Half-year Report

2016 HALF YEAR RESULTS ANNOUNCEMENT

31 August 2016

Exova Group plc ("Exova"), a leading international provider of technically demanding testing and advisory services, announces its results for the period ended 30 June 2016.

Strong revenue growth drives solid first half 

· Revenue up 9.5% at constant currency; 13.0% at actual rates

o 1.7% organic1 growth at constant currency2 (8.3% excluding Oil & Gas and Industrials)

o 7.8% growth from M&A activity

· Strong performance in Product and Certification, Aerospace, Health Sciences and the Middle East

· Oil & Gas and Industrials continued to weaken and forward visibility remains poor

· Sale of Food, Water and Pharmaceuticals business in the UK and Ireland completed

· Two acquisitions completed, Admaterials in Singapore and Jones Environmental Forensics in the UK, with encouraging pipeline

· Interim dividend of 1.05p per share, +5% 

Notes:

1) Organic revenue growth at constant currency represents revenue growth at constant currency for each year excluding the growth attributable to acquisitions until the acquisition has been owned for a 12 month period and excluding the revenue attributable to disposals in the year of disposal and the preceding year. As such, the revenue associated with our UK & Ireland Food, Water & Pharmaceutical disposal are now reflected within inorganic growth.

2) Constant currency growth figures are provided in order to remove the impact of currency translation. We calculate growth at constant rates by translating the current and prior period revenue at the same exchange rates.

3) Adjusted results are operating profit from continuing operations before separately disclosed items, interest and taxation.

Ian El-Mokadem, Chief Executive Officer, commented:

"This is another satisfactory set of results in line with our expectations, demonstrating clear progress towards our medium term objectives. Overall growth was very strong, driven by acquisitions and broad based organic growth in all areas of the portfolio, with the exception of our Oil & Gas and Industrials cluster, which we now expect to weaken further in the second half.

The portfolio has been strengthened by the recent acquisitions and disposal, and with further cost actions taken to mitigate the poor trading conditions in oil & gas, we are on track to achieve market expectations."

Portfolio realigned

In keeping with our stated objectives to optimize the portfolio to take advantage of structural growth in individual clusters, we acquired Admaterials in Singapore, a specialist in construction materials testing and certification. Additionally, on 1 July, we acquired Jones Environmental Forensics in the UK, a business which provides testing and technically demanding analysis for contaminated water and soil. Furthermore, on the same day, we also completed the disposal of ten laboratories in the UK and Ireland engaged in Food, Water and Pharmaceutical testing.

Following the completion of these transactions we intend to realign our clusters and organisational structure to reflect the shape of the Group more appropriately going forward. Full details of these changes will be announced at our Capital Markets Day scheduled for 21 September.

Outlook

The Board continues to expect modest organic revenue growth at constant currency in 2016, driven by good overall growth in most clusters, but with a continuing deterioration in oil and gas moderating the rate of growth for the Group as a whole in the second half of the year. Our acquisitions programme should however continue to contribute significantly to overall revenue growth. Given our further cost actions, we also continue to expect Group margins to be broadly in line with market expectations.

As outlined at the start of the year, our medium term revenue expectation remains mid-single digit organic growth and additional continued expansion through acquisitions with gradual margin improvement.

Contacts

For further information please contact:

Peter Ogden, Powerscourt Group

Tel. Direct +44 (0)20 7549 0997 / +44 (0)7793 858 211

[email protected]

Sophie Moate, Powerscourt Group

Tel. Direct +44 (0)20 7549 0994 / +44 (0)7761 974 589

[email protected]

Analyst briefing and conference call

There will be an analyst briefing and conference call today at 9.30am GMT, held at Goldman Sachs, 10th Floor, Peterborough Court, 133 Fleet Street, London, EC4A 2BB. If you would like to attend the meeting, please contact Powerscourt Group at the above mentioned e-mail address. A copy of the presentation is available on the website.

Corporate website: www.exova.com

Exova

Exova is one of the world's leading laboratory-based testing groups, trusted by organisations to test and advise on the safety, quality and performance of their products and operations. Headquartered in Edinburgh, UK, Exova operates 138 laboratories and offices in 33 countries and employs more than 4,300 people throughout Europe, the Americas, the Middle East, Asia/Asia Pacific and Africa.

Exova's capabilities help to extend asset life, bring predictability to applications, and shorten the time to market for customers' products, processes and materials. With over 90 years' experience, Exova specialises in testing across a number of key sectors from health sciences to aerospace, transportation, oil and gas and construction.

HALF YEAR REPORT 2016

BUSINESS REVIEW

The principal activities of the Group are specialist testing and advisory services and the key markets served are Aerospace; Oil & Gas and Industrials; Product and Certification; Health Sciences and Middle East.

Exova operates primarily in the Testing segment of the Testing, Inspection and Certification ("TIC") sector. It has a growing Certification business, as well as providing Inspection services in a number of niche markets and geographies.

The business comprises 138 permanent facilities in 33 countries and employs more than 4,300 people.

Overview of performance

1) Organic revenue growth at constant currency represents revenue growth at constant currency for each year excluding the growth attributable to acquisitions until the acquisition has been owned for a 12 month period and excluding the revenue attributable to disposals in the year of disposal and the preceding year. As such, the revenue associated with our UK & Ireland Food, Water & Pharmaceutical disposal are now reflected within inorganic growth.

2) Constant currency growth figures are provided in order to remove the impact of currency translation. We calculate growth at constant rates by translating the current and prior period revenue at the same exchange rates.

3) Adjusted items are stated before separately disclosed items, interest and taxation.

4) The cash conversion ratio is calculated by dividing free cash flow by adjusted EBITDA. Free cash flow is defined as adjusted EBITDA less movement in net working capital (excluding the effect of the IPO related cost accrual), less capital expenditure net of disposals.

Revenue

Revenue for the six months ended 30 June 2016 was £160.9m which represented organic growth at constant currency of 1.7%.

Acquisitions contributed 8.3% of growth, partly offset by the UK&I Food, Water and Pharmaceutical business disposal which resulted in a reduction of 0.5%. The Group reports in sterling which weakened during the course of the year over the currencies in most of the territories in which the Group operates. This resulted in a positive translational effect of 3.5%.

Adjusted EBITA margin

Adjusted EBITA margin decreased by 40bps from 15.0% to 14.6%. This reflects the continuing challenges in Oil & Gas and Industrials which negatively affected margins plus the carryover impact of growth investments made in 2015.

Separately disclosed items

Amortisation of intangible assets

Amortisation in the six months to 30 June 2016 was £1.8m, a decrease of £3.0m from £4.8m in 2015. This decrease was due to customer relationships acquired from Bodycote now fully amortised partly offset by customer relationship amortisation relating to acquisitions made over the last few years.

Restructuring costs

We incurred £2.3m of restructuring costs for the six months to 30 June 2016, compared to £1.4m for the same period in 2015. This represents mainly staff redundancy costs relating to rationalisation and restructuring of certain laboratories. It also includes £0.8m for professional fees and staff redundancy costs incurred in relation to the disposal of the Food, Water and Pharmaceutical business in the UK and Ireland.

Restructuring costs in 2015 mainly related to management actions to adapt the business to the changes in the oil & gas market.

Acquisition and integration costs

Acquisition and integration costs include costs incurred in relation to Admaterials Technologies Private Limited, Jones Environmental Forensics Limited, integration costs for businesses acquired towards the end of 2015 and on-going expenses to support the pipeline.Contingent consideration in relation to the acquisition of Metallurgical Services Private Limited was reversed in the current year as the target was not met.

Net cash interest payable for the period was £2.7m compared to £2.8m for the same period in 2015. The increase in pension interest reflects the retirement benefit obligation assumed with the 2015 BM TRADA Group Limited acquisition.

Earnings per share ("EPS")

Basic earnings per share for the six months ended 30 June 2016 was 4.2p (2015: 2.8p).

Basic adjusted earnings per share for the six months ended 30 June 2016 was 5.8p (2015: 5.4p). This measure calculates EPS before separately disclosed items.

Dividend

The Board is recommending an interim dividend of 1.05p per share (2015: 1.0p per share) to be paid on 9 November 2016 to shareholders on the register at the close of business on 28 October 2016.

Acquisitions

On 15 February 2016, the Group acquired 70% of the share capital in Admaterials Technologies Private Limited (Admaterials) for a cash consideration of £5.3m. The consideration to acquire Admaterials includes a put and call option to purchase the remaining shareholding three years after the acquisition based on the same earnings multiple as the original offer. This Singapore based business provides testing in the construction sector, as well as chemical, environmental and mechanical testing and certification services. Founded in 2008, Admaterials is one of the leading construction testing businesses in Singapore, as well as providing chemical, environmental and mechanical testing to a range of customers in the private and government sectors. The business has annual revenues in the region of £3.5m and a team of more than 70 specialists.

On 1 July 2016, the Group acquired 100% of the share capital of Jones Environmental Forensics Limited (Jones) for a cash consideration of £13.9m. A further payment £1.0m was retained and an amount of up to £1.6m is contingent upon future profitability in the year following acquisition. The purchase consideration is subject to further purchase price adjustments. Jones is a North Wales-based independent environmental laboratory business and the UK's market leader in contaminated land analysis and a specialist in environmental forensics, with an excellent reputation for both quality and service. Jones has built a strong reputation as the laboratory of choice for contaminated soil and water analysis, primarily selling its services to leading global environmental consultants, with the ultimate end customers covering a variety of market segments, many in which Exova has an existing presence. The business which has a team of over 150 specialists achieved revenues of around £8m in 2015.

Disposal

The sale of our Food, Water and Pharmaceutical business in the UK and Ireland to Eurofins Scientific, announced on 19 May 2016, completed on 1 July 2016, for a cash consideration of £17.9m which is net of certain working capital balances retained and liabilities transferred (gross consideration of £20.0m). The consideration is subject to a further selling price adjustment. This sale allows us to dedicate significantly more financial and management resource to growing in sectors where we can build on our market leading positions in technically demanding services such as fire, aerospace, industrials and infrastructure related testing.

External net debt (excluding debt issue costs)

Net debt has increased from £153.0m at 31 December 2015 to £160.4m at 30 June 2016 due to the pound weakening against the currencies the term loans are denominated in.

At 30 June 2016, our term loans comprised £182.3m of non-amortising borrowings denominated in sterling, euro, Canadian dollars, US dollars and Swedish krona. The amounts drawn down on the revolving credit facility are denominated in sterling. In addition, a £78.0m revolving credit facility was undrawn at 30 June 2016. There are no repayments scheduled on our term loans until 2019.

Based on the definition in the bank covenant, net debt to Adjusted EBITDA ratio is 2.3x (30 June 2015: 2.5x).

UK withdrawal from the EU

In the 2015 Annual Report and Accounts, we highlighted the potential risks to the Group of the UK withdrawal from the EU. The Group provides testing services to a range of clients across Europe from a broad network of laboratories in both the UK and many countries in Continental Europe.

Many of the standards and schemes under which we operate are international or client specific and we anticipate little or no impact in these areas. We will monitor the impact on testing regimes and certification programmes and will engage with the relevant representative bodies and working groups as required.

We believe that the UK's withdrawal from the European Union is unlikely to have a material adverse impact on the future growth opportunities of the Group.

Presentation of results

Constant currency growth figures are provided in order to remove the impact of currency translation. We calculate growth at constant rates by translating the current and prior period revenue at the same exchange rates.

Organic growth at constant currency represents revenue growth at constant currency excluding the growth attributable to acquisitions until the acquisition has been owned for a 12 month period and excluding the revenue attributable to disposals in the year of disposal and the preceding year.

Adjusted results are stated before separately disclosed items, interest and taxation.

The Group presents, as separately disclosed items on the face of the income statement, those items of income and expense which, because of their nature, merit separate presentation to allow users to understand better the elements of financial performance in the period to facilitate a comparison with prior periods and a better assessment of trends in financial performance.

Foreign exchange

Exchange rates for the most significant currencies used by the Group during the period were:

OPERATING PERFORMANCE

Revenue

Adjusted EBITA

Regional Performance

Europe 

Europe saw modest organic growth of 1.5%, with strong performances in Aerospace, Product and Certification and Health Sciences helping to absorb the continuing challenges in Oil & Gas and Industrials. We saw good organic growth across the Aerospace sector driven by more focused account management and growth in our Top 20 accounts. In Product and Certification, we delivered strong growth in calibration and continued to experience very strong growth in fire testing and the consulting business, with regulation and standards supporting additional revenue development. In Health Sciences, we completed the sale of our UK and Ireland Food, Water and Pharmaceutical businesses on 1 July. Growth in our environmental business was boosted by a modest performance in stack testing. Our recently announced acquisition of Jones Environmental Forensics Limited, the UK's leading environmental contaminated land laboratory, gives us a national presence and a leading positon in this sector. In Oil & Gas and Industrials, as expected, the continued low oil price significantly reduced project spend and therefore testing volumes. We have seen some partial offset through industrials volumes for higher end testing.

The decline in margin reflects the continuing challenges in Oil & Gas and Industrials, with more intense competition and client cost base reductions putting pressure on prices. This was partially offset by Aerospace, where consolidation of our European creep and stress rupture testing services drove margin improvement.

Americas

Organic revenues in the Americas were marginally up, driven by strong performances in the Aerospace, Transportation and Health Sciences clusters. Aerospace delivered solid growth, with investments in CMC fatigue testing and capability to support testing associated with Additive Layer Manufacturing processes. In transportation we delivered very strong growth overall, fuelled by performance at our Troy laboratory; a major structural fatigue testing project; and high test volumes in our engine-testing facility in Toluca, Mexico. Health Sciences had a strong first half with good growth in all businesses, particularly food. In Oil & Gas and Industrials, we have continued to experience strong headwinds leading to reductions in client volumes and pricing pressures. This is driven by the depressed oil price, together with some slow-down in the steel industry as a result of oversupply through cheaper foreign imports.

The margin decline was driven by ongoing challenges in Western Canada and Houston in the Oil & Gas and Industrials cluster, but we are continuing to take a number of restructuring actions to mitigate the impact.

Rest of World 

The Rest of the World delivered strong organic growth of 5.8%. The Middle East cluster saw very strong growth, as a result of ongoing infrastructure investment in rail and road projects in Saudi Arabia and Qatar, together with growth in metallurgy testing. We acquired a civils testing business in Singapore in February of this year and integration is on track with performance in line with expectation. Our fire consulting business has seen a change in mix to more conventionally-sized projects, but the pipeline remains promising. In Australia, fire testing has seen some very positive development, driven by changing building codes and regulation. The Asian Oil & Gas and Industrials business has seen reduced project activity as a result of strong market headwinds.

Notwithstanding the challenges in our two Oil & Gas and Industrials laboratories, we have seen strong margin improvement in the region, driven by a mix of good growth coupled with disciplined cost control.

Outlook

The Board continues to expect modest organic revenue growth at constant currency in 2016, driven by good overall growth in most clusters, but with a continuing deterioration in oil and gas moderating the rate of growth for the Group as a whole in the second half of the year. Our acquisitions programme should however continue to contribute significantly to overall revenue growth. Given our further cost actions, we also continue to expect Group margins to be broadly in line with market expectations.

As outlined at the start of the year, our medium term revenue expectation remains mid-single digit organic growth and additional continued expansion through acquisitions with gradual margin improvement.

PRINCIPAL RISKS & UNCERTAINTIES

The 2015 Annual Report & Accounts set out the principal risks and uncertainties faced by the business and detail the process in place for managing these risks. The Report and Accounts are available from our website www.exova.com . As set out on pages 10 to 12 of the Annual Report, we believe that the principal risks and uncertainties which could impact the Group are as follows:

· Health and safety

· Reputational damage

· People

· Global economic and market conditions

· UK withdrawal from the EU

· Business infrastructure

· IT systems

· Acquisitions

· Litigation

· Business integrity and ethics

· Financial irregularity

· Treasury

There have been no significant changes to the risk management process in the current financial year. 

Responsibility statement

The Directors confirm that, to the best of their knowledge:

· The interim condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;

· The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the period and description of principal risks and uncertainties for the remainder of the financial year); and

· The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein).

By order of the Board

Ian El-Mokadem Philip Marshall

Chief Executive Officer Chief Financial Officer

30 August 2016

Cautionary statement

This half year report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The report should not be relied upon by any other party or for any other purpose.

The half year report contains certain forward looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

INDEPENDENT REVIEW REPORT TO EXOVA GROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the Interim Condensed Consolidated Income Statement, the Interim Condensed Consolidated Statement of Other Comprehensive Income, the Interim Condensed Consolidated Balance Sheet, the Interim Condensed Consolidated Statement of Changes in Equity, the Interim Condensed Consolidated Statement of Cash Flows and Notes 1 to 17. We have read the other information contained in the half-yearly financial 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 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. 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 half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 1, 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 half-yearly financial 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 half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with 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 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 half-yearly financial 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.

Ernst & Young LLP

Glasgow

30 August 2016

The maintenance and integrity of the Exova Group plc web site is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the web site.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2016

* Earnings per share on adjusted results are disclosed in Note 7.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2016

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2016

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2016

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2016

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2016

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2015.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. There are no standards or interpretations effective for the first time in the current financial period with a significant impact on the Group's consolidated results or financial position.

The European Markets and Securities Authority has issued "Guidelines on Alternative Performance Measures" which are effective from 3 July 2016 and which have been followed in explaining the use of non-GAAP measures in this interim statement.

Non-GAAP Measures

Our reported interim results are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and applied in accordance with the provisions of the Companies Act 2006. In measuring our performance, the financial measures that we use include those which have been derived from our reported results in order to eliminate factors which distort period-on-period comparisons. These are considered non-GAAP financial measures. We believe this information, along with comparable GAAP measurements, is useful for investors in providing a basis for measuring our operational performance. Below we set out our definitions of non-GAAP measures and provide reconciliations to relevant GAAP measures.

Free cash flow and adjusted EBITDAFree cash flow is defined as adjusted EBITDA less movement in net working capital (excluding the effect of the IPO related cost accrual), less capital expenditure net of disposals.Adjusted EBITDA is operating profit from continuing operations before separately disclosed items, interest, taxation and depreciation.

1. Net capital expenditure comprises purchase of property, plant and equipment and intangible assets less proceeds on disposal of property plant & equipmentand intangible assets.

2. SEGMENTAL REPORTING

3. OPERATING COSTS

4. SEPARATELY DISCLOSED ITEMS

Further information is given in the Business Review under separately disclosed items on page 4.

6. INCOME TAX 

The major components of income tax expense in the interim condensed consolidated income statement are:

A tax credit of £0.6m (2015: charge of £0.1m) is included in other comprehensive income.

The income tax expense is recognised based on management's best estimate of the average annual income tax rates on a region by region basis expected for the full financial year applied to the pre-tax income of the interim period per region.

The Group's consolidated effective tax rate as a function of the profit before tax for the six months ended 30 June 2016 is 22.9% (six months ended 30 June 2015: 23%). Differences between the estimated effective rate of 22.9% and the weighted average notional statutory UK tax rate of 20.25% include, but are not limited to, the mix of profits, the effect of tax rates in foreign jurisdictions, non-deductible expenses, foreign exchange movements and the effect of unrecognised tax losses.

7. EARNINGS PER SHARE

The Board has approved an interim dividend of 1.05p per share (30 June 2015: 1.0p per share). The dividend will be paid on 9 November 2016 to shareholders on the register at the close of business on 28 October 2016.

9. GOODWILL

During the six months, goodwill of £6.1m in relation to current year acquisitions was capitalised and £9.5m was re-allocated to assets classified as held for sale. There was a positive impact of £24.8m of foreign exchange on the total carrying value of goodwill in the six months ended 30 June 2016 (six months ended 30 June 2015: £10.9m negative impact; year ended 31 December 2015: £6.1m negative impact).

Impairment reviews

Goodwill was tested for impairment at 31 December 2015 and will be tested annually thereafter and when circumstances indicate the carrying value may be impaired. The Group's impairment test is performed by comparing the carrying amount of each cash-generating unit ("CGU"), including goodwill, with the recoverable amount.

The recoverable amounts are determined from value-in-use calculations and the key assumptions used to determine these recoverable amounts were disclosed in the annual consolidated financial statements for the year ended 31 December 2015.

The Group monitors its performance against these key assumptions, amongst other factors, when reviewing for indicators of impairment. At 31 December 2015 there was significant headroom above the carrying value for each CGU with the exception of Rest of World. As there has been no significant adverse change in the financial performance of the Rest of World region, there is no requirement for a formal review at this stage

10. INTANGIBLE ASSETS

During the six months ended 30 June 2016, the Group capitalised software assets with a cost of £0.5m and customer relationship of £1.7m (six months ended 30 June 2015: £1.1m; year ended 31 December 2015: £1.8m for software, £0.2m for patents and £0.7m from trade names, both from business combinations).

There was a positive impact of £0.6m of foreign exchange on the total value of intangible assets in the six months ended 30 June 2016 (six months ended 30 June 2015: £0.3m negative impact; year ended 31 December 2015: £0.1m negative impact).

11. PROPERTY, PLANT AND EQUIPMENT

Acquisitions and disposals

During the six months ended 30 June 2016, the Group capitalised assets with a cost of £7.9m including £1.2m from business combinations (note 13) (six months ended 30 June 2015: £7.5m including £1.7m from business combinations; year ended 31 December 2015: £17.5m including £1.8m from business combinations).

No assets were disposed of during the six months ended 30 June 2016 (six months ended 30 June 2015: £nil; year ended 31 December 2015 £0.1m).

During the six months ended 30 June 2016, the Group transferred £2.9m to assets classified as held for sale (six months ended 30 June 2015: £nil; year ended 31 December 2015: £nil).

There was a positive impact of £5.0m of foreign exchange on the total carrying value of property, plant and equipment in the six months ended 30 June 2016 (six months ended 30 June 2015: £2.2m negative impact; year ended 31 December 2015: £6.0m negative impact).

The net book value of property, plant and equipment was as follows:

Property, plant and equipment include £0.3m (six months ended 30 June 2015: £0.5m; year ended 31 December 2015: £0.4m) of assets held under finance leases.

Capital commitments

At 30 June 2016 the Group had commitments to purchase property, plant and equipment for £2.8m (six months ended 30 June 2015: £4.1m; year ended 31 December 2015: £3.4m).

12. HELD FOR SALE

The sale of our Food, Water and Pharmaceutical business in the UK and Ireland to Eurofins Scientific, announced on 19 May 2016, completed on 1 July 2016, for a cash consideration of £17.9m which is net of certain working capital balances retained and liabilities transferred (gross consideration of £20.0m). The consideration is subject to a further selling price adjustment. The sale consists of a portfolio of ten well-established, accredited laboratories across the UK and Ireland which provide a wide range of chemistry and microbiological testing services. This sale allows us to dedicate significantly more financial and management resource to growing in sectors where we can build on our market leading positions in technically demanding services such as fire, aerospace, industrials and infrastructure related testing. Accordingly, the related net assets have been classified as held for sale. Their value in the balance sheet is the lower of their carrying amount and fair value less costs to sell. No impairments have been recognised in respect of the sale.

Notes

13. BUSINESS COMBINATIONS

Acquisitions in the six months to 30 June 2016

On 15 February 2016, the Group acquired 70% of the share capital in Admaterials Technologies Private Limited (Admaterials) with a put and call option to acquire the remaining share capital in three years' time. This Singapore based business provides testing in the construction sector, as well as chemical, environmental and mechanical testing and certification services. Founded in 2008, Admaterials is one of the leading construction testing businesses in Singapore, as well as providing chemical, environmental and mechanical testing to a range of customers in the private and government sectors. The business has annual revenues in the region of £3.5m and a team of more than 70 specialists.

The consideration to acquire Metallurgical Services Private Limited included contingent consideration based on future targets being met. The contingent consideration's range was between a minimum of £nil and a maximum of £2.8m. In the six months to 30 June 2016 the remaining amount of the contingent consideration was reversed as the target was not met.

The consideration to acquire Western Technical Services Limited and Accusense Systems Limited included contingent consideration based on future targets being met. The contingent consideration's range is between a minimum of £nil and a maximum of £0.3m. The contingent consideration becomes payable in May 2017. The fair value of the contingent consideration is the present value of expected future cashflows based on the latest forecasts of future performance.

The contingent consideration to acquire Admaterials Technologies Private Limited represents a put and call option to purchase the remaining shareholding three years after the acquisition, based on the same earnings multiple as the original offer. The contingent consideration's range is between a minimum of £nil and a maximum of £8.1m. The contingent consideration is expected to become payable in 2019. The fair value of the contingent consideration is the present value of expected future cashflows based on the latest forecasts of future performance.

Acquisitions in 2015

During the period to 30 June 2015, the Group made the following acquisitions in aggregate: