RNS Number:3759N
Low & Bonar PLC
10 July 2003





10 July 2003




Press Release/Stock Exchange Announcement




                 LOW  &  BONAR  PLC  2003  INTERIM  RESULTS





Low & Bonar PLC today reported its results for the half year ended 31 May 2003.


                                                                2003             2002           %

Turnover                                                      #89.4m         #79.1m            + 13

Operating profit (pre exceptional)                           #  5.2m         #  3.9m           + 33

Profit before tax                                            #  4.3m         #  3.8m           + 13

Earnings per share (pre exceptional)                           3.28p             2.44p         + 34



Dividend per share                                             1.50p             2.50p




*  Pre exceptional eps growing by 34% from 2.44p to 3.28p

*  Floors:

   - Operating profit growth from existing business of #0.5m despite lower
     sales in demanding markets

   - Acquired carpet tile business trading in line with expectation, and
     achievement of synergies from acquisition on track

*  Yarns & Fabrics:

   - Continued growth in artificial grass yarns business

   - Operating profit at Belgian business held despite steep rise in
     polypropylene prices in 2nd quarter

*  Plastics:

   - Operating profit increased by #0.8m

   - Revenue growth of 6%, originating in North America and Northern 
     Europe

   - Turnaround of French business proceeding in line with expectations

*  Ungeared balance sheet with #0.9m net cash reflecting strong cash
   performance

*  Dividend per share of 1.5p in line with the new dividend policy
   announced at the year end


                                     - 2 -







Commenting on the results, Low & Bonar's recently appointed Chief Executive,
Paul Forman, said:



"The market conditions in which we operate remain demanding.  Nonetheless we
have achieved underlying revenue growth in four of our five business areas.
This, allied to cost restructuring activities, has produced Low & Bonar's first
like-for-like profit growth in a considerable period.  I am pleased to report
that the programme to bring French Plastics to a breakeven level is progressing
as planned and that the acquisition of the carpet tile business is meeting the
expectations set out in the circular in January.  Operating profit is improving
despite our having to contend with particularly high raw material costs in the
second quarter and an increased pension charge.  A tight focus on cash
management has also enabled us to finish the half year with no borrowings,
despite the carpet tile business acquisition.  It remains difficult to predict
the market conditions but I remain cautiously confident that we can continue
this improved performance in the second half."



                                    - Ends -







Enquiries:



Duncan Clegg, Chairman
Paul Forman, Chief Executive
Jon Kempster, Finance Director
Low & Bonar PLC                         Tel: 020 7298 6820



Tim Spratt
Michelle Morton
Financial Dynamics                         Tel: 020 7831 3113





Photographs for the media are available at Visual Media Online
www.vismedia.co.uk 020 7436 9595


CHAIRMAN'S INTERIM STATEMENT



As we stated at the time of the Annual General Meeting, our markets remained
extremely demanding and raw material prices had increased substantially in the
second quarter.



Despite this backdrop our businesses achieved a good performance with pre
exceptional operating profit improving to #5.2m from #3.9m including a three
month contribution from the acquired carpet tile business.  To provide
additional information, the segmental analysis below has been expanded to
isolate the central costs which includes the past service cost element of the UK
pension scheme.



Exceptional costs of #0.3m were incurred in our Floors operation because of a
reduction in headcount in the first half.   In addition, integration costs of
#0.3m have been incurred, as predicted, as a consequence of the Gaskell Carpet
Tile Division acquisition.   Profit before tax was #4.3m (2002: #3.8m) after an
interest expense of #0.3m (2002: #0.2m).  Earnings per share were 2.87p (2002:
2.44p) with a tax rate of 34% (2002: 35%).  On a pre exceptional basis, earnings
per share were 3.28p (2002: 2.44p).



Despite the acquisition of the carpet tile business a positive Group net cash
position has been maintained, albeit at a much reduced level of #0.9m (2002:
#9.4m).   This has been possible due to a strong performance in managing working
capital and will continue to be a prime focus for the Group.



The directors have declared an interim ordinary dividend of 1.5p per share in
line with the new dividend policy announced in February 2003 (2002: 2.5p) which
will be paid on 2 October 2003 to ordinary shareholders on the register on 5
September 2003.







CHIEF EXECUTIVE'S REVIEW OF OPERATIONS



Flooring



Excluding the acquisition of the carpet tile business, operating profit grew to
#4.0m for the half year (2002:  #3.5m) despite a decline in sales to #25.8m
(2002: #27.7m).  The revenue shortfall was caused by the decrease in sales of a
third party product in the US, subdued demand in the German and Benelux markets
and a SARS-driven slowdown in Hong Kong and Southern China.



Action was taken by the new Managing Director, Mark Sefton, to reduce many cost
elements.  This drove operating margins up significantly from 12.7% in the first
half of 2002 to 15.5% in the first half of 2003.  The focus now is to build on
this progress through a much more determined and structured approach to organic
growth.  Our capabilities in this area are being further strengthened by
selective recruitment.



The newly acquired carpet tile business has been satisfactorily integrated into
Bonar Floors.  Both its own level of trading and the post merger integration
work have met expectations fully and we are beginning to see selected examples
of large customers purchasing our full range of products as a "one-stop-shop"
offering.




Yarns & Fabrics



Yarns & Fabrics continued its improvement in sales despite demanding markets in
much of Europe, particularly Germany and Benelux.  Sales of #23.4m compared to
#20.2m last year.  Sales in our Dundee yarns business benefited from the
continued growth in artificial sports surfaces and the carpet backing yarns
business held up relatively well.   The Belgian business had a more mixed
experience with non-woven fabrics and groundcovers progressing but a number of
other sectors experiencing very tough market conditions, especially in Spain and
Benelux.



Nonetheless the volume growth achieved across Yarns & Fabrics, together with
selective cost improvements, meant that we were able to grow profitability above
the 2002 half year levels despite a sharp upward movement in polypropylene
prices in the second quarter. In aggregate operating profit grew to #1.1m (2002:
#1.0m) for the first half year.  Our expectation for the second half is of lower
material prices and hence scope for higher margins.



Plastics



Plastics moved further into profit driven by good sales growth across the
division and much improved cost control in our French operation.  Sales were
#33.0m (2002: #31.2m) with an operating profit of #0.9m (2002: #0.2m).  A number
of new product introductions have helped us grow in virtually every site and our
North American business saw some indications of limited market recovery towards
the end of the first half.



Cost reduction measures, allied to better operational control, ensured the
French operation moved ahead and tighter financial controls were instigated
across all the Plastics businesses.  Our Danish business had a disappointing
first half and we have targeted the improvements necessary to ensure a better
performance going forward.  Progress across Plastics is being consolidated by
strengthening the management teams in both Europe and North America.



Outlook



It remains difficult to predict the market conditions for the balance of the
year.  Broadly our markets mirror the overall pattern of national GDP with the
US and the UK proving most resilient and Germany least so.  I am pleased,
however, that a number of management actions, as contained in the January
strategic review, aimed at growing our market shares and improving our cost base
are starting to improve operating margins.  I anticipate this improvement being
sustained through the second half and also expect some benefit from lower raw
material prices.  Consequently, I remain cautiously confident that we can
continue this improved  performance in the second half.







LOW & BONAR PLC


Unaudited Consolidated Profit and Loss Account for the half year ended 31 May
2003



                                                                     Six months      Six months            Year
                                                                          ended           ended           ended
                                                                        31/5/03         31/5/02        30/11/02
                                                                           #000            #000            #000

Turnover

   Existing                                                              82,168          79,081         162,637

   Acquisitions                                                           7,201               -               -

                                                                         89,369          79,081         162,637



Operating profit before amortisation and exceptional
costs



   Existing                                                               4,229           3,933           7,722

   Acquisitions                                                           1,087               -               -



Amortisation

   Acquisitions                                                           (138)               -               -



Exceptional operating costs (note 5)

   Existing

      - restructuring costs                                               (308)               -         (1,348)

   Acquisitions

      - integration costs                                                 (274)               -               -





Operating profit

   Existing                                                               3,921           3,933           6,374

   Acquisitions                                                             675               -               -

                                                                          4,596           3,933           6,374



Exceptional non-operating costs (note 5)

   Loss on disposal of business                                               -               -         (1,683)



Net interest payable                                                      (254)           (175)           (215)



Profit on ordinary activities before taxation                             4,342           3,758           4,476



Taxation                                                                (1,475)         (1,315)         (2,383)



Profit on ordinary activities after taxation                              2,867           2,443           2,093



Dividends:

   Preference                                                              (11)            (11)            (23)

   Ordinary                                                             (1,492)         (2,487)         (3,979)



Transferred to/(from)reserves                                             1,364            (55)         (1,909)



Ordinary dividend per share                                               1.50p           2.50p           4.00p



Earnings per share before exceptional items                               3.28p           2.44p           4.88p



Basic and diluted earnings per share                                      2.87p           2.44p           2.08p




LOW & BONAR PLC

Summary Unaudited Group Balance Sheet at 31 May 2003


                                                                        31/5/03         31/5/02        30/11/02
                                                                           #000            #000            #000



Fixed assets

Tangible assets                                                          62,923          60,072          57,455

Goodwill                                                                 10,071               -               -



                                                                         72,994          60,072          57,455

Working capital

Stocks                                                                   34,898          26,377          24,087

Debtors                                                                  51,864          45,403          42,436

Creditors                                                              (47,112)        (35,856)        (35,992)



                                                                         39,650          35,924          30,531





Net cash                                                                    883           9,410          18,231





Tax, dividends and other liabilities                                    (9,929)         (7,939)         (9,278)





                                                                        103,598          97,467          96,939





Capital and reserves

Share capital                                                            50,137          50,137          50,137

Reserves                                                                 53,461          47,330          46,802



                                                                        103,598          97,467          96,939









LOW & BONAR PLC

Summary Unaudited Consolidated Cash Flow Statement for the half year ended 31
May 2003



                                                                     Six months      Six months            Year
                                                                          ended           ended           ended
                                                                        31/5/03         31/5/02        30/11/02
                                                                           #000            #000            #000



Net cash inflow/(outflow) from operating activities (note 6)              4,223           (344)          11,132



Net interest paid                                                         (219)           (473)           (524)

Non-equity dividends paid                                                  (11)            (11)            (23)



Returns on investment and servicing of finance                            (230)           (484)           (547)



Tax (paid)/recovered                                                      (921)            (50)           1,193



Purchase of tangible fixed assets                                       (2,068)         (2,953)         (5,632)

Sale of tangible fixed assets                                               443           2,841           2,840

Receipt of government grants                                                140               -               -



Capital expenditure                                                     (1,485)           (112)         (2,792)



Acquisitions and disposals (note 7)                                    (18,318)               -             333



Equity dividends paid                                                   (1,492)         (3,482)         (5,970)



Net cash (outflow)/inflow before management of

liquid resources and financing                                         (18,223)         (4,472)           3,349



Management of liquid resources                                            4,000          22,900          30,000



Financing                                                               (7,426)        (24,223)        (31,686)



(Decrease)/increase in cash                                            (21,649)         (5,795)           1,663





Reconciliation of net cash



Opening net cash                                                         18,231          14,858          14,858

Exchange                                                                    875           (976)              24

Net cash flow                                                          (18,223)         (4,472)           3,349

Closing net cash                                                            883           9,410          18,231











LOW & BONAR PLC

Consolidated Statement of Total Recognised Gains and Losses

for the half year ended 31 May 2003

                                                               Six months         Six months              Year
                                                                    ended              ended             ended
                                                                  31/5/03            31/5/02          30/11/02
                                                                     #000               #000              #000

Profit for the period                                               2,867              2,443             2,093

Currency translation differences on overseas

net investments and related borrowings                              5,295              (642)             (470)



Total recognised gains and losses for the                           8,162              1,801             1,623

financial period



Prior year adjustment for implementation of

FRS 19 'Deferred Tax'                                                   -            (3,833)           (3,595)



Total recognised gains and losses since

last annual report                                                  8,162            (2,032)           (1,972)










LOW & BONAR PLC

Reconciliation of Movements in Consolidated Shareholders' Funds

for the half year ended 31 May 2003

                                                              Six months        Six months              Year
                                                                   Ended             ended             ended
                                                                 31/5/03           31/5/02          30/11/02
                                                                    #000              #000              #000

Profit for the period                                              2,867             2,443             2,093

Dividends                                                        (1,503)           (2,498)           (4,002)

Result for period                                                  1,364              (55)           (1,909)

Other recognised gains and losses
relating to the period                                             5,295             (642)             (470)
Goodwill transferred to profit and loss account
on disposal of business                                                -                 -             1,154

Net increase/(decrease) in shareholders' funds                     6,659             (697)           (1,225)

Shareholders' funds at start                                      96,939            98,164            98,164

Shareholders' funds at end                                       103,598            97,467            96,939




LOW & BONAR PLC

Segmental information for the half year ended 31 May 2003


                                            Turnover                               Profit




                                     Six mths     Six mths        Year        Six mths    Six mths        Year
                                        ended        ended       Ended           ended       ended       ended
                                      31/5/03      31/5/02    30/11/02         31/5/03     31/5/02    30/11/02
                                         #000         #000        #000            #000        #000        #000





CLASSES OF BUSINESS

Floors
- Existing businesses                  25,820       27,713      56,072           4,006       3,523       7,553
- Acquisitions                          7,201            -           -             949           -           -
Yarns & Fabrics                        23,393       20,194      44,342           1,093         978       2,630

Total Specialist Materials             56,414       47,907     100,414           6,048       4,501      10,183

North European Plastics                11,580       10,073      21,721             419         678         836
South European Plastics                 9,904       10,390      18,728           (138)       (910)     (1,948)
North American Plastics                11,471       10,711      21,774             645         395         489

Total Plastics                         32,955       31,174      62,223             926         163       (623)

                                       89,369       79,081     162,637           6,974       4,664       9,560

Central costs                                                                  (1,796)       (731)     (1,838)
Exceptional operating costs                                                      (582)                 (1,348)
                                                                                                 -
Operating profit                                                                 4,596       3,933       6,374
Exceptional non-operating costs                                                      -           -     (1,683)
Net interest payable                                                             (254)       (175)       (215)

Profit on ordinary activities before taxation                                    4,342       3,758       4,476






GEOGRAPHICAL SEGMENTS

United Kingdom                         25,703       17,306      37,125           4,439       3,320       7,328
Continental Europe                     52,195       49,939     102,092           1,890       1,434       2,267
North America                          11,471       11,836      23,420             645        (90)        (35)

                                       89,369       79,081     162,637           6,974       4,664       9,560

Central costs                                                                  (1,796)       (731)     (1,838)
Exceptional operating costs                                                      (582)                 (1,348)
                                                                                                 -
Operating profit                                                                 4,596       3,933       6,374
Exceptional non-operating costs                                                      -           -     (1,683)
Net interest payable                                                             (254)       (175)       (215)

Profit on ordinary activities before taxation                                    4,342       3,758       4,476




LOW & BONAR PLC

Notes on Interim Report 2003



1.       This interim report has been prepared on the basis of the accounting
policies set out in the annual report for the year ended 30 November 2002, with
the addition of the accounting policy for purchased Goodwill which is set out in
note 7.



2.       This interim report was approved by the board of directors on 10 July
2003.



3. Taxation on the operating profit after interest before exceptional items has
been provided at a rate of 34% for the six months ended 31 May 2003 (2002 - 35%)
which is the estimated rate of tax for the full year.





4. Earnings per share are based on the weighted average of ordinary shares in
issue during the half year of 99,474,690 (2002 - 99,474,690).  There is no
dilutive effect of unexercised share options.



5.                Exceptional items
                                                                     Six months      Six months            Year
                                                                          ended           ended           ended
                                                                        31/5/03         31/5/02        30/11/02
                                                                           #000            #000            #000

         Operating

         Floors European restructuring                                    (308)               -               -

         Carpet tiles integration costs                                   (274)               -               -

         Senior group management changes                                      -               -           (812)

         Floors US closure costs                                              -               -           (536)



                                                                          (582)               -         (1,348)

         Non-operating

         Loss on disposal of business                                         -               -         (1,683)






6.       Net cash inflow/(outflow) from operating activities
                                                                     Six months      Six months            Year
                                                                          Ended           ended           ended
                                                                        31/5/03         31/5/02        30/11/02
                                                                           #000            #000            #000



            Operating profit                                              4,596           3,933           6,374

            Depreciation and amortisation                                 4,053           3,986           7,738

            Write back of government grants                                (42)            (30)            (68)

            Increase in working capital                                 (4,384)         (8,233)         (2,912)



                                                                          4,223           (344)          11,132










7.                The Group acquired the trade and assets of the carpet tile
division of Gaskell plc on 21 February 2003.  The Directors consider that the
fair values are not materially different from book values at the date of
acquisition.


                                                                                                  Book Value

                                                                                                & Fair Value

                                                                                                        #000



            Fixed assets                                                                               4,476

            Stock                                                                                      6,056

            Debtors                                                                                    3,877

            Creditors                                                                                (5,329)

            Net assets acquired                                                                        9,080



            Purchase consideration, including costs                                                   19,289



            Goodwill arising on acquisition                                                           10,209



             Analysis of Purchase consideration including costs:
            Cash paid during period                                                                   18,318

            Included within creditors at 31 May 2003                                                     971

                                                                                                      19,289




            Purchased Goodwill is capitalised on the balance sheet and amortised
through the profit and loss account over its estimated useful life.  The
Directors consider that the estimated useful life of the Goodwill arising on the
acquisition of the carpet tiles business is 20 years.



8                The comparative figures for the financial year ended 30
November 2002 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 unqualified and
did not contain a statement under section 237(2) or (3) of the Companies Act
1985.






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