16 Jun 2006

Low & Bonar PLC - 2005 IFRS restatement

UPDATE ON ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

Low & Bonar PLC (“Low & Bonar”) is preparing for the adoption of International Financial Reporting Standards (“adopted IFRS”) as its primary accounting basis for the year ending 30 November 2006. As part of this transition Low & Bonar is presenting today financial information prepared in accordance with International Accounting Standards and adopted IFRS for the six months ended 31 May 2005 and the year ended 30 November 2005.

Low & Bonar PLC has previously reported financial information under UK Generally Accepted Accounting Practice (“UK GAAP”).

The primary changes to Low & Bonar’s reported financial information from the adoption of adopted IFRS are as a result of the:

• Requirement not to amortise goodwill
• Requirement not to recycle goodwill previously written off to reserves under UK GAAP through the income statement on disposal
• Recognition of deferred tax liabilities on a different basis
• Inclusion of a fair value charge in relation to employee share awards
• Recognition of all employee benefit related assets and obligations, principally pensions; and the
• Requirement to recognise dividends in the period in which they are declared

Caroline Thomas, Interim Group Finance Director, commented:

“The financial information provided today shows how adopted IFRS impacts on Low & Bonar’s previously reported results in advance of the adoption of IFRS by Low & Bonar in the current financial year.

The most significant changes relate to the accounting for business combinations. Low & Bonar will no longer amortise goodwill but will amortise intangible assets arising on acquisition. Low & Bonar has acquired 6 businesses since 2003.

Furthermore, under adopted IFRS the result from the Plastics division disposed of during 2005 is disclosed on the face of the income statement in a single line and there is no requirement to charge the goodwill previously written off through reserves to the income statement on disposal.

These two changes result in a clearer presentation of underlying business performance.

Under UK GAAP, Low & Bonar adopted FRS 17 in the year ended 30 November 2005 which consequently brought the pension fund deficit onto the Group balance sheet at that time.

Low & Bonar’s preferred profit measure under UK GAAP has been profit before tax, exceptional items and amortisation of goodwill. This is referred to as Normalised Profit. Under adopted IFRS the definition of Normalised Profit is the profit before tax, non-recurring items, and amortisation which is considered to be the equivalent measure of profitability. The UK GAAP definition included the result from discontinued operations, but the IFRS definition excludes it. The impact of the change to adopted IFRS on Normalised Profit for the year ended 30 November 2005 is a reduction of £417,000 from £12,569,000 to £12,152,000 comprising:

		Year ended 30 November 2005 £'000
Normalised Profit under UK GAAP		12,569
Financing costs (deferred consideration)	(98)
Employee benefits	(57)
Share based payment	20
Software depreciation reclassifed as amortisation under adopted IFRS	210
Discontinued business	(492)
		(417)
Normalised profit under adopted IFRS		12,152

For the year ended 30 November 2005 the impact of the change to adopted IFRS is to reduce the loss after tax for the year by £21,235,000, from £28,133,000 to £6,898,000 comprising:

		Year ended
		30 November
		2005
		£'000
Loss on ordinary activities after taxation under UK GAAP		(28,133)
Goodwill written off on disposal of Plastics under UK GAAP	20,637
UK GAAP amortisation of goodwill written back	1,310
Adopted IFRS intangible amortisation charge	(922)
Financing costs	(98)
Employee benefits	(57)
Share based payment	20
Taxation effects	345
		21,235
Loss for the year under adopted IFRS		(6,898)

The impact of the change to adopted IFRS on net assets as reported under UK GAAP at 30 November 2005 is an increase of £3,634,000, from £65,191,000 to £68,825,000, the main impact being that the final dividend of £3,006,000 for the year ended 30 November 2005 as reported under UK GAAP will be included in the 2006 accounts under adopted IFRS.

		30 November
		2005
		£'000
Net Assets as reported under UK GAAP		65,191
Final dividend	3,006
Share based payment	392
Taxation	62
Employee benefits	(394)
Business Combinations	568
		3,634
Net Assets under adopted IFRS		68,825

The full detail of Low & Bonar’s restatement of financial information for the year ended 30 November 2005 and the unaudited six months ended 31 May 2005 under IAS and adopted IFRS can be found on our website at www.lowandbonar.com.

For further information:

Low & Bonar PLC
Caroline Thomas, Interim Group Finance Director	020 7535 3180
Tulchan
David Trenchard, Peter Hewer	020 7353 4200

View the 2005 IFRS restatement (in PDF format).