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Tuesday, July 03, 2023

Dawson International to sell and leaseback Kincross property

Dawson International announces that it has entered into an agreement with Montgomery Hanson Property Limited for the sale and leaseback of its entire property at Lochleven Mills, Kinross. The Property contains the administrative offices of the Group and the administrative offices and production facilities of its cashmere yarn spinning business, Todd & Duncan.

The initial consideration is 3.5m in cash with a further amount receivable in cash based on a 50 per cent share of any development profit which may be realised or potentially realised by the purchaser in due course. The development profit of the Property will depend upon a number of complex factors, outside Dawson's direct control, including the nature of, time taken and cost to achieve that development. Accordingly, the actual further amount which might be received by Dawson at this stage is uncertain. The immediate impact will be to reduce Group borrowings, while the leaseback ensures continuity of production. The net book value of the assets disposed of is 0.9m. The lease is for an initial period of 5 years with a mutual break clause after two years. This is sufficient time to enable the Group to consider and implement options for future production.

Following a difficult year in 2006, which was impacted by production issues in the first half, Todd and Duncan has reported a strong start to 2007. In the first five months overall sales increased by 7 per cent with cashmere volumes up 15%. With last years production issues resolved, customer service and stock service availability levels have been restored and enhanced. New product development and underlying cost reductions are contributing to improved results. Whilst Todd and Duncan has made significant progress in its turnaround strategy and maintained its price premium at the top end of the luxury cashmere market neither they nor the market generally have been able to pass on the raw material price increases of the last two years.

Mike Hartley, Chairman of Dawson International commented: "I am pleased to announce this deal which releases value from a site which is too large for our production requirements following the exit from our cashmere fibre business in 2005 and installation of more efficient spinning technology in 2006. In Todd & Duncan we believe we have the premier brand in cashmere yarn and we continue to review how we optimise the strategic opportunities of this business including relocation to modernised premises."

James McArdle, Managing Director of Todd & Duncan added: "During the last 12 months Todd & Duncan has significantly improved its performance largely through increased productivity and new product innovation assisted by a 2m investment programme. The property deal not only generates income for the Dawson International Group but it also presents an opportunity for Todd & Duncan to build on recent improvements and enhance future performance".