Interim Results

TT electronics PLC 11 September 2006 TT electronics plc TT electronics, a world leader in sensor and electronic component technology, today announces its interim results for the six months ended 30 June 2006. KEY POINTS Strong order intake and new product innovation driving future growth â€¢ Group revenue from continuing operations was Â£301.8 million (2005: Â£286.4 million) generating operating profit of Â£17.8 million (2005: Â£16.2 million before exceptional items). â€¢ Group profit before tax was Â£15.3 million (2005: Â£13.4 million, before the exceptional profit of Â£5.0 million from the sale of the Gravesend site). â€¢ The group has won contracts for sensors and systems worth over Â£100 million from the automotive market including new orders of Autopad (R) inductive sensors. â€¢ The group is continuing to expand its successful operations in low labour cost economies. â€¢ Earnings per share up 23 per cent to 7.0p (2005: 5.7p before exceptional items) â€¢ The interim dividend is maintained at 3.69p per share. John Newman, Executive Chairman, said today: 'I am pleased to report that TT electronics has delivered an improved performance resulting from stronger sales and the benefits from the closures of loss making operations actioned last year. 'In the electronic sector we have been successful in winning orders for our sensors from our core automotive customers and demand for our electronic components is stronger. The electrical sector has delivered very good results and has benefited from high demand for both power generation equipment and connection systems, particularly for the defence market. 'We will continue to transfer manufacturing to low labour cost economies and to drive the development of our world-leading technologies. We have achieved a strong order intake in the first half of the year which augurs well for future growth.' Enquiries: TT electronics Tel: 01932 856 647 John W Newman, Executive Chairman: Biddicks Tel: 020 7448 1000 Zoe Biddick: Highlights Half year Half year Full year 30 June 2006 % 30 June 2005 2005 Â£ million Change Â£ million Â£ million ---------- ------- ---------- ------- Revenue 301.8 +5% 286.4 565.3 -------------------------- ---------- ------- ---------- ------- Operating profit before exceptional items 17.8 +10% 16.2 29.9 -------------------------- ---------- ------- ---------- ------- Profit before tax and exceptional items 15.3 +14% 13.4 24.7 Exceptional items - 5.0 2.1 -------------------------- ---------- ------- ---------- ------- Profit before tax 15.3 18.4 26.8 -------------------------- ---------- ------- ---------- ------- Earnings per share from continuing operations - basic 7.0p 8.3p 11.8p - diluted 6.9p 8.2p 11.7p - basic before exceptional items 7.0p 5.7p 10.7p -------------------------- ---------- ------- ---------- ------- Dividend per share to be paid 3.69p 3.69p 10.05p -------------------------- ---------- ------- ---------- ------- Chairman's statement TT electronics continues to introduce innovative, electronic products which are driving new sales and ensuring that the group maintains its position as a leading global supplier. We continue progressively to transfer manufacturing to low cost economies to enhance margins. The group is also benefiting from the actions taken last year to close certain loss making operations. Revenue from continuing operations for the first half was Â£301.8 million, compared to Â£286.4 million in 2005. Operating profit from continuing operations was Â£17.8 million (2005: excluding exceptional items Â£16.2 million), an increase of 10 per cent. The first half year's profit before taxation was Â£15.3 million compared to Â£13.4 million excluding last year's exceptional profit of Â£5.0 million. Taxation has been charged at 29 per cent (2005: 30 per cent). Basic earnings per share were 7.0p compared to 5.7p excluding exceptional items, an increase of 23 per cent. As previously reported the electronic sector's results are expected to benefit from the strong order intake for innovative new products and in particular our Autopad(R) inductive sensor products. The electrical sector has improved in the first half from increased demand for generator sets at Ottomotores in Mexico and higher revenue at AB Connectors for connection systems. The expansion of our Chinese activities continues to fulfil expectations with four factories now in operation. We have recently announced our plans to rationalise the electronic manufacturing services production in the UK by closing our factory at Blyth near Newcastle and transferring manufacturing to our existing sites at Rogerstone in South Wales and Malaysia. We have seen increases in short term borrowing rates and the UK AA rated corporate bond yields have also increased. This, together with investment returns being in line with expectations, has resulted in the pension schemes' deficit being reduced by Â£24.9 million. The group's net borrowings at Â£48.8 million are a great improvement on June 2005 at Â£65.5 million. In the first half of 2006 borrowings have slightly increased by Â£1.7 million, this is after the payment of the final dividend for 2005, which amounted to Â£9.9 million, in May 2006. The interim dividend is unchanged at 3.69 pence per share and will be paid on 26 October 2006 to shareholders on the register on 20 October 2006. TT electronics has achieved a strong order intake in the first half year which augurs well for future growth. John W Newman Executive Chairman 11 September 2006 Business review The group has made good progress in the first half of 2006. Trading conditions have been favourable and the benefits arising from last year's restructuring are being realised. The group's revenue was Â£301.8 million (2005: Â£286.4 million) with operating profit of Â£17.8 million (2005: before exceptional items Â£16.2 million). There were no exceptional items in this half year. New product development is a key element of the group's strategy and important innovative products are being progressively launched to the automotive and electronic component markets. The group policy continues to be to manufacture in the most cost effective way by a combination of investing in highly automated plants and low labour cost factories. Total group - sector analysis 2006 2005 2005 First half First half Full Year Â£million Â£million Â£million --------- --------- -------- Revenue: Sensors and electronic systems 99.0 97.4 195.0 Electronic components 71.2 65.9 129.6 Electronic manufacturing services 33.0 27.4 60.3 ---------------------------- --------- --------- --------- Electronic sector 203.2 190.7 384.9 ---------------------------- --------- --------- --------- Power systems 29.0 25.0 50.4 Power transmission 69.6 70.7 130.0 ---------------------------- --------- --------- --------- Electrical sector 98.6 95.7 180.4 ---------------------------- --------- --------- --------- Group total 301.8 286.4 565.3 ---------------------------- --------- --------- --------- Operating profit (1): Sensors and electronic systems 5.7 5.3 9.1 Electronic components 4.6 5.1 8.7 Electronic manufacturing services 2.0 1.5 2.0 ---------------------------- --------- --------- --------- Electronic sector 12.3 11.9 19.8 ---------------------------- --------- --------- --------- Power systems 2.0 1.8 4.6 Power transmission 3.5 2.5 5.5 ---------------------------- --------- --------- --------- Electrical sector 5.5 4.3 10.1 ---------------------------- --------- --------- --------- Group total 17.8 16.2 29.9 ---------------------------- --------- --------- --------- (1) Operating profit for 2005 is stated before exceptional items. There were no exceptional items in 2006. Sensors and electronic systems 2006 2005 2005 First half First half Full Year Â£million Â£million Â£million --------- --------- --------- Revenue 99.0 97.4 195.0 Operating profit 5.7 5.3 9.1 ---------------------------- --------- --------- --------- The group has been successful in winning new contracts worth more than Â£100 million over the life of the product from the German and North American automotive markets. This includes orders for the new range of Autopad(R) inductive sensors which have been particularly well received and new business to supply systems direct to vehicle manufacturers rather than to the tier one system providers. The manufacture of systems and sensors in the group's lower labour cost factories is being set up. Sensors will be built in Mexico and the manufacture of a new systems product will start up in 2007 in China. Electronic components 2006 2005 2005 First half First half Full Year Â£million Â£million Â£million --------- --------- -------- Revenue 71.2 65.9 129.6 Operating profit 4.6 5.1 8.7 --------------------------- --------- --------- -------- Demand for electronic components has been stronger than last year particularly in North America. The specialist tanfilm resistor products which are capable of operating reliably in demanding environmental conditions have been very successful with order intake up 35 per cent over last year. New products for high frequency microwave, power and current sense applications have been launched. Electronic manufacturing services 2006 2005 2005 First half First half Full Year Â£million Â£million Â£million --------- -------- -------- Revenue 33.0 27.4 60.3 Operating profit 2.0 1.5 2.0 --------------------------- --------- -------- -------- The group's operation in China continues to perform exceptionally well and has expanded its facilities to four factories with 150,000 sq. ft. of floor area. The closure has recently been announced of the group's loss making factory in North East England and the transfer of production to the factories in Wales and Malaysia has commenced. Power systems 2006 2005 2005 First half First half Full Year Â£million Â£million Â£million --------- -------- -------- Revenue 29.0 25.0 50.4 Operating profit 2.0 1.8 4.6 --------------------------- --------- -------- -------- Revenue has increased as a result of a major contract to supply generators to Central America which is now substantially complete. The UK operations which service and upgrade generators and supply uninterruptible power supply units have now been combined onto a single site which will be more cost effective. Power transmission 2006 2005 2005 First half First half Full Year Â£million Â£million Â£million --------- -------- -------- Revenue 69.6 70.7 130.0 Operating profit 3.5 2.5 5.5 --------------------------- --------- -------- -------- The high cost of copper metal has increased both revenue and the material cost of sales. Demand for house wiring has remained strong but price competition remains fierce. The cable accessories and electrical connection system businesses in particular have benefited from strong demand and have maintained good margins. Dividends and earnings per share The interim dividend is 3.69p per share (2005: 3.69p per share). Basic earnings per share from continuing operations before exceptional items is 7.0p (2005: 5.7p). There were no exceptional items in this half year. Basic earnings per share is 7.0p (2005: 8.3p). Cash flow and working capital Working capital has been tightly controlled so that the increase in net borrowings since the year end was restricted to Â£1.7 million notwithstanding the growth in revenue, the payment of the final dividend of Â£9.9 million and higher raw material prices. Net debt at the half year was Â£48.8 million (December 2005: Â£47.1 million) and gearing improved to 30 per cent (December 2005: 31 per cent). Pensions The increase in the discount rate which is used to evaluate the liabilities of the pension schemes has reduced these liabilities by Â£24.8 million. The return on the assets of the pension schemes has been closely in line with actuarial expectations and therefore the overall net effect has been to reduce the deficit of the pension schemes since the year end by Â£24.9 million to Â£65.3 million (2005: Â£90.2 million). This improvement to the total net worth of the group is accounted for through the reserves. Outlook The group is well positioned for a successful full year for 2006 and the new products and technologies being introduced are expected to provide good growth in future years. Neil A Rodgers Roderick W Weaver Chief Executive Finance Director 11 September 2006 11 September 2006 Consolidated income statement for the six months ended 30 June 2006 Note 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million ----- --------- --------- --------- Continuing operations Revenue 2 301.8 286.4 565.3 --------------------------- ----- --------- --------- --------- Operating profit before exceptional items 3 17.8 16.2 29.9 Exceptional items 4 - 5.0 2.1 --------------------------- ----- --------- --------- --------- Operating profit 17.8 21.2 32.0 Finance income 6 7.8 5.9 12.0 Finance costs 6 (10.3) (8.7) (17.2) --------------------------- ----- --------- --------- --------- Profit before taxation 15.3 18.4 26.8 Taxation 7 (4.5) (5.5) (8.5) --------------------------- ----- --------- --------- --------- Profit for the period from continuing operations 10.8 12.9 18.3 --------------------------- ----- --------- --------- --------- Discontinued operation Loss for the period from discontinued operation - (1.4) (5.3) --------------------------- ----- --------- --------- --------- Profit for the period attributable to shareholders 10.8 11.5 13.0 --------------------------- ----- --------- --------- --------- Earnings per share 8 From continuing and discontinued operations -basic 7.0p 7.4p 8.4p -diluted 6.9p 7.3p 8.3p From continuing operations -basic 7.0p 8.3p 11.8p -diluted 6.9p 8.2p 11.7p --------------------------- ----- --------- --------- --------- Dividend per share to be paid 3.69p 3.69p 10.05p --------------------------- ----- --------- --------- --------- Consolidated balance sheet at 30 June 2006 Note 2006 2005 2005 30 June 30 June 31 December Â£ million Â£ million Â£ million ------ ---------- --------- --------- ASSETS Non-current assets Property, plant and equipment 111.0 124.1 118.0 Goodwill 49.1 50.8 52.5 Other intangible assets 16.0 16.9 15.7 Financial assets - 1.0 - Deferred tax assets 22.6 23.0 30.0 ------------------------ ------ ---------- ---------- --------- Total non-current assets 198.7 215.8 216.2 ------------------------ ------ ---------- ---------- --------- Current assets Inventories 93.9 100.2 93.9 Trade and other receivables 107.9 115.7 95.1 Financial assets 0.4 - - Cash and cash equivalents 22.2 18.0 24.0 ------------------------ ------ ---------- ---------- --------- Total current assets 224.4 233.9 213.0 ------------------------ ------ ---------- ---------- --------- Total assets 423.1 449.7 429.2 ------------------------ ------ ---------- ---------- --------- LIABILITIES Current liabilities Short-term borrowings 8.5 77.9 4.0 Financial liabilities 0.1 0.3 0.4 Trade and other payables 99.0 99.1 94.8 Current tax payable 7.1 6.4 4.9 Provision for liabilities 1.2 1.5 1.6 ------------------------ ------ ---------- ---------- --------- Total current liabilities 115.9 185.2 105.7 ------------------------ ------ ---------- ---------- --------- Non-current liabilities Long-term borrowings 62.5 5.6 67.1 Deferred tax provision 5.8 8.6 6.1 Pensions and other post employment benefits 9 65.3 70.4 90.2 Other provisions 0.9 1.3 1.0 Other non-current liabilities 7.7 8.4 7.4 ------------------------ ------- ---------- ---------- --------- Total non-current liabilities 142.2 94.3 171.8 ------------------------ ------- ---------- ---------- --------- Total liabilities 258.1 279.5 277.5 ------------------------ ------- ---------- ---------- --------- Net assets 165.0 170.2 151.7 ------------------------ ------- ---------- ---------- --------- EQUITY Share capital 38.7 38.7 38.7 Share premium account - 56.0 - Capital redemption reserve - 4.4 - Merger reserve - 23.0 - Share options 0.7 0.3 0.5 Hedging and translation reserve (1.7) (1.1) 3.5 Retained earnings 125.3 46.0 107.0 Minority interests 2.0 2.9 2.0 ---------------------- --------- ---------- ---------- --------- Total equity 11 165.0 170.2 151.7 ---------------------- --------- ---------- ---------- --------- Consolidated statement of recognised income and expense for the six months ended 30 June 2006 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million -------- -------- -------- Profit for the period 10.8 11.5 13.0 Exchange differences on net foreign currency investments (5.2) 1.8 5.7 Income tax on foreign currency exchange differences - - 0.7 Actuarial gain/(loss) on defined benefit pension schemes 24.8 - (26.0) Deferred tax on actuarial gain/(loss) (7.4) - 7.8 ------------------------------ -------- --------- ---------- Total recognised income and expense for the period 23.0 13.3 1.2 ------------------------------ -------- --------- ---------- Consolidated cash flow statement for the six months ended 30 June 2006 Note 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million ----- --------- --------- --------- Operating activities Profit for the period attributable to shareholders 10.8 11.5 13.0 Adjustments for Finance costs 2.5 3.2 6.1 Taxation 4.5 4.9 5.2 Depreciation and amortisation 16.0 17.2 37.2 Gain on disposal of property, plant and equipment (2.0) (7.6) (12.0) Gain on disposal of subsidiary - - (4.1) Other non cash items (0.2) (0.4) 0.1 Movement in working capital (9.8) (1.8) 18.1 Additional payments to pension funds (0.8) (1.9) (9.3) Exchange differences (4.4) 1.6 4.0 ------------------------- ------ ---------- ---------- --------- Cash generated from operations 16.6 26.7 58.3 Tax paid (2.0) (5.8) (8.7) ------------------------- ------ ---------- ---------- --------- Net cash from operating activities 14.6 20.9 49.6 ------------------------- ------ ---------- ---------- --------- Cash flows from investing activities Purchase of property, plant and equipment (9.2) (6.8) (15.6) Proceeds from sale of property, plant and equipment and grants received 4.4 17.4 21.3 Development expenditure (4.9) (5.2) (8.7) Acquisition of subsidiary net of cash acquired - (8.8) (10.1) Net cash proceeds from sale of subsidiary - - 7.8 ------------------------- ------ ---------- ---------- --------- Net cash used in investing activities (9.7) (3.4) (5.3) ------------------------- ------ ---------- ---------- --------- Cash flows from financing activities Net interest paid (1.4) (1.8) (3.4) Change in loans and finance lease liabilities (0.1) (1.5) 7.2 Dividends paid (9.9) (9.8) (15.6) ------------------------- ------ ---------- ---------- --------- Net cash used in financing activities (11.4) (13.1) (11.8) ------------------------- ------ ---------- ---------- --------- Net (decrease)/increase in cash and cash equivalents 10 (6.5) 4.4 32.5 Cash and cash equivalents at beginning of period 22.3 (9.6) (9.6) Exchange difference 0.2 (1.4) (0.6) ------------------------- ------ ---------- ---------- --------- Cash and cash equivalents at end of period 10 16.0 (6.6) 22.3 ------------------------- ------ ---------- ---------- --------- Cash and cash equivalents comprise Cash and cash equivalents 22.2 18.0 24.0 Bank overdrafts (6.2) (24.6) (1.7) ------------------------- ------ ---------- ---------- --------- 10 16.0 (6.6) 22.3 ------------------------- ------ ---------- ---------- --------- Notes to the interim financial statements 1. Basis of accounting The interim financial statements for the half year to 30 June 2006 are unaudited and have been prepared under International Financial Reporting Standards (IFRS) in accordance with the accounting policies set out in the Annual Report for 2005. The figures for the year ended 31 December 2005 have been extracted from the statutory accounts, filed with the Registrar of Companies on which the auditors gave an unqualified report. The results of Prestwick Circuits Limited for the half year to 30 June 2005 have been reclassified as a discontinued operation consistent with the treatment in the 2005 Annual Report. These interim statements comply with IAS 34 'Interim Financial Reporting' and were approved by the Directors on 11 September 2006. 2. Analysis of revenue 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million ---------- ---------- ---------- By business sector Electronic - Sensors and electronic systems 99.0 97.4 195.0 - Electronic components 71.2 65.9 129.6 - Electronic manufacturing services 33.0 27.4 60.3 --------------------- ---------- ---------- ---------- Total electronic 203.2 190.7 384.9 --------------------- ---------- ---------- ---------- Electrical - Power systems 29.0 25.0 50.4 - Power transmission 69.6 70.7 130.0 --------------------- ---------- ---------- ---------- Total electrical 98.6 95.7 180.4 --------------------- ---------- ---------- ---------- Total revenue 301.8 286.4 565.3 --------------------- ---------- ---------- ---------- By destination United Kingdom 81.7 82.0 161.1 Rest of Europe 106.1 103.7 199.9 North America 70.7 55.8 131.7 Rest of the World 43.3 44.9 72.6 --------------------- ---------- ---------- ---------- Total revenue 301.8 286.4 565.3 --------------------- ---------- ---------- ---------- The group's primary reporting format is by business segments and its secondary format is by geographical segments. 3. Analysis of operating profit before exceptional items 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million ---------- ---------- ---------- By business sector Electronic - Sensors and electronic systems 5.7 5.3 9.1 - Electronic components 4.6 5.1 8.7 - Electronic manufacturing services 2.0 1.5 2.0 ---------------------- ----------- ----------- ---------- Total electronic 12.3 11.9 19.8 ---------------------- ----------- ----------- ---------- Electrical - Power systems 2.0 1.8 4.6 - Power transmission 3.5 2.5 5.5 ---------------------- ----------- ----------- ---------- Total electrical 5.5 4.3 10.1 ---------------------- ----------- ----------- ---------- ---------------------- ----------- ----------- ---------- Operating profit before exceptional items 17.8 16.2 29.9 ---------------------- ----------- ----------- ---------- 4. Exceptional items 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million --------- ----------- ---------- Profit on sale of Gravesend site - 7.8 7.8 Closure costs of Gravesend cables operation - (2.8) (3.1) ------------------------ --------- ----------- ---------- Net gain on closure of Gravesend cables operation - 5.0 4.7 Profit on sale of Houchin Aerospace Limited - - 4.1 Closure costs of AB Automotive (France) SAS - - (6.7) ------------------------ --------- ----------- ---------- - 5.0 2.1 ------------------------ --------- ----------- ---------- The profit on sale of the Gravesend site was calculated based on initial proceeds of Â£12.5 million. Further proceeds may be received based on the development of the site at which time such additional profit will be recognised. Houchin Aerospace Limited was sold on 1 August 2005 for a cash consideration of Â£8.0 million. AB Automotive (France) SAS ceased production in the first half of 2006. 5. Discontinued operation On 9 September 2005 the group announced the discontinuation of manufacturing at Prestwick Circuits Limited, a printed circuit board manufacturer and its results for the half year to 30 June 2005 have been reclassified as a discontinued operation consistent with the treatment in the 2005 Annual Report. The results of the discontinued operation are after charging net finance costs of Â£0.4 million for the half year to 30 June 2005 (full year : Â£0.9 million) and after crediting tax relief of Â£0.6 million for the first half of 2005 (full year : Â£3.3 million). 6. Finance costs - net 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million ---------- ---------- ---------- Continuing operations Interest payable (2.2) (1.8) (3.7) Unwinding of the discount on pension scheme liabilities (8.1) (6.9) (13.5) ----------------------- ---------- ---------- ---------- Finance costs (10.3) (8.7) (17.2) ----------------------- ---------- ---------- ---------- Interest receivable 0.6 0.2 0.6 Expected return on pension scheme assets 7.2 5.7 11.4 ----------------------- ---------- ---------- ---------- Finance income 7.8 5.9 12.0 ----------------------- ---------- ---------- ---------- Finance costs - net (2.5) (2.8) (5.2) ----------------------- ---------- ---------- ---------- 7. Taxation Taxation on the profit for the half year to 30 June 2006 has been based on the estimated effective rate for the full year ending 31 December 2006. 8. Earnings per share 2006 2005 2005 First half First half Full year pence pence pence --------- ---------- ---------- From continuing and discontinued operations: Basic 7.0 7.4 8.4 Diluted 6.9 7.3 8.3 ------------------------ --------- ---------- ---------- Earnings per share has been calculated by dividing the profit attributable to shareholders by the weighted average number of shares in issue during the period. The numbers used in calculating basic and diluted earnings per share are shown below: Â£ million Â£ million Â£ million ---------- ---------- ---------- Profit for the period attributable to shareholders: Earnings basic and diluted 10.8 11.5 13.0 ----------------------- ---------- ---------- ---------- million million million ----------------------- ---------- ---------- ---------- Weighted average number of shares in issue: Basic 154.8 154.8 154.8 Adjustment for share options 1.5 1.9 1.4 ----------------------- ---------- ---------- ---------- Diluted 156.3 156.7 156.2 ----------------------- ---------- ---------- ---------- 2006 2005 2005 First half First half Full year pence pence pence --------- ---------- ---------- From continuing operations : Basic 7.0 8.3 11.8 Diluted 6.9 8.2 11.7 ------------------------ --------- ---------- ---------- Â£ million Â£ million Â£ million --------- ---------- ---------- Profit for the period attributable to shareholders 10.8 11.5 13.0 Add loss for the period from discontinued operation - 1.4 5.3 ------------------------ --------- ---------- ---------- Earnings basic and diluted from continuing operations 10.8 12.9 18.3 ------------------------ --------- ---------- ---------- The denominators are the same as shown above for basic and diluted earnings per share. 9. Retirement benefit plans The group now operates six defined benefit plans in the UK, all of which are closed to new members. These are final salary plans. It also operates defined benefit plans in the United States and Japan relating to BI Technologies. Actuarial valuations of the plans were carried out by independent qualified actuaries between 2002 and 2005 principally using the projected unit credit method. These actuarial valuations have been updated by the actuaries to assess the assets and liabilities of the plans at 30 June 2006. Pension scheme assets are stated at market value at 30 June 2006. At 30 June 2005 the deficit was extrapolated from the December 2004 update using the same assumptions. The principal assumptions used for the purpose of the actuarial valuations were as follows: 2006 2005 2005 30 June 30 June 31 December % % % ----------- ----------- ----------- Discount rate 5.4 5.6 4.9 Inflation rate 2.7 2.6 2.6 Increases to pensions in payment 2.5-2.6 2.5-3.0 2.5-2.6 Salary increases 3.3 3.2 3.2 --------------------- ----------- ----------- ----------- The expected long-term rates of return on the main asset classes, net of expenses, set by management having regard to actuarial advice and relevant indices at 30 June 2006 were: 2006 2005 2005 30 June 30 June 31 December % % % ---------- ----------- ----------- Equities 6.6 7.0 6.9 Bonds 4.6 5.0 4.3 Gilts and cash 3.6 4.0 3.6 --------------------- ----------- ----------- ----------- On the above basis the amounts recognised on the consolidated balance sheet are: Â£ million Â£ million Â£ million --------- ----------- ----------- Fair value of assets 251.8 210.8 245.7 Present value of funded obligation (317.1) (281.2) (335.9) ----------------------- --------- ----------- ----------- Net liability recognised on the balance sheet (65.3) (70.4) (90.2) ----------------------- --------- ----------- ----------- Costs recognised in the consolidated income statement are: 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million ----------- ----------- ----------- Current service cost 2.5 2.6 4.8 Interest on obligation 8.1 7.7 15.3 Expected return on plan assets (7.2) (6.4) (12.8) --------------------- ----------- ----------- ----------- Changes in the present value of the defined benefit obligation are: 2006 2005 2005 30 June 30 June 31 December Â£ million Â£ million Â£ million Opening defined benefit obligation 335.9 274.4 274.4 Current service cost 2.5 2.6 4.8 Interest on obligation 8.1 7.7 15.3 Plan participant contributions 0.8 0.8 2.0 Change in actuarial estimates and assumptions (24.8) - 47.6 Exchange differences (0.4) - 0.3 Benefits paid (5.0) (4.3) (8.5) --------------------- ----------- ----------- ----------- Closing defined benefit obligation 317.1 281.2 335.9 --------------------- ----------- ----------- ----------- Changes in the fair value of plan assets are: 2006 2005 2005 30 June 30 June 31 December Â£ million Â£ million Â£ million ----------- ----------- ----------- Opening fair value of plan assets 245.7 203.5 203.5 Expected return on plan assets 7.2 6.4 12.8 Excess of actual over expected returns - - 21.6 Contributions by employer 3.3 4.5 14.1 Contributions by employees 0.8 0.8 2.0 Exchange differences (0.2) (0.1) 0.2 Benefits paid (5.0) (4.3) (8.5) --------------------- ----------- ----------- ----------- Closing fair value of plan assets 251.8 210.8 245.7 --------------------- ----------- ----------- ----------- The experience adjustments arising on the plan assets and liabilities are reported in the consolidated statement of recognised income and expense and are as follows: 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million --------- ----------- ----------- Experience adjustments on plan liabilities 24.8 - (47.6) ----------------------- --------- ----------- ----------- Experience adjustments on plan assets - - 21.6 ----------------------- --------- ----------- ----------- 10. Reconciliation of net cash flow to movement in net debt Net Loans and cash/(overdraft) finance leases Net debt Â£ million Â£ million Â£ million ----------- ----------- ----------- Balance at 31 December 2004 (9.6) (57.7) (67.3) Cash flow 4.4 1.5 5.9 Exchange differences (1.4) (2.7) (4.1) --------------------- ----------- ----------- ----------- Balance at 30 June 2005 (6.6) (58.9) (65.5) Cash flow 28.1 (8.7) 19.4 Disposal - 0.7 0.7 Exchange differences 0.8 (2.5) (1.7) --------------------- ----------- ----------- ----------- Balance at 31 December 2005 22.3 (69.4) (47.1) Cash flow (6.5) 0.1 (6.4) Exchange differences 0.2 4.5 4.7 --------------------- ----------- ----------- ----------- Balance at 30 June 2006 16.0 (64.8) (48.8) --------------------- ----------- ----------- ----------- Net cash represents cash and cash equivalents less bank overdrafts. 11. Summary of movements in shareholders' equity 2006 2005 2005 First half First half Full year Â£ million Â£ million Â£ million ----------- ----------- ----------- Opening shareholders' equity 151.7 166.7 166.7 Profit for the period 10.8 11.5 13.0 Exchange differences on net foreign currency investments (5.2) 1.8 5.7 Income tax on foreign currency exchange differences - - 0.7 Actuarial gain/(loss) (net) on defined benefit pension schemes 24.8 - (26.0) Deferred tax on actuarial gain/(loss) (7.4) - 7.8 Dividends paid (9.9) (9.9) (15.6) Share based payment 0.2 0.1 0.3 Distribution to minority interest - - (0.9) --------------------- ----------- ----------- ----------- Closing shareholders' equity 165.0 170.2 151.7 --------------------- ----------- ----------- ----------- 12. Dividend payment The interim dividend of 3.69p per share will be paid on 26 October 2006 to shareholders on the register on 20 October 2006. Shares will be ex-dividend on 18 October 2006. The interim report will be sent to all shareholders on the register. Copes are available at the Company's Registered Office, Clive House, 12-18 Queens Road, Weybridge, Surrey KT13 9XB or at www.ttelectronicsplc.com. This information is provided by RNS The company news service from the London Stock Exchange

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