Final Results
TT electronics PLC
30 March 2004
TT ELECTRONICS PLC REPORTS ON STRONGER SECOND HALF FOR 2003 AND INDICATES
CONFIDENCE FOR 2004.
TT electronics, a World leader in resistor and sensor technology today announces
its preliminary results for the year to 31 December 2003.
KEY POINTS
•Group turnover on continuing activities of £527.5 million (2002: £512.5
million).
•Profit before goodwill amortisation, exceptional items and taxation was
£20.0 million (2002: £19.2 million).
•The uplift in the second half saw operating profit before goodwill
amortisation increase by 19 per cent from £10.1 million in the first half to
£12.0 million (H2 2002: £9.3 million).
•Sales to the automotive market grew by 12 per cent which was ahead of the
average market growth. The group has received over £350 million new
automotive orders spread over the lives of the product lines.
•The acquisition of Optek Technology for £30.3 million significantly
expanded our sensor activities and will contribute to group profitability in
2004.
•Magnetic businesses now reorganised with exceptional costs of £3.7
million and goodwill of £10.1 million recycled through the profit and loss
account.
•The Board is recommending a maintained final dividend of 6.36p per share
bringing the total for the year to 10.05p (2002: 10.05p).
John Newman, Executive Chairman said today:
'These results reflect both our continuing success within the automotive market
and improved trading conditions.
It is particularly pleasing to report a 12 per cent growth in sales to the
automotive market. We have for some years recognised the potential of this
market. The range of products and technologies we have developed is such that we
estimate that over 60 per cent of all cars produced in Europe and North America
incorporate at least one of our products. We continue to work with our customers
to develop new electronic solutions which improve vehicle fuel efficiency,
safety and comfort.
In recent months we have experienced an improvement in order intake which we
believe will be maintained and as a result now look forward with confidence to
better trading conditions in the current year.'
30 March 2004
Enquiries:
TT electronics plc Tel: 01932 856647
John W Newman, Executive Chairman
Biddicks Tel: 020 7448 1000
Zoe Biddick
Website: www.ttelectronics.com
Financial Highlights
2003 2002
£million £million
Turnover - continuing activities 527.5 512.5
- discontinued activities 6.4 7.8
----------- --------------------------------- -------- -------
Turnover - total 533.9 520.3
---------- --------------------------------- -------- -------
Operating profit before impairment
provisions and goodwill amortisation 22.1 22.4
Interest (2.1) (3.2)
------------------------------------------ -------- -------
Profit before impairment provisions,
goodwill amortisation, exceptional
items and taxation 20.0 19.2
------------------------------------------ -------- -------
Profit on ordinary activities after
taxation on continuing activities 10.8 9.6
------------------------------------------ -------- -------
Earnings per share, basic and fully
diluted (0.1)p 3.6p
------------------------------------------ -------- -------
Earnings per share before impairment
provisions, goodwill amortisation and
exceptional items 10.4p 10.1p
------------------------------------------ -------- -------
Ordinary dividends per share 10.05p 10.05p
------------------------------------------ -------- -------
Chairman's statement
Turnover for 2003 on continuing activities was £527.5 million compared with
£512.5 million in the previous year, an increase of 3 per cent. Profit before
taxation, impairment provisions, goodwill amortisation, and exceptional items
was £20.0 million (2002 - £19.2 million). No impairment provisions were made
this year (2002 - £10.4 million), goodwill amortisation was £1.8 million (2002 -
£2.1 million) and exceptional items totalled £15.0 million (2002 - £1.2 million
credit). After these items the profit before taxation amounted to £3.2 million
(2002 - £7.9 million).
The exceptional items totalling £15.0 million (2002 - £1.2 million credit)
comprise reorganisation costs of the group's magnetic businesses of £3.7
million; goodwill in respect of these magnetic businesses of £10.1 million which
had previously been written-off to reserves in 1995; the loss on sale of the
business of Air Transport Avionics Limited of £0.4 million and associated
goodwill written-off to reserves in 1994 of £0.8 million. A taxation charge of
£3.2 million has been incurred being at an effective rate of 23 per cent (2002 -
27 per cent). Interest costs have reduced to £2.1 million from £3.2 million in
2002. Earnings per share before impairment provisions, goodwill amortisation and
exceptional items were 10.4p compared with 10.1p in 2002.
After a difficult first half-year I am pleased to report that the group achieved
a 19 per cent growth in profit over the first half of 2003. Operating profit
before goodwill amortisation increased to £12.0 million from £10.1 million in
the first half of 2003 and compares with £9.3 million in the second half of
2002.
The group ended the year with net borrowings of £78.2 million compared with
£55.8 million in 2002. The increase in borrowings was mainly due to the US$51.3
million (£30.3 million) consideration for the acquisition of Optek Technology
Inc. The reduction in the borrowings before the acquisition of Optek Technology
confirms the strong cash management of the group.
During the year TT electronics has benefited from a continuing growth in the
requirement for electronic products by the automotive industry. Automotive sales
have grown by 12 per cent and the group has received substantial new orders
amounting to over £350 million spread over the lives of the product lines we are
supplying. Sales to the telecom industry have continued to suffer from lack of
demand. Order intake, however, has recently shown signs of improvement. As
stated in my half-year Chairman's statement we have discontinued our laminations
business and closed our ferrite manufacturing in the USA and United Kingdom. We
are transferring our ferrite manufacturing to India and are in the course of
expanding our Indian factory to handle the increased volumes.
Within the Electrical sector we continue to concentrate on those business areas
which in the future will have the ability to meet the group's financial
requirements. During the year we ceased the manufacture of generator sets in the
United Kingdom and these are now only manufactured in our Mexican facility.
We have continued to follow our policy of seeking to acquire businesses at
sensible prices, which will strengthen our position in the marketplace. As
reported in my interim statement, the net assets of Demo Tableaux de Commande SA
with a book value of £4.4 million were purchased for £1.7 million on 14 March
2003. Demo manufactures electromechanical climate controls which complement our
electronic climate control units.
On 3 December 2003 Optek Technology Inc was acquired for a consideration of
US$51.3 million (£30.3 million) subject to completion accounts. The Company has
its engineering and administrative centre at Carrollton, Texas, USA and its
manufacturing facility in Juarez, Mexico, the other side of the USA BORDER='0'
to El Paso. This acquisition represents a significant expansion of the group's
sensor activities. In the year to 31 January 2003 Optek Technology made profits
before goodwill amortisation, interest and tax of US$4.0 million (£2.4 million)
on a turnover of US$68.6 million (£40.4 million). Prior to the acquisition Optek
Technology closed its silicon wafer manufacturing facility and consolidated all
manufacturing in Juarez, Mexico resulting in a significant improvement in
profitability. Optek Technology is a leading supplier of infrared light emitting
diodes. These components are used in marketplaces served by the group including
the office equipment market where the products are used for photocopiers and
mail handling devices to monitor the edge of a moving sheet of paper. Optek
Technology also manufactures sensors for the automotive industry particularly
used for cam and crankshafts. The reputation of Optek Technology in the
marketplace leads us to believe that there will be opportunity for good future
growth.
On 11 March 2004, TT electronics announced the acquisition of Sensopad
Technologies Ltd, for a cash consideration of £1.4 million together with the
payment of future royalties. Sensopad Technologies has developed an inductive
sensor technology that has both position and angle capabilities. The group
believes that this is the technology which will enable it to secure orders from
the automotive industry in the year 2006 onwards when we commence to replace
products based on the Hall effect technology. This acquisition will ensure the
group's future growth in the automotive market.
TT electronics holds a 24.4 per cent shareholding in Pressac plc, a manufacturer
of relays, electronic and plastic components for the automotive and telecom
accessories markets. On 7 January 2004, Sheridan Comonte joined the Board of
Pressac; in 2003 we did not have a significant influence on the affairs of
Pressac and have therefore treated this shareholding as an investment. Pressac
has a strong presence in the European automotive industry particularly in
France.
The Board recommends a final dividend of 6.36p per share, this brings the total
dividend for the year to 10.05p, the same as last year. The dividend will be
paid to shareholders on the register on 21 May and will be payable on 28 May
2004.
The requirement to adopt International Financial Reporting Standards comes into
effect with our 2005 accounts. We are keeping the matter under review to ensure
that the adoption of these standards runs smoothly.
The Board continues to address the issues of Corporate Governance including the
Revised Code based on the reports of Sir Derek Higgs and Sir Robert Smith. Mr
Timothy Reed, a non-executive Director of TT electronics plc, comes up for
re-election as an independent non-executive Director at the forthcoming Annual
General Meeting and annually thereafter. Timothy Reed, aged 63, has been a
non-executive Director for more than the nine year term recommended for guidance
in the Revised Code; he is a former corporate lawyer who has presented a strong
independent voice on the Board since his appointment. He has seen the group
evolve over recent years and it is the opinion of the whole Board that as an
independent non-executive Director his continuing involvement in the group will
be beneficial to the future of TT electronics plc. The executive and
non-executive Directors recommend that shareholders vote in favour of Timothy
Reed being re-elected as an independent non-executive Director at the Annual
General Meeting.
The Board will be seeking shareholder approval at the Annual General Meeting on
19 May 2004 for the adoption of two new share option plans to replace the
existing schemes, one of which expires in May 2004 and the other in 2006, and
amendments to the current share option schemes to allow the use of Treasury
Shares. Due to the economic downturn, particularly in the telecom industry, the
group's profits have been at lower levels. As a result the performance criteria
of the share incentive schemes have not in recent years been met. The Board
considers that share option plans have two principal objectives, firstly to make
senior managers of operating companies feel part of TT electronics and share in
its success and secondly to provide senior staff based at head office with an
incentive to achieve above average performance for the benefit of shareholders.
The Board intends to discuss these proposals with major shareholders and subject
to their support share option plan resolutions will be submitted to shareholders
at the Annual General Meeting. The Board of TT electronics is recommending that
shareholders vote in favour of these resolutions.
The past two years have been a difficult trading period for manufacturers
supplying the electronics industries. The group's workforce has responded well
despite, in many companies, some of their colleagues having to accept
redundancy. I would like to thank them for their perseverance. As the trading
environment continues to improve, the business outlook becomes better which in
turn will benefit all the group's employees.
I would like to pay tribute to Sheridan Comonte, who retires on 5 April having
reached the age of 65. Over the past sixteen years Sheridan's considerable
knowledge and experience has made an immense contribution to TT electronics. As
announced in my half-year statement, Neil Rodgers will take over as Chief
Executive on Sheridan's retirement.
The weakening of the US dollar against other currencies creates its own
challenges, but also opportunities. For the last two years we have been cautious
and whilst there has been encouraging news we have, in retrospect, been rightly
guarded in believing it was sustainable. In recent months we have experienced an
improvement in order intake which we believe will be maintained and as a result
now look forward with confidence to better trading conditions in the current
year.
John W Newman
Executive Chairman
29 March 2004
Chief Executive's Statement
Overview
It is with mixed emotions that I am writing my last report as Chief Executive,
having joined TT electronics plc in 1987. Over the last 16 years the group has
been changed significantly and is now focussed on its electronic and electrical
businesses. The group has a global presence servicing major customers including
the majority of the World's major original equipment manufacturers ('OEM') in
the automotive, telecom, computer and general industrial markets working with
them on the development of new product lines. The group has built up a
reputation amongst this blue chip customer base as being innovative, cost
effective and a high quality manufacturer of a range of electronic and
electrical products.
The global economy in 2003 was generally sluggish with a number of the World's
developed countries near to recession. The first quarter gave rise to some
optimism in the electronic sector but this was dashed by the SARS outbreak and
the Iraq war and the second and third quarters produced a difficult economic
climate. There were some positive signs in the fourth quarter of a strengthening
of demand in certain markets which has been maintained so far in 2004.
Sales to the automotive market grew by 12 per cent over last year. This success
was due to the strength of our product range and to the successful range of
vehicles using our components. Electronic component sales were reduced as a
result of downsizing, the reorganisation of our unprofitable magnetics
operations and lower sales to the still depressed telecom and computer markets.
Sales of our electronic manufacturing services business were also reduced
following the decision by one large customer to take assembly work back in
house. There was little sign of a recovery in the telecom data infrastructure or
computer markets during the year but currently there is generally more optimism
for the sector during 2004. The power transmission and generation markets
remained highly competitive, imports from low labour cost countries had an
adverse effect on margins and our export business to the Far East was held back
in the early part of the year due to the SARS virus.
We continue to respond rapidly to the changing demands of our customers for new
technical developments, improving factory efficiencies and moving more
production to our factories in low labour cost areas will enable satisfactory
profit margins to be achieved. We have continued the introduction of cost
reduction programmes and to streamline our administration. We continue to take a
long-term view of our markets and have increased resources appropriately in both
product development and technical sales where we see opportunities for growth.
Whilst the group emphasises the importance of organic growth to all our
businesses, we actively seek suitable acquisitions at the right price provided
they enhance our technologies and product range for the markets we serve. The
acquisition of Optek Technology in December 2003, a £40 million turnover company
based in Dallas, Texas with a large manufacturing unit located just across the
border in Juarez, Mexico met our acquisition criteria and is successfully
being fully integrated into the sensor and electronic systems sub-sector.
Electronic sector
The electronics' market continues to change rapidly not only from a
technological standpoint but also as the large OEMs move from one country to
another to take advantage of the most cost competitive manufacturing base as
well as to serve the rapidly growing customer demand in developing countries. We
continue to monitor and respond to these dynamics.
Automotive market - represents 63 per cent of the electronic sector turnover
Over the last decade the electronic content of cars has increased annually at an
average of 6 per cent and this trend is forecast to continue. It is pleasing to
note that our sales growth to this market was 12 per cent and above the average
market growth. We recognised the potential of this market some years ago and
have developed a range of technologies and products which satisfy this demand.
Currently 60 per cent of all cars produced in Europe and North America
incorporate at least one of our products. The demand for electronics is driven
by three main features and our technologies and products are used in all three
of these growth areas:
Demand for enhanced vehicle performance and better fuel efficiency
A key aspect of reducing exhaust pollutants is to improve fuel efficiencies
which is achieved by a combination of better engine management systems and
lighter weight cars. TT electronics has developed a number of sensors which form
a part of the complex electronics required in today's engine management systems
as well as being a pioneer in drive-by-wire technologies for accelerator, brake
and steering systems. Currently all new BMW and Mercedes Benz cars use our
accelerator pedal sensor modules which are produced on dedicated automated
production lines at one of our German plants. Electronic steering is taking over
from the currently used hydraulic systems as this saves weight, improves fuel
consumption and reduces cost. TT electronics was one of the first to market
sensors for an electrically powered system and these are now incorporated into a
growing number of European and North American cars. Sales of these sensors grew
by 20 per cent last year.
Demand for improvements to car safety
A car's stability on the road is paramount and we produce a range of sensors for
chassis height control as well as ABS braking sensors. Other sensors and systems
include hybrid circuits for controlling high intensity discharge headlamps.
Demand for improved driving comfort
At our automotive engineering centre in Wales we specialise in the design of
complex climate control systems which control the different zones in a vehicle's
passenger compartment as well as incorporating in-car entertainment systems.
Such systems can take up to 12,000 engineering hours to develop due to the need
for the software to interface with other electronic and electrical systems
within the car as well as designing the appropriate style of the unit
incorporated into the dashboard. These products are manufactured in Wales and
the USA and, following the acquisition of Demo, in France and Brazil. Last year
the total number of our units sold increased to over two million units.
Telecom market - represents 9 per cent of the electronic sector turnover
The telecom market had in the past shown steady growth which peaked during the
boom year of 2000. Subsequently, in part due to the financial difficulties of
many of the World's largest service providers and equipment manufacturers, the
demand for the wide range of components we manufacture for this industry
collapsed. Sales this year reduced by 16 per cent from 2002 and by over 60 per
cent from 2000. Telecom products attracted a good profit margin and this
reduction in demand has adversely affected profitability.
Currently there are signs that investment in both wireless and wireline
infrastructures will increase as service providers and equipment manufacturers
repair their balance sheets and the World's spare capacity becomes more utilised
driven by the demand for new technologies. We expect some growth in this market
in 2004.
Due to the reduction in demand and increasing competition from China sales of
our magnetic components have been badly affected. We have responded by a major
reorganisation of our operations. This included closing our manufacturing plants
for laminations in the United Kingdom and exiting this market. Our ferrite
manufacturing plants in the United Kingdom and USA have been closed and
production transferred to our low labour cost factory in India which is being
enlarged to handle the additional equipment and turnover.
Computer market - represents 6 per cent of the electronic sector turnover
Our range of inductors and resistors continue to be designed into assemblies by
the World's leading computer manufacturers. However, the rapid move of the
production of PC's and laptops to China has impacted on the sales which have
reduced by 34 per cent from 2002 and over 60 per cent from 2000. These factors
have caused us to re-evaluate our supply chain into this market. During the year
we increased our presence in China by opening a technical centre based at our
sales office in Shenzhen and set up a manufacturing facility in Southern
Mainland China. This has the effect of bypassing import duties into China and
giving us a more competitive base to offset the rapid rise in local Chinese
competition.
Industrial market - represents 22 per cent of the electronic sector turnover
This market includes a wide range of industries and a large number of companies,
from large international to more niche specialist companies. The majority of our
sales have been to the control instrumentation and aerospace sectors which have
been stagnant during the year. Our marketing departments continually analyse the
opportunities and focus our technical sales and engineering on growth areas or
where we have a technological advantage.
Optek Technology sales to the office equipment market represent 32 per cent of
their turnover and it is our intention to use their contacts and expertise to
increase sales of our existing products into this market.
Electrical sector
Power generation - represents 29 per cent of the electrical sector turnover
The majority of the generator sets we manufactured in the United Kingdom were
for export to Africa, the Middle East and the Far East. This market has been
depressed for some years and made worse by the strength of sterling against the
US dollar. This year profitability was adversely affected by technical problems
on a large complex project for North Africa. To enable us to remain competitive
we have withdrawn from production in the United Kingdom and transferred business
to our efficient and profitable factory in Mexico which has undergone an
expansion and upgrade programme over the last three years. We continue to run a
maintenance and overhaul service for both the United Kingdom and selected
overseas customers. Our uninterruptible power supply business which has suffered
due to the telecom downturn won a number of new orders for our product
incorporated into mobile base stations in Singapore and Thailand.
Power transmission - represents 71 per cent of the electrical sector turnover
We have been successful in winning the sub-sea cable contracts for both of the
offshore wind farms constructed in the United Kingdom to date and have
expectation of winning future orders. The wind farm cable delivered in the
middle of 2003, whilst achieving an acceptable margin, due to its technical
complexity caused other production disruptions and delays. The general
industrial cable market is still oversupplied and is open to competition from
low cost imports from Eastern European countries which has the effect of
depressing margins. The specialist cable contract which we won in the second
half of 2003 for new naval vessels currently under construction will commence
delivery shortly and further orders are expected later this year.
Outlook
I stated in my review in March last year that 2003 would be a demanding
environment in which to grow sales. In the early stages of 2004 there is
generally more optimism for the recovering worldwide economy and demand for our
products is increasing. TT electronics is well prepared to benefit from such a
recovery.
Our policy has and will be to continue to manage the group in the long-term
interest of shareholders and employees. I am pleased to be handing over my role
to Neil Rodgers, who joined the group 12 years ago and has for the last 7 years
been Divisional Chief Executive responsible for our successful automotive
businesses. I wish him and the management teams who have supported me over the
years good fortune and an improving marketplace.
Sheridan W A Comonte
Chief Executive
29 March 2004
Consolidated profit and loss account
For the year ended 31 December 2003
Note Acquisitions Ongoing Continuing Discontinued 2003 Continuing Discontinued 2002
activities activities Total activities activities Total
Total
£million £million £million £million £million £million £million £million
Turnover 1 9.4 518.1 527.5 6.4 533.9 512.5 7.8 520.3
Cost of (8.2) (425.9) (434.1) (6.1) (440.2) (424.7) (10.9) (435.6)
sales ----- -------- ------- ------- -------- ------- ------- -------- -------
Gross profit 1.2 92.2 93.4 0.3 93.7 87.8 (3.1) 84.7
Operating
expenses (1.1) (71.5) (72.6) (0.8) (73.4) (73.3) (1.5) (74.8)
----- -------- ------- ------- -------- ------- ------- -------- -------
Operating
profit 0.1 20.7 20.8 (0.5) 20.3 14.5 (4.6) 9.9
----- -------- ------- ------- -------- ------- ------- -------- -------
Operating
profit before
impairment
provisions and
goodwill
amortisation 0.2 22.4 22.6 (0.5) 22.1 24.0 (1.6) 22.4
Impairment
provisions - - - - - (7.4) (3.0) (10.4)
Goodwill
amortisation (0.1) (1.7) (1.8) - (1.8) (2.1) - (2.1)
----- -------- ------- ------- -------- ------- ------- -------- -------
Operating
profit 0.1 20.7 20.8 (0.5) 20.3 14.5 (4.6) 9.9
----- -------- ------- ------- -------- ------- ------- -------- -------
Cost of
reorganisation
-magnetics 2 - (3.0) (3.0) (10.8) (13.8) - - -
Loss on sale
of business 2 - (1.2) (1.2) - (1.2) - - -
Profit on sale
of fixed asset
investment 2 - - - - - 1.2 - 1.2
----- ------- ------ ------- -------- ------ ------- -------- ------
Profit on
ordinary
activities
before
interest 0.1 16.5 16.6 (11.3) 5.3 15.7 (4.6) 11.1
Interest (0.1) (2.0) (2.1) - (2.1) (2.8) (0.4) (3.2)
----- ------- ------ ------- -------- ------ ------- -------- ------
Profit on
ordinary
activities
before
taxation 1 - 14.5 14.5 (11.3) 3.2 12.9 (5.0) 7.9
Taxation - (3.7) (3.7) 0.5 (3.2) (3.3) 1.2 (2.1)
----- ------- ------ ------- -------- ------ ------- -------- ------
Profit on
ordinary
activities
after taxation - 10.8 10.8 (10.8) - 9.6 (3.8) 5.8
Minority
interests - (0.1) (0.1) - (0.1) (0.2) - (0.2)
----- ------- ------ ------- -------- ------ ------- -------- ------
(Loss)/profit
for the year - 10.7 10.7 (10.8) (0.1) 9.4 (3.8) 5.6
Dividends 3 - (15.6) (15.6) - (15.6) (15.6) - (15.6)
----- ------- ------ ------- -------- ------ ------- -------- ------
Retained - (4.9) (4.9) (10.8) (15.7) (6.2) (3.8) (10.0)
loss ----- ------- ------ ------- -------- ------ ------- -------- ------
Earnings per
share 4
- basic and
fully diluted (0.1)p 3.6p
- before
impairment
provisions,
goodwill
amortisation
and
exceptional
items 10.4p 10.1p
Consolidated balance sheet
At 31 December 2003
Note 2003 2002
£million £million
Fixed assets
Intangible assets 44.9 30.2
Tangible assets 143.5 142.1
Investments 5.3 5.1
------- -------
193.7 177.4
------- -------
Current assets
Property 1.8 2.0
Stocks 98.5 98.2
Debtors 108.7 109.7
Investments 0.1 0.1
Cash 8.5 5.1
------- -------
217.6 215.1
Creditors falling due within one year (147.2) (121.0)
------- -------
Net current assets 70.4 94.1
------- -------
Total assets less current liabilities 264.1 271.5
Creditors falling due after more than one
year (60.9) (57.2)
Provisions for liabilities and charges (4.2) (5.8)
Minority interests (2.9) (2.8)
------- -------
Total net assets 196.1 205.7
------- -------
Capital and reserves
Share capital 38.7 38.7
Share premium account 56.0 56.0
Capital redemption reserve 4.4 4.4
Merger reserve 23.0 12.1
Profit and loss account 74.0 94.5
------- -------
Equity shareholders' funds 5 196.1 205.7
------- -------
Consolidated cash flow statement
For the year ended 31 December 2003
Note 2003 2002
£million £million
Net cash inflow from operating activities 6 45.2 42.6
------------------------------------- ------ ------- ------
Returns on investments and servicing of finance
Dividends received - 0.3
Interest paid (2.6) (4.0)
Interest received 0.5 0.5
------------------------------------- ------ ------- ------
Net cash outflow from returns on
investments and servicing of finance (2.1) (3.2)
------------------------------------- ------ ------- ------
Taxation (2.9) (2.9)
------------------------------------- ------ ------- ------
Capital expenditure and financial investment
Sale of tangible fixed assets 2.2 1.2
Government grants received 0.8 1.0
Sale of fixed asset investments - 10.6
Purchase of fixed asset investments (0.2) (4.0)
Purchase of tangible fixed assets (23.5) (26.5)
------------------------------------- ------ ------- ------
Net cash outflow from capital expenditure
and financial investment (20.7) (17.7)
------------------------------------- ------ ------- ------
Acquisitions and disposals
Purchase of businesses 8 (31.0) -
Sale of business 8 1.1 -
------------------------------------- ------ ------- ------
Net cash outflow from acquisitions and
disposals (29.9) -
------------------------------------- ------ ------- ------
Ordinary dividends paid (15.6) (15.6)
------------------------------------- ------ ------- ------
Net cash (outflow) / inflow before liquid
resources and financing (26.0) 3.2
------------------------------------- ------ ------- ------
Net cash outflow from management of liquid resources - -
------------------------------------- ------ ------- ------
Financing
New loans 6.7 2.2
Loan repayments (0.4) (1.6)
Finance lease repayments - (0.3)
------------------------------------- ------ ------- ------
Net cash inflow from financing 6.3 0.3
------------------------------------- ------ ------- ------
(Decrease)/increase in cash 7 (19.7) 3.5
------------------------------------- ------ ------- ------
Notes to the financial statements
1. Analysis of turnover and profit on ordinary activities before taxation
Turnover
2003 2002
£million £million
By sector
Electronic 349.3 341.2
Electrical 178.2 171.3
----------------------------------------- ------- -------
Continuing activities 527.5 512.5
Discontinued activities 6.4 7.8
----------------------------------------- ------- -------
533.9 520.3
------- -------
The results of Optek Technology Inc and the business of Demo Tableaux de
Commande SA acquired during the year are reported in the electronic sector. Air
Transport Avionics Limited up to its disposal is reported as a continuing
activity within the electrical sector. The magnetics businesses, except for
laminations, are reported as continuing activities within the electronic sector.
The result of the laminations business, formerly part of the electronic sector,
is reported as a discontinued activity.
2003 2002
£million £million
By origin
United Kingdom 258.6 263.1
Rest of Europe 136.2 112.9
North America 102.0 106.3
Rest of the World 30.7 30.2
----------------------------------------- ------- -------
Continuing activities 527.5 512.5
Discontinued activities 6.4 7.8
----------------------------------------- ------- -------
533.9 520.3
------- -------
By destination
United Kingdom 155.8 156.3
Rest of Europe 206.5 179.9
North America 101.5 108.0
Rest of the World 63.7 68.3
----------------------------------------- ------- -------
Continuing activities 527.5 512.5
Discontinued activities 6.4 7.8
----------------------------------------- ------- -------
533.9 520.3
------- -------
The turnover of discontinued activities originates in the United Kingdom.
Turnover of discontinued activities by destination was £4.7 million (2002 - £6.1
million) to the United Kingdom, £0.7 million (2002 - £0.4 million) to the Rest
of Europe, £0.9 million (2002 - £1.2 million) to North America and £0.1 million
(2002 - £0.1 million) to the Rest of the World.
Profit on ordinary activities before taxation (continued)
2003 2002
£million £million
By sector
Electronic 16.9 17.3
Electrical 5.7 6.7
---------------------------------------- ------- -------
Continuing activities 22.6 24.0
Discontinued activities (0.5) (1.6)
---------------------------------------- ------- -------
Operating profit before impairment provisions
and goodwill amortisation 22.1 22.4
Impairment provisions - (10.4)
Goodwill amortisation (1.8) (2.1)
---------------------------------------- ------- -------
Total operating profit 20.3 9.9
Exceptional items (15.0) 1.2
---------------------------------------- ------- -------
Profit on ordinary activities before interest 5.3 11.1
Interest (2.1) (3.2)
---------------------------------------- ------- -------
Profit on ordinary activities before taxation 3.2 7.9
---------------------------------------- ------- -------
By origin
United Kingdom 2.0 0.7
Rest of Europe 14.2 12.5
North America 4.4 5.6
Rest of the World 2.0 5.2
---------------------------------------- ------- -------
Continuing activities 22.6 24.0
Discontinued activities (0.5) (1.6)
---------------------------------------- ------- -------
Operating profit before impairment provisions
and goodwill amortisation 22.1 22.4
Impairment provisions - (10.4)
Goodwill amortisation (1.8) (2.1)
---------------------------------------- ------- -------
Total operating profit 20.3 9.9
Exceptional items (15.0) 1.2
---------------------------------------- ------- -------
Profit on ordinary activities before interest 5.3 11.1
Interest (2.1) (3.2)
---------------------------------------- ------- -------
Profit on ordinary activities before taxation 3.2 7.9
---------------------------------------- ------- -------
2. Exceptional items
2003 2002
£million £million
Cost of reorganisation - magnetics (13.8) -
Loss on sale of business (1.2) -
Profit on sale of fixed asset investment - 1.2
------- -------
(15.0) 1.2
------- -------
The group has carried out a major reorganisation of its magnetic businesses
which in previous years were a significant part of the group's activities. This
reorganisation resulted in a charge of £13.8 million including £10.1 million of
goodwill previously written off to reserves. On 11 June 2003 the group sold the
business of Air Transport Avionics Limited at a loss of £1.2 million including
£0.8 million of goodwill previously written off to reserves.
The cost of reorganisation comprises £10.8 million in respect of discontinued
activities, and £3.0 million in respect of continuing activities.
On 19 December 2002 the group disposed of its entire holding in Johnston Group
PLC at a profit of £1.2 million.
3. Dividends
2003 2002 2003 2002
pence per pence £million £million
share per
share
Equity
Ordinary dividends
- Interim, paid 3.69 3.69 5.7 5.7
- Final, proposed 6.36 6.36 9.9 9.9
-------- ------- ------- -------
10.05 10.05 15.6 15.6
-------- ------- ------- -------
4. Earnings per share
2003 2002
pence per pence per
share share
Earnings per share
Basic and fully diluted (0.1) 3.6
Before impairment provisions,
goodwill amortisation and
exceptional items 10.4 10.1
------- -------
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 fully diluted earnings per
share are reconciled below.
An adjusted earnings per share has also been presented based on the profit
attributable to shareholders before impairment provisions, goodwill amortisation
and exceptional items. The effect of these items on earnings is reconciled
below.
2003 2002
£million £million
Net (Loss)/profit for the period attributable to
shareholders
Earnings basic and fully diluted (0.1) 5.6
Goodwill amortisation 1.8 2.1
Impairment provisions, net of tax relief - 9.1
Exceptional items, net of tax relief 14.5 (1.2)
------- -------
Earnings before impairment provisions, goodwill
amortisation and exceptional items 16.2 15.6
------- -------
2003 2002
million million
Weighted average number of shares in issue
Basic 154.8 154.8
Adjustment for share options 0.6 0.4
------- -------
Fully diluted 155.4 155.2
------- -------
5. Reconciliation of movements in shareholders' funds
2003 2002
£million £million
(Loss)/profit for the year (0.1) 5.6
Exchange differences on net foreign currency
investments (4.8) (6.4)
------- -------
Total recognised gain and losses (4.9) (0.8)
Dividends (15.6) (15.6)
Goodwill included in exceptional items, see note
2 10.9 -
------- -------
Net change in shareholders' funds (9.6) (16.4)
Opening shareholders' funds 205.7 222.1
------- -------
Closing shareholders' funds 196.1 205.7
------- -------
6. Reconciliation of group operating profit to net cash inflow from operating
activities
2003 2002
£million £million
Total operating profit 20.3 9.9
Depreciation 26.1 26.0
Amortisation 1.8 2.1
Charge for impairment - 10.4
Government grants credited to profit (0.8) (1.0)
Profit on sale of tangible fixed assets (0.7) (0.1)
Closure and other costs (1.5) (1.0)
Decrease in property current assets 0.8 2.0
Decrease in stocks 1.5 0.9
Decrease in debtors 8.6 2.2
Decrease in creditors (8.9) (4.0)
Movement on pension prepayments and accruals (0.9) (1.2)
Exchange translation differences (1.1) (3.6)
------- --------
Net cash inflow from operating activities 45.2 42.6
------- --------
7. Reconciliation of net cash flow to movement in net debt
Net cash/ Short-term Loans Net Debt
(overdraft) investments and finance £million
£million £million lease
obligations
£million
Balance at 31
December 2001 (11.6) 0.1 (52.0) (63.5)
Cash flow 3.5 - (0.3) 3.2
Exchange
differences 0.5 - 4.0 4.5
------------------------ --------- --------- --------- --------
Balance at 31
December 2002 (7.6) 0.1 (48.3) (55.8)
Cash flow (19.7) - (6.3) (26.0)
Acquisition - - (0.6) (0.6)
Exchange
differences 0.1 - 4.1 4.2
------------------------ --------- --------- --------- --------
Balance at 31
December 2003 (27.2) 0.1 (51.1) (78.2)
------------------------ --------- --------- --------- --------
8. Acquisitions and Disposals
The group acquired Optek Technology Inc, a sensor manufacturer, on 3 December
2003 at a cost of £30.6 million. On 14 March 2003 the group acquired the
business of Demo Tableaux de Commande SA, a manufacturer of automotive climate
control units at a cost of £1.7 million. The net cash outflows in respect of
these acquisitions totalled £31.0 million. The business of Air Transport
Avionics Limited was sold on 11 June 2003 for a cash consideration of £1.1
million.
9. Post balance sheet event
On 11 March 2004 TT electronics plc announced the acquisition of Sensopad
Technologies Ltd, a technology development company, for a cash consideration of
£1.4 million together with the payment of future royalties.
10. Basis of preparation
The information above, which does not constitute full financial statements
within the meaning of S240 CA, 1985 is extracted from the audited financial
statements of TT electronics plc for the year ended 31 December 2003 which:
• have been prepared on a basis consistent with the accounting policies
set out in the annual report for the year ended 31 December 2002 as filed
with the Registrar of Companies
• were approved by the Directors on 29 March 2004
• carry an unqualified audit report, which did not contain statements
under S237 CA, 1985
• will be posted to shareholders and available to the public in April 2004
• will be filed with the Registrar of Companies following the Annual
General Meeting on 19 May 2004
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 4 hours ago National Grid
- 4 hours ago Greencore Group (CDI)
- 4 hours ago Barclays
- 4 hours ago EJF Investments Ltd
- 5 hours ago IG Group Holdings