Spirent Comm PLC SPT Interim Management Statement

  Spirent Comm PLC (SPT) - Interim Management Statement

RNS Number : 6017Q
Spirent Communications PLC
08 November 2012




                          SPIRENT COMMUNICATIONS PLC

                   INTERIM MANAGEMENT STATEMENT (UNAUDITED)

London, UK - 8 November 2012: Spirent Communications plc ("Spirent", the
"Company" or the "Group") (LSE: SPT), a leading communications technology
company, announces the following unaudited Interim Management Statement for
the period from 1 July 2012 to date. Unless otherwise stated the financial
information is for the three months ended 30 September 2012.

The sale of the Systems Division announced on 24 September 2012 was completed
on

1 November 2012. The Systems Division has been classified as a discontinued
operation in these results and comparatives have been restated to reflect this
disposal.



Trading to date

As anticipated at the time of Spirent's half-year results announcement market
conditions during the third quarter were challenging, due to macro-economic
factors. This caused our customers to exercise caution in the timing of their
investment decisions which in turn tempered our short term growth rates.



Results summary

The results for the third quarter and for the first nine months of 2012 for
the continuing Group are set out below:



                                   2012         2011         2012         2011
$ million                  3^rd quarter 3^rd quarter 9 months YTD 9 months YTD
Reported
Revenue                           111.7        115.4        347.8        345.2
Operating profit                   25.9         28.6         79.1         79.2
Basic earnings per share
(cents)                            2.77         2.95         8.44         8.38
Free cash flow^1                   17.1         25.8         67.5         42.9
Adjusted
Operating profit^2                 28.2         29.3         87.8         82.5
Basic earnings per share^3
(cents)                            3.11         3.06         9.61         8.80

Notes

1. Operating cash flow  for the total  Group after tax,  net interest and  net 
capital expenditure.

2. Before exceptional  items, share-based payment,  acquired intangible  asset 
amortisation and acquisition related costs.

3. Adjusted basic earnings per share is based on adjusted earnings as set  out 
in note 3 of Notes to the Interim Management Statement.





Highlights - third quarter 2012

Continuing operations



Financial

· Sale of Systems announced in September for $64.0 million, cash
consideration received on completion on 1 November 2012. It is envisaged that
net proceeds will be returned to shareholders by way of on market share
buybacks.

· Group revenue reduced 3% to $111.7 million (Q3 2011: $115.4 million); book
to bill ratio was 92 for the quarter (Q3 2011: 105).

· Performance Analysis revenues steady at $103.8 million (Q3 2011: $104.0
million); Service Assurance down 31% to $7.9 million (Q3 2011: $11.4 million).

· Adjusted operating profit down 4% to $28.2 million (Q3 2011: $29.3
million). Reported operating profit, after charging acquisition costs,
acquired intangible asset amortisation and share-based payments of $2.3
million (Q3 2011: $0.7 million), was $25.9 million (Q3 2011: $28.6 million).

· Return on sales maintained at 25%.

· Adjusted basic earnings per share from continuing operations rose 2% to
3.11 cents (Q3 2011: 3.06 cents). Basic earnings per share 6% lower at 2.77
cents (Q3 2011: 2.95 cents).

· Free cash generation of $17.1 million (Q3 2011: $25.8 million). Cash and
cash equivalents at 30 September 2012 were $191.7 million (1 July 2012: $234.7
million), after the acquisition of Metrico Wireless for $52.0 million in
September 2012.



Operational

· Acquisition of Metrico Wireless in September, brings together Spirent's
mobile device performance test strength in the lab with Metrico's field-based,
subscriber-level focus.

· Released iTest Lab Optimizer, a next-generation lab management platform
that improves test equipment utilisation, productivity and test cycle time for
equipment vendors and operators.

· Check Point selected Spirent's Avalanche security solution to test the
performance and scalability of the Check Point 61000 Security System using
real-world traffic.

· Cisco partnered with Spirent to test the new ultra-low-latency,
high-density, high-performance Cisco Nexus^® 3548 Switch, using Spirent
TestCenter^TM to test the 3548's latency performance.

· Released new Hybrid Location Technology Solution to test a new
generation of hybrid positioning technologies that employ Wi-Fi, Global
Navigation Satellite System, sensors and cellular signals.

· Spirent and Brocade gave the first public demonstration of a live 100Gb
per second OpenFlow network, using Spirent TestCenter's Software Defined
Networking application.

· Growing interest in testing for the Chinese Compass ("Beidou")
navigation satellite system, with several new orders secured in Asia and North
America.



Market conditions and outlook

The fundamental drivers for the test and measurement market remain strong,
although the global macro-economic environment is uncertain. The underlying
revenues in the fourth quarter of 2012 are expected to be similar to last year
and with the addition of revenues from acquisitions could show some growth
overall.



Bill Burns, Chief Executive Officer, commented:

"We have made good strategic progress in the third quarter executing on the
acquisition of Metrico Wireless and disposing of the non-core Systems
Division, allowing us to focus the Group's activities exclusively on the
faster growing test and measurement market. As a result, we intend to
increase investment in the technologies that will serve our customers'
evolving needs while at the same time pursuing initiatives to expand our
served markets."



Third quarter performance

Overview

Revenue for the third quarter of 2012 for the continuing Group was 3 per cent
lower compared with 2011, as a result of flat revenues in Performance Analysis
and the continued decline in demand in Service Assurance for its legacy
products. Adjusted operating profit was down by 4 per cent compared with the
third quarter of 2011 on lower revenue. Adjusted earnings per share grew by 2
per cent to 3.11 cents.



Performance Analysis

Revenues were steady at $103.8 million (Q3 2011: $104.0 million) and operating
profit was down by 6 per cent to $27.7 million (Q3 2011: $29.5 million). The
book to bill ratio was 93 compared with 105 for the third quarter of 2011.
Demand for our wireless test solutions continued to grow, however, this was
offset by weakness in demand for wireline infrastructure equipment and by
further delays in the procurement of positioning test solutions. We
experienced weakness in Europe and from the US government coupled with a
marked slowdown in growth in China.



Service Assurance

Revenue fell by 31 per cent compared with the third quarter of 2011 and
operating profit was up by $0.4 million, reflecting the cost reductions made
during the first half of 2012 in response to the rapid fall in Service
Assurance's legacy business. We expect this division to operate at similar
levels in the fourth quarter of 2012.



Discontinued operations - Systems

The Systems Division has been classified as a discontinued operation. The
sale for $64.0 million to Curtiss-Wright Corporation was completed after the
end of the quarter on 1 November 2012. The result for Systems after tax was
$0.6 million for the third quarter (Q3 2011: $1.9 million); this is after
charging costs of $1.0 million in relation to the divestment.

The net proceeds from the sale after tax and expenses are expected to be
approximately $61 million and it is envisaged that they will be returned to
Spirent's shareholders by way of on market share buybacks.



Acquisitions

Metrico Wireless, Inc. ("Metrico") was acquired in September for $52.0
million. Metrico is included within the Performance Analysis division. The
acquisition brings together Spirent's strength in the lab with Metrico's focus
on subscriber-level device testing in the field, resulting in a unique
end-to-end test portfolio. This timely offering enables Spirent to address
the needs of service providers and device manufacturers who must contend with
disruptive technologies including 4G data, voice over LTE and the cloud. It
enables service providers and their suppliers to minimise time to market,
improve subscriber satisfaction and loyalty, and reduce device return rates.

Revenue from Metrico was $1.6 million in the third quarter and it made a
positive contribution to profit in the period from the 13 September 2012
closing date.

Acquired intangible asset amortisation for Metrico is expected to be in the
region of $5 million per annum.



Cash

Free cash generation was $17.1 million in the third quarter (Q3 2011: $25.8
million). Year to date free cash flow was $67.5 million compared with $42.9
million in 2011. Cash and cash equivalents closed at $191.7 million (1 July
2012: $234.7 million). The cash position reflects the payment of the interim
dividend for 2012 of $9.4 million and the acquisition of Metrico Wireless for
$52.0 million.



                                   - ends -



Enquiries



                                        Spirent Communications  +44 (0)1293
Bill Burns, Chief Executive Officer     plc                     767676
Eric Hutchinson, Chief Financial
Officer
James Melville-Ross/Sophie McMillan/                            +44 (0)20 7831
Emma Appleton                           FTI Consulting          3113



 A conference call for analysts will take place today at 8:00am. A replay of
 the conference call will be available in the Investor section of the Spirent
                 Communications plc website www.spirent.com.



About Spirent Communications plc



Spirent Communications plc is a global leader in test and measurement
inspiring innovation within development labs, communication networks and IT
organisations. We enable today's communication ecosystem as well as
tomorrow's emerging enterprises to deploy life enriching communications
networks, devices, services and applications. Further information about
Spirent Communications plc can be found at www.spirent.com.

Spirent Communications plc Ordinary Shares are traded on the London Stock
Exchange (ticker: SPT). The Company operates a Level 1 American Depositary
Receipt ("ADR") programme with each ADR representing four Spirent
Communications plc Ordinary Shares. The ADRs trade in the US over-the-counter
("OTC") market under the symbol SPMYY and the CUSIP number is 84856M209.
Spirent ADRs are quoted on the Pink OTC Markets electronic quotation service
which can be found at www.pinksheets.com.

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.

Condensed consolidated income statement (unaudited)

Period ended 30 September 2012



                                    Period to 30 September Period to 2 October
                                                      2012                2011
                                                                3^rd   Year to
$ million                        3^rd quarter Year to date   quarter      date
Continuing operations

Revenue                                 111.7        347.8     115.4     345.2
Cost of sales                          (30.8)       (99.3)    (35.2)   (105.7)
Gross profit                             80.9        248.5      80.2     239.5
Product development                    (21.1)       (63.3)    (20.8)    (62.3)
Selling and distribution               (21.4)       (67.9)    (21.8)    (66.6)
Administration                         (12.5)       (38.2)     (9.0)    (31.4)
Operating profit                         25.9         79.1      28.6      79.2
Net finance income                        0.4          1.1       0.3       0.9
Profit before tax                        26.3         80.2      28.9      80.1
Tax                                     (8.1)       (24.8)     (9.2)    (24.1)
Profit for the period from
continuing operations                    18.2         55.4      19.7      56.0
Discontinued operations
Profit for the period from
discontinued operations                   0.6          3.2       1.9       5.3
Profit for the period
attributable to owners of parent
Company                                  18.8         58.6      21.6      61.3
Earnings per share (cents)
Continuing operations
Basic                                    2.77         8.44      2.95      8.38
Diluted                                  2.76         8.40      2.92      8.30
Discontinued operations
Basic                                    0.09         0.49      0.28      0.79
Diluted                                  0.09         0.48      0.28      0.79
Total Group
Basic                                    2.86         8.93      3.23      9.17
Diluted                                  2.85         8.88      3.20      9.09





Notes to the Interim Management Statement



1 Segmental analysis



                               Period to 30 September
                                                 2012 Period to 2 October 2011
                                                                       Year to
$ million                   3^rd quarter Year to date  3^rd quarter       date
Revenue from continuing
operations
Performance Analysis               103.8        323.2         104.0      302.8
Service Assurance                    7.9         24.6          11.4       42.4
                                   111.7        347.8         115.4      345.2
Operating profit from
continuing operations
Performance Analysis                27.7         89.8          29.5       80.2
Service Assurance                    1.6          2.2           1.2        6.5
Total reportable segment
profit before exceptional
items                               29.3         92.0          30.7       86.7
Exceptional items - Service
Assurance                              -        (2.9)             -          -
Total reportable segment
profit                              29.3         89.1          30.7       86.7
Unallocated amounts
Corporate                          (1.1)        (4.2)         (1.4)      (4.2)
Acquisition related costs          (0.5)        (2.0)             -      (1.2)
Acquired intangible asset
amortisation                       (1.2)        (2.4)         (0.3)      (1.3)
Share-based payment                (0.6)        (1.4)         (0.4)      (0.8)
                                    25.9         79.1          28.6       79.2


Other information -
continuing operations
$ million
Depreciation                         3.8         10.9           3.2        9.3
Capital expenditure                  4.4         11.5           5.5       14.0





2 Discontinued operations



On 24 September 2012 the Group announced the sale of its Systems Division for
a cash consideration of $64.0 million. At the period end the disposal was
subject to the usual and customary terms. The sale completed on 1 November
2012.



                              Period to 30 September
                                                2012  Period to 2 October 2011
$ million                  3^rd quarter Year to date 3^rd quarter Year to date
Revenue                            13.4         39.4         14.8         45.4
Cost of sales                     (8.3)       (24.9)        (9.2)       (28.6)
Gross profit                        5.1         14.5          5.6         16.8
Expenses                          (3.0)        (9.0)        (3.1)        (9.7)
Expenses of sale incurred
to date                           (1.0)        (1.0)            -            -
Profit before tax                   1.1          4.5          2.5          7.1
Tax                               (0.5)        (1.3)        (0.6)        (1.8)
Profit for the period from
discontinued operations             0.6          3.2          1.9          5.3



3 Earnings per share



                               Period to 30 September
                                                 2012 Period to 2 October 2011
                                                                       Year to
Cents                       3^rd quarter Year to date  3^rd quarter       date
Earnings per share
Basic from continuing
operations                          2.77         8.44          2.95       8.38
Basic from discontinued
operations                          0.09         0.49          0.28       0.79
Basic total Group                   2.86         8.93          3.23       9.17
Diluted from continuing
operations                          2.76         8.40          2.92       8.30
Diluted from discontinued
operations                          0.09         0.48          0.28       0.79
Diluted total Group                 2.85         8.88          3.20       9.09
Adjusted earnings per share
Adjusted basic from
continuing operations               3.11         9.61          3.06       8.80
Adjusted basic from
discontinued

 operations                       0.25         0.64          0.28       0.79
Adjusted basic total Group          3.36        10.25          3.34       9.59
Adjusted diluted from
continuing operations               3.10         9.56          3.03       8.72
Adjusted diluted from
discontinued operations             0.25         0.64          0.28       0.79
Adjusted diluted total
Group                               3.35        10.20          3.31       9.51
Weighted average number of
shares

 in issue at period end
 Basic (million)                              656.4                    668.5
 Diluted (million)                            660.1                    674.3





A reconciliation of adjusted earnings is provided below:



$ million                                                    3^rd quarter 2012
                                                 Continuing Discontinued Total
                                                 operations   operations Group
Profit for the period attributable to owners of
parent Company                                         18.2          0.6  18.8
Expenses of sale of Systems                               -          1.0   1.0
Acquisition related costs                               0.5            -   0.5
Acquired intangible asset amortisation                  1.2            -   1.2
Share-based payment                                     0.6            -   0.6
Adjusted earnings                                      20.5          1.6  22.1



$ million                                                    3^rd quarter 2011
                                                 Continuing Discontinued Total
                                                 operations   operations Group
Profit for the period attributable to owners of
parent Company                                         19.7          1.9  21.6
Acquired intangible asset amortisation                  0.3            -   0.3
Share-based payment                                     0.4            -   0.4
Adjusted earnings                                      20.4          1.9  22.3



$ million                                       3^rd quarter year to date 2012
                                     Continuing       Discontinued
                                     operations         operations Total Group
Profit for the period attributable
to owners of parent Company                55.4                3.2        58.6
Exceptional items                           2.9                  -         2.9
Expenses of sale of Systems                   -                1.0         1.0
Acquisition related costs                   2.0                  -         2.0
Acquired intangible asset
amortisation                                2.4                  -         2.4
Share-based payment                         1.4                  -         1.4
Tax effect on the above items             (1.0)                  -       (1.0)
Adjusted earnings                          63.1                4.2        67.3



$ million                                       3^rd quarter year to date 2011
                                     Continuing       Discontinued
                                     operations         operations Total Group
Profit for the period attributable
to owners of parent Company                56.0                5.3        61.3
Prior year tax credit                     (0.3)                  -       (0.3)
Acquisition related costs                   1.2                  -         1.2
Acquired intangible asset
amortisation                                1.3                  -         1.3
Share-based payment                         0.8                  -         0.8
Tax effect on the above items             (0.2)                  -       (0.2)
Adjusted earnings                          58.8                5.3        64.1



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IMSLLFSDLELDIIF -0- Nov/08/2012 07:00 GMT
 
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