Interim Results
TT electronics PLC
11 September 2001
Interim Results for the six months ended 30 June 2001
TT electronics plc, a World leader in resistor and sensor technology,
announces its interim results today, the first set of results following the
demerger of its non-core activities in the first half of the year.
HIGHLIGHTS
* Turnover from continuing operations £343.8m (2000: £343.1m)
* Operating profit before goodwill amortisation on continuing operations
increased 5% to £23.8m (2000: £22.6m)
* Earnings per share before goodwill amortisation and exceptional items
rose 7% to 10.6p (2000: 9.9p)
* Interim dividend of 3.69p per share (2000: 3.69p)
* Operating profit before goodwill amortisation from electronic sector
up 23% to £23.1m (2000: £18.7m)
* Strong growth in sales to automotive sector driven by sensor
technology
* Sensor sales boosted by £67million contract to supply power steering
sensors, with deliveries commencing in 2002
John Newman, Executive Chairman said today:
'In the year following the group's strategic review, we have successfully
achieved our objectives, disposing of non-core activities, focusing on our
electronic and electrical businesses and reducing dependence on UK
manufacturing.
'The Group's World leading sensor technology establishes a competitive
advantage in the important market for automotive electronics. This has
resulted in a strong long term order book supported by important new products
in development.
With a sharpened focus and leading edge technology I am confident that in the
long term TT electronics will generate continued growth.'
11 September 2001
Enquiries:
TT electronics plc Tel: 01932 856647
John W Newman, Executive Chairman
College Hill Tel: 020 7457 2020
James Henderson
Peter Rigby
Chairman's statement: John Newman
Following shareholders approval at the Annual General Meeting in May 2001, the
company changed its name to TT electronics plc from 1 June 2001. This change
has been well received and has emphasised the company's focus on its
electronic and electrical activities. Linked with this was the move of TT
electronics plc from the engineering to the electronic and electrical
equipment sector of the Financial Times share index.
The demerger of our glass container businesses was announced on 20 March 2001
and approved by shareholders at an Extraordinary General Meeting held on 14
May 2001. As a result the company's shareholders received one new share in
Send Group plc for every 20 shares held in TT electronics plc. Send Group plc
has a stock market listing on the AIM market.
TT electronics turnover for the half year on continuing activities was £343.8
million compared with £343.1 million. The turnover of the discontinued
activities was £24.9 million compared with a turnover for the half year in
2000 of £31.6 million.
Operating profit of continuing activities before amortisation of goodwill was
£23.8 million compared with £22.6 million. The profit of the discontinued
activities was £1.5 million compared with £2.6 million. Earnings per share
before amortisation of goodwill and exceptional items were 10.6p compared with
9.9p after a tax charge of 28 per cent (2000 - 27 per cent). The interim
results included a charge for amortisation of goodwill of £1.1 million (2000 -
£0.9 million) and exceptional items being the loss on sale of a business and
the cost of demerger, totalling £2.0 million (2000 - £nil).
During the first half of the year TT electronics disposed of F.D.Sims Limited,
a manufacturer of magnet wire, a product which was not considered to be part
of our long term future. The proceeds of sale were £2.9 million for certain
fixed and current assets and £2.8 million was realised from trade debtors.
Since the half year end the disposal of United Packaging PLC has been
announced for a consideration of £2.6 million, and its results are included in
the discontinued activities.
An interim dividend at 3.69p per share (2000 - 3.69p) will be paid to
shareholders on the register on 12 October 2001 and will be payable on 25
October 2001.
I am pleased to welcome Sir Laurie Magnus as a non-executive director. I know
that his wealth of experience within investment banking will be a benefit to
the Board.
The current trading outlook for TT electronics is difficult to predict. On
the one hand sales to the telecom industry will be lower in the second half
due to a fall off in orders in recent months whilst on the other hand sales of
our automotive electronic components, particularly sensors, are showing
growth.
Customers' automatic computer control of supply chain management contributes
to a more rapid variation in order levels. Whilst the Board believe that the
level of order intake recently experienced will improve towards the year end,
we have already taken necessary steps to contain costs including a reduction
in the group's workforce. If needed, there are plans prepared to mitigate the
effect of any further downturn in demand. In the meantime we are engineering
products into many new applications for existing and new customers. In
addition, the present economic climate provides TT electronics with the
opportunity to strengthen its position in the marketplace with appropriate
acquisitions.
John W Newman
Executive Chairman
11 September 2001
Chief Executive's review: Sheridan Comonte
During the first half of the year there were two important changes for the
group. The successful demerger of the glass container businesses enables the
management to concentrate on the core electronic and electrical businesses and
the change of name to TT electronics plc enables a more focused worldwide
branding of group products. The name change is part of the process of
communicating to major customers the group's commitment to technical
expertise. This is already reaping rewards because the new name projects a
higher group profile as a global supplier and meets the requirements from
global customers for a reduced supplier base.
TT electronics operates worldwide and maintains a strong presence in local
markets to identify new product applications and market opportunities as well
as to ensure a close technical and sales service to major customers in the
automotive, computer, telecoms and industrial markets. In the period the
group continued to invest in plant and equipment to increase capacity for new
products and reduce manufacturing unit costs. In order to maintain
satisfactory margins, where appropriate, labour intensive products are being
transferred to our world class factories in Mexico, Malaysia, India and
Barbados.
Electronic
The electronic sector represents 65 per cent of turnover of the ongoing
activities. The year started with a good order book resulting in the first
half year sales increasing by 4 per cent and operating profits by 23 per cent,
a strong achievement given the deteriorating computer and telecom market
conditions over this period.
Automotive Market
Our policy of continued investment in developing new products and improving
manufacturing facilities and equipment has generated strong growth in the half
year for this market where over 50 per cent of cars produced in Europe and the
USA now incorporate a component or assembly manufactured by TT electronics.
The demand for additional functionality, better fuel efficiency, enhanced
safety features and improved reliability in new vehicles drives the growing
electronic content. It is forecast that this demand will continue to grow.
The group has a leading position in sensor technologies including applications
for suspension and braking, accelerator pedal, steering, engine management and
a range of temperature and position sensors. The automotive systems business
has a growing reputation for complex climate control systems.
New programmes are being won and continued growth is envisaged despite the
weakening of worldwide automotive sales in 2001.
Computer Market
More than 30 per cent of all PCs sold incorporate at least one of our
components. However worldwide slowdown of production of PCs during the first
half has reduced the demand for our products. We have successfully introduced
additional products that have been designed into new PCs which will generate
orders later in the year.
Telecoms Market
Our products are incorporated into the combined telecom internet
infrastructure. Last year's buoyant demand for these products provided a good
opening order book. However during the second quarter of 2001 we received
cancellations and schedule delays due to the sudden and well publicised
collapse of the telecom market, firstly in the USA and subsequently in Europe.
This has resulted in a weak order book going into the second half of this
year.
Industrial Market
We are continuing to win new applications in the control instrumentation,
medical and aerospace markets.
Electrical
The electrical sector accounts for 35 per cent of turnover of the ongoing
activities. The difficult market for both cable and power systems within the
United Kingdom continued during this period and there was only a modest
increase from our main markets in the Far East. We have been successful in
winning more orders for sub-sea cables for our manufacturing plant in the
United Kingdom and power generator sets manufactured in our Mexican facility.
This sector's poor trading results were due to a combination of the
competitive marketplace and reorganisation costs in downsizing manufacturing
capacity in line with the current market conditions.
Outlook
In response to market conditions the group has been making appropriate
headcount reductions to contain costs, whilst at the same time concentrating
on new product applications to ensure increased order intake when demand
recovers.
We anticipate continued growth in the sales of our electronic products to the
automotive industry. Demand for our components for the computer and telecom
industries is unclear in the short term because of customers' high stock
levels. Whilst the second half of 2001 is a challenging period, the group
will maximise opportunities available in the marketplace.
Sheridan W A Comonte
Chief Executive
11 September 2001
Consolidated profit and loss account
For the six months ended 30 June 2001
Note Half Half Full
year year year
2001 2000 2000
£ £ £
million million million
Turnover - continuing activities 343.8 343.1 679.9
- discontinued activities 24.9 31.6 66.1
2 368.7 374.7 746.0
Operating profit - continuing activities 22.7 21.7 46.4
- discontinued activities 1.5 2.6 3.2
3 24.2 24.3 49.6
Operating profit before goodwill amortisation
- continuing activities 23.8 22.6 48.4
- discontinued activities 1.5 2.6 3.2
25.3 25.2 51.6
Exceptional items 4 (2.0) - (1.5)
Profit on ordinary activities before interest 22.2 24.3 48.1
Interest (3.5) (3.5) (7.4)
Profit on ordinary activities before taxation 18.7 20.8 40.7
Taxation 5 (5.3) (5.7) (11.0)
Profit on ordinary activities after taxation 13.4 15.1 29.7
Dividends - interim 10 (5.7) (5.1) (15.0)
- in specie (41.1) - -
Retained (loss)/profit (33.4) 10.0 14.7
Earnings per share 6
- basic and fully diluted 8.6p 9.3p 18.7p
- before goodwill amortisation and exceptional 10.6p 9.9p 21.0p
items
Dividends per share 3.69p 3.69p 10.05p
Consolidated balance sheet
As at 30 June 2001
Note 30 June 30 June 31 Dec
2001 2000 2000
£ million £ million £ million
Fixed assets
Intangible assets 40.3 35.0 39.3
Tangible assets 165.3 191.9 195.0
Investments 9.5 8.5 9.5
215.1 235.4 243.8
Current assets
Property 9 2.9 - -
Stocks 122.6 130.4 127.9
Debtors 131.4 143.2 137.9
Quoted investments 1.2 - 0.1
Cash 8.3 9.8 5.1
266.4 283.4 271.0
Creditors: falling due within one year (184.3) (240.5) (226.6)
Net current assets 82.1 42.9 44.4
Total assets less current liabilities 297.2 278.3 288.2
Creditors: falling due after more than one (60.7) (28.2) (31.5)
year
Provisions for liabilities and charges (6.0) (10.3) (8.9)
Minority interests (3.3) (3.3) (3.3)
Total net assets 227.2 236.5 244.5
Capital and reserves
Share capital 38.7 38.8 38.7
Reserves 188.5 197.7 205.8
Equity shareholders' funds 10 227.2 236.5 244.5
Consolidated cash flow statement
For the six months ended 30 June 2001
Note 2001 2000 2000
First First Full
half half year
£ million £ million £ million
Net cash inflow from operations
Operating profit 24.2 24.3 49.6
Non-cash items - Depreciation and amortisation 17.4 17.4 35.0
- Other (3.7) (2.9) (0.4)
Movement in working capital (16.0) (5.8) (14.0)
Net cash inflow from operating activities 21.9 33.0 70.2
Net interest paid (5.5) (4.6) (7.3)
Taxation paid (5.8) (4.5) (10.6)
Capital expenditure and financial investment
Purchase of fixed assets (22.4) (22.3) (43.0)
Purchase of fixed asset investments - (0.2) (1.2)
Sale of fixed assets and grants received 1.5 6.2 7.6
Acquisitions - (37.4) (39.8)
Disposals 7 2.2 - 0.8
Net overdraft demerged 8 16.3 - -
Ordinary dividends paid (9.8) (9.5) (15.3)
Net cash flow before use of liquid
resources and financing (1.6) (39.3) (38.6)
Financing and management of
liquid resources
Movement of current asset investment (1.7) 1.3 1.3
Purchase of own shares - (11.0) (12.4)
Movement of loans and finance leases 29.7 (1.9) (3.1)
Increase/(decrease) in cash 11 26.4 (50.9) (52.8)
Notes to the financial statements
1. Basis of accounting
The interim financial statements for the half year to 30 June 2001 are
unaudited and have been prepared in accordance with the accounting policies
detailed in the annual report for the year ended 31 December 2000. The
statements were approved by the Directors on 11 September 2001. The figures
for the year ended 31 December 2000 have been extracted from the statutory
accounts, filed with the Registrar of Companies on which the auditors gave an
unqualified report.
2. Analysis of turnover
First half First half Full year
2001 2000 2000
£ million £ million £ million
By Sector
Electronic 223.4 215.1 434.0
Electrical 120.4 128.0 245.9
Continuing activities 343.8 343.1 679.9
Discontinued activities 24.9 31.6 66.1
368.7 374.7 746.0
First half First half Full year
2001 2000 2000
£ million £ million £ million
By Origin
United Kingdom 206.5 209.9 402.0
Rest of Europe 54.8 52.7 106.8
North America 54.5 54.6 112.7
Rest of the World 28.0 25.9 58.4
Continuing activities 343.8 343.1 679.9
Discontinued activities 24.9 31.6 66.1
368.7 374.7 746.0
2. Analysis of turnover Continued
First half First half Full year
2001 2000 2000
£ million £ million £ million
By Destination
United Kingdom 126.5 139.1 258.6
Rest of Europe 111.9 95.5 197.8
North America 61.4 62.6 128.9
Rest of the World 44.0 45.9 94.6
Continuing activities 343.8 343.1 679.9
Discontinued activities 24.9 31.6 66.1
368.7 374.7 746.0
Discontinued activities arose from the demerged businesses, see note 8, and
the business sold see note 12. The demerged businesses were previously
reported as 'to be discontinued' and the business sold was reported within the
electrical sector.
Turnover of the discontinued activities by origin was £21.6 million (2000 - £
29.3 million) in the United Kingdom and £3.3 million (2000 - £2.3 million) in
the Rest of Europe.
Turnover of the discontinued activities by destination was £18.0 million (2000
- £25.3 million) to the United Kingdom, £4.4 million (2000 - £3.4 million) to
the Rest of Europe, £1.0 million (2000 - £1.1 million) to North America and £
1.5 million (2000 - £1.8 million) to the Rest of the World.
3. Analysis of operating profit
First half First half Full year
2001 2000 2000
£ million £ million £ million
By Sector
Electronic 23.1 18.7 42.1
Electrical 0.7 3.9 6.3
23.8 22.6 48.4
Goodwill amortisation (1.1) (0.9) (2.0)
Continuing activities 22.7 21.7 46.4
Discontinued activities 1.5 2.6 3.2
24.2 24.3 49.6
First half First half Full year
2001 2000 2000
£ million £ million £ million
By Origin
United Kingdom 7.2 8.3 14.8
Rest of Europe 4.9 4.5 9.9
North America 7.6 7.1 16.3
Rest of the World 4.1 2.7 7.4
23.8 22.6 48.4
Goodwill amortisation (1.1) (0.9) (2.0)
Continuing activities 22.7 21.7 46.4
Discontinued activities 1.5 2.6 3.2
24.2 24.3 49.6
Operating profit of the discontinued activities by origin was £1.1 million
(2000 - £2.3 million) in the United Kingdom and £0.4 million (2000 - £0.3
million) in the Rest of Europe.
4. Exceptional items
Exceptional items comprise the loss of £0.9 million on disposal of the
business of
F. D. Sims Limited, see note 7, and costs of £1.1 million arising from the
demerger of Send Group plc, see note 8.
5. Taxation
Taxation on profit on ordinary activities has been based on the estimated
effective rate for the full year ending 31 December 2001.
6. Earnings per share
Basic earnings per share of 8.6p (2000 - 9.3p) are calculated on earnings of £
13.4 million (2000 - £15.1 million) and on 154,798,103 shares (2000 -
162,001,584 shares) being the weighted average number of shares in issue
during the period. The calculation of fully diluted earnings per share
assumes the exercise of dilutive share options equivalent to 633,955 shares
(2000 - 146,291 shares). Earnings per share before goodwill amortisation and
exceptional items are calculated on earnings of £16.5 million (2000 - £16.0
million) and the weighted average number of shares in issue during the period.
7. Disposal
Certain assets of F. D. Sims Limited were sold on 28 February 2001 for £2.9
million of which £2.2 million was received by 30 June 2001. In addition, cash
realised from debtors amounted to £2.8 million. The loss on disposal of £0.9
million after a goodwill credit of £0.1 million is an exceptional item.
8. Demerger
On 15 May 2001 the group's glass container businesses were demerged by way of
a dividend in specie of Send Group plc shares. Net assets demerged were £26.5
million including £16.3 million of net bank borrowings. The cost of the
dividend in specie includes £14.6 million of goodwill previously written off
to reserves. As part of the demerger agreement loans of £6.0 million
repayable in 2004 and £2.0 million repayable in 2008 were made to Send Group
plc. The results of the demerged businesses are reported as discontinued
activities.
9. Property
Following the demerger of the group's glass container businesses, certain land
and buildings retained by the group have been reclassified from fixed assets
to current assets.
10. Reconciliation of movements in shareholders' funds
First half First half Full year
2001 2000 2000
£ million £ million £ million
Profit for the period 13.4 15.1 29.7
Exchange differences on net foreign
currency investments 1.6 0.1 2.7
Total recognised gains and losses 15.0 15.2 32.4
Dividends - ordinary (5.7) (5.1) (15.0)
- in specie (41.1) - -
Purchase of own shares - (12.1) (12.4)
Goodwill on demerger and disposals 14.5 - 1.0
Net change in shareholders' funds (17.3) (2.0) 6.0
Opening shareholders' funds 244.5 238.5 238.5
Closing shareholders' funds 227.2 236.5 244.5
The costs of dividends for the 2000 first half and full year benefited from a
reduction of £0.6 million in the final dividend payment for 1999 as a result
of the share buy backs in the first half of 2000.
11. Reconciliation of net cash flow to movement in net debt
Loans and
finance
Net Short term lease
overdraft investments obligations Net debt
£ million £ million £ million £ million
Balance at 31 December (16.0) 1.0 (27.5) (42.5)
1999
Cash flow (50.9) (1.3) 1.9 (50.3)
Exchange differences (1.7) - - (1.7)
Other non-cash - 0.3 - 0.3
movements
Balance at 30 June 2000 (68.6) - (25.6) (94.2)
Cash flow (1.9) - 1.2 (0.7)
Exchange differences (2.4) - - (2.4)
Other non-cash - 0.1 - 0.1
movements
Balance at 31 December (72.9) 0.1 (24.4) (97.2)
2000
Cash flow 26.4 1.7 (29.7) (1.6)
Exchange differences (1.7) - 0.1 (1.6)
Other non-cash - (0.6) 0.1 (0.5)
movements
Balance at 30 June 2001 (48.2) 1.2 (53.9) (100.9)
During the half year the group repaid a bank loan of £20.0 million and reduced
bank overdrafts by £30.0 million through utilisation of a £50.0 million five
year term bank loan facility.
12. Post balance sheet event
On 21 August 2001 the group disposed of United Packaging PLC, a packaging
machinery manufacturer, for a cash consideration of £2.6 million. Its results
are included in discontinued activities.
The interim report will be sent to all shareholders on the register. Copies
are available at the Company's Registered Office, Clive House, 12-18 Queens
Road, Weybridge, Surrey KT13 9XB.
Latest directors dealings
- 1 hour ago Centrica
- 1 hour ago Northern Bear
- 2 hours ago Weir Group
- 2 hours ago Legal & General Group
- 2 hours ago Legal & General Group