FY16 was a year of good underlying progress diluted by one underperforming business unit. We believe that FY17 is likely to more clearly demonstrate gains from strategic and operational execution, as seen in our upwardly revised estimates. Consequently, we expect the re-rating that began a year ago to continue.
Three steps forward, one back
Good underlying progress was achieved in three of Low & Bonar's (LON:LWB) business units in FY16, aided further by favourable translation of overseas earnings. Internal issues at Coated Technical Textiles were flagged in H1 and held back the group result, although this effect began to recede during the second half. Investment in capacity and capability is an ongoing group theme and the commissioning of a new China Colback facility was a significant achievement in the year. Increased earnings and business disposal receipts benefited y-o-y cash flow comparisons, although their impact on net debt was more than offset by investment in working capital and adverse overseas borrowing translation at the year end.
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