REG - Flowtech Fluidpower - 2023 Half-year report
30/08/2023 07:00
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RNS Number : 7251K Flowtech Fluidpower PLC 30 August 2023
WEDNESDAY, 30 AUGUST 2023
FLOWTECH FLUIDPOWER PLC
("Flowtech", the "Group" or "Company")
"a world of motion"
Our aim is to provide our customers with power, motion & control
solutions, from a single component to integrated engineering systems, in the
most cost-effective way, harnessing the best global brands & products,
services and engineers in the market.
2023 HALF-YEAR REPORT
For the six months ended 30 June 2023
"Despite increasingly challenging economic conditions, overall Group revenue
increased by 2.8% in the period with a more positive performance in our
solutions and services segments and a weaker performance in the product
distribution segment, as previously reported. We have continued to make
positive progress on working capital management, continuing to improve our
debt position whilst maintaining tight cost controls.
We expect these market headwinds to continue through H2 23 and into 2024 but I
am pleased to report good progress is being made in deploying an immediate
performance improvement plan and the refreshed strategy, strengthening the
leadership team and simplifying the operating model building the capabilities
to deliver mid-term scalable growth in a highly fragmented market."
Mike England, Chief Executive Officer
TRADING AND OPERATIONAL HIGHLIGHTS
· Revenue increased by 2.8% with varying performance across
segments
· Sustained strong gross margin of 35.5% (H1 22 36.3%)
· Inflationary pressures partially offset by cost savings
initiatives
· Underlying operating profit of £3.4m, a decrease of £0.9m on
the comparative period
· £4.3m decrease in net debt (pre-leases)
Half year ended Half year ended Year ended
30 June 2023 30 June 2022 31 December 2022
FINANCIAL HIGHLIGHTS Unaudited Unaudited Audited
· Revenue £59.1m £57.5m £114.8m
· Gross profit % 35.5% 36.3% 35.7%
· Underlying EBITDA* £5.0m £5.8m £11.6m
· Underlying operating profit** £3.4m £4.3m £8.6m
· Operating profit / (loss) £2.4m £3.6m (£4.4m)
· Profit / (loss) before tax £1.6m £3.1m (£5.6m)
· Earnings per share (basic) 2.28p 4.24p (10.17p)
· Net debt*** £15.4m £19.7m £16.0m
*Underlying EBITDA is profit before interest, taxation, depreciation and
separately disclosed items.
**Underlying operating profit is operating profit for continuing operations
before separately disclosed items (note 3).
***Net debt is bank debt less cash and cash equivalents. It excludes lease
liabilities under IFRS 16.
RESULTS PRESENTATION:
Today, 30 August 2023, at 10.00am (BST) CEO Mike England and CFO Russell Cash
will provide a 'live' presentation via the Investor Meet Company platform
(IMC) at:
https://www.investormeetcompany.com/flowtech-fluidpower-plc/register-investor
(https://www.investormeetcompany.com/flowtech-fluidpower-plc/register-investor)
Website: www.investormeetcompany.com (http://www.investormeetcompany.com)
FLOWTECH FLUIDPOWER PLC 2023 HALF-YEAR REPORT
For the six months ended 30 June 2023
2023 HALF-YEAR FINANCIAL PERFORMANCE AND DIVISIONAL ANALYSIS
Revenue by current segment Six months Six months % Year
ended ended Change ended
30 June 2023 30 June 2022 31 December 2022 (re-stated**)
(re-stated**) £000
£000 £000
Flowtech (Product Distribution) 26,606 28,192 -5.6% 53,273
Fluidpower Group Solutions 22,019 19,749 11.5% 40,368
Fluidpower Group Services 10,445 9,516 9.8% 21,125
Total Group revenue 59,070 57,457 2.8% 114,766
Gross profit % 35.5% 36.3% 35.7%
Underlying segment operating profit* Six months Return on revenue Six months Return on revenue Year Return on revenue
ended ended ended
30 June 2023 30 June 2022 31 December 2022
% (re-stated) % (re-stated) %
£000 £000 £000
Flowtech (Product Distribution) 2,275 8.6% 3,617 12.8% 6,206 11.7%
Fluidpower Group Solutions 2,462 11.2% 2,707 13.7% 5,086 12.6%
Fluidpower Group Services 1,202 11.5% 234 2.5% 1,804 8.5%
Central costs (2,515) (2,245) (4,510)
Underlying operating profit* 3,424 4,313 8,586
* Underlying operating profit is operating profit for continuing operations
before separately disclosed items (note 3).
** H1 22 and FY 22 figures have been re-stated to reflect the movement of certain
revenue streams between segments, however there is no impact on Group
profitability.
REVENUE
Revenue increased by 2.8% in H1 23 compared to H1 22. The growth achieved in
both the Solutions (11.5%) and Services (9.8%) segments was pleasing; this
served to mitigate the impact of a disappointing performance within the
Product Distribution segment where revenue declined by 5.6%. The second
quarter of the year provided more challenging trading conditions across each
segment than the first quarter.
Gross profit margin
Our gross profit margin remains strong at 35.5% (H1 22 36.3%); the modest
movement relates primarily to the change in sales mix due to divisional
margins being lower in the Solutions and Service segment as compared to the
Product Distribution segment.
OPERATING Costs
Underlying operating costs have increased by £1.0m (6.2%), compared to the
comparative 2022 period. Approximately two thirds of our cost base relate to
people costs; our average number of employees in H1 23 decreased by 5.8%
compared to H1 22 but this was offset by inflation on wages and other costs
alongside the impact of investment in senior personnel (building future
capability and scale).
UNDERLYING OPERATING PROFIT
Underlying operating profit of £3.4m is a decrease of £0.9m from the
comparative period (H1 22: £4.3m).
The performance of the Product Distribution segment was disappointing, as
explained under the "Trading Review" section below. We are pleased with the
performance in the Solutions and Services divisions which both continued to
show strong growth at attractive margins.
NET DEBT
Net debt (pre-lease debt) was £15.4m at 30 June 2023 (H1 22: £19.7m), with
headroom of £9.6m under the Group's banking facilities. Key to achieving this
reduction was a £3.9m reduction in inventory levels. We expect this trend
to continue as we benefit from a less volatile supply chain environment. If
leases are taken into account, the reduction in Group debt was £5.1m.
TRADING REVIEW
We have highly skilled and capable people, passionate about providing the
highest levels of technical and engineering expertise and customer service.
In a technical industrial market, this is a source of competitive advantage.
Positive progress has been made in H1 23 building our people capabilities
including increased investment in training, learning and development,
investment in health, safety and wellbeing and supporting them through these
more challenging economic times. We thank our people for their continued
commitment and dedication.
In our Product Distribution segment (which accounts for 45% of Group revenue),
the performance has been disappointing for over 12 months continuing through
H1 23 with revenue decline of 5.6%. This is in part due to the more volatile
economic and industrial landscape but also due to internal challenges
resulting from the consolidation of five businesses into one during 2021/2022
including the closure of the Leicester Distribution Centre, consolidating
inventory into the main Skelmersdale Distribution Centre. Whilst this
consolidation has enabled improved scale and efficiency, aspects of this
integration have impacted some parts of the customer experience.
Interventions are in flight to address this to ensure we have quickly
returned to the levels of high service expected by our customers including
further improvements to our website, catalogue, commercial discipline and our
service.
In our Solutions and Services segments, we are pleased with the performance
with H1 23 revenue growth of 11%. We have improved the focus in offering a
wide range of engineering services, further building our reputation for
delivering technical products, designing, manufacturing and supporting our
distributors, industrial end users and original equipment manufacturers across
our geographies.
Our international businesses in the Island of Ireland and Benelux which
contribute c.28% of Group revenue have continued to perform well. Ireland in
particular, where we have consolidated our two businesses into one has seen
revenue growth in H1 23 of 19%. Our two businesses in Benelux have made a
positive contribution of 16% return on revenues and we see further opportunity
here to drive greater synergy and to further increase market share gains.
Group Gross Margin performance was stable, and management has remained focused
ensuring we stay ahead of supplier price rises and service labour costs during
a continued inflationary market. There is though gross profit impact
resulting from the revenue mix between the higher gross margin Product
Distribution segment and the Solutions and Services segment. We see further
opportunity for gross margin enhancement across the Group by improving our
commercial effectiveness, pricing discipline and building greater procurement
capability.
Our cost management remains disciplined and whilst we have taken all necessary
action to react to inflationary market pressures, we continue to support our
highly skilled and talented workforce and build enhanced capabilities as we
look to underpin our mid-term strategy to deliver scalable and sustainable
growth and value creation. However, we see significant further opportunity
for delivering efficiencies across the Group as we scale through the
deployment of our refreshed strategy, further simplifying the operating model,
underpinned by investment in improved automation, technology and processes.
We have continued to focus on cash and optimising our working capital which
resulted in the £5.1m reported reduction in net debt. As we look forward,
our focus will remain on achieving further working capital optimisation and
improved cash efficiencies across the Group whilst seeking to improve overall
stock availability and service by adopting a more rigorous approach to
inventory and supplier management.
STRATEGY
We are pleased to report good progress in implementing an immediate
Performance Improvement Plan and the refreshed strategy (our journey to the
future), across the Group.
i) Performance Improvement Plan
The Performance Improvement Plan focusses on near-term performance improvement
to quickly deliver a more customer centric, lean and scalable platform for
growth. It consists of three key components;
a) Simple - we are implementing a simple operating model releasing the full
potential of our people and our capabilities,
b) Customer centric - moving decision making and activities to be more centred
around the customer with a renewed growth focus across all channels, and
c) Scalable - Re-focusing on doing the basics brilliantly whilst improving our
operational and technology infrastructure to power future growth.
ii) Refreshed strategy
Our refreshed strategy (our journey to the future) sets out our ambition and
has two key components;
a) A world of motion - We will expand on our product and engineering
capabilities across the wider power, motion and control sector. In doing so,
we increase our market share opportunity in Europe from c£10bn to c£30bn.
We will target two times market growth rate. This also serves to future
proof the Group with a focus on new emerging technologies.
b) The power of one - we will release the full potential, scalability and
efficiency of the Group by transitioning to a single brand and operating
model. We will launch a simplified value proposition for our target
customers.
As part of the strategy, we are focused on delivering a measurable value
creation plan consisting of defined strategic focus areas to deliver mid-teens
underlying operating profit margin.
The Performance Improvement Plan and refreshed strategy is enabled by the
formation of a new, diverse and highly skilled leadership team organised into
a functional, country led structure where we are building greater core
competence and capabilities. Five of the previous leadership team have
exited the business and the new team, consisting of a strong mix of existing
and new talent, has now been appointed; a number of the new members of the
team are already operating within the business with the final three leaders
onboarding in October. The accountability of this team will be to deliver
the defined areas of strategic focus, known internally as growth engines.
The immediate priority is on short-term 'self-help' interventions to deliver
improved performance throughout H2 23 and into 2024 focused on improvements in
a) our growth capabilities (including our marketing, digital and sales
capabilities), b) our core service and delivery capabilities (doing the basics
brilliantly) and c) simplifying how we work (to deliver greater speed, agility
and efficiencies).
OUTLOOK
We expect external economic headwinds to continue to bite through H2 23 and
into 2024 with continued slowdown in industrial output and production. We
have deployed a number of focused interventions to address weaker performing
areas underpinned by a change in leadership and capability and providing
greater clarity on our forward strategy and plans. Our people are motivated
and committed to delivering high performance and whilst we expect H2 23 to
remain challenging, we are optimistic in our outlook in building our momentum
and capabilities into 2024 and beyond through the deployment of our refreshed
strategy.
By order of the Board
29 August 2023
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2023
Notes Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 30-June 31-December
2023 2022 2022
£000 £000 £000
Continuing operations
Revenue 59.070 57,457 114,766
Cost of sales (38,089) (36,611) (73,792)
Gross profit 20,981 20,846 40,974
Distribution expenses (2,288) (2,159) (4,428)
Administrative expenses before separately disclosed items: (15,269) (14,374) (27,960)
- separately disclosed items 3 (987) (690) (12,966)
Total administrative expenses (16,256) (15,064) (40,926)
Operating profit / (loss) 2,437 3,623 (4,380)
Financial expenses (813) (474) (1,192)
Profit / (loss) from continuing operations before tax 1,624 3,149 (5,572)
Taxation 4 (220) (542) (680)
Profit / (loss) from continuing operations 1,404 2,607 (6,252)
Earnings per share 5
Basic earnings per share - continuing operations 2.28p 4.24p (10.17p)
Diluted earnings per share - continuing operations 2.28p 4.19p (10.17p)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 30-June 31-December
2023 2022 2022
£000 £000 £000
Profit for the period 1,404 2,607 (6,252)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
-Exchange differences on translating foreign operations (225) 153 318
Total comprehensive income in the period 1,179 2,760 (5,934)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2023
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£000 £000 £000
Assets
Non-current assets
Goodwill 53,092 63,164 53,092
Other intangible assets 2,979 4,107 3,523
Right of use assets 5,921 6,805 6,091
Property, plant, and equipment 7,900 6,904 7,234
Total non-current assets 69,892 80,980 69,940
Current assets
Inventories 30,843 34,731 31,486
Trade and other receivables 25,257 24,293 24,620
Prepayments 1,130 1,129 387
Cash and cash equivalents 4,446 273 3,972
Total current assets 61,676 60,426 60,465
Liabilities
Current liabilities
Interest bearing borrowings - - 19,967
Lease liability 1,453 1,868 1,705
Trade and other payables 20,248 20,539 19,569
Tax Payable 1,123 1,154 1,219
Total current liabilities 22,824 23,561 42,460
Net current assets 38,852 36,865 18,005
Non-current liabilities
Interest-bearing borrowings 19.889 19,947 -
Lease liability 4,705 5,178 5,008
Provisions 339 302 317
Deferred tax liabilities 1,196 1,437 1,281
Total non-current liabilities 26,129 26,864 6,606
Net assets 82,615 90,981 81,339
Equity directly attributable to owners of the parent
Share capital 30,746 30,746 30,746
Share premium 60,959 60,959 60,959
Other reserves 187 187 187
Shares owned by the Employee Benefit Trust (EBT) (124) (141) (124)
Merger reserve 293 293 293
Merger relief reserve 3,646 3,646 3,646
Currency translation reserve (66) 66 159
Retained losses (13,026) (4,775) (14,527)
Total equity attributable to the owners of the parent company 82,615 90,981 81,339
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
Share capital Share Other reserves Shares owned by EBT £000 Merger reserve Merger relief Currency Retained Total
premium reserve translation losses equity
£000 £000 £000 £000 reserve
£000 £000 £000 £000
Six months ended
30 June 2023
Unaudited
Balance at 1 January 2023 30,746 60,959 187 (124) 293 3,646 159 (14,527) 81,339
Profit for the period 1,404 1,404
Other comprehensive income (225) - (225)
Total comprehensive income for the year
(225) 1,404 1,179
Transaction with owners
Share options settled
Share-based payment charge 97 97
Balance at 30 June 2023 30,746 60,959 187 (124) 293 3,646 (66) (13,026) 82,615
Six months ended
30 June 2022
unaudited
Balance at 1 January 2022 30,746 60,959 187 (276) 293 3,646 (286) (7,267) 88,002
Profit for the period 2,607 2,607
Other comprehensive income - - - - - - 352 (199) 153
Total comprehensive income for the year - - - - - -
352 2,408 2,760
Transaction with owners
Share-based payment charge 135 (19) 116
Share options settled - - - - - - - 103 103
Balance at 30 June 2022 30,746 60,959 187 (141) 293 3,646 66 (4,775) 90,981
Twelve months ended
31 December 2022
audited
Balance at 1 January 2022 30,746 60,959 187 (276) 293 3,646 (286) (7,267) 88,002
Profit or the year - - - - - - - (6,252) (6,252)
Other comprehensive income - - - - - - 318 - 318
Total comprehensive income for the year - - - - - - 318 (6,252) (5,934)
Transaction with owners:
Shares options settled - - - 152 - - - (25) 127
Share-based payment charge - - - - - - - 372 372
Dividends paid - - - - - - - (1,228) (1,228)
Transfers between reserves - - - - - - 127 (127) -
Total transactions with owners - - - 152 - - 127 (1,008) (729)
Balance at 31 December 2022 30,746 60,959 187 (124) 293 3,646 159 (14,527) 81,339
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
Note Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 30 June 31 December
2023 2022 2022
£000 £000 £000
Net cash from operating activities 6 3,607 (2,505) 5,014
Cash flow from investing activities
Acquisition of property, plant, and equipment (1,340) (683) (1,645)
Acquisition of intangible assets - (62) (212)
Proceeds from sale of property, plant, and equipment 3 34 65
Net cash used in investing activities (1,337) (711) (1,792)
Cash flows from financing activities
Repayment of lease liabilities (880) (830) (1,673)
Interest on lease liabilities (116) (118) (227)
Other interest (776) (336) (925)
Proceeds from sale of shares held by EBT - 155 172
Dividends paid - - (1,228)
Net cash generated from / (used in) financing activities (1,772) (1,129) (3,881)
Net change in cash and cash equivalents 498 (4,345) (659)
Cash and cash equivalents at start of period 3,972 4,562 4,562
Exchange differences on cash and cash equivalents (24) 56 69
Cash and cash equivalents at end of period 4,446 273 3,972
Short-term borrowings Long-term borrowings Lease liabilities Total
£000 £000 £000 £000
At 1 January 2023 19,967 - 6,713 26,680
Cash flows
Repayment - - (880) (880)
Movement between short-term and long-term (19,967) 19,967 - -
Other movements - (78) 358 280
Non-cash
Foreign exchange - - (33) (33)
At 30 June 2023 - 19,889 6,158 26,047
NOTES TO THE HALF-YEAR REPORT
For the six months ended 30 June 2023
1. General information
The principal activity of Flowtech Fluidpower plc (the "Company") and its
subsidiaries (together, the "Group") is the distribution of engineering
components and assemblies, concentrating on the fluid power industry. The
Company is a public limited company incorporated and domiciled in the United
Kingdom. The address of its registered office is Bollin House, Wilmslow, SK9
1DP.
The registered number is 09010518.
As permitted, this Half-year report has been prepared in accordance with the
AIM rules and not in accordance with IAS 34 "Interim Financial Reporting".
The consolidated financial statements are prepared under the historical cost
convention, as modified by the revaluation of certain financial instruments.
This consolidated Half-year report and the financial information for the six
months ended 30 June 2023 does not constitute full statutory accounts within
the meaning of section 434 of the Companies Act 2006 and are unaudited. This
unaudited Half-Year Report was approved by the Board of Directors on
29 August 2023.
The Group's financial statements for the year ended 31 December 2022 have been
filed with the Registrar of Companies. The Group's auditor's report on these
financial statements was unqualified and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Electronic communications
The Company does not intend to bulk print and distribute hard copies of this
Half-year report, although copies can be requested by contacting: The Company
Secretary, Flowtech Fluidpower plc, Bollin House, Bollin Walk, Wilmslow, SK9
1DP. Email: info@flowtechfluidpower.com (mailto:info@flowtechfluidpower.com)
.
The Board believes that by utilising electronic communication it delivers
savings to the Company in terms of administration, printing and postage, and
environmental benefits through reduced consumption of paper and inks, as well
as speeding up the provision of information to shareholders. News updates,
regulatory news, and financial statements can be viewed and downloaded from
the Group's website https://www.flowtechfluidpower.com
(https://www.flowtechfluidpower.com) .
2. aCCOUNTING POLICIES
2.1 Basis of preparation
The financial information set out in this consolidated Half-year report has
been prepared under International Accounting Standards in conformity with the
requirements of the IFRIC interpretations issued by the International
Accounting Standards Board (IASB) and the Companies Act 2006 and in accordance
with the accounting policies which will be adopted in presenting the Group's
Annual Report and Financial Statements for the year ended 31 December 2023.
These are consistent with the accounting policies used in the Financial
Statements for the year ended 31 December 2022.
2.2 Going concern
The financial statements are prepared on a going concern basis. The Directors
believe this to be the most appropriate basis for the following reasons:
· The Group generated underlying operating profit of £3.4m.
· The Group is financed by revolving credit facilities totaling
£20m (extended to February 2026) and £5m overdraft facility,
repayable on demand.
· The Group has operated, and is expected to continue to operate,
well within its Banking facilities.
The Directors have revisited the forecasts and continue to anticipate a
profitable performance in the second half of 2023. Updated cash flow forecasts
continue to show the business operating well within the limits of its Banking
facilities.
Naturally, these forecasts include a number of key assumptions notably
relating, inter alia, to revenue, margins, costs and working capital. In any
set of forecasts there are inherent risks relating to each of these
assumptions. If future trading performance significantly underperformed
expectations, management believe there would be the ability to mitigate the
impact of this by careful management of the Group's cost base and working
capital and that this would assist in seeking to ensure all bank covenants
were complied with and the business continued to operate well within its
aggregate £25m banking facility. The Group therefore continues to adopt the
going concern basis in preparing its financial statements.
3. OPERATING SEGMENTS
The operations of the business are reviewed based on three segments -
Flowtech, Fluidpower Group Solutions and Fluidpower Group Services (as
explained in note 2.18 of the Annual report 2022). These operating segments
are monitored by the Group's Chief Operating Decision Maker and strategic
decisions are made on the basis of adjusted segment operating results.
Inter-segment revenue arises on the sale of goods between Group undertakings.
Segment information for the reporting periods is as follows:
Half year ended 30 June 2023 Flowtech Fluidpower Group Solutions Fluidpower Group Services Inter-segmental transactions Central Total
£000 £000 £000 Costs continuing
operations
£000 £000 £000
Income statement - continuing operations:
Revenue from external customers 26,606 22,019 10,445 - - 59,070
Inter segment revenue 1,177 541 375 (2,093) -
Total revenue 27,783 22,560 10,820 (2,093) 59,070
Underlying operating result* 2,275 2,462 1,202 - (2,515) 3,424
Net financing costs (34) (75) (3) - (701) (813)
Underlying segment result 2,241 2,387 1,199 - (3,216) 2,611
Separately disclosed items (see below) (205) (307) (66) (409) (987)
Profit before tax 2,036 2,080 1,133 - (3,625) 1,624
Specific disclosure items
Depreciation on owned plant ,property and equipment 477 83 85 - - 645
Depreciation on right-of-use assets 386 394 35 - 65 880
Amortisation 200 288 57 - - 545
Reconciliation of underlying operating result to operating profit:
Underlying operating result* 2,275 2,462 1,202 - (2,515) 3,424
Separately disclosed items (see below) (205) (307) (66) - (409) (987)
Operating profit/ (loss) 2,070 2,155 1,136 - (2,924) 2,437
(*) Underlying operating result is continuing operations'
operating profit before separately disclosed items
The Directors believe that the Underlying Operating Profit provides additional
useful information on underlying trends to Shareholders. The term 'underlying'
is not a defined term under IFRS and may not be comparable with similarly
titled profit measurements reported by other companies. A reconciliation of
the underlying operating result to operating result from continuing operations
is shown below. The principal adjustments made are in respect of the
separately disclosed items as detailed later in this note; the Directors
consider that these should be reported separately as they do not relate to the
performance of the segments.
Segment information for the half year ended June 2022 has been re-stated
following the movement of Primary Components, excluding OEM customers, from
Fluidpower Group Solutions to Flowtech, as this reflects the information
reported to the Chief Operating Decision Maker. Segment information for the
year ended December 2022 has also been restated to include sales from OEM
customers within the Solutions segment. Some overheads costs relating to
Divisional management have been re-categorised as segment operating overheads
to present a more comparable segment result. The re-statement of the prior
year periods does not impact Group profitability.
(*) Underlying operating result is continuing operations' operating profit
before separately disclosed items
Half year ended 30 June 2022 Flowtech Fluidpower Group Solutions Fluidpower Group Services Inter-segmental transactions Central Total
(re-stated) £000 £000 £000 costs continuing
operations
£000 £000 £000
Income statement - continuing operations:
Revenue from external customers 28,192 19,749 9,516 - - 57,457
Inter segment revenue 863 652 409 (1,924) - -
Total revenue 29,055 20,401 9,925 (1,924) - 57,457
Underlying operating result* 3,617 2,707 234 - (2,245) 4,313
Net financing costs (72) (31) (8) - (363) (474)
Underlying segment result 3,545 2,676 226 - (2,608) 3,839
Separately disclosed items (see below) (108) (335) (57) - (190) (690)
Profit before tax 3,437 2,340 169 - (2,798) 3,149
Specific disclosure items
Depreciation on owned plant ,property and equipment 509 77 85 - - 671
Depreciation on right-of-use assets 355 322 72 - 99 848
Amortisation 108 307 57 - - 472
Reconciliation of underlying operating result to operating profit:
Underlying operating result* 3,617 2,707 234 - (2,245) 4,313
Separately disclosed items (see below) (108) (335) (57) - (190) (690)
Operating profit/ (loss) 3,509 2,372 177 - (2,435) 3,623
Reconciliation of re-stated segment information for the half year ended 30 Flowtech Fluidpower Group Solutions Fluidpower Group Services Inter-segmental transactions Central Total
June 2022 to prior year report
£000 £000 £000 costs continuing
operations
£000 £000 £000
Revenue as per prior year report 27,614 21,842 9,925 (1,924) 57,457
Revenue from Primary components non-OEM customers categorised to Flowtech 1,441 (1,441) - - - -
Segment
Total re-stated revenue 29,055 20,401 9,925 (1,924) - 57,457
Underlying operating results in prior year report 3,725 2,952 328 - (2,692) 4,313
Underlying operating result for Primary Components categorised to Flowtech 10 (10) - - - -
Segment
Re-allocation of costs between segments (118) (235) (94) - 447 -
Underlying operating results, re-stated 3,617 2,707 234 - (2,245) 4,313
For the year ended 31 December 2022 Flowtech Fluidpower Group Solutions Fluidpower Group Services Inter-segmental transactions Central Total
(re-stated) £000 £000 £000 costs continuing
operations
£000 £000 £000
Income statement - continuing operations:
Revenue from external customers 53,273 40,368 21,125 - - 114,766
Inter segment revenue 1,706 1,008 868 (3,582) -
Total revenue 54,979 41,376 21,993 (3,582) 114,766
Underlying operating result* 6,206 5,086 1,804 - (4,510) 8,586
Net financing costs (141) (68) (5) - (978) (1,192)
Underlying segment result 6,065 5,018 1,799 - (5,488) 7,394
Separately disclosed items (see below) (8,240) (785) (3,329) - (612) (12,966)
Profit / (loss) before tax (2,175) 4,233 (1,530) - (6,100) (5,572)
Specific disclosure items
Depreciation and impairment on owned plant, property and equipment
867 157 179 - 2 1,205
Depreciation on right-of-use assets 707 695 73 - 195 1,670
Impairment of goodwill 7,105 - 2,967 - - 10,072
Impairment of acquired intangibles - - 168 - - 168
Amortisation 230 683 124 - - 1,037
Reconciliation of underlying operating result to operating profit:
Underlying operating result* 6,206 5,086 1,804 - (4,510) 8,586
Separately disclosed items (see below) (8,240) (785) (3,329) - (612) (12,966)
Operating profit/ (loss) (2,034) 4,301 (1,525) - (5,122) (4,380)
(*) Underlying operating result is continuing operations' operating profit
before separately disclosed items
Reconciliation of re-stated segment information for the year ended 31 December Flowtech Fluidpower Group Solutions Fluidpower Group Services Inter-segmental transactions Central Total
2022 to prior year report
£000 £000 £000 costs continuing
operations
£000 £000 £000
Revenue as per prior year report 57,271 39,084 21,993 (3,582) - 114,766
Revenue from former Primary components OEM customers categorised from the (2,292) 2,292 - - - -
Flowtech Segment
Total re-stated revenue 54,979 41,376 21,993 (3,582) - 114,766
Underlying operating results in prior year report 6,887 4,405 1,804 - (4,510) 8,586
Underlying operating result from Primary Components OEM customers categorised (681) 681 - - - -
from the Flowtech Segment
Underlying operating results, re-stated 6,206 5,086 1,804 - (4,510) 8,586
SEPARATELY DISCLOSED ITEMS Six months ended Six months ended Year ended
30 June 30 June 31 December
2023 2022 2022
£000 £000 £000
Separately disclosed items within administrative expenses:
Acquisition costs 8 3 10
Amortisation of acquired intangibles 452 472 943
Impairment of acquired intangibles - - 168
Impairment of goodwill - - 10,072
Share-based payment costs 97 103 372
Restructuring costs 430 112 1,401
Total 987 690 12,966
· Acquisition costs relate to outline research into potential acquisition
opportunities which are presented to us
· Share-based payment costs relate to the provision made in accordance with
IFRS 2 "Share-based payment" following the issue of share options to employees
· Restructuring costs related to restructuring activities of an
operational nature following acquisition of business units and other
restructuring activities in established businesses. Costs include
restructuring advice, service contract termination costs and employee
redundancies
4. TAXATION
Six months ended Six months ended Year ended
30 June 30 June 31 December
2023 2023 2022
£000 £000 £000
Current tax on income for the period - continuing operations:
UK tax 61 511 734
Overseas tax 265 211 185
Adjustments in respect of prior periods/ other differences - (89) 9
Deferred tax charge (106) (91) (248)
Total taxation 220 542 680
The taxation for the period has been calculated by applying the estimated tax
rate for the financial year ending 31 December 2023.
5. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. For diluted earnings per share the weighted
average number of ordinary shares in issue is adjusted to assume conversion of
all dilutive potential ordinary shares. The dilutive shares are those share
options granted to employees where the exercise price is less than the average
market price of the Company's ordinary shares during the period. For diluted
loss per share the weighted average number of ordinary shares in issue is not
adjusted.
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31
Dec
emb
er
202
2
Earnings Weighted average number of shares Earnings per share Earnings Weighted average number of shares Earnings per share Earnings Weighted average number of shares Earnings per share
£000 000's Pence £000 000's Pence £000 000's Pence
Basic earnings per share
Continuing operations 1,404 61,493 2.28 2,607 61,493 4.24 (6,252) 61,493 (10.17)
Diluted earnings per share
Continuing operations 1,404 61,673 2.28 2,607 62,236 4.19 (6,252) 61,770 (10.17)
Six months ended Six months ended Year ended
30 June 30 June 31 December 2022
2023 2022 £000
£000 £000
Weighted average number of ordinary shares for basic and diluted earnings per 61,493 61,493 61,493
share
Impact of share options 180 743 277
Weighted average number of ordinary shares for diluted earnings per share 61,673 62,236 61,770
6. NET CASH FROM OPERATING ACTIVITIES
Six months ended Six months ended Year ended
30 June 30 June 31 December 2022
2023 2022 £000
£000 £000
Reconciliation of profit before taxation to net cash flows from operations:
Profit / (loss) from continuing operations before tax 1,624 3,149 (5,572)
Depreciation and impairment on property, plant, and equipment 645 671 1,205
Depreciation on right-of-use assets (IFRS 16) 880 848 1,670
Impairment of right-of-use assets (IFRS16) - - 388
Release of lease liability (IFRS16) (387) - -
Finance costs 890 474 1,192
(Gain) / Loss on sale of plant and equipment 2 (24) 57
Loan arrangement fee charged to income statement (77) - -
Amortisation of intangible assets 545 472 1,037
Impairment of intangible assets - - 168
Impairment of goodwill - - 10,072
Settled share options - (40) (42)
Equity settled share-based payment charge 97 103 372
Exchange differences on non-cash balances (56) - 65
Operating cash inflow before changes in working capital and provisions 4,163 5,653 10,612
Change in trade and other receivables (1,664) (3,316) (2,945)
Change in stocks 601 (4,099) (738)
Change in trade and other payables 804 (642) (1,702)
Change in provisions 24 (7) 7
Cash generated from operations 3,928 (2,411) 5,234
Tax paid / (reclaimed) (321) (94) (220)
Net cash generated / (used) from operating activities 3,607 (2,505) 5,014
7. PRINCIPAL RISKS AND UNCERTAINTIES
In common with all organisations, Flowtech faces risks which may affect its
performance. The Group operates a system of internal control and risk
management to provide assurance that we are managing risk whilst achieving our
business objectives. No system can fully eliminate risk and therefore the
understanding of operational risk is central to management processes. The
long-term success of the Group depends on the continual review, assessment,
and control of the key business risks it faces. The Directors set out in the
2022 Annual Report and Financial Statements the principal risks identified
during this exercise, including quality control, systems and site disruption
and employee retention. The Board does not consider that these risks have
changed materially in the last six months.
8. FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements which reflect the
knowledge and information available to the Company during the preparation and
up to the publication of this document. By their very nature, these
statements depend upon circumstances and relate to events that may occur in
the future thereby involving a degree of uncertainty. Although the Group
believes that the expectations reflected in these statements are reasonable,
it can give no assurance that these expectations will prove to have been
correct. Given that these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by these
forward-looking statements. The Group undertakes no obligation to update any
forward-looking statements whether because of new information, future events
or otherwise.
ENQUIRIES:
Flowtech Fluidpower plc Registered Office:
Mike England, Chief Executive Officer Bollin House, Bollin Walk,
Russell Cash, Chief Financial Officer Wilmslow, Cheshire, SK9 1DP
Tel: +44 (0) 1695 52759 email: info@flowtechfluidpower.com (mailto:info@flowtechfluidpower.com)
website: www.flowtechfluidpower.com (http://www.flowtechfluidpower.com)
Liberum Capital Limited (Nominated adviser and Sole Broker)
Richard Lindley / Ben Cryer / Will King
Tel: 44 (0) 20 3100 2000
TooleyStreet Communications (IR and media relations)
Fiona Tooley
Tel: +44 (0) 7785 703523 or email: fiona@tooleystreet.com
(mailto:fiona@tooleystreet.com)
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