TIDMTTG
RNS Number : 6248H
TT Electronics PLC
05 August 2021
2021 Interim Results, 5 August 2021
TT Electronics plc
Results for the half-year ended 30 June 2021
For further information, please contact:
TT Electronics
Richard Tyson, Chief Executive Officer
Mark Hoad, Chief Financial Officer
Geoff Callow, Investor Relations
Tel: +44 (0)1932 827 779
MHP Communications
Tim Rowntree / Rachel Mann Tel: +44 (0)20 3128 8100
A management presentation for analysts and investors will be
held today at 08.30 and can be accessed on
https://webcasting.brrmedia.co.uk/broadcast/60f71ca805da7a5c2646f9ca
.
There will be a conference call and moderated Q&A session
following this and to participate you will need to dial 0800
2797209 OR +44 (0)330 336 9434, confirmation code 8000008.
A recording of the presentation and Q&A session will be
available on the website later in the day.
A PDF of this half year announcement is available for download
from
https://www.ttelectronics.com/investors/investor-highlights/reports-presentations-videos/
.
Interim Results for the half-year ended 30 June 2021
Strong momentum, good margin progression and further increase in
full year profit expectations
Highlights
-- Record order book and continued strong order intake with good visibility building for 2022
-- H1 book to bill of 134%
-- Significant new customer wins, reflecting focus on structural
growth markets underpinned by megatrends and ESG drivers
-- Revenue up 16% for the period on a constant currency basis, 12% on an organic basis
-- Successful self-help programme remains on track to deliver expected savings at reduced cost
-- Adjusted operating profit up 27% benefiting from growth, self-help programme and M&A
-- Adjusted operating margin improved to 6.7% and run rate
margin higher at 8.0% excluding Virolens start-up costs
-- Statutory operating profit increased to GBP9.3m, statutory basic EPS of 3.3p
-- Interim dividend of 1.8p per share reflecting confidence in outlook
Outlook
-- Order and sales momentum continue; 2021 expected revenues already fully covered
-- Confident in medium term outlook and further modest increase in full year profit expectation
-- Anticipate strong improvement in adjusted operating margin and cash conversion in H2
-- Increased visibility in our path to deliver double digit Group operating margins
GBP million (unless otherwise
stated) Adjusted Results(1) Statutory Results
H1 2021 H1 2020 Change Change H1 2021 H1 2020
Constant Restated(2)
Restated(2) fx
Revenue 235.6 210.0 12% 16% 235.6 210.0
Operating profit 15.9 13.2 20% 27% 9.3 (1.1)
Operating profit margin 6.7% 6.3% 40bps 50bps 3.9% (0.5)%
Profit before tax 14.1 11.3 25% 33% 7.4 (3.0)
Basic earnings per share 6.5p 5.6p 16% 23% 3.3p (1.8)p
Dividend per share 1.8p - -
Return on invested capital
(2020: year-end) 8.3% 7.7% 60bps
Cash conversion (7)% 53%
-------- ------------ ------- ---------
Free cash flow(1) (10.3) (5.2)
Net debt (2020: year-end)
(1) 107.3 83.9
Leverage (2020: year-end)(1) 2.0x 1.6x
--------- ------------
Richard Tyson, Chief Executive Officer, said:
"We are really pleased to have delivered a strong performance in
the first half with a record order book and strong growth as a
direct result of the steps we have taken to reposition and improve
the quality of the business. This growth together with the benefits
of our self-help programme and higher margin acquisitions have
resulted in improved margins.
With 2021 expected revenues already fully covered by orders,
continuing demand momentum and the benefits of our successful
self-help programme being realised we are confident of delivering a
further improvement in full year 2021 results and have increased
visibility in our path to double digit margins".
About TT Electronics
TT Electronics is a global provider of engineered electronics
for performance critical applications.
TT solves technology challenges for a sustainable world. TT
benefits from enduring megatrends in structurally high-growth
markets including healthcare, aerospace, defence, automation and
electrification. TT invests in R&D to create designed-in
products where reliability is mission critical. Products designed
and manufactured include sensors, power management and connectivity
solutions. TT has design and manufacturing facilities in the UK,
North America, Sweden and Asia.
Notes
1. Throughout this announcement we refer to a number of
alternative performance measures which provide additional useful
information. The Directors have adopted these measures to provide
additional information on the underlying trends, performance and
position of the Group with further details set out on page 27. The
adjusted measures used are set out in the reconciliation of KPIs
and non IFRS measures on pages 38 to 44.
2. The results for the period ended 30 June 2020 have been
restated to reflect prior year adjustments. Further details are set
out in note 2.
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
We are very encouraged by our sales and order performance in the
first half of the year, with continued improvement in trading
momentum and we are on track to return to 2019 revenue and margin
levels in 2021. The structural growth markets we operate in have
moved back towards their long-term growth trajectory, and the
benefits of our strategic repositioning and focus on building close
relationships with our customers can be seen in new business wins,
the order book and the financial performance of the Group.
Our partnership approach to deliver solutions based on our
technical expertise has been a key component in winning new orders.
Another key growth driver has been our focus on leveraging
expertise across the Group to pursue cross selling opportunities,
which continues to gain traction and has started to yield new
orders. Much of this effort is led by the Global Manufacturing
Solutions (GMS) division which is integral to converting these
opportunities and increasingly GMS is able to highlight the
capabilities of the other divisions. Across the Group, but
especially pronounced in the Specialist Sensors and Components
(S&SC) division, an increasing focus on supply chain challenges
has led to customers committing to demand earlier than usual,
providing greater revenue visibility.
The self-help programme continues to progress in line with
expectations. During the period the Barbados and Carrollton, Texas
sites were closed and the transfer of manufacturing from the Corpus
Christi, Texas and Lutterworth, UK sites is expected to be
completed before year end. In June we sold the Covina, California
property, helping to reduce the net cost of the self-help programme
and offering an opportunity to capture additional benefits.
All divisions are seeing strong top line growth and the benefits
of growth and self-help are feeding through into business
performance. This is most prominent in the improved margins in
S&SC while in our GMS division, the work to position the
business as a partner to our customers to win long-term incremental
business has translated into winning new, higher value contracts.
We now see scope to drive GMS operating margins higher.
We are delighted with the Torotel acquisition which completed in
November 2020. The business is performing ahead of expectations -
we are on track to deliver planned cost synergy benefits and
Torotel has achieved material new contract wins under our ownership
and is expanding the pipeline of new business opportunities by
working with other parts of the Group.
The Virolens COVID-19 screening device achieved its first
important regulatory milestone in H1, gaining registration with the
MHRA in Great Britain. We have now established a product with
commercial potential and remain encouraged that active dialogue is
continuing with a number of regulators and that commercial
potential exists with a range of customers subject to further
approvals.
Results and operations
Group revenue for the period was GBP235.6 million, up 16 per
cent on a constant currency basis and 12 per cent on an organic
basis. The Group's adjusted operating profit for the period was
GBP15.9 million, 27 per cent higher than the prior year on a
constant currency basis.
There was a strong improvement in financial performance in the
first half despite incurring start-up costs to establish the
Virolens product line. In common with many others we also
experienced a tightening in the supply chain leading to some cost
inflation. This has been largely mitigated through price increases,
although there is a lag effect here and we will continue to see the
benefit of this action in the second half of the year.
The adjusted operating margin in the first half was 6.7 per cent
and we remain on track to deliver a full year margin in line with
market expectations. The adjusted run rate excluding Virolens was
higher at 8.0 per cent. After the impact of adjusting items,
including restructuring and acquisition and disposal costs, the
Group's half year statutory operating profit was GBP9.3 million and
operating margin was 3.9 per cent.
Cash conversion was impacted by a working capital outflow
totalling GBP18.9 million. This investment in working capital was
driven by the high levels of growth we are experiencing and our
decision to invest in additional inventory to support the customer
order book for the second half. We expect to see improved cash
conversion in the second half of the year. Adjusted operating cash
flow during the period was GBP6.1 million. On a statutory basis,
cash flow from operating activity was an outflow of GBP5.0 million
(2020: inflow of GBP2.8 million).
At 30 June 2021 net debt was GBP107.3 million, (31 December
2020: GBP83.9 million), including IFRS 16 lease liabilities of
GBP20.9 million (31 December 2020: GBP15.9 million), and leverage
increased as expected to 2.0x (31 December 2020: 1.6x), within the
Board's target range. We expect leverage to reduce over the course
of the second half.
Momentum across the Group has been strong with the order book
for 2021 fully covering expected revenues and we are now starting
to build good visibility of revenues for 2022.
Dividend
Against an improving market backdrop, combined with the strong
trading momentum, the Board is declaring an interim dividend of 1.8
pence per share. The total cost of this dividend will be
approximately GBP3.1 million. Payment of the dividend will be made
on 14 October 2021, to shareholders on the register at 24 September
2021.
Our markets
We create value by providing advanced technology solutions to
customers in our target markets of healthcare, aerospace &
defence and automation & electrification. These markets have
strong long term growth potential underpinned by structural drivers
as we move towards a more sustainable world. Demand is strong as we
emerge from the pandemic, with customers restarting projects, new
products coming to market and significant new wins helping us
deliver orders and growth above market rates.
Healthcare
In healthcare (26 per cent of Group revenue), our customers are
gradually returning to 'business as usual' which is expected to
lead to the need to catch up on non-COVID-19 related treatments,
supporting future growth through new investment. As hospitals begin
to return to normal we expect the focus will move from COVID-19
treatments to catching up on elective procedures and improving the
efficiency of healthcare provision through increased use of
technology and automation. This is where TT has a compelling
offering and we have already started to see strong growth in the
order pipeline.
Aerospace and Defence
In aerospace and defence (19 per cent of Group revenue), we have
started to see a stabilisation of the commercial aerospace market
following COVID-19 related disruption. Whilst confidence is slowly
improving, we believe it will be some time yet before we see a
meaningful return to growth, however we believe that this will be a
growth market over the longer term. Defence remains a key market
with governments continuing to place a heightened focus on
technology innovation and security, which we expect to lead to
increased government spending. TT's ability to design and
manufacture more efficient, highly reliable military products,
along with our expanding platform exposure will remain a
competitive advantage.
Automation and Electrification
In automation and electrification (38 per cent of Group
revenue), we are seeing the quest for sustainable solutions driving
growth. Technologies such as robotics, remote asset tracking,
monitoring and inspection are in strong demand with good visibility
of current year revenues and improving visibility into 2022. A
number of new customer wins provide long term growth opportunities
and underpin our confidence in the future outlook for our power,
sensing and connectivity solutions.
Creating value through technology investment
Working in partnership with our customers to bring new,
innovative products to market that provide sustainable solutions is
key to driving future growth. Investment in R&D is therefore
one of our top capital allocation priorities. During the period we
invested GBP5.8 million (2020: GBP5.7 million) in R&D spend,
representing 5 per cent (2020: 5 per cent) of aggregate revenue of
our product businesses.
We are developing with customers a pipeline of new products to
bring to market. A selection of notable examples from H1
include:
-- Following investment in our S-2CONNECT platform we have been
selected as hardware partner to Telenor, a leading communications
and IoT provider ranked among the top 10 IoT operators globally and
the top three in Europe. One of the near-term opportunities will be
provided by the sunsetting of 2G and 3G cellular technology which
will create a requirement for devices to be upgraded or replaced.
We will initially work with Telenor in the Nordic region with the
potential to expand the scope of work into the wider European,
Southern Asian and North American markets in a project that could
generate multi-million pounds a year of additional revenue.
-- We have also been investing in the surgical navigation and
robotics market. This segment is experiencing sustained
double-digit growth and is driven by several emerging clinical
applications that provide the physician with exceptionally accurate
catheter placement, often eliminating the need for harmful
radiation. The miniaturised and highly accurate characteristics of
our technologies enable access to parts of the anatomy that in the
past were difficult to navigate including the lung, brain, and
heart. Additionally, new applications for improved navigation needs
have emerged to diagnose breast cancer.
-- We are currently investing in a combination of AC-DC and
DC-DC power conversion technologies in direct response to demand
from aerospace and defence customers, as well as ruggedised wire
harness and magnetic capabilities. These investments build upon our
existing capabilities and give us a wider platform to support major
aerospace and defence customers, many of which are requiring power
solutions that feature higher voltages and/or efficiency
improvements from legacy designs.
-- Our work in developing our first ever European-designed power
convertor is progressing well supporting a world recognised defence
prime contractor with a DC-DC converter solution for
next-generation fighter jet power and control applications. Our
first deliverables were recently supplied to our partners having
successfully passed functional acceptance testing, clearing the way
for further progress and critical design review in the second half
of the year.
Creating value through margin enhancement
We have made good progress with margin enhancement in the first
half, returning to 2019 levels on a run-rate basis. This, together
with the order intake momentum is increasing visibility to
delivering double digit Group operating margins. A number of
factors are driving margins higher as we return to significant
growth:
-- Operational leverage from organic revenue growth: The
benefits of strategic repositioning to build closer, more embedded
customer relationships and completing more design led work with an
increased focus on cross selling is supporting strong growth;
-- Reductions in overheads: The self-help programme which will
be completed during 2021 and is expected to generate full run rate
benefits of GBP11-12 million per annum from 2023 onwards
-- Acquisition-led expansion of technology offerings and market
positions: The Covina and Torotel businesses acquired in 2020 are
both contributing strongly to the Group's margins and absolute
profit improvement.
A noticeable characteristic of the new orders we are winning is
the number from customers wanting more integrated, design led
solutions. We are winning new higher quality orders from existing
customers and have won work from fourteen new customers in the
first half of the year.
We continue to make good progress with the self-help programme.
The Barbados and Carrollton sites were closed during the first half
and we are working towards the transfer of manufacturing from the
Lutterworth and Corpus Christi sites before year end. We have
opened our new facility in Plano, Texas which will house the former
activities from Carrollton and Corpus Christi and manufacturing is
expected to commence in Q4 2021, although high demand levels have
caused us to keep Corpus Christi open longer than originally
planned.
In June we completed the sale of the freehold property of the
Covina business (acquired in January 2020) as an extension of the
self-help programme. We have agreed to lease the site back for a
period of 12 months while we prepare for relocation.
The cash cost of the Group self-help programme is now expected
to reduce from GBP18 million to GBP16 million as a result of the
funds raised from the sale of the Covina plant net of move costs
and an increase in the cost of the Plano build. Having incurred
GBP4 million of programme spend in 2020, and with GBP12 million to
be spent in 2021, we will complete the vast majority of this
programme this year and are on track to deliver GBP5 million of
incremental benefits in 2021 (2020: GBP2 million) taking the annual
run rate benefits in 2021 to GBP7 million. We remain confident of
achieving the programme's GBP11-12 million of run-rate benefits in
2023 and see some potential for additional benefits from the
re-location of Covina to a more suitable facility.
Creating value from mergers and acquisitions
M&A is an important part of our growth proposition as we
look to add higher margin businesses that enhance TT's capability
in our key markets. The Torotel business, acquired in November
2020, continues to perform ahead of our expectations. We have
started to realise benefits from integrating the products across
the Group and are capitalising on the cross-selling opportunities
that are being generated with new tier one OEMs. The Torotel
business has benefited from fresh investment and it can now partner
more closely with clients and expand the product offering.
We have secured a number of new contract wins including an order
for complex cable assemblies with a major US defence supplier that
will be delivered in 2021, and a win in the radar electronics space
that will be delivered in 2022. These wins support higher organic
growth than originally set out in our acquisition business
plan.
With the integration of Torotel complete and the business
performing well, this serves as a great example of how we can
improve the quality of TT through acquisition. We continue to look
for further acquisition opportunities to expand TT's technology
capabilities and customer reach.
Environmental, social and governance (ESG)
TT is positioned to benefit from megatrends that are driving
sustainable growth. Our cleaner, smarter solutions improve energy
efficiency, addressing climate change and resource scarcity. These
solutions include power controls for aerospace and defence markets
which contribute to lighter and more environmentally friendly
aircraft, reducing fuel consumption. Our smarter solutions include
sensors and controls that ensure accuracy and drive automation,
improving productivity and addressing resource scarcity. Our
sensing and control technology can improve efficiency and therefore
reduce energy consumption, resulting in a lower carbon
footprint.
We remain at the forefront of delivering technologies that meet
the ever-increasing demand for cleaner energy, smart monitoring
systems and home automation. Our products can be found in a range
of applications including:
-- Renewable energy generation and smart grid metering
-- Power management and energy control systems
-- Water and wastewater measurement and monitoring
In addition to the products we design and manufacture for our
customers that enable a more sustainable world, we are also
optimising our own operations to reduce our impact on the
environment. Our environmental strategy is focused around the areas
we have assessed to have the greatest environmental impact, namely
energy usage and waste management.
TT's top three environmental sustainability priorities are
to:
1. R educe our carbon footprint, with an aim of being carbon
neutral by 2035 (Scope 1 and 2 emissions)
2. Cut single use plastic packaging purchased
3. Reduce waste to landfill
Since the start of the year, we have made good progress, with 5
additional sites transitioning to renewable energy contracts. We
have embarked on a range of initiatives with our customers,
suppliers, and employees to address our energy, waste and plastic
usage including changing waste providers, reusing rather than
recycling and adopting environmentally friendly packaging
options.
Outlook
The momentum from the first half of the year has continued with
expected revenues for 2021 fully covered and order book visibility
for 2022 is building nicely and ahead of where it would normally be
at this stage of the year. Whilst there are clear constraints in
the supply chain leading to longer delivery times, we are working
closely with customers to plan further ahead with ordering so that
we can meet delivery requirements. We are seeing industry wide cost
inflation but we have largely been able to agree with customers on
price increases across our product range that will protect
margins.
In addition to our strong order book, our new business
opportunity pipeline is as buoyant as we have ever seen it and we
believe that the Group is well placed to deliver both top line and
margin growth.
Overall, our self-help programme and strategic repositioning
have meant that TT is emerging from the pandemic-related slowdown
very well positioned and with the flexibility to capture both
organic and inorganic opportunities to grow the business and create
value for shareholders.
Cash conversion is expected to improve in the second half of the
year, and the spend on the self-help programme is due to be largely
completed in the second half.
With 2021 expected revenues already fully covered by orders,
continuing demand momentum and the benefits of our successful
self-help programme being realised we are confident of delivering a
further improvement in full year 2021 results and have increased
visibility in our path to double digit margins.
FINANCIAL OVERVIEW
Group revenue was GBP235.6 million (H1 2021: GBP210.0 million)
and is back at pre-COVID levels on a constant currency basis. Group
revenue was 16 per cent higher than in the same period last year on
a constant currency basis. Sales volumes in all key markets, with
the exception of aerospace, have rebounded and the order book and
forward pipeline of new business opportunities gives us confidence
that this momentum will continue.
The Group reported an adjusted operating profit of GBP15.9
million (H1 2020: GBP13.2 million) with the improvement driven by
revenue growth and benefits from the Group's self-help programme.
Statutory operating profit for the period was GBP9.3 million (H1
2020: loss of GBP1.1 million) after a charge of GBP6.6 million (H1
2020: GBP14.3 million) for items excluded from adjusted operating
profit including:
-- Restructuring costs of GBP2.6 million (H1 2020: GBP11.4
million), comprising GBP2.0 million relating to the restructure of
the North America Resistors business; GBP0.8 million relating to
the closure of our site in Lutterworth and GBP0.5 million relating
to the closure of our site in Tunis, Tunisia, along with GBP0.6
million of other pension restructuring costs, partially offset by a
gain of GBP1.3 million from the disposal of the Covina
property.
-- Acquisition and disposal related costs of GBP4.0 million (H1
2020: GBP2.9 million), comprising GBP2.5 million of amortisation of
acquired intangible assets, GBP1.1 million of costs to integrate
Torotel and the aerospace and defence power supply business of
Excelitas Technologies Corp based in Covina, California, along with
GBP0.4 million of costs of unannounced and terminated
acquisitions.
The Group generated an improved adjusted operating margin of 6.7
per cent (H1 2020: 6.3 per cent), despite incurring start-up costs
to establish the Virolens product line. This improvement was
delivered whilst dealing with increased costs to execute on high
levels of growth and increases in input costs linked to supply
chain constraints, the latter which we are in the process of
recovering through price increases. We are seeing much of the
business back at 2019 levels.
The net finance cost was GBP 1.8 million ( H1 2020 : GBP 1.9
million). The Group's overall tax charge was GBP1.7 million ( H1
2020: GBP nil). The tax charge on adjusted profit before tax was
GBP 2.8 million ( H1 2020: GBP 2.1 million), resulting in an
effective adjusted tax rate of 19.6 per cent ( H1 2020 : 18.6 per
cent).
Basic earnings per share (EPS) increased to 3.3 pence ( H1 2020:
1.8 pence loss ) benefiting from the improved operating performance
and reduction in adjusting items set out above. Adjusted EPS
increased to 6.5 pence ( H1 2020 : 5.6 pence), reflecting the
improvement in adjusted operating profit.
Adjusted operating cash flow was lower with a GBP 6.1 million
inflow ( H1 2020 : GBP 11.5 million inflow) which was primarily due
to a GBP18.9 million working capital outflow ( H1 2020: GBP 11.2
million outflow), due to strong growth and the decision to build
inventory levels in response to the tightening of the supply chain
and growth in order book for H2. This resulted in operating cash
conversion of -7 per cent ( H1 2020 : 53 per cent). On a statutory
basis, cash flow from o perating activity was an outflow of GBP 5.0
million ( H1 2020: GBP 2.8 million inflow).
There was a free cash outflow of GBP 10.3 million ( H1 2020 :
GBP 5.2 million outflow), including GBP0.6 million of restructuring
and acquisition related payments (H1 2020: GBP4.7 million) .
Pension contribution payments in the period were unchanged at GBP
2.7 million. The total net accounting surplus under the Group's
defined benefit pension schemes was GBP61.2 million (31 December
2020: GBP30.5 million) with the increase mainly due to strong
returns on scheme growth assets .
As at 3 0 June 202 1 the Group's net debt was GBP 107.3 million
( 31 December 20 20 : GBP 83.9 million), including GBP20.9 million
of lease liabilities (31 December 20 20 : GBP 15.9 million).
Leverage, consistent
with the bank covenants, was 2.0 times at 3 0 June 202 1 ( 31 December 20 20 : 1.6 times).
In August 2021, TT agreed a debut issue of GBP75 million of
private placement fixed rate loan notes with three institutional
investors. The funds will be received in December 2021 and the
issue is evenly split between 7 and 10 year maturities with an
average interest rate of 2.9% and covenants in line with our bank
facility. The private placement complements at an attractive rate
the Group's existing bank revolving credit facility, diversifying
our sources of debt funding and providing us with a stable,
long-term financing structure.
DIVISIONAL REVIEW
POWER AND CONNECTIVITY
The Power and Connectivity division develops and manufactures
power application products and connectivity devices which enable
the capture and wireless transfer of data. We collaborate with our
customers to develop innovative solutions to optimise their
electronic systems.
H1 2021 H1 2020 Change Change constant
fx
Revenue GBP68.2m GBP60.0m 14% 17%
--------- --------- --------- ----------------
Adjusted operating profit(1) GBP3.6m GBP4.4m (18)% (16)%
--------- --------- --------- ----------------
Adjusted operating margin(1) 5.3% 7.3% (200)bps (210)bps
--------- --------- --------- ----------------
(1) See note 1c on page 27 for an explanation of alternative
performance measures. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items please refer to note 5 on page 32 of this document.
Revenue in creased by GBP 8.2 million to GBP 68.2 million ( H1
2020 : GBP 60.0 million). Revenue included a GBP 9.7 million
contribution from the acquisition of Torotel , which has performed
ahead of our expectations. O rganic revenue was 1 per cent higher
with growth in defence, healthcare and automation &
electrification offset by lower commercial aerospace demand
compared to H1 last year, when the first quarter was not impacted
by COVID-19. Overall order intake remains strong and is well ahead
of the prior year. Establishment of the Virolens product line is
now complete, it has received its first important regulatory
milestone with MHRA registration in Great Britain and a limited
number of units have been sold, however it is still at an early
stage of commercialisation.
Whilst the majority of our sites have been operating at full
capacity, the Kuantan facility in Malaysia has been impacted by
COVID-19 restrictions and at end of June was only running at 60 per
cent of capacity.
Adjusted operating profit decreased by GBP 0.8 million to GBP3.6
million ( H1 2020 : GBP 4.4 million). The adjusted operating margin
was 5.3 per cent ( H1 2020 : 7.3 per cent). Run-rate margins were
9.5 per cent, excluding the start-up costs incurred in relation to
the Virolens project. Going forward we expect these costs to be
significantly reduced.
There have been some significant awards during the period,
including:
-- Selection by Telenor as its key hardware partner as it
sunsets existing 2G and 3G technology resulting in the need for
devices to be replaced.
-- In aerospace and defence, a cross selling opportunity
originating from the Torotel business has generated over $2 million
in orders in the first half of 2021 for complex, ruggedised wire
harness assemblies. The orders will be executed this year and were
won through partnering with a major customer and investing in the
capabilities needed to succeed in this market. We are now
positioned to partner with other aerospace and defence customers to
provide this product. With a second aerospace and defence prime, TT
used its supply chain expertise to significantly reduce lead times
and was the only supplier positioned to secure critical materials
and meet programme requirements.
-- An excellent example of our focus on cross-selling is evident
in our recently launched partnership with Radwave Technologies, an
innovative surgical navigation tracking technology company based in
Minneapolis, Minnesota. Producing a magnetic sensor that, when
paired with Radwave's hardware and software, delivers superior
accuracy to a physician. As the partnership expands, TT will also
be providing complete system manufacturing from additional
facilities, including Cleveland, Ohio.
GLOBAL MANUFACTURING SOLUTIONS
The Global Manufacturing Solutions division provides
manufacturing services and engineering solutions for our product
divisions and to customers that often require a lower volume and
higher mix of different products. We manufacture complex integrated
product assemblies for our customers and provide engineering
services including designing testing solutions and
value-engineering.
H1 2021 H1 2020 Change Change constant
fx
Revenue GBP109.6m GBP95.5m 15% 18%
---------- --------- -------- ----------------
Adjusted operating
profit(1) GBP8.5m GBP8.3m 2% 9%
---------- --------- -------- ----------------
Adjusted operating
margin(1) 7.8% 8.7% (90)bps (60)bps
---------- --------- -------- ----------------
(1) See note 1c on page 27 for an explanation of alternative
performance measures. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items please refer to note 5 on page 32 of this document.
The results for the period ended 30 June 2020 have been restated
to reflect prior year adjustments. Further details are set out in
note x.
Revenue grew by GBP14.1 million to GBP109.6 million (H1 2020:
GBP95.5 million). We have seen organic growth of 18 per cent,
partially driven through the opportunities created by establishing
Kuantan as an alternative site for our customers to support
growth.
Outstanding progress has been made in growing the order book at
record pace. All sites are fully booked for the year and the order
book growth has been underpinned by multiple wins which generate
higher quality, higher margin orders. We are increasingly seeing
that our power customers, in particular, require manufacturing
capability and GMS and Power and Connectivity are increasingly
partnering to offer this. We are constantly improving our
understanding of how to leverage these opportunities from the
customer perspective.
Adjusted operating profit increased by GBP0.7 million at
constant currency to GBP8.5 million (H1 20: GBP7.8 million at
constant currency). The underlying operating profit margin was 7.8
per cent (H1 2020: 8.4 per cent at constant currency). The strong
overall performance was held back by reduced recovered hours in our
Cleveland operations. Here we have undertaken work to realign the
cost structure to fully capitalise on a full order book.
Consequently, we expect to see enhanced margin from the GMS
division in the second half of the year.
The considerable sales momentum has resulted in customer awards
across our key markets from new and existing customers. Notable
wins and growth areas include:
-- A global leader in specialist diagnostics was introduced to
TT through an existing customer. We have worked with the customer
to provide complex electronics assembly to their Hemostasis product
line. The order involves our Cleveland and Suzhou , China, sites
and is worth c. GBP1 million per annum.
-- In healthcare, we have improved our offerings through the
expansion of our Kuantan facility, with a primary focus on medical
customers. Through this expansion and an overall demand increase in
the medical industry, GMS has been able to increase healthcare
sales by 38%.
-- In automation and electrification, we have expanded our
relationships with two different long-standing customers supporting
semiconductor products. In the first instance, TT was awarded a new
5-year contract worth GBP2 million per annum beginning in 2022 for
high-level assembly which will be built in our Kuantan facility. A
second long-term customer awarded TT a contract for 16 interface
assemblies for a semiconductor product built in Suzhou. The
five-year contract was awarded in June, and will have an annual run
rate of GBP1 million per annum from 2022.
-- Aerospace & Defence - North America defence order intake
continued to grow compared to a year ago, driven by a long term
contract agreed with a key defence supplier on missile products. In
addition, we have started receiving new orders for a large defence
company in June on a three-year agreement, worth c. GBP5 million
per annum.
Overall, the GMS division is in excellent shape, the order
pipeline is stronger than ever and our self-help and cross selling
initiatives are delivering material growth. We now see scope to
drive GMS operating margins higher.
SENSORS AND SPECIALIST COMPONENTS
The Sensors and Specialist Components division works with
customers to develop high specification, standard and customised
solutions, including sensors and power management devices. Our
solutions improve the precision, speed and reliability of critical
aspects of our customers' applications .
H1 2021 H1 2020 Change Change constant
fx
Revenue GBP57.8m GBP54.5m 6% 13%
--------- --------- -------- ----------------
Adjusted operating profit(1) GBP7.4m GBP3.8m 95% 100%
--------- --------- -------- ----------------
Adjusted operating margin(1) 12.8% 7.0% 580 bps 560 bps
--------- --------- -------- ----------------
(1) See note 1c on page 27 for an explanation of alternative
performance measures. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items please refer to note 5 on page 32 of this document.
Revenue increased by GBP3.3 million to GBP57.8 million (H1 2020:
GBP54.5 million). Organic revenue was 13 per cent higher. Despite
usually having short order visibility in this division we are
already covered for the balance of this year's revenue and are
starting to build the order book for 2022. We are seeing very
strong demand from the automation and electrification market.
Whilst aerospace has not yet returned to growth, we are encouraged
by the new contracts awarded in the period.
Adjusted operating profit increased by GBP3.6 million to GBP7.4
million (H1 2020: GBP3.8 million). The impact of the initiatives
put in place as part of the self-help programme have started to
benefit the performance of the division and is reflected in a
significant step up in adjusted operating profit margin to 12.8 per
cent (H1 2020: 7.0 per cent), above the adjusted operating profit
margin delivered in 2019.
Under the self-help programme, the Barbados and Carrollton sites
were closed in H1 and the transfer of manufacturing from the Corpus
Christi site is on track for completion before year end. Our new
plant at Plano is due to commence manufacturing before year end
which will drive further efficiency throughout the division.
Price increases are being put through to reflect the recent cost
inflation and we are already winning material new orders at the
higher price points. There have been a number of key developments
during the first half of the year including:
-- Development of an optical emitter and detector pair to be
used in an ocean sensing satellite that will predict weather
conditions. The customer needed a supplier who could develop a
solution that would pass space level requirements with custom
testing levels and specific documentation related to radiation
tolerance;
-- To improve fuel economy, safety and comfort in modern
vehicles, our customer introduced additional functions to the
electric vehicle system to ensure a reliable and stable power
supply at all times. We provided a tight tolerance current sense
resistor to meet these requirements;
-- Orders received for a potentiometer made to measure linear
travel in the landing gear of second-generation E-Jet commercial
jets.
OTHER FINANCIAL INFORMATION
Summary of Adjusted results
To assist with the understanding of earnings trends, the Group
has included within its non-GAAP alternative performance measures
including adjusted operating profit and adjusted profit. Further
information is contained in the 'Reconciliation of KPIs and non
IFRS measures' on pages 38 to 44.
A summary of the Group's adjusted results, and a reconciliation
of statutory to adjusted profit numbers are set out below:
GBP million H1 2021 H1 2020
(restated)
(1)
----------------------------------- -------------- --------------
Revenue 235.6 210.0
----------------------------------- -------------- --------------
Operating profit 15.9 13.2
Operating margin 6.7% 6.3%
Net finance expense (1.8) (1.9)
----------------------------------- -------------- --------------
Profit before tax 14.1 11.3
Tax (2.8) (2.1)
Tax rate 19.6% 18.6%
----------------------------------- -------------- --------------
Profit after tax 11.3 9.2
Weighted average number of shares 174.7 million 163.5 million
EPS 6.5p 5.6p
=================================== ============== ==============
(1) The results for the period ended 30 June 2020 have been
restated to reflect prior year adjustments. Further details are set
out in note 1f on page 29.
Reconciliation of Adjusted results
GBP million Note H1 2021 H1 2020
(restated)
(1)
----------------------------------------- ----- -------- ------------
Operating profit / (loss) 9.3 (1.1)
Adjusted to exclude:
----------------------------------------- ----- -------- ------------
Restructuring and other items
Restructuring 1 (3.3) (11.4)
Property disposals 2 1.3 -
Pension and past service charge 3 (0.6) -
----------------------------------------- ----- -------- ------------
(2.6) (11.4)
Acquisition related costs
Amortisation of intangible assets
arising on business combinations 4 (2.5) (2.0)
Release of warranty and claims
provision relating
to Transportation business divestment 5 - 1.0
Torotel acquisition and integration
costs 6 (0.9) (0.4)
Covina acquisition and integration
costs 7 (0.2) (1.1)
Other acquisition related costs 8 (0.4) (0.4)
----------------------------------------- ----- -------- ------------
(4.0) (2.9)
----------------------------------------- ----- -------- ------------
Total operating reconciling items (6.6) (14.3)
----------------------------------------- ----- -------- ------------
Adjusted operating profit 15.9 13.2
========================================= ===== ======== ============
Profit / (loss) before tax 7.5 (3.0)
Total operating reconciling items
(as above) 6.6 14.3
----------------------------------------- ----- -------- ------------
Adjusted profit before tax 14.1 11.3
Taxation charge on adjusted profit (2.8) (2.1)
----------------------------------------- ----- -------- ------------
Adjusted profit after taxation 11.3 9.2
========================================= ===== ======== ============
(1) The results for the period ended 30 June 2020 have been
restated to reflect prior year adjustments. Further details are set
out in note 1f on page 29.
Restructuring and other costs charged in the period
comprise:
Note 1: Restructuring costs charged in the period primarily
relate to costs arising on the restructuring of the Group's
footprint, product rationalisation and headcount reduction
programme to reduce the Group's fixed costs which was initiated in
2020. Total costs of GBP3.3 million comprise GBP2.0 million
relating to the restructure of the North America Resistors
business; GBP0.8 million relating to closure of our site in
Lutterworth, UK and GBP0.5 million relating to the closure of our
site in Tunis, Tunisia. Prior period's restructuring costs of
GBP11.4 million related to the initiation of the Group's
restructuring programme, primarily relating to severance costs,
asset write downs, inventory write downs and other restructuring
costs.
Note 2: Gain on disposal of the Covina property
Note 3: Other pension costs relating primarily to the
equalisation of male and female members' benefits in respect of
guaranteed minimum pensions.
Acquisition and disposal related costs charged in the period
comprise:
Note 4: Amortisation of acquired intangible assets;
Note 5: Release of the warranty and claims provision relating to
the Transportation business divestment and other acquisition and
integration related costs
Note 6 & 7: Integration costs of Torotel and the aerospace
and defence power supply business of Excelitas Technologies Corp
based in Covina, California
Note 8: Costs of unannounced and terminated acquisitions
Cash flow, net debt and leverage
The table below sets out Group cash flows and net debt
movement:
GBP million H1 2021 H1 2020
Restated(1)
Adjusted operating profit 15.9 13.2
-------- -------------
Depreciation and amortisation 8.0 8.7
-------- -------------
Working capital movement (18.9) (11.2)
-------- -------------
Net capital expenditure(2) (6.2) (3.0)
-------- -------------
Capitalised development expenditure (1.0) (1.5)
-------- -------------
Other 1.1 0.8
-------- -------------
Adjusted Operating Cash Flow post capex
and excluding property disposals (2) (1.1) 7.0
-------- -------------
Restructuring and acquisition costs(2) (0.6) (4.7)
-------- -------------
Net interest and tax (4.0) (3.0)
-------- -------------
Lease payments (1.9) (1.8)
-------- -------------
Retirement benefit schemes (2.7) (2.7)
-------- -------------
Free Cash Flow (10.3) (5.2)
-------- -------------
Dividends (8.2) -
-------- -------------
Lease payments 1.9 1.8
-------- -------------
Equity issued 0.3 0.1
-------- -------------
Acquisitions & disposals (0.5) (14.6)
-------- -------------
Other (0.1) (1.8)
-------- -------------
Increase in net debt (16.9) (19.7)
-------- -------------
Opening net debt (83.9) (69.1)
-------- -------------
Other non-cash (new leases and lease reassessments) (7.1) 0.9
-------- -------------
FX 0.6 (1.1)
-------- -------------
Closing net debt (107.3) (89.0)
-------- -------------
(1) The results for the period ended 30 June 2020 have been
restated to reflect prior year adjustments. Further details are set
out in note1fx on page 29.
(2) Restructuring, acquisition and disposal related costs'
includes the net proceeds of the Covina property sale (GBP5.8
million).
At 30 June 2021 the Group's net debt was GBP107.3 million (31
December 2020: GBP83.9 million). Included within net debt was
GBP20.9 million of lease liabilities (31 December 2020: GBP15.9
million).
Consistent with the Group's borrowing agreements, which exclude
the impact of IFRS 16, Leases, leverage ratio was 2.0 times at 30
June 2021 (31 December 2020: 1.6 times). Net interest cover was
12.4 times (H1 2020: 13.1 times). The Group's debt covenants state
that the leverage ratio must not exceed 3.0 times and that interest
cover must be more than 4.0 times.
Principal risks and uncertainties
The Group has an established, structured approach to identifying
and assessing the impact of financial and operational risks on its
business, which is reviewed and updated quarterly. The principal
risks and uncertainties for the remainder of the financial year are
not expected to change materially from those included on pages 52
and 53 of the Annual Report and Accounts 2020. The risks identified
relate to the following areas: general revenue reduction due to
Brexit and COVID-19, contractual risks; research and development;
people and capability; supplier resilience due to Brexit and
COVID-19; IT systems and information; M&A and integration,
sustainability, climate change and the environment, health and
safety, legal and regulatory compliance. Further information in
relation to the Group's financial position and going concern is
included on page 19.
Cautionary statement
This report contains forward-looking statements. These have been
made by the Directors in good faith based on the information
available to them up to the time of their approval of this report.
The Directors can give no assurance that these expectations will
prove to have been correct. Due to the inherent uncertainties,
including both economic and business risk factors underlying such
forward-looking information, actual results may differ materially
from those expressed or implied by these forward-looking
statements. The Directors undertake no obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise.
TT Electronics plc
Interim Results for the half-year ended 30 June 2021
Going Concern
The Group has experienced continued improvement in trading
momentum and strong growth on our 2020 numbers. The structural
growth markets we have selected to focus on have moved back towards
their long-term growth trajectory, the benefits of our strategic
repositioning and focus on building close relationships with our
clients can be seen in both the order book and financial
performance of the Group.
The Group's financial position remains strong, at 30 June 2021
it had:
-- GBP244.3 million of total borrowing facilities available
(comprising committed facilities of GBP205.2 million and
uncommitted facilities of GBP39.2 million representing overdraft
lines and an undrawn accordion facility of GBP30 million). The
Group's primary source of finance is the GBP180 million committed
revolving credit facility (RCF); at 30 June 2021 GBP152.2 million
of this facility had been drawn down. The Group's RCF will mature
in November 2023. In August 2021, TT agreed a debut issue of GBP75
million of private placement fixed rate loan notes with three
institutional investors. The funds will be received in December
2021 and the issue is evenly split between 7 and 10 year maturities
with an average interest rate of 2.9% and covenants in line with
our bank facility. The private placement complements, at an
attractive rate, the Group's existing bank revolving credit
facility, diversifying our sources of debt funding and providing us
with a stable, long-term financing structure.
-- A leverage ratio of 2.0 times at 30 June 2021 compared to an
RCF covenant maximum of 3.0 times. Interest cover (pre-IFRS 16 and
excluding pension interest) of 12.4 times compared to an RCF
covenant minimum of 4.0 times. The private placement does not
impact these covenants.
The Group has prepared and reviewed cash flow forecasts across
the business over the twelve-month period from the date of the
approval of these interim results, considering the Group's current
financial position and the potential impact of our principal risks
on divisions.
The Group's financial projections contain key assumptions
surrounding revenue and operating profit recovery in 2021, these
estimates position the Group outperforming pre-Covid 2019 levels
throughout the twelve months from the date of signing these
financial statements. Under the Group's base case financial
projections, the Group retains significant liquidity and covenant
headroom, with both metrics improving from the position as at 30
June 2021.
The Group's downside stress test scenario has been sensitised
for supply chain challenges which shows a reduction in revenue and
operating profit compared to the latest forecast. Despite this
further reduction these projections show that the Group should
remain well within its facilities headroom and within bank
covenants for 2021 and 2022. A "reverse" stress-test was also
modelled to understand the conditions which could jeopardise the
ability of the Group to continue as a going concern including
assessing against covenant testing and facility headroom. The
stress testing also considered mitigating actions which could be
put in place. Mitigating actions included limiting capital
expenditure and reducing controllable costs including items such as
discretionary bonuses and pay rises. The reverse stress test is
deemed to have a remote likelihood and help inform the Directors'
assessment that there are no material uncertainties in relation to
going concern.
The Group's wide geographical and sector diversification helps
minimise the risk of serious business interruption or catastrophic
reputational damage. Furthermore, the business model is structured
so that the Group is not overly reliant on any single customer,
market or geography.
The Directors have assessed the future funding requirements of
the Group with due regard to the risks and uncertainties to which
the Group is exposed and compared them with the level of available
borrowing facilities and are satisfied that the Group has adequate
resources for at least twelve months from the date of signing.
Accordingly, the financial statements have been prepared on a going
concern basis.
Responsibility statement of the Directors
We confirm that to the best of our knowledge:
-- The 2021 annual financial statements of TT Electronics plc
will be prepared in accordance with United Kingdom adopted
International Financial Reporting Standards. The condensed set of
financial statements included in this half yearly financial report
has been prepared in accordance with United Kingdom adopted
International Accounting Standard 34 'Interim Financial
Reporting';
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R:
(i) an indication of important events that have occurred during
the first six months of the financial year, and their impact on the
condensed set of financial statements; and
(ii) a description of the principal risks and uncertainties for
the remaining six months of the year
-- the interim management report includes a fair review of the
information required by DTR 4.2.8R:
(i) related party transactions that have taken place in the
first six months of the current financial year and that have
materially affected the financial position or performance of the
Group in that period; and
(ii) any changes in the related parties transactions described
in the 2020 Annual Report that could have a material effect on the
financial position or performance of the Group in the current
period.
By order of the Board
Richard Tyson Mark Hoad
Chief Executive Officer Chief Financial Officer
4 August 2021 4 August 2021
Cautionary statement
This report contains forward-looking statements. These have been
made by the directors in good faith based on the information
available to them up to the time of their approval of this report.
The directors can give no assurance that these expectations will
prove to have been correct. Due to the inherent uncertainties,
including both economic and business risk factors underlying such
forward looking information, actual results may differ materially
from those expressed or implied by these forward-looking
statements. The directors undertake no obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise.
Independent review report to TT Electronics plc
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2021 which comprises the Condensed
consolidated income statement, the Condensed consolidated statement
of comprehensive income, the Condensed consolidated statement of
financial position, the Condensed consolidated statement of changes
in equity, and the Condensed consolidated cash flow statement and
related notes 1 to 14. We have read the other information contained
in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group will be prepared in accordance with United Kingdom adopted
International Financial Reporting Standards. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with United Kingdom adopted
International Accounting Standard 34, "Interim Financial
Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review 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, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
4 August 2021
TT Electronics plc
Interim results for the half-year ended 30 June 2021
Condensed consolidated income statement (unaudited)
for the six months ended 30 June 2021
Six months Six months Year ended
ended 30 ended 31 December
June 2021 30 June 2020 (audited)
GBPmillion (unless otherwise stated) Note 2020 (1)
------------------------------------------- ----- ----------- ----------- ----------------
Revenue 3 235.6 210.0 431.8
Cost of sales (178.8) (162.0) (332.7)
------------------------------------------- ----- ----------- ----------- ----------------
Gross profit 56.8 48.0 99.1
Distribution costs (12.9) (13.0) (24.6)
Administrative expenses (34.6) (36.1) (67.9)
------------------------------------------- ----- ----------- ----------- ----------------
Operating profit/(loss) 9.3 (1.1) 6.6
Analysed as:
Adjusted operating profit 3 15.9 13.2 27.5
Restructuring and other 5 (2.6) (11.4) (14.5)
Acquisition and disposal related costs 5 (4.0) (2.9) (6.4)
------------------------------------------- ----- ----------- ----------- ----------------
Finance income 0.4 0.3 0.6
Finance costs (2.2) (2.2) (4.3)
------------------------------------------- ----- ----------- ----------- ----------------
Profit/(loss) before taxation 7.5 (3.0) 2.9
Taxation 6 (1.7) - (1.6)
------------------------------------------- ----- ----------- ----------- ----------------
Profit/(loss) for the period attributable
to the owners of the Company 5.8 (3.0) 1.3
------------------------------------------- ----- ----------- ----------- ----------------
EPS attributable to owners of the Company
(pence)
Basic 7 3.3 (1.8) 0.8
Diluted 7 3.3 (1.8) 0.8
------------------------------------------- ----- ----------- ----------- ----------------
1. 'Cost of sales' and 'Taxation' have been restated in the
comparative period as described in note 2f.
TT Electronics plc
Interim results for the half-year ended 30 June 2021
Condensed consolidated statement of comprehensive income
(unaudited)
for the six months ended 30 June 2021
GBPmillion Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
(1) (audited)
-------------------------------------------------------- ----------- ----------- -------------
Profit/(loss) for the period 5.8 (3.0) 1.3
Other comprehensive income/(loss) for the year
after tax
Items that are or may be reclassified subsequently
to the income statement:
Exchange differences on translation of foreign
operations (1.8) 13.2 (5.0)
Tax on exchange differences - - 0.3
Gain/(loss) on hedge of net investment in foreign
operations 0.2 (1.4) 0.7
(Loss)/gain on cash flow hedges taken to equity
less amounts recycled to the income statement (1.4) (3.2) 7.1
Items that will never be reclassified to the income
statement:
Remeasurement of defined benefit pension schemes 27.6 15.9 8.6
Tax on remeasurement of defined benefit pension
schemes (9.2) (3.4) (2.1)
--------------------------------------------------------- ----------- ----------- -------------
Total comprehensive income for the period attributable
to the owners of the Company 21.2 18.1 10.9
1. 'Profit/(loss) for the period' has been restated in the
comparative period as described in note 2f.
TT Electronics plc
Interim results for the half-year ended 30 June 2021
Condensed consolidated statement of financial position
(unaudited)
GBPmillion Note 30 June 30 June 31 December
2021 2020 (1) 2020 (audited)
(2)
---------------------------------- ----- -------- ---------- ----------------
ASSETS
Non-current assets
Right-of-use assets 17.8 11.0 12.4
Property, plant and equipment 48.6 55.3 53.0
Goodwill 4 154.6 143.5 155.5
Other intangible assets 54.3 51.2 57.1
Deferred tax assets 8.1 8.6 9.1
Derivative financial instruments 5.8 0.8 1.8
Pensions 10 65.4 41.1 35.4
---------------------------------- ----- -------- ---------- ----------------
Total non-current assets 354.6 311.5 324.3
---------------------------------- ----- -------- ---------- ----------------
Current assets
Inventories 106.8 106.7 98.2
Trade and other receivables 86.3 73.9 71.3
Income taxes receivable 2.7 3.6 3.0
Derivative financial instruments 0.8 0.8 5.8
Cash and cash equivalents 11 100.6 69.7 70.2
---------------------------------- ----- -------- ---------- ----------------
Total current assets 297.2 254.7 248.5
---------------------------------- ----- -------- ---------- ----------------
Total assets 651.8 566.2 572.8
---------------------------------- ----- -------- ---------- ----------------
LIABILITIES
Current liabilities
Borrowings 35.8 15.5 2.3
Lease liabilities 3.4 3.9 3.6
Derivative financial instruments 1.9 5.8 1.1
Trade and other payables 95.2 86.0 90.2
Income taxes payable 7.3 7.5 7.5
Provisions 4.4 9.2 6.6
---------------------------------- ----- -------- ---------- ----------------
Total current liabilities 148.0 127.9 111.3
---------------------------------- ----- -------- ---------- ----------------
Non-current liabilities
Borrowings 151.2 127.5 135.9
Lease liabilities 17.5 11.8 12.3
Derivative financial instruments 0.4 1.1 0.8
Deferred tax liability 16.2 7.1 8.6
Pensions 10 4.2 5.9 4.9
Provisions and other non-current
liabilities 0.9 0.9 1.0
---------------------------------- ----- -------- ---------- ----------------
Total non-current liabilities 190.4 154.3 163.5
---------------------------------- ----- -------- ---------- ----------------
Total liabilities 338.4 282.2 274.8
---------------------------------- ----- -------- ---------- ----------------
Net assets 313.4 284.0 298.0
---------------------------------- ----- -------- ---------- ----------------
EQUITY
Share capital 12 43.7 41.0 43.6
Share premium 12 21.9 4.2 21.7
Translation reserve 28.4 45.8 30.0
Other reserves 6.2 (5.9) 5.5
Retained earnings 211.2 196.9 195.2
---------------------------------- ----- -------- ---------- ----------------
Equity attributable to owners of
the Company 311.4 282.0 296.0
Non-controlling interests 2.0 2.0 2.0
---------------------------------- ----- -------- ---------- ----------------
Total equity 313.4 284.0 298.0
---------------------------------- ----- -------- ---------- ----------------
1. 'Inventories', 'Deferred tax assets', 'Trade and other
payables', 'Provisions', 'Provisions and other non-current
liabilities' and 'Retained earnings' have been restated in the
comparative period as described in note 2f.
2. 'Goodwill' and 'Trade and other receivables; have been
restated in the comparative period as described in note 2f.
Approved by the Board of Directors on 4 August 2021 and signed
on their behalf by:
Richard Tyson Mark Hoad
Director Director
TT Electronics plc
Interim results for the half-year ended 30 June 2021
Condensed consolidated statement of changes in equity
(unaudited)
for the six months ended 30 June 2021
GBPmillion Share Share Translation Other Retained Sub- Non-controlling Total
capital premium Reserve reserves earnings total interest
(1)
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
At 31 December 2019
(audited) 41.0 4.1 34.0 (0.5) 187.4 266.0 2.0 268.0
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Loss for the period
(1) - - - - (3.0) (3.0) - (3.0)
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Other comprehensive - - - - - -
income
Exchange differences
on translation
of foreign operations - - 13.2 - - 13.2 - 13.2
Loss on hedge of net
investment
in foreign operations - - (1.4) - - (1.4) - (1.4)
Loss on cash flow
hedges taken
to equity less
amounts recycled
to the income
statement - - - (3.2) - (3.2) - (3.2)
Remeasurement of
defined benefit
pension schemes - - - - 15.9 15.9 - 15.9
Tax on remeasurement
of defined
benefit pension
schemes - - - - (3.4) (3.4) - (3.4)
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Total comprehensive
income - - 11.8 (3.2) 9.5 18.1 - 18.1
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Transactions with
owners recorded
directly in equity
Share-based payments - - - (1.9) - (1.9) - (1.9)
Deferred tax on
share-based payments - - - (0.3) - (0.3) - (0.3)
New shares issued - 0.1 - - - 0.1 - 0.1
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
At 30 June 2020 41.0 4.2 45.8 (5.9) 196.9 282.0 2.0 284.0
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
At 31 December 2020
(audited) 43.6 21.7 30.0 5.5 195.2 296.0 2.0 298.0
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Profit for the period 5.8 5.8 - 5.8
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Other comprehensive - - -
income
Exchange differences
on translation
of foreign operations - - (1.8) - - (1.8) - (1.8)
Gain on hedge of net
investment
in foreign operations - - 0.2 - - 0.2 - 0.2
Loss on cash flow
hedges taken
to equity less
amounts recycled
to income statement - - - (1.4) - (1.4) - (1.4)
Remeasurement of
defined benefit
pension schemes - - - - 27.6 27.6 - 27.6
Tax on remeasurement
of defined
benefit pension
schemes - - - - (9.2) (9.2) - (9.2)
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Total comprehensive
income - - (1.6) (1.4) 24.2 21.2 - 21.2
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
Transactions with - - -
owners recorded
directly in equity
Equity dividends paid
by the
Company - - - - (8.2) (8.2) - (8.2)
Share-based payments - - - 1.8 - 1.8 - 1.8
Deferred tax on
share-based payments - - - 0.3 - 0.3 - 0.3
New shares issued 0.1 0.2 - - - 0.3 - 0.3
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
At 30 June 2021 43.7 21.9 28.4 6.2 211.2 311.4 2.0 313.4
----------------------- --------- --------- ------------ ---------- ---------- ------- ---------------- ------
1. 'Loss for the period' has been restated in the comparative
period as described in note 2f.
TT Electronics plc
Interim results for the half-year ended 30 June 2021
Condensed consolidated cash flow statement (unaudited)
for the six months ended 30 June 2021
GBPmillion Note Six months Six months Year ended
ended 30 ending 31 December
June 2021 30 June 2020 (audited)
2020 (1)
------------------------------------------------ ----- ----------- ----------- ----------------
Cash flows from operating activities
Profit/(loss) for the year 5.8 (3.0) 1.3
Taxation 1.7 - 1.6
Net finance costs 1.8 1.9 3.7
Restructuring and other 2.6 11.4 14.5
Acquisition related costs 4.0 2.9 6.4
Adjusted operating profit 15.9 13.2 27.5
Adjustments for:
Depreciation 6.7 7.0 14.0
Amortisation of intangible assets 1.3 1.7 3.0
Impairment of property, plant and equipment
and intangible assets - - 0.2
Other items 2.7 0.8 0.7
(Increase)/decrease in inventories (9.6) (2.0) 4.2
(Increase)/decrease in receivables (17.5) 9.0 11.2
Increase/(decrease) in payables and provisions 6.6 (18.2) (11.8)
------------------------------------------------ ----- ----------- ----------- ----------------
Adjusted operating cash flow 6.1 11.5 49.0
Special payments to pension funds (2.7) (2.7) (5.4)
Restructuring and acquisition related costs (6.4) (4.7) (15.1)
------------------------------------------------ ----- ----------- ----------- ----------------
Net cash generated from operations (3.0) 4.1 28.5
Net income taxes paid (2.0) (1.3) (0.3)
------------------------------------------------ ----- ----------- ----------- ----------------
Net cash flow from operating activities (5.0) 2.8 28.2
------------------------------------------------ ----- ----------- ----------- ----------------
Cash flows from investing activities
Purchase of property, plant and equipment (6.0) (2.5) (9.3)
Proceeds from sale of property, plant and
equipment and government grants received 5.8 - 3.4
Capitalised development expenditure (1.0) (1.5) (3.3)
Purchase of other intangibles (0.2) (0.5) (0.8)
Acquisitions of businesses (0.5) (14.6) (43.3)
Cash with acquired businesses - - 1.4
Net cash flow used in investing activities (1.9) (19.1) (51.9)
------------------------------------------------ ----- ----------- ----------- ----------------
Cash flows from financing activities
Issue of share capital 0.3 0.1 20.2
Interest paid (2.0) (1.7) (3.5)
Repayment of borrowings (4.6) (5.3) (27.2)
Proceeds from borrowings 18.8 19.5 49.8
Payment of lease liabilities (1.9) (1.8) (4.1)
Other items (0.1) (1.8) (1.8)
Dividends paid by the Company (8.2) - -
------------------------------------------------ ----- ----------- ----------- ----------------
Net cash flow from financing activities 2.3 9.0 33.4
------------------------------------------------ ----- ----------- ----------- ----------------
Net (decrease)/increase in cash and cash
equivalents (4.6) (7.3) 9.7
Cash and cash equivalents at beginning
of year 11 69.0 60.2 60.2
Exchange differences 11 0.5 1.3 (0.9)
------------------------------------------------ ----- ----------- ----------- ----------------
Cash and cash equivalents at end of year 11 64.9 54.2 69.0
------------------------------------------------ ----- ----------- ----------- ----------------
Cash and cash equivalents comprise:
Cash at bank and in hand 100.6 69.7 70.2
Bank overdrafts (35.7) (15.5) (1.2)
------------------------------------------------ ----- ----------- ----------- ----------------
64.9 54.2 69.0
------------------------------------------------ ----- ----------- ----------- ----------------
1. 'Profit/(loss) for the period', 'Taxation' and
'(Increase)/decrease in inventories' have been restated in the
comparative period as described in note 2f.
TT Electronics plc
Interim results for the half-year ended 30 June 2021
Notes to the condensed consolidated financial statements
(unaudited)
1. General information
The condensed consolidated financial statements for the six
months ended 30 June 2021 are unaudited and were authorised for
issue in accordance with a resolution of the Board of Directors.
The information for the six months ended 30 June 2021 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. Comparative information for the year ended 31
December 2020 has been taken from the published statutory accounts,
a copy of which has been delivered to the Registrar of Companies.
The auditors reported on those accounts: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
2. Basis of preparation
a) Condensed consolidated half-year financial statements
The 2021 annual financial statements of TT Electronics plc will
be prepared in accordance with United Kingdom adopted International
Financial Reporting Standards. The condensed set of financial
statements included in this half yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34 'Interim Financial Reporting'. These
condensed consolidated half-year financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
2020 Annual Report.
b) Basis of accounting
The accounting policies adopted are consistent with those
followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2020.
Interest rate benchmark reform
The Group is exposed to the following interest rate benchmarks
within its hedge accounting relationships, which are subject to
interest rate benchmark reform: GBP LIBOR and USD LIBOR ("IBORs").
The hedged items are Sterling and US Dollar floating rate debt. The
Group has closely monitored the market and the output from various
industry working groups managing the transition to new benchmark
interest rates. The FCA has made it clear that, at the end of 2021,
it will no longer seek to persuade, or compel banks to submit to
LIBOR.
In response to the announcements, the Group has begun dialogue
with its banking group in respect of IBOR reform, with the
expectation that the banking facility will transition to updated
referenced benchmarked rates towards the end of 2021. The Group
will adopt the Phase 2 amendments of 'Interest Rate Benchmark
Reform: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16'
which were issued by the IASB in August 2020 at the end of 2021and
the impact is expected to be minimal.
c) Alternative performance measures
The Group presents Alternative Performance Measures ("APMs") in
addition to the statutory results of the Group.
Adjusted operating profit has been defined as operating profit
from continuing operations excluding the impacts of significant
restructuring programmes, significant one-off items including
property disposals, certain one off pension costs, business
acquisition, integration and divestment related activity; and the
amortisation of intangible assets recognised on acquisition.
Acquisition and disposal related items include the writing off of
the pre-acquisition profit element of inventory written up on
acquisition, other direct costs associated with business
combinations and adjustments to contingent consideration related to
acquired businesses. Restructuring includes significant changes in
footprint (including movement of production facilities) and
significant costs of management changes.
In addition to the items above, adjusting items impacting profit
after tax include:
-- The net effect on tax of significant restructuring from
strategy changes that are not considered by the Group to be part of
the normal operating costs of the business; and
-- The tax effects of adjustments to profit before tax.
Costs associated with restructuring, acquisitions and disposals
are uncertain with regard to their timing and size and therefore
their inclusion within adjusted operating profit could mislead the
reader of the accounts.
These interim results include alternative performance measures
that are not prepared in accordance with IFRS. These alternative
performance measures have been selected by the Directors to assist
them in making operating decisions because they represent the
underlying operating performance of the Group and facilitate
internal comparisons of performance over time.
The Directors consider the adjusted results to be an important
measure used to monitor how the businesses are performing as this
provides a meaningful reflection of how the businesses are managed
and measured on a day-to-day basis and achieves consistency and
comparability between reporting periods, when all businesses are
held for a complete reporting period.
These alternative performance measures exclude certain
significant non-recurring, infrequent or non-cash items that the
Directors do not believe are indicative of the underlying operating
performance of the Group (that are otherwise included when
preparing financial measures under IFRS).
Adjusted profit is not a defined term under IFRS and may not be
comparable with similarly titled profit measures reported by other
companies. It is not intended to be a substitute for, or superior
to, GAAP measures. All APMs relate to the current year results and
comparable periods where provided.
The Directors consider there to be four main alternative
performance measures: adjusted operating profit, free cash flow,
adjusted EPS and adjusted effective tax rate.
All alternative performance measures are presented within the
section titled 'Reconciliation of KPIs and non IFRS Measures' and
are reconciled to their equivalent statutory measures where this is
appropriate.
d) Estimates and judgements
The preparation of condensed consolidated financial statements
requires management to make judgements, estimates and assumptions
which affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expense. Actual
results may differ from these estimates.
In preparing the condensed consolidated financial statements,
the significant judgements and estimates made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were consistent with those applied to the
consolidated financial statements as at and for the year ended 31
December 2020. Significant judgements relate to the determination
of items of income and expense excluded from operating profit to
arrive at adjusted operating profit. Significant estimates relate
to taxation, impairment of goodwill, acquisitions and defined
benefit pension obligations. The Group is, from time to time, party
to various legal proceedings and claims and management do not
anticipate that the outcome of these, either individually or in
aggregate, will have a material adverse effect upon the Group's
financial position.
The Group tests whether goodwill has suffered any impairment on
an annual basis or when there are triggers based on the value of
the discounted future cash flows allocated to the group of CGUs to
which it is allocated. The methodology and key assumptions used in
assessing the carrying value of goodwill are set out in note 15 of
the 2020 Annual Report. The key assumptions made for long term
projections, sales and costs growth rates and discount rate all
include an element of estimation that may give rise to a difference
between the value ascribed and the actual outcomes. It is
reasonably possible that a change in these assumptions could lead
to a material change in the carrying value of goodwill specifically
within the IoT Solutions CGU, where GBP27.6 million of goodwill is
allocated, within the next financial year. At 31 December 2020 and
30 June 2021, the Group recognised no impairment loss in respect of
these assets.
Further details of the key assumptions used and the sensitivity
analysis in respect of the recoverable amount of goodwill is
disclosed in note 4.
e) Going concern
After making appropriate enquiries, the Directors have a
reasonable expectation that the Company has adequate resources and
financial headroom to continue in operational existence for at
least twelve months from the date of signing these interim results.
Therefore , they continue to adopt the going concern basis of
accounting in preparing the condensed consolidated half-year
financial statements. Page 19 outlines the going concern
assessment.
Given the financial resources available, together with long term
partnerships with multiple key customers and suppliers across
different geographic areas and industries, the Directors believe
that the Group is well placed to manage its business risks
successfully.
The Group continues to manage foreign currency risk at a
transactional level through the use of hedges which are monitored
by the Group Treasury Committee.
The Treasury Committee regularly reviews counterparty credit
risk and ensures cash balances are held with carefully assessed
counterparties with strong credit ratings.
Pages 52 to 53 of the 2020 Annual Report provide details of the
Group's policy on managing its operational and financial risks.
f) Restatements, representations and acquisition accounting
In June 2021 the Group received new information about conditions
which were present at the time of the acquisition of Torotel, Inc,
namely that the PPP loan from the US government Covid-19 support
scheme, was waived. As prescribed in the Group's accounts for the
year ended 31 December 2020 the Group has updated the acquisition
balance sheet to reflect this new information. The effect on the
acquired balance sheet and the Group's consolidated statement of
financial position as at 31 December 2020 was to decrease Goodwill
by GBP1.4m and recognise a receivable of GBP1.4m.
Within the comparative period of the six months to 30 June 2020,
it was determined certain overheads had been included in raw
materials in a manner inconsistent with IAS 2: 'Inventories' at one
site within the Global Manufacturing Solutions segment. For the
period ending 30 June 2020 the cumulative effect was to decrease
'Inventories' by GBP0.9 million, increase 'Deferred tax assets' by
GBP0.2 million, increase 'Operating profit' by GBP1.8 million and
increase 'Taxation' by GBP0.4 million.
Within the comparative period of the six months to 30 June 2020
the consolidated statement of financial position has been
represented to report certain balances held within accruals within
current 'Trade and other payables' relating to warranty and
property items into current 'Provisions' and non-current
'Provisions and other non-current liabilities'. The impact as at 30
June 2020 was to reduce 'Trade and other payables' by GBP2.0
million, increase 'Provisions' by GBP1.2 million and increase
'Provisions and other non-current liabilities' by GBP0.8
million.
The reconciliations below describe the impact of the
restatements and representations on the consolidated income
statement for the period ending 30 June 2020 and the consolidated
statement of financial position as at 30 June 2020 and 31 December
2020.
30 June 2020
Restatement
of accruals Restatement
GBPmillion As published and provisions of inventory As Restated
------------------------------------- ------------- ---------------- -------------- ------------
Consolidated statement of financial
position
Cash and cash equivalents 69.7 - - 69.7
Inventories 107.6 - (0.9) 106.7
Borrowing (current) 15.5 - - 15.5
Trade and other payables 88.0 (2.0) - 86.0
Provisions - current 8.0 1.2 - 9.2
Deferred tax asset 8.4 - 0.2 8.6
Provisions and other non-current
liabilities 0.1 0.8 - 0.9
Retained earnings 197.6 (0.7) 196.9
Total equity 284.7 (0.7) 284.0
------------------------------------- ------------- ---------------- -------------- ------------
30 June 2020
Restatement
GBPmillion As published of inventory As Restated
------------------------------- ------------- -------------- ------------
Consolidated income statement
Cost of sales (163.8) 1.8 (162.0)
Operating loss (2.9) 1.8 (1.1)
Adjusted operating profit 11.4 1.8 13.2
Loss before taxation (4.8) 1.8 (3.0)
Taxation 0.4 (0.4) -
Loss for the period (4.4) 1.4 (3.0)
------------------------------- ------------- -------------- ------------
30 June 2020
Restatement
GBPmillion As published of inventory As Restated
-------------------- ------------- -------------- ------------
Loss per share (p)
Basic (2.7) 0.9 (1.8)
Diluted (2.7) 0.9 (1.8)
-------------------- ------------- -------------- ------------
31 December 2020
Adjustment
to assets
acquired
through
GBPmillion As published acquisitions As Restated
------------------------------------- ------------- -------------- ------------
Consolidated statement of financial
position
Goodwill 156.9 (1.4) 155.5
Trade and other receivables 69.9 1.4 71.3
------------------------------------- ------------- -------------- ------------
3. Segmental reporting
The Group is organised into three divisions, as shown below,
according to the nature of the products and services provided. Each
of these divisions represents an operating segment in accordance
with IFRS 8 'Operating segments' and there is no aggregation of
segments. The chief operating decision maker is the Board of
Directors. The operating segments are:
-- Power and Connectivity - The Power and Connectivity division
develops and manufactures power application products and
connectivity devices which enable the capture and wireless transfer
of data. We collaborate with our customers to develop innovative
solutions to optimise their electronic systems;
-- Global Manufacturing Solutions - The Global Manufacturing
Solutions division provides manufacturing services and engineering
solutions for our product divisions and to customers that often
require a lower volume and higher mix of different products. We
manufacture complex integrated product assemblies for our customers
and provide engineering services including designing testing
solutions and value-engineering; and
-- Sensors and Specialist Components - The Sensors and
Specialist Components division works with customers to develop
standard and customised solutions, including sensors and power
management devices. Our solutions improve the precision, speed and
reliability of critical aspects of our customers' applications.
The key performance measure of the operating segments is
adjusted operating profit. Refer to the section titled
'Reconciliation of KPIs and non IFRS Measures' for a definition of
adjusted operating profit.
Corporate costs - Resources and costs of the head office managed
centrally but deployed in support of the operating units are
allocated to segments based on a combination of revenue and
adjusted operating profit.
Resources and costs of the head office which are not related to
the operating activities of the trading units are not allocated to
divisions and are separately disclosed, equivalent to the segment
disclosure information, so that reporting is consistent with the
format that is used for review by the chief operating decision
maker. This gives greater transparency of the adjusted operating
profits for each segment. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items see note 5.
The accounting policies of the reportable segments are the same
as the Group's accounting policies.
Group financing (including finance costs and finance income) and
income taxes are managed on a Group basis and are not allocated to
operating segments. Goodwill is allocated to the individual cash
generating units within the segment of which it is a part.
Six months ended 30 June 2021
--------------------------------------------------------------------------------------
GBPmillion Power Global Sensors Total Corporate Total
and Connectivity Manufacturing and Specialist Operating
Solutions Components Segments
----------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Sales to external customers 68.2 109.6 57.8 235.6 - 235.6
----------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Adjusted operating
profit 3.6 8.5 7.4 19.5 (3.6) 15.9
Add back: adjustments
made to operating profit
(note 5) (6.6)
----------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Operating profit 9.3
Net finance costs (1.8)
----------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Profit before taxation 7.5
----------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Six months ended 30 June 2020
---------------------------------------------------------------------------------------
GBPmillion Power Global Sensors Total Corporate Total
and Connectivity Manufacturing and Specialist Operating
Solutions Components Segments
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Sales to external customers 60.0 95.5 54.5 210.0 210.0
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Adjusted operating
profit (1) 4.4 8.3 3.8 16.5 (3.3) 13.2
Add back: adjustments
made to operating profit
(note 5) (14.3)
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Operating loss (1.1)
Net finance costs (1.9)
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Loss before taxation (3.0)
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
1. 'Adjusted operating profit' has been restated for the period
ended 30 June 2020 as described in note 2e.
Year ended 31 December 2020
---------------------------------------------------------------------------------------
GBPmillion Power Global Sensors Total Corporate Total
and Connectivity Manufacturing and Specialist Operating
Solutions Components Segments
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Sales to external customers 125.1 197.5 109.2 431.8 - 431.8
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Adjusted operating
profit 10.3 15.0 9.4 34.7 (7.2) 27.5
Add back: adjustments
made to operating profit
(note 5) (20.9)
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Operating profit 6.6
Net finance costs (3.7)
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Profit before taxation 2.9
----------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
There is no significant intergroup trading between segments.
The tables below show the geographies and markets in which the
Group's revenues arose during the period.
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020
2021 2020
--------------------------- ----------- ----------- -------------
United Kingdom 48.0 50.1 100.2
Rest of Europe 40.3 37.2 74.8
North America 90.2 76.1 164.2
Central and South America 0.6 0.3 0.7
Asia 55.6 44.6 88.8
Rest of the World 0.9 1.7 3.1
--------------------------- ----------- ----------- -------------
235.6 210.0 431.8
--------------------------- ----------- ----------- -------------
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020
2021 2020
-------------------------------- ----------- ----------- -------------
Healthcare 62.2 48.8 106.1
Aerospace and defence 43.4 41.4 93.4
Automation and electrification 89.1 75.8 163.6
Distribution 40.9 44.0 68.7
-------------------------------- ----------- ----------- -------------
235.6 210.0 431.8
-------------------------------- ----------- ----------- -------------
4. Goodwill
At 30 June 2021, due to lower than budgeted performance at the
half year resulting from the effects of the ongoing Covid-19
pandemic, an indicator of impairment was identified in respect of
goodwill allocated to IoT Solutions CGU. As a result, a review for
impairment was performed using cash flow forecasts derived from the
5-year strategic growth plan forecasts which are then projected
into perpetuity using a long term growth rate applicable to the
market in which the CGU operates. No impairment losses have been
recognised in the current or prior year as recoverable amounts
exceed the total carrying value of assets for the IoT Solutions
CGU.
Key assumptions used in the value in use test is the projected
performance of the IoT Solutions CGU based on sales growth rates,
operating margins likely to be achieved, expected cash conversion
and long-term growth rates used. Forecast sales growth rates are
based on past experience adjusted for the strategic direction and
near-term investment priorities. Cash flow forecasts are determined
based on historic experience of operating margins, adjusted for the
impact of changes in product mix and cost-saving initiatives,
including the impact of our committed restructuring projects and
cash conversion based on historical experience.
IoT Solutions CGU operates in markets with strong growth
fundamentals and the short-term forecasts for the IoT Solutions CGU
include revenue and margin growth from successful product launches
in the short and medium term. However, these forecasts exclude any
potential benefits from the Virolens(R) rapid COVID-19 screening
device given operational trials and validation testing are ongoing
and the wide range of possible outcomes.
IoT Solutions CGU shows headroom of GBP8.2 million above the
GBP58.4 million carrying amount, including GBP27.6m of goodwill.
The growth rates assume that demand for our product remains broadly
in line with the underlying economic environment in the long-term
future. Taking into account our expectation of future market
conditions, we believe that the evolution of selling prices and
cost measures put into place will lead to a sustained improvement
in profitability. In accordance with IAS 36 'Impairment of Assets'
the Group performed sensitivity analysis on the estimates of
recoverable amounts and found that the excess of recoverable amount
over the carrying amount of the IoT Solutions CGU would be reduced
to GBPnil as a result of a reasonably possible change in
assumptions. Sensitivity analysis has been carried out and a
reasonably possible change in the discount rate and long-term
growth rate from 12.2% to 13.5% or from 1.5% to -0.5% respectively
would reduce headroom to GBPnil.
A reduction in operating cash flow of 12.0% in all forecast
periods would also reduce headroom to GBPnil. Management does not
consider that the relevant change in these assumptions would have a
consequential effect on other key assumptions.
During the year new information was received which meant that an
adjustment to the value of Goodwill recognised upon the
acquisitions of Torotel, Inc. was required. See note 1f for more
information. The table below show the impact of this
adjustment.
GBPmillion 2021
----------------------------------------- ------
Cost
As at 31 December 2020 156.9
Remeasurement of acquired fair values (1.4)
Adjusted balance as at 31 December 2020 155.5
------------------------------------------ ------
Net exchange adjustment (0.9)
------------------------------------------ ------
At 30 June 2021 154.6
------------------------------------------ ------
5. Adjusting items
Restructuring costs charged in the period primarily relate to
costs arising on the restructuring of the Group's footprint,
product rationalisation and headcount reduction programme to reduce
the Group's fixed costs which was initiated in 2020. Total costs of
GBP3.3 million comprise GBP2.0 million relating to the restructure
of the North America Resistors business; GBP0.8 million relating to
closure of our site in Lutterworth, UK and GBP0.5 million relating
to the closure of our site in Tunis, Tunisia. Prior period
restructuring costs of GBP11.4 million related to the initiation of
the Group's restructuring programme, primarily relating to
severance costs, asset write downs, inventory write downs and other
project team costs. Property disposal income of GBP1.3 million
relates to the gain on the sale of property which was acquired
through the acquisition of the aerospace and defence power supply
business of Excelitas Technologies Corp based in Covina,
California. Pension costs of GBP0.6 million as a result of UK
pensions schemes having to equalise male and female members'
benefits in respect of guaranteed minimum pensions.
Acquisition and disposal related costs charged in the period
comprise GBP2.5 million (2020: GBP2.0 million) of amortisation of
acquired intangible assets; GBP0.9 million of integration costs of
Torotel (2020: GBP0.4 million of acquisition costs); GBP0.2 million
of integration costs of the aerospace and defence power supply
business of Excelitas Technologies Corp based in Covina, California
(2020: GBP1.1 million of acquisition costs) and GBP0.4 million of
costs of unannounced and terminated acquisitions (2020: GBP0.4
million).
Period Period Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
---------- ------ ---------- -------- ------------- ------
GBPmillion Operating Tax Operating Tax (1) Operating Tax
profit profit profit
(1)
------------------------------------- ---------- ------ ---------- -------- ------------- ------
As reported 9.3 (1.7) (1.1) - 6.6 (1.6)
------------------------------------- ---------- ------ ---------- -------- ------------- ------
Restructuring and other
Restructuring (3.3) 0.7 (11.4) 1.5 (14.8) 1.8
Property disposals 1.3 (0.3) - - 1.2 -
Pension Costs (0.6) 0.1 - - (0.9) 0.1
(2.6) 0.5 (11.4) 1.5 (14.5) 1.9
------------------------------------- ---------- ------ ---------- -------- ------------- ------
Acquisition and disposal related
costs
Amortisation of intangible assets
arising on business combinations (2.5) 0.4 (2.0) 0.4 (4.2) 0.4
Release of warranty and claims
provision - - 1.0 - 1.0 (0.1)
Torotel integration and acquisition
costs (0.9) 0.1 (0.4) 0.1 (1.3) 0.2
Covina integration and acquisition
costs (0.2) 0.0 (1.1) 0.1 (1.3) 0.2
Other acquisition related costs (0.4) 0.1 (0.4) - (0.6) 0.1
------------------------------------- ---------- ------ ---------- -------- ------------- ------
(4.0) 0.6 (2.9) 0.6 (6.4) 0.8
------------------------------------- ---------- ------ ---------- -------- ------------- ------
Total items excluded from adjusted
measure (6.6) 1.1 (14.3) 2.1 (20.9) 2.7
------------------------------------- ---------- ------ ---------- -------- ------------- ------
Adjusted measure 15.9 (2.8) 13.2 (2.1) 27.5 (4.3)
------------------------------------- ---------- ------ ---------- -------- ------------- ------
1. 'Operating profit' and 'Tax' have been restated in the
comparative period as described in note 2f.
6. Taxation
The half-year tax charge of GBP1.7 million is based on a
forecast effective tax rate of 19.6% on adjusted profit and a
GBP1.1 million credit on restructuring, asset impairments and
acquisition and disposal related costs. The tax charge arising on
the profit in the period is offset by tax credits arising on prior
periods.
The enacted UK tax rate applicable from 1 April 2017 is 19% and
due to changes in legislation enacted in the period this remains
the UK rate as the rate drop, originally legislated to occur from 1
April 2020 to 17%, has been reversed. The applicable tax rate for
the period is based on the UK standard rate of corporation tax of
19% (2020: 19%).
On 3 March 2021 the UK Government announced changes to the UK
corporate tax system and an increase in tax rate from the fiscal
year 2023 to 25% from the currently enacted rate of 19%. The change
in tax rate has resulted in a change to the level of deferred tax
held within the Consolidated Statement of Financial Position in
respect of the Group's UK operations.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Company by the weighted average
number of shares in issue during the period. The weighted average
number of shares in issue is 174.7 million (30 June 2020: 163.5
million, 31 December 2020: 166.5 million). The calculation of the
diluted earnings per share excludes 4,516,660 (2020: 2,801,278)
share options whose effect would have been anti-dilutive.
Underlying earnings per share is based on the adjusted profit or
loss after interest and tax.
Pence Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 (1)
-------------------- ----------- ----------- -------------
Earnings per share
Basic 3.3 (1.8) 0.8
Diluted 3.3 (1.8) 0.8
-------------------- ----------- ----------- -------------
1. 'Earnings per share' has been restated in the comparative
period as described in note 2f.
The numbers used in calculating adjusted earnings per share are
shown below:
GBPmillion Six months Six months Year ended
ended ended 30 31 December
30 June June 2020 2020
2021 (1)
--------------------------------------------- ----------- ----------- -------------
Group
Profit/(loss) for the year attributable to
owners of the Company 5.8 (3.0) 1.3
Restructuring and other 2.6 11.4 14.5
Acquisition and disposal related costs 4.0 2.9 6.4
Tax effect of above items (see note 5) (1.1) (2.1) (2.7)
--------------------------------------------- ----------- ----------- -------------
Adjusted earnings 11.3 9.2 19.5
--------------------------------------------- ----------- ----------- -------------
Adjusted earnings per share (pence) 6.5 5.6 11.7
Adjusted diluted earnings per share (pence) 6.4 5.6 11.6
--------------------------------------------- ----------- ----------- -------------
1. 'Profit/loss for the year' and 'adjusted earnings per share'
has been restated in the comparative period as described in note
2f.
8. Dividends
2021 2021 2020 2020
pence GBPmillion pence GBPmillion
per share per share
--------------------------------------- ----------- ------------ ----------- ------------
Final dividend paid for prior year 4.70 8.2 - -
Interim dividend declared for current
year 1.80 3.1 - -
--------------------------------------- ----------- ------------ ----------- ------------
The Directors have declared an interim dividend of 1.8 pence per
share which will be paid on 14 October 2021 to shareholders on the
register on 24 September 2021. Shares will become ex-dividend on 23
September 2021.
9. Fair value of financial instruments
IFRS 13 "Fair Value Measurement" requires an analysis of those
financial instruments that are measured at fair value at the end of
the period in a fair value hierarchy. In addition, IFRS 13 requires
financial instruments not measured at fair value but for which fair
value is disclosed to be analysed in the same fair value
hierarchy:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (i.e. unobservable inputs).
30 June 30 June 31 December
2021 2020 2020
--------- -------- --------- -------- --------- ------------
GBPmillion Fair Carrying Carrying Carrying
value value Fair value Fair value Fair
hierarchy value value value
---------------------------------- ----------- --------- -------- --------- -------- --------- ------------
Held at amortised cost
Cash and cash equivalents n/a 100.6 100.6 69.7 69.7 70.2 70.2
Trade and other receivables n/a 74.3 74.3 62.0 62.0 60.2 60.2
Trade and other payables n/a (88.8) (88.8) (67.7) (67.7) (77.1) (77.1)
Borrowings 2 (187.0) (187.0) (143.0) (143.0) (138.2) (138.2)
Lease liabilities n/a (20.9) (20.9) (15.7) (15.7) (15.9) (15.9)
Held at fair value -
Derivative financial instruments
(assets) 2 6.6 6.6 1.6 1.6 7.6 7.6
Derivative financial instruments
(liabilities) 2 (2.3) (2.3) (6.9) (6.9) (1.9) (1.9)
Deferred consideration for
acquisition of Power Partners
Inc. 3 - - (0.5) (0.5) (0.4) (0.4)
Held at depreciated cost -
Investment properties 3 1.1 1.8 - 0.7 1.1 1.8
---------------------------------- ----------- --------- -------- --------- -------- --------- ------------
The fair value of the financial assets and liabilities are
included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a
forced or liquidation sale. The following methods and assumptions
were used to estimate the fair values:
-- cash and cash equivalents, trade and other receivables and
trade and other payables approximate to their carrying amounts
largely due to the short-term maturities of these instruments;
-- during the year an impairment charge against trade and other
receivables of GBP2.0 million (2020: GBP0.2 million) was
recognised;
-- the fair value of borrowings is estimated by discounting
future cash flows using rates currently available for debt and
remaining maturities.
-- the fair value of derivative financial instrument assets
(GBP6.6 million) and liabilities (GBP2.3 million) are estimated by
discounting expected future cash flows using current market indices
such as yield curves and forward exchange rates over the remaining
term of the instrument (level 2); and
-- the fair value of investment properties are based on market
valuations obtained through third party valuations (level 3).
-- The fair value of deferred consideration for the acquisition
of Power Partners Inc is based upon the estimated amount payable to
the seller as a result of the expected performance of Power
Partners Inc as forecast by the Group. Due to materiality, the
disclosures required by IFRS 13 for the level 3 items were not
provided.
10. Retirement benefit schemes
At 30 June 2021 the Group operated two defined benefit schemes
in the UK (the TT Group (1993) scheme and Southern & Redfern
Ltd Retirement Benefits Scheme) and overseas defined benefit
schemes in the USA. These schemes are closed to new members and the
UK scheme is closed to future accrual.
Given the nature of the Company's control of the plan under the
Scheme's rules, a pension surplus has been recognised under IFRIC
14.
The amounts recognised in the condensed consolidated statement
of financial position are:
GBPmillion 30 June 30 June 31 December
2021 2020 2020
-------------------- -------- -------- ------------
TT Group (1993) 65.4 41.1 35.4
Southern & Redfern - - -
USA schemes (4.2) (5.9) (4.9)
-------------------- -------- -------- ------------
Net surplus 61.2 35.2 30.5
30 June 30 June 31 December
GBPmillion 2021 2020 2020
----------------------------------------- -------- -------- ------------
Fair value of assets 630.8 628.2 648.7
Defined benefit obligation (569.6) (593.0) (618.2)
----------------------------------------- -------- -------- ------------
Net surplus recognised in the statement
of financial position 61.2 35.2 30.5
Represented by
Schemes in net surplus 65.4 41.1 35.4
Schemes in net deficit (4.2) (5.9) (4.9)
----------------------------------------- -------- -------- ------------
61.2 35.2 30.5
----------------------------------------- -------- -------- ------------
The costs recognised in the condensed consolidated income
statement are:
Six months Six months Year ended
ended 30 ended 30 31 December
GBPmillion June 2021 June 2020 2020
-------------------------------------------- ----------- ----------- -------------
Scheme administration costs 0.8 0.6 1.7
Past service cost, settlements and other
restructuring
(excluded from adjusted operating profit) 0.6 - 0.8
Net interest credit 0.2 0.2 0.4
-------------------------------------------- ----------- ----------- -------------
Amounts recognised in the consolidated statement of
comprehensive income are a gain of GBP27.9 million (2020: gain of
GBP15.9 million)
which comprises of; the actual return on schemes' assets, a loss
of GBP14.7 million (2020: gain of GBP33.2 million) and the
remeasurement of the schemes' obligations, a gain of GBP42.6
million (2020: loss of GBP17.3 million).
The fair value of assets within the TT Group scheme decreased
during the period despite increases in the value of growth assets,
due to a decrease in the value of the liability hedging assets,
predominantly due to the increases in gilt yields during the
period. The decrease in the funded obligation is due to increases
in yields on corporate bonds.
The triennial valuation of the TT Group scheme as at April 2019
showed a net surplus of GBP0.3 million against the Trustee's
funding objective compared with a deficit of GBP46.0 million at
April 2016.
As the scheme was fully funded at the 2019 triennial valuation
date, there is no requirement for the Company to pay deficit repair
contributions. In addition to the statutory funding objective, the
Trustee and Company have agreed to move towards a
'self-sufficiency' funding target with the ultimate goal of moving
the scheme to buyout. To support the scheme's long-term goal the
Company has agreed to pay additional fixed contributions of GBP5.5
million, GBP5.7 million and GBP4.4 million to be paid in the years
2021 to 2023.
The Group has set aside GBP1.5 million (31 December 2020: GBP2.5
million) to be utilised in agreement with the Trustee for reducing
the long-term liabilities of the scheme. The total payments made in
period ended 30 June 2021 in respect of UK schemes was GBP2.7
million.
11. Reconciliation of net cash flow to movement in net debt
GBPmillion Net cash Lease liabilities Borrowings Net debt
--------------------------------------- --------- ------------------ ----------- ---------
As at 1 January 2020 60.2 (17.6) (111.7) (69.1)
Cash flow (7.3) - - (7.3)
Repayment of borrowings - - 5.3 5.3
Proceeds from borrowings - - (19.5) (19.5)
Payment of lease liabilities - 1.8 - 1.8
Reassessment of lease liabilities 1.4 - 1.4
New leases - (0.3) - (0.3)
Amortisation of loan arrangement fees - - (0.2) (0.2)
Exchange differences 1.3 (0.9) (1.5) (1.1)
--------------------------------------- --------- ------------------ ----------- ---------
As at 31 June 2020 54.2 (15.6) (127.6) (89.0)
Cash flow 17.0 - - 17.0
Businesses acquired - (2.0) (3.0) (5.0)
Repayment of borrowings - - 21.9 21.9
Proceeds from borrowings - - (30.3) (30.3)
Payment of lease liabilities - 2.3 - 2.3
Reassessment of lease liabilities - (1.5) - (1.5)
New leases - (0.2) - (0.2)
Amortisation of loan arrangement fees - - (0.2) (0.2)
Exchange differences (2.2) 1.1 2.2 1.1
--------------------------------------- --------- ------------------ ----------- ---------
At 1 January 2021 69.0 (15.9) (137.0) (83.9)
Cash flow (4.6) - - (4.6)
Repayment of borrowings - - 4.6 4.6
Proceeds from borrowings - - (18.8) (18.8)
Payment of lease liabilities - 1.9 - 1.9
New leases and reassessment of lease
liabilities - (6.9) - (6.9)
Amortisation of loan arrangement fees - - (0.2) (0.2)
Exchange differences 0.5 - 0.1 0.6
--------------------------------------- --------- ------------------ ----------- ---------
At 30 June 2021 64.9 (20.9) (151.3) (107.3)
Net cash comprises:
--------------------------------------- --------- ------------------ ----------- ---------
Cash at bank and in hand 100.6 - - 100.6
Bank overdrafts (35.7) - - (35.7)
--------------------------------------- --------- ------------------ ----------- ---------
Net cash at end of period 64.9 - - 64.9
--------------------------------------- --------- ------------------ ----------- ---------
The Group signed new leases with a corresponding initial lease
liability value of GBP6.9 million during the period, GBP6.3 million
of which was related to a new lease in Plano, Texas.
12. Share capital
The performance conditions of the Long Term Incentive Plan
(LTIP) awards issued in 2018 were partially met and 228,605 new
issue shares were allocated to award holders. During the period the
Company issued 116,080 ordinary shares as a result of share options
being exercised under the Sharesave scheme and Share Purchase
plans. The aggregate consideration received in respect of all new
issues of shares was GBP0.3 million, which was represented by
GBP0.1 million increase in share capital and a GBP0.2 million
increase in share premium.
During the period grants of awards were made under the LTIP for
the issue of shares in 2024. An award is a contingent right to
receive shares in the future, subject to continued employment and
the achievement of predetermined performance criteria. During the
period grants of awards were made under the 2021 LTIP scheme for
the issue of up to 2,166,219 shares in 2024.
13. Related party transactions
Transactions between the company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note. No
related party transactions have taken place during the six months
ended 30 June 2021 that have affected the financial position or
performance of the Group
14. Subsequent events
In August 2021, TT agreed a debut issue of GBP75 million of
private placement fixed rate loan notes with three institutional
investors. The funds will be received in December 2021 and the
issue is evenly split between 7 and 10 year maturities with an
average interest rate of 2.9% and covenants in line with our bank
facility. The private placement complements, at an attractive rate,
the Group's existing bank revolving credit facility, diversifying
our sources of debt funding and providing us with a stable,
long-term financing structure.
Reconciliation of KPIs and non IFRS Measures
Additional information is provided on the alternative
performance measures (APMs) used by the Group below.
To assist with the understanding of earnings trends, the Group
has included within its financial statements APMs including
adjusted operating profit and adjusted profit. The APMs used are
not defined terms under IFRS and therefore may not be comparable to
similar measures used by other companies. They are not intended to
be a substitute for, or superior to, GAAP measures.
Management uses adjusted measures to assess the operating
performance of the Group, having adjusted for specific items as
detailed in note 5. They form the basis of internal management
accounts and are used for decision making, including capital
allocation, with a subset also forming the basis of internal
incentive arrangements. By using adjusted measures in segmental
reporting, this enables readers of the financial statements to
recognise how incentive performance is targeted. Adjusted measures
are also presented in this announcement because the Directors
believe they provide additional useful information to shareholders
on comparable trends over time. Finally, this presentation allows
for separate disclosure and specific narrative to be included
concerning the adjusting items; this helps to ensure performance in
any one year can be more clearly understood by the user of the
financial statements.
Income statement measures:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
============ ================== ======================= =====================================================
Adjusted Operating profit Adjusting Operating profit from continuing operations
operating items as disclosed excluding the impacts of significant restructuring
profit in note 5 programmes; significant one-off items including
property disposals, certain one off pension
costs, business acquisition and divestment
related activity; and the amortisation
of intangible assets recognised on acquisition.
Business acquisition and divestment related
items include the writing off of the pre-acquisition
profit element of inventory written up
on acquisition, other direct costs associated
with business combinations and adjustments
to contingent consideration related to
acquired businesses. Costs arising from
significant changes in footprint (including
movement of production facilities) and
significant costs of management changes
are also excluded.
To provide a measure of the operating profits
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============ ================== ======================= =====================================================
Adjusted Operating profit Adjusting Adjusted operating profit as a percentage
operating margin items as disclosed of revenue.
margin in note 5 To provide a measure of the operating profits
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============ ================== ======================= =====================================================
Adjusted Earnings per See note 7 The profit for the year attributable to
earnings share for the reconciliation the owners of the Group adjusted to exclude
per share and calculation the items not included within adjusted
of adjusted operating profit divided by the weighted
earnings per average number of shares in issue during
share the year.
To provide a measure of earnings per share
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============ ================== ======================= =====================================================
Income statement measures continued:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
============= ================== ======================= ================================================
Adjusted Diluted earnings See note 7 The profit for the year attributable to
diluted per share for the reconciliation the owners of the Group adjusted to exclude
earnings and calculation the items not included within adjusted
per share of adjusted operating profit divided by the weighted
diluted earnings average number of shares in issue during
per share the year, adjusted for the effects of any
potentially dilutive options.
To provide a measure of earnings per share
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============= ================== ======================= ================================================
Prior year Revenue and See note APM Revenue and adjusted operating profit (see
revenue operating profit 1 note 5) for the prior year retranslated
and adjusted at the current year's foreign exchange
operating rates.
profit at
constant
currency
============= ================== ======================= ================================================
Organic Revenue See note APM This is the percentage change in revenue
revenue 2 from continuing operations in the current
year compared to the prior year, excluding
the effects of currency movements, acquisitions
and disposals. This measures the underlying
growth or decline of the business.
To provide a comparable view of the revenue
growth of the business from period to period
excluding acquisition impacts.
============= ================== ======================= ================================================
Adjusted Effective tax See note APM Tax charge adjusted to exclude tax on items
effective charge 3 not included within adjusted operating
tax charge profit divided by adjusted profit before
tax, which is also adjusted to exclude
the items not included within adjusted
operating profit.
To provide a tax rate which excludes the
impact of adjusting items such as restructuring
or acquisition related activity and other
items such as amortisation of intangibles
which may not be present in peer companies
which have grown organically.
============= ================== ======================= ================================================
Return on None See note APM Adjusted operating profit for the year
invested 4 divided by average invested capital for
capital the year. Average invested capital excludes
pensions, provisions, tax balances, derivative
financial assets and liabilities, cash
and borrowings and is calculated at average
rates taking 12 monthly balances.
This measures how efficiently assets are
utilised to generate returns with the target
of exceeding the cost to hold the assets
============= ================== ======================= ================================================
Statement of financial position measures:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
================ ====================== ================== ==================================================
Net debt Cash and cash Reconciliation Net debt comprises cash and cash equivalents
equivalents of net cash and borrowings including lease liabilities.
less borrowings flow to movement This is additional information provided
and lease liabilities in net (debt)/ which may be helpful to the user in understanding
funds (note the liquidity and financial structure
11) of the business.
================ ====================== ================== ==================================================
Leverage Cash and cash N/A Leverage is the net debt defined as per
(bank covenant) equivalents the banking covenants (net debt (excluding
less borrowings lease liabilities) adjusted for certain
terms as per the bank covenants) divided
by EBITDA excluding items removed from
adjusted profit and further adjusted
for certain terms as per the bank covenants.
Provides additional information over
the Group's financial covenants to assist
with assessing solvency and liquidity.
================ ====================== ================== ==================================================
Net capital None See note APM Purchase of property, plant and equipment
and development 5 net of government grants (excluding property
expenditure disposals), purchase of intangibles (excluding
(net capex) acquisition intangibles) and capitalised
development.
A measure of the Group's investments
in capex and development to support longer
term growth.
================ ====================== ================== ==================================================
Dividend Dividend per Not applicable Amounts payable by dividend in terms
per share share of pence per share.
Provides the dividend return per share
to shareholders.
================ ====================== ================== ==================================================
Statement of cash flows measures:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
============= ===================== ================== ====================================================
Adjusted Operating cash See note APM Adjusted operating profit, excluding depreciation
operating flow 6 of property, plant and equipment and amortisation
cash flow of intangible assets less working capital
and other non-cash movements.
An additional measure to help understand
the Group's operating cash generation.
============= ===================== ================== ====================================================
Adjusted Operating cash See note APM Adjusted operating cash flow less net capital
operating flow 7 and development expenditure.
cash flow An additional measure to help understand
post capex the Group's operating cash generation after
the deduction of capex.
============= ===================== ================== ====================================================
Working Cashflow - See note APM Working capital comprises of three statutory
capital inventories 8 cashflow figures: (increase)/decrease in
cashflow payables, provisions inventories, increase/(decrease) in payables
and receivables and provisions, and (increase)/decrease
in receivables. This definition includes
the movement of any provisions over trade
receivables.
To provide users a measure of how effectively
the group is managing its working capital
and the resultant impact on liquidity.
============= ===================== ================== ====================================================
Free cash Net increase/ See note APM Free cash flow represents cash generated
flow decrease in 9 from trading after all costs including
cash and cash restructuring, pension contributions, tax
equivalents and interest payments. Cashflows to settle
LTIP schemes are excluded.
Free cash flow provides a measure of how
successful the company is in creating cash
during the period which is then able to
be used by the Group at its discretion.
============= ===================== ================== ====================================================
Cash None See note APM Adjusted operating cash flow post capex
conversion 10 (less any property disposals which were
part of restructuring programmes) divided
by adjusted operating profit
Cash conversion measures how effectively
we convert profit into cash and tracks
the management of our working capital and
capital expenditure.
============= ===================== ================== ====================================================
R&D cash None See note APM R&D cash spend and R&D investment as a
spend as 11 percentage of revenue excludes Global Manufacturing
a percentage Solutions which is a manufacturing services
of revenue business and therefore has no R&D.
To provide a measure of the company's expenditure
on R&D relative to its overall size which
may be helpful in considering the Group's
longer term investment in future product
pipeline.
============= ===================== ================== ====================================================
APM 1 - Prior year revenue and adjusted operating profit at
constant currency:
Six months ended 30 June 2020
-------------------------------------------------------------
Global Sensors
Power Manufacturing and Specialist
GBPmillion and Connectivity Solutions Components Total
------------------------- ------------------ --------------- ---------------- ------
2020 revenue 60.0 95.5 54.5 210.0
Foreign exchange impact (1.9) (2.4) (3.2) (7.5)
2020 revenue at 2021
exchange rates 58.1 93.1 51.3 202.5
--------------------------- ------------------ --------------- ---------------- ------
Six months ended 30 June 2020
--------------------------------------------------------------------------------------
Global Sensors Total Corporate Total
Power Manufacturing and Specialist Operating
GBPmillion and Connectivity Solutions Components Segments
-------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
2020 adjusted operating
profit 4.4 8.3 3.8 16.5 (3.3) 13.2
Foreign exchange impact (0.1) (0.5) (0.1) (0.7) - (0.7)
2020 adjusted operating
profit at 2021 exchange
rates 4.3 7.8 3.7 15.8 (3.3) 12.5
-------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
APM 2 - Organic revenue:
Six months ended 30 June 2021
-----------------------------------------------------------
Sensors and
Power and Global Manufacturing Specialist
GBPmillion Connectivity Solutions Components Total
--------------------------------------- -------------- --------------------- ------------ ------
2021 revenue 68.2 109.6 57.8 235.6
Acquisitions 9.7 - - 9.7
2021 revenue (excluding acquisitions) 58.5 109.6 57.8 225.9
--------------------------------------- -------------- --------------------- ------------ ------
2020 revenue 60.0 95.5 54.5 210.0
Foreign exchange impact (1.9) (2.4) (3.2) (7.5)
2020 revenue at 2021 exchange
rates 58.1 93.1 51.3 202.5
--------------------------------------- -------------- --------------------- ------------ ------
Organic revenue increase
(%) 1% 18% 13% 12%
APM 3 - Effective tax charge:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
(1)
----------------------------- -------------- -------------- -------------
Adjusted operating profit 15.9 13.2 27.5
Net interest (1.8) (1.9) (3.7)
------------------------------ -------------- -------------- -------------
Adjusted profit before tax 14.1 11.3 23.8
Adjusted tax 2.8 (2.1) (4.3)
------------------------------ -------------- -------------- -------------
Adjusted effective tax rate 19.6% 18.6% 18.1%
------------------------------ -------------- -------------- -------------
1. 'Adjusted operating profit' has been restated in the
comparative period as described in note 2f.
APM 4 - Return on invested capital:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
(1)
---------------------------------- -------------- -------------- -------------
Adjusted operating profit 15.9 13.2 27.5
Adjusted operating profit H2
prior year (adjustment required
for half year only) 14.3 19.3 -
Average invested capital 364.4 356.8 356.0
----------------------------------- -------------- -------------- -------------
Return on invested capital 8.3% 9.1% 7.7%
----------------------------------- -------------- -------------- -------------
1. 'Adjusted operating profit' has been restated in the
comparative period as described in note 2f.
APM 5 - Net capital and development expenditure (net capex):
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
------------------------------------- -------------- -------------- -------------
Purchase of property, plant
and equipment (6.0) (2.5) (9.3)
Proceeds from sale of investment
property, plant and equipment
and capital grants received 5.8 - 3.4
Capitalised development expenditure (1.0) (1.5) (3.3)
Purchase of other intangibles (0.2) (0.5) (0.8)
-------------------------------------- -------------- -------------- -------------
Net capital and development
expenditure (1.4) (4.5) (10.0)
-------------------------------------- -------------- -------------- -------------
APM 6 - Adjusted operating cash flow:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
(1)
--------------------------------------------- -------------- -------------- -------------
Adjusted operating profit 15.9 13.2 27.5
Adjustments for:
Depreciation 6.7 7.0 14.0
Amortisation of intangible
assets 1.3 1.7 3.0
Impairment of property, plant and equipment
and intangible assets - - 0.2
Other items 2.7 0.8 0.7
Decrease/(increase) in inventories (9.6) (2.0) 4.2
Decrease/(increase) in receivables (17.5) 9.0 11.2
(Decrease)/increase in payables
and provisions 6.6 (18.2) (11.8)
---------------------------------------------- -------------- -------------- -------------
Adjusted operating cash flow 6.1 11.5 49.0
---------------------------------------------- -------------- -------------- -------------
1. 'Adjusted operating profit' and 'Decrease/(increase) in
inventories' has been restated in the comparative period as
described in note 2f.
APM 7 - Adjusted operating cash flow post capex:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020
2020
------------------------------------- -------------- ----------- -------------
Adjusted operating cash flow 6.1 11.5 49.0
Purchase of property, plant
and equipment (6.0) (2.5) (9.3)
Proceeds from sale of property,
plant and equipment and government
grants received 5.8 - 3.4
Capitalised development expenditure (1.0) (1.5) (3.3)
Purchase of other intangibles (0.2) (0.5) (0.8)
Adjusted operating cash flow
post capex 4.7 7.0 39.0
-------------------------------------- -------------- ----------- -------------
APM 8 - Working capital cashflow:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020
2020 (1)
------------------------------------- -------------- ----------- -------------
Decrease/(increase) in inventories (9.6) (2.0) 4.2
(Increase)/decrease in receivables (17.5) 9.0 11.2
Increase/(decrease) in payables and
provisions 6.6 (18.2) (11.8)
Items reported within other items
in the statutory cashflow:
Increase in provisions over trade 1.6 - -
receivables
-------------- ----------- -------------
Working capital cashflow (18.9) (11.2) 3.6
-------------------------------------- -------------- ----------- -------------
1. 'Decrease/(increase) in inventories' has been restated in the
comparative period as described in note 2f.
APM 9 - Free cash flow:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
------------------------------------- -------------- -------------- -------------
Net cash flow from operating
activities (5.0) 2.8 28.2
Add back: Bonus paid to employees
of Torotel which crystallised
upon acquisition - - 3.8
Net cash flow from investing
activities (1.9) (19.1) (51.9)
Add back: Acquisition of business 0.5 14.6 43.3
Add back: Cash with acquired
businesses - - (1.4)
Payment of lease liabilities (1.9) (1.8) (4.1)
Interest paid (2.0) (1.7) (3.5)
-------------------------------------- -------------- -------------- -------------
Free cash flow (10.3) (5.2) 14.4
-------------------------------------- -------------- -------------- -------------
APM 10 - Cash conversion:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020 2020
2021 (1)
----------------------------------------- ----------- -------------- -------------
Adjusted operating profit 15.9 13.2 27.5
Adjusted operating cash flow
post capex 4.7 7.0 39.0
Exclude: Property disposal proceeds as
part of restructuring programmes (5.8) - (3.2)
Adjusted operating cash flow post capex
and excluding property disposals (1.1) 7.0 35.8
------------------------------------------ ----------- -------------- -------------
Cash conversion -7% 53% 130%
------------------------------------------ ----------- -------------- -------------
1. 'Adjusted operating profit' has been restated in the
comparative period as described in note 2f.
APM 11 - R&D cash spend as a percentage of revenue:
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
-------------------------------- -------------- -------------- -------------
Revenue (excluding GMS) 126.0 114.5 234.3
R&D cash spend 5.8 5.7 11.2
--------------------------------- -------------- -------------- -------------
R&D cash spend as a percentage
of revenue 4.6% 5.0% 4.8%
--------------------------------- -------------- -------------- -------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR VZLFBFVLXBBK
(END) Dow Jones Newswires
August 05, 2021 02:00 ET (06:00 GMT)
Tt Electronics (LSE:TTG)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Tt Electronics (LSE:TTG)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024