Half Yearly Report

RNS Number : 4519P

TT electronics PLC

19 August 2014

 



TTG.L

19 August 2014

TT ELECTRONICS PLC

An innovative global electronics company supplying world leading manufacturers  

Half Year Report for the six months ended 30 June 2014

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Change	Change at constant currency
Continuing operations
Revenue	261.1	261.0	-	4.1%
Operating profit1	12.9	12.7	1.6%	10.2%
Operating profit margin1	4.9%	4.9%	-	30bps
Profit before taxation and exceptional items	12.3	11.5	7.0%	15.7%
(Loss)/profit before taxation	(0.4)	8.9
Headline earnings per share1	5.9p	5.5p	7.3%	16.4%
Dividend per share	1.7p	1.6p	6.2%
Net (debt)/cash	(14.9)	9.0

¹before exceptional items

HIGHLIGHTS

·     Positive trading performance with revenue growth of 4.1% at constant currency

·     Order momentum in the first half was positive, providing confidence for the second half

·     Continued investment in the Sensing and Control division to support future growth, including the acquisition of Roxspur Measurement & Control Limited

·     Progress in implementation of Operational Improvement Plan, although uncertainty remains around the scope and timing of the European restructuring

·     New Group Chief Executive, Richard Tyson joined 1 July

·     Interim dividend increased by 6.2 per cent, reflecting confidence in future prospects

Sean Watson, Chairman, said today:

"The Group has reported a first half performance in line with expectations, supported by a positive trading performance and improved operating efficiencies.

Richard Tyson joined TT as Group Chief Executive on 1 July 2014.  Richard has over twenty years of experience in the avionics and communication industries, recently as President of Cobham's Aerospace & Security division.  We are delighted to welcome him to TT Electronics at this important stage in the Group's development."

Richard Tyson, Group Chief Executive, said today:

"I am excited about the opportunity to further develop TT Electronics.  Over the coming months, my focus will be on familiarising myself with our operations, validating our business plans, focusing on our customers and new products and progressing the implementation of our Operational Improvement Plan."

For further information please contact:
TT Electronics plc	Tel:  [phone]
Richard Tyson, Group Chief Executive Shatish Dasani, Group Finance Director
Hudson Sandler	Tel:  [phone]
Andrew Hayes / Wendy Baker / Katie Matthews
An audio webcast of the analysts' presentation will be available to download later today at:  http://investors.ttelectronics.com/en/investor-relations/reports  For further information visit: www.ttelectronics.com

Chairman's statement

I am pleased to report that TT Electronics has delivered a first half performance in line with our expectations, despite variable market conditions which we anticipate will continue into the second half.   Revenue from continuing operations grew by 4.1% to £261.1 million, excluding the impact of foreign exchange. Profit before tax and exceptional items was £12.3 million, as compared to £11.5 million in the prior half year.  Headline earnings per share were 5.9 pence, which is an increase of 16.4% at constant currency compared to the prior half year.  The impact of currency movement in the period was £10.6 million on revenues and £1.1 million on operating profit.

We continue to implement the Operational Improvement Plan (OIP) and invest in the Sensing and Control business in order to accelerate sales growth and improve operating performance.  Under the Operational Improvement Plan, a number of sales offices have been closed on schedule and line transfers from our Fullerton, California facility to Mexico have progressed.  The proposed transfer of manufacturing from our site in Werne, Germany to the Group's best cost sites, principally in Romania, was announced in January 2014. This is a large and complex project, and discussions continue with the trade union and workers' council. These have taken longer than anticipated, and uncertainty remains regarding the final scope and timing of the product line transfers.  Investment in preparing the Romania site for receipt of these lines is advanced and the site has been approved by certain major customers.

Our Components and Integrated Manufacturing Services (IMS) businesses have continued to perform in line with expectations.  The profitability of our Components business has improved significantly through the actions taken last year to improve operational performance. In our IMS division, we see stable demand and consistent profitability levels based on a customer focused approach and execution on delivery. 

I am pleased to welcome Richard Tyson as Group Chief Executive, succeeding Geraint Anderson who ably led the Group for six years. I am confident that, based on his successful track record, Richard will drive the Group forward in growing both organically and through acquisition as well as improving operating performance.

Following the period end, we announced the acquisition of Roxspur Measurement & Control Limited (Roxspur), for £7.5 million with up to a further £2.5 million deferred consideration payable in 2016 based on the performance of the business.  The acquisition, which will form part of the Sensing and Control division, accelerates TT's strategy to develop its position in attractive industrial markets, including process control, complementing the Group's existing technologies and products and providing a platform for future growth.  

The Group retains a strong balance sheet, with a modest debt level of £14.9 million at the end of June 2014 and committed borrowing facilities of £82.7 million.  We plan to continue to invest organically in the business and make appropriate acquisitions where we can clearly demonstrate value.

The Board is pleased to declare an interim dividend of 1.7 pence per share, an increase of 6.2 per cent (2013: 1.6 pence), reflecting the Board's confidence in the forward order book and future prospects of the business.

Outlook

Recent trading is in line with our expectations and the cumulative ratio of orders to sales for the Group overall continues to be positive, providing confidence that the underlying full year performance will be in line with the Board's expectations.

Sean M Watson

Chairman

19 August 2014

Business review

Revenue growth was positive throughout the first half of the year, excluding the impact of foreign exchange, mainly driven by trading in the Sensing and Control and IMS divisions. Order book momentum in the first half was positive, providing confidence for the second half.

Operating profit for the half year was £12.9 million compared with £12.7 million in 2013.  The average sterling rate was 7.7% higher against the Dollar and 2.5% higher against the Euro half year on half year. This had a negative impact on revenue of £10.6 million and operating profit of £1.1 million.  At constant currency exchange rates, revenue growth was 4.1% and operating profit increased by 10.2%.

The Operational Improvement Plan announced last year is being implemented within the Sensing and Control business at an expected exceptional cost of £30 million over three years and an annual benefit of £8 million.  Sales office closures in Japan, France and Italy have been completed on schedule during the first half, with an annualised cost benefit of £1.3 million per annum.  The project to transfer manufacturing from our Fullerton, California site to Mexicali, Mexico has progressed on track.  The transfer of certain product lines has been put on hold in order to fulfil a significant customer order agreed in the first half and it is anticipated that these transfers will now be made during 2015.

The key element of the Operational Improvement Plan is the large and complex project relating to the proposed relocation of manufacturing from Werne, Germany to best cost facilities including Romania. We remain in discussions with the unions, workers' council and arbitrator around the details of the proposal, although these have taken longer than originally anticipated and uncertainty remains around the final scope and timing of the product line transfers.  The investment in people, plant & machinery and buildings at our Romania facility continues as the site is prepared to receive the new product lines.  Discussions with customers on the product line transfers are progressing and the Romania site has been approved by certain major customers. 

The Sensing and Control business made significant investments in new product development, increasing capabilities for Research and Development in our centres of excellence and the establishment of a core technology team focused on Microelectromechanical Systems (MEMS).  MEMS technology enables very small, low power sensing devices, and innovation in this area will enhance our ability to develop the next generation of pressure sensor solutions for our customers.

The Group announced its acquisition of Roxspur on 14 July for an initial consideration of £7.5 million in cash with a further amount of up to £2.5 million deferred to March 2016 based on the performance of the business.  Roxspur is a leading supplier of temperature, flow, pressure and level sensors, together with calibration services, for a range of critical measurement and control applications for global industrial customers and will be integrated into our Sensing and Control division. The acquisition will be immediately earnings enhancing.

Overview of Group performance

Continuing operations £million	Six months ended 30 June 2014	Six months ended 30 June 2013	Change at constant currency
Revenue
Sensing and Control	143.6	141.5	5.7%
Components	48.1	51.1	(2.7)%
Integrated Manufacturing Services	69.4	68.4	5.8%
Total	261.1	261.0	4.1%

Operating profit2
Sensing and Control	6.6	8.9	£(1.6)m
Components	3.7	1.0	£2.9m
Integrated Manufacturing Services	2.6	2.8	-
Total	12.9	12.7	£1.3m

² Throughout this review operating profit is stated before exceptional items

Revenue from continuing operations increased by 4.1% in the first half to £261.1 million, excluding a negative variance of 4.1% arising from foreign exchange movements. The Sensing and Control division achieved underlying revenue growth of 5.7% driven by growth from new products and end user demand. In Components sales fell by 2.7% at constant currency exchange rates, mainly affected by the closure of our US based connectors business. The IMS division delivered sales growth of 5.8% at constant currency.

Operating margins in Sensing and Control declined from 6.3% in the first half of 2013 to 4.6% in 2014, reflecting investment in our Research and Development capabilities and the anticipated impact ofoperational inefficiencies associated with the Operational Improvement Plan. The Components division delivered an increase in margins from 2.0% to 7.7%, benefiting from better overall mix and efficiency across all businesses, as well as the closure of the US based connectors business and one-off orders arising from the announced closure of our Smithfield, USA facility. Margins in IMS declined from 4.1% to 3.7% half year on half year associated with the consolidation of UK sites and the transfer of production to Romania.

The overall Group operating margin was in line with last year at 4.9% reflecting the strength in Components offset by adverse exchange rates and the operational factors in Sensing and Control and IMS.  The underlying operating margin at constant currency rates was 5.2%.

Sensing and Control

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December  2013
Revenue	143.6	141.5	285.2
Operating profit	6.6	8.9	17.3
Operating profit margin	4.6%	6.3%	6.1%

The division provides sensing and control solutions, including speed, position, temperature, optical and pressure sensors, together with microcircuits and intelligent power modules for critical applications which require high levels of expertise, precision and reliability. These solutions often operate in extremely harsh environments. We are focused on markets where our ability to meet such requirements helps our customers to compete and win. The division's principal operations are located in Germany, Austria, Romania, India, China and Mexico and are supported by additional engineering and development teams in the USA and UK. With a sales presence in all major markets, the division is well positioned to serve its global customer base.

Underlying revenue in the first half of 2014 increased by 5.7%, excluding a foreign exchange impact of 4.2%. Growth was underpinned by strong demand in our transportation markets, including a better performance from our operation in Austria.  Operating profit decreased by £1.6 million after excluding a £0.7 million adverse exchange variance, reflecting £2.5 million increased investment in our Research and Development capabilities and someoperational inefficiencies associated with the Operational Improvement Plan, as previously announced.  These inefficiencies are anticipated to continue for the duration of the Operational Improvement Plan. This investment, combined with an improved sales mix and traction on key profit enhancement projects, will lead to a stronger performance over time.  The second half is expected to benefit from the fulfilment of a significant customer order, following which it is planned that the programme to move manufacturing from Fullerton, California to Mexicali, Mexico will be completed during the first half of 2015.

We continue to target sectors where we can apply our leading technology and engineering expertise and this is providing new growth opportunities. Key drivers include emissions regulations and industrial power efficiency, resulting in additional sensor requirements and smaller, more efficient controls.  We continue to see good opportunities for growth in all our target markets, including transportation, industrial, aerospace, defence and medical. 

During the period we continued to innovate and develop our product portfolio.  Our next generation torque sensor, Magnetorque® Plus, launched in March 2014, enables improved efficiency for power steering systems and is already showing early signs of success.  In the second half of 2014 we have plans to move to the commercialisation phase of our "chip stacking" technology for power modules, enhance our position sensing portfolio with the addition of a multi-turn, non contacting rotary sensor and expand our pressure and temperature sensor offerings into industrial applications.  Additionally, we are developing Microelectromechanical Systems (MEMS) pressure sensing capability to increase further our ability to provide innovative technical solutions to our customers.

Components

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Revenue	48.1	51.1	100.4
Operating profit	3.7	1.0	4.1
Operating profit margin	7.7%	2.0%	4.1%

The Components division comprises our Resistors, Power and Hybrid, Magnetics and Connectors businesses. We serve customers in the industrial, automotive, aerospace, defence and medical markets and focus on creating value by delivering innovative electronic solutions. Our engineered component solutions include fixed and variable resistor products, magnetics, connectors, power modules and control circuitry for multiple applications. 

Revenue in the first half of 2014 reduced by 2.7% excluding a negative foreign exchange variance of 3.2%. A strong revenue performance from our Magnetics and Resistors businesses (the latter benefiting from one-off last time buy orders following the announced closure of the Smithfield, US site) was offset by programme delays in other areas and a reduction in volumes linked to the closure of a loss making connectors business in the US. Operating profit increased from £1.0 million in 2013 to £3.7 million benefiting from a significant improvement in manufacturing efficiencies, the one-off last time buy orders and an improvement in the cost base due to the restructuring completed in the second half of last year.  Foreign exchange impact on operating profit for the division was £0.2 million.

The Components division made significant progress strengthening customer relationships and developing new products.  The Power and Hybrid business won a supplier award from Honeywell for its supply of high reliability micro circuits used in defence applications, whilst the Connectors business launched its next generation connector product addressing the increasing deployment of integrated power and data communications systems in soldier equipment. 

Integrated Manufacturing Services

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Revenue	69.4	68.4	146.6
Operating profit	2.6	2.8	8.8
Operating profit margin	3.7%	4.1%	6.0%

The division draws on design engineering capabilities, global facilities and world-class quality standards to provide highly complex electronic manufacturing solutions to customers in the aerospace, defence, medical, and high technology industrial sectors. We have a broad range of capabilities, from printed circuit board assembly to environmental testing and full systems integration. This suite of end-to-end solutions is focused exclusively on low volume, high mix business.

Revenue in the first half increased by 5.8% on an underlying basis excluding the adverse currency impact of 4.3%, despite some customer programme delays.  Operating profit of £2.6 million was affected by the impact of foreign exchange of £0.2 million and operational costs arising from site consolidation in the UK and establishment of the facility in Romania.

The IMS business continued to build on its customer focused strategy, winning 2013 Supplier of the Year from Thermo Fisher Scientific and securing new business from Shanghai Avionics Corporation (SAVIC) supporting production of airborne avionics systems used on the C919, China's first domestically produced airplane.  IMS also established a design facility in Cary, North Carolina to support defence and aerospace customers with specialised technical expertise and extended product support. 

The division made progress against its strategy to increase its manufacturing presence in best cost regions with the expansion of its manufacturing footprint in the new Romanian facility and the closure of its facility at Tonypandy, Wales in March 2014.

Exceptional items

An exceptional cost of £12.7 million has been recognised in the half year to 30 June 2014, compared to £2.6 million during the first half of 2013.  

£million	Six months ended 30 June 2014	Six months ended 30 June 2013
Continuing operations
Sensing and Control Operational Improvement Plan	(10.2)	-
Other restructuring costs Costs relating to closure of Boone, North Carolina plant	(2.5) -	(2.4) (0.2)
Negative goodwill on business acquisition	-	0.4
Acquisition costs	-	(0.4)
Total	(12.7)	(2.6)

The Operational Improvement Plan is a fundamental restructuring of the manufacturing footprint and sales organisation of the Sensing and Control division. The charge in the first half of 2014 arose from the move of production from Fullerton, California to Mexico and reorganisation costs arising from the proposed transfer of manufacturing at Werne, Germany to our best cost facilities principally in Romania.

Other restructuring costs of £2.5 million arise from site consolidation in the UK and establishment of a Romania facility for the IMS division, and costs incurred to ensure continuity of supply relating to a supplier in distress.

Taxation

The half year tax charge is based on a forecast effective tax rate for the full year (excluding exceptional items) of 23.8%. This compares to the effective tax rate for full year 2013 of 24.1%. The reduction in the effective tax rate reflects further progress in optimising the Group's tax position and in managing tax risks.

Earnings per share and dividends

Headline earnings per share from continuing operations grew by 7.3%, increasing from 5.5 pence in the first half of 2013 to 5.9 pence.  Basic loss per share from continuing operations was 2.1 pence, compared to earnings of 4.1 pence for the same period in 2013.

The Directors have declared an interim dividend of 1.7 pence per share, an increase of 6.2 per cent over the interim dividend paid in 2013.  The Group's policy is to increase dividends progressively whilst maintaining cover of at least two times underlying earnings per share.  The interim dividend will be paid on 30 October 2014 to shareholders on the register on 17 October 2014.

Pensions

The Group operates one significant defined benefit scheme in the UK and an overseas defined benefit scheme in the USA.  These schemes are closed to new members and the UK scheme is closed to future accrual. 

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. It was agreed with the Trustee that the existing recovery plan is sufficient to address the deficit; namely contributions of £4.1 million, £4.3 million and £4.5 million to be paid over the next three years. In addition, the Company has set aside £3.0 million over the last three years to be utilised in agreement with the Trustee for reducing the long-term liabilities of the scheme. This actuarial valuation has been updated by the actuaries to assess the assets and liabilities of the schemes at 30 June 2014.

An actuarial valuation of the USA defined benefit scheme was carried out by independent qualified actuaries in 2012 using the projected unit credit method. Pension scheme assets are stated at their market value at 30 June 2014.

The amounts recognised in the Condensed consolidated balance sheet are:

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Fair value of assets	397.1	391.5	394.1
Liabilities	(412.9)	(419.4)	(414.6)
Total Group deficit	(15.8)	(27.9)	(20.5)

Cash flow, borrowings and facilities

Operating cash outflow before exceptional payments was £8.5 million compared to an inflow of £2.9 million in the first half of 2013.  Working capital showed an outflow of £33.5 million due to significant supplier payments during the first half, inventory increases due to delays in customer shipments at IMS and one-off increases arising from the implementation of the Operational Improvement Plan as well as the expansion in Romania by the IMS division. In addition, within our Resistors business there was a small planned increase in working capital ahead of a new system go-live on 1 July.

Capital expenditure (including software) increased by £2.5 million to £16.0 million, exceeding depreciation (and software amortisation) of £9.2 million. Significant capital expenditure projects included the investment in our Resistors business for the new Signal conditioning product line, expansion of our Romania facility within both Sensing and Control and IMS, and product development investment within Sensing and Control.

Net debt at 30 June 2014 was £14.9 million, compared with net funds of £9.0 million at 30 June 2013, reflecting working capital outflow and capital investment.  At 31 December 2013 the Group had a net cash balance of £26.9 million, with the decrease in the half year arising primarily from the working capital outflow and capital investment.

The financial covenants of the banking facility restrict net debt to below 2.75 times EBITDA before exceptional items.  In addition, EBITDA before exceptional items is required to cover net finance charges by 4.0 times.  The covenants are tested half-yearly on a rolling 12 month basis.  The financial covenants at 30 June 2014 were comfortably met.

The Directors have considered the future funding requirements of the Group and compared them with the level of available borrowing facilities and are satisfied that the Group has adequate resources for the foreseeable future.

Foreign Exchange

The average exchange rates for the first half of 2014 and 2013 used to translate revenues and profits for the major currencies that the Group operate in are set out below:

	Six months ended 30 June 2014	Six months ended 30 June 2013	Change %
£ : US$	1.67	1.55	7.7%
£ : Euro	1.21	1.18	2.5%
£ : RMB	10.25	9.62	6.5%

The change in rates had an adverse impact on translated revenues of £10.6 million and operating profit of £1.1 million.

Richard Tyson	Shatish D Dasani
Group Chief Executive	Group Finance Director
19 August 2014	19 August 2014

Responsibility statement

 

We confirm that to the best of our knowledge

 

(a)        the condensed set of financial statements has been prepared in accordance with IAS34 "Interim Financial Reporting" as adopted by the EU.

(b)        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.

(c)        the interim management report includes a fair review of the information required by DTR 4.2.8R:

            (i)       related parties 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 Annual Report 2013 that could have a material effect on the financial position or performance of the Group in the current period.

On behalf of the Board

Richard Tyson	Shatish D Dasani
Group Chief Executive	Group Finance Director
19 August 2014	19 August 2014

Cautionary Statement

This announcement contains forward looking statements which are made in good faith based on the information available to the time of its approval.  It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward looking statement which could cause actual results to differ materially from those currently anticipated.

Independent review report to TT Electronics plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-year report for the six months ended 30 June 2014 which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated statement of changes in equity, the Condensed consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this 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 reached.

Directors' responsibilities

The half-year report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-year report in accordance with the DTR of the UK FCA.

The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-year report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-year report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, 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 Ireland) 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.

Conclusion

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-year report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Anthony Sykes

for and on behalf of KPMG Audit Plc

Chartered Accountants

15 Canada Square

London

E14 5GL

19 August 2014

Condensed consolidated income statement (unaudited)

for the six months ended 30 June 2014

£million (unless otherwise stated)	Note	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Continuing operations
Revenue	3	261.1	261.0	532.2
Cost of sales		(215.8)	(211.9)	(432.1)
Gross profit		45.3	49.1	100.1
Distribution costs		(14.6)	(16.6)	(33.7)
Administrative expenses		(31.2)	(23.1)	(49.0)
Other operating income		0.7	0.7	1.6
Operating profit		0.2	10.1	19.0
Analysed as:
Operating profit before exceptional items	3a	12.9	12.7	30.2
Exceptional items	4	(12.7)	(2.6)	(11.2)
Finance income	5	0.6	0.6	2.8
Finance costs	5	(1.2)	(1.8)	(3.5)
(Loss)/profit before taxation		(0.4)	8.9	18.3
Taxation	6	(2.9)	(2.5)	(4.5)
(Loss)/profit from continuing operations		(3.3)	6.4	13.8
Discontinued operations
Loss from discontinued operations		-	(0.8)	(0.8)
(Loss)/profit for the period attributable to owners of the Company		(3.3)	5.6	13.0
EPS attributable to owners of the Company - basic
From continuing operations (pence)	7	(2.1)	4.1	8.8
From discontinued operations (pence)	7	-	(0.5)	(0.5)
		(2.1)	3.6	8.3
EPS attributable to owners of the Company - diluted
From continuing operations (pence)	7	(2.1)	4.1	8.7
From discontinued operations (pence)	7	-	(0.5)	(0.5)
		(2.1)	3.6	8.2

Condensed consolidated statement of comprehensive income (unaudited)

for the six months ended 30 June 2014

£million		Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
(Loss)/profit for the period		(3.3)	5.6	13.0
Other comprehensive (expense)/income for the period after tax
Items that are or may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations		(4.4)	6.4	(1.6)
(Loss)/gain on hedge of net investment in foreign operations		(2.2)	4.1	(0.9)
Net (loss)/gain on cash flow hedges taken to equity less amounts taken to income statement		(0.4)	(1.1)	0.3
Items that will never be reclassified to the income statement:
Remeasurement of defined benefit pension schemes		4.0	8.7	12.9
Remeasurement of other post-employment benefits		-	-	(0.3)
Tax on remeasurement of pension deficit movement		(0.8)	(2.0)	(3.9)
Tax on remeasurement of other post-employment benefits		-	-	0.1
Total comprehensive (expense)/income for the period		(7.1)	21.7	19.6

Total comprehensive expense for the six months ended 30 June 2014 is entirely attributable to the owners of the Company.

Condensed consolidated balance sheet (unaudited)

at 30 June 2014

£million	Note	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
ASSETS
Non-current assets
Property, plant and equipment		91.1	91.8	88.6
Goodwill		62.5	68.7	63.9
Other intangible assets		19.8	16.7	18.1
Deferred tax assets		6.0	10.1	7.3
Total non-current assets		179.4	187.3	177.9
Current assets
Inventories		81.8	79.1	80.0
Trade and other receivables		81.1	82.7	74.4
Derivative financial instruments		0.3	0.8	0.8
Cash and cash equivalents		27.9	37.3	54.5
Total current assets		191.1	199.9	209.7
Total assets		370.5	387.2	387.6
LIABILITIES
Current liabilities
Borrowings		5.6	4.0	3.9
Derivative financial instruments		0.1	1.5	-
Trade and other payables		81.5	94.9	104.8
Income taxes payable		11.9	11.4	10.4
Provisions		17.1	7.0	10.0
Total current liabilities		116.2	118.8	129.1
Non-current liabilities
Borrowings		37.2	24.3	23.7
Deferred tax liability		4.4	2.5	4.7
Pensions and other post-employment benefits	9	15.8	27.9	20.5
Provisions		0.2	0.2	0.2
Other non-current liabilities		5.8	6.4	6.1
Total non-current liabilities		63.4	61.3	55.2
Total liabilities		179.6	180.1	184.3
Net assets		190.9	207.1	203.3
EQUITY
Share capital		39.8	39.5	39.7
Share premium		1.5	1.0	1.4
Share options reserve		1.8	1.0	1.2
Hedging and translation reserve		10.3	28.9	17.3
Retained earnings		135.5	134.7	141.7
Equity attributable to owners of the Company		188.9	205.1	201.3
Non-controlling interest		2.0	2.0	2.0
Total equity		190.9	207.1	203.3

Condensed consolidated statement of changes in equity (unaudited)

for the six months ended 30 June 2014

£million	Share capital	Share premium	Share options reserve	Hedging reserve	Translation reserve	Retained earnings	Sub- total	Non- controlling interest	Total
At 1 January 2014	39.7	1.4	1.2	(11.7)	29.0	141.7	201.3	2.0	203.3
Loss for the period	-	-	-	-	-	(3.3)	(3.3)	-	(3.3)
Other comprehensive (expense)/income:
Exchange differences on translation of foreign operations	-	-	-	-	(4.4)	-	(4.4)	-	(4.4)
Net loss on hedge of net investment in foreign operations	-	-	-	-	(2.2)	-	(2.2)	-	(2.2)
Net loss on cash flow hedges taken to equity less amounts taken to income statement	-	-	-	(0.4)	-	-	(0.4)	-	(0.4)
Remeasurement of defined benefit pension schemes	-	-	-	-	-	4.0	4.0	-	4.0
Tax on remeasurement of defined benefit pension schemes	-	-	-	-	-	(0.8)	(0.8)	-	(0.8)
Total other comprehensive (expense)/income	-	-	-	(0.4)	(6.6)	3.2	(3.8)	-	(3.8)
Transactions with owners recorded directly in equity:
Equity dividends paid by the Company	-	-	-	-	-	(6.0)	(6.0)	-	(6.0)
Share-based payments	-	-	0.6	-	-	-	0.6	-	0.6
New shares issued	0.1	0.1	-	-	-	(0.1)	0.1	-	0.1
At 30 June 2014	39.8	1.5	1.8	(12.1)	22.4	135.5	188.9	2.0	190.9
At 1 January 2013	39.2	0.7	1.5	(12.0)	31.5	128.2	189.1	2.0	191.1
Profit for the period	-	-	-	-	-	5.6	5.6	-	5.6
Other comprehensive income/(expense):
Exchange differences on translation of foreign operations	-	-	-	-	6.4	-	6.4	-	6.4
Net gain on hedge of net investment in foreign operations	-	-	-	-	4.1	-	4.1	-	4.1
Net loss on cash flow hedges taken to equity less amounts taken to income statement	-	-	-	(1.1)	-	-	(1.1)	-	(1.1)
Remeasurement of defined benefit pension schemes	-	-	-	-	-	8.7	8.7	-	8.7
Tax on remeasurement of defined benefit pension schemes	-	-	-	-	-	(2.0)	(2.0)	-	(2.0)
Total other comprehensive income/(expense)	-	-	-	(1.1)	10.5	6.7	16.1	-	16.1
Transactions with owners recorded directly in equity:
Equity dividends paid by the Company	-	-	-	-	-	(5.5)	(5.5)	-	(5.5)
Change in fair value of non-controlling interest	-	-	-	-	-	(0.1)	(0.1)	-	(0.1)
Share-based payments	-	-	(0.4)	-	-		(0.4)	-	(0.4)
Deferred tax on share-based payments	-	-	(0.1)	-	-	-	(0.1)	-	(0.1)
New shares issued	0.3	0.3	-	-	-	(0.2)	0.4	-	0.4
At 30 June 2013	39.5	1.0	1.0	(13.1)	42.0	134.7	205.1	2.0	207.1

Condensed consolidated cash flow statement (unaudited)

for the six months ended 30 June 2014

£million	Note	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Cash flows from operating activities
(Loss)/profit for the period		(3.3)	5.6	13.0
Taxation		2.9	2.5	4.5
Net finance costs		0.6	1.2	0.7
Exceptional items		12.7	2.6	11.2
Loss from discontinued operations		-	0.8	0.8
Operating profit from continuing operations before exceptional items		12.9	12.7	30.2
Adjustments for:
Depreciation of property, plant and equipment		8.2	8.6	16.8
Amortisation of intangible assets		2.9	2.0	4.4
Impairment of intangible assets		-	-	0.4
Other items		1.0	0.5	0.4
Increase in inventories		(3.9)	(7.7)	(13.8)
Increase in receivables		(9.0)	(11.8)	(7.2)
(Decrease)/increase in payables		(20.6)	(1.4)	11.6
Operating cash flow before exceptional payments		(8.5)	2.9	42.8
Special payments to pension funds		(1.0)	(1.0)	(3.9)
Exceptional costs		(5.4)	(2.5)	(6.1)
Net cash (used in)/generated from operations		(14.9)	(0.6)	32.8
Income taxes paid		(1.3)	(2.5)	(2.5)
Net cash flow from operating activities		(16.2)	(3.1)	30.3
Cash flows from investing activities
Interest received		0.1	0.1	0.1
Purchase of property, plant and equipment		(14.2)	(10.7)	(20.3)
Proceeds from sale of property, plant and equipment and grants received		1.0	0.1	0.6
Development expenditure		(3.4)	(2.3)	(5.2)
Purchase of other intangibles		(1.8)	(2.8)	(4.2)
Acquisitions of businesses		-	(8.3)	(8.3)
Disposal of subsidiaries		-	(4.1)	(4.1)
Deferred consideration paid		(0.5)	(0.1)	(0.1)
Net cash flow used in investing activities		(18.8)	(28.1)	(41.5)
Cash flows from financing activities
Issue of share capital		0.1	0.4	0.9
Interest paid		(0.5)	(0.3)	(0.8)
Repayment of borrowings		-	(0.9)	(0.8)
Proceeds from borrowings		16.0	16.0	17.4
Finance leases		-	-	(0.1)
Other items		(0.5)	(1.2)	(1.2)
Dividends paid by the Company		(6.0)	(5.5)	(8.0)
Net cash flow used in financing activities		9.1	8.5	7.4
Net decrease in cash and cash equivalents		(25.9)	(22.7)	(3.8)
Cash and cash equivalents at beginning of period	10	54.5	59.1	59.1
Exchange differences	10	(0.7)	0.9	(0.8)
Cash and cash equivalents at end of period	10	27.9	37.3	54.5
Cash and cash equivalents comprise
Cash at bank and in hand		27.9	37.3	54.5
Bank overdrafts		-	-	-
	10	27.9	37.3	54.5

Notes to the Condensed consolidated financial statements (unaudited)

1.   General information

      The Condensed consolidated financial statements for the six months ended 30 June 2014 are unaudited and were authorised for issue in accordance with a resolution of the Board of Directors.  They do not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006. The comparative figures for the year ended 31 December 2013 are based on the Company's statutory accounts for that financial year.  Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies.  The report of the auditors was unqualified, did not include a reference to any matter to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under section 498 of the Companies Act 2006.

2.    Basis of preparation

a)    Condensed consolidated half-year financial statements

       These condensed consolidated half-year financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU.  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 2013 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 2013. Adoption of amendments to published standards and interpretations effective for the Group for the half-year ended 30 June 2014 did not have any impact on the financial position and performance of the Group.

c)   Estimates

The preparation of half-year 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.

In preparing the condensed consolidated half-year financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were consistent with those applied to the consolidated financial statements as at and for the year ended 31 December 2013.

d)   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 the foreseeable future. Therefore they continue to adopt the going concern basis of accounting in preparing the Condensed consolidated half-year financial statements. The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business review on pages 4 to 8.

The Group had net debt of £14.9 million at 30 June 2014 (31 December 2013: Net cash of £26.9 million). The Group had available £39.4 million of undrawn committed borrowing facilities and £60.4 million of undrawn uncommitted borrowing facilities, representing overdraft lines (£18.6 million) and the accordion facility (£41.8 million). Given the considerable financial resources available, together with long term partnerships with a number of 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 Treasury Committee regularly reviews counterparty credit risk, and ensures cash balances are held with carefully assessed counterparties with strong credit ratings.

Pages 24 to 27 of the 2013 Annual Report provide details of the Group's policy on managing its operational and financial risks.

Notes to the Condensed consolidated financial statements continued

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:

·      Sensing and Control - the provision of integrated and intelligent solutions meeting customer requirements comprising sensors which convert physical variables into electronic signals and controls that process input from the sensor and instruct systems;

·      Components - specialist resistive and magnetic components and mircocircuits, connectors and interconnection systems; and

·      Integrated Manufacturing Services - the provision of global electronics manufacturing capability with logistics and integrated solutions.

The accounting policies of the reportable segments are the same as the Group's accounting policies and are as published in the 2013 Annual Report.

The key performance measure of the operating segments is operating profit before exceptional items. The Group reports non-trading income or expenditure as exceptional when the size, nature 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 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 - continuing operations

				Six months ended 30 June 2014
£million	Sensing and Control	Components	Integrated Manufacturing Services	Total
Revenue from external customers	143.6	48.1	69.4	261.1
Segment operating profit before exceptional items	6.6	3.7	2.6	12.9
Exceptional items				(12.7)
Operating profit				0.2
Net finance costs				(0.6)
Loss before taxation				(0.4)

Notes to the Condensed consolidated financial statements continued

a)    Income statement information - continuing operations continued

				Six months ended 30 June 2013
£million	Sensing and Control	Components	Integrated Manufacturing Services	Total
Revenue from external customers	141.5	51.1	68.4	261.0
Segment operating profit before exceptional items	8.9	1.0	2.8	12.7
Exceptional items				(2.6)
Operating profit				10.1
Net finance costs				(1.2)
Profit before taxation				8.9

				Year ended 31 December 2013
£million	Sensing and Control	Components	Integrated Manufacturing Services	Total
Revenue from external customers	285.2	100.4	146.6	532.2
Segment operating profit before exceptional items	17.3	4.1	8.8	30.2
Exceptional items				(11.2)
Operating profit				19.0
Net finance costs				(0.7)
Profit before taxation				18.3

There is no significant revenue between segments.

b)    Analysis of revenue by destination - continuing operations

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
United Kingdom	43.4	49.2	104.1
Rest of Europe	133.4	128.2	260.1
North America	45.6	47.0	94.4
Central and South America	1.8	2.0	3.9
Asia	35.4	33.8	68.8
Rest of the World	1.5	0.8	0.9
Total continuing operations	261.1	261.0	532.2

Notes to the Condensed consolidated financial statements continued

4.    Exceptional items

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Continuing operations
S&C Operational Improvement Plan	(10.2)	-	(3.1)
Other restructuring costs	(2.5)	(2.4)	(5.9)
Costs relating to closure of Boone, North Carolina plant	-	(0.2)	(1.2)
Negative goodwill on business acquisition	-	0.4	0.4
M&A costs (including aborted deals)	-	(0.4)	(1.4)
Total	(12.7)	(2.6)	(11.2)

For the six months ended 30 June 2014 exceptional items relate to:

·      The Operational Improvement Plan (OIP), which is a fundamental restructuring of the manufacturing footprint and sales organisation of the Sensing and Control division. The charge in the first half of 2014 arose from the move of production from Fullerton, California to Mexico and restructuring costs arising from the proposed transfer of manufacturing at Werne, Germany to our best cost facilities in Romania.

·      Other restructuring costs of £2.5 million on the half year arise from site consolidation in the UK and the establishment of a Romania facility for the IMS division, and costs incurred to ensure continuity of supply relating to a supplier in distress.

·      The provisions recorded at the half year in respect of these restructuring activities have been made in accordance with international accounting standards (IAS 37) and represent management's best estimate of the expected outcome at this stage.

For the six months ended 30 June 2013 exceptional items relate to:

·     the closure and relocation of the ACW Technology facilities from Southampton to Tonypandy in Wales of £1.1 million;

·      the relocation and start-up costs of production facilities in Romania of £0.4 million;

·      the relocation of production facilities in Malaysia of £0.5 million;

·      restructuring costs arising from the creation of the new organisation structure of £0.4 million;

·      the costs relating to the closure of Boone, North Carolina plant of £0.2 million;

·      the release of a surplus Fair Value inventory provision created at the date of the acquisition of ACW Technology of £0.4 million; and

·      the amortisation of the Fair Value adjustment made to inventory at the date of the acquisition of ACW Technology of £0.4 million.

Notes to the Condensed consolidated financial statements continued

For the year ended 31 December 2013, the exceptional items relate to:

·      OIP charges in the year comprising:

· the closure of the facility at Fullerton, USA and transfer of production to Mexico of £0.3 million;

· the closure of sales offices in France, Italy and Japan of £2.3 million; and

· consultancy costs of £0.5 million.

·      Other restructuring costs of £5.9 million comprise of the following:

· the closure of the loss-making connectors business in the USA at a cost of £2.0 million;

· the closure and relocation of the ACW Technology facilities from Southampton to Tonypandy in Wales for £1.1 million;

· the transfer of production lines from Germany and Austria, and start-up costs in Romania of £1.3 million;

· the relocation of production facilities in Malaysia of £0.5 million by IMS;

· costs arising from the creation of the new organisation structure of £0.6 million; and

· costs incurred to ensure continuity of supply relating to a supplier in distress of £0.4 million.

·      The additional costs relating to the Boone property in North Carolina mainly comprise environmental clean-up costs;

·      Negative goodwill arising on the release of a surplus Fair Value inventory provision created at the date of the acquisition of ACW Technology of £0.4 million; and

·      M&A costs arising from the acquisition of ACW in December 2012 and other costs for potential acquisitions and disposals.

The group reports non-trading income or expenditure as exceptional when the size, nature or function of an item or aggregation of similar items is such that separate presentation is relevant to an understanding of its financial position.

5.    Finance income and costs

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Interest income	-	0.1	0.1
Foreign exchange gains	0.6	0.5	2.7
Finance income	0.6	0.6	2.8
Interest expense	0.6	0.3	0.8
Foreign exchange losses	0.1	0.7	1.0
Net interest on employee obligations	0.4	0.7	1.5
Amortisation of arrangement fees	0.1	0.1	0.2
Finance costs	1.2	1.8	3.5
Net finance costs	0.6	1.2	0.7

6.    Taxation

The half year tax charge is based on a forecast effective tax rate for the full year (excluding exceptional items) of 23.8%. This compares to the effective tax rate for full year 2013 of 24.1%. The reduction in the effective tax rate reflects further progress in optimising the Group's tax position and in managing tax risks.

Notes to the Condensed consolidated financial statements continued

7.    Earnings per share

       Basic earnings per share is calculated by dividing the loss/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 158.2 million (30 June 2013: 157.2 million, 31 December 2013: 157.6 million). 

       Headline earnings per share is based on profit for the period from continuing operations excluding exceptional items and their associated tax effect.    

Pence	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Basic (loss)/earnings per share
Continuing operations	(2.1)	4.1	8.8
Discontinued operations	-	(0.5)	(0.5)
Total	(2.1)	3.6	8.3
Pence	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Diluted (loss)/earnings per share
Continuing operations	(2.1)	4.1	8.7
Discontinued operations	-	(0.5)	(0.5)
Total	(2.1)	3.6	8.2

The numbers used in calculating headline earnings per share are shown below:

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Continuing operations
Profit for the period attributable to owners of the Company	(3.3)	6.4	13.8
Exceptional items	12.7	2.6	11.2
Tax effect of exceptional items	(0.1)	(0.3)	(2.6)
Headline earnings	9.3	8.7	22.4
Headline earnings per share (pence)	5.9	5.5	14.2

8.    Dividends

	Pence per share	Six months ended 30 June 2014 £million	Pence per share	Year ended 31 December 2013 £million
Final dividend for prior year	3.8	6.0	3.5	5.5
Interim dividend for current year	-	-	1.6	2.5
	3.8	6.0	5.1	8.0

The Directors have declared an interim dividend of 1.7 pence per share which will be paid on 30 October 2014 to shareholders on the register on 17 October 2014.  Shares will become ex-dividend on 16 October 2014.  The Group's dividend policy is to increase dividends progressively whilst maintaining cover of at least two times underlying earnings per share.

Notes to the Condensed consolidated financial statements continued

9.    Retirement benefit schemes

       The Group operates one significant defined benefit scheme in the UK and an overseas defined benefit scheme 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 ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Fair value of assets	397.1	391.5	394.1
Present value of funded obligation	(412.9)	(419.4)	(414.6)
Net liability recognised in the balance sheet	(15.8)	(27.9)	(20.5)

       The amounts recognised in the Condensed consolidated income statement are:

£million	Six months ended 30 June 2014	Six months ended 30 June 2013	Year ended 31 December 2013
Scheme administration costs	0.3	0.3	1.3
Net interest on employee obligations	0.4	0.7	1.5
Settlements and curtailments	-	-	(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. It was agreed with the Trustee that the existing recovery plan is sufficient to address the deficit; namely contributions of £4.1 million, £4.3 million and £4.5 million to be paid over the next three years. In addition, the Company has set aside £3.0 million over the last three years to be utilised in agreement with the Trustee for reducing the long-term liabilities of the scheme. This actuarial valuation has been updated by the actuaries to assess the assets and liabilities of the schemes at 30 June 2014.

An actuarial valuation of the USA defined benefit scheme was carried out by independent qualified actuaries in 2012 using the projected unit credit method. Pension scheme assets are stated at their market value at 30 June 2014.

Notes to the Condensed consolidated financial statements continued

10.   Reconciliation of net cash flow to movement in net (debt)/funds

£million	Net cash	Borrowings and finance leases	Net (debt)/funds
At 1 January 2013	59.1	(12.4)	46.7
Cash flow	(22.7)	(15.1)	(37.8)
Non-cash items	-	(0.1)	(0.1)
Exchange differences	0.9	(0.7)	0.2
At 1 July 2013	37.3	(28.3)	9.0
Cash flow	18.9	(1.4)	17.5
Non-cash items	-	-	-
Exchange differences	(1.7)	2.1	0.4
At 1 January 2014	54.5	(27.6)	26.9
Cash flow	(25.9)	(16.0)	(41.9)
Non-cash items	-	(0.1)	(0.1)
Exchange differences	(0.7)	0.9	0.2
Balance at 30 June 2014	27.9	(42.8)	(14.9)

Net cash represents cash and cash equivalents less bank overdrafts.  Net cash includes overdraft balances of £nil (30 June 2013: £nil, 31 December 2013: £nil).

11.   Share capital

       During the period the Company issued 278,708 ordinary shares on the vesting of the Long Term Incentive Plan awards issued in April 2011. The shares were then allocated to award holders via an Employee Benefit Trust for nil consideration.  A charge of £0.1 million has been recognised in retained earnings accordingly.

       The Company also issued 74,664 ordinary shares as a result of share options being exercised under the 2004 Approved Plan and Unapproved Plan, the Sharesave scheme and Share Purchase plans.  The aggregate consideration received was £0.1 million, which was represented by a £0.1 million increase in share premium.

       These transactions led to an increase in share capital of £0.1 million.

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 2014 that have affected the financial position or performance of the Group.

Notes to the Condensed consolidated financial statements continued

13.   Principal risks and uncertainties

As described on pages 24 to 27 of the 2013 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 Directors do not believe that the risks faced by the Group have changed significantly during the first six months of 2014, and these relate to the following areas: 

Economic downturn; acquisitions; disposals; new products or technical capability; operational improvement plan; customer concentration; margin erosion; health and safety; attract and retain talent; IT delivery and support; supply chain reliance and costs; business continuity; product liability and contractual risk; legal and regulatory compliance and financial risks.

14.   Post balance sheet event

On 14 July 2014 the Group announced the acquisition of Roxspur. Roxspur is a leading UK supplier of temperature, flow, pressure and level sensors, together with calibration services, for critical applications serving global customers in segments including oil and gas, power generation, water management and materials processing. The acquisition will form part of the Sensing and Control division.

Initial net consideration of £7.5 million was paid in cash with a further amount of up to £2.5 million payable in cash in 2016 based on the performance of the business in the period from completion to 31 December 2015.

 

END

 

 

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