Interim Results

14th Jul 2008 07:00



Not for release before 07:00 14th July 2008

 

INTERIM RESULTS FOR the six months ended 31 may 2008

Low & Bonar PLC ("Low & Bonar" or "the Group"), the international technical textiles and contract flooring manufacturer, today announces its interim results for the six months ended 31 May 2008. 

Highlights Include: 

Total revenue up 50% to £213.4m (2007: £142.1m)

Operating profit margin* increase of 1.6% to 8.1%

Profit before tax* up 62% to £12.0m (2007: £7.4m)

Earnings per share* increased by 59% to 5.43p (2007: 3.41p) 

Interim dividend increased by 10% to 1.925p (2007: 1.75p)

Mehler Texnologies (MTX) has performed ahead of expectations in the period

Continued emphasis on product innovation and geographic expansion, including the previously announced joint venture in Abu Dhabi

* before amortisation and non-recurring items

Commenting on the Group's outlook, Duncan Clegg, Low & Bonar's Chairman, said: 

 "Whilst we monitor the macroeconomic environment closely, we continue to see significant opportunities to expand our business and improve margins. Our focus will remain on growing the business, both organically and through prudent acquisitions, when suitable opportunities present themselves. The breadth and geographic diversity of our customers and operations have assisted our performance in the first half and we are confident that these factors will continue to maintain the Group's progress during the second half and beyond." 

For further information, please contact:

Low & Bonar PLC	+44 (0)20 7535 3180
Paul Forman, Chief Executive
Kevin Higginson, Finance Director
Hogarth Partnership Limited	+44 (0)20 7357 9477
Andrew Jaques/Tim McCall/Ian Payne

NOTE TO EDITORS 

 

1. Low & Bonar is a world leading technical textiles and contract flooring manufacturer, operating from over 20 sites in 9 countries. The Group is quoted on the London Stock Exchange and is committed to delivering shareholder value through a strategy of organic and acquisitive growth. Recent acquisitions include the acquisitions of Mehler Texnologies, the German-based manufacturer of technically coated fabrics, and Westbond, the specialist UK producer of fusion-bonded carpet tiles.

Low & Bonar comprises two divisions: Technical Textiles and Contract Flooring. The key characteristics of its businesses are that they manufacture added-value products based on advanced technology and address markets with strong growth potential. Many of Low & Bonar's products are leaders in their niche markets.

 

2. You can view or download copies of this announcement and our latest Half Year and Annual reports from our

website at www.lowandbonar.com or request free printed copies by contacting Matthew Joy, Company

Secretary.

Chairman's Statement

Results

	6 months May 2008	6 months May 2007	Change	12 months Nov 2007
Revenue	£213.4m	£142.1m	+ 50%	£311.8m
Operating Profit*	£ 17.2m	£ 9.2m	+ 87%	£ 26.1m
Normalised Profit**	£ 12.0m	£ 7.4m	+ 62%	£22.4m

* Operating profit before amortisation and non-recurring items   ** Profit before tax and amortisation

During the six months ended 31 May 2008, we have seen further good progress in both organic and acquired growth. Total revenue grew by 50% to £213.4m (2007: £142.1m). Profit before tax, amortisation and non-recurring items increased by 62% to £12.0m (2007: £7.4m).

These results were improved by first time contributions from both MTX and Westbond, and by the translation benefit from the strengthening of the Euro.

In total, before the impact of acquisitions and exchange rate movements, revenues were increased by 4.2%, and operating profit before amortisation and non-recurring items by 17.0%.

Earnings per share were increased by 41% to 3.57p (2007: 2.54p) on a statutory basis. Earnings per share before amortisation and non-recurring items were increased by 59% to 5.43p (2007: 3.41p).

Net debt

The net debt at the end of May 2008 was £208.2m. The increase from £50.5m at 30 November 2007 was driven principally by the acquisitions of MTX (£122m) and Westbond (£6m). It was also impacted by the Euro exchange rate on our Euro denominated borrowings, causing an increase of around £20m.

Dividends

Continuing the progressive dividend policy, the Board has declared an Interim Dividend of 1.925p, payable on 2 October 2008 to ordinary shareholders on the register on 5 September 2008. (2007: 1.75p). This represents an increase of 10%.

  Review of Operations

Technical Textiles

	6 months May 2008	6 months May 2007	Change	12 months Nov 2007
Revenue	£157.5m	£ 96.3m	+ 64%	£210.3m
Operating Profit*	£ 13.5m	£ 6.5m	+108%	£ 17.9m
Margin	8.6%	6.7%		8.5%

* before amortisation and non-recurring items

The Division produced a material step forward in sales and operating profit before amortisation and non-recurring items of 64% and 108% respectively, being significantly impacted by the acquisition of Mehler Texnologies ("MTX") on 3 January 2008. Excluding MTX, revenue (before exchange adjustments) was up 4% and operating profit before amortisation and non-recurring items was up 29%.

The strengthening of the Euro against sterling in the period has also positively affected these results as around two thirds of sales are Euro denominated.

MTX has performed well during the period and was slightly ahead of our expectations at the end of the first half, with demand in transport, architecture and print sectors all proving resilient. Our integration process remains very firmly on track and we continue to identify opportunities to develop the business further.

The Grass Yarns business has continued to improve its financial performance and has benefited from significant market volume growth especially in North America. Additional benefits have been delivered by the operational improvements initiated by the new management team put in place some 18 months ago.

Within the other business segments, performance of our markets has been broadly as anticipated, specifically with the expected areas of weakness in US auto and residential being offset by stronger performance in the European and Middle Eastern civil engineering markets. Colbond, the acquisition made in 2006, in particular has grown operating margins through increased operational efficiencies.

As anticipated, raw material prices have been, in aggregate, at broadly similar levels to those at the start of the period. Within this overall picture there have been noticeable differences with polypropylene declining recently but polyethylene increasing in price.

  Floors

 

	6 months May 2008	6 months May 2007	Change	12 months Nov 2007
Revenue	£ 55.9m	£ 45.8m	+22%	£101.5m
Operating Profit*	£ 6.1m	£ 4.5m	+35%	£ 12.0m
Margin	10.9%	9.8%		11.8%

* before amortisation and non-recurring items

Trading was satisfactory during the period and, despite the anticipated softness in the UK commercial market, organic sales have increased. Sales and operating profits before amortisation and non-recurring items were assisted by the acquisition of Westbond which continues to perform to expectations, and where the integration plan remains on track. Excluding Westbond (before exchange adjustments) revenue was up 5% and operating profit before amortisation and non-recurring items was up 7%.

Revenues were underpinned by refurbishment spending from retail banks, offsetting a weaker general UK commercial office sector. Sales in our continental European markets were more resilient, particularly in France and Spain. Public sector spending also remained robust.

Our focus on product innovation as well as geographic expansion was maintained with digitally printed Flotex demonstrating good sales growth.

Current trading and outlook

 

Whilst we monitor the macroeconomic environment closely, we continue to see significant opportunities to expand our business and improve margins. Our focus will remain on growing the business, both organically and through prudent acquisitions, when suitable opportunities present themselves. The breadth and geographic diversity of our customers and operations have assisted our performance in the first half and we are confident that these factors will continue to maintain the Group's progress during the second half and beyond.

LOW & BONAR PLC

Consolidated Income Statement 

	Six months ended			Six months ended			Year ended
	31 May 2008			31 May 2007			30 November 2007
	Before amortisation and non-recurring items	Amortisation and non-recurring items	Total	Before amortisation and non-recurring items	Amortisation and non-recurring items	Total	Before amortisation and non-recurring items	Amortisation and non-recurring items	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	213.4	-	213.4	142.1	-	142.1	311.8	-	311.8
Operating profit	17.2	(4.0)	13.2	9.2	(1.7)	7.5	26.1	(3.3)	22.8
Financial income	1.1	-	1.1	0.8	-	0.8	9.4	-	9.4
Financial expenses	(6.3)	-	(6.3)	(2.6)	-	(2.6)	(13.1)	-	(13.1)
Net financing costs	(5.2)	-	(5.2)	(1.8)	-	(1.8)	(3.7)	-	(3.7)
Profit before taxation	12.0	(4.0)	8.0	7.4	(1.7)	5.7	22.4	(3.3)	19.1
Taxation	(3.5)	1.1	(2.4)	(2.2)	0.5	(1.7)	(6.6)	0.9	(5.7)
Profit after taxation	8.5	(2.9)	5.6	5.2	(1.2)	4.0	15.8	(2.4)	13.4
Attributable to
Equity holders of the Company	8.4	(2.9)	5.5	5.1	(1.2)	3.9	15.5	(2.4)	13.1
Minority interest	0.1	-	0.1	0.1	-	0.1	0.3	-	0.3
	8.5	(2.9)	5.6	5.2	(1.2)	4.0	15.8	(2.4)	13.4
Earnings per share
Basic			3.57p			2.54p			8.60p
Diluted			3.51p			2.49p			8.46p

All results derive from continuing activities

LOW & BONAR PLC

Condensed Consolidated Group Balance Sheet 

		31 May 2008	31 May 2007	30 November 2007
		£m	£m	£m
Non current assets
Goodwill		99.3	48.0	48.0
Intangible assets		61.7	20.2	21.2
Property, plant & equipment		129.3	94.1	97.3
Investment in associate		0.2	0.2	0.2
Deferred tax assets		4.4	3.5	2.8
		294.9	166.0	169.5
Current assets
Inventories		93.4	56.7	51.3
Trade and other receivables		98.5	54.0	61.5
Derivative assets		0.8	0.4	0.2
Cash and cash equivalents		9.8	3.7	5.8
		202.5	114.8	118.8
Current liabilities
Interest bearing loans and borrowings		12.7	15.5	8.4
Current tax liabilities		8.0	4.3	5.7
Trade and other payables		93.7	60.3	72.3
Derivative liabilities		9.1	0.1	1.6
		123.5	80.2	88.0
Net current assets		79.0	34.6	30.8
Non-current liabilities
Interest bearing loans and borrowings		205.3	51.6	47.9
Deferred tax liabilities		27.0	16.0	15.1
Post employment benefits		9.7	6.0	4.8
Other payables		1.5	1.3	1.4
		243.5	74.9	69.2
Net Assets		130.4	125.7	131.1
Equity attributable to equity holders of the parent
Share capital		38.5	38.3	38.5
Reserves		88.5	84.5	89.5
Total equity shareholders' funds		127.0	122.8	128.0
Minority interests		3.4	2.9	3.1
Total Equity		130.4	125.7	131.1

  LOW & BONAR PLC

Condensed Consolidated Cash Flow Statement

	Six months	Six months	Year
	ended	ended	Ended
	31 May 2008	31 May 2007	30 November 2007
	£m	£m	£m
Profit for the period	5.6	4.0	13.4
Depreciation	7.1	4.9	9.8
Amortisation	3.4	1.7	3.3
Income tax expense	2.4	1.7	5.7
Net financing costs expense	5.2	1.8	3.7
Increase in working capital	(16.7)	(14.6)	(4.1)
Equity settled shared based payment	0.7	0.5	1.2
Other	0.1	-	0.1
Cash inflow from operations	7.8	-	33.1
Net financing costs paid	(3.1)	(1.1)	(2.8)
Tax paid	(1.8)	(1.9)	(3.9)
Pension cash contributions in excess of operating charge	(1.7)	(1.6)	(3.5)
Net cash inflow/(outflow) from operating activities	1.2	(4.6)	22.9
Acquisition of subsidiaries (net of cash acquired)	(128.2)	-	-
Acquisition of property, plant & equipment	(7.5)	(8.6)	(15.1)
Intangible assets purchased	(0.8)	-	(1.5)
Disposal of property, plant & equipment	0.1	0.1	1.5
Net cash outflow from investing activities	(136.4)	(8.5)	(15.1)
Proceeds of share issues	-	-	0.6
Inflow from new borrowings	159.9	17.9	4.4
Finance lease capital repayments	(0.2)	(0.2)	(0.3)
Movement in cash flow hedges	-	-	(3.6)
Equity dividends paid	(4.8)	(4.3)	(7.0)
Net cash inflow/(outflow) from financing activities	154.9	13.4	(5.9)
Net cash inflow	19.7	0.3	1.9
Cash and cash equivalents at start of period	5.8	3.3	3.3
Foreign exchange differences	(15.7)	0.1	0.6
Cash and cash equivalents at end of period	9.8	3.7	5.8

LOW & BONAR PLC

Condensed Consolidated Statement of Recognised Income and Expense

	Six months	Six months	Year
	ended	ended	ended
	31 May 2008	31 May 2007	30 November 2007
	£m	£m	£m
Foreign exchange translation differences	0.1	(0.3)	(2.1)
Deferred tax on share based payment	0.1	0.1	(0.2)
Actuarial (loss)/gain on defined benefit pension scheme	(3.4)	12.4	12.0
Deferred tax on defined benefit pension scheme	1.1	(3.6)	(3.5)
Net (expense)/income recognised directly in equity	(2.1)	8.6	6.2
Profit for the period after tax	5.6	4.0	13.4
Total recognised income for the period	3.5	12.6	19.6
Attributable to:
Equity holders of the parent	3.1	12.4	19.3
Minority interest	0.4	0.2	0.3
	3.5	12.6	19.6

Reconciliation of changes in Shareholders' Equity

for the six months ended 31 May 2008

	Six months	Six months	Year
	ended	ended	ended
	31 May 2008	31 May 2007	30 November 2007
	£m	£m	£m
Opening equity	128.0	114.1	114.1
Total recognised income for the period	3.1	12.4	19.3
Dividends to ordinary shareholders	(4.8)	(4.3)	(7.0)
Ordinary shares issued	-	0.1	0.6
Share based payment	0.7	0.5	1.0
Net (decrease)/increase in shareholders' funds	(1.0)	8.7	13.9
Closing shareholders' equity	127.0	122.8	128.0

Segmental information for the six months ended 31 May 2008

Primary segment - Business			Technical Textiles		Floors		Unallocated		Total
			£m		£m		£m		£m
Revenue			157.5		55.9		-		213.4
Operating profit before amortisation and non-recurring items			13.5		6.1		(2.4)		17.2
Amortisation of intangible assets			(2.9)		(0.5)		-		(3.4)
Operating profit before non-recurring items			10.6		5.6		(2.4)		13.8
Non-recurring items			-		(0.6)		-		(0.6)
Operating profit			10.6		5.0		(2.4)		13.2
Net financing costs							(5.2)		(5.2)
Profit before taxation			10.6		5.0		(7.6)		8.0
Taxation									(2.4)
Profit after taxation									5.6
Capital expenditure			5.3		3.3				8.6
Depreciation			5.9		1.2				7.1
Segment assets			397.7		81.2				478.9
Segment liabilities			(59.4)		(26.2)				(85.6)
Segment net assets			338.3		55.0				393.3
Unallocated assets and liabilities									(54.7)
Cash and cash equivalents									9.8
Interest bearing borrowings									(218.0)
Group net assets									130.4
Secondary segment - Geography
		Europe £m		North America £m		Asia £m		Unallocated £m	Total £m
Revenue		185.4		23.0		5.0		-	213.4
Operating profit before non-recurring items		14.7		1.5		-		(2.4)	13.8
Non-recurring items		(0.6)		-		-		-	(0.6)
Operating profit		14.1		1.5		-		(2.4)	13.2
Net financing costs									(5.2)
Profit before taxation									8.0
Taxation									(2.4)
Profit after taxation									5.6
Capital expenditure		7.4		1.0		0.1		0.1	8.6
Segment assets		439.2		30.2		9.5			478.9
Segment liabilities		(81.2)		(3.6)		(0.8)			(85.6)
Segment net assets		358.0		26.6		8.7			393.3
Unallocated assets and liabilities									(54.7)
Cash and cash equivalents									9.8
Interest bearing borrowings									(218.0)
Group net assets									130.4

Segmental information for the six months ended 31 May 2007

Primary segment - Business			Technical Textiles		Floors		Unallocated	Total
			£m		£m		£m	£m
Revenue			96.3		45.8		-	142.1
Operating profit before amortisation and non-recurring items			6.5		4.5		(1.8)	9.2
Amortisation of intangible assets			(1.6)		(0.1)		-	(1.7)
Operating profit before non-recurring items			4.9		4.4		(1.8)	7.5
Non-recurring items			-		-		-	-
Operating profit			4.9		4.4		(1.8)	7.5
Net financing costs			-		-		(1.8)	(1.8)
Profit before taxation			4.9		4.4		(3.6)	5.7
Taxation								(1.7)
Profit after taxation								4.0
Capital expenditure			6.2		2.4		-	8.6
Depreciation			3.9		1.0		-	4.9
Segment assets			209.8		61.7		-	271.5
Segment liabilities			(39.5)		(17.5)		-	(57.0)
Segment net assets			170.3		44.2		-	214.5
Unallocated assets and liabilities								(25.4)
Cash and cash equivalents								3.7
Interest bearing borrowings								(67.1)
Group net assets								125.7
Secondary segment - Geography
		Europe £m		North America £m		Asia £m	Unallocated £m		Total £m
Revenue		119.7		17.4		5.0	-		142.1
Operating profit before non-recurring items		8.1		1.1		0.1	(1.8)		7.5
Non-recurring items		-		-		-	-		-
Operating profit		8.1		1.1		0.1	(1.8)		7.5
Net financing costs									(1.8)
Profit before taxation									5.7
Taxation									(1.7)
Profit after taxation									4.0
Capital expenditure		7.2		0.5		0.9	-		8.6
Segment assets		238.9		23.3		9.3	-		271.5
Segment liabilities		(51.9)		(4.3)		(0.8)	-		(57.0)
Segment net assets		187.0		19.0		8.5	-		214.5
Unallocated assets and liabilities									(25.4)
Cash and cash equivalents									3.7
Interest bearing borrowings									(67.1)
Group net assets									125.7

Segmental information for the year ended 30 November 2007

Primary segment - Business			Technical Textiles			Floors		Unallocated	Total
			£m			£m		£m	£m
Revenue			210.3			101.5		-	311.8
Operating profit before amortisation and non-recurring items			17.9			12.0		(3.8)	26.1
Amortisation of intangible assets			(3.0)			(0.3)		-	(3.3)
Operating profit before non-recurring items			14.9		11.7			(3.8)	22.8
Non-recurring items			-			-		-	-
Operating profit			14.9			11.7		(3.8)	22.8
Net financing costs			-			-		(3.7)	(3.7)
Profit before taxation			14.9			11.7		(7.5)	19.1
Taxation									(5.7)
Profit after taxation									13.4
Capital expenditure			11.1			5.0		0.5	16.6
Depreciation			7.9			1.9		-	9.8
Segment assets			209.2			68.0		-	277.2
Segment liabilities			(42.0)			(24.5)		-	(66.5)
Segment net assets			167.2			43.5		-	210.7
Unallocated assets and liabilities									(29.1)
Cash and cash equivalents									5.8
Interest bearing borrowings									(56.3)
Group net assets									131.1
Secondary segment - Geography
		Europe £m		North America £m			Asia £m	Unallocated £m		Total £m
Revenue		263.6		37.5			10.7	-		311.8
Operating profit before non-recurring items		24.6		1.6			0.4	(3.8)		22.8
Non-recurring items		-		-			-	-		-
Operating profit		24.6		1.6			0.4	(3.8)		22.8
Net financing costs										(3.7)
Profit before taxation										19.1
Taxation										(5.7)
Profit after taxation										13.4
Capital expenditure		13.7		1.3			1.1	0.5		16.6
Segment assets		248.1		21.6			7.5	-		277.2
Segment liabilities		(62.3)		(3.6)			(0.6)	-		(66.5)
Segment net assets		185.8		18.0			6.9	-		210.7
Unallocated assets and liabilities										(29.1)
Cash and cash equivalents										5.8
Interest bearing borrowings										(56.3)
Group net assets										131.1

LOW & BONAR PLC

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:

DTR 4.2.7R(indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year)

DTR 4.2.8R(disclosure of related party transactions and changes therein)

By order of the Board			By order of the Board
K Higginson			P Forman
Group Finance Director			Group Chief Executive

Notes on Interim Report 2008

Low & Bonar PLC is a Company domiciled in the United Kingdom. The interim condensed consolidated financial statements (the "interim financial statements") of the Company as at and for the six months ended 31 May 2008 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 2007 are available on request from the Company's registered office or www.lowandbonar.com.

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 and 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 2007. In the current financial year, the Group will adopt IFRS 7 Financial Instruments: Disclosures, the amendments to IAS 1 Presentation of Financial Statements Capital Disclosures and IFRIC 11 Group and treasury share transactions for the first time. As IFRS 7 and the amendments to IAS 1 relate to disclosures, there is no impact of these changes on accounting policies in the interim financial statements. IFRIC 11 has no impact on the consolidated results or position. Details of the changes will be disclosed in the Group's financial statements for the year ending 30 November 2008.

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 2007.

The comparative figures for the financial year ended 30 November 2007 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 237(2) or (3) of the Companies Act 1985. 

LOW & BONAR PLC

Notes on Interim Report 2008 - 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 2007. 

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 bias has reduced slightly with the acquisition of MTX.

 

3. This interim report was approved by the board of directors on 14 July 2008.

 

4. Taxation on the operating profit after interest has been provided at a rate of 30% for the six months ended 31 May 2008 (2007: 30%) which is the estimated rate of tax for the full year.

 

5. The Board has declared an interim ordinary dividend of 1.925p per share payableon 2 October 2008 to ordinary shareholders on the register on 5 September 2008. In accordance with IAS10 'Events after the Balance Sheet Date', this dividend has not been reflected in the interim accounts. During the period an ordinary dividend of 3.1p per share was paid to the ordinary shareholders. 

 

6. 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 2008). 

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

	31 May 2008	31 May 2007	30 November 2007
	(millions)	(millions)	(millions)
Weighted average number of shares	153.786	152.458	152.933
Effect of dilutive items	2.627	3.014	2.557
Diluted weighted average number of shares	156.413	155.472	155.490

The directors consider that the calculation of earnings per share before amortisation and non- recurring items gives a more meaningful indication of the underlying performance. For the six months ended 31 May 2008 this figure was 5.43p per share, (May 2007: 3.41p), (November 2007: 10.16p).

 

LOW & BONAR PLC

Notes on Interim Report 2008 - continued

7. Non recurring items

			Six months	Six months	Year
			ended	ended	ended
			31 May 2008	31 May 2007	30 November 2007
			£m	£m	£m
	Amounts charged to operating profit
	Floors restructuring and integration following the acquisition of Westbond		0.6	-	-
			0.6	-	-

8. Pensions and other post-retirement 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 2008 is summarised below. 

	UK Schemes	Overseas Schemes	Six months ended 31 May 2008 Total	Six months ended 31 May 2007 Total	Year ended 30 November  2007 Total
	£m	£m	£m	£m	£m
Net liability at 30 November 2007	(1.0)	(3.8)	(4.8)	(19.8)	(19.8)
Current service costs	(0.3)	(0.1)	(0.4)	(0.4)	(0.9)
Actuarial (losses)/gains	(4.0)	0.6	(3.4)	12.4	12.0
Expected return on plan assets	4.0	0.2	4.2	3.9	7.7
Interest cost	(4.1)	(0.3)	(4.4)	(4.0)	(8.0)
Employer contributions	1.8	0.3	2.1	2.1	4.3
Arising on acquisition	-	(2.6)	(2.6)	-	-
Exchange adjustments	-	(0.4)	(0.4)	(0.2)	(0.1)
	(2.6)	(2.3)	(4.9)	13.8	15.0
Net liability at 31 May 2008	(3.6)	(6.1)	(9.7)	(6.0)	(4.8)

LOW & BONAR PLC

Notes on Interim Report 2008 - continued

9. Acquisitions

(a) MTX acquisition

On 3 January 2008 the Group acquired 100% of the share capital of the individual companies within the MTX Group for €166m on a cash-free and debt-free basis. MTX is a leading producer of technical coated fabrics and produces premium materials for a variety of uses, including side curtains for the transport market and fabrics for the architectural and print markets. 

			Book	Fair value	Fair
			Value	adjustments and accounting policy alignment	Value
			£m	£m	£m
	Intangible assets		0.2	34.4	34.6
	Deferred tax assets		0.4	-	0.4
	Property, plant and equipment		21.6	-	21.6
	Inventories		28.0	(1.8)	26.2
	Trade and other receivables		26.9	-	26.9
	Current tax liabilities		-	(1.0)	(1.0)
	Trade and other payables		(11.6)	-	(11.6)
	Deferred tax liabilities		(0.1)	(10.3)	(10.4)
	Post-employment benefits		(2.6)	-	(2.6)
	Net assets		62.8	21.3	84.1
	Cash consideration paid including costs				(123.7)
	Less cash acquired with business				1.6
	Net cash outflow				(122.1)
	Goodwill arising on consolidation				38.0

The fair value adjustments above have arisen as follows:

(i) Recognition of intangible assets for marketing related assets, customer relationships and technology based assets.

(ii) Adjustments have been made to inventories in accordance with IFRS 3

(iii)As required by IAS12 "Income Taxes", current and deferred tax has been provided on the above adjustments.

The fair value adjustments shown above are provisional figures, being the best estimates currently available. Final negotiations with the seller and detailed exercises to identify the fair value adjustments, including tangible fixed asset valuations, are expected to be completed in the second half of the year. Further adjustments to goodwill and other intangible fixed assets will be necessary when additional information becomes available.

The goodwill arising on the acquisition of the MTX Group is attributable to the anticipated profitability from the sale of the group's existing products in new markets, and the anticipated future technological and operational synergies from the integration into the Group.

MTX Group contributed £48.9 million to revenue and £1.7 million to the Group's profit after tax for the period between the date of acquisition and 31 May 2008.

LOW & BONAR PLC

Notes on Interim Report 2008 - continued

(b) Westbond acquisition

On 8 January 2008 the Group acquired 100% of the share capital of Westbond Limited, a producer of fusion bonded carpet tiles. Of the total consideration, £4.5m is deferred and dependent on certain revenue and profitability targets being met during 2008 and 2009.

			Book	Fair Value	Fair
			Value	Adjustments	Value
			£m	£m	£m
	Intangible assets		-	4.0	4.0
	Property, plant and equipment		0.4	-	0.4
	Inventories		1.6	(0.5)	1.1
	Trade and other receivables		1.7	-	1.7
	Current tax liabilities		(0.4)	-	(0.4)
	Trade and other payables		(1.5)	(0.1)	(1.6)
	Deferred tax liabilities		-	(1.2)	(1.2)
	Net assets		1.8	2.2	4.0
	Cash consideration including costs				(11.4)
	Less cash acquired with business				0.4
	Add external debt acquired
	Net cash outflow				(11.0)
	Goodwill arising on consolidation				7.0

The fair value adjustments above have arisen as follows:

(i) Recognition of intangible assets for marketing related assets, customer relationships and technology based assets.

(ii) Assets and liabilities have been fair valued at the date of acquisition.

(iii)Adjustments have been made to inventories and payables in accordance with IFRS 3

(iv)As required by IAS12 "Income Taxes", current and deferred tax has been provided on the above adjustments.

The fair value adjustments shown above are provisional figures, being the best estimates currently available. Further adjustments to goodwill and other intangible fixed assets may be necessary when additional information becomes available.

The goodwill arising on acquisition of Westbond is attributable to the creation of significant opportunities for cross-selling and other synergies.

Westbond contributed £5.1 million revenue and £0.8 million to the Group's profit after tax for the period between the date of acquisition and 31 May 2008.

If the acquisition of MTX and Westbond had been completed on the first day of the current period, Group revenues for the period would have been £221.2 million and Group profit attributable to equity holders would have been £6.3 million.

10. Risks and uncertainties

Cautionary statement

This interim report contains forward-looking statements that involve risk and uncertainty. These have been made by the directors in good faith based on the information available to them up to the time of their approval of this report. The directors give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. Recent volatility in the financial markets has added to market uncertainty. Limitations on the Group's ability to fund its financing requirements may arise given current credit market conditions. The Group's results continue to be exposed to foreign exchange risks associated with our international operations. Further information on the principal long-term risks and uncertainties of the Group is included in the latest annual report.

ENDIR RBMFTMMJBBMP

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