Low & Bonar PLCFi l R l f Y E d d 30 N b 2008Final Results for Year Ended 30 November 2008and Placing and Open Offer

Low & Bonar PLC

Paul Forman, Group CEOKevin Higginson, Group FD

February 2009

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y

Disclaimer

• ‘This presentation does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any securitysecurity.

• This presentation does not constitute a prospectus or prospectus equivalent document. Nothing in this presentation should be interpreted as a term or condition of the proposed placing and open offer by Low & Bonar PLC (Low & Bonar or the Group) (the Placing and Open Offer). Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any security offered in connection with the Placing and Open Offer must be made only on the basis of the information contained in and incorporated by reference into the prospectus issued by Low & Bonar in respect of the Placing and Open Offer (the Prospectus). Copies of the Prospectus will be available on publication from Low & Bonar’s registered office.

• Cautionary note regarding forward-looking statements• This presentation 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”, “intends”, “plans, “goal”, “target”, “aim”, “may”, “will”, “would”, “could” or “should” or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this presentation and include statements regarding the intentions, beliefs or current expectations of the Group concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies and dividend policy of the Group and the ot e t gs, t e esu ts o ope at o s, a c a co d t o , qu d ty, p ospects, g o t , st ateg es a d d de d po cy o t e G oup a d t eindustries in which they operate.

• 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, liquidity, dividend policy and the development of the industries in which it operates 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, liquidity and dividend policy of the Group, and the development of the industries in which it operates, are consistent with the forward looking statements contained in this presentation those results or developments may not be indicative of results or developments inlooking statements contained in this presentation, 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: the effect of the Placing and Open Offer on the Group; 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.

• Other than in accordance with their legal or regulatory obligations, Low & Bonar 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 ’

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any forward-looking statement, whether as a result of new information, future events or otherwise.’

Key pointsy p

• Encouraging set of results

• Funding strategy to ensure balance sheet flexibility

• Key operating metrics progressing

• Strategic realignment now complete:

– focus on attractive industrial technical textiles markets

• Organic profit growth levers identified to ensure further progress

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Financial headlines

2008 2007 (Restated excl

Floors Division)

Group revenue £335.2m £210.3m + 59.4%

Profit before tax* £16.0m £10.4m + 53.8%

Earnings per share* 7.37p 4.62p + 59.5%

• Placing and Open Offer announced – expected to generate net proceeds of c.£30m to improve the financial position significantly and allow additional investment in profit growth initiativesg

* Before amortisation and non-recurring items

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Operational highlightsp g g

• Floors disposal has transformed and refocused the Groupp p• Strategic emphasis on creating a leading global performance

materials business• MTX performed stronglyMTX performed strongly• Rate of product innovation increased through strong R&D focus• Volatile raw material environment successfully mitigated• Cost reductions and increases in operational productivity across the

Group• Divisional operating margin increased• Leading positions maintained in wide range of attractive niche

markets

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Income statement summaryy

R t t d2008

Restated 2007 * Var

£'m £'m %

Revenue 335 2 210 3 +59 4%Revenue 335.2 210.3 +59.4%

Operating profit** 26.7 14.1 +89.4%

Net financing costs (10 7) (3 7)Net financing costs (10.7) (3.7)

Normalised profit** 16.0 10.4 +53.8%

* Restated following the disposal of Floors Division

** Continuing operations, before amortisation and non-recurring items

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Income statement measures

2008Restated

2007 * Var %008 2007 * a %

Tax rate** 29.4% 28.8%

N li d EPS** 7 37 4 62 59 5%Normalised EPS** 7.37p 4.62p +59.5%

* Restated following the disposal of Floors Division

** Continuing operations, before amortisation and non-recurring items

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Revenue analysisy

Technical Textiles

£'m

FY 2007 210.3

MTX 105.3

Underlying business 19.6

FY 2008 335.2

• Future segmental reporting will be split between Technical Coated Fabrics and Performance Technical Textiles

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Operating profit analysis**p g p y

2008Restated

2007 *

£'m £'m£ m £ m

Technical Textiles 32.1 17.9

Central costs (5.4) (3.8)

26.7 14.1

* Restated following the disposal of Floors Division

** Continuing operations, before amortisation and non-recurring items

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Impact of Floors disposalp p

2008 2007

£'m £'m

Revenue - Technical Textiles 335.2 210.3

- Floors* 96.0 101.5

431.2 311.8

Operating profit** - Technical Textiles 32.1 17.9Operating profit Technical Textiles 32.1 17.9

- Floors* 10.4 12.0

- Central costs (5.4) (3.8)

37.1 26.1

* 10 months to September 2008; 12 months to November 2007.

** Before amortisation and non-recurring items

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Technical Textiles analysisy

2008 2007 Var£'m £'m %

Revenue 335.2 210.3 +59.4%

Operating profit* 32.1 17.9 +79.3%

M i 9 6% 8 5%Margin 9.6% 8.5%

* Before amortisation and non-recurring items

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Normalised Profit Analysis*y

£m

FY 2007 22.4

Floors disposal (12.0)

MTX 12.3MTX 12.3

Other Technical Textiles 1.9

Net financing costs (7.0)

Other (1.6)

FY 2008 16.0

• “Others” impacted by reduced central cost allocation to Floors; increased HO cost and central provisioning

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* Before tax, amortisation, non-recurring items and after interest

Non-recurring itemsg

2008 2007

£'m £'m

MTX post-acquisition integration and restructuring 2.3 -

Profit on fixed asset disposalsProfit on fixed asset disposalsPrincipally surplus land in Asheville, North Carolina (0.9) -

1.4

Pension equalisation charge 6.2 -

Profit from discontinued activitiesFl Di i i 60 8Floors Division 60.8 -

• 2009 will incur restructuring costs of £2.0m (Total cash costs of £3.1m)

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Balance sheet

2008 2007

£'m £'m

Goodwill and intangibles 138.8 69.2

Fixed assets 125.8 97.3

Other net assets 4.4 15.1

Net debt (104.5) (50.5)

164.5 131.1

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Movement in debt

£m £mNet debt - Nov 07 (50.5)Operating profit before amortisation (inc disc ops) 37.1Operating non-recurring items (inc disc ops) (2.0)Depreciation 15.0 50.1

Working capital movements 1.3Pension / Tax (9.1)Net interest paid (8.7)Net capital expenditure (inc intangibles) (16.7) (33.2)

Free cash flow 16.9Free cash flow 16.9

Acquisitions (132.9)Disposals* 108.5Dividends paid (7.7)Fx including net cashflow hedges (39.0)

* Adjusted for £8m pension payment

Other 0.2Net debt - Nov 08 (104.5)

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* Adjusted for £8m pension payment

Bank covenants

N t D bt / EBITDA 2 6• Net Debt / EBITDA 2.6 x

– Compared to covenant of 3.25 xCovenant reduced to 3 0 x from May 2010 onwards– Covenant reduced to 3.0 x from May 2010 onwards

• Interest cover 3 7 xInterest cover 3.7 x

– Compared to covenant of 3.0 x

• Facilities in place until December 2011

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Capital expenditurep p

Property, Plant and Equipment 2008

£'m

Technical Textiles 12.1

Floors 4.6

Central 0.1

Total Group 16.8

• 2009 Depreciation estimated at £14.5m• Capex 2009 estimate

– Ongoing £11m– Abu Dhabi JV £ 6m

£17m

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Placing and Open Offerg p

• Placing and Open Offer (with clawback) to raise c.£30m net of expenses

• Six for seven issue at 25p per share

• Funds to be used, initially, to reduce net debt and enhance flexibility

• Invest in identified organic profit growth opportunities when appropriate

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Dividend policyp y

• Final dividend to be passed saving £4.8m v 2007

• Future policy to target minimum cover of 2x underlying EPS

• Intention to resume dividend payment in 2009p y

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Current trading - summaryg y

• Trading at start of FY 2009 subdued• Material year on year sales volume falls• Clearer picture of underlying trading conditions is likely to takeClearer picture of underlying trading conditions is likely to take

some time to emerge• Significant cost actions already taken

B fiti f f ll i i f k t i l• Benefiting from falls in prices of key raw materials• Other cost options identified if necessary

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Current trading – positive factorsg p

• Impact of lower sales mitigated

• Cost actions taken:– Headcount reduction of > 10% globally (c. 250 FTEs)– Flexed working practices in Belgium and Germany

£2 4 li d d ti i di ti d– £2.4m annualised reduction in discretionary spend– Current spend in sales, marketing, R&D ringfenced– Cash cost of actions to date of £3.1m– Additional options identified if neededAdditional options identified if needed

• Additional benefits from:– Lower raw material costs– Lower energy costs than budgetedLower energy costs than budgeted– Other purchasing benefits

• Pending additional business development initiatives being accelerated

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accelerated

Group cash conservationp

• MTX reduction of working capital in ’08 of €10m, ahead ofMTX reduction of working capital in 08 of €10m, ahead of acquisition plan

• Excluding JV, ’09 capex limited to 75% of depreciation vs. trend of 125%+trend of 125%+

• Additional ’09 working capital reduction targeted

• Actions taken to mitigate FX impact on debtActions taken to mitigate FX impact on debt

• Pensions deficit contributions of £3m p.a. not expected to increase materially

• Additional actions identified if needed in 09/10

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Benefits of the proposed fundingp p g

The Board believes:• The equity raising of around £30m net of costs will allow L&B to• The equity raising of around £30m net of costs will allow L&B to

build further through known organic opportunities• That better prospects are created in 2010 onwards through

investments in reducing capacity constraints and further improvinginvestments in reducing capacity constraints and further improving unit costs

• It will support upward trend in operating profit* margins and enhance strategic position: internal target of 12% local marginsenhance strategic position: internal target of 12% local margins

• It enables the Group to take advantage of expected competitive opportunities arising from current macroeconomic difficultiesI k L&B l l f i h i b l h fl ibili• It takes L&B to a level of gearing that gives balance sheet flexibility appropriate for the current economic environment: pro forma balance sheet with c.£75m net debt and c.£200m net assets

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* Before amortisation and non-recurring items

Low & Bonar: Five years of transformationy

TimelineJanuary 2003 Buy carpet division of Gaskell (floor tiles, UK) for £18m

July 2004 Buy 50.1% Yihua Bonar (carpet backing and civil eng, China) for £3m

December 2004 Buy Adfil (civil eng, UK) for £12.9m

July 2005 Buy Xirion (artificial grass yarns, Belgium) for €16.5m

July 2005 Sell Bonar Plastics for £25.8m

February 2006 Buy Geo-Tipptex (civil eng, Hungary) for €14.9m

July 2006 Buy Colbond (carpet tile backing, civil eng, building products, Holland) for €106.9m

December 2007 Buy MTX (trailer, building products, print media, Germany) for €163.0m

January 2008 Buy Westbond (floor tiles, UK) for £10.9m

April 2008 Announcement of yarns joint venture in Abu Dhabi

September 2008 Disposal of Bonar Floors for £123m

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Snapshot of Low & Bonarp

Revenue (Technical Textiles) £210m 2007, £335m 2008

Products Performance fabrics, composites, yarns and fibres used for industrial applications

Customers Several ‘000 in civil engineering, carpet tile manufacturing building and construction sport andmanufacturing, building and construction, sport and leisure, truck side manufacturing, agriculture

Market Size* £65-70bn (Global)

Trend Growth Rate GDP x 1-2

Market Positions Leading positions, primarily Western Europe

Competition Varies by each product and market segment

Average Organic Sales Growth 5.8%, 2004-2008’08 EBIT margin 9.6%

Estimated Target EBIT Margin Up to 12%

* Company estimate 2005

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Company estimate 2005

Low & Bonar revenue breakdown

Technical textiles 2008: £335 2m revenueTechnical textiles 2008: £335.2m revenue9.6% EBIT margin

Revenue by geographyRevenue by end market segment - Pro forma Revenue by geography

USA, 15.7%

Other, 8.3% UK, 5.5%

Revenue by end market segment Pro forma

Sport and Leisure, 12.0% Civil Engineering,

22.0%Transport, 14.0%

Europe Excl UK,

70.5%Carpet Tile Manufacturers,

16.0%

Building Products, 16.0%

Industrial, 20.0%

Residential building and automotive are less than 10% of sales

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Leading market positions in most segmentsg p g

Civil engineering • A leading European supplier of geotextile and geosynthetic productsgeosynthetic products

Building products• Attractive niche European positions in commercial

buildings with non-wovens, polymeric mats, and coated fabrics for architectural awnings

Carpet tile manufacture• A leading European and US non-woven supplier

of carpet tile backings• A leading Chinese woven backing supplier

coated fabrics for architectural awnings

Sport and Leisure• A leading global supplier of artificial grass yarns

and technical coated fabrics including for boat, pool, and sunshading

• A leading position in coated fabrics for truck sidesTransport • A leading position in coated fabrics for truck sides and also non-wovens for automotive carpets

Industrial and others • A leading position in a number of niche markets

including print media, greenhouse screens, it d t

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composites, and storage

Structural growth drivers – diversity and resilienceg y

Civil engineering • Global infrastructure investmentB fit f ti l k

g g• Benefits of stimulus packages

Building products• Global new build and refurbishment • Benefits of stimulus packages

Carpet tile manufacture • Carpet tile growth at expense of broadloom in Europe and US and China market demandD d f tifi i l t it h

• Use of architectural fabrics for cost and aesthetics

Sport and Leisure• Demand for artificial sports pitches • Landscape legislation

Transport • European freight haulage volumes: WE/CEE

Industrial and others• Adoption of large scale digital printing in outdoor media• Yield improvement and energy reduction in agriculture• Increased use of ‘greener’ products throughout industry

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• Increased use of greener products throughout industry

L&B plays at several points along the industry l h ivalue chain

Raw Yarn Fabric Coating and C t

L&B focus

materials production productiong

composites Customers

Growers & installers

Needle-punched

non-wovens

Monofilament yarns Artificial grass producers

Carpet manufacturers

Tapes

wovens

Spun-bonded

non-

PVC/ PU coatedwoven PET fabrics

PE/ PP/ PET resin

Truck tarpaulin manufacturers

Construction companies

Tapes

Fibrillated yarns

wovens

Woven fabrics

Other materials:(Nylon, PVC,

PA6, PU)

Outdoor screen printers

Architects and builders

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Thermal bonded 3D profiles &

grids

Composites formed from non-wovens, 3D

profiles and grids

Additives for specific performance & colour

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Bi-component yarns

Some recent examples of our customer focused innovationSo e ece t e a p es o ou custo e ocused o at o

Enka®-Moss Colback® SMR Colback® F2FEnka Moss Colback SMR Colback F2F

EnkaRetain & Drain®

Cherr cloth Phormidrain Mo ie screen

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Cherry cloth Phormidrain Movie screen

The L&B strategic modelg

The Company believes its strategy will bring benefits:

B2B2B market Ability to use scale to Continuous operational

will bring benefits:

understanding

Enhancing customer processes & products

provide competitive advantage in:

•purchasing & operations

and process improvements to:

• drive down costs

Supporting with new products/services

•commercial infrastructure and R&D

• sustain/improve quality levels

Distinct and sustained value added for our customers

generating Our higher returns and above-market growth rates

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g

Technical TextilesSignificant historic growth 04 08Significant historic growth 04-08

335.2

300

400

(£m

)

30

40

m)

Revenues (£m) EBIT* (£m)

59.3 77.7127.2

210.3

100

200

Rev

enue

s

10

20

EBIT

* (£m

02004 2005 2006 2007 2008

R

0

Margin 9 0% 9 4% 7 2% 8 5% 9 6%

* Note: figures before amortisation and non-recurring items

Margin 9.0% 9.4% 7.2% 8.5% 9.6%

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Note: figures before amortisation and non recurring items

Summary – Strategic repositioningy g p g

The Board believes:The Board believes:

• ’08 M&A activity has focused L&B on the industry with the greater growth potential and stronger positions: Bonar Floors g g p g pdisposal reduced exposure to the UK building sector

• Geographic and end-market diversity reduces exposure to any ifi t / tspecific country/sector

• Chosen end markets have structural growth potential

• Strong market positions can help sustain margins and offer opportunities to increase market share during ’09 and ‘10

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Fund-raising to support organic growthg pp g g

• There are revenue and cost initiatives which require significant investment

• Company’s self-help plan will not generate sufficient financial flexibility• Current capacity constraints will impact revenue growth in 2010 and

onwards (12-18 months build time):– Supplying growth markets like civil engineering and grass– Enabling share gain in Colbond– Geographic expansion, especially Asia– Removing specific capacity constraints in weavingg p p y g– R&D expenditure on NPD in woven and yarn products– Need to fund working capital impact of growth

• Additional investment should also lower average unit cost• Management foresees opportunities to take market share as the

downturn continues• We will be targeting 3 to 4 year cash payback projects for organic growth

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• And …..

Fund-raising to support organic growthg pp g g

• Investment opportunities to reduce cost/increase cash• Investment opportunities to reduce cost/increase cash generation including:

– MTX working capital reductions

– MTX manufacturing productivity enhancements

– Colbond automation

• Typical target 1 to 3 year cash payback projects for cost• Typical target 1 to 3 year cash payback projects for cost reduction

• Accelerates progress to target operating marginsp g g p g g

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Conclusion

The Board believes:The Board believes:

• Good performance for 2008 given economic backdrop • Equity raising will provide greater financial flexibility forEquity raising will provide greater financial flexibility for

investment in our organic opportunities • Additional funding will enable a higher growth trajectory from

2010 onwards2010 onwards • Current trading is subdued but cost controls and raw material

prices mitigating volume declines

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