Flowtech Fluidpower PLC Acquisition of Group HES, New Division established (3821T)

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: [phone] 
  Email: [e-mail] 
 Zeus Capital Limited (Nominated Adviser and Broker) 
  Andrew Jones, Alistair Donnelly (corporate finance) 
  Dominic King, John Goold (sales & broking) 
  Tel: [phone] 
 
  finnCap Limited (Joint Broker) 
  Ed Frisby, Kate Bannatyne (corporate finance) 
  Rhys Williams, Emily Morris (sales & broking) 
  Tel: [phone] 
 
  TooleyStreet Communications (IR and media relations) 
  Fiona Tooley 
  Tel: [phone] 
  or email: [e-mail] 
 
 
 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

ACQEAAEFFSEXFAF

(END) Dow Jones Newswires

October 12, 2017 02:00 ET (06:00 GMT)