Disposal

Carclo plc
26 May 2005

26 May 2005



                                  Carclo plc


                    Proposed disposal of ECC Card Clothing


Highlights



  • Carclo plc ('Carclo' or 'the Group') has today received a binding offer
    from NV Bekaert SA ('Bekaert') for its ECC Card Clothing business ('ECC')
    for a total consideration of up to £8.6 million payable in cash



  • Carclo's remaining specialist wire business, ECC supplies consumable wire
    products to the textile industry worldwide.  The business comprises eight
    companies located in the UK, France, Italy, Turkey, the USA, Canada, India
    and China



  • £6.5 million is payable on completion with further payments of up to £2.1
    million dependent upon the achievement of certain performance criteria in
    the two year period following 31 May 2005



  • Completion of the disposal is conditional, inter alia, upon satisfactory
    completion of the UK and French employee consultation processes, Turkish
    merger clearance and the approval by shareholders of the acceptance of the
    offer and the subsequent disposal at an extraordinary general meeting



  • Completion of the disposal is expected to occur on or around 13 June 2005



                                    - Ends -


Enquiries:

Carclo plc                                   01924 268040
Ian Williamson, Chief Executive
Robert Brooksbank, Finance Director


Dresdner Kleinwort Wasserstein Limited       020 7623 8000
Michael Covington
Alex Thomas


Weber Shandwick Square Mile                  020 7067 0700
Richard Hews
Susanne Walker


Dresdner Kleinwort Wasserstein, which is authorised and regulated by the
Financial Services Authority, is acting for Carclo plc and no-one else in
connection with the contents of this announcement and will not be responsible to
anyone other than Carclo plc for providing the protections afforded to customers
of Dresdner Kleinwort Wasserstein, or for affording advice in relation to the
contents of this announcement or any matter referred to herein.




26 May 2005



Carclo plc


Proposed disposal of ECC Card Clothing


Introduction


On 20 May 2005 it was announced that Carclo plc ('Carclo' or 'the Group') had
entered into discussions with a third party regarding the possible disposal its
ECC Card Clothing business ('ECC').  Today Carclo announces that it has received
a binding offer from NV Bekaert SA ('Bekaert') for the sale of ECC to Bekaert
for a total consideration of up to £8.6 million, payable in cash.  Of this, £6.5
million is payable on completion, which is expected to occur on or around 13
June 2005, with further payments of up to £2.1 million dependent upon the
achievement of certain performance criteria in the two years following 31 May
2005.  The additional consideration would be payable as follows: up to £0.6
million on or before 31 July 2006 and up to £1.5 million on or before 31 July
2007.


Completion of the disposal is conditional, inter alia, upon satisfactory
completion of the UK and French employee consultation processes, Turkish merger
clearance and the approval by shareholders of the acceptance of the offer and
the subsequent disposal at an extraordinary general meeting.


Strategy and background to and reasons for the Disposal


In 1997 Carclo commenced a strategy of expanding its high quality Technical
Plastics operations through a series of focused acquisitions, initially in the
UK and subsequently in the USA.  Carclo's Technical Plastics operations have
been further developed with the establishment of facilities in the Czech
Republic, China and India.  In conjunction with the development of Technical
Plastics, Carclo has sought to streamline its operations through the disposal of
its non core metal processing businesses.


The main disposals undertaken by Carclo included the disposal of a steel strip
business for cash consideration of £19.3 million in 1999 and a specialist wire
business for £5.2 million in cash in 2001 (which also generated cash income of
£6.4 million from the disposal of surplus property previously occupied by this
business).  Other disposals of non core metal processing businesses have
generated £11.9 million in cash since 1997.


Carclo has now received an offer from Bekaert to acquire ECC, the remaining
specialist wire business.


ECC supplies consumable wire products to the textile industry world-wide.  As a
result of changes in tariff structures, the textile industry has gone through a
period of uncertainty and some restructuring of the ECC business has been
necessary to maintain a competitive position in the market.  In particular plans
are underway to consolidate UK manufacturing onto one site in Cleckheaton in
late 2005 and to expand the newly commissioned manufacturing facility in China.


The Board believes that the interests of ECC and the Group are best served if
this restructuring takes place outside the Group.  Having received an offer for
ECC from Bekaert which appropriately reflects the value of the business, the
Board has concluded that it should pursue the proposed disposal.  Bekaert is a
world class supplier of a range of wire products and ECC fits well with its
existing businesses.


Current trading and prospects

On 1 April 2005, Carclo issued the following period end update:


'The board anticipates that the trading outcome for the year ended 31 March 2005
will be in line with its expectations.


As forecast, the Group delivered a strong performance in the last quarter.  The
Technical Plastics division benefited from good automotive volumes and a
recovery in divisional operating profits.  We are now seeing the real benefit of
the ongoing re-structuring programme and this should provide the base for
further progress in the new financial year.  In general, demand has stabilised.
We have some concerns over the strength of demand for automotive components in
the USA, but the medical market remains buoyant.


We have seen encouraging growth in our Chinese Technical Plastics operation
which is now profitable.  The Indian Joint Venture which was set up to
manufacture control cables will become fully operational during our next
financial year.


ECC has experienced a difficult year but the order book is now improving and the
new China facility is performing well.


The development of our new technologies continues to progress well and we
anticipate that the Conductive Inkjet Technology joint venture will commence
generating revenues in the new financial year.'


Since this time, trading has continued satisfactorily in line with management's
expectations.  Looking ahead, management will continue its focus on improving
sales whilst also delivering the planned efficiencies from the re-structuring
programme.  The Board will also continue to realise value from properties, where
appropriate.  The Board remains confident in the prospects for the Continuing
Group for the current financial year.


Information on ECC


The ECC business comprises eight companies located in the UK, France, Italy,
Turkey, the USA, Canada, India and China.  The facilities in the UK, France,
India and China manufacture a range of card clothing products which are sold
throughout the world.  In addition the operations in the USA, Italy, Turkey and
Canada provide a fitting and distribution service for card clothing products in
those geographic regions.


For the year ended 31 March 2004 the ECC business reported sales of £17.6
million and operating profit of £0.7 million before exceptional costs of £0.1
million incurred in relation to restructuring.  For the six months ended 30
September 2004, the ECC business reported sales of £8.2 million and an operating
profit of £0.1 million before exceptional costs of £0.1 million incurred in
relation to restructuring.  As at 30 September 2004 the net asset value of the
assets of the ECC business which are subject to the disposal amounted to
approximately £8.6 million.


The unaudited management accounts of ECC for the year to 31 March 2005 show
sales and underlying profit below the prior year. ECC had a slow start to the
year ended 31 March 2005, with demand improving towards the end of the financial
year. The new Chinese facility experienced a good end to the financial year with
growing activity levels.


Principal terms and conditions of the Disposal


The offer letter from Bekaert provides that the offer made to purchase ECC can
only be accepted if certain conditions are satisfied, including, inter alia,
satisfactory conclusion of the UK and French employee consultation process, the
approval by shareholders of the acceptance of the offer and the subsequent
disposal at the proposed extraordinary general meeting and Turkish merger
clearance having been obtained.  If the conditions have not been satisfied by 17
June 2005 (or any later date agreed by Carclo and Bekaert), the offer will
lapse.


Under the sale and purchase agreement, to be signed upon acceptance of the
offer, Carclo will sell (or procure the sale of) ECC to Bekaert for a cash
consideration of up to £8.6 million.  Of this cash consideration, £6.5 million
will be payable on completion with further payments of up to £2.1 million
dependent upon the achievement of certain performance criteria in the two years
to 31 May 2007.


One element of these further payments is payable (up to a maximum of £1.7
million) dependent upon sales of card clothing products by the ECC and Bekaert
businesses in China for the years ending 31 May 2006 and 31 May 2007.  An
initial payment (up to a maximum of £0.6 million), is payable on or before 31
July 2006 with the balance payable on or before 31 July 2007.  A further amount
of up to a maximum of £425,000 will be paid to the extent that the costs of
consolidating the UK operations of ECC onto one site in Cleckheaton are less
than the agreed budget during the twenty four month period to 31 May 2007.


Excluded from the transaction are the main freehold properties occupied by the
UK and French ECC businesses, the UK trade debts and the UK bank balances.  The
properties will be retained by Carclo and leased to Bekaert with effect from
completion or, for the French property, as soon as practicable following
completion.


The unaudited operating assets of ECC at 31 March 2005 were £11.1 million.
Property with a net book value of £2.2 million is being retained, which will be
added to Carclo's surplus property portfolio, together with the UK trade debts
of £1.2 million which will be realised for cash and the net bank overdraft of
ECC UK which amounted to £0.5 million.  The balance of the assets, which are
subject to the disposal, will be sold at their prevailing net book value of £8.2
million.  This will be settled by way of the initial consideration of £6.5
million and the first element of the deferred consideration of up to £1.7
million.


Further information


A circular to shareholders providing further information on the disposal, and
containing a notice of the extraordinary general meeting to be held at the
offices of Weber Shandwick Square Mile, Fox Court, 14 Gray's Inn Road, London
WC1X 8WS on 13 June 2005 at 11.30 a.m., will be posted to shareholders shortly.


                                    - Ends -


Enquiries:

Carclo plc                                   01924 268040
Ian Williamson, Chief Executive
Robert Brooksbank, Finance Director


Dresdner Kleinwort Wasserstein Limited       020 7623 8000
Michael Covington
Alex Thomas


Weber Shandwick Square Mile                  020 7067 0700
Richard Hews
Susanne Walker




Dresdner Kleinwort Wasserstein, which is authorised and regulated by the
Financial Services Authority, is acting for Carclo plc and no-one else in
connection with the contents of this announcement and will not be responsible to
anyone other than Carclo plc for providing the protections afforded to customers
of Dresdner Kleinwort Wasserstein, or for affording advice in relation to the
contents of this announcement or any matter referred to herein.



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