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DLH Group explores new strategic options for its subsidiaries

The Board of Directors has decided that the company should explore the possibility of disposing of its individual business areas, with the aim of delivering the greatest possible cash proceeds to the company’s shareholders.

Background

Since 2009, the DLH Group has been through a number of restructurings involving the selling off and winding up of its assets, the optimisation of working capital, rationalisation and the streamlining of the head office as well as a reduction in the net interest bearing debt. Over the period, the net interest bearing debt has been reduced from DKK 1.3 billion to just DKK 270 million currently. The company is therefore close to being debt-free.

On the backdrop of the above, combined with an ever challenging market for wholesale trade in timber and timber products and an uncertain outlook in the years ahead, the Board of Directors and the Management, along with external consultants, have carried out a thorough analysis of the company’s future options, including whether the DLH Group is the best owner for the existing business units.

The company currently comprises three regional European business units, which handle sales to the retail sector and to industry. It also comprises the business entity, Global Sales, which sells back-to-back, particularly in China and Vietnam, without carrying stock itself.

All business units make a positive contribution to the Group, although there is limited synergy between the units. At the current time, the individual units are not of a sufficient size to be able to cover the Group’s overheads.

On a European level, where market conditions are particularly difficult, the view of the Board of Directors and the Management is that there is a need for consolidation and scale to ensure competitiveness.

In relation to the analysis, potential buyers have expressed an interest in selected assets, albeit only at an exploratory level.

Conclusion of the analysis

The Board of Directors and the Management’s main conclusion from this process is that the in-terests of the shareholders and employees are best served by a disposal of the Group’s companies and operations.

The Board of Directors has therefore decided that the company should explore the possibility of disposing of individual business areas with the aim of delivering the greatest possible cash proceeds to the company’s shareholders.

Consequently, the Board of Directors will call an extraordinary general meeting in January 2014 with a view to securing the shareholders’ backing for the Group’s new strategic direction.

While the Group pursues its new strategic direction, DLH will continue to develop and optimise its business units with the aim of creating maximum value for its shareholders.

The Board of Directors has signed retention agreements with the Management Group and senior executives so that the organisation will remain fully functional.

Chairman Kurt Anker Nielsen comments:

"Based on an indepth analysis of the various scenarios, the Board of Directors has concluded that the company’s shareholders will derive most value if an acceptable price for the individual business areas is obtained, and the head office disposed of, with a view to creating maximum proceeds for our shareholders. This is a very difficult decision. The company has proud tradi-tions, but our view is that the individual business units will have better opportunities to develop under different ownership."

CEO Kent Arentoft comments:

"The management has been involved in initiating this process, and we fully support the conclusion. Making oneself redundant is a rather unusual situation, but fortunately only a few employees, in addition to the management, will be affected. This is the best way for us to protect the interests of our shareholders and employees."

The previously announced financial outlook for the 2013 financial year is maintained.

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