- Title:
Acquisition of Monmouth Scientific Limited & TVR - Time:
07:00:05 - Date:
3 Dec 2020 - Category:
Acquisitions and alliances - ID:
3481H
SDI Group plc
("SDI", the "Company" or the "Group")
(AIM: SDI)
Acquisition of Monmouth Scientific 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 2 December 2020 of Monmouth Scientific Limited ("Monmouth Scientific"), a UK manufacturer of biological safety cabinets, fume cupboards, laminar flow cabinets and cleanrooms (the "Acquisition"). Total consideration, including earnout, is forecast to be approximately £5.8 million, net of cash acquired.
Highlights:
· Monmouth Scientific specialises in providing controlled clean air environments for scientific, medical and other technical applications
· The company is currently benefiting from high levels demand for its solutions for COVID-19 testing infrastructure
· Expected to move to new larger purpose-built premises in 2022
· Acquisition expected to be immediately earnings enhancing
Ken Ford, Chairman of SDI said: "Monmouth Scientific is a further step in our Group growth strategy. It is a complementary fit with our stable of businesses providing laboratory equipment, and generates areas for potential growth. The Acquisition is expected to be immediately earnings enhancing. We are delighted to welcome David Pomeroy and his team into the Group."
About Monmouth Scientific
Monmouth Scientific specialises in the design, manufacture and service of clean air solutions for a variety of scientific, medical and other technical sectors, protecting the purity of the air for both the controlled activity and for the operator. Principal products are biological safety cabinets, fume cupboards, laminar flow cabinets, bespoke and modular cleanrooms, and related items.
For the year ended 31 March 2020, Monmouth Scientific achieved revenues of £6.2 million, and EBIT of £0.4 million (unaudited) and for the six months ended 30 September 2020, the company achieved revenues of £3.7 million and EBIT of £0.8 million (unaudited), adjusted to eliminate non-recurring items and to reflect Monmouth Scientific's ongoing cost base within the Group (year ended 31 March 2020, unaudited statutory profit before tax of £0.28 million).
Approximately 80 per cent. of Monmouth Scientific's sales are to UK customers. The COVID-19 pandemic has generated a significant surge in demand for the company's biological safety cabinets which is expected to continue for the rest of its financial year.
Based in Bridgwater, Somerset, Monmouth Scientific was founded in 2003 by David & Lisa Pomeroy and employs approximately 65 staff. David will continue to lead the company within the SDI Group.
Monmouth Scientific is outgrowing its current premises and is expected, following the Acquisition, to contract for new and larger purpose-built leased premises locally which have already been identified, and which will enable operating efficiency and production expansion.
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. Monmouth Scientific is expected to join SDI's Sensors and Controls reporting segment. Excluding current COVID-19 led demand, the SDI Board considers that there are long term growth drivers for Monmouth Scientific's products and services.
Consideration for the Acquisition
Total consideration is estimated at £5.8 million, excluding cash acquired, and consists of:
· Initial consideration of £2.66 million, of which £2.46 million in cash and £200,000 in SDI ordinary shares ("Ordinary Shares") equating to 230,680 shares issued at 86.7 pence per 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*;
· A payment in cash shortly after completion, equivalent to the net tangible assets of Monmouth Scientific at completion, currently estimated at £1.6 million and which net tangible assets are estimated to include c.£0.6 million of cash and no bank debt (subject to completion accounts); and
· An earnout cash payment, payable after 31 March 2021, currently estimated at £2.1 million.
The total consideration is capped at £6.94 million (including estimated £0.6 million of cash acquired), and this would be payable based on Monmouth Scientific achieving adjusted EBIT for the year to 31 March 2021 in excess of £1.9 million.
The cash consideration will be funded from existing cash resources and from the Group's existing revolving credit facility with HSBC UK Bank. At 31 October 2020, the Group had cash of £3.4 million (unaudited), net debt of £0.3 million (unaudited) (excluding IFRS16 lease liabilities), and £5.0 million of undrawn bank facility.
Issue of new Ordinary Shares and Total Voting Rights
As referred to above, as part of the consideration for the Acquisition, SDI has issued 230,680 new Ordinary Shares. Application will be made to the London Stock Exchange for the 230,680 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 9 December 2020.
The total number of Ordinary Shares in issue is now 98,017,964 and the total number of voting rights is therefore 98,017,964. This figure may be used by shareholders as the denominator for the calculations by which they 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.
Enquiries
SDI Group plc 01223 320480
Ken Ford, Chairman
Mike Creedon, CEO
Jon Abell, CFO
finnCap Ltd 020 7220 0500
Ed Frisby/Kate Bannatyne - 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 and Monmouth Scientific.
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
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.
*Lock-in Agreement: No disposals of Ordinary Shares without the prior consent of the Company.
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
Acquisition of Monmouth Scientific Limited & TVR07:00:053 Dec 2020Acquisitions and alliances3481H