TT ELECTRONICS PLC
Annual Report & Accounts 2024
To engineer and
manufacture electronic
solutions enabling a
safer, healthier and
more sustainable world.
We design custom technology solutions that enable smaller, lighter,
and more energy-efficient products used in performance critical
applications. Our global manufacturing capability provides solutions
for customers in highly regulated markets, from new product
introduction to full scale production of complex systems.
Read this Annual Report online
www.ttelectronics.com/investors/annual-report/
IN THIS ANNUAL REPORT
STRATEGIC REPORT
In this Annual Report
IFC
Who we are
1
Our markets, products and capabilities
2
Chair’s statement
3
CEO Q&A
5
Our business model
7
Our markets
8
Our strategy
14
CEO review
15
CFO review
18
Our KPIs
26
Our people, communities and environment
28
Task Force on Climate-related Financial Disclosures
38
Stakeholder engagement and S172 Statement
47
Risk management
50
Principal risks and uncertainties
53
Viability statement and Going concern
57
GOVERNANCE AND DIRECTORS’ REPORT
Governance at a glance
58
Board of Directors
60
Chair’s introduction to governance
62
Leadership and Company purpose
65
Nominations Committee report
71
Audit Committee report
76
Remuneration Committee report
82
Executive remuneration at a glance
87
Remuneration Policy overview
89
Annual report on remuneration
91
Other statutory disclosures
100
Statement of Directors’ responsibilities
102
FINANCIAL STATEMENTS
Independent auditor’s report
104
Consolidated income statement
116
Consolidated statement of comprehensive income
116
Consolidated statement of financial position
117
Consolidated statement of changes in equity
118
Consolidated statement of cash flows
119
Notes to the Consolidated financial statements
120
Company statement of financial position
155
Company statement of changes in equity
155
Notes to the Company financial statements
156
Reconciliation of KPIs and non IFRS measures
161
Shareholder information
167
WELCOME
Chair’s statement
Despite a tough year, the Board is pleased with
the way the organisation has faced the challenge.
We look forward to seeing the results of these
efforts in 2025.
Read more on page 3
CEO Q&A
During the year we have reorganised our
management structure, refreshed our strategy,
and introduced a significant self-help programme,
Project Dynamo, across the business.
Read more on page 5
Our people, communities
and environment
We made a fundamental change to how we work in
2024, designed to unlock value in efficiency and
opportunity. We have also continued to make
progress on our environmental agenda.
Read more on page 28
Governance
The Board continues to drive high standards of
governance across the Group.
Read more on page 58
Our Purpose
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
EUROPE
Power, sensors & specialist
components
Locations (UK)
Abercynon, Barnstaple, Bedlington,
Eastleigh, Fairford, Manchester,
Nottingham, Sheffield, Woking
INSIDE TT ELECTRONICS
CUSTOMERS
Our customers range from global multi-
nationals to innovative start-ups operating in the
healthcare, aerospace, defence, automation,
electrification, electronics and energy sectors.
We aim to work as part of the customer’s team,
driving solutions, and with our products and
services integral to customers’ designs and the
lifecycle of their products.
OUR PEOPLE AND CULTURE
TT is truly a people business. The passion,
expertise and values of our people drive our
success. Our culture gives us a competitive
advantage, making us a great company to work
for and with, enabling us to attract and retain
talented people, grow productivity, build strong
partnerships with our customers and, ultimately,
deliver our business goals.
SUSTAINABILITY
We aim to positively impact the world by
creating value and enhancing sustainability
through our products, business practices,
employee care, community engagement, and
environmental responsibility. Sustainability is
integrated into all aspects of our strategy to
reduce risk and maximise opportunities.
REVENUE
£521.1m
2023: £613.9m
ORGANIC REVENUE
GROWTH1
(5)%
2023: 1%
ADJUSTED OPERATING
PROFIT MARGIN1
7.1%
2023: 7.7%2
STATUTORY OPERATING
PROFIT MARGIN
(4.5)%
2023: 0.5%2
CASH CONVERSION1
117%
2023: 104%2
RETURN ON INVESTED
CAPITAL1
10.0%
2023: 10.9%2
LEVERAGE
1.8x
2023: 1.9x2
WHO WE ARE
NORTH AMERICA
Power, manufacturing, sensors
& specialist components
Locations
Boston, Cleveland, Dallas, Denver,
Juarez, Kansas City, Mexicali,
Minneapolis
ASIA
Power, manufacturing
Locations
Kuantan (Malaysia), Singapore,
Suzhou (China)
OUR REGIONS
28%
Group revenue
35%
Group revenue
37%
Group revenue
1 Our KPIs include a number of Alternative Performance Measures
(APMs) which have been adopted by the Directors to provide further
information on underlying trends and the performance and position of
the Group. Details of these APMs and a reconciliation to statutory
measures can be found on pages 161 to 166.
2 The reported operating profit for 2023 has been retrospectively
adjusted by £(5.7) million as described further in note 1. This is
principally related to our Cleveland site where as part of our project
to address operational execution challenges, we identified issues
in relation to the recoverability of certain assets recognised in
prior periods.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
1
INSIDE TT ELECTRONICS CONTINUED
GROUP REVENUE (%)
HEALTHCARE
23%
AEROSPACE & DEFENCE
27%
AUTOMATION & ELECTRIFICATION
33%
DISTRIBUTION SALES CHANNEL
17%
HEALTHCARE
Direct patient care and monitoring
– Patient monitoring equipment, including
remote applications
– Anaesthesia machines
– Surgical lighting
– Cardiopulmonary perfusion equipment
– Ventilators and defibrillators
– Fluid monitoring
– Wearable technologies
Advanced interventional and
surgical devices
– Surgical navigation technology
– Implantable pacemakers and defibrillators
– Neuromodulators
– Implant programmers and chargers
– Ventricular assist systems
– Robotic assisted surgery
Innovative diagnostic and imaging
– Ultrasound, X-ray and MRI
– Radiotherapy equipment for cancer treatment
– Sensor-enabled diagnostic devices
Laboratory and life sciences
– Therapeutic drug monitoring
– Gene sequencing
– Blood analysis
– Portable haemodialysis systems
– Scientific instrumentation
AEROSPACE & DEFENCE
Cockpit avionics and flight controls
– Avionics and display units
– Flight controls
– Landing gear
– Joystick controls
– Wing de-icing
Engine controls and fuel systems
– Engine control units
– Fuel distribution systems
– Engine ice protection
– Auxiliary power units
Electric propulsion
– On board systems for electric flight
Aircraft interiors
– Passenger control units
– In-flight entertainment systems
– Cabin signage
– Mood and ambient lighting
Precision guidance, communication
and navigation systems
– Laser targeting and inertial navigation
– Communications, signalling and navigation
– Precision guidance
– Global positioning (“GPS”)
– Radar and radar jammers
AUTOMATION & ELECTRIFICATION
Factory automation and electrification
– Industrial robotics and automation equipment
– Power monitoring
– Industrial safety and security controls
– Smart packaging and labelling equipment
– Electric vehicle inverter technology
Clean energy and smart cities
– Renewable energy generation and smart grid
metering
– Power management and energy control
systems
– Water and wastewater measurement and
monitoring
– Smart lighting, security systems and fire
detection
– Secure access and safety controls
– Energy-efficient home appliances
Smart infrastructure and industrial
connectivity
– Transportation communication systems
– Electric vehicles and charging stations
– Railway signalling systems and temperature
control
– Data centre power
– Asset tracking and inventory management
systems
– Communication and cloud service connectivity
PRODUCTS AND CAPABILITIES
SENSORS
Optoelectronic, temperature, pressure
and flow sensor technologies for
control and signal conditioning
RESISTORS
Power, control and variable resistors
MAGNETICS
Custom electromagnetic components,
transformers and inductors
PCBA
Printed circuit board design and
assembly
CABLES & CONNECTORS Harsh environment wiring harnesses
and rugged interconnects
—
POWER MANAGEMENT
& CONVERSION
Power supplies, inverters, converters
and hybrids
COMPLEX ELECTRONIC
ASSEMBLIES
Manufacture of complete, complex
electronics assemblies, power
& control cabinets and test systems
OUR MARKETS
2
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
BUSINESS PERFORMANCE
After a number of years of good results, 2024 has been a
challenging year for TT and, regrettably, the Group
performance was down compared with the previous
year. Business performance has been mixed, in
particular hampered by difficult component market
conditions and operational challenges in our business
in North America. While we saw a strong performance
in Europe and Asia, and strong revenue growth in
our Aerospace & Defence end market, our adjusted
operating margin closed the year down 60 bps at
7.1 per cent.
Supported by the Board, our Executive team has
faced these challenges head on. To offset lower
component demand we took cost action in the form
of headcount reductions in North America, and we
have implemented a business-wide operational
improvement programme, Project Dynamo, to unlock
opportunities and make TT stronger for the future.
We successfully divested sites in Hartlepool, Cardiff
and Dongguan (China) in the first half of the year and
reorganised the business from three divisions to a
function-led regional structure to support future
improved customer service, execution and
performance. We have also set out new medium-term
targets for revenue growth, operating margin, cash
conversion and ROIC.
The organisation continues to focus on long-term
collaboration with customers through product
lifecycles and the Board is pleased to note the healthy
number of new business wins and grants in the year,
across all of our end markets.
PROJECT DYNAMO
Our self-help programme, Project Dynamo, was
launched in the early part of the year to drive
productivity and efficiency at all of our sites. We have
eight key workstreams underway, as well as an
immediate focus on operational execution issues at
two North American sites.
FACING THE
CHALLENGE
2024 FINANCIAL
HIGHLIGHTS
– Revenue at constant
currency, down 2%
excluding unwind of
pass-through
revenue, 5% down
organically. Growth
from Europe and Asia
offset by North
American region.
– Adjusted operating
profit down 17% to
£37.1m.
– Adjusted operating
margin at constant
currency 7.1%.
– Strong European
delivery with margin
up 580 bps to 12.9%.
– Asian margin
improved 400 bps to
15.0%.
– North American
performance
impacted by subdued
components market
and operational
challenges at two
sites.
– Statutory operating
loss £23.5 million.
– Statutory basic EPS
of (30.2)p
Read more
page 18
Longer term, we expect Dynamo to yield benefits on
innovation as we enhance product and technology
roadmaps at our sites and effectively prioritise
resources to deliver at pace for our customers.
APPOINTMENT OF NEW CFO
In November we announced Mark Hoad’s intention
to retire in 2025. Our ongoing succession planning
activity meant that we were able to move quickly and
expedite a process to assess both internal and external
candidates to succeed him. Eric Lakin was identified
as the standout candidate at the end of the year, and
we are pleased that Eric was able to join the team as
CFO Designate at the beginning of 2025.
Eric transitions to the CFO role and is appointed to the
Board at the date of the full year results. He is a highly
experienced CFO with a proven track record in
engineering and industrial sectors. He was previously
CFO of Ceres Power, a FTSE clean energy technology
business, and spent ten years in senior leadership roles
at Smiths Group.
On behalf of the Board, I welcome Eric and express
sincere thanks to Mark for his many years of service to
TT. Mark leaves the Group with our very best wishes
for a happy retirement.
PEOPLE AND CULTURE
As noted above, the business had to take the difficult
decision to reduce headcount at certain sites during
the year, as well as say goodbye to employees of our
sites moving to new ownership. We also made a
fundamental change to the structure of the business
and to the way we work. While the right thing to do for
our employees in the longer term, the Board does not
underestimate the impact of these changes on the
individuals involved and the cohesiveness of the
organisation and its culture.
Despite a tough year, the Board is
pleased with the way the organisation
has faced the challenge. We look
forward to seeing the results of these
efforts in 2025.”
Warren Tucker
Chair
CHAIR’S STATEMENT
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
3
We have regular discussions at the Board on purpose,
culture and values, and are proud of the work that has
been done on safety, pay and benefits, recognition,
community and leadership in recent years. We have
also enjoyed the direct engagement we have had with
TT teams in 2024 through our site visits to Manchester
and Suzhou China, and face-to-face sessions with site
leaders and divisional/functional heads.
NET ZERO
We recorded another year of strong progress in our
emissions reduction programme. Two major solar
photovoltaic installations came on stream at our
Mexicali and Suzhou sites in 2024. These investments
will generate 1.4 GWHrs of renewable electricity per
annum and have already contributed to Scope 1 & 2
reductions. Our emissions intensity ratio is now 15 vs
56 in our 2019 baseline year and the Board was
pleased to support bringing our Scope 1 & 2 Net Zero
target forward by five years to 2030.
GOVERNANCE AND BOARD ACTIVITY
During the year the Board received an unsolicited
conditional proposal for the Group from two parties,
as disclosed to the market in November, both of which
were rejected as undervaluing the Group and its
long-term prospects. Before rejecting these proposals,
the Board was grateful to be able to engage
appropriately and candidly with shareholders.
We were delighted to appoint Anne Thorburn as the
Group’s Senior Independent Director in May and
welcome Inken Braunschmidt to the Board as
Non-executive Director in July. Anne joined the
Board in 2019 and also serves as Chair of the Audit
Committee. Her wise counsel is greatly appreciated
by all Board members. Inken is currently non-executive
director of both James Fisher and Sons plc and
Xaar plc. Her executive experience includes six years
with FTSE 100 industrials business Halma plc and the
Group is already benefiting from her expertise. It is
intended that Inken will succeed Alison Wood as
Chair of the Remuneration Committee when Alison
steps down from the Board at the AGM. Jack Boyer
stepped down as a Non-executive Director during the
year. The Board have greatly appreciated Alison
and Jack’s wisdom and commitment over their
respective tenures.
DIVIDEND AND OUTLOOK
Given the current uncertainty over the macroeconomic
environment and associated business risks, the
Board has concluded that it is prudent to pause the
dividend and will not be recommending a final dividend
for 2024.
The Board is mindful of the increased market
uncertainty arising from the recently announced trade
tariffs and the potential impact on demand patterns.
Given the current macro backdrop the Board sees a
wider range of potential outcomes for 2025. We remain
resolutely focused on our operational improvement
plan, Project Dynamo, and our clear action plan to
improve operational efficiency and productivity,
however the current uncertainty has increased the
downside risk for the Group, and the Board now
expects adjusted operating profit to be in the range
of £32 million to £40 million.
The Board also remains focused on driving
performance towards its medium-term financial
framework and, while it does not expect to achieve a
12% operating margin in 2026, its confidence in the
medium term for the business is underpinned by its
operational improvement plans, expectation of
continued momentum in Europe and Asia, and an
anticipated improvement in the North American region.
The Board has noted a material uncertainty relating
to going concern as a result of the current challenging
macroeconomic environment. See note 1d for
further details.
Warren Tucker
Chair
9 April 2025
NET ZERO 2030
Our emissions intensity
ratio is now 15 vs 56
in our 2019 baseline
year and the Board
was pleased to support
bringing our Scope 1 &
2 Net Zero target
forward by five years
to 2030.
Read more
page 35
CHAIR’S STATEMENT CONTINUED
4
STRATEGIC REPORT
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ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
Can you reflect on your first year at TT?
Our regions have had a mixed year, reflecting their
respective product mix and end market focus. We
have delivered a strong European performance,
predominantly driven by Aerospace & Defence end
market growth, and good profit growth in Asia. This has
been more than offset by weakness in our North
American region, where we have experienced significant
headwinds in the shorter cycle components business
due to persistent de-stocking. We also suffered
operational performance issues in two North American
sites which, together with the de-stocking, significantly
impacted profitability in the North American region.
Despite these issues, the quality of the business, and
our capabilities are good, and we have clear plans in
place to deliver the improvements required. I remain
excited by the huge potential of the Group. We have
started a series of workstreams to unlock this and
deliver shareholder value, including the change from
a divisional to a function-led regional structure with
functional experts in commercial, operations and
engineering. I believe this will optimise resources and
enhance collaboration across the company.
This change is already delivering benefits to our
customers, as evidenced by recent results from our
“Voice of the Customer” feedback programme. A
refreshed approach, combined with the efforts of our
regional teams, resulted in record-breaking customer
participation and a 7-point NPS score improvement.
This early progress supports our view that we are well
positioned for significant further improvement over the
coming years.
Please describe Project Dynamo in more detail?
The Project Dynamo self-help programme was
introduced in April. It underpins our strategic focus
on improving performance in three critical areas:
efficiency, growth and innovation. The central theme
running through all workstreams is driving excellence
through disciplined execution.
To date, we have identified £17 million of potential cost
saving and incremental margin opportunities, net of
£4 million reinvestment in the business in efficiency,
growth and innovation projects. We will continue to seek
further opportunities. Eight workstreams are underway:
with £6 million of expected SG&A savings, £8 million
from efficiency projects, and £7 million from growth and
innovation. In the short term we have been prioritising
operational execution improvements in North America.
As part of our efficiency savings, we have identified
more than £30 million of external spend on things
which have the potential to be insourced such as
machining, calibration testing and printed circuit board
assemblies (“PCBAs”), which should lead to increased
productivity and profit over time. For connectors and
cable harnesses we are establishing regional centres
of excellence, thus allowing us to focus on scoping
more TT content on bills of materials, where possible.
We have a clear remediation plan underway to resolve
the operational execution challenges experienced in
Kansas City and Cleveland unearthed as part of the
Dynamo project.
On growth, we have already made some progress
on the contracts where the margin is below our
expectation and we are strengthening our sales
structure to deal with these. Teams have been
reorganised with a renewed focus on developing new
business opportunities and supporting regional
activities, as well as using our Group resources to
unlock opportunities that we would have missed in
our old structure.
On innovation there is a clear, untapped opportunity
to leverage engineering expertise across the Group
aided by process and software standardisation, and
collaborating as one team, to drive new business
opportunities. We have a good pipeline of new product
launches, a great recent example being a technology
platform of high voltage DC power conversion
solutions which enable more efficient, longer-duration
flights at higher altitudes in both civil aerospace and air
mobility vehicles. This was developed in collaboration
with the Aerospace Technology Institute.
Q&A
My first 12 months have been incredibly
busy. We have reorganised our
management structure, refreshed our
strategy, and introduced a significant
self-help programme, Project Dynamo,
across the business.
Clearly we have had our challenges in
our North American business, but we
have made good strategic progress
across Europe and Asia.”
Peter France
CEO
CHIEF EXECUTIVE OFFICER
STRATEGIC REPORT
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ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
5
What is the update on North America performance?
The supply chain issues experienced in the years
following COVID-19 with extended lead times,
component shortages and notable cost inflation
created an artificial peak of stock in the distribution
channels. Our higher margin component factories
continue to be impacted by prolonged de-stocking in
these channels, the route to market for most of our
components. We have good visibility of stock held
within our distribution channels and, while stock levels
peaked in December 2023, they have been slow to
return to an equilibrium, particularly as lead times
have reduced.
We have made tough decisions to reduce headcount,
the majority of which is in our North American
components business. It is our shortest lead time
business area and where we can usually expect to
book and ship product orders as late as the end of the
third quarter and, for some products, the beginning
of the fourth quarter. However, while order intake
remained positive in the second half of 2024, orders
for execution in year were materially weaker than we
anticipated, with orders being more weighted for
delivery in 2025. As a result of revised forecasts for this
business, there was a non-cash write-down in respect
of assets in the region.
We continue to expect a slow recovery in order intake
through 2025, with actions taken over the last few
months positioning us to benefit from any volume
improvement through operational gearing.
As part of Project Dynamo, we have identified
opportunities to significantly improve operational
execution at four sites across the Group. In two of
these sites, Kansas City and Cleveland, in North
America, productivity issues were previously masked
by lower volumes and a simpler product mix but, as the
business has evolved to greater product complexity on
long-term programmes, increased volumes at these
sites have exacerbated underperformance. We have in
train a number of corrective plans to rectify these
issues, including bolstering management teams and
adding specialist resource, and improving factory
inventory and planning management. These measures
will improve efficiency and streamline our processes to
address the issues we have identified and thus support
our medium-term plans.
How is employee engagement ?
As I travel around our global locations, I remain
impressed by the quality of our people and their
commitment to deliver on our growth plans in Europe
and Asia. In North America, against a difficult
backdrop, the teams have remained focused on the
improvement plans required to get the business back
to profitable growth.
We have recently worked to improve the pay and
earnings potential for our direct labour employees,
including training to grow their skills, and investment in
hourly rates.
In 2024 we have pulse surveyed our employees and I
believe it’s testament to the strength of our culture that
some of our sites hit hardest by change have retained
excellent employee surveys through this period.
What are your thoughts on reducing Group leverage?
I believe we are well placed to continue to reduce our
debt and leverage.
TT is a cash generative business, but we are very
conscious that this has not been our recent experience
due to the absorption of a succession of cash
exceptional costs. The situation has also been
exacerbated by the impact of external supply chain
issues and growth in our order book over the last two
to three years, which have pushed up inventory levels.
In some instances, this has been aggravated by our
own internal inventory and production planning
processes.
As part of Project Dynamo, inventory management is
a priority focus area. We are making good progress
with the appointment of a Group lead focused on
inventory management and there was a £13 million
inventory reduction delivered in 2024. We are targeting
a further £15 million of additional cash benefit from
inventory reduction by the end of 2026.
We have made excellent progress on the UK pension
scheme which is approaching the final stages of
buy-out. There was a further surplus return to the
company of £11.2 million (after tax) in 2024.
I am pleased we generated strong free cash flows in
2024 to keep leverage in our 1-2x target range.
What are your priorities as you look into 2025?
Put simply, we will deliver value to all our stakeholders
if we execute on our performance improvement plans.
Our focus is on improved execution, reducing debt and
leverage, and delivering shareholder value. However,
we are mindful of the increased market uncertainty
arising from the recently announced trade tariffs and
the potential impact on demand patterns.
This all positions us well as we make TT stronger for
the future.
Peter France
Chief Executive Officer
9 April 2025
CHIEF EXECUTIVE OFFICER Q&A CONTINUED
6
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ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
KEY FEATURES OF OUR MARKETS
LIFECYCLE SUPPORT
Read more in Our markets
on page 8
Performance
critical
R&D
Size, Weight, Efficiency
and Cost Engineering
Collaboration
Manufacturing
Design
Testing
High complexity
Significant market
regulation
Requiring
customisation
for specific
applications
OUR BUSINESS MODEL
ROBUST PLATFORM
VALUE CREATION
Compelling business
fundamentals with a strong
platform for above market
growth and value creation for
all stakeholders.
Customers and suppliers
– R&D spend 4.2% of sales
– Regional connection via new
organisational structure
– Voice of Customer
integration
– Fair treatment of suppliers
Our people
– Recordable Incident Rate
significantly better than
industry average
– Investment in talent pipeline
– ED&I strategy
Communities
– STEM partnerships
– Fundraising and volunteering
Environmental
– On trajectory for Net Zero
Scope 1 & 2 by 2030
– Zero waste to landfill and
single-use plastics by 2035
Shareholders
– Dividend 2.25 pence per
share
We are a business with high-quality assets and a differentiated offer. Long-term
collaboration with our customers on innovation, design and product delivery
creates value for all our stakeholders.
Read about stakeholders
on page 47
ASSETS/EXPERTISE
STRATEGY TO DELIVER
EMBEDDED IN PRODUCT LIFECYCLES THROUGH
LONG-TERM COLLABORATION WITH CUSTOMERS
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing collaboration
and commercial focus
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering and
manufacturing expertise
Engineering and
manufacturing capability
– Deep domain knowledge
– Years of embedded
experience and skills
– Strength in smaller, lighter,
energy-efficient solutions
– Low volume, high mix ability
Innovation/development
proficiency
– R&D, IP and specialist
product development skills
– Agility in products to market
– Experience in complex
regulatory approvals
Global footprint
– Locations in Europe,
North America and Asia,
enabling customer proximity
worldwide
Customer relationships/
access
– Customer credibility and
long-term value creating
partnerships
– Business development
organisation to maximise
opportunities
People and culture
– Talented, passionate and
service-driven experts
Product development
End of life
Product maturity
Aerospace & Defence
0-5 yrs
Healthcare
0-5 yrs
Automation & Electrification0-2 yrs
30-50 yrs
15-30 yrs
5-10 yrs
3-30 yrs
3-15 yrs
1-5 yrs
Key
Engineering effort
Sales volume/revenue
Potential engineering opportunity
Read more in Our strategy
on page 14
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7
OUR MARKETS
HEALTHCARE
We provide electronic products and manufacturing solutions that enable
healthcare innovation.
From supporting the
digital healthcare
transformation in
medical and life
sciences equipment to
improving patient
outcomes through
implantable devices, we
are at the forefront of
the next generation of
healthcare technologies.
8
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MARKET
TT is positioned to address transformative trends
within healthcare, through advanced technologies
and robust global manufacturing capabilities. From
powering next-generation medical and life sciences
equipment to enabling precision in robotic surgery
through our sensor technologies, our products and
expertise continue to meet the stringent requirements
of medical technology markets.
Healthcare advancements are shaped by evolving
illness patterns, shifting demographics and scientific
development. By 2025, those over 65 will comprise
11 per cent of the global population, creating new
demands for healthcare solutions as life expectancy
rises. These factors are driving innovation in surgical
navigation tools, miniaturised implantable devices,
advanced diagnostics, life sciences equipment and
remote health monitoring.
Supply chain considerations remain high on the
agenda for medical OEMs globally. The trend of
re-shoring continues as OEMs establish a
manufacturing footprint that mitigates supply chain
risk and serves their local end markets.
Speed to market is especially important for a medical
OEM bringing an innovative product to market. New
product introduction services, engineering support
and design for supply chain considerations are driving
increased collaboration in manufacturing partnerships.
TT’s expertise in electronic design, complex electronic
manufacturing, and a global manufacturing footprint
enables medical technology customers to bring
innovative products to market faster.
PRECISION ROBOTIC SURGERY: ENHANCING
PATIENT OUTCOMES
The rise of digital healthcare is set to revolutionise the
industry, with robotic surgery leading advancements in
precision and safety. Combining AI, surgical navigation,
and imaging technologies, robotic systems enhance
procedural accuracy by offering real-time decision
support and enabling repetitive tasks to be performed
autonomously. These innovations optimise surgical
efficiency and free up staff for other vital roles.
TT’s sensors, electromagnetic components and power
supplies meet the stringent reliability and safety
standards required for life-saving robotic systems,
ensuring stable and precise performance in critical
applications.
IMPLANTABLE DEVICES THAT SAVE LIVES
Implantable medical devices address growing needs
in patient care, offering safer alternatives to drug-
based management. These devices are integral to
minimally invasive surgeries for applications like
heart monitoring, pacing, pain management and
nerve stimulation through neuromodulation. TT’s
precision miniature sensors and implantable devices
support surgical navigation instruments, helping
OEMs deliver safe, reliable technologies that improve
patient outcomes.
BIOTECH & AUTOMATION IN THE LIFE
SCIENCES LABORATORY
An aging population, longer life spans, and rising
chronic disease rates, are driving demand for
advanced diagnostics, personalised medicine and
advanced therapies. The life sciences tools and
diagnostic equipment market, valued at approximately
£125 billion, is expected to grow at an 11 per cent
CAGR through 2026.
Emerging trends like biotech advancements in cell and
gene therapies, personalised medicine, and laboratory
automation are revolutionising the sector. TT’s
products and manufacturing capabilities are
instrumental in these developments, enabling
researchers and healthcare providers to push the
boundaries of innovation and develop new diagnostic
tools and treatments.
KEY CONTRACT WINS IN 2024
– A long-standing customer in the life science sector
has selected one of our North American facilities
for PCBA assembly for an innovative cellular
imaging system.
– TT has secured a new contract with one of the
world’s leading manufacturers of radiotherapy
systems. TT will manufacture large-scale cabinets
that support highly sophisticated linear accelerators,
which help deliver radiation quickly and effectively
to patients undergoing cancer treatment.
– In Europe we have secured a two-year contract from
a medical device innovator for the production of high
voltage chip resistors. These resistors will support
one of the newest, most modern automated external
defibrillators.
Europe
3%
North America
25%
Asia
72%
REVENUE BY
GEOGRAPHY (%)
OUR MARKETS: HEALTHCARE CONTINUED
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TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
9
OUR MARKETS
AEROSPACE & DEFENCE
We provide high-reliability solutions for applications across a broad range of
mission-critical platforms operating on land, air and sea. Growth for TT is driven
by increasing air travel and global investment in national security.
As a trusted partner, we
deliver tailored solutions
for the diverse needs of
the aerospace &
defence sector – from
power and propulsion to
control and advanced
communication.
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MARKET
TT’s products and manufacturing solutions provide
size, weight and efficiency benefits for aerospace and
defence applications. Our power solutions enhance
operational efficiency in commercial and defence
aircraft by supporting critical systems and enhancing
efficiency, while our sensors drive precision and
performance in applications such as jet engines and
missile guidance. Our electronics manufacturing
services provide customisation and rigorous testing
solutions to meet the demanding requirements of
advanced aerospace and defence electronics.
TT’s global footprint gives us a strategic edge, enabling
localised production to meet regional security
regulations, and scalable solutions to meet customers’
regional market demands. With facilities located
worldwide, we deliver high-quality products wherever
our customers operate. In today’s rapidly evolving
market, this global reach ensures OEMs can expand
seamlessly to meet growing multi-regional demands.
The global aerospace & defence industry is
experiencing robust growth, driven by Western
economic recovery, a resurgence in air travel, and
heightened geopolitical tensions. Air traffic in the US
has already surpassed pre-pandemic levels, with other
regions following suit. Meanwhile, rising defence
budgets reflect a renewed focus on national security
while investments in emerging technologies that will
enable more sustainable aviation are creating
substantial growth opportunities across the
commercial aerospace and defence sectors.
Our ability to address a wide array of these industry
needs across multiple technologies and manufacturing
capabilities makes us a valuable partner to our
customers. We are uniquely positioned to help our
customers navigate these evolving demands and seize
these new growth opportunities.
COMMERCIAL AEROSPACE: STRONG DEMAND
FOR NEW AIRCRAFT
The commercial aviation sector is experiencing
strong demand for new aircraft as airlines respond
to rising passenger volumes and modernise fleets.
Order backlogs remain significant, with manufacturers
ramping up production to meet the need for fuel-
efficient, reliable aircraft. This demand reflects both the
resurgence of air travel and a long-term commitment
to reducing emissions and improving operational
efficiency.
While supply chain challenges persist, the industry
is steadily recovering, enabling increases in production
rates. Our portfolio of advanced power conversion
technologies, precision components and contract
manufacturing capabilities is critical to supporting
these next-generation aircraft. These solutions
position us as a trusted partner for commercial
and business aviation manufacturers striving to
meet ambitious production targets and operational
demands.
DEFENCE SECTOR: BOLSTERED
BY GEOPOLITICAL TENSIONS
Geopolitical uncertainties have driven significant
increases in global defence spending, particularly
among NATO countries. Governments are prioritising
military modernisation, fuelling demand for advanced
aircraft, missiles, drones and other critical systems.
Global defence spending is projected to continue to
grow as NATO members commit to higher levels
of spend.
Defence aerospace production is forecasted to grow
at a 3 per cent CAGR to 2033, driven by demand for
next-generation fighter jets, hypersonic systems,
precision-guided missiles and smart munitions.
TT plays a key role in this market with strengths in
power converters, sensors and complex electronic
manufacturing solutions that enable these
technologies. In maritime defence, programmes like
the AUKUS partnership are boosting investments in
undersea security across the UK, USA and Australia,
driving demand for systems such as submarines and
sonobuoys. Across air, land and sea, TT supports
platforms including the Tempest fighter jet, the Boxer
land defence vehicle, various maritime systems, and
many more classified programmes.
TT’s products are engineered to meet the stringent
demands of defence applications. Our power
solutions deliver reliable performance in high-stress
environments, while our sensors provide precise,
real-time data essential for navigation, targeting
and threat detection in modern defence systems.
Additionally, our PCBA and complex manufacturing
services supply custom assemblies critical to
mission success.
As defence production accelerates, TT is prepared to
meet the growing demand with high-performance
components designed to exceed industry standards
and support mission-critical technologies.
SUSTAINABLE AVIATION DRIVING
ELECTRIFICATION
Electrification is a notable trend, particularly in the
aerospace industry. More electric aircraft (“MEA”)
technology, which replaces traditional hydraulic and
pneumatic systems for key functions in aircraft, offers
reduced weight, increased fuel efficiency, and lower
maintenance costs. This technology also eliminates
environmentally hazardous hydraulic fluids and
enhances data analytics capabilities, thus supporting
both cost efficiency and sustainability as airlines and
manufacturers look for ways to move to Net Zero
aviation. TT is actively investing in R&D, in power
management in particular, to help enable this shift.
KEY CONTRACT WINS IN 2024
– Our North America team secured multiple contracts
with a leading provider of naval power systems for a
variety of engineering services and custom
technologies including large-scale transformers and
moulded coil assemblies. End applications include
motor controllers, and power and energy storage
systems for several naval platforms.
– Our Europe team secured a multi-year contract to
support a significant MOD combat air platform with
power conversion technology.
– We secured a grant worth £2.6 million over three
years from Innovate UK for the development of
innovative high voltage power conversion
technology, which will enable the future of
sustainable aviation including more electric aircraft.
– A leading defence contractor and long-time
customer awarded TT a new contract for custom,
radiation-hard microcircuit hybrids used on various
defence platforms.
Europe
61%
North America
37%
Asia
2%
REVENUE BY
GEOGRAPHY (%)
OUR MARKETS: AEROSPACE & DEFENCE CONTINUED
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11
OUR MARKETS
AUTOMATION & ELECTRIFICATION
Customers rely on TT to help solve their toughest automation and electrification challenges
by streamlining their supply chains, driving performance and increasing efficiency.
Continued adoption
of advanced
technologies, supported
by government policies
and shifting market
demands, will drive
improvements in the
industrial sector’s
resilience and
productivity.
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MARKET
Market dynamics in the industrial automation sector
were mixed in 2024, with semiconductor capital
equipment customers showing resilience despite
cyclical pressures. However, the broader industrial
distribution channel experienced more pronounced
softening as distributors and OEM customers worked
through elevated inventory positions accumulated in
prior periods. While this temporary inventory correction
impacted our components business, our strategic
position in high-reliability industrial applications and
semiconductor manufacturing remains strong,
supported by long-term automation and electrification
trends. Looking ahead, these forces, supported by
government policies and shifting market demands,
are reshaping the sector, driving productivity and
enhancing resilience.
Semiconductors are at the heart of industrial
innovation, powering advancements in automation,
electric vehicles and high-performance computing.
TT’s expertise in precision components, power
conversion and complex manufacturing supports
the semiconductor market’s growth, enabling
breakthroughs in energy efficiency, AI-driven systems
and next-generation industrial technologies. Key
government initiatives such as the CHIPS and Science
Act of 2022 in the United States, the National
Semiconductor Strategy in the United Kingdom, the
European Chips Act, and similar programmes across
Asia have further propelled the industry, supporting
sales of semiconductor capital equipment projected
through 2025 and 2026.
With a robust network of global facilities and advanced
capabilities in power solutions, sensor technology and
contract manufacturing, TT is well-positioned to help
customers navigate these shifts and capitalise on
emerging opportunities.
LOCALISATION: A NEW PRODUCTION
PARADIGM
Trade tensions, tariffs and fluctuating logistics costs
are driving a shift towards localised production. This
“local-for-local” approach prioritises supply chain
resilience and responsiveness over cost, reducing
dependency on overseas markets while enhancing
operational stability.
Government incentives such as US federal
investments in onshoring, and the growing focus on
domestic manufacturing, are accelerating this trend.
Industries like semiconductors, electric aircraft and
automation are leading the charge, creating additional
demand for maintenance, repair and industrial
services. Simultaneously, countries like China are
investing heavily in localised supply chains, bolstering
sectors from healthcare to semiconductors.
TT’s regional facilities and expertise in automation
and complex electronic assembly support these shifts,
enabling customers to manage higher labour costs
while enhancing productivity. By integrating advanced
technologies, we help OEMs achieve sustainable,
competitive domestic production with a resilient
supply chain.
EMERGING TECHNOLOGIES: ROBOTICS AND AI
Advances in industrial automation are unlocking
new growth pathways, with robotics adoption
accelerating to meet the need for intelligent, adaptive
manufacturing capabilities. Technologies like Edge AI
are transforming factory operations, enabling real-time
robotic control, predictive maintenance and quality
inspection. These innovations promise significant
efficiency gains and position manufacturers to thrive
in a rapidly evolving market.
Semiconductors play a critical role in these
advancements. TT partners with leading
semiconductor equipment manufacturers, delivering
sensors, resistors, PCBA, cable harnesses and
complex electronic assemblies. These solutions
ensure equipment reliability in demanding
environments, enabling breakthroughs in AI, 5G
and automation. TT’s high-precision technologies
and deep industry expertise position us to support
manufacturers in staying ahead of shifting industrial
demands.
TT plays a vital role in enabling this progress.
Our customised components deliver the precision
and reliability needed for advanced automation
systems, empowering manufacturers to stay ahead
of the curve.
KEY CONTRACT WINS IN 2024
– In North America we secured two new programmes
from a strategic customer in semiconductor
equipment manufacturing for PCBA and power
distribution units.
– Building on a 10+ year relationship, TT secured a
new contract with China’s leading rail transit control
system integrator to deliver complex, high-level
assembly of large-scale cabinets for the signal
control systems on the longest metro line in Asia.
– In Europe, an energy technology customer awarded
us a new contract for custom test equipment used
for offshore, sub-sea oil and gas production.
Europe
15%
North America
30%
Asia
55%
REVENUE BY
GEOGRAPHY (%)
OUR MARKETS: AUTOMATION & ELECTRIFICATION CONTINUED
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13
PROJECT
DYNAMO
OUR JOURNEY
OUR STRATEGY
MAKING TT STRONGER
FOR THE FUTURE
EFFICIENCY
GROWTH
INNOVATION
Efficiency
Growth
Innovation
2024
2026
2027
2025
Efficiency
Focusing on efficiency to boost
productivity and reduce costs.
Growth
Developing our people, products
and market positioning to propel
sustainable growth.
Innovation
Promoting innovation, design,
engineering and manufacturing
expertise. Enhancing collaboration
and commercial focus.
SG&A savings
Logistics and energy
Inventory management
Make vs buy and asset optimisation
Cost of production
Commercial/pricing
Pipeline and sales growth
Global vertical market structure
Analytics for decision-making
Engineering controls process
Joined up technology roadmaps
Leverage assets and product
integration
14
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TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
INTRODUCTION
2024 has been a challenging year for the Group with
strong performances in Europe and Asia offset by
difficult market conditions in our shorter cycle
components business as well as operational
challenges, impacting North America in particular.
I would like to thank my colleagues for their hard work
in often very difficult circumstances.
On an organic basis revenue was down 2 per cent
excluding the unwind of pass-through revenue and
the impact of Project Albert, the divestment of our
business units in Cardiff and Hartlepool, UK and
Dongguan, China which completed at the end of Q1
2024. Adjusted operating margin of 7.1 per cent was
down 40 basis points on a constant currency basis
but was 7.4 per cent excluding the Project Albert
divestment. Adjusted operating profit included circa
£2.3 million of severance costs expensed.
The performance of our Europe and Asia regions was
excellent with organic growth of 14 per cent and 6 per
cent excluding pass-through respectively. The
operational leverage on this growth, coupled with
strong efficiency improvements in a number of sites
resulted in strong margin improvement in both
regions. This was further enhanced as a result of the
divestment of margin dilutive businesses at the end
of the first quarter.
In North America, distributor de-stocking, which has
continued for longer than originally expected, had a
significant impact on demand for our components
products. We took cost action, reducing headcount by
almost 400 in the first half equating to £9 million of
annualised benefit, to offset the lower demand; the
£1.7 million severance costs were incurred within
adjusted operating profit in the period. In the second
half we took further cost action reducing headcount by
a further 100 heads (severance costs of £0.6 million)
and bringing the annualised benefits to £12 million in
total. Furthermore, we experienced operational
execution issues in two North American sites,
Cleveland and Kansas City. This, combined with the
performance of the component business created a
significant profit shortfall in North America. In light of
this trading performance and reflecting a revised view
A CLEAR
ACTION PLAN
Our European and Asian regions have
delivered strong improvements in
profitability in 2024, though this
performance has been more than
offset by continued demand softness in
our components business in North
America and operational issues in
Kansas City and Cleveland.
As we look into 2025, our focus is on
improved execution, reducing debt and
leverage and delivering shareholder
value. Our operational improvement
plan, Project Dynamo, and our clear
action plan to improve operational
efficiency and productivity will benefit
our financial performance in the current
year and beyond.”
Peter France
CEO
CHIEF EXECUTIVE OFFICER’S REVIEW
of recovery, we have booked a £52.2 million non-cash
write-down being a £36.7 million non-cash impairment
of goodwill for the region and a £15.5 million write-
down in respect of assets within a North American
components site.
In terms of our end markets, there was strong growth
in Aerospace & Defence, up 27 per cent organically
and Automation & Electrification markets were flat
organically, excluding pass-through revenues.
Healthcare revenues decreased by 14 per cent
organically, or 7 per cent excluding zero margin
pass-through revenues. Revenues from Distribution,
which is the main route to market for our components
business, reduced by 27 per cent organically.
Book to bill in the year was positive at 103 per cent and
order intake was 9 per cent higher than the prior year
on an organic basis.
The successful divestment of the Hartlepool, Cardiff
and Dongguan businesses (Project Albert) completed
in the first half supporting improvement in Group
margin, and we have re-organised the business from
three divisions to a function-led regional structure
which will enable improved business performance.
Significant benefits will be delivered through our
self-help programme, Project Dynamo, through eight
initial workstreams across the Efficiency, Growth and
Innovation headings. Of the opportunities we have
scoped to date, we expect cost savings and margin
improvements of £17 million, net of £4 million of
reinvestment in the business, to drive long term growth
and underpin our medium-term targets.
There are eight areas of near-term focus under
Project Dynamo which can be summarised under
the headings:
– SG&A savings
– Logistics & Energy
– Inventory management
– Make vs Buy & Asset optimisation
– Cost of Production
– Commercial – Pricing
– Pipeline expansion & sales growth
– Innovation
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15
SCOPE 1&2 EMISSIONS
(73)%
vs. 2019 baseline
Read more
page 35
Our focus on building close, long-term relationships
further up the value chain and collaborating on
design-led solutions often leads to us being designed
in for the life of the product. This is evidenced by new
business, with 58 significant new wins in the year
delivering over £150 million of potential lifetime
revenues and further key customer growth from
pipeline opportunities. Furthermore, we believe we are
well placed, with our broad geographic footprint, to
offer our customers choice and support their near-
shoring activities.
Following the success of adding manufacturing
services into Kuantan, Malaysia, we have taken the
same, low capital intensity model and established
these capabilities within our existing facility in Mexicali,
Mexico. Here, Surface Mount Technology (SMT)
equipment has been installed, teams have been trained
and initial product qualification has been completed.
We are also in the process of increasing further our
capacity within our Malaysian facility in advance of
anticipated customer demand growth and transfer of
programmes from other sites. The preparation and
transfer of work, together with associated one-off
costs, will take place over the course of 2025 with
revenue being delivered from Malaysia from 2026.
Environmental, social and governance (“ESG”)
principles are central to our purpose, and our growth
expectations partly reflect opportunities presented by
the move to a lower carbon world for our design-led
technologies. We have made further excellent progress
in 2024 to reduce our Scope 1 & 2 carbon emissions,
down 23 per cent (adjusting for the impact of the
Project Albert divestment); a 73 per cent reduction
against our 2019 baseline. More detail on page 35.
STRATEGY
A focus on improved execution, supported by the move
from our previous divisional structure to a function-led
regional structure, has started to leverage our strong
engineering and manufacturing capabilities to unlock
value and improve returns.
This focus will drive enhanced performance and
underpins our medium-term financial targets:
– Revenue growth ahead of end market growth
of 4-6%
– 12% adjusted operating margin
– Strong cash conversion of 85%+
– ROIC target of mid to high-teens
PROJECT DYNAMO
We have made good progress on Project Dynamo as
we target £17 million of potential benefits from cost
savings and incremental margin, net of £4 million of
planned reinvestment in the business. As part of our
inventory management workstream, we delivered a
£12.8 million cash benefit from inventory reduction in
2024 and expect a further £15 million reduction by the
end of 2026.
All sites have rolled out Project Dynamo
communications and set up Company-wide teams
and processes. Any employee can submit an idea for
improvement under the efficiency, growth and
innovation categories which is evaluated by the site
and can also be promoted to a region or group project
for implementation.
We can see good margin progression in our European
and Asian regions that support our view that the
Dynamo initiatives are having a positive impact and
give us confidence in delivering the £17 million of
benefit by 2026.
The eight key project workstreams are:
SG&A savings
At our Capital Markets Event in April, we shared that we
had identified £5–6 million of annual SG&A savings,
many of which were actioned during 2024 to achieve
£2 million savings in the year and we now expect to
realise a run rate saving of £6 million in 2026. This
included travel savings, headcount savings and
pension and other discretionary savings.
Logistics & Energy
We have already made savings in logistics, particularly
inbound freight costs, where we have consolidated
down from multiple freight suppliers to a limited
number of preferred suppliers. We have also secured
upside, particularly in the UK, through centralised
buying of forecasted energy demand across our sites.
Inventory management
During 2024 we have completed an inventory process
diagnosis and implemented improvement actions
including a review of key parameters such as
processing times and safety stock. We have focused
on our factory planning capabilities revising lead times
and capacity models and believe there is improvement
potential in some of our order management
procedures.
Short term actions taken to reduce inventory include:
– Group oversight with seven sites placed in special
measures
– site by site inventory reduction plans; and
– high frequency reviews to ensure delivery of
reduction plans.
We are also focused on medium term structural
actions which include:
– setting standard TT ways of working for planning
and demand management
– site by site planning and scheduling capability
assessments; and
– disciplined execution of plans to close gaps.
These actions will improve our inventory health over
time and drive increased inventory turns. The inventory
reduction of £12.8 million in the year supported our
improved second half working capital performance
and full-year cash conversion, and we are targeting an
additional £15 million reduction in net inventory by the
end of 2026.
Make vs Buy & Asset optimisation
We have identified more than £30 million of external
spend on areas such as machining, calibration testing,
connectors and PCBAs, which has the potential to be
insourced. We plan to insource around a third of this
spend and are reviewing the most cost-effective
locations to manufacture our products to serve global
markets. Short term, we have been prioritising the
operational improvement plans.
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
16
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R&D AND CAPITAL
SPENDING
£18.2m
2023: £33.2m
Cost of Production
Of our 18 manufacturing locations, there are four sites,
previously identified, with specific cost of production
issues and the opportunity for improvement.
The product mix in Cleveland and Kansas City, in our
North America region, has become increasingly
complex and this highlighted underlying inefficiencies,
inadequate capacity planning and scheduling, and
is exacerbated by factory layouts. A focus on
strengthening planning and inventory management,
adding specialist resource and reducing the costs of
re-work and improving process yield, will contribute to
the required performance improvement. In Kansas
City, the operational improvement plan is already
delivering with factory layout improvements facilitating
increases in throughput on affected production lines.
Given the strength of the order book here, we expect
a significant step up in the productivity of the
engineering team in 2025 and improved efficiency.
The improvement plan for Cleveland is underway but
the full benefits will take longer to realise than originally
anticipated. The site leadership team will be at full
strength during Q2 and key workstreams such as cost
reduction, a thorough overhaul of demand, production
and resource planning and inventory control is being
rolled out. There will be further learnings to implement
in due course from lean processes.
Commercial – Pricing
We have identified a number of contracts where the
margin is below our expectation and the new sales
organisation and operations teams are working
together to address them. Actions taken through 2024
have included increasing pricing, focused efficiency
improvements and transfers to lower cost sources and
we are seeing the benefits of this in our European
margin improvement.
Pipeline management and sales growth
We have deployed a global sales and business
development structure to enable us to sell all of
TT’s engineering and manufacturing capability to
our global customer base. The previous divisional
structure was a barrier to us capturing the full benefits
of a global approach.
The function-led regional structure is already
increasing the pipeline with a fully integrated transfer
of opportunities between the regions, adding vertical
integration options and the ability to cross-sell other
products within the TT portfolio using existing sales
relationships.
Additionally, the function is targeting improvements in
forecasting, quote turnaround and responsiveness to
support the changing needs of our customers.
Innovation
We prioritise organic investment in the business,
investing in R&D and capital equipment to drive
differentiation in our offer to customers, resulting in us
becoming firmly embedded as valued partners on
long-term programmes. This expenditure totalled
£18.2 million in 2024 (2023: £33.2 million) including
£11.3 million (2023: £10.8 million) in R&D spend,
representing 4.2 per cent (2023: 3.4 per cent) of the
aggregate product revenues. Capital expenditure was
reduced in the year in response to the trading
performance.
While we expect the majority of innovation benefits
under Project Dynamo to be realised over the longer
term, we have already made good progress with the
establishment of an Engineering function with key
roles appointed. Product and technology roadmaps
have been established for all sites and the process and
software standardisation is expected to deliver savings
and make collaboration easier. This has also enabled
us to reprioritise resources and projects consistently
across the business to deliver key programmes sooner,
and to stop certain activities where the economic
payback was uncertain.
A great example of our teams starting to collaborate
across regions is our Kansas City site in the US and
Manchester in the UK working together to respond to
a request for a quotation from a market leading
Aerospace & Defence player for a power converter
system. We are using power electronics technology
developed in Kansas City combined with the
technology developed in the UK; this includes a high to
low voltage conversion which was developed under
the ATI programme AEPEC (Aerospace Electric
Propulsion Equipment) and is being further developed
in FABB-HVDC (Future Aircraft Building Blocks for High
Voltage DC). This allows TT to offer tailored power
solutions for our customers’ unique programme
requirements by leveraging our global capability.
OUTLOOK
In 2024, our European and Asian regions have
delivered strong improvements in profitability.
However, this progress has been more than offset by
continued demand softness in our components
business in North America and operational issues in
Kansas City and Cleveland.
The Board is mindful of the increased market
uncertainty arising from the recently announced trade
tariffs and the potential impact on demand patterns.
Given the current macro backdrop the Board sees a
wider range of potential outcomes for 2025. We remain
resolutely focused on our operational improvement
plan, Project Dynamo, and our clear action plan to
improve operational efficiency and productivity,
however, the current uncertainty has increased the
downside risk for the Group and the Board now
expects adjusted operating profit to be in the range
of £32 million to £40 million.
The Board also remains focused on driving
performance towards its medium-term financial
framework and while it does not expect to achieve a
12% operating margin in 2026, its confidence in the
medium-term for the business is underpinned by its
operational improvement plans, expectation of
continued momentum in Europe and Asia, and an
anticipated improvement in the North American region.
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
17
RESULTS AND OPERATIONS
Revenue for the year was £521.1 million, 13 per cent
lower than the prior year at constant currency. Excluding
the impact of the Project Albert divestment and lower
pass-through revenue, Group revenue was down
2 per cent. Reported revenue included £5.3 million of
zero margin pass-through revenues, a £13.5 million
reduction on 2023 at constant currency. This relates to
materials where we experienced very significant cost
inflation during the supply chain problems which were
being transparently passed on to customers with no
margin mark-up.
CFO
REVIEW
CFO REVIEW
ADJUSTED OPERATING
PROFIT AT CONSTANT
CURRENCY
£37.1m
2023: £47.1m
Adjusted operating profit was £37.1 million, 17 per cent
lower than the prior year at constant currency, reflecting
the significant headwinds in our components business
and operational execution issues in our North American
region. Adjusted operating margin of 7.1 per cent was
down 40 basis points on a constant currency basis
but was 7.4 per cent excluding the Project Albert
divestment. Adjusted operating profit included
£2.3 million of severance costs. After the impact of
adjusting items, including pension restructuring, and
non-cash asset impairment costs, the Group’s
statutory operating loss was £23.5 million (2023
restated: £3.0 million profit) and operating margin was
(4.5) per cent (2023 restated: 0.5 per cent).
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
£million (unless otherwise stated)
Adjusted results1
Statutory results
2024
20232
Change
Change
constant FX
2024
20232
Revenue
521.1
613.9
(15)%
(13)%
521.1
613.9
Revenue ex divestment
505.0
545.3
(7)%
(5)%
Operating profit/(loss)
37.1
47.1
(21)%
(17)%
(23.5)
3.0
Operating profit ex divestment
37.3
45.2
(17)%
(13)%
Operating profit margin
7.1%
7.7%
(60)bps
(40)bps
(4.5)%
0.5%
Operating profit margin ex divestment
7.4%
8.3%
(90)bps
(70)bps
Profit/(loss) before taxation
27.2
37.3
(27)%
(23)%
(33.4)
(6.8)
Earnings/(loss) per share
11.0p
16.7p
(34)%
(30)%
(30.2)p
(6.4)p
Return on invested capital
10.0%
10.9%
Cash conversion
117%
104%
2024
2023
Free cash flow1
27.7
23.9
Net debt1
97.4
126.2
Leverage1
1.8x
1.9x
Dividend per share
2.25p
6.8p
1 Throughout this report we refer to a number of alternative performance measures which provide additional useful information. The Directors have adopted these
measures to provide additional information on the underlying trends, performance and position of the Group with further details set out on pages 26 to 27. The
adjusted measures used are set out in the “Reconciliation of KPIs and non IFRS measures” section on pages 161 to 166.
2. The reported operating profit for 2023 has been restated by £(5.7) million as described further in note 1.This is principally related to our Cleveland site where as part
of our project to address operational execution challenges, we identified issues in relation to the recoverability of certain assets recognised in prior periods at this
site in North America.
18
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
CASH CONVERSION
117%
2023: 104%
NET DEBT
£97.4m
2023: £126.2m
Non-cash write-down costs totalled £52.2 million
(2023: £32.5 million relating to businesses held for
sale in our IoT Solutions and GMS CGUs) being a
£36.7 million non-cash impairment of goodwill for
the region and £15.5 million write-down in respect of
assets within a North American components site. This
is linked to revised forecasts for the business in the
context of our recent trading performance and based
on a revised recovery assumption.
As at December 2024 we derecognised £16.0 million
of deferred tax assets reflecting the recent
performance and near term outlook for the North
American region. The associated losses remain
available to the Group once the North American region
returns to taxable profit.
The reported operating profit for 2023 has been
restated by £(5.7) million as described further in the
Audit Committee report and note 1. This is principally
related to our Cleveland site where as part of our
project to address operational execution challenges,
we identified issues in relation to the recoverability of
certain assets recognised in prior periods at this site in
North America. We are strengthening the local finance
team and actions to address the associated control
deficiencies are being incorporated into our ongoing
work to improve the effectiveness of our internal
controls over financial reporting.
A separate issue was identified in relation to
inappropriate recording of certain prepaid assets
in North America, restatement was also required for
this item.
Cash flow impacting adjusting items totalled £0.6 million
(2023: £ 4.0 million)
Adjusted earnings per share (“EPS”) reduced to
11.0 pence (2023 restated: 16.7 pence), reflecting
the reduced adjusted operating profit in the period.
Basic EPS was a 30.2 pence loss (2023 restated:
6.4 pence loss).
Cash conversion improved to 117 per cent (2023
restated: 104 per cent) including the benefit of a
£12.8 million inflow from inventory reduction delivered
as part of the Project Dynamo workstream which
targeted a £15 million reduction in 2024 and a further
£15 million by the end of 2026. Good cash conversion
also reflects lower capital expenditure levels given
management actions taken in the second half, to
significantly reduce cash outflows from discretionary
spend. There was a total working capital outflow of
£1.2 million (2023 restated: £6.8 million inflow). There
was a free cash inflow of £27.7 million in the year
(2023: £23.9 million inflow) as a result of these factors
and the benefit of a further surplus refund from the UK
defined benefit pension scheme as detailed below.
The strong free cash flow performance, together with
the proceeds from the Project Albert divestment,
contributed to leverage remaining within our stated
1-2x range despite the reduction in adjusted EBITDA.
Adjusted operating cash inflow post capital
expenditure during the period was £43.4 million (2023:
£48.8 million inflow). On a statutory basis, cash flow
from operating activity was an inflow of £51.2 million
(2023: £62.9 million inflow).
Following the buy-in of our UK defined benefit pension
scheme (the “Scheme”) in November 2022, the
Scheme was de-risked with scheme liabilities matched
by the buy-in insurance policy. There remains a small
surplus of £7.1 million at 31 December 2024, following
a further £15.0 million gross return to the Company in
December 2024, in addition to the gross return of
£5.0 million in 2023 (£11.2 million and £3.2 million
respectively net of tax). Workstreams to finalise all
details of the buy-in and transfer all scheme data to
Legal and General are well progressed and we are now
planning the steps to move to buy-out after which we
can proceed with the wind up of the scheme.
We completed the buy-out of our smaller US defined
benefit scheme for a cash contribution of £1.8 million
in January 2024. This leaves the UK Scheme nearing
buy-out and there is just one small £1.5 million
unfunded US scheme remaining.
At 31 December 2024 net debt was £97.4 million
(31 December 2023: £126.2 million), including IFRS 16
lease liabilities of £17.3 million (31 December 2023:
£20.8 million), and leverage was stable at 1.8x
(31 December 2023 restated: 1.9x). We expect leverage
to reduce during 2025.
Our return on invested capital was 10.0 per cent (2023:
10.9 per cent), with the benefit of the Project Albert
divestment more than offset by the reduction in
adjusted operating profit.
On 4 March 2024 we announced the divestment of
our business units in Cardiff and Hartlepool, UK and
Dongguan, China. After costs of disposal and normal
working capital adjustment, the divestment realised
net proceeds of £12.2 million. The loss on disposal
was £4.4 million.
CFO REVIEW CONTINUED
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
19
CFO REVIEW CONTINUED
CFO REVIEW CONTINUED
EUROPE
Revenue by market (%)
Healthcare
2%
Automation & Electrification
18%
Aerospace & Defence
59%
Distribution sales channel
21%
2024
2023
Change
Change
constant fx 1
Revenue
£146.3m
£169.6m
(14)%
(14)%
Revenue ex divestment
£134.5m
£118.3m
14%
14%
Adjusted operating profit 1
£18.9m
£11.9m
59%
58%
Adjusted Operating profit
ex divestment
£19.4m
£11.7m
66%
64%
Adjusted operating margin 1
12.9%
7.0%
590bps
580bps
Adjusted operating margin
ex divestment 1
14.4%
9.9%
450 bps
440 bps
1 See note 1c for an explanation of alternative performance measures. Adjusting items are not allocated to
regions for reporting purposes. For further discussion of these items please refer to note 7.
REVENUE BREAKDOWN
FINANCIAL HIGHLIGHTS – EUROPE
Revenue decreased by £23.3 million to £146.3 million
(2023: £169.6 million) but excluding the divestment of
the Hartlepool and Cardiff locations, as part of Project
Albert, organic revenue was 14% higher at £134.5 million
(2023: £118.3 million) driven by increased demand
from the Aerospace & Defence market.
Adjusted operating profit increased by £7.0 million to
£18.9 million (2023: £11.9 million) given healthy levels
of operational leverage on the organic growth and
efficiency improvements from Project Dynamo.
Excluding the impact of Project Albert organic adjusted
operating profit increased by 64 per cent and adjusted
operating margin increased 440 basis points to
14.4 per cent (2023: 9.9 per cent).
Overall order intake remains strong. As we look into
2025, we expect continued revenue growth supported
by a strong order book.
Contract awards and growth drivers during the year,
giving us confidence as we look forward, include:
Innovate UK – Sustainable aviation tech win
TT has won a grant over three years from Innovate UK
for the development of high voltage power conversion
technology, which will support a range of future
aerospace platforms for leading Aerospace OEMs.
TT received the funding award as part of a
£200 million joint government and industry investment
plan to boost British manufacturing and R&D. The
funding is being awarded to Aerospace R&D projects
across the UK that support the development of
energy-efficient and zero-carbon aircraft technology
and accelerate the transition to net zero aviation.
Medical device
Our Bedlington team has secured a two-year contract
from a medical device innovator for the production of
high voltage chip resistors. These resistors will support
one of the newest, most modern automated external
defibrillators.
Defence
A leading defence contractor and long-time customer
has awarded TT a new contract for custom, radiation-
hard microcircuit hybrids that support an inertial
measurement unit used on various defence platforms.
This latest award reflects the collaborative relationship
that has grown over seven years and the customer’s
recognition of our advanced capabilities to produce
complex electronic solutions for use in high-reliability
applications in harsh environments.
Energy technology
A customer in the energy technology sector has
awarded TT a new contract for custom test equipment
used for offshore, sub-sea oil and gas production. TT’s
Barnstaple facility will design and manufacture the new
test technologies, which will enable the customer to
integrate and test equipment in the platform and
factory environment. The success of this win has
resulted in the customer awarding TT an additional
contract with similar requirements.
20
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
CFO REVIEW CONTINUED
NORTH AMERICA
Revenue reduced by £45.1 million to £184.4 million
(2023: £229.5 million) reflecting significant volume
headwinds in our components’ businesses impacting
the region. In the sites serving the components market,
significant cost action has been taken, to mitigate the
volume declines experienced.
Adjusted operating profit decreased by £22.1 million
to a loss of £2.7 million (2023 restated: £19.4 million
profit) including a £1.0 million foreign exchange
headwind. The adjusted operating profit margin was
(1.5) per cent (2023 restated: 8.5 per cent) reflecting
the impact of volume declines in higher margin
component lines and associated factory inefficiencies
and operational issues in Kansas City and Cleveland.
Excluding severance costs, adjusted operating
margins were (0.6) per cent.
We have a clear remediation plan well underway to
resolve the operational issues experienced in two sites
with various workstreams in train. In Kansas City we
are seeing the improvements coming through. The
improvement plan for Cleveland, which involves
process refinements together with headcount
reductions, underpinning the required productivity
improvements, are underway but the full benefits will
take longer to realise than originally anticipated and
exacerbated by £10 million of revenue which has
moved from 2025 into the 2026 order book.
Compared to 2023, orders were up 10 per cent at
constant currency in 2024. We are planning for a
gradual improvement in Components order intake but
no meaningful revenue growth in 2025. Profitability is
expected to benefit from our self-help actions.
Notable wins and growth drivers in the period include
the following:
Life sciences win
A long-standing customer in the life science sector
has selected TT’s newest Mexicali facility for PCBA
assembly requirements for an innovative cellular
imaging system. TT already provides manufacturing
for this customer at our locations in Suzhou, Kuantan
and Cleveland. The expansion into Mexicali reflects
confidence in TT’s ability to support this strategic
account globally, leveraging best-cost-geographies
and providing global business continuity for this
important customer. The customer’s selection of this
location and entrusting TT is a testament to the
partnership and proven performance of our teams
globally. Value of this initial award is around £2 million
over five years, with potential for additional growth
opportunity.
Semiconductor equipment
Our Cleveland facility was awarded two new
programmes from a strategic customer in the
semiconductor equipment manufacturing space. The
programmes over the next six years, will see Cleveland
supplying PCBA and power distribution units.
Naval power systems
Our Kansas team secured nine new contracts with a
leading provider of naval power systems for a variety
of engineering services and custom technologies
including large-scale transformers and molded coil
assemblies. End applications include motor
controllers, power and energy storage systems for
several naval platforms. These latest awards highlight
our success in developing deep relationships and
demonstrating superior technical capability – enabling
us to secure sole source positions on key defence
platforms.
Medical technology
Through a focused account development approach,
TT Minneapolis was awarded four new contracts from
a leading provider of medical and surgical equipment.
TT will provide custom 5DOF Aircoil Sensor
Assemblies for a next-generation balloon dilation
system that will offer a minimally invasive alternative
to traditional endoscopic sinus surgery.
Revenue by market (%)
Healthcare
16%
Automation & Electrification
28%
Aerospace & Defence
29%
Distribution sales channel
27%
2024
2023
Change
Change
constant fx 1
Revenue
£184.4m
£229.5m
(20)%
(17)%
Adjusted operating profit 1
£(2.7)m
£19.4m
(114)%
(115)%
Adjusted operating margin 1
(1.5)%
8.5%
(1000)bps
(980)bps
1 See note 1c for an explanation of alternative performance measures. Adjusting items are not allocated to
regions for reporting purposes. For further discussion of these items please refer to note 7. Note: No
divestment impact here. The reported operating profit for 2023 has been restated by £(5.7) million as
described further in note 1h. This is principally related to our Cleveland site where as part of our project to
address operational execution challenges, we identified issues in relation to the recoverability of certain
assets recognised in prior periods at this site in North America.
REVENUE BREAKDOWN
FINANCIAL HIGHLIGHTS – NORTH AMERICA
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
21
Revenue by market (%)
Healthcare
45%
Automation & Electrification
51%
Aerospace & Defence
1%
Distribution sales channel
3%
CFO REVIEW CONTINUED
ASIA
Revenue reduced by £24.4 million to £190.4 million
(2023: £214.8 million) including a £9.2 million foreign
exchange headwind. Organic constant currency
revenue was down 1 per cent excluding the impact of
the Project Albert divestment to £186.1 million (2023:
£197.5 million), and 6 per cent higher also excluding the
£5.3 million unwind of pass-through revenue.
Adjusted operating profit increased by £4.6 million to
£28.5 million (2023: £23.9 million) with the benefit of
volume growth and efficiencies in part offset by a
£1.3 million foreign exchange headwind and a
£1.4 million reduction from the disposal of the
Dongguan site, as part of Project Albert. The adjusted
operating profit margin increased to 15.0 per cent
(2023: 11.1 per cent) due to good operational leverage
on volume increases, site efficiencies and the
reduction in zero margin pass-through revenues.
Excluding £5.3 million of pass-through revenues and
Project Albert, adjusted operating margin was
15.6 per cent (2023: 12.5 per cent).
We are in the process of increasing further our
capacity within our Malaysian facility in advance of
anticipated customer demand growth and transfer of
programmes from other sites. The preparation and
transfer work, together with associated one-off costs,
will take place over the course of 2025 with revenue
being delivered from Malaysia from 2026.
Order intake in the year was 6 per cent lower than the
prior year, although this is largely timing related due to
the orders relating to the transfer of activity from
Suzhou to Kuantan being delayed in 2025, with
revenues for 2025 expected to be up low single digit
excluding the pass-through revenue unwind.
There have been a number of key wins during the year
including:
Life sciences and diagnostics
TT has been awarded a five-year contract from a
global provider of life sciences and diagnostics
equipment. Our Suzhou facility, which has also been
designated as a “preferred supplier”, will provide
complex PCBA that support microplate readers used
in various laboratory environments.
Railway signalling
Building on a 10+year relationship, TT has secured a
new contract with China’s leading rail transit control
system integrator. The award will involve delivering
complex, high-level assembly of large-scale cabinets
for the signal control systems that will support Wuhan
Metro Line 12 – the longest metro line in Asia and the
second-longest in the world. TT now supports more
than eight metro line projects, with more on the
horizon.
Radiotherapy equipment
TT has secured a new contract with one of the world’s
leading manufacturers of radiotherapy systems. TT
will manufacture large-scale cabinets that support
highly sophisticated linear accelerators, which help
deliver radiation quickly and effectively to patients
undergoing cancer treatment. The three year contract
is worth over £2 million.
2024
2023
Change
Change
constant fx 1
Revenue
£190.4m
£214.8m
(11)%
(7)%
Revenue ex divestment
£186.1m
£197.5m
(6)%
(1)%
Adjusted operating profit 1
£28.5m
£23.9m
19%
26%
Adjusted Operating profit
ex divestment
£28.2m
£22.2m
27%
34%
Adjusted operating margin 1
15.0%
11.1%
390bps
400bps
Adjusted operating margin
ex divestment
15.2%
11.2%
400bps
410bps
1 See note 1c for an explanation of alternative performance measures. Adjusting items are not allocated to
regions for reporting purposes. For further discussion of these items please refer to note 7.
REVENUE BREAKDOWN
FINANCIAL HIGHLIGHTS – ASIA
22
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
CFO REVIEW CONTINUED
FINANCIAL OVERVIEW
Group revenue was £521.1 million (2023: £613.9 million).
This included a currency translation headwind of
£16.7 million. Group revenue was 13 per cent lower
than the prior year at constant currency. Adjusting for
the impact of the divestment and excluding zero
margin pass-through revenues, revenue was 2 per cent
lower on an organic basis.
The Group’s adjusted operating profit was £37.1 million
(2023 restated: £47.1 million) and statutory operating
loss was £23.5 million (2023 restated: £3.0 million
profit) after a charge for items excluded from adjusted
operating profit of £60.6 million (2023: £44.1 million)
including:
– restructuring credit of £0.1 million (2023: £2.0 million
costs);
– pension restructuring costs of £1.3 million (2023:
£1.9 million) relating mainly to work to prepare the
UK defined benefit scheme for buy-out;
– acquisition and disposal costs totalled £4.5 million
(2023: £3.1 million) relating to the Project Albert
divestment, Torotel and Ferranti integration;
– amortisation of intangible assets arising on business
combinations of £2.7 million (2023: £4.6 million); and
– non-cash asset write-down in the North American
region of £52.2 million linked to revised forecasts
for the business (2023: £32.5 million relating to
businesses held for sale in our IoT and GMS CGUs)
being a £36.7 million non-cash impairment of
goodwill for the region and a £15.5 million asset
write-down in relation to one North American
components site.
The Group generated an adjusted operating margin
of 7.1 per cent (2023 restated: 7.7 per cent) with the
decrease as a result of the significant headwinds
faced in our North American components business,
severance costs incurred in response to this and
operational issues at Kansas City and Cleveland in
North America.
The reported operating profit for 2023 has been
restated by £(5.7) million as described further in note 1.
This is principally related to our Cleveland site where as
part of our project to address operational execution
challenges, we identified issues in relation to the
recoverability of certain assets recognised in prior
periods at this manufacturing site in North America.
The net finance cost was £9.9 million (2023: £9.8 million)
with the impact of higher base rates and being offset
by lower drawn debt levels. The Group’s overall tax
charge was £20.0 million (2023 restated: £4.5 million),
including a £12.3 million charge (2023: £3.5 million
credit) on items excluded from adjusted profit.
The adjusted tax charge was £7.7 million (2023 restated:
£8.0 million), resulting in an effective adjusted tax
rate of 28.3 per cent (2023 restated: 21.4 per cent).
Loss after tax was £53.4 million (2023 restated:
£11.3 million). Adjusted EPS decreased to 11.0 pence
(2023 restated: 16.7 pence), reflecting the reduction in
adjusted operating profit in the period. Basic EPS was
a loss of 30.2 pence (2023 restated: 6.4 pence loss).
Adjusted operating cash inflow after capex was
£43.4 million (2023: £48.8 million inflow). The
reduction was as a result of lower adjusted operating
profit offset by a significantly reduced outflow on
capital expenditure. Capital and development
expenditure of £8.7 million (2023: £24.0 million)
reflected management actions to reduce discretionary
spend. There was a total working capital outflow of
£1.2 million (2023 restated: £6.8 million inflow),
including a £12.8 million inflow from inventory
reduction. This resulted in adjusted operating
cash conversion of 117 per cent (2023 restated:
104 per cent). On a statutory basis, cash flow
from operating activities was £51.2 million (2023:
£62.9 million).
There was a free cash inflow of £27.7 million (2023:
inflow £23.9 million), net of £0.6 million of restructuring
and acquisition related costs (2023: £4.0 million)
primarily pension costs of £0.1 million (2023: £0.2 million)
and other costs of £0.5 million (2023: £0.6 million). In
2024 there was a £11.2 million pension surplus refund
from the UK defined benefit scheme after tax (2023:
£3.2 million) and there was a £1.8 million cash outflow
on the buy-out of a smaller US defined benefit scheme
which completed in January 2024. Dividend payments
totalled £12.2 million (2023: £11.3 million).
At 31 December 2024, the Group’s net debt was
£97.4 million (31 December 2023: £126.2 million),
including £17.3 million of lease liabilities (31 December
CASH FLOW, NET DEBT AND LEVERAGE
£million
2024
2023
restated
Adjusted operating profit
37.1
47.1
Depreciation and amortisation
13.8
16.5
Net capital expenditure
(6.9)
(22.4)
Capitalised development expenditure
(1.8)
(1.6)
Working capital
(1.2)
6.8
Other
2.4
2.4
Adjusted operating cash flow after capex.
43.4
48.8
Adjusted operating cash conversion
117%
104%
Net interest and tax
(20.3)
(19.7)
Lease payments
(4.2)
(4.4)
Restructuring, acquisition and disposal related costs
(0.6)
(4.0)
Retirement benefit schemes
9.4
3.2
Free cash flow
27.7
23.9
Dividends
(12.2)
(11.3)
Lease payments
4.2
4.4
Equity issued/acquired
0.8
1.3
Albert divestment costs
12.2
(3.6)
Other
(2.1)
(1.2)
Decrease in net debt
30.6
13.5
Opening net debt
(126.2)
(138.4)
New, acquired, modified and surrendered leases
(3.0)
(3.4)
Leases transferred to liabilities held for sale
2.6
2.6
FX and other
(1.4)
(1.5)
Closing net debt as per balance sheet
(97.4)
(127.2)
Cash and leases held within assets and liabilities held for sale
–
1.0
Closing net debt including assets and liabilities held for sale
(97.4)
(126.2)
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
23
CFO REVIEW CONTINUED
2023: £20.8 million). Leverage at 31 December 2024,
consistent with the bank covenants, was 1.8 times
(31 December 2023 restated: 1.9 times). As detailed on
page 24 below, the Group’s net interest covenant has
been relaxed from 4.0 times to 3.0 times at 30 June
2025 and 3.25 times at 31 December 2025, before
reverting to 4.0 times.
Summary of adjusted results
To assist with the understanding of earnings trends,
the Group has included non-GAAP alternative
performance measures including adjusted operating
profit and adjusted profit. Further information is
contained in the “Reconciliation of KPIs and non IFRS
measures” on pages 161 to 166.
A summary of the Group’s adjusted results is set
out below:
£million
2024
2023 restated
Revenue
521.1
613.9
Operating profit
37.1
47.1
Operating margin
7.1%
7.7%
Net finance expense
(9.9)
(9.8)
Profit before tax
27.2
37.3
Tax
(7.7)
(8.0)
Tax rate
28.3%
21.4%
Profit after tax
19.5
29.3
Weighted average number of shares
176.9 million 175.6 million
EPS
11.0p
16.7p
FUNDING AND LIQUIDITY
The Group funds its operations through retained
earnings, equity, and borrowings, typically raised at
the Group level and lent to subsidiaries. Sufficient
committed borrowings are maintained to cover
forecasted funding requirements.
As of 31 December 2024, the Group’s net debt was
£97.4 million compared to £126.2 million at year-end
2023 (including cash and leases of £1.0 million held for
sale). Lease liabilities included in net debt amounted to
£17.3 million versus £20.8 million in 2023 (£2.6 million
held for sale).
Metric
2024
2023 restated
Leverage ratio
1.8x
1.9x
Net interest cover
4.4x
5.6x
The Group’s debt covenants state that the leverage
ratio (net debt to EBITDA) must not exceed 3.0 times
and that interest cover must be more than 4.0 times.
The Group obtained a relaxation to the interest cover
ratio in December 2024 to reduce the interest cover
requirements for the measurement periods ending
31 December 2024 (3.75x), 30 June 2025 (3.0x) and
31 December 2025 (3.25x). Our current forecasts
indicate sufficient headroom against these covenants
in both base case and downside scenarios.
The Group’s borrowings comprise a multi-currency
Revolving Credit Facility (RCF) maturing in June 2027
and private placement (PP) fixed-rate loan notes with
maturities of seven and ten years. These facilities
maintain covenants aligned with the Group’s bank
agreements.
Leverage ratio
As of 31 December 2024, the Group’s leverage ratio of
1.8 times remains within the 1–2 times target range.
The net debt/adjusted EBITDA calculation excludes
IFRS 16 lease liabilities and incorporates adjustments
for specified items. The Group maintains a capital
allocation policy targeting net debt/EBITDA within this
range under prevailing market conditions.
Further details on borrowings and maturities are
provided in note 20.
GOING CONCERN
The financial statements have been prepared on a
going concern basis, but the Board has noted a
material uncertainty relating to going concern as a
result of the current challenging macroeconomic
environment, see note 1d for further details.
DIVIDEND POLICY AND DIVIDEND
The Board has a progressive dividend policy,
considering adjusted earnings cover as a primary
factor. Additionally, it evaluates other key aspects, such
as the Group’s anticipated business growth, capital and
investment requirements, and pension obligations, as
well as current year trading performance. The balance
sheet position and cash generation capability also play
a crucial role in dividend decisions.
As part of the agreed covenant relaxation, the Group
has committed to testing the interest cover covenant
ratio before paying any dividend. In the event that
interest cover falls or is expected to fall below 4.0 times
in the measurement period preceding the distribution
or in the forecasted ratios for the following two testing
periods then no dividend will be paid while the
relaxation is in place.
The Board assesses these factors within the broader
context of the Group’s principal risks (outlined on
pages 53 to 56) and its overall risk profile. The Group’s
ability to pay dividends is supported by distributable
reserves within the parent company, which functions
as a holding company and primarily derives its income
from subsidiary dividends. As of 31 December 2024,
TT Electronics had £157.6 million in distributable
reserves (2023: £199.7 million), ensuring sufficient
funds for future dividend payments. The parent
company’s balance sheet is available on page 155.
Given the current uncertainty over the macroeconomic
environment and associated business risks, the Board
has concluded that it is prudent to pause the dividend
and will not be recommending a final dividend for 2024.
SIGNIFICANT ACCOUNTING MATTERS
Impairment
The impairment of goodwill, tangible and intangible
assets in the current period relates to goodwill
(£36.7 million), property, plant and equipment
(£15.3 million) and capitalised development costs
(£0.2 million) in the North American region reflecting
recent trading performance and based on a prudent
recovery assumption. For further details see notes 12,
13, 14 and 15.
The Group also derecognised £16.0 million of deferred
tax assets as at 31 December 2024 reflecting the
recent performance and near term outlook for the
North American region. The associated losses remain
available to the Group once the North American region
returns to taxable profit.
24
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
CFO REVIEW CONTINUED
Restatement of prior period results
The reported operating profit for 2023 has been
retrospectively adjusted by £(5.7) million and net
assets reduced by £5.7 million (before the impact
of tax) associated with the Cleveland operational
execution challenges and confirmed through the year
end process and in consultation with our external
auditors. These adjustments primarily relate to the
incorrect interpretation of contractual provisions for
the recovery of cost variances from customers as well
as aged inventory and preparation and review of
related reconciliations. For further details see the
Audit Committee report and note 1.
Recommendations on control findings and required
improvements have been reviewed by the Audit
Committee and are being incorporated into our
on-going programme to improve the effectiveness
of our internal controls over financial reporting.
PENSIONS
The Group operates one significant defined benefit
scheme in the UK alongside one smaller scheme in the
US. All these schemes are closed to new members
and future accrual.
In December 2024, TT received an additional refund
from the Scheme escrow account, amounting to
£15.0 million before tax (£11.2 million net), following a
previous refund of £5.0 million before tax (£3.2 million
net) in 2023. Additionally, the Group completed the
buy-out of its primary US-approved defined benefit
pension scheme at a cash cost of £1.8 million.
As of 31 December 2024, the total net accounting
surplus under the Group’s defined benefit pension
schemes stood at £5.6 million (2023: £22.2 million).
The decrease was primarily driven by a £15.0 million
refund repayment (£11.2 million net of tax).
Following the buy-in of the TT Group scheme in
November 2022, the primary financial risk associated
with the scheme is insurer credit risk, which
remains low.
£million
2024
2023
Fair value of assets
317.1
363.5
Liabilities
311.5
341.3
UK scheme (surplus)
7.1
25.3
Overseas schemes (deficit)
(1.5)
(3.1)
Total Group surplus
5.6
22.2
The April 2022 triennial valuation of the TT Group
scheme reported a net surplus of £45.4 million
against the Trustee’s funding objective, a significant
improvement from the £0.3 million surplus in
April 2019.
Further details on the Group’s defined benefit schemes
can be found in note 22.
FINANCIAL RISK MANAGEMENT AND
TREASURY POLICIES
The Group’s Treasury function, reporting to the Chief
Financial Officer, manages treasury activities centrally.
Treasury operations adhere to Board-approved policies
and delegation levels.
The Group’s primary financial risks include funding
and liquidity, interest rate fluctuations, and currency
exposure. Financial instruments are used solely to
manage these risks, with no speculative transactions
undertaken.
The Group hedges at least 75% of expected net cash
flow exposure for the next 12 months and 50% for the
following 12-24 months. Further details on Treasury
operations are available in note 21.
Interest rate management
The Group seeks to stabilise borrowing costs,
maintaining 25%-75% of debt at fixed interest rates.
FOREIGN CURRENCY TRANSLATION
The exchange rates impacting the Group’s financial
statements are:
£million
2024
2023
Income Statement
Average rate
$/£
1.28
1.24
RMB/£
9.20
8.78
Balance Sheet
Closing rate
$/£
1.25
1.27
RMB/£
9.14
9.04
The Group manages foreign exchange translation
exposure, primarily arising from US and China-based
earnings.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
25
HOW WE ARE PERFORMING
OUR KPIs
Our KPIs include a number of APMs which have been adopted by the Directors to provide further information on underlying trends and the
performance and position of the Group. Details of these APMs and a reconciliation to statutory measures can be found on pages 161 to 166.
1 As part of our project to address Cleveland operational execution challenges, we identified issues in relation to the recoverability of certain
assets recognised in prior periods. As a result, the reported operating profit for 2023 has been retrospectively adjusted by £(5.7) million as
described further in note 1.
FINANCIAL
KPI DESCRIPTION AND WHY IT IS IMPORTANT
MEDIUM-TERM
TARGET
FIVE-YEAR PERFORMANCE CHART
2024 PROGRESS
LINK TO
STRATEGY
Organic revenue growth (%)
The percentage change in revenue from continuing operations in
the current year compared to the prior year, excluding the effects
of currency movements, divestments and acquisitions. This
measures the like-for-like growth or decline of the business.
Sustainable organic revenue growth is an indicator of value
creation. It reflects a combination of conditions in our markets
and our success in gaining market share from serving our
customers better.
4–6% organic
revenue growth
annually over the
medium term
(5)%
Organic revenue, adjusting for
the Albert divestment and
excluding pass-through revenue,
was down 2%.
Enhancing collaboration
and commercial focus
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering and
manufacturing expertise
2023: 1%
Adjusted operating profit margin (%)
Adjusted operating profit as a percentage of revenue. Adjusted
operating profit margin is an indicator of our ability over the longer
term to extract fair value from our products and services, driven by
a mixture of increasing revenue and an optimised cost base.
Double-digit margin
7.1%
Positive adjusted operating profit
margin progression in both Europe
and Asia was more than offset by
the impact of weakness in the
components market and North
American operational issues.
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing collaboration
and commercial focus
2023: 7.7%1
Adjusted earnings per share (pence)
The profit for the year attributable to shareholders excluding
items not included within adjusted operating profit divided by the
weighted average number of shares in issue during the year.
Adjusted EPS summarises the overall financial performance of the
Group, including revenue growth, operating margin, the cost of debt
finance and the rate of underlying taxation.
Double-digit
adjusted EPS
growth annually at
constant currency
over the medium
term
11.0p
Adjusted EPS of 11.0p reflects the
reduction in operating profit.
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing collaboration
and commercial focus
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering and
manufacturing expertise
2023: 16.7p1
Cash conversion (%)
Adjusted operating cash flow including capital expenditure, divided
by adjusted operating profit. Cash conversion measures how
effectively profit is converted into cash and, within this, reflects the
management of working capital and capital expenditure. A high
level of cash conversion aids investment in the business, enables
the Group to deliver increased returns for shareholders and
supports a strong balance sheet.
90%+ cash
conversion annually
over the medium
term
117%
Strong cash conversion of 117%
in 2024 reflects the £13 million
inventory reduction and lower
capital expenditure, given
management action to reduce
discretionary spend in H2 2024.
Focusing on efficiency
to boost productivity
and reduce costs
2023: 104%1
(12)%
10%
20%
1%
(5)%
2024
2023
2022
2021
2020
7.6%
7.3%
6.4%
7.1%
7.7%
2024
2023
2022
2021
2020
18.2p
14.5p
11.7p
11.0p
16.7p
2024
2023
2022
2021
2020
2024
2023
2022
2021
2020
65%
33%
130%
117%
104%
26
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
FINANCIAL
KPI DESCRIPTION AND WHY IT IS IMPORTANT
MEDIUM-TERM
TARGET
FIVE-YEAR PERFORMANCE CHART
2024 PROGRESS
LINK TO
STRATEGY
Return on invested capital
Adjusted operating profit for the year divided by average invested
capital for the year. Average invested capital excludes pensions,
provisions, tax balances, derivative financial assets and liabilities,
cash and borrowings. It is calculated at average rates taking into
account monthly balances. Return on invested capital is a measure of
how efficiently the Group is utilising its assets, relative to profitability,
in generating shareholder returns.
Exceed the cost of
holding assets with
year-on-year
increases
10.0%
The benefit of the Project Albert
divestment was more than offset
by the reduction in adjusted
operating profit.
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing collaboration
and commercial focus
Promoting innovation,
design, engineering and
manufacturing expertise
2023: 10.9%1
NON-FINANCIAL
KPI DESCRIPTION AND WHY IT IS IMPORTANT
MEDIUM-TERM
TARGET
FIVE-YEAR PERFORMANCE CHART
2024 PROGRESS
LINK TO
STRATEGY
R&D investment as a % of sales
R&D cash investment as a percentage of revenue. This metric
excludes manufacturing services revenue which has no R&D. A
consistent and sustainable level of R&D investment enables us to
introduce new products that increase our revenue and deliver on
our Purpose.
Target R&D
investment at
around 5% of
revenue annually
over the medium
term
4.2%
R&D investment at 4.2% of product
revenue was in line with our target,
as we continue to invest in new
product development.
Promoting innovation,
design, engineering and
manufacturing expertise
2023: 3.4%
Safety performance (recordable incident rate)
The number of recordable workplace health and safety incidents per
200,000 work hours. Measures how well we are executing on our
commitment to raise safety standards globally and protect our
people on our journey to zero harm.
Year-on-year
reduction in
incident rate,
ultimately leading
to zero harm
0.31
RIR fell by 18% to 0.31, well below
the industry average of 1.2,
reflecting our strong commitment
to safety awareness and building a
proactive safety culture.
Developing our people,
products and market
positioning to propel
sustainable growth
2023: 0.38
Employee engagement score
Results from a Best Companies Ltd third party survey which gathers
anonymous employee feedback and scores against eight success
factors. Having engaged employees is crucial to attracting and
maintaining the talent we need to execute our strategy.
Survey-on-survey
increase in the
Group’s
engagement
score over the
medium term
2023:
771.7
In 2023 we were delighted to attain
an engagement score in line with
the 3*** “world class companies
to work for” Best Companies Ltd
benchmark. Pulse surveys in 2024
indicated continued good
engagement.
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering and
manufacturing expertise
Scope 1 & 2 emissions
Total amount of carbon dioxide equivalent tonnes (tCO2e) of Scope 1
& 2 emissions from operations. Details of the calculation method are
set out on page 37. Reducing our Scope 1 & 2 emissions is a critical
part of reducing our environmental footprint.
Annual reductions
vs our 2019
baseline. Net Zero
by 2030
73%
In 2024 we delivered good
progress on our path to Net Zero in
2030. The reduction was driven by
two new solar programmes
coming online and includes the
impact of the three divested
locations.
Focusing on efficiency
to boost productivity
and reduce costs
2023: 62%
9.1%
10.5%
7.7%
10.9%
10.0%
2024
2023
2022
2021
2020
4.5%
3.7%
4.8%
4.2%
3.4%
2024
2023
2022
2021
2020
0.31
0.38
2024
2023
718.5
694.8
771.7
Interim pulse surveys
Interim pulse surveys
XXX.X
2024
2023
2022
2021
2020
20,875
15,740
12,782
10,533
7,506
2024
2023
2022
2021
2020
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
27
OUR PEOPLE, COMMUNITIES AND ENVIRONMENT
POSITIVE
IMPACT
We aim to positively impact the world by
creating value and enhancing sustainability
through our products, business practices,
employee care, community engagement,
and environmental responsibility.
OUR PURPOSE
To engineer and manufacture electronic
solutions enabling a safer, healthier and
more sustainable world.
SUSTAINABILITY
– Sustainability is integrated into all aspects of our
strategy to reduce risk and maximise opportunities.
– Key efforts include improving fuel efficiency,
enhancing productivity with automation and
advancing precise medical technologies.
– We help customers develop efficient, durable and
eco-friendly solutions to combat climate change and
resource scarcity.
PEOPLE AND COMMUNITIES
– Regularly survey our employees to provide insight
and nurture our culture.
– Group standards and policies on engagement,
wellbeing, community and ED&I matters.
– Committed to enhancing safety awareness and
fostering a proactive safety culture across the
organisation.
– Focused on unlocking potential by upskilling leaders
and giving line managers the right tools.
– Pay fairly and equally for like-for-like roles within
each of our labour markets.
– Play an active role in communities through STEM
promotion, volunteering and fundraising.
ENVIRONMENTAL COMMITMENTS
– Committed to achieving Net Zero Scope 1 & 2
emissions by 2030, having already reduced
emissions by 73% since 2019.
– Actively improving data for Scope 3 emissions and
targeting reductions.
– Focusing on minimising water usage, eliminating
single-use plastics, and eliminating waste to landfill
– Progress includes renewable energy installations
generating 1.4 GWh annually.
ETHICS AND INTEGRITY
– We maintain a single global ethical standard based
on fairness, honesty and compliance with the law.
– Our Business Ethics Code addresses behaviour,
conflicts of interest, bribery and fair competition.
– Issues can be reported anonymously via a multi-
lingual whistle-blower hotline.
– Oversight is managed by our Governance and Risk
Committee.
SUPPLY CHAIN AND MODERN SLAVERY
– Our Procurement Code ensures suppliers align with
our ethical and sustainability standards.
– Policies include zero tolerance for modern slavery
and specific measures to uphold workers’ rights.
– Suppliers undergo regular assessments, and
violations result in termination of partnerships.
Read more about
Governance on page
58
ALIGNMENT WITH GLOBAL GOALS
– Our efforts support seven of the UN’s Sustainable
Development Goals.
KEY METRICS
– Employee engagement: 3*** in 2023. Transitioning
to new survey methodology in 2025.
– Group safety record: As measured by recordable
incident rate. Improved by 18% in 2024.
– Net Zero target: 2030 for Scope 1 & 2 emissions.
– Emission reductions: 73% vs 2019 baseline.
– Renewables contribution: Increase in renewable
electricity usage to 62%.
– Waste reduction: Eliminating single-use plastics and
waste to landfill by 2035.
GOVERNANCE AND RISK MANAGEMENT
Environment and people matters including culture,
strategy, compliance, risk and internal controls are
governed as part of our overall governance and risk
management frameworks, ultimately overseen by the
Board. An update on key people, safety and
environmental metrics and activities is discussed at
the Corporate Social Responsibility meetings four
times per year and subsequently provided at Board
meetings. In-depth reviews are undertaken by the
Board on at least an annual basis.
Non-financial and Sustainability Information
Statement
In accordance with Sections 414CA and 414CB
of the Companies Act 2006, our non-financial
and sustainability information can be found on
the following pages of this 2024 Annual Report:
business model page 7; environment matters
pages 35 to 37; climate-related financial
disclosures pages 38 to 46; social matters pages
31 to 33; employees pages 29 to 33; human
rights page 34; anti-corruption and anti-bribery
page 34; principal risks pages 53 to 56.
Our continuing progress
on ESG matters is
recognised externally,
with a rating of “AA” in
the latest MSCI ESG
Ratings assessment.
28
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
TT Electronics is truly a people business. The passion,
expertise and values of our people drive our success,
and our most critical job is to value them and support
them to achieve great things for our business, our
customers and the communities we serve.
Our culture and values
Our TT culture gives us a true competitive advantage
and makes us a great company to work for and with.
Walk onto any of our sites – regardless of location,
product or market focus – and you will meet open and
caring people, proud of what they do, and who work
together to bring out the best in each other. We are
incredibly proud of the work we have done over the last
few years to build this culture through our focus on
safety, pay and benefits, recognition, community
and leadership.
It is this culture that has enabled us to respond to the
challenges we have faced this year. Our market and
performance challenges have impacted each one of
our businesses differently. Where we had to, we took
the difficult decision to make over 500 of our
employees redundant, predominantly in our North
American operations. Carrying out these changes with
care and dignity is core to our culture and many exiting
employees have said openly that they would work for
us again in the future. Many of our sites in Europe and
Asia have continued to improve their performance and
we are proud of the way that all teams have adopted a
One TT mindset in facing our challenges as a group.
Following our 3*** Best Company engagement rating
for the Group as a whole in 2023, in 2024 we continued
to pulse survey our employees and work hard on the
tangible things they value. It’s a testament to the
strength of our culture and approach to engagement
that some of our sites most impacted by market and
performance issues have retained excellent employee
survey ratings through this period. Examples of this
include our Mexican facilities retaining their 3* and 2*
ratings. Businesses with high employee engagement
ratings in Europe and Asia, for example Fairford,
Manchester, Suzhou and Kuantan, continue to go from
strength to strength in performance.
Our experience shows that where TT leaders focus on
creating and nurturing a culture in which employees
thrive, our businesses rise to the challenge. Being a
great company to work for enables us to attract and
retain talented people, grow productivity, build strong
partnerships with our customers and, ultimately,
deliver our business goals.
TT’s culture is overseen and supported by the Board.
While some aspects, such as ethics and safety, are
aligned and reinforced by policy, others are governed
by frameworks originated at the centre which
empower our sites to work appropriately in their
jurisdictions and according to local needs and norms.
The TT Way connects us all and guides how we work
with each other and our stakeholders every day. They
are supported by our focus on leadership, knowledge
and performance to drive progress, innovation and
service as well as build respectful, happy and
supportive work environments.
Up to and including 2024, we have evaluated our
culture and employee engagement every two years
through our Employee Engagement Survey using Best
Companies Ltd methodology and metrics, and used
pulse surveys for the latest feedback and an indication
of progress. Results from these surveys drive HR and
local planning in the form of targeted action plans
created by site management teams in response to
their results. Each manager receives a personal
engagement score relating to their team, and we
use these results, and the wider engagement results,
when considering management discretionary incentive
payments.
During 2025, we will start the transition towards a new
employee survey methodology to provide a greater
level of insight and focus on the actions of managers
at all levels and how this affects the work culture and
employee experience. Giving managers the tools and
skills to engage, inspire and develop employees will
deepen and strengthen our ability to unlock business
performance through our people.
OUR TT WAY VALUES
We do the
right thing
We bring out
the best in
each other
We achieve
more together
We champion
expertise
We get the job
done… well
Read more about
Board oversight of
culture
on page 67
EMPLOYEE ENGAGEMENT
SURVEY RATING (2023)
3***
“Our TT culture gives us a true
competitive advantage and makes us
a great company to work for and with.
Walk onto any of our sites – regardless
of location, product or market focus –
and you will meet open and caring
people, proud of what they do, and who
work together to bring out the best in
each other.
2024 has been a year of change for our
company. In early 2024, we made a
fundamental change to how we work,
moving to a functionally led regional
model, which has unlocked huge
value in both efficiency and future
opportunity. In response to our market
and production challenges, we also
took the difficult decision to make over
500 of our employees redundant,
predominantly in our North American
operations. Our foundational values of
engagement, integrity and community
have sustained us through this period
and will support our recovery in 2025.”
Clare Nicholls
EVP Human Resources
PEOPLE AND CULTURE
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
29
OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
We communicate frequently and openly with
employees using a range of methods.
At Group level, our intranet, ConnecTT, enables
employees to communicate with each other
and easily find and share resources and news
in their local language. We regularly publish
news items celebrating business and personal
successes as well as reporting on events
across the Group. ConnecTT also hosts
employee communities for skill specialisms,
equality, diversity & inclusion progress, and
personal interests.
Regular communication is critical to the success of our
sites. Activities include regular all-hands meetings,
daily stand-ups to drive productivity and team
meetings. As part of our HSE improvements this year,
sites are required to conduct daily safety walks, which
also further facilitates communication and feedback.
Several of our sites have established employee forums
to ensure robust two-way communication and
feedback. Our CEO, Peter France, has made it a priority
to regularly visit and talk directly with employees at
each of our sites.
Social and fundraising events are also a big part of
our culture, helping to create strong personal and
social bonds both within our sites and with our local
communities. Members of the senior leadership team
regularly visit, giving Town Halls, walking the floor,
and recognising outstanding performance and
improvement. Members of our Board also take the
time to visit sites, with the Board group visiting
Manchester and Suzhou in 2024.
Employee voice at the Board
It is important that the employee voice is heard at the
highest levels of the organisation. The results of our
engagement surveys are reviewed by the Board. In
previous years, this information was discussed at a
specific Board subcommittee (the People, Social,
Environment and Ethics Committee) with a single
designated NED.
In 2024, we changed our approach in two ways. Firstly,
we established the People, Social, ED&I Committee
(“PSED&I”) at TT-level, with representatives from our
five key geographies, which works to set standards
and policy in the areas of engagement, wellbeing,
community and ED&I. During 2025, this Committee will
roll out a set of minimum standards in these areas for
all sites to follow, in addition to sponsoring specific
initiatives to drive these topics forward. Secondly,
Board members undertook employee engagement
sessions for the first time at our Suzhou and
Manchester sites, with a cross section of employees,
independently of TT management. The sessions
enabled our Board members to hear the employee
voice directly, and for employees to ask questions and
talk about topics important to them. This activity was
hugely valuable to both our Board members and the
employees who attended, and we will continue this
approach into 2025 and expand this approach to all
senior leaders.
For the purposes of the UK Corporate Governance
Code, all Board members participate in these sessions
on a rolling basis and regular updates on progress in
employee engagement is shared with the Board
through reports and physical meetings.
LOCATIONS VISITED BY
BOARD IN 2024
2
EMPLOYEE ENGAGEMENT AND COMMUNICATION
BOARD
EMPLOYEES
Leadership meetings/
conference/business reviews
Site Town
Halls,
including
Q&A
People,
Social, ED&I
Committee
(PSED&I)
Personal
objectives
and
business
targets
Employee
engagement
per site
Corporate Social
Responsibility Committee
ConnecTT intranet
Ask Peter/the Board
NED/Board site visits and employee voice sessions
Whistle-blowing hotline
Engagement survey
30
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OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
Health, Safety and Environment (“HSE”) are
fundamental company values at TT.
Our HSE framework and tools are specifically designed
to ensure compliance while fostering the identification
and implementation of best practices. Site HSE
professionals report to their respective General
Managers, with a dotted line to our Global Director of
HSE. The Global Director leads progressive HSE
programmes and provides support across the
business, ensuring a consistent and proactive
approach to HSE management.
In 2024 we took further steps to enhance our safety
KPIs by expanding our tracking to include not only
cases involving lost time but also incidents requiring
medical treatment and those where first aid was given.
This shift allows for a more comprehensive approach
to safety management by enabling us to monitor a
broader spectrum of incidents.
Additionally, we conducted a deeper review of root
causes to ensure that we not only understand the
underlying factors contributing to injuries, but also
implement sustainable corrective actions aimed at
preventing recurrence. This focus on root cause
analysis ensures that our safety efforts are both
effective and forward-looking, supporting long-term
injury reduction and safer work environments.
Safety performance remains a key Group KPI. Over
the past year, we have placed strong emphasis on
increasing proactive hazard observations, leading to
a significant improvement in safety reporting. This
initiative resulted in an 80% increase in reported
hazards vs 2023, an 18% reduction in injuries requiring
medical treatment or resulting in lost time, and a 22%
reduction in injuries requiring first aid. These positive
outcomes highlight our continued commitment to
enhancing safety awareness and fostering a proactive
safety culture across the organisation. We’ve
strengthened our reporting, made progress vs 2023
and now outperform the industry average.
A Health, Safety, Security, Environmental and
Quality (“HSSEQ”) Committee has also been
established, comprising key operational leaders. The
Committee will lay the foundation for global alignment
and collaboration, ensuring a unified approach to risk
reduction and compliance, and drive the rollout of a
standardised approach to managing health, safety,
security, environmental and quality practices across all
TT Electronics locations.
HSE compliance
In 2024 we also introduced an HSSEQ functional
group through which we reviewed our approach to
compliance by compiling a comprehensive list of all
accreditations held by sites across the organisation.
And, over the course of the year, we hosted more than
50 external accreditation and compliance audits.
In 2025, a key focus will be ensuring that improvement
actions are “horizontally deployed” across the
organisation to ensure that corrective measures are
effectively implemented throughout the business. We
are also working towards standardising our approach
to managing non-conformances identified during
audits, with clear timeframes for closure.
As part of this process, audit management will be
integrated into Q-Pulse, our electronic quality
management system, which will enhance visibility,
standardise workflows, and provide clear escalation
paths when necessary. Additionally, the introduction
and standardisation of investigation stages will ensure
that robust containment, root cause analysis,
corrective and preventative actions are consistently
implemented across the business for effective
management of non-conformances.
Health and wellbeing
Supporting our employees to take care of their health
is also important to us. It is the right thing to do, and it
supports business needs by ensuring that our teams
are fit and well to be at work and feel supported to give
their best.
We see a strong crossover between all types of health
– physical, mental and financial health – and we take
opportunities to raise awareness and make
conversations on these matters normal and expected,
as well as giving employees access to resources and
things they need such as medical assessments.
In the US we continue to drive preventative healthcare,
working with the providers of our healthcare schemes.
This has included rolling out zero copay on maintenance
drugs to support proactive health management; a
communication campaign to ensure employees are
aware of, and can access, the tools and support they
need; and onsite provision of healthcare such as mini
medicals, biometric screening and mammograms.
During 2024 75% of scheme members completed a
medical and 22% engaged in a wellbeing programme.
We also have an Employee Assistance Programme
(“EAP”) available to all employees through which our
people can seek help from a third party organisation.
2024
2023
Industry
average
Total recordable incident rate (“RIR”)
0.31
0.38
1.2
First aid incident rate
2.76
3.54
Proactive observations
12,226
6,763
Near misses
268
291
PROACTIVE HAZARD
OBSERVATIONS IN 2024
12,226
up 80% vs 2023
SAFETY RIR
0.31
down 18% vs 2023, well
below industry average
of 1.2
SAFETY, HEALTH AND WELLBEING
2024
2023
0.38
0.31
RECORDABLE INCIDENT RATE
2024: 0.31
(2023: 0.38)
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31
OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
DEVELOPMENT AND CAREERS
Investing in the training and development of our
people is key to helping them to work efficiently,
grow our business, and pioneer new ways of
doing things.
Two specific areas of focus are key to our future
success. We have commenced a process to establish
common organisational roles, competencies and skills
across our major functional groups – for example
engineering – driven by our functional operating
model. Secondly, we believe that our managers, at all
levels, hold the keys to unlock the potential in our
people – and therefore development and assessment
of line management at all levels of our organisation will
be our focus going into 2025 and beyond.
Following the continued success of our first line
leadership “bite size” development programme, in
which first line leaders from across the UK and US
were brought together for two days of training, our
focus in 2025 will be on upskilling our middle
managers and continuing to foster networking for
these groups.
For the wider workforce, we have improved our
processes, systems and support to enable line
managers to develop and improve the performance of
their people going into 2025. We take pride in the fact
that anyone, at any level, will always be given the
opportunity, encouragement and support to progress
if they wish to. Our line managers hold regular career
conversations with their direct reports and create
personal performance development plans that align
with wider site, region, function and Group objectives.
We assess performance both on what is done and
how it is done – i.e. in line with our TT values.
Our summer internship programme for our US sites
has gone from strength to strength this year, with 13
interns completing a 10-week programme of on-the-
job training, mentoring and support. Of the interns
from our 2023 cohort, a third have chosen to join us on
a permanent basis following the end of their education.
A number of our UK sites also invest in apprentice and
graduate roles, and expanding this programme is a key
area of focus for 2025. Several of our sites draw on
regional and national funding to help existing
employees train for new roles in the business.
Our strategy moving into 2025 and beyond is to
invest in developing a truly robust talent pipeline for
leadership and key skills across the business. This will
involve a renewed focus on early careers talent, the
development of functional competence frameworks
and development, and implementing standard
organisational roles to enable both upwards and lateral
career development.
REWARD AND RECOGNITION
Being fairly rewarded and recognised for your
contributions is an important part of our culture.
Reward
We ensure we pay fairly and equally for like-for-like
roles within each labour market. Over recent years, we
have worked to improve pay and earnings potential for
our direct labour employees through significant
investment in hourly rates and via frameworks and
training which allow employees to earn more as they
grow their skills. In 2024, we were able to match or
exceed the Real Living Wage for our UK employees in
semi-skilled operator roles, representing a significant
investment in the community. We aspire to maintain
this approach subject to affordability.
Our approach to flexible working makes it possible to
balance work and personal commitments so that
employees can take care of all the things that matter.
The majority of our office staff have the opportunity to
work on a hybrid basis. Our parental leave policy allows
men and women to share responsibility and time at
home with new additions to the family.
Over and above salary all employees are able to
participate in site-specific pay-for-performance
schemes, be it our site incentive schemes, or annual
incentive schemes, and we operate attractive all-
employee share plans for UK and US employees.
In line with Corporate Code Provision 41 we have
undertaken reward workforce sessions which cover
our reward principles, the role of the Remuneration
Committee and how we achieve alignment of
remuneration.
Recognition
Our BE Inspired recognition scheme is extremely
popular with employees as an opportunity to recognise
teams and individuals who demonstrate our TT Way
values and have a positive impact on the business.
Winners receive a sum of money and are celebrated at
their site. In 2024, we reviewed and revised the
programme for relaunch in early 2025, including a
greater focus on peer-to-peer recognition, an online
nominations portal, and enhanced award payments for
some geographies.
INTERNS CHOOSING TO
JOIN TT PERMANENTLY
29%
32
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OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
COMMUNITIES
We encourage our teams to take an active role
in their local communities, whether fundraising
and volunteering for chosen charities or
committing time and resources to promoting
STEM education and careers.
STEM skills
Our teams of engineering, technology and
manufacturing experts are passionate advocates
for the development of STEM skills and engaging with
the next generation of potential talent. We are
particularly keen to encourage more women and
under-represented groups to take up STEM subjects
and careers.
Many of our employees give up their time to develop
local STEM partnerships to promote careers in
electronics and related fields, undertaking talks,
demonstrations and attending careers fairs to interest
and educate young people in the sector. Across the
world we also aid school curriculums directly by
supporting science projects and engineering
competitions to highlight the importance of STEM
subjects in everyday life.
Volunteering and charitable giving
TT has a big fundraising and volunteering culture – our
efforts bring our employee teams together as well as
benefiting our communities. Each site chooses a local
charity to support through the year and our “hours for
giving” programme enables employees to take five
hours of paid leave per year to support local causes.
In 2024 1,250 hours were taken under the programme.
Our teams support many other local and national
causes and are able to request matched funding from
TT through the “giving the TT Way” programme.
EQUALITY, DIVERSITY AND INCLUSION
We see equality, diversity and inclusion (“ED&I”)
as a fundamental cornerstone in ensuring we
can attract, develop and retain the talent we
need to achieve our ambitions as a company.
The need for equality and fairness at work is a given.
All employees and potential employees must be
treated fairly and have equal access to opportunities in
a workplace that is tolerant, respectful and ensures
dignity for all. As set out in our employment policies, no
employee, applicant, contractor or temporary worker
should be treated less favourably or victimised or
harassed on the grounds of disability, sex, marital or
civil partnership status, race, nationality, colour,
ethnicity, religion or similar philosophical belief, sexual
orientation, gender identity, age or any distinction other
than merit.
An inclusive culture is an essential building block for
everyone in our company to thrive, and this has been
a key focus for leadership over the past few years. Site
employees and leaders have driven this agenda with
passion and creativity – celebrating the diversity
inherent in their cultures and communities, creating
psychologically safe environments to discuss such
topics, and providing training and support to all
employees to build awareness.
Efforts to grow the diversity of our workforce have
continued this year, especially regarding gender
diversity. Our highly successful Northern Women
ConnecTT event in 2023 evolved into a UK-wide event
for 2024, with 60 women from all businesses and
levels of role brought together for an overnight
networking and development event in May. Diversity
is also essential in our early careers pipeline.
Our ED&I policy explains our approach to equality,
diversity and inclusion including such matters as
harassment, victimisation and bullying, recruitment
and promotion, religious accommodations, gender
confirmation and workplace adjustments; the
expected standards for employees and their
responsibilities; and how we will deal with
infringements of the policy. In October 2024, we
evolved our UK policy to recognise the change in
employer responsibilities to proactively prevent sexual
harassment in the workplace. Senior leaders have
been trained in their responsibilities and further
ongoing training and awareness activities are planned
for 2025.
Gender diversity
We are pleased to have three women Board members
and a female member of our Management Board
(“TMB”) which replaced the Executive Leadership
Team (“ELT”) on 1 March 2024. In addition, we
appointed two female site general managers during
2024, one externally and one through internal promotion.
In total, we have more women employees than men.
Our UK Gender Pay Gap report is published annually on
the TT website. Our gender diversity disclosure, as
required by UK listing rules is provided below.
VOLUNTEER HOURS
RECORDED IN OUR HOURS
FOR GIVING PROGRAMME
1,250
See our Board
diversity disclosure
on page 74
GENDER DIVERSITY
AT 31 DECEMBER 2024
Employees – full-time equivalents
Men
Women
Non-executive Directors
2
3
TT Management Board (“TMB”)
5
1
TMB and direct reports
18
17
Senior managers (ex-TMB)1
44
21
All employees:
Europe
626
329
North America
675
714
Asia
445
1,040
Head Office
42
30
Total
1,788
2,113
1 Senior managers (ex-TMB) includes TT’s regional and functional
senior leaders and Directors of subsidiary companies.
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33
OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
We are an ethical company, acting worldwide
with integrity and within the law.
The fundamental principles of fairness, honesty
and common sense are at the heart of our
philosophy and corporate standards. We have
one ethical standard worldwide to create an
environment where TT businesses can flourish
within an appropriate compliance and risk
management framework in line with our TT
Way values.
Our Statement of Values and Business Ethics Code
sets out these standards and covers a comprehensive
range of ethical matters including the working
environment, standards of behaviour, avoiding conflicts
of interest, hospitality and entertainment, bribery,
intellectual property protection and fair competition.
We do not tolerate fraud, corrupt practices or
behaviour not in line with our standards and have in
place systems and processes to effectively detect and
deal with any contraventions of our code.
Any concerns relating to matters covered by the
code and behaviour more generally can be reported,
either to management, or by using our anonymous
whistle-blower hotline by telephone or through our
ethics and integrity portal. Reports are investigated
thoroughly, and any significant concerns are reported
to the Audit Committee. Our Whistle-blowing Policy
describes how employees should raise matters of
concern, our approach to dealing with concerns, and
examples of the types of issue employees should bring
to our attention.
Day-to-day oversight of ethical matters is the
responsibility of our Governance and Risk Committee.
An Ethics Committee of our senior leaders can also be
convened on an as-needed basis. Mandatory ethics
training covering TT’s code of ethics, anti-bribery and
corruption practices and policies, cybersecurity and
data protection is provided for relevant employees on
an annual basis.
Regulatory requirements are different around the
world, so we have a core structure which Group
businesses comply with, beyond which they are
empowered to tailor their approach to local needs.
The nature of our business and the markets we work
in means that legal and regulatory compliance is a
principal risk for TT.
Human rights
Upholding human rights is the responsibility of
everyone at TT and, as part of our ethics framework,
human rights are treated as an equal priority to other
business issues. We are committed to upholding
human rights of workers (at all points in our supply
chains) and to treating them with dignity and respect.
Supply chain
We procure from a wide network of suppliers and
distributors through global supply chains. It is
important to us that our suppliers share our values
and our approach, and we seek out those that do.
Our Corporate and Social Responsibilities – Supplier
Requirements Policy sets out our required standard
with regard to supplier social and environmental
practices. The policy is provided to all suppliers with
purchase orders. We carry out regular assessments
of our suppliers to ensure compliance with our
requirements and we will not do business with
suppliers that violate them.
Our Procurement Code of Conduct outlines the
standards expected for the purchase of goods and
services across the Group. This code focuses on the
approval process required for the appointment of
new suppliers, together with our ongoing supplier
monitoring process which includes the application
of a digital supplier risk rating tool.
Our Supply Chain Council forum meets on a monthly
basis and comprises a senior group of executives with
responsibility for global purchasing and supply chain
activities across TT. The Council considers ethical
matters including modern slavery as part of its remit.
Modern slavery
We have a zero-tolerance approach to modern
slavery – whether in the form of servitude; forced,
bonded or indentured labour; slavery; child labour;
human trafficking or any other activity that amounts
to an unreasonable restriction on the free movement
of workers.
We recognise that the rights of individual workers can,
potentially, be violated within our supply chain and
other partnerships. We have had a Modern Slavery
Policy since 2016 which applies to all persons working
for TT and its subsidiaries or acting on its behalf in any
capacity. The Policy is reviewed each year.
Our approach to addressing the challenge of modern
slavery is to ensure that there is transparency in our
own business and throughout our supply chains.
We expect the same high standards from all our
contractors, suppliers, distributors and other business
partners, consistent with our obligations under the
Modern Slavery Act 2015. We include specific
prohibitions in our contracting processes against the
use of forced, compulsory or trafficked labour, or any
other activity that amounts to an unreasonable
restriction on the free movement of workers, and we
expect that our suppliers will hold their own suppliers
to the same high standards.
Our Modern Slavery Statement and our Modern
Slavery Policy are published on our website.
ETHICS
Upholding human rights
is the responsibility of
everyone at TT and, as
part of our ethics
framework, human
rights are treated as an
equal priority to other
business issues.
Read more about
our employee
engagement survey
on page 29
34
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TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
Sustainability
This year has seen TT make further good progress on
our sustainability strategy and deliver further, tangible
results in our transition to achieve Net Zero. Our
Purpose is to engineer and manufacture electronics
solutions enabling a safer, healthier and more
sustainable world, and we are ever mindful to manage
and reduce the impact of our own operations on the
environment.
First and foremost, in our day-to-day actions is a
constant drive to reduce TT’s Scope 1 & 2 emissions
and we have continued to deliver meaningful results in
2024. Application of our Group-wide Energy Strategy
and the work of highly motivated teams at our sites
has seen us deliver further reductions in energy
consumption, steadily increase the share of our
electricity coming from renewables and increase
our own renewable electricity generation. Each site
has its own energy saving projects which include
energy-efficient lighting and controls, furnace use
optimisation, reducing out of hours energy use and
upgrading facilities.
As a result of these efforts, we have seen another
excellent year of performance, with Scope 1 & 2
emissions falling 29% year-on-year and 73% from our
2019 baseline. Adjusting for the impact of the Project
Albert divestment in 2024, Scope 1 & 2 emissions were
down 23% year-on-year. Such is the progress we have
made that in April we committed to a new target of
Net Zero Scope 1 & 2 by 2030, five years ahead of our
previous target. We are also mindful of our impact on
the environment relating to external factors, including
our supply chain, and this year we have made further
progress on our measurement and publication of TT’s
Scope 3 emissions. We will continue to improve data
collection in this area, but have made progress in 2024
on our ability to accurately size and analyse TT’s
material Scope 3 emissions. A more comprehensive
dataset is reflected in some of our Scope 3 categories
showing year-over-year increases.
In addition to our work on CO2 emissions we are also
committed to reducing our impact on the environment
from our use of precious resources such as water, use
of single-use plastics and the waste we send to landfill.
Again, we continue to improve the capture of data in
these areas and are committed to eliminating single-
use plastics and waste to landfill by 2035.
We note recent guidance on transition planning, and
we state our intention to publish a Transition Plan in
the future. In 2024 we formally committed to Science-
Based Targets and this has been acknowledged by
the Science-Based Targets initiative (“SBTi”); we will
submit our plan for approval within the required
time scale.
We continue to be consistent with ten of the eleven
disclosures in our Task Force on Climate-related
Financial Disclosures (“TCFD”) statement following the
work undertaken in 2023 which assessed our climate-
related risks and opportunities, including a range of
relevant scenarios. Our work is ongoing to deliver a
quantitative assessment of the impact of climate-
related risks and opportunities. See page 38 for our
TCFD disclosure. See page 39 for Board oversight of
environment and climate matters.
In 2024 we have made further progress on our Net
Zero journey and for our successful transition towards
a future low-carbon economy.
Scope 1 & 2 emissions
We have taken a further step forward this year by
delivering a 29% reduction versus 2023, taking us to a
73% reduction versus our 2019 baseline. In 2024 two
new major solar photovoltaic installations came on
stream in Mexicali, Mexico and Suzhou. Together
these two installations will generate around 1.4 GWHrs
of renewable electricity per annum. Given this
progress, we have now committed to achieve our
target of Net Zero Scope 1 & 2 emissions by 2030, five
years earlier than our previous target of 2035.
The main drivers to achieve this target are further
switch of purchasing to renewable electricity; utilisation
of self-generated renewable electricity from solar panel
installation at suitable locations; moving production to
modern energy-efficient facilities; and further
improvements in the energy efficiency of our sites.
ACTUAL REDUCTION VS
2019 BASELINE
73%
OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
Application of our Group-wide Energy
Strategy and the work of our highly
motivated site teams has seen us
deliver further reductions in energy
consumption, steadily increase the
share of our electricity coming from
renewables and take benefits from our
own renewable electricity generation.”
Peter France
CEO
ENVIRONMENT
RENEWABLE ELECTRICITY
AS A % OF TOTAL
ELECTRICITY CONSUMED
62%
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35
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2019
Scope 2
Scope 1
Total
30,000
25,000
20,000
15,000
10,000
5,000
0
OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
Scope 3 emissions
In 2024 our focus has been on improving methods of
collecting and qualifying our data following an
assessment and preliminary measurement of our
most material Scope 3 emissions which was
completed in 2023. For Category 1 – Purchased
Goods and Services, which is our most material, we
have surveyed double the number of our major
suppliers in 2024 and had a higher response rate with a
higher inclusion of emissions data, which we have
used to calculate emissions factors. We are committed
to reporting, managing and eliminating all categories of
emissions from our value chain where possible, while
maintaining the immediate priority on eliminating
emissions from our own operations. The reported
emissions are calculated directly, where possible, with
data gaps covered by proxy data, extrapolation, and
use of sampling as appropriate.
Waste, water and energy
As well as managing and progressing to eliminate our
CO2 emissions, we are also committed to measuring
and eliminating, or at least reducing, the amount of
electricity we use from non-renewable sources, waste
sent to landfill, and single-use plastics used at TT. We
continue to improve our data gathering ability in the
latter two areas and we have a target of zero waste to
landfill and single-use plastics by 2035. We also track
our water consumption and are committed to
minimising water use.
OUR SCOPE 1 & 2 NET ZERO ROADMAP
In 2024 we have formally committed to Science-Based Targets, and we committed to being Net Zero Scope 1 & 2
emissions by 2030, five years ahead of our previous target.
ENVIRONMENT CONTINUED
Net Zero roadmap: Scope 1 & 2 (tCO2e)
Renewable: Tariff or REC
Renewable: Power purchase agreement (“PPA”)
Renewable: TT solar or wind
Energy use reduction
Factory utilisation
Replacement of natural gas
Electric vehicles
Action to Net Zero Scope 1 & 2
Scope 3 categories
Category 1: Purchased
goods and services
We have a process to
measure our emissions
using a combination of
direct input from our
suppliers and estimates
where necessary.
Category 4: Upstream
transportation
and distribution
We have partnered with
our logistics providers
to gain access to
emissions data.
Category 5: Waste
generated in
operations
We have constructed a
robust system to
measure and report all
of our waste streams at
our facilities.
Category 6: Business
travel
We have partnered with
our centralised travel
providers to gain access
to emissions data.
Category 7: Employee
commuting
We have calculated
these emissions
centrally taking into
consideration employee
data supplied by all
locations.
Category 9:
Downstream
transportation
and distribution
Included in Category 4.
SWITCHING TO RENEWABLE ELECTRICITY
Renewables as a % of total electricity
consumed
2024
2023
2022
2021
2019
2020
45%
36%
0%
6%
53%
62%
36
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OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CONTINUED
EMISSIONS, WATER AND WASTE DATA
Change vs
previous year
Change vs
2019
baseline
2024
2023
2019
GHG emissions Scope 1 & 2 (tCO2e)
Scope 1 1
(17)%
(38)%
991
1,102
1,479
Scope 2 (location-based)
(7)%
(39)%
15,582
17,107
26,066
Scope 2 (market-based)
(30)%
(75)%
6,587
9,431
26,066
Scope 1 & 2 (location-based)
(8)%
(39)%
16,772
18,209
27,545
United Kingdom only
(32)%
(49)%
2,484
3,670
4,862
Scope 1 & 2 (market-based)
(29)%
(73)%
7,506
10,533
27,545
United Kingdom only
(17)%
(91)%
456
549
4,862
Intensity ratio Group (market-based tCO2e/£m revenue)
(14)%
(74)%
15
17
58
GHG emissions Scope 3 (tCO2e) 2
Category 1 – Purchased Goods & Services
18%
–
187,394
158,998
–
Category 4 – Upstream Transportation & Distribution
19%
–
4,310
5,329
–
Category 5 – Waste
31%
–
277
212
–
Category 6 – Business Travel
(33)%
–
1,264
1,883
–
Category 7 – Employee Commute
(17)%
–
3,478
4,202
–
Category 9 – Downstream Transportation & Distribution 3
NA
–
Included in
Category 4
Scope 3 Total
15%
–
196,723
170,624
–
Intensity ratio Group (tCO2e/£m revenue)
40%
–
388
278
–
Energy consumption (MWhs)
Electricity (non-renewable)
(28)%
(73)%
15,729
21,985
59,261
Electricity (renewable)
6%
–
25,883
24,435
–
Natural gas
(24)%
(29)%
2,971
3,912
4,185
Vehicle fuel
20%
(83)%
493
409
2,890
Total energy
(11)%
(32)%
45,076
50,741
66,336
United Kingdom only
(22)%
(43)%
11,782
15,182
20,509
Intensity ratio Group (Total energy/£m revenue)
8%
(36)%
89
83
139
Water and Waste
Total waste (tonnes)
(2)%
–
1,381
1,406
–
Waste to landfill (tonnes) 4
29%
–
539
417
–
Single-use plastics (tonnes) 5
48%
–
63
43
–
Intensity ratio Group (Total waste/£m revenue)
19%
–
3
2
–
Water use (m3)
(10)%
–
126,785
140,175
–
Intensity ratio Group (Water use/£m revenue)
10%
–
250
228
–
1 Entries for Scope 1 include emissions related to fugitive GHG release, where
data is available. The level of emissions is not material but this is being
included to improve inventory completeness.
2 Categories 3, 8, 10, 11, 12, 13, 14 and 15 are not included as they are not
relevant to the Group business model. Category 2 (Capital Goods) is included
in Category 1 (Purchased Goods & Services).
3 Downstream transportation (services paid for by ourselves) is included in
Category 4 (Upstream Transportation & Distribution) per GHG Protocol
guidance. The remaining Downstream Transportation & Distribution (not paid
for by ourselves) cannot currently be measured and we are assessing the
viability of measuring this in the future.
4 Excluding diverted from landfill (typically incineration).
5 Single-use plastics utilised for packaging. TT does not have any widespread
or significant single-use plastics consumption, other than for packaging.
Data
Our results are calculated centrally from data collected
locally. For 2024 we have applied a consistent
methodology with the prior year to enable us to better
understand the reported movements. We use the
market-based method for emissions calculations and,
in line with GHG Protocol guidelines, we use the
following information in this order of priority: energy
attribute certificates; contracts; supplier emission
rates; residual mix or grid average emission factors.
We are using an operational control boundary for direct
GHG emissions. We have adopted a cross-sector
calculation method in line with the GHG Protocol
Corporate Standard. For Scope 1 emissions, we
include our total owned and leased vehicle direct
emission impact. Emissions factors, for conversion of
activity or energy consumption into emitted CO2e, are
taken from widely used sources, often governmental.
The emissions factors used in this report are the most
recent available at time of publication.
ENVIRONMENT CONTINUED
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37
TT Electronics solves technology challenges
for a sustainable world. We do this by delivering
solutions for our customers that enable
products that are cleaner, smarter and healthier,
and that will benefit our planet and people for
future generations.
As a global manufacturer of electronic components
and provider of manufacturing services, we
understand the importance of analysing the current
and future potential impacts of climate change on our
activities and the urgent need to protect the
environment for future generations given the severity
of the climate crisis. A more comprehensive analysis of
our climate-related risks and opportunities, taking into
consideration their impact under different timeframes
and scenarios was undertaken in 2023. We support
the transition to a low-carbon economy through our
products and through our operations via our
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”)
commitment to becoming a Net Zero emissions
business on a Scope 1 & 2 basis by 2030.
The Board has noted the requirement for mandatory
climate-related disclosures arising from the
Companies (Strategic Report) (Climate-related
Financial Disclosure) Regulations 2022, as well as
FCA Listing Rule 9.8.6R(8). Below we have set out our
climate-related financial disclosures which
demonstrate consistency with ten of the eleven
TCFD recommended disclosures as detailed in
“Recommendations of the Task Force on Climate-
related Financial Disclosures”, 2017, with use of
additional guidance from “Implementing the
Recommendations of the Task Force on Climate-
Related Financial Disclosures”, 2021. The disclosure
that we are not consistent with is Strategy (b) where
we have provided qualitative but not fully quantitative
analysis of our physical risks and transition risks and
opportunities. TT Electronics will look to refine the
financial impact analysis, relevant to Strategy (b)
and Physical Risk, with a view to updating the
disclosures when the analysis is complete. The
climate-related financial disclosures made by
the Group comply with the requirements of the
Companies Act 2006 as amended by the Companies
(Strategic Report) (Climate-related Financial
Disclosure) Regulations 2022.
In 2024 we have performed an internal review of the
Group’s climate-related risks and opportunities,
building upon the work performed in the prior year,
which is detailed in the Strategy section of this
TCFD disclosure (see page 40). Our view remains that
significant financial planning or budgetary change as a
result of climate change is not likely to be required and
the transition to Net Zero is taken into account in the
Group’s strategic planning.
Detail on the 11 recommended disclosures can be
found on the pages highlighted below.
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”)
TCFD RECOMMENDATION
RECOMMENDED DISCLOSURE
ANNUAL REPORT
REFERENCE
GOVERNANCE
Disclose the organisation’s governance around
climate-related risks and opportunities.
a. Describe the Board’s oversight of climate-related risks and opportunities.
Page 39
b. Describe management’s role in assessing and managing climate-related risks and opportunities.
Page 39
STRATEGY
Disclose the actual and potential impacts of
climate-related risks and opportunities on the
organisation’s businesses, strategy and financial
planning where such information is material.
a. Describe the climate-related risks and opportunities the organisation has identified over the short, medium
and long term.
Page 40
b. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning.
Page 41
c. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario.
Page 41
RISK MANAGEMENT
Disclose how the organisation identifies, assesses
and manages climate-related risks.
a. Describe the organisation’s processes for identifying and assessing climate-related risks.
Page 40
b. Describe the organisation’s processes for managing climate-related risks.
Page 41
c. Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s
overall risk management.
Page 40
METRICS AND TARGETS
Disclose the metrics and targets used to assess
and manage relevant climate-related risks and
opportunities where such information is material.
a. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk
management process.
Page 46
b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (“GHG”) emissions, and the related risks.
Page 36
c. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against
targets.
Page 46
“We understand the
importance of analysing
the current and future
potential impacts of
climate change on our
activities and the urgent
need to protect the
environment for future
generations given
the severity of the
climate crisis.”
Peter France
CEO
38
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TCFD CONTINUED
BOARD OVERSIGHT OF CLIMATE-RELATED
RISKS AND OPPORTUNITIES
At TT, the Board of Directors oversees all ESG matters,
including climate-related issues, across Group culture,
strategy, compliance, risk and internal controls as part
of our overall governance, budgetary approval and risk
management frameworks. The Board receives regular
updates on the status of Group environmental issues
(including sustainability and climate-related risks and
opportunities). The Board also receives regular
updates on the progress made against targets and
ongoing action items in the form of a presentation and
supplementary written document.
An overview of risks and opportunities is provided
in addition to an update on the progress of current
projects related to strengthening the reporting
infrastructure for climate-related risks and
opportunities. A review by the Board of the Group’s
Net Zero planning and Sustainability Strategy is
undertaken at least annually.
The Board’s oversight and support for the acceleration
of the Group’s Net Zero targets has resulted in further
investment in renewables enabling the 2024
installation and activation of solar panels at our
Suzhou and Mexicali sites.
Audit and Risk Committees
The Board is also responsible for risk management,
supported by the Audit Committee and informed by
the executive Governance and Risk Committee, under
which there is a periodically scheduled meeting
focused on the climate risk register. The Board defines
risk appetite and monitors the management of
significant risks. Climate-related risks are included in
the Group risk register.
Corporate Social Responsibility (“CSR”) Committee
Beneath Board level, the CSR Committee provides
oversight of and decision-making on matters including
our environmental strategy and performance. The CEO
chairs the CSR Committee, which also includes the
members of the TT Management Board. The CEO
GOVERNANCE
reports directly to the Board following each CSR
Committee meeting, which occur four times per year.
The CSR Committee receives updates on the progress
of climate-related strategic initiatives and is advised
by our Group Head of Sustainability who provides
on-the-ground insight and specialist advice as well as
enabling the sharing of best practice and ideas across
the Group. The climate-related content of the CSR
Committee agenda is closely aligned with the Board
report, albeit being more detailed in analysis and more
strategically focused.
Reporting into the CSR Committee is the Sustainability
Committee chaired by the EVP Operations and with
the purpose to ensure that TT can meet the needs
of the present without compromising the ability of
future generations to meet their own needs. The
Sustainability Committee meets regularly to oversee
sustainability activities.
Management’s role in assessing and managing
climate-related risks and opportunities
At the direction of the Board, management are
assigned the responsibility to assess, monitor and
manage climate-related risks and opportunities.
We have put in place a process for our Executive team
to be fully engaged in the governance process and
monitor progress through monthly reports/dashboards
and more detailed quarterly reviews. We use our
existing structure to manage these processes.
Management receives information on emissions, and
details of any actions, strategic or financial planning
required to address climate-related issues. Executive
management are represented in the CSR Committee
and are also informed by the Group Head of
Sustainability.
Responsibility for local risk management, planning and
performance lies with our site managers who work
with our site environmental champions and employee
Green Teams to formulate and deliver projects and
engage employees with our local and global agendas.
Site managers are also responsible for the monitoring
and management of any physical climate-related
risk exposure.
Climate-related governance framework
Chair: Anne Thorburn.
Senior Independent
Director
Number of meetings
in 2024: 4
Supports the Board on
risk management.
Oversees risk
management and
internal control
processes.
Audit
Committee
Chair: Peter France,
CEO
Number of meetings
in 2024: 4
Supports the Board
and the Audit
Committee in
monitoring the
exposure to risks,
reviewing risk
management
processes and
controls. Provides the
framework for
managing Group risks
and regularly reviews
principal risks.
Governance and Risk
Committee
Number of meetings
in 2024: Scheduled
weekly
Responsible for
implementation of the
Group’s ESG strategy,
including climate
change risks and
opportunities.
TT Management
Board
Chair: Peter France,
CEO
Number of meetings
in 2024: 4
Oversees the Group’s
ongoing commitment
relating to
sustainability and
climate-related issues.
Corporate Social
Responsibility
Committee
Sustainability Committee
Reporting into the CSR Committee is the Sustainability Committee chaired by the EVP Operations and
with the purpose to ensure that TT can meet the needs of the present without compromising the ability
of future generations to meet their own needs. The Sustainability Committee meets regularly to
oversee sustainability activities.
Group Sustainability
Group Head of Sustainability updates the Board on risks and opportunities, the outcome of climate-
related scenario analysis exercises, action plans and/or amends business processes.
Board of Directors
Chair: Warren Tucker
Number of meetings in
2024: 8
Overall responsibility for climate-related policy, plans
and budget as well as mitigation of key climate-related
risks and leveraging opportunities.
Management
Help achieve goals, feed back areas for improvement, and update business continuity plans.
Responsible for data collection, reporting, risk assessment and mitigation at site level. Also, the
integration of climate strategy into local business plans.
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39
TCFD CONTINUED
OUR PROCESSES TO IDENTIFY, ASSESS
AND MONITOR CLIMATE-RELATED RISKS
Climate-related risks are fully integrated into and
considered as part of our overall Group risk
management processes. Our climate-related risk
assessment considers existing and emerging risks
and all risk categories outlined in the TCFD
recommendations in relation to all of TT’s global
operations, selected key suppliers and selected key
customer locations. Not all risk categories are
applicable or material to the business.
Climate-related risk identification is performed both
bottom-up, through a detailed assessment at
operational site level, as well as top-down, through
an assessment of strategic and market risks.
Site-level environmental risks are identified as part
of our operational risk assessments. The work
undertaken in 2023 enhanced our site-level
assessment of physical climate-related risks using a
natural hazards risk analysis software tool, which
provided greater depth to our analysis of all our global
operations (see below). We also extended this analysis
to some of our key suppliers and customers. Site-level
risk assessments are monitored and consolidated at
regional and then Group level. Alongside risk
identification and assessment, regions provide action
plans to incorporate a consideration for mitigation in
the analysis. This assessment of physical climate-
related risks was initially performed as a “one-off”
and going forward will be repeated at least once every
three years.
Climate-related transition risks are discussed in
periodic Climate Risk Meetings. We have “sustainability
and the environment” and ‘health and safety’ risks
on our Group risk register which are captured as a
principal risk in the Annual Report, see “sustainability,
climate change and the environment” on page 56. The
Group risk register is reviewed by the Governance and
Risk Committee and the Board.
CLIMATE-RELATED RISKS AND OPPORTUNITIES
Outlined in detail from page 41 are climate-related
physical risks, three headline climate-related transition
risk categories, and three headline climate-related
opportunity categories that have been identified as
having an impact on our business. The Group’s
strategic planning for Net Zero and our emissions
reduction initiatives form the basis of our mitigation
strategies for our risks and our positioning to benefit
from the opportunities.
For the purposes of this disclosure, TT defines time
horizons of where our climate-related risks and
opportunities first occur as follows:
Ongoing data and information relevant to climate-
related risks is supplied through regular Board reports
in the form of dashboards and written submissions.
As part of the risk management processes, the Board
regularly considers its risk appetite in terms of the
tolerance it is willing to accept in relation to each
principal risk based on key risk indicators to ensure it
continues to be aligned with the Group’s goals and
strategy. Each risk is considered as to whether it
currently falls within the Group’s appetite for that risk
and a decision is made on whether to mitigate, control
or accept that risk. As a result, the relative materiality
and the prioritisation of climate-related risks is
considered alongside other Group risks within the
existing Group risk management framework. In
addition to our disclosed climate-related risks and
opportunities, sustainability, climate change and the
environment is an identified principal risk of the Group.
RISK MANAGEMENT
STRATEGY
The relative materiality
and the prioritisation of
climate-related risks is
considered alongside
other Group risks within
the existing Group risk
management
framework.
SHORT-TERM
2025–2029
In line with specific business plan forecasting
MEDIUM-TERM
2030–2035
Encompassing the Group’s ambition to achieve and sustain Net Zero Scope 1 & 2
LONG-TERM
2036–2100
Encompassing long-term industry and policy trends, such as UK Net Zero 2050, the
useful life of our facilities and equipment (often >10 years and up to 50 years) and
the manifestation of long-term climate-related risks
40
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TCFD CONTINUED
Impact of climate-related risks and opportunities
on the organisation’s businesses, strategy and
financial planning
The analysis and quantification of our climate-related
risks indicates that the climate risk exposure of the
Group in the short term is mostly Very Low (see scale
below), rising to mostly Low in the medium term. Long
term, some climate-related risks rise to Medium and
High levels, but in that time horizon, the Group’s
operating profit can be expected to be larger and more
able to withstand those risks. The Group’s climate-
related opportunities are also expected to be mostly
Low in the short term. In the medium and long term
horizons the analysis indicates that climate-related
opportunities are potentially transformational for the
Group. The margin of error in long-term forecasting is
high and thus there is a high level of uncertainty in our
long-term impact calculations for both our risks and
opportunities.
The identification of risks has allowed us to factor in
certain specific risk management and mitigation
actions into our plans. The Group’s existing business
strategy, disclosure and ambition for Net Zero already
provide some financial resilience and strategic
robustness to climate change, but the analysis will also
help focus our product and service strategy towards
exploiting the opportunities identified.
Resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios,
including a 2°C or lower scenario
The transition to Net Zero is already incorporated into
the Group’s strategic planning and is considered
“business as usual” with respect to operational and
capital costs. There are no effects of climate-related
matters reflected in judgements and estimates applied
in the financial statements as a result. We will continue
to develop our analysis as new data becomes
available, both internally and externally, and we will
continue to monitor our climate exposures and action
plans through the Group’s risk management
framework.
Our approach to climate scenario analysis
We undertook a substantial qualitative and quantitative
analysis of the resilience of our business model and
strategy in 2023. Commonly referenced public climate
scenarios were used to provide comparisons across
potential climate outcomes. These were selected
because the outcomes, supporting data and forecasts
are appropriate for the nature of our business and our
operating environment. The outcome of this analysis is
a confirmation of the resilience of our strategy and that
significant financial planning or budgetary change as a
result of climate change is not likely to be required and
the transition to Net Zero is already incorporated into
the Group’s strategic planning.
Physical risks were analysed using three scenarios
from the Intergovernmental Panel on Climate Change
(“IPCC”) embedded in the software platform used to
analyse physical risks of climate change:
– RCP 2.6: a “very stringent” pathway, likely to keep
global temperature rise below 2°C by 2100.
– RCP 4.5: an intermediate more likely than not to result
in global temperature rise between 2°C and 3°C, by
2100.
– RCP 8.5: a bad-case scenario where global
temperatures rise between 4.1–4.8°C by 2100.
To understand their potential future impact, our
transition risks and opportunities are modelled out
to 2050 against two International Energy Agency’s
(“IEA”) scenarios. These were selected as they are
accompanied by supportive datasets, forecasts and
industry projections which are useful for modelling
climate positive outcomes:
– Net Zero Emissions by 2050 Scenario (“NZE”): a narrow
but achievable pathway for the global energy sector
to achieve Net Zero CO2 emissions by 2050. This
scenario meets the requirement for a “below 2°C”
scenario. NZE also informs the decarbonisation
pathways used by the SBTi.
– Stated Policies Scenario (“STEPS”): representing
projections based on the current policy landscape.
Global temperatures rise by around 2.5°C by 2100
from pre-industrial levels, with a 50% probability.
CLIMATE-RELATED PHYSICAL RISKS
With locations (including both offices and
manufacturing sites) across the world, TT maintains
a large and diverse geographical footprint. Work
completed in 2023 enhanced our physical risk
assessment, using geospatial risk modelling software
to analyse the Group’s exposure to natural hazards
and how these risks may change in the future under
various scenarios for global temperature rise by 2030,
2050 and 2100.
Physical climate-related risks incorporate changes to
the environment from the impact of climate change.
The assessment considers acute risks, defined by the
TCFD as the change in frequency and/or intensity of
extreme events, such as river flooding; and chronic
risks, defined as longer-term shifts in climate such as
rising mean temperatures, rising sea levels, changes in
precipitation and weather extremes. The primary
physical climate-related risks for TT are flood, storm
and fire weather stress.
All Group sites were assessed. Five of our current sites
(Suzhou, Kuantan, Dallas, Mexicali and Juarez) were
deemed more susceptible to climate-related risk and
the potential future risk for these sites, within the
timescales presented here, was classified as serious.
In 2023 Cardiff was included in this list, but this site
was divested during 2024 as part of Project Albert.
Our definition of “serious” in this case is a 100-year
return period meaning that there is a 1 per cent chance
(or 1 in 100 chance) of a significant weather event in a
given year. The nature of the potential climate-related
risk is detailed further in this section. Any other sites
with heightened risk exposure were deemed to be of
low impact to the Group’s ongoing business resilience.
The primary potential financial impact of climate-
related physical risks is business or production
disruption and/or asset damage leading to loss of
revenue, increased insurance premiums, reduced
asset value and reduced labour productivity. In
addition, climate-related physical risks may result
in disruption to local or regional infrastructure or
transportation, and thereby cause disruptions to our
upstream and downstream supply chains.
Five of our current sites
(Suzhou, Kuantan,
Dallas, Mexicali and
Juarez) are deemed
more susceptible to
climate-related risk.
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41
TCFD CONTINUED
We also conducted the same climate-related physical
risk assessment on nine of our key customers (mostly
distributors) and ten key suppliers.
On the back of the analysis, our site managers
provided feedback on individual sites’ historic exposure
to natural hazards and their impact, which to date has
been insignificant. Each individual site reviews and/or
amends business continuity plans and investigates the
requirement for mitigation. The following existing
features and mitigations have been identified:
– All TT sites are insured for both property and asset
damage as well as business interruption (i.e. loss of
profit), which materially limits the Group’s exposure
to any climate-related financial impact. Sites are
periodically visited by insurers, at their discretion, for
risk assessment, including climate-related risk.
– Affected assembly operations can be moved and/or
dual manufacturing strategies could be developed.
– Multiple sites operate on more than one floor for part
of their operations. They could be consolidated on
upper floors (partial manufacturing) with notice (c.
one year).
– At least one site is at a higher elevation than the
surrounding area.
STRATEGY CONTINUED
CLIMATE-RELATED TRANSITION RISKS
We continue to leverage the work performed in 2023
where we enhanced our transition risk assessment via
a more detailed analysis of our climate risk exposures
and the impact of scenarios. Climate-related
megatrends, which feature in our analysis, are
powerful, transformative forces that can change the
trajectory of the global economy by shifting the
priorities of societies, driving innovation and redefining
business models.
SHORT-TERM
2025–2029
In line with specific business plan forecasting
MEDIUM-TERM
2030–2035
Encompassing the Group’s ambition to achieve and sustain Net Zero Scope 1
& 2
LONG-TERM
2036–2050
Encompassing long-term industry and policy trends, such as UK Net Zero 2050
For more complex manufacturing facilities a timeline
for a factory move could be lengthy (in the region of
two to three years); however, these facilities could be
moved within the period implied by physical risks and
therefore a plant move is possible as a pre-emptive
mitigation action in the event that the physical risk
were to be considered unacceptable.
TT does not extensively use water-intensive production
processes, so drought risks are minor and relate to
employee wellbeing and services.
Climate risks and opportunities are assessed on the
timescale (below) and a five-point scale based on
gross impact on business performance.
All TT sites are insured
for both property and
asset damage as well
as business interruption
(i.e. loss of profit), which
materially limits the
Group’s exposure to
any climate-related
financial impact.
42
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TCFD CONTINUED
CLIMATE-RELATED TRANSITION RISKS
Materiality
Impact
Very low
Low
Moderate
High
Very high
RISK
RISK DESCRIPTION
RISK
TYPE
FINANCIAL
IMPACT
MITIGATION
AND RESPONSE
IMPACT
SCENARIO
IMPLICATIONS
SHORT
(2025
2029)
MEDIUM
(2030
2035)
LONG
(2036
2050)
Growing UK and
global regulations
on carbon
emissions and
increasing
reporting
requirements.
Operational exposure to carbon pricing mechanisms. The
adoption of carbon pricing instruments is rising globally, driving
the price levels of all carbon pricing systems and therefore
the overall risk exposure. UK requirements may exceed global
industry standards.
Current & Emerging
Regulation
Higher energy
costs or direct
carbon tax
related to Scope
1 & 2 emissions
Our target is to achieve Net Zero
Scope 1 & 2 emissions by 2030.
No change in exposure
between STEPS and
NZE scenarios, given
our projected emissions
profile
Value chain exposure to carbon pricing mechanisms. The
adoption of carbon pricing instruments is rising globally, driving
the price levels of all carbon pricing systems and therefore
the overall risk exposure. The impact is likely to be felt through
potential increases to the cost of raw materials and transport
costs as suppliers pass on the added costs to their customers.
Higher cost of
raw materials
and transport
should suppliers
pass on added
costs
Our ambition is to achieve Net Zero.
We are working to set near-term
targets for Scope 3.
No change in exposure
between STEPS and
NZE scenarios, given
our Scope 3 projected
emissions profile
UK listed companies reporting requirements. UK listed
companies reporting requirements become onerous. In addition,
the risk that UK legislation becomes onerous for specific
products and in the extreme drives them out of existence.
Potential loss of revenue and risk of insufficient internal resource
and data management for Group-level and product-level
compliance reporting.
Loss of revenue
Resource and data management
for Group-level and product-level
compliance and reporting.
Requirements may
increase under the
NZE scenario, but we
expect no change to our
risk exposure
Growing global
scrutiny of
commercial
businesses’
impact on, and
preparedness for,
climate change
and the low-
carbon transition.
TT’s position within sustainability relative to performance and
reporting. Investors, lending banks and customers represent the
key stakeholders demanding sustainability performance from TT,
especially around climate change. Areas of scrutiny may include
the Group’s relative sustainability performance, delivery on
targets and the Net Zero roadmap and strategic plan.
Reputation
Not deemed
reasonably
possible
to define
reputational
financial impact
Additional sustainability resources
applied.
Additional reporting and data
management resource and systems.
No change in exposure
between STEPS and
NZE scenarios, given
our projected emissions
profile
Net Zero roadmap and targets. Investors, lending banks
and customers represent the key stakeholders demanding
sustainability performance from TT, especially around climate
change.
Not deemed
reasonably
possible
to define
reputational
financial impact
Additional sustainability resources
applied.
Additional reporting and data
management resource and systems.
No change in exposure
between STEPS and
NZE scenarios, given
our Scope 3 projected
emissions profile
Legacy business, new business and NPI supplied to fossil fuel
industry. Risk related to TT’s direct exposure to the fossil fuel
industry.
Not deemed
reasonably
possible
to define
reputational
financial impact
Reduce and phase out exposure to
fossil fuel industries.
No change in exposure
between STEPS and
NZE scenarios, given
our Scope 3 projected
emissions profile
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43
TCFD CONTINUED
CLIMATE-RELATED TRANSITION RISKS CONTINUED
RISK
RISK DESCRIPTION
RISK
TYPE
FINANCIAL
IMPACT
MITIGATION
AND RESPONSE
IMPACT
SCENARIO
IMPLICATIONS
SHORT
(2025
2029)
MEDIUM
(2030
2035)
LONG
(2036
2050)
Rapid transition to
a low-carbon
economy and
technological
advancement
stranding legacy
technology, or
impeding
businesses
supplying
customers caught
with legacy
technology.
Legacy business, new business and NPI supplied to aerospace
industry. Loss of revenue as aerospace industry becomes
restricted and taxed to deter emissions.
Market
Loss of revenue
Additional sustainability resources
applied.
Additional reporting and data
management resource and systems.
No change in exposure
between STEPS and
NZE scenarios, given
our projected emissions
profile
Technology – excessive technology redundancy in our
manufacturing, product and NPI portfolio. Our technology
(design/manufacturing) must keep pace with market and
customer requirements.
Technology
Loss of revenue
Additional sustainability resources
applied.
Additional reporting and data
management resource and systems.
Large impact under
STEPS and NZE
scenarios
Technology – excessive technology redundancy in our
customers’ manufacturing, product and NPI portfolio. Our
customers fail to transition to a low-carbon economy.
Loss of revenue
Reduce and phase out exposure to
fossil fuel industries.
Large impact under
STEPS and NZE
scenarios
CLIMATE-RELATED TRANSITION OPPORTUNITIES
OPPORTUNITY
OPPORTUNITY DESCRIPTION
OPPORTUNITY
TYPE
FINANCIAL
IMPACT
ADAPTATION AND
RESPONSE
IMPACT
SHORT
(2025
2029)
MEDIUM
(2030
2035)
LONG
(2036
2050)
SCENARIO
IMPLICATIONS
Ability to
capitalise on
megatrends
associated with
the low-carbon
economy.
Annual profitability from alignment of products that drive a low-
carbon economy.
Market
Increased
revenue
Invest in aerospace and automation
and electrification products that drive
a low-carbon economy.
Large impact under
STEPS and NZE
scenarios
Significant majority of products are universal enablers.
Increased
revenue
Invest in aerospace and automation
and electrification products that
enable a low-carbon economy.
Large impact under
STEPS and NZE
scenarios
Exposure to megatrends – technology and products (additional
profitability).
Increased
revenue
Invest in technology and products
aligned to climate megatrends.
Large impact under
STEPS and NZE
scenarios
Materiality
Impact
Very low
Low
Moderate
High
Very high
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TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
TCFD CONTINUED
CLIMATE-RELATED TRANSITION OPPORTUNITIES CONTINUED
OPPORTUNITY
OPPORTUNITY DESCRIPTION
OPPORTUNITY
TYPE
FINANCIAL
IMPACT
ADAPTATION AND
RESPONSE
IMPACT
SHORT
(2025
2029)
MEDIUM
(2030
2035)
LONG
(2036
2050)
SCENARIO
IMPLICATIONS
Products with
applications
that directly
reduce energy
consumption and
emissions may
outperform
market average
for growth.
In-house technology and products for decarbonising the
aerospace industry.
Products & Services
Increased
revenue
Expand our exposure to megatrends
and applications related to
aerospace.
Product marketing and marketing
resource in conjunction with future
NPI.
Large impact under
STEPS and NZE
scenarios
In-house technology and products for decarbonising the on-road
vehicle, off-road vehicle and traction industries.
Increased
revenue
Expand our exposure to megatrends
and applications related to transport.
Product marketing and marketing
resource in conjunction with future
NPI.
Large impact under
STEPS and NZE
scenarios
In-house technology and products for systems, software and
devices that sense, control and manage energy consumption.
Increased
revenue
Expand our exposure to megatrends
and applications related to energy.
Product marketing and marketing
resource in conjunction with future
NPI.
Large impact under
STEPS and NZE
scenarios
Growth through
sustained energy
and carbon
reductions, and
exceeding
sustainability
requirements.
Renewables (Scope 2): purchase of renewable electricity
certificates or corporate power purchase agreements (“PPAs”).
Installation of solar photovoltaic (“PV”) facilities, reducing reliance
on local grid, emissions and operating costs.
Energy Source
Reduced costs,
decreased
exposure to
carbon price
risks (Scope 2)
Net Zero programme, switch to
renewable electricity.
No change in exposure
between STEPS and
NZE scenarios, given
our projected emissions
profile
Energy strategy. Energy use reduction programmes, elimination
of use of fossil fuel & related equipment (Scope 1 & 2 initiatives).
Net Zero factory.
Resource Efficiency
Reduced costs
Net Zero programme, energy
reduction.
Employee engagement to reduce
energy consumption.
LED lighting, renewable energy
installations – solar PV, insulation,
boilers.
No change in exposure
between STEPS and
NZE scenarios, given
our projected emissions
profile
Reduce focus on airfreight, eliminate waste from operations,
employee travel assistance, minimise business travel, partner
with suppliers on a Net Zero journey (Scope 3 initiatives).
Logistics strategy.
Reduced costs
Net Zero programme, Scope 3
reduction.
Non-hazardous waste landfill target.
Recycling, waste reduction initiatives.
n/a
Materiality
Impact
Very low
Low
Moderate
High
Very high
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45
CLIMATE-RELATED METRICS AND TARGETS
TT uses a wide variety of metrics to assess climate-
related risks and opportunities. Metrics (and reduction
targets) for emissions of GHGs play a key role in
reducing our impact on the planet, addressing a
principal risk of reputational damage and bolstering
our recognised opportunities related to our purpose of
engineering and manufacturing electronic solutions
enabling a safer, healthier and more sustainable world.
Comprehensive emissions statistics are used at
monthly regional meetings and at Board meetings.
In addition to Scope 1 & 2, TT reports all material
categories of Scope 3: purchased goods and services,
employee commute, business travel, upstream
transportation and distribution, waste and downstream
transportation and distribution (the upstream element
only of the latter). All other categories are deemed
not material.
Targets to manage climate-related risks and
opportunities
Our initial Scope 1 & 2 emissions target of 50%
reduction by 2023 (from a 2019 base year) was
achieved in 2022, one year early. Our remaining target
is Net Zero Scope 1 & 2 by 2030. There are also
additional targets to transition all sites to renewable
electricity supply, where at all possible, either externally
supplied or internally generated by 2030.
Executive Director remuneration is aligned with
sustainability and the achievement of ESG targets.
The 2024 Short-term incentive plan is weighted 70%
to financial performance measures, 10% to ESG
measures and 20% to strategic objectives. The ESG
target in 2024 was exclusively linked to the delivery
of quantitative reductions in our Scope 1 & 2 emission
intensity ratio; a measure that also features in the
Short-term incentive plan for the TT Management
Board. Short-term incentive plans for the wider
leadership group are weighted 75% to financial
TCFD CONTINUED
performance measures and 25% to strategic
objectives (inclusive of ESG measures). For 2025, it is
intended that ESG targets in the Short-term incentive
plan will cascade further down the organisation to
include anyone in the TT bonus scheme.
Typically, ESG forms one of the focus areas within the
strategic objectives, with metrics targeted to human
capital management and achieving our carbon Net
Zero ambitions. We have also widened our range of
performance metric definitions that can be used
across both short-term and long-term incentives to
enable ESG measures to also feature in our long-term
incentives as appropriate in the future.
The table below highlights some of the key metrics and
targets used within the Group.
METRICS & TARGETS
METRIC
DEFINITION
TARGET
LINK TO CLIMATE-RELATED
RISKS AND OPPORTUNITIES
METRIC REPORTING STATUS
Energy consumption (intensity)
KWhs of consumption for all Group locations
per annum, in ratio to revenue (£m)
Year-on-year reductions
Opportunity to reduce both emissions and
costs with better use of energy source and
efficiency.
Tracked monthly as part of our emissions data management
system. Reported annually. Group intensity ratio in 2024 was 89,
against 83 in 2023.
Switch to renewables
Percentage of consumed electricity derived
from renewable sources
100% by 2030 (subject to availability)
Risk exposure to emerging regulation,
reputation and future carbon pricing
mechanisms.
Tracked monthly and reported annually. In 2024 62% of our
electricity was from renewable sources, against 53% in 2023.
Emissions Scope 1 & 2 (absolute)
Absolute CO2e emissions from our own
operations
Net Zero 2030 Scope 1 & 2. Net Zero being a
state where the amount of GHGs released into
the earth’s atmosphere is balanced by the
amount of GHGs removed
Risk exposure to emerging regulation,
reputation and future carbon pricing
mechanisms.
Tracked monthly and reported annually. 2024 Scope 1 & 2
emissions 29% lower than 2023 and 73% down versus the 2019
baseline.
Emissions Scope 1 & 2 (intensity)
CO2e emissions from our own operations, in
ratio to revenue (£m)
Net Zero 2030
Risk exposure to emerging regulation,
reputation and future carbon pricing
mechanisms.
Tracked monthly and reported annually. Group emissions
intensity in 2024 was 15, against 17 in 2023.
Waste to landfill
General waste, that cannot reasonably be
recycled or diverted, sent to landfill (measured
as a percentage of total)
Zero by 2035
Opportunity to improve resource efficiency.
Tracked monthly as part of our emissions data management
system and reported annually. In 2024 39% of our total waste
was sent to landfill, with the increase versus 2023 more a
reflection of improved data collection.
Single-use plastics
Consumption of single-use plastics in
packaging (tonnes)
Zero by 2035
Opportunity to improve resource efficiency.
In 2024 TT used 63 tonnes of single-use plastics.
Executive Director
remuneration is aligned
with sustainability
and the achievement
of ESG targets.
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ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
Under Section 172 of the Companies Act 2006,
Directors are required to promote the success of the
Company for the benefit of our shareholders, while
having regard to the factors set out in Section 172
including the interests of our other stakeholders.
The principal decisions taken by the Board in 2024
centred around:
– Revised purpose, strategic focus and organisational structure.
Feedback from our customers, and employees fed into the
new Purpose statement for TT and shaped the new
organisational structure to support future improved customer
service, execution and performance.
– Consideration of unsolicited conditional proposals for the
Group. The Board’s engagement with investors and advisers
informed the Board’s responses to the unsolicited conditional
proposals received during the year.
– Organisational response to market and operational challenges.
Feedback from our sites, senior management and customers
all played a role in the Board’s analysis and the Company’s
response to market and operational challenges in 2024.
– Divestment of the Cardiff, Hartlepool and Dongguan sites.
Engagement with our teams at the three divested sites as well
as customers and suppliers affected by the divestment played
a significant role in the work undertaken to complete this
project.
– Increasing capability in Mexicali and Kuantan to offer
customer manufacturing flexibility. Led by key engagement
work with senior management team, customers and
suppliers.
– Brought forward Scope 1&2 Net Zero target by five years.
Following extensive work with our global teams, we were able
to pull forward our Net Zero target.
The Board believes that engagement with our stakeholders is
key to the long-term success of our business. We use the
knowledge and feedback gained from our stakeholders to push
our business forward and respond to key requirements and
challenges in the industries in which we operate. The Board
considers its current engagement mechanisms to be effective.
The Board fully understands its role in this process and regularly
reviews the Group’s key stakeholders and the impacts our
activities have on these groups. The Board encourages open and
purposeful engagement so that they can use clear and honest
feedback to assist in their decision-making processes. The
nature of Board meetings allows information about our
stakeholders to flow from the workforce, through commercial
teams and senior management to the Board and back down the
organisational structure. The Board also actively seeks feedback
from external advisers to help form its strategic decisions.
Throughout the year, the Board considered how stakeholders are
affected by its key decisions.
The following engagement disclosures describe how the Board
has had regard to the matters set out in Section 172 (1) (a) to (f)
and forms the Directors’ statement required under Section
414CZA of the Companies Act 2006.
STAKEHOLDER ENGAGEMENT AND SECTION 172 STATEMENT
ENGAGING OUR
STAKEHOLDERS
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47
STAKEHOLDER ENGAGEMENT AND SECTION 172 STATEMENT CONTINUED
STAKEHOLDER
OUR ACTIVITIES THAT
AFFECT THEM
HOW WE ENGAGE
AT BOARD LEVEL
HOW WE ENGAGE ACROSS
THE GROUP
OUTCOMES OF
ENGAGEMENT
CUSTOMERS
AND SUPPLIERS
– R&D and new product introduction
– Products, including those supporting
environmental sustainability
– Operations and production pipeline
– Safety, environmental quality control and
reliability
– Sustainability targets
– Legal and regulatory compliance
– Payment practices/prompt payment
– Inventory management
– Responsible business practices
– Supply chain management
– Modern slavery review
– CEO, TMB and Board regularly receive
reports from functional leads, regional
divisions and internal Councils on key
customer and supplier initiatives
– The Board reviews and approves payment
times and practices
– The Board reviews and approves responsible
business practices and targets
– Overview of environment and sustainability
actions and targets through reports and
updates from the CSR Committee
– Engagement with Executive Directors and
senior management on organisational
re-structuring to improve customer
experience and product development
– Day-to-day contact on supply chain,
products and service
– R&D partnerships with customers and
universities
– Collaboration across divisions to meet
customer needs including through our
Business Development and Supply Chain
Councils
– Undertaking Voice of the Customer surveys
to receive customer feedback
– Supplier assessments
– Engagement with customers regarding
downturn in components business
– New organisational structure improves
customer and supplier experience by
ensuring we connect on a regional basis in
the regions in which we operate.
– New Company Purpose with focus on
cleaner, smarter and healthier solutions,
reflecting customer growth markets
– Divestment completed whilst facilitating
customer and supplier continuity
– Improved feedback from Voice of the
Customer survey programme
– Increasing capability in Mexicali and
Kuantan to offer customer manufacturing
flexibility
– Monitoring of supplier payment times,
global supply chain, inventory management
and export risks
EMPLOYEES
– Culture and purpose
– TT Way values and conducting business with
integrity
– Organisational re-structuring
– Safety and wellbeing, including financial
planning and security
– Employee Assistance Programme
– Training and development
– Group employment policies
– Engagement and community support
activities
– ED&I activities
– Environmental sustainability
– Pensions
– Oversight of Group culture
– HSE and Sustainability updates at each
Board meeting
– Board, CEO, CFO and TMB site visits (see
page 30)
– PSED&I Committee reports to the CSR
Committee which feeds into the Board
ensuring the voice of the employee is shared
with the Board
– Employee engagement survey results and
action plans
– Oversight of ED&I actions
– Regular workforce, talent and succession
updates
– Support for Employee Assistance
Programme
– Board carries out Employee Engagement
Sessions with sample of workforce during
site visits
– Approval of environmental sustainability
targets
– Oversight and review of changing product
priorities and the effects on the workforce
Read more
on page 30
– Formal employee engagement survey
(biannual) and regular engagement pulse
surveys
– Site employee forums and Town Halls with
TMB members during site visits
– Regular Company-wide communication and
on-demand access to information and
employee forums via ConnecTT
– BE Inspired recognition scheme
– Training and development activities aligned
to business and employee needs
– PSED&I Committee and ED&I Councils
– Regular employee information sessions on
personal wellbeing, salary review, pay rates
and company-wide employee benefits
– Employee consultation on proposed
changes to executive remuneration
– Stakeholder consultation on major changes
to process and policy
– Career conversations and personal
performance development plans
Read more
on pages 29 to 30
– 3*** employer rating employee engagement
survey with 91% response rate (2023
survey)
– Changes to the organisational model to
strengthen deployment of common
functional standards and processes
– Divestment of three sites completed with
appropriate employee engagement and
consultation
– Employees engaged in creating new
purpose and strategic focus
– Further development of the ED&I strategy at
Group and site level
– Employee mindfulness and wellbeing
activities
– Financial wellbeing initiatives
– Investment in functional and sales capability
– Ambitious environmental sustainability
targets
– Flexible working initiatives
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STAKEHOLDER
OUR ACTIVITIES THAT
AFFECT THEM
HOW WE ENGAGE
AT BOARD LEVEL
HOW WE ENGAGE ACROSS
THE GROUP
OUTCOMES OF
ENGAGEMENT
INVESTORS
– Financial performance
– Leadership
– Governance and transparency
– Sustainability/ESG
– Reputation
– Communication
– Regular report to the Board on investor views
on the business including ESG matters
– Direct engagement through the Capital
Markets Event
– Direct engagement with specialist advisers
on geopolitical changes and emerging risks
and challenges
– Shareholder engagement on the business
including on ESG programme and targets
– Results, Annual Report and AGM
– CEO, CFO, IR and Board engagement with
investors and advisers on enhancing the
purpose of the Company and external
comms to give a better understanding of our
investment case
Read more
on page 64
– Appropriate governance policies
– Alignment of business and employees
around the Group strategy
– Collection of data supporting external
reporting and ESG strategy
– Appropriate consideration and response to
unsolicited conditional proposals for the
Group
– Successful completion of divestment to
simplify the operational footprint of the
Group, enabling greater focus on growth
opportunities
– Stable access to capital
– Revised strategic focus
– Ambitious environmental sustainability
targets
– Enhanced Capital Markets Event to aid
understanding of business and
communicate medium-term financial
targets
– Review decisions on site footprint and
production pipelines in light of changing
geopolitical situation
SOCIETY
– Products that enable a safer, healthier and
more sustainable world
– Responsible business practices
– Environmental practices and sustainability
– Employment training and apprenticeships
– ED&I focus
– Employee Assistance Programme
– Local supply chains
– Supporting local communities
– Oversight of Group strategy including ESG
strategy and performance
– The Board reviews and approves responsible
business practices and targets
– Receipt of reports from CSR Committee,
which in turn receives reports from its
focused subcommittees
– Net Zero consideration
– Legal and regulatory compliance
– Responsible business practices including
environmental practices and approach to
modern slavery
– STEM education activities in local
communities
– Charitable initiatives in local communities
– Regular monitoring of our ESG and
sustainability programmes
– Supply chain partnership with CDP
– Collaboration with IEMA
Read more
on page 28
– Brought forward Scope 1&2 Net Zero target
by five years
– Suzhou and Mexicali solar panel installation
– New Purpose with focus on products that
enable a safer, healthier and more
sustainable worlds
– Creation of a new CSR Committee with
Sustainability, GRC, PSED&I and HSSEQ
subcommittees for greater engagement on
areas including our society (further details
on page 30)
– Driving ED&I strategy at Board, Group and
site level
STAKEHOLDER ENGAGEMENT AND SECTION 172 STATEMENT CONTINUED
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49
The Board of Directors is responsible for risk
management and internal controls, supported by
the Audit Committee and informed by the executive
Governance & Risk Committee. The Board defines risk
appetite and monitors the management of significant
risks to ensure that the nature and extent of significant
risks taken by the Group are aligned with overall goals
and strategic objectives.
The Governance & Risk Committee supports the Board
and the Audit Committee in monitoring the exposure
through regular reviews, including reviewing the
effectiveness of risk management processes
and controls.
The Head of Internal Audit & Risk assists the
Governance & Risk Committee by advising
management on improvements to the overall risk
management framework, facilitating the risk review
process and providing independent experience and
input to the process.
Risk management processes and internal control
procedures are established within business practices
across all levels of the organisation. Risk identification,
assessment and mitigation, including climate-related
risks, are performed at an operational level, as well as
through top-down assessment of strategic and market
risk at the Executive management and Board level.
RISK MANAGEMENT POLICY
The Group’s risk management strategy sets out the
Group’s approach to risk management including its risk
appetite, oversight and monitoring and roles and
responsibilities. The Group’s risk management
framework draws from the three lines of defence:
– The first line comprises the site operational and
finance teams responsible for day-to-day
management of risk and delivery of control
procedures with oversight from site management.
– The second line reflects the risk management
framework and includes regional and functional
teams who drive compliance including Group Legal,
Finance, Human Resources and HSE, with oversight
and monitoring from senior management and the
Management Board.
– The third line compromises oversight from the
Board, Audit Committee and Governance & Risk
Committee with independent assurance from the
Group Internal Audit function.
RISK APPETITE
Risk management and internal controls provide
reasonable but not absolute protection against risk.
The Board acknowledges and recognises that in
the normal course of business, the Group is exposed
to risk and that it is willing to accept a level of risk in
managing the business to achieve its strategic
priorities.
Risk appetite is not static and, as part of its risk
management processes, the Board regularly considers
its risk appetite in terms of the tolerance it is willing to
accept in relation to each principal risk based on key
risk indicators to ensure it continues to be aligned with
the Group’s goals and strategy.
Each principal risk is considered as to whether or not
it currently falls within the Group’s appetite for that risk.
As part of the year-end risk assessment with the
Board, it was confirmed that all of the principal risk
areas continue to be within Board and Executive
management’s appetite for that risk.
RISK
MANAGEMENT
Our focus is to ensure
continuous improvement in our
risk management processes and
control environment. We have further
refined our risk management and
control framework and delivered a suite
of training to further embed risk
management and controls across the
Group.”
Jennifer Chase
Group Financial Controller
ROBUST PRACTICES IN SUPPORT OF OUR BUSINESS MODEL
Risk management
processes and internal
control procedures are
established within
business practices
across all levels of the
organisation.
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ADDITIONAL INFORMATION
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Audit Committee
Oversees risk management and internal control processes
CSR Committee
The CSR Committee, being chaired by the CEO and
consisting of the TT Management Board, reviews detailed
risk updates from the GRC and in turns reports these to
the Board
Governance & Risk Committee
Provides framework for managing risks; regular reviews
of principal risks; and risk management processes
Board of Directors
Primary responsibility for risk oversight; setting strategic
objectives; and defining risk appetite
Business units/site-level steering and reporting
Implement and embed risk management at an
operational level
Functional-level steering and reporting
Risk identification assessment and implementation
of risk management action plans and actions
Regional-level steering and reporting
Risk identification assessment and implementation
of risk management action plans and actions
Operational steering and implementation
Bottom-up identification, assessment and mitigation of risk at operational level
Corporate-level steering
Top-down oversight; set risk appetite; monitor significant risks; alignment with strategic objectives at corporate level
Risk and Assurance function
RISK MANAGEMENT CONTINUED
OUR RISK MANAGEMENT FRAMEWORK
RISK PROFILE AND EMERGING RISKS
At the direction of the Board, Executive management performed
a robust assessment of the principal and emerging risks facing
the Group, taking into account those that would threaten the
business model, future performance, solvency or liquidity, as
well as the Group’s strategic objectives. This process includes a
bottom-up analysis of key risks at a site, functional and regional
level, including climate-related risks. All principal risks identified
by this process may have an impact on the Group’s strategic
objectives within the next six to twelve months. Executive
management and the Governance & Risk Committee perform
further analysis to prioritise these risks, with a focus on those
principal elements posing the highest current risk to the
achievement of the Group’s objectives or the ongoing viability of
the business. Risks assessed as higher priority are consolidated
into a Group risk register. Risks included on the register are
monitored closely by the Board in terms of both prioritisation and
mitigation strategies.
It is recognised that, while these “top risks” represent a
significant proportion of the Group’s risk profile, Executive
management and the Governance & Risk Committee continue to
monitor the entire universe of potential risks to identify new or
emerging threats as well as changes in risk exposure and a risk
horizon scanning exercise is performed annually.
The risk horizon scanning exercise includes consideration of the
emerging risks facing TT as a global provider of electronics
technologies and, as a result, if any new emerging risks or
additional mitigating controls require inclusion on the Group risk
register. As a result of the risk horizon scanning exercise and
consideration of new emerging risks throughout the year no new
principal risks have been identified. The Governance & Risk
Committee reviews the Group risk register at each meeting to
ensure that the risk profile is appropriate and includes all relevant
risks including emerging risks as appropriate. The assessment
of principal risks during the year has identified that the Group
has faced a period of change including the divestment of
Hartlepool, Cardiff and Dongguan, the structural reorganisation
from a divisional to function-led regional structure, and difficult
market conditions in North America set against improved
performance in Europe and Asia. This is reflected in the table of
principal risks.
The Group has long been conscious of the ESG agenda
which is reported to the Board through our Corporate Social
Responsibility (“CSR”) Committee. There continues to be a risk
that a negative perception of our ESG profile could impact
on our ability to attract new talent to the business, build
relationships with our customers, positively impact the
communities in which we operate, and attract investment
from potential shareholders. The risks in relation to these
areas are captured in two principal risks, “Sustainability,
climate change and the environment” and “Health and safety”.
TT is committed to achieving its sustainability objectives,
reducing carbon emissions and improving efficiency. We have
set out our approach and our progress in these areas in the
“Our people, communities and environment” section of this
report from page 28 and in the TCFD section of this report
from page 38.
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51
INTERNAL CONTROL ENVIRONMENT
The Internal Audit function is operated under a directed
co-sourced arrangement with PwC to enhance the
levels of resource and expertise available to the Group
in specific areas, with its activities under the direction
of the Management Board and the Audit Committee. A
risk assessment is performed each year when building
our internal audit plan to ensure that it continues to be
focused on the risks that are relevant and important to
the Group and reflects the latest changes and
developments. All of our manufacturing sites perform
a self-assessment against the Control Framework and
the results inform the internal audit programme of
work and internal audit plan risk assessment.
Enhancements to the Group’s Control Framework have
been made during the year as set out below in the “Key
Areas of Focus during the Year” section.
The Board monitors the Company’s internal control
systems and has reviewed their effectiveness in 2024.
The review process considered all material controls
including, (i) the information relating to the general
controls environment as outlined in the Internal Audit
reports submitted to the Audit Committee at each
meeting; (ii) financial controls; (iii) compliance controls;
(iv) the key outputs of the controls framework
programme; and (v) management actions in relation to
internal and external audit findings. Whilst the Board
has seen evidence of improvements in the Group’s
control environment, it continues to raise the bar on
expected compliance with the Group’s control
framework and notes the control deficiency associated
with the prior year adjustments set out on page 79.
Plans are in place to conduct a comprehensive gap
analysis to ensure our material controls sufficiently
and appropriately address the Group’s principal risks
as outlined on pages 53 to 56.
RISK MANAGEMENT CONTINUED
These actions will position TT to meet the revised
requirements by the start of 2026. With clear action
plans in place, we will be ready to report on the
effectiveness of these controls in the 2026 Annual
Report, ensuring compliance and demonstrating our
commitment to robust governance.
Internal Audit also completed a number of activities
during 2024 to strengthen the Group’s fraud risk
framework including updating the Fraud Risk
Assessment to ensure we cover all possible fraud
risk scenarios in response to the failure to prevent
bribery offence introduced by the Economic Crime
and Corporate Transparency Act 2023. We have
also refreshed our Group risk registers and
delivered training to communicate the updates made,
enhanced supporting guidance and updated the Risk
Management Strategy to align with the updates made.
KEY AREAS OF FOCUS DURING THE YEAR
From a risk perspective, our Leadership Conference
was both strategy and risk focused, reinforcing the
importance of managing and mitigating risk in order to
achieve our strategic objectives. Live exercises and
workshops enabled our leadership team to come
together in considering risk which has resulted in a
fuller, more embedded focus.
In addition, during the year, Internal Audit reviewed and
refreshed the Group’s Control Framework by:
– further streamlining of the number of controls and
added new controls where gaps were identified;
– updating control descriptions where appropriate; and
– providing clarity on the ownership and retention of
evidence requirements.
Internal Audit took a risk-based approach to the review,
assessing all the associated risks for each process
area and mapping the existing controls in place against
the risks to ensure adequate coverage was in place.
We also delivered Control Framework training to aid
the communication of the updates made and provide
clarity on evidence requirements to support control
compliance.
In response to the 2024 Corporate Governance Code,
which has a broad, enterprise-wide impact, we have
mobilised a project team, using internal resources, to
assess and respond to the changes. This project is
sponsored by the CEO, overseen by the Governance
and Risk Committee, and is led by the new Deputy
Group Financial Controller, and work will continue
through 2025.
In 2025, we will conduct a comprehensive gap analysis
to ensure our material controls sufficiently and
appropriately address the Group’s principal risks. This
analysis will likely highlight opportunities for
improvement and simplification. It also provides a
chance to assess how effectively our Group functions
and regional teams collaborate in addressing the areas
of greatest importance to the organisation. Once the
baseline of material controls is established, we will
assess their effectiveness through an extended
self-certification exercise in the second half of 2025.
From a risk perspective,
our Leadership
Conference was both
strategy and risk
focused, reinforcing the
importance of
managing and
mitigating risk in order
to achieve our strategic
objectives.
52
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
RISK MANAGEMENT CONTINUED
PRINCIPAL RISKS
AND UNCERTAINTIES
The risk management framework is described on page 52. Using this framework the Board sets out the risks that
it currently believes to be most significant to the Group as they have the potential to undermine the achievement
of our strategic objectives.
RISK DESCRIPTION
POTENTIAL IMPACT
MITIGATING ACTION
CHANGE IN THE YEAR
GENERAL
General revenue reduction
Reduction in demand and orders due to
economic downturn or disruption to
operational effectiveness
Sponsor
Peter France
Link to strategy
– Decelerating sales growth affecting
operating profit
– Monitor the wider economic conditions of our markets
– Timely financial reporting to monitor performance and
provide a basis for corrective action when required
– Ongoing optimisation of our cost base and strategic
moves creating a more resilient portfolio
– Business continuity and crisis management planning
– Management structures in place to enable a rapid
response to changing circumstances
2024
Risk increased.
This year has been impacted by
difficult market conditions in our
shorter cycle components business,
primarily in North America, despite
strong performances in Europe and
Asia. We do not anticipate further
reductions supported by our book to
bill and order intake and the long term
nature of our contracts.
COMMERCIAL
Contractual risks
Potential liabilities from defects in
performance-critical products that often
operate in extreme environments, as well
as contractual risk on pricing and
performance
Sponsor
Michael Leahan
Link to strategy
– Reputational impact
– Deterioration in customer
relationships
– Liability claims
– Reduction in revenue, profitability and
cash generation
– Quality control procedures and systems in place and
appropriate levels of insurance carried for key risks
– Group guidelines on acceptable levels of contractual
liability are reinforced
– Continuing to enhance and deepen expertise in
contract management across the Group
2024
Risk reduced.
A global bid governance process for
large contracts has been enhanced
during the year, training has been
provided and the Commercial
Excellence team ensures compliance.
STRATEGIC PRIORITIES
KEY
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing
collaboration and
commercial focus
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering
and manufacturing
expertise
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
53
RISK MANAGEMENT CONTINUED
RISK MANAGEMENT CONTINUED
RISK DESCRIPTION
POTENTIAL IMPACT
MITIGATING ACTION
CHANGE IN THE YEAR
COMMERCIAL CONTINUED
Research and development
Delay in new product development which
is intended to support revenue growth
Sponsor
Stewart Patridge
Link to strategy
– Increased cost in product
development
– Delay in achieving projected revenue
– Inability to meet the latest
requirements due to a step change in
technology
– Close collaboration with key customers
– Active monitoring of costs and milestones
– Target R&D more effectively
– Implementation of standard project management
disciplines
2024
Risk stable.
During the year we have strengthened
our engineering capability. We have put
in place a new Head of Engineering
and brought together a group wide
engineering function to better manage
resource and focus and to establish a
group wide engineering roadmap.
OPERATIONAL
People and capability
Ability to attract and retain high-quality
and capable people
Sponsor
Clare Nicholls
Link to strategy
– Loss of key personnel
– Potential business disruption
– Breakdown of communication and
misalignment
– Remuneration structure designed to support retention
– Succession planning processes embedded within the
businesses
– Campaigns to increase performance and development
of communication between managers and employees
to ensure alignment to objectives
– Regular talent reviews across all regions and Group
– Using a feedback loop utilising surveys to encourage
regular objectives and performance discussions.
See “People and culture” on page 29
2024
Risk increased.
The change in performance in the
business across the year heightens the
risk of churn in key personnel. Our
inclusive culture and way of working
together remains strong and aids
resilience.
Supplier resilience
Potential failure of critical suppliers;
product delivery delays; inability to meet
customer commitments
Sponsor
Stewart Patridge
Link to strategy
– Reduction in revenue, profitability and
cash generation
– Regular review of key supplier financial health and
product quality
– Monitoring of relevant commodity and precious metals
pricing
– Review of spend patterns to identify opportunities
– Inventory build on key components where considered
necessary to mitigate some of the supply chain risk
– Supply Chain Council in place
2024
Risk stable.
Continued focus on both supplier and
customer relationships ensures
appropriate allocation of product
through the supply chain.
STRATEGIC PRIORITIES
KEY
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing
collaboration and
commercial focus
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering
and manufacturing
expertise
54
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
RISK MANAGEMENT CONTINUED
RISK DESCRIPTION
POTENTIAL IMPACT
MITIGATING ACTION
CHANGE IN THE YEAR
OPERATIONAL CONTINUED
IT systems and information
IT security breaches or disruption,
unauthorised access or mistaken
disclosure of information
Sponsor
Eric Lakin
Link to strategy
– Reputational impact, business
disruption and potential deterioration
in customer relationships
– Regular analysis of cybersecurity and data
management
– IT strategy reviewed by management and the Board
– Information security policies in place
– IT security and enterprise resource planning (“ERP”)
specialists in place
– Processes and tools put in place to support
cybersecurity certifications
– Disaster recovery plans in case of system failure
– Annual penetration testing
– Internal vulnerability scanning
2024
Risk stable.
We continually update and
strengthen our cyber controls in
response to ongoing cyber risks.
M&A and integration
Realisation of financial benefit of
acquisitions
Sponsor
Peter France
Link to strategy
– Failure to realise the expected benefits
of an acquisition or post-acquisition
performance of the acquired business
not meeting the expected financial
performance at the time acquisition
terms were agreed could adversely
affect the strategic development,
future financial results and prospects
of the Group
– Full financial and other due diligence is conducted to
the extent achievable in the context of each M&A
opportunity
– A detailed business case including forecasts is
reviewed by the Board for each opportunity
– Integration risk and planning is reviewed and
undertaken as part of every acquisition
– Lessons-learned activities are built into future plans
2024
Risk reduced.
Successful completion of Project
Albert, the divestment of our business
units in Cardiff and Hartlepool, UK and
Dongguan, China in Q1. M&A
opportunity consideration ongoing in
conjunction with leverage and capital
allocation policy.
Health and safety
The manufacturing industry may have
inherent risk related to, for example,
materials and processes. Eliminating or
managing these risks is critical to mitigate
the impact on our employees, sites and
the environment of these risks
Sponsor
Stewart Partridge
Link to strategy
– Incidents occurring due to unsafe use
of materials or manufacturing
processes. Failure to eliminate or
manage the impact of these risks
could negatively impact our
employees, cause harm to the
environment, or lead to regulatory
fines or reputational damage
– HSSEQ Committee responsible for Group-wide best
practice sharing, monitoring and improvements, and
strategy setting
– Data analysis, processes and roadmaps in place to
minimise the risk of incidents
– HSE compliance annual self-assessment and external
global health and safety audit on a rolling three-year
cycle across the sites
2024
Risk stable.
Increased reporting of observations
and introduced the HSSEQ function to
support compliance and
accreditations.
STRATEGIC PRIORITIES
KEY
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing
collaboration and
commercial focus
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering
and manufacturing
expertise
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
55
RISK MANAGEMENT CONTINUED
RISK MANAGEMENT CONTINUED
RISK DESCRIPTION
POTENTIAL IMPACT
MITIGATING ACTION
CHANGE IN THE YEAR
OPERATIONAL CONTINUED
Sustainability, climate change and
the environment
Our manufactured products or other
activities or decisions of the Group,
including in relation to climate-related
risks, may not be judged by our customers,
employees, communities and investors as
being sustainable. Our sites and business
activities may be subject to physical risks
due to climate change or both risks and
opportunities as we transition to a
low-carbon economy
Sponsor
Stewart Partridge
Link to strategy
– Failure to appropriately manage the
environmental impact of our
operations and products
– Failure to manage climate physical or
transition risks, or the failure to realise
transition opportunities (as described
in the TCFD section on page 38)
– Reputational impact and potential
deterioration in our relationships with
our stakeholders
– CSR Committee responsible for reporting Group
progress, to the Board, against the development and
monitoring of our strategy and associated KPIs related
to climate, including risks and opportunities
– Continued investment in M&A, business development
and new product introduction in areas where the
solutions contribute to a more sustainable world
– Execution of our Net Zero roadmap for Scope 1 & 2
carbon emissions, resulting in significant emissions
reductions and a practical path to zero emissions
– Detailed scenario analysis of both physical and
transition risks to inform the Board and management
2024
Risk stable.
In April this year, we brought forward
our Net Zero target to 2030, from the
original objective of 2035. In 2024 we
delivered a 73% reduction in our Scope
1 & 2 carbon emissions from our
baseline set in 2019. See Environment
and TCFD sections from page 35 for
further detail.
Legal and regulatory compliance
Intentional or inadvertent non-compliance
with legislation including laws and
regulations covering export control,
anti-bribery and competition
Sponsor
Ian Buckley
Link to strategy
– Reputational impact
– Civil or criminal liabilities leading to
significant fines and penalties or
restrictions being placed on the ability
to trade
– Reduction in revenue, profitability and
cash generation
– Cross-divisional export compliance group established
and anti-bribery programme in place
– Export control policy, procedure and training all in
place and Denied Party Screening undertaken
– Approach involves risk assessment, policy, training,
review and monitoring
– Whistle-blower process in place to ensure issues can
be raised, investigated and managed
2024
Risk stable.
Enhanced focus on export control
compliance with a new training
program launched for US and UK sites,
supported by reviews of current
compliance activities.
Geopolitical
War, the threat of war, trade wars,
blockades, sanctions, political polarisation
either globally or locally that might affect
our ability to trade, resulting in reduced
sales and profitability
Sponsor
Peter France
Link to strategy
– Reduction in revenue, profitability and
cash generation
– Supply chain challenges
– Going concern risk relating to
compliance with financial covenants
– Diversification of manufacturing sites strategy
– Diverse product offering
– Management structures in place to enable a rapid
response to changing circumstances
– Strong customer relationships with key account
managers
– See also “Supplier resilience” risk for mitigating actions
in place
2024
Risk increased.
Geopolitical tensions remain elevated,
including changes in key
administrations, increased tariffs, and
ongoing war, although our diverse
offering across North America, Europe
and Asia increases choice for
customers.
STRATEGIC PRIORITIES
KEY
Focusing on efficiency
to boost productivity
and reduce costs
Enhancing
collaboration and
commercial focus
Developing our people,
products and market
positioning to propel
sustainable growth
Promoting innovation,
design, engineering
and manufacturing
expertise
56
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
RISK MANAGEMENT CONTINUED
RISK MANAGEMENT CONTINUED
VIABILITY STATEMENT AND PROSPECTS
In accordance with the UK Corporate Governance
Code, the Directors have assessed the viability and
long-term prospects of the Group over the period to
December 2027, taking into account the Group’s
current position and the potential impact of the
principal risks and uncertainties set out on pages 53 to
56 of the Strategic report. Based on this assessment,
the Directors confirm that they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over
the period to December 2027.
TT operates in markets with structural growth
dynamics. We engineer and manufacture custom
technology solutions to address our customers’
challenges in the healthcare, aerospace & defence, and
automation & electrification markets. These benefit
from the trends for improved healthcare, for increased
aircraft fuel efficiency and safety, investment in
national security, and demand for sustainable
solutions to streamline supply chains and drive
performance and efficiency. By positioning ourselves
in the right markets, by creating differentiated
capabilities through our R&D investment, and by
attracting and developing the right talent we have a
strategy to create sustainable value over the long term.
While the Directors have no reason to believe the
Group will not be viable over a longer period, the period
over which the Directors consider it possible to form a
reasonable expectation as to the Group’s longer-term
viability is the three-year period to 31 December 2027
and aligns with the business cycle including product
development and order intake trends. The Group’s
existing primary banking facility extends to June 2027
and is expected to be renewed during the
three-year period. The macroeconomic environment
and the uncertainty over tariffs represent a material
uncertainty which is covered in the going concern
section to the right.
In making this statement, the Directors have carried
out a robust assessment of the principal risks facing
the Group, including those that would threaten its
business model, the underlying mitigation planning, the
assessment of future performance, solvency and
liquidity, and the Group’s internal controls environment.
In performing the assessment, the Directors have
further stress-tested the Group’s financial projections
for the period covered by the viability statement, testing
it for “business as usual” risks (such as profit growth
and working capital variances), the combined impact
of “severe but plausible events”, as well as a “reverse”
stress test to understand the conditions which could
jeopardise the future viability of the Group. This work
included assessing against financial covenants and
facility headroom.
This severe but plausible events stress testing included
consideration of the potential impact of the Group’s
principal risks and uncertainties outlined on pages 53
to 56. The stress testing specifically included the
impact of the following principal risks crystallising
during the three-year period to 31 December 2027:
general revenue reductions; contractual risks; research
and development; people and capability; supplier
resilience; and health and safety. The financial impact
associated with the other principal risks were
considered not likely to have a material impact within
the viability period or their financial effect was covered
within the overall downside economic risks implicit
within the stress testing.
The Group’s wide geographical and sector
diversification helps minimise the risk of serious
business interruption or catastrophic reputational
damage. Furthermore, the business model is
structured so that the Group is not overly reliant on
any single customer, market or geography. While this
review does not consider all of the risks that the Group
may face, the Directors consider that this stress
testing-based assessment of the Group’s prospects
is reasonable in the circumstances of the inherent
uncertainty involved.
GOING CONCERN
In determining the appropriate basis of preparation of
the financial statements, the Directors are required to
consider whether the Group can continue in
operational existence for the foreseeable future.
After making enquiries and having considered
forecasts and appropriate sensitivities, the Directors
have established that in a base case and a severe
downside scenario, there is a reasonable expectation
that the Group would remain compliant with covenants
and has adequate resources to continue in operational
existence for the period to 30 June 2026. Accordingly,
the accounts have been prepared on a going
concern basis.
However, the recent introduction of US global tariffs
and certain retaliatory tariffs provide an uncertain and
volatile macroeconomic backdrop, which could have
an impact beyond that assumed in the severe
downside case. This has led the Board to conclude
that it is not possible to be certain of meeting the
covenant test in certain extreme scenarios, in
particular where customer reticence in placing orders
against the backdrop of tariff uncertainty reduces
order intake. Even in this scenario, the Company would
seek to negotiate an adjustment to its covenants.
These matters represent a material uncertainty which
may cast doubt on the Group’s ability and the
Company’s ability to continue as a going concern for
the period up to 30 June 2026. The financial
statements do not contain the adjustments that would
result if the Group and Company were unable to
continue as a going concern.
More information on the going concern judgement can
be found in note 1 to the financial statements.
The 2024 Strategic report, from pages IFC to 57,
has been reviewed and was approved by the Board of
Directors on 9 April 2025.
Peter France
Mark Hoad
Chief Executive Officer
Chief Financial Officer
The Group’s wide
geographical and sector
diversification helps
minimise the risk of
serious business
interruption or
catastrophic reputational
damage. Furthermore,
the business model is
structured so that the
Group is not overly reliant
on any single customer,
market or geography.”
Peter France
CEO
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
57
KEY GOVERNANCE HIGHLIGHTS FOR 2024
Board changes
The Board’s leadership succession planning came to the fore in 2024
with the CFO retirement transition process and the appointment of
a new NED. The Board was able to move quickly on the recruitment
process for a new CFO and we were well-positioned to appoint
Eric Lakin who joined the Board in April 2025. Inken Braunschmidt,
appointed as NED in July 2024, has already made an impact on
the Board and is preparing to succeed Alison Wood as Chair of the
Remuneration Committee in 2025.
Read more
on page 73
Strategy review
The Board continued its review and focus on TT’s strategic direction
through a challenging year. The Board, TT’s internal functions and
external advisers worked collaboratively to navigate the market
challenges and operational concerns experienced in H2 of 2024.
Read more
on page 63
Organisational
restructuring
The Board worked closely with key stakeholders and senior
management to oversee the move from a divisional to functional-
led regional structure. The internal leadership structure was also
reformed, creating new Committees to improve governance oversight
and information flow to the Board.
Read more
on page 65
Board engagement
with employees
The Board changed its approach for Voice of the Employee
engagement, opting to maximise engagement by creating
opportunities for all NEDs to take part in direct employee
engagement. The Board considers this arrangement to be effective
because it allows every Board member to participate enabling
insights and engagement to occur collectively and giving more
members of the Board access to direct engagement activities with
our employees.
Read more
on page 68
GOVERNANCE
AT A GLANCE
BOARD COMPOSITION
BOARD DIVERSITY – GENDER
Our Board split
3 – Women
4 – Men
7 Board members
1 – Independent Non-executive Chair
2 – Executive Directors
4 – Independent Non-executive Directors
7 – Leadership/management
7 – Strategy/Growth
6 – Finance/Risk
6 – M&A/Financing
3 – Manufacturing/Engineering
DIRECTORS’ SKILLS AND EXPERTISE
58
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
Alison Wood
Michael Ord
Inken Braunschmidt
Anne Thorburn
Warren Tucker
2016
2017
2018
2019
2020
2021
2022
2023
2025
2024
2026
2027
2028
2029
2030
2031
2033
2032
BOARD TENURE IN YEARS
Board
Audit
Committee
Nominations
Committee
Remuneration
Committee
Number of
meetings held
8
4
2
4
Chair
Warren Tucker
8/8
2/2
4/4
Executive Directors
Peter France
8/8
Mark Hoad
8/8
Non-executive Directors
Anne Thorburn
8/8
4/4
2/2
4/4
Jack Boyer 1
2/3
1/2
1/1
2/2
Inken Braunschmidt 2
4/4
2/2
0/1
2/2
Michael Ord 3
7/8
4/4
1/2
3/4
Alison Wood
8/8
4/4
2/2
4/4
1 Jack Boyer stepped down from the Board on 10 May 2024.
2 Inken Braunschmidt was appointed to the Board on 1 July 2024.
3 Michael Ord was appointed to the Audit Committee on 10 January 2024.
BOARD ATTENDANCE 2024
Warren Tucker
Peter France
Michael Ord
Mark Hoad
Inken Braunschmidt
Anne Thorburn
Alison Wood
5
4
3
4
3
4
2
2
2
2
2
4
2
3
BOARD EXTERNAL APPOINTMENTS
Listed company mandates (as defined by the ISS UK voting policy)
Listed company boards
UK CORPORATE GOVERNANCE CODE
COMPLIANCE STATEMENT
1. Board leadership and Company purpose
Read more
on page
A. Board effectiveness, long-term value and
sustainability
62-64
B. Purpose, values, strategy and culture
14, 29, 64
C. Governance framework
65
D. Stakeholder engagement
48
E. Workforce policies and practices
28-37, 67
2. Division of responsibilities
F. Roles and responsibilities
69
G. Leadership structure
65
H. External appointments
59-61
I. Board policies and processes
68-70
3. Composition, succession and evaluation
J. Appointments, succession planning and ED&I
72-74
K. Skills, experience, knowledge and length of
service
58-59
L. Performance evaluation
74-75
4. Audit, risk and internal control
M. Financial reporting, internal and external audit
functions
77-79
N. Fair, balanced and understandable
78
O. Internal controls and risk management
50-52
5. Remuneration
P. Policies and practices
87-89
Q. Directors’ Remuneration Policy table
88-89
R. Remuneration outcomes and
performance targets
91-95
The Nominations Committee monitors a schedule of the Directors' tenure and reviews potential departure dates assuming the relevant Directors are not
permitted to serve more than three three-year terms (nine years) from their appointment date, unless in exceptional circumstances.
GOVERNANCE AT A GLANCE CONTINUED
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
59
BOARD OF DIRECTORS
OUR TEAM
Corporate Social
Responsibility
Committee
OUR COMMITTEE KEY
N
R
G
C
A
Nominations
Committee
Remuneration
Committee
Governance and
Risk Committee
Audit
Committee
Chair of the
Committee
Warren Tucker
Chair
N
R
Joined: April 2020
Current external appointments:
– Non-executive director and
chair of the audit committee of
Tate & Lyle plc (UK Listed)
– Non-executive director and
chair of the audit committee of
BCP V Modular Services
Holdings Limited (operating
globally as Modulaire)
– Trustee on the board of Magna
Learning Partnership and
Chalke History Festival
Relevant skills and experience:
– Strategy/Growth
– M&A/Financing
– Equity and Debt Capital Markets
– Financial and Risk Management
– International Business
– Manufacturing/Engineering
– Operations/Supply Chain
– Aerospace & Defence sector
– Investor Relations
Past appointments:
– Non-executive director of
Reckitt Benckiser Group plc and
the Foreign, Commonwealth
and Development Office
– Chief financial officer of
Cobham plc
Peter France
Chief Executive Officer
G
C
Joined: October 2023
Current external appointments:
– Non-executive director of Spirax
Group plc (UK Listed)
Relevant skills and experience:
– Strategy Growth
– M&A
– Integration
– Innovation
– International Business
– Risk Management
– Talent Succession
– Leadership Management
– Engineering/Manufacturing
– Sales and Marketing
Past appointments:
– Chief executive officer of ASCO
Group Limited
– Chief executive officer of
Rotork plc
Alison Wood
Independent
Non-executive Director
R
N
A
Joined: July 2016
Current external appointments:
– Non-executive chair of Galliford
Try Holdings plc (UK listed)
– Senior independent director and
chair of remuneration committee
of Oxford Instruments plc (UK
Listed)
– Senior independent director of
Morgan Advanced Materials plc
(UK listed)
– Board adviser for British
Standards Institution (BSI)
Relevant skills and experience:
– Strategy/Growth
– Remuneration Policy-Setting
– M&A/Financing
– International Business
– Regulatory
– Talent and Succession
– Risk Management
– Investor Relations
– Aerospace & Defence sector
Past appointments:
– Global director corporate
development & strategy for
National Grid plc
– Group strategic development
director for BAE Systems plc
– Non-executive director of
Capricorn Energy plc, Cobham
plc, e2v technologies plc, BTG
plc, THUS plc, and Costain Group.
Anne Thorburn
Senior Independent Non-
executive Director
A
N
R
Joined: July 2019
Current external appointments:
– Senior independent director of
IMI plc (UK listed)
– Board member and chair of the
audit committee of SPT
LabTech Limited
Relevant skills and experience:
– Strategy/Growth
– Financial Management
– Risk Management
– Audit and Internal Control
– M&A/Financing
– International Business
– Operations/Supply Chain
– Medical and Industrial Sectors
Past appointments:
– Senior Independent director and
chair of Audit Committee of
Diploma PLC (UK listed)
– Chief financial officer of Exova
Group plc
– Group finance director of British
Polythene Industries plc
– Non-executive director of
BTG plc
Mark Hoad
Chief Financial Officer
G
C
Joined: January 2015
Current external appointments:
– Non-executive director and
chair of the audit committee of
De La Rue plc (UK listed)
Relevant skills and experience:
– Strategy/Growth
– Leadership/Management
– Financial Management
– International Business
– Restructuring
– Transformation
– M&A/Financing
– Equity and Debt Capital Markets
– Investor Relations
– Risk Management
– Aerospace & Defence sector
Past appointments:
– Group finance director of BBA
Aviation plc
60
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BOARD OF DIRECTORS CONTINUED
Corporate Social
Responsibility
Committee
OUR COMMITTEE KEY
N
R
G
C
A
Nominations
Committee
Remuneration
Committee
Governance and
Risk Committee
Audit
Committee
Chair of the
Committee
Michael Ord
Independent Non-executive Director
N
R
A
Joined: January 2023
Current external appointments:
– Group Chief Executive of Chemring
Group plc (UK listed)
Relevant skills and experience:
– Strategy/Growth
– Transformation
– Technology/Innovation
– Manufacturing/Engineering
– Product Technology
– Risk Management
– Leadership/Management
– Aerospace & Defence sector
Past appointments:
– Managing director of business units
of BAE Systems plc
– Trustee of The Education & Training
Foundation
Inken Braunschmidt
Independent Non-executive Director
N
R
A
Joined: July 2024
Current external appointments:
– Non-executive director and chair of
the remuneration committee of
Xaar plc (UK listed)
– Non-executive director and chair
of the remuneration committee of
James Fisher and Son plc (UK
listed)
– Member of Digital Programme
Board of the Royal Academy of
Engineering Society
Relevant skills and experience:
– Strategy/Growth
– International Business
– Technology/Innovation
– Transformation
– M&A/Financing
– Manufacturing/Engineering
– Remuneration Policy-setting
– Talent/Succession
– Leadership/Management
– Medical, Energy and Marine
Services Sector
Past appointments:
– Chief Innovation and Digital Officer
and member of the Executive Board
of Halma plc
– Chief Innovation Officer RWE AG &
Innogy SE
Ian Buckley
General Counsel and Company
Secretary
G
C
Joined: March 2024
Relevant skills and experience:
A qualified solicitor, with a
postgraduate diploma in intellectual
property law and practice. Ian has over
15 years’ experience advising on UK
and international matters, focusing on
corporate, commercial, regulatory,
intellectual property and litigation.
Past appointments:
– Solicitor with Reed Smith LLP, with a
practice focused on M&A and life
sciences.
Eric Lakin
Chief Financial Officer (Designate)
G
C
Joined: April 2025
Relevant skills and experience:
Eric joined TT in January 2025 as CFO
(Designate) in preparation for the
retirement of Mark Hoad in April 2025.
Eric is a highly experienced CFO with a
proven track record in engineering and
industrial sectors. Eric will join the
Board from the date of the 2024
results announcement and will stand
for election by our shareholders at the
next AGM in June 2025.
Past appointments:
– Chief Financial Officer of Ceres
Power plc
– Chief Financial Officer of Smiths
Interconnect
– Chief Financial Officer of Morpho
Detection
Read more
on Board biographies
on our website:
www.ttelectronics.
com/investors/
leadership/
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61
CHAIR’S INTRODUCTION TO GOVERNANCE
WHAT’S INSIDE
Chair’s introduction
62
Governance at a glance
58
The Board
60
Leadership and
Company purpose
66
Nominations
Committee
report
71
Audit Committee
report
76
Remuneration
Committee report
82
Other statutory
disclosures
100
DELIVERING
GOOD
GOVERNANCE
To further unlock growth opportunities
and strengthen governance during the
first half of 2024, the Group transitioned
from a divisional to a function-led
regional structure.”
Warren Tucker
Chair
GOOD GOVERNANCE
The Board continues to drive high standards of
governance across the Group. Our Governance and
Directors’ Report explains how we have applied the
principles and provisions of the UK Corporate
Governance Code 2018 (“the Code”). Additionally, the
Board has been working closely with internal functions
and external advisers to ensure TT is in the best
possible position to comply with the updated 2024
Corporate Governance Code published by the Financial
Reporting Council (“FRC”).
This year we put our leadership succession planning
into practice through a CFO retirement transition
process, and the integration of a new Non-executive
Director (“NED”) Board member. I am pleased to report
that this succession planning activity led to the
appointment of Eric Lakin in January 2025 as CFO
Designate, and his appointment as CFO and to the
Board effective from the date of the 2024 results
announcement. Eric is a highly experienced CFO with a
proven track record in engineering and industrial
sectors. He was most recently CFO of Ceres Power,
a FTSE clean energy technology business. Before that
he spent ten years at Smiths Group in a variety of
roles, latterly as CFO of Smiths Interconnect. The
Group is already benefiting from Eric’s experience
and expertise.
I would like to acknowledge formally the Board’s
appreciation for the significant contribution made by
our outgoing CFO, Mark Hoad, to TT’s continued
progression. Mark served as CFO for over ten years,
and has been instrumental in transforming the
business and creating the platform that we have today
in higher growth sectors, with improved customer
focus and market penetration.
Additionally, we were pleased to welcome Inken
Braunschmidt as a new NED, her wealth of experience
on strategy, innovation and technology is already
benefiting the Group. Inken’s appointment also forms
part of our succession planning for the Chair of the
Remuneration Committee with Alison Wood
completing nine years of service and standing down
at the 2025 AGM. I would like to formally acknowledge
the Board’s appreciation for Alison’s invaluable
contribution to TT, in particular, for the energy,
commitment and enthusiasm with which Alison has
carried out her duties as Chair of the Remuneration
Committee. Jack Boyer retired as a NED during the
year. The Board greatly appreciated Jack’s wisdom
and commitment over his seven years with the Group.
For more information on the CFO transition process
and NED appointment, please see the Nominations
Committee report on page 72.
2024 additionally saw Peter France complete his
first 12 months as CEO and his reflections on those
first 12 months are set out in his CEO report (see
page 5).
Market and operational developments
In response to a challenging year, with delays and
very significant reductions in order intake for our
components business, and operational issues
affecting two of our North American sites, the Board
took proactive steps and made prompt decisions.
Those challenges regrettably necessitated the
issuance of a negative Trading Update in September,
which flowed through into further actions to optimise
efficiency across the Group, and to lower our cost base
throughout the Group. The Project Dynamo self-help
programme continues to focus on efficiency, growth
and innovation. Read more on page 5.
The Board received an unsolicited highly conditional
proposal for the Group from two parties, as disclosed
to the market in November, both of which were rejected
as undervaluing the Group and its long-term prospects.
These developments required the Board to carefully
consider the impacts on each of its stakeholder
groups, with whom we appropriately engaged with
speed and candour. In particular, we appreciate the
open conversations that we were able to have with
both our shareholders and our people. Our people
have shown great commitment and resourcefulness
through supporting the needs of the business,
responding to the market and operational
developments and implementing our Project Dynamo
self-help programme.
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CHAIR’S INTRODUCTION TO GOVERNANCE CONTINUED
Strategic prioritisation for future growth
Whilst responding to the market and operational
developments noted above, the Board has also
remained focused on delivering the other strategic
priorities of the Group in 2024, and has continued to
prioritise operational improvement in key areas such
as Health and Safety, Sustainability, ED&I and linking
our corporate purpose and values to our culture. In
2024 we introduced a revised streamlined purpose for
the Group “To engineer and manufacture electronics
solutions enabling a safer, healthier and more
sustainable world”. This revised purpose provides an
appropriate reflection of the Group’s direction and the
Group’s impact on the world; it also provides an
underpin and focus through which we seek to
strategically grow our business and its positive impact.
To further unlock growth opportunities and strengthen
governance during the first half of 2024 the Group
transitioned from a divisional, to a function-led regional
structure with functional experts in commercial,
operations, engineering, HR and legal furthering efforts
to deliver the standardisation and delivery of best
practice across the Group. This approach seeks to
drive efficiency and good governance by ensuring
functional oversight which is then represented at the
TT Management Board.
The Strategic report highlights the key areas of focus
for the Board in 2024 in driving forward TT’s strategic
plan, which are reinforced in the “People, environment
and communities” section (on page 28) and the
stakeholder engagement summary on page 47 (which
also includes our s172 statement). These sections
outline the continued focus on people and
sustainability initiatives throughout the year. The
following initiatives are particularly noteworthy, in
highlighting the Board’s focus on TT’s strategic
prioritisation:
– The adoption of the Project Dynamo self-help
programme, focused on efficiency, growth and
innovation. Project Dynamo is the vehicle through
which the Company will deliver the operational
efficiency improvements and operational
prioritisation to deliver future growth.
– Restructuring from a divisional to a function-led
regional structure, to deliver the standardisation and
delivery of best practice across the Group, with
greater functional governance oversight.
– The implementation of a review and strengthening
of our approach to identifying and addressing key
risks for our business, see Audit section at page 78
for further details.
– Through the Group’s continued commitment to
achieving Net Zero, and the further progress made
on that journey, the Group has been able to bring
forward its Net Zero target for Scope 1 & 2
emissions by five years to 2030. This is a great
achievement and is testament to focus and efforts
of our people to tangibly deliver on our sustainability
journey.
– Following the buy-in of the Group’s UK defined
benefit pension scheme in November 2022, thus
de-risking the scheme, the progression to complete
the buy-out resulting in a further surplus refund of
£15 million received during 2024 (as described in
more detail in the CFO Review on page 25).
– The completion in March 2024 of the divestment of
the Group’s Hartlepool and Cardiff, UK and
Dongguan, China sites, which provided electronics
manufacturing services and certain connectivity
products, principally to industrial clients. The
divestment simplified the operational footprint of the
Group, enabling greater focus on growth
opportunities in the Group’s core business and end
markets.
– The increase of operational capability at existing
sites in Mexicali, Mexico and Kuantan, Malaysia, to
provide customers with enhanced, lower-cost
optionality in the changing geopolitical climate.
– The continued focus on talent management, ED&I
and succession planning (as described in more
detail in the Nominations Committee report on page
73).
– Cash flow generation and debt reduction.
Diversity and stakeholder engagement
Following the appointment of Inken Braunschmidt as a
NED on 1 July 2024, the female composition of our
Board is 42.85 per cent, in compliance with the UK
Listing Rules (UKLR 6.6.6R(9)) target of 40% female
representation on listed company boards. In addition,
we were pleased to announce, effective 10 May 2024,
the appointment of Anne Thorburn as the Group’s
Senior Independent Director, in compliance with the UK
Listing Rules target that at least one senior Board
position is held by a woman. This evidences the
Group’s continued direction of travel in terms of
promoting gender diversity at the Board level. As at the
date of publication, we have not met the FCA target as
stated in UKLR 6.6.6R(9) that at least one member of
the Board should come from an ethnic minority
background (read more in the Nominations Committee
report on page 73).
As we explain in the Nominations Committee report on
page 72, the Board are committed to working on NED
succession planning over the next year and we are
hopeful that this will improve the level of gender and
ethnic diversity on our Board in the future. A core
element of our approach to diversity is based around
the wide range of experience that our Board members
bring to the decision-making process, as well as their
capability in sectors that are close to TT’s business
operations. It is my view that this wealth of expertise,
together with the honest, open and collegiate way in
which the Board operates, lies at the heart of how we
operate as a collective group in progressing TT’s
growth agenda.
The Board has maintained a strong focus on
stakeholder engagement, in an attempt to better
understand the impact of external macroeconomic
factors on the Group’s core business and ensure the
effective linkage of the Group’s culture and purpose
to the Company’s strategic plan. This approach has
led to, and is reflected in, the introduction of TT’s
revised Purpose statement in 2024. Wherever
possible, meetings have been held face to face, and
with a wide range of important stakeholder groups,
including TT staff and senior management, and
shareholder representatives, with due consideration
given to customers and suppliers.
Read more
about Board
diversity
on page 73
Read more
about Stakeholder
Engagement
on page 48
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63
CHAIR’S INTRODUCTION TO GOVERNANCE CONTINUED
These key stakeholder events in the 2024 Board schedule
included the following:
– Board visits to our Manchester, UK and Suzhou, China sites, to
meet senior management and staff working in these business
units.
– As part of her induction programme, Inken spent one on one
time with key personnel within the Group’s leadership team
and visited three of TT’s sites, with further visits scheduled for
Inken in 2025.
– Various face-to-face sessions were conducted by the NEDs
throughout the year with site leaders and divisional/functional
heads to discuss business dynamics and operational
challenges (through Board dinners and ad hoc meetings).
– Face-to-face dialogue was held with key advisers (including
TT’s brokers and financial advisers) on key areas of strategic
planning and investor relations, together with targeted
engagement with investors involving (at separate times) the
Chair, CEO and CFO (see page 49 for more detail).
– As part of the annual Board cycle, the Chair met with a
number of shareholders who accepted his invitation to
discuss TT’s business; this process was supplemented by
additional shareholder meetings to discuss the market and
operational developments in the second half of the year.
The Board believes that these meetings have been important in
setting the Group’s strategic direction, across various regions
(with different cultural approaches), reflecting factors such as
cost inflation pressures, geopolitical challenges and staff
retention/hiring considerations, without losing sight of TT’s
corporate purpose. Some examples of how these factors have
impacted the Board’s decision-making in 2024 are set out in the
“Stakeholder engagement” section (on page 48) and elsewhere
throughout the Strategic report.
UK Corporate Governance Code compliance
TT is committed to achieving and maintaining the highest
standards of corporate governance. Throughout the year, the
Group was compliant with all of the relevant provisions of the
Code. The Code is available to view at the website of the FRC,
www.frc.org.uk. The table on page 59 sets out where details and
explanations of the application of the principles of corporate
governance can be found in this Annual Report. Throughout the
year, the Group was compliant with all of the relevant provisions
of the Code, which included reviewing the new 2024 Code and
ensuring processes were in place to meet the new requirements.
Conclusion
Despite the market and operational challenges faced by the
Company over 2024, the Group’s strong corporate culture and
the resourcefulness of its people demonstrate the Group’s
ability to adapt and evolve. That evolution is ongoing, through
the strategic changes instigated through 2024 by our new CEO
and overseen by the Board, and which will continue in 2025 with
the input of a new CFO. The Board will continue to play a
proactive role in building upon our strong corporate culture, and
our strong business fundamentals, to deliver future growth.
The Board’s main role is to provide oversight and leadership of
the Group, to determine and ensure the implementation of the
Group’s strategy, and to maintain the highest standards of
corporate governance. Underpinning these aspects of the
Board’s responsibilities lies the principal aim of ensuring the
sustainable, long-term success of the Company.
The Board understands the relationship between the Company’s
purpose, strategy and values and their importance to the
long-term success of the Group. The Board oversees and
monitors our culture to enable the Board to be satisfied that it
aligns with the Group’s purpose, values and strategy and is
reflected consistently in our workplace policies and practices.
RELATIONSHIP BETWEEN PURPOSE, STRATEGY AND VALUES
WHY?
Our corporate Purpose describes why we do what we do
and aligns the whole of the Company.
WHAT?
Our strategy defines what we do for both our employees
and our wider stakeholders. The Company’s strategy is
clearly defined and regularly reviewed by the Board. The
multi-year strategic plan is discussed in detail and is
approved annually, based on the Company’s activities; its
progress on delivering strategic priorities; and challenges
identified within the business and in the wider
macroeconomic and geopolitical environment.
HOW?
The Company’s values, culture and behaviours drive how
we execute our relationships with internal and external
stakeholders and our strategic vision. Our TT Way values
(see page 29) describe our culture and set out how we
expect our employees, from the top down, to conduct
business and act with integrity, transparency and
professionalism.
Good governance sets the tone for the culture of TT. The
Board and Executive Directors strive to promote an
atmosphere of openness and trust throughout the Group.
The Company’s Purpose statement is:
To engineer and manufacture electronics solutions enabling
a safer, healthier and more sustainable world.
The Board considers that this Purpose is an appropriate
reflection of the Group’s culture, strategic direction and
impact on the world.
COMPANY PURPOSE, STRATEGY AND VALUES
64
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LEADERSHIP STRUCTURE
2024 has seen a number of organisational changes
for TT and the leadership structure has evolved to
reflect the new strategic plans for the Company. The
TT Management Board (“TMB”) replaced the
Executive Leadership Team in 2024 with the remit to
review performance and implement any actions
necessary to drive delivery of the Group’s key
strategic priorities. The senior leadership team
constitutes the TMB, together with site and specific
functional leads, with the remit to review and discuss
strategic and operational matters, and to aid onward
information sharing. A new Corporate Social
Responsibility Committee was formed which has
oversight delegated to it from the Board for all CSR
matters (see page 39 for more information), these
matters are covered by the CSR’s sub-committees
for:
– People, Social, ED&I (“PSED&I”) – covering all
aspects of employee engagement, communities,
ED&I and employee wellbeing.
– Governance and Risk – responsible for compliance
with regulatory requirements, policy-setting,
identifying and creating a framework for the
Company’s risks and managing Business
Continuity Plans.
– Sustainability – responsible for communication
and education around sustainability in the different
contexts of TT, setting policies and procedures,
ensuring best practice and regulatory compliance
and reporting to internal and external stakeholders,
developing actions and frameworks to inform TT’s
strategic planning process.
– Health and Safety, Security, Environment and
Quality (“HSSEQ”) – which monitors statutory
compliance, develops HSSEQ management
systems and tools, reports on HSSEQ performance
and evaluates risks relating to the Company’s
activities.
CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER
REMUNERATION
COMMITTEE
Committee report on
page 82
NOMINATIONS
COMMITTEE
Committee report on
page 71
AUDIT
COMMITTEE
Committee report on
page 76
DISCLOSURE
COMMITTEE
Reviews potential
existence of and
manages the disclosure
of inside information
BOARD
TT MANAGEMENT BOARD
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
SENIOR LEADERSHIP TEAM
SUSTAINABILITY
COMMITTEE
HSSEQ
COMMITTEE
GOVERNANCE & RISK
COMMITTEE
Key
Reporting
Delegation
The terms of reference for each of the Audit, Remuneration and Nominations Committees
can be found on our website. The terms of reference are reviewed and approved annually.
PEOPLE, SOCIAL,
ED&I COMMITTEE
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65
BOARD ACTIVITIES
LEADERSHIP AND COMPANY PURPOSE
During the financial year the Board discussed and implemented the following key actions:
STRATEGY
– Strategic planning for future growth
– Creation of additional manufacturing capacity at
Kuantan (Malaysia)
– Completion of the divestment of the Group’s sites
in Hartlepool, Cardiff and Dongguan (China)
– Oversight of engineering, technology and product
roadmaps
– Organisational restructuring from a divisional to a
function-led regional approach
– Revised structure of Councils and Committees to
improve governance oversight and reporting lines
– Deep-dive reviews and strategic planning for sites
with operational challenges and to mitigate
headwinds in components business
ESG/ENGAGEMENT
– Sustainability planning and progress (including
continued development of our Net Zero journey
bringing forward Net Zero scope 1 & 2 to 2030)
– Site visits: Manchester and Suzhou (aligned with
scheduled Board meetings) and other ad hoc
visits for individual Board members (see page 70)
– Implementation of green energy initiatives for a
number of sites (see page 35)
– Improving cybersecurity certifications and
defence against significant security attacks
– New CSR/ESG Committee structure and
improved reporting lines to the Board regarding
people, HSE, governance, environment and
sustainability and quality compliance
PEOPLE
– Organisational re-structuring to a functional
matrix structure
– CFO succession planning and transition plans
– Induction programme for new NED
– Recruitment and retention processes and
succession planning
– Direct employee engagement sessions with the
Board in Manchester and Suzhou
– Enhanced engagement process introduced
through the PSED&I Committee
IR
– Regular Investor Relations (“IR”) updates on share
price progression and movements in major
shareholdings
– Investor feedback analysis
– Capital Markets Event
– Investor engagement relating to bid defence and
trading updates
FINANCIAL
– Improving financial reporting from site level to
Group Executive Committees
– Regular review of existing and emerging financial
risks
– Pensions, pension surplus refund and buy-out of
a US defined benefit pension scheme
– Trading updates and results
– Tax/Treasury reviews
– Self-help programme, Project Dynamo, to
maximise potential through commercial and
operational improvements
OPERATIONS
– Customer engagement and improving customer
relationships and service
– Board-level CRM, Marketing and Net Promoter
Score review
– Contract wins and commercial bids reported at
each meeting
– Overview of supply chain resilience
– Overview of site-specific operational
performance
– Global geopolitical events
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WE DO THE RIGHT THING
BOARD OVERSIGHT OF CULTURE MATTERS – OUR TT WAY VALUES
LEADERSHIP AND COMPANY PURPOSE CONTINUED
Our TT culture gives us
a true competitive
advantage and makes us
a great company to work
for and with.”
Clare Nicholls
EVP Human Resources
From ethics within our workforce and
safety matters, to consideration of
our wider impact on the environment
and our communities, we pride
ourselves on doing the right thing
and encourage others to do the
same. Our customers benefit from
our focus on providing cleaner,
smarter and healthier solutions to
technology challenges.
– Statement of Values and Business
Ethics Code
– Whistle-blowing reports
– Safety metrics
– Integration of ESG and sustainability
matters into decision-making and
business practices as a strategic
priority
– Net Zero Scope 1 & 2 target by 2030
and other environmental impact
reduction work
– Anti-bribery and corruption policies
– Modern Slavery Policy
– Global supplier standards for
corporate and social responsibilities
– Gender Pay Gap reports
– ED&I Policy
WE BRING OUT THE BEST IN EACH OTHER
Our people are our greatest asset.
We know that supporting
development, promoting wellbeing,
ED&I and collaborating with our
colleagues leads to better
performance for our people and our
business.
– Leadership programmes and
conferences
– Succession planning/talent reviews
– Remuneration schemes and
employee benefits
– Cross-divisional working and
information sharing
– Workforce engagement on
remuneration
WE ACHIEVE MORE TOGETHER
Throughout the business, our people
are encouraged to share their ideas
and feed back to improve the way we
work. Our culture of openness and
transparency is demonstrated
through the reporting systems we
have in place and the two-way
conversations we have with our
employees, our customers and our
suppliers.
– Best practice sharing across the
Group
– Ensuring transparency in reporting
systems
– Site-specific pulse surveys
– Voice of the Customer surveys
– Board engagement directly with
employees throughout the year
– Project Dynamo employee ideas
WE CHAMPION EXPERTISE
Our talented team of design,
engineering and manufacturing
experts operates in a supportive
culture that champions knowledge,
skills, innovation, problem-solving
and service. We cannot achieve our
purpose without passionate support
for technical expertise in the
business – from R&D and
manufacturing to marketing and
sales.
– Focus on capabilities – power,
connectivity, sensing, and
manufacturing and engineering
– R&D investment as a percentage of
sales target
– Review of product roadmaps
– BE Inspired awards for individual
achievements
– Focus on training, STEM and
apprenticeship initiatives
WE GET THE JOB DONE...WELL
TT’s performance outcomes are an
indicator of getting the job done, but
our success is based on a culture of
pride within our organisation to do
the best job we can. From the
boardroom to our manufacturing
sites, decision-making is based on
achieving the best results the TT
Way.
– Strategic decisions for long-term
success
– Strong capital discipline and
financing to ensure continued
availability of funds to invest in the
business
– Continual site rationalisation reviews
– Improved asset and product
roadmaps
– Customer feedback and Voice of
Customer surveys
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67
LEADERSHIP AND COMPANY PURPOSE CONTINUED
pipeline and climate-related risks and opportunities)
together with operational, financial, human resources,
HSE and sustainability, legal, governance and investor
relations items.
The Directors reviewed, throughout the year, the
opportunities and risks to the future success of the
business by receiving and discussing information from
both internal and external sources regarding the issues
affecting the business, the wider industry and the
macroeconomic/geopolitical environment. The
non-standard areas of focus for the Board in 2024 are
shown on page 66.
Leadership structure
Details of TT’s Board of Directors are set out on pages
60 to 61 of this report. The leadership structure chart
on page 65 provides further information on how
leadership at the Board level is discharged. Most
importantly, the Board comprises a majority of
independent NEDs, with the division of responsibilities
between the Chair and Chief Executive Officer having
been clearly articulated. The Board believes that its
composition, the structure of its principal Committees
and the processes it has in place to discharge its
primary areas of responsibility, meet the requirements
of “Board Leadership” and “Composition” under the
Code.
The Board has established a number of Committees,
each with its own delegated authority defined in
terms of reference. The Board reviews these terms
periodically (the last occasion being in December
2024) and 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.
For the purposes of engagement with the workforce
under the Code, the Board has revised its method of
engagement in 2024. Prior to 2024, the Company
adopted the designated NED approach for Voice of the
Employee engagement. In 2024 this process was
changed as the Board determined that to maximise
engagement all NEDs should have responsibility for
employee engagement. The Board considers this
arrangement to be effective because it allows every
Board member to participate, rather than channelling
engagement through a single Director, enabling
insights and engagement to occur collectively and
giving more members of the Board access to direct
engagement activities with our employees. The
Committees reporting to the Board on employee
matters were also changed in 2024, the new Corporate
Social Responsibility Committee (“CSR”) constitutes all
of the TMB members and feeds in directly to the
Board. The CSR Committee receives regular updates
from the newly formed PSED&I Committee, whose role
is to: initiate, monitor and regularly review employee
engagement activities across all sites; manage the
format and process of Board engagement with
employees; monitor and assess the Company culture
and how it is being reflected in employees’ actions and
behaviour from the top down. The Board is kept fully
informed of the voice of the employee and
sustainability initiatives including climate-related risks
through the CSR reports and regular reports from the
EVP HR on employee engagement. More information
on our employee engagement activities is provided on
page 30 and sustainability initiatives, including
climate-related risk described from page 35. More
information on the work of the CSR and PSED&I
Committees can be found on pages 39 and 30.
LEADERSHIP
The Board
Subject to the Company’s Articles of Association,
UK legislation and any directions given by special
resolution, the Board manages the Company’s
business. The Board has reserved certain specific
matters to itself for decision. These include strategic
development; financial policy/reporting; internal control
and capital structure (including tax and treasury
matters); policy relating to acquisitions and disposals;
contracts exceeding certain thresholds; and corporate
governance matters (including non-financial policies
and appointments/remuneration at a management
layer below Board level).
The Board appoints its members, and those of its
principal Committees, having received the
recommendations of the Nominations Committee.
It also 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, including
emerging risks, and the effectiveness of the Group’s
system of internal control as set out on pages 50 to 55.
Board and Committee meetings are scheduled in line
with the Company’s financial calendar, thereby
ensuring that the 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. Additional
meetings were held in the year to address
performance and trading updates, site performance
challenges and bid defences. The Board has held two
principal meetings to date during 2025. The NEDs
meet, without the Executive Directors present, during
the course of each scheduled Board meeting, as a
standing agenda item.
The main events in the Board calendar are the approval
of the half-year and full-year results, the Board site
visits, the review of the multi-year strategic plan and
the approval of the budget towards the end of the year.
At each meeting during 2024 the Board discussed
strategic issues (principally focused on organisational
restructuring, financial performance from site-level to
Group-level, operational restructuring, opportunity
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LEADERSHIP AND COMPANY PURPOSE CONTINUED
DIVISION OF RESPONSIBILITIES
Chair, Chief Executive Officer and Senior Independent Director
The division of responsibilities between the Chair and the Chief Executive Officer has been defined, formalised in writing and approved by the Board:
ROLES AND RESPONSIBILITIES
Chair
Chief Executive Officer
Senior Independent Director
Maintains responsibility for:
– The leadership and effectiveness of the Board
and for setting its agenda
– Ensuring all Directors receive accurate, timely
and clear information on financial, business and
corporate matters so they can participate in
Board decisions effectively
– Facilitating the effective contribution of NEDs
– Ensuring constructive relations between
Executive and Non-executive Directors
– Ensuring effective communication with
shareholders
– Ensuring the performance of individual
Directors, the Board as a whole, and its
Committees are evaluated at least once a year
Maintains responsibility for:
– The operations of the Group
– Developing Group objectives and strategy,
having regard to the Group’s responsibilities to
its shareholders, customers, employees and
other stakeholders
– Successful implementation and achievement of
strategies and objectives, as approved by the
Board
– Managing the Group’s risk profile, including its
HSE/Sustainability performance
– Ensuring the Group’s businesses are managed
in line with strategy and approved business
plans, and complying with applicable legislation
and Group policy
– Ensuring effective communication with
shareholders
– Setting Group human resource policies,
including management development and
succession planning for the senior
management team
Maintains responsibility for:
– Reviewing the performance of the Chair
– Providing a sounding board for the Chair on
strategic matters/succession planning
– Supporting the Board on the delivery of key
objectives
– Acting as an intermediary for Board members
and/or an alternative point of contact for
investors (as required)
DIRECTORS’ INTERESTS
The table showing the beneficial interests held by
Directors of the Company (directly or through their
connected persons) at 31 December 2024 is shown
in the Remuneration report on pages 94 and 95. There
have been no changes to the number of shares held by
Directors between 31 December 2024 and 8 April
2025.
CONFLICTS OF INTEREST
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
Directors may have, and for the authorisation of such
conflicts by the Board. All new external appointments
taken on by Directors in 2024 were pre-approved by the
Board before the effective date of the appointment. 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, we conduct a review
of Director conflicts of interest annually.
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69
LEADERSHIP AND COMPANY PURPOSE CONTINUED
APPOINTMENTS TO THE BOARD
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 or her 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 71.
COMPENSATION FOR LOSS OF OFFICE
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 Policy. Copies of the
Executive Directors’ service contracts and letters of
appointment of the NEDs are available for inspection
by any person at the Company’s registered office,
during normal business hours on any weekday (other
than public holidays) and at the AGM from 15 minutes
before the start of the AGM until its conclusion.
BOARD SUPPORT
All Directors have access to the advice and services
of the Group General Counsel and the Company
Secretary. They are also offered training to fulfil their
role as Directors, both on appointment and
subsequently. In 2024 there were Board sessions
aimed at developing a greater awareness and
understanding of our business and stakeholders.
The Board visited our sites in Manchester and Suzhou
where they received presentations about site-based
operations and completed employee engagement
sessions. Michael Ord and Inken Braunschmidt also
individually visited sites in the UK and US during the
year. There were also learning update sessions around
IT, cybersecurity, geopolitical risks and the changing
legal and regulatory landscape. There is an agreed
procedure for any individual Director to take
independent professional advice at the Company’s
expense if they consider it necessary.
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.
Each member of the Board, including the SID, has the
right to include items on the Board agenda or the
agenda of the Committees they sit on.
RELATIONS WITH SHAREHOLDERS
The list of engagement activities and our relations with
shareholders during the year are set out on pages 48
to 49.
Find our Articles of
Association
at www.ttelectronics.
com/investors/
governance
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COMPOSITION, SUCCESSION AND EVALUATION
WHAT’S INSIDE
Principal
responsibilities
71
Key activities during
the year
71
Q&A with the Chair
72
2024 review
73
Board composition
73
Equality, diversity and
inclusion
73
Board and Committee
performance
evaluation
74
Directors’ performance
evaluation
75
NOMINATIONS
COMMITTEE REPORT
PRINCIPAL RESPONSIBILITIES
– Regularly review the structure, size, composition and skill set of the Board
as a whole and make recommendations for any changes to the Board.
– Review the overall leadership needs of the organisation including considering
succession planning for the NEDs (having due regard to their length of
service), Executive Directors and members of the TMB, and make
recommendations to the Board.
– Manage the search for, and selection of, suitable candidates for the
appointment of replacement or additional Directors and nominate candidates
for the approval of the Board.
MEMBERSHIP
Warren Tucker (Chair)
Inken Braunschmidt (appointed 1 July 2024)
Alison Wood
Anne Thorburn
Michael Ord
KEY ACTIVITIES DURING THE YEAR
– CFO succession plan conducted, resulting in the appointment of Eric Lakin
as the new Group CFO, joining the Group as CFO Designate in January 2025
and completing the transition to CFO following the 2024 full-year results in
April 2025.
– NED recruitment process completed, culminating in the appointment of Inken
Braunschmidt to the Board in July 2024.
– Appointment of Anne Thorburn as Senior Independent Director in May 2024.
– Ongoing review of the Listing Rules requirements for Board and senior
management ED&I targets.
– Succession/recruitment project ongoing with an external agency to consider
future NED requirements, factoring in ED&I considerations, NED length of
service and the future needs of the business.
– In-depth review of the Group’s updated organisational structure, which
covered the TMB and key leadership positions.
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71
Q&A
What were the key aspects of the CFO recruitment
exercise that the Committee has overseen in 2024?
As highlighted in the Chair’s Governance statement,
the Nominations Committee was required to put its
succession planning processes into action during
2024, in dealing with both a transition to a new CFO
and the integration of a newly appointed NED. Prior to
the announcement of the intention to retire of our CFO
Mark Hoad, announced in November 2024, the
Committee had maintained an active dialogue with its
external recruitment agency (and other professionals
in the sector) on succession planning, to ensure it
remained current on developments in the Executive
Director recruitment market. As a result, the
Committee was well placed to expedite the CFO
search process, with a role specification being made
available to the recruitment agency in short order and
the launch of the formal process commencing shortly
after the announcement of Mark Hoad’s intention to
retire, considering both internal and external
candidates. This led to the identification of Eric Lakin
as the stand-out candidate by the end of 2024, and,
following contractual discussions, we were able to
announce his appointment as CFO Designate in
January 2025, and his appointment as CFO and to the
Board effective post the full-year results in April 2025.
The systems we already had in place to address
succession issues at the Executive Director level
ensured a successful and seamless transition process
from Mark to Eric.
In identifying the preferred CFO candidate, the
Committee followed a rigorous process in selecting a
candidate equipped with the necessary skills and
experience to take the Group on to the next stage in its
progression. This process included one-on-one
interviews with the NEDs and the CEO, each of whom
came to an early view that Eric Lakin would be the ideal
successor as CFO. Ultimately, it was Eric’s track record
over many years as a high-performing CFO, with listed
company experience, in international businesses
closely aligned with TT’s area of operations, which
was the determining factor.
This CFO search exercise represented the key priority
for the Committee during the past year.
To what extent was the Committee able to address the
Listing Rules requirements on ED&l?
I am pleased to report that during 2024 our ongoing
efforts to promote diversity on the Board were
successful. Following the appointment of Inken
Braunschmidt as a NED on 1 July 2024, the female
composition of our Board is up to 42.85 per cent, in
compliance with the UK Listing Rules target of 40%
female representation on listed company boards. In
addition, we were pleased to announce, effective 10
May 2024, the appointment of Anne Thorburn as the
Group’s Senior Independent Director, in compliance
with the UK Listing Rules target that at least one senior
Board position is held by a woman. This evidences
the Group’s continued direction of travel in terms of
promoting gender diversity at the Board level. We do,
however, recognise that our female representation on
our TMB is only at 17 per cent and we are committed
to improving the diversity of our Board, TMB and the
senior leadership below the TMB level.
TT’s stated position on ED&I (together with its Board
policy in this area) were key drivers in its approach to
the NED and CFO recruitment. In particular, our
appointed external recruitment agent was asked to
consider candidates from non-traditional professional
and academic backgrounds, whose career history and
experience might not typically be aligned with a search
process for a UK listed engineering company.
We recognise that as at 31 December 2024, and as at
the date of publication, we do not meet the FCA’s target
(as stated in the UK Listing Rules) that at least one
member of the Board should come from an ethnic
minority background. The Committee understands the
intent behind LR 9.8.6(9) and remains committed to
maintaining its focus on increasing the diversity of
thinking/decision-making at the Board level, whilst also
developing a path to full compliance in the future. If
possible, the Committee would hope to achieve this as
part of the possible forthcoming NED recruitment
exercise, recognising the fierce competition for talent
in this area; however, it is also important to recognise
the additional objective of enhancing the Board’s
diversity of perspective, which means identifying future
candidates capable of contributing fully to the Board
debate, with experience and capability in sectors that
are closely aligned to TT’s business operations.
Numerical data on the gender diversity and ethnic
representation of the Board and senior management,
as at 31 December 2024, is set out in the table on
page 74. Each member of the Board and the TMB
submitted a completed questionnaire to enable us to
gather the numerical data required.
What plans does the Committee have in 2025 for
future change at the Board-level?
The Committee is mindful of the fact that (as at the
date of this report), one of our NEDs Alison Wood,
who is also chair of the Remuneration Committee, is
in her ninth year as a Director of TT. As announced on
2 September 2024, our succession plan is well
advanced with Inken Braunschmidt being her
nominated successor effective at the 2025 AGM; the
transition process from Alison to Inken is well
advanced to ensure a smooth transition.
The Board is committed to working on NED
succession planning this year to improve the level of
gender and ethnic diversity on our Board in the future.
A core element of our approach to diversity is based
around the wide range of experience that our Board
members bring to the decision-making process, as
well as their capability in sectors that are close to TT’s
business operations. It is my view that this wealth of
expertise, together with the honest, open and collegiate
way in which the Board operates, lies at the heart of
how we operate as a collective group in progressing
TT’s growth agenda.
COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
I am pleased to report
that during 2024 our
ongoing efforts to
promote diversity on the
Board were successful.”
Warren Tucker
Chair, Nominations
Committee
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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
2022 and we have provided numerical data on the
gender diversity profile of the Board and senior
management in the table set out on page 74. The
Committee remains focused on maintaining gender
balance and addressing ethnic diversity on the Board,
in future Board-level recruitment exercises.
The Committee held two scheduled meetings in 2024
(supported by ad hoc calls) at which, in addition to the
recruitment exercises described above, the Committee
undertook a detailed review of TT’s updated
organisational structure, which covered the senior
management team (operating at TMB level and a layer
below), together with selected members of the wider
leadership group. In this review attention was also
focused on identifying and addressing strengths and
weaknesses across the organisation.
In addition to the activities referenced above:
– The Committee assessed its performance in 2024
as part of the external board evaluation. It was
concluded that the Committee had performed
effectively and was structured appropriately to
provide effective support to the Board.
– The Committee undertook a detailed review of ED&I
performance, both from a perspective of compliance
with LR 9.8.6(9) Board requirements, and through
the wider organisation.
– The Committee undertook a review of feedback
received from Proxy agencies in response to the
2023 Annual Report.
BOARD COMPOSITION
Warren Tucker (Chair), Peter France (CEO), Mark Hoad
(CFO), Anne Thorburn (SID), Alison Wood and Michael
Ord (NEDs) were continuously in place as members of
the Board throughout 2024, with Inken Braunschmidt
joining effective 1 July 2024 as part of the succession
plan to replace Alison Wood. We provide full details of
each Director’s Board and Committee meeting
attendance on page 59 and Directors’ biographies,
including the Committees they serve on and chair,
which can be found on pages 60 to 61.
At the time of his appointment as Chair, Warren Tucker
was considered to be independent in accordance with
the provisions of the Code. All the remaining NEDs are
also considered to be independent as defined by the
Code.
2024 REVIEW
As stated in the Q&A section, the Committee’s key
priority in the past year has been to manage the
process for recruiting a new CFO, which ultimately led
to the appointment of Eric Lakin in January 2025. Eric
is a highly experienced CFO with a proven track
record in the engineering and industrial sectors. He
was previously CFO of Ceres Power, a FTSE clean
energy technology business. Before that he spent
10 years at Smiths Group in a variety of roles, latterly
as CFO of Smiths Interconnect. The Group is already
benefiting from Eric’s experience and expertise.
In addition, the Committee has engaged in
planning the NED induction programme for Inken
Braunschmidt (following her appointment to the
Board in July 2024), to welcome her to the Board
and to ensure a smooth transition to Chair of the
Remuneration Committee effective at the 2025 AGM.
Inken is currently non-executive director of both
James Fisher and Sons plc and Xaar plc, additionally
being chair of the remuneration committee at James
Fisher and Sons plc. Her executive experience
includes six years with FTSE 100 industrials business
Halma plc until 2023, latterly as Chief Innovation and
Digital Officer and member of the Executive Board.
The Group is already benefiting from Inken’s wealth
of experience and expertise.
The Committee is open to the possibility of recruiting
one further NED. The Q&A section provides
background information on the processes
undertaken in managing these recruitment projects,
particularly with regards to the appointment of the
new CFO, which was led by an external recruitment
firm, Russell Reynolds, whose expertise was drawn
upon in developing a detailed role specification and
subsequently a list of candidates. There are no
connections between TT, its Directors and Russell
Reynolds that require disclosure in relation to this
recruitment exercise.
As noted above, the Committee was mindful of the
requirements of LR 9.8.6(9) throughout the CFO
and NED recruitment exercises, The extent of
TT’s compliance to date with LR 9.8.6(9) is also
summarised in the Q&A section, it being noted that a
Board-level diversity policy (which also applies to the
Board Committees) was adopted for the first time in
In accordance with the Company’s Articles of
Association and the Code, Directors must offer
themselves for re-election at the forthcoming AGM.
This practice will continue in the future, to ensure
compliance with the requirements of the Code and the
Company’s Articles of Association. Following formal
performance evaluation, the Board has concluded that
the performance of each Director continues to be
effective and to demonstrate commitment to the role.
The Notice of AGM will set out details of the key areas
of contribution made by each of the Directors in
providing leadership to the Company.
EQUALITY, DIVERSITY AND INCLUSION (“ED&I”)
The Board (through reports from the CEO, EVP HR and
reports of the CSR Committee) receives updates on
the progress of the initiatives launched pursuant to the
Company’s ED&I strategy and monitors the
achievement of targets set in line with the strategy.
A Board-level diversity policy was adopted for the first
time in 2022, which requires the Committee to have
regard to issues such as culture and diversity when
reviewing recruitment practices and succession
planning. This ED&I Board policy assists the
Committee in overseeing a diverse pipeline for senior
management and Board positions.
At all times during 2024, the Committee has sought
to ensure that the Board is balanced and effective,
with diverse skills, knowledge and experience, as
highlighted in the Directors’ biographies on pages 60 to
61. The Committee attaches a high degree of
importance to diversity at all levels across the Group
and is committed to recruiting the best talent available,
based on merit, and assessed against an objective
criteria of skills, knowledge, independence and
experience. We do not advocate a forced approach to
diversity at any level of the organisation. The extent of
TT’s compliance to date with LR 9.8.6(9) is set out in
the Q&A section. We are pleased with the Board ED&I
progress made during 2024.
A table setting out data on the gender diversity profile
of the Board and senior management is set out on
page 74.
For more detail on TT’s approach to ED&I across
the organisation, see page 33 of the “People and
culture” section.
At all times during
2024, the Committee
has sought to ensure
that the Board is
balanced and effective,
with diverse skills,
knowledge and
experience.
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73
COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
BOARD AND COMMITTEE PERFORMANCE
EVALUATION
In accordance with the Code, the Board has conducted
an evaluation of its performance and that of its
principal Committees. For the 2024 review the decision
was taken to undertake an external evaluation exercise,
with Equity Culture being selected as the independent
facilitator to conduct this exercise on behalf of the
Board. There are no connections between TT, its
Directors and Equity Culture that require disclosure in
relation to this exercise. Succession, culture and
diversity considerations formed a key part of the
process of evaluating the future requirements of the
Board and its Committees; indeed, the evaluation
process highlighted the need to ensure that
succession and diversity were actively monitored by
the Committee at both a Board and senior leadership
level and remained firmly on the Board agenda.
BOARD DIVERSITY – GENDER AND ETHNICITY
TT Electronics plc Board of Directors
Senior positions
Executive Management (defined as Executive Leadership Team)
Number of Board Members
% of Board members
Number of senior positions on the Board
(CEO, CFO, SID & Chair)
Number in Executive Leadership Team
% of Executive Leadership Team
Men
4
57.1%
3
5
83%
Women
3
42.9%
1
1
17%
Other/Not specified/Prefer not to say
–
–
–
–
–
TT Electronics plc Board of Directors
Senior positions
Executive Management (defined as Executive Leadership Team)
Number of Board Members
% of Board members
Number of senior positions on the Board
(CEO, CFO, SID & Chair)
Number in Executive Leadership Team
% of Executive Leadership Team
White British or other White
(including minority-white groups)
7
100%
4
6
100%
Mixed/Multiple ethnic groups
–
–
–
–
–
Asian/Asian British
–
–
–
–
–
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group
–
–
–
–
–
Not specified/ prefer not to say
–
–
–
–
–
The Group has selected 31 December 2024 as the reference date for the data provided above.
PROCESS
September 2024: From a long list of potential external
evaluation providers a short list was created and
interviewed with applicable references sought,
resulting in the selection of Equity Culture.
October 2024: The Chair led the process of
determining the areas of focus for the Board interviews
with guidance from Equity Culture.
November and December 2024: One to one interviews
were conducted by Equity Culture with all Directors and
the Company Secretary.
January 2025: Equity Culture prepared their evaluation
report, which was distributed to the Board in advance
of a specifically scheduled Board meeting in January
at which Equity Culture presented their report and
discussed it in detail with the Directors. This facilitated
a detailed Board discussion to assess the key findings
and identify improvement opportunities.
KEY FINDINGS
The evaluation report which was presented to the
Board by Equity Culture and evaluated Board
performance with a focus on the following key aspects:
Board meeting and culture, strategy, succession, risks
and committees. The evaluation exercise highlighted
the broad range of talents, skills and experience within
the Board, with Board relationships described as
productive, professional and appropriately challenging.
In respect of the key aspects:
– Equity Culture and the Board considered the Board
to be effective.
– Board Meetings and Culture – Noted the tone was
viewed as positive, with the Board working “well as a
collaborative unit”, with a focus on fostering active
and open communication.
The evaluation exercise
highlighted the broad
range of talents, skills
and experience within
the Board, with Board
relationships described
as productive,
professional and
appropriately
challenging.”
Warren Tucker
Chair, Nominations
Committee
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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED
– Strategy – Noted the focus on turning around the
business following the September trading update,
with a requirement for delivery focus and greater
operational effectiveness.
– Succession – Noted the view that Board succession
had been handled efficiently. Further noted the
positive view of the relatively recent NED
appointment of Inken Braunschmidt, and previously
Michael Ord, both of whom possessed turnaround
experience.
– Risk – Noted the key risks identified within the
business, and the desire for continual improvement
in this area to build on risk processes and oversight.
– Committees – Noted a unified and positive response
regarding the work of all the Committees.
In summary, the Board concluded from the evaluation
exercise that the Board, its members and Committees
had performed effectively over 2024, with all members
giving due commitment to his or her role.
DISCUSSION POINTS AND AREAS OF FOCUS
The 2024 evaluation review highlighted developmental
areas for further consideration, which included the
need to ensure that strategic planning, people and
monitoring of business performance remained at the
centre of the Board’s thinking and approach. We will
continue to strengthen and develop our approach
during 2025, including through allotting more time to
strategic planning and people considerations, and
increasing the reporting reviewed by the Board around
business-critical delivery and major projects.
DIRECTORS’ PERFORMANCE EVALUATION
In accordance with the Code, the performance of
individual Directors was evaluated during 2024.
For the NEDs, the output from a private meeting held
between the Chair and the Executive Directors formed
the basis for individual appraisals held by the Chair
with each NED, together with input from Equity Culture.
This also provided an opportunity to discuss any
issues which had arisen from either their individual
assessments or those of the Board and its principal
Committees. For the Chair’s performance, the other
NEDs, led by the Senior Independent Director, and, with
input from the Chief Executive Officer and Chief
Financial Officer, held meetings privately to discuss
this, with the outcomes being fed back to the Chair by
the Senior Independent Director for discussion.
At the beginning of the year, we set each Executive
Director challenging performance objectives, and
reviewed progress against these as the year
progressed.
Both of the Executive Directors take part in the Group’s
performance management programme 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 Chief
Executive Officer meets with the Chief Financial
Officer at the beginning of each year to discuss and
review performance against objectives.
The Chair conducted the performance evaluation of
the Chief Executive Officer, taking account of the
output from the Group’s performance management
programme together with feedback provided by the
other NEDs at a private meeting held to discuss this
and any other matters which the NEDs wished to raise.
Warren Tucker
Chair, Nominations Committee
9 April 2025
Read more
about performance
objectives
on page 87
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75
WHAT’S INSIDE
Principal
responsibilities
76
Key activities during
the year
76
Q&A with the Chair
77
Procedural and
governance matters
77
2024 review
78
Significant issues
80
AUDIT COMMITTEE
REPORT
AUDIT, RISK AND INTERNAL CONTROL
PRINCIPAL RESPONSIBILITIES
– Monitor the integrity of the financial statements (including significant
reporting/accounting issues, going concern/viability statements, and fair,
balanced and understandable reporting process) and the Group results
announcements.
– Recommend appointment and remuneration of the Auditor, assess
effectiveness and monitor provision of non-audit services.
– Assess content of the Auditor’s independence report in providing both audit
and non-audit services, including the Auditor fee structure.
– Review the remit, planned scope of activities, performance and effectiveness
of the Internal Audit function.
– Review changes to accounting policies and procedures, decisions of
judgement affecting financial reporting and compliance with accounting
standards and company law (including FRC recommendations).
– Review risk management/assurance processes and risk management
strategy, including the principal risks and internal control findings highlighted
by management or internal/external audit.
– Monitor the Group’s systems and controls for the prevention of bribery and
fraud.
– Review Group whistle-blowing arrangements and procedures.
MEMBERSHIP
Anne Thorburn (Chair)
Michael Ord
Alison Wood
Inken Braunschmidt (appointed 1 July 2024)
KEY ACTIVITIES DURING THE YEAR
– Key areas of accounting judgement considered in detail, including: (i) going
concern and viability; (ii) prior period adjustments; (iii) goodwill and the annual
impairment review; (iv) consideration of items excluded from adjusted profit;
and (v) Group tax rates and provisions.
– Considered the nature and cause of the prior period adjustments identified in
the Group Financial Statements (see page 124).
– Performance assessment of the external Auditor and overall audit quality and
effectiveness, identifying areas of potential improvement for the audit teams.
– Detailed consideration of findings from the risk/assurance reviews
undertaken by the Internal Audit function, including structuring the 2025
programme to align with key Group-level risks.
– Review of the revised requirements of the 2024 Corporate Governance Code,
approving minor updates to our internal governance in order to align to the
requirements effective for 2025 and considering the impact of the
requirements of Provision 29 on the Group, effective for 2026.
– Review of risk management strategy.
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Q&A
What steps have and will be taken to be ready for the
1 January 2026 implementation of the revised
requirements of the UK Corporate Governance Code in
respect of material controls?
The revised requirements have a broad, enterprise-
wide impact, and our response is sponsored by the
CEO and overseen by the Governance and Risk
Committee. To determine the optimal approach for TT,
we have actively engaged in industry roundtables and
discussions while staying abreast of regulatory
guidance and thought leadership on the subject. TT
already has processes and systems in place to assess
risk and monitor internal controls, accordingly these
revised requirements present an opportunity to refocus
on the most critical risks and rigorously evaluate the
effectiveness and efficiency of our material controls.
The Audit Committee considered the root causes,
including control deficiencies, associated with the prior
year adjustments outlined on page 124 and as a result
management are strengthening the local finance team
and the control findings and recommendations are
being incorporated into our on-going work to improve
the effectiveness of our internal controls over financial
reporting.
In 2025, we will conduct a comprehensive gap analysis
to ensure our material controls sufficiently and
appropriately address the Group’s principal risks. This
analysis will likely highlight opportunities for
improvement and simplification. It also provides a
chance to assess how effectively our Group functions
and regional teams collaborate in addressing the areas
of greatest importance to the organisation. Once the
baseline of material controls is established, we will
assess their effectiveness through an extended
self-certification exercise in the second half of 2025.
These actions will position TT to meet the revised
requirements by the start of 2026. With clear action
plans in place, we will be ready to report on the
effectiveness of these controls in the 2026 Annual
Report, ensuring compliance and demonstrating our
commitment to robust governance.
What steps have been taken during 2024 to ensure the
effectiveness of the Company’s approach to risk
management?
Risk management has had an even greater focus this
year in light of the changes in the UK Corporate
Governance Code requirements. Our Leadership
Conference, the first under Peter’s tenure as CEO, was
both strategy and risk focused, reinforcing the
importance of managing and mitigating risk in order to
achieve our strategic objectives. Our risk management
strategy was reviewed taking into account the
discussions at the conference.
The restructuring of the Group to a function-led
regional structure has enabled the regional leadership
teams to review site risk registers through a refreshed
lens, further driving continuous improvement in risk
management discussions and considerations at an
executive management and Board level.
What steps have and will be taken in response to the
revised Global Internal Audit standards?
The Global Internal Audit Standards are principle based
and represent an opportunity for Internal Audit to
incorporate the latest developments in good practice
and drive transformation to increase the value they can
provide to their stakeholders. The Head of Internal
Audit and Risk has completed a detailed self-
assessment of the Internal Audit function against the
new standards and an action plan has been developed
to address further improvements required to ensure
that the Internal Audit function continually moves
forwards with best practice. The self-assessment and
action plan have been reviewed and agreed by the
Audit Committee.
AUDIT, RISK AND INTERNAL CONTROL CONTINUED
In 2025, we will conduct
a comprehensive gap
analysis to ensure our
material controls
sufficiently and
appropriately address the
Group’s principal risks.”
Anne Thorburn
Chair, Audit Committee
PROCEDURAL AND GOVERNANCE MATTERS
Meetings of the Committee are structured on the
following basis:
– The CFO, the Group Financial Controller, the
Company Secretary and external and internal
Auditor representatives attend each Committee
meeting, at which they present reports and provide
analysis on key areas within the remit of the
Committee. At the request of the Committee, other
members of the Board (including the Chair and the
CEO) also attend for part of the scheduled
Committee meetings.
– The Head of Internal Audit and Risk presents on the
progress of the internal audit plan (undertaken in
conjunction with PwC under the co-sourced
partnering arrangement) and provides updates on
the Group’s risk management framework, to allow
members to review principal risks and the
effectiveness of risk management processes.
– The Committee meets with the Auditor on a regular
basis, without Executives being present. The
Committee also has the opportunity to meet with
the Internal Audit function on the same basis.
In relation to Governance considerations:
– The Committee Chair, Anne Thorburn, fulfils the
Code requirement of at least one member of the
Committee having recent and relevant financial
experience (as a former CFO of several listed
companies and as prior audit committee chair of
Diploma PLC).
– The Committee was comprised of three
independent NEDs throughout the year, which
increased to four NED Committee members from 1
July 2024, when Inken Braunschmidt joined the
Committee.
– The Committee recognised that the conclusion of
the current audit cycle would coincide with the
requirement for Deloitte to rotate its current lead
audit partner. As a result, steps were taken to ensure
that the audit partner succession process was
managed so as minimise disruption to the audit
programme (noting the benefits experienced to date
from good levels of staff continuity provided by the
Deloitte audit team).
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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
– Following review of the new 2024 Corporate
Governance Code and FRC’s Audit Committees and
External Audit Minimum Standard, the Terms of
Reference of the Committee were refined to ensure
alignment and approved by the Board in November
2024. The updated Terms of Reference are available
on the Company website.
– The Committee assessed its performance in 2024
as part of the External Board Review, further details
of which are provided on page 74. It was concluded
that the Committee had performed satisfactorily in
the year and was structured appropriately to provide
effective support to the Board.
2024 REVIEW
The Committee held four scheduled meetings during
2024. A summary of the key financial reporting and
judgement issues considered by the Committee in
2024 is set out in the table on page 80.
The key activities for the Committee in 2024 are set
out on page 84. The following specific audit matters
were considered by the Committee for the reporting
period: (i) consideration of items excluded from
adjusted profit; (ii) goodwill and the asset impairment
review; (iii) Group tax rates and provisioning (with the
Committee concluding that, as a result of processes
first adopted in 2021, the level of judgemental analysis
applied in this area for the current year had been
significantly reduced); (iv) the going concern and
viability position for the Group (reflecting current year
trading, the US PP arrangement and ongoing RCF
financing including the covenant relaxation); and (v)
considered the nature and cause of the prior period
adjustments identified in the Group Financial
Statements.
The Committee also assessed the outputs of the
internal audit reviews conducted during 2024, which
are undertaken: (i) on a site-specific basis (with the
target of reviewing each principal TT site at least once
every three years, or two years for sites generating
revenues in excess of £50 million per annum on a risk
assessed basis); and (ii) for targeted functional areas;
for 2024 these functional reviews included Contract
Management, IT Disaster Recovery, Payroll and
Accounts Payable. The Committee has continued to
pay close attention in the past year to the progress
made in developing the Group-wide Control
Framework programme. Improvements in the Control
Framework have been designed to help drive business
performance across TT, particularly from the
perspective of simplifying the approach to managing
key controls, the use of more standardised procedures
and prioritisation of the shared service function for
activities of a transactional nature.
During 2024, the Governance and Risk Committee
continued to conduct a detailed review of possible
emerging risks (in consultation with the Internal Audit
function), which were not currently addressed in the
Group risk register but could have application in the
future to an international business operating in TT’s
sector. The outputs of this analysis were discussed
further at both the Board and Audit Committee level,
which included a review of the risk appetite of the
Group. For further details of the Board’s approach to
assessing the Group’s risk appetite, see page 50 to 55.
FAIR, BALANCED AND UNDERSTANDABLE
In accordance with the Code, the Board requested the
Committee to advise it on whether it believed the
Group’s Annual Report, taken as a whole, is fair,
balanced and understandable, and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategic plan. Procedures are in place to facilitate
the appropriate and timely review of the drafts of the
Annual Report and specifically to highlight evidence of
a fair and balanced representation, which supports
input and challenge from all independent NEDs, the
external Auditor and other external advisers. On careful
review of the Annual Report for the year ended 31
December 2024, and the basis for the statement made
by the Board on “Fair, balanced and understandable”
on page 102, the Audit Committee recommended to
the Board that, taken as a whole, the Annual Report is
fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategic plan.
During 2024, the
Governance and Risk
Committee continued
to conduct a detailed
review of possible
emerging risks (in
consultation with the
Internal Audit function),
which were not currently
addressed in the Group
risk register but could
have application in the
future to an international
business operating in
TT’s sector.
AUDITOR’S INDEPENDENCE, OBJECTIVITY AND
EFFECTIVENESS
The Audit Committee assesses the independence of
the Auditor annually to ensure suitable policies and
procedures are in place to safeguard the Auditor’s
independence and objectivity. In 2024 this included
reviewing the length of tenure of Deloitte and the lead
audit partner, provision of non-audit services and the
existence of any conflicts of interest. No concerns
were identified with respect to the independence of
the external Auditor. In addition, Deloitte has
provided a statement to the Committee confirming
it remains independent within the meaning of the
relevant regulations and in accordance with its
professional standards.
The Committee also assessed the quality and
effectiveness of the audit programme through
engagement with Deloitte, both during Committee
meetings and through ongoing dialogue with the lead
audit partner. Additionally, management provides an
annual report to the Committee evaluating the audit’s
effectiveness, based on feedback gathered from local
site leads and other internal stakeholders via a
structured questionnaire. Any issues identified are
discussed by the Committee and incorporated into
future audit planning.
POLICY OF NON-AUDIT SERVICES
The Company has an established policy regarding the
provision of non-audit services by the external Auditor,
which was last refreshed in 2021. This policy provides
that non-audit services may be obtained from the
most appropriate source, having regard to expertise,
availability, knowledge and cost as confirmation that
they comply with the whitelist of permitted services as
set out in the Revised Ethical standard 2019. Non-audit
services where fees are expected to exceed £25,000
should be approved, in advance, by the Chair of the
Audit Committee or, in her absence, by another
member of the Audit Committee. Any arrangement
with the Auditor that includes contingent fee
arrangements is not permitted. There is also a
restriction that fees for non-audit services will not
exceed 50 per cent of the annual audit fee which is
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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
more stringent than the FRC imposed cap of
70 per cent of the average audit fees paid for the
audit of the parent and its controlled subsidiaries in
the last three years. This limit will only be exceeded in
unusual circumstances and only with the pre-approval
of the Audit Committee. The overriding preference
of the Committee is not to engage the Auditor for
additional non-assurance services, unless there are
compelling reasons to the contrary, such as capability,
time or cost.
In 2024, the total fees paid to Deloitte were £2.0 million,
including £0.1 million for their review of the Company’s
interim results, while no other non-audit service fees
were paid to Deloitte in the year. Accordingly, during
2024, non-audit service fees paid to Deloitte
represented 5 per cent of audit service fees paid to
them during the same period.
PRIOR YEAR ADJUSTMENTS
Prior period accounting errors
During the course of the project to address the
Cleveland operational execution challenges the
Company identified certain balances held within the
trade and other receivables and inventory financial
statement line items in respect of the site that could
not be substantiated. As a result, the Company
commenced an internal investigation over the root
cause of these matters, and concluded that they
represented material errors as at 31 December 2023
which required prior period restatement. This was
confirmed through the year end process and in
consultation with our external auditors.
Primarily, these errors related to incorrect judgements
associated with complex contracts, certain finance
team members being inappropriately skilled,
reconciliations not being appropriately performed or
reviewed, compounded by staff turnover issues as well
as insufficient challenge and review from the divisional
finance team. As a result, we are strengthening the
local finance team and the control findings and
recommendations are being incorporated into our
on-going work to improve the effectiveness of our
internal controls over financial reporting.
In addition, a further matter of concern was identified
in relation to North America. Further investigation
was undertaken, under the oversight of the Audit
Committee Chair, using resource from Group internal
audit and an external forensic specialist. This review
confirmed an accounting irregularity in relation to the
inappropriate recording of certain costs as a prepaid
asset, which whilst not quantitatively material, has also
been restated in the 31 December 2023 balance sheet.
The Committee noted inappropriate direction from
senior finance employees related to this matter.
The impact of the prior period restatements in respect
of all matters described above, had the effect of
reducing prior year profit before tax by £5.7 million and
prior year net assets by £5.0 million. Further disclosure
is provided in Note 1.
Response to matters identified
As noted above, the Audit Committee has overseen
the Company’s response into the matters highlighted
above. The Committee will closely monitor the
Company’s progress on the remediation of the control
findings above. As the Company looks to comply with
Provision 29 of the Revised Combined Code, the level
of formalisation of, and adherence to, the Company’s
control framework will be a key focus through 2025.
SIGNIFICANT ISSUES CONSIDERED
IN RELATION TO THE FINANCIAL STATEMENTS
The key areas of judgement and estimation are
outlined in the accounting policies on pages 125 to
129. The Committee reviewed reports from
management and the external Auditor detailing
significant issues related to the 2024 financial
statements, as noted on pages 80 to 81. These
matters were discussed with management throughout
the year and with the external Auditor during key
stages: when reviewing and approving the external
Auditor’s Group audit plan, during the half-year results
review in August 2024, and upon completion of the
financial statements audit.
The Committee is satisfied that the significant
assumptions used in valuing assets and liabilities have
been thoroughly examined and appropriately
challenged, ensuring their robustness. Management
has confirmed to the Committee that there are no
material uncorrected misstatements or intentionally
made immaterial misstatements designed to achieve a
specific presentation. The Committee also confirms its
satisfaction with the external Auditor’s diligence and
application of professional scepticism.
After reviewing management’s presentations and
reports and consulting with the Auditor where
necessary, the Audit Committee concludes that the
financial statements adequately address critical
judgements and key estimates, both in terms of
reported amounts and related disclosures.
Read more about
Significant issues
on page 80
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AUDIT, RISK AND INTERNAL CONTROL CONTINUED
SIGNIFICANT ISSUES
SIGNIFICANT ISSUE
COMMITTEE ACTIONS/WORK UNDERTAKEN
Going concern and viability (see note 1d)
The Committee considered the outcome of
management’s reviews of current and forecast net debt
positions and the various financing facilities and options
available to the Group, including the risk and potential
impact of unforeseen events. In addition, this considered
the covenant arrangements associated with the
borrowings of the Group.
The Committee reviewed the going concern and viability assessment based upon the 2025 budget and the strategic plan
to 2027. The Committee confirmed that the application of the going concern basis for the preparation of the financial
statements continued to be appropriate.
The Auditor explained to the Committee the work they had conducted and the results of their audit procedures on going
concern and viability. This included consideration of the US PP and RCF facilities, taking into account the covenant
relaxation obtained by the Group in 2024.
The Committee considered recent developments in relation to tariffs and the macroeconomic environment and
concluded this created a material uncertainty as to going concern.
Prior period adjustments
The Group has identified a number of prior period
adjustments impacting the Group Financial statements.
The Committee considered the nature and cause of the prior period adjustments, further details of which are set out in
note 1 to the financial statements. This work included having oversight of management’s process to determine the nature
and cause of these adjustments and the control deficiencies identified and discussed with the external auditors. The
Committee considered the quantum of each of the adjustments relative to materiality and considered the requirements of
IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, concluding the adjustments relate to material
matters which has required retrospective restatement of the Group Financial Statements.
The Auditor explained to the Committee the extent of the work they had performed in respect of these adjustments and
how they had determined that the accounting as a prior period restatement was appropriate in accordance with IAS 8.
The Committee is satisfied that the disclosures in note 1 explain the reason for the adjustments and the impact on previously
reported profit and net assets. The control findings and recommendations are being incorporated into our on-going work to
improve the effectiveness of our internal controls over financial reporting.
Goodwill and asset impairment review (see notes
13 and 14)
CGUs to which goodwill has been allocated are tested
for impairment annually and assets are reviewed for
impairment, when triggers for review have been
identified. The Committee has reviewed management’s
computation of the present value of future cash flows over
a five-year plan and the assumed longer-term growth rate.
The review identified that an impairment was required with
respect to the goodwill in relation to the North America
group of CGUs.
Furthermore, an impairment was identified with respect to
one site in the North America region.
The Committee reviewed management’s conclusion that an impairment charge for goodwill was required for 2024 with
respect to the North American group of CGUs. The Committee noted the basis of preparation for the forecast cash flows
included in the five-year plan, challenging management’s assumptions and concurring with them. In addition, the
Committee considered the impairment of the one site in the North America region, prepared on the same basis as the
goodwill test, and concurred with management’s conclusion.
The Auditor explained to the Committee the work they had conducted during the year, including their work on the
reallocation of goodwill as required following the Group’s regional restructure and the assessment of goodwill and asset
carrying values for impairment. In particular, the Auditor challenged management’s growth assumptions through
meetings with management, comparison to external data and the use of valuation specialists.
Adjusted profit (see note 7)
The Group reports non-trading income or expenditure
outside of adjusted profit 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.
The Committee challenged the items that were excluded from adjusted profit and were satisfied that these were (i) in
accordance with the Group’s disclosed accounting policy; (ii) were not subject to undue prominence; and (iii) gave a true
and fair view of the Group’s underlying financial position.
The Auditor explained to the Committee the work they had conducted and the results of their audit procedures on
significant items recorded outside adjusted profit. This work included consideration of external FRC and ESMA guidance,
measurement and sample testing of the balances, and the appropriateness of their classification.
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COMMITTEE ACTIVITIES IN 2024
FINANCIAL REPORTING
GOVERNANCE
– Monitored and reviewed the Group’s financial statements and results announcements.
– Reviewed significant financial reporting and accounting issues.
– Reviewed going concern and viability statements, including appropriate sensitivity analysis.
– Reviewed the fair, balanced and understandable process for the financial reports.
– Reviewed and discussed 2024 H1 and year-end accounting issues.
– Monitored and reviewed implementation of the revised requirements of the UK
Corporate Governance Code in respect of material controls.
– Reviewed Terms of Reference.
– Received and considered whistle-blowing matters reported through the Group’s
multi-lingual, anonymous ethics and integrity portal.
– Undertook an evaluation on the effectiveness of the Committee.
INTERNAL AUDIT AND RISK AND ASSURANCE
EXTERNAL AUDIT
– Reviewed the internal audit programme of work and resource and received a report at each
meeting on progress and any changes to the plan.
– Reviewed and approved the 2025 Internal Audit plan.
– Conducted the annual review of the Group’s internal audit function.
– Monitored progress on the Controls Framework.
– Ongoing monitoring of the Group’s internal controls environment throughout the year,
including risk management strategy. For further detail on risk refer to the “Risk management”
section on pages 50 to 55.
– Reviewed reports on the control deficiencies identified in relation to the prior period
adjustments and considered the adequacy of management’s response to identified
deficiencies and mitigation actions taken, as well as the implementation of longer term
control improvements.
– Conducted annual review of systems and controls for the prevention of bribery and fraud.
– Monitored and reviewed self-assessment of compliance with revised Global Internal Audit
standards.
– Discussed and approved the external audit plan and audit fee.
– Reviewed external Auditor planned activity.
– Reviewed and confirmed both the independence of the external Auditor as part of
the 2024 review, and non-audit fees.
– Assessed the quality and effectiveness of the audit programme, including the
performance of the Auditor relative to prior year.
– Reviewed compliance with FRC guidance on minimum audit standards.
Anne Thorburn
Chair, Audit Committee
9 April 2025
AUDIT, RISK AND INTERNAL CONTROL CONTINUED
SIGNIFICANT ISSUES
SIGNIFICANT ISSUE
COMMITTEE ACTIONS/WORK UNDERTAKEN
Provisions – Taxation (see note 8)
Current tax provisions held in respect of tax risks are
included within current tax liabilities depending on the
underlying circumstances of the provision.
Management confirmed to the Committee that the provisions recorded at 31 December 2024 represent its best estimate
of the potential financial exposure faced by the Group. The Committee reviewed each significant provision and challenged
the basis of management’s judgement and concurred with the estimates. This included challenging and confirming the
continued appropriateness of policy decisions made in prior years.
The Auditor explained to the Committee the work they had conducted during the year, including how their audit procedures
were focused on those provisions with the highest level of judgement on recognition criteria and/or measurement.
In addition, the Auditor inquired into correspondence with local tax authorities and was satisfied that no matters had
been identified.
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81
REMUNERATION
COMMITTEE
REPORT
PRINCIPAL RESPONSIBILITIES
– Determine the Remuneration Policy for Directors for shareholder approval at
least every three years.
– Determine remuneration packages and terms and conditions of employment
for the Executive Directors, senior managers and the Chair of the Board.
– Approve the design, performance measures, targets and outturns of
incentive schemes for the Executive Directors and senior managers.
– Set the Remuneration Policy within the wider context of remuneration
trends across the workforce.
– Produce an annual report of the implementation of the Directors’
Remuneration Policy in respect of the last financial year and for the
current year.
MEMBERSHIP
Alison Wood (Chair)
Warren Tucker
Michael Ord
Anne Thorburn
Inken Braunschmidt (appointed 1 July 2024)
KEY ACTIVITIES DURING THE YEAR
– We continued to support our employees and further develop our employment
proposition, especially amongst our lowest earners (who have been most
impacted by the increased cost of living) with higher salary increases in 2024.
– We considered the 2024 remuneration outcomes to ensure they remain fair,
appropriate, and in line with our remuneration principles and
Company performance. This included mutually agreeing with the Executive
Directors that there should be no STIP award for 2024.
– In the context of the revised results for 2023, we recalculated the outcomes
of the 2023 STIP and the 2021 LTIP vesting and have taken actions to ensure
appropriate restitution.
– In November 2024, Mark Hoad announced his intention to retire as Chief
Financial Officer (“CFO”); Mark will step down from the Board following the
announcement of the full-year results.
– In January 2025 we announced the appointment of Eric Lakin as CFO
Designate, pending his appointment to the Board following the
announcement of the full-year results.
– We considered the remuneration arrangements for 2025 and concluded that
they remain fit for purpose.
WHAT’S INSIDE
Principal
responsibilities
82
Key activities during
the year
82
Q&A with the Chair
83
Annual statement
84
2024 Executive
Remuneration at
a glance
87
Implementation of the
Policy for 2025
88
Remuneration Policy
overview
89
Implementation of the
Policy for 2024
91
Total single figure
remuneration
91
Directors’ share
interests
94
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
2024 has been a year of
managing remuneration
against a challenging
backdrop. Ensuring that
remuneration outcomes
are aligned with
shareholder interests
have been at the
forefront of our
considerations with the
Committee deciding to
both not pay a bonus
under the 2024 STIP and
exercising clawback.”
Alison Wood
Chair, Remuneration
Committee
REMUNERATION COMMITTEE REPORT CONTINUED
Q&A
Alison Wood, Chair, Remuneration Committee
How has business performance impacted 2024
incentive outcomes?
Business performance across the Group has been
mixed in 2024 with a strong performance in Europe
and Asia, and strong revenue growth in our Aerospace
& Defence end market; continued demand weakness in
the component market has impacted the North
America region, as has operational efficiency issues at
two sites. At the Group level, profit performance was in
line with the guidance in the September trading update
and the downward revision to trading expectations.
Free cash flow was in line with expectations.
In light of the overall financial performance and
stakeholder experience, the Executive Directors and
the Committee mutually concluded that no bonus
should be paid to the Executive Directors or the TT
Management Board (“TMB”) under the 2024 Short-
term incentive plan (“STIP”). Additionally, the Long-
term incentive plan (“LTIP”) performance periods that
ended during the year, did not meet the threshold
performance targets and lapsed in full.
The Executive Directors did not receive any variable
performance-related pay for 2024 and only received
their fixed pay.
Across the wider workforce, variable pay outcomes
were varied, reflecting individual site performance,
although they were reduced by the Group’s financial
performance.
How has the Committee approached target setting for
2025 incentives?
As a Committee our role includes encouraging
enhanced performance and rewarding contribution to
the Group’s return to sustainable year-on-year profit
growth and the required improvement in North
America. Following on from a challenging year in 2024
with no variable pay outcomes and low forecast LTIP
vestings, this year a major consideration is how to set
motivational yet stretching performance targets for the
Executive team. These remain under discussion as the
Committee assesses the current economic
uncertainty, the volatility in share prices and the
ongoing operational challenges in the business. The
2025 STIP targets will be disclosed in next year’s
report and we will publish the 2025 LTIP targets by no
later than the AGM.
Eric Lakin joined as CFO Designate in January 2025
following the announcement of Mark Hoad’s intended
retirement; how did the Committee approach the CFO
transition?
In November 2024, Mark Hoad informed the Board of
his intention to retire as CFO. In attracting a successor,
the Committee’s focus was to ensure that the
remuneration arrangements were appropriate to
attract high calibre individuals who were able to
demonstrate a track record of, or demonstrate the
potential to, lead and develop the Group. The
Committee was delighted to attract a candidate of Eric
Lakin’s calibre; Eric’s remuneration package is in line
with the existing Remuneration Policy.
Mark will complete ten years of service to TT before he
retires, over which he has overseen a period of
significant transformation of the Group and
successfully led both the buy out of the pension and
the refinancing of the Group. The treatment of Mark’s
remuneration will be in line with the Remuneration
Policy and typical market practice in respect to
retirement.
In the context of the revised results for 2023, how has
the Committee approached the historic overpayment
of incentives?
The Committee has recalculated the outcomes of the
2023 STIP and the 2021 LTIP vesting to reflect the
revised results. This clearly shows that the payouts
based on the revised results would have been lower
than those actually awarded at the time.
In determining an appropriate level of restitution,
the Committee considered both the materiality of
the adjustment and the causes. The Committee
concluded that a proportional partial restitution
was appropriate and has exercised its discretion
and applied the malus provision in the Deferred
Share Bonus Plan to reduce the number of shares
under award.
The Committee concluded that the impact to
Executive Director remuneration of no bonuses
awarded in 2024 and the application of malus, which
considerably exceeds the formulaic overpayment,
was an appropriate outcome in respect to the revised
results for 2023 and the wider stakeholder experience
in 2024.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
83
over 2024. Free cash flow, however, was strong
resulting in a net debt reduction and leverage of 1.8x,
within our 1-2x target range.
In light of this context and our pay for performance
principle, the outcomes of the variable pay plans were
reflective of the Group’s performance in 2024.
2024 INCENTIVE ARRANGEMENTS
A summary of the approach to variable remuneration
was as follows:
– STIP: A maximum opportunity of up to 150 per cent
of base salary for the Executive Directors. The STIP
was based on profit before tax (up to 70 per cent of
salary), free cash flow (up to 35 per cent of salary),
ESG (up to 15 per cent of salary) and strategic
objectives (up to 30 per cent of salary).
– LTIP: Awards were granted to the Executive Directors
in March 2024 at 150 per cent of base salary. Further
details of the awards are set out in the Annual Report
on Remuneration.
2024 STIP outturn
Following a review of performance against the STIP
performance targets, no annual bonuses were
awarded to the Executive Directors in respect to the
year ended 31 December 2024. Whilst free cash flow
performance was between the threshold and
maximum performance targets and would have
resulted in a payout alongside payments for progress
made on ESG and the strategic objectives, profit before
tax was significantly below the threshold target. In light
of the overall financial performance and stakeholder
experience, the Executive Directors and the Committee
mutually concluded that no bonuses should be paid to
the Executive Directors or the TMB for the year ended
31 December 2024.
Application of malus for revised 2023 results and
discretion
As discussed in the CEO report, the reported operating
profit for 2023 has been retrospectively adjusted by
£(5.7) million. This principally related to our Cleveland
site where, as part of our project to address Cleveland
operational execution challenges, we identified issues
in relation to the recoverability of certain assets
recognised in prior periods. There were no changes to
operating cashflows.
The Committee has recalculated the outcomes of the
2023 STIP and the 2021 LTIP vesting to reflect the
revised results. This clearly shows that the payouts
based on the revised results would have been lower
than those actually awarded at the time.
In determining an appropriate level of restitution, the
Committee considered both the materiality of the
adjustment and the causes. The Committee
concluded that a proportional partial restitution was
appropriate and has exercised its discretion and
applied the malus provision in the Deferred Share
Bonus Plan to reduce the number of shares
under award.
The Committee concluded that the impact to
Executive Director remuneration of no bonuses
awarded in 2024 and the application of malus, both of
which considerably exceeds the formulaic
overpayment, was an appropriate outcome in respect
to the revised results for 2023 and the wider
stakeholder experience in 2024.
2024 LTIP outturns
The 2021 LTIP award to Mark Hoad vested in March
2024 prior to the identification of the issues resulting in
the revised results for 2023, and vested at a level
higher than that based on the revised results. Vesting
was based on two equally weighted performance
measures, absolute adjusted Earnings Per Share
(“EPS”) and relative total shareholder return (“TSR”)
performance up to the date of vesting. As reported last
year, the EPS component vested at a level between the
threshold and maximum. TSR performance over the
period to the vesting date was below the threshold
performance target and this part of the award lapsed
in full.
The 2022 LTIP award granted to Mark Hoad is due to
vest following the 2024 full year results announcement
based on two equally weighted performance
measures, absolute adjusted EPS and relative TSR
performance up to the third anniversary of the date of
grant. In line with the downward revision to trading
expectation, EPS performance did not meet the
threshold performance target and this part of the
award lapsed in full. TSR performance concluded in
March 2025 at a level below the median threshold
performance target and this part of the award also
lapsed in full.
ANNUAL STATEMENT
On behalf of the Remuneration Committee (“the
Committee”), I am pleased to present the Directors’
Remuneration report for the financial year ended
31 December 2024 which will be put to an advisory
vote at the AGM on 8 May 2025.
The past year has been challenging for the Group and
this is reflected in the variable, performance-related
pay outcomes for the Executive Directors. This report
is designed to demonstrate the link between the
Group’s strategy, its performance and the
remuneration outcomes for our Executive Directors.
CONTEXT FOR EXECUTIVE REMUNERATION
Our approach to remuneration is driven by the need
to attract, retain and motivate the right calibre of
talent to deliver long-term sustainable growth and
stakeholder value. TT is a diverse, complex, multi-
national company competing for talent with global
peers in tight labour markets.
Our remuneration principles (pay for performance,
strategic progress and the delivery of sustainable value
to shareholders), combined with our strong
organisational culture, underpinned by our TT Way
behaviours, define how decisions are made, how
people act and how we assess and reward them.
The majority of the Executive Directors’ remuneration
opportunity is made up of variable, performance-related
pay, which is linked to stretching financial, strategic,
cultural and ESG targets, and is proportionately
delivered in shares to strengthen stakeholder alignment.
The year was challenging for the Group and its
stakeholders; continued demand weakness in the
components market during the year resulted in
workforce reductions, and operational efficiency
issues at two North American sites have impacted
revenue and profitability.
Whilst the adjusted profit before tax outturn for the
year was in line with the revised guidance in the
September trading update and the reduction to trading
expectations, the share price has fallen by 32 per cent
REMUNERATION COMMITTEE REPORT CONTINUED
Further details
on the Group’s
financial
performance
are provided
on page 18
84
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
REMUNERATION COMMITTEE REPORT CONTINUED
In setting the performance targets for 2025, the
Committee is mindful of the underlying performance
of the business, internal and external forecasts, the
stakeholder experience and the need to meaningfully
motivate the new management team over the duration
of each incentive. The Committee also notes the
outturns of the 2024 incentives and the forecast levels
of vesting under previous LTIP grants.
In line with good practice, the Committee retains
discretion to adjust future formulaic vesting outcomes
to ensure they reflect underlying business
performance and shareholder interests.
BROADER EMPLOYEE REMUNERATION
CONSIDERATIONS
The Committee actively reviews and considers wider
workforce pay when determining Executive Director
remuneration. During 2024, we were pleased to see
higher base pay increases for the majority of UK
employees with salaries increasing by 5.5 per cent
on average.
A core component of our approach to remuneration
is variable performance-related pay. Business
performance across the Group has been mixed in
2024 and performance across the sites has varied
considerably. The alignment of incentive schemes and
the choice of performance measures, combined with
stretching performance targets, means that incentive
outcomes closely follow the performance of each site,
appropriately reflecting the impact of each role.
Incentive outcomes: (i) have been reduced by the
Group’s financial performance, and (ii) are reflective of
individual site performance.
Our people are a key differentiating factor of our
competitive advantage and are fundamental to
delivering sustainable future performance and growth.
In addition to updates from the Company, the
Committee independently receives updates and
insights from multiple sources, such as via check-ins
between Committee members and key role holders,
and from NED site visits, which allow for open and
frank dialogue directed by feedback and priority areas
from our employees.
dates subject to performance testing and time
pro-rating. Post cessation, Mark will remain subject to
the post-employment shareholding requirement in line
with our Policy. Further detail is set out in the Annual
Report on Remuneration.
In respect of the NEDs, we announced that Inken
Braunschmidt joined the Board as NED in July 2024.
Inken will take over as Chair of the Remuneration
Committee at the 2025 AGM when I will step down
from the Board. Inken brings a wealth of experience,
being an experienced Remuneration Committee Chair
at James Fisher and Sons plc.
IMPLEMENTATION FOR 2025
A review of base salaries will take place during the first
half of 2025. Any increase awarded is anticipated to be
effective from 1 July 2025 and will be set at a level
below the average UK workforce percentage increase.
Eric Lakin is not eligible for a 2025 base salary review.
A review of fees for the Chair and the NED’s will occur
at the same time and on the same basis.
The STIP opportunity for the year will remain at 150 per
cent of salary for the Executive Directors. The
performance measures will continue to be based on
profit before tax (46.7 per cent), free cash flow (23.3
per cent), ESG (10 per cent) and strategic objectives
(20 per cent). In accordance with the Policy, 30 per
cent of any award payable will be deferred into shares
with a two-year holding period.
LTIP awards of up to 150 per cent of salary are
expected to be granted to Peter France and Eric Lakin.
The measures for the 2025 grants are expected to
remain: EPS (50 per cent), cash conversion (25 per
cent) and TSR (25 per cent). Cash conversion will
require a range of 80 to 95 per cent. TSR will be
measured relative to companies comprising the FTSE
SmallCap index excluding Investment Trusts, requiring
median performance for threshold vesting and upper
quartile performance for maximum vesting. The EPS
target range, and the number of shares under award,
will be agreed in advance of the grant date and the
target range and award levels will be disclosed in the
RNS issued following the grant.
CHANGES TO THE BOARD
During the year, we announced several further changes
to the Board. In November we announced the intended
retirement of Mark Hoad from the role of Chief
Financial Officer during 2025. In January 2025 we
were delighted to appoint Eric Lakin as CFO Designate.
Eric is a highly experienced CFO with a proven track
record in engineering and industrial sectors. Eric will be
appointed CFO and join the Board following the
announcement of the full-year results. On this date
Mark Hoad will step down as CFO and from the Board.
Mark will remain employed by TT until 30 September
2025 to ensure an orderly transition.
The remuneration arrangements for the outgoing
and incoming Directors are in line with both the
Remuneration Policy approved by shareholders
and good governance practice.
Eric’s remuneration package (which is broadly equal to
that of Mark Hoad and represents the necessary levels
to recruit a high calibre, experienced candidate who is
able to lead a company of our scale and complexity) is
as follows:
– Base salary: £400,000 per annum
– Benefits: In line with the shareholder approved Policy
– Pension: Workforce aligned pension contribution
– STIP: 150 per cent of salary
– LTIP: 150 per cent of salary
As noted, Mark Hoad will not receive any variable pay
in respect to 2024, his DSBP awards will be reduced for
the 2023 revised results and he will not receive an LTIP
grant in 2025. In line with the Remuneration Policy and
typical market practice in respect to Mark Hoad’s
retirement, it is intended that Mark will: (i) continue to
receive salary, benefits and pension up to his exit date,
(ii) remain eligible to receive an STIP award in respect
of the 2025 financial year, payable at the normal
payment date subject to performance testing and time
pro-rating, (iii) retain his awards under the DSBP, less
those lapsed following the application of malus in
respect to the 2023 revised results, which will vest on
the normal vesting dates, and (iv) retain his awards
under the LTIP which will vest on the normal vesting
Further details
on the alignment
of wider workforce
remuneration
are provided
on page 90
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
85
Before agreeing remuneration outcomes we reflect on
whether the Company’s overall performance and
stakeholder experience are appropriately represented by
the financial and non-financial performance measures
we have set. We also reflect on the demonstration of
leadership qualities, living our values and feedback from
our major shareholders where relevant.
As we have done this year, where malus, clawback
or discretion is exercised, the rationale for this
discretion will be disclosed to stakeholders in the
relevant Annual Report.
CONCLUSION
2024 has been a challenging year. The Committee has
carefully considered the retrospective revision to 2023
results, remuneration outcomes for 2024 and the
operation of the Policy for the year ahead, to ensure the
stabilisation of the Company, stakeholder alignment
and a return to the delivery of sustainable year-on-year
progress.
We have carefully managed the remuneration aspects
relating to the CFO transition and have ensured that we
have agreed an appropriate remuneration package to
secure a candidate of Eric’s calibre.
This is my final report as Committee Chair, it has been a
pleasure as both a NED and as the Remuneration
Committee Chair to oversee a period of significant
business transformation over the last nine years. In
2025, a review of the Remuneration Policy will be
undertaken and Inken’s fresh perspective will be pivotal
in leading the evolution of executive remuneration to
drive the next phase of the business strategy.
Alison Wood
Chair, Remuneration Committee
9 April 2025
During the year, we started to assess the Group’s
remuneration arrangements to ensure the
arrangements continue to be remain “fit for purpose”
to unlock the potential of the Group and to drive the
appropriate behaviours which are underpinned by our
TT Way values. We have agreed a long-term direction
of travel for workforce remuneration with wider
participation in our discretionary share schemes to
drive greater alignment to our Group priorities and
improve retention. We will shortly commence
preliminary discussions on any implications for the
future Remuneration Policy.
MALUS (WITHHOLDING), CLAWBACK
(RECOVERY) AND DISCRETION
As demonstrated by our actions described above, the
Committee takes a firm approach to malus and
clawback. Malus and clawback events include material
misstatement, misconduct of the participant, vesting/
payments based on erroneous or misleading data,
serious reputational damage or corporate failure.
The Committee may enact clawback up to three years
from the vesting of share awards under the LTIP and the
Deferred Share Bonus Plan (“DSBP”). Clawback on the
cash-based element of the STIP may be enacted up to
two years after payment. In the event that clawback is
enacted, the Committee has the discretion to require
repayment or to reduce any unvested or unpaid award
made under any discretionary Share Scheme or the
STIP. In addition, if a participant in the DSBP is subject to
investigation then the vesting of their award may be
delayed until the outcome of that investigation.
As a Committee, we are willing to exercise judgement
and discretion when determining remuneration
outcomes for the Executive Directors.
REMUNERATION COMMITTEE REPORT CONTINUED
86
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
Share ownership requirement
200% of salary. Values are
before the application of malus.
Short-term incentive
Awards subject to a 30% deferral
into shares with a two-year
vesting period.
Long-term incentive
Delivered in shares and subject
to a three-year vesting period
and a two-year holding period.
Workforce alignment
Executive remuneration set
in the context of wider workforce
remuneration.
Remuneration principles flow
through the Group to ensure
alignment.
Post-employment
share ownership
Shares to the value of 100% of
salary to be held until two years
after cessation of employment.
CEO
CFO
27%
248.9%
200%
2024 EXECUTIVE REMUNERATION
AT A GLANCE
To reinforce our philosophy, the majority
of the Executive Directors’ remuneration
package is made up of variable at-risk pay,
linked to stretching performance targets `
that align with our strategy, the financial
performance of the Group and the creation
of sustainable shareholder value.
CONTEXT FOR REMUNERATION
Creating value
– Leverage our assets and differentiators
– Maintain strong capital discipline
– Grow our exposure to long-term growth markets
– Deliver sustainable stakeholder value
Our TT Way values
We do the right thing
We champion expertise
We bring out the best
in each other
We get the job done… well
We achieve more together
Our remuneration principles
– Performance-related
– Strategic alignment
– Alignment with stakeholders
– Transparency and culture
– Competitive
Alignment with stakeholders
Read more about
the Group’s
financial
performance
on page 18
The Executive
Directors did not
receive a bonus
under the 2024
STIP. Read more
about the 2024
STIP outcome
from page 91
Read more about
the LTIP outcomes
on page 93
Read more about
single figure of
remuneration
from page 91
IMPLEMENTATION OF REMUNERATION POLICY IN 2024
Base salary
Peter France, CEO
£550,000
Mark Hoad, CFO
£403,632
Short-term incentive plan (“STIP”)
Total STIP payment (% of maximum)
Peter France, CEO
0%
Mark Hoad, CFO
0%
Performance measures
Weighting
Threshold
Outturn
Maximum
Achievement (% of max)
Adjusted PBT
46.7%
£41.1m
£27.7m
£49.9m
0%
Free cash flow
23.3%
£17.9m
£28.8m
£32.2m
55.3%
ESG, Scope 1&2 carbon
intensity
10%
2% reduction 14%
5% reduction
100%
Strategic objectives
20%
Targets based on a range of objectives.
Long-term incentive plan (“LTIP”)
Total LTIP payment (% of maximum)
Peter France, CEO
N/A
Mark Hoad, CFO
0%
Performance measures
Weighting
Threshold
Outturn
Maximum
Achievement (% of max)
Total shareholder return 1 50%
Median rank Below median
Upper quartile rank
0%
EPS growth 2
50%
5% CAGR
(8.3)% CAGR
12% CAGR
0%
1 2021 LTIP grant is based on 50% TSR and 50% EPS. The EPS performance condition concluded in 2023 and was previously disclosed in the 2023 single figure of
remuneration, the TSR performance condition concluded in 2024 and is included in the 2024 single figure of remuneration.
2 2022 LTIP grant is based on 50% TSR and 50% EPS. The EPS performance condition concluded in 2024 and is included in the 2024 single figure of remuneration,
the TSR performance condition concludes in 2025 and will be disclosed in the 2025 single figure of remuneration.
Total remuneration for 2024
Peter France, CEO
£0.618m
Mark Hoad, CFO
£0.466m
Salary and benefits
94%
Pension
6%
Short-term incentive
0%
Long-term incentive
0%
Salary and benefits
94%
Pension
6%
Short-term incentive
0%
Long-term incentive
0%
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
87
Base salary
Peter France, CEO
£550,0001
Eric Lakin, CFO designate
£400,0001
1 Base salaries will be reviewed during the first half of the year. Any increased is anticipated to be effective 1 July 2025 and any increases will be set at a level below
the average UK workforce percentage increase. Eric Lakin is not eligible for a 2025 salary review.
The tables set out a summary of how the
Directors’ Remuneration Policy will be applied
during the year ending 31 December 2025.
The Committee is of the view that the current
remuneration framework remains fit for purpose.
There are no material changes to the implementation
of the Policy from 2024 and no changes to the Policy
are proposed. The Remuneration Policy was last
approved by shareholders in 2023 and will be subject
to shareholder approval at the 2026 AGM. The
Committee will undertake a full review of the
Remuneration Policy during 2025.
In setting the performance targets for 2025, the
Committee is mindful of the underlying performance
of the business, internal and external forecasts, the
stakeholder experience and the need to meaningfully
motivate the new management team over the duration
of each incentive. The Committee also notes the
outturns of the 2024 incentives and the forecast levels
of vesting under previous LTIP grants.
As described in the Committee Chair’s Statement, it is
intended that the CEO and CFO Designate will receive
LTIP grants of 150 per cent of salary. Final awards will
be confirmed at the date of grant and will be fully
disclosed in an RNS. In line with good practice, the
Committee retains discretion to adjust future formulaic
vesting outcomes to ensure they reflect underlying
business performance and shareholder interests.
Following the announcement of Mark Hoad’s planned
retirement, he will not receive an LTIP grant in 2025
and will remain eligible for the 2025 STIP on a time
pro-rata basis.
In the STIP, ESG performance will continue to be
focused on quantitative reductions of our Scope 1 & 2
carbon intensity; strategic objectives will focus on
unlocking the value in the business, delivery of major
projects, disciplined execution, and HSE.
A review of base salaries will take place during the first
half of 2025. Any increase awarded is anticipated to be
effective from 1 July 2025 and will be set at a level
below the average UK workforce percentage increase.
Eric Lakin is not eligible for a 2025 base salary review.
Short-term incentive plan (“STIP”)
Long-term incentive plan (“LTIP”)
Target
75%
of base salary
Maximum
150%
of base salary
Maximum
Up to 150% 1
of base salary, CEO & CFO Designate
Performance
measure
Weighting
Adjusted profit before tax 1
46.7%
Free cash flow 1
23.3%
ESG 2
10%
Strategic objectives 2
20%
– 30% of STIP award deferred into shares for two years.
– Specific targets are considered to be commercially sensitive and will
be disclosed retrospectively.
1 Financial measures are measured using constant budget exchange rates.
2 To the extent that the threshold performance target for neither
financial performance measure is attained, the Committee will consider,
if appropriate, a reduction to the outcomes payable in respect to ESG
and/or strategic objectives, up to and including a reduction to zero.
Performance
measure
Weighting
Threshold
Maximum
(full vesting)
Adjusted EPS growth 2
50%
TBC%
TBC%
Average cash conversion
25%
80%
95%
Relative TSR performance 3
25%
Median
Upper quartile
– Awards expected to be granted in April 2025, as outlined above, with
performance conditions over the three-year financial period.
– Two-year post-vesting holding period applies.
1 Grant levels are intended to be in line with the 2023 and 2024 awards. The
grant to the CFO Designate is in line with the terms of his appointment.
Actual grants will be reviewed on the date of grant.
2 Adjusted EPS targets are expected to be set as a compound annual growth
rate on a constant currency basis. The targets will be agreed prior to the
2025 grant date and disclosed in the RNS issued post grant.
3 TSR comparator group is the FTSE SmallCap, excluding Investment Trusts.
Pension
Benefits
7%
of base salary
Benefits package consisting of healthcare, insurance benefits and
car benefit.
Performance measures and link to strategy
Performance measures in our STIP for 2025
Performance measures in our LTIP for 2025
Adjusted profit
before tax
Strong operational execution, encompassing our
strategic priorities of strategic business
development and operational excellence
Adjusted EPS
growth
Sustainable growth in the Group’s profitability
per share over three years
Free cash flow Essential to capital reinvestment to fund technology
investment and R&D, reduce leverage and take
advantage of market opportunities such as targeted
and complementary M&A
Average cash
conversion
Long-term operational cash flow efficiency over
three years, supporting cash generation for
capital reinvestment
ESG
Integration of ESG, doing the right thing with regard
to the environment and our stakeholders, ensuring
a sustainable business for the future
Relative TSR
performance
Aligns executive reward to the shareholder
experience. Compares the Group’s share price
and dividend performance relative to a peer group
over three years
Strategic
objectives
Progress of the Group’s strategy to deliver
sustainable growth in stakeholder value
SHAREHOLDING
REQUIREMENTS
Executive Directors are
required to build and
maintain a minimum
shareholding in
employment equivalent
to 200% of basic salary.
Post cessation of
employment, Executive
Directors are required to
maintain for two years
a shareholding of half
this requirement, or
maintain their actual
holding if lower.
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN 2025
88
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
Remuneration objectives and key principles
The Remuneration Policy supports and rewards the achievement of the Group’s strategy to deliver profitable and sustainable growth over the short and longer term.
This is driven and evaluated by how the Group performs against a variety of strategically aligned KPIs, both financial and non-financial. Our Directors’ Remuneration
Policy was last approved by shareholders at the AGM on 9 May 2023. A summary of the Policy is shown below.
Executive Director remuneration for 2025
Element
Policy maximum
2025
2026
2027
2028
2029
Fixed Pay
Salary
Market competitive.
Increases set with reference
to the wider workforce.
Salary paid.
Benefits
Market competitive.
Benefits paid.
Pension
Aligned to those available to
majority of local workforce.
Pension provision
paid.
Variable Pay
Short-term
incentive plan
CEO/CFO 150% of salary.
70% cash and 30% in
deferred shares.
Annual performance
conditions apply.
Majority weighting on
Group financial
targets, minority to
ESG performance
and strategic
objectives.
Cash
element paid
(70% of
incentive).
Two-year share deferral
(30% of incentive).
Long-term
incentive plan
CEO/CFO 150% of salary.
Two-year holding period.
Based on a variety of financial and/or shareholder
value creation and/or ESG measures over a three-
year performance period.
Two-year holding period.
Governance
Malus (withholding)
and clawback
(recovery)
All incentives.
Malus and clawback: misstatement, serious misconduct, serious reputational
damage, error in calculation and corporate failure.
Committee discretion: ability to exercise discretion and make adjustments
to formulaic outcomes.
Share ownership
requirement
200% of salary.
Executive Directors required to build and maintain the share ownership requirement.
Post-employment
share ownership
100% of salary.
Holding requirement for shares until two years after cessation of employment.
Read the full
Remuneration
Policy in the 2022
Annual Report and
Accounts on pages
112 – 121
REMUNERATION POLICY OVERVIEW
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
89
All employees
Executive Directors
Salary
– Pay increase recommended
by site and division
– Reviewed and approved
by head office (UK average
5.5% in 2024)
– Pay rise % below that of wider
employee pay increases (0%
to CEO and 3% to CFO in 2024)
Short-term incentive
– All employees are eligible
for a bonus
– Site incentive targets:
customer delivery,
productivity, quality, HSE
– Leadership and senior
managers: targets cascade
from Executive Director design
– Max 150%, on-target 75%
– Performance conditions:
profit, cash flow, ESG,
strategic delivery
Deferred share
bonus plan
– Not applicable
– 30% of short-term incentive
deferred for two years
Long-term incentive
– Leadership team, three-year
period, no holding period
– Max 150% of salary
– Three years, two-year
holding period
– Performance conditions: EPS,
TSR, cash conversion
Retirement
– Up to 7% of salary
contribution
– 7% of salary contribution
Other benefits
– Life cover
– Healthcare
– ShareSave
– Car allowance (Sales and
senior leadership)
– Life cover
– Healthcare
– ShareSave
– Car allowance
– Risk benefits
ALIGNMENT WITH THE UK CORPORATE GOVERNANCE CODE
The table below details how the Committee addresses the factors set out in Provision 40 of the
Code, which align with our principles and Executive Director remuneration framework.
Clarity
Simplicity
– We provide open and
transparent disclosures of
our Executive Directors’
remuneration arrangements.
– We welcome stakeholder
engagement and are
committed to undertaking
stakeholder consultation when
considering changes to our
Remuneration Policy.
– We are mindful to avoid overly complex
remuneration structures.
– We aim to ensure that remuneration arrangements for our
Executive Directors and the wider workforce are as simple
as possible to drive understanding and engagement.
– We take the time to engage with participants and
wider stakeholders.
Predictability
Proportionality, risk and alignment to culture
– The Remuneration Policy
details the maximum
opportunity levels for each
component of pay.
– Actual incentive outcomes
vary depending on the level of
performance achieved against
specific measures.
– The Committee undertakes an annual review of risks.
Identified risks are considered with appropriate mitigation
strategies or tolerance levels agreed.
– The metrics used to measure performance in our
incentive plans drive behaviours that are consistent with
the business strategy and our TT Way values.
– The incentive structures and balance of fixed to variable
pay do not encourage inappropriate risk taking. They are
subject to the achievement of stretching performance
targets and the Committee has the ability
to apply discretion to override formulaic outcomes.
– Our approach to decision-making ensures pay
outcomes are fair, proportionate and do not reward
poor performance.
– Formulaic incentive outcomes can be adjusted and are
assessed to ensure they reflect underlying business
performance and stakeholder interests.
– Clawback and malus provisions are in place across
all incentive plans and are clearly communicated.
– Annual short-term incentive deferral, LTIP holding periods
and our shareholding requirements provide a clear link
to the ongoing performance of the business and are
therefore aligned with shareholder interests.
ALIGNMENT WITH THE WIDER WORKFORCE
The Committee considers a range of factors when deciding upon the remuneration for
Executive Directors, one of which is the alignment and cascade of reward programmes down
the organisation. In implementing the current Policy, the Committee took the opportunity to
ensure that changes to performance metrics in Executive Director incentives appropriately
cascaded down the organisation. In addition, the Company regularly engages with employees
on the alignment of reward practices and provides opportunity to give feedback to the Committee.
Two sessions were conducted during 2024; feedback focused on overall alignment and the
inclusion of ESG in the short-term incentives, feedback was considered as part of improvements
to 2025 incentive design.
The following summarises the alignment of remuneration for the wider workforce during 2024.
The detail of retirement and benefits are specific to each location and are shown for the UK.
90
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
ANNUAL REPORT ON
REMUNERATION
IMPLEMENTATION OF THE REMUNERATION POLICY
FOR THE YEAR ENDED 31 DECEMBER 2024
Single figure for total remuneration (audited)
Directors’ remuneration for the year ended 31 December 2024 was as follows:
£’000
Salary
Taxable
benefits
Pension
Total
fixed
pay
Short-
term
Incentive 1
Long-
term
Incentive 2
Other 3
Malus 4
Total
variable
pay
Single
total
figure
Executive Directors
Peter France 5
2024
550
30
38
618
–
–
–
–
–
618
2023
138
7
10
155
189
–
390
(46)
533
688
Mark Hoad
2024
404
34
28
466
–
–
–
–
–
466
2023
392
33
27
452
551
198
–
(205)
544
996
1 Executive Directors’ short-term incentive awards are subject to deferral into shares in the Company. The STIP value includes the incentive
paid in both cash and deferred into shares. In line with the current Remuneration Policies 30% of any STIP is deferred into shares. Deferred
awards are not subject to any further performance conditions. The Executive Directors did not receive a STIP award for 2024.
2 LTIP values shown in the single figure include dividend equivalents. The 2024 single figure is comprised of the TSR component of the 2021
award and the EPS component of the 2022 award, neither component achieved the threshold performance target and therefore no value
was attributable to share price appreciation in the 2024 single figure values. The 2023 figure is comprised of the 2020 award and the EPS
component of the 2021 award; the 2023 single figure of remuneration has been restated to reflect the actual value of the shares subject to
the EPS component of the 2021 award which vested on 14 March 2024. The value attributable to share price appreciation in the 2023 single
figure for the CFO was £(59,819).
3 Value relates to the bonus buy-out share award to compensate Peter France for the 2023 pro-rata annual bonus forfeit from his previous
employer on resignation.
4 The 2023 single figure for remuneration has been restated to reflect the application of malus for the revised results for 2023 and the
reduction in the number of shares held under the DSBP. The value of the shares lapsed following the application of malus has been
calculated using the share price at the time of grant. The value of the malus applied, when added to the nil payment of the 2024 STIP
considerably exceeds the overpayments.
5 Peter France joined as CEO on 2 October 2023.
BASE SALARY
In line with Peter France’s hire agreement he was not eligible for a salary increase in 2024. The
base salary for Mark Hoad was reviewed in early 2024 and was increased by 3 per cent with effect
from 1 January 2024. The increases were set at a level below those of the wider UK workforce
which averaged 5.5 per cent.
TAXABLE BENEFITS
The Executive Directors’ taxable benefits consist of a car allowance and insurance benefits.
Costs associated with insurance benefits reflect the circumstances of each Executive Director
and typically increase with age.
PENSION
Employer contributions were paid at 7 per cent of base salary in line with those available
to the wider UK workforce. Contributions are made as defined contribution pension and/or
a cash supplement.
SHORT-TERM INCENTIVE PLAN
In line with the Remuneration Policy, the maximum opportunity under the STIP for Executive
Directors is 150 per cent of salary, subject to the achievement of the stretching performance
measures detailed below. 70 per cent of any award is paid in cash and 30 per cent is deferred into
shares which will vest after two years.
STIP design for 2024
Performance measure
Weighting
Threshold
(% of salary)
Target
(% of salary)
Maximum
(% of salary)
Group adjusted profit before tax
46.7%
7%
35%
70%
Group free cash flow
23.3%
3.5%
17.5%
35%
ESG
10%
n/a
7.5%
15%
Strategic objectives
20%
n/a
15%
30%
Total
75%
150%
The plan includes an underpin relating to the achievement of ESG and/or strategic objective
performance measures. To the extent that neither threshold performance target of the financial
measures has been met, the Committee may reduce the outcomes payable in respect to these
measures, up to and including a reduction to zero.
On a formulaic basis, as set out over the following pages, free cash flow performance would have
resulted in a payout alongside payments for progress made on ESG and the strategic objectives.
However, while free cash flow performance was between the threshold and maximum
performance targets set by the Committee, profit before tax was significantly below the threshold
target. In light of the overall financial performance of the Group and the investor experience during
the year, the Executive Directors and the Committee mutually concluded that no bonuses should be
awarded to the Executive Directors for the year ended 31 December 2024.
2024 PERFORMANCE TARGETS
The Remuneration Committee sets targets for the Executive Directors to coincide with the start of
the performance period. Targets are set primarily on the business plan at the time, with reference
to external forecasts of the Group’s performance and market conditions. In setting the performance
targets, the Committee were mindful to ensure that targets were appropriately stretching and the
performance range appropriately positioned.
For 2024, adjusted profit before tax (at the Group’s budget FX rates) was £27.7 million, which
reflects performance below the threshold performance target set by the Committee.
Free cash flow performance (at the Group’s budget FX rates), was £28.8 million, which reflects
performance between the threshold and maximum performance targets set by the Committee.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
91
FINANCIAL PERFORMANCE
Performance measure
Weighting
Required for
threshold bonus
(£m)
Required for
maximum bonus
(£m)
Outturn
(£m)
Outturn
(% of maximum)
Group adjusted profit before tax 1
46.7%
41.1
49.9
27.7
0%
Group free cash flow 1
23.3%
17.9
32.2
28.8
55.3%
1 Short-term incentives are measured using constant budget exchange rates. In line with common market practice the free cash flow financial
targets were restated to exclude the pro-rata budget contribution of the three business units within the GMS and Power and Connectivity
divisions that were divested in March 2024.
The adjusted profit before tax outturn was in line with the revised guidance in the September
trading update and the reduction to trading expectations stemming from continued demand
weakness in the components market and operational efficiency issues at two non-component
North American sites. Free cash flow, however, was strong resulting in a net debt reduction and
leverage of 1.8x, within our 1-2x target range.
ESG
The 2024 STIP includes two non-financial components, a 10 per cent weighting of opportunity to
ESG and a 20 per cent weighting of opportunity to strategic objectives. In line with good practice,
and as previously disclosed, the ESG measures have transitioned from a mix of quantitative and
qualitative measures to a quantitative measure for 2024.
Performance measure
Weighting
Required for
threshold bonus
Required for
maximum bonus
Outturn
Weighting
Outturn
(% of maximum)
Scope 1 & 2 carbon
emission intensity ratio reduction
10%
2% reduction
5% reduction
14% reduction
100%
Scope 1 & 2 carbon emission intensity ratio performance was underpinned by the contribution
from the Suzhou and Mexicali solar projects, Kansas moving to a renewable energy tariff and the
divestment of the three business units within the GMS and Power and Connectivity divisions.
Excluding divisions. Excluding the divested businesses from both the 2023 and 2024 comparator
years the reduction remained above the maximum bonus target.
STRATEGIC OBJECTIVES
For 2024 the Executive Directors shared a common set of strategic objectives. The Committee
received regular performance updates during 2024 in respect of the strategic objectives and
noted the progress made. However, as a result of the agreement not to award bonuses to the
Executive Directors, the Committee did not formally assess the strategic targets post year end.
Strategic objective
Strategic objective detail
Outturn
Weighting
Outturn
(% of maximum)
Strategic review
– Develop and agree revised company strategy with the Board.
– Deliver updated strategic growth plan and commence
strategic actions in line with timelines agreed with the Board.
10%
n/a
Organisational efficiency
– Revise organisational structure and arrangements to
improve strategic delivery and operational reliability.
– Manage change to mitigate risk to business performance.
10%
n/a
Improve inventory efficiency Improvement in stock turns, equivalent to delivering material
reduction in inventory:
– Threshold: improvement to 2.8 turns
– Target: improvement to 2.94 turns
– Maximum: improvement to 3.08 turns
10%
n/a
2024 SHORT-TERM INCENTIVE OUTCOMES
On a formulaic basis and assuming the strategic objectives would have paid out at the on-target
performance level, awards would have been as follows:
Performance measure
Opportunity (% of salary)
Peter France
Mark Hoad
Group adjusted profit before tax
70%
0%
0%
Group free cash flow
35%
19.3%
19.3%
ESG
15%
15%
15%
Strategic objectives
30%
15%
15%
Total award (% of salary)
150%
49.3%
49.3%
Total award (% of maximum)
32.9%
32.9%
Total award (£)
271,382
199,161
Taking into account the financial performance of the business and the investor experience during
the year, the Executive Directors and the Committee mutually concluded that no bonuses should
be paid to the Executive Directors for the year ended 31 December 2024.
ANNUAL REPORT ON REMUNERATION CONTINUED
92
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
ANNUAL REPORT ON REMUNERATION CONTINUED
LONG-TERM INCENTIVE
LTIP awards over conditional shares have historically been granted with performance measures
over separate three-year performance periods; EPS performance aligns with the Group’s financial
year while the TSR performance ends on the third anniversary of the award date. Accordingly, the
performance periods of the performance conditions end in separate reporting years. Both the
2021 and 2022 LTIP awards had performance periods that ended on or by 31 December 2024
which are included in the single figure of remuneration for 2024.
Award year and
performance measure
Threshold
(25% vesting)
Maximum
(100% vesting)
Outcome
Percentage of
maximum
achievement
2021 LTIP award 1: Relative
TSR performance against the
FTSE SmallCap (excluding
Investment Trusts)
Median
Upper quartile
35 percentile
(Below threshold)
0%
2022 LTIP award 2: Adjusted EPS
compound annual growth on
a constant currency basis
5%
12%
(8.3)%
(Below threshold)
0%
1 2021 LTIP award (vested March 2024): The EPS performance period for this award ended on 31 December 2023; the vesting of the EPS
component was between threshold and maximum performance target, and was included in the 2023 single figure of total remuneration.
The TSR performance period ended in March 2024; the vesting of the TSR component was not below the threshold performance target as
indicated in the above table. The lapsing of the TSR component is reflected in the 2024 single figure of total remuneration.
2 2022 LTIP award (vesting March 2025): The EPS performance period for this award ended on 31 December 2024; the vesting of the EPS
component was below the threshold performance target as indicated in the above table. The lapsing of the EPS component is reflected in
the 2024 single figure of total remuneration; the TSR performance period ends in March 2025 and will be included in the 2025 single figure
for total remuneration.
Malus and clawback
Following the end of the year, and as noted in the Annual Statement of this Report, the reported
operating profit for 2023 has been retrospectively adjusted by £(5.7) million. There were no
changes to operating cashflows.
The Committee recalculated the outcomes of the 2023 STIP and the 2021 LTIP vesting to reflect
the revised results. This shows that the total payouts for the CEO and CFO based on the revised
results would have been £358,830 lower than those actually paid at the time.
In determining an appropriate level of restitution, the Committee considered both the materiality of
the adjustment and the causes. The Committee concluded that a partial restitution, equivalent to
70 per cent of the overpayment, was appropriate and exercised its discretion to apply the malus
provision in the Deferred Share Bonus Plan to reduce the number of shares under award. The
value of the shares lapsed, based on their value at grant, totalled £251,183.
The Committee concluded that the impact to Executive Director remuneration of no bonuses
awarded in 2024 and the application of malus, both of which at £721,725 considerably exceeds
the formulaic overpayment, was an appropriate outcome in respect to the revised results for 2023
and the wider stakeholder experience in 2024.
The following sections in the remainder of this report are reflective of the respective position as at
31 December 2024 and prior to the application of malus which has been applied in 2025, unless
otherwise stated.
LONG-TERM INCENTIVES GRANTED DURING THE FINANCIAL YEAR (AUDITED)
LTIP awards over conditional shares were granted to the Executive Directors on 11 March 2024.
Awards are subject to a three-year vesting period plus an additional two-year holding period.
Basis of
award granted
(% of salary)
Share price at
date of grant
(pence) 1
Number of
shares over
which award
was granted
Face value
of award
(£)
% of award
that would vest
at threshold
performance
Performance
period end date 2
Peter France
150%
151.80
543,478
825,000
25%
31/12/2026
Mark Hoad
150%
151.80
398,845
605,448
25%
31/12/2026
1 The share price used to determine the number of shares granted on 11 March was the average share price over the two trading days prior to grant.
2 Since the 2023 LTIP grant, the performance period for all performance measures have been aligned to ensure that the performance periods end on
31 December following the relevant three-year performance period. Prior to this, the relative TSR performance period ran for three years from the
date of grant.
The Committee retains discretion to adjust formulaic incentive vesting outcomes to ensure they
reflect underlying business performance and shareholder interests.
PERFORMANCE MEASURES FOR LTIP AWARDS GRANTED DURING THE FINANCIAL
YEAR (AUDITED)
Awards granted to Executive Directors in 2024 are subject to the three performance measures
over the same three-year performance period as follows:
Performance measure
Weighting
Threshold
(25% vesting)
Maximum
(100% vesting)
Adjusted EPS compound annual growth on a constant currency basis
50%
4%
12%
Average cash conversion
25%
80%
95%
Relative TSR performance against the FTSE SmallCap
(excluding Investment Trusts)
25%
Median
Upper quartile
DEFERRED SHORT-TERM INCENTIVE AWARDS
During the year, Executive Directors were awarded conditional shares as deferred bonus share
plan awards in relation to the 2023 STIP outcome. Details of the grants made in March 2024, prior
to the application of malus, are summarised in the table below. No performance conditions apply
to these awards.
Date of grant
Number of shares
awarded 1
Share price at
date of grant
(pence) 2
Face value
of award
(£)
Date of vesting
Peter France 3
11/03/2024
37,264
151.80
56,566
11/03/2026
Mark Hoad
11/03/2024
108,817
151.80
165,185
11/03/2026
1 As a result of the restated results for 2023, the Committee has exercised discretion and applied malus in 2025 to reduce the number of
unvested shares under the DSBP. Following the cancellation of shares for malus, the number of shares remaining for Peter France is 6,833,
the award has lapsed in full for Mark Hoad.
2 The share price used to determine the number of shares granted was the average share price over the two trading days prior to grant.
3 Peter France received a pro-rated STIP award for 2023 for the period he was a Director following his commencement date of
2 October 2023.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
93
EXECUTIVE DIRECTOR INTERESTS IN SHARES
The table below sets out details of outstanding share awards held by Executive Directors at 31 December 2024 and prior to the application of malus.
Scheme
Date of grant
Performance
conditions apply
Exercise
price
(pence)
1 January 2024
Granted during
the year
Lapsed
Vested
31 December
2024
Market value at
31 December
2024
(£) 1
Market
price at
granted date
(pence)
Vesting
date
Expiry date 2
Peter France
LTIP
02/10/2023
Y
–
479,930 5
479,930
508,726
172
02/10/2026
–
11/03/2024
Y
–
543,478
543,478
576,087
152
11/03/2027
–
DSBP
11/03/2024
–
–
37,264
37,264 8
39,500
152
11/03/2026
Buy-out Award 6
02/10/2023
–
–
226,876
226,876
240,489
172
02/10/2026
–
ShareSave 7
30/09/2024
–
127
14,617
14,617
–
96
01/11/2027
30/04/2028
Total outstanding
1,302,165
1,364,801
Mark Hoad
LTIP
16/03/2021
Y
–
262,265 3
147,118
115,147
–
–
208
16/03/2024
–
14/03/2022
Y
–
262,321 4
262,321
278,060
192
14/03/2025
–
16/03/2023
Y
–
324,992 5
324,992 9
344,492
181
16/03/2026
–
11/03/2024
Y
–
398,845
398,845 9
422,776
152
11/03/2027
–
DSBP
14/03/2022
–
–
46,039
–
46,039
–
–
192
14/03/2024
–
16/03/2023
–
–
31,558
31,558
33,451
181
16/03/2025
–
11/03/2024
–
–
108,817
108,817 8
115,346
152
11/03/2026
ShareSave 7
29/09/2021
–
174
7,964
7,964
–
–
226
01/11/2024
30/04/2025
30/09/2024
–
127
14,617
14,617 8
–
96
01/11/2027
30/04/2028
Total outstanding
1,141,150
1,194,125
1 Calculated as the total number of shares awarded multiplied by the share price on 31 December 2024 of 106.0 pence. The calculation does not take into account dividend equivalents or the likelihood of vesting.
2 The expiry date, relevant only to ShareSave, is that applying in normal circumstances.
3 The performance condition attached to 50% of the award is based on EPS. 25% of the shares subject to this part of the award will vest for EPS growth of 10% compound per annum, increasing on a straight-line basis to 100% vesting for EPS growth for the year ending 31 December 2023 of
18% compound per annum. The performance condition attached to the other 50% of the award is based on TSR performance against the FTSE SmallCap (excluding Investment Trusts) during the three-year performance period from the date of award. 25% of the shares subject to this part
of the award will vest at median performance increasing on a straight-line basis to 100% vesting at the upper quartile of the comparator group.
4 The performance condition attached to 50% of the award is based on EPS. 25% of the shares subject to this part of the award will vest for EPS growth of 5% compound per annum, increasing on a straight-line basis to 100% vesting for EPS growth for the year ending 31 December 2024 of
12% compound per annum. The performance condition attached to the other 50% of the award is based on TSR performance against the FTSE SmallCap (excluding Investment Trusts) during the three-year performance period from the date of award. 25% of the shares subject to this part
of the award will vest at median performance increasing on a straight-line basis to 100% vesting at the upper quartile of the comparator group.
5 The performance condition attached to 50% of the award is based on EPS. 25% of the shares subject to this part of the award will vest for EPS growth of 4% compound per annum, increasing on a straight-line basis to 100% vesting for EPS growth for the year ending 31 December 2025 of
12% compound per annum. The performance condition attached to 25% of the award is based on TSR performance against the FTSE SmallCap (excluding Investment Trusts) during the three-year performance period from the year ending 31 December 2025. 25% of the shares subject to
this part of the award will vest at median performance increasing on a straight-line basis to 100% vesting at the upper quartile of the comparator group. The performance condition attached to the final 25% of the award is based on average cash conversion for the three performance years
ending on 31 December 2025. 25% of the shares subject to this part of the award will vest for average cash conversion of 80%, increasing on a straight-line basis to 100% vesting for an average cash conversion of 95%.
6 Peter France was granted a buy-out award in connection with his recruitment to compensate for a cash annual bonus that was forfeit on resignation from his prior employer. No performance conditions apply to this award.
7 The market value is the difference between the share price on 31 December 2024 and the option price (174 pence of the 2021 grant and 127 pence of the 2024 grant respectively) multiplied by the total number of shares under the option (or £0 if this difference is negative).
8 As a result of the restated results for 2023, the Committee has exercised discretion and applied malus to reduce the number of unvested shares under the DSBP. This has been applied in 2025 and will be reflected in the table above in next year’s Directors’ Remuneration report. For Peter
France, 30,431 shares of the 37,264 shares awarded under the March 2024 DSBP award have lapsed. For Mark Hoad, the full March 2024 DSBP award of 108,817 has lapsed and, 22,007 shares of the 31,558 shares awarded under the March 2023 DSBP award have lapsed.
9 On 14 November 2024, the Company announced the intended retirement of Mark Hoad. As such, LTIP grants remain subject to the original vesting dates, performance conditions and holding periods continue to apply and the number of shares under award will be time pro-rated to reflect
the time served between the date of grant and the date of cessation of employment.
ANNUAL REPORT ON REMUNERATION CONTINUED
94
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS (AUDITED)
The table below shows the shareholding for each Executive Director as at 31 December 2024.
The Executive Directors are required to build and hold a shareholding of 200 per cent of salary.
Executive Directors must retain 50 per cent of the net of tax value of any vested LTIP/DSBP shares
until the guideline is met.
Beneficially
owned at
1 January
2024
Beneficially
owned at
31 December
2024
Unvested
share awards
subject to
Company
performance
conditions
Unvested
deferred
bonus share
plan awards 1
Unvested
share
buy-out
award
Outstanding
share awards
under all-
employee
share plans
Shareholding
(% of Salary) 2
Value of
shareholding
(£) 3
Executive Directors
Peter France
–
–
1,023,408
37,264
226,876
14,617
27.0%
148,394
Mark Hoad
787,799
873,226
986,158
140,375
–
22,581
248.9%
1,004,481
1 As a result of the restated results for 2023, the Committee has exercised discretion and applied malus to reduce the number of unvested
shares under the DSBP. This has been applied in 2025 and will be reflected in next year’s Directors’ Remuneration report.
2 Shareholding includes beneficially owned shares and shares awards, such as DSBP grants, which are not subject to performance conditions
(net of assumed tax withholding). Shareholding calculated using the salary at the close of business on 31 December 2024.
3 Calculated using the share price as at close of business on 31 December 2024 of 106.0 pence.
Other than the application of malus as described in footnote 1 above and detailed in footnote 8 of
the Executive Director interests in shares table, there have been no changes to shareholdings
between 31 December 2024 and the date of this report.
Post cessation of employment, the Executive Directors are required to hold for two years the lower
of half of the share ownership requirement or their shareholding at cessation.
The closing middle market prices for an ordinary share of 25 pence of the Company on
31 December 2023 and 31 December 2024 as derived from the Stock Exchange Daily Official
List were 156.2 pence and 106.0 pence respectively. During 2024, the middle market price of
TT Electronics plc ordinary shares ranged between 73.6 pence and 179.0 pence.
PAYMENTS TO PAST DIRECTORS (AUDITED)
On 1 October 2023, Richard Tyson stepped down as Chief Executive Officer. In accordance with
the previously disclosed 2023 payments for loss of office, Richard Tyson retained the 2022 and
2023 grants under the Deferred Share Bonus Plan which reflect annual bonus earned in 2021 and
2022 respectively. The 2022 grant of 61,374 shares vested on 16 March 2024 at a pre-tax value of
£101,114 including dividend equivalents. The vested shares post-tax are subject to the post
cessation of employment shareholding requirement.
No other payments were made to past Directors in 2024.
PAYMENTS FOR LOSS OF OFFICE (AUDITED)
No payments were made in 2024.
The intended remuneration approach for Mark Hoad, which is in line with the Remuneration Policy
and typical market practice for retirement, is as follows:
– Salary, pension and benefits – Mark will continue to receive his contractual salary, pension
and benefits up to cessation of employment;
– Short-term incentive plan – Mark will remain eligible to receive an award in respect to the 2025
financial year, payable at the normal payment date subject to performance time pro-rating;
– Long-term incentive plan – Mark will retain his existing awards under the LTIP which will vest
on the normal vesting date subject to performance testing and time pro-rating. Mark will not
receive an LTIP grant in 2025;
– Deferred Share Bonus Plan – Mark will retain his awards under the DSBP, which reflect annual
bonus awards previously earned, less those lapsed following the application of malus in respect
to the 2023 revised results. DSBP awards will vest on the normal vesting dates;
– ShareSave – Mark will retain his Options on a time pro-rated basis in line with the scheme rules.
– Share Ownership Guideline – A two-year post cessation of employment shareholding
requirement will apply in respect to maintaining a shareholding of 100% of salary (or actual
eligible holding, if lower).
Retained incentive awards will continue to be subject to the performance conditions (where
relevant), scheme rules, malus and clawback provisions, the STIP will be paid at the normal date
and share awards will vest at their normal dates. LTIP awards will continue to be subject to their
respective two-year holding periods which will continue to apply post cessation of employment.
Full details of Mark’s leaving arrangements will be included in next year’s Directors’ Remuneration
report.
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
The Executive Directors have rolling contracts which are terminable by either party giving 12
months’ notice. Service contracts are available for viewing at the Company’s registered office.
Date of
appointment
Date of current
contract/letter
of appointment
Notice from
Company
Notice from
individual
Unexpired
period of
service contract
Peter France
02/10/2023
26/07/2023
12 months
12 months
Rolling contract
Mark Hoad
01/01/2015
09/12/2014
12 months
12 months
Rolling contract
PAY ACROSS THE ORGANISATION
This section of the report enables our remuneration arrangements to be viewed in the context
of providing:
– a comparison of the percentage change in our Directors’ remuneration with the change in our
UK employees’ average remuneration;
– a 10-year history of our Chief Executive’s remuneration;
– our TSR performance over the same period;
– the ratio between our Chief Executive’s remuneration and the remuneration of employees; and
– a year-on-year comparison of the total amount spent on employment costs across the Group
and shareholder payments.
ANNUAL REPORT ON REMUNERATION CONTINUED
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
95
PERCENTAGE CHANGE IN REMUNERATION OF DIRECTORS AND EMPLOYEES
The following table compares the percentage change in Directors’ salary/fees, benefits and short-term incentive to the average change for all employees of the parent Company for the past five years.
No bonuses were awarded to the Executive Directors for the year ended 31 December 2024, the reduction shown below in respect to the bonus award between 2023 and 2024 is therefore a
100 per cent reduction.
2023 to 2024
2022 to 2023
2021 to 2022
2020 to 2021
2019 to 2020
Salary/fees
Benefits
Bonus
Salary/fees
Benefits
Bonus
Salary/fees
Benefits
Bonus
Salary/fees
Benefits
Bonus
Salary/fees
Benefits
Bonus
Executive Directors
Peter France 1
0%
0.2%
(100)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Mark Hoad
3.0%
1.8%
(100)%
5.0%
(1.3)%
26.8% 6
2.5%
5.0%
(35.5)%
6.7%
52.0%
169.4%
(5.0)%
8.0%
(28.5)%
Chair
3.0%
n/a
n/a
5.0%
n/a
n/a
2.5%
n/a
n/a
1.5%
n/a
n/a
n/a
n/a
n/a
Non-executive Directors
Anne Thorburn 2
23.3%
n/a
n/a
5.0%
n/a
n/a
2.5%
n/a
n/a
8.0%
n/a
n/a
6.0%
n/a
n/a
Alison Wood
12.2%
n/a
n/a
5.0%
n/a
n/a
2.5%
n/a
n/a
12.5%
n/a
n/a
(5.0)%
n/a
n/a
Inken Braunschmidt 3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Michael Ord
11.5%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Former Directors
Jack Boyer 4
n/a
n/a
n/a
5.0%
n/a
n/a
2.5%
n/a
n/a
14.9%
n/a
n/a
3.3%
n/a
n/a
Average UK TT Electronics Parent
Company employees 5
5.9%
11.4%
(55.4%)
6.3%
11.2%
27.9%
9.4%
10.4%
(25.7)%
2.9%
6.8%
108.4%
3.8%
6.1%
(39.4)%
1 Peter France was appointed Chief Executive Officer on 2 October 2023.
2 Anne Thorburn was appointed Senior Independent Director on 10 May 2024.
3 Inken Braunschmidt was appointed as a Non-executive Director on 1 July 2024, table entries are not applicable as there is no prior year remuneration for comparison purposes.
4 Jack Boyer stepped down from the role of Non-executive Director and the Board on 10 May 2024.
5 Average parent Company employee based on employees who were employed throughout each two-year comparison period.
6 The 2022 to 2023 % bonus change has been restated to reflect the revised formulaic outcome of the 2023 STIP for the retrospective reduction to the 2023 results. The percentage change has been reduced from 92.9%.
CHIEF EXECUTIVE OFFICER’S REMUNERATION FOR THE LAST 10 YEARS
The total remuneration figures for the Chief Executive Officer during each of the last 10 years are shown in the table below. The total remuneration figures include the short-term incentive based on
that year’s performance and LTIP vesting based on the three-year performance periods ending in the relevant year.
2015
2016
2017
2018
2019
2020
2021
2022
2023 2
2023 3
2024 4
Total remuneration (£’000)
1,151
1,152
1,794
2,189
1,430
1,003
1,306
1,194
453
668
618
Short-term incentive (% of maximum)
90.8
100.0
100.0
93.3
64.0
45.8
97.1
61.2
–
59.6
0.0
LTIP vesting (% of maximum) 1
–
–
50.0
100.0
86.5
50.0
18.3
27.4
–
–
–
1 LTIP vesting is reflective of the three-year performance periods ending in the relevant year.
2 Relates to Richard Tyson who was CEO from 1 July 2014 to 1 October 2023.
3 Relates to Peter France who became CEO on 2 October 2023. 2023 values have been restated to reflect the revised formulaic outcome of the 2023 STIP for the retrospective reduction to the 2023 results. The short-term incentive (% of maximum) has been reduced from 91.7% and the total
remuneration has been reduced from £734,000.
4 The Executive Directors and the Committee mutually concluded that no bonuses should be paid to the Executive Directors for 2024.
ANNUAL REPORT ON REMUNERATION CONTINUED
96
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
TSR PERFORMANCE
The following graph shows the cumulative TSR of the Company over the last 10 financial years
relative to the FTSE SmallCap Index (excluding Investment Trusts). The FTSE SmallCap Index
has been selected for consistency as it is the index against which the Company’s TSR is
measured for the purposes of the LTIP. In addition, the Company is a constituent of the Index.
The graph shows the value, by 31 December 2024, of £100 invested in TT Electronics plc on
31 December 2014 compared with the value of £100 invested in the FTSE SmallCap Index
(excluding Investment Trusts).
Dec 24
Dec 23
Dec 22
Dec 21
Dec 20
Dec 19
Dec 18
Dec 17
Dec 16
Dec 15
Dec 14
Dec 24
Dec 23
Dec 22
Dec 21
Dec 20
Dec 19
Dec 18
Dec 17
Dec 16
Dec 15
Dec 14
0
50
100
150
200
175
300
TT Electronics (Re-based to 100)
FTSE SmallCap excluding Investment Trusts (Re-based to 100)
25
125
75
250
225
275
CHIEF EXECUTIVE OFFICER PAY RATIO
The Committee is mindful of the relationship between the remuneration of the Chief Executive
Officer and the wider employee population. The table below shows the ratio of the total
remuneration of the Chief Executive Officer to that of the UK employees of the Group for the last
six years.
Year
Methodology used
Lower quartile
Median
Upper quartile
2024
Option B
23:1
18:1
13:1
2023 1
Option B
45:1
39:1
25:1
2022
Option B
51:1
43:1
28:1
2021
Option B
62:1
52:1
34:1
2020 2
Option B
54:1
40:1
29:1
2019
Option B
63:1
55:1
38:1
1 The 2023 ratio is based on the combined CEO single figure of remuneration of Peter France and Richard Tyson. The 2023 pay ratio has
been restated for the revised 2023 single figure of remuneration for Peter France following the application of malus in respect to the 2023
revised results.
2 The 2020 ratio was impacted by COVID-19. Salary and incentive remuneration levels for 2020 include salary reductions taken by the CEO,
included in the single figure of remuneration, and the impact of the UK Government Coronavirus Job Retention Scheme and associated
voluntary furlough salary reductions in the wider UK workforce. Under the chosen method for calculation, the employee ranking and quartile
assessment was based on the April 2020 snapshot date during which time approximately 14% of employees were on furlough.
We continue to use Option B of the available methodologies as permitted under The Companies
(Miscellaneous Reporting) Regulations 2018. Given the complexity of the Group, this approach
enables us to use our existing Gender Pay reporting datasets as the foundation for our
calculations. We determined the hourly rates at each quartile of our 5 April 2024 Gender Pay data
then calculated the average annual salary and total remuneration for representative employees
at each quartile. Representative employees must have been employed on 31 December 2024
and employee data is based on full-time equivalent pay and calculated in accordance with the
single figure of remuneration. Adjustments may be made to ensure that quartiles are
representative; no adjustments were required for 2024.
Across the UK, the majority of the workforce undertake operational roles in our facilities.
The employee lower quartile values are generally reflective of the roles held by our semi-skilled/
skilled operators. The median is broadly representative of our skilled technicians, early career
professionals and early career managers. The quartile data is broadly representative of total
remuneration across the workforce in the UK.
The change in the median CEO pay ratio is attributable to changes in the remuneration of the
CEO and of the Company’s UK employees as a whole. In line with our remuneration principles,
the majority of the CEO’s remuneration opportunity is performance-related variable pay.
The CEO’s pay ratio is, therefore, heavily dependent on the outcomes of the STIP and LTIP plans
and, in the case of long-term share-based awards, share price movements. As such it is expected
that there will be considerable year-to-year changes in the ratio. The lower CEO pay ratio
principally results from two factors: (i) higher UK employee remuneration from the actions to
support employees in managing the impacts of high inflation through targeted salary increases to
lower paid employees, and (ii) no variable remuneration awards to the CEO. The Committee
believes that the pay ratio is appropriate and is reflective of the performance of the Group and the
roles undertaken by employees in the UK. Further context to the CEO total remuneration is set out
in detail in this report.
For 2024, the salary and single figure of total remuneration for our pay quartiles of UK employees
are as follows:
Lower quartile
Median
Upper quartile
Salary
£25,791
£31,916
£42,948
Single figure of total remuneration
£27,235
£34,238
£47,001
ANNUAL REPORT ON REMUNERATION CONTINUED
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
97
RELATIVE IMPORTANCE OF SPEND ON PAY
The following table sets out the change in payments to shareholders and the overall expenditure
on pay across the Group.
2024
2023
Change
Staff costs for the Group (£m)
159.7
180.6
(11.6)%
Dividends relating to the period (£m)
4.0
12.0
(66.7)%
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Non-executive Directors’ single figure for total remuneration (audited)
The Chair’s fee was increased by 3 per cent, a level below the wider UK workforce increases which
averaged 5.5 per cent. As disclosed in last year’s report, the NED base fee was increased by 12 per
cent and the NED additional fees were increased by 16 per cent following a review to re-align fees
to reflect the time commitments and expertise required in the roles. Changes to the fees were
effective 1 January 2024.
£’000
Salary/ fees
Benefits
Total
2024
2023
2024
2023
2024
2023
Warren Tucker
203
197
–
–
203
197
Anne Thorburn 1
71
58
–
–
71
58
Alison Wood 2
65
58
–
–
65
58
Inken Braunschmidt 3
27
–
–
–
27
–
Michael Ord 4
55
47
–
–
55
47
Former Directors
Jack Boyer 5
24
58
–
–
24
58
1 Anne Thorburn’s fee comprised the NED base fee, the additional fee for chairing the Audit Committee, and the additional fee as a Senior
Independent Director effective from 10 May 2024.
2 Alison Wood’s fee comprised her NED base fee and her additional fee for chairing the Remuneration Committee.
3 Inken Braunschmidt was appointed to the Board on 1 July 2024.
4 Michael Ord was appointed to the Board on 16 January 2023.
5 Jack Boyer stepped down from the Board on 10 May 2024, his fees comprised the NED base fee and the additional fee as Senior
Independent Director up to this date.
NON-EXECUTIVE DIRECTORS’ FEES
Chair and Non-executive Director fees will be reviewed during the first half of the year.
Any increases will be set at a level below the average UK workforce percentage increase and
are anticipated to be effective from 1 July 2025. The fees shown below for 2025 are as at
1 January 2025.
2025
2024
Increase
Chair
£202,530
£202,530
0%
NED base fee
£55,000
£55,000
0%
NED additional fees:
Senior Independent Director
£10,000
£10,000
0%
Audit Committee Chair
£10,000
£10,000
0%
Remuneration Committee Chair
£10,000
£10,000
0%
NON-EXECUTIVE DIRECTORS’ SHARE OWNERSHIP
While Non-executive Directors cannot participate in Company share schemes, share ownership
is encouraged to strengthen stakeholder alignment.
Non-executive Directors’ shareholdings (audited)
The table below shows the shareholding for each Non-executive Director. There have been
no changes to shareholdings between 31 December 2024 and the date of this report:
Beneficially owned at
31 December 2024
Chair
Warren Tucker
60,075
Non-executive Directors
Alison Wood
0
Anne Thorburn
60,000
Inken Braunschmidt
0
Michael Ord
25,000
ANNUAL REPORT ON REMUNERATION CONTINUED
98
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
The Chair and Non-executive Directors are appointed under letters of appointment. Letters of
appointment are available for viewing at the Company’s registered office.
Date of grant
Date of current
contract/letter of
appointment
Notice from
Company
Notice from
individual
Unexpired
period of
service contract
Chair
Warren Tucker
06/05/2020
02/04/2020
1 month
1 month
Rolling contract
Non-executive Directors
Alison Wood
11/07/2016
11/07/2016
1 month
1 month
Rolling contract
Anne Thorburn
01/07/2019
12/06/2019
1 month
1 month
Rolling contract
Inken Braunschmidt
01/07/2024
25/06/2024
1 month
1 month
Rolling contract
Michael Ord
16/01/2023
09/01/2023
1 month
1 month
Rolling contract
SHAREHOLDER VOTING
At the AGM held on 10 May 2024, the proxy votes cast in respect of the resolution to approve the
Directors’ Remuneration report is set out below together with the vote on the current
Remuneration Policy approved at the 2023 AGM.
Number of votes
Date of
AGM
For and
Discretionary
For and
Discretionary
(%)
Against
Against
(%)
Withheld
Directors’ Remuneration Policy
May 2023
131,581,506
90.59%
13,666,522
9.41%
40,262
Directors’ Remuneration report
May 2024
115,782,454
91.88%
10,227,700
8.12%
15,427
Withheld votes are not counted towards the total percentage of votes cast.
Full schedules in respect of shareholder voting on the above and all AGM resolutions are available
at www.ttelectronics.com.
The Remuneration Committee considers shareholder feedback received in connection with
the AGM each year and at other times of the year. This feedback is considered as part of the
Group’s annual review of the Remuneration report and Remuneration Policy. In addition, the
Remuneration Committee endeavours to consult directly with the largest shareholders and the
main representative bodies on proposals ahead of significant changes.
ADVISERS TO THE COMMITTEE
During the year, the Committee received support and advice from the Chief Executive Officer,
the Chief Financial Officer, the EVP Human Resources, the Group Reward Director and FIT
Remuneration Consultants LLP (“FIT”). FIT is the Committee’s appointed independent
remuneration adviser. The Company Secretary is secretary to the Committee.
The Company paid a total fee of £19,990 to FIT in relation to remuneration advice to the
Committee during the year. Fees were determined on the basis of time and expenses.
During 2024, FIT provided the Committee with advice in respect of the share plan rules, CFO
transition, compliance support for this year’s Directors’ Remuneration report and the provision of
other advice relating to remuneration governance and market practice. FIT is a member of the
Remuneration Consultants Group and has signed up to its code of conduct. The Committee is
satisfied that the advice it received during the year was appropriate, objective and independent.
FIT did not provide any other services to the Group and does not have any other connection with
the Company or individual Directors.
The Group’s approach to the Chair’s and Executive Directors’ remuneration is determined by the
Board on the advice of the Remuneration Committee. The Committee considers the views of the
Chair on the performance of the CEO, and of the CEO on the performance and remuneration of
the other members of the TMB. No Committee members or attendees take part in any
discussions relating to their own remuneration.
STATUTORY REQUIREMENTS
The Committee’s composition, responsibilities and operation comply with the principles of good
governance as set out in the Code and the requirements of the Listing Rules (of the Financial
Conduct Authority) and the Companies Act 2006. The Directors’ Remuneration report has been
prepared on the basis prescribed in the Large- and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013.
The Directors’ Remuneration report has been approved by the Board and signed on its behalf by:
Alison Wood
Chair, Remuneration Committee
9 April 2025
ANNUAL REPORT ON REMUNERATION CONTINUED
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
99
OTHER STATUTORY
DISCLOSURES
This Annual Report and Accounts includes the
Directors’ report and the audited financial statements
for the year ended 31 December 2024. 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 Governance and Remuneration
reports and specific elements of the financial
statements noted below. The table below lists items
that are relevant to this report, and which are
incorporated by reference, including information
required in accordance with the UK Companies Act
2006 and Listing Rule 9.8.4R:
AGM information
Page 167
Current and future dividend waiver
Page 101
Employee engagement
Page 30
Future developments in the business
Page IFC - 57
Going concern
Page 57
Scope 1, 2 and 3 emissions
Page 37
Section 172 statement
Page 47
Share capital
Page 167
Subsidiary undertakings
Page 159
Viability statement
Page 57
Results and dividend
The Group’s loss on ordinary activities after taxation was
£53.4 million (2023: £11.3 million loss). The audited financial
statements of the Group and the Company are set out on pages
116 to 160. Further details of the Group’s activities are set out in
the Strategic report on pages IFC to 57 which is incorporated
into the Directors’ report by reference.
Full details of the Company’s dividend policy are set out on page
24 and note 9.
Tax principles and strategy
The Group applies a conservative approach to tax and seeks to
comply with the OECD Transfer Pricing guidelines, which should
ensure that profits are taxed where value is created and
business risks are managed. The Group’s full Tax Principles and
Strategy document is published on the Group’s website.
Important events since the end of the financial year
The macroeconomic environment and the impact of tariffs
have led to the Board noting a material uncertainty relating to
going concern.
Auditor
In 2019, the Company undertook a competitive re-tender
exercise for external audit services, following which Deloitte LLP
(“Deloitte”) was appointed as external Auditor for the financial
year 2020 onwards. Deloitte was appointed by the Company’s
shareholders at the AGM held on 6 May 2020 and has
been reappointed at each subsequent AGM (including the
2024 AGM).
The Auditor’s responsibilities are set out on page 112 and should
be read in conjunction with those of the Directors as set out at
the end of this report.
Significant agreements relating to change of control
The Group has a number of borrowing facilities provided by
various banking groups. The most significant of these facility
agreements (as described below) 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:
PP: In August 2021, the Group agreed a debut issue of
£75 million of private placement fixed rate loan notes with three
institutional investors. The PP transaction completed in
December 2021, whereupon funds were received by the Group,
with the issue being evenly split between seven- and ten-year
maturities with an average interest rate of 2.9%.
RCF: In June 2022, the Group entered into an agreement for a
£147.4 million multi-currency revolving credit facility with a
syndicate of five relationship banks, with a maturity date of
27 June 2026 and a one-year extension option. In June 2023,
this extension option was exercised, with the result that RCF
maturity date is now 27 June 2027. In addition, in February
2023, £15 million of a £32.6 million accordion was exercised
increasing the facility size to £162.4 million.
100
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
OTHER STATUTORY DISCLOSURES CONTINUED
There are a number of other agreements that may be terminable
upon a change of control of the Company and therefore subject
to renegotiation. No such agreements are considered at present
to be significant in terms of their potential impact on the
business of the Group as a whole.
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 it maintains high
standards of employee welfare in all its operations, irrespective
of where in the world, and of local market conditions. Further
details on the Group’s policies relating to its employees are given
on pages 30 to 34.
Political contributions
The Group made no political contributions during the year.
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, in
line with the updated Statement of Principles published by the
Pre-Emption Group in November 2022, at the AGM to be held on
30 June 2025. During 2024, this authority was used in respect
of customary allotments of shares resulting from the operation
of the Group’s share schemes. The Notice of Annual General
Meeting will be available to shareholders at www.ttelectronics.
com/investors/agm-gm.
Purchase of own shares
At the AGM held on 10 May 2024, the Company was given
authority to purchase up to 17,746,033 of its ordinary shares
until the date of its next AGM. Other than market purchases
made by the Employee Benefit Trust (“EBT”), 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 AGM.
Further details regarding the authority to allot shares and
disapply statutory pre-emption rights and the purchase of own
shares will be set out in the Notice of the Annual General
Meeting, which will be available to view on the Company’s
website at www.ttelectronics.com/investors/agm-gm.
Shares held by the Employee Benefit Trust
The Company has established an EBT, the Trustee of which is
Apex Group Fiduciary Services Limited, part of Apex Group. As
at 31 December 2024, the Trustee held 588,319 shares with a
nominal value of £147,079.75 and an aggregate purchase price
of £1.56 per share, representing 0.331 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, the TT Electronics plc LTIP, the TT Electronics
Deferred Share Bonus Plan or other employee share schemes.
The maximum number of shares held by the EBT during the
year was 1,129,471. 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.
A dividend waiver is in place under which the Trustee waived its
right to receive dividends on the shares it held during the year,
and any future dividends. The Executive Directors, as employees
of the Company, are potential beneficiaries of shares held by
the EBT.
Disclosure of information to the Auditor
To the best of each Director’s knowledge and belief, there is no
audit information relevant to the preparation of the Auditor’s
report of which the Auditor is unaware and each Director has
taken all steps which might be expected to be aware of such
relevant information and to establish that the Auditor is also
aware of that information.
Approved by the Board on 9 April 2025 and signed on its
behalf by:
Ian Buckley
General Counsel and Company Secretary
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ADDITIONAL INFORMATION
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101
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The Directors are responsible for preparing the Annual
Report and Accounts and the Group and parent
Company financial statements in accordance with
applicable law and regulations:
– for the Group financial statements, state whether they have
been prepared in accordance with UK adopted international
accounting standards;
– 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;
– assess the Group and parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern; and
– use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
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 are responsible for such internal
control as they determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error, and 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 Strategic report, Directors’ report,
Directors’ Remuneration report and Corporate Governance
statement that complies with that law and those regulations.
Company law requires the Directors to prepare Group and
parent Company financial statements for each financial year.
Under that law the Directors are required to prepare the Group
financial statements in accordance with UK adopted
international accounting standards in conformity with the
requirements of the Companies Act 2006. The financial
statements also comply with International Financial Reporting
Standards (“IFRS”) as issued by the IASB. The Directors have
elected to prepare the parent Company financial statements in
accordance with UK accounting standards, including FRS 101
Reduced Disclosure Framework.
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:
– select suitable accounting policies and then apply them
consistently;
– make judgements and estimates that are reasonable, relevant
and reliable;
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 and Accounts
We confirm that to the best of our knowledge:
– the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
– the Strategic report 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.
We consider the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
The coordination and review of Group-wide input into the Annual
Report is a key element of the control process upon which the
Directors rely and is an exercise which spans a period wider
than the timetable for compiling the Annual Report itself. This
control process incorporates the controls the Group operates
throughout the year to identify key financial and operational
issues and includes:
– strategy meetings held as part of most Board meetings, at
which the entire Board is present, resulting in a clear
agreement of the Group’s strategy;
– the identification of the key milestones and the related KPIs to
be monitored and measured throughout the period;
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES CONTINUED
– monthly reviews of business performance conducted by
Executive management (in consultation with divisional
management), supplemented by reports highlighting key
issues and analysis of the main variances from budget and
prior year;
– preparation of a detailed budget, reviewed and agreed by
management and then the Board, which is used to calibrate
strategy implementation and against which actual
performance is measured;
– a timetabled process coordinating input from each division,
identifying significant market issues and key elements of
performance for each business area, and appropriately
incorporating them into the structure of the Annual Report;
– the identification of key risks from the risk management
process, for inclusion within the Annual Report, ensuring a
consistency of approach with regard to the risks and the
ongoing review programme;
– a planned Audit Committee sign-off process which
incorporates meetings of the Chair of the Audit Committee
with the Executive Directors, the Risk and Assurance function
and external Auditor to identify and timetable potential issues
of significance to be addressed; and
– a process for internal distribution and comment on the Annual
Report, including those of the members of the Board, key
advisers and external Auditor.
By order of the Board:
Ian Buckley
General Counsel and Company Secretary
9 April 2025
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Report on the audit of the financial statements
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
TT ELECTRONICS PLC
1. OPINION
In our opinion:
– the financial statements of TT Electronics plc (the ‘parent company’) and its subsidiaries
(the ‘Group’) give a true and fair view of the state of the Group’s and of the parent company’s
affairs as at 31 December 2024 and of the group’s loss for the year then ended;
– the group financial statements have been properly prepared in accordance with United
Kingdom adopted international accounting standards and IFRS Accounting Standards as
issued by the International Accounting Standards Board (IASB);
– the parent company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice, including Financial Reporting
Standard 101 “Reduced Disclosure Framework”; and
– the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements which comprise:
– the consolidated income statement;
– the consolidated statement of comprehensive income;
– the consolidated and parent company statements of financial position;
– the consolidated and parent company statements of changes in equity;
– the consolidated cash flow statement; and
– the related Notes 1 to 31 of the consolidated financial statements and Notes 1 to 14 of the parent
company financial statements
The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law, United Kingdom adopted international accounting standards and
IFRS Accounting Standards as issued by the IASB. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and
United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”
(United Kingdom Generally Accepted Accounting Practice).
2. BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We confirm that we have not provided any non-audit services prohibited by the
FRC’s Ethical Standard to the group or the parent company. Full details of all audit and non-audit
fees are provided in Note 6.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
3. MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to note 1d in the financial statements, which indicates that current geopolitical
uncertainty creates significant challenges in forecasting future market conditions, including in
respect of the impact of recently announced US government tariffs, any retaliatory tariffs
implemented by other countries in response, and any global macroeconomic downturn that
may result.
Profitability has been reduced significantly during the year with the Group generating an operating
loss of £23.5m in 2024 compared with an operating profit of £3.0m for 2023. The business has
been adversely impacted by difficult component market conditions and operational challenges,
particularly in North America.
As a result of challenging performance in the period, in December 2024 the Group agreed with its
lenders a relaxation of the interest cover covenant. Revised agreed thresholds were 3.75 times for
the year ended 31 December 2024, 3.00 times for the 12 months ending 30 June 2025, and 3.25
times for the year ending 31 December 2025 to provide headroom for the covenants which are
tested on a six-monthly basis. The covenant reset currently applies until 31 December 2025 and
therefore 30 June 2026 represents the first date at which the required interest cover covenant
reverts to being at 4.0 times respectively. The net debt covenant remains a maximum of 3.0 times
throughout the going concern period.
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INDEPENDENT AUDITOR’S REPORT CONTINUED
Over the forecast period to 30 June 2026, prior to the potential impact of United States and
potential retaliatory tariff regimes, and any associated global macroeconomic downturn, the Group
is forecasting both sufficient liquidity headroom and levels of EBITDA to pass the interest and debt
cover covenants under its financing agreements.
However, since the time of preparation of the base case and severe scenario analysis, there have
been significant geopolitical and macroeconomic developments including the potential
introduction by the United States of tariffs at unprecedented levels, and potential retaliatory tariffs
being proposed by other countries. These world events are fast moving, and the prospect of global
recession and the stress in the debt market has significantly increased.
There are a wide range of potential outcomes from the proposed US tariff regime, but any global
macroeconomic downturn or recession has the potential to have a significant impact on the future
demand for the Group’s products and cost base.
As such, there is an elevated risk associated with the ability of the Group to continue as a going
concern as a result of the current trading performance, and the low headroom over the financial
covenants attached to the Group’s principal borrowings.
The Group has set out in Note 1d a summary of the Group’s financing structure and related
financial covenants. The Audit Committee’s discussion of this matter is set out on page 80.
These events or conditions, along with the other matters as set forth in note 1d, indicate that a
material uncertainty exists that may cast significant doubt on the Group’s and parent company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and parent company’s ability to
continue to adopt the going concern basis of accounting included:
– We obtained an understanding of the Group’s relevant controls around the risk of non-
compliance with covenants and the going concern assessment of the Group;
– We challenged management on their projections which resulted in a number of revisions being
required to their models;
– We performed various tests on the integrity and mathematical accuracy of management’s
base case and severe but plausible downside scenario;
– We challenged the judgements and assumptions applied by management in their going
concern assessment and associated forecasts of financial performance and financial position;
– We used external market information available to challenge the revenue forecasts;
– We considered the business performance through to the end of March 2025 and the net debt
position at that date;
– We consulted internally with specialists within the firm, including debt financing specialists to
assist us with understanding current lender behaviour;
– We evaluated the cash and borrowings forecast through to 30 June 2026 and obtained an
understanding and relevant support for material cash movements;
– We assessed key loan documentation to understand the principal terms, including financial
covenants and current relaxations in place, and performed an assessment of the Group’s
existing and forecast compliance with debt covenants;
– We assessed the deliverability of management’s mitigations included in the severe but
plausible downside; and
– We challenged the disclosure in the financial statements in respect of going concern to
determine whether it contained sufficient and appropriate explanation of the going concern
judgement and the material uncertainty.
In relation to the reporting on how the group has applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to:
– the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting; and
– the directors’ identification in the financial statements of the material uncertainty related to the
group’s ability to continue as a going concern over a period of at least twelve months from the
date of approval of the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
3. MATERIAL UNCERTAINTY RELATED TO GOING CONCERN CONTINUED
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Key audit matters
The key audit matters that we identified in the current year were:
– Going concern (see material uncertainty related to going concern
section above);
– Impact of prior period accounting matters and accounting irregularity;
– Impairments within North America; and
– Inventory provisioning.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the Group financial statements was
£1.9m, which was determined on the basis of a number of key
benchmarks, including net assets, revenue and adjusted profit before tax
after amortisation.
Scoping
Our approach to audit scoping included performing audit procedures over
74% of the Group’s revenue and 78% of the Group’s adjusted operating
profit before tax after amortisation.
Significant changes
in our approach
Our materiality determination takes into account key benchmarks
including net assets, revenue and adjusted profit before tax after
amortisation. In the prior year, we determined materiality based on
7.1% (restated) of adjusted profit before tax after amortisation. As the
profitability is significantly depressed for the current year, a solely profit
based metric was not considered appropriate for the current year.
Our key audit matters have evolved from the prior year as discussed below.
We have identified the following new key audit matters:
– material uncertainty over going concern, as a result of the deterioration
of trading performance in the year, in the US region in particular,
uncertainty regarding the global economic environment, and levels of
judgement in respect of forecast covenant compliance.
– the impact of prior period accounting matters and accounting
irregularity.
– impairments within North America, given the downturn in performance
within the region in FY24.
– inventory provisioning, specifically associated with the application of
management judgement and estimation in determination of the
provision for excess and obsolete inventory in specific sites within the
US and Asia region.
In the prior year we also identified the following key audit matters:
– Classification of adjusting items. This has not been identified as key
audit matter as, excluding the items already identified as key audit
matters, the level of judgement in this area has reduced given the
reduction in any new items considered to be adjusting in nature.
– Classification of assets and liabilities held for sale. As the sale of these
assets and liabilities completed in March 2024, this is no longer a key
audit matter.
5. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In
addition to the matter described in the material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be communicated in
our report.
4. SUMMARY OF OUR AUDIT APPROACH
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INDEPENDENT AUDITOR’S REPORT CONTINUED
5.1. Impact of prior period accounting matters and accounting irregularity
Key audit matter
description
As detailed in the Audit Committee report on page 79, during November, it
was identified that the Group could not substantiate certain balances held
within the trade and other receivables and inventory financial statement
line items in respect of the Group’s operations in Cleveland.
As a result, the Group commenced an internal investigation over the root
cause of these matters, and concluded that they represented material
errors as at 31 December 2023 which required prior period restatement.
The causal factor analysis identified the following control weaknesses:
– certain component finance teams being inappropriately skilled/trained
and issues with high finance staff turnover;
– inappropriately optimistic judgements being taken on recoverability of
assets without effective review;
– reconciliations not being appropriately performed or reviewed;
– ineffective review of accounting for customer arrangements with
non-standard contractual terms; and
– insufficient challenge and review from divisional finance teams
In addition, a further matter of concern was identified in relation to North
America. Further investigation was undertaken, under the oversight of the
Audit Committee Chair, using resource from Group internal audit and an
external forensic specialist.
This review confirmed an accounting irregularity in relation to the
inappropriate recording of certain group costs as a prepaid asset, which
whilst not quantitatively material, has also been restated in the 31
December 2023 balance sheet.
The Committee noted inappropriate direction from senior finance
employees related to this matter.
We note that the nature of the accounting irregularity, demonstrated a
potential for management override of control. As a result, we identified an
increased risk of management bias.
In relation to the financial year ended 31 December 2023, the correction
of prior period misstatements reduced profit after tax by £4.5 million and
net assets by £5.0 million as fully described in note 1.
Refer also to page 80 of the Audit Committee report.
How the scope of
our audit responded
to the key audit
matter
We updated our risk assessment and tailored our audit procedures in
response to the key audit matter identified. Our audit procedures included:
– using a lower component performance materiality for certain
components impacted (being 50% of group performance materiality)
than would be ordinarily used if the control environment had been
deemed effective, increasing the volume of substantive testing
completed;
– interacting with management, the Audit Committee and their external
advisors to understand their response to the identified internal control
issues;
– increasing the level of partner and director oversight of our component
audit teams;
– using forensics specialists to challenge the scope and review the
results of the Group’s investigations, to assess the competence,
capabilities, independence and objectivity of the external experts used
by the Group and to consider the proposed remedial actions;
– holding tailored fraud discussions with an increased number of senior
management and finance personnel within the business;
– changing the nature and extent of our audit work relating to revenue
cut-off, including identifying a significant risk across the group and
consequently increasing sample sizes;
– performing increased levels of detailed sampling on trade and other
receivables and inventory in Cleveland with increased oversight from
senior members of the Group team;
– selecting an additional component to include in our scope for certain
procedures to increase the unpredictability of our audit testing; and
– performing incremental journal testing with specific focus and tailoring
to search for certain types of fraud and error.
Key observations
Overall, given the extent to which our audit procedures identified
significant deficiencies in relevant controls, we consider that the control
environment requires significant enhancement for a group of this size and
complexity.
Management and the Audit Committee recognise the need to improve the
level of financial control within the business, including continuing to
strengthen the “tone from the top”, to address the lessons learnt from the
FY24 close process.
We concur with management’s assessment that the prior year errors and
accounting irregularity require restatement of the prior period financial
statements. In respect of the prior year adjustments, we have also
concluded that the disclosures made are in accordance with IAS 8.
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5.2. Impairments within North America
Key audit matter
description
Total goodwill on the balance sheet within the North America group of
cash generating units (‘CGUs”) as at 31 December 2024 was £77.1 million
arising from past acquisitions prior to any current year impairment.
As required by IAS 36 Impairment of Assets management performs an
impairment review for groups of CGUs, that have goodwill, on an annual
basis. For amortising assets such as PPE and ROU Assets an impairment
review must be undertaken when an indicator of impairment exists.
During the year an impairment of £36.7 million was recorded to the
goodwill associated with the North America group of CGUs. This
impairment has arisen as a result of the poor financial performance
during 2024 and the reduction in the Group’s expectations of future
profitability.
The impairment assessment of goodwill for this group of CGUs has been
identified as a key audit matter as a result of the estimation involved in the
value of impairment recorded during the year, the quantitative significance
of the balance, and the application of management judgement and
estimation in its impairment assessment. The key assumptions driving
the impairment relates to Revenue Growth, Operating Profit, Discount
Rate and Long-Term Growth Rate.
Note 14 to the financial statements discloses the sensitivities reflecting
the risks inherent in the value in use calculations that were used in
performing the impairment review. Note 1g discloses this matter as a key
source of estimation uncertainty and reasonably possible changes in the
value for this CGU.
In addition, an impairment of £15.3 million associated with assets relating
to one North American site in the components business (£9.9 million of
property, plant and equipment and £5.4 million of right of use assets) was
recognised, reducing the carrying value to £0.6 million for property, plant
and equipment, representing fair value less cost of disposal, and nil for
right of use assets. The impairment of assets was as a result of
management’s assessment that the site is forecast to make losses for
the foreseeable future.
Refer also to page 80 of the Audit Committee report.
How the scope of
our audit responded
to the key audit
matter
We obtained an understanding of the relevant controls over the valuation
of goodwill, in particular controls over the Group’s forecasting of future
cash flows and the determination of CGU specific discount and growth
rates that underpin the impairment model, and controls around
management’s preparation of the model.
We assessed management’s impairment paper, underlying analysis, and
supporting financial models, and challenged the reasonableness of the
assumptions which underpinned the forecasts. Specifically, our work
included, but was not limited to:
– challenging the key assumptions relating to the 2025 forecast and later
forecast periods with reference to the recent and historical
performance of the American business, expected order book levels, our
knowledge of the businesses, utilisation pressures, and the status of
new product launches;
– retrospective review of performance against budget, including
consideration of post year end actual performance against budget;
– involving our valuation specialists to challenge the discount rate and
long term growth rates applied by benchmarking against market data
and comparable organisations, and by evaluating the underlying
process used to determine the risk-adjusted cash flow projections;
– testing the integrity and mathematical accuracy of the impairment
models;
– checking the application of the input assumptions, and testing their
compliance with IAS 36;
– assessing and reperforming management’s sensitivity analysis to
assess the key assumptions which have a significant effect on
the model;
– challenging management on the key drivers of the value in use model
such as forecast revenues, operating margins, discount and long-term
growth rates. We considered how movements in these drivers, either
individually or collectively, could impact the level of impairment and the
likelihood of such movements; and
– assessing the appropriateness of the disclosures relating to North
America’s goodwill as an area with key sources of estimation certainty,
and whether a reasonably possible change disclosure has been
included which appropriately reflects the sensitivity in the CGU
impairment review.
In relation to the impairment of PPE and ROU assets at the North
American site our work included:
– considering the past performance of the site and challenging
management’s forecasts;
– obtaining schedules of the PPE and ROU assets to be impaired and
agreeing back to amounts recorded in the general ledger;
– assessing the appropriateness of management’s assessment of
recoverable amount; and
– assessing the appropriateness of the disclosures.
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Key observations
We determined that the accounting for the impairments set out above
and the associated disclosures in the financial statements are
appropriate.
5.3. Inventory provisioning
Key audit matter
description
Total inventory on the balance sheet at 31 December 2024 is £132.7 million
(2023: £142.7 million. This is stated after a provision for obsolescence of
£17.2m (2023: £17.8 million), representing 11.4% of gross inventory
(FY23: 11.0%).
The provision for excess and obsolete inventory has been considered as
a key audit matter, pinpointed to three North American sites which have
experienced depressed trading conditions and operational challenges, as
well as the site in China, due to the quantitative size of the balance.
The Group uses a standardised provisioning policy based on ageing or
forecast demand which may be amended where management can
support an adjustment to the formulaic answer provided, and therefore
is a key estimate that can be subject to potential management bias.
There is a risk that the inventory held on the balance sheet is not
recoverable at its current value and the provision does not adequately
cover the risk of recovering the assets value.
Note 16 to the financial statements discloses the inventory balances.
How the scope of
our audit responded
to the key audit
matter
For the North American sites with depressed trading and Suzhou, we
obtained an understanding of the relevant controls over the Group’s
inventory provisioning. We assessed management’s underlying analysis,
and supporting provisioning calculation, and challenged the
reasonableness of the assumptions which underpinned the calculations.
Specifically, our work included, but was not limited to:
– reviewing whether the inventory provision methodology applied by the
Group is appropriate, consistent with the Group’s provisioning policies
and that any additional specific provisions applied can be justified
appropriately;
– testing the integrity and mathematical accuracy of the provisioning
calculations;
– challenging the key data and assumptions within the provisioning
calculations; and
– sample testing areas where management had made manual
adjustments to the Group’s formula driven model to determine whether
adjustments were appropriate.
Key observations
We determined that the provisioning policy applied is reasonable and the
resultant overall position adopted was reasonable including the
recoverable value of the inventory held within the US sites.
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6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the
results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Group financial statements
Parent company financial statements
Materiality
£1.9m (2023: £2.4m)
£0.6m (2023: £0.8m)
Basis for determining
materiality
We consider a range of
benchmarks such as net assets,
revenue, and adjusted profit
before tax.
Materiality for the current year
represents:
– 0.4% of revenue (2023: 0.4%);
– 7.8% of adjusted profit before
tax after amortisation (2023:
7.1%, on a restated basis); and
– 0.8% of net assets (2023: 0.9%,
on a restated basis).
Parent company materiality
equates to 0.3% (2023: 0.3%) of
net assets which is capped at 32%
of Group materiality (2023: 33%),
in order to address the risk of
aggregation when combined with
other businesses.
Rationale for the
benchmark applied
We considered the financial
measures that were most relevant
to users of the financial
statements and concluded that
the measures above represented
the most relevant metrics for the
purpose of evaluating financial
performance.
We believe that use of a balance
sheet measure was appropriate
given that the parent company
acts as a holding company.
Group materiality £1.9m
Component materiality range £0.5m–£0.7m
Audit committee reporting threshold £0.095m
Adjusted PBT after
amortisation £24.5m
Group materiality
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in
aggregate, uncorrected and undetected misstatements exceed the materiality for the financial
statements as a whole.
Group financial statements
Parent company financial statements
Performance materiality
65% (2023: 65%) of group
materiality
70% (2023: 70%) of parent
company materiality
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered the
following factors:
– our assessment of the respective complexity of the Group and
the parent company, and nature of the Group’s business
model;
– the de-centralised nature of the Group’s control environment
and its variation across the Group; and
– the number of misstatements identified in the previous year.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in
excess of £95,000 (2023: £120,000), as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the financial statements.
6. OUR APPLICATION OF MATERIALITY
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7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including Group-wide controls, and assessing the risks of material misstatement at the Group and
component level.
There are 63 (2023: 76) reporting components in total, each of which is responsible for maintaining
their own accounting records and controls and using an integrated consolidation system to report
to UK head office.
Our Group audit scope focused on audit work at 24 components (2023: 19 components).
We selected 13 (2023: 10) reporting components where we requested component auditors to
perform an audit of the component’s financial information. Coverage from the in-scope
components representing 74% (2023: 78%) of the Group’s revenue, and 78% (2023: 79%) of the
Group’s adjusted operating profit.
Each component was set a specific component materiality, considering its relative size and
any component-specific risk factors such as the location of components. The component
performance materialities applied were in the range £0.5 million to £0.7 million (2023: £0.6 million
to £0.8 million).
We tested the consolidation process at the parent company level and conducted analytical
procedures for entities not subject to detailed audit work to confirm our conclusion that there was
no significant risk of material misstatement in the aggregated financial information.
74%
26%
Direct Procedures
Analytical Review
78%
22%
Revenue
Profit before tax
7.2. Our consideration of the control environment
The Group include their assessment of the internal control environment under the Risk
Management section of the annual report included on page 52 .
Our audit approach is fully substantive with no controls reliance and our work performed in
respect of the significant controls weaknesses is set out in section 5.2 above. These matters are
also further discussed in the Audit and Risk Committee Report on page 79.
With the involvement of our IT specialists, we have obtained an understanding of the control
environment and of the general IT controls, including an understanding of the business
processes and relevant controls within the key areas of the audit. We did not rely on the Group’s
IT controls given the varying systems across the Group and the de-centralised nature of the IT
control environment, IT user access issues and the lack of formalised documentation around IT
controls.
7.3. Our consideration of climate-related risks
Climate change and the transition to a low carbon economy were considered in our audit where
they have the potential to impact, directly or indirectly, key judgements and estimates within the
Group financial statements. The Group continues to develop its assessment of the potential
impacts of climate change as disclosed in the People, Environment and Communities section of
the annual report on page 28. The Group has identified sustainability, climate change and the
environment as a principal risk to the business.
We performed the following procedures to address the climate-related risks:
– held discussions with management to obtain an understanding of the process for considering
the impact of climate-related risks and controls that are relevant to the entity;
– read and understood the work performed by the Group’s engaged third party climate
specialists and assessed the conclusions reached for consistency with the disclosures made
in the financial statements;
– performed a climate related risk assessment with the involvement of our specialist
Environmental, Social and Governance (“ESG”) team;
– considered whether information included in the climate related disclosures in the Annual
Report were materially consistent with the financial statements and our knowledge obtained in
the audit; and
– evaluated the appropriateness of disclosures included in the financial statements in note 1 on
page 122.
7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT
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7.4. Working with other auditors
We performed site visits to a number of our components during the year including Cleveland,
Plano and Kansas to discuss significant matters of the audit, audit procedures performed, as well
as results of work performed. The Group engagement team continued to have online interaction
with the Group’s largest and most complex businesses during 2024 and early 2025 with a
particular focus on components within North America. In respect of Suzhou where it is not
possible to review workpapers electronically from outside China, we had a team member attend in
person to review the component workpapers.
In addition to the above, the Group engagement partner held Group-wide, regional and individual
planning and close meetings which covered all businesses. Each division has a dedicated senior
member of the Group audit team responsible for the supervision and direction of components,
including where appropriate sector-specific expertise. We included all component audit teams in
our team briefing, discussed and reviewed their risk assessment, and reviewed documentation of
the findings from their work. We also reviewed the audit work papers supporting each component
team’s reporting to us.
Following the identification of the prior year restatements and the accounting irregularity we varied
the nature and extent of the scope of work for our components as set out in Section 5.2.
8. OTHER INFORMATION
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in
the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and
the parent company’s ability to continue as a going concern, disclosing as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
10. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
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Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including
the design of the Group’s remuneration policies, key drivers for directors’ remuneration, bonus
levels and performance targets;
– the scope and results of the work performed as part of the Group’s investigations into the prior
year accounting matters and the accounting irregularity including the reports from external
forensic specialists; which is discussed in the Audit and Risk Committee report;
– results of our enquiries of management, internal audit, the directors and the audit committee
about their own identification and assessment of the risks of irregularities, including those that
are specific to the Group’s sector;
– any matters we identified having obtained and reviewed the Group’s documentation of their
policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware
of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual,
suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and
regulations;
– our accumulated audit knowledge of the Group’s control environment from prior year audits; and
– the matters discussed among the audit engagement team including significant component
audit teams and relevant internal specialists, including forensics, tax, valuations, pensions, IT,
and ESG regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist
within the organisation for fraud and identified the greatest potential for fraud in going concern,
impact of prior year restatements and accounting irregularity (including revenue recognition
cut-off), impairments within North America and inventory provisioning. There are significant issues
identified within the Group’s control environment highlighted above which increase the potential for
fraud to occur. In common with all audits under ISAs (UK), we are also required to perform specific
procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group
operates in, focusing on provisions of those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the financial statements. The key laws and
regulations we considered in this context included the UK Companies Act, Listing Rules, pensions
legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct
effect on the financial statements but compliance with which may be fundamental to the Group’s
ability to operate or to avoid a material penalty.
11.2. Audit response to risks identified
As a result of performing the above, we identified going concern, impact of prior year
restatements (including revenue recognition cut-off), and accounting irregularity, impairments
within North America and inventory provisioning, as key audit matters related to the potential risk
of fraud. The key audit matters section of our report explains the matters in more detail and also
describes the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to
assess compliance with provisions of relevant laws and regulations described as having a
direct effect on the financial statements;
– enquiring of management, the audit committee and external legal counsel concerning actual
and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit
reports and reviewing correspondence with tax authorities; and
– in addressing the risk of fraud through management override of controls, testing the
appropriateness of journal entries and other adjustments; assessing whether the judgements
made in making accounting estimates are indicative of a potential bias; and evaluating the
business rationale of any significant transactions that are unusual or outside the normal
course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members including internal specialists and component audit teams and
remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD
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Report on other legal and regulatory requirements
12. OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year
for which the financial statements are prepared is consistent with the financial statements;
and
– the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and
their environment obtained in the course of the audit, we have not identified any material
misstatements in the strategic report or the directors’ report.
13. CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating to the group’s
compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with the
financial statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 57;
– the directors’ explanation as to its assessment of the group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 57;
– the directors’ statement on fair, balanced and understandable set out on page 102;
– the board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 53;
– the section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 52; and
– the section describing the work of the audit committee set out on page 76.
14. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– 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
– the parent company financial statements are not in agreement with the accounting records and
returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures
of directors’ remuneration have not been made or the part of the directors’ remuneration report to
be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
INDEPENDENT AUDITOR’S REPORT CONTINUED
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15. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS
15.1. Auditor tenure
Following the recommendation of the audit committee, we were appointed by the Shareholders of
the Group on 6 May 2020 at the Annual General Meeting to audit the financial statements for the
year ending 31 December 2020 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 5 years, covering the
years ending 31 December 2020 to 31 December 2024.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to
provide in accordance with ISAs (UK).
16. USE OF OUR REPORT
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.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule
(DTR) 4.1.15R – DTR 4.1.18R, these financial statements will form part of the Electronic Format
Annual Financial Report filed on the National Storage Mechanism of the FCA in accordance with
DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic
Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Robert Knight (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
9 April 2025
INDEPENDENT AUDITOR’S REPORT CONTINUED
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ADDITIONAL INFORMATION
£million (unless otherwise stated)
Note
2024
2023
Restated 1
Revenue
3
521.1
613.9
Cost of sales
(411.4)
(471.6)
Gross profit
109.7
142.3
Distribution costs
(22.9)
(26.9)
Administrative expenses
(110.3)
(112.4)
Operating (loss)/profit
(23.5)
3.0
Analysed as:
Adjusted operating profit
3
37.1
47.1
Restructuring costs
7
0.1
(2.0)
Pension restructuring costs
7
(1.3)
(1.9)
Asset impairments and measurement losses
7
(52.2)
(32.5)
Amortisation of intangible assets arising on business combinations
7
(2.7)
(4.6)
Acquisition and disposal related costs
7
(4.5)
(3.1)
Finance income
1.6
1.6
Finance costs
(11.5)
(11.4)
Loss before taxation
(33.4)
(6.8)
Taxation
8
(20.0)
(4.5)
Loss for the year attributable to the owners of the Company
(53.4)
(11.3)
EPS attributable to owners of the Company (pence)
Basic
10
(30.2)
(6.4)
Diluted
10
(30.2)
(6.4)
1. 2023 results have been restated as described in note 1h.
£million
2024
2023
Restated 1
Loss for the year
(53.4)
(11.3)
Other comprehensive income/(loss) for the year after tax
Items that are or may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations
2.9
(17.3)
Tax on exchange differences
(0.4)
1.1
Foreign exchange gain on disposals recycled to income statement
(0.6)
–
(Loss)/gain on hedge of net investment in foreign operations
(0.8)
1.8
(Loss)/gain on cash flow hedges taken to equity less amounts recycled to the income
statement
(10.2)
3.5
Deferred tax gain/(loss) on movement in cash flow hedges
2.4
(0.7)
Items that will not be reclassified to the income statement:
Remeasurement of defined benefit pension schemes
(2.3)
0.2
Tax on remeasurement of defined benefit pension schemes
3.1
(0.1)
Total comprehensive loss for the year attributable to the owners of the Company
(59.3)
(22.8)
1. ‘Loss for the year’ has been restated as described in note 1h.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2024
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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£million
Note
2024
2023
Restated 1
2022
Restated 1
ASSETS
Non-current assets
Right-of-use assets
12
9.9
15.8
19.6
Property, plant and equipment
13
49.3
61.3
54.8
Goodwill
14
105.4
140.8
155.1
Other intangible assets
15
30.8
32.7
53.7
Deferred tax assets
8
13.1
16.6
13.2
Derivative financial instruments
21
–
0.8
0.8
Pensions
22
7.1
25.3
31.3
Total non-current assets
215.6
293.3
328.5
Current assets
Inventories
16
132.7
142.7
189.2
Trade and other receivables
17
91.2
84.8
119.8
Income taxes receivable
2.9
2.0
1.1
Derivative financial instruments
21
0.7
5.2
3.1
Assets classified as held for sale
4
–
48.0
–
Cash and cash equivalents
69.2
74.1
65.0
Total current assets
296.7
356.8
378.2
Total assets
512.3
650.1
706.7
LIABILITIES
Current liabilities
Borrowings
20
0.1
1.2
3.7
Liabilities directly associated with assets classified as held for sale
4
–
28.1
–
Lease liabilities
20, 30
4.0
3.8
4.4
Derivative financial instruments
21
5.4
1.5
3.6
Trade and other payables
18
120.0
127.9
173.2
Income taxes payable
13.1
10.9
9.6
Provisions
19
3.7
3.1
3.5
Total current liabilities
146.3
176.5
198.0
Non-current liabilities
Borrowings
20
149.2
181.9
176.6
Lease liabilities
20, 30
13.3
14.4
18.7
Derivative financial instruments
21
2.4
0.6
0.8
Deferred tax liability
8
3.5
7.0
12.4
Pensions
22
1.5
3.1
2.9
Provisions and other non-current liabilities
18, 19
1.2
1.1
0.8
Total non-current liabilities
171.1
208.1
212.2
Total liabilities
317.4
384.6
410.2
Net assets
194.9
265.5
296.5
£million
Note
2024
2023
Restated 1
2022
Restated 1
EQUITY
Share capital
44.5
44.3
44.1
Share premium
24.6
24.0
22.9
Translation reserve
41.8
40.7
55.1
Other reserves
24
4.0
11.9
7.9
Retained earnings
80.0
144.6
167.1
Total equity
194.9
265.5
296.5
1. ‘Inventories’, ‘Trade and other receivables’ and ‘deferred tax assets’ have been restated as described in note 1h.
Approved by the Board of Directors on 9 April 2025 and signed on their behalf by:
Peter France
Mark Hoad
Director
Director
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2024
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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£million
Share
capital
Share
premium
Translation
Reserve
Other
reserves
Retained
earnings
Total
At 31 December 2022 – restated1
44.1
22.9
55.1
7.3
167.1
296.5
Loss for the year – restated 1
–
–
–
–
(11.3)
(11.3)
Other comprehensive income
Exchange differences on translation of foreign operations
–
–
(17.3)
–
–
(17.3)
Tax on exchange differences
–
–
1.1
–
–
1.1
Gain on hedge of net investment in foreign operations
–
–
1.8
–
–
1.8
Profit on cash flow hedges taken to equity less amounts recycled to the income statement
–
–
–
3.5
–
3.5
Deferred tax on movement in cash flow hedges
–
–
–
(0.7)
–
(0.7)
Remeasurement of defined benefit pension schemes
–
–
–
–
0.2
0.2
Tax on remeasurement of defined benefit pension schemes
–
–
–
–
(0.1)
(0.1)
Total comprehensive (loss)/income
–
–
(14.4)
2.8
(11.2)
(22.8)
Transactions with owners recorded directly in equity
Equity dividends paid by the Company
–
–
–
–
(11.3)
(11.3)
Share-based payments
–
–
–
3.1
–
3.1
Deferred tax on share-based payments
–
–
–
(0.1)
–
(0.1)
New shares issued
0.2
1.1
–
–
–
1.3
Other movements
–
–
–
(1.2)
–
(1.2)
At 31 December 2023 – restated 1
44.3
24.0
40.7
11.9
144.6
265.5
At 31 December 2023 – restated 1
44.3
24.0
40.7
11.9
144.6
265.5
Loss for the year
–
–
–
–
(53.4)
(53.4)
Other comprehensive income/(expense)
Exchange differences on translation of foreign operations
–
–
2.9
–
–
2.9
Tax on exchange differences
–
–
(0.4)
–
–
(0.4)
Foreign exchange gain on disposals recycled to income statement
–
–
(0.6)
–
–
(0.6)
Loss on hedge of net investment in foreign operations
–
–
(0.8)
–
–
(0.8)
Loss on cash flow hedges taken to equity less amounts recycled to income statement
–
–
–
(10.2)
–
(10.2)
Deferred tax on movement in cash flow hedges
–
–
–
2.4
–
2.4
Remeasurement of defined benefit pension schemes
–
–
–
–
(2.3)
(2.3)
Tax on remeasurement of defined benefit pension schemes
–
–
–
–
3.1
3.1
Total comprehensive income/(loss)
–
–
1.1
(7.8)
(52.6)
(59.3)
Transactions with owners recorded directly in equity
Dividends paid by the Company
–
–
–
–
(12.2)
(12.2)
Share-based payments
–
–
–
2.2
–
2.2
Deferred tax on share-based payments
–
–
–
(0.2)
–
(0.2)
New shares issued
0.2
0.6
–
–
–
0.8
Payments to fund employee benefit trust
–
–
–
(2.1)
–
(2.1)
Other movements
–
–
–
–
0.2
0.2
At 31 December 2024
44.5
24.6
41.8
4.0
80.0
194.9
1. Balances have been restated as described in note 1h.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2024
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
118
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
£million
Note
2024
2023
Restated 1
Cash flows from operating activities
Loss for the year
(43.9)
(11.3)
Taxation
8
20.0
4.5
Net finance costs
9.9
9.8
Restructuring costs and non underlying asset impairments and remeasurements
7
43.9
36.4
Amortisation, acquisition and disposal related costs
7
7.2
7.7
Adjusted operating profit
37.1
47.1
Adjustments for:
Depreciation
12,13
12.2
14.0
Amortisation of intangible assets
15
1.6
2.5
Share based payment expense
2.2
3.1
Scheme funded pension administration costs
1.1
1.6
Other items
0.2
(0.7)
Decrease in inventories
12.8
5.3
(Increase)/decrease in receivables
(2.2)
15.4
Decrease in payables and provisions
(12.9)
(15.5)
Adjusted operating cash flow
52.1
72.8
Reimbursement from pension schemes net of funding payments
22
9.4
3.2
Restructuring and acquisition related costs
(0.6)
(4.0)
Net cash generated from operations
60.9
72.0
Income taxes paid
(9.7)
(9.1)
Net cash flow from operating activities
51.2
62.9
Cash flows from investing activities
Purchase of property, plant and equipment
13
(6.9)
(22.3)
Proceeds from sale of property, plant and equipment and government grants received
0.5
0.5
Capitalised development expenditure
15
(1.8)
(1.6)
Purchase of other intangibles
15
(0.5)
(0.6)
Proceeds from disposal of business
4
17.5
–
Cash with disposed businesses
4
(5.3)
–
Net cash flow from/(used) in investing activities
3.5
(24.0)
£million
Note
2024
2023
Restated 1
Cash flows from financing activities
Issue of share capital
23
0.8
1.3
Interest paid
(10.6)
(10.6)
Repayment of borrowings
(49.2)
(26.1)
Proceeds from borrowings
15.1
32.7
Capital payment of lease liabilities
(4.2)
(4.4)
Payments to fund employee benefit trust
24
(2.1)
(1.2)
Dividends paid by the Company
9
(12.2)
(11.3)
Net cash flow used in financing activities
(62.4)
(19.6)
Cash transferred to held for sale
–
(3.6)
Net (decrease)/increase in cash and cash equivalents
(7.7)
15.7
Cash and cash equivalents at beginning of year including those classified as held for
sale
26
76.5
61.3
Exchange differences
26
0.3
(4.1)
Cash and cash equivalents at end of year
26
69.1
72.9
Cash and cash equivalents comprise:
Cash at bank and in hand
26
69.2
74.1
Bank overdrafts
26
(0.1)
(1.2)
Cash and cash equivalents at end of year
26
69.1
72.9
Cash and cash equivalents included within assets classified as held for sale
–
3.6
Cash and cash equivalents at end of year including those classified as held for sale
69.1
76.5
1. ’Loss for the year’, ‘Taxation’, ‘Adjusted operating profit’, ‘Decrease in inventories’, and ‘(Increase)/decrease in receivables’ have been
restated as described in note 1h.
CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 2024
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
at 31 December 2024
1 Basis of preparation
a) Basis of accounting
TT Electronics Plc (“the Group”) is a public company limited by shares (company number
00087249) and is the ultimate parent company of the Group. The Group is incorporated in the
United Kingdom under the Companies Act 2006 and registered in England and Wales. The address
of the registered office is ‘TT Electronics Plc, Fourth Floor, St Andrews House, West Street, Woking,
Surrey, GU21 6EB’. The nature of the Group’s operations and its principal activities by operating
segment are set out in note 3 and in the regional reviews on pages 20 to 22. The Consolidated
Financial Statements of the Group for the year ended 31 December 2024 were authorised in
accordance with a resolution of the Directors of TT Electronics Plc on 9 April 2025.
These consolidated financial statements are presented in pounds sterling, which is also the
functional currency of the Company. Foreign operations are included in accordance with the
policies set out in note 2.
The consolidated financial statements have been prepared on a historical cost basis modified
by derivatives held at fair value. The consolidated financial statements have been prepared in
accordance with UK adopted international accounting standards in conformity with the
requirements of the Companies Act 2006. The financial statements have also been prepared in
accordance with International Financial Reporting Standards as issued by the IASB.
The financial statements set out on pages 116 to 119 have been prepared using consistent
accounting policies except for the adoption of new accounting standards and interpretations
noted below.
b) Basis of consolidation
The consolidated financial statements set out the Group’s financial position as at 31 December
2024 and the Group’s financial performance for the year ended 31 December 2024.
Subsidiaries are those enterprises controlled by the Group. Control exists when the Group is
exposed, or has rights, to variable returns from its involvement with the subsidiary and has the
ability to affect those returns through its power over the subsidiary. 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) Alternative performance measures
The Group presents Alternative Performance Measures (“APMs”) in addition to the statutory
results of the Group. These are presented in accordance with the guidelines on APMs issued by
the European Securities and Markets Authority (“ESMA”).
Adjusted operating profit has been defined as operating profit from continuing operations
excluding the impacts of significant restructuring programmes, significant one-off items including
property disposals, impairment charges significant in nature and/or value, business acquisition,
integration, and divestment related activity, and the amortisation of intangible assets recognised
on acquisition. Acquisition and disposal related items include the writing off of the pre-acquisition
profit element of inventory written up on acquisition, other direct costs associated with business
combinations and adjustments to contingent consideration related to acquired businesses.
Restructuring includes significant changes in footprint (including movement of production
facilities) and significant costs of management changes.
In addition to the items above, adjusting items impacting profit after tax include:
– The net effect on tax of significant restructuring from strategy changes that are not considered
by the Group to be part of the normal operating costs of the business; and
– The tax effects of adjustments to profit before tax.
These financial statements include alternative performance measures that are not prepared in
accordance with IFRS. These APMs have been selected by the Directors to assist them in making
operating decisions because they represent the underlying operating performance of the Group
and facilitate internal comparisons of performance over time.
Alongside the statutory results, the Directors consider the adjusted results to be an important
measure used to monitor how the businesses are performing as this provides a meaningful
reflection of how the businesses are managed and measured on a day-to-day basis and achieves
consistency and comparability between reporting periods.
These APMs exclude certain significant non-recurring, infrequent or non-cash items that the
Directors do not believe are indicative of the underlying operating performance of the Group (that
are otherwise included when preparing financial measures under IFRS).
Adjusted profit is not a defined term under IFRS and may not be comparable with similarly
titled profit measures reported by other companies. It is not intended to be a substitute for, or
superior to, GAAP measures. All APMs relate to the current year results and comparable periods
where provided.
The Directors consider there to be five main APMs: adjusted operating profit, free cash flow,
adjusted EPS, adjusted effective tax rate and net debt.
All APMs are presented on pages 161 to 166 and are reconciled to their equivalent statutory
measures where this is appropriate.
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
120
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
d) Going concern
The Group’s business activities, along with the factors likely to influence its future development,
performance, and position, are detailed in the Strategic Report on pages 1 to 57. This report
provides an analysis of the Group’s financial position, cash flows, liquidity, and borrowing facilities.
Additionally, note 21 to the financial statements outlines the Group’s objectives, policies, and
processes for capital management, financial risk management strategies, financial instruments,
hedging activities, and exposures to credit and liquidity risks.
2024 has been a challenging year for the Group. Business performance has been mixed and
adjusted EBITDA and interest cover reduced. In particular performance has been impacted by
difficult component market conditions and operational challenges in our business in North
America. These challenging conditions have continued into 2025, as anticipated.
As a result of the above the Group sought agreement from its lenders to an interest covenant
relaxation which covers the covenant test dates at December 2024, June 2025 and December 2025.
From 30 June 2026 onwards, the Group’s covenants will revert to original contractual levels and, as
a result of this, the Directors have extended their going concern review period to 30 June 2026
During this extended going concern period, it is the potential impact of a possible covenant breach
in the future which we consider to be the largest risk to going concern as any such breach would
contractually allow the lenders to trigger default clauses and to request immediate repayment of all
related facilities.
Financing
The Group’s primary sources of £265.5 million in total borrowing facilities comprise:
– A £162.4 million committed revolving credit facility (“RCF”), signed in June 2022 and maturing in
June 2027. The RCF operates on a floating rate basis tied to GBP SONIA, USD SOFR, or
EURIBOR, depending on the loan currency. As at 31 December 2024, £75.9 million of the
available £162.4 million RCF facility had been drawn down, as at 31 March 2025 the RCF drawn
amount was £65.8 million;
– A £75 million fixed-rate loan issued in December 2021 to three institutional investors, evenly split
between 7- and 10-year maturities, with an average interest rate of 3.65 per cent and the same
covenants as our bank facility; and
– £28.1 million in uncommitted facilities (being overdraft lines and an accordion facility of
£17.6 million)
There are no required repayments of principal amounts on any financing prior to the RCF maturity
in 2027. Whilst drawdowns on existing facilities are required within the going concern review
period, none of the Company’s forecast models show any requirement for any additional financing
beyond the existing committed facilities.
Financial Covenants and Agreement to Relaxation by Lenders
The Group’s key financing facilities, the RCF and the fixed rate loans have the same financial
covenant metrics relating to debt and interest cover which measures EBITDA against net debt
and net interest. The loan agreements set these at a maximum debt cover of three times and a
minimum interest cover of four times. All covenants are measured on a last twelve months
basis (“LtM”)
As of 31 December 2024, the calculated ratios for the financial covenants as defined in the loan
agreements were as follows:
– Leverage ratio of 1.8 times; and
– Interest cover of 4.4 times
In December 2024, the Group agreed with its lenders, a relaxation of the interest cover covenant for
3 testing periods, as set out below:
Interest cover maximum
31 December
2024
30 June
2025
31 December
2025
30 June
2026
Contractual
4.0x
4.0x
4.0x
4.0x
Agreed relaxation
3.75
3.0x
3.25x
n/a
In return for the relaxation, the Group has agreed that during the covenant relaxation period, in the
event that interest cover falls, or is forecast in the next two testing periods to fall, below 4.0 times,
then a dividend will not be paid until interest cover returns to above 4.0 times.
Forecasts and covenant compliance
The Group has prepared and reviewed detailed cash flow forecasts for the period through until
30 June 2026. These forecasts take into account the Group’s financial position and potential
impacts of principal risks on different divisions.
Key assumptions in the Group’s financial projections for this period include revenue growth,
operating profit growth and working capital projections. The Board considers the Company’s Base
Case scenario to be an appropriate base case for the going concern assessment. Under this base
case scenario, the Group retains sufficient liquidity and covenant headroom throughout the
forecast period, with interest cover not expected to fall below 4.0 times and debt cover expected to
well within covenant limits.
The Group’s financial projections have been stress-tested against “business as usual” risks (such
as profit fluctuations, supply chain pressures, and working capital variances) as well as principal
risks, including general revenue reduction, contractual obligations, workforce turnover, tariff
impacts and health and safety. These risks were analysed both individually and collectively,
assuming that all adversely impact EBITDA in all periods.
1 Basis of preparation continued
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The Board notes that there are a number of inherent uncertainties within the Group’s going
concern forecasts, accordingly the Group extended these tests to take into account currently
elevated geopolitical risks, operational issues experienced at two North America sites in 2024 and
uncertainties about the timing of the return of demand in the Group’s components market. In
order to appropriately consider these risks and other principal risks in the business, the Company
forecasts a severe downside scenario.
This severe downside scenario reduces EBITDA by £11.7 million, £23.9 million and £29.3 million for
the 12 months to 30 June 2025, year ended 31 December 2025 and 12 months to 30 June 2026,
respectively. At these levels of EBITDA, the modelling shows that the Group would need to
implement some mitigating actions in order to meet the financial covenants. These mitigations
could include but are not limited to reducing incentive payments, wage and salary savings, reduced
dividends, capital expenditure and additional working capital measures. In this severe downside
scenario, to remain compliant with covenants, the Group would need to implement mitigating
actions with a EBITDA impact of circa £5 million or cash flow impact of circa £16 million, which the
Board believes would be readily achievable from the range of mitigating actions available to the
Group. After the impact of these mitigations, the modelling shows that severe downside scenario
passing the financial covenants.
Impact of elevated macroeconomic and tariff uncertainty
Whilst the Group’s severe downside scenario sought to take account certain tariff and elevated
geopolitical risks and the resultant impact on revenues, there have been significant emerging
geopolitical and macroeconomic developments in these areas. These events are recent,
fast moving, and the prospect of global recession and stress in the debt market has significantly
increased.
There are a wide range of potential outcomes from the proposed US tariff regime, but any global
macroeconomic downturn or recession has the potential to have an impact beyond that assumed
in the severe downside case. As such, current global economic volatility may have an associated
impact on the Company’s ability to generate the EBITDA required to meet the Company’s financial
covenants over the going Financial Covenants and Agreement to Relaxation by Lenders
As a result, the directors consider these matters represent a material uncertainty which may cast
significant doubt upon the Group’s ability and the Company’s ability to continue as a going concern
for a period up to 30 June 2026.
e) New and revised standards and interpretations adopted, not yet adopted and those in issue
but not yet effective
New and revised standards and interpretations adopted during the year:
At the date of authorisation of these financial statements the Group has considered the following
revised standards or interpretations, however they were deemed not to have a material effect on
the financial statements:
– Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
– Amendments to IAS 1 – Non-current Liabilities with Covenants
– Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback
– Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements
New and revised standards and interpretations not yet adopted
The Group does not consider that any standard, amendment or interpretation issued by the IASB,
but not yet applicable, will have a significant impact on the financial statements.
New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following
new and revised IFRS Standards that have been issued but are not yet effective:
– Amendments to IAS 21 – Lack of Exchangeability
– Amendments to IFRS 9 and IFRS 7 – Amendments to the Classification and Measurement of
Financial Instruments
– Annual Improvements to IFRS Accounting Standards – Volume 11
– IFRS 18 Presentation and Disclosure in Financial Statements
– IFRS 19 Subsidiaries without Public Accountability: Disclosures
f) Change in accounting policies
Adoption of new and amendments to published standards and interpretations effective for the
Group for the year ended 31 December 2024 did not have any material impact on the financial
position or performance of the Group.
g) Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in note 2, the Directors
are required to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experiences and other factors
that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of revision and future periods if the revision affects both
current and future periods.
The Directors have assessed that there is currently no material impact arising from climate change
on the judgements and estimates determining the valuations within the financial statements. In
particular, the Group considered the impact of climate change in respect of going concern and
viability of the Group over the next three years, forecast cash flows for the purposes of impairment
assessments of non-current assets and the useful lives of certain assets. Whilst there is currently
little short to medium-term impact expected from climate change, the Directors are aware of the
changing nature of risks associated with climate change and will regularly assess these risks
against judgements and estimates made in preparation of the Group’s Consolidated Financial
Statements.
1 Basis of preparation continued
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
122
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Critical judgements
In the course of preparing the Financial Statements, critical judgements within the scope of
paragraph 122 of IAS 1: “Presentation of Financial Statements” were made during the process of
applying the Group’s accounting policies. These are outlined below.
Adjusting items
Judgements were required as to whether items were disclosed as adjusting, with consideration
given to both quantitative and qualitative factors. Further information about the determination of
adjusting items in the year ended 31 December 2024 is included in note 1c.
Critical judgements involving estimates that have had a significant effect on the amounts
recognised in the financial statements are set out below.
Key sources of estimation uncertainty
Assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are discussed below.
– Note 8 – Taxation accruals. Accruals for tax contingencies require management to make
judgements and estimates in relation to tax authority audits and exposures. Amounts accrued
are based on management’s interpretation of country-specific tax law and the likelihood of
settlement. Tax benefits are not recognised unless the tax positions are probable of being
sustained. Once considered to be probable, management reviews each material tax benefit to
assess whether a provision should be taken against full recognition of the benefit on the basis of
potential settlement through negotiation and/or litigation. These amounts are expected to be
utilised or to reverse as tax audits occur or as the statute of limitations is reached in the
respective countries concerned. The Group’s current tax liability at 31 December 2024 includes
tax provisions of £10.4 million (2023: £9.3 million). The Group believes the range of reasonable
possible outcomes in respect of these exposures is tax liabilities of up to £13.9 million
(2023: £12.3 million).
– Note 8 – Deferred tax assets. The Group completed a five year forward looking strategic plan
covering the periods from 2025 to 2029. Under IAS 12 a deferred tax asset can only be
recognised if it is considered probable that the business will achieve a net taxable profit in the
near to utilise the deferred tax asset. Management determined that the strategic plan did not
support full recovery of all deferred tax assets within the US, in the North America segment.
As a result, the Group derecognised deferred tax assets of £16.0 million leaving deferred tax
assets of £9.2 million which offset against the North American deferred tax liabilities. The
charge was recognised in items excluded from adjusted profit (note 7). Should recovery of these
US deferred tax assets become probable this would cause the Group to recognise up to an
additional £16.0 million of deferred tax assets and a credit would be recognised in items
excluded from adjusted profit.
– Note 14 – Assumptions used to determine the carrying value of goodwill in relation to the North
America group of cash generating units (“CGUs”). The carrying amount of goodwill in relation to
the North America group of CGUs at 31 December 2024 was £40.4 million after impairment
(there is no comparative for 2023 as the Group’s CGUs have changed in 2024 because the group
has moved from divisions to a functional matrix structure across three regions as explained in
note 14). Determining whether goodwill is impaired requires an estimation of the value in use of
the CGUs to which the goodwill has been allocated. The value in use calculation requires
management to estimate the future cash flows expected to arise from CGUs and a suitable
discount rate to calculate present value. During the year a full impairment review was performed
and an impairment of £36.7 million was recognised against goodwill held in the North America
group of CGUs which was recognised within the North America segment in items excluded from
adjusted operating profit. Should the business experience unforeseen deterioration of results a
future impairment may be required. Further information is provided in note 7 and sensitivity
analysis is provided in note 14.
h) Prior year restatements
During a project to address the Cleveland operational execution challenges the Group identified
certain balances held within the trade and other receivables and inventory financial statement line
items in respect to the site that could not be substantiated. As a result, the Group commenced an
internal investigation over the root cause of these matters, and concluded that they represented
material errors as at 31 December 2023 which required prior period restatement. This was
confirmed through the year end process and in consultation with our external auditors.
Primarily, these errors related to incorrect judgements associated with complex contracts, certain
finance team members being inappropriately skilled, reconciliations not being appropriately
performed or reviewed, compounded by staff turnover issues as well as insufficient challenge and
review from the divisional finance team. As a result, we are strengthening the local finance team
and the control findings and recommendations are being incorporated into our on-going work to
improve the effectiveness of our internal controls over financial reporting.
In addition, a further matter of concern was identified in relation to North America. Further
investigation was undertaken, under the oversight of the Audit Committee Chair, using resource
from Group internal audit and an external forensic specialist. This review confirmed an accounting
irregularity in relation to the inappropriate recording of certain costs as a prepaid asset, which
whilst not quantitatively material, has also been restated in the 31 December 2023 balance sheet.
The Committee noted inappropriate direction from senior finance employees related to this matter.
1 Basis of preparation continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
In respect of all matters above it was determined the recoverability of £0.5 million of receivables in
2022, £0.8 million of inventories in 2023 and £4.4 million of receivables in 2023 was lower than
their presented carrying value. The directors considered these adjustments to be material and so
the prior years have been restated.
In accordance with IAS 8: ‘Accounting Policies, Changes in Accounting Policies and Errors’
amounts in the consolidated income statement; consolidated statement of comprehensive
income; consolidated statement of financial position; consolidated statement of changes in
equity and consolidated statement of cash flows for the year ending 31 December 2023 have
been restated.
The impact of this change is shown in the tables below.
2022 £million
As published
Restatement
of receivables
As restated
Consolidated statement of changes in equity
Retained earnings
167.6
(0.5)
167.1
Total equity
297.0
(0.5)
296.5
2022 £million
As published
Restatement
of receivables
As restated
Consolidated statement of financial position
Trade and other receivables
120.3
(0.5)
119.8
Retained earnings
167.6
(0.5)
167.1
Total equity
297.0
(0.5)
296.5
2023 £million
As published
Restatement
of prepayments
Restatement
of receivables
Restatement
of inventory
As restated
Consolidated statement of financial position
Inventories
143.5
–
–
(0.8)
142.7
Trade and other receivables
90.2
(1.0)
(4.4)
–
84.8
Deferred tax assets
15.4
0.2
0.8
0.2
16.6
Retained earnings
149.6
(0.8)
(3.6)
(0.6)
144.6
Total equity
270.5
(0.8)
(3.6)
(0.6)
265.5
2023 £million
As published
Restatement
of prepayments
Restatement
of receivables
Restatement
of inventory
As restated
Consolidated income statement
Cost of sales
(466.9)
–
(3.9)
(0.8)
(471.6)
Gross profit
147.0
–
(3.9)
(0.8)
142.3
Administrative expenses
(111.4)
(1.0)
–
–
(112.4)
Operating profit
8.7
(1.0)
(3.9)
(0.8)
3.0
Adjusted operating profit
52.8
(1.0)
(3.9)
(0.8)
47.1
Loss before taxation
(1.1)
(1.0)
(3.9)
(0.8)
(6.8)
Taxation
(5.7)
0.2
0.8
0.2
(4.5)
Loss for the year
(6.8)
(0.8)
(3.1)
(0.6)
(11.3)
2023 pence
As published
Restatement
of prepayments
Restatement
of receivables
Restatement
of inventory
As restated
Earnings per share (p)
Basic – adjusted
19.2
(0.4)
(1.7)
(0.4)
16.7
Diluted – adjusted
19.0
(0.4)
(1.7)
(0.5)
16.4
Basic
(3.9)
(0.4)
(1.7)
(0.4)
(6.4)
Diluted
(3.9)
(0.4)
(1.7)
(0.4)
(6.4)
2023 £million
As published
Restatement
of prepayments
Restatement
of receivables
Restatement
of inventory
As restated
Consolidated statement of cashflows
Loss for the year
(6.8)
(0.8)
(3.1)
(0.6)
(11.3)
Taxation
5.7
(0.2)
(0.8)
(0.2)
4.5
Adjusted operating profit
52.8
(1.0)
(3.9)
(0.8)
47.1
Decrease in inventories
4.5
–
–
0.8
5.3
(Increase)/decrease in receivables
10.5
1.0
3.9
–
15.4
Adjusted operating cash flow
72.8
–
–
–
72.8
Net cash generated from operations
72.0
–
–
–
72.0
Net cash flow from operating activities
62.9
–
–
–
62.9
Net (decrease)/increase in cash and cash
equivalents
15.7
–
–
–
15.7
1 Basis of preparation continued
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2 Summary of material accounting policies
The following material accounting policies have been applied in the preparation of the consolidated
financial statements. These accounting policies have been consistently applied across the Group.
a) Revenue
Revenue is measured at the fair value of the right to consideration, usually the invoiced value, for
the provision of goods to external customers excluding value added tax and other sales related
taxes and is recognised when the customer obtains control of goods for revenues which are not
recognised over time. In most cases this is at the point in time of transfer of legal title of the goods;
terms vary by customer, but the two most common arrangements are at the time of dispatch and
at the time of delivery. Where revenue is recognised over time this is recognised with regards to
completion of performance obligation milestones. For sales to customers where a right to return
an item is granted, revenue is recognised to the extent of the consideration to which the Group
ultimately expects to be entitled (i.e. revenue is not recognised for goods expected to be returned).
Where a service warranty is provided to customers, the associated revenue, based upon an
allocation of the overall cost of performance, is recognised over the warranty period. Payment
terms typically range from 30 to 120 days.
b) Finance income
Finance income comprises interest income on funds invested, the calculated interest income on
pensions assets for schemes which are in surplus and net foreign exchange gains or losses on
cash balances and loans receivables. Interest income is recognised using the effective interest
rate. Net foreign exchange gains or losses on other monetary assets or liabilities are recognised
either within other income or cost of sales, depending on what the underlying monetary asset or
liability relates to.
c) Finance costs
Finance costs comprise interest expense on borrowings which are not capitalised under the
borrowing costs policy, the calculated interest expense on pension liabilities for schemes which are
in deficit, the interest costs on lease liabilities and net foreign exchange gains or losses on external
loans. Net foreign exchange gains or losses on other monetary assets or liabilities are recognised
either within other income or cost of sales, depending on what the underlying monetary asset or
liability relates to.
d) Discontinued operations and assets held for sale
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.
Assets classified as held for sale and directly associated liabilities
An asset is classified as held for sale if it is available for immediate sale in its present condition
subject only to terms that are usual and customary for sales of such assets and that it is highly
probable the asset will be sold within one year from the date of classification. Assets held for sale
and directly associated liabilities are remeasured to their fair value less costs to sell. Any
impairment is first applied to non-current assets and then current assets in the order deemed
most appropriate by management.
e) 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.
f) Business combinations
Business combinations are accounted for using the acquisition method. Goodwill on business
combinations is recognised as the fair value of the consideration, including the full cost of any
derivative financial instruments used to hedge this item, less the fair value of the identifiable assets
and liabilities acquired and is recognised as an asset in the consolidated balance sheet. Costs
directly attributable to business combinations are recognised as an expense within the income
statement as incurred.
Acquisitions and disposals of non-controlling interests that do not result in a change of control are
accounted for as transactions with owners in their capacity as owners and therefore no goodwill is
recognised as a result of such transactions. The adjustments to non-controlling interests are
based on a proportionate amount of the net assets of the subsidiary. Any difference between the
price paid or received and the amount by which non-controlling interests are adjusted is
recognised directly in equity and attributed to the owners of the parent.
If the initial accounting for a business combination is incomplete by the end of the reporting period
in which the combination occurs, the Group reports provisional amounts for the items for which
the accounting is incomplete. Those provisional amounts are adjusted during the measurement
period (which is no longer than 12 months from the acquisition date), or additional assets or
liabilities are recognised, to reflect new information obtained about facts and circumstances that
existed as of the acquisition date that, if known, would have affected the amounts recognised as of
that date.
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g) 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
50 years
Leasehold building improvements
50 years (or over the period of the lease, if shorter)
Plant and equipment
3 to 10 years
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.
h) 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 that
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.
i) Leases
The Group applies IFRS 16 ‘Leases’ and recognises right-of-use assets and lease liabilities for most
leases (unless the lease term is 12 months or less or the underlying asset has a low value).
The Group recognises a lease liability at the lease commencement date, measured as the present
value of the future lease payments, discounted at the incremental borrowing rate. A corresponding
right-of-use asset is recognised separately on the face of the consolidated balance sheet, net of
accumulated depreciation and impairment losses.
The Group has applied judgement to determine the lease term for contracts that include renewal
options. The assessment of whether the exercise of such options is reasonably certain impacts
the lease term, which affects the amount of lease liability and right-of-use asset recognised.
j) 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.
k) 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. On the subsequent disposal or discontinuance of a previously acquired
business, the relevant goodwill is included in the gain or loss on disposal within the consolidated
income statement except to the extent it has been previously impaired.
Negative goodwill arising on the acquisition of a business is credited to the consolidated income
statement on acquisition as part of acquisition costs reported outside adjusted profit.
Cash-generating units to which goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be impaired. If the recoverable
amount of the cash-generating unit is less than the carrying amount of the unit, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then
to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the
unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
l) 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.
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.
Customer relationships and contracts are valued on the basis of the net present value of the future
additional cash flows arising from customer relationships with appropriate allowance for attrition
of customers.
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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
3 to 22 years
Order backlog
up to 2 years
Software
3 to 5 years
Amortisation is charged on a straight-line basis.
m) 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.
n) 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. Net realisable value is based on estimated selling price less costs
expected to be incurred to completion and disposal. Provisions are made for obsolescence or
other expected losses where necessary.
o) 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 (or minus) directly attributable transaction costs.
Trade receivables are recognised at transaction price (i.e. original invoice price) and subsequently
measured at amortised cost less provision made for loss allowance of these receivables based
upon the expected credit loss model (simplified model). All trade receivables are held to collect
contractual cash flows within a business model and meet the ‘Solely Payments of Principal and
Interest’ (SPPI) test.
Trade payables are carried at the amounts expected to be paid to counterparties and are held at
amortised cost.
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.
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.
Within the cashflow statement this definition also includes bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash management. Cash and cash equivalents
are initially recognised at fair value and subsequently are measured at amortised cost because
they meet the SPPI test.
In determining estimated fair value, investments are valued at quoted bid prices on the trade date.
2 Summary of material accounting policies continued
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Derivatives and hedge accounting
The Group uses derivative financial instruments such as forward foreign exchange contracts and
interest rate derivatives to hedge risks associated with foreign exchange fluctuations and interest
rate risk. These are designated as cash flow hedges (CFH). 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 reclassified to 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.
Hedge accounting is discontinued when 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.
When hedging the foreign currency risk on a forecast business combination, the Group includes
the accumulated gains or losses on hedging instruments within goodwill as a ‘basis adjustment’.
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 – other financial assets
At each reporting date the Group assesses credit risk by considering reasonable and supportable
information that may indicate increases in credit risk. Indicators that an asset carries a higher
credit risk compared to that at inception or that an asset is credit-impaired would include
observable data in relation to the financial health of the debtor: significant financial difficulty of the
issuer or the debtor; the debtor breaching contract; it being probable that the debtor will enter
bankruptcy or financial reorganisation.
The amount of credit risk provision is the difference between the original carrying amount and the
recoverable amount, being the present value of expected cash flows receivable (discounted using
the original effective interest rate). The amount of the provision is recognised in the income
statement within administrative expenses.
Financial assets are written off when there is evidence indicating that the debtor is in severe
financial difficulty and the Group has no realistic prospect of recovery. Receivables written off are
still subject to enforcement activity and pursued by the Group.
p) 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.
q) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) because
of a past event, 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.
r) Employee benefits
The Group operates defined benefit post-retirement benefit schemes and defined contribution
pension schemes.
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.
Defined benefit plans
The net liability recognised in the balance sheet for defined benefit schemes is the present value of
the schemes’ liabilities less the fair value of the 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. Net interest income and expense on net defined benefit assets and liabilities is
determined by applying discount rates used to measure defined benefit obligations at the
beginning of the year to net defined benefit assets and liabilities at the beginning of the year and is
included in finance income and costs. Remeasurements arising from defined benefit plans
comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of
the asset ceiling (if any, excluding interest).
The Group recognises remeasurements immediately in other comprehensive income and all other
expenses related to defined benefit plans in employee benefit expenses in profit or loss. Surpluses
are recognised where, on wind-up, the Group has unconditional right to any surplus and Trustees
do not have unilateral power to alter members’ benefits.
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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.
s) 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 retained earnings.
t) 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 (which are designated as net investment hedges) and
exchange differences on intercompany loans which will not be repaid in the foreseeable future
(which are treated as quasi equity) are also recorded within 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.
u) Impairment of non-financial assets
Property, plant and equipment and intangible assets (excluding goodwill) carrying amounts are
reviewed at each reporting date to determine whether there is any indication of impairment. If any
such indication exists, the recoverable amount of the asset is estimated. Recoverable amount is
the higher of fair value less costs of disposal and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate.
Assets that do not generate largely independent cash flows are assessed based on the CGU to
which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less
than its carrying amount, an impairment loss is recognised in the income statement.
3 Segmental reporting
In 2023 the Group was organised into three divisions which corresponded to the products and
services provided. Following the organisational change put in place from 1 March 2024, which was
announced internally in January 2024 and externally at the Capital Markets Event in April 2024, the
Group has now moved from divisions to a functional matrix structure across three regions.
Segmental reporting in note 3a presents performance of both the new and old segments for 2023.
The Group is organised into three regions, as shown below. Each of these regions 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 Chief Executive Officer. The operating
segments are:
– Europe – the Europe segment encompasses all the Group’s European operations comprising
the manufacturing sites in Sheffield, Bedlington, Manchester, Barnstaple, Nottingham,
Abercynon, Fairford and Eastleigh as well as the European sales offices. The regional segment is
supported by a leadership team who have functional responsibilities that span the individual
entities within the business;
– North America – the North America segment encompasses all the Group’s North American
operations comprising Juarez, Mexicali, Dallas, Minneapolis, Kansas, Denver, Cleveland and
Boston. The regional segment is supported by a leadership team who have functional
responsibilities that span the individual entities within the business;
– Asia – the Asia segment encompasses all the Group’s Asian operations comprising the
manufacturing sites in Suzhou and Kuantan and the Singapore sales office. The regional
segment is supported by a leadership team who have functional responsibilities that span the
individual entities within the business.
2 Summary of material accounting policies continued
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The key performance measure of the operating segments is adjusted operating profit. Refer to
the section titled ‘Reconciliation of KPIs and non IFRS Measures’ for a definition of adjusted
operating profit.
Corporate costs – Resources and costs of the head office managed centrally but deployed in
support of the operating units are allocated to segments based on a combination of revenue and
adjusted operating profit.
Resources and costs of the head office which are not related to the operating activities of the
trading units are not allocated to regions and are separately disclosed, equivalent to the segment
disclosure information, so that reporting is consistent with the format that is used for review by the
chief operating decision maker. This gives greater transparency of the adjusted operating profits
for each segment. Adjusting items are not allocated to segments for reporting purposes. For
further discussion of these items see note 7.
The accounting policies of the reportable segments are the same as the Group’s accounting
policies.
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 segments
which comprise groups of cash generating units as this is the level at which goodwill is monitored.
a) Income statement information
2024
£million
Europe
North
America
Asia
Total
Operating
Segments
Central
Total
Sales to external customers
146.3
184.4
190.4
521.1
–
521.1
Adjusted operating profit
18.9
(2.7)
28.5
44.7
(7.6)
37.1
Add back: adjustments made to
operating profit (note 7)
(60.6)
Operating profit
(23.5)
Net finance costs
(9.9)
Profit before taxation
(33.4)
2023
Restated 1
£million
Europe
North
America
Asia
Total
Operating
Segments
Central
Total
Sales to external customers
169.6
229.5
214.8
613.9
–
613.9
Adjusted operating profit
11.9
19.4
23.9
55.2
(8.1)
47.1
Add back: adjustments made to
operating profit (note 7)
(44.1)
Operating profit
3.0
Net finance costs
(9.8)
Loss before taxation
(6.8)
1. ‘Adjusted operating profit’ has been restated as described in note 1h. This was in the North America segment.
2023
Restated 1
£million
Power and
Connectivity
Global
Manufacturing
Solutions
Sensors and
Specialist
Components
Total
Operating
Segments
Corporate
Total
Sales to external customers
169.7
299.2
145.0
613.9
–
613.9
Adjusted operating profit
13.8
22.4
19.0
55.2
(8.1)
47.1
Add back: adjustments made to
operating profit (note 7)
(44.1)
Operating profit
3.0
Net finance costs
(9.8)
Loss before taxation
(6.8)
1. ‘Adjusted operating profit’ has been restated as described in note 1h. This restatement related to the Global Manufacturing
Solutions and Power and Connectivity segments.
b) Segment assets and liabilities
Assets
Liabilities
£million
2024
2023
Restated 1
2024
2023
Europe
148.2
133.8
37.4
32.7
North America
178.3
263.5
42.6
48.3
Asia
86.7
79.0
58.6
60.9
Segment assets and liabilities
413.2
476.3
138.6
141.9
Pensions
7.1
25.3
1.5
3.1
Unallocated
92.0
148.5
177.3
239.6
Total assets/liabilities
512.3
650.1
317.4
384.6
Unallocated assets of £92.0 million (2023: £148.5 million) comprise deferred tax assets of
£13.1 million (2023: £16.6 million), cash and cash equivalents of £69.2 million (2023: £74.1 million),
income tax receivable of £2.9 million (2023: £2.0 million), and assets associated with the central
corporate function of £6.8 million (2023: £7.8 million). The prior year also included assets held for
sale of £48.0 million.
3 Segmental reporting continued
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ADDITIONAL INFORMATION
130
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Unallocated liabilities of £177.3 million (2023: £239.6 million) comprise borrowings (excluding
leases and overdrafts) of £149.2 million (2023: £181.9 million), overdrafts of £0.1 million (2023:
£1.2 million), deferred tax liability of £3.5 million (2023: £7.0 million), income tax payable of
£13.1 million (2023: £10.9 million), and liabilities associated with the central corporate function of
£11.4 million (2023: £10.4 million). The prior year also included liabilities transferred to assets held
for sale of £28.1 million.
Capital expenditure
Depreciation and amortisation
£million
2024
2023
2024
2023
Europe
4.2
10.3
4.5
5.8
North America
3.6
11.5
6.7
7.2
Asia
1.4
2.7
2.6
3.5
Total
9.2
24.5
13.8
16.5
c) Geographic information
Revenue by destination
The Group operates on a global basis. Revenue from external customers by geographical
destination is shown below. Management monitors and reviews revenue by region rather than by
individual country given the significant number of countries where customers are based.
£million
2024
2023
United Kingdom
111.8
144.7
Rest of Europe
71.6
95.7
North America
214.6
225.1
Asia
122.6
145.5
Rest of the World
0.5
2.9
521.1
613.9
Revenue from services is less than 1% of Group revenues. All other revenue is from the sale of
goods.
Non-current assets
The carrying amount of non-current assets, excluding deferred tax assets, derivatives and
pensions, analysed by the geographical area is shown below:
£million
2024
2023
United Kingdom
91.5
80.3
Rest of Europe
–
0.1
North America
76.0
157.2
Central and South America
8.1
4.9
Asia
19.8
8.1
195.4
250.6
d) Market information key customers
The Group operates in the following markets:
£million
2024
2023
Healthcare
118.1
146.3
Aerospace and defence
142.1
123.5
Automation and electrification
174.3
221.4
Distribution
86.6
122.7
521.1
613.9
The Group had no customers who contributed greater than 10% of revenues in 2024 or 2023.
4 Disposals
On 31 March 2024 the Group sold three business units within the Europe and Asia segments to the
Cicor Group for a cash consideration of £20.2 million comprising £22.2 million received in March
2024 less a consideration adjustment of £2.0 million paid in July 2024. The divestment relates to
business units in Hartlepool and Cardiff, UK and Dongguan, China which provide electronics
manufacturing services and certain connectivity products, principally to industrial clients. The
disposed business units contributed £16.1 million of revenue and £0.2 million of operating loss
during 2024.
The assets and liabilities disposed are presented below.
£million
30 March 2024
Assets
Property, plant and equipment
0.3
Other intangible assets
0.2
Inventories
28.0
Cash and cash equivalents
5.3
Trade and other receivables
11.4
Assets within disposal group
45.2
Liabilities
Lease liabilities
2.6
Derivative financial instruments
0.4
Trade and other payables
18.7
Provisions
0.4
Deferred tax liability
1.0
Liabilities within disposal group
23.1
Net assets disposed
22.1
3 Segmental reporting continued
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
£million
Net proceeds per the statement of cashflows
17.5
Cash with disposed businesses
(5.3)
Impact on net debt (see note 26)
12.2
£million
Cash consideration received
22.2
Disposal costs paid
(2.7)
Net proceeds per the statement of cash-flows at H1 2024
19.5
Working capital adjustment paid in H2 2024
(2.0)
Net proceeds per the statement of cash-flows
17.5
Net assets disposed
(22.1)
Disposal costs accrual
(0.4)
Cumulative translation difference recycled on disposal
0.6
Loss on disposal
(4.4)
The loss on disposal of £4.4 million has been reported within items excluded from adjusted
operating profit which is disclosed in note 7.
5 Finance costs and finance income
£million
2024
2023
Interest income
0.5
0.1
Net interest income on pension schemes in surplus
1.1
1.5
Finance income
1.6
1.6
Interest expense
10.1
9.9
Interest on lease liabilities
0.7
0.8
Net interest expense on pension schemes in deficit
0.1
0.1
Amortisation of arrangement fees
0.6
0.6
Finance costs
11.5
11.4
Net finance costs
9.9
9.8
6 Loss for the year
Loss from continuing operations for the year is stated after charging/(crediting):
£million
2024
2023
Restated 3
Depreciation of property, plant and equipment
8.6
10.0
Depreciation of right-of-use assets
3.6
4.0
Amortisation of intangible assets 1
4.3
7.2
Asset impairments (excluded from adjusted operating profit, see note 7)
52.2
–
Measurement loss of assets classified as held for sale excluded from operating profit
–
32.5
Net foreign exchange gain/(losses) recognised within operating profit
1.2
(2.2)
Cost of inventories recognised as an expense
411.4
471.6
Research and development
10.7
11.0
Staff costs (see note 11)
159.7
180.6
Restructuring (income)/costs (excluded from adjusted operating profit)
(0.1)
2.0
Pension restructuring costs (excluded from adjusted operating profit)
1.3
1.9
Acquisition and disposal related costs (excluded from adjusted operating profit)
4.5
3.1
Remuneration of Group Auditor:
– audit of these financial statements
1.0
1.0
– audit of financial statements of subsidiaries of the Company
0.9
1.0
– assurance and other services 2
0.1
0.1
Income from government grants
0.3
0.2
Share-based payments expense
2.2
3.1
1. Included within amortisation of intangible assets is £2.7 million (2023: £4.6 million) reported within items excluded from adjusted
operating profit. The remaining charge is within administrative expenses.
2. Assurance and other services of £0.1 million relate to the half year review (2023: £0.1 million relating to the half year review).
3. ‘Cost of inventories recognised as an expense’ has been restated as described in note 1h.
4 Disposals continued
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ADDITIONAL INFORMATION
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
7 Adjusting items
As described in note 1c, adjusted profit measures are an alternative performance measure used by
the Board to monitor the operating performance of the Group.
2024
2023
£million
Operating
profit
Tax
Operating
profit
restated 1
Tax
restated 1
As reported
(23.5)
(20.0)
3.0
(4.5)
Restructuring costs
Restructuring costs
0.1
–
(2.0)
0.7
0.1
–
(2.0)
0.7
Pension restructuring costs
Pension restructuring costs
(1.3)
0.3
(1.9)
0.7
(1.3)
0.3
(1.9)
0.7
Asset impairments and measurement losses
Asset impairments
(52.2)
3.2
–
–
Deferred tax asset derecognition
–
(16.0)
Measurement loss on assets classified as held for sale
–
–
(32.5)
–
(52.2)
(12.8)
(32.5)
–
Amortisation of intangible assets arising on business
combinations
Amortisation of intangible assets arising on
business combinations
(2.7)
0.5
(4.6)
1.6
(2.7)
0.5
(4.6)
1.6
Acquisition and disposal related costs
Torotel integration costs
–
–
(0.4)
0.1
Ferranti Power and Control acquisition and integration costs
(0.2)
–
(1.3)
0.2
Disposal costs
(4.4)
(0.4)
(1.2)
0.2
Property sale
0.7
–
–
–
Other
(0.6)
0.1
(0.2)
–
(4.5)
(0.3)
(3.1)
0.5
Total items excluded from adjusted measure
(60.6)
(12.3)
(3.1)
3.5
Adjusted measure
37.1
(7.7)
47.1
(8.0)
1. ‘Adjusted operating profit’ and ‘tax’ have been restated as described in note 1h.
Restructuring credit £0.1 million (2023: £2.0 million cost)
Net restructuring credit was £0.1 million comprising a credit of £0.4 million in respect of the
closure of our Barbados facility in 2021 partly offset by £0.3 million cost in respect of the closure
of the Hatfield, USA facility. In the prior period restructuring costs of £2.0 million relate to costs
associated with the relocation of production facilities from our USA site in Covina to Kansas,
representing the last stage of the self-help programme which started in 2020.
Pension restructuring costs £1.3 million (2023: £1.9 million)
Pension restructuring costs of £1.3 million (2023: £1.9 million) comprised £1.1 million (2023:
£1.9 million) associated with the buy-out of the UK scheme and a settlement cost of £0.2 million
in respect of the buy-out of one of the US schemes that completed in January 2024.
Asset impairments and measurement losses £52.2 million (2023: £32.5 million)
Due to revised forecasts for one manufacturing site in North America, in the context of the weak
components market, impairment charges were recognised in the North America segment. The
impairment was £15.5 million in total comprising £9.9 million of property, plant and equipment,
£5.4 million of right of use assets and £0.2 million of intangible assets. The impairment reduced
the carrying value to £0.6 million for property, plant and equipment, representing fair value less
cost of disposal, and £nil for right of use assets and intangible assets.
During the year an impairment of £36.7 million was recognised against goodwill for the
North America segment reflecting recent trading performance.
As at 31 December 2024 the Group derecognised £16.0 million of deferred tax assets reflecting
the recent performance and near term outlook for the North America region. The associated
losses remain available to the Group once the North America region returns to taxable profit.
Measurement loss on assets classified as held for sale in the prior year of £32.5 million relates to
the writing down of assets held for sale in preparation for the sale of three business units to the
Cicor Group (‘Project Albert’, see note 4).
Amortisation of intangible assets arising on business combinations £2.7 million
(2023: £4.6 million)
Amortisation of intangible assets arising on business combinations of £2.7 million (2023:
£4.6 million) relate to amortisation of the fair value of acquired order books, acquired customer
relationships and other intangible assets acquired on business combinations.
Acquisition and disposal related costs £4.5 million (2023: £3.1 million)
Acquisition and disposal related costs of £4.4 million (2023: £3.1 million) comprise £4.4 million
(2023: £1.2 million) in relation to the sale of three business units to the Cicor Group (‘Project Albert’,
see note 4), £0.3 million relating to costs incurred in preparing land for sale, £0.3 million relating to
historic legal claims, £0.2 million (2023: £1.3 million) relating to the acquisition of the Power and
Control business of Ferranti Technologies Ltd. based in Manchester, UK, and a gain of £0.7 million
relating to the sale of property in Pembroke, UK. The prior year included £0.4 million of integration
costs relating to the acquisition of Torotel, Inc based in Kansas, US.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
8 Taxation
a) Analysis of the tax charge for the year
£million
2024
2023
Restated 1
Current tax
Current income tax charge
13.9
11.1
Adjustments in respect of current income tax of previous year
1.0
1.9
Total current tax charge
14.9
13.0
Deferred tax
Relating to origination and reversal of temporary differences
(10.9)
(4.1)
Change in tax rate
0.1
–
Derecognition of deferred tax assets in the North America segment
16.0
–
Adjustments in respect of deferred tax of previous years
(0.1)
(4.4)
Total deferred tax credit
5.1
(8.5)
Total tax charge in the income statement
20.0
4.5
1. The tax charge for 2023 has been restated as described in note 1h.
The applicable tax rate for the period is based on the UK standard rate of corporation tax of 25.0%
(2023: 23.5%). Overseas taxation is calculated at the rates prevailing in the respective jurisdictions.
The Group’s effective tax rate for the year was (59.9%) (the adjusted tax rate was 28.3%, see
section ‘Reconciliation of KPIs and non IFRS measures’). Included within the total tax charge above
is a £12.3 million debit relating to items reported outside adjusted profit (2023: £3.5 million credit).
b) Reconciliation of the total tax charge for the year
£million
2024
2023
Restated 1
Loss before tax from continuing operations
(33.4)
(6.8)
Loss before tax multiplied by the standard rate of corporation tax in the UK of 25%
(2023: 23.5%)
(8.3)
(1.5)
Effects of:
Impact on deferred tax arising from changes in tax rates
0.1
0.1
Overseas tax rate differences
3.0
(0.5)
Items not deductible for tax purposes or income not taxable
8.2
9.7
Adjustment to current tax in respect of prior periods
0.9
0.1
Current year tax losses and other items not recognised
0.3
(0.8)
Impairment of deferred tax assets in the North America segment
16.0
–
Adjustments in respect of deferred tax of previous years
(0.2)
(2.6)
Total tax charge reported in the income statement
20.0
4.5
1. The tax charge for 2023 has been restated as described in note 1h.
The overall aim of the Group’s tax strategy is to support business operations by ensuring a
sustainable tax rate, mitigating tax risks in a timely and cost-efficient way and complying with tax
legislation in the jurisdictions in which the Group operates. It is however inevitable that the Group
will be subject to routine tax audits or is in ongoing disputes with tax authorities in the multiple
jurisdictions it operates within. This is much more likely to arise in situations involving more than
one tax jurisdiction. Differences in interpretation of legislation, of global standards (e.g. OECD
guidance) and of commercial transactions undertaken by the Group between different tax
authorities are one of the main causes of tax exposures and tax risks for the Group.
In order to manage the risk to the Group an assessment is made of such tax exposures and
provisions are created using the best estimate of the most likely amount to be incurred within a
range of possible outcomes. The resolution of the Group’s tax exposures can take a considerable
period of time to conclude and, in some circumstances, it can be difficult to predict the final
outcome.
The current tax liability at 31 December 2024 includes tax provisions of £10.4 million (2023: £9.3
million). The Group believes the range of reasonable possible outcomes in respect of these
exposures is tax liabilities of up to £13.9 million (2023: £12.3 million).
c) Deferred tax
The Group completed a five year forward looking strategic plan covering the periods from 2025 to
2029 in which it was forecast that the Europe and Asia regions would show increasing profitability.
Therefore, a deferred tax asset relating to these regions was recognised on the basis that it is
considered probable that net taxable profits will be recognised in the future.
The authorised pension surplus payments charge reduced from 35% to 25% from 6 April 2024.
The deferred tax liability has been recognised at 25% (2023: 35%).
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
134
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The amounts of deferred taxation assets/(liabilities) provided in the financial statements are
as follows:
£million
As at 1 Jan
2024
Continuing
operations
Recognised in
equity/OCI
Net exchange
translation
As at
31 December
2024
Intangible assets
(8.5)
0.4
–
(0.1)
(8.2)
Property, plant and equipment
(1.4)
1.1
–
(0.2)
(0.5)
Deferred development costs
(0.3)
0.2
–
–
(0.1)
Retirement benefit obligations
(8.4)
3.8
3.1
0.1
(1.4)
Inventories
0.8
0.4
–
–
1.2
Tax losses
14.1
(13.0)
–
0.3
1.4
Unremitted overseas earnings
(0.8)
0.5
–
(0.1)
(0.4)
Share-based payments
0.7
(0.2)
(0.2)
–
0.3
Cash flow hedges
(0.6)
–
2.4
(0.2)
1.6
Short-term temporary differences
14.0
1.7
–
–
15.7
Net deferred tax asset/(liability)
9.6
(5.1)
5.3
(0.2)
9.6
Deferred tax assets
16.6
13.1
Deferred tax liabilities
(7.0)
(3.5)
Net deferred tax asset/(liability)
9.6
9.6
£million
As at 1 Jan
2023
Continuing
operations
Recognised in
equity/OCI
Transferred
to assets
and liabilities
classified as
held for sale
Net exchange
translation
As at
31 December
2023
Restated 1
Intangible assets
(12.4)
1.2
–
2.7
–
(8.5)
Property, plant and equipment
0.8
(1.2)
–
(1.0)
–
(1.4)
Deferred development costs
(0.5)
0.2
–
–
–
(0.3)
Retirement benefit obligations
(10.4)
2.1
(0.1)
–
–
(8.4)
Inventories
0.9
(0.2)
–
–
0.1
0.8
Tax losses
10.7
3.6
–
–
(0.2)
14.1
Unremitted overseas earnings
(1.8)
1.0
–
–
–
(0.8)
Share-based payments
0.7
–
(0.1)
–
0.1
0.7
Cash flow hedges
0.1
–
(0.7)
–
–
(0.6)
Short-term temporary differences
12.7
1.8
–
(0.4)
(0.1)
14.0
Net deferred tax asset/(liability)
0.8
8.5
(0.9)
1.3
(0.1)
9.6
Deferred tax assets
13.2
16.6
Deferred tax liabilities
(12.4)
(7.0)
Net deferred tax asset/(liability)
0.8
9.6
1. ‘Deferred tax assets’ has been restated as described in note 1h.
Deferred tax
Description
Intangible assets
Deferred tax relating to intangible assets created on acquisitions by the Group. This
excludes any internally generated intangibles relating to product development costs.
Property, plant and equipment
Deferred tax relating to temporary differences in the value of property, plant and
equipment between Group accounting and local accounting and/or tax returns.
Deferred development costs
Deferred tax relating to deferred development costs.
Retirement benefit obligations
Deferred tax relating to retirement benefit obligations.
Inventories
Deferred tax relating to temporary differences between the local book value and
Group consolidated value of inventory.
Tax losses
Deferred tax relating to recognised tax losses carried forwards for offset against
future profits of the Group. Included within tax losses as at 31 December 2024 is an
asset of £nil (2023: £6.6 million) in respect of capitalised US R&D expenses.
Unremitted overseas earnings
Deferred tax relating to the repatriation of subsidiary profits to the Group’s ultimate
holding company.
Share based payments
Deferred tax relating to share based payment.
Cash flow hedges
Deferred tax relating to derivatives designated as cash flow hedges.
Short term temporary differences
Deferred tax relating to temporary differences between Group accounts and local
accounts or tax return arising where a tax deduction is received on payment of an
amount either between Group companies or to external unconnected third parties
rather than on an accounting basis. This includes product development costs.
At 31 December 2024, the gross amount and expiry date of losses not recognised for deferred tax
purposes but available for carry forward are as follows:
£million
Expiring
within
5 years
Expiring
within
6–10 years
Unlimited
Total
Losses for which no deferred tax asset has been recognised
–
–
136.0
136.0
Deferred tax is not recognised on these losses because profit projections do not support the
utilisation of these losses.
Tax losses of £136.0 million are subject to substantial limitations in the type of profits they can be
offset against and no such capital disposals are currently anticipated. Included within this number
is £56.2 million in respect of capitalised R&D expenses and R&D tax credits. Deferred tax is not
recognised on these temporary differences, unused tax losses or unused tax credits because
profit projections do not support their utilisation.
8 Taxation continued
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
At 31 December 2023, the gross amount and expiry date of losses available for carry forward were
as follows:
£million
Expiring
within
5 years
Expiring
within
6–10 years
Unlimited
Total
Losses for which no deferred tax asset has been recognised
0.6
–
71.2
71.8
At 31 December 2024, the Group had no other items for which no deferred tax assets have been
recognised (2023: £nil).
9 Dividends
2024
pence
per share
2024
£million
2023
pence
per share
2023
£million
Final dividend paid for prior year
4.65
8.2
4.30
7.5
Interim dividend declared for current year
2.25
4.0
2.15
3.8
The Directors do not recommend a final dividend.
10 Earnings per share
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners of
the Company by the weighted average number of shares in issue during the year.
Pence
2024
2023
Restated 1
Loss per share (pence)
Basic
(30.2)
(6.4)
Diluted
(30.2)
(6.4)
1. ‘Loss per share’ has been restated as described in note 1h.
As the Group made a statutory loss in 2024 and 2023, diluted statutory EPS for 2024 has been
calculated using the basic weighted average number of shares because using weighted average
diluted shares would be anti-dilutive.
The numbers used in calculating adjusted, basic and diluted earnings per share are shown below.
Adjusted earnings per share is based on the adjusted profit after interest and tax.
Adjusted earnings per share:
£million (unless otherwise stated)
2024
2023
Restated 1
Loss for the year attributable to owners of the Company
(53.4)
(11.3)
Restructuring costs
(0.1)
2.0
Pension restructuring costs
1.3
1.9
Asset impairments and measurement losses
52.2
32.5
Amortisation of intangible assets arising on business combinations
2.7
4.6
Acquisition and disposal related costs
4.5
3.1
Tax effect of adjusting items (see note 7)
12.3
(3.5)
Adjusted earnings
19.5
29.3
Adjusted earnings per share (pence)
11.0
16.7
Adjusted diluted earnings per share (pence)
10.9
16.4
1 ‘Loss for the year attributable to owners of the Company’ and ‘Adjusted earnings per share’ have been restated as described in
note 1h.
The weighted average number of shares in issue is as follows (new shares issued in the year
described in note 23):
million
2024
2023
Basic
176.9
175.6
Adjustment for share awards
1.6
2.6
Diluted
178.5
178.2
11 Employee information
The average number of full time equivalent employees (including Directors) during the year from
continuing operations was:
Number
2024
2023
By function
Production
3,725
4,357
Sales and distribution
245
311
Administration
314
328
4,284
4,996
By region
Europe
1,085
1,302
North America
1,617
2,036
Asia
1,582
1,658
Total
4,284
4,996
8 Taxation continued
STRATEGIC REPORT
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ADDITIONAL INFORMATION
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
11 Employee information continued
Aggregate emoluments, including those of Directors, for the year were:
£million
2024
2023
Wages and salaries
120.7
135.6
Social security charges
32.4
36.8
Employers’ pension costs
3.3
3.5
Defined benefit pension costs
1.1
1.6
Share based payments expense
2.2
3.1
159.7
180.6
Remuneration in respect of the Directors was as follows:
£million
2024
2023
Emoluments
1.1
2.4
Key management personnel are the TT Management Board (“TMB”). The remuneration of key
management during the year was as follows:
£million
2024
2023
Short-term benefits
2.3
3.5
Share based payments
1.3
1.2
3.6
4.7
The Schedule 5 requirements of the Accounting Regulations for directors’ remuneration, including
that of the highest paid director, are included within the Directors’ remuneration report on pages 91
to 99.
12 Right-of-use assets
£million
Land and
buildings
Other
Right-of-use
assets
Cost
At 1 January 2023
46.2
1.5
47.7
Additions
5.0
0.6
5.6
Disposals
(6.1)
(0.4)
(6.5)
Transferred to assets held for sale
(5.4)
–
(5.4)
Net exchange adjustment
(1.5)
–
(1.5)
At 1 January 2024
38.2
1.7
39.9
Additions
2.6
0.4
3.0
Disposals
(0.5)
(0.3)
(0.8)
Net exchange adjustment
0.3
–
0.3
At 31 December 2024
40.6
1.8
42.4
Depreciation
At 1 January 2023
26.8
1.3
28.1
Depreciation charge
3.7
0.3
4.0
Disposals
(6.1)
(0.4)
(6.5)
Transferred to assets held for sale
(0.9)
–
(0.9)
Net exchange adjustment
(0.6)
–
(0.6)
At 1 January 2024
22.9
1.2
24.1
Depreciation charge
3.3
0.3
3.6
Impairment
5.3
0.1
5.4
Disposals
(0.4)
(0.3)
(0.7)
Net exchange adjustment
0.4
(0.3)
0.1
At 31 December 2024
31.5
1.0
32.5
Net book value
At 31 December 2024
9.1
0.8
9.9
At 31 December 2023
15.3
0.5
15.8
Additions during the year relate to a new lease agreement in Suzhou, China (£1.9 million) and other
locations throughout the Group (£0.7 million). Prior year additions relate to a new lease agreement
in Cardiff, UK (£4.4 million) and other locations throughout the Group (£1.2 million).
Included within the impairment charge for the year is £5.4 million (2023: £nil) relating to one
manufacturing site within the North America segment and within items excluded from adjusted
operating profit as described in note 7. Impaired right of use assets have been written down to a
recoverable amount of £nil.
The Group only leases land and buildings for use in trading activities. Lease liabilities are disclosed
in note 20. Contractual cashflows for these leases are disclosed in note 21e.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
13 Property, plant and equipment
£million
Land and
buildings
Plant and
equipment
Total
Cost
At 1 January 2023
27.6
171.8
199.4
Additions
1.0
21.3
22.3
Disposals
(0.4)
(9.9)
(10.3)
Transferred to assets held for sale
(1.9)
(20.4)
(22.3)
Reclassification
0.7
(0.7)
–
Net exchange adjustment
(1.1)
(7.1)
(8.2)
At 1 January 2024
25.9
155.0
180.9
Additions
1.7
5.2
6.9
Disposals
–
(3.3)
(3.3)
Transferred to assets held for sale
(0.8)
(0.3)
(1.1)
Other movements
–
(0.4)
(0.4)
Net exchange adjustment
0.5
1.2
1.7
At 31 December 2024
27.3
157.4
184.7
Depreciation and impairment
At 1 January 2023
7.3
137.3
144.6
Depreciation charge
1.6
8.4
10.0
Disposals
(0.4)
(9.9)
(10.3)
Transferred to assets held for sale
(1.2)
(18.0)
(19.2)
Net exchange adjustment
(0.2)
(5.3)
(5.5)
At 1 January 2024
7.1
112.5
119.6
Depreciation charge
1.6
7.0
8.6
Impairment
6.9
3.0
9.9
Disposals
(0.1)
(3.0)
(3.1)
Transferred to assets held for sale
(0.8)
–
(0.8)
Net exchange adjustment
0.1
1.1
1.2
At 31 December 2024
14.8
120.6
135.4
Net book value
At 31 December 2024
12.5
36.8
49.3
At 31 December 2023
18.8
42.5
61.3
Included within land and buildings in the prior year was one investment property with a carrying
value of £nil and a fair value of £0.7 million. This property was sold in 2024 and a gain on disposal
of £0.7 million was recognised within items adjusted from operating profit (see note 7). Rental
income of £nil (2023: £0.2 million) was recognised within other income in relation to this property.
Included within the impairment charge for the year is £9.9 million (2023: £nil) relating to one
manufacturing site within the North America segment and within items excluded from adjusted
operating profit as described in note 7. Impaired property, plant and equipment has been written
down to a recoverable amount of £0.6m, representing fair value less cost of disposal.
Transferred to held for sale represents assets purchased during the year and then sold as part of
the disposal on 31 March 2024 where the Group sold three business units within the Europe and
Asia segments to the Cicor Group as described in note 4.
14 Goodwill
£million
Cost
At 1 January 2023
172.8
Transferred to held for sale
(26.3)
Net exchange adjustment
(5.7)
At 31 December 2023
140.8
Net exchange adjustment
1.3
At 31 December 2024
142.1
Impairment
At 1 January 2023
17.7
Transferred to held for sale
(17.7)
At 31 December 2023
–
Impairment
36.7
At 31 December 2024
36.7
Net book value
At 31 December 2024
105.4
At 31 December 2023
140.8
Goodwill arising from acquisitions represents the premium paid above the fair value of net assets,
including identified intangible assets, at the time of acquisition. Future enhancements to acquired
businesses–driven by strategic direction, operational efficiencies, and investment–are expected to
improve profitability over the ownership period.
In 2023, the Group operated through three divisions aligned with its product and service offerings.
However, following an organisational restructuring effective 1 March 2024–internally announced in
January 2024 and externally at the Capital Markets Event in April 2024–the Group transitioned to a
functional matrix structure spanning three regions. See note 3 for more details. Following this
Group restructure goodwill was re-allocated to the new groups of CGUs shown in the table below.
At this point goodwill was re-assessed and no indicators of impairment were found.
Goodwill is allocated to groups of CGUs and monitored at this level. Each group of CGUs
comprises multiple CGUs which are primarily individual manufacturing sites.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
138
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
In the year ended 31 December 2023 £8.6 million of goodwill (net of £17.7 million impairment)
was transferred to assets held for sale. The amount transferred comprised £6.4 million (net of
£17.7 million impairment) relating to the IoT Solutions CGU and £2.2 million related to the Global
Manufacturing Solutions group of CGUs. These two CGUs ceased to exist after the re-allocation
of goodwill to new groups of CGUs following the Group’s new regional structure (see above).
Goodwill, excluding amounts transferred to assets held for sale, is attributed to the following
groups of CGUs below:
£million
2024
2023
Europe:
Europe
52.7
–
North America:
North America
40.4
–
Asia:
Asia
12.3
–
Power and Connectivity:
Power Solutions
–
63.7
IoT Solutions
–
3.5
Global Manufacturing Solutions:
Global Manufacturing Solutions
–
16.7
Sensors and Specialist Components:
Resistors
–
32.3
Sensors
–
24.6
Total
105.4
140.8
Impairment Testing
The Group tests goodwill impairment annually or more frequently if there are indications that
goodwill might be impaired.
Recoverable amounts for CGUs are calculated using a value-in-use approach. Key assumptions
include discount rates, growth projections, and operating cash flow forecasts. Growth rates
beyond the forecast period align with long-term GDP projections, capped at long-term inflation
rates for the primary CGU market. These rates are determined based on the Group’s geographic
footprint and market presence. Discount rates are estimated using pre-tax rates that reflect market
conditions and CGU-specific risks. In determining the cost of equity, the Capital Asset Pricing
Model has been used. Accordingly the cost of equity is determined by adding a risk premium,
based on an industry adjustment, to the expected return of the equity market above the risk-free
return. The relative risk adjustment reflects the risk inherent in each group of CGUs relative to all
other sectors and geographies on average.
The cost of debt is determined using a risk-free rate based on the cost of government bonds, and
an interest rate premium equivalent to a corporate bond with a similar credit rating to
TT Electronics Plc.
Long-term growth assumptions reflect anticipated demand trends in line with economic
conditions. Price evolution and cost-control measures are expected to drive sustained profitability
improvements. Management has detailed plans in place reflecting the latest budget and strategic
growth plan. The pre-tax discount rates and periods of management approved forecasts are
shown below. The discount rates used in the annual impairment test as at 30 September 2024
(Europe and Asia) and 31 December 2024 (North America) are shown below:
2024
2023
Pre-tax
discount rate
Long term
growth rate
Period of
forecast
(years)
Pre-tax
discount rate
Long term
growth rate
Period of
forecast
(years)
Europe:
Europe
14.7%
1.4%
5.0
North America:
North America
15.5%
2.1%
5.0
Asia:
Asia
14.6%
3.5%
5.0
Power and Connectivity:
Power Solutions
13.8%
2.0%
5.0
IoT Solutions
14.1%
1.9%
5.0
Global Manufacturing Solutions:
Global Manufacturing Solutions
16.5%
3.1%
5.0
Sensors and Specialist
Components:
Resistors
13.8%
1.9%
5.0
Sensors
13.6%
2.0%
5.0
The date of the annual impairment test was 30 September 2024 for the Europe and Asia CGUs
with the impairment test for North America being carried out as at 31 December 2024. The
recoverable amounts associated with the goodwill balances which are based on these
performance projections and current forecast information do not indicate that any goodwill
balance, other than that for North America, is impaired. Based on the impairment testing
performed, an impairment charge of £36.7 million was recorded in 2024 (2023: £nil) in respect of
the North America group of CGUs related to the operational issues and weak performance in
North America, the timing of the recoverability in the profitability and certain macroeconomic
assumptions including the discount rate. After impairment, the recoverable amount of the North
America group of CGUs was £148.8 million.
14 Goodwill continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The impairment charge is shown as an adjusting item (see note 7) in conjunction with related
assets in the North America group of CGUs. In the prior year an impairment charge of £17.7 million
was recognised in relation to the IoT Solutions CGU and was recorded in assets held for sale as at
31 December 2023.
Sensitivity Analysis
Sensitivity analysis has been performed on the key assumptions; operating cash flow projections,
revenue growth rates and discount rate. Cash flows can be impacted by changes to sales prices,
direct costs and replacement capital expenditure; individually they are not significant assumptions.
Forecast sales growth rates are based on past experience adjusted for the strategic direction and
near-term investment priorities. Cash flow forecasts are determined based on historic experience
of operating margins, adjusted for the impact of changes in product mix and cost-saving initiatives,
including the impact of our committed restructuring projects and cash conversion based on
historical experience. If a company’s actual performance does not meet these projections this
could lead to an impairment of the goodwill in future periods.
In accordance with IAS 36 ‘Impairment of Assets’, sensitivity analysis has been carried out with
respect to the North America group of CGUs, which has a recoverable amount of £148.8 million as
at 31 December 2024, as illustrated below:
– a further 1 per cent increase in the discount rate would result in a reduction in value in use (and
additional impairment) of £11.3 million.
– a further 5 per cent decrease in operating profit over the entire assessment period (driven by
lower than anticipated margin) would result in a reduction in value in use (and additional
impairment) of £8.2 million.
– a 10 per cent reduction in the terminal value of operating profit (driven by lower than anticipated
margin) would result in a reduction in value in use (and additional impairment) of £10.1 million.
– f working capital cash inflows expected in 2025 fail to materialise this would result in a reduction
in value in use of £6.1 million
– 12 month delay in the anticipated improvement in the financial performance of our Cleveland
manufacturing site would result in a reduction in value in use (and additional impairment) of
£14.9 million.
15 Other intangible assets
£million
Product
development
costs
Patents,
licences and
other
Customer
relationships
Total
Cost
At 1 January 2023
22.2
39.4
69.2
130.8
Additions
1.6
0.6
–
2.2
Disposals
(0.3)
(0.2)
–
(0.5)
Transferred to assets held for sale
(7.4)
(1.2)
(17.7)
(26.3)
Net exchange adjustment
(0.9)
(0.2)
(1.4)
(2.5)
At 1 January 2024
15.2
38.4
50.1
103.7
Additions
1.8
0.5
–
2.3
Disposals
(0.2)
(1.4)
(1.0)
(2.6)
Transferred to assets held for sale
(0.2)
–
–
(0.2)
Other movements
0.3
–
–
0.3
Net exchange adjustment
0.2
0.1
0.4
0.7
At 31 December 2024
17.1
37.6
49.5
104.2
Amortisation
At 1 January 2023
13.1
37.0
27.0
77.1
Charge for the year
1.8
1.5
3.9
7.2
Disposals
(0.3)
(0.2)
–
(0.5)
Transferred to assets held for sale
(3.7)
(1.0)
(6.7)
(11.4)
Net exchange adjustment
(0.6)
(0.4)
(0.4)
(1.4)
At 1 January 2024
10.3
36.9
23.8
71.0
Charge for the year
1.1
0.5
2.7
4.3
Impairment
0.2
–
–
0.2
Disposals
(0.1)
(1.3)
(1.0)
(2.4)
Net exchange adjustment
0.2
(0.1)
0.2
0.3
At 31 December 2024
11.7
36.0
25.7
73.4
Net book value
At 31 December 2024
5.4
1.6
23.8
30.8
At 31 December 2023
4.9
1.5
26.3
32.7
Included within the amortisation charge for the year is £2.7 million (2023: £4.6 million) included
within items excluded from adjusted profit as the charge relates to intangibles acquired upon
acquisition of businesses.
Included within the impairment charge for the year is £0.2 million (2023: £nil) relating to one
manufacturing site within the North America segment and within items excluded from adjusted
operating profit as described in note 7. Impaired intangible assets have been written down to a
recoverable amount of £nil.
14 Goodwill continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
140
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Customer relationships are intangible assets recognised upon acquisition which are amortised
over long periods of time and are summarised below. The amortisation charge is excluded from
adjusted operating profit as described in note 7. The composition of customer relationships and
the years remaining until they are fully amortised is shown below.
Customer relationships held on the balance sheet are summarised below.
£million
Net book
value
Years
remaining
Torotel
9.5
17.9
Aero Stanrew
6.6
6.0
Precision Inc.
4.5
7.7
Ferranti Power and Control
2.3
10.0
Stadium Group
0.9
8.3
At 31 December 2024
23.8
£million
Net book
value
Years
remaining
Torotel
10.0
18.9
Aero Stanrew
7.8
7.0
Precision Inc.
4.9
8.7
Ferranti Power and Control
2.5
11.0
Stadium Group
1.1
9.3
At 31 December 2023
26.3
16 Inventories
£million
2024
2023
Restated 1
Raw materials
74.9
86.9
Work in progress
34.3
36.0
Finished goods
23.5
19.8
132.7
142.7
1. ‘Work in progress’ (Inventories) has been restated as described in note 1h.
Inventories are stated after a provision for obsolescence of £17.2 million (2023: £17.8 million).
The directors do not consider there to be a material difference between net book value and
replacement cost for inventories.
17 Trade and other receivables
£million
2024
2023
Restated 1
Trade receivables
76.3
71.0
Prepayments
5.9
7.1
VAT and other taxes receivable
5.1
3.4
Accrued income
1.5
1.3
Contract assets
–
0.8
Other receivables
2.4
1.2
91.2
84.8
1. ‘Trade receivables’, ‘Prepayments’ and ‘Other receivables’ have been restated as described in note 1h.
Other receivables are expected to be converted into cash within twelve months.
Loss allowance for expected credit losses in respect of trade receivables and amounts owed by
non-controlling interests are shown in note 21d(ii) and note 21d(iii) respectively.
18 Trade and other payables
£million
2024
2023
Current liabilities
Trade payables
61.3
68.5
Taxation and social security
3.6
2.7
Accruals
23.9
27.4
Deferred income
22.5
21.0
Goods received not invoiced
7.4
6.3
Other payables
1.3
2.0
120.0
127.9
Other payables are expected to be settled with cash in the next twelve months.
£million
2024
2023
Non-current liabilities
Accruals
0.1
0.1
Deferred income primarily represents pre-funded inventory which is expected to be converted into
finished goods and sold within 12 months. All the brought forward balance carried over from 2023
was converted into finished goods and sold to the end customer within the year.
15 Other intangible assets continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
19 Provisions
£million
Property
Reorganisation
Legal,
warranty and
other
Total
At 1 January 2023
0.7
0.4
3.1
4.2
Utilised
–
(0.2)
(1.9)
(2.1)
Arising during the year
2.2
–
1.8
4.0
Transferred to held for sale
(1.9)
–
–
(1.9)
Exchange differences
–
–
(0.1)
(0.1)
At 1 January 2024
1.0
0.2
2.9
4.1
Utilised
–
(0.2)
(1.2)
(1.4)
Disposal of business
–
–
(0.4)
(0.4)
Arising during the year
0.1
0.3
2.2
2.6
At 31 December 2024
1.1
0.3
3.5
4.9
£million
2024
2023
Non-current
1.1
1.0
Current
3.8
3.1
4.9
4.1
Property
Property provisions of £1.1 million (2023: £1.0 million) relate to dilapidation provisions.
Reorganisation
Reorganisation provisions relate to committed costs in respect of restructuring programmes, as
described in note 7, usually resulting in cash spend within one year.
£0.3 million (2023: £0.2 million) relate to the preparation of land owned by the Group for future
disposal.
Legal, warranty and other
Legal, warranty and other claims represent the best estimate for the cost of settling outstanding
product and other claims, and warranty provisions created on the disposal of businesses.
£1.5 million (2023: £0.7 million) relate to local warranty provisions of which £0.8 million was
charged to the income statement during the year.
£1.6 million (2023: £1.3 million) relate to onerous contracts acquired within the Ferranti Power and
Control business of which £0.3 million was utilised and £0.6 million was charged to the income
statement during the year.
£0.4 million (2023: £0.9 million) relates to other provisions with £0.9 million utilised in the year, a
further £0.8 million charged to the income statement in the year and £0.4 million released on
divestment of former Group entities in March 2024.
The Group has, on occasion, been required to enforce commercial contracts and to defend itself
against proceedings brought by other parties. Provisions are made for the expected costs
associated with such matters, based on past experience of similar items and other known factors,
taking into account professional advice received, and represent management’s best estimate of
the likely outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting
the complexity of issues and the outcome of various court proceedings and negotiations.
Contractual and other provisions represent the Directors’ best estimate of the cost of settling
future obligations although there is a higher degree of judgement involved. Unless specific
evidence exists to the contrary, these provisions are shown as current.
No provision is made for proceedings which have been or might be brought by other parties
against Group companies unless management, taking into account professional advice received,
assesses that it is more likely than not that such proceedings may be successful. Contingent
liabilities associated with such proceedings have been identified, but the Directors are of the
opinion that any associated claims that might be brought can be resisted successfully, and
therefore the possibility of any material outflow in settlement in excess of amounts provided is
assessed as unlikely.
The timing of the utilisation of these amounts is uncertain as they are subject to commercial
negotiation and legal process in different jurisdictions. Where possible the Group has purchased
insurance cover to protect itself from these exposures.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
142
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
20 Borrowings and lease obligations
£million
Maturity
Currency of
denomination
Current
Non-current
Total
At 31 December 2024
£162.4 million multi-currency revolving credit facility
2027
GBP
–
36.0
36.0
2027
USD
–
39.9
39.9
Unsecured loan note
2028
GBP
–
37.5
37.5
Unsecured loan note
2031
GBP
–
37.5
37.5
Overdrafts
0.1
–
0.1
Lease liabilities
4.0
13.3
17.3
Loan arrangement fee
–
(1.7)
(1.7)
Total
4.1
162.5
166.6
At 31 December 2023
£162.4 million multi-currency revolving credit facility
2027
GBP
–
68.0
68.0
2027
USD
–
40.8
40.8
Unsecured loan note
2028
GBP
–
37.5
37.5
Unsecured loan note
2031
GBP
–
37.5
37.5
Overdrafts
1.2
–
1.2
Lease liabilities
3.8
14.4
18.2
Loan arrangement fee
–
(1.9)
(1.9)
Total
5.0
196.3
201.3
The Group’s primary source of finance is the £162.4 million committed revolving credit facility
(RCF), and an uncommitted accordion facility of £17.6 million, which was signed in June 2022.
The Group’s RCF is payable on a floating rate basis above GBP SONIA or USD depending on the
currency of the loan and will mature in June 2027. As at 31 December 2024, £75.9 million (31
December 2023: £108.8 million) of the facility was drawn down. Arrangement fees with amortised
cost of £1.7 million (2023: £1.9 million) have been netted off against these borrowings.
The interest margin payable on the facility is based on the Group’s compliance with financial
covenants, net debt / adjusted EBITDA (bank covenant) and is payable on a floating basis above
GBP SONIA, or USD SOFR depending on the currency of denomination of the loan.
In December 2021 the Group issued £75.0 million of unsecured loan notes with £37.5 million
maturing in seven years and £37.5 million maturing in 10 years respectively to a collection of three
counterparties. The average interest rate on the loan notes is 3.65 per cent.
In December 2024 the RCF and the unsecured loan note lenders agreed to a relaxation of the
covenant relating to the ratio of consolidated EBITDA to consolidated net finance charges for each
reporting period up to, and including, 31 December 2025. This is 3.75x at 31 December 2024, 3.00x
at 30 June 2025 and 3.25x at 31 December 2025.
As part of this agreed relaxation, the Group has committed that, should it wish to issue a dividend,
it will test the covenant ratio both for the measurement period immediately prior to the distribution
and the forecasts for the subsequent two measurement periods, against the original interest cover
covenant ratio of more than 4.0x.
Undrawn facilities
At 31 December 2024, the total lease liabilities and borrowing facilities available to the Group net of
£1.7 million of loan arrangement fees (2023: £1.9 million) amounted to £281.1 million (2023:
£282.4 million). At 31 December 2024, the Group had available £86.5 million (2023: £56.9 million)
of undrawn committed borrowing facilities (comprising the main facility £86.5 million (2023:
£53.6 million) and China £nil (2023: £3.3 million)) and £28.1 million (2023: £22.6 million) of
undrawn uncommitted borrowing facilities, representing overdraft lines and the accordion facility.
21 Financial risk management
The main risks arising from the Group’s financial instruments are foreign exchange risk, interest
rate risk, credit risk and liquidity 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 Treasury
Committee which is chaired by the Chief Financial Officer. 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 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 2o.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
a) Derivatives, other financial instruments and risk management
The Group uses derivative financial instruments to manage certain exposures to fluctuations in
exchange rates and interest rates. 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. Translation 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,
hedging strategies are undertaken through the use of forward currency contracts for up to two
years ahead. The forward currency contracts have been designated as cash flow hedges and the
effective portion of the mark to market valuation of these derivatives at 31 December 2024 is taken
to the hedging reserve within equity. Currency basis spread that is not designated is taken to the
income statement.
The Group has designated £39.9 million ($52.0 million) (2023: £40.8 million ($52.0 million)) of loans
in a net investment hedge of USD net assets. No ineffectiveness was recorded (2023: £nil) and a
loss of £0.8 million (2023: £1.8 million gain) was taken to the translation reserve. The amount
accumulated in this reserve in respect of gains/losses arising on hedging instruments designated
in net investment hedges up to 31 December 2024 was an accumulated loss of £2.7 million (2023:
accumulated loss of £1.9 million).
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
and pre-approved by the Treasury Committee. The interest rate hedging instruments are floating to
fixed rate interest rate swaps used to manage the Group’s interest cost.
At 31 December 2024, the Group had a net derivative financial liability of £7.1 million (2023:
£3.9 million net asset).
Foreign exchange (FX) hedges
Notional
Amount
(£m)
Average
Hedged Rate
Fair value
(£m)
Type of hedge
31 December 2024
USD:CNY
61.5
6.84
(3.0)
CFH – Forward rate
USD:MXN
31.2
18.72
(4.1)
CFH – Forward rate
USD:GBP
16.3
0.78
(0.2)
CFH – Forward rate
USD:MYR
11.8
4.49
0.1
CFH – Forward rate
CNY:GBP
6.8
0.11
0.1
CFH – Forward rate
CNY:EUR
3.8
0.13
(0.1)
CFH – Forward rate
EUR:GBP
3.2
0.85
0.1
CFH – Forward rate
GBP:USD
0.8
1.27
–
CFH – Forward rate
Total
135.4
(7.1)
31 December 2023
USD:CNY
61.1
6.76
(1.9)
CFH – Forward rate
USD:MXN
44.9
20.29
4.9
CFH – Forward rate
USD:GBP
21.7
1.03
0.6
CFH – Forward rate
EUR:GBP
11.3
0.87
–
CFH – Forward rate
USD:MYR
10.1
4.53
–
CFH – Forward rate
CNY:GBP
7.2
0.12
0.2
CFH – Forward rate
CNY:EUR
4.6
0.13
0.1
CFH – Forward rate
GBP:USD
2.6
1.26
–
CFH – Forward rate
Total
163.5
3.9
CFH is an abbreviation for cash flow hedge.
The most common exchange rate risk is the transaction risk the Group takes when it invoices a
customer or purchases from suppliers in a different currency to the underlying functional currency
of the business. The Group policy is to review transactional foreign exchange exposures and place
contracts on a quarterly basis. To the extent the cash flows associated with a transactional foreign
exchange risk are committed the Group will hedge 100%. The notional values of the hedged
transactions are disclosed in the above table. The group’s policy is to hedge these transactions on
a 1:1 ratio. Foreign currency basis spread of the derivative item is not designated and is therefore
recognised in the income statement. The potential sources of ineffectiveness are timing of forecast
transaction and credit risk. There was no hedge ineffectiveness incurred during the period.
21 Financial risk management continued
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ADDITIONAL INFORMATION
144
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The closing value of the hedging reserve in relation to FX hedges on 31 December 2024 was an
accumulated loss of £6.5 million (2023: accumulated gain of £3.2 million). The transactions that
have been designated as the hedged item in a cash flow hedge relationship are still considered
highly probable forecasted transactions, both during the next year and at the year ended
31 December 2024.
Hedges with a notional amount of £94.6 million (2023: £106.6 million) are due within 12 months
with the remainder maturing within 24 months.
b) Foreign exchange risk
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, in
the main, hedged through forward foreign currency exchange contracts.
The Group’s exposure to foreign currency before the impact of hedging is shown below:
£million
GBP
USD
Euro
Other
Total
31 December 2024
Trade and other receivables
–
18.0
1.0
0.1
19.1
Cash and cash equivalents
–
7.7
0.9
1.1
9.7
Borrowings
–
(39.9)
–
–
(39.9)
Lease liabilities
–
–
–
(0.8)
(0.8)
Trade and other payables
(0.2)
(8.8)
(0.6)
(1.6)
(11.2)
Net Derivative financial instruments
–
–
(0.1)
(7.0)
(7.1)
Total
(0.2)
(23.0)
1.2
(8.2)
(30.2)
31 December 2023
Trade and other receivables
–
17.6
2.4
0.1
20.1
Cash and cash equivalents
–
13.8
2.6
0.3
16.7
Borrowings
–
(40.8)
–
–
(40.8)
Lease liabilities
–
–
–
(1.0)
(1.0)
Trade and other payables
(0.5)
(14.2)
(1.5)
(0.9)
(17.2)
Net Derivative financial instruments
0.8
–
0.1
3.0
3.9
Total
0.3
(23.6)
3.6
1.5
(18.3)
A 10% strengthening of GBP against the following currencies at 31 December 2024 would have
reduced profit after tax by the amounts shown below. These sensitivities have been chosen
because they are a reasonable approximation of possible changes. This analysis assumes that all
other variables, in particular interest rates, remain constant. A 10% weakening of GBP against the
above currencies at 31 December 2024 would have had an equal but opposite effect on profit after
tax, on the basis that all other variables remain constant.
£million
2024
2023
US dollar
1.7
1.7
Euro
0.1
0.4
A 10% strengthening of GBP against the following currencies at 31 December 2024 would have
decreased equity by the amounts shown below. These sensitivities have been chosen because
they are a reasonable approximation of possible changes. This analysis assumes that all other
variables, in particular interest rates, remain constant. The Group finances operations by obtaining
funding through external borrowings and, where they are in foreign currencies, these borrowings
may be designated as net investment hedges. This enables gains and losses arising on
retranslation of these foreign currency borrowings to be charged to other comprehensive income,
providing a partial offset in equity against the gains and losses arising on translation of the net
assets of foreign operations. This has been considered in the analysis below.
£million
2024
2023
US dollar
2.3
2.4
Euro
(0.1)
(0.4)
10% weakening of GBP against the above currencies at 31 December 2024 would have had an
equal but opposite effect on equity, 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 Group’s objective is to
manage this interest rate exposure through the use of interest rate derivatives.
21 Financial risk management continued
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The exposure of the Group’s financial assets and liabilities to interest rate risk is as follows:
£million
Floating
rate
Fixed
rate
Non-interest
bearing
2024 total
Financial assets
Trade and other receivables
–
–
76.3
76.3
Cash and cash equivalents
14.7
–
54.5
69.2
Derivative financial instruments
–
–
0.7
0.7
Total financial assets
14.7
–
131.5
146.2
Financial liabilities
Borrowings (including overdrafts)
(76.0)
(75.0)
1.7
(149.3)
Lease liabilities
–
(17.3)
–
(17.3)
Trade and other payables
–
–
(92.7)
(92.7)
Derivative financial instruments
–
–
(7.8)
(7.8)
Total financial liabilities
(76.0)
(92.3)
(98.8)
(267.1)
£million
Floating
rate
Fixed
rate
Non-interest
bearing
2024 total
Financial assets
Trade and other receivables – restated 1
–
–
71.0
71.0
Cash and cash equivalents
14.7
–
59.4
74.1
Derivative financial instruments
–
–
6.0
6.0
Total financial assets
14.7
–
136.4
151.1
Financial liabilities
Borrowings (including overdrafts)
(110.0)
(75.0)
1.9
(183.1)
Lease liabilities
–
(18.2)
–
(18.2)
Trade and other payables
–
–
(102.3)
(102.3)
Derivative financial instruments
–
–
(2.1)
(2.1)
Total financial liabilities
(110.0)
(93.2)
(102.5)
(305.7)
1. ‘Trade and other receivables’ has been restated as described in note 1h.
At 31 December 2024, 50% of borrowings was at a fixed rate when including the effect of
derivatives (2023: 41%).
The interest charged on floating rate financial liabilities is based on the relevant benchmark rate
(such as GBP SONIA and USD SOFR). Interest on financial instruments classified as fixed rate is
fixed until the maturity of the instrument.
The average cost of the debt for the Group is expected to be approximately 5.0% over the next
12 months.
Considering the net debt position of the Group at 31 December 2024, any increase in interest rates
would result in a net loss in the consolidated income statement, and any decrease in interest rates
would result in a net gain. The effect on loss after tax of a 1% movement in interest rate, based on
the year end floating rate borrowings, with all other variables held constant, is estimated to be
£0.5 million (2023: £0.7 million). The impact on equity would be materially the same.
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.
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 region 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 ongoing basis. Letters of credit or payments in advance are
obtained where customer credit quality is not considered strong enough for open credit. The
Group operates the expected credit losses model when applying credit risk to receivables.
During the year there was a £0.1 million impairment of trade receivables as at 31 December 2024
(2023: £0.3 million) recognised within admin expenses. The solvency of the debtor and their ability
to repay the receivables were considered in assessing the impairment of such assets. The Group
performed an expected credit loss model at 31 December 2024 and a general provision of £nil
(2023: £nil) was required.
(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
2024
2023
Restated 1
Europe (including UK)
26.6
22.6
North America
35.8
33.9
Asia
13.5
14.3
Rest of the World
0.4
0.2
76.3
71.0
1. ‘Trade and other receivables’ has been restated as described in note 1h.
21 Financial risk management continued
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ADDITIONAL INFORMATION
146
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
(ii) Impairment losses
The ageing of trade receivables at 31 December was:
£million
2024
Gross
2024
Impairment
2023
Gross
Restated 1
2023
Impairment
Not past due
62.0
–
61.7
–
Past due 1 – 60 days
12.5
–
7.4
–
Past due 61 – 120 days
2.1
(0.3)
2.1
(0.2)
More than 120 days
0.4
(0.4)
0.4
(0.4)
77.0
(0.7)
71.6
(0.6)
1. ‘Trade and other receivables’ has been restated as described in note 1h.
£million
2024
2023
At 1 January
0.6
2.1
Charged to income statement
0.1
0.3
Utilised
–
(1.8)
At 31 December
0.7
0.6
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 2024, the Group had £86.5 million of undrawn committed borrowing facilities
(2023: £56.9 million) and £28.1 million (2023: £22.6 million) of undrawn uncommitted borrowing
facilities.
Contractual cashflows of financial liabilities
The following are the contractual maturities of financial liabilities including contractual future
interest payments and commitment fees:
£million
Carrying
value
Contractual
Cash Flows
On
demand
Under 3
months
3 to 12
months
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
Over 5
years
31 December 2024
Borrowings (excl overdrafts)
149.2
175.0
–
0.9
5.3
6.1
80.8
40.2
1.4
40.3
Overdrafts
0.1
0.1
0.1
–
–
–
–
–
–
–
Lease liabilities
17.3
18.8
–
1.0
3.4
4.0
2.3
1.6
1.1
5.4
Trade and other payables
92.7
92.7
–
91.5
1.2
–
–
–
–
–
Derivatives settled gross
7.8
116.2
–
14.2
61.6
40.4
–
–
–
–
267.1
402.8
0.1
107.5
71.5
50.5
83.1
41.8
2.5
45.7
31 December 2023
Borrowings (excl overdrafts)
181.9
219.9
–
1.6
6.8
8.4
8.4
114.1
39.7
40.9
Overdrafts
1.2
1.2
1.2
–
–
–
–
–
–
–
Lease liabilities
18.2
21.9
–
1.1
3.4
3.9
3.9
1.8
1.3
6.5
Trade and other payables
102.3
102.3
–
100.4
1.9
–
–
–
–
–
Derivatives settled gross
2.1
82.5
–
10.3
41.8
30.4
–
–
–
–
305.7
427.8
1.2
113.4
53.9
42.7
12.3
115.9
41.0
47.4
f) Fair value of financial assets and liabilities
IFRS 13 “Fair Value Measurement” requires an analysis of those financial instruments that are
measured at fair value at the end of the year in a fair value hierarchy. In addition, IFRS 13 requires
financial instruments not measured at fair value but for which fair value is disclosed to be analysed
in the same fair value hierarchy:
– Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
– 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
– Level 3 – inputs for the asset or liability that are not based on observable market data (i.e.
unobservable inputs).
21 Financial risk management continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
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.
2024
2023
Restated 1
£million
Fair value
hierarchy
Carrying
value
Fair
value
Carrying
value
Fair
value
Held at amortised cost
Cash and cash equivalents
n/a
69.2
69.2
74.1
74.1
Trade receivables
n/a
76.3
76.3
71.0
71.0
Trade and other payables
n/a
(92.7)
(92.7)
(102.3)
(102.3)
Borrowings (excluding unsecured loan notes)
2
(74.2)
(74.2)
(108.1)
(108.1)
Unsecured loan notes
3
(75.0)
(66.0)
(75.0)
(61.2)
Held at fair value
Derivative financial instruments (assets)
2
0.7
0.7
6.0
6.0
Derivative financial instruments (liabilities)
2
(7.8)
(7.8)
(2.1)
(2.1)
Assets classified as held for sale and associated
liabilities
3
–
–
19.9
19.9
Held at depreciated cost
Investment properties
3
–
–
–
0.7
1. ‘Trade and other receivables’ has been restated as described in note 1h.
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:
– 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;
– the fair value of borrowings is estimated by discounting future cash flows using rates currently
available for debt and remaining maturities.
– the fair value of derivative financial instrument assets (£0.7 million) and liabilities (£5.4 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 2); and
– the fair value of investment properties are based on market valuations obtained through third
party valuations (level 3).
– the fair value of unsecured loan notes has been derived from available market data for
borrowings of similar terms and maturity period.
g) Capital management
The overriding 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 has a progressive dividend policy.
The Group has net debt of £97.4 million (2023: £126.2 million). Included within the debt facilities are
certain financial covenants related to IFRS (excluding IFRS 16 update, and after the application of
other covenant defined adjustments) net debt divided by adjusted EBITDA. Adjusted EBITDA is
EBITDA adjusted to exclude the items not included within adjusted operating profit/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.
22 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 and are not on
its balance sheet. The total contributions charged by the Group in respect of defined contribution
schemes were £3.3 million (2023: £3.5 million).
Defined benefit schemes
At 31 December 2024 the Group operated one defined benefit schemes in the UK (the TT Group
(1993) Pension Scheme) and one overseas defined benefit scheme in the USA. These schemes
are closed to new members and the UK scheme is closed to future accrual.
The TT Group scheme commenced in 1993 and increased in size in 2006, 2007 and 2019 through
the mergers of former UK schemes following a number of acquisitions. The parent company is the
sponsoring employer in the TT Group scheme. The TT Group scheme is governed by TTG Pension
Trustees Limited (the “Trustee”) that has control over the operation, funding and investment
strategy in consultation with the Group.
In November 2022, the Trustees of the TT Group Scheme entered into a bulk annuity insurance
contract (a “buy-in policy”) with an insurer in respect of the liabilities of the defined benefit scheme.
The insurer will pay into the Scheme cash matching the benefits covered by the policy which are
due to members. The Trustee is of the opinion that this investment decision is appropriate, reduces
the risks in the Scheme and provides additional security for the benefits due to members of the
Scheme. The Trustee continues to be responsible for running the Scheme and retains the legal
obligation for the benefits provided under the Scheme.
As the buy-in policy is a qualifying insurance asset, the fair value of the insurance policy is deemed
to be the present value of the obligations that have been insured. The policy secured matches the
benefits due to Scheme members under the Scheme’s Trust Deed and Rules.
21 Financial risk management continued
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ADDITIONAL INFORMATION
148
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Since the assets of the Scheme were greater than the premium required to secure the liabilities
through the buy-in, the Scheme is in a net asset position at 31 December 2024 of £7.1 million.
The Group is not exposed to any unusual, entity specific or scheme specific risks, but given the
material nature of the TT Group scheme, the Group has developed a comprehensive strategy
covering the following areas to manage the financial risk associated with it:
– Maintaining a long term working partnership with the Trustee to ensure strong governance of
risks within the TT Group scheme. The TT Group scheme is a long term undertaking and is
managed accordingly, in order to provide security to members’ benefits and value for money to
the Group.
– The Scheme’s investment strategy has been assessed as being low risk as the insured asset
matches changes in the assessed value of the Schemes liabilities due to changes in interest
rates, inflationary expectations and longevity expectations. The buy-in policy therefore matches
the term and nature of the liabilities.
The weighted average duration of the TT Group scheme defined benefit obligation is around
11 years.
UK legislation requires the Trustee to carry out a statutory funding valuation at least every three
years and to target full funding against a basis that prudently reflects the TT Group scheme’s risk
exposure.
The last triennial valuation of the TT Group scheme as at April 2022 showed a net surplus of £45.4
million against the Trustee’s statutory funding objective.
Due to the favourable funding position the Trustee and Company have agreed that there was no
requirement for any further funding contributions to the TT Group scheme. In December 2024 a
£15.0 million (2023: £5.0 million) refund of the surplus was paid to the group out of scheme assets
by the Trustee (£11.2 million (2023: £3.2 million) net of tax due, which has been paid directly by the
scheme).
In the year ended 31 December 2023 the Trustees of the BI Technologies Corporation Retirement
Plan, one of the US defined benefit schemes in the USA, completed a partial buy-out and a bulk
settlement exercise, extinguishing gross liabilities of £5.5 million in total. In January 2024, the
buy-out was completed, extinguishing the remaining gross liabilities. A final payment of £1.8
million was made and a settlement cost of £0.2 million was recognised within items excluded from
adjusted operating profit as a result of this exercise.
An analysis of the pension surplus/(deficit) by scheme is shown below:
£million
2024
2023
TT Group (1993)
7.1
25.3
USA schemes
(1.5)
(3.1)
Net surplus
5.6
22.2
Given the nature of the Group’s control of the TT Group under the Scheme rules, the Group
considers that it has an unconditional right to refund of surplus in the event of the Scheme’s
wind-up. Based on these rights, any pension surpluses have been recognised in full under IFRIC 14.
The ongoing expenses of running the Scheme are now met from the remaining Scheme assets.
Following the decision by the Court of Appeal to uphold the High Court’s ruling in Virgin Media Ltd
vs NTL Pension Trustees II, the Company has commenced the process of investigation into
identifying the potential impact to benefits and the associated accounting liabilities for the defined
benefit pensions schemes within the Group. As this process is still at an early stage, the Group is
not yet in a position to be able to determine or quantify any potential financial impacts of any
possible challenges to historic changes affecting these schemes.
The principal assumptions used for the purpose of the actuarial valuations for the Group’s primary
defined benefit schemes were as follows:
%
TT Group
2024
TT Group
2023
Discount rate
5.50
4.80
Inflation rate (RPI)
3.30
3.20
Increases to pensions in payment (LPI 5% pension increases)
3.15
2.95
Increases to deferred pensions (CPI)
2.90
2.70
The mortality tables applied by the actuaries at 31 December 2024 for the TT Group (1993)
Scheme were S3 tables (‘Middle’ for females) with 107% (male)/104% (female) weighting for
pensioners and 114% (male)/107% (female) weighting for non-pensioners with a 1.5% long-term
rate of improvement in conjunction with the CMI 2023 projection model. The assumptions are
equivalent to life expectancies as follows: Current pensioner aged 65: 86 years (male), 88 years
(female). Future retiree currently aged 45: 87 years (male), 90 years (female).
Risk and sensitivity
Following the buy-in, changes in actuarial assumptions will impact the liabilities and insured
asset to the same extent, with no overall impact on the net reporting position. A decrease in the
discount rate by 0.1% per annum increases the liabilities and assets by approximately £3.4 million.
An increase by 0.1% per annum in the inflation rate increases the liabilities and assets by
approximately £2.0 million. An increase in the life expectancy of 1 year increases the liabilities
and assets by approximately £9.7 million.
The sensitivities above consider the impact of the single change shown, with the other
assumptions unchanged. The inflation sensitivities allow for the consequential impact on the
relevant pension increase assumptions. The sensitivity analyses have been determined based on
a method that extrapolates the impact on the defined benefit obligation as a result of reasonable
changes in key assumptions occurring at the end of the reporting period.
22 Retirement benefit schemes continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The amounts recognised in respect of the pension surplus in the consolidated balance sheet are:
£million
2024
2023
Equities
–
1.2
Cash and cash equivalents
7.1
24.5
Insured assets
310.0
336.9
Other
–
0.9
Fair value of assets
317.1
363.5
Present value of defined benefit obligation
(311.5)
(341.3)
Net surplus recognised in the consolidated balance sheet
5.6
22.2
The schemes’ assets are unquoted unless otherwise stated and do not include the Group’s
financial instruments, any property occupied by, or other assets used by the Group. All of the
funds included in the asset split are pooled investment vehicles for which due diligence has been
completed. We have classified all of the Scheme’s investments other than the cash held at the
custodian, government bonds and the exchange traded funds (ETFs) as unquoted assets.
Amounts recognised in the consolidated income statement are:
£million
2024
2023
Scheme administration costs
(1.0)
(1.3)
Net loss on pension projects (excluded from adjusted operating profit)
(1.3)
(1.9)
Net interest credit
1.1
1.4
Amounts recognised in the consolidated statement of comprehensive income are a gain of
£2.3 million (2023: gain of £0.2 million) which comprises of; the actual return on scheme
assets excluding interest income, a loss of £23.4 million (2023: loss of £18.3 million) and the
remeasurement of the schemes obligations, a gain of £21.3 million (2023: gain of £18.5 million).
Changes in the present value of the defined benefit obligation are:
£million
2024
2023
Defined benefit obligation at 1 January
341.3
368.4
Past service charge and settlements
(1.5)
(5.5)
Interest on obligation
15.6
17.7
Remeasurements:
Effect of changes in demographic assumptions
(0.8)
(9.7)
Effect of changes in financial assumptions
(22.0)
6.0
Effect of experience adjustments
0.3
(15.0)
Benefits paid
(21.5)
(20.2)
Exchange
0.1
(0.4)
Defined benefit obligation at 31 December
311.5
341.3
TT Group (1993)
310.0
336.9
USA scheme
1.5
4.4
311.5
341.3
Changes in the fair value of the schemes’ assets are:
£million
2024
2023
Fair value of schemes’ assets at 1 January
363.5
396.8
Interest income on defined benefit scheme assets
16.7
19.1
Return on scheme assets, excluding interest income
(23.5)
(18.3)
Contributions by employer
-
0.2
Return of pension surplus 1
(15.0)
(5.0)
Pension scheme expenses
(2.0)
(3.2)
Settlements
(1.5)
(5.5)
Benefits paid
(21.5)
(20.2)
Exchange
0.4
(0.4)
Fair value of schemes’ assets at 31 December
317.1
363.5
1. During 2024 the TT Group (1993) Pension Scheme returned £15.0 million (2023: £5.0 million) of pension surplus as cash to the
Group. This was net of £3.8 million (2023: £1.8 million) of tax paid directly by the scheme to HMRC.
22 Retirement benefit schemes continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
150
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
23 Share capital
Share capital
£million
2024
2023
Issued and fully paid
177,884,541 (2023: 177,371,049) ordinary shares of 25p each
44.5
44.3
During the period the Company issued 513,492 ordinary shares as a result of share options being
exercised under the Sharesave scheme and Share Purchase plans.
The performance conditions of the Restricted Share Plan awards issued in 2021, 2022 and 2023
and the Long-term Incentive Plan awards issued in 2021 were met and shares were allocated to
award holders from existing shares held by an Employee Benefit Trust for £nil consideration.
The aggregate consideration received for all share issues during the year was £0.8 million which
was represented by a £0.2 million increase in share capital and a £0.6 million increase in share
premium.
24 Other reserves
£million
Share Based
Payment
Reserve
Employee
Benefit
Trust
Share
options
reserve
Hedging
Reserve
Merger
reserve
Total
At 1 January 2023
4.3
(0.4)
3.9
–
3.4
7.3
Share based payment charge
3.1
–
3.1
–
–
3.1
Awards made to employees
(1.0)
1.1
0.1
–
–
0.1
Deferred tax on share based payments
(0.1)
–
(0.1)
–
–
(0.1)
Funding of employee benefit trust
–
(1.3)
(1.3)
–
–
(1.3)
Loss on cash flow hedges taken to equity less
amounts taken to income statement
–
–
–
3.5
–
3.5
Deferred tax on movement in cash flow hedges
–
–
–
(0.7)
–
(0.7)
At 1 January 2024
6.3
(0.6)
5.7
2.8
3.4
11.9
Share based payment charge
2.2
–
2.2
–
–
2.2
Awards made to employees
(1.8)
1.4
(0.4)
–
–
(0.4)
Deferred tax on share based payments
(0.2)
–
(0.2)
–
–
(0.2)
Funding of employee benefit trust
–
(1.7)
(1.7)
–
–
(1.7)
Loss on cash flow hedges taken to equity less
amounts recycled to income statement
–
–
–
(10.2)
–
(10.2)
Deferred tax on movement in cash flow hedges
–
–
–
2.4
–
2.4
At 31 December 2024
6.5
(0.9)
5.6
(5.0)
3.4
4.0
25 Share-based payment plans
The Company has the following share-based payment plans in operation at 31 December 2024:
– Long-term Incentive Plan (“LTIP”) for senior executives;
– Restricted Share Plan (“RSP”) for certain senior executives; and
– Sharesave plans for UK employees and a Share Purchase plan for US employees.
The LTIP and RSP schemes have been classified as equity settled schemes. The terms of the LTIP
and RSP schemes state that the Group has the right to decide how to settle these awards and it is
the Group’s intention to settle these with equity. At the date of vesting the Group will settle the
awards either with new issue shares or shares purchased on the market at an earlier point in time.
The Group offers the employees the option for the Group to settle the tax liability, which the
employee would incur upon receipt of the award, on behalf of the employee with the relevant tax
authority. In this circumstance the Group may choose to pay, in cash, the tax liability due on behalf
of the employee to the tax authority and the employee would receive the remaining value of their
award in equity. In 2024 the Group paid £0.5 million to settle the employees’ tax liabilities (2023:
£0.5 million). The Group estimates that the future cashflows associated with the above would
remain consistent with the 2024 outflows. The Group also offers the employee the option for the
Group to sell the remaining shares on the employees’ behalf and to forward that cash to the
employee, although the Group is not compelled to do so no matter what the employee chooses. In
2024 £0.1 million was used for these purposes (2023: £0.1 million). The Group estimates that the
future cashflows associated with the above would remain consistent in future years with the 2024
outflows. These arrangements do not change the assessment that the share-based payments are
equity settled.
The Sharesave scheme has also been classified as an equity settled scheme. The rules of this
scheme state that the participant must always be paid in equity and that neither party can request
settlement in any other way.
a) Long-term Incentive Plans
Details of the LTIP awards outstanding during the year are as follows:
2024
2023
Number of
share awards
Number of
share awards
At 1 January
2,265,228
3,958,289
Granted
942,323
1,238,163
Forfeited/Lapsed
(679,131)
(2,931,224)
Exercised/Vested
(518,854)
–
At 31 December
2,009,566
2,265,228
Exercisable at 31 December
–
–
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
During 2024 grants of awards were made under the LTIP for the issue of shares in 2027. An 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 93.
The fair value of the shares was estimated at the grant date using a Monte Carlo simulation model,
considering 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 considers historic
dividends and share price fluctuations to predict the distribution of relative share price
performance.
The table below lists the awards which were made during the year and the inputs to the model:
Grant date
Number of
awards
Fair value at
grant date
Share price at
grant date
Exercise
price
Expected
volatility
Vesting period
(years)
2024
11 March 2024
942,323
132.8p
150.0p
£nil
37%
3.0
2023
14 March 2023
758,233
135.1p
183.0p
£nil
38%
3.0
2 October 2023
479,930
117.8p
171.0p
£nil
38%
3.0
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 historical share price movements.
The performance conditions of the LTIP grants made in 2021 that reached the end of their
performance periods in 2024 were partially met and shares were allocated to award holders from
existing shares held by an Employee Benefit Trust for £nil consideration.
b) Restricted Share Plan
During the year the Group granted 1,047,446 shares (2023: 1,530,984) under the restricted plan.
Awards are typically subject to continuing employment with no other vesting criteria.
Details of the restricted share plan awards outstanding during the year are as follows:
2024
2023
Number of
share awards
Number of
share awards
At 1 January
2,910,500
2,289,873
Granted
1,047,446
1,530,984
Forfeited/Lapsed
(1,089,928)
(123,745)
Exercised/Vested
(248,028)
(786,612)
At 31 December
2,619,990
2,910,500
Exercisable at 31 December
–
–
During the year 77,800 (2023: 76,536) notional RSP share awards were granted to senior managers
which will ultimately be settled in cash.
The performance conditions of the RSP grants made in 2021, 2022 and 2023 that reached the end
of their performance periods in 2024 were partially met and shares were allocated to award
holders from existing shares held by an Employee Benefit Trust for £nil consideration.
The table below lists the awards which were made during the year the inputs to the model:
Grant date
Number of
awards
Fair value at
grant date
Share price at
grant date
Exercise
price
Expected
volatility
Vesting period
(years)
2024
11 March 2024
1,047,446
150.0p
150.0p
£nil
37%
3.0
Grant date
Number of
awards
Fair value at
grant date
Share price at
grant date
Exercise
price
Expected
volatility
Vesting period
(years)
2023
16 March 2023
1,247,648
183.0p
183.0p
£nil
38%
3.0
3 August 2023
56,460
153.0p
153.0p
£nil
38%
3.0
2 October 2023
226,876
172.0p
172.0p
£nil
38%
3.0
All of the above awards are subject to continuing employment with the Group.
c) Sharesave schemes
The Group operates a Sharesave scheme for participating employees in the UK under a three-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 £6,000 in any
one year. Monthly contributions are saved with Lloyds Bank 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 three years from commencement of the savings contract.
Options become exercisable on completion of the three-year term or within six months of leaving
in certain circumstances. All Sharesave scheme awards are accounted for as equity settled.
25 Share-based payment plans continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
152
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Details of the save as you earn share plan awards outstanding during the year are as follows:
2024
2023
Number of
share awards
Number of
share awards
At 1 January
3,451,965
3,749,876
Granted
564,005
1,292,868
Forfeited/Lapsed
(1,239,891)
(908,159)
Exercised
(263,996)
(682,620)
At 31 December
2,512,083
3,451,965
Exercisable at 31 December
216,873
303,407
The fair value of the shares at grant date was as follows:
Date price set
Market price
Option price
Fair value
Options
outstanding
07 September 2021
271.0p
226.0p
110.9p
196,264
06 September 2022
149.3p
119.5p
67.5p
1,020,583
05 September 2023
174.1p
139.4p
66.5p
751,984
03 September 2024
158.6p
126.9p
20.0p
543,252
The Group operates 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 a social security credit of £nil (2023:
£0.1 million debit) arising from the above share scheme plans was £2.2 million (2023: £3.1 million).
26 Reconciliation of net cash flow to movement in net debt
Net cash of £69.1 million (2023: £76.5 million) comprises cash at bank and in hand of £69.2 million
(2023: £74.1 million), overdrafts of £0.1 million (2023: £1.2 million) and cash within assets held for
sale of £nil (2023: £3.6 million).
£million
Net cash
Lease
liabilities
Borrowings
Net debt
At 1 January 2023
61.3
(23.1)
(176.6)
(138.4)
Cash flow
19.3
–
–
19.3
Transferred to held for sale
(3.6)
2.6
–
(1.0)
Repayment of borrowings
–
–
26.1
26.1
Proceeds from borrowings
–
–
(32.7)
(32.7)
Payment of lease liabilities
–
4.4
–
4.4
New leases
–
(3.4)
–
(3.4)
Net movement in loan arrangement fees
–
–
(0.1)
(0.1)
Exchange differences
(4.1)
1.3
1.4
(1.4)
At 31 December 2023
72.9
(18.2)
(181.9)
(127.2)
Included within assets classified as held for sale and associated
liabilities
3.6
(2.6)
–
1.0
At 31 December 2023
76.5
(20.8)
(181.9)
(126.2)
Cash flow
(4.1)
–
–
(4.1)
Disposals of business
(3.6)
2.6
–
(1.0)
Repayment of borrowings
–
–
49.2
49.2
Proceeds from borrowings
–
–
(15.1)
(15.1)
Net movement in loan arrangement fees
–
–
(0.2)
(0.2)
Payment of lease liabilities
–
4.2
–
4.2
New leases
–
(3.0)
–
(3.0)
Exchange differences
0.3
(0.3)
(1.2)
(1.2)
At 31 December 2024
69.1
(17.3)
(149.2)
(97.4)
25 Share-based payment plans continued
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
27 Changes in liabilities arising from financing activities
£million
Lease
liabilities
Borrowings
Interest rate
swaps
Liabilities
arising from
financing
activities
At 1 January 2023
(23.1)
(176.6)
0.6
(199.1)
Cash movements
Cash flows
5.2
3.3
(0.6)
7.9
Non cash movements
Transferred to held for sale
2.6
–
–
2.6
Interest accrued
(0.8)
(9.9)
–
(10.7)
Net movement in loan arrangement fees
–
(0.1)
–
(0.1)
New leases
(3.4)
–
–
(3.4)
Exchange differences
1.3
1.4
–
2.7
At 31 December 2023
(18.2)
(181.9)
–
(200.1)
Included within liabilities associated with assets classified as held
for sale
(2.6)
–
–
(2.6)
At 31 December 2023
(20.8)
(181.9)
–
(202.7)
Cash movements
Cash flows
4.9
44.0
–
48.9
Non cash movements
Disposals of business
2.6
–
–
2.6
Interest accrued
(0.7)
(9.9)
–
(10.6)
Net movement in loan arrangement fees
–
(0.2)
–
(0.2)
New leases
(3.0)
–
–
(3.0)
Exchange differences
(0.3)
(1.2)
–
(1.5)
At 31 December 2024
(17.3)
(149.2)
–
(166.5)
28 Contingent liabilities
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.
29 Capital commitments
£million
2024
2023
Contractual commitments for the purchase of property, plant and equipment
0.6
2.7
30 Leases
The total cash outflow for leases is £4.9 million (2023: £5.1 million) comprising lease repayments
of £4.2 million (2023: £4.4 million) and interest on lease liabilities of £0.7 million (2023: £0.8 million).
Interest on lease liabilities is shown in note 5, the maturity of the lease liabilities is shown in note
21(e) and the corresponding assets to which the lease liabilities relate are shown in note 12.
31 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 2024 or 2023 that have affected the financial
position or performance of the Group.
Key management personnel and Directors’ emoluments are disclosed in note 11.
32 Five year record
£million (unless otherwise stated)
2024
2023
Restated 4
2022
Restated 4
2021
2020
Revenue
521.1
613.9
617.0
476.2
431.8
Operating profit
(23.5)
3.0
(3.4)
19.3
6.6
Adjusted operating profit 1
37.1
47.1
47.1
34.8
27.5
(Loss)/profit before taxation
(33.4)
(6.8)
(10.1)
16.0
2.9
Adjusted profit before taxation 1
27.2
37.3
40.4
31.5
23.8
(Loss)/earnings
(53.4)
(11.3)
(13.2)
12.8
1.3
Adjusted earnings 1
19.5
29.3
32.0
25.3
19.5
(Loss)/earnings per share (pence)
(30.2)
(6.4)
(7.5)
7.3
0.8
Adjusted earnings per share (pence) 1
11.0
16.7
18.2
14.5
11.7
Dividends – paid and proposed 2
4.0
12.0
11.1
9.9
8.2
Dividend per share – paid and proposed (pence) 2
2.3
6.8
6.3
5.6
4.7
Average number of shares in issue
176.9
175.6
175.8
174.8
166.5
Net debt 3
97.4
126.2
138.4
102.5
83.9
Total equity
194.9
265.5
296.5
330.0
298.0
1. Adjusted operating profit, profit before taxation, adjusted earnings and adjusted earnings per share exclude the impact of
restructuring costs, asset impairments and acquisition and disposal related costs.
2. 2024 shows the cashflows/value of the proposed 2024 dividend. 2023 and before shows the cashflows/value of the actual
dividends relating to that particular year.
3. Net debt includes cash and overdrafts within assets and liabilities held for sale
4. Income statement measures and ‘Total equity’ have been restated as described in note 1h.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
154
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
£million
Note
2024
2023
Non current assets
Right-of-use assets
2
0.2
0.4
Property, plant and equipment
2
0.2
0.3
Intangible assets
2
0.5
0.8
Investments
3
124.6
126.4
Deferred tax asset
11
1.4
3.4
Pensions
10
7.1
25.3
Debtors
4
179.5
128.1
Total fixed assets
313.5
284.7
Current assets
Debtors
4
33.1
27.6
Cash at bank and in hand
13
0.7
1.4
Total current assets
33.8
29.0
Current liabilities
Lease liabilities
6
0.2
0.2
Creditors: amounts falling due within one year
5
101.7
18.6
Total current liabilities
101.9
18.8
Net current assets
(68.1)
10.2
Non current liabilities
Lease liabilities
6
0.1
0.3
Deferred tax liability
11
1.8
8.4
Total non current liabilities
1.9
8.7
Net assets
243.5
286.2
Capital and reserves
Called up share capital
7
44.5
44.3
Share premium account
7
24.6
24.0
Share options reserve
8
5.7
5.8
Merger reserve
3.4
3.4
Profit and loss account
9
165.3
208.7
Shareholders’ funds
243.5
286.2
The Company reported a loss for the financial year ended 31 December 2024 of £32.0 million
(2023: profit of £10.2 million).
Approved by the Board of Directors on 9 April 2025 and signed on their behalf by:
Peter France
Mark Hoad
Director
Director
£million
Share
capital
Share
premium
Merger
reserve
Share options
reserve
Profit and loss
account
Total
At 1 January 2022
44.1
22.9
3.4
3.9
209.6
283.9
Profit for the year
–
–
–
–
10.2
10.2
Other comprehensive income
Remeasurement of defined benefit
pension schemes
–
–
–
–
0.3
0.3
Tax on remeasurement of defined
benefit pension schemes
–
–
–
–
(0.1)
(0.1)
Total comprehensive income
–
–
–
–
10.4
10.4
Transactions with owners recorded
directly in equity
Dividends paid by the Company
–
–
–
–
(11.3)
(11.3)
Share-based payments
–
–
–
3.1
–
3.1
Other movements
–
–
–
(1.2)
–
(1.2)
New shares issued
0.2
1.1
–
–
–
1.3
At 31 December 2023
44.3
24.0
3.4
5.8
208.7
286.2
Loss for the year
–
–
–
–
(32.0)
(32.0)
Other comprehensive (loss)/income
Remeasurement of defined benefit
pension schemes
–
–
–
–
(2.3)
(2.3)
Tax on remeasurement of defined
benefit pension schemes
–
–
–
–
3.1
3.1
Total comprehensive loss
–
–
–
–
(31.2)
(31.2)
Transactions with owners recorded
directly in equity
Dividends paid by the Company
–
–
–
–
(12.2)
(12.2)
Share-based payments
–
–
–
2.2
–
2.2
Deferred tax on share-based
payments
–
–
–
(0.2)
–
(0.2)
Payments to fund employee
benefit trust
–
–
–
(2.1)
–
(2.1)
New shares issued
0.2
0.6
–
–
–
0.8
At 31 December 2024
44.5
24.6
3.4
5.7
165.3
243.5
COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2024
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2024
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
155
NOTES TO THE COMPANY FINANCIAL STATEMENTS
continued
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1 Material accounting policies
a) Basis of preparation
The financial statements of TT Electronics plc (the “Company”) were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).
In preparing these financial statements, the Company applies the recognition, measurement and
disclosure requirements of International Financial Reporting Standards, but makes amendments
where necessary in order to comply with Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
In these financial statements, the Company has applied the exemptions available under FRS 101 in
respect of the following disclosures:
– a cash flow statement and related notes;
– disclosures in respect of transactions with wholly owned subsidiaries;
– disclosures in respect of capital management;
– the effects of new but not yet effective IFRSs;
– disclosures in respect of the compensation of key management personnel;
– comparable movement tables for tangible and intangible fixed assets; and
– disclosures in respect of leases
The accounting policies set out in note 2 of the Consolidated financial statements have, unless
otherwise stated, been applied in the preparation of the Company financial statements.
Change in accounting policy
There have been no changes to accounting policies during the year. Adoption of new and
amendments to published standards and interpretations effective for the Group for the year ended
31 December 2024 did not have any impact on the financial position or performance of the Group.
b) Critical accounting judgements and key sources of estimation uncertainty
During the year there were no judgements made by the Directors, in the application of the adopted
accounting policies, deemed to have a significant effect on the financial statements nor were there
any estimates deemed to carry a significant risk of material adjustment in the next year.
Details of the Directors’ assessment of the Company’s ability to continue in operational existence for
at least twelve months from the date of signing these financial statements are shown in note 1 of the
Consolidated financial statements and in the Governance and Directors’ Report on page 57.
c) Investments
Fixed asset investments in subsidiaries are carried at cost less provision for impairment.
d) 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 Non Current Assets
£million
Intangible
Assets
Plant,
equipment and
vehicles
Right-of-use
assets
Cost
At 1 January 2023
18.0
1.2
1.2
Disposals
–
–
(0.1)
Additions
0.4
–
–
At 31 December 2023
18.4
1.2
1.1
At 31 December 2024
18.4
1.2
1.1
Depreciation
At 1 January 2023
17.1
0.7
0.7
Disposals
–
–
(0.1)
Depreciation charge
0.5
0.2
0.1
At 31 December 2023
17.6
0.9
0.7
Depreciation charge
0.3
0.1
0.2
At 31 December 2024
17.9
1.0
0.9
Net book value
At 31 December 2024
0.5
0.2
0.2
At 31 December 2023
0.8
0.3
0.4
Intangible assets solely relate to software.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
156
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
continued
3 Investments
£million
Subsidiary undertakings
Cost
At 1 January 2023
252.0
At 31 December 2023
252.0
Disposals
(48.6)
At 31 December 2024
203.4
Provisions
At 1 January 2023
125.6
At 31 December 2023
125.6
Disposals
(46.8)
At 31 December 2024
78.8
Net book value
At 31 December 2024
124.6
At 31 December 2023
126.4
During the year the Company disposed of its investments in ‘TT Electronics IoT Solutions Limited’,
and ‘TTG Properties Ltd’ as part of the Groups divestment of three business units to the Cicor
Group. See note 4 of the Group accounts for more information.
The Company’s subsidiary undertakings and their locations are shown in note 14. Shareholdings
are held indirectly for all principal operating subsidiary undertakings.
4 Debtors
£million
2024
2023
Current debtors
Amounts owed by subsidiary undertakings
31.0
25.7
Prepayments, accrued income and other receivables
2.1
1.9
Amounts due within one year
33.1
27.6
Non Current debtors
Amounts owed by subsidiary undertakings
179.5
128.1
Amounts due later than one year
179.5
128.1
Total
212.6
155.7
‘Amounts owed by subsidiary undertakings’ have been considered for impairment using the
12 months expected credit loss model because there was no change in credit risk since initial
recognition. The expected credit loss is considered immaterial because the probability of non-
payment when the Company chooses to call in the debtor is negligible.
As at 31 December 2024 £179.5 million (2023: £128.1 million) of debtors have been classified as
non current due to management’s expectation that these will not be settled within 12 months.
5 Creditors
£million
2024
2023
Amounts falling due within one year
Trade creditors
2.4
2.6
Amounts owed to subsidiary undertakings
91.0
8.7
Taxation and social security
4.4
0.9
Accruals and deferred income
3.9
6.4
101.7
18.6
6 Lease obligations
£million
Current lease
liabilities
Non-current
lease liabilities
Total
At 31 December 2023
0.2
0.3
0.5
Capital repayments
–
(0.2)
(0.2)
At 31 December 2024
0.2
0.1
0.3
7 Share capital
£million
2024
2023
Issued, called up and fully paid
177,884,541 (2023: 177,371,049) ordinary shares of 25p each
44.5
44.3
During the period the Company issued 513,492 ordinary shares as a result of share options being
exercised under the Sharesave scheme and Share Purchase plans.
The performance conditions of the Restricted Share Plan awards issued in 2021, 2022 and 2023
and the Long-term Incentive Plan awards issued in 2021 were partially met and shares were
allocated to award holders from existing shares held by an Employee Benefit Trust for £nil
consideration.
The aggregate consideration received for all share issues during the year was £0.8 million
which was represented by a £0.2 million increase in share capital and a £0.6 million increase in
share premium.
8 Share-based payments
Details of share-based payments are shown in note 25 of the Consolidated financial statements.
Any charge associated with share-based payments made to employees of subsidiaries are
recharged out to the relevant subsidiaries within the same financial year
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 Company reported a loss for the financial year ended
31 December 2024 of £32.0 million (2023: profit of £10.2 million). The auditor’s remuneration for
audit services is disclosed in note 6 to the Consolidated financial statements.
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
157
NOTES TO THE COMPANY FINANCIAL STATEMENTS
continued
10 Pension schemes
Defined benefit scheme
In November 2022, the Trustees of the TT Group Scheme entered into a bulk annuity insurance
contract with an insurer in respect of the liabilities of the defined benefit scheme (‘buy-in’). The
insurer will pay into the Scheme cash matching the benefits due to members. The Trustee is of the
opinion that this investment decision is appropriate, reduces the risks in the Scheme and provides
additional security for the benefits due to members of the Scheme. The Trustee continues to be
responsible for running the Scheme and retains the legal obligation for the benefits provided under
the Scheme.
As the buy-in policy is a qualifying insurance asset, the fair value of the insurance policy is deemed
to be the present value of the obligations that have been insured. The policy secured matches the
benefits due to Scheme members under the Scheme’s Trust Deed and Rules.
Since the assets of the Scheme were greater than the premium required to secure the liabilities
through the buy-in, the Scheme Is in a net asset position at 31 December 2024 of £7.1 million.
The last triennial valuation of the TT Group scheme as at April 2022 showed a net surplus of
£45.4 million against the Trustee’s statutory funding objective.
Due to the favourable funding position the Trustee and Company have agreed that there was no
requirement for any further funding contributions to the TT Group scheme. In December 2024 a
£15.0 million refund of the surplus was paid to the group out of scheme assets by the Trustee
(£11.2 million after tax suffered by the scheme).
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 including employee
salary exchange contributions in respect of the year ended 31 December 2024 were £0.6 million
(2023: £0.6 million).
11 Deferred tax
The deferred tax asset of £1.4 million (2023: £3.4 million) comprises £0.3 million asset in respect
of share-based payments (2023: £0.7 million asset) the movement in which has been recognised
in equity (£0.2 million) and the income statement (£0.2 million); £1.1 million in respect of non-
current assets (2023: £1.2 million asset); and £nil in respect of tax losses (2023: £1.5 million) the
movement in which has been recognised in profit and loss (£1.5 million).
The deferred tax liability of £1.8 million (2023: £8.4 million) is in respect of the pension asset (2023:
£8.4 million liability), the movement in which has been recognised in equity (credit equity of
£3.1 million), and the income statement (credit to income statement of £3.5 million).
12 Employee information
The average number of full time equivalent employees (including Directors) during the year was 71.
13 Related party transactions
During 2024 and 2023, the Company did not have any related party transactions other than with
wholly owned subsidiaries.
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
158
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
continued
14 Subsidiary undertakings
The following entities are 100% owned with only ordinary shares in issue, unless otherwise stated.
The country of incorporation matches the country in which the registered office/principal place of
business is located.
Name of subsidiary undertaking
Registered office/principal
place of business
TT Electronics Integrated Manufacturing Services (Suzhou) Co., Ltd
(1)
TT Electronics SAS
(2)
TT Electronics GmbH
(3)
TT Electronics Srl
(4)
BI Technologies Corporation SDN BHD (ordinary and preference shares)
(5)
BI Technologies S.A. de C.V.
(6)
Optron de Mexico S.A. de C.V.
(7)
TT Electronics Asia Pte Ltd
(8)
TT Electronics Sweden AB
(9)
AB Connectors Limited
(10)
AB Electronic Components Limited
(11)
Abtest Limited 2
(11)
Aero Stanrew Group Limited (ordinary and preference shares) 1,2
(12)
Aero Stanrew Limited
(12)
Automotive Electronic Systems Limited 1
(11)
BI Technologies Limited 2
(11)
Commendshaw Limited 2
(11)
Controls Direct Limited 2
(11)
Crystalate Electronics Limited
(11)
Dale Electric International Limited 1,2
(11)
Deltight Washers Limited 2
(11)
Ferrus Power Limited 2
(11)
Fox Industries Limited 2
(11)
Hale End Holdings Limited 2
(11)
Kingslo Limited 2
(11)
KRP Power Source (UK) Limited 2
(11)
Linton and Hirst Group Limited 2
(11)
Midland Electronics Limited
(11)
MMG Linton and Hirst Limited 2
(11)
Nulectrohms Limited 2
(11)
Roxspur Measurement & Control Limited
(11)
Sensit Limited 2
(11)
Name of subsidiary undertaking
Registered office/principal
place of business
TT Electronics Electrical Holdings Limited 2
(11)
TT Electronics (Woking) Limited 2
(11)
TT Electronics IGT Limited
(11)
TT Electronics Power Limited 2
(11)
TT Electronics Wireless Limited 2
(11)
TT Electronics Wireless Devices Limited 2
(11)
Stadium Zirkon UK Limited 2
(11)
TT Electronics (Norwich) Limited 2
(11)
The Brearley Group Limited 2
(11)
TT Asia Holdings Limited
(11)
TT Automotive Electronics Limited 2
(11)
TT Electronics Europe Limited 1,2
(11)
TT Electronics Fairford Limited
(13)
TT Electronics Group Holdings Limited 1
(11)
TT Electronics Holdco Limited
(11)
TT Electronics Power Solutions (UK) Limited
(11)
TT Group Limited 2
(11)
TT Power Solutions Limited 2
(11)
TTE Trustees Limited 1,2
(11)
TTG Investments Limited 1
(11)
TTG Nominees Limited 1,2
(11)
TTG Pension Trustees Limited 1,2
(11)
Valuegolden Limited 2
(11)
Welwyn Components Limited
(14)
Welwyn Electronics Limited 2
(11)
Wolsey Comcare Limited 2
(11)
Zirkon Holdings Limited 2
(11)
AB Interconnect, Inc.
(15)
Apsco Holdings, Inc
(15)
BI Technologies Corporation
(15)
Cletronics N.A. Inc,
(16)
International Resistive Company Inc
(15)
International Resistive Company of Texas, LLC
(17)
Optek Technology Inc.
(15)
Power Partners, Inc.
(18)
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
159
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Name of subsidiary undertaking
Registered office/principal
place of business
Precision, Inc.
(19)
Torotel, Inc.
(20)
Torotel Products, Inc.
(20)
TT Electronics Global Manufacturing Solutions (Mexico), Inc.
(16)
TT Electronics Integrated Manufacturing Services, Inc.
(21)
TT Electronics Power Solutions (US), Inc.
(16)
TT Group Industries, Inc.
(16)
(1) 158-24 Hua Shan Road, Snd Suzhou, 215129, China
(2) 4 place Louis Armand, 75012 Paris, France
(3) Max-Lehner-Strasse 31, 85354, Freising, Germany
(4) Via Santa Redegonda N. 11, Milano, Italy
(5) Lot 6.05, Level 6, KPMG tower, 8 First Avenue, Bandar Utama 47800 Petaling Jaya, Selangor,
Darul Ehsan, Malaysia
(6) Ave Circulo de la Amistad No.102, Parque Industrial Mexicali IV, Mexico
(7) Ave Rio Bravo 1551-a, Parque Industrial Rio Bravo, CD. Juarez Chihuahua, Mexico
(8) 2 Shenton Way, #18-01 SGX Centre 1, 068804, Singapore
(9) Gullfossgatan 3, 164 40 Kista, Sweden
(10) Abercynon, Mountain Ash, Rhondda Cynon Taff, CF45 4SF, Wales
(11) Fourth Floor, St Andrews House, West Street, Woking, Surrey, GU21 6EB, England
(12) Unit 1 Gratton Way, Roundswell Business Park, Barnstaple, Devon, EX31 3AR, England
(13) London Road, Fairford, Gloucestershire, GL7 4DS, England
(14) Welwyn Electronics Park, Bedlington, Northumberland, NE22 7AA, England
(15) Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States
(16) CT Corporation System, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801,
United States
(17) Corporation Service Company, 211 East 7th Street, Suite 620, Austin, TX 78701-3218,
United States
(18) 155 Northboro Road, Suite #9, Southborough, MA 01772, USA
(19) 1700 Freeway Boulevard, Minneapolis, MN 55430, United States
(20) 520 N Rogers Road, Olathe, KS66062, United States
(21) CT Corporation System, 4400 Easton Commons Way, Suite 125, Columbus, OH43219,
United States
1 Shares held directly by TT Electronics plc
2 Dormant UK subsidiary
UK Registered Subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within section
479A of the Companies Act 2006 for the year ended 31 December 2024. The following entities are
100% owned and have a single class of ordinary share with a nominal value of £1, unless otherwise
stated. All subsidiaries below are registered at Fourth floor, St Andrews House, West Street,
Woking GU21 6EB, United Kingdom.
Name of subsidiary undertaking
Company number
AB Electronic Components Limited
578077
Automotive Electronic Systems Limited 1
1518303
Crystalate Electronics Limited
691591
Midland Electronics Limited
675333
TT Asia Holdings Limited
2464046
TT Electronics Group Holdings Limited 1, 2
299275
Semelab Limited
6649272
Ferrus Power Limited
2601096
Fox Industries Limited
2098754
Hale End Holdings Limited 3
2353285
Kingslo Limited
1830552
KRP Power Source (UK) Limited
888113
TT Electronics Electrical Holdings Limited 4
459656
TT Electronics (Woking) Limited
7249966
TT Electronics Power Limited
2844194
TT Electronics United Wireless Limited
7030729
TT Electronics Wireless Devices Limited 3
645215
Stadium Zirkon UK Limited
2126710
TT Electronics (Norwich) Limited
2270716
Valuegolden Limited
2604168
Zirkon Holdings Limited 5
3730931
1 Shares held directly by TT Electronics plc
2 Single class of ordinary shares with a nominal value of £0.25
3 Ordinary shares with a nominal value of £1.00 and ‘A’ Ordinary shares of £1.00
4 Single class of ordinary shares with a nominal value of £0.20
5 Ordinary shares of £1.00 each and non voting ordinary shares with a nominal value of £0.01
14 Subsidiary undertakings continued
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
160
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
RECONCILIATION OF KPIS AND NON IFRS MEASURE
In accordance with the Guidelines on APMs issued by the European Securities and Markets
Authority (ESMA), additional information is provided on the APMs used by the Group below.
To assist with the understanding of earnings trends, the Group has included within its financial
statements APMs adjusted operating profit and other adjusted profit measures. The APMs used
are not defined terms under IFRS and therefore may not be comparable to similar measures used
by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.
Management uses adjusted measures to assess the operating performance of the Group, having
adjusted for specific items as detailed in note 7. They form the basis of internal management
accounts and are used for decision making, including capital allocation, with a subset also forming
the basis of internal incentive arrangements. By using adjusted measures in segmental reporting,
this enables readers of the financial statements to recognise how incentive performance is
targeted. Adjusted measures are also presented in this announcement because the Directors
believe they provide additional useful information to shareholders on comparable trends over time.
Finally, this presentation allows for separate disclosure and specific narrative to be included
concerning the adjusting items; this helps to ensure performance in any one year can be more
clearly understood by the user of the financial statements.
INCOME STATEMENT MEASURES:
Alternative
Performance
Measure
Closest
equivalent
statutory
measure
Note reference to
reconciliation to
statutory measure
Definition and purpose
Adjusted
operating
profit
Operating
profit
Adjusting items
as disclosed in
note 7
Adjusted operating profit has been defined as operating profit from
continuing operations excluding the impacts of significant restructuring
programmes, significant one-off items including property disposals,
impairment charges significant in nature and/or value, business
acquisition, integration, and divestment related activity; and the
amortisation of intangible assets recognised on acquisition. Acquisition
and disposal related items include the writing off of the pre-acquisition
profit element of inventory written up on acquisition, other direct costs
associated with business combinations and adjustments to contingent
consideration related to acquired businesses. Restructuring includes
significant changes in footprint (including movement of production
facilities) and significant costs of management changes.
To provide a measure of the operating profits excluding the impacts of
significant items such as restructuring or acquisition related activity
and other items such as amortisation of intangibles which may not be
present in peer companies which have grown organically.
Adjusted
operating
margin
Operating
profit margin
Adjusting items
as disclosed in
note 7
Adjusted operating profit as a percentage of revenue.
To provide a measure of the operating profits excluding the impacts of
significant items such as restructuring or acquisition related activity
and other items such as amortisation of intangibles which may not be
present in peer companies which have grown organically.
Alternative
Performance
Measure
Closest
equivalent
statutory
measure
Note reference to
reconciliation to
statutory measure
Definition and purpose
Adjusted
earnings per
share
Earnings per
share
See note 10 for
the reconciliation
and calculation of
adjusted earnings
per share
The profit for the year attributable to the owners of the Group adjusted
to exclude the items not included within adjusted operating profit divided
by the weighted average number of shares in issue during the year.
To provide a measure of earnings per share excluding the impacts of
significant items such as restructuring or acquisition related activity
and other items such as amortisation of intangibles which may not be
present in peer companies which have grown organically.
Adjusted
diluted
earnings per
share
Diluted
earnings per
share
See note 10 for
the reconciliation
and calculation of
adjusted diluted
earnings per
share
The profit for the year attributable to the owners of the Group adjusted
to exclude the items not included within adjusted operating profit divided
by the weighted average number of shares in issue during the year,
adjusted for the effects of any potentially dilutive options.
To provide a measure of earnings per share excluding the impacts of
significant items such as restructuring or acquisition related activity
and other items such as amortisation of intangibles which may not be
present in peer companies which have grown organically.
Prior period
revenue and
adjusted
operating
profit at
constant
currency
Revenue and
operating
profit
See note APM 1
Revenue and adjusted operating profit for the prior year retranslated at
the current year’s foreign exchange rates.
Organic
revenue and
adjusted
operating
profit
Revenue
See note APM 2
Revenue and adjusted operating profit from continuing operations in the
current year compared to the prior year, excluding the effects of currency
movements, acquisitions and disposals. This measures the underlying
growth or decline of the business.
To provide a comparable view of the revenue growth of the business
from period to period excluding acquisition and disposal impacts.
Adjusted
effective tax
charge
Effective tax
charge
See note APM 3
The effective tax charge on the company’s adjusted profit, which gives
a clearer view of the ongoing tax rate by excluding the effects of unusual
or non-recurring items.
Return on
invested
capital
None
See note APM 4
Adjusted operating profit for the year divided by average invested capital
for the year. Average invested capital excludes pensions, provisions, tax
balances, derivative financial assets and liabilities, cash and borrowings
and is calculated at average rates taking twelve monthly balances.
This measures how efficiently assets are utilised to generate returns
with the target of exceeding the cost to hold the assets.
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
161
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
RECONCILIATION OF KPIS AND NON IFRS MEASURE
continued
Income statement measures: continued
Alternative
Performance
Measure
Closest
equivalent
statutory
measure
Note reference to
reconciliation to
statutory measure
Definition and purpose
Revenue
and adjusted
operating
profit
excluding
passthrough
revenue
Revenue,
operating
profit and
operating
margin
See note APM 13 Revenue and operating margin excluding the impact of nil margin sales
to customers to secure their supply chain.
Organic
revenue and
adjusted
operating
profit
excluding
pass through
revenues
Revenue,
operating
profit and
operating
margin
See note APM 14 This is organic revenue and adjusted operating profit (see APM 2) with
pass through revenues (see APM 13) removed.
To provide a comparable view of growth for the business from period
to period excluding acquisition and disposal impacts and one-off nil
margin sales
Statement of financial position measures:
Alternative
Performance
Measure
Closest
equivalent
statutory
measure
Note reference to
reconciliation to
statutory measure
Definition and purpose
Net debt
Cash and cash
equivalents
less
borrowings
and lease
liabilities
Reconciliation
of net cash flow
to movement in
net (debt)/funds
(note 26)
Net debt comprises cash and cash equivalents and borrowings
including lease liabilities.
This is additional information provided which may be helpful to the user
in understanding the liquidity and financial structure of the business.
Leverage
(bank
covenant)
Cash and cash
equivalents
less
borrowings
See note APM 12 Leverage is the net debt defined as per the banking covenants (net debt
(excluding lease liabilities) adjusted for certain terms as per the bank
covenants) divided by EBITDA excluding items removed from adjusted
profit and further adjusted for certain terms as per the bank covenants.
Provides additional information over the Group’s financial covenants to
assist with assessing solvency and liquidity.
Net capital and
development
expenditure
(net capex)
None
See note APM 5
Purchase of property, plant and equipment net of government grants
(excluding property disposals), purchase of intangibles (excluding
acquisition intangibles) and capitalised development.
A measure of the Group’s investments in capex and development to
support longer term growth.
Dividend per
share
Dividend per
share
Not applicable
Amounts payable by dividend in terms of pence per share.
Provides the dividend return per share to shareholders.
Statement of cash flows measures:
Alternative
Performance
Measure
Closest
equivalent
statutory
measure
Note reference to
reconciliation to
statutory measure
Definition and purpose
Adjusted
operating
cash flow
Operating
cash flow
See note APM 6
Adjusted operating profit, excluding depreciation of property, plant and
equipment and amortisation of intangible assets less working capital
and other non-cash movements.
An additional measure to help understand the Group’s operating cash
generation.
Adjusted
operating
cash flow
post capex
Operating
cash flow
See note APM 7
Adjusted operating cash flow less net capital and development
expenditure.
An additional measure to help understand the Group’s operating cash
generation after the deduction of capex.
Working
capital
cashflow
Cashflow –
inventories
payables,
provisions and
receivables
See note APM 8
Working capital comprises three statutory cashflow figures: (increase)/
decrease in inventories, increase/(decrease) in payables and provisions,
and (increase)/decrease in receivables. This definition includes the
movement of any provisions over trade receivables.
To provide users a measure of how effectively the group is managing its
working capital and the resultant impact on liquidity.
Free cash flow Net increase/
decrease in
cash and cash
equivalents
See note APM 9
Free cash flow represents cash generated from trading after all
costs including restructuring, pension contributions, tax and interest
payments. Cashflows to settle LTIP schemes are excluded.
Free cash flow provides a measure of how successful the company is
in creating cash during the period which is then able to be used by the
Group at its discretion.
Cash
conversion
None
See note APM 10 Adjusted operating cash flow post capex (less any property disposals
which were part of restructuring programmes) divided by adjusted
operating profit.
Cash conversion measures how effectively we convert profit into
cash and tracks the management of our working capital and capital
expenditure.
R&D cash
spend as a
percentage of
revenue
None
See note APM 11 R&D cash spend and R&D investment as a percentage of revenue
excludes revenue from contract manufacturing services as these
activities do not give rise to intellectual property.
To provide a measure of the company’s expenditure on R&D relative to
its overall size which may be helpful in considering the Group’s longer-
term investment in future product pipeline.
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ADDITIONAL INFORMATION
162
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RECONCILIATION OF KPIS AND NON IFRS MEASURE
continued
Non-financial measures:
Alternative
Performance
Measure
Closest
equivalent
statutory
measure
Note reference to
reconciliation to
statutory measure
Definition
Employee
engagement
Not applicable Not applicable
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 (as
surveyed by Best Companies Ltd). A company is awarded between zero
and three stars based on the employee feedback.
Provides a measure of employee sentiment and engagement.
Safety
performance
Not applicable Not applicable
Safety performance is defined as 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 our facilities worldwide, reflecting our commitment to raising
standards globally.
Provides users additional information about the Group’s commitment
and achievements in the area of health and safety.
APM 1 – Prior period revenue and adjusted operating profit at constant currency:
2023
£million
Europe
North
America
Asia
Total
2023 revenue
169.6
229.5
214.8
613.9
Foreign exchange impact
–
(7.5)
(9.2)
(16.7)
2023 revenue at 2024 exchange rates
169.6
222.0
205.6
597.2
2023
£million
Europe
North
America
Asia
Total
Operating
Segments
Central
Total
2023 adjusted operating profit –
restated 1
11.9
19.4
23.9
55.2
(8.1)
47.1
Foreign exchange impact
0.1
(1.0)
(1.3)
(2.2)
–
(2.2)
2023 adjusted operating profit at 2024
exchange rates
12.0
18.4
22.6
53.0
(8.1)
44.9
1 ‘Adjusted operating profit’ has been restated as described in note 1h. This was related to the North America segment.
APM 2 – Organic revenue and operating profit:
2024
£million
Europe
North
America
Asia
Total
2024 revenue
146.3
184.4
190.4
521.1
Removal of businesses disposed
(11.8)
–
(4.3)
(16.1)
2024 revenue on an organic basis
134.5
184.4
186.1
505.0
2023 revenue
169.6
229.5
214.8
613.9
Removal of businesses disposed
(51.3)
–
(17.3)
(68.6)
Foreign exchange impact
–
(7.5)
(8.7)
(16.2)
2023 revenue on an organic basis
118.3
222.0
188.8
529.1
Organic revenue increase (%)
14%
(17%)
(1%)
(5%)
2024
£million
Europe
North
America
Asia
Total
Operating
Segments
Central
Total
2024 operating profit
18.9
(2.7)
28.5
44.7
(7.6)
37.1
Removal of businesses disposed
0.5
–
(0.3)
0.2
–
0.2
2024 operating profit on an
organic basis
19.4
(2.7)
28.2
44.9
(7.6)
37.3
2023 operating profit – restated 1
11.9
19.4
23.9
55.2
(8.1)
47.1
Removal of businesses disposed
(0.2)
–
(1.7)
(1.9)
–
(1.9)
Foreign exchange impact
0.1
(1.0)
(1.2)
(2.1)
–
(2.1)
2023 operating profit on an
organic basis
11.8
18.4
21.0
51.2
(8.1)
43.1
Organic operating profit increase (%)
64%
(115%)
34%
(12%)
6%
(13%)
1 ‘Adjusted operating profit’ has been restated as described in note 1h. This was related to the North America segment.
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163
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RECONCILIATION OF KPIS AND NON IFRS MEASURE
continued
APM 3 – Effective tax charge:
£million
2024
2023
Restated 1
Adjusted operating profit
37.1
47.1
Net interest
(9.9)
(9.8)
Adjusted profit before tax
27.2
37.3
Adjusted tax
(7.7)
(8.0)
Adjusted effective tax rate
28.3%
21.4%
1 ‘Adjusted operating profit’ has been restated as described in note 1h.
APM 4 – Return on invested capital:
£million
2024
2023
Restated 1
Adjusted operating profit
37.1
47.1
Average invested capital
371.0
433.8
Return on invested capital
10.0%
10.9%
1 ‘Adjusted operating profit’ has been restated as described in note 1h.
APM 5 – Net capital and development expenditure (net capex):
£million
2024
2023
Purchase of property, plant and equipment
(6.9)
(22.3)
Proceeds from sale of investment property, plant and equipment and capital grants received
0.5
0.5
Capitalised development expenditure
(1.8)
(1.6)
Purchase of other intangibles
(0.5)
(0.6)
Net capital and development expenditure
(8.7)
(24.0)
APM 6 – Adjusted operating cash flow:
£million
2024
2023
Restated 1
Adjusted operating profit
37.1
47.1
Adjustments for:
Depreciation
12.2
14.0
Amortisation of intangible assets
1.6
2.5
Share based payment expense
2.2
3.1
Scheme funded pension administration costs
1.1
1.6
Other items
0.2
(0.7)
Decrease in inventories
12.8
5.3
(Increase)/decrease in receivables
(2.2)
15.4
Decrease in payables and provisions
(12.9)
(15.5)
Adjusted operating cash flow
52.1
72.8
Reimbursement from pension schemes
9.4
3.2
Restructuring and acquisition related costs
(0.6)
(4.0)
Net cash generated from operations
60.9
72.0
Net income taxes paid
(9.7)
(9.1)
Net cash flow from operating activities
51.2
62.9
1. ‘Adjusted operating profit’, ‘Decrease in inventories’ and ‘(Increase)/decrease in receivables’ have been restated as described in
note 1h.
APM 7 – Adjusted operating cash flow post capex:
£million
2024
2023
Adjusted operating cash flow
52.1
72.8
Purchase of property, plant and equipment
(6.9)
(22.3)
Proceeds from sale of property, plant and equipment and government grants received
0.5
0.5
Capitalised development expenditure
(1.8)
(1.6)
Purchase of other intangibles
(0.5)
(0.6)
Adjusted operating cash flow post capex
43.4
48.8
APM 8 – Working capital cashflow:
£million
2024
2023
Restated 1
Decrease in inventories
14.2
5.3
(Increase)/decrease in receivables
(3.6)
15.4
Decrease in payables and provisions
(12.9)
(15.5)
Scheme funded pension administration costs
1.1
1.6
Working capital cashflow
(1.2)
6.8
1 ‘Decrease in inventories’ and ‘(Increase)/decrease in receivables’ have been restated as described in note 1h.
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
164
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RECONCILIATION OF KPIS AND NON IFRS MEASURE
continued
APM 9 – Free cash flow:
£million
2024
2023
Net cash flow from operating activities
51.2
62.9
Net cash flow from investing activities
3.5
(24.0)
Add back: Proceeds from disposal of business
(17.5)
–
Add back: Cash with disposed businesses
5.3
–
Payment of lease liabilities
(4.2)
(4.4)
Interest paid
(10.6)
(10.6)
Free cash flow
27.7
23.9
APM 10 – Cash conversion:
£million
2024
2023
Restated 1
Adjusted operating profit
37.1
47.1
Adjusted operating cash flow post capex
43.4
48.8
Cash conversion
117%
104%
1 ‘Adjusted operating profit’ has been restated as described in note 1h.
APM 11 – R&D cash spend as a percentage of revenue:
£million
2024
2023
Revenue (excluding contract manufacturing)
269.1
314.7
R&D cash spend
11.3
10.8
R&D cash spend as a percentage of revenue
4.2%
3.4%
APM 12 – Leverage:
£million
2024
2023
Restated 1
Adjusted operating profit
37.1
47.1
Depreciation
12.2
14.0
Amortisation
1.6
2.5
EBITDA
50.9
63.6
Adjustment to align with covenants
(5.3)
(5.3)
EBITDA (covenants)
45.6
58.3
Net debt as per note 26
97.4
126.2
Less: leases
(17.3)
(20.8)
Net debt excluding leases
80.1
105.4
Adjustment to align with covenants
2.0
4.9
Net debt (covenants)
82.1
110.3
Leverage
1.8
1.9
1 ‘Adjusted operating profit’ has been restated as described in note 1h.
APM 13 – Revenue and adjusted operating profit excluding passthrough revenue:
£million
2024
2023
Restated 1
Revenue
521.1
613.9
Removal of passthrough revenue
(5.3)
(19.9)
Revenue excluding passthrough revenue
515.8
594.0
Adjusted operating profit
37.1
47.1
Removal of operating profit attributable to passthrough revenue
–
–
Adjusted operating profit excluding passthrough revenue
37.1
47.1
Adjusted operating margin excluding passthrough revenue
7.2%
7.9%
1 ‘Adjusted operating profit’ has been restated as described in note 1h.
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RECONCILIATION OF KPIS AND NON IFRS MEASURE
continued
APM 14 – Organic revenue and adjusted operating margin excluding pass through revenues:
£million
2024
2023
Revenue
521.1
613.9
Removal of businesses disposed
(16.1)
(68.6)
Removal of passthrough revenue
(5.3)
(19.9)
FX adjustment to bring in line with 2024 fx rates
–
(15.1)
Organic revenue excluding passthrough
499.7
510.3
Organic revenue growth excluding passthrough
(2%)
£million
2024
2023
Restated 1
Adjusted operating profit
37.1
47.1
Removal of businesses disposed
0.2
(1.9)
Removal of adjusted operating profit attributable to passthrough revenue
–
–
FX adjustment to bring in line with 2024 fx rates
–
(2.1)
Organic adjusted operating profit excluding passthrough and disposed businesses
37.3
43.1
Organic adjusted operating margin excluding passthrough and disposed businesses
7.4%
8.4%
Organic adjusted operating profit growth excluding passthrough and disposed businesses
(13%)
1 ‘Adjusted operating profit’ has been restated as described in note 1h.
STRATEGIC REPORT
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ADDITIONAL INFORMATION
166
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
SHAREHOLDER
INFORMATION
SHAREHOLDER
INFORMATION
DIVIDENDS
See page 24 for details on the dividend policy.
ANNUAL GENERAL MEETING (“AGM”)
The next AGM will be held on 30 June 2025 at 11.30 am. Details
of the AGM procedure for 2025 and the Notice of Annual
General Meeting will be made available at
www.ttelectronics.com/investors/agm-gm.
ARTICLES OF ASSOCIATION
The Company’s Articles of Association may only be amended
by special resolution approved at a general meeting of the
shareholders.
SHARE CAPITAL
The Company’s issued share capital comprises a single class of
share capital divided into ordinary shares of 25 pence each. All
issued shares are fully paid. The share capital during the year is
shown in note 23 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, a
copy of which can be obtained from Companies House in the
United Kingdom or by writing to the Group General Counsel and
Company Secretary. Subject to applicable statutes, shares may
be issued with such rights and restrictions as the Company may
decide by ordinary resolution, 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.
AGM and trading update
30 June 2025
2025 half-year results
August 2025
Preliminary announcement of 2025 results
March 2026
Annual Report 2025
April 2026
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
167
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. You can find further details
regarding voting at the Annual General Meeting in the Notice of
the Annual General Meeting which accompanies this document.
None of the ordinary shares carries 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 their 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 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 grounds 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 or the Market Abuse Regulations 2015); 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 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.
SHARE DEALING SERVICES
Shareview Dealing is a telephone and internet service provided
by Equiniti. It offers a simple and convenient way of buying and
selling TT Electronics plc shares.
Log on to www.shareview.co.uk/dealing or call 03456 037 037
between 8.00 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 daily postal dealing service is also available and a form,
together with terms and conditions, can be obtained by calling
0371 384 2248. Commission is 1.90 per cent with a minimum
charge of £70.
SHAREGIFT
ShareGift is a charity share donation scheme for shareholders,
administered by The Orr Mackintosh Foundation. It 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.
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.
If you would like any multiple accounts combined into one
account, please write to Equiniti Limited at the address given on
this page.
SHAREHOLDER INFORMATION CONTINUED
168
STRATEGIC REPORT
GOVERNANCE & DIRECTORS’ REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
Printed by Park Communications
The material used in this Report is from 100% recycled material. The paper mill and printer
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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 8 April 2025 and
31 December 2024.
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.
8 April 2025
31 December 2024
Number
%
Number
%
FIL Limited
17,651,300
12.03
17,651,300
12.03
Aberforth
14,832,779
9.10
14,832,779
9.10
DBAY Advisors Limited
18,815,378
8.89
11,840,378
6.65
BennBridge Limited
8,984,103
5.10
8,984,103
5.10
Slater Investments Ltd
8,915,000
5.06
8,915,000
5.06
Artemis Investment
Management LLP
8,940,400
5.02
-
-
M&G plc
8,764,166
5.00
8,764,166
5.00
Chelverton Asset
Management Ltd
8,797,581
4.98
8,797,581
4.98
Schroders plc
8,672,794
4.91
8,672,794
4.91
Polar Capital LLP
8,539,130
4.88
8,539,130
4.88
Aberdeen Asset
Management Ltd
7,835,077
4.83
7,835,077
4.83
NN Group N.V.
7,815,000
4.78
7,815,000
4.78
Franklin Templeton
7,590,000
4.64
7,590,000
4.64
SHAREHOLDER INFORMATION CONTINUED
SHAREHOLDER ENQUIRIES
Registrar
The Company’s Registrar is Equiniti Limited.
Equiniti provides a range of services to shareholders.
Extensive information including many
answers to frequently asked questions can
be found online.
Use the QR code to register for FREE at
www.shareview.co.uk
Equiniti’s registered address is:
Highdown House
Yeoman Way
Worthing
West Sussex
BN99 3HH
Equiniti offers a range of shareholder information online at
www.shareview.co.uk
WEBSITE
Information on the Group’s financial performance, activities and
share price is available at www.ttelectronics.com
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2024
170
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
TT Electronics plc
Fourth Floor
St Andrews House
West Street
Woking
Surrey
GU21 6EB
Tel +44(0) 1932 825300
Fax +44(0) 1932 836450
For more information on
our business please visit
www.ttelectronics.com