The BBC's introduction of digital television on a pilot World Cup channel last week heralds a boom period for an Irish-quoted company. Silvermines, for many years an ailing company linked with mining and exploration in Tipperary, has metamorphosed into an engineering and technology operation which specialises in buying emerging technology companies. Last March, it reported a pre-tax profit of £5.6 million.
Its stake in digital technology looks set to further fuel its current growth as Silvermines recently acquired Active Imaging, a manufacturer of products for digital imaging, for £4.5 million. Digital broadcasting delivers high quality pictures over an infinite number of channels at once and is expected to revolutionise the television industry.
Active Imaging's intelligent system allows near-live video transmission over digital networks, which can be used in a variety of applications including Internet sites, remote surveillance and traffic applications. Now the broadcast equipment division of Silvermines, comprising RF Technology and Continental Microwave, has signed a contract with Castle Transmission International (CTI) formerly the transmission arm of the BBC for exclusive supply of digital terrestrial television transmitters at low and medium powers. Silvermines received its first order for digital equipment from the BBC earlier this year, the first of many expected to facilitate the changeover from next autumn.
It has also signed a digital television contract with China Central Television, and just this week closed a £2 million contract with the Singapore North East Line railway company to supply trainborne digital television and recording equipment.
Sales in the broadcast equipment area quadrupled to 21 million last year to generate profits of 10 per cent.
The successes of Silvermines in this area and others stem largely from its strategic investments under the guidance of group managing director, Mr Clem Jansen. Mr Jansen joined the company in 1987 with the aim of setting up an electrical and electronics group. From inheriting an ancient mine which it failed to make profitable, Silvermines had become a conglomerate with minority holdings in interests as diverse as property development and natural resources.
Mr Jansen set about directing the company into high end broadcast, telecommunications, security and aerospace technologies. In Bangkok last week, to open a seminar on security and digital products, Mr Jansen said: "I buy companies for their technology, but they also need to have good management. I try not to change the management, but provide a framework and support instead by implementing our own financial controlling and accounting systems. My strength is growing companies organically."
Though Silvermines currently has irons in several fires, the opportunities presented by digital technology have captured Mr Jansen's imagination. He predicts exponential growth here as the broadcast equipment division is well positioned to cast its net wide across an almost limitless market. It is somewhat ironic that what could be the greatest driver of the company's future growth was only stumbled upon when Silvermines's biggest division, the closed circuit television (CCTV) operation discovered it had to change over all its CCTV systems from analogue to digital technology. This prompted the acquisition of Active Imaging last year which is estimated to have saved Silvermines three years of research and development.
Mr Jansen envisages a period of high growth for several years at least, as all customers of Continental Microwave worldwide transfer to digital. RTE has already ordered two vehicle-based satellite news gathering systems from Silvermines. Sales of the closed circuit television operation have flattened out at a healthy £25 million annually, but with profits of only £1.5 million the foray into digital broadcasting is a much needed boost.
Recently, Silvermines invested in the American Echlin Motor Component Group as Mr Jansen wanted to find a home for a brushless DC motor to powerdrive steering systems in cars. He knew he couldn't introduce this technology to the motor industry without an industry heavyweight on board, and turned over 51 per cent of the project to Echlin which retains control of the steering systems. Silvermines expects to benefit from the returns.
Mercedes-Benz has said it will install it in one of its new range of cars and orders have been secured to the value of £66 million over the next six years. A contributing feature to Silvermines's growth is the adaptation of technologies from industries most related to their function for use in new sectors. Its aerospace division, largely comprised of Muirhead Vactric, specialises in the design and manufacture of electronic components providing accurate signals of angular and linear position, velocity, direction and displacement for the aviation industry.
The company also manages Pickering Controls, a US company specialising in the manufacture of linear and rotary displacement transducers. It provides the vehicle for expansion of Muirhead Vactric's products in North America, and in a reciprocal arrangement, Pickering's products have been introduced into the European market on aerospace programmes, and more unusually for use in Formula One racing cars.
The products monitor car suspension by fitting transducers originally designed for the aerospace industry. They are attached to each of the car's suspension units to measure damper displacement. Jordan Grand Prix used these transducers last season to monitor clutch position which is proportional to the engine's power output. By combining the information from the clutch position and the suspension loadings, the pit crew can build a virtual map of the circuit. Using this information the driver knows when to push harder and when to back off. Next season McLaren, Arrows, Prost, Tyrell and Sauber will follow Jordan's lead and apply the Pickering transducers in their cars.
Silvermines's aerospace division is its most profitable arm, with sales increasing 50 per cent last year to £21 million reflected in a profit increase of one-third to £2.2 million. The Muirhead Avionics and Accessories division provides maintenance and repair for a wide range of avionics equipment.
