SPIRENT COMMUNICATIONS PLC
Results for the six months ended 30 June 2024
Challenging conditions remain
Innovative new product releases and diversification strategy progress$ million

Orderbook1
Order intake2
Revenue
Gross margin (%)
Adjusted operating profit3
Adjusted profit before tax3
Adjusted basic earnings per share4 (cents)
Reported operating (loss)/profit
Reported (loss)/profit before tax
Reported basic earnings per share (cents)
Closing cash

First half2024

First half2023

Change
(%)

284.2
188.8
197.3
70.0
5.0
6.8
1.05
(9.3)
(7.5)
(1.17)
131.0

303.4
239.4
223.9
71.9
11.6
14.8
2.10
1.6
4.8
0.87
148.2

-6
-21
-12
-3
-57
-54
-50
-681
-256
-234
-12

Commenting on today’s announcement, Eric Updyke, Chief Executive Officer, said:“Performance in the period has been impacted by the ongoing industry-wide slowdown, coupled withsome customer hesitancy following the recently announced offer by Keysight Technologies Inc.
(“Keysight”). In the second quarter we experienced delays to contract placements as customers
digested the information. There have been no order cancellations.
“We have continued to focus on delivering our product roadmaps to serve our customer needs so that
we can fully support them as they advance their own R&D investments and plans, which we expect toroll out as the broader sector recovers. In addition, we have focused on retaining our critical talent,
which is a vital part of our people strategy at this time of transition. In the first half of the year,
operating costs benefited from the restructuring and cost saving initiatives that were delivered during2023 and early 2024.
“Our diversified portfolio of solutions and services, combined with our robust operating model, means
we continue to focus on delivering innovative solutions into new customer segments, whilst also
positioning our business for recovery in our more traditional segments. New logo wins for our financial
services segment in particular remain very promising and many product releases in the first half are
ensuring that we retain our technology leadership positions.
“Whilst at an early stage, our diversification strategy is continuing to advance and deliver results, andin the first half we secured more contract wins for Financial Services assurance, automation and test.
Whilst smaller in value, they represent important progress as we develop a growing pipeline in thissegment. To underpin growth into 2025, our new Positioning product (PNT X) was released in April
and, in the period, we also introduced new Wi-Fi 7 products.

Spirent Communications plc
Origin One, 108 High Street, Crawley, West Sussex RH10 1BD, United Kingdom
Tel +44 (0)1293 767676 | Fax +44 (0)1293 767677 | www.spirent.com
Registered in England Number 470893 | Registered at the above addressSpirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 2 of 28“We were pleased to announce the release of our new Data Centre AI Testing solution in July. In thefirst half, we trialled the solution with ten customers and have already had two commercial wins. The
need to be able to test the performance of Ethernet network fabric in an AI data centre is mission
critical for customers and will drive new business for Spirent. This innovative solution won theprestigious grand prize at the Interop Tokyo 2024.
“We expect challenging market conditions to continue in the second half of 2024, which we anticipate
will be reflected in our near-term performance.
“Looking forward, beyond the current year, our confidence in 5G as an enduring growth driver remains
intact. While initial 5G Standalone (SA) launches have remained sluggish due to the complexity
associated with deploying and operating a cloud-native core network, acceleration is anticipated in
2025 as demand-side drivers increase, especially from enterprises for private 5G.
“Core network spending, including cloud capabilities and associated high-speed Ethernet (HSE) IP core
upgrades, is also poised to increase through at least 2027 as investment cycles move beyond 5G New
Radio coverage, the long tail of global service providers progressively upgrade, and 5G Advanced
becomes standardised. This will enable a wealth of new capabilities for direct-to-device satellite
connectivity, eXtended Reality (XR) and AI, well positioned to capitalise on through our leadership in
HSE test, and core network test and assurance.
“Our market leading products and solutions will promote market opportunities as they open up.”
Details of the recommended cash offer for Spirent by KeysightOn 28 March 2024, the Boards of Keysight and Spirent announced that they had reached agreementon the terms of a recommended cash offer for the entire issued ordinary share capital of Spirent (the“Transaction”). It is intended that the Transaction will be implemented by means of a scheme ofarrangement under Part 26 of the Companies Act 2006 (the “Scheme”). On 25 April 2024, Spirent
published a shareholder circular to convene the Court Meeting and the General Meeting, to approve
the Scheme. On 22 May 2024, the resolutions proposed at the Court Meeting and General Meeting inconnection with the Transaction were duly passed.
Keysight and Spirent continue to engage and work constructively with the relevant regulatory
authorities in order to satisfy all necessary regulatory conditions (per Clause 3.3.1 of the Co-operation
Agreement entered into between Keysight and Spirent) in relation to the Transaction as promptly aspracticable (and in any event, prior to the long stop date (being 29 September 2025)). Keysight andSpirent continue to expect the Scheme to become effective during the first half of Keysight's next fiscal
year, being 1 November 2024 to 30 April 2025.
Outlook
The challenging market conditions witnessed in the first half are expected to continue in the second
half, and we expect this will be reflected in our near-term performance. Looking forward, ourconfidence in 5G as an enduring growth driver remains intact and acceleration is anticipated in 2025
as demand-side drivers increase.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 3 of 28

Notes
1. Orderbook is an alternative performance measure as defined in the appendix on page 27.
2. Order intake represents commitments from customers in the period to purchase goods and/or services that will ultimately result inrecognised revenue.
3. Adjusted operating profit is before acquired intangible asset amortisation, share-based payment and other adjusting items totalling$14.3 million (first half 2023: $10.0 million).
4. Adjusted basic earnings per share is based on adjusted earnings as set out in note 6.

- ends Enquiries
Eric Updyke, Chief Executive Officer
Paula Bell, Chief Financial &Operations Officer
James Melville-Ross/
Humza Vanderman/Leah Dudley

Spirent Communications +44 (0)1293 767676
plc
E: investor.relations@spirent.com

DGA Group+44 (0)20 7664 5095
E: spirent@dgagroup.com

About Spirent Communications plc
Spirent Communications plc (LSE: SPT) is the leading global provider of automated test and assurance
solutions for networks, cybersecurity and positioning. The Company provides innovative products,
services and managed solutions that address the test, assurance and automation challenges of a newgeneration of technologies, including 5G, SD-WAN, Cloud, autonomous vehicles and beyond. From thelab to the real world, Spirent helps companies deliver on their promise to their customers of a newgeneration of connected devices and technologies. Further information about Spirent
Communications plc can be found at https://corporate.spirent.com/.
Spirent Communications plc Ordinary Shares are traded on the London Stock Exchange (ticker: SPT;
LEI: 213800HKCUNWP1916L38). The Company operates a Level 1 American Depositary Receipt (ADR)
programme with each ADR representing four Spirent Communications plc Ordinary Shares. The ADRs
trade in the US over-the-counter (OTC) market under the symbol SPMYY and the CUSIP number is84856M209. Spirent ADRs are quoted on the Pink OTC Markets electronic quotation service which canbe found at https://www.otcmarkets.com/marketplaces/otc-pink.
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 theuse 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 andspeculative 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 impliedby these statements. The Company undertakes no obligation to update any forward-looking statements contained in thisdocument, whether as a result of new information, future events or otherwise.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 4 of 28

Operating and financial review
Group financial performance
The industry-wide slowdown continued during 2024 especially in the telecommunications sector,
where customer spending continued to be constrained. This coupled with customer hesitancy
resulting from the recent announcement of the offer for the Group by Keysight. contributed to theimpact of the Group’s performance in the first half of the year. We continue to engage closely withour customers to understand their needs.
These factors impacted our first half order intake and revenue, as many customers continued todisplay caution in their investment decisions, including delayed deployments of 5G standalone (witha 5G core network), and the impact on spending in China.
The reduction in revenue from $223.9 million to $197.3 million had an adverse impact on theoperating profit; though this has been partly mitigated through careful cost control and by the costsavings initiatives implemented in previous years.
Effective supply chain management and effective customer pricing resulted in a robust gross margin
being maintained at 70 per cent (first half 2023: 72 per cent). Adjusted operating profit was $5.0
million in the first half of 2024 (first half 2023: $11.6 million). Reported operating loss was $9.3 million
in the first half of 2024 (first half 2023: $1.6 million profit).
Other adjusting items were $8.4 million (first half 2023: $4.6 million) which comprise mainly of advisor
costs of $7.1 million (first half 2023: nil) relating to the acquisition of Spirent, the remainder being
restructuring and strategic evaluation costs of $0.9 million (first half 2023: $4.6 million). Adjusting
items are further detailed on page 7.
The effective tax rate decreased from 14.7 per cent to 11.2 per cent mainly driven by the mix of profit
generation by region.
Our approach to strong financial management and focus on our balance sheet remains in place. Cashclosed at $131.0 million (first half 2023: $148.2 million).
Given the recommended cash offer from Keysight, the Board does not recommend a dividend be
proposed for the first half of 2024.

Spirent Communications plc
Results for the six months ended 30 June 2024

Revenue$ million

Revenue by segment
Lifecycle Service Assurance
Networks & Security
Revenue by geography
Americas
Asia Pacific
Europe, Middle East and Africa

6 August 2024

Page 5 of 28

First half2024%

First half
2023

%

85.7
111.6

43.4
56.6

95.6
128.3

42.7
57.3

197.3

100.0

223.9

100.0

113.4
57.0
26.9

57.5
28.9
13.6

126.4
74.2
23.3

56.5
33.1
10.4

197.3

100.0

223.9

100.0

Overall Group revenue reduced by 12 per cent, with Lifecycle Service Assurance and Networks &Security down 10 per cent and 13 per cent, respectively, compared to the same period last year.
Overall Networks & Security revenue declined by $16.7 million over the first half of 2023.
Lifecycle Service Assurance revenue reduced by $9.9 million over the first half of 2023 due to theongoing macroeconomic environment with slower-than-expected deployments of 5G Standalone.
However, the division benefited from increasing momentum around our lab and test automation
solutions in both our traditional and new end-markets as customers looked to drive efficiencies,
implement transformation programs, and prepare for AI.
We also saw stable demand for our Landslide core-network lab test offering and our network
assurance offerings, despite the market headwinds in telecoms.
We have strong engagement with our Wi-Fi customers around new Wi-Fi 7 technology, closing
important product deals with leading device and solution players in the ecosystem, and havecontinued to increase our focus on strategic partnerships with select global system integrators thatplay a leadership role in 5G and digital transformation projects for telecoms and enterprise.
Networks & Security revenue was impacted by delays to spending by network operator and network
equipment manufacturer customers of our high-speed Ethernet and security test portfolio. This was
driven by the current economic environment, as well as softness in China.
Notwithstanding the overall market caution, we maintained our 400G and 800G high-speed Ethernet
test momentum with strategic wins at chipset vendors, network fabric vendors, and hyperscalers.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 6 of 28

The team released its next generation test solution for Positioning, Navigation and Timing (PNT X) tohelp simplify the complex testing of future generations of mission-critical systems for military andcommercial sectors and established a strategic relationship with dSPACE, a global leader in theautomotive test industry.
We continued to see positive progress on our diversification strategy, including into new markets withwins in Financial Services with an increasing pipeline as our new offerings gather wider customer
interest.
Except for EMEA, revenue was down in all regions including North America. In particular, we
experienced softness in China which impacted our High-Speed Ethernet business in the main.
Gross margin$ million

Lifecycle Service Assurance
Networks & Security

First half2024%

First half
2023

%

61.7
76.5

72.0
68.5

69.5
91.5

72.7
71.3

138.2

70.0

161.0

71.9

Gross profit reduced to $138.2 million although with continued effective management of supply chain
cost increases, the overall gross margin was similar to the prior period.
Operating costs

First half
adjusted1
2024

First halfreported
2024

First half
adjusted1
2023

First halfreported2023

Product development
Selling and marketing
Administration1

47.4
60.2
25.6

47.4
60.2
39.9

53.2
67.7
28.5

53.2
67.7
38.5

Operating costs1

133.2

147.5

149.4

159.4

Lifecycle Service Assurance
Networks & Security
Corporate

55.4
72.4
5.4

55.8
72.9
18.8

71.3
74.3
3.8

72.9
77.4
9.1

Operating costs1

133.2

147.5

149.4

159.4

$ million

Note
1. Before acquired intangible asset amortisation, share-based payment and other adjusting items totalling $14.3 million (first half 2023:$10.0 million).

The continued focus on financial management of our cost base, and a number of initiatives
implemented in the last 12 months, resulted in adjusted operating costs savings.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 7 of 28

The overall investment in product development decreased period-on-period from $53.2 million to$47.4 million, driven by cost-saving initiatives as we transferred activities to lower-cost regions in
2023. Shared costs which include sales, marketing and all administration functions are allocated toeach segment based on a budgeted percentage of revenue methodology. The recent market
challenges impacting volatility of our sales volumes by segment, has in turn created some variations
to the costs being charged to each segment.
Selling and marketing costs decreased by $7.5 million, partly as a result of reduced incentivisation
rewards from lower order bookings.
Operating (loss)/profit$ million

First half
2024

Adjusted
operatingMargin1,2 (%)

First half
2023

Adjusted
operatingMargin1,2 (%)

Lifecycle Service Assurance
Networks & Security
Corporate

6.3
4.1
(5.4)

7.4
3.7

(1.8)
17.2
(3.8)

(1.9)
13.4

Adjusted operating profit1

5.0

2.5

11.6

5.2

Adjusting items:
Acquired intangible asset amortisation
Share-based payment
Other adjusting items

(2.7)
(3.2)
(8.4)

(2.4)
(3.0)
(4.6)

Reported operating (loss)/profit

(9.3)

1.6

Notes
1. Before acquired intangible asset amortisation, share-based payment and other adjusting items totalling $14.3 million (first half 2023:$10.0 million).
2. Adjusted operating profit as a percentage of revenue in the period.

Adjusted operating profit was $5.0 million (first half 2023: $11.6 million) and the reported loss was$9.3 million (first half 2023: $1.6 million profit) impacted by reduced revenue and negative operating
leverage.
Acquired intangible asset amortisation
The acquired intangible asset amortisation charge of $2.7 million (first half 2023: $2.4 million) was
broadly flat, and includes the amortisation of the intangible assets recognised on the acquisition of
the NetScout business carve-out in September 2023.
Other adjusting items$ million

Restructuring
Acquisition related costs

First half2024

First half
2023

0.9
7.5

4.6
-

8.4

4.6

Spirent Communications plc
Results for the six months ended 30 June 2024

Restructuring$ million

R&D engineering plan
Finance transformation
Organisational restructure
Facilities downsize

6 August 2024

Page 8 of 28

First half2024

First half
2023

0.2
0.5
0.2

0.4
4.2
-

0.9

4.6

Restructuring
We concluded our R&D engineering site plan to relocate activities from North America to lower cost
regions for our High-Speed Ethernet business in 2023. No further significant costs are expected in
2024.
In 2023, to embed standardised global finance processes, we moved certain accounting activities from
North America to the UK, incurring $1.1 million of costs including $0.5 million consultancy. In 2024,
we moved into the next phase of the initiative, incorporating the review of key global process and/or
control enhancements, incurring further consultancy costs.
In 2022, the Group embarked on a strategic evaluation of its operating model. This reached substantial
completion in early 2024. The half year 2023 costs relate to this initiative.
Strategic actions were taken to review the cost base and facility footprint in the second half of 2023.
The 2024 amounts relate to moving, relocating and downsizing costs directly attributable to thisproject.
Acquisition related costs
In March 2024, Keysight announced its intention to purchase Spirent. Therefore, the costs of $7.1
million recognised for the first half of 2024 relates mainly to professional advisory charges due to thisacquisition. We expect further deal related charges, the majority of which are expected to be incurred
when the deal is closed.
On 8 September 2023, the Group completed the asset purchase of a small Test Lab Automation
business carve-out from NetScout Inc. Retention costs of c.$0.4 million were incurred during 2024.
The total cash outflow in respect of other adjusting items is reported within cash flows from operating
activities in the consolidated cash flow statement.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 9 of 28

Finance income and costs
Finance income in the first half of 2024 was earned from bank interest of $2.0 million (first half 2023:$3.2 million) and $0.2 million (first half 2023: $0.4 million) of interest income in relation to the UK
defined benefit pension plans.
Finance costs in the first half were $0.4 million (first half 2023: $0.4 million), being interest on leaseliabilities.
Tax
The reported tax credit for the Group for the first half of 2024 was $0.8 million (first half 2023: tax
credit $0.4 million). The adjusted tax charge, excluding the tax credit on the adjusting items of $1.6
million, was $0.8 million (first half 2023: $2.2 million), resulting in an effective tax rate of 11.2 per centof adjusted pre-tax profit. This compared with an effective tax rate of 14.7 per cent for the first half of2023. As expected, for the full year 2024 the effective tax rate will be in the region of 10-12 per cent.
Earnings per share
Adjusted basic earnings per share fell 50 per cent to 1.05 cents, reflecting the trading performance inthe first half of 2024. There were 573.7 million weighted average shares in issue (first half 2023: 598.7
million). Reported basic (loss)/earnings per share was (1.17) cents compared with 0.87 cents for the
first half of 2024. See note 6 on page 21 for the calculation of earnings per share.
Financing and cash flow
Free cash flow from operations increased by $27.0 million to $31.1 million in the first half of 2024
compared to the first half of 2023, driven by the decrease in trade receivables and a reduction intax paid. Cash flow from operations is detailed in note 9 on page 24. An explanation on free cash flow
as an alternative performance measure can be found on page 28.
Free cash flow is set out below:

First half2024

First half2023

Cash flow from operations
Tax paid

32.8
(2.7)

16.2
(8.3)

Net cash inflow from operating activities
Interest received
Net capital expenditure
Capitalised development costs
Payment of lease liabilities, principal and interest
Lease payments received from finance leases
Acquisition related other adjusting items (note 4)

30.1
2.2
(3.6)
(1.9)
(3.4)
0.2
7.5

7.9
3.6
(3.3)
(4.4)
0.3
-

Free cash flow

31.1

4.1

$ million

Net capital expenditure of $3.6 million was flat over the same period last year and was predominantly
incurred on leasehold improvements and demonstration and test equipment.
Cash and cash equivalents closed at $131.0 million at 30 June 2024, compared with $108.1 million at
31 December 2023. There continues to be no bank debt.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 10 of 28

Balance sheet and dividend
The consolidated balance sheet is set out on page 13.
Net assets decreased by $0.9 million to $374.9 million at 30 June 2024, from $375.8 million at 31
December 2023, largely as a result of the operating performance in the period.
Overall, the decrease in total assets of $15.4 million from 31 December 2023 is mainly attributable tothe decrease in trade receivables of circa $30 million, resulting from reduced revenue; offset by theincrease in cash of circa $20 million. Total liabilities decreased by $14.5 million to $193.5 million at 30
June 2024, primarily due to a decrease in trade and other payables of $16.1 million.
Net assets remained flat at $374.9 million as at 30 June 2024 compared to 30 June 2023 ($371.5
million).
The decrease in total assets from 30 June 2023 is mainly attributable to the decrease in tradereceivables of circa $21 million. Total liabilities decreased by $35.0 million to $193.5 million primarily
due to the settlement of the liability held at 30 June 2023 in relation to the Share Buyback Programmeof $35.6 million which completed on 24 August 2023 (note 12).
Cash at 30 June 2024 was $131.0 million ($148.2 million) and the Company has no bank debt.
The Board continues to regularly review the Company’s balance sheet in light of current and expected
trading performance and cash generation, working capital requirements and expected investments,
and principal risks and uncertainties.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group for the remainder of the year are unchanged
from those reported in the Annual Report 2023. The uncertainties arising from the macroeconomic
backdrop and inflationary pressures are covered by existing risks and these continue to be closely
monitored.
The Group’s principal risks and uncertainties at 31 December 2023 were detailed on pages 55 to 60 of
the Annual Report 2023 and related to the following areas: macroeconomic change; technology
change; business continuity; customer dependence/customer investment plans; competition,acquisitions; and employee skill base. A copy of the Annual Report 2023 is available on the Company’s
website at https://corporate.spirent.com/.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 11 of 28

Condensed consolidated income statement
First half 2024
$ million

Revenue
Cost of sales
Gross profit
Product development
Selling and marketing
Administration

Notes

3

3

Operating profit/(loss)
Adjusting items:
Acquired intangible asset amortisation
Share-based payment
Other adjusting items

4

Finance income
Finance costs
Profit/(loss) before tax
Tax

5

Profit/(loss) for the period attributable to ownersof the parent Company
Earnings per share (cents)
Basic
Diluted6

Adjusted

Adjustingitems1

Reported

197.3(59.1)-

138.2(47.4)(60.2)(25.6)First half 2023
Adjusted

Adjustingitems1

Reported

197.3(59.1)

223.9(62.9)-

223.9(62.9)(14.3)

138.2(47.4)(60.2)(39.9)

161.0(53.2)(67.7)(28.5)(10.0)

161.0(53.2)(67.7)(38.5)

5.0(14.3)

(9.3)

11.6

(10.0)

1.6

-

(2.7)
(3.2)
(8.4)

(2.7)
(3.2)
(8.4)

-

(2.4)
(3.0)
(4.6)

(2.4)
(3.0)
(4.6)

(14.3)(14.3)-(10.0)(10.0)

2.2
(0.4)

-

2.2
(0.4)

3.6
(0.4)

-

3.6
(0.4)

6.8
(0.8)

(14.3)
1.6

(7.5)
0.8

14.8
(2.2)

(10.0)
2.6

4.8
0.4

6.0

(12.7)

(6.7)

12.6

(7.4)

5.2

(1.17)(1.17)

2.10
2.10

1.05
1.04

0.87
0.87

Note
1. Adjusting items comprise amortisation of acquired intangible assets, share-based payment, other adjusting items, tax on adjusting items and any over/under provision
in respect of prior year tax.

The performance of the Group is assessed using a variety of non-GAAP alternative performance measures which are presented to provide
additional financial information that is regularly reviewed by management. Adjusting items are identified and excluded by virtue of theirsize, nature or incidence as they do not reflect management’s evaluation of the underlying trading performance of the Group. The
alternative performance measures are presented in the appendix. The reported GAAP measures give the complete measure of financial
performance.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 12 of 28

Condensed consolidated statement of comprehensive income
First half2024

First half
2023

(6.7)

5.2

(1.1)
3.0

2.5
(0.3)

1.9

2.2

-

(0.4)

-

(0.4)

Other comprehensive income

1.9

1.8

Total comprehensive (loss)/income for the period attributable to owners of theparent Company

(4.8)

7.0

$ million

Note(Loss)/Profit for the period attributable to owners of the parent Company
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:− Exchange differences on retranslation of foreign operations− Re-measurement of the net defined benefit pension asset
Items that will not subsequently be reclassified to profit or loss:− Re-measurement of the net defined benefit pension asset

88Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 13 of 28

Condensed consolidated balance sheet
30 June2024

30 June2023

Audited31 December
2023

204.1
15.0
16.7
1.1
1.3
10.2
46.5

199.9
18.6
19.4
6.5
0.3
10.0
37.0

206.6
15.8
17.2
5.0
0.3
8.4
43.2

294.9

291.7

296.5

40.3
99.1
0.3
2.8
131.0

41.8
114.9
0.9
2.5
148.2

43.5
133.7
1.0
1.0
108.1

273.5

308.3

287.3

Total assets

568.4

600.0

583.8

Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Other financial liabilities
Current tax liability
Provisions(49.8)(86.8)
(8.2)
(1.0)
(4.6)

(50.3)(84.7)(6.7)(35.6)(3.7)(5.9)(65.9)(66.6)(10.7)(0.8)(5.0)(150.4)(186.9)(149.0)(0.2)(18.4)(11.5)(10.6)(2.4)(0.2)(14.6)(15.0)
(9.1)
(2.7)

(0.2)
(33.7)(10.7)(11.4)(3.0)(43.1)(41.6)(59.0)

Total liabilities(193.5)(228.5)(208.0)Net assets

374.9

371.5

375.8

Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Other reserves
Translation reserve
Retained earnings

24.4
25.5
18.1
18.0
4.4
284.5

25.1
25.6
17.3
18.0
5.1
280.4

24.6
25.7
18.2
17.5
5.5
284.3

Total equity attributable to owners of the parent Company

374.9

371.5

375.8

$ million

AssetsNon-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Trade and other receivables
Assets recognised from costs to obtain a contract
Defined benefit pension plan surplus
Deferred tax asset

Note

8

Current assets
Inventories
Trade and other receivables
Assets recognised from costs to obtain a contract
Current tax asset
Cash and cash equivalents

Non-current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Deferred tax liability
Defined benefit pension plan deficit
Provisions

128

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 14 of 28

Condensed consolidated statement of changes in equity$ million

Notes

Share
capitalAttributable to the equity holders of the parent Company
Share
Capitalpremium redemption
Other
Translation
Retained
account
reserve
reserves
reserveearnings

Total
equityAt 1 January 2023 (audited)

24.7

24.4

16.0

20.9

2.6

376.6

465.2

Profit for the period
Other comprehensive income

-

-

-

-

2.5

5.2
(0.7)

5.2
1.8

Total comprehensive income

-

-

-

-

2.5

4.5

7.0

Share-based payment1
Tax charge on share incentives
Equity dividends
Share repurchase2
Exchange adjustment

(0.7)
1.1

1.2

0.7
0.6

(2.9)

-

2.3
(1.0)
(31.1)(70.9)-

2.3(1.0)(31.1)(70.9)-At 30 June 2023

25.1

25.6

17.3

18.0

5.1

280.4

371.5

At 1 January 2024 (audited)

24.6

25.7

18.2

17.5

5.5

284.3

375.8

Loss for the period
Other comprehensive income

-

-

-

-

(1.1)

(6.7)
3.0

(6.7)
1.9

Total comprehensive loss

-

-

-

-

(1.1)

(3.7)

(4.8)

(0.2)

(0.2)

(0.1)

0.5

-

2.6
1.3
-

2.6
1.3
-

24.4

25.5

18.1

18.0

4.4

284.5

374.9

Share-based payment1
Tax charge on share incentives
Equity dividends
Exchange adjustment
At 30 June 2024

7
11

7

Notes
1. There were no costs in administration expenses in the income statement in respect of deferred shares for Executive Directors’ Annual
Incentive (first half 2023: nil).
2. Share Buyback Programme reflects transactional costs of Tranche 1 ($35.3 million) plus liability for Tranche 2 of $35.6 million inclusive of
0.5 per cent stamp duty and legal fees.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 15 of 28

Condensed consolidated cash flow statement
First half2024

First half
2023

32.8
(2.7)

16.2
(8.3)

Net cash inflow from operating activities

30.1

7.9

Cash flows from investing activities
Interest received
Capital development costs
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Lease payments received from finance leases

2.2
(1.9)
(3.6)
0.2

3.6
(3.6)
0.3
0.3

Net cash (used)/generated in investing activities

(3.1)

0.6

Cash flows from financing activities
Lease liability principal repayments
Lease liability interest paid
Dividend paid
Share repurchase

(3.0)
(0.4)
-

(4.0)
(0.4)
(31.1)(35.3)Net cash used in financing activities(3.4)(70.8)Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of foreign exchange rate changes

23.6
108.1
(0.7)

(62.3)
209.6
0.9

Cash and cash equivalents at the end of the period

131.0

148.2

$ million

Cash flows from operating activities
Cash flow from operations
Tax paid

Notes

9

7
12

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 16 of 28

Notes to the half year condensed consolidated financial statements
1

General information

The half year condensed consolidated financial statements do not constitute statutory accounts within themeaning of the Companies Act 2006. The statutory accounts for the year ended 31 December 2023 wereapproved by the Board of Directors on 5 March 2024 and have been delivered to the Registrar of Companies.
The auditor’s report on those accounts was unqualified, did not draw attention to any matters by way ofemphasis and did not contain a statement made under Section 498(2) or (3) of the Companies Act 2006.
In compliance with DTR 4.2.9(2), the half year condensed consolidated financial statements have not beenreviewed by the Group’s auditor.
The half year condensed consolidated financial statements for the period ended 30 June 2024 were approvedby the Directors on 6 August 2024.
2

Accounting policies

The accounting policies adopted and methods of computation used are consistent with those applied in the
consolidated financial statements for the year ended 31 December 2023. The annual financial statements of theGroup are prepared in accordance with United Kingdom adopted International Financial Reporting Standards(IFRS).
Basis of preparation
The half year condensed consolidated financial statements have been prepared in accordance with IAS 34‘Interim Financial Reporting’ as issued by the International Accounting Standards Board and endorsed by andadopted for use in the United Kingdom. This condensed set of half year financial statements has also been
prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority.
Critical accounting estimates and judgements
The preparation of the half year condensed consolidated financial statements requires management to makejudgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these half year condensed consolidated financial statements, the significant judgements made bymanagement in applying the Group’s accounting policies and the key sources of estimation uncertainty were
the same as those that applied to the consolidated financial statements for the year ended 31 December 2023.
The Group is required to perform an impairment review on goodwill annually and where there are indicators of
impairment. The Group has an annual impairment testing date of 30 November. At 30 June 2024, management
have reviewed goodwill for indicators of impairment and have considered the trading performance, the Group’s
principal risks and uncertainties and the other assumptions used in the value in use calculations. Management
have also considered sensitivities in respect of potential downside scenarios. There are no indicators of
impairment at any of the cash generating units.

Spirent Communications plc
Results for the six months ended 30 June 2024

2

6 August 2024

Page 17 of 28

Accounting policies continued

Going concern
In adopting the going concern basis for preparing the condensed consolidated financial statements, the Directors
have considered the Group’s principal risks and uncertainties as set out on page 10.
The Directors have also considered sensitivities in respect of potential downside scenarios, including stresstesting the latest cash flow projections that cover a period of at least 12 months from the date of approval ofthese condensed consolidated financial statements. In these scenarios, the Group has more than sufficient
headroom in its available resources.
At 30 June 2024, the Group had cash balances of $131.0 million and external debt only in relation to its leaseliabilities.
The Directors have reviewed the detailed financial projections for the period ending 31 December 2024, as wellas the business plan and cash flows for the six months ending 30 June 2025. The Directors have also considered
the period to the end of 2027 which forms part of the Group’s longer term viability assessment. In addition, they
have considered the principal risks faced by the Group, and the sensitivity analysis and the Group’s significant
financial headroom, and are satisfied that the Group has adequate financial resources to continue in operational
existence for the foreseeable future, and for a period of at least 12 months from the date of approval of thisreport. Accordingly, the going concern basis of accounting continues to be used in the preparation of thecondensed consolidated financial statements.
New standards and interpretations
There have been no new standards or amendments to existing standards effective from 1 January 2024 that are
applicable to the Group or that has had any material impact on the financial statements and related notes as at
30 June 2024.
The Directors do not anticipate that the adoption of any of the new standards and interpretations issued by the
IASB and IFRIC with an effective date for the Group after the date of these interim financial statements will havea material impact on the Group’s interim financial statements in the period of initial application.
3

Operating segments

The Group’s organisational structure is based on differences in the products and services offered by eachsegment and information regularly reviewed by the Group’s Chief Executive Officer, its chief operating decision
maker, is presented on this basis. The Group’s operating segments follow this structure.
The Group’s reportable operating segments are Lifecycle Service Assurance and Networks & Security. The Groupevaluates adjusted operating profit before acquired intangible asset amortisation, share-based payment andother adjusting items. Finance income and finance costs are not allocated to the reportable segments. Corporate
is not an operating segment and costs are separately reported and not allocated to the reportable segments.
Information on segment assets and segment liabilities is not regularly provided to the Group’s Chief Executive
Officer and is therefore not disclosed below. There is no aggregation of operating segments.
The Group disaggregates revenue from contracts with customers by nature of products and services and primarygeographical markets, as management believe this best depicts how the nature, amount, timing and uncertaintyof the Group’s revenue and cash flows are affected by economic factors.

Spirent Communications plc
Results for the six months ended 30 June 2024

3

6 August 2024

Page 18 of 28

Operating segments continued$ million

First half 2024
Revenue
Nature of products and services
Sale of hardware and software
Maintenance and support services

Primary geographical markets
Americas
Asia Pacific
Europe, Middle East and Africa

Profit before tax
Adjusted operating profit/(loss)
Other adjusting items note 4
Total reportable segment profit/(loss)
Unallocated amounts:− Acquired intangible asset amortisation− Share-based payment

Lifecycle
Service
Assurance

Networks &Security

Corporate

Total

31.7
54.0

76.5
35.1

-

108.2
89.1

85.7

111.6

-

197.3

59.5
16.4
9.8

53.9
40.6
17.1

-

113.4
57.0
26.9

85.7

111.6

-

197.3

6.3
(0.4)

4.1
(0.5)

(5.4)
(7.5)

5.0
(8.4)

5.9

3.6

(12.9)

(3.4)
(2.7)
(3.2)

Operating loss
Finance income
Finance costs

(9.3)
2.2
(0.4)

Loss before tax(7.5)

Other information
Product development
Depreciation of property, plant and equipment
Depreciation of right-of-use assets

22.0
1.9
1.4

25.4
2.5
1.6

0.2

47.4
4.4
3.2

Spirent Communications plc
Results for the six months ended 30 June 2024

3

6 August 2024

Page 19 of 28

Operating segments continued$ million

First half 2023
Revenue
Nature of products and services
Sale of hardware and software
Maintenance and support services

Primary geographical markets
Americas
Asia Pacific
Europe, Middle East and Africa

Profit before tax
Adjusted operating (loss)/profit
Other adjusting items note 4
Total reportable segment (loss)/profit
Unallocated amounts:− Acquired intangible asset amortisation− Share-based payment

Lifecycle
Service
Assurance

Networks &Security

Corporate

Total

38.6
57.0

94.4
33.9

-

133.0
90.9

95.6

128.3

-

223.9

63.0
24.8
7.8

63.4
49.4
15.5

-

126.4
74.2
23.3

95.6

128.3

-

223.9

(1.8)
(1.6)

17.2
(3.1)

(3.8)
0.1

11.6
(4.6)

(3.4)

14.1

(3.7)

7.0
(2.4)
(3.0)

Operating profit
Finance income
Finance costs

1.6
3.6
(0.4)

Profit before tax

4.8

Other information
Product development
Intangible asset amortisation – other
Depreciation of property, plant and equipment
Depreciation of right-of-use assets

27.2
0.1
2.3
1.7

26.0
3.1
1.8

0.1

53.2
0.1
5.4
3.6

Inter-segment revenue is eliminated in the above periods. All of the Group’s revenue arose from contracts withcustomers.
Generally, revenue from the sale of hardware and software is recognised at a point in time and revenue frommaintenance and support services is recognised over time.
Europe, Middle East and Africa includes United Kingdom revenue of $5.7 million (first half 2023: $3.8 million).
Americas includes United States revenue of $106.0 million (first half 2023: $116.0 million).
Asia Pacific includes China revenue of $27.4 million (first half 2023: $36.7 million).
Revenues are attributed to regions and countries based on customer location.
No one customer accounted for 10 per cent or more of total Group revenue in either the first half of 2024 or
2023.
The Group’s activities are seasonal and are typically weighted towards the second half of the year.

Spirent Communications plc
Results for the six months ended 30 June 2024

46 August 2024

Page 20 of 28

Other adjusting items
First half2024

First half
2023

Strategic restructuring initiatives
Acquisition related costs

0.9
7.5

4.6
-

Total charge in the income statement

8.4

4.6

First half2024

First half
2023

R&D engineering plan
Finance transformation
Organisational restructure
Facilities downsize

0.2
0.5
0.2

0.4
4.2
-

Total charge in the income statement

0.9

4.6

$ million

Restructuring$ million

Restructuring
We concluded our R&D engineering site plan to relocate activities from North America to lower cost regions for
our High-Speed Ethernet business in 2023. No further significant costs expected in 2024.
In 2023, to embed standardised global finance processes, we moved certain accounting activities from North
America to the UK, incurring $1.1 million of costs including $0.5 million consultancy. In 2024, we moved into thenext phase of the initiative, incorporating the review of key global process and/or control enhancements,
incurring further consultancy costs.
In 2022, the Group embarked on a strategic evaluation of its operating model. This reached substantial
completion in early 2024. The half year 2023 costs relate to this initiative.
Strategic actions were taken to review the cost base and facility footprint in the second half of 2023. The 2024
amounts relate to moving, relocating and downsizing costs directly attributable to this project.
Acquisition related costs
In March 2024, Keysight announced its intention to purchase Spirent. Therefore, the costs of $7.1 million
recognised for the first half of 2024 relates mainly to professional advisory charges due to this acquisition. We
expect further deal related charges, the majority of which are expected to be incurred when the deal is closed.
On 8 September 2023, the Group completed the asset purchase of a small Test Lab Automation business carveout from NetScout Inc. Retention costs of c.$0.4 million were incurred during 2024.

Spirent Communications plc
Results for the six months ended 30 June 2024

5

6 August 2024

Page 21 of 28

Tax
First half2024

First half
2023

Current income tax
UK tax
Foreign tax

0.7
0.9

2.5
2.5

Total current income tax charge

1.6

5.0

Deferred tax
Recognition of deferred tax assets
Reversal of temporary differences

(2.4)

(5.4)

Total deferred tax

(2.4)

(5.4)

Tax credit in the income statement

(0.8)

(0.4)

$ million

The effective tax rate for the first half of 2024 is 11.2 per cent (first half 2023: 14.7 per cent), being the current
period tax charge, excluding tax on adjusting items, as a percentage of adjusted profit before tax.
6

Earnings per share

Basic and diluted earnings per share are calculated by dividing profit or loss attributable to ordinary equity
holders by the weighted average number of ordinary shares in issue during the six months to 30 June. Where
dilution would improve the loss on earnings per share reported, the table only includes the figure for basic
earnings per share, being the lowest result.
First half2024

First half
2023

(6.7)

5.2

Weighted average number of Ordinary Shares in issue – basic
Dilutive potential of employee share incentives

573.7
4.2

598.7
1.5

Weighted average number of Ordinary Shares in issue – diluted

577.9

600.2

(1.17)(1.17)

0.87
0.87$ million(Loss)/profit for the period attributable to owners of the parent Company
Number million

Cents(Loss)/Earnings per share
Basic
DilutedSpirent Communications plc
Results for the six months ended 30 June 2024

6

6 August 2024

Page 22 of 28

Earnings per share continued

Adjusted
The Group is disclosing adjusted earnings per share for continuing operations attributable to owners of the parent
Company in order to provide a measure to enable period-on-period comparisons to be made of its performance.
The following items are excluded from adjusted earnings:-

acquired intangible asset amortisation;
share-based payment;
other adjusting items; andtax effect on the above items

A reconciliation is provided below:
First half2024
$ million

EPS
cents

First half
2023
EPS
cents

$ million(Loss)/profit for the period attributableto owners of the parent Company
Acquired intangible asset amortisation
Share-based payment
Other adjusting items note 4
Tax effect on the above items

(6.7)
2.7
3.2
8.4
(1.6)

(1.17)

5.2
2.4
3.0
4.6
(2.6)

0.87

Adjusted basic

6.0

1.05

12.6

2.10

Adjusted diluted
7

1.04

2.10

First half2024

First half
2023

Dividends paid and proposed

Cents perOrdinary Share$ million

Cents perOrdinary Share$ million

Amounts recognised as distributions toequity in the period
Final dividend paid for previous year

-

-

4.94

31.1

Amounts approved by the Directors (notrecognised as a liability at the balance
sheet date)

-

-

2.76

16.5

No dividend was proposed at 31 December 2023 and The Board does not recommend a dividend for the firsthalf of 2024.
Dividends are declared or proposed in US Dollars and will be paid in Pound Sterling at the exchange rate
prevailing when the dividend is declared or proposed.

Spirent Communications plc
Results for the six months ended 30 June 2024

8

6 August 2024

Page 23 of 28

Defined benefit pension plans

The Group operates two funded defined benefit pension plans in the United Kingdom which are closed to newentrants.
In order to protect the balance sheet from further risk of market movements affecting the valuation of pension
liabilities, in October 2022, the Trustees, with the Company’s support, purchased a bulk annuity insurance policy
from specialist UK insurer Pension Insurance Corporation (PIC), in respect of the largest plan, the Staff Plan. The
premium was met from the plan’s assets and sufficient assets remain to meet the plan’s ongoing costs. Thispension buy-in secures an insurance asset from PIC that matches the remaining pension liabilities of the Staff
Plan, such that the Company no longer bears any investment, inflation, longevity or other demographic risks.
Following the purchase of the bulk annuity insurance policy, the Group does not expect to make any further
cash contributions to this plan.
There is also a liability for an unfunded plan in the United Kingdom and a deferred compensation plan in the
United States.
The assets and liabilities on the balance sheet are as follows:First half2024

First half
2023

Year
2023

13.6
-

15.3
-

12.9
-

13.6

15.3

12.9

Withholding tax payable

(3.4)

(5.3)

(4.5)

Surplus in the plan

10.2

10.0

8.4

Schemes in net liability position
UK defined benefit pension plan – Cash Plan
UK unfunded plan
US deferred compensation plan

(0.3)
(0.5)
(9.8)

(0.8)
(0.5)
(7.8)

(1.7)
(0.5)
(9.2)

Deficit in the plan

(10.6)(9.1)(11.4)Net pension plan (deficit)/surplus on the balance sheet

(0.4)

0.9

(3.0)

First half2024

First half
2023

Year
2023

188.9
(175.6)190.0(175.5)197.0(185.8)

Surplus in the plans

13.3

14.5

11.2

Withholding tax payable

(3.4)

(5.3)

(4.5)

Net UK funded defined benefit pension plan surplus on the balance sheet

9.9

9.2

6.7

$ million

Schemes in net asset position
UK defined benefit pension plan – Staff Plan
UK defined benefit pension plan – Cash Plan

The assets and liabilities in the funded defined benefit pension plans were as follows:$ million

Fair value of defined benefit pension plans’ assets
Present value of defined benefit pension plans’ obligations

Spirent Communications plc
Results for the six months ended 30 June 2024

8

6 August 2024

Page 24 of 28

Defined benefit pension plans continued

The key financial assumptions in respect of the funded plans are as follows:%

Inflation – RPI
Inflation – CPI (pre-2030)
Inflation – CPI (post-2030)
Rate of increase in pensionable salaries
Rate of increase for pensions in payment− Pre 2001 service− 2001 to 5 April 2005 service− Post 5 April 2005 service
Rate of increase in deferred pensions
Rate used to discount plan liabilities

First half2024

First half
2023

Year
2023

3.3
RPI less 1.0% pa
RPI less 0.1% pa
CPI

3.4
RPI less 1.0% pa
RPI less 0.1% pa
CPI

3.1
RPI less 1.0% pa
RPI less 0.1% pa
CPI

3.7
3.1
2.1
CPI
5.2

3.8
3.2
2.1
CPI
5.3

3.6
3.0
2.1
CPI
4.5

Finance income of $0.3 million (first half 2023: $0.4 million) has been recognised. As at 30 June there are $0.5
million fees relating to the defined benefit pensions that are due to be re-imbursed to the Group in the second
half of 2024 (first half 2023: $0.9 million). These fees are recorded in Other Comprehensive Income on page 12.
The Group also operates a deferred compensation plan for employees in the United States. The plan has
elements of a defined benefit pension retirement obligation and therefore is required to be valued in accordancewith IAS 19 ‘Employee Benefits’. At 30 June 2024, the deferred compensation deficit amounted to $9.8 million(31 December 2023: $9.2 million). There were no changes to the re-measurement at 30 June 2024 (31 December
2023: $0.6 million).
9

Reconciliation of (loss)/profit before tax to cash generated from operations$ million(Loss)/profit before tax
Adjustments for:Finance income
Finance costs
Intangible asset amortisation
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Share-based payment
Changes in working capital:
Increase/(decrease) in inventories
Decrease in receivables
Decrease in payables
Increase in contract liabilities(Decrease)/increase in provisions
Defined benefit pension plan employer contributions net of plan admin
expenses
Deferred compensation planNon-cash movements
Cash flow from operationsFirst half2024

First half
2023

(7.5)

4.8

(2.2)
0.4
2.7
4.4
3.2
3.2

(3.6)
0.4
2.5
5.4
3.6
3.0

3.2
37.5
(16.8)
5.3
(1.0)

(1.7)
45.9
(44.8)
0.6
0.2

0.2
0.6
(0.4)

(0.7)
0.9
(0.3)

32.8

16.2

Spirent Communications plc
Results for the six months ended 30 June 2024

10

6 August 2024

Page 25 of 28

Fair value

The Directors consider that the carrying amounts of the financial instruments included within trade and otherreceivables, trade and other payables and contractual provisions approximates their fair value.
11

Employee Share Ownership Trust

During the first half of 2024 and 2023, no shares were purchased or placed into the Employee Share Ownership
Trust (ESOT) and 3.5 million shares were transferred from the ESOT to satisfy options exercised under the Spirent
employee share plans (first half 2023: 2.5 million transferred). At 30 June 2024, the ESOT held 2.9 million Ordinary
Shares (31 December 2023: 6.4 million Ordinary Shares).
12

Share Buyback Programme

On 3 April 2023, the Company commenced a Share Buyback Programme of $71.6 million (£56.0 million) which
was successfully completed on 24 August 2023. These 33 million shares, representing circa 5.4 per cent of theCompany’s issued share capital, have been cancelled as at 31 December 2023.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 26 of 28

Statement of Directors’ responsibilities
The Directors confirm that to the best of their knowledge:
The condensed set of financial statements has been prepared in accordance with IAS 34 ‘Interim Financial
Reporting’ as issued by the IASB and endorsed and adopted by the United Kingdom.
The half year management report includes a fair review of the information required by:(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that haveoccurred during the first six months of the financial year and their impact on the condensed set offinancial statements; and a description of the principal risks and uncertainties for the remaining six
months of the financial year; and(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have takenplace in the first six months of the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in the related party
transactions described in the 2023 Annual Report.
The Directors of Spirent Communications plc are listed below and are unchanged from the Spirent
Communications plc Annual Report at 31 December 2023.
Sir William Thomas
Eric Updyke
Paula Bell
Jonathan Silver
Gary Bullard
Margaret Buggie
Wendy Koh
Edgar Masri
By order of the Board of Spirent Communications plc.

E A Updyke
Chief Executive Officer
6 August 2024

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 27 of 28

Appendix
Alternative Performance Measures
The performance of the Group is assessed using a variety of alternative performance measures (APMs) which
are presented to provide users with additional financial information that is regularly reviewed by management.
The APMs presented are not defined under IFRS and therefore may not be directly comparable with similarly
identified measures used by other companies.
In management’s view, the APMs reflect the underlying performance of the Group and provide an alternativebasis for evaluating how the Group is managed and measured on a day-to-day basis. Such APMs are non-GAAP
measures and should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
The APMs and key performance indicators are aligned to the Group’s strategy and collectively are used tomeasure the performance of the Group and form the basis of the metrics for Director and management
remuneration. The Group’s key performance indicators are presented within the Strategic Report of its 2023
Annual Report.
Order intake
Order intake represents commitments from customers to purchase goods and/or services from Spirent during
the period that will ultimately result in recognised revenue. Where there can reasonably be changes to the scopeor duration of an order, the Group exercises judgement on the amount of the order that is booked.
Order intake is a measure of operating performance used by management to assess whether future activity
levels are increasing or slowing and therefore how effective we have been in the execution of our strategy. Orderintake is a key performance indicator used to measure Group, operating segment and regional performance forinternal reporting purposes.
OrderbookOrderbook comprises the value of all unsatisfied orders from customers and provides an indication of theamount of revenue that has been secured and will be recognised in future periods. Orderbook represents thetransaction price allocated to wholly and partially unsatisfied performance obligations, including amounts heldin contract liabilities at the period end. There is no comparable IFRS measure.
Book to bill
Book to bill is the ratio of orders booked to revenue recognised in the period and is a measure of the visibility of
future revenues at current levels of activity. Book to bill is a key performance indicator used to measure Groupand operating segment performance for internal reporting purposes.
Adjusted operating profit
Adjusted operating profit is reported operating profit excluding amortisation of acquired intangible assets,share-based payment and other adjusting items. Management uses adjusted operating profit, in conjunction
with other GAAP and non-GAAP financial measures, to evaluate the overall operating performance of the Group
as well as each of the operating segments and believes that this measure is relevant to understanding theGroup’s financial performance, as specific items (adjusting items) are identified and excluded by virtue of theirsize, nature or incidence, as they do not reflect the underlying trading performance of the Group and therefore
can lead to period-on-period fluctuations that can make it difficult to assess financial performance.
Specifically, items are excluded from adjusted operating profit if they are acquisition related in nature, including
acquired intangible asset amortisation which is dependent on being able to identify intangible assets andassessing their useful economic lives, or if their exclusion allows for more meaningful comparisons with peer
companies such as share-based payment which can fluctuate from period to period. The exclusion of adjusting
items from adjusted operating profit is consistent from period to period.
Adjusted operating profit is also used in setting Director and management remuneration targets and in
discussions with the investment analyst community.

Spirent Communications plc
Results for the six months ended 30 June 2024

6 August 2024

Page 28 of 28

Adjusted operating margin
Adjusted operating margin is adjusted operating profit as a percentage of revenue. It is a measure of the Group’s
overall profitability and how successful we are in executing on our overall strategy, and demonstrates our ability
to improve margin through efficient operations and cost management, whilst being mindful of the need to invest
for the future.
Effective tax rate
Effective tax rate is the adjusted tax charge, before tax on adjusting items, expressed as a percentage of adjusted
profit before tax. The adjusted tax charge is the reported tax charge excluding the tax effect on adjusting items
and adjustments made to provisions in respect of prior year tax.
Adjusted basic earnings per share
Adjusted basic earnings per share (EPS) is adjusted earnings attributable to owners of the parent Company
divided by the weighted average number of Ordinary Shares outstanding during the year. Adjusted earnings isreported profit before tax excluding amortisation of acquired intangible assets, share-based payment, otheradjusting items, tax on adjusting items and over/under provisions in respect of prior year tax.
Adjusted basic EPS is a measure of how successful we are in executing on our strategy and ultimately delivering
increased value for shareholders. Adjusted basic EPS is also used in setting Director and management
remuneration targets and in discussions with the investment analyst community. The Group sets out thecalculation of adjusted basic EPS in note 6 of Notes to the consolidated financial statements.
Product development spend as a percentage of revenue
Product development as a percentage of revenue in the period. It is a measure of how much the Group isinvesting to support further organic growth initiatives in line with the strategic objectives, whilst driving
improved productivity and effectiveness.
Free cash flow
Free cash flow is cash flow generated from operations, less tax and net capital expenditure, lease liability
principal repayments and lease liability interest paid, add interest received and lease payments received fromfinance leases, excluding acquisition related other adjusting items and one-off employer contributions to the UK
pension scheme.
Free cash flow is a measure of the quality of the Group’s earnings and reflects the ability to convert profits into
cash and ultimately to generate funds for future investment. It gives us financial strength and flexibility and theability to pay sustainable dividends to our shareholders. Free cash flow is an important indicator of overall
operating performance as it reflects the cash generated from operations after capital expenditure, financing andtax which are significant ongoing cash flows associated with investing in the business and financing operations.
Free cash flow excludes corporate level cash flows that are independent of ongoing trading operations such as
dividends, acquisitions and disposals and share repurchases and therefore is not a measure of the funds that areavailable for distribution to shareholders.
A reconciliation of cash generated from operations, the closest equivalent GAAP measure, to free cash flow isprovided within the Financial review on page 24.
Free cash flow conversion
Free cash flow conversion is the ratio of free cash flow to adjusted earnings, presented as a percentage.
Free cash flow conversion is a measure used in conjunction with free cash flow to assess the Group’s ability toconvert profit into cash and ultimately to generate funds for future investment.