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Spirent Communications plc

Spirent Communications Plc Results for the six months ended 30 June 2019

$ millionFirst half2019First half2018Change(%)
Order intake219.5205.6+7
Revenue217.4209.2+4
Adjusted operating profit120.717.8+16
Reported operating profit18.114.6+24
Reported profit before tax18.717.4+7
Adjusted basic earnings per share2 (cents)3.032.49+22
Basic earnings per share (cents)2.722.38+14
Closing cash141.895.4+49
Interim dividend per share3 (cents)1.941.76+10

Notes

1 Adjusted operating profit is before charging acquisition related costs, acquired intangible asset amortisation and share-based payment amounting to $2.6 million in total (first half 2018: $3.2 million).

2 Adjusted basic earnings per share is based on adjusted earnings as set out in note 5 of Notes to the half year condensed consolidated financial statements.

3 Dividends are determined in US dollars and paid in sterling at the exchange rate prevailing when the dividend is proposed.  The interim dividend proposed for 2019 of 1.94 cents per Ordinary Share is equivalent to 1.59 pence per Ordinary Share (first half 2018: 1.34 pence).

Solid H1 progress

·    Order intake growth of 7 per cent, reflecting good progress across all segments.

·    Revenue growth of 4 per cent; we continue to see demand growth to support our customer base with their 5G development requirements.

·    Adjusted operating profit growth of 16 per cent, which together with a lower tax charge, resulted in adjusted EPS growth of 22 per cent.

·    Interim dividend increase of 10 per cent to 1.94 cents.

·    Robust cash conversion, cash closed at $141.8 million.

Operational highlights

·    Over 60 new 5G wins from across the portfolio to support the market’s acceleration towards 5G.

·    Received important industry awards across all business segments.

·    Grew our business in APAC despite US/China trade challenges.

·    Maintained our R&D effectiveness and released a number of new products and solutions.

·    Extended our key account management programme to develop deeper and broader collaboration with our most important customers.

Networks & Security

·    Continued progress on 400G high-speed Ethernet sales, although phasing remains more H2 weighted, as expected.

·    Secured multi-million-dollar deal with leading 5G radio access network (RAN) network equipment manufacturer in China to support virtualising the 5G radio network.

·    Major releases in the period included a significant enhancement to our TestCenter high-speed Ethernet solution that accelerates troubleshooting, reporting and testing cycles, as well as the world’s first commercially available test solution for assuring network functions virtualisation (NFV) performance to the European Telecommunications Standards Institute (ETSI) standards.

·    Launched a new CyberFlood Data Breach Assessment security test solution and won new logos for enterprise customers to broaden our customer base.

·    Solid trading performance from our Positioning business with particular large deals for US Government, increasing demand from Asia and a strategic win to support the new GNSS constellation system for the UK.

Lifecycle Service Assurance

·    Solid demand for 5G lab test management and automation and mobile infrastructure test products.

·    First VisionWorks service assurance deal with a US Tier 1 customer to support 5G.

·    Additional VisionWorks wins with our North American customers as they continue to deploy our use cases and expand our footprint in these leading service providers.

Connected Devices

·    A solid first half performance underpinned by growth in demand for our Wireless products including some important multi-year support contract renewals.

·    New 5G performance and location testing solutions for chipsets and devices on track with increasing customer interest and multiple 5G channel emulator deals with leading 5G chipset and network equipment vendors.

Board Update

In November 2018, Eric Hutchinson informed the Board of his wish to retire from the Company which he did on 30 June 2019.  Eric Updyke was appointed Chief Executive Officer on 1 May 2019.

Outlook

We continue to invest in our chosen growth areas and we have established a strong technical and operational platform to leverage market opportunities.  As in previous years, our performance is expected to be weighted to the second half of the year.  The Board remains confident of continued progress and the outlook for the year remains unchanged.

Eric Updyke, Chief Executive Officer, commented:

“I am delighted to have recently joined Spirent, and I am personally excited about the potential for our business.  Spirent is well respected by our customers globally and the technical ability, passion and engagement of our resource is impressive.  As we move forward, I will be looking to identify specific opportunities to broaden our offerings and to expand our customer base and of course, maximise opportunities that current technology trends can offer such as 5G, 400G high-speed Ethernet and cloud development.  The first half results represent a solid platform from which we can drive growth.”