2nd December 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT

This announcement is an advertisement and not a prospectus and this announcement does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for any securities in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter into, any investment activity.  ANY DECISION TO INVEST IN THE PROPOSED RIGHTS ISSUE MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE PUBLISHED.

LAIRD PLC

UPDATE ON TRADING AND FINANCIAL POSITION

PROPOSED UNDERWRITTEN RIGHTS ISSUE

Laird PLC ("Laird" or "the Company" and, together with its subsidiary undertakings, "the Group") today issues an update on trading and its financial position, together with proposals to raise up to £185 million by way of an underwritten Rights Issue during the first quarter of 2017, and an update on the Group's proposed dividend policy going forwards.

Trading

·     Trading is in line with the update issued on 19^th October.  Full year underlying profit before tax is expected to be around £50m for 2016 and we expect year end net debt to EBITDA to be within the Group's covenant of 3.5x

·     The operational improvement programme remains on track.  The programme will deliver annualised savings of at least $20m from 2018, with $15m expected in 2017. The total P&L cash cost of the project remains at c.$60m, much of which was provided for in 2015, with c.$30m paid by the end of 2016 and the balance of c.$30m to be spent in 2017.

·     Within the Wireless Systems division, Novero is now fully integrated into the Connected Vehicle Solutions (CVS) business and is expected to make a modest profit in 2017

·     Performance Materials continues to face challenging market conditions and actions are being taken to stabilise and improve the financial performance of the division.  Particular focus will be on the assessment of the optimal route to maximise shareholder value in the Precision Metals business

Financial position

·     The Board recognises the high level of leverage (including the impact on reported net debt of the weakness in sterling) and the limited covenant headroom. It has determined that it is in the best interests of shareholders to proactively address the Group's financial position

·     Proposed rights issue (the "Rights Issue") of up to £185 million expected to be undertaken in Q1 2017 together with the full year results; underwritten on a standby basis by J.P. Morgan Cazenove

·     Discussions will commence with debt providers to seek appropriate amendments to the operation of the covenants to ensure that the Group remains in compliance with the terms of its debt facilities

·     The Board is targeting a capital structure of between 1.0 x to 2.0x net debt to EBITDA in the medium term

·     The benefits of a strengthened financial position for Laird would be that it:

-      Enables continued investment in 2017 to deliver the previously announced operational improvement programme and the associated benefits in 2017 and 2018

-      Enables continued investment in opportunities for future growth, in particular in relation to the CVS business

-      Provides the financial strength required to demonstrate our ability to support our customers

-      Provides a strong foundation from which to assess the optimal route to maximise shareholder value in Performance Materials and particularly Precision Metals

Dividend 

·    In light of the proposed Rights Issue, the Board intends that no final dividend will be paid in respect of 2016.

·    The Board understands the importance of optimising value for shareholders and believes in balancing returns to shareholders with investment in the business to support future growth. To this end the Board intends to resume dividends in 2017 based on a dividend per share that is covered 3x by underlying earnings per share with the interim dividend at approximately one third of the full year dividend.

·    Thereafter, consistent with the anticipated improvement in earnings and of cash generation in 2018 and beyond, and subject to prevailing market conditions, the Board expects to reduce dividend cover towards 2x over the medium term.

Tony Quinlan, Chief Executive Officer, said:

"We have identified and assessed the measures required to provide the financial strength and foundations necessary to be able to return Laird to growth. 

Our focus now is on delivering day to day excellence in our operations, including driving the efficiencies from the operating model changes; being wholly customer focused, making Laird easier to do business with.  We will also pursue cost efficiency in manufacturing processes as a key deliverable.

Laird remains fundamentally well positioned in its key growth markets, notably in rapidly evolving ones such as connected vehicles.  The proposed amendments to the debt facilities covenants and the proposed Rights Issue will provide us with the balance sheet strength required to take the business forward with confidence."

Divisional Review

Wireless Systems

The majority of the businesses within this division have continued to perform in line with our expectations, with further growth expected in the automotive sector.  Further investment in key platforms will mean that the combined CVS business is well positioned to take advantage of the significant growth potential in the connected automotive market. We expect to see strong revenue growth in this business with revenues reaching in excess of $500m by 2020 (2016: $330m) and margin progression from the low base today.   Novero is now fully integrated, the turnaround programme is on track and we would expect to make a modest profit in 2017. In the rest of Wireless Systems, we have high margin, value add technologies, systems and products with significant potential across a number of the markets in which we operate.    

Performance Materials

Performance in this division has been disappointing this year. Pricing and margin pressures from a key customer, reduced volumes from a later than expected customer start up cycle on smartphones and operational issues, have led to a significant decline in Precision Metals. As a first step in the stabilisation of the business a new President has been recruited and will join Laird early next year.  We are taking action to improve commercial and operational performance within Precision Metals to firstly stabilise that part of the business and the overall financial performance of the division as a whole, at the same time as reviewing the growth and value creation options for the division.  We will then seek to optimise what is a strong portfolio across the division, to navigate a path to long-term sustainable growth.

 The remaining businesses within this division are performing as expected in the year.

Capital structure

The Group's £255m bilateral loan facilities, $105m and €15m private placement loan notes and $35m and €70m Schuldschein loan notes all contain the same financial covenants: Leverage (Net debt to EBITDA) of less than 3.5x (at the average exchange rates for covenant purposes) and Interest cover (EBITA to Net interest payable)  greater than 3.0x.

Given the high level of leverage (including the impact on reported net debt of the weakness in sterling) and the limited covenant headroom, the Board has determined that it is in the best interests of shareholders to proactively address the Group's financial position and to significantly reduce its structural indebtedness. The Board is targeting a capital structure of between 1.0 x to 2.0x net debt to EBITDA in the medium term and intends to undertake a Rights Issue to raise up to £185 million, underwritten on a standby basis by J.P. Morgan Cazenove. The Rights Issue is anticipated to be launched in Q1 2017 together with the full year results. The standby agreement contains representations and warranties, undertakings, conditions, indemnities and termination rights, including an undertaking to reduce the nominal value from 28 pence per share to 1 pence per share, if required.

The Group will commence discussions with the banks providing its revolving credit facilities and its loan note and Schuldschein holders to seek the appropriate amendments to the operation of the covenants to ensure that the Group remains in compliance with the terms of its debt facilities and to reflect the Group's intention to strengthen its capital structure through the proposed raising of new equity.

Investing for future growth / strategy

Laird has been on a journey of high investment both organically and inorganically over the last three years and the organic investment will continue in to 2017. The Group has, and continues to re-position itself as a diverse, global technology company that is a trusted partner to our customers by delivering problem solving solutions through Innovation, Reliable Fulfilment and Speed.

We continue to see strong market trends around the products that Laird provides and we are investing to fully benefit from these in the coming years, together with a return to good cash generation in 2018 and beyond.

A conference call will hosted by Tony Quinlan, CEO, and Kevin Dangerfield, CFO, at 8.30 am GMT today.

Dial in details:

This announcement contains inside information 

About Laird:   

Laird is a global technology company 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.  Laird is a global leader in the field of innovative radio frequency ("RF") engineering.

Enquiries:

Numis

Christopher Wilkinson

Simon Willis

Jamie Loughborough

Tel: +44 20 7260 1000

Important notice

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The information in this announcement is subject to change. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue.

This announcement contains "forward-looking statements" with respect to the financial condition, results of operations and business of Laird and to certain of Laird's plans and objectives with respect to these items.

Forward-looking statements are sometimes but not always identified by the use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'targets', 'goal', or 'estimates'. By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or will occur in the future.

There are various factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies, political situations and markets in which Laird operates; changes in government priorities due to programme reviews or revisions to strategic objectives; changes in the regulatory or competition frameworks in which Laird operates; the impact of legal or other proceedings against or which affect Laird; changes to or delays in programmes in which Laird is involved; the completion of acquisitions and divestitures and changes in commodity prices, inflation or exchange rates.

All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to Laird or persons acting on their behalf, are expressly qualified in their entirety by the factors referred to above. Neither Laird nor any other person (including JP Morgan Cazenove, Numis and Rothschild) intends to update these forward-looking statements.

No statement in this announcement is intended as a profit forecast for 2016 and no statement in this announcement should be interpreted to mean that underlying operating profit before tax for the current or future financials years would necessarily be above a minimum level, or match or exceed the historical published operating profit or set a minimum level of operating profit.

Each of N M Rothschild & Sons Limited ("Rothschild"), and Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, and J.P. Morgan Securities plc, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), which is authorised in the United Kingdom by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Laird and for no one else in connection with the Rights Issue and will not be responsible to anyone other than Laird for providing the protections afforded to clients of Rothschild or J.P. Morgan Cazenove or Numis (as the case may be) nor for providing advice in relation to the Rights Issue referred to in this announcement or any other transaction, arrangement or matter referred to in this announcement.

This announcement has been issued by Laird PLC and is the sole responsibility of Laird PLC. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by J.P. Morgan Cazenove or Rothschild or Numis, or by any of their affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

 This announcement and the information contained herein do not constitute an offer of securities in the United States. The securities referred to in this announcement have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration under the Securities Act or pursuant to an exemption from, or a transaction not subject to, such registration requirements. Laird has not registered and does not intend to register the offering of any securities in the United States or to conduct a public offering of any securities in the United States.

The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.