REG - Braime Group PLC - Acquisition of Don Electronics

BraimeAnnouncement

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RNS Number : 9096Y  Braime Group PLC  31 March 2026

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service (RIS), this inside information
will be in the public domain

 

Braime Group PLC

("Braime" or the "Company" and together with its subsidiaries the "Group")

 

Acquisition of Electronics manufacturing businesses

 

The Company is pleased to announce that it has today completed the acquisition
of the entire issued share capital of Don Electronics Limited ("Don
Electronics"), which itself holds 100% of the equity in Synatel
Instrumentation Limited ("Synatel") from Donelec Group Limited (the "Seller")
(together the "Acquisition"). As a result, the Company has obtained control of
two businesses that supply electronic component parts to the Group.

 

Rationale for Acquisition

 

The Acquisition has been undertaken to strengthen control over the Group's key
supply chain, secure valuable intellectual property in a fast-growing sector
and broaden its customer base.  While the Acquisition is not expected to
result in a material increase in revenues in the short-term, it is anticipated
to enhance the Group's profitability through captured margin.  These
businesses also further strengthen and enhance the Group's capabilities to
bring new designs to market, in line with the Group's strategy for continually
developing innovative end-user products.

 

The Acquisition was settled for initial cash consideration of £5.0 million;
deferred cash consideration with a principal value of £4.9 million (the
"Deferred Consideration") and additional contingent consideration as detailed
below. The Deferred Consideration is recorded as an amount owing to the
Seller. Interest accrues on the Deferred Consideration at the rate of Bank of
England base rate plus 3% and the Deferred Consideration is payable at a rate
of £750,000 per annum for three years, with the remaining balance payable in
full six-months after the third anniversary of completion.

 

In addition, the sale and purchase agreement also provides for additional
contingent consideration payable in the fourth, fifth and sixth years
following completion, conditional upon the two businesses acquired achieving
certain combined annual profit targets agreed to between the Seller and the
Company.  For guidance purposes only, the fair value of the estimated
contingent consideration has been calculated as £1.5 million, based on
Braime's management's estimate of the profits expected to be achieved over the
six-year period by Don Electronics and Synatel and discounted to a net present
value using a discount rate of 6.25%. The estimated nominal undiscounted value
of the consideration, based on these assumptions and inclusive of interest on
the Deferred Consideration, is £13.1 million.  However, the additional
contingent consideration, and therefore the total consideration payable under
the Acquisition agreement is uncapped, although the terms are structured such
that profits earned by achieving the targets always exceed the contingent
consideration.

 

Braime's estimated fair value of the net assets acquired, including intangible
assets but excluding balances with the Group is £9.0 million.  This remains
subject to adjustment once the Completion Accounts become available.

 

For the year ended 31 March 2025 (audited), Don Electronics reported revenue
of £7.1 million, a profit before tax of £1.6 million and net assets of
£3million.  Don Electronics only acquired Synatel on 1 February 2026 and
accordingly there are no consolidated accounts for the two companies, however
for the year ended 31 March 2025 (audited), Synatel reported revenue of £3.5
million with a profit before tax of £0.4 million and net assets of £3.1m.

 

New Loan Agreement

 

The cash consideration payable on completion was funded through a new £5.2
million term loan facility entered into today with the Company's incumbent
banking partner, HSBC for an initial term of 41 months, expiring on 31 August
2029.  Repayment is to be amortised over seven years and interest on the loan
is payable at 2.6% above Bank of England base rate.  Standard covenants are
in place and the debt is secured on fixed and floating charges on all the
assets of the UK entities within the Group.

 

The Company was advised on the Acquisition by Hill Dickinson, Armstrong Watson
and Moore Kingston Smith.

 

Nicholas Braime, Chairman said "Both Don Electronics and Synatel have strong
reputations for quality and engineering capability, and we are delighted to
welcome their teams into the Group. These two businesses have been
long-standing suppliers to our Group with whom we have worked for over 40
years and bringing them into the Braime family marks an important milestone.
We believe this partnership will help us drive forward new ideas, support
future product launches and broaden the solutions we can offer customers".

 

For further information please contact:

 

Braime Group PLC

Nicholas Braime - Chairman

Cielo Cartwright - Chief Financial Officer

0113 245 7491

 

Zeus Capital Limited (Nominated Adviser and Broker)

Katy Mitchell

0203 829 5000

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