Sovereign Oilfield Group Completes Acquisition of Labtech and Vertec

Sovereign Oilfield Group has completed the acquisition of Labtech Services Limited and associated companies, and Vertec Engineering Limited and its subsidiary, for a total consideration of £7.9 million.

Labtech and Vertec both specialize in the design, engineering and manufacture of onshore and offshore cabins, containers, baskets, air conditioning and refrigeration units. In addition they both run repair and refurbishment operations, as well as a cabin hire service.

Labtech was founded in 1983 and operates from purpose built facilities in Aberdeen, Scotland where it employs approximately 130 people. For the nine months ended January 31, 2007, Labtech had unaudited turnover of £8.1 million and profit before taxation of £0.3 million, as extracted from unaudited management accounts. Audited turnover for the 12 months to April 30, 2006 was £7.2 million with a profit before taxation of £0.7 million.

The consideration for Labtech is £6.0 million, which includes £1.5 million for the purpose built facilities Labtech occupies, which was satisfied by a payment in cash of £3.6 million and loan notes of £1.8 million redeemable in November 2007, and a further £0.6 million of loan notes which are redeemable in April 2008.

Vertec was founded in 1985 and operates from rented facilities in Aberdeen where it employs approximately 70 people. For the 12 months to September 30, 2006, Vertec had audited turnover of £6.8 million and a profit before taxation of £0.3 million.

The consideration for Vertec was £1.9 million, satisfied by a payment in cash.

All key members of the management teams of both companies are continuing with the business. The acquisition of Labtech and Vertec adds to and strengthens Sovereign's existing operations by expanding the capabilities and range of services that the Group offers.

Graham Burgess, Chief Executive of Sovereign Oilfield Group plc stated:

"Labtech and Vertec represent an excellent strategic fit with Sovereign's existing fabrication businesses and operations and broadens the skill base of the group with a different product line. Labtech and Vertec have different customer bases with very little overlap and these customers are all new to the Sovereign group.

These acquisitions demonstrate yet again Sovereign's ability to enhance earnings through targeted acquisitions which widen and compliment the Group's range of services."