Tt Electronics Regulatory News (TTG)

21 Mar 2005 07:01

TT electronics PLC21 March 2005 TT electronics plc TT ELECTRONICS PLC REPORTS ON STRONG PERFORMANCE IN 2004 TT electronics is a world leader in resistor and sensor technology and today announces its preliminary results for the year to 31 December 2004. KEY POINTS • Group turnover on continuing activities of £597.4 million (2003: £527.5 million). • Profit before goodwill amortisation and taxation was £30.1 million (2003: £20.0 million, before exceptional items). • Demand for automotive products remained strong and sales to this market grew by 10 per cent. • Sales to the telecom and computer market grew by 35 per cent as this market experienced a recovery. • Our acquisition Optek Technology, which substantially expanded our sensor business, performed ahead of expectations and provided the group with its entry into the active component market. • The recent acquisition of Dage Limited establishes TT electronics' manufacturing base in China and will be earnings enhancing with immediate effect. • Performance of the electrical division was substantially improved following the reorganisation of the UK genset business. • The group generated cash from operations of £58.3 million (2003: £45.2 million) and gearing at the year end was 32 per cent (2003: 40 per cent). • The Board is recommending a maintained final dividend of 6.36p per share bringing the total for the year to 10.05p (2003: 10.05p). John Newman, Executive Chairman, said today: "These results reflect the continued growth in demand from the automotive marketand the sustained recovery of the electronic component market. "Our future strategy lies in both passive and active components and we continueto develop new technologies such as our advanced inductive sensors and highintensity visible light emitting diodes which are attracting significantinterest. Our recent expansion into China is an important strategic developmentenabling us to continue to meet the requirements of our customers, particularlyin the automotive industry. "In 2005 we expect demand from North America to remain stable and to seecontinuing growth in China. With this relatively healthy background we areconfident of our ability to achieve future growth." 21 March 2005 Enquiries: TT electronics plc Tel: 01932 856647John W Newman, Executive Chairman Biddicks Tel: 020 7448 1000Zoe Biddick Financial Highlights 2004 2003 £million £million -------- --------Turnover - continuing activities 597.4 527.5 - discontinued activities - 6.4----------------------------------------- -------- --------Turnover - total 597.4 533.9----------------------------------------- -------- --------Operating profit before goodwill amortisation 33.1 22.1Interest (3.0) (2.1)----------------------------------------- -------- --------Profit before goodwill amortisation, exceptional itemsand taxation 30.1 20.0----------------------------------------- -------- --------Profit on ordinary activities after taxation oncontinuing activities 19.0 10.8----------------------------------------- -------- --------Earnings per share, basic 12.3p (0.1)p----------------------------------------- -------- --------Earnings per share before goodwill amortisation andexceptional items 13.9p 10.4p----------------------------------------- -------- --------Ordinary dividends per share 10.05p 10.05p----------------------------------------- -------- -------- Chairman's statement This year has seen a significant improvement in operating profit. Turnover oncontinuing activities has grown from £527.5 million to £597.4 million, a growthof 13 per cent, whilst operating profit before goodwill amortisation hasincreased from £22.1 million to £33.1 million, an increase of 50 per cent.Goodwill amortisation was £2.5 million (2003 - £1.8 million). The increase ingoodwill amortisation was primarily due to the acquisition of Optek Technologyin December 2003. Profit before tax was £27.6 million (2003 - £3.2 million).Taxation charge in the year was £8.6 million (2003 - £3.2 million) at aneffective rate of 29 per cent (2003 - 23 per cent). As a result of funding theacquisition of Optek Technology with bank indebtedness, interest in the year hasincreased from £2.1 million to £3.0 million. Earnings per share before goodwillamortisation were 13.9p compared with 10.4p. These figures show that the group had a strong second half following theimproved first half. The electronic sector turnover for the year has increasedby 16 per cent to £403.6 million. Excluding the full year effect of theacquisition of Optek Technology organic growth was 7 per cent. The electronicsector operating profit before goodwill amortisation was £26.0 million, comparedwith £16.9 million last year. The electrical sector turnover increased by 9 percent to £193.8 million with operating profit improving from £5.7 million to £7.1million. Neil Rodgers was appointed the Chief Executive in April 2004 and makes his firstreport in these accounts. Neil Rodgers' appointment has been at the time of arecovery in demand for electronic components and a continuing growth in therequirement for electronic products from the automotive industry. The increasein sales of electronic components has to a large extent been met out of excessmanufacturing capacity in our factories which was caused by the downturn in thetelecom industry in 2001 and 2002. During the year there has been a further reduction in the value of the US dollaragainst the Euro and Sterling. As TT electronics is a global manufacturer, themovement in currencies has provided the group with opportunities. Thedevaluation has reduced the cost of our manufactured products in US dollar areasand given us the opportunity to reduce costs by sourcing product outside theEuro area. The translation of profits has marginally affected the group's profitafter tax. TT electronics continues to be a strong generator of cash. At the year end, thegroup's net indebtedness had reduced to £62.5 million compared with £78.2million at the end of last year. International Financial Reporting Standards come into effect in 2005 and everyeffort will be made to assist all shareholders to understand the impact of thenew standards on TT electronics' accounts. The Board of TT electronics recommends a final dividend of 6.36p per share,which following the 3.69p interim dividend provides a total dividend for theyear of 10.05p, the same as last year. Following the retirement of Mark Evans, who reached the non-executive retirementage of 70, the Board was very pleased to invite David Crowther FCA to become anon-executive Director of TT electronics plc. I am sure that as a former partnerof PricewaterhouseCoopers LLP, he will make a valuable contribution to thegroup. He joined the Board on 10 January 2005 and will offer himself forelection at the Annual General Meeting. I would like to take this opportunity tothank Mark Evans for his contribution and wise counsel over the past six years.As Timothy Reed has been a non-executive Director for more than the nine yearterm recommended for guidance in the Revised Combined Code, he will again beoffering himself for re-election at the Annual General Meeting. As I said lastyear Timothy Reed, a former corporate lawyer, has always presented a strongindependent voice on the Board and it is the opinion of the whole Board that asan independent non-executive Director his continuing involvement in the groupwill be beneficial to the future of TT electronics plc. I would like to thank all our employees in the group's operations throughout theworld for their contribution to TT electronics' performance during the year andits continuing success. On 10 March 2005 the acquisition of Dage Limited was announced. Dage Limited isa well established contract electronics manufacturer serving a blue chip clientbase. The company has manufacturing facilities in Aylesbury in the UnitedKingdom and in Suzhou, near Shanghai in China. The entire share capital of DageLimited has been acquired for a cash consideration of £8.0 million, subject tocompletion accounts, for net assets of £4.9 million as at 30 April 2004. In theyear ended 30 April 2004, on a turnover of £19.3 million Dage Limited's profitbefore tax was £1.2 million. As well as extending the group's contractelectronic manufacturing services, this acquisition also provides TT electronicswith facilities in China to meet the requirements of our major customers,particularly within the automotive industry. This important expansion into Chinaforms part of the group's long-term plans and followed on from the Board'sdecision to acquire a base in China rather than start with a greenfield site. The future strategy of TT electronics lies in both active and passive electroniccomponents. Growth will be achieved by continuing development of new productsfor our original equipment manufacturing customers and acquisitions to enhanceand strengthen our position in the marketplace. The acquisition of SensopadTechnologies Ltd in March 2004 was part of this strategy as Sensopad providesthe group with advanced inductive sensor technology to meet the future needs ofthe automotive industry. The 2005 global economy for electronic products is likely to be based on astable demand from the North American market and the continuing growth in theChinese market. With this relatively healthy background, TT electronics has thecapability to gain new business from our customers, being the original equipmentmanufacturers, which will provide good future growth opportunities for thegroup. John W NewmanExecutive Chairman18 March 2005 Chief Executive's statement The electronic sector showed strong profit growth, up by an impressive 54 percent, on turnover growth of 16 per cent. Demand for our automotive products remained strong and we experienced healthyrecovery in the telecom, computer and industrial markets. Our recent acquisition Optek Technology performed ahead of expectations andcontinues to provide a significant contribution towards overall profitability. Performance in our electrical sector also improved largely as a result of thereorganisation of our generator set operations in 2003. Electronic sector I am pleased to report the significant improvement in profitability of thissector which results from continuing success in product development and theeffective management of our businesses in automotive and component markets. Automotive market Our overall automotive business grew by 10 per cent, a strong performance in amarket where the volume of vehicles produced worldwide is essentially static.BMW and DaimlerChrysler have become increasingly successful in global markets,particularly North America, and our relationship with these major OEMs hascontributed to our success as a leader in the European automotive sensor market.We continue to work closely with customers on development programmes of newtechnologies for next generation vehicles, a major strength of our Europeanautomotive business. Demand for electronics in vehicles is estimated to grow at 6 per cent per annum.Electronics are taking over more and more of a car's mechanical and electricalcontrols and the group's products are utilised in "drive-by-wire" functions,temperature and pressure sensing, light current switching and a range ofposition and speed sensing applications. Automotive products and technologies TT electronics' product range is dominated by our sensor activities. Theacquisition of Optek, a major sensor manufacturer based in North America andMexico, has positioned the group well for growth in sales of sensors to theNorth American market. Highlights of our European operations are our continuedstrength in the field of electronic throttle control pedals, and a range ofengine speed sensors supplied to the German market. Particularly exciting is the acquisition during early 2004 of SensopadTechnologies Ltd, which brings to the group highly accurate inductive sensortechnology, primarily for position applications. Work on adapting thistechnology within our existing portfolio of products is well advanced and isgenerating major interest from both current and prospective customers. Thedevelopment of the specific componentry and in particular the ASIC required forthe units to be put into volume production is on target for completion early in2006. Our climate control activities are suffering from reduced demand, primarily fromNorth America. There are several new programmes due for launch during 2005 whichare expected to recover some of the lost ground. The group's microcircuit hybrid businesses based in Europe have continued todevelop new products, including an electronic control module for an electricwater pump for German vehicles, sun sensors for the monitoring of climatecontrol systems, and control circuits for the Xenon headlamps now fitted to manyEuropean vehicles. Component market TT electronics' components are sold into a variety of markets including telecomand computer, industrial and office equipment. Our overall component sales grewin a market which, during 2004, saw a recovery across the world. Sales todistribution customers have grown to 28 per cent of our component salesworldwide. Sales to the telecom and computer market grew by 35 per cent. Our products areprimarily sold to computer and telecom equipment providers across the world forapplications such as local and wide area networks, contributing towards the goalof the paperless office environment. TT electronics works closely with westernbased customers to design-in our components, thereby ensuring continuity ofsupply independent of the manufacturing location. Outlook for the component market in 2005 again shows growth, although at a moremodest level. Our strong position in passive components plus our entry into theactive component market following the acquisition of Optek positions us well inthis market. Component products and technologies TT electronics' component operations are skilled at developing new products froma relatively mature product base. Our business is driven towards customdesigned-in products, at lower volume but higher margin than many of our globalcompetitors. During 2004 we developed a Ball Grid Array product range encompassing resistorand capacitor networks, and sales of this product range have commenced. Thisproduct maximises the number of connections for a given component size, therebyenhancing its functionality. Development of the AnothermTM product range,used inhigh intensity LED assemblies, is attracting significant interest fromprospective customers and a number of prototype orders have been received forapplications such as computer display backlighting, traffic signals, signage andspeciality lighting. The demand for components which can function at very high frequencies isexpected to grow over the coming years and TT electronics has designedapplication specific thick film products in anticipation of this growth. New programmes have been identified to develop a range of surface mountedopto-electronic devices. Plans to expand into the visible light emitting diodemarket are advanced and a new product range will be launched to market during2005. Operations TT electronics' policy of investing in modern automated manufacturing equipmentto support manufacture in high labour cost economies has been particularlysuccessful in our German operations, where our factories specialise in leadingedge manufacturing processes capable of producing zero defect products. Sensor manufacturing operations are concentrated in Western Europe and NorthAmerica. However we continue to expand our low cost assembly facility in theUkraine for simple products transferred from our German operations. We have maintained our policy of transferring component manufacturing operationsto lower cost economies where appropriate. In 2004 we moved manufacture ofproduct lines to Barbados, set up thick film printing capability in Mexico andcompleted the transfer of a range of products to our factory in Kuantan,Malaysia. During 2004 we completed the reorganisation of our remaining ferriteoperations with the expansion of our factory in India. During the year two new initiatives commenced. The first is the establishment ofan International Procurement Office based in China, the objective being toassist group companies to obtain competitive pricing for materials. The secondinitiative is the creation of our Manufacturing Improvement Team. The team,comprising lean-manufacturing and six-sigma skills, is tasked with establishinglasting improvements within each of our businesses, with the aim of becomingmore cost competitive in our global markets. Electrical sector Performance in this sector shows a substantial improvement following the UnitedKingdom genset reorganisation carried out in 2003. Our connector and cableaccessories businesses have performed well but the cable operations are beingreorganised due to strong price competition. Market The dominant feature for 2004 was the continuing increase in worldwide copperprices which impacted on our cable manufacturing operations. Orders forindustrial cable varied considerably throughout the year as customers attemptedto predict short-term copper price fluctuations. Domestic cable volumes andmargins showed improvement, and our specialist rubber cables have experiencedhigh demand. The order for the cable for new naval vessels won during 2003 waslargely completed during the year and the next phase of the contract has beenawarded covering 2005 production. Our low cost genset manufacturing operation based in Mexico has performed wellas a result of demand for power generation in China. The United Kingdom gensetoperation, now converted to a maintenance and panel upgrade business, returnedto profitability. The demand for ground power units for aircraft improved, withspecialist products being supplied to military and civilian airlines. Products and technologies Continued development has resulted in an application for patents on a newconcept for tunnel lighting which avoids high installation costs. We havecontinued with the development of new compounds for harsh environment cableapplications, for example our recently developed soft skin fire resistant cable.The cable accessory operations are designing new ranges of lower cost units foruse by Regional Electricity Companies for power supply installations, and workis expected to be completed during 2005 for the resourcing of lower costcomponents from the Far East. TT electronics' connector operations have expanded rapidly during the year.Originally a connector-only supplier to the defence and industrial market, thecompany has expanded its product range to include sub assemblies and finishedproducts, which in many cases comprise complex assembly cables, connectors andhousing units. Demand continues to grow for this product type. Operations We have undertaken major changes to our manufacturing and distributionoperations for cable products. In 2004 we initiated the closure of mineralinsulated cable manufacture at our Merseyside operation and our distributioncentre in North America. On 24 February 2005 we announced the proposed closureof the power cables division located at Gravesend. This loss making operationservices a market dominated by low cost producers and has an old manufacturingfacility. The company is currently in consultation with the workforce. Acquisitions On 10 March 2005 we announced the acquisition of Dage Limited, which is based inBuckinghamshire and in Suzhou near Shanghai, China. The company operates as anelectronic manufacturing services supplier to major OEMs. This acquisition represents an important step for TT electronics in our entryinto the Chinese market. The company has excellent relationships with locallybased, foreign owned customers, and has demonstrated a profitable growth path inthe past four years. Dage Limited's operation in China, has recently expandedinto new production facilities which we will use to manufacture a range of TTproducts for sale into the growing Chinese market. Outlook We are pleased with the results for 2004 achieved from the drive and commitmentof our people across the world. Our electronics sector has a strong product range, world class manufacturingfacilities and a growing customer base. Key to our success remains ourcapability to develop new products and technologies to sustain growth for thefuture. Within our electrical sector we have some strong product groups and costeffective manufacturing strategies. We will continue to review these operationsand will build upon our strengths to improve future profitability. We are positive about our business for 2005. Neil A RodgersChief Executive18 March 2005 Consolidated profit and loss accountFor the year ended 31 December 2004 Note 2004 2003 2003 2003 Continuing Continuing Discontinued Total activities activities activities £million Total £million £million £million ------ --------- --------- --------- -------Turnover 1 597.4 527.5 6.4 533.9Cost of sales (486.0) (434.1) (6.1) (440.2)------------------------ ------ --------- --------- --------- -------Gross profit 111.4 93.4 0.3 93.7Operating expenses (80.8) (72.6) (0.8) (73.4)------------------------ ------ --------- --------- --------- -------Operating profit 30.6 20.8 (0.5) 20.3------------------------ ------ --------- --------- --------- -------Operating profit beforegoodwill amortisation 33.1 22.6 (0.5) 22.1Goodwill amortisation (2.5) (1.8) - (1.8)------------------------ ------ --------- --------- --------- -------Operating profit 30.6 20.8 (0.5) 20.3------------------------ ------ --------- --------- --------- ------- Cost ofreorganisation-magnetics 2 - (3.0) (10.8) (13.8)Loss on sale of business 2 - (1.2) - (1.2)------------------------ ------ --------- --------- --------- -------Profit on ordinaryactivities beforeinterest 30.6 16.6 (11.3) 5.3Interest (3.0) (2.1) - (2.1)------------------------ ------ --------- --------- --------- -------Profit on ordinaryactivities beforetaxation 1 27.6 14.5 (11.3) 3.2Taxation (8.6) (3.7) 0.5 (3.2)------------------------ ------ --------- --------- --------- -------Profit on ordinaryactivities aftertaxation 19.0 10.8 (10.8) -Minority interests - (0.1) - (0.1)------------------------ ------ --------- --------- --------- -------Profit /(loss) for theyear 19.0 10.7 (10.8) (0.1)Dividends 3 (15.6) (15.6) - (15.6)------------------------ ------ --------- --------- --------- -------Retained profit/(loss) 3.4 (4.9) (10.8) (15.7)------------------------ ------ --------- --------- --------- -------Earnings per share 4- basic 12.3p (0.1)p- fully diluted 12.2p (0.1)p- before goodwill amortisation and exceptional items 13.9p 10.4p---------------------------------------------------------------------------------- Consolidated balance sheetAt 31 December 2004 Note 2004 2003 £million £million-------------------------------------- ------ ------- -------Fixed assetsIntangible assets 42.7 44.9Tangible assets 133.6 143.5Investments 5.3 5.3-------------------------------------- ------ ------- ------- 181.6 193.7-------------------------------------- ------ ------- -------Current assetsProperty 0.1 1.8Stocks 99.6 98.5Debtors 107.2 108.7Investments 0.1 0.1Cash 5.4 8.5-------------------------------------- ------ ------- ------- 212.4 217.6 Creditors falling due within one year (126.1) (147.2)-------------------------------------- ------ ------- -------Net current assets 86.3 70.4-------------------------------------- ------ ------- ------- Total assets less current liabilities 267.9 264.1Creditors falling due after more than one year (65.9) (60.9)Provisions for liabilities and charges (2.5) (4.2)Minority interests (2.9) (2.9)-------------------------------------- ------ ------- -------Total net assets 196.6 196.1-------------------------------------- ------ ------- ------- Capital and reservesShare capital 38.7 38.7Share premium account 56.0 56.0Capital redemption reserve 4.4 4.4Merger reserve 23.0 23.0Profit and loss account 74.5 74.0-------------------------------------- ------ ------- -------Equity shareholders' funds 5 196.6 196.1-------------------------------------- ------ ------- ------- Consolidated cash flow statementFor the year ended 31 December 2004 Note 2004 2003 £million £million ------ ------- ------Net cash inflow from operating activities 6 58.3 45.2------------------------------------- ------ ------- ------Returns on investments and servicing of financeInterest paid (3.2) (2.6)Interest received 0.2 0.5------------------------------------- ------ ------- ------Net cash outflow from returns on investments andservicing of finance (3.0) (2.1)------------------------------------- ------ ------- ------Taxation (15.8) (2.9)------------------------------------- ------ ------- ------Capital expenditure and financial investmentSale of tangible fixed assets 6.2 2.2Government grants received 2.0 0.8Loan repayment 6.0 -Purchase of fixed asset investments - (0.2)Purchase of tangible fixed assets (24.6) (23.5)------------------------------------- ------ ------- ------Net cash outflow from capital expenditure andfinancial investment (10.4) (20.7)------------------------------------- ------ ------- ------Acquisitions and disposalsPurchase of businesses 8 (1.6) (31.0)Sale of business - 1.1Reduction in purchase consideration 0.3 -------------------------------------- ------ ------- ------Net cash outflow from acquisitions and disposals (1.3) (29.9)------------------------------------- ------ ------- ------Ordinary dividends paid (15.6) (15.6)------------------------------------- ------ ------- ------Net cash inflow/(outflow) before liquid resourcesand financing 12.2 (26.0)------------------------------------- ------ ------- ------Net cash outflow from management of liquidresources - -------------------------------------- ------ ------- ------FinancingNew loans 4.9 6.7Loan repayments (0.6) (0.4)------------------------------------- ------ ------- ------Net cash inflow from financing 4.3 6.3------------------------------------- ------ ------- ------Increase/(decrease) in cash 7 16.5 (19.7)------------------------------------- ------ ------- ------ Notes to the financial statements 1. Analysis of turnover and profit on ordinary activities before taxation 2004 2003Turnover £million £million ------- --------By sectorElectronic 403.6 349.3Electrical 193.8 178.2---------------------------------------- ------- --------Continuing activities 597.4 527.5Discontinued activities - 6.4---------------------------------------- ------- -------- 597.4 533.9---------------------------------------- ------- --------By originUnited Kingdom 281.8 258.6Rest of Europe 149.1 136.2North America 133.8 102.0Rest of the World 32.7 30.7---------------------------------------- ------- --------Continuing activities 597.4 527.5Discontinued activities - 6.4---------------------------------------- ------- -------- 597.4 533.9---------------------------------------- ------- --------By destinationUnited Kingdom 179.9 155.8Rest of Europe 227.5 206.5North America 117.7 101.5Rest of the World 72.3 63.7---------------------------------------- ------- --------Continuing activities 597.4 527.5Discontinued activities - 6.4---------------------------------------- ------- -------- 597.4 533.9---------------------------------------- ------- -------- 2004 2003Profit on ordinary activities before taxation £million £million ------- -------By sectorElectronic 26.0 16.9Electrical 7.1 5.7---------------------------------------- ------- -------Continuing activities 33.1 22.6Discontinued activities - (0.5)---------------------------------------- ------- -------Operating profit before goodwill amortisation 33.1 22.1Goodwill amortisation (2.5) (1.8)---------------------------------------- ------- -------Total operating profit 30.6 20.3Exceptional items - (15.0)---------------------------------------- ------- -------Profit on ordinary activities before interest 30.6 5.3Interest (3.0) (2.1)---------------------------------------- ------- -------Profit on ordinary activities before taxation 27.6 3.2---------------------------------------- ------- -------By originUnited Kingdom 3.0 2.0Rest of Europe 16.5 14.2North America 10.7 4.4Rest of the World 2.9 2.0---------------------------------------- ------- -------Continuing activities 33.1 22.6Discontinued activities - (0.5)---------------------------------------- ------- -------Operating profit before goodwill amortisation 33.1 22.1Goodwill amortisation (2.5) (1.8)---------------------------------------- ------- -------Total operating profit 30.6 20.3Exceptional items - (15.0)---------------------------------------- ------- -------Profit on ordinary activities before interest 30.6 5.3Interest (3.0) (2.1)---------------------------------------- ------- -------Profit on ordinary activities before taxation 27.6 3.2---------------------------------------- ------- ------- The results include the first full year's contribution from Optek TechnologyInc, acquired on 3 December 2003. The results of TT electronics technologyLimited (formerly Sensopad Technologies Ltd) acquired on 11 March 2004 are notconsidered to be material and therefore are reported as continuing activities.Discontinued activities in 2003 were the results of the laminations business.Exceptional items for 2003 are described in note 2. Goodwill amortisation is inrespect of the electronic sector. 2. Exceptional items - 2003 A major reorganisation of the group's magnetics business was carried out in 2003and resulted in a charge of £13.8 million including £10.1 million of goodwillpreviously written-off to reserves. The group sold the business of Air TransportAvionics in 2003 at a loss of £1.2 million including £0.8 million of goodwillpreviously written-off to reserves. 3. Dividends 2004 2003 2004 2003 pence per pence per £million £million share share -------- ------- ------- -------EquityOrdinary dividends- Interim, paid 3.69 3.69 5.7 5.7- Final, proposed 6.36 6.36 9.9 9.9----------------------------- -------- ------- ------- ------- 10.05 10.05 15.6 15.6----------------------------- -------- ------- ------- ------- The final dividend will be paid on 27 May 2005 to shareholders on the registerat 20 May 2005. 4. Earnings per share 2004 2003 pence per pence per share share -------- -------Earnings per shareBasic 12.3 (0.1)Fully diluted 12.2 (0.1)Before goodwill amortisation and exceptional items 13.9 10.4--------------------------------------- -------- ------- Earnings per share has been calculated by dividing the profit attributable toshareholders by the weighted average number of shares in issue during theperiod. The numbers used in calculating basic and fully diluted earnings pershare are reconciled below. An adjusted earnings per share has also been presented based on the profitattributable to shareholders before goodwill amortisation and exceptional items.The effect of these items on earnings is reconciled below. 2004 2003 £million £million ------- -------Net profit/(loss) for the period attributable toshareholdersEarnings basic and fully diluted 19.0 (0.1)Goodwill amortisation 2.5 1.8Exceptional items, net of tax relief - 14.5--------------------------------------- ------- -------Earnings before goodwill amortisation and exceptionalitems 21.5 16.2--------------------------------------- ------- ------- 2004 2003 million million ------- -------Weighted average number of shares in issueBasic 154.8 154.8Adjustment for share options 1.5 0.6--------------------------------------- ------- -------Fully diluted 156.3 155.4--------------------------------------- ------- ------- 5. Reconciliation of movements in shareholders' funds 2004 2003 £million £million ------- -------Profit/(loss) for the year 19.0 (0.1)Exchange differences on net foreign currency investments (2.9) (4.8)--------------------------------------- ------- -------Total recognised gains and losses 16.1 (4.9)Dividends (15.6) (15.6)Goodwill included in exceptional items - 10.9--------------------------------------- ------- -------Net change in shareholders' funds 0.5 (9.6)Opening shareholders' funds 196.1 205.7--------------------------------------- ------- -------Closing shareholders' funds 196.6 196.1--------------------------------------- ------- ------- 6. Reconciliation of group operating profit to net cash inflow from operatingactivities 2004 2003 £million £million ------- --------Total operating profit 30.6 20.3Depreciation 29.3 26.1Amortisation 2.7 1.8Government grants credited to profit (1.1) (0.8)Profit on sale of tangible fixed assets (2.8) (0.7)Closure and other costs - (1.5)Decrease in property current assets 1.7 0.8(Increase)/decrease in stocks (1.1) 1.5(Increase)/decrease in debtors (3.8) 8.6Increase/(decrease) in creditors 5.4 (8.9)Movement on pension prepayments and accruals (0.8) (0.9)Exchange translation differences (1.8) (1.1)-------------------------------------- -------- --------Net cash inflow from operating activities 58.3 45.2-------------------------------------- -------- -------- 7. Reconciliation of net cash flow to movement in net debt Net cash/ Short-term Loans Net Debt (overdraft) investments and finance £million £million £million lease obligations £million --------- --------- --------- ---------Balance at 31 December2002 (7.6) 0.1 (48.3) (55.8)Cash flow (19.7) - (6.3) (26.0)Acquisitions - - (0.6) (0.6)Exchange differences 0.1 - 4.1 4.2---------------------- --------- --------- --------- ---------Balance at 31 December2003 (27.2) 0.1 (51.1) (78.2)Cash flow 16.5 - (4.3) 12.2Exchange differences 1.0 - 2.5 3.5---------------------- --------- --------- --------- ---------Balance at 31 December2004 (9.7) 0.1 (52.9) (62.5)---------------------- --------- --------- --------- --------- 8. Acquisitions On 11 March 2004 the group acquired Sensopad Technologies Ltd, a technologydevelopment company, which then changed its name to TT electronics technologyLimited. The purchase consideration was £3.5 million including future royaltiesprovisionally valued at £2.1 million. The net cash outflow in respect of thisacquisition was £1.6 million. 9. Post balance sheet event On 10 March 2005 the group announced the acquisition of Dage Limited, anelectronic manufacturing services business with manufacturing facilities in theUnited Kingdom and China. The cash consideration was £8.0 million, subject tocompletion accounts, for £4.9 million of assets as at 30 April 2004. In the yearended 30 April 2004, Dage Limited's profit before taxation was £1.2 million on aturnover of £19.3 million. 10. Basis of preparation The information above, which does not constitute full financial statementswithin the meaning of S240 CA, 1985 is extracted from the audited financialstatements of TT electronics plc for the year ended 31 December 2004 which: • have been prepared on a basis consistent with the accounting policies set out in the annual report for the year ended 31 December 2003 filed with the Registrar of Companies • were approved by the Directors on 18 March 2005 • carry an unqualified audit report, which did not contain statements under S237 CA, 1985 • will be posted to shareholders and available to the public in April 2005 • will be filed with the Registrar of Companies following the Annual General Meeting on 18 May 2005 This information is provided by RNS The company news service from the London Stock Exchange