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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Low & Bonar Plc | LSE:LWB | London | Ordinary Share | GB0005363014 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 15.45 | 15.40 | 15.45 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMLWB
RNS Number : 6532K
Low & Bonar PLC
11 July 2017
Low & Bonar PLC
("Low & Bonar" or "the Group")
Half Year Results for the Six Months to 31 May 2017
SOLID FIRST HALF
Low & Bonar PLC ("Low & Bonar" or "the Group"), the international performance materials group, today announces its half year results for the six months to 31 May 2017.
Hot Features
Premium
12 months
Six months to 31 May to 30 Nov
Constant
Currency(1)
2017 2016 Actual () 2016
Continuing operations
Revenue GBP210.3m GBP180.6m 16.4% 4.6% GBP400.0m
Operating profit before
amortisation and non-recurring
items GBP15.5m GBP13.3m 16.5% 3.3% GBP34.7m
Operating margin before
amortisation and non-recurring
items(2) 7.4% 7.4% 8.7%
Profit before tax,
amortisation and non-recurring
items GBP13.1m GBP10.6m 23.6% 10.1% GBP29.2m
Profit before taxation GBP10.8m GBP8.3m 30.1% GBP25.9m
(statutory)
Basic EPS before amortisation
and non-recurring items 2.70p 2.16p 25.0% 11.1% 6.01p
Basic EPS (statutory) 2.14p 1.63p 31.3% 5.20p
Dividend per share 1.05p 1.00p 5.0% 3.00p
Return on capital employed(3) 10.4% 11.3% -90 bps 11.1%
Net debt GBP149.0m GBP139.5m GBP111.0m
(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates.
(2) Operating profit before amortisation and non-recurring items as a percentage of revenue.
(3) Operating profit before amortisation and non-recurring items as a percentage of net assets plus net debt.
-- Delivering effectively against strategic objectives despite challenging end markets
-- Benefits being delivered from focus on operational excellence, customer intimacy and product development
-- Good performance in B&I offsetting slower start in CTT and Civil Engineering -- Strengthened global footprint
-- Acquisition of Walflor Industries Inc in North America integrating well and performing as expected
-- Commenced build of second manufacturing line in Changzhou, China -- Net debt seasonally high, expected to reduce to normal levels of gearing by November
-- Post period end, agreed sale of agro-textile business, including the manufacturing site in Lokeren, Belgium for cash consideration of EUR7.0m (GBP6.1m)
Martin Flower, Chairman, said:
"The Group had a solid first half. Although we do not envisage a sustained pick-up in our markets, we do anticipate further benefits to be realised from our focus on operational excellence and product development. Overall we remain confident of meeting the Board's expectations for the full year."
11 July 2017
For further information, please contact:
Low & Bonar PLC +44 (0) 20 7535 3180 Brett Simpson, Group Chief Executive Simon Dray, Interim Chief Financial Officer Instinctif Partners +44 (0) 20 7457 2020 Matthew Smallwood Helen Tarbet Rosie Driscoll
Results Overview
We are pleased to report that the Group overall had a solid first half, and that we continue to make good strategic progress in exiting legacy businesses and plants and improving the quality of our core businesses. Sales of GBP210.3m were 16.4% ahead of 2016 (GBP180.6m) and 4.6% ahead at constant currency. Profit before tax, amortisation and non-recurring items from continuing operations for the six months ended 31 May 2017 increased by 23.6% to GBP13.1m (2016: GBP10.6m). On a constant currency basis, profit before tax, amortisation and non-recurring items was up 10.1% (2016: GBP11.9m).
Disposal
As announced separately today, we have successfully agreed the sale of our agro-textile business, including the manufacturing facility based in Lokeren, Belgium, for a cash consideration of GBP6.1m (EUR7.0m). The disposal is expected to complete before the end of September 2017, after a period of employee consultation. The agro-textile business comprises a part of the Building & Industrial global business unit and contributed GBP9.5m of sales and a GBP(0.1)m loss in the six months to May 2017 (2016: GBP7.5m sales, GBP(0.4)m loss). An estimated net loss of GBP10.0m will be recorded as a non-recurring item on completion of the disposal. This disposal continues the Group's strategy of active portfolio management to improve the quality of its businesses and to focus its resources on the areas of highest return. Estimated net cash proceeds, after costs, of GBP5.1m, will be used to reduce Group borrowings.
Operational review
Building & Industrial
Building & Industrial performed strongly; on a constant currency basis sales of GBP40.9m were 14.2% ahead of the prior period (2016: GBP35.8m) and operating profits before amortisation and non-recurring items were up 17.6% to GBP6.0m (2016: GBP5.1m), driven by robust demand across all its markets, particularly North America, and the strength of its sales and marketing approach to developing niche markets. Walfor Industries Inc, acquired in January 2017, is integrating well and performed in line with our expectations, contributing GBP0.4m to sales and GBP0.1m to profit in the period. The disposal of the agro-textile business, announced today, will improve the quality of business and margins within Building & Industrial over the medium term and focus management time and resources on the core business.
Civil Engineering
Civil Engineering made a slower than expected start to the year, with demand in its core European markets remaining subdued. While sales were up 5.0% at constant currency to GBP45.8m (2016: GBP43.6m) the business broke even in the period, compared to an operating profit of GBP1.0m (before amortisation and non-recurring items) in 2016, due to an adverse sales mix in the period. Transactional sales volumes grew well, however seasonal factors delayed the major project start dates this year, meaning that the majority of the higher margin specification business is expected to fall in the second half this year. The sharp increase in raw material input costs in Q1 2017 also meant margins were squeezed in the low-margin, high volume transactional business. Pricing has now been adjusted and margins are expected to improve in the second half of the year.
Coated Technical Textiles
On a constant currency basis, Coated Technical Textiles sales were flat at GBP66.5m (2016: GBP66.6m), although operating profits before amortisation and non-recurring items of GBP4.9m were 32.4% above the prior period (2016: GBP3.7m). The manufacturing problems which impacted profits in 2016 have been resolved and product availability has improved. As expected, despite a relatively supportive market, trailer market volumes were subdued as the business rebuilds its reputation for service delivery and product quality. This was partially offset by improved sales of building products, assisted by ongoing tensile architecture projects. We anticipate volumes will continue to recover over the second half of 2017.
Interiors & Transportation
Interiors & Transportation sales of GBP57.1m were 3.8% ahead of 2016 (GBP55.0m) at constant currency, however higher raw material input costs held operating profits before amortisation and non-recurring items at GBP7.9m, 3.7% below 2016 (GBP8.2m) on a constant currency basis. Interiors sales performed well, compensating for flat demand in transportation, and raw material cost pressure is expected to reduce over the second half. Sales in China continue to grow strongly, and, with export sales, the plant in Changzhou is running at capacity. Work has commenced on adding a second manufacturing line in the facility, which will complete in early 2018; total spend is expected to be around GBP22m of which GBP10m has been incurred at May 2017.
Discontinued operations
We reached agreement with the purchaser of the artificial grass yarns business, sold in 2016, on the level of deferred purchase consideration receivable; half of the EUR4.3m agreed amount was received in April 2017 with the balance due in September 2017. A non-recurring charge to discontinued operations of GBP0.9m has been made to reflect the difference between the final amount agreed and the debtor held at the end of 2016.
Good progress has been made on agreeing our exit from the Bonar Natpet JV. We wrote off our investment in 2015, and anticipate that the GBP1.1m provision held at May 2017 will be sufficient to cover any resultant costs of exit, and no further charge has been accrued in the period.
Amortisation and non-recurring items
The charge for amortisation of acquired intangible assets was GBP1.8m (2016: GBP1.9m) in the period. During the period, the Group incurred GBP0.5m of non-recurring costs from continuing operations; GBP0.2m of acquisition-related costs and GBP0.3m of costs associated with the disposal of the agro-textile business.
Interim dividend
To reflect the solid first half of the year and the Board's confidence in the Group's future, we are declaring an interim dividend of 1.05 pence per share, an increase of 5.0% on last year, payable on 22 September 2017 to shareholders registered on 25 August 2017.
Net debt and interest
Net debt, which is seasonally higher at the half year, increased to GBP149.0m (2016: GBP139.5m) from GBP111.0m (2016: GBP102.1m) at the start of the year. Foreign exchange rate differences account for GBP2m (2016: GBP4m) of the increase in the period. Cash outflow into working capital was GBP27.8m in the six months to May 2017 (2016: GBP26.0m). The seasonal stock build was higher than normal, with inventories brought forward from 2016 taking longer to unwind than expected, particularly within Civil Engineering in preparation for a more specification-weighted second half. Higher sales in May 2017 also increased trade debtors. As anticipated, a further GBP15.0m (2016: GBP14.3m) was spent on capital expenditure. This includes GBP7.5m (2016: GBPnil) of investment in the second production line at our facility in Changzhou, China and GBP2.2m (2016: GBP1.2m) of spend relating to the new Group ERP system. The first ERP roll-out went ahead at the end of Q2 2017 and to date the project has gone to plan. Gearing at 31 May 2017 was 2.5 times (2016: 2.7 times), we expect the net consideration receivable from the agro-textile business disposal, working capital efficiency measures and the normal seasonal pattern of sales to reduce this to normal levels by November 2017.
Return on capital
The Group's return on capital on a 12-month trailing basis was 10.4%, compared to 11.3% in the first half of last year, principally due to higher working capital and the assets under construction in China.
Outlook
This is expected to be a year of significant progress for the Group, with our focus on operational excellence and product development starting to bear fruit, and we are confident of achieving our objectives for the second half. Whilst we have seen little evidence of a sustained pick-up in demand in our markets, we are pleased that growth continues to come as a result of our disciplined approach to sales and marketing and offering clients innovative solutions.
Overall, we remain confident of meeting the Board's expectations for the full year.
Martin Flower Brett Simpson Chairman Group Chief Executive
Forward looking statements
This announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including, but not limited to, the terms "believes", "estimates", "anticipates", "expects", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts.
By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition and liquidity may differ materially from the impression created by the forward looking statements contained in this announcement. In addition, even if the results of operations, financial condition, and liquidity are consistent with the forward looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: changes in the competitive framework in which the Group operates and its ability to retain market share; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash to service its debt; the Group's ability to control its capital expenditure and other costs; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; and general local and global economic, political, business and market conditions. In light of these risks, uncertainties and assumptions, the events described in the forward looking statements in this announcement may not occur.
Other than in accordance with its legal or regulatory obligations, the Group does not undertake any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise.
LOW & BONAR PLC
Condensed Consolidated Income Statement
Six months ended Six months ended Year ended
31 May 2017 31 May 2016 30 November 2016
Unaudited Unaudited
Before Before Before
amortisation Amortisation amortisation Amortisation amortisation Amortisation
and and and and and and
non-recurring non-recurring non-recurring non-recurring non-recurring non-recurring
items items Total items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 210.3 - 210.3 180.6 - 180.6 400.0 - 400.0
-------------- -------------- ------ -------------- -------------- ------ -------------- -------------- ------
Operating
profit/(loss) 15.5 (2.3) 13.2 13.3 (2.3) 11.0 34.7 (3.3) 31.4
Financial
income - - - 0.1 - 0.1 0.2 - 0.2
Financial
expense (2.4) - (2.4) (2.8) - (2.8) (5.7) - (5.7)
-------------- -------------- ------ -------------- -------------- ------ -------------- -------------- ------
Net financing
costs (2.4) - (2.4) (2.7) - (2.7) (5.5) - (5.5)
Profit/(loss)
before taxation 13.1 (2.3) 10.8 10.6 (2.3) 8.3 29.2 (3.3) 25.9
Taxation (4.0) 0.5 (3.5) (3.2) 0.6 (2.6) (8.8) 0.6 (8.2)
-------------- -------------- ------ -------------- -------------- ------ -------------- -------------- ------
Profit/(loss)
after taxation 9.1 (1.8) 7.3 7.4 (1.7) 5.7 20.4 (2.7) 17.7
Profit/(loss)
for the period
from continuing
operations 9.1 (1.8) 7.3 7.4 (1.7) 5.7 20.4 (2.7) 17.7
Loss for the
period from
discontinued
operations - (0.9) (0.9) - (2.6) (2.6) 0.5 (3.7) (3.2)
Profit/(loss)
for the period 9.1 (2.7) 6.4 7.4 (4.3) 3.1 20.9 (6.4) 14.5
Attributable
to
Equity holders
of the Company 8.8 (2.7) 6.1 7.1 (4.3) 2.8 20.3 (6.4) 13.9
Non-controlling
interest 0.3 - 0.3 0.3 - 0.3 0.6 - 0.6
-------------- -------------- ------ -------------- -------------- ------ -------------- -------------- ------
9.1 (2.7) 6.4 7.4 (4.3) 3.1 20.9 (6.4) 14.5
============== ============== ====== ============== ============== ====== ============== ============== ======
Earnings
per share
Continuing
operations:
Basic 2.70p 2.14p 2.16p 1.63p 6.01p 5.20p
Diluted 2.66p 2.10p 2.14p 1.61p 5.95p 5.15p
Discontinued
operations:
Basic - (0.29p) - (0.79p) 0.14p (0.98p)
Diluted - (0.28p) - (0.78p) 0.14p (0.97p)
Total:
Basic 2.70p 1.85p 2.16p 0.84p 6.15p 4.22p
Diluted 2.66p 1.82p 2.14p 0.83p 6.09p 4.18p
LOW & BONAR PLC
Condensed Consolidated Balance Sheet
31 May 31 May 30 November
2017 2016 2016
Unaudited Unaudited
GBPm GBPm GBPm
Non-current assets
Goodwill 85.7 75.2 82.6
Intangible assets 25.2 21.1 22.2
Property, plant and equipment 156.1 134.1 150.3
Investment in joint venture - - -
Investment in associate 0.6 0.5 0.5
Deferred tax assets 6.0 4.6 5.6
Post-employment benefits - - -
----------- ----------- ------------
273.6 235.5 261.2
Current assets
Inventories 113.1 86.2 97.5
Trade and other receivables 87.3 67.9 79.1
Cash and cash equivalents 27.7 21.5 26.3
Assets classified as held - 31.3 -
for sale
----------- ----------- ------------
228.1 206.9 202.9
Current liabilities
Interest-bearing loans and
borrowings 0.2 34.4 0.1
Current tax liabilities 2.8 4.1 4.4
Trade and other payables 81.7 62.3 84.4
Provisions - 0.8 -
Derivative liabilities - 0.1 -
Liabilities directly associated
with assets classified as
held for sale 1.1 8.4 1.3
----------- ----------- ------------
85.8 110.1 90.2
Net current assets 142.3 96.8 112.7
----------- ----------- ------------
Total assets less current
liabilities 415.9 332.3 373.9
----------- ----------- ------------
Non-current liabilities
Interest-bearing loans and
borrowings 176.5 126.6 137.2
Deferred tax liabilities 19.0 17.5 19.1
Post-employment benefits 14.0 14.5 15.0
Other payables 0.6 0.2 0.2
----------- ----------- ------------
210.1 158.8 171.5
Net assets 205.8 173.5 202.4
=========== =========== ============
Equity attributable to equity holders
of the parent
Share capital 47.4 47.4 47.4
Share premium account 74.4 74.2 74.4
Translation reserve (24.5) (47.8) (26.0)
Retained earnings 101.8 93.6 100.2
----------- ----------- ------------
Total equity attributable
to
Equity holders of the parent 199.1 167.4 196.0
Non-controlling interest 6.7 6.1 6.4
----------- ----------- ------------
Total equity 205.8 173.5 202.4
=========== =========== ============
LOW & BONAR PLC
Condensed Consolidated Cash Flow Statement
Six months Six months Year
ended ended ended
31 May 2017 31 May 2016 30 November
Unaudited Unaudited 2016
GBPm GBPm GBPm
Profit for the period from continuing
operations 7.3 5.7 17.7
Loss for the period from discontinued
operations (0.9) (2.6) (3.2)
------------ ------------ ------------
Profit for the period 6.4 3.1 14.5
Adjustments for:
Depreciation 8.0 7.6 15.8
Amortisation 2.3 2.4 5.2
Income tax expense 3.5 2.6 8.2
Net financing costs 2.4 2.7 5.5
Share of results of joint venture - - 1.3
Loss on disposal of discontinued assets 0.9 2.6 1.3
Increase in working capital (27.8) (26.0) (15.0)
Non-cash pension charges 0.3 0.4 1.0
Decrease in provisions (0.2) (0.1) (0.1)
Loss/(gain) on disposal of property,
plant and equipment 0.2 - (0.1)
Equity-settled share-based payment 0.7 0.4 0.9
Other non-cash items (0.4) - -
Cash (outflow)/inflow from operations (3.7) (4.3) 38.5
Net financing costs paid (2.1) (2.9) (4.9)
Tax paid (6.0) (4.8) (10.8)
Pension cash contributions (0.2) (0.2) (4.6)
------------ ------------ ------------
Net cash (outflow)/inflow from operating
activities (12.0) (12.2) 18.2
Proceeds from the disposal of the grass
yarns business 1.5 - 21.7
Acquisition of property, plant and
equipment (12.8) (12.9) (18.9)
Dividends paid to non-controlling interests (0.6) (0.3) (0.3)
Intangible assets purchased (2.2) (1.4) (3.3)
Acquisition of Walflor Industries Inc. (2.9) - -
Net cash outflow from investing activities (17.0) (14.6) (0.8)
Drawdown of borrowings 36.8 19.1 17.8
Repayment of borrowings - - (37.9)
Movement in cash flow hedges - - 0.1
Proceeds of share issues - - 0.2
Equity dividends paid (6.6) (5.9) (9.2)
------------ ------------ ------------
Net cash inflow/(outflow) from financing
activities 30.2 13.2 (29.0)
Net cash inflow/(outflow) 1.2 (13.6) (11.6)
Cash and cash equivalents at start
of period 26.3 33.9 33.9
Foreign exchange differences 0.2 1.2 4.0
Cash and cash equivalents at end of
period 27.7 21.5 26.3
============ ============ ============
LOW & BONAR PLC
Condensed Consolidated Statement of Comprehensive Income
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2017 2016 2016
Unaudited Unaudited
GBPm GBPm GBPm
Profit for the period 6.4 3.1 14.5
Other comprehensive income/(expense)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations, net of hedging 2.1 13.2 36.7
Exchange differences recycled from
reserves - - (1.7)
Items that will not be reclassified
to profit or loss:
Actuarial gain/(loss) on defined
benefit pension scheme 1.3 (9.0) (11.8)
Deferred tax on defined benefit
pension schemes - - 0.3
Total other comprehensive income
for the period, net of tax 3.4 4.2 23.5
----------- ----------- ------------
Total comprehensive income for
the period 9.8 7.3 38.0
----------- ----------- ------------
Attributable to
Equity holders of the parent 9.0 7.0 37.4
Non-controlling interest 0.8 0.3 0.6
----------- ----------- ------------
9.8 7.3 38.0
=========== =========== ============
Condensed Consolidated Statement of Changes in Equity
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2017 2016 2016
Unaudited Unaudited
GBPm GBPm GBPm
Shareholders' equity at start of
period 196.0 165.9 165.9
Total comprehensive income for
the period 9.0 7.0 37.4
Dividends paid to Ordinary Shareholders (6.6) (5.9) (9.2)
Disposal of equity participation
in subsidiary - - 0.8
Shares issued - - 0.2
Share-based payment 0.7 0.4 0.9
Net increase in shareholders' funds 3.1 1.5 30.1
Shareholders' equity at end of
period 199.1 167.4 196.0
=========== =========== ============
LOW & BONAR PLC
Notes to the Interim Report 2017
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:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board Brett Simpson Group Chief Executive 11 July 2017
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
1. Segmental information for the six months ended 31 May 2017
The Group's principal activities are in the international manufacturing and supply of those performance materials commonly referred to as technical textiles. For the purposes of management reporting to the chief operating decision maker, the Group is split into four reportable business units: Building & Industrial, Civil Engineering, Coated Technical Textiles and Interiors & Transportation. Segment assets and liabilities include items directly attributable to segments as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly cash and cash equivalents, interest-bearing loans, borrowings, investments in joint ventures and associates, post-employment benefits and corporate assets and expenses. Inter-segment sales are not material.
Segment analysis
Revenue from external customers Six months Six months Year ended
ended ended 30 November
31 May 31 May 2016
2017 2016
GBPm GBPm GBPm
Building & Industrial 40.9 31.8 73.4
Civil Engineering 45.8 39.5 90.8
Coated Technical Textiles 66.5 60.1 129.8
Interiors & Transportation 57.1 49.2 106.0
Revenue for the period 210.3 180.6 400.0
=========== =========== =============
Profit for the Before amortisation and non-recurring After amortisation and non-recurring
period items items
Six months Six months Year ended Six months Six months Year ended
ended ended 30 November ended ended 30 November
31 May 31 May 2016 31 May 31 May 2016
2017 2016 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm
Building &
Industrial 6.0 4.5 10.9 5.3 4.3 10.8
Civil Engineering - 1.0 4.2 (0.1) 0.7 3.7
Coated Technical
Textiles 4.9 3.5 8.7 3.4 2.2 5.9
Interiors &
Transportation 7.9 7.3 17.1 7.9 7.0 17.6
Unallocated
Central (3.3) (3.0) (6.2) (3.3) (3.2) (6.6)
------------ ------------ -------------- ------------ ------------ -------------
Operating profit 15.5 13.3 34.7 13.2 11.0 31.4
============ ============ ==============
Financial income - 0.1 0.2
Financial expense (2.4) (2.8) (5.7)
------------ ------------ -------------
Net financing
costs (2.4) (2.7) (5.5)
Profit before
taxation 10.8 8.3 25.9
Taxation (3.5) (2.6) (8.2)
------------ ------------ -------------
Profit for the
period -
continuing
operations 7.3 5.7 17.7
Loss for the
period -
discontinued
operations (0.9) (2.6) (3.2)
------------ ------------ -------------
Profit for the
period 6.4 3.1 14.5
============ ============ =============
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
Segment assets,
liabilities,
other information Coated
Building Technical Interiors Unallocated
31 May 2017 & Industrial Civil Engineering Textiles & Transportation Central Total
GBPm GBPm GBPm GBPm GBPm GBPm
Reportable segment
assets 77.2 96.7 152.2 139.1 0.2 465.4
Investment in joint -
venture
Investment in
associate 0.6
Cash and cash
equivalents 27.7
Post-employment -
benefits
Assets classified as -
held
for sale
Other unallocated
assets 8.0
--------
Total Group assets 501.7
========
Reportable segment
liabilities (16.3) (19.6) (23.2) (21.4) - (80.5)
Loans and borrowings (176.7)
Derivative -
liabilities
Post-employment
benefits (14.0)
Liabilities directly
associated
with assets
classified as
held for sale (1.1)
Other unallocated
liabilities (23.6)
--------
Total Group
liabilities (295.9)
========
Other information
Additions to
property, plant
and equipment 1.3 1.3 1.0 9.2 - 12.8
Additions to
intangible assets
and goodwill 4.4 0.7 - 0.7 0.2 6.0
Depreciation 1.4 1.4 1.7 3.4 0.1 8.0
Amortisation of
acquired intangible
assets 0.2 0.1 1.5 - - 1.8
Non-recurring items 0.5 - - - - 0.5
============== ================== =========== ================== ============ ========
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
Segment assets,
liabilities,
other information Coated
Building Technical Interiors Unallocated
31 May 2016 & Industrial Civil Engineering Textiles & Transportation Central Total
GBPm GBPm GBPm GBPm GBPm GBPm
Reportable segment
assets 59.6 81.4 133.2 106.4 - 380.6
Investment in joint -
venture
Investment in
associate 0.5
Cash and cash
equivalents 21.5
Post-employment -
benefits
Assets classified as
held
for sale 31.3
Other unallocated
assets 8.5
--------
Total Group assets 442.4
========
Reportable segment
liabilities (13.5) (15.8) (16.1) (16.7) - (62.1)
Loans and borrowings (161.0)
Derivative
liabilities (0.1)
Post-employment
benefits (14.5)
Liabilities directly
associated
with assets
classified as
as held for sale (8.4)
Other unallocated
liabilities (22.8)
--------
Total Group
liabilities (268.9)
========
Other information
Additions to
property, plant
and equipment 0.7 3.5 0.7 5.5 - 10.4
Additions to
intangible assets
and goodwill 0.5 0.4 - 0.5 - 1.4
Depreciation 1.2 1.3 1.5 3.6 - 7.6
Amortisation of
acquired
intangible assets 0.2 0.3 1.3 0.1 - 1.9
Non-recurring items - - - 0.2 0.2 0.4
============== ================== =========== ================== ============ ========
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
Segment assets,
liabilities,
other
information Coated Interiors
Building Civil Technical & Unallocated
30 November 2016 & Industrial Engineering Textiles Transportation Central Total
GBPm GBPm GBPm GBPm GBPm GBPm
Reportable
segment assets 64.2 83.4 145.7 127.0 - 420.3
Investment in -
joint venture
Investment in
associate 0.5
Cash and cash
equivalents 26.3
Post-employment -
benefits
Other
unallocated
assets 17.0
---------
Total Group
assets 464.1
=========
Reportable
segment
liabilities (17.2) (17.7) (24.2) (25.4) - (84.5)
Loans and
borrowings (137.3)
Derivative -
liabilities
Post-employment
benefits (15.0)
Other
unallocated
liabilities (24.9)
---------
Total Group
liabilities (261.7)
=========
Other
information
Additions to
property, plant
and equipment 1.6 4.6 2.2 9.4 0.7 18.5
Additions to
intangible
assets
and goodwill 1.0 1.0 0.2 1.1 - 3.3
Depreciation 2.6 2.6 3.3 7.1 0.2 15.8
Amortisation of
acquired
intangible
assets 0.5 0.5 2.8 0.2 - 4.0
Non-recurring
items (0.4) - - (0.7) 0.4 (0.7)
=============== ================= ============ ================= ============= =========
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
Geographical analysis
External revenue by location Non-current assets by location
of customers of assets*
Six months Six Year ended
ended months 30 November 30 November
31 May ended 2016 31 May 31 May 2016
2017 31 May 2017 2016
2016
GBPm GBPm GBPm GBPm GBPm GBPm
Western Europe 116.2 101.2 219.2 183.2 163.1 176.7
Eastern Europe 18.8 16.0 36.0 17.8 15.7 17.4
North America 48.2 41.3 89.2 26.1 23.1 26.2
Middle East 3.9 3.5 12.4 0.1 0.1 0.1
Asia 17.3 13.5 32.5 40.4 28.9 35.2
Rest of World 5.9 5.1 10.7 - - -
210.3 180.6 400.0 267.6 230.9 255.6
=========== ======== ============= ========= ========= ==============
Revenues arising in the UK, which is the parent company's country of domicile, were GBP10.2m (six months ended 31 May 2016: GBP9.4m; year ended 30 November 2016: GBP15.6m). The net book value of non-current assets located in the UK at 31 May 2017 was GBP2.1m (31 May 2016: GBP3.0m; 30 November 2016: GBP2.1m). More than 10% of the Group's revenues arose in Germany. The net book value of non-current assets located in Germany at 31 May 2017 was GBP75.7m (31 May 2016: GBP70.4m; 30 November 2016: GBP76.1m) and revenues arising in Germany in the period ended 31 May 2017 were GBP34.5m (six months ended 31 May 2016: GBP32.1m; year ended 30 November 2016: GBP69.5m).
*Non-current assets exclude those relating to non-current assets held for sale and deferred tax assets.
Constant currency analyses
Constant currency analyses retranslate prior period results at the current period's rates of exchange. Management believe this allows a better understanding of underlying business performance.
Six months
ended 31
May 2016
Six months Six months (constant
ended 31 ended 31 currency)
May 2017 May 2016
(reported) (reported) Period Period
on period on period
change change
GBPm GBPm % GBPm %
Revenue
Building & Industrial 40.9 31.8 28.6% 35.8 14.2%
Civil Engineering 45.8 39.5 15.9% 43.6 5.0%
Coated Technical
Textiles 66.5 60.1 10.6% 66.6 (0.2)%
Interiors &
Transportation 57.1 49.2 16.1% 55.0 3.8%
Revenue for the period 210.3 180.6 16.4% 201.0 4.6%
============= ============= ============
PBTA
Building & Industrial 6.0 4.5 33.3% 5.1 17.6%
Civil Engineering - 1.0 (100.0)% 1.0 (100.0)%
Coated Technical
Textiles 4.9 3.5 40.0% 3.7 32.4%
Interiors &
Transportation 7.9 7.3 8.2% 8.2 (3.7)%
Unallocated Central (3.3) (3.0) 10.0% (3.0) 10.0%
------------- ------------- ------------
Operating profit
before non-recurring
items 15.5 13.3 16.5% 15.0 3.3%
Net financing costs (2.4) (2.7) (11.1)% (3.1) (22.6)%
PBTA before non-recurring
items and discontinued
operations 13.1 10.6 23.6% 11.9 10.1%
============= ============= ============
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
2. General information
Low & Bonar PLC is a company domiciled and incorporated in Scotland. The interim condensed consolidated financial statements (the "interim financial statements") of the Company as at and for the six months ended 31 May 2017 comprise the Company and its subsidiaries (together the "Group") and the Group's interests in its associates and joint ventures. The consolidated financial statements of the Group as at and for the year ended 30 November 2016 are available on request from the Company's head office or from the Group's website at www.lowandbonar.com.
3. Basis of preparation
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 in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board. 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 2016.
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 2016.
Other information
The comparative figures for the financial year ended 30 November 2016 are based on the Company's statutory accounts for that financial year and do not constitute the Group's statutory accounts for that period as defined in section 434 of the Companies Act 2006. 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 498(2) or (3) of the Companies Act 2006.
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 above, 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 were the same as those applied to the consolidated financial statements as at and for the year ended 30 November 2016.
Included within Net current assets is GBP(1.5)m due to Bonar Natpet LLC, a joint venture (31 May 2016: GBP(0.9)m; 30 November 2016: GBP(0.1)m). Other than these transactions, 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 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.
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
4. Taxation
Taxation on profit/(loss) before amortisation, non-recurring items and share of results of joint ventures has been provided at a rate of 30.0% for the six months ended 31 May 2017 which is the estimated rate of tax for the full year (six months ended 31 May 2016: 30.4%; year ended 30 November 2016: 30.4%).
5. Dividend
The Board has declared an interim Ordinary dividend of 1.05p per share, payable on 22 September 2017 to Ordinary Shareholders on the register of members at close of business on 25 August 2017. In accordance with IAS 10 "Events after the Balance Sheet Date", this dividend has not been reflected in the interim accounts. During the period a final dividend of 2.00p was paid to Ordinary Shareholders in respect of the financial year ended 30 November 2016.
6. Earnings per share
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 2017).
During the period 81,784 Ordinary Shares were issued (six months ended 31 May 2016: 1,468; year ended 30 November 2016: 314,549).
The Directors consider that the calculation of earnings per share before amortisation and non-recurring items gives a more meaningful indication of the Group's underlying performance. Reconciliations of the earning and weighted average number of shares used in the calculation are set out below:
30 November
31 May 31 May 2016
2017 2016
Total operations
Earnings - Statutory GBPm 6.1 2.8 13.9
Earnings - Before amortisation
and non-recurring items GBPm 8.8 7.1 20.3
Weighted average number of
shares (millions) 329.323 328.958 328.984
Effect of dilutive shares (millions) 5.672 2.586 3.330
Diluted weighted average number
of shares (millions) 334.995 331.544 332.314
Statutory
Basic earnings per share p 1.85 0.84 4.22
Diluted earnings per share p 1.82 0.83 4.18
Before amortisation and non-recurring
items
Basic earnings per share p 2.70 2.16 6.15
Diluted earnings per share p 2.66 2.14 6.09
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
7. Amortisation and non-recurring items
Six months Six months Year
ended ended ended
31 May 2017 31 May 2016 30 November
2016
GBPm GBPm GBPm
Amounts charged to operating profit
China factory start-up costs - 0.2 -
Profit from land sale - - (1.1)
Acquisition-related costs 0.2 - 0.1
Costs associated with the disposal 0.3 -
of the agro-textile business -
Pension administration costs - 0.1 0.1
Pension buy-in costs - 0.1 0.2
Total non-recurring items 0.5 0.4 (0.7)
Amortisation of acquired intangible
assets 1.8 1.9 4.0
------------ ------------ ------------
Total charge to operating profit 2.3 2.3 3.3
Tax credit in the period (0.5) (0.6) (0.6)
Total charge to discontinued operations 0.9 2.6 3.7
Total charge to profit before tax 2.7 4.3 6.4
Total charge to operating profit
Current period
In the period the Group incurred costs of GBP0.2m (six months ended 31 May 2016: GBPnil, year ended 30 November 2016: GBP0.1m) relating to the acquisition of Walflor Industries Inc. and GBP0.3m relating to the disposal of the agro-textile business (2016: GBPnil).
The Group incurred GBPnil (six months ended 31 May 2016: GBP0.1m; year ended 30 November 2016: GBP0.1m) of non-recurring pension administration costs relating to its UK defined benefit scheme. We expect further costs to be incurred in the six months to 30 November 2017.
Prior period
During the prior period initial costs relating to the Group's construction of a new manufacturing location in Changzhou, China, represented GBP0.2m.
Professional fees of GBPnil (six months ended 31 May 2016: GBP0.1m; year ended 30 November 2016: GBP0.2m) were incurred in respect of the medically-underwritten buy-in of GBP34m of UK pension scheme liabilities, which completed on 3 December 2015.
In the year ended 30 November 2016, the Group recorded a profit of GBP1.1m on the sale of unused land at our North American manufacturing site in Asheville.
Total charge to discontinued operations
Current period
The Group recorded a loss of GBP0.9m in discontinued operations relating to the settlement of the deferred purchase consideration with the purchaser of the artificial grass yarns business. The GBP0.9m reflects the difference between the final amount agreed and the debtor held at the end of 2016.
Prior period
In the six months ended 31 May 2016, the GBP2.6m loss reflected the anticipated loss from the sale of the artificial grass yarns business. In the year ended 30 November 2016, the GBP3.7m loss reflected the actual loss from the sale of the artificial grass yarns business.
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
8. Pensions and other post-employment 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 2017 is summarised below.
Six months Six months Year ended
ended 31 ended 31 30 November
Overseas May 2017 May 2016 2016
UK schemes schemes Total Total Total
GBPm GBPm GBPm GBPm GBPm
Net liability at start
of period (2.2) (12.8) (15.0) (4.7) (4.7)
Current service cost - - - (0.1) (0.4)
Interest (cost)/income - (0.1) (0.1) 0.1 (0.1)
Contributions from employers - 0.2 0.2 0.2 4.6
Administration costs (0.3) - (0.3) (0.3) (0.5)
Actuarial gain/(loss) 1.3 - 1.3 (9.0) (11.8)
Exchange adjustments - (0.1) (0.1) (0.7) (2.1)
Net liability at end of
period (1.2) (12.8) (14.0) (14.5) (15.0)
======== ========== =========== =========== =============
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
9. Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
31 May 2017 31 May 2016 30 November
2016
GBPm GBPm GBPm
Net increase/(decrease) in cash
and cash equivalents 1.2 (13.6) (11.6)
Net cash flow from movements in
debt financing (36.8) (19.1) 20.1
Amortisation of bank arrangement
fees (0.2) (0.3) (0.4)
Foreign exchange differences (2.2) (4.4) (17.0)
----------------- ----------------- ------------
Movement in net debt in period (38.0) (37.4) (8.9)
Net debt at start of period (111.0) (102.1) (102.1)
----------------- ----------------- ------------
Net debt at end of period (149.0) (139.5) (111.0)
================= ================= ============
Derivative liabilities - (0.1) -
----------------- ----------------- ------------
Total net debt and derivative liabilities (149.0) (139.6) (111.0)
================= ================= ============
31 May 2017 31 May 2016 30 November
2016
GBPm GBPm GBPm
Analysis of net debt
Cash at bank and in hand 27.7 21.5 26.3
2.57% EUR60m Senior Note due 2022-2026 (52.3) - (50.9)
5.9% EUR45m Senior Note due 2016 - (34.4) -
Bank loans and overdrafts falling
due after more than one year (124.7) (127.2) (86.9)
Prepaid arrangement fees 0.7 1.0 0.9
Preference shares (0.4) (0.4) (0.4)
------------ ------------ ------------
Net debt (149.0) (139.5) (111.0)
============ ============ ============
There are two principal covenants within both the private placement financing and the bank loans which relate to interest cover and financial gearing. These are tested bi-annually on a 12 month trailing basis using average exchange rates on both income statement items and net debt. The covenants are as follows:
Measure Covenant Consolidated net debt / EBITDA <3.00 EBITA / Net interest payable >3.00
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
10. Discontinued operations and disposal of the agro-textile business
Discontinued operations
During the prior year, the Board announced the disposal of the Group's artificial grass yarns business (previously comprising the majority of its Sport & Leisure global business unit). The disposal was completed on 1 September 2016. In the prior periods, the results were presented within discontinued operations on the face of the income statement and as a disposal group held for sale on the balance sheet. The GBP0.9m loss for the current period primarily represents the true-up of the final settlement of the deferred purchased consideration receivable outstanding at 30 November 2016.
In addition to this, the Board are pursuing the disposal of the Group's interest in the joint venture, Bonar Natpet LLC and negotiations are well under way with our partner, Natpet. In the period to 31 May 2017 we have not recognised our share of the loss from the joint venture as we anticipate that the GBP1.1m provision held at 31 May 2017 will be sufficient to cover any exit costs.
The results of the discontinued operations, which have been included in the condensed consolidated income statement, were as follows:
Six months Six months Year
Ended ended ended
31 May 31 May 30 November
2017 2016 2016
GBPm GBPm GBPm
Revenue - 14.0 22.3
Expenses - (14.3) (22.9)
Loss before tax - (0.3) (0.6)
Attributable tax expense - (0.1) -
Loss recognised on the measurement - (1.6)
to fair value less costs to sell -
Loss on disposal of grass yarns
business (0.9) - (2.2)
Tax on loss of disposal of grass
yarns business - - 0.9
------------- ------------- ------------
Net loss from the disposal of the
Grass yarns business (0.9) (2.0) (1.9)
Share of results from Bonar Natpet
LLC - (0.6) (1.3)
------------- ------------- ------------
Net loss attributable to discontinued
operations (attributable to owners
of the Company) (0.9) (2.6) (3.2)
============= ============= ============
During the six months ended 31 May 2017, the discontinued businesses contributed GBP(0.9)m (six months ended 31 May 2016: GBP(1.6m), year ended 30 November 2016: (GBP3.6m)) to the Group's net operating cash flows and paid GBPnil (six months ended 31 May 2016: GBPnil, year ended 30 November 2016: GBPnil) in respect of investing activities.
Disposal of the agro-textile business
In 2017, the Board commenced a plan to sell the Group's Lokeren-based agro-textile business which is part of its Building & Industrial global business unit and operating segment. At 31 May 2017, the status of the disposal did not meet the definition of a disposal group held for sale however, since the balance sheet date, the disposal has progressed and as announced on the 11(th) July 2017, agreement was reached to dispose of the trade and assets of the agro-textile business. The disposal is expected to complete no later than 30 September 2017, subject to the fulfilment of a number of conditions, including the satisfactory completion of an information and consultation process with the employees affected by the disposal, which commenced on the 11(th) July 2017. The loss on disposal is expected to be GBP10.0m including GBP1.0m of transaction costs.
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
11. Business combinations
On 17 January 2017, Low & Bonar acquired 100% of the share capital of Walflor Industries Inc., a company registered in Washington State, USA, on a debt-free, cash basis for a total consideration of $3.6m and a contingent consideration of up to $0.9m in cash based on the commercial performance of the business in the 12 months following acquisition. The contingent consideration has been fair-valued upon acquisition at $0.6m. The company produce rain screens and acoustic mats and the acquisition significantly strengthens our customer relationships in the US building products market and provides a West Coast platform for further growth.
Costs of GBP0.2m relating to the acquisition have been charged to non-recurring items. Results of the acquired business are included with the results of the Building & Industrial global business unit.
The acquired business contributed GBP0.4m to the Group's consolidated revenue for the period and increased the Group's consolidated profit before interest, tax, amortisation and non-recurring items for the period by GBP0.1m. Had the business been owned by the Group for the entire period, the contribution to the Group's consolidated revenue and consolidated profit before interest, tax, amortisation and non-recurring items would have been GBP0.6m and GBP0.1m respectively.
Details of the purchase consideration, the provisional fair values of net assets acquired and provisional goodwill arising on the acquisition of Walflor Industries Inc. are as follows:
Book value Fair Value Provisional
at acquisition adjustments fair value
GBPm GBPm GBPm
Intangible assets
Customer related - 2.5 2.5
Technology related - 0.1 0.1
Non-compete agreement related - 0.2 0.2
Property, plant and equipment 0.2 0.3 0.5
Inventories 0.1 - 0.1
Deferred tax liabilities (0.1) (1.0) (1.1)
---------------- ------------- ------------
Net assets acquired 0.2 2.1 2.3
Cash consideration 2.9
Contingent consideration 0.5
------------
Fair value of consideration 3.4
Goodwill arising on acquisition 1.1
------------
Goodwill of GBP1.1m arising from the acquisition is attributable to revenue synergies expected to be generated from new cross-selling opportunities across the enlarged US building products market. It also includes expected benefits from the existing workforce and expertise as a result of being part of the enlarged Buildings & Industrial global business unit.
The fair values ascribed to the assets and liabilities are provisional. Should new information be obtained within one year of the acquisition date about facts and circumstances that existed at the acquisition date which would necessitate adjustments to the above amounts or the recognition of additional liabilities that existed at the acquisition date, then the acquisition accounting will be revised.
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
12. Goodwill
The Group tests goodwill values annually for impairment or more frequently if there are indications that goodwill might be impaired. At 31 May 2017, there are no indications of potential impairment in any of the cash generating units ("CGUs") apart from Civil Engineering, who have made a slower start to the year than expected, with divisional margins impacted by a sharp increase in raw material input costs in the first quarter of the period and seasonal factors delaying the majority of the higher margin specification sales into the second half of the year.
As in the annual impairment review process, the recoverable amount of the Civil Engineering CGU has been determined using value in use calculations based on projected cash flows, discounted to calculate the net present value. The methodology applied in preparing the impairment review is in line with that disclosed in the 2016 Annual Report with the exception that cash flow projections for the Civil Engineering CGU are based on management's updated five-year projections for the CGU.
Sensitivity
Whilst management believe that the assumptions used in the impairment testing are realistic, it is reasonably possible that variations in key assumptions, particularly a material under-performance in their forecast short-term cash flows over the next 5 years could lead to an impairment in the Civil Engineering CGU. Accordingly a sensitivity analysis has been performed by varying key assumptions whilst holding other variables constant.
A summary of the Civil Engineering CGU's sensitivity to changes in the key assumptions, setting out the required changes in cash flow, growth rate and discount rate beyond which an impairment would be triggered, is shown below:
Goodwill
Cash flow Long-term growth rates Discount rate 2017
----------- --------
Sensitivity Current Sensitivity Current Sensitivity
(decrease) assumption (rate) assumption (rate) GBPm
------------------ ----------- ----------- ----------- ---------- ----------- --------
Civil Engineering 14.6% 2% 0.3% 9.1% 10.2% 19.0
------------------ ----------- ----------- ----------- ---------- ----------- --------
LOW & BONAR PLC
Notes to the Interim Report 2017 - continued
13. Fair value of financial instruments
Estimation of fair value
The major methods and assumptions used in estimating the fair values of financial instruments are summarised as follows:
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.
Trade and other receivables/payables
The fair value of trade and other receivables and trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.
Interest-bearing financial assets and liabilities
The fair value of interest-bearing assets and liabilities that bear interest at floating rates approximates to their carrying value. The fair value of the fixed interest financial liabilities is determined by discounting future contracted cash flows, using appropriate yield curves, to their net present value.
Forward exchange contracts
The fair value of forward foreign exchange contracts is based on their publicly available market price. If this is not available, forward contracts are marked to market based on the current spot rate.
All financial instruments have been measured using a Level 2 valuation method.
14. Risks and uncertainties
The Board has considered the principal risks and uncertainties affecting the Group in the second half of the year. The Group has in place processes for identifying, evaluating and managing key risks. The principal risks and uncertainties, together with the approach to their mitigation, are discussed in the Business Review on pages 30 to 33 of the 2016 Annual Report, which is available on the Group's website at www.lowandbonar.com, remain relevant and there are no significant changes. In summary, the Group's principal risks and uncertainties are:
* Global activity * Raw material pricing
* Treasury
* Organic growth/competition
* Cyber security * Pension funding
* Growth strategy * Funding
* Business continuity * Laws and regulations
* Employee * Health and safety
The Directors have reviewed the Group's medium-term forecasts along with possible changes in trading performance arising from these uncertainties to determine whether the Group's committed banking facilities are sufficient to support its projected liquidity requirements and whether the forecast earnings are sufficient to meet the covenants associated with its facilities. The Directors believe that the Group's current committed borrowing facilities, which comprise a EUR165m revolving loan facility maturing in July 2019, a EUR60m private placement note with an average maturity of 8 years from September 2016, and RMB150m of revolving and term loan facilities expiring in June 2020 are sufficient to support the current requirements of the Group, and that the Group will continue to operate within the associated covenants.
After making enquiries, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future, and have continued to adopt the going concern basis in preparing the interim financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR URRWRBWABAAR
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