Share deals help TT to improve results

TT, the components manufacturer with aggressive shareholdings in AB Electronics and ML Holdings, has increased pre-tax profits by 10 per cent.

However, some of the increase is derived not from TT's manufacturing business but from dealing in the shares of target companies.

TT is run by two ex-Hanson executives, John Newman and Nicholas Shipp. Taxable profits were pounds 7.5m, up from pounds 6.8m in the six months to 27 June.

In June it raised pounds 6.8m in a placing of shares. Some of the money was used to buy Magnetic Materials in July.

It is currently in talks with AB management about possible links. Mr Shipp said TT had also met ML.

He added: 'The stakes are not necessarily a prelude to us bidding, but previously we have always taken holdings in companies we have later acquired.'

He explained that TT liked to have an equity stake so that it could benefit from the share price rise if it lost out to a rival bidder.

It also means TT can profit from its stakebuilding. In March TT bought 5 per cent of Renold, a chain maker.

It sold again in May after talks with the Renold board fell through, but TT's action sent Renold's shares from 46p to 68p.

Mr Newman said TT made a 'few hundred thousand pounds' profit from the shareholding but set against the profit were carrying costs and the cost of work done in pursuit of a possible bid.

He added that the cost of carrying other shareholdings were also to be set against the profit.

The profit on dealing in the Renold shares was taken in operating profits where it contributed to the 3 per cent increase.

The rest of the increase feeding from operating profits to the pre- tax line came from lower interest payments. Interest charges fell partly as a result of the placing and partly because rates were lower.

Earnings per share rose from 6.5p to 6.9p and the interim dividend was lifted from 2.2p to 2.4p.

The company's shares rose 1p yesterday to close at 198p. In May the stock struck a three-year high of 238p.