4 Feb 2014 07:00
Low & Bonar PLC
("Low & Bonar" or "the Group")
Final Results for the year ended 30 November 2013
MOMENTUM REGAINED, CONFIDENT OF FURTHER PROGRESS
Low & Bonar PLC ("Low & Bonar" or "the Group"), the international performance materials group, today announces its final results for the year ended 30 November 2013.
Highlights
Continuing operations
2013 | 2012 | Actual | Constant currency(1) | |
Revenue | £403.1m | £380.5m | +5.9% | +2.8% |
Operating margin (2) | 8.0% | 8.0% | - | |
PBTA (2) | £26.1m | £ 24.5m | +6.5% | +2.7% |
Profit before taxation (statutory) (3) | £17.8m | £6.1m | ||
Adjusted earnings per share (2) | 6.2p | 6.3p | -0.8% |
|
Dividend per share | 2.6p | 2.4p | +8.3% | |
Return on capital (4) | 16.8% | 17.2% | -40bps |
· Strong second half performance resulted in another year of sales and profit growth
· Further investments made to enhance the Group's strategic positioning and growth prospects
· Dividend increase of 8% reflecting the Board's confidence in the coming year
(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates
(2) Profit before tax, amortisation and non-recurring items
(3) After amortisation and non-recurring items
(4) Last 12 months operating profit as a percentage of operating capital employed
Martin Flower, Chairman, said:
"These are good results during a period of continued macroeconomic challenge in Europe and poor weather in the first half of the year, providing further evidence of the quality and resilience of our business and its growth prospects.
The Group has continued to make investments to drive future growth: extending its product range in attractive segments with the acquisition of Texiplast, and increasing its geographic reach. These investments are already contributing to the current year and further underpin the Board's confidence in a continuation of cash generative, profitable growth."
4 February 2014
For further information, please contact:
Low & Bonar PLC | 020 7535 3180 |
Steve Good, Group Chief Executive | |
Mike Holt, Group Finance Director | |
Instinctif Partners | 020 7457 2020 |
Matthew Smallwood Helen Tarbet |
CHAIRMAN's STATEMENT
I am pleased to report that the Group had a strong second half and delivered another year of profit growth.
Profit before tax, amortisation and non-recurring items on a constant currency basis increased by 2.7% on revenues up 2.8% on last year. The second half of the year saw like-for-like revenues increase by 5.1% and pre-tax profits by 16.6% against a background of continuing macroeconomic weakness in Europe which accounts for about two thirds of Group sales. Including Texiplast, reported sales increased by 6.3% and pre-tax profits by 19.1% in the second half. Demand for our products remains robust and reflects the diversity and strength of our niche market positions and products.
Profit before tax, amortisation and non-recurring items rose 6.5% to £26.1m (2012: £24.5m). Earnings per share were broadly unchanged at 6.2 pence (2012: 6.3 pence) taking into account the 10% share placing in September. Statutory profit before tax from continuing operations was £17.8m (2012: £6.1m) after non-recurring charges of £2.7m (2012: £12.6m) and an amortisation charge of £5.6m (2012: £5.8m). Non-recurring charges in 2013 principally relate to costs associated with acquiring Texiplast and starting-up our geotextile joint venture, Bonar Natpet, in Saudi Arabia.
Investing to drive future growth
During the year, the Group has made further investments totalling £21.2m to support management initiatives for future growth.
To drive growth within the Group's civil engineering sector, we acquired Texiplast, a manufacturer of soil reinforcement, separation, filtration and erosion control products for a net cash payment of €18.9m (£15.9m) on 6 September. The acquisition of Texiplast, which is performing well, enables Bonar to become a more integrated provider of solutions for civil engineering projects, provides sales leverage for the extended product range and improves access to Texiplast's principal Central and Eastern European markets. We continue to seek other investment opportunities, including those outside of Europe.
The Group invested £11.3m (2012: £13.2m) in property, plant and equipment during the year to support volume growth in key markets. In addition, the Group's joint venture in Saudi Arabia, Bonar Natpet, began manufacturing from its new factory. The joint venture, which will supply geotextiles to the fast growing Middle East civil engineering market, will gradually build sales during 2014. We are also planning to make further capital investments in Asia in the coming year.
We have continued to invest in organisational capability, particularly within sales and marketing in Bonar, both in North America and Asia. We have also strengthened the leadership team in Technical Coated Fabrics to support its strategy of driving growth through expansion in attractive niche markets and operational efficiency. Both of these investments are now delivering benefits.
Share placing
The Group successfully completed a placing of ordinary shares representing 10% of its share capital on 11 September raising £20m. The proceeds funded the acquisition of Texiplast and will provide the Group with the flexibility and headroom to continue to pursue its growth ambitions.
Yarns
Although conditions remain tough within the artificial grass yarns market, we are pleased that actions taken to reduce costs and improve performance have produced a small, but encouraging, profit this year. Further actions are being taken to improve performance within the Yarns business.
Increased Dividend
To reflect the Board's continuing confidence in the Group's future, we are proposing a final dividend payment of 1.75 pence per share (2012: 1.6 pence). Subject to shareholders' approval at the Annual General Meeting in March, the dividend will be paid on 17 April 2014 to members registered as of 21 March 2014. The proposed full year dividend of 2.6 pence per share (2012: 2.4 pence per share) is covered 2.4 times (2012: 2.6 times) by earnings before amortisation and non-recurring items.
People
Our key asset is our people. Our current and future success rests entirely with them. I believe that Low & Bonar has a highly skilled and motivated team, which is ambitious to achieve further success. I would like to take this opportunity to thank them for their hard work during a challenging year.
As separately announced today, Steve Good has informed the Board of his intention to retire from full time executive roles. A search for a new Chief Executive has begun. Steve will remain in his current role until the second half of the year before handing over to his successor.
Outlook
The Group has continued to make investments to drive future growth: extending its product range in attractive segments with the acquisition of Texiplast, and increasing its geographic reach. These investments are already contributing to the current year and further underpin the Board's confidence in a continuation of cash generative, profitable growth.
Martin Flower
4 February 2014
Business Review
Low & Bonar PLC is an international performance materials group using proprietary technologies to engineer polymers for a wide range of applications in niche industrial markets.
Sales and profit momentum resumed in second half
2013 £m | 2012 £m | Actual | Constant currency(1)
| |
Revenues from external customers | ||||
Bonar | 245.6 | 238.7 | +2.9% | -0.3% |
Technical Coated Fabrics | 124.7 | 115.3 | +8.2% | +4.9% |
Yarns | 32.8 | 26.5 | +23.8% | +21.4% |
403.1 | 380.5 | +5.9% | +2.8% | |
Group operating margin (2) |
8.0% |
8.0% |
(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates
(2) Before amortisation and non-recurring items
It is pleasing to report strong sales and profit growth in both Technical Coated Fabrics and Yarns, where management actions are now beginning to deliver real improvement in these businesses including market share gains. Bonar faced difficult market conditions in Europe particularly during the first half of the year and a constrained recovery in the second half within Civil Engineering.
After a difficult first half, due to abnormal weather conditions across Europe which saw sales decline by 4.2% within Europe and 1.1% overall, sales for the second half were 5.1% ahead of last year on a like-for-like constant currency basis and 6.3% ahead including an in-line fourth quarter contribution of £2.5m from our recently acquired geosynthetic business in Slovakia, Texiplast. This resulted in like-for-like constant currency sales growth of 2.1% for the year as a whole, 2.8% up on last year with the inclusion of Texiplast.
Group operating margins for the year were unchanged at 8.0%, but comfortably ahead during the second half of the year at 9.9% (H2 2012: 9.1%). Margins in the second half were buoyed by a small profit within Yarns and generally better volumes throughout the Group, particularly in North America and Europe, offsetting further investment in organisational capability.
Investing and building for the future
The Group has continued to make investments to accelerate growth, increase capability and create a stronger business. As with last year, there have been three areas of focus: bolt-on acquisitions to expand either the Group's product range or its geographic reach; capital expenditure; and investing in people and organisational change.
On 6 September 2013, we announced the acquisition of Texiplast for €18.9m (£15.9m). Texiplast manufactures high strength geosynthetic products for demanding applications in the Civil Engineering market such as soil reinforcement, separation, filtration and erosion control. The acquisition extends our technology base and product range within civil engineering and enables a stronger solution sell within this important market for the Group. It also provides sales synergies for both Texiplast's products and Bonar's existing products and strengthens our position in the growing Central and East European market. Texiplast is performing in line with our expectations and is being integrated within the Bonar division.
We have made further capital investments to increase capacity and capability for target growth markets within Bonar and to improve operational efficiency within Technical Coated Fabrics. Full year expenditure was £11.3m of which £5.3m was on expansion. In addition, our Saudi Arabian joint venture with NATPET, Bonar Natpet, has begun manufacturing products for the Civil Engineering market in the Middle East and will provide a strong platform to access this fast growing market over the next two years.
The merger and reorganisation of Colbond and Fabrics, the two major businesses within the former Performance Technical Textiles division, to create Bonar has been completed, increasing its scope and scale to grow more globally. The enlarged business is organised regionally with global business roles directing overall strategy for our key civil engineering, flooring and building & industrial markets. In January 2013, the merged business was re-branded 'Bonar'. Bonar has a clear opportunity to leverage its successful European business and expertise in other regions and this organisational change is designed to accelerate this development and put it on a clear path to globalisation. In July 2013, the second phase was completed with regional management teams established for EMEA, North America and Asia accountable for the execution of the key market strategies. A new sales and logistics organisation was set up during the year in Shanghai, China to augment our focus in Asia, particularly in the fast growing Flooring market.
The Group therefore enters the new year in a much stronger position strategically, both in terms of market positioning and organisational capability and with capacity to deliver a year of significant progress. The successful share placing in September also provides the financial headroom and flexibility to continue to pursue growth opportunities.
Bonar
Our Bonar division supplies products such as geosynthetics, carpet tile backing, agrotextiles and construction fibres to the civil engineering, flooring, transport, industrial and construction sectors.
2013
| 2012
| Actual | Constant currency(1) | |
Revenue | £245.6m | £238.7m | +2.9% | -0.3% |
Operating profit (2) | £23.0m | £25.0m | -8.0% | -11.5% |
Operating margin (2) | 9.4% | 10.5% |
(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates
(2) Before amortisation and non-recurring items
Reported sales were 2.9% above last year. Sales on a constant currency basis, including a £2.5m contribution from Texiplast, were flat. First half sales were 5.3% lower than last year on a like-for-like basis, due to the abnormal weather conditions across Europe affecting civil engineering and building products markets which were both nearly 10% down and account for about 50% of divisional sales. Second half sales on a like-for-like basis were 2.2% ahead of last year as Civil Engineering (+2.6%) and Building Products (+8.9%) sales recovered, albeit the recovery within Civil Engineering was constrained by inventory shortages and extended lead-times. A maiden contribution from Texiplast advanced civil engineering sales by a further 5.2% in the second half, in line with our expectations. The acquisition provides a strong platform for future growth. Building product sales were strong in the USA with increased demand within the residential property market offsetting softness in the European commercial market.
Underlying sales to the Flooring market were steady throughout the year. North American and Asian volumes continue to grow; however demand has been lacklustre in Europe. Automotive sales were disappointing, down 5.6% on last year, as a key customer switched sourcing on one of its platforms part-way through the year. Industrial markets were mixed. Good progress continued in new filtration applications; however, this was offset by a more subdued agricultural screens market.
The integration of the Colbond and Fabrics commercial activities was completed during the year creating a new 'go-to-market' organisation. The focus is now on accelerating growth, particularly outside of Europe. The division continues to seek investment opportunities in the USA and has recently set-up a new sales team and warehousing in Shanghai, China to support and drive growth in Asia, with a particular focus on China, Taiwan, Malaysia and Australia.
Our joint venture geotextile plant in Saudi Arabia began manufacturing shortly before year-end. Utilisation is expected to gradually build up during the upcoming year and the joint venture is expected to make a small but positive profit contribution. Importantly, the ramp up will free up much needed capacity within Europe to support growth in civil engineering. Capital expenditure totalled £7.5m within Bonar, which included £2.5m on extending capacity and £2.9m relating to health and safety projects. Accident rates have reduced significantly this year and, whilst there remains some way to go to achieve all of our objectives, this year's progress has been excellent.
Bonar remains well positioned to grow in its European markets and continues to invest to accelerate its exposure to markets outside Europe, where significant growth opportunities exist for its products and technologies.
Technical Coated Fabrics
Our Technical Coated Fabrics division, Mehler Texnologies (MTX), supplies products such as side curtains for lorry trailers, advertising banners, tensioned structures, awnings, marquees and tarpaulins to the print, architectural and transport markets.
2013
| 2012
| Actual | Constant currency(1) | |
Revenue | £124.7m | £115.3m | +8.2% | +4.9% |
Operating profit (2) | £12.1m | £10.7m | +13.1% | +13.2% |
Operating margin (2) | 9.7% | 9.3% |
(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates
(2) Before amortisation and non-recurring items
Sales on a constant currency basis grew by 4.9%. Sales were better than last year in all major sectors and margins improved by 40bps to 9.7% with constant currency operating profits growing by 13.2%. The rate of sales growth was particularly strong in the second half of the year (+6.1%). Improved margins reflect increased volumes, but more importantly management's focus on margins within the trailer and niche industrial markets.
In the Transport sector, sales to the trailer side curtain market advanced 7.1% due to share gains and increased activity in the new truck market. Sales in the Industrial sector were also strong, up 6.7% on last year with growth in container applications and increased demand in higher-end print applications, whilst competition from low-cost Asian competitors continued to take uncontested share gains in low-end applications. In the Leisure sector, sales to boat and pool applications were also lower as these markets continue to suffer from reduced discretionary spending; Southern Europe was, as expected, particularly weak. The division has continued to build its capability to directly service regions outside of Europe with new investments having been made to accelerate progress in India, Brazil and the USA. Capital expenditure totalled £4.6m and included £2.0m on improving manufacturing capability.
Further progress has been made in improving operating efficiencies, a key focus of the leadership team. Despite significant improvements in the management of health and safety risks, accident rates increased. Health and safety related capital expenditure was £0.9m.
The division has attractive growth opportunities in Architectural, Industrial and other niches and this, combined with a commitment to operational excellence, will drive further improvements in the growth and quality of earnings.
Yarns
Our Yarns division supplies yarns used in the manufacture of artificial grass in sports and landscaping applications as well as yarns used as a backing material in the manufacture of woven carpets.
2013
| 2012
| Actual | Constant currency(1) | |
Revenue | £32.8m | £26.5m | +23.8% | +21.4% |
Operating profit/(loss) (2) | £0.5m | £(1.8)m | ||
Operating margin (2) | 1.5% | (6.8)% |
(1) Constant currency is calculated by retranslating comparative period results at current period exchange rates
(2) Before amortisation and non-recurring items
The business, which represents 8% of Group sales, made significant progress this year. Sales volumes increased by 24% partly through slightly easier, although still tough, market conditions but mainly through share gains. Sales to the USA and the Middle East were particularly strong. Actions taken last year to reduce costs across the business added to operational leverage to deliver a small operating profit of £0.5m. We are continuing to work on additional measures to improve performance and the Group is confident that the business will make further progress in 2014.
FINANCIAL REVIEW
Pre-tax profit
Profit before tax, amortisation and non-recurring items from continuing operations increased by 6.5% to £26.1m (2012: £24.5m), an increase of 2.7% on a constant currency (underlying) basis. Operating profits were 5.6% higher than last year at £32.2m (2012: £30.5m) including a contribution of £0.4m from Texiplast, acquired on 6 September 2013. On an underlying basis, operating profits were 1.9% ahead. Statutory profit before tax was £17.8m (2012: £6.1m) after a net non-recurring charge of £2.7m (2012: £12.6m) and a £5.6m charge for amortisation (2012: £5.8m).
Non-recurring items
The Group incurred £0.9m of costs in connection with its acquisition of Texiplast and £0.1m in relation to potential acquisitions. In 2012, costs of £0.7m were incurred in relation to acquisitions, mainly in respect of the acquisition of Xeroflor. A further £1.2m (2012: £0.2m) of non-recurring costs arose in relation to the start-up of the Group's joint venture, Bonar Natpet, which was commissioned during the second half of the year. This included £0.6m (2012: £nil) of the Group's share of costs borne by the joint venture.
Other non-recurring costs related to the set-up of a new legal entity, sales office and warehousing facility in China (£0.3m) and the integration of the Group's principal Performance Technical Textile operations into a single global business, Bonar, which began last year (£0.2m (2012: £0.5m)).
The carrying value of assets within each Cash Generating Unit has been reviewed and no impairment or write-back has been booked. Last year, an impairment charge of £11.2m was booked against the assets within the Yarns business.
Taxation
The overall tax charge on the profit before tax was £5.0m (2012: £4.7m). The tax charge on profit from continuing operations before amortisation and non-recurring items was £6.8m (2012: £6.4m), a rate of 26.0% (2012: 26.0%). The full effective tax rate during 2013 was 27.9% (2012: 77.5%), substantially lower than last year due to the non-deductible asset impairment arising in 2012. Prior year adjustments increased the tax rate by 1.2% (2012: reduced by 2.3%) and relate primarily to changing estimates in respect of earlier years. The tax rate on profit from continuing operations before amortisation and non-recurring items for 2014 is expected to be marginally higher than 2013 due principally to recent legislative changes in the Netherlands.
Acquisitions
On 6 September 2013, the Group acquired the trade and assets of Texiplast for a net cash consideration of €18.9m (£15.9m). The fair value of assets totalled £10.2m including marketing and customer relationship intangible assets of £0.7m. Goodwill arising on the acquisition was £5.7m. Texiplast's business has been integrated into our Bonar segment, and contributed £2.5m and £0.4m to the Group's sales and operating profit before amortisation and non-recurring items for the year respectively.
The acquisition was funded by a 10% placing of ordinary shares, which raised £19.8m net of costs. The placing also provides flexibility and headroom for the Group to pursue its growth ambitions.
Cash
Overall net debt increased to £86.8m from £82.6m at November 2012. Cash inflow from operations was £39.6m (2012: £40.3m) excluding a shareholder loan of £9.1m to the Group's 50/50 Saudi Arabian joint venture, Bonar Natpet. Since year-end, £6.0m has been repaid and the balance of the loan is expected to be repaid in the coming year.
Trade working capital as a percentage of sales increased from 22% last year to 23%, contributing to a cash outflow into working capital of £4.8m (2012: £4.3m) excluding the joint venture loan.
During the year, the Group spent £15.9m (2012: £8.6m) on acquisitions and joint ventures, £11.3m (2012: £13.2m) on property, plant and equipment and £2.1m (2012: £1.0m) on intangible assets. Excluding replacement and health & safety capital expenditure, the amount invested in equipment to support future growth was £5.3m (2012: £9.5m).
The analysis of the Group's net debt is as follows:
2013 | 2012 | |
£m | £m | |
Cash and cash equivalents | 17.9 | 26.9 |
Total bank debt | (104.7) | (109.5) |
Net bank debt | (86.8) | (82.6) |
The gearing ratio of total net debt to EBITDA was unchanged at 1.9 times.
Pensions
The charges for pensions are calculated in accordance with the requirement of IAS 19 Employee Benefits. During the year, the Group's UK defined benefit scheme continued to adopt a lower risk investment strategy in which the interest rate and inflation risks were more closely hedged and the exposure to equities was held at 27% of the scheme's assets (2012: 25%). The UK scheme deficit has reduced to £3.8 m (2012: £15.1m), principally due to the outperformance of the scheme's assets against their expected return. The deficit in the Group's overseas schemes in Belgium, Germany and the USA reduced to £8.9 m (2012: £9.7m).
Return on capital
The Group's return on operating capital employed at the year end was 16.8% (2012: 17.2%).
Earnings per share
Earnings per share before amortisation and non-recurring items were marginally lower than last year at 6.2 pence per share (2012: 6.3 pence) due to a higher number of shares following the share placing in September. The weighted average number of shares was 301.0 million (2012: 288.4 million).
Dividends
Taking into account performance during the second half of the year and our confidence in the future prospects of the Group, the Board is recommending a final dividend of 1.75 pence per share (2012: 1.6 pence), increasing the full year dividend to 2.6 pence per share (2012: 2.4 pence). Subject to shareholders' approval at the Annual General Meeting in March, the dividend will be paid on 17 April 2014 to members registered as of 21 March 2014. The proposed full year dividend is covered 2.4 times by earnings before amortisation and non-recurring items.
Risks and Uncertainties
Global economic activity risks | Mitigating strategy |
The Group may be adversely affected by global economic conditions, particularly in its principal markets in mainland Europe and North America. The volatility of international markets could result in reduced levels of demand for the Group's products, a greater risk of customers defaulting on payment terms, supply chain risk and a higher risk of inventory obsolescence. | Local operating management monitor their own markets and are empowered to respond quickly to changing conditions. Production costs may be quickly flexed to balance production with demand, including the use of short-time working arrangements where available. Further actions, such as reducing the Group's cost base and cancelling or delaying capital investment plans, are available to allow continued profitability and cash generation in the face of a sustained reduction in volumes.
The Group also has a broad base of customers. Group policies ensure customers are given an appropriate level of credit based on their trading history and financial status, and a prudent approach is adopted towards credit control. Credit insurance is used where available.
Procurement management mitigates supply chain risk by identifying and qualifying alternative sources of key raw materials. |
Growth strategy risks | Mitigating strategy |
The Board believes that growth, both organic and through acquisitions, is a fundamental part of its strategy for the Group. The Board reviews such growth opportunities on an ongoing basis and its acquisition strategy is based on appropriate acquisition targets being available and on acquired companies being integrated rapidly and successfully into the Group. | The current focus of the Group is on profitable, cash-generative organic growth supplemented by acquisitions where appropriate.
The senior management team is experienced and has successfully executed and integrated several acquisitions and joint ventures in the past. Acquisitions are made subject to clearly defined criteria in existing or adjacent segments whose products and technologies are well understood, and only after extensive pre-acquisition due diligence. Acquisition proposals are supported by a detailed post-acquisition integration plan that is rigorously managed through to completion. |
Organic growth/competition risks | Mitigating strategy |
The markets in which the Group operates are competitive with respect to price, geographic distinction, functionality, brand recognition and the effectiveness of sales and marketing. | The Group has chosen to operate in attractive niche markets within the technical textile industry, using proprietary technology to manufacture products which are important determinants of the performance and/or efficiency of our customers' final product or process.
Significant resources are dedicated to developing and maintaining strong relationships with our customers, and to developing new and innovative products which meet their precise needs.
The Board believes that these factors maintain the Group's strong competitive position. |
Cyber security risks | Mitigating strategy |
Disruption to or penetration of our information technology platforms could have a material adverse effect on the Group. | The Group has business continuity measures in place to minimise the impact of any disruption to its operations. The Group's information technology resources are continuously monitored and maintained by appropriately trained staff and safeguards are in place to provide security of our networks and data.
|
Business continuity risks | Mitigating strategy |
The occurrence of major operational problems could have a material adverse effect on the Group. These may include risks of fire or major environmental damage. | The Group has business continuity/disaster recovery plans in place to minimise the impact of any disruption to its operations and has process controls and proactive maintenance programmes designed to avoid problems arising. These are supportedby regular site visits from risk management and internal audit staff, and training programmes provided by the Health, Safety and Environment Committee.
Where appropriate, risks are partially transferred through insurance programmes.
|
Raw material pricing risks | Mitigating strategy |
The Group's profitability can be affected by the purchase price of its key raw materials and its ability to reflect any changes through its selling prices. The Group's main raw materials are polypropylene, polyester, nylon, polyethylene and PVC. The prices of these raw materials are volatile, and they are influenced ultimately by oil prices and the balance of supply and demand for each polymer. | The Group has a good level of expertise in polymer purchasing and uses a number of suppliers to ensure a balance between competitive pricing and continuity of supply.
The Group's focus on operating efficiencies and the strength of its product propositions has in the past allowed the effect of raw material cost increases to be successfully mitigated.
|
Employee risks | Mitigating strategy |
The Group is reliant on its ability to attract, develop and retain key employees. | Employee retention and development is a key feature in ensuring the continued success of the Group. Employees are recruited and regularly appraised against a formal job specification. Formal policies cover all material aspects of employment and we are committed to high standards of health and safety at work, effective communication with employees and employee development. We empower our people to take initiative, to think and act for themselves. |
Funding risks | Mitigating strategy |
The Group, like many other companies, is dependent on its ability to both service its existing debts, and to access sufficient funding to refinance its liabilities when they fall due and to provide sufficient capital to finance its growth strategy. | The Group manages its capital to safeguard its ability to continue as a going concern, to optimise its capital structure and to provide sufficient liquidity to support its operations and the Board's strategic plans. The Group's borrowing requirements are regularly reforecast to ensure funding is in place to support its operations and growth plans. Compliance with the covenants associated with these facilities is closely monitored. |
Treasury risks | Mitigating strategy |
Foreign exchange is the most significant treasury risk for the Group.
The reported value of profits earned by the Group's overseas entities is sensitive to the strength of Sterling, particularly against the Euro and, to a lesser extent, the US Dollar. The Group is exposed to a lesser extent to other treasury risks such as interest rate risk and counterparty credit risk. | Group policy aims to naturally hedge transactional foreign exchange risks by buying and selling in the same currency. Policy in relation to residual risk ensures treasury activities are focused on the management of risk with high quality counterparties; no speculative transactions are undertaken. The Group uses financial instruments to manage the exposures that may arise from its business operations as a result of movements in financial markets. |
Pension funding risks | Mitigating strategy |
The Group may be required to increase its contributions into its defined benefit pension schemes to cover funding shortfalls. The funding may be affected by poor investment performance of pension fund investments, changes in the discount rate applied and longer life expectancy of members. | The main Group scheme is closed to new members and to future benefit accrual; and assumptions, including funding rates, are set in line with the actuaries' recommendations. Regular dialogue takes place with pension fund trustees and the Board regularly discusses pension fund strategy. |
Laws and regulations risks | Mitigating strategy |
The Group's operations are subject to a wide range of laws and regulations, including employment, environmental and health and safety legislation, along with product liability and contractual risks. | The Group's policy manuals ensure all applicable legal and regulatory requirements are met or exceeded in all territories in which it operates, and ongoing programmes and systems monitor compliance and provide training for relevant employees.
Product liability risks are managed through stringent quality control procedures covering review of goods on receipt and prior to despatch and all manufacturing processes. Insurance cover, appropriate for the nature of the Group's business and its size, is maintained. The Group also seeks to minimise risks through its terms and conditions of trading. |
Responsibility statement of the Directors on the Annual Report and Accounts
The responsibility statement below has been prepared in connection with the Company's full Annual Report and Accounts for the year ended 30 November 2013. Certain parts thereof are not included within this Preliminary Announcement.
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with IFRS, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the company and the undertakings included in the consolidation taken as a whole; and
· the Strategic Report includes a fair review of the development and performance of the business and the position of the company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. |
Directors
The Directors of the Company are:
Martin Flower, Chairman
Steve Good, Chief Executive Officer
Mike Holt, Group Finance Director
Steve Hannam, Non-Executive Director
Trudy Schoolenberg, Non-Executive Director
John Sheldrick, Non-Executive Director
Related party transactions
There are no related party transactions requiring disclosure.
Steve Good Mike Holt
4 February 2014 4 February 2014
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.
Consolidated Income Statement
for the year ended 30 November
| 2013
|
| 2012
| ||||
Before amortisation and non- recurring items | Amortisation and non-recurring items (note 6) |
Total | Before amortisation and non- recurring items | Amortisation and non-recurring items (note 6) |
Total | ||
Note |
£m |
£m |
£m |
£m |
£m |
£m | |
Continuing operations Revenue |
2 |
403.1 |
- |
403.1 |
380.5 |
- |
380.5 |
Operating profit / (loss) |
2 |
32.2 |
(7.7) |
24.5 |
30.5 |
(18.4) |
12.1 |
Financial income | 6.7 | - | 6.7 | 7.0 | - | 7.0 | |
Financial expense | (12.8) | - | (12.8) | (13.0) | - | (13.0) | |
Net financing costs
| 3 | (6.1) | - | (6.1) | (6.0) | - | (6.0) |
Share of results of joint venture | 6 | - | (0.6) | (0.6) | - | - | - |
Profit/(loss) before taxation | 26.1 | (8.3) | 17.8 |
24.5 |
(18.4) |
6.1 | |
Taxation | 4 | (6.8) | 1.8 | (5.0) | (6.4) | 1.7 | (4.7) |
Profit/(loss) after taxation | 19.3 | (6.5) | 12.8 | 18.1 | (16.7) | 1.4 | |
Profit/(loss) for the year | 19.3 | (6.5) | 12.8 | 18.1 | (16.7) | 1.4 | |
Attributable to | |||||||
Equity holders of the Company | 18.8 | (6.5) | 12.3 | 18.1 | (16.7) | 1.4 | |
Non-controlling interest | 8 | 0.5 | - | 0.5 | - | - | - |
19.3 | (6.5) | 12.8 | 18.1 | (16.7) | 1.4 | ||
Earnings per share |
7 | ||||||
Continuing operations and Total: | |||||||
Basic | 6.23p | 4.08p | 6.28p | 0.47p | |||
Diluted | 6.09p | 3.98p | 6.08p | 0.46p |
Consolidated Statement of Other Comprehensive Income
for the year ended 30 November
Note | 2013 £m | 2012 £m | |
Profit for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss: | 12.8
| 1.4
| |
Actuarial gain / (loss) on defined benefit pension schemes | 9.3 | (13.9) | |
Deferred tax on defined benefit pension schemes
| (0.3) | 0.7 | |
Items that may be reclassified subsequently to profit or loss: | |||
Exchange differences on translation of foreign operations, net of hedging | 0.1 | (8.3) | |
Other comprehensive income for the year, net of tax | 9.1 | (21.5) | |
Total comprehensive income for the year | 21.9 | (20.1) | |
Attributable to Equity holders of the parent |
21.5 |
(20.2) | |
Non-controlling interest | 8 | 0.4 | 0.1 |
21.9 | (20.1) |
Consolidated Balance Sheet
as at 30 November
Note | 2013 £m | 2012 £m | ||
Non-current assets | ||||
Goodwill | 81.2 | 74.2 | ||
Intangible assets | 34.0 | 36.7 | ||
Property, plant and equipment | 114.2 | 108.8 | ||
Investment in joint venture | 4.7 | 5.3 | ||
Investment in associate | 0.4 | 0.4 | ||
Deferred tax assets | 3.1 | 3.3 | ||
237.6 | 228.7 | |||
Current assets | ||||
Inventories | 86.8 | 75.1 | ||
Trade and other receivables | 81.7 | 69.3 | ||
Cash and cash equivalents | 17.9 | 26.9 | ||
Current liabilities | 186.4 | 171.3 | ||
Interest-bearing loans and borrowings | - | - | ||
Current tax liabilities | 5.4 | 6.2 | ||
Trade and other payables | 82.9 | 76.2 | ||
Provisions | - | 0.1 | ||
Derivative liabilities | 0.1 | - | ||
88.4 | 82.5 | |||
Net current assets | 98.0 | 88.8 | ||
Total assets less current liabilities | 335.6 | 317.5 | ||
Non-current liabilities | ||||
Interest-bearing loans and borrowings | 104.7 | 109.5 | ||
Deferred tax liabilities | 23.2 | 23.5 | ||
Post-employment benefits | 12.7 | 24.8 | ||
Other payables | 1.9 | 1.8 | ||
142.5 | 159.6 | |||
Net assets | 193.1 | 157.9 | ||
Equity attributable to equity holders | ||||
of the parent | ||||
Share capital | 47.2 | 45.5 | ||
Share premium account | 73.9 | 55.5 | ||
Translation reserve | (36.9) | (37.0) | ||
Retained earnings | 102.5 | 87.9 | ||
Total equity attributable to
| ||||
Equity holders of the parent | 186.7 | 151.9 | ||
Non-controlling interest 8 | 6.4 | 6.0 | ||
Total equity | 193.1 | 157.9 | ||
Consolidated Cash Flow Statement
for the year ended 30 November
2013 £m | 2012 £m | |
Profit for the year and from continuing operations | 12.8 | 1.4 |
Adjustments for:
| ||
Depreciation | 12.8 | 12.1 |
Impairment of non-current assets | - | 11.2 |
Amortisation | 6.3 | 6.4 |
Income tax expense | 5.0 | 4.7 |
Net financing costs | 6.1 | 6.0 |
Share of results of joint venture | 0.6 | - |
Partial EU fine refund | - | 2.2 |
Increase in inventories | (7.3) | (2.8) |
Decrease / (Increase) in trade and other receivables | 0.5 | (1.6) |
Short-term loan to joint venture | (9.1) | - |
Increase in trade and other payables | 2.0 | 0.1 |
Decrease in provisions | (0.1) | (0.4) |
Loss / (gain) on disposal of non-current assets | 0.3 | (0.2) |
Equity-settled share-based payment | 0.6 | 1.2 |
Cash inflow from operations | 30.5 | 40.3 |
Interest received | - | 0.1 |
Interest paid | (4.8) | (4.9) |
Tax paid | (6.8) | (3.9) |
Pension cash contributions in excess of operating charge | (3.7) | (3.9) |
Net cash inflow from operating activities | 15.2 | 27.7 |
Acquisition of subsidiaries | (15.9) | (5.0) |
Acquisition of property, plant and equipment | (11.3) | (13.2) |
Equity investment in joint ventures | - | (5.3) |
Prepaid participation in joint ventures | - | 1.7 |
Proceeds from disposal of non-current assets | - | 0.4 |
Intangible assets purchased | (2.1) | (1.0) |
Net cash outflow from investing activities | (29.3) | (22.4) |
Proceeds of share issues from the share placing | 19.8 | - |
Proceeds of other share issues to employees | 0.1 | 0.2 |
Drawdown of borrowings | - | 9.1 |
Repayment of borrowings | (8.5) | (1.7) |
Equity dividends paid | (7.2) | (6.3) |
Net cash inflow from financing activities | 4.2 | 1.3 |
Net cash (outflow) / inflow | (9.9) | 6.6 |
Cash and cash equivalents at start of year | 26.9 | 20.9 |
Foreign exchange differences | 0.9 | (0.6) |
Cash and cash equivalents at end of year | 17.9 | 26.9 |
Consolidated Statement of Changes in Equity
for the year ended 30 November
Share capital |
Share premium |
Translation reserve |
Retained earnings | Equity attributable to equity holders of the parent |
Non-controlling interest |
Total equity | |
£m | £m | £m | £m | £m | £m | £m | |
At 1 December 2011
| 45.3 | 54.1 | (28.6) | 106.1 | 176.9 | 5.9 | 182.8 |
Total comprehensive income for the year |
- |
- |
(8.4) |
(11.8) |
(20.2) |
0.1 |
(20.1) |
Dividends paid to Ordinary Shareholders |
- |
- |
- |
(6.3) |
(6.3) |
- |
(6.3) |
Shares issued | 0.2 | 1.4 | - | (1.3) | 0.3 | - | 0.3 |
Share based payment | - | - | - | 1.2 | 1.2 | - | 1.2 |
Net increase / (decrease) for the year |
0.2 |
1.4 |
(8.4) |
(18.2) |
(25.0) |
0.1 |
(24.9) |
At 30 November 2012 | 45.5 | 55.5 | (37.0) | 87.9 | 151.9 | 6.0 | 157.9 |
Total comprehensive income for the year - |
- |
0.1 |
21.4 |
21.5 |
0.4 |
21.9 | |
Dividends paid to Ordinary Shareholders |
- |
- |
- |
(7.2) |
(7.2) |
- |
(7.2) |
Shares issued | 1.7 | 18.4 | - | (0.2) | 19.9 | - | 19.9 |
Share-based payment
|
- |
- |
- |
0.6 |
0.6 |
- |
0.6 |
Net increase for the year |
1.7 |
18.4 |
0.1 |
14.6 |
34.8 |
0.4 |
35.2 |
At 30 November 2013 |
47.2 |
73.9 |
(36.9) |
102.5 |
186.7 |
6.4 |
193.1 |
Notes
1. Basis of preparation
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 revaluation to fair value of certain financial instruments.
The financial information set out above does not constitute the company's statutory accounts for the years ended 30 November 2013 or 2012 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the registrar of companies, and those for 2013 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor 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.
2. Segmental information
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 organised into three reportable operating divisions: Bonar, Technical Coated Fabrics and Yarns. Financial information for each operating division is also available in a disaggregated form in line with the identified cash generating units. 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, goodwill and intangible assets, derivative assets and liabilities, post-employment benefits and corporate assets and expenses. Inter-segment sales are not material.
2013
Continuing operations |
Bonar £m | Technical Coated Fabrics £m |
Yarns £m |
Unallocated Central £m |
Total £m |
Revenue from external customers | 245.6 | 124.7 | 32.8 | - | 403.1 |
Operating profit/(loss) before amortisation and non-recurring items |
23.0 |
12.1 |
0.5 |
(3.4) |
32.2 |
Amortisation of acquired intangible assets | (2.7) | (2.9) | - | - | (5.6) |
Operating profit/(loss) before non-recurring items |
20.3 |
9.2 |
0.5 |
(3.4) |
26.6 |
Non-recurring items | (2.1) | - | - | - | (2.1) |
Operating profit/(loss) | 18.2 | 9.2 | 0.5 | (3.4) | 24.5 |
Financial Income | 6.7 | ||||
Financial Expense | (12.8) | ||||
Net financing costs | (6.1) | ||||
Share of results of joint venture | (0.6) | ||||
Profit before taxation | 17.8 | ||||
Taxation | (5.0) | ||||
Profit for the year - continuing operations | 12.8 | ||||
Reportable segment assets | 168.1 | 86.5 | 27.7 | - | 282.3 |
Intangible assets and goodwill | 115.2 | ||||
Investment in joint venture | 4.7 | ||||
Investment in associate | 0.4 | ||||
Cash and cash equivalents | 17.9 | ||||
Other unallocated assets | 3.5 | ||||
Total Group assets | 424.0 | ||||
Reportable segment liabilities | (52.2) | (23.5) | (8.5) | - | (84.2) |
Loans and borrowings | (104.7) | ||||
Post-employment benefits | (12.7) | ||||
Derivative liabilities | (0.1) | ||||
Other unallocated liabilities | (29.2) | ||||
Total Group liabilities | (230.9) | ||||
Other information | |||||
Additions to property, plant and equipment | 6.2 | 4.5 | 0.6 | 0.3 | 11.6 |
Additions to intangible assets and goodwill | 8.3 | 0.2 | - | - | 8.5 |
Impairment to intangible assets, goodwill and property plant and equipment | - | - | - | - | - |
Depreciation | 8.3 | 3.7 | 0.8 | - | 12.8 |
2012
Continuing operations |
Bonar £m |
Technical Coated Fabrics £m |
Yarns £m |
Unallocated Central £m |
Total £m | |
Revenue from external customers | 238.7 | 115.3 | 26.5 | - | 380.5
| |
Operating profit/(loss) before amortisation and non-recurring items |
25.0 |
10.7 |
(1.8) |
(3.4) |
30.5 | |
Amortisation of acquired intangible assets | (3.0) | (2.8) | - | - | (5.8) | |
Operating profit/(loss) before non-recurring items |
22.0 |
7.9 |
(1.8) |
(3.4) |
24.7 | |
Non-recurring items | (0.8) | - | (11.2) | (0.6) | (12.6) | |
Operating profit / (loss) | 21.2 | 7.9 | (13.0) | (4.0) | 12.1 | |
Financial Income | 7.0 | |||||
Financial Expense | (13.0) | |||||
Net financing costs | (6.0) | |||||
Profit before taxation | 6.1 | |||||
Taxation | (4.7) | |||||
Profit for the year from continuing operations | 1.4 - | |||||
Reportable segment assets Intangible assets and goodwill Investment in joint venture Investment in associate |
145.6 |
83.9 |
23.4 |
-
|
252.9
110.9
5.3
0.4 | |
|
26.9
3.6 | |||||
Cash and cash equivalents | ||||||
Other unallocated assets | ||||||
Total Group assets |
| 400.0 | ||||
Reportable segment liabilities |
(49.0) |
(21.8) |
(6.2) |
- |
(77.0) | |
Loans and borrowings | (109.5) | |||||
Post-employment benefits | (24.8) | |||||
Other unallocated liabilities | (30.8) | |||||
Total Group liabilities | (242.1) | |||||
Other information | ||||||
Additions to intangible assets and goodwill | 10.9 | 2.1 | 0.1 | - | 13.1 | |
Additions to intangible assets and goodwill | 2.4 | 0.1 | - | - | 2.5 | |
Impairment to intangible assets, goodwill and property plant and equipment |
- |
- |
11.2 |
- |
11.2 | |
Depreciation | 7.4 | 3.5 | 1.2 | - | 12.1 | |
3. Financial income and financial expense
2013 | 2012 | |
£m | £m | |
Financial income | ||
Interest income | 0.1 | 0.1 |
Expected return on pension plan assets | 6.6 | 6.9 |
6.7 | 7.0 | |
Financial expense | ||
Interest on bank overdrafts and loans | (4.8) | (4.9) |
Interest payable on all other loans | (0.1) | - |
Amortisation of bank arrangement fees | (0.5) | (0.5) |
Interest on pension scheme liabilities | (7.4) | (7.8) |
Amounts capitalised within property, plant and equipment | - | 0.2 |
(12.8) | (13.0) | |
Net financing costs | (6.1) | (6.0) |
4. Taxation
2013 | 2012 | |
Current Tax | £m | £m |
UK corporation tax | ||
Current year | - | - |
Prior year | - | (0.2) |
Overseas tax | ||
Current year | 6.3 | 5.5 |
Prior Year | 0.2 | (0.4) |
Total current tax | 6.5 | 4.9 |
Deferred tax | (1.5) | (0.2) |
Total tax charge in the income statement | 5.0 | 4.7 |
5. Dividends
Amounts recognised as distributions to equity shareholders in the year were as follows:
2013 | 2012 | |
£m | £m | |
Final dividend for the year ended 30 November 2012 - 1.6 pence per share (2011: 1.4 pence per share) | 4.7 | 4.0 |
Interim dividend for the year ended 30 November 2013 - 0.85 pence per share (2012: 0.8 pence per share) | 2.5 | 2.3 |
7.2 | 6.3 |
The Directors have proposed a final dividend in respect of the financial year ended 30 November 2013 of 1.75 pence per share which will absorb an estimated £5.7m of shareholders' funds. This has not been provided for in these accounts because the dividend was proposed after the year end. If it is approved by shareholders at the Annual General Meeting of the Company to be held on 25 March 2014, it will be paid on 17 April 2014 to Ordinary Shareholders who are on the register of members at close of business on 21 March 2014.
During the year the Board declared a final dividend on Ordinary Shares in respect of the year ended 30 November 2012 of 1.6 pence per share, which was paid on 18 April 2013 to Ordinary Shareholders on the register of members at close of business on 22 March 2013.
The Directors declared an interim dividend on Ordinary Shares in relation to the year ended 30 November 2013 of 0.85 pence per share, which was paid to Ordinary Shareholders on the register of members at close of business on 30 August 2013.
6. Amortisation and non-recurring items
During the year the Group recognised significant non-recurring items and amortisation of acquired intangible assets as detailed below:
2013 | 2012 | |
£m | £m | |
Amounts charged to operating profit | ||
Joint venture start-up costs | 0.6 | 0.2 |
China office set-up costs | 0.3 | - |
Acquisition related costs | 1.0 | 0.7 |
Reorganisation costs | 0.2 | 0.5 |
Impairment of assets | - | 11.2 |
Total non-recurring items | 2.1 | 12.6 |
Amortisation of acquired intangible assets | 5.6 | 5.8 |
Total charge to operating profit | 7.7 | 18.4 |
Share of results of joint venture | 0.6 | - |
Total charge to profit before tax | 8.3 | 18.4 |
Current year
During the current year, the Group incurred £0.6m (2012: £0.2m) of costs in respect of Bonar Natpet LLC, its joint venture in Saudi Arabia; and £0.3m (2012: £nil) of initial costs in respect of setting up a sales and distribution office in China.
The Group incurred £1.0m of costs in the period in connection with the acquisition of Texiplast (see Note 9) and in connection with another potential acquisition.
£0.2m (2012: £0.5m) of costs were incurred in relation to the integration of the Group's principal Performance Technical Textile operations into a single business, Bonar.
The Group also incurred a £0.6m loss (2012:£nil) in the year from their share of the results of the joint venture, Bonar Natpet LLC.
Prior year
During the prior year, the Group incurred £0.7m of costs in the period in connection with the acquisition of the trade and assets of Xero Flor International GmbH and in connection with another potential acquisition.
In the year ended 30 November 2012, an impairment charge of £11.2m was recognised against the carrying value of the Yarns business, in response to deteriorating market conditions, of which £8.4m was allocated against goodwill and £2.8m was allocated to property, plant and equipment.
7. Earnings per share
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:
2013 | 2012 | |||||
Earnings £m | Weighted average number of shares (millions) | Per share amount pence | Earnings £m | Weighted average number of shares (millions) | Per share amount pence | |
Statutory - continuing and total operations | ||||||
Basic earnings per share | ||||||
Earnings attributable to Ordinary Shareholders | 12.3 | 301.035 | 4.08 | 1.4 | 288.447 | 0.47 |
Effect of dilutive items | ||||||
Share-based payment | - | 7.249 | - | 9.215 | ||
Diluted earnings per share | 12.3 | 308.284 | 3.98 | 1.4 | 297.662 | 0.46 |
Before amortisation and non-recurring items | ||||||
Basic earnings per share | ||||||
Earnings attributable to Ordinary Shareholders | 18.8 | 301.035 | 6.23 | 18.1 | 288.447 | 6.28 |
Effect of dilutive items | ||||||
Share-based payment | - | 7.249 | - | 9.215 | ||
Diluted earnings per share | 18.8 | 308.284 | 6.09 | 18.1 | 297.662 | 6.08 |
8. Non-controlling interest
2013 | 2012 | |
£m | £m | |
At 1 December | 6.0 | 5.9 |
Share of profit after taxation | 0.5 | - |
Exchange adjustment | (0.1) | 0.1 |
At 30 November | 6.4 | 6.0 |
9. Business combination
On 6 September 2013 the Group acquired Texiplast a.s ("Texiplast"), a Slovakian producer of high strength geosynthetic products serving the civil engineering market, on a cash-free debt-free basis for a cash consideration of €18.9m (£15.9m).
Costs of £0.9m relating to the acquisition have been charged to non-recurring items. Results of the acquired business are included within the results of the Bonar segment.
The acquired business contributed £2.5m 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 £0.4m. 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 £9.0m and £1.3m respectively.
In 2014, the Group expects to spend €1.5m on site clean-up costs and environmental rectification work to ensure that the site meets the Group's health, safety and environmental standards.
The provisional fair values of the identifiable assets and liabilities acquired are as follows:
Book value at acquisition | Fair value adjustments | Provisional fair value | ||
£m | £m | £m | ||
Intangible assets | ||||
Marketing related | - | 0.3 | 0.3 | |
Customer relationships | - | 0.4 | 0.4 | |
Property, plant and equipment | 4.7 | 1.8 | 6.5 | |
Inventories | 2.4 | (0.3) | 2.1 | |
Trade and other receivables | 2.1 | - | 2.1 | |
Deferred tax liability | (0.3) | (0.5) | (0.8) | |
Trade and other payables | (0.4) | - | (0.4) | |
Net assets acquired | 8.5 | 1.7 | 10.2 | |
Consideration | ||||
Cash consideration | 15.9 | |||
Fair value of consideration | 15.9 | |||
Goodwill arising on acquisition | 5.7 | |||
Goodwill on acquisition reflects synergies arising from extended sales networks and enabling Bonar to develop a stronger solution sell capability for demanding civil engineering applications.
On 1 March 2012 the Group acquired the trade and assets of Xero Flor International GmbH ("Xeroflor"), an innovative business with a strong position in the fast growing green roofing market, on a cash-free debt-free basis for a cash consideration of €6.0m (£5.0m). There have been no changes to the provisional fair value of the acquired assets and liabilities in the current year.
10. Annual General Meeting
The Annual General Meeting will be held on 25 March 2014 at The Pullman Hotel St Pancras, 100-110 Euston Road, London NW1 2AJ.