INTENTION TO FLOAT ON THE AIM MARKET

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA OR TO BE TRANSMITTED, DISTRIBUTED TO, OR SENT BY, ANY NATIONAL OR RESIDENT OR CITIZEN OF ANY SUCH COUNTRIES OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION MAY CONTRAVENE LOCAL SECURITIES LAWS OR REGULATIONS OF SUCH JURISDICTION.

This announcement is an advertisement and not an admission document or a prospectus and does not constitute or form part of an offer to sell or issue or a solicitation of an offer to subscribe for or buy any securities nor should it be relied upon in connection with any contract or commitment whatsoever in any jurisdiction. Potential investors should not purchase or 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 in its entirety and your investment decision, if any, must be made only on the 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:

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 Financial Services and Markets Act 2000.

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 2000 (as amended).

Neither this announcement nor any copy of it may be taken or transmitted, published or distributed, directly or indirectly, in, into or from any restricted jurisdiction or to any persons in any of those jurisdictions or any other jurisdiction where to do so would constitute a violation of the relevant securities laws of such jurisdiction. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese, New Zealand or South African securities laws.

This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or other securities in any restricted jurisdiction. The distribution of this announcement and other information in connection with the Admission in certain jurisdictions may be restricted by law and persons into whose possession this announcement, any document or other information referred to herein comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this announcement nor any part of it nor the fact of its distribution shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

This announcement is directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments and are: (i) if in a member state of the European Economic Area ("EEA"), Qualified Investors as defined in article 2(e) of Regulation (EU) 2017/1129 (the "EU Prospectus Regulation"); (ii) if in the United Kingdom, are Qualified Investors as defined in article 2(e) of the EU Prospectus Regulation as it forms part of domestic law pursuant to the European Union (Withdrawal) Act 2018 and (a) fall within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (b) are persons who fall within article 49(2)(a) to (d) of the Order, or (c) to whom it may otherwise be lawfully distributed (all such persons together being referred to as "Relevant Persons").

This announcement must not be acted on or relied on by persons who are not Relevant Persons. Persons distributing this announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. This announcement does not itself constitute an offer for sale or subscription of any securities in the Company.

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 other jurisdiction of the United States. The securities may not be offered or sold in the United States absent registration under the US Securities Act or an available exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of securities in the United States.

Any subscription for or purchase of Ordinary Shares should be made solely on the basis of the information contained in the final Admission Document to be published by the Company in connection with the Admission. The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed for any purposes whatsoever on the information contained in this announcement or its accuracy, completeness or fairness. The information in this announcement is subject to change. However, the Company does not undertake to provide the recipient of this announcement with any additional information, or to update this announcement or to correct any inaccuracies, and the distribution of this announcement shall not be deemed to be any form of commitment on the part of the Company to proceed with the Admission or any transaction or arrangement referred to in this announcement. This announcement has not been approved by any competent regulatory authority.

Strand and/or Cavendish and any of their respective affiliates, acting as investors for their own accounts, may subscribe for or purchase Ordinary Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Admission or otherwise. Accordingly, references in the Admission Document, once published, to the Ordinary Shares being offered, subscribed, acquired, placed or otherwise dealt in should be read as including any offer to, or subscription, acquisition, placing or dealing by Strand and/or Cavendish and any of their respective affiliates acting as investors for their own accounts. In addition, Strand and/or Cavendish or their respective affiliates may enter into financing arrangements and swaps in connection with which it or its affiliates may from time to time acquire, hold or dispose of Ordinary Shares. Neither Strand nor Cavendish has any intention to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Strand, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom is acting exclusively for the Company as the Company's nominated adviser for the purposes of the AIM Rules for Companies ("AIM Rules") and no one else in connection with the Admission, and Strand will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Admission or any other matters referred to in this announcement.

Cavendish, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom is acting exclusively for the Company as the Company's broker for the purposes of the AIM Rules and no one else in connection with the Admission, and Cavendish will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Admission or any other matters referred to in this announcement.

Neither Strand, nor Cavendish nor any of their respective subsidiary undertakings, affiliates or any of their respective directors, officers, employees, advisers, agents or any other person accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy, completeness or fairness of the information or opinions contained in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith and any liability therefore is expressly disclaimed.

The anticipated timetable for Admission, including the publication of the Admission Document and/or the date of Admission, may be influenced by a range of circumstances, including market conditions. There is no guarantee that the Admission Document will be published or that Admission will occur and investors should not base their financial decisions on the Company's intentions in relation to the Admission at this stage.

The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.
Certain figures contained in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly to the total figure given.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

Forward-Looking Statements

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These statements reflect beliefs of the Directors (including based on their expectations arising from pursuit of the Company's strategy) as well as assumptions made by the Directors and information currently available to the Company. Although the Directors consider that these beliefs and assumptions are reasonable, by their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company's actual financial condition, results of operations, cash flows, liquidity or prospects to be materially different from any future such metric expressed or implied by such statements. Past performance cannot be relied upon as a guide to future performance and should not be taken as a representation that trends or activities underlying past performance will continue in the future. Forward-looking statements speak only as of the date they are made. No representation is made or will be made that any forward-looking statements will come to pass or prove to be correct.