RNS Number:3986H
Low & Bonar PLC
12 February 2003
12 February 2003
Press Release/Stock Exchange Announcement
Low & Bonar PLC 2002 Preliminary Results
Low & Bonar PLC today reported its results for the year ended 30 November 2002.
The results are in line with those indicated in the company's announcement on
the 28th January regarding the proposed acquisition of the Carpet Tile Division
of Gaskell plc.
2002 2001
Turnover #162.6m #171.9m
Profit before tax and exceptionals #7.5m #9.4m
Profit/(loss) before tax #4.5m (#8.2m)
Earnings per share before exceptionals 4.88p 6.14p
Earnings/(loss) per share 2.08p (11.35p)
Dividend per share 4.00p 6.00p
* Flooring Division maintains profits despite tough trading environment
* Yarns & Fabrics Division increases both sales and profits
* North European and North American Plastics profitable
* French Plastics loss making - remedial actions underway
* Cash balances increased to #18.2m
Commenting on the results and outlook, Duncan Clegg, Low & Bonar's Chairman
said:
"Since Paul Forman joined as our new Chief Executive we have undertaken many new
initiatives and moved to strengthen our flooring division through the proposed
acquisition announced on 28 January, of the Carpet Tile Division of Gaskell plc.
Our main thrust is to improve the returns from our existing businesses, albeit
in continuing tough trading conditions. We will also look to complement our
existing activities with further acquisitions when appropriate."
Enquiries: Paul Forman, Chief Executive Low & Bonar PLC 020 7298 6820
Jon Kempster, Finance Director Low & Bonar PLC 020 7298 6820
Michelle Morton/Tim Spratt Financial Dynamics 020 7831 3113
EXTRACTS FROM CHAIRMAN'S STATEMENT
Overview
The last year was difficult with the markets in which we operate not showing any
significant recovery. In such conditions we continued to address our cost base.
I was pleased to announce the appointment of Paul Forman as Chief Executive in
June; he started work full time on 30 September. Since then he has undertaken a
review of the businesses and actions already taken, together with the recent
announcement of the proposed acquisition of the Gaskell Tile Division provides
me with confidence that Low & Bonar can look forward to a more focused and
profitable future.
In 2002 the Plastics business had a mixed year with subdued demand impacting the
North American business, whilst operational shortcomings in our French business
led to that business moving into loss. We have taken firm action, principally
through revised management structures and tighter reporting procedures. Our
North European businesses performed most consistently.
The Flooring Division experienced difficult demand in its major markets in
mainland Europe but still achieved profits in line those last year.
Our Yarns & Fabrics Division continued to improve with both its Belgian and
Dundee businesses doing well.
Financial Performance
Turnover fell to #162.6m (2001: #171.9m), reflecting the economic conditions in
our major markets and the full year impact of closures and the sale of a
loss-making operation. Operating profits before exceptional costs were #7.7m
compared to #10.0m for the businesses last year.
Profit before tax and exceptional items was #7.5m (2001: #9.4m) after an
interest expense of #0.2m (2001: #0.6m). Earnings per share before exceptional
items were 4.88p (2001 (restated): 6.14p)
Operating exceptional items amounted to #1.3m (2001: #17.6m), consisting of
#0.5m of closure costs in our Bonar Floors US operation and #0.8m relating to
senior management changes.
After accounting for all exceptional items, the profit before tax was #4.5m
(2001: loss of #8.2m) representing earnings per share of 2.08p (2001 (restated):
loss per share of 11.35p).
Net cash balances at the year end were #18.2m (2001: #14.9m). This positive
result was achieved despite the trading conditions and the ongoing investment
programme, and reflected the attention given to cash management throughout the
Group.
Dividend
As recently announced, the Board is recommending a final ordinary dividend of
1.50p (2001: 3.50p) payable on 1 May 2003 to shareholders on the register at 4
April 2003, making a total ordinary dividend for the year of 4.00p (2001:
6.00p). This dividend reduction brings the dividend in line with the earnings
of the Group and enables dividend cover to be re-established in the coming
years.
Review of Operations
The Flooring Division
Turnover in our Flooring Division decreased in the year to #56.1 million from
#57.8 million last year. Operating profit at #6.9 million was marginally less
than last year's #7.0 million despite tough trading conditions.
The US sales and warehouse operation was closed during the year and the closure
costs have been separately identified as an exceptional item. With our Flotex
product being successfully sold via our alliance partner Lees, the need to
maintain a direct presence was no longer necessary.
Volumes in our other major markets were mixed with the UK performing
satisfactorily but the Continental European markets, especially France and
Germany, proved extremely challenging. Our Far East sales were quite strong and
this area will remain a focus for future growth. We continue to focus on the
markets where our products' properties provide a competitive advantage,
specifically the healthcare and education sectors. We have supplemented our
existing product ranges in these key sectors with new product launches in 2002.
As previously disclosed, we have launched Flytex, specifically aimed at the
airline industry. This, together with other transport sector initiatives and a
more focused sales and marketing emphasis, will provide the Division with
mid-term growth potential.
The recently announced proposed acquisition of the Gaskell Tile Division will
provide us with additional complementary products.
Yarns & Fabrics
Turnover in our Yarns & Fabrics business increased to #44.3 million from #43.0
million last year. Operating profit increased from #1.5 million to #2.1
million.
The turnover increase reflects the full year impact of our non-woven capacity
coming on stream and operating to planned levels. Our non-woven geotextiles
volumes increased 40% against 2001. We continue to increase our sales in
artificial grass yarn with volumes increasing in the year by 15%, reflecting the
potential of this market.
We benefited from cheaper raw material prices in 2002 but a proportion of the
price decrease was passed back to our customers. Raw material prices have
remained at these slightly lower levels in the first two months of the current
year but the expectation is for them to increase significantly as oil prices
remain high.
Plastics
The performance of our three plastics businesses was mixed. The North European
businesses, namely Germany, Holland, Poland and Denmark, saw turnover increase
with the expansion of our Polish operation. The operating profit was maintained
at #0.6 million whilst sales grew to #21.7 million from #19.1 million.
In our South European businesses, the French businesses did not perform
satisfactorily. The businesses were impacted severely by the difficulties
experienced in integrating some UK business into our French operations following
the closure of our UK operation last year. Action has been taken to rectify the
operational issues with new management installed and the business reporting
directly to the Chief Executive. Much tighter financial controls have been put
in place and the business has a detailed recovery programme agreed and underway.
Our Spanish operation improved both sales and profits whilst the sale of
Spila, the loss making Italian business, was concluded in July.
The turnover in our South European Business Group has reduced significantly from
#25.8 million to #18.7 million with the full effect of the UK closure and the
disposal of Spila.
In North America, the turnover fell from #26.1 million to #21.8 million
reflecting the difficult trading environment in the North American market. The
businesses remained profitable despite the fall in volumes following continual
cost cutting initiatives. As with a number of our businesses, the last few
months have seen a significant strengthening of local management and of
financial monitoring processes.
Outlook
As we indicated at the time of the announcement for the proposed acquisition of
the Carpet Tile Division of Gaskell plc, demand was subdued in the majority of
the Group's major markets in 2002 and the first two months of the new financial
year have continued this trend. The Group has, however, carried out a
substantial amount of work to achieve a cost base that is commensurate with this
level of demand. Looking ahead, while there will continue to be uncertainties
in the underlying demand in most of the Group's major markets, the Directors
expect to achieve operational improvement and look to increase revenue growth
potential wherever possible through increased new product introduction,
geographic expansion and additional service provision.
Low & Bonar PLC
Group Profit and Loss Account
for the year ended 30 November 2002
2002 2001
Restated
#000 #000
Turnover 162,637 171,890
Operating profit before exceptional costs 7,722 10,001
Exceptional operating costs - restructuring costs (1,348) (11,159)
- goodwill impairment - (6,391)
Operating profit/(loss) 6,374 (7,549)
Exceptional non-operating items:
Loss on disposal of businesses (Note 1) (1,683) -
Profit/(loss) before interest 4,691 (7,549)
Net interest payable (215) (635)
Profit/(loss) on ordinary activities before taxation 4,476 (8,184)
Taxation (2,383) (3,085)
Profit/(loss) for the financial year 2,093 (11,269)
Dividends (including non-equity) (Note 2) (4,002) (5,992)
Transferred from reserves (1,909) (17,261)
Earnings per ordinary share before operating
and non-operating exceptional items (Note 3) 4.88p 6.14p
Basic and fully diluted earnings/(loss) per ordinary share 2.08p (11.35p)
(Note 3)
The results of the Group for this and the preceding financial year relate solely
to continuing activities.
Low & Bonar PLC
Group Balance Sheet
at 30 November 2002
2002 2001
#000 #000
Restated
Fixed assets
Tangible assets 57,455 63,079
Current assets
Stocks 24,087 25,586
Debtors
- due within one year 39,445 38,237
- due after one year 5,652 5,963
45,097 44,200
Cash and short term deposits 30,131 58,337
99,315 128,123
Creditors - due within one year
Bank and other borrowings 8,030 37,748
Other creditors 40,337 41,659
48,367 79,407
Net current assets 50,948 48,716
Total assets less current liabilities 108,403 111,795
Creditors - due after one year
Bank and other borrowings 3,870 5,731
Other creditors 2,098 2,568
5,968 8,299
Provisions for liabilities and charges
Deferred taxation 5,204 4,972
Accruals and deferred income
Government grants 292 360
96,939 98,164
Capital and reserves
Equity and non-equity called up share capital 50,137 50,137
Share premium account 60,424 60,424
Exchange reserve (9,453) (7,820)
Profit and loss account (4,169) (4,577)
Shareholders' funds
- Equity 96,539 97,764
- Non-equity 400 400
96,939 98,164
Low & Bonar PLC
Group Consolidated Cash Flow Statement
for the year ended 30 November 2002
2002 2001
#000 #000 #000 #000
Net cash inflow from operating activities (Note 4) 11,132 19,744
Interest received 1,046 2,719
Interest paid (1,570) (3,518)
Non-equity dividends paid (23) (23)
Returns on investments and servicing of finance (547) (822)
Tax recovered/(paid) 1,193 (3,525)
Purchase of tangible fixed assets (5,632) (10,892)
Sale of tangible fixed assets 2,840 4,957
Capital expenditure (2,792) (5,935)
Acquisition of subsidiaries - (690)
Sale of subsidiaries 333 -
Acquisitions and disposals 333 (690)
Equity dividends paid (5,970) (5,970)
Net cash inflow before management of
liquid resources and financing 3,349 2,802
Management of liquid resources
Decrease in short term deposits 30,000 15,900
(Repayment of)/additional loans due under one year (29,719) 31,108
Repayment of loans due after one year (1,967) (57,240)
Financing (31,686) (26,132)
Increase/(decrease) in cash (Note 5) 1,663 (7,430)
Reconciliation of net cash
Opening net cash 14,858 13,622
Exchange 24 (1,566)
Net cash flow 3,349 2,802
Closing net cash (Note 5) 18,231 14,858
Low & Bonar PLC
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 30 November 2002
2002 2001
#000 #000
Restated
Profit/(loss) for the financial year 2,093 (11,269)
Currency translation differences on overseas net investments
and related borrowings (470) 734
Total recognised gains/(losses) for the year 1,623 (10,535)
Prior year adjustment, implementation FRS 19 (3,595)
Total losses recognised since last annual report (1,972)
Reconciliation of Movements in Consolidated Shareholders' Funds
for the year ended 30 November 2002
2002 2001
#000 #000
Restated
Profit/(loss) for the financial year 2,093 (11,269)
Dividends (4,002) (5,992)
Result for year (1,909) (17,261)
Other recognised losses and gains relating to the year (470) 734
Goodwill transferred to profit and loss account on disposal of 1,154 -
businesses
Net decrease in shareholders' funds (1,225) (16,527)
Shareholders' funds at start of year 98,164 114,691
Shareholders' funds at end of year 96,939 98,164
The accounts comply with Financial Reporting Standard (FRS 19), "Deferred tax",
which has resulted in a change in the accounting policy for deferred tax to a
full provision basis and comparatives for last year have been restated
accordingly. The impact of FRS 19 on the accounts is to reduce the opening
shareholders' funds of #118,286,000 previously reported at 30 November 2000 by
#3,595,000 to #114,691,000. The loss for the financial year of #11,031,000 as
previously reported for the year ended 30 November 2001 is increased by #238,000
to #11,269,000.
Low & Bonar PLC
Segmental Information
Turnover Profit/(Loss) Net assets
2002 2001 2002 2001 2002 2001
#000 #000 #000 #000 #000 #000
Restated
Classes of business
Floors 56,072 57,763 6,920 7,019 20,412 21,039
Yarns & Fabrics 44,342 43,044 2,129 1,462 29,471 30,299
Total Specialist Materials 100,414 100,807 9,049 8,481 49,883 51,338
North European Plastics 21,721 19,125 590 630 12,610 12,019
South European Plastics 18,728 25,809 (2,160) (156) 6,928 8,490
North American Plastics 21,774 26,149 243 1,046 13,798 14,291
Total Plastics 62,223 71,083 (1,327) 1,520 33,336 34,800
162,637 171,890 7,722 10,001 83,219 86,138
Exceptional operating costs (1,348) (17,550)
Exceptional non-operating costs (1,683) -
Net interest (215) (635)
Group profit/(loss) before taxation 4,476 (8,184)
Non-operating liabilities (4,511) (2,832)
Net cash 18,231 14,858
Total net assets 96,939 98,164
Geographical segments
By origin:
United Kingdom 37,125 39,835 6,909 6,406 18,002 18,990
Europe 102,092 99,621 1,113 2,879 50,809 50,073
North America 23,420 32,434 (300) 716 14,408 17,075
162,637 171,890 7,722 10,001 83,219 86,138
Exceptional operating costs (1,348) (17,550)
Exceptional non-operating costs (1,683) -
Net interest (215) (635)
Group profit/(loss) before taxation 4,476 (8,184)
Non-operating liabilities (4,511) (2,832)
Net cash 18,231 14,858
Total net assets 96,939 98,164
Turnover by destination:
United Kingdom 22,211 24,210
Continental Europe 99,578 101,242
North America 30,225 38,287
Rest of World 10,623 8,151
162,637 171,890
Low & Bonar PLC
Notes on Preliminary Results for 2002
1. Exceptional non-operating items
2002 2001
#000 #000
Loss on sale of Spila, Italian Plastics business
Loss on disposal of business 529 -
Goodwill previously written off to reserves 1,154 -
Loss on disposal of business 1,683 -
2. Dividends
2002 2001
#000 #000
On non-equity shares:
First, second and third cumulative preference stock
Half year to 31 May 2002 (paid) 11 11
Half year to 30 November 2002 (since paid) 12 12
23 23
On equity shares:
Ordinary shares
Interim dividend of 2.50p (2001 - 2.50p) (paid) 2,487 2,487
Final dividend of 1.50p (2001 - 3.50p) (proposed) 1,492 3,482
4,002 5,992
3. Earnings per ordinary share
2002 2001
#000 #000
Profits/(losses) are calculated as follows:
Profit/(loss) after tax 2,093 (11,269)
Preference dividend (23) (23)
Profits/(losses) attributable to equity shareholders 2,070 (11,292)
Exceptional non-operating items 1,683 -
Taxation relief thereon - -
Exceptional operating costs 1,348 17,550
Taxation relief thereon (244) (150)
Earnings before exceptional items 4,857 6,108
Basic and fully diluted earnings/(loss) per share 2.08p (11.35p)
Earnings per share before operating and non-operating exceptional items 4.88p 6.14p
All calculations of earnings per share are based on the number of ordinary
shares in issue during the year of 99,474,690 (2001 - 99,474,690).
4. Net cash inflow from operating activities
2002 2001
#000 #000
Operating profit/(loss) 6,374 (7,549)
Depreciation - operating 7,738 8,819
Depreciation - exceptional - 5,027
Amortisation - operating - 369
Amortisation - exceptional - 6,391
Write back of government grants (68) (69)
Gain on disposal of fixed assets - (164)
Decrease in stocks 1,175 5,102
Decrease in debtors (2,692) 10,490
Decrease in creditors (1,395) (8,672)
11,132 19,744
5. Reconciliation and analysis of net cash
Short term Borrowings Borrowings
Cash net of Bank under Over Net
Overdrafts Deposits one year one year cash/(debt)
#000 #000 #000 #000 #000
At 30 November 2000 21,562 59,700 (6,511) (61,129) 13,622
Cash flow (7,430) (15,900) (31,108) 57,240 2,802
Exchange rate fluctuations 405 - (129) (1,842) (1,566)
At 30 November 2001 14,537 43,800 (37,748) (5,731) 14,858
Cash flow 1,663 (30,000) 29,719 1,967 3,349
Exchange rate fluctuations 131 - (1) (106) 24
At 30 November 2002 16,331 13,800 (8,030) (3,870) 18,231
6. This preliminary announcement has been prepared on the basis of the
accounting policies set out in the annual report for the year ended 30 November
2001, with the exception of the impact upon accounting for deferred tax as
disclosed at the foot of the Reconciliation of Movements in Consolidated
Shareholders' Funds.
7. The financial information set out in this preliminary announcement does
not constitute the company's statutory accounts for the year ended 30 November
2002 or 2001 but is derived from those accounts. Statutory accounts for 2001
have been delivered to the registrar of companies, whereas those for 2002 will
be delivered following the company's annual general meeting. The auditors have
reported on those accounts; their reports were unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
This information is provided by RNS
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