Issued on behalf of Flowtech Fluidpower PLC
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.
FLOWTECH FLUIDPOWER PLC
(the "Group" or "Company")
Acquisition of Hi-Power
Flowtech adds further technical expertise and product though acquisition
London: Friday, 23 June 2017: AIM listed specialist technical fluid power products supplier Flowtech Fluidpower plc (LSE: symbol FLO), is pleased to announce the further strengthening of its Power Motion Control ("PMC") division through the acquisition of Hi-Power Limited and the business and certain assets of Hi-Power Hydraulics Limited ("Hi-Power Hydraulics") (together "Hi-Power" or "the Acquisition"), a distributor of hydraulic equipment components and, systems design & build predominantly to the mobile and transport sectors.
Hi-Power Limited was founded 40 years ago and holds a market leading position in the Republic of Ireland. Today, Hi-Power holds a number of long-term customer relationships across its Republic of Ireland and Northern Ireland operations. The business employs in total 38 people across its sites in Cork, Dublin, Belfast and Manchester.
The Acquisition provides another complementary business to the Group's PMC division, delivering incremental revenue through a wider customer channel and extends Flowtech's position with important European suppliers further boosting the divisional offer.
In Ireland, Hi-Power Limited will operate as an independent sister company within the PMC division and will continue to be managed by the current Hi-Power executive management team who have been in place for a number of years. The UK operation, Hi-Power Hydraulics, will become a trading division of Primary Fluid Power and will report to its Managing Director, Paul McGrady.
Sean Fennon, Chief Executive, Flowtech Fluidpower plc commented: "This Acquisition represents a further strengthening of the Group offering to the hydraulics marketplace, delivering a greater depth of technical expertise along with a strengthening of our core product set.
"We continue to work on a number of other opportunities which we fully expect, over the coming months, to reach positive conclusions on. As we have previously stated, our targeted approach ensures we can achieve both a concentration and enhancement to our product set which is, and will continue to be, core to our business model."
For the year ended 31 December 2016, Hi-Power achieved sales of £6.9 million producing EBIT of £0.4 million. Net assets excluding net cash and property at the same date were £1.9 million. As well as some immediate back office savings, the Group expects to deliver synergy opportunities over the medium term through coordinated operational activities, particularly in Dublin and Manchester, as well as wider commercial opportunities through collaboration with the division's other Irish operation, Nelson Hydraulics.
The Acquisition completed on 22 June 2017 is being funded from the Company's own resources and comprises £1.9 million on completion with additional payments expected to be c£0.5 million subject to an earn-out over the 18 month period to 31 December 2018. The maximum consideration payable is £3.5million.
In summary, the Board of Flowtech remain very encouraged about the future; the Group will provide a business trading update to the market in mid-July ahead of scheduled Half-year results, which will be released in September.
(Note: The majority of the consideration to be paid in Euros. The above values have been converted at an exchange rate of 1.14 €/GBP)
Flowtech Fluidpower plc
Sean Fennon, CEO
Bryce Brooks, CFO
Tel: 44 (0) 1695 52796
Zeus Capital Limited (Nominated Adviser and Broker)
Andrew Jones, Jonathan Sharp (corporate finance)
Dominic King, John Goold (sales & broking)
Tel: 44 (0) 203 829 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)
Tel: 44 (0) 7785 703523 or email: email@example.com
About Flowtech Fluidpower plc:
AIM: symbol: FLO
The business was founded as Flowtech in 1983, and is the UK's leading specialist supplier of technical fluid power products. The Flowtech Group has three divisions: Flowtechnology, Power Motion Control and Process. All three of the Group's divisions have overlapping product sets, allowing procurement synergies to be maximised.
The Flowtechnology division focuses on supplying distributors and resellers of industrial MRO (maintenance, repair and operation) products, primarily serving urgent orders rather than bulk offerings. It is formed from Flowtechnology UK, Flowtechnology Benelux and Indequip. It offers an unrivalled range of Original Equipment Manufacturer (OEM) and Exclusive Brand products to over 3,400 distributors and resellers and the catalogues are recognised as the definitive source for fluid power products, containing 100,000 individual product lines and are distributed to more than 80,000 industrial Maintenance, Repair and Overhaul end users (MRO). The Power Motion Control division specialises in the design, assembly and supply of engineering components and hydraulic systems and is further enhanced by a service and repair function. The division is formed from Primary Fluid Power, Nelson Hydraulics, TSL Fluidpower and HTL. The Process division focuses on the supply of industrial components to the process sectors.
The Group's main distribution centre is in Skelmersdale, Lancashire with further distribution centres in the Netherlands and China. The Power Motion Control division (PMC) has operations in Merseyside, Northern Ireland, the Republic of Ireland, Shropshire and Yorkshire; Process operates from the West Midlands. In total the business employs over 300 people.
About Hi-Power Group:
The business started in 1977 in Cork and established itself a market leader in the HGV & Trucks components sector before, exploiting its solid-built reputation to extend activities in 1985 into general hydraulics for all industries including industrial, mobile, marine, construction and agriculture. With its growing business it expanded its operational footprint, and by 1995 also opened facilities in Dublin and Belfast (NI). Continuing its expansion, the business opened its first UK office, Hi-Power Hydraulics based in Stockport. The Group represents some of the leading names in the hydraulics industry and has a customer base ranging from individual trade counter sales to large OEMs. In 1997 Hi-Power achieved ISO 9002 accreditation, now known as ISO 9001 standard. Hi-Power is also a member of The British Fluid Power Distributors Association (BFPDA).
23 June 2017