Spirent has reported its results for the year to December 2017. Group revenue and adj, EBIT are both slightly ahead of expectations, with a strong performance in Lifecycle Service Assurance and good cost control in Connected Devices offsetting some weakness in Networks & Security. Effective tax management in FY’17 has resulted in 43% adj. EPS growth to 7.55 cents, well ahead of our 6.3 cents estimate. Cash generation was also strong, with net cash at the period end of $128.4m. This has resulted in the group increasing the FY dividend to 4.08 cents and announcing a 5.0 cent special dividend, to be paid in May ’18. We do not expect to make any major changes to our headline revenue and adj. EBIT expectations for FY’18, which show a long awaited return to top line growth. The group will also benefit from US tax reform, with an effective tax rate of 17% expected. Spirent remains a heavily H2 weighted business, but we believe these results are a step in the right direction, with significant margin expansion possible over the medium term.
