Half-year Report

Laird PLC results for the 6 months ended 30 June 2016 (unaudited)

FINANCIAL SUMMARY

Majority of the business performing as anticipated in H1 2016

· 15.2% increase in revenue reflects growth in majority of the business and acquisitions

· Organic constant currency revenue decreased 3.6% mainly due to strong H1 2015 comparative in Performance Materials

· 5.5% organic growth in Wireless Systems (11.9% excluding WACS)

· Strong operating cash conversion of 120% (2015: 94%)

· Increase in net debt reflects cost of acquiring Novero and investment in the operating model re-design

Lower H1 profit due to challenges; actions taken to address them

Novero

· Challenges identified in due diligence require greater and deeper intervention to fully resolve. Although no new issues have been identified, the cost of this intervention is at the high end of our expectations, albeit mitigated by contingencies in internal plans, creating a £3.5m loss in H1

· Actions are in place to substantially improve performance and deliver modest profitability in 2017 with industry standard margins from 2018

· In the meantime the combined capabilities of the strengthened business have been well received by our customers. There has been a significant uplift in order book and pipeline for automotive which is in large part due to the assurance of reliable fulfilment which Laird offers

WACS

· A rapid and substantial downturn in US rail freight markets due to commodity and energy prices has had a significant impact on revenues in our WACS business

· Actions have been taken to mitigate the impact of this downturn and manage profitability in the second half of the year

Operating model re-design on track with associated cost savings from 2017 at least in line with the original plan as well as broader business benefits.

Overall expectations for the full year, after funding the challenges and costs in Novero and WACS, are broadly unchanged, with increased second half weighting driven by:

· Strengthening in smartphone cycle

· Strong performance and contribution from LSR, acquired in December 2015

· Continued content and share growth in the automotive order book

· Cost reduction and performance improvement actions in response to challenges in Novero and WACS

· Benefits on translation of US dollar earnings at current exchange rates

David Lockwood, Chief Executive, commented:

"The majority of our business continued to perform as expected in the first half. Despite the impact of the smartphone cycle and the sales decline in WACS organic constant currency revenue fell by just 3.6%, demonstrating that our strategy of diversification across markets and customers has provided us with a strong platform to counter such sales headwinds. The reduction in our first half profit and margins is disappointing, however action has already been taken to address this and support delivery of the full year.

"These actions, together with the improved contribution of LSR, and the currency tailwind at current rates means that the Board's expectations for the full year are broadly unchanged."

Explanatory notes

1 Sterling figures have been translated at $1.43/£, the average exchange rate for the period (2015: $1.52/£).

2 Operating profit is stated before exceptional items (2016: £3.4m), and amortisation of acquired intangible assets (2016: £6.6m).

3 Underlying profit before tax and underlying earnings per share are stated before exceptional items, amortisation of acquired intangible assets, deferred tax on acquired intangible assets, goodwill and US capitalised development costs, gain or loss on disposal of businesses and impact arising from the fair valuing of financial instruments.

4 Earnings per share is calculated on a weighted average number of shares of 270.1m (2015: 267.2m).

5 Organic constant currency growth is calculated by eliminating the revenue from acquisitions made for a period of twelve months from the acquisition date, and applying prior year exchange rates to convert current year revenues to GBP.

6 Wireless Automation and Controls (WACS) is part of Laird's Wireless Systems division, providing mission critical technology for use in hostile and remote conditions.

This announcement contains inside information 

ABOUT LAIRD:

Laird is a global technology company focused on providing systems, components and solutions that protect electronics from electromagnetic interference and heat, and that enable connectivity in mission critical wireless applications and antennae systems. We are a global leader in the field of innovative radio frequency ("RF") engineering.

An analyst presentation will be held today at 9.30am at The London Stock Exchange, 10 Paternoster Square, London EC4M 7LS. A live audio webcast of the presentation will be hosted on www.laird-plc.com. A replay of the webcast will also be available on our website for two weeks after the event.

PERFORMANCE REVIEW

Revenue growth

Total sterling revenue increased 15.2% to £352.5m (2015: £305.9m) driven by the sales contribution from our recent acquisitions, LSR and Novero and reflecting growth in the majority of our business. On an organic basis in constant currency, revenue decreased 3.6%. Some reduction in revenue was anticipated due to the strong trading in H1 2015 for our Performance Materials segment comparative. However a sharp and sudden fall-off in a key end market for WACS has added to this decrease. In the other parts of our business, and in particular Connected Vehicle Solutions revenue has continued to grow strongly both on an organic basis and from the increased product offering that we now have following the acquisition of Novero in January 2016.

Lower H1 profits due to two separate one-off factors

Operating margin decreased to 6.0% against 10.1% in the first half of 2015.  This can be attributed to two factors. The first was, as noted above, a rapid drop-off in sales from the US rail freight sector, a key market for WACS. This was sudden and unexpected by our customer base. We believe the steps taken to reduce costs while maintaining capability will enable us to manage the profitability of this business in the second half of the year and going forward into 2017.

The second factor that has reduced profits is the higher level of investment and remedial action required in relation to our recent acquisition, Novero. When the business was acquired, the price reflected that it was an operational and financial turnaround. Although no new issues have been identified, it has become clear that the turnaround actions and associated costs are at the high end of our expectations, resulting in a post acquisition loss for H1 of £3.5m and a likely loss for the full year of around £9.0m. A plan to re-align the operations and business practices is now underway. These steps will stabilise the business in the second half, but it will remain significantly loss making for the full year. The business will, return to modest profitability in 2017 and make normal industry level margins in 2018. The order book and pipeline already won due to the additional capabilities and products acquired with Novero demonstrate its long term value and strategic importance to the Group.

Good performance from the majority of the business and acquisition benefits leave us well positioned

Performance in the first half underlines the importance of our strategy of de-risking and diversifying our business. The majority of the business continued to perform well with organic growth of 11.9% in Wireless Systems (excluding WACS). At the same time, the smooth and efficient integration of LSR into Wireless Systems means that is already making a meaningful contribution. All of which means we have a more robust earnings stream to mitigate some of the impact from the adverse conditions in other areas.

Operating profit, and the resulting effect on net margin, will clearly be even more weighted to the second half of the year than it has been in previous years. The continued performance of the majority of the business, a strong contribution from LSR, the anticipated strengthening in the smartphone cycle, the actions taken to manage costs in our WACS business and more widely across Laird, plus currency tailwinds at current rate, are all factors that should contribute to a strong second half.

Excellent progress has been made in our operating model re-design

The plan to introduce a step-change to our operating model has made excellent progress since it was launched in October 2015. The project continues to run to the budget and timelines set and is on track to deliver the anticipated cost savings of $20m per annum. We will see a substantial amount of these annual savings in 2017 with the first full year of benefits in 2018.

Dividend

We have a progressive dividend policy, where we seek to grow the dividend above the rate of inflation.

The Board has accordingly declared an interim dividend of 4.53 pence (H1 2015: 4.40 pence), a 3% increase over last year's interim dividend. The interim dividend will be paid on 2 December 2016 to shareholders on the register on 4 November 2016.

Divisional review

Wireless Systems

Wireless Systems revenue in sterling increased by 48.7% to £167.4m (2015: £112.6m) with organic growth in constant currency of 5.5%. This was a resilient performance that underlines our progress with diversifying our customers and markets. Operating profit in sterling decreased 20% to £9.8m (2015: £12.2m). Operating margin in sterling was 5.9% (2015: 10.8%). The reduction in revenue was mainly driven by the rapid drop-off in sales in the US rail freight market which had an impact on our WACS business. This decline, along with the higher level of cost required in Novero had an adverse impact on operating profit and margin in the first half of the year. Our Connected Vehicle Solutions business continued to see strong growth in terms of both volume and content to counter these issues.

LSR, acquired in late 2015, has helped to consolidate our position in Enterprise IoT markets. By expanding our scope of supply into design and testing we are able to create and capture customer mindshare more effectively. One example of this is with an existing wireless modules customer. With the addition of design services capabilities, we have been able to expand our engagement to include development engineering revenue along with increased content per machine at an increased average selling price per unit.

Our leading position within the automotive sector has been further strengthened by the acquisition of Novero, reflected in a strong pipeline and order book already being generated for both the individual Laird and Novero products and also for new products with our combined technologies. These opportunities are coming from both new and existing customers in a market where both share and content demands are increasing year on year.

Performance materials

Performance Materials revenue in sterling decreased 4.2% to £185.1m (2015: £193.3m). Organic revenue in constant currency decreased 8.9%. Underlying operating profit was £15.1m (2015: £22.1m), and underlying operating margin was 8.2% (2015: 11.4%). Revenue and profit has been impacted by the strong performance in the comparative period for 2015 and the relative weakness in the smartphone cycle during the first half of the year. We have developed and launched new technology for the smartphone market. This launch will have significant growth opportunities in future years across a number of our markets, but will impact margin in the first year.

During the year we have made significant progress in expanding our customer base within key markets and expanding our product base to address adjacent key markets. By leveraging the relationship we already have with a customer in the telecoms space we have been able to demonstrate our capabilities in the mobile devices sector and have begun to build a strategic partnership around this. We have also seen an increase in revenues from the automotive and medical markets underling how our capabilities can be recycled and applied across different markets.

FINANCE REVIEW

GROUP Revenue

In sterling revenue increased by 15.2% to £352.5m (2015: £305.9m), driven by the contribution from our recent acquisitions, LSR and Novero as well as favourable currency movements.

On an organic constant currency basis, revenue decreased 3.6% . Organic constant currency growth is calculated by eliminating the revenue from acquisitions made for a period of twelve months from the acquisition date, and applying prior year exchange rates to convert current year revenues to sterling.

Underlying operating Profit/operating margin

In sterling, underlying operating profit for Wireless Systems in the first half of 2016 was £9.8m (2015: £12.2m) and £15.1m for Performance Materials (2015: £22.1m).

The table below shows underlying operating profit in sterling for the business segments and the comparative data for 2015. The net operating margin was 6.0% in the first half of 2016 (2015: 10.1%). Operating margins decreased in Wireless Systems due to two one-off factors. The sudden drop-off in sales to the US rail freight market in our WACS business and the higher level of investment required in Novero. The decrease in Performance Materials is due to the strong H1 2015 comparative, continued softness in the smartphone cycle and investment in new technologies for the smartphone market.

The table below provides further analysis in sterling of the underlying operating profit. The gross profit percentage is lower year on year due to the factors already set out above. SG&A increased year on year and are higher relative to revenue, increasing to 22.3% of revenue from 20.6% a year earlier. There has been an increase in R&D in the first half to £31.8m (9.0% of revenue), up from £27.4m in 2015 (9.0% of revenue) as we continue to drive innovation and invest for growth going forward.

Underlying Profit

In sterling underlying profit before tax decreased 39% to £16.4m (2015: £26.9m). Underlying profit is stated before exceptional items, amortisation of acquired intangible assets, deferred tax on acquired intangible assets, goodwill and US capitalised development costs, gain or loss on disposal of businesses and impact arising from the fair value of financial instruments. A statutory profit before tax of £6.2m (2015: £21.6m) was reported for the half year.

Exceptional Items

There was an exceptional net charge of £3.4m (2015: £0.5m credit) in the period relating to changes to the call and put options in respect of Model Solution.

Profit after tax

The profit after tax for the period was £2.3m (2015: £14.9m).

Finance Costs 

Finance costs, before fair value adjustments, were £4.7m (2015: £3.8m). Interest cover was 8.6 times. Fair value adjustments on financial instruments resulted in a loss of £0.2m (2015: gain of £1.5m).

Taxation 

The underlying tax charge on underlying profit before tax is equivalent to an average tax rate of 19.9% (2015: 18.5%), which is our best estimate of the outcome for the 2016 full year.

Underlying Earnings PER SHARE

Continuing underlying basic earnings per share decreased 42% to 4.6p (2015: 7.9p). 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 in the first half of 2016 was 270.1m, compared with 267.2m in the first half of 2015.

Cash Flow

In the first half of 2016, Laird produced an operating cash flow surplus of £25.4m (2015: £28.8m), a cash conversion of 120% of operating profit (2015: 94%). Cash conversion is defined as operating cash flow as a proportion of operating profit.

Capital expenditure was 1.5 times depreciation in the first six months of the year. Taxation outflows will also increase in the second half.

Net Borrowings and Debt Facilities

Overall, net borrowings increased during the half year by £63.1m to £263.1m. Most of our borrowings and cash deposits are in US Dollars. As at 30 June 2016, £75.5m of borrowings were in Euros.

A cornerstone of our financial planning is to ensure that the company maintains committed loan finance which provides sufficient headroom above expected borrowing requirements and has a significant proportion with terms that exceed one year. We have in place £255m of committed bilateral revolving credit facilities, £230m of which expire at the end of March 2019 and £25m at the end July 2019. In addition, we have a number of US Dollar Private Placement loan notes in issue with $43m maturing in approximately four months, $13m maturing in four years and $92m and €15m maturing in five years. In May 2016 we issued Schuldschein loan notes raising €70m and $35m both of which mature in five years.

Covenants

A key consideration for financial planning is to maintain sufficient headroom between borrowings and the ceiling set by the associated covenants. Our 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.

We are comfortably within our banking covenants. For the six months ended 30 June 2016, net borrowings were 2.4 times EBITDA, against the maximum permitted of 3.5 times. Interest cover was 8.6 times, against the minimum requirement of 3.0 times.

We routinely estimate our expected headroom against our covenants and test their sensitivity to a number of scenarios to assess our ongoing compliance. We do not anticipate approaching our covenant limits in the foreseeable future.

Currencies in 2016

The average and period-end exchange rates are set out in note 5.

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 the first half of 2016, 67% of revenues were invoiced in US$, 10% in Renminbi and 19% in Euros. We had a substantial US$ surplus in the first half, as just under 40% of costs are in US$, a smaller Euro surplus, with about 23% of costs in Euros. In most other currencies, costs exceeded revenues, the most significant being the Renminbi which accounted for just under 33% of costs. We aim to cover forward at least 50% of the unmatched cash flows one quarter ahead.

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 £0.5m.

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

Principal Risks

We operate globally in varied markets. The principal risks and uncertainties that are or may be faced are disclosed in the 2015 Annual Report, and we expect them to continue to be relevant for the remaining six months of the year.

The risks set out in the 2015 Annual Report include the competitive markets in which we operate, macroeconomic and political factors, exposure to increases in labour costs in China, world commodity prices, and currency fluctuations, the requirement to meet increasingly stringent environmental laws and regulations, and risks related to brand management, our products, the supply chain and operational continuity.

Total Equity

Total equity at 30 June 2016 was £450.9m (30 June 2015: £429.1m). The reconciliation of total equity is set out in the Group statement of changes in equity.

Statement of directors' responsibilities

The directors confirm that to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report set out on pages 1-11 herein includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules. The Board of directors of Laird PLC that served during the six months to 30 June 2016 and their respective responsibilities are set out in the Laird PLC 2015 Annual Report.

By Order of the Board:

David Lockwood Chief Executive

Tony Quinlan Chief Financial Officer

28 July 2016

INDEPENDENT REVIEW REPORT TO LAIRD PLC

We have been engaged by the Company to review the condensed set of financial statements in the interim report for the six months ended 30 June 2016 which comprises the Group income statement, Group statement of comprehensive income, Group statement of changes in equity, Group statement of financial position, Group cash flow statement and the related notes 1 to 13. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.

Scope of review

We conducted our review in accordance with ISRE (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London

28 July 2016

Group income statement

* attributable to equity shareholders of the parent company

** before amortisation of acquired intangible assets, exceptional items, 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.

 Group statement of comprehensive income

Group statement of changes in equity

for the 6 months to 30 June 2016 (unaudited)

for the 6 months to 30 June 2015 (unaudited)

for the 12 months to 31 December 2015 (audited)

Group statement of financial position

Group cash flow statement

1 Authorisation of interim financial statements

Explanatory note:

These notes provide additional detail and explanations on the disclosures within our Interim Report.

The Group's interim financial statements for the period ended 30 June 2016 were authorised for issue by the Board of Directors on 28 July 2016. Laird PLC is a public limited company incorporated and domiciled in England and Wales and its ordinary shares are traded on the London Stock Exchange.

The comparative financial information for the period to 30 June 2015 and the year ended 31 December 2015 has been extracted from the published financial statements of Laird PLC. The consolidated interim financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. These interim results are unaudited but have been reviewed by the Group's auditor, Deloitte LLP. The statutory accounts for the year ended 31 December 2015 have been reported on by the former Group's auditor, Ernst & Young LLP, and delivered to the registrar of companies. The report of the auditor was unqualified and did not contain the statements under section 498(2) or (3) of the Companies Act 2006.

Further copies of the Interim announcement may be obtained from Laird PLC's registered office at 100 Pall Mall, London SW1Y 5NQ.

2 Basis of preparation

Laird PLC prepares its Annual Report and Accounts on the basis of IFRS as adopted for use by the EU. The financial information presented in this Interim Report has been prepared in accordance with the accounting policies expected to be used in preparing the 2016 Annual Report and Accounts which do not differ significantly from those used in the preparation of the 2015 Annual Report and Accounts. 

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and for this reason, they continue to adopt the going concern basis in preparing the financial statements of the Group.

The condensed set of financial statements included in this Interim Report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the EU.

As set out in the Performance Review on pages 2 and 3, the Group experiences seasonal and cyclical demand for its products and services.

3 Segmental analysis

Explanatory note:

The reportable segments for continuing operations (as defined by IFRS 8) are Performance Materials and Wireless Systems. The financial performance of each segment is shown here (with further information provided in the Finance Review on pages 7-11).

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 prototypes.

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 the infrastructure and automotive markets.

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

Segment assets

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

4 Exceptional items

Explanatory note:

Exceptional items are items of income or expense incurred outside the normal course of business, and are considered to be material and one-off in nature. This note provides a detailed breakdown of the "Exceptional items" line included on the Group income statement.

Notes

(a) In October 2015 the company announced a major re-design of its operating model which in particular includes the simplification of manufacturing capabilities in Europe and North America. In 2015 there were asset write downs of £8.2m and site rationalisation, closure and relocation costs of £30.8m associated with this project which are included within other restructuring costs above.

(b) The total cash outlay for exceptional costs in 2016 was £6.6m (June 2015, £4.3m) all of which was in respect of prior year exceptional costs.

(c) The tax effect on exceptional items in 2016 is £nil (June 2015, £nil).

(d) The changes in valuation of put and call options in respect of Model Solution include a £3.4m loss (2015, £1.4m) on a put option and a £nil result (2015, £0.4m loss) on a call option (see note 10).

5 Exchange rates  

Explanatory note:

The results and cash flows of overseas subsidiaries are translated into sterling using the average rates of exchange for the period as disclosed below.

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

6  Earnings per share

Explanatory note:

Earnings per share ("EPS") represents the amount of our earnings (post-tax profits) that are attributable to each ordinary share we have in issue. The calculation of basic and diluted earnings per share is based on the profit for the period divided by the daily average of the number of shares in issue during the period. Diluted earnings per share is based on the same profit 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 are contingently issuable.

* attributable to equity shareholders of the parent company

7 Underlying results and taxation

Explanatory note:

Underlying profit and earnings per share are shown as the Board considers them to be relevant guides to the performance of the Group.

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 and the impact arising from the fair valuing of financial instruments. 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.

The underlying tax charge for the period is equivalent to 19.9% (June 2015, 18.5%, December 2015, 18.2%) of underlying profit before tax.

* attributable to equity shareholders of the parent company

The tax charge for the period was based on the estimated tax rate for the full year and the amount of overseas tax charged in the period was £3.9m (June 2015, £6.6m, December 2015, £23m).

8 Dividends paid and proposed

Explanatory note:

Dividends are the amounts we return to our shareholders and are paid as an amount per ordinary share held.

On 28 July 2016 the Board declared an interim dividend of 4.53p per share (2015, 4.40p). The interim dividend will be paid on 2 December 2016 to shareholders registered on 4 November 2016. Dividends paid are charged to retained earnings on the earlier of the date of payment or the date on which they become a liability of the Company.

* attributable to the period

** final 2015 dividend of £23.3m paid on 6 July 2016

9 Business combinations

Explanatory note:

This note provides both quantitative and descriptive information on acquisitions made by the Group in 2016 and 2015, including details of the acquisitions themselves, the net assets acquired and the consideration paid or payable.

Acquisition of businesses in 2016

On 19 January 2016, the Group acquired 100% of Novero, a leading Germany based integrated vehicle connectivity systems provider for a total consideration of £51.0m (€66.2m). This acquisition is expected to enhance Laird's offering of innovative wireless solutions in one of its core and fastest growing markets. This is in line with Laird's strategy to invest significantly in Enterprise Internet of Things (EIoT) markets. This purchase has been accounted for as an acquisition and the residual excess over the net assets acquired is recognised as goodwill in the condensed financial statements. Fair values remain provisional whilst the company works through a number of complex issues for which provisions have been recorded on the acquisition balance sheet.

Fair values of the identifiable assets and liabilities of Novero at rates of exchange at the date of acquisition, were as follows: