Safety Medical Products Limited25 Fenden Road, Salisbury Plain,...

Safety Medical Products Limited
25 Fenden Road, Salisbury Plain, South Australia
Australia, 5109
ACN 007 817 192
Phone: (08) 8285 5226 Fax: (08) 8285 3228
Email: [email protected] Website: www.safetymed.com.au
ASX Code: SFP
SafetyMed® is a registered trademark of Safety Medical Products Ltd
Wednesday 31st January 2007
ANNOUNCEMENT - Heads of Agreement - Acquisition
Safetymed is pleased to announce the signing of a Heads of Agreement to acquire
100% of Control and Automation Engineering company, ProControl Systems.
The Agreement was executed last Thursday 25th January 2007, and is subject to due
diligence, with an expected settlement date of end February 2007.
Adelaide-based ProControl Systems was founded in 1983 and has specialist expertise
in Industrial Control and Process Automation, PLC Programming, SCADA/HMI
Development, Drives Systems, Robotics, Vision Systems, Electrical Design and
Installation, Commissioning, 2D and 3D CAD Drafting, Turnkey Projects and Radio
Frequency Identification.
The company has a turnover of $1.5m and EBITDA of $500K, and will be acquired
for $1.5m, by way of a cash payment of $500K and scrip issue of $1m in shares in
Safetymed at a price equating with the average of SFP shares during the five (5) days
prior to completion.
The ProControl client base covers a wide and diverse range of industries including
Wine, Waste Treatment, Mining, Gas, Cement, Pulp and Paper, Steel, Automotive,
Bottling, Medical and Pharmaceutical industries.
This is a significant acquisition for the Company and comes at a time when
ProControl has almost completed work on the Company’s first automated assembly
machine for Safetymed SecureTouch Retractable Syringe.
An enormous amount of work was carried out by the Safetymed Board over the
Christmas period, planning acquisition and corporate development strategies for
2007, as the company moves forward into production and sales of its products.
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Following completion of the first machine Safetymed expects to have further
machines built with even larger capacity, as well as expanding the SecureTouch
range to include the full range of 2,3,5 and 10ml size safety syringes.
Economical Production Processes will also need to be devised for the Company’s
MediTag and Freeze Indicator products during 2007, all of which fall within the
scope of ProControl’s expertise.
The significant investment required to develop all of the abovementioned equipment
indicated that it made good commercial sense for Safetymed to make this move and
use those same funds to instead purchase ProControl, thus absorbing their applicable
margins.
This acquisition also gives Safetymed full security and ownership of all the
associated IP that is developed.
ProControl Systems will continue to run as a separate division of Safetymed, with
Director Mr. Robert Doley contracted to remain with the company for at least the
next three years as General Manager in charge of ProControl and his existing team of
engineers. This will ensure a smooth transition with no disruption to the client base or
business structure as a result.
Safetymed intends to relocate ProControl to the Company’s Salisbury Plain facility to
take advantage of available synergies and costs savings.
The Company also believes there are further growth opportunities in this sector
throughout both Australia and New Zealand and will explore these following
settlement.
Safetymed is actively seeking other logical acquisition opportunities that can be
similarly vertically integrated into the Company’s business plan, to not only provide
additional income streams but also aid directly with the growth of the business by
providing either further appropriate products and services or further avenues into
markets for the Safetymed product range.
The Company has invested a significant proportion of its cash reserves during 2006
to achieve its rapid progress towards production and/or supply of its suite of products,
particularly the flagship SecureTouch Retractable Syringe, and believes it has gapped
its potential competitors in so doing.
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Safetymed’s cash position has been significantly boosted over recent weeks however
with the first installment of the Federal Government Grant received, as well as the
recent exercise of options by several shareholders of the Company, and as such its
cash resources and liquid assets now stand at over $400,000.
This, along with another $250K in grants and Tax Offset refunds to come in over the
next few weeks, will enable the Company to launch into 2007 from a strong financial
base with which to pursue its objectives of continued rapid growth and increasing
fundamental value.
Yours faithfully,
John Riemelmoser
Managing Director