spirent communications plc  annual report 2009
annual report 2009
spirent communications plc
www spirentcom
registered office 
spirent communications plc 
northwood park 
gatwick road 
crawley 
west sussex rh10 9xn 
united kingdom 
tel 44 01293 767676 
fax 44 01293 767677 
email investorrelationsspirentcom 
website wwwspirentcom
registered in england no 470893
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 ethernetdata center 
cloud computing
wireless satellite navigation service assurance
spirent plays a significant role in the way the 
world communicates we inspire innovation 
across our customer base by testing 
tomorrow’s networks and technologies today 
thereby enhancing the products services and 
applications that drive the ever evolving 
communications industry as a leader in test 
and measurement we truly enrich the lives 
of people communicating around the world
spirent’s innovative test solutions push the 
limits of networks elements devices and 
applications our unique testing methodologies 
ensure that global communications equipment 
manufacturers as well as service providers 
supplying a wide range of voice data video 
and applications deliver the highest quality 
products and services thereby improving the 
quality of experience for every user spirent 
and its employees continue to deliver the best 
return for shareholders in our industry
contact details
registered office
spirent communications plc
northwood park
gatwick road
crawley
west sussex rh10 9xn
united kingdom
tel 44 01293 767676
fax 44 01293 767677
email investor relationsspirentcom
website wwwspirentcom
registered in england no 470893
auditor
ernst  young llp
1 more london place
london se1 2af
united kingdom
tel 44 020 7951 2000
website wwweycom
registrar
equiniti limited
aspect house
spencer road
lancing
west sussex bn99 6da
united kingdom
tel 0871 384 2126 uk
tel 44 0121 415 7047 overseas
text phone for shareholders with hearing difficulties 
0871 384 2255 uk
text phone for shareholders with hearing difficulties 
44 0121 415 7028 overseas
website wwwshareviewcouk
adr depositary
the bank of new york mellon corporation
adr depositary receipts
101 barclay street
22nd floor
new york
ny 10286
usa
tel 1 888 269 2377 toll free — us
tel 1 201 680 6825 outside us
email shrrelationsbnymelloncom
website wwwadrbnycom
brokers joint
rbs hoare govett limited
250 bishopsgate
london ec2m 4aa
united kingdom
tel 44 020 7678 8000
website wwwrbscom
ubs limited
2 finsbury avenue
london ec2m 2pp
united kingdom
tel 44 020 7567 8000
website wwwubscom
financial pr advisers
financial dynamics limited
holborn gate
26 southampton buildings
london wc2a 1pb
united kingdom
tel 44 020 7831 3113
website wwwfdcom 1 spirent communications plc
annual report 2009 spirent communications plc
annual report 2009
2
our business
at a glance
our business is divided into three operating divisions group financial highlights
spirent 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 the systems group develops power 
control systems for electrical vehicles in the mobility and 
industrial markets
revenue
2008 £2579m
£272 1m
operating profit
2008 £487m
£ 5 53m
adjusted basic earnings per share
1
2008 624p
6 9 1p
total dividend per share
2008 110p
121p
note
1  adjusted basic earnings per share is based on 
adjusted earnings as set out in note 12 of notes  
to the consolidated financial statements
 
performance analysis
spirent puts innovation to the test with a concentration on ethernet 
mobility and satellite positioning as well as the applications that enrich 
these networks spirent’s performance analysis division facilitates device 
and network testing from the research and development stage to the launch 
of communications networks and services we push the limits of these 
networks their elements mobile and satellite positioning devices and 
applications by allowing equipment makers and service providers to subject 
their offerings to labbased conformance and performance testing simulating 
realworld conditions before a commercial launch this approach accelerates 
time to market and improves the quality of the products and services our 
customers bring to market 
service assurance
spirent’s service assurance solutions allow service providers to diagnose 
troubleshoot and determine how to resolve issues with networks and systems 
within the live network service providers rely on spirent to provide 
centralised and field test tools to improve the quality of service and allow 
technicians to efficiently prevent or resolve issues from the core of the 
network to inside the consumer’s home
systems
pg drives technology is a leading supplier of sophisticated electronic control 
systems for electrically powered vehicles in the mobility and industrial 
markets these include medical vehicles such as powered wheelchairs and 
mobility scooters as well as industrial vehicles such as floor cleaning vehicles  
forklift trucks aerial access platforms and golf carts 3 spirent communications plc
annual report 2009
overview business review governance financial statements
our business is divided into three operating divisions revenue by division
£335m
2008 £335m
£2018m
2008 £1912m
£368m
2008 £332m
2 our business at a glance
4 our financial and operational highlights
5 chairman’s statement
6 chief executive officer’s review
7 description of our business
8 our strategy 
10 our key performance indicators
12 our principal risks and uncertainties
14  business group development and 
performance
18 financial review
22 corporate social responsibility statement
25  board of directors 
26 report of the directors 
29 statement of directors’ responsibilities 
30  directors’ statement on corporate 
governance 
33 report on directors’ remuneration
consolidated financial statements
41  independent auditors’ report to the  
members of spirent communications plc
42 consolidated income statement
43  consolidated statement of  
comprehensive income
44 consolidated balance sheet
45 consolidated cash flow statement
46 consolidated statement of changes  
 in equity
47  notes to the consolidated financial 
statements
parent company financial statements
83  independent auditors’ report to the  
members of spirent communications plc
84 parent company balance sheet
85 notes to the parent company financial 
 statements
101 principal divisions and subsidiaries
other information
102 financial history
104 shareholder information
106 glossary
ibc contact details 07 357
08 624
09 691
07 502
08 422
09 551
07 2370
08 2579
09 2721
07 255
08 487
09 553
spirent communications plc
annual report 2009
4
our financial 
and oper ational 
highlights
summary of 
results
adjusted basic earnings per share
1
pence
free cash flow
2
£ million
group revenue
£ million
group operating profit
4
£ million
      change at 
      constant 
     change currency
3
 
£ million   2009 2008  
revenue 2721 2579 6 10
operating profit 553 487 14 6
profit before tax 541 496 9 
basic earnings per 
share pence 871 1013 14 
adjusted basic earnings 
per share
1
 pence 691 624 11
total dividend per 
share pence 121 110 10 
free cash flow
2
 551 422 31 
revenue grew by 6 per cent to £2721 million 2008 £2579 million at •	
constant currencies revenue was down 10 per cent with signs of 
recovery in the fourth quarter of 2009
operating profit ahead of expectations up 14 per cent at constant •	
currencies down 6 per cent
further increases in gross profit margin to 663 per cent and in operating •	
margin to 203 per cent
adjusted basic earnings per share up 11 per cent at 691 pence 2008 •	
624 pence after charging 020 pence 2008 030 pence for sharebased 
payment and acquired intangible amortisation
strong cash flows resulted in cash and cash equivalents of £1080 million •	
at 31 december 2009 31 december 2008 £597 million
order intake growth in the fourth quarter was strong as book to bill •	
ratio reached 129
final dividend up 10 per cent to 066 pence per share 2008 060 pence •	
spirent released more new and innovative solutions to the market in •	
2009 than ever before
cautionary statement regarding forwardlooking 
statements this annual report 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 forwardlooking 
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 forwardlooking 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 forwardlooking statements contained 
in this annual report whether as a result of new 
information future events or otherwise
notes
1  adjusted basic earnings per share is based on 
adjusted earnings as set out in note 12 of notes to 
the consolidated financial statements
2  operating cash flow after tax net interest and net 
capital expenditure
3  change at constant currencies eliminating the 
effects of fluctuating exchange rates on the 
translation of operating results and on transactions
4 before exceptional items spirent communications plc
annual report 2009
5
overview
chairman’s 
statement
i am pleased to report that spirent’s adjusted earnings per share increased by 11 per 
cent in 2009 to 691 pence which excludes a nonrecurring net tax benefit of 180 
pence per share and is after charging 020 pence in respect of sharebased payment 
and acquired intangible amortisation earnings benefited from an increase in operating 
profit of £66 million an improvement of 14 per cent but this was partially offset by  
an increase in the rate of tax charged for the year
these results reflect the trend of improvement seen in the past several years as  
the company’s management team implements its strategic plan and effectively  
deploys resources an increase in gross profit margin and careful cost control improved 
the operating profit margin to 20 per cent for the group as a whole in our largest 
business performance analysis the operating profit margin increased to 25 per cent 
market share increased and our new product portfolio is well aligned with the 
segments of the market that we expect will exhibit the fastest growth
in the fourth quarter of 2009 market conditions improved noticeably resulting in 
bookings exceeding sales by 29 per cent for the period whereas bookings were 
somewhat lower than sales for the first three quarters of the year accordingly we 
expect a positive start to 2010
the group’s financial position remains strong with cash generation for 2009 that 
exceeded earnings excluding the effect of the nonrecurring tax benefit in these 
circumstances the board is recommending a final dividend of 066 pence per share 
compared with 060 pence per share in 2008
gerard eastman who joined the board in 2006 is retiring at the annual general 
meeting and the board would like to express its thanks for his many thoughtful 
contributions i will also retire from the board at the annual general meeting and  
i am resigning as chairman with effect from 4 march 2010
the board has appointed alex walker who has been a director since 2006 to be 
chairman with the continuing participation of alex the other nonexecutive board 
members and the management team led by bill burns i have every confidence that the 
company is in the best possible hands i would like to express my sincere thanks to all 
of my colleagues at spirent with whom it is a great privilege to have been associated
“in the fourth quarter of 
2009 market conditions 
improved noticeably”
edward bramson
chairman spirent communications plc
annual report 2009
6
chief e xecutive 
officer’s review
over the last several years we have seen significant change across the communications 
industry large and small enterprises as well as consumers are now demanding 
anytime anywhere alwayson internet access with increased levels of quality of 
experience from the numerous applications they use everyday new mobile devices 
are driving the need for faster wireless networks such as lte while downloadable 
applications are increasing both revenue and customer loyalty examples include the 
extraordinary growth in smartphone usage the introduction of affordable netbook and 
tablet devices and the download of billions of applications from online stores 
service providers have shifted their focus to address the ever increasing demand  
for wireless access applications delivery and new enterprise offerings such as cloud 
computing to meet these growing demands service providers must manage an 
increased level of complexity driven by the integration of legacy wireline next
generation wireless and outsourced content delivery networks equipment 
manufacturers have responded by moving resources to growth markets such as 
smartphones higher speed wireless networks and the evolution of enterprise data 
centers with ethernet as the transport technology of choice as a market leader in 
communications test and measurement all of these areas represent significant 
opportunities for spirent 
we have transformed the business in a number of key areas to capitalise on  
these changing market conditions we have rationalised the organisational structure 
consolidated the supply chain and concentrated on driving cost out of all aspects of  
the business we closely monitor the trends in our industry strategically reallocating 
our resources to address growing and emerging markets currently spirent is delivering 
the industry’s most innovative solutions in ethernet wireless applications and  
security testing — the areas that matter most to service providers and equipment 
manufacturers the breadth and depth of our solutions portfolio combined with our 
global reach make spirent uniquely positioned to address the changing needs of the 
communications test and measurement market 
through this transformation we have revitalised spirent’s strategy prioritising 
innovation time to market and most importantly profitable growth in 2009 we 
released more new and innovative solutions to the market than at any time in our 
history examples include the introduction of test solutions for 1040100 gigabit 
ethernet virtualization inside the data center and lte devices and infrastructure  
that have expanded our market leadership within test and measurement 
our customers along with several of the industry’s largest publications conferences 
and research firms frost  sullivan interop and fortune among others have 
recognised our accomplishments with a variety of awards our market leadership new 
product innovation commitment to excellence and service to customers has resulted in 
a strong 2009 financial performance throughout the year we gained market share and 
outperformed our competitors in revenue and profitability 
despite the challenging macro economic environment in 2009 as the year 
progressed operating conditions improved noticeably and customers began to move 
from cost saving to investing for the future the alignment of our solutions portfolio 
with customers’ areas of investment drove increased order activity in the second half 
of the year these improved conditions meant that the fourth quarter saw bookings 
exceeding sales by 29 per cent
this recovery makes us optimistic for the coming year we will continue to manage 
costs thoughtfully as the economy recovers our goal is to outpace the market recovery 
and grow market share with the key objective of topline growth that will drive 
increased profitability we have seen a solid start to 2010 and we aim to continue this 
positive momentum as the year progresses
“the breadth and depth of 
our solutions portfolio 
combined with our global 
reach make spirent uniquely 
positioned to address the 
changing needs of the 
communications test and 
measurement market”
bill burns 
chief executive officer 1
2
3
1
2
3
business review
spirent communications plc
annual report 2009
7
description of 
our business
the spirent group is organised into two business areas 
communications and systems the communications business 
comprises two divisions performance analysis providing test 
solutions for wireline and wireless technologies in the lab and 
service assurance providing network monitoring and field test 
solutions for live networks
spirent communications provides solutions to enable the world to communicate 
faster better and more reliably we develop innovative test solutions for the 
engineers working within the communications industry allowing them to evaluate 
the performance of the latest technologies to be deployed across the worldwide 
telecommunications infrastructure we also provide tools for service technicians and 
field test engineers to improve network quality and make troubleshooting of live 
networks efficient and effective
network equipment manufacturers and service providers face numerous challenges 
associated with bringing products and services from the lab to the commercial 
marketplace spirent’s performance analysis division allows equipment and mobile 
device manufacturers service providers enterprises and government entities to 
holistically test and benchmark the performance of networks elements and services 
accelerating the deployment of these innovations into the market 
spirent provides the ability to conduct functional conformance interoperability 
scalability and quality of experience testing under realworld conditions inside and 
outside the lab this capability across the entire product lifecycle from concept 
inception to use in commercially available scenarios helps shorten the product 
development cycle improve the quality of new services and reduce the cost and  
risk associated with such efforts 
spirent delivers wireline and wireless solutions which address high speed ethernet 
data center ims iptv location based services lte multignss satellites 3g wireless 
and other emerging technologies
spirent’s service assurance solutions allow service providers to diagnose 
troubleshoot and determine how to resolve issues with networks and systems within 
the live network all the way to the home by leveraging the expertise gained by testing 
technologies and systems in the lab spirent enables service providers to deploy and 
maintain efficient cost effective and high performing networks as a result network 
operators enjoy reduced churn by providing a higher quality of experience which 
ultimately increases subscriber retention additionally our test solutions allow  
service providers to reduce operational costs through better identification of potential 
network problems and the use of the appropriate resources to address and correct 
those challenges
systems is a leading supplier of sophisticated electronic control systems for 
electrically powered vehicles in the mobility and industrial markets these include 
medical vehicles such as powered wheelchairs and mobility scooters as well as 
industrial vehicles such as floor cleaning equipment forklift trucks aerial access 
platforms and golf carts
operating profit by division
1
£ million
2009
revenue by division
£ million
2009
 09 08 07
1 performance analysis 2018 1912 1693 
2 service assurance 335 335 343
3 systems 368 332 334
 
 09 08 07
1 performance analysis 499 449 249 
2 service assurance 48 48 38
3 systems 50 43 39
 
1  before sharebased payment acquired  
intangible amortisation and exceptional items 
excludes corporate costs spirent communications plc
annual report 2009
8
our strategy…
our vision
to be the global leader in growing and emerging test 
and measurement markets
our strategy
focus on growing and emerging markets
spirent closely monitors the ever changing trends 
across the communications landscape strategically 
reallocating resources to address growing and 
emerging markets 
invest in our solutions portfolio
spirent continues to enhance its product and service 
offerings by bringing the most advanced test 
solutions to market
innovation
by attracting and retaining the brightest individuals 
spirent leads the industry through innovation 
delivering the “right solutions” at the “right time” 
delivering the right solutions at the right time allows 
our customers to develop and launch new products 
and services in the shortest amount of time
global customer reach 
our world class sales and service organisations 
enable spirent to build strong customer relationships 
across the globe  
product development
£4 7 5m
2008 £453m business review
spirent communications plc
annual report 2009
9
…in action
verizon wireless selects spirent for lte 
device testing solutions
verizon wireless has chosen spirent as 
the first provider of testing solutions for 
the certification of devices for use on 
verizon’s 4glte network spirent test 
equipment will help verizon assure that 
lte devices live up to their performance 
expectations with the industry’s first lte 
and multimode lte with cdma or umts 
device performance platform spirent 
helps verizon control operational expenses 
and maximise revenues from new 
lte services
spirent ranked global market leader for 
ethernet testing
during 2009 spirent was recognised as 
the market leader for ethernet testing by 
research firm frost  sullivan this top 
ranking according to the firm’s world 
gigabit ethernet test equipment market 
report reflects the sale by spirent of 
more ethernet test ports than any 
other vendor
spirent’s portfolio of test solutions is 
the most comprehensive on the market 
extending from the lab to the live network 
and into the subscriber’s home service 
providers and equipment manufacturers 
across the globe continue to depend on 
spirent to test the complexities of  
today’s high speed ethernet equipment 
and networks
spirent preparing enterprises for 
dynamic terabitcapacity data centers
spirent introduced the first holistic 
approach to validating the performance  
of data centers designed to support 
virtualized services and converged 
networks the network performance and 
scale service availability system security 
application quality of experience and 
power efficiency of these new data 
centers can only be validated through a 
holistic test architecture 
holistic testing provides a unified layer 
2—7 test architecture specifically designed 
to test the endtoend performance of  
1040100 gigabit ethernet fabrics fibre 
channel over ethernet convergence 
virtualized server networking cloud 
computingbased applications and security
china telecom to use spirent equipment 
for sophisticated mobile device testing 
china telecom selected spirent’s mobile 
device test system as the most complete 
and best suited to help the service 
provider continue to offer its subscribers 
the highest quality of experience by 
ensuring the mobile devices it sells to 
subscribers comply with industry 
standards as well as offer the highest 
application service quality china telecom 
gains a competitive edge in the fiercely 
contested chinese wireless market 09 08 07
105
98
102
09 08 07
624
646
663
07 2370
08 2579
09 2721
07 289
08 509
09 566
spirent communications plc
annual report 2009
10
our ke y 
performance 
indicators
kpi description commentary
book to bill ratio
revenue 
£ million
gross profit margin 

operating profit before sharebased 
payment and amortisation of  
acquired intangible assets
£ million
ratio of orders booked to revenue billed 
which is a measure of the strength of our 
future revenues 
growth in revenue is a measure of how we 
are growing our business organically our 
goal is to achieve yearonyear growth 
although this aim has been particularly 
challenging in 2009 nonetheless our focus 
has been on increasing our market share 
and growing our new product revenues 
which are some of the key components of 
our strategy
gross profit as a percentage of revenue is 
a measure of our profitability we seek to 
maximise our gross margin through 
operational excellence in all aspects of 
our business
operating profit before sharebased 
payment and acquired intangible 
amortisation is the measure used to 
evaluate the overall performance of the 
group as well as each of our operating 
segments our goal is to achieve yearon
year organic growth
the ratio has increased to 102 during the 
year and this reflects the innovation in 
product solutions offered by the company 
and improving demand levels seen in the 
fourth quarter of 2009
revenue for the group for 2009 increased 
by 6 per cent in sterling terms and was 
down 10 per cent in constant currencies 
this result was in line with our 
expectations during 2009 we have 
increased our market share in our key 
performance analysis division and have 
seen increased demand for our products 
in growing and emerging markets
gross profit margin improved in 2009 to 
663 per cent from 646 per cent in 2008 
there has been an improving trend over a 
number of years achieved through 
increased efficiency redesign and 
outsourcing activities gross margin has 
also been positively affected by an 
increasing proportion of software revenue
in 2009 spirent reported an increase in 
operating profit of 11 per cent in sterling 
terms at constant currencies group 
operating profit was down by 8 per cent 
having the ability to adapt to the changing 
market dynamics has been key in 2009 in 
order for spirent to maintain profitability 
whilst enabling our commitment to 
innovation to be preserved
spirent has identified the following key performance indicators “kpis” that it believes 
are useful in assessing how the group is performing against its strategic aims our 
strategy focuses on medium to long term growth and therefore its achievement cannot 
just be measured by looking at our performance in 2009 compared to the prior year 
trends over a number of years must also be considered the group does not currently 
utilise any nonfinancial kpis 09 08 07
122
197
208
07 357
08 624
09 691
07 502
08 422
09 551
business review
spirent communications plc
annual report 2009
11
kpi description commentary
return on sales before share
based payment and amortisation 
of acquired intangible assets 

adjusted basic earnings per share
pence
free cash flow 
£ million
operating profit before sharebased 
payment and acquired intangible 
amortisation as a percentage of revenue  
is a measure of our profitability we strive 
to achieve best in class operating returns 
for our industry
earnings per share “eps” is the amount 
of earnings attributable to each share in 
issue adjusted eps excludes exceptional 
items net of any related tax and prior 
year tax which enables periodonperiod 
comparisons to be made of our 
performance we aim to achieve growth 
in adjusted eps yearonyear
free cash flow is operating cash flow 
after tax net interest and net capital 
expenditure we focus on cash generation 
as a measure of the quality of our 
earnings and our aim is to achieve a high 
conversion of profit into cash each year 
we have improved return on sales from 
197 per cent in 2008 to 208 per cent in 
2009 this has been achieved through 
efficiency gains improved gross margins 
and control of overhead expenses these 
operating returns are some of the best in 
our industry
adjusted eps was 691 pence for 2009 
an improvement of 11 per cent on the 
prior year in 2009 eps has also been 
adjusted for a deferred tax credit arising 
on a change in estimate of deferred tax 
recovery of £138 million
free cash flow was £551 million for 2009 
which represents 95 per cent of reported 
earnings adjusting for the deferred tax 
credit of £138 million referred to above  
and which was a noncash item in 2009 
the conversion ratio is 124 per cent spirent communications plc
annual report 2009
12
our principal 
risks and 
uncertainties
risk and potential impact mitigation actions
macro economic and industry sector
in common with most businesses spirent is exposed to the current 
economic conditions we are particularly exposed to conditions in 
the telecommunications sector into which we sell many of our 
products and services
having the ability to adapt to changing market dynamics is key 
in order to minimise the effects of adverse economic or 
sector conditions 
our businesses closely monitor both market and geographic 
trends so that we are in a position to take timely actions to 
protect profitability where possible
technological change 
as spirent sell solutions in industries that are characterised by 
rapid technological changes keeping at the forefront of these 
technologies is critical to our success and in ensuring that we 
remain competitive in our markets bringing these new 
solutions to market at the right time for our customers is also 
key to our success as well as ensuring that our solutions 
portfolio is aligned with their needs
we continue to make significant investment in product 
development and in 2009 £475 million being 175 per cent 
of revenue was invested 
we work closely with customers and remain focused on their 
requirements and believe we are investing in areas that 
represent their future 
our value proposition is based on our service expertise and 
product breadth
reliance on contract manufacturers
we use contract manufacturers for the manufacture of a 
substantial amount of our products disruption or financial 
problems of contract manufacturers or limitations in the 
manufacturing capacity at contract manufacturers could either 
limit supply or increase our costs
we work closely with our contract manufacturers and 
maintain a regular onsite presence to minimise the effect 
on supply that could be caused by disruption at contract 
manufacturers there are contingency plans in place to 
transfer manufacturing to other locations
business continuity risks 
operational risks are present in the group’s businesses these 
risks include the risk of failed internal and external processes 
and systems human error and external events such as a 
natural disaster for example a significant portion of our 
communications operations are located in california which has 
in the past experienced natural disasters including 
earthquakes and wildfires
an important component of spirent’s corporate governance is 
its integrated risk management strategy and its regular self 
assessment of risks encompassing all business units part of 
this process is to ensure that the risks of disruption to the 
business are identified monitored and controlled wherever 
possible as well as arranging appropriate insurance cover
we conduct regular risk reviews to identify the major risks in the business which may 
affect our operating and financial performance and where possible put in place 
mechanisms to mitigate them significant risks are reviewed by the board and the audit 
committee it is not possible to identify every risk that could affect the business and 
the actions described below to mitigate those risks cannot provide absolute assurance 
that the risk will not occur andor adversely affect the operating or financial 
performance of the group these processes are more fully described in the directors’ 
statement on corporate governance 
the principal risks and uncertainties which the directors believe are currently faced by 
spirent communications plc are discussed below business review
spirent communications plc
annual report 2009
13
risk and potential impact mitigation actions
retention and recruitment of key staff
spirent is its employees so attracting and retaining highly 
qualified and skilled employees is essential in enabling us to 
deliver on our strategy and to the success of our business
we aim to find keep and engage the highest calibre of 
employees and encourage their contribution and 
development an environment that fosters innovation and 
collaboration is critical to spirent’s success appropriate 
career paths and internal recognition programmes are 
developed for both technical and nontechnical staff
intellectual property
spirent’s success is dependent in part on proprietary 
technology which may be infringed by others inadvertently  
or otherwise 
we may inadvertently infringe the intellectual property rights 
of third parties
we have active intellectual property protection programmes 
in place to obtain appropriate intellectual property 
protection in a cost effective manner 
there are procedures in the development of new products 
that include consideration of intellectual property rights of 
third parties we also consult internal and external legal 
counsel experienced in intellectual property matters
exchange rate
spirent conducts operations globally and accordingly the value 
of revenue and expenses assets and liabilities will be affected 
by fluctuations of the pound sterling the reporting currency 
against the currency in which these are denominated the 
principal currency to which we are exposed is the us dollar
currency exposures also arise from trading transactions 
undertaken by the group’s operations in foreign currencies
the group does not enter into instruments to hedge the 
translation exposure of the operating results or net assets of 
its overseas subsidiaries as these are considered accounting 
and not cash exposures 
where currency exposures on trading do not naturally offset 
forward foreign currency exchange contracts are put in place 
by group treasury to hedge the transactions spirent communications plc
annual report 2009
14
business group 
development and 
performance
communications
 first second full   change at 
 half half  year  change constant  
£ million 2009 2009 2009 2008   currency 
revenue      
performance analysis 1025 993 2018 1912 6 9
service assurance 183 152 335 335 — 14 
communications group 1208 1145 2353 2247 5 10
      
operating profit      
performance analysis 219 280 499 449 11 5
service assurance 26 22 48 48 — 13
communications group 245 302 547 497 10 6
      
return on sales       
performance analysis 214 282 247 235  
service assurance 142 145 143 143  
communications group 203 264 232 221  
performance analysis
market conditions
the year ended with a welcome positive change in customer confidence this followed 
the return to stability during the third quarter of the year after the difficult conditions 
in the first two quarters customer sentiment has now changed from cost management 
to investing for the future a positive trend which has continued into the first quarter 
of 2010
service providers have increased their investments in higher speed ethernet to 
support an increase in broadband and wireless traffic as well as advanced applications 
such as cloud computing network equipment manufacturers have shifted their 
investments accordingly to developing platforms that support higher speed ethernet 
and backhaul of mobile generated data traffic in greater scale than ever before in 
addition we have seen an increase in development spending on nextgeneration 
enterprise solutions these investments promise more application aware networks and 
the support of multiple technologies in the data center such as virtualization and cloud 
computing spirent is benefiting from all of these trends through its diverse solutions 
portfolio of test and measurement products and services
customers are continually seeking ways to optimise their investments in product 
development and in turn are looking for increased value from test and measurement 
tools this has led to a shift in demand from single technology test products to 
solutions that can handle multiple technology scenarios leveraging a single hardware 
and software architecture as a result spirent testcenter™ has emerged as the layer 
2—7 test solution of choice for the market we have seen a strong increase in demand 
for 10 gigabit ethernet “gbe” interface modules in 2009 with customers requesting 
price reductions due to the increase in volume purchases we have proactively met this 
challenge by adopting new technologies which increase port density and lower the 
overall cost per port automation is also playing a key role in driving improvement in 
time to market and efficiency for our customers spirent is leading the way with its 
automation solutions through its participation in industry wide automation initiatives
growth in wireless communication driven by the needs of consumers and businesses 
for anytime anywhere internet access is accelerating the adoption of new technologies 
and the development of complex scenarios such as converged wireless and wireline 
networks as a result we are experiencing strong demand for our umts and lte 
wireless communication test solutions at the same time cdma wireless technology 
began to show signs of expected weakness although the effect of this was masked by  
a few large contract wins during the year as a leader in testing wireless devices and 
infrastructure spirent continues to apply its innovations to meet the ever evolving 
needs of wireless customers 
the market for test equipment in the positioning sector experienced a sharp decline 
in 2009 this was the result of many factors including reduced us government spending 
“customer sentiment has 
now changed from cost 
management to investing 
for the future a positive 
trend which has continued 
into the first quarter of 
2010” business review
spirent communications plc
annual report 2009
15
and a significant reduction in manufacturing production volumes as sales of consumer 
end products fell as the market paused waiting for the development of devices that 
can leverage multiple global navigation satellite systems we expect a recovery in the 
positioning test market in 2010
revenue
performance analysis revenues grew by a reported 6 per cent in sterling masking a 
9 per cent decrease in constant currency for the full year 2009 however the rate of 
decrease moderated in the fourth quarter more importantly order intake for the fourth 
quarter grew by 17 per cent over the same period in 2008 in constant currency 
regionally we saw continued growth in asia particularly in china with recovery 
coming in north america at the end of the year
as customers assessed their investment priorities they cut back on legacy product 
enhancements and shifted to new technology development almost all of the decrease 
in revenue in 2009 can be attributed to the decline in legacy test solution spending 
looking forward this is expected to have less of an impact as legacy products now only 
account for 11 per cent of performance analysis revenue
spirent secured significant wins in the year as a result of new product introductions 
and selling initiatives we enabled service providers and network equipment 
manufacturers to test the interoperability and scalability of the emerging lte enhanced 
packet core in addition sales of our high density 10gbe ports were up nearly two fold 
meanwhile in asia and north america we won orders for our 40100gbe test solutions 
important sales were made throughout the year to service providers and network 
equipment manufacturers who are focused on virtualization cloud computing inside 
the data center and delivery of applications to enterprise and consumers
revenue growth in our wireless business was exceptionally strong in 2009 overall 
3gumts test solutions saw solid growth during the year the continued build out of 
enhanced wireless data networks by cdma carriers such as china telecom and verizon 
wireless drove demand for test solutions the rapid increase in sales and deployment of 
3g smartphones has increased the complexity of testing these devices for both the 
wireless network operators as well as the device manufacturers furthermore we 
became the supplier of choice for the mobile lte device test for verizon a major us 
service provider and their ecosystem of device suppliers the emphasis on creating 
“realworld” conditions while testing in a controlled environment in the laboratory 
increased demand for fader products positioning products saw reduced revenues as  
a result of lower demand due to macro economic conditions in 2009 but fundamental 
long term positive trends continue to exist
profitability
performance analysis profits increased by a reported 11 per cent excluding currency 
effects profits decreased by 5 per cent control of overheads led to a reduction of 
£127 million in constant currency terms offsetting the 9 per cent decrease in revenue 
return on sales for the year was 247 per cent compared to 235 per cent for 2008 with 
the second half year seeing return on sales increase to 282 per cent the benefits of 
improved design for manufacture supply chain efficiencies and proactive product cost 
reduction measures through advancement in technology and density offset price 
pressures to give an increase in gross margin of 06 percentage points over 2008 
product development
new product innovation technical leadership and working closely with our customers 
to bring test solutions to market at the right time to meet demand are key contributors 
to spirent’s success spirent has transformed itself into an organisation that can rapidly 
address the ever changing conditions in our target markets spirent today is more 
efficient and at the same time more agile than it has ever been industry recognition 
for innovation in our test solutions continues to demonstrate the company’s leadership 
position
we delivered a series of new products in 2009 to serve our customers spirent 
testcenter remained the leader in high speed ethernet testing through the addition of 
our high density 10gbe module as well as the industry’s highest performing 40100gbe 
solution in addition we delivered the industry’s first solution to holistically test the 
enterprise data center and enhanced the performance of our integrated application 
“new product innovation 
technical leadership 
and working closely with 
our customers to bring 
test solutions to market 
at the right time to  
meet demand are key 
contributors to spirent’s 
success” spirent communications plc
annual report 2009
16
business group 
development and 
performance 
continued
performance test platform we also released new protocols to support mobile backhaul 
and introduced our lte enhanced packet core performance test capability 
for 2010 we will continue to enhance our high speed ethernet offerings on spirent 
testcenter while we further incorporate additional data center applications and mobile 
backhaul capabilities into the platform in addition we will dramatically increase the 
performance and usability of application test solutions and support increased scalability 
and standards in our lte packet core testing platform 
wireless test solutions delivered in 2009 addressed the requirements of 3g and  
4glte testing needs for our 3g customers we enhanced our testing capabilities to 
better simulate realworld conditions inside a controlled lab environment recreation 
and playback in the lab of data captured in the live wireless network using the virtual 
drive test functionality of our faders allowed customers to do more realworld testing in 
the lab at a lower cost than ever before for the wireless network operators who are 
deploying higher speed data on cdma our upgrades have enabled them to more 
effectively test the roll out of new devices for umts customers we have expanded 
test coverage with our device library test solution that provides developers with a user 
controllable benchtop umts wireless network to test their hardware or software in 
2009 spirent also delivered its first lte device test solutions focused on radio frequency 
and data performance testing requirements
in 2010 our wireless test solutions will expand to address the ever increasing market 
requirements of wireless testing in particular new global navigation satellite systems 
such as glonass will drive the need for wireless device test solutions that combine 
this technology with existing gps capabilities the further growth of smartphones and 
other “datahungry” devices on the 3gcdma and umts networks will drive the need 
for testing high speed data solutions lte will require improved and expanded antenna 
testing by deploying techniques such as multiple input multiple output overtheair 
testing and increase the testing needs to include mobility and location based services 
the ubiquity of positioning technology is also expected to expand in 2010 as consumer 
applications utilising global satellite navigation continue to grow
we deliver testing solutions that address emerging and growing communication 
technologies the desire for anytime anywhere internet access coupled with the 
growing demand for increased bandwidth is driving the convergence of wireline and 
wireless technologies across the communications industry creating new opportunities 
for test and measurement products solutions and services
service assurance
market conditions
as expected market conditions remained challenging throughout 2009 for both the 
service assurance and field test markets in the first half of the year we saw caution 
around operational and capital spending by service providers across all segments of our 
business however in the second half year we began to see indications of increased 
demand for carrier ethernet service assurance and triple play field test solutions 
several factors are driving carrier investment in these areas which include increased 
competition the complexity in the access network and a move towards the improved 
efficiency of their field engineers 
specifically we have added new customers throughout north america and europe 
for 1g and 10g centralised test and performance solutions for the enterprise business 
services and wireless backhaul markets spirent’s nextgeneration field test unit 
techx flex has sold into major north american service providers and cable multiple 
system operators for inhome testing as service providers have begun to launch new 
advanced services such as multiroom digital video recording 
for 2010 we expect to see moderate growth in carrier ethernet service assurance 
and triple play field test solutions this growth is being driven by increased demand for 
more efficient and lower cost carrier ethernet services for business and advanced 
residential triple play offerings spirent is well positioned to take advantage of these 
new areas of spend within cable multiple system operators wireline and wireless 
service providers business review
spirent communications plc
annual report 2009
17
revenue
service assurance revenues declined by 14 per cent in constant currency yearonyear 
as expected as service providers continued to reduce spend on legacy and dsl 
solutions growth in 10gbe monitoring devices was strong and demand for monitoring 
for cable multiple system operators was robust but this did not offset legacy decline 
the second half year saw much more robust order intake which gives confidence that 
revenues will stabilise in 2010
profitability
while the service assurance business saw a decline in revenue in 2009 in constant 
currency the business was able to maintain profitability through increased efficiency 
and continued cost management
product development
the division continues to focus on the development of service assurance and field test 
solutions for nextgeneration networks in 2009 new 1gbe and 10gbe service assurance 
solutions were launched for ethernet business services and 3g4g wireless backhaul 
in addition we completed the development on several new modules for the techx 
flex field test product line providing us with a complete suite of “inhome” and 
“outside the home” test capabilities for the service provider and cable multiple system 
operator markets 
systems
      change 
 first half second half full year   at constant 
£ million 2009 2009 2009 2008 change  currency 
revenue 183 185 368 332 11 5
operating profit  21 29 50 43 16 23
return on sales  115 157 136 130  
    
the systems group comprises pg drives technology a leading supplier of control 
systems for electrically powered medical and small industrial vehicles the business 
was affected by the global recession particularly on industrial sales but less so 
on medical mobility despite changes in us government healthcare funding for 
powered wheelchairs 
at constant currency revenue was down 5 per cent and operating profit by 23 per 
cent nevertheless the exchange rate benefit was more than enough to offset the 
effects of the recession on sales and profit but as we were hedged for much of the 
year at 183£1 we were unable to take full advantage of this effect
during 2009 we introduced new products for scooters and wheelchairs and in  
spite of the recession made good progress in growing market share in the industrial 
market segment 
in 2010 we plan to introduce several significant new products which will include 
new systems for powered wheelchairs and also industrial vehicles in addition we will 
continue to take advantage of operational cost improvements through design and by 
placing more production into china which also supports our activities in the asia 
pacific region the us dollar to sterling exchange rate has moved significantly in our 
favour and this should benefit our results in 2010
corporate costs
corporate costs were £31 million in 2009 and 2008 the cost reductions achieved in 
prior years were maintained as were the reduced staff levels  spirent communications plc
annual report 2009
18
financial 
review
“the book to bill ratio which 
is a measure of the strength 
of our future revenues grew 
to 102 for the year compared 
with 98 for 2008”
group financial performance
results 
the following table shows the key performance indicators monitored by the board to 
measure performance
      change 
 first half second half full year   at constant  
 2009 2009 2009 2008 change  currency
5
 
book to bill ratio
1
 91 112 102 98  
revenue £ million 1391 1330 2721 2579 6 10
gross profit margin  652 675 663 646  
operating profit
2
 
£ million 248 318 566 509 11 8
return on sales
2
  178 239 208 197  
adjusted basic earnings 
per share
3
 pence 301 390 691 624 11 
free cash flow
4
 
£ million 271 280 551 422 31 
      
notes
1 ratio of orders booked to revenue billed
2 before sharebased payment and acquired intangible amortisation
3   adjusted basic earnings per share is based on adjusted earnings as set out in note 12 of notes to the 
consolidated financial statements
4  operating cash flow after tax net interest and net capital expenditure
5  change at constant currencies eliminating the effects of fluctuating exchange rates on the translation of 
operating results and on transactions
revenue
revenue in sterling terms was up 6 per cent compared with 2008 excluding the 
benefits of exchange rates the change was a decrease of 10 per cent which was a solid 
performance in a challenging economic environment during 2009 we have increased 
our market share in our key performance analysis division and have seen increased 
demand for our products in growing and emerging markets
spirent’s revenues are predominantly denominated in us dollars and therefore the 
lower average us dollarsterling exchange rate this year has had a marked positive 
effect on these results increasing reported revenue by £389 million compared with 
2008 there was sequential growth of 3 per cent in revenue in constant currency for 
the second half of 2009 compared with the first half as we started to see some 
recovery in the fourth quarter of 2009 
the geographic profile of revenue did not change significantly with revenue in  
us dollars down in most markets with the exception of china where revenue grew  
8 per cent
£ million   2009  2008 
europe   441 16 478 19
united states   1353 50 1291 50
asia and rest of the world   927 34 810 31
   2721 100 2579 100
    
the book to bill ratio which is a measure of the strength of our future revenues grew 
to 102 for the year compared with 98 for 2008 and in the second half it was at 112 
reflecting the stronger order intake in the fourth quarter order intake for the year 
at constant currencies was down 6 per cent compared with the prior year for 
the fourth quarter there was growth of 18 per cent compared with the fourth 
quarter of 2008
operating profit
reported operating profit was £553 million compared with £487 million in 2008 an 
increase of 14 per cent in sterling terms operating profit before sharebased payment 
and acquired intangible amortisation which is the measure of profit used by the group 
to evaluate performance improved by 11 per cent to £566 million compared with 
eric hutchinson
chief financial officer business review
spirent communications plc
annual report 2009
19
£509 million in 2008 exchange benefited this result by £97 million compared to 2008 
at constant currencies operating profit is down 8 per cent 
spirent’s ability to adapt to changing market dynamics has been key in 2009 in 
enabling profitability to be maintained and allowing the funding of innovation in 
products and solutions to be preserved in 2009 we realised annualised cost reductions 
of £113 million announced at the interim stage at a cost of £10 million which was 
expensed in the year 
we have improved our return on sales from 197 per cent in 2008 to 208 per cent in 
2009 the group’s returns are some of the best in our industry 
currency impact
as previously mentioned the weakening of sterling in the latter part of 2008 against all 
the major currencies resulted in a significant change to the average us dollarsterling 
exchange rate used to translate spirent’s results in 2009 compared with that for 2008 
the average exchange rate decreased from 185 for 2008 to 157 for 2009 this 
increased reported revenue by £329 million and operating profit by £75 million on 
translation the group has reduced its exposure to transactional currency risk in some 
of its businesses as it had hedged its full year expected us dollar exposures at the end 
of 2008 at an average rate of 176£1 transactional currency exposures resulted in an 
increase in reported revenue of £60 million and in operating profit of £22 million for 
2010 approximately half of the forecast transactional exposures have been hedged at 
an average rate of 157£1 
at an exchange rate of 160£1 and based on 2009 results revenue would be lower 
by approximately £4 million and operating profit by £1 million for each 001 change in 
the £ rate earnings per share changes by approximately 003 pence
cost of sales and operating expenses
we have seen a further improvement in gross margin during 2009 an increase of 17 
percentage points to 663 per cent and in the second half of 2009 we achieved 
675 per cent there has been an improving trend over a number of years achieved 
through cost reduction and outsourcing activities gross margin has also been positively 
affected by an increasing proportion of software revenue 
the development of new innovative test solutions is critical to the success of our 
business and product development forms a substantial amount of our overall costs we 
work closely with our customers and remain focused on their requirements and are 
investing in areas that represent their future product development expense in 2009 
increased from £453 million in 2008 to £475 million but was lower in us dollar terms 
and marginally lower as a percentage of revenue dropping to 175 per cent from 176 
per cent of sales in 2008 the majority of this spend £387 million 2008 £378 million 
is for our performance analysis division 
other operating expenses which includes sharebased payment and acquired 
intangible amortisation were higher at £777 million in 2009 compared with £726 
million in 2008 being 286 per cent and 282 per cent of sales respectively the 
absolute increase is principally a result of exchange rate translation effect on us dollar 
operating expenses of £84 million plus the losses on exchange rate hedging of £32 
million this increase has been offset by a lower expense for sharebased payment in 
2009 and by cost control
exceptional items
there were no exceptional items in 2009 in 2008 £08 million of exceptional finance 
income was reported in relation to interest received on tax refunds for prior periods 
an exceptional interest expense of £26 million was charged for interest paid on the 
agreement of prior year tax positions with the relevant tax authorities and a related 
exceptional tax credit of £256 million was also recorded
intangible amortisation
operating expense includes a charge of £09 million for the amortisation of acquired 
intangibles in 2009 compared to £07 million in 2008 there will be a comparable 
charge in 2010
return on sales
208
2008 197 spirent communications plc
annual report 2009
20
sharebased payment
the charge for sharebased payment for 2009 was just £04 
million compared to £15 million for 2008 minimal sharebased 
incentives have again been awarded in 2009 and it is expected 
that this charge will remain at a similar level in 2010
finance income and costs
the strong cash generation of the group has boosted the funds 
available for investment but with continuing low interest rates 
finance income was just £04 million for 2009 compared with 
£32 million for 2008 excluding exceptional interest referred to 
above surplus funds are held in short term bank deposits in the 
uk and us and earn market rates of interest 
finance cost of £16 million includes £11 million in respect of 
the defined benefit pension plan being the expected return on 
pension plan assets less the interest charge on the unwinding of 
the liabilities this item has reduced from £01 million of income 
in 2008 a result of reduced returns and asset values compared 
with the prior year it is expected that the charge for the 
pension plan will be approximately the same for 2010 the 
remainder of the interest charge relates to the unwind of the 
discount on leasehold provisions of £02 million 2008 £03 million 
and bank fees of £03 million 2008 £02 million
profit before tax 
reported profit before tax was £541 million compared with 
£496 million for 2008 there were no adjustments to the 
reported numbers in 2009 in 2008 there was an adjustment for 
the net exceptional interest charge of £18 million giving an 
adjusted profit before tax of £514 million
t ax
the group has reported a tax credit for 2009 of £40 million 
2008 £252 million credit this includes the benefit of £138 
million for a change in estimate in respect of the recovery of 
deferred tax assets an exceptional tax credit arising on the 
agreement of prior year tax positions benefited 2008 excluding 
the deferred tax credit and prior year tax charged of £18 million 
2008 £305 million credit including exceptional items the 
current year tax charge for the group was £80 million in 2009 
2008 £53 million this gives an effective rate of 148 per cent 
for 2009 2008 103 per cent
there is now sufficient evidence under accounting standards 
to require further recognition of deferred tax assets in 2009 in 
relation to unutilised tax losses and temporary differences at  
31 december 2009 deferred tax assets amounting to £264 
million have been recognised on the balance sheet 31 december 
2008 £122 million at 31 december 2009 there are deferred  
financial 
review continued
tax assets amounting to a tax value of £191 million which  
remain unrecognised in respect of unutilised nontrading loan 
relationship losses £175 million and temporary differences  
£16 million 31 december 2008 £372 million 
having recognised the benefit of tax losses brought forward 
the future tax charge is expected to result in an increase in the 
effective rate for 2010 it is expected that the effective tax rate 
will be in the region of 34 per cent
earnings per share
basic earnings per share for the group was 871 pence for 2009 
compared with 1013 pence for 2008 
adjusted basic earnings per share before exceptional items 
net of any related tax and prior year tax and also excluding in 
2009 the benefit of the deferred tax credit of £138 million 
referred to above was 691 pence compared with 624 pence for 
2008 this was an improvement of 11 per cent yearonyear 
weighted average ordinary share capital was 6670 million 
shares compared with 7385 million for 2008 reduced by the 
substantial share repurchases in 2008 at the year end the shares 
in issue ranking for dividend were 6722 million
financial risk management
the key objective of the group treasury department is to 
manage the financial risks of the business and to ensure that 
sufficient liquidity is available to the group all treasury activity 
operates within a formal control framework the board has 
approved treasury policies and guidelines and periodically 
reviews treasury activities additionally it is the group’s policy 
that speculative treasury transactions are expressly forbidden
spirent’s financial risk management objectives and policies 
and its exposure to risks are discussed in note 26 of notes to the 
consolidated financial statements
financing and cash flow
cash and cash equivalents increased to £1080 million at 
31 december 2009 compared with £597 million at 31 december 
2008 the group continues to be debt free and the undrawn 
£25 million threeyear working capital facility which was put in 
place in 2008 was cancelled by the company in 2009 the 
majority of the cash is held in bank deposits in the uk and us 
currency translation has decreased cash and cash equivalents 
by £22 million
operating activities generated £612 million in the year 
compared with £477 million in 2008 free cash flow is set  
out below
£ million   2009 2008
cash flow from operations    677 534
tax paid   65 57
cash flow from operating activities  612 477
net interest income   04 14
net capital expenditure   65 69
free cash flow   551 422 business review
spirent communications plc
annual report 2009
21
free cash flow was £551 million for 2009 which represents 
95 per cent of reported earnings adjusting for the onetime 
deferred tax credit of £138 million which was a noncash  
item in 2009 the conversion ratio is 124 per cent for 2008  
the conversion percentage was 86 per cent adjusting for 
exceptional items
tax payments increased in 2009 to £65 million compared 
with £57 million in 2008 the group is returning to more normal 
levels of tax payment as brought forward tax losses which had 
been available for set off against taxable profits are now 
substantially utilised
net interest received was lower at £04 million compared 
with £14 million in 2008 affected by the reduction in returns on 
bank deposits and in 2008 includes £18 million of net interest 
due on the prior year tax settlements
net capital expenditure for the group was lower at £65 
million in 2009 2008 £69 million this was well below the 
depreciation charge of £86 million 2008 £88 million with 
most manufacturing now outsourced the group’s capital 
investment requirements continue to be low
cash outflow for onmarket share repurchases amounted to 
£07 million in 2009 2008 £672 million an inflow of £24 million 
was received from the exercise of employee share incentives 
2008 £24 million
in 2009 the group settled the final dividend of 060 pence for 
the year ended 31 december 2008 and paid an interim dividend 
of 055 pence per share giving a net dividend outflow of £77 
million 2008 £37 million
finally £14 million 2008 £12 million was transferred from 
the long term cash deposit set up as a consequence of a capital 
reorganisation in 2004 as we settled lease obligations to allow 
release of funds
cash inflow for 2009 was £505 million compared with an 
outflow of £251 million for 2008
 
defined benefit pension plans
the accounting valuation of the uk defined benefit pension 
plans at the end of 2009 was based on the data from the 
triennial valuation of the plans at 1 april 2009 at 31 december 
2009 there was a surplus of £06 million in one of the plans and a 
deficit in the other of £03 million this compares with a total 
surplus for both plans of £26 million at 31 december 2008 the 
market value of the pension plans’ assets has increased in 2009 
largely due to a recovery in global markets but this was offset 
by increases in the liabilities resulting from changes to the 
assumptions used to value the liabilities 
the actuarial valuation at 1 april 2009 has not yet been fully 
finalised such a valuation involves a complete review of all the 
assumptions including longevity and funding once complete it is 
likely that there will be increases to future company 
contributions although these are unlikely to be material
the group has also reported a liability of £04 million 2008 
£06 million in respect of uk unfunded plan liabilities
essential contractual arrangements
spirent uses contract manufacturers for the manufacture of a 
substantial amount of its products the principal contract 
manufacturer is celestica corporation with which an agreement 
is in place until september 2010 the company considers that 
this arrangement is essential to its business
we will negotiate renewal of this contract in advance of 
september 2010
capital structure 
onmarket share repurchases were recommenced towards the 
end of 2009 with 06 million shares being repurchased at a cost 
of £06 million in 2008 £670 million of cash was returned to 
shareholders via onmarket share repurchases and a tender offer 
this represented 1258 million ordinary shares 
dividend
the board are recommending the payment of a final dividend for 
2009 of 066 pence per share which with the interim dividend of 
055 pence per share paid in september 2009 brings the full 
year dividend to 121 pence per share and is covered 57 times 
by adjusted earnings subject to approval by the shareholders at 
the annual general meeting the final dividend will be paid on 6 
may 2010 to ordinary shareholders on the register at 12 march 
2010 payment to adr holders will be made on 13 may 2010 spirent communications plc
annual report 2009
22
corpor ate social 
responsibilit y 
statement
corporate responsibility is integral to the way spirent conducts 
its business and we are committed to advancing our policies and 
systems across the group to ensure that we address all aspects 
of corporate social responsibility “csr” these include in 
particular our corporate practices in terms of ethical behaviour 
our employees care for the environment and community 
involvement
the board takes ultimate responsibility for csr and is 
committed to developing and implementing appropriate policies 
while adhering to a fundamental commitment to create and 
sustain long term value for shareholders 
ethics
spirent expects that all of its business is conducted in 
compliance with high ethical standards of business practice we 
apply these standards to all dealings with employees customers 
suppliers and other stakeholders during 2009 spirent’s 
employees were again clearly reminded of the standards 
expected of them when it refreshed its vision mission and 
values statements 
the group’s ethics policy which has been approved by the 
board is available on our website at wwwspirentcom our 
ethics policy has been developed to ensure that the group’s 
business is conducted in adherence with high ethical and legal 
principles and sets standards of professionalism and integrity for 
all employees and operations worldwide 
the following is a summary of the ethics policy
all employees have the right and responsibility to ensure that •	
spirent’s business is conducted with high ethical and legal 
principles
our policy is to operate within applicable laws •	
discrimination or harassment of any kind will not be tolerated •	
as a matter of policy we do not make political donations •	
no bribes shall be given or received •	
conflicts of interest must be avoided •	
we aim to be a responsible partner within our local •	
communities and
employees are encouraged and supported to report in •	
confidence any suspected wrongdoings “whistleblowing”
appropriate ethical behaviour is reviewed as part of the group’s 
internal control process
employees
spirent is its employees the group aims to find engage and  
keep the highest calibre of employees and encourages their 
contribution and development 
an environment that fosters innovation and collaboration is 
critical to the company’s success appropriate career paths and 
internal recognition programmes are developed for both technical 
and nontechnical staff such a commitment was recognised in 
2009 by fortune china magazine where spirent was found to be 
one of the 20 best companies to work for in china 
employees are provided with numerous learning and 
development opportunities to fulfill their potential for example 
our us employees enjoy a tax free tuition reimbursement 
benefit for classes taken towards collegelevel degrees such  
as a master of business administration or master of science in 
electrical engineering a wide variety of courses and training 
opportunities are also available to employees globally to enhance 
their skills as another example spirent’s north america sales 
team participated in quarterly manager development training as 
well as negotiation skills training  
these development opportunities are structured to align with 
our organisational objectives and to help employees in  
furthering their career aspirations
spirent demonstrates that it values its employees through 
several reward and recognition programmes one example is our 
president’s club which recognises our most exceptional sales 
employees on an annual basis in every geographic region 
another way we reward and recognise excellence is through our 
global recognition programme it is the intention of spirent to 
recognise and reward both the efforts and results of individual 
accomplishments by employees or managers that provide 
positive results for the organisation the programme is broken 
down into three types of recognition
spot recognition award — to provide special recognition of •	
extraordinary achievement
excellence award — to recognise performance or ideas which •	
are tied to the spirent values and result in significant savings 
or benefit
executive award — to recognise remarkable individual effort •	
at the highest level which contributes to a significant positive 
result
similarly the importance of twoway communication is 
recognised particularly as it relates to the business and its 
performance the leadership team is responsible for providing 
forums for employees to understand the business objectives and 
to ask questions a variety of tools are utilised to foster twoway 
communications including management meetings “allhands” 
employee meetings and the company’s intranet business review
spirent communications plc
annual report 2009
23
leadership and management development programmes are 
regularly reviewed and updated as the competition for talented 
employees increases and the leadership needs of our business 
grow formal performance reviews are conducted annually and 
are linked to the goals of the organisation 
the group is committed to providing equality of opportunity 
to all existing and prospective employees without unlawful 
discrimination on the basis of religion disability gender age 
marital status sexual orientation race ethnicity or any other 
protected status with regard to employees who become 
disabled the policy is to take all reasonable steps including 
retraining to ensure that they can remain in employment 
wherever practicable we encourage diversity and opportunity 
which is reinforced through the group’s ethics policy
health and safety
the chief financial officer is the director appointed by the 
board to have responsibility for the health and safety 
performance of the group no major health and safety issues 
were reported by the chief financial officer to the audit 
committee and board during the year
the health and safety risk profile of the group improved 
again in 2009 as further group manufacturing moved to an 
outsourcing model the main risks of the group continue to be 
based around final test and assembly of products and working 
environment issues such as ergonomics and repetitive strain 
injury the group continued to have very low accident rates in 
2009 and no incidents required any hospitalisation 
the group health and safety policy places responsibility for 
the management of health and safety on local management who 
are supported by local external advisers where necessary it is 
the group’s intention that each business unit should have a 
senior individual designated as being responsible for ensuring the 
business unit conforms to local statutory health and safety 
regulations as well as the group policy an annual questionnaire 
on health and safety performance is completed by all our 
business units and any issues are addressed and resolved 
independent external reviews of the company’s health and 
safety performance are conducted annually at selected business 
units regular designated health and safety awareness training 
programmes are also carried out
spirent recognises the importance that health and safety as 
with other corporate responsibilities is managed successfully 
throughout all levels of the organisation successful health and 
safety management contributes to spirent’s overall success by 
preserving and developing staff and physical resources thereby 
reducing costs and liabilities and is an expression of its corporate 
responsibility all spirent staff are provided with a written health 
and safety policy and each staff member can make a valuable 
contribution by taking reasonable care of themselves and those 
affected by their actions or omissions 
spirent is committed to continually improving its health and 
safety performance and is also committed to employee wellbeing 
by encouraging the adoption of healthier lifestyles by its staff 
members regulatory requirements and the outline of care form 
the basis upon which spirent’s commitment is achieved by 
realistic planning review and development spirent continues to 
achieve a successful health and safety management programme 
and appropriate resources are made available for this purpose 
environmental
good environmental practice and the impact that our operations 
have on the environment are of great importance to spirent the 
main aim of spirent’s environmental policy is to comply with all 
applicable environmental legislation in all jurisdictions in which 
we operate and to adopt responsible environmental practices 
the full text of our environmental policy is available on our 
website at wwwspirentcom
business units are required to comply with the group policy 
and local statutory regulations and are encouraged to set their 
own environmental targets an annual environmental 
questionnaire is completed by each business unit which highlights 
their environmental performance the group’s main 
environmental impact now largely involves the effects produced 
from offices housing employees where possible business units 
monitor energy consumption water consumption and waste 
production all business units continue to take positive steps to 
reduce energy consumption such as better space utilisation 
more efficient running of equipment and machinery and sensor 
controlled equipment environmental waste management in  
the group continues to improve with most business units 
operating waste minimisation schemes mainly focusing on 
increased recycling
the vast majority of our products continue to be 
manufactured by outside contract manufacturers and we check 
the environmental policies of these suppliers through audits and 
surveys wherever possible our products are designed and 
manufactured to take account of the recycling and disposal of 
the product at the end of its lifecycle our business units comply 
with both the waste electrical and electronic equipment 
regulations and the batteries directive new products are 
designed to meet the restriction of hazardous substances 
directive “rohs” also known as directive 200295ec even 
though spirent communications’ hardware products are 
classified as category nine monitor and control equipment and 
are therefore currently out of scope with the rohs directive all 
spirent communications’ hardware products will be in 
compliance with the rohs directive at such time they are 
brought in to scope        spirent communications plc
annual report 2009
24
corpor ate social 
responsibilit y 
statement continued
the vacant site reported on last year where historical activity 
had led to minor land and groundwater contamination is 
continuing to be monitored to confirm that remedial work 
carried out has been successful we have also been contacted by 
authorities regarding another previously owned property which 
appears to have historical land and groundwater contamination 
and discussions are ongoing
community
spirent aims to build stronger and healthier global communities 
through education charitable donations and support of non
profit agencies in the communities in which we operate working 
with established nonprofit organisations maximises the impact 
of our community building initiatives
education
the group has established links with certain publicprivate 
nonprofit educational organisations to help students develop the 
skills needed to succeed in the global economy throughout 2009 
we continued to support education by offering internships and 
work experience programmes as part of junior achievement 
wwwjaorg 30 spirent employee volunteers from our 
germantown maryland office spent a day at patterson 
elementary school in the inner city of washington dc teaching 
students aged 6 to 12 the programme enabled volunteers to 
teach students financial literacy work readiness and 
entrepreneurship volunteers served as role models providing 
both education and inspiration  
spirent also periodically provides work experience 
opportunities for local students in our paignton office  
where 15 year olds spend a week with our team visiting each 
department that is of interest to them in our beijing office we  
offered onsite internship opportunities to 13 students from top 
universities in china including university of science and 
technology beijing these internships help students develop 
professional knowledge as well as enhance their competitiveness 
in society
local community support of nonprofit agencies
we recognise the significance of our communities through our 
relationship with local nonprofit agencies our employees 
help their communities by volunteering their time to various 
programmes and donating materials and equipment to 
local causes
the group has formed lasting partnerships with several local 
nonprofit organisations to provide essential resources and 
services to those in need during the winter holiday season in 
2009 our employees in the us participated in a food drive for 
the los angeles regional food bank wwwlafightshungerorg
charitable donation policy
our businesses are encouraged to support the particular needs 
of their local community by contributing to local charities and 
participating in community initiatives support takes the form of 
employee time and skills gifts in kind and cash donations
our charitable donation policy matches employee 
contributions on a regular basis including employee donations  
to the american cancer society’s relay for life programme  
in 2009 spirent made charitable donations of £91000  
2008 £52000
spirent continues to support all of our employees and 
businesses in finding new ways of becoming involved in and 
giving back to their communities spirent communications plc
annual report 2009
25
governance
5 ian brindle 66 
anr
independent nonexecutive director 
ian brindle was appointed to the board on 22 
december 2006 and is chairman of the audit 
committee he was previously uk chairman 
of pricewaterhousecoopers and deputy 
chairman of the financial reporting review 
panel he serves as a nonexecutive director 
on the boards of 4imprint group plc and 
elementis plc
6 gerard eastman 52 
n
nonexecutive director
gerard eastman was appointed to the board 
on 22 december 2006 he is the managing 
member of caumsett capital a public equity 
investment firm focused on operating 
turnarounds until december 2009 he was a 
partner in sherborne investors and was a 
nonexecutive member of the board of 
nautilus inc he was previously a managing 
director of investment banking at citigroup 
and before that held senior positions at 
salomon brothers and sgwarburg  co 
mr eastman will retire as a director at the 
2010 agm
7 duncan lewis 58 
nr
independent nonexecutive director
duncan lewis was appointed to the board on 
1 july 2007 he is chief executive officer of 
vislink plc a technology company supplying 
secure communication systems to the 
broadcast law enforcement marine and 
energy markets until october 2008 he was 
senior adviser to the carlyle group assisting 
them in developing strategy and identifying 
investments in the telecommunications and 
media sector worldwide
8 tom maxwell 62 
an
independent nonexecutive director 
tom maxwell was appointed to the board on 
1 october 2007 until september 2007 he 
was investment director and head of the uk 
growth  income product group at martin 
currie investment management in edinburgh 
and is a nonexecutive director of foresight 
3 vct plc he is a member of the chartered 
institute of bankers in scotland and a 
member of the society of investment 
professionals  cfa institute
statements on the independence of board 
members are given in the directors’ 
statement on corporate governance on 
page 30
further biographical details of the directors 
can be found on the company’s website at 
wwwspirentcom
a audit committee
n nomination committee
r remuneration committee
board of 
directors
1 edward bramson 58 
n
chairman
edward bramson was appointed chairman of 
the board and chairman of the nomination 
committee on 22 december 2006 and served 
as executive chairman and chief executive 
officer from march 2007 to november 2008 
he is chairman and chief executive officer of 
nautilus inc where he was elected to the 
board on 31 december 2007 he was a 
member of the board of directors of 
elementis plc where he served as chairman 
from june 2005 to september 2006 and as 
nonexecutive director until april 2007 mr 
bramson was chairman of 4imprint group plc 
from october 2003 to july 2004 and a 
nonexecutive director until his resignation 
from the board in april 2005 and was 
chairman of ampex corporation until his 
resignation in february 2007 he is currently 
a partner in sherborne investors a 
turnaround investment firm mr bramson is 
resigning as chairman of the company on 4 
march 2010 and will retire as a director at 
the 2010 agm
2 bill burns 42
chief executive officer
bill burns was appointed chief executive 
officer on 6 november 2008 having 
previously led the group’s communications 
division he is responsible for overall 
leadership strategy investments 
coordination of resources and leveraging 
spirent’s breadth and depth of technology 
across all of spirent’s business units
3 eric hutchinson 54
chief financial officer
eric hutchinson was appointed finance 
director on 1 january 2000 having 
previously been responsible for all financial 
reporting and control within the group he 
is a fellow of the chartered association of 
certified accountants and a member of the 
financial reporting review panel
4 alex walker 63 
anr
senior independent nonexecutive director 
alex walker was appointed to the board on 
22 december 2006 and is the senior 
independent nonexecutive director and 
chairman of the remuneration committee 
he was chief executive of yule catto  co 
plc until 17 august 2006 and is currently a 
member of the audit remuneration and 
nomination committees of rotork plc mr 
walker will be appointed nonexecutive 
chairman of the company following mr 
bramson’s resignation from that position on 
4 march 2010
1
2
3
4
5
6
7
8 spirent communications plc
annual report 2009
26
report of the 
directors
the directors present their annual report to the shareholders 
together with the audited consolidated financial statements of the 
group and the parent company financial statements for the year 
to 31 december 2009  
business review
the purpose of the annual report is to provide information to 
the shareholders of the company 
reviews of the group’s activities during the year the position 
at the yearend and developments since that date are set out  
in the chairman’s statement chief executive officer’s review 
the directors’ statement on corporate governance and the 
business review
the business review explains financial performance key 
performance indicators the position at the yearend any post 
balance sheet events any likely future developments and a 
description of the principal risks and uncertainties facing the 
group and how these are managed
the annual report contains certain forwardlooking 
statements with respect to the operations performance and 
financial condition of the group by their nature these 
statements involve uncertainty since future events and 
circumstances can cause results to differ from those anticipated 
the forwardlooking statements reflect knowledge and 
information available at the date of preparation of this annual 
report and the company undertakes no obligation to update 
those forwardlooking statements
principal activities
the principal activities of the group are set out on page 7 of this 
annual report
results and dividends
the consolidated income statement is on page 42 profit for the 
financial year attributable to equity shareholders amounted to 
£581 million 2008 £748 million
a final dividend of 066 pence per ordinary share is 
recommended by the board for the year to 31 december 2009 
2008 060 pence for which approval will be sought from 
shareholders at the company’s 2010 annual general meeting 
“2010 agm” on 5 may 2010 to be paid on 6 may 2010 adr 
holders on 13 may 2010 to those shareholders whose names are 
on the register of members on 12 march 2010
together with the interim dividend of 055 pence per 
ordinary share 2008 050 pence which was paid to shareholders 
on 17 september 2009 this amounts to a total dividend for 2009 
of 121 pence per ordinary share 2008 110 pence
share capital and control
the company has a single class of share which is divided into 
ordinary shares of 3
1
 3 pence each each ordinary share carries 
one vote and all of the ordinary shares rank pari passu there 
are no special control rights relating to the ordinary shares
at the date of this report 6788 million ordinary shares of  
3
1
 3 pence each had been issued which are fully paid up and are 
listed on the london stock exchange the company also 
operates a level 1 american depositary receipt “adr” 
programme with each adr representing four ordinary shares 
the adrs trade on the us overthecounter market and the bank 
of new york mellon is the authorised depositary bank for the 
programme further details on share capital are set out in note 
28 to the consolidated financial statements and note 16 to the 
parent company financial statements
the rights including those relating to voting obligations and 
any restrictions on transfer relating to the company’s ordinary 
shares as well as the powers of the company’s directors are set 
out in the company’s articles of association a copy of which can 
be found on our website at wwwspirentcom or can be obtained 
from companies house or by writing to the company secretary 
the company’s articles of association may only be amended by 
a special resolution at a general meeting of shareholders the 
changes to the articles of association approved at the 2009 agm 
became effective on 1 october 2009 the notice of 2010 agm 
includes a resolution to make minor changes to the companys 
articles of association to take account of recent amendments to 
company law
the company is not aware of any agreements between 
shareholders that may result in restrictions on the transfer  
of securities or on voting rights
during the year to 31 december 2009 options and rights 
exercised pursuant to the company’s share incentive plans 
resulted in the allotment of 69 million new ordinary shares 
a further 07 million new ordinary shares have been allotted 
under the share incentive plans between the end of the  
financial year and the date of this report 
the company has established two employee benefit trusts  
in connection with the operation of the company’s share 
incentive plans the spirent employee share ownership trust 
“esot” and the spirent sharesave trust “sst” the trustees 
of both trusts have waived their right to receive dividends on 
any ordinary shares held by them except for a nominal amount 
of 001 pence other than for those ordinary shares held in the 
esot which are the beneficial property of an employee for 
further details on the employee benefit trusts see “investment 
in own ordinary shares” in note 28 to the consolidated financial 
statements and note 16 to the parent company financial 
statements trustees of both trusts do not vote their ordinary 
shares except for those ordinary shares held in the esot which 
are the beneficial property of an employeeshareholder which 
the trustees will vote in accordance with the instructions 
received from the beneficial owner governance
spirent communications plc
annual report 2009
27
the company does not have agreements with any director or 
employee that would provide compensation for loss of office or 
employment resulting from a takeover except that provisions of 
the company’s share incentive plans may cause outstanding 
unvested options and awards granted to employees under such 
plans to vest on a takeover as follows
 change of  
 control  
 provisions  effect on performance 
share incentive plan in the rules vesting condition
2005 employee    
incentive plan yes prorated still applies
spirent stock 
incentive plan no none na
significant agreements
a group company has a significant agreement with a  
contract manufacturer which contains a clause requiring the 
manufacturer’s consent to any proposed transaction which will 
or may result in a change of control of the group company  
the company considers that the agreement is essential to its 
business and intends it to remain in place until at least 
september 2010
the company is not aware of any other significant 
agreements to which it is party that take effect alter or 
terminate upon a change of control of the company following  
a takeover
return of capital
the company was authorised at the 2006 agm to repurchase up 
to 1499 per cent of its own issued ordinary shares within 
certain limits and as permitted by the company’s articles of 
association this authority has been renewed at each agm since 
2006 since the company began returning capital to shareholders 
in may 2006 a total of £1763 million has been returned through 
the repurchase of 3201 million ordinary shares
during 2009 a total of 06 million ordinary shares each with a 
nominal value of 3
1
 3 pence were repurchased for an aggregate 
consideration of £06 million and cancelled immediately following 
repurchase this represents 009 per cent of the company’s issued 
ordinary share capital at the beginning of 2009 the company has 
not repurchased any further ordinary shares between the end of 
the financial year and the date of this report
the company will seek authority to repurchase up to 999 per 
cent of its own ordinary shares at the 2010 agm to facilitate any 
further return of capital if the board concludes that it is in the 
best interests of shareholders
substantial shareholdings
at the date of this report the company had been notified of  
the following significant interests in its ordinary shares under 
the disclosure and transparency rules of the financial  
services authority
   number of   of 
   ordinary  company’s 
   sharesvoting  total voting 
   rights  rights
blackrock inc  115514742 1702
prudential plc   74053929 1091
aviva plc   49698793 732
ameriprise financial inc   38520235 567
artemis investment 
management limited   35063850 517
legal  general group plc   26423720 389
sun life assurance company
of canada uk limited   23382347 344
deutsche bank ag   21740213 320
aegon uk group of companies  20551904 303
total of significant holdings  404949733 5965
others  273881517 4035
total number of ordinary shares 
in issue  678831250 10000
board of directors
the names and brief biographical details of the directors who 
served during the year under review are shown on page 25
election and reelection of directors
the company’s articles of association contain provisions relating to 
the appointment and replacement of directors other than edward 
bramson and gerard eastman who will be retiring from the board 
at the 2010 agm no director has a letter of appointment which is 
due to expire before the 2011 agm no directors are therefore 
required to seek reelection at the 2010 agm
directors’ interests
the directors’ interests including any connected persons in the 
issued ordinary share capital of the company are set out in the 
report on directors’ remuneration on pages 33 to 40 
directors’ indemnity arrangements
the company has purchased and maintained throughout the year 
directors’ and officers’ liability insurance in respect of itself and 
its directors
in addition to the indemnity provision contained in the 
company’s articles of association the company has provided a 
deed of indemnity for the benefit of each of the directors of the 
company in respect of costs of defending claims against them 
and third party liabilities 
other than this at no time during the year did any director 
hold a material interest in any contract of significance with the 
company or any of its subsidiary undertakings except for the 
service contracts between executive directors and the company
corporate social responsibility
the group’s corporate social responsibility statement appears on 
pages 22 to 24 this statement gives details of the group’s 
policies on ethics the environment health and safety charitable 
donations and involvement in the community spirent communications plc
annual report 2009
28
charitable donations of £91000 were made in the year  
2008 £52000 this amount excludes operating units’ support 
and participation in local community activities in accordance 
with the groups ethics policy no political donations were made 
in the year 2008 nil
the group employs approximately 1450 people 2008 1500 
around the world and is proud of its history of being regarded as 
a responsible and respected employer the corporate social 
responsibility statement gives details of the group’s policies on 
employment training and development
research and development
product development and innovation are considered key 
strategies to maintain and improve the group’s competitive 
position and therefore continue to receive high priority this 
commitment is highlighted by the £475 million research and 
development spend during the year equivalent to 175 per cent 
of revenue 2008 £453 million and 176 per cent the group 
will continue to commit resources as appropriate to research 
and development
policy on payment of suppliers
group operating companies are responsible for agreeing the 
terms and conditions under which business transactions with 
their suppliers are conducted and it is group policy to comply 
with those terms and to make suppliers aware of them
at 31 december 2009 the company had an average of 59 days 
purchases outstanding in trade creditors 2008 51 days
corporate governance
the directors’ statement on corporate governance is set out on 
pages 30 to 32 the statement of directors’ responsibilities in 
respect of the financial statements appears on page 29
going concern
the group’s business activities together with the factors likely 
to affect its future development performance and position are 
set out in the business review on pages 6 to 24 the financial 
position of the group its cash flows liquidity position and 
borrowing facilities are described in the financial review on 
pages 18 to 21 in addition note 26 to the consolidated financial 
statements includes the group’s objectives policies and 
processes for managing its capital its financial risk management 
objectives details of its financial instruments and hedging 
activities and its exposures to credit risk and liquidity risk
the group has considerable financial resources together with 
long term contracts with a number of customers and suppliers 
across different geographic areas and industries as a 
consequence the directors believe that the group is well placed 
to manage its business risks successfully despite the current 
uncertain economic outlook
after making enquiries the directors have a reasonable 
expectation that the group and the company have adequate 
resources to continue in operational existence for the 
foreseeable future accordingly they continue to adopt the  
going concern basis in preparing the annual report
disclosure of information to auditors
each of the directors of the company at the date of this report 
confirms that
so far as the director is aware there is no information  •	
needed by the company’s auditors in connection with 
preparing their report of which the company’s auditors are 
unaware and
he has taken all the steps that he ought to have taken as a •	
director in order to make himself aware of any information 
needed by the company’s auditors in connection with 
preparing their report and to establish that the company’s 
auditors are aware of that information
auditors
resolutions to reappoint ernst  young llp as auditors and to 
authorise the directors to determine their remuneration will be 
proposed at the 2010 agm
annual general meeting
the 2010 agm will be held at 1030am on wednesday 5 may 2010 
at holborn gate 26 southampton buildings london wc2a 1pb 
united kingdom
by order of the board
rachel whiting
company secretary
4 march 2010
report of the 
directors continued governance
spirent communications plc
annual report 2009
29
statement of directors’ 
responsibilities in 
respect of the annual 
report and the 
financial statements
the directors are responsible for preparing the annual report 
the consolidated financial statements of the group and financial 
statements of the parent company
company law requires the directors to prepare financial 
statements for each financial year under that law they are 
required to prepare the consolidated financial statements of the 
group in accordance with international financial reporting 
standards “ifrs” as adopted by the european union “eu” and 
have elected to prepare the parent company financial 
statements in accordance with uk generally accepted 
accounting principles and applicable law
the consolidated financial statements of the group are 
required by law and ifrs to present fairly for each financial 
period the financial position and performance of the group the 
companies act 2006 provides in relation to such financial 
statements that references in the relevant part of that act to 
financial statements giving a true and fair view are references 
to their achieving a fair presentation
the parent company financial statements are required by law 
to give a true and fair view of the state of affairs of the parent 
company
in preparing each of the consolidated financial statements of 
the group and parent company financial statements the 
directors are required to
select suitable accounting policies and then apply them •	
consistently
make judgements and estimates that are reasonable and •	
prudent
state for the audited consolidated financial statements of the •	
group whether they have been prepared in accordance with 
ifrs as adopted by the eu
state for the parent company financial statements whether •	
applicable uk accounting standards have been followed 
subject to any material departures disclosed and explained in 
the parent company financial statements and
prepare the financial statements on a going concern basis •	
unless it is inappropriate to presume the group and the 
parent company will continue in operational business for the 
foreseeable future
the directors confirm that they have complied with the above 
requirements in preparing the financial statements
the directors are responsible for keeping proper accounting 
records that disclose with reasonable accuracy at any time the 
financial position of the group and the parent company and 
enable them to ensure that its financial statements comply with 
the companies act 2006 and for the group article 4 of the 
international accounting standards regulation they have 
general responsibility for taking such steps as are reasonably 
open to them to safeguard the assets of the group and to 
prevent and detect fraud and other irregularities
under applicable law and regulations the directors are also 
responsible for preparing a directors’ report a directors’ 
remuneration report and a statement on corporate governance 
that comply with the law and those regulations they are also 
responsible for the maintenance and integrity of the corporate 
and financial information included on the company’s website 
legislation in the uk governing the preparation and 
dissemination of financial statements may differ from legislation 
in other jurisdictions
this annual report complies with the disclosure and 
transparency rules “dtr” of the financial services authority 
in respect of the requirement to produce an annual financial 
report
the annual report and consolidated financial statements 
are the responsibility of and have been approved by the 
directors
each of the directors confirms that to the best of his 
knowledge
the consolidated financial statements of the group and •	
parent company financial statements prepared in 
accordance with the applicable set of accounting standards 
give a true and fair view of the assets liabilities financial 
position and the profit or loss of the company and the 
undertakings included in the consolidation taken as a whole 
and
the annual report includes a fair review of the development •	
and performance of the business and the position of the 
company and the undertakings included in the consolidation 
taken as a whole together with a description of the 
principal risks and uncertainties that they face
by order of the board
eric hutchinson
chief financial officer
4 march 2010 spirent communications plc
annual report 2009
30
directors’ statement 
on corporate 
governance
compliance
the board is committed to the highest standards of corporate 
governance set out in the combined code on corporate 
governance published by the financial reporting council in june 
2008 the “code” the board is accountable to the company’s 
shareholders for good governance and this statement together 
with the report on directors’ remuneration on pages 33 to 40 
describes how the board has applied the main principles of 
good governance contained within the code during the year 
under review it is the board’s view that the company is 
fully compliant
the board
as at 31 december 2009 the board comprised a chairman four 
independent nonexecutive directors one nonexecutive director 
not classified as independent for the purposes of the code when 
determining the composition of the board or its committees and 
two executive directors details of whom are provided on page 25 
the board operates within a framework of controls including a 
formal schedule of matters specifically reserved for its decision 
there is a clear division of responsibility at the head of the 
company the chairman edward bramson being responsible for 
running the board and the chief executive officer bill burns 
being responsible for implementing strategy
it was announced on 4 march 2010 that mr bramson would 
resign as chairman of the company on that day and that alex 
walker would be appointed nonexecutive chairman of the 
company it was also announced that edward bramson and gerard 
eastman would retire from the board at the 2010 agm
the board discharges its responsibilities by providing leadership 
of the company within a framework of prudent and effective 
controls which enables risk to be assessed and managed it sets 
the company’s strategic aims ensures that the necessary financial 
and human resources are in place for the company to meet its 
objectives and reviews management performance it also defines 
the company’s values and standards and ensures that its 
obligations to shareholders are understood and met
the independence of each director is reviewed on appointment 
and at least annually the board determined that within the 
terms of the code ian brindle duncan lewis tom maxwell and 
alex walker are each independent nonexecutive directors as 
edward bramson and gerard eastman have until september 2009 
had a connected material notifiable interest in the issued ordinary 
share capital of the company the board has concluded that they 
should not be considered independent of the company for the 
period under review details of other professional commitments of 
the chairman and nonexecutive directors are provided in their 
biographies on page 25
in october 2008 the company adopted new articles of 
association permitting the board to consider and if it sees fit to 
authorise situations where a director has an interest that conflicts 
or may possibly conflict with the interests of the company 
“situational conflicts” the board has a formal system in place 
for directors to declare situational conflicts and for these to be 
considered for authorisation by those directors who have no 
connection with the matter being considered in deciding whether 
to authorise a situational conflict the nonconflicted directors are 
required to act in the way they consider most likely to promote 
the success of the company and they may impose limits or 
conditions when giving authorisation or subsequently if they 
think this is appropriate the board considers the procedure to 
have operated effectively during the year
alex walker served as the senior independent nonexecutive 
director during the period under review the senior independent 
nonexecutive director is available to meet shareholders upon 
request if they have concerns which contact through the normal 
channels of the chairman or an executive director has failed to 
resolve or for which such contact would be inappropriate ian 
brindle will become senior independent nonexecutive director 
following mr walkers appointment as nonexecutive chairman  
of the company on 4 march 2010
it is company policy to hold at least four board meetings a 
year there were seven board meetings during 2009 the agenda 
is settled by the chairman in advance of the meeting and papers 
are circulated to board members several days ahead of the 
meeting minutes of previous meetings are circulated to all board 
members and subject to their agreement approved at the 
following board meeting
full attendance by the board is expected at meetings and in 
2009 all directors attended all seven meetings except duncan 
lewis who missed two meetings and ian brindle gerard eastman 
and alex walker who each missed one meeting due to 
unavoidable diary conflicts where the director was absent full 
documentation for the meeting was issued and briefings were 
provided as appropriate it was ensured that any comments on the 
documentation or subject matter to be considered were passed to 
the board for consideration
certain of the matters specifically reserved for the board’s 
decision have been delegated to three committees with clearly 
defined terms of reference which together with the composition 
of each committee are reviewed annually the terms of 
reference for the audit nomination and remuneration 
committees can be found on the company’s website at  
wwwspirentcom
the chairman is responsible for ensuring that the directors 
receive accurate timely and clear information they receive 
regular updates on business performance and receive 
presentations from the executive directors and other senior 
managers at board meetings under the direction of the 
chairman the company secretary ensures good and timely 
information flows between the board and its committees and 
makes sure that board procedures are complied with the 
company secretary also updates and advises the board on all 
regulatory and governance matters
there is a policy whereby the nonexecutive directors and the 
board committees may take independent professional advice at 
the company’s expense in order to fulfill their duties all directors 
also have access to the advice and services of the company 
secretary whose removal may only be effected with the approval 
of the board
board appointments and induction
the board has in place a procedure for the appointment of new 
directors to the board which complies with the code
on appointment to the board and its committees all directors 
receive an induction tailored to their individual requirements  governance
spirent communications plc
annual report 2009
31
new directors are briefed on their legal and other duties and 
obligations as directors of a uk listed company visits to different 
facilities and meetings with senior management are organised 
as appropriate to assist the new director in developing an 
understanding of how the group operates and the key issues that 
it faces
the company’s articles of association require that all directors 
seek election by shareholders at the first annual general meeting 
following their appointment and that all directors seek reelection 
at least every three years it was announced on 4 march 2010 that 
edward bramson and gerard eastman will retire at the 2010 agm 
as no other director has a letter of appointment which is due to 
expire before the 2011 agm no director is required to seek 
reelection at the 2010 agm
performance evaluation
performance evaluation of the board and its committees was 
carried out during the year by directors completing 
questionnaires and the results being collated and analysed by 
the company secretary who prepared a report for board 
discussion the board discussion concluded that the board and 
committees operated well and were effective
the chairman communicates regularly with the nonexecutive 
directors and this contact provides an ongoing opportunity to 
assess performance and to discuss the performance of the 
executive directors or any other matters the chairman has 
concluded that during the year under review the commitment and 
application of the nonexecutive directors was of a high standard 
including each having time to attend all board and appropriate 
committee meetings and to carry out other appropriate duties
the senior independent nonexecutive director met with the 
independent nonexecutive directors on 11 november 2009 in 
the absence of the chairman to assess the chairman’s 
effectiveness notwithstanding mr bramson’s role as chairman 
and chief executive officer of nautilus inc the independent 
nonexecutive directors were of the opinion that mr bramson 
gave sufficient time to his role as chairman of the company and 
was effective in that role during the year under review
board committees
audit committee
the audit committee comprises ian brindle chairman tom 
maxwell and alex walker all of whom are independent non
executive directors making the composition of the committee 
compliant with the code the code also requires that the audit 
committee includes at least one member who has recent 
significant and relevant financial experience the board 
considers that both ian brindle and tom maxwell provide such 
experience duncan lewis will be appointed to the audit 
committee following mr walkers appointment as non executive 
chairman of the company
during 2009 the audit committee held three meetings at 
which there was full attendance by committee members at 
each meeting the company’s external auditors the chief 
financial officer the group vice president finance the head  
of financial reporting and the company secretary were in 
attendance the chairman and the other directors may also 
attend the meetings in addition the committee meets with  
the companys external auditors without management being 
present the minutes of committee meetings are available to  
all directors 
the board has overall responsibility for the system of internal 
controls including risk management and has delegated certain of 
these responsibilities to the audit committee during the year the 
committee has monitored and reviewed risk management and 
internal control reviewed the interim and full year financial 
statements key accounting policies the auditors’ report on the 
interim review and yearend audit and management’s responses to 
the issues raised the internal audit programme and the external 
audit strategy and scope for 2009 were also agreed and approved 
further details of internal control and process are set out below 
regular reports on tax treasury legal and health and safety are 
presented further details of the groups ethics policy and health 
and safety performance are contained in the corporate social 
responsibility statement on pages 22 to 24 the chairman of the 
committee reports any significant findings or identified 
weaknesses to the board
the audit committee has adopted a policy in relation to the 
provision of nonaudit services by the external auditor to ensure 
that the provision of such services does not impair the external 
auditors’ independence or objectivity under this policy certain 
nonaudit services are precluded the policy is reviewed and 
financial limits for nonaudit services are set on an annual basis 
the committee considers that notwithstanding the nonaudit 
services provided during the year ernst  young’s objectivity as 
external auditors was not impaired in recommending their 
reappointment as external auditors the committee considered 
ernst  young’s performance resource quality control 
procedures policy on rotating its audit partners audit partners 
rotate every five years independence and objectivity the 
committee also considered the risk of ernst  young withdrawing 
from the audit market there are no contractual obligations that 
restrict the companys current choice of external auditor 
remuneration committee
the remuneration committee comprises alex walker 
chairman ian brindle and duncan lewis all of whom are 
independent nonexecutive directors making the composition of 
the committee compliant with the code tom maxwell will be 
appointed to and become chairman of the remuneration 
committee following mr walkers appointment as nonexecutive 
chairman of the company
further details about the remuneration committee are 
included in the report on directors’ remuneration on pages 33  
to 40
nomination committee
the nomination committee comprises edward bramson 
chairman ian brindle gerard eastman duncan lewis tom 
maxwell and alex walker and meets at least once each year 
during 2009 the nomination committee held one meeting which 
all committee members attended except duncan lewis who 
had an unavoidable diary conflict the nomination committee is 
responsible for reviewing the composition and structure of the 
board and for identifying and recommending candidates for 
executive and nonexecutive positions based on the required 
role and capabilities which have been specified for the 
appointment executive search consultants are used by the 
nomination committee to assist this process as appropriate as 
the majority of members are independent nonexecutive 
directors the composition of the committee is compliant with 
the terms of the code alex walker will become chairman of the  spirent communications plc
annual report 2009
32
nomination committee following mr bramsons resignation as 
chairman of the company
relations with shareholders  
communication with all shareholders is given a high priority 
and a number of methods are used to promote greater 
understanding and dialogue with investment audiences 
dialogue with institutional investors is conducted on a regular 
basis by the chairman the chief executive officer and the chief 
financial officer 
the company has an established cycle of communication 
based on its financial reporting calendar this includes the 
preliminary results in februarymarch annual report in march 
annual general meeting and interim management statement in 
may halfyear results in august and the interim management 
statement in november 
the chairman chief executive officer and chief financial 
officer ensure that the views expressed at meetings with 
institutional shareholders are communicated effectively to  
the board as a whole so that any issues or concerns are  
fully understood
electronic communications
the company promotes the use of electronic communication  
all stock exchange announcements and presentations to 
shareholders are made available on our website together with 
webcasts of our annual and halfyear financial results our 
website also contains up to date corporate governance 
information including terms of reference for the three board 
committees the terms and conditions of appointment of 
nonexecutive directors the company’s ethics policy and 
articles of association
at its 2008 agm the company passed a resolution allowing it 
to communicate with shareholders by means of the company’s 
website and an invitation to opt out of receiving mailings solely 
by electronic communication was sent to shareholders with the 
2009 agm documentation shareholders who have purchased 
their shares since that invitation was distributed in march 2009 
but who wish to receive company mailings electronically should 
notify the company’s registrar equiniti on 0871 384 2126 or via 
wwwshareviewcouk in line with this policy the companys 
halfyear results will in future only be available on the 
companys website at wwwspirentcom
electronic communications provide significant benefits for 
shareholders and the company in terms of timeliness of 
information reduced environmental impact and cost and the 
board would encourage investors to participate in the programme 
pensions governance
the group’s principal pension and retirement schemes are in the 
uk and the us scheme funds are held separately from those of 
the group and are administered by trustees which include 
employees and independent bodies the schemes do not lend 
money or lease any assets to the group
internal control
the board has overall responsibility for the group’s system of 
internal control the board assisted by the audit committee has 
reviewed the effectiveness of this system and this review did not 
reveal any significant issues or weaknesses the board confirms 
that this process was in place throughout the year under review 
and up to the date of approval of these financial statements the 
primary aim is to operate a system which is appropriate to the 
business and which can over time increase shareholder value 
whilst safeguarding the group’s assets the system is designed to 
manage rather than eliminate the risk of failure to achieve 
business objectives and can only provide reasonable and not 
absolute assurance against material misstatement or loss
process
day to day responsibility for effective internal control and risk 
monitoring rests with senior management at business unit level
the board and the audit committee continue to agree that 
currently there is no need for a dedicated internal control 
department responsibility for internal control rests with the 
group vice president finance and north america vice president 
finance both of these senior finance managers are independent 
of any business unit and play a key role in providing an objective 
view and continuing assessment of the effectiveness of the 
internal control systems throughout the group the group consists 
of a limited number of entities which can comfortably be covered 
by the two senior finance managers as stated above the group 
vice president finance attends all audit committee meetings to 
give an update on any internal control issues arising and any 
outstanding remedial actions
the group’s system of risk management comprises an 
integrated risk management strategy of regular selfassessment of 
all business units significant risks are regularly reviewed by the 
audit committee and by the board
management and specialists within the finance department are 
responsible for ensuring the appropriate maintenance of financial 
records and processes that ensure all financial information is 
relevant reliable in accordance with the applicable laws and 
regulations and distributed both internally and externally in a 
timely manner a review of the consolidation and financial 
statements is completed by management to ensure that the 
financial position and results of the group are appropriately 
reflected all financial information published by the group is 
subject to the approval of the audit committee
in addition to this process the following key elements are 
critical to the overall internal control environment
an organisational structure with clear operating procedures •	
defined lines of responsibility and delegated levels of 
authority
an ethics policy which has been approved by the board which •	
sets standards of professionalism and integrity for all 
employees and operations the ethics policy also includes 
“whistleblowing” procedures whereby employees may report 
in confidence suspected wrongdoings
a comprehensive strategic planning financial control and •	
budgeting system which is properly documented and regularly 
reviewed and
a disciplined acquisitions and divestments due diligence •	
process and post acquisition integration programme
directors’ statement 
on corporate 
governance continued governance
spirent communications plc
annual report 2009
33
report on directors’ 
remuneration
this report on directors’ remuneration has been prepared by 
the remuneration committee on behalf of the board for 
approval by shareholders at the annual general meeting to be 
held on 5 may 2010 2010 agm the report complies with the 
provisions of schedule 8 to the large and mediumsized 
companies and groups accounts and reports regulations 2008 
and the listing rules of the financial services authority the 
remuneration committee has adopted the principles of good 
governance relating to directors’ remuneration as set out in the 
combined code on corporate governance published in june 
2008 the “code” part a of the report which is not subject to 
audit sets out the company’s remuneration policy part b which 
has been audited provides details of the remuneration pensions 
and share incentives of the directors for the period under review
part a unaudited information
remuneration committee
the remuneration committee the committee comprises alex 
walker chairman ian brindle and duncan lewis there were no 
changes to the members of the committee during the year and 
its composition is compliant with the code in terms of 
independent nonexecutive directors tom maxwell will be 
appointed to and become chairman of the remuneration 
committee following mr walkers appointment as nonexecutive 
chairman of the company on 4 march 2010
the committee met four times during the year full 
attendance of the committee is expected at meetings and all 
members attended all meetings except duncan lewis who 
missed one meeting due to an unavoidable diary conflict the 
company secretary is secretary to the committee
the committee is responsible for determining on behalf of 
the board all elements of the remuneration of the chairman 
executive directors and senior managers reviewing 
remuneration policy and overseeing the operation of the 
company’s share incentive plans the committee’s terms of 
reference can be found on the company’s website at  
wwwspirentcom
remuneration policy
the remuneration policy set by the committee aims to 
encourage a performancebased culture which reinforces 
behaviour which will lead to the continued long term 
development of the business attract and retain high calibre 
executive directors and senior managers and align their interests 
with shareholders the aims of the policy are achieved by 
ensuring their remuneration is competitive when compared with 
companies of similar size type and complexity within the 
countries in which they are based it is structured so that a 
substantial element of their total remuneration package is 
weighted towards performancebased pay
advisers to the committee
when the committee considers it appropriate it takes advice on 
remuneration matters from
aon consulting inc — radford executive remuneration data •	
ernst  young llp — independent verification of earnings per •	
share “eps” to determine the vesting of share incentives 
they are also the company’s auditors
kepler associates limited — measurement of total •	
shareholder return “tsr” to determine the vesting of share 
incentives
linklaters llp — advice on share incentive plans they are •	
also one of the company’s general legal advisers and
pricewaterhousecoopers llp — monks’ executive •	
remuneration data and policy review
during the year the committee also consulted with the company’s 
chairman chief executive officer chief financial officer vice 
president human resources and the company secretary but not 
on matters relating directly to their own remuneration
executive directors’ remuneration
the remuneration of executive directors comprises the following 
elements
base salary benefits and pension contributions or cash •	
allowance in lieu of pension
quarterly and annual performance cash incentive and •	
long term share incentive awards •	
edward bramson acted as executive chairman from march 2007 
until the appointment of bill burns as chief executive officer on 
6 november 2008 mr bramson a partner in sherborne investors 
gp llc who until september 2009 were the company’s largest 
shareholder chose to waive his right to any remuneration for his 
role as executive chairman whilst he managed the operational 
turnaround of the group as a consequence he received no 
director’s fee salary pension contributions cash incentive or 
share incentive awards from his appointment to the board on 
22 december 2006 until 31 december 2008 following the 
separation of the chairman and chief executive roles the 
committee determined that mr bramson should receive a fee of 
£150000 per annum from 1 january 2009 for his services as 
nonexecutive chairman
base salary fees and benefits
base salaries and benefits of executive directors are determined 
by the committee and are normally reviewed annually bill 
burns’ base salary and benefits were set on his appointment on  
6 november 2008 and reviewed on 1 january 2010 when the 
committee determined that there should be no change eric 
hutchinson’s base salary and benefits were last reviewed on 1 
january 2010 and the committee determined that there should 
be no change the base salary and benefits of the executive 
directors will next be reviewed on 1 january 2011
when conducting such reviews the committee takes into 
account a range of factors including the company’s performance 
economic conditions the prevailing market rates for similar 
positions in a comparable group of companies the responsibilities  
individual performance and experience of each executive 
director and the level of salary increases awarded to employees 
throughout the group spirent communications plc
annual report 2009
34
bill burns has a service agreement with spirent 
communications inc “sci” and being a us resident receives 
a remuneration package which is in line with us employment 
practice in addition to his base salary he participates in sci’s 
medical dental and vision plans 401k pension plan a non
qualified deferred compensation plan and receives disability 
coverage benefit life insurance cover of four times base salary 
and a car allowance
the sci 401k pension plan is a defined contribution plan 
approved under section 401k of the us internal revenue code 
“us ir code” sci make matching contributions of up to 4 per 
cent of the maximum compensation permitted for these 
purposes under the us ir code which for 2009 was 245000
the sci deferred compensation plan is a nonqualified plan 
offered as a benefit to senior management in the us this plan 
allows participants to defer up to 50 per cent of their base salary 
and up to 100 per cent of any cash incentive until they reach 
retirement age or leave the group’s employment under this 
plan contributions are met solely by mr burns and sci makes no 
matching contributions
eric hutchinson has a service agreement with spirent 
communications plc and being a uk resident receives a 
remuneration package which is in line with uk employment 
practice in addition to base salary he receives private medical 
insurance life insurance cover of four times base salary and a 
car allowance during the year under review eric hutchinson 
received an annual cash allowance in lieu of pension of 20 per 
cent of base salary totalling £58970
quarterly and annual performance cash incentives
the committee regularly reviews performance incentive targets 
and performance conditions to incentivise executive directors 
to meet the short term strategic objectives of the company and 
its divisions 
during 2009 the executive directors participated in a 
performance cash incentive arrangement with two thirds of the 
incentive target being earned quarterly and one third annually 
this cash incentive arrangement was structured so that 
performance was measured against a combination of growth 
targets in the company’s eps other financial targets and 
personal objectives for 2009 the maximum cash incentive 
available for bill burns was 150 per cent of base salary and for 
eric hutchinson was 60 per cent of base salary these limits will 
also apply for 2010 the committee reviewed mr burns’ and mr 
hutchinson’s performance against the targets set and having 
exceeded the eps target and met all personal objectives the 
committee approved a total cash incentive payment for the year 
of 845000 for mr burns £538200 at an average exchange rate  
of 157£1 equivalent to 141 per cent of his base salary  
and £171500 for mr hutchinson equivalent to 58 per cent  
of base salary
long term share incentive awards
the company operates a number of share incentive plans 
currently the principal share incentive plan utilised for 
executive directors is the 2005 employee incentive plan “eip” 
which is a discretionary share plan 
executive directors are also able to participate in all 
employee share plans if offered in the country within which they 
are resident the applicable all employee plans in the uk are the 
2005 sharesave scheme and the uk employee share purchase 
plan and in the us is the us employee stock purchase plan the 
board did not make any invitations to executive directors or any 
other employees to participate in an all employee plan during 
the year under review
during 2009 historical awards of share incentives held by 
executive directors under the spirent stock incentive plan 
“ssip” 1995 executive share option scheme “esos” and the 
uk savings related share option scheme “srsos” remained 
outstanding the ssip was the principal share incentive plan 
used to deliver awards to communications group employees and 
bill burns participated in this plan in his former positions within 
the communications group the grants made to mr burns in 2005 
and 2006 under the ssip have performance conditions attached 
and further details are given below the esos and srsos were 
closed in 2005 and no grants have been made under either 
scheme since then 
further details of the company’s share incentive plans are 
provided in note 29 to the consolidated financial statements and 
note 16 to the parent company financial statements
2005 employee incentive plan
under the eip the company is able to grant options and 
sharesettled stock appreciation rights “sars” the vesting of 
which is subject to meeting an eps growth target performance 
shares may also be granted the vesting of which is subject to 
meeting a tsr performance target
any awards made to executive directors are subject to prior 
satisfactory performance of the individual and award levels vary 
in accordance with the individual’s potential to add value to the 
business over the medium to long term
in normal circumstances the maximum value of an award of 
performance shares under the eip is limited to 125 per cent of 
base salary with awards of options or sars limited to a 
maximum value of 250 per cent of base salary for combined 
awards the maximum value is limited to 250 per cent of base 
salary with one performance share being equivalent to two 
optionssars awards are valued at the closing price for a 
spirent ordinary share on the business day immediately 
preceding the date of award
all awards are tested once on or shortly following the third 
anniversary of grant any part of an award which does not vest 
will lapse and there is no retesting 
the committee considers that real eps growth is the most 
appropriate measure of the company’s performance in 
determining the vesting of sars and options granted under the 
eip the performance condition for sars and options is therefore 
based on the rate of growth in the company’s eps over a three 
year performance period excluding any increase in the retail 
prices index “rpi” details of vesting are set out in the 
following table
report on directors’ 
remuneration continued governance
spirent communications plc
annual report 2009
35
annual rate of growth in eps in  
excess of growth in rpi over the  
performance period  percentage of sarsoptions vesting 
below 6 0
6 25
above 6 and below 15 on a straight line basis 
   between 25 and 100
15 or above 100
following testing of the eps performance condition attached to 
the sars and options granted under the eip on 5 may 2006 100 
per cent vesting occurred on 5 may 2009
the committee considers that a relative tsr growth target is 
the most appropriate measure of the company’s performance in 
determining the vesting of performance shares granted under 
the eip and the performance condition for performance shares is 
therefore based on the company’s relative tsr rating against a 
comparator group of companies over a three year performance 
period as set out in the table below
tsr ranking percentage of performance shares vesting 
below median 0
between median and  on a straight line basis
upper quartile   between 30 and 100
at or above  100
upper quartile 
for awards made prior to 2009 the comparator group  
consisted of the 30 largest companies by market capitalisation 
in the ftse techmark 100 index excluding those companies 
who were also constituents of the ftse 100 index at the 
commencement of the performance period for the award made 
on 30 november 2009 three non uk listed direct competitors 
were added to the comparator group the committee considers 
the selected comparator group provides a suitable benchmark 
for the company’s tsr rating in determining the tsr for the 
company and its comparator group in respect of the award made 
on 30 november 2009 share prices are averaged over the 90 day 
period immediately prior to and at the end of the performance 
period for previous awards there was no averaging period
following testing of the relative tsr performance condition 
attached to the performance shares granted under the eip on 
5 may 2006 100 per cent vesting occurred on 5 may 2009
on 30 november 2009 the committee approved awards of 
377953 performance shares to bill burns and 151829 
performance shares to eric hutchinson 
spirent stock incentive plan
grants made to bill burns in 2005 and 2006 under the ssip 
remain outstanding and are subject to a performance condition 
as set out below which was approved by shareholders in 2004 a 
25 per cent tranche of each grant of sars vests and becomes 
exercisable subject to the attainment of a performance 
condition on each of the first second third and fourth 
anniversaries of the date of grant the performance condition is 
measured against a fixed base year determined at the date of 
grant any tranche which does not meet the performance 
condition before the fourth anniversary of the date of grant is 
subject to a final testing on that fourth anniversary the 
performance condition for this final testing is measured from the 
base year and the performance condition is increased in 
proportion to the four year performance period any tranche 
which has not vested after the fourth anniversary of the date of 
grant lapses
spirent stock incentive plan — performance condition schedule
 
 rate of growth in eps in   
 excess of growth in rpi over  percentage of sars performance 
percentage of total grant tested  the performance period  vesting   period
25  below 6 0 year 1
1st sar tranche 6 25
 between 6 and 15 on a straight line basis between 25 and 100
 15 or above 100
25  below 12 0 years 1 and 2
2nd sar tranche 12 25
 between 12 and 30 on a straight line basis between 25 and 100
 30 or above 100
25 below 18 0 years 1 2 and 3
3rd sar tranche 18 25 
 between 18 and 45 on a straight line basis between 25 and 100
 45 or above 100
25 below 24 0 years 1 2 3 and 4
4th sar tranche plus any  24 25
unvested tranches of  between 24 and 60 on a straight line basis between 25 and 100
1st 2nd and 3rd sar tranches 60 or above 100 spirent communications plc
annual report 2009
36
shareholder dilution 
the committee is mindful of the need to manage shareholder 
dilution in a responsible manner at the 2009 annual general 
meeting “2009 agm” shareholders granted the company 
authority to award share incentives over new issue shares of no 
more than half of one per cent of the then issued ordinary share 
capital under the eip and ssip this authority is due to expire at 
the 2010 agm it was also stated in the notice of 2009 agm that 
the employee share ownership trust “esot” held 08 million 
unallocated shares as a result of share incentives lapsing on 
termination of employees and that the company would utilise 
these unallocated shares before making any significant awards 
over new issue shares
between the 2009 agm and the date of this report the 
committee approved awards of share incentives over 18 million 
ordinary shares and intends to satisfy these awards by the on 
market purchase of ordinary shares by the company’s esot 
overall shareholder dilution resulting from the company’s 
share incentive plans on a rolling 10 year basis has fallen by  
24 per cent when comparing the positions at 31 december 2009 
114 per cent and 31 december 2008 138 per cent the 
overall number of share incentives outstanding has fallen by  
218 million during the year to 283 million at 31 december 2009 
2008 501 million
at the 2009 agm the company was also given authority by 
shareholders to continue to operate the ssip until the 2010 agm 
when the plan will expire during 2009 a minimal number of 
share incentives were granted under the ssip 
shareholder approval was given in 2005 to operate the eip 
until 2015 subject to further shareholder approval being 
required on the use of new issue shares and any material 
changes to the plan no material changes to the eip are 
proposed and therefore no specific shareholder approval is 
required at the 2010 agm to continue to operate this plan 
service contracts
it is the company’s policy that service contracts for the 
executive directors have no fixed term and are capable of 
termination on no more than 12 months’ notice from either the 
company or the executive director
the contract dates and notice periods for each executive 
director are as follows
   notice period notice period 
  date of  by company by director 
  contract months months
bill burns 6 november 2008 1 1
eric hutchinson 13 december 1999 12 12
both contracts contain provisions for the employer to make 
payment in lieu of notice and for removal of the director for 
poor performance or material misconduct without compensation 
in the case of eric hutchinson the company will seek to apply 
practical mitigation measures to any payment of compensation 
on termination taking into account all relevant circumstances 
in the case of bill burns mitigation provisions are contained in 
his service contract as noted above mr burns service contract is 
with sci and governed by the laws of the state of california its 
termination provisions therefore reflect us practice either the 
employer or mr burns may terminate employment upon 30 days’ 
notice and in addition to one month’s base salary or payment in 
lieu he would be entitled to accrued base salary cash incentives 
and vacation pay mr burns would also be entitled to 11 months’ 
base salary subject to a setoff for any base salary earned from 
alternative employment during the 12 month period following 
termination “severance period” and monthly cobra premium 
payments for the duration of the severance period subject to a 
setoff for health insurance provided by an alternative employer 
during the severance period
both service contracts contain appropriate provisions to 
protect the legitimate interests of the company with respect to 
preventing any terminated director from working in a business 
which competes against the company service contracts do not 
contain any compensation rights which could be increased on a 
change of control in the company
external appointments
the company recognises that its executive directors may be 
invited to become nonexecutive directors of other companies 
and that such appointments can broaden their knowledge and 
experience to the benefit of the company the director would 
then retain any related fees at the date of this report neither 
bill burns nor eric hutchinson hold any such external positions
nonexecutive directors’ fees and letters of 
appointment
the company’s remuneration policy with regard to non
executive directors is to pay fees which are in line with market 
practice fees are normally reviewed once every three years and 
having last been reviewed on 1 january 2008 will not formally be 
reviewed until 1 january 2011 it is considered that non
executive director fees are at the median level for comparable 
companies the basic annual fee for nonexecutive directors 
with effect from 1 january 2008 is £36000 the chairmen of the 
audit and remuneration committees each receive additional 
fees of £11000 and £9000 respectively
all nonexecutive directors have a letter of appointment with 
the company for a period of not more than three years subject 
to the company’s articles of association each letter provides for 
retirement every three years except edward bramson and 
gerard eastman who stated on appointment that they would 
seek reelection by shareholders on an annual basis it was 
announced on 4 march 2010 that mr bramson and mr eastman 
will retire from the board at the 2010 agm nonexecutive 
directors are not eligible to participate in cash incentive or share 
incentive arrangements and their service does not qualify for a 
pension or other benefits no element of their fee is 
performance related 
report on directors’ 
remuneration continued 0
20
40
60
80
100
120
140
160
180
200
rebased index
financial year end
dec 04 dec 05 dec 06 dec 07 dec 08 dec 09
spirent ftse 250 ftse techmark 100
1
governance
spirent communications plc
annual report 2009
37
details of individual appointments are as follows
 first appointed  current appointment 
director a director due to expire
edward bramson 22 december 2006 2010 agm
ian brindle 22 december 2006 2012 agm
gerard eastman 22 december 2006 2010 agm
duncan lewis 1 july 2007 2011 agm
tom maxwell 1 october 2007 2011 agm
alex walker 22 december 2006 2012 agm
the letters of appointment are available for inspection on 
request and will be available for inspection before and during 
the 2010 agm an example of a letter of appointment for a 
nonexecutive director is available on the companys website at 
wwwspirentcom
as outlined above edward bramson acted as executive 
chairman from march 2007 until the appointment of bill burns  
as chief executive officer on 6 november 2008 mr bramson a 
partner in sherborne investors gp llc who until september 
2009 were the company’s largest shareholder chose to waive  
his right to any remuneration for his role as executive chairman 
whilst he managed the operational turnaround of the group  
as a consequence he received no remuneration from his 
appointment to the board on 22 december 2006 until 31 
december 2008 following the separation of the chairman and 
chief executive roles the committee determined that  
mr bramson should receive a fee of £150000 per annum from  
1 january 2009 for his role as nonexecutive chairman
gerard eastman who was also a partner in sherborne 
investors waived his right to any fees from his appointment to 
the board on 22 december 2006 whilst the operational 
turnaround of the group was managed following the 
appointment of bill burns as chief executive officer the board 
determined that mr eastman should receive the basic fee of 
£36000 per annum from 1 january 2009 for his services as a 
nonexecutive director 
during 2009 messrs bramson and eastman elected to have 
their fees paid to sherborne investors 
 
total shareholder return performance
the graph below shows tsr performance ie growth in the value 
of a share or index assuming dividends and other distributions 
are reinvested for the last five financial years of spirent 
communications plc as shown against the ftse 250 index “ftse 
250” and the ftse techmark 100 index excluding those 
companies who were also constituents of the ftse 100 index at 
the commencement of the period the committee believes that 
these provide broad equity market indices against which the 
performance of the company can be fairly compared and that 
the ftse techmark 100 index provides a particularly 
representative collection of comparator companies
1 excluding ftse100 companies
5year tsr performance — spirent vs ftse techmark 100
1
 and ftse 250 spirent communications plc
annual report 2009
38
part b audited information
directors’ remuneration
individual and total remuneration for the year to 31 december 2009
     performance 
     related 
   base salary  taxable incentive cash in lieu other total total
   and fees benefits paid in cash of pension payments
1
 2009
2
 2008
2
   £000 £000 £000 £000 £000 £000 £000
executive directors
bill burns   3822 165 5382 — — 9369 3691
eric hutchinson
3
   2954 163 1715 590 — 5422 5182
       
nonexecutive directors
edward bramson
4
   1500 — — — — 1500 —
ian brindle   470 — — — — 470 470
gerard eastman
4
   360 — — — — 360 —
duncan lewis   360 — — — — 360 360
tom maxwell   360 — — — — 360 360
alex walker   450 — — — — 450 450
       
2009   10276 328 7097 590 — 18291 —
2008   5212 1362 1985 590 1364 — 10513
notes
1 other payments in 2008 relate to oneoff nontaxable relocation expenses for bill burns
2 these figures relate to the period of each director’s board membership bill burns was appointed as chief executive officer on 6 november 2008
3 eric hutchinson earned a fee of £500 in respect of his services to the board and its committees 
4 messrs bramson and eastman waived their right to any remuneration for 2008 
 
summary of directors’ remuneration
        2009 2008 
        £000 £000
total emoluments for all directors       18291 10513
gains made on the exercise of share incentives
1
      1419 1498
contributions to 401k pension plan
2
       62 66
        19772 12077
notes
1  2009 on 5 may 2009 91875 performance shares vested and were allotted to bill burns mr burns sold 36922 ordinary shares to cover the tax liability arising on the 
deemed gain of £54666 which was realised on a market price of 595 pence per ordinary share and retained the remaining 54953 ordinary shares 
on 5 may 2009 146650 performance shares vested and were allotted to eric hutchinson the shares were retained by mr hutchinson and a deemed gain of £87257 was 
realised based on a market price of 595 pence per share 
  2008 on 25 august 2008 187200 performance shares vested and were allotted to eric hutchinson the shares were retained by mr hutchinson and a deemed gain of 
£149760 was realised based on a market price of 80 pence per share 
2  a contribution of 9800 was made to the 401k pension plan relating to bill burns equivalent to £6200 at the average exchange rate for year of 157£1  
2008 9800 equivalent to £6600
report on directors’ 
remuneration continued governance
spirent communications plc
annual report 2009
39
directors’ interests in shares
the beneficial interests of the directors and their connected persons in the shares of the company are set out below
      at 31 december 2009 at 31 december 2008 
      ordinary shares
1
 ordinary shares
1
executive directors  
bill burns      54953 —
eric hutchinson      1205581 1058931
  
nonexecutive directors     
edward bramson
2
      220000 130270000
ian brindle      4525 4525
gerard eastman
2
      40000 130250000
duncan lewis      — —
tom maxwell      26955 26955
alex walker       30000  30000
notes
1 directors’ beneficial holdings do not form part of the remuneration provided by the company
2   at 31 december 2008  messrs bramson and eastman had a connected notifiable interest in the 130250000 ordinary shares held by sherborne investors which for
  statutory purposes is also deemed to be an interest of these directors edward bramson also had beneficial ownership of a further 20000 ordinary shares at  
31 december 2009 messrs bramson and eastman had beneficial ownership of 220000 and 40000 ordinary shares respectively spirent communications plc
annual report 2009
40
         market 
        exercise price on 
  at 31  lapsed exercised granted   price date of  
  december  during the during the during the at 1 january date of per share grant date first expiry 
 plan type
1
 2009 period  period period   2009  grant  pence pence exercisable date
bill burns          
 ssip 250000 — — — 250000 10 mar 05 70 70 15 nov 05 10 mar 12
 ssip 262500 — — — 262500 25 aug 05 53 53 25 aug 08 25 aug 12
 ssip 170625 — — — 170625 05 may 06 48 48 05 may 07 05 may 13
 eip — — 91875 — 91875 05 may 06 nil
2
 48 05 may 09 05 may 09
 eip 374000 — — — 374000 07 nov 08 51 51 07 nov 11 07 nov 18
 eip 374000 — — — 374000 07 nov 08 nil
2
 51 07 nov 11 07 nov 11
 eip 377953 — — 377953 — 30 nov 09 nil
2
 98 30 nov 12 30 nov 12
eric hutchinson          
 esos — 75156 — — 75156 01 apr 99 133 133 01 apr 02 01 apr 09
 srsos — 8693 — — 8693 05 oct 01 93 93 01 dec 08 01 jun 09
 esos 234000 — — — 234000 02 apr 02 134 134 02 apr 06 02 apr 12
 esos 387000 — — — 387000 02 may 02 113 113 02 may 06 02 may 12
 srsos 24721 — — — 24721 26 sep 03 38 38 01 jan 11 01 jul 11
 esos 1128000 — — — 1128000 05 aug 04 56 56 05 aug 08 05 aug 14
 eip 695300 — — — 695300 25 aug 05 53 53 25 aug 08 25 aug 15
 eip 544650 — — — 544650 05 may 06 48 48 05 may 09 05 may 16
 eip — — 146650 — 146650 05 may 06 nil
2
 48 05 may 09 05 may 09
 eip 151829 — — 151829 — 30 nov 09 nil
2
 98 30 nov 12 30 nov 12
notes
an explanation of each share plan and its operation is given in note 29 to the audited consolidated financial statements of the group and note 16 to the parent company 
financial statements
1 key to share plan
 eip — 2005 employee incentive plan
 esos — 1995 executive share option scheme
 srsos — uk savings related share option scheme
 ssip — spirent stock incentive plan
2  this relates to an award of performance shares under the eip there is no exercise price payable for a performance share upon vesting further details on performance 
shares are provided above
there has been no change in directors’ interests in ordinary shares or share incentives in the company between 31 december 2009 
and the date of this report 
the middle market price of an ordinary share at the close of business on 2 january 2009 being the first day the london stock 
exchange was open for trading in 2009 and 31 december 2009 was 3925 pence and 102 pence respectively and during that period 
ranged between a high of 102 pence and a low of 33 pence
signed on behalf of the board
alex walker
chairman of the remuneration committee
4 march 2010
report on directors’ 
remuneration continued spirent communications plc
annual report 2009
41
financial statements
independent auditors’ 
report to the members of 
spirent communications plc
we have audited the group financial statements of spirent 
communications plc for the year ended 31 december 2009 which 
comprise the consolidated income statement the consolidated 
statement of comprehensive income the consolidated balance 
sheet the consolidated cash flow statement and the 
consolidated statement of changes in equity and the related 
notes 1 to 32 the financial reporting framework that has been 
applied in their preparation is applicable law and international 
financial reporting standards “ifrss” as adopted by the 
european union
this report is made solely to the company’s members as a 
body in accordance with chapter 3 of part 16 of the companies 
act 2006 our audit work has been undertaken so that we might 
state to the company’s members those matters we are required 
to state to them in an auditor’s report and for no other purpose 
to the fullest extent permitted by law we do not accept or 
assume responsibility to anyone other than the company and the 
company’s members as a body for our audit work for this 
report or for the opinions we have formed
respective responsibilities of directors and auditors
as explained more fully in the statement of directors’ 
responsibilities set out on page 29 the directors are responsible 
for the preparation of the group financial statements and for 
being satisfied that they give a true and fair view our 
responsibility is to audit the group financial statements in 
accordance with applicable law and international standards 
on auditing uk and ireland those standards require us to 
comply with the auditing practices board’s ethical standards 
for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts 
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement whether caused by fraud or 
error this includes an assessment of whether the accounting 
policies are appropriate to the group’s circumstances and 
have been consistently applied and adequately disclosed 
the reasonableness of significant accounting estimates 
made by the directors and the overall presentation of 
the financial statements
opinion on financial statements
in our opinion the group financial statements
give a true and fair view of the state of the group’s affairs  •	
as at 31 december 2009 and of its profit for the year  
then ended
have been properly prepared in accordance with ifrss as •	
adopted by the european union and
have been prepared in accordance with the requirements of •	
the companies act 2006 and article 4 of the ias regulation
opinion on other matters prescribed by the 
companies act 2006
in our opinion
the information given in the report of the directors for the •	
financial year for which the financial statements are prepared 
is consistent with the group financial statements and
the information given in the directors’ statement on •	
corporate governance set out on pages 30 to 32 with respect 
to internal control and risk management systems in relation 
to financial reporting processes and in the report of the 
directors about share capital structures is consistent with the 
financial statements
matters on which we are required to report by 
exception
we have nothing to report in respect of the following
under the companies act 2006 we are required to report to you 
if in our opinion
certain disclosures of directors’ remuneration specified by •	
law are not made or
we have not received all the information and explanations we •	
require for our audit
under the listing rules we are required to review
the report of the directors set out on page 28 in relation to •	
going concern and
the part of the directors’ statement on corporate governance •	
on pages 30 to 32 relating to the company’s compliance with 
the nine provisions of the june 2008 combined code specified 
for our review
other matters
we have reported separately on the parent company financial 
statements of spirent communications plc for the year 
ended 31 december 2009 and on the information in the 
report on directors’ remuneration that is described as having 
been audited 
richard wilson senior statutory auditor
for and on behalf of ernst  young llp  statutory auditor
london
4 march 2010 spirent communications plc
annual report 2009
42
consolidated 
income statement 
      2009   2008 
year to 31 december     notes £ million   £ million
       before exceptional  
       exceptional items  
      total
1
 items note 6 total
revenue     3 4 2721 2579 — 2579
cost of sales      916 913 — 913
gross profit      1805 1666 — 1666
product development     4 475 453 — 453
selling and distribution      497 467 — 467
administration      280 259 — 259
operating profit     4 553 487 — 487
finance income     7 04 32 08 40
finance costs     8 16 05 26 31
profit before tax     4 5 541 514 18 496
tax     11 40 04 256 252
profit for the year attributable  to equity shareholders 
of parent company      581 510 238 748
     
earnings per share pence     12    
basic      871   1013
diluted      867   1006
     
1 there were no exceptional items in 2009
2 all activities relate to continuing operations     
     
the notes on pages 47 to 82 and page 101 form part of these financial statements      spirent communications plc
annual report 2009
43
financial statements
consolidated statement 
of comprehensive income 
        2009 2008 
year to 31 december       notes £ million £ million
profit for the year attributable  to equity shareholders of  parent company    581 748
other comprehensive income   
fair value movements on cash flow hedges      25 51 42
exchange differences on retranslation of foreign operations     108 293
actuarial losses on defined benefit pension plans     10 14 51
irrecoverable element of defined benefit pension plan surplus    10 — 14
deferred tax credit on defined benefit pension plans     11 06 03
other comprehensive income       65 217
total comprehensive income  for the year attributable to equity shareholders of parent company  516 965
   
the notes on pages 47 to 82 and page 101 form part of these financial statements    spirent communications plc
annual report 2009
44
consolidated 
balance sheet
        2009 2008 
at 31 december       notes £ million £ million
assets   
noncurrent assets   
intangible assets       14 698 776
property plant and equipment      15 147 186
trade and other receivables      19 23 25
cash on deposit       20 11 25
defined benefit pension plan surplus      10 06 26
deferred tax       22 264 122
        1149 1160
current assets   
inventories       18 175 242
trade and other receivables      19 505 624
derivative financial instruments      25 06 —
cash and cash equivalents       20 1080 597
        1766 1463
total assets        2915 2623
liabilities   
current liabilities   
trade and other payables       21 538 635
current tax        64 46
derivative financial instruments      25 01 56
provisions and other liabilities      24 38 37
        641 774
noncurrent liabilities   
trade and other payables       23 49 51
defined benefit pension plan deficit      10 07 06
provisions and other liabilities      24 33 82
        89 139
total liabilities        730 913
net assets        2185 1710
capital and reserves       28
share capital        226 224
share premium account        183 172
capital redemption reserve        106 106
capital reserve        10 14
translation reserve        118 226
cash flow hedges        04 47
retained earnings        1538 1015
total equity attributable to equity shareholders of parent company    2185 1710
   
the notes on pages 47 to 82 and page 101 form part of these financial statements   
   
signed on behalf of the board   
   
eric hutchinson   
director   
4 march 2010    spirent communications plc
annual report 2009
45
financial statements
consolidated 
cash flow statement
        2009 2008 
year to 31 december       notes £ million £ million
cash flows from operating activities   
cash flow from operations       31 677 534
tax paid        65 57
net cash inflow from operating activities      612 477
cash flows from investing activities   
interest received        04 41
transfer from long term deposit       14 12
purchase of intangible assets       02 —
purchase of property plant and equipment      64 74
proceeds from the sale of property plant and equipment     01 05
net cash used in investing activities       47 16
cash flows from financing activities   
interest paid        — 27
dividend paid        77 37
proceeds from the issue of share capital and employee share ownership trust    24 24
share repurchase        07 672
net cash used in financing activities       60 712
net increasedecrease in cash and cash equivalents      505 251
cash and cash equivalents at the beginning of the year     597 790
effect of foreign exchange rate changes       22 58
cash and cash equivalents at the end of the year     20 1080 597
   
the notes on pages 47 to 82 and page 101 form part of these financial statements    spirent communications plc
annual report 2009
46
consolidated statement 
of changes in equity    
         £ million
   share capital   cash retained  
  share premium redemption capital translation flow earnings total 
  capital account reserve reserve reserve hedges loss equity
at 1 january 2008  280 155 48 36 67 05 965 1412
total comprehensive income a — — — — 293 42 714 965
share cancellation note 28  58 — 58 — — — — —
sharebased payment note 30 — — — — — — 15 15
new shares issued note 28  02 17 — — — — — 19
employee share ownership 
 trust note 28  — — — — — — 06 06
share repurchase note 28  — — — — — — 670 670
equity dividends note 13  — — — — — — 37 37
other movements note 28  — — — 22 — — 22 —
at 1 january 2009  224 172 106 14 226 47 1015 1710
total comprehensive income b — — — — 108 51 573 516
share–based payment note 30 — — — — — — 04 04
deferred tax credit on 
share incentives note 11  — — — — — — 11 11
current tax on share 
incentives note 11  — — — — — — 03 03
new shares issued note 28  02 11 — — — — — 13
employee share ownership 
trust note 28  — — — — — — 11 11
share repurchase note 28  — — — — — — 06 06
equity dividends note 13  — — — — — — 77 77
other movements note 28  — — — 04 — — 04 —
at 31 december 2009  226 183 106 10 118 04 1538 2185
a the amount included in retained earnings for 2008 of £714 million represents profit attributable to the owners of the parent of 
£748 million less actuarial losses of £51 million plus a movement of £14 million on the irrecoverable element both in respect of 
the defined benefit pension plans net of a tax credit of £03 million       
 
 the amount included in the translation reserve of £293 million represents other comprehensive income related to the 
translation of foreign operations       
 the amount included within cash flow hedges of £42 million is in relation to movements on cash flow hedges see note 25  
     
b  the amount included in retained earnings for 2009 of £573 million represents profit attributable to the owners of the parent  
of £581 million less actuarial losses of £14 million in respect of the defined benefit pension plans net of a tax credit of 
 £06 million       
 the amount included in the translation reserve of £108 million represents other comprehensive income related to the translation 
of foreign operations       
 the amount included within cash flow hedges of £51 million is in relation to movements on cash flow hedges see note 25  
     
 the notes on pages 47 to 82 and page 101 form part of these financial statements      
  spirent communications plc
annual report 2009
47
financial statements
1 corporate information 
the group’s consolidated financial statements for the year ended 31 december 2009 were authorised for issue by the board of 
directors on 4 march 2010 spirent communications plc is a public limited company incorporated and domiciled in england and 
wales the company’s ordinary shares are traded on the london stock exchange 
as required by the european union’s “eu” ias regulation and the companies act 2006 the group has prepared its consolidated 
financial statements in accordance with international financial reporting standards “ifrs” as adopted by the eu and issued by 
the international accounting standards board 
the company has elected to prepare the company financial statements in accordance with uk accounting standards these are 
presented on pages 84 to 101 and the accounting policies in respect of the company are set out on pages 85 to 88
2 summary of significant accounting policies 
basis of preparation 
the consolidated financial statements have been prepared under the historical cost convention except unless otherwise indicated 
the group has prepared its financial statements under ifrs the significant accounting policies applied in the preparation of these 
consolidated financial statements are set out below and the accounting policies adopted are consistent with those applied in the 
consolidated financial statements for the year ended 31 december 2008
 
the following new standards amendments to standards and interpretations are mandatory for the first time in the current financial 
year and have been adopted by the group with no significant impact on its consolidated results or financial position ias 1 revised 
“presentation of financial statements” has introduced a number of terminology changes and changes to presentation and disclosure  
ifrs 8 “operating segments” requires operating segments to be identified on the basis of internal reports about components of the 
group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and assess their 
performance the standard has not required a change to the reported segments however segment profit is measured before 
sharebased payment and acquired intangible amortisation and this has required a change to the way the results have been 
presented comparative information has been restated on the same basis
international accounting standards “iasifrs”  
ias 1 revised  presentation of financial statements 
ias 23 borrowing costs 
ias 32 and ias 1 amendments to ias 32 and ias 1 — puttable financial instruments and obligations 
   arising on liquidation 
ifrs 1 and ias 27 amendments to ifrs 1 and ias 27 — cost of an investment in a subsidiary jointly 
   controlled entity or associate 
ifrs 2 amendments to ifrs 2 — vesting conditions and cancellations 
ifrs 7 amendments to ifrs 7 — improving disclosures about financial instruments 
ifrs 8 operating segments 
ifric 9 and ias 39 amendment to ifric 9 and ias 39 — embedded derivatives 
ifric 13 customer loyalty programmes 
ifric 15 agreements for the construction of real estate 
ifric 16 hedges of a net investment in a foreign operation
ifric 18 transfers of assets from customers
annual improvements 2008 
basis of consolidation 
the consolidated financial statements incorporate the financial statements of the company and its subsidiaries made up to 
31 december each year the financial statements of subsidiaries are prepared for the same reporting year as the parent company 
using consistent accounting policies 
results of subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from 
the date on which control is transferred out of the group all intra group transactions balances income and expenses are 
eliminated on consolidation 
notes to the consolidated 
financial statements spirent communications plc
annual report 2009
48
2 summary of significant accounting policies continued
goodwill 
goodwill arising on the acquisition of subsidiaries representing the excess of cost over the net fair value of the identifiable assets 
liabilities and contingent liabilities acquired is capitalised as an intangible asset goodwill is carried at cost less any accumulated 
impairment losses 
goodwill is subject to an annual review for impairment for the purpose of impairment testing goodwill is allocated to the related 
cashgenerating units monitored by management where the recoverable amount of the cashgenerating unit is less than its carrying 
amount including goodwill an impairment loss is recognised in the income statement 
the carrying amount of goodwill allocated to a cashgenerating unit an operation within a cashgenerating unit an associate or 
jointly controlled entity is included in the profit or loss on its disposal 
intangible assets 
intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses separately identifiable 
intangible assets such as patent fees licence fees trademarks and customer lists and relationships are capitalised on the balance 
sheet only when the value can be measured reliably or the intangible asset is purchased as part of the acquisition of a business 
such intangible assets are amortised over their useful economic lives on a straight line basis the carrying value of intangible assets 
is reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable 
 
product development
research expenditure is recognised in the year in which it is incurred intangible assets arising on the group’s various product 
development projects are recognised only if the recognition criteria of ias 38 “intangible assets” are met 
product development costs are expensed as incurred until the technological feasibility of the product under development has
been established technological feasibility in spirent’s circumstances occurs when a working model is completed for software 
development technological feasibility is not established until the process of developing the software is complete after technological 
feasibility is established additional costs are capitalised and amortised on a straight line basis over the estimated useful life
at 31 december 2009 no amounts have met the recognition criteria
property plant and equipment 
property plant and equipment are stated at cost less accumulated depreciation and accumulated impairment depreciation is not 
provided on freehold land depreciation is provided to write off the cost less estimated residual value of all other assets over their 
estimated useful lives on a straight line basis at rates which take into account commercial conditions at their location usual asset 
lives are as follows 
 
freehold buildings  50 years
plant and machinery  3 to 8 years
fixtures fittings and equipment  
building installations  20 years or lease period if less
fittings and equipment  3 to 8 years
motor vehicles  3 to 5 years
business systems software  4 years
the carrying values of property plant and equipment are reviewed for impairment if events or changes in circumstances indicate 
the carrying value may not be recoverable 
impairment of assets 
intangible assets with finite useful lives and property plant and equipment are tested for impairment at each reporting date where 
there is an indication that an asset may be impaired goodwill and intangible assets with an indefinite useful life are assessed at least 
annually when an impairment test is performed the recoverable amount is assessed by reference to the higher of the net present 
value of the expected cash flows value in use of the relevant cashgenerating unit or asset and the fair value less cost to sell in 
notes to the consolidated 
financial statements c on t in u e d   spirent communications plc
annual report 2009
49
financial statements
2 summary of significant accounting policies continued
assessing value in use the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects 
current market assessments of the time value of money and the risks specific to the asset where the carrying amount of an asset 
exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount impairment losses are 
recognised in the income statement in those expense categories consistent with the function of the impaired asset
where an impairment loss has been recognised against an asset it may be reversed in future periods where there has been a change 
in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised but only to the 
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation 
or amortisation had no impairment loss been recognised in prior years this does not apply for goodwill for which an impairment 
loss must not be reversed in any circumstances such a reversal is recognised in the income statement 
 
leases 
operating leases are leases where the lessor retains substantially all the risks and rewards of ownership of the asset and are not 
finance leases operating lease rentals are charged to the income statement on a straight line basis over the period of the lease 
inventories 
inventories are stated at the lower of cost and estimated net realisable value after provisions for obsolescence cost includes all 
costs in bringing each product to its present location and condition being the full manufacturing cost on a firstinfirstout basis 
including all attributable overheads based on a normal level of activity 
provisions 
provisions are recorded when the group has a present legal or constructive obligation as a result of a past event for which it is 
probable that the group will be required to settle by an outflow of resources and for which a reliable estimate of the amount of the 
obligation can be made provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate 
where the effect of the time value of money is material the amount of the provision shall be the present value of the expenditures 
expected to be required to settle the obligation 
foreign currencies 
the consolidated financial statements are presented in pounds sterling which is the company’s functional and presentation currency 
transactions in foreign currencies are initially recorded at the rates ruling at the date of the transaction monetary assets and 
liabilities denominated in foreign currencies are retranslated at the rates ruling at the balance sheet date all exchange differences 
are taken to the consolidated income statement nonmonetary assets and liabilities denominated in foreign currencies are 
measured in terms of historical costs using the exchange rate at the date of the initial transaction
the functional currencies of the group’s operations are principally us dollar sterling or euro on consolidation the assets and 
liabilities of the group’s foreign operations are translated into the group’s presentation currency at exchange rates ruling at the 
balance sheet date the results of foreign operations are translated into sterling using average rates the exchange differences 
arising on retranslation are classified as a separate component of equity the translation reserve such translation differences are 
recognised as part of the profit or loss on disposal should an operation be disposed of the group has elected to apply the exemption 
in ifrs 1 “first time adoption of international financial reporting standards” which allows the cumulative translation differences for 
all foreign operations to be deemed to be zero at the date of transition to ifrs being 1 january 2003 
financial instruments 
financial assets and liabilities are recognised on the group’s balance sheet when it becomes a party to the contractual provisions of 
the instrument
 
trade receivables 
trade receivables are noninterest bearing and are stated at original invoiced amount less an appropriate allowance for 
estimated irrecoverable amounts such allowances are based on an assessment of debtor ageing past experience or known 
customer exposures 
  spirent communications plc
annual report 2009
50
2 summary of significant accounting policies continued
cash and cash equivalents 
cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short term deposits with an original maturity 
of three months or less for the purposes of the consolidated cash flow statement cash and cash equivalents consist of cash and 
cash equivalents as defined above there are no bank overdrafts
trade payables
trade payables are noninterest bearing and are stated at the original invoiced amount 
 
equity instruments 
equity instruments are recorded at the proceeds received net of direct issue costs spirent communications plc ordinary shares 
held by the group are classified in shareholders’ equity as treasury shares and are recognised at cost and shown as a deduction from 
retained earnings consideration received for the sale of such treasury shares is also recognised in equity with any difference 
between the proceeds from sale and the original cost being taken to retained earnings 
 
derivative financial instruments and hedge accounting
the group uses forward foreign currency exchange contracts to manage exposures arising on forecast receipts and payments in 
foreign currencies relating to firm commitments or highly probable forecast transactions such derivative financial instruments are 
initially recognised at fair value on the date on which the contract is entered into and are subsequently remeasured to fair value at 
each reported balance sheet date the fair value of forward foreign currency exchange contracts is calculated by reference to 
current forward exchange rates for contracts with similar maturity profiles 
the group has designated its forward foreign currency exchange contracts as cash flow hedges changes in the fair value of 
contracts which are designated as effective are recognised directly in equity and the gain or loss on the ineffective portion of the 
hedge is recognised immediately in the income statement for derivatives that do not qualify for hedge accounting any gains or 
losses arising from changes in fair value are taken to the income statement for effective hedges that are in relation to a financial 
asset or liability amounts originally deferred are recognised in the income statement in the same period in which the hedged item 
affects profit or loss for example when a highly probable forecast sale occurs for nonfinancial assets or liabilities the gains or 
losses that have been included in equity are included in the initial measurement of the nonfinancial asset or liability at the time the 
asset or liability is recognised on the balance sheet
the group discontinues hedge accounting if the hedging instrument expires or is sold terminated or exercised the hedge no longer 
meets the criteria for hedge accounting or the group revokes the designation gains or losses arising on hedging instruments which 
are cancelled due to termination of the underlying exposure are taken to the income statement immediately 
derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and 
characteristics are not closely related to those of the host contracts 
retirement benefits
the group operates two defined benefit pension plans which are in the united kingdom all other pension plans are defined 
contribution in nature for the defined contribution plans the amount charged to the income statement is the contributions paid or 
payable during the year
for defined benefit pension plans full actuarial valuations are carried out every three years using the projected unit credit method 
and updates are performed at each balance sheet date the cost of providing benefits under these plans is determined separately 
for each plan and attributes entitlement to benefits to the current period to determine current service cost and to the current 
and prior periods to determine the present value of defined benefit obligations past service costs are recognised in the income 
statement on a straight line basis over the vesting period or immediately if the benefits have vested when a settlement eliminating 
all obligations for benefits already accrued or a curtailment reducing future obligations as a result of a material reduction in the 
plan membership or a reduction in future entitlement occurs the obligation and related plan assets are remeasured using current 
actuarial assumptions and the resultant gain or loss recognised in the income statement during the period in which the settlement or 
curtailment occurs
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
51
financial statements
2 summary of significant accounting policies continued
the interest element of the defined benefit pension plan cost represents the change in present value of plan obligations resulting 
from the passage of time and is determined by applying the discount rate to the opening present value of the benefit obligation 
taking into account material changes in the obligation during the year the expected return on plan assets is based on an assessment 
made at the beginning of the year of long term market returns on plan assets adjusted for the effect on the fair value of plan assets 
of contributions received and benefits paid during the year the difference between the expected return on plan assets and the 
interest cost is recognised in the income statement as finance costs or finance income
 
actuarial gains and losses arising from differences between actual and expected returns on plan assets experience adjustments on 
liabilities and changes in actuarial assumptions are recognised immediately in the statement of comprehensive income
 
the defined benefit pension plan asset or liability in the balance sheet comprises the total for each plan of the present value of the 
defined benefit obligation using a discount rate based on high quality corporate bonds denominated in the same currency and 
whose term is consistent with the estimated term of the obligation less any past service cost not yet recognised and less the fair 
value of plan assets out of which the obligations are to be settled directly fair value is based on market price information and in 
the case of quoted securities is the published bid price the value of a net pension benefit asset is restricted to the sum of any 
unrecognised past service costs and the present value of any amount the group expects to recover by way of refunds from the plan 
or reductions in the future contributions 
revenue recognition 
revenue is recognised when it is probable that economic benefits will flow to the group the revenue can be reliably measured and 
when the group has transferred to the buyer the significant risks and rewards of ownership in addition revenue is only recognised 
when collectability is probable 
for the sale of services revenue is recognised in accounting periods in which the service is rendered revenue from maintenance 
contracts is recognised over the period of performance on a straight line basis
revenue from product sales of hardware and software is recognised at the time of delivery and acceptance and when there are no 
significant vendor obligations remaining it is not until acceptance has occurred that the risks and rewards of ownership are 
transferred to the buyer terms of acceptance are dependent upon the specific contractual arrangement agreed with the customer
contractual arrangements are accounted for as two or more separate transactions only where the commercial substance is that the 
individual components operate independently of each other because they are capable of being provided separately from one 
another and it is possible to attribute reliable fair values to every component to the extent that a separate component comprises a 
product sale of hardware or software revenue is recognised as described above revenue is recognised on other components as the 
group fulfils its contractual obligations and to the extent that it has earned the right to consideration 
employee benefits 
when an employee has rendered services to the group during an accounting period short term benefits expected to be paid in 
exchange for those services are recognised in the same accounting period 
sharebased payment
the group operates various equitysettled sharebased compensation plans and accounts for these awards in accordance with ifrs 2 
“sharebased payment” in accordance with the transitional provisions available on firsttime adoption of ifrs the standard has 
been applied to awards granted after 7 november 2002 which were unvested at 1 january 2005
the fair value of these awards is recognised in the income statement on a straight line basis over the vesting period together with a 
corresponding change in equity the fair value is measured using a binomial model by reference to the fair value at the date the 
awards were granted and taking into account the best estimate of the number of awards expected to vest the charge is reassessed 
at each balance sheet date to reflect the expected and actual levels of vesting except where the failure to vest is a result of not 
meeting a market condition awards where vesting is conditional upon satisfying a market condition are treated as vesting 
irrespective of whether the market condition has been satisfied
the group has an employee share trust for the granting of certain share incentives to employees shares in the group held by the 
employee share trust are treated as treasury shares and presented in the balance sheet as a deduction from equity  spirent communications plc
annual report 2009
52
2 summary of significant accounting policies continued
t ax
income tax on the profit or loss for the year comprises current and deferred tax income tax is recognised in the income statement 
except to the extent that it relates to items in equity
current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at the 
balance sheet date and any adjustments to tax payable for previous years
deferred tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying 
amounts in the financial statements with the following exceptions
where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not •	
a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss 
in respect of taxable temporary differences associated with investments in subsidiaries associates and joint ventures where the •	
timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not 
reverse in the foreseeable future
a deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which the 
deductible temporary differences carried forward tax credits or tax losses can be utilised 
deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the 
related asset is realised or the liability is settled based on tax rates and laws enacted or substantively enacted at the balance  
sheet date
dividends paid
the interim dividend is included in the financial statements in the period it is approved by the directors and the final dividend in 
the period it is approved by the shareholders at an annual general meeting
critical accounting assumptions and judgements
the preparation of financial statements requires the group to make estimates and assumptions that affect items reported such 
estimates and assumptions are based on management’s best knowledge of current facts circumstances and future events actual 
results may differ possibly significantly from those estimates the areas requiring a high degree of judgement or where assumptions 
and estimates are significant to the consolidated financial statements are discussed below
goodwill impairment
the group tests annually by cashgenerating unit whether goodwill has suffered impairment and more frequently when events or 
circumstances indicate that the current carrying value may not be recoverable the recoverable amounts of cashgenerating units 
have been determined based on value in use calculations which require the use of estimates and assumptions these are described 
in note 14
defined benefit pension plans
the pension cost and the defined benefit obligation of the group’s defined benefit pension plans are based on a number of selected 
assumptions these include the discount rate inflation rate salary growth longevity and expected return on the plans’ assets 
differences arising from actual experience or future changes in assumptions will be reflected in future periods the effect of 
changing these assumptions is described in note 10
revenue recognition
for revenue recognition purposes contractual arrangements are accounted for as two or more separate transactions only where the 
commercial substance is that the individual components operate independently of each other because they are capable of being 
provided separately from one another and it is possible to attribute reliable fair values to every component to the extent that a 
separate component comprises a product sale of hardware or software revenue is recognised as described above revenue is 
recognised on other components as the group fulfils its contractual obligations and to the extent that it has earned the right to 
consideration management exercises a degree of judgement in setting the criteria used for determining when revenue which 
involves several elements should be recognised
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
53
financial statements
2 summary of significant accounting policies continued
income taxes
the group is subject to income taxes in a number of tax jurisdictions and judgement is applied in determining the worldwide 
provision for income taxes there are many transactions for which the final tax determinability is uncertain for example liabilities 
are recognised for anticipated tax audit issues based on whether additional taxes are likely to be due based on the facts and 
circumstances known at the time the financial statements are prepared where the final outcome differs from the amounts that 
were initially recorded the differences will be recorded in the future period in which the determination is made
deferred taxes
the extent to which deferred tax assets can be recognised is based on current forecasts and estimates prepared by management 
a change to these forecasts and estimates could result in a different recognition outcome
provisions
the group records a provision for vacant property based on future rentals and reduced by its expected ability to sublease the vacant 
space to a third party provisions are discounted where the effect is significant changes in the actual outcome compared with the 
expected outcome on subleasing or changes to other assumptions will be recorded in future periods
new standards and interpretations not applied
the iasb and ifric have issued the following standards and interpretations with an effective date for the group after the date of 
these financial statements
       effective for annual 
international accounting standards “iasifrs”       periods beginning on or after 
ias 24 revised related party disclosures 1 january 2011
ias 27 revised consolidated and separate financial statements 1 july 2010
ias 32 amendment to ias 32 — classification of rights issues 1 february 2010
ias 39 amendment to ias 39 — eligible hedged items 1 july 2009
ifrs 2 amendments to ifrs 2 — group cashsettled sharebased payment transactions 1 january 2010
ifrs 3 revised  business combinations  1 july 2009
ifrs 9 financial instruments classification and measurement 1 january 2013
ifric 14 amendment to ifric 14 — prepayments of a minimum funding requirement 1 january 2011
ifric 17  distributions of noncash assets to owners  1 july 2009
ifric 19 extinguishing financial liabilities with equity instruments 1 july 2010
annual improvements 2009  various
the directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the group’s 
financial statements in the period of initial application
3 revenue   
        2009 2008 
        £ million £ million
sale of goods        2265 2196
maintenance and support services       456 383
total revenue        2721 2579
4 operating segments
the group’s organisational structure is based on differences in the products and services offered by each segment 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 however where operating segments exhibit similar economic characteristics and are similar 
in nature they are aggregated into a single reportable segment 
the group’s reportable operating segments are performance analysis service assurance and systems for presentational purposes 
the group combines performance analysis and service assurance into the communications operating group its core activity the 
group evaluates segment operating profit before sharebased payment acquired intangible amortisation and exceptional items  spirent communications plc
annual report 2009
54
4 operating segments continued
although there were no exceptional operating items in 2008 or 2009 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 
corporate assets comprise cash and cash equivalents held for central treasury purposes acquired intangible assets and other 
corporate assets information on segment liabilities is not regularly provided to the group’s chief executive officer and is therefore 
not disclosed below
the principal activities of each reportable operating segment are as follows
performance analysis division of the communications group develops testing solutions for a broad range of communications •	
technologies critical to the development of nextgeneration network equipment and devices
service assurance division of the communications group provides solutions to allow service providers to diagnose troubleshoot •	
and determine how to resolve issues with networks and systems within the live network
systems group comprises pg drives technology which develops power control systems for electrical vehicles in the mobility and •	
industrial markets
         2009 
         £ million
    performance service communications    
    analysis assurance total systems corporate total
revenue      
external revenue    2018 335 2353 368 — 2721
there were no intersegment sales      
      
profit before tax      
total reportable segment profitloss   499 48 547 50 31 566
unallocated amounts      
acquired intangible amortisation        09
sharebased payment note 30        04
operating profit         553
finance income         04
finance costs         16
profit before tax         541
      
other information      
product development    387 63 450 25  — 475
expenditure on property plant and equipment note 15 57 05 62 02 — 64
depreciation note 15    75 07 82 04 — 86
intangible amortisation other   03 — 03 — — 03
segment assets    1557 28 1585 133 1197 2915
segment cash flows      
operating activities    589 66 655 66 109 612
investing activities    58 05 63 02 18 47
financing activities    — — — — 60 60
    531 61 592 64 151 505
      
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
55
financial statements
4 operating segments continued
         2008 
         £ million
    performance service communications    
    analysis assurance total systems corporate total
revenue      
external revenue    1912 335 2247 332 — 2579
there were no inter–segment sales      
      
profit before tax      
total reportable segment profitloss   449 48 497 43 31 509
unallocated amounts      
acquired intangible amortisation        07
share–based payment note 30        15
operating profit         487
finance income         40
finance costs         31
profit before tax         496
      
other information      
product development    378 52 430 23 — 453
expenditure on property plant and equipment note 15 52 18 70 04 — 74
depreciation note 15    76 07 83 04 01 88
segment assets    1679 96 1775 146 702 2623
segment cash flows      
operating activities    476 38 514 40 77 477
investing activities    47 18 65 04 53 16
financing activities    — — — — 712 712
    429 20 449 36 736 251
      
geographical information      
        2009 2008 
        £ million £ million
revenue by market      
europe        441 478
united states        1353 1291
asia pacific rest of americas africa       927 810
        2721 2579
      
europe includes united kingdom revenue of £89 million 2008 £111 million 
revenues are attributed to countries based on customer location     
       spirent communications plc
annual report 2009
56
4 operating segments continued 
        2009 2008 
        £ million £ million
noncurrent assets      
europe        34 84
united states        800 865
asia pacific rest of americas africa       11 13
        845 962
europe includes united kingdom noncurrent assets of £30 million 2008 £79 million
no one customer accounts for 10 per cent or more of total group revenue in either 2009 or 2008
      
5 profit before tax     
the following items have been charged or credited in arriving at profit before tax     
        2009 2008 
        £ million £ million
employee benefit costs note 9       1020 969
costs of inventories recognised as an expense      661 632
writedown of inventories to net realisable value note 18     11 13
amortisation of intangible assets note 14      12 07
depreciation of property plant and equipment     
owned assets note 15        86 88
loss on disposal of property plant and equipment      01 03
operating leases     
minimum lease payments        68 68
sublease income        05 05
product development costs  note 4       475 453
net foreign exchange chargecredit       35 01
     
services provided to all of the operations of the group by the auditor ernst  young llp  and its associates   
  
        2009 2008 
        £ million £ million
audit services     
statutory audit        03 03
other fees to auditors     
local statutory audits for subsidiaries       02 02
other audit related services       01 —
other services relating to tax       01 —
        04 02
        07 05
     
a description of the work of the audit committee is set out in the directors’ statement on corporate governance and includes an 
explanation of how auditor objectivity and independence is safeguarded when nonaudit services are provided by the auditors 
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
57
financial statements
6 exceptional items        
there were no exceptional items in 2009        
        
exceptional interest income and expense        
in 2008 there was exceptional interest income of £08 million and an exceptional interest expense of £26 million see notes 7 and 8 
       
exceptional tax credit        
there was an exceptional tax credit of £256 million in 2008 which was in relation to the agreement of an overseas tax position  
see note 11
7 finance income        
        2009 2008 
        £ million £ million
interest receivable        04 31
defined benefit pension plans note 10       — 01
        04 32
exceptional interest income       — 08
        04 40
        
exceptional interest income in 2008 related to interest received on prior year tax refunds during the year 
8 finance costs        
        2009 2008 
        £ million £ million
bank fees        03 02
leasehold provisions discount unwind note 24      02 03
defined benefit pension plans note 10       11 —
        16 05
exceptional interest on tax settlement       — 26
        16 31
        
an exceptional interest charge was incurred in 2008 on the agreement of prior year tax positions with the relevant tax authorities 
9 employees         
the average number of people employed by the group during the year was 
        2009 2008 
        number number
manufacturing        414 443
product development        500 532
selling and distribution        362 381
administration        173 191
        1449 1547 spirent communications plc
annual report 2009
58
9 employees continued
employee benefit costs were         
        2009 2008 
        £ million £ million
remuneration        912 857
social security costs        72 68
pension and other related costs       32 29
expense of sharebased payment note 30      04 15
        1020 969
         
please refer to the report on directors’ remuneration on pages 33 to 40 for disclosures relating to the emoluments share incentives 
and pensions of the directors
10 pensions         
defined benefit plans         
the defined benefit pension plans are in the united kingdom and comprise the spirent communications plc staff pension  life 
assurance plan “staff plan” and the spirent communications plc retirement cash  life assurance plan “cash plan” the staff 
plan is the group’s most significant plan there is in addition a united kingdom unfunded plan     
    
the assets and liabilities on the balance sheet are as follows       
        2009 2008 
        £ million £ million
assets         
uk defined benefit pension plan — staff plan      — 21
uk defined benefit pension plan — cash plan      06 05
        06 26
liabilities         
uk defined benefit pension plan — staff plan      03 —
uk unfunded plan        04 06
        07 06
         
the most recent actuarial valuations at 1 april 2009 of the plans’ assets and the present value of the defined benefit plans’ 
obligations using the projected unit credit method have been used and updated by our independent actuaries   
      
i the key financial assumptions         
the assumptions used for both plans were as follows        
        2009 2008 
         
inflation        34 30
rate of increase in pensionable salaries       39 35
rate of increase for pensions in payment pre 2001 service     37 36
rate of increase for pensions in payment post 2001 pre april 2005 service    32 29
rate of increase for pensions post april 2005 service      22 21
rate of increase in deferred pensions       34 30
rate used to discount plan liabilities       57 60
expected rate of return on plan assets weighted for both plans     56 52
         
spirent communications plc employs a building block approach in determining the long term rate of return on plans’ assets 
historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely 
accepted capital market principles the assumed long term rate of return on each class of asset is set out within this note   
   
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
59
financial statements
10 pensions continued 
the overall expected rate of return on assets is then derived by aggregating the expected return of each asset class over the actual 
asset allocation for the plans 
 
the mortality assumptions are based on standard mortality tables which allow for future mortality improvements the assumptions 
are such that a member currently aged 68 2008 aged 65 will live on average for a further 191 years 2008 217 years if they are 
male and for a further 209 years 2008 240 years if they are female for a member who retires in 2019 2008 in 2028 at age 64 
2008 age 65 the assumptions are that they will live on average for a further 236 years 2008 229 years after retirement if they 
are male and for a further 255 years 2008 250 years after retirement if they are female 
 
the approximate impact to the past service liabilities of changing these main assumptions is as follows 
 
reducing the discount rate by 01 per cent per annum this would increase past service liabilities by £20 million •	
increasing the life expectancy of a member by one year by modifying the standard mortality tables using an appropriate scaling •	
factor this would increase past service liabilities by £43 million     
there will also be an impact on the future service cost but given the small active population in these plans this is likely to  
be insignificant         
         
ii the assets and the liabilities in the plans        
      long term  long term  
      rate of return  rate of return  
      expected 2009 expected 2008 
       £ million  £ million
staff plan 
equities      85 306 80 249
government bonds      43 322 40 603
corporate bonds      51 573 57 257
insured annuities      57 29 57 38
property      90 36 70 41
cash and other      10 45 27 36
fair value of plan assets      57 1311 53 1224
present value of defined benefit pension plan obligations    1314  1201
deficitsurplus in the plan       03  23
irrecoverable element of pension plan surplus     —  02
deficitsurplus in the plan on the balance sheet     03  21
 
cash plan 
equities      85 18 80 16
government bonds      44 27 40 21
insured annuities      57 02 40 03
cash and other      10 21 27 29
fair value of plan assets      45 68 44 69
present value of defined benefit pension plan obligations    60  64
surplus in the plan       08  05
irrecoverable element of pension plan surplus     02  —
surplus in the plan on the balance sheet      06  05
         
the plans are prohibited from investing in spirent’s own financial instruments      
   
for the purposes of the following disclosures the two plans have been combined as the cash plan is immaterial to these  
financial statements          spirent communications plc
annual report 2009
60
10 pensions continued
iii analysis of the amounts chargedcredited to the income statement     
        2009 2008 
        £ million £ million
analysis of amount charged to operating costs      
current service cost        01 02
expected return on pension plans’ assets      64 76
interest on pension plans’ liabilities       75 75
finance costincome note 7 and 8       11 01
net charge to the income statement       12 01
         
iv analysis of amount recognised directly in the statement of comprehensive income 
        2009 2008 
        £ million £ million
actual return on pension plans’ assets       139 78
less expected return on pension plans’ assets      64 76
experience gainslosses on plans’ assets      75 154
experience losses arising on plans’ liabilities      25 04
changes in assumptions underlying the present value of plans’ liabilities    64 107
actuarial losses recognised directly in equity      14 51
 
the cumulative amount of actuarial gains and losses recognised since 1 january 2003 in the statement of comprehensive income is 
£131 million loss 2008 £117 million loss the directors are unable to determine how much of the pension plan deficit recognised on 
1 january 2003 and taken directly to equity of £419 million in the group is attributable to actuarial gains and losses since inception 
of those pension plans consequently the directors are unable to determine the amount of actuarial gains and losses that would 
have been recognised in the statement of comprehensive income before 1 january 2003 
 
        2009 2008 
        £ million £ million
movement in the irrecoverable element of the pension plan surplus    — 14
 
v movements in the present value of funded defined benefit obligations 
        2009 2008 
        £ million £ million
at 1 january        1265 1351
current service cost        01 02
interest cost        75 75
employee contributions        01 01
benefit payments        57 61
actuarial lossgain        89 103
present value of funded defined benefit pension plans’ obligations     1374 1265
 
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
61
financial statements
10 pensions continued
vi movements in the fair value of plans’ assets 
        2009 2008 
        £ million £ million
at 1 january        1293 1428
expected return on plans’ assets       64 76
employer contributions        03 03
employee contributions        01 01
benefit payments        57 61
actuarial gainloss        75 154
fair value of plans’ assets        1379 1293
 
vii history of experience gains and losses 
     2009 2008 2007 2006 2005 
     £ million £ million £ million £ million £ million
present value of defined benefit pension  plans’ obligations  1374 1265 1351 1582 1796
fair value of plans’ assets     1379 1293 1428 1606 1288
net surplusdeficit in plans    05 28 77 24 508
 
experience gains and losses on plans’ liabilities 
amount £ million     25 04 08 100 48
percentage of plans’ liabilities     18 03 06 63 27
experience gains and losses on plans’ assets 
amount £ million     75 154 26 05 146
percentage of plans’ assets     54 119 18 03 113
 
the above plans are funded and have full uk hm revenue  customs “hmrc” taxexempt approval certain members whose 
salaries were in excess of the hmrc statutory earnings cap had their benefits increased through unapproved unfunded arrangements 
to the level that would otherwise have applied in respect of basic salary only the group has contractually agreed to pay the 
additional retirement benefits itself and a provision is made in respect of this obligation in the balance sheet at 31 december 2009 
of £04 million 2008 £06 million this represents the actuarial value as confirmed by the group’s pension advisers of the 
unapproved benefit entitlements accrued at that date the value is assessed and reviewed on a market value basis in line with the 
main plan valuation and adjusted each year there are no experience gains or losses in the period from 2005 to 2009 on the 
unfunded plan 
 
expected contributions for these plans for 2010 are £03 million 
 
defined contribution plans 
united kingdom 
the group maintains defined contribution pension plans for employees in the united kingdom employer contributions into these 
plans for 2009 were £08 million 2008 £07 million         
united states 
the group maintains a defined contribution pension plan for employees of its united states subsidiaries this plan also known as a 
401k plan allows employees to defer a percentage of their salary for retirement the investment choices offered by the plan are a 
selection of diversified mutual funds offering a broad mix of investment return potential with varying levels of risk in aggregate the 
group contributions to the us plan totalled £20 million for 2009 2008 £17 million total assets in the defined contribution plan at 
the end of 2009 were £768 million 2008 £621 million there were no defined benefit plans in the united states in 2009 or 2008 
  spirent communications plc
annual report 2009
62
10 pensions continued
other jurisdictions 
outside the united kingdom and the united states employees are provided with pension arrangements determined in accordance 
with approved local practice and regulations these arrangements are defined contribution plans total contributions for 2009 in 
respect of these plans amounted to £03 million 2008 £02 million 
 
total contributions to defined contribution plans were £31 million 2008 £26 million 
 
directors’ pension arrangements 
the pension arrangements of the executive directors are described in detail in the report on directors’ remuneration on 
pages 33 to 40
11 tax
        2009 2008 
        £ million £ million
tax creditcharge in the income statement
current income tax
foreign tax        75 50
amounts underprovidedoverprovided in previous years
uk tax        — 34
foreign tax        18 271
prior year tax chargecredit       18 305
total current income tax        93 255
deferred tax
recognition of deferred tax assets       198 25
origination and reversal of temporary differences      65 28
total deferred tax creditcharge       133 03
tax credit in the income statement       40 252
the tax credit in the income statement is disclosed as follows
income tax charge        93 01
deferred tax creditcharge       133 03
income tax credit — exceptional       — 256
        40 252
tax relating to items charged or credited to equity
        2009 2008 
        £ million £ million
current tax credit on share incentives       03 —
deferred tax credit on share incentives       11 —
deferred tax credit on defined benefit pension plan      06 03
reconciliation of the total tax charge
the tax expense in the income statement for the year is lower than the standard rate of corporation tax in the uk of 280 per cent 
2008 lower and 285 per cent
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
63
financial statements
11 tax continued 
the differences are reconciled below
        2009 2008 
        £ million £ million
accounting profit before tax       541 496
accounting profit multiplied by the uk standard rate of corporation tax
of 280 per cent 2008 285 per cent       151 141
exceptional items not given credit       — 05
intangible assets        01 02
sharebased payment        09 04
differences in overseas rates and other adjustments      13 09
tax underprovidedoverprovided in prior years      18 305
recognition of uk deferred tax assets       91 —
recognition of us deferred tax assets       107 25
use of pension fund and other uk deductions      — 30
use of overseas tax credits and unrecognised losses      16 35
total tax credit reported in the income statement      40 252
amount overprovided in prior year
in 2008 the group released provisions of £305 million following the agreement of tax positions with various tax authorities for prior 
years of this £256 million was reported as an exceptional item
recognition of deferred tax assets
during the year the group has recognised deferred tax assets in the united kingdom of £91 million 2008 nil and in the united 
states of £107 million 2008 £25 million
of the deferred tax credit arising in 2009 £138 million is as a result of a change in estimate in respect of the recovery of tax losses 
and timing differences
12 earnings per share 
earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent company by 
the weighted average number of ordinary shares outstanding during the year 
 
diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent 
company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of 
ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares 
 
        2009 2008 
        £ million £ million
profit for the year attributable to equity shareholders of parent company    581 748
 
        2009 2008 
        number number 
        million million
weighted average number of shares in issue — basic      6670 7385
dilutive potential of employee share incentives      34 53
weighted average number of shares in issue — diluted     6704 7438
 
        2009 2008 
        pence pence
earnings per share 
basic earnings per share        871 1013
diluted earnings per share        867 1006 spirent communications plc
annual report 2009
64
12 earnings per share continued
there were no ordinary share transactions that occurred after 31 december that would have significantly changed the number of 
ordinary shares or potential ordinary shares outstanding at the end of the period if those transactions had occurred before the end 
of the reporting period in either year 
 
the group discloses adjusted earnings per share attributable to equity shareholders in order to provide a measure to enable 
periodonperiod comparisons to be made of its performance 
       2009  2008 
      £ million pence £ million pence
profit for the period attributable to  equity shareholders of parent company  581 871 748 1013
exceptional finance income note 7     —  08 
exceptional finance costs note 8     —  26 
exceptional tax credit note 11     —  256 
deferred tax assets — change in estimate note 11    138  —
prior year tax chargecredit note 11     18  49 
adjusted basic      461 691 461 624
adjusted diluted       688  620
13 dividends paid and proposed 
        2009 2008 
        £ million £ million
declared and paid in the year 
equity dividend on ordinary shares 
final dividend paid for the year ended 31 december 2008 of 060 pence 
per ordinary share 31 december 2007 nil      40 —
interim dividend 2009 055 pence per ordinary share 2008 050 pence    37 37
        77 37
 
proposed for approval at agm not recognised as a liability at 31 december 
equity dividend on ordinary shares 
final dividend 2009 066 pence per ordinary share 2008 060 pence    44 40
 
the directors are proposing a final dividend in respect of the financial year ended 31 december 2009 of 066 pence per share 
2008 060 pence which will absorb an estimated £44 million of shareholders’ funds 2008 £40 million it will be paid on 6 may 
2010 to shareholders who are on the register of members at close of business on 12 march 2010 payment will be made to adr 
holders on 13 may 2010 no liability is recorded in the financial statements in respect of this final dividend
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
65
financial statements
14 intangible assets
         £ million
        intangible  
       goodwill assets total
cost net of accumulated amortisation and impairment losses
at 1 january 2008       554 32 586
amortisation for the year       — 07 07
exchange adjustment       189 08 197
at 1 january 2009       743 33 776
amortisation for the year       — 12 12
additions       — 02 02
exchange adjustment       64 04 68
at 31 december 2009       679 19 698
at 31 december 2008
cost gross carrying amount      18849 83 18932
amortisation and accumulated impairment losses     18106 50 18156
net carrying amount       743 33 776
at 31 december 2009
cost gross carrying amount      18152 76 18228
amortisation and accumulated impairment losses     17473 57 17530
net carrying amount       679 19 698
the carrying amounts of intangible assets at 31 december by class are as follows
         £ million
      customer current 
      list technology other total
at 31 december 2009      01 10 08 19
at 31 december 2008      04 19 10 33
amortisation and impairment charges 
goodwill at 31 december 2009 acquired through business combinations is all in the cashgenerating unit performance analysis which 
is a reportable segment there has been no goodwill impairment charged in 2009 or 2008 
 
intangible assets are amortised on a straight line basis over their estimated useful lives which are on average five years and the 
charge is included within administration expenses in the income statement 
 
the remaining amortisation periods of the intangible asset balances arising in relation to customer list and current technology are 
12 years and 14 years respectively 
annual impairment test 
the recoverable amount of the performance analysis cashgenerating unit at 30 november 2009 the annual impairment testing 
date has been determined based on a value in use calculation using management’s cash flow projections over a five year period 
cash flows in subsequent years have been extrapolated using a 275 per cent growth rate 2008 over a three year period and 
250 per cent which management estimates to be the approximate average long term growth rate for the industries in which this 
unit operates the cash flows have been discounted using a pretax discount rate of 176 per cent 2008 210 per cent the 
recoverable amount of this unit calculated on a value in use basis was in excess of its carrying value and consequently no 
impairment has been recognised 
  spirent communications plc
annual report 2009
66
14 intangible assets continued
key assumptions for the annual impairment test 
the key assumptions used in the value in use calculation were 
 
 revenue growth rates •	
 gross margin •	
 operating expenses •	
 discount rate •	
 growth rate used to extrapolate cash flows beyond the five year period covered by management’s projections •	
 
projections are denominated in the same currency as the denomination of the goodwill balance to eliminate the effect of fluctuating 
exchange rates 
 
revenue growth rates used in management’s projections are based on management’s estimate of growth in the markets served 
the cash flows used in the impairment review have been approved by the board 
gross margins and operating expenses are based on historical values adjusted for the effect of revenue growth 
 
the discount rate applied to the cash flows is based on the risk free rate for ten year government bonds adjusted for a risk premium 
to reflect both the increased risk associated with investing in equities and the systematic risk of the specific cashgenerating unit 
long term growth rates are based upon management’s estimate 
 
sensitivity to changes in key assumptions 
the directors believe that no reasonable possible change in any of the key assumptions used in isolation would cause the carrying 
value of performance analysis to exceed its recoverable amount
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
67
financial statements
15 property plant and equipment    
         £ million
        fixtures  
      land and plant and fittings and  
      buildings machinery equipment total
cost net of accumulated depreciation and accumulated impairment    
at 1 january 2008      26 79 57 162
additions    
owned assets      21 35 18 74 
disposals      — 04 04 08
depreciation charge for the year     14 43 31 88
exchange adjustment      14 24 08 46 
at 1 january 2009      47 91 48 186 
additions    
owned assets      02 45 17 64
disposals      — 02 — 02
depreciation charge for the year     13 48 25 86
exchange adjustment      04 07 04 15
at 31 december 2009      32 79 36 147
at 31 december 2008    
cost      146 327 326 799
accumulated depreciation and accumulated impairment   99 236 278 613
net carrying amount      47 91 48 186
at 31 december 2009    
cost      138 313 327 778
accumulated depreciation and accumulated impairment   106 234 291 631
net carrying amount      32 79 36 147
    
none of the property plant and equipment is held under finance lease arrangements
16 capital commitments and contingent liabilities 
the group had no capital commitments at 31 december 2009 31 december 2008 £01 million 
 
the group has provided indemnities of £04 million 2008 £05 million for certain ongoing business obligations under letters of credit 
for subsidiary companies 
17 subsidiaries 
a list of the significant investments in subsidiaries including the name country of incorporation and proportion of ownership 
interest is given on page 101 of these financial statements 
18 inventories
        2009 2008 
        £ million £ million
raw materials        82 117
work in progress        09 15
finished goods        84 110
        175 242
an expense of £11 million 2008 £13 million has been recognised in the period for inventory writedowns there are no reversals of 
prior period inventory writedowns 2008 nil
no inventories are carried at fair value less costs to sell 2008 nil  spirent communications plc
annual report 2009
68
19 trade and other receivables 
        2009 2008 
        £ million £ million
noncurrent assets 
other receivables        18 22
 prepayments accrued income and deferred costs      05 03
        23 25
current assets 
trade receivables        419 522
other receivables        20 24
prepayments accrued income and deferred costs      66 78
        505 624
        528 649
the trade receivables are stated net of provisions for doubtful debts the movement in the provision was as follows  
        2009 2008 
        £ million £ million
at 1 january        19 18
charge for the year        01 05
released in the year        01 06
amounts written off        05 —
exchange adjustment        01 02
at 31 december        13 19
 
the directors consider that the carrying amount of trade and other receivables approximates to their fair value 
 
the group has no significant concentration of credit risk attributable to its trade receivables as the exposure is spread over a large 
number of customers 
20 cash and cash equivalents 
        2009 2008 
        £ million £ million
cash at bank and in hand        413 274
short term bank deposits        667 323
        1080 597
 
cash at bank and in hand earns interest at floating interest rates of this balance £166 million 2008 nil is callable at notice 
of between 7 and 35 days 
short term bank deposits are made for varying periods of between one day and three months 2008 one day and one week 
depending on the cash requirements of the group and earn interest at the short term deposit rates appropriate for the term of the 
deposit and currency  
 
for the purposes of the cash flow statement cash and cash equivalents comprise the above amounts  
        2009 2008 
        £ million £ million
noncurrent 
cash on deposit        11 25
 
at 31 december 2009 £11 million 2008 £25 million is held in a blocked trust account and is available for use by the company as 
creditors who were outstanding at the date of the cancellation of the share premium and capital redemption reserve being 24 
november 2004 are settled see note 28
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
69
financial statements
21 trade and other payables — current     
        2009 2008 
        £ million £ million
trade payables        117 137
payments received on account       08 23
other taxes and social security costs       18 17
accruals and deferred income       395 458
        538 635
     
trade payables are noninterest bearing and are normally settled on 60 day terms other payables are noninterest bearing    
   
the directors consider that the carrying amount of trade payables approximates to their fair value    
22 deferred tax    
the movements in the deferred tax assetsliabilities are as follows    
         £ million
      temporary  uk pension  
      differences tax losses plans total
at 1 january 2008      105 08 08 105
recognised in the year note 11     08 33 — 25
charged in the year note 11      23 05 — 28
deferred tax on uk pension plan note 11     — — 03 03
exchange adjustment      15 02 — 17
at 1 january 2009      89 38 05 122
recognised in the year note 11     110 88 — 198
charged in the year note 11      60 05 — 65
deferred tax on defined benefit pension plan note 11    — — 06 06
deferred tax on share incentives recognised in equity note 11   11 — — 11
exchange adjustment      08 — — 08
at 31 december 2009      142 121 01 264
a deferred tax asset of £264 million has been recognised at 31 december 2009 2008 £122 million £127 million is in the united 
kingdom 2008 £61 million and £137 million is in the united states 2008 £61 million 
the deferred tax asset includes £33 million in respect of the tax deduction which may be available on the future exercise of 
share incentives 2008 nil of which £11 million has been recognised in equity    
     
the deferred tax liability arising on the united kingdom pension plan surplus in 2008 has been offset as permitted by ias 12 “income 
taxes” movements in deferred tax in relation to the pension plan have been charged to the statement of comprehensive income in 
2009 and 2008     
all deferred tax assets on temporary differences arising principally in the united kingdom and united states have been recognised 
at 31 december 2009 apart from £16 million in canada in 2008 £291 million of temporary differences were not recognised as there 
was insufficient evidence under ias 12 to recognise a deferred tax asset in respect of these temporary differences 
 
the group has tax losses arising in the united kingdom of £622 million 2008 £918 million that are available for offset against 
suitable future taxable profits a deferred tax asset has not been recognised in respect of these losses as their future recovery is 
uncertain united kingdom tax losses can be carried forward indefinitely in total deferred tax assets amounting to £191 million 
2008 £372 million have not been recognised spirent communications plc
annual report 2009
70
23 trade and other payables — noncurrent
        2009 2008 
        £ million £ million
other payables        10 13
accruals and deferred income       39 38
        49 51
24 provisions and other liabilities       
         £ million
       restructuring   
       and other lease  
       provisions provisions total
at 1 january 2009       09 110 119
discount unwind note 8       — 02 02
utilised in the year       — 43 43
exchange adjustment       01 06 07
at 31 december 2009       08 63 71
provisions have been analysed as follows       
        2009 2008 
        £ million £ million
current        38 37
noncurrent        33 82
        71 119
       
the lease provisions are for the continuing obligations under leases in respect of properties which have been vacated by the group 
where material lease obligations are discounted the group expects these provisions to be utilised over the next seven years 
restructuring and other provisions at 31 december 2009 and 2008 are mainly in relation to environmental provisions on property 
disposed of
25 derivative financial instruments         
the derivative financial instruments are forward foreign currency exchange contracts      
   
the group uses forward foreign currency exchange contracts in the management of transactional exchange rate exposures these 
contracts are designated where possible as hedging instruments 
 
at 31 december 2009 and 2008 the group held various forward foreign currency exchange contracts in respect of the forward sale 
of us dollars against sterling and at 31 december 2009 for the purchase of euro against sterling on trading transactions  
         
        2009 2008 
        £ million £ million
sale of us dollars against sterling at an average rate of 157 2008 176    173 265
purchase of euro against sterling at an average rate of 111     14 —
         
these contracts have been designated as cash flow hedges at 31 december 2009 and 31 december 2008    
     
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
71
financial statements
25 derivative financial instruments continued
the fair value of the derivative financial instruments at 31 december is as follows     
       2009  2008 
       £ million  £ million
      assets liabilities assets liabilities
currency derivatives — expected to be realised in less than one year      
designated as a cash flow hedge     06 01 — 56
         
the movements included within other comprehensive income in respect of cash flow hedges are as follows  
        2009 2008 
        £ million £ million
gainslosses arising during the year       05 56
less reclassification adjustments for losses included in profit or loss    46 14
fair value movements on cash flow hedges      51 42
         
gains and losses on cash flow hedges recycled into the income statement from equity are charged or credited to administration costs
26 financial instruments and financial risk management 
the main purpose of the group’s financial instruments other than trade receivables trade payables and provisions is to fund the 
group’s liquidity requirements 
 
all the group’s financial assets and liabilities are categorised as loans and receivables with the exception of the derivative financial 
instruments which are measured at fair value these are shown in the following table 
 
       2009  2008 
       £ million  £ million
       derivative  derivative 
      loans and financial loans and financial 
      receivables at instruments receivables at instruments 
      amortised cost at fair value amortised cost at fair value
noncurrent cash on deposit note 20     11 — 25 —
noncurrent other receivables note 19     18 — 22 —
cash and cash equivalents note 20     1080 — 597 —
current trade and other receivables note 19    439 — 546 —
currency derivatives that qualify for hedge accounting note 25   — 06 — —
financial assets      1548 06 1190 —
 
noncurrent other payables note 23     10 — 13 —
current trade and other payables note 21    135 — 154 —
provisions note 24      71 — 119 —
currency derivatives that qualify for hedge accounting note 25   — 01 — 56
financial liabilities      216 01 286 56
 
the group enters into derivative transactions forward foreign currency exchange contracts for the management of the group’s 
foreign currency exposures when deemed appropriate 
 
the key objective of the group treasury department is to manage the financial risks of the business and to ensure that sufficient 
liquidity is available to the group all treasury activity operates within a formal control framework the board has approved treasury 
policies and guidelines and periodically reviews treasury activities additionally it is the group’s policy that speculative treasury 
transactions are expressly forbidden 
  spirent communications plc
annual report 2009
72
26 financial instruments and financial risk management continued
a market risk 
the main types of market risk that affect the group are interest rate risk and exchange rate risk 
 
interest rate risk 
the group has no external debt and has limited exposure to interest rate risk 
the group’s excess funds are principally held in the united kingdom and the united states and invested in short term bank deposits 
it therefore has some exposure to interest rate risk arising on changes in sterling and us dollar interest rates  
 
cash and cash equivalents long term cash on deposit and forward foreign currency exchange contracts are the group’s 
financial instruments which are exposed to interest rate risk 
 
short term bank deposits all mature within three months forward foreign currency exchange contracts all mature within one 
year the financial instruments bear the following interest rates 
      effective  effective  
      interest  interest  
      rate 2009 rate 2008 
       £ million  £ million
fixed rate 
fixed deposits      042 667 126 323
forward foreign currency exchange contracts net     05  56
       672  267
floating rate 
cash at bank and in hand       413  274
 
interest rates on financial instruments classified as fixed rate are fixed until the maturity of the instrument all fixed rate deposits 
mature within three months 2008 one week after which date they will be exposed to floating rates of interest 
 
in addition £11 million 2008 £25 million was held in a blocked trust account and was earning interest of 061 per cent at 
31 december 2009 2008 175 per cent the maturity of the deposit is three months 2008 less than one month at maturity the 
interest rate will be reset this cash must be retained in the blocked trust account in accordance with the terms of the undertakings 
made at the time of the cancellation of the share premium account and capital redemption reserve the “cancellation” in 2004 
the funds must remain in this account until creditors which existed at the date of the cancellation have been repaid and therefore 
the maturity of this account is uncertain 
 
interest receivable for the year was £04 million note 7 2008 £31 million and is under the effective interest method 
 
the other financial instruments of the group that are not included in the above table are noninterest bearing and are therefore not 
subject to interest rate risk 
 
a movement of 50 basis points in interest rates based on levels of investment at 31 december 2009 would increase or reduce 
interest income and equity by £05 million 
 
exchange rate risk 
currency exposures arise from trading transactions undertaken by the group in foreign currencies and on the translation of the 
operating results and net assets of overseas subsidiaries 
 
the group presents its consolidated financial statements in sterling but has significant operations in the united states and its results 
can therefore be substantially affected on translation by movements in the us dollar to sterling exchange rate the group does not 
enter into instruments to hedge the translation exposure of the operating results or net assets of its overseas subsidiaries since these 
are accounting and not cash exposures during the year sterling has strengthened against the us dollar the group does not have 
any net investment hedges in place 
 
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
73
financial statements
26 financial instruments and financial risk management continued
the group is not exposed to significant transactional foreign currency risk at 31 december 2009 nor at 31 december 2008 because 
the majority of its businesses do not enter into nonfunctional currency transactions where such  transactions do occur the group 
enters into forward foreign currency exchange contracts as appropriate 
 
group treasury by means of forward foreign currency exchange contracts carries out the transaction hedging activity in relation to 
normal trading activity at 31 december 2009 the group has hedged some of its 2010 us dollar forecast trading exposures at an 
average exchange rate of 157 us dollars to sterling 31 december 2008 at an average exchange rate of 176 at 31 december 2009 
the group has also hedged some of its euro purchases at an average rate of 111 
 
b credit risk 
investment counterparties are subject to preapproval by the board and as such short term deposits are limited to banks with 
a rating of standard  poor’s a or moody’s a there are preapproved limits set for each bank to avoid any concentrations of 
credit risk 
 
the maximum credit exposure at the balance sheet date under financial instruments in relation to cash and bank deposits is equal 
to the carrying value of £1091 million 2008 £622 million 
 
trade receivables which generally have 30 to 90 day terms are carried at original invoice amount less an allowance for 
uncollectable amounts where appropriate trade receivable exposures are managed in the business units where they arise 
allowance is made for bad and doubtful debts based on management’s assessment of the risk taking into account ageing profile 
experience and circumstance 
 
the group has no significant concentration of credit risk attributable to its trade receivables as the exposure is spread over a 
large number of customers with no one customer accounting for more than 10 per cent of total group revenue the maximum 
credit exposure at the balance sheet date in relation to trade receivables is equal to the carrying value of £419 million 
2008 £522 million 
 
the composition of trade receivables at 31 december is as follows 
        2009 2008 
        £ million £ million
neither impaired nor past due       273 295
past due but not impaired 
less than 30 days overdue       97 147
30 to 60 days        20 38
over 60 days        29 42
trade receivables        419 522
 
the group closely monitors amounts due from customers and performs activities such as credit checks and review of payment 
history and has put in place appropriate credit approval limits based on these procedures management assessed the quality of those 
receivables that are past due but not impaired as low risk 
 
the movement on the receivables provision during the year is given in note 19 the value of impaired trade receivables is £13 million 
2008 £19 million 
  spirent communications plc
annual report 2009
74
26 financial instruments and financial risk management continued
c liquidity risk 
the group’s objective is to ensure that there are sufficient sources of funding to meet projected requirements its operations are 
financed through cash and cash equivalents held centrally and cash generated from operations 
 
at 31 december 2009 the group had cash and cash equivalents of £1080 million 2008 £597 million all of which matures within 
three months 2008 one week 
 
during 2009 the group generated £612 million of cash from operating activities 2008 £477 million and considers that with current 
cash resources no debt and positive cash flow from its operating activities it has adequate resources available to it to remain in 
operational existence for the forseeable future 
 
the group has entered into forward foreign currency exchange contracts all of which mature within one year the gross settlement 
amounts of these contracts are as follows 
        2009 2008 
        £ million £ million
sale of us dollars against sterling       173 265
purchase of euro against sterling       14 —
gross settlement amounts        187 265
 
the group is debt free and does not have loans payable financial liabilities other than derivative financial liabilities are trade and 
other payables the majority of which are all due to be settled within one year and provisions note 24 
 
the group does not have any other material financial contractual commitments 
 
d fair value of financial instruments 
the carrying value of all financial assets and liabilities is a reasonable approximation of fair value 
 
derivative financial instruments are stated at fair value 
the fair value of currency derivatives is determined by reference to current forward exchange rates for contracts with similar 
maturity profiles and is therefore determined to be a level 2 financial instrument as its value is based on observable market inputs 
 
e capital management 
the primary objective of the group’s capital management is to support its business and maximise shareholder value the group’s 
capital is its total shareholders’ funds 
 
the group manages its capital structure and makes adjustments to it in the light of changes in economic conditions during 2008 and 
2009 the company has been operating an onmarket share repurchase programme in 2009 the company repurchased 06 million of 
its ordinary shares at a cost of £06 million in 2008 the company repurchased 729 million of its ordinary shares at a cost of 
£422 million in 2008 the company also undertook a tender offer for the purchase of ordinary shares in the company which resulted 
in a further 529 million ordinary shares being repurchased at a cost of £248 million
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
75
financial statements
27 operating lease commitments
at 31 december the group had outstanding commitments for future minimum lease payments under noncancellable operating 
leases which fall due as follows
        2009 2008 
        £ million £ million
within one year        68 81
in the second to fifth years        134 178
over five years        06 16
        208 275
the group leases certain land and buildings under noncancellable operating lease agreements with a variety of terms the group 
also leases certain plant and equipment under noncancellable operating lease agreements total future sublease payments 
receivable relating to the above leases amounts to £13 million 2008 £12 million of which £06 million 2008 £05 million will be 
recognised within one year and the balance in the second to fifth year
28 equity
a authorised and issued share capital
authorised
        2009 2008 
        £ million £ million
1250 million 2008 1250 million ordinary shares of 3
1
 3 pence each    417 417
issued and fully paid
        number of  
        ordinary shares  
        million £ million
at 1 january 2008        8408 280
allotted pursuant to share incentives exercised      52 02
cancelled during the year        1742 58
at 1 january 2009        6718 224
allotted pursuant to share incentives exercised      69 02
cancelled during the year        06 —
at 31 december 2009
1
        6781 226
note
1  during 2009 under the programme of returning capital to shareholders the company repurchased 06 million 2008 729 million ordinary shares onmarket in 2008  
the company also repurchased 529 million ordinary shares by way of a tender offer all ordinary shares repurchased during the year were cancelled 
in accordance with the rules of the following share plans share incentives were exercised during the year which resulted in new 
ordinary shares being allotted by the company or existing ordinary shares being transferred from either the spirent employee 
share ownership trust “esot” or spirent sharesave trust “sst” as follows
        number of consideration 
        ordinary shares received 
        million £ million
2005 employee incentive plan       05 —
spirent stock incentive plan       78 22
1995 executive share option scheme       03 01
all employee share plans
1         
03 01
        89 24
note
1  the all employee share plans are the uk savings related share option scheme the 2005 sharesave scheme the us employee stock purchase plan the global all 
employee share purchase plan and the uk employee share purchase plan see note 29 spirent communications plc
annual report 2009
76
28 equity continued
during the year 03 million ordinary shares were transferred from the sst to satisfy options exercised under the uk all employee 
share schemes 2008 03 million and 17 million ordinary shares were transferred from the esot to satisfy options exercised under 
the spirent stock incentive plan 2008 07 million
there has been no material increase in the issued ordinary share capital whether by exercise of share incentives or
otherwise between 31 december 2009 and 4 march 2010 the date on which these financial statements have been signed
b equity and reserves
the nature and purpose of each reserve within equity is as follows
i share premium account this reserve records the consideration premium for shares issued at a value that exceeds their nominal 
value
ii capital redemption reserve this reserve arises in relation to share capital cancellation
iii capital reserve this reserve arises in relation to share option plans in acquired companies
iv  translation reserve this reserve is used to record exchange differences arising from the translation of the financial statements of 
foreign subsidiaries and
v  cash flow hedges this reserve records movements in the fair value of effective forward foreign currency exchange contracts 
designated as hedging instruments
investment in own ordinary shares
at 31 december 2009 an amount of £1755 million 2008 £1760 million has cumulatively been deducted from retained earnings in 
relation to the cost of investment in own ordinary shares
at 31 december 2009 the esot held 54 million ordinary shares 2008 71 million ordinary shares to satisfy awards under various 
share incentive plans of this number 01 million ordinary shares were unconditionally vested at 31 december 2009 2008 02 million 
ordinary shares at 31 december 2009 the sst held 06 million ordinary shares 2008 09 million ordinary shares to satisfy awards 
made to uk based employees under an all employee share scheme the market value of own ordinary shares held in trust being in 
total 60 million ordinary shares 2008 80 million ordinary shares at 31 december 2009 was £61 million 2008 £29 million
cancellation of share premium and capital redemption reserves
on 24 november 2004 spirent communications plc was granted an order of the high court for the approval of the cancellation of 
the share premium account and capital redemption reserve the “cancellation” which stood at that date at £7027 million and 
£07 million respectively
the cancellation created a reserve in the financial statements of the company which was applied to eliminate the deficit in 
distributable reserves the balance of this reserve created after the deficit in distributable reserves had been eliminated was 
transferred to a special nondistributable reserve during 2006 the company transferred funds equal to the aggregate amount due to 
any creditors of spirent communications plc who were creditors on 24 november 2004 and who still remained creditors to a 
blocked trust account placing these funds in a blocked trust account in accordance with the undertakings made at the time of the 
cancellation allowed the special reserve to be released to distributable reserves
capital redemption reserve
during 2009 the company cancelled 06 million ordinary shares 2008 1742 million ordinary shares that had been the subject of the 
onmarket share repurchase programme and in 2008 the tender offer and transferred £20333 2008 £58 million to the capital 
redemption reserve
capital reserve
in 2009 the reserve has been reduced by £04 million 2008 £22 million in relation to share incentives which have been
cancelled or have lapsed
share repurchase
during 2009 the company repurchased 06 million ordinary shares onmarket at a cost of £06 million 2008 729 million at a cost of 
£422 million in addition in 2008 the company undertook a tender offer whereby it repurchased 529 million ordinary shares at a 
cost of £248 million all ordinary shares repurchased have been subsequently cancelled
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
77
financial statements
29 employee share plans
movements in share incentives over a two year period ending on 31 december 2009 are shown below    
      
  2005  spirent  1995     
  employee  stock  executive    uk 
  incentive  incentive  share option  acquisition  sharesave 
  plan
1
  plan
2
  scheme  plans
3
  schemes
4
  weighted  weighted  weighted  weighted  weighted 
 number  average number average number average number average number average 
 of share exercise of share exercise of share exercise of share exercise of share exercise 
 incentives price incentives price incentives price incentives price incentives price 
 million pence million pence million pence million pence million pence
incentives outstanding          
at 31 december 2007 29 36 561 72 52 121 21 115 08 39
granted 08 25 05 65 — — — — — —
exercised 06 23 86 56 06 42 — — 03 39
forfeited 01 — 14 53 — — — — — —
expired — — 49 151 10 173 07 100 01 44
incentives outstanding          
at 31 december 2008 30 37 417 66 36 119 14 122 04 39
granted 17 — 01 72 — — — — — —
exercised 07 19 139 52 03 49 — — 03 38
forfeited — — 03 50 — — — — — —
expired — — 66 123 03 425 12 116 — —
incentives outstanding          
at 31 december 2009 40 24 210 57 30 123 02 157 01 39
incentives exercisable          
at 31 december 2008 08 53 346 69 36 119 14 122 04 39
at 31 december 2009 15 50 193 58 30 123 02 157 01 39
          
notes          
1   figures for the 2005 employee incentive plan include share options stock appreciation rights and performance shares in aggregate as at 31 december 2009 08 million 
ordinary shares held in the esot had been allocated to hedge awards made under the 2005 employee incentive plan 2008 08 million
2   figures for the spirent stock incentive plan show both share options and stock appreciation rights in aggregate as at 31 december 2009 22 million ordinary shares held 
in the esot had been allocated to hedge awards made under the spirent stock incentive plan 2008 39 million
3   the acquisition plans are share plans which originally granted options over other companies’ equity which on acquisition by spirent communications plc have been 
rolled over into spirent ordinary shares further details of the acquisition plans can be found below
4   03 million ordinary shares were transferred from the sst to settle the exercise of uk sharesave options in 2009 2008 03 million as at 31 december 2009 06 million 
ordinary shares remained in the sst hedging share option grants made under the uk sharesave schemes      
    
the weighted average share price at exercise date was 824 pence 2008 739 pence      
    
          
           spirent communications plc
annual report 2009
78
29 employee share plans continued
      2009   2008
      weighted   weighted 
    weighted number average weighted number average   
   range of average of share remaining average of share remaining 
   exercise exercise incentives contractual exercise incentives contractual 
  exercise period as at  prices price outstanding life price outstanding life 
share plan  31 december 2009 pence pence million years pence million years
2005 employee        
incentive plan 250808 — 291119 053 24 40 82 37 30 59
spirent stock        
incentive plan 110304 — 070510 1722 20 — 03 17 20 09
 120903 — 121115 3757 50 119 30 50 193 40
 170904 — 120816 5987 67 91 16 85 204 19
1995 executive share 031004 — 040814 5672 59 15 44 60 17 53
option scheme 020405 — 010512 113—134 126 10 23 128 14 25
 110503 — 080411 305334 322 05 07 322 05 17
acquisition plans 150802 — 060811 10 10 — 16 10 01 32
 141100 — 121010 127 127 02 05 118 12 05
 141100 — 121010 350 350 — 08 350 01 18
uk sharesave schemes 011209 — 310511 3841 39 01 11 39 04 07
total    283   501
          
description of employee share plans         
2005 employee incentive plan “eip”
the eip which was introduced in 2005 and replaced the now closed esos see below is currently available for selected employees 
including executive directors on a discretionary basis
under the eip the company is able to grant share options including hmrc approved options sharesettled stock appreciation rights 
“sars” and performance shares no price is payable on the grant of an award
in normal circumstances eip awards vest three years following the date of grant provided the relevant performance conditions have 
been met for share options and sars the performance conditions relate to the company’s earnings per share “eps” and for 
performance shares relate to total shareholder return “tsr”
further information on the performance conditions for eip share incentives is set out in the report on directors’ remuneration on 
pages 34 and 35
options and sars granted under the eip expire on the tenth anniversary of their grant unless they have previously lapsed or 
been exercised
spirent stock incentive plan “ssip”
the ssip was introduced in 2000 this discretionary plan is primarily targeted at us employees with grants normally determined by 
reference to the seniority and contribution of the individual together with the performance of the relevant business and prevailing 
local market practice grants are also permitted to selected newly hired and promoted employees on a monthly basis under the 
ssip  the company is able to grant share options and sharesettled sars no price is payable on the grant of an award
at the annual general meeting held in may 2009 shareholders approved the extension of the ssip until the company’s 2010 annual 
general meeting after which the plan will expire the current shareholder approved mandate regarding the annual dilution rate is 
05 per cent of the issued ordinary share capital for both the ssip and eip in aggregate
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
79
financial statements
29 employee share plans continued
most awards made pursuant to the ssip vest over four years provided that the participant remains in employment vesting is not 
normally subject to a performance condition and awards become 25 per cent exercisable on the first anniversary of the date of grant 
and thereafter in equal tranches on a monthly basis over a further 36 months any award not exercised by the seventh anniversary of 
the date of grant will lapse
the vesting of the ssip awards made to bill burns prior to his appointment as chief executive officer and to certain other key 
senior managers within the communications group are subject to the company meeting eps growth targets over the vesting 
periods further details of these performance conditions are set out in the report on directors’ remuneration on page 35
sars granted under the eip and ssip will deliver the appreciation value ie the increase in market value of an ordinary share over 
the base price of the sar in the form of ordinary shares this “sars approach” helps the company manage its dilution headroom 
more efficiently as only the sar gain needs to be funded using a sars approach it is not possible to determine the precise level of 
dilution until the sars are exercised at 31 december 2009 19 million eip sars and 176 million ssip sars with an average base price 
of 50 pence and 56 pence respectively were outstanding 2008 22 million eip sars and 275 million ssip sars with an average base 
price of 50 pence and 56 pence respectively during 2009 94 million eip and ssip sars were exercised resulting in the issue of 
31 million ordinary shares 2008 16 million ordinary shares were issued on the exercise of 54 million eip and ssip sars
1995 executive share option scheme “esos”
the esos is now closed for new grants and has been replaced by the eip referred to above
under the esos awards of share options including hmrc approved options were on a discretionary basis no price was payable on 
the grant of an option and no options were granted at a discount to the market price
the normal exercise period for options granted under the esos is between the third and tenth anniversary of the date of grant 
options awarded under the esos were subject to the achievement of an eps performance condition before they could be exercised 
all outstanding options have now passed their eps performance conditions and remain exercisable until they expire on the tenth 
anniversary of their respective grant dates
acquisition plans
netcom amended and restated stock option plan “narsop”
spirent completed the acquisition of netcom systems inc “netcom” in 1999 445 million of the total consideration was satisfied 
through the rollover of outstanding options over netcom shares into options over approximately 238 million ordinary shares as 
adjusted on substantially similar terms as previously existed at 31 december 2009 there were no remaining exercisable options 
under this plan and it will be formally closed during 2010
zarak amended and restated stock option plan “zarsop”
out of a total consideration of approximately 449 million ordinary shares issued for the acquisition of zarak systems corporation 
“zarak” in 2000 approximately 38 million ordinary shares arose in connection with the rollover of outstanding options over zarak 
shares into options over spirent ordinary shares on substantially similar terms as previously existed any remaining outstanding 
zarsop options have a ten year life from the original date of grant and will therefore expire if not exercised during 2010 and the 
plan will be formally closed
caw amended and restated stock plan “carsp”
out of a total initial consideration for the acquisition of caw networks inc “caw” in 2002 of 49 million approximately 4 million 
was in respect of spirent ordinary shares and options which arose on the rollover of outstanding options and shares under the 
previous caw employee stock plan the options and shares vested over a period ending in 2006 on substantially similar terms as 
previously existed the options have a ten year life from the original date of grant pursuant to the terms of the merger agreement 
for caw an additional cash payment of 788 us cents was payable as each share vested or upon the exercise of a vested option no 
further award can be made under this plan
the ordinary shares subject to rolledover options from the acquisition of netcom zarak and caw or granted under the ssip do not 
count towards abi scheme limits  spirent communications plc
annual report 2009
80
29 employee share plans continued
uk savings related share option scheme “srsos” and the 2005 sharesave scheme 
the srsos closed in 2005 and was replaced by the 2005 sharesave scheme srsos options which remain outstanding may still be 
exercised prior to expiry however no further grants can be made both schemes operate as hmrc approved saveasyouearn 
schemes and are open to all uk employees subject to a qualifying service period any future sharesave invitations will be made 
under the 2005 sharesave scheme which is broadly similar to the srsos
no price is payable on the grant of an option the option exercise price is calculated by reference to the middle market closing price 
of an ordinary share on the business day prior to the beginning of the invitation period discounted by up to 20 per cent at the 
board’s discretion options are normally exercisable within six months of the third fifth or seventh anniversary of the contract 
commencement date as elected by the option holder at the start of the contract
the company operates the sst to honour the commitment to deliver ordinary shares against the exercise of outstanding options 
under the srsos spirent sharesave trust limited a whollyowned subsidiary of spirent communications plc acts as sole trustee of 
the sst during the year 03 million ordinary shares were transferred to participants 2008 03 million ordinary shares
no invitations have been made under either of these schemes since 2003
us employee stock purchase plan “espp”
the espp enables the company to grant eligible us employees the right to acquire spirent american depositary shares using the 
proceeds of a savings contract when joining the espp participants enter into a 12 month contract to save up to 15 per cent of basic 
salary subject to an individual limit of 1000 per month
no offer has been made under this plan since 2003
global all employee share purchase plan “gaespp”
the gaespp was approved by shareholders in 2001 and offers employees in countries other than the uk or us an opportunity to 
share in the company’s performance through share ownership the gaespp was implemented in canada in january 2002 and 
operates on similar terms to the espp above with participants entering into a 12 month contract to save up to 15 per cent of basic 
salary subject to an individual maximum of cdn 1000 per month
no offer has been made under this plan since 2003
uk employee share purchase plan “uk espp”
the uk espp which is based on an hmrc approved share incentive plan was approved by shareholders in 2005 and is available to all 
uk employees subject to a qualifying service period the uk espp offers three ways to provide ordinary shares to employees free 
shares partnership shares and matching shares the uk espp will operate in conjunction with a trust which will hold the shares on 
behalf of participants
to date no awards have been made under this plan
stock appreciation rights plan “sarp”
the sarp was introduced in september 1999 as an interim incentive arrangement for the employees of netcom following the closure 
of the narsop described above and subsequently for certain other employees in the communications group rights under the sarp 
vested over four years 25 per cent vesting one year after the date of grant and the remainder vesting on a monthly basis over a 
further 36 months rights granted were not subject to the fulfilment of any performance conditions
the sarp will deliver the appreciation value ie the aggregated increase in the market value of an ordinary share over the rights 
price in the form of existing ordinary shares which have been purchased in the market by the company’s esot the sarp is closed 
and no further grants can be made under it
at 31 december 2009 10 million 2008 15 million rights were outstanding at rights prices of 335p to 416p the plan will expire 
in 2010          
notes to the consolidated 
financial statements c on t in u e d spirent communications plc
annual report 2009
81
financial statements
30 sharebased payment 
the total charge for the year relating to employee sharebased payment plans is as follows 
        2009 2008 
        £ million £ million
1995 executive share option scheme       — 02
2005 employee incentive plan       01 02
spirent stock incentive plan       03 10
all employee share plans        — 01
        04 15
 
all schemes are equitysettled 
 
the fair value of share incentives is estimated as at the date of grant using a binomial model the following table gives the 
assumptions made in arriving at the sharebased payment charge and the fair value 
 
        2009 2008
weighted average share price pence       963 559
weighted average exercise price pence       39 405
weighted average fair value pence       294 193
expected volatility         53—55 40—45
expected life years        45 45
risk free rate         24—25 37—49
dividend yield         20 20
 
the expected volatility was determined by calculating the historical volatility of the company’s share price over the previous two 
years which management considers to be the period which is likely to be most representative of future volatility the expected life 
used in the model has been adjusted based on management’s best estimate for the effects of nontransferability exercise 
restrictions and behavioural considerations for performance shares granted under the 2005 employee incentive plan which have a 
market based performance condition it has been assumed that there will be 30 per cent vesting for valuation purposes
31 reconciliation of profit before tax to cash generated from operations 
        2009 2008 
        £ million £ million
profit before tax        541 496
adjustments for 
finance income        04 40
finance costs        16 31
intangible asset amortisation       12 07
depreciation of property plant and equipment      86 88
loss on the disposal of property plant and equipment     01 03
sharebased payment        04 15
changes in working capital 
deferred income receivedreleased       41 13
decrease in receivables        46 24
decreaseincrease in inventories       51 16
decrease in payables        70 21
decrease in provisions        43 39
defined benefit pension plan       04 01
cash flows from operations        677 534 spirent communications plc
annual report 2009
82
32 related party transactions 
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are 
not disclosed in this note 
 
remuneration of key management personnel 
the remuneration of the directors who are the key management personnel of the group is set out below in aggregate for each of 
the categories specified in ias 24 “related party disclosures” 
        2009 2008 
        £000 £000
short term employee benefits       1829 1051
sharebased payment        66 156
postretirement benefits        6 7
        1901 1214
 
in 2009 eric hutchinson made gains on the exercise of share incentives of £87257 2008 £149760  
in 2009 bill burns made gains on the exercise of share incentives of £54666 2008 nil
notes to the consolidated 
financial statements c on t in u e d financial statements
spirent communications plc
annual report 2009
83
independent auditors’ 
report to the members of
spirent communications plc 
       
we have audited the parent company financial statements of 
spirent communications plc for the year ended 31 december 
2009 which comprise the parent company balance sheet and the 
related notes 1 to 21 the financial reporting framework that has 
been applied in their preparation is applicable law and united 
kingdom accounting standards united kingdom generally 
accepted accounting practice
this report is made solely to the company’s members as a body 
in accordance with chapter 3 of part 16 of the companies act 
2006 our audit work has been undertaken so that we might 
state to the company’s members those matters we are required 
to state to them in an auditor’s report and for no other purpose 
to the fullest extent permitted by law we do not accept or 
assume responsibility to anyone other than the company and the 
company’s members as a body for our audit work for this 
report or for the opinions we have formed
respective responsibilities of directors and auditors
as explained more fully in the statement of directors’ 
responsibilities set out on page 29 the directors are responsible 
for the preparation of the parent company financial statements 
and for being satisfied that they give a true and fair view our 
responsibility is to audit the parent company financial 
statements in accordance with applicable law and international 
standards on auditing uk and ireland those standards require 
us to comply with the auditing practices board’s ethical 
standards for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free from 
material misstatement whether caused by fraud or error this 
includes an assessment of whether the accounting policies are 
appropriate to the parent company’s circumstances and have 
been consistently applied and adequately disclosed the 
reasonableness of significant accounting estimates made 
by the directors and the overall presentation of the 
financial statements
opinion on financial statements
in our opinion the parent company financial statements
give a true and fair view of the state of the company’s affairs •	
as at 31 december 2009
have been properly prepared in accordance with united •	
kingdom generally accepted accounting practice and
have been prepared in accordance with the requirements of •	
the companies act 2006
opinion on other matters prescribed by the 
companies act 2006
in our opinion
the part of the report on directors’ remuneration to be •	
audited has been properly prepared in accordance with the 
companies act 2006 and
the information given in the report of the directors’ for the •	
financial year for which the financial statements are prepared 
is consistent with the parent company financial statements
matters on which we are required to report by 
exception
we have nothing to report in respect of the following matters 
where the companies act 2006 requires us to report to you if in 
our opinion
adequate accounting records have not been kept by the •	
parent company or returns adequate for our audit have not 
been received from branches not visited by us or
the parent company financial statements and the part of the •	
report on directors’ remuneration to be audited are not in 
agreement with the accounting records and returns or
certain disclosures of directors’ remuneration specified by •	
law are not made or
we have not received all the information and explanations we •	
require for our audit
other matter
we have reported separately on the group financial statements 
of spirent communications plc for the year ended 31 december 
2009
richard wilson senior statutory auditor
for and on behalf of ernst  young llp  statutory auditor
london
4 march 2010 spirent communications plc
annual report 2009
84
parent company 
balance sheet
        2009 2008 
at 31 december       notes £ million £ million
fixed assets   
intangible assets       4 50 56
tangible assets       5 17 23
fixed asset investments   
shares in subsidiaries       6 1652 1649
loans to subsidiaries       7 179 87
total fixed assets        1898 1815
current assets   
inventories       8 59 67
trade and other debtors       9 229 224
derivative financial instruments      15 06 —
cash and bank deposits        844 411
        1138 702
current liabilities   
creditors due within one year      10 109 119
derivative financial instruments      15 01 56
        110 175
net current assets        1028 527
assets less current liabilities       2926 2342
long term liabilities   
creditors due after more than one year      11 612 552
provisions for liabilities and charges   
provisions       13 02 11
assets less liabilities excluding pension plan      2312 1779
pension plan deficitsurplus      3 03 11
assets less liabilities including pension plan      2309 1790
   
capital and reserves       16  
called up share capital        226 224
share premium account        183 172
capital redemption reserve        106 106
capital reserve        10 14
cash flow hedges        04 47
profit and loss account        1780 1321
shareholders’ funds — equity       2309 1790
   
the notes on pages 85 to 101 form part of these financial statements   
   
signed on behalf of the board   
   
eric hutchinson   
director   
4 march 2010    spirent communications plc
annual report 2009
85
financial statements
notes to the parent company 
financial statements     
1 significant accounting policies
basis of accounting
the financial statements have been prepared under the historical cost convention modified for measurement of derivative financial 
instruments at fair value and in accordance with applicable uk law and uk generally accepted accounting principles uk gaap
as the company is included in the consolidated financial statements made up to 31 december each year it is not required to 
present a separate profit and loss account as provided by section 408 of the companies act 2006
new accounting standards
the company has adopted the amendments to frs 2 frs 6 and frs 28 “amendments for companies act changes” the amendment 
to frs 20 “vesting conditions and cancellations” and the amendments to uitf 42 and frs 26 “embedded derivatives and 
reclassification” the adoption of these amendments had no impact on the net results or net assets of the company
intangible assets
intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses the carrying value of 
intangible assets is reviewed for impairment if events or changes in circumstances indicate the carrying value may not be 
recoverable
purchased goodwill representing the excess of cost over the fair value of assets acquired is written off on a straight line basis from 
the date of acquisition over 20 years being its anticipated useful life
tangible assets
depreciation is not provided on freehold land depreciation is provided to write off the cost of all other assets less residual value 
on a straight line basis over their estimated useful lives at rates which take into account commercial conditions at their location 
usual asset lives are as follows
freehold buildings    50 years  
plant and machinery    3 to 8 years  
fixtures fittings and equipment
building installations    20 years or lease period if less 
fittings and equipment    3 to 8 years  
motor vehicles    3 to 5 years  
business systems software    4 years 
the carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate 
the carrying value may not be recoverable
investments
fixed asset investments including investment in subsidiaries are stated at cost and reviewed for impairment if there are indications 
that the carrying value may not be recoverable
leases
operating lease rentals are charged to the profit and loss account over the period of the lease on a straight line basis
inventories
inventories are valued at the lower of cost and estimated net realisable value cost includes all costs in bringing each product to its 
present location and condition being the full manufacturing cost on a firstinfirstout basis including all attributable overheads 
based on a normal level of activity net realisable value represents the selling price less further costs to be incurred to completion 
and on sale
trade and other debtors
trade debtors which generally have 30 to 90 day terms are recognised and carried at original invoice amount less an allowance for 
any uncollectable amounts an estimate for doubtful debts is made when collection of the full amount is no longer probable bad 
debts are written off when identified spirent communications plc
annual report 2009
86
1 significant accounting policies continued
provisions
provisions are recorded when the company has a present legal or constructive obligation as a result of a past event for which it is 
probable that it will be required to settle by an outflow of resources and for which a reliable estimate of the amount of the 
obligation can be made provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate
where the effect of the time value of money is material the amount of the provision shall be the present value of the 
expenditures expected to be required to settle the obligation
revenue recognition
revenue is recognised when it is probable that economic benefits will flow to the company the revenue can be reliably 
measured and when the company has transferred to the buyer the significant risks and rewards of ownership in addition revenue is 
only recognised when collectability is probable
for the sale of services revenue is recognised in accounting periods in which the service is rendered
foreign currencies
transactions in foreign currencies are recorded at the rate ruling at the date of transaction
monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at the balance sheet date all 
exchange profits and losses are taken to the profit and loss account
product development
expenditure is charged to the profit and loss account in the year in which it is incurred
financial instruments
financial assets and liabilities are recognised on the company’s balance sheet when it becomes a party to the contractual provisions 
of the instrument
equity instruments
equity instruments are recorded at the proceeds received net of direct issue costs
derivative financial instruments and hedge accounting
the company uses forward foreign currency exchange contracts to manage exposures arising on forecast receipts and payments in 
foreign currencies relating to firm commitments or highly probable forecast transactions such derivative financial instruments are 
initially recognised at fair value on the date on which the contract is entered into and are subsequently remeasured to fair value at 
each reported balance sheet date the fair value of forward foreign currency exchange contracts is calculated by reference to 
current forward exchange rates for contracts with similar maturity profiles 
 
the company has designated its forward foreign currency exchange contracts as cash flow hedges changes in the fair value of 
contracts which are designated as effective are recognised directly in equity and the gain or loss on the ineffective portion of the 
hedge is recognised immediately in the profit and loss account for derivatives that do not qualify for hedge accounting any gains or 
losses arising from changes in fair value are taken to the profit and loss account for effective hedges that are in relation to a 
financial asset or liability amounts originally deferred are recognised in the profit and loss account in the same period in which the 
hedged item affects profit or loss for example when a highly probable sale occurs for nonfinancial assets or liabilities the gains or 
losses that have been included in equity are included in the initial measurement of the nonfinancial asset or liability at the time the 
asset or liability is recognised on the balance sheet 
 
the company discontinues hedge accounting if the hedging instrument expires or is sold terminated or exercised the hedge no 
longer meets the criteria for hedge accounting or the company revokes designation 
gains or losses arising on hedging instruments which are cancelled due to termination of the underlying exposure are taken to the 
profit and loss account immediately 
 
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
87
financial statements
1 significant accounting policies continued
derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and 
characteristics are not closely related to those of the host contracts 
pensions
the company operates two defined benefit pension plans all other plans are defined contribution in nature where the amount 
charged to the profit and loss account is the contributions paid or payable during the year
for defined benefit pension plans full actuarial valuations are carried out every three years using the projected unit credit method 
and updates are performed at each balance sheet date the cost of providing benefits under these plans is determined separately 
for each plan and attributes entitlement to benefits to the current period to determine current service cost and to the current 
and prior periods to determine the present value of defined benefit obligations
past services are recognised in the profit and loss account on a straight line basis or immediately if the benefits have vested when 
a settlement eliminating all obligations for benefits already accrued or a curtailment reducing future obligations as a result of a 
material reduction in the plan membership or a reduction in future entitlement occurs the obligation and related plan assets are 
remeasured using current actuarial assumptions and the resultant gain or loss recognised in the profit and loss account during the 
period in which the settlement or curtailment occurs
the interest element of the defined benefit pension plan cost represents the change in present value of plan obligations resulting 
from the passage of time and is determined by applying the discount rate to the opening present value of the benefit obligation 
taking into account material changes in the obligation during the year 
the expected return on plan assets is based on an assessment made at the beginning of the year of long term market returns on 
plan assets adjusted for the effect on the fair value of plan assets of contributions received and benefits paid during the year the 
difference between the expected return on plan assets and the interest cost is recognised in the profit and loss account as finance 
costs or finance income
actuarial gains and losses arising from differences between actual and expected returns on plan assets experience adjustments on 
liabilities and changes in actuarial assumptions are recognised immediately in the statement of total recognised gains and losses
the defined benefit pension plan asset or liability in the balance sheet comprises the total for each plan of the present value of 
the defined benefit obligation using a discount rate based on high quality corporate bonds denominated in the same currency and 
whose term is consistent with the estimated term of the obligation fair value is based on market price information and in the 
case of quoted securities is the published bid price the value of a net pension benefit asset is restricted to the sum of any 
unrecognised past service costs and the present value of any amount the company expects to recover by way of reductions in the 
future contributions or refunds from the plan that have been agreed by the trustees 
treasury shares
spirent communications plc ordinary shares held by the company are classified in shareholders’ equity as treasury shares and 
are recognised at cost and shown as a deduction from retained earnings consideration received for the sale of such ordinary 
shares is also recognised in equity with any difference between the proceeds from sale and the original cost being taken to 
retained earnings
employee benefits
when an employee has rendered service to the company during an accounting period short term benefits expected to be paid in 
exchange for that service are recognised in the same accounting period
dividends paid
the interim dividend is included in the financial statements in the period it is approved by the directors and the final dividend in 
the period it is approved by the shareholders at an annual general meeting spirent communications plc
annual report 2009
88
1 significant accounting policies continued
sharebased payment
the cost of equitysettled transactions with employees is measured by reference to the fair value at the date at which they are 
granted the fair value is determined using a binomial model
the cost of equitysettled transactions is recognised as a cost to the company or as an addition to the cost of investment in the 
subsidiary in which the relevant employees work over the vesting period of the equitysettled transactions with a corresponding 
adjustment to reserves any payments received from the company’s subsidiaries in respect of these sharebased payments result 
in a reduction in the cost of investment
no expense is recognised for awards that do not ultimately vest except for awards where vesting is conditional upon a market 
condition which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other 
vesting conditions are satisfied
where the terms of an equitysettled award are modified as a minimum an expense is recognised as if the terms had not been 
modified in addition an expense is recognised for any increase in the value of the transaction as a result of the modification as 
measured at the date of modification
where an equitysettled award is cancelled it is treated as if it had vested on the date of cancellation and any expense not yet 
recognised for the award is recognised immediately however if a new award is substituted for the cancelled award and designated 
as a replacement award on the date that it is granted the cancelled and new awards are treated as if they were a modification of 
the original award as described in the previous paragraph
the company has an employee share trust for the granting of certain share incentives to employees shares are held by the 
employee share trust treated as treasury shares and presented in the balance sheet as a deduction from equity 
t ax
the tax expense represents the sum of the tax currently payable and deferred tax
the tax currently payable represents the amount expected to be paid or recovered in respect of taxable profit for the year and is 
calculated using tax rates that have been enacted or substantively enacted at the balance sheet date
deferred tax is provided on an undiscounted basis on all timing differences that have originated but not reversed at the balance 
sheet date except as referred to below amounts provided are calculated with reference to tax rates that are expected to apply 
in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or 
substantively enacted by the balance sheet date
deferred tax assets are recognised only to the extent that it is considered more likely than not that there will be suitable taxable 
profits from which the future reversal of the underlying timing differences can be deducted
deferred tax is not provided on gains on the disposal of fixed assets that have been rolled over into replacement assets unless there 
is a binding agreement to dispose of the assets concerned provision will not be made where it is considered more likely than not 
that the taxable gain will be rolled over into replacement assets and charged to tax only when the replacement assets are sold
2 employees         
please refer to the report on directors’ remuneration on pages 33 to 40 for disclosures relating to the emoluments share incentives 
and long term incentive interests and pensions of the directors
3 pensions 
defined benefit plans 
the defined benefit pension plans are in the united kingdom and comprise the spirent communications plc staff pension  life 
assurance plan “staff plan” and the spirent communications plc retirement cash  life assurance plan “cash plan” the staff 
plan is the company’s most significant plan there is in addition an unfunded plan 
 
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
89
financial statements
3 pensions continued
the most recent actuarial valuations at 1 april 2009 of the plans’ assets and the present value of the defined benefit plans’ 
obligations using the projected unit credit method have been used and updated by our independent actuaries 
 
i the key financial assumptions
the assumptions used for both plans were as follows 
        2009  2008 
          
inflation        34  30
rate of increase in pensionable salaries       39  35
rate of increase for pensions in payment pre 2001 service     37  36
rate of increase for pensions in payment post 2001 pre april 2005 service    32  29
rate of increase for pensions post april 2005 service      22  21
rate of increase in deferred pensions       34  30
rate used to discount plan liabilities       57  60
expected rate of return on plan assets weighted for both plans     56  52
spirent communications plc employs a building block approach in determining the long term rate of return on the plans’ assets 
historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted 
capital market principles the assumed long term rate of return on each class of asset is set out within this note the overall expected 
rate of return on assets is then derived by aggregating the expected return of each asset class over the actual asset allocation for 
the plans 
 
the mortality assumptions are based on standard mortality tables which allow for future mortality improvements the assumptions 
are such that a member currently aged 68 2008 aged 65 will live on average for a further 191 years 2008 217 years if they are 
male and for a further 209 years 2008 240 years if they are female for a member who retires in 2019 2008 in 2028 at age 64 
2008 aged 65 the assumptions are that they will live on average for a further 236 years 2008 229 years after retirement if they 
are male and for a further 255 years 2008 250 years after retirement if they are female 
 
the approximate impact to the past service liabilities of changing these main assumptions is as follows 
 
reducing the discount rate by 01 per cent per annum this would increase past service liabilities by £20 million •	
increasing the life expectancy of a member by one year by modifying the standard mortality tables using an appropriate scaling •	
factor this would increase past service liabilities by £43 million 
 
there will also be an impact on the future service cost but given the small active population in these plans this is likely to 
be insignificant 
  spirent communications plc
annual report 2009
90
3 pensions continued
ii the assets and the liabilities in the plans were as follows  
      long term  long term  
      rate of return  rate of return  
      expected 2009 expected 2008 
       £ million  £ million
staff plan and unfunded plan 
equities      85 306 80 249
government bonds      43 322 40 603
corporate bonds      51 573 57 257
insured annuities      57 29 57 38
property      90 36 70 41
cash and other      10 45 27 36
fair value of plan assets      57 1311 53 1224
present value of defined benefit pension plan obligations    1314  1201
deficitsurplus in the plan       03  23
surplus restriction       —  07
deficitsurplus recognised       03  16
present value of unfunded obligations      04  06
deficitsurplus on the balance sheet      07  10
deferred tax assetliability note 12      02  03
net deficitsurplus on the balance sheet     05  07
 
cash plan 
equities      85 18 80 16
government bonds      44 27 40 21
insured annuities      57 02 40 03
cash and other      10 21 27 29
fair value of plan assets      45 68 44 69
present value of defined benefit pension plan obligations    60  64
surplus in the plan       08  05
surplus restriction       05  —
pension surplus recognised       03  05
deferred tax liability note 12      01  01
net surplus on the balance sheet      02  04
net pension plan deficitsurplus on the balance sheet    03  11
the recognition of the surplus in the staff plan was restricted in 2008 to the present value of economic benefits available in the 
form of refunds from the plan or reductions in future contributions to the plan as a result only £16 million of the £23 million 
surplus has been recognised on the balance sheet at 31 december 2008  
 
the recognition of the surplus in the cash plan is restricted in 2009 to the present value of economic benefits available in the form 
of refunds from the plan or reductions in future contributions to the plan as a result only £03 million of  the £08 million surplus has 
been recognised on the balance sheet at 31 december 2009  
 
the plans are prohibited from investing in spirent’s own financial instruments 
 
for the purposes of the following disclosures the two plans have been combined as the cash plan is immaterial to these 
financial statements 
 
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
91
financial statements
3 pensions continued
iii analysis of the amounts chargedcredited to the profit and loss account  
        2009 2008 
        £ million £ million
analysis of amount charged to operating costs 
current service cost        01 02
expected return on pension plans’ assets      64 76
interest on pension plans’ liabilities       75 75
finance costincome        11 01
net profit and loss charge        12 01
 
iv analysis of amount recognised directly in equity 
        2009 2008 
        £ million £ million
actual return on pension plans’ assets       139 78
less expected return on pension plans’ assets      64 76
experience gainslosses on plans’ assets      75 154
experience losses arising on plans’ liabilities      25 04
changes in assumptions underlying the present value of plans’ liabilities    64 107
movement in surplus restriction       02 40
actuarial losses recognised directly in equity      12 11
 
the cumulative amount of actuarial gains and losses recognised since 1 january 2003 in the company’s statement of total recognised 
gains and losses is £136 million loss 2008 £124 million loss the directors are unable to determine how much of the pension plan 
deficit recognised on 1 january 2003 and taken directly to equity of £419 million in the company is attributable to actuarial gains 
and losses since inception of those pension plans consequently the directors are unable to determine the amount of actuarial gains 
and losses that would have been recognised in the company’s statement of recognised gains and losses before 1 january 2003
 
v movements in the present value of funded defined benefit obligations  
        2009 2008 
        £ million £ million
at 1 january        1265 1351
current service cost        01 02
interest cost        75 75
employee contributions        01 01
benefit payments        57 61
actuarial lossgain        89 103
present value of funded defined benefit pension plans’ obligations     1374 1265
  spirent communications plc
annual report 2009
92
3 pensions continued
vi movements in the fair value of plans’ assets 
        2009 2008 
        £ million £ million
at 1 january        1293 1428
expected return on plans’ assets       64 76
employer contributions        03 03
employee contributions        01 01
benefit payments        57 61
actuarial gainloss        75 154
fair value of plans’ assets        1379 1293
vii history of experience gains and losses 
     2009 2008 2007 2006 2005 
     £ million £ million £ million £ million £ million
present value of defined benefit  pension plans’ obligations  1374 1265 1351 1582 1796
fair value of plans’ assets     1379 1293 1428 1606 1288
net surplusdeficit in plans    05 28 77 24 508
experience gains and losses on plans’ liabilities 
amount £ million     25 04 08 100 48
percentage of plans’ liabilities     18 03 06 63 27
experience gains and losses on plans’ assets 
amount £ million     75 154 26 05 146
percentage of plans’ assets     54 119 18 03 113
 
expected cash contributions for 2010 for these plans are £03 million 
 
the above plans are funded and have full uk hm revenue  customs “hmrc” taxexempt approval certain members whose 
salaries were in excess of the hmrc statutory earnings cap had their benefits increased through unapproved unfunded 
arrangements to the level that would otherwise have applied in respect of basic salary only the company has contractually  
agreed to pay the additional retirement benefits itself and a provision is made in respect of this obligation in the balance sheet at 
31 december 2009 of £04 million 2008 £06 million this represents the actuarial value as confirmed by the company’s pension 
advisers of the unapproved benefit entitlements accrued at that date the value is assessed and reviewed on a market value basis 
in line with the main plan valuation there are no experience gains or losses on the unfunded plan in the period from 2005 to 2009
defined contribution schemes
the company also maintains defined contribution pension plans for employees employer contributions into these plans for 2009 
were £08 million 2008 £07 million
4 intangible assets   
         £ million 
         goodwill
cost   
at 1 january 2009 and 31 december 2009       68
amortisation   
at 1 january 2009         12
provided during the year         06
at 31 december 2009         18
net book value at 31 december 2008        56
net book value at 31 december 2009        50
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
93
financial statements
5 tangible assets    
         £ million
      freehold  fixtures  
      land and plant and fittings and  
      buildings machinery equipment total
cost    
at 1 january 2009      06 39 37 82
additions      — 02 01 03
disposals      — 02 02 04
at 31 december 2009      06 39 36 81
depreciation and impairment    
at 1 january 2009      — 29 30 59
provided during the year      — 05 03 08
disposals      — 01 02 03
at 31 december 2009      — 33 31 64
net book value at 31 december 2008     06 10 07 23
net book value at 31 december 2009     06 06 05 17
6 shares in subsidiaries    
         £ million
cost    
at 1 january 2009         8854
additions         03
at 31 december 2009         8857
provisions    
at 31 december 2009 and 1 january 2009       7205
net book value at 31 december 2008        1649
net book value at 31 december 2009        1652
7 loans to subsidiaries    
         £ million
at 1 january 2009         87
advances         115
repayments         09
exchange         14
at 31 december 2009         179
8 inventories    
        2009 2008 
        £ million £ million
raw materials        31 42
work in progress        07 12
finished goods        21 13
        59 67 spirent communications plc
annual report 2009
94
9 trade and other debtors   
        2009 2008 
        £ million £ million
due within one year   
trade debtors        61 76
owed by subsidiaries        31 67
other debtors        06 10
prepayments and accrued income       04 05
        102 158
due after more than one year   
deferred tax asset note 12        127 66
        229 224
10 creditors due within one year   
        2009 2008 
        £ million £ million
trade creditors        54 57
owed to subsidiaries        02 04
accruals and deferred income       45 51
other taxes and social security costs       08 07
        109 119
11 creditors due after more than one year    
        2009 2008 
        £ million £ million
owed to subsidiaries        612 552
12 deferred tax   
         £ million
at 1 january 2009          66
recognised in the year         61
at 31 december 2009         127
   
the deferred tax asset is in relation to short term timing differences and tax losses   
   
there is a deferred tax liability at 31 december 2009 of £01 million and a deferred tax asset of £02 million 2008 liability of 
£04 million in relation to the pension plans note 3   
13 provisions    
         £ million
lease provisions    
at 1 january 2009         11
utilised in the year         09
at 31 december 2009         02
    
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
95
financial statements
13 provisions continued
provisions are analysed as follows    
        2009 2008 
        £ million £ million
current        02 02
noncurrent        — 09
        02 11
    
these provisions are in respect of obligations for properties under operating leases which have been vacated the lease provisions 
are expected to be utilised in the next year
14 operating lease commitments  
at the balance sheet date the company had annual commitments which expire as follows  
        2009 2008 
        £ million £ million
in the second to fifth years        05 05
over five years        — 02
        05 07
15 derivative financial instruments     
the company has taken advantage of the exemption under frs 29 “financial instruments disclosures” for parent company 
financial statements the disclosures in respect of the group are included in the consolidated financial statements   
  
the fair value of derivative financial instruments is as follows     
       2009  2008 
       £ million  £ million
      assets liabilities assets liabilities
currency derivatives      06 01 — 56
     
currency derivatives which are cash flow hedges are expected to be realised within one year 
 
currency derivatives 
the company uses forward foreign currency exchange contracts in the management of transactional exchange rate exposures these 
contracts are designated where possible as hedging instruments      spirent communications plc
annual report 2009
96
16 capital and reserves       
         £ million
   called up share capital   profit  
   share premium redemption capital cash flow and loss  
   capital account reserve reserve hedges account
2
 total
at 1 january 2009   224 172 106 14 47 1321 1790
new shares issued   02 11 — — — — 13
profit for the year
3
   — — — — — 530 530
sharebased payment
4
   — — — — — 04 04
actuarial loss recognised on 
defined benefit pension plans  — — — — — 12 12
deferred tax on defined benefit pension plans — — — — — 05 05
cash flow hedges   — — — — 51 — 51
employee share ownership trust  — — — — — 11 11
share repurchase   — — — — — 06 06
equity dividends   — — — — — 77 77
other movements   — — — 04 — 04 —
at 31 december 2009   226 183 106 10 04 1780 2309
       
notes 
1 the company has taken advantage of the exemption given in section 408 of the companies act 2006 not to publish its profit and loss account 
2 the company’s profit and loss account of £1780 million 2008 £1321 million includes nondistributable reserves of £69 million 2008 £69 million 
3  the profit for the year dealt with in the financial statements of the company was £530 million 2008 £404 million which after dividends of £77 million  
2008 £37 million gave a retained profit of £453 million 2008 £367 million 
4 sharebased payment has been recorded for subsidiary companies whose incentives are satisfied by the company’s shares 
 
changes during the year in the issued ordinary share capital were as follows 
         number of 
         ordinary shares 
         million
issued and fully paid at 1 january 2009       6718
allotted pursuant to share incentives exercised       69
cancelled during the year         06
issued and fully paid at 31 december 2009
1
       6781
       
note 
1  during 2009 under the programme of returning capital to shareholders the company repurchased 06 million ordinary shares onmarket all ordinary shares 
repurchased during the year were cancelled  
in accordance with the rules of the following share plans share incentives were exercised during the year which resulted in new 
ordinary shares being allotted by the company or existing ordinary shares being transferred from either the spirent employee share 
ownership trust “esot” or from the spirent sharesave trust “sst” as follows  
        number of consideration 
        ordinary shares received 
        million £ million
2005 employee incentive plan       05 —
spirent stock incentive plan       78 22
1995 executive share option scheme       03 01
all employee share plans
1
        03 01
        89 24
       
note 
1  the all employee share plans are the uk savings related share option scheme the 2005 sharesave scheme the us employee stock purchase plan the global all 
employee share purchase plan and the uk employee share purchase plan 
 
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
97
financial statements
16 capital and reserves continued
during the year 03 million ordinary shares were transferred from the sst to satisfy options exercised under the uk all employee 
share schemes 2008 03 million and 17 million ordinary shares were transferred from the esot to satisfy options exercised under 
the spirent stock incentive plan 2008 07 million
there has been no material increase in the issued ordinary share capital whether by exercise of share incentives or otherwise 
between 31 december 2009 and 4 march 2010 the date on which these financial statements have been signed
investment in own ordinary shares
at 31 december 2009 the esot held 54 million ordinary shares 2008 71 million ordinary shares to satisfy awards under various 
share incentive plans of this number 01 million ordinary shares were unconditionally vested at 31 december 2009 2008 02 million 
ordinary shares at 31 december 2009 the sst held 06 million ordinary shares 2008 09 million ordinary shares to satisfy awards 
made to uk based employees under an all employee share scheme the market value of own ordinary shares held in trust being in 
total 60 million ordinary shares 2008 80 million ordinary shares at 31 december 2009 was £61 million 2008 £29 million
capital redemption reserve
during 2009 the company cancelled 06 million ordinary shares that had been the subject of the onmarket share repurchase 
programme 2008 1742 million ordinary shares onmarket share repurchase and tender offer and transferred £20333  
2008 £58 million to the capital redemption reserve
capital reserve
in 2009 the reserve has been reduced by £04 million 2008 £22 million in relation to share incentives which have been cancelled or 
have lapsed
share repurchase
during 2009 the company repurchased 06 million ordinary shares onmarket at a cost of £06 million 2008 729 million ordinary 
shares at a cost of £422 million in addition in 2008 the company undertook a tender offer whereby it repurchased 529 million 
ordinary shares at a cost £248 million all ordinary shares repurchased have been subsequently cancelled 
 
employee share plans 
the company operates a number of employee share incentive plans as described below the following share incentives over 
ordinary shares under these plans have been granted and remain outstanding held by employees of the parent company
movements in share incentives during the year to 31 december 2009 are shown below
       1995  uk 
   2005 employee  spirent stock  executive share  share save 
   incentive plan  incentive plan  option scheme  schemes
  number weighted number weighted number weighted number weighted 
  of share average of share average of share average of share average 
  incentives exercise price   incentives exercise price  incentives exercise price incentives exercise price 
  million pence million pence million pence million pence
options outstanding at
31 december 2008  27 37 21 57 30 110 04 39
granted  08 — — — — — — —
exercised  04 21 05 55 02 33 03 38
forfeited  01 37 — — — — — —
expired  — — — — 02 138 — —
options outstanding at
31 december 2009  30 30 16 58 26 112 01 39
options exercisable at
31 december 2009  14 50 14 59 26 112 01 39 spirent communications plc
annual report 2009
98
16 capital and reserves continued
the weighted average share price at exercise date was 776 pence 2008 774 pence
the following information relates to outstanding share incentives at 31 december 2009
         2009
        weighted  
      weighted number average 
     range of average of share remaining 
     exercise exercise incentives contractural  
    exercise period prices price outstanding life 
share plan    as at 31 december 2009 pence pence million years
2005 employee incentive plan       250808—061118 0—53
1
 30 30 50
spirent stock incentive plan   120903—121115 37—53 50 09 30
    170904—120816 59—87 67 07 17
1995 executive share    031004—040814 56—72 58 14 45
option scheme    020405—010512 113—134 125 09 23
    110503—080411 305—334 322 03 07
uk sharesave schemes    011209—310511 38—41 39 01 11
       73 
note
1   figures for the 2005 employee incentive plan include share options stock appreciation rights and performance shares in aggregate no exercise price is payable on the 
vesting of a performance share 
description of employee share plans 
2005 employee incentive plan “eip” 
the eip which was introduced in 2005 and replaced the now closed esos see below is currently available for selected employees 
including executive directors on a discretionary basis
under the eip the company is able to grant share options including hmrc approved options sharesettled stock appreciation rights 
“sars” and performance shares no price is payable on the grant of an award
in normal circumstances eip awards vest three years following the date of grant provided the relevant performance conditions have 
been met for share options and sars the performance conditions relate to the company’s earnings per share “eps” and for 
performance shares relate to total shareholder return “tsr”
further information on the performance conditions for eip share incentives is set out in the report on directors’ remuneration on 
pages 34 and 35
options and sars granted under the eip expire on the tenth anniversary of their grant unless they have previously lapsed or  
been exercised
spirent stock incentive plan “ssip”
the ssip was introduced in 2000 this discretionary plan is primarily targeted at us employees with grants normally determined by 
reference to the seniority and contribution of the individual together with the performance of the relevant business and prevailing 
local market practice grants are also permitted to selected newly hired and promoted employees on a monthly basis under the 
ssip the company is able to grant share options and sharesettled sars no price is payable on the grant of an award 
 
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
99
financial statements
16 capital and reserves continued
at the annual general meeting held in may 2009 shareholders approved the extension of the ssip until the company’s 2010 annual 
general meeting after which the plan will expire the current shareholder approved mandate regarding the annual dilution rate is 
05 per cent of the issued ordinary share capital for both the ssip and eip in aggregate 
 
most awards made pursuant to the ssip vest over four years provided that the participant remains in employment vesting is not 
normally subject to a performance condition and awards become 25 per cent exercisable on the first anniversary of the date of grant 
and thereafter in equal tranches on a monthly basis over a further 36 months any award not exercised by the seventh anniversary of 
the date of grant will lapse  
the vesting of the ssip awards made to bill burns prior to his appointment as chief executive officer and to certain other key 
senior managers within the communications group are subject to the company meeting eps growth targets over the vesting 
periods further details of these performance conditions are set out in the report on directors’ remuneration on page 35 
 
sars granted under the eip and ssip will deliver the appreciation value ie the increase in market value of an ordinary share over 
the base price of the sar in the form of ordinary shares this “sars approach” helps the company manage its dilution headroom 
more efficiently as only the sar gain needs to be funded using a sars approach it is not possible to determine the precise level of 
dilution until the sars are exercised 
 
1995 executive share option scheme “esos” 
the esos is now closed for new grants and has been replaced by the eip referred to above 
 
under the esos awards of share options including hmrc approved options were on a discretionary basis no price was payable on 
the grant of an option and no options were granted at a discount to the market price 
 
the normal exercise period for options granted under the esos is between the third and tenth anniversary of the date of grant 
options awarded under the esos were subject to the achievement of an eps performance condition before they could be exercised 
all outstanding options have now passed their eps performance conditions and remain exercisable until they expire on the tenth 
anniversary of their respective grant dates 
 
uk savings related share option scheme “srsos” and the 2005 sharesave scheme 
the srsos closed in 2005 and was replaced by the 2005 sharesave scheme srsos options which remain outstanding may still be 
exercised prior to expiry however no further grants can be made both schemes operate as hmrc approved saveasyouearn 
schemes and are open to all uk employees subject to a qualifying service period any future sharesave invitations will be made 
under the 2005 sharesave scheme which is broadly similar to the srsos 
 
no price is payable on the grant of an option the option exercise price is calculated by reference to the middle market closing price 
of an ordinary share on the business day prior to the beginning of the invitation period discounted by up to 20 per cent at the 
board’s discretion options are normally exercisable within six months of the third fifth or seventh anniversary of the contract 
commencement date as elected by the option holder at the start of the contract 
 
the company operates the sst to honour the commitment to deliver ordinary shares against the exercise of outstanding options 
under the srsos spirent sharesave trust limited a whollyowned subsidiary of spirent communications plc acts as sole trustee of 
the sst during the year 03 million ordinary shares were transferred to participants 2008 03 million ordinary shares 
 
no invitations have been made under either of these schemes since 2003 
 
uk employee share purchase plan “uk espp” 
the uk espp which is based on an hmrc approved share incentive plan was approved by shareholders in 2005 and is available to all 
uk employees subject to a qualifying service period the uk espp offers three ways to provide ordinary shares to employees free 
shares partnership shares and matching shares the uk espp will operate in conjunction with a trust which will hold the shares on 
behalf of participants
to date no awards have been made under this plan       spirent communications plc
annual report 2009
100
17 sharebased payment
the total charge for the year relating to employee sharebased payment plans is as follows
        2009 2008 
        £ million £ million
1995 executive share option scheme       — 01
2005 employee incentive plan       01 02
all employee share plans        — 01
        01 04
all schemes are equitysettled
the fair value of share incentives is estimated as at the date of grant using a binomial model the following table gives the 
assumptions made in arriving at the sharebased payment charge and the fair value
        2009 2008
weighted average share price pence       978 505
weighted average exercise price pence       — 253
weighted average fair value pence       293 167
expected volatility         530 450
expected life years        45 45
risk free rate         24 37
dividend yield         20 20
the expected volatility was determined by calculating the historical volatility of the company’s share price over the previous two 
years which management considers to be the period which is likely to be most representative of future volatility the expected life 
used in the model has been adjusted based on management’s best estimate for the effects of nontransferability exercise 
restrictions and behavioural considerations for performance shares granted under the 2005 employee incentive plan which have a 
market based performance condition it has been assumed that there will be 30 per cent vesting for valuation purposes
18 related party transactions 
the company has taken advantage of the exemption under frs 8 “related party disclosures” in relation to disclosing transactions 
with its subsidiaries 
19 subsidiaries 
a list of the significant investments in subsidiaries including the name country of incorporation and proportion of ownership 
interest is given on page 101 of this annual report 
20 capital commitments and contingent liabilities 
there were no capital commitments at 31 december 2009 or 31 december 2008 
 
spirent communications plc has provided indemnities of £04 million 2008 £05 million for certain ongoing business obligations 
under letters of credit for subsidiary companies 
21 directors’ emoluments and transactions with directors 
please refer to the report on directors’ remuneration on pages 33 to 40 for disclosures relating to the remuneration share 
incentives and pensions of the directors
notes to the parent company 
financial statements c on t in u e d spirent communications plc
annual report 2009
101
financial statements
principal divisions 
and subsidiaries
         held at 31 december 2009
communications group
performance analysis and service assurance solutions  
  
canada  
spirent communications of ottawa limited nepean ontario      100
  
france  
spirent communications sas paris        100
  
hong kong  
spirent communications asia limited        100
  
india  
spirent communications india pvt limited bangalore      100
  
people’s republic of china  
spirent communications technology beijing limited      100
  
united kingdom  
spirent communications international limited crawley west sussex     100
spirent communications positioning paignton devon
†
  
  
united states  
spirent communications hawaii llc honolulu hawaii      100
spirent communications inc        100
calabasas california  
sunnyvale california  
eatontown new jersey  
spirent communications of rockville inc germantown maryland      100
  
systems group  
control systems for the mobility and industrial markets  
  
united kingdom  
pg drives technology limited christchurch dorset       100
  
united states  
pg drives technology inc anaheim california       100
  
notes  
the above companies operate and are incorporated in the countries listed all shareholdings in the companies are held indirectly by spirent communications plc except 
where indicated by an asterisk  where the shareholding is held directly by spirent communications plc  
  
† spirent communications positioning operates as a division of spirent communications plc  
  
the activity mentioned is indicative and not comprehensive   spirent communications plc
annual report 2009
102
financial 
history
         £ million
     2009 2008 2007 2006 2005
summary income statement     
continuing operations     
revenue     2721 2579 2370 2589 2593
operating profit before exceptional items     
and goodwill impairment     553 487 255 84 64
exceptional items     — — 144 88 84
goodwill impairment     — — — 191 370
operating profitloss      553 487 111 195 390
profit on disposal of operations    — — — — 39
profitloss before interest    553 487 111 195 351
net finance incomecosts     12 27 67 60 66
exceptional net finance costs     — 18 — 88 —
profitloss before tax     541 496 178 223 417
tax     40 04 38 04 40
exceptional tax     — 256 39 — —
profitloss from continuing operations after tax   581 748 255 227 377
discontinued operations     — — 79 1315 132
profitloss for the year     581 748 176 1088 245
minority interest     — — — — 04
profitloss attributable to equity shareholders     
of parent company     581 748 176 1088 249
summary balance sheet     
intangible assets     698 776 586 633 715
property plant and equipment    147 186 162 253 301
working capital excluding cash and deferred tax   52 159 190 22 33
operating assets     897 1121 558 864 983
net assets classified as held for sale    — — — — 1154
derivative financial instruments net    05 56 05 01 01
net fundsborrowings including long term cash   1091 622 827 1061 259
provisions and other liabilities    71 119 127 120 142
deferred tax     264 122 105 12 02
defined benefit pension plan surplusdeficit   01 20 54 10 515
net assets     2185 1710 1412 1828 1222
equity shareholders of parent company    2185 1710 1412 1828 1203
minority interests     — — — — 19
total equity     2185 1710 1412 1828 1222
summary cash flows     
cash flow from operating activities    612 477 498 430 294
net interest receivedpaid    04 14 56 41 65
net capital expenditure     65 69 52 145 299
free cash flow     551 422 502 534 70
acquisitions and disposals     — — 117 2338 24
share capital and share repurchase    17 648 619 395 27
dividends paid     77 37 — — —
borrowings     — — — 822 16
long term cash and dividends from associates   14 12 48 85 02
net increasedecrease in cash and cash equivalents   505 251 186 502 33 spirent communications plc
annual report 2009
103
         £ million
     2009 2008 2007 2006 2005
other information     
capital expenditure       64 74 51 141 330
depreciation     86 88 95 134 226
product development     475 453 463 580 628
share information     
earningsloss per share from continuing operations pence     
basic     871 1013 297 245 397
diluted      867 1006 294 245 397
adjusted basic      691 624 357 148 022
total dividend per ordinary share pence   121 110 — — —
fully paid ordinary shares in issue     
at year end million     6781 6718 8408 9759 9658
segmental analysis     
revenue from continuing operations     
performance analysis     2018 1912 1693 1795 1788
service assurance     335 335 343 436 428
communications     2353 2247 2036 2231 2216
systems     368 332 334 358 377
     2721 2579 2370 2589 2593
operating profit from continuing operations
1
     
performance analysis     499 449 249 147 220
service assurance     48 48 38 01 96
communications     547 497 287 148 124
systems     50 43 39 48 44
segment operating profit     597 540 326 196 168
corporate — nonsegmental    31 31 37 55 53
acquired intangible amortisation    09 07 09 05 —
sharebased payment     04 15 25 52 51
     553 487 255 84 64
geographical information     
revenue by market from continuing operations     
europe     441 478 437 437 430
united states     1353 1291 1232 1439 1515
asia pacific rest of americas africa    927 810 701 713 648
     2721 2579 2370 2589 2593
     
         rates 
         against sterling
average exchange rates for major currencies     
us dollar     157 185 200 185 182
euro     112 126 146 147 146
notes
1 before exceptional items and goodwill impairment
      spirent communications plc
annual report 2009
104
shareholder 
information
financial calendar 2010
4 march preliminary results and final dividend announcement
10 march final dividend — exdividend date
12 march final dividend — record date
5 may annual general meeting and interim management statement
6 may final dividend — payment date ordinary shareholders
13 may final dividend — payment date adr holders
4 july halfyear end
august halfyear results and interim dividend announcement
august interim dividend — exdividend date
august interim dividend — record date
september interim dividend — payment date ordinary shareholders
september interim dividend — payment date adr holders
november interim management statement
31 december financial year end
february 2011 2010 preliminary results and final dividend announcement
ordinary shares and american depositary receipts
the company’s 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 ordinary shares the adrs trade on the us 
overthecounter market symbol spmyy cusip 84856m209 the bank of new york mellon is the authorised depositary bank for 
the company’s adr programme the adrs are quoted on the pink sheets electronic quotation service which can be found at 
wwwpinksheetscom
annual general meeting
the company’s 2010 annual general meeting “2010 agm” will be held at 1030am on wednesday 5 may 2010 at holborn gate 
26 southampton buildings london wc2a 1pb united kingdom
dividends
shareholders are able to choose how they receive their dividends
direct to their bank account •	
reinvested in ordinary shares through the company’s dividend reinvestment plan see below •	
paid by cheque or •	
paid in foreign currencies •	
the quickest and most efficient way to receive your dividends is to have them paid direct to your bank account it saves waiting for 
funds to clear and reduces the paper and postage we use to change how you receive your dividends please contact the company’s 
registrar equiniti on 0871 384 2623 or log on to wwwshareviewcouk
dividend reinvestment plan
the company has a dividend reinvestment plan “drip” delivered by equiniti financial services limited the drip allows eligible 
shareholders to use their cash dividend to buy additional shares in the company so increasing their shareholding if you would like 
additional information please contact the company’s registrar equiniti on 0871 384 2623 or log on to wwwshareviewcouk
electronic communications
at its 2008 agm the company passed a resolution allowing it to communicate with shareholders by means of the company’s website 
and an invitation to opt out of receiving mailings solely by electronic communication was sent to shareholders with the 2009 agm 
documentation shareholders who have purchased their shares since that invitation was distributed in march 2009 but who wish to 
receive company mailings electronically should notify the company’s registrar equiniti on 0871 384 2126 or via wwwshareviewcouk 
in line with this policy the company’s halfyear results will in future only be available on the company’s website at wwwspirentcom
electronic communications provide significant benefits for shareholders and the company in terms of timeliness of information 
reduced environmental impact and cost and the board would encourage investors to participate in the programme  spirent communications plc
annual report 2009
105
company’s registrar
enquiries concerning shareholdings change of address or other particulars should be directed in the first instance to the 
company’s registrar equiniti on 0871 384 2126 equiniti also provide a range of online shareholder information services at 
wwwshareviewcouk where shareholders can check their holdings and find practical help on transferring shares or updating 
their details
share dealing services
equiniti shareview dealing is a service that provides a simple and convenient way of buying and selling the company’s ordinary 
shares for telephone services call 08456 037 037 between 800am and 430pm monday to friday and for internet services visit 
wwwshareviewcoukdealing a postal share dealing service for buying and selling ordinary shares is also available and a dealing 
form can be obtained by calling 0871 384 2126 or at wwwshareviewcouk
individual savings accounts
information about investing in the company’s ordinary shares through an individual savings account “isa” may be obtained from 
equiniti on 0845 300 0430 or at wwwshareviewcouk isas are also offered by other organisations
shareholder security
shareholders are advised to be wary of any unsolicited advice offers to buy shares at a discount or offers of free reports about the 
company details of any share dealing facilities that the company endorses will be included in the company’s mailings or on our 
website more detailed information can be found at wwwmoneymadeclearfsagovuk
unsolicited mail
the company is obliged by law to make its share register publicly available subject to a “proper purpose” test should a request 
be received as a consequence some shareholders may receive unsolicited mail to limit the amount of unsolicited mail received 
please contact the mailing preference service mps dma house 70 margaret street london w1w 8ss register online at 
wwwmpsonlineorguk or call the mps registration line on 0845 703 4599 the mailing preference service is an independent 
organisation which offers a free service to the public within the uk registering with them will help stop most unsolicited consumer 
advertising material
company’s website
the directors are responsible for the maintenance and integrity of the company’s website financial information published on the 
website is based on legislation in the uk governing the preparation and dissemination of financial statements that may be different 
from comparable legislation in other jurisdictions
shareholder analysis
at 4 march 2010 the number of registered shareholders was 4274 and the number of ordinary shares in issue was 6788 million
      
       number of  
       ordinary 
     number of  of total  shares  of share  
     holdings  shareholders million capital
range of holdings      
1—5000     3027 7082 4377511 064
5001—10000     446 1043 3315508 049
10001—50000     462 1081 9626873 142
50001—100000     70 164 4788536 070
100001—250000     73 171 12064582 178
250001—500000     58 136 21032037 310
500001—1000000     50 117 35366606 521
1000001—highest     88 206 588259597 8666
total     4274 10000 678831250 10000
held by    
individuals     3465 8107 17574205 259
institutions     809 1893 661257045 9741
total     4274 10000 678831250 10000 spirent communications plc
annual report 2009
106
glossary
3g third generation  third generation of mobile communications following first generation analogue and second 
generation digital that promises megabits per second
4g fourth generation  future generation of mobile communications following 3g that promises hundreds of megabits 
per second
broadband generic term for devices with a bandwidth greater than one megabit per second
cdma code division a digital cellular standard technology allowing communications circuits to carry multiple 
multiple access  conversations simultaneously thus increasing its capacity used in radio communications
cloud computing a way of computing via the internet that broadly shares computer resources instead of  
 having local servers handle specific applications
content delivery network a system storing data on different servers across the internet on content delivery service  
 providers making it is possible to ensure that content is closer and more quickly accessible  
 to users
data center a centralised location where computing resources critical to an organisation are maintained in  
 a highly controlled environment
ethernet  a family of networking technologies developed for local area networks migrating to metro 
area networks and becoming a dominant standard in wireline networks
gbe gigabit ethernet  a term describing various technologies for transmitting ethernet frames at a rate of a gigabit
 per second gbe uses the same framing as ethernet and fast ethernet but has a much higher
 clock speed one billion bits per second
gps global positioning system  a system for determining location and height at any point on the earth’s surface a receiver 
uses minute differences in measured time signals from clocks on satellites to calculate position 
and altitude
glonass global navigation global navigation satellite system operated by the russian federation ministry of defence
satellite system  
ims internet protocol a standardised nextgeneration architecture for telecoms operators who want to provide 
multimedia subsystem mobile and fixed multimedia services spirent communications plc
annual report 2009
107
internetip telephony generic term used to describe various approaches to running voice telephony over ip 
ip internet protocol data protocol used by many networking devices to facilitate and control the flow of data
lte long term evolution a standard to enhance existing 3g wireless to add 4g mobile communications technology on  
 an ip network air interface to create a wireless broadband internet system
layer 27 layer 27 are abstract descriptions of layered communication levels between two devices the 
layers from top to bottom are the application presentation session transport network 
datalink and physical layers
location based services the delivery of information mapping and locally available business and public data over the  
 wireless network dependent upon the ability to locate mobile devices by means of direct  
 satellite or cellular assisted satellite signals
mimo multiple input a wireless technology that employs multiple intelligent radio antennas to improve transmission
multiple output speed and quality of wireless networks over longer distances than otherwise possible
mso multiple system operator a company that operates more than one cable tv system often in different places
overtheair mobile network radio cellular tower signal or satellite signal transmitted overtheair to  
a mobile device antenna and processed by the mobile device communicating with the  
mobile network
triple play voice video and data transmitted over a single transport medium
umts universal mobile one of the 3g wireless technologies the most common form of umts uses wcdma on its 
telecommunications system  underlying air interface and offers support for high speed data transfer
virtualization a term that refers to the abstraction of computer resources virtualization puts a number of
 computing facilities together in such a way that it looks like a virtual computer to a user
 or customer
wcdma wideband cdma a global standard for mobile 3g spirent communications plc
annual report 2009
108
notes ethernetdata center 
cloud computing
wireless satellite navigation service assurance
spirent plays a significant role in the way the 
world communicates we inspire innovation 
across our customer base by testing 
tomorrow’s networks and technologies today 
thereby enhancing the products services and 
applications that drive the ever evolving 
communications industry as a leader in test 
and measurement we truly enrich the lives 
of people communicating around the world
spirent’s innovative test solutions push the 
limits of networks elements devices and 
applications our unique testing methodologies 
ensure that global communications equipment 
manufacturers as well as service providers 
supplying a wide range of voice data video 
and applications deliver the highest quality 
products and services thereby improving the 
quality of experience for every user spirent 
and its employees continue to deliver the best 
return for shareholders in our industry
contact details
registered office
spirent communications plc
northwood park
gatwick road
crawley
west sussex rh10 9xn
united kingdom
tel 44 01293 767676
fax 44 01293 767677
email investor relationsspirentcom
website wwwspirentcom
registered in england no 470893
auditor
ernst  young llp
1 more london place
london se1 2af
united kingdom
tel 44 020 7951 2000
website wwweycom
registrar
equiniti limited
aspect house
spencer road
lancing
west sussex bn99 6da
united kingdom
tel 0871 384 2126 uk
tel 44 0121 415 7047 overseas
text phone for shareholders with hearing difficulties 
0871 384 2255 uk
text phone for shareholders with hearing difficulties 
44 0121 415 7028 overseas
website wwwshareviewcouk
adr depositary
the bank of new york mellon corporation
adr depositary receipts
101 barclay street
22nd floor
new york
ny 10286
usa
tel 1 888 269 2377 toll free — us
tel 1 201 680 6825 outside us
email shrrelationsbnymelloncom
website wwwadrbnycom
brokers joint
rbs hoare govett limited
250 bishopsgate
london ec2m 4aa
united kingdom
tel 44 020 7678 8000
website wwwrbscom
ubs limited
2 finsbury avenue
london ec2m 2pp
united kingdom
tel 44 020 7567 8000
website wwwubscom
financial pr advisers
financial dynamics limited
holborn gate
26 southampton buildings
london wc2a 1pb
united kingdom
tel 44 020 7831 3113
website wwwfdcom spirent communications plc  annual report 2009
annual report 2009
spirent communications plc
www spirentcom
registered office 
spirent communications plc 
northwood park 
gatwick road 
crawley 
west sussex rh10 9xn 
united kingdom 
tel 44 01293 767676 
fax 44 01293 767677 
email investorrelationsspirentcom 
website wwwspirentcom
registered in england no 470893
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


Summary:
 spirent communications plc
annual report 2009
5
overview
chairman’s 
statement
i am pleased to report that spirent’s adjusted earnings per share increased by 11 per 
cent in 2009 to 691 pence which excludes a nonrecurring net tax benefit of 180 
pence per share and is after charging 020 pence in respect of sharebased payment 
and acquired intangible amortisation earnings benefited from an increase in operating 
profit of £66 million an improvement of 14 per cent but this was partially offset by  
an increase in the rate of tax charged for the year
these results reflect the trend of improvement seen in the past several years as  
the company’s management team implements its strategic plan and effectively  
deploys resources an increase in gross profit margin and careful cost control improved 
the operating profit margin to 20 per cent for the group as a whole in our largest 
business performance analysis the operating profit margin increased to 25 per cent 
market share increased and our new product portfolio is well aligned with the 
segments of the market that we expect will exhibit the fastest growth
in the fourth quarter of 2009 market conditions improved noticeably resulting in 
bookings exceeding sales by 29 per cent for the period whereas bookings were 
somewhat lower than sales for the first three quarters of the year accordingly we 
expect a positive start to 2010
the group’s financial position remains strong with cash generation for 2009 that 
exceeded earnings excluding the effect of the nonrecurring tax benefit in these 
circumstances the board is recommending a final dividend of 066 pence per share 
compared with 060 pence per share in 2008
gerard eastman who joined the board in 2006 is retiring at the annual general 
meeting and the board would like to express its thanks for his many thoughtful 
contributions i will also retire from the board at the annual general meeting and  
i am resigning as chairman with effect from 4 march 2010
the board has appointed alex walker who has been a director since 2006 to be 
chairman with the continuing participation of alex the other nonexecutive board 
members and the management team led by bill burns i have every confidence that the 
company is in the best possible hands i would like to express my sincere thanks to all 
of my colleagues at spirent with whom it is a great privilege to have been associated
“in the fourth quarter of 
2009 market conditions 
improved noticeably”
edward bramson
chairman