RNS Number : 6305H
Flowtech Fluidpower PLC
21 May 2014



Wednesday, 21 May 2014


Flowtech Fluidpower plc

("Flowtech" or "Company")

Admission to AIM & First day of dealings


Admission to AIM:

·      Flowtech's Admission and trading of its Ordinary Shares commences at 08:00am today (21 May) on the AIM market of the London Stock Exchange (TIDM identifier FLO)


·      Flowtech has successfully raised £40 million via the Placing of 40,000,000 new ordinary shares with institutional and other investors at a Placing price of 100 pence per ordinary share, capitalizing the business on Admission at £40m


The Flowtech business:

·      Flowtech, founded in 1983, is the UK's leading specialist supplier of technical fluid power products with modern distribution facilities in the UK and Benelux.  It offers an unrivalled range of Original Equipment Manufacturer (OEM) and Own Brand products to c.3,000 distributors and resellers.  Its catalogue is recognised as the definitive source for fluid power products, containing approximately 47,000 individual product lines and is distributed to more than 90,000 industrial Maintenance, Repair and Overhaul end users (MRO).  Over 80% of product is stocked and ordered by 10pm, can be delivered next day in the UK, providing 'best in industry' service offering.


·      The Group's headquarters and main distribution centre is in Skelmersdale, Lancashire with further centres in the Netherlands and China; in total, the business employs 160 people.


·      The management team, led by Sean Fennon who has been with Flowtech since 2009, has overseen significant growth in operating profit in a challenging macro-economic climate.


·      Flowtech has established a cash generative financial track record over a number of years.   As at 31 December 2013, Flowtech achieved an operating profit of £4.3 million and revenue of £34.3m


Commenting on the Company's debut on AIM, Sean Fennon, Chief Executive Officer, Flowtech said:


"We believe there is significant opportunity for organic growth through product development and international expansion; the Directors have identified a number of businesses that could be acquired to accelerate complementary channel development and geographic expansion."


"We are delighted to join AIM; it offers us the platform to enhance our profile and achieve our future aspirations.  We have been bolstered by the strong show of support at the Placing from institutional investors which we believe is testament to our future prospects."




Flowtech Fluidpower plc

Zeus Capital Limited

(Nominated Adviser and Sole Broker)

TooleyStreet Communications

(investor & media relations)

Sean Fennon, Chief Executive Officer

Bryce Brooks, Chief Financial Officer

Tim Metcalfe

Ross Andrews  

Fiona Tooley

Tel: 44 (0)1695 52796

Mobile: 44 (0) 07538 075 341 (SF)

Tel:  44 (0) 20 7533 7727

Tel: 44 (0) 161 831 1512

Tel: 44 (0) 7785 703523

Tel: 44 (0) 121 309


Email: info@flowtechfluidpower.com

Email: fiona@tooleystreet.com



Flowtech Fluidpower plc

("Flowtech" or "Company")

The following information is derived from, and should be read in conjunction with, the Admission Document which will shortly be available to view at www.flowtechfluidpower.com.

The Market

The British Fluid Power Association estimated demand for hydraulic and pneumatic fluid power products in the UK at £940 million in 2012, with hydraulics accounting for £721 million and pneumatics £219 million.  The British Fluid Power Association forecasts that the market will increase at an annual rate of 3.37 per cent. between 2014-2016.


Information on Flowtech

Flowtech is the UK's leading distributor of technical fluid power products.  It has an international footprint with its headquarters and modern distribution centre located in Skelmersdale, Lancashire, UK, supported by a distribution facility in the Netherlands and a procurement team and a recently established logistics centre in mainland China. 


The Company supplies circa. 3,000 customers in the UK and Northern Europe.  In the UK market, which accounted for circa. 88 per cent. of the Group's sales in 2013, Flowtech focuses on supplying fluid power products to distributors and resellers of industrial maintenance, repair and operations ("MRO") products primarily serving urgent orders rather than bulk offerings.


The business enjoys a diverse customer base, with its top customer contributing 3.5 per cent. of sales, top ten customers contributing 16 per cent. of sales and top 100 customers contributing 49 per cent. of sales in 2013.  As a result, Flowtech is not overly exposed to any one customer.


Flowtech's Strategy

The Directors have a strategy designed to continue growing sales and profitability.


·     Growth in market share

Orders placed with Flowtech currently amount to only a relatively small percentage of their customers total spend in the sector.  The Directors believe that continued focus on good customer service can deliver an increase in this percentage, to realise organic growth and that there is also significant potential to grow the business in Northern Europe, to capitalise on the recent efficiencies realised from consolidating the Dutch operation into a single facility and rebranding as Flowtechnology Benelux.


·     Margin improvement

The Directors believe this can be achieved by expanding Flowtech's range of own-brand products and capitalising on the productivity benefits presented by its new Chinese logistics centre.


·     New products

The Company's customers currently place only a relatively small percentage of their total sector spend with Flowtech. Having successfully introduced technical hydraulic and industrial hosing products to its pneumatics-focused product range, the Directors believe that there is an opportunity to expand the product range into new categories that support its market position as a 'one-stop-shop' supplier of technical fluid power products and through this expansion, capture a greater percentage of current customers' budget.  Potential complementary technical areas include valves and pumps.


·     Geographic expansion

The Directors believe that Flowtech's business model could be rolled out throughout Europe, other English speaking countries, and emerging markets. In particular they believe Central Europe should be a priority area.  In addition, Flowtech's operations in China are ideally positioned to be used as a hub from which to supply fast-growing Asian economies as well as South Africa, New Zealand and Australia.


·     Acquisition opportunities

In addition to organic growth, the Directors have identified a number of businesses which could be acquired to accelerate complementary channel development and geographic expansion, subject to negotiating terms acceptable to the Group.


Flowtech Board of Directors

On Admission the Board comprises:


Malcolm Diamond MBE (Non-executive Chairman, aged 65)

Malcolm is an experienced company director, having served as CEO of Trifast plc for 18 years to 2002 before re-joining the board of Trifast plc in 2009 as executive chairman. He has served on the boards of numerous companies, including Nobo plc, Sytner Group plc and Dechra Pharmaceuticals plc.  His key areas of expertise include sales and marketing, strategic planning and implementation, business development and investor relations.


Sean Fennon(Chief Executive Officer, aged 53)

Appointed in December 2009, Sean has gained experience over at least 25 years having worked in design, manufacturing, wholesale, retail and industrial distribution.  Prior to joining Flowtech, Sean was the Managing Director of a large UK industrial distribution company for six years.  Sean is responsible for driving the Group and its strategies for growth.


Bryce Brooks(Chief Financial Officer, aged 48)

Bryce joined Flowtech in March 2010 to head up the finance function. He has a degree in civil engineering and qualified as a chartered accountant in 1989.  Post qualification, Bryce spent two years as a Financial Controller at a paper manufacturing business, followed by twelve years as a Finance Director at an American-owned industrial products distribution group.


Paul Watson(Group Marketing Director, aged 56)

Paul has worked in the industrial sector for the past 30 years including management and marketing consultancy roles.  Prior to joining Flowtech as a consultant in 2010 and being engaged as a director in 2011, Paul spent five years as Marketing Director at a UK industrial distributor and four years as Managing Director of his own marketing consultancy.  Paul is responsible for heading up the Marketing functions and supporting Sean in delivering and implementing strategy across the Group.


Nigel Richens (Non-Executive Director, aged 58)

As a former partner of a global accountancy firm, Nigel has over 23 years' experience at partner level advising the boards of listed, family and private equity owned businesses in a variety of industries including manufacturing, distribution, pharmaceuticals, house building, construction, engineering, brewing and leisure.  He is treasurer of Onside Youth Zones, a charity building, delivering and sustaining a network of world class facilities for young people.

This information is provided by RNS
The company news service from the London Stock Exchange