Flowtech Fluidpower PLC Acquisition of Group HES, New Division established (3821T)
12 October 2017 - 5:00PM
UK Regulatory
TIDMFLO
RNS Number : 3821T
Flowtech Fluidpower PLC
12 October 2017
NEWS RELEASE
Issued on behalf of Flowtech
Fluidpower PLC
Immediate Release
FLOWTECH FLUIDPOWER PLC
("Flowtech" the "Group" or "Company")
Acquisition of Group HES Ltd further strengthens UK
presence
and
Onsite Services Division to be established in 2018
London: Thursday, 12 October 2017: AIM listed specialist
technical fluid power products supplier Flowtech Fluidpower
plc (LSE: AiM: symbol: FLO) is pleased to announce
the further strengthening of its Power Motion Control
(PMC) division through the acquisition of Group HES
Ltd ("HES") (www.grouphes.com).
Background to the Acquisition
Founded in 1965 and, today headquartered in Gloucester,
England, HES is a multi-faceted solutions provider
to the Fluidpower sector. HES employs 89 people across
is network of branches located in Birmingham, Durham,
Gloucester and Leeds. The business operates under
five trading brands: Hydraulic Equipment Supermarkets;
Branch Hydraulic Systems, and more recently established
specialist distributor brands in HES Tractec, HES
Lubemec and HES Automatec.
The acquisition provides another complementary business
to the Group's PMC division, delivering incremental
revenue through a mix of wider technical applications,
reinforces our offer to the off-highway market and
adds aerospace to our sector coverage. In addition,
the acquisition extends Flowtech's position with important
global suppliers, including Danfoss Power Solutions
(www.powersolutions.danfoss.com).
HES will operate within the PMC division and continue
to be managed by the current senior management team.
Previous owner and Managing Director, Stuart Diesel,
who has been with the business for over 20 years will
remain with the HES business during a transition period,
and in 2018 he will then take up a new role as Divisional
Managing Director - Onsite Services. Working with
the existing resources available within the PMC and
Flowtechnology operations Stuart will build this new
division within the Flowtech Group. The launch of
this new division represents the final element of
the multi-channel strategy outlined at the time of
the Group's IPO in 2014.
For the year ended 30 June 2017, HES achieved sales
of GBP10.0 million producing adjusted EBIT of GBP0.7
million. Net assets excluding Net Debt at the same
date were GBP3.0 million.
Unaudited Net Debt at 30 September was GBP0.75 million,
which includes c.GBP0.5m relating to a large project
currently being installed with the contractor, Galliford
Try, on behalf of Airbus in the UK. Following completion
of this contract Net Debt is expected to return to
a "normalised" level of c.GBP0.1 million by 31 December
2017.
The Group expects to deliver synergy opportunities
over the short and medium term through coordinated
operational, procurement and back office activities.
Purchase Consideration
The consideration of GBP4.1 million is to be satisfied
as to GBP3.1 million in cash on completion, and the
balance of GBP1.0 million by the allotment of 661,805
new ordinary shares in Flowtech (the "Consideration
Shares") to Stuart Diesel.
The Consideration Shares have been credited as fully
paid and will rank pari passu in all respects with
the existing ordinary shares in the capital of the
Company in issue, including the right to receive all
dividends and other distributions declared, made or
paid in respect of such shares after the date of issue
of the shares. Application has been made for the Consideration
Shares to be admitted to trading on AIM and it is
expected that admission will become effective and
that dealings will occur on or around 18 October 2017
("Admission"). The vendor has agreed not to dispose
of any of the Consideration Shares for a period of
12 months (except under limited circumstances with
the approval of the Board) from completion and thereafter
orderly market arrangements for a further period of
12 months.
Sean Fennon, Chief Executive, Flowtech Fluidpower
plc commented:
"We are delighted to add the technical skills and
knowledge of this long-established business to the
Group; HES adds new brands and sectors to our portfolio;
it also gives us the opportunity to build our fourth
leg in technical maintenance which enhances our overall
service offering to our customer network. This move
clearly reinforces our ongoing strategy to develop
a focused Fluid Power Group that serves a wide number
of industry sectors, allowing a de-risking of some
of the cyclic nature of the business."
Stuart Diesel, former owner and Managing Director
of Group HES added:
"The opportunity to join Flowtech as it rolls out
an exciting Group strategy was instrumental in my
decision to sell the business. This change also considerably
enhances several aspects of our HES business and offers
new and exciting prospects for all our employees.
My team and I are looking forward to being part of
this industry respected business - we recognise that
the strategy and the resources available to us opens
up new prospects and makes it possible to attain significant
growth beyond what was achievable as an independent
business."
Summary and Notice of Q3 Trading Update
The Board of Flowtech remain very encouraged about
the future and remain confident that the Group's current
performance will deliver another year of solid progress.
As a business, it is confident in its strategy, commercial
opportunities and the prospects of the Group.
Flowtech will be releasing its Q3 Trading Update on
Tuesday 17 October 2017.
Total Voting Rights (TVR)
On Admission, of the above, the Company's issued share
capital will consist of 52,819,000 ordinary shares.
There are no ordinary shares held in treasury. Therefore,
in accordance with the FCA's Disclosure Guidance and
Transparency Rule 5.6.1, the Company confirms that
following Admission, the total number of voting rights
(TVR) in the Company will be 52,819,000.
Enquiries:
Flowtech Fluidpower plc
Sean Fennon, Chief Executive
Bryce Brooks, Chief Financial Officer
Tel: +44 (0) 1695 52796
Email: info@flowtechfluidpower.com
Zeus Capital Limited (Nominated Adviser and Broker)
Andrew Jones, Alistair Donnelly (corporate finance)
Dominic King, John Goold (sales & broking)
Tel: +44 (0) 20 3829 5000
finnCap Limited (Joint Broker)
Ed Frisby, Kate Bannatyne (corporate finance)
Rhys Williams, Emily Morris (sales & broking)
Tel: +44 (0) 20 7220 0500
TooleyStreet Communications (IR and media relations)
Fiona Tooley
Tel: +44 (0) 7785 703523
or email: fiona@tooleystreet.com
EDITORS NOTES
----------------------------------------------------------------------------------
About Group HES:
Group HES are specialists in designing, building,
installing, commissioning and repairing fluid power
and control systems. As a supplier and stockholder
of hydraulic components on a 24/7 next day delivery
service its end markets include agriculture, brewing,
construction, waste, wind turbines and wind farms
and specialist engineering projects.
BS5750 and ISO 9001 and 9002 accredited. For more
information please visit www.grouphes.com
Also, HES is an official distributor for Danfoss,
Bosch Rexroth, SKF and Carraro.
About Flowtech Fluidpower plc
----------------------------------------------------------------------------------
Founded as Flowtech in 1983, the Flowtech Group is
the UK's leading specialist supplier of technical
fluid power products. The business joined AiM in 2014.
Today, the Group has four distinct divisions:
Division: What we do: Locations:
---------------- -------------------------------- ------------------------------
Flowtechnology focus on supplying distributors Flowtechnology Benelux
and resellers of industrial (Deventer)
MRO products, primarily Flowtechnology China
serving urgent orders (Guangzhou)
rather than bulk offerings. Flowtechnology UK
It offers an unrivalled (Skelmersdale)
range of OEM and Exclusive Indequip (Skelmersdale)
Brand products to over
3,400 distributors and
resellers. The catalogue
is recognised as the
definitive source for
fluid power products,
containing 100,000 individual
product lines and are
distributed to more
than 80,000 industrial
MRO end users.
---------------- -------------------------------- ------------------------------
Power Motion Specialise in the design, Primary Fluid Power
Control assembly and supply (Knowsley)
(PMC) of engineering components Nelson Fluid Power
and hydraulic systems (Dublin, Lisburn,
and is further enhanced Dungannon)
by a service and repair TripleSix (West Yorkshire)
function. Albroco (Knowsley)
Hydraulics & Transmissions
(Ludlow)
HiPower Hydraulics
(Cork, Dublin, Belfast
Manchester)
Hydroflex (Brussels,
Rotterdam and OudBeijerland)
Hydraulic Equipment
Supermarkets (Gloucester,
Leeds, Birmingham,
Durham)
Branch Hydraulics
(Gloucester)
---------------- -------------------------------- ------------------------------
Process Focus on the supply Hydravalve (Willenhall)
of industrial components Orange County (Spennymoor)
and solutions to the
process sectors.
---------------- -------------------------------- ------------------------------
Onsite Services In 2018, the Group will HES Onsite (Durham,
extend its service offering Leeds, Birmingham,
to include Onsite Technical Gloucester)
Maintenance
through highly skilled
engineers.
---------------- -------------------------------- ------------------------------
All four of the Group's divisions have overlapping
product sets, allowing procurement synergies to be
maximised
The above divisions are supported by a centralised
back office team at the Skelmersdale site and a procurement
and quality control team in Shanghai. In total, the
business employs over 400 people. For more information
please visit, www.flowtechfluidpower.com
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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