spirent communications plc
annual report 2008
spirent communications plc   annual report 2008
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
wwwspirentcom spirent communications plc is a leading communications 
technology company focused on delivering innovative 
systems and services to meet the needs of customers 
worldwide we are a global provider of testing and 
service assurance solutions that enable the development 
and deployment of nextgeneration networking 
technologies such as ethernet triple play wireless 
satellite positioning web applications and security 
further information about spirent communications plc 
can be found at wwwspirentcom
our business at a glance revenue by division
performance analysis
network equipment manufacturers and service providers face numerous 
challenges associated with taking products and solutions from the lab 
to the marketplace spirent’s performance analysis division allows 
equipment manufacturers service providers enterprise and governments 
to holistically test and benchmark the performance of voice video and 
data systems and services in an effort to accelerate the development 
and deployment of related applications 
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 as well as address the transition to 
nextgeneration service offerings service providers rely on spirent to 
improve the quality of service at the network core edge or even within 
the 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 golf carts forklift trucks and aerial 
access platforms 
£1912m
2007 £1693m
£335m
2007 £343m
£332m
2007 £334m
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 investorrelationsspirentcom
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
service helplines
tel 0871 384 2126 uk
tel 44 0121 415 7047 overseas
text phone for shareholders with hearing difficulties 
0871 384 2255 uk
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
other information 1
spirent communications plc
annual report 2008
financial highlights –  
continuing operations
revenue
£2579m
2007 £2370m
operating profit
1
£487m
2007 £255m
adjusted basic earnings per share
2
624p
2007 357p
total dividend per share
11p
2007 nil
overview
 ifc our business at a glance
 2 financial and operational highlights
 3 chairman’s statement
business review
 4 chief executive officer’s review
 5 description of the business
 6 business group development and performance
 10 financial review
 15 principal risks and uncertainties
 18 corporate social responsibility statement
governance
 21 board of directors
 22 report of the directors
 26 statement of directors’ responsibilities
 27 directors’ statement on corporate governance
 32 report on directors’ remuneration
financial statements
  consolidated financial statements 
 42 independent auditors’ report to the members of spirent  
  communications plc
 43 consolidated income statement
 44 consolidated statement of recognised income and expense
 45 consolidated balance sheet
 46 consolidated cash flow statement
 47 notes to the consolidated financial statements
  parent company financial statements
 92 independent auditors’ report to the members of spirent  
  communications plc
 93 parent company balance sheet
 94 notes to the parent company financial statements
 111 principal divisions and subsidiaries
other information
 112 financial history
 115 shareholder information
 117 glossary
 ibc contact details
cautionary statement regarding forwardlooking statements
this annual report may contain forwardlooking 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
1 before exceptional items
2  adjusted basic earnings per share is based on adjusted earnings as 
set out in note 13 of notes to the consolidated financial statements
overview 2008 624
357
148
2007
2006
2008 430
223
106
2007
2006
2008 46
33
11
2007
2006
2008 43
38
47
2007
2006
2
spirent communications plc
annual report 2008
financial and operational highlights
summary of results – continuing operations
        underlying 
        change at 
        constant 
£ million     2008 2007 change  currency 
3
reported
revenue     2579 2370 9 2
profit before tax     496 17 8 179
basic earnings per share pence    1013 297 241
total dividend per share pence    11 – 
adjusted
operating profit
1
     487 255 91 80
profit before tax
1
     514 322 60
adjusted basic earnings
2
 per share pence   624 357 75
group highlights
adjusted earnings per share up 75 per cent to   •
624 pence 2007 357 pence after charging  
030 pence for sharebased payment and 
amortisation of intangibles 2007 038 pence
adjusted operating profit up 91 per cent to   •
£487 million 2007 £255 million
increase in operating return on sales to 189 per cent  •
2007 108 per cent
cash flows from operations up 22 per cent to   •
£534 million 2007 £438 million
total order intake in january 2009 for the group is  •
level yearonyear in constant currency with 
performance analysis being down by 10 per cent
annualised cost reduction of £82 million  •
implemented in the first quarter of 2009
adjusted basic earnings 
per share
2
 pence
operating profit
14
 
£ million
performance analysis service assurance systems
notes
1 before exceptional items
2 adjusted basic earnings per share is based on adjusted earnings as set out in note 13 of notes to the consolidated financial statements
3 change at constant currencies eliminating the effects of fluctuating exchange rates on the translation of operating results
4 operating divisions excluding nonsegmental costs
overview 3
spirent communications plc
annual report 2008
chairman’s statement
“during 2008 spirent introduced new 
innovative products and lowered its 
cost base resulting in a stronger 
financial position overall”
spirent’s financial performance improved in each 
quarter throughout 2008 as a result of the programmes 
put in place to increase manufacturing efficiency and to 
deliver new innovative products in addition the 
company benefited from favourable exchange rates and 
a reduced number of issued shares these factors with 
annualised cost reductions of a further £82 million 
implemented in the first quarter of 2009 and the strong 
financial position of the company mean that spirent is 
well placed to face the challenges of an uncertain market 
in the coming year
group revenue increased by £209 million some 9 per 
cent over that for 2007 and the resulting gross profit 
increased by £188 million with the gross profit margin 
increasing by 22 percentage points yearonyear 
adjusted earnings per share increased by 75 per cent to 
624 pence from 357 pence in 2007 this was after 
charging 030 pence for sharebased payment and 
intangible amortisation down from 038 pence in 2007 
cash generation was robust with free cash flow of 
£422 million in the year
the company paid its first dividend since the first half 
of 2002 and proposes a final dividend of 06 pence per 
share this will result in a total dividend for the year of 
11 pence per share it is the board’s policy to maintain 
a high dividend cover and to pursue a sustainable 
distribution policy consistent with the development of 
earnings over time
the cash generation of the group allowed the funding of 
share repurchases through onmarket repurchase and by 
way of a tender offer £670 million was used to 
repurchase and cancel 1258 million shares some 16 
per cent of the shares in issue the total cash returned 
to shareholders since 1 january 2007 is £1338 million 
to ensure flexibility further authority will be sought at the 
annual general meeting for share repurchases of up to 
15 per cent of issued share capital depending on market 
conditions and other factors
total order intake in january 2009 for the group is level 
with that for the same period in the prior year in constant 
currency terms with performance analysis being down 
by 10 per cent in sterling total order intake in january 
2009 increased 27 per cent yearonyear the 
restructuring of the business over the past two years has 
resulted in a material reduction in the breakeven point 
for sales at current exchange rates the company will 
benefit both as an exporter of products and services 
from the uk and in the translation of the group’s 
substantial dollar earnings these factors combined with 
the reduction in the number of shares in issue will result 
in a greater resilience to the impact of any reduction in 
sales levels on the earnings per share and the cash 
generation of the group
edward bramson
chairman
edward bramson
chairman
overview 4
spirent communications plc
annual report 2008
chief executive officer’s review
“our role as leaders in test and measurement 
is to enable our customers to develop and 
validate their most successful products 
and services not just from a technological 
perspective but also to ensure the greatest 
return on their investment”
as we look back over the past year customers in most 
segments of the telecommunications industry spent more 
cautiously as 2008 progressed this was particularly true 
as the end of the fourth quarter approached network 
equipment manufacturers remained focused on 
profitability and growth as competition intensified 
restructuring across the telecommunications industry had 
an impact not only on major wireline network equipment 
manufacturers but also mobile equipment suppliers and 
service providers these factors are contributing to an 
uncertain outlook in 2009 although it is expected that 
research and development investments are unlikely to be 
reduced to the same levels as other areas of spending 
while network operator’s wireless and ethernet based 
broadband services experienced strong yearonyear 
growth revenues for traditional wireline services declined 
service providers and network equipment manufacturers 
continue to invest in areas of growth aimed at ensuring 
their future test requirements in these growth areas have 
become even more critical as service providers are driven 
to deploy highly complex converged networks delivering 
differentiated voice video data and nextgeneration 
mobile networks that include an array of gps and location 
based services the need for testing today’s as well as 
tomorrow’s equipment and networks is driven by the 
requirement to achieve uncompromised performance and 
scalability while delivering superior quality of service and 
experience across the telecommunication infrastructure 
our global reach and worldclass sales and service 
organisations allow spirent to partner closely with our 
customers enabling research and development 
efficiencies through leadership in test methodologies and 
automation spirent’s products and services serve a wide 
range of technologies from wired to wireless from 
development laboratories to live networks from chip 
manufacturers to enterprise customers our strong 
customer relationships and broad solutions portfolio 
brings value to our customers and represent a distinct 
strategic advantage for spirent 
the financial performance of the company reflects 
operational improvements undertaken through outsourced 
manufacturing design improvements and focus on driving 
efficiency throughout all aspects of our business our cash 
generation and profitability allows us to invest in the areas 
most critical to the success of our customers at the same 
time we have an agile business which is able to react 
quickly to developments in our markets in addition we 
have already taken action in the first quarter of 2009 to 
reduce spirent’s cost base by an annualised £82 million
major customers view 2009 as a year of decreased 
activity with few seeing upside before 2010 service 
providers and network equipment manufacturers will 
prioritise their overall spending but will invest in key 
technology development areas to ensure their future 
success this will drive demand for our test solutions 
despite the challenging economic environment 
our role as leaders in test and measurement is to enable 
our customers to develop and validate their most 
successful products and services not just from a 
technological perspective but also to ensure the greatest 
return on their investment spirent’s financial strength and 
diversified solutions portfolio will be key to defending and 
expanding our market share as well as developing new 
opportunities we remain realistic in facing the challenges 
resulting from the current worldwide economic downturn 
and we believe that spirent enters this year well placed to 
face the market uncertainties ahead
bill burns
chief executive officer
bill burns
chief executive officer
business review 5
spirent communications plc
annual report 2008
description of the business
spirent delivers wireline and wireless solutions which 
address carrier ethernet data center ims iptv location 
based long term evolution “lte” satellite triple play 
wimax 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 as well as address the transition to next
generation service offerings service providers rely on 
spirent to improve the quality of service at the network 
core edge or even within the home 
by leveraging the expertise gained by testing 
technologies and systems in the lab spirent enables 
service providers to deploy and maintain efficient 
costeffective and highperforming networks spirent’s 
equipment and software facilitate functional 
conformance interoperability and scalability testing 
across an entire wireline or wireless network as a result 
the operators of ethernet ims iptv triple play and 
wireless networks see reduced churn by providing a 
higher quality of experience which ultimately increases 
subscriber retention additionally such testing helps 
service providers reduce operational costs through better 
identification of potential network problems and then 
using the right resources to address and correct those 
difficulties
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 vehicles golf carts forklift trucks and aerial 
access platforms 
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 and service assurance providing network 
monitoring solutions for telecom service providers
spirent communications provides tools and systems to 
enable the world to communicate faster better more 
frequently and more reliably we develop new test 
solutions for the engineers working within the 
communications industry 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 quality and make troubleshooting 
more efficient and effective
network equipment manufacturers and service providers 
face numerous challenges associated with taking 
products and solutions from the lab to the marketplace 
spirent’s performance analysis division allows equipment 
manufacturers service providers enterprise and 
governments to holistically test and benchmark the 
performance of voice video and data systems and 
services in an effort to accelerate the development and 
deployment of related applications
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
business review 6
spirent communications plc
annual report 2008
business review
business group development and performance
communications
        underlying 
        change at 
   first second full   constant 
   half  half year  change currency 
£ million   2008 2008 2008 2007    
revenue      
performance analysis  881 1031 1912 1693 13 5
service assurance   158 177 335 343 2 9
communications group  1039 1208 2247 2036 10 3
 adjusted operating profit
1
      
performance analysis  182 248 430 223 93 83
service assurance   23 23 46 33 39 30
communications group  205 271 476 256 86 76
return on sales
1
       
performance analysis  207 241 225 132  
service assurance   146 130 137 96  
communications group  197 224 212 126  
note
1 before exceptional items in 2007
performance analysis
market conditions
the market saw growth in the first half year in all major 
areas while the second half was characterised by 
cautious spending highlighted by reduced demand in 
the fourth quarter of 2008 the current economic climate 
is forcing network equipment manufacturers and service 
providers to reprioritise the way they do business and 
has increased their focus on driving efficiency and 
operating even more costeffectively at the same time 
they understand the need to invest in technologies 
and solutions that will allow them to compete in 
global markets 
the demand for nextgeneration networks and services 
continues the pervasive nature of the internet on 
multiple devices computers mobile equipment tv and 
others offering content rich applications is driving 
growth in traffic demand for higher speed access and 
network complexity for example ethernet is evolving to 
meet the demand for increased business connectivity 
the migration of storage networks and service provider 
core networks which are moving from 10 gbe to 40100 
gbe in order to handle larger volumes of traffic 
investment in nextgeneration technologies will continue 
to drive the need for test solutions furthermore the 
current economic climate has led network equipment 
suppliers to focus on increasing efficiency in the use of 
research and development resources which drives the 
demand for more automated solutions professional 
services and expertise to assist in automation projects 
all of which are important sources of revenue for spirent
mobile communication now demands a higher level of 
performance testing which is not satisfied by existing 
conformance test standards and equipment emulation 
of realworld wireless testing in the laboratory has 
become a fundamental requirement as field testing is 
expensive and inconsistent demand is also increasing 
for smartphone testing where greater numbers of 
integrated applications on a mobile device require a 
higher degree of testing open mobile device operating 
systems are leading to the proliferation of applications to 
take advantage of higher speed data and location based 
services further growth will come from streaming and 
broadcast video as content becomes more attractive to 
users spirent delivers industry leading wireless test 
solutions to meet the ever evolving needs of wireless 
applications and services 
the market for test equipment in the positioning sector 
continues to grow as gps services evolve and new 
investments are being made in satellite systems such as 
glonass and galileo
revenue
performance analysis revenues grew by 5 per cent in 
constant currencies yearonyear the rate of growth in 
the second half year slowed following the 9 per cent 
growth in the first half of 2008 7
spirent communications plc
annual report 2008
business review
demand in the second half was softer in all areas of the 
business new broadband products including spirent 
testcenter
tm
 grew over the levels for the first half year 
but order intake slowed towards the end of the year 
wireless test solutions saw a peak in demand during the 
first half year and similarly demand softened towards the 
end of the year legacy products continued to decrease 
yearonyear but the level of revenue decline flattened in 
the second half year 
spirent continues to command technology leadership 
across its broadband solutions winning headtohead 
competitive opportunities based on technical comparisons 
against competitive products and solutions customers 
choose spirent testcenter for its performance scalability 
and ability to replicate realworld conditions across a 
wide array of testing environments combined these 
characteristics maximise return on investment and reduce 
total cost of ownership for our customers 
professional services are an increasingly important part 
of the business the number of maintenance agreements 
and their renewals has increased reflecting the value 
these services bring to our customers laboratory 
automation has stimulated demand for professional 
services the industry’s first automation forum the test 
automation alliance was launched by spirent working 
with bestinclass providers of automation solutions 
revenues for spirent’s wireless umts test solutions 
increased during the year including significant wins with 
tier 1 carriers in the us and network equipment 
manufacturers worldwide for both mobile device 
performance test systems and rf channel emulators 
revenues for cdma evdo rev a reached record levels 
and new customers adopted our solutions for lte 
infrastructure testing in europe and asia wireless 
solutions now account for 36 per cent of performance 
analysis revenues 2007 32 per cent
market adoption of location based solutions continue to 
drive revenue for our positioning products as these 
services are integrated into a wide range of devices such 
as smartphones the adoption of location based 
services has opened up a new market for our positioning 
test solutions which served 172 new customers in 2008
the division’s revenues are broad based by customer 
type and geography with a low level of customer 
concentration no single customer accounts for more 
than 10 per cent of revenues and the top 20 customers 
account for 43 per cent of the total
profitability
performance analysis profits grew in constant currency 
for the year by 83 per cent over 2007 and the second 
half year grew by 24 per cent over the same period 
profitable growth in sales contributed to the improved 
returns whilst improvement in design of our products 
and the supply chain increased gross profit margin by 19 
percentage points yearonyear indirect overheads were 
reduced in constant currency by £95 million or some 
9 per cent
product development
anticipating the needs of customers and bringing 
products to market at the right time is a key contributor 
to spirent’s success as we continue to command the 
number one or two position in most markets we serve 
in 2008 spirent launched multiple new solutions to 
support a variety of customer needs new broadband 
application and security testing solutions were 
introduced along with 10 gigabit ethernet application 
performance appliances we delivered nextgeneration 
solutions to support integrated layer 2–7 testing at line 
rate performance for mobile packet core performance 
testing we evolved our landslide solutions to support 
nextgeneration wireless standards such as lte and 
wimax our spirent testcenter platform is now capable 
of handling the needs of the latest data centre 
technology such as fibre channel over ethernet as well 
as evolving metro ethernet standards our focus in 
2009 is to continue to enhance our ethernet solutions 
portfolio meeting the requirement for testing higher 
speeds such as 1040100 gbe from a software 
perspective we will enhance our capabilities to offer 
more testing and technology coverage under our flagship 
product spirent testcenter
spirent offers unique solutions that allow makers of 
wireless equipment as well as operators of wireless 
networks to be successful in 2008 spirent launched 
overtheair test solutions for location based services 
testing devices through the antenna for both umts and 
cdma technologies call reliability testing was a market 
first in the measurement of the reliability of a device to 
complete and maintain a call under various adverse 
conditions including handover from one cell to another 
we continue our leadership in cdma testing by 
increasing protocol test coverage and the release of an 
evdo rev a protocol test solution with the release of 
the video user experience test solution we have 
assumed a leadership position in measuring the quality 
of experience in viewing video on a handset complex 
performance analysis continued 8
spirent communications plc
annual report 2008
business review
business group development and performance continued
for these solutions will reach levels to cover the decline 
in legacy solution spend until some time in 2010
professional services revenues for test automation and 
custom software remained an area of growth as service 
providers looked to increase the effectiveness of their 
existing service assurance solutions
profitability
while the service assurance business saw a decline 
in revenue in 2008 the business was able to improve 
profitability by 30 per cent in constant currency driven 
by increased efficiency and continued tight cost control 
measures across the business
product development
the division continues to focus on the development  
of service assurance and field test solutions for  
nextgeneration networks in november 2008 we 
launched a new modular field test platform techx flex 
to the market for inhome triple play testing we are in 
the process of adding additional modules in the first half 
of 2009 to extend test capabilities to “outside the home” 
and to address opportunities in the european market we 
are in trial with several major service providers in north 
america and will look to begin shipping in quantity during 
the first half of 2009 in addition we continue to 
enhance our nextgeneration diagnostic and performance 
management ethernet solutions 
systems
    underlying  
    change at  
    constant  
   change currency  
£ million 2008 2007  
revenue 332 334 1 3 
operating profit  43 38 13 9 
return on sales  130 114 
the systems group comprises pg drives technology 
a leading supplier of control systems for electrically 
powered medical and small industrial vehicles revenue 
continued to be affected by changes in us government 
healthcare funding for powered wheelchairs creating a 
shift from premium systems to lower cost solutions 
this was however offset by solid growth in our industrial 
systems the us dollar exchange rate did not materially 
impact revenue but profit was impacted by a loss on 
exchange of £04 million the weaker exchange rate 
for sterling to us dollars will benefit earnings in 2009 
compared to 2008 by £10 million on hedge contracts 
antenna configurations required for lte are tested using 
the advanced multiple input multiple output channels 
models on the sr5500 platform released in 2008 
2009 will see the need for lte device performance test 
and the multimode combination of lte and cdma we 
also expect further development in smartphones and 3g 
wireless deployments particularly in china combined 
with the need to evaluate mobile performance in real
world conditions we continue to deliver testing solutions 
that address all emerging wireless technologies
undoubtedly the investment priorities in 
telecommunications will be reset during 2009 as a 
result of the increased efficiency low cost production 
and investment in innovation our performance analysis 
division is better positioned than most in our industry to 
respond to the challenges ahead the longer term 
prospects resulting from the convergence of wired and 
wireless technologies in a world of increased connectivity 
with greater functionality remain good for test and 
measurement products solutions and services
service assurance
market conditions
market conditions remained challenging throughout 2008 
for the service assurance division however there were 
signs that the adoption of nextgeneration network 
architectures has grown to a scale where service 
assurance solutions are required specifically we saw 
increased demand for metro ethernet and triple play 
solutions for both centralised test and field test 
solutions this included important wins in 2008 at 
several large service providers in north america
overall we see the service assurance market remaining 
sluggish during 2009 due to the economic climate and 
continued caution around capital spending however we 
believe that increased global competition and the 
transition to nextgeneration networks provides additional 
market opportunities for the service assurance division 
within cable multiple system operators wireline and 
wireless service providers
revenue
service assurance revenues declined by 9 per cent in 
constant currency yearonyear as service providers 
continued to reduce spend on legacy and dsl solutions 
we received further orders for our triple play monitoring 
solutions while we have seen increased demand for 
nextgeneration solutions we do not anticipate spending 
performance analysis continued 9
spirent communications plc
annual report 2008
business review
in place at the year end we continued to place more 
production into china to support our activities in the asia 
pacific region and in order to gain product and logistical 
cost benefits
during 2008 we introduced new products for scooters 
and wheelchairs to further strengthen our position in the 
medical mobility market good progress was made in 
opening new industrial market segments such as 
forklift trucks 
nonsegmental costs
nonsegmental costs before exceptional items reduced 
by £07 million to £32 million in 2008 these cost 
reductions were principally a result of the consolidation 
of reporting activities and other functions in the business 
units enabling a reduction in staff levels 
systems continued 10
spirent communications plc
annual report 2008
business review
financial review
eric hutchinson
chief financial officer
“foreign exchange will be a continuing theme in 
2009 and if exchange rates remain at current 
levels this will have a significant positive 
effect on spirent’s reported revenue and 
earnings due to translation periodonperiod”
group financial performance
results – continuing operations
the following table shows the key performance indicators monitored by the board in order to measure performance
        underlying 
        change at 
   first second full   constant 
   half  half year  change currency 
   2008 2008 2008 2007    
book to bill ratio
1
   098 097 098 105  
revenue £ million   1205 1374 2579 2370 9 2
gross profit margin
2
   635 656 646 624  
operating profit
2
 £ million  210 277 487 255 91 80
return on sales
2
    174 202 189 108  
adjusted basic earnings per share
3
 pence 267 357 624 357 75 
free cash flow
4
 £ million  178 244 422 502 16 
the group’s financial performance is reported in accordance with international financial reporting standards “ifrs”
all comments below refer to continuing activities only unless otherwise stated
the group is reporting an underlying change in revenue and adjusted operating profit given the effect the strength of the us dollar has had on operating 
results this year compared with the previous year underlying change is the change at constant currencies and eliminates the effects of fluctuating 
exchange rates on the translation of operating results
notes
1 ratio of orders booked to revenue billed
2 before exceptional items in 2007
3 adjusted basic earnings per share is based on adjusted earnings as set out in note 13 of notes to the consolidated financial statements
4 operating cash flow after tax net interest and net capital expenditure
a significant amount of spirent’s revenues are 
denominated in us dollars and with sterling weakening 
against the us dollar particularly in the last quarter of 
2008 translation has had a positive effect increasing 
reported revenue by £160 million compared with 2007 
revenue
reported revenue in sterling was up 9 per cent compared 
with 2007 the underlying change was an increase of  
2 per cent due to the improvement seen in  
performance analysis 11
spirent communications plc
annual report 2008
business review
the geographic profile by market of reported revenues 
did not change significantly with revenue in sterling terms 
up in all markets
£ million 2008  2007 
europe 478 19 437 18
north america 1395 54 1322 56
asia and rest 
of the world 706 27 611 26
 2579  2370 
 
the book to bill ratio was lower at 098 for the year 
compared with 105 for 2007 this reflects both the 
changing profile of the spirent group as technology 
continues to migrate from older platforms to new and a 
weakening of demand levels seen towards the end of the 
fourth quarter of the year the group continues to 
maintain a healthy order book
operating profit
operating profit improved by 91 per cent to £487 million 
compared with an operating profit before exceptional 
items of £255 million in 2007 11 percentage points of 
the improvement was due to exchange rates other 
factors include higher revenue improved gross profit 
margin and reductions in overhead cost resulting from 
the actions commenced in 2007
the resulting operating return on sales increased to  
189 per cent for 2008 compared to 108 per cent in 
2007 return on sales was 202 per cent for the second 
half of 2008
currency impact
as previously mentioned there was a significant 
weakening of sterling in the latter part of the year against 
all the major currencies spirent is most exposed to the 
sterling to us dollar exchange rate and this rate has 
changed from 199£1 at 31 december 2007 to 
144£1 at 31 december 2008 although there was a 
marked change to the closing exchange rate as this 
happened in the latter part of 2008 its effect on the 
average rate used to translate spirent’s results was 
positive but less material the average us dollar to 
sterling exchange rate was 185£1 in 2008 compared 
with 200£1 in 2007 
given that a significant amount of spirent’s revenue 
arises in north america even this degree of change in 
the average exchange rate positively affected the 
translation of our revenue and profits increasing 
reported revenue as noted above the impact on 
operating profit was an increase of £26 million due 
to translation 
our uk based businesses are exposed to transactional 
currency risk but had hedged most of the 2008 us 
dollar exposures by the end of 2007 at an average 
forward rate of 203£1 for 2009 transaction 
exposures have been hedged in 2008 at a forward 
average rate of 176 this will result in a £30 million 
benefit in 2009 compared to the hedge rate in 2008 
foreign exchange will be a continuing theme in 2009 
and if exchange rates remain at current levels this will 
have a significant positive effect on spirent’s reported 
revenue and earnings due to translation periodonperiod 
at an average exchange rate of 145£1 and based on 
2008 revenue and operating profit revenue would 
increase by approximately £48 million and operating 
profit by £12 million compared to that reported
cost of sales and operating expenses
gross profit margin increased by just over two 
percentage points to 646 per cent of revenue from 
624 per cent in 2007 much of this increase reflects the 
further improvements achieved through the restructuring 
and outsourcing initiatives undertaken in the 
communications businesses in 2007
as the development of new innovative test products is 
critical to the success of performance analysis product 
development continues to be a significant cost for the 
group product development expense increased from 
£445 million in 2007 to £453 million in 2008 but was 
lower in us dollar terms and dropping to 176 per cent 
from 188 per cent of sales in 2007 
this reduction reflects benefits achieved through 
increased efficiencies reduction in facilities and lower 
development spending on older technology products
other operating expenses excluding exceptional items 
reduced from £778 million in 2007 to £726 million in 
2008 being 328 per cent and 282 per cent of sales 
respectively the annual reduction includes the lower 
expense for sharebased payment of £15 million in 
2008 compared with £25 million in 2007 and the lower 
cost base achieved through restructuring
exceptional items
no exceptional operating items have been charged in 
2008 in 2007 £144 million was expensed for 
group financial performance continued 12
spirent communications plc
annual report 2008
business review
financial review continued
restructuring costs including severance costs asset 
writedowns and provisions for vacant leasehold space
in 2008 £08 million of exceptional finance income has 
been reported in relation to interest received on tax 
refunds for prior periods an exceptional interest expense 
of £26 million has been charged for interest paid on the 
agreement of prior year tax positions with the relevant 
tax authorities
there is an exceptional tax credit of £256 million which 
relates to the agreement of an overseas tax position
intangible amortisation
operating expense for continuing businesses includes a 
charge of £07 million for the amortisation of intangibles 
in 2008 compared to £09 million in 2007 
sharebased payment
the charge for sharebased payment for 2008 was 
£15 million compared to £25 million for 2007 minimal 
sharebased incentives were awarded in 2008 and it is 
expected that this charge will fall further in 2009 to 
approximately £04 million
net finance income
net finance income was £27 million compared with 
£67 million for 2007 excluding exceptional interest 
referred to above this reflects the significant reduction 
in returns particularly in the last quarter of 2008 as 
central banks lowered base rates in response to the 
economic uncertainties surplus funds are held in short 
term bank deposits and earn market rates of interest 
since these returns have reduced considerably this will 
result in substantially reduced interest income in 2009 
net finance income includes £01 million of income in 
respect of the expected return on pension plan assets 
less the interest charge on the unwinding of liabilities 
this has reduced from £09 million in 2007 a result of 
reduced asset values compared with the prior year for 
2009 the expected interest for the pension plan will be a 
cost in the region of £12 million affected by the 
reduced returns on assets as well as lower asset values
profit before tax for continuing operations
reported profit before tax for continuing operations was 
£496 million compared with £178 million for 2007
adjusted profit before tax is set out below
£ million  2008 2007
reported profit before tax  496 178
exceptional operating items  – 144
exceptional interest net  18 –
adjusted profit before tax  514 322
  
tax
in 2008 there was a net tax credit of £252 million 
2007 £77 million credit this includes the release of a 
£305 million provision resulting from the agreement of 
prior year tax positions with the relevant tax authorities 
of this £256 million has been classed as exceptional 
due to its significance and unusual nature as discussed 
above net interest of £18 million has been incurred as 
a result of these agreements excluding prior period 
adjustments the current year tax charge was £53 million 
giving an effective tax rate of 103 per cent
in 2007 there was a prior year tax credit of £53 million 
and a tax credit on exceptional items of £39 million the 
current year charge for 2007 was £15 million giving an 
effective tax rate for 2007 of 47 per cent including the 
recognition of deferred tax assets
at 31 december 2008 a deferred tax asset of 
£122 million 2007 £105 million has been recognised 
deferred tax assets on temporary differences of 
£291 million 2007 £562 million arising principally in 
the united states canada and the united kingdom have 
not been recognised in addition the group has tax 
losses arising in the united kingdom of £803 million 
2007 £689 million in the united kingdom and 
£286 million in the united states that are available for 
offset against future taxable profits 
in total deferred tax assets amounting to a tax value 
of £340 million 2007 £501 million have not been 
recognised on unutilised losses and temporary 
differences although the directors ultimately expect 
to realise these assets there is currently insufficient 
evidence under ias 12 “income taxes” to recognise them
as the group utilises the benefit of tax losses brought 
forward the future tax rate will increase progressively 
this effect is expected to result in an increase in the 
effective rate for 2009 to about 15 per cent
group financial performance continued 13
spirent communications plc
annual report 2008
business review
discontinued operations
in 2007 discontinued operations relate to the loss 
making swissqual business the disposal was 
completed on 5 july 2007 for cash proceeds of 
30 million £15 million a loss on disposal of 
£42 million was recorded there were no discontinued 
operations in 2008
earnings per share
basic earnings per share for the group was 1013 pence 
for 2008 compared with 205 pence for 2007 
adjusted basic earnings per share for continuing 
operations being before exceptional items net of any 
related tax and prior year tax was 624 pence compared 
with 357 pence for 2007 an improvement of 75 per cent 
yearonyear 
weighted average ordinary share capital was 
7385 million shares compared with 8598 million for 
2007 significantly reduced by the onmarket share 
repurchase programme and tender offer made to 
shareholders in 2008 at the year end the shares in 
issue ranking for dividend were 6640 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 
27 of notes to the consolidated financial statements
financing and cash flow
cash and cash equivalents were £597 million at 
31 december 2008 compared with £790 million at 
31 december 2007 and this was after an outflow of 
£672 million for the share repurchase programme and 
tender offer in 2008 the group continues to be debt 
free although a £25 million threeyear working capital 
facility which is currently undrawn was put in place in 
the second half year the majority of the cash is held in 
the united kingdom and the united states currency 
translation has increased cash and cash equivalents by 
£58 million
operating activities generated cash of £477 million in 
the year compared with £498 million in 2007 free cash 
flow is set out below
£ million  2008 2007
cash flow from operations   534 438
tax paidreceived  57 60
cash flow from operating activities  477 498
net interest income  14 56
net capital expenditure  69 52
free cash flow  422 502
  
in 2008 there was a net tax payment of £57 million 
compared with a net tax refund in 2007 of £60 million 
in 2007 brought forward tax losses were available for 
setoff of taxable profits and tax refunds were due for 
prior years in 2008 profitability has improved and the 
losses available for setoff have also reduced resulting in 
a return to tax payments at more normal levels 
net interest received is considerably lower at £14 million 
compared with £56 million in 2007 affected by the 
reduction in returns on bank deposits and includes 
£18 million of net interest due on the prior year  
tax settlements
net capital expenditure for the group has increased to 
£69 million of cash outflow in 2008 2007 £52 million 
this was well below the depreciation charge of 
£88 million with most manufacturing now outsourced 
the group’s capital investment requirements continue 
to be low
net proceeds of £06 million were received from the sale 
of swissqual in 2007 and a tax payment of £68 million 
was made in respect of a prior year disposal 
in 2008 the group paid an interim dividend of 05 pence 
per share giving a net outflow of £37 million 2007 nil
pension fund
the accounting valuation of the uk defined benefit 
pension plans at the end of 2008 was based on the 
results of the triennial valuation of the plans at 1 april 
2006 the next valuation is due at 1 april 2009 
group financial performance continued 14
spirent communications plc
annual report 2008
business review
financial review continued
the group has adopted ifric 14 “the limit on a defined 
benefit asset minimum funding requirements and their 
interaction” and this has required a restatement of the 
opening surplus to £61 million having previously been 
restricted to £30 million at 31 december 2007 under 
ias 19 “employee benefits”
the surplus in the plans reduced from £61 million at 31 
december 2007 to £26 million at 31 december 2008 
this reduction is due to falling equity markets and 
returns on other assets compensated for by a change in 
the assumptions underlying the calculation of the 
liabilities principally the rate of return on corporate 
bonds the asset allocation strategy of the main plan 
has progressively been reduced from an equity weighting 
of 375 per cent at 1 january 2008 to 25 per cent at 31 
december 2008 and this has mitigated the impact of 
falling equity markets during 2008 
the group has also reported a liability of £06 million 
2007 £07 million in respect of the uk unfunded plan
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
capital structure 
in 2008 £670 million 2007 £668 million of cash 
was returned to shareholders via onmarket share 
repurchases and a tender offer this represents 
1258 million ordinary shares 2007 1034 million 
as a result of the tender offer in november 2008 the 
company repurchased 529 million shares at a strike 
price of 46 pence per ordinary share shares 
repurchased onmarket amounted to 729 million and 
these were repurchased at an average price of 57 pence 
per share
at 31 december 2008 there were no shares held in 
treasury all shares repurchased have been cancelled 
and at 31 december 2008 there were 6640 million 
ordinary shares in issue ranking for dividend 
dividend
following a period of improved profitability and more 
stable cash generation the board was pleased to 
announce at the interim stage a dividend of 05 pence 
per share this was paid to shareholders in october 
2008 and amounted to £37 million 
the board are now recommending the payment of a  
final dividend for 2008 of 06 pence per ordinary share 
bringing the full year dividend to 11 pence per ordinary 
share and being covered 57 times by adjusted earnings 
this is the first full year dividend payment since that for 
2001 subject to approval by the shareholders at the 
annual general meeting the final dividend will be paid  
on 8 may 2009 to shareholders on the register at  
6 march 2009 payment to adr holders will be made  
on 18 may 2009
outlook
during 2008 spirent introduced new innovative 
products and lowered its cost base resulting in a 
stronger financial position overall these factors with the 
benefit of current exchange rates and the substantially 
reduced number of shares in issue will result in relative 
resilience in earnings and cash generation
spirent enters 2009 well placed to face the uncertainties 
of the market
group financial performance continued 15
spirent communications plc
annual report 2008
business review
principal risks and uncertainties
the principal risks and uncertainties which the directors 
believe are currently faced by spirent communications 
plc are discussed below
global economic and market conditions 
spirent operates globally with revenue generated in the 
united states europe and asia demand for spirent’s 
products is therefore dependent on the general economic 
and market conditions in all these regions a significant 
deterioration in economic or market conditions for 
example a recession in any one of these regions could 
significantly reduce demand for spirent’s products which 
could harm the business operating results and financial 
condition of the group
deteriorating economic and market conditions may also 
impact the financial position of the group’s customers 
and suppliers and impact their ability to do business 
with spirent
the group’s businesses closely monitor both market and 
geographic trends in order to take timely actions to 
minimise the effects of adverse economic and 
market conditions
technological change
the spirent group sells products and systems in several 
industries that are characterised by rapid technological 
changes frequent product and service introductions and 
evolving industry standards if the communications 
business fails to extend its existing capabilities in the 
nextgeneration technology the business operating 
results and financial condition of the communications 
group will suffer
spirent believes that the continued success of the 
communications business is dependent on its ability to 
advance nextgeneration technologies and continues to 
make significant investment in product development and 
in 2008 £453 million being 18 per cent of revenue was 
invested spirent prioritises investment across its 
portfolio based on the expected return
customer concentration
although no one customer accounts for more than 
10 per cent of revenue for the spirent group in some 
businesses in particular in service assurance and 
systems there are a limited number of customers which 
makes relationships with these customers as well as 
the success of those customers’ businesses critical to 
their success the loss of one or more of spirent’s major 
customers could harm the business operating results 
and financial condition of spirent
spirent is continuing to diversify its customer base in 
service assurance and systems in addition spirent 
works closely with all its customers to develop strong 
relationships with a significant focus on ensuring its 
products and services meet the needs of its customers 
and are of the highest quality
reliance on contract manufacturers
the fact that spirent uses contract manufacturers for the 
manufacture of a substantial amount of its products 
could have an adverse impact on the supply of its 
products and on operating results financial problems of 
contract manufacturers on whom spirent rely or 
limitations in the manufacturing capacity at contract 
manufacturers could either limit supply or increase 
costs also a major contract manufacturer of the group 
is located in asia any disruption of its operations could 
have an adverse impact on spirent
spirent works closely with its contract manufacturers and 
maintains 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
operational risks and systems
operational risks are present in the spirent group’s 
businesses these risks include but are not limited to 
the risk of failed internal and external processes and 
systems including information technology systems 
human error and external events such events could have 
an impact on the business operating results and 
financial condition
a significant portion of spirent’s communications 
operations are located in california which has 
experienced natural disasters including earthquakes and 
wildfires in the past a significant natural disaster such 
as an earthquake or wildfire could disrupt its ability to 
conduct business in the affected locations and could 
have a material adverse impact on business operating 
results and financial condition
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 16
spirent communications plc
annual report 2008
business review
principal risks and uncertainties continued
competition
the spirent group faces competition in all of its 
businesses to stay competitive these businesses will 
need to introduce successful new products and also may 
have to adjust prices of some products the business 
operating results and financial condition may suffer if 
spirent does not compete effectively
the group invests in product development to develop 
new technologies and products to sustain and improve 
its competitive position spirent actively works with its 
customers to find innovative ways to meet their 
technological needs in order to remain a key provider to 
them spirent’s value proposition is based on its service 
expertise and product breadth rather than just competing 
on price
financial markets and credit risk
the spirent group is exposed to credit risk in relation to 
its trade receivables and its short term bank deposits 
and other investments 
deteriorating economic conditions may impact the 
financial position of our customers and of those banks 
with whom spirent transact investments there has also 
been significant weakness during the year in the 
international financial markets which should it continue 
could pose risks to the financial position of our 
customers and may impact that of the banks with whom 
spirent transact investments 
should spirent be subject to the failure of a major 
customer or a bank with which it transacts investments 
the spirent group’s business operating results and 
financial condition may suffer
for trade receivables the appropriate credit checks are 
made on potential customers prior to sales commencing 
and balances due from customers are monitored and 
managed by local management the concentration of 
credit risk is limited due to the large customer base 
the spirent group invests cash as short term bank 
deposits and other similar investments investment 
is limited to a group of high quality banks there are 
preapproved limits set by the board for each bank 
to avoid concentrations of credit risk 
credit risk is discussed in note 27 of notes to the 
consolidated financial statements
retention and recruitment of key staff
spirent’s success is dependent on attracting and 
retaining highly qualified and skilled employees there  
is competition for personnel from other organisations 
and the loss of key employees or the failure to attract 
and retain other highly skilled employees may impair 
spirent’s ability to run and expand its business 
effectively
the group aims to attract retain and motivate the 
highest calibre of employees and encourages their 
contribution and development appropriate career paths 
and internal recognition programmes are developed for 
both technical and nontechnical staff
intellectual property
while spirent does not believe that any of its products 
infringe the valid intellectual property rights of third 
parties it may be unaware of intellectual property rights 
of others that may cover some of its technology 
products and services as a result spirent could suffer 
litigation expenses or could be prevented from selling 
certain products as a result of thirdparty infringement 
claims spirent has procedures in place regarding the 
development of new products that includes consideration 
of intellectual property rights and also consults internal 
and external legal counsel experienced in intellectual 
property matters
the success of spirent depends in part on proprietary 
technology should spirent fail to maintain or enforce 
intellectual property rights or if competitors design 
around its technology or develop competing technologies 
its competitive position could suffer and its operating 
results may be harmed spirent prioritises investment 
across its portfolio based on the expected return  
spirent also has active ip protection programmes to 
obtain appropriate intellectual property protection in 
a cost effective manner
regulation and taxes
the businesses are subject to various significant 
international federal state and local regulations 
currently in effect and scheduled to become effective 
in the near future including but not limited to 
environmental health and safety and importexport 
regulations these regulations are complex change 
frequently can vary from country to country and have 
increased over time spirent may incur significant 
expense in order to comply with these regulations or  17
spirent communications plc
annual report 2008
business review
to remedy violations of them any failure by spirent to 
comply with applicable government regulations could 
result in noncompliant portions of our operations being 
shut down product recalls or impositions of civil and 
criminal penalties and in some cases prohibition from 
distributing our products or performing our services until 
the products and services are brought into compliance 
which could significantly affect our operations
the group closely monitors regulations across its 
businesses to ensure that it complies with the relevant 
laws and regulations whilst spirent does not believe that 
it is noncompliant with any laws or regulations other 
than as disclosed in note 17 of notes to the consolidated 
financial statements any instances of noncompliance 
would be brought to the attention of the appropriate 
authorities as soon as possible 
the group’s tax charge is comprised of current and 
deferred tax charges the calculation of these charges 
involves a certain amount of estimation and judgement 
spirent is subject to income taxes in a number of tax 
jurisdictions and there are many transactions for which 
the final tax determination is uncertain and which may 
take many years to resolve liabilities are recognised for 
anticipated tax audit issues determined on whether 
additional taxes are likely to be due using facts and 
circumstances known at the time the financial 
statements are prepared the final outcome could differ 
significantly from the amounts initially recorded and 
affect the financial position and results of the group
exchange rate
currency exposures arise from trading transactions 
undertaken by the group’s operations in foreign 
currencies and on the translation of the operating results 
and net assets of overseas subsidiaries
spirent conducts operations globally and accordingly the 
value of its revenue and expenses assets and liabilities 
will be affected by fluctuations of the pound sterling its 
reporting currency against the currency in which these 
are denominated 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 such fluctuations in exchange could 
therefore have a material impact on the reported results 
the principal currency to which spirent is exposed is the 
us dollar
where trading transactions within spirent’s operations 
are exposed to foreign currencies and these do not 
naturally offset forward foreign currency exchange 
contracts are put in place to hedge the transactions
critical accounting policies and judgements
the consolidated group financial statements are 
prepared using a number of estimations and 
assumptions which are based on the directors’ best 
knowledge of the current facts and circumstances 
results may differ significantly from those estimates 
made under different assumptions and judgements the 
directors have outlined those accounting policies which 
are considered most critical in note 2 of notes to the 
consolidated financial statements
forwardlooking statements
this document includes forwardlooking statements 
concerning spirent’s business operations and financial 
performance and condition forwardlooking statements 
are based on current expectations and projections about 
future events these forwardlooking statements are 
subject to risks uncertainties and assumptions about 
the spirent group the spirent group undertake no 
obligation to update publicly or revise any forwardlooking 
statements whether as a result of new information 
future events or otherwise given these considerations 
readers are cautioned not to place undue reliance on 
such forwardlooking statements
regulation and taxes continued 18
spirent communications plc
annual report 2008
business review
corporate social responsibility statement
we recognise that our social environmental and ethical 
conduct has an impact on our reputation we therefore 
take our corporate social responsibilities “csr” 
seriously and are committed to advancing our policies 
and systems across the group to ensure we address and 
monitor all aspects of csr that are relevant to our 
business these include good ethical behaviour concern 
for employee health and safety care for the environment 
and community involvement
we strive to maintain a productive and open dialogue 
with all parties who may have an interest in our activities 
including shareholders customers suppliers and 
employees we have an established investor relations 
programme work closely with our customers monitor 
supplier performance and actively encourage feedback 
from our employees we maintain our website as one of 
the main routes for providing information to interested 
parties and for contacting us
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 as a 
group driven largely by technological innovation our main 
assets are the talents and skills of the people we 
employ the board does not believe that the activities of 
the group present any significant environmental risks
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
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 ethics policy was reviewed 
and revised by the board during 2008 and sent to every 
spirent employee
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 so the group aims to find 
keep and engage 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
employees are provided with numerous learning and 
development opportunities to fulfil 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 in our beijing office we had 33 
employees during the last fiscal year taking english 
language training through guided multimedia and 
supported selfstudy combined with facetoface 
speaking activities 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 spot bonus 
programme employees in any function or business unit 
are eligible for a spot bonus award for performing at a 
level above and beyond the call of duty including 
contributions that produce results that will continually 
improve current operations that delight our customers 
or that result in a significant reduction of expenses  19
spirent communications plc
annual report 2008
business review
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
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 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 the chief financial officer 
reports any major health and safety issues to the audit 
committee and the board as necessary
the health and safety risk profile of the group again 
improved in 2008 as further group manufacturing moved 
to an outsourcing model the main risks of the group 
are 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 2008 and no incidents 
required any hospitalisation no major health and safety 
issues were reported to the audit committee and board 
during the year
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
all business units are responsible for providing 
employees with a written health and safety 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
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 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 businesses comply with  
both the waste electrical and electronic equipment 
regulations and the restriction of the use of certain 
hazardous substances in electrical and electronic 
equipment regulations 2004
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
employees continued 20
spirent communications plc
annual report 2008
business review
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 also 
have historic land and groundwater contamination it is 
our position that we do not have legal responsibility for 
the clean up costs on this site
community 
spirent aims to build stronger and healthier global 
communities through education charitable donations 
and support of nonprofit 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 public
private nonprofit educational organisations to help 
students develop the skills needed to succeed in the 
global economy throughout 2008 we continued to 
support education by offering internships and work 
experience programmes for example in the uk 
one of our employees is a “science and engineering 
ambassador” for stemnet the science technology 
engineering mathematics network wwwstemnetorguk
spirent also periodically provides work experience 
opportunities for local teenagers in our paignton uk 
office where 15 year olds spend a week with our team 
visiting each department that is of interest to them our 
service assurance division in maryland partners with its 
local junior achievement chapter to bring the realworld 
to students through handson curriculum 
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 2008 our employees in the us 
participated in food drives for the second harvest food 
bank wwwsecondharvestfoodorg and for the santa 
comes to agoura and beyond programme our california 
employees also collect toys during the holidays for 
underprivileged children as part of the annual california 
highway patrol’s holiday toy drive “chips for kids” 
charitable donation policy
our businesses are encouraged to support the particular 
needs of their population 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 
while our charitable donation policy matches employee 
contributions on a regular basis there are times when 
extraordinary events lead to extraordinary action 
following the devastating earthquake in china’s sichuan 
province in may 2008 our employees in china donated 
time money and gifts generously spirent also made a 
special contribution to the red cross china relief fund 
of £10700
in addition to the special contribution to the red cross 
spirent made charitable cash donations of £41300 in 
2008 2007 £40000
spirent continues to support all of our employees and 
businesses in finding new ways of becoming involved to 
give back to their communities
corporate social responsibility statement continued
environmental continued 21
spirent communications plc
annual report 2008
governance
board of directors
1 edward bramson 57 
n
chairman
edward bramson was appointed chairman of 
the board and chairman of the nomination 
committee on 22 december 2006 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 non
executive 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
2 bill burns 41
chief executive officer
bill burns was appointed chief executive officer 
on 6 november 2008 having previously led the 
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 53
chief financial officer
eric hutchinson was appointed finance director 
in 2000 having previously been responsible for 
all financial reporting and control within the 
group he is also a nonexecutive director and 
chairman of the audit committee of trifast plc
4 alex walker 62 
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 
5 ian brindle 65 
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 51 
n
nonexecutive director
gerard eastman was appointed to the board 
on 22 december 2006 he is a partner in 
sherborne investors a turnaround investment 
firm he also serves as a director on 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
7 duncan lewis 57 
nr
independent nonexecutive director
duncan lewis was appointed to the board on  
1 july 2007 mr lewis is chief executive officer 
of vislink plc a technology company supplying 
secure communication systems to the 
broadcast law enforcement and 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 61 
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 27
further biographical details of the directors  
can be found on the company’s website at  
wwwspirentcom
a  audit committee chairman – ian brindle
n  nomination committee chairman – edward bramson
r remuneration committee chairman – alex walker
1
2
3
4
5
6
7
8 22
spirent communications plc
annual report 2008
governance
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 2008 the purpose of the annual report is to 
provide information to shareholders of the company 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 nothing in this annual report should be 
construed as a profit forecast 
business review
the companies act 2006 requires the directors to 
present a business review in this report the information 
that fulfils this requirement can be found in the sections 
set out below and is incorporated by reference into  
this report
chairman’s statement on page 3 •
chief executive officer’s review on page 4 •
description of the business on page 5 •
business group development and performance on  •
pages 6 to 9
financial review on pages 10 to 14 •
principal risks and uncertainties on pages 15 to 17  •
corporate social responsibility statement on pages 18  •
to 20 and
statement of directors’ responsibilities on   •
page 26
this business review has been prepared to provide the 
company’s shareholders with a fair review of the 
business of the company and a description of the 
principal risks and uncertainties facing it 
this report together with the sections of the annual 
report incorporated by reference as set out above 
consist of a directors’ report that has been drawn up and 
presented in accordance with and reliance upon 
applicable english law the liabilities of the directors in 
connection with that report shall be subject to the 
limitations and restrictions provided by such law
principal activities
the principal activities of the group are set out on page 
5 of this annual report
results and dividends
the consolidated income statement is on page 43 profit 
for the financial year attributable to equity shareholders 
amounted to £748 million
a final dividend of 06 pence per ordinary share is 
recommended by the board for the year to 31 december 
2008 2007 nil for which approval will be sought from 
shareholders at the company’s 2009 annual general 
meeting “2009 agm” on 7 may 2009 to be paid on  
8 may 2009 adr holders on 18 may 2009 to those 
shareholders whose names are on the register of 
members on 6 march 2009
together with the interim dividend of 05 pence per 
ordinary share 2007 nil which was paid to shareholders 
on 15 october 2008 this amounts to a total dividend for 
2008 of 11 pence per ordinary share
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 6718 million ordinary shares 
of 3
1
 3 pence each had been issued and 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 overthe
counter market and the bank of new york mellon is the 
authorised depositary bank for the company’s adr 
programme further details on share capital are set out 
in note 29 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 company is not aware of any agreements between 
shareholders that may result in restrictions on the 
transfer of securities or on voting rights 23
spirent communications plc
annual report 2008
governance
during the year to 31 december 2008 options and 
rights exercised pursuant to the company’s share 
incentive plans resulted in the allotment of 52 million 
new ordinary shares no 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 
save 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 16 to the parent 
company financial statements on page 106
trustees of both trusts do not vote their ordinary shares 
save for those ordinary shares held in the esot which are 
the beneficial property of an employeeshareholder which 
they will vote in accordance with the instructions received 
from the beneficial owner
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 options and awards granted to 
employees under such plans to vest on a takeover 
as follows
 change of 
 control  
share incentive provisions  effect on performance 
plan in the rules  vesting condition
2005 employee 
incentive plan yes prorated still applies
spirent stock 
incentive plan no none na
the company has entered into a £25 million multicurrency 
revolving facilities agreement dated 5 september 2008 
which provides that in the event of a change of control of 
the company the lenders are entitled to call for the 
repayment or cancellation of the facilities the facilities 
are undrawn at the date of this report
share capital and control continued
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
since the company commenced returning capital to 
shareholders in may 2006 a total of £1757 million 
has been returned representing 3195 million 
ordinary shares
the company will seek renewal of the authority to 
repurchase up to 1499 per cent of its own ordinary 
shares at the 2009 agm to facilitate any further return 
of capital if it is concluded that it is in the best interests 
of shareholders
onmarket programme
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 
was renewed at the 2007 and 2008 agms and the  
2008 egm see tender offer below during 2008 a  
total of 729 million ordinary shares each with a nominal 
value of 3
1
 3 pence were repurchased for an aggregate 
consideration of £422 million and placed either in 
treasury and cancelled or cancelled immediately following 
the repurchase this represents 92 per cent of the 
company’s issued ordinary share capital at the 
beginning of 2008 excluding treasury shares – see 
also note 29 to the consolidated financial statements 
and note 16 to the parent company financial 
statements the company did not repurchase any 
further ordinary shares between 1 january 2009 and 
the date of this report
tender offer
on 15 september 2008 the company announced the 
launch of a tender offer to repurchase up to £50 million 
of ordinary shares in the company a circular was sent  
to shareholders on 15 september 2008 containing  
the detailed terms of that tender offer however on   24
spirent communications plc
annual report 2008
governance
13 october 2008 the company announced that as the 
company’s ordinary shares were trading at a 22 per cent 
discount to the bottom of the price range set out in the 
tender offer it no longer believed the tender offer to be 
in the best interests of the company or the shareholders 
as a whole and withdrew the tender offer 
on 13 october 2008 the company announced that  
it would launch a new tender offer to repurchase up 
to £25 million of ordinary shares in the company and 
a new price range was set for this tender offer this 
offer was launched on 27 october 2008 and led to 
529 million ordinary shares 73 per cent of the 
company’s issued ordinary share capital at  
27 november 2008 being repurchased for immediate 
cancellation at a total cost of £248 million
substantial shareholdings
at the date of this report the following significant 
holdings of voting rights had been disclosed to the 
company under the disclosure and transparency rules 
of the financial services authority
  number of  of 
  ordinary  company’s 
  shares total 
  voting rights voting rights
sherborne investors gp llc  130270000 1939
prudential plc 82045817 1221
aviva plc 51634447 769
ameriprise financial inc 38520235 573
blackrock inc 37539447 559
credit suisse asset management ltd 36863179 549
legal  general group plc 35628811 530
sun life assurance company of
 canada uk ltd 23382347 348
board of directors
the names and brief biographical details of the directors 
who served during the year under review are shown on 
page 21
election and reelection of directors
the company’s articles of association contain provisions 
relating to the appointment and replacement of directors
pursuant to the company’s articles of association and 
the combined code on corporate governance ian 
brindle and alex walker will retire at the 2009 agm and 
being eligible offer themselves for reelection having 
been appointed since the last annual general meeting 
bill burns will retire at the 2009 agm and being eligible 
will offer himself for election on appointment to the 
report of the directors continued
return of capital continued
board on 22 december 2006 edward bramson and 
gerard eastman stated that they would retire and offer 
themselves for reelection as directors on an annual 
basis and therefore will retire at the 2009 agm and 
being eligible offer themselves for reelection bill burns 
is the only director subject to election or reelection who 
has a service contract with a group company
directors’ interests
edward bramson and gerard eastman have a connected 
notifiable interest in the company’s ordinary shares held 
by sherborne investors gp llc see substantial 
shareholdings above this connected notifiable interest 
is also deemed for statutory purposes to be an interest 
of these directors as they are members of sherborne 
investors gp llc which is the general partner of 
sherborne investors lp sherborne investors lp is the 
managing member of each of the following funds which 
are the beneficial owners of the company’s ordinary 
shares sherborne strategic fund a llc sherborne 
strategic fund b llc hayden investor partners llc and 
hayden investor partners ii llc 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
directors’ indemnity arrangements
save as disclosed 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 other than a third party indemnity provision 
between each director and the company and service 
contracts between executive directors and the company 
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 the 
directors of the company in respect of costs of defending 
claims against them and third party liabilities these 
provisions are currently in force
corporate social responsibility
the group’s corporate social responsibility statement 
appears on pages 18 to 20 this statement gives details 
of the group’s policies on ethics the environment health 
and safety charitable donations and involvement in 
the community  25
spirent communications plc
annual report 2008
governance
charitable donations of £52000 were made in the year 
2007 £40000 this amount excludes operating units’ 
support and participation in local community activities 
no political donations were made in the year 2007 nil
the group employs approximately 1500 people  
2007 1550 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 
£453 million research and development spend during 
the year for continuing business equivalent to 18 per 
cent of revenue 2007 £445 million and 19 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 2008 the company had an average of 
51 days purchases outstanding in trade creditors 
2007 43 days
corporate governance
the directors’ statement on corporate governance is set 
out on pages 27 to 31 the statement of directors’ 
responsibilities in respect of the financial statements 
appears on page 26
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 4 to 
20 the financial position of the group its cash flows 
liquidity position and borrowing facilities are described in 
the financial review on pages 10 to 14 in addition note 
27 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 
corporate social responsibility continued
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 2009 agm
annual general meeting
the 2009 agm will be held at 1030am on thursday  
7 may 2009 at the offices of the company’s pr advisers 
financial dynamics holborn gate 26 southampton 
buildings london wc2a 1pb united kingdom
by order of the board
michael anscombe
company secretary
24 february 2009 26
spirent communications plc
annual report 2008
governance
statement of directors’ responsibilities in respect of the annual report 
and the financial statements
the directors are responsible for preparing the annual 
report and the audited consolidated financial statements 
of the group and parent company financial statements 
in accordance with applicable law and regulations
company law requires the directors to prepare such 
financial statements for each financial year under that 
law they are required to prepare the audited 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 audited consolidated financial statements of the 
group are required by law and ifrs as adopted by the eu 
to present fairly the financial position and performance of 
the group the companies act 1985 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 audited 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 
1985 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
the directors are 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
each of the directors the names of whom are set out 
on page 21 of this annual report confirms that to the 
best of his knowledge
the audited 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
this 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
24 february 2009 27
spirent communications plc
annual report 2008
governance
directors’ statement on corporate governance
compliance
this statement describes how the principles and 
provisions as set out in the combined code on corporate 
governance issued by the financial reporting council in 
june 2006 the “code” have been applied within the 
group during 2008
the board
as at 31 december 2008 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 21 the board operates within a framework of 
controls including a formal schedule of matters 
specifically reserved for its decision at an extraordinary 
general meeting held on 22 december 2006 “2006 
egm” shareholders elected edward bramson as a 
director of the company following which the board 
elected him as chairman mr bramson assumed 
responsibility for the management of the group by 
becoming executive chairman on 7 march 2007 at that 
point in time as there was no longer a separation of the 
chairman and chief executive roles code provision a21 
was breached although mr bramson performed a critical 
role during the strategic review and reorganisation of the 
group the board considered that given the balance of 
nonexecutive directors no single individual dominated 
its decision making however on 6 november 2008 bill 
burns was appointed as chief executive officer resulting 
in a separation of the chairman and chief executive roles 
and renewed compliance with this code provision
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 its shareholders are 
understood and met
the independence of each director is reviewed at least 
annually the board determined that within the terms of 
the code ian brindle duncan lewis tom maxwell and 
alex walker are all independent nonexecutive directors 
as edward bramson and gerard eastman have a 
connected material notifiable interest in the issued 
ordinary share capital of the company see the report of 
the directors on pages 22 to 25 the board has 
concluded that they should not be considered 
independent of the company details of other 
professional commitments of the chairman and non
executive directors are provided in their biographies on 
page 21
the company adopted new articles of association  
which were approved by shareholders at the company’s 
2008 annual general meeting “2008 agm” with effect 
from 1 october 2008 the new articles of association 
permit 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 interest in 
the matter being considered in deciding whether to 
authorise a situational conflict these nonconflicted 
directors are required to act in the way they would 
consider would be 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
alex walker currently serves as the senior independent 
nonexecutive director the senior independent non
executive director is available to meet shareholders 
upon request if they have concerns which contact 
through the normal channels the chairman or an 
executive director has failed to resolve or for which such 
contact would be inappropriate
it is company policy to hold at least four board meetings 
a year there were seven board meetings during 2008 
the agenda is settled by the chairman in advance of the 
meeting and board papers are circulated to board 
members several days ahead of any meeting minutes of 
previous meetings are circulated to all board members 
and approved at the next board meeting
full attendance of the board is expected at meetings 
and in 2008 all directors attended all seven meetings 
except duncan lewis who missed two meetings due to 
unavoidable diary conflicts where the director was  
absent full documentation for the meeting was issued 
and briefings were provided as appropriate where a 
director was absent it was ensured that any comments  
on the documentation or subject matter to be  
considered were passed to the board as appropriate  
for consideration 28
spirent communications plc
annual report 2008
governance
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 remuneration and 
nomination 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 directors 
are encouraged to update their skills continually and their 
knowledge of the company required to fulfill their role 
both on the board and on board committees under the 
direction of the chairman the company secretary 
ensures good and timely information flows within 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 be effected only 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 is in compliance with 
the code and this procedure was applied in relation to 
the appointment of bill burns during 2008
the company’s articles of association require that all 
directors seek election by shareholders at the first 
annual general meeting following their appointment and 
as a result bill burns will offer himself for election at the 
2009 annual general meeting “2009 agm” they also 
require that all directors seek reelection at least every 
three years and therefore ian brindle and alex walker 
will offer themselves for reelection at the 2009 agm 
notwithstanding the requirements of the company’s 
articles of association edward bramson and gerard 
eastman have agreed to offer themselves for reelection 
at each annual general meeting whilst they serve on the 
directors’ statement on corporate governance continued
board and will therefore also offer themselves for 
reelection at the 2009 agm
on appointment to the board and its committees all 
directors receive an induction tailored to their individual 
requirements 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
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 non
executive directors and this contact provides an 
opportunity to assess performance and to raise any 
questions regarding the performance of the executive 
directors or in respect of any other matters the 
chairman concluded that during the year the quality and 
commitment of the nonexecutive directors was high the 
chairman also confirms that all those nonexecutive 
directors seeking reelection at the 2009 agm continue 
to contribute effectively and to demonstrate commitment 
to their roles including 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 16 december 
2008 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
board committees
audit committee
chairman ian brindle
the audit committee comprises ian brindle tom maxwell 
and alex walker all of whom are independent non
executive directors and the composition of the 
the board continued 29
spirent communications plc
annual report 2008
governance
board committees continued
committee is compliant with the code the code 
requires that the audit committee includes at least one 
member who has recent significant and relevant financial 
experience and the board believes that both ian brindle 
and tom maxwell provide such experience 
during 2008 the audit committee held three meetings 
at which there was full attendance by committee 
members at all meetings the company’s external 
auditors the chief financial officer the group vice 
presidentfinance the head of financial reporting and 
the company secretary were in attendance the 
chairman and the other directors may also attend the 
meetings the committee also meets with the external 
auditors without management present the minutes of all 
committee meetings are available to all directors
the audit committee assists the board in fulfilling its 
responsibilities by reviewing financial statements and 
post audit findings before their presentation to the 
board focusing in particular on accounting policies 
compliance management judgement and estimates 
it also monitors the group’s internal control and risk 
management regime and financial reporting any 
significant findings or identified weaknesses are closely 
examined so that appropriate action can be taken 
monitored and reported to the board the audit 
committee also advises the board on the appointment 
of external auditors
there is a detailed agenda for each audit committee 
meeting specific issues dealt with during the year are 
set out below
in february 2008 the committee considered the external 
auditors’ performance and independence and their 
reappointment reviewed the annual financial 
statements key accounting policies areas of judgement 
quality of earnings the external auditors’ report on the 
year end audit and management’s responses to the 
issues raised the committee also reviewed corporate 
governance within the group in particular compliance 
with turnbull and the annual internal control audit plan
in august 2008 the committee reviewed the halfyear 
report key accounting policies areas of judgement 
quality of earnings the external auditors’ report on the 
halfyear audit and management’s responses to the 
issues raised the committee also reviewed internal 
controls throughout the group with particular emphasis 
on visits by the financial management team to the 
business units
in november 2008 the committee reviewed the external 
auditors’ report on their strategy and scope for the audit 
of the annual financial statements and proposed fees 
the committee also reviewed the corporate risk register 
and an amended updated ethics policy which it 
recommended to the board should be adopted 
throughout the group
at each meeting the group vice presidentfinance also 
briefed the committee on progress made against the 
annual internal control audit plan and any significant 
findings regular reports to the committee also covered 
issues in the areas of tax litigation treasury and health 
and safety
the audit committee has adopted a policy in relation to 
the provision of nonaudit services performed by the 
external auditor to ensure that the provision of such 
services does not impair the external auditors’ 
independence or objectivity this policy is reviewed on an 
annual basis a report is presented to the committee on 
a regular basis detailing all nonaudit services performed 
by the external auditors including cost when the 
services were provided and who approved the instruction 
this policy identifies those services which the external 
auditors are permitted to provide and those which they 
are precluded from providing precluded services include 
but are not limited to bookkeeping or other services 
relating to the accounting records or financial 
statements financial information systems design and 
implementation management functions human 
resources actuarial services and information technology 
consulting if the company wishes to engage the external 
auditors to provide any other services which are not 
contained in the policy and which are not precluded  
the company must obtain preapproval for such  
services from the audit committee through the 
committee’s chairman
as part of this policy the committee also preapproves 
annual financial limits for permitted audit services tax 
services and any other services which the company may 
pay to ernst  young globally for services performed 
during the year these financial limits may not be 
exceeded without approval by the committee committee 
approval of permitted services is not required during the 
year provided the aggregate amounts paid by the 
company do not exceed the preapproved financial limits  30
spirent communications plc
annual report 2008
governance
the total fees paid to ernst  young llp during the 
year to 31 december 2008 were £05 million 2007 
£06 million of which none 2007 £01 million related to 
nonaudit work further disclosure of fees paid to the 
auditors during the year can be found in note 5 to the 
audited consolidated financial statements of the group
remuneration committee
chairman alex walker
the remuneration committee comprises ian brindle 
duncan lewis and alex walker all of whom are 
independent nonexecutive directors and the composition 
of the committee is compliant with the code
further details about the remuneration committee are 
included in the report on directors’ remuneration on 
pages 32 to 41
nomination committee
chairman edward bramson
the nomination committee comprises the chairman and 
all nonexecutive directors and meets at least once each 
year during 2008 the nomination committee held two 
meetings at which there was full attendance by 
committee members except for duncan lewis who was 
unable to attend one meeting the nomination 
committee is responsible for reviewing the composition 
and structure of the board and for identifying and 
recommending candidates for executive and non
executive 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
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’s largest shareholder sherborne investors gp 
llc has been represented on the board by edward 
bramson and gerard eastman since december 2006
the company has an established cycle of communication 
based on its financial reporting calendar this includes 
the preliminary results in february annual report in 
march annual general meeting and interim management 
directors’ statement on corporate governance continued
board committees continued
statement in may halfyear report 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
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
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 sign up 
for this method of communication will be sent to 
shareholders with the 2009 agm documentation 
electronic communications provide significant benefits 
for shareholders and the company in terms of timeliness 
of information reduced environmental impact and cost 
and the board encourages investors to participate in  
the programme
pensions governance
the group’s principal pension and retirement schemes 
exist 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  31
spirent communications plc
annual report 2008
governance
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 presidentfinance and north 
america vice presidentfinance 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
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
internal control continued 32
spirent communications plc
annual report 2008
governance
report on directors’ remuneration
1 compliance
this report on directors’ remuneration has been 
prepared on behalf of the board by the remuneration 
committee the “committee” the committee has 
adopted the principles of good governance relating to 
directors’ remuneration as set out in the 2006 combined 
code the “code” the report complies with the 
companies act 1985 as amended by the directors’ 
remuneration report regulations 2002 and the listing 
rules of the uk listing authority shareholders will be 
asked to approve the report at the annual general 
meeting to be held on 7 may 2009 “2009 agm”
2 remuneration committee
there were no changes to the composition of the 
committee during the year the members of the 
committee were alex walker chairman ian brindle 
and duncan lewis the composition of the committee 
is compliant with the code in terms of independent 
nonexecutive directors the committee met four times 
during the year full attendance of the commitee is 
expected at meetings and all members attended all four 
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
3 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 
proportion of their total remuneration package is 
weighted towards performancebased pay
4 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
during the year the committee also consulted with the 
company’s chairman chief executive officer chief 
financial officer vice president of human resources  
and the company secretary but not on matters relating 
directly to their own remuneration
 
5 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 andor annual performance cash incentive  •
and
long term share incentive awards •
a edward bramson chairman
edward bramson acted as executive chairman until 
the appointment of bill burns as chief executive officer 
on 6 november 2008 mr bramson who is a partner in 
sherborne investors gp llc “sherborne investors” 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 director’s fee of £150000 
per annum from 1 january 2009 for his services as 
nonexecutive chairman 33
spirent communications plc
annual report 2008
governance
b 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 
appointment on 6 november 2008 and will not be 
reviewed until 1 january 2010 eric hutchinson’s base 
salary and benefits were last reviewed on 1 january 
2008 and the committee determined that there should 
be no change for 2008 mr hutchinson’s base salary and 
benefits will next be reviewed on 1 july 2009
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 
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 see below and a nonqualified 
deferred compensation plan see below 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 under the us ir code the maximum annual 
amount of an employee’s compensation that can be 
taken into account in determining the employer’s 
contribution is 230000 in respect of 2008 
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
during the year bill burns was required to relocate to 
california a taxable relocation payment of 174200 
£116913
1
 was made during the year 
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 2007 £58970
further details of executive directors’ remuneration are 
given in paragraphs 7a 7b and 8b
c annual and quarterly 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
since appointment as chief executive officer bill burns 
has participated in a quarterly performance cash 
incentive arrangement this cash incentive arrangement 
was structured so that performance was measured 
against a mixture of growth targets in the company’s 
eps other financial targets and personal objectives the 
committee reviewed mr burns’ performance against the 
targets set and having exceeded the eps target and met 
all personal objectives the committee approved a total 
cash incentive payable for the period he served as a 
director during the year of 76087 £51065
1
 which 
was equivalent to 83 per cent of his prorated base salary
during 2008 eric hutchinson participated in an annual 
performance cash incentive arrangement which was 
structured so that performance was measured against 
growth targets in the company’s eps together with 
personal objectives the target annual cash incentive for 
2008 was set at 50 per cent of base salary 
the committee reviewed his performance against the 
targets set and having exceeded the eps target and met 
all personal objectives the committee approved a cash 
incentive payable for 2008 of £147425 which was 
equivalent to 50 per cent of base salary
d 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 
note
1 using an average exchange rate for his period as a director of  
£1  149
5 executive directors’ remuneration continued 34
spirent communications plc
annual report 2008
governance
incentive plan “eip” which is a discretionary share 
plan the only award made under the eip during the year 
was to bill burns on his appointment as chief executive 
officer further details are given in paragraph 8b below
executive directors are also able to participate in an all 
employee share plan if one is offered in the country 
within which they are domiciled the applicable all 
employee plans in the uk are the 2005 sharesave 
scheme and the uk employee share purchase plan the 
applicable plan 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 
during 2008 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 is 
the principal share incentive plan used to deliver awards 
to communications group employees mr burns 
participated in the ssip in his former positions within the 
communications group and there is no intention to offer 
further awards to mr burns under the ssip following his 
appointment to the board the grants made to bill burns 
in 2005 and 2006 under the ssip all 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 on all 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
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
under the eip the company is able to grant options and 
sharesettled stock appreciation rights “sars” the 
vesting of which would be subject to meeting an eps 
growth target performance shares may also be granted 
the vesting of which would be subject to meeting a tsr 
performance target 
report on directors’ remuneration continued
in normal circumstances the maximum combined award 
under the eip is limited to 250 per cent of base salary in 
sarsoptions as explained above grants would normally 
consist partly of sarsoptions and partly of performance 
shares with the proviso that the performance share 
element does not exceed 100 per cent of base salary  
ie using the ratio of two sarsoptions being equivalent 
to one performance share executive directors would 
normally receive a mix of sarsoptions and performance 
shares utilising a ratio of two sarsoptions being 
equivalent to one performance share at least 25 per 
cent of each grant is delivered in sarsoptions and  
at least 25 per cent in performance shares with  
the balance of the grant delivered through a mix of  
sarsoptions and performance shares as determined  
by the committee
all eip 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 believes 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 since 2005 accordingly the performance 
condition for sars and options is based on growth in the 
company’s eps after excluding any increase in the retail 
prices index “rpi” over a three year performance 
period as set out in the following table
 
annual rate of growth   
in eps in excess of growth in rpi  proportion of 
over the performance period   sarsoptions vesting 
below 6 0
6 25
between 6 and 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 25 august 2005 100 per cent vesting occurred on  
25 august 2008 
the committee believes 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 since 2005 accordingly 
the performance condition for performance shares is 
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 overleaf
5 executive directors’ remuneration continued 35
spirent communications plc
annual report 2008
governance
the comparator group consists 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 the 
committee considers the selected comparator group as 
providing a suitable benchmark for the company’s tsr 
rating in determining the tsr for the company and its 
comparator group share prices are taken at a fixed point 
immediately prior to and at the end of the performance 
period and there is no averaging period
 proportion of performance  
tsr ranking shares vesting 
below median 0
between median on a straight line basis
and upper quartile between 30 and 100
at or above upper quartile 100
following testing of the relative tsr performance 
condition attached to the performance shares granted 
under the eip on 25 august 2005 100 per cent vesting 
occurred on 25 august 2008 
spirent stock incentive plan – performance condition schedule
 
  rate of growth in 
  eps in excess of   
portion of  growth in rpi over proportion  
total grant  the performance of sars performance 
tested   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 1st 2nd   between 24 and 60 on a straight line basis
and 3rd sar tranches   between 25 and 100 
  60 or above 100 
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 approved by shareholders in 
2004 as set out below 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 
remains unvested after the fourth anniversary of the 
date of grant lapses
5 executive directors’ remuneration continued 36
spirent communications plc
annual report 2008
governance
report on directors’ remuneration continued
e 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 the 
company and no more than 12 months’ notice from the 
executive director
the contract dates and notice periods for each executive 
director are as follows
   notice notice 
  period by period by 
 date of company  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 his service contract is 
with sci and is governed by the laws of the state of 
california and accordingly its termination provisions 
reflect us practice either the employer or mr burns may 
terminate upon 30 days’ notice although the employer 
may make payment of base salary in lieu of notice if the 
employer terminates employment in circumstances other 
than for death disability or “cause” which is defined in 
detail in the contract and includes dismissal for material 
misconduct or poor performance or mr burns 
terminates for “good reason” which is defined in detail in 
the contract and includes any material breach of the 
contract by the employer he is entitled to the following 
payments in addition to one month’s base salary or 
payment in lieu accrued base salary accrued paid time 
off and vacation pay cash incentive due and payable 
with respect to the previous quarter andor fiscal year as 
appropriate in which the termination occurs a sum 
equal to 11 months’ base salary payable in 10 equal 
monthly instalments but subject to a setoff for any base 
salary earned from alternative employment during the 12 
months 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 from alternative employment 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
f 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 retains any related fees eric 
hutchinson serves as a nonexecutive director on the 
board of trifast plc and received a fee of £33250 during 
the year
g  shareholder dilution and share plan approval sought 
at 2009 agm
the committee is mindful of the need to manage 
shareholder dilution in a responsible manner at the 
2008 annual general meeting “2008 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 2009 agm it was also stated in the notice 
of 2008 agm that the employee share ownership trust 
“esot” held 17 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 2008 agm and the date of this report the 
committee approved awards of share incentives over 
12 million ordinary shares just under one million of 
which were sourced from unallocated ordinary shares 
held in the company’s esot the remainder of the 
awards to be satisfied with new issue shares equated to 
just 002 per cent of the issued ordinary share capital 
on 8 may 2008 the date of the 2008 agm in addition 
wherever practical sars are awarded rather than share 
options sars are more efficient than share options in 
terms of actual dilution as only the appreciation value 
and not the full value of the award needs to be funded in 
shares when awards are exercised to demonstrate this 
efficiency during 2008 the company issued only 
16 million new ordinary shares to cover the exercise of 
54 million sars 
5 executive directors’ remuneration continued 37
spirent communications plc
annual report 2008
governance
overall shareholder dilution resulting from the company’s 
share incentive plans on a rolling 10 year basis has 
fallen by 09 per cent when comparing the positions at 
31 december 2008 141 per cent and 31 december 
2007 150 per cent the overall number of share 
incentives outstanding at 31 december 2008 has fallen 
by 17 million when compared to the number outstanding 
at 31 december 2007 2008 501 million 2007 
671 million however the committee’s efforts to 
manage shareholder dilution have been significantly 
offset by the company’s share repurchase programme 
as this has resulted in a large drop in the issued ordinary 
share capital over the year 2008 6718 million 2007 
7924 million ignoring the impact of the share 
repurchase programme the dilution position at 31 
december 2008 would have been 112 per cent a drop 
of 38 per cent
the committee considers sars options and 
performance shares to be meaningful share incentives 
accordingly in line with its sustainable dilution strategy 
and to give management flexibility the company will seek 
shareholder authority at the 2009 agm to award share 
incentives over new issue shares of no more than half of 
one per cent of the current issued ordinary share capital 
such authority to expire at the 2010 annual general 
meeting “2010 agm” in order to further mitigate the 
impact on dilution the company intends to utilise the 
08 million unallocated shares currently held in the esot 
these shares were allocated to awards which have since 
lapsed before making any significant awards over new 
issue shares
at the 2008 agm the company was also given authority 
by shareholders to continue to operate the ssip until the 
2009 agm as outlined above during 2008 a minimal 
number of share incentives were granted under the ssip 
the company continues to review share incentive 
arrangements and as such it will seek shareholder 
authority to further extend the operation of the ssip until 
the 2010 agm at which time the company will revert to 
shareholders with an update on long term share 
incentive policy accordingly a resolution is being placed 
before shareholders at the 2009 agm to renew the 
authority to operate the ssip and to grant share 
incentives using new issue shares 
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 shareholder 
approval is required at the 2009 agm to continue to 
operate this plan
6  nonexecutive directors’ fees and letters of 
appointment
the company’s remuneration policy with regard to 
nonexecutive 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 nonexecutive 
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 receive an additional fee of £11000 and 
£9000 respectively 
all nonexecutive directors have a letter of appointment 
with the company for not more than a three year period 
subject to the company’s articles of association each 
letter provides for retirement every three years except 
edward bramson and gerard eastman who have stated 
that they will seek reelection by shareholders on an 
annual basis 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 details of individual appointments 
are as follows
  current 
 first appointed  appointment  
director a director due to expire
edward bramson 22 december 2006 2009 agm
ian brindle 22 december 2006 2009 agm
gerard eastman 22 december 2006 2009 agm
duncan lewis 1 july 2007 2011 agm
tom maxwell 1 october 2007 2011 agm
alex walker 22 december 2006 2009 agm
the letters of appointment are available for inspection on 
request and will be available for inspection before and 
during the 2009 agm
as outlined in 5a above edward bramson acted as 
executive chairman until the appointment of bill burns 
as chief executive officer on 6 november 2008  
mr bramson who is a partner in sherborne investors 
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 
5 executive directors’ remuneration continued 38
spirent communications plc
annual report 2008
governance
following the separation of the chairman and chief executive roles the committee determined that mr bramson should 
receive a director’s fee of £150000 per annum from 1 january 2009 for his role as nonexecutive chairman
gerard eastman also a partner in sherborne investors continued to waive his right to any fees in 2008 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 messrs bramson and eastman have both elected to have their fees paid to 
sherborne investors
further information on nonexecutive directors’ fees is provided in paragraph 7a
7  directors’ remuneration
a individual and total remuneration for the year to 31 december 2008
information relating to directors’ remuneration in 7a and 7b has been audited
 
    performance  
    related  
    incentive  cash in compensation 
 base  taxable paid  lieu of for loss of other total total
 salary
1
 fees
2
 benefits
3
 in cash
4 
pension
5 
office
 
payments
6
 2008
7 
2007
7
 £000 £000 £000 £000 £000 £000  £000 £000 £000
directors in service at 31 december 2008       
executive directors         
bill burns  618 – 1198 511 – – 1364 3691 –
eric hutchinson
8
 2949 05 164 1474 590 – – 5182 4723
         
nonexecutive directors         
edward bramson
9
 – – – – – – – – –
ian brindle – 470 – – – – – 470 400
gerard eastman
9
 – – – – – – – – –
duncan lewis – 360 – – – – – 360 165
tom maxwell – 360 – – – – – 360 83
alex walker – 450 – – – – – 450 400
         
directors who left during the previous year        
anders gustafsson
10
 – – – – – – – – 7529
göran ennerfelt – – – – – – – – 138
         
2008  3567 1645 1362 1985 590 – 1364 10513 –
2007 3818 1191 1049 1000 848 4653 879 – 13438
 
notes
1  base salary received by bill burns has been prorated for his period as a director and was equal to 92000 equivalent to £61800 using an average 
exchange rate for his period as a director of £1  149 
2  eric hutchinson earned these fees in respect of his services to the board and its committees further details on fees paid to nonexecutive directors 
are provided in paragraph 6
3  further details on taxable benefits are provided in paragraph 5b  
4  further details of the annual and quarterly performance cash incentive arrangements are provided in paragraph 5c
5  further details on cash in lieu of pension are provided in paragraph 5b
6 other payments in 2008 relate to nontaxable relocation expenses for bill burns in 2007 other payments relate to a contractual payment made in 
lieu of holiday to anders gustafsson on termination of his employment
7  these figures relate to the period of each director’s board membership bill burns was appointed as chief executive officer on 6 november 2008 
report on directors’ remuneration continued
6 nonexecutive directors’ fees and letters of appointment continued 39
spirent communications plc
annual report 2008
governance
8  remuneration figures for eric hutchinson exclude fees received as a result of his external appointment details of which are given in paragraph 5f
9  messrs bramson and eastman waived their right to any remuneration for 2008 further details are provided in paragraph 6
10  anders gustafsson’s employment was terminated on 7 march 2007 and a payment of £465257 was made to him as compensation for loss of 
office in accordance with his contractual entitlements
b summary of directors’ remuneration
       2008 2007 
       £000 £000
total emoluments for all directors      10513 13438
gains made on the exercise of share incentives
1
     1498 5310
contributions to 401k pension plan
2
     66 –
       12077 18748
notes
1 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 
 2007 this relates to the exercise and sale of 20 million share incentives by anders gustafsson on various dates and the vesting of two awards of 
conditional shares mr gustafsson left the company on 7 march 2007
2  a contribution of 9800 was made to the 401k pension plan relating to bill burns equivalent to £6600 at an average exchange rate for his period 
as a director of £1  149
8 directors’ interests
information relating to directors’ interests in 8a and 8b has been audited
a ordinary shares
the beneficial and nonbeneficial interests of the directors and their connected persons in the issued ordinary share 
capital of the company at the beginning and end of the year are set out below
     at 31 december 2008 at 1 january 2008 or date of appointment
    ordinary ordinary  ordinary ordinary  
   shares shares  shares shares  
    beneficial
1
 nonbeneficial share incentives
2
 beneficial
1
 nonbeneficial share incentives
2
executive directors       
bill burns   – – 1523000 – – 775000
eric hutchinson   1058931 – 3244170 871731 – 3460956
       
nonexecutive directors      
edward bramson
3
   130270000 – – 130270000 – –
ian brindle   4525 – – 4525 – –
gerard eastman
3
   130250000 – – 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  share incentives include share options stock appreciation rights and performance shares
3  messrs bramson and eastman have 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 has beneficial ownership of a further 20000  
ordinary shares
7  directors’ remuneration continued 40
spirent communications plc
annual report 2008
governance
b share incentives
  
      at   market 
      1 january  exercise value on 
  at lapsed exercised granted 2008 or  price per date of  
 plan  31 december during the during during the date of date of share grant date first 
 type
1
  2008  period the period period appointment grant pence pence exercisable expiry date
bill burns
2
        
 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
3
 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
3
 51 07 nov 11 07 nov 11
eric hutchinson        
 esos – 29586 – – 29586 27 apr 98 152 152 27 apr 01 27 apr 08
 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 – – 187200 – 187200 25 aug 05 nil
3
 53 25 aug 08 25 aug 08
 eip 544650 – – – 544650 05 may 06 48 48 05 may 09 05 may 16
 eip 146650 – – – 146650 05 may 06 nil
3
 48 05 may 09 05 may 09
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  the figures shown for bill burns are as at his date of appointment as chief executive officer on 6 november 2008
3  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 in paragraph 5d
save as disclosed there have been no changes between 31 december 2008 and 24 february 2009 in the directors’ 
interests in ordinary shares or share incentives in the company
the middle market price of an ordinary share at the close of business on 2 january 2008 being the first day the 
london stock exchange was open for trading in 2008 and 31 december 2008 was 6425 pence and 3625 pence 
respectively and during that period ranged between a high of 8275 pence and a low of 3625 pence
report on directors’ remuneration continued
8 directors’ interests continued dec 03
0
20
40
60
80
100
120
140
160
180
200
dec 04 dec 05
spirent ftse 350 ftse it
dec 06 dec 07 dec 08
financial year end
rebased index
41
spirent communications plc
annual report 2008
governance
9 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 
350 index “ftse 350” and the ftse information technology index “ftse it” the committee believes that both the 
ftse 350 and the ftse it provide broad equity market indices against which the performance of the company can be 
fairly compared and that the ftse it provides a particularly representative collection of comparator companies
signed on behalf of the board
alex walker
chairman of the remuneration committee
24 february 2009 42
spirent communications plc
annual report 2008
financial statements
we have audited the group financial statements of spirent 
communications plc for the year ended 31 december 
2008 which comprise the consolidated income statement 
the consolidated balance sheet the consolidated cash 
flow statement the consolidated statement of recognised 
income and expense the related notes 1 to 35 and the 
list of principal divisions and subsidiaries these group 
financial statements have been prepared under the 
accounting policies set out therein
we have reported separately on the parent company 
financial statements of spirent communications plc for 
the year ended 31 december 2008 and on the information 
in the report on directors’ remuneration that is described 
as having been audited 
this report is made solely to the company’s members as 
a body in accordance with section 235 of the companies 
act 1985 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
the directors’ responsibilities for preparing the annual 
report and the group financial statements in accordance 
with applicable united kingdom law and international 
financial reporting standards “ifrss” as adopted by  
the european union are set out in the statement of 
directors’ responsibilities
our responsibility is to audit the group financial 
statements in accordance with relevant legal and 
regulatory requirements and international standards on 
auditing uk and ireland
we report to you our opinion as to whether the group 
financial statements give a true and fair view and whether 
the group financial statements have been properly 
prepared in accordance with the companies act 1985 and 
article 4 of the ias regulation we also report to you 
whether in our opinion the information given in the report 
of the directors is consistent with the financial statements
in addition we report to you if in our opinion we have not 
received all the information and explanations we require for 
our audit or if information specified by law regarding 
director’s remuneration and other transactions is  
not disclosed
we review whether the directors’ statement on corporate 
governance reflects the company’s compliance with the 
nine provisions of the 2006 combined code specified for 
our review by the listing rules of the financial services 
authority and we report if it does not we are not required 
independent auditors’ report to the members of 
spirent communications plc
to consider whether the board’s statements on internal 
control cover all risks and controls or form an opinion on 
the effectiveness of the group’s corporate governance 
procedures or its risk and control procedures
we read other information contained in the annual report 
and consider whether it is consistent with the audited 
group financial statements the other information 
comprises only the chairman’s statement the business 
review the board of directors the report of the directors 
the statement of directors’ responsibilities the directors’ 
statement on corporate governance the report on 
directors’ remuneration financial history and shareholder 
information we consider the implications for our report if 
we become aware of any apparent misstatements or 
material inconsistencies with the group financial 
statements our responsibilities do not extend to any 
other information
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the 
auditing practices board an audit includes examination 
on a test basis of evidence relevant to the amounts and 
disclosures in the group financial statements it also 
includes an assessment of the significant estimates and 
judgements made by the directors in the preparation  
of the group financial statements and of whether  
the accounting policies are appropriate to the  
group’s circumstances consistently applied and 
adequately disclosed
we planned and performed our audit so as to obtain all 
the information and explanations which we considered 
necessary in order to provide us with sufficient evidence 
to give reasonable assurance that the group financial 
statements are free from material misstatement whether 
caused by fraud or other irregularity or error in forming  
our opinion we also evaluated the overall adequacy  
of the presentation of information in the group  
financial statements
opinion
in our opinion
the group financial statements give a true and fair view  •
in accordance with ifrss as adopted by the european 
union of the state of the group’s affairs as at 31 
december 2008 and of its profit for the year then ended 
the group financial statements have been properly  •
prepared in accordance with the companies act 1985 
and article 4 of the ias regulation and
the information given in the report of the directors is  •
consistent with the group financial statements
ernst  young llp
registered auditor
london
24 february 2009 43
spirent communications plc
annual report 2008
financial statements
consolidated income statement
     2008   2007 
year to 31 december  notes   £ million   £ million
   before exceptional  before exceptional  
   exceptional  items  exceptional  items  
   items note 7 total items note 7 total
continuing operations       
revenue  34 2579 – 2579 2370 – 2370
cost of sales   913 – 913 892 24 916
gross profit   1666 – 1666 1478 24 1454
product development 4 453 – 453 445 – 445
selling and distribution  467 – 467 471 – 471
administration   259 – 259 307 120 427
operating profit  4 487 – 487 255 144 111
finance income  8 32 08 40 70 – 70
finance costs  9 05 26 31 03 – 03
profit before tax  45 514 18 496 322 144 178
tax  12 04 256 252 38 39 77
profit for the year from
 continuing operations 
after tax   510 238 748 360 105 255
discontinued operations       
loss for the year from        
discontinued operations 6 – – – 37 42 79
profit for the year attributable       
to equity shareholders of        
parent company   510 238 748 323 147 176
       
earnings per share pence 13      
basic     1013   205
basic from continuing       
operations     1013   297
diluted     1006   203
diluted from continuing       
operations     1006   294
       
dividend   14      
proposed final dividend 
£ million     40   –
interim dividend paid 
£ million     37   –
proposed final dividend 
pence per share     06   –
interim dividend paid 
pence per share     05   –
       
the notes on pages 47 to 91 and page 111 form part of these financial statements     
   44
spirent communications plc
annual report 2008
financial statements
consolidated statement of recognised income and expense
        2007 
       2008 restated 
year to 31 december      notes £ million £ million
income and expense recognised directly in equity      
losses on cash flow hedges taken to equity     56 05
exchange differences on retranslation of foreign operations    293 06
actuarial lossesgains on defined benefit pension plans   11 51 41
irrecoverable element of pension plan surplus    11 14 16
deferred tax creditcharge on pension plans    12 03 08
       203 06
transfers to income statement      
losses on cash flow hedges reclassified     14 –
net income recognised directly in equity     217 06
profit for the year       748 176
total recognised income and expense       
for the year attributable to equity shareholders of parent company  31 965 182
      
the notes on pages 47 to 91 and page 111 form part of these financial statements     
  45
spirent communications plc
annual report 2008
financial statements
consolidated balance sheet
        2007 
       2008  restated 
at 31 december      notes £ million £ million
assets      
noncurrent assets      
intangible assets      15 776 586
property plant and equipment     16 186 162
trade and other receivables     20 25 14
cash on deposit      21 25 37
defined benefit pension plan surplus    11 26 61
deferred tax      23 122 105
       1160 965
current assets      
inventories      19 242 178
trade and other receivables     20 624 502
cash and cash equivalents     21 597 790
       1463 1470
total assets       2623 2435
liabilities      
current liabilities      
trade and other payables     22 635 546
current tax       46 327
derivative financial instruments     26 56 05
provisions and other liabilities     25 37 51
       774 929
noncurrent liabilities      
trade and other payables     24 51 11
defined benefit pension plan deficit    11 06 07
provisions and other liabilities     25 82 76
       139 94
total liabilities       913 1023
net assets       1710 1412
capital and reserves      
share capital      2931 224 280
share premium account     31 172 155
capital redemption reserve     31 106 48
capital reserve      31 14 36
translation reserve      31 226 67
unrealised gains and losses     31 47 05
retained earnings      31 1015 965
total equity attributable to equity shareholders of parent company   1710 1412
      
the notes on pages 47 to 91 and page 111 form part of these financial statements    
  
signed on behalf of the board      
      
eric hutchinson      
director      
24 february 2009       46
spirent communications plc
annual report 2008
financial statements
consolidated cash flow statement
       2008 2007 
year to 31 december      notes £ million £ million
cash flows from operating activities      
cash flow from operations     32 534 438
tax paidreceived       57 60
net cash inflow from operating activities     477 498
cash flows from investing activities      
interest received       41 57
transfer from long term deposit      12 48
disposal of operations     34 – 06
tax paid on the disposal of operations     – 68
purchase of intangible assets      – 03
purchase of property plant and equipment     74 51
proceeds from the sale of property plant and equipment    05 02
acquisition of subsidiaries     33 – 55
net cash used in investing activities     16 64
cash flows from financing activities      
interest paid       27 01
dividend paid       37 –
proceeds from the issue of share capital and employee share ownership trust   24 44
share repurchase       672 663
net cash used in financing activities     712 620
net decrease in cash and cash equivalents     251 186
cash and cash equivalents at the beginning of the year    790 976
effect of foreign exchange rate changes     58 –
cash and cash equivalents at the end of the year    21 597 790
      
the notes on pages 47 to 91 and page 111 form part of these financial statements    
   47
spirent communications plc
annual report 2008
financial statements
notes to the consolidated financial statements
1 corporate information
the group’s consolidated financial statements for the year ended 31 december 2008 were authorised for issue by the 
board of directors on 24 february 2009 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 ias regulation and the companies act 1985 the group has prepared its 
consolidated financial statements in accordance with international financial reporting standards “ifrs” as adopted by 
the european union “eu”
2 summary of significant accounting policies
basis of preparation
the consolidated financial statements have been prepared under the historical cost convention modified to include 
revaluation to fair value of certain instruments as described below
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
the accounting policies adopted are consistent with those applied in the consolidated financial statements for the year 
ended 31 december 2007 except in relation to the implementation of ifric 14 “the limit on a defined benefit asset 
minimum funding requirements and their interaction”
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 other than in relation to ifric 14 which is discussed below
international accounting standards “iasifrs”                                                   effective date
ifric 11 ifrs2 group and treasury share transactions     1 january 2008
ifric 12 service concession arrangements      1 january 2008
ifric 14 the limit on a defined benefit asset minimum funding requirements and their interaction 1 january 2008
ias 39  ifrs 7 reclassification of financial assets     1 july 2008
ias 19 “employee benefits” limits the measurement of a defined benefit asset to the present value of economic 
benefits available in the form of refunds from the plan or reductions in future contributions to the plan plus 
unrecognised gains and losses ifric 14 clarifies what effect the existence of a minimum funding requirement has on 
this limit and provides guidance as to when the employer has an unconditional right to a refund from the plan
at 1 january 2007 the full amount of the defined benefit plan surplus had been recognised but the surplus was 
restricted at 31 december 2007 to the present value of economic benefits available as a reduction in future 
contributions however as clarified by ifric 14 an unconditional right of refund to the employer exists in the spirent 
plans and therefore the full amount of the surplus should be recognised on the balance sheet at 31 december 2007 
ifric 14 requires provision to be made for any part of the surplus that would not be recoverable any surplus on the 
plans that may ultimately be repaid to the company would currently be subject to a 35 per cent tax charge prior to 
repayment ifric 14 requires that this liability be recognised at the balance sheet date the comparatives have been 
restated accordingly there is no effect on the income statement for the year to 31 december 2007 nor on earnings 
per share 48
spirent communications plc
annual report 2008
financial statements
the effect of the implementation of ifric 14 on the consolidated balance sheet at 31 december 2007 is as follows  
     
       defi ned benefi t  
       pension plan retained  
       surplus earnings 
       £ million £ million
as previously reported      30 934 
implementation of ifric 14      31 31
31 december 2007 restated      61 965
       
the effect of the implementation of ifric 14 on the consolidated statement of recognised income and expense   
for the year to 31 december 2007 is as follows       
        irrecoverable 
         element of 
       actuarial gains pension plan 
       and losses surplus 
       £ million £ million
as previously reported      06 – 
implementation of ifric 14      47 16
31 december 2007 restated      41 16
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
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
for the purpose of impairment testing goodwill is allocated to the related cashgenerating units monitored by 
management usually at business segment level or statutory company level as the case may be 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
notes to the consolidated financial statements continued
2 summary of significant accounting policies continued 49
spirent communications plc
annual report 2008
financial statements
intangible assets arising on the group’s various product development projects are recognised only if all of the following 
conditions are met
i  an asset is created that can be separately identified such as software or a new process
ii  it is probable that the asset created will generate future economic benefits
iii  the development cost can be measured reliably
iv it is intended that the asset is completed and used and
v  there is adequate financial technical and other resources to complete use or sell the asset
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
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
the group assesses at each reporting date whether there is an indication that an asset may be impaired if any such 
indication exists or when annual impairment testing for an asset is required the group makes an estimate of the 
asset’s recoverable amount an asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s fair 
value less costs to sell and its value in use and is determined for an individual asset unless the asset does not 
generate cash inflows that are largely independent of those from other assets or groups of assets where the carrying 
amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its 
recoverable amount in 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 impairment losses of continuing operations are recognised in the income statement of those expense 
categories consistent with the function of the impaired asset
an assessment is made at each reporting date as to whether there is any indication that previously recognised 
impairment losses may no longer exist or may have decreased if such indication exists the recoverable amount is 
estimated a previously recognised impairment loss is reversed only if there has been a change in the estimates used to 
determine the asset’s recoverable amount since the last impairment loss was recognised if that is the case the 
carrying amount of the asset is increased to its recoverable amount the increased amount cannot exceed the carrying 
amount that would have been determined net of depreciation had no impairment loss been recognised for the asset in 
prior years such reversal is recognised in the income statement after such a reversal the depreciation charge is 
2 summary of significant accounting policies continued 50
spirent communications plc
annual report 2008
financial statements
adjusted in future periods to allocate the asset’s revised carrying amount less any residual value on a systematic basis 
over its remaining useful life
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 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 and excluding borrowing costs net realisable value 
represents selling price less further costs to be incurred to completion and on sale
trade and other receivables
trade receivables 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
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
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 recorded at the rates of exchange prevailing on the dates of the transactions 
monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at the balance sheet 
date 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 transactions
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 prevailing at the balance sheet date the results of foreign operations are translated into 
sterling using average rates
equity investments in foreign operations include long term intra group loans the settlement of which is neither planned 
nor likely to occur in the foreseeable future exchange differences arising from the retranslation of opening net assets of 
notes to the consolidated financial statements continued
2 summary of significant accounting policies continued 51
spirent communications plc
annual report 2008
financial statements
foreign investments and exchange adjustments arising from the translation of the results of foreign operations are 
classified as equity and transferred to the group’s 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 
the gain or loss on the subsequent disposal of any foreign operation therefore excludes translation differences that 
arose before the date of transition
goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of 
the foreign entity and translated at closing rates of exchange as permitted by ifrs 1 the group has elected to treat 
goodwill and fair value adjustments arising on acquisitions prior to the date of transition to ifrs as an asset of the 
parent and as such these are sterling denominated
all other exchange profits and losses are taken to the income statement
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
equity instruments
equity instruments are recorded at the proceeds received net of direct issue costs
derivative financial instruments
the group uses derivative financial instruments to hedge its exposures to fluctuations in foreign exchange rates the 
group’s policy is not to undertake any trading activity in financial instruments such derivative financial instruments are 
stated at fair value
such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is 
entered into and are subsequently remeasured to fair value at the reported balance sheet date 
for those derivatives designated as hedges and for which hedge accounting is desired the hedging relationship is 
documented at its inception this documentation identifies the hedging instrument the hedged item or transaction the 
nature of the risk being hedged and how effectiveness will be measured throughout its duration such hedges are 
expected at inception to be highly effective
forward foreign currency exchange contracts are used to hedge foreign exchange exposures arising on forecast receipts 
and payments in foreign currencies the fair value of forward foreign currency exchange contracts is calculated by 
reference to current forward exchange rates for contracts with similar maturity profiles
for the purpose of hedge accounting hedges are classified as fair value hedges when they hedge the exposure to 
changes in the fair value of a recognised asset or liability or cash flow hedges where they hedge exposure to the 
variability in cash flows that is due to the risk associated with a recognised asset or liability or a forecast transaction 
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
in relation to those fair value hedges which meet the conditions for hedge accounting any gain or loss from remeasuring 
the hedging instrument is recognised in the income statement and any gain or loss on the item that is being hedged is 
adjusted against its carrying amount and recognised in the income statement
in relation to cash flow hedges forward foreign currency exchange contracts to hedge firm commitments or highly 
probable forecast transactions and which meet the conditions for hedge accounting the proportion of the gain or loss 
on the remeasurement of the fair value of the hedging instrument that is deemed to be effective is recognised in equity 
and the ineffective portion is recognised in the income statement
2 summary of significant accounting policies continued 52
spirent communications plc
annual report 2008
financial statements
when the firm commitment or highly probable forecast transaction results in the recognition of a nonfinancial asset or a 
nonfinancial liability the associated gains and losses that have previously been recognised in equity are included in the 
initial measurement of the carrying amount of the asset or liability at the time the asset or liability is recognised
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
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
pensions
in the united kingdom the group operates two defined benefit pension plans for the benefit of employees these plans 
require contributions to be made to separately administered funds based on triennial actuarial valuations other plans 
are defined contribution in nature
the cost of providing benefits under the defined benefit pension plans is determined separately for each plan using the 
projected unit credit method which 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 and is based 
on actuarial advice 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
the interest element of the defined benefit 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
actuarial gains and losses are recognised in full in the statement of recognised income and expense in the period in 
which they occur
the defined benefit pension 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 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
contributions payable to the defined contribution plans are charged to the income statement in the year for which they 
are due
treasury shares 
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 
notes to the consolidated financial statements continued
2 summary of significant accounting policies continued 53
spirent communications plc
annual report 2008
financial statements
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
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
employees including executive directors of the group receive remuneration in the form of sharebased payment 
transactions whereby employees render services in exchange for shares or rights over shares equitysettled transactions
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 together with a corresponding increase in equity over the period in 
which the performance conditions are fulfilled ending on the date on which the relevant employees become fully entitled 
to the award vesting date the cumulative expense recognised for equitysettled transactions at each reporting date 
until the vesting date reflects the extent to which the vesting period has expired and the number of awards that will 
ultimately vest in the opinion of the directors of the company at that date and based on the best available estimates
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 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
2 summary of significant accounting policies continued 54
spirent communications plc
annual report 2008
financial statements
the dilutive effect of outstanding share incentives is reflected in the computation of diluted earnings per share
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
the group took advantage of the transitional provisions of ifrs 1 in respect of equitysettled awards and has applied 
ifrs 2 “sharebased payment” only to equitysettled awards granted after 7 november 2002 which were unvested at 
1 january 2005
tax
current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation 
authorities based on tax rates and laws that are enacted or substantively enacted by the balance sheet date
deferred income 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 and
deferred income tax assets are 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 income 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 liability is settled based on tax rates and laws enacted or substantively 
enacted at the balance sheet date
income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity otherwise 
income tax is recognised in the income statement
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 15
notes to the consolidated financial statements continued
2 summary of significant accounting policies continued 55
spirent communications plc
annual report 2008
financial statements
defined benefit pension schemes
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 11
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
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 and discounted where the effect is significant changes in the actual 
outcome compared with expected outcome on subleasing or changes to expectations will be recorded in future periods
new standards and interpretations not applied
during the year 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
 
international accounting standards “iasifrs” effective date
ias 1 revised presentation of financial statements 1 january 2009
ias 23 borrowing costs 1 january 2009
ias 27 amendment to ias 27 – consolidated and separate financial statements 1 july 2009
ias 32 and ias 1 amendment to ias 32 and ias 1 – puttable financial instruments and
   obligations arising on liquidation 1 january 2009
ias 38 amendment to ias 38 – intangible assets 1 january 2009
ifrs 2 amendment to ifrs 2 – vesting conditions and cancellations 1 january 2009
ifrs 3 revised business combinations 1 july 2009
ifrs 8 operating segments 1 january 2009
ifric 13 customer loyalty programmes 1 july 2008
ifric 15 agreements for the construction of real estate 1 january 2009 
ifric 16 hedges of a net investment in a foreign operation 1 october 2008 
ifric 17 distributions of noncash assets to owners 1 july 2009
ifric 18 transfers of assets from customers 1 july 2009
2 summary of significant accounting policies continued 56
spirent communications plc
annual report 2008
financial statements
ifrs 8 “operating segments” will require disclosure of information about the group’s operating segments and replace 
the requirement to determine primary business and secondary geographical reporting segments of the group the 
group expects that the operating segments will remain the same as the business segments previously identified under 
ias 14 “segment reporting”
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
       2008 2007 
       £ million £ million
sales of goods       2196 2028
maintenance and support services      383 342
total revenue from continuing operations     2579 2370
revenues from discontinued operations principally related to sales of goods
4 segmental analysis
the group’s primary reporting format is business segments and its secondary format is geographical segments
business segments
for management purposes the group is currently organised on a worldwide basis into two operating groups 
communications and systems communications is further subdivided into two divisions performance analysis and 
service assurance the swissqual business which was included in performance analysis was sold in 2007 and was 
reported as a discontinued operation in that year there are no discontinued operations in 2008
the principal activities of each 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 network monitoring and management systems for  •
service providers to assure the quality of their high bandwidth data services sales include hardware and software 
products as well as maintenance and support services
systems group comprises pg drives technology which develops power control systems for electrical vehicles in the  •
mobility and industrial markets
nonsegmental costs represent corporate expenses nonsegmental assets comprise cash and cash equivalents held 
for central treasury purposes and other corporate assets and nonsegmental liabilities represent tax payable and other 
corporate liabilities
notes to the consolidated financial statements continued
2 summary of significant accounting policies continued 57
spirent communications plc
annual report 2008
financial statements
4 segmental analysis continued
        2008 
        £ million
        continuing 
   performance service communications  non operations 
   analysis assurance total systems segmental total
revenue      
external sales   1912 335 2247 332 – 2579
there were no intersegment sales      
      
profitloss      
operating profitloss  430 46 476 43 32 487
finance income        40
finance costs        31
profi t before tax        496
tax        252
profit after tax for the year       748
      
other information      
product development  378 52 430 23 – 453
sharebased payment note 30  12 02 14 – 01 15
intangible amortisation note 15  07 – 07 – – 07
capital expenditure note 16  52 18 70 04 – 74
depreciation note 16  76 07 83 04 01 88
assets      
segment assets   1702 96 1798 146 679 2623
liabilities      
segment liabilities   612 99 711 50 152 913
net assetsliabilities  1090 03 1087 96 527 1710
   58
spirent communications plc
annual report 2008
financial statements
4 segmental analysis continued
        2007 
        £ million
      continuing discontinued  
 performance service communications  non operations operations total 
 analysis assurance total systems segmental total note 6 operations
revenue        
external sales 1693 343 2036 334 – 2370 36 2406
there were no intersegment sales        
profitloss        
operating profitloss before        
exceptional items 223 33 256 38 39 255 34 221
exceptional operating  
 items note 7 100 26 126 – 18 144 – 144
operating profitloss 123 07 130 38 57 111 34 77
loss on the disposal 
 of operations      – 42 42
finance income      70 – 70
finance costs      03 – 03
profitloss before tax      178 76 102
tax      77 03 74
profitloss after tax for the year      255 79 176
other information        
product development 369 53 422 23 – 445 18 463
sharebased payment note 30 17 05 22 01 02 25 – 25
intangible amortisation note 15 09 – 09 – – 09 06 15
capital expenditure note 16 41 01 42 05 03 50 01 51
depreciation note 16 78 09 87 05 01 93 02 95
assets        
segment assets restated 1307 92 1399 117 919 2435 – 2435
liabilities        
segment liabilities 451 94 545 42 436 1023 – 1023
net assetsliabilities 856 02 854 75 483 1412 – 1412
geographical segments
the group manages its business segments on a global basis and the operations are based in three main geographical 
areas the following tables present external revenue and other information regarding the group’s geographical 
segments revenue is by market and is based on the location of the customer and other disclosures are based on the 
geographical area in which the operations are located
notes to the consolidated financial statements continued 59
spirent communications plc
annual report 2008
financial statements
4 segmental analysis continued
       2008 2007 
       £ million £ million
revenue by market        
continuing operations        
europe       478 437
north america       1395 1322
asia pacific rest of americas africa     706 611
       2579 2370
discontinued operations        
europe       – 32
north america       – 03
asia pacific rest of americas africa     – 01
       – 36
       2579 2406
        
        2007 
       2008  restated 
       £ million £ million
geographical assets        
continuing operations        
europe       170 71
north america       1620 1358
asia pacific rest of americas africa     154 87
       1944 1516
nonsegmental assets      679 919
       2623 2435
        
       2008 2007 
       £ million £ million
capital expenditure        
continuing operations        
europe       10 05
north america       59 14
asia pacific rest of americas africa     05 31
       74 50
discontinued operations        
europe       – 01
       74 51 60
spirent communications plc
annual report 2008
financial statements
5 profit before tax        
the following items have been charged in arriving at profit before tax and are disclosed for continuing and  
discontinued operations where relevant 
       2008 2007 
       £ million £ million
employee benefit costs note 10      969 953 
costs of inventories recognised as an expense     632 599 
 writedown of inventories to net realisable value note 19    13 50 
 amortisation of intangible assets note 15     07 15 
 depreciation of property plant and equipment      
owned assets note 16      88 95
loss on disposal of property plant and equipment    03 08
operating leases        
minimum lease payments      68 70 
sublease income       05 11
product development costs      453 463
net foreign exchange creditcharge     01 06
services provided to all of the operations of the group by the auditor ernst  young llp and its associates
       2008 2007 
       £ million £ million
audit services        
statutory audit       03 03
other fees to auditors       
local statutory audits for subsidiaries     02 02
other services relating to tax      – 01
       02 03
       05 06
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 continued 61
spirent communications plc
annual report 2008
financial statements
6 discontinued operations        
discontinued operations in 2007 relate to swissqual which was sold on 5 july 2007 swissqual was included within the 
performance analysis division there were no discontinued operations in 2008      
  
the results for discontinued operations are presented below       
        2007 
        £ million
revenue        36
cost of sales        32
gross profi t        04
expenses        38
operating loss        34
loss on the disposal of operations note 34      42
loss before tax from discontinued operations      76
tax note 12        03
loss for the year from discontinued operations      79
        
the net cash flows after tax for discontinued operations were as follows      
  
        2007 
        £ million
operating        13
investing        01
net cash outflow        14
7 exceptional items        
operating items        
         
       2008 2007 
       £ million £ million
inventory provisions       – 24
restructuring costs        – 128 
curtailment gains on defined benefit pension plan note 11    – 08
       – 144
the group defines exceptional items as those items which by virtue of their size or nature would distort the 
comparability of the group’s results from year to year there were no exceptional operating items in 2008   
     
restructuring costs and inventory provisions        
major restructuring actions were taken throughout the group during 2007      
  
restructuring costs included severance costs and other reorganisation costs of £61 million impairment of property  
plant and equipment of £31 million and onerous lease provisions in respect of the group’s separable vacant space of 
£36 million        
        
in addition an inventory writedown of £24 million was charged in relation to excess and obsolete inventory identified 
as a result of outsourcing activities        
         62
spirent communications plc
annual report 2008
financial statements
7 exceptional items continued
curtailment gains        
the curtailment gain of £08 million in 2007 relates to the closure of a site which led to a reduction in the number of  
employees covered by the spirent staff pension plan        
        
exceptional interest income and expense        
exceptional interest income of £08 million and an exceptional interest expense of £26 million have been reported in 
2008 2007 nil see notes 8 and 9 
exceptional tax credit
there is an exceptional tax credit of £256 million in 2008 2007 nil which is in relation to the agreement of an 
overseas tax position see note 12
8 finance income        
       2008 2007 
       £ million £ million
interest receivable       31 61
defined benefit pension plans note 11     01 09
       32 70
exceptional interest income      08 –
       40 70
finance income is all in respect of continuing operations        
exceptional finance income in 2008 relates to interest received on prior year tax refunds during the year   
     
9 finance costs        
       2008 2007 
       £ million £ million
bank loans and overdrafts      02 01 
leasehold provisions discount adjustment note 25    03 02
       05 03 
exceptional interest on tax settlement     26 –
       31 03
finance costs are all in respect of continuing operations      
  
an exceptional interest charge has been incurred on the agreement of prior year tax positions with the relevant  
tax authorities
10 employees
the average number of people employed by the group during the year was
       2008 2007 
       number number
manufacturing       443 465
product development      532 556
selling and distribution      381 437
administration       191 203
       1547 1661
notes to the consolidated financial statements continued 63
spirent communications plc
annual report 2008
financial statements
10 employees continued
employee benefit costs were
       2008 2007 
       £ million £ million
remuneration       857 818
social security costs      68 67
pension and other related costs      29 43
expense of sharebased payment note 30     15 25
       969 953
employee numbers and costs include discontinued operations up to the date of disposal     
   
please refer to the report on directors’ remuneration on pages 32 to 41 for disclosures relating to the emoluments 
share incentives and pensions of the directors
        
11 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” these plans have been combined for the purposes of the following disclosures there is in addition a 
united kingdom unfunded plan
        
the assets and liabilities on the balance sheet are as follows       
        2007 
       2008  restated 
       £ million £ million
assets        
uk defined benefit pension plan surplus     26 61
liabilities        
uk unfunded plan       06 07
        
the most recent actuarial valuations at 1 april 2006 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        
       2008 2007 
        
infl ation        30 34
rate of increase in pensionable salaries     35 41 
rate of increase for pensions in payment pre 2001 service    36 36 
rate of increase for pensions in payment post 2001 pre april 2005 service   29 34 
rate of increase for pensions post april 2005 service    21 24 
rate of increase in deferred pensions     30 34 
 rate used to discount plan liabilities     60 57 
expected rate of return on plan assets     52 59
spirent communications plc employs a building block approach in determining the long term rate of return on plan  
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     64
spirent communications plc
annual report 2008
financial statements
11 pensions continued        
the mortality assumptions are based on standard mortality tables which allow for future mortality improvements the 
assumptions are such that a member currently aged 65 will live on average for a further 217 years 2007 216 years if 
they are male and for a further 240 years 2007 240 years if they are female for a member who retires in 2028 at 
age 65 the assumptions are that they will live on average for a further 229 years 2007 228 years after retirement if 
they are male and for a further 250 years 2007 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 £18 million •
increasing the life expectancy of a current 65 year old by one year by modifying the standard mortality tables using  •
an appropriate scaling factor this would increase past service liabilities by £31 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 2007 
     expected 2008 expected  restated 
      £ million  £ million
equities     80 249 80 480
government bonds     40 603 45 643
corporate bonds     57 295 47 130
property     70 41 70 58
cash and other     38 105 59 117
fair value of plans’ assets    52 1293 59 1428
present value of defined benefit pension plans’ obligations   1265  1351
surplus in the plans      28  77
irrecoverable element of pension plan surplus    02  16
net surplus in the plans on the balance sheet    26  61
        
the surplus at 31 december 2007 has been restated on the implementation of ifric 14 “the limit on a defined benefit 
asset minimum funding requirements and their interaction” the effect of this restatement is discussed in note 2
       
the plans are prohibited from investing in spirent’s own financial instruments      
  
iii analysis of the amounts chargedcredited to the income statement     
       2008 2007 
       £ million £ million
analysis of amount chargedcredited to operating costs     
current service cost      02 02
past service cost       – 06 
curtailment gains        – 08
total operating charge      02 –
analysis of amount credited to finance income      
expected return on pension plans’ assets     76 81
interest on pension plans’ liabilities     75 72
finance income note 8      01 09
net chargecredit to the income statement     01 09
notes to the consolidated financial statements continued 65
spirent communications plc
annual report 2008
financial statements
11 pensions continued
iv analysis of amount recognised directly in the statement of recognised income and expense   
        2007 
       2008 restated 
       £ million £ million
actual return on pension plans’ assets     78 55
less expected return on pension plans’ assets     76 81
experience losses on plans’ assets     154 26
experience losses arising on plans’ liabilities     04 08
changes in assumptions underlying the present value of plans’ liabilities   107 75
actuarial lossgain recognised directly in equity     51 41
the cumulative amount of actuarial gains and losses recognised since 1 january 2003 in the group’s statement of 
recognised income and expense is £117 million loss 2007 £66 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 group’s 
statement of recognised income and expense before 1 january 2003
        2007 
       2008 restated 
       £ million £ million
movement in the irrecoverable element of pension plan surplus    14 16
       
v movements in the present value of defined benefit obligations      
       2008 2007 
       £ million £ million
at 1 january       1351 1582
current service cost       02 02
past service cost       – 06
interest cost       75 72
employee contributions      01 01
benefi t payments       61 49
transfer values paid       – 188
curtailment gains       – 08
actuarial gain       103 67
present value of defined benefit pension plans’ obligations    1265 1351
vi movements in the fair value of plans’ assets        
       2008 2007 
       £ million £ million
at 1 january       1428 1606
expected return on plans’ assets      76 81
employer contributions      03 03
employee contributions      01 01
benefi t payments       61 49
transfer values paid       – 188
actuarial loss       154 26
fair value of plans’ assets      1293 1428
         66
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financial statements
11 pensions continued
vii history of experience gains and losses        
    2008 2007 2006 2005 2004 
    £ million £ million £ million £ million £ million
present value of defined benefit pension 
plans’ obligations    1265 1351 1582 1796 1442
fair value of plans’ assets   1293 1428 1606 1288 1069
net surplusdeficit in plans   28 77 24 508 373
experience gains and losses on plans’ liabilities 
amount £ million    04 08 100 48 24
percentage of plans’ liabilities    03 06 63 27 17
experience gains and losses on plans’ assets      
amount £ million    154 26 05 146 36
percentage of plans’ assets    119 18 03 113 34
the above plans are funded and have full uk hm revenue  customs taxexempt approval certain members whose 
salaries were in excess of the 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 2008 of £06 million 2007 £07 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 2004 to 2008 on the unfunded plan
        
expected contributions for these plans for 2009 are £03 million       
 
a curtailment gain of £08 million arose in 2007 on the closure of a site which led to a reduction in the number of  
employees covered by the plans as the curtailment gain related to restructuring it was included within exceptional 
restructuring costs
defined contribution plans         
united kingdom         
the group maintains defined contribution pension plans for employees in the united kingdom employer contributions 
into these plans for 2008 were £07 million 2007 £07 million       
  
united states         
the group maintains a defined contribution pension benefit 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 31 million for 2008 2007 35 million total assets in 
the defined contribution plan at the end of 2008 were 894 million 2007 1292 million there were no defined 
benefit plans in the united states in 2008 or 2007         
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 2008 in respect of these plans amounted to £02 million 2007 £05 million    
     
total contributions to defined contribution plans were £26 million 2007 £30 million   
notes to the consolidated financial statements continued 67
spirent communications plc
annual report 2008
financial statements
11 pensions continued
directors’ pension arrangements         
the pension arrangements of the executive directors are described in detail in the report on directors’ remuneration on 
pages 32 to 41         
         
12 tax         
       2008 2007 
       £ million £ million
tax creditcharge in the income statement       
current income tax 
foreign tax
continuing operations      50 79
discontinued operations note 6      – 03
current income tax charge      50 82
amounts overprovidedunderprovided in previous years
uk tax       34 64
foreign tax       271 11
prior year tax credit       305 53
total current income tax      255 29
deferred tax
recognition of deferred tax assets      25 105
origination and reversal of temporary differences     28 02
total deferred tax expensecredit      03 103
tax credit in the income statement      252 74
the tax credit in the income statement is disclosed as follows
continuing operations    
income tax charge       01 26 
income tax credit – exceptional      256 –
deferred tax chargecredit      03 103
       252 77
discontinued operations
income tax charge note 6      – 03
tax credit in the income statement      252 74
tax relating to items charged or credited to equity
       2008 2007 
       £ million £ million
deferred tax liability on defined benefit pension plan surplus    03 08
tax creditcharge in the statement of recognised income and expense   03 08
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 
285 per cent 2007 lower and 30 per cent         
          68
spirent communications plc
annual report 2008
financial statements
12 tax continued
the differences are reconciled below         
       2008 2007 
       £ million £ million
profit before tax from continuing operations     496 178
loss before tax from discontinued operations note 6    – 76
accounting profit before tax      496 102
accounting profit multiplied by the uk standard rate of corporation tax    
of 285 per cent 2007 30 per cent     141 31
exceptional items not given credit      05 09
intangible assets       02 04
sharebased payment      04 07
disposals        – 23
differences in overseas rates and other adjustments    09 14
tax overprovided in prior years      305 53
recognition of uk deferred tax assets     – 66
use of pension fund and other uk deductions     30 43
use of overseas tax credits and unrecognised losses    60 –
total tax credit reported in the income statement     252 74
amount overprovided in prior years          
in 2008 the group released provisions of £305 million 2007 £53 million following the agreement of tax positions with 
various tax authorities for prior years of this £256 million has been reported as an exceptional item 2007 nil  
       
recognition of deferred tax assets          
during the year the group has recognised deferred tax assets in the united states of £25 million 2007 £39 million 
no additional deferred tax assets were recognised in the united kingdom 2007 £66 million    
     
tax effect of exceptional items          
the tax effect in respect of exceptional items in 2007 was a £39 million credit there was no tax effect on exceptional 
items in 2008          
          
13 earningsloss per share          
earningsloss per share is calculated by reference to the profitloss for the year and the number of ordinary shares in 
issue during the year as follows          
       2008 2007 
       £ million £ million
profitloss for the year attributable to equity shareholders of parent company    
continuing operations      748 255 
 discontinued operations      – 79
       748 176
       2008 2007 
       number number 
       million million
weighted average number of shares in issue – basic     7385 8598
dilutive potential of employee share incentives     53 88
weighted average number of shares in issue – diluted    7438 8686
notes to the consolidated financial statements continued 69
spirent communications plc
annual report 2008
financial statements
13 earningsloss per share continued
       2008 2007 
       pence pence
earningsloss per share       
basic earnings per share      1013 205
basic earnings per share from continuing operations    1013 297
basic loss per share from discontinued operations    – 092
diluted earnings per share      1006 203
diluted earnings per share from continuing operations    1006 294
diluted loss per share from discontinued operations    – 091
the group discloses adjusted earnings per share attributable to equity shareholders for continuing operations in order 
to provide a measure to enable periodonperiod comparisons to be made of its performance     
      2008  2007 
      £ million pence £ million pence
profit for the period  attributable to 
equity shareholders of parent company   748 1013 255 297
exceptional operating items note 7    –  144 
exceptional finance income note 8    08  – 
exceptional finance expense note 9   26  – 
tax on exceptional items note 12    –  39 
exceptional tax credit note 12    256  –
prior year tax credit note 12    49  53
adjusted basic     461 624 307 357
adjusted diluted      620  354
14 dividends paid and proposed          
       2008 2007 
       £ million £ million
declared and paid in the year      
equity dividend on ordinary shares      
interim dividend 2008 05 pence 2007 nil     37 –
proposed for approval at agm not recognised as a liability at 31 december    
equity dividend on ordinary shares      
final dividend 2008 06 pence 2007 nil     40 –
the directors are proposing a final dividend in respect of the financial year ended 31 december 2008 of 06 pence per 
share 2007 nil which will absorb an estimated £40 million of shareholders’ funds it will be paid on 8 may 2009 to 
shareholders who are on the register of members at close of business on 6 march 2009 payment will be made to adr 
holders on 18 may 2009 no liability is recorded in the financial statements in respect of this final dividend 70
spirent communications plc
annual report 2008
financial statements
15 intangible assets         
        £ million
       intangible 
      goodwill assets total
cost net of accumulated amortisation and impairment losses     
at 1 january 2007      548 85 633 
increase during the year     – 03 03 
 discontinued operations note 34     – 34 34 
 amortisation for the year     – 15 15 
 release of accrual for deferred consideration    – 05 05
exchange adjustment     06 02 04
at 1 january 2008      554 32 586
amortisation for the year     – 07 07
exchange adjustment     189 08 197
at 31 december 2008     743 33 776
at 31 december 2007   
cost gross carrying amount     17379 57 17436
amortisation and accumulated impairment losses    16825 25 16850
net carrying amount      554 32 586
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
goodwill and intangible assets at 31 december 2008 and 2007 are all within the performance analysis segment
 
the carrying amounts of intangible assets at 31 december by class are as follows
 
        £ million
     customer current 
     list technology other total
at 31 december 2008    04 19 10 33
at 31 december 2007    04 19 09 32
amortisation and impairment charges         
goodwill at 31 december 2008 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 2008 or 2007   
      
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 22 years and 24 years respectively      
notes to the consolidated financial statements continued 71
spirent communications plc
annual report 2008
financial statements
15 intangible assets continued
annual impairment test         
the recoverable amount of the performance analysis cashgenerating unit at 30 november 2008 the annual impairment 
testing date has been determined based on a value in use calculation using management’s cash flow projections over a 
three year period cash flows in subsequent years have been extrapolated using a 25 per cent 2007 25 per cent 
growth rate which approximates to the 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 210 per cent 2007 213 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         
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 three year period covered by management’s projections   •
       
projections were 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 taking into account the current economic uncertainties the cash flows used in the impairment review were 
approved by the board         
gross margins and operating expenses are based on historical values     
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 industry analysis        
 
sensitivity to changes in key assumptions         
at 30 november 2008 the date of the group’s annual impairment review the estimated recoverable amount of the 
performance analysis cashgenerating unit exceeded its carrying value by £362 million the table below shows the key 
assumptions used in the value in use calculation and the rate to which each must change in isolation in order for the 
estimated recoverable amount to be equal to its carrying value
 
        rate 
        required for 
       assumptions  carrying value 
       used in  to equal 
       value in use  recoverable 
       calculation  amount
 pretax discount rate       210 287
rate of revenue decline in year 1      190 232
long term growth rate       25 31
         72
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annual report 2008
financial statements
15 intangible assets continued
in the impairment review carried out at 30 november 2007 the recoverable amount exceeded the carrying value of the 
cashgenerating unit by £1382 million the directors believed that no reasonable possible change in any of the key 
assumptions used in isolation would have caused the carrying value of the performance analysis cashgenerating unit to 
exceed its recoverable amount
16 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 2007     44 123 86 253
additions       
owned assets     04 28 19 51
discontinued operations note 34    – – 05 05
disposals      – 09 01 10
depreciation charge for the year    11 45 39 95
impairment     11 17 03 31
exchange adjustment    – 01 – 01
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 31 december 2008    47 91 48 186
 at 31 december 2007        
cost     88 383 362 833 
accumulated depreciation and accumulated impairment  62 304 305 671
net carrying amount     26 79 57 162
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
none of the property plant and equipment is held under finance leases arrangements    
     
17 capital commitments and contingent liabilities         
the group had capital commitments at 31 december 2008 of £01 million 31 december 2007 nil   
      
the group has provided indemnities of £05 million 2007 £04 million for certain ongoing business obligations under 
letters of credit for subsidiary companies         
         
during 2006 spirent discovered potential violations of the united states export administration regulations surrounding 
the valuation and classification of exports together with record keeping requirements the company has notified the 
office of export enforcement of the us department of commerce and until the office of export enforcement has 
concluded on this matter the company is unable to determine what liability if any might be due in respect of this  
       
18 subsidiaries         
a list of the significant investments in subsidiaries including the name country of incorporation and proportion of  
ownership interest is given on page 111 of these financial statements      
notes to the consolidated financial statements continued 73
spirent communications plc
annual report 2008
financial statements
19 inventories         
       2008 2007 
       £ million £ million
raw materials       117 83
work in progress       15 19
finished goods       110 76
       242 178
an expense of £13 million 2007 £50 million has been recognised in the period for inventory writedowns there are 
no reversals of prior period inventory writedowns 2007 nil
no inventories are carried at fair value less costs to sell 2007 nil       
  
20 trade and other receivables         
       2008 2007 
       £ million £ million
noncurrent assets
other receivables       22 14
prepayments accrued income and deferred costs     03 –
       25 14
current assets
trade receivables       522 402
other receivables       24 27
prepayments accrued income and deferred costs     78 73
       624 502
       649 516
the trade receivables are stated net of provisions for doubtful debts the movement in the provision was as follows  
       
       2008 2007 
       £ million £ million
at 1 january       18 13
charge for the year       05 05
released in the year       06 –
exchange adjustment      02 –
at 31 december        19 18
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         
         
21 cash and cash equivalents         
       2008 2007 
       £ million £ million
cash at bank and in hand      274 123
short term bank deposits      323 617
short dated commercial paper      – 50
       597 790
cash at bank and in hand earns interest at floating interest rates      74
spirent communications plc
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financial statements
21 cash and cash equivalents continued    
short term bank deposits are made for varying periods of between one day and one week 2007 one day and two 
months 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 in 2007 short dated commercial paper was also held having a maturity of 
between one day and one month and rated standard  poor’s a or moodys a2 or better     
      
for the purposes of the cash flow statement cash and cash equivalents comprise the above amounts   
       2008 2007 
       £ million £ million
noncurrent
cash on deposit       25 37
at 31 december 2008 £25 million 2007 £37 million is held in a blocked trust account and is only available for use by 
the company once all 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 31      
     
22 trade and other payables – current         
       2008 2007 
       £ million £ million
trade payables       137 90
payments received on account      23 20
other taxes and social security costs     17 06
other payables       – 32
accruals and deferred income      458 398
       635 546
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   
        
23 deferred tax           
the movements in the deferred tax assets and liabilities are as follows
     
        £ million
       uk pension 
     temporary  plan  
     differences tax losses surplus total
deferred tax asset at 1 january 2007   02 10 – 12
recognised in the year note 12    105 – – 105
charged in the year note 12    – 02 – 02
deferred tax on uk pension plan surplus note 12   – – 08 08
disposal of operations note 34    02 – – 02
deferred tax asset at 1 january 2008   105 08 08 105
recognised in the year note 12    08 33 – 25
charged in the year note 12    23 05 – 28
deferred tax on uk pension plan surplus note 12   – – 03 03
exchange adjustment    15 02 – 17
deferred tax asset at 31 december 2008   89 38 05 122
notes to the consolidated financial statements continued 75
spirent communications plc
annual report 2008
financial statements
23 deferred tax continued
a deferred tax asset of £122 million has been recognised at 31 december 2008 2007 £105 million £61 million is in 
the united kingdom 2007 £58 million and £61 million is in the united states 2007 £47 million   
        
the deferred tax liability arising on the united kingdom pension plan surplus in 2008 and 2007 has been offset as 
permitted by ias 12 “income taxes” movements have been charged to the statement of recognised income and 
expense in 2008 and 2007           
deferred tax assets on temporary differences of £291 million 2007 £562 million arising principally in the united 
states canada and the united kingdom have not been recognised these assets can only be realised when they 
reverse against suitable taxable profits although the directors ultimately expect to realise these assets there is 
currently insufficient evidence under ias 12 to recognise a deferred tax asset in respect of these temporary differences 
          
in addition the group has tax losses arising in the united kingdom of £803 million 2007 £689 million in the united 
kingdom and £286 million in the united states that are available for offset against suitable future taxable profits the 
united states tax losses unrecognised at 31 december 2007 have been reduced by £268 million following agreement 
of the tax position for prior years with the balance being utilised in the current year 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 £340 million 2007 £501 million have not been recognised on unutilised 
losses and temporary differences           
no deferred tax asset has been recognised in respect of the tax deduction which may be available on the future exercise 
of share incentives
24 trade and other payables – noncurrent  
       2008 2007 
       £ million £ million
other payables       13 11
accruals and deferred income      38 –
       51 11
25 provisions and other liabilities         
        £ million
      restructuring  
      and other lease 
      provisions provisions total
at 1 january 2008      23 104 127
chargedreleased during the year     04 08 04
discount unwind note 9     – 03 03
change in discount rate     – 05 05
utilised in the year      04 32 36
transfer to payables      12 – 12
exchange adjustment     06 22 28
at 31 december 2008     09 110 119 76
spirent communications plc
annual report 2008
financial statements
25 provisions and other liabilities continued
provisions have been analysed as follows         
       2008 2007 
       £ million £ million
current       37 51
noncurrent       82 76
       119 127
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 eight years         
restructuring and other provisions at 31 december 2008 are mainly in relation to environmental provisions on property 
disposed of         
26 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 2008 the group held various forward foreign currency exchange contracts in respect of the forward sale 
of us dollars against sterling on trading transactions contracts for the sale of us dollars total £265 million 2007 
£297 million are for various maturity dates over the period to 31 december 2009 at an average exchange rate of 176 
2007 over the period to 31 december 2008 at an average rate of 203 at 31 december 2007 there were also 
outstanding contracts for the purchase of us dollars against the euro which totalled £07 million at an average exchange 
rate of 141 which all matured before 31 december 2008        
 
these contracts have been designated as hedges at 31 december 2008 and 31 december 2007    
     
the fair value of the derivative financial instruments at 31 december is as follows
       2008 2007 
       £ million £ million
       liabilities liabilities
currency derivatives – expected to be realised in less than one year
designated as a cash flow hedge      56 05
gains and losses on cash flow hedges recycled into the income statement from equity are charged or credited to  
administration costs        
 
notes to the consolidated financial statements continued 77
spirent communications plc
annual report 2008
financial statements
27 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   
      
      2008  2007 
       £ 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 21   25 – 37 –
noncurrent other receivables note 20   22 – 14 –
cash and cash equivalents note 21   597 – 790 –
current trade and other receivables note 20   546 – 429 –
financial assets     1190 – 1270 –
noncurrent other payables note 24   13 – 11 –
current trade and other payables note 22   154 – 128 –
provisions note 25     119 – 127 –
current derivatives that qualify for hedge accounting note 26  – 56 – 05
financial liabilities     286 56 266 05
the group enters into derivative transactions forward foreign currency exchange contracts for the management of the 
group’s 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
a market risk         
the main types of market risk that affect the group are interest rate risk and exchange rate risk    
     
interest rate risk         
following the repayment of its long term debt in february 2006 the group has remained debt free with limited exposure 
to market risk for changes in interest rates the group’s excess funds are principally held in the united kingdom and 
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 in 2007 the group also invested in short dated commercial paper which 
all matured within one month         
         
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        
  78
spirent communications plc
annual report 2008
financial statements
27 financial instruments and financial risk management continued
short term bank deposits all mature within one week forward foreign currency exchange contracts all mature within one 
year the financial instruments bear the following interest rates      
     effective   effective  
     interest  interest 
     rate 2008 rate 2007 
      £ million  £ million
fixed rate
fixed deposits     126 323 598 617
short dated commercial paper    – – 418 50
forward foreign currency exchange contracts    56  05
      267  662
floating rate
cash at bank and in hand     274  123
interest rates on financial instruments classified as fixed rate are fixed until the maturity of the instrument all fixed rate 
deposits mature within one week 2007 two months after which date they will be exposed to floating rates of interest 
in addition £25 million 2007 £37 million was held in a blocked trust account and was earning interest of 175 per cent 
at 31 december 2008 2007 625 per cent the maturity of the deposit is 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 all the creditors who 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 £31 million note 8 2007 £61 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 100 basis points in interest rates based on levels of investment at 31 december 2008 would increase 
or reduce interest income and equity by £03 million 2007 £07 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 
significantly weakened against the us dollar the group does not have any net investment hedges in place   
      
a 10 per cent change in the us dollar to sterling exchange rate will have the following effect on the income statement 
and balance sheet compared with the reported exchange rate
       2008 2007 
       £ million £ million
income statement
profit before tax       50 30
balance sheet
shareholders’ funds       100 70
notes to the consolidated financial statements continued 79
spirent communications plc
annual report 2008
financial statements
27 financial instruments and financial risk management continued
the group is not exposed to significant transactional foreign currency risk at 31 december 2008 nor at 31 december 
2007 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 majority of the transaction  
hedging activity in relation to normal trading activity at 31 december 2008 the group had hedged the major part of its 
2009 us dollar forecast trading exposures at an average exchange rate of 176 us dollars to sterling at 31 december 
2007 at an average exchange rate of 203
         
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 a2 or better 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 bank deposits is 
equal to the carrying value of £348 million 2007 £704 million bank deposits and short dated commercial paper
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 
£522 million 2007 £402 million
the composition of trade receivables at 31 december is as follows      
       2008 2007 
       £ million £ million
neither impaired nor past due      295 274
past due but not impaired 
less than 30 days overdue      147 87
30 to 60 days       38 21
over 60 days       42 20
trade receivables       522 402
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 20      
    
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 in 
addition the group has a committed but currently undrawn borrowing facility for £25 million in place until september 
2011 this facility incurs commitment fees at market rates        
  80
spirent communications plc
annual report 2008
financial statements
27 financial instruments and financial risk management continued
the facility requires that the following financial covenants are met
i the ratio of operating profit to net interest shall not be less than 500100
ii the ratio of net debt to operating profit shall not be greater than 200100
iii the ratio of net debt to shareholders funds shall not exceed 100100
all three financial covenants have been complied with for the 12 months ended 31 december 2008
at 31 december 2008 the group had cash and cash equivalents of £597 million 2007 £790 million all of which 
mature within one week 2007 two months         
during 2008 the group generated £477 million of cash from operating activities 2007 £498 million and considers 
that with current cash resources positive cash flow from operating activities and a committed borrowing facility it has 
adequate resources available to it to remain in operational existence for the forseeable future
the group has entered into forward foreign exchange contracts all of which mature within one year the gross 
settlement amounts of these contracts are as follows
       2008 2007 
       £ million £ million
sale of us dollars against sterling      265 297
purchase of us dollars against euro     – 07
gross settlement amounts      265 304
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 see note 25  
        
the group does not have any other material 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        
  
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 2007 and 2008 the company has been operating an onmarket share repurchase programme in 2008 
the company repurchased 729 million of its ordinary shares 2007 1034 million at a cost of £422 million 
2007 £668 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 shares being repurchased at a cost of £248 million  
      
28 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 
       2008 2007 
       £ million £ million
within one year       81 66
in the second to fifth years      178 152
over five years       16 20
       275 238
notes to the consolidated financial statements continued 81
spirent communications plc
annual report 2008
financial statements
28 operating lease commitments  continued
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 £12 million 2007 £09 million
29 authorised and issued share capital        
authorised           
       2008 2007 
       £ million £ million
1250 million 2007 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 2007       9759 325
allotted pursuant to share incentives exercised     102 03
cancelled during the year      1453 48
at 1 january 2008       8408 280
allotted pursuant to share incentives exercised     52 02
cancelled during the year      1742 58
at 31 december 2008
1
      6718 224
note
1  during 2008 under the programme of returning capital to shareholders the company repurchased 729 million ordinary shares onmarket and 
529 million by way of a tender offer all ordinary shares repurchased during the year were cancelled the remaining 484 million ordinary shares 
which were held in treasury were cancelled during the year leaving no ordinary shares in treasury as at 31 december 2008 2007 484 million for 
the purposes of providing comparative data the issued ordinary share capital of the company when treasury shares are taken into account and 
excluded from the calculation as at 31 december 2007 was 7924 million ordinary shares compared with 6718 million as at 31 december 2008
    
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 £000
2005 employee incentive plan      04 240
spirent stock incentive plan      49 19731
1995 executive share option scheme     06 2383
all employee share plans
1
      03 1259
       62 23613
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 notes g to j on page 86
during the year 03 million ordinary shares were transferred from the sst to satisfy options exercised under the uk all 
employee share schemes 2007 06 million and 07 million ordinary shares were transferred from the esot to satisfy 
options exercised under the spirent stock incentive plan 2007 16 million 82
spirent communications plc
annual report 2008
financial statements
29 authorised and issued share capital continued
there has been no material increase in the issued ordinary share capital whether by exercise of share incentives or 
otherwise between 31 december 2008 and 24 february 2009 the date on which these financial statements have 
been signed
employee share plans
movements in share incentives over a two year period ending on 31 december 2008 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 2006 66 37 838 74 154 119 45 93 15 40
granted 01 – 10 62 – – – – – –
exercised 01 4 123 52 28 45 15 22 06 39
forfeited 37 38 103 52 – – – – 01 40
expired – – 61 169 74 145 09 168 – 82
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
incentives exercisable           
at 31 december 2007 01 48 405 79 36 148 21 115 01 41
at 31 december 2008 08 53 346 69 36 119 14 122 04 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 2008 08 million ordinary shares held in the esot had been allocated to hedge awards made under the 2005 employee incentive 
plan 2007 nil
2   shows both share options and stock appreciation rights in aggregate as at 31 december 2008 39 million ordinary shares held in the esot had 
been allocated to hedge awards made under the spirent stock incentive plan 2007 44 million
3   the acquisition plans are share plans which originally granted options over other companies’ equity which have been rolledover into spirent ordinary 
shares when the said companies were acquired by spirent communications plc further details of the acquisition plans can be found in notes  
d to f on page 85 of these financial statements 
4    03 million ordinary shares were transferred from the sst to settle the exercise of uk sharesave options in 2008 2007 06 million as at  
31 december 2008 09 million ordinary shares remained in the sst hedging share option grants made under the uk sharesave schemes
notes to the consolidated financial statements continued 83
spirent communications plc
annual report 2008
financial statements
29 authorised and issued share capital continued
the weighted average share price at exercise date was 739 pence 2007 759 pence
the following information relates to outstanding share incentives
          
      2008   2007
      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 notes 31 december 2008 pence pence million years pence million years
2005 employee  
  incentive plan a 250808–061118 0–53
1
 37 30 59 36 29 60
spirent stock  
  incentive plan b 101003 – 091009 6 6 01 08 6 01 18
  141103 – 090410 13–18 17 18 10 17 23 20
  080504 – 070510 22 22 01 14 22 01 24
  120903 – 121115 37–57  50 193 40 50 241 49
  031002 – 130815 59–87 67 154 25 67 226 30
  130902 – 120609 94–140 123 05 02 118 07 11
  050702 – 130309 141–190 143 45 02 143 52 12
  010302 – 060608 270–383 – – – 311 06 03
  020102 – 010108 550–579 – – – 570 04 01
1995 executive share  c 250306 – 240313 16 16 01 42 16 03 52
option scheme  031004 – 040814 56–72 60 16 53 61 22 62
  270401 – 010512 113–152 128 14 25 130 20 33
  110503 – 080411 305–341 322 05 17 320 07 28
acquisition plans d e f 150802 – 250612 8–11
2
 10 01 32 9 01 42
  230799 – 121010 90–127 107 09 04 103 16 12
  170500 – 190709 151 151 03 05 151 03 15
  141100 – 121010 350–572 350 01 18 374 01 27
uk sharesave schemes g 011208 – 310511 38–93 39 04 07 39 08 14
total     501   671 
notes
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
2   these exercise prices relate to the caw amended and restated stock plan and are expressed in this table in sterling using the average exchange 
rate between pounds sterling and us dollars for the year the actual exercise prices of these options are priced at either 1503 us cents or 2003 
us cents per share
description of employee share plans
a 2005 employee incentive plan “eip”
on 4 may 2005 spirent shareholders approved the eip to replace the now closed esos see c on page 84 the eip is 
currently available for selected employees including executive directors on a similar discretionary basis as the esos 
no price is payable on the grant of an award the company is able to grant share options including hmrc approved 
options share settled stock appreciation rights “sars” and performance shares under the eip
in normal circumstances eip options or sars vest three years following grant provided the company’s earnings per 
share “eps” growth targets have been met over the three year performance period
  84
spirent communications plc
annual report 2008
financial statements
29 authorised and issued share capital continued
in normal circumstances eip performance shares vest three years following grant provided the company’s total 
shareholder return “tsr” targets have been met over the three year performance period
for further information on the performance conditions for eip share incentives please see section 5d of the report on 
directors’ remuneration
sars granted under the eip will deliver the appreciation value ie the aggregated increase in market value of an ordinary 
share over the base price of the sar in the form of ordinary shares this “sars approach” which is also being utilised 
for the spirent stock incentive plan see note b below helps the company manage its dilution headroom more 
efficiently as only the sar gain and not the entire share value needs to be funded using a sars approach it is not 
possible to determine the precise level of dilution until the sars are exercised 22 million eip sars with an average 
base price of 50 pence were outstanding as at 31 december 2008 2007 19 million sars outstanding 52 pence 
average base price 216959 eip sars were exercised in 2008 resulting in the issue of 77867 ordinary shares 2007 
1946 ordinary shares were issued on the exercise of 5070 eip sars
options and sars granted under the eip expire on the tenth anniversary of their grant unless they have previously 
lapsed or been exercised
b 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 under the ssip grants are also permitted to selected newly hired 
and promoted employees on a monthly basis
at the annual general meeting held in may 2008 shareholders approved the extension of the ssip until the company’s 
2009 annual general meeting 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 see a on page 83 in aggregate
275 million ssip sars with an average base price of 56 pence were outstanding as at 31 december 2008  
2007 344 million sars outstanding 58 pence average base price during 2008 15 million ordinary shares  
were issued as a consequence of the exercise of 52 million ssip sars 2007 17 million ordinary shares resulted from 
the exercise of 67 million ssip sars
most awards made pursuant to the ssip vest over four years provided that the participant remains in employment 
vesting is not subject to a performance condition awards normally become 25 per cent exercisable on the first 
anniversary of the date of grant and thereafter in equal proportions on a monthly basis over a further 36 months any 
award not exercised by the seventh anniversary 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 for further details on these performance conditions please see section 5d of the report on 
directors’ remuneration
no price is payable on the grant of options or sars and no options or sars have been or can be granted at a discount 
to the market price
c 1995 executive share option scheme “esos”
the esos is now closed however outstanding options may still be exercised and has been replaced by the eip referred 
to in a on page 83 
notes to the consolidated financial statements continued 85
spirent communications plc
annual report 2008
financial statements
29 authorised and issued share capital continued
awards under the esos normally determined annually were at the sole discretion of the remuneration committee after 
considering recommendations made to it by the chief executive officer 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 
during 2008 all remaining share options awarded under the esos passed their eps performance conditions and are 
now exercisable until they expire on the tenth anniversary of their respective grant dates or in the case of terminated 
participants 12 months from the date of termination if sooner
d 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 all remaining  
outstanding options are fully vested and exercisable until they expire
e 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
f 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
unvested rolledover options were capable of immediate exercise ie prior to their respective vesting date and any 
shares arising from such an event were held in the esot until the relevant vesting date the option holder was entitled 
to the beneficial but not legal interest in the ordinary shares whilst they were held in the esot but they remained 
subject to forfeiture with the original option exercise prices being refunded to the participant if the participant’s 
employment was terminated prior to the vesting date all carsp options and resulting ordinary shares held in the esot 
have now fully vested
in accordance with the original terms for acquiring caw in march 2004 spirent allotted 43 million ordinary shares and 
issued 75000 options following the achievement by caw of certain technical and financial earn out targets participation 
in the carsp entitled the participants to a share in the earn out any earn out payment for an outstanding carsp option 
was made by increasing the number of shares subject to the option and decreasing the per share exercise price so as to 
preserve the existing aggregate total exercise price of the 43 million ordinary shares 54000 ordinary shares were 
issued to the esot in respect of unvested restricted shares which remained subject to forfeiture prior to vesting as a 
result of the earn out the additional cash payment referred to above was adjusted to 669 us cents as each share 
vested or upon the exercise of a vested option
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 the plans mentioned in c to f above are closed to new entrants and no 
further awards of options can be made under them 86
spirent communications plc
annual report 2008
financial statements
29 authorised and issued share capital continued
g 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
the employee enters into a saveasyouearn contract with the company’s savings carrier to save a regular sum of 
between £5 and £250 per month for a fixed period of either three or five years
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 2007 06 million
no invitations have been made under either of these schemes since 2003
h 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 proceeds of a savings contract when joining the espp participants enter into a contract to save up to 15 per cent 
of basic salary gross subject to an individual maximum of 1000 net per month over a contract period of 12 
months by way of regular payroll deductions
no offer has been made under this plan since 2003
i 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 gross subject to an individual maximum of cdn 1000 net per month
no offer has been made under this plan since 2003
j uk employee share purchase plan “uk espp”
on 4 may 2005 shareholders approved the uk espp which is based on an hmrc approved share incentive plan 
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 the behalf of participants
to date no awards have been made under this plan
notes to the consolidated financial statements continued 87
spirent communications plc
annual report 2008
financial statements
29 authorised and issued share capital continued
k 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 in d on page 85 and subsequently for certain other employees in the 
communications group under the sarp recruitment promotion and recognition awards over ordinary shares have been 
made in line with historic and local market practice the operation of the sarp reflected as far as practicable the 
narsop accordingly 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 2008 the following rights were outstanding under the sarp
       2008 2007 
       number of number of 
       rights rights 
      rights price  outstanding outstanding 
rights exercise dates      pence million million
100900–290610      182–416 15 16
30 sharebased payment
the total charge for the year relating to employee sharebased payment plans is as follows
       2008 2007 
       £ million £ million
continuing operations
1995 executive share option scheme     02 03
2005 employee incentive plan      02 01
spirent stock incentive plan      10 20
all employee share plans      01 01
       15 25
all schemes are equity settled
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
       2008 2007
weighted average share price pence     410 560
weighted average fair value pence     310 280
expected volatility       40–45 40–50
expected life years       45 45
risk free rate        37–49 47–53
dividend yield        20 nil 88
spirent communications plc
annual report 2008
financial statements
30 sharebased payment continued
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 non
transferability 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 movements in equity
        £ million
      net 
  share capital   unrealised retained total 
 share premium redemption capital translation gains and earnings equity 
 capital account reserve reserve reserve losses loss restated
at 1 january 2007 325 106 – 55 61 – 1403 1828 
total recognised income and         
expense for the year – – – – 06 05 193 182
share cancellation 48 – 48 – – – – – 
sharebased payment – – – – – – 25 25 
new shares issued 03 49 – 19 – – – 33 
employee share ownership trust – – – – – – 12 12 
share repurchase – – – – – – 668 668
at 1 january 2008 280 155 48 36 67 05 965 1412
total recognised income and         
expense for the year – – – – 293 42 714 965
share cancellation 58 – 58 – – – – – 
sharebased payment – – – – – – 15 15 
new shares issued 02 17 – – – – – 19 
employee share ownership trust – – – – – – 06 06 
share repurchase – – – – – – 670 670 
equity dividends – – – – – – 37 37 
other movements – – – 22 – – 22 –
at 31 december 2008 224 172 106 14 226 47 1015 1710
nature and purpose of reserves
a reconciliation of the opening and closing balance on each reserve is shown in the reconciliation of movements in 
equity 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   net unrealised gains and losses 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 2008 an amount of £1758 million 2007 £1094 million has cumulatively been deducted from 
retained earnings in relation to the cost of investment in own ordinary shares 
notes to the consolidated financial statements continued 89
spirent communications plc
annual report 2008
financial statements
31 reconciliation of movements in equity continued
at 31 december 2008 the esot held 71 million ordinary shares 2007 78 million ordinary shares to satisfy awards 
under various share incentive plans of this number 02 million ordinary shares were unconditionally vested at 31 
december 2008 2007 02 million ordinary shares at 31 december 2008 the sst held 09 million ordinary shares 
2007 12 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 80 million ordinary shares 2007 
90 million ordinary shares at 31 december 2008 was £29 million 2007 £56 million
at 31 december 2008 the company held no ordinary shares in treasury 2007 484 million the market value of own 
ordinary shares held in treasury at 31 december 2007 was £300 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 2008 the company cancelled 1742 million ordinary shares 2007 1453 million that had been the subject  
of the onmarket share repurchase programme and tender offer and transferred £58 million 2007 £48 million to the 
capital redemption reserve
capital reserve
in 2008 the reserve has been reduced by £22 million 2007 nil in relation to share incentives which have been 
cancelled or have lapsed
share repurchase
during 2008 the company repurchased 729 million ordinary shares onmarket at a cost of £422 million 2007 
1034 million at a cost of £668 million in addition the company undertook a tender offer whereby it repurchased 
529 million ordinary shares at a cost £248 million 2007 nil all ordinary shares repurchased have been 
subsequently cancelled 90
spirent communications plc
annual report 2008
financial statements
32 reconciliation of profitloss before tax to cash generated from operations
       2008 2007 
       £ million £ million
continuing operations
profit before tax       496 178
adjustments for 
finance income       40 70
finance costs       31 03
intangible asset amortisation      07 09
depreciation of property plant and equipment     88 93
loss on the disposal of property plant and equipment    03 08
impairment of property plant and equipment     – 31
sharebased payment      15 25
curtailment gains on pension plan     – 08
changes in working capital
deferred income released      13 04
decrease in receivables      24 77
increasedecrease in inventories     16 61
decreaseincrease in payables      21 49
decrease in provisions      39 09
defined benefit pension plan      01 05
cash flows from continuing operations     534 448
discontinued operations
loss before tax       – 76
adjustments for
loss on sale of discontinued operations     – 42
intangible asset amortisation      – 06
depreciation of property plant and equipment     – 02
changes in working capital
decrease in receivables      – 30
increase in inventories      – 02
decrease in payables      – 12
cash flows from discontinued operations     – 10
cash flows from operations      534 438
33 acquisition of businesses
there were no acquisitions made by the group in 2008 or 2007
the cash flows in respect of prior year acquisitions were as follows
       2008 2007 
       £ million £ million
deferred consideration paid      – 55
net cash outflow on acquisitions      – 55
34 disposal of operations
in 2007 spirent disposed of its swissqual business a business within the performance analysis division of the 
communications group the sale was completed on 5 july 2007 there were no disposals made in 2008 and no cash 
flows related to prior year disposals
notes to the consolidated financial statements continued 91
spirent communications plc
annual report 2008
financial statements
34 disposal of operations continued
        2007 
        £ million
net assets disposed of
intangible assets        34
property plant and equipment       05
inventories        14
trade and other receivables       29
cash and cash equivalents       05
current tax        01
trade and other payables       27
deferred tax        02
pension plan deficit       08
net assets        53
less consideration net of expenses      11
loss on disposal of operations note 6      42
cash flows in respect of the disposal of operations were as follows
        2007 
        £ million
cash consideration received on disposal of operations     15
cash expenses paid        04
cash consideration net of expenses      11
cash and cash equivalents sold       05
net cash flow on the disposal of operations      06
35 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”     
       2008 2007 
       £000 £000
short term employee benefits      1051 879
termination benefi ts       – 465
sharebased payment      156 255
postretirement benefits      7 –
       1214 1599
the termination costs relate to the resignation of anders gustafsson on 7 march 2007
in 2008 eric hutchinson made gains on the exercise of share incentives of £149760 in 2007 anders gustafsson  
made gains on the exercise of share incentives of £531018 92
spirent communications plc
annual report 2008
financial statements
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 2008 which comprise the company balance 
sheet and the related notes 1 to 21 and the list of 
principal divisions and subsidiaries these parent 
company financial statements have been prepared under 
the accounting policies set out therein we have also 
audited the information in the report on directors’ 
remuneration that is described as having been audited
we have reported separately on the group financial 
statements of spirent communications plc for the year 
ended 31 december 2008 
this report is made solely to the company’s members as 
a body in accordance with section 235 of the companies 
act 1985 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 auditors’ 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
the directors’ responsibilities for preparing the annual 
report the report on directors’ remuneration and the 
parent company financial statements in accordance with 
applicable united kingdom law and accounting standards 
united kingdom generally accepted accounting practice 
are set out in the statement of directors’ responsibilities
our responsibility is to audit the parent company financial 
statements and the part of the report on directors’ 
remuneration to be audited in accordance with relevant 
legal and regulatory requirements and international 
standards on auditing uk and ireland
we report to you our opinion as to whether the parent 
company financial statements give a true and fair view 
and whether the parent company financial statements and 
the part of the report on directors’ remuneration to be 
audited have been properly prepared in accordance with 
the companies act 1985 we also report to you whether in 
our opinion the information given in the report of the 
directors is consistent with the financial statements 
in addition we report to you if in our opinion the company 
has not kept proper accounting records if we have not 
received all the information and explanations we require 
for our audit or if information specified by law regarding 
directors’ remuneration and other transactions is  
not disclosed
we read other information contained in the annual report 
and consider whether it is consistent with the audited 
parent company financial statements the other 
information comprises only the chairman’s statement  
the business review the board of directors the report of 
the directors the statement of directors’ responsibilities 
the directors’ statement on corporate governance the 
unaudited part of the report on directors’ remuneration 
financial history and shareholder information we 
consider the implications for our report if we become 
aware of any apparent misstatements or material 
inconsistencies with the parent company financial 
statements our responsibilities do not extend to any 
other information
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the 
auditing practices board an audit includes examination 
on a test basis of evidence relevant to the amounts and 
disclosures in the parent company financial statements 
and the part of the report on directors’ remuneration to 
be audited it also includes an assessment of the 
significant estimates and judgements made by the 
directors in the preparation of the parent company 
financial statements and of whether the accounting 
policies are appropriate to the company’s circumstances 
consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all 
the information and explanations which we considered 
necessary in order to provide us with sufficient evidence 
to give reasonable assurance that the parent company 
financial statements and the part of the report on 
directors’ remuneration to be audited are free from 
material misstatement whether caused by fraud or other 
irregularity or error in forming our opinion we also 
evaluated the overall adequacy of the presentation of 
information in the parent company financial statements 
and the part of the report on directors’ remuneration to 
be audited
opinion
in our opinion
the parent company financial statements give a true  •
and fair view in accordance with united kingdom 
generally accepted accounting practice of the state of 
the company’s affairs as at 31 december 2008 
the parent company financial statements and the part  •
of the report on directors’ remuneration to be audited 
have been properly prepared in accordance with the 
companies act 1985 and
the information given in the report of the directors   •
is consistent with the parent company  
financial statements
ernst  young llp
registered auditor
london
24 february 2009 93
spirent communications plc
annual report 2008
financial statements
parent company balance sheet
       2008 2007 
at 31 december      notes £ million £ million
fixed assets     
intangible assets      4 56 62
tangible assets      5 23 25
fixed asset investments     
shares in subsidiaries     6 1649 1933
loans to subsidiaries     7 87 408
total fixed assets       1815 2428
current assets     
inventories      8 67 50
trade and other debtors     9 224 198
cash and bank deposits      411 626
       702 874
current liabilities     
creditors due within one year     10 119 103
derivative financial instruments     15 56 05
       175 108
net current assets       527 766
assets less current liabilities      2342 3194
long term liabilities      
creditors due after more than one year    11 552 1094
provisions for liabilities and charges     
provisions      13 11 13
assets less liabilities excluding pension plan surplus    1779 2087
pension plan surplus      3 11 15
assets less liabilities including pension plan surplus    1790 2102
capital and reserves      16
called up share capital      224 280
share premium account      172 155
capital redemption reserve      106 48
capital reserve       14 36
unrealised gains and losses      47 05
profit and loss account      1321 1588
shareholders’ funds – equity      1790 2102
the notes on pages 94 to 111 form part of these financial statements
signed on behalf of the board 
eric hutchinson
director
24 february 2009 94
spirent communications plc
annual report 2008
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 230 of the companies act 1985
new accounting standards
the company has adopted amendments to frs 17 “retirement benefits” and the amendment to frs 26 and frs 29 
“reclassification of financial assets” 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 95
spirent communications plc
annual report 2008
financial statements
1 significant accounting policies continued
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
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
the company uses derivative financial instruments to hedge its exposures to fluctuations in foreign exchange rates the 
company’s policy is not to undertake any trading activity in financial instruments such derivative financial instruments 
are stated at fair value 
such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is 
entered into and are subsequently remeasured to fair value at the reported balance sheet date 
for those derivatives designated as hedges and for which hedge accounting is desired the hedging relationship is 
documented at its inception this documentation identifies the hedging instrument the hedged item or transaction the 
nature of the risk being hedged and how effectiveness will be measured throughout its duration such hedges are 
expected at inception to be highly effective 96
spirent communications plc
annual report 2008
financial statements
1 significant accounting policies continued
forward foreign currency exchange contracts are used to hedge foreign exchange exposures arising on forecast receipts 
and payments in foreign currencies the fair value of forward foreign currency exchange contracts is calculated by 
reference to current forward exchange rates for contracts with similar maturity profiles
for the purpose of hedge accounting hedges are classified as fair value hedges when they hedge the exposure to 
changes in the fair value of a recognised asset or liability or cash flow hedges where they hedge exposure to the 
variability in cash flows that is due to the risk associated with a recognised asset or liability or a forecast transaction
in relation to cash flow hedges forward foreign currency exchange contracts to hedge firm commitments or highly 
probable forecast transactions and which meet the conditions for hedge accounting the proportion of the gain or loss 
on the remeasurement of the fair value of the hedging instrument that is deemed to be effective is recognised in equity 
and the ineffective portion is recognised in the profit and loss account
when the firm commitment or highly probable forecast transaction results in the recognition of an asset or liability the 
associated gains and losses that have previously been recognised in equity are included in the initial measurement of 
the carrying amount of the asset or liability at the time the asset or liability is recognised
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
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
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 for the benefit of employees these plans require 
contributions to be made to separately administered funds based on triennial actuarial valuations other plans are 
defined contribution in nature
the assets of the defined benefit plans are measured at their market value at the balance sheet date and the liabilities 
of the plans are measured using the projected unit credit method the discount rate used to measure the plans’ 
liabilities is the current rate of return on an aa corporate bond of equivalent term and currency to the liabilities the 
extent to which the plans’ assets exceed or fall short of the plans’ liabilities is shown as a surplus or deficit in the 
balance sheet net of deferred tax
the regular service cost of providing retirement benefits to employees in defined benefit plans is charged to operating 
profit in the year together with the cost of providing benefit improvements in respect of past service and gains or losses 
arising on settlements and curtailments
a credit for the expected return on the plans’ assets and a charge for the increase during the period in the present value 
of the plans’ liabilities because the benefits are one year closer to settlement are included in other finance income or 
expense in the profit and loss account differences arising between the actual and expected returns on the plans’ 
assets together with changes in the actuarial assumptions are included in the statement of total recognised gains  
and losses
contributions payable to the other defined contribution plans are charged to the profit and loss account in the year for 
which they are due
notes to the parent company financial statements continued 97
spirent communications plc
annual report 2008
financial statements
1 significant accounting policies continued
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     
  
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 
      
tax       
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  98
spirent communications plc
annual report 2008
financial statements
1 significant accounting policies continued
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 32 to 41 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 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” these plans have been combined for the purposes of the following disclosures there is in addition a uk 
unfunded plan
the most recent actuarial valuation at 1 april 2006 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 used were
       2008 2007 
        
infl ation       30 34
rate of increase in pensionable salaries     35 41
rate of increase for pensions in payment pre 2001 service    36 36
rate of increase for pensions in payment post 2001 pre april 2005 service   29 34
rate of increase for pensions post april 2005 service    21 24
rate of increase in deferred pensions     30 34
rate used to discount plan liabilities     60 57
expected rate of return on plan assets     52 59
spirent communications plc employs a building block approach in determining the long term rate of return on plan 
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 65 will live on average for a further 217 years 2007 216 years 
if they are male and for a further 240 years 2007 240 years if they are female for a member who retires in 2028 at 
age 65 the assumptions are that they will live on average for a further 229 years 2007 228 years after retirement if 
they are male and for a further 250 years 2007 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 £18 million •
increasing the life expectancy of a current 65 year old by one year by modifying the standard mortality tables using  •
an appropriate scaling factor this would increase past service liabilities by £31 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
notes to the parent company financial statements continued 99
spirent communications plc
annual report 2008
financial statements
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 2008  expected 2007 
      £ million  £ million
equities     80 249 80 480
government bonds     40 603 45 643
corporate bonds     57 295 47 130
property     70 41 70 58
cash and other     38 105 59 117
fair value of plans’ assets    52 1293 59 1428
present value of defined benefit pension plans’ obligations   1265  1351
surplus in the plans      28  77
surplus restriction      07  47
surplus recognised      21  30
present value of unfunded obligations    06  07
pension asset on the balance sheet    15  23
deferred tax liability  note 12     04  08
net pension asset on the balance sheet    11  15
      
the recognition of the surplus is restricted in both 2008 and 2007 to the present value of economic benefits available 
in the form of refunds from the plans or reductions in future contributions to the plans as a result only £21 million of 
the £28 million surplus has been recognised on the balance sheet at 31 december 2008 at 31 december 2007 only 
£30 million of the £77 million surplus was recognised      
      
the plans are prohibited from investing in spirent’s own financial instruments      
iii analysis of the amounts chargedcredited to the profit and loss account     
       2008 2007 
       £ million £ million
analysis of amount chargedcredited to operating costs     
current service cost      02 02
past service cost       – 06
curtailment gains       – 08
total operating charge      02 –
analysis of amount credited to finance income      
expected return on pension plans’ assets     76 81
interest on pension plans’ liabilities     75 72
finance income       01 09
net profit and loss chargecredit      01 09
       100
spirent communications plc
annual report 2008
financial statements
3 pensions continued
iv analysis of amount recognised directly in equity
       2008 2007 
       £ million £ million
actual return on pension plans’ assets     78 55
less expected return on pension plans’ assets     76 81
experience losses on plans’ assets     154 26
experience losses arising on plans’ liabilities     04 08
changes in assumptions underlying the present value of plans’ liabilities   107 75
movement in surplus restriction      40 47
actuarial loss recognised directly in equity     11 06
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 £124 million loss 2007 £113 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 defined benefit obligations
       2008 2007 
       £ million £ million
at 1 january       1351 1582
current service cost       02 02
past service cost       – 06
interest cost       75 72
employee contributions      01 01
benefi t payments       61 49
transfer values paid       – 188
curtailment gains       – 08
actuarial gain       103 67
present value of defined benefit pension plans’ obligations    1265 1351
vi movements in the fair value of plans’ assets      
       2008 2007 
       £ million £ million
at 1 january       1428 1606
expected return on plans’ assets      76 81
employer contributions      03 03
employee contributions      01 01
benefi t payments       61 49
transfer values paid       – 188
actuarial loss       154 26
fair value of plans’ assets      1293 1428
notes to the parent company financial statements continued 101
spirent communications plc
annual report 2008
financial statements
3 pensions continued
vii history of experience gains and losses      
    2008 2007 2006 2005 2004 
    £ million £ million £ million £ million £ million
present value of defined benefit 
pension plans’ obligations   1265 1351 1582 1796 1442
fair value of plans’ assets   1293 1428 1606 1288 1069
net surplusdeficit in plans   28 77 24 508 373
      
experience gains and losses on plans’ liabilities      
amount £ million    04 08 100 48 24
percentage of plans’ liabilities    03 06 63 27 17
experience gains and losses on plans’ assets      
amount £ million    154 26 05 146 36
percentage of plans’ assets    119 18 03 113 34
      
expected cash contributions for 2009 for these plans are £03 million 
     
the above plans are funded and have full uk hm revenue  customs taxexempt approval certain members whose  
salaries were in excess of the hm revenue  customs statutory earnings cap have 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 2008 of £06 million 2007 £07 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 2004 to 2008     
 
defined contribution schemes      
the company also maintains defined contribution pension plans for employees employer contributions into these plans 
for 2008 were £07 million 2007 £07 million
4 intangible assets      
        £ million 
        goodwill
cost      
at 1 january 2008 and 31 december 2008      68
amortisation      
at 1 january 2008        06
provided during the year       06
at 31 december 2008       12
net book value at 31 december 2007      62
net book value at 31 december 2008      56 102
spirent communications plc
annual report 2008
financial statements
5 tangible assets
        £ million
     freehold  fixtures  
     land and plant and fittings and  
     buildings machinery equipment total
cost    
at 1 january 2008     06 33 37 76
additions     – 06 – 06
at 31 december 2008    06 39 37 82
depreciation and impairment    
at 1 january 2008     – 24 27 51
provided during the year    – 05 03 08
at 31 december 2008    – 29 30 59
net book value at 31 december 2007   06 09 10 25
net book value at 31 december 2008   06 10 07 23
6 shares in subsidiaries
        £ million
cost      
at 1 january 2008        8814
additions        40
at 31 december 2008       8854
provisions      
at 1 january 2008        6881
increase in provisions       324
at 31 december 2008       7205
net book value at 31 december 2007      1933
net book value at 31 december 2008      1649
7 loans to subsidiaries 
        £ million
at 1 january 2008        408
advances        07
repayments        328
at 31 december 2008       87
8 inventories
       2008 2007 
       £ million £ million
raw materials       42 32
work in progress       12 12
finished goods       13 06
       67 50
notes to the parent company financial statements continued 103
spirent communications plc
annual report 2008
financial statements
9 trade and other debtors      
       2008 2007 
       £ million £ million
due within one year      
trade debtors       76 66
owed by subsidiaries      67 46
other debtors       10 09
tax receivable       – 04
prepayments and accrued income      05 07
       158 132
due after more than one year
deferred tax asset note 12      66 66
       224 198
the balance at 31 december 2007 has been restated to reclassify the deferred tax asset to trade and other debtors 
from fixed assets
10 creditors due within one year      
       2008 2007 
       £ million £ million
trade creditors       57 42
owed to subsidiaries      04 01
other creditors       – 12
accruals and deferred income      51 43
other taxes and social security costs     07 05
       119 103
11 creditors due after more than one year      
       2008 2007 
       £ million £ million
owed to subsidiaries      552 1094
12 deferred tax      
        £ million
at 1 january 2008 and 31 december 2008      66
the deferred tax asset is in relation to shortterm timing differences and tax losses
there is a deferred tax liability at 31 december 2008 of £04 million 2007 £08 million in relation to the pension plan 
surplus note 3 104
spirent communications plc
annual report 2008
financial statements
13 provisions      
        £ million
lease provisions      
at 1 january 2008        13
utilised in the year        02
at 31 december 2008       11
      
provisions are analysed as follows      
       2008 2007 
       £ million £ million
current       02 03
noncurrent       09 10
       11 13
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 seven years 
14 operating lease commitments
at the balance sheet date the company had annual commitments which expire as follows
       2008 2007 
       £ million £ million
in the second to fifth years      05 05
over five years       02 02
       07 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      
       2008 2007 
       £ million £ million
       liabilities liabilities
currency derivatives       56 05
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
notes to the parent company financial statements continued 105
spirent communications plc
annual report 2008
financial statements
16 capital and reserves 
        £ million
  called up share  capital   net  profit  
  share  premium redemption capital unrealised and loss   
  capital account reserve reserve gains and losses account
2 
total
at 1 january 2008  280 155 48 36 05 1588 2102 
new shares issued  02 17 – – – – 19
profit for the year
3
  – – – – – 404 404
sharebased payment
4
 – – – – – 15 15
share cancellation  58 – 58 – – – –
actuarial loss recognised on 
the pension plans  – – – – – 11 11
deferred tax on pension asset – – – – – 04 04
unrealised gains and losses – – – – 42 – 42
employee share ownership trust – – – – – 06 06
share repurchase  – – – – – 670 670
equity dividends  – – – – – 37 37 
other movements  – – – 22 – 22 –
at 31 december 2008 224 172 106 14 47 1321 1790
notes
1  the company has taken advantage of the exemption given in section 230 of the companies act 1985 not to publish its profit and loss account 
2   the company’s profit and loss account of £1321 million 2007 £1588 million includes nondistributable reserves of £69 million  
2007 £69 million         
3   the profit for the year dealt with in the financial statements of the company was £404 million 2007 £110 million which after dividends of  
£37 million 2007 nil gave a retained profit of £367 million 2007 £110 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 2008      8408 
allotted pursuant to share incentives exercised      52 
cancelled during the year       1742
issued and fully paid at 31 december 2008
1
      6718
note
1  during 2008 under the programme of returning capital to shareholders the company repurchased 729 million ordinary shares onmarket and 
529 million by way of a tender offer all ordinary shares repurchased during the year were cancelled the remaining 484 million ordinary shares 
which were held in treasury were cancelled during the year leaving no ordinary shares in treasury as at 31 december 2008 2007 484 million for 
the purposes of providing comparative data the issued ordinary share capital of the company when treasury shares are taken into account and 
excluded from the calculation as at 31 december 2007 was 7924 million ordinary shares compared with 6718 million as at 31 december 2008
          106
spirent communications plc
annual report 2008
financial statements
16 capital and reserves continued
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 £000
2005 employee incentive plan      04 240 
spirent stock incentive plan      49 19731 
1995 executive share option scheme     06 2383 
all employee share plans
1
      03 1259
       62 23613
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 notes g to j on page 86   
      
during 2008 03 million ordinary shares were transferred from the sst to satisfy options exercised under the uk all  
employee share schemes 2007 06 million and 07 million ordinary shares were transferred from the esot to satisfy 
options exercised under the spirent stock incentive plan 2007 16 million      
   
there has been no material increase in the issued ordinary share capital whether by the exercise of share incentives 
or otherwise between 31 december 2008 and 24 february 2009 the date on which these financial statements have 
been signed         
         
investment in own ordinary shares
at 31 december 2008 the esot held 71 million ordinary shares 2007 78 million ordinary shares to satisfy awards 
under various share incentive plans of this number 02 million ordinary shares were unconditionally vested at  
31 december 2008 2007 02 million ordinary shares at 31 december 2008 the sst held 09 million ordinary 
shares 2007 12 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 80 million ordinary shares 
2007 90 million ordinary shares at 31 december 2008 was £29 million 2007 £56 million
at 31 december 2008 the company did not hold any ordinary shares in treasury 2007 484 million the market value 
of own ordinary shares held in treasury at 31 december 2007 was £300 million
capital redemption reserve
during 2008 the company cancelled 1742 million ordinary shares 2007 1453 million that had been the subject of 
the onmarket share repurchase programme and tender offer and transferred £58 million 2007 £48 million to the 
capital redemption reserve
capital reserve
in 2008 the reserve has been reduced by £22 million 2007 nil in relation to share incentives which have been 
cancelled or have lapsed
share repurchase
during 2008 the company repurchased 729 million ordinary shares onmarket at a cost of £422 million 2007 
1034 million at a cost of £668 million in addition the company undertook a tender offer whereby it repurchased 
529 million ordinary shares at a cost of £248 million 2007 nil all ordinary shares repurchased have been 
subsequently cancelled
notes to the parent company financial statements continued 107
spirent communications plc
annual report 2008
financial statements
16 capital and reserves continued
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 2008 are shown below
      1995  uk 
  2005 employee  spirent stock  executive share  sharesave  
  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 2007 25 39 22 57 44 111 07 39
granted 07 25 – – – – – –
transferred in 01 – 09 57 01 155 – –
exercised 05 23 07 58 06 42 03 39
transferred out 01 36 02 51 01 160 – –
forfeited – – – – – – – –
expired – – 01 71 08 160 – –
options outstanding  
  at 31 december 2008 27 37 21 57 30 110 04 39
options exercisable  
  at 31 december 2008 07 53 14 61 30 110 03 40
the weighted average share price at exercise date was 774 pence 2007 746 pence
the following information relates to outstanding share incentives at 31 december 2008
        
       2008
      number weighted 
     weighted of share average 
    range of average incentives remaining 
   exercise period exercise prices exercise price outstanding contractual life 
share plan  notes as at 31 december 2008 pence pence million years
2005 employee incentive plan a 250808–061118 053
1
 37 27 60
spirent stock incentive plan b 070706–090813 3753 50 12 40 
   120904–180414 5987 67 09 26
1995 executive share  
  option scheme  c 250306–240313 16 16 01 42 
   031004–040814 5672 58 15 55 
   010402–010512 113134 126 11 28 
   110503–080411 305334 322 03 17
uk sharesave schemes d 011208–310511 3893 39 04 08
       82
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 108
spirent communications plc
annual report 2008
financial statements
16 capital and reserves continued
description of employee share plans
a 2005 employee incentive plan “eip”
on 4 may 2005 spirent shareholders approved the eip to replace the now closed esos see c below the eip is 
currently available for selected employees including executive directors on a similar discretionary basis as the esos 
and any awards will be subject to prior satisfactory individual performance no price is payable on the grant of an award 
the company is able to grant share options including hmrc approved options share settled stock appreciation rights 
“sars” and performance shares under the eip
in normal circumstances eip options or sars vest three years following grant provided the company’s earnings per 
share “eps” growth targets have been met over the three year performance period
in normal circumstances eip performance shares vest three years following grant provided the company’s total 
shareholder return “tsr” targets have been met over the three year performance period 
for further information on the performance conditions for eip share incentives please see section 5d of the report on 
directors’ remuneration
sars granted under the eip will deliver the appreciation value ie the aggregated increase in market value of an ordinary 
share over the base price of the sar in the form of ordinary shares this “sars approach” will help the company 
manage its dilution headroom more efficiently as only the sar gain and not the entire share value needs to be funded 
using a sars approach it is not possible to determine the precise level of dilution until the sars are exercised
options and sars granted under the eip expire on the tenth anniversary of their grant unless they have previously 
lapsed or have been exercised
b 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 under the ssip grants are also permitted to selected newly hired 
and promoted employees on a monthly basis
at the annual general meeting held in may 2008 shareholders approved the extension of the ssip until the company’s 
2009 annual general meeting 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 see a above in aggregate
most awards made pursuant to the ssip vest over four years provided that the participant remains in employment 
vesting is not subject to a performance condition awards normally become 25 per cent exercisable on the first 
anniversary of the date of grant and thereafter in equal proportions on a monthly basis over a further 36 months any 
award not exercised by the seventh anniversary 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 for further details on these performance conditions please see section 5d of the report on 
directors’ remuneration
no price is payable on the grant of options or sars and no options or sars have been or can be granted at a discount 
to the market price
c 1995 executive share option scheme “esos” 
the esos is now closed however outstanding options may still be exercised and has been replaced by the eip referred 
to in a above
notes to the parent company financial statements continued 109
spirent communications plc
annual report 2008
financial statements
16 capital and reserves continued
awards under the esos normally determined annually were at the sole discretion of the remuneration committee after 
considering recommendations made to it by the chief executive officer 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
during 2008 all remaining share options awarded under the esos passed their eps performance conditions and are 
now exercisable until they expire on the tenth anniversary of the their respective grant dates or in the case of 
terminated participants 12 months from the date of termination
d uk savings related share option scheme “srsos” and 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
the employee enters into a saveasyouearn contract with the company’s savings carrier to save a regular sum of 
between £5 and £250 per month for a fixed period of either three or five years
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 contractual commitment to deliver ordinary shares against the exercise  
of outstanding options under the srsos and 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 2007 06 million
no invitations have been made under either of these schemes since 2003 110
spirent communications plc
annual report 2008
financial statements
17 sharebased payment
the total charge for the year relating to employee sharebased payment plans is as follows
       2008 2007 
       £ million £ million
1995 executive share option scheme     01 03 
2005 employee incentive plan      02 –
all employee share plans      01 01
       04 04
all schemes are equity settled
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
       2008 2007
weighted average share price pence     250 610 
weighted average fair value pence     340 240 
expected volatility       450 400
expected life years       45 45
risk free rate        37 47
dividend yield        20 nil
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 111 of this annual report
20 capital commitments and contingent liabilities
there were no capital commitments at 31 december 2007 or 31 december 2008
spirent communications plc has provided indemnities of £05 million 2007 £04 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 32 to 41 for disclosures relating to the remuneration 
share incentives and pensions of the directors
notes to the parent company financial statements continued 111
spirent communications plc
annual report 2008
financial statements
principal divisions and subsidiaries
        held at 31 december 2008
communications group 
performance analysis and service assurance
 
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 inc       100
  calabasas california
 sunnyvale california
 honolulu hawaii
 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 112
spirent communications plc
annual report 2008
other information
financial history
        £ million
    2008 2007 2006 2005 2004
consolidated income statement
continuing operations       
revenue    2579 2370 2589 2593 2872
operating profitloss   487 111 195 390 152
add back       
exceptional items    – 144 88 84 29
goodwill impairment   – – 191 370 –
operating profit before exceptional items 
and goodwill impairment   487 255 84 64 181
joint venture’s loss    – – – – 07
profit on disposal of operations   – – – 39 40
profitloss before interest   487 111 195 351 185
net finance incomeexpense   27 67 60 66 68
exceptional finance income   08 – – – –
exceptional finance costs   26 – 88 – 05
profitloss before tax   496 178 223 417 112
tax    252 77 04 40 20
profitloss from continuing operations after tax   748 255 227 377 92
discontinued operations   – 79 1315 132 173
profitloss for the year   748 176 1088 245 265
minority interest    – – – 04 03
profitloss attributable to equity shareholders  
  of parent company    748 176 1088 249 262
consolidated balance sheet       
intangible assets    776 586 633 715 1065
property plant and equipment   186 162 253 301 863
investments    – – – – 143
working capital excluding cash overdrafts 
and deferred tax    159 190 22 33 230
operating assets    1121 558 864 983 2301
net assets classified as held for sale  – – – 1154 –
derivative financial instruments net  56 05 01 01 –
net fundsborrowings   622 827 1061 259 264
provisions and other liabilities   119 127 120 142 138
deferred tax    122 105 12 02 86
defined benefit pension plan surplusdeficit  20 54 10 515 381
net assets     1710 1412 1828 1222 1604
equity shareholders of parent company  1710 1412 1828 1203 1591
minority interests    – – – 19 13
total equity    1710 1412 1828 1222 1604
        113
spirent communications plc
annual report 2008
other information
        £ million
    2008 2007 2006 2005 2004
other information
capital expenditure   – owned assets  74 51 141 305 253
   – leased assets  – – – 25 03
depreciation    88 95 134 226 254
product development   453 463 580 628 673
intangible amortisation   07 15 16 – –
sharebased payment   15 25 56 56 52
share information
basic earningsloss per share pence  1013 205 1175 262 279
basic earningsloss per share from
continuing operations pence   1013 297 245 397 098
diluted earningsloss per share pence  1006 203 1175 262 274
diluted earningsloss per share 
from continuing operations pence  1006 294 245 397 096
adjusted basic earningsloss per share 
from continuing operations pence  624 357 148 022 078
dividend per ordinary share pence  11 – – – –
fully paid ordinary shares in issue 
at year end million   6718 8408 9759 9658 9562
segmental analysis
business segments
revenue
performance analysis   1912 1693 1795 1788 1768
service assurance    335 343 436 428 747
communications    2247 2036 2231 2216 2515
systems    332 334 358 377 313
on going operations    2579 2370 2589 2593 2828
other disposals
2
    – – – – 44
continuing operations   2579 2370 2589 2593 2872
discontinued operations
communications    – 36 127 – –
network products    – – 280 2055 1878
    2579 2406 2996 4648 4750
operating profit
1
performance analysis   430 223 106 184 185
service assurance    46 33 11 108 11
communications    476 256 95 76 196
systems    43 38 47 43 33
nonsegmental    32 39 58 55 54
on going operations    487 255 84 64 175
other disposals
2
    – – – – 06
continuing operations   487 255 84 64 181
discontinued operations
communications    – 34 01 – –
network products    – – 30 248 209
    487 221 113 312 390 114
spirent communications plc
annual report 2008
other information
        £ million
    2008 2007 2006 2005 2004
geographical segments
revenue by market
europe    478 437 437 430 483
north america    1395 1322 1521 1582 1786
asia pacific rest of americas africa  706 611 631 581 559
on going operations    2579 2370 2589 2593 2828
other disposals
2
    – – – – 44
continuing operations   2579 2370 2589 2593 2872
discontinued operations   – 36 407 2055 1878
    2579 2406 2996 4648 4750
        rates 
        against sterling
average exchange rates for major currencies       
us dollar    185 200 185 182 183
euro    126 146 147 146 147
        number
average employment by geographical area       
europe    379 448 818 1771 1742
north america    976 1038 1380 1813 1988
asia pacific rest of americas africa  192 175 237 794 791
    1547 1661 2435 4378 4521
notes
1  before goodwill impairment and exceptional items
2  other disposals includes other less significant disposals and closures which do not qualify as discontinued operations
financial history continued 115
spirent communications plc
annual report 2008
other information
shareholder information
financial calendar 2009
24 february 2008 preliminary results and final dividend announcement
4 march final dividend – exdividend date
6 march final dividend – record date
16 april last date for receipt of applications to participate in dividend reinvestment plan
   for 2008 final dividend
7 may annual general meeting and interim management statement
8 may final dividend – payment date ordinary shareholders
18 may final dividend – payment date adr holders
28 june halfyear end
august 2009 halfyear results and interim dividend announcement
august interim dividend – exdividend date
august interim dividend – record date
october interim dividend – payment date ordinary shareholders
october interim dividend – payment date adr holders
november interim management statement
31 december financial year end
february 2010 2009 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 2009 annual general meeting “2009 
agm” will be held at 1030am on thursday 7 may 2009 
at the offices of the company’s pr advisers financial 
dynamics 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 •
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 either log on to wwwshareviewcouk or 
contact the company’s registrar equiniti
dividend reinvestment plan
the company has introduced a dividend reinvestment 
plan “drip” provided 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 additional 
information including details of how to participate 
can be obtained from the company’s website at 
wwwspirentcom and from equiniti on 0871 384 2623
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 sign up for 
this method of communication will be sent to 
shareholders with the 2009 agm documentation 
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
company’s registrar
enquiries concerning shareholdings change of address 
or other particulars should be directed in the first 
instance to equiniti on 0871 384 2126 they 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 116
spirent communications plc
annual report 2008
other information
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 wwwshareview
coukdealing 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 2248
individual savings accounts
information about investing in the company’s ordinary 
shares through an individual savings account “isa” 
may be obtained from equiniti on 0871 384 2244 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 alternatively 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 24 february 2009 the number of registered shareholders was 4571 and the number of ordinary shares in issue 
was 6718 million
       number 
       of ordinary 
     number of  of total shares  of share 
     holdings shareholders million capital
range of holdings    
1–5000     3269 7151 48 072
5001–10000     490 1072 37 055
10001–50000     495 1083 106 159
50001–100000     69 151 48 072
100001–250000     69 151 114 169
250001–500000     53 116 186 276
500001–1000000    46 101 315 469
1000001–highest     80 175 5864 8728
total     4571 10000 6718 10000
held by    
individuals     3726 8151 203 302
institutions     845 1849 6515 9698
total     4571 10000 6718 10000
shareholder information continued 117
spirent communications plc
annual report 2008
other information
glossary
3g third generation third generation of mobile communications following first generation analogue and second 
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
data center a centralised location where computing resources critical to an organisation are maintained  
in a highly controlled environment
dslam digital subscriber  a network device located in the telephone exchange that takes numbers of dsl lines and
line access multiplexer concentrates them into a single line
ethernet a family of networking technologies developed for local area networks migrating to metro 
area networks and becoming a dominant standard in wireline networks
evdo rev a evolution  data only revision a is a collection of mobile telephone protocols that extend and improve
data optimised revision a the performance of existing cdma protocols for high speed data transmission typically for 
broadband internet access
galileo the informal name for the european global navigation satellite system a system that will 
offer users anywhere in the world “near pinpoint” geographic positioning when it becomes 
fully operational
gps global  a system for determining location and height at any point on the earth’s surface a receiver
positioning system uses minute differences in measured time signals from clocks on satellites to calculate 
these positions and altitudes
glonass global  global navigation satellite system operated by the russian federation ministry of defence
navigation satellite
system
hspa high speed  a collection of mobile telephone protocols that extend and improve the performance of
packet access existing umts protocols for high speed data transmission
ims internet protocol  a standardised nextgeneration architecture for telecoms operators who want to provide
multimedia subsystem mobile and fixed multimedia services
internetip telephony generic term used to describe various approaches to running voice telephony over ip 
internet protocol
ip internet protocol data protocol used by many networking devices to facilitate and control the flow of data 118
spirent communications plc
annual report 2008
glossary continued
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
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
rf radio frequency a technology used for wireless broadcasting andor communications
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  underlying air interface and offers support for high speed data transfer
system
wcdma wideband cdma a global standard for mobile 3g
wimax worldwide  a wireless transmission technology
interoperability for
microwave access
other information 119
spirent communications plc
annual report 2008
notes 120
spirent communications plc
annual report 2008
notes spirent communications plc is a leading communications 
technology company focused on delivering innovative 
systems and services to meet the needs of customers 
worldwide we are a global provider of testing and 
service assurance solutions that enable the development 
and deployment of nextgeneration networking 
technologies such as ethernet triple play wireless 
satellite positioning web applications and security 
further information about spirent communications plc 
can be found at wwwspirentcom
our business at a glance revenue by division
performance analysis
network equipment manufacturers and service providers face numerous 
challenges associated with taking products and solutions from the lab 
to the marketplace spirent’s performance analysis division allows 
equipment manufacturers service providers enterprise and governments 
to holistically test and benchmark the performance of voice video and 
data systems and services in an effort to accelerate the development 
and deployment of related applications 
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 as well as address the transition to 
nextgeneration service offerings service providers rely on spirent to 
improve the quality of service at the network core edge or even within 
the 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 golf carts forklift trucks and aerial 
access platforms 
£1912m
2007 £1693m
£335m
2007 £343m
£332m
2007 £334m
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 investorrelationsspirentcom
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
service helplines
tel 0871 384 2126 uk
tel 44 0121 415 7047 overseas
text phone for shareholders with hearing difficulties 
0871 384 2255 uk
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
other information spirent communications plc
annual report 2008
spirent communications plc   annual report 2008
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
wwwspirentcom


Summary:
 3
spirent communications plc
annual report 2008
chairman’s statement
“during 2008 spirent introduced new 
innovative products and lowered its 
cost base resulting in a stronger 
financial position overall”
spirent’s financial performance improved in each 
quarter throughout 2008 as a result of the programmes 
put in place to increase manufacturing efficiency and to 
deliver new innovative products in addition the 
company benefited from favourable exchange rates and 
a reduced number of issued shares these factors with 
annualised cost reductions of a further £82 million 
implemented in the first quarter of 2009 and the strong 
financial position of the company mean that spirent is 
well placed to face the challenges of an uncertain market 
in the coming year
group revenue increased by £209 million some 9 per 
cent over that for 2007 and the resulting gross profit 
increased by £188 million with the gross profit margin 
increasing by 22 percentage points yearonyear 
adjusted earnings per share increased by 75 per cent to 
624 pence from 357 pence in 2007 this was after 
charging 030 pence for sharebased payment and 
intangible amortisation down from 038 pence in 2007 
cash generation was robust with free cash flow of 
£422 million in the year
the company paid its first dividend since the first half 
of 2002 and proposes a final dividend of 06 pence per 
share this will result in a total dividend for the year of 
11 pence per share it is the board’s policy to maintain 
a high dividend cover and to pursue a sustainable 
distribution policy consistent with the development of 
earnings over time
the cash generation of the group allowed the funding of 
share repurchases through onmarket repurchase and by 
way of a tender offer £670 million was used to 
repurchase and cancel 1258 million shares some 16 
per cent of the shares in issue the total cash returned 
to shareholders since 1 january 2007 is £1338 million 
to ensure flexibility further authority will be sought at the 
annual general meeting for share repurchases of up to 
15 per cent of issued share capital depending on market 
conditions and other factors
total order intake in january 2009 for the group is level 
with that for the same period in the prior year in constant 
currency terms with performance analysis being down 
by 10 per cent in sterling total order intake in january 
2009 increased 27 per cent yearonyear the 
restructuring of the business over the past two years has 
resulted in a material reduction in the breakeven point 
for sales at current exchange rates the company will 
benefit both as an exporter of products and services 
from the uk and in the translation of the group’s 
substantial dollar earnings these factors combined with 
the reduction in the number of shares in issue will result 
in a greater resilience to the impact of any reduction in 
sales levels on the earnings per share and the cash 
generation of the group
edward bramson
chairman
edward bramson
chairman
overview