REG - Flowtech Fluidpower - Preliminary results - year ended 31 December 2024
09/04/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250409:nRSI2532Ea&default-theme=true
RNS Number : 2532E Flowtech Fluidpower PLC 09 April 2025
NEWS RELEASE
Issued on behalf of Flowtech Fluidpower plc
Wednesday, 9 April 2025
FLOWTECH FLUIDPOWER PLC
("Flowtech", the "Group" or "the Company")
"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."
AIM listed Flowtech Fluidpower plc (LSE symbol: FLO), today releases
preliminary results for the year ended 31 December 2024 and extracts from the
2024 annual report and financial statements, which will be published in full
shortly.
Key Information
Financial Highlights:
2024 2023
Revenue £107.3m £112.1m
Operating loss -£25.2m -£10.4m
Gross profit % 38.2% 36.8%
Underlying EBITDA* £5.9m £9.4m
Underlying operating profit* £2.7m £6.0m
Net cash from operating activities £8.7m £8.2m
Net debt** £15.1m £14.7m
Final dividend Nil 2.2p
In Year Highlights:
Gross and Operating Margin Growth Levers
Ø Further focus on commercial discipline resulted in continued gross margin
increase of 142bps to 38.2%.
Ø Continued reduction in inventory levels by an underlying £3m, whilst
maintaining 97% service availability demonstrating increased operational
effectiveness.
Ø Direct and indirect procurement cost reduction of £1m as buying power
across the Group scales up.
Ø Restructured to a simplified operating model which resulted in a further
2.2% year on year, like for like headcount reduction without limiting our
future growth ambitions.
Ø High level of health & safety focus with Zero RIDDORs.
Sales Growth Levers
Ø Orderbook increased by 5.1% against December 2023 despite a more
challenged external market. Sales pipeline quality and value materially
improved during the year with a number of new contracts secured to underpin
2025 growth.
Ø High customer retention with like for like customer numbers remaining
stable in a challenging market.
Ø A continued focus on customer service and operational improvements has
resulted in further improvements in customer satisfaction measures.
Ø Increased website traffic resulted in online orders growing by 2% (FY23:
170.1K vs FY24: 173.6K) with the percentage of online orders now at over 70%
of our product distribution channel (up 5% on FY23) and now up to 26% of total
revenues.
Ø Creation and delivery of over 53,000 new and enhanced Flowtech catalogues
to market.
Ø Successful acquisition and integration of Thorite, the largest
independent pneumatic distributor in the UK, adding new customers and seven
new branch locations.
Ø Own brand range (FT PRO) saw sales outperform like for like product
distribution sales by 7.7% and represented 16% of total sales (excluding
Thorite) at the end 2024.
Post Period End Highlights
We are pleased to report the acquisition in March 2025 of the business and
assets of Allswage, a specialist in the supply, repair and servicing of static
and mobile hydraulic swaging equipment and assets. The business and assets
were acquired for initial consideration of £50,000 from the company's
liquidator; assets acquired included inventory with a book value of £400,000
as well as all equipment associated with the business. Similar to the Thorite
transaction this will likely result in negative goodwill given the bargain
nature of the purchase.
Current Trading and Outlook
Ø Trading headwinds have continued to persist into Q1'25 with expected
market uncertainty to continue given the current Global trade wars.
Ø Q1'25 trading has nevertheless been in line with our expectations following
the work completed during 2024 to build a more stable and scalable platform
for focused growth.
Ø Flowtech has over 70% of revenues concentrated in the UK with two thirds
of sales serving opex led maintenance, repair and operations requirements and
one third serving capex led original equipment manufacturing requirements.
The Group has limited exposure to automotive sectors.
Ø Our order book and sales pipeline remain strong, and we are concentrating
efforts in higher growth sectors (i.e. defence, waterways & flood defence,
data centres, construction & infrastructure and transportation).
Ø We are launching the new E-commerce platform during Q2'25 which will serve
as an important sales growth lever.
Roger McDowell, Non-Executive Chair said:
"2024 was a year of execution against our stated strategic objectives and
transformation plan in order to grow our addressable market and underpin
future profitable growth. We have focused on protecting the business against a
challenging market backdrop and believe the business is now more robust.
During the period I believe we have made solid progress on the path towards
transforming the company, including in the delivery of our Strategy and
Performance Improvement Plan (PIP), building the stable and scalable platform
needed to support future growth.
"Although key operational and strategic milestones have been reached in our
PIP, I am disappointed with the financial outcome, with like for like revenue
declining by 8.6% as customers reduced volumes, destocked, and delayed project
timelines in response to a volatile macroeconomic backdrop. Whilst we
outperformed the overall market trend, our decline in sales reflects the tough
trading conditions present in our end markets. However, our improved gross
margin to 38.2% in conjunction with our strengthened sales pipeline and order
book as a result of a number of new and exciting orders secured for execution
in 2025 is a positive lead indicator of the team's commitment and execution in
2024.
"After careful consideration the Board conclude that shareholder best
interests would be served by passing on the final dividend and retaining cash
for investment.
"As we look ahead to 2025, we will continue to adapt and remain agile in order
to protect against our expectation of a continuation of the market conditions
experienced in 2024. We will focus on the drivers of performance that are
within our control, to unlock the power of our business across the six defined
EBITDA growth engines.
Mike England, CEO added:
"We have made strong progress to implement our strategic plan with further
operational improvements delivering enhancements to gross margins, working
capital optimisation, service levels, and operational efficiencies. Group
rebranding and restructuring are complete, and the successful integration and
financial contribution of Thorite is well ahead of our expectations. With much
of the business transformation concluded we have a firm, stable and scalable
platform from which to deliver profitable growth into 2025 and beyond.
"We are well on track with the development of our new digital platform to be
launched to market in H1'25 and there is confidence that the broader strategy
and actions taken to grow our addressable market and improve operational
efficiency within the business will drive strong returns and improved
shareholder value.
FURTHER ENQUIRIES TO:
FLOWTECH FLUIDPOWER PLC
Mike England, Chief Executive Officer
Russell Cash, Chief Financial Officer
Tel: +44 (0) 1695 52759
Email: investorrelations@flowtech.co.uk
(mailto:investorrelations@flowtech.co.uk)
Panmure Liberum (Nominated Adviser and Joint Broker)
Nicholas How, Managing Director, Head of Business Services and Industrials
William King, Assistant Director, Investment Banking
Tel: +44 (0) 20 3100 2000
Singer Capital Markets (Joint Broker)
Tom Salvesen, Head of Investment Banking
James Todd, Associate, Investment Banking
Tel: +44 (0) 207 496 3000
TooleyStreet Communications (IR and media relations)
Fiona Tooley
Tel: +44 (0) 7785 703523
Email: fiona@tooleystreet.com (mailto:fiona@tooleystreet.com)
NOTES
*Underlying operating profit is used as an alternative performance measure to
assess the trading performance of the business and is operating profit before
separately disclosed items which are amortisation and impairment of
intangibles, impairment of goodwill, impairment of right of use assets, share
based payments, and restructuring costs. The £3.2m differential between
underlying profit and underlying EBITDA relates to depreciation charges.
**Net debt is bank debt less the value of cash and cash equivalents. It
excludes lease liabilities under IFRS16. Bank debt is the value of the
Barclays Revolving Credit Facility of £20m and any utilised value of the £5m
overdraft facility, less cash and any unamortised value of loan arrangement
fee.
2024 webcast presentations
The Company will be holding a live presentation via:
Investor Meet Company on 9 April at 08:30am - Click here to register.
(https://www.investormeetcompany.com/companies/flowtech-fluidpower-plc)
and
SparkLive on 9 April at 10:00am - Click here to register
(https://sparklive.lseg.com/FlowtechFluidPower/events/8bfc2a3b-d300-4d88-b538-598a47f763cd/flowtech-fluidpower-plc-investor-presentation)
.
Annual General Meeting (AGM)
The AGM will be held at 11:00am on 17 June 2025 at the Group's Headquarters,
Flowtech Fluidpower plc, Bollin House, Bollin Walk, Wilmslow, SK9 1DP. The
Notice convening the Company's 2025 Annual General Meeting shall be published
on the Company's website and posted to shareholders who have elected to
receive postal copies in due course.
News updates, regulatory news and financial statements can be viewed and
downloaded from the Group's website www.flowtechfluidpower.com
(http://www.flowtechfluidpower.com/) . Copies can also be requested from: The
Company Secretary, Flowtech Fluidpower plc, Bollin House, Bollin Walk,
Wilmslow, SK9 1DP. Email: investorrelations@flowtech.co.uk
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. Therefore, nothing in this document
should be construed as a profit forecast by the Company.
Chair's statement
Our year
2024 was a year of execution against our stated strategic objectives and
transformation plan in order to grow our addressable market and underpin
future profitable growth. We have focused on protecting the business against a
challenging market backdrop and believe the business is now more robust.
During the period I believe we have made solid progress on the path towards
transforming the company, including in the delivery of our Strategy and
Performance Improvement Plan (PIP), building the stable and scalable platform
needed to support future growth.
I am pleased with the strategic progress being made by a highly energised,
determined and galvanised new team under the leadership of Mike England in his
first full year at the helm.
2024 was certainly not an easy year in terms of the external markets we serve.
The well-documented market headwinds persisted throughout the year with the
British Fluid Power Association (BFPA) consistently citing market decline of
above 10% in the UK in Hydraulics and Pneumatics and macro indicators
continuing to weaken particularly in the second half of the year as consumer
and industry confidence fell.
Although key operational and strategic milestones have been reached in our
PIP, I am disappointed with the financial outcome, with like for like revenue
declining by 8.6% as customers reduced volumes, destocked, and delayed project
timelines in response to a volatile macroeconomic backdrop. Whilst we
outperformed the overall market trend, our decline in sales of 8.6% reflects
the tough trading conditions present in our end markets. However, our improved
gross margin to 38.2% in conjunction with our strengthened sales pipeline and
order book, as a result of a number of new and exciting orders secured for
execution in 2025 is a positive lead indicator of the team's commitment and
execution in 2024.
The Board has been particularly encouraged by the Thorite acquisition which,
whilst only taking place in August 2024, is demonstrating strong performance
and success in terms of integration and strengthening our pneumatics,
automation, vacuum and compressed air offer; a key strategic aim. In the first
18-week period of ownership to the year end the business generated an
underlying operating profit of £0.1m, ahead of our initial expectations. The
deal structure was such that the immediate cash outlay of £0.35m was more
than repaid by the approximate £0.4m upside relating to the recovery of book
debts. In addition, after settlement payments totalling approximately £0.7m
we secured title to inventory which we have fair valued at £2.1m. Overall
negative goodwill associated with the transaction was £2.2m as a result of
acquiring assets at less than fair/market value, accounted for as a separately
disclosed credit. Thorite performance has exceeded expectations providing
confidence in the stability and growth of this channel into 2025. Including
the Thorite contribution, 2024 full year revenues declined by only 4.3%.
With lower-than-expected revenues driven by the persistent market headwinds,
we are reporting underlying EBITDA at £5.9m. This excludes the profit arising
from negative goodwill of £2.2m in relation to the Thorite acquisition.
Separately disclosed items total £27.9m; this includes £25.6m in respect of
impairment of goodwill, intangible assets and fixed assets. The impairment
calculation is based on assumptions for several years into the future and is
extremely sensitive to assumptions on revenue growth and the discount factor
applied to adjust future cash flows to net present value. Recent
announcements relating to trade tariffs were non-adjusting post balance sheet
events: as such any associated impact (which we do not deem to be material)
has not been taken into account in the cash flow forecast used for impairment
testing.
Net debt** increased by £0.4m to £15.1m at year end (2023: £14.7m) with the
increase mitigated by cost reductions and strong working capital management,
most notably an underlying £3m inventory reduction. As a board, we remain
very focused on the management of working capital and cash generation. We
are comfortable with the current debt profile of the business, which provides
ample liquidity and remains within our stated bank covenants.
The Board has reviewed the Group's capital allocation priorities which remain
focused principally on supporting the implementation of our strategic plan
with appropriate investment into the business to drive future profitable
growth. Furthermore, the Board believes the market could offer attractive
opportunities for further bolt-on acquisitions at distressed prices.
Accordingly, the Board has given careful consideration to the payment of a
dividend in respect of the year ended 31 December 2024 and has concluded that
saving the cash that would be otherwise paid as a dividend is in the best
interests of the Company, reducing leverage and retaining capital allocation
flexibility. In 2024 the dividend payment in respect of the year ended 31
December 2023 was approximately £1.4m.
Trading in the first quarter of 2025 has started positively and in line with
our expectations. Notwithstanding the continued depressed market conditions
and global uncertainty, we now have an enhanced platform in place from which
to grow, take market share and meaningfully improve the Company's financial
results in the coming year and into the future.
Building a scalable platform for profitable growth
2024 was an important year of transition and execution for Flowtech and whilst
we are disappointed with the decline in revenue, our performance was ahead of
the external market trends, implying share gains which is supportive of our
move into pneumatics. As such, the Board is pleased with the progress made in
delivering the necessary restructuring and underlying performance improvement
interventions.
Delivering change is not easy and I have been impressed with the determination
and resilience of the new leadership team in remaining tightly focused on our
end customers and delivering strong business performance, all the while
undertaking the step changes needed to enable the solid structural and
commercial foundations for scalable growth.
This focus has concentrated on three key areas:
Simple - In the year, we fully completed the restructuring to a leaner and
more scalable operating model, rebranding under One Flowtech and re-aligning
the organisation around our newly launched single value proposition, powering
up our leadership, commercial and operational capabilities.
Customer First - Implementing important initiatives focused on improving the
customer experience, including enhancements to the current website, the launch
of the new catalogue and steps taken to address key customer issues further
reducing customer complaints.
Scalable - Focused on delivering efficiency and service improvements across
the product distribution network and within the manufacturing and service
locations, introducing standardised and consistent work methods resulting in
productivity gains and scalability.
The Board is pleased with the steps taken in delivering on our three pillar
Strategic Plan: Customer First, The Power of One and A World of Motion.
Highlights in the year include:
· Completion of the rebranding of the business to one Flowtech and
our own brand to FT Pro.
· The launch of the new Flowtech Value Proposition across all three
regions.
· Building the new Digital Platform ready for launch during H1
2025.
· Acquisition and integration of the business and assets of
Thorite, expanding our product range and geographical footprint in the
UK.
Our commitment to a safer and more sustainable world
Our refreshed purpose-led culture and strategy underpins our unchanging ESG
commitment, and I am again pleased to report that we have continued to build
on the good progress already made. Our updated ESG strategy is now ready,
and we will be implementing this during 2025.
In terms of progress, over the past year we have:
· Further increased focus and leadership attention on the health,
safety and wellbeing of our people, customers, suppliers and all other
stakeholders. We have had zero RIDDOR (Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations) incidents and, due to improved reporting,
have again increased near miss reporting by over 100%.
· Continued to focus on our gender diversity goals with 24% of our
top 60 leaders now female.
· Our focus throughout 2024 has been on compliance with data
recording, ensuring we have an accurate picture of carbon usage across our
whole business. Whilst this does result in an increase in emissions reported,
it does give us a robust baseline from which to measure future improvements.
Our investors
Mike and Russ have continued with their mission to reinvigorate our focus to
increase our investor facing activity. I have been encouraged during 2024 with
a number of interactive investor visits to Flowtech locations, enabling
first-hand demonstration of the progress and improvements being made. This
has given us the opportunity to demonstrate the progress of the Performance
Improvement Plan and our refreshed and refocused strategy. We are committed to
maintaining an active and open dialogue with our investors and we thank our
investors for their continued support.
We are also pleased to welcome Singer Capital Markets as Flowtech's Joint
Broker; they came on board in September 2024 and have issued an initiation
note to the market in January 2025. Panmure Liberum remain as the Company's
Nominated Adviser and Joint Broker.
Our people and the Board
The team have worked tirelessly to improve the operational performance of the
business, driving improved gross margins through commercial pricing and cost
control, delivering enhanced service levels and on-time deliveries, further
strengthening the senior leadership team and optimising all aspects of the
business.
I remain very encouraged by the determination and resilience of our new
leadership and the energy demonstrated by our people during a period of rapid
change and very difficult external markets. We have made significant
progress towards the delivery of our strategy and improvement plan despite
these challenges and I would thank everyone for their invaluable
contribution.
I am also pleased with the progress made in developing our Board with varied
and relevant experience, combined with a positive but challenging approach to
strive for the high performance expected by our customers. Mike England and
his other senior leadership hires are now well established in the business,
and it is encouraging to see the new depth of relevant industry and leadership
knowledge and experience in action during 2024 as we have set the business up
in the right way for scalable growth.
I would like to sincerely thank the Board members for their continued
commitment and positive contributions.
Looking ahead
With the rebranding and restructuring now complete, and the new website launch
expected in H1 2025, we expect the improvements made across 2024 to bear fruit
in future years. We believe we have a strong, stable, and scalable platform to
deliver profitable growth into 2025 and beyond.
As we look ahead to 2025, we do expect that challenging external market
conditions will persist, but we remain cautiously optimistic that the Group is
well placed to outperform the wider industry. We have completed the vast
majority of the Performance Improvement Plan and business transformation, and
the Leadership Team are now focused on delivering enhanced customer service,
efficiency and market share growth. We remain confident in our strategy
which serves to unlock the full potential of the Group across the six defined
EBITDA growth engines:
1. Customer growth
2. Commercial excellence
3. Product and service expansion
4. Own brand
5. Operating for less, and
6. Building talent and capabilities.
We are well positioned to capitalise on the opportunities available to us
after the strategic and operational delivery achieved in 2024. Looking
forward, with a broader addressable market and customer base and the new
digital platform being launched, there are a number of key components to
driving improved momentum in 2025, and I am confident we have the right team
in place with an unwavering determination to now build on a solid foundation
for sustained growth and value creation in the years to come.
CEO review
"Controlling the controllables in a difficult market whilst building the
solid, stable and scalable platform needed for profitable growth".
Reflections of the year
We entered 2024 anticipating a market recovery, however, trading conditions
remained difficult throughout the year. As a newly formed leadership team, we
had a steely determination to quickly implement and deliver the lion's share
of the Performance Improvement Plan in 2024 to deliver a solid, stable and
scalable platform for profitable growth into 2025 and beyond. I am pleased
to report that much of the heavy lifting has now been done.
Controlling the controllables
Our optimism of any market recovery was short lived as market headwinds
persisted through the first half of the year and continued to deteriorate
further in the second half across all of our three geographical regions - UK,
Ireland and Benelux. This was reflected in the Purchasing Managers' Index
(PMI) and British Fluid Power Association reports citing a more than 10%
market decline.
We have taken a mindset of 'controlling the controllables' - taking necessary
actions to deliver further gross margin improvements, tight control and a
reduction in costs and making interventions to optimise and reduce working
capital throughout the year. We pivoted to higher growth customer segments
ensuring continued market share gains, resulting in a strengthening of our
sales pipeline and forward order book. As we look into 2025, we note some
exciting projects that are due to complete. Across product distribution, we
maintained consistent customer order frequency but saw a notable reduction in
order value, a common trend across the industry as volumes reduced. There
was a slowdown particularly in construction and Original Equipment
Manufacturers across all three of our regions in the UK, Ireland and Benelux,
with many projects being stopped or delayed as destocking and/or cost control
measures took hold.
Holding firm to the plan
Despite these challenging end markets, we've completed the restructuring to
the new, simplified operating model, strengthening the leadership and
organisational effectiveness with a concentration on firing up our growth
engines. The rebranding to 'One Flowtech' was successfully completed across
all three regions with a clear purpose, vision, and values being introduced to
galvanise our people and capabilities together. This was in parallel to the
development and launch of our new, single value proposition combining the
extensive Product Distribution and Engineering capabilities across the Group
to bring greater value to our customers, from the supply of a single component
up the value curve to designing, building and installing complex engineering
solutions.
We were proud to welcome Thorite to the Flowtech Group in August 2024. Thorite
is a strong and trusted UK brand with over 170 years of heritage. The
acquisition brings a wealth of expertise, knowledge, product and service
capability across Pneumatics, Vacuum and Compressed Air to support the
expansion of our end user customer base and takes us further into the world of
motion. Pleasingly, Thorite exceeded expectations in Q4, and we have a
highly motivated and re-energised team focused on delivering growth.
Taking on board customer feedback, we've focused on making some important
improvements to the existing website experience during the year which has led
to increased traffic and conversion rates. In parallel, we are well on track
with the development of our new digital platform to be launched to the market
in H125, which will replace our legacy platforms, enable a step change in
speed and customer experience including a range of new data management and
marketing tools to improve new and existing customer interactions.
Our people
Above all, it's our people that have made the difference in what has been a
challenging year both in managing through a difficult external market and
delivering the important step change across the Group to deliver on our
strategy and improvement plan. We thank our people sincerely; they have
embraced our vision for a brighter future and gone above and beyond for our
customers.
There is growing confidence that the broader growth strategy and actions taken
to improve operational efficiency within the business will drive strong
returns and improved shareholder value, further aided when the market
recovers.
Reviewing 2024
Like for like revenues declined by 8.6% in the year as the rate of market
related decline across all three regions has offset our positive achievements
in winning new customers, retaining and strengthening our existing customer
base and delivering improved gross margins.
This revenue decline has been multi-faceted with the larger impact being
reduced volumes from Original Equipment Manufacturers, as they have continued
to de-stock and larger engineering projects have been suspended or delayed.
This was more prevalent in the second half of the year with Ireland in
particular being impacted by the Aggregates & Construction sector (in
particular the OEM Crushing & Screening market) which saw more than 20%
reduction in volume.
Underlying EBITDA for the year ended 31 December 2024 was £5.9m. We have
also achieved a profit recognition of negative goodwill of £2.2m, which is
separately disclosed. We incurred an impairment charge of £25.6m, the
detail of which is covered in the CFO statement.
As a team, we've remained very focused on the management of working capital
and cash generation and are comfortable with the current debt profile of the
business, albeit this remains an area of focus.
Leadership focus has remained firm on executing strongly across all areas of
our Performance Improvement Plan, designed to fix many of the core basics
required to improve customer service and performance. The business is now a
more customer-centric, lean and scalable platform for growth.
This is broadly structured under three headings where progress updates in the
year have been summarised.
A new, simplified operating model
To unlock the full potential of our people and capabilities across the
Group.
We have successfully rebranded under ONE Flowtech, embedding a new single
integrated organisational model, across the three regions, aligned to our new
value proposition and corresponding go-to-market approach. In doing so,
this has strengthened commercial, operational and functional leadership and
human capital capabilities, creating new departments and roles including
changing 60% of the top 60 leaders in role during the year.
Customer-centric
Winning back customer confidence, powering up our growth capabilities to
increase the quality and frequency of customer interactions underpinned by
improved customer service.
Taking on board customer feedback throughout 2023, we were pleased to launch
the new Flowtech Catalogue, something that many of our customers value, in
April 2024, with 53,000 catalogues deployed across our trusted Partners.
The new catalogue has been received very positively, restoring Flowtech as the
leader in the market, with this vital industry publication.
Over the year, we were pleased with the progress made by our sales teams,
taking our new value proposition to market and building the sales pipeline,
increasing the value of opportunities by over 50% and securing a number of new
contracts for 2025 delivery. As a result, the Group orderbook at the end of
2024 was at the highest level to date.
With improvements made to our on-time-in-full service, existing website and a
continued focus on the speed of response to customer enquiries, we are pleased
to report that customer satisfaction measures have continued to improve.
This is a testament to the focus of the teams which has continued to win back
customer confidence and renewed enquiries.
Getting back to doing the basics, brilliantly
Delivering operational and service excellence.
We have implemented material changes to improve the operational service and
pricing mechanics across the business, recovering a lack of commercial and
operational attention and regaining customer confidence which had been
significantly eroded over the past years. This being a key factor in the
gross margin, service and efficiency gains made.
Gross margin has improved by 142bps in the year through our commercial focus
and discipline. The careful management of operating overheads throughout
the year and restructuring work now completed has delivered a net £1.5m
annualised cost reduction into 2025. In addition, our newly formed Group
Procurement Team has delivered over £1m of indirect and direct procurement
savings through enhanced capabilities and rationalisation across the Group.
Continued focus on working capital management and service excellence enabled a
reduction in inventory of £4m whilst sustaining >97% availability on our
fastest moving lines.
Executing well on our strategy
We have defined a strategic framework consisting of three pillars and six
defined EBITDA growth engines. 2024 has been an important year, with strong
progress in all three areas.
1. Customer First
Diverse customer base and omni-channel approach.
We are well on plan in building the new digital platform and associated
technology improvements; ready for testing in Q1 2025 and launch in Q2
2025. This includes a new, improved customer website interface, enhancement
of core technology infrastructure with the successful implementation of a new
technology integration layer, new customer data platform, new content
management system underpinned by some big steps to improve our product
information management capability and data quality.
2. The Power of One
Differentiated value proposition delivered through one team.
We have completed the rebranding of the Company to 'One Flowtech' across all
three regions embedding our purpose, vision and values. We have built and
enhanced core Group capabilities in Procurement, Product Management,
Communications & Marketing, Digital, Data, HR and Finance meaning that we
bring standards and consistency in our processes, ways of working and are
delivering greater efficiency gains.
One primary focus in 2024 has been to reset our relationships with our key
strategic supplier partners. Now we are operating as one Flowtech with
clarity of our value proposition and growth plans, we've seen far greater
levels of understanding and engagement from our suppliers and have put in
place refreshed growth plans.
We also brought together ten of our leading own brands into one single brand,
FT Pro. Offering an extensive range of high quality professionally
engineered products, we launched FT Pro to market and began brand building and
awareness to initiate greater levels of growth. This is the start of a
longer-term plan to grow and expand the FT Pro range. We were encouraged to
see growth in FT Pro at 7.7%, higher than the overall business and bucking the
trend of the wider market. FT Pro now represents 16% of total revenues and
is higher margin.
3. A World of Motion
Expanding our products, services and geographical reach
The acquisition of the business and assets of Thorite in September brings
market share gains and expands our brand, product and service offering in
pneumatics, vacuum and compressed air. This combined with 1,000 collective
years of relevant industry experience across colleagues in seven branches,
expanding our technical capability and geographical footprint in the UK.
The integration has been successful, and we are pleased to report performance
ahead of plan with £4.5m of revenue over 4 months, acquired from
administration and turned around from a £1m annual loss to making a positive
profit contribution in the first 18 weeks of ownership and with full recovery
of the debt and cash outlay.
Our commitment to ESG - helping to build a safer and more sustainable world
We have continued to increase our focus on ESG within three key areas. In
parallel, we have completed a detailed analysis of our ESG activities, and I'm
pleased with the progress we made towards renewing our strategy, which will
launch in 2025.
Our environment and becoming more sustainable
Our focus throughout 2024 has been on compliance with data recording, ensuring
we have an accurate picture of carbon usage across our whole business. Prior
to 2024, the business operated as separate business units, so this work has
been essential to standardise our approach.
In 2025 we will be launching our updated ESG strategy. Within that we will
detail our targets to manage and reduce our environmental impact, along with
the Key Performance Indicators we will use to assess progress against these
targets.
Our culture, health, safety and wellbeing of our people
Focus on further deployment of our Health & Safety improvement plans has
resulted in increased reporting of near misses, demonstrating a step change in
awareness and management attention and importantly, zero RIDDORs. At the end
of 2024, we launch our new FLOW Safe programme. A long-term awareness and
improvement programme built around FLOW Safe - Feel Safe, Live Safe, Operate
Safe and Work Safe. This is gaining good momentum and keeping safety and
wellbeing at the forefront of our people's minds.
We were proud during 2024 to initiate our partnership with CALM (Campaign
Against Living Miserably) to raise funding towards suicide prevention and
mental health causes.
Our governance and policies as we've now become One Flowtech
Ensuring we have the right foundations in place to support our move to One
Flowtech is vital. We have introduced a company-wide tiering system to ensure
consistency and transparency across all roles across the organisation. We are
also undertaking a full review of all our policies to ensure they support our
updated ways of working.
In summary
We are satisfied with the progress we have made implementing our strategic
plan, whilst recognising that this has been a difficult year due to
challenging end markets. With further operational improvements delivering
enhancements to gross margins, working capital optimisation, service levels,
and operational efficiencies, we are confident that we are controlling the
controllables. The group rebranding and restructuring is now complete, and the
successful integration of Thorite is well ahead of our expectations. With much
of the business transformation concluded we now have a firm, stable and
scalable platform from which to deliver profitable growth into 2025 and
beyond.
We recognise the likelihood of continuing challenging markets, and we are not
relying on a market recovery to drive our progress. Our mantra is to make our
own success, and we head into 2025 with cautious optimism. The pipeline and
order book are materially stronger entering 2025 than at any point in the
past. We equally have a close eye on gross margin optimisation and generating
accretive EBITDA. Actions to deliver £1.5m annual net cost savings during
2024 and return Thorite to positive profitability are key enablers to
this, with any market recovery seen as upside in our view. We are well
positioned, despite the persistent market headwinds and remain steadfast,
determined and confident in our strategy.
CFO Review
We have taken actions to manage our cost base and continue to focus on
managing working capital and capital expenditure. We believe the business is
very well placed to capitalise on more favourable market conditions and we
have built our teams, and infrastructure over the last year, allowing us to
pursue a number of exciting growth opportunities.
The Group trading performance at a glance:
2024 2023 Change
£m £m £m/%
Group revenue 107.3 112.1 -4.3%
Gross profit 41.0 41.3 -0.3
Gross profit % 38.2% 36.8% 142bps
Distribution expenses (4.2) (4.5) 0.3
Administrative expenses before separately disclosed items (34.2) (30.7) -3.5
Underlying operating overheads (38.4) (35.2) -3.2
Less Central costs (6.0) (5.3) -0.7
Underlying segment operating overheads (32.4) (30.0) -2.4
Underlying segment operating profit 8.7 11.4 -2.7
Underlying operating profit* 2.7 6.0 -3.13
Less separately disclosed items (27.9) (16.4) -11.5
Operating loss (25.2) (10.4) -14.8
Financing costs (1.8) (1.7) -0.1
Loss before tax (27.1) (12.1) -15.0
Tax 0.7 (0.9) 1.6
Loss after tax (26.4) (13.0) -13.4
Underlying EBITDA* 5.9 9.4 -3.5
(*) Underlying operating profit is used as an alternative performance measure
to assess the trading performance of the business and is operating profit
before separately disclosed items which are amortisation and impairment of
acquired intangibles, impairment of goodwill, negative goodwill, impairment of
right of use assets, share based payments, and restructuring costs. The £3.2m
differential between underlying operating profit and underlying EBITDA relates
to £3.2m in respect of depreciation charges.
Our geographical segments at a glance:
Great Britain ("GB") Benelux Ireland
2024 2023 Change 2024 2023 Change 2024 2023 Change
audited audited audited audited audited audited
Revenue (£m) 75.9 77.4 (1.5) 10.0 10.6 (0.6) 21.4 24.1 (2.7)
Underlying operating profit (£m) 5.8 6.2 (0.4) 0.4 1.6 (1.2) 2.5 3.5 (1.0)
Underlying operating margin 7.6% 8.0% 0.1% 3.6% 15.0% (11.0%) 11.8% 14.5% (2.8%)
Underlying profit before tax (£m) 5.5 6.0 (0.5) 0.4 1.6 (1.2) 2.5 3.5 (1.0)
Revenue
Thorite contributed £4.8m revenue from the acquisition date (23 August 2024).
As such, on a like for like basis revenue reduced by £9.6m (8.6%).
· After accounting for Thorite, GB revenue fell by £6.3m (8.1%) -
There are significant plans now in place to support a return to the growth
agenda as outlined in the CEO year in review section of this report.
· In Ireland after a year of significant growth (11.9%) in 2023,
revenue reduced by £2.7m (11.4%); this was primarily in the second half of
the year and specific to a downturn in the activity within the crushing and
screening sector.
· In Benelux our revenue reduced by £0.6m (5.5%). 2024 saw the
arrival of Francisco Terol to lead the Benelux business. Francisco has
invested in his team, has identified a number of self-help areas to gain
market share and is well set to capitalise when market conditions improve.
Gross profit
The 142bps improvement in our gross profit margin is pleasing and builds on
progress made in recent years. This has resulted in a similar value of gross
profit notwithstanding a £4.8m reduction in revenue. Control of gross margin
across all areas of our business is fundamental.
Segment operating overheads
Underlying segment operating overheads increased by £2.4m, £1.4m of which
relates to Thorite. The underling increase of £1.0m (3%) primarily relates to
payroll costs where a combination of pay increases and the investment in
typically higher paid new personnel has more than offset the impact of a
modest reduction in underlying headcount.
Central costs
A summary of central costs is provided below:
2024 2023
£000 £000
Management salaries 2,376 2,271
Accounting & finance 939 935
Project & IT costs 1,132 723
PLC costs 572 589
Other central operating costs 1,021 784
Total 6,040 5,302
Management costs include the employment costs of the Executive Officers and
Group Leadership Team members excluding those that have specific segment
responsibilities.
Accounting and finance cover the salary costs of the central finance and
internal audit function. PLC costs capture the salaries of Non-Executive
Directors and professional fees associated with our PLC status. Other areas of
cost primarily relate to our project management and central health and safety
teams.
The increase in Project & IT costs links to our strategic decision to
build out in-house capability and resource as we focus on this area of our
business which we anticipate will form a critical component of our future
success.
Separately disclosed items
Separately disclosed items within administrative expenses:
2024 2023
£000 £000
Amortisation of acquired intangibles 820 906
Impairment of goodwill 25,070 13,026
Depreciation of old website 241 -
Impairment of right of use assets 81 456
Impairment of intangible assets 284
Impairment of fixed assets 246
Negative goodwill (2,205) -
Share-based payment costs 729 462
Release of lease liability - property vacated in 2023 - (412)
Acquisition costs 41 -
Restructuring 2,581 1,918
Total separately disclosed items 27,888 16,356
Impairment of goodwill and right of use assets
The calculations which underpin the annual evaluation of the carrying value of
assets is based on a number of key assumptions, notably revenue growth rates
and the discount rate applied to reflect the net present value of future cash
flows.
In total a non-cash impairment charge of £25,620,000 has been recognised in
2024, of which £25,070,000 was against Goodwill, £246,000 against fixed
assets, £284,000 against intangible assets and £20,000 against right of use
assets. The split of impairment charge by geographical segment is shown
below:
· Great Britain - £22,005,000 which relates entirely to the
impairment of Goodwill.
· Island of Ireland - NIL.
· Benelux - £3,615,000 split £3,065,000 in relation to goodwill,
£246,000 in relation to fixed assets, £284,000 in relation to intangible
assets and £20,000 in relation to right of use assets.
Restructuring costs
The key components of restructuring costs are c£1.7m in respect of salary
costs of personnel who left the business. The balance of the charges relate to
costs associated with a broad range of restructuring projects.
Net Debt
Our Net Debt position (excluding lease liabilities) increased modestly from
£14.7m to £15.1m; for clarity £15.1m is the net of our £16.9m revolving
credit facility (RCF) and the £1.8m cash at bank we held at year end. If
IFRS16 lease liabilities are included the position is £20.5m at 2024 year-end
compared with £20.2m at 2023 year-end.
Net cash generated from operating activities totalled £8.7m (2023: £8.2m);
this is the aggregation of operating cash inflow before working capital
movements of £3.1m (2023:£7.5m), favourable working capital movements
(excluding Thorite) totalling £5.2m (2023: £1.8m) and tax paid of £0.8m
(2023: £1.1m). After net cash outflows after Thorite contribution of £5.8m
(2023: £2.1m) associated with investing activities, £3.2m (2023: £3.6m)
relating to financing activities and the dividend payment of £1.4m (2023:
£1.3m) led to a £0.4m increase (2023: £1.3m reduction) in Bank debt.
This is summarised in the graph below:
(*) Opening and closing figures exclude IFRS 16 related liabilities. IFRS16
debt reduced by £0.1m in 2024.
Thorite Acquisition
On 23 August 2024 we acquired the business and assets of Thomas Wright/Thorite
Group Ltd ("Thorite") immediately following the appointment of its
Administrator. Thorite was established in 1850 and has a fantastic
reputation within the Fluidpower sector. Its activities complement the
existing activities of the Group and cross selling opportunities exist in
various directions.
The consideration paid was £764k, which included initial cash consideration
of £350k plus an additional £414k which was repaid to the administrators
against recovered debtors. This saw assets acquired with values materially in
excess of this - the disclosure in note 24 of our full annual report shows
fair value of assets acquired exceeding sums paid by approx. £2.2m.
Highlights within this include:
· Acquiring stock with a fair value of c£2.7m and settlement
payments made to creditors to secure title were limited to £0.7m. This stock
has/will turn relatively quickly so this represents material upside.
· Through a mechanism agreed with the Administrator we achieved
recoveries of approx. £2.2m from book debts. This represents £0.4m in excess
of the £1.7m we paid to acquire this asset.
Shortly after the acquisition, steps were taken to reduce the cost base of the
business - within two months we had taken approximately £1m on an annualised
basis out of the business. This, combined with significant improvements in the
gross profit percentage being achieved, led to a position where we got the
business back into profit within the first few months of ownership and where
we expect it to make a material contribution to the profit in 2025 and beyond.
Banking facilities
Our £20m revolving credit facility provided by Barclays Bank was extended to
May 2027. Covenant terms under the new agreement are consistent with before,
and the base charge for the credit facilities are Sterling Overnight Index
Average (SONIA)+2.40% and are subject to a non-utilisation fee of 0.84%.
The Group also has a £5m overdraft facility which was reviewed in February
2025 and on-going support was approved.
Summary
Profitability was materially impacted by challenging market conditions
throughout 2024; we had expected conditions to ease in the second half of the
year but that did not prove to be the case. We have taken actions to manage
our cost base and continue to manage all aspects of working capital and
capital expenditure closely. We believe the business is very well placed to
capitalise on more favourable market conditions. We have built our teams, and
infrastructure, and have a number of exciting growth opportunities which are
currently being pursued.
We look forward to the remainder of 2025 and beyond, buoyed by the range of
profit improvement initiatives which are available to us.
Consolidated Income Statement
For the year ended 31 December
2024 2023
£000 £000
Continuing operations
Revenue 107,282 112,095
Cost of sales (66,267) (70,832)
Gross profit 41,015 41,263
Distribution expenses (4,169) (4,534)
Administrative expenses before separately disclosed items: (34,196) (30,740)
- Separately disclosed items (27,888) (16,356)
Total administrative expenses (62,084) (47,096)
Operating loss (25,238) (10,367)
Financial expenses (1,839) (1,735)
Loss from continuing operations before tax (27,077) (12,102)
Taxation 671 (875)
Loss from continuing operations (26,406) (12,977)
Loss for the year attributable to:
Owners of the parent (26,406) (12,977)
(26,406) (12,977)
Earnings per share
Basic earnings per share - continuing operations (42.23p) (21.10p)
Consolidated Statement of Comprehensive Income
2024 2023
£000 £000
(Loss)/profit for the year (26,406) (12,977)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
- Exchange differences on translating foreign operations (359) (136)
Total comprehensive loss for the year (26,765) (13,113)
Total comprehensive loss for the year attributable to:
Owners of the parent (26,765) (13,113)
(26,765) (13,113)
Consolidated Statement of Financial Position
2024 2023
£000 £000
Assets
Non-current assets
Goodwill 14,996 40,066
Other intangible assets 3,776 2,529
Right-of-use assets 4,806 4,829
Property, plant and equipment 7,546 7,822
Total non-current assets 31,124 55,246
Current assets
Inventories 29,263 32,009
Trade and other receivables 22,740 23,725
Prepayments 1,052 856
Cash and cash equivalents 1,839 5,184
Total current assets 54,894 61,774
Liabilities
Current liabilities
Lease liability 1,694 1,695
Trade and other payables 20,866 21,558
Tax payable 228 767
Total current liabilities 22,788 24,020
Net current assets 32,1 06 37,754
Non-current liabilities
Interest-bearing borrowings 16,913 19,915
Lease liability 3,743 3,822
Provisions 179 330
Deferred tax liabilities 791 1,534
Total non-current liabilities 21,626 25,601
Net assets 41,604 67,399
Equity directly attributable to owners of the Parent
Share capital 31,637 30,746
Share premium 61,662 60,959
Other reserves 187 187
Shares owned by the Employee Benefit Trust (54) (124)
Merger reserve 293 293
Merger relief reserve 3,646 3,646
Currency translation reserve (336) 23
Retained losses (55,431) (28,331)
Total equity attributable to the owners of the Parent 41,604 67,399
Consolidated Statement of Changes in Equity
Share capital £000 Share Other Shares Merger Merger Currency translation Retained Total
premium
reserve
owned by the EBT
reserve
relief
reserve
losses
equity
£000
£000
£000
£000
reserve
£000
£000
£000
£000
Balance at 30,746 60,959 187 (124) 293 3,646 159 (14,527) 81,339
1 January 2023
Loss for the year - - - - - - - (12,977) (12,977)
Other comprehensive income - - - - - - (136) - (136)
Total comprehensive income for the year - - - - - - (136) (12,977) (13,113)
Transactions
with owners
Share-based payment charge - - - - - - - 462 462
Dividends paid - - - - - - - (1,289) (1,289)
Total transactions with owners - - - - - - - (827) (827)
Balance at 31 December 2023 30,746 60,959 187 (124) 293 3,646 23 (28,331) 67,399
Balance at 30,746 60,959 187 (124) 293 3,646 23 (28,331) 67,399
1 January 2024
Loss for the year - - - - - - - (26,406) (26,406)
Other comprehensive income - - - - - - (359) - (359)
Total comprehensive income for the year - - - - - - (359) (26,406) (26,775)
Transactions
with owners
Issue of share capital 891 703 - (200) - - - - 1,394
Share options settled - - - 270 - - - (41) 229
Share-based payment charge - - - - - - - 730 730
Dividends paid - - - - - - - (1,383) (1,383)
Total transactions with owners 891 703 - 70 - - - (695) 969
Balance at 31 December 2024 31,637 61,662 187 (54) 293 3,646 (336) (55,431) 41,604
Consolidated Statement of Cash Flows
2024 2023
£000 £000
Cash flow from operating activities
Net cash from operating activities 8,706 8,202
Cash flow from investing activities
Payment for acquisition (832)
Repayment of Credit facility from acquisition (1,694)
Acquisition of property, plant and equipment (1,547) (2,092)
Acquisition of intangible assets (1,764) (121)
Proceeds from sale of property, plant and equipment 31 135
Net cash used in investing activities (5,806) (2,078)
Cash flows from financing activities
Net proceeds from issue of share capital 1,393
Repayment of lease liabilities (1,663) (1,818)
Repayment of bank loan (3,000)
Interest on lease liabilities (117) (221)
Other interest (1,725) (1,567)
Proceeds from sale of shares held by the EBT 270 -
Dividends paid (1,383) (1,289)
Net cash used in financing activities (6,225) (4,895)
Net change in cash and cash equivalents (3,325) 1,229
Cash and cash equivalents at start of year 5,184 3,972
Exchange differences on cash and cash equivalents (20) (17)
Cash and cash equivalents at end of year 1,839 5,184
Net Debt 15,074 14,731
Reconciliation of liabilities arising from financing activities
The changes in the Group's liabilities arising from financing activities can
be classified as follows:
Long-term borrowings Short-term borrowings Lease liabilities Total
£000 £000 £000 £000
At 1 January 2023 - 19,967 6,713 26,680
Cash flows:
Repayment - - (1,819) (1,819)
Other movements (52) - (52)
Non cash:
Additions - - 1,068 1,068
Disposals - - (425) (425)
Reclassification of liabilities 19,915 (19,915) - -
Other lease movements - - - -
Foreign exchange difference - - (21) (21)
At 31 December 2023 19,915 - 5,516 25,431
At 1 January 2024 19,915 - 5,516 25,431
Cash flows:
Repayment (3,000) - (1,663) (4,663)
Other movements (2) - - (2)
Non cash:
Additions - - 1,628 1,628
Disposals - - - -
Reclassification of liabilities - - - -
Other lease movements - - - -
Foreign exchange difference - - (44) (44)
At 31 December 2024 16,913 - 5,437 22,350
Other lease movements are adjustments for the reduction in value of the lease
liabilities following either the exercise of an early termination clause or an
agreement with the landlord.
Notes to the Consolidated Financial Information
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, Bollin Walk,
Wilmslow, SK9 1DP. The registered number is 09010518.
News updates, regulatory news, and financial statements can be viewed and
downloaded from the Group's website, www.flowtechfluidpower.com
(http://www.flowtechfluidpower.com/) . Copies can also be requested from: The
Company Secretary, Flowtech Fluidpower plc, Bollin House, Bollin Walk,
Wilmslow, SK9 1DP. Email: info@flowtechfluidpower.com
(mailto:info@flowtechfluidpower.com) .
2. Accounting policies
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with UK adopted international accounting standards and the
Companies Act 2006. The Company financial statements have been prepared in
accordance with Financial Reporting Standard 101 'Reduced disclosure
framework' (FRS 101).
The consolidated financial statements have been prepared on a going concern
basis and prepared on the historical cost basis.
The consolidated financial statements are presented in sterling and have been
rounded to the nearest thousand (£'000). The functional currency of the
Company is sterling.
The preparation of financial information in conformity with UK-adopted
international accounting standards requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual events
ultimately may differ from those estimates.
3. Segment reporting
During 2024, Management reviews the operations of the business based on three
geographical segments - Great Britain, Ireland and Benelux. 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.
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 reporting periods are as follows:
For the year ended 31 December 2024 Great Britain Benelux Inter-segmental transactions Central costs Total continuing operations
£000 £000 £000 £000 £000
Ireland
£000
Income statement - continuing operations:
Revenue from external customers 75,913 9,999 21,370 - - 107,282
Inter-segment revenue 4,541 378 469 (5,388) - -
Total revenue 80,454 10,377 21,839 (5,388) - 107,282
Underlying operating result (*) 5,806 363 2,521 - (6,040) 2,650
Net financing costs (325) (6) (23) - (1,482) (1,836)
Underlying segment result 5,481 357 2,498 - (7,522) 814
Separately disclosed items (21,715) (3,823) (218) - (2,133) (27,888)
Profit/(loss) before tax (16,234) (3,466) 2,278 - (9,655) (27,077)
Specific disclosure items
Depreciation and impairment on owned plant, property and equipment 1,375 70 96 - 1 1,542
Depreciation on right of use assets 1,109 112 165 - 146 1,532
Accelerated depreciation of old website 241 - - - - 241
Impairment of right of use assets 61 20 - - - 81
Negative goodwill (2,205) - - - - (2,205)
Impairment of goodwill 22,005 3,065 - - - 25,070
Impairment of intangible assets 284 284
Impairment of fixed assets - 246 - - - 246
Amortisation 877 73 99 - - 1,049
Reconciliation of underlying operating result
Underlying operating result (*) 5,806 363 2,521 - (6,040) 2,650
Separately disclosed items (21,715) (3,823) (218) - (2,133) (27,888)
Operating (loss)/profit (15,909) (3,460) 2,303 - (8,173) (25,238)
(*) Underlying operating result is continuing operations' operating profit
before separately disclosed items detailed later in this note.
For the year ended 31 December 2023 Great Britain Benelux Inter-segmental transactions Central costs Total continuing operations
£000
£000
£000
(re-stated) £000 £000 Ireland
£000
Income statement - continuing operations:
Revenue from external customers 77,371 10,583 24,141 - - 112,095
Inter-segment revenue 3,141 652 585 (4,378) - -
Total revenue 80,512 11,235 24,726 (4,378) - 112,095
Underlying operating result (*) 6,165 1,585 3,541 - (5,302) 5,989
Net financing costs (172) (8) (30) - (1,525) (1,735)
Underlying segment result 5,993 1,577 3,511 - (6,827) 4,254
Separately disclosed items (13,925) (98) (588) - (1,745) (16,356)
Profit/(loss) before tax (7,933) 1,479 2,923 - (8,571) (12,102)
Specific disclosure items
Depreciation and impairment on owned plant, property and equipment 1,208 71 83 - 1 1,363
Depreciation on right of use assets 1,065 262 344 - 139 1,810
Impairment of right of use assets - - 456 - - 456
Impairment of goodwill 13,026 - - - - 13,026
Impairment of acquired intangibles - - - - - -
Amortisation 900 98 118 - - 1,116
Reconciliation of underlying operating result
Underlying operating result (*) 6,165 1,585 3,541 - (5,302) 5,989
Separately disclosed items (13,925) (98) (588) - (1,745) (16,356)
Operating (loss)/profit (7,760) 1,487 2,953 - (7,047) (10,367)
(*) Underlying operating result is continuing operations' operating profit
before separately disclosed items detailed below.
2024 2023
£000 £000
Separately disclosed items
Separately disclosed items within administration expenses:
- Acquisition costs 41
- Amortisation of acquired intangibles 820 906
- Accelerated depreciation of old website 241
- Impairment of Fixed assets 246 -
- Impairment of intangible asset 284
- Impairment of goodwill 25,070 13,026
- Impairment of right of use asset 81 456
- Negative goodwill (2,205)
- Share-based payment costs 729 462
- Release of lease liability of property closed in FY23 - (412)
- Restructuring 2,581 1,919
Total separately disclosed items 27,888 16,356
Share-based payment costs relate to charges made in accordance with IFRS 2
'Share-based payment' following the issue of share options to employees.
Restructuring costs relate to restructuring activities of an operational
nature following acquisition of business units and other restructuring
activities in established businesses. In 2024 restructuring costs included
£377k relating to the exit of members of the previous leadership team, £441k
related to the acquisition of Thorite and £1,705k related to the organisation
redesign and One Flowtech project.
Geographical and category analysis of revenue
The Group operates primarily in the UK, The Netherlands, Belgium and
Ireland. Revenue generated from distribution of hydraulic and pneumatic
consumables, bespoke manufacture, commissioning and installation of equipment
are categorised as sale of goods. Income from on-site services and revenue
arising from contracts is disclosed separately.
31 December 2024 Sale of goods Contracts On-site services Total revenue Non-current assets
£000 £000 £000 £000 £000
United Kingdom 79,864 5,420 1,279 86,563 55,411
Europe 19,502 332 - 19,834 1,396
Rest of the World 885 - - 885 -
Total 100,251 5,752 1,279 107,282 56,807
31 December 2023 Sale of goods Contracts On-site services Total revenue Non-current assets
£000 £000 £000 £000 £000
United Kingdom 83,178 3,041 1,087 87,306 64,979
Europe 23,148 - - 23,148 3,749
Rest of the World 1,641 - - 1,641 -
Total 107,967 3,041 1,087 112,095 68,728
No customers of the Group account for 10% or more of the Group's revenue for
either of the years ended 31 December 2024 or 2023. Non-current assets are
allocated based on their physical location. Revenue recognised at a point in
time was £101,571k (2023: £109,953k) and revenue recognised over time was
£5,371k (2023: £2,142k).
Some contract works begun during the year were still in progress at the end of
the year. For 2024, revenue includes £Nil (2023: £174k) included in the
contract liability balance at the beginning of the reporting period.
Contract balances 31 December 2024 31 December 2023 1 January 2023
£000 £000 £000
Trade receivables 1,061 946 1,216
Advances received for contract works - - 174
Deferred service revenue - - -
Total contract liabilities 1,061 946 1,390
4. Operating loss/profit
The following items have been included in arriving at the operating
loss/profit for continuing operations:
2024 2023
£000 £000
Depreciation of property, plant and equipment under right-of-use assets 1,532 1,810
Depreciation and impairment of tangible assets 1,788 1,363
Amortisation of intangible assets - website 241 210
Amortisation of intangible assets - customer relationships and brands 820 906
Impairment of intangible asset 284
Impairment of goodwill 25,070 13,026
Impairment of right of use asset 81 456
Impairment loss/(gain) on trade receivables and prepayments 10 10
(Profit) / Loss on foreign currency transactions (151) (9)
Repairs and maintenance expenditure on plant and equipment 16 292
Services provided by the Group's Auditor
2024 2023
£000 £000
Audit of the statutory consolidated and Company financial statements of 112 95
Flowtech Fluidpower plc
Amounts receivable by the Company's Auditor and its associates in respect of: 276 226
Audit of financial statements of subsidiaries of the Company
No other services were provided to the Company and its subsidiaries by the
Group's auditor. Services are provided by other professional advisers as
deemed appropriate by the Board.
5. Taxation
Recognised in the income statement
Continuing operations: 2024 2023
£000 £000
Current tax expense
UK Corporation tax 130 146
Overseas tax 93 292
Adjustment in respect of prior periods 47 184
Current tax expense 270 622
Deferred tax
Origination and reversal of temporary differences (771) 49
Adjustment in respect of prior periods (170) 217
Change in tax rate - (13)
Deferred tax (credit)/charge (941) 253
Total tax (credit) / charge - continuing operations (671) 875
Reconciliation of effective tax rate 2024 2023
£000 £000
Loss profit for the year (26,406) (12,977)
Total tax (expense) 671 (875)
Loss excluding taxation (27,077) (12,102)
Tax using the UK corporation tax rate of 25% (2023: 23.5%) (6,778) (2,846)
Impact of change in tax rate on deferred tax balances - 1
Amounts not deductible 6,016 3,412
Adjustment in respect of prior periods 101 401
Other adjustments 140 37
Other tax reliefs and transfers (150) (130)
Total tax expense in the income statement - continuing operations (671) 875
6. 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
during the year.
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 year. For diluted loss per share the weighted
average number of ordinary shares in issue is not adjusted since its impact
would be anti-dilutive.
Year ended 31 December 2024 Year ended 31 December 2023
Loss Weighted average number of shares Loss Profit Weighted average number of shares Earnings
after tax per share after tax per share
£000 Pence £000 Pence
Basic earnings per share
Continuing operations (26,406) 62,526 (42.23p) (12,977) 61,493 (21.10p)
2024 2023
£000 £000
Weighted average number of ordinary shares for basic and diluted earnings per 62,526 61,493
share
Impact of share options 85 97
Weighted average number of ordinary shares for diluted earnings per share 62,441 61,590
7. Goodwill
2024 2023
£000 £000
Cost
Balance at 1 January 63,164 63,164
Balance at 31 December 63,164 63,164
Impairment
At 1 January 23,098 10,072
Impairment charge 25,070 13,026
At 31 December 48,168 23,098
Carrying amount at 31 December 14,996 40,066
Background
Goodwill impairment is monitored for groups of CGUs. The CGU groupings are
split across the three geographical segments.
The carrying amounts of goodwill allocated now stands as at 31 December 2024
are:
Geographical segment £000
audited
Great Britain 13,127
Island of Ireland 1,869
Benelux -
Total 14,996
Impairment tests
The carrying amount of goodwill in each geographical segment was determined by
calculating the sum of the carrying amounts of all intangible assets
(including goodwill) and tangible assets attributable to that unit. These were
then compared with the value in use calculations for each geographical segment
based on discounted cash flows of future period forecasts. Management prepared
forecasts for a five-year period and all forecasts have been approved by the
Board.
Cash flows beyond the period forecast by management for each CGU were
extrapolated at an expected long-term growth rate of 2%. This growth rate does
not exceed the long-term average growth rate for the market in which the Group
operates.
Goodwill impairment charges in 2024
In total an impairment charge of £25,620,000 has been taken in 2024, of which
£25,070,000 was taken against Goodwill, £246,000 against fixed assets,
£284,000 against intangible assets and £20,000 against right of use assets.
The split of impairment charge by geographical segment is shown below:
· Great Britain - £22,005,000 which relates entirely to Goodwill.
· Island of Ireland - NIL.
· Benelux - £3,615,000 split £3,065,000 in relation to goodwill,
£246,000 in relation to fixed assets, £284,000 in relation to intangible
assets and £20,000 in relation to Right of Use Assets.
Recent announcements relating to trade tariffs were non-adjusting post balance
sheet events; as such any associated impact (which we do not deem to be
material) has not been taken into account in the cash flow forecasts used for
impairment testing.
Great Britain
An impairment charge of £22,005,000 has been taken; Comprising entirely of an
impairment to Goodwill. This leaves a balance of goodwill of £13,127. The
value in use calculation is sensitive to a number of assumptions. In arriving
at the impairment charge the forecasts assumed a pre-tax discount rate of
15.47% and revenue growth rates of 19.7% in 2025, 9.9% in 2026, 7.3% in 2027,
2.5% in 2028 and 2% in 2029 and beyond. The 2025 growth rate is materially
impacted by a full year contribution from Thorite (acquired August 2024). The
calculation is extremely sensitive to any movement in these assumptions. With
regards to movements in the long-term revenue growth assumptions, the impact
of a 1% decrease would increase the impairment charge by approximately £4.4m
whilst a 1% increase would decrease the impairment charge by approximately
£5.4m. Movements in revenue and discount rates are considered the factors
to which the value in use calculation is most sensitive.
Benelux
An impairment charge of £3,615,000 has been taken; this comprises £3,065,000
in relation to goodwill, £246,000 in relation to fixed assets, £284,000 in
relation to intangible assets and £20,000 in relation to Right of Use Assets.
This leaves the balance of goodwill, intangible assets, fixed assets and ROU
assets at £Nil as at the impairment date. The value in use calculation is
sensitive to a number of assumptions. In arriving at the impairment charge the
forecasts assumed a pre-tax discount rate of 15.29% and revenue growth rates
of 8.3% in 2025, 10.0% in 2026, 8.5% in 2027 and 2% in 2028 and beyond. The
calculation is extremely sensitive to any movement in these assumptions. Due
to the Goodwill in the Benelux group of CGUs being fully impaired at the
assessment date no further impairment would arise on sensitivity analysis.
8. Net cash from operating activities
2024 2023
£000 £000
Reconciliation of (loss)/profit before taxation to net cash flows from
operations
Loss from continuing operations before tax (27,077) (12,102)
Depreciation and impairment of property, plant and equipment 1,537 1,363
Depreciation on right-of-use assets (IFRS 16) 1,526 1,810
Impairment of right-of-use assets (IFRS 16) 82 456
Write off of right-of-use liability (IFRS 16) - (387)
Finance costs 1,839 1,737
Loss on sale of plant and equipment - 1
Amortisation of intangible assets 1,289 1,116
Impairment of fixed assets 246 -
Impairment of intangible assets 284
Negative goodwill (2,205)
Impairment of goodwill 25,070 13,026
Cash settled share options (45) -
Equity-settled share-based payment charge 729 462
Exchange differences on non-cash balances (128) (15)
Operating cash inflow before changes in working capital and provisions 3,147 7,467
Change in trade and other receivables 3,310 347
Change in stocks 4,864 (619)
Change in trade and other payables (1,562) 2,086
Change in provisions (239) 15
Cash generated from operations 9,520 9,296
Tax paid (814) (1,094)
Net cash generated/(used) from operating activities 8,706 8,202
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UPUCCCUPAUUBRecent news on Flowtech Fluidpower
See all newsREG - Flowtech Fluidpower - Director/PDMR Shareholding
AnnouncementREG - Flowtech Fluidpower - Preliminary results - year ended 31 December 2024
AnnouncementREG - Flowtech Fluidpower - Notice of Results and webcast presentations
AnnouncementREG - Flowtech Fluidpower - Director/PDMR Shareholding
AnnouncementREG - Flowtech Fluidpower - FULL YEAR TRADING UPDATE
Announcement