
Adjusted basic earnings
per share
4
(EPS)
Cents
7.75¢
Product development costs
as a percentage of revenue
%
21.5%
Voluntary employee turnover
%
5.3%
Free cash flow
5
$ million
$54.3m
7.75
24
21.5
24
5.3
24
54.3
24
Notes
1. Ratio of orders booked to
revenue recognised in the period.
2. Before acquired intangible
asset amortisation, share-based
payment and other adjusting
items amounting to $35.9 million
in total (2023 $26.8 million).
3. Adjusted operating profit as
a percentage of revenue in
the period.
4. Adjusted basic earnings
per share is based on
adjusted earnings as set
out in note 11 of Notes to
the full year consolidated
financial statements.
5. Cash flow generated from
operations, less tax and net
capital expenditure, after interest
paid and/or received, payment
of lease liabilities, finance
lease payments received and
excluding acquisition related
other adjusting items and
one-off contributions to the UK
pension scheme.
Items with notes 1 to 5 are
non-GAAP alternative performance
measures; see pages 195 and 196
for more detail.
Reason for measurement
The ratio of orders booked
to revenue recognised is a
measure of the visibility of
future revenue at current
levels of activity and
provides an indication of the
underlying trend in Spirent’s
future revenue stream.
Reason for measurement
Spirent monitors growth in
revenue as this shows how
successful Spirent has been
in expanding its markets and
growing its customer base.
Reason for measurement
Adjusted operating profit
is the measure used
to evaluate the overall
performance of the Group
as well as each of the
operating segments.
Reason for measurement
Adjusted operating margin
is a measure of the Group’s
profitability. Spirent operates
in markets which have high
operating returns and strives
to achieve best-in-class
operating margin compared
with its peers.
Reason for measurement
Long-term growth in
adjusted basic EPS
is a fundamental
driver to increasing
shareholder value.
Reason for measurement
To maintain its competitive
position, Spirent must invest
at suitable levels to support
further organic growth
initiatives in line with the
strategic objectives, whilst
driving improved productivity
and effectiveness.
Reason for measurement
Spirent’s success is
dependent on its talented
employees and retaining
them is extremely important.
Voluntary employee turnover
compared to the industry
average is the measure used
to assess how well the Group
has performed.
Reason for measurement
Free cash flow is a measure
of the quality of Spirent’s
earnings. The aim is to
achieve a high conversion
of earnings into cash.
Performance
Order intake was
greater than revenue in the
year resulting in a book
to bill ratio of 104 as we
continue to win larger,
longer-term contracts that
improve revenue visibility
and build repeatable
business (2023 101).
Performance
3 per cent revenue
decrease in 2024, following
a 21.9 per cent decrease
in 2023. 5G is expected to
be a strong driver of future
business across our solution
portfolio in the mid term;
however, during the year,
customers delayed their
investments to manage
economic challenges.
Performance
Adjusted operating profit
increased to $46.2 million,
from $45.2 million in 2023,
as a result of improved
trading conditions,
particularly in the final
quarter of the year and
continued focus on
cost control.
Performance
The increase in adjusted
operating margin to
10.0 per cent, from 9.5
per cent in 2023, reflects
the improved trading
conditions, particularly in
the final quarter of the year
and continued focus on
cost control.
Performance
Spirent aims to achieve
growth in adjusted basic
EPS. Part of the Executive
Directors’ remuneration is
dependent on achieving EPS
targets. In 2024, adjusted
basic EPS remained
comparable to 2023.
Performance
In 2024, product
development costs of $99.0
million (2023 $102.4 million)
benefited from transferring
North American activities to
lower-cost regions.
Performance
Our 2024 voluntary
turnover rate of 5.3 per
cent remains well below
the global industry average
of 11.7 per cent.
Performance
Free cash flow in 2024 was
positive at $54.3 million.
Free cash flow conversion
for 2024 was 122 per
cent of adjusted earnings
(2023 54 per cent).
Relevance to strategy
The book to bill ratio is an
indicator of the underpin to
future revenue and whether
activity levels are rising or
slowing, and therefore how
effective we have been in the
execution of our strategy.
Relevance to strategy
Revenue demonstrates
the effectiveness of our
strategy: our success in
expanding our markets both
organically and through
acquisition; maintaining
technology leadership; and
our strong relationships with
our customers, all of which
ensure that we continue to
win and maintain business.
Relevance to strategy
Adjusted operating profit
indicates our financial
strength and our ability
to invest in the business to
support the growth agenda.
Relevance to strategy
Adjusted operating margin is
a measure of how successful
we are in our overall strategy
and demonstrates our ability
to improve profitability
through efficient operations
whilst being mindful of the
need to invest for the future.
Relevance to strategy
Adjusted basic earnings per
share is a measure of how
successful we are in our
strategy and ultimately how
Spirent increases value for
its shareholders.
Relevance to strategy
It is critical that Spirent’s
product development
investment keeps pace
with the speed of change
in technology, and that
it is directed at the right
key technology areas;
this enables us to expand
our markets and to
maintain our technology
leadership position.
Relevance to strategy
We cannot avoid the fact
that some of our employees
will move on but we can
avoid a skills shortage by
appropriately managing,
recognising and rewarding
our people. Voluntary
employee turnover is a
measure of how successful
Spirent is in its strategy of
retaining and investing in
its people.
Relevance to strategy
Having strong free cash
flow reflects Spirent’s ability
to generate funds for future
investment. It provides
financial strength and
flexibility and the ability to
pay sustainable dividends
to our shareholders.
14.68
2120
18.86
7.55
16.59
22 23
19.7
2120
18.3
21.6
19.7
22 23
6.7
2120
10.1
5.6
7.2
22 23
102.6
2120
91.9
103.8
23.7
22 23
STRATEGIC REPORT
23
Spirent Communications plc Annual Report 2024