TIDMTTG
RNS Number : 8701G
TT Electronics PLC
11 August 2016
2016 Interim Results, 11 August 2016
TT Electronics plc
Results for the half-year ended 30 June 2016
Interim Results for the half-year ended 30 June 2016
GBP million unless
otherwise stated Underlying(1) Statutory
H1 H1 Change Change H1 H1
2016 2015 constant 2016 2015
fx
Continuing operations
Revenue 277.0 263.6 5% 2% 277.0 263.6
Operating profit 13.7 10.4 32% 24% 8.8 7.6
Profit before
taxation 11.4 9.1 25% 16% 6.5 6.3
Earnings per share
(pence) 5.1p 4.2p 21% 12% 2.4p 2.6p
Return on invested
capital (2) 9.5% 9.0%(3)
Cash conversion
(4) 68% 71%
Free cash flow
(5) (4.9) (5.1)
Net debt (2015:
year-end) 70.7 56.1
Dividend per share
(pence) 1.7p 1.7p
1. Excluding the effect of restructuring costs, asset
impairments and acquisition related costs.
2. Rolling 12 month underlying operating profit return on
average invested capital
3. Return on invested capital for full year 2015
4. Underlying operating cash flow (underlying EBITDA less net
capital expenditure, capitalised development expenditure, working
capital and non-cash movements) divided by underlying operating
profit
5. Net cash flow from operating activities less net cash flow
from investing activities less interest paid
The non-IFRS financial measures reported in this announcement
are explained in note 13.
Strategic Progress
-- Returned the business to profitable growth
-- Transportation Sensing and Control in profit
-- Strategic focus enabling robust sales in challenging markets; continuing to win new contracts
-- Aero Stanrew integration complete and performing well
-- OIP completed well ahead of schedule providing benefits as expected; other on-going self-help actions improving
operating efficiency
Financial Headlines
-- Revenue growth of 2% at constant currency
-- Underlying operating profit up 24% at constant currency; 15% from Aero Stanrew, 9% from self-help actions and
underlying business performance
-- Steady cash conversion
-- Return on invested capital improving
Richard Tyson, Chief Executive Officer, said:
"We are pleased with our performance in the first half of 2016.
Our strategy is gaining momentum and we have returned the business
to profitable growth. We have delivered good revenue growth in
Transportation Sensing and Control, earlier than expected, and the
division is back in profit.
Whilst the uncertain macro-economic environment continues to
impact some market segments, our self-help actions are producing
tangible benefits. The combination of our underlying business
performance and the contribution from Aero Stanrew mean we are
confident of continued progress in 2016."
For further information, please contact:
TT Electronics
Richard Tyson, Chief Executive Officer
Mark Hoad, Chief Financial Officer
Emma Darke, Head of Investor Relations and Communications Tel:
+44 (0)1932 825 300
MHP Communications
Tim Rowntree / Jamie Ricketts / John Olsen Tel: +44 (0)20 3128
8100
An analyst presentation will be held today at 9.00am at Numis,
10 Newgate Street London EC1A 7HD. A replay of the webcast will be
available on the investor relations section of our website later
today.
H1 2016 OVERVIEW
We are pleased with our performance in the first half and have
returned the business to profitable growth. Group revenue increased
by 5 per cent to GBP277.0 million, or 2 per cent excluding the
effects of foreign exchange (plus GBP8.5 million). Excluding the
GBP9.0 million revenue contribution from Aero Stanrew, revenue
declined by 2% on an organic basis.
The Group's order book remains sound although the order intake
has been mixed across different markets. Strong demand from
automotive markets benefited Transportation Sensing and Control and
Advanced Components. North American industrial markets remained
challenging, affecting our performance in parts of Industrial
Sensing and Control, Advanced Components and IMS.
Underlying operating profit increased by 32 per cent to GBP13.7
million (H1 2015: GBP10.4 million) with the improvement mainly
driven by Transportation Sensing and Control returning to
profitability, the contribution from Aero Stanrew, together with
on-going improvements in cost efficiency. Underlying operating
profit increased by 24 per cent at constant currency of which 15
per cent related to the contribution from Aero Stanrew and 9 per
cent to underlying improvement. There was a GBP0.8 million foreign
exchange benefit and if current exchange rates continue throughout
the rest of the year, the currency translation impact on the
Group's results is expected to be positive. We do not currently
anticipate any significant impact on the Group's trading following
the UK referendum on Brexit.
Cash performance was steady with cash conversion of 68 per cent
(H1 2015: 71 per cent) and a reduced free cash outflow of GBP4.9
million (H1 2015: outflow GBP5.1 million). Higher working capital
requirements reflected growth in Transportation Sensing and Control
and a very strong 2015 year end performance which resulted in a
working capital outflow of GBP8.2 million (H1 2015: outflow GBP4.5
million). Our continued operational focus resulted in a GBP2.0
million inflow from inventory reduction. The Group's net debt
increased to GBP70.7 million at 30 June 2016 (31 December 2015:
GBP56.1 million) reflecting both spend on restructuring projects
and the 2015 final dividend payment. In May 2016 the Group signed a
new five year GBP150 million multi-currency revolving credit
facility to replace the GBP75 million multi-currency and $60
million US dollar facilities.
STRATEGIC PROGRESS
Our strategy is to build leading positions in markets with
structural growth drivers where we have strong and differentiated
capabilities to create long term value for our shareholders. Our
organisational agility is allowing us to respond quickly to
changing customer and market dynamics.
The business is now well placed to benefit from higher demand
coming from the drive for increased efficiency, accuracy and
reliability of electronic components. In the automotive industry,
growth is being driven by the increased electrification of the
vehicle and the engine. We continue to focus on safety, emissions
and power electronics where tightening legislation is driving
demand for our solutions. In the industrial space, the trend for
increasing electric content has extended into consumer electrical
equipment where we have seen increased demand for specialist
resistors and optical sensors.
Following the acquisition of Aero Stanrew in December 2015, the
integration process was executed smoothly and is now complete. The
business is focused on higher margin growth segments and we
continue to develop our market leading position in electromagnetics
and power electronic components and assemblies. Aero Stanrew has
performed well and early customer indications have reinforced its
potential within TT Electronics.
Opportunities for increased operational collaboration have been
identified in addition to a growing pipeline of prospects in both
existing TT Electronics and Aero Stanrew customers. During the
early stages of integration, Aero Stanrew and IMS worked closely
together to win a small initial order for test equipment in the
aerospace and defence sector. More recently, we have identified the
opportunity to utilise our existing expertise and operations in
Malaysia to build civil aerospace components for one of Aero
Stanrew's customers. Applicable skills for industrial markets are
being adapted to meet the more rigorous testing requirements of our
aerospace customers.
Across our other divisions, Transportation Sensing and Control
and IMS have collaborated to meet a customer's cabling requirements
resulting in a new contract award for 2017. IMS has now also taken
over production of all of Transportation Sensing and Controls'
printed circuit board (PCB) requirements in Romania. Working
collaboratively has allowed our divisions to share expertise,
capabilities and customer opportunities in ways not previously
possible.
As previously indicated, we have been exploring further
self-help actions to improve operating efficiency. We have
announced the transfer of our remaining activities from Fullerton
(US) to Bedlington (UK) where we are creating a centre of
excellence for power hybrid assemblies. The move is ahead of
schedule and we will fully exit the Fullerton site in 2017. We have
also announced the transfer of the last of our US thick film
production from Corpus Christi (US) to Mexicali (Mexico), utilising
our lower cost capabilities and consolidating thick film production
for the region into a single site. Finally, we are closing our
Basingstoke site, moving operations to Sheffield and engineering
skills to Cambridge, where a small team will support R&D
efforts across three of our divisions.
Our site simplifications are complemented by a continued focus
on lean initiatives. Three lean site pilots are underway and a
fourth will take place in H2. 14 additional Master Lean
Practitioners ('MLPs') were trained in H1 giving us a 30 strong MLP
community. Every site now has a trained lean practitioner. Across
lines on our pilots, stock turns have improved by more than 30%. In
Suzhou, we have halved the lead time for printed circuit board
assembly ('PCBA'). These early successes highlight the potential
from the continued implementation of lean techniques across the
business.
DIVISIONAL REVIEWS
TRANSPORTATION SENSING AND CONTROL
The Transportation Sensing and Control division develops both
sensors and control solutions for automotive OEMs and tier one
suppliers including powertrain providers for passenger cars and
trucks. TT develops a wide range of products for multiple
applications on a vehicle, from power controls, gear position and
pedal sensors to fluid and emission sensors, with almost all of
them focused on the safety and driver assistance features required
by our customers.
H1 2016 H1 2015 Change Change
constant
fx
--------------------- --------- --------- ------ ---------
Revenue GBP117.8m GBP107.5m 10% 5%
Underlying operating
profit GBP1.7m GBP(0.9)m 289% 267%
Underlying operating
profit margin 1.4% (0.8)% 220bps 210bps
--------------------- --------- --------- ------ ---------
Revenue in the first half of 2016 was GBP117.8 million (H1 2015:
GBP107.5 million), an organic increase of 5 per cent, excluding a
foreign exchange benefit of GBP4.4 million. Organic growth was
delivered earlier than anticipated as a result of strong demand in
Europe as well growth in the Chinese market where we have won new
contracts to service the growing domestic market.
As anticipated, the division returned to profit in the first
half, supported by the benefits of the Operational Improvement Plan
as well as on-going operational efficiencies, together with good
organic growth. The underlying operating profit of GBP1.7 million
(H1 2015: loss GBP0.9 million) resulted in an operating margin of
1.4 per cent (H1 2015: minus 0.8 per cent) and included a GBP0.2
million foreign exchange benefit.
The division saw continued momentum in China following our
strategy to target growth from the sizeable domestic market. We
have seen increased production volumes with a large automotive
customer for a pedal platform as well as increased volumes for
speed sensor crankshaft components. The speed sensor is a
redeployment of technology platforms originally developed by our
European operations. We have also converted two further
opportunities for truck pedals into contracts.
We have started to make early progress in the US with our first
development order from one of the big three automotive OEMs marking
our re-entry into large US market where we see opportunities to
grow market share over the medium term. The development order is
for a linear sensor on our SIMPSpad technology for a suspension
damper application. These innovative sensors provide car position
and speed information using fewer parts than needed before,
bringing accuracy, reliability and cost benefits to our
customers.
In France, we have won a three year LED project for five
different head lamps for a large French OEM.
Our successes in China, the US and France are broadening our
customer base, demonstrating results from targeting markets where
we have low share and reducing our customer concentration.
INDUSTRIAL SENSING AND CONTROL
The Industrial Sensing and Control division addresses
challenging sensing requirements in terms of precision, speed of
response, reliability or the physical environment in which the
products operate. Its position, pressure, temperature, flow and
fluid quality sensors are used for critical applications in a range
of end markets including industrial automation and process control,
medical and aerospace sectors.
H1 2016 H1 2015 Change Change
constant
fx
--------------------- -------- -------- ------ ---------
Revenue GBP30.4m GBP33.8m (10)% (15)%
Underlying operating
profit GBP5.5m GBP6.4m (14)% (20%)
Underlying operating
profit margin 18.1% 18.9% -80bps -120bps
--------------------- -------- -------- ------ ---------
First half revenue was GBP30.4 million (H1 2015: GBP33.8
million), an organic decrease of 15 per cent, excluding a GBP1.6
million foreign exchange contribution. This decline was partially
due to the 2015 pull forward in demand resulting from a customer
request, ahead of a change in material supply linked to a key
programme in H1 2015. North American industrial weakness as seen in
Advanced Components last year, also had some impact on the growth
momentum for wider industrial sensors.
Underlying operating profit for the period declined by 14 per
cent to GBP5.5 million (H1: 2015: GBP6.4 million) on the back of
reduced revenues and increased R&D expense. Operating margins
reduced by 80 basis points to 18.1 per cent (H1 2015: 18.9 per
cent). There was a GBP0.4 million foreign exchange benefit.
We continue with our focused process driven approach for
R&D, targeting industry segments which have an increased
requirement for high specification sensors, requiring superior
reliability and accuracy such as factory automation and medical
equipment. In May, we launched a next generation optical presence
and position sensor, Photologic(R) V. The sensor is used in
industrial printing and paper handling, factory automation and
medical equipment.
Collaboration between Industrial Sensing and Control and
Transportation Sensing and Control has resulted in core electronic
capabilities from the Transportation division being deployed in the
launch of a new pressure sensor, TPM, developed in Klingenberg.
ADVANCED COMPONENTS
The Advanced Components division creates specialist, high
performance, ultra-reliable, highly engineered electronic
components for circuit protection, power management, signal
conditioning and connectivity applications in harsh environments.
It serves customers in the industrial, automotive, aerospace,
defence and medical markets and focuses on creating value by
developing innovative electronic solutions to challenging problems
for our customers' electronic circuits or systems.
H1 2016 H1 2015 Change Change
constant
fx
--------------------- -------- -------- ------ ---------
Revenue GBP56.5m GBP49.8m 13% 11%
Underlying operating
profit GBP4.3m GBP3.4m 26% 24%
Underlying operating
profit margin 7.6% 6.8% 80bps 80bps
--------------------- -------- -------- ------ ---------
Revenue for the first half was GBP56.5 million (H1 2015: GBP49.8
million) an increase of 13 per cent. Excluding the GBP9.0 million
revenue contribution from Aero Stanrew and a GBP1.1 million foreign
exchange benefit, there was a 7 per cent organic decline with the
base business performance stabilising following the downturn in
North American demand experienced in the second half of 2015.
There was an improvement in underlying operating profit for the
period to GBP4.3 million (H1 2015: GBP3.4 million). The increase
was due to the GBP1.6 million contribution from Aero Stanrew,
partially offset by the drop-through on the organic revenue
reduction. Operating margins improved by 80 basis points to 7.6 per
cent (H1 2015: 6.8%). There was a GBP0.1 million foreign exchange
benefit.
We saw a good contribution from Aero Stanrew, which is
performing well. The integration process was executed smoothly and
is now complete. Early customer indications confirm potential to
grow a market leading position in the design, development and
production of electromagnetic components and electronic
sub-systems. The business continues to provide components and
sub-systems for numerous aerospace and defence programmes where we
have single source positions. This includes components for the
Joint Strike Fighter ('JSF') programme which has begun to ramp up
and volume growth for our Power Distribution Panel, a higher value
sub-system designed alongside the customer. The order intake has
been strong and is positioning the business well for the growth
expected.
We have seen good progress in our magnetics and connectors
offerings, a key area of strategic focus for Advanced Components,
including wins in the automotive and defence markets. As part of
our leading edge product development, we have designed a new
connector, Mag-NET which is being used in demonstration equipment
in trials for a large customer in the defence industry.
IMS
The IMS division draws on its manufacturing design engineering
capabilities, global facilities and world-class quality standards
to provide highly complex electronic manufacturing solutions to
customers in the aerospace and defence, medical, and high
technology industrial sectors. The business has broad capabilities
ranging from printed circuit board assembly to environmental test
and full systems integration. This global suite of end-to-end
solutions is focused exclusively on low volume, high mix
business.
H1 2016 H1 2015 Change Change
constant
fx
--------------------- -------- -------- ------ ---------
Revenue GBP72.3m GBP72.5m (0)% (2)%
Underlying operating
profit GBP2.2m GBP1.5m 47% 40%
Underlying operating
profit margin 3.0% 2.1% 90bps 90bps
--------------------- -------- -------- ------ ---------
Revenue for the first half was broadly flat at GBP72.3 million
(H1 2015: GBP72.5 million), although it declined by 2 per cent on
an organic basis, excluding a GBP1.4 million foreign exchange
benefit. We have seen strong domestic demand in China, partially
offsetting weakness in North American industrial markets.
Underlying operating profit for the period improved by 47 per
cent to GBP2.2 million (H1 2015: GBP1.5 million) and by 40 per cent
on a constant currency basis. Operating margins improved by 90
basis points to 3.0 per cent (H1 2015: 2.1 per cent). Despite the
organic revenue decline, profitability has been improved as a
result of strong cost discipline and on-going operational
efficiency.
Our Chinese operation benefited from increased demand from an
urban rail infrastructure customer in China and a contract award
for vacuum pumps for semiconductors in South Korea. Conversely, our
US operations are facing continued market headwinds and in the
first half a defence project in North America has reached the
planned end of its cycle which is affecting volumes.
In Europe, there have been opportunities to collaborate in
Romania with the Transportation Sensing and Control division on
PCBs as outlined above. After an initial small order for test
equipment in the aerospace and defence sector, IMS and Aero Stanrew
have continued to work together to identify opportunities to
collaborate on shared operations and customer initiatives.
OTHER FINANCIAL INFORMATION
The net interest expense of GBP2.3 million increased by GBP1.0
million (H1 2015: GBP1.3 million) primarily as a result of the
increased debt associated with the acquisition of Aero Stanrew.
Underlying profit before tax improved by 25 per cent to GBP11.4
million (H1 2015: GBP9.1 million) representing a 16 per cent
increase on a constant currency basis.
The underlying effective tax rate was 28.1 per cent (H1 2015:
26.9 per cent; Full Year 2015: 27.0 per cent) and basic underlying
earnings per share increased by 21 per cent to 5.1 pence (H1 2015:
4.2 pence), and by 12 per cent at constant currency.
The profit for the period reduced to GBP3.9 million (H1 2015:
GBP4.1 million) after a charge for items excluded from underlying
profit of GBP4.9 million (H1 2015: GBP2.8 million). Included within
this charge were restructuring costs of GBP3.3 million, which
related principally to the Operational Improvement Plan, and
acquisition costs of GBP1.6 million (H1 2015: GBP0.6 million)
relating mainly to acquisition integration costs, the non-cash
amortisation of acquisition intangibles net of the release of a
surplus disposal provision. The cash costs relating to these items
totalled GBP7.8 million (H1 2015: GBP4.7 million).
Net debt at the end of the period was GBP70.7 million (2015
year-end: GBP56.1 million). Net debt to underlying EBITDA at the
end of the first half was 1.5 times (2015 year-end: 1.3 times, H1
2015: 0.5 times).
In May, the Group signed a GBP150 million multi-currency
revolving credit facility to replace the GBP75 million
multi-currency and US$60 million facility which expired in August
2016. The facility has a five year term. The margin on drawings has
been reduced and certain covenants have been relaxed including the
net debt to EBITDA covenant, which has been changed from 2.75 times
to 3.0 times. At the balance sheet date GBP36.1 million of these
total long-term borrowing commitments remained undrawn.
The net accounting deficit under the Group's defined benefit
pension scheme reduced to GBP1.3 million (2015 year-end: GBP21.1
million). The improvement in the position of the scheme was due to
improved asset returns and reduced inflation rates, partially
offset by reduced discount rates. Deficit contributions of GBP2.2
million were made to the UK scheme in the first half. A triennial
valuation of the UK scheme is currently underway.
DIVID
The Board has declared an interim dividend of 1.7 pence per
share. Payment of the dividend will be made on 20 October 2016 to
shareholders on the register on 7 October 2016.
OUTLOOK
We are pleased with our performance in the first half of 2016.
Our strategy is gaining momentum and we have returned the business
to profitable growth. We have delivered good revenue growth in
Transportation Sensing and Control, earlier than expected, and the
division is back in profit.
Whilst the uncertain macro-economic environment continues to
impact some market segments, our self-help actions are producing
tangible benefits. The combination of our underlying business
performance and the contribution from Aero Stanrew mean we are
confident of continued progress in 2016.
Interim Results for the half-year ended 30 June 2016
GOING CONCERN
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 the foreseeable future. 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 condensed set of financial statements has been prepared in accordance with IAS34 "Interim Financial
Reporting" as adopted by the EU;
-- 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 parties 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 Annual Report 2015 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
10 August 2016 10 August 2016
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
Introduction
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 2016 which comprises the condensed
consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated balance sheet,
condensed consolidated statement of changes in equity, condensed
consolidated cash flow statement and the related explanatory notes.
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.
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the company those
matters we are required to state to it in this 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 reached.
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 DTR of the UK FCA.
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU.
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 Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, 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 Ireland) 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 2016 is not prepared, in all material respects, in accordance
with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Mike Barradell
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
10 August 2016
Condensed consolidated income statement (unaudited)
for the six months ended 30 June 2016
Six Six
months months Year
ended ended ended
30 30 31
GBPmillion (unless otherwise June June December
stated) Note 2016 2015 2015
==================================== ===== ======== ======== ==========
Revenue 3 277.0 263.6 509.9
Cost of sales (226.5) (216.0) (417.5)
==================================== ===== ======== ======== ==========
Gross profit 50.5 47.6 92.4
Distribution costs (16.1) (16.1) (29.0)
Administrative expenses (26.2) (24.4) (48.2)
Other operating income 0.6 0.5 1.1
==================================== ===== ======== ======== ==========
Operating profit 8.8 7.6 16.3
Analysed as:
Underlying operating profit 3a 13.7 10.4 21.7
Restructuring 4 (3.3) (2.2) (2.9)
Asset impairments 4 - - (1.7)
Acquisition related costs 4 (1.6) (0.6) (0.8)
------------------------------------ ----- -------- -------- ----------
Finance income 1.6 1.4 1.8
Finance costs (3.9) (2.7) (4.3)
==================================== ===== ======== ======== ==========
Profit before taxation 6.5 6.3 13.8
Taxation 5 (2.6) (2.2) (3.4)
==================================== ===== ======== ======== ==========
Profit for the period attributable
to owners of the Company 3.9 4.1 10.4
------------------------------------ ----- -------- -------- ----------
EPS attributable to owners
of the Company (p)
Basic 6 2.4 2.6 6.5
Diluted 6 2.4 2.6 6.5
Condensed consolidated statement of comprehensive income
(unaudited)
for the six months ended 30 June 2016
Six Six
months months Year
ended ended ended
30 30 31
June June December
GBPmillion 2016 2015 2015
======================================== ======== ======== ==========
Profit for the period 3.9 4.1 10.4
Other comprehensive income/(expense)
for the period after tax
Items that are or may be reclassified
subsequently to the income
statement:
Exchange differences on translation
of foreign operations 12.6 (2.8) 2.5
Gain/(loss) on hedge of net
investment in foreign operations 5.0 (3.4) (1.2)
Net (loss)/gain on cash flow
hedges taken to equity less
amounts taken to income statement (0.7) 0.8 (0.1)
Items that will never be reclassified
to the income statement:
Remeasurement of defined benefit
pension schemes 18.1 (6.4) (11.4)
Remeasurement of other post-employment
benefits - - 0.1
Tax on remeasurement of defined
benefit pension schemes (3.3) 1.3 1.9
Total comprehensive income/(loss)
for the period 35.6 (6.4) 2.2
========================================= ======== ======== ==========
Total comprehensive income for the six months ended 30 June 2016
is entirely attributable to the owners of the Company.
Condensed consolidated balance sheet (unaudited)
at 30 June 2016
Six Six
months months Year
ended ended ended
30 30 31
June June December
GBPmillion Note 2016 2015 2015*
=============================== ===== ======== ======== ==========
ASSETS
Non-current assets
Property, plant and equipment 89.8 87.0 89.6
Goodwill 101.2 68.8 95.2
Other intangible assets 36.2 19.3 36.6
Deferred tax assets 2.1 6.6 4.9
Pensions 8 1.9 - -
=============================== ===== ======== ======== ==========
Total non-current assets 231.2 181.7 226.3
=============================== ===== ======== ======== ==========
Current assets
Inventories 83.8 73.3 79.9
Trade and other receivables 93.3 73.2 71.9
Derivative financial
instruments 0.6 0.8 0.2
Cash and cash equivalents 44.3 34.9 40.9
Assets held for sale 5.9 - -
=============================== ===== ======== ======== ==========
Total current assets 227.9 182.2 192.9
=============================== ===== ======== ======== ==========
Total assets 459.1 363.9 419.2
=============================== ===== ======== ======== ==========
LIABILITIES
Current liabilities
Borrowings 1.5 1.2 1.8
Derivative financial
instruments 2.6 0.9 1.3
Trade and other payables 95.8 76.0 83.7
Income taxes payable 8.0 6.0 7.4
Provisions 8.3 15.9 12.6
=============================== ===== ======== ======== ==========
Total current liabilities 116.2 100.0 106.8
=============================== ===== ======== ======== ==========
Non-current liabilities
Borrowings 113.5 59.1 95.2
Deferred tax liability 3.5 5.9 4.3
Pensions 8 3.2 16.8 21.1
Provisions - 0.3 0.2
Other non-current liabilities 4.6 5.6 4.2
=============================== ===== ======== ======== ==========
Total non-current liabilities 124.8 87.7 125.0
=============================== ===== ======== ======== ==========
Total liabilities 241.0 187.7 231.8
=============================== ===== ======== ======== ==========
Net assets 218.1 176.2 187.4
=============================== ===== ======== ======== ==========
EQUITY
Share capital 40.6 39.8 40.5
Share premium 5.4 1.6 5.2
Share options reserve 4.6 2.6 3.6
Hedging and translation
reserve 35.0 11.5 18.1
Retained earnings 130.5 118.7 118.0
=============================== ===== ======== ======== ==========
Equity attributable to
owners of the Company 216.1 174.2 185.4
Non-controlling interest 2.0 2.0 2.0
=============================== ===== ======== ======== ==========
Total equity 218.1 176.2 187.4
=============================== ===== ======== ======== ==========
* Updated to reflect remeasured fair values on the acquisition
of Aero Stanrew Group Limited (see note 2 b))
Approved by the Board of Directors on 10 August 2016 and signed
on their behalf by:
Richard Tyson Mark Hoad
Director Director
Condensed consolidated statement of changes in equity
(unaudited)
for the six months ended 30 June 2016
Hedging
Share and Non-
Share Share options translation Retained Sub- controlling
GBPmillion capital premium reserve reserve earnings total interest Total
========================= ========= ========= ========= ============= ========== ======= ============= =======
At 1 January 2016 40.5 5.2 3.6 18.1 118.0 185.4 2.0 187.4
========= ========= ========= ============= ==========
Profit for the period - - - - 3.9 3.9 - 3.9
========================= ========= ========= ========= ============= ========== ======= ============= =======
Other comprehensive
/income:
Exchange differences
on translation of
foreign operations - - - 12.6 - 12.6 - 12.6
Net gain on hedge
of net investment
in foreign operations - - - 5.0 - 5.0 - 5.0
Net loss on cash
flow hedges taken
to equity less amounts
taken to income
statement - - - (0.7) - (0.7) - (0.7)
Remeasurement of
defined benefit pension
schemes - - - - 18.1 18.1 - 18.1
Tax on remeasurement
of defined benefit
pension schemes - - - - (3.3) (3.3) - (3.3)
=========================
Total other
comprehensive
income - - - 16.9 14.8 31.7 - 31.7
========================= ========= ========= ========= ============= ========== ======= ============= =======
Transactions with
owners recorded directly
in equity:
Equity dividends
paid by the Company - - - - (6.2) (6.2) - (6.2)
Share-based payments - - 1.0 - - 1.0 - 1.0
New shares issued 0.1 0.2 - - - 0.3 - 0.3
At 30 June 2016 40.6 5.4 4.6 35.0 130.5 216.1 2.0 218.1
========================= ========= ========= ========= ============= ========== ======= ============= =======
At 1 January 2015 39.8 1.5 1.9 16.9 125.7 185.8 2.0 187.8
========= ========= ========= ============= ==========
Profit for the period - - - - 4.1 4.1 - 4.1
========================= ========= ========= ========= ============= ========== ======= ============= =======
Other comprehensive
(expense)/income:
Exchange differences
on translation of
foreign operations - - - (2.8) - (2.8) - (2.8)
Net loss on hedge
of net investment
in foreign operations - - - (3.4) - (3.4) - (3.4)
Net gain on cash
flow hedges taken
to equity less amounts
taken to income
statement - - - 0.8 - 0.8 - 0.8
Remeasurement of
defined benefit pension
schemes - - - - (6.4) (6.4) - (6.4)
Tax on remeasurement
of defined benefit
pension schemes - - - - 1.3 1.3 - 1.3
=========================
Total other
comprehensive
income - - - (5.4) (5.1) (10.5) - (10.5)
========================= ========= ========= ========= ============= ========== ======= ============= =======
Transactions with
owners recorded directly
in equity:
Equity dividends
paid by the Company - - - - (6.0) (6.0) - (6.0)
Share-based payments - - 0.7 - - 0.7 - 0.7
New shares issued - 0.1 - - - 0.1 - 0.1
At 30 June 2015 39.8 1.6 2.6 11.5 118.7 174.2 2.0 176.2
========================= ========= ========= ========= ============= ========== ======= ============= =======
Condensed consolidated cash flow statement (unaudited)
for the six months ended 30 June 2016
Six Six
months months Year
ended ended ended
30 30 31
June June December
GBPmillion Note 2016 2015 2015
====================================== ===== ======== ======== ==========
Cash flows from operating activities
Profit for the period 3.9 4.1 10.4
Taxation 2.6 2.2 3.4
Net finance costs 2.3 1.3 2.5
Restructuring 3.3 2.2 2.9
Acquisition related costs 1.6 0.6 0.8
Asset impairments - - 1.7
====================================== ===== ======== ======== ==========
Underlying operating profit 13.7 10.4 21.7
Adjustments for:
Depreciation of property, plant
and equipment 9.1 8.0 15.9
Amortisation of intangible
assets 2.5 2.0 4.4
Other items 1.1 0.4 1.0
Decrease in inventories 2.0 2.9 2.2
(Increase)/decrease in receivables (16.8) (5.2) 3.5
Increase/(decrease) in payables 6.6 (2.2) (1.1)
====================================== ===== ======== ======== ==========
Underlying operating cash flow 18.2 16.3 47.6
Special payments to pension
funds (2.2) (2.1) (4.3)
Restructuring and acquisition
related items (7.8) (4.7) (10.1)
====================================== ===== ======== ======== ==========
Net cash generated from operations 8.2 9.5 33.2
Income taxes paid (3.1) (4.8) (7.9)
====================================== ===== ======== ======== ==========
Net cash flow from operating
activities 5.1 4.7 25.3
====================================== ===== ======== ======== ==========
Cash flows from investing activities
Interest received 0.1 - 0.1
Purchase of property, plant
and equipment (7.4) (7.4) (15.1)
Proceeds from sale of property,
plant and equipment and grants
received 0.4 0.4 0.8
Development expenditure (0.5) (0.8) (1.3)
Purchase of other intangibles (1.4) (1.1) (2.5)
Acquisitions of businesses - - (39.8)
Cash with acquired businesses - - 1.6
Net cash flow from investing
activities (8.8) (8.9) (56.2)
====================================== ===== ======== ======== ==========
Cash flows from financing activities
Issue of share capital - 0.1 0.5
Interest paid (1.2) (0.9) (2.2)
Repayment of borrowings (93.7) (5.0) (2.9)
Proceeds from borrowings 106.8 12.9 44.6
Finance leases (0.2) - -
Other items (0.3) - (0.1)
Dividends paid by the Company (6.2) (6.0) (8.7)
====================================== ===== ======== ==========
Net cash flow from financing
activities 5.2 1.1 31.2
====================================== ===== ======== ======== ==========
Net increase/(decrease) in
cash and cash equivalents 1.5 (3.1) 0.3
Cash and cash equivalents at
beginning of period 9 40.3 39.4 39.4
Exchange differences 9 2.5 (1.4) 0.6
====================================== ===== ======== ======== ==========
Cash and cash equivalents at
end of period 9 44.3 34.9 40.3
====================================== ===== ======== ======== ==========
Notes to the Condensed consolidated financial statements
(unaudited)
1. General information
The Condensed consolidated financial statements for the six
months ended 30 June 2016 are unaudited and were authorised for
issue in accordance with a resolution of the Board of Directors.
They do not constitute statutory financial statements as defined in
Section 434 of the Companies Act 2006. The comparative figures for
the year ended 31 December 2015 are based on the Group's statutory
accounts for that financial year. Those accounts have been reported
on by the Group's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified, did not
include a reference to any matter to which the auditors drew
attention by way of emphasis without qualifying their report, and
did not contain a statement under section 498 of the Companies Act
2006.
2. Basis of preparation
a) Condensed consolidated half-year financial statements
These condensed consolidated half-year financial statements have
been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the EU. 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 2015 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 2015. Adoption of
amendments to published standards and interpretations effective for
the Group for the half-year ended 30 June 2016 did not have any
impact on the financial position and performance of the Group.
Comparative financial information for the year ended 31 December
2015 has been updated to reflect remeasured fair values on the
acquisition of Aero Stanrew Group Limited. The effect on the
balance sheet was to decrease trade and other receivables by GBP0.3
million and to increase goodwill by GBP0.3 million.
c) Estimates
The preparation of half-year 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 half-year financial
statements, the significant judgements 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 2015.
d) 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 the
foreseeable future. Therefore they continue to adopt the going
concern basis of accounting in preparing the condensed consolidated
half-year financial statements. The Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Business review on
pages 2 to 7.
2. Basis of preparation (continued)
The Group had net debt of GBP70.7 million at 30 June 2016 (31
December 2015: GBP56.1 million). In May 2016 the Group signed a new
five year GBP150 million multi-currency revolving credit facility
to replace the GBP75 million multi-currency and $60 million US
dollar facilities. The Group had available GBP54.4 million of
undrawn committed borrowing facilities and GBP53.3 million of
undrawn uncommitted borrowing facilities, representing overdraft
lines (GBP23.3 million) and the accordion facility (GBP30.0
million). Given the considerable financial resources available,
together with long term partnerships with a number of 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 24 to 25 of the 2015 Annual Report provide details of the
Group's policy on managing its operational and financial risks.
3. Segmental reporting
The Group is organised into four 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:
-- Transportation Sensing and Control - The Transportation
Sensing and Control division develops both sensors and control
solutions for automotive OEMs and tier one suppliers including
powertrain providers for passenger cars and trucks. The division
develops a wide range of products for multiple applications on a
vehicle, from power controls, gear position and pedal sensors to
fluid and emission sensors, with almost all of them focused on the
safety and driver assistance features required by our
customers;
-- Industrial Sensing and Control - The Industrial Sensing and
Control division addresses challenging sensing requirements in
terms of precision; speed of response; reliability or physical
environment in developing position, pressure, temperature, flow and
fluid quality sensors which are used for critical applications in a
range of end markets including industrial automation, industrial
process control, medical and aerospace sectors;
-- Advanced Components - The Advanced Components division creates specialist, high performance, ultra-reliable, highly engineered electronic components for circuit protection, power management, signal conditioning and connectivity applications in harsh environments. The division serves customers in the industrial, automotive, aerospace, defence and medical markets and focuses on creating value by developing innovative electronic solutions to challenging problems for our customers' electronic circuits or systems; and
3. Segmental reporting (continued)
-- Integrated Manufacturing Services ('IMS') - The IMS division
draws on its manufacturing design engineering capabilities, global
facilities and world-class quality standards to provide highly
complex electronic manufacturing solutions to customers in the
aerospace and defence, medical, and high technology industrial
sectors. The division has broad capabilities ranging from printed
circuit board assembly to environmental test and full systems
integration. This global suite of end-to-end solutions is focused
exclusively on low volume, high mix business.
The accounting policies of the reportable segments are the same
as the Group's accounting policies and are as published in the 2015
Annual Report.
The key performance measure of the operating segments is
underlying operating profit. The Group reports non-trading income
or expenditure outside underlying operating profit when the size,
nature or function of an item or aggregation of similar items is
such that separate presentation is relevant to an understanding of
its financial position. Segment underlying operating profit
represents the profit earned by each segment after the allocation
of central head office administration costs and is reviewed by the
chief operating decision maker.
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.
a) Income statement information
Six
months
ended
30
June
2016
=============== =========== ============ =============== ========
Transportation Industrial
Sensing Sensing Integrated
and and Advanced Manufacturing
GBPmillion Control Control Components Services Total
=========================== =============== =========== ============ =============== ========
Revenue from external
customers 117.8 30.4 56.5 72.3 277.0
=========================== =============== =========== ============ =============== ========
Segment underlying
operating profit 1.7 5.5 4.3 2.2 13.7
Adjustments to underlying
operating profit (note
4) (4.9)
=========================== =============== =========== ============ =============== ========
Operating profit 8.8
Net finance costs (2.3)
=========================== =============== =========== ============ =============== ========
Profit before taxation 6.5
=========================== =============== =========== ============ =============== ========
Six
months
ended
30
June
2015
=============== =========== ============ =============== ========
Transportation Industrial
Sensing Sensing Integrated
and and Advanced Manufacturing
GBPmillion Control Control Components Services Total
=========================== =============== =========== ============ =============== ========
Revenue from external
customers 107.5 33.8 49.8 72.5 263.6
=========================== =============== =========== ============ =============== ========
Segment underlying
operating profit (0.9) 6.4 3.4 1.5 10.4
Adjustments to underlying
operating profit (note
4) (2.8)
=========================== =============== =========== ============ =============== ========
Operating profit 7.6
Net finance costs (1.3)
=========================== =============== =========== ============ =============== ========
Profit before taxation 6.3
=========================== =============== =========== ============ =============== ========
Year
ended
31
December
2015
=============== =========== ============ =============== ==========
Transportation Industrial
Sensing Sensing Integrated
and and Advanced Manufacturing
GBPmillion Control Control Components Services Total
=========================== =============== =========== ============ =============== ==========
Revenue from external
customers 205.8 61.0 95.3 147.8 509.9
=========================== =============== =========== ============ =============== ==========
Segment underlying
operating profit (1.4) 11.4 6.0 5.7 21.7
Adjustments to underlying
operating profit (note
4) (5.4)
=========================== =============== =========== ============ =============== ==========
Operating profit 16.3
Net finance costs (2.5)
=========================== =============== =========== ============ =============== ==========
Profit before taxation 13.8
=========================== =============== =========== ============ =============== ==========
There is no significant revenue between segments.
b) Analysis of revenue by destination - continuing operations
Six Six
months months
ended ended Year
30 30 ended
June June 31 December
GBPmillion 2016 2015 2015
=========================== ======== ======== =============
United Kingdom 46.9 42.4 82.6
Rest of Europe 128.3 119.1 234.5
North America 49.5 56.0 101.9
Central and South America 1.5 1.5 2.4
Asia 48.0 43.3 84.6
Rest of the World 2.8 1.3 3.9
=========================== ======== ======== =============
Total revenue 277.0 263.6 509.9
=========================== ======== ======== =============
4. Underlying measures
Six
months
Six months ended Year
ended 30 ended
30 June June 31 December
GBPmillion 2016 2015 2015
==================================== =========== ======== =============
Restructuring
Operational Improvement Plan (2.2) (1.6) (1.8)
Other restructuring costs (1.1) (0.6) (0.7)
Charges associated with management
changes - - (0.4)
(3.3) (2.2) (2.9)
==================================== =========== ======== =============
Asset impairments - - (1.7)
==================================== =========== ======== =============
Acquisition related costs
Contingent consideration - (0.2) 0.8
Amortisation of intangible
assets arising on business
combinations (1.8) (0.4) (0.8)
Release of divestment provision 0.9 - -
Other acquisition related
costs (0.7) - (0.8)
(1.6) (0.6) (0.8)
==================================== =========== ======== =============
Total (4.9) (2.8) (5.4)
==================================== =========== ======== =============
Restructuring costs charged in the period relate to further
costs incurred on the Operational Improvement Plan initiated in a
previous period as well as costs associated with other site
restructuring.
Acquisition related costs include a credit of GBP0.9 million
relating to the release of a provision established for warranty
liabilities arising from a divestment that is no longer
required.
5. Taxation
The half-year tax charge is based on a forecast effective tax
rate of 28.1% on profit excluding restructuring, asset impairments
and acquisition related costs.
The enacted UK corporation tax rate applicable from 1 April 2015
is 20%, from 1 April 2017 is 19% and from 1 April 2020 is 18%. In
addition the UK Government has tabled legislation reducing the
Corporation Tax rate to 17% from 1 April 2020, which has yet to be
enacted.
6. Earnings per share
Basic earnings per share is calculated by dividing the
profit/loss 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 162.1 million (30
June 2015: 159.0 million, 31 December 2015: 159.2 million).
Underlying earnings per share is based on profit for the period
from continuing operations before restructuring costs, asset
impairments and acquisition related costs and their associated tax
effect.
Six Six
months months
ended ended Year
30 30 ended
June June 31 December
Pence 2016 2015 2015
============================ ======== ======== =============
Basic earnings per share 2.4 2.6 6.5
Diluted earnings per share 2.4 2.6 6.5
The numbers used in calculating underlying earnings per share
are shown below:
Six Six
months months
ended ended Year
30 30 ended
June June 31 December
GBPmillion 2016 2015 2015
==================================== ======== ======== =============
Continuing operations
Profit for the period attributable
to owners of the Company 3.9 4.1 10.4
Restructuring 3.3 2.2 2.9
Acquisition related costs 1.6 0.6 1.7
Asset impairments - - 0.8
Tax effect of above items (0.6) (0.2) (1.8)
====================================
Underlying earnings 8.2 6.7 14.0
==================================== ======== ======== =============
Underlying earnings per share
(pence) 5.1 4.2 8.8
==================================== ======== ======== =============
7. Dividends
Six months Year months
ended ended
Pence 30 June Pence 31 December
per 2016 per 2015
share GBPmillion share GBPmillion
========================== ======= ============ ======= =============
Final dividend for prior
year 3.8 6.2 3.8 6.0
Interim dividend for
current year - - 1.7 2.7
========================== ======= =============
3.8 6.2 5.5 8.7
========================== ======= ============ ======= =============
The Directors have declared an interim dividend of 1.7 pence per
share which will be paid on 20 October 2016 to shareholders on the
register on 7 October 2016. Shares will become ex-dividend on 6
October 2016. The Group has a progressive dividend policy.
8. Retirement benefit schemes
The Group operates one significant defined benefit scheme in the
UK and overseas defined benefit schemes in the USA. These schemes
are closed to new members and the UK scheme is closed to future
accrual.
The amounts recognised in the condensed consolidated balance
sheet are:
Six Six
months months Year
ended ended ended
30 30 31
June June December
GBPmillion 2016 2015 2015
==================================== ======== ======== ==========
Fair value of assets 525.4 451.1 442.2
Present value of funded obligation (526.7) (467.9) (463.3)
==================================== ======== ======== ==========
Net liability recognised
in the balance sheet (1.3) (16.8) (21.1)
==================================== ======== ======== ==========
Represented by:
Schemes in net surplus 1.9 - -
Schemes in net deficit (3.2) (16.8) (21.1)
==================================== ======== ======== ==========
The costs recognised in the condensed consolidated income
statement are:
Six Six
months months Year
ended ended ended
30 30 31
June June December
GBPmillion 2016 2015 2015
============================= ======== ======== ==========
Scheme administration costs 0.5 0.3 0.8
Net interest on employee
obligations 0.3 0.2 0.4
The triennial valuation of the UK scheme as at April 2013 showed
a deficit of GBP19.1 million compared with GBP39.4 million at April
2010. Under the existing recovery plan contributions of GBP4.5
million are to be paid in respect of 2016 to address the deficit.
GBP2.2 million was paid in the half-year. In addition, the Group
has set aside GBP3.0 million to be utilised in agreement with the
Trustee for reducing the long-term liabilities of the scheme. An
actuarial valuation of the scheme as at April 2016 is currently in
progress.
9. Reconciliation of net cash flow to movement in net debt
Borrowings
and finance Net
GBPmillion Net cash leases debt
====================== ========= ============= =======
At 1 January 2015 39.4 (53.7) (14.3)
Cash flow (3.1) (7.9) (11.0)
Non-cash items - - -
Exchange differences (1.4) 1.3 (0.1)
====================== ========= ============= =======
At 1 July 2015 34.9 (60.3) (25.4)
Cash flow 3.4 (33.7) (30.3)
Non-cash items - (0.2) (0.2)
Exchange differences 2.0 (2.2) (0.2)
====================== ========= ============= =======
At 1 January 2016 40.3 (96.4) (56.1)
Cash flow 1.5 (12.9) (11.4)
Non-cash items - (1.8) (1.8)
Exchange differences 2.5 (3.9) (1.4)
====================== =======
At 31 December 2016 44.3 (115.0) (70.7)
====================== ========= ============= =======
Net cash includes overdraft balances of GBPnil (30 June 2015:
GBPnil, 31 December 2015: GBP0.6 million).
10. Share capital
During the period the Company issued 201,094 ordinary shares as
a result of share options being exercised under the Sharesave
scheme and Share Purchase plans. The aggregate consideration
received was GBP0.2 million, which was represented by a GBP0.2
million increase in share premium.
11. 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 2016 that have affected the financial position
or performance of the Group.
12. Principal risks and uncertainties
As described on pages 24 to 25 of the 2015 Annual Report, the
Group continues to be exposed to a number of operational and
financial risks and has an established, structured approach to
identifying, assessing and managing those risks.
The Group is monitoring developments following the UK referendum
on 23 June to leave the EU. TT Electronics is a global engineered
electronics company. Within the EU we have operations in Germany,
Austria, Romania and the UK. Our UK revenue accounted for 16.2% of
Group revenue in 2015. We believe that the outcome of the UK
referendum regarding the EU will not have a significant impact on
our ability to conduct business into and out of the EU in the short
to medium term. However, we recognise that we are entering a period
of uncertainty as the exit process is agreed and we are monitoring
political and macro-economic developments closely.
The Directors do not believe, that other than as described
above, the risks faced by the Group have changed significantly
during the first six months of 2016, and these relate to the
following areas:
General economic downturn; contractual risks; pricing and margin
pressures; product development; health and safety; people and
capability; supplier resilience; legal and regulatory
compliance.
13. Alternative performance measure definitions
These Interim Financial Statements include financial measures
that are not prepared in accordance with IFRS. These non-IFRS
financial measures have been selected by management 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.
Non-IFRS financial measures are presented in these Interim
Financial Statements as management believe that they provide
investors with a means of evaluating performance of the Group on a
consistent basis, similar to the way in which management evaluates
performance, that is not otherwise apparent on an IFRS basis, given
that certain non-recurring, infrequent or non-cash items that
management does not otherwise believe are indicative of the
underlying performance of the Group may not be excluded when
preparing financial measures under IFRS. These non-IFRS measures
should not be considered in isolation from, as substitutes for, or
superior to financial measures prepared in accordance with
IFRS.
Underlying operating profit
Definition: Operating profit excluding the impacts of business
acquisition and divestment related activity, restructuring costs,
impairments of intangible assets.
Organic revenue/operating profit growth
Definition: The percentage change in revenue/operating profit in
the current reporting period from the prior reporting period
excluding the effects of acquisitions and divestments and the
impact of movements in exchange rates.
Underlying earnings per share
Definition: Underlying operating profit after interest and tax
divided by the weighted average number of shares in issue during
the period.
Cash conversion percentage
Definition: Underlying operating cash flow (underlying EBITDA
less net capital expenditure, capitalised development expenditure,
working capital and non-cash movements) divided by underlying
operating profit.
Return on invested capital percentage
Definition: Underlying operating profit for the preceding 12
month rolling period divided by monthly average invested capital
for the preceding year. Invested capital is net assets excluding
provisions, tax balances and financial assets and liabilities,
including cash and borrowings.
Free cash flow
Definition: Net cash flow from operating activities less net
cash flow from investing activities less interest paid.
Operating margin percentage
Definition: Underlying operating profit divided by revenue.
Stockturn
Definition: annualised underlying cost of sales expressed as a
ratio of net inventory at the balance sheet date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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