that Spirent's adjusted earnings per share increased by141 per cent in 2007 to 3.57 pence, before exceptional items, from 1.48 pence inthe prior year. This was after charging 0.38 pence for share-based payment andintangible amortisation, down from 0.62 pence in 2006. The restructuringprogramme announced by the Board in April yielded greater benefits thanoriginally expected, allowing Spirent to substantially exceed its originalearnings expectations for the year. Due to the timing of the restructuringactions, almost all of the improvements were realised after June, so themajority of the earnings increase for the year occurred in the second half ofthe year when adjusted earnings per share increased to 2.72 pence (aftershare-based payment and intangible amortisation of 0.22 pence), an increase of228 per cent over the second half of last year. The largest component of Spirent's revenue and profit is our PerformanceAnalysis business, which supplies telecommunications test and measurementequipment and software, principally to manufacturers of telecommunicationsnetwork products. Performance Analysis sales returned to growth in the secondhalf of the year on a constant currency basis. This growth was driven primarilyby next-generation broadband and wireless products. Wireless products grew by21 per cent in 2007. The overall growth of Performance Analysis sales wassubstantially less than this as we still have a number of mature or declininglegacy items in our portfolio. Our second half sales increases are indicativeof the fact that the growth of our new products is now overtaking the decline ofolder ones, a trend that we expect to continue in 2008. Future prospects for the Performance Analysis business are encouraging as theincreasing data intensity of services such as IPTV and evolving wirelesstechnologies challenge our customers to respond by continuously investing indeveloping new products, which is a key driver of the test and measurementmarkets. Market conditions at the end of last year were reasonably good formost of the major test and measurement suppliers and 2008 has started out inline with our expectations. Spirent's Service Assurance and Systems businesses, representing 15 per cent and14 per cent, respectively, of our sales, performed slightly better thanexpectations against a market backdrop that was relatively flat. At present,the markets for these businesses in 2008 appear to be similar to thoseexperienced in 2007. Restructuring has reduced Spirent's costs and lowered the break-even level ofsales, but it has also resulted in improvement in important areas of operatingperformance that will be of continuing benefit in the future. For example, oursuccess in completing new product developments on time. Similarly, inventoryturnover in Performance Analysis has improved to 3.7 times in 2007 versus 2.6times in the prior year, releasing capital employed and, more importantly,reducing our exposure to charges for excess or obsolete inventory which havebeen costly in the past. The programmes implemented by the Board last year also contributed to a majorincrease in cash generation. Free cash flow increased to £50.2 million in 2007compared with a negative cash flow in the prior year. We are optimistic that afull year of restructuring benefits in 2008 and the reduced capital requirementsresulting from our further outsourcing of manufacturing should generatesignificant free cash in 2008 as well. The financial flexibility afforded byour improved cash generation enabled us to return £75.0 million from January2007 to date to our investors through share repurchases. The anticipated freecash flow in 2008 will be available for further distributions to shareholdersand to fund expansion of the Company's businesses. The outlook for increasing volumes of data traffic and evolving wirelesstechnologies is encouraging. As outlined in the Board's November StrategicReview, we are investing significant amounts in research and development toaddress these opportunities and to transform the exceptional breadth ofcapabilities that Spirent possesses into a sustainable competitive advantage.To facilitate this, we have created a new position, Chief Executive of theCommunications businesses, to bring the Communications businesses into strategicalignment. William Burns, who joined the Group in 2004 and has substantialindustry experience, assumed this role from January of this year. We anticipate that the effect of a full year of restructuring benefits in 2008compared to only six months in 2007 will support a significant growth inearnings and free cash flow. Although we are cognisant of the uncertainty inthe service provider marketplace, our current expectation is for PerformanceAnalysis sales to increase in constant currency terms. Encouragingly,reinvigorated sales and marketing teams and a strong new product portfolioenabled us to end the year with a Performance Analysis order book that hasincreased substantially over that at the end of 2006. Allowing the order bookto build in this way is a goal that we set for ourselves as part of the changein setting operational targets instituted by the Board earlier in the year. Asa result, we have more visibility into future sales levels than at the same timelast year and are able to manage our operations more effectively. Inevitably, given its significant size and the amount of change in the business,we have primarily dwelt on Performance Analysis in this year's results.However, our other business units, Service Assurance and Systems have eachperformed well relative to expectations and have some interesting opportunitiesto focus on in the coming year. Spirent now has in place a highly competent, motivated and stable managementteam, which merits our sincere thanks and congratulations. I look forward to updating you on our progress at the Annual General Meeting. BUSINESS REVIEW Introduction The Company performed well in 2007, due in large part to the talents of itsemployees, its strong base of technology and its customer relationships. Thestrong balance sheet and cash generation both support the development of thebusiness and reflect the achievements realised in the year. As indicated at thebeginning of the year, the successful outcome of the Board's review has comethrough the focus of resources, increased efficiency and effectiveness of thebusiness in its leading markets. Business portfolio In 2007 the Board's focus has been on developing the Performance Analysisbusiness, which has an exceptional product breadth and comprises 71 per cent ofoverall Group revenue. Performance Analysis generated a 20 per cent return onsales for the second half of 2007 compared with 6 per cent in the first half, asa result of the cost containment actions and operating changes set out in theOperating and Strategic Reviews. During the period the division has reallocatedsignificant development resources to expand its wireless and positioning productofferings. In Service Assurance, although the expected adoption of 'Triple Play' serviceassurance solutions did not progress to any great extent, the outlook for thebusiness stabilised and the decline in legacy product revenues has slowedcompared to past years. In Systems revenues were impacted, as expected, by changes in the US governmenthealthcare funding for powered wheelchairs, although the business issuccessfully diversifying its product range into new industrial products. Inaddition, the weakness in the US dollar exchange rate impacted the results.Increased outsourcing of production has been and continues to be undertaken tomitigate currency impact. Restructuring The cost savings objective of £21.5 million announced in April was achieved andexceeded, as previously communicated in the Strategic Review at the beginning ofNovember. Total realised savings of £29.0 million resulted in a significantimprovement in second half profits. Revenues also increased during the secondhalf in US dollar terms. Restructuring has been achieved with minimal effect ontrading, as demonstrated by our stronger second half result, and with no delayin our product development programme. Restructuring actions have concentratedon eliminating duplicated activities and processes, consolidating manufacturingand reducing general overheads. We have made significant progress inoutsourcing our manufacturing activities across the entire Group. On-market share repurchase programme Substantial returns of cash were made to shareholders through the on-marketshare repurchase programme during 2007. Shares in issue were reduced by 103.4million, being 12 per cent of the opening issued Ordinary share capital,resulting in a £66.8 million return of cash to the market. This in itselfrepresents a meaningful enhancement to future earnings per share. Share-based payment In addition, the potential and real dilution through the issue of shareincentives has been addressed. Share incentives granted in the year amounted to1.1 million share options compared to 25.8 million share options in 2006. The charge for share-based payment was £2.5 million, less than half of the £5.2million for 2006, the charge in 2008 is expected to be about £1.5 million. Business performance The business improved in 2007 with the book to bill ratio growing to 1.05 from0.97, resulting in an increased order book compared to the prior year. Revenuewas lower by 2 per cent at constant currencies affected by the expected declinein legacy product revenue in Service Assurance. Adjusted pre-tax profits grewto £32.2 million in 2007 from £14.4 million in 2006, with profit before tax forthe second half year of £24.1 million compared to £7.9 million for the secondhalf of 2006. The resulting adjusted earnings per share for continuing operations was 3.57pence compared to 1.48 pence for 2006. The marked improvement primarilyoccurred in the second half year, generating earnings of 2.72 pence for 2007compared to 0.83 pence for 2006. Board As reported at the interim, the addition of two new independent non-executivedirectors to the Board, Duncan Lewis in July and Tom Maxwell in October, hasenabled the composition of the Board and its Committees to become fullycompliant with the Combined Code in terms of independent non-executivedirectors. In addition, it is intended that the role of Chairman and that of ChiefExecutive will be separated before the 2009 Annual General Meeting. Summary and outlook The year ended with the Group restructuring completed, having exceeded theinitial cost saving targets. However, these strong results, with theperformance in the second half ahead of original expectations, reflect more thana successful restructuring and cost reduction exercise. Operationally, thebusiness is in a much better position with new products, improved manufacturingprocesses and a clear focus on key areas such as the wireless market which offersignificant potential opportunities. The year also saw an increasing trend of winning orders, enhancing visibilityand in turn providing additional confidence around the prospects for the Group.In addition, the strong free cash flow performance has enabled the Company tocontinue the share repurchase programme, reaching a total of 12 per cent of theopening issued Ordinary share capital during the year. At this stage the outlook for 2008 is encouraging. Business group development and performanceCommunications Underlying change at First half Second half Full year Restated constant£ million 2007 2007 2007 20061 Change (%) currencies (%)---------------------------------------------------------------------------------------------------------------------RevenuePerformance Analysis 80.6 88.7 169.3 179.5 (6) 1Service Assurance 16.5 17.8 34.3 43.6 (21) (16) Communications group 97.1 106.5 203.6 223.1 (9) (2) Adjusted operating profit/(loss) 2Performance Analysis 4.5 17.8 22.3 10.6 110 140Service Assurance 0.9 2.4 3.3 (1.1) >100 >100------------------------------------------------------------------------------------------Communications group 5.4 20.2 25.6 9.5 169 205------------------------------------------------------------------------------------------ Return on sales (%)2Performance Analysis 5.6 20.1 13.2 5.9Service Assurance 5.5 13.5 9.6 (2.5)------------------------------------------------------------------------------------------Communications group 5.6 19.0 12.6 4.3------------------------------------------------------------------------------------------ Notes 1 Restated to reflect the presentation of SwissQual as a discontinued operation.2 Before exceptional items and goodwill impairment. Performance Analysis Market conditions Market conditions in 2007 were variable; after a subdued start to the firsthalf, demand increased in the second half year. For the Broadband business,this was stimulated by the release of the flagship test product SpirentTestCenterTM 2.0 in the second quarter. This provided a catalyst for demand ascustomer confidence grew based on positive results after deployment in theirlabs. The first half was characterised by capital spending delays by majorcustomers, whereas the second half saw increased spending on testing fordeveloping IP requirements, such as integrated layer testing, multimediaapplications and services. Application and mobility testing solutions achievedstrong growth levels. Wireless test products saw growth across the productrange. Demand was driven by intense competition between wireless serviceproviders to provide increasingly high levels of data transmission rates.Service providers are seeking to retain customers through increased reliabilityand provision of new applications. Multimedia capabilities on high-end mobiledevices are setting new benchmarks and new content providers are entering thewireless market. However, during 2007 the rate of deployment of video servicesacross networks was lower than expected. CDMA test demand grew with enhanced data service development ("EV-DOrA"). In the WCDMA and physical layer wireless test markets opportunities for growthare increasing, particularly driven by Location Based Services ("LBS") and RadioFrequency Channel emulation. 4G technologies are in the early stage ofdeployment, but we expect that 3G deployments will continue until 2010 and othertechnologies, such as WiMax, will also be deployed. Revenue Performance Analysis revenues were flat in constant currencies year-on-year.The rate of underlying growth in the second half was 5 per cent, following a 3per cent decline in the first half. The growth in the second half of 2007 was a result of many factors, includingthe introduction of Spirent TestCenter 2.0 in the second quarter, and the switchover from legacy products to the new platform reaching the critical inflectionpoint during the second half, with new broadband products' order intake growingby £14.3 million, which outpaced the decline in that for legacy products of£11.0 million. There was an increase in demand for wireless and positioningproducts. Business was won with new and existing customers through theadvantages of Spirent's overall system performance and new features able tosupport customers' product innovations. The increasing pressure on customersfor a faster time to market has created a need for a reduction in testing cycletimes. The focus on test automation and professional services support ishelping customers to speed up their test processes to simplify and to automatetheir lab environment. This has been evidenced in the growth of Spirent'sservices business. Wireless and positioning products' underlying sales growthwas 21 per cent year-on-year. These revenues now account for 32 per cent oftotal Performance Analysis revenues. Growth was achieved across all majorproduct areas with WCDMA-based systems, particularly location test systems,increasing strongly through new customers being won. CDMA test product revenuesgrew strongly in Asia and North America, whilst physical layer test productrevenues saw a strong performance in Europe, Middle East and Africa ("EMEA")driven by WiMax investments. Support services grew with the business and a newservice centre was opened in India. Positioning products' revenue wasstimulated by growth in GPS as a result of the continued take-up of new signalsand the modernisation programme. Due to government funding problems, activitylevels fell in 2007 in the European positioning satellite programme, Galileo;however, recent events have increased optimism of generating revenues from thisprogramme in the future. The divisional revenues are broad-based, with nosingle customer accounting for more than 10 per cent of sales and the top tencustomers accounting for 30 per cent of the total. Profitability The profitability of the Performance Analysis division improved markedly, mainlydue to the cost reductions and operating changes made as a result of theOperating and Strategic Reviews. As a result the gross profit margin improvedin the second half of 2007 by 5.3 percentage points compared to that for thefirst half year. The cost reductions and operating improvements were primarilybased in our Broadband business, but all operations have benefited from thelower shared service overheads across the Group. Product development The development of the Performance Analysis business builds on its expertise intest and measurement of the performance of devices in real-world conditions. Akey objective is to emulate and test the quality of experience for end users,which is increasingly important in multimedia telecommunications. The Companycontinues to build on its switching and routing test expertise through futureenhancements to Spirent TestCenter. Achievements are evidenced by the expansionof the customer base for Spirent TestCenter from 200 customers at the beginningof 2007 to 340 at the end of the year. Additional application and mobilitytesting capabilities were and continue to be expanded, driving further growth inour professional services and support business. Spirent's Broadbandapplications test capabilities are being utilised in the testing of devicesutilised in the convergence of technologies and in the expansion of mobilecommunications. These address the needs of new wireless technologies and willenable Spirent to increase its market share in the future. The Company's development strategy is to select desirable market areas, withevolving technologies, showing faster than average growth, where there are largemarkets or market share opportunities that have a stable or expanding customerbase. Such opportunities are matched with Spirent's relative strengths. Productdevelopment projects are based on realistic engineering objectives that alsoenable access to greater engineering efficiency. Such new products will beintroduced in a way that will involve minimal disruption to existing activities.In addition, the software content of sales is being increased, which will alsoresult in the associated professional service and support business. Applications being addressed include IPTV, wireless services, IMS and multimediatesting, wireless data services, testing increased entertainment content withintegrated voice services. Given the Performance Analysis division's broad product portfolio, the businessis in a position to benefit from the current positive market trends driven bythe convergence of wired and wireless technologies in a world that is demandingmore and more mobile communication. Service Assurance Market conditions General market conditions remained challenging throughout 2007 for the ServiceAssurance division. There were continued delays in 'Triple Play' serviceassurance deployments by most major customers. More positively field testrepresents a growing market and offers potential opportunities. Overall the service assurance market remains sluggish with limited growthopportunities in this sector. Demand was limited by delays in procurement ofservice assurance solutions due to customer reorganisations, consolidations andchanges in ownership. Revenue The decline in legacy revenues continued, but at a lower rate than in pastyears. This indicates that carriers will continue to spend on legacy solutionsfollowing a period when they cut back spending in these areas dramatically. Thecut back in spending was in anticipation of shifting spending to next-generationnetwork architecture, which has created some challenges across customers andpotential customers. Service revenues, through professional serviceengagements, were an area of growth. Order intake grew year-on-year in constant currencies through customeracceptance of new products and growth in professional service engagements. As expected, revenue declined in constant currencies by 16 per cent. Thisreflected recognition of deferred revenue of £4.5 million for prior years in2006, the decline in legacy revenues and their associated maintenance contracts. Profitability Profitability improved markedly in the second half year compared to that for thefirst half. The improvement was achieved as a result of higher revenue,additional gross profit margin and to the full year benefit of cost savingspreviously actioned. Product development New service assurance solutions were launched for 'Triple Play', includingSmartSight Central Software and the IPMax hardware probe. These generated newrevenues in 2007. A major new development programme commenced for an in-homefield test solution product in the last quarter of 2007. Whilst the adoption of 'Triple Play' service assurance solutions remainuncertain, the outlook for 2008 appears to be relatively stable. Thedevelopment of field test solutions offer opportunities for growth and thedevelopment of an in-home field test solution offers a capability which iscompatible with fibre-to-the-node and fibre-to-the-home network topographies. Systems Underlying change at constant£ million 2007 2006 Change (%) currency (%)------------------------------------------------------------------------------------------------------------Revenue 33.4 35.8 (7) -Operating profit 1 3.8 4.7 (19) 11Return on sales (%) 11.4 13.1------------------------------------------------------------------------------------------------------------ Note 1 Before exceptional items and goodwill impairment. The Systems group comprises PG Drives Technology, a leading supplier of controlsystems for electrically powered medical and small industrial vehicles. Asexpected, revenue was impacted in 2007 due to the previously announced changesin US government healthcare funding for powered wheelchairs. This created ashift from premium systems to lower cost solutions. The US dollar exchange rateimpacted revenue and profit by £2.3 million and £1.4 million respectively. Wecontinued to place more production into China to support our activities in theAsia Pacific Region and in order to gain product and logistical cost benefits. During 2007, new products for scooters and rehabilitation wheelchairs wereintroduced that further strengthen System's position in the medical mobilitymarket. New industrial market segments, such as forklift trucks and golf carts,began to be served by new products, such as Sigma and X30/25. The divisioncontinues to generate an 11 per cent operating return on sales whilst thebusiness is being diversified beyond the healthcare sector. Non-segmental costs Costs not directly attributable to the operating segments reduced to £3.9million compared to £5.8 million in 2006. The second half costs were £1.8million. The cost reductions are a result of the actions implemented in thesecond quarter of 2007. The actions included consolidating reporting activitiesand other functions in the business units, enabling a reduction in staff levels. The deregistration in the United States has also reduced overhead costs.Overall there has been a lowering in the cost of the Board of Directors. Group financial performance Results Underlying change at First half Second half Full year Restated constant£ million 2007 2007 2007 20061 Change (%) currencies (%)---------------------------------------------------------------------------------------------------------------------Revenue 114.2 122.8 237.0 258.9 (8) (2)Adjusted operating profit(2) 5.0 20.5 25.5 8.4 204 260Return on sales(2) (%) 4.4 16.7 10.8 3.2Adjusted earnings pershare (pence)(3) 0.85 2.72 3.57 1.48 141 177Free cash flow4 21.3 28.9 50.2 (6.4)--------------------------------------------------------------------------------------------------------------------- The Group's financial performance is reported in accordance with InternationalFinancial Reporting Standards ("IFRS"). All comments below refer to continuing activities only unless otherwise stated. The Group is reporting an underlying change in revenue and adjusted operatingprofit given the significant effect the weakness of the US dollar has had onoperating results this year compared with the previous year. Underlying changeis the change at constant currencies and eliminates the effects of fluctuatingexchange rates on the translation of operating results and on the transactionsduring the year. Notes 1 Restated to reflect the presentation of SwissQual as a discontinued operation. 2 Before exceptional items and goodwill impairment. 3 Adjusted earnings per share is based on adjusted earnings as set out in note 6. 4 Operating cash flow, net interest and net capital expenditure. Revenue Reported revenue in sterling was down 8 per cent compared with 2006. Theunderlying change was a reduction of 2 per cent. The fall in revenue waslargely due to the expected decline in the Service Assurance division's revenueand to the impact of the weak US dollar. The impact of currency on reported revenue was to reduce the reported figure by£14.0 million on the translation of foreign currency denominated results and by£2.5 million due to the translation impact on exports priced in US dollars. The geographic profile by market of reported revenues was as follows: 2007 % 2006 %----------------------------------------------------------------------------------------------------------Europe 43.7 18 43.7 17North America 132.2 56 152.1 59Asia and Rest of the World 61.1 26 63.1 24---------------------------------------------------------------------------------------------------------- 237.0 258.9---------------------------------------------------------------------------------------------------------- The geographical revenue profile did not change significantly, although therewas a shift away from North America to Europe and Asia. This effect was largelydue to the decline in Service Assurance revenue. Adjusted operating profit improved by £17.1 million compared to 2006. £16.3million of the improvement was achieved in the second half year. This derivedfrom increased underlying revenues, improved gross profit margin and reductionin overhead cost. The resulting operating return on sales increased to 10.8 per cent for 2007compared to 3.2 per cent in 2006, being 16.7 per cent for the second half of2007. Currency impact There was a significant weakening of the US dollar in 2007 compared with 2006,as the average US dollar to sterling exchange rate rose to $2.00:£1 in 2007 from$1.85:£1 in 2006. Given that 64 per cent of our revenue arises in North Americathis had a marked effect on the translation of our revenue and profits, reducingrevenue as previously noted. The impact on operating profit was a reduction of£2.3 million due to translation and a reduction of a further £2.4 million due toUS dollar priced exports. The Systems group is exposed to transactional currency risk, but as it hadhedged some of the 2007 US dollar exposures by the end of 2006 it did not feelthe full effect of the US dollar weakness in 2007. This business has hedgedforecast US dollar exposures for 2008 at an average forward rate of $2.03:£1.These forward contracts have been fair valued based at a closing spot rate of$1.99:£1, this resulted in an unrealised loss of £0.5 million at the balancesheet date. Cost of sales and operating expenses Cost of sales reduced to 37.6 per cent from 39.4 per cent in 2006. Thisreduction reflects the improvement achieved through the restructuring andoutsourcing actions undertaken in the Communications businesses and the benefitof the increased efficiencies achieved as new products were produced in highervolume. The result was a 1.8 percentage point improvement in gross profitmargin. Product development expense reduced from £53.7 million in 2006 to £44.5 millionin 2007, or a fall from 20.7 per cent to 18.8 per cent of sales respectively.The second half year run rate was £21.7 million for the Group. The lowerexpense was achieved by the reduction in the number of sites and throughincreases in engineering efficiency. The increase in engineering efficiencyenabled an increase in on-time delivery of engineering projects. There was asignificant investment in new product development, with an increased emphasis onWireless test products. Other operating expenses reduced from £94.9 million in 2006 to £77.8 million in2007, being 36.7 per cent of sales and 32.8 per cent of sales respectively. Thesecond half year operating expense run rate was £37.2 million, or 30.3 per centof sales. The annual reduction includes the lower expense for share-based payment of £2.7 million and the cost reduction benefit arising from the termination of the Company's reporting obligations under the US Securities Exchange Act. Exceptional items The cost containment actions were identified in the Operating and StrategicReviews. The actions were to eliminate duplicated activities and processes,consolidate manufacturing and business sites and to reduce general overheads. In total exceptional items of £14.4 million have been charged in 2007 (2006:£8.8 million). This compares with the estimate of £15 million made at the timeof the Operating Review. Of this overall cost £5.3 million relates to severanceand other reorganisation costs associated with the outsourcing of manufacturing,£3.1 million was charged for asset write-downs in relation to redundantproperty, plant and equipment as sites were vacated, inventory write-downs of£2.4 million in respect of excess and obsolete inventory, identified as a resultof the outsourcing activities, and £3.6 million was in respect of onerous leaseobligations on empty properties, net of releases, created by vacatedmanufacturing facilities and the consolidation of functions. Progress has beenmade in reducing the obligations on certain empty properties where leasesurrender or termination have been negotiated. Goodwill impairment There was no goodwill impairment in 2007. In 2006 £19.1 million was charged inrespect of the Service Assurance division, this was included in the continuingbusiness results. A further £27.7 million was charged in respect ofdiscontinued businesses. Intangible amortisation Operating expense for continuing businesses includes a charge of £0.9 millionfor the amortisation of intangibles in 2007, compared to £0.5 million in 2006. Share-based payment The charge for share-based payment for 2007 was £2.5 million compared to £5.2million for 2006. The reduction reflects the lower number of share incentivesgranted in 2007 and the lapsing of prior year awards. The charge for 2008 is expected to be about £1.5 million. Net finance income Net finance income was £6.7 million compared with £6.0 million for 2006. 2006excludes the exceptional cost associated with the repayment of loan notes of£8.8 million. Net finance income includes £0.9 million in respect of theexpected return on pension scheme assets less the interest charge on theunwinding of liabilities (2006: £2.0 million). The surplus cash is held on deposit earning current market rates of interest. Profit before tax for continuing operations Reported profit before tax for continuing operations was £17.8 million comparedwith a loss of £22.3 million for 2006. Adjusted profit before tax is set out below: £ million 2007 2006----------------------------------------------------------------------------------------------------------Reported profit/(loss) before tax 17.8 (22.3)Exceptional items 14.4 8.8Goodwill impairment - 19.1Cost associated with the repayment of loan notes - 8.8----------------------------------------------------------------------------------------------------------Adjusted profit before tax 32.2 14.4---------------------------------------------------------------------------------------------------------- Tax There was a net tax credit in 2007 of £7.7 million (2006: £0.4 million charge),which includes a £5.3 million credit in respect of prior years and a tax crediton exceptional items of £3.9 million. This gives an effective current year rateof 4.7 per cent on the adjusted profit before tax. A very low effective taxrate continues to be incurred due to the carry forward of tax losses. Includedin the above, a deferred tax asset of £10.5 million has been recognised. Undercurrent conditions it is expected that the low effective tax rates will continuefor the foreseeable future. Discontinued operations 2007 discontinued operations relate to the loss making SwissQual business. Thedisposal was completed on 5 July 2007 for cash proceeds for $3.0 million (£1.5million). A loss on disposal of £4.2 million was recorded. In the periodSwissQual reported revenue of £3.6 million and an operating loss of £3.4million. Discontinued operations in 2006 also include the HellermannTyton Division soldin February 2006. Earnings per share Basic earnings per share for the Group was 2.05 pence compared with 11.75 pencefor 2006. Earnings in 2006 include the profit on the sale of theHellermannTyton Division of £166.1 million. Adjusted earnings per share for continuing operations, being before exceptionalitems, goodwill impairment, costs associated with repayment of loan notes, netof any related tax and prior year tax, was 3.57 pence compared with 1.48 pencefor 2006. Weighted average Ordinary share capital was 859.8 million shares compared with925.9 million for 2006, significantly reduced by the on-market share repurchaseprogramme during 2007. Financing and cash flow Cash generation was strong in 2007. Cash and cash equivalents were £79.0million at 31 December 2007 compared with £97.6 million at 31 December 2006, andthis was after an outflow of £66.3 million for the share repurchase programme in2007, with £0.5 million of share repurchases in 2007 being settled in 2008.Cash flows improved throughout 2007 as the results of the cost containmentactions started to take effect. The Group continues to be debt free. Operating activities generated £49.8 million in the year compared with a cashoutflow in 2006 of £43.0 million. In 2006 the Company made a payment of £47.0million to fund the UK defined benefit pension fund. Free cash flow is set out below: £ million 2007 2006----------------------------------------------------------------------------------------------------------Reported operating cash flow before pension 49.8 4.0Net interest income 5.6 4.1Net capital expenditure (5.2) (14.5)----------------------------------------------------------------------------------------------------------Free cash flow 50.2 (6.4)---------------------------------------------------------------------------------------------------------- Tax payments are low as the Group benefits from tax losses carried forward andin 2007 there was a net tax refund of £6.0 million compared with a net paymentof £2.3 million in 2006. In addition, in 2007 tax obligations of £6.8 milliondue in respect of the sale of the HellermannTyton Division were settled. Net capital expenditure for the Group was reduced to £5.2 million of cashoutflow in 2007 (2006: £14.5 million). This was well below the depreciationcharge of £9.5 million. With the outsourcing of production there is a lowerrequirement to make new capital investment, in addition the reduction in thenumber of sites and increased engineering efficiency has also had a beneficialimpact. Net proceeds of £0.6 million were received from the sale of SwissQual and £5.5million of deferred consideration was incurred in respect of acquisitions madein 2006. Pension fund The accounting valuation of the UK defined benefit pension plans at the end of2007 was based on the results of the triennial valuation of the plans at 1 April2006. This valuation was completed during 2007. The surplus in the plans rosefrom £2.4 million at 31 December 2006 to £7.7 million at 31 December 2007 withthe improvement in funding being a result of the rising equity markets and achange to the assumptions underlying the calculation of the liabilities, namelythe rate of return on corporate bonds. The accounting rules however limit thesurplus that may be recognised by the Company and, due to this, the surplusrecognised on the balance sheet at 31 December 2007 was restricted to £3.0million. The Group has also reported a liability of £0.7 million in respect ofthe UK unfunded plan. Capital structure, on-market share repurchase programme and dividend In 2007 £66.8 million of cash was returned to shareholders, representing 103.4million Ordinary shares. Including monies returned since May 2006, the totalreturn of cash to shareholders to 31 December 2007 was £108.7 million,representing 193.7 million Ordinary shares. The share repurchase programme has continued into 2008 and has now returned£75.0 million of cash in total since the start of 2007. At the end of February 2008, there were 777.6 million Ordinary shares in issue.This excludes treasury shares. Dividend policy is under review by the Board, however no dividend is being paidin respect of 2007. US listing and SEC registration On 5 June 2007 Spirent filed an application to delist its American DepositaryShares ("ADS") from the New York Stock Exchange and to terminate the USregistration of its ADS and Ordinary shares from the US Securities and ExchangeCommission. The Company's US Securities Exchange Act reporting obligations havenow ceased and the termination of registration occurred after the statutory 90day review period. Consolidated income statement----------------------------- 2006 2007 (restated)1Year to 31 December Notes £ million £ million----------------------------------------------------------------------------------------------------------------------- Before exceptional Exceptional Before items and items and Exceptional Exceptional goodwill goodwill items items note Total impairment impairment Total 5 note 5-----------------------------------------------------------------------------------------------------------------------Continuing operationsRevenue 2,3 237.0 - 237.0 258.9 - 258.9Cost of sales (89.2) (2.4) (91.6) (101.9) - (101.9)-----------------------------------------------------------------------------------------------------------------------Gross profit 147.8 (2.4) 145.4 157.0 - 157.0Product development (44.5) - (44.5) (53.7) - (53.7)Selling and distribution (47.1) - (47.1) (55.8) - (55.8)Administration (30.7) (12.0) (42.7) (39.1) (27.9) (67.0)-----------------------------------------------------------------------------------------------------------------------Operating profit/(loss) 25.5 (14.4) 11.1 8.4 (27.9) (19.5)Finance income 7.0 - 7.0 7.6 - 7.6Finance costs (0.3) - (0.3) (1.6) - (1.6)Costs associated with the repayment of loan notes - - - - (8.8) (8.8)-----------------------------------------------------------------------------------------------------------------------Profit/(loss) before tax 32.2 (14.4) 17.8 14.4 (36.7) (22.3)Tax 3.8 3.9 7.7 (0.4) - (0.4)-----------------------------------------------------------------------------------------------------------------------Profit/(loss) for the year from continuing operations after tax 36.0 (10.5) 25.5 14.0 (36.7) (22.7)Discontinued operations 4Profit/(loss) for the year from discontinued operations (3.7) (4.2) (7.9) 2.3 129.2 131.5-----------------------------------------------------------------------------------------------------------------------Profit/(loss) for the yearattributable to equity holders of parent 32.3 (14.7) 17.6 16.3 92.5 108.8----------------------------------------------------------------------------------------------------------------------- Earnings/(loss) per share (pence) 6Basic earnings 2.05 11.75Basic earnings/(loss) from continuing operations 2.97 (2.45)Diluted earnings 2.03 11.75Diluted earnings/(loss) from continuing operations 2.94 (2.45)----------------------------------------------------------------------------------------------------------------------- Note 1 2006 has been restated to reflect the presentation of SwissQual as adiscontinued operation, the reclassification of product development out of costof sales and the reclassification of costs of customer service operations tocost of sales from selling and distribution expense. Consolidated statement of recognised income and expense Year to 31 December -------------------£ million 2007 2006-----------------------------------------------------------------------------------------------------------Income and expense recognised directly in equityGains/(losses) on cash flow hedges taken to equity (0.5) -Exchange differences on retranslation of foreign operations (0.6) (10.3)Actuarial gains/(losses) on defined benefit pension plans (0.6) 1.6Deferred tax liability on pension plans (0.8) ------------------------------------------------------------------------------------------------------------ (2.5) (8.7)Transfers to income statementExchange gain transferred to profit on sale - (1.3)Gains on cash flow hedges - (1.9)-----------------------------------------------------------------------------------------------------------Net income/(expense) recognised directly in equity (2.5) (11.9)Profit for the year 17.6 108.8-----------------------------------------------------------------------------------------------------------Total recognised income and expense for the year attributable to equity holders of parent 15.1 96.9----------------------------------------------------------------------------------------------------------- Consolidated balance sheet-------------------------- At 31 December -------------------£ million 2007 2006-----------------------------------------------------------------------------------------------------------AssetsNon-current assetsIntangible assets 58.6 63.3Property, plant and equipment 16.2 25.3Trade and other receivables 1.4 1.4Cash on deposit 3.7 8.5Defined benefit pension plan surplus 3.0 2.4Deferred tax 10.5 1.2----------------------------------------------------------------------------------------------------------- 93.4 102.1----------------------------------------------------------------------------------------------------------- Current assetsInventories 17.8 25.4Trade and other receivables 50.2 63.8Derivative financial instruments - 0.1Cash and cash equivalents 79.0 97.6----------------------------------------------------------------------------------------------------------- 147.0 186.9-----------------------------------------------------------------------------------------------------------Total assets 240.4 289.0----------------------------------------------------------------------------------------------------------- Liabilities-----------Current liabilitiesTrade and other payables (54.6) (61.8)Current tax (32.7) (30.5)Derivative financial instruments (0.5) -Provisions and other liabilities (5.1) (5.9)----------------------------------------------------------------------------------------------------------- (92.9) (98.2)----------------------------------------------------------------------------------------------------------- Non-current liabilitiesTrade and other payables (1.1) (0.5)Defined benefit pension plan deficit (0.7) (1.4)Provisions and other liabilities (7.6) (6.1)----------------------------------------------------------------------------------------------------------- (9.4) (8.0)-----------------------------------------------------------------------------------------------------------Total liabilities (102.3) (106.2)-----------------------------------------------------------------------------------------------------------Net assets 138.1 182.8----------------------------------------------------------------------------------------------------------- Capital and reserves--------------------Share capital 28.0 32.5Share premium account 15.5 10.6Capital redemption reserve 4.8 -Capital reserve 3.6 5.5Translation reserve (6.7) (6.1)Net unrealised gains and losses (0.5) -Retained earnings 93.4 140.3-----------------------------------------------------------------------------------------------------------Total equity 138.1 182.8----------------------------------------------------------------------------------------------------------- Consolidated cash flow statement-------------------------------- Year to 31 December --------------------£ million Note 2007 2006-----------------------------------------------------------------------------------------------------------Cash flows from operating activitiesCash flows from operations 7 43.8 (40.7)Tax received/(paid) 6.0 (2.3)-----------------------------------------------------------------------------------------------------------Net cash inflow/(outflow) from operating activities 49.8 (43.0)----------------------------------------------------------------------------------------------------------- Cash flows from investing activitiesInterest received 5.7 5.5Transfer from/(to) long term deposit 4.8 (8.5)Disposal of operations 0.6 278.2Tax paid on the disposal of operations (6.8) -Purchase of intangible assets (0.3) (0.8)Purchase of property, plant and equipment (5.1) (14.1)Proceeds from the sale of property, plant and equipment 0.2 0.4Acquisition of subsidiaries (5.5) (44.4)-----------------------------------------------------------------------------------------------------------Net cash from/(used in) investing activities (6.4) 216.3----------------------------------------------------------------------------------------------------------- Cash flows from financing activitiesInterest paid (0.1) (1.4)Costs associated with the repayment of loan notes - (9.5)Proceeds from the issue of share capital and employee share ownership trust 4.4 2.4On-market share repurchase (66.3) (41.9)New borrowings - 23.0Repayments of borrowings - (95.7)-----------------------------------------------------------------------------------------------------------Net cash used in financing activities (62.0) (123.1)----------------------------------------------------------------------------------------------------------- Net increase/(decrease) in cash and cash equivalents (18.6) 50.2Cash and cash equivalents at the beginning of the year 97.6 48.8Effect of foreign exchange rate changes - (1.4)-----------------------------------------------------------------------------------------------------------Cash and cash equivalents at the end of the year 79.0 97.6----------------------------------------------------------------------------------------------------------- Notes 1 Financial information presented The financial information contained in this document does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. As required by the European Union's IAS Regulation and the Companies Act 1985the Group has prepared its consolidated financial statements for the year to 31December 2007 in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The comparative financial informationis based on the statutory accounts to 31 December 2006 apart from as statedbelow. These accounts, upon which the auditors issued an unqualified opinion,have been delivered to the Registrar of Companies. The Group has reclassified product development costs out of cost of sales and isdisclosing these costs separately in the income statement. The change has beenmade to improve the transparency of the Group's results. The costs of customer service operations have been reclassified from selling anddistribution expense to cost of sales. This change reflects the increasingproportion of revenues derived from the provision of value added services, andthe Board has concluded that this classification is a fairer representation ofthe commercial operations and the gross profit of the Group. Comparatives have been restated accordingly. In addition comparative numbershave been restated to reflect the presentation of SwissQual as a discontinuedoperation. 2 Segmental analysis Continuing Performance Service operations£ million Analysis Assurance Communications Systems Non-segmental Total2007Revenue 169.3 34.3 203.6 33.4 - 237.0-----------------------------------------------------------------------------------------------------------------Operating profit/(loss) before exceptional items 22.3 3.3 25.6 3.8 (3.9) 25.5Exceptional items (10.0) (2.6) (12.6) - (1.8) (14.4)-----------------------------------------------------------------------------------------------------------------Operating profit/(loss) 12.3 0.7 13.0 3.8 (5.7) 11.1Finance income 7.0Finance costs (0.3)-----------------------------------------------------------------------------------------------------------------Profit before tax 17.8Tax 3.8Tax on exceptional items 3.9-----------------------------------------------------------------------------------------------------------------Profit after tax for the year 25.5-----------------------------------------------------------------------------------------------------------------Other informationProduct development 36.9 5.3 42.2 2.3 - 44.5Share-based payment 1.7 0.5 2.2 0.1 0.2 2.5Intangible amortisation 0.9 - 0.9 - - 0.9----------------------------------------------------------------------------------------------------------------- Continuing operations Performance Service (restated)£ million Analysis Assurance Communications Systems Non-segmental Total------------------------------------------------------------------------------------------------------------------- 2006----Revenue 179.5 43.6 223.1 35.8 - 258.9------------------------------------------------------------------------------------------------------------------- Operating profit/(loss) before exceptional items and goodwill impairment 10.6 (1.1) 9.5 4.7 (5.8) 8.4Exceptional items (3.8) (5.3) (9.1) - 0.3 (8.8)Goodwill impairment - (19.1) (19.1) - - (19.1)-------------------------------------------------------------------------------------------------------------------Operating profit/(loss) 6.8 (25.5) (18.7) 4.7 (5.5) (19.5)Finance income 7.6Finance costs (1.6)Costs associated with the repayment of loan notes (8.8)-------------------------------------------------------------------------------------------------------------------Loss before tax (22.3)Tax (0.4)-------------------------------------------------------------------------------------------------------------------Loss after tax for the year (22.7)-------------------------------------------------------------------------------------------------------------------Other informationProduct development 41.9 9.5 51.4 2.3 - 53.7Share-based payment 3.6 1.2 4.8 0.1 0.3 5.2Intangible amortisation 0.5 - 0.5 - - 0.5------------------------------------------------------------------------------------------------------------------- Revenue and operating profit for discontinued operations are disclosed in note 4. 3 Geographical analysis 2006£ million 2007 (restated)-----------------------------------------------------------------------------------------------------------Revenue by marketContinuing operationsEurope 43.7 43.7North America 132.2 152.1Asia Pacific, Rest of Americas, Africa 61.1 63.1----------------------------------------------------------------------------------------------------------- 237.0 258.9----------------------------------------------------------------------------------------------------------- Revenue by source-----------------Continuing operationsEurope 64.2 63.8North America 151.8 175.9Asia Pacific, Rest of Americas, Africa 21.0 19.2----------------------------------------------------------------------------------------------------------- 237.0 258.9 ----------------------------------------------------------------------------------------------------------- 4 Discontinued operations 2007 2006£ million (restated)-----------------------------------------------------------------------------------------------------------Revenue 3.6 40.7-----------------------------------------------------------------------------------------------------------Operating loss (3.4) (24.8)Share of profit of associates - 0.1Profit/(loss) on the disposal of operations (4.2) 166.1Net finance costs - (0.1)-----------------------------------------------------------------------------------------------------------Profit/(loss) before tax (7.6) 141.3Tax (0.3) (0.6)Tax on the disposal of operations - (9.2)-----------------------------------------------------------------------------------------------------------Profit/loss for the year (7.9) 131.5----------------------------------------------------------------------------------------------------------- Discontinued operations relate to the HellermannTyton Division, which was soldon 15 February 2006, and SwissQual, which was sold on 5 July 2007. In 2006expenses include goodwill impairment of £27.7 million in respect of SwissQual. 5 Exceptional items and goodwill impairment £ million 2007 2006-------------------------------------------------------------------------------------------------------------Goodwill impairment - 19.1Inventory provisions 2.4 -Restructuring costs 12.0 9.1EGM costs - 2.0Curtailment and settlement gain on defined benefit pension plan - (1.7)-------------------------------------------------------------------------------------------------------------Release of provision for prior year disposals - (0.6)------------------------------------------------------------------------------------------------------------- 14.4 27.9------------------------------------------------------------------------------------------------------------- 6 Earnings/(loss) per share Continuing Discontinued Total£ million operations operations operations----------------------------------------------------------------------------------------------------------- 2007----Profit/(loss) for the year attributable to equity holders of parent 25.5 (7.9) 17.6Exceptional items 14.4 - 14.4Loss on the disposal of operations - 4.2 4.2Tax on exceptional items (3.9) - (3.9)Prior year tax credit (5.3) - (5.3)-----------------------------------------------------------------------------------------------------------Adjusted earnings attributable to equity holders of parent 30.7 (3.7) 27.0----------------------------------------------------------------------------------------------------------- 2006 restated-------------Profit/(loss) for the year attributable to equity holders of parent (22.7) 131.5 108.8Exceptional items 8.8 - 8.8Goodwill impairment 19.1 27.7 46.8Profit on the disposal of operations - (156.9) (156.9)Costs associated with the repayment of loan notes 8.8 - 8.8Prior year tax credit (0.3) - (0.3)-----------------------------------------------------------------------------------------------------------Adjusted earnings attributable to equity holders of parent 13.7 2.3 16.0----------------------------------------------------------------------------------------------------------- 2006 2007 (restated)-----------------------------------------------------------------------------------------------------------Earnings/(loss) per share (pence)Basic 2.05 11.75Basic from continuing operations 2.97 (2.45) Diluted 2.03 11.75Diluted from continuing operations 2.94 (2.45) Adjusted basic 3.14 1.73Adjusted basic from continuing operations 3.57 1.48----------------------------------------------------------------------------------------------------------- Weighted average number of shares in issue (million)Basic and adjusted 859.8 925.9Dilutive potential of employee share options 8.8 3.8-----------------------------------------------------------------------------------------------------------Weighted average number of shares in issue - diluted 868.6 929.7----------------------------------------------------------------------------------------------------------- 7 Reconciliation of profit/(loss) before tax to cash generated from operations £ million 2007 2006 (restated)-----------------------------------------------------------------------------------------------------------Continuing operationsProfit/(loss) before tax 17.8 (22.3)Adjustments for:Finance income (7.0) (7.6)Finance costs 0.3 1.6Costs associated with the repayment of loan notes - 8.8Goodwill impairment - 19.1Intangible asset amortisation 0.9 0.5Depreciation of property, plant and equipment 9.3 11.5Loss on the disposal of property, plant and equipment 0.8 0.6Impairment of property, plant and equipment 3.1 0.8Share-based payment 2.5 5.2Settlement and curtailment of pension fund (0.8) (1.7)Changes in working capital:Deferred income released (0.4) (0.7)Decrease/(increase) in receivables 7.7 (4.8)Decrease in inventories 6.1 0.2Increase/(decrease) in payables 4.9 (2.9)Decrease in provisions (0.9) (1.0)Defined benefit pension fund 0.5 (47.0)-----------------------------------------------------------------------------------------------------------Cash flows from continuing operations 44.8 (39.7)----------------------------------------------------------------------------------------------------------- Discontinued operationsProfit/(loss) before tax (7.6) 141.3Adjustments for:Share of profit of associates - (0.1)(Profit)/loss on the sale of discontinued operations 4.2 (166.1)Finance costs - 0.1Intangible asset amortisation 0.6 1.1Goodwill impairment - 27.7Depreciation of property, plant and equipment 0.2 1.9Profit on the disposal of property, plant and equipment - (0.1)Share-based payment - 0.4Changes in working capital:Deferred income released - (0.6)Decrease/(increase) in receivables 3.0 (4.2)Increase in inventories (0.2) (0.1)Decrease in payables (1.2) (2.3)-----------------------------------------------------------------------------------------------------------Cash flows from discontinued operations (1.0) (1.0)-----------------------------------------------------------------------------------------------------------Cash flows from operating activities 43.8 (40.7)----------------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Spirent