UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2005
SPIRENT plc
Spirent House, Crawley Business Quarter, Fleming Way,
Crawley, West Sussex RH10 9QL, UK
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F).
Form 20-F X Form 40-F ......
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).
Yes....... No X
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ..............).
SPIRENT PLC
TRADING UPDATE
London, UK - 21 April 2005: Spirent plc (LSE: SPT; NYSE: SPM), a leading
communications technology company, today provided an update on trading.
At the time of the announcement of our 2004 final results we reported that we
had seen a satisfactory start to 2005 for the Group as a whole, albeit that we
were experiencing a slow down in our Service Assurance division's existing
leased line and DSL business. Since then, however, the extent of the decline in
this business has been significantly greater than anticipated. This was due in
part to customers delaying the release of capital spending budgets. When
released these showed a larger than expected shift in customers' investment
towards next-generation networks and IP service deployments, including their
FTTx initiatives. In addition, recent merger activity among the US carriers has
delayed spending on monitoring equipment. These factors have adversely affected
this division's performance. Turnover for the Service Assurance division for the
first quarter of 2005 was £9.0 million, down £10.8 million compared with the
same period last year, and the division generated an operating loss of £5.4
million. We are now expecting to report an operating loss for the division in
the region of £10 million in the first half of 2005.
Largely due to the performance of our Service Assurance division, we anticipate
that Group operating profit for the first half of the year will be significantly
below our previous expectations. In addition, we will be charging one off costs
of approximately £3 million in relation to reorganisation expenses and stock
write downs and anticipate further costs associated with the planned
rationalisation of the supply chain across the Communications group. We also
anticipate that we will take a goodwill impairment charge in relation to the
Service Assurance division at the half year. The carrying value of goodwill
associated with the Service Assurance division is £45 million.
The Group saw a net cash outflow in the first quarter of 2005 in accordance with
our plans, as we absorbed working capital and increased capital expenditure. As
a result, net debt increased to £33.6 million compared with £26.4 million at the
year end.
Our Network Products and Systems groups both traded in line with expectations in
the first quarter of 2005 with turnover of £51.4 million and £9.0 million,
respectively.
Within our Communications group, the Performance Analysis division delivered
turnover of £40.2 million in the first quarter of 2005 representing a 6 per cent
increase in constant currencies over the same period last year. This was
slightly below our expectations, although we had been budgeting for a seasonally
lower first quarter. Quote activity in this division remains good but results
for the first half are now expected to be marginally below our original
expectations due to a slow down in spending by the US carriers as well as lower
than anticipated US government spending on telecoms.
In the Service Assurance division, we have taken actions to realign resources
and reduce operating costs including changing the senior management and reducing
employee numbers by 15 per cent. We are now also implementing further actions in
relation to the rationalisation of the supply chain that will increase
efficiencies.
We remain focused on our strategy of transitioning the Service Assurance
division towards IP service assurance. We continue to work with potential
customers to help them define their strategy for monitoring IP services and are
receiving encouraging feedback on our technical understanding and approach to
the challenges of monitoring advanced IP-based networks and services. We believe
this sector represents a significant future opportunity for us.
Note
The above disclosures are unaudited and are reported on the basis of
International Financial Reporting Standards (IFRS).
Business segments reported under IFRS are the same as those reported under UK
GAAP however the operating profit or loss is affected by the stricter
definitions under IFRS regarding allocation of central costs. Those shared
costs, which cannot be directly attributed to individual segments, will now be
reported separately as corporate and other costs. Where appropriate comparative
numbers have been restated to reflect this change.
Conference call
An analysts conference call will be held at 08.45 UK time today.
| Dial in: +44 (0)1452 541 076 | US freephone: +1 866 223 9754 | ||
Replay: +44 (0)1452 550 000 | US freephone: +1 866 247 4222 | ||
| Access Number: 5737903 # | |||
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Enquiries
| Anders Gustafsson, Chief Executive | Spirent plc | +44 (0)1293 767676 | |||
| Eric Hutchinson, Finance Director | |||||
Investor Relations | |||||
| Catherine Nash | Spirent plc | +44 (0)1293 767676 | |||
Media | |||||
| Tom Buchanan/Rupert Young | Brunswick | +44 (0)20 7404 5959 | |||
About Spirent
Spirent 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 performance analysis and service assurance solutions that
enable the development and deployment of next-generation networking technologies
such as broadband services, Internet telephony, 3G wireless and web applications
and security testing. Our Network Products business is a developer and
manufacturer of innovative solutions for fastening, identification, protection
and connectivity in electrical and communications networks marketed under the
global brand HellermannTyton. The Systems group comprises PG Drives Technology
which develops power control systems for specialist electrical vehicles in the
mobility and industrial markets. Further information about Spirent plc can be
found at www.spirent.com
Spirent Ordinary shares are traded on the London Stock Exchange (ticker: SPT)
and on the New York Stock Exchange (ticker: SPM; CUSIP number: 84856M209) in the
form of American Depositary Shares (ADS), represented by American Depositary
Receipts, with one ADS representing four Ordinary shares.
Spirent and the Spirent logo are trademarks or registered trademarks of Spirent
plc. All other trademarks or registered trademarks mentioned herein are held by
their respective companies. All rights reserved.
This press release may contain forward-looking statements (as that term is
defined in the United States Private Securities Litigation Reform Act of 1995)
based on current expectations or beliefs, as well as assumptions about future
events. You can sometimes, but not always, identify these statements by the use
of a date in the future or such words as "will", "anticipate", "estimate",
"expect", "project", "intend", "plan", "should", "may", "assume" and other
similar words. By their nature, forward-looking statements are inherently
predictive and speculative and involve risk and uncertainty because they relate
to events and depend on circumstances that will occur in the future. You should
not place undue reliance on these forward-looking statements, which are not a
guarantee of future performance and are subject to factors that could cause our
actual results to differ materially from those expressed or implied by these
statements. Such factors include, but are not limited to: the extent to which
customers continue to invest in next-generation technology and deploy advanced
IP-based services; our ability to successfully expand our customer base; our
ability to continue to benefit from generally improving market conditions; the
prevailing market conditions and pace of economic recovery; our ability to
improve efficiency and adapt to economic changes and other changes in demand or
market conditions; our ability to develop and commercialise new products and
services, extend our existing capabilities in IP services and expand our product
offering internationally; our ability to attract and retain qualified personnel;
the effects of competition on our business; fluctuations in exchange rates and
heavy exposure to a weak US dollar; changes in the business, financial condition
or prospects of one or more of our major customers; risks of doing business
internationally; the financial burden of our pension fund deficit; risks
relating to the acquisition or sale of businesses and our subsequent ability to
integrate businesses; our reliance on proprietary technology; our exposure to
liabilities for product defects; our reliance on third party manufacturers and
suppliers; and other risks described from time to time in Spirent plc's
Securities and Exchange Commission periodic reports and filings. The Company
undertakes no obligation to update any forward-looking statements contained in
this press release, whether as a result of new information, future events or
otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LUKE THOMAS
(Registrant)
Date: 21 April, 2005
By
/S/ Luke Thomas
(Signature)