Tt Electronics Regulatory News (TTG)

10 Sep 2007 07:01

TT electronics PLC10 September 2007 TTG.L TT ELECTRONICS PLC TT electronics is a world leader in sensor and electronic components technology and today announces its results for the six months to 30 June 2007. KEY POINTS New products to drive future growth • Group revenue from continuing operations of £270.5 million (2006: £272.3 million). • Operating profit from continuing operations was £18.9 million (2006: £18.2 million). • The disposal of the AEI Cables business increases the group's focus on being a supplier of higher margin, innovative components. • The group has acquired two new sensor technologies to broaden our product range in the automotive markets. • Earnings per share from trading were 7.4p (2006: 7.2p). • The interim dividend is maintained at 3.69p per share. Neil Rodgers, Chief Executive, said today: "I am pleased to report on a good first half result from TT electronics. "The disposal of AEI Cables is a further step in TT electronics' strategy tofocus on its higher margin businesses, maximise the exploitation of existingtechnologies and invest in advanced technology development to drive productinnovation. "We continue to win orders for sensors from the automotive markets where we haveestablished a leading market position, particularly in Europe. The new sensortechnologies we have recently acquired will broaden our product range. The groupis experiencing strong demand for its specialist thin film resistor productrange and for electronic components incorporating microcircuit technology. "Volume manufacture of several important new products is expected to commenceduring 2008. This, together with the further transfer of manufacturing to lowlabour cost economies, will continue to enhance margins and drive growth." Enquiries: TT electronics plc Tel: 01932 841310Neil Rodgers, Chief Executive Biddicks Tel: 020 7448 1000Zoe Biddick Highlights Half year Half year Full year 30 June 2007 30 June 2006 2006 £million £million £million ---------- ----------- --------Revenue 270.5 272.3 539.4-------------------------- ---------- ----------- --------Operating profit before exceptional item 18.9 18.2 36.5-------------------------- ---------- ----------- --------Profit before tax and exceptional item 16.0 15.8 31.2Exceptional item - - 8.8-------------------------- ---------- ----------- --------Profit before tax 16.0 15.8 40.0-------------------------- ---------- ----------- --------Loss from discontinued operation (14.5) (0.3) --------------------------- ---------- ----------- -------- Earnings per share from continuingoperations - basic 7.4p 7.2p 18.1p - diluted 7.3p 7.1p 17.9p - basic before exceptional item 7.4p 7.2p 12.4p-------------------------- ---------- ----------- --------Dividend per share to be paid 3.69p 3.69p 10.05p-------------------------- ---------- ----------- -------- Chairman's statement I am pleased to report that our trading results have improved compared with thefirst half of 2006 and this has been achieved after a reduction in revenue andoperating profit of £9.7 million and £0.7 million respectively arising from theweakness in foreign currencies, principally the US dollar against sterling,compared with a year ago. In the first half of 2007 revenue from continuing operations was £270.5 million(2006: £272.3 million) and operating profit was £18.9 million (2006: £18.2million), a growth in operating profit of 3.8 per cent; before the effect of thechanges in translation the growth was 7.7 per cent. Basic earnings per share from continuing operations were 7.4p (2006: 7.2p). Theinterim dividend is unchanged at 3.69p per share and will be paid on 25 October2007 to shareholders on the register on 19 October 2007. On 29 June 2007 the group announced its intention to exit from the AEI Cablesbusiness and this was sold on 3 September 2007, a further step in the strategyof transforming the group away from low margin, non-specialist products to asupplier of higher margin, innovative components. The consideration for the saleis £13.3 million, which is a discount of £13.2 million against the carryingvalue of the net assets sold. AEI Cables was incurring increasing levels oftrading losses and these, together with the discount and other costs of sale,are reported as a discontinued operation. This disposal will virtually eliminatethe group's exposure to the risk of volatile changes in the prices ofcommodities such as copper and was a lower cost alternative to closure. The merger of the principal UK pension schemes into one has now been completed;the pension scheme deficit has reduced, mainly through improved returns onassets and a higher discount rate. At 30 June 2007 the deficit was £33.0 million(June 2006: £65.3 million). Expenditure on property, plant and equipment has increased in the first half ofthe year to £15.0 million (2006: £9.2 million). This includes the expansion ofour sensor factory in eastern Germany and our electronic component factory inAustria together with expenditure on new plant, including equipment forincreasing the manufacture of Autopad(R) inductive sensors and for our expansionin China. This investment reflects the success of our electronic sensor andmicrocircuit products and will support the future growth of these businesses. Since the last Chairman's statement two non-executive Directors, Timothy Reedand Sir Laurence Magnus, have left the Board. On behalf of all colleagues, Ithank them for their contributions to the group's success and welcome JohnShakeshaft to the Board as an independent non-executive Director. I announced atthe last Annual General Meeting that, whilst remaining Executive Chairman, I wasreducing my involvement in the day to day running of the group. TT electronicshas a strong management team at both Board and senior management levels. I amconfident in their ability to move the group forward with its strategy. Our ongoing businesses are operating in markets which have been stable andcurrent trading is in line with expectations. John W NewmanExecutive Chairman7 September 2007 Business review The group has continued to focus on higher margin specialist electronic andelectrical products with the planned exit from the commodity cables business.The sale of the AEI Cables business was completed on 3 September 2007. The group's revenue for the six months to June 2007 was £270.5 million (2006:£272.3 million) and operating profit was £18.9 million (2006: £18.2 million).The result of the cables business is reported as a discontinued operation andincludes a provision of £13.7 million for the loss on sale. New product development and the identification of new technologies remain key tothe success of the group. In the past six months we completed the acquisition oftwo new sensor technologies to supplement our growth in global automotivemarkets. Total group - sector analysis 2007 2006 2006 First half First half Full year £million £million £million -------- --------- ----------Revenuesensors and electronic systems 90.7 99.0 184.8electronic components 67.5 71.2 139.9electronic manufacturing services 44.5 33.0 72.1------------------------------ -------- --------- ----------Electronic sector 202.7 203.2 396.8------------------------------ -------- --------- ----------power systems 26.2 29.0 63.1power transmission 41.6 40.1 79.5------------------------------ -------- --------- ----------Electrical sector 67.8 69.1 142.6------------------------------ -------- --------- ----------Group total 270.5 272.3 539.4------------------------------ -------- --------- ----------Discontinued operation 26.8 29.5 60.9------------------------------ -------- --------- ----------Operating profit (1)sensors and electronic systems 5.5 5.7 11.6electronic components 4.6 4.6 11.4electronic manufacturing services 1.9 2.0 1.3------------------------------ -------- --------- ----------Electronic sector 12.0 12.3 24.3------------------------------ -------- --------- ----------power systems 1.8 2.0 5.4power transmission 5.1 3.9 6.8------------------------------ -------- --------- ----------Electrical sector 6.9 5.9 12.2------------------------------ -------- --------- ----------Group total 18.9 18.2 36.5------------------------------ -------- --------- ---------- (1) Operating profit is for continuing operations and is stated before theexceptional item. Sensors and electronic systems 2007 2006 2006 First half First half Full year £million £million £million------------------------------ -------- --------- ----------Revenue 90.7 99.0 184.8Operating profit 5.5 5.7 11.6------------------------------ -------- --------- ---------- Revenues were affected by the weakness of the USA automotive market and thecessation of our climate systems business in France during early 2006. However,demand for sensors from our European customers remained strong throughout thefirst half. Volume production on the first Autopad(R) inductive products doesnot commence until 2008. The programme has been affected by a delay to thecompletion of the ASIC (application specific integrated circuit). However thisis now resolved. The first orders have been received from local Indianautomotive manufacturers for sensors to be produced by our Indian joint venture. Electronic components 2007 2006 2006 First half First half Full year £million £million £million -------- --------- ----------Revenue 67.5 71.2 139.9Operating profit 4.6 4.6 11.4------------------------------ -------- --------- ---------- Revenue is down on the older resistive products particularly those used in theUSA automotive market. The strong demand for our specialist tanfilm resistorproduct range has continued throughout this period and our operation in CorpusChristi, USA has been running at full capacity. New equipment is being installedlater this year which will provide further capacity to satisfy this demand.Microcircuit revenues have increased mainly due to demand from the defence andaerospace markets. In the automotive sector a number of new products are beingdeveloped for launch in 2008 and beyond. Electronic manufacturing services 2007 2006 2006 First half First half Full year £million £million £million -------- --------- ----------Revenue 44.5 33.0 72.1Operating profit 1.9 2.0 1.3------------------------------ -------- --------- ---------- The integration of Apsco Inc (now renamed TT Apsco Inc) into the group has beensuccessfully completed and new senior management appointed. Demand in NorthAmerica has been weaker than expected and new programmes slower to start,leading to lower than anticipated profitability. The introduction of new productinto our Malaysian facility, following the closure of the Blyth factorycompleted last year, has suffered initial problems. Additional costs such aspremium prices for materials and airfreight have been incurred, depressing themargin. Production is now running smoothly and improved margins are expected tobe achieved. The operation in China has continued to grow. Electrical 2007 2006 2006 First half First half Full year £million £million £million -------- --------- ---------Revenuepower systems 26.2 29.0 63.1power transmission 41.6 40.1 79.5------------------------------ -------- --------- ---------- 67.8 69.1 142.6------------------------------ -------- --------- ----------Operating profitpower systems 1.8 2.0 5.4power transmission 5.1 3.9 6.8------------------------------ -------- --------- ---------- 6.9 5.9 12.2------------------------------ -------- --------- ---------- The power systems operation in Mexico continues to perform well in both theexport and domestic Mexican markets. The electrical connections systems businesshas benefited from strong demand for specialist system assemblies for thedefence market. New product ranges for military connectors are being introducedwhich are expected to generate further growth in 2008 and beyond. The electrical accessories operation had a slow start to the year following thefactory move, production efficiency has now improved to normal levels. Discontinued operation The sale of the AEI Cables business was completed on 3 September 2007 and isreported as a discontinued operation. The carrying value of the net assets soldis estimated at £26.5 million, and the consideration £13.3 million. The loss onsale, together with other costs of sale and trading losses amount to £14.5million. AEI Cables was the last significant business in the group producing acommodity product. Dividends and earnings per share The interim dividend is unchanged at 3.69p per share. Basic earnings per sharefrom continuing operations has improved to 7.4p (2006: 7.2p). Treasury and borrowings There has been an increase in the requirement for working capital of £7.8million (2006: £9.8 million). This was principally in inventory and debtors andwas due in part to the cost of copper metal, which despite falling to £2,700 perton in the first quarter, then increased to over £3,800 per ton at the end ofJune. This combined with the payment of the final dividend of £9.9 million andthe special cash contribution of £5.5 million to the pension fund has resultedin net borrowings increasing to £83.5 million from £71.0 million at December2006. Gearing at the end of June 2007 was 51 per cent (December 2006: 45 percent). The net effect of changes in the exchange rates of foreign currencies used totranslate the results is a reduction in revenue and operating profit of £9.7million and £0.7 million respectively. This is mainly due to the weaker USdollar. Pensions The main pension schemes in the UK have now been merged. The deficit has reducedto £33.0 million from £72.6 million at the end of 2006. This reduction isprimarily due to an increase in the discount rate to 5.9 per cent from 5.3 percent, additional cash contributions of £5.5 million and better than expectedreturns on assets. Outlook The group's strategy is to develop our worldwide businesses to enhance ourposition as a supplier of specialist products. New technologies and products are key to TT electronics' future growth. Thevolume manufacture of new products for a number of new programmes will commenceduring 2008. The markets in which we operate are stable and therefore we anticipate littlechange to current trading conditions during the second half of 2007. Neil A Rodgers Roderick W WeaverChief Executive Finance Director7 September 2007 7 September 2007 Consolidated income statementfor the six months ended 30 June 2007 2007 2006 2006 First half First half Full year Note £million £million £million ----- --------- --------- --------- Continuing operationsRevenue 2 270.5 272.3 539.4--------------------------- ----- --------- --------- ---------Operating profit before exceptionalitem 3 18.9 18.2 36.5Exceptional item 4 - - 8.8--------------------------- ----- --------- --------- ---------Operating profit 18.9 18.2 45.3Finance income 5 8.1 7.2 14.0Finance costs 5 (11.0) (9.6) (19.3)--------------------------- ----- --------- --------- ---------Profit before taxation 16.0 15.8 40.0Taxation 6 (4.6) (4.7) (12.0)--------------------------- ----- --------- --------- ---------Profit for the period from continuingoperations 11.4 11.1 28.0--------------------------- ----- --------- --------- ---------Discontinued operationLoss for the period from discontinuedoperation 7 (14.5) (0.3) ---------------------------- ----- --------- --------- ---------Profit/(loss) for the periodattributable to shareholders (3.1) 10.8 28.0--------------------------- ----- --------- --------- --------- Earnings per share 8From continuing and discontinuedoperations - basic (2.0)p 7.0p 18.1p - diluted (2.0)p 6.9p 17.9pFrom continuing operations - basic 7.4p 7.2p 18.1p - diluted 7.3p 7.1p 17.9p--------------------------- ----- --------- --------- ---------Dividend per share to be paid 3.69p 3.69p 10.05p--------------------------- ----- --------- --------- --------- Consolidated balance sheetat 30 June 2007 2007 2006 2006 30 June 30 June 31 December Note £million £million £million ------ ---------- --------- ---------ASSETSNon-current assetsProperty, plant and equipment 106.5 111.0 108.6Goodwill 51.9 49.1 53.1Other intangible assets 16.1 16.0 16.0Deferred tax assets 8.6 22.6 21.0------------------------ ------ ----------- ---------- ---------Total non-current assets 183.1 198.7 198.7------------------------ ------ ----------- ---------- ---------Current assetsInventories 91.0 93.9 99.8Trade and other receivables 95.8 107.9 104.6Financial derivatives 0.1 0.4 0.6Cash and cash equivalents 5.0 22.2 9.5------------------------ ------ ----------- ---------- ---------Total current assets 191.9 224.4 214.5------------------------ ------ ----------- ---------- ---------Assets of disposal group heldfor sale 7 20.6 - ------------------------- ------ ----------- ---------- ---------Total assets 395.6 423.1 413.2------------------------ ------- ----------- ---------- ---------LIABILITIESCurrent liabilitiesShort-term borrowings 21.5 8.5 11.5Financial derivatives 0.3 0.1 -Trade and other payables 89.4 99.0 87.3Current tax payable 3.0 7.1 1.3Provision for liabilities 0.4 1.2 0.9------------------------ ------- ----------- ---------- ---------Total current liabilities 114.6 115.9 101.0------------------------ ------- ----------- ---------- ---------Non-current liabilitiesLong-term borrowings 67.0 62.5 69.0Deferred tax provision 5.3 5.8 5.4Pensions and other postemployment benefits 9 33.0 65.3 72.6Other provisions 0.7 0.9 0.7Other non-current liabilities 6.2 7.7 7.5------------------------ ------- ----------- ---------- ---------Total non-current liabilities 112.2 142.2 155.2------------------------ ------- ----------- ---------- ---------Liabilities of disposal groupclassified as held for sale 7 5.4 - ------------------------- ------- ----------- ---------- ---------Total liabilities 232.2 258.1 256.2------------------------ ------- ----------- ---------- ---------Net assets 163.4 165.0 157.0------------------------ ------- ----------- ---------- ---------EQUITYShare capital 38.7 38.7 38.7Share options 0.9 0.7 0.8Hedging and translation reserve (7.4) (1.7) (6.1)Retained earnings 129.2 125.3 121.6Minority interests 2.0 2.0 2.0---------------------- --------- ----------- ---------- ---------Total equity 11 163.4 165.0 157.0---------------------- --------- ----------- ---------- --------- Consolidated statement of recognised income and expensefor the six months ended 30 June 2007 2007 2006 2006 First half First half Full year £million £million £million -------- --------- ----------Profit/(loss) for the period (3.1) 10.8 28.0Exchange differences on net foreigncurrency investments (1.2) (5.2) (9.6)Actuarial gain on defined benefitpension schemes 33.0 24.8 3.2Deferred tax on pension deficit movement (12.5) (7.4) (1.0)------------------------------ -------- --------- ----------Total recognised income and expense forthe period 16.2 23.0 20.6------------------------------ -------- --------- ---------- Consolidated cash flow statementfor the six months ended 30 June 2007 2007 2006 2006 First half First half Full year Note £million £million £million ------ -------- --------- ---------Operating activitiesProfit/(loss) for the periodattributable to shareholders (3.1) 10.8 28.0Adjustments forFinance costs 3.1 2.5 5.7Taxation 4.6 4.5 11.3Depreciation and amortisation 15.6 16.0 32.3Gain on disposal of property, plant andequipment (0.1) (2.0) (2.0)Provision against assets held for sale 7 13.5 - -Pension curtailment gain (1.1) - (8.8)Other non cash items (net) - (0.2) 0.4Movement in working capital (7.8) (9.8) (21.4)Additional payments to pension funds (6.3) (0.8) (7.0)Exchange differences (1.0) (4.4) (6.4)---------------------------- ------ -------- --------- ---------Cash generated from operations 17.4 16.6 32.1Tax paid (2.9) (2.0) (7.0)---------------------------- ------ -------- --------- ---------Net cash from operating activities 14.5 14.6 25.1---------------------------- ------ -------- --------- --------- Cash flows from investing activitiesPurchase of property, plant and equipment (15.0) (9.2) (20.6)Purchase of patents (0.6) - -Proceeds from sale of property, plantand equipment and grants received 3.3 4.4 7.1Development expenditure (4.4) (4.9) (8.6)Acquisition of subsidiary net of cashacquired - - (14.7)---------------------------- ------ -------- --------- ---------Net cash used in investing activities (16.7) (9.7) (36.8)---------------------------- ------ -------- --------- --------- Cash flows from financing activitiesNet interest paid (2.0) (1.4) (3.8)Change in loans and finance leaseliabilities (0.1) (0.1) 10.0Dividends paid (9.9) (9.9) (15.6)---------------------------- ------ -------- --------- ---------Net cash used in financing activities (12.0) (11.4) (9.4)---------------------------- ------ -------- --------- --------- Net decrease in cash and cashequivalents 10 (14.2) (6.5) (21.1)Cash and cash equivalents at beginningof period 0.7 22.3 22.3Exchange difference 0.1 0.2 (0.5)---------------------------- ------ -------- --------- ---------Cash and cash equivalents at end ofperiod 10 (13.4) 16.0 0.7---------------------------- ------ -------- --------- --------- Cash and cash equivalents compriseCash and cash equivalents 5.0 22.2 9.5Bank overdrafts (18.4) (6.2) (8.8)---------------------------- ------ -------- --------- --------- 10 (13.4) 16.0 0.7---------------------------- ------ -------- --------- --------- Notes to the interim financial statements 1. Basis of accounting The interim financial statements for the half year to 30 June 2007 areunaudited. They have been prepared under International Financial ReportingStandards (IFRS), as adopted by the European Union, in accordance with theaccounting policies set out in the Annual Report for 2006. On 29 June 2007 the group announced its intention to exit from the AEI Cablesbusiness. This business meets the criteria of IFRS 5 'Non-current assets heldfor sale and discontinued operations' requiring it to be classified as adiscontinued operation. The full year figures in this report are derived from the statutory accounts,restated as appropriate to classify AEI Cables as a discontinued operation. Thestatutory accounts on which the auditors gave an unqualified report have beenfiled with the Registrar of Companies. These interim statements comply with IAS 34 'Interim Financial Reporting' andwere approved by the Directors on 7 September 2007. 2. Analysis of revenue - continuing operations 2007 2006 2006 First half First half Full year £million £million £million --------- --------- ---------By business sectorElectronic- sensors and electronic systems 90.7 99.0 184.8- electronic components 67.5 71.2 139.9- electronic manufacturing services 44.5 33.0 72.1------------------------- ---------- ---------- ----------Total electronic 202.7 203.2 396.8------------------------- ---------- ---------- ----------Electrical- power systems 26.2 29.0 63.1- power transmission 41.6 40.1 79.5------------------------- ---------- ---------- ----------Total electrical 67.8 69.1 142.6------------------------- ---------- ---------- ----------Total revenue 270.5 272.3 539.4------------------------- ---------- ---------- ---------- By destinationUnited Kingdom 56.4 58.8 115.7Rest of Europe 102.2 103.9 200.9North America 72.6 70.6 145.6Rest of the World 39.3 39.0 77.2------------------------- ---------- ---------- ----------Total revenue 270.5 272.3 539.4------------------------- ---------- ---------- ---------- The group's primary reporting format is by business segments and its secondaryformat is by geographical segments. 3. Analysis of operating profit before exceptional item 2007 2006 2006 First half First half Full year £million £million £million --------- --------- ---------By business sectorElectronic- sensors and electronic systems 5.5 5.7 11.6- electronic components 4.6 4.6 11.4- electronic manufacturing services 1.9 2.0 1.3------------------------- ---------- ---------- ----------Total electronic 12.0 12.3 24.3------------------------- ---------- ---------- ----------Electrical- power systems 1.8 2.0 5.4- power transmission 5.1 3.9 6.8------------------------- ---------- ---------- ----------Total electrical 6.9 5.9 12.2------------------------- ---------- ---------- ----------Operating profit before exceptional item 18.9 18.2 36.5------------------------- ---------- ---------- ---------- 4. Exceptional item 2007 2006 2006 First half First half Full year £million £million £million --------- --------- ---------Curtailment of pension scheme benefits - - 8.8--------------------------- --------- --------- --------- The pensionable salaries of members of the UK defined benefit schemes are frozenfor three years. The consequent reduction in the liabilities of the schemes wasrecognised in the actuarial valuations of the schemes at 31 December 2006. 5. Finance costs - net 2007 2006 2006 First half First half Full year £million £million £million --------- --------- ---------Continuing operationsInterest payable (2.4) (2.1) (4.3)Unwinding of the discount on pension schemeliabilities (8.6) (7.5) (15.0)---------------------------- --------- --------- ---------Finance costs (11.0) (9.6) (19.3)---------------------------- --------- --------- ---------Interest receivable 0.3 0.6 0.8Expected return on pension scheme assets 7.8 6.6 13.2---------------------------- --------- --------- ---------Finance income 8.1 7.2 14.0---------------------------- --------- --------- ---------Finance costs - net (2.9) (2.4) (5.3)---------------------------- --------- --------- --------- 6. Taxation Taxation on the profit for the half year to 30 June 2007 has been based on anestimated effective rate of 29 per cent for the year ending 31 December 2007. 7. Discontinued operation On 29 June 2007 the group announced its intention to exit from the AEI Cablesbusiness. This business meets the criteria of IFRS 5 'Non-current assets heldfor sale and discontinued operations' as a disposal group held for sale andtherefore the trading of AEI Cables has been reported as a discontinuedoperation in the consolidated income statement and its assets and liabilitieshave been classified as held for sale on the consolidated balance sheet. Thesale was completed on 3 September 2007. At 30 June 2007 the amounts included inthe financial statements in respect of AEI Cables are: 2007 2006 2006 First half First half Full year £million £million £million -------- --------- ---------Revenue 26.8 29.5 60.9---------------------------- -------- --------- ---------Operating loss (1.7) (0.4) (0.3)Finance income 0.5 0.6 1.3Finance costs (0.7) (0.7) (1.7)---------------------------- -------- --------- ---------Loss before taxation (1.9) (0.5) (0.7)Taxation - 0.2 0.7---------------------------- -------- --------- ---------Loss from trading after taxation (1.9) (0.3) -Pension curtailment arising from exit 1.1 - -Provision against assets (13.5) - -Other disposal costs (0.2) - ----------------------------- -------- --------- ---------Loss for the period from discontinuedoperation (14.5) (0.3) ----------------------------- -------- --------- --------- 2007 30 June £million -------- --------- ---------Assets of disposal group held for sale:Plant and equipment 1.5Inventories 17.3Trade and other receivables 15.3---------------------------- -------- --------- --------- 34.1Provision against assets (13.5)---------------------------- -------- --------- ---------Assets of disposal group held for sale 20.6---------------------------- -------- --------- ---------Liabilities of disposal group classified asheld for sale:Trade and other payables 5.4---------------------------- -------- --------- --------- 2007 2006 2006 First half First half Full year £million £million £millionCash flowsNet cash from operating activities 2.1 (3.0) (10.1)Net cash used in investing activities (0.3) 0.8 0.5Net cash used in financing activities (0.1) (0.1) (0.3)---------------------------- -------- --------- --------- 8. Earnings per share From continuing and discontinued operations: 2007 2006 2006 First half First half Full year pence pence pence Basic (2.0) 7.0 18.1Diluted (2.0) 6.9 17.9--------------------------- --------- --------- --------- 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: 2007 2006 2006 First half First half Full Year £million £million £million -------- --------- ---------Profit/(loss) for the period attributable toshareholders:Earnings basic and diluted (3.1) 10.8 28.0---------------------------- -------- --------- --------- million million millionWeighted average number of shares in issue:Basic 154.8 154.8 154.8Adjustment for share options 1.7 1.5 1.4---------------------------- -------- --------- ---------Diluted 156.5 156.3 156.2---------------------------- -------- --------- --------- From continuing operations: 2007 2006 2006 First half First half Full year pence pence pence ---------------------------- -------- --------- ---------Basic 7.4 7.2 18.1Diluted 7.3 7.1 17.9---------------------------- -------- --------- --------- £million £million £millionProfit/(loss) for the period attributable to shareholders (3.1) 10.8 28.0Add loss for the period from discontinued operation 14.5 0.3 ----------------------------- -------- --------- ---------Earnings basic and diluted fromcontinuing operations 11.4 11.1 28.0---------------------------- -------- --------- --------- The denominators are the same as shown above for basic and diluted earnings pershare. 9. Retirement benefit plans Following scheme mergers in 2006 and 2007, the group now operates two definedbenefit plans in the UK, both of which are closed to new members. It alsooperates defined benefit plans in the United States and Japan. Actuarialvaluations of the plans were carried out by independent qualified actuariesbetween 2002 and 2005 principally using the projected unit credit method. Theseactuarial valuations have been updated by the actuaries to assess the assets andliabilities of the plans at 30 June 2007. Pension scheme assets are stated atmarket value. The principal assumptions used for the purpose of the actuarial valuations wereas follows: 2007 2006 2006 30 June 30 June 31 December % % % --------- --------- ---------Discount rate 5.9 5.4 5.3Inflation rate 3.2 2.7 2.9Increases to pensions in payment 2.5-3.2 2.5-2.6 2.5-2.9Salary increases for 3 years - 3.3 -Salary increases thereafter 3.7 3.3 3.4------------------------- --------- --------- --------- 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 2007 were: 2007 2006 2006 30 June 30 June 31 December % % % --------- --------- ---------Equities 7.0 6.6 6.8Bonds 4.5 4.6 4.3Gilts and cash 4.0 3.6 3.8------------------------- --------- --------- --------- The mortality tables applied by the actuaries at 30 June 2007 and 31 December2006 were PA92MC + two years. On the above basis the amounts recognised on the consolidated balance sheet are: £million £million £million --------- --------- ---------Fair value of assets 286.9 251.8 272.1Present value of funded obligation (319.9) (317.1) (344.7)------------------------- --------- --------- ---------Net liability recognised on the balance sheet (33.0) (65.3) (72.6)------------------------- --------- --------- --------- Costs recognised in the consolidated income statement are: 2007 2006 2006 First half First half Full year £million £million £million --------- --------- ---------Current service cost 1.7 2.5 4.4Interest on obligation 9.1 8.1 16.4Expected return on plan assets (8.3) (7.2) (14.5)------------------------- --------- --------- --------- Changes in the present value of the defined benefit obligation are: 2007 2006 2006 First half First half Full year £million £million £million --------- --------- ---------Opening defined benefit obligation 344.7 335.9 335.9Current service cost 1.7 2.5 4.4Interest on obligation 9.1 8.1 16.4Plan participant contributions 0.7 0.8 1.5Curtailment (1.1) - (8.8)Change in actuarial estimates and assumptions (28.5) (24.8) 6.2Exchange differences - (0.4) (0.8)Benefits paid (6.7) (5.0) (10.1)--------------------------- --------- --------- ---------Closing defined benefit obligation 319.9 317.1 344.7--------------------------- --------- --------- --------- Changes in the fair value of plan assets are: 2007 2006 2006 First half First half Full year £million £million £million --------- --------- ---------Opening fair value of plan assets 272.1 245.7 245.7Expected return on plan assets 8.3 7.2 14.5Excess of actual over expected returns 4.5 - 9.4Contributions by employer 8.0 3.3 11.4Contributions by employees 0.7 0.8 1.5Exchange differences - (0.2) (0.3)Benefits paid (6.7) (5.0) (10.1)------------------------- --------- --------- ---------Closing fair value of plan assets 286.9 251.8 272.1------------------------- --------- --------- --------- The experience adjustments arising on the plan assets and liabilities arereported in the consolidated statement of recognised income and expense and areas follows: £million £million £million --------- --------- ---------Experience adjustments on plan liabilities 28.5 24.8 (6.2)Experience adjustments on plan assets 4.5 - 9.4------------------------- --------- --------- ---------Total actuarial gain 33.0 24.8 3.2------------------------- --------- --------- --------- 10. Reconciliation of net cash flow to movement in net debt Net cash/ Loans and (overdraft) finance leases Net debt £million £million £million --------- ---------- ---------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)Cash flow (14.6) (10.1) (24.7)Exchange differences (0.7) 3.2 2.5------------------------- --------- ---------- ---------Balance at 31 December 2006 0.7 (71.7) (71.0)Cash flow (14.2) 0.1 (14.1)Exchange differences 0.1 1.5 1.6------------------------- --------- ---------- ---------Balance at 30 June 2007 (13.4) (70.1) (83.5)------------------------- --------- ---------- --------- Net cash represents cash and cash equivalents less bank overdrafts. 11. Summary of movements in shareholders' equity 2007 2006 2006 First half First half Full year £million £million £million -------- ---------- ---------Opening shareholders' equity 157.0 151.7 151.7Profit for the period (3.1) 10.8 28.0Exchange differences on net foreign currencyinvestments (1.2) (5.2) (9.6)Actuarial gain (net) on defined benefit pensionschemes 33.0 24.8 3.2Deferred tax on pension deficit movement (12.5) (7.4) (1.0)Dividends paid (9.9) (9.9) (15.6)Share based payment 0.1 0.2 0.3----------------------------- -------- ---------- ---------Closing shareholders' equity 163.4 165.0 157.0----------------------------- -------- ---------- --------- 12. Dividend payment The interim dividend of 3.69p per share will be paid on 25 October 2007 toshareholders on the register on 19 October 2007. Shares will be ex-dividend on17 October 2007. The interim report will be sent to all shareholders on the register. Copies 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