Acquisition and Trading Update

RNS Number : 2058S

Flowtech Fluidpower PLC

06 July 2015

 

Monday, 6 July 2015	Immediate Release
Flowtech Fluidpower plc ("Flowtech" ,"Company" or "Group") Acquisition of Nelson Hydraulics Limited & Current Trading Update and Notice of Half-Year Results

Flowtech Fluidpower plc (AIM:FLO), is pleased to announce the further strengthening of its product offering in the growing sector of hydraulics through the acquisition of Nelson Hydraulics Limited ("NHL") and its parent company Nelson Fluid Power Limited ("NFP").  The consideration comprises £4.1 million (part of which is subject to an earn-out) for the trading operation and £1.7 million for the net cash position held at completion, a total of £5.8 million. The consideration is being funded from the Company's own cash resources. NFP has been in the ownership of the Nelson family for 50 years.  It currently employs 40 staff and distributes hydraulic equipment, components and hose assemblies from its locations at Lisburn and Dungannon in Northern Ireland and Dublin in the Republic of Ireland.  The business has a broad customer base in Ireland with emphasis in the crushing and screening, agricultural and marine and fishing sectors.  For the year ended 30 September 2014, turnover was £6.7 million producing EBIT of £0.7 million.  Net assets at the same date were £4.1 million. The acquisition of NFP and its wholly owned subsidiary NHL was completed on 3 July 2015, for a total consideration of approximately £5.8 million, being £4.1 million for the trading operation and a further £1.7 million for the net cash position held at completion.  The consideration relating to the trading operation is to be satisfied as to £2.9 million in cash on completion with further payments over the first two years of ownership expected to be £1.2 million in cash, contingent on the average EBIT performance of NHL for the periods ending 30 June 2017. NFP will operate as an independent sister company within the Flowtech Group and will add significantly to the Group's procurement position in hydraulic components, hose and couplings.  The current management team will remain in place; Managing Director, Mark Nelson who has been with the business for over 25 years will also join Flowtech's operational Board.  The Group expect to deliver synergy opportunities before the end of 2016 through introducing more sophisticated IT and stock sytems that are already used within Flowtech's core business.  Albroco Limited This acquisition comes shortly after the acquisition of Albroco Limited ("Albroco") which was completed at the end of May 2015. Albroco, based in North Wales is a distributor of hydraulic and electro-mechanical components to the mobile, on- and off-highway and construction markets.  Albroco trades as a division of Primary Fluid Power under the leadership of Stephen Merrie, Primary's MD.  It is expected that the business will be fully integrated into the Primary site in Knowsley on Merseyside before the end of September 2015. For the year ended 31 October 2014, turnover was £1.4 million producing a profit before tax of £0.2 million.  Net assets at the same date were £0.8 million. Total consideration comprised £1.0m for the trading operation and a further £0.2 million for the net cash position held at completion, a total of £1.2 million. The consideration relating to the trading operation is to be satisfied as to £0.7 million in cash on completion with further cash payments over the first two years of ownership estimated at £0.3 million contingent on the gross profit performance of the business over the same period. Commenting, Sean Fennon, Chief Executive Officer, said: " The acquisition of NFP and Albroco continues the progressive development of Flowtech, and along with Primary Fluid Power will both sit within a newly formed division providing clear focus on the power and motion control market. In addition the acquisitions widen the geographical areas and customer sectors we serve, and extends significantly the Group's hydraulic offer and procurement opportunities."  CURRENT TRADING AND NOTICE OF HALF-YEAR RESULTS The Board announces that the Company is trading in line with market expectations, while trading remains competitive. Flowtech will update the market at the time of its half-year results (for the six month period ended 30 June 2015), which are scheduled to be released on Tuesday 8 September 2015.

Enquiries:
Flowtech Fluidpower plc AIM: FLO Sean Fennon, Chief Executive Officer Bryce Brooks, Chief Financial Officer & Company Secretary Tel: [phone] Email: [e-mail] www.flowtechfluidpower.com
Zeus Capital Limited (Nominated Adviser and Broker) Ross Andrews Andrew Jones Dominic King Tel: [phone]
TooleyStreet Communications (IR and media relations) Fiona Tooley Tel: [phone] Email: [e-mail]

Editors' note: Flowtech Fluidpower plc, founded as Flowtech 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 Exclusive Brand products to over 3,000 distributors and resellers. Its catalogue is recognised as the definitive source for fluid power products, containing approximately 50,000 individual product line and  is distributed to more than 90,000 industrial Maintenance, Repair and Overhaul end users (MRO).  Over 80% of product is stocked and if 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 distribution centres in the Netherlands and China and an assembly operation in Merseyside; in total the business employs 229 people.

 

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