REG - TT Electronics PLC - Half-year Report <Origin Href="QuoteRef">TTG.L</Origin> - Part 2
11/08/2016 07:06
- Part 2: For the preceding part double click ID:nRSK8701Ga
or function of an item or aggregation
of similar items is such that separate presentation is relevant to an
understanding of its financial position. Segment underlying operating profit
represents the profit earned by each segment after the allocation of central
head office administration costs and is reviewed by the chief operating
decision maker.
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.
a) Income statement information
Six months ended 30 June 2016
£million Transportation Sensing and Control Industrial Sensing and Control Advanced Components Integrated Manufacturing Services Total
Revenue from external customers 117.8 30.4 56.5 72.3 277.0
Segment underlying operating profit 1.7 5.5 4.3 2.2 13.7
Adjustments to underlying operating profit (note 4) (4.9)
Operating profit 8.8
Net finance costs (2.3)
Profit before taxation 6.5
Six months ended 30 June 2015
£million Transportation Sensing and Control Industrial Sensing and Control Advanced Components Integrated Manufacturing Services Total
Revenue from external customers 107.5 33.8 49.8 72.5 263.6
Segment underlying operating profit (0.9) 6.4 3.4 1.5 10.4
Adjustments to underlying operating profit (note 4) (2.8)
Operating profit 7.6
Net finance costs (1.3)
Profit before taxation 6.3
Year ended 31 December 2015
£million Transportation Sensing and Control Industrial Sensing and Control Advanced Components Integrated Manufacturing Services Total
Revenue from external customers 205.8 61.0 95.3 147.8 509.9
Segment underlying operating profit (1.4) 11.4 6.0 5.7 21.7
Adjustments to underlying operating profit (note 4) (5.4)
Operating profit 16.3
Net finance costs (2.5)
Profit before taxation 13.8
There is no significant revenue between segments.
b) Analysis of revenue by destination - continuing operations
£million Six months Six months Year ended
ended ended 31 December 2015
30 June 2016 30 June 2015
United Kingdom 46.9 42.4 82.6
Rest of Europe 128.3 119.1 234.5
North America 49.5 56.0 101.9
Central and South America 1.5 1.5 2.4
Asia 48.0 43.3 84.6
Rest of the World 2.8 1.3 3.9
Total revenue 277.0 263.6 509.9
4. Underlying measures
£million Six months Six months Year ended
ended ended 31 December 2015
30 June 2016 30 June 2015
Restructuring
Operational Improvement Plan (2.2) (1.6) (1.8)
Other restructuring costs (1.1) (0.6) (0.7)
Charges associated with management changes - - (0.4)
(3.3) (2.2) (2.9)
Asset impairments - - (1.7)
Acquisition related costs
Contingent consideration - (0.2) 0.8
Amortisation of intangible assets arising on business combinations (1.8) (0.4) (0.8)
Release of divestment provision 0.9 - -
Other acquisition related costs (0.7) - (0.8)
(1.6) (0.6) (0.8)
Total (4.9) (2.8) (5.4)
Restructuring costs charged in the period relate to further costs incurred on
the Operational Improvement Plan initiated in a previous period as well as
costs associated with other site restructuring.
Acquisition related costs include a credit of £0.9 million relating to the
release of a provision established for warranty liabilities arising from a
divestment that is no longer required.
5. Taxation
The half-year tax charge is based on a forecast effective tax rate of 28.1% on
profit excluding restructuring, asset impairments and acquisition related
costs.
The enacted UK corporation tax rate applicable from 1 April 2015 is 20%, from
1 April 2017 is 19% and from 1 April 2020 is 18%. In addition the UK
Government has tabled legislation reducing the Corporation Tax rate to 17%
from 1 April 2020, which has yet to be enacted.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit/loss
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 162.1 million (30 June 2015: 159.0 million, 31 December 2015: 159.2
million).
Underlying earnings per share is based on profit for the period from
continuing operations before restructuring costs, asset impairments and
acquisition related costs and their associated tax effect.
Pence Six months Six months Year ended
ended ended 31 December 2015
30 June 2016 30 June 2015
Basic earnings per share 2.4 2.6 6.5
Diluted earnings per share 2.4 2.6 6.5
The numbers used in calculating underlying earnings per share are shown
below:
£million Six months Six months Year ended
ended ended 31 December 2015
30 June 2016 30 June 2015
Continuing operations
Profit for the period attributable to owners of the Company 3.9 4.1 10.4
Restructuring 3.3 2.2 2.9
Acquisition related costs 1.6 0.6 1.7
Asset impairments - - 0.8
Tax effect of above items (0.6) (0.2) (1.8)
Underlying earnings 8.2 6.7 14.0
Underlying earnings per share (pence) 5.1 4.2 8.8
7. Dividends
Pence per share Six months ended Pence per share Year months ended
30 June 2016 31 December 2015
£million £million
Final dividend for prior year 3.8 6.2 3.8 6.0
Interim dividend for current year - - 1.7 2.7
3.8 6.2 5.5 8.7
The Directors have declared an interim dividend of 1.7 pence per share which
will be paid on 20 October 2016 to shareholders on the register on 7 October
2016. Shares will become ex-dividend on 6 October 2016. The Group has a
progressive dividend policy.
8. Retirement benefit schemes
The Group operates one significant defined benefit scheme in the UK and
overseas defined benefit schemes in the USA. These schemes are closed to new
members and the UK scheme is closed to future accrual.
The amounts recognised in the condensed consolidated balance sheet are:
£million Six months Six months Year ended
ended ended 31 December 2015
30 June 2016 30 June 2015
Fair value of assets 525.4 451.1 442.2
Present value of funded obligation (526.7) (467.9) (463.3)
Net liability recognised in the balance sheet (1.3) (16.8) (21.1)
Represented by:
Schemes in net surplus 1.9 - -
Schemes in net deficit (3.2) (16.8) (21.1)
The costs recognised in the condensed consolidated income statement are:
£million Six months Six months Year ended
ended ended 31 December 2015
30 June 2016 30 June 2015
Scheme administration costs 0.5 0.3 0.8
Net interest on employee obligations 0.3 0.2 0.4
The triennial valuation of the UK scheme as at April 2013 showed a deficit of
£19.1 million compared with £39.4 million at April 2010. Under the existing
recovery plan contributions of £4.5 million are to be paid in respect of 2016
to address the deficit. £2.2 million was paid in the half-year. In addition,
the Group has set aside £3.0 million to be utilised in agreement with the
Trustee for reducing the long-term liabilities of the scheme. An actuarial
valuation of the scheme as at April 2016 is currently in progress.
9. Reconciliation of net cash flow to movement in net debt
£million Net cash Borrowings and finance leases Net debt
At 1 January 2015 39.4 (53.7) (14.3)
Cash flow (3.1) (7.9) (11.0)
Non-cash items - - -
Exchange differences (1.4) 1.3 (0.1)
At 1 July 2015 34.9 (60.3) (25.4)
Cash flow 3.4 (33.7) (30.3)
Non-cash items - (0.2) (0.2)
Exchange differences 2.0 (2.2) (0.2)
At 1 January 2016 40.3 (96.4) (56.1)
Cash flow 1.5 (12.9) (11.4)
Non-cash items - (1.8) (1.8)
Exchange differences 2.5 (3.9) (1.4)
At 31 December 2016 44.3 (115.0) (70.7)
Net cash includes overdraft balances of £nil (30 June 2015: £nil, 31 December
2015: £0.6 million).
10. Share capital
During the period the Company issued 201,094 ordinary shares as a result of
share options being exercised under the Sharesave scheme and Share Purchase
plans. The aggregate consideration received was £0.2 million, which was
represented by a £0.2 million increase in share premium.
11. 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 2016 that have affected the financial position or performance of the
Group.
12. Principal risks and uncertainties
As described on pages 24 to 25 of the 2015 Annual Report, the Group continues
to be exposed to a number of operational and financial risks and has an
established, structured approach to identifying, assessing and managing those
risks.
The Group is monitoring developments following the UK referendum on 23 June to
leave the EU. TT Electronics is a global engineered electronics company.
Within the EU we have operations in Germany, Austria, Romania and the UK. Our
UK revenue accounted for 16.2% of Group revenue in 2015. We believe that the
outcome of the UK referendum regarding the EU will not have a significant
impact on our ability to conduct business into and out of the EU in the short
to medium term. However, we recognise that we are entering a period of
uncertainty as the exit process is agreed and we are monitoring political and
macro-economic developments closely.
The Directors do not believe, that other than as described above, the risks
faced by the Group have changed significantly during the first six months of
2016, and these relate to the following areas:
General economic downturn; contractual risks; pricing and margin pressures;
product development; health and safety; people and capability; supplier
resilience; legal and regulatory compliance.
13. Alternative performance measure definitions
These Interim Financial Statements include financial measures that are not
prepared in accordance with IFRS. These non-IFRS financial measures have been
selected by management to assist them in making operating decisions because
they represent the underlying operating performance of the Group and
facilitate internal comparisons of performance over time.
Non-IFRS financial measures are presented in these Interim Financial
Statements as management believe that they provide investors with a means of
evaluating performance of the Group on a consistent basis, similar to the way
in which management evaluates performance, that is not otherwise apparent on
an IFRS basis, given that certain non-recurring, infrequent or non-cash items
that management does not otherwise believe are indicative of the underlying
performance of the Group may not be excluded when preparing financial measures
under IFRS. These non-IFRS measures should not be considered in isolation
from, as substitutes for, or superior to financial measures prepared in
accordance with IFRS.
Underlying operating profit
Definition: Operating profit excluding the impacts of business acquisition and
divestment related activity, restructuring costs, impairments of intangible
assets.
Organic revenue/operating profit growth
Definition: The percentage change in revenue/operating profit in the current
reporting period from the prior reporting period excluding the effects of
acquisitions and divestments and the impact of movements in exchange rates.
Underlying earnings per share
Definition: Underlying operating profit after interest and tax divided by the
weighted average number of shares in issue during the period.
Cash conversion percentage
Definition: Underlying operating cash flow (underlying EBITDA less net capital
expenditure, capitalised development expenditure, working capital and non-cash
movements) divided by underlying operating profit.
Return on invested capital percentage
Definition: Underlying operating profit for the preceding 12 month rolling
period divided by monthly average invested capital for the preceding year.
Invested capital is net assets excluding provisions, tax balances and
financial assets and liabilities, including cash and borrowings.
Free cash flow
Definition: Net cash flow from operating activities less net cash flow from
investing activities less interest paid.
Operating margin percentage
Definition: Underlying operating profit divided by revenue.
Stockturn
Definition: annualised underlying cost of sales expressed as a ratio of net
inventory at the balance sheet date.
This information is provided by RNS
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