Table 1: Highlights
|� million||2004||2003||Reported||Constant currency|
|Profit before taxation and amortisation(2)||37.4||30.0||25|
|Profit before taxation||24.0||0.3||>100|
|Earnings per share(3) (pence)||2.99||2.31||29|
Our performance in 2004 showed a marked improvement as a result of our investment in and focus on growth markets.
In the Communications group, our Performance Analysis division achieved a substantial improvement in its results, with turnover up 31 per cent in constant currencies and operating profit1 up materially from £4.4 million to £19.7 million due to increased customer spending on next-generation technologies.
Actions have been taken to reinvigorate the Service Assurance division, but we are not anticipating a recovery in its performance until the latter part of 2005. Results for the division were affected by market pressures, with turnover down 10 per cent in constant currencies and operating profit1 at break-even.
The Network Products group delivered another strong performance, with turnover up 11 per cent and operating profit1 up 27 per cent in constant currencies.
The movement in the US dollar exchange rate reduced reported turnover by £32.8 million, operating profit1 by £3.2 million and profit before taxation and amortisation2 by £2.5 million.
Product development spending in the Communications group was £60.4 million, 24 per cent of turnover, to secure our position at the forefront of telecoms technology.
Strong cash generation reduced net debt to £26.4 million at the end of 2004 compared with £57.5 million at the end of 2003.
1 Before goodwill amortisation and operating exceptional items.
2 Before exceptional items.
3 Earnings per share is based on headline earnings as set out in note 3 to this report.
4 In constant currencies or on a constant currency basis means calculated at constant exchange rates.
Commenting on the results, Anders Gustafsson, Chief Executive, said:
“The positive trends in customer spending seen towards the end of 2003 have continued throughout 2004 and we are delighted to announce results showing a substantial improvement in our Performance Analysis division. During 2005 we expect this division to benefit from further customer spending on technologies critical to the migration to packet-based networks. In our Service Assurance division we have taken actions to cut costs and reinvigorate the business, but we do not anticipate seeing a recovery in its performance until the latter part of the year. Our Network Products group had another strong year in 2004 and is expected to continue to make further progress in 2005.
“As expected, we have had a satisfactory start to 2005 and looking ahead I anticipate further progress as we pursue our strategy of growing our communications business.”