Final Results

1 March 2013

Laird PLC

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012

Laird PLC today announces results for the financial year ending 31 December 2012. Laird is a global technology company focused on providing components and solutions that protect electronic devices from electromagnetic interference and heat, and that enable wireless connectivity through wireless applications and antennae systems.

Highlights

Financial:

·; Revenue from continuing operations of £520.2 million, up 6% on 2011

·; Underlying profit before tax(i) of £60.7 million, up 17%

·; Profit before tax from continuing operations £45.1 million, up 54%

·; Improvement in operating margin to 13.1% (2011, 11.9%)

·; Full year underlying earnings per share(i) of 19.1 pence, up 18%

·; Statutory basic earnings per share 17.5 pence (2011, (44.8) pence)

·; Final dividend per share declared of 6.6 pence (2011, 5.3 pence). Total 2012 dividend of 10.0 pence, in-line with previously announced dividend recommendations (2011, 8.0 pence)

·; Cash conversion of 109% (2011, 104%)

Operational:

·; Additional capacity on stream to meet strong demand for tablets and smartphones

·; Strong margin improvement from new products, vertical integration, withdrawal from low margin business and operating efficiencies

·; Major Telematics automotive long-term contracts won for H2 2014

David Lockwood, Chief Executive, commented:

"In 2012, significant progress has been made to focus the Company on its three primary sources of sustainable differentiation - innovation, reliable fulfilment and speed. These are also the qualities that are most valued by Laird's customers.

The Company sells into global market segments with attractive growth prospects. This, together with Laird's clear strategic focus and increase in investment, provides a good platform from which to deliver its medium to long-term targets.

We expect first quarter revenues to be at a similar level to last year as we continue to see the impact of our exit from lower margin business and as customers adjust inventory in their supply chains. We expect revenues to be weighted towards the second half of the year, as a result of ours and our customers' product launches and seasonal factors, and we are confident of making good progress in 2013.

The Group has a strong balance sheet and demonstrable cash generation characteristics to fund further acquisitions, and drive further value for shareholders by enhancing Laird's capabilities and market access."

Explanatory notes:

(i) Laird uses underlying results as key performance indicators. Underlying profit before tax and underlying earnings per share are stated before exceptional items, the amortisation of acquired intangible assets, deferred tax on acquired intangible assets, goodwill and US capitalised development costs, the gain or loss on disposal of businesses, the impact arising from the fair valuing of financial instruments and acquisition transaction costs. The narrative is based on underlying operating profit, profit before tax and earnings per share, as the directors believe that these provide a more consistent measure of operating performance

(ii) The weighted average number of shares used to calculate earnings per share was 265.6 million in 2012 and 265.4 million in 2011

Results

The Group delivered a robust set of results with strong growth in profit, outstanding cash conversion, improving margins and increased revenues driven from the now fully integrated acquisitions. Revenue on an organic basis was level with last year largely as a result of market conditions which, with some notable exceptions, remained subdued.

Revenue from continuing businesses in 2012 was £520.2 million, up 6% (2011, £491.3 million). In US Dollars, revenue was $824.1 million (2011, $788.6 million).

Revenue on an organic basis was level with prior year in US Dollars (2011, 12%).

Sales to Laird's largest OEM customer accounted for 19% of revenue in 2012, an increase on 2011 (14%) as a direct result of the very strong demand from this customer who operates in one of the Group's growth sectors. The focus remains on ensuring Laird supplies the right balance of markets, and OEMs within those markets, in order to ensure that the Group is not over exposed to any one market or customer.

Underlying operating profit was £68.1 million in 2012, up 17% (2011, £58.4 million). In US Dollars, underlying operating profit was $107.9 million (2011, $93.7 million). Operating margin was 13.1%, up from 11.9% in 2011.

Underlying profit before tax from continuing businesses was £60.7 million in 2012, up 17% (2011, £51.7 million). In US Dollars, underlying profit before tax was $96.1 million (2011, $83.0 million).

Total exceptional costs for the year were £2.1 million, of which £1.5 million were in respect of acquisition transaction costs. Exceptional costs in 2011 were £8.1 million.

Underlying earnings per share were 19.1 pence, up 18% on 16.2 pence in 2011.

Dividend

The Board has declared a 2012 final year dividend of 6.6 pence per share (2011 5.3 pence), resulting in a total full year dividend of 10.0 pence (2011, 8.0 pence), in line with our recommendation for dividend payments to deliver a compound annual growth rate averaging 24% from 2010 to 2013.

The Board's dividend policy is to increase returns to shareholders over time, while taking account of both the underlying profitability and cash requirements of the business.

Strategy

Laird sells value not price.

The value that Laird sells is embedded in three strategic differentiators - innovation, reliable fulfilment and speed. These differentiators resonate with customers and enable the Group to create and capture value.

Operating Review

The Performance Materials division has the ambition to 'own the electronic environment'. At the heart of all the sectors the division serves are printed circuit boards (PCBs) that require controlled and stable conditions to deliver the intelligence that the modern world requires. The division has a unique portfolio of capabilities which enables it to work in collaboration with its customers to create design options the customer could not have foreseen if it were acting alone.

The Wireless Systems division 'enables wireless communication'. The customers of this division operate in sectors requiring high performance and high reliability. Equally importantly those customers are restricted by crowded and challenging radio frequency (transmission and interference) (RF) environments. Whether through antenna systems, wireless modules or machine to machine (M2M) solutions, the division is trusted by the major OEMs it serves to ensure the customer's total system will be securely connected.

This is best analysed by looking in more detail at the performance of each division.

Performance Materials 

The Division designs and supplies a full range of electromagnetic interference (EMI) shielding materials, thermal management solutions and signal integrity products (SIP), providing critical protection for a wide range of electronic devices, allowing them to function and connect effectively. These products isolate and protect sensitive electronic components and systems from the electronic emissions from other components, and filter and remove electromagnetic 'noise' and improve a device's performance through the efficient management of heat.

Divisional revenues increased by 6% in 2012 to £324.7 million (2011, £305.0 million). Organic revenue growth was 1% (2011, 9%).

By product line, the majority of the divisional revenues (69%) in 2012 were from EMI shielding materials, with 22% from thermal management solutions and 9% from signal integrity products.

By market segment, 25% of the division's revenues were from sales of EMI shielding materials to the Handset (Smartphone) market, 18% were from shielding and thermal solutions used in the IT market, 17% from the telecoms market, with the balance from the automotive, consumer, industrial, medical and military markets.

Underlying operating profit in the division increased 14% in the year to £48.9 million (2011, £43.0 million), and operating margin increased to 15.1% in 2012 from 14.1% in 2011. Improvements in profit resulted mainly from higher margin products and an ongoing, successful Continuous Improvement Programme which creates value for both Laird and its customers.

EMI

Revenue in the Company's EMI shielding business was up 11% year on year, driven by the substantial increase in sales of electromagnetic shielding components for smartphone and tablet products. To meet strong demand levels in this market, further capacity was added in China during the year, from which the initial benefit was seen in the second half of 2012. The EMI business is expected to continue to benefit from this increased capacity throughout 2013.

The telecoms market remained subdued due to lower infrastructure spend and EMI shielding revenues were 19% lower than in 2011 for this segment. Furthermore, demand was much lower for plasma display panel shielding as consumers continue to favour liquid crystal displays.

New contract wins in 2012 have included providing EMI solutions for eReaders (which provide both new customers and a new product market for Laird) and providing EMI shielding and thermal in entertainment products used in the automotive market.

In March, Laird announced the acquisition of Microwave Materials Group NV, a global leader in the development and manufacture of microwave absorbing materials, low-loss dielectrics and electrically conductive shielding materials. This added to Laird's existing EMI shielding and absorber product range for higher frequency, more powerful electronic devices and allows Laird to offer customers a more comprehensive range of shielding solutions. Laird will leverage its strong Asian footprint to expand Microwave Materials Group NV revenues beyond its home markets in the US and Europe.

Thermal

Revenue in the Thermal business was down by 8% year on year. The Thermal business' key market segments include Telecoms, IT and Medical. As within the EMI business, the telecoms market remained subdued due to lower infrastructure spend which led to reduced demand for thermoelectric coolers.

The Thermal Interface Materials Laird provides however, saw the benefit from the upgrading of PCBs used in telecoms equipment as well as increased Thermal content in new base stations installed to support 4G.

SIP

The SIP product line serves customers in the IT and printer market where revenue from this business has increased 2% year on year.

As electronic devices continue to evolve, with greater requirements for higher power and speed, the solutions Laird provides to protect and enhance each device's performance, remain critical for customers and their markets.

Wireless Systems

Laird designs and supplies a broad range of products, systems, and software solutions that enable wireless communication such as antennae, embedded wireless modules, telematics products, M2M devices, wireless automation and control systems, along with software solutions to enable asset management across a broad range of markets.

Divisional revenues increased by 5% in 2012 to £195.5 million (2011, £186.3 million). Revenue on an organic basis was 1% lower (2011, 18% higher).

By product line, Telematics/M2M accounted for 57% of divisional revenues in 2012, with 22% from Wireless Automation and Control Solutions, and 21% from Infrastructure Antennae Solutions.

By market segment, 58% of the division's revenues were from the automotive/transportation market. 19% were from industrial applications, 16% from the telecom sector, with the balance coming from other markets such as consumer and IT.

The division's underlying operating profit increased 14% in the year to £25.8 million (2011, £22.7 million). Operating margin increased from 12.2% in 2011 to 13.2% in 2012, with the margin advancement driven by improvements from vertical integration and further product rationalisation in Telematics/M2M solutions

Telematics/M2M

Revenues in the Telematics/M2M business, net of acquisitions, were 7% lower year on year. End-market demand remained robust in the North American automotive market but comparisons with the prior year are distorted due to inventory ownership changes in 2011 which led to a one-time increase in revenue that year.

During the year major new automotive contracts were won which will deliver benefits in 2014 and beyond, and include new GPS applications.

Steps were taken during the year to rationalise the product portfolio to exit lower margin, standardised product areas in accordance with Laird's strategy of differentiation. This resulted in lower revenue in the area of asset tracking, but leaves the business well positioned to focus on more profitable products and faster-growing segments going forward.

The acquisition of Summit, added to Laird's existing capabilities to offer non-cellular M2M modules in WiFi, to enable wireless systems to function in particularly harsh RF environments, such as in factories, warehouses and hospitals.

Wireless Automation and Control Solutions

Wireless Automation and Control Solutions' industrial and transportation markets have been less robust as some replacement rail programmes were deferred in 2012, particularly in North America, with revenues 6% lower. After-market services revenues were solid. Demand is increasing for more comprehensive wireless networking with diagnostic software, which should command higher margins.

Infrastructure Antennae

Revenue from the Infrastructure Antennae Systems business was 25% higher as a result of a sustained level of demand across multiple market segments, including WLAN, RFID, cellular networks and public safety. This demand has been driven by the continuing need for increased bandwidth and coverage required to make use of smartphones and other connected devices. This business also experienced good demand for antennae used within gaming consoles in the consumer entertainment market.

The demand for increased connectivity in everyday lives is expected to accelerate. More advanced solutions are being required as the industry evolves, which in turn creates sustained demand for Laird's products and systems. The rise of 'Infotainment' in the automotive industry, the proliferation of wireless connectivity within public infrastructure, and the provision for 4G in the telecoms market all contribute to the increasing demand for Laird's products and solutions.

Board changes

Two long-serving Board members, Bill Spivey and Andrew Robb, stepped down at the AGM in May, and Paula Bell joined the Board.

David Lockwood joined Laird as Chief Executive in August. Since David's appointment there have been a number of organisational changes to encourage more collaborative working across the business in pursuit of a single vision for the Group which was presented to City stakeholders in a Business Review in December 2012. He has also made a number of internal organisational changes which allows more collaborative working across the business units and enhances the operational culture. The senior 250 leaders in Laird attended a working conference to explore and understand how as a collective leadership, more value can be delivered to customers and ultimately shareholders.

Outlook

In 2012, significant progress has been made to focus the Company on its three primary sources of sustainable differentiation - innovation, reliable fulfilment and speed. These are also the qualities that are most valued by Laird's customers.

The Company sells into global market segments with attractive growth prospects. This, together with Laird's clear strategic focus and increase in investment, provides a good platform from which to deliver its medium to long-term targets.

We expect first quarter revenues to be at a similar level to last year as we continue to see the impact of our exit from lower margin business and as customers adjust inventory in their supply chains. We expect revenues to be weighted towards the second half of the year, as a result of ours and our customers' product launches and seasonal factors, and we are confident of making good progress in 2013.

The Group has a strong balance sheet and demonstrable cash generation characteristics to fund further acquisitions, and drive further value for shareholders by enhancing Laird's capabilities and market access

FINANCIAL REVIEW

Segments

Laird has two segments within Continuing Operations; Performance Materials and Wireless Systems. Laird's Handset Antennae business was divested during 2012 and is disclosed as Discontinued Operations in Note 3 to the Accounts.

Revenue

Revenue from continuing operations increased by 6% to £520.2 million for the full year in 2012 from £491.3 million in 2011. In US$, the increase was 5%.

In US$, Performance Materials revenues were 5% higher and Wireless Systems revenues were 4% higher. The table below shows revenue for each segment in US$ together with the incremental revenue contribution from acquisitions in 2012.

Segmental revenue is also disclosed in note 1.

Revenue to the largest customer, including revenue invoiced indirectly through its suppliers, amounted to 19% of revenue from Continuing Operations (2011, 14%). The top five customers accounted for 36% of revenue (including revenue invoiced indirectly through its immediate suppliers) in 2012 (2011, 32%).

Underlying Operating Profit / Operating Margin

The table that follows shows underlying operating profit for the business segments for 2012 and the comparative data for 2011 together with the operating margin percentage. Operating margin was 13.1% in 2012 (2011, 11.9%).

Gross margin of 40.0% (2011, 37.7%) has increased year on year largely due to higher margins on new products, savings from vertical integration and automation, and from the withdrawal from low margin business.

Operating margin for Performance Materials increased to 15.1% in 2012 (2011, 14.1%) and for Wireless Systems operating margin increased to 13.2% (2011, 12.2%).

Profit/Loss

Profit before tax from continuing operations was £45.1 million (2011, £29.3 million). Profit for the year after taxation and after discontinued operations was £46.5 million (2011, loss of £119.0 million).

Underlying Profit

Underlying profit before tax in the year was £60.7 million (2011, £51.7 million). Underlying profit is defined as profit before tax, exceptional items, amortisation of acquired intangible assets, the gain or loss on sale of businesses, the impact arising from the fair valuing of financial instruments, and acquisition transaction costs, as set out in note 6.

Exceptional Costs

Exceptional costs in the period amounted to £2.1 million for continuing operations (2011, £8.1 million, including £3.8 million for bid defence costs) of which £1.5 million were in respect of acquisition transaction costs.

Finance Costs

Finance costs, excluding a profit on the fair valuing of financial instruments of £0.4 million (2011, loss of £0.2 million) were £7.4 million, compared to £6.7 million in 2011.

Taxation

The underlying tax charge on total underlying profit before tax is equivalent to an average tax rate of 16.5% (2011, 17.1%). The average tax rate in 2013 is expected to be in the range 17% to 18%.

Profits in the USA continue to be sheltered by amortised goodwill deductions, resulting from acquisitions.

Discontinued Operations

Profit from discontinued operations was £12.9 million (2011 loss of £131.2 million) of which £7.7 million was a transfer of exchange gains from reserves in respect of the divested business.

Underlying Earnings

Continuing underlying earnings per share were 19.1 pence (2011, 16.2 pence). Underlying earnings are based on underlying profit less underlying tax and exclude deferred tax on acquired intangible assets, goodwill and US capitalised development costs. The average number of shares in issue throughout 2012 was 265.6 million (2011, 265.4 million).

Cash Flow

The table below provides a further analysis of cash flow to complement the notes to the Accounts.

* after adjusting for creditor decreases on exceptional items of £12.4 million

Cash conversion (operating cash flow as a proportion of operating profit) for continuing operations was strong at 109%. In addition there was an operating cash inflow from discontinued operations of £12.3 million.

Research & Development

Laird increased its investment in research and development in 2012. Expenditure on research and development increased by £5.6m (+18%) to £36.6m amounting to 7.0% of revenue (2011, 6.3%). A further step up in research and development is planned for 2013, which initially will slow the further improvement in operating margins that would otherwise be expected.

Treasury Policies

Laird has a centralised Treasury function, the objectives of which are to monitor and manage the financial risks of the Group and to ensure that sufficient liquidity is available to meet the requirements of the business. Group Treasury is not a profit centre and operates within a framework of policies and procedures.

Laird's Treasury uses derivative financial instruments to assist in the management of foreign exchange and interest rate risk, principally forward foreign exchange contracts and interest rate swaps. All hedging is carried out centrally and speculative trading is specifically prohibited by Group Treasury policy.

Interest Rate Risk

Laird is exposed to interest rate risk as it holds borrowings on both a fixed and floating basis. Laird's policy for this risk is to optimise the mix of fixed and floating rate borrowings using interest rate swaps and forward rate agreements to manage Laird's finance costs.

Credit and Counterparty Risk

Laird's policy on counterparty risk management is to place cash deposits and other financial instruments with its relationship banks, all of which also provide credit facilities to Laird. The level of exposure to each bank is continually monitored. As at 31 December 2012 all cash and short-term deposits had a maturity of less than three months.

Foreign Exchange Management

Laird aims to minimise its exposures to US Dollar transactional currency exposures by matching local currency income with local currency costs. Laird aims to forward cover at least 75% of the unmatched cash flows on a quarterly basis.

Foreign currency borrowings are used partially to hedge the currencies of the Group's principal assets and cash flows. Where foreign currency borrowings are in the same currency as investment in overseas assets they are treated as a hedge of the net investment.

Net Borrowings and Debt Facilities

Net borrowings were £106.8 million (2011, £117.7 million).

A cornerstone of Laird's financial planning is to ensure that the Group maintains committed loan finance which provides sufficient headroom above expected borrowing requirements and has a significant proportion with terms that exceed one year. Laird has £235 million (2011, £235 million) of bilateral revolving credit facilities which do not expire until April 2016.

In addition, Laird has in issue $140.0 million (£86.1 million) of US Dollar Private Placement notes which have remaining terms of just under two years (2014, $97.0 million), and four years (2016, $43.0 million).

Covenants

A key consideration for financial planning is to maintain sufficient headroom between borrowings and the ceiling set by the covenants. Laird's bank facilities and US Private Placement loan notes contain two principal financial covenants; net debt/EBITDA (earnings before exceptional items, interest, tax, depreciation and amortisation), and interest cover.

For the year ended 31 December 2012, net borrowings were 1.2 times EBITDA, 34% of the maximum permitted of 3.5 times. Interest cover was 10.1 times against the minimum requirement of 3.0 times. Thus, there was considerable financial headroom.

The expected headroom is routinely estimated against the covenants and the sensitivity to a number of alternative scenarios is tested to ensure ongoing compliance. The Group does not anticipate approaching its covenant limits in the foreseeable future.

Currencies in 2012

Local currency exposures are balanced where possible but the Group operates a global business and this creates currency imbalances where operating and procurement costs may not be able to be matched with revenues in local currencies.

In 2012, circa 75% of revenues were negotiated in US$. With circa 40% of the cost base in US$, there is a large US$ surplus. Approximately 10% of revenues are negotiated in both Renminbi and Euros.

In most currencies (other than US$ and Euro), costs exceed revenues, the most significant being the Renminbi (RMB) which accounts for approximately 40% of Laird's cost base. This imbalance led to an adverse impact, in so far as the strengthening of the RMB may not have been fully recovered in US$ selling prices.

In addition, there is a translation impact in converting profits into the Group's reporting currency (Sterling); each US$0.01 appreciation against sterling approximates to an annual increase in operating profit of £0.4 million. In 2012, on average through the year the US$ was stronger against sterling than in 2011 and this increased profits on translation by £0.8 million.

The majority of the Group's assets are held overseas and these are hedged in part by foreign currency loans.

Pensions

There are 31 employees who are active members of defined benefit plans and approximately 1,600 deferred and current pensioners. There is an overall defined benefit pension scheme deficit under IAS 19 of £1.5 million at 31 December 2012. At 31 December 2011, there was an overall surplus of £1.0 million.

The principal driver of the year-on-year change resulting in a deficit was a reduction in the bond rate used to discount liabilities from 4.95% in 2011 to 4.4% in 2012, which contributed to the increase in the estimate of liabilities. This was offset by an experience gain on liabilities as a result of using updated data from the formal triennial valuation carried out at 1 January 2012.

Shareholders' Funds

Shareholders' funds at the 2012 year end were £440.9 million (2011, £440.4 million). The reconciliation is set out in the Group statement of changes in equity.

Return on Capital Employed

Return on capital employed (underlying profit before interest and tax as a proportion of average shareholders' funds plus net borrowings during the year) was 12.4% in 2012 compared to 9.7% in 2011.

Group income statement

for the year to 31 December 2012

*before amortisation of acquired intangible assets, exceptional items, deferred tax on the amortisation of acquired intangible assets, goodwill and US capitalised development costs, the gain or loss on disposal of businesses, the impact arising from the fair valuing of financial instruments and acquisition transaction costs

Group statement of comprehensive income

for the year to 31 December 2012

Group statement of changes in equity

for the year to 31 December 2012

Group statement of financial position

as at 31 December 2012

The accounts were approved by the Board of Directors on 28 February 2013 and were signed on its behalf by:

D C LOCKWOOD

J C SILVER

Directors

Group cash flow statement

for the year to 31 December 2012

Notes to the financial statements

for the year ended 31 December 2012

1 Segmental analysis

In 2011, the Group reported the following segments for continuing operations: Performance Materials, Wireless Systems and Discontinued businesses.

During 2012, Discontinued businesses has been reclassified as Discontinued operations.

Following this change, the reportable segments for continuing operations (as defined by IFRS5) are as follows:

·; Performance Materials - designs and supplies a range of EMI shielding materials, thermal management solutions and signal integrity products to a wide variety of electronic devices, and

·; Wireless Systems - designs and supplies a range of high specification wireless antennae, and machine-to-machine ("M2M") wireless modules for a number of markets including infrastructure and automotive markets.

Discontinued operations comprise the Handset Antennae business.

The Group did not have any inter-segment revenue in 2012 and 2011.

Revenue from one customer of the Performance Materials division and Wireless Systems division represents approximately £91.0m (2011, £65.0m) of the Group's total revenues.

Unallocated costs are central costs related to managing the parent company.

\* These relate to other business segments disposed of in years before 2012

2 Operating profit before finance costs and tax  

Note

(a) Included in selling, administration and other expenses are £2.1m (2011, £8.1m) of exceptional items as described in note 7 to the financial statements and £13.9m (2011, £14.1m) of amortisation relating to acquired intangible assets.

(b) Included in research and development expenditure is £5.3m (2011, £3.9m) of amortisation in respect of capitalised development costs.

(c) Cost of inventories recognised as an expense within cost of sales was £221.6m (2011, £222.4m).

3 Exceptional items

 Note

4 Discontinued operations

Discontinued operations comprise the Handset Antennae business. An agreement was completed on 2 November 2012 with Shenzhen Sunway Communication Co., Ltd ("Sunway") to dispose of the entire issued share capital of Laird Technologies (Beijing ) Co., Ltd for a cash consideration of £17.5m. Laird Technologies (Beijing ) Co., Ltd was the owner of assets which are associated with the Handset Antennae business. Total assets disposed of £13.8m included £12.0m of property, plant and equipment. The profit on prior year disposals represents a reassessment of provisions for warranty claims.

5 Earnings per share

The calculation of basic and diluted earnings per share is based on the profit / (loss) for the year divided by the daily average of the number of shares in issue during the year. Diluted earnings per share is based on the same profit / (loss) but with the number of shares increased to reflect the daily average effect of relevant share options granted but not yet exercised where performance conditions have been met and shares contingently issuable.

6 Underlying results

Underlying profit and earnings per share are shown as the Board considers them to be relevant guides to the performance of the Group. The tax charge for the year is equivalent to 16.5% (2011, 17.1%) of underlying profit before tax.

Underlying tax is stated before exceptional items, deferred tax on the amortisation of acquired intangible assets, goodwill and US capitalised development costs, the gain or loss on disposal of businesses, the impact arising from the fair valuing of financial instruments and acquisition costs. The deferred tax impact of short-term losses and current tax on the amortisation of acquired intangible assets and goodwill are included in the calculation of underlying tax.

7 Dividends paid and proposed

On 28 February 2013 the Board declared, subject to approval from shareholders, a final dividend of 6.6p per share (2011, 5.3p). The final dividend will be paid on 7 June 2013 to shareholders registered on 10 May 2013. Dividends paid are charged to retained earnings on the earlier of the date of payment or the date on which they become a legal liability of the Company.

* attributable to the year

8 Business combinations

Acquisition of businesses in 2012

On 1 March 2012, Summit Data Communications Inc, a designer and supplier of wireless modules which provide secure and reliable wireless connectivity in industrial and medical markets, was acquired for a total consideration of £14.0m. On acquisition there was maximum potential contingent consideration of £5.1m. As at the acquisition date, the fair value of the contingent consideration has been estimated at £nil.This purchase has been accounted for as an acquisition and all intangible assets were recognised at their respective fair values. The fair values are provisional. The residual excess over the net assets acquired is recognised as goodwill in the financial statements.

Book and fair values of the net assets of the business acquired, stated at rates of exchange at the date of acquisition, were as follows:

The Group has acquired a 100% interest in the acquisition noted above. Underlying profit before tax for the entity acquired in the period was £1.2m following acquisition. If the acquisition had been held for the full year, 2012 revenues would have been £1.7m higher, at £521.9m and the profit before tax would have been unchanged at £45.1m. Profit before tax for the entity acquired following acquisition on an IFRS basis was £0.9m. Included in the £8.5m of goodwill recognised above are certain assets that cannot be individually separated and reliably measured due to their nature. These items include the expected value of synergies.

Acquisition of businesses in 2012

On 9 May 2012, Microwave Materials Group NV, the holding company of Emerson & Cuming Microwave Products, a designer and supplier of microwave absorber products, was acquired for a total consideration of £16.9m. This purchase has been accounted for as an acquisition and all intangible assets were recognised at their respective fair values. The fair values are provisional. The residual excess over the net assets acquired is recognised as goodwill in the financial statements.

Book and fair values of the net assets of the business acquired, stated at rates of exchange at the date of acquisition, were as follows:

The Group has acquired a 100% interest in the acquisition noted above. Underlying profit before tax for the entity acquired in the period was £1.2m following acquisition. If the acquisition had been held for the full year, 2012 revenues would have been £4.9m higher, at £525.1m and the profit before tax would have been £0.2m higher at £45.3m. Profit before tax for the entity acquired following acquisition on an IFRS basis was £0.8m. Included in the £11.0m of goodwill recognised above are certain assets that cannot be individually separated and reliably measured due to their nature. These items include the expected value of synergies.

9 Additional cash flow information

Cash generation from operations

Note

Note

Net cash outflow on acquisitions and disposals

Analysis of movements in net borrowings