TT Electronics PLC - Half-year Report

 2025 Interim Results, 24 September 2025

 

 

 

 

TT Electronics plc

 

Results for the half-year ended 30 June 2025

 

 

For further information, please contact:

TT Electronics 

Eric Lakin, Chief Executive Officer

Richard Webb, Interim Chief Financial Officer

Kate Moy, Head of Investor Relations                                                       Tel: +44 (0)1932 827 779

MHP

Tim Rowntree / Ollie Hoare                                                                       Tel: +44 (0) 7817 458804

 

 

A management presentation for analysts and investors will be held today at 08.30 at Berenberg's offices at 60 Threadneedle Street, London and a webcast can be accessed at:

https://stream.brrmedia.co.uk/broadcast/686fd7aec36b2d0013a249ea

 

A recording of the presentation and Q&A session will be available on the website later in the day.

A PDF of this half year announcement is available for download from https://www.ttelectronics.com/investors/results-reports-presentations/

 

 

Significant progress on operational turnaround

 

TT Electronics plc ("TT, "the Group"), a global engineer and manufacturer of electronic solutions for critical applications, today announces its interim results for the six months ended 30 June 2025 (the "Period").

 

Summary

·   Good European performance, driven by strong growth in Aerospace & Defence, offset by challenges in North America and order delays for our Asian business

·    Closure of the Plano site underway and Cleveland turnaround progressing well

·    Strategic review of components business under separate management oversight

·    Net debt continues to reduce with strong cash conversion at 135%

·    Eric Lakin appointed CEO

 

£m (unless otherwise stated) Group	H1 2025	H1 2024 restated5	Change organic1
Adjusted Results1,4
Revenue (organic)1	237.9	253.1	(6.0)%
Operating profit (organic)1	13.0	18.5	(29.7)%
Operating margin	5.5%	7.3%	(180)bps
Cash conversion	135%	35%
Profit before tax	8.5	13.8	(38.4)%
Basic earnings per share	1.9p	5.4p	(64.2)%
Statutory Results
Revenue	237.9	273.3
Operating (loss)/profit	(5.1)	11.9
(Loss)/profit before tax	(9.6)	6.7
Net cash generated from operations	20.0	7.9
Basic earnings per share	(5.8)p	1.6p
Dividend per share	-	2.25p
Other KPIs
Free cash flow1	6.4	(7.8)
Return on invested capital	10.0%3	10.0%2
Net debt (excl lease liabilities)	73.3	80.12
Leverage1	1.9x	1.8x2

 

 

Eric Lakin, Chief Executive Officer, said:

"Our European region continues to perform well, driven by strong Aerospace & Defence markets and our positioning on long term programmes. Overall progress has been offset by the two site specific challenges in North America, at Cleveland and Plano, and order delays for our Asian business due to geopolitical related uncertainties.

 

We have implemented two important strategic actions to improve our future financial performance. We have made the difficult decision to close our Plano site and have launched a strategic review of our components business. Our Cleveland improvement plan is on track and delivering improved performance.

These improvement actions in North America, further progress in Europe and a resilient contribution from Asia are expected to underpin the step up in second half profitability. The Board therefore expects full year adjusted operating profit to be in line with market expectations⁶."

 

Financial Summary

·    Mixed H1 performance with revenue down 6.0% organically (down 4.3% if excluding Plano site)

·    Adjusted operating margin of 5.5%¹

·    Statutory operating loss £5.1 million, after £18.1 million of adjusting items predominantly relating to the Plano site closure and Cleveland restructuring

·    Statutory basic EPS of (5.8)p

·    H1 book to bill of 98%, with strong European performance and stabilisation in North America, offset by moderated demand into Asia

 

Operational turnaround

·    Components business strategic review

o  Decision to close the Plano site by the end of 2025

o  Managed separately for enhanced focus and oversight

·    Cleveland turnaround progressing to plan, productivity improving through the half

o  Site leadership team at full strength

o  Implementing multiple revenue, margin and cash improvement initiatives

·    Inventory management programme delivered a further £5.2 million underlying reduction in the half

·    Short term focus on delivering the required operational turnaround with further detail on medium-term strategic direction to be shared in the new year

 

Notes

1.  Throughout this announcement we refer to a number of alternative performance measures which provide additional useful information. Organic revenue and organic operating profit are revenue and adjusted operating profit on a constant currency basis and excluding the impacts of business disposals, see APM2 on page 41. 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 in note 2c on page 26.  The adjusted measures are set out in the reconciliation of KPIs and non IFRS measures on pages 37 to 44.

2.     As at 31 December 2024

3.     Calculated for the 12 months to June 2025

4.     Excludes 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

5.     H1 2024 results have been restated as described in note 1f. As disclosed in the 2024 Annual Report, certain balances in North America were identified as representing material errors in the 2023 Financial Statements and the opening balances in 2024. This resulted in material errors consistent in nature as at 30 June 2024 requiring prior period restatement

6.     Consensus for 2025 adjusted operating profit is £33.7 million in a range £31.6million to £35.6million.

About TT Electronics

TT Electronics is a global provider of engineered electronics for performance critical applications.

TT engineers and manufactures electronic solutions enabling a safer, healthier and more sustainable world. TT benefits from enduring megatrends in structurally high-growth markets including Healthcare, Aerospace, Defence, Automation and Electrification. TT invests in R&D to create designed-in products where reliability is mission critical. Products designed and manufactured include sensors, power management and connectivity solutions. TT has design and manufacturing facilities in the UK, North America, and Asia.

 

CHIEF EXECUTIVE OFFICER'S REVIEW

 

Introduction

 

In the first half of the year, we report strong profit growth in Europe offset by the challenges in our North American region and order delays for our Asian business. On an organic basis revenue was down 6.0 per cent as growth in Europe, driven by strong Aerospace & Defence markets, was more than offset by ongoing softness in Healthcare and Automation & Electrification markets in North America and Asia. Excluding the revenue of the Plano site which will be closed in the second half, revenue was down 4.3 per cent. Statutory revenue was down 13.0 per cent.

 

Adjusted operating margin of 5.5 per cent was down 180 basis points on an organic basis. Within the regions, Europe delivered a further strong organic performance with margins up 330 basis points, the North American performance reflects the trading losses at Plano and Cleveland.

 

During the first half, we moved quickly to address the two greatest areas of challenge within the Group, by launching a strategic review of the components business and the engagement of external consultants to investigate and improve the ongoing poor performance in our manufacturing business at Cleveland, Ohio. Resolution of the issues here will put the Group on a more stable operational and financial footing.

 

The downturn in the components market and the associated impact on our dedicated manufacturing facilities servicing that market, mostly in North America, has highlighted the operating leverage impact of our component sites. Accordingly, in April, the Board launched a strategic review of this business to assess all options in respect of the four locations servicing this market. In late June we took the difficult decision to close our components site in Plano which has been running at an annual loss of c. £6 million. Production will cease and we expect to close the site by the end of 2025. The costs of closure in the first half, including severance costs and inventory write-downs, are £6.7 million and are reported in items excluded from adjusted operating profit; the cash cost of the closure is expected to be c£4 million, of which £2-3 million will be incurred in the second half. To enable maximum focus in this ongoing review, our components business now has separate management oversight.

 

In April the Board also deployed specialist external resources and capability into our Cleveland manufacturing facility, which provides Electronic Manufacturing Services (EMS) to OEM customers. This aims to accelerate the required turnaround programme and enhance the effectiveness and predictability of day-to-day operations. Furthermore, we have concluded a comprehensive balance sheet review at the site, resulting in a largely non-cash restructuring charge of £5.7 million which is predominantly related to inventory and is reported in items excluded from adjusted operating profit in the first half. We have made progress in improving productivity during this period. The specialist external resource project work has now concluded and Cleveland now has a full site leadership team in place. We have also implemented further cost-saving measures and have identified additional opportunities for pricing, working capital and procurement savings. 

 

In terms of our first half end market performance, there was strong growth in Aerospace and Defence (A&D), up 12 per cent organically. As expected, revenues from distribution, which is the main route to market for our components business, reduced by 17 per cent organically. Healthcare revenues were down 6 per cent organically in the first half as US research grants to the sector and funding reduced, consistent with wider market trends. Automation & Electrification was down 14 per cent reflecting tough industrial markets for some of our products.

 

Order intake in the half year broadly tracked revenue, with book to bill at 98 per cent. Order intake was comfortably ahead of revenue in the first half in Europe, and the region is on track for a year of record order intake given its exposure to the A&D end market. This strong performance was offset by end market weakness for certain customers across the Healthcare and Automation & Electrification sectors in our Asia business and stabilisation in North America.

 

Going forwards, Project Dynamo has evolved to be an internal driver of improved performance, with areas of near-term focus including further SG&A reductions, inventory management, driving an efficient cost of production and improving commercial pricing where necessary.

 

Our focus on building close customer relationships and collaborating on design-led solutions often leads to us being designed in for the life of the product, often spanning decades. As well as several new business contracts secured in the half year, we secured significant awards for next phase programmes and programme variants with our long-standing customers that demonstrate performance, trust and long term collaboration. Furthermore, we believe we are well placed, with our proven global manufacturing footprint in the United States, Mexico and Malaysia to support regionalisation/localised supply chain trends, especially in healthcare and life sciences.

 

 

Results and operations

 

Group revenue for the period was £237.9 million, down 6.0 per cent on an organic basis.  Group adjusted operating profit for the period was £13.0 million, 29.7 per cent lower than the prior period on an organic basis.

 

The adjusted operating margin in the first half was 5.5 per cent (H1 2024 restated: 7.3 per cent), down on an organic basis, with an improvement in Europe offset by reductions in North America and Asia. We expect to deliver margin improvement in the second half given our anticipation of reduced North American losses as part of the turnaround plan. After the impact of adjusting items of £18.1 million, which includes restructuring costs of £13.8 million and pension restructuring costs of £3.0 million, the Group's half year statutory operating loss was £5.1 million (H1 2024 restated: £11.9 million profit) and operating margin was (2.1) per cent (H1 2024 restated: 4.4 per cent).

 

The reported operating profit for H1 2024 has been restated by £(3.2) million as described in note 2f; and as disclosed in the 2024 Annual Report, certain balances in North America were identified as representing material errors in the 2023 Financial Statements and therefore the opening balances in 2024. This resulted in consistent material errors as at 30 June 2024 which required prior period restatement.

 

Adjusted operating cash inflow post capital expenditure during the period was £17.6 million (H1 2024: £6.6 million). Cash conversion was significantly higher than H1 2024 at 135 per cent (H1 2024: 35 per cent) driven by inventory reductions of £5.2 million, partially offset by a decrease in payables, resulting in a net working capital inflow of £0.9 million (H1 2024 restated: £18.1 million outflow). On a statutory basis, cash flow from operating activities was an inflow of £16.4 million (H1 2024: £3.4 million inflow). Free Cash Flow was £6.4 million (H1 2024: £7.8 million outflow).

 

Following the buy-in of the UK defined benefit scheme in November 2022, the scheme is de-risked with the scheme liabilities matched by the buy-in insurance policy and no further contributions have been made to the scheme. There was a surplus of £10.5 million at 30 June 2025 (Dec 2024: £7.1 million surplus), following the gross return of £5.0 million to TT in December 2023 and a £15.0 million gross return in December 2024. Workstreams to finalise all details of the buy-in and transfer all scheme data to Legal and General are well progressed and the notice to trigger wind up of the scheme was issued on 31 March 2025. We continue to move towards buy-out which we anticipate completing in 2026 after which we can conclude the wind up of the scheme.

 

At 30 June 2025 net debt was £87.7 million (31 December 2024: £97.4 million), which included lease liabilities of £14.4 million (31 December 2024: £17.3 million). Excluding lease liabilities, net debt was £73.3 million (31 December 2024: £80.1 million). Leverage slightly increased to 1.9x (31 December 2024: 1.8x). We expect leverage to reduce slightly by the end of the year. 

 

Dividend

 

Given continued uncertainty over the macro-economic environment and associated business risks, the Board has concluded that it is prudent to continue the pause on the dividend and will not be paying an interim dividend for 2025.

 

Going concern

 

In determining the appropriate basis of preparation of the interim financial statement, 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 downside stress test 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.

 

As noted in the 2024 Annual Report, there have been significant emerging geopolitical and macroeconomic developments including trade tariffs. While tensions have begun to ease following a willingness of governments, to negotiate trade agreements, these recent events continue to be fast moving with a range of potential outcomes. The outcomes remain uncertain and any resulting economic volatility may have an impact beyond that assumed in the downside stress test scenario.  Even in this circumstance, the Company would seek to negotiate an adjustment to its covenants.  These matters represent a material uncertainty which may cast doubt upon the Group's ability to continue as a going concern for at least twelve months from the date of signing the interim results. The interim 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 on page 19.

 

OUR PRIORITIES

 

In the short term, our immediate focus continues to be on disciplined execution in the fixing of operational issues at Cleveland, Ohio and closing our Plano, Texas site which will improve returns. We are focused on control and efficiencies in production costs and inventory management. Where markets are soft, or there are delays in customer decisions, in part due to tariff uncertainty, we are relentlessly focused on our customers' needs and order intake. Free cashflow generation and debt reduction remain key priorities.

 

As part of the re-set for a focus on high-performance, we reshaped an Executive Committee to empower our regional leaders; providing better clarity of ownership, accountability and lines of responsibility.

 

The newly appointed CEO has started to evaluate the Group's medium- term strategic priorities and enablers and we will provide a further update on these initiatives with the FY25 results. The process to appoint a permanent CFO is ongoing.

 

Our overall mission is to be a leading and respected engineering and manufacturing power electronics partner of choice in our core markets of Aerospace & Defence, Healthcare and Automation & Electrification. We do this through:

 

·    Relentless focus on efficiency, productivity and agility, particularly in our EMS business

·    Promoting innovation, design, product, engineering and manufacturing expertise with proprietary know-how and technology

·    Our components business has traditionally delivered strong cash flow generation and added scale to the Group. We continue to evaluate the role the remaining portfolio of components businesses fulfil in the Group's strategy.

 

 

TECHNOLOGY

We have established a Group-wide Engineering function and product and technology roadmaps at all sites to effectively leverage and capitalise on TT's engineering expertise across all regions, in recent years.

 

Our organic investment in R&D and capital equipment to drive differentiation in our offer to customers, has firmly embedded us as valued and trusted partners on long term programmes. This expenditure totalled £18.2 million in 2024 and in the first half of 2025 we invested £8.3 million (H1 2024: £9.2 million), including £5.2 million (H1 2024: £6.1 million) in R&D spend, representing 4.1 per cent (H1 2024: 4.6 per cent) of the aggregate product revenues.

 

An example showcasing how our engineering led approach, working closely with business development, can deliver new revenue streams is in Europe where we currently provide build-to-print power modules for critical applications on silicon-based devices used in aerospace applications. Silicon Carbide (SiC), including silver sintering technology, represents the next-generation technology enabling higher temperature, faster switching potential and high reliability within a small, power-dense package.

 

We are currently investing in a baseline module allowing TT to supply low-volume, customisable products focused on Aerospace and Defence platforms where sintered power modules are rapidly gaining traction given their superior reliability and thermal performance. 

 

From a technology standpoint, our investment in the silver sintering process will create opportunities to develop new products for existing customers and other TT sites who currently purchase power modules, increasing the potential for vertical integration across the business.

 

Our global sales and business development structure enables us to sell all of TT's technology, engineering and manufacturing services to our global customer base.

 

Closer collaboration between the regions is driving improvements across the business as we bring engineering skills and product experience from across the teams together and subsequently place contracts in the most effective location for production. For example, we are already supplying certain customers and programmes from multiple locations, and we continue to consider, where appropriate, transfers of production to our most cost-effective locations; this is currently under consideration for our cable and harness assemblies.

 

EFFICIENCY

Boosting productivity and reducing costs

 

Our short-term focus continues to be on improving operational efficiency at a small number of predominantly North American sites.

 

In Kansas City, our operational improvement plan has achieved positive results following factory layout improvements which facilitated increases in throughput on affected production lines. Given the strength of the order book here, we have seen a significant step up in the productivity of the engineering team in 2025 and improved efficiency, which is underpinning the improved results. Encouragingly, we have recently received confirmation of a significant award with a long-standing customer, one of the world's largest suppliers of Aerospace and Defence products, for the development, manufacture and test of a critical Power Delivery Subsystem on a defence programme.

 

The Cleveland improvement plan is well underway. The site leadership team is now at full strength, with key workstreams of cost reduction, a thorough overhaul of demand, production & resource planning and inventory control all in train. Adding short term specialist resource helped identify opportunities to improve process yield, reduce the costs of re-work, and ensure we are paid for the costs of executing customer requested design changes. This externally resourced project has now concluded, and the site leadership team has full ownership for the workstreams.

 

Following a detailed review, and as previously announced, the Board has taken decisive action to close our components site in Plano, which is expected by the end of the year. We are supporting customers, employees and suppliers during the closure process.

 

Inventory management

 

Inventory levels in the business increased over recent years. The appointment of a Group Lead focused on inventory has continued to ensure appropriate management attention is applied to inventory outcomes across all group locations. This role, supported by a small expert team with a regional presence, focuses on improving the underlying processes and master data management.

 

In the first half of 2025 we have reduced underlying net inventory levels by a further £5.2 million and expect to deliver further reductions in the second half. We are on track to deliver our target of a £15 million reduction in net inventory levels by the end of 2026.

 

ENVIRONMENT

 

We are actively reducing our operational carbon footprint through several initiatives including equipment upgrades and the second phase of our solar installation at Suzhou scheduled for completion in the second half. We are also working with a third-party partner to plan the purchase of unbundled Renewable Energy Certificates (RECs) for TT Electronics sites where on-site renewable generation or direct renewable electricity procurement is not feasible.

 

 

REGIONAL REVIEW

 

EUROPE

 

	H1 2025	H1 2024	Change
Revenue (organic) 1	£68.5m	£65.3m	5%
Revenue	£68.5m	£77.1m	(11)%
Adjusted operating profit (organic)1	£10.7m	£8.0m	34%
Adjusted operating profit	£10.7m	£7.5m	43%
Adjusted operating margin (organic)1	15.6%	12.3%	330bps

 

¹ See note 2c on page 26 for an explanation of alternative performance measures, and APM2 on page 41 in relation to 'organic' measures which present revenue and adjusted profit on a constant currency basis, excluding the impacts of business disposals and adjusting items.  Adjusting items are not allocated to divisions for reporting purposes.  For further discussion of these items please refer to note 4 on page 31 of this document.

 

Organic revenue was 5 per cent higher at £68.5 million (H1 2024: £65.3 million) driven mainly by increased demand from our positioning on long term programmes in the Aerospace and Defence end market and a focus on pricing discipline. Reported revenue was £8.6 million lower than H1 last year, reflecting the movements above, more than offset by the £11.8 million impact of the Q1 2024 disposal of sites in Cardiff and Hartlepool.

 

Organic operating profit increased by £2.7 million to £10.7 million (H1 2024: £8.0 million) driven by operational leverage on the organic revenue growth and focussed cost control. Adjusted operating margin increased to 15.6 per cent (H1 2024: 12.3 per cent). 

 

Overall order intake for the region was pleasingly strong, with book to bill well over 100% and we expect continued growth in the second half of the year.  Contract awards and growth drivers during the period, giving us confidence as we look forward, include:

 

·    TT has won a new contract from an existing A&D customer for human-machine-interface assemblies supporting a European combat vehicle. The 5-year contract builds on our existing customer relationship and reflect TT's expanding role as a trusted supplier of mission-critical electronic systems in support of national and allied defence priorities.

 

·    We have recently been awarded a significant new contract with long-standing customer Ultra PCS Ltd (Ultra Precision Control Systems) to manufacture highly complex, military-grade cable harness assemblies at our facility in Fairford, UK, for Ultra PCS Ltd's advanced engine ice protection systems, which are integral to the operation of modern combat aircraft.

This new contract strengthens the long-standing, 35-year relationship between the two companies and underscores our pivotal role as a preferred and trusted supplier in the Aerospace and Defence markets.

 

·    Continuing our strong, long-standing partnership with a large European Aerospace & Defence prime we have recently announced a sizeable contract to supply military grade cable harness assemblies for a critical defence programme. This new contract award leverages TT's exceptional capabilities and proven track record of supporting critical defence applications worldwide.

 

 

 

NORTH AMERICA

 

	H1 2025	H1 2024 restated2	Change
Revenue (organic) 1	£83.2m	£92.7m	(10)%
Revenue	£83.2m	£94.4m	(12)%
Adjusted operating profit (organic)1	£(5.0)m	£1.3m	(485)%
Adjusted operating profit	£(5.0)m	£1.6m	(413)%
Adjusted operating margin (organic)1	(6.0)%	1.4%	(740)bps

 

¹ See note 2c on page 26 for an explanation of alternative performance measures, and APM2 on page 41 in relation to 'organic' measures which present revenue and adjusted profit on a constant currency basis, excluding the impacts of business disposals and adjusting items.  Adjusting items are not allocated to divisions for reporting purposes.  For further discussion of these items please refer to note 4 on page 31 of this document.

²H1 2024 results have been restated as described in note 2f. As disclosed in the 2024 Annual Report, certain balances in North America were identified as representing material errors in the 2023 Financial Statements and therefore the opening balances in 2024. This resulted in material errors consistent in nature as at 30 June 2024 which required prior period restatement.

Note: No divestment impact here

 

Organic revenue reduced by £9.5 million to £83.2 million (H1 2024: £92.7 million) predominantly reflecting significant volume headwinds in our components business including our Plano site. Reported revenue was £11.2 million lower than H1 last year, reflecting the movements above and foreign exchange headwinds of £1.7 million.

 

Organic operating profit decreased by £6.3 million to a £5.0 million loss (H1 2024 restated: £1.3 million profit).  The adjusted, organic operating profit margin was (6.0) per cent (H1 2024 restated: 1.4 per cent) reflecting an improved performance in Kansas, more than offset by the impact of volume declines in the components business and losses at our components site in Plano and our EMS site at Cleveland. 

 

We are pleased to report that the first half Kansas City performance reflects a significant step up in the productivity of its engineering team and some positive re-pricing. Furthermore, engineers at this site are now collaborating on joint pipeline reviews with other regional sites to allocate workstreams between sites depending on capabilities.

 

Our Cleveland site leadership team is now up to full strength and progressing through key improvement workstreams of contract profitability, operational efficiency including a thorough overhaul of demand, production and resource planning. Encouragingly, production efficiency levels at the site are significantly improved, the need for re-work and scrap levels are reducing, headcount savings are contributing. As noted previously, the full benefits of the improvement plan are expected to be realised over the longer term, driven by the need for increased manufacturing volumes.

 

With the planned closure of Plano in the second half together with the benefits of the last time buy and the contribution from the Cleveland improvement plan, the region is expected to show a return to profit in the second half, though will still be loss-making for the year as a whole.

 

At the time of our FY24 results, in April 2025, we reported prior year adjustments in relation to our 2023 North American results. This principally related to our Cleveland site where we identified issues in relation to the recoverability of certain assets recognised in prior periods at this site in North America. In response to this, we have strengthened the local and regional finance teams and addressed the associated control deficiencies.

 

We are pleased to have had recent new customer wins across the region; notable wins and growth drivers in the period include the following:

 

·    A customer in the commercial satellite sector selected our Juarez facility for high-reliability optoelectronics that will be used in a low earth orbit communication/navigation satellite. This win reflects the importance of distributor relationships with customers, as it enabled TT to secure the new project at an early phase where our components will be designed in.

 

·    Our Minneapolis facility was awarded a new contract from an existing customer to provide in-seat flight magnetics for commercial aircraft. The one-year contract builds on our track record of success providing value-added assemblies with this customer.

 

·    TT's Mexicali facility was awarded a new contract for box-build assemblies for a customer providing innovative, digital power distribution systems. This latest award reflects confidence in TT's ability to support this account globally, leveraging best-cost-geographies and extends over 5 years.

 

 

ASIA

 

	H1 2025	H1 2024	Change
Revenue (organic) 1	£86.2m	£95.1m	(9)%
Revenue	£86.2m	£101.8m	(15)%
Adjusted operating profit (organic)1	£11.4m	£13.2m	(14)%
Adjusted operating profit	£11.4m	£14.0m	(19)%
Adjusted operating margin (organic)1	13.2%	13.9%	(70)bps

 

¹ See note 2c on page 26 for an explanation of alternative performance measures, and APM2 on page 41 in relation to 'organic' measures which present revenue and adjusted profit on a constant currency basis, excluding the impacts of business disposals and adjusting items.  Adjusting items are not allocated to divisions for reporting purposes.  For further discussion of these items please refer to note 4 on page 31 of this document.

 

Organic revenue was down 9 per cent to £86.2 million (H1 2024: £95.1 million) reflecting some end market weakness for certain customers across the Healthcare and Automation & Electrification sectors.  Customer uncertainty around tariffs continues. Reported revenue was £15.6 million lower than H1 last year, reflecting the movements above, foreign exchange headwinds of £2.4 million and the £4.4 million impact of the Q1 2024 disposal of the Dongguan, China facility.

 

Adjusted operating profit was £2.6 million lower at £11.4 million (H1 2024: £14.0 million) from the impact of the volume reductions, foreign exchange headwinds of £0.5 million and the £0.3 million impact of the Q1 2024 business disposal, representing an organic decline of 14%. The adjusted operating profit margin was marginally lower at 13.2 per cent (H1 2024: 13.9 per cent).

 

The process of increasing further our capacity within our Malaysian facility, in Kuantan, to prepare for the shift in customer demand and transfer of programmes from other sites is nearing its final stages. The transfer of work, together with associated one-off costs and a production hiatus while safety stock is consumed, will occur over the remainder of 2025 with revenue being delivered from Malaysia from 2026.

 

Order intake in the year was lower than the prior year as a result of order delays due to geopolitical related uncertainties. There is a constant focus on growing our Asia for Asia revenues with recent momentum wins supporting global medical and life science OEMs with robust local production capabilities in Suzhou.

 

There have been a number of key developments during the first half of the year including:

 

·    Our Kuantan facility was awarded three new contracts for PCBA requirements from a long-standing customer in the life science sector. TT already provides manufacturing for this customer at locations in Suzhou, Cleveland, and most recently, Mexicali. The customer's selection of this location and entrusting TT is a testament to the partnership and proven performance of TT teams globally.

 

·    TT Suzhou has been awarded a new 3-year contract by a leading medical imaging equipment provider. The award will see Suzhou provide multiple PCBAs supporting a new product design, demonstrating our success in developing deep customer relationships - enabling us to secure positions on new, medical equipment innovations.

 

·    A longtime customer in the industrial label and printing sector has awarded TT Kuantan a 3-year contract for PCBA and sub-assemblies supporting the textile industry. The order reflects our ability to support this strategic account globally with prototype and NPI capabilities, while leveraging best-cost geographies.

 

Outlook

 

In the first half of 2025 we have implemented two important strategic actions to improve our future financial performance. We have made the difficult decision to close our Plano site and have launched a strategic review of our components business. Our Cleveland improvement plan is on track and delivering improved performance.

 

These improvement actions in North America, further progress in Europe and a resilient contribution from Asia are expected to underpin the step up in second half profitability.  The Board therefore expects full year adjusted operating profit to be in line with market expectations.

 

OTHER FINANCIAL INFORMATION

 

Group revenue of £237.9 million (H1 2024 restated: £273.3 million) reflected currency headwinds in the period compared to H1 last year of £4.1 million, and the impact of the divestment of our business units in Cardiff and Hartlepool, UK and Dongguan, China which reduced revenue by £16.1 million. Excluding the impact of currency and the divestment organic revenue was 6.0 per cent lower than in the same period last year.

 

The Group reported an adjusted operating profit of £13.0 million (H1 2024 restated: £19.0 million). Currency headwinds in the period compared to H1 last year were £0.7 million, and the impact of the divestment of our business units in Cardiff and Hartlepool, UK and Dongguan, China increased operating profit by £0.2 million.

 

Statutory operating loss for the period was £5.1 million (H1 2024 restated: £11.9 million profit) after a charge of £18.1 million (H1 2024: £7.1 million) for items excluded from adjusted operating profit including:

 

·    Acquisition and disposal related costs of £1.3 million (H1 2024: £6.3 million including £4.9 million relating to the Project Albert divestment), comprising amortisation of acquired intangible assets.

 

·    Pension restructuring costs of £3.0 million (H1 2024: £0.8 million) relate to buy in costs and all anticipated future costs post issuing the notice to trigger wind up.

 

·    Charges associated with management change of £1.4 million (H1 2024: £ nil) reflecting duplicate costs in the period for senior management transition.

 

·    Other restructuring costs at Cleveland of £5.7 million (H1 2024: £ nil) including the costs of the specialist resource and inventory write down.

 

·    Plano closure costs of £6.7 million (H1 2024: £ nil) including inventory write down.

 

 

The Group generated an adjusted operating margin of 5.5 per cent (H1 2024 restated: 7.0 per cent) with the decrease as a result of the significant headwinds faced in our North American components business and Cleveland site challenges.

 

The net finance cost reduced to £4.5 million (H1 2024: £5.2 million) due to lower interest rates and lower debt levels. The Group's overall tax charge was £0.7 million (H1 2024 restated: £3.9 million). The tax charge on adjusted profit before tax was £5.1 million (H1 2024: £4.3 million), resulting in an effective adjusted tax rate of 60.0 per cent (H1 2024: 31.2 per cent), this higher than usual rate is due to losses within the North America region and the inability to currently recognise a deferred tax asset in respect of those losses.

 

Basic earnings per share (EPS) decreased to a loss of 5.8 pence (H1 2024 restated: 1.6 pence). Adjusted EPS reduced to 1.9 pence (H1 2024 restated: 5.4 pence), reflecting the reduction in adjusted operating profit.

 

Adjusted operating cash flow post capital expenditure was £17.6 million inflow (H1 2024: £6.6 million inflow) which was primarily due to a £0.9 million working capital inflow (H1 2024: £18.1 million outflow) and a reduced share-based payment expense. This resulted in a significantly higher operating cash conversion of 135 per cent (H1 2024: 35 per cent). On a statutory basis, cash flow from operating activity was an inflow of £16.4 million (H1 2024: £3.4 million inflow).

 

There was a free cash inflow of £6.4 million (H1 2024: £7.8 million outflow) reflecting lower tax and interest payments and includes £1.4 million of restructuring and acquisition related payments (H1 2024: £0.5 million).

 

As at 30 June 2024 the Group's net debt was £87.7 million (31 December 2024: £97.4 million), including £14.4 million of lease liabilities (31 December 2024: £17.3 million). Excluding lease liabilities, net debt was £73.3m (31 December 2024: £80.1 million).  Leverage, consistent with the bank covenants, was 1.9 times at 30 June 2025 (31 December 2024: 1.8 times). Net interest cover at 30 June 2025 was 4.3 times (31 Dec 2024: 4.4 times)

 

Following the buy-in of the UK defined benefit scheme in November 2022, the scheme is de-risked and had a surplus of £10.5 million at 30 June 2025. No contributions were made to the scheme in the period, and none are expected going forwards. Workstreams to finalise all details of the buy-in and transfer all scheme data to Legal and General are well progressed and the notice to trigger wind up of the scheme was issued on 31 March 2025. We continue to move towards buy-out which we anticipate completing in 2026 after which we can conclude the wind up of the scheme.

 

Summary of Adjusted results

 

To assist with the understanding of earnings trends, the Group has included within its 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 37 to 44.

 

A summary of the Group's adjusted results, and a reconciliation of statutory to adjusted profit numbers are set out below:

 

£ million	H1 2025	H1 2024 restated
Revenue	237.9	273.3
Adjusted Operating profit	13.0	19.0
Adjusted Operating margin	5.5%	7.0%
Net finance expense	(4.5)	(5.2)
Adjusted Profit before tax	8.5	13.8
Adjusted Tax	(5.1)	(4.3)
Tax rate	60.0%	31.2%
Adjusted Profit after tax	3.4	9.5
Weighted average number of shares	177.7m	176.7m
Adjusted EPS	1.9p	5.4p

 

 

Reconciliation of Adjusted results

 

£ million	Note	H1 2025	H1 2024 restated
Operating profit		(5.1)	11.9
Adjusted to exclude:
Restructuring and other items
Pension restructuring costs	1	(3.0)	(0.8)
Restructuring	2	(13.8)	-
		(16.8)	(0.8)
Acquisition related costs
Amortisation of intangible assets arising on business combinations		(1.3)	(1.4)
Project Albert costs		-	(4.9)
		(1.3)	(6.3)
Total operating reconciling items		(18.1)	(7.1)
Adjusted operating profit		13.0	19.0
Profit before tax		(9.6)	6.7
Total operating reconciling items (as above)		18.1	7.1
Adjusted profit before tax		8.5	13.8
Taxation charge on adjusted profit		(5.1)	(4.3)
Adjusted profit after taxation		3.4	9.5

 

Note 1: Pension restructuring costs of £3.0 million (2024: £0.8 million) relate to buy in costs and all anticipated future post wind up costs which are required to be booked following the 31 March 2025 triggering of the wind up of the scheme.

 

Note 2: Restructuring costs of £13.8 million comprise £6.7 million relating to closure costs of the Plano manufacturing site, of which £4.9 million relates to inventory, £5.7 million relating to costs associated with operational restructuring at the Cleveland manufacturing site, which is predominantly related to inventory, and £1.4 million relating to costs associated with the changes in executive leadership.

 

Cash flow, net debt and leverage

 

The table below sets out Group cash flows and net debt movement:

 

£ million	H1 2025	H1 2024 restated
Adjusted operating profit	13.0	19.0
Depreciation and amortisation	6.7	7.4
Working capital movement	0.9	(18.1)
Net capital expenditure	(3.1)	(3.1)
Capitalised development expenditure	(0.7)	(0.5)
Other	0.8	1.9
Adjusted Operating Cash Flow post Capex	17.6	6.6
Restructuring and acquisition costs	(1.4)	(0.5)
Net interest and tax	(7.8)	(10.1)
Lease payments	(2.0)	(2.0)
US pension scheme buy-out	-	(1.8)
Free Cash Flow	6.4	(7.8)
Dividends	-	(8.2)
Lease payments	2.0	2.0
Equity issued	0.2	0.4
Disposals	-	19.5
Cash with disposed businesses	-	(5.3)
Other	-	(2.0)
Net debt impacting cashflow	8.6	(1.4)
Opening net debt	(97.4)	(126.2)
Leases disposed of as part of Project Albert	-	2.6
Other non-cash (new leases and lease reassessments)	(0.6)	(1.2)
FX	1.7	(0.8)
Closing net debt	(87.7)	(127.0)

 

 

 

At 30 June 2025 the Group's net debt was £87.7 million (31 December 2024: £97.4 million).  Included within net debt was £14.4 million of lease liabilities (31 December 2024: £17.3 million).  Excluding lease liabilities, net debt was £73.3m (31 December 2024: £80.1 million).

 

Consistent with the Group's borrowing agreements, which exclude the impact of IFRS 16 leases, leverage ratio was 1.9 times at 30 June 2025 (31 December 2024: 1.8 times). Net interest cover was 4.3 times (31 December 2024: 4.4 times).

 

The Group's debt covenants state that the leverage ratio must not exceed 3.0 times and interest cover must be over 4.0 times. A temporary amendment with the Group's lenders is in place over the existing financing facilities for the periods to 30 June 2025 and 31 December 2025. The amendment relates specifically to the financial covenant regarding interest cover to provide the Group with additional headroom. Under the amendment, the interest cover covenant will be reduced from a minimum ratio of EBITDA to net finance charges of 4.0 times to 3.0 times and 3.25 times for the periods to 30 June 2025 and 31 December 2025 respectively. During the relaxation period, in the event that interest cover falls below or is forecast to be less than 4.0 times the Board would not be able to declare or pay a dividend.

 

Principal risks and uncertainties

 

The Group has an established, structured approach to identifying and assessing the impact of financial and operational risks on its business, which is reviewed and updated quarterly. The principal risks and uncertainties for the remainder of the financial year are not expected to change materially from those included on pages 53 to 56 of the Annual Report and Accounts 2024. The risks identified relate to the following areas: general revenue reduction due to geopolitical instability or economic downturn; contractual risks; research and development; people and capability; supplier resilience; IT systems and information; M&A and integration; sustainability, climate change and the environment; health and safety; legal and regulatory compliance and geopolitical. Further information in relation to the Group's financial position and going concern is included on page 19.

 

 

Cautionary statement

 

This report contains forward-looking statements. These have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. The Directors can give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The Directors undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.