16th Jul 2007 07:01
Low & Bonar PLC16 July 2007 EMBARGOED UNTIL 7 am 16 July 2007 Press Release/Stock Exchange Announcement Low & Bonar PLC 2007 Interim Results Low & Bonar PLC, the specialist materials group, today reports its results forthe half year ended 31 May 2007 2007 2006 % Turnover £142.1m £89.7m + 58 Operating profit before amortisation and non recurring items £ 9.2m £ 5.1m + 80 Operating profit £ 7.5m £ 3.5m + 114 Profit before tax, amortisation and non-recurring items £ 7.4m £ 4.5m + 64 Profit before tax £ 5.7m £ 2.9m + 97 Basic earnings per share 2.54p 1.73p* + 47 Earnings per share before amortisation and non-recurring items 3.41p 2.74p* + 24 Dividend per share 1.75p 1.58p* + 11 * Restated for the effect of the rights issue. Highlights •Turnover up 58% to £142.1m and profit before tax, amortisation and non-recurring items up 64% to £7.4m •Floors divisional operating profit up 12.5% to £4.5m boosted by new product launches and continued high customer service •Technical Textiles divisional operating profit up 160% to £6.5m with a maiden first half contribution from Colbond Commenting on the results, Paul Forman, Group Chief Executive, said: "This half year, one of 80% growth in operating profit before amortisation andnon-recurring items, reinforces the growing financial stability of the Group andthe major benefit of the Colbond acquisition. We are confident that our two coremarkets can sustain significant growth in sales and profit into the future, bothorganically and through acquisition. Our expectations of progress for the restof this year are being underpinned by continued positive markets, furtherproductivity improvement and a comparatively stable raw material environment.Accordingly, trading remains in line with expectations." For further enquiries please contact: Low & Bonar PLCPaul Forman Group Chief Executive 020 7535 3180Kevin Higginson Group Finance Director 020 7535 3180 Tulchan CommunicationsDavid Trenchard 020 7353 4200Peter Hewer 020 7353 4200 Chairman's Statement--------------------The first six months of 2007 saw continued progress towards our goal ofenhancing shareholder value through the execution of our strategy of organic andacquisitive growth in the contract flooring and technical textile markets. Overall, the Group has moved forward strongly both in sales and profits, withthe successful integration of Colbond, our major acquisition during last year. We have been encouraged by the underlying progress in both Divisions and, as weexpected, a rather more stable raw material supply environment than we haveencountered in the last few years. Financial Review-----------------In total, revenue for the period has grown by 58% to £142.1m compared with£89.7m last year. Profits before tax, amortisation and non-recurring items have moved forward to£7.4m, an increase of 64% on last year's £4.5m. Earnings per share were up 47% to 2.54p compared with 1.73p (after adjusting forthe Bonus Adjustment Factor) on a statutory basis. Earnings per share beforeamortisation and non recurring items were up to 3.41p, an increase of 24% (2006:2.74p). Floors has achieved a higher proportion of branded product sales which led to animproved operating margin and improved profits. Technical Textiles benefited from the full first half contribution from, andsuccessful integration of, Colbond and Geo-Tipptex. Continued success in ourFabrics businesses offset the expected decline in Specialist Yarns. Net debt increased to £63.4m (November 2006: £46.1m) largely as a result of theanticipated increase in the levels of working capital which are at a seasonalpeak at the end of our first half. Dividend-------- In line with our progressive dividend policy the Board has declared an InterimDividend of 1.75p per share payable on 4 October 2007 to ordinary shareholderson the register on 7 September 2007 (2006: 1.58p per share after adjusting forthe bonus adjustment factor). This represents an increase of 10.8% Duncan CleggChairman16 July 2007 Group Chief Executive's Review of Operations-------------------------------------------- Floors------Within Floors, operating profit before amortisation and non-recurring items grewby 12.5% and operating margins increased from 8.4% to 9.8% in what is typicallyour lower margin half year. This was achieved because of a positive mix insales, which fell slightly from £47.8m to £45.8m. The revenue movement contained two very different trends. The first is a highlyencouraging increase in sales of our branded products of over 6%. This growthhas been driven both by a significant number of new product launches as well asby continued very high customer service levels. All five of our branded productareas have seen new product activity; the most significant of which is therecent commencement of digitally printed Flotex. This innovative technologyallows almost infinite design flexibility and two product ranges have beenlaunched, of which one is in conjunction with one of Europe's leading designhouses, Sottsass Associati. The other commercial highlight was the performanceof our carpet tile business, Tessera, which grew strongly on the back ofcontinued outstanding UK customer service, growth in distributor markets andalso through being added to our direct salesforce's product offering in France.Geographically we have seen particularly strong progress in many of our Asianmarkets and will continue to drive this through our local salesforce and ourdistribution network. The second trend affecting Bonar Floors' revenues was a marked decline in salesto the Ministry of Defence ("MoD"). This was driven by two factors. The first isthe structural long-term decline in spend that was anticipated at the time ofcommencing the contract in 2004. The second is the short term refocusing of MoDspend given the military commitments overseas. Nevertheless, it is pleasing toreport that the contract has been extended for a further two years, a reflectionof the excellent service provided hitherto. The contract, whilst important, onlyrepresents around 10% of the Division's sales and has a lower than average grossmargin. Other key aspects of the business continue to show positive momentum. Rawmaterial costs are much less of a burden than they have proved to be for theTechnical Textiles Division and manufacturing productivity, most notably in ourUK Flotex manufacturing facility, has improved markedly as a result of a focusedchange programme. Overhead costs remain tightly under control and we are seeingthe benefits of capital investment in some of the older production equipmentacross the Division. As a result of these various initiatives - and theincreased capital investments made to support our growth programmes - operatingprofit before amortisation and non-recurring items has grown from £4.0m to £4.5mand we are well positioned to ensure this trend continues throughout 2007. Technical Textiles------------------- The Technical Textiles Division comprises our former Yarns & Fabrics Divisionand Colbond. Divisional revenue grew by 130% to £96.3m (2006: £41.9m) includingmaiden first half sales from Colbond, our acquisition in July 2006. Salesexcluding Colbond also progressed positively, however, up by some 9%. Divisionaloperating profit before amortisation and non-recurring items increased by 160%to £6.5m (2006: £2.5m). Whilst the average raw material cost was again higherthan last year's comparable period, the average cost in the first half year hasbeen broadly as anticipated, and the rate of increase was less than for lastyear. Colbond, which has been part of the Group for almost 12 months, had a strongfirst half and continues to perform ahead of our expectations at the time ofacquisition. I am pleased with the way that the new Divisional team, comprisingColbond and the former Yarns & Fabrics management, have been working togetherand this bodes well for the future development of the Division. The majority ofColbond's markets were positive and therefore good revenue growth was achievedin them, although our small business in the automotive sector in North Americafaced weaker underlying demand. The comparative stability of its key rawmaterials allied to the benefits of cost-reduction capital spend, ensuredmargins moved forward. There is confidence that progress will be maintained forthe full year. Bonar Fabrics (comprising our woven and non-woven textiles businesses and ourconstruction fibre operation) saw highly satisfactory growth in sales andprofit, sustained by efficiency-related capital investments, new productinitiatives and continued improvements in manufacturing productivity. Ourconstruction fibre facility, for example - which was relocated some 18 monthsago to become part of our Belgian facility - has seen output increase by over30% on a like-for-like basis. Good underlying demand in many of our coremarkets, combined with progress in many business supporting activities, leads usto expect continued progress in the second half - albeit we do envisage aseasonal increase in raw materials in the third quarter. Our Chinese wovenbusiness, partly owned by a large Chinese petrochemical group, Sinopec, has hadanother good half of sales and profit growth and we continue to invest to ensureit can keep up with demand growth. The third business grouping within the Division, Technical Yarns, remains theentity with the most challenges to regain the margins of which it is capable. Anumber of management changes have been made and the underlying market growthremains strong. The new team have made conspicuous progress in many areas ofoperations such as productivity, raw material usage, and health and safety. Weare confident that the internal progress will, together with continued growth indemand, and the actions on cost taken earlier in the year, ensure that thesecond half is in line with management expectations. Outlook---------- This half year, one of 80% growth in operating profit before amortisation andnon-recurring items, reinforces the growing financial stability of the Group andthe major benefit of the Colbond acquisition. We are confident that our two coremarkets can sustain significant growth in sales and profit into the future, bothorganically and through acquisition. Our expectations of progress for the restof this year are being underpinned by continued positive markets, furtherproductivity improvement and a comparatively stable raw material environment.Accordingly, trading remains in line with expectations. Paul FormanGroup Chief Executive16 July 2007 LOW & BONAR PLC Unaudited Consolidated Income Statement for the six months ended 31 May 2007 Six months ended 31 May 2007 Before Amortisation Total amortisation and and non-recurring non-recurring items items £m £m £m === === === Revenue 142.1 - 142.1 Operating profit 9.2 (1.7) 7.5 Financial income 0.8 - 0.8Financial expenses (2.6) - (2.6) ---- ---- ---- Net financing costs (1.8) - (1.8) ---- ---- ---- Profit before tax 7.4 (1.7) 5.7Taxation on UK companies (0.1) 0.1 -Taxation on overseas companies (2.1) 0.4 (1.7) ---- ---- ----Profit after tax 5.2 (1.2) 4.0 ---- ---- ----Attributable toEquity holders of the company 5.1 (1.2) 3.9Minority interest 0.1 - 0.1 ---- ---- ---- 5.2 (1.2) 4.0 ---- ---- ----Earnings per shareBasic 2.54pDiluted 2.49p Six months ended 31 May 2006 Before amortisation Amortisation and and non-recurring non-recurring items items Total £m £m £m === === ===Revenue 89.7 - 89.7 Operating profit 5.1 (1.6) 3.5 Financial income 4.3 - 4.3Financial expenses (4.9) - (4.9) ---- ---- ----Net financing costs (0.6) - (0.6) ---- ---- ---- Profit before tax 4.5 (1.6) 2.9Taxation on UK companies (0.2) 0.4 0.2Taxation on overseas companies (1.1) 0.1 (1.0) ---- ---- ---- Profit after tax 3.2 (1.1) 2.1 ---- ---- ---- Attributable toEquity holders of the company 3.1 (1.1) 2.0Minority interest 0.1 - 0.1 ---- ---- ---- 3.2 (1.1) 2.1 ---- ---- ---- Earnings per share Basic 1.73pDiluted 1.70p Year ended 30 November 2006 Before Amortisation amortisation and and non-recurring non-recurring items Total items £m £m £m === === ===Revenue 224.5 - 224.5 Operating profit 17.0 (4.9) 12.1 Financial income 9.0 - 9.0Financial expenses (11.3) - (11.3) ----- ---- ---- Net financing costs (2.3) - (2.3) ----- ---- ---- Profit before tax 14.7 (4.9) 9.8Taxation on UK companies (1.2) 1.5 0.3Taxation on overseas companies (3.0) - (3.0) ----- ---- ----Profit after tax 10.5 (3.4) 7.1 ----- ---- ----Attributable toEquity holders of the company 10.1 (3.4) 6.7Minority interest 0.4 - 0.4 ---- ---- ---- 10.5 (3.4) 7.1 ---- ---- ---- Earnings per share Basic 5.80pDiluted 5.72p All results derive from continuing activities LOW & BONAR PLCUnaudited Group Balance Sheet at 31 May 2007 31 May 31 May 30 November 2007 2006 2006 £m £m £m Non current assetsIntangible assets 68.2 38.3 69.0Property, plant & equipment 94.1 40.4 90.2Investment in associate 0.2 - 0.1Deferred tax assets 3.5 7.1 7.3 ----- ---- ----- 166.0 85.8 166.6 Current assetsInventory 56.7 37.8 49.5Trade and other receivables 54.0 39.8 52.2Financial assets 0.4 0.3 0.9Cash and cash equivalents 3.7 6.9 3.3 ----- ---- ----- 114.8 84.8 105.9 Current liabilitiesInterest bearing loans and borrowings 15.5 3.6 12.5Current tax liabilities 4.3 2.9 4.1Trade payables and other payables 60.3 39.8 63.6Financial liabilities 0.1 0.1 0.1 ----- ---- ----- 80.2 46.4 80.3 Net current assets 34.6 38.4 25.6 Non-current liabilitiesInterest bearing loans and borrowings 51.6 26.5 36.9Deferred tax liabilities 16.0 7.8 16.7Post employment benefits 6.0 20.1 19.8Other payables 1.3 2.9 1.9 ----- ---- ----- 74.9 57.3 75.3 ----- ---- -----Net assets 125.7 66.9 116.9 ===== ==== ===== Equity attributable to equity holders of the parentShare capital 38.3 25.5 38.3Reserves 84.5 39.2 75.8 ----- ---- -----Total equity shareholders' funds 122.8 64.7 114.1Minority interests 2.9 2.2 2.8 ----- ---- -----Total equity 125.7 66.9 116.9 ===== ==== ===== LOW & BONAR PLCUnaudited Consolidated Cash Flow Statement for the six months ended 31 May 2007 Six months Six months Year ended ended Ended 31 May 31 May 30 November 2007 2006 2006 £m £m £m Profit for the period from continuing operations 4.0 2.1 7.1Depreciation 4.9 2.9 7.0Amortisation of intangible assets 1.7 0.8 2.4Income tax expense 1.7 0.8 2.7Net financing costs expense 1.8 0.6 2.3Increase in working capital (14.6) (10.4) (6.9)Share based payments charge 0.5 0.4 1.0 ----- ----- -----Cash inflow/(outflow) from operations - (2.8) 15.6 Net financing costs paid (1.1) (0.3) (1.8)Tax/(paid)/repaid (1.9) 0.4 (1.7)EU fine paid - (8.4) (8.5)Pension cash contributions in excess of operating charge (1.6) (6.1) (6.0) ---- ---- ----Net cash outflow from operating activities (4.6) (17.2) (2.4) ---- ---- ---- Investing ActivitiesDisposal of subsidiaries - 1.4 1.5Disposal of plant, property & equipment 0.1 0.3 1.5Acquisition of subsidiaries (net of cash acquired) - (11.0) (36.7)Acquisition of plant, property & equipment (8.6) (4.2) (10.2) ---- ---- ----Net cash outflow from investing activities (8.5) (13.5) (43.9) ---- ---- ---- Financing ActivitiesProceeds of share issues - 1.9 43.1Additional borrowings and loans 17.9 27.6 46.0 Purchase of own shares - (1.5) (1.5)Finance lease repayments (0.2) (0.2) -External debt acquired with subsidiaries - - (45.9)Equity dividends paid (4.3) (4.8) (6.6) ---- ----- -----Net cash inflow from financing activities 13.4 23.0 35.1 ---- ----- -----Net increase/(decrease) in cash and cashequivalents 0.3 (7.7) (11.2) Cash and cash equivalents at start of period 3.3 14.7 14.7Effect of exchange rate fluctuations oncash and cash equivalents 0.1 (0.1) (0.2) ----- ----- -----Cash and cash equivalents at end of period 3.7 6.9 3.3 ----- ----- ----- LOW & BONAR PLCConsolidated Statement of Recognised Income and Expensefor the six months ended 31 May 2007 Six months Six months Year ended ended ended 31 May 31 May 30 November 2007 2006 2006 £m £m £m Foreign exchange translation differences (0.3) (0.7) (1.1)Fair value movement in cash flow hedges - - (0.3)Deferred tax on share based payment 0.1 - -Actuarial gain on defined benefit pensionscheme 8.8 0.2 5.1 ----- ---- ----Net expense recognised directly in equity 8.6 (0.5) 3.7Profit for the period after tax 4.0 2.1 7.1 ----- ---- ----Total recognised income for the period 12.6 1.6 10.8 ===== ==== ==== Attributable toEquity holders of the parent 12.4 1.4 10.7Minority interest 0.2 0.2 0.1 ----- ---- ---- 12.6 1.6 10.8 ===== ==== ==== Reconciliation of changes in Shareholders' Equityfor the six months ended 31 May 2007 Six months Six months Year ended ended ended 31 May 31 May 30 November 2007 2006 2006 £m £m £m Opening equity 114.1 65.8 65.8Adoption of IAS 32 on 1 December 2005 - (0.4) (0.4)Adoption of IAS 39 on 1 December 2005 - 0.3 0.3 ----- ----- -----Opening equity restated 114.1 65.7 65.7 Total recognised income for the period 12.4 1.4 10.7Dividends to ordinary shareholders' (4.3) (3.1) (4.9)Ordinary shares issued 0.1 1.8 43.1Purchase of own shares - (1.5) (1.5)Share based payment 0.5 0.4 1.0 ----- ---- -----Net increase/(decrease) in shareholders'funds 8.7 (1.0) 48.4 ----- ---- -----Closing shareholders equity 122.8 64.7 114.1 ===== ==== ===== LOW & BONAR PLCSegmental information for the six months ended 31 May 2007 Primary segment - Business Technical Floors Textiles Unallocated Total £m £m £m £m Revenue 45.8 96.3 - 142.1 ===== ==== ===== =====Operating profit before amortisationand non-recurring items 4.5 6.5 (1.8) 9.2Amortisation of intangible assets (0.1) (1.6) - (1.7) ----- ---- ---- -----Operating profit before non-recurringitems 4.4 4.9 (1.8) 7.5Non-recurring items - - - - ----- ---- ---- -----Operating profit 4.4 4.9 (1.8) 7.5Net financing costs - - (1.8) (1.8) ----- ---- ----- -----Profit before taxation 4.4 4.9 (3.6) 5.7Taxation (1.7) -----Profit after taxation 4.0 ===== Capital expenditure 2.4 6.2 - 8.6Depreciation 1.0 3.9 - 4.9 Segment assets 61.7 209.8 - 271.5Segment liabilities (17.5) (39.5) - (57.0) ----- ----- ---- -----Segment net assets 44.2 170.3 - 214.5Unallocated liabilities (25.4)Cash and cash equivalents 3.7Interest bearing borrowings (67.1) -----Group net assets 125.7 ===== Secondary segment - Geography European North Union America Asia Unallocated Total £m £m £m £m £m Revenue 119.7 17.4 5.0 - 142.1 ===== ==== === === ===== Operating profit 8.1 1.1 0.1 (1.8) 7.5Non-recurring items - -----Operating profit 7.5Net financing costs (1.8) -----Profit before taxation 5.7Taxation (1.7) -----Profit after taxation 4.0 ===== Segment assets 238.9 23.3 9.3 - 271.5Segment liabilities (51.9) (4.3) (0.8) - (57.0) ----- ---- ---- --- -----Segment net assets 187.0 19.0 8.5 - 214.5Unallocated liabilities (25.4)Cash and cash equivalents 3.7Interest bearing borrowings (67.1) -----Group net assets 125.7 ===== LOW & BONAR PLCSegmental information for the six months ended 31 May 2006 Primary segment - Business Technical Floors Textiles Unallocated Total £m £m £m £m Revenue 47.8 41.9 - 89.7 ==== ===== ==== ==== Operating profit before amortisation and non-recurring items 4.0 2.5 (1.4) 5.1Amortisation of intangible assets (0.1) (0.7) - (0.8) ---- ---- ---- ----Operating profit beforenon-recurring items 3.9 1.8 (1.4) 4.3Non-recurring items - (0.4) (0.4) (0.8) ---- ---- ---- ----Operating profit 3.9 1.4 (1.8) 3.5Net financing costs - - (0.6) (0.6) ---- ---- ---- ----Profit before taxation 3.9 1.4 (2.4) 2.9Taxation (0.8) ----Profit after taxation 2.1 ==== Capital expenditure 1.0 2.9 - 3.9Depreciation 1.0 1.9 - 2.9 Segment assets 56.9 96.9 153.8Segment liabilities (17.9) (19.4) (37.3) ---- ---- ---- ----Segment net assets 39.0 77.5 116.5Unallocated liabilities (26.4)Cash and cash equivalents 6.9Interest bearing borrowings (30.1) ----Group net assets 66.9 ==== Secondary segment - Geography European North Union America Asia Unallocated Total £m £m £m £m £m Revenue 85.6 - 4.1 - 89.7 ===== ==== ==== ==== ==== Operating profit beforenon-recurring items 5.5 - 0.2 (1.4) 4.3Non-recurring items (0.8) ----Operating profit 3.5Net financing costs (0.6) ----Profit before taxation 2.9Taxation (0.8) ----Profit after taxation 2.1 ==== Segment assets 146.6 - 7.2 - 153.8Segmentliabilities (36.8) - (0.5) - (37.3) ------- ---- ----- ---- -------Segment net assets 109.8 - 6.7 - 116.5Unallocated liabilities (26.4)Cash and cash equivalents 6.9Interest bearing borrowings (30.1) ----Group net assets 66.9 ==== LOW & BONAR PLCSegmental information for the six months ended 30 November 2006 Primary segment - Business Technical Floors Textiles Unallocated Total £m £m £m Revenue 97.3 127.2 - 224.5 ==== ===== ===== ===== Operating profit before amortisation and non-recurring items 10.7 9.1 (2.8) 17.0Amortisation of intangible assets (0.2) (2.2) - (2.4) ---- ---- ----- -----Operating profit beforenon-recurring items 10.5 6.9 (2.8) 14.6Non-recurring items - (2.0) (0.5) (2.5) ---- ---- ----- -----Operating profit 10.5 4.9 (3.3) 12.1Net financing costs - - (2.3) (2.3) ---- ---- ----- -----Profit before taxation 10.5 4.9 (5.6) 9.8Taxation (2.7) ----Profit after taxation 7.1 ==== Capital expenditure 2.2 7.9 0.1 10.2Depreciation 1.7 5.2 0.1 7.0 Segment assets 58.6 200.7 - 259.3Segment liabilities (18.6) (40.7) - (59.3) ----- ----- ---- -----Segment net assets 40.0 160.0 - 200.0Unallocated liabilities (37.0)Cash and cash equivalents 3.3Interest bearing borrowings (49.4) -----Group net assets 116.9 ===== Secondary segment - Geography European North Union America Asia Unallocated Total £m £m £m £m £m Revenue 205.1 12.2 7.2 - 224.5 ===== ==== === === ===== Operating profit before non-recurring items 15.3 1.4 0.7 (2.8) 14.6Non-recurring items (2.5) ----Operating profit 12.1Net financing costs (2.3) ----Profit before taxation 9.8Taxation (2.7) ----Profit after taxation 7.1 ==== Segment assets 233.0 20.1 6.2 - 259.3Segment liabilities (54.5) (4.3) (0.5) - (59.3) ----- ---- ---- ---- -----Segment net assets 178.5 15.8 5.7 - 200.0Unallocated liabilities (37.0)Cash and cash equivalents 3.3Interest bearing borrowings (49.4) -----Group net assets 116.9 ===== LOW & BONAR PLCNotes on Interim Report 2007 1. Basis of preparation The consolidated financial statements are prepared in accordance withInternational Financial Reporting Standards as endorsed and adopted for use inthe European Union (IFRS). This interim consolidated financial information isun-audited and has been prepared on the basis of accounting policies consistentwith those applied in the consolidated financial statements for the year ended30 November 2006. IFRS is subject to ongoing review and endorsement by the EU orpossible amendment by interpretative guidance from the International AccountingStandards Board (IASB). The Group has chosen not to adopt IAS34 "Interim Financial Statements" inpreparing the interim consolidated financial statements. The following exemptions as set out in IFRS 1 "First Time Adoption ofInternational Financial Reporting Standards" were adopted in the comparativeperiods (a) Business combinations prior to 1 December 2004 have not been restated tocomply with IFRS 3 "Business Combinations". (b) Cumulative translation differences on foreign operations are deemed to bezero at 1 December 2004. Any gains and losses recognised in the consolidatedincome statement on subsequent disposals of foreign operations will thereforeexclude translation differences arising prior to the transition date. (c) IAS 32 and IAS 39 have been adopted from 1 December 2005, with norestatement of comparative information. (Comparative information has beenprepared and disclosed in accordance with UK GAAP.) (d) Only share based payment awards made after 7 November 2002 have beenmeasured in accordance with IFRS 2 "Share Based Payment". At the date of authorisation of these financial statements there are a number ofStandards and Interpretations in issue but not yet effective and have thereforenot yet been applied in these financial statements. The Directors anticipatethat adoption of these Standards and Interpretations in future periods will haveno material impact on the financial statements of the Group or the Company. The financial statements are presented in pounds sterling, rounded to thenearest hundred thousand pounds. They are prepared on the historical cost basisexcept for the valuation to fair value of certain financial instruments. 2. This interim report was approved by the board of directors on 16 July 2007 3. Taxation on the operating profit after interest has been provided at arate of 30% for the six months ended 31 May 2007 (2006: 27%) which is theestimated rate of tax for the full year. 4. The Board has declared an interim ordinary dividend of 1.75p per sharepayable on 4 October 2007 to ordinary shareholders on the register on 7September 2007. In accordance with IAS10 'Events after the Balance SheetDate', this dividend has not been reflected in the interim accounts. 5. Basic earnings per share and earnings per share before amortisation andnon-recurring items are based on the weighted average number of ordinary sharesin issue during the half year of 152,458,138 (Restated 2006: 113,271,932). Thecalculation of fully diluted earnings per share is based on the weighted averagenumber of ordinary shares in issue plus the dilutive effect of outstanding shareoptions 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 May2007) being 3,013,947 (Restated 2006: 1,670,774) shares. The number of sharesincluded in the calculation of fully diluted earnings per share was 155,472,085(Restated 2006: 114,942,706). The directors consider that the calculation of earnings per share beforeamortisation and non-recurring items gives a more meaningful indication of theunderlying performance. For the six months ended 31 May 2007 this figure was3.41p per share (Restated 2006: 2.74p). 6. Non-recurring items Six months Six months Year ended ended ended 31 May 31 May 2006 30 Nov 2007 2006 £m £m £m Amounts charged to operating profit Technical Textiles restructuring - (0.4) (2.0)Aborted transaction costs - (0.4) (0.5) --- ---- ---- - (0.8) (2.5) === ==== ==== 7. Acquisitions Colbond Group acquisition On 31 July 2006 the Group acquired 100% of the share capital of Colbond Groupfor a cash consideration of up to €106.9m. Colbond Group is a producer ofsynthetic non-woven textiles (for flooring, automotive, and constructionappliances). The Group acquired Colbond Group with cash balances of £3.7m and aggregateborrowings of £45.9m. Acquisition costs were £2.9m. Of the total consideration,€3.6m is deferred and dependent upon certain vendor warranty obligations beingmet. The fair values of identifiable assets and liabilities arising from theacquisition are as follows Book Fair Value Fair Value Adjustments Value £m £m £m Investment in associate 0.1 - 0.1Intangible assets 0.2 12.5 12.7Deferred tax assets 1.1 0.6 1.7Property, plant and equipment 50.7 - 50.7Inventories 12.1 - 12.1Trade and other receivables 13.1 - 13.1Current tax liabilities (0.2) (1.0) (1.2)Trade and other payables (18.2) (2.8) (21.0)Deferred tax liabilities (7.8) (3.6) (11.4)Post-employment benefits (3.8) - (3.8) ---- ----- ----Net assets 47.3 5.7 53.0 ---- ----- Cash consideration paid including costs 30.1Less cash acquired with business (3.7)Add external debt acquired 45.9 ----Net cash outflow 72.3 ---- Goodwill arising on consolidation 19.3 The fair value adjustments above have arisen as follows and are provisional : (i) Recognition of intangible assets for marketing related assets, customerrelationships and technology based assets.(ii) Assets and liabilities have been fair valued at the date of acquisition.(iii)Provision has been made for onerous contracts in accordance with IFRS 3.(iv)As required by IAS12 "Income Taxes", current and deferred tax has beenprovided on the above adjustments. 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