Arbonia considers purchase offers for the Climate Division and publishes
annual results for 2023

Arbonia AG / Key word(s): Annual Results
Arbonia considers purchase offers for the Climate Division and publishes
annual results for 2023

27-Feb-2024 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.

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Arbon, 27 February 2024 - The Board of Directors has received several
unsolicited expressions of interest in purchasing the Climate (formerly
HVAC) Division, prompted by comparable transactions in the market. After
careful consideration and with a view to sustainably increasing the value
for shareholders, the Board decided to carry out a structured sales process
with several strategic prospective buyers. Upon conclusion of a possible
transaction, the Board of Directors intends to return a significant share of
the proceeds to the shareholders, in addition to reducing debt. At the same
time, the remaining Doors Division is to be strategically developed as well
as further strengthened through targeted acquisitions.

The Arbonia Board of Directors has received several unsolicited indications
of interest in purchasing the Climate (formerly HVAC) Division and has
subsequently decided to carefully review them with the involvement of
investment banks. The process and the negotiations with several strategic
potential buyers are currently at an advanced stage.

The valuation of the Climate Division used for the negotiations is based on
market-standard EBITDA transaction multiple for a company operating in the
heating, ventilation and air-conditioning sector.

The Board of Directors intends to provide the shareholders with a
significant share of the sales proceeds of the Climate Division upon
completion (closing) of a possible transaction. When the possible
transaction is completed and the proceeds from the sale are received,
expected for the second half of 2024, the Board of Directors would invite
shareholders to an Extraordinary General Meeting, which would vote on the
instruments for returning funds to the shareholders. Due to the ongoing
negotiations, the Board of Directors has also decided to request the
distribution of an ordinary dividend for the financial year 2023 at such an
Extraordinary General Meeting.

Upon completion of the transaction, Arbonia would completely focus on the
doors business and implementing the adopted strategy. The division continues
to work towards the goal of expanding its leading position as a Central and
Eastern European supplier of wooden doors and glass solutions. Based on the
largely completed, comprehensive investment programme for increasing
capacity and productivity as well as by increasing market shares in its
domestic and neighbouring target markets, the Arbonia Doors group is aiming
for above-average market growth in the future. Building on the investments
made and with the aid of digital solutions, the Arbonia Doors group is
positioning itself as an innovative full-range supplier and cost leader.

The Doors Division would use the sales proceeds that remain following debt
reduction and the return of funds to shareholders to accelerate the further
development of its business. Firstly, it will continue growing organically
and, secondly, make acquisitions that will help it establish a broader
position both geographically and with regard to product variety.

Without currently knowing if and when the negotiations will lead to a
transaction, the relevant IFRS guidelines (IFRS 5) require the Climate
Division to be recorded as a discontinued operation in the consolidated
financial statement as soon as a sale is classified as highly probable. At
the same time, it is important to note that the full holding costs are
allocated to the continuing operating activities, which leads to increased
expense items and negatively affects the profitability figures.

Financial figures for continuing operations for 2023

In the financial year 2023, Arbonia was confronted with a historic slump in
the construction industry in most of its core markets, which resulted in a
volume decrease of up to 30% for its products in individual markets. In
addition to inflationary increases in construction costs and sharp rises in
interest rates, the construction industry was also subjected to
uncertainties in Germany, culminating in the divisive negotiations within
the "traffic light" coalition government regarding the German Buildings
Energy Act (GEG).

Revenue of the continuing operations decreased in the financial year by
9.2%, from CHF 555.9 million to CHF 504.6 million. Without currency and
acquisition effects (organic), the decrease in revenue amounted to 8.2%.
EBITDA without one-time effects fell from CHF 53.3 million to CHF 34.0
million, corresponding to a decrease of 36.3%. EBITDA with one-time effects
fell by 36.2% to CHF 31.7 million (previous year: CHF 49.7 million).
Accordingly, the EBITDA margin (without one-time effects) fell from 9.6% to
6.7%; including one-time effects, the EBITDA margin amounted to 6.3%,
compared with 8.9% in the previous year. The one-time effects amounted to
CHF 2.2 million net on the EBITDA level and were mainly due to personnel
measures in connection with changes made to production capacity. In
continuing operations, EBIT without one-time effects fell from CHF 16.2
million to CHF -6.6 million. EBIT with one-time effects amounted to CHF -8.9
million, after CHF 12.4 million in the previous year. The corresponding EBIT
margin without one-time effects fell from 2.9% to -1.3%; with one-time
effects, it decreased from 2.2% to -1.8%. The group result from continuing
operations without one-time effects amounted to CHF -12.5 million, compared
with CHF 3.2 million in the previous year. The group result with one-time
effects amounted to a total of CHF -14.2 million (previous year: CHF 0.5
million). The group result from discontinued operations after taxes amounted
to CHF -3.0 million, which led to a group result of CHF -17.2 million in
total. (1)

Compared to the previous year, the cash flow from operating activities of
the group substantially increased by CHF 126.8 million, from CHF -25.8
million to CHF 101.0 million. This was due to the CHF 34 million reduction
in net working capital, which over-compensated higher interest charges. Both
divisions contributed to this positive effect. Both divisions achieved
positive cash flows from their operating activities. Decreasing investments
of CHF 93 million, which corresponds to an investment rate of 8.6% compared
with 12.4% of the revenues of the continuing and discontinued operations in
the previous year, the payment of the purchase price for Interwand, the
shareholding increase in KIWI and deferred payments for acquisitions, led to
a free cash flow of CHF 2.4 million. This would have been significantly
higher if there had been no semi-finished and finished products and
materials totalling more than CHF 20 million in stock at the end of the year
due to the slump in demand for heat pumps.

The net debt increased to CHF 209 million at year-end, from CHF 184 million
in the previous year. A free cash flow of CHF 2.4 million was countered by
the payment of the dividend (CHF 20 million), the purchase of treasury
shares (CHF 3 million) as well as an increase in leasing liabilities. At the
end of the year, the leverage ratio was 2.3x (without one-time effects) or
2.9x, taking into account all one-time effects. A mortgage financing in the
amount of CHF 15 million was set-up as announced in order to independently
finance the investment property in Arbon. As of year-end, the shareholders'
equity was CHF 921.0 million, which corresponds to an extremely stable
equity ratio of 62.1%.

Outlook
Arbonia expects a challenging environment in its core markets in the
financial year 2024 as well. Despite improving external factors (decreasing
inflation and interest rates as well as lower material and construction
costs), Arbonia does not anticipate any increase in new residential building
activity in Central Europe in 2024. Only in the renovation sector could a
recovery start in the course of the year.

Due to the wide product and country mix as well as a significant share of
commercial and public construction, Arbonia expects organic growth in the
Climate Division, while the Doors Division should end up at the previous
year's level. The profitability (EBITDA) of the Climate Division is set to
increase further as a result of revenue growth and additional cost
optimizations. In the current year, the Doors Division is benefiting from
the consistent implementation of the cost-savings measures it started in
2023 as well as the positive effect of strategic electricity purchasing; as
a result, profitability is expected to increase compared to the previous
year.

The detailed reporting can be found in the annual report 2023 in the
chapters "Letter to the Shareholders" and "Divisions" as well as
"Sustainability Report"; see www.arbonia.com/report2023.

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(1) Explanations, definitions and reconciliations for the Alternative
Performance Measures are found in the Annual Report 2023 on pages 237 - 241.

Contact
Fabienne Zürcher
Head Corporate Communications & Investor Relations
T +41 71 447 45 54
fabienne.zuercher@arbonia.com


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End of Inside Information

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   Language:       English
   Company:        Arbonia AG
                   Amriswilerstrasse 50
                   9320 Arbon
                   Switzerland
   Phone:          +41 71 447 41 41
   E-mail:         holding@arbonia.com
   Internet:       www.arbonia.com
   ISIN:           CH0110240600
   Listed:         SIX Swiss Exchange
   EQS News ID:    1845607

End of Announcement EQS News Service
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1845607 27-Feb-2024 CET/CEST