Final Results

2 March 2012

LAIRD PLC

ANNOUNCEMENT OF PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011

Strong results and strategic progress

Laird PLC today announces results for the financial year ending 31 December 2011. Laird is a global technology company focused on providing components and solutions that protect electronic devices from electromagnetic interference and heat, and that enable connectivity through wireless applications and antennae systems.

Highlights

Financial:

·; Revenue from continuing businesses* of £491.3 million, up 19% on 2010

·; Organic revenue growth of 12%

·; Underlying profit before tax of £52.7 million, up 31%

·; Improvement in operating margin to 11.9% (2010, 10.2%)

·; Full year underlying earnings per share of 16.5 pence, up 40%

·; Final dividend per share declared of 5.3 pence (2010, 4.2 pence). Total 2011 dividend of 8.0 pence (2010, 6.3 pence), up 27%

·; Cash conversion of 106% (2010, 89%)

Operational:

·; Recent acquisitions performing ahead of our expectations

·; Benefiting from strong demand for tablets, smartphones and telematics solutions

·; Increasing market in software enhanced solutions

·; Customer base broadened further

·; Focus on innovation maintains competitive advantage

·; Exit from Handset antennae business progressing according to plan

* Excludes Handset Antennae and Mechanisms

Nigel Keen, Executive Chairman:

"We have delivered good results and progressed strongly. We have made improvements in both Performance Materials and Wireless Systems, benefiting from strong demand in many of the markets we serve. Our recent acquisitions have delivered results above our expectations, and strengthen our position as a leading player in high growth, niche markets, requiring innovative products and solutions.

We are well positioned to benefit from the growth anticipated across a number of the markets we serve, even though the wider economic outlook remains uncertain. Innovation and new products provide added confidence that we will continue to grow our business in line with our medium to long-term targets, and drive Laird forward in 2012."

(i) 2011 numbers and 2010 comparisons restated to exclude the Handset Antennae business and Mechanisms

(ii) 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 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

(iii) The weighted average number of shares used to calculate earnings per share was 265.4 million in 2011 and 266.0 million in 2010

Performance

2011 was a year of great change for Laird. We streamlined our organisation to focus on two divisions, Performance Materials and Wireless Systems. We continued to integrate our recent acquisitions of Cattron and Klüver into each of these divisions and we are exiting our Mechanisms and Handset Antennae businesses (discontinued businesses) that have been performing poorly. The ongoing focus on developing and improving our continuing businesses, proved especially important during the second half of the year when we encountered a more challenging business environment in some of our markets.

In July, at the time of our Interim Results we forecast that the underlying earnings per share for the year would be not less than 16 pence and I am pleased to report that the Group met this forecast with underlying earnings per share for 2011 of 16.5 pence.

Strategic progress

Laird is a global technology leader in specialist, high-growth markets, offering an array of innovative bespoke solutions. Throughout 2011 we have continued to progress our strategy of servicing a breadth of markets and identifying opportunities where we can move up the value chain.

In addition we have expanded through acquisitions into complementary markets that share the same requirements for materials science and wireless connectivity solutions, or where we have identified opportunities to leverage our technology development and global scale. This also provides a platform from which to expand our addressable market and where we feel there are opportunities for us to improve market share.

We have continued to broaden our customer base and won new customers in the year. We have expanded our presence for applications in vertical markets such as with the acquisition of Klüver, which specialises in active cooling in medical technology markets, into our Thermal business earlier this year, and by further integrating Cattron into our Wireless Automation and Control Solutions business.

We expect the underlying demand for our products to continue to grow as electronic devices continue to evolve. These will require more complex heat management and shielding solutions from our Performance Materials division, and connectivity and control systems from our Wireless Systems division, directed at meeting the proliferation of wireless in everyday life.

Results

Revenue from continuing businesses in 2011 was £491.3 million, up 19% (2010, £413.7 million). We saw good growth in 2011 in both our Performance Materials and Wireless Systems divisions, particularly in the first half.

Revenue from our discontinued businesses segment was £94.7 million (2010, £153.7 million).

Organic revenue growth was 12% (2010, 28%).

Sales to what is now our largest OEM customer in the continuing businesses accounted for 14% of continuing business revenue in 2011, whereas in 2010, sales to our largest OEM customer now in the discontinued businesses segment, accounted for 19% of total revenues. We have continued to focus on growing our revenue into the full range of markets we serve within the year, broadening our customer base.

Underlying operating profit from continuing businesses was £58.4 million in 2011, up 38% (2010, £42.3 million). Operating margin was 11.9%, up from 10.2% in 2010. The operating profit in the second half of 2011, at £29.9 million, improved on the £28.5 million in the first half (from continuing businesses).

Underlying operating margin in the second half of the year was 12.0%, compared with 11.7% in the first half. This demonstrates meaningful progress towards achieving our target of operating margin of 15%.

Operating profit from discontinued businesses was £1.0 million in 2011.

Underlying profit before tax from continuing businesses was £51.7 million in 2011, up 43% (2010, £36.1 million).

Total exceptional costs for the year (including provisions for closing the Handset Antennae business) were £140.1 million, of which £23.6 million are cash and £116.5 million are non-cash asset write-downs. The closure of this business, announced in June, is progressing according to plan.

Underlying earnings per share were 16.5 pence, up 40% on 11.8 pence in 2010, and is consistent with our profit forecast at the time of the 2011 Interim Results of not less than 16 pence.

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 Board has declared a 2011 final year dividend of 5.3 pence per share (2010, 4.2 pence), resulting in a total full year dividend of 8.0 pence (2010, 6.3 pence), in line with our recommendation for dividend payments, as set out in our Interim Results.

Also, in accordance with our Interim Results announcement in July 2011, we will be recommending a full year dividend of 10.0 pence and 12.0 pence for 2012 and 2013 respectively.

Acquisitions

The acquisitions of MMG and Summit Technologies announced today, for a cash consideration of approximately $60 million, complement our existing businesses in EMI shielding and wireless modules, and allow us to extend our presence and product offering in these high-growth markets.

Recognising the changing requirements for shielding, as electronic devices become more powerful and higher frequency in nature, the MMG acquisition ensures we have the fullest range of shielding to offer our customers. MMG adds a range of commercial absorber products in EMI shielding, antenna and high frequency circuits which complement our existing absorber portfolio for the defence industry. They are already present in Europe and the USA, and have the potential to leverage Laird's extensive Asian footprint and customer base to drive incremental sales.

Similarly, the addition of Summit Data communication to Laird's Wireless Systems division allows us to offer an enhanced non-cellular M2M module range with software tailored for focus on industrial and medical markets. The modules are used to provide connectivity solutions, specifically in harsh radio frequency environments, such as found within factories material handling and hospital environments where secure connectivity is performance critical, and serve a market which already exhibits good growth prospects.

Both acquisitions are expected to be earnings enhancing in 2012.

Board changes

In August 2011, Marty Rapp resigned from his position as Managing Director of Laird PLC and stood down from the Laird Board, where he had served as a Director since 2005. Following this we have made several changes within our business, to shorten our lines of communication.

In November, Peter Hill, Laird's CEO, became seriously ill causing him to resign from his position. Peter made a substantial contribution over his tenure, helping transform Laird into the leading technology business that it is today.

I assumed executive responsibility for the Company and a search for a new CEO was instigated. The search is well underway and we will announce the appointment as soon as we are in a position to do so.

Andrew Robb, Chairman of the Audit Committee, and Dr Bill Spivey will retire following the Annual General Meeting on 4 May. Paula Bell joined the Board, effective from 2 March, and will succeed Andrew Robb as Chair of the Audit Committee from 4 May.

Outlook

We expect the underlying demand for our products to continue to grow as electronic devices continue to evolve. These will require more complex heat management and shielding solutions from our Performance Materials division, and connectivity and control systems from our Wireless Systems division, directed at meeting the proliferation of wireless in everyday life.

We are well positioned to benefit from the growth anticipated across a number of the markets we serve even though the wider economic outlook remains uncertain. Innovation and new products provide added confidence that we will continue to grow our business in line with our medium to long-term targets and drive Laird forward in 2012.

Nigel Keen

Executive Chairman

OPERATIONAL REVIEW

Performance Materials

The division designs and supplies a full range of EMI (electromagnetic interference) 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 transfer of heat.

Divisional revenues increased by 8% in 2011 to £305.0 million (2010, £282.8 million) driven by continued growth in a number of the markets to which we supply EMI and Thermal solutions.

Organic revenue growth was 9% (2010, 21%).

The majority, 65%, of the divisional revenues in 2011 were from EMI shielding materials, with 26% from thermal management solutions and 9% from signal integrity products.

By market segment, 42% of the division's revenues were to the IT, telecommunications and data communications sectors, 17% were to the mobile handset market, with the balance to the consumer electronics, industrial and instrumentation, medical, aerospace and defence markets.

Underlying operating profit in the division increased 11% in the year to £43.0 million (2010, £38.8 million), and return on sales increased to 14.1% in 2011 from 13.7% in 2010. Both were helped by sales of higher margin thermal solutions and increased volumes in our market-leading EMI business.

The division has performed well throughout the year, and we have benefited in particular from strong demand for tablets and smartphones. We have seen good growth in sales to the automotive, medical and consumer markets, with more modest growth in telecoms. We are also benefiting from demand for solutions required by higher frequency devices in the telecoms markets, such as our EMI products used in servers. The breadth of the markets we service helps to diversify risk from the fortunes of any one specific market.

We maintained our leading positions in EMI and Thermal technologies, launching new products to the market and offering solutions that competitors find hard to replicate. One such example is the launch of our new environmentally-friendly halogen-free EMI gasket product for high-temperature applications in network infrastructure, telecoms and automotive markets. There has been an increase in demand for products from the "green" markets, for components used within electric vehicles, LED lighting and smart meters.

Our broad range of technologies provides opportunities to improve our position in other market niches adjacent to those we currently serve. Our Corporate Research Laboratory (CRL) in Bangalore develops the next generation of materials which will help to maintain our market leading position for the years to come.

Our EMI shielding product lines performed well, with revenues up 9% year on year, driven by sales of electromagnetic shielding components for smartphones and tablets. Sales of our fingerstock and fabric-over-foam products to our computing and telecoms customers had a softer second half of the year.

To complement our existing range of Thermal solutions, Klüver was acquired in March 2011, combining its compressor based cooling technologies with our passive and active thermal cooling solutions portfolio. We have now successfully integrated Klüver into our Thermal business and the acquisition has strengthened our position within the medical segment. Elsewhere within Thermal, we introduced new high thermal conductivity product lines. We have seen stronger demand for our advanced thermal solutions, such as Thermal Electric Assemblies and Thermal Interface Materials, which has helped balance the slower sales from the IT market.

New product introduction is key in this business and during the year for example, we have provided bespoke thermoelectric cooling assemblies to a major Chinese telecoms company. These have been developed specifically to provide cooling for their base stations. In addition we have developed new forms of thermal interface material which eliminate the need for significant amounts of polyethylene terephthalate (PET) film, which is very susceptible to heat degradation. Overall, revenues from our Thermal business were up 25% year on year, including the contribution from Klüver.

Our SIP product line has been impacted in the latter part of the year by the slowdown in demand from the IT and printer markets and we did not see the usual seasonal uplift in the second half of 2011. This particularly affected our IT cable core product line and revenues were flat on last year. We have however, secured the majority of new programmes for a leading printer manufacturer, which bodes well for 2012.

The floods in Thailand in 2011 had an adverse effect on the supply of disc drives to the IT market, and are expected to have an effect on sales within our SIP business as customers remain cautious with orders until the supply chain recovers fully.

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

Wireless Systems

We design and supply a range of telematics and infrastructure antennae products, machine-to-machine ("M2M") wireless modules and software-enabled wireless control systems, used in a broad range of e-markets including wireless infrastructure, automotive, asset management, transportation, industrial, mining, datacom, medical and retail markets.

Divisional revenues increased by 42% in 2011 to £186.3 million (2010, £130.9 million).

Organic revenue growth was 18% (2010, 47%).

Telematics/"M2M" accounted for 59% of divisional revenues in 2011, with 24% from Wireless Automation and Control Solutions, and 17% from Infrastructure Antennae Solutions.

54% of the division's revenues were from telematics antennae into the automotive market. 27% were from industrial applications, 14% from the infrastructure and datacom sectors, and 4% from sales of wireless M2M modules, with the balance coming from other markets.

The division's underlying operating profit increased 120% in the year to £22.7 million (2010, £10.3 million). Return on sales increased from 7.9% in 2010 to 12.2% in 2011, with the margin advancement driven by the favourable mix effect of sales from our Telematics/"M2M" solutions, and the higher margin Wireless Automation and Control Solutions.

Across the division, we experienced strong growth driven by demand for our bespoke technology solutions. We benefited particularly from the strength in the automotive market for our telematics solutions and from rail and industrial for our Wireless Automation and Control Solutions as well as robust demand from the mobile radio market.

In 2011, we saw increasing requirements from our customers for more complex solutions which combine software and hardware. We have proven technology to offer systems that monitor data and feedback information through our Wireless Automation and Control Solutions, and through the advances that we have made in our M2M product offering.

Revenues in our Telematics business grew 25% year on year, boosted by automotive sales growth and market share gains by our principal customers, particularly in North America together with strong sales of asset tracking devices. During the year we were awarded a new long-term programme with a major North American truck supplier, delivering specialist GPS modules consisting of an antenna and receiver, plus a microprocessor, for their next generation trucks. This M2M device for auto applications moves us further up the value chain delivering high performance at low cost.

Our commercial wireless module sales, predominantly into the electronic point-of-sale market and industrial markets, were robust. We have seen increased demand for our gateway products, which combine hardware and software and allow customers to monitor efficiently stock levels and other key operational information on handheld devices. We continue to develop products which facilitate renewable and responsible energy use, such as achieving a design win with a solar energy manufacturer to provide embedded wireless modules that facilitate control and data transmission between their solar panel sites in the field.

Wireless Automation and Control Solutions had an excellent year, performing ahead of original expectations at the time of acquisition, with revenues up 23% on last year, on a pro-forma basis. Revenues in the rail segment grew strongly driven by customers' demand for wireless control used in replacement programmes, particularly in North America. The mining segment, although small, has seen healthy demand and in that market we benefit from its larger than average order size.

We launched Cattron Control™ and Cattron Connect™ during the year. Cattron Control™ consolidates global engineering platforms, and Cattron Connect™, with its diagnostic software, provides location based reports to increase safety and optimise productivity. Coupled with our after sales service this ensures we offer a comprehensive solution to customers.

Our infrastructure antennae product line delivered marginally lower revenues (4% lower) as a result of softer demand from the WLAN (wireless local area network) segment. Sales to the mobile radio markets, have however helped maintain margin in this business.

Our mobile radio solutions provide reliable systems for the fast-growing public safety market. This is an area where we expect demand to continue. During the year we participated in a programme for a major radio manufacturer to develop the 'Law enforcement vehicle of the future', developing a vehicular antennae to be used in public safety providing real-time video, data and audio communications on a secure network.

We continue to see the increasing demand for wireless connectivity embedded in new infrastructure programmes including winning the contract to supply antennae for a comprehensive WiFi network throughout the central London transportation infrastructure for the 2012 London Olympics and Paralympics.

The demand for increased connectivity in our everyday lives is expected to accelerate. More advanced solutions are being required as the industry evolves, which in turn creates sustained demand for our products and systems which allows us to capitalise on our ability to exploit technology and product convergence. This can be seen with the rise of 'Infotainment' in the automotive industry and the proliferation of wireless connectivity within public infrastructure.

With the need for greater functionality comes higher margins and increased visibility in our business. In alignment with our strategy, this is an area where we will continue to focus resources.

Discontinued Businesses

Discontinued businesses include Mechanisms, the exit from which was completed in the third quarter of 2011, and Handset Antennae (exit announced June 2011). Handset Antennae was reported as part of Wireless Systems in 2010 and prior year numbers have been restated for ease of comparison.

Overall revenue for these businesses was £94.7 million in 2011. Revenue in the second half of the year was 10% higher than the first half, but represented an overall reduction of 38% year on year.

Following the announcement to exit the Handset Antennae business, existing contractual obligations are being fulfilled with customers. The underlying operating profit for the year from the discontinued businesses was £1.0 million (2010, £4.1 million), a significant improvement from the half year loss position of £(3.1) million, achieved by the running-down of engineering and development overhead. Minimal revenue is expected from the Handset Antennae product line in 2012.

The exit from the Handset Antennae business is expected to be cash positive, as working capital is withdrawn and fixed assets sold.

FINANCIAL REVIEW

Segments

As a result of the decision to exit the Handset Antennae business made during 2011, the results of this business are being disclosed in the Discontinued Business segment along with the Mechanisms product line, consistent with the disclosures in the 2011 Interim Results.

Revenue

Total revenue from continuing businesses increased by 19% to £491.3 million for the full year in 2011 from £413.7 million in 2010. In US Dollars, the increase was 23%.

Total revenue including discontinued businesses increased by 3% to £586.0 million from £567.4 million in 2010. In US Dollars, Performance Materials revenues were 12% higher and Wireless Systems revenues were 48% higher. The table below shows revenue for each segment in US Dollars together with the revenue contribution from acquisitions (as defined as acquisitions completed in both 2010 and 2011).

Segmental revenue is also disclosed in note 1.

Organic growth in 2011 was 12% for the continuing businesses. Organic growth is defined as the increase in revenue year on year including revenue growth from newly acquired companies and basing such growth on the revenue level for the comparable period in 2010, as if the acquired companies were owned in that period. The " base" businesses (continuing businesses excluding the recent acquisitions of Cattron and Klüver) grew by 11% and the acquired businesses by 22%.

Revenue to the largest customer within continuing businesses, including revenue invoiced indirectly through its suppliers, amounted to 14% of revenue. The top five customers of the continuing businesses accounted for 32% (including revenue invoiced indirectly through their suppliers) of revenue of the continuing businesses in 2011 (2010, 29%).

Underlying Operating Profit / Net Margins

The table that follows shows underlying operating profit for the continuing business segments for 2011 and the comparative data for 2010 together with the net margins percentage. Net margins were 11.9% in 2011 (2010, 10.2%).

Gross margins of 37.7% (2010, 37.9%) were largely unchanged year on year. Although, the newly acquired businesses have above average gross margins, a higher proportion of smart phone, tablet and telematic revenues, which command below average gross margins, led to lower margins in the base business. Overall gross margins, taking into account the newly acquired companies, were therefore flat year on year.

Net margins for Performance Materials increased to 14.1% in 2011 (2010, 13.7%) and for Wireless Systems net margins increased to 12.2% (2010, 7.9%).

Loss

The loss before tax from continuing operations was £101.7 million (2010, loss of £8.6 million). No operations were classified as discontinued in 2011.

Underlying Profit

Underlying profit before tax in the year was £52.7 million (2010, £40.2 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

As a result of the decision to exit the Handset Antennae business, a non-cash asset impairment charge of £115.7 million, plus a £16.3 million restructuring charge have been provided for in respect of that business. Overall, a cash surplus is expected to result from the decision taken to close the business, and arises from surpluses from the run out of the order book and the monetisation of working capital and fixed assets. Other exceptional cost in the period amounted to £8.1 million, including £3.8 million for bid defence costs.

Note 3 analyses these costs by segment. The cash outlay on exceptional items in the period was £22.6 million (including cash spent on exceptional items provided for in 2010) with a further cash outlay of £4.0 million to come in 2012 and 2013, for costs provided for in 2011.

Finance Costs

Finance costs, excluding a loss on the fair valuing of financial instruments of £0.2 million (2010, gain of £1.2 million) were £6.7 million compared to £6.2 million in 2010.

Taxation

The underlying tax charge on total underlying profit before tax is equivalent to an average tax rate of 17.1%, a reduction on the rate of 21.9% in 2010. The average tax rate in 2012 is expected to be around the same level as in 2011.

The reduction in the tax rate reflects higher profits in the USA which continue to be sheltered by amortised goodwill deductions, resulting from acquisitions and higher profits from European businesses which benefit from tax incentives. An analysis of the total tax charge is given in note 5.

Underlying Earnings

Continuing underlying earnings per share were 16.5 pence (2010, 11.8 pence). Underlying earnings are based on underlying profit less underlying tax and exclude deferred tax movements. The average number of shares in issue throughout 2011 was 265.4 million (2010, 266.0 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 £1.0 million.

There was a good cash conversion (operating cash flow as a proportion of operating profit) result of 106%.

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 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 2011 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 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

Net borrowings increased to £117.7 million; with the overall net increase being £14.1 million. £21.0 million was spent on the acquisition of Klüver.

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 (2010, £265 million) of bilateral revolving credit facilities which do not expire until April 2016.

In addition, Laird has in issue $140.0 million (£90.1 million) of US Dollar Private Placement notes which have remaining terms in excess of two years (2014, $97 million), and five years (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 2011, net borrowings were 1.4 times EBITDA, 39% of the maximum permitted of 3.5 times. Interest cover was 10.0 times against the minimum requirement of 3.0 times. Thus, there was sufficient financial headroom.

We routinely estimate our expected 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 in the foreseeable future.

Currencies in 2011

The average and period end exchange rates are set out in note 2. In 2011, almost 70% 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. Almost 20% of revenues are negotiated in Renminbi and 10% in Euros.

In most currencies (other than the US Dollar and Euro), costs exceed revenues, the most significant being the Renminbi (RMB). This imbalance led to a theoretical adverse impact of some £5 million compared with the average exchange rates prevailing in 2010. In so far as the strengthening of the RMB was reflected and recovered in US Dollar selling prices, the impact on profits would be somewhat less.

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.

In addition, there is a translation impact in converting profits into our reporting currency (Sterling); each US$0.01 appreciation against sterling approximates to an annual increase in operating profit of £0.4 million. In 2011, sterling strength against the US Dollar reduced profits on translation by £2.4 million.

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

Pensions

There are 10 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 surplus under IAS 19 of £1.0 million at 31 December 2011. At 31 December 2010, there was an overall deficit of £0.1 million.

The principal driver of the year on year change resulting in a surplus was a £5.0 million increase in asset values. The bond rate used to discount liabilities was 4.95% in 2011 compared to 5.5% in 2010 and contributed to the increase in the estimate of liabilities.

Shareholders' Funds

Shareholders' funds at the 2011 year end were £440.4 million (2010, £574.9 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 9.7% in 2011 compared to 7.0% in 2010.

Group income statement

for the year to 31 December 2011

*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 2011

Group statement of changes in equity

for the year to 31 December 2011

Group statement of financial position

as at 31 December 2011

The accounts were approved by the Board of Directors on 1 March 2012 and were signed on its behalf by:

N J KEEN

J C SILVER

Directors

Group cash flow statement

for the year to 31 December 2011

Notes to the financial statements

for the year ended 31 December 2011

1 Segmental analysis

In 2010, the Group reported the following segments: Performance Materials, Wireless Systems and Mechanisms.

In June 2011, the Group announced the exit from the Handset Antennae business.

Following this change, the reportable segments for continuing operations (as defined by IFRS5) for 2011 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 businesses - this is comprised of the Handset Antennae business, included within Wireless Systems in 2010 and the Mechanisms product line.

As a result of the change in reportable segments prior year numbers have been restated for ease of comparison.

Notes to the financial statements

for the year ended 31 December 2011

1 Segmental analysis (continued)

The Group did not have any inter-segment revenue in 2011 and 2010.

Revenue from one customer of the Performance Materials division, Wireless Systems division and discontinued businesses represents approximately £85m (2010, £84m) 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.

Notes to the financial statements

for the year ended 31 December 2011

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

Notes to the financial statements

for the year ended 31 December 2011

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 17.1% (2010, 21.9%) of underlying profit before tax.

Notes to the financial statements

for the year ended 31 December 2011

6 Dividends paid and proposed

On 1 March 2012 the Board declared, subject to approval from shareholders, a final dividend of 5.3p per share (2010, 4.2p). The final dividend will be paid on 1 June 2012 to shareholders registered on 4 May 2012. 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

Notes to the financial statements

for the year ended 31 December 2011

7 Additional cash flow information

Cash generation from operations

Note

Notes to the financial statements

for the year ended 31 December 2011

7 Additional cash flow information (continued)

Net cash outflow on acquisitions and disposals

8 Analysis of movements in net borrowings

The current financial assets are cash deposits which have a deposit term of greater than 3 months and so cannot be classified as cash or cash equivalents.

Notes to the financial statements

for the year ended 31 December 2011

9 Retirement benefit obligations

Pension schemes

10 employees (2010, 12) are members of two different defined benefit schemes and these schemes have approximately 1,600 (2010, 1,600) deferred and current pensioners. The employer contributions made to these schemes during the year were £0.3m (2010, £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:

The expected long term rates of return on gilts and bonds are estimated at 3.3% per annum (2010, 4.4%) and those for equities at 7.2% per annum (2010, 8.1%). The returns on the annuities match the relevant liabilities.