TIDMTTG
RNS Number : 9286Y
TT Electronics PLC
09 March 2017
2016 Preliminary Results, 9 March 2017
TT Electronics plc
Results for the year ended 31 December 2016
GBP million unless Underlying(1) Statutory
otherwise stated
-----------------------------------
2016 2015 Change Change 2016 2015
constant
fx
Revenue 569.9 509.9 12% 3% 569.9 509.9
Operating profit 31.3 21.7 44% 26% 27.6 16.3
Profit before
tax 26.9 19.2 40% 20% 23.2 13.8
Earnings per
share (pence) 12.0p 8.8p 36% 19% 10.3p 6.5p
Return on invested
capital(2) 10.3% 9.0% 130bps
Cash conversion(3) 87% 136%
------ ------ ------- ---------- ------- -------
Free cash flow(4) 13.8 5.1
Net debt (55.4) (56.1)
Dividend per
share (pence)
(5) 5.6p 5.5p
------- -------
1. Excluding the effect of restructuring costs, asset
impairments and acquisition related costs
2. Rolling 12 month underlying operating profit return on
average invested capital
3. Underlying operating cash flow (underlying EBITDA less net
capital expenditure excluding property disposals, capitalised
development expenditure, working capital and non-cash movements)
divided by underlying operating profit
4. Net cash flow from operating activities less net cash flow
from investing activities less interest paid
5. Interim dividend combined with final proposed dividend
Good strategic progress and strong financial performance
-- Continued customer focus driving new contract wins; strong sales performance in Asia
-- Operational efficiency improvements supporting excellent profit growth
-- Aero Stanrew continues to perform well and successfully integrated
-- Entering 2017 with good momentum and a robust order book
Financial headlines
-- Robust organic revenue performance, returned to organic revenue growth in H2
-- Underlying operating profit up 26%, underlying EPS up by 19% at constant currency
-- Good underlying cash conversion at 87%, further enhanced by
GBP12.3 million from sale of properties
-- Return on invested capital improving, up 130bps
-- Increase in dividend reflects progress in 2016 and confidence in 2017
Richard Tyson, Chief Executive Officer, said:
"We are pleased with the strong performance achieved in 2016,
ahead of expectations. This has resulted in improved growth and
profitability for the Group, and our free cash flow performance has
been excellent.
We have a clear and realistic strategy for TT to focus on
structural growth markets where there is increasing electronic
content. We continue to deploy our engineering expertise and
investment in areas where we see real opportunities for growth.
Despite uncertain end-markets, we enter the year with good momentum
in operational efficiency improvement and a robust order book,
giving us confidence of making further progress in 2017."
For further information, please contact:
TT Electronics
Richard Tyson, Chief Executive Officer
Mark Hoad, Chief Financial Officer
Emma Darke, Head of Investor Relations and Communications Tel: +44 (0)1932 825 300
MHP Communications
Tim Rowntree / Jamie Ricketts / Hannah Winter Tel: +44 (0)20
3128 8100
An analyst presentation will be held today at 10.00am at Numis,
10 Paternoster Square, London EC4M 7LT. A replay of the webcast
will be available on the investor relations section of our website
later today at www.ttelectronics.com.
2016 OVERVIEW
We are pleased with the strong strategic and financial
performance of the Group. 2016 trading was ahead of
expectations.
Group revenue for 2016 was GBP569.9 million (2015: GBP509.9
million) an increase of 12 per cent and 3 per cent excluding the
impact of foreign exchange (plus GBP43.0 million). As expected,
revenue was flat on an organic basis (excluding the impact of
exchange rates, acquisitions and disposals). Aero Stanrew
contributed revenues of GBP18.3 million. Our sales performance has
been good, particularly in Asia, delivering a robust performance in
markets that remained challenging throughout the year. The Group's
order book is encouraging and is slightly ahead compared to the
same time last year.
Underlying operating profit increased by 44 per cent to GBP31.3
million (2015: GBP21.7 million) driven by the turnaround of
Transportation Sensing and Control and the contribution from the
Aero Stanrew acquisition. Excluding the positive foreign exchange
movement of GBP3.2 million, underlying operating profit increased
by 26 per cent, with GBP3.4 million contributed from Aero Stanrew
and GBP3.0 million coming from self-help actions and underlying
business performance. Underlying operating profit margin for the
Group has improved by 120 basis points and return on invested
capital is now 10.3 per cent (2015: 9.0 per cent).
Cash generation improved in the second half of the year as
expected and we delivered full year cash conversion of 87 per cent
(2015: 136 per cent) and a free cash inflow of GBP13.8 million
(2015: GBP5.1 million), an increase of 171 per cent. Continued
strong underlying cash performance was enhanced by GBP12.3 million
of proceeds received from the sale of surplus sites in Weybridge,
Fullerton and a site in Werne.
Year-end net debt was GBP55.4 million (2015: GBP56.1 million).
Net debt to EBITDA was 1.0 times (2015: 1.3 times).
STRATEGIC PROGRESS
We have achieved a significant amount in 2016:
-- We have turned around the Transportation Sensing and Control
division. We have returned the division to profitable growth by
positioning the business around structural growth drivers including
safety, emissions and power electronics.
-- We have repositioned and invested in Industrial Sensing and
Control (IS&C) and Advanced Components and will continue to do
so. We have increased the cash spent on R&D in these divisions
by 13 per cent compared to 2015.
-- We have increased the level of penetration within our key
customers and opened up new channels of business. We have
strengthened strategic account management across the Group and
increased sales in Asia by 12 per cent at constant currency.
Our strategy is to build leading positions in markets with
structural growth drivers where there is increasing electronic
content. Our core capabilities are developing highly engineered
electronic components and assemblies for harsh, often regulated
environments. Our organisational agility is allowing us to respond
quickly to changing customer and market dynamics.
Increasingly going to market as a unified business has helped
unlock customer opportunities, including new business won with an
existing consumer electrical equipment supplier, increasing
revenues for this strategic customer account by over 50 per cent in
the last two years. As a result of a collaborative 'One TT' sales
effort, we secured a new contract with a global engine
manufacturer, already an Aero Stanrew customer, for
Application-specific Integrated Circuit (ASIC) solutions from our
clean room in Bedlington.
We continue to strengthen our capabilities in markets that are
strategically important due to their size or high growth rates.
This includes Asia, where Group revenue has increased 12 per cent
at constant currency, and in the US, where we won an important
development order with a large automotive OEM.
We now have an established R&D management framework with a
gated approval process and clear prioritisations for efficient
R&D spend in alignment with our strategy. During the year, we
spent GBP22.6 million on our focused R&D efforts. We are
creating a culture of collaboration for innovative thinking and
supporting the investment in R&D initiatives that will help
drive growth for TT in the future. During the year, we launched 29
new products as a result of our R&D capabilities, an increase
from the number of products launched in 2015.
Lean initiatives have been a continued focus across the Group
with four lean projects undertaken throughout the year. We have
trained a community of Master Lean Practitioners ('MLPs') who are
in turn training colleagues in lean methodologies across our sites
and functions. We have run a number of 'Be Lean' projects across
the business; on production lines where we have focused our
efforts, we have seen significant improvements, including an
example where stock turns improved by more than 30 per cent. Across
the pilots, lead times were cut by between 40 and 60 per cent.
We have taken sensible steps to improve our procurement
practices including focusing on our freight and logistics supply
chain. Reducing the number of suppliers has improved the simplicity
of our operations and created savings. For air and sea freight, our
actions have seen identified savings of over 40 per cent.
Safety is of paramount importance to us and we have seen clear
progress in our zero harm measures which have gained momentum. Our
employees continue to manage and prioritise health and safety and
2016 saw a 55 per cent improvement in safety performance over the
prior year.
Aero Stanrew was acquired in December 2015. In our first full
year of ownership the business has been successfully integrated,
has performed well, achieved strong order growth, and is on track
to deliver return on invested capital in excess of our cost of
capital this year. We continue to explore inorganic opportunities
to accelerate growth in attractive markets where we can leverage
our expertise to expand market presence and enhance our offerings
to customers.
DIVISIONAL REVIEWS
TRANSPORTATION SENSING AND CONTROL
The Transportation Sensing and Control division develops both
sensors and control solutions for automotive OEMs and tier one
suppliers including powertrain providers for passenger cars and
trucks. TT develops a wide range of products for multiple
applications on a vehicle, from power controls, gear position and
pedal sensors to fluid and emission sensors, with almost all of
them focused on the safety and driver assistance features required
by our customers.
2016 2015 Change Change
constant
fx
------------------------------- --------- --------- ------ ---------
Revenue GBP237.2m GBP205.8m 15% 4%
Underlying operating profit(1) GBP3.2m GBP(1.4)m 329% 500%
Operating profit margin(1) 1.3% (0.7)% 200bps 170bps
------------------------------- --------- --------- ------ ---------
1. Excluding restructuring costs, asset impairments and
acquisition related costs.
The Transportation Sensing and Control (TS&C) division has
performed strongly, making a step change in performance with the
division returning to profitable growth faster than expected.
Revenue for the division was GBP237.2 million (2015: GBP205.8
million) up by 15 per cent. There was a positive foreign exchange
impact of GBP22.6 million. Revenues increased by 4 per cent on an
organic basis as a result of market demand in both Europe and
China, together with new contract wins in China to service the
growing domestic market.
Underlying operating profit was GBP3.2 million (2015: GBP(1.4)
million), an increase of GBP4.0 million at constant currency due to
the realisation of benefits from the Operational Improvement Plan,
together with the impact of organic growth. There was a GBP0.6
million foreign exchange benefit. Operating margins improved by 200
basis points to 1.3 per cent (2015: minus 0.7 per cent).
The strong financial performance reflects the faster than
expected turnaround in the business. We have gained momentum in our
strategy by focusing on areas of the market where there are
structural growth drivers including safety, emissions and power
electronics. We have maintained our strong position in Europe while
driving growth in China in the sizeable domestic market, and
securing our first major win in the US earlier this year, marking
our re-entry to the large US market where we see opportunity to
grow market share over the medium term.
We have seen good growth in China with five new customers won
during the year for position sensors in chassis applications in
addition to further revenue growth with a number of existing
customers. We have seen the ramp up of a new pedal platform and
global crankshaft platform which has increased volumes sold in
China. Our European operations have also performed strongly with
significant ramp up of new contracts during the year including for
remote lights, LED lighting solutions and a chassis height sensor
solution.
During the year, we also launched a new automotive actuator to
deliver significant improvements to our next generation haptic
accelerator pedals offering power-efficient transmission and a
significant weight reduction from previous generation offerings,
improving our customers' fuel efficiency.
We have positioned TS&C in the right areas of the automotive
market to benefit from increasing electrification, additional
sensors on cars, and the market trend towards electric, hybrid
electric and autonomous vehicles. New changes in emissions
legislation have refocused industry efforts on turbo charged
engines, where we have won a new contract during the year for our
high temperature sensors for a leading German OEM. We also have a
wide range of products for exhaust after treatment including fluid
quality sensors which we offer in Europe, India and Korea.
INDUSTRIAL SENSING AND CONTROL
The Industrial Sensing and Control division addresses
challenging sensing requirements in terms of precision, speed of
response, reliability or the physical environment in which the
products operate. Its position, pressure, temperature, flow and
fluid quality sensors are used for critical applications in a range
of end markets including industrial automation and process control,
medical and aerospace.
2016 2015 Change Change
constant
fx
------------------------------- -------- -------- ------- ---------
Revenue GBP64.4m GBP61.0m 6% (4)%
Underlying operating profit(1) GBP11.9m GBP11.4m 4% (8)%
Operating profit margin(1) 18.5% 18.7% (20)bps (60)bps
------------------------------- -------- -------- ------- ---------
1. Excluding restructuring costs, asset impairments and
acquisition related costs.
Industrial Sensing and Control (IS&C) revenues increased by
6 per cent from GBP61.0 million to GBP64.4 million. There was a
GBP6.4 million positive foreign exchange impact, with revenues
decreasing by 4 per cent on an organic basis. The decrease in
revenues was in large part a result of challenging North American
industrial markets, although the division returned to modest growth
in the second half of the year.
The division maintained strong profitability despite the decline
in revenues and an increase in R&D expense to support future
growth. Underlying operating profit was GBP11.9 million (2015:
GBP11.4 million) up by 4 per cent. Operating profit margin was 18.5
per cent, down 20 basis points from 18.7 per cent in 2015. There
was a GBP1.5 million foreign exchange benefit.
Our optoelectronics offerings, that combine the use of
electronics and light, have seen good growth throughout the year,
improving the mix of business towards higher reliability and
precision offerings which have a higher margin profile.
During the year IS&C launched a number of new products to
support future growth including a component that transfers
electrical signals between two isolated circuits using light, to
support satellites, and spacecraft. We also launched a
high-performance industrial pressure transmitter for a range of
industrial applications including chemical plants, mining, power
generation and plastics manufacturing. Our R&D efforts will
continue to provide our customers with high precision, high
reliability components for industrial, medical, and transportation
markets.
During the year we won a contract with an American computer
hardware, software and electronics customer to design and deliver
circuit board assemblies to be used in ATMs for detecting currency,
cheques and deposit envelopes. We have a longstanding relationship
with this customer for delivering individual infrared light
emitting and detecting components as well as cable assemblies which
are all core components in the new circuit board assembly
contract.
ADVANCED COMPONENTS
The Advanced Components division creates specialist, high
performance, ultra-reliable, highly engineered electronic
components for circuit protection, power management, signal
conditioning and connectivity applications in harsh environments.
It serves customers in the industrial, automotive, aerospace,
defence and medical markets and focuses on creating value by
developing innovative electronic solutions to challenging problems
for our customers' electronic circuits or systems.
2016 2015 Change Change
constant
fx
------------------------------- --------- -------- ------ ---------
Revenue GBP121.3m GBP95.3m 27% 21%
Underlying operating profit(1) GBP10.3m GBP6.0m 72% 66%
Operating profit margin(1) 8.5% 6.3% 220bps 230bps
------------------------------- --------- -------- ------ ---------
1. Excluding restructuring costs, asset impairments and
acquisition related costs.
Advanced Components revenues increased by 27 per cent to
GBP121.3 million (2015: GBP95.3 million). The division returned to
growth in the second half of the year and for the year as whole
revenues increased by 3 per cent on an organic basis. Aero Stanrew
contributed GBP18.3 million of revenues and there was a positive
foreign exchange impact of GBP5.0 million.
There was an improvement in underlying operating profit to
GBP10.3 million (2015: GBP6.0 million). The increase was due to the
Aero Stanrew profit contribution of GBP3.4 million, together with
drop-through on the organic growth. There was a positive foreign
exchange benefit of GBP0.2 million. Operating margins increased by
220 basis points to 8.5 per cent (2015: 6.3 per cent), reflecting
good efficiency improvements and the incorporation of the higher
margin Aero Stanrew business.
Advanced Components released 11 new products during the year,
further enhancing its position as a global leader in circuit
protection, detection and power management across aerospace and
defence, transportation and industrial markets. These product
launches will position the division to benefit from structural
growth drivers in these markets. We continue to see strong demand
for wire wound resistors targeted at the smart metering business,
as a result of European legislation.
We are experiencing good growth in automotive electro-magnetics
due to increasing demand for high quality components for power
management as our customers manage the increasing power requirement
and increasing electronic content in cars. Our electromagnetic
capabilities have been enhanced by the acquisition of Aero Stanrew
and additional product launches including two power inductors and a
transformer targeting demanding high temperatures in automotive and
industrial applications.
This year we launched mag-Net(R), a new connector which forms
part of a soldier system for the digital battlefield. The system is
for the next generation digital battlefield which enables
communications for the connected solider. mag-Net(R) is currently
being used in equipment trials with a large customer in the defence
industry.
Aero Stanrew was acquired in December 2015. In our first full
year of ownership the business has been successfully integrated,
has performed well, achieved strong order growth, and is on track
to deliver return on invested capital in excess of our cost of
capital this year. As a result of a collaborative 'One TT' sales
effort, we secured a new contract with a global engine
manufacturer, already an Aero Stanrew customer, for
Application-specific Integrated Circuit (ASIC) solutions from our
clean room in Bedlington.
IMS
The IMS division draws on its manufacturing design engineering
capabilities, global facilities and world-class quality standards
to provide highly complex electronic manufacturing solutions to
customers in the aerospace and defence, medical, and high
technology industrial sectors. The business has broad capabilities
ranging from printed circuit board assembly to environmental test
and full systems integration. This global suite of end-to-end
solutions is focused exclusively on low volume, high mix
business.
2016 2015 Change Change
constant
fx
------------------------------- --------- --------- ------ ---------
Revenue GBP147.0m GBP147.8m (1)% (6)%
Underlying operating profit(1) GBP5.9m GBP5.7m 4% (11)%
Operating profit margin(1) 4.0% 3.9% 10bps (20)bps
------------------------------- --------- --------- ------ ---------
1. Excluding restructuring costs, asset impairments and
acquisition related costs.
IMS revenues were down 1 per cent at GBP147.0 million (2015:
GBP147.8 million). There was a positive foreign exchange impact of
GBP9.0 million and on an organic basis, revenues declined by 6 per
cent. Revenues in China were strong, with new customers won in
transportation and medical markets. The division was faced with
challenging industrial markets in the US which resulted in a volume
reduction as project revenues ended as expected.
Underlying operating profit increased from GBP5.7 million in
2015 to GBP5.9 million in 2016. There was a positive foreign
exchange benefit of GBP0.9 million. In China good progress with
operational efficiency measures supported a strong contribution to
the divisional performance. The impact of the reduction in volume
in the US was mitigated in large part through a 22 per cent
headcount reduction and other cost reduction actions. Operating
margins were increased to 4.0 per cent (2015: 3.9 per cent).
IMS provides services to customers primarily in aerospace and
defence, medical and industrial markets, all of which are
responding to the need for increasing electronic content. In the
medical market, we have seen strong growth in life sciences,
ophthalmology and direct patient care, including winning a new
contract with an Australian optometry equipment provider.
During the year, there continued to be good collaboration across
IMS sites and between IMS and our other divisions. Within IMS, our
UK site in Rogerstone and our Chinese site in Suzhou collaborated
on a cabin lighting project for a customer. In addition, IMS has
been supporting the good growth in Advanced Components by providing
specialist manufacturing capabilities for engine test
equipment.
During the year, we won a number of new customers in Asia in
addition to expanding existing customer relationships. Sales in
Asia increased by 17 per cent at constant currency. In particular,
we have seen strong growth in the Chinese rail market where new
business included a three year contract to provide design and
manufacturing services for the Chinese metro lines. We have also
started to win new customers across Asia Pacific as a result of
focused sales efforts to meet growing regional demand which
includes a Korean semi-conductor customer won during the year.
OTHER FINANCIAL INFORMATION
There was a GBP1.9 million increase in the net interest expense
to GBP4.4 million (2015: GBP2.5 million) primarily as a result of
the increased debt associated with the Aero Stanrew
acquisition.
The underlying effective tax rate was 27.9 per cent (2015: 27.0
per cent) and basic underlying earnings per share increased by 36
per cent to 12.0 pence (2015: 8.8 pence), and by 19 per cent at
constant currency.
Profit for the year improved to GBP16.7 million (2015: GBP10.4
million) after a charge for items excluded from underlying profit
of GBP3.7 million (2015: GBP5.4 million). Included within this
charge were restructuring costs of GBP4.2 million relating to the
OIP and other footprint change, a GBP4.3 million gain on the
disposal of surplus properties, in part linked to the footprint
change projects, and acquisition costs of GBP3.8 million relating
mainly to the non-cash amortisation of acquisition intangibles.
Net debt at the end of the year was GBP55.4 million (2015:
GBP56.1 million). In May 2016, the Group signed a new five year
GBP150 million multi-currency revolving credit facility to replace
the GBP75 million multi-currency and $60 million US dollar
facilities which were due to expire in August 2016. The Group had
available GBP65.2 million of undrawn committed borrowing facilities
and GBP57.6 million of undrawn uncommitted borrowing facilities,
representing overdraft lines (GBP27.6 million) and the accordion
facility (GBP30.0 million).
The triennial valuation of the UK pension scheme as at April
2016 showed a deficit of GBP46.0 million against the Trustee's
funding objective compared with GBP19.1 million at April 2013. The
Company will continue with the previously agreed schedule of
deficit contributions. These planned contributions amount to GBP4.7
million in 2017, GBP4.9 million in 2018, GBP5.1 million in 2019 and
GBP3.9 million in 2020. The total accounting deficit under the
Group's defined benefit pension schemes decreased to GBP5.7 million
(2015: GBP21.1 million). The reduction was due to deficit
contributions to the UK scheme, together with positive asset
returns and experience improvements which more than offset the
impact of a reduction in discount rates and increase in inflation
rate.
DIVID
The Board is recommending increasing the final dividend to 3.9
pence. This, when combined with the interim dividend of 1.7 pence,
gives an increased total dividend of 5.6 pence per share for the
full year (2015: 5.5 pence per share). Payment of the dividend will
be made on 2 June 2017 to shareholders on the register on 19 May
2017.
OUTLOOK
We are pleased with the strong performance achieved in 2016,
ahead of expectations. This has resulted in improved growth and
profitability for the Group, and our free cash flow performance has
been excellent.
We have a clear and realistic strategy for TT to focus on
structural growth markets where there is increasing electronic
content. We continue to deploy our engineering expertise and
investment in areas where we see real opportunities for growth.
Despite uncertain end-markets, we enter the year with good momentum
in operational efficiency improvement and a robust order book,
giving us confidence of making further progress in 2017.
GOING CONCERN
The Directors have reviewed the budgets for 2017 and the
projections for 2018 developed during the 2016 annual strategic
planning cycle. The Directors have assessed the future funding
requirements of the Group and compared them with the level of
available borrowing facilities, recognising that the main committed
facility was re-negotiated in May 2016 for a period of five years
to May 2021. Based on this, the Directors are satisfied that the
Group has adequate resources to continue in operational existence
for at least 12 months from the date of the Audit Report. For this
reason they continue to adopt the going concern basis in preparing
the financial statements.
RESPONSIBILITY OF THE DIRECTORS
We confirm that to the best of our knowledge:
-- The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- The Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
We consider the Annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
By order of the Board
Richard Tyson Mark Hoad
Chief Executive Officer Chief Financial Officer
8 March 2017 8 March 2017
Cautionary statement
This report contains forward-looking statements. These have been
made by the Directors in good faith based on the information
available to them up to the time of their approval of this report.
The Directors can give no assurance that these expectations will
prove to have been correct. Due to the inherent uncertainties,
including both economic and business risk factors underlying such
forward looking information, actual results may differ materially
from those expressed or implied by these forward-looking
statements. The Directors undertake no obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise.
Consolidated income statement
for the year ended 31 December 2016
GBPmillion (unless otherwise stated) Note 2016 2015
====================================== ===== ======== ========
Revenue 3 569.9 509.9
Cost of sales (461.6) (417.5)
====================================== ===== ======== ========
Gross profit 108.3 92.4
Distribution costs (32.0) (29.0)
Administrative expenses (49.8) (48.2)
Other operating income 1.1 1.1
====================================== ===== ========
Operating profit 27.6 16.3
========
Analysed as:
Underlying operating profit 3 31.3 21.7
Restructuring 6 0.1 (2.9)
Acquisition related costs 6 (3.8) (0.8)
Asset impairments 6 - (1.7)
====================================== ===== ======== ========
Finance income 5 0.2 1.8
Finance costs 5 (4.6) (4.3)
====================================== ===== ======== ========
Profit before taxation 23.2 13.8
Taxation 7 (6.5) (3.4)
====================================== ===== ======== ========
Profit for the year attributable
to owners of the Company 16.7 10.4
====================================== ===== ======== ========
EPS attributable to owners of the
Company (p)
Basic 9 10.3 6.5
Diluted 9 10.3 6.5
Consolidated statement of comprehensive income
for the year ended 31 December 2016
GBPmillion 2016 2015
======================================== ====== =======
Profit for the year 16.7 10.4
Other comprehensive income/(loss)
for the year after tax
Items that are or may be reclassified
subsequently to the income statement:
Exchange differences on translation
of foreign operations 19.4 2.5
Gain/(loss) on hedge of net investment
in foreign operations 7.3 (1.2)
Loss on cash flow hedges taken
to equity less amounts taken to
income statement (0.5) (0.1)
Items that will never be reclassified
to the income statement:
Remeasurement of defined benefit
pension schemes 11.3 (11.4)
Remeasurement of other post-employment
benefits (0.2) 0.1
Tax on remeasurement of defined
benefit pension schemes (2.1) 1.9
========================================= =======
Total comprehensive income for
the year attributable to the owners
of the Company 51.9 2.2
========================================= ====== =======
Consolidated balance sheet
at 31 December 2016
GBPmillion Note 2016 2015*
================================== ===== ====== ======
ASSETS
Non-current assets
Property, plant and equipment 92.2 89.6
Goodwill 106.5 95.2
Other intangible assets 36.7 36.6
Deferred tax assets 6.4 4.9
================================== ===== ====== ======
Total non-current assets 241.8 226.3
================================== ===== ====== ======
Current assets
Inventories 79.6 79.9
Trade and other receivables 96.8 71.9
Income taxes receivable 0.8 -
Derivative financial instruments 0.6 0.2
Cash and cash equivalents 49.8 40.9
================================== ===== ====== ======
Total current assets 227.6 192.9
================================== ===== ====== ======
Total assets 469.4 419.2
================================== ===== ====== ======
LIABILITIES
Current liabilities
Borrowings 1.6 1.8
Derivative financial instruments 2.4 1.3
Trade and other payables 94.8 83.7
Income taxes payable 9.7 7.4
Provisions 7.5 12.6
================================== ===== ====== ======
Total current liabilities 116.0 106.8
================================== ===== ====== ======
Non-current liabilities
Borrowings 103.6 95.2
Deferred tax liability 6.1 4.3
Pensions 11 5.7 21.1
Provisions - 0.2
Other non-current liabilities 4.6 4.2
================================== ===== ====== ======
Total non-current liabilities 120.0 125.0
================================== ===== ====== ======
Total liabilities 236.0 231.8
================================== ===== ====== ======
Net assets 233.4 187.4
================================== ===== ====== ======
EQUITY
Share capital 40.6 40.5
Share premium 2.1 1.8
Other reserves 9.6 7.0
Hedging and translation reserve 44.3 18.1
Retained earnings 134.8 118.0
================================== ===== ====== ======
Equity attributable to owners
of the Company 231.4 185.4
Non-controlling interests 2.0 2.0
================================== ===== ====== ======
Total equity 233.4 187.4
================================== ===== ====== ======
* Updated to reflect remeasured fair values on the acquisition
of Aero Stanrew Group Limited (see note 4) and a representation of
reserves.
Approved by the Board of Directors on 8 March 2017 and signed on
their behalf by:
Richard Tyson Mark Hoad
Director Director
Consolidated statement of changes in equity
for the year ended 31 December 2016
Hedging
and
Share Share translation Other Retained Sub- Non-controlling
GBPmillion capital premium* reserve reserves* earnings total interest Total
=================== ========= ========== ============= =========== ========== ======= ================ =======
At 1 January 2015 39.8 1.5 16.9 1.9 125.7 185.8 2.0 187.8
=================== ========= ========== ============= =========== ========== ======= ================ =======
Profit for the
year - - - - 10.4 10.4 - 10.4
=================== ========= ========== ============= =========== ========== ======= ================ =======
Other
comprehensive
income
Exchange
differences
on translation of
foreign
operations - - 2.5 - - 2.5 - 2.5
Loss on hedge of
net
investment in
foreign
operations - - (1.2) - - (1.2) - (1.2)
Loss on cash flow
hedges taken to
equity
less amounts
taken
to income
statement - - (0.1) - - (0.1) - (0.1)
Remeasurement of
defined
benefit pension
schemes - - - - (11.4) (11.4) - (11.4)
Remeasurement of
other
post-employment
benefits - - - - 0.1 0.1 - 0.1
Tax on
remeasurement
of defined
benefit
pension schemes - - - - 1.9 1.9 - 1.9
===================
Total other
comprehensive
income - - 1.2 - (9.4) (8.2) - (8.2)
=================== ========= ========== ============= =========== ========== ======= ================ =======
Transactions with owners
recorded directly in equity
Equity dividends
paid
by the Company - - - - (8.7) (8.7) - (8.7)
Share-based
payments - - - 1.6 - 1.6 - 1.6
Deferred tax on
share-based
payments - - - 0.1 - 0.1 - 0.1
New shares issued 0.7 0.3 - 3.4 - 4.4 - 4.4
At 31 December
2015 40.5 1.8 18.1 7.0 118.0 185.4 2.0 187.4
=================== ========= ========== ============= =========== ========== ======= ================ =======
Profit for the
year - - - - 16.7 16.7 - 16.7
=================== ========= ========== ============= =========== ========== ======= ================ =======
Other
comprehensive
income
Exchange
differences
on translation of
foreign
operations - - 19.4 - - 19.4 - 19.4
Gain on hedge of
net
investment in
foreign
operations - - 7.3 - - 7.3 - 7.3
Loss on cash flow
hedges taken to
equity
less amounts
taken
to income
statement - - (0.5) - - (0.5) - (0.5)
Remeasurement of
defined
benefit pension
schemes - - - - 11.3 11.3 - 11.3
Remeasurement of
other
post-employment
benefits - - - - (0.2) (0.2) - (0.2)
Tax on
remeasurement
of defined
benefit
pension schemes - - - - (2.1) (2.1) - (2.1)
Total other
comprehensive
income - - 26.2 - 9.0 35.2 - 35.2
=================== ========= ========== ============= =========== ========== ======= ================ =======
Transactions with owners
recorded directly in equity
Equity dividends
paid
by the Company - - - - (8.9) (8.9) - (8.9)
Share-based
payments - - - 2.4 - 2.4 - 2.4
Deferred tax on
share-based
payments - - - 0.2 - 0.2 - 0.2
New shares issued 0.1 0.3 - - - 0.4 - 0.4
At 31 December
2016 40.6 2.1 44.3 9.6 134.8 231.4 2.0 233.4
=================== ========= ========== ============= =========== ========== ======= ================ =======
*Updated to reflect a representation of reserves to transfer
GBP3.4 million on the acquisition of Aero Stanrew Group Limited
from share premium to merger reserve.
Consolidated cash flow statement
for the year ended 31 December 2016
GBPmillion Note 2016 2015
========================================= ===== ======== =======
Cash flows from operating activities
Profit for the year 16.7 10.4
Taxation 6.5 3.4
Net finance costs 4.4 2.5
Restructuring (0.1) 2.9
Asset impairments - 1.7
Acquisition related costs 3.8 0.8
========================================= ===== ======== =======
Underlying operating profit 31.3 21.7
Adjustments for:
Depreciation of property, plant
and equipment 18.3 15.9
Amortisation of intangible assets 5.3 4.4
Other items 1.8 1.0
Decrease in inventories 9.3 2.2
(Increase)/decrease in receivables (17.5) 3.5
Increase/(decrease) in payables 1.1 (1.1)
========================================= ===== ======== =======
Underlying operating cash flow 49.6 47.6
Special payments to pension funds (4.5) (4.3)
Restructuring and acquisition
related costs (10.8) (10.1)
========================================= ===== ======== =======
Net cash generated from operations 34.3 33.2
Net income taxes paid (7.7) (7.9)
========================================= ===== ======== =======
Net cash flow from operating activities 26.6 25.3
========================================= ===== ======== =======
Cash flows from investing activities
Interest received 0.2 0.1
Purchase of property, plant and
equipment (17.4) (15.1)
Proceeds from sale of property,
plant and equipment and grants
received 13.1 0.8
Development expenditure (1.5) (1.3)
Purchase of other intangibles (4.2) (2.5)
Acquisitions of businesses - (39.8)
Cash with acquired businesses - 1.6
Net cash flow from investing activities (9.8) (56.2)
========================================= ===== ======== =======
Cash flows from financing activities
Issue of share capital 0.3 0.5
Interest paid (3.0) (2.2)
Repayment of borrowings (113.7) (2.9)
Proceeds from borrowings 114.6 44.6
Other items (0.3) -
Finance leases (0.3) (0.1)
Dividends paid by the Company (8.9) (8.7)
========================================= ===== ======== =======
Net cash flow from financing activities (11.3) 31.2
========================================= ===== ======== =======
Net increase in cash and cash
equivalents 5.5 0.3
Cash and cash equivalents at beginning
of year 10 40.3 39.4
Exchange differences 10 4.0 0.6
========================================= ===== ======== =======
Cash and cash equivalents at end
of year 10 49.8 40.3
========================================= ===== ======== =======
Cash and cash equivalents comprise
Cash at bank and in hand 49.8 40.9
Bank overdrafts 10 - (0.6)
========================================= ===== ======== =======
10 49.8 40.3
========================================= ===== ======== =======
1 General information
The information set out below, which does not constitute full
financial statements, is extracted from the audited financial
statements of the Group for the year ended 31 December 2016
which:
-- was approved by the Directors on 8 March 2017;
-- contained an unqualified audit report that did not contain
statements under section 498(2) or (3) of the Companies Act
2006;
-- will be available to the shareholders and the public in April 2017; and
-- will be filed with the Registrar of Companies following the Annual General Meeting.
2 Basis of accounting
The consolidated financial statements have been prepared on a
historical cost basis modified by the revaluation of financial
assets and derivatives held at fair value and by the revaluation of
certain property, plant and equipment at the transition date to
International Financial Reporting Standards (IFRS). The
consolidated financial statements have been prepared in accordance
with IFRS as issued by the International Accounting Standards Board
(IASB) and interpretations issued by the IFRS Interpretations
Committee of the IASB, as adopted by the European Union, and in
accordance with the provisions of the Companies Act 2006.
The financial statements have been prepared using consistent
accounting policies.
Adoption of new and amendments to published standards and
interpretations effective for the Group for the year ended 31
December 2016 did not have any impact on the financial position or
performance of the Group.
Comparative financial information for the year ended 31 December
2015 has been updated to reflect remeasured fair values on the
acquisition of Aero Stanrew Group Limited. The effect on the
balance sheet was to decrease trade and other receivables by GBP0.3
million and to increase goodwill by GBP0.3 million. Reserves have
been re-presented to transfer GBP3.4 million on the acquisition of
Aero Stanrew Group Limited from share premium to the merger
reserve.
3 Segmental reporting
The Group is organised into four divisions, as shown below,
according to the nature of the products and services provided. The
presentation of these divisions is consistent with the information
reviewed by the chief operating decision maker. The chief operating
decision maker is the Board of Directors.
The operating segments are:
- Transportation Sensing and Control - The Transportation
Sensing and Control division develops both sensors and control
solutions for automotive OEMs and tier one suppliers including
powertrain providers for passenger cars and trucks. The division
develops a wide range of sensors for multiple applications on a
vehicle, from gear position and pedal sensors to fluid and emission
sensors and with almost all of them focused on safety and driver
assistance features required by our customers;
- Industrial Sensing and Control - The Industrial Sensing and
Control division addresses challenging sensing requirements in
terms of precision; speed of response; reliability or physical
environment in developing position, pressure, temperature, flow and
fluid quality sensors which are used for critical applications in a
range of end markets including industrial automation, industrial
process control, medical and aerospace sectors;
- Advanced Components - The Advanced Components division creates
specialist, high performance, ultra-reliable, highly engineered
electronic components for circuit protection, power management,
signal conditioning and connectivity applications in harsh
environments. The division serves customers in the industrial,
automotive, aerospace, defence and medical markets and focuses on
creating value by developing innovative electronic solutions that
solve especially challenging problems for our customers' electronic
circuits or systems; and
- Integrated Manufacturing Services - The IMS division draws on
its manufacturing design engineering capabilities, global
facilities and world-class quality standards to provide highly
complex electronic manufacturing solutions to customers in the
aerospace and defence, medical, and high technology industrial
sectors. The division has broad capabilities ranging from printed
circuit board assembly to environmental test and full systems
integration. This global suite of end-to-end solutions is focused
exclusively on low volume, high mix business.
The accounting policies of the reportable segments are the same
as the Group's accounting policies.
As detailed in note 6, the key performance measure of the
operating segments is underlying operating profit. Segment
underlying operating profit represents the profit earned by each
segment after allocation of central head office administration
costs and is reviewed by the chief operating decision maker. Note
14 provides a definition of underlying operating profit and other
alternative performance measures.
Group financing (including finance costs and finance income) and
income taxes are managed on a Group basis and are not allocated to
operating segments.
Goodwill is allocated to the individual cash generating units
which are smaller than the segment which they are part of.
a) Income statement information - continuing operations
2016
=============== =========== ============ =============== ======
Transportation Industrial
Sensing Sensing Integrated
and and Advanced Manufacturing
GBPmillion Control Control Components Services Total
============================== =============== =========== ============ =============== ======
Sales to external customers 237.2 64.4 121.3 147.0 569.9
============================== =============== =========== ============ =============== ======
Segment underlying operating
profit 3.2 11.9 10.3 5.9 31.3
Adjustments to underlying
operating profit (note
6) (3.7)
============================== =============== =========== ============ =============== ======
Operating profit 27.6
Net finance costs (4.4)
============================== =============== =========== ============ =============== ======
Profit before taxation 23.2
============================== =============== =========== ============ =============== ======
3 Segmental reporting (continued)
2015
=============== =========== ============ =============== ======
Transportation Industrial
Sensing Sensing Integrated
and and Advanced Manufacturing
GBPmillion Control Control Components Services Total
============================== =============== =========== ============ =============== ======
Sales to external customers 205.8 61.0 95.3 147.8 509.9
============================== =============== =========== ============ =============== ======
Segment underlying operating
profit (1.4) 11.4 6.0 5.7 21.7
Adjustments to underlying
operating profit (note
6) (5.4)
============================== =============== =========== ============ =============== ======
Operating profit 16.3
Net finance costs (2.5)
============================== =============== =========== ============ =============== ======
Profit before taxation 13.8
============================== =============== =========== ============ =============== ======
There are no significant sales between segments.
b) Geographic information
Revenue by destination
The Group operates on a global basis. Revenue from external
customers by geographical destination is shown below. Management
monitor and review revenue by region rather than by individual
country given the significant number of countries where customers
are based.
GBPmillion 2016 2015
============================= ====== ======
United Kingdom 96.9 82.6
Rest of Europe 259.1 234.5
North America 103.3 101.9
Central and South America 3.1 2.4
Asia 102.8 84.6
Rest of the World 4.7 3.9
============================= ====== ======
Total continuing operations 569.9 509.9
============================= ====== ======
No individual customer directly accounts for more than 10% of
Group revenue. Revenue from services is less than 1% of Group
revenues. All other revenue is from the sale of goods.
4 Acquisitions
On 18 December 2015 the Group acquired Aero Stanrew Group
Limited. The consideration was paid through a combination of
GBP39.8 million in cash and the issue of 2,575,669 shares (with a
fair value of GBP4.0 million) to key members of the management
team.
As consideration exceeds the GBP21.4 million of net assets
acquired (including identifiable intangible assets of GBP18.9
million), goodwill of GBP22.4 million has been recognised on the
balance sheet.
Comparative financial information for the year ended 31 December
2015 has been updated to reflect remeasured fair values on the
acquisition of Aero Stanrew Group Limited. The effect on the
balance sheet was to decrease trade and other receivables by GBP0.3
million and to increase goodwill by GBP0.3 million. The measurement
period closed on 17 December 2016 with no further adjustments to
provisional fair values.
5 Finance costs and finance income
GBPmillion 2016 2015
================================= ====== ======
Interest expense (2.9) (2.2)
Foreign exchange losses (0.3) (1.5)
Net interest on post retirement
benefits (0.7) (0.4)
Amortisation of arrangement
fees (0.7) (0.2)
================================= ====== ======
Finance costs (4.6) (4.3)
================================= ====== ======
Interest income 0.2 0.1
Foreign exchange gains - 1.7
Finance income 0.2 1.8
================================= ====== ======
Net finance costs (4.4) (2.5)
================================= ====== ======
6 Alternative performance measures
This financial information includes alternative performance
measures that are not prepared in accordance with IFRS. These
alternative performance measures have been selected by management
to assist them in making operating decisions because they represent
the underlying operating performance of the Group and facilitate
internal comparisons of performance over time.
Alternative performance measures are presented as management
believe they provide investors with a means of evaluating
performance of the Group on a consistent basis, similar to the way
in which management evaluates performance, that is not otherwise
apparent on an IFRS basis, given that certain non-recurring,
infrequent or non-cash items that management does not believe are
indicative of the underlying operating performance of the Group are
included when preparing financial measures under IFRS.
The Directors consider there to be four main alternative
performance measures: underlying operating profit, free cash flow,
underlying EPS (see note 9) and underlying effective tax rate.
Underlying operating profit
This has been defined as operating profit from continuing
operations excluding the impacts of significant restructuring
programmes, significant one-off asset impairments and business
acquisition and divestment related activity. Business acquisition
and divestment related items include the amortisation of intangible
assets recognised on acquisition, the writing off of the
pre-acquisition profit element of inventory written up on
acquisition, other direct costs associated with business
combinations and adjustments to contingent consideration related to
acquired businesses. Items related to significant restructuring
programmes include the impact of the Operational Improvement Plan
initiated in 2014, other significant changes in footprint
(including movement of production facilities and sale of
properties) and significant costs of management changes.
2016 2015
========== ====== ========== ======
Operating Tax Operating Tax
GBPmillion profit profit
==================================== ========== ====== ========== ======
As reported 27.6 (6.5) 16.3 (3.4)
Restructuring
Operational Improvement Plan (2.9) 0.2 (1.8) 1.1
Other restructuring (1.3) 0.6 (0.7) 0.2
Property items 4.3 (0.7) - -
Charges associated with management
changes - - (0.4) 0.1
0.1 0.1 (2.9) 1.4
==================================== ========== ====== ========== ======
Asset impairments - - (1.7) -
------------------------------------ ========== ====== ========== ======
Acquisition related costs
Contingent consideration - - 0.8 -
Release of divestment provision 0.9 - - -
Amortisation of intangible
assets arising on business
combinations (3.5) 0.7 (0.8) 0.2
Other acquisition related
costs (1.2) 0.2 (0.8) 0.2
(3.8) 0.9 (0.8) 0.4
==================================== ========== ====== ========== ======
Total items excluded from
underlying measure (3.7) 1.0 (5.4) 1.8
==================================== ========== ====== ========== ======
Underlying measure 31.3 (7.5) 21.7 (5.2)
==================================== ========== ====== ========== ======
Restructuring GBP0.1 million credit (2015: GBP2.9 million
charge)
In the year ended 31 December 2016 restructuring costs related
to further costs incurred on the Operational Improvement Plan
initiated in a previous year, costs associated with other site
restructuring (net of a release for certain sites) and a credit of
GBP4.3 million arising on sale of properties (net of a write down
of certain properties).
In the year ended 31 December 2015 total restructuring costs of
GBP2.9 million were incurred, of which GBP1.8 million related to
the Operational Improvement Plan, GBP0.7 million related to other
restructuring costs and GBP0.4 million related to the change of
management structure.
Impairments GBPnil (2015: GBP1.7 million)
In the year ended 31 December 2015 asset impairment costs of
GBP1.7 million were incurred, relating mainly to the North American
resistors business, reflecting the downturn in activity experienced
in the second half of the year.
Acquisition related costs GBP3.8 million (2015: GBP0.8
million)
In the year ended 31 December 2016 acquisition costs amounted to
GBP3.8 million which included a credit of GBP0.9 million relating
to the release of a provision established for warranty liabilities
arising from a divestment that are no longer required, GBP3.5
million amortisation of acquisition intangibles and GBP1.2 million
of other costs, relating primarily to the integration of Aero
Stanrew.
In the year ended 31 December 2015 acquisition costs amounted to
GBP0.8 million which related to GBP0.8 million of acquisition
related costs, GBP0.8 million of amortisation of acquired
intangible assets and a GBP0.8 million credit relating to the
reversal of an accrual for deferred acquisition consideration.
Free cash flow
This has been defined as net cash flow from operating activities
less cash flow from investing activities (excluding acquisitions
and disposal proceeds) less interest paid.
GBPmillion 2016 2015
=============================== ====== =========
Net cash flow from operating
activities 26.6 25.3
Net cash flow from investing
activities (9.8) (56.2)
Acquisition of business - 39.8
Cash with acquired businesses - (1.6)
Interest paid (3.0) (2.2)
Free cash flow 13.8 5.1
=============================== ====== =======
Underlying earnings per share
This is the profit for the year attributable to owners of the
Company adjusted to exclude the items not included within
underlying operating profit divided by the weighted average number
of shares in issue during the year (see note 9).
Underlying effective tax rate
This is defined as the tax charge, adjusted to exclude items not
included within underlying operating profit divided by underlying
profit before tax, which is also adjusted to exclude the items not
included within underlying operating profit.
GBPmillion 2016 2015
============================= ====== ======
Underlying operating profit 31.3 21.7
Net finance costs (4.4) (2.5)
Underlying profit before
tax 26.9 19.2
Underlying tax (see above) 7.5 5.2
Underlying effective tax
rate 27.9% 27.0%
============================= ====== ======
7 Taxation
a) Analysis of the tax charge for the year
GBPmillion 2016 2015
========================================== ====== ======
Current tax
Current income tax charge 6.5 7.1
Adjustments in respect of current income
tax of previous year 1.7 (1.5)
========================================== ====== ======
Total current tax charge 8.2 5.6
========================================== ====== ======
Deferred tax
Relating to origination and reversal
of temporary differences (1.7) (2.2)
========================================== ====== ======
Total tax charge in the income statement 6.5 3.4
========================================== ====== ======
UK tax is calculated at 20.0% (2015: 20.25%) of taxable profits.
Overseas tax is calculated at the tax rates prevailing in the
relevant countries. The Group's effective tax rate for the year
from continuing operations was 28.2% (the underlying tax rate was
27.9% (see note 6)).
Included within the total tax charge above is a GBP1.0 million
credit relating to items reported outside underlying profit (2015:
GBP1.8 million).
b) Reconciliation of the total tax charge for the year
GBPmillion 2016 2015
================================================ ====== ======
Profit before tax from continuing operations 23.2 13.8
================================================ ====== ======
Profit before tax multiplied by the standard
rate of corporation tax in the UK of
20.0% (2015: 20.25%) 4.6 2.8
Effects of:
Overseas tax rate differences 0.9 0.7
Income not taxable and items not deductible
for tax purposes (1.0) 0.4
Adjustment to current tax in respect
of prior years 1.7 (1.5)
Impact on deferred tax arising from changes
in tax rates 0.2 0.1
Recognition and utilisation of tax losses
and other items not previously recognised (0.7) (0.1)
Current year tax losses and other items
not recognised 2.5 2.0
Adjustment to value of deferred tax assets (1.7) (1.0)
================================================
Total tax charge reported in the income
statement 6.5 3.4
================================================ ====== ======
The enacted UK corporation tax rate applicable is 19% from 1
April 2017 and 17% from 1 April 2020.
8 Dividends
2016 2015
pence pence
per 2016 per 2015
share GBPmillion share GBPmillion
=============================== ======= ============ ======= ============
Final dividend for prior year 3.8 6.2 3.8 6.0
Interim dividend for current
year 1.7 2.7 1.7 2.7
=============================== ======= ============
5.5 8.9 5.5 8.7
=============================== ======= ============ ======= ============
The Directors recommend a final dividend of 3.9 pence per share
which when combined with the interim dividend of 1.7 pence per
share gives a total dividend for the year of 5.6 pence per share.
The Group has a progressive dividend policy. The final dividend
will be paid on 2 June 2017 to shareholders on the register on 19
May 2017.
9 Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners of the Company by the weighted average
number of shares in issue during the year.
Underlying earnings per share is based on the underlying profit
after interest and tax.
Pence 2016 2015
============================ ===== =====
Basic earnings per share 10.3 6.5
Diluted earnings per share 10.3 6.5
============================ ===== =====
The numbers used in calculating underlying, basic and diluted
earnings per share are shown below.
Underlying earnings per share:
GBPmillion 2016 2015
================================== ====== ======
Continuing operations
Profit for the year attributable
to owners of the Company 16.7 10.4
Restructuring (0.1) 2.9
Asset impairments - 1.7
Acquisition related costs 3.8 0.8
Tax effect of above items (see
note 7) (1.0) (1.8)
==================================
Underlying earnings 19.4 14.0
================================== ====== ======
Underlying earnings per share
(pence) 12.0 8.8
================================== ====== ======
The weighted average number of shares in issue is as
follows:
Million 2016 2015
============================= ====== ======
Basic 162.2 159.2
Adjustment for share awards - 0.1
============================= ======
Diluted 162.2 159.3
============================= ====== ======
10 Reconciliation of net cash flow to movement in net debt
Borrowings
and
Net finance Net
GBPmillion cash leases debt
====================== ====== =========== =======
At 1 January 2015 39.4 (53.7) (14.3)
Cash flow 0.3 (41.6) (41.3)
Non-cash items - (0.2) (0.2)
Exchange differences 0.6 (0.9) (0.3)
====================== ====== =========== =======
At 1 January 2016 40.3 (96.4) (56.1)
Cash flow 5.5 (0.6) 4.9
Non-cash items - (1.8) (1.8)
Exchange differences 4.0 (6.4) (2.4)
====================== ====== =======
At 31 December 2016 49.8 (105.2) (55.4)
====================== ====== =========== =======
Net cash includes overdraft balances of GBPnil (2015: GBP0.6
million).
11 Retirement benefit schemes
Defined contribution schemes
The Group operates 401(k) plans in North America and defined
contribution arrangements in the rest of the world. The assets of
these schemes are held independently of the Group. The total
contributions charged by the Group in respect of defined
contribution schemes were GBP2.7 million (2015: GBP2.4
million).
Defined benefit schemes
During the year the Group operated a significant defined benefit
scheme in the UK and schemes in the USA (which includes a post
retirement medical benefit element). The Group's main scheme is the
UK plan which commenced in 1993 and increased in size in 2006 and
2007 through the merger of the UK former schemes. The parent
company is the sponsoring employer in the UK plan. The UK plan is
governed by TTG Pension Trustees Limited (the "Trustee") that has
control over the operation, funding and investment strategy in
consultation with the Group.
The triennial valuation of the UK scheme as at April 2016 showed
a deficit of GBP46.0 million against the Trustee's funding
objective compared with GBP19.1 million at April 2013. The Company
has agreed additional fixed contributions extending to 2020 with
the UK Scheme, based on the actuarial deficit at April 2016. These
planned contributions amount to GBP4.7 million, GBP4.9 million,
GBP5.1 million and GBP3.9 million to be paid over the next four
years. In addition, the Company has set aside GBP3.0 million over
the last three years to be utilised in agreement with the Trustee
for reducing the long-term liabilities of the scheme. Both the UK
and USA schemes are closed to new members and the UK scheme was
closed to future accrual in 2010.
The amounts recognised in respect of the pension deficit in the
Consolidated balance sheet are:
GBPmillion 2016 2015
================================== ======== ========
Fair value of assets 546.2 442.2
Present value of defined benefit
obligation (551.9) (463.3)
==================================== ======== ========
Net liability recognised in
the Consolidated balance sheet (5.7) (21.1)
==================================== ======== ========
Amounts recognised in the consolidated income statement are:
GBPmillion 2016 2015
============================== ====== =====
Scheme administration costs 1.2 0.8
Net interest cost 0.7 0.4
Settlements and curtailments (0.6) -
================================ ====== =====
12 Related party transactions
Transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note.
No related party transactions have taken place in 2016 or 2015
that have affected the financial position or performance of the
Group.
13 Principal risk and uncertainties
The Group continues to be exposed to a number of operational and
financial risks and has an established, structured approach to
identifying, assessing and managing those risks. These risks relate
to the following areas: general economic downturn; contractual
risks; pricing and margin pressures; research and development;
people and capability; supplier resilience; and legal and
regulatory compliance.
14 Alternative performance measure definitions
This financial information includes alternative performance
measures that are not prepared in accordance with IFRS. These
alternative performance measures have been selected by management
to assist them in making operating decisions because they represent
the underlying operating performance of the Group and facilitate
internal comparisons of performance over time.
Alternative performance measures are presented as management
believe they provide investors with a means of evaluating
performance of the Group on a consistent basis, similar to the way
in which management evaluates performance, that is not otherwise
apparent on an IFRS basis, given that certain non-recurring,
infrequent or non-cash items that management does not believe are
indicative of the underlying operating performance of the Group are
included when preparing financial measures under IFRS.
The Group uses the following alternative performance
measures:
Underlying operating profit
Definition: Operating profit from continuing operations
excluding the impacts of significant restructuring programmes,
significant one-off asset impairments and business acquisition and
divestment related activity.
Free cash flow
Definition: Net cash flow from operating activities less net
cash flow from investing activities less interest paid.
Underlying earnings per share
Definition: Profit for the year attributable to the owners of
the Company adjusted to exclude the items not included within
underlying operating profit divided by the weighted average number
of shares in issue during the period. We have chosen EPS as a KPI
as it is a standard metric to determine corporate profitability for
shareholders. In addition, it is a measure used as one of the
performance conditions in the Group's Long Term Incentive Plan.
Underlying effective tax rate
Definition: The tax charge adjusted to exclude items not
included within underlying operating profit divided by underlying
profit before tax, which is also adjusted to exclude the items not
included within underlying operating profit.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UWOKRBAAORAR
(END) Dow Jones Newswires
March 09, 2017 02:00 ET (07:00 GMT)
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