Report of the Directors

The Directors present their report and the accounts of the Company and the Group for the year ended 30 November 2011.

Principal activities

The Report of the Directors should be read in conjunction with the Business Review, which forms part of this report and contains details of the principal activities of the Group during the year and an indication of likely future developments.

Business review

The Directors are required to set out in this report a fair review of the development of the business of the Group during the financial year ended 30 November 2011 and of the position of the Group at the end of that financial year together with a description of the principal risks and uncertainties facing the Group (known as a “Business Review”). The information that fulfils the requirements of the Business Review can be found in the Business Review section.

Results and dividends

The Group's consolidated profit for the year attributable to equity holders of the Company was £21.0m (2010: £6.3m).

The Company paid an interim dividend for the year ended 30 November 2011 of 0.7 pence per share on 29 September 2011 to Ordinary Shareholders whose names appeared in the register at the close of business on 2 September 2011. The Directors recommend that a final dividend of 1.4p (2010: 1.1p) be paid on 19 April 2012 to Ordinary Shareholders on the register at close of business on 23 March 2012.

Dividends

2011

2010

% Increase

Interim

0.7

0.5

40%

Final

1.4

1.1

27%

Total

2.1

1.6

31%

Directors

The present Directors of the Company are set out in the Board of Directors page. They all held office throughout the financial year under review, save for John Sheldrick, who was appointed as a Non-Executive Director on 1 October 2011.

The Company has purchased and maintained throughout the year directors’ and officers’ liability insurance in respect of itself and its Directors. The Directors also have the benefit of the indemnity provision contained in the Company’s Articles of Association. The Company has executed deeds of indemnity for the benefit of each Director of the Company in respect of liabilities which may attach to them in their capacity as Directors of the Company or of associated companies. These provisions, which are qualifying third party indemnity provisions as defined by section 234 of the Companies Act 2006, were entered into in June 2009 (September 2009 for Steve Good, November 2010 for Mike Holt and October 2011 for John Sheldrick) and are currently in force.

Re-election of Directors

Steve Hannam retires by rotation and, being eligible, offers himself for reappointment. Mr Hannam’s appointment may be terminated by either him or the Company giving six months’ notice in writing. Mr Hannam was appointed as Non-Executive Director of the Company in September 2002 for an initial term of three years and was last reappointed in 2011 for a term of one year up to 31 August 2012. Mr Hannam’s reappointment has taken into account his performance and commitment to the role, the need for progressive refreshing of the Board and the Company’s overall corporate governance standards. The Board continues to believe that it benefits substantially from Mr Hannam’s experience and expertise and notes that he is subject to annual re-election due to his long tenure on the Board. Further details regarding Mr Hannam’s reappointment are set out in the Corporate Governance report.

Folkert Blaisse retires by rotation and, being eligible, offers himself for reappointment. Mr Blaisse was appointed as a Non-Executive Director of the Company in January 2007 for an initial term of three years and was reappointed in December 2009. Mr Blaisse’s appointment may be terminated by either him or the Company giving six months’ notice in writing.

Chris Littmoden is retiring and will leave the Board on 28 February 2011.

John Sheldrick was appointed in October 2011 and, in accordance with the Articles of Association and being eligible, offers himself for reappointment.

The Chairman confirms to shareholders that, following formal performance evaluation, the performance of each of the Directors proposed for reappointment continues to be effective and to demonstrate commitment to the role.

Directors’ interests

Directors’ interests in shares and debentures of the Company are set out in the Directors' Report on Remuneration.

Substantial interests

At the date of this report, the Company’s register of substantial shareholdings showed the following interests in 3% or more of the Company’s issued Ordinary Shares:

No. of Ordinary Shares

% of Ordinary Shares

Aberforth Partners LLP

50,307,220

17.47%

Hermes Fund Managers Limited

29,051,062

10.09%

AXA S.A.

29,020,891

10.08%

Schroders PLC

26,535,592

9.22%

M&G Investment Management Ltd

25,452,045

8.84%

Standard Life Investments Ltd

15,458,356

5.37%

Legal & General Investment Management Ltd

10,284,563

3.57%

Ordinary share capital

Details of the Company’s issued share capital at 30 November 2011 and of options granted and shares issued pursuant to the Company’s employee share option schemes and long-term incentive plans are shown in Note 23 to the accounts.

Annual General Meeting

The Annual General Meeting will be held at The Cumberland Hotel, Great Cumberland Place, London W1C 1LZ on 29 March 2012 commencing at midday. The notice of meeting is contained in the separate booklet which is enclosed. The booklet contains the text of the resolutions to be proposed and explanatory notes concerning the proposals to authorise the Directors to allot relevant securities and to allot equity securities for cash other than on a pre-emptive basis.

Going concern

Having reviewed the medium-term forecasts and compared the cash flow with available bank facilities, the Directors are of the opinion that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the accounts.

Employee involvement

The Group's overall policy is to keep employees informed on matters of concern to them and to encourage employee involvement. This policy is implemented in a wide variety of ways, which are reported on by the Group's businesses, including the regular publication of a company newsletter, “Your Low & Bonar”, which is translated into the main languages of our employees at least twice a year, and regular meetings with employees’ representatives.

Payment of suppliers

The Company’s policy and practice is to pay agreed invoices in accordance with the terms of payment agreed with suppliers at the time orders are placed.

Charitable and political contributions

The Company made charitable donations totalling £15,000 in 2011 (2010: £10,000). No political donations were made during the year (2010: £nil).

Essential contracts

The Company has a number of significant agreements, however the only agreements considered to be essential to the Group as
a whole are its bank facilities and private placement notes, which include change of control provisions. In the event of a change
in ownership of the Company, these provisions could result in renegotiation or withdrawal of the relevant facilities.

Information to the auditor

The Directors who held office at the date of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditor is unaware, and that each Director has taken all steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

Auditor

KPMG Audit Plc have expressed their willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

By order of the Board

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Matthew Joy

Company Secretary

7 February 2012

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