19th Jul 2006 07:01
Low & Bonar PLC19 July 2006 19 July 2006 Press Release / Stock Exchange Announcement Low & Bonar PLC 2006 Interim Results Low & Bonar PLC, the specialist materials group, today reports its results forthe half year ended 31 May 2006. 2006 2005 % Turnover £89.7m £78.2m 14.7%Turnover - continuing businesses £86.2m £78.2m 10.3%Operating profit (before amortisation andnon-recurring items) £5.1m £4.6m 9.8%Profit before tax (before amortisation andnon-recurring items) £4.5m £3.8m 20.9%Earnings per share (before amortisation andnon-recurring items) 3.09p 2.74p 12.8%Dividend per share 1.8p 1.7p 5.9% Operating profit (after amortisation andnon-recurring items) £3.5m £4.4m (21.9)%Profit before tax (after amortisation andnon-recurring items) £2.9m £3.5m (18.2)%Basic earnings per share 1.95p 2.95p (33.9)% Highlights • Turnover up 15% to £89.7m with continuing turnover up 10% to £86.2m • Solid progress in Floors Division with revenues up 7% to £47.8m driven by successful range launches • Yarns & Fabrics Divisional revenues up 25% to £41.8m of which organic revenues were up 14% • Increase in operating profit before amortisation and non-recurring items of 11% to £5.1m despite the negative impact of higher raw material prices and energy costs • Recent acquisitions - Xirion, Threshold and Geotipptex - successfully integrated and performing as planned • Proposed acquisition of Colbond, announced on 7 July 2006, will provide a step change for the Group and create exciting new strategic opportunities within the technical textiles market Commenting on the results, Paul Forman, Group Chief Executive, said: "This has been another strong performance with revenue growth in both ourDivisions and profit growth in spite of further increases in raw material costs.We have also seen good performances from our recent acquisitions. The proposedacquisition of Colbond provides exciting new strategic opportunities for uswithin the technical textiles market and further enhances the Group's long-termgrowth potential." Enquiries: Low & Bonar PLC: Paul Forman, Group Chief Executive 020 7535 3191Tulchan Communications: David Trenchard / Peter Hewer 020 7353 4200 Chairman's Statement-------------------- The first half of 2006 has been highly significant for the Group, as we havecontinued to implement successfully our strategy of both organic and acquisitivegrowth in our chosen markets of contract flooring and technical textiles. Encouraging levels of organic growth have been achieved in both Divisions and Iam pleased to report that the three acquisitions made within the last 12 months- Xirion, Threshold and Geotipptex - are all performing as planned. Furthermore,the proposed acquisition of Colbond (which is subject to shareholder approval atan extraordinary general meeting to be held on 24 July 2006) will provide astep-change in size for the Group and create exciting new strategicopportunities within the technical textiles market. As the acquisition ofGeotipptex and the proposed acquisition of Colbond demonstrate, I am pleased toreport that we have pursued our strategy effectively, notwithstanding thedistraction of the approach, in December 2005, from a third party in relation toa possible offer being made for the Company. A further positive development occurred on 29 June 2006 when the Companyannounced the appointment of Kevin Higginson as Group Finance Director witheffect from 5 September 2006. Financial Review----------------In our first results published under IFRS, revenue has grown by 15% and profitbefore tax, amortisation and non-recurring items, has been improved by 21%.Bonar Floors has continued to benefit from the investment made in new productlaunches and cost restructuring 12 months ago. Bonar Yarns & Fabrics has heldoperating profit broadly in line with last year as revenue growth and a smallfirst half contribution from Geotipptex have offset yet another significantincrease in raw material and energy costs. Revenue was £89.7m compared with £78.2m for the same period last year. Profitbefore tax, amortisation and non-recurring items was £4.5m (2005: £3.8m) afternet financing costs of £0.6m (2005: £0.9m). Earnings per share beforeamortisation and non-recurring items(1) were 3.09p (2005: 2.74p), an increase of13%, with a tax rate of 28% (2005: 24%). As at 31 May 2006, the Group had net debt of £23.0m (2005: net debt of £7.9m).The key reasons for this movement were the payment of £8.4m in respect of the EUfine(2), and additional pension contributions of £9.3m. The cost of theacquisitions of Xirion, Threshold and Geotipptex was offset by the proceeds from the sale of the Plastics Division. Dividend-------- In line with the Board's policy of the last three years and consistent with thatstated in the recent Prospectus and Circular, the Board has declared an interimordinary dividend of 1.8p per share payable on 4 October 2006 to ordinaryshareholders on the register on 11 August 2006 (2005: 1.7p per share).Shareholders should note that as detailed in the Company's Prospectus dated 7July 2006 the new ordinary shares proposed to be issued pursuant to the proposed rights issue will not qualify for this interim ordinary dividend. (1) See Note 5. (2) Following the conclusion of its investigation, the European Commission notified the Company and its subsidiary Bonar Technical Fabrics N.V. on 30November 2005 of its decision that they infringed Article 81 of the EuropeanTreaty. The investigations involved an alleged cartel relating to industrialbags, a market which the Group exited in 1997 following the sale of its Belgianpackaging business to British Polythene Industries PLC. The Company has lodgedan appeal against the fine of £8.4m, which was paid in the period. Group Chief Executive's Review of Operations-------------------------------------------- Floors------The Division continued to make very encouraging progress during the first half.Divisional revenue grew by over 7% to £47.8m from £44.6m. The revenue growth waslargely attributable to progress in our branded manufactured products, asopposed to sales of third party products to the MoD as was the case last year. There are two major factors that have driven this improvement. First is thecontinued positive impact of the range launches undertaken to an unprecedenteddegree in the first half of 2005. I am pleased to report that all five of ourmajor product brands have shown year-on-year growth in revenue and our overallorder book remains at a healthy level. The second factor is the benefit of thecost restructuring exercise undertaken in June 2005, which has delivered theanticipated benefits. Consequently, Divisional operating profit beforeamortisation and non-recurring items has grown by 18%, to £4.4m from £3.8m. Thishas been achieved in the face of significant escalation in the costs of energyand certain raw materials. There are some signs of sales demand in our marketsin continental Europe beginning to recover, although this is not yet aconsistent picture. It is encouraging to note that the other key performance metrics by which wemanage our business are also showing year-on-year progress. These include ourworking capital levels, operating cash flow, health and safety performance,employee absenteeism rates and customer delivery service levels. All of theseare vital to ensure that Bonar Floors regains and then sustains the operatingmargins which we know it is capable of producing. We now have a very strong andcapable Divisional management team in place. Yarns & Fabrics---------------Divisional revenue grew by 25% to £41.8m (2005: £33.5m) including a maidencontribution of £3.5m from our acquisition, Geotipptex. The revenue growth fromcontinuing businesses was 14%. Divisional operating profit before amortisationand non-recurring items was £2.0m (2005: £2.2m), including a post-acquisitioncontribution of £0.3m from Geotipptex. As has been the case for the last two tothree years, raw material and energy costs have had a significantly negativeimpact, with a like-for-like cost increase in the first half of £2.0m versus thecomparable period in H1 2005. Our two woven and non-woven textiles businesses, Bonar Technical Fabrics ("BTF")in Belgium and Geotipptex in Hungary, have started the year encouragingly. BTFhas progressed in both revenue and profit despite being the business mostaffected by rising polypropylene prices. The non-woven capacity investment madein early 2005 is performing to our expectations and revenue progress isoccurring in most areas of the business. Geotipptex has performed well duringour period of ownership and I am very satisfied by the progress it has made madein forging a good working relationship with BTF. Our fibres business, ADFIL, hasseen sales hold steady year-on-year, notwithstanding pricing and volumepressures in continental Europe. The transfer of manufacturing to BTF (at anon-recurring cost of £0.4m) is now complete and operating as envisaged. Recent evidence indicates that sales growth from new products from ADFIL is alsomoving ahead. Yihua Bonar, our Chinese operation, has shown good year-on-yearprogress in both revenue and profit. Grass production is now operational andsales of woven textiles are up strongly versus 2005. The commencement of localgrass production, as agreed, has resulted in the increase in our equity holdingfrom 50.1% to 60% with effect from 26 April 2006. The artificial grass yarns market, serviced by Bonar Yarns in Scotland andXirion in Belgium, is undergoing significant structural change. This is beingdriven by the shift in demand towards monofilament products (made by Xirion)from fibrillated products (made by Bonar Yarns). The rate and full extent ofthis shift is being monitored and assessed in order to allow us to modify ourbalance of grass yarn capacity - both in terms of geographical balance andproduct - so we can best service the constantly evolving market needs. BonarYarns is continuing to gain new grass yarn customers, build its carpet backingbusiness and address fully all aspects of its cost base. Xirion is experiencinggood year on year growth and its profit for the period is in line with ourexpectations. Two new lines were installed earlier on in the year to meet apredicted significant growth in demand for their product. Overall our customerbase is predicting continued strong growth in market demand for grass yarn. Outlook-------The last three financial years were focused on creating a platform for growtharound two core markets that we believe to be attractive on a long term basis.This platform has been strengthened further in the first half of 2006 by theacquisition of Geotipptex and the announcement of the proposed acquisition ofColbond, the associated proposed rights issue and increased debt facilities during July 2006. Overall trading of the Group remains in line with the Board's expectations. Within the Floors Division, the Board remains pleased with both revenue growthand cost control and anticipates a good result for the full year. The Yarns &Fabrics Division continues to be impacted by increases in the price of the rawmaterials, although there has been some evidence of a levelling off in thistrend. In summary, despite these raw material pressures, the Group has made asatisfactory start to the second half of the financial year. LOW & BONAR PLC Unaudited Consolidated Income Statement for the half year ended 31 May 2006 Six months ended 31 May 2006 Before Amortisation Total amortisation and and non-recurring non-recurring items items £000 £000 £000RevenueContinuing businesses 86,185 - 86,185Acquisitions 3,474 - 3,474 ------ ------ ------- 89,659 - 89,659 ====== ====== =======Operating profit Continuing businesses 4,664 (1,555) 3,109Acquisitions 435 (86) 349 ----- ------ ----- 5,099 (1,641) 3,458 EU fine - - - Financial income 4,254 - 4,254Financial expenses (4,821) - (4,821) ------ ------ -------Net financing costs (567) - (567) Profit before 4,532 (1,641) 2,891Taxation on UK companies (136) 394 258Taxation on overseas companies (1,134) 102 (1,032) ------ ----- -------Profit after tax 3,262 (1,145) 2,117Discontinued operations - - - ------ ----- ------Profit for the period 3,262 (1,145) 2,117 ====== ===== ====== Attributable to:Equity holders of the company 3,104 (1,145) 1,959Minority interest 158 - 158 ------ ------- ------ 3,262 (1,145) 2,117 ====== ======= ======Earnings per share Basic 1.95 pDiluted 1.92 p LOW & BONAR PLCUnaudited Consolidated Income Statement for the half year ended 31 May 2006 Six months ended 31 May 2005 Before Amortisation Total amortisation and and non-recurring non-recurring items items £000 £000 £000RevenueContinuing businesses 78,160 - 78,160Acquisitions - - - ------- ----- ------ 78,160 - 78,160 ======= ===== ======Operating profitContinuing businesses 4,643 (215) 4,428Acquisitions - - - ------- ------ ----- 4,643 (215) 4,428 EU fine - - - Financial income 4,706 - 4,706Financial expenses (5,599) - (5,599) -------- ------- ------Net financing costs (893) - (893) Profit before tax 3,750 (215) 3,535Taxation on UK companies (182) 94 (88)Taxation on overseas companies (724) (37) (761) ------- ------- -----Profit after tax 2,844 (158) 2,686Discontinued operations - 370 370 ------ ------ -----Profit for the period 2,844 212 3,056 ====== ====== ===== Attributable to:Equity holders of the company 2,735 212 2,947Minority interest 109 - 109 ------- ------ ----- 2,844 212 3,056 ======= ======= =====Earnings per share Basic 2.95pDiluted 2.89p LOW & BONAR PLCUnaudited Consolidated Income Statement for the half year ended 31 May 2006 Year ended 30 November 2005 Before Amortisation Total amortisation and and non-recurring non-recurring items items £000 £000 £000RevenueContinuing businesses 175,403 - 175,403Acquisitions - - - ------- --- ------- 175,403 - 175,403 ======= === =======Operating profitContinuing businesses 13,292 (2,099) 11,193Acquisitions - - - ------ ----- ------ 13,292 (2,099) 11,193 EU fine - (8,439) (8,439) Financial income 8,305 - 8,305Financial expenses (9,445) - (9,445) -------- ------ ------Net financing costs (1,140) - (1,140) Profit before tax 12,152 (10,538) 1,614Taxation on UK companies 930 257 1,187Taxation on overseas companies (2,115) 13 (2,102) ------ ------ ------Profit after tax 10,967 (10,268) 699Discontinued operations - (7,597) (7,597) ------ ------- -------Profit for the period 10,967 (17,865) (6,898) ====== ======= ======= Attributable to:Equity holders of the company 10,675 (17,865) (7,190)Minority interest 292 - 292 ------ ------- ------- 10,967 (17,865) (6,898) ====== ======= =======Earnings per share Basic (7.20)pDiluted (7.04)p LOW & BONAR PLCSummary Unaudited Group Balance Sheet at 31 May 2006 31 May 31 May 30 November 2006 2005 2005 £000 £000 £000 Non current assetsIntangible assets 38,321 24,457 34,029Property, plant & equipment 40,363 58,442 38,112Deferred tax assets 7,150 8,818 9,418 ------- ------- ------- 85,834 91,717 81,559 Current assetsInventory 37,781 37,806 29,528Trade and other receivables 39,850 48,712 39,245Financial assets 255 - -Cash and cash equivalents 6,950 9,530 14,733 ------- ------- -------- 84,836 96,048 83,506 Current liabilitiesInterest bearing loans and borrowings 3,575 7,075 1,903Current tax liabilities 2,927 4,066 1,696Trade payables and other payables 39,831 46,209 53,423Financial liabilities 75 - - ------ ------ ------ 46,408 57,350 57,022 Net current assets 38,428 38,698 26,484 Non-current liabilitiesInterest bearing loans and borrowings 26,400 10,369 -Deferred tax liabilities 7,763 6,730 7,042Post employment benefits 20,112 27,942 28,677Other payables 2,891 3,739 3,499 ------ ------- ------ 57,166 48,780 39,218 Net Assets 67,096 81,635 68,825 ====== ====== ====== Equity attributable to equity holders of the parentShare capital 25,473 50,352 25,458Reserves 39,450 28,917 40,594 ------ ------ ------ Total equity shareholders' funds 64,923 79,269 66,052Minority Interests 2,173 2,366 2,773 ------- ------- -------Total Equity 67,096 81,635 68,825 ======= ======= ======= LOW & BONAR PLC Summary Unaudited Consolidated Cash Flow Statement for the half year ended 31May 2006 Six months Six months Year ended ended ended 31 May 31 May 30 November 2006 2005 2005 £000 £000 £000 Profit/(loss) for the period 2,117 3,056 (6,898)Less discontinued operations - 370 (7,597) ----- ----- ------Profit for the period (continuing operations) 2,117 2,686 699 Adjustments for:Depreciation 2,928 2,351 4,664Amortisation 827 394 1,132Income tax expense 774 849 915Interest expense 567 893 1,140EU fine accrued - - 8,439Increase in working capital (10,067) (9,784) (2,482)Government grants credited to income (35) (33) (65) ------ ------ ------Cash (outflow)/inflow from operations (2,889) (2,644) 14,442 Net financing costs paid (286) (633) (488)Tax repaid/(paid) 395 (512) (2,019)EU fine paid (8,390) - -Pension cash contributions in excess ofoperating charge (6,075) (1,540) (5,370) -------- ------- ------Net cash (outflow)/inflow from operatingactivities (17,245) (5,329) 6,565 Acquisition of subsidiaries (net of cashacquired) (11,018) (10,373) (19,773)Acquisition of plant, property & equipment (4,221) (4,446) (6,374)Disposal of subsidiaries 1,418 - 20,183Disposal of plant, property & equipment 347 234 303Receipt of government grants - 60 60 ------ ------ ------Net cash outflow from investing activities (13,474) (14,525) (5,601) Proceeds of share issues 1,849 63 256Purchase of own shares (1,492) (83) (261)Additional/(repayment of) loans 27,657 3,520 (12,054) ------ ------ -------Finance lease repayments (257) - (201)Equity dividends paid (4,761) (2,895) (2,895) -------- -------- -------Net cash inflow/(outflow) from financingactivities 22,996 605 (15,155) -------- -------- ------- Net cash outflow (7,723) (19,249) (14,191) Cash and cash equivalents at start of period 14,733 28,938 28,938Exchange (60) (159) (14) ------ ------ ------Cash and cash equivalents at end of period 6,950 9,530 14,733 ===== ====== ====== Reconciliation of net cash Opening net cash 12,830 14,953 14,953Exchange (75) (98) 14Non cash movement on the adoption of IAS 32 (400) - -Net cash outflow (7,723) (19,249) (14,191)(Additional)/repayment of loans (27,657) (3,520) 12,054 -------- ------- -------Closing net (debt)/cash (23,025) (7,914) 12,830 ======== ======= ======= Consolidated Statement of Recognised Income and Expensefor the half year ended 31 May 2006 Six months Six months Year ended ended ended 31 May 31 May 30 November 2006 2005 2005 £000 £000 £000 Foreign exchange translation differences (722) (107) 1,027Actuarial gain/(loss) on defined benefitpension scheme 161 2,117 (726) ----- ------ -----Net expense recognised directly in equity (561) 2,010 301Profit/(loss) for the period after taxand discontinued operations 2,117 3,056 (6,898) ----- ------ ------ Total recognised income and (expense) forthe period 1,556 5,066 (6,597) ===== ====== ====== Attributable to: Equity holders of the parent 1,398 4,957 (6,889)Minority interest 158 109 292 ----- ------ ------ 1,556 5,066 (6,597) ===== ====== ====== Group Reconciliation of changes in Shareholders' Equityfor the half year ended 31 May 2006 Six months Six months Year ended ended ended 31 May 31 May 30 November 2006 2005 2005 £000 £000 £000 Opening equity 66,052 77,075 77,075Adoption of IAS 32 on 1 December 2005 (400) - -Adoption of IAS 39 on 1 December 2005 283 - - ------- ------- ------Opening equity restated 65,935 77,075 77,075 Total recognised income/(expense) 1,398 4,957 (6,889)for the periodDividends to ordinary shareholders (3,057) (2,894) (4,598)Dividends to preference - (11) (23)shareholdersOrdinary shares issued 1,849 63 256Purchase of own shares (1,492) (83) (261)Movement on cash flow hedge (103) - -reserveShare based payment 393 162 492 ------ ----- -------Net (decrease)/increase in (1,012) 2,194 (11,023)shareholders' funds Closing equity 64,923 79,269 66,052 ====== ====== ======= LOW & BONAR PLCSegmental information for the half year ended 31 May 2006 Revenue Profit Six mths Six mths Year Six mths Six mths Year ended ended ended ended ended ended 31/5/06 31/5/05 30/11/05 31/5/06 31/5/05 30/11/05 £000 £000 £000 £000 £000 £000 CLASSES OF BUSINESS Floors 47,814 44,644 97,725 4,432 3,771 9,896 Yarns & Fabrics - continuing businesses 38,371 33,516 77,678 1,650 2,160 7,133 - acquisitions 3,474 - - 349 - - ------- ------ ------ ----- ------ -----Total Yarns &Fabrics 41,845 33,516 77,678 1,999 2,160 7,133 ------- ------ ------ ----- ------ ----- 89,659 78,160 175,403 6,431 5,931 17,029 ====== ====== ====== Central costs (2,159) (1,682) (4,869) ------ ----- -----Operating profit before non-recurring items 4,272 4,249 12,160Non-recurring costs (883) - (1,200)Other operating income 69 179 233 ----- ----- ------Operating profit 3,458 4,428 11,193Net financing costs (567) (893) (1,140)EU Fine - - (8,439) ----- ----- ------Profit on ordinary activities before taxation 2,891 3,535 1,614 ====== ===== ====== GEOGRAPHICAL SEGMENTS United Kingdom 2,996 3,787 9,443Continental Europe 3,097 1,910 6,986Asia 338 234 600 ------ ----- ------ 6,431 5,931 17,029 Central costs (2,159) (1,682) (4,869) ------ ------ ------Operating profit before non-recurring items 4,272 4,249 12,160 Non-recurring costs (883) - (1,200)Other operating income 69 179 233 ------ ------ ------ Operating profit 3,458 4,428 11,193 Financing costs (567) (893) (1,140)EU Fine - - (8,439) ------ ------ ------Profit on ordinary activities before taxation 2,891 3,535 1,614 ====== ====== ====== 1. Basis of preparation To date, Low & Bonar has prepared its primary financial statements under UKGenerally Accepted Accounting Principles ("UK GAAP"). For accounting periodsstarting from 1 December 2005 onwards, the Group is required to prepare itsconsolidated financial statements in accordance with International AccountingStandards ("IAS") and International Financial Reporting Standards as adopted bythe European Union ("adopted IFRS"). These financial statements are Low &Bonar's first published results under adopted IFRS. The Group's first AnnualReport under adopted IFRS will be for the year ending 30 November 2006. The datefor the transition to adopted IFRS was 1 December 2004, being the start of theperiod of comparative information. On 16 June 2006 the Group published an analysis of the impact of adopting IFRSfrom 1 December 2004. This news release is available from the Group's website atwww.lowandbonar.com. This included income statement, balance sheet and openingbalance sheet reconciliations, as well as details of the accounting policiesapplied in restating its financial statements for the year ended 30 November2005 and the six months ended 31 May 2005. The financial statements have been prepared in accordance with accountingpolicies the Group expects to follow at the year end. EU law (IAS Regulation EC1606/2002) requires that the next annual consolidated financial statements ofthe Company, for the year ending 30 November 2006, be prepared in accordancewith adopted IFRS. This interim financial information has been prepared on thebasis of the recognition and measurement requirements of IFRS in issue thateither are endorsed by the EU and effective (or available for early adoption) at30 November 2006. As permitted, these interim financial statements have beenprepared in accordance with the UK listing rules and not in accordance withIAS34 'Interim Financial Reporting'. The adopted IFRS that will be effective (or available for early adoption) in theannual financial statements for the year ending 30 November 2006 are stillsubject to change and to additional interpretations and therefore cannot bedetermined with certainty. Accordingly, the accounting policies for that annualperiod will be determined finally only when the annual financial statements areprepared for the year ending 30 November 2006. Section 240 Statement The comparative figures for the financial year ended 30 November 2005 are notthe Company's statutory accounts for that financial year. Those accounts, whichwere prepared under UK Generally Accepted Accounting Practices, have beenreported on by the Company's auditors and delivered to the Registrar ofCompanies. The report of the auditors was unqualified and did not contain astatement under section 237(2) or (3) of the Companies Act 1985. IFRS 1 'First Time Adoption of IFRS'. As allowed by IFRS 1 the Group has elected not to apply IFRS 3 'BusinessCombinations' retrospectively to business combinations that occurred before 1December 2004. The impact of this exemption on Low & Bonar is as follows: • £10.8m of goodwill has been frozen at 1 December 2004 and is now only subject to annual impairment testing. • £31.0m of goodwill on the UK GAAP balance sheet at 30 November 2005 has been removed and replaced with goodwill of £25.0m and identified intangible assets of £9.0m under adopted IFRS. • £1.3m of goodwill amortisation expense recorded under UK GAAP in the year ended 30 November 2005 has been reversed. • A charge of £0.9m in respect of intangible asset amortisation has been included in the year ended 30 November 2005 under adopted IFRS. Low & Bonar has taken the option available under IFRS 1 and has not applied IAS32 'Financial Instruments Presentation and Disclosure' and IAS 39 'FinancialInstruments Measurement and Recognition' to the comparative information. Thesestandards have been adopted from 1 December 2005. The adoption of IAS 32involves the reallocation of preference shares with a nominal value of £0.4mfrom share capital to non-current liabilities, interest bearing borrowings.Under IAS 32 preference share dividends are included within financing costs. Low & Bonar has adopted the transition arrangements within IFRS 1 and has onlyapplied IFRS 2 'Share Based Payment' to equity settled options granted since 7November 2002 that remained unvested at 1 January 2005. IAS 21 'The Effects of Foreign Exchange Rates' requires an entity to classifysome translation differences as a separate component of equity and on disposalof a foreign entity to transfer the cumulative translation differences for thatforeign operation to the income statement as part of the gain or loss ondisposal. Low & Bonar has taken the exemption available in IFRS 1 that deems allcumulative translation differences for all foreign operations be set to zero at1 December 2004. 2. This interim report was approved by the board of directors on 19 July 2006. 3. Taxation on the operating profit after interest has been provided at a rateof 27% for the six months ended 31 May 2006 (2005: 24%) which is the estimatedrate of tax for the full year. 4. The Board has declared an interim ordinary dividend of 1.8p per share payableon 4 October 2006 to ordinary shareholders on the register on 11 August 2006. Inaccordance with IAS10 'Events after the Balance Sheet Date', this dividend hasnot 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 100,436,187 (2005: 99,783,636). The calculationof fully diluted earnings per share is based on the weighted average number ofordinary shares in issue plus the dilutive effect of outstanding share optionsand the Low & Bonar 2003 Long-Term Incentive Plan (the '2003 LTIP') awards (tothe extent to which performance criteria had been achieved at 31 May 2006) being1,481,446 (2005: 2,227,123) shares. The number of shares included in thecalculation of fully diluted earnings per share was 101,917,633 (2005:102,010,759). 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 2006 this figure was3.09p per share (2005: 2.74p). Non recurring items Six months Six months Year ended ended ended 31/5/06 31/5/05 30/11/05 £000 £000 £000 Yarns & Fabrics manufacturing (352) - -relocationAborted transaction costs (531) - -Floors restructuring - - (1,111)Capital reorganisation - - (89) ----- --- -----Operating costs (883) - (1,200) ----- === ----- Other operating income 69 179 233 ===== === ====== EU fine - - (8,439) ===== === ====== During December 2005 the Group ceased the manufacture of concrete constructionfibres at its plant in Beverley, in the UK and transferred production to itsfacility at Zele in Belgium. Costs of £352,000 were incurred in respect ofemployee redundancies, the transfer of machinery from Beverley to Zele, andmoving offices in the UK. During November 2005 the Group received an approach from a third party withrespect to a possible offer being made for the Company. No offer materialisedand the Group ended discussions on 24 February 2006. Costs of £531,000 wereincurred by the Company in dealing with this approach. During June 2005 the Group announced a cost reduction programme in its FloorsDivision. Costs of £1,111,000 were incurred during the year ended 30 November2005. In July 2005 the Group announced the need to complete a Capital Reorganisationin order to continue paying dividends as the loss on sale of the PlasticsDivision together with the accounting requirement to recognise the deficit onthe defined benefit pension scheme on the balance sheet had extinguished thedistributable reserves. The Capital Reorganisation was completed in November2005 and a cost of £89,000 was recorded in the year ended 30 November 2005. Other operating income and EU fine Other operating income relates to the gain on the sale of fixed assets. The EUfine relates to an alleged cartel relating to the Industrial Bag market, amarket which the Group exited in 1997. A European Commission enquiry resulted ina fine of €12,240,000 being imposed on the Group. The fine was paid in March2006. The Group has lodged an appeal against the decision. 6. Acquisitions Geotipptex The Group acquired Geotipptex Kft on 28 February 2006 for a maximum cashconsideration of €14.9m, including the assumption of cash balances of £89,000.Acquisition costs were £284,000. €2.0m of the consideration has been placed inescrow. Provisional Book Fair Value Fair Value Adjustments Value £000 £000 £000 Non current assets 1,921 2,651 4,572Current assets 4,509 - 4,509Current liabilities (2,158) - (2,158)Non current liabilities - (477) (477) ------ ----- ------Net assets acquired 4,272 2,174 6,446 ====== ===== ====== Cash consideration paid in period including costs 10,487Less cash acquired with business (89) ------Total consideration payable 10,398 ====== Excess of consideration over net assets acquired 3,952 ======Represented by:Cash held in escrow included within current assets at 31 May 2006 1,373 Goodwill arising on acquisition 2,579 ------ 3,952 ====== Fair value adjustments relate principally to intangible assets acquired andassociated deferred tax liabilities. The fair value adjustments shown areprovisional. ADFIL ADFIL was acquired on 7 December 2004. Deferred consideration of £620,000 waspaid during the period. Yihua Bonar The Group increased its stake in its Chinese subsidiary Yihua Bonar from 50.1%to 60% on 26 April 2006 by way of a transaction that involved the grant of aperpetual licence of the Group's proprietary intellectual property in themanufacture of artificial grass yarns to Yihua Bonar. In respect of theincreased level of ownership, minority interest at 31 May 2006 was reduced by£534,000. 7. Post balance sheet event On 7 July 2006 the Group announced the acquisition of Colbond Investments B.V.(the "Colbond Group") for a cash consideration of €103.3m (equivalent toapproximately £71.7m) subject to approval by shareholders at an extraordinarygeneral meeting to be held on 24 July 2006. The Colbond Group manufactures andsells non-woven textiles. The Company also announced a proposed 1 for 2 rightsissue at 85p per ordinary share in order to raise £41.2m net of expenses. Theacquisition of the Colbond Group is not dependent upon a successful Rights Issueas the Group has arranged new committed debt facilities of £140m. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
LWB.L