TIDMTTG
RNS Number : 1309I
TT Electronics PLC
03 August 2023
TT Electronics plc
Results for the half-year ended 30 June 2023
For further information, please contact:
TT Electronics
Richard Tyson, Chief Executive Officer
Mark Hoad, Chief Financial Officer
Kate Moy, Investor Relations
Tel: +44 (0)1932 827 779
MHP Communications
Tim Rowntree / Ollie Hoare Tel: +44 (0)20 3128 8276
A management presentation for analysts and investors will be
held today at 09.30 and can be accessed on
https://stream.brrmedia.co.uk/broadcast/6489c7dba4eaa3202590592d
A recording of the presentation and Q&A session will be
available on the website later in the day.
A PDF of this half year announcement is available for download
from
https://www.ttelectronics.com/investors/results-reports-presentations/
.
Interim Results for the half-year ended 30 June 2023
Delivering improved margins and cash generation; increased
confidence in full year outlook
GBP million (unless otherwise
stated) Adjusted Results(1) Statutory Results
H1 2023 H1 2022 Change Change H1 2023 H1 2022
Constant
fx
Revenue 309.1 269.2 15% 12% 309.1 269.2
Operating profit 25.6 1 8.3 40% 34% 20.9 8.9
Operating profit margin 8.3% 6.8% 150bps 140bps 6.8% 3.3%
Profit before tax 20.7 15.0 38% 33% 16.0 5.6
Basic earnings per share 8.8p 6.6p 33% 28% 6.8p 2.3p
Return on invested capital 12.0(3)
(2022(2) ) % 10.5% 150bps
Cash conversion 74% (55)%
-------- -------- ------- -----------
Free cash flow(1) 6.9 (23.5)
Net debt (2022(2) ) (1) 138.8 138.4
Leverage (2022(2) )(1) 1.8x 2.0x
Dividend per share 2.15p 2.00p
--------- ---------
Financial highlights
-- Revenue up 12% on a constant currency basis
-- Adjusted operating profit up 34% at constant currency
-- Adjusted operating margin, at constant currency, up 140 bps to 8.3%
-- Statutory operating profit 120% up at GBP20.9m, statutory basic EPS of 6.8p
-- Inflection in cash generation: free cash flow of GBP6.9m and cash conversion of 74%
-- Continued deleveraging with net debt to adjusted EBITDA of 1.8x
-- Interim dividend increased 8% to 2.15p per share reflecting
confidence in full year outlook and future prospects
Operational highlights
-- Order intake remains robust and is normalising as expected,
15 new significant contract wins in the half delivering over
GBP150m of potential lifetime revenues
-- Significant recovery in P&C performance, with continued momentum in GMS and S&SC
-- Order book provides visibility for balance of 2023 revenues with cover building for 2024
-- Expansion of facilities in Kuantan, Malaysia and now in
Mexicali, Mexico increases our geographic diversification and
facilitates re-shoring opportunities with customers
-- Appointment of Peter France as CEO to succeed Richard Tyson on 2 October 2023
Richard Tyson, Chief Executive Officer, said:
"We are really pleased with a great performance by the team to
achieve these results, delivering strong organic growth in revenue
and profit. Adjusted operating margin is up by 140 basis points at
constant currency. Leverage has reduced on the back of the
inflection in cash generation and increased adjusted EBITDA.
The business is clearly demonstrating the benefit of the work to
re-position in the right markets, with the right customers and from
the right operational footprint. More new customer wins together
with the ramp-up of previously awarded contracts continue to
provide multi-year revenue visibility and the new business pipeline
remains strong, supported by new re-shoring opportunities.
The Group's order book underpins our full year anticipated
revenue projections, and we remain focused on executing on the
order book, delivering continued strong profit growth and driving a
material step up in free cashflow and further reducing leverage by
the year end. While mindful of the macroeconomic backdrop, our
performance in the first half, alongside continued strong momentum
in the business provides the Board with increased confidence in
delivering its full year expectations. "
About TT Electronics
TT Electronics is a global provider of engineered electronics
for performance critical applications.
TT solves technology challenges for a sustainable world. TT
benefits from enduring megatrends in structurally high-growth
markets including healthcare, aerospace, defence, automation and
electrification. TT invests in R&D to create designed-in
products where reliability is mission critical. Products designed
and manufactured include sensors, power management and connectivity
solutions. TT has design and manufacturing facilities in the UK,
North America, and Asia.
Notes
1. Throughout this announcement we refer to a number of
alternative performance measures which provide additional useful
information. The Directors have adopted these measures to provide
additional information on the underlying trends, performance and
position of the Group with further details set out in note 2c on
page 25. The adjusted measures used are set out in the
reconciliation of KPIs and non IFRS measures on pages 35 to 41.
2. As at December 2022
3. Calculated for the 12 months to June 2023
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
We have delivered a much-improved performance in the first half
with further good revenue growth. Constant currency revenue
increased by 12 per cent in the half. As expected, order intake has
started to normalise, but has still broadly tracked our revenue
growth in the first half. Our visibility covers our anticipated
2023 revenues and extends into 2024, reflecting both our success
with customers and the structural growth in the end markets in
which we operate. Our visibility remains materially ahead of
pre-COVID levels.
Our Power and Connectivity (P&C) division has, as expected,
delivered a much improved first half performance and is firmly on
track back to double digit margins. Global Manufacturing Solutions
(GMS) is a business fully transformed and has continued to build on
the significant momentum of 2022. Sensors and Specialist Components
(S&SC) delivered a robust performance against an exceptionally
strong comparator. We have a clear line of sight to deliver a good
second half performance across all divisions as we continue to
execute on our order book.
Demand from our customers remains robust as our focus on
building close, long-term relationships further up the value chain
and collaborating on design-led solutions often leads to us being
designed in for the life of the product. This is evidenced by new
business, with 15 significant new wins in the half delivering over
GBP150 million of potential lifetime revenues and further key
customer growth from pipeline opportunities.
We believe our collaborative approach to deliver solutions based
on our technical expertise has been a key factor in winning new
orders. We are focused on leveraging expertise across the Group to
pursue cross selling opportunities. Furthermore, we believe we are
well placed, with locations in the United States, Mexico and
Malaysia to collaborate with our customers on their re-shoring
activities.
We have always believed strongly that high levels of employee
engagement would enable excellent execution of strategy. We are
delighted to have attained a 2023 employee engagement score in line
with the three star "world class companies to work for" Best
Companies Ltd benchmark.
With the spend on our self-help programme now complete, our
focus turns to achieving further efficiencies from process
improvements, including benefits from the consolidation of the
Covina site into the Torotel site at Kansas City. Our facility in
Plano, Texas completed the qualification of its high-volume
products in late 2022 and is now focused on delivering operational
efficiencies.
Plans are well advanced for the move of the Ferranti Power and
Control (Ferranti) business into a new facility in Greater
Manchester which is expected in the second half. Following the
success of GMS' expansion into Malaysia, we are now following the
same, low capital intensity model and establishing GMS capabilities
within our existing facility in Mexicali, Mexico from where we
expect to be able to commence customer deliveries in H1 2024.
Results and operations
Group revenue for the period was GBP309.1 million, up 12 per
cent on a constant currency basis. The Group's adjusted operating
profit for the period was GBP25.6 million, 34 per cent higher than
the prior period on a constant currency basis.
Our results in the first half reflect good revenue growth across
all our businesses, complemented by the incremental benefits of our
self-help programme. Cost inflation continues to be largely
mitigated through price increases.
The adjusted operating margin in the first half was 8.3 per cent
(H1 2022: 6.8 per cent), up 140 basis points on a constant currency
basis, and we expect to deliver further margin improvement in the
second half. After the impact of adjusting items, including
restructuring and acquisition related costs, the Group's half year
statutory operating profit was GBP20.9 million (H1 2022: GBP8.9
million) and operating margin was 6.8 per cent (H1 2022: 3.3 per
cent).
Cash conversion was significantly ahead of prior year at 74 per
cent (H1 2022: minus 55 per cent) even with a modest working
capital outflow of GBP6.9 million (H1 2022: GBP33.0 million
outflow), reflecting normal H1 seasonality. Free cash flow has
reached an inflection point, with an inflow of GBP6.9 million in
the period (H1 2022: GBP23.5 million outflow). Adjusted operating
cash inflow post capital expenditure during the period was GBP19.0
million (H1 2022: GBP10.0 million outflow). On a statutory basis,
cash flow from operating activity was an inflow of GBP24.4 million
(H1 2022: GBP12.3 million outflow).
Following the buy-in of the UK defined benefit scheme in
November 2022, the scheme is de-risked and had a surplus of GBP29.2
million at 30 June 2023. The scheme liabilities are now matched by
the buy-in insurance policy. The surplus in excess of these
liabilities is largely invested in short-term money market funds.
No contributions were made to the scheme in the period (H1 2022:
GBPnil). The net surplus across all schemes was GBP26.3 million (H1
2022: GBP91.6 million).
At 30 June 2023 net debt was GBP138.8 million, (31 December
2022: GBP138.4 million), including IFRS 16 lease liabilities of
GBP20.2 million (31 December 2022: GBP23.1 million), and as
previously indicated leverage reduced to 1.8x (31 December 2022:
2.0x). We expect leverage to reduce further by December 2023.
Momentum across the Group remains good with the order book for
2023 covering expected revenues and we now have good visibility of
revenues for 2024. As pass-through revenues reduce on a comparative
basis in the second half of 2023 and more significantly in 2024,
this will create a headwind to headline organic growth, but on an
underlying basis the Group is well positioned to deliver growth in
2023 and beyond.
Dividend
The performance in the first half and size of our order book
strengthens our confidence in our expectations for the full year
and the Group's future prospects. As a result, the Board is
declaring an interim dividend of 2.15 pence per share, an increase
of 8 per cent. The total cost of this dividend will be
approximately GBP3.8 million. Payment of the dividend will be made
on 12 October 2023, to shareholders on the register at 15 September
2023.
OUR STRATEGY
Creating value through technology investment
We prioritise organic investment in the business, investing in
R&D and capital equipment to drive differentiation in our offer
to customers, resulting in us becoming firmly embedded as valued
partners. This expenditure totalled GBP22.7 million in 2022 and in
the first half of 2023 we invested GBP15.3 million, including
GBP6.0 million (H1 2022: GBP5.4 million) in R&D spend,
representing 3.8 per cent (H1 2022: 4.0 per cent) of the aggregate
revenue of our product businesses.
Our focus on R&D and investment in equipment and facilities
has been integral to our dialogue with our customers. This has
resulted in us becoming firmly embedded with them, enabling us to
stay ahead of their needs and meet the challenges they set us.
Evidence of the value customers place on this can be seen in our
organic sales growth.
In the second half of 2023 we will relocate our acquired
Ferranti business to a new flagship Power Solutions facility in
Greater Manchester. We are also expanding our GMS offering in
existing TT facilities. This started in 2020 with Kuantan, Malaysia
and we are now adopting the same low capital intensity approach in
Mexicali, Mexico to support growth programmes for our customers and
to enable their re-shoring priorities .
Creating value through margin enhancement
We are focused on activities which will enable the Group
consistently to achieve double-digit operating margins. The
operational leverage on organic revenue growth and the results of
our restructuring and footprint rationalisation will also
contribute to further margin improvement.
We have increased Group margins in the first half of 2023 by 140
basis points (on a constant currency basis) to 8.3 per cent (H1
2022: 6.8 per cent) as our Power and Connectivity business
delivered a much-improved performance and we remain focused on
continued margin growth in the second half. Margins are currently
being impacted by pass-through revenue, primarily in our GMS
division, which inflates revenue with no profit benefit.
Pass-through revenues in the first half were approximately GBP12
million (H1 2022: c. GBP10 million) and are expected to gradually
reduce by the end of 2024. Excluding pass through revenues,
adjusted operating margins would have been 8.6% (H1 2022:
7.1%).
We remain focused on continuing to enhance our margins, in part
through operational leverage from revenue growth , our focus on
costs and pricing discipline and the continued benefits of our
strategic repositioning to build closer, more embedded customer
relationships. Delivery of our 10 per cent adjusted operating
margin milestone is within reach.
Creating value from mergers and acquisitions
M&A remains an important part of our growth proposition as
we look to add higher margin businesses that enhance TT's
capability in our key markets. While leverage has reduced and is
expected to continue to fall, our near-term focus is on free cash
flow generation and leverage reduction to generate capacity for
M&A . We continue to monitor an active pipeline of
opportunities.
Environmental, social and governance (ESG)
Not only do we design, develop, and manufacture products that
enable reduced environmental impacts for our customers, but we are
also optimising our own operations to reduce our impact on the
environment.
We have made great progress in reducing our carbon emissions to
achieve our target to be Net Zero by 2035, for our Scope 1 & 2
emissions. In 2022 we delivered a 54 per cent reduction in our
Scope 1 & 2 carbon emissions from our baseline set in 2019,
achieving our short-term target of delivering a 50 per cent
reduction a year ahead of plan. Earlier this year we commissioned
our first solar project at our site in Kuantan, Malaysia. Further
reductions in our carbon emissions will require additional such
investment in solar power, acquiring alternative sources of
renewable power within deregulated markets and progress in the
supply of renewables in regulated Asian markets.
For our Scope 3 emissions we have commenced measurement and
internal reporting of the six most relevant/measurable
categories.
Employee engagement
We're delighted to have delivered a 2023 employee engagement
score in line with the three star "world class companies to work
for" Best Companies Ltd benchmark. The three star rating is the
highest level achievable and demonstrates a year-on-year
improvement on our two star (outstanding) rating in 2021 and one
star (very good) result in 2020. Focus was directed on
participation in 2023, encouraging our employees to have their say
and make their voice heard, concluding with a record high of 91% of
employees globally completing the survey, up from 86% in both 2021
and 2020.
DIVISIONAL REVIEW
POWER AND CONNECTIVITY
The Power and Connectivity division develops and manufactures
power application products and connectivity devices which enable
the capture and wireless transfer of data. We collaborate with our
customers to develop innovative solutions to optimise their
electronic systems.
H1 2023 H1 2022 Change Change constant
fx(1)
Revenue GBP79.9m GBP68.8m 16% 13%
--------- --------- ------- ----------------
Adjusted operating profit(1) GBP5.9m GBP2.1m 181% 168%
--------- --------- ------- ----------------
Adjusted operating margin(1) 7.4% 3.1% 430bps 430bps
--------- --------- ------- ----------------
(1) See note 2c on page 25 for an explanation of alternative
performance measures. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items please refer to note 4 on page 29 of this document.
Revenue inc reased by GBP11.1 million to GBP79.9 million ( H1
2022 : GBP 68.8 million) . O rganic revenue was 13 per cent higher
against a comparative period which was impacted by the timing of
programme revenues and the closure and transfer of production from
the Lutterworth facility.
Adjusted operating profit increased by GBP 3.8 million to GBP5.9
million ( H1 2022 : GBP 2.1 million) given healthy levels of
operational leverage on the organic growth and benefits from the
self-help programme. Adjusted operating margin more than doubled to
7.4 per cent ( H1 2022 : 3.1 per cent). There was a GBP0.1 million
foreign exchange benefit.
Overall order intake remains good and revenues from commercial
aerospace are recovering. As we look into the second half, we
expect a further step-up in margin performance.
Contract awards and growth drivers during the period, giving us
confidence as we look forward, include:
-- Within our healthcare end market, we have secured two major
manufacturing wins in the period with total annual revenues of
cGBP4.5 million for a top tier medtech company for high voltage
transformers for use in surgical navigation and for implantables.
We have also won ten new development wins including two new
clinical applications in the surgical navigation space.
-- Our Abercynon team has successfully secured work for a new
customer to develop a custom connector solution incorporated in our
manufactured cable assemblies for the Jubilee Line on the London
Underground.
-- In aerospace and defence, we have won work with a world leader in in-flight entertainment and communications solutions for its latest on-the-ground technology Astrova, designed initially for installation on the 737 and A321 platforms. We will be providing inductors and transformers for the system.
-- Our work on the Boxer programme (the main UK army vehicle
programme) continues to expand with significant recent additional
contract wins. This expands our position on the programme which
includes a cross sell of our expertise into GMS to design and
manufacture printed circuit board assemblies. These are complex,
high reliability power electronics assemblies and we will lead the
design, production and delivery of the battery control and command
display units providing signalling and communications functionality
on every Boxer vehicle.
-- We have recently been awarded a contract supporting
feasibility studies relating to the technology development on the
BAE Tempest programme. Harnessing our extensive engineering
expertise, we will develop electrical power solutions in support of
this crucial next generation combat air platform. Team Tempest is
composed of the UK Ministry of Defence and industry partners BAE
Systems, Rolls-Royce, Leonardo UK, and MBDA, which are all working
together to deliver world firsts in advanced technical
capabilities.
GLOBAL MANUFACTURING SOLUTIONS
The Global Manufacturing Solutions division provides
manufacturing services and engineering solutions for our product
divisions and to customers that often require a lower volume and
higher mix of different products. We manufacture complex integrated
product assemblies for our customers and provide engineering
services including designing testing solutions and
value-engineering.
H1 2023 H1 2022 Change Change constant
fx(1)
Revenue GBP153.8m GBP135.3m 14% 12%
---------- ---------- -------- ----------------
Adjusted operating
profit(1) GBP13.8m GBP9.4m 47% 44%
---------- ---------- -------- ----------------
Adjusted operating
margin(1) 9.0% 6.9% 210 bps 200 bps
---------- ---------- -------- ----------------
(1) See note 2c on page 25 for an explanation of alternative
performance measures. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items please refer to note 4 on page 29 of this document.
Revenue grew by GBP18.5 million to GBP153.8 million (H1 2022:
GBP135.3 million). We have delivered organic growth of 12 per cent,
reflecting partnerships with our key long term relationship
customers and recent project wins. Pass-through revenue was around
GBP12 million in the first half, around GBP2 million higher than in
the first half of last year; this continues to create a technical
head wind to margin progression.
The GMS division is fully booked for the remainder of the year.
The order book has been underpinned by several multi-million pound
wins, a number of which extend beyond 12 months.
Adjusted operating profit increased by GBP4.4 million to GBP13.8
million (H1 2022: GBP9.4 million) including a GBP0.2 million
foreign exchange benefit. The adjusted operating profit margin was
9.0 per cent (H1 2022: 6.9 per cent) reflecting operational
leverage on growth as well as the benefit of pricing actions.
Excluding pass-through revenues adjusted operating margin was 9.7
per cent (H1 2022: 7.5 per cent).
The considerable sales momentum has resulted in customer awards
across our key markets from new and existing customers. Notable
wins and growth drivers include the following:
-- In the UK we have secured an GBP8 million win for cable
harnesses for a market-leading safety and mission-critical
solutions provider in the UK defence market. TT has supported this
customer on the Joint Strike Fighter (JSF) programme for several
years and this contract runs through to 2025.
-- Our Suzhou facility has secured a GBP6 million contract for a
global leader in patient-focused innovations for structural heart
disease and critical care monitoring. This is our first win for the
Japanese division of this key customer, and we will provide
electronics assembly and box-build solutions for vacuum pumps used
in semi-conductor equipment. Furthermore, we will incorporate value
added services such as product life cycle management and NPI to
accelerate time to market.
-- We have recently expanded our relationship geographically
with a key leading industrial customer to include our Kuantan
facility in Malaysia, to support its expansion in Singapore. This
follows on from our award of a 'best in class' supplier award and
our work on high level assemblies (HLA) for a new programme for
semiconductors. The customer has chosen TT on the back of the
proven partnership and confidence in our global teams. Our vertical
integration strategy and HLA capabilities are key to winning with
this customer.
Overall, the GMS division delivers best in class margins with a
24% ROIC. Order visibility remains strong, and our enhanced
customer relationships and business development initiatives
positions us for medium term sustainable revenue growth.
SENSORS AND SPECIALIST COMPONENTS
The Sensors and Specialist Components division works with
customers to develop high specification, standard and customised
solutions, including sensors and power management devices. Our
solutions improve the precision, speed and reliability of critical
aspects of our customers' applications .
H1 2023 H1 2022 Change Change constant
fx(1)
Revenue GBP75.4m GBP65.1m 16% 11%
--------- --------- ------- ----------------
Adjusted operating profit(1) GBP9.8m GBP10.6m (8)% (12)%
--------- --------- ------- ----------------
(330)
Adjusted operating margin(1) 13.0% 16.3% bps (330) bps
--------- --------- ------- ----------------
(1) See note 2c on page 25 for an explanation of alternative
performance measures. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items please refer to note 4 on page 29 of this document.
Revenue increased by GBP10.3 million to GBP75.4 million (H1
2022: GBP65.1 million). Organic revenue was 11 per cent higher even
with some output shifting from the first half into the second half,
due to a machinery breakdown in June. We are broadly covered for
the balance of this year's revenue and are starting to build the
order book for 2024, even as order intake normalises as
anticipated. This is significantly better than the 8-12 weeks
visibility we typically had in the past.
Adjusted operating profit reduced slightly by GBP0.8 million to
GBP9.8 million (H1 2022: GBP10.6 million) including a GBP0.5
million foreign exchange benefit. The adjusted operating profit
margin reduced to 13.0 per cent (H1 2022: 16.3 per cent) impacted
by the output shift noted above. Prior period margins were strong,
boosted by an attractive drop through on volume growth and
favourable product mix. Second half margins are expected to return
to prior levels.
There have been a number of key developments during the first
half of the year including:
-- In the US we provided two custom high reliability
hermetically packaged optical sensors for a global security and
aerospace company's Stinger Missile Program. We were able quickly
to provide products with the necessary level of screening to meet
the application requirements. These are high-reliability sensors
used for the Stinger's fuse warhead body assembly. Our team worked
closely with the company's engineers from the very beginning to
fully understand the requirements and develop the right sensor to
meet the harsh environment demands.
-- We have had a long-standing relationship with Delta
Electronics. Delta trusts our team to provide excellent sales and
engineering support, which helped us to win a 5 year opportunity
(worth over GBP7 million over the life of the contract) providing
resistors for use in Delta's compact, high-density, high-power,
power supply for an ICT (Information and Communication
Technologies) data centre. Our product's technical capabilities and
our ability to deliver the product 40% ahead of our published
leadtime secured us this win. The ICTBG (Information and
Communication Technologies Business Group) division of Delta is new
to TT and could provide future cross-selling opportunities.
-- In India we won a further opportunity for a custom electric
power steering sensor to a long-standing customer, Rane Madras, for
use in one of India's largest heavy commercial vehicle
manufacturer's 4 wheeler commercial electric vehicle. TT
Electronics has a great relationship with the customer and is
positioned as a single source of supply for all its electronics
power assisted steering projects.
-- S&SC has provided an optical sensor to be used in the
Centre Information Display of electric vehicles manufactured by
Foxconn/Fisker. Our sensor will be used to detect the CID in either
horizontal or vertical position. This opportunity began during
COVID, where our prompt communication and excellent commercial and
technical support from the Asia team set us apart from the
competition. We won this opportunity with great support from our
local distributor, Arrow.
Outlook
We are really pleased with a great performance by the team to
achieve these results, with strong organic growth in revenue and
profit. Adjusted operating margin is up by 140 basis points on a
constant currency basis. Leverage has reduced on the back of the
inflection in cash generation and increased adjusted EBITDA.
The business is clearly demonstrating the benefit of the work to
re-position in the right markets, with the right customers and from
the right operational footprint. More new customer wins together
with the ramp-up of previously awarded contracts continue to
provide multi-year revenue visibility and the new business pipeline
remains strong, supported by new re-shoring opportunities.
The Group's order book underpins our full year anticipated
revenue projections, and we remain focused on executing on the
order book, delivering continued strong profit growth and driving a
material step up in free cashflow and further reducing leverage by
the year end. While mindful of the macroeconomic backdrop, our
performance in the first half, alongside continued strong momentum
in the business provides the Board with increased confidence in
delivering its full year expectations.
OTHER FINANCIAL INFORMATION
Group revenue was GBP309.1 million (H1 2022: GBP269.2 million).
Group revenue was 12 per cent higher than in the same period last
year on a constant currency basis. Sales volumes in all key
markets, including more recently the bounce back in commercial
aerospace, are buoyant and the order book and forward pipeline of
new business opportunities gives us confidence that this momentum
will continue.
The Group reported an adjusted operating profit of GBP25.6
million (H1 2022: GBP18.3 million) with the improvement driven by
revenue growth. Statutory operating profit for the period was
GBP20.9 million (H1 2022: GBP8.9 million) after a charge of GBP4.7
million (H1 2021: GBP9.4 million) for items excluded from adjusted
operating profit including:
-- Acquisition and disposal related costs of GBP3.5 million (H1
2022: GBP3.9 million), comprising GBP2.7 million of amortisation of
acquired intangible assets, GBP0.4 million of integration costs
relating to the acquisition of Ferranti and GBP0.4 million of
Torotel integration costs.
-- Restructuring and other costs of GBP1.2 million (H1 2022:
GBP5.5 million), comprising pension project costs of GBP0.9 million
(GBP0.7 million in respect of the buy-in of the UK pension scheme
and a settlement charge of GBP0.2 million in respect of the partial
buy out of the US scheme) and GBP0.3 million (H1 2022: GBP0.7
million) comprises GBP0.2 million relating to the relocation of
production facilities from Covina, USA to Kansas and GBP0.1 million
relating to clean up operations.
The Group generated an adjusted operating margin of 8.3 per cent
(H1 2022: 6.8 per cent) with the increase a result of operational
leverage on growth, supplemented by the benefits of our self-help
programme.
The net finance cost was higher at GBP 4.9 million ( H1 2022 :
GBP 3.3 million) due to a higher level of borrowing over the half
year and sharply higher interest rates. The comparative period
included a non-cash accelerated amortisation of fees of GBP0.6
million, associated with the previous RCF. The Group's overall tax
charge was GBP4.1 million ( H1 2022: GBP 1.5 million). The tax
charge on adjusted profit before tax was GBP 5.2 million ( H1 2022:
GBP 3.4 million), resulting in an effective adjusted tax rate of
25.2 per cent ( H1 2022 : 22.8 per cent) with the increase due to
the increase in the UK corporation tax rate.
Basic earnings per share (EPS) increased to 6.8 pence ( H1 2022:
2.3 pence). Adjusted EPS increased to 8.8 pence ( H1 2022 : 6.6
pence), reflecting the improvement in adjusted operating profit
partly offset by a higher interest and tax charge.
Adjusted operating cash flow post capital expenditure was higher
with a GBP 19.0 million inflow ( H1 2022 : GBP 10.0 million
outflow) which was primarily due to a much improved GBP6.9 million
working capital outflow ( H1 2022: GBP 33.0 million outflow),
reflecting normal seasonality. This resulted in operating cash
conversion of 74 per cent ( H1 2022 : minus 55 per cent). On a
statutory basis, cash flow from o perating activity was an inflow
of GBP 24.4 million ( H1 2022: GBP 12.3 million outflow).
There was a free cash inflow of GBP 6.9 million ( H1 2022 : GBP
23.5 million outflow), including GBP1.0 million of restructuring
and acquisition related payments (H1 2022: GBP7.0 million) .
As at 3 0 June 202 3 the Group's net debt was GBP 138.8 million
( 31 December 20 22 : GBP 138.4 million), including GBP20.2 million
of lease liabilities (31 December 20 22 : GBP 23.1 million).
Leverage, consistent with the bank covenants, was 1.8 times at 3 0
June 202 3 ( 31 December 20 22 : 2.0 times).
In June 2022 the Group re-financed its bank revolving credit
facility (RCF) with a syndicate of five relationship banks at
commercially attractive rates. This GBP147.4 million facility had a
four-year tenor with one year extension option. In the first half
of 2023 we exercised GBP15 million of a GBP32.6 million accordion,
thereby increasing the facility size to GBP162.4 million, and we
also exercised the one year extension, taking the facility maturity
out to June 2027. The RCF is complemented by GBP75 million of
private placement fixed rate loan notes, which were issued in
December 2021, with 7 and 10 year maturities.
Following the buy-in of the UK defined benefit scheme in
November 2022, the scheme is de-risked and had a surplus of GBP29.2
million at 30 June 2023. No contributions were made to the scheme
in the period (H1 2022: GBPnil) and none are expected going
forwards. The scheme data is now being adopted by Legal and General
and a decision on moving to buy-out is expected be made by the end
of the year.
Summary of Adjusted results
To assist with the understanding of earnings trends, the Group
has included within its non-GAAP alternative performance measures
including adjusted operating profit and adjusted profit. Further
information is contained in the 'Reconciliation of KPIs and non
IFRS measures' on pages 35 to 41.
A summary of the Group's adjusted results, and a reconciliation
of statutory to adjusted profit numbers are set out below:
GBP million H1 2023 H1 2022
----------------------------------- -------------- --------------
Revenue 309.1 269.2
----------------------------------- -------------- --------------
Adjusted Operating profit 25.6 18.3
Adjusted Operating margin 8.3% 6.8%
Net finance expense (4.9) (3.3)
----------------------------------- -------------- --------------
Profit before tax 20.7 15.0
Tax (5.2) (3.4)
Tax rate 25.2% 22.8%
----------------------------------- -------------- --------------
Profit after tax 15.5 11.6
Weighted average number of shares 176.0 million 175.7 million
EPS 8.8p 6.6p
=================================== ============== ==============
Reconciliation of Adjusted results
GBP million Note H1 2023 H1 2022
------------------------------------ ----- -------- --------
Operating profit 20.9 8.9
Adjusted to exclude:
------------------------------------ ----- -------- --------
Restructuring and other items
Pension restructuring costs 1 (0.9) (1.0)
Restructuring 2 (0.3) (4.5)
(1.2) (5.5)
Acquisition related costs 3
Amortisation of intangible assets
arising on business combinations (2.7) (3.1)
Torotel integration costs (0.4) (0.1)
Ferranti integration costs (0.4) (0.6)
Other acquisition related costs - (0.1)
(3.5) (3.9)
------------------------------------ ----- -------- --------
Total operating reconciling items (4.7) (9.4)
------------------------------------ ----- -------- --------
Adjusted operating profit 25.6 18.3
==================================== ===== ======== ========
Profit before tax 16.0 5.6
Total operating reconciling items
(as above) 4.7 9.4
------------------------------------ ----- -------- --------
Adjusted profit before tax 20.7 15.0
Taxation charge on adjusted profit (5.2) (3.4)
------------------------------------ ----- -------- --------
Adjusted profit after taxation 15.5 11.6
==================================== ===== ======== ========
Note 1: Pension restructuring costs of GBP0.9 million (2022:
GBP1.0 million) comprise GBP0.7 million relating to costs
associated with liability management exercises and cleansing of
scheme data and GBP0.2 million as a settlement cost upon completion
of the buyout of our US pension scheme.
Note 2: Restructuring costs charged in the period of GBP0.3
million (H1 2022: GBP4.5 million) relates to the relocation of
production facilities from Covina, USA to Kansas and GBP0.1 million
relating to clean up operations. Prior year restructuring costs
also included GBP2.6 million relating to the restructure of the
North America Resistors business, which includes pre-production
costs at our new Plano facility; GBP1.0 million relating to closure
of our site in Lutterworth, UK, and GBP0.2 million relating to the
relocation of production facilities from Medina, USA to Minnesota,
USA.
Note 3: Acquisition related costs of GBP3.5 million (H1 2022:
GBP3.9 million) comprise GBP2.7 million (H1 2022: GBP3.1 million)
of amortisation of acquisition intangibles, GBP0.4 million (H1
2022: GBP0.1 million) of integration costs relating to the
acquisition of Torotel, Inc and GBP0.4 million (H1 2022: GBP0.4
million integration costs and GBP0.2 million acquisition costs) of
integration costs relating to the acquisition of the Power and
Control business of Ferranti Technologies Ltd. based in Oldham.
Cash flow, net debt and leverage
The table below sets out Group cash flows and net debt
movement:
GBP million H1 2023 H1 2022
Adjusted operating profit 25.6 18.3
-------- --------
Depreciation and amortisation 8.6 7.9
-------- --------
Working capital movement (6.9) (33.0)
-------- --------
Net capital expenditure (9.3) (5.0)
-------- --------
Capitalised development expenditure (0.9) (1.0)
-------- --------
Other 1.9 2.8
-------- --------
Adjusted Operating Cash Flow post Capex 19.0 (10.0)
-------- --------
Restructuring and acquisition costs (1.0) (7.0)
-------- --------
Net interest and tax (8.8) (4.6)
-------- --------
Lease payments (2.3) (1.9)
-------- --------
Free Cash Flow 6.9 (23.5)
-------- --------
Dividends (7.5) (6.7)
-------- --------
Lease payments 2.3 1.9
-------- --------
Equity issued 0.1 0.2
-------- --------
Acquisitions & disposals - (8.3)
-------- --------
Other - (0.2)
-------- --------
Net debt impacting cashflow 1.8 (36.6)
-------- --------
Opening net debt (138.4) (102.5)
-------- --------
Other non-cash (new leases and lease reassessments) (0.5) (1.1)
-------- --------
FX (1.7) (1.8)
-------- --------
Closing net debt (138.8) (142.0)
-------- --------
At 30 June 2023 the Group's net debt was GBP138.8 million (31
December 2022: GBP138.4 million). Included within net debt was
GBP20.2 million of lease liabilities (31 December 2022: GBP23.1
million).
Consistent with the Group's borrowing agreements, which exclude
the impact of IFRS 16 leases, leverage ratio was 1.8 times at 30
June 2023 (31 December 2022: 2.0 times). Net interest cover was 7.0
times (31 December 2022: 7.4 times). The Group's debt covenants
state that the leverage ratio must not exceed 3.0 times and that
interest cover must be more than 4.0 times.
Principal risks and uncertainties
The Group has an established, structured approach to identifying
and assessing the impact of financial and operational risks on its
business, which is reviewed and updated quarterly. The principal
risks and uncertainties for the remainder of the financial year are
not expected to change materially from those included on pages 69
to 72 of the Annual Report and Accounts 2022. The risks identified
relate to the following areas: general revenue reduction due to
geopolitical instability or economic downturn; contractual risks;
research and development; people and capability; supplier
resilience; IT systems and information; M&A and integration;
sustainability, climate change and the environment; health and
safety and legal and regulatory compliance. Further information in
relation to the Group's financial position and going concern is
included on page 17.
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.
TT Electronics plc
Interim Results for the half-year ended 30 June 2023
Going Concern
The Group has experienced continued improvement in trading
momentum and strong growth from our 2022 results. We continue to
see benefit from our strategic repositioning in our chosen
structural growth markets as well as our focus on building close
relationships with our clients and this can be seen in both the
order book and financial performance of the Group.
The Group's financial position remains stable, on 30 June 2023
it had GBP289.8 million of total borrowing facilities available
(comprising committed facilities of GBP258.6 million, of which
GBP190.6 million is drawn, and uncommitted facilities of GBP31.2
million representing overdraft lines and an undrawn accordion
facility of GBP17.6 million).
The Group's primary source of finance is the GBP162.4 million
committed revolving credit facility (RCF) which was signed in June
2022 and will mature in June 2027 following the Group exercising an
option to extend the previously existing maturity by one year in
May 2023. The RCF includes a GBP15.0 million committed extension
converted from the existing uncommitted accordion facilities in
February 2023. At 30 June 2023 GBP115.6 million of this facility
had been drawn down. The Group's RCF is payable on a floating rate
basis above GBP SONIA, USD SOFR or EURIBOR depending on the
currency of the loan.
In December 2021, TT completed a debut issue of GBP75 million of
private placement fixed rate loan notes with three institutional
investors; the issue is evenly split between 7 and 10 year
maturities with an average interest rate of 2.9% and covenants in
line with our bank facility.
The Group had a leverage ratio of 1.8 times on 30 June 2023
compared to an RCF covenant maximum of 3.0 times and interest cover
(pre-IFRS 16 and excluding pension interest) of 7.0 times compared
to an RCF covenant minimum of 4.0 times.
The Group has prepared and reviewed cash flow forecasts across
the business over the twelve-month period from the date of the
approval of these interim results, considering the Group's current
financial position and the potential impact of our principal risks
on divisional performance.
Under the Group's base case financial projections, the Group
retains significant liquidity and covenant headroom, with both
metrics improving from the position as at 30 June 2023.
The Group's downside stress test scenario has been sensitised
for supply chain challenges, interest rate risks, general economic
downturn and people and capability challenges which show a
reduction in revenue and operating profit compared to the latest
forecast. Despite this further reduction these projections show
that the Group should remain well within its facilities headroom
and within bank covenants during 2023 and 2024. A 'reverse' stress
test was also modelled to understand the conditions which could
jeopardise the ability of the Group to continue as a going concern
including assessing against covenant testing and facility headroom.
The reverse stress test scenario is deemed to have a remote
likelihood and helped inform the Directors' assessment that there
are no material uncertainties in relation to going concern.
The Group's wide geographical and sector diversification helps
minimise the risk of serious business interruption or catastrophic
reputational damage. Furthermore, the business model is structured
so that the Group is not overly reliant on any single customer,
market or geography.
The Directors have assessed the future funding requirements of
the Group with due regard to the risks and uncertainties to which
the Group is exposed and compared them with the level of available
borrowing facilities and are satisfied that the Group has adequate
resources for at least twelve months from the date of signing these
interim financial statements. Accordingly, the financial statements
have been prepared on a going concern basis.
Responsibility statement of the Directors
We confirm that to the best of our knowledge:
-- The 2023 annual financial statements of TT Electronics plc
will be prepared in accordance with United Kingdom adopted
International Accounting Standards. The condensed set of financial
statements included in this half yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34 'Interim Financial Reporting';
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R:
(i) an indication of important events that have occurred during
the first six months of the financial year, and their impact on the
condensed set of financial statements; and
(ii) a description of the principal risks and uncertainties for
the remaining six months of the year.
-- the interim management report includes a fair review of the
information required by DTR 4.2.8R:
(i) related party transactions that have taken place in the
first six months of the current financial year and that have
materially affected the financial position or performance of the
Group in that period; and
(ii) any changes in the related parties transactions described
in the 2022 Annual Report that could have a material effect on the
financial position or performance of the Group in the current
period.
By order of the Board
Richard Tyson Mark Hoad
Chief Executive Officer Chief Financial Officer
2 August 2023 2 August 2023
Cautionary statement
This report contains forward-looking statements. These have been
made by the directors in good faith based on the information
available to them up to the time of their approval of this report.
The directors can give no assurance that these expectations will
prove to have been correct. Due to the inherent uncertainties,
including both economic and business risk factors underlying such
forward-looking information, actual results may differ materially
from those expressed or implied by these forward-looking
statements. The directors undertake no obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise.
Independent review report to TT Electronics plc
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises of the condensed
consolidated income statement, the condensed consolidated statement
of financial position, the condensed consolidated statement of
changes in equity, the condensed consolidated cash flow statement
and related notes 1 to 13.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This Conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410;
however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the group a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our conclusion, including our conclusion relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
2 August 2023
TT Electronics plc
Interim results for the half-year ended 30 June 2023
Condensed consolidated income statement (unaudited)
for the six months ended 30 June 2023
Six months Six months Year ended
ended 30 ended 31 December
June 2023 30 June 2022 (audited)
GBPmillion (unless otherwise stated) Note 2022
---------------------------------------- ----- ----------- ----------- ----------------
Revenue 3 309.1 269.2 617.0
Cost of sales (235.6) (206.8) (481.5)
---------------------------------------- ----- ----------- ----------- ----------------
Gross profit 73.5 62.4 135.5
Distribution costs (14.8) (15.0) (29.6)
Administrative expenses (37.8) (38.5) (109.3)
---------------------------------------- ----- ----------- ----------- ----------------
Operating profit/(loss) 20.9 8.9 (3.4)
Analysed as:
Adjusted operating profit 3 25.6 18.3 47.1
Restructuring and other 4 (1.2) (5.5) (20.2)
Asset impairments 4 - - (23.1)
Acquisition and disposal related costs 4 (3.5) (3.9) (7.2)
---------------------------------------- ----- ----------- ----------- ----------------
Finance income 0.8 0.8 2.3
Finance costs (5.7) (4.1) (9.0)
---------------------------------------- ----- ----------- ----------- ----------------
Profit/(loss) before taxation 16.0 5.6 (10.1)
Taxation 5 (4.1) (1.5) (3.1)
---------------------------------------- ----- ----------- ----------- ----------------
Profit/(loss) for the period attributable
to the owners of the Company 11.9 4.1 (13.2)
----------------------------------------------- ----------- ----------- ----------------
EPS/(LPS) attributable to owners of
the Company (pence)
Basic 6 6.8 2.3 (7.5)
Diluted 6 6.7 2.3 (7.5)
---------------------------------------- ----- ----------- ----------- ----------------
TT Electronics plc
Interim results for the half-year ended 30 June 2023
Condensed consolidated statement of comprehensive income
(unaudited)
for the six months ended 30 June 2023
GBPmillion Six months ended 30 June Six months ended 30 June Year ended 31 December
2023 2022 2022 (audited)
---------------------------- --------------------------- --------------------------- ---------------------------
Profit/(loss) for the period 11.9 4.1 (13.2)
Other comprehensive
income/(loss) for the
period after tax
Items that are or may be
reclassified subsequently
to the income statement:
Exchange differences on
translation of foreign
operations (18.1) 26.6 26.9
Tax on exchange differences - - (1.6)
Gain/(loss) on hedge of net
investment in foreign
operations 1.9 (3.0) (3.4)
Gain/(loss) on cash flow
hedges taken to equity less
amounts recycled to the
income statement 3.2 (4.8) (2.9)
Deferred tax loss on
movements in cash flow
hedge reserves (0.5) (0.8) (0.4)
Items that will never be
reclassified to the income
statement:
Remeasurement of defined
benefit pension schemes (1.4) 16.8 (35.9)
Tax on remeasurement of
defined benefit pension
schemes 0.5 (4.4) 6.5
----------------------------- --------------------------- --------------------------- ---------------------------
Total comprehensive
income/(loss) for the
period attributable to the
owners of the Company (2.5) 34.5 (24.0)
----------------------------- --------------------------- --------------------------- ---------------------------
TT Electronics plc
Interim results for the half-year ended 30 June 2023
Condensed consolidated statement of financial position
(unaudited)
GBPmillion Note 30 June 30 June 31 December
2023 2022 2022 (audited)
---------------------------------- ----- -------- -------- ----------------
ASSETS
Non-current assets
Right-of-use assets 17.4 19.8 19.6
Property, plant and equipment 56.5 54.7 54.8
Goodwill 149.7 171.6 155.1
Other intangible assets 49.9 56.2 53.7
Deferred tax assets 12.6 9.1 13.2
Derivative financial instruments 2.0 0.9 0.8
Pensions 9 29.2 95.0 31.3
---------------------------------- ----- -------- -------- ----------------
Total non-current assets 317.3 407.3 328.5
---------------------------------- ----- -------- -------- ----------------
Current assets
Inventories 181.4 193.7 189.2
Trade and other receivables 107.6 102.5 120.3
Income taxes receivable 0.3 0.7 1.1
Derivative financial instruments 5.9 1.9 3.1
Cash and cash equivalents 10 75.4 76.3 65.0
---------------------------------- ----- -------- -------- ----------------
Total current assets 370.6 375.1 378.7
---------------------------------- ----- -------- -------- ----------------
Total assets 687.9 782.4 707.2
---------------------------------- ----- -------- -------- ----------------
LIABILITIES
Current liabilities
Borrowings 10 5.6 12.6 3.7
Lease liabilities 4.0 4.5 4.4
Derivative financial instruments 3.7 4.0 3.6
Trade and other payables 153.0 160.3 173.2
Income taxes payable 9.0 6.6 9.6
Provisions 3.2 4.7 3.5
---------------------------------- ----- -------- -------- ----------------
Total current liabilities 178.5 192.7 198.0
---------------------------------- ----- -------- -------- ----------------
Non-current liabilities
Borrowings 10 188.4 182.3 176.6
Lease liabilities 16.2 18.9 18.7
Derivative financial instruments 1.2 1.2 0.8
Deferred tax liability 12.5 23.5 12.4
Pensions 9 2.9 3.4 2.9
Provisions and other non-current
liabilities 1.1 0.9 0.8
---------------------------------- ----- -------- -------- ----------------
Total non-current liabilities 222.3 230.2 212.2
---------------------------------- ----- -------- -------- ----------------
Total liabilities 400.8 422.9 410.2
---------------------------------- ----- -------- -------- ----------------
Net assets 287.1 359.5 297.0
---------------------------------- ----- -------- -------- ----------------
EQUITY
Share capital 11 44.1 44.1 44.1
Share premium 11 23.0 22.8 22.9
Translation reserve 38.9 56.8 55.1
Other reserves 10.0 3.0 7.3
Retained earnings 171.1 230.8 167.6
---------------------------------- ----- -------- -------- ----------------
Equity attributable to owners of
the Company 287.1 357.5 297.0
Non-controlling interests - 2.0 -
---------------------------------- ----- -------- -------- ----------------
Total equity 287.1 359.5 297.0
---------------------------------- ----- -------- -------- ----------------
Approved by the Board of Directors on 2 August 2023 and signed
on their behalf by:
Richard Tyson Mark Hoad
Director Director
TT Electronics plc
Interim results for the half-year ended 30 June 2023
Condensed consolidated statement of changes in equity
(unaudited)
for the six months ended 30 June 2023
GBPmillion Share Share Translation Other Retained Sub NCI Total
capital premium Reserve reserves earnings total ([1])
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
At 31 December 2021 (audited) 44.1 22.6 33.2 7.1 221.0 328.0 2.0 330.0
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Profit for the period - - - - 4.1 4.1 - 4.1
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Other comprehensive income
Exchange differences on
translation
of foreign operations - - 26.6 - - 26.6 - 26.6
Loss on hedge of net
investment
in foreign operations - - (3.0) - - (3.0) - (3.0)
Loss on cash flow hedges taken
to equity less amounts
recycled
to the income statement - - - (4.8) - (4.8) - (4.8)
Deferred tax on movement in
cash flow hedge reserves - - - (0.8) - (0.8) - (0.8)
Remeasurement of defined
benefit
pension schemes - - - - 16.8 16.8 - 16.8
Tax on remeasurement of
defined
benefit pension schemes - - - - (4.4) (4.4) - (4.4)
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Total comprehensive income - - 23.6 (5.6) 16.5 34.5 - 34.5
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Transactions with owners
recorded
directly in equity
Equity dividends paid by the
Company - - - - (6.7) (6.7) - (6.7)
Share based payments - - - 2.3 - 2.3 - 2.3
Deferred tax on share-based
payments - - - (0.8) - (0.8) - (0.8)
New shares issued - 0.2 - - - 0.2 - 0.2
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
At 30 June 2022 44.1 22.8 56.8 3.0 230.8 357.5 2.0 359.5
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
At 31 December 2022 (audited) 44.1 22.9 55.1 7.3 167.6 297.0 - 297.0
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Profit for the period - - - - 11.9 11.9 - 11.9
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Other comprehensive income
Exchange differences on
translation
of foreign operations - - (18.1) - - (18.1) - (18.1)
Gain on hedge of net
investment
in foreign operations - - 1.9 - - 1.9 - 1.9
Gain on cash flow hedges taken
to equity less amounts
recycled
to the income statement - - - 3.2 - 3.2 - 3.2
Deferred tax loss on movements
in cash flow hedge reserves - - - (0.5) - (0.5) - (0.5)
Remeasurement of defined
benefit
pension schemes - - - - (1.4) (1.4) - (1.4)
Tax on remeasurement of
defined
benefit pension schemes - - - - 0.5 0.5 - 0.5
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Total comprehensive
(loss)/income - - (16.2) 2.7 11.0 (2.5) - (2.5)
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
Transactions with owners
recorded
directly in equity
Equity dividends paid by the
Company - - - - (7.5) (7.5) - (7.5)
Share-based payments - - - 0.2 - 0.2 - 0.2
Deferred tax on share-based
payments - - - (0.2) - (0.2) - (0.2)
New shares issued - 0.1 - - - 0.1 - 0.1
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
At 30 June 2023 44.1 23.0 38.9 10.0 171.1 287.1 - 287.1
------------------------------- --------- --------- ------------ ---------- ---------- ------- ------- -------
1. Non-controlling interests ('NCI') were eliminated in the
second half of 2022.
TT Electronics plc
Interim results for the half-year ended 30 June 2023
Condensed consolidated cash flow statement (unaudited)
for the six months ended 30 June 2023
GBPmillion Note Six months Six months Year ended
ended 30 ending 31 December
June 2023 30 June 2022 (audited)
2022
------------------------------------------------ ----- ----------- ----------- ----------------
Cash flows from operating activities
Profit for the year 11.9 4.1 (13.2)
Taxation 4.1 1.5 3.1
Net finance costs 4.9 3.3 6.7
Restructuring and other 1.2 5.5 43.3
Acquisition related costs 3.5 3.9 7.2
Adjusted operating profit 25.6 18.3 47.1
Adjustments for:
Depreciation 7.3 6.8 13.9
Amortisation of intangible assets 1.3 1.1 2.2
Share based payment expense 1.5 2.5 4.8
Other items 0.4 0.3 0.5
Increase in inventories (2.6) (39.1) (40.4)
Decrease/(increase) in receivables 7.3 (8.4) (26.3)
(Decrease)/increase in payables and provisions (11.6) 14.5 27.9
------------------------------------------------ ----- ----------- ----------- ----------------
Adjusted operating cash flow 29.2 (4.0) 29.7
Restructuring and acquisition related costs (1.0) (7.0) (11.1)
------------------------------------------------ ----- ----------- ----------- ----------------
Net cash generated from / (used in) operations 28.2 (11.0) 18.6
Net income taxes paid (3.8) (1.3) (5.9)
------------------------------------------------ ----- ----------- ----------- ----------------
Net cash generated from / (used in) operating
activities 24.4 (12.3) 12.7
------------------------------------------------ ----- ----------- ----------- ----------------
Cash flows from investing activities
Purchase of property, plant and equipment (9.0) (5.1) (11.4)
Proceeds from sale of property, plant and
equipment and government grants received 0.1 0.2 0.3
Capitalised development expenditure (0.9) (1.0) (2.3)
Purchase of other intangibles (0.4) (0.1) (0.6)
Acquisitions of businesses - (8.3) (8.3)
Net cash flow used in investing activities (10.2) (14.3) (22.3)
------------------------------------------------ ----- ----------- ----------- ----------------
Cash flows from financing activities
Issue of share capital 0.1 0.2 0.4
Interest paid (5.0) (3.3) (7.5)
Repayment of borrowings (4.0) (109.5) (149.3)
Proceeds from borrowings 17.5 141.3 174.3
Payment of lease liabilities (2.3) (1.9) (4.3)
Other items - (0.2) (1.0)
Dividends paid to minority shareholders - - (2.0)
Dividends paid by the Company (7.5) (6.7) (10.2)
------------------------------------------------ ----- ----------- ----------- ----------------
Net cash flow (used in) / generated from
financing activities (1.2) 19.9 0.4
------------------------------------------------ ----- ----------- ----------- ----------------
Net change in cash and cash equivalents 13.0 (6.7) (9.2)
Cash and cash equivalents at beginning
of year 10 61.3 67.2 67.2
Exchange differences 10 (4.5) 3.2 3.3
------------------------------------------------ ----- ----------- ----------- ----------------
Cash and cash equivalents at end of year 10 69.8 63.7 61.3
------------------------------------------------ ----- ----------- ----------- ----------------
Cash and cash equivalents comprise:
Cash at bank and in hand 75.4 76.3 65.0
Bank overdrafts (5.6) (12.6) (3.7)
------------------------------------------------ ----- ----------- ----------- ----------------
69.8 63.7 61.3
------------------------------------------------ ----- ----------- ----------- ----------------
TT Electronics plc
Interim results for the half-year ended 30 June 2023
Notes to the condensed consolidated financial statements
(unaudited)
1. General information
The condensed consolidated financial statements for the six
months ended 30 June 2023 are unaudited and were authorised for
issue in accordance with a resolution of the Board of Directors.
The information for the six months ended 30 June 2023 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. Comparative information for the year ended 31
December 2022 has been taken from the published statutory accounts,
a copy of which has been delivered to the Registrar of Companies.
The auditors reported on those accounts: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
2. Basis of preparation
a) Condensed consolidated half-year financial statements
The 2023 annual financial statements of TT Electronics plc will
be prepared in accordance with United Kingdom adopted International
Accounting Standards. The condensed set of financial statements
included in this half yearly financial report has been prepared in
accordance with United Kingdom adopted International Accounting
Standard 34 'Interim Financial Reporting'. These condensed
consolidated half-year financial statements do not include all the
information and disclosures required in the annual financial
statements and should be read in conjunction with the 2022 Annual
Report.
b) Basis of accounting
The accounting policies adopted are consistent with those
followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2022.
c) Alternative performance measures
The Group presents Alternative Performance Measures ("APMs") in
addition to the statutory results of the Group.
Adjusted operating profit has been defined as operating profit
from continuing operations excluding the impacts of significant
restructuring programmes, significant one-off items including
property disposals, impairment charges significant in nature and/or
value, certain one-off pension costs, business acquisition,
integration and divestment related activity; and the amortisation
of intangible assets recognised on acquisition. Acquisition and
disposal related items include 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. Restructuring includes significant changes in
footprint (including movement of production facilities) and
significant costs of management changes.
In addition to the items above, adjusting items impacting profit
after tax include:
-- The net effect on tax of significant restructuring from
strategy changes that are not considered by the Group to be part of
the normal operating costs of the business; and
-- The tax effects of adjustments to profit before tax.
Costs associated with restructuring, acquisitions and disposals
are uncertain with regard to their timing and size and therefore
their inclusion within adjusted operating profit could mislead the
reader of the accounts.
These interim results include alternative performance measures
that are not prepared in accordance with IFRS. These alternative
performance measures have been selected by the Directors 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.
The Directors consider the adjusted results to be an important
measure used to monitor how the businesses are performing as this
provides a meaningful reflection of how the businesses are managed
and measured on a day-to-day basis and achieves consistency and
comparability between reporting periods, when all businesses are
held for a complete reporting period.
These alternative performance measures exclude certain
significant non-recurring, infrequent or non-cash items that the
Directors do not believe are indicative of the underlying operating
performance of the Group (that are otherwise included when
preparing financial measures under IFRS).
Adjusted profit is not a defined term under IFRS and may not be
comparable with similarly titled profit measures reported by other
companies. It is not intended to be a substitute for, or superior
to, GAAP measures. All APMs relate to the current year results and
comparable periods where provided.
The Directors consider there to be four main alternative
performance measures: adjusted operating profit, free cash flow,
adjusted EPS and adjusted effective tax rate.
All alternative performance measures are presented within the
section titled 'Reconciliation of KPIs and non IFRS Measures' and
are reconciled to their equivalent statutory measures where this is
appropriate.
d) Estimates and judgements
The preparation of condensed consolidated financial statements
requires management to make judgements, estimates and assumptions
which affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expense. Actual
results may differ from these estimates.
Significant judgements relate to the determination of items of
income and expense excluded from operating profit to arrive at
adjusted operating profit. Judgements are required as to whether
items are disclosed as adjusting with consideration given to both
quantitative and qualitative factors. Further information about the
determination of adjusting items is included in note 1c of the 2022
Annual Report.
Significant estimates relate to uncertain tax provisions and
goodwill. Accruals for tax contingencies require management to make
judgements and estimates in relation to tax authority audits and
exposures. Amounts accrued are based on management's interpretation
of country-specific tax law and the likelihood of settlement. Tax
benefits are not recognised unless the tax positions are probable
of being sustained. Once considered to be probable, management
reviews each material tax benefit to assess whether a provision
should be taken against full recognition of the benefit on the
basis of potential settlement through negotiation and/or
litigation. These amounts are expected to be utilised or to reverse
as tax audits occur or as the statute of limitations is reached in
the respective countries concerned. The Group's current tax
liability at 30 June 2023 includes tax provisions of GBP9.3 million
(2022: GBP8.4 million). The Group believes the range of reasonable
possible outcomes in respect of these exposures is tax liabilities
of up to GBP12.3 million (2022: GBP11.1 million).
There is a significant estimate over the carrying value of the
goodwill attributable to the IoT Solutions cash generating unit
('CGU'). The goodwill was impaired in 2022 so therefore the
headroom as at 31 December 2022 was limited. The raising of
interest rates by the Bank of England in 2023 has caused the
discount factor which is used in assessing the headroom to rise.
The rise in rates and the fact that the goodwill was impaired in
2022 is an indicator of impairment. On 30 June 2023 an impairment
analysis was performed and headroom was determined to be GBP0.9
million. Sensitivity analysis has been performed and indicates that
a change in the pre-tax discount rate and long-term growth rate
from 15.6% to 15.9% or from 1.8% to 1.3% respectively would reduce
headroom to GBPnil. A reduction in the terminal value of operating
profit by 3.7% would also reduce the headroom to GBPnil.
e) Going concern
After making appropriate enquiries, the Directors have a
reasonable expectation that the Company has adequate resources and
financial headroom to continue in operational existence for at
least twelve months from the date of signing these interim results.
Therefore, they continue to adopt the going concern basis of
accounting in preparing the condensed consolidated half-year
financial statements. Page 17 outlines the going concern
assessment.
Given the financial resources available, together with long term
partnerships with multiple key customers and suppliers across
different geographic areas and industries, the Directors believe
that the Group is well placed to manage its business risks
successfully.
The Group continues to manage foreign currency risk at a
transactional level through the use of hedges which are monitored
by the Group Treasury Committee.
The Group Treasury Committee regularly reviews counterparty
credit risk and ensures cash balances are held with carefully
assessed counterparties with strong credit ratings.
Pages 69 to 72 of the 2022 Annual Report provide details of the
Group's policy on managing its operational and financial risks.
3. Segmental reporting
The Group is organised into three divisions, as shown below,
according to the nature of the products and services provided. Each
of these divisions represents an operating segment in accordance
with IFRS 8 'Operating segments' and there is no aggregation of
segments. The chief operating decision maker is the Board of
Directors. The operating segments are:
-- Power and Connectivity - the Power and Connectivity division
develops and manufactures power application products and
connectivity devices which enable the capture and wireless transfer
of data. We collaborate with our customers to develop innovative
solutions to optimise their electronic systems;
-- Global Manufacturing Solutions - the Global Manufacturing
Solutions division provides manufacturing services and engineering
solutions for our product divisions and to customers that often
require a lower volume and higher mix of different products. We
manufacture complex integrated product assemblies for our customers
and provide engineering services including designing testing
solutions and value-engineering; and
-- Sensors and Specialist Components - the Sensors and
Specialist Components division works with customers to develop
standard and customised solutions, including sensors and power
management devices. Our solutions improve the precision, speed and
reliability of critical aspects of our customers' applications.
The key performance measure of the operating segments is
adjusted operating profit. Refer to the section titled
'Reconciliation of KPIs and non IFRS Measures' for a definition of
adjusted operating profit.
Corporate costs - Resources and costs of the head office managed
centrally but deployed in support of the operating units are
allocated to segments based on a combination of revenue and
adjusted operating profit.
Resources and costs of the head office which are not related to
the operating activities of the trading units are not allocated to
divisions and are separately disclosed, equivalent to the segment
disclosure information, so that reporting is consistent with the
format that is used for review by the chief operating decision
maker. This gives greater transparency of the adjusted operating
profits for each segment. Adjusting items are not allocated to
divisions for reporting purposes. For further discussion of these
items see note 4.
The accounting policies of the reportable segments are the same
as the Group's accounting policies.
Group financing (including finance costs and finance income) and
income taxes are managed on a Group basis and are not allocated to
operating segments. Goodwill is allocated to the individual cash
generating units within the segment of which it is a part.
Six months ended 30 June 2023
--------------------------------------------------------------------------------------
GBPmillion Power Global Sensors Total Corporate Total
and Connectivity Manufacturing and Specialist Operating
Solutions Components Segments
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Sales to external
customers 79.9 153.8 75.4 309.1 - 309.1
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Adjusted operating
profit 5.9 13.8 9.8 29.5 (3.9) 25.6
Add back: adjustments
made to operating profit
(note 4) (4.7)
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Operating profit 20.9
Net finance costs (4.9)
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Profit before taxation 16.0
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Six months ended 30 June 2022
--------------------------------------------------------------------------------------
GBPmillion Power Global Sensors Total Corporate Total
and Connectivity Manufacturing and Specialist Operating
Solutions Components Segments
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Sales to external
customers 68.8 135.3 65.1 269.2 - 269.2
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Adjusted operating
profit 2.1 9.4 10.6 22.1 (3.8) 18.3
Add back: adjustments
made to operating profit
(note 4) (9.4)
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Operating profit 8.9
Net finance costs (3.3)
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Profit before taxation 5.6
--------------------------- ------------------ --------------- ---------------- ----------- ---------- ------
Year ended 31 December 2022
---------------------------------------------------------------------------------------
GBPmillion Power Global Sensors Total Corporate Total
and Connectivity Manufacturing and Specialist Operating
Solutions Components Segments
--------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Sales to external
customers 154.2 323.0 139.8 617.0 - 617.0
--------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Adjusted operating
profit 7.9 25.2 21.8 54.9 (7.8) 47.1
Add back: adjustments
made to operating profit
(note 4) (50.5)
--------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Operating loss (3.4)
Net finance costs (6.7)
--------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
Loss before taxation (10.1)
--------------------------- ------------------ --------------- ---------------- ----------- ---------- -------
There is no significant intergroup trading between segments.
The tables below show the geographies and markets in which the
Group's revenues arose during the period.
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
--------------------------- ----------- ----------- -------------
United Kingdom 70.3 59.4 130.0
Rest of Europe 51.4 44.1 104.3
North America 111.9 102.7 236.6
Central and South America 0.5 0.6 1.5
Asia 74.2 61.9 143.2
Rest of the World 0.8 0.5 1.4
--------------------------- ----------- ----------- -------------
309.1 269.2 617.0
--------------------------- ----------- ----------- -------------
GBPmillion Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
-------------------------------- ----------- ----------- -------------
Healthcare 79.1 70.7 172.0
Aerospace and defence 51.2 38.8 91.7
Automation and electrification 112.9 105.6 229.6
Distribution 65.9 54.1 123.7
-------------------------------- ----------- ----------- -------------
309.1 269.2 617.0
-------------------------------- ----------- ----------- -------------
4. Adjusting items
Restructuring costs charged in the period of GBP0.3 million
comprises GBP0.2 million (2022: GBP0.7 million) relating to the
relocation of production facilities from Covina, USA to Kansas and
GBP0.1 million (2022: GBPnil) relating to clean up operations.
Prior year restructuring costs also included GBP2.6 million
relating to the restructure of the North America Resistors
business, which includes pre-production costs at our new Plano, USA
facility; GBP1.0 million relating to closure of our site in
Lutterworth, UK, and GBP0.2 million relating to the relocation of
production facilities from Medina, USA to Minnesota, USA.
Pension restructuring costs of GBP0.9 million (2022: GBP1.0
million) comprise GBP0.7 million relating to costs associated with
liability management exercises and cleansing of scheme data and
GBP0.2 million as a settlement cost upon completion of the buyout
of our US pension scheme.
Acquisition related costs of GBP3.5 million (2022: GBP3.9
million) comprise GBP2.7 million (2022: GBP3.1 million) of
amortisation of acquisition intangibles, GBP0.4 million (2022:
GBP0.1 million) of integration costs relating to the acquisition of
Torotel, Inc and GBP0.4 million (2022: GBP0.4 million integration
costs and GBP0.2m acquisition costs) of integration costs relating
to the acquisition of the Power and Control business of Ferranti
Technologies Ltd. based in Oldham, UK.
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
----------- ------ ----------- ------ ------------- ------
GBPmillion Operating Tax Operating Tax Operating Tax
profit profit profit
------------------------------------- ----------- ------ ----------- ------ ------------- ------
As reported 20.9 (4.1) 8.9 (1.5) (3.4) (3.1)
------------------------------------- ----------- ------ ----------- ------ ------------- ------
Restructuring and other
Restructuring (0.3) 0.1 (4.5) 0.9 (6.4) 1.2
Pension restructuring costs (0.9) 0.2 (1.0) 0.2 (2.0) 0.4
Pension enhanced transfer value
exercise - - - - (11.8) 2.2
(1.2) 0.3 (5.5) 1.1 (20.2) 3.8
------------------------------------- ----------- ------ ----------- ------ ------------- ------
Asset impairments
Goodwill impairment - - - - (17.7) -
Other impairments - - - - (5.4) 1.0
- - - - (23.1) 1.0
------------------------------------- ----------- ------ ----------- ------ ------------- ------
Acquisition and disposal related
costs
Amortisation of intangible
assets arising on business
combinations (2.7) 0.6 (3.1) 0.6 (6.0) 0.3
Torotel integration and acquisition
costs (0.4) 0.1 (0.1) - (0.1) -
Ferranti Power and Control
acquisition and integration
costs (0.4) 0.1 (0.6) 0.2 (1.1) 0.2
Other acquisition related costs - - (0.1) - - -
------------------------------------- ----------- ------ ----------- ------ ------------- ------
(3.5) 0.8 (3.9) 0.8 (7.2) 0.5
------------------------------------- ----------- ------ ----------- ------ ------------- ------
Total items excluded from
adjusted measure (4.7) 1.1 (9.4) 1.9 (50.5) 5.3
------------------------------------- ----------- ------ ----------- ------ ------------- ------
Adjusted measure 25.6 (5.2) 18.3 (3.4) 47.1 (8.4)
------------------------------------- ----------- ------ ----------- ------ ------------- ------
5. Taxation
The half-year tax charge of GBP4.1 million (2022: GBP1.5
million) is based on a forecast effective tax rate of 25.2 per cent
(2022: 22.8 per cent) on adjusted profit and a GBP1.1 million
(2022: GBP1.9 million) credit on restructuring, asset impairments
and acquisition related costs.
The enacted UK tax rate applicable since 1 April 2017 to 31
March 2023 was 19 per cent. From 1 April 2023 the UK tax rate
increased to 25 per cent meaning the current year blended rate is
23.5 per cent.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Company by the weighted average
number of shares in issue during the period. The weighted average
number of shares in issue is 176.0 million (30 June 2022: 175.7
million, 31 December 2022: 175.8 million). The calculation of the
diluted earnings per share excludes 3,666,008 (30 June 2022:
2,175,908) share options whose effect would have been
anti-dilutive. Adjusted earnings per share is based on the adjusted
profit after interest and tax.
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
---------------------------------------------- ----------- ----------- -------------
Earnings (millions)
Profit for the period attributable to owners
of the Company 11.9 4.1 (13.2)
Adjusted earnings 15.5 11.6 32.0
Earnings / (loss) per share (pence)
Basic (pence) 6.8 2.3 (7.5)
Diluted (pence) 6.7 2.3 (7.5)
---------------------------------------------- ----------- ----------- -------------
The numbers used in calculating statutory and adjusted earnings
per share are shown below:
GBPmillion (unless otherwise stated) Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
---------------------------------------------- ----------- ----------- -------------
Profit for the period attributable to owners
of the Company 11.9 4.1 (13.2)
Restructuring and other 1.2 5.5 20.2
Asset impairments - - 23.1
Acquisition and disposal related costs 3.5 3.9 7.2
Tax effect of above items (see note 4) (1.1) (1.9) (5.3)
---------------------------------------------- ----------- ----------- -------------
Adjusted earnings 15.5 11.6 32.0
---------------------------------------------- ----------- ----------- -------------
Adjusted earnings per share (pence) 8.8 6.6 18.2
Adjusted diluted earnings per share (pence) 8.7 6.5 18.0
---------------------------------------------- ----------- ----------- -------------
The weighted average number of shares used to calculate
statutory and adjusted earnings per share are disclosed below:
Million Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
----------------------------- ----------- ----------- -------------
Basic 176.0 175.7 175.8
Adjustment for share awards 2.2 2.8 2.0
----------------------------- ----------- ----------- -------------
Diluted 178.2 178.5 177.8
----------------------------- ----------- ----------- -------------
7. Dividends
2023 2023 2022 2022
pence GBPmillion pence GBPmillion
per share per share
------------------------------- ----------- ------------ ----------- ------------
Final dividend paid for prior
year 4.30 7.5 3.80 6.7
Interim dividend declared for
current year 2.15 3.8 2.00 3.5
------------------------------- ----------- ------------ ----------- ------------
The Directors have declared an interim dividend of 2.15 pence
per share which will be paid on 12 October 2023 to shareholders on
the register on 15 September 2023. Shares will become ex-dividend
on 14 September 2023.
8. Fair value of financial instruments
IFRS 13 "Fair Value Measurement" requires an analysis of those
financial instruments that are measured at fair value at the end of
the period in a fair value hierarchy. In addition, IFRS 13 requires
financial instruments not measured at fair value but for which fair
value is disclosed to be analysed in the same fair value
hierarchy:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
Level 3 - inputs for the asset or liability that are not based
on observable market data (i.e. unobservable inputs).
30 June 2023 30 June 2022 31 December
2022
--------- ------------- --------- ------------- --------- ---------------
GBPmillion Fair value Carrying Carrying Carrying
hierarchy value Fair value value Fair value value Fair value
---------------------- -------------- --------- ------------- --------- ------------- --------- ---------------
Held at amortised
cost
Cash and cash
equivalents n/a 75.4 75.4 76.3 76.3 65.0 65.0
Trade and other
receivables n/a 84.0 84.0 87.0 87.0 101.3 101.3
Trade and other
payables n/a (118.2) (118.2) (123.9) (123.9) (135.1) (135.1)
Borrowings (excluding
unsecured loan
notes) 2 (119.0) (119.0) (119.9) (119.9) (105.3) (105.3)
Unsecured loan notes 3 (75.0) (54.1) (75.0) (57.8) (75.0) (55.1)
Held at fair value
Derivative financial
instruments (assets) 2 7.9 7.9 2.8 2.8 3.9 3.9
Derivative financial
instruments
(liabilities) 2 (4.9) (4.9) (5.2) (5.2) (4.4) (4.4)
Held at depreciated
cost
Investment properties 3 - 0.7 - 0.7 - 0.7
---------------------- -------------- --------- ------------- --------- ------------- --------- ---------------
The fair value of the financial assets and liabilities are
included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a
forced or liquidation sale. The following methods and assumptions
were used to estimate the fair values:
-- cash and cash equivalents, trade and other receivables and
trade and other payables approximate to their carrying amounts
largely due to the short-term maturities of these instruments;
-- the fair value of borrowings is estimated by discounting
future cash flows using rates currently available for debt and
remaining maturities (level 2);
-- the fair value of unsecured loan notes has been derived from
available market data for borrowings of similar terms and maturity
period (level 3);
-- The fair value of derivative financial instrument assets
(GBP7.9 million) and liabilities (GBP4.9 million) are estimated by
discounting expected future cash flows using current market indices
such as yield curves and forward exchange rates over the remaining
term of the instrument (level 2);
-- the fair value of investment properties are based on market
valuations obtained through third party valuations (level 3).
9. Retirement benefit schemes
At 30 June 2023 the Group operated one defined benefit scheme in
the UK (the TT Group (1993) scheme) and overseas defined benefit
schemes in the USA. These schemes are closed to new members and the
UK scheme is closed to future accrual. Given the nature of the
Company's control of the plan under the Scheme's rules, a pension
surplus has been recognised under IFRIC 14.
In the period ended 30 June 2023 the Trustees of the BI
Technologies Corporation Retirement Plan, one of the US defined
benefit schemes in the USA, completed a partial buy-out,
extinguishing gross liabilities of GBP3.9m, with effect from March
2023. A settlement cost of GBP0.2 million was recognised within
items excluded from adjusted operating profit as a result of this
exercise.
In November 2022, the Trustees of the TT Group Scheme entered
into a bulk annuity insurance contract with an insurer in respect
of the liabilities of the defined benefit scheme (also known as a
'buy-in'). Following the buy-in the Trustees and Company agreed
that there was no requirement for any further contributions to be
paid to the Scheme.
In October 2022, the Trustees of the Southern & Redfern Ltd
Retirement Benefits Scheme completed a buy-out of the scheme with a
leading insurer.
The amounts recognised in the condensed consolidated statement
of financial position are:
GBPmillion 30 June 30 June 31 December
2023 2022 2022
-------------------- -------- -------- ------------
TT Group (1993) 29.2 95.0 31.3
Southern & Redfern - - -
USA schemes (2.9) (3.4) (2.9)
-------------------- -------- -------- ------------
Net surplus 26.3 91.6 28.4
30 June 30 June 31 December
GBPmillion 2023 2022 2022
----------------------------------------- -------- -------- ------------
Fair value of assets 349.9 521.3 396.8
Defined benefit obligation (323.6) (429.7) (368.4)
----------------------------------------- -------- -------- ------------
Net surplus recognised in the statement
of financial position 26.3 91.6 28.4
Represented by
Schemes in net surplus 29.2 95.0 31.3
Schemes in net deficit (2.9) (3.4) (2.9)
----------------------------------------- -------- -------- ------------
26.3 91.6 28.4
----------------------------------------- -------- -------- ------------
The costs recognised in the condensed consolidated income
statement are:
Six months Six months Year ended
ended 30 ended 30 31 December
GBPmillion June 2023 June 2022 2022
---------------------------------------- ----------- ----------- -------------
Scheme administration costs 0.5 0.5 1.2
Net cost on pension projects (excluded
from adjusted operating profit) 0.9 1.0 13.8
Net interest credit (0.7) (0.7) (2.1)
---------------------------------------- ----------- ----------- -------------
Amounts recognised in the consolidated statement of
comprehensive income are a loss of GBP1.4 million (2022: gain of
GBP16.8 million) which comprises a GBP40.4 million loss on schemes'
assets of GBP349.9 million (2022: loss of GBP126.4 million) and a
GBP39.0 million gain on the remeasurement of the schemes'
obligations of GBP323.6 million (2022: gain of GBP143.2 million).
Following the buy-in of the UK pension scheme in 2022, all
actuarial remeasurements on the UK scheme liabilities are fully
offset by movements in the value of the buy-in contract.
The decrease in the scheme obligation is due to increases in
yields on corporate bonds and experience losses in the half
year.
The triennial valuation of the TT Group scheme as at April 2022
showed a net surplus of GBP45.4 million against the Trustee's
funding objective compared with a surplus of GBP0.3 million at
April 2019.
10. Reconciliation of net cash flow to movement in net debt
GBPmillion Net Lease Borrowings Net
cash liabilities debt
------------------------------------ ------ ------------- ----------- --------
As at 1 January 2022 67.2 (22.6) (147.1) (102.5)
Cash flow (6.7) - - (6.7)
Businesses acquired - (0.2) - (0.2)
Repayment of borrowings - - 109.5 109.5
Proceeds from borrowings excluding
capitalised loan arrangement fees - - (142.2) (142.2)
Capitalised loan arrangement fees - - 0.9 0.9
Amortisation of loan arrangement
fees - - (0.8) (0.8)
Payment of lease liabilities - 1.9 - 1.9
New leases - (0.6) - (0.6)
Exchange differences 3.2 (1.9) (2.6) (1.3)
------------------------------------ ------ ------------- ----------- --------
As at 30 June 2022 63.7 (23.4) (182.3) (142.0)
Cash flow (2.5) - - (2.5)
Repayment of borrowings - - 39.8 39.8
Proceeds from borrowings excluding
capitalised loan arrangement fees - - (33.8) (33.8)
Capitalised loan arrangement fees - - 0.8 0.8
Amortisation of loan arrangement
fees - - (0.2) (0.2)
Payment of lease liabilities - 2.4 - 2.4
New leases - (1.7) - (1.7)
Exchange differences 0.1 (0.4) (0.9) (1.2)
------------------------------------ ------ ------------- ----------- --------
At 1 January 2023 61.3 (23.1) (176.6) (138.4)
Cash flow 13.0 - - 13.0
Repayment of borrowings - - 4.0 4.0
Proceeds from borrowings excluding
capitalised loan arrangement fees - - (17.9) (17.9)
Capitalised loan arrangement fees - - 0.4 0.4
Amortisation of loan arrangement
fees - - (0.2) (0.2)
Payment of lease liabilities - 2.3 - 2.3
New leases and reassessment of
lease liabilities - (0.5) - (0.5)
Exchange differences (4.5) 1.1 1.9 (1.5)
------------------------------------ ------ ------------- ----------- --------
At 30 June 2023 69.8 (20.2) (188.4) (138.8)
Net cash comprises:
------------------------------------ ------ ------------- ----------- --------
Cash at bank and in hand 75.4 - - 75.4
Bank overdrafts (5.6) - - (5.6)
------------------------------------ ------ ------------- ----------- --------
Net cash at end of period 69.8 - - 69.8
------------------------------------ ------ ------------- ----------- --------
The Group's primary source of finance is the GBP162.4 million
committed revolving credit facility (RCF) which was signed in June
2022 and will mature in June 2027 following the Group exercising an
option to extend the previously existing maturity by one year in
May 2023. The RCF includes a GBP15.0 million committed extension
converted from existing uncommitted accordion facilities in
February 2023. At 30 June 2023 GBP115.6 million of this facility
had been drawn down. The Group's RCF is payable on a floating rate
basis above GBP SONIA, USD SOFR or EURIBOR depending on the
currency of the loan.
In December 2021, TT completed a debut issue of GBP75 million of
private placement fixed rate loan notes with three institutional
investors; the issue is evenly split between 7 and 10 year
maturities with an average interest rate of 2.9% and covenants in
line with our bank facility.
11. Share capital
During the period the Company issued 92,555 ordinary shares
(2022: 134,804) as a result of share options being exercised under
the Sharesave scheme and Share Purchase plans. The aggregate
consideration received in respect of all new issues of shares was
GBP0.1 million (2022: GBP0.2 million), which was represented by a
GBP0.1 million (2022: GBP0.2 million) increase in share
premium.
During the period grants of awards were made under the LTIP for
the issue of shares in 2026. An award is a contingent right to
receive shares in the future, subject to continued employment and
the achievement of predetermined performance criteria. During the
period grants of awards were made under the 2023 LTIP scheme for
the issue of up to 1,680,053 shares in 2026.
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 during the six months
ended 30 June 2023 that have materially affected the financial
position or performance of the Group.
13. Subsequent events
There were no subsequent events to report between the balance
sheet date of 30 June 2023 and the date of issue of these financial
statements.
Reconciliation of KPIs and non IFRS Measures
In accordance with the Guidelines on APMs issued by the European
Securities and Markets Authority (ESMA), additional information is
provided on the APMs used by the Group below.
To assist with the understanding of earnings trends, the Group
has included within its financial statements APMs adjusted
operating profit and other adjusted profit measures. The APMs used
are not defined terms under IFRS and therefore may not be
comparable to similar measures used by other companies. They are
not intended to be a substitute for, or superior to, GAAP
measures.
Management uses adjusted measures to assess the operating
performance of the Group, having adjusted for specific items as
detailed in note 4. They form the basis of internal management
accounts and are used for decision making, including capital
allocation, with a subset also forming the basis of internal
incentive arrangements. By using adjusted measures in segmental
reporting, this enables readers of the financial statements to
recognise how incentive performance is targeted. Adjusted measures
are also presented in this announcement because the Directors
believe they provide additional useful information to shareholders
on comparable trends over time. Finally, this presentation allows
for separate disclosure and specific narrative to be included
concerning the adjusting items; this helps to ensure performance in
any one year can be more clearly understood by the user of the
financial statements.
Income statement measures:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
============ ================== ======================= ===================================================
Adjusted Operating profit Adjusting Adjusted operating profit has been defined
operating items as disclosed as operating profit from continuing operations
profit in note 4 excluding the impacts of significant restructuring
programmes, significant one-off items including
property disposals, impairment charges
significant in nature and/or value, business
acquisition, integration, and divestment
related activity; and the amortisation
of intangible assets recognised on acquisition.
Acquisition and disposal related items
include 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. Restructuring includes
significant changes in footprint (including
movement of production facilities) and
significant costs of management changes.
To provide a measure of the operating profits
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============ ================== ======================= ===================================================
Adjusted Operating profit Adjusting Adjusted operating profit as a percentage
operating margin items as disclosed of revenue.
margin in note 4
To provide a measure of the operating profits
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============ ================== ======================= ===================================================
Adjusted Earnings per See note 6 The profit for the year attributable to
earnings share for the reconciliation the owners of the Group adjusted to exclude
per share and calculation the items not included within adjusted
of adjusted operating profit divided by the weighted
earnings per average number of shares in issue during
share the year.
To provide a measure of earnings per share
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============ ================== ======================= ===================================================
Income statement measures continued:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
============= ================== ======================= ================================================
Adjusted Diluted earnings See note 6 The profit for the year attributable to
diluted per share for the reconciliation the owners of the Group adjusted to exclude
earnings and calculation the items not included within adjusted
per share of adjusted operating profit divided by the weighted
diluted earnings average number of shares in issue during
per share the year, adjusted for the effects of any
potentially dilutive options.
To provide a measure of earnings per share
excluding the impacts of significant items
such as restructuring or acquisition related
activity and other items such as amortisation
of intangibles which may not be present
in peer companies which have grown organically.
============= ================== ======================= ================================================
Prior year Revenue and See note APM Revenue and adjusted operating profit for
revenue operating profit 1 the prior year retranslated at the current
and adjusted year's foreign exchange rates.
operating
profit at
constant
currency
============= ================== ======================= ================================================
Organic Revenue See note APM This is the percentage change in revenue
revenue 2 from continuing operations in the current
year compared to the prior year, excluding
the effects of currency movements, acquisitions
and disposals. This measures the underlying
growth or decline of the business.
To provide a comparable view of the revenue
growth of the business from period to period
excluding acquisition impacts.
============= ================== ======================= ================================================
Adjusted Effective tax See note APM Tax charge adjusted to exclude tax on items
effective charge 3 not included within adjusted operating
tax charge profit divided by adjusted profit before
tax, which is also adjusted to exclude
the items not included within adjusted
operating profit.
To provide a tax rate which excludes the
impact of adjusting items such as restructuring
or acquisition related activity and other
items such as amortisation of intangibles
which may not be present in peer companies
which have grown organically.
============= ================== ======================= ================================================
Return on None See note APM Adjusted operating profit for the year
invested 4 divided by average invested capital for
capital the year. Average invested capital excludes
pensions, provisions, tax balances, derivative
financial assets and liabilities, cash
and borrowings and is calculated at average
rates taking 12 monthly balances.
This measures how efficiently assets are
utilised to generate returns with the target
of exceeding the cost to hold the assets.
============= ================== ======================= ================================================
Statement of financial position measures:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
================ ====================== ================== ==================================================
Net debt Cash and cash Reconciliation Net debt comprises cash and cash equivalents
equivalents of net cash and borrowings including lease liabilities.
less borrowings flow to movement
and lease liabilities in net (debt)/ This is additional information provided
funds (note which may be helpful to the user in understanding
10) the liquidity and financial structure
of the business.
================ ====================== ================== ==================================================
Leverage Cash and cash N/A Leverage is the net debt defined as per
(bank covenant) equivalents the banking covenants (net debt (excluding
less borrowings lease liabilities) adjusted for certain
terms as per the bank covenants) divided
by EBITDA excluding items removed from
adjusted profit and further adjusted
for certain terms as per the bank covenants.
Provides additional information over
the Group's financial covenants to assist
with assessing solvency and liquidity.
================ ====================== ================== ==================================================
Net capital None See note APM Purchase of property, plant and equipment
and development 5 net of government grants (excluding property
expenditure disposals), purchase of intangibles (excluding
(net capex) acquisition intangibles) and capitalised
development.
A measure of the Group's investments
in capex and development to support longer
term growth.
================ ====================== ================== ==================================================
Dividend Dividend per Not applicable Amounts payable by dividend in terms
per share share of pence per share.
Provides the dividend return per share
to shareholders.
================ ====================== ================== ==================================================
Statement of cash flows measures:
Note reference
Alternative to reconciliation
Performance Closest equivalent to statutory
Measure statutory measure measure Definition and purpose
============= ===================== ================== ====================================================
Adjusted Operating cash See note APM Adjusted operating profit, excluding depreciation
operating flow 6 of property, plant and equipment and amortisation
cash flow of intangible assets less working capital
and other non-cash movements.
An additional measure to help understand
the Group's operating cash generation.
============= ===================== ================== ====================================================
Adjusted Operating cash See note APM Adjusted operating cash flow less net capital
operating flow 7 and development expenditure.
cash flow
post capex An additional measure to help understand
the Group's operating cash generation after
the deduction of capex.
============= ===================== ================== ====================================================
Working Cashflow - See note APM Working capital comprises of three statutory
capital inventories 8 cashflow figures: (increase)/decrease in
cashflow payables, provisions inventories, increase/(decrease) in payables
and receivables and provisions, and (increase)/decrease
in receivables. This definition includes
the movement of any provisions over trade
receivables.
To provide users a measure of how effectively
the group is managing its working capital
and the resultant impact on liquidity.
============= ===================== ================== ====================================================
Free cash Net increase/ See note APM Free cash flow represents cash generated
flow decrease in 9 from trading after all costs including
cash and cash restructuring, pension contributions, tax
equivalents and interest payments. Cashflows to settle
LTIP schemes are excluded.
Free cash flow provides a measure of how
successful the company is in creating cash
during the period which is then able to
be used by the Group at its discretion.
============= ===================== ================== ====================================================
Cash None See note APM Adjusted operating cash flow post capex
conversion 10 (less any property disposals which were
part of restructuring programmes) divided
by adjusted operating profit.
Cash conversion measures how effectively
we convert profit into cash and tracks
the management of our working capital and
capital expenditure.
============= ===================== ================== ====================================================
R&D cash None See note APM R&D cash spend and R&D investment as a
spend as 11 percentage of revenue excludes Global Manufacturing
a percentage Solutions which is a manufacturing services
of revenue business and therefore has no R&D.
To provide a measure of the company's expenditure
on R&D relative to its overall size which
may be helpful in considering the Group's
longer-term investment in future product
pipeline.
============= ===================== ================== ====================================================
APM 1 - Prior year revenue and adjusted operating profit at
constant currency:
Six months ended 30 June 2022
-------------------------------------------------------------
Global Sensors
Power Manufacturing and Specialist
GBPmillion and Connectivity Solutions Components Total
------------------ ------------------ --------------- ------------------ --------------- ---------------- ------
2022 revenue 68.8 135.3 65.1 269.2
Foreign exchange
impact 2.2 2.2 3.0 7.4
2022 revenue at
2023
exchange rates 71.0 137.5 68.1 276.6
------------------ ------------------ --------------- ------------------ --------------- ---------------- ------
Six months ended 30 June 2022
--------------------------------------------------------------------------------------------------
Global Sensors Total Corporate Total
Power Manufacturing and Specialist Operating
GBPmillion and Connectivity Solutions Components Segments
------------------ ------------------ --------------- ------------------ --------------- ---------------- ------
2022 adjusted
operating
profit 2.1 9.4 10.6 22.1 (3.8) 18.3
Foreign exchange
impact 0.1 0.2 0.5 0.8 - 0.8
2022 adjusted
operating
profit at 2023
exchange
rates 2.2 9.6 11.1 22.9 (3.8) 19.1
------------------ ------------------ --------------- ------------------ --------------- ---------------- ------
APM 2 - Organic revenue:
Six months
ended
30 June
------------------ --------------- ---------------- -----------
Power Global Sensors
and Connectivity Manufacturing and Specialist
GBPmillion Solutions Components Total
-------------------------- ------------------ --------------- ---------------- -----------
2023 revenue 79.9 153.8 75.4 309.1
---------------------------- ------------------ --------------- ---------------- -----------
2022 revenue 68.8 135.3 65.1 269.2
Foreign exchange impact 2.2 2.2 3.0 7.4
2022 revenue at 2023
exchange rates 71.0 137.5 68.1 276.6
---------------------------- ------------------ --------------- ---------------- -----------
Organic revenue increase
(%) 13% 12% 11% 12%
---------------------------- ------------------ --------------- ---------------- -----------
APM 3 - Effective tax charge:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
----------------------------- ----------- ----------- -------------
Adjusted operating profit 25.6 18.3 47.1
Net interest (4.9) (3.3) (6.7)
------------------------------ ----------- ----------- -------------
Adjusted profit before tax 20.7 15.0 40.4
Adjusted tax (5.2) (3.4) (8.4)
------------------------------ ----------- ----------- -------------
Adjusted effective tax rate 25.2% 22.8% 20.8%
------------------------------ ----------- ----------- -------------
APM 4 - Return on invested capital:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
---------------------------------- ----------- ----------- -------------
Adjusted operating profit 25.6 18.3 47.1
Adjusted operating profit H2
prior year (adjustment required
for half year only) 28.8 18.9 -
Average invested capital 452.0 415.7 448.6
----------------------------------- ----------- ----------- -------------
Return on invested capital 12.0% 8.9% 10.5%
----------------------------------- ----------- ----------- -------------
APM 5 - Net capital and development expenditure (net capex):
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
------------------------------------- ----------- ----------- -------------
Purchase of property, plant
and equipment (9.0) (5.1) (11.4)
Proceeds from sale of investment
property, plant and equipment
and capital grants received 0.1 0.2 0.3
Capitalised development expenditure (0.9) (1.0) (2.3)
Purchase of other intangibles (0.4) (0.1) (0.6)
-------------------------------------- ----------- ----------- -------------
Net capital and development
expenditure (10.2) (6.0) (14.0)
-------------------------------------- ----------- ----------- -------------
APM 6 - Adjusted operating cash flow:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
------------------------------------ ----------- ----------- -------------
Adjusted operating profit 25.6 18.3 47.1
Adjustments for:
Depreciation 7.3 6.8 13.9
Amortisation of intangible
assets 1.3 1.1 2.2
Share based payment expense 1.5 2.5 4.8
Other items 0.4 0.3 0.5
Increase in inventories (2.6) (39.1) (40.4)
Decrease/(increase) in receivables 7.3 (8.4) (26.3)
(Decrease)/increase in payables
and provisions (11.6) 14.5 27.9
------------------------------------- ----------- ----------- -------------
Adjusted operating cash flow 29.2 (4.0) 29.7
Restructuring and acquisition
related costs (1.0) (7.0) (11.1)
------------------------------------- ----------- ----------- -------------
Net cash generated from / (used
in) operations 28.2 (11.0) 18.6
Net income taxes paid (3.8) (1.3) (5.9)
Net cash flow from operating
activities 24.4 (12.3) 12.7
------------------------------------- ----------- ----------- -------------
APM 7 - Adjusted operating cash flow post capex:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
------------------------------------- ----------- ----------- -------------
Adjusted operating cash flow 29.2 (4.0) 29.7
Purchase of property, plant
and equipment (9.0) (5.1) (11.4)
Proceeds from sale of property,
plant and equipment and government
grants received 0.1 0.2 0.3
Capitalised development expenditure (0.9) (1.0) (2.3)
Purchase of other intangibles (0.4) (0.1) (0.6)
Adjusted operating cash flow
post capex 19.0 (10.0) 15.7
-------------------------------------- ----------- ----------- -------------
APM 8 - Working capital cashflow:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
------------------------------------ ----------- ----------- -------------
Increase in inventories (2.6) (39.1) (40.4)
Decrease/(increase) in receivables 7.3 (8.4) (26.3)
(Decrease)/increase in payables
and provisions (11.6) 14.5 27.9
------------------------------------- ----------- ----------- -------------
Working capital cashflow (6.9) (33.0) (38.8)
------------------------------------- ----------- ----------- -------------
APM 9 - Free cash flow:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
------------------------------------- ----------- ----------- -------------
Net cash flow from operating
activities 24.4 (12.3) 12.7
Net cash flow from investing
activities (10.2) (14.3) (22.3)
Add back: Acquisition of business - 8.3 8.3
Payment of lease liabilities (2.3) (1.9) (4.3)
Interest paid (5.0) (3.3) (7.5)
-------------------------------------- ----------- ----------- -------------
Free cash flow 6.9 (23.5) (13.1)
-------------------------------------- ----------- ----------- -------------
APM 10 - Cash conversion:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
------------------------------ ----------- ----------- -------------
Adjusted operating profit 25.6 18.3 47.1
Adjusted operating cash flow
post capex 19.0 (10.0) 15.7
------------------------------- ----------- ----------- -------------
Cash conversion 74% -55% 33%
------------------------------- ----------- ----------- -------------
APM 11 - R&D cash spend as a percentage of revenue:
GBPmillion Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
-------------------------------- ----------- ----------- -------------
Revenue (excluding GMS) 155.3 133.9 294.0
R&D cash spend 6.0 5.4 11.0
--------------------------------- ----------- ----------- -------------
R&D cash spend as a percentage
of revenue 3.9% 4.0% 3.7%
--------------------------------- ----------- ----------- -------------
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