TT ELECTRONICS PLC

ANNUAL REPORT & ACCOUNTS 2023

WE ARE A GLOBAL PROVIDER

OF DESIGN-LED, ADVANCED

ELECTRONICS TECHNOLOGIES

FOR PERFORMANCE-

CRITICAL APPLICATIONS

IN SPECIALISED MARKETS

We solve 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.

Our positioning and offering to customers in markets that are growing

well, and our differentiated customer service, are driving strong top line

growth for the Group.

Read our report online

www.ttelectronics.com/investors/annual-report/

Read moreon page 68

GOVERNANCE

We have a strong governance platform

thatenables enhanced decision-making.

IN THIS ANNUAL REPORT

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023

CONTENTS

STRATEGIC REPORT

In this Annual Report IFC

2023 performance highlights 1

Who we are 2

Chairman’s statement 4

CEO Q&A 7

Our business model 11

Our markets 12

Our strategy 15

Strategic business wins 16

CFO review 17

Key performance indicators 27

Our people, communities and environment 29

Task Force on Climate-related Financial Disclosures 47

Stakeholder engagement and S172 Statement 57

Risk management 59

Principal risks and uncertainties 62

Viability statement and Going concern 67

GOVERNANCE AND DIRECTORS’ REPORT

Governance at a glance 68

Board of Directors 70

Chairman’s introduction to governance 72

Leadership and Company purpose 75

Nominations Committee report 82

Audit Committee report 88

Remuneration Committee report 94

Executive remuneration at a glance 98

Remuneration Policy overview 100

Annual report on remuneration 102

Other statutory disclosures 112

Statement of Directors’ responsibilities 114

FINANCIAL STATEMENTS

Independent auditor’s report 116

Consolidated income statement 126

Consolidated statement

of comprehensive income 126

Consolidated statement of financial position 127

Consolidated statement of changes in equity 128

Consolidated statement of cash flows 129

Notes to the Consolidated financial statements 130

Company statement of financial position 167

Company statement of changes in equity 167

Notes to the Company financial statements 168

Five-year record 173

Reconciliation of KPIs and non IFRS measures 174

Shareholder information 178

Glossary 181

REVENUE

£613.9m

2022: £617.0m

ORGANIC REVENUE GROWTH

2022: 20%

ADJUSTED OPERATING PROFIT

£52.8m

2022: £47.1m

STATUTORY OPERATING PROFIT

£8.7m

2022: £(3.4)m loss

ADJUSTED OPERATING PROFIT MARGIN

8.6%

2022: 7.6%

STATUTORY OPERATING MARGIN

1.4%

2022: (0.6)%

ADJUSTED EPS

19.2p

2022: 18.2p

STATUTORY EPS

(

3.9

)

2022: (7.5)p

Throughout this Annual Report we refer to 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 174 to 177.

2023 PERFORMANCE HIGHLIGHTS

RETURN ON INVESTED CAPITAL

12.0%

2022: 10.5%

CASH CONVERSION

92%

2022: 33%

LEVERAGE

1.7x

2022: 2.0x

DIVIDEND PER SHARE

6.8p

2022: 6.3p

– Excellent business development

success, with 37 significant contract

awards delivering c. £250 million of

potential lifetime revenues

– Delivered an 18% reduction in

Scope 1 & 2 emissions

– Broadened our customer offering by

extending our capabilities in Mexico

– Successful transfer of Ferranti

business to a modern facility in

Greater Manchester

– Achieved employee engagement score

in line with 3*** ‘world class companies

to work for’

– Agreement for sale of Cardiff,

Hartlepool and Dongguan business

units for £20.8 million on cash and

debt free basis signed – expected to

enhance margins and reduce leverage

– Environmental ratings of B- from CDP

and AA from MSCI

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 1

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

We solve technological challenges for

a sustainable world.

We service our global

markets from 21 design

and manufacturing

facilities in Europe,

NorthAmerica and Asia.

Global breakdown

Europe: 9 primary locations

39% of Group revenue

North America: 9 primary locations

37% of Group revenue

Asia: 3 primary locations

24% of Group revenue

Read more

on page 29

INSIDE TT ELECTRONICS

WHO

WE ARE

OUR KEY CAPABILITIES

Power

We design and manufacture customised, highly

efficient power management devices.

Connectivity

Our products support the digitisation of industrial

processes, smart infrastructure andautomation.

Sensing

Our solutions improve the precision, speed and

reliability of critical aspects of customer

applications.

OUR CUSTOMERS

Our customers range from start-up businesses to

global multi-nationals 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.

PEOPLE AND CULTURE

Our talented team of design, engineering and

manufacturing experts operate in a supportive

culture that champions expertise, innovation,

problem-solving and doing the right thing.

RESPONSIBLE BUSINESS

We are committed to having a positive impact on

the world around us: creating value and enhancing

sustainability through our products; the way we

dobusiness, including how we look after our

employees; and by reducing our environmental

footprint. This commitment is described in our

purpose and embedded in our strategy as one

ofour four strategicpriorities.

OUR GLOBAL REACH

% GROUP REVENUE

Healthcare

24%

Aerospace &

Defence

20%

Automation &

Electrification

36%

Distribution

sales channel

20%

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 20232

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATIONSTRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OUR DIVISIONS

OUR MARKETS

Power and Connectivity

P&C designs and manufactures custom

powerand control systems, electromagnetics

and connected devices that deliver size,

weightand efficiency benefits for high-

performance applications.

28% of Group revenue

Sensors and Specialist Components

S&SC works with customers to develop

high-specification, standard and customised

solutions including sensors and power

management devices that improve the

precision, speed andreliability of applications.

23% of Group revenue

Global Manufacturing Solutions

GMS provides manufacturing services and

engineering solutions for our product divisions

and to customers that often require a lower

volume and higher mix of products, including

complex integrated product assemblies

andengineering services such as value-

engineering and designing testing solutions.

49% of Group revenue

Read moreon page 24 Read moreon page 22

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

– Pill counting and dispensing

– Portable haemodialysis systems

– Scientific instrumentation

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

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

Read moreon page 12 Read moreon page 13 Read moreon page 14

Read moreon page 23

3TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATIONSTRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

BUSINESS PERFORMANCE

In 2023 TT delivered on all priorities set at the

beginning of the year. A strong order book was

converted into revenue and double-digit operating

profit growth; our margin increased by 110 bps at

constant currency; and we saw an improved

performance in the P&C business. From a balance

sheet perspective, strong free cash flow generation

resulted in reduced debt and a further reduction in

leverage to 1.7x.

We also invested substantially in the business to

enhance our pipeline of new products and build

capacity to meet existing and future demand from

customers. Organic investment in the business

totalled £33.2 million, with £10.8 million spent on R&D

and £22.4 million on capex, in particular to support

themove to our new flagship P&C facility in Greater

Manchester, UK and the expansion of manufacturing

capacity in Mexicali, Mexico where we are seeing

significant demand from some GMS customers

looking to near-shore.

CONTINUING

PROGRESS

I am very pleased to report a year of strong

and improved operational and financial

progress for TT. We have delivered against

the strategic and operational priorities

set for the year, including achieving a

significant increase in adjusted operating

profit margin to 8.6% and strong free

cash flow. While mindful of the wider

macroeconomic environment, the outlook

for the Group is good, underpinned by the

strength and visibility of our order book,

robust demand and growth in our end

markets, and planned operational and

strategic initiatives under our new CEO,

Peter France.”

Warren Tucker

Chairman

CHAIRMAN’S STATEMENT

WHAT MAKES US

DIFFERENT?

Our target markets

havestrong, long-term

structural growth

potential supported by

the megatrends we are

aligned to.

We have a culture of

expertise and our teams

are passionate about

finding solutions to the

world’s toughest

technology challenges.

We are focused on

design-led technology,

creating bespoke

technology solutions for

customer applications.

Our success has been

built on engaging deeply

with our customers and

becoming real partners.

See Our markets

on page 12 and

Our business model

on page 11

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 20234

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Our success has been built on engaging deeply

withour customers to build long-term relationships

where we collaborate right from the early stages

ofproduct development. This embeds us deeply

intheirvalue chains and creates the opportunity

formulti-yearrevenues.

In 2023 we secured 37 significant contract wins

withthe potential to deliver c. £250 million of lifetime

revenues across our three end markets. These wins

included optical sensors for a new blood gas analysis

device and a power module for a leading aerospace

manufacturer that will advance electric propulsion

inthe sector (see page 6).

We are absolutely focused on continuing to develop

our capabilities and our relationships with customers

so that we are in the best position to take advantage

ofexpected growth from the megatrends driving

ourmarkets.

APPOINTMENT OF NEW CEO

After a thorough and wide-ranging recruitment

exercise, we were delighted that Peter France agreed

to join us as our new CEO in October, with our prior

succession planning being a meaningful accelerator.

Peter was quickly identified as the stand-out candidate

for the role early in the search process with the

undoubted calibre and experience to progress our

change agenda in the coming years. He brings with him

an unparalleled track record in the industrial engineering

and manufacturing sector having been CEO of ASCO

Group, and with a 28-year career at Rotork plc, including

nine years as CEO. The Board is very much looking

forward to working with Peter to build on our strong

foundations and accelerate the execution of our

strategy for sustainable disciplinedgrowth.

On behalf of the Board, I express sincere thanks for

theenormous contribution made by our outgoing CEO,

Richard Tyson, to the Group. Richard served as CEO

for over nine years and oversaw the transformation of

the business to address higher growth market sectors

and the development of the capabilities and culture

that TT enjoys today. He leaves the Group with our

very best wishes for the future.

PEOPLE AND CULTURE

TT is, at its heart, a people business. In a competitive

marketplace we aim to make TT stand out as an

employer where people are happy and proud to work

because their needs are being met, whether that is the

opportunity to work flexibly, feeling included at work,

orcareer progression. I am proud of the incredible

progress we are making in this area which is obvious

at the sites visited by members of the Board in 2023.

The 3*** score achieved in our latest employee

engagement survey (the highest rating possible) is

testament to the efforts of everyone at TT to keep

building our culture and make us a great place to work.

We really focused on encouraging our employees to

make their voice heard in the survey this year,

concluding with a record 91% globally completing

thesurvey, up from 86% in previous years.

NET ZERO

Thanks to our highly motivated teams we continue to

advance our transition to Net Zero. We have developed

a road map to Net Zero Scope 1 & 2 emissions in

2035(page 45) and are on track with our operational

emissions now down 62% from our 2019 baseline and

renewable electricity at 53% of total electricity use.

Wehave also completed assessment and measurement

of our Scope 3 emissions with the intention of

improving collection methods and validation in 2024.

The Board was pleased that our first solar project in

Kuantan, Malaysia came on stream during the year

and to see the start of our next solar project in

Mexicali, Mexico. Peter has visited both facilities,

alongwith the vast majority of the sites in the Group.

We are pleased that our focus on ESG matters is

recognised externally, with a rating of “AA” in the latest

MSCI ESG Ratings assessment and a “B-” rating

fromCDP.

GOVERNANCE AND BOARD ACTIVITY

In addition to the appointment of Peter France, there

were two changes to the Board in 2023 when we

welcomed Michael Ord and Wendy McMillan as

Non-executive Directors in January. We benefited

during the year from their wealth of experience,

particularly the valuable insight provided by Michael

asa serving CEO of a UK listed company. We were

saddened that, having accepted a new executive

position with a third-party organisation, Wendy had to

step down from the Board in November. TT has since

engaged an external recruitment firm to start the

process of identifying suitable candidates for the next

phase of NED succession planning and we are hopeful

that this will contribute further to our gender, ethnic

and overall diversity on our Board in the future.

While a significant portion of Board time was spent

onsuccession planning and appointments, the Board

was able to spend a large amount of time on strategic

initiatives which, in 2023, have included the continued

strengthening of TT’s capital structure; our deleveraging

imperative; strengthening internal controls; investment

in the business for future growth; delivery of organic

growth; equality, diversity & inclusion (“ED&I”); and

Health & Safety. We also continued to pay close

attention to TT’s sustainability agenda and our people

and culture objectives, both of which are considered

critical to future success.

Our 2023 Board evaluation exercise once again

reinforced the positive working dynamics of the Board

and its Committees, and I thank my colleagues for

thisand for all their support during the year.

CHAIRMAN’S STATEMENT CONTINUED

Our 2023 Board

evaluation exercise once

again reinforced the

positive working

dynamics of the Board

and its Committees, and

I thank my colleagues

forthis and for all their

support during the year.”

Read moreabout

governance and board

activity on page 72

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 5

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A new long-term partnership with the manufacturer

has the potential to deliver revenue for TT in excess

of £30 million over the course of the contract once

fully in production and incorporated into a range of

applications supporting electric flight and other

low-carbon projects.

The cornerstone of the partnership is TT’s

development of a new power module to advance

propulsion systems for electric aircraft applications.

State-of-the-art technology in the E Drive 150 Power

Module will enhance electrical switching

functionalities in key on board systems such as

electric starter generators, cabin air systems,

electric pumps, and electric actuation for test, and

later, production models. The E Drive 150 also has

the potential for use in other sectors served by the

company including urban air mobility and small

modular nuclear reactors.

The agreement, furthermore, presents an opportunity

for TT to expand its capabilities in silicon carbide

power modules, a rapidly growing market segment

becoming crucial in the drive to electrify aerospace

and sectors such as energy storage.

TT was chosen as partner based on the collaborative

approach demonstrated in our existing relationship,

our power module expertise, and the team’s

determination to develop a solution to this complex

challenge. The first order for work under the

agreement was secured in November 2023 and we

look forward to working on this new programme over

many years.

The landmark agreement had the additional benefit

ofkickstarting an exciting opportunity for TT to

participate in an ambitious collaboration with the

product development facilities of the UK Driving the

Electric Revolution (“DER”) initiative. The DER is a

UKgovernment-funded programme supporting the

acceleration of electrical power technology

development and the creation of a resilient cross-

sectoral UK manufacturing supply chain to underpin

automotive electrification and the transition to a

low-carbon economy.

CASE STUDY

INSIDE TT ELECTRONICS

TT SOLUTIONS DRIVING THE

ELECTRIC FLIGHT REVOLUTION

The E Drive 150

also has the

potential for use

in other sectors

served by the

manufacturer

including urban

air mobility and

small modular

nuclear reactors.

LIFETIME REVENUE

POTENTIAL

£30m+

Electric propulsion is rapidly

revolutionising mobility technologies

across industries, including flight, where

a key UK aerospace OEM is a leader in

the journey to “jet zero”.

DIVIDEND

Given our strong trading performance in 2023 and

thepositive outlook for 2024 and beyond, the Board

isproposing a final dividend of 4.65 pence per share.

When combined with our interim dividend of 2.15pence

pershare this represents a dividend increase of 8%

vs2022.

Warren Tucker

Chairman

6 March 2024

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 20236

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ADJUSTED OPERATING

PROFIT MARGIN

8.6%

What are your initial thoughts as you approach the

end of your first 100 days?

Firstly on the business?

It is a great honour to have been appointed CEO of

TT Electronics in early October. The role was attractive

as I could see a company with a strong culture and

highly technical products focused on attractive

endmarkets.

As I have visited our various locations, it is clear that

myinitial thoughts were well founded. TT has strong

fundamentals: a solid business with leading

technologies and great people. It has been a real

pleasure meeting my colleagues at our various sites

and discussing with them the opportunities we have for

further growth and performance enhancements. It has

also been good to meet a number of other stakeholders

including customers and shareholders and hear from

them on how TT can support their objectives.

The partnership with our customers is something that

has been evident during my first few months and our

engineering expertise, along with our manufacturing

capability, provides a solid platform to accelerate

growth and improve execution.

On the people and culture?

The strength of the TT culture and the great people

weemploy has been evident as I visited our sites

during my induction process. The depth of our domain

knowledge and appreciation of this by key customers

isalso clear in my early conversations with

somecustomers.

The TT Way ensures we take care of our teams around

the world; I have been pleased to hear about a recent

focus on employee welfare support, not just physical

but also financial, through a range of schemes.

I will continue the focus on attracting and retaining

diverse talent who can contribute to our success and

CHIEF EXECUTIVE OFFICER

Q&A

The positive feeling from my initial review

is that the business is in a good place with

several structural improvements already

made by the team. We have a strong

foundation to launch our accelerated

performance strategy that will deliver a

stronger balance sheet, improved margins

and disciplined growth.”

Peter France

CEO

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 7

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CHIEF EXECUTIVE OFFICER Q&A CONTINUED

who share our values. Looking after our people is

critical and the focus on safety, talent and development

providing interesting work and strong career paths is

something that I am passionate about but is an area

where we can still do more.

I was pleased to see the results of the recent Group-

wide engagement survey indicating that we have a

highly engaged workforce and I have seen that for

myself during my site visits.

What does sustainability mean to you?

Sustainability is an important topic personally and as a

good corporate citizen it is important that we do all we

can to protect the planet. For me, part of the attraction

of joining TT was its ability to be part of the solution,

be front and centre with the components and products

we provide to our customers that enable them to meet

their own sustainability objectives. We, as TT, need to

ensure the opportunities presented to us by the move

to a lower-carbon world are clearly understood

whether it be by our customers, our investors or

employees, and that it is an integral part of our

purpose. On my visits I was able to hear about TT’s

work across a number of our sites with one of the

world’s leading engine manufacturers to spearhead

the development of electronic power modules and

electromagnetics to power a wide range of

aircraftsystems.

I have been impressed by the progress already made

in reducing our own emissions and confirm that we

will continue to prioritise our journey to Net Zero.

Do you think that TT is exposed to the right end

markets given your margin ambitions and need

to deliver through cycle growth?

TT’s end market exposure has been deliberately

targeted towards those areas exposed to megatrends

exhibiting structural growth: healthcare including

lifesciences, aerospace & defence, and automation

&electrification.

I believe these markets are the right focus areas for

growth and investment. We will continue to develop

products and sales channels to maximise our position

in these attractive end markets.

What are the results of your business review?

We will explore the results of my in-depth business and

strategy review at a Capital Markets Seminar in April.

The positive feeling from my initial review is that

thebusiness is in a good place, with several

structuralimprovements already made by the team.

The divestment of the business units in Hartlepool

andCardiff, UK and Dongguan, China is a great

example of the simplification and value creation we

can achieve. We have a strong platform from which

toaccelerate growth. Alongside this, I see a number

ofopportunities across the Group to create additional

value, namely additional focus on operational

excellence, commercial discipline and innovation.

What are your thoughts on the strategy for

the Company?

I think we are going in the right direction but we now

need to focus on execution and speed of delivery.

Mythoughts and approach will be shared as part

ofour business review update.

2023 CONTRACT AWARDS

SIGNIFICANT AWARDS

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 20238

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CHIEF EXECUTIVE OFFICER Q&A CONTINUED

What do you believe is the margin potential of

the Group?

There are many Group initiatives already set in train

throughout the business to create additional value and

I will accelerate the delivery of these projects. A first

step in driving improved margins is the recently

announced divestment of business units in Hartlepool

and Cardiff, UK and Dongguan, China. This together

with our focus on costs and pricing discipline and the

conclusion of pass-through margin impact, alongside

operational leverage from growth, underpins our

confidence in achieving 10% operating margin in 2024.

Thoughts on the balance sheet?

Our attention in the short term is to strengthen the

balance sheet and generate strong cash flow. In 2024

we will focus on maintaining capital discipline and

careful use of the balance sheet to facilitate continued

investment; M&A will be focused on in future years.

What are you excited about as you look into 2024?

Given the strength and visibility of the order book,

current end market activity and operational

improvement initiatives that are underway, while

mindful of the wider macro environment, we are

ontrack to deliver a 10% operating margin in 2024.

Thereis a lot to do but it will be an exciting journey.

Peter France

Chief Executive Officer

Mike Leahan

EVP Commercial

Ian Buckley

Group General Counsel

and Company Secretary

(designate)

Mark Hoad

Chief Financial Officer

Stewart Partridge

EVP Operations

Clare Nicholls

EVP Human Resources

THE TT MANAGEMENT BOARD

Our new Management Board (“TMB”) replaced the previous Executive Leadership Team structure on

1March2024.

An EVP Engineering will be appointed to the TMB in the near future

EXTERNAL RECOGNITION

We are pleased to

continue to receive

external recognition

forESG matters

We received a rating

of “AA” in the 2023

MSCI ESG Ratings

assessment, placing

TTin the leading

companies inits

sectorgroup

B-

We also participate in

CDP’s annual climate

change survey.

Wereceived a “B-”

(management level)

rating in 2023for our

2022 data submission

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 9

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TT’s US team is continuing to work in partnership

with a medical device company on complex optical

sensors for use in blood analyser technology.

The two sensors will be used in the disposable test

vessel cartridges designed for our partner’s blood

gas analyser. The sensors detect the proper loading

of the cartridge to ensure alignment with the

analyser optics and correct spectral measurements,

making them essential for proper execution of the

test. The test can be used to measure, for example,

blood gases, pH, electrolytes or metabolites.

TT designed a custom assembly for the applications

and will be the sole source supplier for an estimated

15-year product life. As the vendor of choice, we are

now moving forward with the design of new

assemblies for the next generation of machines.

INSIDE TT ELECTRONICS

TECHNOLOGY IMPROVING

PATIENT OUTCOMES

CASE STUDYCASE STUDY

INSIDE TT ELECTRONICS

SUPPORTING THE UK’S

FUTURE AS A GLOBAL LEADER

IN INTEGRATED AIR COMBAT

The Team Tempest consortium is composed of the

UK Ministry of Defence and industry partners BAE

Systems, Rolls-Royce, Leonardo UK and MBDA,

working together to deliver an FCAS that pioneers

advanced technology including deep learning AI, the

ability to fly unmanned, and a virtual helmet cockpit

to stay ahead of evolving threats.

This award expands the longstanding business

relationship and multiple development and

manufacturing touchpoints between TT and BAE

Systems on the Tempest and other new military

aircraft as well as a range of other high-profile

military platforms in the UK and Europe. These

include the Boxer mechanised infantry vehicle

programme for which we provide primary power

assemblies including battery control units and

command display units for signalling and

communication, and electrical cable harnesses;

CV-90 armoured combat vehicles for which we

provide control panels; the prototype Challenger 3

main battle tank for the British Army; and next-

generation naval radar systems.

Building on existing work on the UK

Tempest programme, TT was awarded a

further contract during 2023 to support

feasibility studies for advanced electrical

power solutions on the sixth-generation

Tempest fighter aircraft entering service

from 2035 in the UK’s future combat air

system (“FCAS”).

We are exceptionally proud to support

Team Tempest. Our working relationship

with BAE Systems is truly collaborative

and this win provides an excellent

opportunity to strengthen our ties and

become more deeply embedded in the

value chain of this incredible next-

generation platform.”

Matt Yeates

SVP Strategy & Programmes

CHIEF EXECUTIVE OFFICER Q&A CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202310

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OUR BUSINESS MODEL

STRONG

PLATFORM

OUR ASSETS

Engineering and manufacturing capability

– Deep domain knowledge, years of

experience across our global footprint.

– Design and manufacturing skills that

make end products smaller, lighter and

more energy-efficient.

– Specialists in low-volume, high-mix

products, offering customisation and

flexibility to customers.

Research and development

– R&D capability with IP and specialist

product development skills.

– Agile development model brings

productsquickly to market.

– Know-how and experience in complex

regulatory approvals.

Access to our customers

– Customer credibility and long-term,

value-creating partnerships.

– Business development organisation

thatfosters inter-Group collaboration

andcross-selling.

People and culture

– Talented designers, engineers and

manufacturing experts passionate

aboutwhat they do.

– Caring, supportive and

service-driventeams.

– Always guided by our TT Way values.

WHAT MAKES US DIFFERENT

Cleaner, smarter, healthier

Our target markets offer strong long-term

structural growth supported by global

megatrends pushing for the development

of cleaner, smarter and healthier products

and applications as we move towards a

more sustainable world.

Culture of expertise

Passionate teams finding solutions to the

world’s toughest technology challenges.

We champion knowledge, skills, innovation,

problem-solving and service, and attract

and promote talented people and develop

expertise at all levels.

Design-led technology

We design and manufacture bespoke

technology solutions for specific

applications. We work from initial concept

to production at scale, and from single

component to complete device

manufacture. We seek single source and

designed-in development opportunities

that enable us to move up the value chain

and create long-term revenue streams.

True partners

We engage deeply with our customers to

become true partners. Customer intimacy

enables us to leverage our capabilities to

respond to their unique requirements and

become a critical contributor to their teams

and products.

TARGETED AND

COMPLEMENTARY M&A

to expand technology capabilities

and customer and market reach

ESG

to drive sustainability into decision-

making andbusiness practices, from

product development torecruitment

MARGIN ENHANCEMENT

through portfolio change, operational

leverage and self-help actions

TECHNOLOGY AND CAPITAL

INVESTMENT SUPPORTING R&D

and new programmes to drive growth

and consolidate customer positions

OUR STRATEGY

Our strategy leverages our assets and

differentiators to generate optimum returns

for all our stakeholders while maintaining

strong capital discipline, a focus on cash

generation, and careful use of the balance

sheet to facilitate investment.

THE VALUE WE CREATE

Customers and suppliers

– Critical products and services;

solvingtough technology challenges.

– £33.2 million R&D and capex

investment in 2023.

– Fair treatment of suppliers.

Our people

– Employee safety and wellbeing a

priority.

– Investment to build skills, experience

and create development opportunities.

– Equality, diversity and inclusion

considered a positive business driver.

Environment and our communities

– Cleaner, smarter and healthier

products.

– 62% reduction in Scope 1 & 2

emissions in four years.

– Committed to social responsibility,

ethical business practices and

community support.

Shareholders

– 19.2p adjusted earnings per share.

– Increased ROIC by 150 bps to 12.0%

– 6.8p dividend per share.

Read more about our strategy

on page 15

OUR STRATEGIC PRIORITIES

We are a business with high-quality assets and a differentiated offer aligned

with global megatrends. We create value by helping our customers to succeed

in growing markets by solving their technology challenges and contributing

to their sustainability goals; investing in and creating opportunities for our

people; and doing business responsibly and with integrity.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 11

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

We provide design and manufacturing

solutions for a range of diagnostic, surgical

and direct patient care devices critical to

the identification, treatment and prevention

of disease.

The ageing of populations in most developed countries

with continued increases in life expectancy (the world’s

population of over 60s is expected to double by 2050)

has major implications on healthcare costs. The ability

to deliver healthcare to these populations is a structural

driver of growth forcing the acceleration of the pace of

innovation in healthcare. Furthermore, the pandemic

significantly increased demand for remote healthcare

solutions, including home-based care and telemedicine.

The growing need to expand healthcare access and

reduce the burden on medical resources through the

use of technology in medical devices is driving an

expected CAGR of 7% through to 2027. Beyond this,

itis likely that growth will continue as medtech offers

cost-efficiency and convenience for both patients

andproviders.

McKinsey recently reported that technological change

is one of the biggest developments forcing structural

change in healthcare, particularly the incorporation of

AI into medtech and healthcare and the use of data

and analytics to improve care and productivity. There

has been a rapid increase in healthcare innovations

which are benefiting society by enhancing quality of

life, fighting disease and promoting wellbeing.

Our power, connectivity and sensor technologies span

the modern surgical suite, from patient monitoring and

therapeutic devices to surgical navigation, diagnostic

equipment and life sciences. According to New

Venture Research, monitoring and surgical equipment

are set to experience the strongest growth in the

sector, followed by medical diagnostics technologies.

TT is focused on growing in three areas where

wearewell placed to capitalise on this increasing

demand for high-complexity products driven by

technologicaladvancement.

Robotic surgery

Minimally invasive surgical procedures are good for

both patient and doctor given the reduced risk and

faster recoveries. It is estimated that fewer than 10%

ofprocedures today are carried out using the aid of

arobot, despite resulting in greater precision and

improved overall patient outcomes. These are markets

measured in the billions of dollars and increased

penetration equates to huge growth potential over the

next few decades. We are pushing boundaries in this

area by enabling sensor miniaturisation, increased

sensor precision and highly effective integration of

sensor and device.

TT sensors attached to surgical instruments provide

real-time positioning and orientation information

andwe are a market leader in the smallest electro-

magnetic micro-coil sensors for these applications.

Implantable devices

There is increasing use of wearable devices to track

health, as well as remote patient monitoring, including

devices that can conduct ECGs, detect high blood

pressure and monitor mental health indicators.

TTproducts also help deliver therapy directly to

patients through implantable devices such as

pacemakers and defibrillators. Implantables are

nowalso competing with pharmaceutical solutions

forissues like hypertension and sleep apnoea and

areableto support other external applications

requiring high-reliability power and sensor-

enabledcommunication.

Life sciences and laboratory equipment

We are continuing to expand our involvement in

lifesciences and laboratory equipment, supporting

new ultra-low temperature freezers and gaining

momentum in automated sample storage systems.

Bysupporting our partners in this area, we are

collectively improving laboratory automation systems

and enabling samples to be collected and analysed

with minimal human intervention, the benefits of which

are improved data reliability and accuracy, less waste,

and time-efficient results.

We are pushing boundaries in robotic

surgery by enabling sensor miniaturisation,

increased sensor precision and highly

effective integration of sensor and device.”

HEALTHCARE

OUR MARKETS

TELEHEALTH AND

REMOTE PATIENT

MONITORING EXPECTED

SECTOR CAGR TO 2027

+7%

REVENUE BY DIVISION

Power and

Connectivity

17%

Global

Manufacturing

Solutions

82%

Sensors and

Specialist

Components

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202312

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OUR MARKETS CONTINUED

We provide solutions for high-reliability

applications across a broad range of

platforms operating on land, air and sea.

Growth for TT is driven by increasing

electrification of these platforms, which

supports fuel efficiency and safety.

Megatrends impacting this market are the climate

crisis, global power shift, rapid urbanisation,

demographic changes, innovative technological

change and global connectedness. All these factors

are driving a multi-year up cycle in the aerospace

anddefence sectors.

Being challenging industries to decarbonise,

aerospace and defence players have been at the

forefront of adopting new and advanced manufacturing

technologies, which can help address the sustainability

challenge. The industry is likely to move towards using

sustainable aviation fuels (“SAF”) at scale and new

propulsion technologies such as electric, hydrogen

and hybrid. In its efforts to advance decarbonisation,

the sector will likely establish multiple partnerships

comprising technology investors, energy companies,

airlines and government agencies.

Via our innovative solutions and systems with proven

mission-critical, high-reliability characteristics aimed

at commercial and military aircraft, defence products

and space programmes, we expect to grow in

thesemarkets.

Aerospace

Air travel is rebounding strongly to pre-COVID levels

with continuing tailwinds given a growing, global

middle-class population which exhibits a greater

propensity to travel. Robust activity levels span

bothaftermarket and, increasingly, original

equipment(narrow body predominantly) as supply

chains continue to show signs, albeit slowly, of

steadyimprovement.

Fundamentally, the need for safer, more efficient

andmore environmentally friendly aircraft remains.

Moves to “conscious” or digital aircraft will require a

large increase in interconnected control systems with

an increased focus on cyber security. Growth in new

technologies such as advanced air mobility (“AAM”)

and evolving business models in the space sector

arealso at the forefront of industry development.

Thisdrives demand for increasingly advanced

electronic systems and applications, all of which

aresupported by TT technologies. We are growing

capabilities in electrical power conversion and related

sub-systems and collaborating with aerospace

companies in the development of high efficiency,

highpower density converters as well as technologies

for the next generation of higher voltage platforms.

The pace of growth continues in the space sector too,

both non-commercial, which is driving developments

in technology and capabilities, and commercial space

with NASA, SpaceX, Blue Origin and Virgin Galactic all

targeting lunar orbits. TT provides components for

satellites, space vehicles, and for power management.

Defence

With the focus of global growth shifting, creating

morepowerful national economies in different regions,

there will be greater resources to protect, and greater

resources available to invest in security and defence.

This rising tide looks set to support strong, sustainable

compound growth over the next decade, with priorities

shifting to intelligence and multi-domain integration.

Active conflict and geopolitical tensions have

increased weapons demand and replenishment of

stores. This is compounded by elevated security

concerns in several regions.

Aerospace guidance production, particularly in the

imaging, signal processing and smart weapons

categories, will continue to expand as military budgets

increase, with a large percentage of funding being

directed to modern electronics technology. Hypersonic

missile developments are gaining pace with significant

investment expected.

In 2023 the global defence electronics manufacturing

market is expected to have expanded by around 2.5%.

This is a pace reflective of the past seven years, all of

which have seen consistent, moderate expansion, as

governments invest to maintain state-of-the-art

capabilities, with a high level of upgrades on existing

platforms to meet the pace of demand. It is likely that

there will be a pickup in growth from here, with

estimates suggesting an additional $1 trillion in global

defence spending over the next decade, and further

investment in R&D, mostly in the US and Europe.

In defence, we are focused on next-generation

requirements for high-density power electronics

andelectrical machines through the development

oftechnologies that reduce size, weight, power and

cost (“SWaP-C”), while simultaneously enhancing

command, control, communications, computing,

intelligence, surveillance and reconnaissance

(“C4ISR”)capabilities. Integrated sensing is a key

growth area in global defence spending with combat

vehicle platforms representing the highest upside.

Fundamentally, the need for safer, more

efficient and more environmentally friendly

aircraft remains.”

AEROSPACE &

DEFENCE

REVENUE BY DIVISION

Power and

Connectivity

60%

Global

Manufacturing

Solutions

36%

Sensors and

Specialist

Components

ESTIMATED ADDITIONAL

GLOBAL DEFENCE

SPENDING OVER NEXT

5YEARS

$1.5TN

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 13

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OUR MARKETS CONTINUED

Customers rely on us to help solve their

toughest automation and electrification

challenges; streamlining their supply

chains; increasing their efficiency; and

helping them bring smart, new products

to market.

Digitalisation is a megatrend in its own right as it

permeates every industry and offers solutions for

many of the challenges faced. Industrial automation

isthe backbone of manufacturing and production

processes that support economies and, with

increased focus on climate change and natural

resources, there is continuing pressure to facilitate

higher efficiency and productivity.

We support increased demand for digitalisation

through the design and manufacture of connectivity

solutions. Given the wide scope of these markets,

performance correlates strongly with global economic

growth, with key indicators being GDP growth and the

Purchasing Managers’ Index (“PMI”), but the

digitisation and proliferation of electronics and

electrification means markets will grow faster than

these indicators. The electronics manufacturing

market is estimated to have grown by over 5% globally

in 2023.

The pandemic significantly disrupted global supply

chains, highlighting the importance of digital

technologies, for example the Internet of Things (“IoT”),

to ensure operational continuity. While a globally

connected industry stimulates competition and

innovation, locating production close to markets –

known as nearshoring or local-for-local business –

makes local economies more resilient and sustainable.

This megatrend is described as glocalisation, the

success of which is dependent on access to digital

technology and its prerequisites of economic freedom,

standardisation, a reduction of technical barriers to

trade, and government policies that support the

digitaleconomy.

Furthermore, the increasing trend of re-shoring

manufacturing capability, or moves to regions with

less expensive labour, will increase the demand for

AI,augmented reality, IoT and other aspects of

digitalisation. The enactment of the CHIPS Act in

theUS has triggered investments in semiconductor

manufacturing in the country, with the first plant

expected to begin production in 2024.

Our positioning in sub-segments such as

electrification and industrial automation are good

contributors to growth.

Urbanisation is another megatrend that drives these

sectors. Megacities are on the rise. Today, the world

has 33 cities with more than 10 million inhabitants

andsome of those – including Tokyo, Shanghai and

NewDelhi – are home to more than 20 million people.

Forecasts suggest that, by 2030, there will be a total of

43 megacities, with most of the expansion occurring

indeveloping countries.

Growing cities will require smart buildings, hospitals,

schools, and communication networks that provide

connectivity and edge computing. Software-based

optimisation and intelligent hardware technologies

willhelp reduce energy consumption and boost the

efficiency of buildings and factories.

For TT, the opportunity in electrification is our ability

toprotect and ensure the efficiency of electronic

systems. The broad trend of electrification is in turn

driving more power and data usage. As electrification

prevails, the increasing installed base of electrical

equipment will require protection and connection and

electrified, digitalised industries and applications will

need an increasing number of data centres and

connected products. This megatrend has popularly

been referred to as the “electrification of everything’”

spanning the modernisation and decarbonisation of

the grid, the expansion of broadband with 5G, and the

shift to electric vehicles, among ongoing transitions.

Our positioning in sub-segments such as

electrification and industrial automation

are good contributors to growth.”

AUTOMATION &

ELECTRIFICATION

REVENUE BY DIVISION

Power and

Connectivity

25%

Global

Manufacturing

Solutions

61%

Sensors and

Specialist

Components

14%

ESTIMATED GROWTH

INELECTRONICS

MANUFACTURING

MARKET IN 2024

+10%

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202314

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OUR STRATEGY

DRIVING

VALUE

STRATEGIC PRIORITY 2023 ACHIEVEMENTS

TECHNOLOGY AND

CAPITAL INVESTMENT

SUPPORTING R&D

and new programmes

todrive growth

andconsolidate

customerpositions

– £33.2 million investment in technology and capital to support higher growth, innovative and sustainable products. R&D investment at 3.4% of the aggregate

revenue of our product businesses.

– 37 significant contract awards delivering circa £250 million of potential lifetime revenues.

– Collaboration with a prime defence contractor on power supplies for TEMPEST.

– Opened new Ferranti facility in Greater Manchester for the design and manufacture of advanced electronic and electromechanical power units.

– Enabled the expansion of the use of electromagnetic tracking for new medical procedures through TT sensor technology.

– As one of two strategic manufacturing partners supporting the Honeywell Anthem avionics suite, advanced the development of prototypes.

– Mexicali footprint expansion for our customer needs, replicating previous successful expansion into Kuantan.

– Investment in Kuantan solar (commissioned in 2023); commenced solar at Mexicali for commissioning in 2024.

MARGIN

ENHANCEMENT

through portfolio change,

operational leverage and

self-help actions