LWB.L Regulatory News (LWB)

3 June 2019

Low & Bonar PLC

Disposal of Construction Fibres business

Low & Bonar PLC (the "Group"), the international performance materials group, has agreed to dispose of its Construction Fibres ("CF") business (comprising a part of its Civil Engineering division), for a cash consideration of €6.4m (£5.6m) to Adfil NV and Industria BV. Adfil NV, which will purchase the business and production assets, is owned by a private Belgian investor. Industria BV, which will purchase the CF factory site, is owned by parties connected with Adfil NV.

The disposal will comprise the sale of all of the assets of the CF business, including part of the Group's factory in Zele, Belgium and the associated inventory, with the consideration payable in cash upon completion, subject to normal working capital adjustments.

The transaction is expected to complete on or around 1 July 2019, subject to the fulfilment of a limited number of conditions in the sale agreements and the buyer's financing arrangements, including the satisfactory completion of an information and consultation process with the employees affected by the disposal, which commenced today. Under the terms of the agreement, all employees of CF will transfer with the business and no redundancies are anticipated.

The transaction is consistent with Management's stated intention of disposing of its Civil Engineering division to allow it to further reduce its net debt levels and invest in more profitable parts of its business. As part of this strategy, the Group is continuing to progress the disposal of its Needle-Punched Non-Wovens business, the remaining and larger part of the Civil Engineering division. CF has an established market position and an excellent customer base, and the new owner is well placed to take it through its next stage of development in improving its efficiency and performance.

In the year ended 30 November 2018, CF recorded a loss of approximately €1.8m (£1.6m), out of Civil Engineering underlying divisional profits of €0.1m. Civil Engineering, including CF, has performed more strongly in 2019, and as a consequence management had expected CF to make a modest profit contribution to the Group in the year to 30 November 2019. At 30 November 2018, the assets of CF were approximately €10.7m (£9.4m), out of a divisional total for Civil Engineering of €46.9m (£41.4m). The transaction will generate an estimated £1.3m non-recurring post tax loss for the Group. The net proceeds of the disposal will be used to reduce the Group's net borrowings. The Civil Engineering division as a whole will be presented as a discontinued operation and its assets held for sale in the Group's 2019 half-year financial results.

Philip de Klerk, Group Chief Executive, commented:

"We are pleased to announce the disposal of the Construction Fibres business as part of our strategy to simplify our portfolio and to improve our core business. We have found a very good buyer, who will be able to further grow and develop this business. We are also progressing well with the disposal of the Needle-Punched Non-Woven business and are seeking to conclude a full disposal of the Civil Engineering division during the current year."

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