Final Results

Low & Bonar PLC ("Low & Bonar" or "the Group")

Final Results for the year ended 30 November 2014

GOOD PROGRESS AGAINST A CHALLENGING BACKDROP

Low & Bonar PLC ("Low & Bonar" or "the Group"), the international performance materials group, today announces its final results for the year ended 30 November 2014.

Highlights

Continuing operations

· Profits increased 7.4% on a constant currency basis despite difficult markets in Europe

· Continued progress and profit growth in Technical Coated Fabrics and Yarns

· Further investment in infrastructure; good progress made in seeding of Chinese market

· Final dividend maintained at 1.75 pence per share, full year dividend up 3.8% to 2.7 pence

(1) Adjusted for IAS 19 changes in accounting for pensions

(2) Constant currency is calculated by retranslating comparative period results at current period exchange rates

(3) Before amortisation and non-recurring items

(4) After amortisation and non-recurring items

Brett Simpson, Group Chief Executive, said:

"These are resilient results delivered in challenging circumstances - evidence of our robust market position and of the investments made in improving and growing the business.

Since taking over the role of Group Chief Executive in September, I have been getting under the skin of the business and our operations globally, and what I have found is greatly encouraging. This is a solid business with good market positions and compelling opportunities for growth. I believe there are further improvements which can be made which will enhance and accelerate our growth prospects, and I look forward to setting these out in detail later in the year."

3 February 2015

For further information, please contact:

Chairman's Statement

In the face of very difficult economic conditions across most of Europe, I am pleased to be able to report that the Group has continued to progress.

Having started the year well, the Group experienced a significant drop in demand across its European civil engineering markets from mid-July which resulted in a change to full year expectations. The Group still delivered profit before tax, amortisation and non-recurring items of £25.2m, similar to last year, despite a significant foreign exchange headwind of some £2.2m. On a constant currency basis, profits before tax increased by 7.4% with existing businesses advancing by 12.2% before taking into account the Group's share of losses within our Saudi Arabian joint venture. Results were buoyed by strong and improving results within Technical Coated Fabrics, further progress in Yarns and good results in Bonar's North American business. The Group also made good progress in seeding the flooring and filtration markets in China, supported by the newly established sales office in Shanghai.

The Group has continued to invest in assets to support growth. Capital expenditure totalled £19.0m (2013: £11.3m) including £5.3m on a new factory build in Changzhou, China which is expected to cost a further £21.0m by its completion scheduled for the first quarter of 2016. The Group's joint venture in Saudi Arabia, Bonar Natpet, began commercial operations in October 2013 and its results have been included for the first time this year. The quality of manufactured products is of the highest standard. The JV incurred a loss of £2.2m in the year of which the Group's share was £1.1m. This largely relates to slower than anticipated sales growth which has been hindered by procedural delays in gaining product approvals. We are pleased to report that product approvals are now starting to come through.

Earnings per share, before amortisation and non-recurring items, were 5.5 pence (2013 restated: 6.0 pence) and reflect the share placing in September 2013, the weak Euro in comparison to last year and the lower than originally anticipated sales and profit growth.

The Board is recommending an unchanged final dividend of 1.75 pence per share which would make the full year dividend 2.7 pence per share (2013: 2.6 pence). The Board believes that this represents a sensible base for future dividends taking into account the anticipated sales and profit growth for the Group whilst balancing the need to support and fund further investment. The proposed full year dividend is covered 2.0 times (2013: 2.3 times) by earnings before amortisation and non-recurring items. Subject to shareholder approval at the Annual General Meeting in March, the final dividend will be paid on 16 April 2015.

As always, it is my pleasure to acknowledge the skills and dedication of employees throughout the Group who have worked hard to deliver further progress for the Group under some trying circumstances in the latter part of this year. In particular I would like to thank Steve Good, our former Group Chief Executive, for re-positioning the Group and building its organisational capability. Last but not least, this year we were delighted to welcome Brett Simpson as our new Group Chief Executive.

Whilst market conditions in Europe are expected to remain challenging, the Board is confident that the Group will continue to make further progress this year.

Martin Flower

3 February 2015

Business Review

Overview

Low & Bonar PLC is an international performance materials group using proprietary technologies to engineer polymers for a wide range of applications in niche industrial markets.

1. Adjusted for IAS 19 changes in accounting for pensions

2. Constant currency is calculated by retranslating comparative period results at current period exchange rates

3. Before amortisation and non-recurring items

4. After amortisation and non-recurring items

The Group has continued to make progress this year, albeit full year results were severely impacted by a drop in demand across its European civil engineering markets from mid-July. This also affected the first full year contribution from Texiplast. Sales on a constant currency basis increased by 7.2% to £410.6m and operating profits increased by 8.2% to £31.7m. On a like-for-like basis, excluding Texiplast, which was acquired in H2 last year, constant currency sales were up 5.5%.

Sales and profits in both Technical Coated Fabrics and Yarns grew strongly aided by market share gains and ongoing actions to improve operational efficiency. Having started the year reasonably well, the slowdown in construction activity within Europe in the second half of the year led to a disappointing result for Bonar despite strong performances within its flooring and industrial markets.

Profit before tax, amortisation and non-recurring items, excluding our share of JV results, increased by 12.2% to £26.3m. The Group's joint venture in Saudi Arabia (selling geotextiles into the region's civil engineering market) made a loss of £2.2m due to a slower than anticipated build-up in sales order intake; the Group's share of this loss was £1.1m. For the most part, this relates to a delay in product certification by key customers which is expected to be resolved shortly. Including these losses, the Group's profit before tax, amortisation and non-recurring items was £25.2m, an increase of 7.4% on a constant currency basis.

Return on capital employed was 15.7%, slightly lower than last year (2013 restated: 16.3%).

Bonar

Our Bonar division supplies products such as geosynthetics, carpet tile backing, agrotextiles and construction fibres to the civil engineering, flooring, transport, industrial and construction sectors.

(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates

(2) Before amortisation and non-recurring items

On a constant currency basis, sales increased by 2.8% excluding acquisitions. Texiplast contributed a further 2.7% to constant currency sales growth. Given lower than expected sales growth, operating margins suffered falling to 8.5%. Sales mix contributed, but the recent investment in sales, application management and business development teams to build organisational capability and drive sales has yet to be leveraged and deliver promised sales and profit growth.

Flooring sales, which have grown strongly over the last three years, recovered from a slow start to the year and increased by 6.7% year-on-year aided by strong sales growth in China supported by our recently established sales and technical service organisation in Shanghai and a strong sales performance in North America. Good progress has been made in building our activities in the filtration market, which together with new product launches helped industrial sales advance by 7.2%. As anticipated, sales to the transport sector were weak in the first half of the year, following the loss of a major automotive platform part way through last year, but recovered in the second half, ending the year 1.6% lower than 2013.

Within civil engineering, sales were on track through mid-year but suffered a severe set-back from mid-July. Sales on a like-for-like basis were 7.9% lower in Q3 and 2.8% down in Q4 compared to 2013, ending the second half 5.1% lower. Activity levels have stabilised but remain subdued due to difficult economic conditions in our main European markets. Sales by Texiplast were £8.8m for the full year, some £3m lower than had been expected at the start of the year. The shortfall largely relates to very weak sales in Poland, currently the main sales territory for its products, due to economic slowdown and geopolitical tensions in Eastern Europe.

Despite the difficulties during the second half of the year, we remain confident that we are well positioned in core markets and that the recent investments will deliver results in the next few years. Some leadership changes have been made within the division and the main focus is on improving customer intimacy and our commercial effectiveness, particularly within the civil engineering markets.

Technical Coated Fabrics

Our Technical Coated Fabrics division, Mehler Texnologies (MTX), supplies products such as side curtains for lorry trailers, advertising banners, tensioned architectural structures, awnings, marquees and tarpaulins to the transport, building products, print, leisure and industrial markets.

(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates

(2) Before amortisation and non-recurring items

Technical Coated Fabrics delivered strong sales and profit growth, building on the momentum achieved last year. Sales grew by 8.8% on a constant currency basis. Sales were better than last year in all major sectors and margins improved by 140 bps to 11.1% with constant currency operating profits growing by 27.8%. Improved margins reflect increased volumes and further operational efficiencies in Fulda and Huckelhoven in Germany and Lomnice in the Czech Republic.

Significant growth was achieved in the targeted, higher margin architecture and industrial sectors. Sales of building products, principally tensioned architectural membranes, grew by 10.8% and industrial product sales increased by 10.5%. Sales to the transport sector increased by 7.1% buoyed by market share gains as the trailer market enjoyed a modest cyclical recovery. Sales outside Europe grew by 18.1%. Recent investments in sales and distribution in India, Brazil and Malaysia, together with a greater share of the growing architectural market, should continue this trend.

Over the last two years £3.2m has been invested in the Technical Coated Fabrics division to enable margin improvement through improved operational efficiencies and a further £1.1m is expected to be invested in the coming year. We continue to believe that the division is well positioned to secure further value from operational excellence and niche market growth.

Yarns

Our Yarns division supplies yarns used in the manufacture of artificial grass in sports and landscaping applications as well as yarns used as backing material in the manufacture of woven carpet installations.

(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates

(2) Before amortisation and non-recurring items

Yarns delivered another significant improvement this year, albeit profits and margins remain well below target level. Sales increased by 14.1% on a constant currency basis in markets that showed modest recovery. Market share gains are being achieved through a growing reputation for product quality and customer service.

Actions taken to improve efficiency added to operational leverage but, with margins still well below target level, additional measures are currently being implemented. In October, we announced our intention to relocate production of fibrillated yarn from Dundee in order to concentrate the majority of production at our class-leading facility in Abu Dhabi. The consultation process was completed on 27 November 2014 and the equipment is now being transferred. To date, about a third of the reduction in staffing has been completed. The transfer of production to Abu Dhabi was enabled by the buy-out of the non-controlling interest in the business, which was completed in May 2014 at a cost of £1.4m.

FINANCIAL REVIEW

Pre-tax profit

Reported profit before tax, amortisation and non-recurring items from continuing operations was slightly below last year at £25.2m (2013(1): £25.3m); on a constant currency basis this represents an increase of 7.4%. Operating profits were 1.2% higher than last year at £31.7m (2013(1): £31.4m) including a contribution of £1.1m (2013: £0.4m) from Bonar Geosynthetics a.s. (formerly Texiplast), acquired on 6 September 2013. Operating profit growth at constant currency was 8.2%. Statutory profit before tax was £16.7m (2013(1): £16.7m) after a net non-recurring charge of £3.3m (2013(1): £3.0m) and a £5.2m charge for amortisation (2013: £5.6m).

Non-recurring items

The Group's continuing operations incurred £3.3m (2013(1): £3.0m) of non-recurring items.

Restructuring costs and redundancy costs of £2.2m (2013: £0.2m) were incurred in relocating part of the Yarns business from Dundee to Abu Dhabi, and in the integration of the Group's principal Performance Technical Textile operations into a single global business, Bonar. Initial costs relating to the Group's construction of a new manufacturing location in Changzhou, China, represented a further £0.2m. In 2013, £1.5m start-up costs related to the Group's sales office in Shanghai, China and the commissioning of its joint venture, Bonar Natpet.

Acquisition related costs of £0.1m were expensed in the year (2013: £1.0m, principally in relation to the acquisition of Texiplast). A further £0.5m of non-recurring costs, and £0.4m of capital expenditure, were incurred this year on site clean-up and environmental rectification work to bring Texiplast in line with Group environmental, health and safety standards.

The Group also incurred £0.3m (2013(1): £0.3m) of non-recurring pension administration costs relating to data cleansing for its UK defined benefit scheme.

Taxation

The overall tax charge on the profit before tax was £4.9m (2013(1): £4.9m). The tax charge on profit from continuing operations before amortisation and non-recurring items was £7.0m (2013: £6.7m), a rate of 26.5% (2013: 26.0%).

Acquisitions

On 11 May 2014, the Group purchased the non-controlling interest in Bonar Emirates Technical Yarns Industries LLC for a cash consideration of $2.0m (£1.2m). As this was a transaction with minority equity owners of the business without a change of control, it has been recognised as an equity transaction in the Group's reserves and not as a business combination or investment. Directly attributable costs of £0.2m have been recorded in equity.

Net debt and refinancing

Overall net debt increased to £88.0m from £86.8m at November 2013. Cash inflow from operations was £38.1m (2013(1): £39.9m) excluding movements in loans to the Group's Saudi Arabian joint venture, Bonar Natpet.

Trade working capital as a percentage of sales increased slightly to 24% from 23% in the prior year, contributing to a cash outflow into working capital of £7.0m (2013: £4.8m) excluding the joint venture loan.

During the year, the Group spent £1.4m (2013: £15.9m) on acquisitions, joint ventures and purchases of non-controlling interests, £19.0m (2013: £11.3m) on property, plant and equipment and £1.2m (2013: £2.1m) on intangible assets. Excluding replacement and health & safety capital expenditure, the amount invested in equipment to support future growth was £16.2m (2013: £5.3m).

(1) Adjusted for IAS 19 changes in accounting for pensions

The analysis of the Group's net debt is as follows:

The gearing ratio of total net debt to EBITDA was unchanged at 1.9 times.

The Group successfully refinanced its revolving credit facility in July 2014 with a syndicate of four relationship banks. The new facility is for a term of five years with an increased availability of €165m, with a further €30m available through an accordion facility if required. Pricing for the new facility is 40bps lower than the old facility. The Group's total committed debt facilities now total €210m (2013: €175m).

Dividends

The Directors have proposed a final dividend in respect of the financial year ended 30 November 2014 of 1.75 pence per share which will absorb an estimated £5.7m of shareholders' funds. This has not been provided for in these accounts because the dividend was proposed after the year end. If it is approved by shareholders at the Annual General Meeting of the Company to be held on 24 March 2015, it will be paid on 16 April 2015 to Ordinary Shareholders who are on the register of members at close of business on 20 March 2015.

Pensions

The charges for pensions are calculated in accordance with the requirement of IAS 19 Employee Benefits (revised). During the year, the Group's UK defined benefit scheme continued to adopt a lower risk investment strategy in which the interest rate and inflation risks were more closely hedged and the exposure to equities reduced to 23% of the scheme's assets (2013: 27%). At 30 November 2014 the UK scheme showed a surplus of £0.2m (2013: £3.8m deficit), principally due to the outperformance of the scheme's assets against their expected return. The deficit in the Group's overseas schemes in Belgium, Germany and the USA increased to £11.0m (2013: £8.9m).

Restatement

The Group adopted a new accounting standard, revised IAS 19 Employee Benefits, during the year and as required the comparative amounts for the year ended 30 November 2013 have been restated. The impact from the revision of the accounting policy is that the Group's operating profit and profit before tax, amortisation and non-recurring items for the year to 30 November 2013 are £0.8m lower; and statutory operating profit and profit before tax are £1.1m lower. This is due to changes to the treatment of pension scheme administration costs and net financing costs, which are explained further in Note 1.

Joint venture

The Group's joint venture in Saudi Arabia, Bonar Natpet, made a loss during the year of £2.2m, of which the Group's share was £1.1m.

Discontinued operations

A profit from discontinued operations of £0.9m has arisen from the release of a warranty accrual held in relation to the Floors business, which was sold in 2008, on expiry of the warranty period.

Risks and Uncertainties

Responsibility statement of the Directors on the Annual Report and Accounts

The responsibility statement below has been prepared in connection with the Company's full Annual Report and Accounts for the year ended 30 November 2014. Certain parts thereof are not included within this Preliminary Announcement.

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with IFRS, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the company and the undertakings included in the consolidation taken as a whole; and

Directors

The Directors of the Company are:

Martin Flower, Chairman

Brett Simpson, Group Chief Executive

Mike Holt, Group Finance Director

Steve Hannam, Non-Executive Director

Trudy Schoolenberg, Non-Executive Director

John Sheldrick, Non-Executive Director

Related party transactions

There are no related party transactions requiring disclosure.

Brett Simpson Mike Holt

3 February 2015 3 February 2015

Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including, but not limited to, the terms "believes", "estimates", "anticipates", "expects", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition and liquidity may differ materially from the impression created by the forward looking statements contained in this announcement. In addition, even if the results of operations, financial condition, and liquidity are consistent with the forward looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: changes in the competitive framework in which the Group operates and its ability to retain market share; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash to service its debt; the Group's ability to control its capital expenditure and other costs; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; and general local and global economic, political, business and market conditions. In light of these risks, uncertainties and assumptions, the events described in the forward looking statements in this announcement may not occur.

Other than in accordance with its legal or regulatory obligations, the Group does not undertake any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise.

Consolidated Income Statement

for the year ended 30 November

Consolidated Statement of Other Comprehensive Income

for the year ended 30 November

Consolidated Balance Sheet

as at 30 November

Consolidated Cash Flow Statement

for the year ended 30 November

Consolidated Statement of Changes in Equity

for the year ended 30 November

Notes

1. Basis of preparation

The financial statements are presented in pounds sterling, rounded to the nearest hundred thousand pounds. They are prepared on the historical cost basis except for the revaluation to fair value of certain financial instruments.

The financial information set out above does not constitute the company's statutory accounts for the years ended 30 November 2014 or 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The Group has adopted IAS 19 Employee Benefits (Revised) in the year, the impact of which can be seen below.

The revised standard requires retrospective application, therefore the narrative below reflects the adjustments made to the comparative amounts for the year ended 30 November 2013.

The impact from the revision of the accounting policy is that operating profit and profit before tax, amortisation and non-recurring items for the year ended 30 November 2013 are £0.8m lower; and statutory operating profit and profit before tax are £1.1m lower; due to:

• pension administration costs of £1.1m, which were previously reported within financing costs, being reclassified into administrative expenses; £0.8m of these costs have been charged against operating profit before tax, amortisation and non-recurring items, and £0.3m against non-recurring items, due to the nature of the costs concerned; and

• financing costs are £1.1m higher due to the interest cost and expected return on scheme assets being replaced by a single net interest charge, calculated by applying the discount rate to the net defined benefit liability.

Correspondingly, actuarial gains in the Consolidated Statement of Comprehensive Income increased by £1.1m for the year ended 30 November 2013. The tax impact of the restatement is a reduction in the Income Statement tax charge of £0.1m for the year to 30 November 2013 and a corresponding increase in the tax charge in the Consolidated Statement of Comprehensive Income.

Due to the restatement, basic earnings per share for the year ended 30 November 2013 (based on earnings before amortisation and non-recurring items) reduced to 5.98p from the 6.23p previously reported, and statutory basic earnings per share reduced to 3.74p from the 4.08p previously reported.

2. Segmental information

The Group's principal activities are in the international manufacturing and supply of those performance materials commonly referred to as technical textiles. For the purposes of management reporting to the chief operating decision maker, the Group is organised into three reportable operating divisions: Bonar, Technical Coated Fabrics and Yarns. Segment assets and liabilities include items directly attributable to segments as well as those that can be allocated on a reasonable basis.

Unallocated items comprise mainly cash and cash equivalents, interest-bearing loans and borrowings, derivative assets and liabilities, post-employment benefits and corporate assets and expenses. Inter-segment sales are not material.

3. Financial income and financial expense