TIDMSOLI
RNS Number : 5973Q
Solid State PLC
01 March 2021
Solid State plc
("Solid State", the "Group" or the "Company")
Acquisition of Digital Imaging Specialist
& Investor Presentation
Solid State plc (AIM: SOLI), the AIM listed manufacturer of
computing, power and communications products, and value added
supplier of electronic and opto-electronic components , is pleased
to announce the acquisition of Active Silicon Limited and its
subsidiaries ("Active Silicon") (the "Acquisition") for an initial
consideration of GBP6.3m, which, when adjusted for the cash on the
balance sheet, results in an effective net initial consideration of
approximately GBP2.7m.
Highlights of the Acquisition include:
-- Active Silicon is an industry leading expert in the design
and manufacture of board level solutions for high-performance
digital image capture, processing, and transmission.
-- Active Silicon has built its reputation and brand over 30
years, with world-class products serving high growth markets
including complex manufacturing, medical imaging, security, defence
and life sciences.
-- Active Silicon operates at higher gross margin than the
Group's existing computing systems business unit.
-- Active Silicon has established international sales channels
with circa 50% of revenue coming from overseas.
-- The Acquisition complements the Group's opto-electronic and
embedded computing capability, significantly enhancing the Group's
technical expertise, scale, strength, and depth in the high growth
vision market.
-- Combining Active Silicon and Steatite's capabilities (Solid
State's manufacturing entity) delivers a differentiated customer
offering.
-- The enlarged Group is now able to offer design-led high
performance image processing and embedded computing solutions,
meeting the demands of next generation technologies reliant on
machine vision, autonomy, edge computing, internet of things (IoT)
and artificial intelligence (AI).
-- The Acquisition is expected to be earnings enhancing in the first full year.
Acquisition consideration:
The Company has acquired the entire share capital of Active
Silicon for an initial cash consideration of GBP6.3m, which on a
cash free debt free basis results in an initial net consideration
of approximately GBP2.7m. The initial consideration is subject to a
completion accounts pound for pound adjustment in the event of any
variance to the expected net assets at completion , with settlement
being made out of the Group's existing cash resources and banking
facilities.
In addition to the initial consideration there is a 25 month
earn out period. The earn out consideration will be paid in two
tranches based on the level of profit after tax generated in the
periods ending 31 March 2022 and 31 March 2023 respectively. In
aggregate, the earn out consideration is expected to be less than
GBP1m.
Information on Active Silicon Limited:
Established in 1988, Active Silicon designs and manufacturers
imaging and embedded vision systems allowing the capture,
processing, and transmission of image data in high performance and
critical environments. World-class products include innovative
embedded systems for IoT applications, pioneering autofocus-zoom
cameras and high-speed acquisition cards allowing real-time,
high-resolution image capture over long cable lengths. With a
longstanding, global customer base, Active Silicon's products have
applications in multiple areas of industry, science, and technology
- including advanced manufacturing, life sciences, robotics,
medical imaging, security and defence.
Active Silicon's headquarters and research & development
centre are in Iver (west of London) with its production facility
nearby in Langley. In addition, it has a US subsidiary, Active
Silicon Inc., which operates from Severna Park, Maryland. This
office provides sales, support, and operations for the North
American market.
All hardware is designed in-house with some subcontract
manufacturing taking place in Europe. Final assembly, inspection
and testing is undertaken at the UK production facility.
Financial performance:
For the year ended 31 March 2020 Active Silicon reported revenue
of GBP5.5m, profit after tax of GBP0.3m and had net assets of
GBP5.7m.
The business experienced a significant downturn in the first
half of the current financial year principally due to the COVID-19
pandemic. In recent months both orders and billings have seen a
strong recovery. Although revenues to 31 March 2021 are expected to
be down on the prior year, at just under GBP4.5m, management took
appropriate actions to control costs which has meant the business
will continue to be profitable with underlying profit after tax
expected to be circa GBP0.2m.
Benefits of the Acquisition:
Solid State will combine Active Silicon's expertise and
technology with the industrial computer product portfolio from its
Steatite manufacturing division. This enables the enlarged Group to
address the growing demand for 3D vision and robotic applications,
as well as the increased requirements for embedded machine vision
and edge AI computing products.
The enhanced in-house capability resulting from the addition of
Active Silicon to the Group extends the scope for the design and
manufacture of own brand products, with the resulting margin and
customer retention benefits.
Commenting on the Acquisition, Gary Marsh, Chief Executive of
Solid State, said:
"Solid State's acquisition strategy targets complementary
technologies with exposure to structural growth markets. The
acquisition of Active Silicon achieves both of these objectives
while additionally broadening the capacity for the enlarged Group
to increase its range of own brand products and value added
services.
"The computing sector has been a key market for Solid State,
which has driven a focus on expanding capability in the development
of AI enabled technologies for industries such as medical,
security, defence and life sciences. We see the acquisition of
Active Silicon as a considerable step in broadening our customer
offering and further extending into the product value chain.
"We look forward to welcoming the Active Silicon team to the
Solid State group and are very optimistic about our future
together."
Commenting on the Acquisition, Colin Pearce, Chief Executive of
Active Silicon, added:
"We are pleased to become part of the Solid State Group and
firmly believe the synergies of our embedded electronics expertise,
combined with Solid State's portfolio of computing platforms, will
lead to an acceleration of our profitable growth in the expanding
areas of AI and embedded computing in general."
Investor Presentation: 16.00 on 4 March 2021
Matthew Richards, Managing Director of Steatite, and Peter
James, Group Finance Director, will hold a presentation on Active
Silicon at 16.00 on 4 March 2021. The presentation will be hosted
through the digital platform Investor Meet Company. Investors can
sign up to Investor Meet Company for free and add to meet Solid
State plc via the following link
https://www.investormeetcompany.com/solid-state-plc/register-investor
. Investors who have already registered and added to meet the
Company will automatically be invited.
Questions can be submitted pre-event to
solidstate@walbrookpr.com , or in real time during the presentation
via the "Ask a Question" function.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of MAR.
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.
For further information please contact:
Solid State plc Via Walbrook
Gary Marsh - Chief Executive
Peter James - Group Finance Director
WH Ireland (Nominated Adviser & Joint
Broker) 0207 220 1666
Mike Coe / Chris Savidge (Corporate
Finance)
Jasper Berry / David Kilbourn (Corporate
Broking / Sales)
finnCap (Joint Broker)
Ed Frisby (Corporate Finance)
Rhys Williams / Tim Redfern (Sales
/ ECM) 020 7220 0500
Walbrook PR (Financial PR) 020 7933 8780
Tom Cooper / Paul Vann 0797 122 1972
solidstate@walbrookpr.com
Analyst Research Reports: For further analyst information and
research see the Solid State plc website:
https://solidstateplc.com/research/
Notes to Editors:
Solid State plc (SOLI) is a value added electronics group
supplying industrial and military markets with ruggedised/durable
components, assemblies and manufactured units for use in harsh
environments. The Group's mantra is - 'Trusted technology for
demanding applications'. To see an introductory video on the Group
- https://bit.ly/3kzddx7
Operating through two main divisions: Manufacturing (Steatite)
and Value Added Supplies (Solid State Supplies & Pacer); the
Group specialises in complex engineering challenges often requiring
design-in support and component sourcing for computing, power,
communications, electronic and optoelectronic products.
Headquartered in Redditch, Solid State employs over 230 staff
across the UK with a branch office in the USA, serving specialist
markets in oil & gas production, transportation, medical,
construction, security, military and field maintenance.
Solid State was established in 1971 and admitted to AIM in June
1996. The Group has grown organically and by acquisition - having
made 11 acquisitions since 2002.
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