RCS - RC Fornax - INTENTION TO FLOAT ON THE AIM MARKET
21/01/2025 08:00
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RNS Number : 0314U RC Fornax 21 January 2025
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subscribe for any transferable securities referred to in this announcement
except on the basis of the information in the final form of an admission
document (the "Admission Document") which may be published in due course in
connection with the proposed admission of RC Fornax plc's issued and to be
issued ordinary shares of 0.25 pence each in the capital of the Company
("Ordinary Shares") to trading on AIM, a market of that name operated by
London Stock Exchange plc ("AIM"). Upon any such publication the Admission
Document will supersede this announcement and the information contained herein
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basis of the information contained therein. Copies of the Admission Document
will, following publication, be available during normal business hours on any
day (except Saturdays, Sundays and public holidays) at the registered office
of the Company and online at www.rcfornax.co.uk, subject to applicable
securities laws or regulations.
21 January 2025
RC FORNAX PLC
("RC Fornax" or the "Company")
INTENTION TO FLOAT ON THE AIM MARKET OF THE LONDON STOCK EXCHANGE AND
FUNDRAISE OF APPROXIMATELY £5 MILLION
RC Fornax, the UK-based, highly accredited engineering consultancy providing
high-impact work package solutions for critical military platforms, is pleased
to announce its intention to apply for the admission of its Ordinary Shares to
trading on the AIM Market of the London Stock Exchange ("Admission").
Highlights
· RC Fornax's Ordinary Shares are expected to admit to trading on AIM
in early February 2025.
· RC Fornax is a veteran-led engineering consultancy, established to
define and execute engineering design projects under Statements of Work
("SoW"), enhancing and augmenting customer capabilities while improving
project efficiency to the UK defence sector for critical military platforms.
The Company aims to provide distinct, outcome-based solutions to defence
contractors utilising bespoke project teams from an associate community of
expert consultants.
· The Company was founded in 2020 by Paul Reeves and Daniel Clark, two
Royal Air Force veterans with a combined service of over 24 years, vast
industry experience and in-depth market knowledge.
· RC Fornax has demonstrated its ability to deliver bespoke solutions
to highly reputable players within the defence industry, including 10 blue
chip customers.
· The Company has a strong financial track record, with a revenue CAGR
of 100 per cent since formation, having generated £6.5 million in 2024,
resulting in £0.9 million EBITDA.
· The Company is seeking to raise approximately £5 million through the
placing of new Ordinary Shares to certain institutional and other investors
(the "Placing").
· The net proceeds of the Placing will be used to accelerate the
Company's growth objectives, including the development of an advanced
artificial intelligence ("AI") tool, known as the Fornax Automatic Statement
of work Generator (Project FAS-G), designed to streamline the creation of SoWs
by harnessing the Company's expertise and in-depth industry knowledge
· The Company has appointed Strand Hanson Limited as its Nominated
& Financial Adviser and Cavendish Capital Markets Limited as its sole
broker in respect of the Admission.
Paul Reeves, CEO of RC Fornax, commented, "I am proud and excited to announce
our decision to seek admission of RC Fornax on AIM, bringing our business to
the London Stock Exchange. When I co-founded this business in 2020 with
Daniel, our vision was to enhance the defence consulting industry and create a
company that would stand at the forefront of innovation and excellence in
supporting the national security of the UK. By floating on AIM we will be able
to gain the platform, resources, and visibility needed to strengthen our role
in supporting the UK's defence and high-tech industries."
Key Strengths
The Directors believe the success of the Company and the expectations for its
future growth are founded on the following key strengths:
· RC Fornax's Directors and Senior Management possess vast industry
experience and in-depth market knowledge;
· RC Fornax operates in a growing industry with the UK's defence
spending continuing to rise;
· RC Fornax has demonstrated its ability to deliver bespoke solutions
to highly reputable players within the defence industry, including 10 blue
chip customers;
· RC Fornax has the ability to grow its revenue share from each of its
existing clients while also targeting new businesses and international
expansion;
· RC Fornax is highly accredited having been approved for frameworks
which provide a high barrier-to-entry for potential competitors;
· RC Fornax has generated an aggregate of over £12 million of revenue
since orders commenced in September 2021 through to 31 August 2024, achieving
gross profit margins of 29.7 per cent;
· RC Fornax is well placed to win high value contracts from key defence
frameworks which have high barriers to entry with a new bid capability;
· RC Fornax provides a differentiated approach by offering the
advantages of traditional consultancies combined with that of recruitment
solutions; and
· RC Fornax provides flexible and adaptable services, delivering
incremental and dynamic deliverable-based contracts to align with customers'
changing requirements without penalties of contract change.
Rationale for Admission
RC Fornax believes Admission to AIM will provide it with several advantages,
including:
· accelerating the expansion of the business.
· enhancing the Company's ability to attract, recruit and retain key
employees and consultants.
· providing additional product development capabilities for the
Company's planned AI tool that seeks to create robust and contractable SoWs,
providing clients with increased opportunities to outsource work.
· raising the public profile of the Company and increasing awareness of
the brand.
· providing the Company with the ability to issue new Ordinary Shares
to satisfy in part or in full the consideration payable in connection with
attractive acquisition opportunities.
Business Overview
Comprehensive Defence Solutions for Critical Platforms
· RC Fornax defines and executes engineering design projects under SoWs.
The Company specialises in supporting critical military platforms.
o Services are provided with the aim of supporting the whole product
lifecycle with expertise of Systems, Software and Hardware Engineering of high
complexity and high integrity platforms.
Veteran-Founded, UK-Focused Excellence
· RC Fornax is a proud, veteran-founded small-medium enterprise
(SME) primarily focussed on supporting the UK defence industry. The Company
seeks to drive long-term relationships and repeat business.
o Co-founded in 2020 by Paul Reeves and Daniel Clark, two Royal Air Force
veterans, with a combined service of over 24 years.
o Progressing from their service careers to consultancy roles, they
supported an array of tier 1 defence contractors, leading large engineering
teams to deliver high-value projects and, in doing so, identified common
challenges which the Company seeks to tackle.
Transforming Delivery with Outcome-Driven SoWs
· At the heart of RC Fornax's solutions is its ability to support
customers in switching from traditional labour-based contracts into fully
managed outcome-based services under SoWs.
o An overarching SoW is produced covering a 12-month period, aligning with
the client's budget cycles. This SoW is then defined in greater detail in
three-month increments, providing the client with a highly flexible approach
which supports changing requirements and ensures that the contract can
dynamically adjust while emphasising accountability through clear
deliverables.
o The Company leverages its industry knowledge and access to its associate
community, enabling it to deploy highly skilled teams that have the right
expertise and capabilities to meet the specific needs of each project.
o Rapid mobilisation allows projects to move forward whilst minimising
delays.
A rapid growth, market-disruptive, solutions provider in the defence sector
· A profitable company, having exhibited significant growth over
the past four years.
o The Company has grown revenues by 100 per cent CAGR to FY24 and generated
aggregate EBITDA of over £1.6 million. The Company also reported gross
margins of 25 per cent in the most recent financial year and has a clear
strategy to increase this through transitioning more customers to higher
margin services and reducing costs.
o With defence budgets increasing globally, and the UK's defence spending
expected to have reached approximately 2.3 per cent of GDP by the end of 2024
with ongoing government discussions in place to raise this to 2.5 per cent by
2030, RC Fornax is well positioned to capitalise on this increased spending.
Supporting the UK MoD's Targets with Bespoke Solutions
· RC Fornax has the ability to support the MoD's overarching
commitments to maximise the integration of SMEs and shorten supply chains.
o The MoD's core departments in 2023/2024 spent £37.6 billion with UK and
foreign owned organisations, having placed an estimated £15.7 billion on new
contracts, an increase of £2.5 billion on the year before. As outlined in the
MoD's SME Action Plan adopted in 2019, the MoD has set a goal of directing 25
per cent of its procurement spending towards SMEs.
o RC Fornax also intends to expand its business model to position itself as
an SME integrator, harnessing the capabilities of SMEs with the ultimate aim
of supporting the MoD deliver on its SME action plan.
o The Board believes this will enable the Company to deliver higher value
projects to customers; and to contract directly with the MoD, which would
support the MoD's strategy to increase the robustness and diversity of the
defence supply chain.
IR35 Compliance and Managed Services
· RC Fornax has robust processes and dedicated IR35 commitments in
place.
o Unlike traditional contractors, the Company possesses in-house expertise to
fully manage IR35 compliance or provide targeted support with its
complexities, enabling both the client and project team to remain focused on
project objectives.
o Leveraging a combination of internal knowledge and strategic partnerships,
the Company addresses IR35 requirements effectively - a critical step which
can be overlooked by other firms that lack the necessary insight or capacity
to manage these regulatory intricacies.
Trusted by Leading Defence Primes, Positioned for Continued Growth
· Since inception, RC Fornax has engaged directly as a preferred
supplier with 10 well-recognised blue chip defence businesses.
o RC Fornax has developed a blue chip customer base that has long term
contractual/framework relationships and repeat business. A typical contract
for the Company on a framework is approximately 12 months. Customers include
10 blue chip companies, many of which are international businesses, and RC
Fornax has ambitions to internationalise its own business.
o The Company is an approved supplier on frameworks which spent over £1.2
billion with SMEs in 2023.
o The Company has won 22 new mandates since 1 September 2024 covering a
range of critical defence projects with existing clients.
Expansion into New Markets and Industries
· While the defence industry customer base was the original target
market, the Company's innovative and efficient business proposition is
expected to see adoption and growth in adjacent markets.
o The aim is to convert more customers from time & materials based work
to outcome-based solutions contracts, implementing managed services or fully
defined outsourced work packages. The outcome for the customer is a more rapid
deployment and delivery of projects resulting in greater efficiency and
customer cost savings.
o Over 2025, the Company aims for the number of consultants being booked to
projects to grow to over 100. RC Fornax aims to achieve this primarily through
increasing its focus on delivering larger, embedded teams by supporting
existing clients on more sites, more projects and more business areas,
utilising the net proceeds of the Placing.
The Future of Defence: Innovation and Technological Superiority
· RC Fornax is committed to becoming a driving force behind the
future of the UK defence sector.
o The Company intends to utilise approximately £2.2 million of the
Placing's net proceeds for product development and the marketing costs of
delivering Project FAS-G.
o The Board believes that secondary only to the initial employee and skill
capacity constraints, the skills required internally within defence companies
to correctly define work is a key barrier to successful outsourcing.
o Accordingly, RC Fornax aims to improve this process with Project FAS-G to
accelerate clients' access to better-defined outsourced work packages and
teams. An internal team of AI/ML engineers will produce an AI-based tool,
capable of analysing a project schedule for unallocated tasks and skills
demand, taking account of critical path activities and inter team
dependencies, to produce a Statement of Work that will be contractable.
o The plan is for this FAS-G tool to be licenced, providing the Company with
an additional revenue stream whilst unlocking higher volume of opportunities
through creation of more SoWs to contract out.
For additional information, please contact:
RC Fornax plc info@rcfornax.co.uk (mailto:info@rcfornax.co.uk)
Paul Reeves - CEO
Rob Shepherd - CFO
Strand Hanson Limited (Nominated & Financial Adviser) +44 (0)20 7409 3494
Christopher Raggett
Rob Patrick
Harry Marshall
Cavendish Capital Markets Limited (Broker) +44 (0)20 7908 6000
Carl Holmes / George Lawson - Corporate Finance
Dale Bellis / Harriet Ward - Sales and ECM
BlytheRay (Financial PR) +44 (0)20 7138 3204
Tim Blythe rcfornax@blytheray.com
Megan Ray
Said Izagaren
About RC Fornax
RC Fornax is an established, highly accredited engineering consultancy, formed
to define and execute engineering design projects under Statements of Work,
enhancing and augmenting customer capabilities while improving project
efficiency. A rapid growth, market-disruptive, solutions provider in the
defence sector, RC Fornax was founded by two ex-RAF engineers who spotted
deficiencies in the existing outsourced contract defence market. By leveraging
this experience, RC Fornax aims to become a challenger to the industry and
establish itself to be a best-in-class provider of services to the UK defence
sector, by offering a wider range of expertise and capabilities, with an
initial focus on systems, software and hardware engineering.
By utilising a well-established associate community approach to augment core
capabilities, RC Fornax defines and executes engineering design projects under
Statements of Work. Services are provided with the aim of supporting the whole
product lifecycle with expertise of systems, software, and hardware
engineering of high complexity and high integrity platforms.
IMPORTANT INFORMATION
The communication of this announcement is not being made, and has not been
approved, by an authorised person for the purposes of section 21 of the UK
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The contents of this announcement, which has been prepared by and is the sole
responsibility of the Company, has not been approved by either of Strand
Hanson Limited ("Strand") or Cavendish Capital Markets Limited ("Cavendish")
for the purposes of section 21(2)(b) of the Financial Services and Markets Act
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The Ordinary Shares referred to in this Announcement have not been and will
not be registered under the US Securities Act of 1933, as amended (the "US
Securities Act") or with any securities regulatory authority of any state or
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