Tt Electronics Regulatory News (TTG)

11 Sep 2006 07:02

TT electronics PLC11 September 2006 TT electronics plc TT electronics, a world leader in sensor and electronic component technology, today announces its interim results for the six months ended 30 June 2006. KEY POINTS Strong order intake and new product innovation driving future growth • Group revenue from continuing operations was £301.8 million (2005: £286.4 million) generating operating profit of £17.8 million (2005: £16.2 million before exceptional items). • Group profit before tax was £15.3 million (2005: £13.4 million, before the exceptional profit of £5.0 million from the sale of the Gravesend site). • The group has won contracts for sensors and systems worth over £100 million from the automotive market including new orders of Autopad (R) inductive sensors. • The group is continuing to expand its successful operations in low labour cost economies. • Earnings per share up 23 per cent to 7.0p (2005: 5.7p before exceptional items) • The interim dividend is maintained at 3.69p per share. John Newman, Executive Chairman, said today: "I am pleased to report that TT electronics has delivered an improvedperformance resulting from stronger sales and the benefits from the closures ofloss making operations actioned last year. "In the electronic sector we have been successful in winning orders for oursensors from our core automotive customers and demand for our electroniccomponents is stronger. The electrical sector has delivered very good resultsand has benefited from high demand for both power generation equipment andconnection systems, particularly for the defence market. "We will continue to transfer manufacturing to low labour cost economies and todrive the development of our world-leading technologies. We have achieved astrong order intake in the first half of the year which augurs well for futuregrowth." Enquiries:TT electronics Tel: 01932 856 647John W Newman, Executive Chairman:Biddicks Tel: 020 7448 1000Zoe Biddick: Highlights Half year Half year Full year 30 June 2006 % 30 June 2005 2005 £ million Change £ million £ million ---------- ------- ---------- ------- Revenue 301.8 +5% 286.4 565.3-------------------------- ---------- ------- ---------- -------Operating profit beforeexceptional items 17.8 +10% 16.2 29.9-------------------------- ---------- ------- ---------- -------Profit before tax andexceptional items 15.3 +14% 13.4 24.7Exceptional items - 5.0 2.1-------------------------- ---------- ------- ---------- -------Profit before tax 15.3 18.4 26.8-------------------------- ---------- ------- ---------- ------- Earnings per share fromcontinuing operations- basic 7.0p 8.3p 11.8p- diluted 6.9p 8.2p 11.7p- basic before exceptional items 7.0p 5.7p 10.7p-------------------------- ---------- ------- ---------- -------Dividend per share to be paid 3.69p 3.69p 10.05p-------------------------- ---------- ------- ---------- ------- Chairman's statement TT electronics continues to introduce innovative, electronic products which aredriving new sales and ensuring that the group maintains its position as aleading global supplier. We continue progressively to transfer manufacturing tolow cost economies to enhance margins. The group is also benefiting from theactions taken last year to close certain loss making operations. Revenue from continuing operations for the first half was £301.8 million,compared to £286.4 million in 2005. Operating profit from continuing operationswas £17.8 million (2005: excluding exceptional items £16.2 million), an increaseof 10 per cent. The first half year's profit before taxation was £15.3 millioncompared to £13.4 million excluding last year's exceptional profit of £5.0million. Taxation has been charged at 29 per cent (2005: 30 per cent). Basicearnings per share were 7.0p compared to 5.7p excluding exceptional items, anincrease of 23 per cent. As previously reported the electronic sector's results are expected to benefitfrom the strong order intake for innovative new products and in particular ourAutopad(R) inductive sensor products. The electrical sector has improved in the first half from increased demand forgenerator sets at Ottomotores in Mexico and higher revenue at AB Connectors forconnection systems. The expansion of our Chinese activities continues to fulfil expectations withfour factories now in operation. We have recently announced our plans torationalise the electronic manufacturing services production in the UK byclosing our factory at Blyth near Newcastle and transferring manufacturing toour existing sites at Rogerstone in South Wales and Malaysia. We have seen increases in short term borrowing rates and the UK AA ratedcorporate bond yields have also increased. This, together with investmentreturns being in line with expectations, has resulted in the pension schemes'deficit being reduced by £24.9 million. The group's net borrowings at £48.8 million are a great improvement on June 2005at £65.5 million. In the first half of 2006 borrowings have slightly increasedby £1.7 million, this is after the payment of the final dividend for 2005, whichamounted to £9.9 million, in May 2006. The interim dividend is unchanged at 3.69 pence per share and will be paid on 26October 2006 to shareholders on the register on 20 October 2006. TT electronics has achieved a strong order intake in the first half year whichaugurs well for future growth. John W NewmanExecutive Chairman11 September 2006 Business review The group has made good progress in the first half of 2006. Trading conditionshave been favourable and the benefits arising from last year's restructuring arebeing realised. The group's revenue was £301.8 million (2005: £286.4 million) with operatingprofit of £17.8 million (2005: before exceptional items £16.2 million). Therewere no exceptional items in this half year. New product development is a key element of the group's strategy and importantinnovative products are being progressively launched to the automotive andelectronic component markets. The group policy continues to be to manufacture in the most cost effective wayby a combination of investing in highly automated plants and low labour costfactories. Total group - sector analysis 2006 2005 2005 First half First half Full Year £million £million £million --------- --------- -------- Revenue:Sensors and electronic systems 99.0 97.4 195.0Electronic components 71.2 65.9 129.6Electronic manufacturing services 33.0 27.4 60.3---------------------------- --------- --------- ---------Electronic sector 203.2 190.7 384.9---------------------------- --------- --------- ---------Power systems 29.0 25.0 50.4Power transmission 69.6 70.7 130.0---------------------------- --------- --------- ---------Electrical sector 98.6 95.7 180.4---------------------------- --------- --------- ---------Group total 301.8 286.4 565.3---------------------------- --------- --------- --------- Operating profit (1):Sensors and electronic systems 5.7 5.3 9.1Electronic components 4.6 5.1 8.7Electronic manufacturing services 2.0 1.5 2.0---------------------------- --------- --------- ---------Electronic sector 12.3 11.9 19.8---------------------------- --------- --------- ---------Power systems 2.0 1.8 4.6Power transmission 3.5 2.5 5.5---------------------------- --------- --------- ---------Electrical sector 5.5 4.3 10.1---------------------------- --------- --------- ---------Group total 17.8 16.2 29.9---------------------------- --------- --------- --------- (1) Operating profit for 2005 is stated before exceptional items. There were no exceptional items in 2006. Sensors and electronic systems 2006 2005 2005 First half First half Full Year £million £million £million --------- --------- --------- Revenue 99.0 97.4 195.0Operating profit 5.7 5.3 9.1---------------------------- --------- --------- --------- The group has been successful in winning new contracts worth more than £100million over the life of the product from the German and North Americanautomotive markets. This includes orders for the new range of Autopad(R)inductive sensors which have been particularly well received and new business tosupply systems direct to vehicle manufacturers rather than to the tier onesystem providers. The manufacture of systems and sensors in the group's lowerlabour cost factories is being set up. Sensors will be built in Mexico and themanufacture of a new systems product will start up in 2007 in China. Electronic components 2006 2005 2005 First half First half Full Year £million £million £million --------- --------- -------- Revenue 71.2 65.9 129.6Operating profit 4.6 5.1 8.7--------------------------- --------- --------- -------- Demand for electronic components has been stronger than last year particularlyin North America. The specialist tanfilm resistor products which are capable ofoperating reliably in demanding environmental conditions have been verysuccessful with order intake up 35 per cent over last year. New products forhigh frequency microwave, power and current sense applications have beenlaunched. Electronic manufacturing services 2006 2005 2005 First half First half Full Year £million £million £million --------- -------- -------- Revenue 33.0 27.4 60.3Operating profit 2.0 1.5 2.0--------------------------- --------- -------- -------- The group's operation in China continues to perform exceptionally well and hasexpanded its facilities to four factories with 150,000 sq. ft. of floor area.The closure has recently been announced of the group's loss making factory inNorth East England and the transfer of production to the factories in Wales andMalaysia has commenced. Power systems 2006 2005 2005 First half First half Full Year £million £million £million --------- -------- -------- Revenue 29.0 25.0 50.4Operating profit 2.0 1.8 4.6--------------------------- --------- -------- -------- Revenue has increased as a result of a major contract to supply generators toCentral America which is now substantially complete. The UK operations whichservice and upgrade generators and supply uninterruptible power supply unitshave now been combined onto a single site which will be more cost effective. Power transmission 2006 2005 2005 First half First half Full Year £million £million £million --------- -------- -------- Revenue 69.6 70.7 130.0Operating profit 3.5 2.5 5.5--------------------------- --------- -------- -------- The high cost of copper metal has increased both revenue and the material costof sales. Demand for house wiring has remained strong but price competitionremains fierce. The cable accessories and electrical connection systembusinesses in particular have benefited from strong demand and have maintainedgood margins. Dividends and earnings per share The interim dividend is 3.69p per share (2005: 3.69p per share). Basic earningsper share from continuing operations before exceptional items is 7.0p (2005:5.7p). There were no exceptional items in this half year. Basic earnings pershare is 7.0p (2005: 8.3p). Cash flow and working capital Working capital has been tightly controlled so that the increase in netborrowings since the year end was restricted to £1.7 million notwithstanding thegrowth in revenue, the payment of the final dividend of £9.9 million and higherraw material prices. Net debt at the half year was £48.8 million (December 2005:£47.1 million) and gearing improved to 30 per cent (December 2005: 31 per cent). Pensions The increase in the discount rate which is used to evaluate the liabilities ofthe pension schemes has reduced these liabilities by £24.8 million. The returnon the assets of the pension schemes has been closely in line with actuarialexpectations and therefore the overall net effect has been to reduce the deficitof the pension schemes since the year end by £24.9 million to £65.3 million(2005: £90.2 million). This improvement to the total net worth of the group isaccounted for through the reserves. Outlook The group is well positioned for a successful full year for 2006 and the newproducts and technologies being introduced are expected to provide good growthin future years. Neil A Rodgers Roderick W WeaverChief Executive Finance Director11 September 2006 11 September 2006 Consolidated income statementfor the six months ended 30 June 2006 Note 2006 2005 2005 First half First half Full year £ million £ million £ million ----- --------- --------- --------- Continuing operationsRevenue 2 301.8 286.4 565.3--------------------------- ----- --------- --------- ---------Operating profit before exceptionalitems 3 17.8 16.2 29.9Exceptional items 4 - 5.0 2.1--------------------------- ----- --------- --------- ---------Operating profit 17.8 21.2 32.0Finance income 6 7.8 5.9 12.0Finance costs 6 (10.3) (8.7) (17.2)--------------------------- ----- --------- --------- ---------Profit before taxation 15.3 18.4 26.8Taxation 7 (4.5) (5.5) (8.5)--------------------------- ----- --------- --------- ---------Profit for the period from continuingoperations 10.8 12.9 18.3--------------------------- ----- --------- --------- ---------Discontinued operationLoss for the period from discontinuedoperation - (1.4) (5.3)--------------------------- ----- --------- --------- ---------Profit for the period attributable toshareholders 10.8 11.5 13.0--------------------------- ----- --------- --------- ---------Earnings per share 8From continuing and discontinuedoperations-basic 7.0p 7.4p 8.4p-diluted 6.9p 7.3p 8.3pFrom continuing operations-basic 7.0p 8.3p 11.8p-diluted 6.9p 8.2p 11.7p--------------------------- ----- --------- --------- ---------Dividend per share to be paid 3.69p 3.69p 10.05p--------------------------- ----- --------- --------- --------- Consolidated balance sheetat 30 June 2006 Note 2006 2005 2005 30 June 30 June 31 December £ million £ million £ million ------ ---------- --------- ---------ASSETSNon-current assetsProperty, plant and equipment 111.0 124.1 118.0Goodwill 49.1 50.8 52.5Other intangible assets 16.0 16.9 15.7Financial assets - 1.0 -Deferred tax assets 22.6 23.0 30.0------------------------ ------ ---------- ---------- ---------Total non-current assets 198.7 215.8 216.2------------------------ ------ ---------- ---------- ---------Current assetsInventories 93.9 100.2 93.9Trade and other receivables 107.9 115.7 95.1Financial assets 0.4 - -Cash and cash equivalents 22.2 18.0 24.0------------------------ ------ ---------- ---------- ---------Total current assets 224.4 233.9 213.0------------------------ ------ ---------- ---------- ---------Total assets 423.1 449.7 429.2------------------------ ------ ---------- ---------- ---------LIABILITIESCurrent liabilitiesShort-term borrowings 8.5 77.9 4.0Financial liabilities 0.1 0.3 0.4Trade and other payables 99.0 99.1 94.8Current tax payable 7.1 6.4 4.9Provision for liabilities 1.2 1.5 1.6------------------------ ------ ---------- ---------- ---------Total current liabilities 115.9 185.2 105.7------------------------ ------ ---------- ---------- ---------Non-current liabilitiesLong-term borrowings 62.5 5.6 67.1Deferred tax provision 5.8 8.6 6.1Pensions and other postemployment benefits 9 65.3 70.4 90.2Other provisions 0.9 1.3 1.0Other non-current liabilities 7.7 8.4 7.4------------------------ ------- ---------- ---------- ---------Total non-current liabilities 142.2 94.3 171.8------------------------ ------- ---------- ---------- ---------Total liabilities 258.1 279.5 277.5------------------------ ------- ---------- ---------- ---------Net assets 165.0 170.2 151.7------------------------ ------- ---------- ---------- ---------EQUITYShare capital 38.7 38.7 38.7Share premium account - 56.0 -Capital redemption reserve - 4.4 -Merger reserve - 23.0 -Share options 0.7 0.3 0.5Hedging and translation reserve (1.7) (1.1) 3.5Retained earnings 125.3 46.0 107.0Minority interests 2.0 2.9 2.0---------------------- --------- ---------- ---------- ---------Total equity 11 165.0 170.2 151.7---------------------- --------- ---------- ---------- --------- Consolidated statement of recognised income and expensefor the six months ended 30 June 2006 2006 2005 2005 First half First half Full year £ million £ million £ million -------- -------- --------Profit for the period 10.8 11.5 13.0Exchange differences on net foreigncurrency investments (5.2) 1.8 5.7Income tax on foreign currency exchangedifferences - - 0.7Actuarial gain/(loss) on defined benefitpension schemes 24.8 - (26.0)Deferred tax on actuarial gain/(loss) (7.4) - 7.8------------------------------ -------- --------- ----------Total recognised income and expense forthe period 23.0 13.3 1.2------------------------------ -------- --------- ---------- Consolidated cash flow statementfor the six months ended 30 June 2006 Note 2006 2005 2005 First half First half Full year £ million £ million £ million ----- --------- --------- --------- Operating activitiesProfit for the period attributable toshareholders 10.8 11.5 13.0Adjustments forFinance costs 2.5 3.2 6.1Taxation 4.5 4.9 5.2Depreciation and amortisation 16.0 17.2 37.2Gain on disposal of property, plantand equipment (2.0) (7.6) (12.0)Gain on disposal of subsidiary - - (4.1)Other non cash items (0.2) (0.4) 0.1Movement in working capital (9.8) (1.8) 18.1Additional payments to pension funds (0.8) (1.9) (9.3)Exchange differences (4.4) 1.6 4.0------------------------- ------ ---------- ---------- ---------Cash generated from operations 16.6 26.7 58.3Tax paid (2.0) (5.8) (8.7)------------------------- ------ ---------- ---------- ---------Net cash from operating activities 14.6 20.9 49.6------------------------- ------ ---------- ---------- --------- Cash flows from investing activitiesPurchase of property, plant and equipment (9.2) (6.8) (15.6)Proceeds from sale of property, plantand equipment and grants received 4.4 17.4 21.3Development expenditure (4.9) (5.2) (8.7)Acquisition of subsidiary net of cashacquired - (8.8) (10.1)Net cash proceeds from sale ofsubsidiary - - 7.8------------------------- ------ ---------- ---------- ---------Net cash used in investing activities (9.7) (3.4) (5.3)------------------------- ------ ---------- ---------- --------- Cash flows from financing activitiesNet interest paid (1.4) (1.8) (3.4)Change in loans and finance leaseliabilities (0.1) (1.5) 7.2Dividends paid (9.9) (9.8) (15.6)------------------------- ------ ---------- ---------- ---------Net cash used in financing activities (11.4) (13.1) (11.8)------------------------- ------ ---------- ---------- --------- Net (decrease)/increase in cash andcash equivalents 10 (6.5) 4.4 32.5Cash and cash equivalents atbeginning of period 22.3 (9.6) (9.6)Exchange difference 0.2 (1.4) (0.6)------------------------- ------ ---------- ---------- ---------Cash and cash equivalents at end ofperiod 10 16.0 (6.6) 22.3------------------------- ------ ---------- ---------- --------- Cash and cash equivalents compriseCash and cash equivalents 22.2 18.0 24.0Bank overdrafts (6.2) (24.6) (1.7)------------------------- ------ ---------- ---------- --------- 10 16.0 (6.6) 22.3------------------------- ------ ---------- ---------- --------- Notes to the interim financial statements 1. Basis of accounting The interim financial statements for the half year to 30 June 2006 are unauditedand have been prepared under International Financial Reporting Standards (IFRS)in accordance with the accounting policies set out in the Annual Report for2005. The figures for the year ended 31 December 2005 have been extracted fromthe statutory accounts, filed with the Registrar of Companies on which theauditors gave an unqualified report. The results of Prestwick Circuits Limited for the half year to 30 June 2005 havebeen reclassified as a discontinued operation consistent with the treatment inthe 2005 Annual Report. These interim statements comply with IAS 34 'Interim Financial Reporting' andwere approved by the Directors on 11 September 2006. 2. Analysis of revenue 2006 2005 2005 First half First half Full year £ million £ million £ million ---------- ---------- ---------- By business sectorElectronic- Sensors and electronic systems 99.0 97.4 195.0- Electronic components 71.2 65.9 129.6- Electronic manufacturing services 33.0 27.4 60.3--------------------- ---------- ---------- ----------Total electronic 203.2 190.7 384.9--------------------- ---------- ---------- ----------Electrical- Power systems 29.0 25.0 50.4- Power transmission 69.6 70.7 130.0--------------------- ---------- ---------- ----------Total electrical 98.6 95.7 180.4--------------------- ---------- ---------- ----------Total revenue 301.8 286.4 565.3--------------------- ---------- ---------- ---------- By destinationUnited Kingdom 81.7 82.0 161.1Rest of Europe 106.1 103.7 199.9North America 70.7 55.8 131.7Rest of the World 43.3 44.9 72.6--------------------- ---------- ---------- ----------Total revenue 301.8 286.4 565.3--------------------- ---------- ---------- ---------- The group's primary reporting format is by business segments and its secondaryformat is by geographical segments. 3. Analysis of operating profit before exceptional items 2006 2005 2005 First half First half Full year £ million £ million £ million ---------- ---------- ---------- By business sectorElectronic- Sensors and electronic systems 5.7 5.3 9.1- Electronic components 4.6 5.1 8.7- Electronic manufacturing services 2.0 1.5 2.0---------------------- ----------- ----------- ----------Total electronic 12.3 11.9 19.8---------------------- ----------- ----------- ----------Electrical- Power systems 2.0 1.8 4.6- Power transmission 3.5 2.5 5.5---------------------- ----------- ----------- ----------Total electrical 5.5 4.3 10.1---------------------- ----------- ----------- -------------------------------- ----------- ----------- ----------Operating profit before exceptional items 17.8 16.2 29.9---------------------- ----------- ----------- ---------- 4. Exceptional items 2006 2005 2005 First half First half Full year £ million £ million £ million --------- ----------- ---------- Profit on sale of Gravesend site - 7.8 7.8Closure costs of Gravesend cablesoperation - (2.8) (3.1)------------------------ --------- ----------- ----------Net gain on closure of Gravesend cablesoperation - 5.0 4.7Profit on sale of Houchin AerospaceLimited - - 4.1Closure costs of AB Automotive (France)SAS - - (6.7)------------------------ --------- ----------- ---------- - 5.0 2.1------------------------ --------- ----------- ---------- The profit on sale of the Gravesend site was calculated based on initialproceeds of £12.5 million. Further proceeds may be received based on thedevelopment of the site at which time such additional profit will be recognised.Houchin Aerospace Limited was sold on 1 August 2005 for a cash consideration of£8.0 million. AB Automotive (France) SAS ceased production in the first half of2006. 5. Discontinued operation On 9 September 2005 the group announced the discontinuation of manufacturing atPrestwick Circuits Limited, a printed circuit board manufacturer and its resultsfor the half year to 30 June 2005 have been reclassified as a discontinuedoperation consistent with the treatment in the 2005 Annual Report. The resultsof the discontinued operation are after charging net finance costs of £0.4million for the half year to 30 June 2005 (full year : £0.9 million) and aftercrediting tax relief of £0.6 million for the first half of 2005 (full year :£3.3 million). 6. Finance costs - net 2006 2005 2005 First half First half Full year £ million £ million £ million ---------- ---------- ---------- Continuing operationsInterest payable (2.2) (1.8) (3.7)Unwinding of the discount on pensionscheme liabilities (8.1) (6.9) (13.5)----------------------- ---------- ---------- ----------Finance costs (10.3) (8.7) (17.2)----------------------- ---------- ---------- ----------Interest receivable 0.6 0.2 0.6Expected return on pension scheme assets 7.2 5.7 11.4----------------------- ---------- ---------- ----------Finance income 7.8 5.9 12.0----------------------- ---------- ---------- ----------Finance costs - net (2.5) (2.8) (5.2)----------------------- ---------- ---------- ---------- 7. Taxation Taxation on the profit for the half year to 30 June 2006 has been based on theestimated effective rate for the full year ending 31 December 2006. 8. Earnings per share 2006 2005 2005 First half First half Full year pence pence pence --------- ---------- ---------- From continuing and discontinued operations:Basic 7.0 7.4 8.4Diluted 6.9 7.3 8.3------------------------ --------- ---------- ---------- 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 diluted earnings per share areshown below: £ million £ million £ million ---------- ---------- ----------Profit for the period attributable toshareholders:Earnings basic and diluted 10.8 11.5 13.0----------------------- ---------- ---------- ---------- million million million----------------------- ---------- ---------- ----------Weighted average number of shares in issue:Basic 154.8 154.8 154.8Adjustment for share options 1.5 1.9 1.4----------------------- ---------- ---------- ----------Diluted 156.3 156.7 156.2----------------------- ---------- ---------- ---------- 2006 2005 2005 First half First half Full year pence pence pence --------- ---------- ----------From continuing operations :Basic 7.0 8.3 11.8Diluted 6.9 8.2 11.7------------------------ --------- ---------- ---------- £ million £ million £ million --------- ---------- ----------Profit for the period attributable toshareholders 10.8 11.5 13.0Add loss for the period fromdiscontinued operation - 1.4 5.3------------------------ --------- ---------- ----------Earnings basic and diluted fromcontinuing operations 10.8 12.9 18.3------------------------ --------- ---------- ---------- The denominators are the same as shown above for basic and diluted earnings pershare. 9. Retirement benefit plans The group now operates six defined benefit plans in the UK, all of which areclosed to new members. These are final salary plans. It also operates definedbenefit plans in the United States and Japan relating to BI Technologies.Actuarial valuations of the plans were carried out by independent qualifiedactuaries between 2002 and 2005 principally using the projected unit creditmethod. These actuarial valuations have been updated by the actuaries to assessthe assets and liabilities of the plans at 30 June 2006. Pension scheme assetsare stated at market value at 30 June 2006. At 30 June 2005 the deficit wasextrapolated from the December 2004 update using the same assumptions. The principal assumptions used for the purpose of the actuarial valuations wereas follows: 2006 2005 2005 30 June 30 June 31 December % % % ----------- ----------- -----------Discount rate 5.4 5.6 4.9Inflation rate 2.7 2.6 2.6Increases to pensions in payment 2.5-2.6 2.5-3.0 2.5-2.6Salary increases 3.3 3.2 3.2--------------------- ----------- ----------- ----------- The expected long-term rates of return on the main asset classes, net ofexpenses, set by management having regard to actuarial advice and relevantindices at 30 June 2006 were: 2006 2005 2005 30 June 30 June 31 December % % % ---------- ----------- -----------Equities 6.6 7.0 6.9Bonds 4.6 5.0 4.3Gilts and cash 3.6 4.0 3.6--------------------- ----------- ----------- ----------- On the above basis the amounts recognised on the consolidated balance sheet are: £ million £ million £ million --------- ----------- -----------Fair value of assets 251.8 210.8 245.7Present value of funded obligation (317.1) (281.2) (335.9)----------------------- --------- ----------- -----------Net liability recognised on the balancesheet (65.3) (70.4) (90.2)----------------------- --------- ----------- ----------- Costs recognised in the consolidated income statement are: 2006 2005 2005 First half First half Full year £ million £ million £ million ----------- ----------- -----------Current service cost 2.5 2.6 4.8Interest on obligation 8.1 7.7 15.3Expected return on plan assets (7.2) (6.4) (12.8)--------------------- ----------- ----------- ----------- Changes in the present value of the defined benefit obligation are: 2006 2005 2005 30 June 30 June 31 December £ million £ million £ millionOpening defined benefit obligation 335.9 274.4 274.4Current service cost 2.5 2.6 4.8Interest on obligation 8.1 7.7 15.3Plan participant contributions 0.8 0.8 2.0Change in actuarial estimates andassumptions (24.8) - 47.6Exchange differences (0.4) - 0.3Benefits paid (5.0) (4.3) (8.5)--------------------- ----------- ----------- -----------Closing defined benefit obligation 317.1 281.2 335.9--------------------- ----------- ----------- ----------- Changes in the fair value of plan assets are: 2006 2005 2005 30 June 30 June 31 December £ million £ million £ million ----------- ----------- -----------Opening fair value of plan assets 245.7 203.5 203.5Expected return on plan assets 7.2 6.4 12.8Excess of actual over expected returns - - 21.6Contributions by employer 3.3 4.5 14.1Contributions by employees 0.8 0.8 2.0Exchange differences (0.2) (0.1) 0.2Benefits paid (5.0) (4.3) (8.5)--------------------- ----------- ----------- -----------Closing fair value of plan assets 251.8 210.8 245.7--------------------- ----------- ----------- ----------- The experience adjustments arising on the plan assets and liabilities arereported in the consolidated statement of recognised income and expense and areas follows: 2006 2005 2005 First half First half Full year £ million £ million £ million --------- ----------- -----------Experience adjustments on plan liabilities 24.8 - (47.6)----------------------- --------- ----------- -----------Experience adjustments on plan assets - - 21.6----------------------- --------- ----------- ----------- 10. Reconciliation of net cash flow to movement in net debt Net Loans and cash/(overdraft) finance leases Net debt £ million £ million £ million ----------- ----------- -----------Balance at 31 December 2004 (9.6) (57.7) (67.3) Cash flow 4.4 1.5 5.9Exchange differences (1.4) (2.7) (4.1)--------------------- ----------- ----------- -----------Balance at 30 June 2005 (6.6) (58.9) (65.5)Cash flow 28.1 (8.7) 19.4Disposal - 0.7 0.7Exchange differences 0.8 (2.5) (1.7)--------------------- ----------- ----------- -----------Balance at 31 December 2005 22.3 (69.4) (47.1)Cash flow (6.5) 0.1 (6.4)Exchange differences 0.2 4.5 4.7--------------------- ----------- ----------- -----------Balance at 30 June 2006 16.0 (64.8) (48.8)--------------------- ----------- ----------- ----------- Net cash represents cash and cash equivalents less bank overdrafts. 11. Summary of movements in shareholders' equity 2006 2005 2005 First half First half Full year £ million £ million £ million ----------- ----------- -----------Opening shareholders' equity 151.7 166.7 166.7Profit for the period 10.8 11.5 13.0Exchange differences on net foreigncurrency investments (5.2) 1.8 5.7Income tax on foreign currency exchangedifferences - - 0.7Actuarial gain/(loss) (net) on definedbenefit pension schemes 24.8 - (26.0)Deferred tax on actuarial gain/(loss) (7.4) - 7.8Dividends paid (9.9) (9.9) (15.6)Share based payment 0.2 0.1 0.3Distribution to minority interest - - (0.9)--------------------- ----------- ----------- -----------Closing shareholders' equity 165.0 170.2 151.7--------------------- ----------- ----------- ----------- 12. Dividend payment The interim dividend of 3.69p per share will be paid on 26 October 2006 toshareholders on the register on 20 October 2006. Shares will be ex-dividend on18 October 2006. The interim report will be sent to all shareholders on the register. Copes areavailable at the Company's Registered Office, Clive House, 12-18 Queens Road,Weybridge, Surrey KT13 9XB or at www.ttelectronicsplc.com. This information is provided by RNS The company news service from the London Stock Exchange