Interim Results
TT Group PLC
12 September 2000
TT GROUP
Interim Results for the six months ended 30 June 2000
TT Group, a leading engineering company focusing on the electronic and
electrical sectors announces its interim results today.
HIGHLIGHTS
* Turnover increased 26% to £374.7m (1999: £297.2m)
* Operating profit before goodwill amortisation increased 19% to £25.2m
(1999: £21.2m)
* Basic earnings per share rose 8% to 9.3p (1999: 8.6p)
* Earnings per share before goodwill amortisation increased by 15% to 9.9p
(1999: 8.6p)
* Interim dividend kept at 3.69p per share (1999: 3.69p)
* Increasing focus on electronic sector now representing 57% of Group
turnover and 74% of operating profits
* Acquisition of BI Technologies has enhanced the Group's electronic
sector customer base, product range and provides additional, low cost
overseas manufacturing facilities
* Order book significantly ahead of 1999
John Newman, Executive Chairman said today:
'TT Group has had a successful first half year. Our recent acquisition of BI
Technologies has enhanced Group profitability and strengthened our presence
in the electronic sector.'
'The Group has benefited from the actions taken last year to reduce
manufacturing costs and increase new business development'
'The future growth lies in the Group's electronic sector which will come both
organically as the result of new products and by acquisitions such as BI
Technologies.'
12 September 2000
Enquiries:
TT Group PLC Tel: 01932 856647
John W Newman, Executive Chairman
College Hill Tel: 0207 457 2020
Alex Sandberg
James Henderson
Chairman's Statement
TT Group has had a successful first half year. Turnover has increased from
£297.2 million to £374.7 million, a growth of 26 per cent. Excluding the
effect of the acquisition of BI Technologies the growth in turnover was 14
per cent. Profit before tax and amortisation of goodwill has increased to
£21.7 million, compared to £19.7 million, an improvement of 10 per cent.
Earnings per share before amortisation of goodwill has grown to 9.9p from
8.6p, an increase of 15 per cent, after a tax charge of 27 per cent (1999: 27
per cent). The interim results include a charge for the amortisation of
goodwill on acquisitions of £0.9 million (1999: £nil million).
The Group has benefited from the actions taken last year to reduce
manufacturing costs and increase new business development, and also from an
improved worldwide demand for electronic components. Profits generated by
Prestwick Circuits, a printed circuit board manufacturer acquired in May 1999
and BI Technologies, a major global manufacturer of resistors, sensors,
trimmers and inductors acquired on 10 January 2000 have contributed to TT
Group's improved overall performance.
The Chairman's statement in the 1999 annual report said that TT Group would
in future concentrate on its electronic and electrical businesses. The
phased disposal of packaging and other non-core businesses has commenced and
announcements will be made after disposals are completed.
The sector analysis reported in the half year accounts has been changed to
reflect the Group's new strategy. The electronic manufacturing services,
which include the placing of electronic components onto printed circuit
boards; the ferrite and lamination businesses, manufacturing components for
the computer and telecom markets and the recently acquired BI Technologies
activities, have now become part of the electronic sector. In the half year
57 per cent of the Group's turnover and 74 per cent of the Group's operating
profit before amortisation of goodwill came from this sector. The electrical
sector comprises the uninterruptible power supply, generator set, cable and
cable accessory businesses. The packaging and other sector includes the non-
core companies which are in the course of being sold.
In the period to 30 June 2000, TT Group bought in 11,318,664 of its own
ordinary shares at an average cost of 106.8p per share. During July the
Group bought in a further 250,000 shares at a cost of 131.7p per share. TT
Group has therefore bought in for cancellation a total of 11,568,664 shares
being 7 per cent of the issued share capital at the beginning of the year in
line with the approval given at the Annual General Meeting. This both
enhances the Group's earnings per share and reduces dividend costs.
Following these share purchases and the acquisition of BI Technologies the
Group's total net indebtness has increased from £42.5 million to £94.2
million on 30 June 2000. However, disposals outlined above will reduce the
Group's borrowings.
The Board has decided to keep the interim dividend at 3.69p per share, the
same as last year. This dividend will be paid to shareholders on the
register on 13 October 2000 and will be payable on 26 October 2000.
The future growth of TT Group lies in the Group's electronic sector, this
will come both organically as the result of new products and by acquisitions
such as BI Technologies. The improvement in trading reflected in these half
year accounts provides the Group with the basis for this future growth.
John W Newman
Executive Chairman
12 September 2000
Chief Executive's Report
TT Group's electronic sector experienced strong demand from the
telecommunications and automotive industries enabling the Group to report
improved profits in the first half of 2000. Trading in both the electrical
and packaging sectors remained at a similar level to last year. The Group's
total order book, excluding BI Technologies acquired activities, has improved
and at June 2000 was 35 per cent ahead of June 1999.
As reported in both the interim and annual reports for last year the Group
initiated a headcount reduction in early 1999, placed increased emphasis on
new business development and further reduced manufacturing costs. These
actions together with other measures taken will form the basis for improved
performance.
Prospects for new business in the Far East are improving as these economies
recover and the Group has taken action to adapt to the weak Euro. However
the volatility of the Euro against sterling continues to present a barrier to
business growth in mainland Europe.
Electronic
The current demand for certain electronic components is greater than the
supply. This is due to the increased demand for mobile phones, laptops,
computers and the infra-structure and equipment required to maintain and
update internet and telecommunication systems. TT Group is benefiting from
this increased demand with higher levels of production and an easing of the
pressure to reduce prices.
The telecommunications market is rapidly evolving in appearance and size.
The combination of voice data and video information into an integrated
structure is changing the once clearly defined edge of the differing
technologies. It is estimated that this multi-billion pound marketplace will
grow by 10 per cent per annum for the foreseeable future. The Group is
investing both in the development of new products and in additional
production capability to win a greater share of these growth opportunities.
Worldwide, many of the components used in the manufacture of today's
generation of mobile phones are standard rather than the customer specific
products manufactured by the Group. The rapidly increasing functionality
incorporated into third generation phones, the move to miniaturisation in
equipment and more integrated components will favour the Group's technologies
for electronic devices which require a higher level of application
engineering and are specifically developed to customer's individual
requirements.
The integration of BI Technologies acquired in January is progressing in line
with expectations. TT Group's electronic activities have been enhanced by
the addition of BI Technologies customer base and product range.
The number of large contracts awarded over the last year for electronic
sensors, systems for vehicle chassis height levelling, electronic accelerator
pedals and climate control units, have enabled the Group's sales into the
automotive marketplace to continue to grow. Despite only modest increases
being forecast for world car production the value of electronics per car is
estimated to increase by 9 per cent per annum for the next five years. This
trend ensures continued opportunities in the marketplace.
Chief Executive's Report
CONTINUED
Electrical
The international market for standard cables is experiencing excess capacity
and, especially in the UK, price competition. The Group's strategy is to
develop new, better margin products by working closely with original
equipment manufacturers. The sub sea cable for Shell Petroleum in Nigeria,
which was mostly manufactured in 1999, was delivered successfully on time in
May 2000.
The rationalisation of the Group's generator set manufacturing operations
onto one site in North Yorkshire was completed in the first half of the year
but the cost benefits will not be felt until the demand for equipment from
both overseas and the UK improves.
Packaging and other
Glass container sales in terms of units reached a record level against a
background of reduced UK and European demand but over-capacity in Europe has
resulted in pressure on margins.
Outlook
TT Group's worldwide operations are continuously reviewed in order to
maximise the Group's strong international base to take advantage of the
growing opportunities in the electronic and electrical markets.
The strategy of providing a high level of service and quality, together with
innovative product development, will enable the Group to achieve the
objective of sustained long-term growth.
Sheridan W A Comonte
Chief Executive
12 September 2000
Consolidated profit and loss account
FOR THE SIX MONTHS ENDED 30 JUNE 2000
2000 1999 1999
First First Full
half half year
Acquisitions Total Total Total
Notes £m £m £m £m £m
Turnover 2 35.0 339.7 374.7 297.2 612.4
Operating profit before 3 2.1 23.1 25.2 21.2 41.7
goodwill amortisation
Goodwill amortisation (0.8) (0.1) (0.9) - (0.1)
Operating profit 3 1.3 23.0 24.3 21.2 41.6
Profit on sale of fixed - 0.3 0.4
asset investments
Profit on ordinary 24.3 21.5 42.0
activities before interest
Interest (3.5) (1.8) (4.0)
Profit on ordinary 20.8 19.7 38.0
activities before taxation
Taxation 4 (5.7) (5.4) (10.6)
Profit on ordinary 15.1 14.3 27.4
activities after taxation
Minority interests - - (0.1)
Profit for the period 15.1 14.3 27.3
Dividends (5.1) (6.2) (16.3)
Retained profit for the 10.0 8.1 11.0
period
Earnings per share
- basic 5 9.3p 8.6p 16.4p
- fully diluted 5 9.3p 8.6p 16.4p
- before goodwill 5 9.9p 8.6p 16.5p
amortisation
Dividends per share 3.69p 3.69p 9.79p
The above results arise from continuing activities
Consolidated balance sheet
AS AT 30 JUNE 2000
2000 1999 1999
30 30 31
June June Dec
Notes £m £m £m
Fixed assets
Intangible assets 6 35.0 3.4 3.3
Tangible assets 191.9 181.2 182.7
Investments 8.5 7.3 8.3
235.4 191.9 194.3
Current assets
Stocks 130.4 116.1 115.3
Debtors 143.2 114.2 118.5
Quoted investments - 1.4 1.0
Cash 9.8 6.3 4.4
283.4 238.0 239.2
Creditors: falling due within (240.5) (151.0) (151.7)
one year
Net current assets 42.9 87.0 87.5
Total assets less current 278.3 278.9 281.8
liabilities
Creditors: falling due after (28.2) (30.8) (29.4)
more than one year
Provisions for liabilities and (10.3) (7.1) (10.6)
charges
Minority interests (3.3) (3.3) (3.3)
Total net assets 236.5 237.7 238.5
Capital and reserves
Called up share capital 38.8 41.6 41.6
Reserves 197.7 196.1 196.9
Equity shareholders' funds 7 236.5 237.7 238.5
Consolidated cash flow statement
FOR THE SIX MONTHS ENDED 30 JUNE 2000
2000 1999 1999
First First Full
half half year
Notes £m £m £m
Net cash inflow from operations
Operating profit 24.3 21.2 41.6
Non-cash items - Depreciation and 17.4 14.1 28.5
amortisation
- Other (2.9) 1.3 (1.1)
Change in working capital (5.8) (2.2) (5.5)
Net cash inflow from operating 33.0 34.4 63.5
activities
Net interest paid (4.6) (3.1) (4.0)
Taxation paid (4.5) (3.0) (12.9)
Capital expenditure and financial
investment
Purchase of fixed assets (22.3) (15.8) (34.0)
Purchase of fixed asset (0.2) (3.8) (4.6)
investments
Sale of fixed asset investments - 5.4 5.4
Sale of fixed assets and grants 6.2 0.7 2.2
received
Acquisitions (37.4) (2.9) (3.2)
Ordinary dividends paid (9.5) (10.1) (16.3)
Net cash flow before use of liquid (39.3) 1.8 (3.9)
resources and financing
Financing and management of liquid
resources
Movement of current asset 1.3 (0.1) 0.7
investments
Purchase of own shares (11.0) - -
Movement of loans and finance (1.9) (0.4) (1.5)
leases
(Decrease)/increase in cash 8 (50.9) 1.3 (4.7)
Notes to the financial statements
1. BASIS OF ACCOUNTING
The interim financial statements for the half year to 30 June 2000 are
unaudited and have been prepared in accordance with the accounting policies
detailed in the annual report for the year ended 31 December 1999. The
statements were approved by the Directors on 12 September 2000. The figures
for the year ended 31 December 1999 have been extracted from the statutory
accounts, filed with the Registrar of Companies on which the auditors gave an
unqualified report.
2. ANALYSIS OF TURNOVER
The Group has changed its reporting by sector into that shown below.
Comparative figures have been restated. The post acquisition results of BI
Technologies are included in the electronic sector.
2000 1999 1999
First half First half Full year
By Sector £m £m £m
Electronic 215.1 145.4 304.8
Electrical 123.2 115.6 234.3
Packaging and other 36.4 36.2 73.3
374.7 297.2 612.4
2000 1999 1999
First half First half Full year
By Origin £m £m £m
United Kingdom 239.2 213.4 441.7
Rest of Europe 55.0 41.6 81.3
North America 54.6 27.9 58.7
Rest of the World 25.9 14.3 30.7
374.7 297.2 612.4
2000 1999 1999
First half First half Full year
By Destination £m £m £m
United Kingdom 164.4 153.5 307.7
Rest of Europe 98.9 72.5 152.0
North America 63.7 35.4 76.8
Rest of the World 47.7 35.8 75.9
374.7 297.2 612.4
Notes to the financial statements
continued
3. ANALYSIS OF OPERATING PROFIT
2000 1999 1999
First half First half Full year
By Sector £m £m £m
Electronic 18.7 12.7 25.7
Electrical 4.0 4.8 9.0
Packaging and other 2.5 3.7 7.0
25.2 21.2 41.7
Goodwill amortisation (0.9) - (0.1)
24.3 21.2 41.6
2000 1999 1999
First half First half Full year
By Origin £m £m £m
United Kingdom 10.6 12.4 22.7
Rest of Europe 4.8 3.2 6.2
North America 7.1 4.2 9.5
Rest of the World 2.7 1.4 3.3
25.2 21.2 41.7
Goodwill amortisation (0.9) - (0.1)
24.3 21.2 41.6
4. TAXATION
Taxation on profit on ordinary activities has been based on the estimated
effective tax rate for the full year ending on 31 December 2000.
5. EARNINGS PER SHARE
Basic earnings per share of 9.3p (1999: 8.6p) are calculated on earnings of
£15.1 million (1999: £14.3 million) and on 162,001,584 shares (1999:
166,366,767 shares) being the weighted average number of shares in issue
during the period. The calculation of fully diluted earnings per share
assumes the exercise of dilutive share options equivalent to 146,291 shares
(1999: 77,345 shares). Earnings per share before goodwill amortisation are
calculated on earnings of £16.0 million (1999: £14.3 million) and the
weighted average number of shares in issue during the period.
Notes to the financial statements
continued
6. ACQUISITIONS
The Group acquired BI Technologies with effect from 10 January 2000 for a
cash consideration of £39.7 million. This consideration is subject to the
agreement of completion accounts. Net assets acquired included net cash of
£3.3 million and have been fair valued at £8.1 million. Goodwill arising on
acquisition of £32.6 million has been included in intangible fixed assets.
7. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2000 1999 1999
First half First Full year
half
£m £m £m
Profit for the period 15.1 14.3 27.3
Exchange differences on net foreign 0.1 1.3 (0.8)
currency investments
Total recognised gains and losses 15.2 15.6 26.5
Dividends (5.1) (6.2) (16.3)
Purchase of own shares (12.1) - -
Net change in shareholders' funds (2.0) 9.4 10.2
Opening shareholders' funds 238.5 228.3 228.3
Closing shareholders' funds 236.5 237.7 238.5
During the first half year 11,318,664 shares (1999: nil) were purchased at a
cost of £12.1 million. Shareholders' funds reduced accordingly. The share
purchases also resulted in a reduction of £0.6 million in the final dividend
payment in respect of 1999. Subsequent to 30 June 2000, 250,000 shares have
been purchased at a cost of £0.3 million.
Notes to the financial statements
continued
8. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Loans and
finance
Short term lease
Net cash investments obligations Net debt
£m £m £m £m
Balance at 31 December (11.3) 2.1 (24.9) (34.1)
1998
Cash flow 1.3 0.1 0.4 1.8
Acquisition - - (4.4) (4.4)
Exchange differences (0.1) - 0.4 0.3
Other non-cash movements - (0.8) - (0.8)
Balance at 30 June 1999 (10.1) 1.4 (28.5) (37.2)
Cash flow (6.0) (0.8) 1.1 (5.7)
Acquisition - - (0.1) (0.1)
Exchange differences 0.1 - - 0.1
Other non-cash movements - 0.4 - 0.4
Balance at 31 December (16.0) 1.0 (27.5) (42.5)
1999
Cash flow (50.9) (1.3) 1.9 (50.3)
Exchange differences (1.7) - - (1.7)
Other non-cash movements - 0.3 - 0.3
Balance at 30 June 2000 (68.6) - (25.6) (94.2)
The interim report will be sent to all shareholders on the register. Copies
are available at the Company's Registered Office, Clive House, 12-18 Queens
Road, Weybridge, Surrey KT13 9XB.
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