TT Electronics plc (LON:TTG), a global provider of engineered electronics for performance critical applications, publishes the following Trading Update on the Group’s performance for the year ended 31 December 20201.
Continued improvement in trading
The improvement trends seen to the end of October have continued, with revenue in the last two months of 2020 only 4 per cent lower than the previous year on an organic2 basis.
Revenue for the full year of c. £432m, was 9 per cent lower on a constant currency basis and 12 per cent lower on an organic basis.
Order intake continues to improve across the Group. Bookings for full year were at 99 per cent of revenue, and for the second half were 103 per cent of revenue. The order book remains broadly in line with this time last year.
Recognising the resilience of the Group’s performance and strong cash generation, the Board has committed to repay the Coronavirus Job Retention Scheme (furlough) payments received from the UK Government. The c. £1.1m cost of the repayment has been accrued in the 2020 results.
With revenue and cost actions on track, the Board now anticipates adjusted3 profit before tax for the year in line with external expectations4, having taken into account the £1.1m furlough repayment.
Despite the national lockdown in the UK, and restrictions elsewhere in the world, all our facilities remain open and are delivering to customer requirements, whilst continuing to prioritise the safety of our employees.
Strong cash performance and financial position
The Group’s cash generation in the second half of the year was strong, with a working capital inflow supporting the reduction in the Group’s net debt at 31 December 2020 to c. £84m including IFRS 16 leases. As a result, net debt to underlying EBITDA on a bank covenant basis5 is expected to be c. 1.8 times.
In the recent MSCI 2020 Environmental, Social and Governance ratings assessment, TT received a rating of “AA”, an upgrade on the “A” received in the previous year. The 2020 rating establishes TT as a leading company in MSCI’s Electronic Equipment, Instruments and Components sector index.
We continue to make good progress with the Group’s extended self-help programme. The project is on schedule to deliver the expected £11-12m of run-rate benefits in 2023.
Operational trials and validation testing are continuing and applications for regulatory approvals of the Virolens® rapid COVID-19 screening device are progressing. There is a wide range of possible outcomes, but commercial interest in the device remains significant.
Torotel integration progressing well
Torotel broadens TT’s power electronics capabilities in the US, adding recurring revenue streams from largely sole source positions on multi-year growth programmes. Since completion of the acquisition on 10 November 2020, activities to integrate the business into TT’s Power and Connectivity division have continued at pace. Site re-branding is complete, finance and IT systems integration is well progressed, workshops have been held to identify business development opportunities, and synergy expectations remain as expected.
Resumption of dividends
As indicated with our interim results in August, our intention is to recommend a dividend at the time of the 2020 year-end results announcement.
Richard Tyson, TT Electronics Chief Executive Officer said:
“TT has proven to be resilient in the face of the Covid pandemic, benefitting from the actions we have taken to improve the quality of the business. Order intake over the last few months is encouraging as we look into 2021, a year in which we expect to see continued revenue recovery and good profit growth.
The structural growth trends in our end markets, and the self-help actions which are well underway give us confidence in our journey to double-digit margins, supported by strong cash generation and improving return on invested capital.”