14th Dec 2005 07:01
Sondex PLC14 December 2005 Wednesday 14th December 2005 Sondex plc ("Sondex" or the "Group") Acquisition of Applied Electronic Systems Inc. Sondex plc, a leading international technology supplier to the oil and gasindustry, announces the acquisition of Applied Electronic Systems Inc. ("AES"),a USA based company designing, manufacturing and supplying ancillary equipmentfor oilwell logging and pipe recovery, for a maximum total consideration of $14million (£7.9 million)*. Sondex has also issued a separate announcement of its interim results for thesix months ended 31 August 2005. Rationale for the Acquisition • Complementary product range for Wireline Division • Growing, profitable and cash generative • Significant growth potential through the Sondex international sales network • Platform for distribution of other Sondex products in North America AES Financial Highlights • 2005 revenues were $5.5 million in first nine months • 2004 revenues were $5.9 million • 2005 EBIT were $2.2 million in first nine months • Historical operating margins circa 30 per cent AES, based in Louisiana, USA, is a leading supplier of specialist technology andequipment used within oil wells to assist with operations during both drillingand production. The acquisition reflects the on-going Sondex strategy ofreinforcing organic growth - international expansion and new product development- by carefully targeted acquisitions. The maximum total consideration of $14 million (which includes a payment of $1.5million for the freehold of the business premises) will be settled by the issueto the vendors of 775,662 new ordinary shares in Sondex plc and $10,125,000 incash. These shares will be restricted from sale for one year. Further shares, toa maximum value of $1 million, will be issued at the prevailing market price inone year dependent on the acquisition achieving certain performance targets. * using a rate of £1:$1.77 AES supplies a range of logging tools and accessories which are complementary tothose of the Sondex Wireline Division. In addition, the AES Free Point Indicatoris used throughout the industry as a standard for assisting in the retrieval ofdrill pipe which has become stuck in the well; this is a complementarytechnology to the Sondex Downhole Electric Cutting Tool. AES has a significant presence in the USA, a market which accounts for 80 percent of its sales. The Wireline Division will aim to improve AES's performanceby distributing its products - that have a strong reputation in the North Seaand the Middle East - through Sondex's international sales network. Sondex willappoint a new general manager to assist in growing AES sales through theseinternational offices. In turn, the Wireline Division will seek to grow salesof its current products through AES's distribution channels in the land marketsof North America. Martin Perry, Chief Executive of Sondex, said: "This acquisition is in line with our stated strategy of pursuing opportunitiesthat enhance the product lines and market reach of the Group. We are delightedto be able to add this complementary range of technology to our existing productlines, and expect enhanced growth through on-going strong market demand andgeographical opportunity. We remain committed to continuing our strategy of investing for growth bothorganically and through targeted acquisitions." For further information, please contact: Sondex Tel: 0125 286 2200Martin Perry (Chief Executive)Chris Wilks (Finance Director) College Hill Tel: 020 7457 2020Ben Brewerton / Nick Elwes www.sondex.com www.aesla.com AES Financial Performance The AES income statement for the nine months ended 30 September 2005, togetherwith the comparable full year numbers for the year ended 31 December 2004 and2003 are as follows: Year ended 31 December 2003 Year ended 31 December 9 months ended 2004 September 30 2005 $'000 $'000 $'000 Revenue 4,681 5,948 5,453Cost of sales (2,478) (3,105) (2,360) Gross profit 2,203 3,105 3,093Sales and marketing (287) (328) (226)General and administration (831) (887) (668)Depreciation (107) (89) (49) Operating profit 978 1,801 2,150Operating profit percentage 20.90% 30.30% 39.40% The company balance sheets at 31 December 2004 and as at 30 September 2005 wereas follows: As at 31 December 2004 As at 30 September 2005 $'000 $'000 Fixed assets 1,188 1,147Current assets Stock 1,467 1,701 Debtors 1,157 1,202 Cash 303 1,639Current liabilities (127) (130) Net assets 3,988 5,559 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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