Interim Results

Low & Bonar

Half Year Results for the six months to 31 May 2011

STRONG TRADING PERFORMANCE, IMPROVED FULL YEAR OUTLOOK

Low & Bonar PLC ("Low & Bonar" or "the Group"), the international performance materials group, today announces its half year results for the six months ended 31 May 2011.

Highlights:

* Before amortisation and non-recurring items

·; Profit before taxation increased by 42% to £11.2m

·; Underlying profits and revenues 20% ahead, after adjusting for foreign exchange movements

·; Margins maintained despite significant raw material inflation

·; Yarns restructuring completed and business will be profitable this year

·; Interim dividend increased by 40% to 0.7p per share, reflecting confidence in growth prospects

·; Further progress towards operational targets

·; Improved full year outlook

Martin Flower, Chairman, said:

"These results, during a period of unprecedented raw material price escalation, demonstrate the quality of our business, its positioning and its growth prospects.

The trading outlook has improved. With good trading momentum, selling prices increased and raw material polymer prices beginning to stabilise, the Group is confident of delivering another year of significant progress. We will continue to push ahead with our initiatives to deliver margin improvement and growth in our chosen niche markets and geographies in 2011 and beyond."

5 July 2011

For further information, please contact:

Interim Statement

We are pleased to report a good set of results for the six months to 31 May 2011 and a period of further progress for the Group as an innovative, high growth performance materials business.

Profit before taxation increased by 42% to £11.2m during the period. Underlying profit before tax, amortisation and non-recurring items rose 20% to £7.9m on revenues up 20% at £182.6m, after adjusting for foreign exchange movements. Basic earnings per share before amortisation and non-recurring items increased by 20% to 1.93p.

Results highlights

* Before amortisation and non-recurring items

The most notable features during the first half of the financial year have been significant sales growth, successful operating margin management in tough raw material polymer markets and the completion of Yarns restructuring.

Significant sales growth

After posting a 15% increase in underlying sales in 2010, sales in the first half of this year continued to grow, advancing by 20% on a constant currency basis. This significant sales growth was achieved through an increasing contribution from recently launched innovative products, the continuation of strong growth in emerging markets and a further recovery in some of the Group's heartland markets. Price increases to recover much higher raw material costs contributed 6% to first half sales growth.

Sales growth was strong in the Flooring and Civil Engineering markets and was supported by a partial recovery in the Transport and Industrial markets. Building Products activities generally remained weak. The initiatives to accelerate growth through innovation and geographic development are making an increasing contribution to sales. Sales of recently developed products as a proportion of total sales grew to 16.4% from 14.3% at the end of last year. Emerging market sales increased by 16% to £39.6m compared to £34.0m in the first half of last year.

Successful operating margin management

We have continued to experience significant and sustained increases in raw material polymer costs affecting the entire Group. The speed and extent of increases during the period was unprecedented. The cost of raw materials increased by 22% (£14.7m) compared to the first half of last year. Sales prices were adjusted to pass through these increases, albeit with a time lag which adversely impacted margins by £4.7m in total. The Group's ability to sustain operating margins during an unprecedented inflationary period demonstrates the quality of our business, its positioning and its growth prospects. Prices for polymers have recently begun to stabilise and, with selling prices already adjusted, operating margins should improve in the second half of the year.

Completion of Yarns restructuring

The project to restructure manufacturing within the Yarns business was completed last month. As planned, production ceased at Ostend in March and the site was closed in June. The equipment transferred to the Group's new Abu Dhabi facility is now in normal operation. The business now enjoys a much improved cost base and, with performance improving, we remain very confident that it will be profitable this year.

Operational performance

Performance Technical Textiles 

(Woven and non-woven fabrics, fibres and yarns for use in the civil engineering, flooring, leisure, construction and industrial sectors).

Sales in the division increased by 22% on a constant currency basis. Operating margins improved to 6.7% from 6.6% last year, benefiting from an improving performance in the restructured Yarns business but have been adversely impacted by high raw material price inflation throughout the first half of the year. Operating margins should improve further in the second half, benefiting from higher selling prices as polymer prices stabilise.

Divisional like-for-like sales grew by 21% in heartland markets and by 25% in emerging markets, adjusting for foreign exchange movements. Sales in the Civil Engineering sector grew strongly as heartland markets improved, buoyed by ongoing growth in emerging markets, particularly in Eastern Europe and Asia. The Flooring sector also continued to experience increased demand driven by improved penetration in Asia and increasing substitution of carpet tiles for other flooring products, particularly in North America. There was some improvement in Industrial and Building Products sales in Europe, but US sales remain depressed. The restructuring of manufacturing in Yarns restricted sales to the artificial grass market in the first half of the year; this is now complete and we are now well placed to grow sales from a much improved cost base.

The Group's Saudi Arabian joint venture to establish geotextile production for the fast growing civil engineering markets in the Middle East and Indian sub-continent is progressing well.

Technical Coated Fabrics

(Technical coated fabrics for use in the print, architecture, transport, leisure and industrial sectors).

Sales in the Technical Coated Fabrics division grew by 15% on a constant currency basis, however operating margins declined to 8.3% from 8.9% last year. The lag effect of raw material inflation was more pronounced in this division as increased costs took somewhat longer to pass through, given its larger customer base.

Divisional like-for-like sales grew by 23% in heartland markets, with a broad base to the recovery, and by 4% in emerging markets. The anticipated improvement in the Transport market accelerated and niche applications in Industrial segments also picked up. Sales continue to grow well in architectural membranes as new products and recently established reference projects begin to impact. Significant opportunities remain to improve operating efficiencies in the division and this, together with higher selling prices, should result in better margins in the second half of the year.

Increased dividend

In light of the strong trading performance, the Board has declared an interim dividend of 0.7 pence per ordinary share (2010: 0.5 pence) payable on 29 September 2011 to ordinary shareholders on the register as at 2 September 2011. The increase reflects the Board's confidence in future growth prospects and its intent to follow a progressive dividend policy, trending towards a cover of 2.5 times earnings in the near term taking into account the cash needs of the business.

Pensions

The Group operates defined benefit pension schemes in the UK, the USA, Belgium and Germany. The largest of these is the UK scheme, which had a deficit of £17.9m as at 30 November 2010. In February 2011, the UK scheme was closed to future accrual and, following the changes to link statutory indexation to CPI, deferred members have been notified of the switch from RPI to CPI in calculating their future pension increases. As a result of these actions, a non-recurring credit of £6.7m has been recorded in the Income Statement and the UK deficit, allowing for expected returns and interest cost, has reduced to £12.8m as at 31 May 2011.

Improved outlook

These results, during a period of unprecedented raw material price escalation, demonstrate the quality of our business, its positioning and its growth prospects.

With good trading momentum, selling prices increased and polymer prices beginning to stabilise, the Group is confident of delivering another year of significant progress. We will continue to push ahead with our initiatives to deliver margin improvement and growth in our chosen niche markets and geographies in 2011 and beyond.

Finally, it is our pleasure to record our thanks and appreciation of the efforts of all members of the Group, whose commitment, expertise and professionalism have made these results possible.

5 July 2011

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.

LOW & BONAR PLC

Condensed Consolidated Income Statement

LOW & BONAR PLC

Condensed Consolidated Balance Sheet

LOW & BONAR PLC

Condensed Consolidated Cash Flow Statement

LOW & BONAR PLC

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Changes in Equity

LOW & BONAR PLC

Notes on Interim Report 2011

Responsibility Statement

We confirm that to the best of our knowledge:

·; the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and

·; the interim report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

LOW & BONAR PLC

Notes on Interim Report 2011 - continued

1. Segmental information for the six months ended 31 May 2011

For the purposes of management reporting to the chief operating decision maker, the Group is organised into two reportable operating divisions - Performance Technical Textiles and Technical Coated Fabrics. Financial information for each operating division is also available in a disaggregated form in line with the identified cash generating units. 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, borrowings, derivative assets and liabilities, post-employment benefits, taxation balances and corporate assets and expenses. Intra-segment sales are not material.

LOW & BONAR PLC

Notes on Interim Report 2011 - continued

Segmental information for the six months ended 31 May 2010

LOW & BONAR PLC

Notes on Interim Report 2011 - continued

Segmental information for the year ended 30 November 2010

LOW & BONAR PLC

Notes on Interim Report 2011 - continued

Geographical information

Revenues arising in the UK, which is the parent company's country of domicile, were £10.2m (six months ended 31 May 2010: £8.5m; year ended 30 November 2010: £19.6m). The net book value of non-current assets located in the UK at 31 May 2011 was £3.8m (31 May 2010: £4.9m; 30 November 2010: £4.4m).

2. General information

Low & Bonar PLC is a company domiciled and incorporated in Scotland. The interim condensed consolidated financial statements (the 'interim financial statements') of the Company as at and for the six months ended 31 May 2011 comprise the Company and its subsidiaries (together the 'Group') and the Group's interests in its associates. The consolidated financial statements of the Group as at and for the year ended 30 November 2010 are available on request from the Company's head office or from the Group's website at www.lowandbonar.com.

3. Basis of preparation

The interim financial statements are prepared in accordance with IAS 34, 'Interim Financial Reporting', as endorsed and adopted for use in the European Union. This interim condensed consolidated financial information has not been audited or reviewed by the Group's auditors in accordance with International Standard on Review Engagement 2410 issued by the Auditing Practices Board. The information has been prepared on the basis of accounting policies consistent with those applied in the consolidated financial statements for the year ended 30 November 2010, except as noted below.

The Group has adopted IFRS 2 (Amendments) concerning group cash-settled share-based payment transactions; IFRIC 15 'Agreements for the construction of real estate'; and improvements to various standards within the 'Improvements to IFRS' programme, none of which have had a significant effect on the reported results or financial position of the Group.

The interim financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the Group as at and for the year ended 30 November 2010.

The comparative figures for the financial year ended 30 November 2010 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors 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.

LOW & BONAR PLC

Notes on Interim Report 2011 - continued

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 valuation to fair value of certain financial instruments.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

Except as described below, in preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 November 2010.

There have been no related party transactions or changes in related party transactions described in the latest annual report that could have a material effect on the financial position or performance of the Group in the first six months of the financial year.

The Group's business has a slight seasonal bias towards the second half of the financial year due to higher levels of infrastructure and civil engineering spend in the Northern hemisphere summer period.

This interim report was approved by the Board of Directors on 5 July 2011.

4. Taxation

Taxation on the operating profit after interest has been provided at a rate of 29% for the six months ended 31 May 2011 (2010: 31%) which is the estimated rate of tax for the full year.

5. Dividend

The Board has declared an interim ordinary dividend of 0.7p per share payable on 29 September 2011 to ordinary shareholders on the register of members at close of business on 2 September 2011. In accordance with IAS 10 "Events after the Balance Sheet Date", this dividend has not been reflected in the interim accounts. During the period a final dividend of 1.1p was proposed and paid to ordinary shareholders in respect of the financial year ended 30 November 2010.

6. Earnings per share

Basic earnings per share and earnings per share before amortisation and non-recurring items are based on the weighted average number of ordinary shares in issue during the half year. The calculation of fully-diluted earnings per share is based on the weighted average number of ordinary shares in issue plus the dilutive effect of outstanding share options and the Low & Bonar 2003 Long-Term Incentive Plan (the '2003 LTIP') awards (to the extent to which performance criteria had been achieved at 31 May 2011).

No shares were issued during the period (2010: no shares issued).

LOW & BONAR PLC

Notes on Interim Report 2011 - continued

The weighted average number of ordinary shares and diluted weighted average number of ordinary shares are set out below.

The directors consider that the calculation of earnings per share before amortisation and non-recurring items gives a more meaningful indication of the Group's underlying performance. For the six months ended 31 May 2011, this figure was 1.93p per share (May 2010: 1.61p; year ended 30 November 2010: 4.41p).

7. Non-recurring items

Following the announcement by the UK Government on 8 July 2010 of their intention to use CPI rather than RPI to calculate statutory minimum increases in both deferred pensions and pensions in payment, the Trustee of the Group's main UK pension scheme has notified deferred members of this change. The Company has given due consideration, including discussions with its legal advisors and the Trustee, to the impact of the change on the valuation of the Scheme liabilities at 31 May 2011. Following the guidance set out in UITF 48, an actuarial gain of £5.4m has been credited to the income statement as a past service credit. The Group's UK defined benefit scheme was closed to future accrual during the period to 31 May 2011, resulting in a non-recurring curtailment credit to the income statement of £1.3m.

During the period, the Group has incurred £0.3m of initial costs in respect of its joint venture in Saudi Arabia. The terms of the joint venture were agreed in January 2011.

LOW & BONAR PLC

Notes on Interim Report 2011 - continued

8. Pensions and other post employment assets and liabilities

The Group operates a number of pension schemes in the UK and overseas. These are either defined benefit or defined contribution in nature. The assets of the schemes are held separately from those of the Group.

The movement in the Group's UK and overseas defined benefit schemes' deficits in the six months ended 31 May 2011 is summarised below.

9. Risks and uncertainties

The Board has considered the principal risks and uncertainties affecting the Group in the second half of the year. The Group has in place processes for identifying, evaluating and managing key risks. The principal risks and uncertainties together with the approach to their mitigation is discussed in the Business Review on pages 18 and 19 of the 2010 Annual Report, which is available on the Group's website at www.lowandbonar.com, remain relevant and there are no significant changes. In summary, the Group's principal risks and uncertainties are:

The Directors have reviewed the Group's medium-term forecasts along with possible changes in trading performance arising from these uncertainties to determine whether the Group's committed banking facilities are sufficient to support its projected liquidity requirements and whether the forecast earnings are sufficient to meet the covenants associated with its facilities.

During the period, the Group agreed new borrowing facilities in the form of a €130m revolving loan facility that replaced existing banking facilities and which matures in February 2015. This facility is in addition to the €45m private placement note which was issued in September 2010 and which matures in September 2016.

After making enquiries, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future, and have continued to adopt the going concern basis in preparing the interim financial statements.