REG - SDI Group PLC - Acquisition of Safelab Systems Limited and TVR

SDIAnnouncement

28/03/2022 07:00

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RNS Number : 1408G  SDI Group PLC  28 March 2022

SDI Group plc

("SDI", "SDI Group", the "Company" or the "Group")

(AIM: SDI)

 

Acquisition of Safelab Systems Limited

and Total Voting Rights

SDI Group plc, the AIM quoted Group focused on the design and manufacture of
scientific and technology products for use in digital imaging and sensing
control applications, is pleased to announce the acquisition on 24 March 2022
of Safelab Systems Limited ("Safelab"), a UK manufacturer of fume cupboards
(the "Acquisition"). Total consideration is forecast to be approximately £7.7
million, net of cash acquired.

 

Highlights:

·         Safelab produces high specification fume cupboards and
similar cabinets, for both commercial and research laboratories and with a
special focus on the education sector which requires versatile and
fully-featured ducted cabinets often specified in newly built or refurbished
laboratory facilities

·         Safelab's cabinets are designed and manufactured in a
dedicated facility in Weston-Super-Mare

·         Revenues for the year ended 28 February 2022 are expected
to be approximately £4.8m, with adjusted EBIT of £0.9 million

·         Acquisition expected to be broadly neutral to FY2022 profit
and earnings enhancing in FY2023

·         Follows SDI's December 2020 acquisition of Monmouth
Scientific Limited, a manufacturer of clean rooms, fume cabinets and safety
cabinets based in Bridgwater. The Company expects to maintain the identity and
autonomy of both companies in their current locations, while looking for
opportunities to enhance the total customer offer

 

Ken Ford, Chairman of SDI said: "The acquisition of Safelab is another step in
our Group growth strategy, and the second significant acquisition of the
financial year, demonstrating again the opportunities to acquire in sectors
related to our existing portfolio. The Acquisition is expected to be earnings
enhancing in FY2023. We are delighted to welcome Roger Guess and his staff to
the SDI Group."

 

 

FURTHER INFORMATION ON THE ACQUISITION IS SET OUT BELOW

 

 

Enquiries

SDI Group
plc
01223 320480

Ken Ford, Chairman

Mike Creedon, CEO

Jon Abell, CFO

www.thesdigroup.net (http://www.scientificdigitalimaging.com)

 

finnCap
Ltd
020 7220 0500

Ed Frisby/Kate Bannatyne/Milesh Hindocha - Corporate Finance

Andrew Burdis/Sunila de Silva - ECM

 

JW
Communications
07818 430877

Julia Wilson - Investor & Public Relations

About SDI Group plc:

SDI designs and manufactures scientific and technology products for use in
digital imaging and sensing and control applications including life sciences,
healthcare, astronomy, manufacturing, precision optics and art conservation.
SDI operates through its company divisions: Atik Cameras, Synoptics,
Graticules Optics, Sentek, Astles Control Systems, Applied Thermal Control,
MPB Industries, Chell Instruments, Monmouth Scientific, Uniform Engineering,
Scientific Vacuum Systems and Safelab Systems.

SDI continues to grow by developing its own technology advancements and by
improving its global sales channels, as well as through pursuing strategic,
complementary acquisitions. www.thesdigroup.net (http://www.thesdigroup.net)
 

 

 

The following information is in relation to the Acquisition

 

About Safelab Systems Limited

 

Safelab specialises in the design, manufacture and servicing of fume cupboards
and related items, used within laboratories to prevent fumes from entering the
laboratory environment. Such fume cupboards are typically used in school,
university and other laboratories to perform experiments and to isolate
processes likely to produce fumes which may be harmful to people in the lab.
Safelab sells to individual schools, universities and laboratories as well as
to building contractors and to scientific equipment distributors. Almost all
of Safelab sales are to UK-based customers.

 

For the year ended 28 February 2022, Safelab is expected to have achieved
revenues of approximately £4.8 million, adjusted EBIT of £0.9 million
(unaudited and adjusted to eliminate non-recurring items and to reflect
Safelab's ongoing cost base within the Group) and unaudited statutory profit
before tax of approximately £0.7 million.

 

Based in Weston-Super-Mare, Somerset, Safelab has been managed for the past 19
years by majority owner-manager Roger Guess, who will continue to lead the
business under SDI Group ownership. Safelab has approximately 41 staff.

 

Acquisition rationale

 

The Acquisition is in line with the Group's strategy of acquiring businesses
with complementary scientific and technology products, with capable management
teams in place and with opportunities to grow further under the SDI Group
structure. Safelab will reside within SDI's Sensors and Controls division. The
SDI Board considers that there are long term growth drivers for Safelab's
products and services.

Consideration for the Acquisition

 

Total consideration is estimated at £7.7 million, excluding cash acquired,
and consists of:

·         Initial consideration of £5.5 million, of which £5.3
million paid in cash and £200,000 in ordinary shares of 1 penny each in the
capital of the Company ("Ordinary Shares") at a price of 169.9 pence per
Ordinary Share (being the average mid-market closing price for the
five-business days prior to the date of this announcement). The shares issued
are subject to a one-year lock-in agreement*; and

·       A payment in cash shortly after completion, equivalent to the
net tangible assets of Safelab at completion, currently estimated at £2.9
million and which net tangible assets are estimated to include c.£0.7 million
of cash and no bank debt (subject to completion accounts). The net assets
include freehold ownership of Safelab's manufacturing facility, valued at
approximately £1.2m.

 

The cash consideration will be funded from existing cash resources and from
the Group's revolving credit facility with HSBC UK Bank.

Admission and Total Voting Rights

 

As referred to above, as part of the consideration for the Acquisition, SDI
has issued 117,716 new Ordinary Shares. Application has been made to the
London Stock Exchange for 117,716 new Ordinary Shares to be admitted to
trading on AIM ("Admission") and it is expected that Admission will become
effective and trading will commence at 8.00 a.m. on 31 March 2022.

After Admission, the total number of Ordinary Shares in issue will be
102,199,676 and the total number of voting rights will therefore be
102,199,676. This figure may be used by shareholders as the denominator for
the calculations by which they will determine if they are required to notify
their interest in, or a change to their interest in, the share capital of the
Company under the FCA's Disclosure Guidance and Transparency Rules.

*Lock-in Agreement: No disposals of Ordinary Shares without the prior consent
of the Company.

 

No statement in this announcement is intended to be a profit forecast or
estimate and no statement in this announcement should be interpreted to mean
that earnings per share of the Company for the current or future financial
years would necessarily match or exceed the historical published earnings per
share of the Company.

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

 

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