TT Electronics
Annual Report 2012

TT electronics plc Annual Report 2012

ACCELERATING
GLOBALISATION

IN THIS REPORT

Overview

Governance

Introduction
1 
2 
Chairman’s statement
3  Our performance in 2012

Our plan for growth

6  Our business model
8  Our markets
9  Our growth drivers
10  Our strategy
11  Our plans for 2013
12  Our business
14  Strategic case studies
20   Focusing on execution
22  Our KPIs

Our progress in 2012 

25  Operating review
34  Financial review
36  Principal risks and risk management process
40  Corporate responsibility

Introduction by the Chairman

43 
44  Board of Directors and Company Secretary
46  Operating Board
47  Corporate Governance
52  Nominations Committee
53  Audit Committee
55  Remuneration report
64  Other statutory disclosures

Financial statements

Group accounts
68 
69 

70  
71 

 Statement of Directors’ responsibilities
 Report of the Independent Auditors to the 
members of TT Electronics plc
 Consolidated income statement
  Consolidated statement of comprehensive 
income
 Consolidated balance sheet
 Consolidated statement of changes in equity
 Consolidated cash flow statement
 Notes to the consolidated financial statements

72 
73 
74 
75 
Company accounts
111  Company balance sheet
112  Notes to the Company financial statements

Shareholder information

117  Five-year record
118  Shareholder information

Online report

Please see www.ttelectronics.com for additional  
content including an introductory video with the  
Group Chief Executive.

www.ttelectronics.com

Cautionary statement on forward-looking statements and related information

This document contains a number of forward-looking statements relating to the Group/Company with respect to, amongst 
others, the following: financial conditions; results of operations; economic conditions in which the Group/Company 
operates; the business of the Group/Company; and management plans and objectives. The Group/Company considers 
any statements that are not historical facts as ”forward-looking statements”. They relate to events and trends that are 
subject to risks and uncertainties that could cause the actual results and financial position of the Group/Company to differ 
materially from the information presented in the relevant forward-looking statement. When used in this document the 
words ”estimate”, ”project”, ”intend”, ”aim”, ”anticipate”, ”believe“, ”expect”, ”should” and similar expressions, as they relate to the 
Group/Company or the management of it, are intended to identify such forward-looking statements. Readers are cautioned 
not to place undue reliance on these forward-looking statements which speak only as at the date of this document. 
Neither the Group/Company nor any member of the Group’s/Company’s Board or management undertake any obligation 
publicly to update or revise any of the forward-looking statements, whether as a result of new information, future events 
or otherwise, save in respect of any requirement under applicable laws, the Listing Rules, and other regulations.

 
TT electronics plc 
Annual Report 2012

1

Directors’ report – Overview
INTRODUCTION

DRIVING TT ELECTRONICS

FORWARD

At TT electronics, we combine core competencies 
in materials science and electronic and mechanical 
engineering with a deep understanding of our 
customers’ needs to develop innovative products. 
We support customers in six core markets – 
Transportation, Industrial, Energy, Medical, Defence 
and Aerospace – through the design and delivery of 
high performing electronic components and systems.

In 2012 the Group made further progress in a difficult market 
environment, improving operating margins to 6.2 per cent 
and ending the year with net cash of £46.7 million. 
Following the successful sale of the Secure Power division 
we are now focused on our core electronics businesses, 
supplementing our organic development with a small 
acquisition in December 2012; the Group’s first since 2008. 
In addition, to improve the cost base and our ability to serve 
our customers, we significantly strengthened our global 
footprint, including scaling our facilities in Mexico and 
Romania, acquiring 100 per cent of our joint venture in India 
and opening a new engineering centre in Bangalore.

During 2013 we will continue to focus where we can create 
differentiation and value for all stakeholders. The deployment 
of electronic systems continues to increase in our core markets 
as our customers’ products become more sophisticated, 
delivering greater functionality, safety and performance. This is 
leading to increasing opportunities for the Group overall, 
particularly in the area of sensing and control. We will combine 
our existing capabilities through the creation of a Sensing and 
Control business, and focus investment to capture these 
growth opportunities.

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2

TT electronics plc 
Annual Report 2012

Directors’ report – Overview
CHAIRMAN’S STATEMENT

I am pleased to report that TT electronics has delivered a resilient set 
of results for 2012 with continued progress towards its margin targets 
against the background of challenging market conditions. Although 
revenue from continuing operations decreased by 4.1 per cent at 
constant exchange rates, to £476.9 million (2011: £509.6 million) 
operating profit before exceptional items increased to £29.4 million 
(2011: £28.7 million) with the operating profit margin increasing to 
6.2 per cent (2011: 5.6 per cent) as a result of our focus on product 
management and a series of self-help measures to optimise the cost 
base. Headline earnings per share was 12.6 pence (2011: 11.4 pence), 
an increase of 10.5 per cent. 

During the year we successfully concluded the sale of the Secure 
Power division, with the disposal of Dale Power Solutions Limited 
in July and the Ottomotores business in December for a total 
consideration of £39.6 million. These disposals were in line with the 
Group’s strategy of realising value from businesses that are non-core 
and mean that TT is now a focused electronics group. We supply 
leading manufacturers who operate in markets with strong underlying 
growth drivers where the pace of deployment of complex electronics 
is being driven by increasing demands in terms of performance 
and reliability.

We have made significant progress in improving our global operational 
footprint, with the expansion of the Mexicali facility in Mexico 
completed ahead of schedule. We established a new facility in 
Romania during the year and plan to take up additional space within 
this facility for all of our divisions. We opened a new purpose built 
facility in India and have opened a Group engineering centre in 
Bangalore which will be used to increase our engineering capacity 
and expertise within the Group. Furthermore, in February 2013 we 
completed the purchase of the minority interest in our Indian business 
from our commercial joint venture partner, to pursue growth 
opportunities in India.

In December, we acquired the majority of the UK business and assets 
of ACW Technology Limited for a consideration of £3.1 million together 
with the transfer of associated production from ACW’s facility in Zhuhai 
in China to our facility in Suzhou, China. This business provides 
manufacturing services to leading global customers in the defence, 
aerospace and industrial markets and strengthens our position as 
one of the largest aerospace and defence contract electronic 
manufacturers in the UK. We will continue to look for selective 
acquisitions to accelerate growth in our target markets and provide 
complementary technologies. 

The Group has further strengthened its cash position with net cash  
of £46.7 million at the end of 2012 compared to £15.2 million at the  
end of 2011, despite significant capital investment in the business.  
The Group’s main debt facility has been refinanced at a level of 
£70.0 million and secures the Group’s financing until August 2017,  
thus  facilitating our organic and inorganic expansion plans.

In view of the progress made in 2012 and the Board’s continued 
confidence in the Group’s financial position and future prospects, the 
Board is pleased to recommend a final dividend of 3.5 pence which, 
when combined with the interim dividend of 1.5 pence, gives a total 
of 5.0 pence per share for the full year (2011: 4.4 pence per share), 
representing an increase of 13.6 per cent. This will be paid on 30 May 
2013 to shareholders on the register at 17 May 2013.

“In 2012 we delivered improved 
profitability, strengthened our global 
presence and invested to ensure we 
have the right products for the future.  
We continue to see increasing 
opportunities in our core markets and 
we are responding by evolving the 
business to position the Group for 
success in 2013 and beyond.”

We have created a more focused electronics business. We see 
increasing opportunities as critical sensing and control electronics 
become more prevalent in our core markets. To address this we have 
proven technologies and a reputation for innovation, a global 
presence, longstanding customer relationships and, most of all, 
talented people. In order to drive value for all shareholders, we will  
be combining our existing capabilities to create a Sensing and Control 
business to capture these opportunities.

SEAN WATSON  
Chairman 

13 March 2013

Directors’ report – Overview
OUR PERFORMANCE IN 2012

HIGHLIGHTS

Resilient performance with operating profit 
margin increased by 60 bps

Wholly focused electronics business following 
disposal of Secure Power division

Strong cash generation resulting in closing 
net cash of £46.7 million

Accelerating globalisation with expansion in 
Mexico, Romania, India and China

Total dividend for 2012 increased by 13.6 per 
cent to 5.0 pence per share (2011: 4.4 pence)

Evolving business structure through creation 
of Sensing and Control business to address 
increasing market opportunities

TT electronics plc 
Annual Report 2012

3

REVENUE3

-4.1%1

2012

2011

0

100

200

300

400

500

600

OPERATING PROFIT MARGIN2,3

+60 bps

2012

2011

0

1

2

3

4

5

6

7

8

PROFIT BEFORE TAXATION2,3

+9.0%

2012

2011

0

5

10

15

20

25

30

NET CASH

+£31.5m

2012

2011

0

10

20

30

40

50

1 at constant exchange rates (-6.4% at actual exchange rates)
2 before exceptional items
3 continuing operations

£476.9m

£509.6m

6.2%

5.6%

£26.7m

£24.5m

£46.7m

£15.2m

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4

TT electronics plc 
Annual Report 2012

OUR PLAN 
FOR GROWTH

TT electronics plc 
Annual Report 2012

5

IN THIS SECTION

6  Our business model
8  Our markets
9  Our growth drivers
10  Our strategy
11  Our plans for 2013
12  Our business
14  Strategic case studies
20  Focusing on execution
22  Our KPIs

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6

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
OUR BUSINESS MODEL

1. WHAT OUR CUSTOMERS NEED
Our customers seek to differentiate themselves in competitive 
markets through the rapid development and manufacture 
of complex high performing products which rely on critical 
electronic sub-systems and components. They look to partner 
with trusted suppliers who understand their challenges, have 
a reputation for providing innovative and reliable technical 
solutions and who have the ability to support them globally.

3. HOW WE DEVELOP SOLUTIONS
Our engineering teams engage early in the design process using 
their experience to quickly understand the customer’s specific 
requirements, often working alongside their development 
teams. Using the Group’s core technologies and product 
platforms, our teams identify the best solution to meet or 
exceed the customer’s requirements in terms of performance, 
reliability, size and cost. 

2. HOW WE WORK WITH OUR CUSTOMERS 
We have sales teams, located in all major markets, that work 
with existing and new customers to understand their product 
development roadmaps. In some cases, these look forward for 
more than five years. By building close relationships at all levels, 
we identify where we can apply our engineering expertise to 
support our customers and help them realise their objectives. 
We always seek to identify specific requirements that span 
multiple customers in our target markets.

4. HOW WE DELIVER
Our geographical footprint means we are well-placed to provide 
manufacturing and after sales service and support in most 
major regions. We have a broad manufacturing presence, with 
our traditional locations in America, Europe and China being 
supplemented by the ongoing development of additional lower 
cost centres of excellence in Mexico, Romania and India. 

A SUMMARY OF THE INVESTMENT AND RETURN MODELS 
The Sensors and Components divisions create value by applying their electronic, mechanical engineering, materials and process 
expertise to develop complex electronic systems and components, in turn enabling their customers to deliver higher performing 
products. The IMS division leverages its global footprint, leading manufacturing capabilities and supply chain expertise to deliver 
world-class end-to-end manufacturing solutions. 

CUSTOMER 
ENGAGEMENT 
PHASE

Up to 2 years

DELIVERY  
PHASE
1 – 6+ years

SENSORS AND 
COMPONENTS

Multiple solutions based 
on core technologies 
developed for specific 
applications 

Manufacture and supply over programme life

INVESTMENT

RETURN

Continuous portfolio of core technologies developed through investment in R&D, licensing and acquisition

IMS

Engagement with global 
customers to develop 
manufacturing and supply 
chain solutions

Manufacture and supply over programme life

INVESTMENT

RETURN

Continuous investment in latest manufacturing capabilities and quality standards

TT electronics plc 
Annual Report 2012

7

OUR VISION
To be the preferred and most trusted provider of performance critical technology solutions 
to world leading manufacturers, embedding innovation in everything we do.

We are focused on markets where the pace of deployment of complex electronics is driven 
by increasing demands in terms of performance, regulation and growth and prosperity
DRIVERS

Performance

Regulation

Growth and prosperity

We have a clear strategy to create value for all stakeholders through innovation, 
focus and globalisation underpinned by our culture

Focus

STRATEGY

Innovation

Culture

Globalisation

We have priorities and plans in place…

EXECUTION

Targeting 
higher growth 
markets

Increasing 
customer 
intimacy

Differentiation 
through 
innovation

International 
expansion 
focused on 
emerging 
regions

Investment in 
people 

Total business 
excellence

Acquisitions

…and a clear set of key performance indicators to measure our progress

KPIs

Organic 
revenue 
growth

Operating 
profit  
margin

EPS  
growth

Relative  
total 
shareholder 
return

Operating 
cash 
conversion

Safety 
performance

Employee 
engagement

Training  
and 
communities

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8

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth
OUR MARKETS

TT supports customers in six core markets: 
Transportation, Industrial, Energy, Medical, 
Defence and Aerospace through the design 
and delivery of high performing electronic 
components and systems.

GROWTH MARKETS

6

1

7

5

4

3

2

Percentage of 2012 revenue:

1  Passenger car 
2  Industrial 
3  Defence and aerospace 
4  Other transportation 
5  Medical 
6  Telecom and computer 
7  Power generation 

41%
26%
12%
9%
7%
4% 
1%

TRANSPORTATION
Demand for transportation (from mass transit 
systems to passenger cars) is growing, 
particularly in emerging economies. 
Sophisticated electronics are being used to 
improve safety and performance and to 
reduce emissions to meet tighter regulations. 
Features introduced on premium cars are 
being deployed on other models and in 
other transportation segments.

ENERGY
There is significant investment in new 
technologies for energy generation to 
meet increasing demand and tighter 
environmental regulations, together with the 
deployment of new smart grid technologies 
to improve the efficiency of the distribution 
network and reduce energy consumption.

DEFENCE
Investment in growth areas including 
communications networks, unmanned 
vehicles and other mission critical electronic 
systems is forecast to continue.

INDUSTRIAL
Our focus is on growth segments within the 
industrial market where the deployment of 
electronics is being driven by the complexity 
of the equipment and processes being used. 
These segments include automation and 
control for manufacturing and process 
equipment, and test and measurement.

MEDICAL
Demand for medical equipment and devices 
is increasing as more individuals and 
governments are able to afford access to 
medical care, together with aging populations 
in many developed countries. Additionally, 
devices are becoming more sophisticated 
with increasingly complex electronic content.

AEROSPACE
Commercial airline production is forecast to 
grow due to globalisation and the continued 
development of emerging markets. 
High-performance electronics are reducing 
weight and improving efficiencies. Demand 
for satellites is increasing, driven by the growth 
of satellite based services.

TT electronics plc 
Annual Report 2012

9

Directors’ report – Our plan for growth
OUR GROWTH DRIVERS

PERFORMANCE

REGULATION

GROWTH AND PROSPERITY

Manufacturers are designing 
increasingly sophisticated products 
which rely upon more complex 
electronic systems to deliver increased 
functionality, efficiency and power. 
In addition, high reliability electro-
mechanical devices are replacing 
hydraulics to reduce weight and 
increase reliability. As new technology 
becomes available it is rapidly 
adopted and deployed, thereby 
fuelling further demand.

Regulation, stemming from safety 
and environmental concerns, drives 
change in many of the markets in 
which we operate. Climate change 
protocols are the catalyst for 
investment in new forms of energy 
generation and its efficient 
distribution and consumption. 
Emissions legislation is resulting 
in significant investment in the 
transportation and aerospace markets 
to improve performance, reduce 
weight and treat exhaust gases.

Rising living standards and increasing 
disposable income, particularly in 
certain emerging economies, is 
driving demand in the energy, 
medical, transportation and 
aerospace markets.

HOW WE HAVE 
RESPONDED

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with technological advancement and 
innovation in the medical market, has meant 
that patient monitoring devices are becoming 
more sophisticated with increasingly complex 
electronic content. 

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Medical Systems, Inc to design and manufacture 
innovative blood sensing oximetry technology 
that delivers accurate and reliable patient data 
in a non-invasive manner. This vital information 
enables clinicians to identify and react to 
instances of lowered brain oxygen saturation 
levels before the situation becomes critical.

environmental standards, such as EURO 6, are 
requiring electronic sensors and controls to 
operate to higher tolerances and accuracy levels, 
work reliably for longer durations and be smaller 
to improve performance and fuel efficiency. 
These standards and regulations are being 
replicated in emerging regions such that they 
become global standards.

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developed the second generation combined 
pressure and temperature sensor which will 
commence production in 2013. Closer tolerances 
and meeting the new environmental standards 
were key in developing this sensor, and we have 
already won a major order with BMW. See page 
31 for further details.

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in China are leading to greater demand for 
domestic and international air travel, with a 
projected 230 airports to be made available 
for commercial use by 2015, and with over 
5,000 new aeroplanes forecast from 2012–2031.

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the Nadcap (the National Aerospace and 
Defense Contractors Accreditation Program) 
aerospace and defence quality standards, has 
won new business with AVIAGE Systems 
who provide avionics solutions for the 
next-generation C919 Chinese-built commercial 
aeroplane which will commence production 
in 2013. See page 14 for further details.

Oximetry sensing solution

Combined temperature and pressure sensor

Shanghai Pudong Airport

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10

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
OUR STRATEGY

Our strategy is to create value for our stakeholders by delivering innovative solutions to world 
leading manufacturers in markets with good long-term growth dynamics. We will build upon our 
existing global footprint to ensure we continue to win new business in all major regions of the world. 
Our culture and values ensure a consistent set of standards and behaviours throughout the Group.

FOCUS

1 We are focused on the following higher growth 

markets: transportation, industrial, energy, medical, 
defence, aerospace and specific segments of the 
industrial market. Within these markets we are 
building our position with leading global players 
through our key account programme.

INNOVATION

2 We create high value differentiated solutions for 

challenging applications built upon our broad 
platform technologies, engineering expertise and 
our reputation in markets which value reliability. 
Our “trusted partner” status with major customers 
leads to early involvement in their development 
programmes and provides us with visibility of their 
future technology roadmaps.

GLOBALISATION

3 The Group is well positioned to benefit from 

globalisation with sales and engineering teams 
and leading international and domestic customers 
in all major regions. We are able to support our 
customers from manufacturing and service 
locations in the Americas, Europe and Asia.

CULTURE

4 We have a clear set of values that provide a 

framework within which we expect all of our 
employees to operate. We put the customer at the 
heart of everything we do, supported by teamwork, 
innovation and a passion for excellence; all 
underpinned by a commitment to invest in our 
employees and to act with integrity at all times.

PROGRESS

In 2012 we focused on strengthening our position in our target 
markets and these represented 96% of total revenue from 
continuing operations. The acquisition of ACW strengthened the 
Group’s presence in the aerospace, defence and industrial markets 
and, following the sale of our Secure Power division, the Group 
now comprises three electronics businesses.

PROGRESS

During the year, we invested in research and development to bring 
new products to market, increase our capabilities and improve 
efficiencies. In addition to servicing the local market, the new 
development centre in Bangalore will provide lower cost support to 
existing development centres in Europe, allowing their experienced 
engineers to focus on more complex tasks. In Texas, we invested in  
a new development laboratory to focus on next generation resistor 
technologies. In the UK, our Cambridge-based research team 
developed a new “SIMSPAD” sensor capable of accurately sensing 
targets through non-ferrous metal, thereby avoiding the need to 
create an aperture for a traditional sensor with the associated cost 
and engineering complexity.

PROGRESS

During the year, we expanded our footprint in Mexico, Romania, 
India and China improving both our cost base and our ability to 
support our customers in the US, Europe and Asia (see page 12 
for further details).

PROGRESS

In 2012, we launched our management development programme 
“Aspire” to ensure our managers have the skills that they need to 
lead the organisation. The programme included over 500 managers 
attending two-day face-to-face workshops at each major location. 
In addition, we conducted our second all-employee engagement 
survey and continued with our global recognition programme 
“Inspire” (see pages 23 and 40 for further details).

TT electronics plc 
Annual Report 2012

11

Directors’ report – Our plan for growth 
OUR PLANS FOR 2013

For additional information please see 

www.ttelectronics.com

Consistent with our strategy, we will continue to develop the Group’s position in target markets, 
building on current customer relationships and winning new accounts where we have a 
compelling offering. The deployment of more complex electronic systems in our core segments 
is driving increased demand for sensors and control electronics. We will combine our existing 
capabilities in these areas, through the creation of a Sensing and Control business, and focus 
investment to capture these growth opportunities.

Automotive, industrial, aerospace and medical 
products are becoming more sophisticated in 
response to demand for greater functionality, 
safety and performance. The increased use of 
complex electronic systems leads to the greater 
deployment of sensors and a requirement for 
intelligence and control. To build on our 
strengths in this area we intend to combine 
our sensor capabilities (which currently span 
our Sensors and Components divisions) with 
our complementary skills in the area of power 
management and control. The revised 
structure will facilitate a unified approach 
to key customers and better utilisation of 
sales resources. Together, the Sensing and 
Control business (which would have 
represented approximately 55 per cent of 
Group revenue in 2012) has the potential 
to deliver significant growth.

We will continue to invest in operational 
excellence scaling the Group’s manufacturing 
footprint in its lower cost locations, which will 
lead to an increasing proportion of production 
being undertaken in Mexico, India, China and 
Romania. In addition, we are adding capacity 
in our new engineering centre in Bangalore 
to supplement our traditional core 
engineering teams in Germany, Austria and 
the US, thereby enabling us to address 
many more opportunities.

We will continue to look for selective 
acquisitions to accelerate the Group’s growth 
in its target markets and provide 
complementary technologies.

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12

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
OUR BUSINESS

WELL  
POSITIONED  

TT is well positioned globally to meet our 
customers’ needs with sales, engineering and 
manufacturing in all major regions. We operate 
in 14 countries, have 20 manufacturing facilities 
and employ over 5,300 people.

Over the last 12 months, we have strengthened 
and developed our position in a number of 
key locations.

OUR PRESENCE

1

3

2

1  The Americas 
  Headcount 
2  Europe, Middle  
  East and Africa 
  Headcount  
3  Asia 
  Headcount  

1,771

2,307

1,313

MEXICO
We have two facilities in Mexico: Mexicali and 
Juarez. We have significantly expanded the 
Mexicali site and have taken additional space as 
production lines were relocated from other sites, 
including Boone, North Carolina. Additional space 
has also been taken in Juarez by the Sensors 
division to serve the North and South American 
markets. Total headcount in Mexico is 796 with 
manufacturing floor space of approximately 
220,000 square feet.

TT electronics plc 
Annual Report 2012

13

For additional information please see 

www.ttelectronics.com

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ROMANIA
We opened a facility in Timisoara in 2011 and 
have significantly ramped up operations during 
2012, with all three of our divisions planning to 
utilise this facility. Total headcount in Romania 
is 71, with manufacturing floor space of 
49,000 square feet. 

INDIA
We moved to a new purpose built facility in 
Manesar in the fourth quarter of 2012 and 
increased our manufacturing capacity from 
5,000 square feet to 35,000 square feet. We have 
also opened an engineering centre in Bangalore. 
Total headcount in India is 100.

CHINA
Our campus facility in Suzhou, established in 2000, 
is used by all three of our divisions and comprises 
manufacturing floor space of approximately 
325,000 square feet. Total headcount is 693.

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14

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
STRATEGIC CASE STUDY: FOCUS

WORLD 
CLASS 
QUALITY 
STANDARDS 

Our IMS facility in Suzhou was the first 
electronics manufacturing services provider 
in China, and one of only five in the world, to 
receive both Nadcap accreditations: AC7120 
for printed circuit board assembly and 
AC7121 for cable and harness assembly. 
Nadcap is a prestigious qualification from the 
global cooperative accreditation programme 
for aerospace and defence engineering. It is 
testament to the high quality standards 
that the site in Suzhou has to offer and has 
enabled the IMS facility to be selected for 
the AVIAGE SIVB project. 

TT electronics plc 
Annual Report 2012

15

CHINA

For additional information please see 

www.ttelectronics.com

CONTRACT WINNING 
ACCREDITATIONS 

Achieving Nadcap accreditation 
enabled our Suzhou facility to 
be selected to provide 
manufacturing services for the 
System Integrated Verification 
Bench (“SIVB”) for AVIAGE 
Systems, a joint venture 
between General Electric 
and the Aviation Industry 
Corporation of China, which 
provides fully integrated, open 
architecture avionics solutions 
for the next generation C919 
aircraft as well as other 
commercial aircraft 
programmes. 

The Nadcap team
The Suzhou team who worked 
on and successfully obtained 
the Nadcap accreditations 
for the facility. 

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16

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
STRATEGIC CASE STUDY: GLOBALISATION

MANUFACTURING 
EXCELLENCE 

Following an extensive review of sites available in Europe, the 
facility in Timisoara, Romania was selected as the Group’s best 
cost manufacturing centre for Europe. The area has a strong 
history in local electronics assembly with high calibre technical 
talent readily available. The facility is well designed, with 
opportunities for future expansion, and provides excellent 
logistical access to the existing European road network, 
thereby enabling TT to serve its customers in Western Europe.

GERMANY

AUSTRIA

TT electronics plc 
Annual Report 2012

17

For additional information please see 

www.ttelectronics.com

ROMANIA

SHARED FACILITY 

The Components division commenced production in the 
Romanian facility in 2012 with further product lines having 
subsequently been transferred to the site. We have also 
commenced the transfer of certain Sensors division product 
lines from Germany to Romania and are considering further 
expansion as all of our divisions seek to utilise this location. 
The new facility will enhance the profitability of certain 
core products.

The opening ceremony
The opening of the new manufacturing facility 
in Timisoara, Romania in October 2012. 
The facility will initially manufacture a range of 
advanced power modules, microelectronic 
devices and sensors for industrial and 
transportation applications.

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TIMISOARA

ROMANIA

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18

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
STRATEGIC CASE STUDY: INNOVATION AND CULTURE

ENGINEERING 
EXPERTISE 

Following an extensive selection process, we 
opened a new dedicated Group engineering 
centre in Bangalore, India, utilising a hybrid 
global in-house centre. The engineering 
centre will be used to increase the expertise 
and capacity of engineering knowledge 
within the Group and to drive growth 
through innovation. 

TT electronics plc 
Annual Report 2012

19

INDIA

For additional information please see 

www.ttelectronics.com

MANESAR

BANGALORE

ENGINEERING CENTRE 
BANGALORE 

Building on our existing presence 
for Sensors in Manesar, we have 
chosen Bangalore as the location 
for the engineering centre. 
The city has ready access to a 
pool of talented electronic and 
mechanical engineers and is 
known as the engineering 
and technology hub of India. 

Engineers from the centre 
are visiting our operations in 
Germany and Austria to 
undertake training and learn 
about TT’s engineering 
processes. This will enable 
them to return to India with the 
knowledge to support product, 
process and technological 
development initiatives across 
the Group. 

The addition of this facility 
complements our existing 
engineering expertise 
and further increases the 
global spread of our 
technical capabilities. 

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20

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
FOCUSING ON EXECUTION

Our priorities reflect our strategy and are designed to strengthen the Group.  
These priorities translate the strategy into deliverable plans within each division.

1 All of our internal resources are focused on 

TARGETING HIGHER 
GROWTH MARKETS

markets with good long-term growth drivers.

Product roadmaps are in place to ensure 
we develop the right technologies. 

Our sales teams have clear objectives to serve 
our customers, supported by manufacturing 
and customer service.

2 We aim to build long-term relationships with our 

INCREASING  
CUSTOMER INTIMACY

customers undertaking regular business reviews 
with them and constantly monitoring our quality, 
responsiveness and on time delivery 
performance. We invest in key account 
management, train our sales and applications 
engineering teams and constantly seek to make 
it easier for our customers to do business with us. 

3 We are investing in our capabilities in 

INTERNATIONAL 
EXPANSION

lower cost regions to underpin our plans 
for growth, improve our cost base and 
better support global customers.

OUR ACTIONS

– 

– 

 The truck and off-road market is a 
focus for the Sensors division with 
the deployment of sensors being 
driven by environmental 
standards. The proportion of the 
division’s revenue from this market 
increased to 20 per cent in 2012 
(2011: 16 per cent).
 The use of electronic systems 
continues to increase in the field 
of commercial aviation. In 2012 the 
Components division further 
strengthened its relationship with 
a major engine manufacturer 
supplying increasing volumes of a 
high performance engine control 
unit for existing programmes, 
whilst securing new design wins 

OUR ACTIONS

– 

– 

 We continued to work closely with 
our key customers to understand 
their technology roadmaps. These 
inform new product development, 
ensuring we have the correct 
portfolio for the future.
 We strengthened our Sensors 
division sales organisations in India 
and America to address identified 
growth opportunities.

– 

for use on engines to be deployed 
in the aviation market and in 
other segments.
 The IMS division targets the 
premium industrial, defence, 
aerospace and medical sectors, 
working with customers who 
require manufacturing partners 
that offer world class 
manufacturing capabilities, quality 
and flexibility. The division’s revenue 
from these segments in 2012 grew 
by around 7 per cent on a constant 
currency basis and comprised 
88 per cent of total sales. 

For more information  
go to pages 8 – 9

– 

 We invested in IT systems to 
improve our efficiency and 
the speed of response to our 
customers, measuring overall 
service delivery performance 
to validate progress.

OUR ACTIONS

– 

 We significantly developed our 
presence and capabilities in 
Mexico and Romania, improving 
our cost base and providing 
additional capacity to support 
new programmes.

– 

 In India we relocated our sensors 
business to a new larger facility, 
reflecting its growth in 2012 and 
future potential, and opened an 
engineering centre in Bangalore. 

For more information  
go to pages 12 – 13

4 We are focused on delivering products 

DIFFERENTIATION 
THROUGH INNOVATION

that our customers value, requiring  
a deep understanding of their needs, a 
commitment to the development of 
new technologies and clear long-term 
product development roadmaps.

5 Our people are key to our success. 

INVESTMENT  
IN PEOPLE

Developing the skills and capabilities of 
our talent base is a strategic imperative 
to deliver performance, innovation 
and sustainable growth.

6 Improving our operational performance 

TOTAL BUSINESS 
EXCELLENCE

in all areas is a key objective for the 
Group. We are doing this by embedding 
standard “best practices” across all sites, 
implementing Lean manufacturing 
techniques and driving continuous 
improvement programmes. 

ACQUISITIONS

7 We seek to acquire technologies and 

businesses that have a good fit with 
our strategy. These businesses will be 
technology leaders serving our target 
markets, will ideally accelerate our 
geographic growth, and will share 
our culture and values.

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TT electronics plc 
Annual Report 2012

21

OUR ACTIONS

– 

– 

 We increased the resource in the 
product management function 
in the Components division and 
introduced new tools to allow us 
to better manage our product 
portfolio.
 We established a dedicated 
research and development 
laboratory to further the pace 
of resistor technology 
developments. Adjacent to our 
volume production lines it will 
assist rapid technology transfer 
from proof of concept through 
to volume production, allowing 
us to respond quickly to customer 
demand.

OUR ACTIONS

– 

 We introduced a number of new 
products including: (i) a next 
generation intelligent power 
module combining higher power 
with increased control; (ii) a 
universal ASIC for cam and crank 
shaft applications that delivers 
higher reliability and greater 
accuracy in a smaller footprint; and 
(iii) a highly accurate and reliable 
“thermocouple” temperature 
sensor capable of operating at 
extremely high temperatures 
in excess of 1,000°C.

– 

 We launched the Group’s first 
multilingual management 
development programme – 
“Aspire”. As part of this programme 
over 500 supervisors and 
managers attended two-day 
management development 
programmes, complementing 
additional learning tools.

– 

– 

 Our divisions and local businesses 
focus on skills development 
pertinent to their needs, creating 
bespoke people learning and 
development programmes.
 During the year, all our facilities 
within the IMS division achieved 
the ISO 18001 accreditation.

For more information  
go to pages 40 – 41

Productive Maintenance (to 
increase equipment productivity); 
SMED (fast machine set-up); Poka 
Yoke (to ensure zero defect 
manufacturing); the increasing 
deployment of more efficient 
cellular manufacturing; and the 
application of Design for Six Sigma 
methodology to improve the way 
we develop new processes and 
products.

– 

 We acquired the minority 
shareholding in our Indian joint 
venture following the considerable 
progress made developing its 
presence in the sensor market and 
recognising the opportunities to 
grow the Group’s business in India.

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– 

– 

– 

 More than 500 employees were 
trained in Lean and Six Sigma 
methodologies.
 We deployed Lean Six Sigma 
champions to drive a change in 
the culture of the organisation.
 Active projects delivered 
generated efficiency gains. These 
included: the application of the Six 
Sigma DMAIC process (Define, 
Measure, Analyse, Improve, 
Control) to increase Overall 
Equipment Effectiveness, Total 

OUR ACTIONS

– 

– 

 We have a clear set of criteria 
against which we assess potential 
acquisition targets. During 2012 
we improved the quality of our 
opportunity pipeline, although 
it is not yet fully mature. 
 We engaged with a number 
of targets and completed the 
Group’s first acquisition since 2008, 
strengthening our position in key 
markets including commercial 
aerospace and defence with the 
acquisition of the majority of the 
business of ACW Technology 
Limited.

 
 
 
 
 
 
 
 
22

TT electronics plc 
Annual Report 2012

Directors’ report – Our plan for growth 
OUR KPIs

We use a number of financial and non-financial key performance  
indicators (KPIs), set in 2009, to measure our performance

FINANCIAL KPIs¹

ORGANIC REVENUE 
GROWTH

EARNINGS PER SHARE (EPS) 
GROWTH

OPERATING CASH 
CONVERSION

2012
2011
2010
Target – each year, to 2014

-4.3%

8.9%
23.5%

2012
2011
2010
Target

12.6p

11.4p
9.0p

2012
2011
2010
Target – each year, to 2012

Mid to high single digits

Year on year growth of 3%  
in excess of RPI

100%

RELATIVE TOTAL 
SHAREHOLDER RETURN 
(TSR)

70%

121%
169%

2012
2011

2010

3rd Quartile
3rd Quartile
1st Quartile

Target – in medium term

Above median performance against the 
FTSE SmallCap (excluding investment trusts)

Definition 
Organic revenue growth measures 
the change in revenue in the current 
year compared with the prior year 
from continuing Group operations. 
The effects of currency movements 
and acquisitions made during the 
current or prior financial year have 
been removed.
We have chosen this specific 
KPI because our strategy is to 
participate in markets which 
have the ability to provide us 
with growth opportunities.
Performance 
Organic revenue decreased in  
2012 reflecting the challenging 
macro-environment during the year 
(see page 26 for further details).

Definition 
Operating cash conversion is defined 
as cash generated from continuing 
operations after capital and 
development expenditure, 
expressed as a percentage of 
operating profit before exceptional 
items from continuing operations. 
Cash conversion is an important 
metric to track the management 
of our working capital and capital 
expenditure programme.
Performance 
The cash conversion target of 100 per 
cent was not met in 2012 due to 
longer supply chains on the business 
globally, the slowdown in activity 
levels in the second half of the year, 
the build up of inventory in the 
Sensors division to facilitate the move 
of production lines to Romania and 
higher levels of capital investment. 
Total cash conversion over the three 
years was 117 per cent.

Definition 
EPS growth is calculated as profit 
before exceptional items from 
continuing operations attributable to 
shareholders divided by the weighted 
average number of shares in issue 
during the year.
We have chosen EPS growth as 
a KPI as it is a standard metric to 
determine corporate profitability 
for shareholders. 
In addition, it is a measure used as 
one of the performance conditions in 
the Group’s Long Term Incentive Plan 
– see further details on page 57.
Performance 
EPS from continuing operations 
increased from 11.4 pence in 2011 
to 12.6 pence in 2012. The growth in 
EPS of 10.5 per cent was significantly 
ahead of the target. The EPS 
numbers shown above for 2010 
include earnings from the Secure 
Power division.
(Note – 2011 EPS as previously 
published: 13.3 pence, 
which included the Secure 
Power division).

Definition 
TSR is defined as capital growth 
plus dividends paid, assuming 
dividends are re-invested over 
the period using a three-month 
opening and closing average.
We believe that TSR is an important 
measure of the delivery of 
shareholder value as well as 
relative performance. In addition, 
it is a measure used as one of the 
performance conditions in the 
Group’s Long Term Incentive Plan 
– see further details on page 57.
Performance 
The Group’s TSR for 2012 was 3.6 per 
cent compared to the median of the 
comparator group of 18.8 per cent.

1 2010 financial KPI data is as previously 
published in the 2011 Annual Report

TT electronics plc 
Annual Report 2012

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FINANCIAL KPIs CONTINUED

NON-FINANCIAL KPIs2

OPERATING PROFIT 
MARGIN

SAFETY  
PERFORMANCE

EMPLOYEE  
ENGAGEMENT

2012
2011
2010

6.2%

5.6%
4.5%

2012
2011
2010

Target – in medium term

Target – in medium term

Group: 8-10%

Components: 10%

2012
2011
2010

5.7%

5.3%
2.7%

2012
2011
2010

Target – in longer term

Sensors: 10%

Target – in medium term

IMS: 6-8%

6.5%

6.1%
4.6%

6.0%

5.1%
4.7%

Definition 
Operating profit margin is defined as 
operating profit before exceptional 
items from continuing operations 
expressed as a percentage of revenue 
from continuing operations.
This KPI is appropriate because we are 
focused on increasing the proportion 
of revenue from those markets where 
we can make higher returns, in 
addition to delivering an improvement 
in operational efficiency.

Performance 
Operating margins improved 
in all businesses, with the IMS 
division reaching its target margin 
of 6–8 per cent.
(Note – 2011 Group operating 
margin as previously disclosed: 
5.8 per cent, which included the 
Secure Power division).

2012
2011
2010
Target – in medium term

3.6

5.1
8.5

2012
2011
2010
Target – in medium term

4.28

4.31
4.28

Lower than UK manufacturing 
benchmark, 2012: 5.4

Achieve UK mid-size manufacturing 
benchmark, 2012: 4.81

Definition 
We use our employee survey to 
measure how our employees feel 
about working in TT using a scale 
of 1 (low) to 7 (high) against eight 
factors. We benchmark the results 
against mid-size UK manufacturing 
companies as surveyed by Best 
Companies Ltd. 
Performance 
The response rate from this year’s 
survey was 58 per cent, compared 
to an industry benchmark of 
48.2 per cent.
The results show a slight drop in our 
overall engagement score against the 
backdrop of numerous challenges in 
the business during 2012. We will 
share the results of the latest survey 
with our employees and develop 
plans to deliver improvements.

and maintained our graduate and 
apprenticeship programmes at 
selected sites. During 2013 we will 
continue to encourage our 
employees to use the increasing 
range of training programmes 
on offer.
The 2010 engagement survey 
highlighted the need to increase our 
engagement with the communities 
in which we operate. A wide range 
of activities took place during the year 
as set out on pages 40 and 41.

Definition 
The number of occupational injuries 
resulting in three or more days 
absence per 1,000 employees.
This KPI allows us to compare 
our performance with that of our 
peers. We use a UK benchmark 
published by the Health and 
Safety Executive and apply this to all 
of our facilities worldwide reflecting 
our commitment to raise standards 
globally. 
Performance 
We are committed to targeting 
zero occupational injuries. The injury 
rate improved further during the year, 
with a 30 per cent reduction in 2012. 
This rate is significantly better than the 
UK manufacturing benchmark.

TALENT AND DEVELOPMENT

Understanding our current 
capabilities and future requirements 
and identifying talent within the 
Group is essential to sustaining 
our growth. We made further 
improvements to our talent 
management and succession 
planning process throughout 2012. 
It has been designed to promote from 
within through career development, 
building on potential talent across all 
divisions and geographies. In 2012, 
we continued to support our future 
leaders through individually tailored 
mentoring and development plans 

2 2011 and 2010 non-financial KPI data 
is as previously published in the 2011 
Annual Report

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24

TT electronics plc 
Annual Report 2012

OUR PROGRESS

IN 2012

IN THIS SECTION
25  Operating review
34  Financial review
36  Principal risks and risk management process
40  Corporate responsibility

TT electronics plc 
Annual Report 2012

25

Directors’ report – Our progress in 2012 
OPERATING REVIEW

GERAINT ANDERSON  
Group Chief Executive

13 March 2013

SHATISH DASANI  
Group Finance Director

13 March 2013

A YEAR OF STRATEGIC

PROGRESS

“The business performed well against the backdrop of a challenging market 
environment reporting an improvement in profitability as we made further progress 
towards our stated margin targets. 

  We are now a wholly focused electronics business and we further expanded our global 
footprint and capacity in strategic regions, enhancing our ability to serve key 
customers.

  In 2013, we will combine our existing capabilities to create a Sensing and Control 
business and focus investment to capture increasing market opportunities and drive 
value for shareholders.”

REVENUE*
-4.1% 

2012

2011

OPERATING PROFIT**
+2.4% 

OPERATING PROFIT MARGIN**
+60 bps 

£476.9m

£509.6m

2012

2011

£29.4m

£28.7m

2012

2011

6.2%

5.6%

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200

300

400

500

600

0

5

10

15

20

25

30

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2

3

4

5

6

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RETURN ON CAPITAL EMPLOYED
+180 bps 

NET CASH
+£31.5m 

2012

2011

20.4%

18.6%

2012

2011

EARNINGS PER SHARE**
+10.5% 

£46.7m

£15.2m

2012

2011

12.6p

11.4p

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40

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*  at constant exchange rates 

**  before exceptional items

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26

TT electronics plc 
Annual Report 2012

Directors’ report – Our progress in 2012 
OPERATING REVIEW CONTINUED

GROUP OVERVIEW
Against the background of a challenging 
market environment, the business has 
performed well and we made further 
progress towards our margin targets with 
an improvement in profitability that was 
underpinned by self-help measures to 
optimise the cost base, whilst at the same 
time balancing the medium and long-term 
goals of the Group. Further operational 
improvements were also delivered 
contributing to the improvement in the 
operating margin. As a result of these actions, 
we are creating a sustainable foundation for 
future growth. 

We successfully concluded the sale of the 
Secure Power division during the year, with 
the disposal of Dale Power Solutions Limited 
in July for £10.6 million and the Ottomotores 
business in December for £29.0 million. 
These disposals are in line with our strategy 
to realise value from businesses that are 
non-core. In accordance with accounting 
standards, the business is shown as 
discontinued for all of 2012 and the 
comparatives for 2011 have been restated.  
The Group is now a focused electronics group 
enabling us to supply leading manufacturers 
in the defence, aerospace, medical, 
transportation, energy and industrial markets 
where the pace of deployment of electronics 
is being driven by increasing demands in 
terms of performance and reliability. 

We have continued to make progress in 
developing our position in markets which 
present the greatest opportunity and have 
strengthened our relationship with key 
customers in these target markets, as 
evidenced by new business wins with leading 
customers (see pages 9, 14 and 15 and 29 to 
33 for examples). The passenger car market 
remains important for us, and following the 

sale of the Secure Power division is the largest 
segment for the Group, representing 41 per 
cent of revenue due to continuing strong 
demand from BMW, VW and Daimler for 
passenger cars in Russia, Asia and North 
America. Good growth was seen in the 
Sensors division in China as we won business 
with local indigenous car manufacturers, but 
this growth was offset by lower global 
demand from certain of the smaller European 
automotive OEMs. We will continue to look at 
opportunities to balance our exposure to the 
passenger car market by targeting other key 
markets, organic growth projects and 
through acquisitions.

We continue to improve our international 
operational footprint in order to increase 
profitability and better support our global 
business by aligning our presence with our 
key customers. The closure of the Boone, 
North Carolina facility and the associated 
expansion of the Mexicali facility in Mexico 
were completed ahead of schedule, delivering 
the annualised economic benefits earlier than 
planned. Additionally, within the Components 
division we commenced manufacturing in 
the facility in Romania during the year and 
have also commenced the transfer of certain 
production lines in the Sensors division from 
Germany to Romania. We plan to take up 
additional space within the Romania facility  
as all of our divisions seek to utilise this new 
opportunity. We have expanded our floor 
space in emerging regions by 51 per cent and 
headcount by 19 per cent over the last three 
years, reflecting their strategic importance to 
the Group. 

We made significant progress within our 
business in India during the year, moving 
to a new purpose built facility and further 
strengthening the management team. 
We also opened a new Group engineering 
centre in Bangalore which will be used to 
increase the expertise and capacity of 
engineering knowledge within the Group. 
In February 2013, we completed the purchase 
of the minority interest in our Indian business 
from our commercial joint venture partner, 
reflecting the opportunities to grow the 
business in India.

In December, we completed the acquisition 
of the majority of the UK business and assets 
of ACW Technology Limited for a 
consideration of £3.1 million. We also agreed 
the transfer of associated production from 
ACW’s facility in Zhuhai in China to our facility 
in Suzhou, China. The acquired business 
provides manufacturing services to leading 
global customers in the defence, aerospace 
and industrial markets and strengthens our 
position as one of the largest aerospace 
and defence CEMs in the UK. 

In August, we completed the re-financing 
of our existing debt facility, which was due 
to be repaid in May 2013, with a new five 
year committed revolving credit facility of 
£70 million and an incremental accordion 
facility of £42 million. These new facilities 
secure the Group’s financing until August 
2017, thus facilitating our organic and 
inorganic expansion plans. Net cash at 31 
December 2012 was £46.7 million compared 
with £15.2 million at 31 December 2011. The 
increase in net cash is due mainly to operating 
cash generation from the business together 
with the proceeds from the Secure Power 
division disposal, offset in part by higher levels 
of capital investment. 

MARKET ENVIRONMENT
After an encouraging start to the year, the 
global macro-economic environment quickly 
deteriorated toward the end of the second 
quarter of 2012 with all of our divisions seeing 
signs of slowdown in their end markets. 
A general nervousness and lack of confidence 
arising from economic concerns in the US, in 
Europe as a result of the Eurozone uncertainty, 
and fears of a soft landing in China led to 
pressure being put on inventory levels 
throughout the supply chain. 

TT electronics plc 
Annual Report 2012

27

GROUP OUTLOOK
We remain focused on providing critical 
technology to markets with strong 
fundamental growth drivers where the 
deployment of complex electronics is 
increasing. This will drive demand for our 
solutions even if the macro-economic 
environment remains uncertain. Going 
forward, the focus of the Group around 
Sensing and Control will enable us to work 
closer with key global customers and take 
maximum advantage of these opportunities. 
The changes being made to the Group’s 
operational footprint will help position us to 
meet these requirements with increasing 
efficiency. We anticipate that the Group will 
make further progress during the year in 
positioning the business for future growth 
and improved margins.

REVENUE
Revenue from continuing operations 
decreased by 6.4 per cent to £476.9 million 
(2011: £509.6 million), reflecting the difficult 
market conditions and the planned exit from 
certain lower margin projects. After adjusting 
for an adverse foreign exchange impact of 
£11.8 million, the underlying decrease in 
revenue was 4.1 per cent. 

OPERATING PROFIT
The overall Group operating profit margin 
improved from 5.6 per cent in 2011 to 
6.2 per cent despite the challenging market 
environment. Our focus on product 
management, productivity improvements 
from our operational excellence programmes 
and investment to improve the underlying 
cost base resulted in an operating profit 
before exceptional items from continuing 
operations of £29.4 million, an increase of 
£0.7 million compared to 2011. All of the 
divisions delivered higher operating profit 
margins compared to 2011 despite the 
difficult market conditions and the challenges 
of managing the short-term cost base whilst 
making investments for the medium and long 
term in response to customer demand. 
Furthermore, the IMS division has achieved 
the 6 to 8 per cent operating profit margin 
target that was previously set. The adverse 
impact of foreign exchange variations on the 
translation of operating profit was £0.9 million, 
primarily due to a strengthening of Sterling 
against the euro by 6.1 per cent. 

OPERATING PROFIT1 BRIDGE 2011 TO 2012

28.7

(0.9)

(4.3)

8.6

29.4

(2.7)

Operating 
Profit 2011

Foreign 
exchange

Sales
Change

Inflation on 
SG & A

Productivity, 
pricing & margin

Operating 
Profit 2012

1 Before exceptional items

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28

TT electronics plc 
Annual Report 2012

Directors’ report – Our progress in 2012 
OPERATING REVIEW CONTINUED

COMPONENTS

REVENUE*
-5.6% 

2012

2011

OPERATING PROFIT**
+0.0% 

YEAR END HEADCOUNT
-7.3% 

£226.0m

£242.7m

2012

2011

£14.8m

£14.8m

2012

2011

2,985

3,219

0

50

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150

200

250

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3

6

9

12

15

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500

1000

1500

2000

2500

3000

3500

OPERATING PROFIT MARGIN**
+40 bps 

RETURN ON CAPITAL EMPLOYED
+150 bps 

2012

2011

6.5%

6.1%

2012

2011

*  At constant exchange rates 

**  Before exceptional items

13.9%

12.4%

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1

2

3

4

5

6

7

8

0

2.5

5

7.5

10

12.5

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COMPONENTS
The Components division is focused on 
creating value by delivering innovative 
electronic solutions with increased 
functionality, efficiency, and control, coupled 
with best in class service and support 
worldwide. The division provides engineered 
component solutions which include fixed and 
variable resistor products, optoelectronics, 
power modules and control circuitry for 
multiple applications. With facilities in North 
America, Europe and Asia, a sales presence in 
all major markets and application engineers 
strategically located around the world, the 
division is well positioned to serve customers 
in all regions. 

STRATEGY
The division targets markets with underlying 
growth drivers where we can create value 
based upon our technology and engineering 
expertise. We work closely with our 
customers, anticipating their needs, turning 
ideas and technology into differentiated 
solutions. The division is focused on increasing 
the pace of new product introduction 
through improvements in product 
management and delivering wide ranging 
operational improvements, making it easier 
for customers to do business with the 
division and thereby contributing to 
improved value creation.

PROGRESS
In 2012, we continued to focus on margin 
progression and responded rapidly to 
mitigate the impact of a challenging market 
in the second half of the year. We took actions 
to balance pressures on input prices, raw 
materials and overheads. These measures 
included temporarily reducing capacity 
where needed and expanding production 
in better cost regions. Furthermore, the 
operations team delivered improvements in 
productivity, efficiency, quality and on-time 
delivery through Lean manufacturing 
principles and Six Sigma initiatives which 
additionally contributed to the improvement 
in the operating margins.

We continued to drive new product 
introductions and the division won more new 
business in 2012 than in 2011. As a result of our 
focus on key accounts, product management, 
and targeting markets with strong underlying 
growth drivers, the division performed better 
than a number of competitors, thereby 
gaining market share in key segments. We 
achieved good customer wins in our target 
markets with customers such as CAS Medical 
Systems Inc (see page 9 for more details) and 
KTM (see page 29 for more details) and also 
grew our business and market share with a 
number of key global distributors. 

 
KTM MOTORCYCLES

The Components division is working with KTM, a manufacturer of off road 
motorcycles to develop a power module for their new electric motorcycle. 
KTM’s primary requirement was for weight reduction and miniaturisation which 
would ultimately lead to improvements in the performance and efficiency of 
the motorbike. Through our strong relationship with KTM and our engineering 
expertise, we were able to jointly design and develop the new power module 
and started to manufacture and supply this in 2012.

TT electronics plc 
Annual Report 2012

29

For additional information please see 

www.ttelectronics.com

SATELLITE SOLUTIONS

The Components division is working with a major international key 
account customer, supplying new hybrid products to a number of 
commercial aerospace, satellite projects and other space programmes. 
The requirement for the components to operate reliably for 
programme lives in excess of ten years in extreme operating 
environments provided significant engineering challenges which 
were overcome by our engineers partnering with the customer’s 
counterparts to develop innovative solutions.

The development of the product portfolio 
remains a critical focus to ensure that our 
product development plans accurately align 
with emerging customer needs. As part of this 
process, we have implemented a project 
portfolio management tool which provides 
a standardised framework for effectively 
managing and prioritising the portfolio  
of development projects, the market 
opportunity and the associated spend. 
This tool will facilitate the enhanced control 
and reporting of new product introduction 
and monitor the subsequent return on 
engineering investments.

The closure of the Boone, North Carolina 
facility and the associated significant 
expansion of the Mexicali facility in Mexico 
were completed several months ahead of 
schedule. Over the last two years, the capacity 
at the Mexicali facility has increased by 67 per 
cent to 100,000 square feet. Mexicali now 
provides the division with a North American 
low cost centre of excellence which is part 
of the Group’s strategy to align its footprint 
with key customers and to improve 
competitiveness and margins. Additionally, in 
2012, we commenced manufacturing in the 
Group’s East European facility in Romania. 
Across the Group, we are planning to take 
additional space within the Romania campus 
for further transfers. 

Our focus on innovation remains key to 
meeting the demands of increasingly 
sophisticated and complex electronic 
systems. To support our customers’ needs, 
we are establishing a dedicated research and 
development laboratory in our Corpus Christi, 
Texas facility to further the pace of 
development of resistor technologies.  
The primary objective of this laboratory is the 
development, testing and commercialisation 
of next-generation resistor technologies that 
will provide additional value to our customers. 
The development laboratory will assist with 
rapid technology transfer from proof of 
concept to volume production, allowing us to 
respond quickly to customer needs. This state 
of the art facility will start to deliver financial 
benefits in 2014.

The division’s principal competitors include 
Bourns, Koa, Semikron and Vishay.

MARKETS
After a positive start in early 2012, the trading 
environment quickly deteriorated toward the 
end of Q2 2012. This difficult market 
environment was characterised by lower 
levels of confidence in the industry, with 
customers reducing their inventory levels 
and lead times.

PERFORMANCE 
Although underlying revenue for the year 
decreased by 5.6 per cent to £226.0 million 
(excluding an adverse foreign exchange 
impact of 1.3 per cent), the division performed 
better than its main competitors and gained 
market share. Operating profit for the year was 
flat at £14.8 million, giving an operating profit 
margin of 6.5 per cent (2011: 6.1 per cent).

OUTLOOK
Although the first few weeks of 2013 showed 
a notable improvement in order intake over 
2012, market conditions are not expected to 
improve significantly until later in the year.  
The business remains focused on improving 
margins through new product introductions, 
pursuing sales growth through the key 
account programme, and remaining 
responsive to customers’ needs. At the same 
time, we anticipate an improvement in 
operational performance through sharing of 
Lean best practices, expanding our 
productivity improvement programmes, and 
a further ramp up of activity at our Mexicali 
and Romania facilities. 

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30

TT electronics plc 
Annual Report 2012

Directors’ report – Our progress in 2012 
OPERATING REVIEW CONTINUED

SENSORS

REVENUE*
-4.9% 

2012

2011

OPERATING PROFIT**
-4.5% 

YEAR END HEADCOUNT
+5.1% 

£148.2m

£166.9m

2012

2011

£8.4m

£8.8m

2012

2011

1,164

1,108

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800

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1200

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+40 bps 

RETURN ON CAPITAL EMPLOYED
-370 bps 

2012

2011

5.7%

5.3%

2012

2011

*  At constant exchange rates 

**  Before exceptional items

14.8%

18.5%

0

1

2

3

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6

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4

8

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20

SENSORS
The division provides sensing solutions, 
including speed, position, temperature, 
accelerator pedal and pressure sensors, for 
critical applications which require high levels 
of expertise, precision and reliability, often 
operating in extremely harsh environments. 
We are focused primarily on the 
transportation and industrial markets where 
our ability to meet these requirements helps 
our customers to compete and win. 
The division’s principal operations are in 
Germany, India, China and Mexico and are 
supported by additional engineering and 
development teams in the UK. 

STRATEGY
We provide sensors that form the heart 
of critical systems which improve safety, 
performance and emissions, helping our 
customers to be more competitive and 
address increasing levels of regulation and 
legislation. The division’s ability to deliver high 
performance micro electronic and mechanical 
solutions that work reliably first time, every 
time, in extremely harsh environments is a key 
differentiator. We are focused on sectors 
which are growing, that value our expertise 
and where the deployment of sensing 
technology is increasing to address new 
challenges. Target markets include 
transportation, industrial and medical. We are 
building long-term strategic partnerships with 
leading companies in each of these markets 
whilst investing in the further development 
of our geographic footprint to support them 
in all major regions. The division is embedding 
a culture of continuous improvement and 
using total business excellence to ensure 
common core processes and standards 
across all of its operations.

PROGRESS
After an encouraging start to the year, with 
the division performing broadly in line with 
expectations, we experienced a very different 
business environment in the second half of 
the year. Whilst the core business remained 
strong, we were impacted by lower demand 
from specific customers with sales to certain 
of the smaller European OEMs and some truck 
customers being impacted by the uncertain 
economic environment, particularly in Europe. 

The management team was quick to respond 
to the market environment and a number of 
actions were taken to maintain profitability, 
whilst at the same time balancing our 
medium- and long-term goals. The division’s 
global footprint, reputation and strong 
customer contacts have resulted in significant 
new business both identified and won. We are 
investing in resources and capital to take 
advantage of these opportunities which 
will move into volume production in 2014 
and beyond. 

We have continued to develop the division’s 
global footprint into emerging regions as 
part of our globalisation strategy, and have 
commenced the transfer of certain 
production lines from Germany to the Group’s 
facility in Romania. Production from these 
lines is due to commence in early 2013. We 
also commenced production in our new 
manufacturing centre in Mexico during the 
third quarter of 2012.

 
TT electronics plc 
Annual Report 2012

31

For additional information please see 

www.ttelectronics.com

BMW, GERMANY

A new combined pressure and temperature sensor has been designed and
developed at our facility in Klingenberg, Germany. The sensor is now stable 
up to operating temperatures of 150°C (previously 125°C) offering best in 
class competitive performance. This enhanced performance, coupled with 
a cost reduction of more than 20 per cent, gives us the opportunity to make 
our customers more competitive and win more business globally. This 
sensor has been developed in conjunction with BMW and will be used on 
both the four and six cylinder diesel engines of the BMW car range with
production due to commence in 2013.

Significant progress has been made in India 
during the year. We transferred production to 
a new facility in the fourth quarter of 2012 and 
increased our capacity from 5,000 square feet 
to over 30,000 square feet. We have also 
strengthened our global management team 
with the appointment of an India-based VP 
of Global Product Management and a new 
Finance Director for the Indian business. 
Furthermore, we opened a new Group 
engineering centre in Bangalore, which will be 
used to increase the expertise and capacity of 
engineering knowledge within the Group. 
In February 2013, we completed the purchase 
of the minority interest in our Indian business 
from our commercial joint venture partner, 
reflecting the opportunities to grow the 
business in India.

PERFORMANCE
Underlying revenue for the year decreased 
by 4.9 per cent to £148.2 million, excluding 
a foreign exchange impact of 6.3 per cent, 
primarily as a result of lower demand from the 
smaller European OEMs and truck customers. 
Although operating profit decreased to 
£8.4 million (after allowing for a £1.1 million 
adverse foreign exchange impact), as a result 
of the mitigating actions taken the operating 
profit margin increased to 5.7 per cent (2011: 
£8.8 million operating profit, 5.3 per cent 
operating profit margin).

OUTLOOK
We will continue to consolidate our position 
during 2013, with the further transfer of 
production to Romania and bringing on 
stream new lines in Mexico and China. We will 
work closely with our major OEM customers 
to support them in different parts of the world 
and anticipate growth from new contract 
wins with these customers as we go into 2014.

The division is continuing to see operating 
efficiencies from the Lean manufacturing 
programmes being put in place in all of our 
facilities. We are also increasing the skills of 
our workforce through training programmes 
including putting record numbers of people 
through Six Sigma yellow, green and black 
belt programmes. We are continuing to 
implement common processes, equipment 
and systems in all of our facilities so that we 
operate to one global standard. In addition, 
we have moved talented individuals to our 
emerging regions, reflecting our growing 
manufacturing presence in these locations 
and their strategic importance to the 
business.

The division’s principal competitors include 
divisions of Bosch, Continental, CTS and Hella.

MARKETS
Market demand for the top three German 
automotive OEMs grew during 2012 as the 
premium car market outperformed other 
sectors, due to continuing strong demand 
for passenger cars in Russia, Asia and North 
America. However, global demand for certain 
of the smaller European automotive OEMs 
significantly decreased. There was also a 
contraction in the  truck market which was 
particularly impacted by the uncertain 
economic environment within Europe.

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32

TT electronics plc 
Annual Report 2012

Directors’ report – Our progress in 2012 
OPERATING REVIEW CONTINUED

IMS

REVENUE*
+1.0% 

2012

2011

OPERATING PROFIT**
+21.6% 

YEAR END HEADCOUNT
+4.2% 

£102.7m

£100.0m

2012

2011

£6.2m

£5.1m

2012

2011

1,181

1,133

0

20

40

60

80

100

120

0

1

2

3

4

5

6

7

8

0

200

400

600

800

1000

1200

OPERATING PROFIT MARGIN**
+90 bps 

RETURN ON CAPITAL EMPLOYED
+1,080 bps 

2012

2011

6.0%

5.1%

2012

2011

*  At constant exchange rates

**  Before exceptional items

32.5%

21.7%

0

1

2

3

4

5

6

7

8

0

5

10

15

20

25

30

35

40

IMS
The division draws on its design engineering 
capabilities, flexibility and world-class facilities 
to provide high quality electronic 
manufacturing support to customers in 
the defence and aerospace, medical and 
premium industrial sectors. The business 
has broad capabilities, ranging from board 
assembly to full systems integration. This suite 
of end-to-end solutions is focused exclusively 
on high mix, low volume business.

The division supports its customers with a 
global footprint and local support from 
manufacturing operations in China, USA, 
UK and Malaysia.

STRATEGY
The division’s strategy is to work with 
customers who are looking for a partner 
to build their more complex electronic and 
electromechanical products and who value 
our ability to provide support, not only 
throughout the product lifecycle but also 
across multiple geographic regions. 
Our global presence, combined with local 
engineering and customer service, is a key 
differentiator against our regional 
competitors. Furthermore, these core tactics 
are executed exclusively within a high mix, 
low volume model of production designed 
for flexibility and agility.

PROGRESS 
The division has performed well in a difficult 
market environment. Whilst the underlying 
base business has decreased and projects 
have come to the end of their life, this 
reduction has been more than offset by new 
business resulting from the investments made 
in 2011 to strengthen the sales team and our 
focus on winning key strategic customers in 
target markets, which underpins our global 
strategy. 

The division’s sales teams have performed 
very well and we were particularly pleased 
to secure a significant new global aerospace 
and defence customer, Cobham plc, which 
will bring significant business for multiple 
locations (see page 33 for further detail).

Quality and the safety of our employees 
remain a key focus for us, and all four of our 
facilities now have OHAS 18001 certification. 
We have also seen the benefits of the Nadcap 
aerospace and defence quality accreditation 
for cable and harness assemblies (AC7121) that 
was obtained in our China facility in 2012. 
This certification, in addition to the Nadcap 
accreditation for printed circuit board 
assemblies (AC7120) which the facility was 
awarded in 2011, represents the division’s 
commitment to the aerospace industry on 
a global scale. These accreditations have 
enabled us to win strategic new business in 
the Chinese commercial aerospace market 
(see pages 14 and 15 for further detail). These 
quality standards are a key differentiator for us, 
as we were the first CEM company in China 
and only the fifth worldwide to receive both 
printed circuit board assembly and cable and 
harness certification from Nadcap. These 
accreditations are in the process of being 
replicated at our other sites. 

In December, we completed the acquisition 
of the majority of the UK business and 
assets of ACW Technology Limited for a 
consideration of £3.1 million. We also agreed 
the transfer of associated production from 
ACW’s facility in Zhuhai in China to our facility 
in Suzhou, China. The acquired business 
provides manufacturing services to leading 
global customers in the defence, aerospace 
and industrial markets, strengthens our 
position as one of the largest aerospace and 

 
TT electronics plc 
Annual Report 2012

33

For additional information please see 

www.ttelectronics.com

COBHAM PLC

By maintaining an ongoing relationship and continuous dialogue with 
Cobham plc, in 2012 the IMS division secured a significant new business win in 
the defence, aerospace and homeland security markets. The Cobham business 
in question was seeking a rapid outsourcing solution in order to create growth 
capacity internally. The IMS division rapidly responded to Cobham’s needs 
and we quickly established a transition team to manage the customer’s 
requirements and expectations, thereby supporting Cobham’s growth 
ambitions and preserving continuity of the supply chain at a critical time. 
Our relationship with Cobham plc has now extended to an engagement 
with three Cobham locations and has the potential to bring further business 
to a number of our sites.

Cobham’s COFDM RF links, as built by the 
IMS division, delivered stunning live HD 
video directly from the pilot’s perspective 
in the Red Bull Air Race.

defence CEMs in the UK, and is expected 
to generate approximately £25 million of 
sales in 2013. Exceptional costs of £0.5 million 
have been charged in 2012 and a further 
£1.4 million charge is anticipated for 2013 
relating to the restructuring of the ACW 
business post-acquisition.

Our customers are continuing to benefit from 
our global manufacturing footprint and 
operating profit margin improved in 2012 as 
we continued to diversify our customer base 
into our key target markets.

The division’s principal competitors include 
CTS, EPIC, Neways and Plexus.

MARKETS
The market environment in 2012 across all of 
our key target markets has been particularly 
challenging. Our focus on expanding our 
customer base globally utilising our 
manufacturing footprint, and expanding 
our value proposition through technology, 
services and corporate responsibility meant 
that the division had some success in these 
difficult market conditions. 

PERFORMANCE
Excluding the acquisition of the trade 
and assets of ACW Technology Limited in 
December 2012, underlying revenue for the 
year grew by 1.0 per cent excluding a foreign 
exchange benefit of 1.7 per cent. The division 
performed well given the challenging global 
market environment with continued progress 
being made with our key global strategic 
customers. This led to an improvement in 
operating profit before exceptional items to 
£6.2 million, delivering an operating profit 
margin of 6.0 per cent (2011: £5.1 million 
operating profit, 5.1 per cent operating profit 
margin) which is within the 6 to 8 per cent 
target range for the division. 

OUTLOOK 
We anticipate making further progress during 
2013 and will complete the integration of the 
ACW business, further strengthening our 
competitive position in key markets. 

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34

TT electronics plc 
Annual Report 2012

Directors’ report – Our progress in 2012 
FINANCIAL REVIEW

MEASURING OUR 
PERFORMANCE
The Group has a clear strategy to improve 
performance and deliver shareholder value. 
Financial progress is monitored using the 
financial key performance indicators detailed 
on pages 22 and 23. Organic revenue from 
continuing operations contracted by 4.1 per 
cent, compared to the target of mid to high 
single digit growth. Despite the challenging 
macro-economic environment, the Group 
drove further progress towards the operating 
profit margin target of 8 to 10 per cent, 
achieving an operating profit margin from 
continuing operations of 6.2 per cent in 2012 
compared to 5.6 per cent in 2011. All three 
divisions made progress towards their 
respective targets, with the IMS division 
reaching its target margin of 6 to 8 per cent. 
Headline earnings per share increased by 
10.5 per cent to 12.6 pence, significantly 
outperforming the target of year on year 
growth of 3 per cent in excess of RPI. Operating 
cashflow conversion from continuing 
operations was 70 per cent, compared to the 
target of 100 per cent. Total cash conversion 
over the three years was 117 per cent. Relative 
total shareholder return was in the third quartile 
for the year, as was the case in 2011. 

DISCONTINUED OPERATIONS
In executing our strategy to focus on higher 
growth markets, the Group disposed of the 
Secure Power division during 2012. Total 
consideration received comprised £39.6 million 
in cash before costs (£43.9 million including 
costs and nebt debt disposed of), and is subject 
to a final adjustment once the completion 
balance sheet for the Ottomotores business has 
been agreed. In line with accounting standards, 
the business is shown as discontinued for all of 
2012 and the comparatives for 2011 have been 
restated. Discontinued operations for 2011 also 
include AEI Compounds Limited which was 
sold in July 2011.

ACQUISITIONS

In December 2012 the Group acquired the 
majority of the UK business and assets of ACW 
Technology Limited for consideration of 
£3.1 million. The acquired business provides 
manufacturing services to leading global 
customers in the defence, aerospace and 
industrial markets and strengthens our 
position as one of the largest aerospace and 
defence CEMs in the UK. Exceptional costs of 
£0.5 million have been charged in 2012 and a 
further £1.4 million charge is anticipated for 
2013 relating to the restructuring of the ACW 
business post-acquisition.

EXCEPTIONAL ITEMS
The Group reports non-trading income or 
expenditure as exceptional when the size, 
nature or function of an item or aggregation 
of similar items is such that separate 
presentation is relevant to an understanding 
of its financial position. An exceptional charge 
of £3.3 million from continuing operations has 
been recognised during 2012, compared with 
an exceptional credit of £2.3 million for 2011. 
The make-up is shown below: 

TAXATION
The tax charge from continuing operations for 
the year was £6.2 million (2011: £5.3 million), 
which represents an effective tax rate of 
26.2 per cent on continuing operations 
excluding exceptional items (2011: 28.2 per 
cent). The charge arises from the profits 
generated in overseas countries, in particular 
the USA, China and India. There is a minimal 
level of tax payable in the UK and Germany 
due to the availability of tax losses.

EARNINGS PER SHARE AND 
DIVIDENDS
Headline earnings per share from continuing 
operations were 12.6 pence, an increase of 
10.5 per cent from 2011. Basic earnings per 
share from continuing operations were 
11.0 pence (2011: 13.9 pence). 

The Directors recommend a final dividend  
of 3.5 pence which together with the interim 
dividend of 1.5 pence gives a total dividend 
for the year of 5.0 pence per share (2011: 4.4 
pence), an increase of 13.6 per cent. This is in 
line with the Group’s policy of increasing 
dividends progressively whilst maintaining 
cover of at least two times underlying 
earnings per share. The final dividend will be 
paid on 30 May 2013 to shareholders on the 
register at 17 May 2013.

£million
Continuing operations
Reduction in UK pension 
liabilities
Restructuring costs 
Negative goodwill on business 
acquisition
Acquisition costs
Total

The exceptional items relate to:

2012

2011

– 

(3.2)

0.3 

(0.4)
(3.3)

7.5 

(5.2)

–

–
2.3 

(cid:116)(cid:1)

(cid:1)(cid:51)(cid:70)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:98)(cid:20)(cid:15)(cid:19)(cid:1)(cid:78)(cid:74)(cid:77)(cid:77)(cid:74)(cid:80)(cid:79)(cid:1)
associated with:

–  the closure of the Components 

operation in Boone, North Carolina 
of £2.1 million;

–  the transfer of certain production lines 
from the Sensors division facilities to 
Romania of £0.2 million;

–  redundancy costs of £0.4 million; and

–  costs associated with the post-

acquisition restructuring of the ACW 
Technology business of £0.5 million.

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:1)(cid:47)(cid:70)(cid:72)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:72)(cid:80)(cid:80)(cid:69)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
acquisition of the trade and assets of ACW 
Technology Limited of £0.3 million; and

(cid:1)(cid:98)(cid:17)(cid:15)(cid:21)(cid:1)(cid:78)(cid:74)(cid:77)(cid:77)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:68)(cid:82)(cid:86)(cid:74)(cid:84)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:14)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:77)(cid:70)(cid:72)(cid:66)(cid:77)(cid:1)
and professional fees.

NET FINANCE COSTS

Net finance costs for 2012 were £2.7 million 
compared to £4.2 million in 2011. Included 
within this amount is £0.5 million (2011: £1.0 
million) in respect of the net interest expense 
arising on pension scheme liabilities, 
£0.8 million (2011: £0.6 million) in respect of 
the amortisation of loan arrangement fees 
and £0.7 million (2011: £0.7 million) in respect 
of the interest expense on the minority put/
call option relating to a third party minority 
interest in one of the Group’s subsidiaries.

 
 
 
 
 
 
TT electronics plc 
Annual Report 2012

35

PENSIONS
The Group operates one significant defined 
benefit scheme in the UK and two overseas 
defined benefit schemes, in the USA and 
Japan. All of these schemes are closed to new 
members and the UK and USA schemes are 
closed to future accrual. 

The assets and liabilities of the Group’s defined 
benefit schemes are summarised below:

£million
Fair value of assets
Liabilities
Deficit – UK scheme
Overseas schemes
Total Group deficit

2012

2011

382.5

373.4

(416.2)

(405.5)

(33.7)

(3.1)
(36.8)

(32.1)

(3.4)
(35.5)

The triennial valuation of the UK scheme as at 
April 2010 showed a deficit of £39.8 million. 
A funding agreement is in place with the 
Trustee fixing deficit contributions at £3.7 
million in 2012 and increasing by £0.2 million 
each year to £4.5 million in 2016. In addition, 
the Company has agreed to set aside £1.0 
million per year for the next three years to 
be utilised in agreement with the Trustee for 
reducing the long-term liabilities of the 
scheme. The next triennial valuation of the 
UK scheme will take place in April 2013.

In the year ending 31 December 2013, 
revisions to IAS 19 ‘Employee benefits’ will 
become effective leading to a change in the 
calculation of net interest expense on the 
pension scheme deficit and also the charging 
of administration expenses to operating profit 
rather than as a deduction to the expected 
return on pension scheme assets. Had the 
revisions to IAS 19 been adopted during the 
year, profit before tax would have decreased 
by £1.4 million.

CASH FLOW, BORROWINGS  
AND FACILITIES
During 2012 the Group further strengthened 
its cash position with net cash of £46.7 million 
at 31 December 2012 compared to £15.2 
million at the end of 2011. The increase in 
net cash is mainly due to operating cash 
generation from the business together with 
the proceeds from the disposal of the Secure 
Power division, offset in part by higher levels 
of capital investment.

£million (unless otherwise stated)
Underlying operating cash 
flow*
Working capital (outflow)/
improvement*
Capital expenditure (including 
software)
Exceptional costs
Proceeds from disposal of 
businesses (net of expenses) 
Net cash
Stock turns (times)*
Debtor days*
Creditor days*

2012

2011

45.4

61.6

(3.5)

10.7

(20.0)

(21.6)

(4.1)

(2.2)

37.5

46.7

5.6

39

48

8.3

15.2

6.6

38

39

*  Amounts relate to continuing operations excluding the  

ACW acquisition and Secure Power division disposal

Underlying operating cash flow from 
continuing operations for 2012 was £45.4 
million, compared with £61.6 million in 2011. 
The cash outflow from working capital was 
£3.5 million, compared to a cash inflow of 
£10.7 million in 2011 and was largely 
attributable to the build-up of inventory 
within the Sensors division as certain 
production lines are in the process of being 
transferred from Germany to Romania. 
This inventory build-up contributed 
£3.3 million of the increase in working capital. 

Trade working capital represented 14 per cent 
of sales at 31 December 2012 (2011: 14 per 
cent). Working capital balances continued 
to be actively monitored and managed, with 
debtor days at a healthy 39 days and creditor 
days improving by 9 days to 48 days. Stock 
turns decreased from 6.6 turns to 5.6 turns due 
to the build-up of inventory within the Sensors 
division (as discussed above), longer supply 
chains on the business globally and the 
slowdown in activity levels in the second 
half of the year.

Conversion of operating profit to operating 
cash flow after capital expenditure from 
continuing operations was 70 per cent, due 
to higher capital investment and the increase 
in inventory mentioned above.

Exceptional cash restructuring costs of 
£4.1 million were incurred, together with a 
£3.7 million special payment to the UK 
pension fund.

In August 2012, the Group agreed a new five 
year committed revolving credit facility of 
£70 million and a further incremental 
accordion facility of £42 million with a club 
of four banks comprising HSBC, The Royal 
Bank of Scotland, Santander UK and Barclays 
Bank, as well as two separate bi-lateral 
agreements with Fifth Third Bank and 
Comerica Bank, both within the USA.

At 31 December 2012, £8.4 million of the 
revolving credit facility was drawn down 
and the accordion facility was undrawn. 
The undrawn facilities, together with the 
Group’s net cash position, give the Group 
£61.6 million of committed undrawn facilities 
and £192.4 million of total cash and facilities 
available to fund organic and inorganic 
growth.

The main financial covenants in the new 
facility restrict net debt to below 2.75 times 
EBITDA before exceptional items. In addition, 
EBITDA before exceptional items is required 
to cover net finance charges by 4.0 times. 
The covenants are tested half-yearly on a 
rolling 12 month basis and were satisfied 
comfortably at 31 December 2012:

Net debt/EBITDA before 
exceptional items
EBITDA before exceptional 
items/net finance charges

Covenant

December 
20121

< 2.75

(0.9)

> 4.00

22.7

1  based on EBITDA and net finance charges for  
the year ended 31 December 2012

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

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36

TT electronics plc 
Annual Report 2012

Directors’ report – Our progress in 2012 
PRINCIPAL RISKS AND RISK MANAGEMENT PROCESS

“Top-down” oversight 
Set risk appetite 
Monitor significant risks 
Alignment with strategic 
objectives at corporate level
CORPORATE LEVEL STEERING

Board of Directors

Primary responsibility for risk oversight; setting strategic objectives 
and defining risk appetite

Audit Committee
Oversee risk management  
and internal control  
processes

Risk Committee
Provides framework for managing risks;  
regular reviews of principal risks  
and risk management processes

RISK AND  
ASSURANCE  
FUNCTION

OPERATIONAL STEERING AND IMPLEMENTATION

Divisional level steering and reporting

Risk identification, assessment and implementation  
of risk management action plans and actions

Business units/site level steering and reporting

Implement and embed risk management  
on operational level

“Bottom-up” identification, 
assessment and mitigation  
of risk at operational level

RISK MANAGEMENT 
FRAMEWORK 
The Board of Directors has overall 
responsibility for risk management and 
internal controls, supported by the Audit 
Committee and the Risk Committee. 
The Board defines risk appetite and monitors 
the management of significant risks to ensure 
that the nature and extent of those risks taken 
by the Company are aligned with overall goals 
and strategic objectives. The Risk Committee 
supports the Board and the Audit Committee 
in monitoring the exposure through regular 

reviews and has been delegated the 
responsibility for reviewing the effectiveness 
of risk management processes and controls. 
The Risk and Assurance function assists the 
Risk Committee in defining improvements 
to the overall risk management framework 
and evaluating the design and operating 
effectiveness of the framework as well 
as risk mitigation strategies implemented 
by management. 

Risk management processes and internal 
control procedures are established within 
business practices across all levels of the 

organisation. Risk identification, assessment 
and mitigation are performed both  
“Bottom-up”, with more detailed assessment 
at operational level, as well as through 
“Top-down” assessment of strategic and 
market risk at the executive management 
and Board level. 

It is recognised that risk management and 
internal controls can only provide reasonable 
and not absolute protection against risk. Risk 
appetite is not static and will be reassessed 
on an ongoing basis to ensure it continues 
to be aligned with goals and strategy.

TT electronics plc 
Annual Report 2012

37

RISK MANAGEMENT DEVELOPMENTS DURING 2012
Management have focused developments during the year on three main areas: 

Developments during 2012 include:

Benefits for our stakeholders:

1. CLARIFIED ROLES AND RESPONSIBILITIES THROUGHOUT THE GOVERNANCE STRUCTURE

Defined risk management roles and responsibilities in more detail on all levels 
of the organisation. Strengthened the Risk Committee by ensuring more cross 
functional representation and involvement from executive management at 
Group as well as divisional level. 

Clarified roles and responsibilities throughout the organisation to assist all 
stakeholders in understanding their role in identifying, assessing, managing and 
reporting risks. This enriches the organisation’s ability to analyse risks, prioritise 
resource and respond to opportunities as it pursues strategic objectives.

2.  REFRESHED THE COMPANY WIDE RISK FRAMEWORK INCLUDING MORE FORMALISED RISK QUANTIFICATION 

AND APPETITE

Implemented a more structured approach for risk identification and assessment, 
incorporating a “top-down” and “bottom-up” perspective on risk. Executive 
management, in partnership with the Risk and Assurance function, identified 
and assessed “top-down” risks during a series of meetings to better understand 
risk exposure and appetite. This was supported by a similar, more 
comprehensive, “Bottom-up” process at divisional and operational level. 

3. TRAINING AND COMMUNICATION

Supports the Board, Audit Committee and executive management in establishing 
a mechanism for understanding risk exposure and defining the risk appetite 
as well as linking significant risks to company strategy and objectives. 

The roll-out of the refreshed risk management framework was supported by a 
training and communication programme across the Group. The training 
programme consisted of face-to-face and remote virtual training, including 
case studies, best practice examples, step-by-step manuals, templates, etc. 

Successful training and communication help build a culture and ability to further 
embed processes and procedures throughout the organisation. A more deeply 
embedded risk management culture supports long-term value creation for 
all stakeholders.

Our management plan aims to continue building on 2012 developments during 2013 to:

– 

– 

– 

 Embed the refreshed risk culture throughout the Group

 Continue to improve understanding of risk quantification and appetite 

 Implement more robust risk management for strategic projects 

All of this should lead to better informed decisions, actions, and fewer surprises, thereby  
improving the likelihood of the business achieving goals and strategic objectives.

RISK PROFILE 
A number of risks were identified and 
assessed through risk identification and 
assessment processes during 2012. Executive 
management, the Risk Committee and the 
Board of Directors performed further analysis 
to prioritise these risks, with a focus on 
principal risks which posed the highest 
current risk to achieving company objectives. 
Risks assessed as higher priority were 
consolidated onto a “Risk Heat Map” and 
are monitored more closely by executive 
management, the Risk Committee and the 
Board of Directors. Whilst these principal 
“top risks” represent a significant portion 
of the Group’s overall risk profile, executive 
management and the Risk Committee 

continue to monitor the entire universe 
of risks to identify new or emerging risks 
as well as any changes in risk exposure. 

The “top principal risks” shown overleaf are 
not presented in any order of priority. The risks 
have been linked to our strategic objectives of:

1   Focus
2   Innovation
3   Globalisation

4   Culture

as explained on page 10. It should be noted 
that the Group is exposed to additional risks 
that are not considered material but could 
have an adverse impact. 

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38

TT electronics plc 
Annual Report 2012

Directors’ report – Our progress in 2012 
PRINCIPAL RISKS AND RISK MANAGEMENT PROCESS CONTINUED

RISK PROFILE CONTINUED
Strategic 
objective

Risk description and context

STRATEGIC, MARKET AND BRAND

Economic downturn
Economic downturn

General economic downturn leading to reduction in customer demand and 
General economic downturn leading to reduction in customer demand 
production volumes impacting sales and margins. 
and production volumes impacting sales and margins. 

1 2

3 4

21

Acquisitions
Acquisitions

3

1

1 2

1

3

1

The Group pursues acquisitions as part of our overall growth strategy. 
The Group pursues acquisitions as part of our overall growth strategy. 
Such acquisitions may not realise expected benefits.
Such acquisitions may not realise expected benefits.

Disposals 
Disposals 
The Group disposes of non core businesses, not supporting the growth 
strategy in key markets. Risks include not achieving an expected sale price, 
The Group disposes of non core businesses, not supporting the growth 
unsuccessful or delayed disposal processes, or deteriorating business 
strategy in key markets. Risks include not achieving an expected sale 
performance. 
price, unsuccessful or delayed disposal processes, or deteriorating 
business performance. 

New products or technical capability
New products or technical capability
The Group is seeking to introduce an increased number of new product 
offerings to key customers to grow existing and create new business 
The Group is seeking to introduce an increased number of new product 
opportunities. Risks include potential write-off for unsuccessful projects, 
offerings to key customers to grow existing and create new business 
project overruns, and not achieving expected customer contracts, market 
opportunities. Risks include potential write-off for unsuccessful projects, 
pricing and benefits. 
project overruns and not achieving expected customer contracts, market 
pricing and benefits. 
Operational transformation programme
Operational transformation programme
The Group continues to review and assess the target operating model 
to improve competitive advantage and be responsive to customers’ 
The Group continues to review and assess the target operating model 
requirements. This is achieved by consolidating manufacturing sites and 
to improve competitive advantage and be responsive to customers’ 
setting up manufacturing and engineering capability in lower cost regions. 
requirements. This is achieved by consolidating manufacturing sites and 
Risks include disruption to customer base, loss of key talent, and delayed 
setting up manufacturing and engineering capability in lower cost regions. 
or unsuccessful cost savings. 
Risks include disruption to customer base, loss of key talent and delayed 
or unsuccessful cost savings. 
Customer concentration
Customer concentration
Relationships with large key accounts continue to improve. Risks associated 
with large key accounts include over-reliance on key customers, price 
Relationships with large key accounts continue to improve. Risks associated 
pressure, customer default, and not achieving expected orders and benefits. 
with large key accounts include over-reliance on key customers, price 
pressure, customer default and not achieving expected orders and benefits. 

1 2

3

Margin erosion
Margin erosion
The Group operates in highly competitive markets. This combined with 
continued uncertain macro economic conditions, could cause customers to 
The Group operates in highly competitive markets. This, combined with 
accept lower cost competitors and substitute products leading to increased 
continued uncertain macro-economic conditions, could cause customers to 
price pressure, margin erosion, or lost business. 
accept lower cost competitors and substitute products leading to increased 
price pressure, margin erosion or lost business. 

Mitigation actions

Forward-looking indicators are regularly reviewed to identify deteriorating 
Forward-looking indicators are regularly reviewed to identify deteriorating 
market conditions. 
market conditions. 
Management structures in place to enable a rapid response to changing 
Management structures in place to enable a rapid response to changing 
circumstances.
circumstances.
Alternative “economic downturn” plans in place.
Alternative “economic downturn” plans in place.

Performing robust due diligence.
Clear acquisition criteria used to confirm fit and value creation potential. 
Obtaining representation, warranties and indemnities from vendors where 
Performing robust due diligence.
possible. 
Obtaining representations, warranties and indemnities from vendors 
Implementing business integration processes.
where possible. 
Implementing business integration processes.

Assemble cross functional team with necessary skill sets. 
Regular reviews with project team. 
Assemble cross functional team with necessary skill sets. 
Regular talent and performance reviews, supported by monitoring and 
Regular reviews with project team. 
communication with employees.
Regular talent and performance reviews, supported by monitoring 
Close monitoring of representation, warranties, and indemnities. 
and communication with employees.
Close monitoring of representation, warranties and indemnities. 

Robust project delivery and cost controls throughout product and project 
development cycle.
Robust project delivery and cost controls throughout product and project 
Close communication and working relationship with key customers to ensure 
development cycle.
products meet expectation and demand. 
Close communication and working relationships with key customers to ensure 
Regular project reviews with standard gated processes.
products meet expectation and demand. 
Regular project reviews with standard gated processes.

Strong change management and operational control with professional project 
managers to oversee major programmes.
Strong change management and operational control with professional project 
Close communication with key customers to explain the actions being taken 
managers to oversee major programmes.
and to understand and address their concerns.
Close communication with key customers to explain the actions being taken 
Regular talent and performance reviews, supported by monitoring 
and to understand and address their concerns.
and communication with employees.
Regular talent and performance reviews, supported by monitoring 
and communication with employees.

Review customer and market concentration and pursue opportunities 
by diversifying into new industries and regions.
Review customer and market concentration and pursue opportunities 
Improve margin with existing key customers by leveraging lower cost regions. 
by diversifying into new industries and regions.
Regular review and monitoring of key customers’ financial status, orderbook 
Improve margin with existing key customers by leveraging lower cost regions. 
levels and trends.
Regular review and monitoring of key customers’ financial status, orderbook 
levels and trends.

Strong relationships with key customers, including ongoing review of product 
strategy, pricing and other demand. 
Strong relationships with key customers, including ongoing review of product 
Operational transformation programme to leverage lower cost manufacturing 
strategy, pricing and other demand. 
locations, driving margin improvements. 
Operational transformation programme to leverage lower cost manufacturing 
Monitoring of competitors and potential new entrants into specific markets. 
locations, driving margin improvements. 
Monitoring of competitors and potential new entrants into specific markets. 

1

2

3

4

Focus

Innovation

Globalisation

Culture

 
  
  
  
  
TT electronics plc 
Annual Report 2012

39

Strategic 
objective

Risk description and context

OPERATIONAL

3 4

Health and Safety
Health and Safety

Inherent to our industry is the risk of incidents due to unsafe manufacturing 
Inherent to our industry is the risk of incidents due to unsafe manufacturing 
processes or facilities causing injuries or fatalities to our people. 
processes or facilities causing injuries or fatalities to our people. 

3 4

Attract and retain talent
Attract and retain talent

Our future success as we expand will be dependent on our ability to attract 
Our future success as we expand will be dependent on our ability to attract 
and retain highly skilled and qualified employees. We face risks in selecting, 
and retain highly skilled and qualified employees. We face risks in selecting, 
recruiting, training and retaining the people we need. 
recruiting, training, and retaining the people we need. 

Mitigation actions

Zero tolerance attitude for safety incidents at all levels of operations, with rules 
Zero tolerance attitude for safety incidents at all levels of operations, with rules 
incorporated into operational procedures, safety manuals and all aspects of 
incorporated into operational procedures, safety manuals and all aspects of 
communication on safety. 
communication on safety. 
Health and Safety Committee responsible for Group-wide best practice sharing, 
Health and Safety Committee responsible for Group-wide best practice sharing, 
monitoring and improvements. 
monitoring, and improvements. 

Talent strategy and requirements regularly reviewed at Board 
Talent strategy and requirements regularly reviewed at Board 
and Operating Board level. 
and Operating Board level. 
Human resource teams share best practice across the Group to adapt 
Human resource teams share best practice across the Group to adapt 
recruitment and retention programmes to reflect changes in the labour market.
recruitment and retention programmes to reflect changes in the labour market.
Regular reviews of development plans and opportunities, including 360º 
Regular reviews of development plans and opportunities, including 360º 
appraisal results and succession planning.
appraisal results and succession planning.
Remuneration Committee review of pay/bonus and ensuring competitive 
Remuneration Committee review of pay/bonus and ensuring competitive 
compensation plans and pensions are in place. 
compensation plans and pensions are in place. 

1 2

3 4

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1 2

3 4

1 2

3 4

IT delivery and support
IT delivery and support

The Group and operational management depend on timely, accurate and 
The Group and operational management depend on timely, accurate and 
reliable information from software systems. Risks associated with the IT 
reliable information from software systems. Risks associated with the IT 
environment include failure to deliver IT projects on time and on budget, 
environment include failure to deliver IT projects on time and on budget, 
inadequate Enterprise Research Planning (“ERP”) controls and security, lack of 
inadequate Enterprise Resource Planning (“ERP”) controls and security, and a 
management information that could delay/impact decision making or our 
lack of management information that could delay/impact decision making 
or our service. 
service. 

The Group’s IT Steering Committee, chaired by the Group Chief Executive, 
The Group’s IT Steering Committee, chaired by the Group Executive, meets 
on a regular basis to review all major IT projects.
meets on a regular basis to review all major IT projects.
Hardware and software are sourced from reputable suppliers.
Hardware and software are sourced from reputable suppliers.
Implementation of up-to-date ERP solution is in progress and will reduce 
Implementation of up-to-date ERP solution is in progress and will reduce 
exposure to older more fragmented ERP suites. 
exposure to older more fragmented ERP suites. 
Appropriate disaster recovery plans are in place.
Appropriate disaster recovery plans are in place.

Supply chain reliance and costs
Supply chain reliance and costs

We rely upon a small number of core vendors for a high percentage of our 
We rely upon a small number of core vendors for a high percentage of our 
material requirements. Some of our needs may only be available from a 
material requirements. Some of our needs may only be available from a 
limited number of these vendors. There is potential risk in terms of supply 
limited number of these vendors. There is potential risk in terms of supply 
and price fluctuations driven by commodity price changes.
and price fluctuations driven by commodity price changes.

LAWS AND REGULATIONS

Product liability and contractual risk
Product liability and contractual risk

We manufacture products that often operate in extreme environments 
We manufacture products that often operate in extreme environments 
where a serious incident arising from failure could result in liabilities for 
where a serious incident arising from failure could result in liabilities for 
personal injury and/or damage to property, which could have an impact 
personal injury and/or damage to property, which could have an impact 
on our reputation, particularly in the automotive sector. 
on our reputation, particularly in the automotive sector. 

Legal and regulatory compliance 
Legal and regulatory compliance 

We operate in a large number of jurisdictions and, as a consequence, are 
We operate in a large number of jurisdictions and, as a consequence, are 
subject to numerous domestic and international regulations. These include 
subject to numerous domestic and international regulations. These include 
laws and regulations covering export control, anti-bribery and competition. 
laws and regulations covering export control, anti-bribery, and competition. 
Failure to comply could result in civil or criminal liabilities leading to 
Failure to comply could result in civil or criminal liabilities leading to 
significant fines and penalties or restrictions being placed upon our ability to 
significant fines and penalties or restrictions being placed upon ability to 
trade, resulting in reduced sales, profitability and reputational damage.
trade resulting in reduced sales, profitability, and reputational damage.

FINANCIAL

Financial risks
Financial risks

As an international business, the major financial risks faced by the Group are: 
As an international business, the major financial risks faced by the Group are: 
foreign exchange risk, interest rate risk, credit risk, liquidity risk, commodity 
foreign exchange risk, interest rate risk, credit risk, liquidity risk, commodity 
price risk and tax compliance.
price risk, and tax compliance.

Monthly reviews of key data ensures that each of our businesses are kept fully 
Monthly reviews of key data ensure that each of our businesses are kept fully 
informed of developments in commodity pricing. Increased low cost sourcing 
informed of developments in commodity pricing. Increased low cost sourcing 
will further offset current risk. In addition, commodity price hedging is 
will further offset current risk. In addition, commodity price hedging is 
undertaken on a non-deliverable basis taking into account the forecast volume 
undertaken on a non-deliverable basis taking into account the forecast volume 
of purchases, forward commodity prices and the cost of taking out cover.
of purchases, forward commodity prices and the cost of taking out cover.

Comprehensive quality control procedures are in place and appropriate levels 
Comprehensive quality control procedures and appropriate levels of insurance 
of insurance are carried for key risks. 
are carried for key risks. 
Major contracts are reviewed by the Group Legal Counsel and we work 
Major contracts are reviewed by the Group Legal Counsel, and we work 
continuously to build and maintain relationships with all key stakeholders. 
continuously to build and maintain relationships with all key stakeholders. 
Group guidelines on acceptable levels of contractual liability are reinforced by 
Group guidelines on acceptable levels of contractual liability are reinforced by 
legal and regulatory risk training specific to each division’s business and 
legal and regulatory risk training, specific to each Division’s business and 
geographical needs.
geographical needs.

Robust control framework. A cross-division export compliance group is 
Robust control framework. A cross-division export compliance group is 
embedded in the business, supported by Group Legal Counsel with external 
embedded in the business, supported by Group Legal Counsel, with external 
adviser participation.
adviser participation.
An anti bribery programme including employee declaration, supported by 
An Anti bribery programme including employee declaration, supported by 
on-line and site specific training and audit programmes. 
online and site specific training and audit programme. 

Financial risks are managed by the Group’s Treasury department in close 
Financial risks are managed by the Group’s Treasury department in close 
co-operation with the Group’s business divisions and operating companies, 
co-operation with the Group’s business divisions and operating companies, 
under the oversight of a Tax and Treasury Committee which is chaired by the 
under the oversight of a Tax and Treasury Committee which is chaired by the 
Group Finance Director. The responsibilities of the Group’s Tax and Treasury 
Group Finance Director. The responsibilities of the Group’s Tax and Treasury 
department include the monitoring of financial risks, management of cash 
department include the monitoring of financial risks, management of cash 
resources, debt and capital structure management, approval of counterparties 
resources, debt and capital structure management, approval of counterparties 
and relevant transaction limits, and oversight of all significant tax and treasury 
and relevant transaction limits, and oversight of all significant tax and treasury 
activities undertaken by the Group. 
activities undertaken by the Group. 

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40

TT electronics plc 
Annual Report 2012

 Directors’ report – Our progress in 2012
CORPORATE RESPONSIBILITY

As a trusted provider of performance 
critical technology solutions with 
customers and operations around the 
world, TT electronics has responsibility for 
our workplace, marketplace, community 
and environment. Global industries face 
unprecedented challenges of macro-
economic uncertainty, climate change and 
energy issues. Society expects creative, 
innovative and responsible thinking 
from industry.

We manage TT electronics responsibly and 
sustainably in accordance with the diverse 
expectations of global stakeholders. We 
understand corporate responsibility (“CR”) as a 
dynamic discipline to understand the direction 
of TT electronics, manage risk and maximise 
opportunities worldwide.

The Corporate and Social Responsibility 
Committee, chaired by the Group Chief 
Executive, is responsible for defining our CR 
strategies, monitoring our CR performance and 
ensuring that our CR activity contributes to our 
overall business objectives.

Our CR agenda covers principal issues affecting 
the long-term sustainability of the Group by 
directly impacting reputation or ability to 
operate. The Group’s four CR priorities, 
identified below, are material to our long-term 
performance and are supplemented at 
local level by CR programmes addressing 
local issues.

OUR WORKPLACE
We believe that the people working at TT 
electronics are our key assets. Creating a good 
working environment at all of our locations is 
of paramount importance. We strive to build 
supportive, diverse and attractive workplaces, 
whilst nurturing a high performance corporate 
culture from our core values.

An engaged workforce significantly enhances 
company performance. Engaged employees 
are more likely to perform well, promote TT 
and remain with TT for the longer term. 
They are also more likely to enhance our 

relationships with customers, stakeholders and 
the communities within which we operate.

Employee engagement begins with fostering 
a culture that is open, transparent and 
collaborative. At all levels within TT, we 
encourage openness and equality to enhance 
our culture. 

We strive to maintain engagement of 
employees at all points from recruitment to 
retirement. We approach every interaction 
with openness, honesty and integrity. Strong 
relationships built on trust are at the core of 
what we do. Collaboration across the Group 
and outside of TT assists our ability to gather 
important insights and ideas, improving the 
way we conduct our business and serve 
our customers.

In 2012, significant progress was made to 
connect continually with our employees at all 
levels: We see this as critical to engagement. 
Throughout TT, we provide numerous open, 
transparent and two-way communication 
channels in manufacturing process, the 
promotion of best practice and strategically. 
Employees enjoy a wide range of 
communication tools to assist their 
understanding of the Company’s goals and 
objectives. For example, all managers are 
encouraged to attend the quarterly webcast 
presented by the Group Chief Executive and 
Group Finance Director and cascade messages 
to their teams. Team briefings, suggestion 
schemes, employee forums and our global 
intranet “TT Talk” are among many other 
examples of our communication channels.

TT Talk is a Group wide intranet which 
showcases a broad range of activities from 
across the Group. Our CR section focuses on  
initiatives, employee achievements and 
charitable causes in which our people are 
involved, both through work and in the 
outside world.

jobs effectively, encouraging them to develop 
to their full potential. TT electronics provides a 
variety of tailored training and development 
opportunities. In 2012, the divisions continued 
their Six Sigma training programmes with 
further development of yellow, green and 
black belts.

In 2012, we launched our global management 
development programme – Aspire. The aim of 
Aspire is to provide supervisors and managers 
with fundamental skills for coaching their 
employees. Over 500 managers participated 
in the two day face-to-face training sessions 
which were held at each of our locations. 
91 per cent of participants believe the course 
will lead to an overall increase in productivity.

We continued to make significant progress 
during 2012 in creating a working environment 
that supports the health, safety and well-being 
of our people. We saw a 30 per cent reduction 
in the number of three day workplace 
accidents compared with 2011. This represents 
an overall 58 per cent reduction in our three 
day accident rate over the last two years.

During the year all facilities within our 
Integrated Manufacturing Services division 
(IMS) achieved OHAS 18001 accreditation. 
The OHAS 18001 specification provides 
consistent requirements for an occupational 
Health and Safety management system, 
enabling IMS to control its occupational health 
and safety risks and improve its performance.

Managers and employees alike are encouraged 
to promote and live our corporate values, 
collectively making our people feel proud to 
be part of our organisation. During 2012 over 
1,000 “Thank You” cards were issued through 
our global recognition programme “Inspire”, 
which acknowledges individual and team 
contributions through monthly recognition 
awards, quarterly exceptional awards and 
bi-annual Group Chief Executive awards.

We employ more than 5,000 people globally 
and continue to invest in their training and 
development. We strongly believe in 
equipping our people with the skills to do their 

During 2012, Neil Jones and Bertold Lange 
(pictured below) were presented with the CEO 
Award in recognition of their outstanding 
contributions to the Group.

Bertold Lange is pictured 
receiving his CEO Award 
from Pat Murray, Chief 
Executive for the Sensors 
division. Bertold was 
awarded the CEO award in 
recognition of his leadership 
skills and unfaltering focus 
on the customer.

Neil Jones was awarded 
the CEO Award in 
recognition of relentless 
pursuit for an innovative 
solution to an important 
problem, coupled with his 
outstanding leadership 
skills. 

TT electronics plc 
Annual Report 2012

41

OUR MARKETPLACE
We work closely with our customers, treating 
them with respect whilst ensuring we 
maintain the highest ethical standards. To this 
end we have launched a global, multi-lingual 
Ethics and Integrity Helpline. During the year 
five cases, all pertaining to the same matter, 
were submitted via the portal. All were 
investigated and appropriate action taken.

We seek to be a business partner that 
customers choose to work with for integrity 
and fairness. We require our own supply chain 
to ensure that their employees operate in a safe 
environment. The Group is a member of the 
Electronic Industry Citizenship Coalition (“EICC”) 
and follows its Code of Conduct. The Code of 
Conduct provides guidance in four critical areas 
of CR performance – Environment, Ethics, 
Health and Safety, and Labour.

In 2012, we focused on improving the way in 
which we monitor and manage our supply 
chain and our production facilities. We adhere 
to appropriate values, ethics, standards and 
behaviours, even in areas where laws or 
standards are inadequate or absent, ensuring 
that we meet the needs of all stakeholders. 
During the year, we completed comprehensive 
EICC self-assessment questionnaires for each of 
our manufacturing facilities. All facilities scored 
well in each of the four critical areas.

Ensuring that we provide a world-class service 
to our customers is essential to the continued 
growth of our business. Each division has its 
own set of quality and performance measures 
which are monitored on a monthly basis. 
We undertake regular reviews with all our 
key customers to gather clear feedback on 
our performance.

We are vigilant about ensuring compliance 
with the UK’s Bribery Act and similar legislation 
elsewhere, including continuous training and 
the terms and conditions under which we 
conduct business.

OUR ENVIRONMENT
During 2012, we continued to consolidate 
our position in terms of optimised energy 
consumption and are well placed in the 
published Carbon Reduction Commitment 
league table for our industrial sector.

Our objective of improving our carbon 
footprint within UK operations continues to 
gain momentum. Managed by focused internal 
teams, we are actively seeking best use of 
renewable resources, with localised wind 
generation and targeted solar arrays 
under consideration.

During 2012, all UK manufacturing sites 
installed smart metering systems to monitor 
gas and electricity usage and provide real time 
data with which we can further monitor and 
manage energy consumption.

In another example of improvement, our UK 
subsidiary, Welwyn Components Ltd is in the 
final stages of obtaining phase 2 of a Climate 
Change Agreement. The Welwyn team is 
working alongside AB Connectors and 
consultants from the Surface Coating 
Association on targeted carbon reduction. 
We continue to support and meet the 
requirements of the Carbon Trust Standard and 
aim to continue with our membership in 2013.

OUR COMMUNITY
Our UK charity partnership with Help the 
Hospices ended in 2012. Our employees have 
been amazing in supporting this charity over 
the last two years. Through fundraising and 
volunteering efforts, they have taken part  
in everything from bike rides to marathons, 
organised raffles and cake bakes, dressed up 
and dressed down. The work and energy that 
has been put into these activities by our 
employees is admirable. In total, we raised 
£100,000 for our local hospices.

For 2013, based on feedback from employees, 
our UK Charity of the Year partnership is with 
Macmillan Cancer Support. Macmillan is a 
national organisation, with many initiatives 
organised at a local level, and we look forward 
to working with and supporting them during 
the course of 2013.

Our facility in Mexico supported their local 
community when they participated in an event 
organised by the City Children’s Hospital and 
the AproCancer Organization for the 
International Childhood Cancer Day.  
Employees donated a total of 80 new toys  
for children between the ages of three and  
13 years. The committee of employees also 
helped with a range of other activities.

Congratulations to all who gave something 
back to their local community through their 
support for this noble cause.

As an organisation we believe that it is our 
responsibility to ensure that our activities 
support strong, thriving and diverse 
communities around the world. We aim to 
make a distinctive contribution to equality and 
social development by establishing effective 
partnerships and programmes that make best 
use of the energies and skills of our employees. 
We will continue to support our employees in 
fundraising for charities and voluntary work, 
recognising both the benefit to the 
community and to the employees themselves.

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Our UK Charity of the 
Year partnership is with 
Macmillan Cancer Support.

Our colleagues in Mexico 
supporting International 
Childhood Cancer Day.

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42

TT electronics plc 
Annual Report 2012

GOVERNANCE

IN THIS SECTION

Introduction by the Chairman

43 
44  Board of Directors and Company Secretary
46  Operating Board
47  Corporate Governance
52  Nominations Committee
53  Audit Committee
55  Remuneration Report
64  Other statutory disclosures

TT electronics plc 
Annual Report 2012

43

Directors’ report – Governance
INTRODUCTION BY THE CHAIRMAN

“Progress in embedding our 
core values, principles and 
ethics so that employees at 
all levels understand, and 
adhere to, the behaviours 
expected of them in their 
day to day activities has 
continued throughout 2012.”

Effective corporate governance continues to 
be of fundamental importance to the future 
success of TT electronics. Progress in 
embedding our core values, principles 
and ethics so that employees at all levels 
understand, and adhere to, the behaviours 
expected of them in their day to day activities 
has continued throughout 2012, supported 
by our Group-wide anti-bribery training and 
compliance programme and our multi-lingual, 
anonymous whistleblowing helpline.

Effective succession planning has continued 
to be a key theme in the governance of 
TT electronics, with John Shakeshaft and 
Stephen King successfully transitioning into 
their respective roles of Senior Independent 
Director and Chairman of the Audit 
Committee, upon the retirement of David 
Crowther in May 2012. The Board is well-
balanced, with non-executives who 
collectively draw on a wealth and variety of 
experience, thus providing for meaningful 
discussion and effective decision making.

The earlier involvement of the Board as a 
whole in the strategic planning cycle during 
2012 is a prime example of where this range 
of experience comes to the fore, with much 
greater challenge and debate being evident 
than in previous years and strategic plans 
being subjected to rigorous review.

Although not all elements of the existing UK 
Corporate Governance Code apply to TT 
electronics, the wider requirements of the 
Code have been considered by the Board and, 
where appropriate, action has been taken. 
For example, whilst the requirement for the 
annual re-election of all directors does not 
apply to TT electronics, as we are outside 
the FTSE 350, the Board has agreed that all 
Directors will stand for re-election at the 
Annual General Meeting to be held in May 

SEAN WATSON Chairman

2013. The Financial Reporting Council recently 
issued a revised UK Corporate Governance 
Code and revised guidance for Audit 
Committees. The Board and the Audit 
Committee have scheduled time in 2013 
to discuss how the Company can best 
comply with these new requirements.

In June 2012, the Government published 
a consultation on what companies must 
disclose in their remuneration reports. The 
Remuneration report on pages 55 to 63 must 
necessarily address existing legislation. 
However, we have anticipated some of the 
new requirements as described in the Letter 
from the Remuneration Committee Chairman 
on page 55. 

The Board of TT electronics attaches great 
importance to diversity issues at all levels 
across the business, but believes that of equal 
importance is the need to ensure that staff 
skills and competencies are matched to 
the strategic and operational needs of 
the business in our core markets. 

Our risk management processes have been 
significantly enhanced following the 
appointment of Per-Olof Ahlstrom to the new 
combined role of Group Head of Risk and 
Assurance in January 2012. During the year 
Per-Olof has initiated a number of 
improvements in the analysis, detection and 
reporting of risk and, although there still 
remains work to be done, the benefits of 
this work are already evident.

These enhancements to our risk management 
process, together with our continued focus 
on encouraging the correct behaviours, serve 
to embed our core values throughout the 
Group and to strengthen our position as a 
trusted and respected partner to the world 
leading manufacturers with whom we do 
business.

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TT electronics plc 
Annual Report 2012

Directors’ report – Governance
 BOARD OF DIRECTORS AND COMPANY SECRETARY

1. SEAN WATSON (64)
Chairman

Committees: 
Nominations (Chairman) 
Corporate Governance (Chairman) 
Remuneration

Joined TT: 2007 as an independent 
non-executive Director. Chairman since 
May 2010.

Experience: A former partner and Head 
of Corporate Finance with CMS Cameron 
McKenna LLP. Was a non-executive Director 
of  Informa plc from 2000 to 2009. A Trustee 
of Princess Alice Hospice.

2. GERAINT ANDERSON (53)
Group Chief Executive

3. SHATISH DASANI (51)
Group Finance Director

Committees: 
Corporate and Social Responsibility (Chairman) 
Risk (Chairman)

Committees: 
Corporate Governance 
Risk

Joined TT: 2008

Joined TT: 2008

Experience: Previously Vice President and 
General Manager of the Worldwide Service 
Provider Organisation for Linksys, a division 
of Cisco Systems, Inc.

Experience: A Chartered Accountant, 
previously with De La Rue plc, Lafarge SA and 
Blue Circle Industries plc. Was also previously 
a non-executive Director of Camelot plc.

4. TIM ROBERTS (42)
Group Business Development Director

Committees: 
Corporate Governance 
Risk

Joined TT: 2008. Appointed to the Board 
in January 2010.

Experience: Previously Strategy and Business 
Development Director with Spirent 
Communications plc and formerly a solicitor 
specialising in corporate finance.

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TT electronics plc 
Annual Report 2012

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5. JOHN SHAKESHAFT (58)
Senior Independent Non-executive Director

6. MICHAEL BAUNTON CBE (62)
Independent Non-executive Director

7. STEPHEN KING (52)
Independent Non-executive Director

Committees: 
Audit 
Nominations 
Remuneration

Joined TT: 2010

Experience: Currently Chairman of the Board 
of SMMT Industry Forum Limited (the Society 
of Motor Manufacturers and Traders’ Industry 
Forum) and a non-executive Director of ACAL 
Energy Ltd. Awarded a CBE in 2004 for 
services to the automotive and engineering 
industries in the UK. Previously held senior 
executive roles with companies including 
Caterpillar Inc, Perkins Engines Company 
Limited and Tenneco Inc.

Committees: 
Remuneration (Chairman) 
Audit 
Nominations 
Corporate and Social Responsibility

Joined TT: 2007

Experience: Currently Chairman of Ludgate 
Environmental Fund Limited; Deputy 
Chairman and Chair of the Audit Committee 
of  The Economy Bank NV; Chair of the 
Investment Committee of Corestone, AG; 
Director and Chair of the Audit Committee 
of both Tele2 AB and Xebec Adsorption, Inc.
Director of Valiance Investment Funds. 
External member and Chair of the Audit 
Committee of the Council of Cambridge 
University. Formerly a Managing Director at 
ABN AMRO and Lazard Brothers, having held 
senior positions within Barings, Morgan 
Stanley and Morgan Grenfell. Joined the City 
in 1986 following a number of overseas 
postings with HM Foreign and 
Commonwealth Office.

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Committees: 
Audit (Chairman) 
Nominations 
Corporate Governance

Joined TT: 2011

Experience: Currently Group Finance Director 
of Caledonia Investments plc and Chairman of 
the Audit Committee of the Board of Bristow 
Group Inc. Formerly non-executive Director 
and Chairman of the Audit Committee of The 
Weir Group plc. Group Finance Director of De 
La Rue plc from 2003 to 2009 and, prior to 
that, Finance Director of Aquila Networks plc 
(formerly Midlands Electricity plc). A Chartered 
Accountant, Stephen has also held senior 
financial positions in Lucas Industries plc and 
Seeboard plc and was also a non-executive 
Director of Camelot plc from 2008 to 2009.

8. LYNTON BOARDMAN (46)
Group General Counsel & Company Secretary 

Committees: 
Risk 
Corporate Governance

Joined TT: October 2012 

Experience: A qualified solicitor, having 
practiced with Simmons & Simmons, 
MacFarlanes and Burges Salmon LLP. Formerly 
Head of Legal (Europe, Middle East and Africa) 
at Syngenta Crop Protection and then General 
Counsel and Company Secretary of QinetiQ 
Group plc from 2002 to 2011.

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TT electronics plc 
Annual Report 2012

Directors’ report – Governance
OPERATING BOARD

The Operating Board consists of the executive 
Directors, the Group General Counsel & 
Company Secretary and:

1. BILLAL HAMMOUD (40)
Divisional Chief Executive – Components 

Committees: 
Risk

Joined TT: 2010 

Experience: Previously responsible for 
Honeywell’s magnetic, optical and pressure 
sensor portfolios serving the global 
transportation, aerospace, medical and 
industrial markets. An engineer who holds 
an MBA, he is fluent in French and Arabic 
and is Six Sigma green belt certified.

2. PAT MURRAY (53)
Divisional Chief Executive – Sensors 

Committees: 
Risk

Joined TT: 2009 

Experience: Previously Global Leader of 
Honeywell’s Sensor Division and Regional 
Vice-President and General Manager for 
Europe, Middle East and Africa. A chartered 
engineer and Six Sigma green belt certified.

3. JOHN MOLLOY (49)
Divisional Chief Executive – IMS 

5. PER-OLOF AHLSTROM (36)
Group Head of Risk and Assurance 

Committees:  
Risk 

Joined TT: January 2012 

Experience: Joined from Everything 
Everywhere Limited, a joint venture between 
Orange UK and T-Mobile UK, where he was 
Director, Risk Assurance and Internal Audit. 
Previously worked with T-Mobile and PwC 
covering programme, service integration, risk, 
audit and compliance management. A CISA 
accredited Information System Auditor with 
a BSc and MSc, he is fluent in Swedish.

Committees: 
Risk

Joined TT: 2005 

Experience: Joined the Group when it 
acquired Dage (a business which now forms 
part of the IMS division) where he had been 
working in senior management roles for six 
years, primarily in Asia. Previously held senior 
management positions with electronics 
companies and EMS providers.

4. JOHN LEIGHTON-JONES (43) 
Group Human Resources Director 

Committees:  
Corporate and Social Responsibility  
Risk

Joined TT: 2010 

Experience: Joined from QinetiQ Group plc, 
where he was Human Resources Director. 
Previously worked in a variety of senior 
human resources roles. Originally trained 
as a tax accountant.

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TT electronics plc 
Annual Report 2012

47

Directors’ report – Governance
CORPORATE GOVERNANCE

The Company is committed to achieving and maintaining the highest standards of corporate governance. The main and supporting principles 
of good corporate governance set out in the UK Corporate Governance Code (“Code”) have been complied with throughout the year ended 
31 December 2012. Details and explanations of the application of the principles of corporate governance are set out below. 

The Board 
Subject to the Company’s Articles of Association, UK legislation and any directions given by special resolution, the business of the Company is 
managed by the Board. The Board’s main roles are to provide leadership to the management of the Group, determine the Group’s strategy and 
ensure that the agreed strategy is implemented. The Board has also reserved certain specific matters to itself for decision. These include financial 
policy and acquisition and disposal policy. The Board appoints its members and those of its principal Committees having received the 
recommendations of the Nominations Committee and reviews recommendations of the Board Committees and the financial performance and 
operation of the Group’s businesses. It regularly reviews the identification, evaluation and management of the principal risks faced by the Group 
and the effectiveness of the Group’s system of internal control. 

During 2012 the Board comprised three executive Directors and up to five non-executive Directors. All of the Directors served throughout the 
year, with the exception of David Crowther who retired on 15 May 2012. David Crowther was the senior independent non-executive Director until 
his retirement, at which point John Shakeshaft was appointed senior independent non-executive Director. 

Board and Committee meetings are scheduled in line with the financial calendar of the Company, thereby ensuring that latest operating data is 
available for review and sufficient time and focus can be given to matters under consideration. During the year there were eight principal Board 
meetings on scheduled dates for which full notice was given. Of these principal meetings, one was dedicated to strategic planning, whilst one 
was held at Welwyn Components Ltd, a subsidiary located in Bedlington, UK, thereby enabling the non-executive Directors to meet with 
employees and gain a better understanding of this operation. Additional meetings are held as and when required and, during 2012, five such 
meetings took place. The Board has had two principal meetings and two additional meetings to date during 2013. Full details of each Director’s 
Board and Committee meeting attendance are given on page 49 and in the relevant Committee report.

Directors 
Directors’ biographies including the Committees on which they serve and chair are shown on pages 44 and 45. 

At the time of his appointment as Chairman, Sean Watson was considered to be independent in accordance with the provisions of the Code. 
All the remaining non-executive Directors are also considered to be independent as defined by the Code.

In accordance with the Company’s Articles of Association each Director will offer himself for re-election at the first Annual General Meeting held 
following his initial appointment and thereafter, every three years. However, in light of best practice, the Board has agreed that all Directors will 
retire and, being eligible, offer themselves for re-election at the forthcoming Annual General Meeting. Following formal performance evaluation, 
the performance of each Director continues to be effective and to demonstrate commitment to the role.

Directors’ interests 
The Directors of the Company at 31 December 2012 held interests in the following numbers of the Company’s Ordinary shares of 25 pence each 
on 1 January 2012, 31 December 2012 and 11 March 2013:

11 March 2013 
Ordinary shares

31 Dec 2012 
Ordinary shares

1 Jan 2012 
Ordinary shares

Sean Watson

Geraint Anderson

Shatish Dasani

Tim Roberts

John Shakeshaft

Michael Baunton

Stephen King

190,000
560,000
708,000
130,475
51,206
72,717
100,000

190,000
560,000
708,000
130,475
51,206
72,717
100,000

173,000
140,000
420,000
33,196
15,479
64,217
50,000

The interests of the Directors in the Company’s share options and Long Term Incentive Plan are shown in the Directors’ remuneration report on 
pages 62 and 63. 

The Chairman and Group Chief Executive 
The division of responsibilities between the Chairman and the Group Chief Executive has been defined, formalised in writing, and approved by 
the Board:

The Chairman maintains responsibility for the leadership and effectiveness of the Board and setting its agenda; ensuring that all Directors receive 
accurate, timely and clear information on financial, business and corporate matters to enable them to participate effectively in Board decisions; 
facilitating the effective contribution of non-executive Directors in particular; ensuring constructive relations between executive and  
non-executive Directors; and ensuring effective communication with shareholders. He is also responsible for ensuring that the performance  
of individual Directors, the Board as a whole and its Committees is evaluated at least once a year.

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TT electronics plc 
Annual Report 2012

Directors’ report – Governance
CORPORATE GOVERNANCE CONTINUED

The Group Chief Executive is responsible for the operations of the Group. He is responsible for developing Group objectives and strategy, having 
regard to the Group’s responsibilities to its shareholders, customers, employees and other stakeholders and, following presentation to, and 
approval by, the Board, for the successful implementation and achievement of those strategies and objectives. His other areas of responsibility 
include managing the Group’s risk profile, including its Health and Safety performance; ensuring that the Group’s businesses are managed in 
line with strategy and approved business plans, and comply with applicable legislation and Group policy; ensuring effective communication 
with shareholders; and setting Group human resource policies, including management development and succession planning for the 
senior executive team. 

Board procedures 
All Directors have access to the advice and services of the Group General Counsel & Company Secretary and are offered training to fulfil their role 
as Directors, both on appointment and at any subsequent time. There is an agreed procedure for any individual Director to take independent 
professional advice at the Company’s expense if he considers it necessary. 

In accordance with the provisions on conflicts of interest in the Companies Act 2006, the Company has put in place procedures for the disclosure 
and review of any conflicts, or potential conflicts, of interest which the Directors may have and for the authorisation of such conflicts by the Board. 
In deciding whether to authorise a conflict or potential conflict the Directors must have regard to their general duties under the Companies Act 
2006. The authorisation of any conflict, and the terms of authorisation, may be reviewed at any time and, in accordance with best practice, 
a review of Directors’ conflicts of interests is conducted annually. 

Board and Committee performance evaluation 
In accordance with the Code, the Board conducted an evaluation of its performance and that of its principal Committees. The potential use of 
external facilitation of the Board performance evaluation process was considered by the Board during the year, but was not felt to be appropriate 
at this point in time.

The Board performance evaluation programme was led by the Chairman and each Director completed a questionnaire which they used to score 
and comment on a number of performance criteria. These individual responses were then compiled into a single report by the Group General 
Counsel & Company Secretary and this was circulated to the Board for discussion and detailed review. It was concluded that the Board was 
performing satisfactorily, noting in particular that:

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:1)(cid:53)(cid:73)(cid:70)(cid:1)(cid:70)(cid:79)(cid:73)(cid:66)(cid:79)(cid:68)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:68)(cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:84)(cid:84)(cid:13)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:1)(cid:35)(cid:80)(cid:66)(cid:83)(cid:69)(cid:1)(cid:78)(cid:70)(cid:70)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:69)(cid:70)(cid:69)(cid:74)(cid:68)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:90)(cid:13)(cid:1)(cid:73)(cid:66)(cid:69)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:76)(cid:70)(cid:90)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:242)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)
development of Group strategy, but that involving the Board in strategy development at an earlier stage would provide further benefits;

(cid:1)(cid:52)(cid:74)(cid:72)(cid:79)(cid:74)(cid:246)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1)(cid:74)(cid:78)(cid:81)(cid:83)(cid:80)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:73)(cid:66)(cid:69)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:80)(cid:67)(cid:86)(cid:84)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:242)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:80)(cid:74)(cid:79)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:41)(cid:70)(cid:66)(cid:69)(cid:1)
of Risk and Assurance and Stephen King’s succession to the role of Chairman of the Audit Committee. Opportunities existed, however, for 
further improvement to the risk management process by more effective communication of emerging issues;

(cid:1)(cid:42)(cid:79)(cid:68)(cid:83)(cid:70)(cid:66)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:80)(cid:66)(cid:83)(cid:69)(cid:8)(cid:84)(cid:1)(cid:70)(cid:79)(cid:72)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:78)(cid:66)(cid:85)(cid:85)(cid:70)(cid:83)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:36)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:52)(cid:80)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:51)(cid:70)(cid:84)(cid:81)(cid:80)(cid:79)(cid:84)(cid:74)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:84)(cid:73)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)(cid:67)(cid:70)(cid:1)(cid:72)(cid:74)(cid:87)(cid:70)(cid:79)(cid:1)(cid:72)(cid:83)(cid:70)(cid:66)(cid:85)(cid:70)(cid:83)(cid:1)(cid:71)(cid:80)(cid:68)(cid:86)(cid:84)(cid:28)

(cid:1)(cid:42)(cid:79)(cid:68)(cid:83)(cid:70)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:87)(cid:74)(cid:84)(cid:74)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:70)(cid:79)(cid:74)(cid:80)(cid:83)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:67)(cid:70)(cid:77)(cid:80)(cid:88)(cid:1)(cid:35)(cid:80)(cid:66)(cid:83)(cid:69)(cid:1)(cid:77)(cid:70)(cid:87)(cid:70)(cid:77)(cid:1)(cid:9)(cid:87)(cid:74)(cid:66)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:1)(cid:85)(cid:80)(cid:1)(cid:67)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:69)(cid:86)(cid:68)(cid:85)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:47)(cid:80)(cid:78)(cid:74)(cid:79)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:36)(cid:80)(cid:78)(cid:78)(cid:74)(cid:85)(cid:85)(cid:70)(cid:70)(cid:10)(cid:1)(cid:88)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)
enhance successful succession planning; and

(cid:1)(cid:53)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:1)(cid:88)(cid:74)(cid:69)(cid:70)(cid:83)(cid:1)(cid:83)(cid:66)(cid:79)(cid:72)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:69)(cid:66)(cid:85)(cid:66)(cid:1)(cid:88)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:1)(cid:67)(cid:70)(cid:85)(cid:85)(cid:70)(cid:83)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:79)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:84)(cid:13)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:70)(cid:85)(cid:74)(cid:85)(cid:80)(cid:83)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)
developments. 

Directors’ performance evaluation 
In accordance with the Code, the performance of individual Directors was also evaluated.

Each of the non-executive Directors completed a self-assessment questionnaire which required them to score their own performance against 
a number of criteria. The Chairman then held private discussions with each non-executive Director and this provided an opportunity to discuss 
any  issues which had arisen in respect of either their individual assessments or those of the Board and its principal Committees. In respect of 
the Chairman’s performance, the other non-executive Directors, led by the senior independent non-executive Director, and with input from the 
Group Chief Executive, met privately to discuss this, with the outcomes being fed back to the Chairman by the senior independent non-executive 
Director for discussion and action as appropriate.

At the beginning of the year, each executive Director was set challenging performance objectives, progress against which was then reviewed as 
the year progressed. All the executive Directors take part in the Group’s performance management programme under which they each receive 
detailed feedback from their colleagues which, together with a review of progress against agreed goals and objectives, is used to assess 
performance and to set clear objectives and developmental plans for the following year which are closely aligned with the Group’s strategic 
priorities and values. The Group Chief Executive met with each of the other two executive Directors to discuss and review confidentially their 
performance against objectives. The performance evaluation of the Group Chief Executive was conducted by the Chairman, taking account 
of the output from the Group’s performance management programme together with feedback provided by the other non-executive Directors  
at a private meeting held to discuss this and any other matters which the non-executive Directors wished to raise.

TT electronics plc 
Annual Report 2012

49

Board Committees 
The Board has established a number of Committees, each with its own delegated authority defined in terms of reference. These terms are 
reviewed periodically and the Board receives reports and copies of minutes of Committee meetings. The Board appoints the members of 
all principal Board Committees, having received the recommendations of the Nominations Committee. 

Principal Committees 
The principal Committees are the Nominations, Audit and Remuneration Committees. Details of the Nominations and Audit Committees, 
including brief descriptions of their terms of reference (full details of which are available for inspection by shareholders at the Annual General 
Meeting and on the Group’s website) and duties, together with a summary of significant events which have taken place during the year, can  
be found on pages 52 to 54 and should be read as part of the Directors’ report. Details of the Remuneration Committee and its activities are 
contained within the Remuneration report on pages 55 and 63.

Board meeting attendance 2012 
Eight principal Board meetings were held during 2012. Details of attendance are set out below:

Sean Watson
Geraint Anderson
Shatish Dasani
Tim Roberts
David Crowther (retired 15 May 2012)
Michael Baunton
Stephen King
John Shakeshaft 

8 of 8
8 of 8
8 of 8
8 of 8
3 of 3
8 of 8
8 of 8
8 of 8

Additional meetings of the Board and its principal Committees take place as and when required throughout the year. During 2012 there were 
five such Board meetings. By necessity, these meetings are often convened at shorter notice than would be the case for principal meetings. 
Two of these meetings were fully attended, however John Shakeshaft, Stephen King and Michael Baunton were unable to attend one 
such unscheduled meeting each. 

Directors’ attendance at meetings of the principal Committees on which they serve are detailed in the Nominations, Audit and Remuneration 
Committee reports on pages 52, 53 and 61.

Other Committees

Corporate Governance Committee 
The Corporate Governance Committee is responsible for monitoring the Group’s compliance with good corporate governance. During the year 
it was chaired by the Chairman and included an independent non-executive Director, the Group Finance Director, the Group Business 
Development Director and the Group Company Secretary. The Committee’s duties are as follows: to review regularly the corporate governance 
procedures of the Company to ensure that they are up-to-date and effective, and are communicated to those employees, officers and/or 
Directors of the Company or its subsidiaries to whom they are relevant; to make recommendations to the Board from time to time on any 
procedures, or processes, that may need changing, in order to ensure that the Company is compliant with relevant legislation, including but not 
limited to, the Companies Act 2006; to ensure that the Company is compliant with the standards and disclosures required by the Code and the 
Listing, Prospectus and Disclosure and Transparency Rules of the UK Listing Authority; and to receive reports, or any views expressed by 
shareholders, stakeholders, government or other regulatory bodies and any other interested parties in relation to corporate governance.

The Committee met twice during 2012, during which time it re-considered Code provisions regarding the annual re-election of Directors. It was 
concluded that, notwithstanding the fact that this provision does not apply to the Company, it currently being outside of the FTSE 350, annual 
re-election for all Directors would be implemented with effect from the Annual General Meeting to be held in 2013. The reports and AGM voting 
recommendations from various investor bodies were also reviewed and suggested areas for improvement noted in relation to auditors and audit 
policy, remuneration and environmental, social and governance matters. 

Corporate and Social Responsibility Committee
The Corporate and Social Responsibility Committee is chaired by the Group Chief Executive and also comprises one independent non-executive 
Director and up to three senior executives from within the Group. The Committee met four times during 2012 and has had one meeting to date 
during 2013. The Board regularly receives reports on its activities.

Further information on the activities of the Corporate and Social Responsibility Committee is given in the Corporate responsibility section 
on pages 40 and 41.

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50

TT electronics plc 
Annual Report 2012

Directors’ report – Governance
CORPORATE GOVERNANCE CONTINUED

Risk Committee 
The Risk Committee assists the Board and the Audit Committee in fulfilling their responsibilities by: providing a framework for managing risks 
throughout the Group; monitoring risk appetite and exposure through regular reviews of principal risks; reviewing the effectiveness of risk 
management processes and controls; and providing an appropriate level of reporting on the status of risk management within the Group.

This is achieved by promoting awareness of risk management, and ensuring that a robust risk management framework is in place to ensure 
that risks are identified, quantified, managed, monitored and reported. 

During the year the Committee was strengthened by ensuring more cross functional representation and involvement from executive 
management at a Group as well as a divisional level. The Committee was chaired by the Group Chief Executive and included the Group Finance 
Director, the Group General Counsel, the Group Head of Risk and Assurance and other senior executives from within the Group. The Group 
Business Development Director, Group IT Director, Group Purchasing Director and Divisional Chief Executives also became members of the 
Committee in June 2012 and, in December 2012, the new Group General Counsel & Company Secretary replaced the existing Group General 
Counsel on the Committee. The Committee met eight times during 2012 and has had two meetings to date in 2013. 

Further information on the Group’s risk management activities and framework is given in the Risk management framework and risk profile section 
on pages 36 to 39 and in the Review of internal controls below.

Review of internal controls 
The Directors have overall responsibility for the Group’s systems of internal control and for reviewing their effectiveness. These systems have been 
in place for the full financial year. The Group is committed to a policy of maintaining appropriate internal control over all of its activities. Controls 
are designed to provide the Directors with reasonable assurance that assets are safeguarded, transactions are properly authorised, and that 
material errors and irregularities are prevented or, if controls are failing, are discovered and mitigated on a timely basis. The systems of control are 
reviewed regularly and improved where necessary to meet the Group’s requirements. Business risk evaluation takes place at operating company, 
divisional and Group levels as part of the annual budget preparation process. Having identified risks, operating companies and divisions then 
monitor, review and update the associated controls to mitigate the risks appropriately. 

Further details of the Group’s exposure to risk and processes in place to manage the same are set out on pages 36 to 39. 

The risk management procedures and systems of internal control are designed to identify and assess principal risks which the Group faces and 
to manage them appropriately. However, such systems can only provide reasonable and not absolute protection against material mis-statement 
or loss. 

Principal features of the system of internal control 
The Directors meet as a Board at least every other month to monitor financial performance, give direction on significant strategic and financial 
issues and review the principal risks of the Group. 

The Group Chief Executive chairs a Committee (“Operating Board”) consisting of the executive Directors, Divisional Chief Executives and other 
senior management. The Operating Board meets on a monthly basis and reviews the historical performance and the outlook for the Group as a 
whole and agrees and implements any actions as necessary. In addition, it is responsible for monitoring and driving delivery of the Group’s key 
priorities and acts as a forum to raise and debate significant operational issues. Biographies of Operating Board members are given on page 46.

Each operating company within the Group operates within the policies, rules and procedures determined by the Directors and communicated 
through an internet based Group Policies hub. The Directors exercise control over operating companies through divisional senior executives who 
monitor and oversee the activities, financial performance and controls of each operating company and seek to ensure that these companies 
comply with Group accounting policies in the process for preparation of consolidated financial statements. The directors of operating companies 
and heads of business units are held accountable for the effectiveness of the implementation and maintenance of controls within their 
companies. This provides constant and consistent management. 

The Group has detailed financial planning and reporting systems. Management accounts are prepared monthly by each operating company 
comparing actual performance with budget. The financial performance of each operating company is subjected to in-depth formal review at 
monthly meetings. One purpose of these reviews is the early identification of potential business risks and agreement on suitable and prompt 
courses of action. Operating companies prepare strategic plans and annual budgets which are consolidated up to a divisional and Group level 
and are reviewed and approved by the divisional senior executives, Group management and the Board. 

The Group has comprehensive control and approval procedures which are rigorously enforced. There are clear definitions of appropriate 
authorisation levels. Capital investment and other major items of expenditure are made only after compliance with detailed appraisal procedures 
and, if above set levels, only with the approval of the executive Directors and the Board. 

Accounting and reporting policies and practices require that the Group’s accounting records are prepared consistently, accurately and in 
compliance with Group policy and relevant accounting standards.

TT electronics plc 
Annual Report 2012

51

The Risk and Assurance department review the internal control environment according to the annual internal audit plan agreed with the 
Audit Committee. 

During 2012, risk management processes were reviewed and assessed by the Group Head of Risk and Assurance to identify recommended 
improvements. This review and consultation resulted in the executive management team agreeing to implement a two year improvement 
programme to further strengthen risk management processes and controls. Improvements implemented during 2012 are set out on page 37.

Certain key functions, including treasury, taxation, pensions, provision of legal advice, risk and insurance are controlled at the Group’s head office 
and are monitored by the executive Directors. 

The Directors have reviewed the effectiveness of the systems of risk management and internal control during the year to 31 December 2012 
and during the period since then to the date of this report. They have made, and will continue to make, improvements where necessary.

Financial risk management objectives and policies are set out under Financial risks on page 39. 

Investor relations
Geraint Anderson and Shatish Dasani meet institutional investors immediately after publication of the annual and interim results and on an 
ongoing basis as required. Sean Watson, as Chairman, and John Shakeshaft, as senior independent non-executive Director and Chairman of the 
Remuneration Committee, also undertake consultation on certain matters with major shareholders from time to time. Through these Directors, 
the Company maintains a regular dialogue with institutional shareholders and analysts and feedback received is reported to the Board so that all 
Directors develop an understanding of the views of major shareholders about the Company. Trading updates and press releases are issued as 
appropriate and the Company’s brokers provide briefings on shareholder opinion and compile independent feedback from investor meetings. 
Information offered at the analysts’ meetings together with our financial press releases are available on the Group’s website. The Annual General 
Meeting is used by the Directors to communicate with both institutional and private investors. 

Going concern 
The Directors have reviewed the budgets for 2013 and the projections for 2014 developed during the 2012 annual strategic planning cycle. 
The Directors have assessed the future funding requirements of the Group and compared them with the level of available borrowing facilities, 
recognising that the main committed facility was re-negotiated during 2012 for a period of five years to August 2017. Based on this, the Directors 
are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue 
to adopt the going concern basis in preparing the financial statements. 

Approved by the Board on 13 March 2013 and signed on its behalf by: 

Lynton Boardman
Group General Counsel & Company Secretary 

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52

TT electronics plc 
Annual Report 2012

Directors’ report – Governance
NOMINATIONS COMMITTEE

MEMBERSHIP:
Sean Watson (Chairman)

Michael Baunton

Stephen King

John Shakeshaft 

David Crowther (retired 15 May 2012)

Remit
The Nominations Committee’s remit includes the structure, size and composition of the Board as a whole; the overall leadership needs of the 
organisation; consideration of succession planning for Directors and Divisional Chief Executives (having due regard to the length of service of 
non-executive Directors) and the search for and selection of suitable candidates for the appointment of replacement or additional Directors. 

Committee meeting attendance 2012
During 2012 the Committee met twice.

Sean Watson
Michael Baunton
Stephen King

The Committee has had no meetings to date during 2013.

John Shakeshaft
David Crowther

2 of 2

2 of 2

2 of 2

2 of 2

1 of 1

2012 review
The Committee seeks to ensure that the Board of TT electronics is balanced and effective with diverse skills, knowledge and experience. 
Diversity and gender inclusiveness span the whole Group and are important and enduring considerations in the search for and selection 
of Board members.

During 2012 the Committee re-considered whether the introduction of diversity quotas or targets was appropriate. The Committee is rigorous in 
seeking talent and is focused on ensuring that the Group has the best possible Board available to promote its interests. The Committee engages 
external search consultants to assist in the specification of Board positions and their selection of prospective candidates to ensure that there is a 
robust, measurable and orderly process. The Committee believes that this rigorous process has, over time, led to the recruitment of talented 
individuals, significantly enhancing the composition of the Board. 

The Committee continues to consider that diversity quotas are inappropriate and is committed to recruiting the best talent available, based 
on merit and assessed against objective criteria of skills, knowledge, independence and experience. Its primary objective is to ensure that 
TT electronics maintains the strongest possible leadership. 

The Board attaches a high degree of importance to diversity at all levels across the Group, although of equal importance is the need to ensure 
that staff skills and competencies are matched to the strategic and operational needs of the business in its core markets. 

During 2012 the Committee considered Board and Committee composition in light of the retirement of David Crowther. At the time of his 
appointment, Stephen King had already been identified as a suitable successor to the role of Chairman of the Audit Committee. The Committee 
further recommended to the Board that John Shakeshaft should be appointed as the senior independent non-executive Director, with Michael 
Baunton to serve on the Remuneration Committee and Stephen King on the Corporate Governance Committee.

Non-executive Directors’ lengths of service

2007

2008

2009

2010

2011

2012

2013

2014

2015

John Shakeshaft
Michael Baunton
Stephen King

First three year term

First additional three year term

Second additional three year term

Performance evaluation
The Committee carried out an assessment of its performance in 2012 based on a review of its activities during the year against its terms of 
reference. It was concluded that the Committee had performed satisfactorily and is structured appropriately to provide effective support to the 
Board. The Committee had increased its involvement in the recruitment process for senior positions below Board level, which in turn had enabled 
greater visibility of potential successors to executive Board positions. The Committee continued to have improved visibility on the business and 
the performance of senior management team members as a result of Divisional Chief Executives presenting at Board meetings, site visits 
undertaken by the Board and non-executive Directors participating in Group events. 

TT electronics plc 
Annual Report 2012

53

Directors’ report – Governance
AUDIT COMMITTEE

MEMBERSHIP:
Stephen King (Chairman)

Michael Baunton

John Shakeshaft

David Crowther (retired 15 May 2012)

Remit 
The Committee’s duties include reviewing and advising the Board on: 

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:72)(cid:83)(cid:74)(cid:85)(cid:90)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:246)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:28)(cid:1)

(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:80)(cid:74)(cid:79)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:89)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:80)(cid:83)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:74)(cid:83)(cid:1)(cid:70)(cid:242)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:77)(cid:74)(cid:79)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:69)(cid:70)(cid:28)(cid:1)

(cid:85)(cid:73)(cid:70)(cid:1)(cid:79)(cid:66)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:89)(cid:85)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:34)(cid:86)(cid:69)(cid:74)(cid:85)(cid:80)(cid:83)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:74)(cid:83)(cid:1)(cid:74)(cid:79)(cid:69)(cid:70)(cid:81)(cid:70)(cid:79)(cid:69)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:80)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:78)(cid:66)(cid:74)(cid:79)(cid:85)(cid:66)(cid:74)(cid:79)(cid:70)(cid:69)(cid:28)(cid:1)

(cid:1)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:74)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:69)(cid:86)(cid:83)(cid:70)(cid:84)(cid:13)(cid:1)(cid:69)(cid:70)(cid:68)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:75)(cid:86)(cid:69)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:66)(cid:242)(cid:70)(cid:68)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:246)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:13)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:74)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)
and with the Companies Act 2006; 

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and external audit;

(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:34)(cid:86)(cid:69)(cid:74)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:81)(cid:66)(cid:83)(cid:70)(cid:79)(cid:68)(cid:90)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:13)(cid:1)(cid:68)(cid:80)(cid:79)(cid:68)(cid:70)(cid:83)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:34)(cid:86)(cid:69)(cid:74)(cid:85)(cid:80)(cid:83)(cid:1)(cid:74)(cid:79)(cid:69)(cid:70)(cid:81)(cid:70)(cid:79)(cid:69)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:67)(cid:80)(cid:85)(cid:73)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:28)

(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:68)(cid:80)(cid:81)(cid:70)(cid:13)(cid:1)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:242)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:1)(cid:71)(cid:86)(cid:79)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:34)(cid:86)(cid:69)(cid:74)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:84)(cid:84)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:80)(cid:79)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)

(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:8)(cid:84)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:69)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:83)(cid:70)(cid:84)(cid:81)(cid:80)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:80)(cid:1)(cid:66)(cid:79)(cid:90)(cid:1)(cid:66)(cid:77)(cid:77)(cid:70)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)(cid:67)(cid:90)(cid:1)(cid:88)(cid:73)(cid:74)(cid:84)(cid:85)(cid:77)(cid:70)(cid:67)(cid:77)(cid:80)(cid:88)(cid:70)(cid:83)(cid:84)(cid:15)(cid:1)

(cid:116)(cid:1)
The Code requires that at least one member of the Audit Committee has recent and relevant financial experience. Stephen King fulfils this 
requirement. 

Committee meeting attendance 2012
During 2012 the Committee held five scheduled meetings.

Stephen King 
Michael Baunton

5 of 5

5 of 5

John Shakeshaft
David Crowther

5 of 5

3 of 3

One additional meeting of the Committee took place during the year and this was fully attended. The Committee met twice with the Group’s 
auditors, KPMG Audit Plc, without executives of the Company being present. During the year, the Committee also met once with the Group Head 
of Risk and Assurance (the head of the internal control function) without executives of the Company being present.

The Committee has had one meeting to date during 2013.

2012 review
In order that the Audit Committee fulfils its duties regarding the integrity of the financial statements and other financial data, the Group Finance 
Director and the Group Financial Controller attend Committee meetings, presenting reports and providing analysis and explanations for queries 
raised. The external auditors are also attendees and present reports on their audits – addressing such matters as an overview of the financial 
statements, key accounting judgements, accounting policies, audit differences and internal control matters.

During 2012 the Group Head of Risk and Assurance also attended meetings, to update the Audit Committee on progress on the internal audit 
plan; findings and recommendations; and team and methodology improvements. A formal review of the effectiveness of the internal control 
function is undertaken as part of the year end process. The Committee also regularly received reports from the Risk Committee to review principal 
risks and the effectiveness of risk management processes. 

Whistleblowing matters reported through the Group’s multi-lingual, anonymous Ethics and Integrity portal are reported to, and considered by, 
the Committee. During the year the Committee received details of five cases, all pertaining to the same matter, each of which was investigated 
and appropriate action taken. 

The Committee has reviewed the form and content of the Group’s Annual report and accounts and financial statements for 2012. In conducting 
its review, the Committee considered reports prepared by management and the external auditors. These reports covered analyses of the 
judgements and sources of estimation uncertainty involved in applying the accounting policies as described in note 1(g) to the financial 
statements. The Committee also considered the goodwill assumptions and level of provisions held on the balance sheet, as well as the going 
concern statement on page 51.

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54

TT electronics plc 
Annual Report 2012

Directors’ report – Governance
AUDIT COMMITTEE CONTINUED

Auditors’ independence, objectivity and effectiveness
The independence of the Auditors is assessed annually by the Audit Committee in order to ensure that suitable policies and procedures are 
in place to safeguard the Auditors’ independence and objectivity, having regard to length of tenure, provision of non-audit services and the 
existence of any conflicts of interest. KPMG Audit Plc were appointed in July 2010, at which time their independence had been considered. At the 
time of the annual assessment, the provision of non-audit services was reviewed, together with KPMG Audit Plc’s Transparency Report, and KPMG 
Audit Plc confirmed that no conflicts of interest existed of which the Audit Committee should be aware.

The Committee has formally reviewed the independence of the Auditors as part of the 2012 review. KPMG Audit Plc have provided a letter to the 
Committee confirming that they remain independent within the meaning of the regulations on this matter and in accordance with their 
professional standards.

The Committee also reviewed the effectiveness of the Auditors during the year. The use of an evaluation questionnaire, an auditor assessment 
survey (completed by heads of finance across the Group’s operations), together with information provided by the Auditors, assisted in ensuring 
that a comprehensive assessment was undertaken. Areas for improvement were identified and communicated to the Auditors for action.

The Audit Committee has recommended to the Board that KPMG Audit Plc continue in office as Auditors.

Policy on non-audit services
The Company has an established policy regarding the provision of non-audit services by external auditors. This states that non-audit services may 
be obtained from the most appropriate source having regard to expertise, availability, knowledge and cost. Non-audit services where fees are 
expected to exceed £25,000 should be approved, in advance, by the Chairman of the Audit Committee or in his absence by another member 
of the Audit Committee. There is also a restriction so that non-audit services fees will not exceed the audit service fees, paid to the same service 
provider, for more than two consecutive years unless specifically recommended by the Audit Committee and agreed by the Board. The overriding 
preference of the Committee is not to engage the Auditors for additional non-assurance services, absent compelling reason (e.g. capability, time, 
cost) to the contrary.

In 2012, audit service fees paid to KPMG Audit Plc were £0.8 million, whilst non-audit service fees paid to KPMG totalled £0.3 million. Of this 
£0.3 million: £39,000 (12 per cent) related to minor projects which were beneath the £25,000 approval threshold detailed above; whilst £122,000 
(37 per cent) related to ongoing work for which KPMG had already been engaged prior to being considered for the audit tender process carried 
out in 2010 and of which the Audit Committee were fully aware at the time of KPMG’s appointment as auditors. The remaining non-audit service 
fees paid to KPMG during the year comprised fees principally relating to the provision of taxation services, including taxation compliance advice.

Performance evaluation
The Committee carried out an assessment of its performance in 2012 based on a review of its activities during the year against its terms of 
reference. It was concluded that the Committee had performed effectively and is structured appropriately to provide effective support to the 
Board, with Stephen King having successfully transitioned into the role of Chair of the Committee upon the retirement of David Crowther. 
Areas for development which emerged from the performance assessment were identified and appropriate focus will be given to these during 
the forthcoming year. 

TT electronics plc 
Annual Report 2012

55

Directors’ report – Governance
REMUNERATION REPORT

MEMBERSHIP:
John Shakeshaft (Chairman)

Michael Baunton

Sean Watson

“Our remuneration policy is to attract, 
retain and motivate high-performing 
individuals to deliver our business 
strategy and create long-term 
sustainable value for stakeholders.”

Letter from the Remuneration Committee Chairman
I am pleased to present the TT electronics plc 2012 Remuneration report.

The Remuneration Committee has agreed to adopt several changes proposed under UK legislation to be applied from the end of 2013. 
This report is therefore divided into two sections: 

(cid:116)(cid:1)

(cid:1)(cid:34)(cid:1)(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:49)(cid:80)(cid:77)(cid:74)(cid:68)(cid:90)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:84)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)(cid:83)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:80)(cid:84)(cid:70)(cid:69)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:19)(cid:17)(cid:18)(cid:20)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:71)(cid:85)(cid:70)(cid:83)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)

(cid:1)(cid:34)(cid:79)(cid:1)(cid:42)(cid:78)(cid:81)(cid:77)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:1)(cid:88)(cid:73)(cid:66)(cid:85)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:70)(cid:69)(cid:1)(cid:80)(cid:83)(cid:1)(cid:87)(cid:70)(cid:84)(cid:85)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:15)

(cid:116)(cid:1)
We will seek your support for both parts of the report by way of a single advisory vote at the AGM on 9 May 2013.

We aim to provide a clear description and rationale for our decisions in determining remuneration policy and awards. Executive remuneration has 
received exceptional levels of coverage during the last 12 months from Government, investors, media and the public. Increased levels of scrutiny, 
coupled with the changes to reporting requirements, have reinforced our endeavours to ensure executive remuneration is measurably linked to 
performance and the delivery of business strategy, creating long-term value.

We believe that discretionary target related remuneration should incentivise exceptional performance. Performance related pay represents a 
significant portion of total remuneration for senior managers across the Group. For executive Directors, 46.5 per cent of anticipated remuneration 
is at risk. Performance is measured against a range of criteria including operational, financial, and Health and Safety.

Emphasis In 2012

The Remuneration Committee consulted shareholders and shareholder representative bodies regarding changes to our Long Term Incentive Plan 
in 2012. We considered and approved executive salary increases against a backdrop of heightened interest in executive remuneration. We 
reviewed and analysed independent remuneration data supplied by New Bridge Street, including comparisons with peer companies.

In 2012, most UK manufacturing companies faced economic uncertainty as a result of the continuing Eurozone crisis. On reviewing performance 
over the past 12 months, given the challenging macro-economic conditions in all our geographic markets, the Group delivered reasonable results.

During 2012, the Committee revisited remuneration policy, ensuring that executives were appropriately incentivised and rewarded for 
performance with appropriate levels of risk management.

The Company’s remuneration policy relies upon three components to ensure that a balanced approach between fixed and variable remuneration 
is maintained in both the short- and long-term: 

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:1)(cid:84)(cid:66)(cid:77)(cid:66)(cid:83)(cid:74)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:84)(cid:70)(cid:85)(cid:1)(cid:66)(cid:83)(cid:80)(cid:86)(cid:79)(cid:69)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:77)(cid:70)(cid:87)(cid:70)(cid:77)(cid:84)(cid:28)

(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:84)(cid:68)(cid:73)(cid:70)(cid:78)(cid:70)(cid:84)(cid:1)(cid:83)(cid:70)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:68)(cid:73)(cid:74)(cid:70)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:73)(cid:80)(cid:83)(cid:85)(cid:14)(cid:85)(cid:70)(cid:83)(cid:78)(cid:1)(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:1)(cid:85)(cid:66)(cid:83)(cid:72)(cid:70)(cid:85)(cid:84)(cid:1)(cid:68)(cid:80)(cid:86)(cid:81)(cid:77)(cid:70)(cid:69)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:70)(cid:77)(cid:74)(cid:87)(cid:70)(cid:83)(cid:90)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:84)(cid:85)(cid:66)(cid:67)(cid:77)(cid:74)(cid:84)(cid:73)(cid:70)(cid:69)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:68)(cid:1)(cid:80)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:28)(cid:1)
and

(cid:1)(cid:77)(cid:80)(cid:79)(cid:72)(cid:14)(cid:85)(cid:70)(cid:83)(cid:78)(cid:1)(cid:74)(cid:79)(cid:68)(cid:70)(cid:79)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:83)(cid:70)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:77)(cid:80)(cid:79)(cid:72)(cid:14)(cid:85)(cid:70)(cid:83)(cid:78)(cid:1)(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:13)(cid:1)(cid:66)(cid:68)(cid:73)(cid:74)(cid:70)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:68)(cid:1)(cid:80)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:1)(cid:66)(cid:77)(cid:74)(cid:72)(cid:79)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:80)(cid:83)(cid:84)(cid:15)

(cid:116)(cid:1)
Our approach to remuneration plays an important role in retaining and incentivising the current management team which has built TT into a 
focused electronics group. We believe our remuneration policy and approach encourage outperformance by executive Directors and senior 
management and align management interests with those of shareholders.

We welcome your comments on our approach to remuneration, including the scope and format of this report.

John Shakeshaft
Chairman of the Remuneration Committee

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56

TT electronics plc 
Annual Report 2012

Directors’ report – Governance
REMUNERATION REPORT CONTINUED

Introduction
The Directors’ remuneration report has been prepared in accordance with the requirements of the Companies Act 2006, Schedule 8 of the Large 
and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules of the Financial Services Authority, the 
principles of the UK Corporate Governance Code and best practice guidelines more generally. Furthermore, in response to the UK Government’s 
proposed legislation regarding the reporting of directors’ remuneration and changes to the voting rights, a number of the revised reporting 
requirements have been incorporated into this year’s report. We will be seeking shareholder approval of the report at the forthcoming Annual 
General Meeting on 9 May 2013.

The Auditors are required to give an opinion on whether certain parts have been prepared in accordance with the Accounting Regulations. 
The report is therefore divided between unaudited and audited information. 

Unaudited information

Remuneration policy 
The Group is committed to the objective of maximising shareholder return in the longer term, ensuring that a strong link between performance 
and reward is maintained. The remuneration policy aims to be competitive, performance based, aligned to shareholder interests and relatively 
simple and transparent in nature. 

The Committee aims to pay base salaries around market levels coupled with highly competitive total rewards that are linked to performance and 
aligned with shareholders’ interests. Remuneration packages must meet the objective of attracting, retaining and motivating executives of the 
highest quality in a challenging business environment. In delivering an appropriate mix between fixed and variable remuneration, the Committee 
is mindful to avoid creating excessive risks in the pursuit of performance metrics. 

Following a review of the existing total remuneration for executive Directors and the most senior managers, the Committee concluded that the 
following principles remain appropriate for 2013: 

Competitive: Through the combination of base salaries and competitive performance-related incentive mechanisms, the Group aims to provide 
individuals with a competitive total remuneration package in return for superior performance. Base salaries are designed to reflect the nature 
of the role and its responsibility, together with the overall level of individual performance. In ascertaining appropriate salary adjustments, account 
is also taken of prevailing market and economic conditions together with salary levels across the Group. 

Performance-related: The majority of the executive Directors’ and senior managers’ remuneration is determined based on the performance of 
the Group. A significant proportion of this is aligned to shareholder interests based on earnings growth and total return. Failure to achieve 
predetermined growth thresholds results in no payout under the Group’s annual bonus or long-term incentive arrangements. In order to provide 
further alignment with the achievement of strategic objectives and delivery of value to shareholders, executive Directors have agreed to maintain 
a minimum shareholding equal to 100 per cent of base salary through the vesting of long-term incentives. 

Transparency: In order to engender a fair and collaborative culture, total remuneration is clear and openly communicated. 

Components of total remuneration 
In the year under review, executive Directors’ total remuneration packages comprised: 

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:39)(cid:74)(cid:89)(cid:70)(cid:69)(cid:1)(cid:81)(cid:66)(cid:90)(cid:13)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:1)(cid:84)(cid:66)(cid:77)(cid:66)(cid:83)(cid:90)(cid:13)(cid:1)(cid:81)(cid:70)(cid:79)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:13)(cid:1)(cid:68)(cid:66)(cid:83)(cid:1)(cid:80)(cid:83)(cid:1)(cid:68)(cid:66)(cid:83)(cid:1)(cid:66)(cid:77)(cid:77)(cid:80)(cid:88)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:83)(cid:74)(cid:87)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:70)(cid:69)(cid:74)(cid:68)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:84)(cid:86)(cid:83)(cid:66)(cid:79)(cid:68)(cid:70)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)

(cid:1)(cid:55)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:81)(cid:66)(cid:90)(cid:13)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:80)(cid:81)(cid:81)(cid:80)(cid:83)(cid:85)(cid:86)(cid:79)(cid:74)(cid:85)(cid:90)(cid:13)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:74)(cid:68)(cid:74)(cid:81)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:45)(cid:80)(cid:79)(cid:72)(cid:1)(cid:53)(cid:70)(cid:83)(cid:78)(cid:1)(cid:42)(cid:79)(cid:68)(cid:70)(cid:79)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:49)(cid:77)(cid:66)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:74)(cid:68)(cid:74)(cid:81)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)
all employee share scheme. 

No changes were made in 2012 to the level of short-term or long-term incentive payouts payable for achieving either on-target or stretch 
performance. 

TT electronics plc 
Annual Report 2012

57

Remuneration policy statement
This policy applies to current executive Directors from 1 January 2013.

Element 

Salary

Bonus

Purpose and link to 
strategy

(cid:116)(cid:1)(cid:1)(cid:1)(cid:1)(cid:51)(cid:70)(cid:248)(cid:70)(cid:68)(cid:85)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
individual and their role
(cid:116)(cid:1)(cid:1)(cid:51)(cid:70)(cid:248)(cid:70)(cid:68)(cid:85)(cid:84)(cid:1)(cid:84)(cid:76)(cid:74)(cid:77)(cid:77)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:89)(cid:81)(cid:70)(cid:83)(cid:74)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)
over time
(cid:116)(cid:1)(cid:1)(cid:49)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:77)(cid:70)(cid:87)(cid:70)(cid:77)(cid:1)
of basic fixed income 
avoiding excessive risk 
arising from over reliance on 
variable income

(cid:116)(cid:1)(cid:1)(cid:42)(cid:79)(cid:68)(cid:70)(cid:79)(cid:85)(cid:74)(cid:87)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:69)(cid:70)(cid:77)(cid:74)(cid:87)(cid:70)(cid:83)(cid:90)(cid:1)
of financial and strategic 
goals
(cid:116)(cid:1)(cid:1)(cid:46)(cid:66)(cid:89)(cid:74)(cid:78)(cid:86)(cid:78)(cid:1)(cid:67)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:80)(cid:79)(cid:77)(cid:90)(cid:1)
payable for achieving 
demanding targets

Operation

Maximum

Performance targets

(cid:116)(cid:1)(cid:1)(cid:51)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:77)(cid:90)(cid:13)(cid:1)(cid:70)(cid:242)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:1)
1 January
(cid:116)(cid:1)(cid:1)(cid:53)(cid:66)(cid:76)(cid:70)(cid:84)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:74)(cid:68)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)
practices of companies with 
similar characteristics and 
sector comparators

(cid:116)(cid:1)(cid:1)(cid:34)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:68)(cid:83)(cid:70)(cid:66)(cid:84)(cid:70)(cid:84)(cid:1)(cid:77)(cid:74)(cid:79)(cid:76)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)
those of the wider 
workforce. Where salaries are 
below market levels, higher 
increases may be awarded 
to close the gap

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:49)(cid:66)(cid:74)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:68)(cid:66)(cid:84)(cid:73)
(cid:116)(cid:1)(cid:1)(cid:47)(cid:80)(cid:85)(cid:1)(cid:81)(cid:70)(cid:79)(cid:84)(cid:74)(cid:80)(cid:79)(cid:66)(cid:67)(cid:77)(cid:70)

(cid:116)(cid:1)(cid:1)(cid:18)(cid:17)(cid:17)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:66)(cid:77)(cid:66)(cid:83)(cid:90)

Long Term 
Incentive Plan, 
SIP, SAYE and 
CSOP

(cid:116)(cid:1)(cid:1)(cid:34)(cid:77)(cid:74)(cid:72)(cid:79)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)(cid:78)(cid:66)(cid:74)(cid:79)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:68)(cid:1)
objectives of delivering 
sustainable profit growth 
and shareholder return

(cid:116)(cid:1)(cid:1)(cid:34)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:72)(cid:83)(cid:66)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:79)(cid:74)(cid:77)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:1)
options or performance 
shares which normally vest 
after three years, subject to 
continued service and 
performance targets

(cid:116)(cid:1)(cid:1)(cid:18)(cid:17)(cid:17)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:66)(cid:77)(cid:66)(cid:83)(cid:90)(cid:1)
(cid:116)(cid:1)(cid:1)(cid:38)(cid:89)(cid:70)(cid:68)(cid:86)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:66)(cid:77)(cid:84)(cid:80)(cid:1)(cid:70)(cid:77)(cid:74)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)
participate in the Group 
SAYE on the same terms as 
other employees

(cid:116)(cid:1)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:81)(cid:83)(cid:80)(cid:246)(cid:85)(cid:1)(cid:9)(cid:22)(cid:17)(cid:6)(cid:10)
(cid:116)(cid:1)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:80)(cid:81)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:66)(cid:84)(cid:73)(cid:1)(cid:248)(cid:80)(cid:88)(cid:1)
(12.5%)
(cid:116)(cid:1)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:34)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:1)(cid:56)(cid:80)(cid:83)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)
Capital (12.5%)
(cid:116)(cid:1)(cid:1)(cid:49)(cid:70)(cid:83)(cid:84)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:80)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:9)(cid:19)(cid:22)(cid:6)(cid:10)

(cid:116)(cid:1)(cid:1)(cid:45)(cid:53)(cid:42)(cid:49)(cid:1)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:78)(cid:70)(cid:66)(cid:84)(cid:86)(cid:83)(cid:70)(cid:69)(cid:1)
over three years
(cid:116)(cid:1)(cid:1)(cid:22)(cid:17)(cid:6)(cid:1)(cid:38)(cid:49)(cid:52)(cid:1)(cid:9)(cid:19)(cid:22)(cid:6)(cid:1)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:87)(cid:70)(cid:84)(cid:85)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)
annual adjusted EPS growth 
of RPI+10% increasing 
pro-rata to full vesting for 
annual EPS growth of 
RPI+20%)
(cid:116)(cid:1)(cid:1)(cid:22)(cid:17)(cid:6)(cid:1)(cid:53)(cid:52)(cid:51)(cid:1)(cid:9)(cid:19)(cid:22)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:74)(cid:84)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)
the award will vest if the 
Company’s TSR is equal to 
the TSR of the median 
company of the FTSE 
SmallCap (excluding 
investment trusts), with full 
vesting for top quartile 
performance)

Changes from  
prior policy

(cid:116)(cid:1)(cid:1)(cid:52)(cid:66)(cid:77)(cid:66)(cid:83)(cid:90)(cid:1)(cid:74)(cid:79)(cid:68)(cid:83)(cid:70)(cid:66)(cid:84)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)
3% were made to 
the Group Chief 
Executive and 
Group Finance 
Director. The 
Group Business 
Development 
Director received 
an award of 8.5%

(cid:116)(cid:1)(cid:1)(cid:49)(cid:77)(cid:70)(cid:66)(cid:84)(cid:70)(cid:1)(cid:84)(cid:70)(cid:70)(cid:1)(cid:81)(cid:66)(cid:72)(cid:70)(cid:1)
3 and 22

(cid:116)(cid:1)(cid:1)(cid:45)(cid:53)(cid:42)(cid:49)(cid:1)(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)
100% of salary 
were made to each 
of the executive 
Directors

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2

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Pension

(cid:116)(cid:1)(cid:1)(cid:49)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:84)(cid:1)(cid:78)(cid:80)(cid:69)(cid:70)(cid:84)(cid:85)(cid:1)(cid:83)(cid:70)(cid:85)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)
benefits
(cid:116)(cid:1)(cid:1)(cid:48)(cid:81)(cid:81)(cid:80)(cid:83)(cid:85)(cid:86)(cid:79)(cid:74)(cid:85)(cid:90)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:70)(cid:89)(cid:70)(cid:68)(cid:86)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)
to contribute to their own 
retirement plan

Other benefits

(cid:116)(cid:1)(cid:1)(cid:53)(cid:80)(cid:1)(cid:66)(cid:74)(cid:69)(cid:1)(cid:83)(cid:70)(cid:85)(cid:70)(cid:79)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
recruitment

Share 
ownership 
guidelines

(cid:116)(cid:1)(cid:1)(cid:53)(cid:80)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:1)(cid:66)(cid:77)(cid:74)(cid:72)(cid:79)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)
between executives and 
shareholders

(cid:116)(cid:1)(cid:1)(cid:37)(cid:70)(cid:246)(cid:79)(cid:70)(cid:69)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:16)(cid:84)(cid:66)(cid:77)(cid:66)(cid:83)(cid:90)(cid:1)
supplement

(cid:116)(cid:1)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:70)(cid:84)(cid:1)(cid:18)(cid:22)(cid:6)(cid:1)(cid:80)(cid:71)(cid:1)
salary
(cid:116)(cid:1)(cid:1)(cid:38)(cid:89)(cid:70)(cid:68)(cid:86)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:66)(cid:77)(cid:66)(cid:83)(cid:90)(cid:1)
exchange on same terms as 
other employees

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:68)(cid:66)(cid:83)(cid:1)(cid:66)(cid:77)(cid:77)(cid:80)(cid:88)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
the provision of private 
medical insurance

(cid:116)(cid:1)(cid:1)(cid:38)(cid:89)(cid:70)(cid:68)(cid:86)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)
required to build and 
maintain a shareholding 
equivalent to one year’s base 
salary through the retention 
of vested share awards or 
through open market 
purchases

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

(cid:116)(cid:1)(cid:1)(cid:47)(cid:16)(cid:34)

It is anticipated that the above policy would also apply to any new executive Director.

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58

TT electronics plc 
Annual Report 2012

Directors’ report – Governance
REMUNERATION REPORT CONTINUED

Possible remuneration for executive Directors
The charts below show how the composition of each of the executive Directors’ remuneration packages varies at different levels of performance 
under the policy set out above, as a percentage of total opportunity and total value respectively:
Proportion of Remuneration Policy (%)

Value of Group Chief Executive’s Package (£'000)

On Target

Exceptional

On Target

Exceptional

0

20

40

60

Salary

Benefits

Bonus

100

80

LTIP

0

300

600

900

1,200

1,500

1,800

Salary

Benefits

Bonus

LTIP

Detailed remuneration policy

Base salary
The Committee reviews salaries annually and takes account of personal and Company performance, together with data on companies of a 
broadly similar size and complexity. Details of current base salary levels for executive Directors who served during the year are set out below: 

Geraint Anderson

Shatish Dasani

Tim Roberts

1 January 2012

£388,516 
£266,049
£210,000

1 January 2013

£400,171
£274,030
£227,766

% increase

3%
3%
8.5%

In reviewing base salaries from 1 January 2013, the Committee had regard to personal performance, Group performance and pay levels within the 
Group. External benchmark data was also considered on companies within similar sectors and of a similar turnover and market capitalisation to 
the Group, although such external comparisons are used cautiously given the risk of upward ratchets in pay. 

As a result, base salary levels for the Group Chief Executive and Group Finance Director were increased by the general workforce increase of 
3 per cent. The salary for the Group Business Development Director was increased by 8.5 per cent reflecting both personal performance and 
increasing experience since joining the Board at the start of 2010. This latest adjustment aligns his remuneration to market. All increases were 
made with effect from 1 January 2013. 

Benefits 
Benefits in kind comprise a company car or allowance and the provision of private medical insurance. 

Pension 
The Company contributes approximately 15 per cent of salary either to a defined contribution arrangement or as a salary supplement for each 
executive Director.

Annual bonus 
The annual performance metrics for 2012 were designed to reward delivery of our strategic priorities for the year. Bonus arrangements for 
executive Directors comprise four elements: operating profit, operating cash flow, average working capital and the attainment of personal 
objectives. The objective of performance-related remuneration is to stimulate improved Group results by providing the opportunity for increased 
remuneration upon the achievement of challenging performance targets. If overall business performance is not at the required level, the 
Committee has the discretion to reduce an individual’s bonus for the year.

For 2012, targets comprised a sliding scale of operating profit (50 per cent of total bonus potential), a sliding scale of cash measures (25 per cent 
of total bonus potential) and personal objectives linked to implementation of the Group’s strategy (25 per cent of total bonus potential). 
This recognises the importance attached to successful implementation of the Group’s strategy. The bonus arrangements for all senior executives 
below Board level are aligned to the same performance criteria to encourage greater team working and also include an element of profit of the 
whole division or business group into which they report.

Bonus awards for 2012

Group profit

Group operating cash flow

Group average working capital / sales

Personal objectives

Total % of salary

Potential (% of salary)

Maximum/Stretch performance 
(% of budget)

% of budget achieved

Actual payout (% of salary)

50%
12.5%
12.5%
25%
100%

120%
120%
95%
n/a

97.8%
107.7%
92.7%
n/a

20%
8.3%
12.5%

TT electronics plc 
Annual Report 2012

59

The mathematical calculation produces a bonus achievement of 65.8 per cent of maximum. Following an assessment of performance targets in 
light of the Group’s overall performance, the Committee has exercised its discretion and moderated bonus payments to 50 per cent of maximum.

For further analysis of the Group’s performance please refer to the Key performance indicators on pages 22 and 23. 

Details of bonuses awarded to the executive Directors for the year ended 31 December 2012 are set out in the emoluments table on page 62.

Annual Bonus Opportunity 2013 
The maximum potential bonus which can be earned will continue to be 100 per cent of salary in 2013. The bonus arrangements for 2013 have 
been reviewed and will continue to be predicated on profitable growth combined with strong cash performance, supported by the achievement 
of key strategic initiatives through the fulfilment of personal objectives including a newly introduced value creation measure. Executives have  
a vested interest in ensuring sustainable value creation. A variety of measures, including ROCE, are used to assess value performance with regard 
to acquisitions and specific investment projects. 

Long Term Incentive Plan 2005 (“LTIP”) 
The LTIP is the Company’s primary long-term incentive scheme. LTIP participants may receive annual awards of up to 100 per cent of base salary. 
The award is a contingent right to receive shares in the future, subject to continued employment and the achievement of agreed performance 
criteria. Participants make no payment upon the grant, vesting or release of an award other than such as may be required as a result of tax, social 
security or other regulatory requirements. Awards normally vest three years after the date of grant. 

The performance targets attached to awards granted in April 2012 require the achievement of earnings per share (“EPS”) and total shareholder 
return (“TSR”) targets measured over a three year performance period as follows: 

(cid:116)(cid:1)

(cid:116)(cid:1)

(cid:1)(cid:22)(cid:17)(cid:1)(cid:81)(cid:70)(cid:83)(cid:1)(cid:68)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:74)(cid:84)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:38)(cid:49)(cid:52)(cid:1)(cid:85)(cid:66)(cid:83)(cid:72)(cid:70)(cid:85)(cid:84)(cid:27)(cid:1)(cid:19)(cid:22)(cid:1)(cid:81)(cid:70)(cid:83)(cid:1)(cid:68)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:1)(cid:84)(cid:86)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:74)(cid:84)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:87)(cid:70)(cid:84)(cid:85)(cid:1)(cid:74)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:38)(cid:49)(cid:52)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)
ending 31 December 2014 is equal to RPI plus 10 per cent compound per annum, increasing on a straight-line basis to 100 per cent vesting 
for EPS growth of at least 20 per cent compound per annum in excess of RPI; and 

(cid:1)(cid:22)(cid:17)(cid:1)(cid:81)(cid:70)(cid:83)(cid:1)(cid:68)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:74)(cid:84)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:53)(cid:52)(cid:51)(cid:1)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:85)(cid:66)(cid:83)(cid:72)(cid:70)(cid:85)(cid:84)(cid:1)(cid:66)(cid:72)(cid:66)(cid:74)(cid:79)(cid:84)(cid:85)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:74)(cid:70)(cid:84)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:39)(cid:53)(cid:52)(cid:38)(cid:1)(cid:52)(cid:78)(cid:66)(cid:77)(cid:77)(cid:36)(cid:66)(cid:81)(cid:1)(cid:9)(cid:70)(cid:89)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:85)(cid:83)(cid:86)(cid:84)(cid:85)(cid:84)(cid:10)(cid:1)
index: 25 per cent of shares subject to this part of the award will vest at median performance increasing on a straight-line basis to 100 per cent 
vesting at the upper quartile of the comparator group. In addition to the TSR targets, the Committee will consider the Company’s underlying 
financial performance to ensure that vesting percentages under this part of an award are appropriate.

The Committee considers that the combined use of EPS and TSR performance conditions provides a good blend of performance measures, with 
EPS rewarding strong financial performance and TSR rewarding relative stock market performance. The Committee’s current intention is that 
similar EPS and TSR targets will apply for awards to be granted in 2013.

Shareholding guidelines 
The Company operates shareholding guidelines for executive Directors for the LTIP. At the time awards vest under the LTIP (or any other executive 
plan operated in the future), there will be a requirement to retain no fewer than 50 per cent of the shares (net of taxes) until such time as a total 
personal shareholding equivalent to 100 per cent of prevailing base salary has been reached. 

Dilution 
The Company’s dilution position for all employee schemes at 31 December 2012 was 5.93 per cent against the 10 per cent in ten year limit 
contained within the LTIP rules. Of this, 4.76 per cent relates to dilution under discretionary arrangements. Share usage is carefully monitored  
by the Committee.  

Clawback 
Consistent with best practice, provisions apply whereby annual bonus and LTIP awards may be clawed back if following payment/grant/vesting  
it transpires that value was awarded/delivered as a result of gross misconduct or a material mis-statement of results. 

Total shareholder return 
The Company’s total shareholder return performance for the six years to 31 December 2012 is shown on the graph overleaf compared with the 
index of the FTSE SmallCap companies (excluding investment trusts). As the Company is a constituent of the FTSE SmallCap Index, the Directors 
consider it an appropriate benchmark for the Company’s performance. 

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60

TT electronics plc 
Annual Report 2012

Directors’ report – Governance
REMUNERATION REPORT CONTINUED

Total shareholder return
Source: Thomson Reuters Datastream

160

140

120

100

80

60

40

20

)
£
(
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u
a
V

l

31 Dec 07

31 Dec 08

31 Dec 09

31 Dec 10

31 Dec 11

31 Dec 12

This graph shows the value, by 31 December 2012, of £100 invested in TT electronics plc on 31 December 2007 compared with the value of £100 
invested in the FTSE SmallCap index (excluding investment trusts). The other plotted points are the values at intervening financial year ends.

TT electronics plc

FTSE SmallCap (excluding investment trusts) Index

Share options 
The Company has operated a number of share option schemes in the past. The Committee does not intend to make further grants to executive 
Directors under these plans. 

Sharesave scheme 
The Company introduced all employee Sharesave schemes in 2010 and these have been extended internationally as legislation and costs permit. 
Grants under the schemes have been made to encourage the involvement of employees in the Company’s performance. The executive Directors 
have all chosen to participate in the UK scheme. 

Service contracts 
The executive Directors have service contracts reflecting current market practice and an appropriate balance between the interests of the 
Company and those of the individual Directors. These contracts include 12 month non compete clauses and standard provisions for summary 
termination and are terminable on 12 months’ notice from either side. 

Non executive Directors
The fees of each of the non executive Directors is determined by the Chairman and the executive Directors, reflecting the time commitment 
required, the responsibility of each role and the fees paid in comparable companies. The fees paid to the Chairman were reviewed at the start  
of 2013 and increased by 3 per cent. Current fee levels are as follows: 

Chairman

Non executive Director

Audit Committee Chair fee

Remuneration Committee Chair fee

1 January 2012

£143,500
£39,000
£7,000
£7,000

1 January 2013

£147,805
£40,000
£7,000
£7,000

% increase

3%
3%
0%
0%

No benefits in kind are provided for non executive Directors. 

 
TT electronics plc 
Annual Report 2012

61

IMPLEMENTATION REPORT

Remuneration Committee Role and Membership
The role of the Committee is to recommend to the Board the policy for the remuneration of the Chairman, executive Directors, Divisional Chief 
Executives and the Group General Counsel & Company Secretary. Such remuneration includes fees, salaries and other benefits, pensions, 
performance related pay, share incentive plans and the terms and conditions of service. In determining these matters the Committee has due 
regard to the contents of the Code as well as to the UK Listing Authority’s Listing Rules and associated guidance.

The Group Chief Executive, Geraint Anderson, and the Group Human Resources Director, John Leighton-Jones, also attend Committee meetings 
as and when required to provide advice on Group strategy, performance and remuneration strategy. No individual is present during discussions 
relating to their own remuneration.  

During the year, the members of the Committee and their attendance at meetings were as follows:

Name

John Shakeshaft

Michael Baunton

Sean Watson

David Crowther

Notes

Attendance

Committee Chairman

(appointed 15 May 2012)

(retired 15 May 2012)

4 of 4
1 of 1
4 of 4
3 of 3

Two additional meetings of the Committee took place during the year and were both fully attended. The Committee has had two meetings  
to date during 2013.

Performance evaluation
The Committee assessed its performance, constitution and terms of reference during 2012 based on a questionnaire completed by members.  
The Committee was deemed to be performing satisfactorily, having benefited from having access to more in depth information on the performance 
assessments of individuals within its remit, together with increased visibility of management remuneration arrangements across the Group.

2012 review 
The Committee’s main activities during 2012 included the:

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(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)

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(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:78)(cid:74)(cid:85)(cid:85)(cid:70)(cid:70)(cid:8)(cid:84)(cid:1)(cid:70)(cid:89)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:66)(cid:69)(cid:87)(cid:74)(cid:84)(cid:70)(cid:83)(cid:84)(cid:28)
(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:69)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:38)(cid:68)(cid:80)(cid:79)(cid:80)(cid:78)(cid:74)(cid:68)(cid:1)(cid:55)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:34)(cid:69)(cid:69)(cid:70)(cid:69)(cid:1)(cid:78)(cid:70)(cid:66)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)
(cid:70)(cid:87)(cid:66)(cid:77)(cid:86)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:80)(cid:84)(cid:70)(cid:69)(cid:1)(cid:35)(cid:42)(cid:52)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:70)(cid:72)(cid:86)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:8)(cid:1)(cid:81)(cid:66)(cid:90)(cid:15)

External advisors
In order to enable the Committee to make informed decisions on executive remuneration, the Committee retained the services of New Bridge 
Street (“NBS”), independent external consultants, to advise on senior executive remuneration matters. NBS provided no other services to the 
Company during the year.

Shareholder voting at AGM
At the Annual General Meeting held on 15 May 2012, resolutions pertaining to the Directors’ remuneration report and the removal of the 
5 per cent dilution rule of the LTIP were passed on a show of hands. Proxy votes cast in respect of these resolutions were as follows:

Number of votes

Remuneration report

LTIP rule deletion

For

112,144,003
101,060,364

Discretionary

148,416
166,954

Against

1,088,217
1,389,227

Withheld

991,019
11,754,585

Total vote

114,371,655
114,371,130

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TT electronics plc 
Annual Report 2012

Directors’ report – Governance
REMUNERATION REPORT CONTINUED

AUDITED INFORMATION

Aggregate Directors’ emoluments 
Set out below are tables of remuneration of the Directors who served during 2012 and 2011. The amount of each element of the remuneration 
received and receivable by the Directors in the year including base salary and fees paid during the year, bonus, benefits in kind and other payments is: 

Executive Directors 

Geraint Anderson 

Shatish Dasani 

Tim Roberts 

Non executive Directors
Sean Watson

Michael Baunton 

Stephen King

John Shakeshaft 

Former Directors

David Crowther 

Salary/fees
£000

389(1)
266
210(1)

144
39
43
46

16

Annual
bonus(2)
£000

194
133
105

–
–
–
–

–

Payment in lieu of 
pension

Benefits(3)
£000

22
38
–

–
–
–
–

–

25
26
11

–
–
–
–

–

2012
Total
£000

630
463
326

144
39
43
46

16

2011
Total
£000

771
533
383

140
38
7
45

45

(1)Prior to adjustments to basic salary for salary exchange pensions

(2) The amounts are payable under the bonus arrangements in place for 2012 as explained above. 50 per cent of salary was payable against the profit targets, 25 per cent of salary was payable 

against the cash flow targets and up to 25 per cent of salary was payable against personal objectives.

(3)Benefits in kind during the year comprised a company car or allowance and the provision of private medical insurance. No Director received an expense allowance during the year. 

Executive Directors’ pensions – defined contribution
During 2012 the Company contributed £44,171.47 for Geraint Anderson, £3,563.09 for Shatish Dasani and £34,195.00 for Tim Roberts to the 
Company’s group personal pension arrangement. For Geraint Anderson and Tim Roberts this amount includes £7,770.32 and £2,695.00 
respectively which was paid by the Company under the salary exchange arrangements.

Long Term Incentive Plan
As at 31 December 2012, Directors’ interests under the LTIP were as follows:

Geraint Anderson

Shatish Dasani

Tim Roberts

Date of grant

05 May 09
04 May 10
27 Apr 11
25 Apr 12

05 May 09
04 May 10
27 Apr 11
25 Apr 12

05 May 09
04 May 10
27 Apr 11
25 Apr 12

1 January
2012 

875,000
330,189
216,285
–
1,421,474
600,000
226,415
148,108
–
974,523
202,667
123,821
108,142
–
434,630

Granted
during
the year

–
–
–
212,885
212,885
–
–
–
146,027
146,027
–
–
–
115,068
115,068

Lapsed

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Vested

875,000
–
–
–
875,000
600,000
–
–
–
600,000
202,667
–
–
–
202,667

31 December 
2012

Market value (1)
at 31 December
2012
£

Market price at 
grant date  
pence

–
330,189
216,285
212,885
759,359
–
226,415
148,108
146,027
520,550
–
123,821
108,142
115,068
347,031

–
475,472
311,450
306,554
1,093,476
–
326,038
213,276
210,279
749,593
–
178,302
155,724
165,698
499,724

30.25
106.00
172.25
182.5

30.25
106.00
172.25
182.5

30.25
106.00
172.25
182.5

Vesting date

07 May 12
04 May 13
27 Apr 14
25 Apr 15

07 May 12
04 May 13
27 Apr 14
25 Apr 15

07 May 12
04 May 13
27 Apr 14
25 Apr 15

(1)  The market value at 31 December 2012 represents the total number of shares awarded multiplied by 144 pence being the share price on 31 December 2012. The calculation does not take 

into account the likelihood of vesting.

TT electronics plc 
Annual Report 2012

63

LTIP Performance Criteria
In 2012, LTIP allocations equal to 100 per cent of base pay were awarded to executive Directors. The performance measures attaching to the 
outstanding and recently vested LTIP awards are shown in the table below:

Vesting criteria(1)

One half on EPS(3) growth in excess of RPI

Full vesting

Zero vesting if below

2009(2)

7% 
3% 

2010

= 14 pence
= 12 pence

2011 

15% 
10% 

2012

20%
10%

Vesting will increase on a straight line basis between 25% and 100% between the above points

One half on TSR performance against the FTSE SmallCap (excluding Investment Trusts)

Full vesting

Zero vesting if below

upper quartile ranking
median ranking

Vesting will increase on a straight line basis between 25% and 100% for ranking between these points

(1) Awards are measured over a three year period. 

(2) The LTIP awards granted in 2009 vested in full on 7 May 2012. The market price on the vesting date was 182.5 pence.
(3) The increase in EPS is measured on a per annum compound basis.

TT electronics plc Sharesave Scheme 
As at 31 December 2012, Directors’ interests under the Sharesave Scheme were as follows: 

Geraint Anderson 

Shatish Dasani 

Tim Roberts 

1 January
2012 

13,552
7,894
7,894

Granted
during
the year

–
–
–

Lapsed

Vested

31 December 
2012

Potential gain at
31 December
2012(1)
£

–
–
–

–
–
–

13,552
7,894
7,894

4,066
2,368
2,368

Date of grant

01 Oct 10
01 Oct 10
01 Oct 10

Option price
pence

Exercisable
between

114
114
114

1 Nov 15–30 Apr 16 
1 Nov 13–30 Apr 14
1 Nov 13–30 Apr 14

(1) The potential gain at 31 December 2012 represents the total number of shares under option multiplied by 144 pence being the share price on 31 December 2012 less the option price. 
The calculation assumes that the executive Director remains employed and completes the contract.

Directors’ interest in shares
The following table shows the interests of the Directors who held office at the end of the year in the Ordinary shares of the Company. 

 Shareholdings as at 31 December 2012 

 Shareholdings as at 31 December 2011 

Executive Directors 

Geraint Anderson  

Shatish Dasani  

Tim Roberts

Non executive Directors
Sean Watson

Michael Baunton

Stephen King

John Shakeshaft

David Crowther (retired 15 May 2012)

560,000 
708,000 
130,475 

190,000 
72,717 
100,000 
51,206 
–

0.350%
0.450%
0.083%

0.120%
0.046%
0.063%
0.032%
–

140,000 
420,000 
33,196 

173,000 
64,217 
50,000 
15,479 
111,006 

0.090%
0.270%
0.021%

0.110%
0.041%
0.032%
0.009%
0.071%

The closing middle market prices for an Ordinary share of 25 pence of the Company on 31 December 2011 and 2012 as derived from the Stock 
Exchange Daily Official List were 134.5 pence and 144 pence respectively. During 2012 the middle market price of TT electronics plc Ordinary 
shares ranged between 114 pence and 203.5 pence.

Conclusion
Given the challenging macro economic conditions in all our geographic markets, the Group delivered reasonable results. In determining base 
salary adjustments, annual bonus and long term awards, the Committee has recognised the achievements of the management team.

Approved by the Board on 13 March 2013 and signed on its behalf by: 

John Shakeshaft 
Chairman of the Remuneration Committee

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64

TT electronics plc 
Annual Report 2012

Directors’ report – Governance
OTHER STATUTORY DISCLOSURES

Directors’ report
This Annual Report includes the Directors’ report and the audited financial statements for the year ended 31 December 2012. Certain information 
required to be disclosed in the Directors’ report is provided in other sections of this Annual Report. This includes the overview, the operating and 
financial reviews, the corporate governance and remuneration reports and specific elements of the financial statements noted below and, 
accordingly, these are incorporated into the Directors’ report by reference.

Principal activities and business review 
TT electronics plc is the parent company of a group whose principal activities during the year were the design, manufacture and sale of electronic 
component and sensor technology for the defence, aerospace, medical, transportation, energy and industrial electronics markets. Further details 
of the Group’s activities and future plans are set out in the overview and operating and financial review sections on pages 1 to 41 of this report. 

The principal operating subsidiaries are listed on page 116. 

Results and dividends 
The Group’s profit on ordinary activities after taxation was £23.5 million (2011: £25.0 million). The audited financial statements of the Group and 
the Company are set out on pages 70 to 116. Further details of the Group’s activities are set out in the Operating and Financial review on pages 
25 to 35. 

The Directors are recommending a final dividend of 3.5 pence per share for the year ended 31 December 2012 (2011: 3.2 pence) to be paid on 
30 May 2013 to shareholders on the register at 17 May 2013 which, together with the interim dividend of 1.5 pence per share paid on 1 November 
2012 (2011: 1.2 pence), makes a total for the year of 5.0 pence (2011: 4.4 pence). 

Acquisitions and disposals 
On 31 July 2012, Dale Power Solutions Limited, part of the Secure Power division, was sold to LDC, a mid-market private equity house, for a 
consideration of £10.6 million (including settlement of inter-company debt of £4.7 million) subject to a balance sheet adjustment at completion.

On 8 December 2012, the sale of the remainder of the Group’s Secure Power division (comprising the Ottomotores businesses based in Mexico 
and Brazil) to a subsidiary of Generac Holdings Inc was completed for a consideration of £29.0 million, subject to a balance sheet adjustment 
at completion.

On 12 December 2012, the UK business and assets of ACW Technology Limited (in administration) were acquired. The transfer of associated 
production from ACW Technology (Zhuhai) Limited to the TT electronics facility in Suzhou, China, was also agreed, the total consideration being 
£3.1 million.

On 24 December 2012, the Group agreed to purchase the 49 per cent minority interest in its Indian sensors business, Padmini TT electronics 
Private Limited, for a consideration of up to £8.7 million, depending on the attainment of certain targets. Completion took place on 1 February 
2013, the actual consideration being £8.7 million.

Directors
Rules for the appointment and replacement of Directors are set out in the Company’s Articles of Association. Directors are appointed by the Board 
on the recommendation of the Nominations Committee. Directors may also be appointed or removed by the Company by ordinary resolution at 
a general meeting of holders of Ordinary shares. The office of a Director shall be vacated if his resignation is requested by all the other Directors, 
not being fewer than three in number. Further details of the activities of the Nominations Committee are set out on page 52. 

There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or employment that 
occurs as a result of a takeover bid except that provisions of the Company’s share plans may cause options and awards granted under such 
schemes to vest on takeover, subject to the satisfaction of any performance conditions. Further details of the executive Directors’ service contracts 
can be found in the Directors’ remuneration report on pages 55 to 63. Copies of the executive Directors’ service contracts and letters of 
appointment of the non-executive Directors are available for inspection by any person at the Company’s registered office during normal business 
hours on any weekday (public holidays excepted) and at the Annual General Meeting from 15 minutes before the start of the Annual General 
Meeting until its conclusion.

The Group maintains Directors’ and Officers’ liability insurance. The Directors of the Company also benefit from a qualifying third party indemnity 
provision in accordance with Section 234 of the Companies Act 2006 and the Company’s Articles of Association. The Company has provided a 
pension scheme indemnity within the meaning of Section 235 of the Companies Act 2006 to directors of associated companies.

TT electronics plc 
Annual Report 2012

65

Auditors 
KPMG Audit Plc have expressed their willingness to continue in office as Auditors and a resolution will be proposed to reappoint them at 
the Annual General Meeting. 

The Auditors’ responsibilities are set out on page 69 and should be read in conjunction with those of the Directors as set out at the end 
of this report. 

Annual General Meeting 

The Annual General Meeting of the Company will be held on 9 May 2013 at the offices of Hudson Sandler Financial and Corporate 
Communications at 11.30 am. The Notice of the Company’s Annual General Meeting accompanies this document. 

Fixed assets 
A professional valuation of land and buildings was carried out during the year ended 31 December 2010 and, in the opinion of the Directors, the 
market value, on an existing use basis, as at 31 December 2012 in aggregate is not materially different from net book value. 

Research and development 
The Group carries out research and development in order to develop new products and processes and to substantially improve existing products 
and processes. Further details are given in note 15 to the consolidated financial statements.

Significant agreements relating to change of control 
The Group has a number of borrowing facilities provided by various banking groups. Some of these facility agreements include change of control 
provisions which, in the event of a change in ownership of the Company, could result in renegotiation or withdrawal of these facilities. 

There are a number of other agreements that may be renegotiated upon a change of control of the Company. None is considered to be 
significant in terms of their potential impact on the business of the Group as a whole. 

Supplier payments policy 
The Group’s policy in relation to the payment of its suppliers is to agree terms of payment with each supplier when negotiating the terms of each 
business transaction. It is Group practice to abide by the agreed terms of payment unless the supplier defaults under its own obligations. 
The average number of days’ credit taken by Group companies at the financial year end was 46 days (2011: 52 days). The average number of days’ 
credit taken by the Company for trade purchases at the financial year end was 38 days (2011: 60 days). 

Employment
The Group is committed to the fair and equal treatment of all its employees regardless of gender, race, age, religion, disability or sexual orientation. 
Where existing employees become disabled, the policy of the Group is to provide continuing employment and training wherever practicable. 
The Group makes significant efforts to ensure that high standards of employee welfare are maintained worldwide in all its operations, irrespective 
of geography and local market conditions. Together with many other global companies operating in its sector, the Group is a member of the 
Electronic Industry Citizenship Coalition, a leading industry organisation promoting best practices in corporate responsibility, which is committed 
to raising standards of employee welfare in all jurisdictions and at all levels of the supply chain for electronic products. Further details on the 
Group’s policies relating to its employees are given on page 40. 

Donations 
During the year the Group contributed £51,000 (2011: £58,000) for charitable purposes. Employees across the Group regularly fund raise for 
charity. Further details on the Group’s fundraising activities are given in the Corporate responsibility section on pages 40 and 41. There were no 
political contributions. 

Share capital 
The Company’s issued share capital comprises a single class of share capital which is divided into Ordinary shares of 25 pence each. All issued 
shares are fully paid. The share capital during the year is shown in note 24 to the consolidated financial statements. The rights and obligations 
attaching to the Company’s Ordinary shares are set out in the Company’s Articles of Association, copies of which can be obtained from 
Companies House in the United Kingdom or by writing to the Group General Counsel & Company Secretary. Subject to applicable statutes, shares 
may be issued with such rights and restrictions as the Company may by ordinary resolution decide, or (if there is no such resolution or so far as it 
does not make specific provision) as the Board may decide. Holders of Ordinary shares are entitled to speak at general meetings of the Company, 
to appoint one or more proxies and, if they are corporations, to appoint corporate representatives and to exercise voting rights. Holders of 
Ordinary shares may also receive a dividend and on a liquidation may share in the assets of the Company. In addition, holders of Ordinary shares 
are entitled to receive the Company’s Annual Report and Accounts. Subject to meeting certain thresholds, holders of Ordinary shares may require 
a general meeting of the Company to be held or the proposal of resolutions at Annual General Meetings. 

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TT electronics plc 
Annual Report 2012

Directors’ report – Governance
OTHER STATUTORY DISCLOSURES CONTINUED

Authority to allot shares and disapply statutory pre-emption rights 
The Directors will be seeking to renew their authorities to allot unissued shares and to disapply statutory pre-emption rights at the Annual General 
Meeting to be held on 9 May 2013. 

Purchase of own shares 
At the Annual General Meeting held on 15 May 2012, the Company was given authority to purchase up to 15,525,822 of its Ordinary shares until 
the date of its next Annual General Meeting. No purchases were made during the year by the Company. The Directors will be seeking a new 
authority for the Company to purchase its Ordinary shares at the forthcoming Annual General Meeting. 

Further details regarding the authority to allot shares and disapply statutory pre-emption rights and the purchase of own shares are set out 
in the Notice of the Annual General Meeting which accompanies this document and is available to view on the Company’s website.

Shares held by the Employee Benefit Trust 
The Company has established an employee benefit trust (“EBT”), the trustee of which is Sanne Trust Company Limited, part of Sanne Group. 
As at 31 December 2012, the trustee held 242,420 shares with a nominal value of £60,605 and an aggregate purchase price of £1.46 per share, 
representing 0.15 per cent of the total issued share capital at that date. These shares will be used to satisfy awards made under the 
TT electronics plc Restricted Share Plan (“RSP”), the TT electronics plc Long Term Incentive Plan (“LTIP”) or other employee share schemes. 
The maximum number of shares held by the EBT during the year was 1,712,396, of which 1,567,256 were used to satisfy awards under the LTIP. 
The voting rights in relation to these shares are exercisable by the trustee; however, in accordance with investor protection guidelines the trustee 
abstains from voting. The executive Directors as employees of the Company are potential beneficiaries of shares held by the EBT.

Substantial shareholding notifications 
The Company had been notified of the following voting rights attaching to TT electronics plc shares in accordance with the Disclosure and 
Transparency Rules at 11 March 2013 and 31 December 2012.

J W Newman

Mondrian Investment Partners Limited

Blackrock, Inc

Tweedy, Browne Company LLC

Crystal Amber Fund Limited

Legal & General Group plc

11 March 2013 
Number

10,548,010
7,912,306
8,156,492
7,664,336
6,000,000
–

 %

  6.7
  5.1
  5.1
  4.9
  3.8
<3.0

31 Dec 2012 
Number

10,548,010
7,912,306
8,156,492
7,664,336
6,000,000
6,188,558

%

6.7
5.1
5.1
4.9
3.8
3.9

So far as has been ascertained, no other person or corporation holds or is beneficially interested in any substantial part of the share capital of 
the Company. 

Voting rights and restrictions on transfer of shares 
On a show of hands at a general meeting of the Company, every holder of Ordinary shares present in person or by proxy and entitled to vote 
has one vote and on a poll every member present in person or by proxy and entitled to vote has one vote for every Ordinary share held. 
Further details regarding voting at the Annual General Meeting can be found in the Notice of the Annual General Meeting which accompanies 
this document. None of the Ordinary shares carry any special rights with regard to control of the Company. Electronic and paper proxy 
appointments and voting instructions must be received by the Company’s Registrars not later than 48 hours before a general meeting. 
A shareholder can lose his entitlement to vote at a general meeting where that shareholder has been served with a disclosure notice 
and has failed to provide the Company with information concerning interests in those shares. 

The Directors may refuse to register a transfer of a certificated share which is not fully paid, provided that the refusal does not prevent dealings in 
shares in the Company from taking place on an open and proper basis. The Directors may also refuse to register a transfer of a certificated share 
unless the instrument of transfer: (i) is lodged, duly stamped (if stampable), at the registered office of the Company or any other place decided by 
the Directors accompanied by the certificate for the share to which it relates and/or such other evidence as the Directors may reasonably require 
to show the right of the transferor to make the transfer; (ii) is in respect of only one class of shares; (iii) is in favour of a person who is not a minor, 
bankrupt or a person in respect of whom an order has been made on the ground that such person is suffering from a mental disorder or is 
otherwise incapable of managing their affairs; or (iv) is in favour of not more than four transferees. 

Transfers of uncertificated shares must be carried out using CREST and the Directors can refuse to register a transfer of an uncertificated share 
in accordance with the regulations governing the operation of CREST. 

The Directors may decide to suspend the registration of transfers, for up to 30 days a year, by closing the register of shareholders. The Directors 
cannot suspend the registration of transfers of any uncertificated shares without obtaining consent from CREST. 

There are no other restrictions on the transfer of Ordinary shares in the Company except: certain restrictions may from time to time be imposed 
by laws and regulations (for example insider trading laws); pursuant to the Company’s share dealing code whereby the Directors and certain 
employees of the Group require approval to deal in the Company’s shares; and where a shareholder with at least a 0.25 per cent interest in the 

TT electronics plc 
Annual Report 2012

67

Company’s certificated shares has been served with a disclosure notice and has failed to provide the Company with information concerning 
interests in those shares. 

The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of Ordinary shares or on 
voting rights. 

Articles of Association 
The Company’s Articles of Association may only be amended by special resolution approved at a general meeting of the shareholders. 

UK Corporate Governance Code
The Code is available to view at the website of the Financial Reporting Council, www.frc.org.uk.

Disclosure of information to auditors
To the best of each Director’s knowledge and belief, there is no audit information relevant to the preparation of the Auditors’ report of which 
the Auditors are unaware and each Director has taken all the steps which might be expected to be aware of such relevant information and 
to establish that the Auditors are also aware of that information.

Approved by the Board on 13 March 2013 and signed on its behalf by: 

Lynton Boardman
Group General Counsel & Company Secretary

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68

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES 

Statement of Directors’ responsibilities in respect of the Annual Report 
The Directors are responsible for preparing the Annual Report. Company law requires the Directors to prepare Group and parent Company financial 
statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted 
by the EU and applicable law and have elected to prepare the parent Company financial statements in accordance with UK Accounting Standards 
and applicable law (UK Generally Accepted Accounting Practice). 

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state 
of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial 
statements, the Directors are required to: 

(cid:2)(cid:3) select suitable accounting policies and then apply them consistently; 

(cid:2)(cid:3) make judgements and estimates that are reasonable and prudent; 

(cid:2)(cid:3) for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU; and 

(cid:2)(cid:3) for the parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material 

departures disclosed and explained in the parent Company financial statements. 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s transactions 
and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial 
statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to 
safeguard the assets of the Group and to prevent and detect fraud and other irregularities. 

Under applicable law and regulations, the Directors are also responsible for preparing a Directors’ report, Directors’ remuneration report and 
a Directors’ report on corporate governance that complies with that law and those regulations. 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. 
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 

Responsibility statement of the Directors in respect of the Annual Report 
Each of the persons who is a Director at the date of approval of this report confirms that to the best of his or her knowledge: 

(cid:2)(cid:3) each of the Group and parent Company financial statements, prepared in accordance with IFRS and UK Accounting Standards respectively, 

gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer and the undertakings included in the 
consolidation taken as a whole; and 

(cid:2)(cid:3) the Directors’ report on pages 1 to 67 includes a fair review of the development and performance of the business and the position of the 
Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and 
uncertainties that they face. 

By order of the Board:  

Lynton Boardman 
Group General Counsel & Company Secretary  

13 March 2013 

 
 
TT electronics plc 
Annual Report 2012

69

Financial statements – Group accounts 
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS 
OF TT ELECTRONICS PLC 

Independent auditor’s report to the members of TT electronics plc 
We have audited the financial statements of TT electronics plc for the year ended 31 December 2012 which comprise the consolidated income 
statement, the consolidated statement of comprehensive income, the consolidated and Company balance sheets, the consolidated statement 
of changes in equity, the consolidated cash flow statement and related notes. 

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International 
Financial Reporting Standards (IFRSs) as adopted by the EU. The financial reporting framework that has been applied in the preparation of the parent 
Company financial statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice). 

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work 
has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and 
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the 
Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. 

Respective responsibilities of Directors and auditor 
As explained more fully in the Statement of Directors’ responsibilities set out on page 68 the Directors are responsible for the preparation of the 
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial 
statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with 
the Auditing Practices Board’s Ethical Standards for Auditors.  

Scope of the audit of the financial statements 
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at 
www.frc.org.uk/auditscopeukprivate 

Opinion on financial statements 
In our opinion: 

(cid:2)(cid:3) the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 December 2012 

and of the Group’s profit for the year then ended; 

(cid:2)(cid:3) the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU; 
(cid:2)(cid:3) the parent Company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice; 
(cid:2)(cid:3) the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the Group 

financial statements, Article 4 of the IAS Regulation.  

Opinion on other matters prescribed by the Companies Act 2006 
In our opinion: 

(cid:2)(cid:3) the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and  

(cid:2)(cid:3) the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the 

financial statements. 

Matters on which we are required to report by exception 
We have nothing to report in respect of the following: 

Under the Companies Act 2006 we are required to report to you if, in our opinion: 

(cid:2)(cid:3) adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from 

branches not visited by us; or 

(cid:2)(cid:3) the parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the 

accounting records and returns; or 

(cid:2)(cid:3) certain disclosures of Directors’ remuneration specified by law are not made; or 
(cid:2)(cid:3) we have not received all the information and explanations we require for our audit. 
Under the Listing Rules, we are required to review: 

(cid:2)(cid:3) the Directors’ statement, set out on page 51 in relation to going concern; 
(cid:2)(cid:3) the part of the Directors’ report on corporate governance relating to the Company’s compliance with the nine provisions of the UK Corporate 

Governance Code specified for our review; and 

(cid:2)(cid:3) certain elements of the report to shareholders by the Board on Directors’ remuneration. 

Anthony Sykes (Senior Statutory Auditor) 
for and on behalf of KPMG Audit Plc, Statutory Auditor 
Chartered Accountants 
15 Canada Square 
London E14 5GL 

13 March 2013

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70

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
CONSOLIDATED INCOME STATEMENT 
For the year ended 31 December 2012 

£million (unless otherwise stated) 

Continuing operations 
Revenue 
Cost of sales 
Gross profit 
Distribution costs 
Administrative expenses 
Other operating income 
Operating profit 
Analysed as: 
Operating profit before exceptional items 
Exceptional items 
Finance income 
Finance costs 
Profit before taxation 
Taxation 
Profit from continuing operations 
Discontinued operations 
Profit from discontinued operations 
Profit for the year attributable to owners of the Company 

EPS attributable to owners of the Company – basic 
From continuing operations (p) 
From discontinued operations (p) 

EPS attributable to owners of the Company – diluted 
From continuing operations (p) 
From discontinued operations (p) 

* Re-presented for discontinued operations in accordance with IFRS 

Note 

2012 

2011*

3 

3a 
8 
6 
6 

9 
7 

5 

11 
11 

11 
11 

476.9 
(384.8) 
92.1 
(32.7) 
(34.8) 
1.5 
26.1 

29.4 
(3.3) 
21.0 
(23.7) 
23.4 
(6.2) 
17.2 

6.3 
23.5 

11.0 
4.0 
15.0 

11.0 
4.0 
15.0 

509.6
(407.8)
101.8
(34.8)
(37.7)
1.7
31.0

28.7
2.3
21.1
(25.3)
26.8
(5.3)
21.5

3.5
25.0

13.9
2.2
16.1

13.6
2.2
15.8

 
 
  
 
 
 
  
 
  
  
 
 
 
 
  
 
  
  
 
 
 
  
  
 
 
 
 
 
  
  
TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
for the year ended 31 December 2012 

£million 

Profit for the year 
Other comprehensive income/(loss) for the year after tax 
Exchange differences on translation of foreign operations 
Tax on exchange differences 
Loss on hedge of net investment in foreign operations 
(Loss)/gain on cash flow hedges taken to equity less amounts taken to income statement 
Foreign exchange gain on disposals taken to income statement 
Actuarial loss on defined benefit pension schemes 
Tax on actuarial amounts in pension deficit movement 
Total comprehensive income for the year 

Total comprehensive income is entirely attributable to the owners of the Company. 

Note 

5 
23 
22 

2012

23.5

(4.3)
0.1
(2.8)
(0.5)
(0.2)
(5.7)
(0.1)
10.0

71

2011

25.0

0.9
0.1
(0.6)
0.2
– 
(6.2)
(2.3)
17.1

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72

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
CONSOLIDATED BALANCE SHEET 
at 31 December 2012 

£million 

ASSETS 
Non-current assets 
Property, plant and equipment 
Goodwill 
Other intangible assets 
Deferred tax assets 
Total non-current assets 
Current assets 
Inventories 
Trade and other receivables 
Derivative financial instruments 
Cash and cash equivalents 
Total current assets 
Total assets 
LIABILITIES 
Current liabilities 
Borrowings 
Derivative financial instruments 
Trade and other payables 
Income taxes payable 
Provisions 
Total current liabilities 
Non-current liabilities 
Borrowings 
Deferred tax liability 
Pensions and other post-employment benefits 
Provisions 
Other non-current liabilities 
Total non-current liabilities 
Total liabilities 
Net assets 
EQUITY 
Share capital 
Share premium 
Share options reserve 
Hedging and translation reserve 
Retained earnings 
Equity attributable to owners of the Company 
Non-controlling interests 
Total equity 

Approved by the Board of Directors on 13 March 2013 and signed on their behalf by:  

Geraint Anderson   Shatish Dasani 
Director  

Director 

Note 

2012 

2011

13  
14  
15  
22  

16  
17  

20  

18  

19  

20  
22  
23  
19  
18  

24  
24  

26  
27  

85.9  
65.2  
13.2  
13.1  
177.4  

68.2  
67.6  
0.2  
59.1  
195.1  
372.5  

3.8  
– 
99.9  
12.5  
10.5  
126.7  

8.6 
2.4  
36.8  
0.2  
6.7  
54.7  
181.4  
191.1  

39.2  
0.7  
1.5  
19.5  
128.2  
189.1  
2.0  
191.1  

90.9 
67.3 
11.8 
21.0 
191.0 

83.4 
85.6 
0.5 
69.5 
239.0 
430.0 

14.2 
6.9 
113.0 
6.1 
6.4 
146.6 

40.1 
9.3 
35.5 
0.2 
6.9 
92.0 
238.6 
191.4 

38.8 
0.5 
3.6 
27.2 
119.3 
189.4 
2.0 
191.4 

 
 
 
 
  
 
 
 
  
  
  
 
 
 
 
 
 
  
 
 
  
  
  
 
 
 
 
  
  
 
 
TT electronics plc 
Annual Report 2012

73

Financial statements – Group accounts 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
for the year ended 31 December 2012 

Sub- 
total 

177.1  
25.0  

Non-
controlling 
interest

2.0 
– 

Total

179.1 
25.0 

£million 

At 1 January 2011 
Profit for the year 
Other comprehensive income 
Exchange differences on translation 
of foreign operations 
Tax on exchange differences 
Net loss on hedge of net investment in 
foreign operations 
Net gain on cash flow hedges taken to equity 
less amounts taken to income statement 
Actuarial loss on defined benefit pension scheme 
Tax on actuarial amounts in pension deficit 
movement 
Total other comprehensive income 
Transactions with owners recorded directly 
in equity 
Equity dividends paid by the Company 
Change in fair value of minority put option 
Share-based payments 
Deferred tax on share-based payments 
New shares issued 
At 31 December 2011 
Profit for the year 
Other comprehensive income 
Exchange differences on translation 
of foreign operations 
Tax on exchange differences 
Net loss on hedge of net investment in 
foreign operations 
Net loss on cash flow hedges taken to equity 
less amounts taken to income statement 
Foreign exchange gain on disposals taken 
to income statement 
Actuarial loss on defined benefit pension scheme 
Tax on actuarial amounts in pension 
deficit movement 
Total other comprehensive income 
Transactions with owners recorded directly 
in equity 
Equity dividends paid by the Company 
Change in fair value of minority financial liability 
Share-based payments 
Deferred tax on share-based payments 
New shares issued 
At 31 December 2012 

Share 
capital

Share 
premium

38.8 
– 

0.4 
– 

Share 
options 
reserve

1.6 
– 

– 

– 
– 

– 

– 
– 

– 

– 
– 
– 
– 
– 
38.8 
– 

– 

– 
– 

– 

– 

– 
– 

– 

– 
– 
– 
– 
0.4 
39.2 

– 

– 
– 

– 

– 
– 

– 

– 
– 
– 
– 
0.1 
0.5 
– 

– 

– 
– 

– 

– 

– 
– 

– 

– 
– 
– 
– 
0.2 
0.7 

– 

– 
– 

– 

– 
– 

– 

– 
– 
1.7 
0.3 
– 
3.6 
– 

– 

– 
– 

– 

– 

– 
– 

– 

– 
– 
(1.3)
(0.8)
– 
1.5 

Hedging 
reserve

Translation 
reserve

Retained 
earnings 

(11.7)
– 

– 

– 
– 

0.2 

– 
– 

38.3 
– 

0.9 

0.1 
(0.6)

– 

– 
– 

109.7  
25.0  

–  

–  
–  

–  

(6.2) 
(2.3) 

0.9  

0.1  
(0.6) 

0.2  

(6.2) 
(2.3) 

0.2 

0.4 

(8.5) 

(7.9) 

– 
– 
– 
– 
– 
(11.5)
– 

– 

– 
– 

(0.5)

– 

– 
– 

– 
– 
– 
– 
– 
38.7 
– 

(4.3)

0.1 
(2.8)

– 

(0.2)

– 
– 

(5.0) 
(1.9) 
–  
–  
–  
119.3  
23.5  

–  

–  
–  

–  

–  

(5.7) 
(0.1) 

(5.0) 
(1.9) 
1.7  
0.3  
0.1  
189.4  
23.5  

(4.3) 

0.1  
(2.8) 

(0.5) 

(0.2) 

(5.7) 
(0.1) 

(0.5)

(7.2)

(5.8) 

(13.5) 

– 
– 
– 
– 
– 
(12.0)

– 
– 
– 
– 
– 
31.5 

(7.3) 
(1.1) 
–  
–  
(0.4) 
128.2  

(7.3) 
(1.1) 
(1.3) 
(0.8) 
0.2  
189.1  

– 

– 
– 

– 

– 
– 

– 

– 
– 
– 
– 
– 
2.0 
– 

– 

– 
– 

– 

– 

– 
– 

– 

– 
– 
– 
– 
– 
2.0 

0.9 

0.1 
(0.6)

0.2 

(6.2)
(2.3)

(7.9)

(5.0)
(1.9)
1.7 
0.3 
0.1 
191.4 
23.5 

(4.3)

0.1 
(2.8)

(0.5)

(0.2)

(5.7)
(0.1)

(13.5)

(7.3)
(1.1)
(1.3)
(0.8)
0.2 
191.1 

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74

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
CONSOLIDATED CASH FLOW STATEMENT 
for the year ended 31 December 2012 

£million 
Cash flows from operating activities 
Profit for the year 
Taxation  
Net finance costs 
Exceptional items 
Profit from discontinued operations 
Operating profit from continuing operations before exceptional items 
Adjustments for: 
Depreciation of property, plant and equipment 
Amortisation of intangible assets 
Impairment of intangible assets 
Other items 
Increase in inventories 
Decrease in receivables 
(Decrease) / increase in payables 
Operating cash flow from continuing operations before exceptional payments 
Operating cash flow from acquisitions and discontinued operations 
Special payments to pension funds 
Exceptional costs 
Net cash generated from operations 
Net income taxes paid 
Net cash flow from operating activities 
Cash flows from investing activities 
Interest received 
Purchase of property, plant and equipment 
Proceeds from sale of property, plant and equipment and grants received 
Development expenditure 
Purchase of other intangibles 
Acquisitions of businesses 
Disposal of subsidiaries (£39.6m consideration less £2.3m of disposal costs add £6.6m 
of overdrafts in subsidiaries at date of disposal) 
Deferred consideration received 
Net cash flow from/(used in) investing activities 
Cash flows from financing activities 
Issue of share capital 
Interest paid 
Repayment of borrowings 
Proceeds from borrowings 
Other items 
Finance leases 
Dividends paid by the Company 
Net cash flow used in financing activities 
Net increase in cash and cash equivalents 
Cash and cash equivalents at beginning of year 
Exchange differences 
Cash and cash equivalents at end of year 
Cash and cash equivalents comprise 
Cash at bank and in hand 
Bank overdrafts 

Note

13 
15 
15 

13 

15 
15 

24 

25 

28 
28 
28 

20 

2012 

23.5  
6.2  
2.7  
3.3  
(6.3) 
29.4  

15.8  
4.6  
0.1  
(1.0) 
(3.5) 
1.1  
(1.1) 
45.4  
(8.5) 
(3.7) 
(4.1) 
29.1  
(2.3) 
26.8  

0.6  
(18.7) 
0.3  
(4.8) 
(1.3) 
(3.0) 
43.9  

0.2  
17.2  

0.2  
(2.0) 
(62.0) 
30.6  
(2.4) 
(0.1) 
(7.3) 
(43.0) 
1.0  
58.8  
(0.7) 
59.1  

59.1  
–  
59.1  

2011*

25.0 
6.3 
4.2 
(2.3)
(4.5)
28.7 

16.0 
7.6 
0.6 
(2.0)
(3.8)
7.8 
6.7 
61.6 
1.4 
(3.5)
(2.2)
57.3 
(7.9)
49.4 

0.3 
(21.3)
2.0 
(5.3)
(0.3)
– 
7.6 

0.7 
(16.3)

0.1 
(2.4)
(11.1)
0.2 
– 
(0.1)
(5.0)
(18.3)
14.8 
44.2 
(0.2)
58.8 

69.5 
(10.7)
58.8 

The consolidated cash flow statement includes cash flows from both continuing and discontinued operations. 

* Re-presented for discontinued operations in accordance with IFRS 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
TT electronics plc 
Annual Report 2012

75

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

1 Basis of preparation 

a) Basis of accounting 
The consolidated financial statements have been prepared on a historical cost basis modified by the revaluation of financial assets and derivatives 
held at fair value and by the revaluation of certain property, plant and equipment at the transition date to International Financial Reporting Standards 
(IFRS). The consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board 
(IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, as adopted by the European 
Union, and in accordance with the provisions of the Companies Act 2006. 

The financial statements set out on pages 70 to 110 have been prepared using consistent accounting policies, except for the adoption of new 
accounting standards and interpretations noted below. No revisions to Adopted IFRS that became applicable in 2012 had a significant impact on the 
Group’s financial statements. 

b) Basis of consolidation  
The consolidated financial statements set out the Group’s financial position as at 31 December 2012 and the Group’s financial performance for the 
year ended 31 December 2012. 

Subsidiaries are those enterprises controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial 
and operating policies of an enterprise so as to obtain benefits from its activities. Subsidiaries are consolidated from the date on which control is 
transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. 

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. 
Unrealised losses are eliminated in the same way as unrealised gains except that they are only eliminated to the extent that there is no evidence 
of impairment. 

c) Discontinued operations 
In accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”, comparatives for prior years have been re-presented for 
businesses treated as discontinued. During the year ended 31 December 2012 the Secure Power division has been re-presented as a discontinued 
operation (see note 5). 

d) Going concern 
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set on pages 6 to 33. 
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial review on pages 34 to 35. 
In addition, note 21 to the financial statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk 
management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. 

The Group had a net cash balance of £46.7 million at 31 December 2012 (2011: £15.2 million), with available financial headroom of £192.4 million. 
Given the considerable financial resources available, together with long-term partnerships with a number of key customers and suppliers across 
different geographic areas and industries, the Directors believe that the Group is well placed to manage its business risks successfully. 

The Directors have a reasonable expectation that the Company has adequate resources and financial headroom to continue in operational 
existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial 
statements. Further details are contained in the Directors’ report on page 51. 

e) New standards and interpretations not yet adopted 
There were no revisions to adopted IFRSs which became applicable in 2012 that had a significant impact on the Group’s financial statements. 
Standards and interpretations issued by the IASB are only applicable if endorsed by the EU. The following will be applicable in the future and will 
have an impact on the Group:  

Amendments to IAS 19 “Employee Benefits”: the principal change is that the financing on post-retirement benefits is calculated on the net 
surplus or deficit using an ‘AA’ corporate bond rate and the recognition of administrative expenses. It will not be permissible to recognise 
administrative expenses relating directly to the administration of defined benefit pension schemes as a deduction to the expected return on 
scheme assets within net finance costs, with the costs instead being recognised as administrative expenses in the income statement. Had the 
revisions to IAS 19 been adopted during the year ended 31 December 2012, operating profit would have decreased by £0.7 million and net 
financing costs increased by £0.7 million. 

The Group does not consider that any other standards, amendments or interpretations issued by the IASB, but not yet applicable, will have a 
significant impact on the financial statements. 

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76

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

1 Basis of preparation (continued) 

f) Change in accounting policies 
There have been no changes to accounting policies during the year. 

g) Significant accounting judgements and estimates 

Judgements 
Determining many of the amounts included in the consolidated financial statements involves the use of judgements. These judgements are based 
on management’s best knowledge of the relevant facts and circumstances having regard to prior experience, but actual results may differ from the 
amounts included in the consolidated financial statements. Other than the key sources of estimation uncertainty shown below, the Directors believe 
that there were no material transactions or events during the year which required critical judgements in applying the Group’s accounting policies.  

Estimation uncertainty  
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that 
affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and 
expenses during the reporting period. Actual outcomes could differ from these estimates. In particular, information about significant areas of 
estimation uncertainty made by the Directors in preparing the consolidated financial statements is shown below: 

(cid:2)(cid:3) Note 4 – Acquisitions. The fair value of assets and liabilities acquired through business combination have been provisionally determined at the 

date of acquisition; 

(cid:2)(cid:3) Note 14 – Impairment of goodwill. The carrying amount of goodwill has been tested for impairment by estimating the value in use of the  

cash-generating units to which it has been allocated. Note 14 outlines the significant assumptions made in performing the impairment tests; 

(cid:2)(cid:3) Note 15 –Other intangible assets. The recoverability of capitalised development costs is dependent on assessments of the future commercial 

viability of the relevant products and processes;  

(cid:2)(cid:3) Note 19 – Provisions. The Group makes appropriate provision on a consistent basis for risks of product liability, litigation, restructuring, credit risk 

and other normal trading exposures with estimates being made regarding the timing of future payments; 

(cid:2)(cid:3) Note 22 – Deferred tax. The recognition of deferred tax assets is dependent on assessments of future taxable income in the relevant countries 

concerned; and 

(cid:2)(cid:3) Note 23 – Defined benefit pension obligations. The defined benefit pension obligations are calculated using a number of assumptions, 

including future inflation, salary increases and mortality and the obligation is then discounted to its present value using an assumed discount 
rate. The pension deficit has been calculated using the assumptions set out in note 23. 

2 Summary of significant accounting policies 
The following significant accounting policies have been applied in the preparation of the consolidated financial statements. These accounting 
policies have been consistently applied across the Group. 

a) Goodwill  
Goodwill arising on the acquisition of a business, representing the difference between the cost of acquisition and the fair value of the identifiable 
net assets acquired, is capitalised and is tested annually for impairment. Goodwill is not amortised, and any impairment losses are not subsequently 
reversed. The net book value of goodwill at the date of transition to IFRS has been treated as deemed cost. On the subsequent disposal or 
discontinuance of a previously acquired business, the relevant goodwill is dealt with in the Consolidated income statement except for the goodwill 
already charged to reserves.  

Negative goodwill arising on the acquisition of a business is credited to the Consolidated income statement on acquisition. 

b) Other intangible assets 
Intangible assets acquired as part of a business combination are stated in the balance sheet at their fair value at the date of acquisition less 
accumulated amortisation.  

 
 
TT electronics plc 
Annual Report 2012

77

2 Summary of significant accounting policies (continued) 
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised 
in the income statement as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the 
production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible 
and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an 
appropriate proportion of overheads. Other development expenditure is recognised in the income statement as incurred. Capitalised development 
expenditure is stated at cost less accumulated amortisation and impairment losses. The carrying values of intangible assets are tested for impairment 
whenever there is an indication that they may be impaired.  

Acquired computer software licences for use within the Group are capitalised as an intangible asset on the basis of the costs incurred to acquire and 
bring to use the specific software. Costs that are directly associated with the implementation of identifiable and unique software products controlled 
by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Capitalised 
software development expenditure is stated at cost less accumulated amortisation. 

The amortisation rates for intangible assets are:  

Acquired patents and licences 

up to 10 years  

Product development costs  

5 years  

Customer relationships  

Software 

3 to 8 years  

3 to 5 years 

Amortisation is charged on a straight-line basis.  

With effect from 1 July 2012 the amortisation period for product development costs was changed from 3 years to 5 years, as this more accurately 
reflects the useful economic lifetime of the underlying products. Had the amortisation period remained at 3 years, the amortisation charge for the 
year ended 31 December 2012 would have increased by £1.7 million. 

c) Foreign currency translation 
The functional currency for each entity in the Group is determined with reference to the currency of the primary economic environment in which 
it operates. Transactions in currencies other than the functional currency are initially recorded at the functional currency rate ruling at the date of 
the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet 
date. Exchange gains and losses on settlement of foreign currency transactions translated at the rate prevailing at the date of the transactions, or the 
translation of monetary assets and liabilities at period end exchange rates, are taken to the income statement. Non-monetary assets and liabilities 
denominated in foreign currencies that are stated at historical cost are translated to the functional currency at the foreign exchange rate ruling at 
the date of the transaction. 

On consolidation, income statements of subsidiaries are translated into sterling, at average rates of exchange. Balance sheet items are translated 
into sterling at period end exchange rates. Exchange differences on the retranslation are taken to equity. Exchange differences on foreign currency 
borrowings financing those net investments are also dealt with in equity and are reported in the statement of comprehensive income. All other 
exchange differences are charged or credited to the income statement in the year in which they arise. On disposal of an overseas subsidiary any 
cumulative exchange movements relating to that subsidiary held in the translation reserve are transferred to the consolidated income statement.  

d) Property, plant and equipment  

Initial measurement 
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. The cost of a tangible fixed asset comprises 
its purchase price and any costs directly attributable to bringing it into working condition for its intended use. The cost of self-constructed assets 
includes the cost of materials, direct labour and an appropriate proportion of production overheads. 

Depreciation 
The cost of each item of property, plant and equipment is depreciated over its useful life. Depreciation is charged to the income statement so as 
to write-off the cost less estimated residual value on a straight-line basis over the estimated useful life of the asset. Depreciation commences on the 
date the assets are ready for use within the business and the asset carrying values are reviewed for impairment when there is an indication that they 
may be impaired. Freehold land is not depreciated. 

The depreciation rates of assets are as follows: 

Freehold buildings 

Leasehold buildings 

2%  

2% (or over the period of the lease if less than 50 years)  

Plant and equipment 

10% to 33¹/3% 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets that take a substantial period of time to get 
ready for their intended use are capitalised as part of the cost of the respective asset.  

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78

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

2 Summary of significant accounting policies (continued) 

e) Investment property 
Property held to earn rental income rather than for the purpose of the Group’s principal activities is classified as investment property. 
Investment property is recorded at cost less accumulated depreciation and any recognised impairment loss. The depreciation policy is consistent 
with those described for other Group properties. The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at each 
balance sheet date. 

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from 
use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the 
asset is recognised in the income statement in the period of derecognition. 

f) Leases  
Finance leases, which transfer to the Group substantially all the risks and rewards of ownership of the leased items, are capitalised at the 
commencement of the lease. Plant and equipment acquired by way of finance lease is stated at an amount equal to the lower of its fair value and the 
present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses. The capital elements 
of future obligations under leases and hire purchase contracts are included as liabilities in the balance sheet. Lease payments are apportioned 
between the finance charge and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. 
Finance charges are charged directly against income. Capitalised lease assets are depreciated over the shorter of the estimated useful life of the asset 
or the lease term. All other leases are treated as operating leases and the cost is expensed to the income statement as incurred. 

g) Government grants  
Government grants relating to non-current assets are treated as deferred income and credited to the income statement by equal instalments 
over the anticipated useful lives of the assets to which the grants relate. Other grants are credited to the income statement over the period of 
the project to which they relate.  

h) Inventories  
Inventories are valued at the lower of cost, including related overheads, and net realisable value. Cost comprises direct materials and, where 
applicable, direct labour costs and the overheads incurred in bringing inventories to their present location and condition. Cost is calculated 
on a weighted average cost basis.  

i) Trade and other receivables  
Trade receivables are carried at original invoice price (which is the fair value of the consideration receivable) less provision made for impairment 
of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to 
collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the original carrying 
amount and the recoverable amount, being the present value of expected cash flows receivable. The amount of the provision is recognised in the 
income statement. 

j) Cash and cash equivalents  
Cash and cash equivalents comprise cash at bank and in hand, short-term deposits held on call or with maturities of less than three months 
at inception and highly liquid investments that are readily convertible into known amounts of cash and are subject to insignificant risk of changes 
in value, and bank overdrafts.  

k) Deferred taxation  
Deferred taxation is provided on taxable temporary differences between the carrying amounts of assets and liabilities in the financial statements and 
their corresponding tax bases. No provision is made for deferred tax which would become payable on the distribution of retained profits by overseas 
subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not 
reverse in the foreseeable future. Deferred tax is measured using the tax rates expected to apply when the asset is realised or the liability settled 
based on tax rates enacted or substantively enacted by the balance sheet date. However, deferred tax is not provided on the initial recognition of 
goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting 
profit. 

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can 
be utilised or that they will reverse. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will 
be realised.  

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred 
taxes relate to the same taxable entity and the same taxation authority. 

l) Borrowings  
Borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, 
borrowings are subsequently measured at amortised cost using the effective interest method. 

m) Trade payables  
Trade payables are carried at the amounts expected to be paid to counterparties.  

 
TT electronics plc 
Annual Report 2012

79

2 Summary of significant accounting policies (continued) 

n) Employee benefits 

Defined benefit plans 
The Group operates defined benefit post-retirement benefit schemes and defined contribution pension schemes. 

The liability recognised in the balance sheet for defined benefit schemes is the present value of schemes’ liabilities less the fair value of schemes’ 
assets. The operating and financing costs of defined benefit schemes are recognised separately in the income statement. Operating costs comprise 
the current service cost, any gains or losses on settlement or curtailments, and past service costs where benefits have vested. Finance items comprise 
the unwinding of the discount on schemes’ liabilities and the expected return on schemes’ assets. Actuarial gains or losses comprising differences 
between the actual and expected return on schemes’ assets, changes in schemes’ liabilities due to experience and changes in actuarial assumptions 
are recognised in the statement of comprehensive income.  

Defined contribution plans 
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have 
no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised in the 
income statement in the periods during which services are rendered by employees.  

Termination benefits 
Termination benefits are recognised as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a 
formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer 
made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group has made 
an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.  

Short-term employee benefits 
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability 
is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or 
constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. 

Share-based payments  
Certain employees of the Group receive part of their remuneration in the form of share-based payment transactions, whereby employees render 
services in exchange for shares or rights over shares (equity-settled transactions). The cost of equity-settled transactions with employees is measured 
at fair value at the date at which they are granted. The fair value of share awards with market-related vesting conditions is determined by an external 
consultant and the fair value at the grant date is expensed on a straight-line basis over the vesting period based on the Group’s estimate of shares 
that will eventually vest. The estimate of the number of awards likely to vest is reviewed at each balance sheet date up to the vesting date at which 
point the estimate is adjusted to reflect the actual outcome of awards which have vested. No adjustment is made to the fair value after the vesting 
date even if the awards are forfeited or not exercised. 

o) Own shares 
Own equity instruments which are re-acquired (own shares) are recognised at cost and deducted from equity. No gain or loss is recognised in 
the income statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying 
amount and the consideration paid to acquire such equity instruments is recognised within equity. 

p) Provisions 
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an 
outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount. If the effect of the time value 
of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market 
assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in 
the provision due to the passage of time is recognised as a finance cost. 

q) Revenue  
Revenue is measured at the fair value of the right to consideration, usually the invoiced value, for the provision of goods and services to external 
customers excluding value added tax and other sales related taxes and is recognised when the significant risks and rewards of ownership have 
transferred to the customer. In most cases this coincides with the transfer of legal title of the goods. Revenue for services is recognised as the 
services are rendered. 

r) Finance income 
Finance income comprises interest income on funds invested, foreign exchange gains and the expected return on pension scheme assets. 
Interest income is recognised as it accrues. 

s) Finance costs 
Finance costs comprise interest expense on borrowings which are not capitalised under the borrowing costs policy, the unwinding of interest cost 
on employee benefits and provisions and foreign exchange losses. 

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80

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

2 Summary of significant accounting policies (continued) 

t) Income tax 
Income tax for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to 
items charged or credited directly to equity, in which case it is recognised in equity. Current tax expense is the expected tax payable on the taxable 
income for the year and any adjustment to tax payable in respect of previous years. 

u) Dividends 
Dividends are recognised as a liability in the period in which they are approved by shareholders. Dividends receivable are recognised when the 
Group’s right to receive payment is established. 

v) Discontinued operations  
The Group reports a business as a discontinued operation when it has been disposed of in a period, or its future sale is considered to be highly 
probable at the balance sheet date, and results in the cessation of a major line of business or geographical area of operation.  

w) Financial instruments 

Recognition 
The Group recognises financial assets and liabilities on its balance sheet when it becomes a party to the contractual provisions of the instrument. 

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to set off the 
recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. 

Measurement 
When financial assets and liabilities are initially recognised, they are measured at fair value being the consideration given or received plus directly 
attributable transaction costs.  

In determining estimated fair value, investments are valued at quoted bid prices on the trade date. When quoted prices on an active market are not 
available, fair value is determined by reference to price quotations for similar instruments traded. 

Loans and receivables comprise loans and advances other than purchased loans. Originated loans and receivables are initially recognised in 
accordance with the policy stated above and subsequently re-measured at amortised cost using the effective interest method. Allowance for 
impairment is estimated on a case-by-case basis. 

The Group uses derivative financial instruments such as forward foreign exchange contracts to hedge risks associated with foreign exchange 
fluctuations. These are designated as cash flow hedges. At the inception of the hedge relationship, the Group documents the relationship between 
the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. 
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument that is used in a 
hedging relationship is highly effective in offsetting changes in cash flows of the hedged item. 

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain 
or loss relating to the ineffective portion is recognised immediately in the income statement. 

Amounts deferred in equity are recycled in the income statement in the periods when the hedged item is recognised in the income statement, 
in the same line of the income statement as the recognised hedged item. However, when the forecast transaction that is hedged results in the 
recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and 
included in the initial measurement of the cost of the asset or liability. 

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, 
or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is 
recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected 
to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the income statement. 

Derecognition 
A financial asset is derecognised when the Group loses control over the contractual rights that comprise that asset. This occurs when the rights are 
realised, expire or are surrendered. A financial liability is derecognised when it is extinguished. Originated loans and receivables are derecognised on 
the date they are transferred by the Group. 

Impairment of financial assets 
The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. 
A financial asset or group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or 
more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated 
future cash flows of the financial asset or group of financial assets that can be reliably estimated. 

x) Business combinations 
Business combinations are accounted for using the acquisition method. Goodwill on business combinations is recognised as the fair value of the 
consideration transferred less the fair value of the identifiable assets and liabilities acquired, and is recognised as an asset in the consolidated Balance 
Sheet. Costs relating to the acquisition are recognised as expenses in the consolidated income statement as incurred. 

 
TT electronics plc 
Annual Report 2012

81

3 Segmental reporting  
For management purposes, the Group is organised into three divisions, as shown below, according to the nature of the products and services 
provided. Each of these divisions represents an operating segment in accordance with IFRS 8 ”Operating segments“ and there is no aggregation 
of segments. The chief operating decision maker is the Board of Directors. The operating segments are: 

(cid:2)(cid:3) Components – specialist resistive components and microcircuits, connectors and interconnection systems; 

(cid:2)(cid:3) Sensors – electronic accelerator pedals, engine and wheel speed, temperature and pressure sensors and chassis height sensors; and 

(cid:2)(cid:3) Integrated Manufacturing Services – the provision of global electronics manufacturing capability with logistics and integrated solutions. 

The accounting policies of the reportable segments are the same as the Group’s accounting policies as shown in note 2.  

The Group disposed of the Secure Power division during 2012, with the disposal of Dale Power Solutions Limited in July 2012 and the disposal 
of Ottomotores SA de CV and Ottomotores Do Brasil Energia Ltda in December 2012. This division is shown as a discontinued operation in these 
financial statements and the 2011 comparative amounts have been re-presented accordingly.  

The key performance measure of the operating segments is operating profit before exceptional items. The Group reports non-trading income 
or expenditure as exceptional when the size, nature or function of an item or aggregation of similar items is such that separate presentation 
is relevant to an understanding of its financial position. Segment operating profit represents the profit earned by each segment after allocation 
of central head office administration costs and is reviewed by the chief operating decision maker.  

Group financing (including finance costs and finance income) and income taxes are managed on a Group basis and are not allocated 
to operating segments. 

Goodwill is allocated to the individual cash generating units which are smaller than the segment which they are part of. 

a) Income statement information – continuing operations 

£million 

Sales to external customers 
Segment operating profit before exceptional items 
Exceptional items 
Operating profit 
Net finance costs 
Profit before taxation 

£million 

Sales to external customers 
Segment operating profit before exceptional items 
Exceptional items 
Operating profit 
Net finance costs 
Profit before taxation 

There are no significant sales between segments.  

Components

226.0 
14.8 

Integrated 
Manufacturing 
Services

102.7 
6.2 

Sensors 

148.2  
8.4  

2012

Total

476.9 
29.4 
(3.3)
26.1 
(2.7)
23.4 

  2011 (re-presented)

Components

242.7 
14.8 

Integrated 
Manufacturing 
Services

100.0 
5.1 

Sensors 

166.9  
8.8  

Total

509.6 
28.7 
2.3 
31.0 
(4.2)
26.8 

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82

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

3 Segmental reporting (continued) 

b) Segment assets 

£million 

Components 
Sensors 
Integrated Manufacturing Services 
Segment assets and liabilities 
Assets and liabilities of discontinued operations 
Pensions and other post-employment benefits 
Unallocated assets and liabilities 
Total assets/liabilities 
(cid:3)

£million 

Components 
Sensors 
Integrated Manufacturing Services 
Total continuing operations 
Discontinued operations 
Total 

c) Geographic information 

Assets 

Liabilities

2012 2011 (re-presented) 

2012  2011 (re-presented)

157.3 
87.1 
55.7 
300.1 
– 
– 
72.4 
372.5 

168.1  
78.9  
45.5  
292.5  
46.6  
–  
90.9  
430.0  

50.8  
30.5  
36.6  
117.9  
–  
36.8  
26.7  
181.4  

48.4 
31.3 
22.0 
101.7 
24.6 
35.5 
76.8 
238.6 

Capital expenditure 

Depreciation and amortisation

2012 2011 (re-presented) 

2012  2011 (re-presented)

9.9 
13.3 
1.2 
24.4 
0.4 
24.8 

11.0  
12.8  
1.7  
25.5  
1.4  
26.9  

8.3  
10.8  
1.3  
20.4  
0.5  
20.9  

9.3 
12.8 
1.4 
23.5 
1.0 
24.5 

Revenue by destination 
The Group operates on a global basis. Revenue from external customers by geographical destination is shown below. Management monitor 
and review revenue by region rather than by individual country given the significant number of countries where customers are based. (cid:3)

£million 

United Kingdom 
Rest of Europe 
North America 
Central and South America 
Asia 
Rest of the World 
Total continuing operations 

2012  2011 (re-presented)

78.3  
234.6  
95.4  
3.2  
62.0  
3.4  
476.9  

79.4 
250.1 
104.1 
4.4 
70.5 
1.1 
509.6 

No individual customer directly accounts for more than 10% of Group revenue. Revenue from services is less than 5% of Group revenues. All other 
revenue is from the sale of goods. 

 
 
  
TT electronics plc 
Annual Report 2012

83

3 Segmental reporting (continued) 

Non-current assets 
The carrying amount of non-current assets, excluding deferred tax assets and financial assets, analysed by the geographical area in which the assets 
are located is shown below:  

£million 

United Kingdom 
Rest of Europe 
North America 
Central and South America 
Asia 

2012

25.0 
53.4 
71.7 
3.9 
10.3 
164.3 

2011

27.2 
52.4 
75.2 
6.6 
8.6 
170.0 

4 Acquisitions 
On 12 December 2012 the Group acquired the majority of the UK business and assets of ACW Technology Limited for a consideration of £3.0 million 
in cash with £0.1 million of consideration being deferred until 2013. Acquisition costs of £0.4 million were incurred and have been recognised within 
administrative expenses and treated as an exceptional item in the income statement.  

From the date of acquisition to the year end, the business contributed £0.9 million of revenue, an operating loss of £0.1 million to the Group’s results 
and an operating cash outflow of £0.4 million. If the acquisition had occurred on 1 January 2012 it is estimated that Group revenue would have 
increased by £31.7 million and Group operating profit would have increased by £1.4 million.  

The fair values of the identifiable assets and liabilities acquired are as follows:  

£million 

Non-current assets 
Property, plant and equipment 
Current assets/(liabilities) 
Inventory 
Trade and other receivables 
Trade and other payables 

Consideration paid/payable 
Cash 
Deferred consideration 
Negative goodwill 

Book value at date 
of acquisition 

Fair value 
adjustments 
(provisional)

Fair value at date 
of acquisition 
(provisional)

0.5  

6.1  
3.8  
(5.2) 
5.2  

(0.2)

(1.6)
– 
– 
(1.8)

0.3 

4.5 
3.8 
(5.2)
3.4 

3.0 
0.1 
(0.3)

As the fair value of the net assets acquired exceeds the consideration payable, negative goodwill of £0.3 million has been recognised within other 
operating income in the income statement. 

No deferred tax asset has been recognised on the fair value adjustment to the assets and liabilities acquired as it is currently considered unlikely 
that this asset could be utilised against future taxable profits of entities in the UK. 

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84

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

5 Discontinued operations 
On 31 July 2012 the Group disposed of Dale Power Solutions Limited for total consideration of £10.6 million in cash before costs. 

On 7 December 2012 the Group disposed of Ottomotores SA de CV and Ottomotores Do Brasil Energia Ltda for total consideration of $46.5 million 
(£29.0 million) in cash before costs, and is subject to a final adjustment once the completion balance sheets have been agreed. 

Following the disposal of these businesses the Secure Power division has been treated as discontinued. 

During the year ended 31 December 2011 the Group disposed of AEI Compounds Limited, for consideration of £8.6 million in cash before costs. 
Discontinued operations during 2011 include both the Secure Power division and AEI Compounds Limited. 

The results from discontinued operations shown in the consolidated income statement are as follows: (cid:3)

£million 

Revenue 
Cost of sales 
Gross profit 
Distribution costs 
Administrative expenses 
Operating profit 
Exceptional items 
Net finance costs 
Profit on disposal of discontinued operations 
Profit before taxation 
Taxation 
Profit from discontinued operations 

The profit on disposal of discontinued operations is analysed below:  

£million 

Gross cash received 
Less: legal and professional costs 
Less: overdrafts/(cash) disposed of at completion 
Net proceeds per consolidated cash flow statement 
Deferred consideration receivable 
Less: net assets at completion 
Add: foreign exchange gain on disposals 

2012  2011 (re-presented)

68.8  
(56.7) 
12.1  
(4.4) 
(4.6) 
3.1  
(0.6) 
(0.4) 
6.8  
8.9  
(2.6) 
6.3  

2012 

39.6  
(2.3) 
6.6  
43.9  
–  
(37.3) 
0.2  
6.8  

94.1 
(76.6)
17.5 
(6.1)
(5.9)
5.5 
– 
(0.5)
0.5 
5.5 
(2.0)
3.5 

2011

8.6 
(0.5)
(0.5)
7.6 
0.2 
(7.3)
– 
0.5 

 
 
  
TT electronics plc 
Annual Report 2012

85

5 Discontinued operations (continued) 
The net cash flows from discontinued operations included within the consolidated cash flow statement are shown below:  

£million 

Operating activities 
Investing activities 
Financing activities 
Net cash flow 

6 Finance income and finance costs 
£million 

Interest expense 
Foreign exchange losses 
Interest on employee obligations 
Amortisation of arrangement fees 
Unwinding of discount factor on minority financial liability 
Finance costs 
Interest income 
Foreign exchange gains 
Expected return on pension scheme assets 
Finance income 
Net finance costs 

7 Profit for the year 
Profit from continuing operations for the year is stated after charging/(crediting):  

£million 

Depreciation of property, plant and equipment 
Amortisation of intangible assets 
Net foreign exchange (gains)/losses 
Cost of inventories recognised as an expense 
Staff costs (see note 12) 
Remuneration of Group Auditors 
– Company and consolidation statutory audits 
– statutory audit of subsidiaries 
– tax services 
– other services 
Government grants credited 
Share-based payments 

2012 2011 (re-presented)

(8.1)
(0.9)
(0.2)
(9.2)

1.4 
(0.7)
2.5 
3.2 

2012 2011 (re-presented)

1.6 
1.6 
19.0 
0.8 
0.7
23.7 
0.6 
1.9 
18.5 
21.0 
2.7 

2.2 
1.8 
20.0 
0.6 
0.7 
25.3 
0.5 
1.6 
19.0 
21.1 
4.2 

2012 2011 (re-presented)

15.8 
4.6 
(0.1)
378.9 
143.1 

0.2 
0.6 
0.3 
– 
(0.8)
1.2 

15.8 
7.6 
1.8 
405.2 
145.8 

0.2 
0.5 
0.1 
0.1 
(0.7)
1.7 

Other operating income includes £0.1 million (2011: £0.4 million) of profit on the disposal of property, plant and equipment. 

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86

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

8 Exceptional items  

£million 

Continuing operations 
Reduction in UK pension liabilities 
Restructuring costs  
Negative goodwill on business acquisition 
Acquisition costs 
Total 

2012 

2011

–  
(3.2) 
0.3  
(0.4) 
(3.3) 

7.5 
(5.2)
–
–
2.3 

a) Year ended 31 December 2012 
For the year ended 31 December 2012, the exceptional items relate to: 

(cid:2)(cid:3) Restructuring costs of £3.2 million associated with: 

– the closure of the Components operation in Boone, North Carolina of £2.1 million; 

– the transfer of certain production lines from the Sensors division facilities to Romania of £0.2 million; 

– redundancy costs of £0.4 million; and 

– costs associated with the post-acquisition restructuring of ACW Technology Limited of £0.5 million. 

(cid:2)(cid:3) Negative goodwill arising on the acquisition of the trade and assets of ACW Technology Limited of £0.3 million; and 

(cid:2)(cid:3) £0.4 million of acquisition-related legal and professional fees. 

b) Year ended 31 December 2011 
For the year ended 31 December 2011, the exceptional items relate to: 

(cid:2)(cid:3) a one-off reduction of £7.5 million in the future liabilities of the UK pension scheme following the UK Government’s announcement to change 

the basis of indexation of occupational pension schemes from RPI to CPI (see note 23); and 

(cid:2)(cid:3) restructuring costs of £5.2 million primarily associated with the closure of the Components operation in Boone, North Carolina. This amount 
includes impairments of fixed assets of £1.8 million, provisions against inventory of £0.6 million and reorganisation provisions of £2.8 million. 

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

 
 
TT electronics plc 
Annual Report 2012

87

9 Taxation 

a) Analysis of the tax charge for the year 

£million 

Current tax  
Current income tax charge 
Adjustments in respect of current income tax of previous year 
Total current tax charge 
Deferred tax 
Relating to origination and reversal of temporary differences 
Total tax charge in the income statement – continuing operations 

2012 2011 (re-presented)

6.7 
0.4 
7.1 

(0.9)
6.2 

7.7 
(0.1)
7.6 

(2.3)
5.3 

UK tax is calculated at 24.5% (2011: 26.5%) of taxable profits. Overseas tax is calculated at the tax rates prevailing in the relevant countries. 
The Group’s effective tax rate for the year from continuing operations was 26.5% (26.2% excluding exceptional items).  

Included within the £0.9 million deferred tax credit for 2012 is £0.8 million relating to exceptional items. 

b) Reconciliation of the total tax charge for the year 

£million 

Profit before tax from continuing operations 
Profit before tax multiplied by the standard rate of corporation tax in the UK of 24.5% (2011: 26.5%) 
Effects of: 
 Items not deductible for tax purposes or income not taxable 
 Adjustment to current tax in respect of prior periods 
 Recognition and utilisation of previously unrecognised tax losses 
 Current year tax losses and other items not recognised 
 Overseas tax rate differences 
 Other timing differences – exceptional items 

Total tax charge reported in the income statement – continuing operations 

– other 

2012 2011 (re-presented)

23.4 
5.7 

1.8 
0.4 
(2.0)
0.5 
0.7 
(0.8)
(0.1)
6.2 

26.8 
7.1 

4.3 
(0.1)
(4.2)
0.2 
(0.5)
(1.6)
0.1 
5.3 

The 2010 Emergency Budget and the 2012 Budget announced that the UK corporation tax rate will reduce from 28% to 22% over a period of four 
years from 2011. The reduction to 23%, effective from 1 April 2013, was substantively enacted on 17 July 2012. As the rate change to 23% was 
substantively enacted prior to the year end, the closing deferred tax assets and liabilities have been calculated at this rate. The resulting charges 
or credits have been recognised in the income statement except to the extent that they relate to items previously charged or credited to other 
comprehensive income or equity. Accordingly, in 2012 £1.3 million has been charged directly to equity and £0.1 million has been charged to the 
income statement. 

Had the further tax rate changes been substantively enacted on or before the balance sheet date it would have had the effect of reducing the 
deferred tax asset by £0.4 million. 

10 Dividends 

Final dividend for prior year 
Interim dividend for current year 

2012 
pence per share

2012 
£million 

2011 
pence per share

2011
£million

3.2 
1.5 
4.7 

5.0  
2.3  
7.3  

2.0 
1.2 
3.2 

3.1 
1.9 
5.0 

The Directors recommend a final dividend of 3.5p which when combined with the interim dividend of 1.5p gives a total dividend for the year 
of 5.0p per share. The Group’s dividend policy is to increase dividends progressively whilst maintaining cover of at least two times underlying 
earnings per share. The final dividend will be paid on 30 May 2013 to shareholders on the register on 17 May 2013. 

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88

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

11 Earnings per share 
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of shares 
in issue during the period. The weighted average number of shares in issue is 156.1 million (2011: 154.9 million).  

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

Pence 

Basic earnings per share 
Continuing operations 
Discontinued operations 
Total 

Pence 

Diluted earnings per share 
Continuing operations 
Discontinued operations 
Total 

The numbers used in calculating headline, basic and diluted earnings per share are shown below. 

Headline earnings per share  
£million 

Continuing operations 
Profit for the period attributable to owners of the Company 
Exceptional items 
Tax effect of exceptional items (see note 9a) 
Headline earnings 
Headline earnings per share (pence) 

The weighted average number of shares in issue is as follows:  

Million 

Basic 
Adjustment for share awards 
Diluted 

2012  2011 (re-presented)

11.0  
4.0  
15.0  

13.9 
2.2 
16.1 

2012  2011 (re-presented)

11.0  
4.0  
15.0  

13.6 
2.2 
15.8 

2012  2011 (re-presented)

17.2  
3.3  
(0.8) 
19.7  
12.6  

2012 

156.1  
0.8  
156.9  

21.5 
(2.3)
(1.6)
17.6 
11.4 

2011

154.9 
3.6 
158.5 

 
 
 
 
 
 
TT electronics plc 
Annual Report 2012

89

12 Employee information 
The average number of full time equivalent employees (including Directors) during the year from continuing operations was: 

Number 

By function 
Production 
Sales and distribution 
Administration 

By division 
Components 
Sensors 
Integrated Manufacturing Services 
Total continuing operations  

The aggregate emoluments including those of Directors for the year were:  

£million 

Wages and salaries 
Social security charges 
Employers’ pension costs 

Remuneration in respect of the Directors was as follows: (cid:3)

£million 

Emoluments 

113.4 
27.8 
1.9 
143.1 

2012

1.5 

2012 2011 (re-presented)

4,791 
330 
343 
5,464 

3,150 
1,138 
1,176 
5,464 

4,879 
285 
324 
5,488 

3,247 
1,092 
1,149 
5,488 

2012 2011 (re-presented)

Further details of individual Directors’ remuneration, pension benefits and share awards are shown in the Directors’ remuneration report on 
pages 55 to 63. 

Key management personnel 
The remuneration of key management during the year was as follows: (cid:3)

£million 

Short-term benefits 
Termination payments 
Post-employment benefits 
Share-based payments 

2012

3.4 
0.1 
0.2 
0.8 
4.5 

116.3 
27.5 
2.0 
145.8 

2011

1.8 

2011

3.8 
–
0.2 
0.9 
4.9 

In accordance with IAS 24 “Related party disclosures”, key management personnel are those persons having authority and responsibility 
for planning, directing and controlling the activities of the Group, directly or indirectly. Key management personnel comprise the Directors, 
Company Secretary, Divisional Chief Executives and other members of the Operating Board. Their compensation is considered and recommended 
to the Board by the Remuneration Committee.  

Disclosures on Directors’ remuneration required by the Companies Act 2006 and those specified for audit by the Directors’ Remuneration Report 
Regulations 2002 are included in the Remuneration report. 

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90

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

13 Property, plant and equipment 

£million 

Cost 
At 1 January 2011 
Additions 
Disposals 
Disposal of subsidiaries 
Net exchange adjustment 
At 1 January 2012 
Additions 
Businesses acquired 
Disposals 
Disposal of subsidiaries 
Net exchange adjustment 
At 31 December 2012 
Depreciation and impairment 
At 1 January 2011 
Depreciation charge 
Impairment 
Disposals 
Disposal of subsidiaries 
Net exchange adjustment 
At 1 January 2012 
Depreciation charge 
Impairment 
Disposals 
Disposal of subsidiaries 
Net exchange adjustment 
At 31 December 2012 
Net book value 
At 31 December 2012 
At 31 December 2011 

Land and 
buildings 

Plant and 
equipment 

61.3  
1.5  
(0.7) 
(0.1) 
(0.5) 
61.5  
1.6  
– 
(3.2) 
(4.3) 
(1.3) 
54.3  

17.7  
2.5  
1.7  
(0.1) 
– 
(0.1) 
21.7  
1.7  
0.6  
(3.2) 
(1.1) 
(0.4) 
19.3  

35.0  
39.8  

295.8  
19.8  
(9.8) 
(5.5) 
(1.9) 
298.4  
17.1  
0.3  
(20.5) 
(5.3) 
(7.0) 
283.0  

245.9  
14.4  
0.1  
(9.0) 
(2.6) 
(1.5) 
247.3  
14.6  
– 
(20.3) 
(3.8) 
(5.7) 
232.1  

50.9  
51.1  

Total

357.1 
21.3 
(10.5)
(5.6)
(2.4)
359.9 
18.7 
0.3 
(23.7)
(9.6)
(8.3)
337.3 

263.6 
16.9 
1.8 
(9.1)
(2.6)
(1.6)
269.0 
16.3 
0.6 
(23.5)
(4.9)
(6.1)
251.4 

85.9 
90.9 

Included within land and buildings are three (2011: two) investment properties with a carrying value of £1.3 million (2011: £0.7 million). The fair 
value of these properties is £6.2 million (2011: £5.5 million). 

The carrying amount of land and buildings includes £0.2 million (2011: £0.3 million) in respect of assets held under finance leases.  

No borrowing costs were capitalised by the Group during the year (2011: £nil) as no significant qualifying assets commenced construction after 
1 January 2011.  

The depreciation charge for the year allocated to continuing operations is £15.8 million (2011: £15.8 million) and discontinued operations £0.5 million 
(2011: £1.1 million). The impairment charge of £0.6 million is allocated to discontinued operations. 

 
 
 
 
 
  
  
 
TT electronics plc 
Annual Report 2012

91

14 Goodwill  

Cost 
At 1 January 2011 
Net exchange adjustment 
At 1 January 2012 
Net exchange adjustment 
At 31 December 2012 

Goodwill is attributed to the following operating company cash generating units in the divisions shown below:  

Components: 
Bl Technologies, USA 
Optek Technology, USA 
New Chapel Electronics, UK 
Semelab, UK 
Integrated Manufacturing Services: 
TT electronics integrated manufacturing services, USA 
TT electronics integrated manufacturing services, Suzhou 
Other 

£million

66.9 
0.4 
67.3 
(2.1)
65.2 

£million

28.1 
17.7 
3.4 
2.3 

7.8 
5.2 
0.7 

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92

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

14 Goodwill (continued) 
The Group tests goodwill impairment for each cash generating unit (“CGU”) annually or more frequently if there are indications that goodwill 
might be impaired. The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use 
calculations are those regarding the discount rates, growth rates and operating cash projections during the period for which management have 
detailed plans. Management estimate discount rates using pre-tax rates that reflect current market assessments of the Group’s time value of money 
and the risks specific to the CGU being measured. 

As part of the annual budgeting and strategic review processes, the Group prepares cash flow forecasts for the following three years. The growth rate 
assumed after this three-year period is based on long-term GDP projections of the primary market for the CGU. The long-term projections used are 
based on GDP growth of 2.5% for the UK businesses and 3.0% for the US and Chinese businesses (2011: 3.0% for the UK, US and Chinese businesses). 
The growth rates assume that demand for our products remains broadly in line with the underlying economic environment in the long-term future. 
Taking into account our expectation of future market conditions, we believe that the evolution of selling prices and cost measures put into place will 
lead to a sustained improvement in profitability which is higher than in recent years. 

The discount rates used to discount the forecast cash flows are:  

UK businesses 
US businesses 
Chinese business 

2012 

7.6% 
10.0% 
11.5% 

2011

8.0%
10.5%
11.5%

Following detailed review, no impairment losses have been recognised in the current or prior year. 

The goodwill allocated to each of BI Technologies, Optek Technology, TT electronics integrated manufacturing services, USA, New Chapel Electronics 
and Semelab are considered to be individually significant. After translation using year end foreign exchange rates, these CGUs represent 91% or 
£59.3 million (2011: 91% or £61.5 million) of the total goodwill balance. 

The recoverable amounts exceed the total carrying value of assets for the CGUs by the following amounts: (cid:3)

£million 

BI Technologies 
Optek Technology 
TT electronics integrated manufacturing services, USA 
New Chapel 
Semelab 

2012 

6.2 
8.7 
3.2 
1.5 
1.3 

2011

12.8
13.8
11.2
1.5
7.9

The recoverable amounts associated with these goodwill balances have been determined on a value in use basis using conservative assumptions. 
A value in use test requires comparison of asset carrying values with pre-tax cash flows (which exclude any tax benefit). Furthermore, the value in 
use test ignores the related deferred tax liabilities which IFRS prevents from being included in any value in use calculation.  

A key assumption in the value in use test is the projected performance of the companies based on cash flow forecasts. The recoverable amounts 
associated with the goodwill balances are based on these performance projections, and based on current forecast information do not indicate 
that any goodwill balance is impaired. If a company’s actual performance does not meet these projections this could lead to an impairment 
of the goodwill in future periods. 

Other key assumptions and sensitivities are as follows: 

Long-term growth rate 
The budget and strategic review for these companies have been extrapolated in perpetuity using a long-term growth rate of 1.0% and discounted 
using the relevant entity discount rate. A key assumption in deriving the growth rate is that the businesses will grow in line with the underlying 
economic environment for the foreseeable future. Revenue growth would need to decrease annually by the following amounts for the carrying 
values to be impaired: (cid:3)

BI Technologies 
Optek Technology 
TT electronics integrated manufacturing services, USA 
New Chapel 
Semelab 

2012 

1.9% 
3.4% 
1.4% 
2.4% 
0.7% 

2011

3.6%
4.9%
6.1%
3.7%
0.2%

 
  
  
 
TT electronics plc 
Annual Report 2012

93

14 Goodwill (continued) 

Discount rate 
Sensitivity analysis has determined that the discount rate of 10.0% in the US and 7.6% in the UK is an influential assumption on the outcome of the 
recoverable amount calculation. For the carrying values to be impaired, the discount rate would need to increase to the following amounts: (cid:3)

BI Technologies 
Optek Technology 
TT electronics integrated manufacturing services, USA 
New Chapel 
Semelab 

2012

11.3%
13.9%
11.6%
9.2%
8.2%

2011

13.3%
15.9%
16.6%
9.9%
13.2%

Cash flows 
Sensitivity analysis has also been performed on the operating cash flow projections. Cash flows can be impacted by changes to sales projections, 
sales prices, direct costs and replacement capital expenditure. In order for the carrying values to be impaired the expected cash flows for every year 
would need to reduce by the following:(cid:3)

BI Technologies 
Optek Technology 
TT electronics integrated manufacturing services, USA 
New Chapel 
Semelab 

2012

13%
30%
17%
20%
11%

2011

23%
36%
41%
22%
42%

The Directors have not identified any other likely changes in other significant assumptions that would cause the carrying value of recognised 
goodwill to exceed its recoverable amount. 

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94

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

15 Other intangible assets  

£million 

Cost 
At 1 January 2011 
Additions 
Disposals 
Disposal of subsidiaries 
Net exchange adjustment 
At 1 January 2012 
Additions 
Net exchange adjustment 
At 31 December 2012 
Amortisation 
At 1 January 2011 
Charge for the year 
Impairment 
Disposals 
Disposal of subsidiaries 
Net exchange adjustment 
At 1 January 2012 
Charge for the year 
Impairment 
Net exchange adjustment 
At 31 December 2012 
Net book value 
At 31 December 2012 
At 31 December 2011 

Product 
development 
costs

Patents, 
 licences and 
other  

Customer 
relationships 

23.7 
5.3 
(11.1)
(0.1)
(0.3)
17.5 
4.8 
(0.4)
21.9 

13.5 
6.7 
0.6 
(11.1)
(0.1)
(0.1)
9.5 
3.6 
0.1 
(0.3)
12.9 

9.0 
8.0 

5.4  
0.3  
– 
– 
(0.1) 
5.6  
1.3  
– 
6.9  

2.4  
0.6  
– 
– 
– 
–  
3.0  
0.7  
– 
– 
3.7  

3.2  
2.6  

3.5  
– 
– 
– 
– 
3.5  
– 
– 
3.5  

2.0  
0.3  
– 
– 
– 
–  
2.3  
0.3  
– 
(0.1) 
2.5  

1.0  
1.2  

Total

32.6 
5.6 
(11.1)
(0.1)
(0.4)
26.6 
6.1 
(0.4)
32.3 

17.9 
7.6 
0.6 
(11.1)
(0.1)
(0.1)
14.8 
4.6 
0.1 
(0.4)
19.1 

13.2 
11.8 

With effect from 1 July 2012 the amortisation period for product development costs was changed from 3 years to 5 years, as this more accurately 
reflects the useful economic lifetime of the underlying products. Had the amortisation period remained at 3 years, the amortisation charge for the 
year ended 31 December 2012 would have increased by £1.7 million. 

16 Inventories 
£million 

Raw materials 
Work in progress 
Finished goods 

2012 

31.4  
19.0  
17.8  
68.2  

2011

40.9 
22.8 
19.7 
83.4 

Inventories are stated after deduction of a provision for slow moving and obsolete items of £25.8 million (2011: £27.8 million).  

 
 
 
 
 
 
  
  
 
  
TT electronics plc 
Annual Report 2012

17 Trade and other receivables 
£million 

Trade receivables 
Prepayments 
Other receivables 

Provisions for impairment in respect of trade receivables are shown in note 21(d)(ii). 

18 Trade and other payables (cid:3)

£million 

Current liabilities 
Trade payables 
Taxation and social security 
Other payables, accruals and deferred income 
Financial liability to settle minority interest 

£million 

Non-current liabilities 
Accruals and deferred income 
Financial liability to settle minority interest 

19 Provisions 
£million 

At 1 January 2011 
Utilised 
Arising during the year 
At 1 January 2012 
Utilised 
Arising during the year 
At 31 December 2012 

95

2011

69.1 
9.5 
7.0 
85.6 

2012

50.5 
9.7 
7.4 
67.6 

2012

2011

50.4 
3.1 
38.2 
8.2 
99.9 

57.6 
5.2 
50.2 
–
113.0 

2012

2011

6.2 
0.5 
6.7 

Reorganisation  

Legal and other 

1.1  
(2.2) 
2.8  
1.7  
(0.9) 
0.4  
1.2  

2.0 
(0.5)
3.4 
4.9 
(0.1)
4.7 
9.5 

6.9 
–
6.9 

Total 

3.1 
(2.7)
6.2 
6.6 
(1.0)
5.1 
10.7 

The reorganisation provision primarily relates to the restructuring programme associated with the closure of the Boone, North Carolina operations 
and the post-acquisition restructuring of the ACW Technology Limited business. Legal and other claims represent the best estimate for the cost of 
settling outstanding product and other claims, and warranty provisions issued on the disposal of businesses.  

The total provisions are analysed between current and non-current as follows:  

£million 

Non-current 
Current 

2012

0.2 
10.5 
10.7 

2011

0.2 
6.4 
6.6 

The timing of the utilisation of these amounts is uncertain as they are subject to commercial negotiation and legal process in different jurisdictions. 

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96

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

20 Borrowings  

£million  

31 December 2012 
£45 million multi-currency revolving credit facility 
$30 million USD bilateral revolving credit facility 
$10 million USD bilateral revolving credit facility 
AB Mikroelektronik GmbH loan 
Finance leases 
Loan arrangement fee 
Total 
31 December 2011 
£60 million multi-currency club facility 
AB Mikroelektronik GmbH loan 
Overdrafts 
Finance leases 
Loan arrangement fee 
Total 

Maturity

Currency of 
denomination

Current 

Non-current 

Total

2017
2017
2017
2015

GBP
USD
USD
Euro

2013
2011

GBP/USD
Euro

–  
–  
–  
3.9  
0.1  
(0.2) 
3.8  

–  
4.0  
10.7  
0.1  
(0.6) 
14.2  

1.0  
6.8  
0.6  
0.7  
0.1  
(0.6) 
8.6  

39.8  
0.3  
–  
0.2  
(0.2) 
40.1  

1.0 
6.8 
0.6 
4.6 
0.2 
(0.8)
12.4 

39.8 
4.3 
10.7 
0.3 
(0.8)
54.3 

In August 2012, the Group agreed a new five year committed revolving credit facility of £70 million and a further incremental accordion facility 
of £42 million with a club of four banks comprising HSBC, The Royal Bank of Scotland, Santander UK and Barclays Bank, as well as two separate  
bi-lateral agreements with Fifth Third Bank and Comerica Bank, both within the USA. At 31 December 2012 £8.4 million of the revolving credit 
facility was drawn down and the accordion facility was undrawn. Arrangement fees with a gross cost before amortisation of £0.9 million, and 
amortised cost of £0.8 million, have been netted off against these borrowings in accordance with IFRS.  

The interest margin payable on the facility is based on the Group’s compliance with financial covenants (net debt/EBITDA before exceptional items) 
and is payable on a floating basis above £LIBOR or $LIBOR depending on the currency of denomination of the loan.  

The loan in AB Mikroelektronik GmbH is an export facility loan and used for working capital purposes within that business. 

During December 2012, proceeds from the disposal of Ottomotores SA de CV and Ottomotores Do Brasil Energia Ltda were used to repay part of the 
revolving credit facilities. 

Undrawn facilities 
At 31 December 2012, the total borrowing facilities available to the Group amounted to £145.7 million (2011: £102.3 million). At 31 December 2012, 
the Group had available £61.6 million (2011: £33.2 million) of undrawn committed borrowing facilities and £71.1 million (2011: £14.8 million) of 
undrawn uncommitted borrowing facilities, representing overdraft lines and the accordion facility. 

 
 
 
 
 
 
 
 
 
 
 
 
 
TT electronics plc 
Annual Report 2012

97

21 Financial risk management  
The financial information disclosed in the tables relating to the year ended 31 December 2012 represents continuing operations only. 

The main risks arising from the Group’s financial instruments are foreign exchange risk, interest rate risk, credit risk, liquidity risk and commodity price 
risk. These risks arise from exposures that occur in the normal course of business and are managed by the Group’s Treasury department in close 
co-operation with the Group’s business divisions and operating companies, under the oversight of a Tax and Treasury Committee which is chaired 
by the Group Finance Director. The responsibilities of the Group’s Treasury department include the monitoring of financial risks, management of cash 
resources, debt and capital structure management, approval of counterparties and relevant transaction limits, and oversight of all significant treasury 
activities undertaken by the Group. The Group Treasury department operates as a service centre to the business divisions of the Group and not as a 
profit centre. 

A Group Treasury policy has been approved by the Board of Directors and is periodically updated to reflect developments in the financial markets 
and the financial exposure facing the Group. The Group’s Treasury and internal audit departments monitor compliance with the Treasury Policy 
on a regular basis. 

The Group’s principal financial instruments comprise borrowings, cash and cash equivalents and derivatives used for risk management 
purposes. The Group’s borrowings, surplus liquidity and derivative financial instruments are monitored and managed centrally by the Group’s 
Treasury department.  

The Group’s accounting policies with regard to financial instruments are detailed in note 2(w). 

a) Derivatives, financial instruments and risk management 
The Group uses derivative financial instruments to manage certain exposures to fluctuations in exchange rates, interest rates and commodity prices. 
The Group does not hold any speculative financial instruments. 

The Group is exposed to transactional and translation foreign exchange risk. Transactional foreign exchange risk arises from sales or purchases 
by a Group company in a currency other than that company’s functional currency. Translational foreign exchange risk arises on the translation 
of profits earned in overseas currencies into GBP and the translation of net assets denominated in overseas currencies into GBP, the Group’s 
functional currency.  

To mitigate transactional foreign exchange risk, wherever possible, Group companies enter into transactions in their functional currencies with 
customers and suppliers. When this is not possible, then hedging strategies are undertaken through the use of forward currency contracts for 
up to one year ahead. 

The Group uses average rate forward currency hedges to mitigate translational foreign exchange risk taking into account the level of forecast profits 
in foreign currencies, natural hedges and the cost of taking out cover. During 2012, the Group took out average rate forward contracts hedging GBP 
against a portion of US dollar and euro forecast cash flows for 2012 and 2013. In 2012, the Group generated a profit of £0.8 million on the hedges that 
matured in 2012, and at 31 December 2012 the mark to market position of the 2013 hedges stood at £nil.  

In light of the current economic environment in the Eurozone economy, the Tax and Treasury Committee has undertaken an assessment of the 
sensitivity of the Group’s euro-denominated assets, liabilities and transactional activity to a variety of potential changes to the Eurozone economy 
and consequential impact on the euro, and has considered the financial and operational consequences of such changes. Mitigating actions have 
been put in place through the use of GBP/euro cash flow hedges to mitigate the impact of any downside risk arising from the Eurozone uncertainty 
and these hedges are constantly monitored by the Tax and Treasury Committee.  

The Group’s interest rate management policy is to maintain a balance between fixed and floating rates of interest on borrowings and deposits, and 
to use interest rate derivatives when appropriate. Given the current low levels of interest rates no interest rate derivatives were outstanding at the 
year end. 

Commodity prices continued to exhibit significant volatility throughout 2012. During 2012, the Group took out non-deliverable hedges against 
a portion of the commodity purchases for 2012 and 2013. In 2012 the Group broke even on the hedges that matured during 2012, and at 
31 December 2012 the mark to market position of the outstanding hedges stood at a profit of £0.1 million which has been recognised in equity. 

The forward currency contracts and commodity hedges have been designated as cash flow hedges and the mark to market valuation of these 
derivatives at 31 December 2012 is taken to the hedging reserve within equity. At 31 December 2012, the Group had a net derivative financial asset 
of £0.2 million (2011: net derivative financial liability of £6.4 million).  

Included within derivative financial liabilities at 31 December 2011 was a cash settled put and call option associated with a minority interest on one 
of the Group’s subsidiaries of £6.9 million. This option could be exercised by either party within a five year window commencing in September 2012. 
This has been accounted for under the anticipated acquisition method which results in the recognition of the liability at its fair value and the 
elimination of the minority interest. Changes in the fair value of the liability have been reflected as a movement in reserves. An interest expense 
on the financial liability has been recognised within finance costs in the income statement representing the unwinding of the discount factor. 
During December 2012 an agreement was signed by the parties for the Group’s acquisition of the remaining interest in the subsidiary and 
completion occurred on 1 February 2013. A financial liability of £8.7 million has been recognised in relation to the settlement. 

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98

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

21 Financial risk management (continued)  

b) Foreign exchange risk 
The Group’s exposure to foreign currency is shown below:  

£million  

31 December 2012 
Trade and other receivables 
Cash and cash equivalents 
Borrowings 
Trade and other payables 

31 December 2011 
Trade and other receivables 
Cash and cash equivalents 
Borrowings 
Trade and other payables 

GBP

USD

Euro 

Other 

Total

0.3 
0.2 
– 
(1.2)
(0.7)

0.3 
0.2 
– 
(0.8)
(0.3)

5.3 
12.1 
(7.4)
(6.2)
3.8 

5.1 
3.3 
(6.4)
(5.6)
(3.6)

1.8  
1.6  
–  
(0.5) 
2.9  

2.3  
2.2  
–  
(1.4) 
3.1  

–  
0.5  
–  
–  
0.5  

2.6  
3.3  
–  
–  
5.9  

7.4 
14.4 
(7.4)
(7.9)
6.5 

10.3 
9.0 
(6.4)
(7.8)
5.1 

A 10% strengthening of GBP against the following currencies at 31 December would have increased/(decreased) equity and profit after tax by the 
amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.  

£million 

US dollar 
Euro 

2012 

0.2  
0.3  

2011

(0.2)
0.3 

A 10% weakening of GBP against the above currencies at 31 December would have had an equal but opposite effect on the above currencies 
to the amount shown above, on the basis that all other variables remain constant. 

c) Interest rate risk 
The Group has financial assets and liabilities which are exposed to changes in market interest rates. Changes in interest rates primarily impact 
borrowings by changing their future cash flows (floating rate debt) or their fair value (fixed rate debt) and deposits.  

The exposure of the Group’s financial assets and liabilities to interest rate risk is as follows:  

£million 

Financial assets 
Trade and other receivables 
Cash and cash equivalents 
Derivative financial instruments 
Total financial assets 
Financial liabilities 
Borrowings 
Trade and other payables 
Total financial liabilities 

Floating
rate

Fixed 
rate 

Non-interest 
bearing 

– 
59.1 
– 
59.1 

(11.5)
– 
(11.5)

–  
–  
–  
–  

(0.9) 
–  
(0.9) 

57.3  
–  
0.2  
57.5  

–  
(105.3) 
(105.3) 

2012
total

57.3 
59.1 
0.2 
116.6 

(12.4)
(105.3)
(117.7)

At 31 December 2012, 7.0% (2011: 8.0%) of total debt was at a fixed rate and the balance was at floating rate. At 31 December 2011 a £20.0 million 
1.0% interest rate cap was in place, fixing 45.0% of the total debt at 31 December 2011. This interest rate cap was closed out during the year. 

 
 
 
  
 
 
  
 
 
 
 
TT electronics plc 
Annual Report 2012

99

21 Financial risk management (continued) (cid:3)

£million 

Financial assets 
Trade and other receivables 
Cash and cash equivalents 
Derivative financial instruments 
Total financial assets 
Financial liabilities 
Borrowings 
Trade and other payables 
Derivative financial instruments 
Total financial liabilities 

Floating
rate

Fixed 
rate 

 Non-interest
bearing

– 
52.5 
– 
52.5 

(50.0)
– 
– 
(50.0)

–  
17.0  
–  
17.0  

(4.3) 
–  
–  
(4.3) 

75.1 
– 
0.5 
75.6 

– 
(114.1)
(6.9)
(121.0)

2011
total

75.1 
69.5 
0.5 
145.1 

(54.3)
(114.1)
(6.9)
(175.3)

The interest charged on floating rate financial liabilities is based on the relevant benchmark rate (such as LIBOR). Interest on financial instruments 
classified as fixed rate is fixed until the maturity of the instrument. 

Considering the net cash position of the Group at 31 December 2012, any increase in interest rates would result in a net gain in the consolidated 
income statement, and any decrease in interest rates would result in a net loss. The effect on profit after tax of a 1% movement in £LIBOR, based 
on the year end floating rate net cash and with all other variables held constant, is estimated to be £0.1 million (2011: £0.2 million). 

d) Credit risk 
Exposure to credit risk arises as a result of transactions in the Group’s ordinary course of business and is applicable to all financial assets. Investments 
in cash and cash equivalents and derivative financial instruments are with approved counterparty banks and other financial institutions. 
Counterparties are assessed prior to, during, and after the conclusion of transactions to ensure exposure to credit risk is limited to an acceptable level. 
The maximum exposure with respect to credit risk is represented by the carrying amount of each financial asset on the balance sheet. 

Credit risk relating to trade receivables  
The Group’s major exposure to credit risk is in respect of trade receivables. Given the number and geographical spread of the Group’s ultimate 
customers and the solvency of major trade debtors, credit risk is believed to be limited. The Group is not reliant on any particular customer in the 
markets in which it operates and there is no significant concentration of credit risk. The Group regularly monitors its exposure to bad debts in order 
to minimise this exposure. 

The Group has strict procedures in place to manage the credit risk on trade receivables. Customer credit risk is managed by each operating company 
within a division but is subject to Group oversight to ensure that each division’s customer credit risk management system operates in a prudent and 
responsible manner. Credit evaluations are performed for all customers and credit limits are established based on internal or external rating criteria. 
The credit quality of the Group’s significant customers is monitored on an on-going basis, and receivables that are neither past due nor impaired are 
considered of good credit quality. Letters of credit or payments in advance are obtained where customer credit quality is not considered strong 
enough for open credit. 

Trade receivables are denominated in the currencies in which the Group trades. The Group’s policy is that receivables and payables not in the 
functional currency of the subsidiary concerned are covered by forward foreign currency exchange contracts. The exchange risk at Group level 
is therefore restricted to the risk on the translation of overseas assets, liabilities and cash flows into GBP which can be hedged using foreign 
exchange hedges.  

There were no material impairments of trade receivables as at 31 December 2012 or 2011. The solvency of the debtor and their ability to repay 
the receivables were considered in assessing the impairment of such assets. 

(i) Risk for trade receivables by geographical regions 
The maximum exposure to credit risk for trade receivables at 31 December by geographic areas was:  

£million 

Europe (including UK) 
North America 
Central and South America 
Asia 
Rest of the World 

2012

34.1 
7.7 
0.3 
7.9 
0.5 
50.5 

2011

39.6 
9.3 
11.2 
8.0 
1.0 
69.1 

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100

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

21 Financial risk management (continued)  

(ii) Impairment losses 
The ageing of trade receivables at 31 December was:  

£million 

Not past due 
Past due 0 – 60 days 
Past due 61 – 120 days 
More than 120 days 

Gross

37.4 
11.9 
1.6 
1.0 
51.9 

2012 
Impairment 

–  
(0.1) 
(0.4) 
(0.9) 
(1.4) 

The movement in the provision for impairment in respect of trade receivables during the year was as follows:  

£million 

At 1 January 
(Credited)/charged to income statement 
Businesses disposed 
At 31 December 

Gross 

50.5  
15.2  
4.1  
1.6  
71.4  

2012 

2.3  
(0.5) 
(0.4) 
1.4  

2011
Impairment

– 
(0.7)
(0.4)
(1.2)
(2.3)

2011

1.5 
0.8 
– 
2.3 

(iii) Credit risk related to other financial assets and cash deposits 
Credit risk relating to the Group’s other financial assets, principally comprising cash and cash equivalents, other receivables and derivative financial 
instruments arises from the potential default of counterparties. Credit risk arising from balances with banks and financial institutions is monitored 
by the Group’s Treasury department. Investment of cash and deposits are made only with approved counterparties of high credit worthiness and 
are reviewed on a regular basis to take account of developments in financial markets. 

No material exposure is considered to exist by virtue of the possible non-performance of the counterparties to derivative financial instruments 
and other receivables. 

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at 31 December was:  

£million 

Other receivables 
Cash and cash equivalents 
Derivative financial instruments (current assets) 

2012 

7.4  
59.1  
0.2  

2011

7.0 
69.5 
0.5 

e) Liquidity risk 
The Group maintains a balance between availability of funding and maximising investment return on cash balances through the use of short-term 
cash deposits, credit facilities and longer term debt instruments. Management regularly reviews the funding requirements of the Group. 

The Group’s policy is to centrally manage debt and surplus cash balances. 

At 31 December 2012, the Group had £61.6 million of undrawn committed borrowing facilities (2011: £33.2 million). 

Maturity of financial assets and liabilities 
The table below analyses the Group’s financial assets and liabilities, which will be settled on a gross basis, into relevant maturity groups based on the 
remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted 
cash flows. (cid:3)

£million  

31 December 2012 
Trade and other receivables 
Cash and cash equivalents 
Derivative financial instruments 

Borrowings 
Trade and other payables 

On demand

Less than
3 months

3 to 12
months

– 
59.1 
– 
59.1 
– 
– 
– 

54.3 
– 
– 
54.3 
(4.0)
(90.1)
(94.1)

2.9 
– 
0.2 
3.1 
(0.2)
(10.1)
(10.3)

 1 to 5 
years 

0.1  
–  
–  
0.1  
(10.0) 
(3.0) 
(13.0) 

Over 5 
years 

–  
–  
–  
–  
–  
(2.1) 
(2.1) 

Total

57.3 
59.1 
0.2 
116.6 
(14.2)
(105.3)
(119.5)

 
  
 
  
 
 
 
 
  
 
  
 
 
 
  
 
 
  
  
 
TT electronics plc 
Annual Report 2012

101

21 Financial risk management (continued)  
At 31 December 2012, the Group had derivative financial instruments hedging a notional contractual amount of £54.9 million of foreign exchange 
and commodity cash flows. Of this total amount, £54.9 million matures within one year. (cid:3)

£million  

31 December 2011 
Trade and other receivables 
Cash and cash equivalents 
Derivative financial instruments 

Borrowings 
Trade and other payables 
Derivative financial instruments 

On demand

Less than
3 months

3 to 12
months

– 
69.5 
– 
69.5 
(10.7)
– 
– 
(10.7)

71.2 
– 
– 
71.2 
0.1 
(102.3)
– 
(102.2)

3.8 
– 
0.5 
4.3 
(1.1)
(5.2)
(7.5)
(13.8)

 1 to 5 
years 

0.1  
–  
–  
0.1  
(44.8) 
(4.4) 
–  
(49.2) 

Over 5
years

– 
– 
– 
– 
– 
(2.2)
– 
(2.2)

Total

75.1 
69.5 
0.5 
145.1 
(56.5)
(114.1)
(7.5)
(178.1)

f) Fair value of financial assets and liabilities 
The Group has adopted the amendment to IFRS 7 “Financial instruments: disclosures” for financial instruments that are measured in the balance 
sheet at fair value. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: 

(cid:2)(cid:3) Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; 

(cid:2)(cid:3) Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) 

or indirectly (i.e. derived from prices); and 

(cid:2)(cid:3) Level 3 – inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs). 

Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments that are carried in the financial 
statements.  

£million  

Trade and other receivables 
Cash and cash equivalents 
Borrowings 
Trade and other payables 
Derivative financial instruments 

Carrying
value

57.3 
59.1 
(12.4)
(105.3)
0.2 

2012 

Fair  
value 

57.3  
59.1  
(12.4) 
(105.3) 
0.2  

Carrying
value

75.1 
69.5 
(54.3)
(114.1)
(6.4)

2011

Fair 
value

75.1 
69.5 
(54.2)
(114.1)
(6.4)

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction 
between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: 

(cid:2)(cid:3) cash and cash equivalents, trade and other receivables, trade and other payables approximate to their carrying amounts largely due to the  

short-term maturities of these instruments; 

(cid:2)(cid:3) the fair value of derivative financial instrument assets (£0.2 million) are estimated by discounting expected future cash flows using current 

market indices such as yield curves and forward exchange rates over the remaining term of the instrument (level 1 and level 2); 

(cid:2)(cid:3) provisions for cash payments are discounted back to their present value; and 

(cid:2)(cid:3) the fair value of borrowings is estimated by discounting future cash flows using rates currently available for debt and remaining maturities. 

g) Capital management 
The over-riding objectives of the Group’s capital management policy are to safeguard and support the business as a going concern through the 
business cycle and to maintain an optimal capital structure by reducing the Group’s overall cost of capital. The Board considers equity shareholders’ 
funds as capital. 

The Group maintains a balance between availability of funding and maximising investment return on cash balances through the use of short-term 
cash deposits, credit facilities and longer term debt instruments, and management regularly reviews the funding requirements of the Group. 

Dividends are paid when the Board consider it appropriate to do so, taking into account the availability of funding. The Group’s dividend policy 
is to increase dividends progressively whilst maintaining cover of at least two times underlying earnings per share. 

The Group is in a net cash position of £46.7 million (2011: £15.2 million). Included within the debt facilities are certain financial covenants related to 
net debt/EBITDA before exceptional items and EBITDA before exceptional items/net finance charges for which compliance certificates are produced 
on a 12 month rolling basis every half year. All financial covenants were fully complied with during the year and up to the date of approval of the 
financial statements. There are no covenants under negotiation at present. 

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102

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

22 Deferred tax 
The amounts of deferred taxation assets/(liabilities) provided in the financial statements are as follows:  

£million 

Intangible assets 
Property, plant and equipment 
Deferred development costs 
Retirement benefit obligations 
Inventories 
Provisions 
Tax losses 
Unremitted overseas earnings 
Share-based payments 
Short-term timing differences 
Deferred tax asset/(liability) 

£million 

Intangible assets 
Property, plant and equipment 
Deferred development costs 
Retirement benefit obligations 
Inventories 
Provisions 
Tax losses 
Unremitted overseas earnings 
Share-based payments 
Short-term timing differences 
Deferred tax asset/(liability) 

As at 
1 January 
2012

(4.2)
(1.6)
(2.3)
9.6 
2.7 
5.2 
2.1 
(1.2)
1.3 
0.1 
11.7 

As at 
1 January 
2011

(3.7)
(0.8)
(3.0)
11.8 
2.8 
4.2 
0.6 
(0.8)
0.7 
(0.6)
11.2 

Continuing 
operations

Discontinued 
operations

Recognised  
in equity 

Net exchange 
translation 

As at 
31 December 
2012

(0.2)
0.4 
(0.3)
(0.4)
(1.0)
(0.8)
1.9 
0.3 
0.5 
0.5 
0.9 

– 
– 
– 
– 
0.5 
(1.1)
– 
– 
– 
(0.2)
(0.8)

–  
–  
–  
(0.1) 
–  
–  
–  
–  
(0.8) 
–  
(0.9) 

0.1  
(0.2) 
(0.2) 
0.2  
(0.2) 
0.1  
–  
–  
–  
–  
(0.2) 

(4.3)
(1.4)
(2.8)
9.3 
2.0 
3.4 
4.0 
(0.9)
1.0 
0.4 
10.7 

Continuing 
operations

Discontinued 
operations

Recognised  
in equity 

Net exchange 
translation 

As at 
31 December 
2011

(0.5)
(0.8)
0.6 
– 
(0.2)
1.0 
1.5 
(0.4)
0.3 
0.8 
2.3 

– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 

–  
–  
–  
(2.3) 
–  
–  
–  
–  
0.3  
–  
(2.0) 

Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances:  

£million 

Deferred tax assets 
Deferred tax liabilities 
Net deferred tax asset 

At 31 December 2012, the Group had the following items for which no deferred tax assets have been recognised:  

£million 

Tax losses 
Property, plant and equipment 

Included within the £27.9 million (2011: £28.0 million) of unrecognised tax losses in the table above is £21.5 million (2011: £19.7 million) of tax 
losses within the Company. Since UK tax legislation does not allow the utilisation of brought forward tax losses of one UK entity against the current 
year tax profits of another UK entity, the use of these tax losses is therefore limited. 

At the balance sheet date the aggregate unrecognised deferred tax liability in respect of undistributed earnings of subsidiaries is £nil (2011: £nil). 

–  
–  
0.1  
0.1  
0.1  
–  
–  
–  
–  
(0.1) 
0.2  

2012 

13.1  
(2.4) 
10.7  

2012 

27.9  
10.0  

(4.2)
(1.6)
(2.3)
9.6 
2.7 
5.2 
2.1 
(1.2)
1.3 
0.1 
11.7 

2011

21.0 
(9.3)
11.7 

2011

28.0 
12.7 

 
 
 
 
 
  
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
TT electronics plc 
Annual Report 2012

103

23 Retirement benefit schemes 

Defined contribution schemes  
The Group operates 401(k) plans in North America and defined contribution arrangements in the rest of the world. The assets of these schemes 
are held independently of the Group. The total contributions charged by the Group in respect of defined contribution schemes were £1.9 million 
(2011: £2.0 million). 

Defined benefit schemes  
The Group operates one significant defined benefit scheme in the UK and two overseas defined benefit schemes in the USA and Japan. All of these 
schemes are closed to new members and, in April 2010, the UK scheme was closed to future accrual following extensive consultation with affected 
employees being transferred into an enhanced Group defined contribution scheme.  

Following the UK Government’s announcement in July 2010 to change the basis of statutory minimum indexation of occupational pension scheme 
from the Retail Price Index (RPI) to the Consumer Price Index (CPI), the Company communicated the impact of this change to affected members in 
2011. This resulted in a one-off reduction in the future liabilities of £7.5 million which was recognised as an exceptional item within the consolidated 
income statement during 2011 (see note 8). 

The Company had reached agreement with the Trustee of the UK scheme for additional fixed contributions extending to 2016 based on the 
actuarial deficit at April 2007 and these arrangements have been confirmed under the actuarial valuation at April 2010. £3.2 million was paid in 2010, 
£3.5 million was paid in 2011, £3.7 million was paid in 2012; and further planned contributions amount to: 2013 £3.9 million; increasing by £0.2 million 
each year to £4.5 million in 2016. The next triennial valuation of the UK scheme will take place in April 2013. 

The Group also operates defined benefit schemes in the USA and Japan. Actuarial valuations of the schemes were carried out by independent 
qualified actuaries in 2007 and 2010 using the projected unit credit method. Pension scheme assets are stated at their market value 
at 31 December 2012. 

An analysis of the pension deficit by country is shown below:  

£million 

UK 
USA 
Japan 

2012

33.7 
2.8 
0.3 
36.8 

2011

32.1 
3.1 
0.3 
35.5 

The principal assumptions used for the purpose of the actuarial valuations for the Group’s primary defined benefit scheme, the UK scheme, 
were as follows:  

% 

Discount rate 
Inflation rate 
Increases to pensions in payment 

2012

4.4 
2.5 
2.5 – 3.2

2011

4.7 
2.7 
2.5 – 3.2

A decrease in the discount rate by 0.1% per annum increases the liabilities by approximately £7.0 million. An increase in the inflation rate of 0.1% 
per annum increases the liabilities by approximately £1.8 million.  

The expected percentage long-term rates of return on the main asset classes, net of expenses, set by management having regard to actuarial advice 
and relevant indices were:  

% 

Equities 
Bonds 
Gilts and swaps 
Cash 

2012

7.0 
4.0 
2.7 
0.3 

2011

6.8 
4.1 
2.5 
0.1 

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104

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

23 Retirement benefit schemes (continued) 
The mortality tables applied by the actuaries at 31 December 2012 were S1NA tables adjusted by + one year, with future improvements increasing 
in line with medium cohort with a 1% per annum floor.  

The amounts recognised in respect of the pension deficit in the Consolidated balance sheet are:  

£million 

Equities 
Bonds 
Gilts and cash 
Swaps 
Fair value of assets 
Present value of funded obligation 
Net liability recognised in the Consolidated balance sheet 

2012

203.8 
83.7 
31.4 
68.6 
387.5 
(424.3)
(36.8)

2011

213.9 
78.6 
26.9 
58.6 
378.0 
(413.5)
(35.5)

2010

199.8 
36.8 
63.0 
38.5 
338.1 
(379.3)
(41.2)

2009 

190.0  
36.8  
61.6  
18.1  
306.5  
(350.2) 
(43.7) 

2008 

174.7  
25.8  
48.7  
33.9  
283.1  
(301.7) 
(18.6) 

2007

182.0 
12.4 
103.8 
– 
298.2 
(315.6)
(17.4)

The schemes’ assets do not include the Group’s financial instruments nor any property occupied by, or other assets used by the Group. Swaps are 
liability driven instruments taken out to hedge part of the scheme inflation and interest rate risks.  

Amounts recognised in the Consolidated income statement are:  

£million 

Current service cost 
RPI/CPI change to indexation 
Interest on employee obligations 
Expected return on pension scheme assets 

2012 

–  
–  
19.0  
(18.5) 

2011

0.1 
(7.5)
20.0 
(19.0)

The actual return on schemes assets was a gain of £21.7 million (2011: £49.3 million). Actuarial gains and losses are recognised directly in retained 
earnings and reported in the Consolidated statement of comprehensive income and, since transition to IFRS, amount to a net loss of £42.0 million.  

Changes in the present value of the defined benefit obligation are:  

£million 

Defined benefit obligation at 1 January 
Current service cost 
Interest on obligation 
RPI/CPI change to indexation 
Change in actuarial estimates and assumptions 
Benefits paid 
Defined benefit obligation at 31 December 

2012 

413.5  
–  
19.0  
–  
8.5  
(16.7) 
424.3  

2011

379.3 
0.1 
20.0 
(7.5)
36.5 
(14.9)
413.5 

 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
  
 
TT electronics plc 
Annual Report 2012

105

23 Retirement benefit schemes (continued) 
Changes in the fair value of the schemes’ assets are:  

£million 

Fair value of schemes’ assets at 1 January 
Expected return on schemes’ assets 
Excess of actual over expected returns 
Contributions by employer 
Benefits paid 
Fair value of schemes’ assets at 31 December 

2012

378.0 
18.5 
2.8 
4.9 
(16.7)
387.5 

2011

338.1 
19.0 
30.3 
5.5 
(14.9)
378.0 

The experience adjustments arising on the schemes’ assets and liabilities are reported in the Consolidated statement of comprehensive income 
and are as follows:  

£million 

Experience adjustments on schemes’ liabilities 
Experience adjustments on schemes’ assets 

2012

(8.5)
2.8 
(5.7)

2011

(36.5)
30.3 
(6.2)

2010 

(31.8) 
25.9  
(5.9) 

2009 

(44.5) 
15.8  
(28.7) 

2008

22.2 
(25.4)
(3.2)

2007

37.8 
0.5 
38.3 

The Group expects to contribute approximately £3.9 million of additional fixed contributions to defined benefit schemes in the UK in 2013. 

24 Share capital 

£million 

Issued and fully paid 
156,950,664 (2011: 155,217,949) ordinary shares of 25p each 

2012

2011

39.2 

38.8 

During 2012 the Company issued 1,550,161 ordinary shares on the vesting of the Long Term Incentive Plan awards issued in 2009. The shares were 
then allocated to award holders via an Employee Benefit Trust for nil consideration. A charge of £0.4 million has been recognised in retained 
earnings accordingly. 

The Company also issued 182,554 ordinary shares as a result of share options being exercised under the 2004 Approved Plan and Unapproved Plan 
and the Sharesave scheme. The aggregate consideration received was £0.2 million, which resulted in an increase in share premium of £0.2 million. 

25 Share-based payment plans 
The Company has the following share-based payment plans in operation at 31 December 2012: 

(cid:2)(cid:3) Share option schemes, which are closed for future grants; 

(cid:2)(cid:3) Long Term Incentive Plans (“LTIP”) for senior executives; 

(cid:2)(cid:3) Restricted Share Plan for certain senior executives; and 

(cid:2)(cid:3) Sharesave plans for UK, German and Austrian employees; and Share Purchase plans for US employees. 

a) Share option schemes 
Details of the share options outstanding during the year are as follows:  

At 1 January 
Forfeited 
Exercised 
Expired 
At 31 December 
Exercisable at 31 December 

2012 

Weighted 
average 
exercise price 
(p) 

115.9  
75.6  
145.0  
165.0  
100.5  
145.0  

Number of 
share options 

579,568  
(60,056) 
(37,377) 
(135,771) 
346,364  
108,989  

Number of 
share options

1,136,161 
(140,818)
(77,234)
(338,541)
579,568 
142,297 

2011

Weighted 
average 
exercise price 
(p)

138.2 
128.9 
145.0 
186.1 
115.9 
145.0 

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106

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

25 Share-based payment plans (continued) 
At 31 December 2012 options were exercisable over 346,364 (2011: 579,568) ordinary shares under the Group share option schemes up to 2015. 
Subscription prices range from 80p to 145p with a weighted average of 100.5p and a weighted average remaining contractual life of 0.64 years 
(2011: 1.32 years). Options are equity settled, have a life of ten years (with the exception of certain schemes where the options lapse after six years 
if the performance criteria are not achieved) and vest after three years. Exercise of the options is conditional on there being an increase in earnings 
per share over any consecutive three year period above the increase in the Retail Price Index over the same period. 

Following the approval of the Long Term Incentive Plan 2005 at the Extraordinary General Meeting held on 20 October 2006, all existing share option 
schemes were closed for future grants.  

b) Long Term Incentive Plans 
Details of the LTIP awards outstanding during the year are as follows: (cid:3)

At 1 January 
Granted 
Forfeited 
Vested 
Expired 
At 31 December 
Exercisable at 31 December 

2012 

2011

Number of  
share awards 

6,609,747  
1,154,691  
(607,544) 
(2,972,671) 
– 
4,184,223  
– 

Number of 
share awards

6,305,879 
1,525,800 
(291,811)
– 
(930,121)
6,609,747 
–

During 2011 and 2012 grants of awards were made under the LTIP for the issue of shares in 2014 and 2015 respectively. The award is a 
contingent right to receive shares in the future, subject to continued employment and the achievement of predetermined performance criteria. 
The performance targets attached to awards require the achievement of earnings per share (“EPS”) and total shareholder return (“TSR”) targets 
as detailed in the Directors’ remuneration report on page 55.  

On 25 April 2012 grants of awards were made under the LTIP for the issue of up to 1,154,691 shares in 2015. On 27 April 2011 and 18 October 2011, 
grants of awards were made under the LTIP for the issue of up to 1,490,800 and 35,000 shares in 2014.  

The fair value of the shares was estimated at the grant date using a Monte Carlo simulation model, taking into account the terms and conditions 
upon which the shares were granted. This model simulates the TSR and compares it against the group of comparator companies. It takes into 
account historic dividends and share price fluctuations to predict the distribution of relative share price performance. 

The following table lists the inputs to the model: (cid:3)

Number of awards 
Fair value at grant date 
Share price at grant date 
Exercise price 
Expected volatility 
Expected weighted average life at 31 December 

2012 

Shares with a 
 25 April 2012 
grant date 

Shares with a  
18 October 2011 
grant date 

1,154,691  
144.0p 
182.5p 
£nil 
49% 
2.3  

35,000  
126.0p 
149.8p 
£nil 
66% 
2.9  

2011

Shares with a 
27 April 2011 
grant date

1,490,800 
148.5p
176.5p
£nil
66%
2.3 

The award of shares is not affected by the risk free rate of interest since no investment is required by the recipient, and therefore no interest could 
be earned elsewhere. Expected volatility is based on historic share price movements. 

On 25 April 2012, 32,545 (27 April 2011: 113,000) notional share awards were granted to senior executives which will ultimately be settled in cash. 
These awards are subject to the same vesting criteria as the 25 April 2012 (27 April 2011) LTIP grant.  

The LTIP grants made in 2009 vested in full during 2012. The weighted average exercise price was nil. 

The Group gave its 2009 LTIP holders the option to receive shares net of the employee tax owed. The employee tax of £2.4 million has been paid to 
the tax authorities in cash.

 
 
 
 
  
  
  
 
 
 
 
 
  
 
  
 
  
 
  
  
  
  
 
TT electronics plc 
Annual Report 2012

107

25 Share-based payment plans (continued) 

c) Restricted Share Plan 
On 24 September 2010, the Group granted 259,515 shares under a restricted share plan to certain senior executives. The award is a contingent right 
to receive shares with a three-year vesting period subject to continued employment with the Group and no performance conditions. Details of the 
restricted share plan awards outstanding during the year are as follows: (cid:3)

At 1 January  
Granted 
Forfeited 
Exercised 
Expired 
At 31 December  
Exercisable at 31 December  

2012

2011

Number of 
share awards

Number of 
share awards

259,515 
– 
(51,903)
– 
–
207,612 
–

259,515 
– 
– 
– 
–
259,515 
–

The fair value of the shares at grant date was 139.0p. On 24 October 2010, the Company purchased 259,515 shares at a cost of £0.4 million through 
an Employee Benefit Trust. These shares are dilutive for the purpose of earnings per share. 

d) Sharesave schemes 
The Group operates Sharesave schemes for participating employees in the UK, Germany and Austria under either a three-year or five-year plan. 
Employees may purchase the Group’s shares at a 20% discount to the market price on the day prior to the commencement of the offer up to a 
maximum contribution value of £3,000 (UK) or €3,480 (Germany/Austria) in any one year. Monthly contributions are saved with LloydsTSB plc, via 
Equiniti Ltd, the Registrars, in the employee’s share savings plan and will only be released to employees who remain in the Group’s employment for 
a period of either three or five years from commencement of the savings contract. Options become exercisable on completion of either the three 
or five year term or within six months of leaving in certain circumstances. (cid:3)

UK 
Germany/Austria 
UK 
Germany/Austria 
UK 

The fair value of the shares at grant date was as follows: (cid:3)

pence 

3 year scheme 
5 year scheme 

Details of the Sharesave awards outstanding during the year are as follows: (cid:3)

Date price set

Market price 

Option price

3 September 2010
19 April 2011
2 September 2011
31 May 2012
31 August 2012

UK

53.2 
61.0 

142.5p 
169.0p 
162.0p 
162.0p 
148.0p 

2012 

Germany/ 
Austria 

58.5  
67.2  

114.0p
136.0p
130.0p
130.0p
119.0p

UK

77.9 
87.5 

Options 
outstanding

1,088,537 
126,368 
254,442 
58,874 
150,293 

2011

Germany/
Austria

83.6 
93.9 

At 1 January  
Granted 
Forfeited 
Exercised 
Expired 
At 31 December  
Exercisable at 31 December 

2012

2011

Number of 
share awards

Number of 
share awards

1,725,512 
216,730 
(208,721)
(55,007)
–
1,678,514 
192,438 

1,492,920 
425,702 
(177,119)
(15,991)
–
1,725,512 
30,695 

On 26 September 2011 the Group launched a Stock Purchase Plan for participating US employees. Under the plan employees may purchase 
the Group’s shares at a 15% discount to the market price at the date of acquisition, up to a maximum of $6,500 per annum. Employees save 
on a monthly basis and shares are purchased each quarter. 

The total share-based payment charge for the year (excluding social security charges of £0.4 million) arising from the above share scheme plans 
was £1.4 million (2011: £1.7 million). 

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108

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

26 Hedging and translation reserves 

£million 

At 1 January 2011 
Exchange differences on translation of foreign operations 
Tax on exchange differences 
Loss on hedge of net investment in foreign operations 
Cash flow hedges 
At 1 January 2012 
Exchange differences on translation of foreign operations 
Tax on exchange differences 
Loss on hedge of net investment in foreign operations 
Cash flow hedges 
Foreign exchange gain on disposals taken to income statement 
At 31 December 2012 

27 Retained earnings  

£million 
At 1 January 2011 
Profit for the year 
Fair value of minority put option 
Dividends paid by the Company 
Actuarial net loss on defined benefit pension schemes (see note 23) 
Tax on actuarial amounts in pension deficit movement 
At 1 January 2012 
Profit for the year 
Fair value of minority financial liability 
Dividends paid by the Company 
New shares issued 
Actuarial net loss on defined benefit pension schemes (see note 23) 
Tax on actuarial amounts in pension deficit movement 
At 31 December 2012 

Hedging 
reserve 

Translation 
reserve 

(11.7) 
–  
–  
–  
0.2  
(11.5) 
–  
–  
–  
(0.5) 
–  
(12.0) 

38.3  
0.9  
0.1  
(0.6) 
–  
38.7  
(4.3) 
0.1  
(2.8) 
–  
(0.2) 
31.5  

Total

26.6 
0.9 
0.1 
(0.6)
0.2 
27.2 
(4.3)
0.1 
(2.8)
(0.5)
(0.2)
19.5 

109.7 
25.0 
(1.9)
(5.0)
(6.2)
(2.3)
119.3 
23.5 
(1.1)
(7.3)
(0.4)
(5.7)
(0.1)
128.2 

 
 
TT electronics plc 
Annual Report 2012

109

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

£million 

At 1 January 2011 
Cash flow 
Non-cash items 
Exchange differences 
At 1 January 2012 
Cash flow 
Non-cash items 
Exchange differences 
At 31 December 2012 

Borrowings and 

Net cash 

finance leases Net (debt)/funds

44.2  
14.8  
–  
(0.2) 
58.8  
1.0  
–  
(0.7) 
59.1  

(54.1)
11.0 
(0.5)
– 
(43.6)
31.5 
(0.9)
0.6 
(12.4)

(9.9)
25.8 
(0.5)
(0.2)
15.2 
32.5 
(0.9)
(0.1)
46.7 

Net cash includes overdraft balances of £nil (2011: £10.7 million). 

29 Contingent liabilities  
The Group has contingent liabilities amounting to £0.7 million (2011: £1.2 million) in respect of performance bonds and guarantees entered into in 
the normal course of business. The Group is subject to claims which arise in the ordinary course of business. Other than those for which provisions 
have been made and included within note 19, the Directors consider the likelihood of any other claims giving rise to a significant liability to 
be remote.  

30 Capital commitments 

£million 

Contractual commitments for the purchase of property, plant and equipment 

31 Operating leases 
Operating lease payments charged to the income statement are as follows:  

£million 

Fixtures and equipment 
Land and buildings 

The Group has outstanding commitments under non-cancellable operating leases, which fall due as follows:  

£million 

In less than one year 
Between one and five years 
After five years 

2012

7.5 

2012

0.5 
3.0 

2012

3.7 
8.1 
1.4 

2011

9.7 

2011

0.4 
2.7 

2011

3.4 
9.6 
1.8 

Lease terms for land and buildings are predominantly for less than ten years with rents fixed for an average of four years. There are 
no contingent rents. 

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110

TT electronics plc 
Annual Report 2012

Financial statements – Group accounts 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
CONTINUED 

32 Related party transactions 
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.  

No related party transactions have taken place in 2012 or 2011 that have affected the financial position or performance of the Group. 

Key management personnel and Directors’ emoluments are disclosed in note 12. 

33 Post balance sheet event 
On 1 February 2013 the Group completed the acquisition of the 49% minority interest in Padmini TT electronics Private Limited, paying an initial 
consideration of £8.2 million with £0.5 million deferred to 2014. Following the acquisition, Padmini TT electronics Private Limited is wholly owned by 
the Group.

 
TT electronics plc 
Annual Report 2012

111

Financial statements – Company accounts 
COMPANY BALANCE SHEET 

£million 

Fixed assets 
Tangible assets 
Intangible assets 
Investments 
Deferred tax asset 

Current assets 
Debtors 
Cash at bank and in hand 

Creditors: amounts falling due within one year 
Net current assets 
Total assets less current liabilities 
Pension liability 
Net assets 
Capital and reserves 
Called up share capital 
Share premium account 
Profit and loss account 
Shareholders’ funds 

Approved by the Board of Directors on 13 March 2013 and signed on their behalf by: 

Geraint Anderson  Shatish Dasani 
Director 

Director 

Note 

2012

2011

2 
2 
3 
11 

4 

5 

10 

6 
8 
8 

1.3 
1.3 
91.9 
8.4 
102.9 

167.0 
2.3 
169.3 
(24.4)
144.9 
247.8 
(33.7)
214.1 

39.2 
0.7 
174.2 
214.1 

3.1 
– 
119.7 
9.0 
131.8 

76.2 
1.3 
77.5 
(9.8)
67.7 
199.5 
(32.1)
167.4 

38.8 
0.5 
128.1 
167.4 

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112

TT electronics plc 
Annual Report 2012

Financial statements – Company accounts 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 

1 Significant accounting policies 

Basis of preparation 
The financial statements of TT electronics plc (the Company) are presented as required by the Companies Act 2006 and have been prepared under 
the historical cost convention as modified by the revaluation of financial assets and derivatives held at fair value and the revaluation of investment 
properties and in accordance with applicable United Kingdom accounting standards and law. 

The following amendments to standards have been adopted in these financial statements for the first time. Adoption of these standards did not 
have a significant impact on the financial position and performance of the Company: 

(cid:3)The Improvements to FRSs (2010).  

There are no new standards or amendments to standards which are issued but not yet effective.  

The principal accounting policies are summarised below and have been applied consistently throughout the current and prior year:  

Tangible fixed assets and depreciation  
Tangible fixed assets are stated at cost less a provision for depreciation. Depreciation is calculated so as to write-off the cost less estimated residual 
value of tangible fixed assets, in equal instalments over their expected useful lives. No depreciation is provided on freehold land. The depreciation 
rates for the major categories of asset are given in note 2 to the consolidated financial statements. The carrying values of fixed assets are reviewed 
for impairment when there is an indication that the assets may be impaired.  

Intangible fixed assets and amortisation 
Acquired computer software licences are capitalised as an intangible asset on the basis of the costs incurred to acquire and bring to use the specific 
software. Costs that are directly associated with the implementation of identifiable and unique software products controlled by the Company, and 
that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets and amortised over a 3 to 5 year 
period. Capitalised software development expenditure is stated at cost less accumulated amortisation. 

Investment properties 
Investment property is recorded at open market value as determined by independent valuers. In accordance with the Statement of Standard 
Accounting Practice (SSAP) 19, depreciation is not provided on investment property on the basis that such property is not held for consumption 
but for investment. The Directors believe, therefore, that this accounting policy is necessary for the accounts to give a true and fair view. 

Changes in the market value of investment properties are not taken to the profit and loss account and are recognised within the revaluation reserve, 
unless a deficit (or its reversal) on an individual investment property is expected to be permanent, in which case it is charged (or credited) in the profit 
and loss account of the period. 

Investments  
Fixed asset investments in subsidiaries are carried at cost less provision for impairment. 

Deferred taxation  
Deferred taxation is the taxation attributable to timing differences between the results computed for taxation purposes and results as stated in the 
financial statements. It is recognised on all timing differences where the transaction or event which gives the Company an obligation to pay more 
tax, or the right to pay less tax in the future, has occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than 
not that they will be recovered. Deferred tax is measured using the rates of tax enacted or substantively enacted at the balance sheet date.  

Pension costs  
The Company operates a pension scheme providing benefits based on final pensionable pay. The assets of the scheme are held separately from 
those of the Company. 

Pension scheme assets are measured using market values. For quoted securities the current bid price is taken as market value. Pension scheme 
liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent 
term and currency to the liability. 

The pension scheme deficit is recognised in full with the movement in the scheme deficit being split between operating charges, finance items and, 
in the statement of total recognised gains and losses, actuarial gains and losses. 

Foreign currencies  
Assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. 

Share-based payments  
Certain employees of the Company receive part of their remuneration in the form of share-based payment transactions, whereby employees render 
services in exchange for shares or rights over shares (equity-settled transactions). The cost of equity-settled transactions with employees is measured 
at fair value at the date at which they are granted. The fair value of share awards with market-related vesting conditions is determined by an external 
consultant and the fair value at the grant date is expensed on a straight-line basis over the vesting period based on the Company’s estimate of shares 
that will eventually vest. The estimate of the number of awards likely to vest is reviewed at each balance sheet date up to the vesting date at which 
point the estimate is adjusted to reflect the actual outcome of awards which have vested. No adjustment is made to the fair value after the vesting 
date even if the awards are forfeited or not exercised. 

TT electronics plc 
Annual Report 2012

113

1 Significant accounting policies (continued) 

Leases  
Payments under operating leases are charged to the profit and loss account on a straight-line basis over the lease term.  

Derivative financial instruments 
Derivative financial instruments used to manage exposure to interest rate risk and to changes in currency exchange rates are measured at fair value. 
All changes in fair value are recognised in the profit and loss account. 

Own shares held by Employee Benefit Trust 
Transactions of the Company-sponsored Employee Benefit Trust are treated as being those of the Company and are therefore reflected in the 
Company’s financial statements. In particular, the Trust’s purchases of shares in the Company are debited directly to equity. 

2 Tangible and intangible fixed assets 

Intangible 
fixed assets

Freehold land 
and buildings 

Plant, equipment 
and vehicles

Total tangible 
fixed assets

£million 

Cost 
At 1 January 2012 
Reclassifications 
Additions 
At 31 December 2012 
Depreciation 
At 1 January 2012 
Reclassifications 
Charge for the year 
Impairment 
At 31 December 2012 
Net book value 
At 31 December 2012 
At 31 December 2011 

– 
0.5 
1.1 
1.6 

– 
0.1 
0.2 
– 
0.3 

1.3 
– 

2.9  
–  
–  
2.9  

0.8  
–  
–  
1.4  
2.2  

0.7  
2.1  

1.3 
(0.5)
0.2 
1.0 

0.3 
(0.1)
0.2 
– 
0.4 

0.6 
1.0 

Freehold land and buildings includes investment property held at market value of £0.7 million (2011: £nil).  

3 Fixed asset investments  

£million 

Cost 
At 1 January and 31 December 2012 
Provisions 
At 1 January 2012 
Returned capital 
At 31 December 2012 
Net book value 
At 31 December 2012 
At 31 December 2011 

The Company’s principal operating subsidiary undertakings and their locations are shown in note 14.  

The Company owns 100% of the ordinary share capital or equivalent and 100% of voting rights of all subsidiary undertakings other than 
Rodco Limited, which is non-trading and is 60% owned. Shareholdings are held indirectly for all principal operating subsidiary undertakings.  

Returned capital relates to the decrease in value of the Company’s subsidiary investment where the related subsidiary has paid up a dividend 
to the Company in excess of this amount.

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0.2 
3.9 

1.1 
(0.1)
0.2 
1.4 
2.6 

1.3 
3.1 

Subsidiary 
undertakings

129.4 

9.7 
27.8 
37.5 

91.9 
119.7 

 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
114

TT electronics plc 
Annual Report 2012

Financial statements – Company accounts 
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED 

4 Debtors 

£million 

Amounts falling due within one year 
Amounts owed by subsidiary undertakings 
Prepayments and accrued income 
Taxation and social security 

5 Creditors 

£million 

Amounts falling due within one year 
Trade creditors 
Amounts owed to subsidiary undertakings 
Taxation and social security 
Accruals and deferred income 

6 Share capital 

£million 

Issued, called up and fully paid 
156,950,664 (2011: 155,217,949) ordinary shares of 25p each 

2012 

163.5  
3.3  
0.2  
167.0  

2011

74.5 
1.7 
– 
76.2 

2012 

2011

2.6  
17.0  
0.2  
4.6  
24.4  

2012 

39.2  

1.4 
2.9 
0.6 
4.9 
9.8 

2011

38.8 

During 2012 the Company issued 1,550,161 ordinary shares on the vesting of the Long Term Incentive Plan awards issued in 2009. The shares 
were then allocated to award holders via an Employee Benefit Trust for nil consideration. A charge of £0.4 million has been recognised in retained 
earnings accordingly. 

The Company also issued 182,554 ordinary shares as a result of share options being exercised under the 2004 Approved Plan and Unapproved Plan 
and the Sharesave scheme. The aggregate consideration received was £0.2 million, which resulted in an increase in share premium of £0.2 million. 

7 Share-based payments  
Details of share-based payments are shown in note 25 of the consolidated financial statements. 

8 Shareholders’ funds(cid:3)

£million 

At 1 January 2012 
New shares issued 
Actuarial net loss on defined benefit pension schemes 
Tax on actuarial amounts in pension deficit movement 
Share-based payments 
Deferred tax on share-based payments 
Dividends paid by the Company 
Profit for the year 
At 31 December 2012 

Share capital 

Share premium 

Profit and 
loss account

38.8 
0.4 
–  
–  
–  
–  
–  
–  
39.2  

0.5  
0.2  
–  
–  
–  
–  
–  
–  
0.7  

128.1 
(0.4)
(5.1)
(0.2)
(1.3)
(0.8)
(7.3)
61.2 
174.2 

9 Profit for the year  
As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its profit and loss account for the year. The profit 
after tax of the Company for the year was £61.2 million (2011: profit of £15.5 million). The auditor’s remuneration for audit services is disclosed in 
note 7 to the consolidated financial statements. 

 
 
  
 
  
 
TT electronics plc 
Annual Report 2012

115

10 Pension schemes  

Defined benefit scheme 
In October 2010 the Company agreed with the Trustee of the UK pension scheme to apportion the pension scheme liabilities from the participating 
employers to the Company. Further details of the UK defined benefit pension scheme are shown in note 23 to the consolidated financial statements.  

Defined contribution scheme 
The Company operates a Group personal pension plan for employees and pays contributions to administered pension insurance plans. 
The Company has no further payment obligation once the contributions have been paid. Payments to the defined contribution scheme are 
charged as an expense as they are incurred. The total contributions charged by the Company in respect of the year ended 31 December 2012 
were £0.3 million (2011: £0.3 million).  

11 Deferred tax 
The deferred tax asset of £8.4 million (2011: £9.0 million) is made up of an asset of £7.7 million (2011: £8.0 million), the movement of which has been 
recognised in equity in respect of the pension liability, and an asset of £0.7 million (2011: £1.0 million) in respect of share-based payments, the 
movement of which has been recognised as a £0.4 million credit to the income tax charge in the profit and loss account and a £0.7 million charge 
to equity.  

At 31 December 2012, the Company had the following items for which no deferred tax assets have been recognised: 

(cid:2)(cid:3) Tax losses £21.5 million (2011: £19.7 million); and 

(cid:2)(cid:3) Property, plant and equipment £0.6 million (2011: £0.3 million). 

12 Commitments under operating leases 
Annual commitments under non-cancellable operating leases were as follows:  

£million 

On leases expiring: 
Within one year 
Between two and five years 

Land and 
buildings

– 
0.4 
0.4 

Other

– 
0.1 
0.1 

2012 
Total

– 
0.5 
0.5 

Land and  
buildings 

–  
0.4  
0.4  

Other

0.1 
0.3 
0.4 

2011 
Total

0.1 
0.7 
0.8 

13 Related party transactions 
During 2012 and 2011, the Company did not have any related party transactions other than with wholly owned subsidiaries. 

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116

TT electronics plc 
Annual Report 2012

Financial statements – Company accounts 
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED  

14 Principal operating subsidiaries  
The principal operating subsidiaries are:  

Components  
International Resistive Company, USA, Barbados 
BI Technologies, USA, Mexico 
Optek Technology, USA, Mexico 
Semelab Limited 
AB Mikroelektronik GmbH, Austria  
Welwyn Components Limited  
AB Connectors Limited  
AB Interconnect Inc, USA  
New Chapel Electronics Limited 
AB Electronics (Suzhou) Co Ltd, China 
TT Electronics Components Manufacturing SRL, Romania 

Sensors 
AB Elektronik GmbH, Germany  
AB Elektronik Sachsen GmbH, Germany  
Padmini TT electronics Private Limited, India  
AB Elektronik Sensors (Suzhou) Co Ltd, China 
AB Electronic Manufacturing, Mexico 
AB Elektronik Manufacturing Romania SRL, Romania 

Integrated Manufacturing Services  
TT electronics integrated manufacturing services Limited  
TT electronics integrated manufacturing services (Suzhou) Co Ltd, China  
TT electronics integrated manufacturing services Inc, USA  
BI Technologies, Malaysia  

Companies are located and incorporated in the UK except where indicated.  

 
 
Shareholder information 
FIVE-YEAR RECORD 

£million (unless otherwise stated) 

Revenue 
Operating profit(2) 
Profit before taxation(2) 
Earnings/(loss)(2) 
Earnings/(loss) per share (p)(2) 
Dividends – paid and proposed 
Dividend per share – paid and proposed (p) 
Average number of shares in issue 
Net cash/(debt) 
Total equity 

Notes  

TT electronics plc 
Annual Report 2012

117

2012

476.9 
29.4 
26.7 
19.7 
12.6 
7.8 
5.0 
156.1 
46.7 
191.1 

2011(1)

509.6    
28.7    
24.5    
17.6    
11.4    
6.8    
4.4    
154.9    
15.2    
191.4    

2010 

555.5  
24.9  
20.6  
13.9  
9.0  
4.3  
2.8  
154.8  
(9.9) 
179.1  

2009

463.5 
6.4 
0.8 
(1.8)
(1.2)
– 
– 
155.0 
(56.9)
155.8 

2008

584.3 
27.0 
21.1 
14.3 
9.2 
5.7 
3.7 
155.0 
(113.2)
212.9 

(1)  Results for 2011 have been adjusted to exclude discontinued operations. 

(2)  Operating profit, profit before taxation, earnings and earnings per share are stated before exceptional items. 

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118

TT electronics plc 
Annual Report 2012

Shareholder information 
SHAREHOLDER INFORMATION 

Annual General Meeting  
The Annual General Meeting will be held on 9 May 2013 at 11.30 am at the offices of Hudson Sandler Financial and Corporate Communications, 
2nd Floor, 29 Cloth Fair, London EC1A 7NN. 

Results 
Announcement of 2013 half year results – late August 2013. 
Preliminary announcement of 2013 results – mid March 2014. 
Annual report 2013 – to be posted mid April 2014. 

Dividends 
For the year ending 31 December 2012, the Board has recommended a final dividend of 3.5p per share which will be paid on 30 May 2013 
to shareholders on the register on 17 May 2013 (2011: 3.2p). An interim dividend of 1.5p per share was paid on 1 November 2012 (2011: 1.2p). 

Multiple accounts on the shareholder register 
If you have received two or more copies of this document, this means that there is more than one account in your name on the shareholder register. 
This may be caused by either your name or address appearing on each account in a slightly different way. For security reasons, the Registrars will not 
amalgamate the accounts without your written consent, so if you would like any multiple accounts combined into one account, please write to 
Equiniti Limited at the address given below. 

Share dealing services 
Shareview Dealing is a telephone and internet service provided by Equiniti and provides a simple and convenient way of buying and selling 
TT electronics plc shares. 

Log on to www.shareview.co.uk/dealing or call 0845 603 7037 between 8.30 am and 4.30 pm, Monday to Friday (except bank holidays), for more 
information about this service and for details of the rates and charges. Please note that telephone lines remain open until 6.00 pm for enquiries. 

A weekly postal dealing service is also available and a form together with terms and conditions can be obtained by calling 0871 384 2248*. 
Commission is 1.75 per cent with a minimum charge of £40. 

ShareGift 
ShareGift is a charity share donation scheme for shareholders, administered by The Orr Mackintosh Foundation. lt is especially for those who may 
wish to dispose of a small parcel of shares whose value makes it uneconomical to sell on a commission basis. Further information can be obtained 
at www.sharegift.org or from Equiniti. 

Shareholder enquiries 
Equiniti maintain the register of members of the Company. If you have any queries concerning your shareholding, or if any of your details change, 
please contact the Registrars: 

Equiniti Limited 
Aspect House 
Spencer Road 
Lancing 
West Sussex 
BN99 6DA 

Telephone 0871 384 2396* (or +44 121 415 7047 if calling from outside the United Kingdom) 
Fax 0871 384 2100* 

Textphone for shareholders with hearing difficulties 0871 384 2255* 

Equiniti also offer a range of shareholder information on-line at www.shareview.co.uk 

*UK calls to 0871 numbers cost 8p per minute plus network extras. Lines are open from 8.30 am to 5.30 pm, Monday to Friday (except bank holidays). 

Website 
Information on the Group’s financial performance, activities and share price is available at www.ttelectronics.com 

 
TT electronics plc 
Annual Report 2012

119

Shareholder information 
SHAREHOLDER NOTES 

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120

TT electronics plc 
Annual Report 2012

Shareholder information 
SHAREHOLDER NOTES CONTINUED 

 
 
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TT electronics plc are committed to caring for the environment and looking for sustainable ways to minimise our impact on it.

This report has been printed on Core Silk, a paper which is certified by the Forest Stewardship Council®. 

The paper is made in a mill registered to EMAS, the Eco Management Audit Scheme,  
and with ISO14001 environmental management system accreditation. 

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an organisation can be credited by a third party.

TT electronics plc

Clive House
12 – 18 Queens Road
Weybridge
Surrey KT13 9XB

Reg No 87249

Tel   +44(0) 1932 825300
Fax  +44(0) 1932 836450

For further information on our group please visit:

www.ttelectronics.com