21st Apr 2005 07:01
Spirent PLC21 April 2005 SPIRENT PLC TRADING UPDATE London, UK - 21 April 2005: Spirent plc (LSE: SPT; NYSE: SPM), a leading communications technology company, today provided an update on trading. At the time of the announcement of our 2004 final results we reported that wehad seen a satisfactory start to 2005 for the Group as a whole, albeit that wewere experiencing a slow down in our Service Assurance division's existingleased line and DSL business. Since then, however, the extent of the decline inthis business has been significantly greater than anticipated. This was due inpart to customers delaying the release of capital spending budgets. Whenreleased these showed a larger than expected shift in customers' investmenttowards next-generation networks and IP service deployments, including theirFTTx initiatives. In addition, recent merger activity among the US carriers hasdelayed spending on monitoring equipment. These factors have adversely affectedthis division's performance. Turnover for the Service Assurance division for thefirst quarter of 2005 was £9.0 million, down £10.8 million compared with thesame period last year, and the division generated an operating loss of £5.4million. We are now expecting to report an operating loss for the division inthe region of £10 million in the first half of 2005. Largely due to the performance of our Service Assurance division, we anticipatethat Group operating profit for the first half of the year will be significantlybelow our previous expectations. In addition, we will be charging one off costsof approximately £3 million in relation to reorganisation expenses and stockwrite downs and anticipate further costs associated with the plannedrationalisation of the supply chain across the Communications group. We alsoanticipate that we will take a goodwill impairment charge in relation to theService Assurance division at the half year. The carrying value of goodwillassociated with the Service Assurance division is £45 million. The Group saw a net cash outflow in the first quarter of 2005 in accordance withour plans, as we absorbed working capital and increased capital expenditure. Asa result, net debt increased to £33.6 million compared with £26.4 million at theyear end. Our Network Products and Systems groups both traded in line with expectations inthe first quarter of 2005 with turnover of £51.4 million and £9.0 million,respectively. Within our Communications group, the Performance Analysis division deliveredturnover of £40.2 million in the first quarter of 2005 representing a 6 per centincrease in constant currencies over the same period last year. This wasslightly below our expectations, although we had been budgeting for a seasonallylower first quarter. Quote activity in this division remains good but resultsfor the first half are now expected to be marginally below our originalexpectations due to a slow down in spending by the US carriers as well as lowerthan anticipated US government spending on telecoms. In the Service Assurance division, we have taken actions to realign resourcesand reduce operating costs including changing the senior management and reducingemployee numbers by 15 per cent. We are now also implementing further actions inrelation to the rationalisation of the supply chain that will increaseefficiencies. We remain focused on our strategy of transitioning the Service Assurancedivision towards IP service assurance. We continue to work with potentialcustomers to help them define their strategy for monitoring IP services and arereceiving encouraging feedback on our technical understanding and approach tothe challenges of monitoring advanced IP-based networks and services. We believethis sector represents a significant future opportunity for us. Note The above disclosures are unaudited and are reported on the basis ofInternational Financial Reporting Standards (IFRS). Business segments reported under IFRS are the same as those reported under UKGAAP however the operating profit or loss is affected by the stricterdefinitions under IFRS regarding allocation of central costs. Those sharedcosts, which cannot be directly attributed to individual segments, will now bereported separately as corporate and other costs. Where appropriate comparativenumbers have been restated to reflect this change. Conference call An analysts conference call will be held at 08.45 UK time today. Dial in: +44 (0)1452 541 076 US freephone: +1 866 223 9754 Replay: +44 (0)1452 550 000 US freephone: +1 866 247 4222Access Number: 5737903 # - ends - Enquiries Anders Gustafsson, Chief Executive Spirent plc +44 (0)1293 767676Eric Hutchinson, Finance Director Investor RelationsCatherine Nash Spirent plc +44 (0)1293 767676 MediaTom Buchanan/Rupert Young Brunswick +44 (0)20 7404 5959 About Spirent Spirent is a leading communications technology company focused on deliveringinnovative systems and services to meet the needs of customers worldwide. We area global provider of performance analysis and service assurance solutions thatenable the development and deployment of next-generation networking technologiessuch as broadband services, Internet telephony, 3G wireless and web applicationsand security testing. Our Network Products business is a developer andmanufacturer of innovative solutions for fastening, identification, protectionand connectivity in electrical and communications networks marketed under theglobal brand HellermannTyton. The Systems group comprises PG Drives Technologywhich develops power control systems for specialist electrical vehicles in themobility and industrial markets. Further information about Spirent plc can befound at www.spirent.com Spirent Ordinary shares are traded on the London Stock Exchange (ticker: SPT)and on the New York Stock Exchange (ticker: SPM; CUSIP number: 84856M209) in theform of American Depositary Shares (ADS), represented by American DepositaryReceipts, with one ADS representing four Ordinary shares. Spirent and the Spirent logo are trademarks or registered trademarks of Spirentplc. All other trademarks or registered trademarks mentioned herein are held bytheir respective companies. All rights reserved. This press release may contain forward-looking statements (as that term isdefined in the United States Private Securities Litigation Reform Act of 1995)based on current expectations or beliefs, as well as assumptions about futureevents. You can sometimes, but not always, identify these statements by the useof a date in the future or such words as "will", "anticipate", "estimate","expect", "project", "intend", "plan", "should", "may", "assume" and othersimilar words. By their nature, forward-looking statements are inherentlypredictive and speculative and involve risk and uncertainty because they relateto events and depend on circumstances that will occur in the future. You shouldnot place undue reliance on these forward-looking statements, which are not aguarantee of future performance and are subject to factors that could cause ouractual results to differ materially from those expressed or implied by thesestatements. Such factors include, but are not limited to: the extent to whichcustomers continue to invest in next-generation technology and deploy advancedIP-based services; our ability to successfully expand our customer base; ourability to continue to benefit from generally improving market conditions; theprevailing market conditions and pace of economic recovery; our ability toimprove efficiency and adapt to economic changes and other changes in demand ormarket conditions; our ability to develop and commercialise new products andservices, extend our existing capabilities in IP services and expand our productoffering internationally; our ability to attract and retain qualified personnel;the effects of competition on our business; fluctuations in exchange rates andheavy exposure to a weak US dollar; changes in the business, financial conditionor prospects of one or more of our major customers; risks of doing businessinternationally; the financial burden of our pension fund deficit; risksrelating to the acquisition or sale of businesses and our subsequent ability tointegrate businesses; our reliance on proprietary technology; our exposure toliabilities for product defects; our reliance on third party manufacturers andsuppliers; and other risks described from time to time in Spirent plc'sSecurities and Exchange Commission periodic reports and filings. The Companyundertakes no obligation to update any forward-looking statements contained inthis press release, whether as a result of new information, future events orotherwise. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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