Final Results

10 March 2011

LAIRD PLC

AUDITED RESULTS

FOR THE YEAR TO 31 DECEMBER 2010

Peter Hill, Chief Executive, said:

"During 2010 Laird emerged strongly from the global recession and financial crisis. The decision to maintain our spend, during this period, on R&D and engineering has resulted in an expansion of our customer base and increasing penetration with most of our existing customers. The majority of our markets also showed a progressive recovery during 2010.

Our strategy has served us well through the difficult trading of the past two years and will continue as market recovery gathers momentum. With a strong financial position and attractive fundamentals in our key markets, we are well placed to make further good progress in 2011."

Summary

·; Strong improvement in results compared with 2009, with benefits from end market recovery, new product development and other actions taken.

·; Revenue for the year of £567.4 million, up 7% (up 15% excluding the Mechanisms product line from which we are exiting).

·; Customer base expanded and concentration reduced. Percentage of revenue to our largest OEM customer was 19% in the year, less than half of the 40% in 2009.

·; Higher revenues, operating margin improvement (to 9.5% in the second half of the year) and a lower interest charge resulted in underlying profit before tax increasing by 52% to £40.2 million.

·; Cattron acquisition successfully completed and bedding in well, moving Laird further into more complete, software driven products and systems.

·; Strong cash generation, with operating cash flow from continuing operations of £41.2 million, and operating cash conversion after capital expenditure of 89%.

Full year dividend of 6.3 pence, up 5%.

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 and goodwill, the gain or loss on disposal of businesses, the impact arising from the fair valuing of financial instruments, and acquisition transaction costs. The narrative that follows 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.

* The weighted average number of shares used to calculate basic earnings per share was 266.0 million in 2010 and 211.6 million in 2009, following the Rights Issue announced in October 2009.

Overview

Laird is a leader in the design, manufacture and supply of customised, performance critical products, systems and controls for wireless and other advanced electronic applications. We design, develop and supply the technology that allows people, organisations, industrial applications and electronic devices to connect efficiently, locally and globally. We provide technology for a connected world.

In 2010 we began the recovery from the global recession and associated credit constraints that prevailed during the second half of 2008 and during 2009. We saw the benefits of the decisive actions we took during that period to reduce costs, and from our decisions to maintain engineering and R&D expenditure. This allowed us to increase our new product development, broaden our customer base, and improve our operating margins, resulting in underlying pre-tax profits growing by more than 50%.

Through our acquisition of Cattron Group International Inc. ("Cattron") late in 2010, we have expanded into the wireless systems and controls area which brings with it services and aftermarket revenues. This acquisition will form a base for further expansion into other "vertical markets" with requirements for hardware, software and systems applications.

We are well placed to make further good progress during 2011.

Results

Revenue from continuing operations in 2010 was £567.4 million, up 7% (2009, £528.8 million). Excluding Mechanisms whose closure was announced at the half year, revenues increased 15% in the year. Total revenues in the second half of 2010 were up 7% on those in the first half expressed in Sterling. We saw good growth in 2010 compared to 2009 in both our Performance Materials and Wireless Systems divisions.

Sales to our largest OEM customer in 2010 accounted for 19% of total revenues (2009, 40%). This percentage is expected to reduce further to between 10% and 15% of total revenues in 2011, and is expected to stabilise in this range by the end of this year. We have grown all other revenues by 44% in the year, broadening our customer base, in particular with a leading supplier of smartphones and tablets.

Underlying operating profit from continuing operations was £46.4 million in 2010, up 38% (2009, £33.6 million). Operating margin was 8.2%, up from 6.4% in 2009. The operating profit in the second half of 2010, at £27.9 million, grew strongly compared with the £18.5 million in the first half. Underlying operating margin in the second half of the year was 9.5%, compared with 6.7% in the first half.

Underlying profit before tax from continuing operations was £40.2 million in 2010, up 52% (2009, £26.5 million). We believe this to be a very creditable result, given the significant reduction in revenues from our largest customer, rising China labour costs, and the adverse effects of exchange rate movements.

We announced the closure of our Mechanisms business at the half year, and subsequently undertook restructuring actions including headcount reductions and the consolidation of manufacturing facilities, particularly in respect of handset antennae and the combining of our EMI shielding and handset metals product lines. These actions resulted in exceptional costs from continuing operations of £36.9 million being incurred in the year, of which £21.1 million were non cash costs, principally asset impairment charges arising from the closure of the Mechanisms business. Exceptional cash spend in the year was £6.9 million, including cash spent on exceptional items provided for in 2009, and cash spend on these items in 2011 will be £11.1 million. Annualised savings are expected to be approximately £10 million.

Statutory loss before tax from continuing operations in 2010, after exceptional items, the amortisation of acquired intangibles, the gain or loss on the disposal of businesses and the fair valuing of financial instruments, was £8.6 million (2009, £4.6 million profit).

We again focused strongly on cash generation in 2010, limiting the working capital outflows despite revenue growth, and with capital expenditure held below depreciation. Operating cash flow after capital expenditure from continuing operations was £41.2 million (2009, £49.7 million). Cash conversion after capital expenditure was healthy at 89% despite the volume and revenue growth (2009, 148%, reflecting the marked fall off in revenues in that year compared to 2008).

Net borrowings at 31 December 2010 were £103.6 million (2009, £45.4 million), with the increase largely due to the acquisition of Cattron in November 2010. Net debt to EBITDA at year end was a very comfortable 1.4 times, giving both balance sheet strength to withstand any external shocks, as well as headroom to pursue additional value added acquisitions.

Underlying earnings per share from continuing operations were 11.8 pence, up 23% (2009, 9.6 pence, adjusted for the bonus element of the October 2009 rights issue), reflecting the higher profits offset by the greater number of shares in issue.

Dividend

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.

The 2009 full year dividend was set at 6.0 pence per share (2008, 10.31 pence), a level which allowed funding of growth opportunities while pursuing a progressive dividend policy. The Board then declared an interim dividend for 2010 of 2.1 pence, and is recommending a final dividend of 4.2 pence per share, giving an annual dividend of 6.3 pence, growth of 5%.

Outlook

During 2010 Laird emerged strongly from the global recession and financial crisis. The benefits of maintaining our spend, during this period, on R&D and engineering has resulted in our expanding our customer base and increasing our penetration with most of our existing customers. The majority of our markets also showed a progressive recovery during 2010. We believe our strategy to be enduring, the fundamentals of our markets remain attractive, our financial position is strong, and we are well placed to pursue further profitable growth.

Strategy

Laird's enduring strategy is driven by the overarching objective of creating and growing shareholder value, by developing a unique capability to provide our customers with a wide range of performance critical electronics products, systems and solutions. Our growth strategy encompasses five key elements:

1. Focus on specialist high growth markets

2. Increase content and value-add in each electronic device/unit

3. Exploit innovation and technology, and product convergence

4. Develop systems and controls combining hardware and software

5. Maintain a culture of operational excellence allied to corporate social responsibility

Our strategy, developed over a number of years is, we believe, enduring, and has proved its mettle in the recession. We believe that "breadth is strength" and that, together with the elements outlined above, will over time deliver superior shareholder value.

Focus on specialist high growth markets

Choice of markets is key to our growth strategy. In recent years we have focused on those showing high growth potential, extending our presence via capital investment in technological and operational excellence and via strategic acquisitions. We are focusing on a "path to growth" that builds on our materials science and component products, and our wireless antennae offering, leading to convergence products and total systems.

Increase our content and value-add in each electronic device/unit

Higher speed, power and performance of electronic devices, as well as the increasing trend to wireless connectivity, drives an increasing need for our products and solutions. By broadening our technology capabilities over recent years we are now able to offer a unique range of components and systems, which in turn gives us access to new, high growth market segments and ensures we are well-equipped to develop and deliver the solutions required by our customers in the future.

Exploit innovation and technology, and product convergence

A valuable source of technology-based competitive advantage is our ability to combine products and solutions and exploit convergence, both technological and physical, by the bundling of components and in the supply of modules and sub-assemblies, allowing us to deliver multi-functional value to our customers, whilst simplifying their supply chain.

Develop systems and controls combining hardware and software

We believe that we can achieve both higher margins, and more sustainable revenue streams, including services and aftermarket revenues, through an increasing focus on systems and controls that combine hardware, software and assemblies. Building on our acquisitions in the wireless M2M areas and our acquisition of Cattron with its wireless systems controls, we see this as a key growth area for the future in a number of selected markets.

Maintain a culture of operational excellence allied to corporate social responsibility

Our focus on operational excellence is a key component of our success, from supplying our customers 'just in time' to being the lowest cost supplier. As part of our commitment to this philosophy, and in recognition that responsible manufacturing practices are essential for sustainable, long term growth, we are, amongst other areas, making strategic investments in upgrading production capabilities, targeting supply chain efficiencies, allied to compliance with the Electronics Industry Citizenship Coalition Code of Conduct and continuous improvement through our Six Sigma programme.

PERFORMANCE MATERIALS DIVISION

As part of the new divisional structure, we combined our EMI shielding product lines with our handset metals product lines at the end of the year, providing greater focus, the ability to better exploit product synergies, and the opportunity to take out duplicate costs. The figures above have been stated accordingly.

The division designs and supplies a full range of EMI shielding materials, thermal management solutions and signal integrity products. These provide critical protection for a wide range of electronic devices, allowing them to function and connect effectively, whether for voice or visual communication or for high quality data storage and transmission.

Our EMI shielding products isolate sensitive electronic components and apparatus from electromagnetic emissions, which can interfere with their operation and performance; our thermal management materials protect and improve a device's performance through the transfer of heat, while our ferrite-based signal integrity products remove and filter unwanted or harmful electromagnetic "noise" generated by active components.

Divisional revenues increased by 25% in 2010 to £287.4 million due to increased customer demand, penetration of new market segments as a result of new product developments, and market share gains.

The majority, 68%, of the divisional revenues in 2010 were from EMI shielding materials including board level shields for mobile handsets and tablets, with 22% from our thermal management solutions and 10% from our signal integrity products.

By market segment, 46% of the division's revenues in 2010 were to the IT, telecommunications and datacommunications sectors, 15% were to the mobile handset market, with the balance to the consumer electronics, industrial and instrumentation, medical, aerospace and defence markets.

The division has performed well, across all of its product lines, growing revenues in excess of market growth. We have seen strong growth in sales to the IT, telecoms, datacoms and consumer segments, and good but more modest growth in our military/aerospace, medical and industrial sales. Revenues into the PC notebook and flat screen TV segments were flat year on year, with volume growth offset by reductions in average selling prices.

Our EMI shielding product lines performed well, with revenues up 19% year on year, with the reduction in board level shield (BLS) sales for mobile phone handsets to our largest customer being more than offset by strong growth in BLS revenues for other smartphones and into the tablet segment.

Following a number of new product introductions in our thermal product lines, particularly gap fillers, thermoelectric coolers and PCB thermal products for LED applications, our thermal revenues increased by 31% year on year, to another record level.

Following a re-engineering of our signal integrity product lines, revenues from these increased by 59% year on year, also to a record level.

Underlying operating profit in the division increased 40% in the year to £38.7 million (2009, £27.6 million), and return on sales was up from 12.0% in 2009 to 13.5% in 2010.

The closure of our signal integrity products manufacturing in Mexico, and its transfer to China, was completed successfully. The division's EMI and thermal production capacity and capabilities were further enhanced at our Shenzhen and Tianjin facilities in China, while production in the Czech Republic and Sweden was maintained at similar levels to 2009.

The higher power, speed and performance of electronic devices is expected to underpin demand for our Performance Materials division's products. We continue to concentrate on new product development, and on enhancing the performance and competitiveness of our products. The division is well placed to make further progress in 2011.

WIRELESS SYSTEMS DIVISION

As part of the new divisional structure, we combined our handset antennae into our Wireless Systems division, to better obtain product and technology synergies. The figures above have been stated accordingly.

We design and supply a range of customised, high specification wireless antennae, machine-to-machine ("M2M") wireless modules which can include micro-processors and embedded software, and software enabled wireless control systems, for the infrastructure, automotive, rail, transportation, municipal, industrial, mining, instrumentation, datacom, security, retail and asset management markets. We are also a leading global supplier of customised, high performance antennae and products to the global mobile phone handset and handheld device manufacturers, enhancing connectivity, performance and physical functionality.

Divisional revenues increased by 5% in 2010 to £262.3 million (2009, £249.9 million).

50% of the division's revenues in 2010 were to the mobile handset market, with telematics antennae into the automotive market representing 29%. 13% of revenues were from the infrastructure, datacom, security and asset management sectors, 6% from sales of wireless M2M modules and 2% from industrial control systems.

Our handset antennae systems product line has been successful in diversifying its customer base and in shipping higher volumes of antennae units. Our new generation of three dimensional laser directed structure antennae went into full commercial production during the year, and we made further progress in the development of a unique "full metal cover antennae", that uses the external cover of a phone as an antenna, increasing external design options for the customer and improving antenna performance.

However, design changes by customers, the effect of programme mix and customer price-downs resulted in a further decline in average selling prices. These effects more than offset the higher volumes, with the result that handset antennae revenue declined by 20% year on year.

We saw excellent growth in our telematics product line, as a result of a recovery in underlying demand, a broadening of the customer base, and market share gains. Revenues into this segment grew 55% year on year. Our commercial wireless module sales, predominantly into the industrial and electronics point-of-sale markets, doubled year on year.

Our infrastructure antennae product lines grew well overall, despite a slow start to the year, with total infrastructure antennae sales growing 20% year on year. The growth was driven largely by a recovery in wireless local area networks in North America, and our successfully gaining market share in Asia and Europe. WiMax, land mobile and portable radio, cellular and RFID antennae sales also grew.

The division's underlying operating profit increased 30% in the year to £15.0 million (2009, £11.5 million). Return on sales increased from 4.6% in 2009 to 5.7% in 2010, with the margin increase driven primarily by the overall rise in revenues, as a result of increased activity in the automotive sector. Underlying operating profit showed strong growth in the second half of 2010 (£10.2 million) compared with the first half (£4.8 million), as a result of the higher revenues; return on sales in the second half increased to 7.4% compared with 3.8% in the first half of the year.

Towards the end of 2010 we commenced a restructuring of our handset antennae product lines. This involves further headcount reductions in Europe and North America, the relocation of antennae assembly from Chennai, India, and Korea to China, and the consolidation of all manufacturing and assembly into our Beijing facilities. These actions will reduce the cost base overall, benefitting both 2011 and 2012, notwithstanding the rising cost of direct labour in China.

In telematics and in our infrastructure antennae product lines we are working on improving margins through greater vertical integration of our manufacturing processes, particularly in respect of surface mount PCB technology and injection moulding. We also expect the continuing revenue growth in these product lines to provide greater economies of scale.

Cattron, acquired in November 2010, is bedding in well and has performed above our expectations. The acquisition has brought a diversification in terms of customers and end-markets, a greater focus on software and systems, and aftermarket revenues from services, parts and spares, all at margins higher than our historical average.

We expect some further reduction in average selling prices in our handset antennae product lines, before stabilising during the second half of 2011. In telematics, infrastructure antennae, wireless M2M modules and our Cattron business, on the other hand, we expect further revenue and margin growth as a result of growing demand from these market segments, our new product development programmes, the enhancement of our technology capabilities and through continuing geographic expansion. Overall, we expect the division to demonstrate further progress in 2011.

FINANCE DIRECTOR'S REPORT

Revision to Segments

In 2010, Laird changed its organisational structure to respond to developments in its principal markets served. The three divisions disclosed in 2009, Performance Materials, Handset Products and Wireless Systems, became two as the Handset Products division was disassembled. Specialty Precision Metals (previously known as Handset Metals) became organised under Performance Materials and Handset Antennae became organised under Wireless Systems. Handset Actuation Mechanisms is being closed and is disclosed separately.

Revenue

Revenue from continuing operations increased to £567.4 million in 2010 from £528.8 million in 2009. Performance Materials revenues were 25% higher, Wireless Systems revenues were 5% higher and Mechanisms revenues 64% lower. The table below shows revenue for each half year for both 2009 and 2010.

Revenue on the new segmental basis is also disclosed in note 1. The old segmental basis, as used in the 2009 Report and Accounts, is disclosed in note 10.

Revenue invoiced to the largest customer in 2010 represented 16% of total revenue (2009, 35%). Total revenue in respect of that customer including revenue invoiced indirectly through its suppliers amounted to 19% of revenue (2009, 40%). The top 5 customers accounted for 40% (including revenue invoiced indirectly through their suppliers) of revenue in 2010 (2009, 51%).

Underlying Operating Profit / Net Margins

The table below shows underlying operating profit. Net margins for the full year were 8.2% in 2010 (2009, 6.4%). Margins were 6.7% in the first half and 9.5% in the second half of the year.

Gross margins increased by 2.8% to 33.3% notwithstanding labour inflation in China adding some £4 million to the cost base and exchange rate imbalances adding a further £4 million.

Net margins for Performance Materials were 13.5% in 2010 (2009, 12.0%) and for Wireless Systems net margins were 5.7% (2009, 4.6%). The Mechanisms business is being closed and following a significant reduction in overheads as its products go end of life, it was back in surplus in the second half.

Profit

The loss before tax from continuing operations was £8.6 million (2009, profit of £4.6 million). There was no profit or loss from discontinued operations in 2010 (2009, loss of £1.9 million).

Underlying Profit

Continuing underlying profit before tax in the year was £40.2 million (2009, £26.5 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 5.

Exceptional Costs

Exceptional costs of £36.9 million were incurred in the year (2009, £10.2 million) of which £21.1 million is non-cash. The closure of the Mechanisms business accounts for £20.0 million of the charge and includes asset impairment charges of £18.1 million.

The disassembling of the Handset Products division, the restructuring of the Handset Antennae business to align its cost structure to a lower revenue base and the consolidation of the Handset Metals product line business into Performance Materials added £9.8 million to the exceptional charge. These initiatives reduce the cost base by approximately £10 million in a full year and £7 million in 2011.

In addition, the transaction costs of £2.2 million, for acquiring Cattron, have been disclosed as exceptional.

Note 3 analyses these costs by division. The cash outlay in the period was £6.9 million (including cash spent on exceptional items provided for in 2009) with a further cash outlay of £11.1 million to come in 2011 for costs provided for in 2010.

Finance Costs

Finance costs, excluding a gain on the fair valuing of financial instruments of £1.2 million (2009, gain of £1.6 million) were £6.2 million compared to £7.1 million in 2009. Interest cover was 8 times, compared to the minimum of 2.5 required by the covenant in the Group's principal loan agreements.

Taxation

The underlying tax charge on total underlying profit before tax is equivalent to an average tax rate of 21.9%, a reduction on 23.4% in 2009. The average tax rate is likely to be around 20% in 2011.

Profits in the USA continue to be sheltered by amortised goodwill deductions resulting from acquisitions. A significant proportion of profits are also from jurisdictions with low tax rates or with tax incentives.

Underlying Earnings

Continuing underlying earnings per share were 11.8p (2009, 9.6p). Underlying earnings are based on underlying profit less underlying tax and exclude deferred tax on acquired intangible assets and goodwill. Following the Rights Issue in October 2009, there were more shares in issue throughout 2010 with an average of 266.0 million in 2010 (2009, 211.6 million).

Cash Flow

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

* after adjusting for creditor increases on exceptional items of £7.9 million.

There was a good cash conversion (operating cash flow as a proportion of operating profit) result of 89%. With the deferral of the payment of the 2009 interim dividend (£7.1 million) into January 2010, three dividends in total were paid in 2010. The interim dividend for 2010 was paid in December 2010.

Treasury Policies

Laird has a centralised Treasury function whose objectives 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 our relationship banks, all of whom also provide credit facilities to Laird. The level of exposure to each bank is continually monitored. As at 31 December 2010 all cash and short-term deposits had a maturity of less than one month.

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 cover forward at least 75% of the unmatched cash flows on a quarterly basis.

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

Net Borrowings and Debt Facilities

Overall, net borrowings increased by £58.2 million to £103.6 million; £55.5 million of the increase due to the acquisition of Cattron.

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 £265 million (2009, £265 million) of bilateral revolving credit facilities which do not expire until August 2012. Laird is currently in discussions with its banks to replace these facilities with new five year facilities.

In addition, Laird has in issue $146.7 million (£93.4 million) of US Dollar Private Placement notes which are repaid over 2011 and 2012 ($6.7 million), and 2014 ($97 million) and 2016 ($43 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 2010, net borrowings were 1.4 times EBITDA, 40% of the maximum permitted of 3.5 times. Interest cover was 8.0 times against the minimum requirement of 2.5 times. Thus, there was sufficient financial headroom.

Going forward, as a matter of course we estimate our headroom against the covenants and we test their sensitivity to a number of alternative scenarios to ensure ongoing compliance. We do not anticipate approaching our covenant limits.

Currencies in 2010

The average and period end exchange rates are set out in note 2. In 2010, some 60% of revenues were negotiated in US Dollars. With just under 40% of the cost base in US Dollars, there is a large US Dollar surplus. Some 25% of revenues are negotiated in Renminbi (which was pegged to the US Dollar for most of the first half of 2010) and 7% in Euros.

In most currencies, (other than the US Dollar and Euro), costs exceed revenues, the most significant being the Renminbi, and to a much lesser extent, the Swedish Krona, the Japanese Yen and the Korean Won. These imbalances led to an adverse impact of some £4 million compared with the average exchange rates prevailing in 2009.

We strive to balance local currency exposures but we operate a global business and this creates currency imbalances where we are unable to match operating and procurement costs with revenues in local currencies. If 2010 year end rates were to prevail throughout 2011, approximately £6.5 million (US Dollar 10 million) would be added to the cost base in 2011 compared to 2010. As steps were taken early in 2011 to hedge the Renminbi exposure, at least 60% (£4.0 million) of this exposure should materialise in the year.

In addition, there is a translation impact in converting profits into our reporting currency (Pound Sterling); each US$0.01 appreciation against sterling approximates to an annual increase in operating profit of £0.5 million.

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

Pensions

There are 12 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 £0.1 million at 31 December 2010. At 31 December 2009, there was an overall deficit of £2.5 million.

The principal causes of the reduction in the deficit was the £6.8 million increase in asset values. The bond rate used to discount liabilities was 5.5% in 2010 compared to 5.65% in 2009 and contributed to the increase in the estimate of liabilities.

Shareholders' Funds

Shareholders' funds at the 2010 year end were £574.9 million (2009, £579.6 million).

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 7.0% compared to 5.1% in 2009.

Group income statement

for the year to 31 December 2010

*before amortisation of acquired intangible assets, exceptional items, deferred tax on acquired intangible assets and goodwill, 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 2010

Group statement of financial position

as at 31 December 2010

The accounts were approved by the Board of Directors on 9 March 2011 and were signed on its behalf by:

P J HILL

J C SILVER

Directors

Group cash flow statement

for the year to 31 December 2010

Notes to the financial statements

for the year ended 31 December 2010

1 Segmental analysis

In 2009, the Group reported the following segments: Performance Materials, Handset Products and Wireless Systems.

During 2010, the Group reorganised the Handset Products division. It was announced that the Mechanisms business would be exited and it is anticipated that all Mechanisms activity will cease during 2011. Once production has ceased the product line will be transferred to discontinued operations. This business unit is shown separately in the analysis below.

The mobile antenna business that was previously in the Handset Products division is now included in the Wireless Systems division. The specialty metals products business that was previously in the Handset Products division is now included within the Performance Materials division. Following the reorganisation there is no longer a Handset Products division.

Following these changes, the reportable segments for 2010 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.

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.

Mechanisms - designs and supplies a range of mechanical actuation devices for mobile phone handsets.

A segmental analysis has been prepared on the same basis as included in the 2009 Report and Accounts, which can be found at note 10.

The Group did not have any inter-segment revenue in 2010 and 2009.

Revenue from one customer of the Performance Materials division, Wireless Systems division and Mechanisms represents approximately £94m (2009, £190m) of the Group's total revenues. Revenue from a second customer represents £84m (2009, £53m) of the Group's total revenues.

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

Unallocated assets in the above table include assets for cash, retirement benefits and other debtors.

Unallocated liabilities - other in the above table include liabilities for current tax, deferred tax, retirement benefits, dividends, provisions and other creditors.

2 Exchange rates 

The results and cash flows of overseas subsidiaries are translated into sterling using weighted average rates of exchange for the year. The principal rates used were as follows:

3 Exceptional items

 Note

4  Earnings per share

The calculation of basic and diluted earnings per share is based on the 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 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.

* The options were anti-dilutive in both years.

5 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 21.9% (2009, 23.4%) of underlying profit before tax.

6 Dividends paid and proposed

On 9 March 2011 the Board declared, subject to approval from shareholders, a final dividend of 4.20p per share (2009, 2.53p). The final dividend will be paid on 3 June 2011 to shareholders registered on 6 May 2011. 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 period

† The final 2008 and the interim 2009 dividends per share have been adjusted to reflect the bonus element of the Rights Issue in 2009

7 Borrowings

Notes

8 Additional cash flow information

Cash generation from operations

Note

9 Retirement benefit obligations

Pension schemes

12 employees (2009, 12) are members of two different defined benefit schemes and these schemes have approximately 1,600 (2009, 1,700) deferred and current pensioners. The employer contributions made to these schemes during the year were £0.3m (2009, £0.3m).

The market value of the schemes' assets, the present value of the schemes' liabilities and the net pension assets and liability under IAS 19 at 31 December were as follows:

10 Segmental analysis

During 2010, Laird changed its organisational structure. The segmental analysis disclosed in note 1 is on the new basis. The old basis is disclosed in this note.

The comparative figures for 2009 differ from those previously published. The analysis is consistent with the methodology used to allocate costs in note 1.

11 Other information

The financial information for the year ended 31 December 2010 set out above has been extracted from the 2010 Annual Report and Accounts which have been audited by Ernst & Young LLP who have given an unqualified audit opinion. The Accounts for 2010 are expected to be filed following the Company's Annual General Meeting to be held on 6 May 2011. The Company's 2010 Annual Report and Accounts, including the notice of Annual General Meeting, will be available to shareholders from 25 March 2011.

The proposed final dividend will be paid on 3 June 2011 to shareholders registered on 6 May 2011.