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 16

Read more

on page 29

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

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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

– Increased programme volume throughput (resumption of growth in civil aero and defence markets) improving operational leverage and hence margin in P&C.

– Delivered final cost savings from self-help programme.

– Ramped up production in new clean rooms at Minneapolis and Bedlington.

– Operational improvements to achieve process efficiencies, including further easing of supply chains and automation improvements.

– Offset cost headwinds with efficiency and focus on appropriate pricing.

– Continued development of high-value New Product Initiatives (“NPI”).

TARGETED AND

COMPLEMENTARY M&A

to expand technology

capabilities and customer

and market reach

– Completed integration and relocation of Ferranti business to flagship Power Solutions facility in Greater Manchester.

– Leverage reduced to 1.7x. Focus on reduction to lower end of 1–2x target range before recommencing M&A.

ESG

driving sustainability into

decision-making and

business practices, from

product development

torecruitment

– Continued focus on building out technology and product opportunities that support energy transition and zero-carbon global goals.

– Completed climate risk and opportunities scenario analysis.

– Scope 1 & 2 emissions reduced by 62% (against revised 2019 baseline), with 53% of electricity now from renewable sources.

– Solar initiated at Kuantan and Mexicali and continued to assess further on-site solar projects.

– Engagement survey results in line with the 3*** “world class companies to work for” Best Companies Ltd benchmark.

– Maintained a strong governance framework and processes across the organisation.

Our strategy is designed to leverage 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 continued

investment in the quality of our assets and growing our exposure

to long-term growth markets.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 15

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OUR STRATEGY C ONTINUED

STRATEGIC BUSINESS WINS

HEALTHCARE

New healthcare customer in Cleveland

In our Cleveland facility we have won a new healthcare customer which

reflects our credentials in partnering with OEMs in highly regulated

markets, such as healthcare. We will work on a new, innovative, infant

feeding device for premature babies and will support the project to

meet the stringent regulatory requirements of ISO 13485 and FDA

(Food & Drug Administration) registration. This novel neonatal medical

device will improve neurological development with the aim of reducing

the length of stay in neonatal intensive care units and hence costs.

Life sciences contract in Malaysia

The next stage of our GMS expansion into our Kuantan site in Malaysia

is evidenced by a life sciences contract win to provide printed circuit

board assemblies (PCBAs) and systems integration for a mass

spectrometer. Such machines are used in spectrometry elemental

isotope analysis to understand the chemistry and composition of

materials used in healthcare and life sciences. We are currently

undertaking sample builds (first articles) with volume production

expected to commence in H2 2024. This work was secured given

ourproven, 10+ year customer partnership and demonstrates the

success of our global manufacturing footprint expansion strategy.

Optical sensor opportunities in US

The US team secured two different optical sensor opportunities with

amedical device company, for use in a blood gas analyser. These

sensors are used in the disposable test vessel cartridges designed for

the device which is used for rapid blood analysis in laboratories and

atpoint of care to measure, for example, blood gases, pH, electrolytes,

metabolites and CO-Oximetry. The sensors are critical to detect the

proper loading of the cartridge as its alignment with the analyser optics,

for spectral measurements, is essential for proper execution of the test.

AEROSPACE AND DEFENCE

Development of new power module

We secured the first order for the development of a new power

moduleas part of a long term collaborative agreement with a leading

commercial aircraft engine manufacturer, aimed at advancing electric

propulsion systems for electric aircraft applications. The cornerstone

ofthis partnership revolves around the E Drive 150 Power Module

which enhances various electrical switching functionalities, critical for

vital aircraft systems. These include electric starter generators, cabin

air systems, electric pumps, and electric actuation with future potential

for use in Urban Air Mobility and Small Modular (Nuclear) Reactors.

Webelieve our power module expertise, along with our persistence in

finding a solution, were key factors in securing this win.

Design and manufacture of custom AC/DC devices

An example of TT moving up the value chain and engineering power

solutions being used in highly efficient, cutting-edge platforms is a

newwin with a global aerospace and defence innovator. TT will design

and manufacture two novel custom AC/DC converters that will meet

SWaP-C and electrical requirements for airborne applications.

Thismulti-million dollar win showcases our ability to align our tech

roadmap with our customers and provide an airborne solution that

hasnever been seen in the market before. This technology is being

designed and built in Kansas City.

Tempest Fighter contract in UK

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”). 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 a

FCAS that pioneers advanced technology including deep learning AI,

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 touch

pointsbetween TT and BAE Systems on the Tempest military aircraft.

Complex PCBAs for military air

We have secured a multi-million, five year contract with defence

innovator, Marotta Controls, to provide complex printed circuit board

assemblies for production of high-reliability electronics on a next

generation military air platform. Our ability to scale to meet the

customer and market demand was a key factor in this award.

DISTRIBUTION SALES CHANNEL

We grew our revenues through distributors again in 2023 and this area

now represents 20% of our overall sales. The demand from distributors

comes from a very wide range of customers and end markets but is,

inlarge part, driven by the same megatrends supporting our focus end

markets including rapid technological change and digitaltransformation.

AUTOMATION AND ELECTRIFICATION

Signalling solutions contract in China

In Suzhou we have won a contract with Casco, a TT customer of

over10 years, for signalling solutions across the Urban Rail network

inChina. We will provide complex, high level assembly build cabinets

andelectronics solutions. The majority of Casco projects are focused

on China, where it is the number one player in the domestic rail transit

market. This win is further recognition of the success of our China

forAsia strategy.

Collaboration with Tier-1 customer in India

Our focus on working with our customers to bring smart, sustainable

products to market is illustrated by a collaboration with one of the

largest Tier-1 companies in India which supplies manual and hydraulic

steering systems to all major commercial vehicle manufacturers in the

country. TT is supplying an Electronic Power Steering (“EPS”) sensor

which is used to measure required torque and desired angle of the

steering system by the driver. The steering torque and position sensor

is mounted in line with the steering shaft of a vehicle and is a critical

part of the EPS assembly. We started supporting the customer at

anearly design stage and provided technical assistance to complete

the design and build stage of the EPS system for the company’s

4WElectric Vehicles commercial segment. Our ability to provide

therequired customisation of our sensor established us as the right

partner, leading to a growing business and technology relationship that

has positioned TT as the single source of supply for all this customer’s

EPS projects.

Securing customers in Mexico

Two long-standing customers in the Automation and Electrification

sector are secured for our new Mexicali facility as they leverage the

best-cost geography while retaining manufacturing footprint in the

Americas to serve local markets.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202316

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Revenue for the year was £613.9 million, 1 per cent

higher than the prior year at constant currency and

3per cent higher excluding the impact of the unwind

ofpass-through revenues. Reported revenue included

£19.9 million of zero margin pass-through revenues,

a£10.4 million reduction on 2022 at constant currency.

This relates to materials where we experienced very

significant cost inflation which was being transparently

passed on to customers with no margin mark-up.

Adjusted operating profit was £52.8 million,

16percenthigher than the prior year at constant

currency, reflecting the benefits of volume growth,

improved pricing and the balance of the benefits

ofourself-helpprogramme.

The adjusted operating margin was 8.6 per cent.

Excluding zero margin pass-through revenues,

adjusted operating margin was 8.9 per cent. After

theimpact of adjusting items, including restructuring,

pension, acquisition and disposal costs, and a non-

cash asset write-down, the Group’s full-year statutory

operating profit was £8.7 million. Thenon-cash

write-down of £32.5 million relates to the recently

announced disposal of businesses in the Power and

Connectivity and GMS divisions, referred to internally

as “Project Albert”. Cash flow impacting adjusting

items totalled £4.0 million.

PRIORITIES

DELIVERED

We have delivered against all of our

priorities set for the year with strong free

cash generation, a further reduction in

leverage, good operating margin

progression, and order book execution.”

Mark Hoad

Chief Financial Officer

CFO REVIEW

Read more

on page 19

ADJUSTED OPERATING

PROFIT AT CONSTANT

CURRENCY

+16%

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 17

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

CFO REVIEW CONTINUED

Adjusted earnings per share (EPS) increased to

19.2pence (2022: 18.2 pence), reflecting the improved

adjusted operating profit in the period offset by higher

interest charges. Basic EPS was a loss of 3.9 pence

(2022: 7.5pence loss).

Cash conversion returned to target levels, at 92 per

cent (2022: 33 per cent) and with significantly reduced

cash impacting adjusting items and a pension surplus

refund (see below), cash generation has inflected

resulting in a free cash inflow of £23.9 million (2022:

outflow £13.1 million). Adjusted operating cash inflow

post capital expenditure during the period was

£48.8million (2022: £15.7 million). On a statutory

basis, cash flow from operating activities was

£62.9million (2022: £12.7 million).

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023

£million (unless otherwise stated)

Adjusted results

Statutory results

2023 2022 Change

Change

constant FX 2023 2022

Revenue 613.9 617.0 (1)% 1% 613.9 617.0

Operating profit/(loss) 52.8 47.1 12% 16% 8.7 (3.4)

Operating profit margin 8.6% 7.6% 100bps 110bps 1.4% (0.6)%

Profit/(loss) before taxation 43.0 40.4 6% 11% (1.1) (10.1)

Earnings/(loss) per share 19.2p 18.2p 5% 10% (3.9)p (7.5)p

Return on invested capital 12.0% 10.5%

Cash conversion 92% 33%

Free cash flow

23.9 (13.1)

Net debt

126.2 138.4

Leverage

1.7x 2.0x

Dividend per share 6.8p 6.3p

1 Throughout the Annual Report we refer to a number of alternative performance measures which provide additional useful information. The Directors have

adopted these measures to provide additional information on the underlying trends, performance and position of the Group with further details set out on

pages 27 to 28. The adjusted measures used are set out in the “Reconciliation of KPIs and non IFRS measures” section on pages 174 to 177.

Following the buy-in of our UK defined benefit

pensionscheme (the “Scheme”) in November 2022,

the Scheme is de-risked with scheme liabilities now

matched by the buy-in insurance policy. Given the

higher level of confidence over there ultimately being

asurplus in the Scheme at the point of wind-up, in

December, the Scheme made an initial surplus refund

to the Company of £5.0 million less tax (£3.2millionnet).

We ended the year with net debt of £126.2 million

(2022: £138.4 million), including lease liabilities of

£20.8 million (2022: £23.1 million). Year-end leverage

was 1.7 times (2022: 2.0 times), within the Board’s

target leverage range of 1-2 times. We are confident

this downward trajectory will continue as EBITDA

increases and as we deliver further strong free

cashflow in 2024.

Our return on invested capital was 12.0 per cent in

2023, increasing by 150 basis points due to the growth

in adjusted operating profit, combined with the high

cash conversion which meant there was only a limited

increase in invested capital.

On 4 March 2024 we announced that we had agreed

to divest our business units in Cardiff and Hartlepool,

UK and Dongguan, China for £20.8 million on a cash

and debt free basis. These assets were classified as

held for sale at 31 December 2023 and were written

down by £32.5 million reflecting fair value and costs

tosell. The disposal is expected to complete by the

end of Q1 2024 and is expected to enhance group

margins and improve leverage.

On track to deliver 10% margins in 2024

The pursuit of higher margins remains core to the

Group’s strategy. In 2023 the Group made good

progress delivering a 110 basis point improvement

inadjusted operating margin to 8.6 per cent.

Excludingthe impact of pass-through revenues,

adjusted operating margin was 8.9 per cent.

Weanticipate pass-through revenues becoming

significantly less pronounced in 2024.

The reduction in pass-through revenues, the recently

announced business unit disposal and our focus

onefficiency, costs and pricing discipline alongside

operational leverage on growth, where we have

goodvisibility from our order book, all underpin our

confidence in achieving a 10% operating margin

in2024.

Revenue

Group revenue was £613.9 million (2022: £617.0million).

This included a currency translation headwind of

£11.3million. Group revenue was 1 per cent higher

than the prior year at constant currency. Excluding the

zero margin pass-through revenues, organic growth

was 3 per cent, split approximately 1per cent volume

growth and 2 per cent pricing. Sales volumes across

our key markets have been buoyant and the strength

of our order book, and the pipeline of new business

opportunities, gives us confidence that organic

growthwill continue despite the headwind to headline

organic growth from the further unwind of pass-

throughrevenue.

CASH CONVERSION

92%

RETURN ON INVESTED

CAPITAL

12%

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202318

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

from adjusted profit. The adjusted tax charge was

£9.2million (2022: £8.4 million), resulting in an

effective adjusted tax rate of 21.4 per cent (2022:

20.8per cent).

Earnings per share

Adjusted EPS increased to 19.2 pence (2022:

18.2pence), reflecting the improved adjusted operating

profit in the period. Basic EPS was a loss of 3.9 pence

(2022: 7.5 pence loss). Adjusted operating cash inflow

after capex was £48.8 million (2022: £15.7 million

inflow). The improvement was as a result of increased

profitability and significantly reduced working capital

outflow both of which more than offset increased

investment in capital expenditure.

Cash flow

Capital and development expenditure of £24.0 million

(2022: £14.0 million) reflected investment to support

growth. This resulted in adjusted operating cash

conversion of 92 per cent (2022: 33 per cent). On a

statutory basis, cash flow from operating activities

was £62.9 million (2022: £12.7 million). There was

afree cash inflow of £23.9 million (2022: outflow

£13.1million), net of £4.0 million of restructuring and

acquisition related costs (2022: £11.1 million) primarily

relating to integration costs of the Ferranti acquisition

(£1.3 million), restructuring costs to move our facility in

Covina, US to Kansas, US (£1.0 million), costs incurred

in preparing assets held for sale (£0.9 million), pension

costs (£0.2 million) and other costs (£0.6 million).

There was a £3.2 million pension surplus refund from

the UK Scheme (2022: £nil). Dividend payments

totalled £11.3 million (2022: £10.2 million).

In June 2022 the Group re-financed its bank

revolvingcredit facility (RCF) with a syndicate of five

relationship banks at commercially attractive rates.

This£147.4million facility had a four-year tenure with

aone-year extension option. In the first half of 2023

weexercised £15 million of a £32.6 million accordion,

thereby increasing the facility size to £162.4 million,

and we also exercised the one-year extension, taking

the facility maturity out to June 2027. The RCF is

complemented by £75 million of private placement

fixed rate loan notes, which were issued in December

2021, with 7 and 10 year maturities.

Operating profit and margin

The Group’s adjusted operating profit was £52.8 million

(2022: £47.1 million) and statutory operating profit was

£8.7 million (2022: £3.4 million loss) after a charge for

items excluded from adjusted operating profit of

£44.1million (2022: £50.5 million) including:

– Restructuring costs of £2.0 million (2022:

£6.4million) largely comprising costs associated

with the relocation of production facilities from our

US site in Covina to Kansas, representing the last

stage of the self-help programme which started

in2020.

– Pension restructuring costs of £1.9 million (2022:

£13.8 million) relating mainly to work to prepare

theUK defined benefit scheme for buy-out.

– Acquisition and disposal costs totalled £3.1 million

(2022: £1.2 million) comprising £1.3 million (2022:

£1.1 million) of integration costs relating primarily

tothe Ferranti acquisition, which was acquired early

in 2022; £1.2 million (2022: £nil) in preparing assets

held for sale; £0.4 million (2022: £0.1 million) relating

to integration activities for the acquisition of Torotel,

Inc. and £0.2m (2022: £nil) of other costs.

– Amortisation of intangible assets arising on

business combinations of £4.6 million (2022:

£6.0million).

– Non-cash write-down costs totalled £32.5 million

relating to businesses held for sale in our IoT

Solutions and GMS CGUs (2022: £23.1 million

relating to the impairment of goodwill and other

assets in the IoT Solutions business).

The adjusted operating margin of 8.6 per cent (2022:

7.6 per cent) reflects the benefits of operational

leverage and our self-help programme. We successfully

offset increases in input costs through price increases.

Finance costs and taxation

The net finance cost was £9.8 million (2022:

£6.7million) with the increase being due to a

combination of higher base rates and higher drawn

debt levels. The Group’s overall tax charge was

£5.7million (2022: £3.1 million), including a £3.5 million

credit (2022: £5.3 million credit) on items excluded

CASH FLOW, NET DEBT AND LEVERAGE

£million 2023 2022

Adjusted operating profit 52.8 47.1

Depreciation and amortisation 16.5 16.1

Net capital expenditure

(22.4) (11.7)

Capitalised development expenditure (1.6) (2.3)

Working capital (0.5) (38.8)

Other 4.0 5.3

Adjusted operating cash flow after capex. 48.8 15.7

Adjusted operating cash conversion 92% 33%

Net interest and tax (19.7) (13.4)

Lease payments (4.4) (4.3)

Restructuring, acquisition and disposal related costs (4.0) (11.1)

Retirement benefit schemes 3.2 –

Free cash flow 23.9 (13.1)

Dividends (11.3) (10.2)

Lease payments 4.4 4.3

Equity issued/acquired 1.3 0.4

Acquisitions – (8.3)

Cash transferred to assets held for sale (3.6) –

Other (1.2) (3.0)

Increase in net debt 13.5 (29.9)

Opening net debt (138.4) (102.5)

New, acquired, modified and surrendered leases (3.4) (2.3)

Leases acquired – (0.2)

Leases transferred to liabilities held for sale 2.6 –

FX and other (1.5) (3.5)

Closing net debt as per balance sheet (127.2) (138.4)

Cash and leases held within assets and liabilities held

for sale 1.0 –

Closing net debt including assets and liabilities held

for sale (126.2) (138.4)

CFO REVIEW CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 19

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Net debt

At 31 December 2023, the Group’s net debt was

£126.2million (31 December 2022: £138.4 million),

including £20.8 million of lease liabilities (31 December

2022: £23.1 million). Leverage at 31 December 2023,

consistent with the bank covenants, was 1.7 times

(31December 2022: 2.0 times).

Pension buy-in

Following the buy-in of our UK defined benefit

pensionscheme (the “Scheme”) in November 2022,

the Scheme is de-risked with scheme liabilities now

matched by the buy-in insurance policy. The Scheme

had a surplus of £25.3 million at December 2023

(December 2022: £31.3 million). Given the higher level

of confidence over there ultimately being a surplus

inthe Scheme at the point of wind-up, in December

theScheme made an initial surplus refund to the

Company of £5.0 million less tax (£3.2 million net).

TTis, in collaboration with the Scheme Trustee, in the

process of preparing the scheme for buy-out, which is

expected to be concluded by late 2024 or early 2025.

Shortly after the year-end, we completed the buy-out

of one of our much smaller US defined benefit pension

schemes at a cash cost of £1.8 million. The net surplus

across all Group schemes (including some smaller

defined benefit schemes in the US) at 31 December

2023 was £22.2 million (2022: £28.4 million).

Continued investment in the business

Organic investment in technology and capital is

important to support new project growth and totalled

£33.2 million in 2023. This in part results in us

becoming firmly embedded with our customers as

valued partners, enabling us to stay ahead of

customers’ needs and meet the challenges they set

us. Our investment is focused on bringing higher

growth, innovative, sustainable products to market.

These typically yield higher returns and development

isoften undertaken in partnership with our customers.

CFO REVIEW CONTINUED

In 2023 GMS expanded its footprint in the Americas

by opening a new state-of-the-art facility in Mexicali,

Mexico, adjacent to our existing S&SC facility. The

project utilised spare capacity in the existing site and

therefore required minimal capital spend as well as

building on our reputation as an employer of choice

in the region.

The new 75,000-square-foot operation will employ

around 250 people and has capacity for up-to-six

highly automated surface mount technology

(“SMT”) lines, the process by which electronic

components are mounted directly onto the surface

of a printed circuit board. Offering fully integrated

electronics manufacturing solutions, including

system integration and testing, the new facility

complements our operations in Cleveland,

Ohioandstarted operating in early 2024.

The expansion complemented similar investment

which increased our capability in Kuantan, Malaysia.

Here we installed a high-speed SMT line which

increased production capacity for high-level

assembly manufacturing solutions in response

torising demand from healthcare and

industrialcustomers.

These key investments support growth in customer

demand while, at the same time, providing mitigation

against risk arising from geopolitical uncertainty.

Manufacturing more closely to our end markets also

reduces the carbon footprint of our products for

customers. With locations in the United States,

Mexico and Malaysia we are now well placed to

collaborate with customers on their re-

shoringactivities.

CASE STUDY

INSIDE TT ELECTRONICS

EXPANDING OUR GLOBAL FOOTPRINT

We continue to invest in our global

facilities to support customer growth

and further our solid reputation for

delivering agile solutions and excellent

customer service.

Manufacturing more

closely to our end

markets also reduces

the carbon footprint

ofour products

forcustomers.”

INVESTMENT TO ADD:

75,000

square foot in Mexico

Kuantan’s new high-speed SMT line has increased production

capacity to meet rising demand from TT’s healthcare and

industrial customers

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202320

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

CFO REVIEW CONTINUED

Our R&D cash investment in the year was £10.8 million

(2022: £11.0 million), representing 3.4 per cent (2022:

3.7 per cent) of the aggregate revenue of our product

businesses. Capital expenditure totalled £22.4 million

(2022: £11.7 million).

In the second half of 2023 we relocated our Ferranti

business to a new flagship Power Solutions facility in

Greater Manchester. We are also expanding our GMS

offering in existing TT facilities. This started in 2020

with Kuantan, Malaysia and we are now adopting the

same low capital intensity approach in Mexicali,

Mexico to support growth programmes for our

customers and to enable their re-shoring priorities.

Outlook

2023 was a year of strong operational and financial

progress. The Group has delivered against the priorities

that were set for the year: strong free cash generation

has led to further reduction in leverage, and our strong

order book was converted into double-digit operating

profit growth, with good operating margin progression

underpinned by a recovery in our P&Cbusiness.

Based on the strength and level of visibility in our order

book, current end market activity and operational

improvement initiatives that are underway, while

mindful of the wider macro environment, we are

confident we are on track to deliver a 10% operating

margin in 2024.

R&D AS % OF SALES

3.4%

This is illustrated by a collaboration with one of the

largest Tier-1 companies in India which supplies

manual and hydraulic steering systems to all major

commercial vehicle manufacturers in the country.

The company is now developing electronic power

steering (“EPS”) systems for commercial vehicles.

TT is supplying an EPS sensor for the steering

systems which is used to measure required torque

and desired angle of the system by the driver. The

steering torque and position sensor is mounted in

line with the steering shaft and is a critical part of

the EPS assembly.

We started working with the customer at an early

design stage and provided technical assistance to

complete the design and build stage of the EPS

system for the company’s 4W Electric Vehicles

commercial segment. Our ability to provide the

required customisation of our sensor established us

as the right partner, leading to a growing business

and technology relationship that has positioned TT

as the single source of supply for all EPS projects.

Our Mexicali facility recently secured a five-year,

c.£600k contract for EPS sensors for three- and

four-wheeler small commercial electric vehicles.

CASE STUDY

INSIDE TT ELECTRONICS

TRANSITIONING COMMERCIAL

VEHICLES TO ELECTRIC

Our focus is on working with our

customers to bring smart, sustainable

products to market.

We started working with the customer

at an early design stage and provided

technical assistance to complete the

design and build stage.”

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 21

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

POWER

AND

CONNECTIVITY

Revenue increased by £15.5 million to £169.7 million

(2022: £154.2 million) and includes a currency

headwind of £0.4 million. Organic revenue was

10percent higher with good growth from healthcare

and aerospace & defence in particular, reflecting

increased market demand and previous business

winsuccesses.

Adjusted operating profit increased by £6.4 million

to£14.3 million (2022: £7.9 million). Included within

thiswas a £0.1 million foreign exchange headwind.

The material step up in operating profit reflects very

healthy levels of drop through on the revenue growth,

price increases which more than offset cost inflation

and operational efficiencies. The adjusted operating

margin was up 330 basis points to 8.4 per cent (2022:

5.1 per cent) for the full year and was 9.4 per cent in

the second half.

FINANCIAL HIGHLIGHTS

2023 2022 Change

Change

constant fx

Revenue £169.7m £154.2m 10% 10%

Adjusted operating

profit

£14.3m £7.9m 81% 83%

Adjusted operating

profit margin

8.4% 5.1% 330bps 330bps

1 See note 1 on page 3 for an explanation of alternative performance measures. Adjusting items are not

allocated to divisions for reporting purposes. For further discussion of these items please refer to the section

titled “Reconciliation of KPIs and non IFRS measures” on pages 174 to 177 of this document.

Order intake has been good in the year and continues

to exceed growing revenues giving us confidence for

further growth and margin expansion in 2024.

In 2023 we have invested in and transferred production

to a new facility for the acquired Ferranti Power and

Control business, based in Greater Manchester, which

designs and manufactures mission-critical complex

power and control sub-assemblies for blue chip

customers in high-reliability and high-performance

end markets, primarily aerospace and defence.

REVENUE BREAKDOWN

Revenue by market (%)

Healthcare

15%

Aerospace & Defence 44%

Automation & Electrification 32%

Distribution sales channel 9%

Revenue by geography (%)

North America

40%

Europe 47%

Asia and RoW 13%

CFO REVIEW CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202322

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

GLOBAL

MANUFACTURING

SOLUTIONS

Revenue decreased, as expected, by £23.8 million

to£299.2 million (2022: £323.0 million) of which the

currency headwind was £10.9 million, with organic

revenue 4 per cent lower. Excluding currency effects

and the unwind of pass-through revenues, total

revenue was broadly unchanged as anticipated with

2023 a year of consolidation following two years of

exceptionally strong growth. Pass-through revenue

was £12.5 million lower in the second half, against the

second half of 2022 and £10.4 million lower for the full

year, which has created a head-wind to top line growth.

Adjusted operating profit increased by £2.4 million

to£27.6 million (2022: £25.2 million), including a

£1.5million foreign exchange headwind. The constant

currency increase reflects operational efficiencies and

the benefit of improved pricing. The adjusted operating

profit margin was 9.2 per cent (2022: 7.8 per cent),

impacted by the pass-through revenues, without which

margins would have been 9.9 per cent.

This division performed well in 2023, reflecting the

momentum built from customers who are winners in

their own markets and provide opportunities to grow

share of wallet. The order book remains strong with

long visibility and in 2023 GMS has made incremental

capital investment to expand its capabilities into an

existing TT facility in Mexicali, Mexico. This follows the

successful addition of GMS capability to the Kuantan

site in Malaysia, back in 2020, which added value

through the regional expansion of our high-level

assembly capabilities to a variety of key customers.

The division’s planned revenues for 2024 are fully

covered and it has started to secure revenue for 2025.

The order book position has been underpinned

byseveral multi-million-pound wins, a number of

which extend beyond 12 months. We continue to

improve ourunderstanding of how to leverage

theseopportunities from the customer perspective.

Whethercustomers are seeking best-value-

geographies for their product, risk mitigation against

geopolitical uncertainties, or looking to reduce their

carbon footprint by manufacturing locally to the end

market, TT is well-positioned to support their needs.

Overall, the GMS division is in excellent shape and

ourenhanced customer relationships and business

development initiatives are delivering strong order

intake. GMS has achieved a step change in its margin

profile over recent years, reflecting the value of the

service we bring to our customers, reliability, and the

value engineering and testing capability we offer.

Webelieve GMS margins can improve incrementally

with growth.

FINANCIAL HIGHLIGHTS

2023 2022 Change

Change

constant fx

Revenue £299.2m £323.0m (7)% (4)%

Adjusted operating

profit

£27.6m £25.2m 10% 16%

Adjusted operating

profit margin

9.2% 7.8% 140bps 160bps

1 See note 1 on page 3 for an explanation of alternative performance measures. Adjusting items are not

allocated to divisions for reporting purposes. For further discussion of these items please refer to the section

titled “Reconciliation of KPIs and non IFRS measures” on pages 174 to 177 of this document.

REVENUE BREAKDOWN

Revenue by market (%)

Healthcare

40%

Aerospace & Defence 15%

Automation & Electrification 45%

Revenue by geography (%)

North America

34%

Europe 38%

Asia 28%

CFO REVIEW CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 23

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

SENSORS AND

SPECIALIST

COMPONENTS

Revenue increased by £5.2 million to £145.0 million

(2022: £139.8 million) and the currency impact was

neutral. Organic revenue was 4 per cent higher, with

good growth through the division’s distribution

partners a key driver. This business is in the sweet spot

of enabling our customers to reach their sustainability

goals with components for smart energy & city

infrastructure and factory automation.

Adjusted operating profit decreased by £2.8 million

to£19.0 million (2022: £21.8 million) with no currency

impact. The reduction in profit is attributable to the

one-off impact of the breakdown of the HVAC system

inour Plano facility.

The permanent fix to the HVAC system at Plano,

essential to the operation of our clean room, took

longer to achieve than anticipated given delays in

receiving parts. The facility is now operating as

expected. We have undertaken a full review of the

viability of the system to ensure it is fit for purpose

andidentified some control software and physical

improvements which will be implemented before

thereturn of warm weather.

We monitor the stock levels in our distribution

channels and saw them increase in 2023. We are

nowstarting to see them reduce and expect them to

return to more normal levels in the first half of 2024.

While order intake from distributors therefore remains

somewhat subdued, we achieved new business wins

from a number of blue-chip customers in 2023 which

is benefiting our order intake in 2024.

FINANCIAL HIGHLIGHTS

2023 2022 Change

Change

constant fx

Revenue £145.0m £139.8m 4% 4%

Adjusted operating

profit

£19.0m £21.8m (13)% (13)%

Adjusted operating

profit margin

13.1% 15.6% (250)bps (250)bps

1 See note 1 on page 3 for an explanation of alternative performance measures. Adjusting items are not

allocated to divisions for reporting purposes. For further discussion of these items please refer to the section

titled “Reconciliation of KPIs and non IFRS measures” on pages 174 to 177 of this document.

REVENUE BREAKDOWN

Revenue by market (%)

Healthcare

Aerospace & Defence 3%

Automation & Electrification 22%

Distribution sales channel 74%

Revenue by geography (%)

North America

38%

Europe 32%

Asia 30%

CFO REVIEW CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202324

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

DIVIDEND POLICY AND DIVIDEND

The Board has a progressive dividend policy, which primarily

takes into account adjusted earnings cover, but also sees

beyond this to take into account other factors such as the

expected underlying growth of the business, its capital and

other investment requirements, and its pension obligations.

TheGroup’s balance sheet position and its ability to generate

cash are also considered.

The Board considers these factors in the context of the Group’s

Principal risks, which are set out on pages 62 to 66, and the

overall risk profile of the Group.

The Group’s ability to pay a dividend is supported by the

distributable reserves available in the parent Company,

whichoperates as a holding company, primarily deriving its

netincome from dividends paid by its subsidiary companies.

At31December 2023, TT Electronics plc had £199.7 million

(2022: £202.8million) of distributable reserves, sufficient to

paydividends for the foreseeable future. The parent Company

Balance Sheet is set out on page 167.

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. The total cash cost of this

dividend will be approximately £8.2 million. This, when

combined with the interim dividend of 2.15 pence per share

gives an increase of 8 per cent in the total dividend to 6.8 pence

(2022: 6.3 pence per share). Payment of the dividend will be

made on 15 May 2024, to shareholders on the register at

12April 2024.

CFO REVIEW CONTINUED

PENSIONS

The Group has one significant defined benefit scheme in the

UKand some much smaller defined benefit schemes in the US.

All the Group’s defined benefit schemes are closed to new

members and to futureaccrual.

The total net accounting surplus under the Group’s defined

benefit pension schemes was £22.2 million (2022: £28.4million).

The main driver of the decrease was a £5.0million refund

repayment (£3.2 million after tax suffered by the scheme)

andthe scheme supporting its own expenses of £3.2million.

Net accounting pension surplus

Following the buy-in of the TT Group scheme in November2022,

the principal financial risk the scheme is exposed to is the credit

risk associated with the insurer, which is assessed to be verylow.

The assets and liabilities of the Group’s defined benefit schemes

are summarised below, together with the Group pension surplus:

£million 2023 2022

Fair value of assets 363.5 396.8

Liabilities 341.3 368.4

UK scheme (surplus) 25.3 31.3

Overseas schemes (deficit) (3.1) (2.9)

Total Group surplus 22.2 28.4

The triennial valuation of the TT Group scheme as at April 2022

showed a net surplus of £45.4 million against the Trustee’s

funding objective compared with a surplus of £0.3 million at

April 2019.

Further details of the Group’s defined benefit schemes are in

Note 22 on page 159 of the Consolidated Financial Statements.

FINANCIAL RISK MANAGEMENT ANDTREASURY

POLICIES

The Group’s Treasury activities are managed centrally by the

Group Treasury Function, which reports to the Chief Financial

Officer. The Treasury Function operates within written policies

and delegation levels that have been approved by the Board.

The Group’s main financial risks relate to funding and liquidity,

interest rate fluctuations and currency exposures. The overall

policy objective is to use financial instruments to manage

financial risks arising from underlying business activities and

therefore the Group does not undertake speculative transactions

for which there is no underlying financial exposure. The Group

manages transactional foreign exchange positions by hedging

aminimum of 75 per cent of expected net cash flow exposures

for the next 12months and 50 per cent of expected net cash

flow exposures for the period from 12 to 24 months.

More details of the Group’s Treasury operations are set out in

Note 21 on page 153 of the Consolidated Financial Statements.

FUNDING AND LIQUIDITY

The Group’s operations are funded through a combination of

retained profits, equity and borrowings. Borrowings are generally

raised at Group level from a group of relationship banks and

lentto operating subsidiaries. The Group maintains sufficient

available committed borrowings to meet any forecasted

fundingrequirements.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 25

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

NET DEBT AND GEARING

At 31 December 2023 the Group’s net debt was £126.2million

(including cash of £3.6 million included in assets held for sale)

(31 December 2022: £138.4 million). Included within net debt

was £20.8 million of lease liabilities (including £2.6 million

included in liabilities held for sale) (31December 2022:

£23.1million).

Consistent with the Group’s borrowing agreements, which

exclude the impact of IFRS 16 Leases, leverageratio was

1.7times at 31 December 2023 (31December 2022: 2.0 times).

Net interest cover was 6.1times (31 December 2022: 7.4 times).

The Group’s debt covenants state that the leverage ratio must

not exceed 3.0 times and that interest cover must be more than

4.0 times.

At 31 December 2023 the Group had available undrawn

committed facilities of £56.9 million. In addition, the Group had

available uncommitted facilities of £22.6 million. The Group’s

borrowings are in the form of a multi-currency Revolving Credit

Facility (“RCF”) and private placement (“PP”) fixed rate loan

notes. The RCF matures in June 2027 and the PP notes, issued

in December 2021, are split between 7- and 10- year maturities

with covenants in line with our bankfacility.

The Group’s leverage is usually expressed in terms of its

netdebt/adjusted EBITDA ratio. The Group’s main financial

covenants in its RCF and PP notes states that net debt must

bebelow 3.0 times adjusted EBITDA, and adjusted EBITDA

isrequired to cover interest charges, excluding interest on

pension schemes by at least 4.0 times.

Leverage ratio

The Group’s year-end leverage ratio of 1.7 times is within the

Group’s target range of 1–2 times. Under the Group’s borrowing

agreements, the figure for net debt used in the calculation of the

net debt/adjusted EBITDA gearing ratio calculation is translated

at an average foreign exchange rate, with IFRS 16 lease liabilities

and other IFRS 16 impacts excluded. In addition, there are other

adjustments including the exclusion of certain specified items

from EBITDA.

TT’s capital allocation policy is set within the framework of

atarget Group net debt/EBITDA gearing ratio that lies within

arange of 1–2 times in current market conditions.

A further summary of the Group’s borrowings and maturities

are set out in Note 20 on page 153 of the Consolidated

FinancialStatements.

FOREIGN CURRENCY TRANSLATION

The following are the average and closing rates of the foreign

currencies that have the most impact on the translation into

sterling of the Group’s Income Statement and Balance Sheet:

£million 2023 2022

Income Statement Average rate

$/£ 1.24 1.25

RMB/£ 8.78 8.34

Balance Sheet Closing rate

$/£ 1.27 1.20

RMB/£ 9.04 8.36

Foreign exchange translation exposure arises on the earnings of

operating companies based in the US and China, with additional

lesser exposures elsewhere in the world.

CFO REVIEW CONTINUED

INTEREST RATES

The Group monitors its exposure to interest rates to bring

greater stability and certainty to its borrowing costs. The policy

is to have between 25 per cent and 75 per cent of the Group’s

debt subject to a fixed interest rate.

GOING CONCERN

See page 67 for the Going concern statement.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202326

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

HOW WE ARE PERFORMING

OUR KPIs

FINANCIAL

KPI DESCRIPTION AND WHY ITISIMPORTANT MEDIUM-TERM

TARGET

FIVE-YEAR PERFORMANCE CHART 2023 PROGRESS

LINK TO

STRATEGY

Organic revenue growth (%)

The percentage change in revenue from continuing operations in the

current year compared to the prior year, excluding the effects of currency

movements, divestments and acquisitions. This measures thelike-for-

like growth or decline ofthe business. Sustainable organic revenue

growth is an indicator of value creation. It reflects a combination of

conditions in our markets and our success in gaining market share from

serving our customers better.

4–6% organic

revenue growth

annually over the

medium term

2023

2022

2021

2020

2019

(12)%

10%

20%

After two years of strong growth,

organic revenue was up 1%.

Organic revenue growth, excluding

pass-through revenues, was 3%.

Technology investment

andR&D

2022: 20%

Adjusted operating profit margin (%)

Adjusted operating profit as apercentage of revenue. Adjusted operating

profit margin is an indicator of our ability over the longer term to extract

fair value from our products and services, driven by a mixture of

increasing revenue and an optimised cost base.

Double-digit

margin

8.6%

2023

2022

2021

2020

2019

7.6%

7.3%

6.4%

8.0%

8.6%

Adjusted operating profit margin

was up 100 bps to 8.6% reflecting

strong recovery in Power &

Connectivity. Excluding zero-

margin pass through revenues,

adjusted operating margin

was8.9%.

Technology investment

andR&D

Margin enhancement

2022: 7.6%

Adjusted earnings per share (pence)

The profit for the year attributable to shareholders excluding items not

included within adjusted operating profit divided by the weighted average

number of shares in issueduring the year. Adjusted EPS summarises the

overall financial performance of the Group, including revenue growth,

operating margin, the cost of debt finance and the rate of

underlyingtaxation.

Double-digit

adjusted EPS

growth annually

at constant

currency over the

medium term

19.2p

2023

2022

2021

2020

2019

18.2p

14.5p

11.7 p

17. 8p

19.2p

Adjusted EPS increased to 19.2p

reflecting improved adjusted

operating profit offset by higher

net finance costs and taxation

Technology investment

andR&D

Margin enhancement

Targeted and

complementary M&A

2022: 18.2p

Cash conversion (%)

Adjusted operating cash flow including capital expenditure, divided by

adjusted operating profit. Cash conversion measures how effectively

profit is converted into cash and, within this, reflects the management of

working capital and capital expenditure. A high level of cash conversion

aids investment in the business, enables the Group to deliver increased

returns for shareholders and supports a strong balance sheet.

90%+ cash

conversion

annually over the

medium term

92%

2023

2022

2021

2020

2019

65%

33%

130%

103%

92%

Much improved cash conversion

of 92% reflects both increased

adjusted operating profit and

higher adjusted operating cash

flow due to a much reduced

working capital outflow.

Margin enhancement

2022: 33%

Our KPIs include a number of Alternative Performance Measures (APMs) which have been adopted by the Directors to provide further information on underlying trends and the performance

and position of the Group. Details of these APMs and a reconciliation to statutory measures can be found on pages 174 to 177.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 27

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

FINANCIAL

KPI DESCRIPTION AND WHY ITISIMPORTANT MEDIUM-TERM

TARGET

FIVE-YEAR PERFORMANCE CHART 2023 PROGRESS

LINK TO

STRATEGY

Return on invested capital

Adjusted operating profit for the year divided by average invested capital

for the year. Average investedcapital excludes pensions, provisions, tax

balances, derivative financial assets and liabilities, cashand borrowings.

Itis calculated at average rates taking into account monthly balances.

Return on invested capital is a measure of how efficiently the Group is

utilising its assets, relative to profitability, in generating

shareholderreturns.

Exceed the cost of

holding assets

with year-on-year

increases

12.0%

2023

2022

2021

2020

2019

9.1%

10.5%

7.7%

10.8%

12.0%

ROIC increased by 150 bps

duetothe growth in adjusted

operatingprofit.

Technology investment

andR&D

Margin enhancement

Targeted and

complementary M&A

2022:

10.5%

NON-FINANCIAL

KPI DESCRIPTION AND WHY ITISIMPORTANT MEDIUM-TERM

TARGET

FIVE-YEAR PERFORMANCE CHART 2023 PROGRESS

LINK TO

STRATEGY

R&D investment as a % of sales

R&D cash investment as a percentage of revenue. This metric excludes

GMS which is a manufacturing services business and has no R&D. A

consistent and sustainable level of R&D investment enables us to

introduce new products that increase our revenue and deliver on our

purpose to solve technology challenges for a sustainable world.

Maintain R&D

investment at

around 5 per cent

of revenue

annually over the

medium term

3.4%

2023

2022

2021

2020

2019

4.5%

3.7%

4.8%

5.1%

3.4%

In 2023 we supported our

customers with organic

investment in a new facility

inGreater Manchester and an

expansion of our capabilities

inMexicali.

Technology investment

andR&D

2022:

3.7%

Safety performance (number of three-day lost-time incidents)

The number of workplace health and safety incidents that resulted in

employees, contractors or visitors needing to be off work for three days

or more. The number of incidents measures how well we are executing

on our commitment to raise safety standards globally and protect our

people onour journey to zero harm.

Year-on-year

reduction in

incidents,

ultimately leading

to zero harm

2023

2022

2021

2020

2019

Safety performance has improved

significantly in recent years as we

have matured our framework and

increased accountability. 85% of

TT locations have achieved at

least one or more years without

alost-time incident.

ESG

2022:

Employee engagement score

Results from a Best Companies Ltd third party survey which gathers

anonymous employee feedback and scores against eight success

factors. Having engaged employees is crucial to attracting and

maintaining the talent we need to execute our strategy.

Survey-on-survey

increase in the

Group’s

engagement

score over the

medium term

771.7

2023

2022

2021

2020

2019

718.5

694.8

771.7

Interim pulse surveys

In 2023 we were delighted to attain

an engagement score in line with

the 3*** “world class companies

towork for” Best Companies Ltd

benchmark.

ESG

2021:

718.5

Scope 1 & 2 emissions

Total amount of carbon dioxide equivalent tonnes (tCO

e) of Scope 1 & 2

emissions from operations. Details of thecalculation method are set out

on page 46. Reducing our Scope 1 & 2 emissions is a critical part of

reducing our environmental footprint. See footnotes on page 46 for

emission recalculations during 2023.

Annual reductions

vs our 2019

baseline. 50%

reduction by 2023

vs 2019 and Net

Zero by 2035

62%

2023

2022

2021

2020

2019

27,5 45

20,875

15,740

12,782

10,533

We made good further progress

onreducing our Scope 1 & 2

emissions due to further site

rationalisation, transferring

capacity to modern, green

facilitiesand local site energy

saving initiatives.

ESG

reduction

since 2019

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202328

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

We intend to have 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 interact with our communities; and

by reducing our environmental impact.

OUR PURPOSE

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.

Environment, social and governance and sustainability

matters are integrated into our strategy and day-to-

day decision-making at all levels of the organisation

toreduce risk and grow our business opportunities.

These activities are important to all of our

stakeholders including our customers, and especially

to our employees who we want to be proud of our

culture andour goals.

TT technologies address key sustainability megatrends

in our target markets and bring environmental and

social benefits to society. Whether improving fuel

efficiency through the development of lighter aircraft

about ethics

on page 30

about our people

and culture

on page 31

Read more about

our communities

on page 41

Read more about

our environmental

commitments

and progress

on page 42

power supplies, manufacturing complex factory

automation equipment to drive productivity gains,

orimproving health and patient outcomes through

ourhighly precise medical device technologies,

sustainability is at the very core of what we do.

We are committed to helping our customers to

develop cleaner, lighter, more efficient and durable

solutions that help combat climate change and

resource scarcity. This focus is a key differentiator of

our customer offer and drives our approach not only

toR&D but to the way we develop, design, engineer

and manufacture our products and use raw materials

and other resource inputs in the most efficient way.

We have an ambitious agenda to reduce our

environmental footprint and carbon emissions and

weare building a safer, more inclusive and engaged

organisation right across the world.

Governance and risk management

Environment and people matters including culture,

strategy, compliance, risk and internal controls are

governed as part of our overall governance and risk

management frameworks, ultimately overseen by

theBoard. An update on key people, safety and

environmental metrics and activities is provided at

Board meetings and in-depth reviews are undertaken

onat least an annual basis.

A POSITIVE

IMPACT

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT

Non-financial reporting regulations

In accordance with Sections 414CA and 414CB of the Companies

Act 2006, our non-financial information can be found on the

following pages of this 2023 Annual Report: relating to

environment matters pages 42 to 46; social matters pages 29

to41; employees pages29 to 40; human rights page 30; and

anti-corruption and anti-bribery page 30.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 29

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

We are an ethical company, acting

worldwide with integrity and within the law.

The fundamental principles of fairness,

honesty and common sense are at the

heart of our philosophy and corporate

standards. We have one ethical standard

worldwide to create an environment where

TT businesses can flourish within an

appropriate compliance and risk

management framework in line with

our TT Way values.

Our Statement of Values and Business Ethics Code

sets out these standards and covers a comprehensive

range of ethical matters including the working

environment, standards of behaviour, avoiding

conflicts of interest, hospitality and entertainment,

bribery, intellectual property protection and fair

competition. We do not tolerate fraud, corrupt

practices or behaviour not in line with our standards

and have in place systems and processes to effectively

detect and deal with any contraventions of our code.

Any concerns relating to matters covered by the code

and behaviour more generally can be reported, either to

management or by using our anonymous, multi-lingual

whistle-blower hotline either by telephone or using our

ethics and integrity portal. Reports are investigated

thoroughly, and any significant concerns are reported

to the Audit Committee. Our Whistleblowing Policy

describes how employees should raise matters of

concern, our approach to dealing with concerns, and

examples of the types ofissue employees should

bringto our attention.

Day-to-day oversight of ethical matters is the

responsibility of our People, Social, Environmental and

Ethics (“PSEE”) Committee (see page 75). An Ethics

Committee of our senior leaders can also be convened

on an as-needed basis. Mandatory ethics training is

provided for relevant employees on an annual basis.

The Q&A section of the Audit Committee Report

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

provides details of the measures taken in 2023 to

strengthen the control environment to mitigate fraud

risks and deliver fraud awareness training, supported

by the introduction of a new Fraud Prevention Policy.

Regulatory requirements are different around the

world, so we have a core structure which Group

businesses comply with, beyond which they are

empowered to tailor their approach to local needs.

Thenature of our business and the markets we work

inmeans that legal and regulatory compliance is a

principal risk for TT.

Human rights

Upholding human rights is the responsibility of

everyone at TT and, as part of our ethics framework,

human rights are treated as an equal priority to other

business issues. We are an associate member of the

Responsible Business Alliance, pursuant to which we

make a formal commitment to uphold the human

rights of workers (at all points in our supply chains) and

to treat them with dignity and respect as understood

by the international community. Our approach is taken

from the industry standard (Responsible Business

Alliance Code of Conduct) and covers expected

standards for the treatment of workers.

Supply chain

We procure from a wide network of suppliers and

distributors through global supply chains. It is

important to us that our suppliers share our values

andour approach, and we seek out those that do.

Our Corporate and Social Responsibilities – Supplier

Requirements policy sets out our required standard

with regard to supplier social and environmental

practices. The policy is provided to all suppliers with

purchase orders. We carry out regular assessments

ofour suppliers to ensure compliance with our

requirements and we will not do business with

suppliers that violate them.

Our Procurement Code of Conduct outlines the

standards expected for the purchase of goods and

services across the Group. This code focuses on the

approval process required for the appointment of

newsuppliers, together with our ongoing supplier

monitoring process which include the application

ofadigital supplier risk rating tool.

Our Supply Chain Council forum meets on a monthly

basis and comprises a senior group of executives with

responsibility for global purchasing and supply chain

activities across TT. The Council considers ethical

matters including modern slavery as part of its remit.

Modern slavery

We have a zero-tolerance approach to Modern Slavery

– whether in the form of servitude; forced, bonded or

indentured labour; slavery; human trafficking or any

other activity that amounts to an unreasonable

restriction on the free movement of workers.

We recognise that the rights of individual workers can,

potentially, be violated within our supply chain and

other partnerships. We have had a Modern Slavery

Policy since 2016 which applies to all persons working

for TT and its subsidiaries or acting on its behalf in any

capacity. The Policy is reviewed each year.

Our approach to addressing the challenge of modern

slavery is to ensure that there is transparency in our

own business and throughout our supply chains.

Weexpect the same high standards from all our

contractors, suppliers, distributors and other business

partners, consistent with our obligations under the

Modern Slavery Act 2015. We include specific

prohibitions in our contracting processes against

theuse of forced, compulsory or trafficked labour, or

any other activity that amounts to an unreasonable

restriction on the free movement of workers, and we

expect that our suppliers will hold their own suppliers

to the same high standards.

Our Modern Slavery Statement and our Modern

Slavery Policy are published on our website.

Our business activities

and the way we operate

are closely aligned to

seven of the UN’s

17Sustainable

Development Goals

AN ETHICAL COMPANY

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202330

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

TT Electronics is truly a people business. The passion,

expertise and values of our people drives our success,

and our most critical job is to value them and support

them to achieve great things for our business, our

customers and the communities we serve.

Our TT culture gives us a true competitive advantage

and makes us a great company to work for and with.

Walk onto any of our sites – regardless of location,

product or market focus – and you will meet open and

caring people, proud of what they do and who work

together to bring out the best in each other. We are

incredibly proud of the work we have done over the

lastfew years to build this culture, through our focus

on safety, pay and benefits, recognition, community

and leadership.

Our TT leaders succeed when they achieve results

through creating a local working environment where

our people feel trusted, empowered to contribute, and

feel able to bring their whole selves to work. We are

thrilled with the exceptional results of this year’s

Engagement Survey, achieving a benchmark level of

participation and a rating in line with the 3*** Best

Company rating for the Group as a whole, two of our

divisions and six of our sites. This is a testament to the

efforts of our leaders and the trust and partnership

they have built with employees over the past five years.

As we look forward, we will continue to focus on those

tangible things that are valued by our employees and

that make TT a great place to work.

Our culture and values

Being a great company to work for enables us to

attract and retain talented people, grow productivity,

build strong partnerships with our customers and,

ultimately, deliver our business goals.

TT’s culture is overseen and supported by the Board.

While some aspects, such as ethics and safety, are

aligned and reinforced by policy, others are governed

by frameworks originated at the centre which empower

our sites to work appropriately in their jurisdictions

andaccording to local needs and norms.

Our TT Way values connect us all and guide how we

work with each other and our stakeholders every day.

They are supported by our focus on leadership,

knowledge and performance to drive progress,

innovation and service as well as build respectful,

happy and supportive work environments.

We evaluate our culture and employee engagement

every two years through our Employee Engagement

Survey using Best Companies Ltd methodology and

metrics. We use pulse surveys for the latest feedback

and an indication of progress. Results from these

surveys drive HR and local planning in the form of

targeted action plans created by site management

teams in response to their results. Each manager

receives a personal engagement score relating to

theirteam, and we use these results, and the wider

engagement results, when considering management

discretionary incentive payments.

We were delighted to record continued development in

our overall Group engagement score this year as well

as celebrating progress at the majority of our sites and

exceptional progress at some. The survey response

rate of 91% was notably high versus a big company all

sector average of 64%.

OUR TT WAY VALUES

We do the right thing

We bring out the best in each other

We achieve more together

We champion expertise

We get the job done… well

Read more about

our employee

engagement survey

on page 32

EMPLOYEE ENGAGEMENT

SURVEY RESPONSE RATE

91%

vs big company all

sector average of 64%

PEOPLE AND CULTURE

Our TT culture gives us a true competitive

advantage and makes us a great company

to work for and with. Walk onto any of our

sites – regardless of location, product or

market focus – and you will meet open and

caring people, proud of what they do and

who work together to bring out the best in

each other.”

Clare Nicholls

EVP Human Resources

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 31

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERALL SURVEY RESPONSE RATE

91%

Up from 86% in 2020 and 2021 vs a big company

allsector average of 64%

TWO DIVISIONS ACHIEVED 3***

S&SC and GMS

Both scored 3*** with higher scores than 2021

HUGE IMPROVEMENT AT THREE SITES

Cardiff

(not accredited in 2021 to 3*** in 2023)

Juarez

(OTW in 2021 to 3*** in 2023)

Barnstaple

(Unaccredited in 2021 to 2** in 2023)

IMPROVEMENT IN EIGHT FACTORS OF ENGAGEMENT VS 2021

+8%

Fair deal

+7%

Leadership, My company

+6%

Personal growth, Wellbeing, My manager,

Giving something back

+5%

My team

SIX SITES 3*** RATING

3***

6 sites

2**

4 sites

3 sites

One to watch (OTW)

6 sites

Unaccredited 2 sites

YEAR-ON-YEAR RATING IMPROVEMENT

2023: 3***

2021: 2**

2020: 1*

There was no survey in 2022

HIGHEST SCORES

My team

My company

Leadership

Wellbeing

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

Our June 2023 Employee Engagement

Survey results signalled a further

improvement in employee engagement

at TT. We received a rating in line with a

3*** rating for the first time in the Best

Companies Ltd “outstanding companies

to work for” benchmark.

3***

2023 EMPLOYEE ENGAGEMENT SURVEY

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202332

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

We communicate frequently and openly

with employees using a range of methods.

At Group level, our intranet, ConnecTT,

enables employees to communicate with

each other and easily find and share

resources and news in their local language.

We regularly publish news items celebrating

business and personal successes as well

as reporting on events across the Group.

ConnecTT also hosts employee

communities for skill specialisms,

equality, diversity & inclusion progress,

and personal interests.

Regular communication is critical to the success of

our sites. Activities include regular all-hands meetings,

Gemba walks to cover safety and wellbeing topics,

daily stand-ups to drive productivity and team

meetings. Several of our sites have established

employee forums to ensure robust two-way

communication and feedback.

Social and fundraising events are also a big part of

ourculture, helping to create strong personal and

social bonds both within our sites and with our local

communities. Members of the senior leadership team

regularly visit, giving Town Halls, walking the floor

andrecognising outstanding performance and

improvement. Members of our Board also take the

time to visit TT locations and the whole Board visited

our Plano and Kansas sites in 2023.

Employee voice at the Board

It is important that the employee voice is heard at the

highest levels of the organisation. The results of our

engagement surveys are reviewed by the Board so

that findings can be acted upon and TT’s Senior

Independent Director, Jack Boyer, participates directly

in people matters through his membership of the

PSEE Committee. The strong links described in the

diagram below ensure that the Board is aware of the

views and needs of our most important stakeholders

and can guide company actions accordingly. For the

purposes of the UK Corporate Governance Code,

JackBoyer is the designated Non-executive Director

for engagement with the workforce.

BOARD

EMPLOYEES

Leadership meetings/

conference/divisional reviews

Site Town

Halls,

including

Q&A

Councils

Sustainability,

Sales, R&D,

Ops,

Procurement

Personal

objectives

and

business

targets

Employee

engagement

per site

People, Social, Environmental

and Ethics Committee

ConnecTT intranet

Ask Peter/the Board

NED/Board site visits

Whistle-blowing hotline

Engagement survey

LOCATIONS VISITED BY

WHOLE BOARD IN 2023

CEO Peter France visits our site inKuantan, Malaysia

EMPLOYEE ENGAGEMENT AND COMMUNICATION

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 33

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

CASE STUDY

After scoring the lowest of all TT sites in our 2021 employee engagement survey and

facing a rapidly growing order book, wholesale change was required to set the TT

Barnstaple team back on the path to success.

TT BARNSTAPLE: THE POWER

OF A WELL-EXECUTED PLAN

In 2023 the team celebrated an enormous leap in the

site’s employee engagement score to 2** as well

asquantified business benefits including an increase

in productivity and capacity usage, an increase in

customer on time in full (OTIF), and improved

safetyperformance.

Determining the path to success

After digesting the 2021 survey results the leadership

team set about defining what good looked like and

creating a plan of action for the site which included:

– Restructuring the leadership team to bring in

people-centric leaders.

– Preparing and communicating a clear leadership

purpose statement.

– Embedding engagement into the objectives of the

leadership team.

– Relaunching regular two-way communication

activities including quarterly all-hands meetings

andteam talks for real-time feedback.

– Piloting a four-day week for all employees.

– Deploying TT’s bite-sized line manager training

programme and ED&I training for all.

– Investing in the quality of the working environment.

– Holding social events to build informal

relationships across and between teams

andleaders.

INSIDE TT ELECTRONICS

Critical to the plan’s success has been site leaders’

determination to personally lead the change by

walking the walk and demonstrating TT’s Values

inaction. Plans are now set, communicated and

reviewed annually to ensure the positive journey

continues. Recent new initiatives have been the

addition of regular stand-up meetings on the shop

floor to cascade metrics and accountability and lean

change programmes that have consolidated teams

toenable more efficient working.

Move to a four-day week

One of the most effective changes has been the move

to a four-day week. This change was tested as an

extended pilot from Autumn 2022 and became

permanent on 1 January 2024 after it was embraced

by employees and delivered clear business benefits in

terms of work capacity and productivity. Employees

are able to work longer days Monday to Thursday, with

the option of working overtime on Fridays rather than

at the weekend. Those choosing the shorter week have

Fridays free to pursue other interests/take care of other

commitments with the corresponding positive impact

on wellbeing. For the second six months of the pilot

period employees were able to advocate for their

preferred working hours and all requests were able

tobe accommodated within the site’s more flexible

working schedule.

BARNSTAPLE

LEADERSHIP PURPOSE

STATEMENT

– To define the future,

monitor, guide and

inspire thecompany.

– To create an

environment that

enables and

empowers teams,

that satisfies/fulfils

the needs ofthe

customer,

employees and

stakeholders to

secure the future

and prosperity of

thebusiness.

– To be a preferred

supplier/employer

ofchoice/business

of choice.

2023 ENGAGEMENT

SURVEY

96%

Response rate

2**

Rating

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

Andy Pacey

Site Director

TT Electronics, Barnstaple

People make our business and are critical to

performance. Having an engaged team drives

attendance, retention and productivity as well as

creating a positive working environment that people

arekeen to be a part of.

The results of the 2021 survey were difficult to read

butnot unexpected after a tough few years which

featured COVID-related redundancies, a high turnover

ofleaders, a lack of focus on employee needs and

wellbeing, and low levels of site investment. We had

notonly lost capability, capacity and tribal knowledge

but also the trust and partnership of our people. They

did not feel considered or empowered and we needed

todeliver substantial change.

Fundamentally, the stability and success of our site is

good for everyone’s future – for the business, for our

employees, for our customers and, as a reasonably

largeemployer, for our community. It was imperative

that we communicated this, walked the walk as

leaders,and changed attitudes and behaviours so

thatour team could be proud of where they worked.

We are really pleased with where we are today but

acknowledge that this is an ongoing endeavour.

Wehave a great team that we want to do our best

forsowe are already executing our 2024 plan.”

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ZERO

HARM

In 2023, to further support all sites, Regional HSELeads

were identified. In their roles, the Regional Leads assist

in the management of compliance and adherence to

our HSE Standards as well as serve as a best practice

sharing platform among peers. Our HSE Council was

also redefined to improve global sharing and build

further strategy alignment across the Group.

In 2024 we will take further steps to ensure that, as

aglobal enterprise, international best practices are

implemented. TT Electronics will be normalising injury

statistics and reporting not only by cases, but by

utilising incident rates. As another best practice step

forward, we will include incidents resulting in medical

treatment in these rates.

development. Two of our sites also completed an

external regulatory compliance audit in 2023 as

scheduled by our rotating global three-yearrequirement.

Safety performance

Safety performance is a Group KPI and has improved

significantly in recent years as we have matured our

framework and increased accountability. Monthly

reporting is completed to the leadership team and

reviewed by the TT Board. Safety performance has

historically been quantified as the number of workplace

injuries/illnesses resulting in three or more days’

absence. This has been applied to all TT locations

worldwide and is more stringent than the Lost-Time

Incident (LTI) requirement for UK reporting which is

seven days’ absence. 92 per cent of TTlocations

haveachieved at least one or more years without

alost-time incident.

TT Electronics prioritises safety. Our

Health, Safety & Environment (“HSE”)

framework and tools are designed to

ensure compliance and support best

practice safety measure identification and

implementation. Our site HSE professionals

report to our site General Managers with a

dotted line to our Global Director of Health,

Safety and Environment who leads

progressive HSE programmes and acts

as a support for the whole business.

Great safety performance is celebrated at TT sites

During 2023 our Kuantan, Malaysia site celebrated five million combined accident-free hours.

LOCATIONS ACHIEVING

ATLEAST ONE OR MORE

YEARS WITHOUT A

LOST-TIME INCIDENT

92%

SAFETY, HEALTH AND WELLBEING

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

During 2023, we enhanced the training and knowledge

inthe organisation to identify and report proactive

hazard observations. This data has been added to our

internal reporting and will continue to be tracked and

trended in 2024.

Global standards

During 2023 all sites implemented new Global HSE

Standards. These 15 standards are based on ISO45001

and ISO 14001 requirements with implementation

required at all TT Electronics locations. During the

yearall sites completed an internal audit against

theStandards. In 2024, all sites will once again be

auditing to all 15 of our Standards, requiring a higher

level ofmaturity for all locations. Weutilise HSE

professionals from other sites to complete these

internal assessments, which allows forknowledge and

information sharing as well as personal peer-to-peer

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 35

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NUMBER OF SITES ACHIEVING ZERO HARM

(NO THREE-DAY LOST-TIME INCIDENTS)

TOTAL NUMBER OF THREE-DAY

LOST-TIME INCIDENTS

2023: 3

(2022: 2)

2023

2022

2021

2020

2019

2023: 24/26*

(2022: 26/28*)

* Includes office locations and sites that were closed during

theyear

28/31*

26/31

2023

2022

2021

2020

24/26*

26/28*

Health and wellbeing

Supporting our employees to take care of their health

is also important to us. It is the right thing to do, and it

supports business needs by ensuring that our teams

are fit and well to be at work and feel supported togive

their best.

We see a strong crossover between all types of

health– physical, mental and financial health – and

we take opportunities to raise awareness and make

conversations on these matters normal and expected,

as well as giving employees access to resources and

things they need such as medical assessments. In

2023 we began piloting a wellbeing support framework

in the US covering the three key aspects of wellbeing

and we have an Employee Assistance Programme

(“EAP”) available to all employees where our people

can seek help from a third party organisation.

Physical health

Our physical health support programmes centre on

preventative measures and fun activities such as team

sports and on-site exercise classes. Our sites also

offer relevant local support such as health screenings,

flu shots, subsidised gym memberships and sharing

for success lunch time sessions. Many sites undertake

Gemba walks every day which incorporate physical

check-ins with employees to review temperature,

ergonomic environment and body posture, all of

whichcontribute to good physical and mental health.

Mental health

Many TT sites have mental health first aiders who are

trained to recognise triggers and help mobilise support

for employees who may be struggling. Sites also

organise events to raise awareness of mental health

matters and provide mental health resources to help

employees cope with issues such as anxiety

andstress.

Financial health

We recognise that the global cost-of-living crisis has

been difficult for many employees and, over the last

two years, have made specific efforts to raise

awareness of the benefits we have available to

employees such as our EAPs, our UK and US health

plans, our UK and US all-employee share plans and

pension/retirement planning. Our more than 1,300 UK

employees have access to a support package of salary

finance options to help strengthen personal financial

fitness and arrangements. This is administered by a

specialist third party not-for-profit organisation and

offers financial health resources; debt consolidation;

salary advance payments; and savings options

attached to payroll.

Wellbeing framework

Wellbeing

Physical

Mental &

Emotional

Financial

Physical work

environment

Rewards and

performance

Manager

effectiveness

Working

relationships

Personal growth

and aspirations

SAFETY, HEALTH AND WELLBEING CONTINUED

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

We see a strong

crossover between all

types of health –

physical, mental and

financial health – and

wetake opportunities

toraise awareness and

make conversations on

these matters normal

and expected.”

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DEVELOPMENT AND CAREERS

Investing in the training and development of

all our people enables them to do their jobs

well, build long-term careers at TT and keep

us at the forefront of innovative product

development and customer service.

We are highly focused on “growing our own” leaders

and innovators by equipping our people with the right

knowledge, opportunities and clarity on career paths

and we take pride in the fact that anyone, at any level,

will always be given the opportunity, encouragement

and support to progress if they wish to. Our line

managers hold regular career conversations with their

direct reports and create personal performance

development plans that align with wider site, division

and Group objectives. We use a five-point performance

scale to guide performance conversations and give

clarity to employees.

We have implemented a successful summer

internship programme at a number of our US sites and

both apprentices and graduates at UK locations.

Several of our sites draw on regional and national

funding to help existing employees train for new roles

in the business. We will continue to evolve and grow

these offerings as we move through 2024.

Improving leadership and line management skills

Our line management skills programme helps new

andexisting line managers to build leadership skills,

bemore effective in their roles, and better support

those working for them. The six bite-sized modules

covering practical topics for leaders are available to all,

but are typically accessed by supervisors, team

leaders and new line managers. During 2023, more

than 70 first line leaders went through the programme

across six locations, brought together during a

two-day period, to learn both critical new skills and

build a network of leaders across the sites. We also

had a very successful year with our leadership webinar

series that saw an average of 120 people attend each

60 minute session. The sessions covered a range of

leadership topics including leadership and mental

health; high-performing teams; ED&I; and facing fear

and embracing change.

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

Being fairly rewarded and recognised for

your contributions is an important part

of our culture.

Reward

We ensure we pay fairly and equally for like-for-like

roles within each labour market and our employees are

rewarded solely on merit. Over the past three years, we

have worked to improve pay and earnings potential for

our direct labour employees, through significant

investment in hourly rates and via frameworks and

training which allow employees to earn more as they

grow their skills.

Our approach to flexible working makes it possible

tobalance work and personal commitments so that

employees can take care of all the things that matter.

Our parental leave policy allows men and women to

share the responsibility and time at home with new

additions to the family.

REWARD AND RECOGNITION

AVERAGE NUMBER

OFPEOPLE ATTENDING

OUR LEADERSHIP

WEBINARSERIES

120

NOMINATIONS FOR

OURBE INSPIRED

RECOGNITION SCHEME

2,200

Over and above salary, all employees are able to

participate in site-specific pay-for-performance

schemes, be it our site incentive schemes, or annual

incentive schemes and we operate attractive all-

employee share plans for UK and US employees.

In line with Corporate Code Provision 41 we have

undertaken reward workforce sessions which cover

our reward principles, the role of the Remuneration

Committee, and how we achieve alignment of

remuneration.

Recognition

Our BE Inspired recognition scheme is extremely

popular with employees as an opportunity to

recognise teams and individuals who demonstrate our

TT Way values and have a positive impact on the

business. Participation is high and in 2023 the awards

attracted more than 2,200 nominations, with each

winner receiving a sum of money and a site

celebration. As described on page 33 we also take

time to share personal and business successes with

the global TT community through ConnecTT.

Our TT Mexicali team enjoying a trip to a baseball game.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 37

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CASE STUDY

In a highly competitive local employment market, our Kansas team has taken big steps

to stand out from the crowd and create a strong employee offer to attract and retain a

highly skilled team capable of delivering the growth opportunities available. The offer

is multi-faceted and encompasses culture and values, recruitment, skills development,

pay, wellbeing and community outreach.

TT KANSAS: AN EMPLOYEE OFFER

TO SUPPORT GROWTH

Employee value proposition

The team has developed and published a compelling

marketing document to promote the company,

itsculture, and the benefits of joining the team to

newrecruits.

Building skills, careers and pay

In response to business needs and to address

areasraised in the employee engagement survey

onself-development and pay the site has deployed

askills matrix that details cross-training career

pathways to progress up the matrix and earn more.

Hourly paid employees are encouraged to embark

on a career journey using the matrix, with current

participation in cross-training activities running at

25%. Multi-skilled employees are bringing huge

benefits to the team through increased capacity

andproductivity. External tuition costs are also

reimbursed for relevant skills development with

opportunities typically taken up by younger

employees who joined from high school.

Growing their own

In a tight labour market it has been important to

attract people right at the start of their careers.

Accordingly, the Kansas engineering intern scheme

has grown steadily from three interns in 2021 to

INSIDE TT ELECTRONICS

2,000

>2,000 days without

a safety incident

25%

Current participation

in cross-training

activities

nineinterns in 2023. The interns undertake summer

projects to get to know the business and receive care

packages and sponsorship when back at college.

Ofthe 2023 cohort, four interns have taken up

permanent graduate positions at TT Kansas and

theother five will return as interns in summer 2024.

Additional investment of time and money will enable

an even larger 2024 cohort to rotate around the site

togain deeper insight into the business.

In the community

From a position of near zero community activity the

team has built employee awareness of TT’s “hours

forgiving” programme to build a regular outreach

programme determined by employee suggestions.

One opportunity is put forward every month for

employees to use their five paid volunteer hours and

Andy Huffman

Program Manager;

one of the first interns

atTT Kansas

In the summer of 2021, I began my journey at TT as an

engineering intern. The internship programme allowed

me to apply my academic knowledge to real-world

scenarios and the opportunity to explore various

departments within TT. Through weekly meetings

withfellow interns across the United States, I gained

insights into TT’s different locations and expanded

myunderstanding of the company. I transitioned to

afull-time role as a LEAN Engineer in July 2022.

Sincethat time, I have been involved in several diverse

and transitional projects for the site, which have given

me the opportunity for frequent collaboration and

interaction with TT leaders and teams across

NorthAmerica.”

enjoy time together while giving back. Kansas now

records more volunteering hours than ever before.

Health and wellbeing

The site has adopted a four-day week since COVID,

enabling employees to work flexibly and establish a

good work life balance if preferred. The team have

taken this further by utilising the TT wellbeing

framework to focus on employee health and wellness

and financial health by providing a range of resources.

Members of the team are encouraged to take

advantage of the health and support plans available

tothem and on-site health screening programmes

including biometric and other medical testing. In line

with other TT sites Kansas holds celebrations to

highlight important cultural events such as International

Women’s Day to foster inclusion and wellbeing among

all employee groups.

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

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Gender diversity

We are pleased to have two women Board members

and a female member of our Management Board

(“TMB”) which replaced the Executive Leadership Team

(“ELT”) on 1 March 2024. The latter is a graduate of our

inaugural Women in Leadership programme, an integral

part of our ED&I strategy, which comprises joint

workshops with senior male leaders as well as skills,

mentoring and advocacy. In total, we have more

women employees than men. Our UK Gender Pay

Gapreport is published annually on the TT website.

Employees – full-time equivalents Men Women

Non-executive Directors 3 2

Executive Leadership Team (ELT) 4 0

ELT and direct reports 20 9

Senior managers (ex-ELT)

66 17

All employees:

Europe 865 518

North America 888 1,061

Asia 521 1,092

Total 2,274 2,671

1 Senior managers (ex-ELT) includes TT’s Group senior leaders,

our divisional and functional leadership teams, and Directors

ofsubsidiarycompanies.

GENDER DIVERSITY AT 31 DECEMBER 2023

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

We see equality, diversity and inclusion

(ED&I) as a fundamental cornerstone in

ensuring we can attract, develop and retain

the talent we need to achieve our ambitions

as a company.

The need for equality and fairness at work is a given.

All employees and potential employees must be

treated fairly and have equal access to opportunities

ina workplace that is tolerant, respectful and ensures

dignity for all. As set out in our employment policies,

no employee, applicant, contractor or temporary

worker should be treated less favourably or victimised

or harassed on the grounds of disability, sex, marital

orcivil partnership status, race, nationality, colour,

ethnicity, religion or similar philosophical belief,

sexualorientation, gender identity, age or any other

distinction other than merit.

An inclusive culture is an essential building block for

everyone in our company to thrive, and this has been

akey focus for leadership over the past few years.

Siteemployees and leaders have driven this agenda

with passion and creativity – celebrating the diversity

inherent in their cultures and communities, creating

psychologically safe environments to discuss such

topics, and providing training and support to all

employees to build awareness.

Although we have an ethnically diverse workforce

given our geographic spread, we are always looking for

ways to grow the diversity of our workforce as we hire

and develop people. International Women’s Day was

celebrated this year in our Northern UK businesses

through a Northern Women ConnecTT event, bringing

together women from a range of businesses and

rolesfor a day of training, speakers and connection.

Diversity is also essential in our early careers pipeline,

where we proactively encourage applications

fromwomen.

We set out our ED&I policy and strategy three years

ago. The policy explains our approach to equality,

diversity and inclusion including such matters as

harassment, victimisation and bullying, recruitment

and promotion, religious accommodations, gender

confirmation and workplace adjustments; the expected

standards for employees and their responsibilities;

andhow we will deal with infringements of the policy.

We do not have Group ED&I KPIs, but we encourage

our divisions and sites to prepare their own, relevant,

improvement plans every year, including focusing on

one annual ED&I objective.

Our Juarez and Manchester sites celebrate International Women’s Day

EQUALITY, DIVERSITY AND INCLUSION (ED&I)

An inclusive culture is an

essential building block

for everyone in our

company to thrive, and

this has been a key

focus for leadership over

the past few years.”

See our Board

diversity disclosure

on page 86

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 39

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

CASE STUDY

With our two Mexico sites expanding to support growth programmes and re-shoring for

customers and high local demand for skills, it has been a priority for our site leaders at

Mexicali and Juarez to build strong site cultures that make our employees happy and

proud to be part of the TT family.

A FAMILY FEEL IN MEXICALI

ANDJUAREZ

Leaders at both sites have put a real focus on

bringing everyone together through events and

initiatives built on employee needs and interests

such as support for women’s voices against

violence, health and wellness programmes, diversity

celebrations, ultra-local community giving, and

family days. TT has also invested in both sites,

Mexicali in 2023 and Juarez beginning in 2024, to

create better working environments for employees

as well as more capacity. Our site leaders take the

time to get personally involved in site events and

celebrations as an opportunity to listen to feedback

and build stronger “family” bonds across the team.

Both sites performed extremely strongly in the

2023employee engagement survey with Juarez

improving to a 3*** score from one to watch and

Mexicali moving up from 1* to 2**.

INSIDE TT ELECTRONICS

We are also extremely proud of the external

recognition achieved by Juarez in 2023:

– From the Women’s College of Lawyers on behalf

ofthe Government of the state of Chihuahua for

its“Ibelieve you” programme which offered

professional consultation and advice from

psychologists and lawyers for female employees

dealing with male violence.

– Achieving the Business and Human Rights

Distinctive based on the site’s human rights policies,

labour practices, culture of inclusion and non-

discrimination, and environmental protection.

– For commitment to employee education from

theGovernment of the state of Chihuahua.

Top: Mexicali’s annual family day celebration had

aMexican wrestling theme. The parking lot was

transformed into a wrestling arena and there was

funfor all the family with music, a wrestling exhibition,

games and food.

Middle: Juarez celebrates its Business and Human

Rights Distinctive award.

Left: Juarez celebrates PRIDE.

3***

Juarez employee

engagement survey

score improved from

2021: One to Watch

2**

Mexicali employee

engagement survey

score improved from

2021: 1*

Our site leaders

takethe time to get

personally involved

insite events and

celebrations as an

opportunity to listen

tofeedback and

buildstronger

“family”bonds

acrossthe team.”

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202340

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We encourage our teams to take an active

role in their local communities, whether

fundraising and volunteering for chosen

charities or committing time and resources

to promoting STEM education and careers.

VOLUNTEER HOURS

RECORDED IN OUR HOURS

FOR GIVING PROGRAMME

6,000

As part of our partnership with the University of Nottingham, TT hosted 37 Indonesian students for an introduction to TT.

Our Woking HQ team celebrating the end of their 25 mile

fundraising walk to Hampton Court Palace.

Our intrepid Sheffield team visited 100 sports stadiums in

100hours in support of a local charity.

COMMUNITIES

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

STEM skills

Our teams of engineering, technology and

manufacturing experts are passionate advocates for

the development of STEM skills and engaging with the

next generation of potential talent. We are particularly

keen to encourage more women and under-

represented groups to take up STEM subjects

andcareers.

Many of our employees give up their time to develop

local STEM partnerships to promote careers in

electronics and related fields, undertaking talks,

demonstrations and attending careers fairs to interest

and educate young people in the sector. Across the

world we also aid school curriculums directly by

supporting science projects and engineering

competitions to highlight the importance of STEM

subjects in everyday life.

Volunteering and charitable giving

TT has a big fundraising and volunteering culture –

ourefforts bring our employee teams together as well

as benefiting our communities. Each site chooses a

local charity to support through the year and our

“hours for giving” programme enables employees to

take five hours of paid leave per year to support local

causes. In 2023 nearly 6,000 hours were taken under

the programme. Our teams support many other

localand national causes and are able to request

matched funding from TT through the “giving the

TTWay”programme.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 41

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Sustainability

This year has seen TT make significant progress in all

areas of our sustainability strategy and deliver strong,

tangible results in our transition to achieve Net Zero.

Our Purpose is to solve technology challenges for a

sustainable world and, in doing so, we are ever mindful

to manage and reduce the impact of our own

operations on the environment.

First and foremost in our day-to-day actions is a

constant drive to reduce TT’s Scope 1 & 2 emissions

and we have continued to deliver meaningful results.

Application of our Group-wide Energy Strategy and

thework of highly motivated teams at our sites has

seen us deliver further falls in energy consumption,

increaseagain the share of our electricity coming

fromrenewables, and take benefits from our own

renewable electricity generation.

As a result of these efforts, we have seen another

excellent year of performance, with Scope 1 & 2

emissions falling 18% year-on-year and 62% from

ourrevised 2019 baseline. We are also mindful of our

impact on the environment relating to external factors,

including our supply chain, and this year has seen our

first measurement and publication of TT’s Scope 3

emissions. While further work is needed to improve

data collection in this area, we are now able to size

andanalyse TT’s material Scope 3 emissions.

In addition to our work on CO

emissions we are also

committed to reducing our impact on the environment

from our use of precious resources such as water,

useof single-use plastics and the unrecycled waste

wesend to landfill. We have made good progress in

the capture of data in these areas and have set a target

toeliminate single-use plastics and waste to landfill

by2035.

ENVIRONMENT

We are mindful that our Net Zero roadmap should be

science-based, and this year we publish our Scope 1

&2 roadmap, in an illustrative form, with an intention

toformally commit to Science-Based Targets in the

future. Additionally, we note recent guidance on

transition planning and we state our intention to

publish a Transition Plan in the future.

In this Annual Report we publish our Task Force on

Climate-related Financial Disclosures (“TCFD”)

statement and confirm our consistency with ten of

theeleven disclosures. 2023 has seen a significant

effort to assess our climate-related risks and

opportunities, including against a range of relevant

scenarios, andconfirm the resilience of our strategy.

For full consistency we continue our work to deliver

aquantitative assessment of the impact of climate-

related risks and opportunities. Seepage 47 for our

TCFD disclosure. See page 48 for Board oversight of

environment and climate matters.

The past year has been one of tremendous progress

for our Net Zero journey and for our successful

transition towards a future low-carbon economy.

Wecontinue to solve technology challenges for a

sustainable world and look forward to another year

ofmeaningful achievement ahead of us.

Climate Sustainability Council

In 2023 TT renewed its Climate Sustainability

Council with a stated purpose to “embed

sustainability in everything we do”. The Council

iscomprised of passionate volunteers from

acrossTTrepresenting Legal, Investor Relations,

Marketing, Business Development, Operations

andCommunications. Looking forward to 2024 the

Council has a wide-ranging action plan focused on

our purpose. We will be organising a Global Climate

Sustainability Day, building a strong network with our

site Green Teams, developing training materials, and

helping our sites to achieve their own Net Zero status.

2023 TARGET REDUCTION

VS 2019 BASELINE

50%

ACTUAL REDUCTION VS

REVISED 2019 BASELINE

62%

Application of our Group-wide Energy

Strategy and the work of highly motivated

teams at our sites has seen us deliver

further falls in energy consumption,

increase again the share of our electricity

coming from renewables, and take

benefits from our own renewable

electricity generation.”

Vicki Faith

Group Head of HSE and Sustainability

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202342

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

ENVIRONMENT CONTINUE D

CASE STUDY

Our drive to reduce electricity consumption, particularly in those plants not yet able to

access renewable electricity, has seen a reduction year-on-year in both absolute and

relative (to activity levels as measured by revenue) consumption. Committed teams

across TT have delivered a variety of impactful projects to make this happen. Here are

some examples of the work done by our teams this year.

A DRIVE TO DELIVER

Suzhou, China

Our Suzhou team completed nine energy saving

projects in 2023, saving a total of 280 MWhs per

year. One of the key projects has been setting up

asmart energy management system that enables

the monitoring of energy use and supports

elimination of energy waste.

INSIDE TT ELECTRONICS

Juarez, Mexico

Our Juarez team has engaged everyone in the team

on caring for the environment. After calculating that

air leaks could cause 20% excess use of electricity,

a successful project to eliminate air leaks was

launched and saved approximately 26tonnes of

emissions in 2023.

Kuantan, Malaysia

Our Kuantan team received significant capital support

from Group to install a major solar photovoltaic

system. This will generate more than 1 GWh of

renewable electricity per year. EVP Commercial,

MikeLeahan threw the “on” switch in 2023 and we

arealready enjoying thebenefits.

Greater Manchester, UK

Our Greater Manchester team successfully

completed the move of all production from a legacy

facility to a new facility that is modern and energy-

efficient. Thenew site boosts space efficiency, has

eliminated the use of natural gas, and includes

100% LED lighting and improved heat insulation.

280 MWhs

Saved per year

1 GWh

Renewable electricity generation capacity per year

100%

LED lighting

26 TONNES

emissions saved in 2023

First and foremost in

ourday-to-day actions

isa constant drive to

reduce TT’s Scope 1 & 2

emissions; and we have

continued to deliver

meaningful results.”

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 43

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Scope 3 emissions

We have completed assessment and measurement

ofour Scope 3 emissions during the year and our

focus will now be to improve the methods of collecting

and qualifying our data. We found that our emissions

are dominated by Category 1 – Purchased Goods and

Services. We are committed to reporting, managing

and eliminating all categories of emissions from our

value chain where possible, while maintaining the

immediate priority on eliminating emissions from

ourown operations. The reported emissions are

calculated directly, where possible, with data gaps

covered by proxy data, extrapolation, and use of

sampling asappropriate.

Scope 1 & 2 emissions

Our Group target for Scope 1 & 2 emissions was to

achieve a 50% reduction versus our 2019 baseline by

the end of 2023. As reported last year, we achieved a

54% reduction by the end of 2022 and we have taken

afurther step forward this year by delivering a further

reduction of 18% versus 2022, taking us to a 62

reduction versus our revised 2019 baseline. We are

well underway to achieve our target of Net Zero

Scope1 &2 emissions by 2035.

The main drivers of this achievement were: further

switch of purchasing to renewable electricity;

utilisation of self-generated renewable electricity from

solar panel installation; moving production to modern

energy-efficient facilities; and further improvements

insite energy efficiency.

Tonnes emitted

50% reduction vs revised baseline

2023

2022

20212020

Revised 2019

32,500

27,500

22,500

17,500

12,500

7,500

Scope 1 & 2 emissions tCO

PERFORMANCE ON SCOPE 1 & 2 EMISSIONS AGAINST TARGET TO REDUCE BY 50% VERSUS

REVISED 2019 BASELINE BY 2023

ENVIRONMENT CONTINUE D

Category 1: Purchased goods and services

We have implemented a process to measure our

emissions using a combination of direct input from

oursuppliers and estimates where necessary.

Category 4: Upstream transportation and distribution

We have partnered with our logistics providers to gain

access to emissions data.

Category 5: Waste generated in operations

We have constructed a robust system to measure

andreport all of our waste streams at our facilities.

Category 6: Business travel

We have partnered with centralised travel providers

togain access to emissions data.

Category 7: Employee commuting

We have calculated these emissions centrally

takinginto consideration employee data supplied

byalllocations.

Category 9: Downstream transportation

and distribution

Included in Category 4.

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

We have completed

assessment and

measurement of our

Scope 3 emissions

during the year and our

focus will now be to

improve the methods of

collecting and qualifying

our data.”

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202344

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Waste, water and energy

As well as managing and eliminating our CO

emissions, we are also committed to measuring and

eliminating, or reducing, the amount of electricity we

use from non-renewable sources, waste sent to landfill

and single-use plastics used at TT. We significantly

improved our data gathering ability in the latter two

areas this year and we have a target of zero waste

tolandfill and single-use plastics by 2035. We also

track our water consumption and are committed to

minimising water use, though our manufacturing

processes use very little water.

Renewables as a % of total electricity consumed

SWITCHING TO RENEWABLEELECTRICITY

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

ENVIRONMENT CONTINUE D

RENEWABLE ELECTRICITY

53%

of total electricity

2027

2025

2033

2035

2023

2031

2021

2029

2019

Scope 2

Scope 1

Total

6000

12000

18000

24000

30000

OUR SCOPE 1 & 2 NET ZERO ROADMAP

We are mindful that our Net Zero roadmap should be science-based with science-based targets. This year we

publish our Scope 1 & 2 roadmap, in an illustrative form, with an intention to formally commit to Science-Based

Targets in the future. TT is committed to Net Zero Scope 1 &2 emissions by 2035.

Net Zero roadmap: Scope 1 & 2 (tCO

Renewable: Tariff or REC

Renewable: Power purchase agreement (“PPA”)

Renewable: TT solar or wind

Energy use reduction

Factory utilisation

Replacement of natural gas

Electric vehicles

Action to Net Zero Scope 1 & 2

53%

45%

36%

20232022202120202019

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 45

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Change vs

previous year

Change vs

revised 2019

baseline 2023 2022 revised 2019

GHG emissions Scope 1 & 2 (tCO

Scope 1

(27)% (25)% 1,102 1,513 1,479

Scope 2 (location-based) (2)% (34)% 17,107 17,371 26,066

Scope 2 (market-based)

(16)% (64)% 9,431 11,269 26,066

Scope 1 & 2 (location-based) (4)% (34)% 18,209 18,884 27,545

United Kingdom only 0% (25)% 3,670 3,654 4,862

Scope 1 & 2 (market-based) (18)% (62)% 10,533 12,782 27,545

United Kingdom only (15)% (89)% 549 648 4,862

Intensity ratio Group (market-based tCO

e/£m revenue) (18)% (70)% 17 21 58

GHG emissions Scope 3 (tCO

Category 1 – Purchased Goods & Services NA NA 158,998 – –

Category 4 – Upstream Transportation & Distribution NA NA 5,329 – –

Category 5 – Waste NA NA 212 – –

Category 6 – Business Travel NA NA 1,883 – –

Category 7 – Employee Commute NA NA 4,202 – –

Category 9 – Downstream Transportation & Distribution

NA NA Included in Category 4

Scope 3 Total NA NA 170,624 – –

Intensity ratio Group (tCO

e/£m revenue) NA NA 278 – –

Energy consumption (MWhs)

Electricity (non-renewable) (18)% (63)% 21,985 26,765 59,261

Electricity (renewable) 11% NA 24,435 21,982 –

Natural gas (4)% (7)% 3,912 4,054 4,185

Vehicle fuel (35)% (86)% 409 625 2,890

Total energy (5)% (24)% 50,741 53,426 66,336

United Kingdom only 0% (26)% 15,182 15,166 20,509

Intensity ratio Group (Total energy/£m revenue) (5)% (40)% 83 87 139

Water and Waste

Total waste (tonnes) NA NA 1,406 – –

Waste to landfill (tonnes)

NA NA 417 – –

Single-use plastics (tonnes)

NA NA 43 – –

Intensity ratio Group (Total waste/£m revenue) NA NA 2 – –

Water use (m

) 10% NA 140,175 127,720 –

Intensity ratio Group (Water use/£m revenue) 10% NA 228 208 –

1 Entries for Scope 1 have been corrected to include emissions

relatedto fugitive GHG release, where data is available. The level

ofemissions is not material but this is being included to improve

inventory completeness.

2 Baseline of 2019 has been recalculated in order to correct minor errors

related to inventory and emission factors. Although these are not

material, in accordance with GHG Protocol guidance on good practice,

these are being corrected as 2023 is a “target” year for the Group.

Thatis, we are reporting our performance against our target to reduce

Scope 1 & 2 emissions by 50% vs baseline 2019.

3 Categories 3, 8, 10, 11, 12, 13, 14 and 15 are not included as they are

not relevant to the Group business model. Category 2 (Capital Goods)

is included in Category 1 (Purchased Goods & Services).

4 Downstream transportation (services paid for by ourselves) is

included in Category 4 (Upstream Transportation & Distribution) per

GHG Protocol guidance. The remaining Downstream Transportation

&Distribution (not paid for by ourselves) cannot currently be measured

and we are assessing the viability of measuring this in the future.

5 Excluding diverted from landfill (typically incineration).

6 Single-use plastics utilised for packaging. TT does not have any

widespread or significant single-use plastics consumption, other

thanforpackaging.

EMISSIONS, WATER AND WASTE DATA

OUR PEOPLE, COMMUNITIES AND ENVIRONMENT CON TINUED

ENVIRONMENT CONTINUE D

Data

Our results are calculated centrally from data collected

locally. We use the market-based method for emissions

calculations and, in line with GHG Protocol guidelines,

we use the following information in this order of priority:

energy attribute certificates; contracts; supplier

emission rates; residual mix or grid average emission

factors. We are using an operational control boundary

for direct GHG emissions. We have adopted a cross-

sector calculation method in line with the GHG

Protocol Corporate Standard. For Scope 1 emissions,

we include our total owned and leased vehicle direct

emission impact. Emissions factors, for conversion of

activity or energy consumption into emitted CO

e, are

taken from widely used sources, often governmental.

The emissions factors used in this report are the most

recent available at time of publication.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202346

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

TT Electronics solves technology challenges for

a sustainable world. We do this by delivering

solutions for our customers that enable products

that are cleaner, smarter and healthier, and that

will benefit our planet and people for

future generations.

As a global manufacturer of electronic components and provider

of manufacturing services, we understand the importance of

analysing the current and future potential impacts of climate

change on our activities and the urgent need to protect the

environment for future generations given the severity of the

climate crisis. This year we have undertaken a more

comprehensive analysis of our climate-related risks and

opportunities, taking into consideration their impact under

different timeframes, and scenarios. We support the transition

to a low-carbon economy through our products and through

ouroperations via our commitment to becoming a Net Zero

emissions business onaScope 1 & 2 basis by 2035.

The Board has noted the requirement for mandatory climate-

related disclosures arising from the Companies (Strategic

Report) (Climate-related Financial Disclosure) Regulations 2022,

as well as FCA Listing Rule 9.8.6R(8). Below we have set out our

climate-related financial disclosures which demonstrate

consistency with ten of the eleven TCFD recommended

disclosures as detailed in ‘Recommendations of the Task Force

on Climate-related Financial Disclosures’, 2017, with use of

additional guidance from ‘Implementing the Recommendations

of the Task Force on Climate-Related Financial Disclosures’,

2021. The disclosure that we are not consistent with is Strategy

(b) where we have provided qualitative but not fully quantitative

analysis of our physical risks and transition risks and

opportunities. TT Electronics will continue to refine financial

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”)

TCFD RECOMMENDATION RECOMMENDED DISCLOSURE

ANNUAL REPORT

REFERENCE

GOVERNANCE

Disclose the organisation’s governance around climate-related

risks and opportunities.

a. Describe the Board’s oversight of climate-related risks and opportunities. Page 48

b. Describe management’s role in assessing and managing climate-related risks and opportunities.

Page 48

STRATEGY

Disclose the actual and potential impacts of climate-related

risks and opportunities on the organisation’s businesses,

strategy and financial planning where such information

is material.

a. Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term.

Page 50

b. Describe the impact of climate- related risks and opportunities on the organisation’s businesses, strategy and financial

planning.

Page 50

c. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including

a2°C orlowerscenario.

Page 50

RISK MANAGEMENT

Disclose how the organisation identifies, assesses and

manages climate-related risks.

a. Describe the organisation’s processes for identifying and assessing climate-related risks.

Page 49

b. Describe the organisation’s processes for managing climate-related risks.

Page 49

c. Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s

overall riskmanagement.

Page 49

METRICS AND TARGETS

Disclose the metrics and targets used to assess and manage

relevant climate-related risks and opportunities where such

information is material.

a. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk

management process.

Page 56

b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (“GHG”) emissions, and the related risks.

Page 46

c. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance

againsttargets.

Page 56

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”)

impact analysis, relevant to Strategy (b) and Physical Risk, with

a view to updating the disclosures at the next reporting cycle.

The climate-related financial disclosures made by Group

comply with the requirements of the Companies Act 2006 as

amended by the Companies (Strategic Report) (Climate-related

Financial Disclosure) Regulations 2022.

Following independent third party and internal analyses

andassessment of the Group’s climate-related risks and

opportunities, which are detailed in the Strategy section of

thisTCFD disclosure (see page 49), our view currently is that

significant financial planning or budgetary change as a result

of climate change is not likely to be required and the transition

to Net Zero is already incorporated into the Group’s

strategicplanning.

Detail on the 11 recommended disclosures can be found

onthe pages highlighted below.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 47

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

TCFD CONTINUED

BOARD OVERSIGHT OF CLIMATE-RELATED RISKS

ANDOPPORTUNITIES

At TT Electronics, the Board of Directors oversees all ESG

matters, including climate-related issues, across Group culture,

strategy, compliance, risk and internal controls as part of our

overall governance, budgetary approval and risk management

frameworks. The Board receives regular updates on the status

of Group environmental issues (including sustainability and

climate-related risks and opportunities). The Board also receives

regular updates on the progress made against targets and

ongoing action items in the form of a presentation and

supplementary writtendocument.

An overview of risks and opportunities is provided in addition

toan update on the progress of current projects related to

strengthening the reporting infrastructure for climate-related

risks and opportunities. A review by the Board of the Group’s

NetZero planning and Sustainability Strategy is undertaken

atleast annually.

Audit and Risk Committees

The Board is also responsible for risk management, supported

by the Audit Committee and informed by the executive Risk

Committee, under which there is a periodically scheduled

meeting focused on the climate risk register. The Board defines

risk appetite and monitors the management of significant risks.

Climate-related risks are included in the Group riskregister.

People, Social, Environmental and Ethics (“PSEE”) Committee

Beneath Board level, the PSEE Committee provides oversight

ofand decision-making on our environmental strategy and

performance. The CEO chairs the PSEE Committee, which also

includes the Senior Independent Director (“SID”). The CEO

reports directly to the Board following each PSEE Committee

meeting, which occur three times per year.

The PSEE Committee receives updates on the progress of

climate-related strategic initiatives and is advised by our Group

Head of HSE and Sustainability who provides on-the-ground

insight and specialist advice as well as enabling the sharing of

best practice and ideas across the Group. The climate-related

content of the PSEE Committee agenda is closely aligned with

the Board report, albeit being more detailed in analysis and

morestrategically focused.

Management’s role in assessing and managing climate-

related risks and opportunities

At the direction of the Board, management are assigned the

responsibility to assess, monitor and manage climate-related

risks and opportunities. We have put in place a process for

ourexecutive management team to be fully engaged in the

governance process and monitor progress through monthly

reports/dashboards and more detailed quarterly reviews.

Weuse our existing structure to manage these processes.

Management receives information on emissions, and details

ofany actions, strategic or financial planning required to

GOVERNANCE

addressclimate-related issues. Executive management are

represented in the PSEE Committee and are also informed

bythe Group Head of HSE and Sustainability.

Responsibility for local risk management, planning and

performance lies with our site managers who work with our

site environmental champions and employee Green Teams

toformulate and deliver projects and engage employees

withour local and global agendas. Site managers are also

responsible for the monitoring and management of any

physical climate-related riskexposure.

Climate-related governance framework

Board of Directors

Chair: Warren Tucker

Number of meetings in 2023: 7

Overall responsibility for climate-related policy, plans and

budget as well as mitigation of key climate-related risks

andleveragingopportunities.

Group Sustainability

Group Head of HSE and Sustainability updates the Board on risks and opportunities, the outcome of climate-related scenario analysis

exercises, action plans and/or amends business processes.

Management

Help achieve goals, feed back areas for improvement, and update business continuity plans. Responsible for data collection, reporting,

risk assessment and mitigation at site level. Also the integration of climate strategy into local business plans.

Audit

Committee

Chair: Anne Thorburn.

Independent Non-Executive

Director

Number of meetings

in 2023: 4

Supports the Board on risk

management. Oversees risk

management and internal

control processes.

Risk Committee

Chair: Peter France, CEO

Number of meetings

in 2023: 3

Supports the Board and

the Audit Committee in

monitoring the exposure

to risks, reviewing risk

management processes

and controls. Provides the

framework for managing

Group risks and regularly

reviews principal risks.

Executive

Leadership Team*

Number of meetings

in 2023: 8

Responsible for

implementation of the

Group’s ESG strategy,

including climate change

risksandopportunities.

* From 1 March 2024 the TMB

People, Social,

Environmental & Ethics

(“PSEE”) Committee

Chair: Peter France, CEO

Number of meetings

in 2023: 3

Oversees the Group’s ongoing

commitment relating to

sustainability and climate-

related issues.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202348

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

SHORT-TERM 2024–2028 In line with specific business plan forecasting

MEDIUM-TERM 2029–2035 Encompassing the Group’s ambition for Net Zero

Scopes1&2

LONG-TERM 2036–2100 Encompassing long-term industry and policy trends, such

as UKNetZero 2050, the useful life of our facilities and

equipment (often >10years and up to 50 years) and the

manifestation of long-term climate-related risks

OUR PROCESSES TO IDENTIFY, ASSESS

ANDMONITOR CLIMATE-RELATED RISKS

Climate-related risks are fully integrated into and considered

aspart of our overall Group risk management processes.

Ourclimate-related risk assessment considers existing and

emerging risks and all risk categories outlined in the TCFD

recommendations in relation to all of TT Electronics global

operations, selected key suppliers, and selected key customer

locations. Not all risk categories are applicable or material to

thebusiness.

Climate-related risk identification is performed both bottom-up,

through a detailed assessment at operational site level, as well

as top-down, through an assessment of strategic and

marketrisks.

Site-level environmental risks are identified as part of our

operational risk assessments. This year, we enhanced our

site-level assessment of physical climate-related risks using

anatural hazards risk analysis software tool, which provided

greater depth to our analysis of all our global operations

(seebelow). We also extended this analysis to some of our

keysuppliers and customers. Site-level risk assessments are

monitored and consolidated at divisional and then Group level.

Alongside risk identification and assessment, divisions provide

action plans to incorporate a consideration for mitigation in

theanalysis. This assessment of physical climate-related risks

was initially performed as a “one-off” and going forward will be

repeated at least once every three years.

Climate-related transition risks, which tend to impact TT in

a top-down manner, are assessed in the periodic Climate Risk

Meeting, which was held three times in 2023. This meeting

informs the Board and the Audit Committee in monitoring

theexposure to climate-related risks through regular reviews,

including reviewing the effectiveness of risk management

processes and controls. The Group risk register is reviewed

bythe Risk Committee and the Board. The Risk Committee

metthree times in 2023.

Ongoing data and information relevant to climate-related

risksissupplied through regular Board reports in the form

ofdashboards and written submissions. As part of the risk

management processes, the Board regularly considers its

RISK MANAGEMENT

CLIMATE-RELATED RISKS ANDOPPORTUNITIES

Outlined in detail from page 51 are climate-related physical risks,

threeheadline climate-related transition risk categories,

andthree headline climate-related opportunity categories

thathave been identified as having an impact on our business.

The Group’s strategic planning for Net Zero and our emissions

reduction initiatives form the basis of our mitigation strategies

for our risks and our positioning to benefit from the opportunities.

For the purposes of this disclosure, TT Electronics defines time

horizons of where our climate-related risks andopportunities

first occur as follows:

STRATEGY

riskappetite in terms of the tolerance it is willing to accept in

relation to each principal risk based on key risk indicators to

ensure it continues to be aligned with the Group’s goals and

strategy. Each risk is considered as to whether it currently falls

within the Group’s appetite for that risk and a decision is made

on whether to mitigate, control or accept that risk. As a result,

the relative materiality and the prioritisation of climate-related

risks is considered alongside other Group risks within the

existing Group risk management framework. In addition to our

disclosed climate-related risks and opportunities, sustainability,

climate change and the environment is an identified principal

risk of the Group. Climate-related physical risks have historically

been identified and considered for business continuity planning.

However, the current in-depth approach is new for 2023.

Thereare no planned changes to the processes used but

weanticipate refinements.

TCFD CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 49

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

TCFD CONTINUED

Impact of climate-related risks and opportunities on the

organisation’s businesses, strategy and financial planning

The analysis and quantification of our climate-related risks

indicates that the climate risk exposure of the Group in the

short-term is mostly Very Low (see scale below), rising to mostly

Low in the medium-term. Long-term, some climate-related risks

rise to Medium and High levels, but in that time horizon, the

Group’s operating profit can be expected to be larger and more

able to withstand those risks. The Group’s climate-related

opportunities are also expected to be mostly Low in the

short-term. In the medium- and long-term horizons the analysis

indicates that climate-related opportunities are potentially

transformational for the Group. The margin of error in long-term

forecasting is high and thus there is a high level of uncertainty

inour long-term impact calculations for both our risks

andopportunities.

The identification of risks has allowed us to factor in certain

specific risk management and mitigation actions into our plans.

The Group’s existing business strategy, disclosure, and ambition

for Net Zero already provides some financial resilience and

strategic robustness to climate change, but the analysis will

alsohelp focus our product and service strategy towards

exploiting the opportunities identified.

Resilience of the organisation’s strategy, taking into

consideration different climate-related scenarios,

including a 2°C or lower scenario

The transition to Net Zero is already incorporated into the

Group’s strategic planning and is considered “business as usual”

with respect to operational and capital costs. There are no

effects of climate-related matters reflected in judgements and

estimates applied in the financial statements as a result. We will

continue to develop our analysis as new data becomes available,

both internally and externally, and we will continue to monitor

our climate exposures and action plans through the Group’s risk

managementframework.

Our approach to climate scenario analysis

In 2023, we undertook a substantial qualitative and quantitative

analysis of the resilience of our business model and strategy.

Commonly-referenced public climate scenarios were used to

provide comparisons across potential climate outcomes.

Thesewere selected because the outcomes, supporting data

andforecasts are appropriate for the nature of our business and

our operating environment. The outcome of this analysis is a

confirmation of the resilience of our strategy and that significant

financial planning or budgetary change as a result of climate

change is not likely to be required and the transition toNet Zero

is already incorporated into the Group’s strategic planning.

Physical risks were analysed using three scenarios from the

Intergovernmental Panel on Climate Change (“IPCC”) embedded

in the software platform used to analyse physical risks of

climatechange:

– RCP 2.6: a “very stringent” pathway, likely to keep global

temperature rise below 2°C by 2100.

– RCP 4.5: an intermediate more likely than not to result in global

temperature rise between 2°C and3°C, by 2100.

– RCP 8.5: a bad-case scenario where global temperatures rise

between 4.1–4.8°C by 2100.

To understand their potential future impact, our transition

risksand opportunities are modelled out to 2050 against two

International Energy Agency’s (“IEA”) scenarios. These were

selected as they are accompanied by supportive datasets,

forecasts and industry projections which are useful for

modelling climate positive outcomes:

– Net Zero Emissions by 2050 Scenario (“NZE”): anarrow but

achievable pathway for the global energy sector to achieve

Net Zero CO

emissions by2050. This scenario meets the

requirement for a“below 2°C” scenario. NZE also informs

thedecarbonisation pathways used by the Science-Based

Targets initiative (“SBTi”).

– Stated Policies Scenario (“STEPS”): representing projections

based on the current policy landscape. Global temperatures

rise by around 2.5°C by 2100 from pre-industrial levels, with

a50%probability.

STRATEGY CONTINUED

CLIMATE-RELATED PHYSICAL RISKS

With locations (including both offices and manufacturing sites)

across the world, TT Electronics maintains a large and diverse

geographical footprint. This year we enhanced our physical

risk assessment, using geospatial risk modelling software to

analyse the group’s exposure to natural hazards and how

these risks may change in the future under various scenarios

for global temperature rise by 2030, 2050 and 2100.

Physical climate-related risks relate to changes to the

environment from the impact of climate change. The

assessment considers acute risks, defined by the TCFD as

thechange in frequency and/or intensity of extreme events,

such as river flooding; and chronic risks, defined as longer-

term shifts in climate such as rising mean temperatures, rising

sea levels, changes inprecipitation and weather extremes.

Theprimary physical climate-related risks for TT Electronics

are flood, storm and fire weather stress.

All 23 Group sites were assessed. Six of these sites

(Suzhou,Kuantan, Dallas, Mexicali, Juarez and Cardiff) are

more susceptible to climate-related risk and the potential

future risk for these sites, within the timescales presented here,

are deemed to be serious. Our definition of “serious” in this

case is a 100 year return period meaning that there is a 1%

chance (or 1 in 100 chance) of a significant weather event in

agiven year. The nature of the potential climate-related risk is

detailed further in this section. Any other sites with heightened

risk exposure were deemed to be of low impact to the Group’s

ongoing business resilience.

The primary potential financial impact of climate-related

physical risks is business or production disruption and/or

asset damage leading to loss of revenue, increased insurance

premiums, reduced asset value and reduced labour

productivity. In addition, climate-related physical risks may

result in disruption to local or regional infrastructure or

transportation, and thereby cause disruptions to our upstream

and downstream supply chains.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202350

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Mexicali, Mexico

Future: River flood and greater incidence of drought, heat and fire

weatherstress

Juarez, Mexico

Future: River flood and greater incidence of drought, heat and fire

weatherstress

Plano, USA

Future: River flood and greater incidence of fire, weather, heat and

precipitationstress

Cardiff

, Wales

Future: River flood

1 Divestment of site announced 4 March 2024

Kuantan, Malaysia

Future: River flood, sea level rise and greater incidence of drought,

heat and precipitation stress

Suzhou, China

Future: River flood, storm surge and greater incidence of

precipitation stress

SITE POTENTIAL EXPOSURE TO PHYSICAL CLIMATE RISK

We have also conducted the same climate-related physical risk

assessment on nine of our key customers (mostly distributors)

and ten key suppliers. The analysis of all current and future

potential physical risks will be shared with our value chain

partners as part of our engagement to help ensure

businesscontinuity.

Following this analysis, our site managers have provided

feedback on individual sites’ historic exposure to natural hazards

and their impact, which to date has been insignificant. Each site

has been requested to review and/or amend business continuity

plans and investigate the requirement for mitigation. The

following existing features and mitigations have beenidentified:

– All TT Electronics sites are insured for both property and asset

damage as well as business interruption (i.e. loss of profit),

which materially limits the Group’s exposure to any climate-

related financial impact. Sites are periodically visited by

insurers, at their discretion, for risk assessment, including

climate-related risk.

– Affected assembly operations can be moved and/or dual

manufacturing strategies could be developed.

– Multiple sites operate on more than one floor for part of

theiroperations. They could be consolidated on upper floors

(partial manufacturing) with notice (c. 1 year).

– At least one site is at a higher elevation than the

surroundingarea.

For more complex manufacturing facilities a timeline for a

factory move could be lengthy (in the region of 2–3 years);

however these facilities could be moved within the period

implied by physical risks and therefore a plant move is possible

as a pre-emptive mitigation action in the event that the physical

risk were to be considered unacceptable.

TT Electronics does not extensively use water-intensive

production processes, so drought risks are minor and relate

toemployee wellbeing and services.

STRATEGY CONTINUED

TCFD CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 51

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Materiality

Impact

Very low

Moderate

Low High

Very high

SHORT-TERM 2024–2028 In line with specific business plan forecasting

MEDIUM-TERM 2029–2035 Encompassing the Group’s ambition for Net Zero

Scopes1&2 by 2035

LONG-TERM 2036–2050 Encompassing long-term industry and policy trends,

such as Group Scope 1 & 2 Net Zero target 2035 and

UK Net Zero2050

STRATEGY CONTINUED

Impact

RISK RISK DESCRIPTION RISK TYPE FINANCIAL IMPACT

MITIGATION AND

RESPONSE

SHORT

(2024–2028)

MEDIUM

(2029–2035)

LONG

(2036–2050)

SCENARIO

IMPLICATIONS

Growing UK

and global

regulations

on carbon

emissions and

increasing

reporting

requirements.

Operational exposure to carbon pricing mechanisms. The

adoption of carbon pricing instruments is rising globally,

driving the price levels of all carbon pricing systems and

therefore the overall risk exposure. UK requirements may

exceed global industry standards.

Current &

Emerging

Regulation

Higher energy costs

or direct carbon tax

related to Scope 1 & 2

emissions

Our target is to achieve

Net Zero Scope 1 & 2

emissions by 2035.

No change in exposure

between STEPS

and NZE scenarios,

given our projected

emissions profile

Value chain exposure to carbon pricing mechanisms. The

adoption of carbon pricing instruments is rising globally,

driving the price levels of all carbon pricing systems and

therefore the overall risk exposure. The impact is likely

to be felt through potential increases to the cost of raw

materials and transport costs as suppliers pass on the

added costs to their customers.

Higher cost of raw

materials and transport

should suppliers pass

on added costs

Our ambition is to

achieve Net Zero.

We are working to set

near-term targets for

Scope 3.

No change in exposure

between STEPS and

NZE scenarios, given

our Scope 3 projected

emissions profile

UK listed companies reporting requirements. UK listed

companies reporting requirements become onerous. In

addition, the risk that UK legislation becomes onerous for

specific products and in the extreme drives them out of

existence. Potential loss of revenue and risk of insufficient

internal resource and data management for Group-level

and product level compliance reporting.

Loss of revenue Resource and

data management

for Group-level

and product-level

compliance and

reporting.

Requirements may

increase under the

NZEscenario, but we

expect no change to

our risk exposure

Climate risks and opportunities are assessed on the timescale

(right) and a five-point scale based on gross impact on

businessperformance.

TCFD CONTINUED

CLIMATE-RELATED TRANSITION RISKS

We have also enhanced our transition risk assessment via a more

detailed analysis of our climate risk exposures and the impact

ofscenarios. Climate-related megatrends, which feature in our

analysis, are powerful, transformative forces that can change

the trajectory of the global economy by shifting the priorities of

societies, driving innovation and redefining business models.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202352

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Materiality

Impact

Very low

Moderate

Low High

Very high

Rapid

transition to a

local carbon

economy and

technological

advancement

stranding

legacy

technology,

or impeding

businesses

supplying

customers

caught

with legacy

technology.

Legacy business, new business and NPI supplied to

aerospace industry. Loss of revenue as aerospace

industry becomes restricted and taxed to deter emissions.

Market Loss of revenue Additional

sustainability

resources applied.

Additional reporting

and data management

resource and systems.

No change in exposure

between STEPS

and NZE scenarios,

given our projected

emissions profile

Technology – excessive technology redundancy in our

manufacturing, product and NPI portfolio. Our technology

(design/manufacturing) must keep pace with market and

customer requirements.

Technology Loss of revenue Additional

sustainability

resources applied.

Additional reporting

and data management

resource and systems.

Large impact

under STEPS and

NZEscenarios

Technology – excessive technology redundancy in our

customers’ manufacturing, product and NPI portfolio. Our

customers fail to transition to a low-carbon economy.

Loss of revenue Reduce and phase

out exposure to fossil

fuelindustries.

Large impact

under STEPS and

NZEscenarios

Impact

RISK RISK DESCRIPTION RISK TYPE FINANCIAL IMPACT

MITIGATION AND

RESPONSE

SHORT

(2024–2028)

MEDIUM

(2029–2035)

LONG

(2036–2050)

SCENARIO

IMPLICATIONS

Growing global

scrutiny of

commercial

businesses’

impact on, and

preparedness

for, climate

change and

the low-carbon

transition.

TT’s position within sustainability relative to performance

and reporting. Investors, lending banks, and customers

represent the key stakeholders demanding sustainability

performance from TT, especially around climate change.

Areas of scrutiny may include the group’s relative

sustainability performance, delivery on targets and the

NetZero roadmap and strategicplan.

Reputation Not deemed

reasonably possible

to define reputational

financial impact

Additional

sustainability

resources applied.

Additional reporting

and data management

resource and systems.

No change in exposure

between STEPS

and NZE scenarios,

given our projected

emissions profile

Net zero roadmap and targets. Investors, lending banks

and customers represent the key stakeholders demanding

sustainability performance from TT, especially around

climatechange.

Not deemed

reasonably possible

to define reputational

financial impact

Additional

sustainability

resources applied.

Additional reporting

and data management

resource and systems.

No change in exposure

between STEPS and

NZE scenarios, given

our Scope 3 projected

emissions profile

Legacy business, new business and NPI supplied to fossil

fuel industry. Risk related to TT’s direct exposure to the

fossil fuelindustry.

Not deemed

reasonably possible

to define reputational

financial impact

Reduce and phase

out exposure to fossil

fuelindustries.

No change in exposure

between STEPS and

NZE scenarios, given

our Scope 3 projected

emissions profile

CLIMATE-RELATED TRANSITION RISKS CONTINUED

TCFD CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 53

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Materiality

Impact

Very low

Moderate

Low High

Very high

Products with

applications

that directly

reduce energy

consumption

and emissions

may

outperform

market

average for

growth

In-house technology and products for decarbonising the

aerospace industry.

Products &

Services

Increased revenue Expand our exposure

to megatrends and

applications related

toaerospace.

Product marketing and

marketing resource

in conjunction with

futureNPI.

Large impact

under STEPS and

NZEscenarios

In-house technology and products for decarbonising the

on-road vehicle, off-road vehicle and traction industries.

Increased revenue Expand our exposure

to megatrends and

applications related

totransport.

Product marketing and

marketing resource

in conjunction with

futureNPI.

Large impact

under STEPS and

NZEscenarios

In-house technology and products for systems, software

and devices that sense, control and manage energy

consumption.

Increased revenue Expand our exposure

to megatrends and

applications related

toenergy.

Product marketing and

marketing resource

in conjunction with

futureNPI.

Large impact

under STEPS and

NZEscenarios

CLIMATE-RELATED TRANSITION OPPORTUNITIES

Impact

OPPORTUNITY OPPORTUNITY DESCRIPTION

OPPORTUNITY

TYPE FINANCIAL IMPACT

ADAPTATION AND

RESPONSE

SHORT

(2024–2028)

MEDIUM

(2029–2035)

LONG

(2036–2050)

SCENARIO

IMPLICATIONS

Ability to

capitalise on

megatrends

associated

with the

low-carbon

economy

Annual profitability from alignment of products that drive

alow-carbon economy.

Market Increased revenue Invest in aerospace

and automation &

electrification products

that drive a low-

carboneconomy.

Large impact

under STEPS and

NZEscenarios

Significant majority of products are universal enablers. Increased revenue Invest in aerospace

and automation &

electrification products

that enable a low-

carbon economy.

Large impact

under STEPS and

NZEscenarios

Exposure to megatrends – technology and products

(additionalprofitability).

Increased revenue Invest in technology

and products aligned to

climate megatrends.

Large impact

under STEPS and

NZEscenarios

TCFD CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202354

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Materiality

Impact

Very low

Moderate

Low High

Very high

Impact

OPPORTUNITY OPPORTUNITY DESCRIPTION

OPPORTUNITY

TYPE FINANCIAL IMPACT

ADAPTATION AND

RESPONSE

SHORT

(2024–2028)

MEDIUM

(2029–2035)

LONG

(2036–2050)

SCENARIO

IMPLICATIONS

Growth

through

sustained

energy and

carbon

reductions,

and exceeding

sustainability

requirements

Renewables (Scope 2): purchase of renewable electricity

certificates or corporate power purchase agreements

(“PPAs”). Installation of solar photovoltaic (“PV”)

facilities, reducing reliance on local grid, emissions

andoperatingcosts.

Energy Source Reduced costs,

decreased exposure

to carbon price risks

(Scope 2)

Net Zero programme,

switch to renewable

electricity.

No change in exposure

between STEPS

and NZE scenarios,

given our projected

emissions profile

Energy strategy. Energy use reduction programmes,

elimination of use of fossil fuel & related equipment

(Scope 1 & 2 initiatives). Net Zero factory.

Resource

Efficiency

Reduced costs Net Zero programme,

energy reduction.

Employee engagement

to reduce energy

consumption.

LED lighting, renewable

energy installations

– solar PV, insulation,

boilers.

No change in exposure

between STEPS

and NZE scenarios,

given our projected

emissions profile

Reduce focus on airfreight, eliminate waste from

operations, employee travel assistance, minimise

business travel, partner with suppliers on a Net Zero

journey (Scope 3 initiatives). Logistics strategy.

Reduced costs Net Zero programme,

Scope 3 reduction.

Non-hazardous waste

landfill target.

Recycling, waste

reduction initiatives.

N/A

CLIMATE-RELATED TRANSITION OPPORTUNITIES CONTINUED

TCFD CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 55

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

CLIMATE-RELATED METRICS AND TARGETS

TT uses a wide variety of metrics to assess climate-related risks

and opportunities. Metrics (and reduction targets) for emissions

of GHGs play a key role in reducing our impact on the planet,

addressing a principal risk of reputational damage and bolstering

our recognised opportunities related to our purpose of solving

technology challenges for a sustainable world. Comprehensive

emissions statistics are used at monthly divisional meetings,

quarterly Executive reviews and at Board meetings.

In addition to Scope 1 & 2, TT reports all material categories of

Scope 3: purchased goods and services, employee commute,

business travel, upstream transportation and distribution,

wasteand downstream transportation and distribution

(theupstream element only of the latter). All other categories

aredeemed notmaterial.

Targets to manage climate-related risks and opportunities

Our Scope 1 & 2 emissions target of 50% reduction by 2023

from a 2019 base year was achieved in 2022, one year early. Our

remaining target is Net Zero Scope 1 & 2 by 2035. There are also

additional targets to transition all sites to renewable electricity

supply, where at all possible, and whether that is externally

supplied or internally generated by 2035.

Executive Director remuneration is already aligned with

sustainability and the achievement of ESG measures. Theshort-

term incentive plan is weighted 70% to financial performance

measures, 10% to ESG measures and 20% to strategic

objectives. In 2023 the ESG targets were largely focused

toward the environment and included targets linked to delivery

of Scope 1 & 2 emission reductions and wider environmental

progress. Short-term incentive plans for the wider leadership

group are weighted 75% to financial performance measures

and 25% to strategic objectives.

Typically, ESG forms one of the focus areas within the

strategicobjectives, with metrics targeted to human capital

management and achieving our carbon Net Zero ambitions.

We have also widened our range of performance metric

definitions that can be used across both short-term and

long-term incentives to enable ESG measures to also feature

inour long-term incentives as appropriate in the future.

This table highlights some of the key metrics and targets used, or under consideration, within the Group

METRIC DEFINITION TARGET

LINK TO CLIMATE-RELATED RISKS

AND OPPORTUNITIES METRIC REPORTING STATUS

Energy

consumption

(intensity)

KWhs of consumption for all Group locations

per annum, in ratio to revenue (£m)

Year-on-year reductions Opportunity to reduce both emissions and

costs with better use of energy source

andefficiency.

Tracked monthly as part of our emissions data management system.

Reported annually in conjunction with announcement on Group revenue.

Switch to

renewables

Percentage of consumed electricity derived

from renewable sources

100% by 2035 (subject to availability) Risk exposure to emerging regulation,

reputation and future carbon

pricingmechanisms.

Tracked monthly as part of our emissions data management system and

reportedannually.

Emissions

Scope 1 & 2

(absolute)

Absolute CO

e emissions from our

ownoperations

Net Zero 2035 Scope 1 & 2. Net Zero being

a state where the amount of GHGs released

into the earth’s atmosphere is balanced by

the amount of GHGs removed

Risk exposure to emerging regulation,

reputation and future carbon

pricingmechanisms.

Tracked monthly as part of our emissions data management system and

reportedannually.

Emissions

Scope 1 & 2

(intensity)

e emissions from our own operations,

inratio to revenue (£m)

Net Zero 2035 Risk exposure to emerging regulation,

reputation and future carbon

pricingmechanisms.

Tracked monthly as part of our emissions data management system.

Reported annually in conjunction with announcement on Group revenue.

Waste to

landfill

General waste, that cannot reasonably

be recycled or diverted, sent to landfill

(measured as a percentage of total)

Zero by 2035 Opportunity to improve resourceefficiency. Tracked monthly as part of our emissions data management system and

reportedannually.

Single-use

plastics

Consumption of single-use plastics

inpackaging (tonnes)

Zero by 2035 Opportunity to improve resourceefficiency. Tracked monthly as part of our emissions data management system and

reportedannually.

Business

continuity

Business continuity plans for each location

that address physical climaterisk

Plans in place and reviewed annually Risk to impact from chronic or acute weather

events and climate change.

We are assessing our business continuity plans and determining the

suitability of this as a measure in relation to physical risk.

METRICS & TARGETS

TCFD CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202356

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Under Section 172 of the Companies Act 2006,

Directors are required to promote the success of

the Company for the benefit of our shareholders,

while having regard to the factors set out in

Section 172 including the interests of our

other stakeholders.

The Board believes that engagement with our stakeholders is key

to the long-term success of our business. We use the knowledge

and feedback gained from our stakeholders to push our business

forward and respond to key requirements and challenges in the

industries in which we operate. The Board considers its current

engagement mechanisms to be effective.

The Board fully understands its role in this process and regularly

reviews the Group’s key stakeholders and the impacts our

activities have on these groups. The Board encourages open

and purposeful engagement so that they can use clear and

honest feedback to assist in their decision-making processes.

ENGAGING OUR

STAKEHOLDERS

STAKEHOLDER ENGAGEMENT AND SECTION 172 STATEMENT

The principal decisions taken by the Board in 2023

centredaround:

– Board and senior management succession planning

– strengthening TT’s capital structure

– Board-level engagement (particularly with TT management,

employees, customers and shareholders)

– increasing operational capacity at overseas

manufacturingsites

– development of TT’s sustainability/ESG initiatives

The nature of Board meetings allows information about our

stakeholders to flow from the workforce, through commercial

teams and senior management to the Board and back down

the organisational structure. The Board also actively seeks

feedback from external advisers to help form its strategic

decisions. Throughout the year, the Board considered how

stakeholders are affected by its key decisions.

The following engagement disclosures describe how the Board

has had regard to the matters set out in Section 172 (1) (a) to

(f) and forms the Directors’ statement required under Section

414CZA of the Companies Act 2006.

STAKEHOLDER OUR ACTIVITIES THAT AFFECT THEM HOW WE ENGAGE AT BOARD LEVEL HOW WE ENGAGE ACROSS THE GROUP OUTCOMES OF ENGAGEMENT

CUSTOMERS

AND

SUPPLIERS

– R&D and new product introduction

– Products, including those supporting

environmental sustainability

– Operations and production pipeline

– Safety, environmental quality control

andreliability

– Sustainability targets

– Legal and regulatory compliance

– Payment practices/prompt payment

– Inventory management

– Responsible business practices

– Supply chain management

– Modern slavery review

– CEO and Board regularly receive reports

from divisions and internal Councils on key

customer and supplier initiatives.

– The Board reviews and approves payment

times and practices.

– The Board reviews and approves responsible

business practices and targets.

– Discussions with customers on funding of

working capital.

– Direct engagement with site senior

management on operational improvements

in production lines.

– Overview of Environment and

Sustainabilityactions and targets

throughthe PSEE Committee.

– Day-to-day contact on supply chain,

products and service.

– R&D partnerships.

– Collaboration across divisions to meet

customer needs including through our

Business Development and Supply

ChainCouncils.

– Voice of the Customer formal feedback.

– Supplier assessments.

– Continued focus on cleaner, smarter and

healthier solutions.

– New product launches and new contract

wins (see case study example on page 6).

– Continued review of Voice of the Customer

programme.

– Longer-term collaborative relationships

(see case study examples on page 10 and

page20).

– Monitoring of supplier payment times,

global supply chain, inventory management

and export risks.

– Third party screening of intermediaries

toprotect customers and suppliers.

– Improvements to the Internal Audit controls.

– Climate-related physical and transition risk

assessments carried out at most TT sites.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 57

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

STAKEHOLDER OUR ACTIVITIES THAT AFFECT THEM HOW WE ENGAGE AT BOARD LEVEL HOW WE ENGAGE ACROSS THE GROUP OUTCOMES OF ENGAGEMENT

EMPLOYEES

– Culture and purpose

– TT Way values and conducting business

with integrity

– Safety and wellbeing, including financial

planning and security

– Employee Assistance Programme

– Training and development

– Group employment policies

– Engagement activities

– ED&I

– Environmental sustainability

– Pensions

– Oversight of Group culture.

– HSE and Sustainability updates at each

Board meeting.

– Board , CEO, CFO and ELT site visits

(see page 74).

– CEO and SID are members of the PSEE

Committee ensuring the connection.

between the Board and the voice of

theemployee.

– Employee engagement survey.

– Oversight of ED&I roadmap.

– Regular talent and succession updates.

– Support for Employee

AssistanceProgramme.

– Employee forums on

ExecutiveRemuneration.

– Approval of environmental

sustainabilitytargets.

Read more

on page 72

– Formal employee engagement survey

andregular engagement pulse surveys.

– Site employee forums and Town Halls

withELT members.

– BE Inspired recognition scheme.

– Training and development activities aligned

to business and employee needs.

– ED&I Councils, inclusive leadership training

and employee courses.

– Regular employee information sessions on

personal wellbeing, salary review, pay rates

and company-wide employee benefits.

– Improving the wellbeing strategy for our

US-based employees

– Career conversations and personal

performance development plans.

Read more

on page 29

– 3*** employer rating following employee

engagement survey (91% response rate).

– Leadership development workshops.

– Further development of the ED&I strategy

atGroup and site level.

– Employee mindfulness and

wellbeingactivities.

– Financial wellbeing initiatives.

– Investment in sales and business

development capability.

– Ambitious environmental

sustainabilitytargets.

– Board diversity policy to complement

theGroup policy.

– Changes to site production capacities.

– Flexible working initiatives (see a case study

example on page 34).

INVESTORS

– Financial performance

– Leadership

– Governance and transparency

– Sustainability/ESG

– Reputation

– Communication

– Pensions buy-in

– RCF extension

– Regular report to the Board on investor views

including on TCFD and ESG.

– Chairman engagement around the

appointment of our new CEO.

– Direct engagement with advisers on

geopolitical changes and upcoming risks

and challenges.

– Shareholder engagement regarding ESG

programme and targets.

– Results, Annual Report and AGM.

Read more

on page 74

– Appropriate governance policies.

– Alignment of business and employees

around the Group strategy.

– Engaging employees with Group strategy.

– Collection of data supporting ESG strategy.

– Stable access to capital.

– Board review of strategic plan and investor

buy-in to TT strategic objectives.

– Ambitious environmental

sustainabilitytargets.

– Review and decisions on site footprint and

production pipelines in light of changing

geopolitical situation.

– Focus on monitoring TT response to

sanction regimes and other compliance

requirements relevant to international

corporations.

SOCIETY

– Products that solve technology challenges

for a sustainable world

– Responsible business practices

– Environmental practices and sustainability

– Employment training and apprenticeships

– ED&I focus

– Employee Assistance Programme

– Local supply chains

– Supporting local communities

– Oversight of Group strategy including ESG

strategy and performance.

– The Board reviews and approves responsible

business practices and targets.

– CEO and SID are members of the

PSEECommittee.

– Legal and regulatory compliance.

– Responsible business practices including

environmental practices and approach to

modern slavery.

– STEM education activities in local

communities.

– Charitable initiatives in local communities.

– Consistent monitoring of our ESG and

sustainability programmes.

– Supply chain partnership with CDP.

– Collaboration with IEMA.

Read more

on page 41

– Introduction of climate sustainability

roadmap to 2035.

– Global reporting tool for emissions across

all sites.

– Continued focus on cleaner, smarter

andhealthier solutions.

– New product launches that support

efficiency and sustainability.

– Site switches to renewable energy.

– Reduction in Scope 1 & 2 emissions.

– Driving ED&I strategy at Board, Group

andsite level.

– Internships and apprenticeships.

STAKEHOLDER ENGAGEMENT AND SECTION 172 STATEMENT CONTINUED

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ROBUST PRACTICES IN SUPPORT OF OUR BUSINESS MODEL

The Board of Directors is responsible for risk management

andinternal controls, supported by the Audit Committee and

informed by the executive Risk Committee. The Board defines

risk appetite and monitors the management of significant risks

to ensure that the nature and extent of significant risks taken by

the Group are aligned with overall goals and strategic objectives.

The Risk Committee supports the Board and the Audit

Committee in monitoring the exposure through regular reviews,

including reviewing the effectiveness of risk management

processes and controls.

The Head of Internal Audit & Risk assists the Risk Committee

byadvising management on improvements to the overall risk

management framework, facilitating the risk review process

andproviding independent experience and input to theprocess.

Risk management processes and internal control procedures

are established within business practices across all levels of the

organisation. Risk identification, assessment and mitigation,

including climate-related risks, are performed at an operational

level, as well as through top-down assessment of strategic and

market risk at the Executive management and Board level.

RISK MANAGEMENT POLICY

The Group’s risk management strategy sets out the Group’s

approach to risk management including its risk appetite,

oversight and monitoring and roles and responsibilities.

TheGroup’s risk management framework draws from the

threelines of defence:

– The third line compromises oversight from the Board,

AuditCommittee and Risk Committee with independent

assurance from the Group Internal Audit Function.

– The second line includes the Head of Internal Audit & Risk

who manages the risk management framework alongside

divisional and functional teams who drive compliance

including Group Legal, Finance, Human Resources and

Health and Safety with oversight and monitoring from the

Executive Leadership Team (the TMB from 1 March 2024)

and Senior Management.

– The first line comprises the site operational andfinance

teams responsible for day-to-day management of risk

anddelivery of control procedures with oversight from

sitemanagement.

RISK APPETITE

Risk management and internal controls provide reasonable but

not absolute protection against risk. The Board acknowledges

and recognises that in the normal course of business, the

Group is exposed to risk and that it is willing to accept a level of

risk in managing the business to achieve its strategicpriorities.

Risk appetite is not static and, as part of its risk management

processes, the Board regularly considers its risk appetite in

terms of the tolerance it is willing to accept in relation to each

principal risk based on key risk indicators to ensure it continues

to be aligned with the Group’s goals and strategy.

Each principal risk is considered as to whether or not itcurrently

falls within the Group’s appetite for that risk. As part of the

year-end risk assessment with the Board, it was confirmed that

all of the principal risk areas continue to be within Board and

Executive management’s appetite for that risk.

RISK MANAGEMENT

Our focus is to ensure continuous improvement

in our risk management processes and control

environment; we have refined our control

framework, delivered a tailored suite of training

across the Group and further embedded climate

risks and opportunities within our risk

management framework.”

Jennifer Chase

Group Financial Controller

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Operational steering and implementation

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

Corporate-level steering

Top-down oversight; set risk appetite; monitor significant risks; alignment with strategic objectives at corporate level

Board of Directors

Primary responsibility for risk oversight; setting strategic

objectives; and defining risk appetite

Audit Committee

Oversees risk management and internal controlprocesses

Risk Committee

Provides framework for managing risks; regularreviews

ofprincipal risks; and riskmanagement processes

Risk and Assurance function

Divisional-level steering and reporting

Risk identification assessment and implementation

ofriskmanagement actionplans and actions

Functional-level steering and reporting

Risk identification assessment and implementation

ofriskmanagement action plans and actions

Business units/site-level steering and reporting

Implement and embed risk management at an

operationallevel

RISK MANAGEMENT CO NTINUED

OUR RISK MANAGEMENT FRAMEWORK

RISK PROFILE AND EMERGING RISKS

At the direction of the Board, Executive management performed

a robust assessment of the principal and emerging risks facing

the Group, taking into account those that would threaten the

business model, future performance, solvency or liquidity, as

wellas the Group’s strategic objectives. This process includes a

bottom-up analysis of key risks at a functional and divisional level,

including climate-related risks. All principal risks identified by this

process may have an impact on the Group’s strategic objectives

within the next six to twelve months. Executive management and

the Risk Committee perform further analysis to prioritise these

risks, with a focus on those principal elements posing the highest

current risk to the achievement of the Group’s objectives or the

ongoing viability of the business. Risks assessed as higher

priority are consolidated into a Group risk register. Risks included

on the register are monitored closely by the Board in terms of

both prioritisation and mitigationstrategies.

It is recognised that, while these “top risks” represent a

significant proportion of the Group’s risk profile, Executive

management and the Risk Committee continue to monitor

theentire universe of potential risks to identify new or

emergingthreats as well as changes in risk exposure and

ariskhorizon scanning exercise is performed annually.

The risk horizon scanning exercise includes consideration

oftheemerging risks facing TT as a provider of electronics

technologies and, as a result, if any new emerging risks or

additional mitigating controls require inclusion on the Group

riskregister. As a result of the risk horizon scanning exercise

and consideration of new emerging risks throughout the year,

we have included a new “Geopolitical” risk. Geopolitical risk

andits impact was previously considered within the “General

Revenue Reduction” risk, but following discussions as set out

above, we have separated this out as a risk in its own right in

theGroup risk register which flows through to our principal risks

detailed in this report. The Risk committee reviews the Group

risk register at each meeting to ensure that the risk profile is

appropriate and includes all relevant risks including emerging

risks as appropriate. The assessment of principal risks during

the year has identified that, while there have been some

significant changes in the external environment, the Group

hasremained robust and resilient with mitigating activities

undertaken. This is reflected in the table of principal risks.

The Group has long been conscious of the ESG agenda which is

reported to the Board through our People, Social, Environmental

and Ethics Committee (“PSEE”) which is attended by the Senior

Independent Director. There continues to be a risk that a

negative perception of our ESG profile could impact on our

ability to attract new talent to the business, build relationships

with our customers, positively impact thecommunities in which

we operate, and attract investment from potential shareholders.

The risks in relation to these areas are captured in two principal

risks, “Sustainability, climate change and the environment” and

“Health and safety”. TT Electronics is committed to achieving

its sustainability objectives, reducing carbon emissions and

improving efficiency. We have further extended our climate

reporting in line with TCFD and CFD reporting requirements to

include identification of climate-related risks and opportunities

including physical risks. We have set out our approach and our

progress in these areas in the Our people, communities and

environment section of this report from page 29 and in the

TCFD section of this report from page 47.

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INTERNAL CONTROL ENVIRONMENT

The Internal Audit function is operated under a directed

co-sourced arrangement with PwC to enhance the levels of

resource and expertise available to the Group in specific areas,

with its activities under the direction of the ELT (the TMB from

1March 2024) and the Audit Committee. A risk assessment is

performed each year when building our internal audit plan to

ensure that it continues to be focused on the risks that are

relevant and important to the Group and reflects the latest

changes and developments. All of our manufacturing sites

perform an annual self-assessment against the Control

Framework and the results inform the internal audit programme

of work and internal audit plan risk assessment. Enhancements

to the Group’s Control Framework have been made during the

year as set out below in the “Key Areas of Focus during the

Year” section.

The Board monitors the Company’s internal control systems

and has reviewed their effectiveness in 2023. The review

process considered all material controls including, (i) the

information relating to the general controls environment as

outlined in the Internal Audit reports submitted to the Audit

Committee at each meeting; (ii) financial controls; (iii)

compliance controls; (iv) the key outputs of the controls

framework programme; and (v) management actions in relation

to internal and external audit findings. The Board found that the

Group operates a sound system of internal control and did not

recommend any specific actions.

KEY AREAS OF FOCUS DURING THE YEAR

During the year, Internal Audit reviewed and refreshed the

Group’s Control Framework by:

– streamlining and removing control duplication

– updating control descriptions

– providing clarity and enhanced guidance on

evidencerequirements

– designating key and fraud controls

Internal Audit took a risk-based approach to the review,

assessing all the associated risks for each process area and

mapping the existing controls in place against the risks to

ensure adequate coverage was in place. We also delivered a

suite of Control Framework training to aid the communication

of the updates made and support control compliance.

Internal Audit also completed a number of activities during

2023to strengthen the Group’s fraud risk framework including

developing a Fraud Prevention Policy and Fraud Risk

Assessment and delivering Fraud Awareness training to Control

Framework control owners across the business to raise fraud

awareness and to support control compliance.

We have embedded the review of climate risks within our risk

management framework. This year in response to the TCFD

reporting requirements we have enhanced our climate reporting

to include climate risks and opportunities for the Group (see

from page 47).

RISK MANAGEMENT CO NTINUED

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RISK MANAGEMENT CO NTINUED

PRINCIPAL RISKS

AND UNCERTAINTIES

RISK DESCRIPTION POTENTIAL IMPACT MITIGATING ACTION CHANGE IN THE YEAR

GENERAL

General revenue reduction

Reduction in demand and orders

due to economic downturn or

disruption to operations

(pandemicor other business

interruption event)

Sponsor

Peter France

Link to strategy

– Decelerating sales growth

affecting operating profit

– Monitor the wider economic conditions of

ourmarkets

– Timely financial reporting to monitor performance

and provide a basis for corrective action

whenrequired

– Ongoing optimisation of our cost base and strategic

moves creating a more resilient portfolio

– Business continuity and crisis management planning

– Management structures in place to enable a rapid

response to changing circumstances

2023

Risk stable. There continue to

be economic challenges due to

cost inflation and supply chain,

but our order book remains

strong as we go into 2024

reflecting our successful

positioning in structural growth

markets, new project wins and

multi-year contracts.

Technology investment

and R&D

Margin enhancement

Targeted and

complementary M&A

E S G

STRATEGIC PRIORITIES

KEY

The risk management framework is described on page 60. Using this framework the Board sets out

the risks that it currently believes to be most significant to the Group as they have the potential to

undermine the achievement of our strategic objectives.

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RISK DESCRIPTION POTENTIAL IMPACT MITIGATING ACTION CHANGE IN THE YEAR

COMMERCIAL

Contractual risks

Potential liabilities from defects

inperformance-critical products

that often operate in

extremeenvironments

Sponsor

Peter France

Link to strategy

– Reputational impact

– Deterioration in

customerrelationships

– Liability claims

– Reduction in revenue,

profitability and

cashgeneration

– Quality control procedures and systems in place and

appropriate levels of insurance carried for key risks

– Group guidelines on acceptable levels of contractual

liability are reinforced

– Continuing to enhance and deepen expertise in

contract management across the Group

2023

Risk stable.

Research and development

Delay in new product development

which is intended to support

revenue growth

Sponsor

Mike Leahan

Link to strategy

– Increased cost in

productdevelopment

– Delay in achieving

projectedrevenue

– Inability to meet the latest

requirements due to a step

change in technology

– Close collaboration with key customers

– Active monitoring of costs and milestones

– Target R&D more effectively

– Implementation of standard project

managementdisciplines

2023

Risk reduced. R&D spend

isone of our key capital

allocation priorities and we

continue to forge strong

partnerships on long term

programmes including our

recent wins in Power with

theTempest programme.

OPERATIONAL

People and capability

Ability to attract and retain

high-quality and capable people

Sponsor

Clare Nicholls

Link to strategy

– Loss of key personnel

– Potential business disruption

– Breakdown of

communication

andmisalignment

– Remuneration structure designed to

supportretention

– Succession planning processes embedded within

the businesses

– Campaigns to increase performance and

development of communication between managers

and employees to ensure alignment to objectives

– Regular talent reviews across all Divisions and Group

– Using a feedback loop utilising surveys to encourage

regular objectives and performance discussions.

See Our people and culture on page 31

2023

Risk reduced. There continue

to be pockets of attrition

throughout our business,

however the 3*** engagement

survey results reflect the

investment in our people that

has had a positive influence

onretention.

RISK MANAGEMENT CO NTINUED

Technology investment

and R&D

Margin enhancement

Targeted and

complementary M&A

E S G

STRATEGIC PRIORITIES

KEY

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RISK DESCRIPTION POTENTIAL IMPACT MITIGATING ACTION CHANGE IN THE YEAR

OPERATIONAL

Supplier resilience

Potential failure of critical suppliers;

product delivery delays; inability to

meet customer commitments

Sponsor

Mike Leahan

Link to strategy

– Reduction in revenue,

profitability and

cashgeneration

– Regular review of key supplier financial health and

product quality

– Monitoring of relevant commodity and precious

metals pricing

– Review of spend patterns toidentify opportunities

– Inventory build on key components where

considered necessary to mitigate some of the

supply chainrisk

– Supply Chain Council inplace

2023

Risk stable. Supply chain

challenges reduced and now

inisolated areas, mitigated

byinvestment in inventory

toenable response to

customerdemand.

IT systems and information

IT security breaches or disruption,

unauthorised access or mistaken

disclosure of information

Sponsor

Derek Winskill, CIO

Link to strategy

– Reputational impact,

business disruption and

potential deterioration in

customer relationships

– Regular analysis of cybersecurity and

datamanagement

– IT strategy reviewed by management and the Board

– Information security policies updated recently

– Investment through recruitment of additional

ITsecurity and enterprise resource planning

(“ERP”)specialists

– Processes and tools put in place to support

cybersecurity certifications

– Disaster recovery plans in case of system failure

– Annual penetration testing

– Internal vulnerability scanning

2023

Risk stable. We continually

update and strengthen our

cyber controls inresponse

toongoing cyber risks.

M&A and integration

Realisation of financial benefit

ofacquisitions

Sponsor

Peter France

Link to strategy

– Failure to realise the

expected benefits of an

acquisition or post-

acquisition performance of

the acquired business not

meeting the expected

financial performance at the

time acquisition terms were

agreed could adversely

affect the strategic

development, future financial

results and prospects

oftheGroup

– Full financial and other due diligence is conducted

tothe extent achievable in the context of each

M&Aopportunity

– A detailed business case including forecasts is

reviewed by the Board for each opportunity

– Integration risk and planning is reviewed and

undertaken as part ofevery acquisition

– Lessons-learned activities are built into future plans

2023

Risk stable. Most recent

acquisition ofFerranti in

January 2022 is fully

embedded within the TT

business and recently moved

to a new facility inManchester.

RISK MANAGEMENT CO NTINUED

Technology investment

and R&D

Margin enhancement

Targeted and

complementary M&A

E S G

STRATEGIC PRIORITIES

KEY

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RISK DESCRIPTION POTENTIAL IMPACT MITIGATING ACTION CHANGE IN THE YEAR

OPERATIONAL

Health and safety

The manufacturing industry may

have inherent risk related to, for

example, materials and processes.

Eliminating or managing these

risks is critical to mitigate the

impact on our employees, sites

and the environment of these risks.

Sponsor

Stewart Partridge

Link to strategy

– Incidents occurring due to

unsafe use of materials or

manufacturing processes.

Failure to eliminate or

manage the impact of these

risks could negatively impact

our employees, cause harm

to the environment, or lead to

regulatory fines or

reputational damage.

– Health, Safety and Environmental (HS&E) Council

responsible for Group-wide best practice sharing,

monitoring and improvements, and strategy setting.

– Data analysis, processes and roadmaps in place to

minimise the risk of incidents.

– HS&E compliance annual self-assessment and

external global Health and safety audit on a rolling

three-year cycle across the sites.

2023

Risk reduced. Enhanced HS&E

reporting and processes in

place clarifying the strength

ofour controls and mitigations

including the Group HS&E

Council which has been

enhanced to improve best

practice sharing on a

regionalbasis.

Sustainability, climate change

and the environment

Our manufactured products or

other activities or decisions of the

Group, including in relation to

climate-related risks, may not be

judged by our customers,

employees, communities and

investors as being sustainable. Our

sites and business activities may

be subject to physical risks due to

climate change, or both risks and

opportunities as we transition to a

low carbon economy.

Sponsor

Stewart Partridge

Link to strategy

– Failure to appropriately

manage the environmental

impact of our operations

andproducts.

– Failure to manage climate

physical or transition risks,

or the failure to realise

transition opportunities

(as described in the TCFD

section on page 47).

– Reputational impact and

potential deterioration

in our relationships with

ourstakeholders

– HS&E and Sustainability Councils responsible

for sharing Group-wide best practice, monitoring

improvements and strategy setting.

– PSEE Committee responsible for reporting Group

progress, to the Board, against the development

and monitoring of our strategy and associated KPIs

related to climate, including risks and opportunities.

– Continued investment in M&A, business

development and new product introduction in

areas where the solutions contribute to a more

sustainableworld.

– Execution of our Net Zero Roadmap for Scope 1 & 2

carbon emissions, resulting in significant emissions

reductions and a practical path to zero emissions.

– Detailed scenario analysis of both physical

and transition risks to inform the Board

andManagement.

2023

Risk reduced. We are actively

reducing our Scope 1 & 2

emissions ahead of our stated

targets, have a programme of

solar installations underway

and have switched to

renewable green electricity.

We also support the transition

to a low carbon economy

through our products. See

TCFD section on page 47 for

furtherdetail

RISK MANAGEMENT CO NTINUED

Technology investment

and R&D

Margin enhancement

Targeted and

complementary M&A

E S G

STRATEGIC PRIORITIES

KEY

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RISK DESCRIPTION POTENTIAL IMPACT MITIGATING ACTION CHANGE IN THE YEAR

OPERATIONAL

Legal and regulatory compliance

Intentional or inadvertent non-

compliance with legislation

including laws and regulations

covering export control, anti-

bribery and competition

Sponsor

Ian Buckley

Link to strategy

– Reputational impact

– Civil or criminal liabilities

leading to significant fines

and penalties or restrictions

being placed on the ability

totrade

– Reduction in revenue,

profitability and

cashgeneration

– Cross-divisional export compliance group

established and anti-bribery programme in place

– Export control policy, procedure and training all

inplace and Denied Party Screening undertaken

– Approach involves risk assessment, policy, training,

review and monitoring

– Whistle-blower process in place to ensure issues

can be raised, investigated and managed

2023

Risk reduced. Restructuring of

the Legal team to be more

regionally focused enhancing

our mitigation ofglobal and

local risk.

Geopolitical

War, the threat of war, trade wars,

blockades, sanctions, political

polarisation either globally or

locally that might affect our ability

to trade, resulting in reduced sales

andprofitability

Sponsor

Peter France

Link to strategy

– Reduction in revenue,

profitability and

cashgeneration

– Supply chain challenges

– Diversification of manufacturing sites strategy

– Diverse product offering

– Management structures in place to enable a rapid

response to changing circumstances

– Strong customer relationships with key

accountmanagers

– See also Supplier resilience risk for mitigating

actions in place

2023

Separated out as a standalone

risk for2023.

Risk stable. While geopolitical

tensions remain elevated, we

have notseen any direct

impact on the business in 2023

and at the same time have

expanded our manufacturing

capabilities in Mexico to

increase choice for customers.

RISK MANAGEMENT CO NTINUED

Technology investment

and R&D

Margin enhancement

Targeted and

complementary M&A

E S G

STRATEGIC PRIORITIES

KEY

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RISK MANAGEMENT CO NTINUED

VIABILITY STATEMENT AND PROSPECTS

In accordance with the UK Corporate Governance Code, the

Directors have assessed the viability and long-term prospects

of the Group over the period to December 2026, taking into

account the Group’s current position and the potential impact of

the principal risks and uncertainties set out on pages 62 to 66 of

the Strategic report. Based on this assessment, the Directors

confirm that they have a reasonable expectation that the Group

will be able to continue in operation and meet its liabilities as

they fall due over the period to December 2026.

TT operates in markets with structural growth dynamics. We

engineer and manufacture power, sensing and connectivity

solutions to address our customers’ challenges in the

healthcare, aerospace & defence, and automation &

electrification markets. These benefit from the trends for

improved healthcare, for increased aircraft fuel efficiency and

safety and demand for sustainable solutions to improve energy

efficiency. By positioning ourselves in the right markets, by

creating differentiated capabilities through our R&D investment,

and by attracting and developing the right talent we have a

strategy to create sustainable value over the long term.

While the Directors have no reason to believe the Group will

notbe viable over a longer period, the period over which the

Directors consider it possible to form a reasonable expectation

as to the Group’s longer-term viability is the three-year period to

31 December 2026. This is encapsulated in the five-year period

business plan prepared annually and reviewed by the Board and

aligns with the business cycle including product development

and order intake trends. The Directors believe that this presents

investors and other key stakeholders with a reasonable degree

of confidence while still providing a longer-term perspective.

The Group’s existing primary facility agreements extend

throughout this period.

In making this statement, the Directors have carried out a

robust assessment of the principal risks facing the Group,

including those that would threaten its business model, the

underlying mitigation planning, the assessment of future

performance, solvency and liquidity, and the Group’s internal

controls environment.

In performing the assessment, the Directors have further

stress-tested the Group’s financial projections for the period

covered by the viability statement, testing it for “business as

usual” risks (such as profit growth and working capital

variances), the combined impact of “severe but plausible

events”, as well as a “reverse” stress test to understand the

conditions which could jeopardise the future viability of

theGroup. This work included assessing against financial

covenants and facility headroom.

This severe but plausible events stress testing included

consideration of the potential impact of the Group’s principal

risks and uncertainties outlined on pages 62 to 66. The stress

testing specifically included the impact of the following principal

risks: general revenue reductions; contractual risks; people and

capability; supplier resilience; and health and safety. Principal

risks which were not specifically modelled were either

considered not likely to have an impact within the viability period

or their financial effect was covered within the overall downside

economic risks implicit within the stress testing.

The Group’s wide geographical and sector diversification helps

minimise the risk of serious business interruption or catastrophic

reputational damage. Furthermore, the business model is

structured so that the Group is not overly reliant on any single

customer, market or geography. While this review does not

consider all of the risks that the Group may face, the Directors

consider that this stress testing-based assessment of the

Group’s prospects is reasonable in the circumstances of the

inherent uncertainty involved.

GOING CONCERN

In determining the appropriate basis of preparation of the

financial statements, the Directors are required to consider

whether the Group can continue in operational existence for

theforeseeable future.

After making enquiries and having considered forecasts and

appropriate sensitivities, the Directors have formed the

judgement that there is a reasonable expectation that the Group

has adequate resources to continue in operational existence for

the foreseeable future, being at least 12 months from the date

of these financial statements.

More information on the going concern judgement can be

found in Note 1 to the financial statements. Accordingly,

thefinancial statements have been prepared on a going

concern basis.

The 2023 Strategic report, from pages IFC to 67, has been reviewed and was approved by the Board of Directors on 6 March 2024.

Peter France Mark Hoad

Chief Executive Officer Chief Financial Officer

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 67

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

GOVERNANCE

AT A GLANCE

CEO

APPOINTMENT

Following a thorough external recruitment exercise,

Peter France was appointed as the Group CEO in

October 2023, supported by a comprehensive

induction programme

Read more

on page 72

STRATEGY

REVIEW

Review and confirmation of TT’s strategic

direction,focusing on the pursuit of revenue and

profit growth, talent/succession and prioritisation

ofkey initiatives, including ED&I, Sustainability

andPeople-basedprogrammes

Read more

on page 73

STAKEHOLDER

ENGAGEMENT

Continued focus on staff and customer engagement,

prioritising face-to-face meetings and NED site visits,

in support of delivering operational improvement,

talent/succession progression and enhanced

decision-making, as well as strengthening the

linkageof TT’s purpose and values to Group strategy

Read more

on page 74

INVESTMENT

PROGRAMMES

Support of investment programmes targeted at

providing customers with improved capability

(suchas our new Power Solutions’ facility in Greater

Manchester, UK) and lower cost optionality in the

GMS customer domain (at our Mexicali, Mexico site)

Read more

on page 73

BOARD COMPOSITION

7 Board members

1 – Independent Non-executive Chairman

2 – Executive Directors

4 – Independent Non-executive Directors

BOARD DIVERSITY – GENDER

Our Board split

2 – Women

5 – Men

KEY GOVERNANCE HIGHLIGHTS FOR 2023

BOARD TENURE IN YEARS

Michael Ord

Anne Thorburn

Alison Wood

Jack Boyer

Warren Tucker

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202368 TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 202368

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

UK CORPORATE GOVERNANCE CODE

COMPLIANCE STATEMENT

1. Board leadership and Company purpose Read more

on page

A. Board effectiveness, long-term value and

sustainability

72-74

B. Purpose, values, strategy and culture 15, 31, 77

C. Governance framework 75

D. Stakeholder engagement 57

E. Workforce policies and practices 29-41, 78

2. Division of responsibilities

F. Roles and responsibilities 80

G. Leadership structure 75

H. External appointments 69-71, 81

I. Board policies and processes 79-81

3. Composition, succession and evaluation

J. Appointments, succession planning and ED&I 83-85

K. Skills, experience, knowledge and length of service 68-69

L. Performance evaluation 86-87

4. Audit, risk and internal control

M. Financial reporting, internal and external audit

functions

90-91

N. Fair, balanced and understandable 91

O. Internal controls and risk management 59-61

5. Remuneration

P. Policies and practices 98-100

Q. Directors’ Remuneration Policy table 99-100

R. Remuneration outcomes and performancetargets 102-107

GOVERNANCE AT A GLANCECONTINUED

BOARD EXTERNAL APPOINTMENTS

Michael Ord

Anne Thorburn

Alison Wood

Jack Boyer

Mark Hoad

Peter France

Warren Tucker

Listed company boards

Listed company mandates

BOARD ATTENDANCE 2023

Board

Audit

Committee

Nominations

Committee

Remuneration

Committee

Number of meetings

held 7 4 4 3

Chair

Warren Tucker 7/7 4/4 3/3

Executive Directors

Peter France

2/2

Mark Hoad 7/7

Richard Tyson

5/5

Non-executive Directors

Jack Boyer 7/7 4/4 4/4 3/3

Wendy McMillan

5/5 3/3 3/3

Michael Ord

6/6 4/4 2/2

Alison Wood 7/7 4/4 4/4 3/3

Anne Thorburn

7/7 4/4 4/4 1/1

1. Peter France was appointed to the Board on 2 October 2023

2. Richard Tyson resigned from the Board on 1 October 2023

3. Wendy McMillan was appointed to the Board on 16 January 2023 and resigned from

the Board on 24 November 2023

4. Michael Ord was appointed to the Board on 16 January 2023

5. Anne Thorburn was appointed to the Remuneration Committee on 9 May 2023

Based on ISS Governance and Glass Lewis voting guidelines

DIRECTORS’ SKILLS AND EXPERTISE

7 7

Leadership Management Strategy/Growth

Financial/Risk

Management

6 6 5

International Business M&A/Financing

Aerospace & Defence

Sector

4 4

Manufacturing/

Engineering

Equity and Debt

Capital Markets Investor Relations

3 2 2

Talent Succession

Engineering/Technology/

Innovation Medical Sector

2 2 2

Operations/

Supply Chain Product Technology Transformation

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Nominations Committee

Remuneration Committee

Risk Committee

People, Social,

Environmental

and Ethics (“PSEE”)

Committee

Audit Committee

Chair of the Committee

Joined: 2020

Current external appointments:

– Non-executive director and chair of

theaudit committee of Tate & Lyle plc

(UK listed)

– Non-executive director and chair

ofthe audit committee of BCP V

Modular Services Holdings Limited

(operating globally as Modulaire)

– Trustee on the board of Magna

Learning Partnership

Relevant skills and experience:

– Strategy/Growth

– M&A/Financing

– Equity and Debt Capital Markets

– Financial and Risk Management

– International Business

– Manufacturing/Engineering

– Operations/Supply Chain

– Aerospace & Defence Sector

– Investor Relations

Past appointments:

– Non-executive director of

ReckittBenckiser Group plc and

theForeign, Commonwealth

andDevelopment Office

– Chief financial officer of Cobham plc

Joined: 2015

Current external appointments:

– Non-executive director and chair of

the audit committee of De La Rue plc

(UK listed)

Relevant skills and experience:

– Strategy/Growth

– Leadership/Management

– Financial Management

– International Business

– Restructuring

– Transformation

– M&A/Financing

– Equity and Debt Capital Markets

– Investor Relations

– Risk Management

– Aerospace & Defence Sector

Past appointments:

– Group Finance Director of BBA

Aviationplc

Joined: 2023

Current external appointments:

– Non-executive director of

Spirax-Sarco Engineering plc

(UKlisted)

Relevant skills and experience:

– Strategy Growth

– M & A

– Integration

– Innovation

– International Business

– Risk Management

– Talent Succession

– Leadership Management.

– Engineering/Manufacturing

– Sales and Marketing

Past appointments:

– CEO of Rotork plc

– CEO of ASCO Group Limited

Joined: 2016

Current external appointments:

– Non-executive director of Ricardo plc

(UK listed)

– Chair of the University of Bristol

– Non-executive director of the

Department of Education

– Member of the Board of the

HenryRoyce Institute for

AdvancedMaterials

Relevant skills and experience:

– Strategy/Growth

– Corporate Finance and Investment

– M&A

– Engineering/Technology/Innovation

– International Business

– Manufacturing/Engineering

– Product Technology

– Operations/Supply Chain

– Aerospace & Defence Sector

– Medical Sector

Past appointments:

– Non-executive director of

ElcogenGroup plc, Mitie Group plc

and Lairdplc

– Chairman of Ilika plc, AIM-listed

Seeing Machines Limited and the

Academies Enterprise Trust

OUR TEAM

THE RIGHT SKILLS AND EXPERIENCE

Warren Tucker

Chairman

Mark Hoad

Chief Financial

Officer

Peter France

Chief Executive

Officer

Jack Boyer OBE

Senior

Independent

Non-executive

Director

R RI

RI N

OUR COMMITTEE KEY

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OUR TEAMCONTINUED

The Board will continue to play

a key role in setting the tone

from the top to help build upon

the strong corporate culture

we have in place across TT and

thereby maintain our focus on

delivering strong, sustainable

growth for the future.”

Warren Tucker

Chairman

Joined: 2016

Current external appointments:

– Non-executive chair of Galliford Try

Holdings plc (UK listed)

– Senior independent director and

chairof remuneration committee of

Oxford Instruments plc (UK listed)

– Non-executive director of British

Standards Institution (BSI)

Relevant skills and experience:

– Strategy/Growth

– Remuneration Policy-Setting

– M&A/Financing

– International Business

– Regulatory

– Talent and Succession

– Risk Management

– Investor Relations

– Aerospace & Defence Sector

Past appointments:

– Global director corporate

development & strategy for National

Grid plc

– Group strategic development director

for BAE Systems plc

– Non-executive director of Capricorn

Energy plc, Cobham plc, e2v

technologies plc, BTG plc, THUS plc

and Costain Group plc

Joined: 2023

Current external appointments:

– Group Chief Executive of Chemring

Group plc (UK listed)

Relevant skills and experience:

– Strategy/Growth

– Transformation

– Technology/Innovation

– Manufacturing/Engineering

– Product Technology

– Risk Management

– Leadership/Management

– Aerospace & Defence sector

Past appointments:

– Managing director of business

unitsofBAE Systems plc

– Trustee of The Education

&TrainingFoundation

Joined: 2019

Current external appointments:

– Senior independent director and

chairof the Audit Committee of

Diploma PLC (UK listed)

– Board member and chair of the audit

committee of SPT LabTech Limited

Relevant skills and experience:

– Strategy/Growth

– Financial Management

– Risk Management

– Audit and Internal Control

– M&A/Financing

– International Business

– Operations/Supply Chain

– Medical and Industrial Sectors

Past appointments:

– Chief financial officer of Exova

Groupplc

– Group finance director of British

Polythene Industries plc

– Non-executive director of BTG plc

Alison Wood

Independent

Non-executive

Director

Michael Ord

Independent

Non-executive

Director

Anne Thorburn

Independent

Non-executive

Director

Nominations Committee

Remuneration Committee

Risk Committee

People, Social,

Environmental

and Ethics (“PSEE”)

Committee

Audit Committee

Chair of the Committee

OUR COMMITTEE KEY

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 71

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

GOVERNANCE

SUPPORTING

SUCCESS

A YEAR OF CHANGE

In last year’s Annual Report, I outlined how TT had

benefited from an extended period of Board continuity,

which had helped the Group navigate the

unprecedented business challenges faced in the

post-pandemic period. This year has been somewhat

different, as the Board has put its leadership

succession planning to the test in dealing with both

aCEO transition process and the integration of new

NED Board members. I am pleased to report that this

succession planning activity has produced the

intended outcomes, with a seamless transition in CEO

leadership helping to deliver a strong set of year-end

results and continued progression on our key metrics.

I see this outcome as testament to TT’s robust

governance structures and the wider bench-strength

we have at our disposal across the business.

In the context of what has been another successful

year for the Group, it is important to acknowledge

formally the Board’s appreciation for the significant

contribution made by our outgoing CEO, Richard

Tyson, to TT’s continued progression. Richard served

as CEO for over nine years, during which time he

oversaw a transformation of the business into more

profitable, higher growth sectors, with improved

customer focus and market penetration. We are very

much indebted to Richard for his unstinting dedication

to TT’s strategic progress and operational delivery,

which remained undiminished throughout the

six-month period of the Board-led search for his

successor. Richard leaves TT with our sincere thanks

and best wishes for the next phase of his career.

I am pleased to report that our succession

planning activity has produced the intended

outcomes with a seamless transition in

CEO leadership.”

Warren Tucker

Chairman

CHAIRMAN’S INTRODUCTION TO GOVERNANCE

WHAT’S INSIDE

Chairman’s introduction 72

Governance at a glance 68

The Board 70

Leadership and

Company purpose

Nominations Committee

report

Audit Committee report 88

Remuneration

Committee report

Other statutory

disclosures

112

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CHAIRMAN’S INTRODUCTION TO GOVERNANCE CONTINUED

While acknowledging these notable achievements,

Richard’s departure presented the Board with an

opportunity to implement its succession plan and

reassess the style of leadership required for the next

phase of TT’s evolution. After a thorough and wide-

ranging recruitment exercise, we were delighted that

Peter France agreed to join us as our new CEO in

October last year. Peter brings with him an unparalleled

track record in the industrial engineering and

manufacturing sector, which is highly complementary

to TT’s growth agenda, and includes a five-year term

as CEO of ASCO Group, a 28-year career with Rotork

plc (including nine years as CEO) and his ongoing NED

position with Spirax-Sarco Engineering plc. The Board

is delighted that this recruitment process has

concluded with the appointment of a CEO of Peter’s

undoubted calibre and experience. We are very much

looking forward to working with him to progress the

Group’s change agenda in the coming years – some

ofPeter’s initial thoughts on this front are set out in

theQ&A section of his CEO report (see page 7).

I would also like to highlight the significant contribution

made by Michael Ord and Wendy McMillan since

joining the Board in January 2023, as well as the rest

of the Board in guiding TT through this period of

significant change. Unfortunately, Wendy had to step

down from the Board in November, having accepted

an executive position with a third party organisation

which had stipulated that she was no longer able to

continue with her NED role with TT. Nevertheless,

wehave been in the very fortunate position in 2023

ofbenefiting from the expertise of two new NEDs,

each having a broad base of experience and excellent

credentials, closely aligned with TT’s business

portfolio and strategic focus. In particular, Michael,

being a serving CEO of a UK listed company, is able to

provide valuable insight to both the Board and the CEO.

For more information on the CEO appointment

process and the induction programme we put in place

for our three new Board members during 2023, please

see the Nominations Committee report on page 82.

Strategic prioritisation

Despite the importance of successfully concluding

thesuccession initiatives described above, the Board

also remained focused on delivering the core strategic

priorities for the Group in 2023 and has continued to

prioritise operational improvement in key areas such

as Health and Safety, Sustainability, ED&I and linking

our corporate purpose and values to our culture. This

is particularly well demonstrated by the 3*** rating

achieved from the “Best Companies” Employee

Engagement Survey conducted in 2023 (the highest

rating possible), which brings to life the exceptional

corporate culture we have in place across the Group

and the overwhelmingly positive response of our

employees to the support provided by TT during the

“cost-of-living” crisis that followed on from the

pandemic. I would like to congratulate all those

involved in achieving this rating.

The Strategic Report highlights the key areas of focus

for the Board in 2023 in driving forward TT’s strategic

plan, which are reinforced in the “People, communities

and environment” section (on page 29) and the

stakeholder engagement summary on page 57 (which

also includes our s172 statement). These sections

outline the continued focus on “people” initiatives

throughout the year, while also highlighting that TT’s

sustainability agenda remained at the heart of our

thinking. In addition, a considerable amount of Board

agenda time was spent on monitoring progress

against TT’s market positioning and the delivery of

organic growth opportunities, which is reflected in

thestrong performance delivered in year, a period

characterised by only limited contribution from

bolt-on M&A. The following initiatives are particularly

noteworthy, in highlighting the Board’s focus on TT’s

growth agenda:

– The continued strengthening of TT’s capital

structure, which included the extension of the

revolving credit facility (“RCF”) for an additional

12-month period (as described in more detail in

theStrategic Report on page 26);

– The progress made in delivering TT’s deleverage

agenda, a notable example of which was the £5m

(£3.2m post-tax) interim cash receipt recorded in

2023 in respect of the UK Defined Benefit scheme

surplus (following the successful completion of the

bulk annuity insurance buy-in transaction in 2022

tode-risk the Group’s pension scheme obligations);

– The creation of new operational capability at our

existing site in Mexicali, Mexico to provide

customers with enhanced, lower-cost optionality

fortheir product requirements in the integrated

manufacturing services domain and to free up

capability at other GMS sites to facilitate more

complex, higher-margin activities; and

– The continued focus on talent management, ED&I

and succession planning (as described in more

detail in the Nominations Committee Report on

page 82).

Diversity and stakeholder engagement

Following the appointment of Michael Ord and

WendyMcMillan as NEDs in January 2023, the

femalecomposition of our Board was 37.5%, although

it reduced to 28.5% at the end of November when

Wendy stepped down from the Board. We recognise

that this figure sits below the UK Listing Rules target of

40% female representation on listed company boards;

however, we believe that this outcome aligns positively

with our peer group and demonstrates a clear direction

of travel in terms of promoting gender diversity at the

Board level. As we explain in the Nominations

Committee Report on page 84, TT has engaged an

external recruitment firm to start the process of

identifying suitable candidates for the next phase of

our NED succession planning and we are hopeful that

this will improve the level of gender and ethnic diversity

on our Board in the future. A core element of our

approach to diversity is based around the wide range

of experience that our Board members bring to the

decision-making process, as well as their capability in

sectors that are close to TT’s business operations. It is

my view that this wealth of expertise, together with the

honest, open and collegiate way in which the Board

operates, lies at the heart of how we function as a

collective group in progressing TT’s growth agenda.

Read more about

the CEO appointment

process and the

induction programme

on page 72

Read more about

People, communities

and environment 

on page 29

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

GOVERNANCE & DIRECTORS’ REPORT

For the past couple of years, the Board has maintained

a strong focus on stakeholder engagement, in an

attempt to better understand the impact of external

macroeconomic factors on the Group’s core business

and ensure the effective linkage of the Group’s culture

and purpose to the Company’s strategic plan.

Wherever possible, meetings have been held face to

face, and with a wide range of important stakeholder

groups, including TT staff and senior management,

and shareholder representatives (as highlighted below).

UK Corporate Governance Code compliance

TT is committed to achieving and maintaining

thehighest standards of corporate governance.

Throughout the year, the Group was compliant with

allof the relevant provisions of the UK Corporate

Governance Code 2018 (the Code).

For reference, the area of non-compliance with the

Code that was highlighted in last year’s annual report

(provision 38 relating to alignment of Executive

Directors pension contributions with the wider UK

workforce) was addressed with effect from 1 January

2023 and as a result, the Group was compliant with

the Code requirements in this regard throughout

theyear.

The Code is available to view at the website of the

Financial Reporting Council, www.frc.org.uk. The table

on page 69 sets out where details and explanations

ofthe application of the principles of corporate

governance can be found in this annual report.

Conclusion

I am delighted that the operational resilience and

adaptability we witnessed last year have been

maintained in 2023, despite the ongoing economic

challenges we have faced as a business and the

changes in leadership we have navigated in year.

Onceagain, I am indebted to my Board colleagues,

thesenior management team and our talented group

of employees, who have delivered another strong set

of financial results and tangible progress against our

strategic plan, including an excellent set of Employee

Engagement scores in year and positive progress

against our ESG targets. The Board will continue to

play a key role in setting the “tone from the top” to help

build upon the strong corporate culture we have in

place across TT and thereby maintain our focus on

delivering strong, sustainable growth for the future.

The Board believes that these meetings have been

important in setting the Group’s strategic direction,

across various regions (with different cultural

approaches), reflecting factors such as cost inflation

pressures, geopolitical challenges and staff retention/

hiring considerations, without losing sight of TT’s

corporate purpose. Some examples of how these

factors have impacted the Board’s decision-making

in2023 are set out in the Stakeholder engagement

section (on page 57) and elsewhere throughout the

Strategic Report. In addition, further information on

the results of the employee engagement survey

conducted in 2023, including the role of our SID in

managing feedback on stakeholder engagement

withthe Board, is set out on pages 32 and 33.

Key stakeholder events in the 2023 Board schedule included the following:

– Board visits to our Plano, Texas and Kansas City

sites, to meet senior management and staff

working in the S&SC and Power and

Connectivitydivisions;

– As part of their induction programme, Michael Ord

and Wendy McMillan visited a number of TT sites,

including Mexicali, Minneapolis, Kansas City and

Bedlington during 2023;

– A detailed induction programme was developed

for our incoming CEO, which saw him visit most

ofour facilities in the UK, North America and Asia

within his first three months in post, together with

representatives of key customers and most of

TT’s key institutional shareholder base;

– Our CFO, Mark Hoad, attended the opening

ofournew Power Solutions facility in Greater

Manchester, UK, together with a number

ofkeystakeholders, including the Royal

Navy’sSubmarine Capability Director and

representativesfrom important customers;

– Various face-to-face sessions were conducted

bythe NEDs throughout the year with site leaders

and divisional/functional heads to discuss

business dynamics and operational challenges

(through Board dinners and ad hoc meetings);

– Face-to-face dialogue was held with key

advisers(including TT’s brokers and financial/

legal advisers) on key areas of strategic planning

andinvestor relations, together with targeted

engagement with investors involving (at separate

times) the Chairman, CEO, CFO, and Remuneration

Committee Chair;and

– As part of the annual Board cycle, the Chairman

met with a number of shareholders who accepted

his invitation to discuss TT’s progress; there were

also specific responses provided to shareholders

who had made requests for additional information

on TT’s ESG agenda.

CHAIRMAN’S INTRODUCTION TO GOVERNANCE CONTINUED

Read more about

Stakeholder

engagement

on page 57

Read more about

corporate governance

compliance 

on page 69

KEY STAKEHOLDER EVENTS IN 2023

EMPLOYEE ENGAGEMENT

3***

rating in our

2023 employee

engagement survey

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

LEADERSHIP STRUCTURE

Audit

Committee

Committee report on

page 88

Nominations

Committee

Committee report on

page 82

Remuneration

Committee

Committee report on

page 94

People, Social, Environmental

and Ethics (“PSEE”) Committee

Health, Safety,

Environment

Human Resources

Employee engagement

withthe Board

Local communities

Ethics

Read more

on page 29

Disclosure Committee

Reviews potential existence of and manages the

disclosure of insideinformation

Maintains project insiderlists

Board

Chief Financial OfficerChief Executive Officer

Executive Leadership Team*

Reviews business performance and agrees and implements any actions

asnecessary

Responsible for monitoring and driving delivery

of the Group’s key strategic priorities

Acts as a forum to raise and debate significant operational issues

* ELT replaced by the Management Board (“TMB”) from 1 March 2024

Risk Committee

Provides a framework for managingrisks

Monitors risk appetite and exposure through regular reviews ofprincipalrisks

Reviews the effectiveness of risk management processes and controls

Provides an appropriate level of reporting on the status of riskmanagement

Assesses wider emerging risks

Diversity & Inclusion Committee

Reviews and develops Equality, Diversity and

Inclusion (“ED&I”) Policyand strategic priorities

Provides an ED&I framework

Information-sharing across the business units

Senior Leadership Team

Reviews and discusses key strategic and

operational matters

Information-sharing between a wider group

ofsenior executives

Considers and scrutinises cross-divisional topics

Research &

Development

HSE

Business Development

Sustainability

Operations

Supply Chain

Councils

Key

Delegation

Reporting

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 75

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

STRATEGY

– Managing growth and addressing challenges

raised by global geopolitical events

– Strategic planning for future growth

– Site rationalisation activity: completion of the

transfer of Covina operations to Kansas City,

finalising the transfer of ex-Ferranti operations

from Oldham to Greater Manchester and

bringing the new site in Plano, Texas, to

fullcapacity

– Creation of new operational capability at our

existing site in Mexicali, Mexico to provide

customers with enhanced capability for

GMSproducts

– Development of divisional strategic

growthplans

– Divisional Technology Roadmaps

ESG/ENGAGEMENT

– Sustainability planning and progress

(includingcontinued development of our

Sustainability Council, and our global

dashboards); MSCI AA rating

– Site visits: Plano and Kansas City (for the entire

Board) and other ad hoc visits for individual

Board members

– Employee engagement at each site visit

– M&A integration activity (Ferranti Power

andControl)

– Implementation of an Energy Usage Policy

PEOPLE

– Recruitment and induction programme for

newCEO

– Induction programme for new NEDs

– Recruitment and retention processes for senior

management positions

– ED&I planning/development at Board and senior

management level, including Board-level policy

– Workforce engagement on remuneration and

wider employee engagement activities

– Cost-of-living initiatives

– Talent management and succession planning

– Regular Investor Relations (“IR”) updates on

share price progression and movements in

major shareholdings

– Investor feedback analysis

FINANCING

– Extension of the Revolving Credit Facility

– Regular review of existing and emerging

financial risks

– Pension buy-in implementation (including

interim surplus refund)

– Tax/Treasury reviews

OPERATIONS

– Customer engagement (i.e. order book

progression/deeper customer relationships

andopportunity pipeline)

– Board-level CRM, Marketing and Net Promoter

Score review

– Contract wins and commercial bids at

eachmeeting

– Review of supply chain challenges

– Overview of plant-specific outage

– Global geopolitical and fiscal events

Our talent management

and succession has

been a key priority for

the Group in a year of

significant change.”

Clare Nicholls

Group Human

Resources Director

During the financial year the Board discussed and implemented the following key actions:

BOARD ACTIVITIES

LEADERSHIP AND COMPANY PURPOSE

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COMPANY PURPOSE, STRATEGY AND VALUES

The Board’s main role is to provide oversight and leadership of the Group, to

determine and ensure the implementation of the Group’s strategy, and to maintain

the highest standards of corporate governance. Underpinning these aspects of the

Board’s responsibilities lies the principal aim of ensuring the sustainable, long-term

success of the Company.

The Board understands the relationship between the Company’s purpose, strategy

and values and their importance to the long-term success of the Group. The Board

oversees and monitors our culture to enable the Board to be satisfied that it aligns

with the Group’s purpose, values and strategy and is reflected consistently in our

workplace policies and practices.

RELATIONSHIP BETWEEN PURPOSE, STRATEGY AND VALUES

WHY?

Our corporate purpose describes why we do what we do and aligns the whole

of the Company.

WHAT?

Our strategy defines what we do for both our employees and our wider

stakeholders. The Company’s strategy is clearly defined and regularly

reviewed by the Board. The multi-year strategic plan is discussed in detail

andis approved annually, based on the Company’s activities; its progress on

delivering strategic priorities; and challenges identified within the business

and in the wider macroeconomic and geopolitical environment.

HOW?

The Company’s values, culture and behaviours drive how we execute our

relationships with internal and external stakeholders and our strategic vision.

Our TT Way values (see page 31) describe our culture and set out how we

expect our employees, from the top down, to conduct business and act with

integrity, transparency and professionalism.

Good governance sets the tone for the culture of TT. The Board and Executive

Directors strive to promote an atmosphere of openness and trust throughout

the Group.

LEADERSHIP AND COMPANY PURPOSE CO NTINUED

Read more about

our TT Way values 

on page 31

The Company’s purpose statement is:

We solve technology challenges for a sustainable world.

The Board considers that this purpose is an appropriate reflection of the Group’s

culture, strategic direction and impact on the world.

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

WE DO THE RIGHT THING

From ethics within our workforce

and safety matters, to consideration

of our wider impact on the

environment and our communities,

we pride ourselves on doing the

right thing and encourage others to

do the same. Our customers benefit

from our focus on providing cleaner,

smarter and healthier solutions to

technology challenges.

– Statement of Values and Business

Ethics Code

– Whistle-blowing reports

– Safety metrics

– Employee support during cost-of-

living crisis

– Integration of ESG and sustainability

matters into decision-making

andbusiness practices as

astrategicpriority

– Net Zero Scope 1 & 2 target by 2035

and other environmental impact

reduction work

– Anti-bribery and corruption policies

– Modern Slavery policy

– Global supplier standards for social

and environmental practices

– Human Rights Code

– Gender Pay Gap reports

– ED&I Policy

WE ACHIEVE MORE TOGETHER

Throughout the business, our

people are encouraged to share

their ideas and feed back to improve

the way we work. Our culture of

openness and transparency is

demonstrated through the reporting

systems we have in place and the

two-way conversations we have

with our employees, our customers

and our suppliers.

– Best practice sharing across

the Group

– Ensuring transparency in

reporting systems

– Employee engagement survey

in 2023

– Voice of the Customer surveys

– SID (Jack Boyer) reports back from

the PSEE Committee to the Board on

stakeholder engagement processes

– Group-wide incentives

WE CHAMPION EXPERTISE

Our talented team of design,

engineering and manufacturing

experts operate in a supportive

culture that champions knowledge,

skills, innovation, problem-solving

and service. We cannot achieve

our purpose without passionate

support for technical expertise

in the business – from R&D and

manufacturing to marketing

and sales.

– Focus on capabilities – power,

connectivity, sensing, and

manufacturing and engineering

– R&D investment as a percentage

of sales target

– Targeted and complementary M&A

to expand technology capabilities

– BE Inspired awards for individual

achievements

– Focus on training, STEM and

apprenticeship initiatives

WE GET THE JOB DONE....WELL

TT’s strong business performance

is an indicator of getting the job

done, but our success is based

on a culture of pride within our

organisation to do the best job we

can. From the boardroom to our

manufacturing sites, decision-

making is based on achieving the

best results the TT Way.

– Strategic decisions for

long-term success

– Strong capital discipline and

financing to ensure continued

availability of funds to invest in

thebusiness

– Successful integration

ofacquisitions

– Customer feedback and Voice

ofCustomer surveys

WE BRING OUT THE BEST IN EACH OTHER

Our people are our greatest asset.

We know that supporting

development, promoting wellbeing,

ED&I and collaborating with

our colleagues leads to better

performance for our people and

our business.

– Leadership programmes

andconferences

– Succession planning/talent reviews

– Remuneration schemes and

employee benefits

– Cross-divisional working and

information sharing

– ED&I initiatives promoting inclusivity

Our TT Way Values

connect us all and guide

how we work with each

other every day. They are

supported by our focus

on leadership,

knowledge and

performance to drive

progress, innovation

andservice and build

respectful and happy

work environments.”

Clare Nicholls

EVP Human Resources

BOARD OVERSIGHT OF CULTURE MATTERS – OUR TT WAY VALUES

LEADERSHIP AND COMPANY PURPOSE CO NTINUED

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LEADERSHIP AND COMPANY PURPOSE CO NTINUED

The Board

Subject to the Company’s Articles of Association,

UKlegislation and any directions given by special

resolution, the Board manages the Company’s

business. The Board has reserved certain specific

matters to itself for decision. These include strategic

development; financial policy/reporting; internal

control and capital structure (including tax and

treasury matters); policy relating to acquisitions and

disposals; contracts exceeding certain thresholds;

andcorporate governance matters (including non-

financial policies and appointments/remuneration

atamanagement layer below Board level).

The Board appoints its members, and those of

itsprincipal Committees, having received the

recommendations of the Nominations Committee.

Italso reviews recommendations of the Board

Committees and the financial performance and

operation of the Group’s businesses. It regularly

reviews the identification, evaluation and management

of the principal risks faced by the Group, including

emerging risks, and the effectiveness of the Group’s

system of internal control as set out on pages 59 to 66.

Board and Committee meetings are scheduled in line

with the Company’s financial calendar, thereby

ensuring that the latest operating data is available for

review and sufficient time and focus can be given to

matters under consideration. During the year, there

were seven principal Board meetings on scheduled

dates, for which full notice was given. Additional

meetings were held in the year to address the CEO

transition progress and certain strategic planning

initiatives. The Board has held two principal meetings

to date during 2024. The NEDs meet, without the

Executive Directors present, during the course of each

scheduled Board meeting, as a standing agenda item.

The main events in the Board calendar are the

approval of the half-year and full-year results, the

Board site visits, the review of the multi-year strategic

plan and the approval of the budget towards the end

ofthe year. At each meeting during 2023 the Board

discussed strategic issues (principally focused on

sitechange management projects, the Divisional

opportunity pipeline, climate-related risks and

opportunities, and the status of integration activity

onrecent acquisitions) together with operational,

financial, human resources, legal, governance and

investor relations items.

The Directors reviewed, throughout the year, the

opportunities and risks to the future success of the

business by receiving and discussing information

fromboth internal and external sources regarding

theissues affecting the business, the wider industry

and the macroeconomic/geopolitical environment.

The non-standard areas of focus for the Board in

2023are shown on page 76.

Leadership structure

Details of TT’s Board of Directors are set out on

pages70 to 71 of this report. The leadership structure

chart on page 75 provides further information on how

leadership at the Board level is discharged. Most

importantly, the Board comprises amajority of

independent NEDs, with the division ofresponsibilities

between the Chairman and Chief Executive Officer

having been clearly articulated. TheBoard believes

that its composition, the structure of its principal

Committees and the processes it has inplace to

discharge its primary areas of responsibility, meet the

requirements of “Board Leadership” and“Composition”

under the Code.

The Board has established a number of Committees,

each with its own delegated authority defined in

termsof reference. The Board reviews these terms

periodically (the last occasion being in November

2023) and receives reports and copies of minutes

ofCommittee meetings. The Board appoints the

members of all principal Board Committees,

havingreceived the recommendations of the

Nominations Committee.

A NED (Jack Boyer) has been nominated to be a

member of the PSEE Committee with the purpose

ofreceiving information about the Company’s

engagement with its key stakeholders. As such, he is

the designated NED for the purposes of engagement

with the workforce under the Code. This includes the

outcomes of our employee engagement activities as

described on page 33 and sustainability initiatives,

including climate-related risk described from page 42.

The designated NED on the PSEE Committee reports

this information directly to the Board following each

Committee meeting. The key activities covered by the

PSEE Committee are described in more detail in the

leadership structure chart on page 75.

Read more about

the Group’s system

of internal control 

on page 61

Read more about

the non-standard

areas of focus for

the Board in 2023 

on page 76

LEADERSHIP

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LEADERSHIP AND COMPANY PURPOSE CO NTINUED

Chairman, Chief Executive Officer and Senior Independent Director

The division of responsibilities between the Chairman and the Chief Executive Officer has been defined,

formalised in writing and approved by the Board:

ROLES AND RESPONSIBILITIES

Chairman Chief Executive Officer Senior Independent Director

Maintains responsibility for:

– The leadership and

effectiveness of the Board

andfor setting its agenda;

– Ensuring all Directors receive

accurate, timely and clear

information on financial,

business and corporate

matters so they can

participate in Board

decisionseffectively;

– Facilitating the effective

contribution of NEDs;

– Ensuring constructive

relations between Executive

and Non-executive Directors;

– Ensuring effective

communication with

shareholders; and

– Ensuring the performance

ofindividual Directors, the

Board as a whole, and its

Committees are evaluated

atleast once a year.

Maintains responsibility for:

– The operations of the Group;

– Developing Group objectives

and strategy, having regard to

the Group’s responsibilities to

its shareholders, customers,

employees and other

stakeholders;

– Successful implementation

and achievement of strategies

and objectives, as approved

by the Board;

– Managing the Group’s risk

profile, including its HS&E/

Sustainability performance;

– Ensuring the Group’s

businesses are managed

inline with strategy and

approved business plans,

andcomplying with applicable

legislation and Group policy;

– Ensuring effective

communication with

shareholders; and

– Setting Group human

resource policies, including

management development

and succession planning for

the senior management team.

Maintains responsibility for:

– Reviewing the performance

of the Chairman;

– Providing a sounding board

for the Chairman on strategic

matters/succession planning;

– Supporting the Board on the

delivery of key objectives; and

– Acting as an intermediary for

Board members and/or an

alternative point of contact

for investors (as required).

DIVISION OF RESPONSIBILITIES

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LEADERSHIP AND COMPANY PURPOSE CO NTINUED

DIRECTORS’ INTERESTS

The table showing the beneficial interests held by

Directors of the Company (directly or through their

connected persons) at 31 December 2023 is shown

inthe Remuneration Report on pages 106 and 110.

There have been no changes to the number of shares

held by Directors between 31 December 2023 and

5March2024.

CONFLICTS OF INTEREST

In accordance with the provisions on conflicts of

interest in the Companies Act 2006, the Company has

put in place procedures for the disclosure and review

of any conflicts, or potential conflicts, of interest which

the Directors may have, and for the authorisation of

such conflicts by the Board. All new external

appointments taken on by Directors in 2023 were

pre-approved by the Board before the effective date of

the appointment. In deciding whether to authorise a

conflict or potential conflict, the Directors must have

regard to their general duties under the Companies Act

2006. The authorisation of any conflict, and the terms

of authorisation, may be reviewed at any time and, in

accordance with best practice, we conduct a review

ofDirector conflicts of interest annually.

APPOINTMENTS TO THE BOARD

Rules for the appointment and replacement of

Directors are set out in the Company’s Articles of

Association. Directors are appointed by the Board on

the recommendation of the Nominations Committee.

Directors may also be appointed or removed by the

Company by ordinary resolution at a general meeting

of holders of ordinary shares. The office of a Director

shall be vacated if his or her resignation is requested

by all the other Directors, not being fewer than three

innumber. Further details of the activities of the

Nominations Committee are set out on page 82.

COMPENSATION FOR LOSS OF OFFICE

There are no agreements between the Company and

its Directors or employees providing for compensation

for loss of office or employment that occurs as a

resultof a takeover bid except that provisions of the

Company’s share plans may cause options and awards

granted under such schemes to vest on takeover,

subject to the satisfaction of any performance

conditions. Further details of the Executive Directors’

service contracts can be found inthe Directors’

Remuneration Policy. Copies of the Executive Directors’

service contracts and letters of appointment of the

NEDs are available for inspection by any person at the

Company’s registered office, during normal business

hours on any weekday (other than public holidays)

andat the AGM from 15 minutes before the start of

theAGM until its conclusion.

Read more about

engagement activities

and our relations with

shareholders 

on pages 57 to 58

BOARD SUPPORT

All Directors have access to the advice and services

ofthe Group General Counsel and the Company

Secretary. They are also offered training to fulfil

theirrole as Directors, both on appointment and

subsequently. In 2023 there were Board sessions

aimed at developing a greater awareness and

understanding of our business and stakeholders.

TheBoard visited our sites in Kansas and Plano and

received presentations about site-based operations

inboth the US and Mexicali and also the progress

ofthe Voice of the Customer initiative. There were

alsolearning sessions around IT, cybersecurity,

AI,geopolitical risks and the changing legal and

regulatory landscape. There is an agreed procedure

forany individual Director to take independent

professional advice at the Company’s expense

iftheyconsider itnecessary.

The Group maintains Directors’ and Officers’ Liability

insurance. The Directors of the Company also benefit

from a qualifying third party indemnity provision in

accordance with Section 234 of the Companies Act

2006 and the Company’s Articles of Association. The

Company has provided a pension scheme indemnity

within the meaning of Section 235 of the Companies

Act 2006 to Directors of associated companies.

Each member of the Board, including the SID, has

theright to include items on the Board agenda or

theagenda of the Committees they sit on.

RELATIONS WITH SHAREHOLDERS

The full list of engagement activities and our relations

with shareholders during the year are set out on pages

57 to 58.

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NOMINATIONS

COMMITTEE

REPORT

COMPOSITION, SUCCESSION AND EVALUATION

PRINCIPAL RESPONSIBILITIES

– Regularly review the structure, size and composition of the Board as

awholeand make recommendations for any changes to the Board.

– Review the overall leadership needs of the organisation by considering

succession planning for the NEDs (having due regard to their length of

service), Executive Directors and members of the ELT (TMB from 1 March

2024)/CEO direct reports, and make recommendations to the Board.

– Manage the search for, and selection of, suitable candidates for the

appointment of replacement or additional Directors and nominate

candidatesfor the approval of the Board.

MEMBERSHIP

KEY ACTIVITIES DURING THE YEAR

– NED recruitment process completed, culminating in the appointment

ofMichael Ord and Wendy McMillan to the Board in January 2023.

– CEO succession plan conducted over a six-month period, resulting in

theappointment of Peter France as the new Group CEO in October 2023.

– Ongoing review of the new FCA Listing Rules requirements for Board and

senior management ED&I targets.

– Succession planning review conducted at Executive Director and ELT/TMB

levels (plus a management layer below).

– Succession/recruitment project started with an external agency to consider

future NED requirements, factoring in ED&I considerations, NED length of

service and the future needs of the business.

– In-depth review of talent (“high potential” and talent gaps) at a senior

management level.

Warren Tucker (Chair)

Jack Boyer

Alison Wood

Anne Thorburn

Michael Ord (Appointed 16 January 2023)

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Principal responsibilities 82

Key activities during the

year 82

Q&A with the Chair 83

2023 review 84

Board composition 85

Equality, diversity and

inclusion 85

Board and Committee

performance evaluation 86

2024 Board objectives 87

Directors’ performance

evaluation 87

WHAT’S INSIDE

The Committee remains

committed to

maintaining its focus on

increasing the diversity

of thinking/decision-

making at the Board

level, while also

developing a path to

fullcompliance in

thefuture.”

Warren Tucker

Chair

Q&A

What were the key aspects of the CEO recruitment

exercise that the Committee has overseen in 2023?

As highlighted in the Chairman’s Governance

statement, after a lengthy period of Board continuity,

the Nominations Committee was required to put its

succession planning processes into action during

2023, in dealing with both a transition to a new CEO

and the integration of two newly appointed NEDs onto

our Board.

Prior to the announcement of the outgoing CEO’s

departure in April 2023, there had not been any form of

engagement on a search process, with the Committee

preferring instead to maintain an active dialogue with

its external recruitment agency (and other professionals

in the sector) on succession planning, toensure it

remained current on developments in the Executive

Director recruitment market. As a result, the

Committee was well placed to expedite the CEO

search process, with a role specification being made

available to the recruitment agency in short order and

the launch of the formal process commencing shortly

after the announcement of Richard Tyson’s departure

on 13 April. The Committee was then able to review

a“long-list” of CEO candidates later that month and

interview a “short-list” of potential successors in May,

which led to the identification of Peter France as the

stand out candidate by the start of June.

I am pleased to say we were able to resolve

thecontractual discussions and all outstanding

requirements of Peter’s previous employer over

thesummer period, resulting in the announcement

ofhisappointment as CEO on 27 July.

The systems we already had in place to address

succession issues at the Executive Director level

ensured a successful and seamless transition process,

which allowed Peter to hit the ground running on his

start date (2 October).

This CEO search exercise represented the key priority

for the Committee during the past year.

To what extent was the Committee able to address

the new Listing Rules requirements on ED&l as part

of this CEO recruitment exercise?

The Committee had identified a range of different

criteria to help progress the CEO recruitment exercise,

which included targeting further progress on the

diversity profile of the Board. While the Committee

wasguided in this process by the new FCA Listing

Rule 9.8.6(9) requirements on board diversity, TT’s

stated position on ED&I (together with its newly

implemented Board policy in this area) were additional

key drivers in its approach. In particular, our appointed

external recruitment agent was asked to consider

candidates from non-traditional backgrounds, whose

career history and experience might not typically

bealigned with a CEO search process for a UK

listedcompany.

In identifying the preferred candidate, the Committee

followed a rigorous process in selecting an individual

equipped with the necessary skills and experience to

take the Group on to the next stage in its progression.

This process included one-on-one interviews with all

of the NEDs and the CFO, each of whom came to an

early view that Peter France would be the ideal

successor as CEO.

While there were candidates on the original “long-list”

who came from backgrounds that were ethnically

and/or gender diverse, none of such candidates were

considered to have the necessary skills and experience

to merit progressing their applications beyond this

preliminary stage. Ultimately, it was Peter’s track

record over many years as a high-performing CEO,

with listed company experience, in international

businesses closely aligned with TT’s area of

operations, which were the determining factors.

What plans does the Committee have in 2024 for

future change at the Board level?

The Committee is mindful of the fact that (as at the

date of this report), two of our NEDs are coming

towards the end of their eighth year as Directors of TT.

Just as importantly, the Committee recognises that

both of these individuals occupy key roles on the

Board; Jack Boyer is our SID and Alison Wood has

been Chair of our Remuneration Committee for a

number of years. Furthermore, the Committee was

informed in late November that one of its NEDs,

WendyMcMillan, had accepted an executive role with

a third party organisation, which had the stipulation

that she was no longer able to continue with her NED

role with TT.

With these considerations in mind, the Committee

decided to instruct an external recruitment firm to

undertake an independent assessment of Board

structure/composition. Following on from this review,

which also assessed TT’s position relative to the

Listing Rule 9.8.6(9) targets, the Committee has

initiated a recruitment exercise, with a view to

appointing one or more NEDs, having the requisite

skills to support TT in delivering its growth agenda.

We recognise that as at 31 December 2023, and as

atthe date of publication, we do not meet the FCA’s

targets (as stated in the Listing Rules) that at least

onemember of the Board should come from an ethnic

minority background; nor are any of the positions of

CEO, CFO, Chair or SID held by a woman and the level

of female representation on the Board remains below

the FCA stated target of 40 per cent (having stood at

37.5 per cent for most of 2023, which reduced to

28.5per cent following Wendy McMillan’s decision

tostep down from the Board in November).

COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

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2023 REVIEW

As stated in the Q&A section above, the Committee’s main

focus in the past year has been to manage the process for

recruiting a new CEO, which ultimately led to the appointment

ofPeter France in October 2023. In addition, the Committee

hasbeen at the forefront of planning the NED induction

programme for Michael Ord and Wendy McMillan (following

their appointments to the Board in January 2023) and starting

the process to recruit one or more new NEDs to replace two

ofourDirectors who are close to the end of their nine-year

appointment cycle (particularly given the 12-month lead-time

required under the Listing Rules before a NED can become a

successor candidate for Chair of the Remuneration Committee).

The Q&A section above provides background information on

the processes undertaken in managing these recruitment

projects, particularly with regards to the appointment of the

newCEO, which was led by an external recruitment firm,

RussellReynolds, whose expertise was drawn upon in

developing a detailed role specification and subsequently,

adiverse list of candidates. There are no connections between

TT, its Directors and Russell Reynolds. Another key criterion

inthe recruitment process was to address the ways in which

each candidate might contribute to increasing the Board’s

diversity ofperspective and add fully to the strategic debate,

based on experience and skill sets.

As noted above, the Committee was mindful of the

requirements of LR 9.8.6(9) throughout the CEO and NED

recruitment exercises. The extent of TT’s compliance to date

with LR 9.8.6(9) is also summarised in the Q&A section, it being

noted that a Board-level diversity policy (which also applies to

the Board Committees) was adopted for the first time in 2022

and we have provided numerical data on the gender diversity

profile of the Board and senior management in the table set out

on page 86. The Committee remains focused on addressing

those areas where TT remains non-compliant with the

requirements of LR 9.8.6(9), as outlined in the Q&A section,

infuture Board-level recruitment exercises.

The Committee held four meetings in 2023, at which (in addition

to the recruitment exercises described above) the Committee

undertook a detailed review of TT’s talent management

programme, which covered the senior management team

(operating at ELT level and a layer below), together with selected

members of the wider leadership group. Attention was also

focused on “high-performing” individuals across the

organisation, who had been identified as possessing the

capability to progress into senior management roles over the

medium to long term. This review exercise identified several

candidates across the business with the potential for promotion

to ELT and/or Executive Director roles in the future, with talent

development also being highlighted as a key priority area for

theGroup going forward.

In addition to the activities referenced above:

– All Board members completed a conflicts of interest

questionnaire, which involved tracking the number of external

appointments held by each Director, including the number of

chairmanships and executive director roles held, to avoid

suggestions of “over-boarding”. No points of concern were

identified by the Committee from this process;

– The Committee assessed its performance in 2023 by

reviewing key activities during the year against its terms

ofreference. It was concluded that the Committee had

performed satisfactorily and was structured appropriately

toprovide effective support to the Board; and

– The Committee undertook a detailed review of ED&I activities,

both from a perspective of compliance with LR9.8.6(9) and

HR-focused initiatives across the business to embed ED&I

thinking into day-to-day operations.

COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

Q&A CONTINUED

The Committee understands the intent behind LR 9.8.6(9)

andremains committed to maintaining its focus on increasing

the diversity of thinking/decision-making at the Board level,

whilst also developing a path to full compliance in the future.

Ifpossible, the Committee would hope to achieve this as part

of the forthcoming NED recruitment exercise, recognising the

fierce competition for talent in this area; however, it is also

important to recognise the additional objective of enhancing

the Board’s diversity of perspective, which means identifying

future candidates capable of contributing fully to the strategic

debate, with experience and capability in sectors that are

closely aligned to TT’s business operations.

Numerical data on the gender diversity and ethnic

representation of the Board and senior management, as

at31December 2023, is set out in the table on page 86.

Eachmember of the Board and the Executive Leadership

Team submitted a completed questionnaire to enable us

togather the numerical data required.

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BOARD COMPOSITION

Warren Tucker (Chairman), Mark Hoad (CFO), Jack Boyer (SID)

and Alison Wood and Anne Thorburn (NEDs) were continuously

in place as members of the Board throughout 2023. Michael

Ord and Wendy McMillan were appointed as new NEDs in

January 2023; Michael Ord continued as a member of the

Board throughout the remainder of the year, with Wendy

McMillan stepping down in November 2023 for the reasons

described in the Q&A section above. On 2 October 2023,

PeterFrance joined the Board as CEO and remains a Director

ofthe Company; he replaced Richard Tyson, who was a Director

throughout the year through to 2 October 2023. The only

changes in Committee membership during 2023 were: (i) the

appointment of Michael Ord and Wendy McMillan (January to

November) to the Nominations Committee; (ii) the appointment

of WendyMcMillan to the Audit Committee (January to

November); and (iii) the appointment of Anne Thorburn and

Michael Ord to the Remuneration Committee. Michael Ord

wasalso appointed to the Audit Committee in January 2024.

We provide full details of each Director’s Board and Committee

meeting attendance on page 69 and Directors’ biographies,

including the Committees they serve on and chair, which can

befound on pages 70 to 71.

At the time of his appointment as Chairman, Warren Tucker was

considered to be independent in accordance with the provisions

of the Code. All the remaining NEDs are also considered to be

independent as defined by the Code.

In accordance with the Company’s Articles of Association

andthe Code, Directors must offer themselves for re-election

atthe forthcoming AGM. This practice will continue in the

future, to ensure compliance with the requirements of the

Codeand the Company’s Articles of Association. Following

formal performance evaluation, the Board has concluded that

the performance of each Director continues to be effective and

todemonstrate commitment to the role. The Notice of AGM

sets out details of the key areas of contribution made by each

ofthe Directors in providing leadership to the Company.

EQUALITY, DIVERSITY AND INCLUSION (ED&I)

In 2020, the Company introduced its ED&I strategy to the

workforce, setting out our three-step multi-year programme

toenable the Company to understand the needs of its

diverseworkforce and embed ED&I as an integral part of the

Company’s strategy (see page 39 for further information).

TheBoard (through the PSEE Committee) receives updates

onthe progress of the initiatives launched pursuant to the

Company’s ED&I strategy and monitors the achievement of

targets set inline with the strategy. The Committee also

received an updateon ED&I strategy/performance in 2023,

withthe CEO committing to report back on progress/future

plans on the ED&Ifront during 2024.

As stated in the 2023 Review above, a Board-level diversity

policy was adopted for the first time in 2022, which requires

theCommittee to have regard to issues such as culture and

diversity when reviewing recruitment practices and succession

planning. This ED&I Board policy will assist the Committee

inoverseeing a diverse pipeline for senior management and

Boardpositions.

At all times during 2023, the Committee has sought to ensure

that the Board is balanced and effective, with diverse skills,

knowledge and experience, as highlighted in the Directors’

biographies on pages 70 to 71. The Committee attaches a high

degree of importance to diversity at all levels across the Group

and is committed to recruiting the best talent available, based

on merit, and assessed against an objective criteria of skills,

knowledge, independence and experience. However, we do not

advocate a forced approach to diversity at any level of the

organisation. The extent of TT’s compliance to date with

LR9.8.6(9) is set out in the Q&A section above. Female

representation on the Board stood at 37.5 per cent for most

of2023, which the Committee believes will have a positive

impact on the Board’s governance processes and sends out

astrong message across the Group of the importance of a

diverse workforce to the future success of the business.

A table setting out data on the gender diversity and ethnic

representation of the Board and senior management, as

at31December 2023, is set out on page 86. The Board

recognises that we do not meet the FCAs targets (as stated

inthe Listing Rules), see page 83 for more information.

For more detail on TT’s approach to ED&I across the

organisation, see page 39 of the Our people section.

COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

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COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

BOARD AND COMMITTEE PERFORMANCE EVALUATION

In accordance with the Code, the Board has conducted

anevaluation of its performance and that of its principal

Committees during 2023.

Following the external evaluation exercise conducted in 2021,

the Board decided to undertake an internal assessment for the

2023 reporting period (without the assistance of an external

facilitator), based largely on the number of Board-level changes

in year, including the CEO transition process. The Board

allocated part of a scheduled meeting in year to conduct this

evaluation exercise, using the Board objectives for 2023 (as

outlined in last year’s annual report) and the outputs of the

previous year’s evaluation exercise to frame the discussion,

which involved all Boardmembers.

The 2023 evaluation exercise once again reinforced the positive

working dynamics at the Board level, with the strong focus on

the appointment and induction of the new CEO having greatly

assisted in maintaining effective continuity. As a result, it was

concluded that the Board had been effective in discharging its

responsibilities throughout the year and operated as a high-

performing team, in an environment of openness, transparency

and trust. In particular, it was noted that:

– Close attention had been paid to addressing the issues raised

during the 2022 evaluation process, with the priority items

receiving appropriate levels of challenge and Board focus.

Itwas recognised that the Board attempted at all times to

take a “value-added” approach, based around a collective

aspiration for TT to be “the best company it possibly could

be”, for the benefit of all stakeholders.

– The NEDs are seen as being appropriately provocative

andchallenging on key issues (using their own unique

approaches), with the appointment of a serving CEO

(MichaelOrd) as a new NED being seen as having contributed

significantly to this process. Likewise, the Executive team is

regarded as very transparent and open. The importance of

maintaining TT’s unique and positive culture is very much

understood and promoted by the Board.

– Key positives for 2023 included: (i) the successful recruitment

of a new CEO (coupled with the appointment of two additional

NEDs); (ii) the Board having navigated the transition to a

newCEO (while minimising disruption to the business);

(iii)theBoard’s continued focus on key strategic topics,

withexecution against priority organic actions being seen as

the most obvious path to value creation; and (iv) the timely

progression of talent reviews, reward discussions and ED&I

initiatives in year.

– Using a skills mapping process, the evaluation exercise

reconfirmed that each Board member possessed the

requisite skills and experience in each of the core areas

relevant to TT’s operations, recognising the opportunity to

further enhance capability through future NED appointments.

In summary, the Board concluded from the evaluation exercise

that it (and its Committees) had performed well on all fronts

in2023 and that the performance of each Director was highly

effective, while giving due commitment to his or her role.

BOARD DIVERSITY – GENDER AND ETHNICITY

TT Electronics plc Board ofDirectors Senior positions Executive Management (definedas Executive LeadershipTeam)

Number of Board Members % of Board members

Number of senior positions on the Board

(CEO, CFO, SID & Chair) Number in Executive Leadership Team % of Executive Leadership Team

Men 5 71% 4 4 100%

Women 2 29% – – –

Other/Not specified/Prefer not tosay – – – – –

TT Electronics plc Board ofDirectors Senior positions Executive Management (definedas Executive LeadershipTeam)

Number of Board Members % of Board members

Number of senior positions on the Board

(CEO, CFO, SID & Chair) Number in Executive Leadership Team % of Executive Leadership Team

White British or other White

(includingminority-white groups) 7 100% 4 4 100%

Mixed/Multiple ethnic groups – – – – –

Asian/Asian British – – – – –

Black/African/Caribbean/Black British – – – – –

Other ethnic group (including Arab) – – – – –

Not specified/ prefer not to say – – – – –

The Group has selected 31 December 2023 as the reference date for the data provided above

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2024 BOARD OBJECTIVES

Following the conclusion of the 2023 evaluation exercise, the

agreed Board objectives for the year ahead were summarised

as follows:

– NEDs will support the new CEO in: (i) gaining maximum

benefit from his induction programme; (ii) establishing

himself in role; and (iii) providing him with every opportunity

to have the desired impact on the performance of the Group.

– The NEDs will remain totally focused on setting the strategic

direction, in conjunction with the Executive Directors, while

giving the Executive Directors the necessary space to execute

and deliver against key performance targets.

– The Board will prioritise achieving further simplification of the

business portfolio, while maintaining operational performance

and driving delivery of margin aspirations.

– The Board will closely monitor geopolitical events to

mitigatethe impact on Group strategy and delivery against

growthtargets.

– The Board will continue to focus on HR priorities, including

succession/retention, talent management and ED&I.

DIRECTORS’ PERFORMANCE EVALUATION

In accordance with the Code, the performance of individual

Directors was evaluated during 2023.

For the NEDs, the output from a private meeting held between

the Chairman, the Executive Directors and the NEDs formed the

basis for individual appraisals held by the Chairman with each

NED. This also provided an opportunity to discuss any issues

which had arisen from either their individual assessments or

those of the Board and its principal Committees. For the

Chairman’s performance, the other NEDs, led by the Senior

Independent Director, and, with input from the Chief Executive

Officer and Chief Financial Officer, met privately to discuss this,

with the outcomes being fed back to the Chairman by the

Senior Independent Director for discussion.

At the beginning of the year, we set each Executive Director

challenging performance objectives, and reviewed progress

against these as the year progressed. This framework was

refreshed following the appointment of the incoming CEO,

PeterFrance, in October 2023.

Both of the Executive Directors take part in the Group’s

performance management programme which, together with

areview of progress against agreed goals and objectives, is

used to assess performance and to set clear objectives and

developmental plans for the following year (which are closely

aligned with the Group’s strategic priorities and values).

TheChief Executive Officer meets with the Chief Financial

Officer at the beginning of each year to discuss and review

performance against objectives. The Chairman conducted

theperformance evaluation of the Chief Executive Officer,

taking account of the output from the Group’s performance

management programme together with feedback provided

bythe other NEDs at a private meeting held to discuss this

andany other matters which the NEDs wished to raise.

Following the Directors’ evaluation process, It was concluded

that all Directors continued to be effective and to demonstrate

commitment to their roles.

Warren Tucker

Chair, Nominations Committee

6 March 2024

COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

Discussion points and areas of focus

The 2023 evaluation review highlighted several developmental

areas for further consideration, whichincluded the following:

– The Board recognised the need to ensure that strategic

planning, people development and monitoring of business

performance remained at the centre of its thinking, which

would be enhanced by: (i) increased accessibility to the senior

leadership team (to provide a wider assessment of

performance dynamics); (ii) changes to the Board cycle (to

improve alignment of the meeting schedule with key decision

points); and (iii) more opportunities for the NEDs to engage

with key shareholder/customer representatives.

– The review exercise noted the attempts to introduce Executive

Director/senior leadership remuneration targets earlier in the

annual cycle, recognising the practical challenges associated

with this objective, particularly given external factors such as

wage inflation dynamics. It was also recognised that the

Group had not yet been able to deliver fully on its ED&I

objectives (both at Board level and across the organisation),

which would continue to be a priority action for the Board.

– The Board concluded that, despite the positive progress

made on succession planning in 2023, this would remain a

priority objective for the year ahead, with a particular focus

on: (i) NED succession (given the fact that the tenure of two

long-serving NEDs was due to come to an end in 2025);

(ii)ensuring the retention of top talent at a senior

management level; and (iii) supporting the development of

newly appointed employees operating in key leadership roles.

Having considered these issues in detail, the overall outcome

ofTT’s evaluation exercise was that the Board was operating

ina very effective manner and that the structure of the Board

remained fit for purpose, given the diversity of experience,

approach, mindset and thinking around the Board table. The

Board also agreed that this outcome had been observed across

the Board Committees, each of which had been extremely well

chaired in year.

BOARD AND COMMITTEE PERFORMANCE EVALUATION CONTINUE D

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AUDIT

COMMITTEE

REPORT

AUDIT, RISK AND INTERNAL CONTROL

PRINCIPAL RESPONSIBILITIES

– Monitor the integrity of the financial statements and results announcements

(including significant reporting/accounting issues, going concern/viability

statements, sustainability reporting, and fair, balanced and understandable

reporting process).

– Recommend appointment and remuneration of the Auditor, assess

effectiveness and monitor provision of non-audit services.

– Assess content of the Auditor’s independence report in providing both

auditand non-audit services, including the Auditor fee structure.

– Review the remit, planned scope of activities, performance and effectiveness

of the Internal Audit function.

– Review changes to accounting policies and procedures, decisions of

judgement affecting financial reporting and compliance with accounting

standards and company law (including FRC recommendations).

– Review risk management/assurance processes and risk management

strategy, including the principal risks and internal control findings highlighted

by management or internal/external audit.

– Monitor the Company’s systems and controls for the prevention of bribery

and fraud.

– Review Group whistle-blowing arrangements and procedures.

MEMBERSHIP

KEY ACTIVITIES DURING THE YEAR

– Key areas of accounting judgement considered in detail, see page 92.

– Performance assessment of the external Auditor and overall audit quality

andeffectiveness, identifying areas of potential improvement.

– Detailed consideration of findings from the risk/assurance reviews

undertaken by the Internal Audit function, including structuring the 2024

programme to align with key Group-level risks.

– Further strengthening the Internal Audit function, see page 90, including

embedding additional UK and US-based in-house resource.

– A strong focus on strengthening controls in key areas (in alignment with

previous Government proposals), including fraud prevention/detection

andpolicy.

– Enhanced focus on climate-related risks (and associated TCFD disclosures),

in light of the new regulatory requirements.

Principal responsibilities 88

Key activities during the

year 88

Q&A with the Chair 89

Procedural and

governance matters 90

2023 review 90

Significant issues 92

WHAT’S INSIDE

Anne Thorburn (Chair)

Jack Boyer

Alison Wood

Michael Ord (Appointed 10 January 2024)

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TT takes its governance

responsibilities

extremely seriously

andwe remain fully

committed to enhancing

our audit, internal

controls and wider

governance processes,

in the interests of all of

our stakeholder groups”

Anne Thorburn

Chair

Read more about

the TCFD review

exercise 

on page 47

Q&A

How has the final outcome of the Government

proposals impacted TT’s approach to strengthening

the internal control environment across the Group in

the past year?

As stated in last year’s Committee report, TT takes

itsgovernance responsibilities extremely seriously

and(regardless of the revised scope of the UK

Government’s audit/governance reform programme)

we remain fully committed to enhancing our audit,

internal controls and wider governance processes,

inthe interests of all of our stakeholder groups.

Webelieve that a number of the Government’s original

recommendations were helpful in this regard and have

taken the opportunity to strengthen our governance

environment, using the Control Framework structure

we already have in place and applying some of the

principles suggested by the Government.

The key areas of focus on this front have included: (i)

refreshing and refining the Control Framework to ensure

completeness of controls and reducing duplication, as

well as identifying key controls followed by providing

bespoke training on the Control Framework, focusing

on the newer sites and those where there have been

personnel changes; (ii) concluding a risk assessment

onthe Group’s fraud prevention/detection maturity

and financial reporting risks, which ultimately led to the

implementation of the new Fraud Policy; and (iii) holding

an initial series of internal workshops to understand our

current state in relation to internal controls for financial

reporting, compliance, IT and tax which will be used as

the basis for a gap analysis exercise in the future.

We believe that this activity puts TT in a strong

position to respond to the implementation of the

revisions to the UK Corporate Governance Code.

Based on the revised guidance following the release

of the 2024 Corporate Governance Code we intend

to carry out a “scoping exercise” to assess the

Group’s processes and controls, as well as sites and

components (on a materiality basis) to determine the

boundaries of work needed on the new operating,

compliance, financial and reporting control

requirements and to put in place a route map

forfuture compliance.

You mention fraud prevention/detection above –

has that been an area of particular concern for the

Group in 2023?

TT does not consider itself to be more vulnerable

tofraudulent activity than any other company of

comparable size or operating in an equivalent sector,

and this has not been a factor impacting business

operations in recent years. That having been said,

weare keen to avoid complacency on this front and,

in anticipation of the original reforms proposed by

the Government, we took the decision to strengthen

our controls and policies in this area during 2023.

The initial step was to collate responses from across

the business into a “fraud questionnaire”, which

provided a generic set of indicators (rather than any

specific evidence of potentially fraudulent activity),

covering areas such as the potential to bypass

controls and the use of the whistle-blower hotline.

The outputs of this exercise provided the Finance

team with a timely opportunity to communicate

theimportance of anti-fraud initiatives across the

business and reinforce the zero-tolerance culture

forbypassing controls.

The Internal Audit team then undertook a fraud risk

assessment work programme, which included a

“mapping” exercise of potential areas of fraud that

could arise from key operational activities. The main

conclusion from this exercise was that (of the one

“high” and three “medium” level risks identified),

cyber crime was rated as the area of highest risk

offraud, which also resulted in the identification

ofspecific risk mitigations closely aligned with

theGroup’s Control Framework. The Committee

recognised that an additional mitigation on the first

line of defence lies in the fact that TT’s business model

is largely based around processing high volumes of

transactions, at relatively low cost for each purchase

order. This risk assessment work directly led to the

creation of a new Fraud Prevention Policy, which was

designed to be closely aligned to both the UK Fraud

Act and the ongoing development of the Control

Framework. We have also delivered fraud awareness

training to control owners across the business to

increase the awareness of fraud and also linking this

tothe importance of strengthening the control

environment to mitigate fraud risks.

In the environmental section of last year’s Annual

Report, you set out a number of improvement areas

that you had planned for 2023 on TCFD reporting.

To what extent do you feel that you have delivered

the progress you were expecting on this front

during 2023?

We have invested significant effort in TCFD reporting

in 2023, to ensure that all key disclosure elements

were materially progressed well in advance of

year-end and that our external auditors were engaged

throughout the process, to address any areas of

perceived weakness well ahead of time. As part of

thiswork plan, the Group Head of HSE & Sustainability

provided the Committee with a detailed progress

update on TCFD planning activities during the Q4

period, it being noted that a gap analysis had been

conducted (in collaboration with external consultants)

to identify areas of priority focus and work undertaken

to assess where the Group was positioned from a

climate risk/opportunity perspective. The detailed

outputs of this TCFD review exercise are set out on

page 47 of this report.

AUDIT, RISK AND INTERNAL CONTROL CONTINUED

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2023 REVIEW

The Committee held four scheduled meetings during 2023.

Asummary of the key financial reporting and judgement issues

considered by the Committee in 2023 is set out in the table on

page 92. In addition, as part of the Committee’s planning for the

2023 year-end audit process, a detailed assessment was

undertaken (in conjunction with the external Auditor) of the

FRC’s key areas of focus, as outlined in its “Review of Corporate

Governance Reporting” document issued in November 2023,

which highlighted the FRCs strong focus on risk management/

internal controls and the Committee’s role in demonstrating

“robust systems, governance and oversight are

operatingeffectively”.

The Q&A section on page 89 sets out details of the core areas

of activity for the Committee in 2023. In addition, the following

specific audit matters were considered by the Committee for

the reporting period: (i) consideration of items excluded from

adjusted profit; (ii) the classification of assets held for sale;

(iii)Group tax rates and provisioning (with the Committee

concluding that, as a result of processes first adopted in 2021,

the level of judgemental analysis applied in this area for the

current year had been significantly reduced); and (iv) the going

concern and viability position for the Group (reflecting current

year trading, the US private placement (“PP”) arrangement and

the RCF financing).

The Committee also assessed the outputs of the internal audit

reviews conducted during 2023, which are undertaken: (i) on a

site-specific basis (with the target of reviewing each principal

TT site at least once every three years, or two years for sites

generating revenues in excess of £50m per annum); and (ii) for

targeted functional areas; for 2023 these functional reviews

included Contract Management, Sales and Pricing, Delegated

Authorities, and Supply Chain activities. The Committee has

continued to pay close attention in the past year to the progress

made in developing the Group-wide Control Framework

programme, which has resulted in the Internal Audit team

setting a higher baseline standard for audit reviews in 2023.

These improvements in the ControlFramework have been

designed to help drivebusiness performance across TT,

particularly from the perspective of simplifying the approach

tomanaging key controls, the use of more standardised

procedures and prioritisation of the shared services function

foractivities of a transactional nature. On this latter point,the

Finance team has focused on ensuring thatclear lines of

responsibility are in place betweenthe shared services function

and individual business units, supported by RACIs and site-by-

site SLAs. For further details of TT’s risk management

andinternal controls structures see pages 59 to 66.

During 2023, the Risk Committee continued to conduct a

detailed review of possible emerging risks(in consultation with

the Internal Audit function), which were not currently addressed

in the Group riskregister but could have application in the

futuretoan international business operating in TT’s sector.

Theoutputs of this analysis were discussed further at both the

Board and Audit Committee level,which included a review of

therisk appetite of theGroup. For further details of the Board’s

approach to assessing the Group’s risk appetite, see page 59.

PROCEDURAL AND GOVERNANCE MATTERS

Meetings of the Committee are structured on the

followingbasis:

– The CFO, the Group Financial Controller, the Company

Secretary and Auditor representatives attend each

Committee meeting, at which they present reports and

provide analysis on key areas of accounting judgement.

Atthe request of the Committee, other members of the

Board(including the Chairman and the CEO) also attend

forpart of the scheduled Committee meetings.

– The Head of Internal Audit and Risk presents on the progress

of the internal audit plan (undertaken in conjunction with PwC

under the co-sourced partnering arrangement) and provides

updates on the Group’s risk management framework, to allow

members to review principal risks and the effectiveness of

risk management processes.

– The Committee meets with the Auditor at the close of each

meeting, without Executives being present. The Committee

also has the opportunity to meet with the internal audit

function on the same basis.

In relation to Governance considerations:

– The Committee Chair, Anne Thorburn, fulfils the Code

requirement of at least one member of the Committee

havingrecent and relevant financial experience

(see Anne’s biography on page 71).

– The Committee was comprised of three independent NEDs

throughout the year, which increased to four NED Committee

members between January and November 2023, when

Wendy McMillan was a member of the Board.

– All Committee members have competence in the sectors that

TT operates in and their biographies can be found on pages

70 to 71.

– The vast majority of audit work was undertaken on a

face-to-face basis in 2023, following the relaxation of

COVID-19 “stay-at-home” measures and a return to normal

working practices. However, the remote working systems and

methodologies that were first put in place in 2020 remain

available, where considered more beneficial to deliver internal

and external audit activities.

– The Committee undertook an evaluation of externalAuditor

performance in 2023, which included input from the heads of

finance across theGroup’s operations. Through this process,

several areas for improvement were identified andshared

with the Auditor (which included the prioritisation of TCFD

review work to occur earlier inthe audit cycle and the

acceleration of certain audit close-out activity). In summary,

this evaluationprocess indicated an improvement inoverall

Auditor performance in 2023, assisted byDeloitte having

nowconcluded several audit cycles since their appointment

at the 2020 AGM.

– The Committee recognised that the conclusion of the 2024

audit cycle would coincide with the requirement for Deloitte

torotate its current lead audit partner. As a result, steps will

be taken to ensure that the audit partner succession process

is managed so as to minimise disruption to the audit

programme (noting the benefits experienced to date from

good levels of staff continuity provided by the Deloitte

auditteam).

– The Committee assessed its performance in 2023 by

reviewing key activities during the year against its terms

ofreference. It was concluded that the Committee had

performed satisfactorily in the year and was structured

appropriately to provide effective support to the Board.

AUDIT, RISK AND INTERNAL CONTROL CONTINUED

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2023 REVIEW CONTINUED

In the fourth quarter, the Committee undertook a detailed

review of the Group’s climate-related risks and opportunities,

with particular reference to the new TCFD disclosure

requirements, as described in the Q&A section above.

KEY JUDGEMENTS

Management has confirmed to the Committee that it was not

aware of any material uncorrected misstatements or immaterial

misstatements made intentionally to achieve a particular

presentation. The Committee confirms that it is satisfied that

the external Auditor has fulfilled its responsibilities with

diligence and professional scepticism.

After reviewing the presentations and reports from

management and consulting where necessary with the Auditor,

the Audit Committee is satisfied that the financial statements

appropriately address the critical judgements and key estimates

(both for the amounts reported and the disclosures).

FAIR, BALANCED AND UNDERSTANDABLE

In accordance with the Code, the Board requested the

Committee to advise it on whether it believed the Group’s

Annual Report, taken as a whole, is fair, balanced and

understandable, and provides the information necessary for

shareholders to assess the Company’s position and

performance, business model and strategic plan. Procedures

are in place to facilitate the appropriate and timely review of the

drafts of the Annual Report and specifically to highlight

evidence of a fair and balanced representation, which supports

input and challenge from all independent NEDs, the external

Auditor and other external advisers. On careful review of the

Annual Report for the year ended 31 December 2023, and the

basis for the statement made by the Board on “Fair, balanced

and understandable” on page 115, the Audit Committee

recommended to the Board that, taken as a whole, the Annual

Report is fair, balanced and understandable and provides

theinformation necessary for shareholders to assess the

Company’s position and performance, business model

andstrategic plan.

AUDITOR’S INDEPENDENCE, OBJECTIVITY AND EFFECTIVENESS

Deloitte were appointed as the Group’s external Auditorin May

2020, following a formal tender conducted in 2019. Thecurrent

audit partner, Robert Knight, has held thisrole since May 2020.

The Audit Committee assesses the independence of the Auditor

annually toensure suitable policies and procedures are in

placeto safeguard the Auditor’s independence andobjectivity,

having regard to length of tenure,provisionof non-audit

services and the existence ofany conflicts of interest.

TheCommitteehas formally reviewed the independence

oftheAuditor as part of the 2023 review. Deloitte hasprovided

astatement to the Committee confirming itremains

independent within the meaningof the relevant regulations

andin accordancewith its professional standards. There are

nocurrent plans to conduct a retendering exercise for the

externalAuditor.

The Committee also reviewed the quality and effectiveness of

the audit programme during the year, as described on page 89.

AUDIT, RISK AND INTERNAL CONTROL CONTINUED

POLICY OF NON-AUDIT SERVICES

The Company has an established policy regarding the provision

of non-audit services by the external Auditor, which was last

refreshed in 2021. This policy provides that non-audit services

may be obtained from the most appropriate source, having

regard to expertise, availability, knowledge and cost as

confirmation that they comply with the whitelist of permitted

services as set out in the Revised Ethical Standard 2019.

Non-audit services where fees are expected to exceed £25,000

should be approved, in advance, by the Chair of the Audit

Committee or, in her absence, by another member of the Audit

Committee. Any arrangement with the Auditor that includes

contingent fee arrangements is not permitted. There is also

arestriction that fees for non-audit services will not exceed 50%

of the annual audit fee which is more stringent than the FRC

imposed cap of 70% of the average audit fees paid for the audit

of the parent and its controlled subsidiaries in the last three

years. This limit will only be exceeded in unusual circumstances

and only with the pre-approval of the Audit Committee. The

overriding preference of the Committee is not to engage the

Auditor for additional non-assurance services, unless there are

compelling reasons to the contrary, such as capability,

timeorcost.

In 2023, the total fees paid to Deloitte were £2.1 million,

including £0.1 million for their review of the Company’s interim

results, while no other non-audit service fees were paid to

Deloitte in the year. Accordingly, during 2023, non-audit service

fees paid to Deloitte represented less than 5 per cent of audit

service fees paid to them during the same period.

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED

SIGNIFICANT ISSUES CONSIDERED IN RELATION TO THE FINANCIAL STATEMENTS

The main areas of judgement and estimation are set out in

theaccounting policies on pages 134 to 138. The Committee

received and reviewed reports from management and the

external Auditor setting out the significant issues in relation

tothe 2023 financial statements, as outlined below.

Theydiscussed these issues with management during the

yearand with the external Auditor at the time the Committee

reviewed and agreed the external Auditor’s Group audit plan;

when the external Auditor reviewed the half-year results in

August 2023; and also at the conclusion of the audit of the

financial statements. The Committee is satisfied that the

significant assumptions used for determining the value of

assets and liabilities have been appropriately scrutinised

andchallenged, and are sufficiently robust.

SIGNIFICANT ISSUES

SIGNIFICANT ISSUE COMMITTEE ACTIONS/WORK UNDERTAKEN

Adjusted profit (see Note 7)

The Group reports non-trading income or expenditure

outside of adjusted profit when the size, nature or function

of an item or aggregation of similar items is such that

separate presentation is relevant to an understanding of

itsfinancialperformance.

The Committee challenged the items that were excluded from adjusted profit and were satisfied that these were in accordance

with the Group’s disclosed accounting policy and gave a true and fair view of the Group’s underlying financial position.

The Auditor explained to the Committee the work they had conducted and the results of their audit procedures on significant

items recorded outside adjusted profit.

Provisions – taxation (see Note 8)

Current tax provisions held in respect of tax risks are

included within current tax liabilities depending on the

underlying circumstances of the provision.

Management confirmed to the Committee that the provisions recorded at 31 December 2023 represent its best estimate of the

potential financial exposure faced by the Group. The Committee reviewed each significant provision and challenged the basis of

management’s judgement and concurred with the estimates.

The Auditor explained to the Committee the work they had conducted during the year, including how their audit procedures were

focused on those provisions with the highest level of judgement on recognition criteria and/or measurement.

Classification of assets held for sale (see Note 4)

The Committee considered management’s assessment of

the conditions that must be satisfied in order to conclude

adisposal group is “held for sale”.

The Committee challenged management’s assessment of the conditions that were satisfied to conclude that the disposal group

was held for sale, in particular noting that it had been actively marketed, that there was a commitment to its disposal and that it

was available for sale in its current condition.

The Auditor explained their work performed to evidence the conditions supporting the classification and presentation as well as

the audit work performed over the allocation of assets to the disposal group.

Going concern and viability (see Note 1d)

The Committee considered the outcome of management’s

reviews of current and forecast net debt positions and the

various financing facilities and options available to the

Group, including the risk and potential impact of

unforeseenevents.

The Committee reviewed the going concern and viability assessment over the three-year period based upon the 2024 budget

and the strategic plan to 2026. The Committee confirmed that the application of the going concern basis for the preparation of

the financial statements continued to be appropriate.

The Auditor explained to the Committee the work they had conducted and the results of their audit procedures on going concern

and viability.

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AUDIT, RISK AND INTERNAL CONTROL CONTINUED

COMMITTEE ACTIVITIES IN 2023

FINANCIAL REPORTING GOVERNANCE

– Monitored and reviewed the Group’s financial statements and results announcements.

– Reviewed significant financial reporting and accounting issues.

– Reviewed going concern and viability statements, including appropriate sensitivityanalysis.

– Reviewed the fair, balanced and understandable process for the financial reports.

– Reviewed and discussed 2023 H1 and year-end accounting issues.

– Reviewed the revised outputs of the Government proposals on Audit and

GovernanceReform.

– Reviewed Terms of Reference.

– Received and considered whistle-blowing matters reported through the Group’s

multi-lingual, anonymous ethics and integrity portal.

– Undertook an evaluation on the effectiveness of the Committee.

– Review of progress against TCFD reporting requirements.

– Considered new areas of audit disclosure under UK legislation/regulation.

INTERNAL AUDIT AND RISK AND ASSURANCE EXTERNAL AUDIT

– Received a report at each meeting on progress on the internal audit and risk

assuranceplan.

– Reviewed internal audit planned activity and resource.

– Agreed the remit of the internal audit programme of work.

– Considered the results of the 2023 internal audit activities.

– Reviewed and approved the 2024 internal audit plan.

– Conducted the annual review of the Group’s internal audit function.

– Monitored progress on improvement activities related to the Controls Framework.

– Risk assessment of controls designed to protect against fraud and implementation

ofGroup Fraud Policy.

– Ongoing monitoring of the Group’s internal controls environment throughout the year,

including risk management strategy.

– Discussed and approved the external audit plan and audit fee.

– Reviewed external Auditor planned activity.

– Reviewed and confirmed both the independence of the external Auditor as part of the 2023

review, and non-audit fees.

– Assessed the quality and effectiveness of the audit programme, including the performance

of the Auditor relative to prior year.

Anne Thorburn

Chair, Audit Committee

6 March 2024

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

REMUNERATION

COMMITTEE

REPORT

INTRODUCTION TO OUR:

PRINCIPAL RESPONSIBILITIES

– Determine the Remuneration Policy for Directors for approval at least

every three years.

– Determine remuneration packages and terms and conditions of employment

for the Executive Directors, senior managers and the Chairman of the Board.

– Approve the design, performance measures, targets and outturns of

incentive schemes for the Executive Directors and senior managers.

– Set the Remuneration Policy within the wider context of remuneration

trendsacross the workforce.

– Produce an annual report of the implementation of the Directors’

Remuneration Policy in respect of the last financial year and for the

current year.

MEMBERSHIP

KEY ACTIVITIES DURING THE YEAR

– Our Remuneration Policy was approved by over 90% of shareholders that

voted at the 2023 AGM and we implemented those changes into our reward

arrangements in 2023.

– We sought to continue supporting our employees with the increased cost

ofliving which disproportionately impacts our lowest earners, providing our

lowest paid UK colleagues with higher salary increases in April 2023 and

we will do the same in 2024.

– In April 2023 Richard Tyson resigned as CEO, stepping down from the Board

on 1 October 2023.

– In July we announced the appointment of Peter France as CEO, starting on

2 October 2023.

– In managing the transition, the Committee determined the remuneration

arrangements for the departing CEO and the recruitment package for the

new CEO.

– We considered remuneration outcomes to ensure they remain fair,

appropriate, and in line with our remuneration principles and

Companyperformance.

Principal responsibilities 94

Key activities during

theyear 94

Q&A with the Chair 95

Annual statement 95

2023 Executive

Remuneration at a glance 98

Implementation of the

Policy for 2024 99

2024 Remuneration

Policy overview 100

Implementation of the

Policy for 2023 102

Total single figure

remuneration 102

Directors’ share interests

106

and

110

WHAT’S INSIDE

Alison Wood (Chair)

Warren Tucker

Jack Boyer

Michael Ord (appointed 16 January 2023)

Anne Thorburn (appointed 10 May 2023)

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

2023 was a busy year

forthe Committee and

we were delighted to be

able to appoint a new

CEO of Peter’s stature

and experience”

Alison Wood

Chair, Remuneration

Committee

Q&A

What were the primary considerations informing

the recruitment package for the new Chief

Executive Officer?

The Remuneration Policy, approved by over 90 per

cent of shareholders which voted at our last AGM,

incorporated changes to ensure our remuneration

packages remained appropriately positioned for

TT’sscale, complexity, and geographic footprint.

Having recently undertaken the Policy review, our

focus was to ensure that we were able to attract high

calibre individuals who were able to demonstrate a

track record of or demonstrate the potential to lead

and develop TT.

In defining the parameters of the recruitment package,

we considered: (i) the appropriate level of opportunity,

(ii) the approaches to any compensation forfeited, and

above all (iii) stakeholder value to ensure the delivery

ofsustainable stakeholder value.

The Remuneration Policy approved by shareholders

at the 2023 AGM brought about some changes to

remuneration and performance measures. A year on,

what are your reflections?

The Committee approached the Policy review to

ensure that we had appropriate flexibility in our

remuneration to ensure the management team

remained fully focused on building on our business

momentum to deliver the next phase of the Company

strategy and to attract, retain and motivate an

experienced leadership team. The changes were

considered to be of vital importance in respect

ofbeing able to attract high calibre individuals

duringthe recruitment process who were able to

demonstrate atrack record of leading and developing

a Company ofour scale and complexity and

ultimately appoint Peter France as our new CEO.

As part of the Policy review, we also made changes

toour incentives to ensure a greater focus on our

short-term ESG progress and our longer-term

cashconversion to strengthen the balance sheet.

Webelieve that this focus continues to align with our

strategy to ensure appropriate capital reinvestment

togrow the Group and those changes are once again

reflected in our incentives for 2024.

What areas will be the focus of the Remuneration

Committee in 2024?

The Committee has been pleased to see the

progress made by the Company to support

employees most impacted by high cost of living

andthe sustained improvements in employee

engagement scores. In 2024, we will continue

tokeepthis under review.

Looking forward, as the Company continues to

develop under Peter’s leadership, we will continue to

assess and ensure our remuneration arrangements

remain “fit for purpose” to unlock the potential of the

Group and drive the appropriate behaviours which

are underpinned by our TT Way values.

ANNUAL STATEMENT

On behalf of the Remuneration Committee (the

Committee), I am pleased to present the Directors’

remuneration report for the financial year ended

31December 2023 which will be put to an advisory

vote at the AGM on 10 May 2024.

The Committee was pleased to see that the 2023

Directors’ Remuneration Policy (the “Policy”) was

approved by over 90 per cent of shareholders which

voted at the 2023 AGM. Consistent with our long-

standing commitment to stakeholder engagement,

theCommittee undertook an extensive consultation

process with our major shareholders whose feedback

helped to shape the Policy. Once again, I would like to

thank all our stakeholders for their time taken in

providing feedback.

Despite the challenges of the external environment,

this is an exciting time for the Group and we were

delighted to welcome Peter France as our new CEO.

The business has once again delivered significant

profit growth alongside strong free cash flow and we

believe that our remuneration and incentive outcomes

for the year are reflective of this performance.

BROADER EMPLOYEE REMUNERATION

CONSIDERATIONS

As a Committee, we continue to take a responsible

approach to ensure remuneration outcomes align

with wider Company performance and

stakeholderoutcomes.

The Committee, independent from the Company,

receives updates and insights from multiple sources,

such as one-to-one check-ins with key role holders

and from NED site visits, which allow for open and

frank dialogue directed by feedback and priority

areasfrom our employees. In addition, there are

frequent updates and inputs by the designated NED,

incorporating feedback from the PSEE Committee.

REMUNERATION COMMITTEE REPORT CONTINUED

Further details

on the Committee’s

approach and

the wider range

of activities

are provided 

on page 59

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

INCENTIVE OUTTURNS IN RESPECT OF 2023

PERFORMANCE

Performance for the year ended 31 December 2023

delivered strong year-over-year profit growth of 16 per

cent at constant currency. On the same basis revenue

grew organically and the operating margin has

increased by 110 bps to 8.6 per cent. Free cash flow

returned to material cash generation and leverage

reduced from 2.0 to 1.7 times in line with our debt

reduction priority. The Group’s progress continues to

be underpinned by good customer wins with a strong

order book giving good visibility for 2024, well above

historic levels. The Group exited the year with a second

half operating margin of 8.9 per cent; we are targeting

the achievement of a 10 per cent margin in 2024.

The Committee considered the formula-driven

incentive outturns in the context of our core

remuneration principles, the broader economic

environment, and the stakeholder experience, while

recognising that the performance targets set were

both stretching and linked to the Group’s strategy

andperformance. The Committee considered the

outcomes under the FY2023 short-term incentive plan

(“STIP”) and the elements ofthe FY2020 and FY2021

long-term incentive plan (“LTIP”) grants reaching the

end of their performance periods in 2023. In light of

the Company performance in 2023 and the historic

impact of the pandemic on the business momentum

and progress during the LTIP performance period,

outcomes across the incentives were mixed.

The FY2023 STIP outcome has been measured by

performance against a combination of profit, cash,

ESG and strategic objectives. Financial performance,

once again delivered significant progress and the

resulting payout in respect of these elements was

91.0per cent of the maximum. Non-financial

performance against ESG and the strategic objectives,

representing up to 30 per cent of the incentive

opportunity, was determined as 93.3 per cent of the

maximum for the CEO and 100 per cent for the CFO.

The overall short-term incentive achieved was

therefore 91.7 per cent of the maximum pro-rated

opportunity for the CEO (34.3 per cent of salary) and

93.7 per cent of the maximum opportunity for the CFO

(140.5 per cent of salary). TheCommittee concluded

that the payment was representative of the

performance. Consistent with thePolicy, 30 per cent

ofthe bonus awarded will bedeferred into shares.

The 2020 LTIP was based on a sole total shareholder

return (“TSR”) performance measure. As TSR over the

three-year period to March 2023 was slightly below the

threshold performance target, the award lapsed in full.

The 2021 LTIP is due to vest in March 2024 based on

two equally weighted performance measures, absolute

adjusted EPS and relative TSR performance up to the

date of vesting. The strong recovery from the pandemic

and successive years of year-on-year growth resulted

in the EPS component vesting at 87.8per cent of the

maximum; the TSR element iscurrently below the

median threshold performance target, although as this

concludes in 2024, it will be disclosed in next year’s

Directors’ remuneration report.

The Policy operated as intended in terms of

Companyperformance and quantum. The Committee

did not therefore exercise any discretion in respect of

incentive outcomes.

CHANGES TO THE BOARD

During the year, we announced several changes to the

Board. As announced in July 2023, we were delighted

to appoint Peter France as CEO to succeed Richard

Tyson who stepped down as CEO on 1 October 2023.

The remuneration arrangements for the outgoing

andincoming Directors are in line with both the

Remuneration Policy approved by shareholders

andgood governance practice.

Our people are a key differentiating factor of our

competitive advantage, operating performance and

growth. We recognise that many of our people

continue to be impacted by inflation and the cost of

living. Building on the range of support offered in 2022,

we were pleased to see support continue in 2023 with

significant base pay increases averaging 7 per cent

and base pay increases in 2024 expected to average

5to 6 per cent. The Committee also received feedback

from HR leaders on the progress and success of the

support initiatives and reviewed a variety of data

points on how high inflation was impacting employees.

This will remain an area of review for the Committee.

We were delighted to see both this, and the progress

ofour wider people strategy, reflected in our 2023

employee engagement scores which delivered an

improved score, in line with the 3*** “world class”

BestCompanies Ltd benchmark.

CONTEXT FOR EXECUTIVE REMUNERATION

Our approach to remuneration is driven by the need

toattract and retain the right calibre of talent to deliver

long-term sustainable growth and stakeholder value.

TT is a diverse, complex multi-national Company

competing for talent with global peers in tight

labourmarkets.

Our remuneration principles (pay for performance,

strategic progress and the delivery of sustainable

value to shareholders), combined with our strong

organisational culture, underpinned by our TT Way

behaviours, define how decisions are made, how

people act and how we assess and reward them.

The majority of the Executive Directors’ remuneration

opportunity continues to be made up of variable,

performance-related pay, which is linked to stretching

financial, strategic, cultural and environmental,

socialand governance (“ESG”) targets, and is

proportionately delivered in shares to strengthen

stakeholderalignment.

REMUNERATION COMMITTEE REPORT CONTINUED

Further details

on the Groups

financial

performance

are provided 

on page 17

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REMUNERATION COMMITTEE REPORT CONTINUED

experience and expertise required for a Company

ofour size, scale and complexity, the base fee has

increased from £49,316 to £55,000 and the additional

fees payable for the Senior Independent Director

andCommittee Chairs (excluding the Nomination

Committee) have increased from £8,610 to £10,000.

LTIP RULES

Our current LTIP rules, originally approved by

shareholders at the AGM in 2014, will shortly reach

theend of their 10-year shareholder approved life and

we will be seeking shareholder approval for the new

rules at the 2024 AGM. The new rules, which are not

materially different to the existing rules which were

lastupdated in 2019, have been updated for good

practice developments and to ensure alignment to

theRemunerationPolicy.

CONCLUSION

The Committee has carefully considered the

remuneration outcomes for 2023 and the operation

ofthe Policy for the year ahead, to ensure the

continued delivery of sustainable year-on-year

progress, aligned to shareholders, employees and

wider stakeholders outcomes. We have carefully

managed the remuneration aspects relating to the

CEO transition and have ensured that we have paid

nomore than necessary to secure a candidate of

Peter’s calibre. In what has undoubtedly been one

ofmy busiest years as Committee Chair, we have

remained mindful of the impact of high inflation on

ourmost valuable assets, our people and culture,

andwill ensure this remains an area of focus.

It has and continues to be my pleasure to serve TT and

its stakeholders as both a NED and as Remuneration

Committee Chair. 2025 will see the end of my final

term on the Board and over the year I will be working

with the Company to commence a smooth handover

to my successor.

Alison Wood

Chair, Remuneration Committee

6 March 2024

IMPLEMENTATION FOR FY2024

In accordance with the terms of his recruitment,

Peteris not eligible to receive a salary increase in 2024.

The base salary of the CFO was increased, at a rate

below that of the wider workforce, by 3 per cent

effective from 1 January 2024. As in prior years,

agreater proportion of the salary increase budget

forUK employees will be targeted to our lowest paid

workers, who remain more significantly affected by

inflationary pressures. For the UK, the 2024 salary

increase budgets are expected to average in the

rangeof 5to6per cent.

The STIP opportunity for the year will remain at 150%

of salary for the Executive Directors. The performance

measures will continue to be based on profit before tax

(46.7%), free cash flow (23.3%), ESG (10%) and strategic

objectives (20%). 30 per cent of any award payable will

be deferred into shares with a two-year holding period.

LTIP awards up to 150 per cent of salary are expected

to be granted to the Executive Directors in 2024,

mirroring those in 2023. This represents a 15per cent

of base salary enhancement to the CFO’s typical grant

who is and will remain, for the coming year, pivotal to

the successful transition of the CEO. The measures for

the 2024 grants will continue to be based on earnings

per share (50%), cash conversion (25%) and total

shareholder return (25%). EPS will require compound

annual growth of between 4 per cent and 12 per cent

over three years and cash conversion a range of

80-95per cent. TSR will be measured relative to

companies comprising the FTSE SmallCap index

excluding Investment Trusts, requiring median

performance for threshold vesting and upper quartile

performance for maximum vesting.

NON-EXECUTIVE DIRECTORS’ (“NED”) FEES

The fee for the Chairman was increased, at a rate

below that of the wider workforce, by 3 per cent

effective from 1 January 2024.

To reflect the time commitments and enable

theCompany to attract and retain NEDs with the

Peter France’s remuneration package from

appointment (which is broadly equal to that of the

former CEO and represents the necessary levels to

recruit a high calibre, experienced candidate who is

able to lead a Company of our scale and complexity)

isas follows:

– Base salary: £550,000 per annum with the first

salary review being 1 January 2025

– Benefits: In line with the shareholder approved Policy

– Pension: Workforce aligned pension contribution

– STIP: 150% of salary (pro-rated in 2023 from

appointment)

– LTIP: 150% of salary.

In addition, the Remuneration Committee agreed to

compensate for Peter’s FY2023 pro-rata annual bonus

that he forfeited on resignation. However, rather than

compensate the amount in cash, Peter agreed to

receive the amount in deferred shares, with a three-

year vesting period with vesting subject to continued

service. Further details are set out on page 105.

Richard Tyson received salary, benefits and pension

upto 1 October 2023. He was not eligible to receive an

STIP award in respect of the 2023 financial year and

other than his awards granted under the Deferred

Share Bonus Plan, all of Richard’s share awards lapsed

at cessation. There was no payment in lieu of notice

associated with Richard’s departure, and he will remain

subject to the post-employment shareholding

requirement in line with our Policy. Further detail is

setout in the Annual Report on Remuneration.

In respect of the Non-Executive Directors, we

announced that Wendy McMillan and Michael Ord

joined the Board as Non-Executive Directors in

January 2023, with Michael also joining the

Remuneration Committee. InMay 2023, we

announced that Anne Thorburn, who remains the

Audit Committee Chair, also joined the Remuneration

Committee. Wendy stepped down from the Board in

November following her appointment to anew

executive role which restricted external appointments;

we wish Wendy well in her new role.

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Share ownership requirement:

200% of salary for

Executive Directors.

Short-term incentive

Awards subject to a 30%

deferral into shares with

a two-year vesting period.

Long-term incentive

Delivered in shares and subject

to a three-year vesting period

and a two-year holding period.

Workforce alignment

Executive remuneration

set inthe context of wider

workforce remuneration.

Remuneration principles flow

through the Group to ensure

alignment.

Post-employment

share ownership

Shares to the value of 100% of

salary to be held until two years

after cessation of employment.

To reinforce our philosophy, the majority

of the Executive Directors’ remuneration

package is made up of variable at-risk pay,

linked to stretching performance targets

that align with our strategy, the financial

performance of the Group and the creation

of sustainable shareholder value.

CONTEXT FOR REMUNERATION

Creating Value

– leverage our assets and differentiators

– maintain strong capital discipline

– grow our exposure to long-term growth markets

– deliver sustainable stakeholder value

Our TT Way values

We do the right thing We champion expertise

We bring out the best in

eachother

We get the job done… well

We achieve more together

Our remuneration principles

– performance-related

– strategic alignment

– alignment with stakeholders

– transparency and culture

– competitive

Read more about

the Group’s financial

performance

on page 17

Read more about

the LTIP outcomes

on page 105

Read more about

single figure of

remuneration

from page 102

ALIGNMENT WITH STAKEHOLDERS

IMPLEMENTATION OF REMUNERATION POLICY IN 2023

SHORT-TERM INCENTIVE PLAN (“STIP”)

Total STIP payment (%of maximum)

Peter France, CEO

91.7%

Mark Hoad, CFO

93.7%

Performance measures Weighting Threshold Outturn Maximum Achievement (% of max)

Adjusted PBT 46.7% £39.7m

£47.3m

£46.1m 100%

Free cash flow 23.3% £11.9m

0 20 40 60 80 100

£27.8m

£31.0m 72.9%

ESG 10% Scorecard

Full achievement

Scorecard 100%

Strategic objectives 20% Targets based on a range of objectives. CEO objectives reflect strategic deliveries from start date in October 2023.

LONG-TERM INCENTIVE PLAN (“LTIP”)

Total LTIP payment (%of maximum)

Peter France, CEO

N/A

Mark Hoad, CFO

29.3%

Performance measure Weighting Threshold Outturn Maximum Achievement (% of max)

Total shareholder return

66.7% Median rank

Below median

Upper quartile rank 0%

EPS growth

33.3% 10% CAGR

16.8% CAGR

18% CAGR 87.8%

1 In line with the disclosures in the 2020 Annual Report and Accounts, 100% of the 2020 LTIP grant was based on relative TSR, the full value of which is included in

the 2023 single figure of remuneration.

2 2021 LTIP grant is based on 50% TSR and 50% EPS. In accordance with the completion of the vesting periods the TSR component will be disclosed in the 2024

single figure of remuneration.

TOTAL REMUNERATION FOR 2023

Peter France, CEO

£0.734m

Mark Hoad, CFO

£1.200m

Salary and benefits 20%

Pension 1%

Short-term incentive 79%

Long-term incentive n/a

Salary and benefits 36%

Pension 2%

Short-term incentive 46%

Long-term incentive 16%

2023 EXECUTIVE REMUNERATION

AT A GLANCE

CEO

CFO

34%

330%

200%

BASE SALARY

Peter France, CEO

£550,000

Mark Hoad, CFO

£391,876

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

The tables set out a summary of how

the Directors’ Remuneration Policy

will be applied during the year ending

31 December 2024.

There are no material changes to the implementation

of the Policy from FY2023. As described in the Chair

Statement, both Executive Directors will receive LTIP

grants of 150 per cent of salary, mirroring the

approach taken in 2023.

The Committee is of the view that the current

remuneration framework remains fit for purpose

andtherefore no changes to the Policy are proposed.

In the STIP, ESG performance will be focused on

quantitative reductions of our Scope 1 & 2 carbon

intensity; strategic objectives will focus on the

sustainable development of the group and

inventoryefficiency.

STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN 2024

BASE SALARY

Peter France, CEO

£550,000

(0% increase)

Mark Hoad, CFO

£403,632

(3% increase)

SHORT-TERM INCENTIVE PLAN (STIP) LONG-TERM INCENTIVE PLAN (LTIP)

Target

75%

of base salary

Maximum

150%

of base salary

Maximum

150%

of base salary

Performance

measure

Weighting

Adjusted profit before tax

46.7%

Free cash flow

23.3%

ESG

10%

Strategic objectives

20%

– 30% of STIP award deferred into shares for two years

– Specific targets are considered to be commercially sensitive and will

bedisclosed retrospectively

1 Financial measures are measured using constant budget exchange rates.

2 To the extent that the threshold performance target for neither

financialperformance measure is attained, the Committee will consider,

ifappropriate, a reduction to the outcomes payable in respect to ESG

and/or strategic objectives, up to and including a reduction to zero.

Performance

measure

Weighting Threshold Maximum

(full vesting)

Adjusted EPS growth

50% 4% 12%

Average cash conversion 25% 80% 95%

Relative TSR performance

25% Median Upper quartile

– Awards expected to be granted in March 2024 with performance conditions

over the three-year financial period

– Two-year post-vesting holding period applies

1 Adjusted EPS growth set as a compound annual growth rate

on a constant currency basis.

2 TSR comparator group is the FTSE SmallCap, excluding InvestmentTrusts.

PENSION BENEFITS

of base salary

Benefits package consisting of healthcare, insurance benefits

andcar benefit.

PERFORMANCE MEASURES AND LINK TO STRATEGY

Performance measures in our short-term incentive plan for FY24 Performance measures in our long-term incentive plan for FY24

Adjusted profit

before tax

Strong operational execution, encompassing our

strategic priorities of strategic business development

and operational excellence

Adjusted EPS

growth

Sustainable growth in the Group’s profitability

pershare over three years

Free cash flow Essential to capital reinvestment to fund technology

investment and R&D, reduce leverage and take

advantage of market opportunities such as targeted

and complimentary M&A

Average cash

conversion

Long-term operational cash flow efficiency over

threeyears, supporting cash generation for

capitalreinvestment

ESG Integration of ESG, doing the right thing with regard

tothe environment and our stakeholders, ensuring

asustainable business for the future

Relative TSR

performance

Aligns Executive reward to the shareholder

experience. Compares the Group’s share price

anddividend performance relative to a peer group

overthree years

Strategic

objectives

Progress of the Group’s strategy to deliver sustainable

growth in stakeholder value

SHAREHOLDING

REQUIREMENTS

Executive Directors are

required to build and

maintain a minimum

shareholding in

employment equivalent

to 200% of basic salary.

Post cessation of

employment, Executive

Directors are required to

maintain for two years,

ashareholding of half

this requirement or

maintain their actual

holding iflower.

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REMUNERATION POLICY OVERVIEW

Executive Director remuneration for 2024

Element Maximum 2024 2025 2026 2027 2028

Fixed Pay Salary Market competitive.

Increasesset with reference

tothe wider workforce.

Salary paid.

Benefits Market competitive. Benefits paid.

Pension Aligned to those available to

majority of local workforce.

Pension provision

paid.

Variable Pay Short-term

incentive plan

CEO/CFO 150% of salary.

70%cash and 30% in

deferredshares.

Annual performance

conditions apply.

Majority weighting

on Group financial

targets, minority to

ESG performance

and strategic

objectives.

Cash

element paid

(70% of

incentive).

Two-year share deferral

(30%of incentive).

Long-term

incentive plan

CEO/ CFO 150% of salary.

Two-year holding period.

Based on a variety of financial and/or shareholder

value creation and/or ESG measures over a three-

year performance periods.

Two-year holding period.

Governance Malus (withholding)

and clawback

(recovery)

All incentives. Malus and clawback: misstatement, serious misconduct, serious reputational

damage, error in calculation and corporate failure.

Committee discretion: ability to exercise discretion and make adjustments

toformulaic outcomes.

Share ownership

requirement

200% of salary. Executive Directors required to build and maintain the share ownership requirement.

Post-employment

share ownership

100% of salary. Holding requirement for shares until two years after cessation of employment.

Remuneration objectives and key principles

The Remuneration Policy supports and rewards the achievement of the Group’s strategy to deliver profitable and sustainable growth over the short and longer

term. This is driven and evaluated by how the Group performs against a variety of strategically aligned KPIs, both financial and non-financial. Our Directors’

Remuneration Policy was last approved by shareholders at the AGM on 9 May 2023. A summary of the Policy is shown below.

Read the full

Remuneration Policy 

in the 2022 Annual

Report and Accounts

on pages 112 – 121

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ALIGNMENT WITH THE UK CORPORATE GOVERNANCE CODE

The table below details how the Committee addresses the factors set out inProvision 40 of the

Code, which align with our principles and Executive Director remuneration framework.

Clarity Simplicity

– We provide open and

transparent disclosures of

ourExecutive Directors’

remuneration arrangements.

– We welcome stakeholder

engagement and are

committed to undertaking

stakeholder consultation when

considering changes to our

Remuneration Policy.

– We are mindful to avoid overly complex

remunerationstructures.

– We aim to ensure that remuneration arrangements for our

Executive Directors and the wider workforce are as simple

as possible to drive understanding and engagement.

– We take the time to engage with participants and

widerstakeholders.

Predictability Proportionality, risk and alignment to culture

– The Remuneration Policy

details the maximum

opportunity levels for each

component of pay.

– Actual incentive outcomes

vary depending on the level of

performance achieved against

specific measures.

– The Committee undertakes an annual review of risks.

Identified risks are considered with appropriate mitigation

strategies or tolerance levels agreed.

– The metrics used to measure performance in our incentive

plans drive behaviours that are consistent with the

business strategy and our TT Way values.

– The incentive structures and balance of fixed to variable

pay do not encourage inappropriate risk taking. They are

subject to the achievement of stretching performance

targets and the Committee has the ability

to apply discretion to override formulaicoutcomes.

– Our approach to decision-making ensures pay

outcomesare fair, proportionate and do not reward

poorperformance.

– Clawback and malus provisions are in place across

allincentive plans and are clearly communicated.

– Annual short-term incentive deferral, LTIP holding periods

and our shareholding requirements provide a clear link

tothe ongoing performance of the business and are

therefore aligned with shareholderinterests.

ALIGNMENT WITH THE WIDER WORKFORCE

All employees Executive Directors

Salary – Pay increase recommended

by site & division

– Reviewed and approved

byhead office (UK average

7% in2023)

– Pay rise % below or in line with

employee pay (5% in 2023)

Short-term incentive – All employees are eligible

forabonus

– Site incentive targets:

customer delivery,

productivity, quality,HSE

– Leadership and senior

managers: targets cascade

from Executive Director

design

– Max 150%, on-target 75%

– Performance conditions:

profit, cash flow, ESG,

strategicdelivery

Deferred share bonus plan – Not applicable – 30% of short-term incentive

deferred for 2 years

Long-term incentive – Leadership team, three-year

performance period,

noholding period

– Max 150% of salary

– Three years, two-year

holdingperiod

– Performance conditions: EPS,

TSR, cash conversion

Retirement – Up to 7% of salary

contribution

– 7% of salary contribution

Other benefits – Life cover

– Healthcare

– ShareSave

– Car allowance (Sales and

senior leadership)

– Life cover

– Healthcare

– ShareSave

– Car allowance

– Risk benefits

The Committee considers a range of factors when deciding upon the remuneration for

ExecutiveDirectors, one of which is the alignment and cascade of reward programmes down

theorganisation. In implementing the current Policy, the Committee took the opportunity to

ensure that changes to performance metrics inExecutive Director incentives appropriately

cascaded down the organisation. Inaddition, the Company regularly engages with employees

onthe alignment of reward practices and provides opportunity to give feedback to the Committee.

Sessions were conducted at three sites during 2023; there was no material feedback on Executive

Director remuneration.

The following summarises the alignment of remuneration for the wider workforce during 2023.

The detail of retirement and benefits are specific toeach location and are shown for the UK.

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IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR ENDED

31DECEMBER 2023

Single figure for total remuneration (audited)

Directors’ remuneration for the year ended 31 December 2023 was as follows:

£’000 Salary

Taxable

benefits Pension

Total

fixed

pay

Short-

term

Incentive

Long-

term

Incentive

Other

Total

variable

pay

Single

total

figure

Executive Directors

Peter France

2023 138 7 10 155 189 – 390 579 734

2022 – – – – – – – – –

Mark Hoad 2023 392 33 27 452 551 197 – 748 1,200

2022 373 34 56 463 285 137 – 422 885

Former Directors

Richard Tyson

2023 392 34 27 453 – – – – 453

2022 498 38 75 611 380 203 – 583 1,194

1 Executive Directors’ short-term incentive awards are subject to deferral into shares in the Company. The STIP value includes the incentive

paid in both cash and deferred into shares. In line with the prevailing Remuneration Policies at the time of grant 30% of the 2023 award

willbe deferred into shares and 20% of the 2022 award was deferred into shares. Deferred awards are not subject to any further

performanceconditions.

2 LTIP values shown in the single figure include dividend equivalents. The 2023 single figure is comprised of the 2020 award and the EPS

component of the 2021 award; the 2022 figure is comprised of the TSR element of the 2019 award. The value attributable to share price

appreciation in the 2023 single figure value for the CFO was £(57,666). The Committee did not exercise any discretion to vesting outcomes

in relation to the impact of share price movements.

3 Value relates to the bonus buy-out share award to compensate Peter France for the FY2023 pro-rata annual bonus forfeit on resignation.

4 Peter France joined as CEO on 2 October 2023.

5 Richard Tyson stepped down from the Board on 1 October 2023.

BASE SALARY

Base salaries for Richard Tyson and Mark Hoad were reviewed in December 2022 and were

increased by 5 per cent with effect from 1 January 2023. The increases were set at a level below

those of the wider UK workforce which averaged 7 per cent.

TAXABLE BENEFITS

The Executive Directors’ taxable benefits consist of a car allowance and insurance benefits.

Costsassociated with insurance benefits reflect the circumstances of each Executive Director

and typically increase with age.

PENSION

Employer contributions were paid at 7 per cent of base salary in line with those available

tothewider UK workforce. Contributions are made as defined contribution pension and/or

acashsupplement.

SHORT-TERM INCENTIVE

Following approval of the Remuneration Policy at the 2023 AGM, the maximum opportunity

under the short-term incentive plan for Executive Directors is 150 per cent of salary, subject to the

achievement of the stretching performance measures detailed below. 70 per cent of the award is

paid in cash and 30 per cent is deferred into shares which will vest after two years. The award for

Peter France is pro-rata reflective of his time served in 2023.

Short-term incentive plan design for 2023

Performance measure Weighting

Threshold

(% of salary)

Target

(% of salary)

Maximum

(% of salary)

Group adjusted profit before tax 46.7% 7% 35% 70%

Group free cash flow 23.3% 3.5% 17.5% 35%

ESG 10% n/a 7.5% 15%

Strategic objectives 20% n/a 15% 30%

Total 75% 150%

The plan includes an underpin relating to the achievement of ESG and/or strategic objective

performance measures. To the extent that neither threshold performance target of the financial

measures has been met, the Committee may reduce the outcomes payable in respect to these

measures, up to and including a reduction to zero.

2023 PERFORMANCE TARGETS

The Remuneration Committee sets targets for the Executive Directors prior to the start of the

performance period. Targets are set primarily on the business plan at the time, with reference

toexternal forecasts of the Group’s performance and market conditions.

In setting the performance targets, the Committee also took account of shareholder feedback

onthe changes to the Remuneration Policy to ensure that targets were appropriately stretching

toreflect the increase in opportunity; this was achieved by stretching the level of performance

required to achieve the maximum and widening the performance range.

REMUNERATION

ANNUAL REPORT ON

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For 2023, adjusted profit before tax (at the Group’s budget FX rates) was £47.3m, up 11% on

alike-for-like basis, which reflects performance exceeding the top end of the target range set

bythe Committee at the start of the year.

Free cash flow performance (at the Group’s budget FX rates), as expected reached an inflection

point with a return to material cash flows of £27.8m, which reflects performance between the

threshold and maximum of the range set by the Committee.

Performance measure Weighting

Required for

threshold bonus

(£m)

Required for

maximum bonus

(£m)

Outturn

(£m)

Outturn

(% of maximum)

Group adjusted profit before tax

46.7% 39.7 46.1 47.3 100%

Group free cash flow

23.3% 11.9 31.0 27.8 72.9%

1 Short-term incentives are measured using constant budget exchange rates.

The results reflect strong year-over-year delivery of increased profit growth. At constant currency

revenue continued to grow organically and the operating margin increased by 110 bps to

8.6percent.

The Group’s progress continues to be underpinned by good customer wins with a strong order

book giving good visibility for 2024, well above historic levels. The Group exited the year with a

second half operating margin of 8.9 per cent, targeting the achievement of 10 per cent margins

in2024.

REMUNERATION CONTINUED

ESG

As previously disclosed, for 2023, ESG was a separate, higher-profile component of the short-term incentive to better reflect the strategic importance of ESG to sustainable shareholder value.

TheCommittee set a mix of quantitative and qualitative measure as follows:

Target Committee assessment

Outturn

Weighting

Outturn

(% of maximum)

Scope 1 & 2 carbon

emission reduction

In assessing the target the Committee noted:

– Reductions continued to be delivered ahead of plan to reach Net Zero by 2035;

– Year-on-year reductions remain impressive with FY2023 reduction to baseline increasing to 62% vs 54% for FY2022;

– Significant capital investment in solar installation completed in Kuantan, Malaysia and installation in Mexicali, Mexico due to complete in early 2024;

– Kansas City, USA transitioned to renewable electricity and significant progress was made towards future delivery of renewable electricity to Juarez,

Mexico; and

– Targeted energy saving projects in Mexicali, Mexico and Juarez, Mexico reduced electricity consumption by 1.1 GWh vs FY2022.

10% 100%

Evaluation of the material

Scope 3 impacts

In assessing the target the Committee noted:

– Measurement and assessment of materiality of categories of material Scope 3 emissionscompleted;

– Reporting completed on six key categories; and

– Improvement continues to be made on material data challenges to target timely, robust and reliabledata.

Progress towards science-based

targets initiative (“SBTi”)

In assessing the target the Committee noted:

– Initial submission of commitment to SBTi is on track with full Net Zero Roadmap submission with the SBTi guideline timeframes.

Employee equity In assessing the target the Committee noted:

– UK salary increases targeted toward roles most impacted by cost of living in both 2023 and 2024;

– Continued progress to recalibrate entry level pay and introduction of career pathways;

– Continued focus on cost-of-living support and changes to site-based incentives to increase value and frequency of payout;

– Review completed on how employees are coping with higher inflation and follow up actions; and

– Employee engagement survey continues to receive strong response rate with significant improvements on “fair deal” and overall 3*** outcome.

FINANCIAL PERFORMANCE

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REMUNERATION CONTINUED

STRATEGIC OBJECTIVES

The strategic objectives of the Executive Directors focused on the creation of sustainable value. Strategic objectives for the CFO were set at the start of the year, theobjective for the CEO was set

inline with his start date in October, and applied to the remaining three months of the plan year.

Strategic objective

Peter France

Committee assessment

Outturn

Weighting

Outturn

(% of maximum)

Strategic objective

Mark Hoad

Committee assessment

Outturn

Weighting

Outturn

(% of maximum)

Delivery of core

strategic actions

In assessing the target the Committee noted:

– Foundations laid for the successful execution of

strategicactions to deliver margin improvement

andtoreduce leverage;

– Significant progress made on the inventory working

capital project. Foundations laid for further material

progress in 2024; and

– Significant progress made towards the successful

completion of the divestment of the business units

inCardiff and Hartlepool, UK and Dongguan, China.

20% 90% Strategic review of customer

strategies and global supply

chains to optimise growth

opportunities

In assessing the target the Committee noted:

– Full evaluation of TT global positions concluded taking

into account industry and political experts;

– Board concluded existing strategy and actions were

robust with actions underway to manage opportunities

and risks;

– Expansion of facilities in Kuantan, Malaysia and now

inMexicali, Mexico increase our geographic product

diversification and facilitates re-shoring opportunities

withcustomers; and

– Alignment of businesses to local markets continues

tomitigate re-shoring impacts.

10% 100%

Human capital management In assessing the target the Committee noted:

– Review of finance operating model completed to deliver a

high capability efficient and partnering organisation;

– Actions undertaken to create additional capacity and

capability. Upskilling delivered on control framework;

– Internal successors appointed to functional leadership

roles with support in place; and

– Talent and succession management in place for selected

core roles with succession optionality. Development

programmes in place for key role holders to

ensurereadiness.

10% 100%

As it does every year, the Committee thoroughly evaluated the performance of both the Group

and the Executive Directors in the round to assess whether the level of short-term incentive award

is both appropriate and justified.

Taking into account the financial performance amid continued challenging and dynamic market

conditions, and the wider assessment of performance described in this report, the Committee

concluded that the formulaic award based on performance against stretching targets is justified

and no discretion was applied.

In line with the Remuneration Policy, 30 per cent of the short-term incentive will be deferred into

shares for two years. Peter France was eligible for a pro-rated award for the period he was an

Executive Director. Richard Tyson was not eligible for a 2023 award following his resignation as

CEO. The awards are as follows:

Performance measure Weighting Peter France Mark Hoad

Group adjusted profit before tax 46.7% 100% 100%

Group free cash flow 23.3% 72.9% 72.9%

ESG 10% 100% 100%

Strategic objectives 20% 90% 100%

Total award (% of maximum) 91.7% 93.7%

Total award (% of salary) 34.3%

140.5%

1 Peter France was eligible for a pro-rated award for the period he was an Executive Director in 2023.

2023 SHORT-TERM INCENTIVE OUTCOMES

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

LONG-TERM INCENTIVE

LTIP awards over conditional shares have historically been granted with performance measures

over separate three-year performance periods; EPS performance aligns with the Group’s financial

year while the TSR performance ends on the third anniversary of the award date. Accordingly, the

performance periods of the performance conditions end in separate reporting years. Both the

2020 and 2021 LTIP awards had performance periods that ended on or by 31 December 2023

which are included in the single figure of remuneration for 2023.

Award year and performance measure

Threshold

(25% vesting)

Maximum

(100% vesting) Outcome

Percentage of

maximumachievement

2020 LTIP award

: Relative

TSR performance against the

FTSE SmallCap (excluding

InvestmentTrusts)

Median Upper quartile 41 percentile

(Below threshold)

2021 LTIP award

: Adjusted EPS

compound annual growth on

aconstant currency basis

10% 18% 16.8%

(Between threshold

andmaximum)

87.81%

1 2020 LTIP award (vested March 2023): As previously disclosed, following shareholder consultation, the award had a sole TSR performance

condition that ended in March 2023.

2 2021 LTIP award (vesting March 2024): The EPS performance period for this award ended on 31 December 2023; the vesting of the EPS

component was between the threshold and the maximum as indicated in the above table. An estimate of the vested value of the shares

subject to the EPS performance measure is included in the 2023 single figure of total remuneration based on the average share price in the

final quarter of 2023 (158.17p). This estimate will be restated for the actual vested value in the next remuneration report. The TSR

performance period ends in March 2024 and will be included in the 2024 single figure for total remuneration.

Malus and clawback

No malus or clawback events occurred during 2023.

LONG-TERM INCENTIVES GRANTED DURING THE FINANCIAL YEAR (AUDITED)

LTIP awards over conditional shares were granted to the CFO and former CEO on 16 March 2023.

An award was made to Peter France on 2 October 2023 following his appointment. Awards are

subject to a three-year vesting period plus an additional two-year holding period.

Basis of

award granted

(% of salary)

Share price at

date of grant

(pence)

Number of

shares over

which award

was granted

Face value

of award

(£)

% of award

that would vest

at threshold

performance

Performance

period end date

Peter France 150% 171.90 479,930 825,000 25% 31/12/2025

Richard Tyson 150% 180.87 433,241 783,603 25% 31/12/2025

Mark Hoad 150% 180.87 324,992 587,814 25% 31/12/2025

1 The share price used to determine the number of shares granted on 16 March was the average share price over the three trading days prior

to grant; for the 2 October grant the average share price was over the four days prior to grant.

The Committee is mindful that share price falls can lead to the perception of windfall gains.

TheCommittee did not believe that windfall gains would apply as a result of the share price

volatility at the time of grant but retains discretion to adjust formulaic incentive vesting

outcomesto ensure they reflect underlying business performance and shareholder interests.

PERFORMANCE MEASURES FOR LTIP AWARDS GRANTED DURING THE FINANCIAL

YEAR (AUDITED)

Awards granted to Executive Directors during 2023 are subject to the three performance

measures over a three-year performance period as follows:

Performance measure Weighting

Threshold

(25% vesting)

Maximum

(100% vesting)

Adjusted EPS compound annual growth on a constant

currencybasis

50% 4% 12%

Average cash conversion 25% 80% 95%

Relative TSR performance against the FTSE SmallCap

(excludingInvestment Trusts)

25% Median Upper quartile

DEFERRED SHORT-TERM INCENTIVE AWARDS

During the year, Executive Directors were awarded conditional shares as deferred bonus share

plan awards in relation to the 2022 STIP outcome. Details of the awards are summarised in the

table below. No performance conditions apply to these awards.

Date of grant

Number of shares

awarded

Share price at

date of grant

(pence)

Face value

of award

(£) Date of vesting

Richard Tyson 16/03/2023 42,070 180.87 76,092 16/03/2025

Mark Hoad 16/03/2023 31,558 180.87 57,080 16/03/2025

1 The share price used to determine the number of shares granted was the average share price over the three trading days prior to grant.

BONUS BUY-OUT SHARE AWARD

In connection with Peter France’s recruitment, the Committee compensated Peter for the FY2023

pro-rata cash annual bonus that he forfeit on resignation from his prior employer. However, rather

than compensate the amount in cash, Peter agreed to receive the amount in deferred shares over

a three-year vesting period. Details of the award are summarised in the table below.

Noperformance conditions apply to this award.

Date of grant

Number of shares

awarded

Share price at

date of grant

(pence)

Face value

of award

(£) Date of vesting

Peter France 02/10/2023 226,876 171.90 390,000 02/10/2026

1 The share price used to determine the number of shares granted was the average share price over the four trading days prior to grant.

REMUNERATION CONTINUED

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

EXECUTIVE DIRECTOR INTERESTS IN SHARES

The table below sets out details of outstanding share awards held by Executive Directors at 31 December 2023.

Scheme Date of grant

Performance

conditions apply

Exercise

price

(pence) 1 January 2023

Granted during

the year Lapsed Vested 31December 2023

Market value at

31December 2023

(£)

Market

price at granted

date

(pence) Vesting date Expiry date

Peter France LTIP 02/10/2023 Y – 0 479,930 479,930 749,651 172 02/10/2026 –

Buy-out Award 02/10/2023 – – 0 226,876 226,876 354,380 172 02/10/2026 –

Total outstanding 706,806 1,104,031

Richard Tyson LTIP 13/03/2020 Y – 365,983

365,983 – – – 196 13/03/2023 –

16/03/2021 Y – 349,621

349,621 – – 208 16/03/2024 –

14/03/2022 Y – 388,550

388,550 – – 192 14/03/2025 –

16/03/2023 Y – 433,241 433,241 – – 181 16/03/2026 –

DSBP 16/03/2021 – – 21,011

– 21,011 – – 208 16/03/2023 –

14/03/2022 – – 61,374 61,374 95,866 192 14/03/2024 –

16/03/2023 – – 42,070 42,070 65,713 181 16/03/2025 –

ShareSave

29/09/2021 – 174 7,96 4 7,964 – – 226 01/11/2024 –

Total outstanding 103,444 161,579

Mark Hoad LTIP 13/03/2020 Y – 247,0 85

247,085 – – – 196 13/03/2023 –

16/03/2021 Y – 262,265

262,265 409,658 208 16/03/2024 –

14/03/2022 Y – 262,321

262,321 409,745 192 14/03/2025 –

16/03/2023 Y – 324,992 324,992 507,638 181 16/03/2026 –

DSBP 16/03/2021 – – 15,761

– 15,761 – – 208 16/03/2023 –

14/03/2022 – – 46,039 46,039 71,913 192 14/03/2024 –

16/03/2023 – – 31,558 31,558 49,294 181 16/03/2025 –

ShareSave

29/09/2021 – 174 7,96 4 7,964 – 226 01/11/2024 30/04/2025

Total outstanding 935,139 1,448,248

1 Calculated as the total number of shares awarded multiplied by the share price on 31 December 2023 of 156.2 pence. The calculation does not take into account dividend equivalents or the likelihood of vesting.

2 The expiry date, relevant only to ShareSave, is that applying in normal circumstances.

3 The sole performance condition attached to the award was TSR performance against the FTSE SmallCap (excluding Investment Trusts) during the three-year performance period from the date of award. 25% of the shares will vest at median performance increasing on a straight-line basis

to 100% vesting at the upper quartile of the comparator group. As previously disclosed, the award was granted shortly before the onset of the COVID-19 pandemic subject to equally weighted EPS and TSR performance conditions. Following consultation with shareholders, the EPS

performance condition was removed and the full weighting was allocated to the existing TSR performance condition.

4 The performance condition attached to 50% of the award is based on EPS. 25% of the shares subject to this part of the award will vest for EPS growth of 10% compound per annum, increasing on a straight-line basis to 100% vesting for EPS growth for the year ending 31 December 2023 of

18% compound per annum. The performance condition attached to the other 50% of the award is based on TSR performance against the FTSE SmallCap (excluding Investment Trusts) during the three-year performance period from the date of award. 25% of the shares subject to this part

of the award will vest at median performance increasing on a straight-line basis to 100% vesting at the upper quartile of the comparator group.

5 The performance condition attached to 50% of the award is based on EPS. 25% of the shares subject to this part of the award will vest for EPS growth of 5% compound per annum, increasing on a straight-line basis to 100% vesting for EPS growth for the year ending 31 December 2024 of

12% compound per annum. The performance condition attached to the other 50% of the award is based on TSR performance against the FTSE SmallCap (excluding Investment Trusts) during the three-year performance period from the date of award. 25% of the shares subject to this part

of the award will vest at median performance increasing on a straight-line basis to 100% vesting at the upper quartile of the comparator group.

6 The Committee applied its discretion to defer the full 2020 STIP award into shares with 80% vesting on the first anniversary and the 20% vesting on the second anniversary.

7 The market value is the difference between the share price on 31 December 2023 and the option price of 174 pence multiplied by the total number of shares under the option (or £0 if this difference is negative).

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

The closing middle market prices for an ordinary share of 25 pence of the Company on

30December 2022 and 29 December 2023 as derived from the Stock Exchange Daily Official

Listwere 174.0pence and 156.2 pence respectively. During 2023, the middle market price of

TT Electronics plc ordinary shares ranged between 146.4 pence and 204.0 pence.

STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS (AUDITED)

The table below shows the shareholding for each Executive Director as at 31 December 2023.

TheExecutive Directors are required to build and hold a shareholding of 200 per cent of salary.

Executive Directors must retain 50 per cent of the net of tax value of any vested LTIP/DSBP

shares until the guideline is met.

Beneficially

owned at

1January

2023

Beneficially

owned at

31December

2023

Unvested

share awards

subject to

Company

performance

conditions

Unvested

deferred

bonus share

plan awards

Unvested

share buy-

out award

Outstanding

share awards

under all-

employee

share plans

Shareholding

(% of

Salary)

Value of

shareholding

(£)

Executive Directors

Peter France n/a – 479,930 – 226,876 – 34.1% 187,821

Mark Hoad 779,446 787,799 849,578 77,597 – 7,96 4 330.4% 1,294,781

Former Directors

Richard Tyson

1,006,666 1,017,801 – 103,444 – – 320.7% 1,675,442

1 Shareholding on date stepped down from the Board, 1 October 2023.

2 Shareholding includes beneficially owned shares and shares awards, such as DSBP grants, which are not subject to performance

conditions (net of assumed tax withholding). Shareholding for Peter France and Mark Hoad calculated using the salary at the close

ofbusiness on 29 December 2023, shareholding for Richard Tyson reflects his annual salary at his exit date.

3 Calculated using the share price as at close of business on 29 December 2023 of 156.2 pence.

There have been no changes to shareholdings between 31 December 2023 and the date

ofthisreport.

Post cessation of employment, the Executive Directors are required to hold for two years

thelower of half of the share ownership requirement or the shareholding atcessation.

PAYMENTS TO PAST DIRECTORS (AUDITED)

No payments were made in 2023.

PAYMENTS FOR LOSS OF OFFICE (AUDITED)

Further to the announcements on 13 April 2023 and 27 July 2023, following a period of support

for the new CEO to ensure a smooth transition of leadership, Richard Tyson stepped down from

the Board as Chief Executive Officer on 1 October 2023 and his employment ended on this date.

In respect of his leaving arrangements:

– Salary, pension and benefits – Richard Tyson received his contractual salary, pension and

benefits up to cessation of employment and received a payment in lieu of accrued but untaken

holiday. No payment was or will be made in lieu of any unexpired period of notice.

– Short-Term Incentive Plan (“STIP”) – Richard Tyson did not receive any bonus award under

the Company’s STIP in respect of the financial year ended 31 December 2023 or any future

years.

– Long-Term Incentive Plan (“LTIP”) – Richard Tyson’s inflight awards under the LTIP granted

in2021, 2022 and 2023 lapsed in full on cessation of employment. The vested LTIP awards

granted in 2019 and 2020 remain subject to their respective two-year holding periods which

willcontinue to apply post cessation. These awards remain subject to malus and clawback

provisions. Nofurther LTIP awards were granted to Richard Tyson.

– Deferred Share Bonus Plan (“DSBP”) – The 2022 and 2023 DSBP awards, which reflect

annual bonus awards earned in 2021 and 2022 respectively, will continue to vest on their

normal vesting dates. Awards will remain subject to malus and clawback provisions with the

net of tax amounts subject to the post cessation of employment shareholding requirement.

NoDSBP award will be made in respect of the 2023 financial year or future years.

– ShareSave – Richard Tyson’s outstanding options under the all-employee Save As You Earn

scheme lapsed on cessation of employment.

– Share Ownership Guideline – A two-year post cessation of employment shareholding

requirement applies to Richard Tyson, who will maintain a shareholding of 100% of salary

(oractual eligible holding, if lower).

Richard Tyson did not receive any other remuneration payment in 2023 or payment for loss

ofoffice.

EXECUTIVE DIRECTORS’ SERVICE CONTRACTS

Date of

appointment

Date of current

contract/letter

of appointment

Notice from

Company

Notice from

individual

Unexpired

period of

service contract

Peter France 02/10/2023 26/07/2023 12 months 12 months Rolling contract

Mark Hoad 01/01/2015 09/12/2014 12 months 12 months Rolling contract

PAY ACROSS THE ORGANISATION

This section of the report enables our remuneration arrangements to be viewed in the context

ofproviding:

– a comparison of the percentage change in our Directors’ remuneration with the change in our

UK employees average remuneration;

– a 10 year history of our Chief Executive’s remuneration;

– our TSR performance over the same period;

– the ratio between our Chief Executive’s remuneration and the remuneration of employees; and

– a year-on-year comparison of the total amount spent on employment costs across the Group

and shareholder payments.

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

PERCENTAGE CHANGE IN REMUNERATION OF DIRECTORS AND EMPLOYEES

The following table compares the percentage change in Director’s salary/fees, benefits and short-term incentive to the average change for all employees of the parent Company for the past four years.

2022 to 2023 2021 to 2022 2020 to 2021 2019 to 2020

Salary/ fees Benefits Bonus Salary/ fees Benefits Bonus Salary/ fees Benefits Bonus Salary/ fees Benefits Bonus

Executive Directors

Peter France

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Mark Hoad 5.0% (1.3)% 92.9% 2.5% 5.0% (35.5)% 6.7% 52.0% 169.4% (5.0)% 8.0% (28.5)%

Richard Tyson

n/a n/a n/a 2.5% 5.2% (35.5)% 6.8% 48.0% 169.4% (5.0)% 5.9% (28.5)%

Chairman 5.0% n/a n/a 2.5% n/a n/a 1.5% n/a n/a n/a n/a n/a

Non-executive Directors

Jack Boyer 5.0% n/a n/a 2.5% n/a n/a 14.9% n/a n/a 3.3% n/a n/a

Anne Thorburn 5.0% n/a n/a 2.5% n/a n/a 8.0% n/a n/a 6.0% n/a n/a

Alison Wood 5.0% n/a n/a 2.5% n/a n/a 12.5% n/a n/a (5.0)% n/a n/a

Michael Ord n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Wendy McMillan n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Average UK TT Electronics parent

company employees

6.3% 11.2% 27.9% 9.4% 10.4% (25.7)% 2.9% 6.8% 108.4% 3.8% 6.1% (39.4)%

1 Peter France was appointed Chief Executive Officer on 2 October 2023.

2 Richard Tyson stepped down from the Board on 1 October 2023.

3 Average parent Company employee based on employees who were employed throughout each two-year comparison period.

CHIEF EXECUTIVE OFFICER’S REMUNERATION FOR THE LAST 10 YEARS

The total remuneration figures for the Chief Executive Officer during each of the last 10 years are shown in the table below. The total remuneration figures include the short-term incentive based on

that year’s performance and LTIP vesting based on the three-year performance periods ending in the relevant year.

2014

2015 2016 2017 2018 2019 2020 2021 2022 2023

2023

Total remuneration (£’000) 249 401 1,151 1,152 1,794 2,189 1,430 1,003 1,306 1,194 453 734

Short-term incentive (% of maximum) – 25.0 90.8 100.0 100.0 93.3 64.0 45.8 97.1 61.2 – 91.7

LTIP vesting (% of maximum)

39.6 – – – 50.0 100.0 86.5 50.0 18.3 27.4 – –

1 LTIP vesting is reflective of the three-year performance periods ending in the relevant year.

2 Relates to Geraint Anderson who was CEO until 30 June 2014.

3 Relates to Richard Tyson who was CEO from 1 July 2014 to 1 October 2023.

4 Relates to Peter France who become CEO on 2 October 2023.

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

TSR PERFORMANCE

The following graph shows the cumulative TSR of the Company over the last 10 financial years

relative to the FTSE SmallCap Index (excluding Investment Trusts). The FTSE SmallCap Index

hasbeen selected for consistency as it is the index against which the Company’s TSR is

measured for the purposes of the LTIP. In addition, the Company is a constituent of the Index.

The graph shows the value, by 31 December 2023, of £100 invested in TT Electronics plc on

31December 2013 compared with the value of £100 invested in the FTSE SmallCap Index

(excluding Investment Trusts).

Dec 23Dec 22Dec 21Dec 20Dec 19Dec 18Dec 17Dec 16Dec 15Dec 14Dec 13

100

150

125

175

200

TT Electronics (Re-based to 100) FTSE SmallCap excluding Investment Trusts (Re-based to 100)

CHIEF EXECUTIVE OFFICER PAY RATIO

The Committee is mindful of the relationship between the remuneration of the Chief Executive

Officer and the wider employee population. The table below shows the ratio of the total

remuneration of the Chief Executive Officer to that of the UK employees of the Group for the last

five years. Due to the change in CEO during the year, the CEO’s pay is based on the combined

single figure of remuneration of Peter France and Richard Tyson.

Year Methodology used Lower quartile Median Upper quartile

2023 Option B 47:1 40:1 26:1

2022 Option B 51:1 4 3:1 28:1

2021 Option B 62:1 52:1 34:1

2020

Option B 5 4:1 4 0:1 29:1

2019 Option B 6 3:1 55:1 38:1

1 The 2020 ratio was impacted by COVID-19. Salary and incentive remuneration levels for 2020 include salary reductions taken by the CEO,

included in the single figure of remuneration, and the impact of the UK Government Coronavirus Job Retention Scheme and associated

voluntary furlough salary reductions in the wider UK workforce. Under the chosen method for calculation, the employee ranking and quartile

assessment was based on the April 2020 snapshot date during which time approximately 14% of employees were on furlough.

We continue to use Option B of the available methodologies as permitted under The Companies

(Miscellaneous Reporting) Regulations 2018. Given the complexity of the Group, this approach

enables us to use our existing Gender Pay reporting datasets as the foundation for our

calculations. We determined the hourly rates at each quartile of our 5 April 2023 Gender Pay data

then calculated the average annual salary and total remuneration for representative employees

ateach quartile. Representative employees must have been employed on 31 December 2023

andemployee data is based on full-time equivalent pay and calculated in accordance with the

single figure of remuneration. Adjustments may be made to ensure that quartiles are

representative, no adjustments were required for 2023.

Across the UK, the majority of the workforce undertake operational roles in our facilities.

Theemployee lower quartile and median remuneration values are generally reflective of

therolesheld by our semi-skilled/skilled operators respectively. The quartile data is broadly

representative of total remuneration across the workforce in the UK.

The change in the median CEO pay ratio is attributable to changes in the remuneration of the

CEOand of the Company’s UK employees as a whole. In line with our remuneration principles,

themajority of the CEO’s remuneration opportunity is performance-related variable pay.

TheCEO’s pay ratio is, therefore, heavily dependent on the outcomes of the short-term and

long-term incentive plans and, in the case of long-term share-based awards, share price

movements. As such it is expected that there will be considerable year-to-year changes in

theratio. The lower CEO pay ratio results from a number of factors: (i) higher UK employee

remuneration from the actions to support employees in managing the impacts of high inflation

through targeted salary increases to lower paid employees, and (ii) lower CEO variable

remuneration from the change in CEO, and low LTIP vesting. The Committee believes that the

payratio is appropriate and is reflective of the performance of the Group and the roles undertaken

by employees in the UK. Further context to the CEO total remuneration is set out on in detail in

this report.

For 2023, the salary and single figure of total remuneration for our pay quartiles of UK employees

are as follows:

Lower quartile Median Upper quartile

Salary £22,951 £27,626 £41,981

Single figure of total remuneration £25,174 £29,357 £45,944

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

RELATIVE IMPORTANCE OF SPEND ON PAY

The following table sets out the change in payments to shareholders and the overall expenditure

on pay across the Group.

2023 2022 Change

Staff costs for the Group (£m) 180.6 164.5 9.8%

Dividends relating to the period (£m) 12.0 11.1 8.1%

Share buyback (£m) 0 0 0%

NON-EXECUTIVE DIRECTORS’ REMUNERATION

Non-Executive Directors’ single figure for total remuneration (audited)

The Chairman’s fee, NED base fee and NED additional fees were increased by 5 per cent with

effect from 1 January 2023. The increases were set at a level below those of the wider UK

workforce which averaged 7 per cent.

Salary/ fees Benefits Total

£’000

2023 2022 2023 2022 2023 2022

Warren Tucker 197 187 – – 197 187

Jack Boyer

58 55 – – 58 55

Anne Thorburn

58 55 – – 58 55

Alison Wood

58 55 – – 58 55

Michael Ord

47 – – – 47 –

Former Directors

Wendy McMillan

43 – – – 43 –

1 Jack Boyer’s fee comprised his NED base fee and his additional fee as Senior Independent Director.

2 Anne Thorburn’s fee comprised her NED base fee and her additional fee for chairing the Audit Committee.

3 Alison Wood’s fee comprised her NED base fee and her additional fee for chairing the Remuneration Committee.

4 Michael Ord was appointed to the Board on 16 January 2023.

5 Wendy McMillan was appointed to the Board on 16 January 2023 and stepped down from the Board on 24 November. Wendy was paid until

the end of November 2023.

NON-EXECUTIVE DIRECTORS’ FEES

The Chairman’s fee increased by 3 per cent, a level below the average expected increase for the

wider UK workforce. As discussed in the Annual Statement on page 97, both the NED base fee

and NED additional fees have been realigned to reflect the time commitments and expertise

required in the roles. Changes to the fees were effective 1 January 2024.

2024 2023 Increase

Chairman £202,530 £196,631 3%

NED base fee £55,000 £49,316 12%

NED additional fees:

Senior Independent Director £10,000 £8,610 16%

Audit Committee Chair £10,000 £8,610 16%

Remuneration Committee Chair £10,000 £8,610 16%

NON-EXECUTIVE DIRECTORS’ SHARE OWNERSHIP

While Non-executive Directors cannot participate in Company share schemes, share ownership

isencouraged to strengthen stakeholder alignment.

NON-EXECUTIVE DIRECTORS’ SHAREHOLDINGS (AUDITED)

The table below shows the shareholding for each Non-Executive Director. There have been

nochanges to shareholdings between 31 December 2023 and the date of thisreport:

Beneficially owned at

31December 2023

Chairman

Warren Tucker 60,075

Non-executive Directors

Jack Boyer 95,514

Alison Wood 0

Anne Thorburn 60,000

Michael Ord 25,000

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT

Date of grant

Date of current

contract/letter of

appointment

Notice from

Company

Notice from

individual

Unexpired

period of

service contract

Chairman

Warren Tucker 06/05/2020 02/04/2020 1 month 1 month Rolling contract

Non-executive Directors

Jack Boyer 10/06/2016 10/06/2016 1 month 1 month Rolling contract

Alison Wood 11/07/2016 11/07/2016 1 month 1 month Rolling contract

Anne Thorburn 01/07/2019 12/06/2019 1 month 1 month Rolling contract

Michael Ord 16/01/2023 09/01/2023 1 month 1 month Rolling contract

SHAREHOLDER VOTING

At the AGM held on 9 May 2023, the proxy votes cast in respect of the resolutions on the

Directors’ Remuneration Policy and Report were as follows:

Number of votes

Date of

AGM

For and

Discretionary

For and

Discretionary

(%) Against

Against

(%) Withheld

Directors’ Remuneration Policy May 2023 131,581,506 90.59% 13,666,522 9.41% 40,262

Directors’ Remuneration Report May 2023 134,470,777 92.64% 10,678,200 7.36% 139,313

Withheld votes are not counted towards the total percentage of votes cast.

A full schedule in respect of shareholder voting on the above and all resolutions at the 2023 AGM

isavailable at www.ttelectronics.com.

The Remuneration Committee considers shareholder feedback received in connection with the

AGM each year and at other times of the year. This feedback is considered as part of the Group’s

annual review of the Remuneration Report and Remuneration Policy. In addition, the

Remuneration Committee endeavours to consult directly with the largest shareholders and the

main representative bodies on proposals ahead of significant changes.

ADVISERS TO THE COMMITTEE

During the year, the Committee received support and advice from the Chief Executive Officer,

theChief Financial Officer, the Group HR Director, the Group Reward Director and FIT

Remuneration Consultants LLP (“FIT”). FIT is the Committee’s appointed independent

remuneration adviser. TheCompany Secretary is secretary to the Committee.

The Company paid a total fee of £43,477 to FIT in relation to remuneration advice to the

Committee during the year. Fees were determined on the basis of time and expenses.

During 2023, FIT provided the Committee with advice in respect of the Remuneration

Policyreview, share plan rules, CEO transition, compliance support for this year’s Directors’

remuneration report and the provision of other advice relating to remuneration governance and

market practice. FIT is a member of the Remuneration Consultants Group and has signed up to

its code of conduct. The Committee is satisfied that the advice it received during the year was

appropriate, objective and independent. FIT did not provide any other services to the Group and

does not have any other connection with the Company or individual Directors.

The Group’s approach to the Chairman’s and Executive Directors’ remuneration is determined

bythe Board on the advice of the Remuneration Committee. The Committee considers the

viewsof the Chairman on the performance of the CEO, and of the CEO on the performance

andremuneration of the other members of the ELT. No Committee members or attendees

takepart inany discussions relating to their own remuneration.

STATUTORY REQUIREMENTS

The Committee’s composition, responsibilities and operation comply with the principles of good

governance as set out in the Code and the requirements of the Listing Rules (of the Financial

Conduct Authority) and the Companies Act 2006. The Directors’ remuneration report has been

prepared on the basis prescribed in the Large- and Medium-sized Companies and Groups

(Accounts and Reports) (Amendment) Regulations 2013.

The Directors’ remuneration report has been approved by the Board and signed on its behalf by:

Alison Wood

Chair, Remuneration Committee

6 March 2024

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OTHER STATUTORY

DISCLOSURES

Results and dividend

The Group’s loss on ordinary activities after taxation was

£6.8million (2022: £13.2 million loss). The audited financial

statements of the Group and the Company are set out on pages

126 to 172. Further details of the Group’s activities are set out in

the Strategic report on pages IFC to 67 which is incorporated

into the Directors’ report by reference.

Full details of the Company’s dividend policy and proposed final

dividend payment for the year ended 31 December 2023 are

setout on page 25 and Note 9 to the consolidated financial

statements.

Tax principles and strategy

The Group applies a conservative approach to tax and seeks

tocomply with the OECD Transfer Pricing guidelines, which

should ensure that profits are taxed where value is created and

business risks are managed. The Group’s full Tax Principles

andStrategy document is published on the Group’s website.

This Annual Report and Accounts includes the Directors’ report and the audited financial

statements for the year ended 31 December 2023. Certain information required to be

disclosed in the Directors’ report is provided in other sections of this Annual Report.

This includes the overview, the operating and financial reviews, the Governance and

Remuneration reports and specific elements of the financial statements noted below.

The table below lists items that are relevant to this report, and which are incorporated

by reference, including information required in accordance with the UK Companies

Act 2006 and Listing Rule 9.8.4R:

AGM information Page 178

Current and future dividend waiver Page 113

Employee engagement Page 33

Future developments in the business Pages IFC to 67

Going concern Page 67

Scope 1, 2 and 3 emissions Page 46

Section 172 statement Page 57

Share capital Page 178

Subsidiary undertakings Page 171

Viability statement Page 67

Important events since the end of the financial year

On 4 March 2024 we announced that we had agreed to divest

our business units in Cardiff and Hartlepool, UK and Dongguan,

China for £20.8 million on a cash and debt free basis. These

assets were classified as held for sale at 31 December 2023

and were written down by £32.5 million reflecting fair value and

costs to sell. The disposal is expected to complete by the end

ofQ1 2024 and is expected to enhance group margins and

improve leverage.

Auditor

In 2019, the Company undertook a competitive re-tender

exercise for external audit services, following which Deloitte LLP

(Deloitte) was appointed as external Auditor for the financial

year 2020 onwards. Deloitte was appointed by the Company’s

shareholders at the AGM held on 6 May 2020 and have been

reappointed at each subsequent AGM (including the 2023AGM).

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

The Auditor’s responsibilities are set out on page 122 and

should be read in conjunction with those of the Directors as

setout at the end of this report.

Significant agreements relating to change of control

The Group has a number of borrowing facilities provided by

various banking groups. The most significant of these facility

agreements (as described below) include change of control

provisions which, in the event of a change in ownership of the

Company, could result in renegotiation or withdrawal of

thesefacilities:

PP: In August 2021, the Group agreed a debut issue of

£75million of private placement fixed rate loan notes with

threeinstitutional investors. The PP transaction completed in

December 2021, whereupon funds were received by the Group,

with the issue being evenly split between seven- and ten-year

maturities with an average interest rate of 2.9%.

RCF: In June 2022, the Group entered into an agreement for

a£147.4 million multi-currency revolving credit facility with a

syndicate of five relationship banks, with a maturity date of

27June 2026 and a one-year extension option. In June 2023,

this extension option was exercised, with the result that RCF

maturity date is now 27 June 2027. In addition, in February

2023, £15 million of a £32.6 million accordion was exercised

increasing the facility size to £162.4million.

There are a number of other agreements that may be terminable

upon a change of control of the Company and therefore subject

to renegotiation. No such agreements are considered at present

to be significant in terms of their potential impact on the

business of the Group as a whole, with the exception of the

contract described below:

Anthem Contract: In November 2022, the Group’s GMS

Divisionentered into a long-term contract with Honeywell,

pursuant to which GMS will provide manufacturing services

toenable Honeywell to bring to market its next-generation

avionics cockpit system. This system is designed to operate

with the next generation of electric aircraft. The long-term

contract has a duration of 12 years and contains market

standard provisions requiring Honeywell’s consent for the

contract to continue in the event of a change of control of

theCompany.

Employment

The Group is committed to the fair and equal treatment of all its

employees regardless of gender, race, age, religion, disability or

sexual orientation. Where existing employees become disabled,

the policy of the Group is to provide continuing employment and

training wherever practicable.

The Group makes significant efforts to ensure it maintains high

standards of employee welfare in all its operations, irrespective

of where in the world, and of local market conditions. Together

with many other global companies operating in this sector,

theGroup is a member of the Responsible Business Alliance

(formerly the Electronic Industry Citizenship Coalition), a leading

industry organisation promoting best practice in corporate

responsibility, which is committed to raising standards of

employee welfare, (addressing such issues as modern slavery)

inall jurisdictions and at all levels of the supply chain for

electronic products. Further details on the Group’s policies

relating to its employees are given on pages 31 to 40.

Political contributions

The Group made no political contributions during the year.

Authority to allot shares and disapply statutory

pre-emption rights

The Directors will be seeking to renew their authorities to allot

unissued shares and to disapply statutory pre-emption rights

atthe Annual General Meeting, to be held on 10 May 2024.

During 2023, this authority was used in respect of customary

allotments of shares resulting from the operation of the Group’s

share schemes. As set out in the Notice of Annual General

Meeting which accompanies this report, the Company is

seeking shareholder approval of revised authorities this

year(inresolutions 13 and 14) in line with the updated

Statement of Principles published by the Pre-Emption Group

inNovember2022.

Purchase of own shares

At the Annual General Meeting held on 9 May 2023, the

Company was given authority to purchase up to 17,653,356

ofits ordinary shares until the date of its next AGM. Other

thanmarket purchases made by the Employee Benefit Trust,

nopurchases were made during the year by the Company.

TheDirectors will be seeking a new authority for the Company

to purchase its ordinary shares at the forthcoming Annual

GeneralMeeting.

Further details regarding the authority to allot shares and

disapply statutory pre-emption rights and the purchase of own

shares are set out in the Notice of the Annual General Meeting,

which accompanies this document and is available to view on

the Company’s website.

Shares held by the Employee Benefit Trust

The Company has established an Employee Benefit Trust

(“EBT”), the Trustee of which is Sanne Fiduciary Services

Limited, part of Sanne Group. As at 31 December 2023,

theTrustee held 449,471 shares with a nominal value of

£112,367.75 and an aggregate purchase price of £1.40 per

share, representing 0.253 per cent of the total issued share

capital at that date. These shares will be used to satisfy awards

made under the TT Electronics plc Restricted Share Plan, the

TT Electronics plc Long-Term Incentive Plan or other employee

share schemes. The maximum number of shares held by the

EBT during the year was 1,229,727. The voting rights in relation

to these shares are exercisable by the Trustee. However, in

accordance with investor protection guidelines, the Trustee

abstains from voting. A dividend waiver is in place under which

the Trustee waived its right to receive dividends on the shares

itheld during the year, and any future dividends. The Executive

Directors, as employees of the Company, are potential

beneficiaries of shares held by the EBT.

Disclosure of information to the Auditor

To the best of each Director’s knowledge and belief, there is no

audit information relevant to the preparation of the Auditor’s

report of which the Auditor is unaware and each Director has

taken all steps which might be expected to be aware of such

relevant information and to establish that the Auditor is also

aware of that information.

Approved by the Board on 6 March 2024 and signed on its

behalf by:

Lynton Boardman

Company Secretary

OTHER STATUTORY DISCLOSURES CONTINUED

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STATEMENT OF

DIRECTORS’

RESPONSIBILITIES

– for the Group financial statements, state whether they have

been prepared in accordance with UK adopted international

accounting standards;

– for the parent Company financial statements, state whether

applicable UK accounting standards have been followed,

subject to any material departures disclosed and explained

inthe parent Company financial statements;

– assess the Group and parent Company’s ability to continue

as a going concern, disclosing, as applicable, matters related

to going concern; and

– use the going concern basis of accounting unless they either

intend to liquidate the Group or the parent Company or to

cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the parent

Company’s transactions and disclose with reasonable accuracy

at any time the financial position of the parent Company and

enable them to ensure that its financial statements comply

withthe Companies Act 2006. They are responsible for such

internal control as they determine is necessary to enable the

preparation of financial statements that are free from material

misstatement, whether due to fraud or error, and have general

The Directors are responsible for preparing the Annual Report and Accounts and the

Group and parent Company financial statements in accordance with applicable law

and regulations:

responsibility for taking such steps as are reasonably open

tothem to safeguard the assets of the Group and to prevent

anddetect fraud and other irregularities.

Under applicable law and regulations, the Directors are also

responsible for preparing a Strategic report, Directors’ report,

Directors’ remuneration report and Corporate Governance

statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity

of the corporate and financial information included on the

Company’s website. Legislation in the UK governing the

preparation and dissemination of financial statements may

differ from legislation in other jurisdictions.

Company law requires the Directors to prepare Group and

parent Company financial statements for each financial year.

Under that law the Directors are required to prepare the Group

financial statements in accordance with UK adopted

international accounting standards in conformity with the

requirements of the Companies Act 2006. The financial

statements also comply with International Financial Reporting

Standards (“IFRS”) as issued by the IASB. The Directors have

elected to prepare the parent Company financial statements in

accordance with UK accounting standards, including FRS 101

Reduced Disclosure Framework.

Under company law, the Directors must not approve the

financial statements unless they are satisfied that they give a

true and fair view of the state of affairs of the Group and parent

Company and of their profit or loss for that period. In preparing

each of the Group and parent Company financial statements,

the Directors are required to:

– select suitable accounting policies and then apply

themconsistently;

– make judgements and estimates that are reasonable,

relevantand reliable;

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STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Responsibility statement of the Directors in respect of the

Annual Report and Accounts

We confirm that to the best of our knowledge:

– the financial statements, prepared in accordance with the

applicable set of accounting standards, give a true and fair

view of the assets, liabilities, financial position and profit or

loss of the Company and the undertakings included in the

consolidation taken as a whole; and

– the Strategic report includes a fair review of the development

and performance of the business and the position of the

Company and the undertakings included in the consolidation

taken as a whole, together with a description of the principal

risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a

whole,is fair, balanced and understandable and provides the

information necessary for shareholders to assess the Group’s

position and performance, business model and strategy.

The coordination and review of Group-wide input into the

Annual Report is a key element of the control process upon

which the Directors rely and is an exercise which spans a period

wider than the timetable for compiling the Annual Report itself.

This control process incorporates the controls the Group

operates throughout the year to identify key financial and

operational issues and includes:

– strategy meetings held as part of most Board meetings,

atwhich the entire Board is present, resulting in a clear

agreement of the Group’sstrategy;

– the identification of the key milestones and the related KPIs

tobe monitored and measured throughout the period;

– monthly reviews of business performance conducted by

Executive management (in consultation with divisional

management), supplemented by reports highlighting key

issues and analysis of the main variances from budget

andprior year;

– preparation of a detailed budget, reviewed and agreed by

management and then the Board, which is used to calibrate

strategy implementation and against which actual

performance is measured;

– a timetabled process coordinating input from each division,

identifying significant market issues and key elements of

performance for each business area, and appropriately

incorporating them into the structure of the Annual Report;

– the identification of key risks from the risk management

process, for inclusion within the Annual Report, ensuring

aconsistency of approach with regard to the risks and the

ongoing reviewprogramme;

– a planned Audit Committee sign-off process which

incorporates meetings of the Chair of the Audit Committee

with the Executive Directors, the Risk and Assurance function

and external Auditor to identify and timetable potential issues

of significance to be addressed; and

– a process for internal distribution and comment onthe

Annual Report, including those of the members of the Board,

the ELT, key advisers and externalAuditor.

By order of the Board:

Lynton Boardman

Company Secretary

6 March 2024

STATEMENT OF DIRECTORS’ RESPONSIBILITIES CONTINUED

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INDEPENDENT AUDITOR’S REPORT

In our opinion:

– the financial statements of TT Electronics plc (the ‘parent

company’) and its subsidiaries (the ‘Group’) give a true

andfair view of the state of the Group’s and of the parent

company’s affairs as at 31 December 2023 and of the

Group’s loss for the year then ended;

– the Group financial statements have been properly

prepared in accordance with United Kingdom adopted

international accounting standards and International

Financial Reporting Standards (IFRSs) as issued by

theInternational Accounting Standards Board (IASB);

– the parent company financial statements have been

properly prepared in accordance with United Kingdom

Generally Accepted Accounting Practice, including

Financial Reporting Standard 101 “Reduced Disclosure

Framework”; and

– the financial statements have been prepared in

accordance with the requirements of the Companies

Act2006.

We have audited the financial statements which comprise:

– the consolidated income statement;

– the consolidated statement of comprehensive income;

– the consolidated and parent company statement

offinancialposition;

– the consolidated and parent company statements

ofchangesin equity;

– the statement of cashflows; and

– the related Notes 1 to 32 of the consolidated financial

statements and the related Notes 1 to 14 of the parent

company financial statements.

The financial reporting framework that has been applied in the

preparation of the Group financial statements is applicable law,

United Kingdom adopted international accounting standards

and IFRSs as issued by the IASB. The financial reporting

framework that has been applied in the preparation of the

parent company financial statements is applicable law and

United Kingdom Accounting Standards, including FRS 101

“Reduced Disclosure Framework” (United Kingdom Generally

Accepted Accounting Practice).

2. BASIS FOR OPINION

We conducted our audit in accordance with International

Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Ourresponsibilities under those standards are further described

in the auditor’s responsibilities for the audit of the financial

statements section of our report.

We are independent of the Group and the parent company in

accordance with the ethical requirements that are relevant to

our audit of the financial statements in the UK, including the

Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard

asapplied to listed public interest entities, and we have fulfilled

our other ethical responsibilities in accordance with these

requirements. We confirm that we have not provided any

non-audit services prohibited by the FRC’s Ethical Standard

tothe Group or the parent company.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Report on the audit of the financial statements

1. OPINION

TO THE MEMBERS OF

TTELECTRONICS PLC

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INDEPENDENT AUDITOR’S REPORT CONTINUED

3. SUMMARY OF OUR AUDIT APPROACH

Key audit matters The key audit matters that we identified in the current year were:

– Classification of adjusting items; and

– Classification of assets and liabilities as held for sale.

Within this report, key audit matters are identified as follows:

Newly identified

Increased level of risk

Similar level of risk

Decreased level of risk

Materiality The materiality that we used for the Group financial statements was

£2.4million which was determined based on 6.2% of the adjusted profit

before tax after amortisation.

Scoping Our approach to audit scoping included performing audit procedures over

78% of the Group’s revenue, 79% of the Group’s adjusted operating profit

before tax after amortisation and 76% of the Group’s net assets.

Significant changes

in our approach

In the prior year, we identified a key audit matter relating to the impairment

of the IoT Solutions cash generating unit’s (‘CGU’) goodwill.

Following the classification of assets held for sale and the resulting

remeasurement under IFRS 5 relating to non-current assets held for sale

and discontinued operations, the residual CGU goodwill and value in use

calculations performed by management indicate that there is no longer a

reasonably possible change within the IoT Solutions CGU that would give

rise to an impairment of goodwill and therefore, this is no longer a key

audit matter.

A new key audit matter was identified, relating to classification of

theassets and liabilities of the disposal Group as held for sale as at

31December 2023 and the Group’s assessment that the completion

ofthe sale within a year was “highly probable” as at that date.

4. CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have concluded that the Directors’ use of the going

concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Group’s and parent company’s ability

tocontinue to adopt the going concern basis of accounting included:

– obtaining an understanding of the key processes relating to the Group’s forecasting;

– inspecting loan documents to assess the principal terms and related financial covenants;

– assessing management’s key assumptions underpinning the Group’s forecasts, specifically

theforecast adjusting items expense and cash flows, and the achievability of forecasts; these

were assessed with reference to external data such as market growth rates and industry data;

– assessing the impact of reasonably possible downside scenarios on the Group’s funding

position including forecast financial covenants;

– performing a reverse stress test on the Group’s funding position including forecast

financialcovenants;

– comparing forecasts to historical financial information to assess management’s historical

forecasting accuracy;

– assessing the mitigating actions available to the Group in the event of any downside scenarios

and the feasibility of these in the next 12 months; and

– assessing the appropriateness of the going concern disclosures in the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating

to events or conditions that, individually or collectively, may cast significant doubt on the Group's

and parent company’s ability to continue as a going concern for a period of at least twelve

months from when the financial statements are authorised for issue.

In relation to the reporting on how the Group has applied the UK Corporate Governance Code,

wehave nothing material to add or draw attention to in relation to the Directors’ statement in the

financial statements about whether the Directors considered it appropriate to adopt the going

concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are

described in the relevant sections of this report.

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5. KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant

assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation

ofresources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5.1. Classification of adjusting items

Key audit matter

description

In addition to the statutory results, the Group presents adjusted performance measures in the consolidated income statement, including adjusted profit.

While the key measure used by management to monitor performance is adjusted operating profit, adjusted profit before tax is also a key measure used by management

incommunication with shareholders. The Group’s policy on adjusting items is set out in note 1c to the financial statements.

Judgements made regarding the classification of adjusting costs and income therefore have a significant impact on the presentation of the Group’s results.

Therefore,weidentified a key audit matter in respect of the classification of items recorded as adjusting.

In total, adjustments of £44.1 million (2022: £50.5 million) have been made to the statutory operating profit of £8.7 million (2022: £3.4 million operating loss) to derive adjusted

operating profit of £52.8 million (2022: £47.1 million profit).

Adjusting items in 2023 include:

– Held for Sale re-measurement loss (£32.5 million) and related disposal costs (£1.2 million) (2022: £23.1 million – Goodwill and asset impairments);

– Amortisation of intangible assets arising on business combinations (£4.6 million) (2022: £6.0 million);

– Restructuring costs (£2.0 million) (2022: £6.4 million);

– Pension restructuring related costs (£1.9 million) (2022: £13.8 million);

– Ferranti Power and Control integration costs (£1.3 million) (2022: £1.1 million);

– Torotel integration costs (£0.4 million) (2022: £0.1 million); and

– Other costs (£0.2 million).

The identification of adjusting items and the presentation of adjusted operating profit and earnings measures that show a consistent and balanced view of the performance

ofthe Group involves significant judgement.

Significant judgement is also involved in ensuring that undue prominence is not given to adjusted financial information, as this would be misleading to the readers of the

financial statements.

There is a risk that items may be classified as adjusting which do not meet the Group’s policy, and therefore distort the reported adjusted operating profit, whether due to

fraudor error; this could also impact financial covenants reported and management remuneration, hence this is considered a fraud risk. Consistency in the identification

andpresentation of these items is important for the comparability of year-on-year reporting as well as compliance with the ESMA and FRC guidelines on alternative

performance measures.

Explanations of each adjustment are set out in note 7 to the financial statements and also in note 1 to the Group financial statements in relation to the critical judgements

indetermining adjusting items. Refer also to page 92 of the Audit Committee Report.

INDEPENDENT AUDITOR’S REPORT CONTINUED

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INDEPENDENT AUDITOR’S REPORT CONTINUED

How the scope

of our audit

responded to the

key audit matter

We obtained understanding of the Group’s relevant controls over the classification of adjusting items in the financial statements.

We evaluated the appropriateness of the inclusion of items, both individually and in aggregate, within adjusted results. Specifically, our procedures included:

– Assessing the consistency of the Group’s policy and items included year on year, and the application of management’s accounting policy, challenging the nature of these

items by assessing these in comparison to ESMA guidance and the latest FRC guidance on alternative performance measures and challenging in particular the inclusion

ofthose items that recur annually;

– Challenging management regarding the nature of restructuring and acquisition related adjusting items by evaluating the underlying reason for the item and whether they

fallwithin management’s accounting policy definition for restructuring and acquisition related costs.

– Testing a sample of adjusting items by agreeing to source documentation and evaluating the classification of the individual costs against the Group’s policy of adjusting

items and assessing whether the disclosures within the financial statements provide sufficient detail for the reader to understand the nature of these items and how

adjustedresults are reconciled to statutory results.

Key observations The value of adjusting items results in a material difference between the statutory and adjusted results. We note that the level of items which are more judgemental such as

restructuring costs are significantly lower than previous periods. Whilst we note that the majority of adjusting items recur from period to period, we have concluded that their

classification and presentation is reasonable and consistent with the Group’s policy and the ESMA and FRC guidelines on alternative performance measure.

5.2. Classification of assets and liabilities as held for sale

Key audit matter

description

In the year, the Group committed to dispose of three businesses (referred to as “the disposal Group”) within the Global Manufacturing Solutions and Power and Connectivity

divisions. The disposal project was authorised and sufficiently advanced as at 31 December 2023 that management determined that the completion of the sale within a year

was “highly probable” as at that date. This determination is inherently judgemental given firm offers were received at the balance sheet date, however the deal was not signed

until 1 March 2024.

Having made this determination, the Group has classified the net assets and liabilities of £19.9 million within the disposal Group as “held for sale” in note 4 to the financial

statements, which is in accordance with IFRS 5 relating to non-current assets held for sale and discontinued operations and IAS 1 relating to Presentation of Financial

Statements. This lead to a remeasurement write down of the net assets and liabilities of £32.5 million to the disposal Group’s fair value less costs to sell.

The significant judgement around the sale being highly probable and the resultant classification of the assets and liabilities as held for sale as at the balance sheet date

hasbeen identified as a key audit matter.

Refer also to page 92 of the Audit Committee report.

How the scope

of our audit

responded to the

key audit matter

We obtained an understanding of the Group’s relevant controls over the classification of assets and liabilities as held for sale in the financial statements.

We have assessed the classification of non-current assets as “held for sale” at the balance sheet date in accordance with the conditions set under IFRS 5. Our work included

specific consideration of the timeline of the transaction, the firm offers received for the business and the conditions attached to those offers. This included assessing the

bidder’s ability to complete the transaction in an appropriate timeline, the Group’s commitment to executing the sales process and the residual work to be completed in

preparing the disposal Group for separation.

Further audit procedures performed included:

– With the involvement of our technical accounting specialists, we assessed the requirements of IFRS 5 and the application of these by management;

– We read the minutes of the Board of Directors which evidenced authorisation and approval of the project; and

– We have assessed management's disclosure in accordance with IFRS 5 and IAS 1, to ensure that disclosures are appropriate.

Key observations We determined the accounting for assets and liabilities held for sale to be appropriate based on our audit procedures.

5.1. Classification of adjusting items continued

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INDEPENDENT AUDITOR’S REPORT CONTINUED

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it

probable that the economic decisions of a reasonably knowledgeable person would be changed

or influenced. We use materiality both in planning the scope of our audit work and in evaluating

the results of our work.

Based on our professional judgement, we determined materiality for the financial statements

asawhole as follows:

GROUP FINANCIAL STATEMENTS PARENT COMPANY

FINANCIALSTATEMENTS

Materiality £2.4 million (2022: £2.1 million) £0.8 million (2022: £0.7 million)

Basis for

determining

materiality

6.2% (2022: 6.1%) of adjusted profit

before tax after amortisation. We

considered other measures such as

revenue, adjusted profit before tax

andstatutory profit before tax.

Materiality for the current year

represents:

– 0.4% of revenue (2022: 0.3%);

– 5.6% of adjusted profit before tax

(2022: 4.5%); and

– 0.9% of net assets (2022: 0.7%).

Parent company materiality

equates to 0.3% (2022: 0.2%)

ofnet assets which is capped

at50% of Group performance

materiality (2022: 60%), in order

to address the risk of aggregation

when combined with other

businesses.

Rationale for the

benchmark applied

We considered the financial measures

that were most relevant to users of the

financial statements and concluded

that the adjusted profit measure

represented the most relevant

metricfor the purpose of evaluating

financial performance.

We believe that use of a balance

sheet measure was appropriate

given that the parent company

acts as a holding company.

Group materiality £2.4m

Component materiality range £0.6m–£0.8m

Audit committee reporting threshold £0.1m

Adjusted PBT after

amortisation £38.4m

Group materiality

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that,

inaggregate, uncorrected and undetected misstatements exceed the materiality for the financial

statements as a whole.

GROUP FINANCIAL STATEMENTS PARENT COMPANY

FINANCIALSTATEMENTS

Performance

materiality

65% (2022: 65%) of Group materiality 70% (2022: 70%) of parent

company materiality

Basis and rationale

for determining

performance

materiality

In determining performance materiality, we considered the

followingfactors:

– our assessment of the respective complexity of the Group and

theparent company, and nature of the Group’s business model;

– the de-centralised nature of the Group’s control environment

anditsvariation across the Group; and

– the number of misstatements identified in the previous year.

6.3. Error reporting threshold

We agreed with the Audit Committee that we would report to the Committee all audit differences

in excess of £120k (2022: £105k), as well as differences below that threshold that, in our view,

warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure

matters that we identified when assessing the overall presentation of the financial statements.

6. OUR APPLICATION OF MATERIALITY

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INDEPENDENT AUDITOR’S REPORT CONTINUED

7.1. Identification and scoping of components

Our Group audit was scoped by obtaining an understanding of the Group and its environment,

including Group-wide controls, and assessing the risks of material misstatement at the Group

andcomponent level.

There are 76 (2022: 72) reporting components in total, each of which is responsible for

maintaining their own accounting records and controls and using an integrated consolidation

system to report to UK head office.

Our Group audit scope focused on audit work at 19 components (2022: 20 components).

Weselected 10 (2022: 10) reporting components where we requested component auditors

toperform a full scope audit of the component’s financial information. We also requested

component auditors to audit specified account balances at a further 9 (2022: 10) reporting

components. Coverage from the in-scope components representing 78% (2022: 81%) of the

Group’s revenue, 79% (2022: 87%) of the Group’s adjusted operating profit and 76% (2022: 80%)

ofthe Group’s netassets.

Each component was set a specific component materiality, considering its relative size and

anycomponent-specific risk factors such as the location of components. The component

materialities applied were in the range £0.6 million to £0.8 million (2021: £0.5 million to

£0.7million).

We tested the consolidation process at the parent company level and conducted analytical

procedures for entities not subject to detailed audit work to confirm our conclusion that there

wasno significant risk of material misstatement in the aggregated financial information.

Revenue Adjusted operating profit Net assets

47%

31%

22%

58%

21%

23%

53%

24%

Full audit scope Specified audit procedures Analytical review procedures

7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT

7.2. Our consideration of the control environment

The Group include their assessment of the internal control environment under the Risk

Management section of the annual report included on page 61.

With the involvement of our IT specialist, we have obtained an understanding of the control

environment and of the general IT controls, including an understanding of the business processes

and relevant controls within the key areas of the audit. We did not rely on the controls given the

varying systems used across the Group as a result of the de-centralised nature of the Group’s

control environment.

We performed an assessment over the Group’s largest ERP system used by several operating

sites in order to assess the potential to follow a controls reliance approach in future periods.

In some components we have performed testing on controls over the key business cycles such

as revenue and the journal entry approval process.

We have also obtained an understanding of the relevant controls over the areas with associated

key audit matters relating to classification of assets and liabilities as held for sale, the

classification of adjusting items, financial reporting and other deemed relevant controls.

7.3. Our consideration of climate-related risks

Climate change and the transition to a low carbon economy were considered in our audit where

they have the potential to impact, directly or indirectly, key judgements and estimates within

theGroup financial statements. The Group continues to develop its assessment of the potential

impacts of climate change as disclosed in the People, Communities and Environment section

ofthe annual report on page 29. The Group has identified sustainability, climate change and

theenvironment as a principal risk to the business.

We performed the following procedures to address the climate-related risks:

– held discussions with management to obtain an understanding of the process for considering

the impact of climate-related risks and controls that are relevant to the entity;

– read and understood the work performed by the Group’s engaged third party climate specialists

and assessed the conclusions reached for consistency with the disclosures made in the

financial statements;

– performed a climate-related risk assessment with the involvement of our specialist

Environmental, Social & Governance ("ESG") team;

– considered whether information included in the climate related disclosures in the Annual

Report were materially consistent with the financial statements and our knowledge obtained

inthe audit; and

– evaluated the appropriateness of disclosures included in the financial statements in note 1 on

page 133.

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INDEPENDENT AUDITOR’S REPORT CONTINUED

7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT CONTINUED

7.4. Working with other auditors

We performed site visits to a number of our significant components to discuss significant

matters of the audit, audit procedures performed, as well as results of work done. The Group

engagement team continued to have online interaction with the Group’s largest and most

complex businesses during 2023 with a particular focus on locations where work was performed

on significant components.

In addition to the above, the Group engagement partner held Group-wide, divisional and individual

planning and close meetings which covered all businesses. Each division has a dedicated senior

member of the Group audit team responsible for the supervision and direction of components,

including where appropriate sector-specific expertise. We included all component audit teams in

our team briefing, discussed and reviewed their risk assessment, and reviewed documentation of

the findings from their work. We also reviewed the audit work papers supporting each component

team’s reporting to us.

8. OTHER INFORMATION

The other information comprises the information included in the annual report, other than the

financial statements and our auditor’s report thereon. The Directors are responsible for the other

information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to

theextent otherwise explicitly stated in our report, we do not express any form of assurance

conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other

information is materially inconsistent with the financial statements or our knowledge obtained

inthe course of the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required

to determine whether this gives rise to a material misstatement in the financial statements

themselves. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9. RESPONSIBILITIES OF DIRECTORS

As explained more fully in the Directors’ responsibilities statement, the Directors are responsible

for the preparation of the financial statements and for being satisfied that they give a true and

fairview, and for such internal control as the Directors determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to

fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and

the parent company’s ability to continue as a going concern, disclosing as applicable, matters

related to going concern and using the going concern basis of accounting unless the Directors

either intend to liquidate the Group or the parent company or to cease operations, or have no

realistic alternative but to do so.

10. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL

STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as

awhole are free from material misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,

butis not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect

amaterial misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located

onthe FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part

ofour auditor’s report.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023122

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INDEPENDENT AUDITOR’S REPORT CONTINUED

11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING

IRREGULARITIES, INCLUDING FRAUD

Irregularities, including fraud, are instances of non-compliance with laws and regulations.

Wedesign procedures in line with our responsibilities, outlined above, to detect material

misstatements in respect of irregularities, including fraud. The extent to which our procedures

arecapable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities,

includingfraud and non-compliance with laws and regulations, we considered the following:

– the nature of the industry and sector, control environment and business performance including

the design of the Group’s remuneration policies, key drivers for Directors’ remuneration, bonus

levels and performance targets;

– results of our enquiries of management, internal audit, the Directors and the Audit Committee

about their own identification and assessment of the risks of irregularities, including those that

are specific to the Group’s sector;

– any matters we identified having obtained and reviewed the Group’s documentation of their

policies and procedures relating to:

• identifying, evaluating and complying with laws and regulations and whether they were aware

of any instances of non-compliance;

• detecting and responding to the risks of fraud and whether they have knowledge of any actual,

suspected or alleged fraud;

• the internal controls established to mitigate risks of fraud or non-compliance with laws

andregulations;

– the matters discussed among the audit engagement team including significant component

audit teams and relevant internal specialists, including tax, valuations, pensions, IT, and ESG

regarding how and where fraud might occur in the financial statements and any potential

indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist

within the organisation for fraud and identified the greatest potential for fraud in the classification

of adjusting items. In common with all audits under ISAs (UK), we are also required to perform

specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the Group

operates in, focusing on provisions of those laws and regulations that had a direct effect on the

determination of material amounts and disclosures in the financial statements. The key laws and

regulations we considered in this context included the UK Companies Act, Listing Rules, pensions

legislation and tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect

on the financial statements but compliance with which may be fundamental to the Group’s ability

to operate or to avoid a material penalty.

11.2 Audit response to risks identified

As a result of performing the above, we identified the classification of adjusting items as a key

audit matter related to the potential risk of fraud. The key audit matters section of our report

explains the matter in more detail and also describes the specific procedures we performed

inresponse to that key audit matter.

In addition to the above, our procedures to respond to risks identified included the following:

– reviewing the financial statement disclosures and testing to supporting documentation

toassess compliance with provisions of relevant laws and regulations described as having

adirect effect on the financial statements;

– enquiring of management, the Audit Committee and external legal counsel concerning actual

and potential litigation and claims;

– performing analytical procedures to identify any unusual or unexpected relationships that may

indicate risks of material misstatement due to fraud;

– reading minutes of meetings of those charged with governance, reviewing internal audit reports

and reviewing correspondence with tax authorities; and

– in addressing the risk of fraud through management override of controls, testing the

appropriateness of journal entries and other adjustments; assessing whether the judgements

made in making accounting estimates are indicative of a potential bias; and evaluating the

business rationale of any significant transactions that are unusual or outside the normal course

of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all

engagement team members including internal specialists and significant component audit

teams, and remained alert to any indications of fraud or non-compliance with laws and

regulations throughout the audit.

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 123

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

INDEPENDENT AUDITOR’S REPORT CONTINUED

12. OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion the part of the Directors’ remuneration report to be audited has been properly

prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

– the information given in the strategic report and the Directors’ report for the financial year for

which the financial statements are prepared is consistent with the financial statements; and

– the strategic report and the Directors’ report have been prepared in accordance with

applicable legal requirements.

In the light of the knowledge and understanding of the Group and the parent company and

their environment obtained in the course of the audit, we have not identified any material

misstatements in the strategic report or the Directors’ report.

13. CORPORATE GOVERNANCE STATEMENT

The Listing Rules require us to review the Directors’ statement in relation to going concern,

longer-term viability and that part of the Corporate Governance Statement relating to the Group’s

compliance with the provisions of the UK Corporate Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the

following elements of the Corporate Governance Statement is materially consistent with

thefinancial statements and our knowledge obtained during the audit:

– the Directors’ statement with regards to the appropriateness of adopting the going concern

basis of accounting and any material uncertainties identified set out on page 67;

– the Directors’ explanation as to its assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate set out on page 67;

– the Directors' statement on fair, balanced and understandable set out on page 115;

– the board’s confirmation that it has carried out a robust assessment of the emerging

andprincipal risks set out on page 62;

– the section of the annual report that describes the review of effectiveness of risk

management and internal control systems set out on page 61; and

– the section describing the work of the Audit Committee set out on page 88.

Report on other legal and regulatory requirements

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023124

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INDEPENDENT AUDITOR’S REPORT CONTINUED

14. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

14.1. Adequacy of explanations received and accounting records

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

– we have not received all the information and explanations we require for our audit; or

– adequate accounting records have not been kept by the parent company, or returns adequate

for our audit have not been received from branches not visited by us; or

– the parent company financial statements are not in agreement with the accounting records

andreturns.

We have nothing to report in respect of these matters.

14.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures

of Directors’ remuneration have not been made or the part of the Directors’ remuneration report

to be audited is not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

15. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS

15.1. Auditor tenure

Following the recommendation of the Audit Committee, we were appointed by the board of

Directors of the Group on 6 May 2020 at the Annual General Meeting to audit the financial

statements for the year ending 31 December 2020 and subsequent financial periods. The period

oftotal uninterrupted engagement including previous renewals and reappointments of the firm

is4 years, covering the years ending 31 December 2020 to 31 December 2023.

15.2. Consistency of the audit report with the additional report to the audit committee

Our audit opinion is consistent with the additional report to the Audit Committee we are required

toprovide in accordance with ISAs (UK).

16. USE OF OUR REPORT

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of

Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state

to the company’s members those matters we are required to state to them in an auditor’s report

and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the company and the company’s members as a body, for our

audit work, for this report, or for the opinions we have formed.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule

(DTR) 4.1.15R – DTR 4.1.18R, these financial statements will form part of the Electronic Format

Annual Financial Report filed on the National Storage Mechanism of the FCA in accordance with

DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the

Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R

– DTR 4.1.18R.

Robert Knight (Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

London/United Kingdom

6 March 2024

Report on other legal and regulatory requirements continued

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 125

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

		£million (unless otherwise stated) Note 2023	2022
Revenue	3	6 13 . 9	6 1 7. 0
Cost of sales		(4 6 6 .9)	(4 8 1. 5)
Gross profit		1 4 7. 0	13 5 . 5
Distribution costs		(26 .9)	(29. 6)
Administrative expenses		(111 . 4)	(10 9 . 3)
Operating profit/(loss)		8 .7	(3 .4)
Analysed as:
Adjusted operating profit	3	52.8	4 7.1
Restructuring costs	7	(2 .0)	(6. 4)
Pension restructuring costs	7	(1. 9)	(13 . 8)
Asset impairments and measurement losses	7	(3 2 .5)	(2 3 .1)
Amortisation of intangible assets arising on business combinations	7	(4 .6)	(6 .0)
Acquisition and disposal related costs	7	(3 .1)	(1. 2)
Finance income	5	1. 6	2.3
Finance costs	5	(11 . 4)	(9.0)
Loss before taxation		(1.1)	(1 0 .1)
Taxation	8	(5 .7)	(3 .1)
Loss for the year attributable to the owners of the Company		(6. 8)	(13 . 2)
EPS attributable to owners of the Company (pence)
Basic	10	(3. 9)	( 7. 5)
Diluted	10	(3. 9)	( 7. 5)

	£million 2023	2022
Loss for the year	(6. 8)	(13 . 2)
Other comprehensive (loss) / income for the year after tax
Items that are or may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations	(1 7. 3)	26 .9
Tax on exchange differences	1.1	(1. 6)
Gain/(loss) on hedge of net investment in foreign operations	1. 8	(3 .4)
Gain/(loss) on cash flow hedges taken to equity less amounts recycled
to the incomestatement	3 .5	(2 .9)
Deferred tax loss on movement in cash flow hedges	(0 .7)	(0.4)
Items that will never be reclassified to the income statement:
Remeasurement of defined benefit pension schemes	0.2	(3 5. 9)
Tax on remeasurement of defined benefit pension schemes	(0 .1)	6.5
Total comprehensive loss for the year attributable to the owners of the Company	(18 . 3)	(24 . 0)

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2023

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2023

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023126

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

		£million Note 2023	2022
ASSETS
Non-current assets
Right-of-use assets	12	15.8	19 . 6
Property, plant and equipment	13	6 1. 3	54 .8
Goodwill	14	14 0 . 8	15 5 .1
Other intangible assets	15	3 2 .7	5 3 .7
Deferred tax assets	8	15 . 4	13 . 2
Derivative financial instruments	21	0.8	0.8
Pensions	22	25.3	3 1. 3
Total non-current assets		29 2 .1	328 .5
Current assets
Inventories	16	14 3 . 5	18 9 . 2
Trade and other receivables	17	90.2	12 0 . 3
Income taxes receivable		2.0	1.1
Derivative financial instruments	21	5.2	3 .1
Assets classified as held for sale	4	4 8.0	–
Cash and cash equivalents		7 4 .1	6 5.0
Total current assets		363.0	3 7 8 .7
Total assets		6 5 5 .1	7 0 7. 2
LIABILITIES
Current liabilities
Borrowings	20	1. 2	3 .7
Liabilities directly associated with assets classified as held for sale	4	2 8 .1	–
Lease liabilities	20, 30	3.8	4.4
Derivative financial instruments	21	1. 5	3 .6
Trade and other payables	18	12 7.9	173.2
Income taxes payable		10 . 9	9.6
Provisions	19	3 .1	3.5
Total current liabilities		17 6 . 5	19 8 . 0
Non-current liabilities
Borrowings	20	18 1. 9	17 6 . 6
Lease liabilities	20, 30	14 . 4	18 .7
Derivative financial instruments	21	0.6	0.8
Deferred tax liability	8	7. 0	12 . 4
Pensions	22	3 .1	2.9
Provisions and other non-current liabilities	18, 19	1.1	0.8
Total non-current liabilities		2 0 8 .1	2 12 . 2

		£million Note 2023	2022
Total liabilities		38 4.6	4 10 . 2
Net assets		270.5	2 9 7. 0
EQUITY
Share capital	23	4 4.3	4 4 .1
Share premium		24.0	2 2 .9
Translation reserve		4 0 .7	5 5 .1
Other reserves	24	11. 9	7. 3
Retained earnings		14 9 . 6	1 6 7. 6
Total equity		27 0.5	2 9 7. 0

Approved by the Board of Directors on 6 March 2024 and signed on their behalf by:

Peter France Mark Hoad

Director Director

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2023

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 127

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

£million

	Share	Share	Translation	Other	Retained
	capital	premium	Reserve	reserves	earnings	Sub-total	NCI	Total
At 31 December 2021	4 4 .1	2 2.6	3 3.2	7.1	2 2 1. 0	3 28 .0	2 .0	3 30.0
Loss for the year	–	–	–	–	(13 . 2)	(13 . 2)	–	(13 . 2)
Other comprehensive income
Exchange differences on translation of foreign operations	–	–	26.9	–	–	2 6 .9	–	26 .9
Tax on exchange differences	–	–	(1. 6)	–	–	(1. 6)	–	(1. 6)
Loss on hedge of net investment in foreign operations	–	–	(3.4)	–	–	(3 .4)	–	(3 .4)
Loss on cash flow hedges taken to equity less amounts recycled to the income statement	–	–	–	(2 .9)	–	(2 .9)	–	(2 .9)
Deferred tax on movement in cash flow hedges	–	–	–	0.2	(0 .6)	(0. 4)	–	(0 .4)
Remeasurement of defined benefit pension schemes	–	–	–	–	(35 .9)	(35 .9)	–	(3 5 .9)
Tax on remeasurement of defined benefit pension schemes	–	–	–	–	6.5	6 .5	–	6.5
Total comprehensive income/(loss)	–	–	21. 9	(2 .7)	(4 3 . 2)	(24 .0)	–	(24 .0)
Transactions with owners recorded directly in equity
Equity dividends paid by the Company	–	–	–	–	(10 . 2)	(10 . 2)	–	(10 . 2)
Share-based payments	–	–	–	4.8	–	4.8	–	4.8
Deferred tax on share-based payments	–	–	–	(1. 0)	–	(1. 0)	–	(1. 0)
New shares issued	–	0.3	–	–	–	0.3	–	0.3
Other movements	–	–	–	(0 .9)	–	(0.9)	–	(0 .9)
Dividend to non-controlling interest	–	–	–	–	–	–	(2 .0)	(2. 0)
At 31 December 2022	4 4 .1	2 2 .9	55 .1	7. 3	1 6 7. 6	2 97. 0	–	2 9 7. 0
At 31 December 2022	4 4 .1	2 2.9	5 5 .1	7. 3	1 6 7. 6	2 97. 0	–	2 9 7.0
Loss for the year					(6 . 8)	(6 . 8)	–	(6 . 8)
Other comprehensive income/(expense)
Exchange differences on translation of foreign operations	–	–	(1 7. 3)	–	–	(1 7. 3)	–	(17. 3)
Tax on exchange differences	–	–	1.1	–	–	1.1	–	1.1
Gain on hedge of net investment in foreign operations	–	–	1. 8	–	–	1. 8	–	1. 8
Gain on cash flow hedges taken to equity less amounts recycled to the income statement	–	–	–	3.5	–	3.5	–	3.5
Deferred tax on movement in cash flow hedges	–	–	–	(0 .7)	–	(0 .7)	–	(0 .7)
Remeasurement of defined benefit pension schemes	–	–	–	–	0.2	0.2	–	0.2
Tax on remeasurement of defined benefit pension schemes	–	–	–	–	(0 .1)	(0 .1)	–	(0 .1)
Total comprehensive (loss)/income	–	–	(14 . 4)	2.8	(6 .7)	(18 . 3)	–	(18 . 3)
Transactions with owners recorded directly in equity
Equity dividends paid by the Company	–	–	–	–	(11. 3)	(11. 3)	–	(11 . 3)
Share-based payments	–	–	–	3 .1	–	3 .1	–	3 .1
Deferred tax on share-based payments	–	–	–	(0 .1)	–	(0 .1)	–	(0 .1)
New shares issued	0.2	1.1	–	–	–	1. 3	–	1. 3
Other movements	–	–	–	(1. 2)	–	(1. 2)	–	(1. 2)
At 31 December 2023	44.3	24.0	4 0 .7	11 . 9	14 9 . 6	270.5	–	27 0.5

1 NCI is an abbreviation of non-controlling interests which was eliminated with a dividend payment in 2022.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2023

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023128

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

		£million Note 2023	2022
Cash flows from operating activities
Loss for the year		(6. 8)	(13 . 2)
Taxation	8	5 .7	3 .1
Net finance costs		9.8	6 .7
Restructuring costs and non underlying asset impairments and remeasurements	7	36.4	4 3.3
Acquisition and disposal related costs	7	7.7	7. 2
Adjusted operating profit		52.8	4 7. 1
Adjustments for:
Depreciation	12, 13	14 . 0	13 . 9
Amortisation of intangible assets	15	2 .5	2.2
Share based payment expense		3 .1	4.8
Scheme funded pension administration costs		1. 6	–
Other items		(0 .7)	0.5
Decrease/(increase) in inventories		4.5	(4 0. 4)
Decrease/(increase) in receivables		10 . 5	(26 .3)
(Decrease)/increase in payables and provisions		(1 5.5)	2 7. 9
Adjusted operating cash flow		7 2.8	2 9 .7
Reimbursement of pension surplus		3.2	–
Restructuring and acquisition related costs		(4 .0)	(11.1)
Net cash generated from operations		72.0	18 . 6
Net income taxes paid		(9 .1)	(5 .9)
Net cash flow from operating activities		62 .9	12 . 7
Cash flows from investing activities
Purchase of property, plant and equipment	13	(2 2 .3)	(11 . 4)
Proceeds from sale of property, plant and equipment and government grants received		0.5	0.3
Capitalised development expenditure	15	(1. 6)	(2 . 3)
Purchase of other intangibles	15	(0 .6)	(0 .6)
Acquisition of business		–	(8 . 3)
Net cash flow used in investing activities		(2 4 .0)	(2 2 .3)

		£million Note 2023	2022
Cash flows from financing activities
Issue of share capital	23	1. 3	0. 4
Interest paid		(10 . 6)	(7. 5)
Repayment of borrowings		(2 6 .1)	(14 9 . 3)
Proceeds from borrowings		3 2 .7	1 74 . 3
Capital payment of lease liabilities		(4 .4)	(4. 3)
Other items		(1. 2)	(1. 0)
Dividends paid to minority shareholders		–	(2 . 0)
Dividends paid by the Company	9	(11 . 3)	(10 . 2)
Net cash flow (used in)/from financing activities		(19 . 6)	0.4
Cash transferred to held for sale		(3 .6)	–
Net increase/(decrease) in cash and cash equivalents		15 .7	(9 .2)
Cash and cash equivalents at beginning of year	26	61. 3	6 7. 2
Exchange differences	26	(4 .1)	3.3
Cash and cash equivalents at end of year	26	7 2 .9	61. 3
Cash and cash equivalents comprise:
Cash at bank and in hand		7 4 .1	6 5.0
Bank overdrafts		(1. 2)	(3 .7)
Cash and cash equivalents at end of year		7 2.9	6 1. 3
Cash and cash equivalents included within assets classified as held for sale		3 .6	–
Cash and cash equivalents at end of year including those within assets classified
as held for sale		76.5	61. 3

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2023

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 129

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

1 Basis of preparation

a) Basis of accounting

TT Electronics Plc (“the Group”) is a public company limited by shares (company number

00087249). The Group is incorporated in the United Kingdom under the Companies Act 2006

and registered in England and Wales. The address of the registered office is ‘TT Electronics Plc,

Fourth Floor, St Andrews House, West Street, Woking, Surrey, GU21 6EB’. The nature of the

Group’s operations and its principal activities by operating segment are set out in note 3 and in

the divisional reviews on pages 22 to 24. The Consolidated Financial Statements of the Group for

the year ended 31 December 2023 were authorised in accordance with a resolution of the

Directors of TT Electronics Plc on 6 March 2024.

These consolidated financial statements are presented in pounds sterling, which is also the

functional currency of the Company. Foreign operations are included in accordance with the

policies set out in note 2.

The consolidated financial statements have been prepared on a historical cost basis modified

by derivatives held at fair value. The consolidated financial statements have been prepared in

accordance with UK adopted international accounting standards in conformity with the

requirements of the Companies Act 2006. The financial statements have also been prepared

in accordance with International Financial Reporting Standards as issued by the IASB.

The financial statements set out on pages 126 to 129 have been prepared using consistent

accounting policies except for the adoption of new accounting standards and interpretations

noted below.

b) Basis of consolidation

The consolidated financial statements set out the Group’s financial position as at 31 December

2023 and the Group’s financial performance for the year ended 31 December 2023.

Subsidiaries are those enterprises controlled by the Group. Control exists when the Group is

exposed, or has rights, to variable returns from its involvement with the subsidiary and has the

ability to affect those returns through its power over the subsidiary. Subsidiaries are consolidated

from the date on which control is transferred to the Group and cease to be consolidated from the

date on which control is transferred out of the Group.

All intercompany balances and transactions, including unrealised profits arising from intra-group

transactions, have been eliminated in full. Unrealised losses are eliminated in the same way as

unrealised gains except that they are only eliminated to the extent that there is no evidence

of impairment.

c) Alternative performance measures

The Group presents Alternative Performance Measures (“APMs”) in addition to the statutory

results of the Group. These are presented in accordance with the guidelines on APMs issued

by the European Securities and Markets Authority (“ESMA”).

Adjusted operating profit has been defined as operating profit from continuing operations

excluding the impacts of significant restructuring programmes, significant one-off items including

property disposals, impairment charges significant in nature and/or value, business acquisition,

integration, and divestment related activity, and the amortisation of intangible assets recognised

on acquisition. Acquisition and disposal related items include the writing off of the pre-acquisition

profit element of inventory written up on acquisition, other direct costs associated with business

combinations and adjustments to contingent consideration related to acquired businesses.

Restructuring includes significant changes in footprint (including movement of production

facilities) and significant costs of management changes.

In addition to the items above, adjusting items impacting profit after tax include:

– The net effect on tax of significant restructuring from strategy changes that are not considered

by the Group to be part of the normal operating costs of the business; and

– The tax effects of adjustments to profit before tax.

These financial statements include alternative performance measures that are not prepared in

accordance with IFRS. These APMs have been selected by the Directors to assist them in making

operating decisions because they represent the underlying operating performance of the Group

and facilitate internal comparisons of performance over time.

The Directors consider the adjusted results to be an important measure used to monitor how the

businesses are performing as this provides a meaningful reflection of how the businesses are

managed and measured on a day-to-day basis and achieves consistency and comparability

between reporting periods.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

at 31 December 2023

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023130

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

These APMs exclude certain significant non-recurring, infrequent or non-cash items that the

Directors do not believe are indicative of the underlying operating performance of the Group

(that are otherwise included when preparing financial measures under IFRS).

Adjusted profit is not a defined term under IFRS and may not be comparable with similarly titled

profit measures reported by other companies. It is not intended to be a substitute for, or superior

to, GAAP measures. All APMs relate to the current year results and comparable periods

where provided.

The Directors consider there to be four main APMs: adjusted operating profit, free cash flow,

adjusted EPS and adjusted effective tax rate.

All APMs are presented on pages 174 to 177 and are reconciled to their equivalent statutory

measures where this is appropriate.

d) Going concern

The Group’s business activities, together with the factors likely to affect its future development,

performance and position are set out within the Strategic Report on pages IFC to 67. The Strategic

Report analyses the financial position of the Group, its cash flows, liquidity position and borrowing

facilities. In addition, note 21 to the financial statements includes the Group’s objectives, policies

and processes for managing its capital; its financial risk management objectives; details of its

financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Group has experienced continued improvement in trading momentum and strong growth

on our 2022 results. We continue to see benefit from our strategic repositioning in our chosen

structural growth markets as well as our focus on building close relationships with our clients

and this can be seen in both the order book and financial performance of the Group.

The Group’s financial position remains strong, at 31 December 2023 it had:

– £2263.3 million of total borrowing facilities available (comprising committed facilities of

£240.7 million and uncommitted facilities of £22.6 million representing overdraft lines and an

accordion facility of £17.6 million). The Group’s primary source of finance is the £162.4 million

committed revolving credit facility (RCF) which was signed in June 2022 and will mature in

June 2027 following the Group exercising an option to extend the previously existing maturity

by one year in May 2023. The RCF includes a £15.0 million committed extension converted

from the existing uncommitted accordion facilities in February 2023. At 31 December 2023

£108.8 million of this facility had been drawn down. The Group’s RCF is payable on a floating

rate basis above GBP SONIA, USD SOFR or EURIBOR depending on the currency of the loan.

In December 2021, the Group issued £75 million of fixed rate loan notes with three institutional

investors; the issue is evenly split between 7- and 10- year maturities with an average interest rate

of 2.9% and covenants in line with our bank facility.

– A leverage ratio (banking covenant defined measure) of 1.7 times at 31 December 2023

compared to the RCF (and PP loan notes) covenant maximum of 3.0 times. Interest cover

(banking covenant defined measure) of 6.1 times compared to the RCF (and PP loan notes)

covenant minimum of 4.0 times.

The Group has prepared and reviewed cash flow forecasts across the business over the twelve-

month period from the date of the approval of these financial statements, considering the

Group’s current financial position and the potential impact of our principal risks on divisions.

The Group’s financial projections contain key assumptions surrounding revenue and operating

profit growth in 2024. Under the Group’s base case financial projections, the Group retains

significant liquidity and covenant headroom throughout the forecast period, with both metrics

improving from the position as at 31 December 2023.

The Group’s financial projections have been stress tested for “business as usual” risks (such

as profit growth, supply chain pressure and working capital variances), and the impact of the

following principal risks: general revenue reduction, contractual risks, research and development,

people and capability, supplier resilience and health and safety (occurring both individually and

in unison). Principal risks which were not specifically modelled were either considered not likely

to have an impact within the going concern period or their financial effect was covered within

the overall downside economic risks implicit within the stress testing. Under the stress tested

modelling, the liquidity headroom within the group remains adequate throughout the forecast

period. Financial covenants continue to be in compliance under the stress tested model and

management have a number of mitigating actions which could be undertaken if required.

1 Basis of preparation continued

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In addition to the stress tests described above the Group’s stress test scenario has been

sensitised for supply chain challenges and capacity constraints which shows a reduction in

revenue and operating profit compared to the latest forecast. Despite this further reduction these

projections show that the Group should remain within its facilities headroom and within bank

covenants for the twelve months following the approval of these financial statements. A “reverse”

stress-test was also modelled to understand the conditions which could jeopardise the ability of

the Group to continue as a going concern including assessing against covenant testing and facility

headroom. The stress testing also considered mitigating actions which could be put in place.

Mitigating actions included limiting capital expenditure and reducing controllable costs including

items such as discretionary bonuses and pay rises. The reverse stress test is deemed to have a

remote likelihood and help inform the Directors’ assessment that there are no material

uncertainties in relation to going concern.

The Group’s wide geographical and sector diversification helps minimise the risk of serious

business interruption or catastrophic reputational damage. Furthermore, the business model is

structured so that the Group is not overly reliant on any single customer, market or geography.

The Directors have assessed the future funding requirements of the Group with due regard to

the risks and uncertainties to which the Group is exposed and compared them with the level of

available borrowing facilities and are satisfied that the Group has adequate resources for at least

twelve months from the date of signing. Accordingly, the financial statements have been prepared

on a going concern basis.

e) New and revised standards and interpretations adopted, not yet adopted and those in issue

but not yet effective

New and revised standards and interpretations adopted during the year

At the date of authorisation of these financial statements the Group has considered the following

revised standards or interpretations, however they were deemed not to have a material effect on

the financial statements:

– IFRS 17 Insurance Contracts

– Amendments to IFRS 17

– Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

– Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments

to IAS 12)

– Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17)

– Definition of Accounting Estimates (Amendments to IAS 8)

– International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12)

– application of the exception and disclosure of that fact

– International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12)

— other disclosure requirements

New and revised standards and interpretations not yet adopted

The Group does not consider that any standard, amendment or interpretation issued by the IASB,

but not yet applicable, will have a significant impact on the financial statements.

New and revised IFRS Standards in issue but not yet effective

At the date of authorisation of these financial statements, the Group has not applied the following

new and revised IFRS Standards that have been issued but are not yet effective:

– IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information

– IFRS S2 — Climate-related Disclosures

– Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

– Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

– Non-current Liabilities with Covenants (Amendments to IAS 1)

– Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).

f) Change in accounting policies

Adoption of new and amendments to published standards and interpretations effective for the

Group for the year ended 31 December 2023 did not have any material impact on the financial

position or performance of the Group.

1 Basis of preparation continued

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g) Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in note 2, the Directors

are required to make judgements, estimates and assumptions about the carrying amounts of

assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experiences and other factors

that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised if the revision

affects only that period, or in the period of revision and future periods if the revision affects both

current and future periods.

The Directors have assessed that there is currently no material impact arising from climate change

on the judgements and estimates determining the valuations within the financial statements.

Critical judgements

In the course of preparing the Financial Statements, critical judgements within the scope of

paragraph 122 of IAS 1: “Presentation of Financial Statements” were made during the process

of applying the Group’s accounting policies. These are outlined below.

Assets classified as held for sale and directly related liabilities

Judgement was required in determining the classification of the Group’s assets and directly

associated liabilities classified as held for sale, particularly with the timing of the held for sale

classification as the transaction was not complete by 31 December 2023. It is management’s

assessment that it is highly probable that the transaction will be completed within 12 months

of the balance sheet date. Further details are set out in note 4.

Adjusting items

Judgements were required as to whether items were disclosed as adjusting, with consideration

given to both quantitative and qualitative factors. Further information about the determination

of adjusting items in the year ended 31 December 2023 is included in note 1c.

Critical judgements involving estimates that have had a significant effect on the amounts

recognised in the financial statements are set out below.

Key sources of estimation uncertainty

Assumptions concerning the future and other key sources of estimation uncertainty at the

balance sheet date, that may have a significant risk of causing a material adjustment to the

carrying amounts of assets and liabilities within the next financial year, are discussed below.

– Note 8 – Taxation. Accruals for tax contingencies require management to make judgements

and estimates in relation to tax authority audits and exposures. Amounts accrued are based

on management’s interpretation of country-specific tax law and the likelihood of settlement.

Tax benefits are not recognised unless the tax positions are probable of being sustained. Once

considered to be probable, management reviews each material tax benefit to assess whether

a provision should be taken against full recognition of the benefit on the basis of potential

settlement through negotiation and/or litigation. These amounts are expected to be utilised or to

reverse as tax audits occur or as the statute of limitations is reached in the respective countries

concerned. The Group’s current tax liability at 31 December 2023 includes tax provisions of

£9.3 million (2022: £8.4 million). The Group believes the range of reasonable possible outcomes

in respect of these exposures is tax liabilities of up to £12.3 million (2022: £11.1 million).

1 Basis of preparation continued

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2 Summary of material accounting policies

The following material accounting policies have been applied in the preparation of the

consolidated financial statements. These accounting policies have been consistently applied

across the Group.

a) Revenue

Revenue is measured at the fair value of the right to consideration, usually the invoiced value, for

the provision of goods to external customers excluding value added tax and other sales related

taxes and is recognised when the customer obtains control of goods for revenues which are not

recognised over time. In most cases this is at the point in time of transfer of legal title of the goods;

terms vary by customer, but the two most common arrangements are at the time of dispatch and

at the time of delivery. Where revenue is recognised over time this is recognised with regards to

completion of performance obligation milestones. For sales to customers where a right to return

an item is granted, revenue is recognised to the extent of the consideration to which the Group

ultimately expects to be entitled (i.e. revenue is not recognised for goods expected to be returned).

Where a service warranty is provided to customers, the associated revenue, based upon an

allocation of the overall cost of performance, is recognised over the warranty period. Payment

terms typically range from 30 to 120 days.

b) Finance income

Finance income comprises interest income on funds invested, the calculated interest income on

pensions assets for schemes which are in surplus and net foreign exchange gains or losses on

cash balances and loans receivables. Interest income is recognised using the effective interest

rate. Net foreign exchange gains or losses on other monetary assets or liabilities are recognised

either within other income or cost of sales, depending on what the underlying monetary asset or

liability relates to.

c) Finance costs

Finance costs comprise interest expense on borrowings which are not capitalised under the

borrowing costs policy, the calculated interest expense on pension liabilities for schemes which

are in deficit, the interest costs on lease liabilities and net foreign exchange gains or losses on

external loans. Net foreign exchange gains or losses on other monetary assets or liabilities are

recognised either within other income or cost of sales, depending on what the underlying

monetary asset or liability relates to.

d) Discontinued operations and assets held for sale

Discontinued operations

The Group reports a business as a discontinued operation when it has been disposed of in a

period, or its future sale is considered to be highly probable at the balance sheet date, and results

in the cessation of a major line of business or geographical area of operation.

Assets classified as held for sale and directly associated liabilities

An asset is classified as held for sale if it is available for immediate sale in its present condition

subject only to terms that are usual and customary for sales of such assets and that it is highly

probable the asset will be sold within one year from the date of classification. Assets held

for sale and directly associated liabilities are remeasured to their fair value less costs to sell.

Any impairment is first applied to non-current assets and then current assets in the order

deemed most appropriate by management

e) Dividends

Dividends are recognised as a liability in the period in which they are approved by shareholders.

Dividends receivable are recognised when the Group’s right to receive payment is established.

f) Business combinations

Business combinations are accounted for using the acquisition method. Goodwill on business

combinations is recognised as the fair value of the consideration, including the full cost of any

derivative financial instruments used to hedge this item, less the fair value of the identifiable

assets and liabilities acquired and is recognised as an asset in the consolidated balance sheet.

Costs directly attributable to business combinations are recognised as an expense within the

income statement as incurred.

Acquisitions and disposals of non-controlling interests that do not result in a change of control are

accounted for as transactions with owners in their capacity as owners and therefore no goodwill is

recognised as a result of such transactions. The adjustments to non-controlling interests are based

on a proportionate amount of the net assets of the subsidiary. Any difference between the price

paid or received and the amount by which non-controlling interests are adjusted is recognised

directly in equity and attributed to the owners of the parent.

If the initial accounting for a business combination is incomplete by the end of the reporting period

in which the combination occurs, the Group reports provisional amounts for the items for which

the accounting is incomplete. Those provisional amounts are adjusted during the measurement

period (which is no longer than 12 months from the acquisition date), or additional assets or

liabilities are recognised, to reflect new information obtained about facts and circumstances that

existed as of the acquisition date that, if known, would have affected the amounts recognised as

of that date.

g) Property, plant and equipment

Initial measurement

Property, plant and equipment is stated at cost less accumulated depreciation and impairment

losses. The cost of a tangible fixed asset comprises its purchase price and any costs directly

attributable to bringing it into working condition for its intended use. The cost of self constructed

assets includes the cost of materials, direct labour and an appropriate proportion of

production overheads.

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Depreciation

The cost of each item of property, plant and equipment is depreciated over its useful life.

Depreciation is charged to the income statement so as to write-off the cost less estimated

residual value on a straight-line basis over the estimated useful life of the asset. Depreciation

commences on the date the assets are ready for use within the business and the asset carrying

values are reviewed for impairment when there is an indication that they may be impaired.

Freehold land is not depreciated.

The depreciation rates of assets are as follows:

Freehold buildings 50 years

Leasehold building improvements 50 years (or over the period of the lease, if shorter)

Plant and equipment 3 to 10 years

Borrowing costs directly attributable to the acquisition, construction or production of qualifying

assets that take a substantial period of time to get ready for their intended use are capitalised

as part of the cost of the respective asset.

h) Investment property

Property held to earn rental income rather than for the purpose of the Group’s principal activities

is classified as investment property. Investment property is recorded at cost less accumulated

depreciation and any recognised impairment loss. The depreciation policy is consistent with that

described for other Group properties. The assets’ residual values and useful lives are reviewed,

and adjusted, if appropriate, at each balance sheet date.

Investment properties are derecognised when either they have been disposed of or when the

investment property is permanently withdrawn from use and no future economic benefit is

expected from its disposal. The difference between the net disposal proceeds and the carrying

amount of the asset is recognised in the income statement in the period of derecognition.

i) Leases

The Group applies IFRS 16 ‘Leases’ and recognises right-of-use assets and lease liabilities for

most leases (unless the lease term is 12 months or less or the underlying asset has a low value).

The Group recognises a lease liability at the lease commencement date, measured as the present

value of the future lease payments, discounted at the incremental borrowing rate. A corresponding

right-of-use asset is recognised separately on the face of the consolidated balance sheet, net of

accumulated depreciation and impairment losses.

The Group has applied judgement to determine the lease term for contracts that include renewal

options. The assessment of whether the exercise of such options is reasonably certain impacts

the lease term, which affects the amount of lease liability and right-of-use asset recognised.

j) Government grants

Government grants relating to non-current assets are treated as deferred income and credited to

the income statement by equal instalments over the anticipated useful lives of the assets to which

the grants relate. Other grants are credited to the income statement over the period of the project

to which they relate.

k) Goodwill

Goodwill arising on the acquisition of a business, representing the difference between the cost

of acquisition and the fair value of the identifiable net assets acquired, is capitalised and is

tested annually for impairment. Goodwill is not amortised, and any impairment losses are not

subsequently reversed. On the subsequent disposal or discontinuance of a previously acquired

business, the relevant goodwill is included in the gain or loss on disposal within the consolidated

income statement except to the extent it has been previously impaired.

Negative goodwill arising on the acquisition of a business is credited to the consolidated income

statement on acquisition as part of acquisition costs reported outside adjusted profit.

Cash-generating units to which goodwill has been allocated are tested for impairment annually,

or more frequently when there is an indication that the unit may be impaired. If the recoverable

amount of the cash-generating unit is less than the carrying amount of the unit, the impairment

loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then

to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the

unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

l) Other intangible assets

Intangible assets acquired as part of a business combination are stated in the balance sheet

at their fair value at the date of acquisition less accumulated amortisation.

Expenditure on research activities undertaken with the prospect of gaining new scientific or

technical knowledge and understanding is recognised in the income statement as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design

for the production of new or substantially improved products and processes, is capitalised if

the product or process is technically and commercially feasible and the Group has sufficient

resources to complete development. The expenditure capitalised includes the cost of materials,

direct labour and an appropriate proportion of overheads. Other development expenditure is

recognised in the income statement as incurred. Capitalised development expenditure is stated

at cost less accumulated amortisation and impairment losses. The carrying values of intangible

assets are tested for impairment whenever there is an indication that they may be impaired.

Customer relationships and contracts are valued on the basis of the net present value of the future

additional cash flows arising from customer relationships with appropriate allowance for attrition

of customers.

2 Summary of material accounting policies continued

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Acquired computer software licences for use within the Group are capitalised as an intangible

asset on the basis of the costs incurred to acquire and bring to use the specific software. Costs

that are directly associated with the implementation of identifiable and unique software products

controlled by the Group and that will probably generate economic benefits exceeding costs

beyond one year, are recognised as intangible assets. Capitalised software development

expenditure is stated at cost less accumulated amortisation.

The amortisation rates for intangible assets are:

Acquired patents and licences up to 10 years

Product development costs 5 years

Customer relationships 3 to 22 years

Order backlog up to 2 years

Software 3 to 5 years

Amortisation is charged on a straight-line basis.

m) Deferred taxation

Deferred taxation is provided on taxable temporary differences between the carrying amounts of

assets and liabilities in the financial statements and their corresponding tax bases. No provision

is made for deferred tax which would become payable on the distribution of retained profits by

overseas subsidiaries where the timing of the reversal of the temporary difference can be

controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is measured using the tax rates expected to apply when the asset is realised, or the

liability settled based on tax rates enacted or substantively enacted by the balance sheet date.

However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial

recognition of an asset or liability unless the related transaction is a business combination or

affects tax or accounting profit.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits

will be available against which the asset can be utilised or that they will reverse. Deferred tax

assets are reduced to the extent that it is no longer probable that the related tax benefit will

be realised.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax

assets against current tax liabilities and the deferred taxes relate to the same taxable entity and

the same taxation authority.

n) Inventories

Inventories are valued at the lower of cost, including related overheads, and net realisable value.

Cost comprises direct materials and, where applicable, direct labour costs and the overheads

incurred in bringing inventories to their present location and condition. Cost is calculated on a

weighted average cost basis. Net realisable value is based on estimated selling price less costs

expected to be incurred to completion and disposal. Provisions are made for obsolescence or

other expected losses where necessary.

o) Financial instruments

Recognition

The Group recognises financial assets and liabilities on its balance sheet when it becomes a party

to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when

there is a legally enforceable right to set off the recognised amounts and there is an intention to

settle on a net basis, or realise the asset and settle the liability simultaneously.

Measurement

When financial assets and liabilities are initially recognised, they are measured at fair value being

the consideration given or received plus (or minus) directly attributable transaction costs.

Trade receivables are recognised at transaction price (i.e. original invoice price) and subsequently

measured at amortised cost less provision made for loss allowance of these receivables based

upon the expected credit loss model (simplified model). All trade receivables are held to collect

contractual cash flows within a business model and meet the ‘Solely Payments of Principal and

Interest’ (SPPI) test.

Trade payables are carried at the amounts expected to be paid to counterparties and are held

at amortised cost.

Borrowings are initially recognised at the fair value of the consideration received less directly

attributable transaction costs. After initial recognition, borrowings are subsequently measured

at amortised cost using the effective interest method.

Cash and cash equivalents comprise cash at bank and in hand, short-term deposits held on call

or with maturities of less than three months at inception, and highly liquid investments that are

readily convertible into known amounts of cash and are subject to insignificant risk of changes

in value. Within the cashflow statement this definition also includes bank overdrafts that are

repayable on demand and form an integral part of the Group’s cash management. Cash and cash

equivalents are initially recognised at fair value and subsequently are measured at amortised cost

because they meet the SPPI test.

In determining estimated fair value, investments are valued at quoted bid prices on the trade date.

2 Summary of material accounting policies continued

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Derivatives and hedge accounting

The Group uses derivative financial instruments such as forward foreign exchange contracts

and interest rate derivatives to hedge risks associated with foreign exchange fluctuations and

interest rate risk. These are designated as cash flow hedges (CFH). At the inception of the hedge

relationship, the Group documents the relationship between the hedging instrument and the

hedged item, along with its risk management objectives and its strategy for undertaking various

hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the

Group documents whether the hedging instrument that is used in a hedging relationship is highly

effective in offsetting changes in cash flows of the hedged item.

The effective portion of changes in the fair value of derivatives that are designated and qualify

as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion

is recognised immediately in the income statement.

Amounts deferred in equity are reclassified to the income statement in the periods when the

hedged item is recognised in the income statement, in the same line of the income statement

as the recognised hedged item.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated,

or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred

in equity at that time remains in equity and is recognised when the forecast transaction is

ultimately recognised in the income statement. When a forecast transaction is no longer expected

to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the

income statement.

When hedging the FX risk on a forecast business combination, the Group includes the

accumulated gains or losses on hedging instruments within goodwill as a ‘basis adjustment’.

Derecognition

A financial asset is derecognised when the Group loses control over the contractual rights that

comprise that asset. This occurs when the rights are realised, expire or are surrendered. A financial

liability is derecognised when it is extinguished. Originated loans and receivables are derecognised

on the date they are transferred by the Group.

Impairment of financial assets – other financial assets

At each reporting date the Group assesses credit risk by considering reasonable and supportable

information that may indicate increases in credit risk. Indicators that an asset carries a higher

credit risk compared to that at inception or that an asset is credit-impaired would include

observable data in relation to the financial health of the debtor: significant financial difficulty of

the issuer or the debtor; the debtor breaching contract; it being probable that the debtor will enter

bankruptcy or financial reorganisation.

The amount of credit risk provision is the difference between the original carrying amount and the

recoverable amount, being the present value of expected cash flows receivable (discounted using

the original effective interest rate). The amount of the provision is recognised in the income

statement within administrative expenses.

Financial assets are written off when there is evidence indicating that the debtor is in severe

financial difficulty and the Group has no realistic prospect of recovery. Receivables written off

are still subject to enforcement activity and pursued by the Group.

p) Income tax

Income tax for the year comprises current and deferred tax. Income tax is recognised in the

income statement except to the extent that it relates to items charged or credited directly to equity,

in which case it is recognised in equity. Current tax expense is the expected tax payable on the

taxable income for the year and any adjustment to tax payable in respect of previous years.

q) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) because

of a past event, it is probable that an outflow of resources will be required to settle the obligation

and a reliable estimate can be made of the amount. If the effect of the time value of money is

material, provisions are determined by discounting the expected future cash flows at a pre-tax

rate that reflects current market assessments of the time value of money and, where appropriate,

the risks specific to the liability. Where discounting is used, the increase in the provision due to the

passage of time is recognised as a finance cost.

r) Employee benefits

The Group operates defined benefit post-retirement benefit schemes and defined contribution

pension schemes.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed

contributions into a separate entity and will have no legal or constructive obligation to pay further

amounts. Obligations for contributions to defined contribution pension plans are recognised in

the income statement in the periods during which services are rendered by employees.

Defined benefit plans

The liability recognised in the balance sheet for defined benefit schemes is the present value of

the schemes’ liabilities less the fair value of the schemes’ assets. The operating and financing

costs of defined benefit schemes are recognised separately in the income statement. Operating

costs comprise the current service cost, any gains or losses on settlement or curtailments, and

past service costs. Net interest income and expense on net defined benefit assets and liabilities

is determined by applying discount rates used to measure defined benefit obligations at the

beginning of the year to net defined benefit assets and liabilities at the beginning of the year and

is included in finance income and costs. Remeasurements arising from defined benefit plans

comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect

of the asset ceiling (if any, excluding interest).

2 Summary of material accounting policies continued

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The Group recognises remeasurements immediately in other comprehensive income and all other

expenses related to defined benefit plans in employee benefit expenses in profit or loss. Surpluses

are recognised where, on wind-up, the Group has unconditional right to any surplus and Trustees

do not have unilateral power to alter members’ benefits.

Termination benefits

Termination benefits are recognised as an expense when the Group is committed demonstrably,

without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment

before the normal retirement date, or to provide termination benefits as a result of an offer made to

encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised

as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer

will be accepted, and the number of acceptances can be estimated reliably.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are

expensed as the related service is provided. A liability is recognised for the amount expected to

be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or

constructive obligation to pay this amount as a result of past service provided by the employee,

and the obligation can be estimated reliably.

Share-based payments

Certain employees of the Group receive part of their remuneration in the form of share-based

payment transactions, whereby employees render services in exchange for shares or rights over

shares (equity-settled transactions). The cost of equity-settled transactions with employees is

measured at fair value at the date at which they are granted. The fair value of share awards with

market-related vesting conditions is determined by an external consultant and the fair value at

the grant date is expensed on a straight-line basis over the vesting period based on the Group’s

estimate of shares that will eventually vest. The estimate of the number of awards likely to vest is

reviewed at each balance sheet date up to the vesting date at which point the estimate is adjusted

to reflect the actual outcome of awards which have vested. No adjustment is made to the fair

value after the vesting date even if the awards are forfeited or not exercised.

s) Own shares

Own equity instruments which are re-acquired (own shares) are recognised at cost and deducted

from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue

or cancellation of the Group’s own equity instruments. Any difference between the carrying

amount and the consideration paid to acquire such equity instruments is recognised within

retained earnings.

t) Foreign currency translation

The functional currency for each entity in the Group is determined with reference to the currency

of the primary economic environment in which it operates. Transactions in currencies other than

the functional currency are initially recorded at the functional currency rate ruling at the date of the

transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at

the rate of exchange ruling at the balance sheet date. Exchange gains and losses on settlement of

foreign currency transactions translated at the rate prevailing at the date of the transactions, or the

translation of monetary assets and liabilities at period end exchange rates, are taken to the income

statement. Non monetary assets and liabilities denominated in foreign currencies that are stated

at historical cost are translated to the functional currency at the foreign exchange rate ruling at the

date of the transaction.

On consolidation, income statements of subsidiaries are translated into sterling at average rates of

exchange. Balance sheet items are translated into sterling at period end exchange rates. Exchange

differences on the retranslation are taken to equity. Exchange differences on foreign currency

borrowings financing those net investments (which are designated as net investment hedges)

and exchange differences on intercompany loans which will not be repaid in the foreseeable

future (which are treated as quasi equity) are also recorded within equity and are reported in the

statement of comprehensive income. All other exchange differences are charged or credited to

the income statement in the year in which they arise. On disposal of an overseas subsidiary any

cumulative exchange movements relating to that subsidiary held in the translation reserve are

transferred to the consolidated income statement.

u) Impairment of non-financial assets

Property, plant and equipment and intangible assets (excluding goodwill) carrying amounts are

reviewed at each reporting date to determine whether there is any indication of impairment. If any

such indication exists, the recoverable amount of the asset is estimated. Recoverable amount is

the higher of fair value less costs of disposal and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate.

Assets that do not generate largely independent cash flows are assessed based on the CGU to

which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less

than its carrying amount, an impairment loss is recognised in the income statement.

2 Summary of material accounting policies continued

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The Group is organised into three divisions, as shown below, according to the nature of the

products and services provided. Each of these divisions represents an operating segment or an

aggregation of operating segments in accordance with IFRS 8 ‘Operating Segments’. The chief

operating decision maker is the Chief Executive Officer. The operating segments are:

– Power and Connectivity – The Power and Connectivity division designs and manufactures

power application products and connectivity devices which enable the capture and wireless

transfer of data. We collaborate with our customers to develop innovative solutions to optimise

their electronic systems; Power and Connectivity is an aggregation of two operating segments

due to similarities in products and markets served;

– Global Manufacturing Solutions – The Global Manufacturing Solutions division provides

manufacturing services and engineering solutions for our product divisions and to customers

that often require a lower volume and higher mix of different products. We manufacture

complex integrated product assemblies for our customers and provide engineering services

including designing testing solutions and value-engineering; and

– Sensors and Specialist Components – The Sensors and Specialist Components division works

with customers to develop standard and customised solutions including sensors and power

management devices. Our solutions improve the precision, speed and reliability of critical

aspects of our customers’ applications.

The key performance measure of the operating segments is adjusted operating profit. Refer to the

section titled ‘Reconciliation of KPIs and non IFRS measure’ for the definition of adjusted profit.

Corporate costs – Resources and costs of the head office managed centrally but deployed in

support of the operating units are allocated to segments based on a combination of revenue and

operating profit. Resources and costs of the head office which are not related to the operating

activities of the trading units are not allocated to divisions and are separately disclosed, equivalent

to the segment disclosure information, so that reporting is consistent with the format that is used

for review by the chief operating decision maker. This gives greater transparency of the adjusted

operating profits for each segment.

Inter-segment pricing is determined on an arms length basis in a manner similar to transactions

with third parties.

The Group’s geographical segments are determined by the location of the Group’s non-current

assets and, for revenue, the location of external customers. Group financing (including finance

costs and finance income) and income taxes are managed on a Group basis and are not allocated

to operating segments. Goodwill is allocated to the individual cash generating units which may be

smaller than the segment of which they are part.

a) Income statement information

2023

£million

		Global	Sensors and	Total
	Power and	Manufacturing	Specialist	Operating
	Connectivity	Solutions	Components	Segments	Corporate	Total
Sales to external customers	169.7	299.2	145.0	613.9	–	613.9
Adjusted operating profit	14.3	27.6	19.0	60.9	(8.1)	52.8
Add back: adjustments made to operating profit (note 7)						(4 4.1)
Operating loss						8.7
Net finance costs						(9.8)
Loss before taxation						(1.1)

2022

£million

		Global	Sensors and	Total
	Power and	Manufacturing	Specialist	Operating
	Connectivity	Solutions	Components	Segments	Corporate	Total
Sales to external customers	154.2	323.0	139.8	617.0	–	617.0
Adjusted operating profit	7.9	25.2	21.8	54.9	( 7.8)	47.1
Add back: adjustments made to operating profit (note 7)						(50.5)
Operating profit						(3.4)
Net finance costs						(6.7)
Loss before taxation						(10.1)

b) Segment assets and liabilities

		Assets		Liabilities
£million	2023	2022	2023	2022
Power and Connectivity	186.7	231.0	37.5	48.1
Global Manufacturing Solutions	148.3	210.0	75.0	118.9
Sensors and Specialist Components	147.3	148.6	29.5	31.0
Segment assets and liabilities	482.3	589.6	142.0	198.0
Pensions	25.3	31.3	3.1	2.9
Unallocated	147.5	86.3	239.5	209.3
Total assets/liabilities	655.1	707.2	384.6	410.2

Unallocated assets of £147.5 million (2022: £86.3 million) comprise deferred tax asset of

£15.4 million (2022: £13.2 million), cash and cash equivalents of £74.1 million (2022: £65.0 million),

income tax receivable of £2.0 million (2022: £1.1 million), assets held for sale of £48.0 million

(2022: £nil) and assets associated with the central corporate function of £8.0 million (2022:

£7.0 million).

3 Segmental reporting

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Unallocated liabilities of £239.5 million (2022: £209.3 million) comprise borrowings (excluding

leases and overdrafts) of £181.9 million (2022: £176.6 million), overdrafts of £1.2 million (2022:

£3.7 million), deferred tax liability of £7.0 million (2022: £12.4 million), income tax payable of

£10.9 million (2022: £9.6 million), liabilities transferred to assets held for sale of £28.1 million

(2022: £nil) and liabilities associated with the central corporate function of £10.4 million (2022:

£7.0 million).

		Capital expenditure		Depreciation and amortisation
£million	2023	2022	2023	2022
Power and Connectivity	10.5	5.4	5.5	5.5
Global Manufacturing Solutions	8.2	2.4	4.4	4.6
Sensors and Specialist Components	5.8	6.5	6.6	6.0
Total	24.5	14.3	16.5	16.1

c) Geographic information

Revenue by destination

The Group operates on a global basis. Revenue from external customers by geographical

destination is shown below. Management monitors and reviews revenue by region rather than

by individual country given the significant number of countries where customers are based.

	£million 2023	2022 1
United Kingdom	144.7	130.0
Rest of Europe	95.7	104.3
North America	225.1	235.2
Asia	145.5	144.7
Rest of the World	2.9	2.8
	613.9	617.0

1 Revenue by destination in 2022 has been represented following a reclassification of end market for one customer.

Revenue from services is less than 1% of Group revenues. All other revenue is from the sale

of goods.

Non-current assets

The carrying amount of non-current assets, excluding deferred tax assets, derivatives

and pensions, analysed by the geographical area is shown below:

	£million 2023	2022
United Kingdom	80.3	103.6
Rest of Europe	0.1	0.2
North America	157.2	162.6
Central and South America	4.9	5.0
Asia	8.1	11.8
	250.6	283.2

d) Market information key customers

The Group operates in the following markets:

	£million 2023	2022
Healthcare	146.3	172.1
Aerospace and defence	123.5	95.3
Automation and electrification	221.4	237.0
Distribution	122.7	112.6
	613.9	617.0

1 Revenue by market in 2022 has been represented following a reclassification of end markets for several key customers.

The Group had no customers who contributed greater than 10% of revenues in 2023 (2022: one

customer who contributed 12% and whose revenues were recognised in the Global Manufacturing

Solutions segment).

3 Segmental reporting continued

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4 Held for sale

On 4 March 2024 the Group announced the agreement to sell three business operating units

within the GMS and Power and Connectivity segments to the Cicor Group for a cash consideration

of £20.8 million on a cash and debt free basis subject to normal working capital adjustments.

The divestment relates to business units in Hartlepool and Cardiff, UK and Dongguan, China which

provide electronics manufacturing services and certain connectivity products, principally to

industrial clients.

The criteria of a highly probable sale were met in December 2023 and the Directors were

committed to the disposal at the balance sheet date. Accordingly, the assets and related liabilities

of the disposal group are shown as being held for sale. The carrying value of assets held for sale

exceeded the fair value less costs to sell and accordingly a measurement loss of £32.5 million has

been recognised within adjusting items of which £22.6 million related to the IoT Solutions CGU and

£9.9 million related to the GMS CGU.

Of the £32.5 million remeasurement, the following assets were fully written down: other intangible

assets (£14.9 million), goodwill (£8.6 million), right of use assets (£4.5 million) and property plant

and equipment (£3.1 million). The remaining write down of £1.4 million was recorded

against inventories.

In the prior year an impairment of £17.7 million was recognised to reduce the carrying value

of the IoT Solutions CGU to the recoverable amount as at 31 December 2022 (see note 7).

The assets and liabilities of the disposal group as well as the allocated remeasurement has been

presented below as follows:

	£million Net
ASSETS
Derivative financial instruments	0.2
Inventories	29.5
Trade and other receivables	14.7
Cash and cash equivalents	3.6
Assets classified as held for sale	48.0
LIABILITIES
Lease liabilities	2.6
Derivative financial instruments	0.8
Trade and other payables	21.4
Income taxes payable	0.1
Provisions	1.9
Deferred tax liability	1.3
Liabilities directly associated with assets classified as held for sale	28.1
Held for sale net assets	19.9

The disposal group does not constitute a major line of business or geographical location and

therefore the results and cash flows continue to be treated as continuing operations as required

by IFRS 5.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

	£million 2023	2022
Interest income	0.1	0.1
Net interest income on pension schemes in surplus	1.5	2.2
Finance income	1.6	2.3
Interest expense	9.9	7.1
Interest on lease liabilities	0.8	0.8
Net interest expense on pension schemes in deficit	0.1	0.1
Amortisation of arrangement fees	0.6	1.0
Finance costs	11.4	9.0
Net finance costs	9.8	6.7

Within ‘Amortisation of arrangement fees’ is an expense of £nil (2022: £0.5 million) relating to the

acceleration of capitalised loan arrangement fees.

6 Loss for the year

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

	£million 2023	2022
Depreciation of property, plant and equipment	10.0	9.6
Depreciation of right-of-use assets	4.0	4.3
Amortisation of intangible assets	7.2	8.2
Impairment of goodwill (excluded from adjusted operating profit, note 14)	–	17.7
Impairment of other assets (excluded from adjusted operating profit)	–	5.4
Measurement loss of assets classified as held for sale excluded from operating profit (see note4)	32.5	–
Net foreign exchange losses recognised within operating profit	2.2	1.1
Cost of inventories recognised as an expense	466.9	481.5
Research and development	11.0	10.1
Staff costs (see note 11)	180.6	164.5
Restructuring costs (excluded from adjusted operating profit)	2.0	6.4
Pension restructuring costs (excluded from adjusted operating profit)	1.9	13.8
Acquisition and disposal related costs (excluded from adjusted operating profit)	3.1	1.2
Remuneration of Group Auditor:
– audit of these financial statements	1.0	0.8
– audit of financial statements of subsidiaries of the Company	1.0	0.8
– assurance and other services	0.1	0.1
Government grants	(0.2)	(0.1)
Share-based payments	3.1	4.8

1 Included within amortisation of intangible assets is £4.6 million (2022: £6.0 million) reported within items excluded from adjusted

operating profit. The remaining charge is within administrative expenses.

2 Included within impairment of other assets of £5.4 million in 2022 is £2.8 million in respect of inventories, £1.5 million in respect

of property, plant and equipment, £0.8 million in respect of receivables and £0.3 million in respect of capitalised product

development costs.

3 Assurance and other services of £0.1 million relate to the half year review (2022: £0.1 million relating to the half year review) .

5 Finance costs and finance income

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

7 Adjusting items

As described in note 1c, adjusted profit measures are an alternative performance measure used

by the Board to monitor the operating performance of the Group.

		2023		2022
	Operating		Operating
£million	profit	Tax	profit	Tax
As reported	8.7	(5.7)	(3.4)	(3.1)
Restructuring costs
Restructuring costs	(2.0)	0.7	(6.4)	1.2
	(2.0)	0.7	(6.4)	1.2
Pension restructuring costs
Pension restructuring costs	(1.9)	0.7	(2.0)	0.4
Pension enhanced transfer value exercise	–	–	(11.8)	2.2
	(1.9)	0.7	(13.8)	2.6
Asset impairments and measurement losses
Goodwill impairment	–	–	(17.7 )	–
Asset impairments	–	–	(5.4)	1.0
Measurement loss on assets classified as held for sale	(32.5)	–	–	–
	(32.5)	–	(23.1)	1.0
Amortisation of intangible assets arising
on business combinations
Amortisation of intangible assets arising
on business combinations	(4.6)	1.6	(6.0)	0.3
	(4.6)	1.6	(6.0)	0.3
Acquisition and disposal related costs
Torotel integration costs	(0.4)	0.1	(0.1)	–
Ferranti Power and Control acquisition and integration costs	(1.3)	0.2	(1.1)	0.2
Disposal costs	(1.2)	0.2	–	–
Other	(0.2)	–	–	–
	(3.1)	0.5	(1.2)	0.2
Total items excluded from adjusted measure	(4 4.1)	3.5	(50.5)	5.3
Adjusted measure	52.8	(9.2)	47.1	(8.4)

Restructuring costs £2.0 million (2022: £6.4 million)

Restructuring costs charged in the period primarily relate to costs associated with the relocation

of production facilities from our USA site in Covina to Kansas (£1.9 million), representing the last

stage of the self-help programme which started in 2020.

Prior year’s restructuring costs of £6.4 million comprise £2.7 million relating to the restructure

of the North America Resistors business, which includes pre-production costs at our new Plano

facility; £2.0 million relating to closure of our site in Lutterworth, UK, £1.5 million relating to the

relocation of production facilities from Covina, USA to Kansas, USA and £0.2 million relating to

the relocation of production facilities from Medina, USA to Minneapolis, USA.

Pension restructuring costs £1.9 million (2022: £13.8 million)

Pension restructuring costs of £1.9 million (2022: £2.0 million relating to costs associated with the

enhanced transfer value exercise) relate to costs associated with scheme buy-outs. Prior period’s

pension enhanced transfer value exercise of £11.8 million represents the settlement cost of a

liability management exercise undertaken ahead of the buy-in completed in 2022.

Amortisation of intangible assets arising on business combinations £4.6 million (2022: £6.0 million)

Amortisation of intangible assets arising on business combinations £4.6 million (2022:

£6.0 million) relate to amortisation of the fair value of acquired order books, acquired customer

relationships and other intangible assets acquired on business combinations.

Asset impairments and measurement losses £32.5 million (2022: £23.1 million)

Measurement loss on assets classified as held for sale of £32.5 million relate to the writing down of

assets held for sale in our IoT Solutions and GMS CGUs, further information is disclosed in note 4.

Prior year asset impairments of £23.1 million comprise £17.7 million to reduce the carrying value of

the IoT Solutions CGU to the recoverable amount and £5.4 million associated with Virolens related

assets both of which were as a result of revised forecasts in the context of a weaker macro-

economic environment and the impact of the evolution of the COVID pandemic on the potential

demand for COVID testing.

Acquisition and disposal related costs £3.1 million (2022: £1.2 million)

Acquisition and disposal related costs charged in the year comprise £1.2 million (2022: £nil)

relating to costs incurred in preparing held for sale assets and liabilities for sale; £1.3 million (2022:

£0.3 million acquisition and £0.8 million integration) of integration costs relating to the acquisition

of the Power and Control business of Ferranti Technologies Ltd based in Oldham, UK and

£0.4 million (2022: £0.1 million) of integration costs of Torotel, Inc.; and £0.2 million relating to

other costs.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

8 Taxation

a) Analysis of the tax charge for the year

	£million 2023	2022
Current tax
Current income tax charge	11.1	9.1
Adjustments in respect of current income tax of previous year	1.9	(0.5)
Total current tax charge	13.0	8.6
Deferred tax
Relating to origination and reversal of temporary differences	(2.9)	(3.4)
Change in tax rate	–	(1.2)
Adjustments in respect of deferred tax of previous years	(4.4)	(0.9)
Total deferred tax credit	(7.3)	(5.5)
Total tax charge in the income statement	5.7	3.1

The enacted UK tax rate applicable from 1 April 2017 to 31 March 2023 was 19%. From 1 April

2023 the UK tax rate increased to 25%. The applicable tax rate for the period is based on the UK

standard rate of corporation tax of 23.5% (2022: 19%). Overseas taxation is calculated at the rates

prevailing in the respective jurisdictions. The Group’s effective tax rate for the year was -518%

(the adjusted tax rate was 21.4%, see section ‘Reconciliation of KPIs and non IFRS measures’).

Included within the total tax charge above is a £3.5 million credit relating to items reported outside

adjusted profit (2022: £5.3 million credit).

b) Reconciliation of the total tax charge for the year

	£million 2023	2022
Loss before tax from continuing operations	(1.1)	(10.1)
Loss before tax multiplied by the standard rate of corporation tax in the UK of 23.5% (2022: 19%)	(0.2)	(1.9)
Effects of:
Impact on deferred tax arising from changes in tax rates	0.1	(1.2)
Overseas tax rate differences	(0.5)	0.8
Items not deductible for tax purposes or income not taxable	9.6	8.8
Adjustment to current tax in respect of prior periods	0.1	(0.5)
Current year tax losses and other items not recognised	(0.8)	(2.0)
Adjustments in respect of deferred tax of previous years	(2.6)	(0.9)
Total tax charge reported in the income statement	5.7	3.1

The overall aim of the Group’s tax strategy is to support business operations by ensuring a

sustainable tax rate, mitigating tax risks in a timely and cost-efficient way and complying with

tax legislation in the jurisdictions in which the Group operates. It is however inevitable that the

Group will be subject to routine tax audits or is in ongoing disputes with tax authorities in the

multiple jurisdictions it operates within. This is much more likely to arise in situations involving

more than one tax jurisdiction. Differences in interpretation of legislation, of global standards

(e.g. OECD guidance) and of commercial transactions undertaken by the Group between different

tax authorities are one of the main causes of tax exposures and tax risks for the Group.

In order to manage the risk to the Group an assessment is made of such tax exposures

and provisions are created using the best estimate of the most likely amount to be incurred

within a range of possible outcomes. The resolution of the Group’s tax exposures can take

a considerable period of time to conclude and, in some circumstances, it can be difficult to

predict the final outcome.

The current tax liability at 31 December 2023 includes tax provisions of £9.3 million (2022:

£8.4 million). The Group believes the range of reasonable possible outcomes in respect of these

exposures is tax liabilities of up to £12.3 million (2022: £11.1 million).

c) Deferred tax

The Group completed a five year forward looking strategic plan covering the periods from 2024

to 2028 in which it was forecast that all divisions would show increasing profitability. Therefore,

a deferred tax asset is recognised on the basis that it is considered probable that net taxable

profits will be recognised in the future.

On 22 November 2023, the Government announced that the authorised pension surplus

payments charge would be reduced from 35% to 25% from 6 April 2024. This has not been legally

enacted as at the date of issue of these financial statements and therefore the deferred tax liability

in respect of the retirement benefit obligations has not currently been calculated using the updated

rate. The deferred tax liability has been recognised at 35% (2022: 35%) but we expect this to reduce

should the legislation be enacted as expected, which will result in a reduction in the deferred tax

liability in respect of the defined benefit pension scheme surplus of £2.5 million (based on the

surplus at 31 December 2023).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

The amounts of deferred taxation assets/(liabilities) provided in the financial statements are

as follows:

£million

				Transferred
				to assets
				and liabilities		As at
	As at 1 Jan	Continuing	Recognised in	classified as	Net exchange	31 December
	2023	operations	equity/OCI	held for sale	translation	2023
Intangible assets	(12.4)	1.2	–	2.7	–	(8.5)
Property, plant and equipment	0.8	(1.2)	–	(1.0)	–	(1.4)
Deferred development costs	(0.5)	0.2	–	–	–	(0.3)
Retirement benefit obligations	(10.4)	2.1	(0.1)	–	–	(8.4)
Inventories	0.9	(0.2)	–	–	0.1	0.8
Tax losses	10.7	2.6	–	–	(0.2)	13.1
Unremitted overseas earnings	(1.8)	1.0	–	–	–	(0.8)
Share-based payments	0.7	–	(0.1)	–	0.1	0.7
Cash flow hedges	0.1	–	(0.7)	–	–	(0.6)
Short-term temporary differences	12.7	1.6	–	(0.4)	(0.1)	13.8
Net deferred tax asset/(liability)	0.8	7.3	(0.9)	1.3	(0.1)	8.4
Deferred tax assets	13.2					15.4
Deferred tax liabilities	(12.4)					( 7.0)
Net deferred tax asset/(liability)	0.8					8.4

£million

						As at
	As at 1 Jan	Continuing	Recognised on	Recognised in	Net exchange	31 December
	2022	operations	acquisition	equity/OCI	translation	2022
Intangible assets	(11.4)	0.9	(1.2)	–	(0.7)	(12.4)
Property, plant and equipment	1.5	(0.6)	–	–	(0.1)	0.8
Deferred development costs	(0.5)	0.2	–	–	(0.2)	(0.5)
Retirement benefit obligations	(18.9)	1.8	–	6.5	0.2	(10.4)
Inventories	1.1	(0.5)	–	–	0.3	0.9
Tax losses	9.3	0.9	–	–	0.5	10.7
Unremitted overseas earnings	(2.3)	0.5	–	–	–	(1.8)
Share-based payments	1.9	(0.2)	–	(1.0)	–	0.7
Cash flow hedges	0.5	–	–	(0.4)	–	0.1
Short-term temporary differences	9.9	2.5	–	(1.6)	1.9	12.7
Net deferred tax asset/(liability)	(8.9)	5.5	(1.2)	3.5	1.9	0.8
Deferred tax assets	11.3					13.2
Deferred tax liabilities	(20.2)					(12.4)
Net deferred tax asset/(liability)	(8.9)					0.8

Deferred tax	Description
Intangible assets	Deferred tax relating to intangible assets created on acquisitions by the Group. This
	excludes any internally generated intangibles relating to product development costs.
Property, plant and equipment	Deferred tax relating to temporary differences in the value of property, plant and
	equipment between Group accounting and local accounting and/or tax returns.
Deferred development costs	Deferred tax relating to deferred development costs.
Retirement benefit obligations	Deferred tax relating to retirement benefit obligations.
Inventories	Deferred tax relating to temporary differences between the local book value and Group
	consolidated value of inventory.
Tax losses	Deferred tax relating to recognised tax losses carried forwards for offset against future
	profits of the Group. Included within tax losses as at 31 December 2023 is an asset of
	£6.6 million (2022: £2.2 million) in respect of capitalised US R&D expenses.
Unremitted overseas earnings	Deferred tax relating to the repatriation of subsidiary profits to the Group's ultimate
	holding company.
Share based payments	Deferred tax relating to share based payment.
Cash flow hedges	Deferred tax relating to derivatives designated as cash flow hedges.
Short term temporary differences	Deferred tax relating to temporary differences between Group accounts and local
	accounts or tax return arising where a tax deduction is received on payment of an
	amount either between Group companies or to external unconnected third parties
	rather than on an accounting basis. This includes product development costs.

At 31 December 2023, the gross amount and expiry date of losses not recognised for deferred tax

purposes but available for carry forward are as follows:

£million

	Expiring	Expiring
	within	within
	5 years	6–10 years	Unlimited	Total
Losses for which no deferred tax asset has been recognised	0.6	–	71.2	71.8

Deferred tax is not recognised on these losses because profit projections do not support

the utilisation of these losses.

Tax losses of £58.2 million are subject to substantial limitations in the type of profits they

can be offset against and no such capital disposals are currently anticipated.

8 Taxation continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

At 31 December 2022, the gross amount and expiry date of losses available for carry forward were

as follows:

£million

	Expiring	Expiring
	within	within
	5 years	6–10 years	Unlimited	Total
Losses for which no deferred tax asset has been recognised	0.6	–	71.6	72.2

At 31 December 2023, the Group had no other items for which no deferred tax assets have been

recognised (2022: £nil).

9 Dividends

	2023		2022
	pence	2023	pence	2022
	per share	£million	per share	£million
Final dividend paid for prior year	4.30	7.5	3.80	6.7
Interim dividend declared for current year	2 .15	3.8	2.00	3.5

The Directors recommend a final dividend of 4.65 pence per share. The Group has a progressive

dividend policy. The final dividend will be paid on 15 May 2024 to shareholders on the register

on 12 April 2024.

10 Earnings per share

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners

of the Company by the weighted average number of shares in issue during the year.

	Pence 2023	2022
Loss per share
Basic	(3.9)	( 7.5)
Diluted	(3.9)	( 7.5)

As the Group made a statutory loss in 2023 and 2022, diluted statutory EPS for 2023 and 2022

has been calculated using the basic weighted average number of shares because using weighted

average diluted shares would be anti-dilutive.

The numbers used in calculating adjusted, basic and diluted earnings per share are shown below.

Adjusted earnings per share is based on the adjusted profit after interest and tax.

Adjusted earnings per share:

	£million (unless otherwise stated) 2023	2022
Loss for the year attributable to owners of the Company	(6.8)	(13.2)
Restructuring costs	2.0	6.4
Pension restructuring costs	1.9	13.8
Asset impairments and measurement losses	32.5	23.1
Amortisation of intangible assets arising on business combinations	4.6	6.0
Acquisition and disposal related costs	3.1	1.2
Tax effect of above items (see note 7)	(3.5)	(5.3)
Adjusted earnings	33.8	32.0
Adjusted earnings per share (pence)	19.2	18.2
Adjusted diluted earnings per share (pence)	19.0	18.0

The weighted average number of shares in issue is as follows (new shares issued in the year

described in note 23):

	million 2023	2022
Basic	175.6	175.8
Adjustment for share awards	2.6	2.0
Diluted	178.2	17 7.8

11 Employee information

The average number of full time equivalent employees (including Directors) during the year from

continuing operations was:

	Number 2023	2022
By function
Production	4,357	4,352
Sales and distribution	311	296
Administration	328	324
	4,996	4,972
By division
Power and Connectivity	1,645	1,650
Global Manufacturing Solutions	1,605	1,567
Sensors and Specialist Components	1,746	1,755
Total	4,996	4,972

8 Taxation continued

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Aggregate emoluments, including those of Directors, for the year were:

	£million 2023	2022
Wages and salaries	135.6	124.8
Social security charges	36.8	30.5
Employers’ pension costs	3.5	3.2
Defined benefit pension costs	1.6	1.2
Share based payments expense	3.1	4.8
	180.6	164.5

Remuneration in respect of the Directors was as follows:

	£million 2023	2022
Emoluments	2.4	2.1

The remuneration of key management during the year was as follows:

	£million 2023	2022
Short-term benefits	3.5	3.5
Pension and other post-employment benefit expense	–	0.2
Share based payments	1.2	2.2
	4.7	5.9

The Schedule 5 requirements of the Accounting Regulations for directors’ remuneration

are included within the Directors’ remuneration report on pages 102 to 111.

12 Right-of-use assets

£million

	Land and		Right-of-use
	buildings	Other	assets
Cost
At 1 January 2022	41.5	2.0	43.5
Additions	2.3	–	2.3
Disposals	(0.5)	(0.1)	(0.6)
Business acquired	0.2	–	0.2
Net exchange adjustment	2.7	(0.4)	2.3
At 1 January 2023	46.2	1.5	47.7
Additions	5.0	0.6	5.6
Disposals	(6.1)	(0.4)	(6.5)
Transferred to assets held for sale	(5.4)	–	(5.4)
Net exchange adjustment	(1.5)	–	(1.5)
At 31 December 2023	38.2	1.7	39.9
Depreciation
At 1 January 2022	22.6	1.3	23.9
Depreciation charge	4.0	0.3	4.3
Impairment reversal	(0.2)	–	(0.2)
Disposals	(0.5)	(0.1)	(0.6)
Net exchange adjustment	0.9	(0.2)	0.7
At 1 January 2023	26.8	1.3	28.1
Depreciation charge	3.7	0.3	4.0
Disposals	(6.1)	(0.4)	(6.5)
Transferred to assets held for sale	(0.9)	–	(0.9)
Net exchange adjustment	(0.6)	–	(0.6)
At 31 December 2023	22.9	1.2	24.1
Net book value
At 31 December 2023	15.3	0.5	15.8
At 31 December 2022	19.4	0.2	19.6

£4.5 million of right of use assets were transferred to assets classified as held for sale (see note 4).

Additions during the year relate to a new lease agreement in Cardiff, UK (£4.4 million) and other

locations throughout the Group (£1.2 million).

The Group only leases land and buildings for use in trading activities. Lease liabilities are disclosed

in note 20. Contractual cashflows for these leases are disclosed in note 21e.

11 Employee information continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

13 Property, plant and equipment

£million

	Land and	Plant and
	buildings	equipment	Total
Cost
At 1 January 2022	24.2	171.8	196.0
Additions	1.8	9.6	11.4
Disposals	(0.3)	(21.5)	(21.8)
Business acquired	–	0.4	0.4
Net exchange adjustment	1.9	11.5	13.4
At 1 January 2023	27.6	171.8	199.4
Additions	1.0	21.3	22.3
Disposals	(0.4)	(9.9)	(10.3)
Transferred to assets held for sale	(1.9)	(20.4)	(22.3)
Reclassification	0.7	(0.7)	–
Net exchange adjustment	(1.1)	( 7.1)	(8.2)
At 31 December 2023	25.9	155.0	180.9
Depreciation and impairment
At 1 January 2022	6.3	139.3	145.6
Depreciation charge	1.2	8.4	9.6
Impairment	–	1.5	1.5
Disposals	(0.5)	(21.5)	(22.0)
Net exchange adjustment	0.3	9.6	9.9
At 1 January 2023	7.3	137.3	144.6
Depreciation charge	1.6	8.4	10.0
Disposals	(0.4)	(9.9)	(10.3)
Transferred to assets held for sale	(1.2)	(18.0)	(19.2)
Net exchange adjustment	(0.2)	(5.3)	(5.5)
At 31 December 2023	7.1	112.5	119.6
Net book value
At 31 December 2023	18.8	42.5	61.3
At 31 December 2022	20.3	34.5	54.8

£3.1 million of property, plant and equipment was transferred to assets classified as held for sale

(see note 4).

Included within land and buildings is one investment property with a carrying value of £nil

(2022: £nil) and a fair value of £0.7 million (2022: £0.7 million). Rental income of £0.2 million

(2022: £0.2 million) was recognised within other income in relation to this property.

14 Goodwill

£million

Cost
At 1 January 2022	156.5
Additions	5.0
Net exchange adjustment	11.3
At 31 December 2022	172.8
Transferred to held for sale	(26.3)
Net exchange adjustment	(5.7)
At 31 December 2023	140.8
Impairment
At 1 January 2022	–
Impairment	17.7
At 31 December 2022	17.7
Transferred to held for sale	(17.7)
At 31 December 2023	–
Net book value
At 31 December 2023	140.8
At 31 December 2022	155.1

£8.6 million of goodwill was transferred to assets classified as held for sale (see note 4).

The £5.0 million addition in goodwill in 2022 arose upon the acquisition of Power and Control

business of Ferranti Technologies Ltd and is considered part of the Power Solutions CGU. In the

year ended 31 December 2023 £8.6 million of goodwill (net of £17.7 million impairment) was

transferred to assets held for sale (see note 4). The amount transferred comprised £6.4 million

(net of £17.7 million impairment) relating to the IoT Solutions CGU and £2.2 million related to the

Global Manufacturing Solutions CGU.

The goodwill generated as a result of acquisitions represents the premium paid in excess of the fair

value of all net assets, including intangible assets, identified at the point of acquisition. The future

improvements applied to the acquired businesses, achieved through a combination of revised

strategic direction, operational improvements and investment are expected to result in improved

profitability of the acquired businesses during the period of ownership. The combined value

achieved from these improvements is expected to be in excess of the value of goodwill acquired.

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Goodwill, excluding amounts transferred to assets held for sale, is attributed to the following

CGUs in the divisions shown below:

	£million 2023	2022
Power and Connectivity:
Power Solutions	63.7	65.6
IoT Solutions	3.5	9.9
Global Manufacturing Solutions:
Global Manufacturing Solutions	16.7	19.5
Sensors and Specialist Components:
Resistors	32.3	34.2
Sensors	24.6	25.9
	140.8	155.1

Impairment Testing

The Group tests goodwill impairment annually or more frequently if there are indications that

goodwill might be impaired the recoverable amounts of the CGUs are determined from value in use

calculations. The key assumptions for the value in use calculations are those regarding the discount

rates, growth rates and operating cash flow projections over a forecast period. The growth rate

assumed after this forecast period is based on long-term GDP projections capped at long term

growth rates (which are approximated as long-term inflation rates) of the primary market for the

CGU, in perpetuity. Long-term growth rates are based on long-term forecasts for growth in the

geography in which the group of CGUs operates. Long-term growth rates are determined using

long-term growth rate forecasts that take into account the international presence and the markets

in which each business operates.

Management estimate discount rates using pre-tax rates that reflect current market assessments

of the Group’s time value of money and the risks specific to the CGU being measured.

In determining the cost of equity, the Capital Asset Pricing Model has been used. Accordingly the

cost of equity is determined by adding a risk premium, based on an industry adjustment, to the

expected return of the equity market above the risk-free return. The relative risk adjustment reflects

the risk inherent in each group of CGUs relative to all other sectors and geographies on average.

The cost of debt is determined using a risk-free rate based on the cost of government bonds,

and an interest rate premium equivalent to a corporate bond with a similar credit rating to

TT Electronics Plc.

The growth rates assume that demand for our products remains broadly in line with the underlying

economic environment in the long-term future. Taking into account our expectation of future

market conditions, we believe that the evolution of selling prices and cost measures put into place

will lead to a sustained improvement in profitability.

Management has detailed plans in place reflecting the latest budget and strategic growth plan.

The pre-tax discount rates and periods of management approved forecasts are shown below.

The discount rates used in the annual impairment test for the year ended 31 December 2023

are shown below:

			2023			2022
	Pre-tax	Long term	Period of	Pre-tax	Long term	Period of
	discount rate	growth rate	forecast (years)	discount rate	growth rate	forecast (years)
Power Solutions	13.8%	2.0%	5	13.4%	1.7%	5
IoT Solutions	14.1%	1.9%	5	14.3%	1.6%	5
Global Manufacturing Solutions	16.5%	3.1%	5	13.8%	1.9%	5
Resistors	13.8%	1.9%	5	13.5%	1.6%	5
Sensors	13.6%	2.0%	5	13.2%	1.7%	5

The date of the annual impairment test was 30 September 2023 to align with internal forecasting

and review processes. The impairment tests were performed as of September, with an additional

impairment test for IoT Solutions and GMS being tested as of December following the transfer of

part of the CGU to assets classified as held for sale. No impairment losses have been recognised

in the current year in respect of the other CGUs as recoverable amounts exceed carrying value

of assets in respect of those businesses. Sensitivity analysis has been provided in respect of

reasonably possible changes to key assumptions where applicable.

Key assumptions in the value in use test are the projected performance of the CGUs based on

sales growth rates, cash flow forecasts and discount rate. Forecast sales growth rates are based

on past experience adjusted for the strategic direction and near-term investment priorities within

each CGU. The key assumptions include externally obtained growth rates in the key markets

disclosed in note 3 and customer demand for product lines. Cash flow forecasts are determined

based on historic experience of operating margins, adjusted for the impact of changes in product

mix and cost-saving initiatives, including the impact of our restructuring projects and cash

conversion based on historical experience.

The recoverable amounts associated with the goodwill balances which are based on these

performance projections and current forecast information do not indicate that any goodwill

balance is impaired. If a company’s actual performance does not meet these projections this

could lead to an impairment of the goodwill in future periods.

14 Goodwill continued

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Sensitivity Analysis

Sensitivity analysis has been performed on the key assumptions; operating cash flow projections,

revenue growth rates and discount rate. Cash flows can be impacted by changes to sales prices,

direct costs and replacement capital expenditure; individually they are not significant assumptions.

The directors have not identified reasonably possible changes in significant assumptions that

would cause the recoverable amount to fall below the carrying value of recognised goodwill.

15 Other intangible assets

£million

	Product	Patents,
	development	licences	Customer
	costs	and other	relationships	Total
Cost
At 1 January 2022	18.6	35.9	63.6	118.1
Additions	2.3	0.6	–	2.9
Disposals	(0.1)	(0.3)	–	(0.4)
Business acquired	–	2.3	3.0	5.3
Net exchange adjustment	1.4	0.9	2.6	4.9
At 1 January 2023	22.2	39.4	69.2	130.8
Additions	1.6	0.6	–	2.2
Disposals	(0.3)	(0.2)	–	(0.5)
Transferred to assets held for sale	(7.4)	(1.2)	(17.7)	(26.3)
Net exchange adjustment	(0.9)	(0.2)	(1.4)	(2.5)
At 31 December 2023	15.2	38.4	50.1	103.7
Amortisation
At 1 January 2022	10.6	33.6	22.2	66.4
Charge for the year	1.2	2.8	4.2	8.2
Impairment	0.3	–	–	0.3
Disposals	(0.1)	(0.3)	–	(0.4)
Net exchange adjustment	1.1	0.9	0.6	2.6
At 1 January 2023	13.1	37.0	27.0	77.1
Charge for the year	1.8	1.5	3.9	7.2
Disposals	(0.3)	(0.2)	–	(0.5)
Transferred to assets held for sale	(3.7)	(1.0)	(6.7)	(11.4)
Net exchange adjustment	(0.6)	(0.4)	(0.4)	(1.4)
At 31 December 2023	10.3	36.9	23.8	71.0
Net book value
At 31 December 2023	4.9	1.5	26.3	32.7
At 31 December 2022	9.1	2.4	42.2	53.7

£14.9 million of intangible assets were transferred to assets classified as held for sale (see note 4).

Included within the amortisation charge for the year is £4.6 million (2022: £6.0 million) included

within items excluded from adjusted profit as the charge relates to intangibles acquired upon

acquisition of businesses.

14 Goodwill continued

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Customer relationships are intangible assets recognised upon acquisition which are amortised

over long periods of time and are summarised below. The amortisation charge is excluded from

adjusted operating profit as described in note 7. The composition of customer relationships and

the years remaining until they are fully amortised is shown below.

Customer relationships held on the balance sheet are summarised below.

£million

	Net book	Years
	value	remaining
Stadium Group	1.1	9.3
Aero Stanrew	7.8	7.0
Torotel	10.0	18.9
Precision Inc.	4.9	8.7
Ferranti Power and Control	2.5	11.0
At 31 December 2023	26.3

Following the transfer of activities from Covina, US to Kansas, US intangible assets relating to

Covina have been transferred to Torotel.

£million

	Net book	Years
	value	remaining
Stadium Group	13.4	10.3
Aero Stanrew	8.9	8.0
Torotel	7.9	19.9
Precision Inc.	5.8	9.7
Covina	3.5	11.2
Ferranti Power and Control	2.7	12.0
At 31 December 2022	42.2

16 Inventories

	£million 2023	2022
Raw materials	86.9	130.9
Work in progress	36.8	34.8
Finished goods	19.8	23.5
	143.5	189.2

£30.9 million of inventories were transferred to assets classified as held for sale (see note 4).

Inventories are stated after a provision for obsolescence of £17.8 million (2022: £25.8 million).

The directors do not consider there to be a material difference between net book value and

replacement cost for inventories.

17 Trade and other receivables

£million	2023	2022
Trade receivables	72.3	101.3
Prepayments	8.1	8.1
VAT and other taxes receivable	3.4	3.4
Accrued income	1.3	1.4
Contract assets	0.8	1.7
Other receivables	4.3	4.4
	90.2	120.3

£14.7 million of trade and other receivables were transferred to assets classified as held for sale

(see note 4).

Loss allowance for expected credit losses in respect of trade receivables and amounts owed

by non-controlling interests are shown in note 21d(ii) and note 21d(iii) respectively.

18 Trade and other payables

	£million 2023	2022
Current liabilities
Trade payables	68.5	97.0
Taxation and social security	2.7	4.1
Accruals	27.4	27.9
Deferred income	21.0	31.3
Goods received not invoiced	6.3	10.1
Other payables	2.0	2.8
	127.9	173.2

£21.4 million of trade and other payables were transferred to liabilities directly associated with

assets classified as held for sale (see note 4).

	£million 2023	2022
Non-current liabilities
Accruals	0.1	0.1

Deferred income primarily represents pre-funded inventory which is expected to be converted into

finished goods and sold within 12 months. All the brought forward balance carried over from 2022

was converted into finished goods and sold to the end customer within the year.

15 Other intangible assets continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

19 Provisions

			Legal,
			warranty
£million	Property	Reorganisation	and other	Total
At 1 January 2022	0.8	1.4	1.1	3.3
Utilised	–	(0.3)	(1.7)	(2.0)
Released	(0.1)	–	(0.2)	(0.3)
Transfer	–	(0.7)	0.5	(0.2)
Arising during the year	–	–	0.3	0.3
Businesses acquired	–	–	3.0	3.0
Exchange differences	–	–	0.1	0.1
At 1 January 2023	0.7	0.4	3.1	4.2
Utilised	–	(0.2)	(1.9)	(2.1)
Arising during the year	2.2	–	1.8	4.0
Transferred to held for sale	(1.9)	–	–	(1.9)
Exchange differences	–	–	(0.1)	(0.1)
At 31 December 2023	1.0	0.2	2.9	4.1

£1.9 million of provisions were transferred to liabilities directly associated with assets classified

as held for sale (see note 4).

	£million 2023	2022
Non-current	1.0	0.7
Current	3.1	3.5
	4.1	4.2

Property

Property provisions of £1.0 million (2022: £0.7 million) relate to dilapidation provisions. £2.2 million

of new provisions arose during the year of which £1.9 million was later classified as part of the held

for sale assets and liabilities.

Reorganisation

Reorganisation provisions relate to committed costs in respect of restructuring programmes,

as described in note 7, usually resulting in cash spend within one year.

£0.2 million (2022: £0.4 million) relate to the integration of the closed Covina, USA, facility into

the Torotel facility in Kansas, USA.

Legal, warranty and other

Legal, warranty and other claims represent the best estimate for the cost of settling outstanding

product and other claims, and warranty provisions created on the disposal of businesses.

£0.7 million (2022: £0.7 million) relate to local warranty provisions of which £0.7 million was

utilised, £0.8 million was charged to the income statement during the year and £0.1m was

recognised within translation reserve in equity.

£1.3 million (2022: £1.9 million) relate to onerous contracts acquired within the Ferranti Power and

Control business of which £0.9 million was utilised and £0.3 million was charged to the income

statement during the year.

£0.2 million (2022: £nil) relate to severance costs which arose as part of the Torotel Inc. acquisition

and were charged to the income statement in year. These costs were excluded from adjusted

operating profit.

£0.2 million (2022: £0.1 million) relate to integration activity payments made following the

acquisition of the Ferranti Power and Control business in 2022. £0.1 million was utilised in the year

with a further charge of £0.2 million relating to integration activity payments following the relocation

to a new purpose built site in Manchester in the year. These costs were excluded from adjusted

operating profit.

£0.5 million (2022: £0.4 million) relates to other provisions with £0.2 million utilised in the year

and a further £0.3 million charged to the income statement in the year.

The Group has, on occasion, been required to enforce commercial contracts and to defend

itself against proceedings brought by other parties. Provisions are made for the expected costs

associated with such matters, based on past experience of similar items and other known factors,

taking into account professional advice received, and represent management’s best estimate of

the likely outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting the

complexity of issues and the outcome of various court proceedings and negotiations. Contractual

and other provisions represent the Directors’ best estimate of the cost of settling future obligations

although there is a higher degree of judgement involved. Unless specific evidence exists to the

contrary, these provisions are shown as current.

No provision is made for proceedings which have been or might be brought by other parties against

Group companies unless management, taking into account professional advice received, assesses

that it is more likely than not that such proceedings may be successful. Contingent liabilities

associated with such proceedings have been identified, but the Directors are of the opinion that any

associated claims that might be brought can be resisted successfully, and therefore the possibility

of any material outflow in settlement in excess of amounts provided is assessed as remote.

The timing of the utilisation of these amounts is uncertain as they are subject to commercial

negotiation and legal process in different jurisdictions. Where possible the Group has purchased

insurance cover to protect itself from these exposures.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

20 Borrowings and lease obligations

		Currency of
	£million Maturity	denomination	Current	Non-current	Total
At 31 December 2023
£162.4 million multi-currency revolving credit facility	2027	GBP		68.0	68.0
	2027	USD		40.8	40.8
Unsecured loan note	2028	GBP		37.5	37.5
Unsecured loan note	2031	GBP		37.5	37.5
Overdrafts			1.2	–	1.2
Lease liabilities			3.8	14.4	18.2
Loan arrangement fee			–	(1.9)	(1.9)
Total			5.0	196.3	201.3
At 31 December 2022
£147.4 million multi-currency revolving credit facility	2026	GBP		72.0	72.0
	2026	USD		31.6	31.6
Unsecured loan note	2028	GBP		37.5	37.5
Unsecured loan note	2031	GBP		37.5	37.5
Overdrafts			3.7	–	3.7
Lease liabilities			4.4	18.7	23.1
Loan arrangement fee			–	(2.0)	(2.0)
Total			8.1	195.3	203.4

The Group’s primary source of finance is the £162.4 million committed revolving credit facility

(RCF), and an uncommitted accordion facility of £17.6 million, which was signed in June 2022.

The Group’s RCF is payable on a floating rate basis above GBP SONIA or USD depending on

the currency of the loan and will mature in June 2027. As at 31 December 2023, £108.8 million

(31 December 2022: £103.6 million) of the facility was drawn down. Arrangement fees with

amortised cost of £1.9 million (2022: £2.0 million) have been netted off against these borrowings.

The interest margin payable on the facility is based on the Group’s compliance with financial

covenants, net debt / adjusted EBITDA (bank covenant) and is payable on a floating basis above

GBP SONIA, or USD SOFR depending on the currency of denomination of the loan.

In December 2021 the Group issued £75.0 million of unsecured loan notes with £37.5 million

maturing in seven years and £37.5 million maturing in 10 years respectively to a collection of

three counterparties. The average interest rate on the loan notes is 2.9 per cent.

Undrawn facilities

At 31 December 2023, the total lease liabilities and borrowing facilities available to the Group net

of £1.9 million of loan arrangement fees (2022: £2.0 million) amounted to £282.4 million (2022:

£288.3 million). At 31 December 2023, the Group had available £56.9 million (2022: £47.4 million)

of undrawn committed borrowing facilities (comprising the main facility £53.6 million (2022:

£43.8 million) and China £3.3 million (2022: £3.6 million)) and £22.6 million (2022: £41.2 million) of

undrawn uncommitted borrowing facilities, representing overdraft lines and the accordion facility.

In February 2023 £15.0 million of accordion was converted from uncommitted into

committed facility.

21 Financial risk management

The main risks arising from the Group’s financial instruments are foreign exchange risk, interest

rate risk, credit risk and liquidity risk. These risks arise from exposures that occur in the normal

course of business and are managed by the Group’s Treasury department in close co-operation

with the Group’s business divisions and operating companies, under the oversight of a Treasury

Committee which is chaired by the Chief Financial Officer. The responsibilities of the Group’s

Treasury department include the monitoring of financial risks, management of cash resources,

debt and capital structure management, approval of counterparties and relevant transaction

limits, and oversight of all significant treasury activities undertaken by the Group. The Group

Treasury department operates as a service centre to the business divisions of the Group and

not as a profit centre.

A Group Treasury policy has been approved by the Board of Directors and is periodically updated

to reflect developments in the financial markets and the financial exposure facing the Group.

The Group’s principal financial instruments comprise borrowings, cash and cash equivalents

and derivatives used for risk management purposes. The Group’s borrowings, surplus liquidity

and derivative financial instruments are monitored and managed centrally by the Group’s

Treasury department.

The Group’s accounting policies with regard to financial instruments are detailed in note 2o.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

a) Derivatives, other financial instruments and risk management

The Group uses derivative financial instruments to manage certain exposures to fluctuations in

exchange rates and interest rates. The Group does not hold any speculative financial instruments.

The Group is exposed to transactional and translation foreign exchange risk. Transactional foreign

exchange risk arises from sales or purchases by a Group company in a currency other than that

company’s functional currency. Translational foreign exchange risk arises on the translation of

profits earned in overseas currencies into GBP and the translation of net assets denominated in

overseas currencies into GBP, the Group’s functional currency.

To mitigate transactional foreign exchange risk, wherever possible, Group companies enter into

transactions in their functional currencies with customers and suppliers. When this is not possible,

hedging strategies are undertaken through the use of forward currency contracts for up to two

years ahead. The forward currency contracts have been designated as cash flow hedges and the

effective portion of the mark to market valuation of these derivatives at 31 December 2023 is

taken to the hedging reserve within equity. Currency basis spread that is not designated is taken

to the income statement.

The Group has designated £40.8 million ($52.0 million) (2022: £31.6 million ($38.0 million)) of loans

in a net investment hedge of USD net assets. No ineffectiveness was recorded (2022: £nil) and a

gain of £1.8 million (2022: £3.4 million loss) was taken to the translation reserve. The amount

accumulated in this reserve in respect of gains/losses arising on hedging instruments designated

in net investment hedges up to 31 December 2023 was an accumulated loss of £1.9 million (2022:

accumulated loss of £3.7 million).

The Group’s interest rate management policy is to maintain a balance between fixed and floating

rates of interest on borrowings and deposits, and to use interest rate derivatives when appropriate

and pre-approved by the Treasury Committee. The interest rate hedging instruments are floating

to fixed rate interest rate swaps used to manage the Group’s interest cost.

At 31 December 2023, the Group had a net derivative financial asset of £3.9 million (2022:

£0.5 million net liability).

	Notional
	Amount	Average	Fair value
Foreign exchange (FX) hedges	(£m)	Hedged Rate	(£m)	Type of hedge
31 December 2023
USD:CNY	61.1	6.76	(1.9)	CFH – Forward rate
USD:MXN	44.9	20.29	4.9	CFH – Forward rate
USD:GBP	21.7	1.03	0.6	CFH – Forward rate
EUR:GBP	11.3	0.87	–	CFH – Forward rate
USD:MYR	10.1	4.53	–	CFH – Forward rate
CNY:GBP	7.2	0.12	0.2	CFH – Forward rate
CNY:EUR	4.6	0.13	0.1	CFH – Forward rate
GBP:USD	2.6	1.26	–	CFH – Forward rate
Total	163.5		3.9
31 December 2022
USD:CNY	74.2	6.65	(1.6)	CFH – Forward rate
USD:MXN	35.2	21.95	2.1	CFH – Forward rate
USD:GBP	31.5	1.07	(0.9)	CFH – Forward rate
GBP:USD	20.1	1.26	0.6	CFH – Forward rate
EUR:GBP	17.0	0.87	(0.5)	CFH – Forward rate
HKD:CNY	10.1	0.88	(0.1)	CFH – Forward rate
USD:MYR	9.7	4.32	(0.1)	CFH – Forward rate
CNY:GBP	6.8	8.57	(0.4)	CFH – Forward rate
CNY:EUR	4.2	7.50	(0.1)	CFH – Forward rate
GBP:EUR	1.9	1.15	–	CFH – Forward rate
GBP:SEK	1.3	12.02	(0.1)	CFH – Forward rate
Total	212.0		(1.1)

CFH is an abbreviation for cash flow hedge.

21 Financial risk management continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

The most common exchange rate risk is the transaction risk the Group takes when it invoices a

customer or purchases from suppliers in a different currency to the underlying functional currency

of the business. The Group policy is to review transactional foreign exchange exposures and place

contracts on a quarterly basis. To the extent the cash flows associated with a transactional foreign

exchange risk are committed the Group will hedge 100%. The notional values of the hedged

transactions are disclosed in the above table. The group’s policy is to hedge these transactions on

a 1:1 ratio. Foreign currency basis spread of the derivative item is not designated and is therefore

recognised in the income statement. The potential sources of ineffectiveness are timing of forecast

transaction and credit risk. There was no hedge ineffectiveness incurred during the period.

The closing value of the hedging reserve in relation to FX hedges on 31 December 2023 was an

accumulated gain of £3.2 million (2022: accumulated loss of £1.1 million). The transactions that

have been designated as the hedged item in a cash flow hedge relationship are still considered

highly probable forecasted transactions, during the year and at the year end 31 December 2023.

Hedges with a notional amount of £106.6 million (2022: £148.6 million) are due within 12 months

with the remainder maturing within 24 months.

Interest rate swaps

	Notional
	amount	Fair value	Type
	(£m)	(£m)	of hedge
31 December 2023
GBP	–	–	N/A
	–	–
31 December 2022
GBP	19.0	0.6	CFH – SONIA
	19.0	0.6

During the year, up until their maturity date of November 2023, the Group held interest rate swap

instruments to fix the cost of GBP SONIA on borrowings under the bank facility. Under the terms

of the swaps on the bank borrowings and excluding the bank margin, the Group paid a weighted

average fixed cost of approximately 1.5%.

The average cost of the debt for the Group is expected to be approximately 5.3% over the next

12 months. The interest rate swaps were designated as cash flow hedges and were highly

effective throughout 2023.

The fair value of the contracts as at 31 December 2023 and the prior year is disclosed in the

table above. For the year ending 31 December 2023 an accumulated gain of £0.6 million (2022:

accumulated loss of £0.1 million) was reclassified from the cash flow hedge reserve and included

in the income statement as part of finance costs.

A loss on the movement in fair value of the hedging instruments of £nil (2022: loss of £3.0 million)

was recognised within other comprehensive income.

The closing value of the hedging reserve in relation to interest rate swaps on 31 December 2023

was £nil (2022: credit of £0.6 million). Swaps with a notional value of £19.0 million matured in

November 2023.

No ineffectiveness was recognised through the income statement in 2023 (2022: £nil) or is

expected to be recognised in future periods.

b) Foreign exchange risk

Trade receivables are denominated in the currencies in which the Group trades. The Group’s policy

is that receivables and payables not in the functional currency of the subsidiary concerned are,

in the main, hedged through forward foreign currency exchange contracts.

The Group’s exposure to foreign currency before the impact of hedging is shown below:

	£million GBP	USD	Euro	Other	Total
31 December 2023
Trade and other receivables	–	17.6	2.4	0.1	20.1
Cash and cash equivalents	–	13.8	2.6	0.3	16.7
Borrowings	–	(40.8)	–	–	(40.8)
Lease liabilities	–	–	–	(1.0)	(1.0)
Trade and other payables	(0.5)	(14.2)	(1.5)	(0.9)	(17.2)
Net Derivative financial instruments	0.8	–	0.1	3.0	3.9
Total	0.3	(23.6)	3.6	1.5	(18.3)
31 December 2022
Trade and other receivables	–	23.8	1.9	0.6	26.3
Cash and cash equivalents	–	18.6	3.3	1.8	23.7
Borrowings	–	(32.7)	–	–	(32.7)
Lease liabilities	–	–	–	(1.6)	(1.6)
Trade and other payables	(0.7)	(23.0)	(1.3)	(2.8)	(27. 8)
Net Derivative financial instruments	(1.8)	1.2	(0.1)	(0.4)	(1.1)
Total	(2.5)	(12.1)	3.8	(2.4)	(13.2)

21 Financial risk management continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

A 10% strengthening of GBP against the following currencies at 31 December 2023 would have

reduced loss after tax by the amounts shown below. This analysis assumes that all other variables,

in particular interest rates, remain constant. A 10% weakening of GBP against the above currencies

at 31 December 2023 would have had an equal but opposite effect on the above currencies to the

amount shown above, on the basis that all other variables remain constant.

	£million 2023	2022
US dollar	1.7	1.8
Euro	0.4	0.4

A 10% strengthening of GBP against the following currencies at 31 December 2023 would have

decreased equity by the amounts shown below. This analysis assumes that all other variables,

in particular interest rates, remain constant. The Group finances operations by obtaining funding

through external borrowings and, where they are in foreign currencies, these borrowings may be

designated as net investment hedges. This enables gains and losses arising on retranslation of

these foreign currency borrowings to be charged to other comprehensive income, providing a

partial offset in equity against the gains and losses arising on translation of the net assets of

foreign operations. This has been considered in the analysis below.

	£million 2023	2022
US dollar	2.4	(3.0)
Euro	(0.4)	–

10% weakening of GBP against the above currencies at 31 December 2023 would have had an

equal but opposite effect on the above currencies to the amount shown above, on the basis that

all other variables remain constant.

c) Interest rate risk

The Group has financial assets and liabilities which are exposed to changes in market interest

rates. Changes in interest rates primarily impact borrowings by changing their future cash flows

(floating rate debt) or their fair value (fixed rate debt) and deposits. The Group’s objective is to

manage this interest rate exposure through the use of interest rate derivatives.

The exposure of the Group’s financial assets and liabilities to interest rate risk is as follows:

£million

	Floating	Fixed	Non-interest	2023
	rate	rate	bearing	total
Financial assets
Trade and other receivables	–	–	72.3	72.3
Cash and cash equivalents	14.7	–	59.4	74.1
Derivative financial instruments	–	–	6.0	6.0
Total financial assets	14.7	–	137.7	152.4
Financial liabilities
Borrowings (including overdrafts)	(110.0)	(75.0)	1.9	(183.1)
Lease liabilities	–	(18.2)	–	(18.2)
Trade and other payables	–	–	(102.3)	(102.3)
Derivative financial instruments	–	–	(2.1)	(2.1)
Total financial liabilities	(110.0)	(93.2)	(102.5)	(305.7)

£million

	Floating	Fixed	Non-interest	2022
	rate	rate	bearing	total
Financial assets
Trade and other receivables	–	–	101.3	101.3
Cash and cash equivalents	19.4	–	45.6	65.0
Derivative financial instruments	0.6	–	3.3	3.9
Total financial assets	20.0	–	150.2	170.2
Financial liabilities
Borrowings (including overdrafts)	(88.3)	(94.0)	2.0	(180.3)
Lease liabilities	–	(23.1)	–	(23.1)
Trade and other payables	–	–	(135.1)	(135.1)
Derivative financial instruments	–	–	(4.4)	(4.4)
Total financial liabilities	(88.3)	(117.1)	(137.5)	(342.9)

At 31 December 2023, 41% of borrowings was at a fixed rate when including the effect

of derivatives (2022: 52%).

The interest charged on floating rate financial liabilities is based on the relevant benchmark rate

(such as GBP SONIA and USD SOFR). Interest on financial instruments classified as fixed rate is

fixed until the maturity of the instrument.

Considering the net debt position of the Group at 31 December 2023, any increase in interest rates

would result in a net loss in the consolidated income statement, and any decrease in interest rates

would result in a net gain. The effect on loss after tax of a 1% movement in interest rate, based on

the year end floating rate borrowings, with all other variables held constant, is estimated to be

£0.7 million (2022: £0.6 million). The impact on equity would be materially the same.

21 Financial risk management continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

d) Credit risk

Exposure to credit risk arises as a result of transactions in the Group’s ordinary course of business

and is applicable to all financial assets. Investments in cash and cash equivalents and derivative

financial instruments are with approved counterparty banks and other financial institutions.

Counterparties are assessed prior to, during, and after the conclusion of transactions to ensure

exposure to credit risk is limited to an acceptable level. The maximum exposure with respect to

credit risk is represented by the carrying amount of each financial asset on the balance sheet.

The Group’s major exposure to credit risk is in respect of trade receivables. Given the number and

geographical spread of the Group’s ultimate customers and the solvency of major trade debtors,

credit risk is believed to be limited. The Group is not reliant on any particular customer in the

markets in which it operates and there is no significant concentration of credit risk. The Group

regularly monitors its exposure to bad debts in order to minimise this exposure.

The Group has strict procedures in place to manage the credit risk on trade receivables.

Customer credit risk is managed by each operating company within a division but is subject to

Group oversight to ensure that each division’s customer credit risk management system operates

in a prudent and responsible manner. Credit evaluations are performed for all customers and credit

limits are established based on internal or external rating criteria. The credit quality of the Group’s

significant customers is monitored on an ongoing basis. Letters of credit or payments in advance

are obtained where customer credit quality is not considered strong enough for open credit.

The Group operates the expected credit losses model when applying credit risk to receivables.

During the year there was a £0.3 million impairment of trade receivables as at 31 December 2023

(2022: £0.4 million) recognised within admin expenses. The solvency of the debtor and their ability

to repay the receivables were considered in assessing the impairment of such assets. The Group

performed an expected credit loss model at 31 December 2023 and a general provision of £nil

(2022: £nil) was required.

(i) Risk for trade receivables by geographical regions

The maximum exposure to credit risk for trade receivables at 31 December by geographic

areas was:

	£million 2023	2022
Europe (including UK)	22.6	40.2
North America	35.2	35.3
Asia	14.3	25.4
Rest of the World	0.2	0.4
	72.3	101.3

(ii) Impairment losses

The ageing of trade receivables at 31 December was:

		2023		2022
	£million Gross	Impairment	Gross	Impairment
Not past due	63.0	–	90.1	–
Past due 1 – 60 days	7.4	–	9.9	–
Past due 61 – 120 days	2.1	(0.2)	1.1	–
More than 120 days	0.4	(0.4)	2.3	(2.1)
	72.9	(0.6)	103.4	(2.1)

The movement in the provision for impairment in respect of trade receivables during the year

was as follows:

	£million 2023	2022
At 1 January	2.1	2.1
Charged to income statement	0.3	0.4
Utilised	(1.8)	(0.4)
At 31 December	0.6	2.1

(iii) Credit risk related to other financial assets and cash deposits

Credit risk relating to the Group’s other financial assets, principally comprising cash and cash

equivalents and derivative financial instruments arises from the potential default of counterparties.

Credit risk arising from balances with banks and financial institutions is monitored by the Group’s

Treasury department. The Group’s policy on investment of cash and deposits are to only hold cash

deposits with banks with a credit rating of investment grade and are reviewed on a regular basis to

take account of developments in financial markets. Currently the Group has 12 counterparties to

which it has credit risk exposure. The credit risk of the counterparties is between AA- and A- on the

S&P’s long term credit risk scale. The same process is undergone for counterparts with which the

Group enters into hedging agreements. As such credit risk on these financial assets (cash and

cash equivalents and derivatives) is calculated as £nil.

The expected credit risk model was applied to other receivables as described in note 2o where

the credit risk was deemed immaterial.

21 Financial risk management continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

The carrying amount of financial assets represents the maximum credit exposure. The maximum

exposure to credit risk at 31 December was:

	£million 2023	2022
Cash and cash equivalents	74.1	65.0
Derivative financial instruments	6.0	3.9

e) Liquidity risk

The Group maintains a balance between availability of funding and maximising investment return

on cash balances through the use of short-term cash deposits, credit facilities and longer-term

debt instruments. Management regularly reviews the funding requirements of the Group.

The Group’s policy is to centrally manage debt and surplus cash balances.

At 31 December 2023, the Group had £56.9 million of undrawn committed borrowing facilities

(2022: £47.4 million) and £22.6 million (2022: £41.2 million) of undrawn uncommitted borrowing

facilities.

Contractual cashflows of financial liabilities

The following are the contractual maturities of financial liabilities including contractual future

interest payments and commitment fees:

£million

	Carrying	Contractual	On	Under 3	3 to 12	1 to 2	2 to 3	3 to 4	4 to 5	Over 5
	value	Cash Flows	demand	months	months	years	years	years	years	years
31 December 2023
Borrowings (excl overdrafts)	181.9	219.9	–	1.6	6.8	8.4	8.4	114.1	39.7	40.9
Overdrafts	1.2	1.2	1.2	–	–	–	–	–	–	–
Lease liabilities	18.2	21.9	–	1.1	3.4	3.9	3.9	1.8	1.3	6.5
Trade and other payables	102.3	102.3	–	100.4	1.9	–	–	–	–	–
Derivatives settled gross	2.1	82.5	–	10.3	41.8	30.4	–	–	–	–
	305.7	427.8	1.2	113.4	53.9	42.7	12.3	115.9	41.0	47.4
31 December 2022
Borrowings (excl overdrafts)	176.6	208.9	–	1.0	5.5	6.0	6.0	107.7	2.2	80.5
Overdrafts	3.7	3.7	3.7	–	–	–	–	–	–	–
Lease liabilities	23.1	26.8	–	1.2	3.8	4.8	3.7	3.2	2.1	8.0
Trade and other payables	135.1	135.1	–	131.8	3.3	–	–	–	–	–
Derivatives settled gross	4.4	148.3	–	28.4	75.8	4 4.1	–	–	–	–
Interest rate swaps	(0.6)	–	–	–	–	–	–	–	–	–
	342.3	522.8	3.7	162.4	88.4	54.9	9.7	110.9	4.3	88.5

f) Fair value of financial assets and liabilities

IFRS 13 “Fair Value Measurement” requires an analysis of those financial instruments that are

measured at fair value at the end of the year in a fair value hierarchy. In addition, IFRS 13 requires

financial instruments not measured at fair value but for which fair value is disclosed to be analysed

in the same fair value hierarchy:

– Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

– Level 2 – inputs other than quoted prices included within level 1 that are observable for

the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

– Level 3 – inputs for the asset or liability that are not based on observable market data

(i.e. unobservable inputs).

Set out below is a comparison by class of the carrying amounts and fair value of the Group’s

financial instruments that are carried in the financial statements.

			At 31 December 2023			At 31 December 2022
	Fair value	Carrying	Fair		Carrying	Fair
£million	hierarchy	value	value		value	value
Held at amortised cost
Cash and cash equivalents	n/a	74.1	74.1		65.0	65.0
Trade and other receivables	n/a	72.3	72.3		101.3	101.3
Trade and other payables	n/a	(102.3)	(102.3)		(135.1)	(135.1)
Borrowings (excluding unsecured loan notes)	2	(108.1)	(108.1)		(105.3)	(105.3)
Unsecured loan notes	3	(75.0)	(61.2)		(55.1)	(55.1)
Held at fair value
Derivative financial instruments (assets)	2	6.0	6.0		3.9	3.9
Derivative financial instruments (liabilities)	2	(2.1)	(2.1)		(4.4)	(4.4)
Assets classified as held for sale and associated
liabilities	3	19.9	19.9	–	–	–
Held at depreciated cost					–	–
Investment properties	3	–	0.7	–	0.7	0.7

The fair value of the financial assets and liabilities are included at the amount at which the

instrument could be exchanged in a current transaction between willing parties, other than

in a forced or liquidation sale. The following methods and assumptions were used to estimate

the fair values:

– cash and cash equivalents, trade and other receivables, trade and other payables approximate

to their carrying amounts largely due to the short-term maturities of these instruments;

– the fair value of borrowings is estimated by discounting future cash flows using rates currently

available for debt and remaining maturities.

– the fair value of derivative financial instrument assets (£6.0 million) and liabilities (£2.1 million)

are estimated by discounting expected future cash flows using current market indices such as

yield curves and forward exchange rates over the remaining term of the instrument (level 2); and

21 Financial risk management continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

– the fair value of investment properties are based on market valuations obtained through third

party valuations (level 3).

– The fair value of unsecured loan notes has been derived from available market data for

borrowings of similar terms and maturity period.

g) Capital management

The overriding objectives of the Group’s capital management policy are to safeguard and support

the business as a going concern through the business cycle and to maintain an optimal capital

structure by reducing the Group’s overall cost of capital. The Board considers equity shareholders’

funds as capital.

The Group maintains a balance between availability of funding and maximising investment return

on cash balances through the use of short-term cash deposits, credit facilities and longer term

debt instruments, and management regularly reviews the funding requirements of the Group.

Dividends are paid when the Board consider it appropriate to do so, taking into account the

availability of funding. The Group has a progressive dividend policy.

The Group has net debt of £126.2 million (2022: £138.4 million). Included within the debt facilities

are certain financial covenants related to IFRS (excluding IFRS 16 update, and after the application

of other covenant defined adjustments) net debt divided by adjusted EBITDA. Adjusted EBITDA

is EBITDA adjusted to exclude the items not included within adjusted operating profit/net finance

charges for which compliance certificates are produced on a 12 month rolling basis every half

year. All financial covenants were fully complied with during the year and up to the date of approval

of the financial statements.

22 Retirement benefit schemes

Defined contribution schemes

The Group operates 401(k) plans in North America and defined contribution arrangements in the

rest of the world. The assets of these schemes are held independently of the Group and are not on

its balance sheet. The total contributions charged by the Group in respect of defined contribution

schemes were £3.5 million (2022: £3.2 million).

Defined benefit schemes

At 31 December 2023 the Group operated one defined benefit schemes in the UK (the TT Group

(1993) Pension Scheme) and one overseas defined benefit scheme in the USA. These schemes

are closed to new members and the UK scheme is closed to future accrual.

The TT Group scheme commenced in 1993 and increased in size in 2006, 2007 and 2019 through

the mergers of former UK schemes following a number of acquisitions. The parent company is the

sponsoring employer in the TT Group scheme. The TT Group scheme is governed by TTG Pension

Trustees Limited (the “Trustee”) that has control over the operation, funding and investment

strategy in consultation with the Group.

In November 2022, the Trustees of the TT Group Scheme entered into a bulk annuity insurance

contract with an insurer in respect of the liabilities of the defined benefit scheme (‘buy-in’). The

insurer will pay into the Scheme cash matching the benefits due to members. The Trustee is of the

opinion that this investment decision is appropriate, reduces the risks in the Scheme and provides

additional security for the benefits due to members of the Scheme. The Trustee continues to be

responsible for running the Scheme and retains the legal obligation for the benefits provided under

the Scheme.

As the buy-in policy is a qualifying insurance asset, the fair value of the insurance policy is deemed

to be the present value of the obligations that have been insured. The policy secured matches the

benefits due to Scheme members under the Scheme’s Trust Deed and Rules.

Since the assets of the Scheme were greater than the premium required to secure the liabilities

through the buy-in, the Scheme Is in a net asset position at 31 December 2023 of £25.3 million.

A ‘true-up premium/refund’ may be payable to/from the insurer during 2024, subject to a data

cleanse exercise to formally agree the final benefits that are covered by the buy-in contract.

Prior to the buy-in, the TT Group scheme exposed the Group to a number of actuarial risks such as

longevity risk, currency risk, inflation risk, interest rate risk and market (investment) risk. The buy-in

mitigates the majority of these risks and the principal risk remaining is the credit risk associated

with the insurer, which is assessed to be very low. The Group is not exposed to any unusual, entity

specific or scheme specific risks, but given the material nature of the TT Group scheme, the Group

has developed a comprehensive strategy covering the following areas to manage the financial risk

associated with it:

– Maintaining a long term working partnership with the Trustee to ensure strong governance of

risks within the TT Group scheme. The TT Group scheme is a long term undertaking and is

managed accordingly, in order to provide security to members’ benefits and value for money

to the Group.

– Following the buy-in the Scheme’s financial and demographic risks are now fully hedged by

the insurer. There will be no material impact on the reported accounting position in future of

a change in interest rates, inflation, or a change in life expectancies, in relation to the Scheme’s

liabilities and matching insurance policy asset. However, a small amount of residual investment

risk remains within the surplus assets held by the Trustee.

– The Scheme’s investment strategy has been assessed as being low risk as the insured asset

matches changes in the assessed value of the Schemes liabilities due to changes in interest

rates, inflationary expectations and longevity expectations. The buy-in policy therefore matches

the term and nature of the liabilities.

The Trustee, in conjunction with the Group, has a duty to ensure that the TT Group scheme has an

appropriate funding strategy in place that meets any local statutory requirements. The objective,

which has been negotiated and agreed between the Group and the Trustee, is that the TT Group

scheme should target and then maintain 100% funding on a basis that should ensure benefits can

be paid as they fall due. Any shortfall in the assets relative to the funding target will be financed

over a period that ensures the contributions are reasonably affordable to the Group.

21 Financial risk management continued

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The weighted average duration of the TT Group scheme defined benefit obligation is around

11 years.

UK legislation requires the Trustee to carry out a statutory funding valuation at least every three

years and to target full funding against a basis that prudently reflects the TT Group scheme’s

risk exposure.

The last triennial valuation of the TT Group scheme as at April 2022 showed a net surplus

of £45.4 million against the Trustee’s statutory funding objective.

Due to the favourable funding position the Trustee and Company have agreed that there was no

requirement for any further funding contributions to the TT Group scheme. In December 2023 an

initial £5.0 million refund of the surplus was paid to the group out of scheme assets by the Trustee

(£3.2 million after tax suffered by the scheme).

The Trustee and Company agreed that the Trustee should undertake an exercise during 2022,

whereby deferred members were offered an enhanced transfer value option. In the year ended

31 December 2022 a £11.8 million settlement cost was recognised within items excluded from

adjusted operating profit as a result of this exercise.

In the year ended 31 December 2022 the Trustees of the Southern & Redfern Ltd Retirement

Benefits Scheme completed a buy-out of the scheme with a leading insurer, securing the pensions

of members for the future. As a result, the assets (£0.6 million) and liabilities (£0.6 million) of the

scheme were derecognised. The subsequent wind-up of the Southern & Redfern Ltd Retirement

Benefits Scheme was completed in October 2023.

An actuarial valuation of the USA defined benefit schemes was carried out by independent

qualified actuaries in 2023 using the projected unit credit method. Pension scheme assets are

stated at their market value at 31 December 2023. In the year ended 31 December 2023 the

Trustees of the BI Technologies Corporation Retirement Plan, one of the US defined benefit

schemes in the USA, completed a partial buy-out and a bulk settlement exercise, extinguishing

gross liabilities of £5.5 million in total.

An analysis of the pension surplus/(deficit) by scheme is shown below:

	£million At 31 December 2023	At 31 December 2022
TT Group (1993)	25.3	31.3
USA schemes	(3.1)	(2.9)
Net surplus	22.2	28.4

Given the nature of the Group’s control of the TT Group under the Scheme rules, the Group

considers that it has an unconditional right to refund of surplus in the event of the Scheme’s

wind-up. Based on these rights, any pension surpluses have been recognised in full under IFRIC 14.

The ongoing expenses of running the Scheme are now met from the remaining Scheme assets.

The Group is aware of the High Court ruling in the case of Virgin Media Ltd v Pension Trustees II

Ltd and is waiting for the outcome of the appeal, scheduled for June 2024 as well as confirmation

from the UK Government regarding whether it will issue new regulations in response to this issue.

The principal assumptions used for the purpose of the actuarial valuations for the Group’s primary

defined benefit schemes were as follows:

	TT Group	TT Group
	2023	2022
Discount rate	4.80	5.00
Inflation rate (RPI)	3.20	3.30
Increases to pensions in payment (LPI 5% pension increases)	2.95	3.05
Increases to deferred pensions (CPI)	2.70	2.65

The mortality tables applied by the actuaries at 31 December 2023 for the TT Group (1993)

Scheme were S3 tables (‘Middle’ for females) with 107% (male)/104% (female) weighting for

pensioners and 114% (male)/107% (female) weighting for non-pensioners with a 1.5% long-term

rate of improvement in conjunction with the CMI 2022 projection model. The assumptions are

equivalent to life expectancies as follows: Current pensioner aged 65: 86 years (male), 88 years

(female). Future retiree currently aged 45: 87 years (male), 90 years (female).

22 Retirement benefit schemes continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Risk and sensitivity

Following the buy-in, changes in actuarial assumptions will impact the liabilities and insured asset

to the same extent, with no overall impact on the net reporting position. A decrease in the discount

rate by 0.1% per annum increases the liabilities and assets by approximately £4 million. An increase

by 0.1% per annum in the inflation rate increases the liabilities and assets by approximately

£2 million. An increase in the life expectancy of 1 year increases the liabilities and assets by

approximately £11 million.

The sensitivities above consider the impact of the single change shown, with the other

assumptions unchanged. The inflation sensitivities allow for the consequential impact on the

relevant pension increase assumptions. The sensitivity analyses have been determined based

on a method that extrapolates the impact on the defined benefit obligation as a result of

reasonable changes in key assumptions occurring at the end of the reporting period.

The amounts recognised in respect of the pension surplus in the consolidated balance sheet are:

	£million 2023	2022
Equities	1.2	4.8
Government bonds	–	15.4
Corporate bonds	–	1.0
Cash and cash equivalents	24.5	14.0
Insured assets	336.9	357.9
Other	0.9	3.7
Fair value of assets	363.5	396.8
Present value of defined benefit obligation	(341.3)	(368.4)
Net surplus recognised in the consolidated balance sheet	22.2	28.4

The schemes’ assets are unquoted unless otherwise stated and do not include the Group’s

financial instruments, any property occupied by, or other assets used by the Group. All of the

funds included in the asset split are pooled investment vehicles for which due diligence has been

completed. We have classified all of the Scheme’s investments other than the cash held at the

custodian, government bonds and the exchange traded funds (ETFs) as unquoted assets.

Amounts recognised in the consolidated income statement are:

	£million 2023	2022
Scheme administration costs	(1.9)	(1.2)
Net loss on pension projects (excluded from adjusted operating profit)	(1.3)	(13.8)
Net interest credit	1.4	2.1

Amounts recognised in the consolidated statement of comprehensive income are a gain of

£0.2 million (2022: loss of £35.9 million) which comprises of; the actual return on scheme

assets excluding interest income, a loss of £18.3 million (2022: loss of £215.3 million) and the

remeasurement of the schemes obligations, a gain of £18.5 million (2022: gain of £179.5 million).

Changes in the present value of the defined benefit obligation are:

	£million 2023	2022
Defined benefit obligation at 1 January	368.4	577.4
Past service charge and settlements	(5.5)	(20.3)
Interest on obligation	17.7	11.9
Remeasurements:
Effect of changes in demographic assumptions	(9.7)	(0.5)
Effect of changes in financial assumptions	6.0	(197.2)
Effect of experience adjustments	(15.0)	18.2
Benefits paid	(20.2)	(22.6)
Exchange	(0.4)	1.5
Defined benefit obligation at 31 December	341.3	368.4
TT Group (1993)	336.9	357.9
USA schemes	4.4	10.5
	341.3	368.4

22 Retirement benefit schemes continued

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Changes in the fair value of the schemes’ assets are:

	£million 2023	2022
Fair value of schemes’ assets at 1 January	396.8	651.9
Interest income on defined benefit scheme assets	19.1	14.0
Return on scheme assets, excluding interest income	(18.3)	(215.4)
Contributions by employer	0.2	1.3
Return of pension surplus	(5.0)	–
Pension scheme expenses	(3.2)	(1.2)
Settlements	(5.5)	(32.1)
Benefits paid	(20.2)	(22.6)
Exchange	(0.4)	0.9
Fair value of schemes’ assets at 31 December	363.5	396.8

1 During the year the TT Group (1993) Pension Scheme returned £3.2 million of pension surplus as cash to the Group. This was net of

£1.8m of tax paid directly by the scheme to HMRC.

23 Share capital

Share capital

		£million 2023	2022
Issued and fully paid
177,371,049	(2022: 176,486,627) ordinary shares of 25p each	44.3	4 4.1

During the period the Company issued 884,422 ordinary shares as a result of share options being

exercised under the Sharesave scheme and Share Purchase plans.

The performance conditions of the Restricted Share Plan awards issued in 2020, 2021 and 2022

were met and shares were allocated to award holders from existing shares held by an Employee

Benefit Trust for £nil consideration. The performance conditions of the Long-term Incentive Plan

awards issued in 2020 were not met and therefore no new shares were issued to award holders.

The aggregate consideration received for all share issues during the year was £1.3 million

which was represented by a £0.2 million increase in share capital and a £1.1 million increase

in share premium.

24 Other reserves

£million

	Share Based	Employee	Share
	Payment	Benefit	options	Hedging	Merger
	Reserve	Trust	reserve	Reserve	reserve	Total
At 1 January 2022	1.3	(0.3)	1.0	2.7	3.4	7.1
Share based payment charge	4.8	–	4.8	–	–	4.8
Awards made to employees	(0.8)	0.4	(0.4)	–	–	(0.4)
Deferred tax on share based payments	(1.0)	–	(1.0)	–	–	(1.0)
Funding of employee benefit trust	–	(0.5)	(0.5)	–	–	(0.5)
Loss on cash flow hedges taken to equity less
amounts taken to income statement	–	–	–	(2.9)	–	(2.9)
Deferred tax on movement in cash flow hedges	–	–	–	0.2	–	0.2
Other movement	–	–	–	–	–	–
At 1 January 2023	4.3	(0.4)	3.9	–	3.4	7.3
Share based payment charge	3.1	–	3.1	–	–	3.1
Awards made to employees	(1.0)	1.1	0.1	–	–	0.1
Deferred tax on share based payments	(0.1)	–	(0.1)	–	–	(0.1)
Funding of employee benefit trust	–	(1.3)	(1.3)	–	–	(1.3)
Loss on cash flow hedges taken to equity less
amounts recycled to income statement	–	–	–	3.5	–	3.5
Deferred tax on movement in cash flow hedges	–	–	–	(0.7)	–	(0.7)
At 31 December 2023	6.3	(0.6)	5.7	2.8	3.4	11.9

22 Retirement benefit schemes continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

25 Share-based payment plans

The Company has the following share-based payment plans in operation at 31 December 2023:

– Long-term Incentive Plan (“LTIP”) for senior executives;

– Restricted Share Plan (“RSP”) for certain senior executives; and

– Sharesave plans for UK employees and a Share Purchase plan for US employees.

The LTIP and RSP schemes have been classified as equity settled schemes. The terms of the LTIP

and RSP schemes state that the Group has the right as to how to settle these awards and it is the

Group’s intention to settle these with equity. At the date of vesting the Group will settle the awards

either with new issue shares or shares purchased on the market at an earlier point in time.

The Group offers the employees the option for the Group to settle the tax liability, which the

employee would incur upon receipt of the award, on behalf of the employee with the relevant tax

authority. In this circumstance the Group may choose to pay, in cash, the tax liability due on behalf

of the employee to the tax authority and the employee would receive the remaining value of their

award in equity. In 2023 the Group paid £0.5 million to settle the employees’ tax liabilities (2022:

£0.9 million). The Group estimates that the future cashflows associated with the above would

remain consistent with the 2023 outflows. The Group also offers the employee the option for the

Group to sell the remaining shares on the employees’ behalf and to forward that cash to the

employee, although the Group is not compelled to do so no matter what the employee chooses.

In 2023 £0.1 million was used for these purposes (2022: £nil). The Group estimates that the future

cashflows associated with the above would remain consistent in future years with the 2023

outflows. These arrangements do not change the assessment that the share-based payments

are equity settled.

The Sharesave scheme has also been classified as an equity settled scheme. The rules of this

scheme state that the participant must always be paid in equity and that neither party can request

settlement in any other way.

a) Long-term Incentive Plans

Details of the LTIP awards outstanding during the year are as follows:

	2023	2022
	Number of	Number of
	share awards	share awards
At 1 January	3,958,289	5,379,293
Granted	1,238,163	650,871
Forfeited/Lapsed	(2,931,224)	(1,614,554)
Exercised/Vested	–	(457,321)
At 31 December	2,265,228	3,958,289
Exercisable at 31 December	–	–

During 2023 grants of awards were made under the LTIP for the issue of shares in 2026. An award

is a contingent right to receive shares in the future, subject to continued employment and the

achievement of predetermined performance criteria. The performance targets attached to awards

require the achievement of earnings per share (‘EPS’) and total shareholder return (‘TSR’) targets

as detailed in the Directors’ Remuneration Report on page 105.

The fair value of the shares was estimated at the grant date using a Monte Carlo simulation model,

considering the terms and conditions upon which the shares were granted. This model simulates

the TSR and compares it against the group of comparator companies. It considers historic

dividends and share price fluctuations to predict the distribution of relative share price

performance.

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The table below lists the awards which were made during the year the inputs to the model:

Grant date

	Number of	Fair value at	Share price at	Exercise	Expected	Vesting period
	awards	grant date	grant date	price	volatility	(years)
2023
14 March 2023	758,233	135.1p	183.0p	£nil	38%	3.0
2 October 2023	479,930	117.8p	171.0p	£nil	38%	3.0
2022
14 March 2022	650,871	164.9p	202.5p	£nil	37%	3.0

The award of shares is not affected by the risk free rate of interest since no investment is required

by the recipient, and therefore no interest could be earned elsewhere. Expected volatility is based

on historical share price movements.

The performance conditions of the LTIP grants made in 2020 that reached the end of their

performance periods in 2023 were not met and no shares were allocated to award holders.

b) Restricted Share Plan

During the year the Group granted 1,530,984 shares (2022: 1,219,914) under the restricted plan.

Awards are typically subject to continuing employment with no other vesting criteria.

Details of the restricted share plan awards outstanding during the year are as follows:

	2023	2022
	Number of	Number of
	share awards	share awards
At 1 January	2,289,873	2,193,182
Granted	1,530,984	1,219,914
Forfeited/Lapsed	(123,745)	(476,619)
Exercised/Vested	(786,612)	(646,604)
At 31 December	2,910,500	2,289,873
Exercisable at 31 December	–	–

During the year 76,536 (2022: 59,874) notional RSP share awards were granted to senior

managers which will ultimately be settled in cash.

The performance conditions of the RSP grants made in 2020, 2021 and 2022 that reached the

end of their performance periods in 2023 were partially met and shares were allocated to award

holders from existing shares held by an Employee Benefit Trust for £nil consideration.

The table below lists the awards which were made during the year the inputs to the model:

Grant date

	Number of	Fair value at	Share price at	Exercise	Expected	Vesting period
	awards	grant date	grant date	price	volatility	(years)
2023
16 March 2023	1,247,648	183.0p	183.0p	£nil	38%	3.0
3 August 2023	56,460	153.0p	153.0p	£nil	38%	3.0
2 October 2023	226,876	172.0p	172.0p	£nil	38%	3.0

Grant date

	Number of	Fair value at	Share price at	Exercise	Expected	Vesting period
	awards	grant date	grant date	price	volatility	(years)
2022
10 January 2022	14,053	264.0p	264.0p	£nil	37%	3.0
14 March 2022	948,429	202.5p	202.5p	£nil	37%	3.0
14 March 2022	107,413	202.5p	202.5p	£nil	37%	3.0
6 June 2022	49,342	200.5p	200.5p	£nil	37%	3.0
20 June 2022	60,677	187.0 p	187.0p	£nil	37%	3.0
21 November 2022	40,000	170.0p	170.0p	£nil	37%	3.0

All of the above awards are subject to continuing employment with the Group.

c) Sharesave schemes

The Group operates a Sharesave scheme for participating employees in the UK under a three-year

plan. Employees may purchase the Group’s shares at a 20% discount to the market price on the

day prior to the commencement of the offer up to a maximum contribution value of £6,000 in

any one year. Monthly contributions are saved with Lloyds Bank plc, via Equiniti Ltd, the Registrars,

in the employee’s share savings plan and will only be released to employees who remain in the

Group’s employment for a period of three years from commencement of the savings contract.

Options become exercisable on completion of the three-year term or within six months of leaving

in certain circumstances. All Sharesave scheme awards are accounted for as equity settled.

25 Share-based payment plans continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Details of the save as you earn share plan awards outstanding during the year are as follows:

	2023	2022
	Number of	Number of
	share awards	share awards
At 1 January	3,749,876	2,465,154
Granted	1,292,868	1,930,800
Forfeited/Lapsed	(908,159)	(601,348)
Exercised	(682,620)	(44,730)
At 31 December	3,451,965	3,749,876
Exercisable at 31 December	303,407	507,668

The fair value of the shares at grant date was as follows:

Date price set

	Market	Option	Fair	Options
	price	price	value	outstanding
30 August 2020	187.0p	151.0p	84.0p	304,474
7 September 2021	271.0p	226.0p	110.9p	263,887
6 September 2022	149.3p	119.5p	67.5p	1,625,595
5 September 2023	174.1p	139.4p	66.5p	1,258,009

The Group operates a Stock Purchase Plan for participating US employees. Under the plan

employees may purchase the Group’s shares at a 15% discount to the market price at the date

of acquisition, up to a maximum of $6,500 per annum. Employees save on a monthly basis and

shares are purchased each quarter.

The total share-based payment charge for the year excluding a social security debit of £0.1 million

(2022: £0.2 million credit) arising from the above share scheme plans was £3.1 million (2022:

£4.8 million).

26 Reconciliation of net cash flow to movement in net debt

Net cash of £76.5 million (2022: £61.3 million) comprises cash at bank and in hand of £74.1 million

(2022: £65.0 million), overdrafts of £1.2 million (2022: £3.7 million) and cash within assets held for

sale of £3.6 million.

	£million Net cash	Lease liabilities	Borrowings	Net debt
At 1 January 2022	67.2	(22.6)	(147.1)	(102.5)
Cash flow	(9.2)	–	–	(9.2)
Businesses acquired	–	(0.2)	–	(0.2)
Repayment of borrowings	–	–	149.3	149.3
Proceeds from borrowings	–	–	(174.3)	(174.3)
Payment of lease liabilities	–	4.3	–	4.3
New leases	–	(2.3)	–	(2.3)
Net movement in loan arrangement fees	–	–	0.7	0.7
Exchange differences	3.3	(2.3)	(5.2)	(4.2)
At 31 December 2022	61.3	(23.1)	(176.6)	(138.4)
Cash flow	19.3	–	–	19.3
Transferred to held for sale	(3.6)	2.6	–	(1.0)
Repayment of borrowings	–	–	26.1	26.1
Proceeds from borrowings	–	–	(32.7)	(32.7)
Payment of lease liabilities	–	4.4	–	4.4
New leases	–	(3.4)	–	(3.4)
Net movement in loan arrangement fees	–	–	(0.1)	(0.1)
Exchange differences	(4.1)	1.3	1.4	(1.4)
At 31 December 2023	72.9	(18.2)	(181.9)	(127.2)
Included within assets classified as held for sale and associated
liabilities	3.6	(2.6)	–	1.0
At 31 December 2023	76.5	(20.8)	(181.9)	(126.2)

25 Share-based payment plans continued

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

27 Changes in liabilities arising from financing activities

				Liabilities
				arising from
			Interest rate	financing
	£million Lease liabilities	Borrowings	swaps	activities
At 1 January 2022	(22.6)	(147.1)	(0.3)	(170.0)
Cash movements
Cash flows	5.1	(17.9)	0.1	(12.7)
Non cash movements
Fair value movements	–	–	0.8	0.8
Business acquired	(0.2)	–	–	(0.2)
Interest accrued	(0.8)	( 7.1)	–	(7.9)
Net movement in loan arrangement fees	–	0.7	–	0.7
New leases	(2.3)	–	–	(2.3)
Exchange differences	(2.3)	(5.2)	–	( 7.5)
At 1 January 2023	(23.1)	(176.6)	0.6	(199.1)
Cash movements
Cash flows	5.2	3.3	(0.6)	7.9
Non cash movements
Transferred to held for sale	2.6	–	–	2.6
Interest accrued	(0.8)	(9.9)	–	(10.7)
Net movement in loan arrangement fees	–	(0.1)	–	(0.1)
New leases	(3.4)	–	–	(3.4)
Exchange differences	1.3	1.4	–	2.7
At 31 December 2023	(18.2)	(181.9)	–	(200.1)
Included within liabilities associated with assets classified as held for sale	(2.6)	–	–	(2.6)
At 31 December 2023	(20.8)	(181.9)	–	(202.7)

28 Contingent liabilities

The Group is subject to claims which arise in the ordinary course of business. Other than those

for which provisions have been made and included within note 19, the Directors consider the

likelihood of any other claims giving rise to a significant liability to be remote.

29 Capital commitments

	£million 2023	2021
Contractual commitments for the purchase of property, plant and equipment	2.7	3.1

30 Leases

The total cash outflow for leases is £5.1 million (2021: £4.7 million) comprising lease repayments

of £4.3 million (2021: £3.9 million), interest on lease liabilities of £0.8 million (2021: £0.8 million).

Interest on lease liabilities is shown in note 5, the maturity of the lease liabilities is shown in note

21(e) and the corresponding assets to which the lease liabilities relate are shown in note 12.

31 Related party transactions

Transactions between the Company and its subsidiaries have been eliminated on consolidation

and are not disclosed in this note.

No related party transactions have taken place in 2022 or 2021 that have affected the financial

position or performance of the Group.

Key management personnel and Directors’ emoluments are disclosed in note 11.

32 Subsequent events

On 4 March 2024 the Group announced the agreement to sell three business operating units

within the Global Manufacturing Solutions and Power and Connectivity segments to the Cicor

Group for a cash consideration of £20.8 million on a cash and debt free basis subject to normal

working capital adjustments. The assets and related liabilities of the disposal group are shown

as being held for sale as at 31 December 2023 as detailed in note 4.

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£million Note 2023 2022

Non current assets

Right-of-use assets 2 0.4 0.5

Property, plant and equipment 2 0.3 0.5

Intangible assets 2 0.8 0.9

Investments 3 126.4 126.4

Deferred tax asset 11 3.4 2.8

Pensions 10 25.3 31.3

Debtors 4 128.1 121.2

Total fixed assets 284.7 283.6

Current assets

Debtors 4 27.6 20.5

Cash at bank and in hand 13 1.4 0.5

Total current assets 29.0 21.0

Current liabilities

Lease liabilities 6 0.2 0.2

Creditors: amounts falling due within one year 5 18.6 9.0

Total current liabilities 18.8 9.2

Net current assets 10.2 11.8

Non current liabilities

Lease liabilities 6 0.3 0.5

Deferred tax liability 11 8.4 11.0

Total non current liabilities 8.7 11.5

Net assets 286.2 283.9

Capital and reserves

Called up share capital 7 44.3 4 4.1

Share premium account 7 24.0 22.9

Share options reserve 8 5.8 3.9

Merger reserve 3.4 3.4

Profit and loss account 9 208.7 209.6

Shareholders’ funds 286.2 283.9

The Company reported a profit for the financial year ended 31 December 2023 of £10.2 million

(2022: loss of £38.2 million).

Approved by the Board of Directors on 6 March 2024 and signed on their behalf by:

Peter France Mark Hoad

Director Director

£million

capital

premium

Merger

reserve

Share options

reserve

Profit and loss

account Total

At 1 January 2021 44.1 22.6 3.4 1.0 288.7 359.8

Loss for the year – – – (38.2) (38.2)

Other comprehensive income

Remeasurement of defined benefit

pension schemes – – – – (37.5) (37.5)

Tax on remeasurement of defined

benefit pension schemes – – – – 6.8 6.8

Total comprehensive income – – – – (68.9) (68.9)

Transactions with owners recorded

directly in equity

Dividends paid by the Company – – – – (10.2) (10.2)

Share-based payments – – – 4.8 – 4.8

Deferred tax on share-based payments – – – (1.0) – (1.0)

Other movements – – – (0.9) – (0.9)

New shares issued – 0.3 – – – 0.3

At 31 December 2022 44.1 22.9 3.4 3.9 209.6 283.9

Profit for the year – – – 10.2 10.2

Other comprehensive income

Remeasurement of defined benefit

pension schemes – – – – 0.3 0.3

Tax on remeasurement of defined

benefit pension schemes – – – – (0.1) (0.1)

Total comprehensive income – – – – 10.4 10.4

Transactions with owners recorded

directly in equity

Dividends paid by the Company – – – – (11.3) (11.3)

Share-based payments – – – 3.1 – 3.1

Other movements – – – (1.2) – (1.2)

New shares issued 0.2 1.1 – – – 1.3

At 31 December 2023 44.3 24.0 3.4 5.8 208.7 286.2

COMPANY STATEMENT OF CHANGES IN EQUITY

at 31 December 2023

COMPANY STATEMENT OF FINANCIAL POSITION

at 31 December 2023

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 167

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

1 Material accounting policies

a) Basis of preparation

The financial statements of TT Electronics plc (the “Company”) were prepared in accordance

withFinancial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).

In preparing these financial statements, the Company applies the recognition, measurement and

disclosure requirements of International Financial Reporting Standards, but makes amendments

where necessary in order to comply with Companies Act 2006 and has set out below where

advantage of the FRS 101 disclosure exemptions has been taken.

In these financial statements, the Company has applied the exemptions available under FRS 101

in respect of the following disclosures:

– a cash flow statement and related notes;

– disclosures in respect of transactions with wholly owned subsidiaries;

– disclosures in respect of capital management;

– the effects of new but not yet effective IFRSs;

– disclosures in respect of the compensation of key management personnel;

– comparable movement tables for tangible and intangible fixed assets; and

– disclosures in respect of leases

The accounting policies set out in note 2 of the Consolidated financial statements have, unless

otherwise stated, been applied in the preparation of the Company financial statements.

Change in accounting policy

There have been no changes to accounting policies during the year. Adoption of new and

amendments to published standards and interpretations effective for the Group for the year ended

31 December 2023 did not have any impact on the financial position or performance of the Group.

b) Estimation uncertainty

During the year there were no judgements made by the Directors, in the application of the adopted

accounting policies, deemed to have a significant effect on the financial statements nor were there

any estimates deemed to carry a significant risk of material adjustment in the next year.

Details of the Directors’ assessment of the Company’s ability to continue in operational existence

for at least twelve months from the date of signing these financial statements are shown in Note 1

of the Consolidated financial statements and in the Strategic Report on page 67.

c) Investments

Fixed asset investments in subsidiaries are carried at cost less provision for impairment.

d) Own shares held by Employee Benefit Trust

Transactions of the Company-sponsored Employee Benefit Trust are treated as being those of

theCompany and are therefore reflected in the Company’s financial statements. In particular,

theTrust’s purchases of shares in the Company are debited directly to equity.

2 Non Current Assets

£million

Intangible

Assets

Plant,

equipment and

vehicles

Right-of-use

assets

Cost

At 1 January 2022 19.4 1.2 1.2

Disposals (1.6) – –

Additions 0.2 – –

At 31 December 2022 18.0 1.2 1.2

Disposals – – (0.1)

Additions 0.4 – –

At 31 December 2023 18.4 1.2 1.1

Depreciation

At 1 January 2022 17.8 0.6 0.6

Disposals (1.6) – –

Depreciation charge 0.9 0.1 0.1

At 31 December 2022 17.1 0.7 0.7

Disposals – – (0.1)

Depreciation charge 0.5 0.2 0.1

At 31 December 2023 17.6 0.9 0.7

Net book value

At 31 December 2023 0.8 0.3 0.4

At 31 December 2022 0.9 0.5 0.5

Intangible assets solely relate to software.

Disposals in the prior year relate to redundant intangible assets which held a carrying value of £nil

at the start of the year.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023168

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

3 Investments

£million Subsidiary undertakings

Cost

At 1 January 2022 253.0

Disposals (1.0)

At 31 December 2022 252.0

At 31 December 2023 252.0

Provisions

At 1 January 2022 78.8

Impairment 46.8

At 31 December 2022 125.6

At 31 December 2023 125.6

Net book value

At 31 December 2023 126.4

At 31 December 2022 126.4

During the prior year an impairment of £46.8 million was recognised to reduce the investment

inIoT Solutions UK Limited to its carrying value of £nil (2022: £46.8 million).

The Company’s subsidiary undertakings and their locations are shown in note 14. Shareholdings

are held indirectly for all principal operating subsidiary undertakings.

4 Debtors

£million 2023 2022

Current debtors

Amounts owed by subsidiary undertakings 25.7 19.4

Prepayments, accrued income and other receivables 1.9 1.1

Amounts due within one year 27.6 20.5

Non Current debtors

Amounts owed by subsidiary undertakings 128.1 121.2

Amounts due later than one year 128.1 121.2

Total 155.7 141.7

‘Amounts owed by subsidiary undertakings’ have been considered for impairment using the

12months expected credit loss model because there was no change in credit risk since initial

recognition. The expected credit loss is considered immaterial because the probability of default

isnegligible.

As at 31 December 2023 £128.1 million (2022: £121.2 million) of debtors have been classified as

non current due to management’s expectation that these will not be settled within 12 months.

5 Creditors

£million 2023 2022

Amounts falling due within one year

Trade creditors 2.6 2.0

Amounts owed to subsidiary undertakings 8.7 1.4

Taxation and social security 0.9 1.4

Accruals and deferred income 6.4 4.2

18.6 9.0

6 Lease obligations

£million

Current lease

liabilities

Non-current

lease liabilities Total

At 31 December 2022 0.2 0.5 0.7

Capital repayments – (0.2) (0.2)

At 31 December 2023 0.2 0.3 0.5

7 Share capital

£million 2023 2022

Issued, called up and fully paid

177,371,049 (2022: 176,486,627) ordinary shares of 25p each 44.3 4 4.1

During the period the Company issued 884,422 ordinary shares as a result of share options being

exercised under the Sharesave scheme and Share Purchase plans.

The performance conditions of the Restricted Share Plan awards issued in 2020, 2021 and 2022

were met and shares were allocated to award holders from existing shares held by an Employee

Benefit Trust for £nil consideration. The performance conditions of the Long-term Incentive Plan

awards issued in 2020 were not met and therefore no new shares were issued to award holders.

The aggregate consideration received for all share issues during the year was £1.3 million which was

represented by a £0.2 million increase in share capital and a £1.1 million increase in share premium.

8 Share-based payments

Details of share-based payments are shown in note 25 of the Consolidated financial statements.

Any charge associated with share-based payments made to employees of subsidiaries are

recharged out to the relevant subsidiaries within the same financial year.

9 Profit for the year

As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present

its profit and loss account for the year. The profit after tax of the Company for the year was

£10.2million (2022: loss of £38.2 million). The auditor’s remuneration for audit services is

disclosed in note 6 to the Consolidated financial statements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 169

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

10 Pension schemes

Defined benefit scheme

In November 2022, the Trustees of the TT Group Scheme entered into a bulk annuity insurance

contract with an insurer in respect of the liabilities of the defined benefit scheme (‘buy-in’). The

insurer will pay into the Scheme cash matching the benefits due to members. The Trustee is of the

opinion that this investment decision is appropriate, reduces the risks in the Scheme and provides

additional security for the benefits due to members of the Scheme. The Trustee continues to be

responsible for running the Scheme and retains the legal obligation for the benefits provided under

the Scheme.

As the buy-in policy is a qualifying insurance asset, the fair value of the insurance policy is deemed

to be the present value of the obligations that have been insured. The policy secured matches the

benefits due to Scheme members under the Scheme’s Trust Deed and Rules.

Since the assets of the Scheme were greater than the premium required to secure the liabilities

through the buy-in, the Scheme is in a net asset position at 31 December 2023 of £25.3 million.

A‘true-up premium/refund’ may be payable to/from the insurer during 2024, subject to a data

cleanse exercise to formally agree the final benefits that are covered by the buy-in contract.

The last triennial valuation of the TT Group scheme as at April 2022 showed a net surplus of

£45.4million against the Trustee’s statutory funding objective.

Due to the favourable funding position the Trustees and Company have agreed that there was

norequirement for any further funding contributions to the TT Group scheme. In December 2023

an initial £5.0 million refund of the surplus was paid to the group out of scheme assets by the

Trustees (£3.2 million after tax suffered by the scheme).

The Trustee and Company agreed that the Trustee should undertake an exercise during 2022,

whereby deferred members were offered an enhanced transfer value option. In the year ended

31December 2022 a £11.8 million settlement cost was recognised within items excluded from

adjusted operating profit as a result of this exercise.

Defined contribution scheme

The Company operates a Group personal pension plan for employees and pays contributions to

administered pension insurance plans. The Company has no further payment obligation once the

contributions have been paid. Payments to the defined contribution scheme are charged as an

expense as they are incurred. The total contributions charged by the Company including employee

salary exchange contributions in respect of the year ended 31 December 2023 were £0.6 million

(2022: £0.5 million).

11 Deferred tax

The deferred tax asset of £3.4 million comprises £0.7 million asset in respect of share-based

payments (2022: £0.7 million asset); £1.2 million in respect of non-current assets (2022:

£1.4million asset) the movement in which has been recognised in profit and loss (£0.2 million);

and £1.5 million in respect of tax losses (2022: £0.7 million) the movement in which has been

recognised in profit and loss (£0.8 million).

The deferred tax liability of £8.4 million is in respect of the pension asset (2022: £11.0 million

liability), the movement in which has been recognised in equity (debit to equity of £0.1 million)

andthe income statement (credit to income statement of £2.7 million).

12 Employee information

The average number of full time equivalent employees (including Directors) during the year

was80.

13 Related party transactions

During 2023 and 2022, the Company did not have any related party transactions other than

withwholly owned subsidiaries.

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023170

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

14 Subsidiary undertakings

The following entities are 100% owned with only ordinary shares in issue, unless otherwise stated.

The country of incorporation matches the country in which the registered office/principal place

ofbusiness is located.

Name of subsidiary undertaking

Registered office/principal

place of business

Dongguan Arlec Electrical Products Co. Limited (capital contribution) (1)

TT Electronics Integrated Manufacturing Services (Suzhou) Co., Ltd (2)

Ying Si Ke Electrical Products Co. Limited (capital contribution) (1)

TT Electronics SAS (3)

TT Electronics GmbH (4)

Stadium Asia Limited (5)

STMC Limited (6)

TT Electronics Srl (6)

BI Technologies Corporation SDN BHD (ordinary and preference shares) (7)

BI Technologies S.A. de C.V. (8)

Optron de Mexico S.A. de C.V. (9)

TT Electronics Asia Pte Ltd (10)

TT Electronics Sweden AB (11)

AB Connectors Limited (12)

AB Electronic Components Limited (13)

Abtest Limited

(14)

Aero Stanrew Group Limited (ordinary and preference shares)

1,2

(15)

Aero Stanrew Limited (15)

Automotive Electronic Systems Limited

(13)

BI Technologies Limited

(13)

Commendshaw Limited

(13)

Controls Direct Limited

(13)

Crystalate Electronics Limited (13)

Dale Electric International Limited

1,2

(13)

Deltight Washers Limited

(13)

Ferrus Power Limited

(13)

Fox Industries Limited

(13)

Hale End Holdings Limited

(13)

Kingslo Limited

(13)

KRP Power Source (UK) Limited

(13)

Linton and Hirst Group Limited

(13)

Midland Electronics Limited (13)

MMG Linton and Hirst Limited

(13)

Nulectrohms Limited

(13)

Name of subsidiary undertaking

Registered office/principal

place of business

Roxspur Measurement & Control Limited (13)

Semelab Limited (13)

Sensit Limited

(13)

Stadium Electrical Holdings Limited

(13)

Stadium Electronics Limited

(13)

Stadium IGT Limited (13)

Stadium Power Limited

(13)

Stadium United Wireless Limited

(13)

Stadium Wireless Devices Limited

(13)

Stadium Zirkon UK Limited

(13)

Stontronics Limited

(13)

The Brearley Group Limited

(13)

TT Asia Holdings Limited (13)

TT Automotive Electronics Limited

(13)

TT Electronics Europe Limited

1,2

(13)

TT Electronics Fairford Limited (16)

TT Electronics Group Holdings Limited

(13)

TT Electronics Holdco Limited (13)

TT Electronics Integrated Manufacturing Services Limited (14)

TT Electronics IoT Solutions Limited

(13)

TT Electronics Power Solutions (UK) Limited (13)

TT Group Limited

(13)

TT Power Solutions Limited

(13)

TTE Trustees Limited

1,2

(13)

TTG Investments Limited

(13)

TTG Nominees Limited

1,2

(13)

TTG Pension Trustees Limited

1,2

(13)

TTG Properties Limited

(13)

Valuegolden Limited

(13)

Welwyn Components Limited (17)

Welwyn Electronics Limited

(13)

Wolsey Comcare Limited

(13)

Zirkon Holdings Limited

(13)

AB Interconnect, Inc. (18)

Apsco Holdings, Inc (18)

BI Technologies Corporation (18)

Cletronics N.A. Inc, (19)

International Resistive Company Inc (18)

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 171

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Name of subsidiary undertaking

Registered office/principal

place of business

International Resistive Company of Texas, LLC (20)

Optek Technology Inc (18)

Power Partners, Inc (21)

Precision, Inc (22)

Torotel, Inc (23)

Torotel Products, Inc (23)

TT Electronics Integrated Manufacturing Services, Inc (24)

TT Electronics Power Solutions (US), Inc (19)

TT Group Industries, Inc. (19)

(1) 4th Building, F Zone, Zheng Wei Science Park, Dongkeng Town, Dongguan City,

Guangdong,China

(2) 158-24 Hua Shan Road, Snd Suzhou, 215129, China

(3) 4 place Louis Armand, 75012 Paris, France

(4) Max-Lehner-Strasse 31, 85354, Freising, Germany

(5) Unit A, 3/F, Bamboos Centre, 52 Hung To Road, Kwun Tong, Kowloon, Hong Kong

(6) Via Santa Redegonda N. 11, Milano, Italy

(7) Lot 6.05, Level 6, KPMG tower, 8 First Avenue, Bandar Utama 47800 Petaling Jaya,

Selangor,Darul Ehsan, Malaysia

(8) Ave Circulo de la Amistad No.102, Parque Industrial Mexicali IV, Mexico

(9) Ave Rio Bravo 1551-a, Parque Industrial Rio Bravo, CD. Juarez Chihuahua, Mexico

(10) 2 Shenton Way, #18-01 SGX Centre 1, 068804, Singapore

(11) Gullfossgatan 3, 164 40 Kista, Sweden

(12) Abercynon, Mountain Ash, Rhondda Cynon Taff, CF45 4SF, Wales

(13) Fourth Floor, St Andrews House, West Street, Woking, Surrey, GU21 6EB, England

(14) Unit 1, Tregwilym Industrial Estate, Rogerstone, Newport, Gwent, NP10 9YA, Wales

(15) Unit 1 Gratton Way, Roundswell Business Park, Barnstaple, Devon, EX31 3AR, England

(16) London Road, Fairford, Gloucestershire, GL7 4DS, England

(17) Welwyn Electronics Park, Bedlington, Northumberland, NE22 7AA, England

(18) Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States

(19) CT Corporation System, Corporation Trust Center, 1209 Orange Street, Wilmington,

DE19801,United States

(20) Corporation Service Company, 211 East 7th Street, Suite 620, Austin,

TX 78701-3218, UnitedStates

(21) 155 Northboro Road, Suite #9, Southborough, MA 01772, USA

(22) 1700 Freeway Boulevard, Minneapolis, MN 55430, United States

(23) 520 N Rogers Road, Olathe, KS66062, United States

(24) CT Corporation System, 4400 Easton Commons Way, Suite 125, Columbus,

OH43219, UnitedStates

1 Shares held directly by TT Electronics plc

2 Dormant UK subsidiary

UK Registered Subsidiaries exempt from audit

The following UK subsidiaries will take advantage of the audit exemption set out within section

479A of the Companies Act 2006 for the year ended 31 December 2023. The following entities

are100% owned and have a single class of ordinary share with a nominal value of £1, unless

otherwise stated. All subsidiaries below are registered at Fourth floor, St Andrews House,

WestStreet, Woking GU21 6EB, United Kingdom.

Name of subsidiary undertaking Company number

AB Electronic Components Limited 00578077

Automotive Electronic Systems Limited

01518303

Crystalate Electronics Limited 00691591

Midland Electronics Limited 00675333

TT Asia Holdings Limited 02464046

TT Electronics Group Holdings Limited

1, 2

00299275

Semelab Limited 06649272

1 Shares held directly by TT Electronics plc

2 Single class of ordinary share with a nominal value of £0.25.

14 Subsidiary undertakings continued

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023172

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

£million (unless otherwise stated) 2023 2022 2021 2020 2019

Revenue 613.9 617.0 476.2 431.8 478.2

Operating profit 8.7 (3.4) 19.3 6.6 16.9

Adjusted operating profit

52.8 47.1 34.8 27.5 38.1

(Loss)/profit before taxation (1.1) (10.1) 16.0 2.9 13.2

Adjusted profit before taxation

43.0 40.4 31.5 23.8 34.4

(Loss)/earnings (continuing) (6.8) (13.2) 12.8 1.3 12.4

Adjusted earnings

33.8 32.0 25.3 19.5 29.0

(Loss)/earnings per share – continuing (pence) (3.9) (7.5) 7.3 0.8 76.0

Adjusted earnings per share (pence)

19.2 18.2 14.5 11.7 17. 8

Dividends – paid and proposed

12.0 11.1 9.9 8.2 11.4

Dividend per share – paid and proposed (pence)

6.8 6.3 5.6 4.7 7.0

Average number of shares in issue 175.6 175.8 174.8 166.5 163.1

Net debt

126.2 138.4 102.5 83.9 69.1

Total equity 270.5 2 97.0 330.0 298.0 268.0

1 Adjusted operating profit, profit before taxation, adjusted earnings and adjusted earnings per share exclude the impact of

restructuring costs, asset impairments and acquisition and disposal related costs.

2 2023 shows the cashflows/value of the proposed 2023 dividend. 2022 and before shows the cashflows/value of the actual

dividends relating to that particular year.

3 Net (debt)/funds includes cash and overdrafts within assets and liabilities held for sale.

FIVE YEAR RECORD

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 173

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

In accordance with the Guidelines on APMs issued by the European Securities and Markets

Authority (ESMA), additional information is provided on the APMs used by the Group below.

To assist with the understanding of earnings trends, the Group has included within its financial

statements APMs adjusted operating profit and other adjusted profit measures. The APMs used

are not defined terms under IFRS and therefore may not be comparable to similar measures used

by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.

Management uses adjusted measures to assess the operating performance of the Group, having

adjusted for specific items as detailed in note 7. They form the basis of internal management

accounts and are used for decision making, including capital allocation, with a subset also forming

the basis of internal incentive arrangements. By using adjusted measures in segmental reporting,

this enables readers of the financial statements to recognise how incentive performance is

targeted. Adjusted measures are also presented in this announcement because the Directors

believe they provide additional useful information to shareholders on comparable trends over time.

Finally, this presentation allows for separate disclosure and specific narrative to be included

concerning the adjusting items; this helps to ensure performance in any one year can be more

clearly understood by the user of the financial statements.

Income statement measures:

Alternative

Performance

Measure

Closest

equivalent

statutory

measure

Note reference to

reconciliation to

statutory measure Definition and purpose

Adjusted

operating

profit

Operating

profit

Adjusting items

asdisclosed

innote 7

Adjusted operating profit has been defined as operating profit from

continuing operations excluding the impacts of significant restructuring

programmes, significant one-off items including property disposals,

impairment charges significant in nature and/or value, business

acquisition, integration, and divestment related activity; and the

amortisation of intangible assets recognised on acquisition. Acquisition

and disposal related items include the writing off of the pre-acquisition

profit element of inventory written up on acquisition, other direct costs

associated with business combinations and adjustments to contingent

consideration related to acquired businesses. Restructuring includes

significant changes in footprint (including movement of production

facilities) and significant costs of management changes.

To provide a measure of the operating profits excluding the impacts of

significant items such as restructuring or acquisition related activity

and other items such as amortisation of intangibles which may not be

present in peer companies which have grown organically.

Adjusted

operating

margin

Operating

profit margin

Adjusting items

asdisclosed

innote 7

Adjusted operating profit as a percentage of revenue.

To provide a measure of the operating profits excluding the impacts of

significant items such as restructuring or acquisition related activity

and other items such as amortisation of intangibles which may not be

present in peer companies which have grown organically.

Alternative

Performance

Measure

Closest

equivalent

statutory

measure

Note reference to

reconciliation to

statutory measure Definition and purpose

Adjusted

earnings

pershare

Earnings

pershare

See note 10

for the

reconciliation

and calculation

ofadjusted

earnings

per share

The profit for the year attributable to the owners of the Group adjusted

toexclude the items not included within adjusted operating profit divided

by the weighted average number of shares in issue during theyear.

To provide a measure of Earnings per Share excluding the impacts of

significant items such as restructuring or acquisition related activity

and other items such as amortisation of intangibles which may not be

present in peer companies which have grown organically.

Adjusted

diluted

earnings

pershare

Diluted

earnings

pershare

See note 10

for the

reconciliation

and calculation

ofadjusted

diluted earnings

pershare

The profit for the year attributable to the owners of the Group adjusted

toexclude the items not included within adjusted operating profit divided

by the weighted average number of shares in issue during the year,

adjusted for the effects of any potentially dilutive options.

To provide a measure of Earnings per Share excluding the impacts of

significant items such as restructuring or acquisition related activity

and other items such as amortisation of intangibles which may not be

present in peer companies which have grown organically.

Organic

revenue

Revenue See note APM 1 This is the percentage change in revenue from continuing operations

in the current year compared to the prior year, excluding the effects of

currency movements, acquisitions and disposals. This measures the

underlying growth or decline of the business.

To provide a comparable view of the revenue growth of the business from

period to period excluding acquisition and foreign exchange impacts.

Adjusted

effective

taxcharge

Effective

taxcharge

See note APM 2 Tax charge adjusted to exclude tax on items not included within

adjustedoperating profit divided by adjusted profit before tax, which

isalso adjusted to exclude the items not included within adjusted

operating profit.

To provide a tax rate which excludes the impact of adjusting items such

as restructuring or acquisition related activity and other items such as

amortisation of intangibles which may not be present in peer companies

which have grown organically.

Return on

invested

capit al

None See note APM 3 Adjusted operating profit for the year divided by average invested capital

for the year. Average invested capital excludes pensions, provisions, tax

balances, derivative financial assets and liabilities, cash and borrowings

and is calculated at average rates taking twelve monthly balances.

This measures how efficiently assets are utilised to generate returns

withthe target of exceeding the cost to hold the assets.

RECONCILIATION OF KPIS AND NON IFRS MEASURES

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023174

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Statement of financial position measures:

Alternative

Performance

Measure

Closest

equivalent

statutory

measure

Note reference to

reconciliation to

statutory measure Definition and purpose

Net debt Cash and cash

equivalents

less

borrowings

andlease

liabilities

Reconciliation

ofnet cash flow

tomovement in

net debt (note 26)

Net debt comprises cash and cash equivalents and borrowings including

lease liabilities.

This is additional information provided which may be helpful to the user

in understanding the liquidity and financial structure of the business.

Leverage

(bank

covenant)

None See note APM 11 Leverage is the net debt defined as per the banking covenants (net debt

(excluding lease liabilities) adjusted for certain terms as per the bank

covenants) divided by EBITDA excluding items removed from adjusted

profit and further adjusted for certain terms as per the bank covenants.

Provides additional information over the Group’s financial covenants to

assist with assessing solvency and liquidity.

Net capital

and

development

expenditure

(net capex)

None See note APM 4 Purchase of property, plant and equipment net of government grants

(excluding property disposals), purchase of intangibles (excluding

acquisition intangibles) and capitalised development.

A measure of the Group’s investments in capex and development to

support longer term growth.

Dividend

pershare

Dividend

pershare

Not applicable Amounts payable by dividend in terms of pence per share.

Provides the dividend return per share to shareholders.

Statement of cash flows measures:

Alternative

Performance

Measure

Closest

equivalent

statutory

measure

Note reference to

reconciliation to

statutory measure Definition and purpose

Adjusted

operating

cashflow

Operating

cashflow

See note APM 5 Adjusted operating profit, excluding depreciation of property, plant and

equipment (depreciation of right-of-use assets is not excluded) and

amortisation of intangible assets (amortisation of acquisition intangibles

is not excluded) less working capital and other non-cash movements.

An additional measure to help understand the Group’s operating

cashgeneration.

Adjusted

operating

cashflow

postcapex

Operating

cashflow

See note APM 6 Adjusted operating cash flow less net capital

anddevelopmentexpenditure.

An additional measure to help understand the Group’s operating

cashgeneration after the deduction of capex.

Working

capital

cashflow

Cashflow –

inventories

payables,

provisions and

receivables

See note APM 7 Working capital comprises of three statutory cashflow figures:

(increase)/decrease in inventories, increase/(decrease) in payables

andprovisions, and (increase)/decrease in receivables.

To provide users a measure of how effectively the group is managing

itsworking capital and the resultant impact on liquidity.

Free

cash flow

Net increase/

decrease in

cash and

cash

equivalents

See note APM 8 Free cash flow represents cash generated from trading after all costs

including restructuring, pension contributions, tax and interest payments.

Cashflows to settle share based payment schemes are excluded.

Free cash flow provides a measure of how successful the company is

in creating cash during the period which is then able to be used by the

Group at its discretion.

Cash

conversion

None See note APM 9 Adjusted operating cash flow post capex (less any property disposals

which were part of restructuring programmes) divided by adjusted

operating profit.

Cash conversion measures how effectively we convert profit into

cash and tracks the management of our working capital and capital

expenditure.

R&D cash

spend as a

percentage

ofrevenue

None See note APM 10 R&D cash spend and R&D investment as a percentage of revenue

excludes Global Manufacturing Solutions which is a manufacturing

services business and therefore has no R&D.

To provide a measure of the company’s expenditure on R&D relative to

its overall size which may be helpful in considering the Group’s longer

term investment in future product pipeline.

RECONCILIATION OF KPIS AND NON IFRS MEASURES CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 175

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Non-financial measures:

Alternative

Performance

Measure

Closest

equivalent

statutory

measure

Note reference to

reconciliation to

statutory measure Definition

Employee

engagement

Not applicable Not applicable We use our employee survey to measure how our employees feel about

working in TT using a scale of 1 (low) to 7 (high) against eight factors

(assurveyed by Best Companies Ltd). A company is awarded between

zero and three stars based on the employee feedback.

Provides a measure of employee sentiment and engagement.

Safety

performance

Not applicable Not applicable Safety performance is defined as the number of occupational injuries

resulting in three or more days’ absence per 1,000 employees. This KPI

allows us to compare our performance with that of our peers. We use a

UK benchmark published by the Health and Safety Executive and apply

this to all our facilities worldwide, reflecting our commitment to raising

standards globally.

Provides users additional information about the Group’s commitment

and achievements in the area of health and safety.

APM 1 – Organic revenue:

£million

Power and

Connectivity

Global

Manufacturing

Solutions

Sensors and

Specialist

Components Total

2023 revenue 169.7 299.2 145.0 613.9

2022 revenue 154.2 323.0 139.8 617.0

Foreign exchange impact (0.4) (10.9) – (11.3)

2022 revenue at 2023 exchange rates 153.8 312.1 139.8 605.7

Organic revenue increase (%) 10% -4% 4% 1%

£million

Power and

Connectivity

Global

Manufacturing

Solutions

Sensors and

Specialist

Components Total

2022 revenue 154.2 323.0 139.8 617.0

Acquisitions 7.9 – – 7.9

2022 revenue (excluding acquisitions) 146.3 323.0 139.8 609.1

2021 revenue 140.2 220.1 115.9 476.2

Foreign exchange impact 7.2 15.4 8.9 31.5

2021 revenue at 2022 exchange rates 147.4 235.5 124.8 507.7

Organic revenue increase (%) (1%) 37% 12% 20%

APM 2 – Effective tax charge:

£million 2023 2022

Adjusted operating profit 52.8 47.1

Net interest (9.8) (6.7)

Adjusted profit before tax 43.0 40.4

Adjusted tax (9.2) (8.4)

Adjusted effective tax rate 21.4% 20.8%

APM 3 – Return on invested capital:

£million 2023 2022

Adjusted operating profit 52.8 47.1

Average invested capital 440.0 448.6

Return on invested capital 12.0% 10.5%

APM 4 – Net capital and development expenditure (net capex):

£million 2023 2022

Purchase of property, plant and equipment (22.3) (11.4)

Proceeds from sale of investment property, plant and equipment and capital grants received 0.5 0.3

Capitalised development expenditure (1.6) (2.3)

Purchase of other intangibles (0.6) (0.6)

Net capital and development expenditure (24.0) (14.0)

RECONCILIATION OF KPIS AND NON IFRS MEASURES CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023176

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

APM 5 – Adjusted operating cash flow:

£million 2023 2022

Adjusted operating profit 52.8 47.1

Adjustments for:

Depreciation 14.0 13.9

Amortisation of intangible assets 2.5 2.2

Share based payment expense 3.1 4.8

Reimbursement of pension surplus 1.6 –

Other items (0.7) 0.5

Decrease/(increase) in inventories 4.5 (40.4)

Decrease/(increase) in receivables 10.5 (26.3)

(Decrease)/increase in payables and provisions (15.5) 27.9

Adjusted operating cash flow 72.8 29.7

Special payments to pension funds 3.2 –

Restructuring and acquisition related costs (4.0) (11.1)

Net cash generated from operations 72.0 18.6

Net income taxes paid (9.1) (5.9)

Net cash flow from operating activities 62.9 12.7

APM 6 – Adjusted operating cash flow post capex:

£million 2023 2022

Adjusted operating cash flow 72.8 29.7

Purchase of property, plant and equipment (22.3) (11.4)

Proceeds from sale of property, plant and equipment and government grants received 0.5 0.3

Capitalised development expenditure (1.6) (2.3)

Purchase of other intangibles (0.6) (0.6)

Adjusted operating cash flow post capex 48.8 15.7

APM 7 – Working capital cashflow:

£million 2023 2022

(Increase)/decrease in inventories 4.5 (40.4)

(Increase)/decrease in receivables 10.5 (26.3)

Increase/(decrease) in payables and provisions (15.5) 27.9

Working capital cashflow (0.5) (38.8)

APM 8 – Free cash flow:

£million 2023 2022

Net cash flow from operating activities 62.9 12.7

Net cash flow from investing activities (24.0) (22.3)

Add back: Acquisition of business – 8.3

Payment of lease liabilities (4.4) (4.3)

Interest paid (10.6) (7.5)

Free cash flow 23.9 (13.1)

APM 9 – Cash conversion:

£million 2023 2022

Adjusted operating profit 52.8 47.1

Adjusted operating cash flow post capex 48.8 15.7

Cash conversion 92% 33%

APM 10 – R&D cash spend as a percentage of revenue:

£million 2023 2022

Revenue (excluding GMS) 314.7 294.0

R&D cash spend 10.8 11.0

R&D cash spend as a percentage of revenue 3.4% 3.7%

APM 11 – Leverage:

£million 2023 2022

Adjusted operating profit 52.8 47.1

Depreciation 14.0 13.9

Amortisation 2.5 2.2

EBITDA 69.3 63.2

Adjustment to align with covenants (5.3) (5.1)

EBITDA (covenants) 64.0 58.1

Net debt as per note 26 126.2 138.4

Less: leases 20.8 23.1

Net debt excluding leases 105.4 115.3

Adjustment to align with covenants 1.2 (0.1)

Net debt (covenants) 106.6 115.2

Leverage (1.7) (2.0)

RECONCILIATION OF KPIS AND NON IFRS MEASURES CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 177

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

SHAREHOLDER

INFORMATION

Ex-dividend date for final dividend

11 April 2024

Record date for final dividend

12 April 2024

AGM and trading update

10 May 2024

Final dividend payment

15 May 2024

2024 half-year results

8 August 2024

Preliminary announcement of 2024 results

March 2025

Annual Report 2024

April 2025

DIVIDENDS

See page 25 for details on the dividend amount pershare.

ANNUAL GENERAL MEETING (AGM)

The next AGM will be held on 10 May 2024 at 11.30 a.m.

Detailsof the AGM procedure for 2024 are set out in detail

intheNotice of Annual General Meeting available at

www.ttelectronics.com/investors/agm-gm/

ARTICLES OF ASSOCIATION

The Company’s Articles of Association may only be amended

by special resolution approved at a general meeting of

theshareholders.

SHARE CAPITAL

The Company’s issued share capital comprises a single class

ofshare capital divided into ordinary shares of 25 pence each.

All issued shares are fully paid. The share capital during the year

is shown in Note 23 to the consolidated financial statements.

Therights and obligations attaching to the Company’s ordinary

shares are set out in the Company’s Articles of Association, a

copy of which can be obtained from Companies House in the

United Kingdom or by writing to the Group General Counsel and

Company Secretary. Subject to applicable statutes, shares may

be issued with such rights and restrictions as the Company

may decide by ordinary resolution, or (if there is no such

resolution or so far as it does not make specific provision)

asthe Board may decide.

Holders of ordinary shares are entitled to speak at general

meetings of the Company, to appoint one or more proxies and,

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023178

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

ifthey are corporations, to appoint corporate representatives

and to exercise voting rights. Holders of ordinary shares may

also receive a dividend, and on a liquidation may share in the

assets of the Company. In addition, holders of ordinary shares

are entitled to receive the Company’s Annual Report and

Accounts. Subject to meeting certain thresholds, holders

ofordinary shares may require a general meeting of the

Company to be held or the proposal of resolutions at Annual

GeneralMeetings.

VOTING RIGHTS AND RESTRICTIONS ON TRANSFER

OF SHARES

On a show of hands at a general meeting of the Company,

everyholder of ordinary shares present in person or by proxy,

and entitled to vote, has one vote and on a poll, every member

present in person or by proxy, and entitled to vote, has one

votefor every ordinary share held. You can find further details

regarding voting at the Annual General Meeting in the Notice

ofthe Annual General Meeting which accompanies this

document. None of the ordinary shares carries any special

rights with regard to control of the Company. Electronic and

paper proxy appointments and voting instructions must be

received by the Company’s Registrars not later than 48 hours

before a general meeting. A shareholder can lose their

entitlement to vote at a general meeting where that shareholder

has been served with a disclosure notice and has failed to

provide the Company with information concerning interests in

those shares. The Directors may refuse to register a transfer of

a certificated share which is not fully paid, provided the refusal

does not prevent dealings in shares in the Company from taking

place on an open and proper basis.

The Directors may also refuse to register a transfer of a

certificated share unless the instrument of transfer: (i) is lodged,

duly stamped (if stampable), at the registered office of the

Company or any other place decided by the Directors

accompanied by the certificate for the share to which it relates

and/or such other evidence as the Directors may reasonably

require to show the right of the transferor to make the transfer;

(ii) is in respect of only one class of shares; (iii) is in favour of

aperson who is not a minor, bankrupt or a person in respect

ofwhom an order has been made on the grounds that such

person is suffering from a mental disorder or is otherwise

incapable of managing their affairs; or (iv) is in favour of not

more than four transferees.

Transfers of uncertificated shares must be carried out using

CREST and the Directors can refuse to register a transfer of

anuncertificated share in accordance with the regulations

governing the operation of CREST.

The Directors may decide to suspend the registration of

transfers for up to 30 days a year, by closing the register of

shareholders. The Directors cannot suspend the registration

oftransfers of any uncertificated shares without obtaining

consent from CREST.

There are no other restrictions on the transfer of ordinary shares

in the Company except: certain restrictions may from time to

time be imposed by laws and regulations (for example, insider

trading laws or the Market Abuse Regulations 2015); pursuant

to the Company’s share dealing code whereby the Directors

andcertain employees of the Group require approval to deal

inthe Company’s shares; and where a shareholder with at least

a 0.25per cent interest in the Company’s certificated shares

has been served with adisclosure notice and has failed to

provide the Company with information concerning interests

inthoseshares.

The Company is not aware of any agreements between

shareholders that may result in restrictions on the transfer

ofordinary shares or on voting rights.

SHARE DEALING SERVICES

Shareview Dealing is a telephone and internet service provided

by Equiniti. It offers a simple and convenient way of buying

andselling TT Electronics plc shares.

Log on to www.shareview.co.uk/dealing or call 03456 037 037

between 8.00 a.m. and 4.30 p.m., Monday to Friday (except

bank holidays), for more information about this service and

fordetails of the rates and charges. Please note that telephone

lines remain open until 6.00 p.m. for enquiries.

A daily postal dealing service is also available and a form,

together with terms and conditions, can be obtained by calling

0371 384 2248*. Commission is 1.90 per cent with a minimum

charge of £70.

SHAREGIFT

ShareGift is a charity share donation scheme for shareholders,

administered by The Orr Mackintosh Foundation. It is especially

for those who may wish to dispose of a small parcel of shares

whose value makes it uneconomical to sell on a commission

basis. Further information can be obtained at www.sharegift.org

or from Equiniti.

SHAREHOLDER INFORMATION CONTINUED

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 179

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

SHAREHOLDER INFORMATION CONTINUED

5 March 2024 31 December 2023

Number % Number %

Blackrock, Inc 23,340,490 13.15 21,453,542 12.13

FIL Limited 17,651,300 12.03 17,651,300 12.03

Aberforth 14,832,779 9.10 14,832,779 9.10

BennBridge Limited 8,984,103 5.10 8,984,103 5.10

Slater Investments Ltd 8,915,000 5.06 8,915,000 5.06

M&G plc 8,764,166 5.00 8,764,166 5.00

Chelverton Asset Management Ltd 8,797,581 4.98 8,797,581 4.98

Schroders plc 8,672,794 4.91 8,672,794 4.91

Polar Capital LLP 8,539,130 4.88 8,539,130 4.88

Aberdeen Asset Management Ltd 7,8 35,077 4.83 7,835,07 7 4.83

NN Group N.V. 7,815,000 4.78 7,815,000 4.78

Franklin Templeton 7,590,000 4.64 7,590,000 4.64

MULTIPLE ACCOUNTS ON THE SHAREHOLDER

If you have received two or more copies of this document, this

means that there is more than one account in your name on the

shareholder register. This may be caused by either your name or

address appearing on each account in a slightly different way.

For security reasons, the Registrars will not amalgamate the

accounts without your written consent.

If you would like any multiple accounts combined into one

account, please write to Equiniti Limited at the address given

onthis page.

SUBSTANTIAL SHAREHOLDING NOTIFICATIONS

The Company had been notified of the following voting rights

attaching to TT Electronics plc shares in accordance with the

Disclosure and Transparency Rules at 5 March 2024 and

31December 2023.

So far as has been ascertained, no other person or corporation

holds or is beneficially interested in any substantial part of the

share capital of the Company.

SHAREHOLDER ENQUIRIES

Registrar

The Company’s Registrar is Equiniti Limited.

Equiniti provide a range of services to shareholders.

Extensive information including many

answers to frequently asked questions

canbe found online.

Use the QR code to register for FREE at

www.shareview.co.uk

Equiniti’s registered address is:

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA.

Equiniti offers a range of shareholder information online at

www.shareview.co.uk

WEBSITE

Information on the Group’s financial performance, activities

andshare price is available at www.ttelectronics.com

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023180

STRATEGIC REPORT GOVERNANCE & DIRECTORS’ REPORT FINANCIAL STATEMENTS ADDITIONAL INFORMATION

GLOSSARY

Advanced Air Mobility AAM

Annual General Meeting AGM

Alternative Performance Measure APM

A TT employee performance initiative BEInspired

Basis point bps

Command, Control, Communications, Computers,

Integration, Surveillance and Reconnaissance C4ISR

Capital Markets Day CMD

Compound annual growth rate CAGR

Carbon Disclosure Project CDP

Chief Operating Officer COO

Chief Executive Officer CEO

Chief Financial Officer CFO

Cash Generating Unit CGU

Consumer Prices Index CPI

Certificateless Registry for

Electronic Share Transfer CREST

Customer Relationship Management CRM

Climate Related Risks & Opportunities CRR&O

Defined Benefit DB

Driving the Electric Revolution DER

Deferred Share Benefit Plan DSBP

Employee Assistance Programme EAP

Earnings Before Interest, Taxes,

Depreciation and Amortisation EBITDA

Employee Benefit Trust EBT

Economic, Cultural and Governance ECG

Equality, Diversity and Inclusion ED&I

Electronics Industry Citizenship Coalition EICC

Executive Leadership Team ELT

Electro-Magnetic EM

Earnings Per Share EPS

Electric Power Steering EPS

Enterprise Resource Planning ERP

Environmental, Social and Governance ESG

European Union EU

Fair, Balanced and Understandable FBU

Financial Conduct Authority FCA

Future Combat Air Systems FCAS

Financial Reporting Council FRC

Financial Reporting Standards FRS

Financial Times Stock Exchange FTSE

Foreign Exchange FX

Financial Year FY

Generally Accepted Accounting Principles GAAP

Pounds Sterling (£) GBP

Gross Domestic Product GDP

Greenhouse Gas GHG

Global Manufacturing Solutions GMS

Global Positioning System GPS

Gigawatt hour/Kilowatt hour GWh/KWh

Health and safety H&S

Half (year) H

Human Resources HR

Health Safety & Environmental HSE

International Accounting Standards IAS

International Accounting Standards Board IASB

International Energy Agency IEA

Institute of Environmental Management

and Assessment IEMA

International Financial Reporting Standards IFRS

Internet of Things IoT

Intellectual Property IP

Intergovernmental Panel on Climate Change IPCC

Investor Relations IR

International Organisation for Standardisation ISO

Information Technology IT

Key Performance Indicator KPI

Light Emitting Diode LED

London Interbank Offered Rate LIBOR

Lost Time Incident LTI

Limited liability partnership LLP

Long-Term Incentive Plan LTIP

Mergers and Acquisitions M&A

Million M/m

Magnetic Resonance Imaging MRI

Morgan Stanley Capital International MSCI

Megawatt-hour MWh

Non-Executive Director NED

New Product Initiatives NPI

Net Zero Emissions NZE

Original Equipment Manufacturer OEM

On time in full OTIF

Power & Connectivity P&C

Profit Before Tax PBT

Public Limited Company PLC

Purchasing Managers’ Index PMI

The TT Remuneration Policy Policy

Private Placement PP

People, Social, Environmental and Ethics PSEE

Quarter (year) Q

Questions & Answers Q&A

Research and Development R&D

Responsible Business Alliance RBA

Revolving Credit Facility RCF

Chinese Yuan RMB

Regulatory News Service RNS

Return On Capital Employed ROCE

Return on Invested Capital ROIC

Retail Price Index RPI

Restricted Share Plan RSP

Sensors & Specialist Components S&SC

Sustainable Aviation Funds SAF

Save As You Earn SAYE

Science Based Targets initiative SBTi

Senior Independent Director SID

Senior Leadership Team SLT

Surface Mount Technology SMT

Stated Policies Scenario STEPS

Short-Term Incentive Plan STIP

Science, Technology, Engineering

and Mathematics STEM

Size, Weight, Power and Cost SWaP-C

Tonne t

Task Force on Climate-related

Financial Disclosures TFCD

TT Management Board TMB

The Board of Directors of TT Electronics plc the Board

UK Corporate Governance Code the Code

TT Electronics plc the Company

The Directors of TT Electronics plc the Directors

TT Electronics plc and its subsidiaries the Group

Total Shareholder Return TSR

TT Electronics plc TT

TT’s values TT Way

United Kingdom of Great Britain

and Northern Ireland UK

United Nations UN

Underlying Earnings Before Interest, Taxes,

Depreciation and Amortisation Underlying EBITDA

Weighted Average Cost of Capital WACC

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TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023182

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023 183

TT ELECTRONICS PLC | ANNUAL REPORT AND ACCOUNTS 2023184

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TT Electronics plc

Fourth Floor

St Andrews House

West Street

Woking

Surrey

GU21 6EB

Tel +44(0) 1932 825300

Fax +44(0) 1932 836450

For more information on

our business please visit