Group income statement

for the year ended 31 December 2016

 

		2016	2015
		£m	£m
	Continuing operations
3	Revenue
	Performance Materials	428.4	394.8
	Wireless Systems	373.2	235.6
		801.6	630.4
	Operating profit before impairment of goodwill, amortisation of acquired intangible assets and exceptional items	61.9	80.7
	Impairment of goodwill	(155.5)	-
	Amortisation of acquired intangible assets	(17.2)	(13.2)
5	Exceptional items	1.2	(45.0)
4	Operating (loss)/profit	(109.6)	22.5
	Finance income	0.1	0.6
	Finance costs	(11.1)	(8.4)
	Financial instruments - fair value adjustments	(1.9)	0.5
	Other net finance income - pension	0.2	0.2
	(Loss)/profit before tax	(122.3)	15.4
	Taxation	11.5	(23.0)
	Loss for the year	(110.8)	(7.6)
	Attributable to:
	Equity shareholders of the parent company	(111.7)	(8.3)
	Non-controlling interests	0.9	0.7
		(110.8)	(7.6)
6	Basic earnings per share on (loss) for the year*	(41.3)p	(3.1)p
6	Diluted earnings per share on (loss) for the year*	(41.3)p	(3.1)p

                                                                                                                                                              

7	Underlying profit before tax**
	Continuing*	51.1	73.1
	Underlying earnings per share**
	Basic from continuing operations*	13.6p	21.8p
	Diluted from continuing operations*	13.6p	21.6p

 

*    Attributable to equity shareholders of the parent company

** Before amortisation and impairment of acquired intangible assets, exceptional items (note 5), the gain or loss on disposal of businesses and the impact arising from the fair valuing of financial instruments and deferred tax on the amortisation and impairment of acquired intangible assets, goodwill and US capitalised development costs.

 

 

 

 

Group statement of comprehensive income

for the year ended 31 December 2016

 

		2016	2015
		£m	£m
	Loss for the year	(110.8)	(7.6)
	Items that will not be reclassified subsequently to profit or loss:
	Net re-measurement gains on retirement benefit obligations net of tax	0.1	3.0
	Items that may be reclassified subsequently to profit or loss:
	Exchange differences on retranslation of overseas net investments	131.7	20.4
	Exchange differences on net investment hedges	(57.6)	(10.6)
		74.1	9.8
	Other comprehensive income for the year	74.2	12.8

 

Total comprehensive (loss)/income for the year

(36.6)

5.2

 

Attributable to:
Equity shareholders of  the parent company	(39.8)	4.3
Non-controlling interests	3.2	0.9
	(36.6)	5.2

 

 

 

Group statement of changes in equity

 

for the year ended 31 December 2016

 

Attributable to equity shareholders of the parent company

 

		Equity Share  Capital		Share premium		Retained earnings	Translation reserve			Treasury shares	Other Reserve			Total	Non- Controlling Interests		Total
		£m		£m		£m	£m			£m	£m			£m	£m		£m
	for the year ended 31 December 2015
	At 1 January 2015	75.3	271.7		27.7			101.7	(1.7)			(33.3)	441.4			8.7	450.1
	(Loss)/profit for the year	-	-		(8.3)			-	-			-	(8.3)			0.7	(7.6)
	Other comprehensive income	-	-		2.6			10.0	-			-	12.6			0.2	12.8
	Total comprehensive (loss)/income	-	-		(5.7)			10.0	-			-	4.3			0.9	5.2
	Exercise of share options	0.1	0.4		-			-	-			-	0.5			-	0.5
	Share based payments	-	-		2.7			-	-			-	2.7			-	2.7
	Treasury shares	-	-		-			-	(5.6)			-	(5.6)			-	(5.6)
	Vesting of LTIPs/Restricted shares	-	-		(4.6)			-	4.6			-	-			-	-
	Non-controlling interests - dividend	-	-		-			-	-			-	-			(1.1)	(1.1)
8	Dividends paid	-	-		(33.8)			-	-			-	(33.8)			-	(33.8)
	At 31 December 2015	75.4	272.1		(13.7)			111.7	(2.7)			(33.3)	409.5			8.5	418.0

 

for the year ended 31 December 2016

	At 1 January 2016	75.4	272.1	(13.7)	111.7	(2.7)	(33.3)	409.5	8.5	418.0
	(Loss)/profit for the year	-	-	(111.7)	-	-	-	(111.7)	0.9	(110.8)
	Other comprehensive income	-	-	0.2	71.7	-	-	71.9	2.3	74.2
	Total comprehensive (loss)/income	-	-	(111.5)	71.7	-	-	(39.8)	3.2	(36.6)
	Exercise of share options	-	0.3	-	-	-	-	0.3	-	0.3
	Issue of shares for acquisition	0.9	9.5	-	-	-	-	10.4	-	10.4
	Share based payments	-	-	1.1	-	-	-	1.1	-	1.1
	Treasury shares	-	-	-	-	(2.2)	-	(2.2)	-	(2.2)
	Vesting of LTIPs/Restricted shares	-	-	(2.2)	-	2.2	-	-	-	-
	Non-controlling interests - dividend	-	-	-	-	-	-	-	(3.0)	(3.0)
8	Dividends paid	-	-	(35.5)	-	-	-	(35.5)	-	(35.5)
	At 31 December 2016	76.3	281.9	(161.8)	183.4	(2.7)	(33.3)	343.8	8.7	352.5

 

 

 

 

 

 

 

	Group statement of financial position		2016	2015	2014
	as at 31 December 2016		£m	£m	£m
				(restated)	(restated)
		Assets
		Non-current assets
		Property, plant and equipment	123.2	83.9	91.9
		Intangible assets	635.1	608.3	556.2
		Deferred tax assets	4.6	3.6	4.1
		Derivative financial instruments	1.5	0.7	1.1
11		Retirement benefit assets	12.5	10.5	8.9
		Other non-current assets	1.9	1.4	1.0
			778.8	708.4	663.2
		Current assets
		Inventories	99.4	66.0	60.2
		Trade and other receivables	209.8	148.5	146.2
		Income tax receivable	0.3	0.2	1.0
		Assets held for sale	-	-	0.5
		Cash and cash equivalents	64.5	68.8	64.0
			374.0	283.5	271.9
		Liabilities
		Current liabilities
		Borrowings	(0.3)	(29.3)	(0.8)
		Derivative financial instruments	(2.1)	(0.2)	(0.6)
		Trade and other payables	(192.0)	(118.6)	(111.5)
		Current tax liabilities	(33.9)	(31.7)	(26.2)
		Provisions	(26.8)	(26.1)	(1.8)
			(255.1)	(205.9)	(140.9)
		Net current assets	118.9	77.6	131.0
		Non-current liabilities
		Borrowings	(408.8)	(239.5)	(222.7)
		Derivative financial instruments	(31.0)	(34.0)	(32.6)
		Deferred tax liabilities	(76.8)	(74.5)	(69.6)
11		Retirement benefit obligations	(13.7)	(9.2)	(10.6)
		Other non-current liabilities	(0.8)	(1.2)	(1.6)
		Provisions	(14.1)	(9.6)	(7.0)
			(545.2)	(368.0)	(344.1)
		Net assets	352.5	418.0	450.1
		Capital and reserves
		Equity share capital	76.3	75.4	75.3
		Share premium	281.9	272.1	271.7
		Retained (loss)/earnings	(161.8)	(13.7)	27.7
		Translation reserve	183.4	111.7	101.7
		Treasury shares	(2.7)	(2.7)	(1.7)
		Other reserves	(33.3)	(33.3)	(33.3)
		Equity attributable to owners of the parent company	343.8	409.5	441.4
		Non-controlling interests	8.7	8.5	8.7
		Equity	352.5	418.0	450.1

 

2015 and 2014 have been restated to reclassify all income tax creditors from non-current liabilities to current liabilities (note 2) and 2015 has been restated for changes to the fair value of identifiable assets and liabilities of LSR acquired (note 9).

 

The accounts were approved by the Board of Directors on 28 February 2017 and were signed on its behalf by:

A J QUINLAN         K J DANGERFIELD

Directors

Group cash flow statement

for the year ended 31 December 2016

 

		2016	2015
		£m	£m
10	Cash flows from operating activities
	Cash generated from operations	75.9	101.3
	Tax paid	(14.4)	(15.3)
	Net cash flows from operating activities	61.5	86.0
	Cash flow from investing activities
	Interest received	0.1	0.6
10	Acquisition of businesses (net of cash acquired)	(39.7)	(33.9)
	Purchase of property, plant and equipment	(41.4)	(15.9)
	Purchase of software	(3.3)	(2.5)
	Purchase of intangible assets (internally developed)	(19.9)	(14.7)
10	Net outflow from sale of businesses	-	(0.2)
	Proceeds from sales of property, plant and equipment	-	0.6
	Net cash flows from investing activities	(104.2)	(66.0)
	Cash flows from financing activities
	Interest and other finance costs paid	(10.5)	(8.3)
	Net proceeds from issue of ordinary share capital	0.3	0.5
	Purchase of treasury shares	(2.2)	(5.6)
	Proceeds from borrowings	114.4	32.8
	Repayments of borrowings	(35.0)	-
	Dividends paid to equity shareholders of parent	(35.5)	(33.8)
	Dividends paid to non-controlling interests	(3.0)	(1.1)
	Net cash flows from financing activities	28.5	(15.5)
	Effects of movements in foreign exchange rates	9.9	0.3
	(Decrease)/increase in cash and cash equivalents for the year	(4.3)	4.8
10	Cash and cash equivalents at 1 January	68.8	64.0
10	Cash and cash equivalents at 31 December	64.5	68.8

 

 

 

1. Corporate information

Laird PLC (the Company) is a limited company incorporated and domiciled in the United Kingdom whose shares are publicly traded.

 

The consolidated financial statements of the Group for the year ended 31 December 2016 were authorised for issue in accordance with a resolution of the directors on 28 February 2017.

 

2. Basis of preparation

(a) The directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing its financial statements.

 

(b) The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. The consolidated financial statements have been prepared in accordance with the accounting policies followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2016.

 

The financial information set out in this document does not constitute the Group's statutory accounts for the year ended 31 December 2016 or 31 December 2015. The annual report and financial statements for the year ended 31 December 2016 were approved by the Board of Directors on 28 February 2017 along with this preliminary announcement, but have not yet been delivered to the Registrar of Companies. The auditor's report on the statutory accounts for the year ended 31 December 2016 was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2015 have been delivered to the Registrar of Companies. The auditor's report on the statutory accounts for the year ended 31 December 2015 was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The 2016 annual report and financial statements, together with details of the Annual General Meeting, will be despatched to shareholders on 23 March 2017. The Annual General Meeting will take place on 28 April 2017.

 

The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the measurement and impairment of goodwill, the measurement of provisions, the measurement of defined benefit pension assets and obligations, the measurement of income and deferred taxes, the measurement of put and call options in respect of non-controlling interests in subsidiaries, acquisition accounting and capitalised development costs. Where appropriate, sensitivity analysis is included in the relevant notes.

 

The directors continue to adopt the going concern basis for accounting in preparing the annual financial statements. Based on the success of the previously announced Rights Issue, which is fully underwritten, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

 

 

 

Accounting policies

The Group has revised its tax accounting policy to classify provisions for tax uncertainties as current liabilities. The Group believes this provides a more relevant presentation, whilst having no impact on the timing of expected cash outflows. Accordingly, the consolidated balance sheets at 31 December 2015 and 31 December 2014 have been restated to reclassify £25.4m and £23.6m respectively of current tax liabilities from non-current liabilities to current liabilities.

 

In addition, the definition of an exceptional item (note 5) has been narrowed to exclude asset write downs. Had this policy been applied in the prior year, underlying operating profit^† would have been the same. Other than these two changes, the financial information in this document is prepared according to the same accounting policies as set out in the previous annual report.

 

3  Segmental analysis

Explanatory note:

The reportable segments are the operating divisions, Performance Materials and Wireless Systems. The financial performance of each segment is shown here.

 

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.

 

 

		Performance		Wireless
		Materials		Systems		Total
		2016	2015	2016	2015	2016	2015
		£m	£m	£m	£m	£m	£m
Revenue from customers		428.4	394.8	373.2	235.6	801.6		630.4
Segment operating profit stated before:		44.2	57.5	25.3	30.4	69.5		87.9
Impairment of goodwill		-	-	(155.5)	-	(155.5)		-
Amortisation of acquired intangible assets		(6.8)	(5.3)	(10.4)	(7.9)	(17.2)		(13.2)
Exceptional items		1.2	(24.0)	(1.8)	(12.5)	(0.6)		(36.5)
		38.6	28.2	(142.4)	10.0	(103.8)		38.2
Unallocated costs						(7.6)		(7.2)
Unallocated exceptional items						1.8		(8.5)
Operating (loss)/profit						(109.6)		22.5
Finance income						0.1		0.6
Finance costs						(11.1)		(8.4)
Financial instruments - fair value adjustments						(1.9)		0.5
Other net finance income - pension						0.2		0.2
(Loss)/profit before tax						(122.3)		15.4
Taxation						11.5		(23.0)
Loss for the year						(110.8)		(7.6)

 

3  Segmental analysis (continued)

The Group did not have any inter-segment revenue in 2016 and 2015.

 

Revenue from one customer of the Performance Materials division and Wireless Systems division represents approximately £105.5m (2015: £84.6m) of the Group's total revenues.

 

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

 

	Performance		Wireless
	Materials		Systems		Total
	2016	2015	2016	2015	2016	2015
	£m	£m	£m	£m	£m	£m
Segment assets	826.8	524.6	282.5	426.5	1,109.3	951.1
Unallocated assets	-	-	-	-	43.5	40.7
Total assets	826.8	524.6	282.5	426.5	1,152.8	991.8
Segment liabilities	105.6	67.0	89.8	43.4	195.4	110.4
Unallocated liabilities
- borrowings	-	-	-	-	409.1	268.8
- other (see below)	-	-	-	-	195.8	194.6
Total liabilities	105.6	67.0	89.8	43.4	800.3	573.8
Other segment items
Capital additions	45.9	15.8	20.9	16.8	66.8	32.6
Acquisition of businesses	-	-	80.3	38.4	80.3	38.4
Total additions	45.9	15.8	101.2	55.2	147.1	71.0
Depreciation	16.8	13.2	6.1	3.2	22.9	16.4
Impairment of goodwill	-	-	155.5	-	155.5	-
Amortisation / write downs of intangible assets	13.0	9.1	21.2	15.5	34.2	24.6

 

Unallocated assets in the above table include part of cash and cash equivalents, 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.

 

Geographic information

The Group managed its business segments on a global basis and the parent company is resident in the UK. The Group's operations are based in the following territories:

 

North America, Europe, Asia and Rest of World.

 

 

 

 

 

 

 

 

 

3  Segmental analysis (continued)

The revenue analysis in the table below is based on the location of the customer. The analysis of non-current assets is based on the location of the assets and for this purpose consists of property, plant and equipment and intangible assets.

	Revenue				Non-current assets
	2016	2015	2016	2015
	£m	£m	£m	£m
Continuing operations				(restated)
North America	269.9	219.9	467.8	520.1
Europe	203.9	97.1	175.7	79.9
Asia	309.5	292.9	114.8	92.2
Rest of World	18.3	20.5	-	-
	801.6	630.4	758.3	692.2

 

Revenue from UK customers (the Company's country of domicile) was £18.8m (2015, £14.5m). UK non-current assets were £12.8m (2015: £19.5m).

 

 

4  Operating (loss)/profit  

 

Explanatory note:

This note sets out the material components of the "Operating profit" line on our Group income statement, including a detailed breakdown of the fees we paid to our auditor, Deloitte LLP (2015: Ernst & Young LLP), in respect of services they have provided to us during the year.

 

	2016	2015
	£m	£m
Continuing operations
Revenue	801.6	630.4
Cost of sales	(522.3)	(375.0)
Gross profit	279.3	255.4
Selling, administration and other expenses	(325.9)	(187.1)
Research and development expenditure (net)	(63.0)	(45.8)
Operating profit before finance costs and tax	(109.6)	22.5

 

Note

(a)    Included in selling, administration and other expenses is a £1.2m exceptional credit (2015, £45.0m charge) as described in note 5 and £172.7m (2015, £13.2m) of goodwill impairment and amortisation of acquired intangibles.

 (b)  Included in research and development expenditure is £13.1m (2015, £6.0m) of amortisation and impairment in respect of capitalised development costs.

 (c)   Cost of inventories recognised as an expense within cost of sales was £340.9m (2015, £249.0m).

 

 

4  Operating (loss)/profit (continued)

	2016		2015
	Continuing operations		Continuing operations
Operating profit  for the year is stated after charging the following items:	£m		£m
Staff costs	195.4		134.4
Exceptional items
Property, plant and equipment write downs	-		2.9
Software write downs	-		0.5
Capitalised development costs write downs	-		3.2
Inventory write downs	-		1.6
Restructuring costs	(0.4)		30.9
Change in valuation of put and call options in respect of Model  Solution	(3.8)		1.8
Costs related to rights issue and covenant waiver fees	3.0		-
Patents litigation	-		0.6
Business acquisition transaction costs	-		3.5
	(1.2)		45.0
Research and development expenditure
Incurred	69.8		54.5
Capitalised	(19.9)		(14.7)
Impairment of capitalised development costs	4.9		-
Depreciation and amortisation
Property, plant and equipment	22.9		16.4
Software	3.9		2.2
Capitalised development costs	8.2		6.0
Acquired intangible assets	17.2		13.2
Operating lease rentals
Hire of plant and machinery	0.5		0.2
Other	11.1		8.9
Auditor's remuneration*
Audit fees
- Audit of financial statements	0.4		0.4
- Audit of subsidiaries	0.8		0.7
Total audit fees	1.2		1.1
Audit related assurance services	0.1		-
Corporate finance services	0.4		-
Tax fees - Compliance services	-		0.2
Tax fees - Bilateral Advance Pricing Agreement US-China	-		0.7
Tax fees - Advisory services	-		0.1
Total non-audit services	0.5		1.0

 

* Total fees paid to the auditor were £1.7m (2015, £2.1m).

 

 

5  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 infrequent in nature. This note provides a detailed breakdown of the "Exceptional items" line included on the Group income statement.

 

	2016	2015
	£m	£m
Continuing operations:
Performance Materials
Asset write downs:
Property, plant and equipment	-	(1.9)
Capitalised development costs	-	(1.5)
Inventory	-	(0.8)
Other restructuring credits/(costs)	1.2	(19.8)
	1.2	(24.0)
Wireless Systems
Asset write downs:
Property, plant and equipment	-	(0.5)
Capitalised development costs	-	(1.7)
Inventory	-	(0.8)
Patents litigation	-	(0.6)
Other restructuring costs	(1.8)	(8.9)
	(1.8)	(12.5)
Unallocated (costs)/credits
Asset write downs:
Property, plant and equipment	-	(0.5)
Software	-	(0.5)
Business acquisition transaction costs	-	(3.5)
Costs related to rights issue and covenant waiver fees	(3.0)	-
Change in valuation of put options in respect of Model Solution	3.0	(1.4)
Change in valuation of call options in respect of Model Solution	0.8	(0.4)
Other restructuring credits/(costs)	1.0	(2.2)
	1.8	(8.5)
Net credit/(charge)	1.2	(45.0)

 

 Note

(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. This gave rise to asset write downs and other restructuring costs.

(b)  A patent lawsuit filed against Laird in 2014 has been settled during 2015 with an additional £0.6m of legal costs charged in 2015.

(c)   The total cash outlay for exceptional costs in 2016 was £16.8m (2015, £7.6m).

(d)        The tax effect on exceptional items in 2016 is a £3.6m tax credit (2015, £8.3m charge).

 

 

 

 

6  Earnings per share

 

Explanatory note:

Earnings per share ("EPS") represents the amount of our earnings (post-tax losses) 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 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 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 contingently issuable.

 

	2016	2015
	£m	£m
Profit
Loss for the year attributable to equity shareholders of the parent company	(111.7)	(8.3)
	Number	Number
	of shares	of shares
	(m)	(m)
Weighted average shares
Basic weighted average shares	270.4	267.2
Options	1.2	2.2
Diluted weighted average shares	271.6	269.4
	Pence	Pence
Earnings per share*
Basic on (loss) for the year	(41.3)	(3.1)
Diluted on (loss) for the year	(41.3)	(3.1)

*   Attributable to equity shareholders of the parent company

 

The impact of all potentially dilutive share options on earnings per share would be to increase the weighted average number of shares in issue to 272.9m (2015: 269.4m).

 

 

 

7  Underlying results

 

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 year is equivalent to 24.9% (2015, 18.2%) of underlying profit before tax.

 

	2016	2015
	£m	£m
Profit
Operating profit before impairment of goodwill, amortisation of acquired intangible assets and exceptional items	61.9	80.7
Finance income	0.1	0.6
Finance costs	(11.1)	(8.4)
Other net finance income - pension	0.2	0.2
Underlying profit before tax	51.1	73.1
Tax
The underlying tax charge is calculated as follows:
Underlying tax	12.7	13.3
Underlying tax rate	24.9%	18.2%
Tax (credit)/charge on exceptional items	(3.6)	8.3
Deferred tax on goodwill, acquired intangible assets and US capitalised development costs	(19.4)	0.2
Exceptional US tax loss (recognition)/movement	(1.2)	1.2
Total tax (credit)/charge	(11.5)	23.0
Earnings per share**	Pence	Pence
Underlying earnings per share - basic	13.6	21.8
Underlying earnings per share - diluted	13.6	21.6

 

** Attributable to equity shareholders of the parent company

 

 

 

 

 

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.

 

No final dividend is proposed in respect of 2016 (2015, a final dividend of 8.6p per share). 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.

 

	Dividends paid		Dividends declared/proposed*
Total Dividends	2016	2015	2016	2015
	£m	£m	£m	£m
Final 2014	-	22.0	-	-
Interim 2015	-	11.8	-	11.8
Final 2015	23.3	-	-	23.3
Interim 2016	12.2	-	12.2	-
Final 2016	-	-	-	-
	35.5	33.8	12.2	35.1

 

 

 

Dividends per share	Dividends paid		Dividends declared/proposed*
	2016	2015	2016	2015
	Pence	Pence	Pence	Pence
Final 2014	-	8.23	-	-
Interim 2015	-	4.40	-	4.40
Final 2015	8.60	-	-	8.60
Interim 2016	4.53	-	4.53	-
Final 2016	-	-	-	-
	13.13	12.63	4.53	13.00

 

* Attributable to the year
 

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 20 January 2016, the Group acquired 100% of Novero, a leading Germany based integrated vehicle connectivity systems provider for a total consideration of £50.1m (EUR 65.0m). This acquisition is expected to enhance Laird's offering of innovative wireless solutions to the automotive market. This purchase has been accounted for as an acquisition and all intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired is recognised as goodwill in the financial statements. 

 

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

 

		Fair values to the Group
		£m
Property, plant and equipment		5.6
Intangible assets		30.4
Inventories		7.2
Trade and other receivables		7.9
Trade and other payables		(17.4)
Income tax payable		(4.9)
Deferred tax liabilities		(6.3)
Retirement benefit obligations		(3.5)
Provisions		(13.2)
Net assets acquired		5.8
Goodwill arising on acquisition		44.3
Consideration		50.1
Consideration satisfied by: Cash consideration		39.4
Net overdraft acquired		0.3
Non cash consideration - shares issued		10.4
		50.1

 

In the period following acquisition, revenue for Novero was £82.5m, there was a loss after tax of £7.6m and underlying loss before tax^† was £0.6m. If the acquisition had been held for the full year, Group revenues would have been £803.2m and the loss before tax would have been £1.2m worse at £123.5m. Included in the goodwill recognised above are certain assets that cannot be individually separated and reliably measured due to their nature. These items include the expected value of synergies. Acquisition related costs of £nil (2015: £2.8m) were recorded within exceptional items in the income statement.

 

 

 

9  Business combinations (continued)

 

Acquisition of businesses in 2015

On 24 November 2015, the Group acquired 100% of LS Research ("LSR"), a US based leader in wireless product design and development for a total consideration of £36.5m ($55.0m). This acquisition adds new capabilities in embedded wireless solutions and services to Laird, provides us with new routes to market for our own products and most importantly, extends our reach, presence and capabilities in Enterprise Internet of Things. This purchase has been accounted for as an acquisition and all intangible assets were recognised at their respective fair values. The fair values are provisional. The residual excess over the net assets acquired is recognised as goodwill in the financial statements.

 

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

 

		Fair values to the Group
		£m
Property, plant and equipment		2.9
Intangible assets		18.4
Inventories		0.5
Trade and other receivables		3.8
Trade and other payables		(1.8)
Deferred tax liabilities		-
Net assets acquired		23.8
Goodwill arising on acquisition		12.7
Consideration		36.5
Consideration satisfied by: Cash consideration		34.7
Net cash acquired		(0.5)
Deferred consideration		0.2
Borrowings acquired		2.1
		36.5

 

In the period following acquisition, revenue for LSR was £1.4m, there was a profit after tax of £nil and underlying profit before tax^† was £0.1m. If the acquisition had been held for the full year, Group revenues would have been £645.6m and the profit before tax would have been £1.4m higher at £16.8m. Included in the goodwill recognised above are certain assets that cannot be individually separated and reliably measured due to their nature. These items include the expected value of synergies. None of the goodwill recognised is expected to be deductible for income tax purposes. Acquisition related costs of £nil (2015: £0.4m) were recorded within exceptional items in the income statement.

 

Subsequent to 31 December 2015, the provisional acquisition accounting was finalised.  Intangible assets increased by £7.3m, deferred tax liabilities decreased by £4.3m and goodwill decreased by £11.6m.  The above table and the 2015 balance sheet has been restated accordingly.
 

10 Additional cash flow information

 

Explanatory note:

Cash generated from operations is the starting point of our cash flow statement. This table makes adjustments for any non-cash accounting items to reconcile our result for the year to the amount of physical cash we have generated from our continuing operations.

 

Cash generation from operations

 

Continuing operations	2016	2015
	£m	£m
(Loss) after taxation	(110.8)	(7.6)
Depreciation and other non-cash items
Depreciation of property, plant and equipment	22.9	16.4
Amortisation of software	3.9	2.2
Amortisation of capitalised development costs	8.2	6.0
Impairment of capitalised development costs	4.9	-
Amortisation of acquired intangible assets	17.2	13.2
Impairment of goodwill	155.5	-
Exceptional property, plant and equipment write downs	-	2.9
Exceptional software write downs	-	0.5
Exceptional capitalised development costs write downs	-	3.2
Exceptional inventory write downs	-	1.6
Exceptional pension curtailment gain	(1.1)	-
Exceptional change in valuation of put and call options	(3.8)	1.8
Share based payments	1.1	2.7
Financial instruments - fair value adjustments	1.9	(0.5)
Other net finance costs	10.8	7.6
Taxation	(11.5)	23.0
Changes in working capital
Inventories	(13.5)	(5.9)
Trade and other receivables	(28.8)	3.0
Trade, other payables and provisions	19.0	31.2
	(23.3)	28.3
Cash generated from continuing operations	75.9	101.3

Note

a)	Changes in working capital from continuing operations include creditor increases of £13.1m (2015, £27.4m decreases) in respect of exceptional costs.

 

 

 

10 Additional cash flow information (continued)

 

Net cash outflow on acquisitions and disposals	2016	2015
	£m	£m
Acquisition of businesses
Consideration:
Cash consideration	(39.4)	(34.4)
Net cash acquired	(0.3)	0.5
Net cash outflow on acquisition of businesses	(39.7)	(33.9)
Borrowings acquired	-	(2.0)
Disposal of businesses
Consideration:
Net cash outflow on disposal of businesses	-	(0.2)

 

 

Analysis of movements in net borrowings

	At 1 January 2016	Cash flow	Acquisitions	Non-cash changes	Exchange differences	At 31 December 2016
Year to 31 December 2016
	£m	£m	£m	£m	£m	£m
Cash and cash equivalents	68.8	(14.2)	-	-	9.9	64.5
Borrowings due within one year	(29.3)	35.0	-	-	(6.0)	(0.3)
Borrowings due after more than one year	(239.5)	(114.4)	-	-	(54.9)	(408.8)
Total	(200.0)	(93.6)	-	-	(51.0)	(344.6)
	At 1 January 2015	Cash flow	Acquisitions	Non-cash changes	Exchange differences	At 31 December 2015
Year to 31 December 2015
	£m	£m	£m	£m	£m	£m
Cash and cash equivalents	64.0	4.5	-	-	0.3	68.8
Borrowings due within one year	(0.8)	2.7	(2.0)	(28.1)	(1.1)	(29.3)
Borrowings due after more than one year	(222.7)	(35.5)	-	28.1	(9.4)	(239.5)
Total	(159.5)	(28.3)	(2.0)	-	(10.2)	(200.0)

 

 

 

 

 

11  Post employment benefit obligations

 

Explanatory note:

The Group operates a number of schemes of both the defined benefit and defined contribution types. Details of the schemes are included below.

 

The income statement charge for the defined contribution scheme represents the contributions due to be paid by the Group in respect of the current period.

 

Pension and severance schemes

Approximately 450 employees (2015, 300) are members of six (2015, five) different defined benefit schemes and these schemes have approximately 1,500 (2015, 1,400) deferred and current pensioners. The employer contributions made to these schemes during the year were £1.4m (2015, £0.6m).

 

The total assessed value of the schemes' assets at 31 December 2016, at their market value, is estimated at £134.8m (2015, £106.0m) and the liabilities estimated at £129.3m (2015, £99.0m).

 

The Group has adopted IFRIC 14 which, depending on the rules of individual schemes, allows the Group to recognise pensions surpluses on the statement of financial position where there is an unconditional right to a refund or benefit available in the form of reduced contributions. The resultant aggregate net pension liability under IAS 19 is £1.2m (2015, £1.4m asset). 

 

Description of the schemes

 

UK

 

In the UK the Group supports the Laird Pension Scheme which is a funded arrangement providing defined benefits on a final salary basis. The Group also operates an unapproved arrangement which provides unfunded defined benefits on a final salary basis to certain members who were previously subject to the HMRC pension schemes earnings cap. Both of the UK arrangements are closed to new entrants.

 

The Laird Pension Scheme makes up approximately 80% of the defined benefit liabilities of the Group.

 

The Laird Pension Scheme operates under trust law and is managed and administered by the Trustee on behalf of the members in accordance with the terms of the Trust Deed and Rules and relevant legislation. The scheme is subject to the scheme specific funding requirements as outlined in UK legislation. The most recent scheme specific funding valuation was at 1 January 2015.

 

The Laird Pension Scheme's investment strategy is to gradually reduce the proportion of the total assets held in return seeking assets to about 15% with 85% of the assets in bonds and annuities over the period to 31 July 2018. This strategy takes account of the scheme's liability profile whilst aiming to minimise long term costs by maximising return. The scheme's assets are held separately from those of the Group.

 

 

 

 

 

Belgium

 

In Belgium the Group operates the Emerson and Cuming Pension Plan which is a funded, insured lump sum defined benefit scheme and the Emerson and Cuming Pre-Pension Plan which is an unfunded plan where the employer pays a monthly indemnity until the retirement date on top of the unemployment allowances paid by the social security.

 

Germany

 

In Germany the Group operates the Cattron-Theimeg Europe GmbH & Co. KG Pension Plan. This is a funded defined benefit scheme currently providing pension benefits to 7 pensioners (2015, 7).

 

The Novero GmbH Pension Arrangement provides salary-linked defined benefits and is closed to future accrual. The arrangement is partly funded via an insured support fund, and partly unfunded.

 

Sweden

 

Within Sweden, the Group operates a scheme included within a multi-employer plan for its employees which is insured with Alecta.  This scheme is a defined benefit scheme, but Alecta is currently unable to provide sufficient information to report the Group's proportional share of the defined benefit commitments and the assets under management and expenses associated with the scheme. Consequently, Alecta cannot provide the information regarding the Group's proportional share of the surplus or deficit in the scheme.  As a result, the scheme is accounted for as if it were a defined contribution scheme.

 

Korea

 

Within Korea, the Group operates the Model Solution severance scheme under Korean Labour law.  This provides a payment to an employee in the event their service is terminated, if they resign or if they retire. On any of these events, employees will receive a lump sum approximately equal to one month of salary for each year of service. The scheme is partially funded to a level of 70% (by law at least 60% of the accrued liabilities must be funded).

 

The benefits provided, the approach to funding and the legal basis of the non UK plans reflect their local environments. IAS19 requires that the discount rate is set according to the level of market yields on either corporate or government bonds in the relevant markets.

 

 

 

11  Post employment benefit obligations (continued)

 

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:

 

	Schemes in surplus  with a right to a  refund	2016       Other schemes	Total	Schemes in surplus with a right to a refund	2015       Other schemes	Total
	£m	£m	£m	£m	£m	£m
Annuities	6.5	-	6.5	6.2	-	6.2
Equities
- UK	-	-	-	-	-	-
- Overseas	23.5	-	23.5	22.6	-	22.6
Gilts and bonds
- Government backed	70.2	-	70.2	56.4	-	56.4
- Investment grade corporate bonds	22.3	-	22.3	16.7	-	16.7
Other including cash	0.1	12.2	12.3	0.5	3.5	4.0
Total market value of assets	122.6	12.2	134.8	102.4	3.5	105.9
Present value of scheme liabilities	(103.4)	(25.9)	(129.3)	(86.3)	(12.7)	(99.0)
Funded status	19.2	(13.7)	5.5	16.1	(9.2)	6.9
Disallowed assets	(6.7)	-	(6.7)	(5.6)	-	(5.6)
Surplus/(deficit) in the schemes	12.5	(13.7)	(1.2)	10.5	(9.2)	1.3

 

The mortality assumption used at the 2016 year end (and 2015 year end) is based on the SAPS all lives tables with a 90% multiplier for executives and directors and 110% for all other members, appropriate for each member's year of birth.  Allowance is made for improvements in line with CMI (2014) projections with a 1.5% pa long term trend from 2002. The expected lifetime of a participant at 31 December 2016 who is age 65 and the expected lifetime of a participant who will be age 65 in 15 years are shown in years below based on these mortality tables:

 

	Other members		Executive and director members
Age	Males	Females	Males	Females
65	22.0	24.3	23.6	26.0
65 in 15 years	23.5	26.0	25.2	27.7

 

For IAS 19 the schemes' liabilities have been calculated under the projected unit method and the main financial assumptions were inflation of 3.45% per annum (2015, 3.20%), salary increases of 3.45% - 4.45% per annum (2015, 3.20% - 4.20%) and a discount rate for liabilities of 2.50% per annum (2015, 3.70%).

 

 

 Appendix

Non-IFRS information

This document contains certain financial measures that are not defined or recognised under IFRS, including Covenant EBITA and Covenant EBITDA, net debt, cash interest expense, underlying profit before tax, underlying basic earnings per share, operating cash flow, free cash flow, organic constant currency metrics and figures relating to the reorganisation of the Group's division. These measures are unaudited and are not measures of financial performance under IFRS and should not be considered as alternatives to other indicators of the Group's operating performance, cash flows or any other measure of performance derived in accordance with IFRS. Accordingly, these non-IFRS measures should be viewed as supplemental to, but not as a substitute for, measures presented in the Laird Final Results and Laird Annual Report and Accounts, which are prepared in accordance with IFRS as adopted by the EU.

 

Information regarding these measures is sometimes used by investors to evaluate the efficiency of a company's operations and its ability to employ its earnings toward repayment of debt, capital expenditures and working capital requirements. However, there are no generally accepted principles governing the calculation of these measures and the criteria upon which these measures are based can vary from company to company. These measures, by themselves, do not provide a sufficient basis to compare the Company's performance with that of other companies and should not be considered in isolation or as a substitute for operating profit or any other measure as an indicator of operating performance, or as an alternative to cash generated from operating activities as a measure of liquidity.

 

Covenant EBITA and Covenant EBITDA

The Group is subject to two key financial covenants, which are tested semi-annually on 30 June and 31 December of each year. These covenants relate to the leverage ratio, being the ratio between Covenant EBITDA and net debt, and the interest cover ratio between Covenant EBITA and cash interest expense. The calculation of these ratios involves the translation of non-sterling denominated debt using average, rather than closing, rates of exchange and adjustments for removal of the 49% of Model Solution that the Group does not own from the calculation.

 

Covenant EBITA is defined as operating profit before amortisation and impairment of acquired intangible assets and exceptional items, adding back amortisation of software, amortisation and impairment of capitalised development costs, share based payments and pre-acquisition gains/(losses), less the amounts attributable to the 49% of Model Solution that the Group does not own. Covenant EBITDA is defined as Covenant EBITA adding back depreciation of property, plant and equipment. The Group uses Covenant EBITA and Covenant EBITDA in the calculation of its interest cover and leverage ratios under its financing arrangements, respectively.

 

Covenant EBITA and Covenant EBITDA eliminate potential differences in performance caused by variations in capital structures (affecting net finance costs), tax positions (such as the availability of net operating losses against which to relieve taxable profits), the cost and age of tangible assets (affecting relative depreciation expense), the extent to which intangible assets are identifiable (affecting relative amortisation expense) and other specific items that are considered to hinder comparison of the trading performance of the Group's businesses either year-on-year or with other businesses. For the periods under review, other specific items represent items defined by management are exceptional items and share based charges.

 

 

 

 

Covenant EBITA and Covenant EBITDA have limitations as an analytical tool. Some of these limitations are:

 

·     does not reflect the Group's cash expenditures or future requirements for capital expenditures or contractual commitments;

·     does not reflect changes in, or cash requirements for, the Group's working capital needs;

·     does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Group's indebtedness;

·     although depreciation and amortisation are non-cash charges, the assets being depreciated and amortised will often have to be replaced in the future, and Covenant EBITA and Covenant EBITDA do not reflect any cash requirements for such replacements;

·     it is not adjusted for all non-cash income or expense items that are reflected in the Group's statements of cash flows; and

·     the further adjustments made in calculating Covenant EBITA and Covenant EBITDA are those that management consider are not representative of the underlying operations of the Group and therefore are subjective in nature.

 

The table below sets out the reconciliation of the Group's total Covenant EBITA and Covenant EBITDA from operating profit before amortisation and impairment of acquired intangible assets and exceptional items for the periods indicated:

 

	2016	2015
	(unaudited)
	(£ millions)
Operating profit before amortisation and impairment of acquired intangible assets and exceptional items	61.9	80.7
Amortisation of software.......................................	3.9	2.2
Amortisation of capitalised development costs......	8.2	6.0
Impairment of capitalised development costs........	4.9	-
Share based payment............................................	1.1	2.7
Pre-acquisition gains/(losses)(1).............................	(1.2)	2.7
Adjustment for non-controlling interest(2)..............	(3.2)	(3.0)
Covenant EBITA.....................................................	75.6	91.3
Depreciation of property, plant & equipment........	22.9	16.4
Covenant EBITDA...................................................	98.5	107.7

 

 

 

Net debt

The Group uses net debt, defined as total borrowings less cash and cash equivalents, as a supplemental measure in evaluating its liquidity, as it indicates the level of the Group's borrowings after taking account of cash and cash equivalents within the Group's business that could be utilised to pay down the outstanding borrowings, as well as in the calculation of the leverage ratio under its financing arrangements.

 

 

 

 

 

The table below sets out the reconciliation of the Group's net debt from borrowings for the periods indicated:

	2016	2015
	(unaudited)
	(£ millions)
Borrowings - current liabilities...........................................	0.3	29.3
Borrowings - non-current liabilities....................................	408.8	239.5
Borrowings........................................................................	409.1	268.8
Less cash and cash equivalents...........................................	(64.5)	(68.8)
Net Debt............................................................................	344.6	200.0

 

In calculating its leverage ratio under its financing arrangements, the Group adjusts net debt to exclude the impact of foreign exchange movements (£28.2 million in 2016) and the 49% of the external debt of Model Solution that the Group does not own (£2.1 million in 2016). In 2016, the Group's net debt for purposes of covenant calculation was £314.3 million.

 

 

Cash interest expense

The Group uses cash interest expense, defined as finance costs, adding back finance income and other net finance income - pension, in the calculation of its interest cover ratio under its financing arrangements.

	2016	2015
	(unaudited)
	(£ millions)
Finance costs.....................................................................	(11.1)	(8.4)
Finance income..................................................................	0.1	0.6
Other net finance income - pension...................................	0.2	0.2
Cash interest expense........................................................	(10.8)	(7.6)

 

 

Underlying profit before tax

The Group uses underlying profit before tax, defined as profit before tax, adding back financial instruments - fair value of adjustments, impairment of goodwill, amortisation of acquired intangible assets and exceptional items as supplemental measures of the Group's profitability which the Group considers useful due to the exclusion of specific items that are considered to hinder comparison of the underlying profitability of the Group's businesses either year-on-year or with other businesses.

 

The table below sets out the reconciliation of the Group's underlying profit before tax from profit before tax for the periods indicated:

	2016	2015
	(unaudited)
	(£ millions)
(Loss)/profit before tax.............................................................	(122.3)	15.4
Financial instruments - fair value of adjustments......................	1.9	(0.5)
Impairment of goodwill.............................................................	155.5	-
Amortisation of acquired intangible assets................................	17.2	13.2
Exceptional items......................................................................	(1.2)	45.0
Underlying profit before tax......................................................	51.1	73.1

 

 

Underlying basic earnings per share

Underlying basic earnings per share is calculated as underlying earnings attributable to shareholders of the parent divided by the weighted average number of shares. Underlying earnings attributable to the parent is defined (loss)/profit for the year attributable to equity shareholders of the parent company, adding back financial instruments - fair value of adjustments, impairment of goodwill, amortisation of acquired intangible assets less amortisation of acquired intangible assets attributable to non-controlling interests, exceptional items, tax on exceptional items, deferred tax on goodwill, acquired intangible assets and US capitalised development costs, exceptional US tax loss movement/(recognition), less tax on amortisation of acquired intangible assets attributable to non-controlling interests. The Group uses underlying basic earnings per share as a supplemental measure of the Group's profitability.

 

The table below sets out the reconciliation of the Group's underlying basic earnings per share from (loss)/profit before tax for the periods indicated:

 

	2016	2015
	(unaudited)
	(£ millions)
(Loss)/profit for the year attributable to equity shareholders of the parent company	(111.7)	(8.3)
Financial instruments - fair value of adjustments......................	1.9	(0.5)
Impairment of goodwill.............................................................	155.5	-
Amortisation of acquired intangible assets................................	17.2	13.2
Amortisation of acquired intangible assets attributable to non-controlling interests	(0.9)	(0.8)
Exceptional items......................................................................	(1.2)	45.0
Tax (credit)/charge on exceptional items...................................	(3.6)	8.3
Deferred tax on goodwill, acquired intangible assets and US capitalised development costs	(19.4)	0.2
Exceptional US tax loss movement/(recognition)	(1.2)	1.2
Tax on amortisation of acquired intangible assets attributable to non-controlling interests	0.2	-
Underlying earnings attributable to shareholders of parent.......	36.8	58.3
Weighted average number of shares (in millions) .....................	270.4	267.2
Underlying basic earnings per share (in pence) .........................	13.6	21.8

 

 

 

 

Operating cash flow and free cash flow pre and post dividend

The Group defines operating cash flow as cash generated from operations, adding back exceptional items, exceptional pension curtailment gain, exceptional change in valuation of put and call options, exceptional property, plant and equipment write downs, exceptional software write downs, exceptional capitalised development costs write downs, exceptional inventory write downs, movements in exceptionals within working capital, purchase of intangible assets (internally developed), purchase of property, plant and equipment, purchase of software and other exceptional cash items. The Group defines free cash flow pre dividend as operating cash flow less exceptional costs, interest received, interest and other finance costs paid and tax paid. The Group defined free cash flow post dividend as free cash flow pre dividend less dividends.

 

The Group uses operating cash flow, free cash flow pre dividend and free cash flow post dividend as supplemental measures of the Group's trading cash flow.

 

	2016	2015
	(unaudited)
	(£ millions)
Cash generated from operations........................................	75.9	101.3
Exceptional items..............................................................	(1.2)	45.0
Exceptional pension curtailment gain................................	1.1	-
Exceptional change in valuation of put and call options......	3.8	(1.8)
Exceptional property, plant and equipment write downs...	-	(2.9)
Exceptional software write downs.....................................	-	(0.5)
Exceptional capitalised development costs write downs....	-	(3.2)
Exceptional inventory write downs	-	(1.6)
Movement in exceptionals within working capital.............	13.1	(27.4)
Purchase of intangible assets (internally developed).........	(19.9)	(14.7)
Purchase of property, plant and equipment.......................	(41.4)	(15.9)
Purchase of software.........................................................	(3.3)	(2.5)
Other.................................................................................	-	0.6
Operating cash flow ..........................................................	28.1	76.4
Exceptional costs...............................................................	(16.8)	(7.6)
Interest received...............................................................	0.1	0.6
Interest and other finance costs paid.................................	(10.5)	(8.3)
Tax paid.............................................................................	(14.4)	(15.3)
Free cash flow pre dividend...............................................	(13.5)	45.8
Dividends..........................................................................	(35.5)	(33.8)
Free cash flow post dividend.............................................	(49.0)	12.0

 

 

 

The table below sets out a reconciliation of the Group's operating cash flow and free cash flow pre and post dividend to operating profit before amortisation and impairment of acquired intangible assets and exceptional items for the periods indicated, which the Group considers useful as a supplemental measure in evaluating the Group's ability to convert profits to cash.

 

 

	2016	2015
	(unaudited)
	(£ millions)
Operating profit before amortisation and impairment of acquired intangible assets and exceptional items	61.9	80.7
Depreciation of property, plant and equipment.................	22.9	16.4
Amortisation of software...................................................	3.9	2.2
Amortisation of capitalised development costs..................	8.2	6.0
Impairment of capitalised development costs....................	4.9	-
Share based payments.......................................................	1.1	2.7
(Increase)/decrease in working capital...............................	(10.2)	0.9
Capitalised research and development expenditure..........	(19.9)	(14.7)
Capital expenditure less disposals.....................................	(44.7)	(17.8)
Operating cash flow ..........................................................	28.1	76.4
Exceptional costs...............................................................	(16.8)	(7.6)
Interest received...............................................................	0.1	0.6
Interest and other finance costs paid.................................	(10.5)	(8.3)
Tax paid.............................................................................	(14.4)	(15.3)
Free cash flow pre dividend...............................................	(13.5)	45.8
Dividends..........................................................................	(35.5)	(33.8)
Free cash flow post dividend.............................................	(49.0)	12.0

 

 

Organic constant currency metrics

The Group uses organic constant currency metrics because the Directors believe that these measures provide investors with useful supplemental information regarding the underlying performance of the Group as they eliminate the effect of acquisitions and the translation effect of currency exchange movements from period to period.

The following tables provide reconciliations of Group and segmental revenue on an actual basis to revenue on an organic constant currency basis for the periods indicated.

 

	2016 as reported	Acquisition Adjustment (1)	Currency Adjustment (2)	2016 at organic constant currency
	(unaudited)
	(£ millions)
Revenue.............................................	801.6	(100.1)	(75.2)	626.3
Performance Materials........................	428.4	-	(45.4)	383.0
Wireless Systems................................	373.2	(100.1)	(29.8)	243.3
	2015 as reported	Acquisition Adjustment (1)	Currency Adjustment (2)	2015 at organic constant currency
	(unaudited)
	(£ millions)
Revenue.............................................	630.4	(1.4)	-	629.0
Performance Materials........................	394.8	-	-	394.8
Wireless Systems................................	235.6	(1.4)	-	234.2
(1)             Acquisitions are eliminated from 2016 and 2015 revenue to allow a comparison of organic performance (2)             Revenue is converted to constant currency by applying prior year exchange rates to convert current year revenues to GBP

 

 

 

Important notice

This announcement contains forward-looking statements, including with respect to financial information, that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could", "is confident", or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this announcement and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Laird's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

 

Nothing in this announcement constitutes an offer of securities for sale, or a solicitation of an offer to buy securities, nor shall there be any sale of securities in the United States or any other jurisdiction where such offer, solicitation or sale would be unlawful. The securities referred to in this announcement have not been, and will not be, registered under the US Securities Act of 1933, as amended, and, subject to certain exceptions, may not be offered or sold within the United States.