TIDMFLO
RNS Number : 9062K
Flowtech Fluidpower PLC
07 September 2021
NEWS RELEASE
Issued on behalf of Flowtech
Fluidpower plc
Immediate Release
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR. Upon the
publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Tuesday, 7 September 2021
FLOWTECH FLUIDPOWER PLC
("Flowtech", the "Group" or "Company")
leading specialist supplier of technical fluid power components
and services
2021 HALF-YEAR REPORT
For the six months ended 30 June 2021
"We are pleased that current trading continues to support our
'return to growth' agenda and we have made meaningful progress with
each of our strategic goals. Volumes are recovering, margins are
stable, and we are proactively addressing the short-term headwinds
associated with problematic global supply chains."
Bryce Brooks, Chief Executive Officer
Ø Revenue much improved against comparative period but 7% down
on a more representative H1 2019.
Ø Sustained strong gross margin.
Ø Overheads broadly flat, with savings achieved from
restructuring activities funding new growth initiatives, such as
digital agenda.
Ø Operating profit improvement directly linked to revenue
recovery (H1 2020 result of GBP0.9m benefitted from GBP0.9m of
furlough support).
Ø Working Capital increased by GBP4.7m in H1 2021, with Net
Debt** up GBP1.6m from 2020 year-end position. This is in line with
our planning and expectations and linked to increased activity
levels, as well as our investment in inventory to combat global
supply chain challenges.
Ø Results now reported on a 3-segment basis.
Half year Half year Year ended
ended ended 31 December
FINANCIAL HIGHLIGHTS 30 June 2021 30 June 2020 2020
unaudited unaudited Audited
================================================= ============== ============== =============
* Revenue GBP55.3m GBP46.6m GBP95.1m
* Gross profit % 35.4% 35.1% 34.3%
GBP(1.4)m
* Operating profit / (loss) GBP2.7m GBP(0.5m)
GBP1.1m
* Underlying operating profit* GBP3.4m GBP0.9m
GBP(2.1)m
* Profit / (loss) before tax GBP2.3m GBP(0.9)m
* Earnings / (loss) per share (basic) 3.02p (1.37) p (3.54) p
GBP11.6m
* Net debt** GBP13.2m GBP14.5m
* Underlying operating result is continuing operations' operating profit
before separately disclosed items (note 3).
**Net Debt includes VAT linked to Government COVID-19 related support schemes
- H1 2021 figure of GBP0.8m; H1 2020 figure of GBP1.6m. Net Debt excludes
IFRS16 related debt
RESULTS PRESENTATIONS:
The Company is to hold a presentation of results for financial
analysts at 9.00am (BST) today (7 September 2021), details of which
can be obtained by contacting either the Company or advisers as
detailed below.
In addition, tomorrow (8 September 2021) at 08.30am (BST) , CEO
Bryce Brooks and CFO Russell Cash will provide a live presentation
via the Investor Meet Company platform (IMC). This presentation is
open to all existing and potential shareholders. Investors who
already follow Flowtech Fluidpower plc on the IMC platform will
automatically be invited. Questions can be submitted pre-event via
your Investor Meet Company dashboard up until 3.00pm the day before
the meeting or at any time during the live presentation. Investors
can sign up to Investor Meet Company for free and add to meet
Flowtech Fluidpower plc via:
https://www.investormeetcompany.com/flowtech-fluidpower-plc/register-investor
Enquiries:
Flowtech Fluidpower plc
Bryce Brooks, Chief Executive
Russell Cash, Chief Financial Officer
Tel: +44 (0) 1695 52759
Email: info@flowtechfluidpower.com
Zeus Capital Limited (Nominated Adviser and Joint Broker)
Andrew Jones, Kieran Russell (corporate finance)
Dominic King (sales & broking)
Tel: +44 (0) 20 3829 5000
finnCap Capital Markets (Joint Broker)
Ed Frisby, Kate Bannatyne (corporate finance)
Rhys Williams, Andrew Burdis (sales & broking)
Tel: +44 (0) 20 7220 0500
TooleyStreet Communications (IR and media relations)
Fiona Tooley
Tel: +44 (0) 7785 703523
or email : fiona@tooleystreet.com
About Flowtech Fluidpower plc
Founded as Flowtech in 1983, the Flowtech Fluidpower Group is a group of
specialist fluid power businesses. Working in partnership with customers
and suppliers, we deliver essential components, customer solutions and
high-quality servicing support to keep global industry moving. The business
joined the AIM market in 2014. Since the start of 2021, the Group has been
operating under three distinct branded segments : with Flowtech and Fluidpower
Group Solutions forming what was 'Components', and Fluidpower Group Services
the remainder. To read more about the Group please visit www.flowtechfluidpower.com
.
Segment: What we do: Locations:
----------------- ---------------------------------------- ----------------------------------
Flowtech Supply of both hydraulic and pneumatic Flowtechnology Benelux (Deventer)
consumables, predominantly through Flowtechnology China ( Guangzhou
distribution for maintenance and )
repair operations across all industry Flowtechnology UK (Skelmersdale)
markets and supported by supply Indequip (Skelmersdale)
agreements direct to a broad range Beaumanor (Leicester)
of original equipment manufacturers. Hydravalve (Oldbury)
Channels to market:
E-commerce websites, customer white
label e-commerce websites, catalogues,
own and customer trade counters.
----------------- ---------------------------------------- ----------------------------------
Fluidpower Supply specialist technical hydraulic Primary Fluid Power Components
Group Solutions components & systems predominantly (Skelmersdale)
into OEMs and end-user channels Nelson Hi-Power Hydraulics
to all industry markets and supported (Dublin, Dungannon, UK)
by supply agreements direct to HTL (Ludlow)
a broad range of manufacturer brands. Hi-Power Hydraulics (Cork,
Dublin, Belfast )
Channels to market: Hydroflex (Brussels, Rotterdam
Engineering collaboration, e-commerce. and OudBeijerland)
Hydraulic Equipment Supermarkets
(Gloucester, Leeds)
Derek Lane & Co (Newton Abbot,
Devon)
HES Tractec (Gloucester)
----------------- ---------------------------------------- ----------------------------------
Fluidpower Bespoke design, manufacturing, Primary Fluid Power Systems
Group Services commissioning, installation, and (Knowsley)
servicing of systems to manufacturers Branch Hydraulic Systems and
of specialised industrial and mobile HES Automatec (Gloucester)
hydraulic OEMs and additionally HES Lubemec (Gloucester)
a wide range of industrial end HES Onsite (Leeds, Gloucester)
users. Capital project-based revenue. Flow Connect (Gloucester)
Orange County (Spennymoor)
Channels to market:
In-house design and build, combined
with on-site installation, servicing
and support.
----------------- ---------------------------------------- ----------------------------------
All the Group's divisions have overlapping product sets, allowing procurement
synergies to be maximised. The above segments are supported by a centralised
back-office team based at the Skelmersdale, Lancashire, and Wilmslow, Cheshire
sites in the UK and a procurement and quality control team in Shanghai,
China. In total, the business employs 629 people.
For more information please visit, Our business | Flowtech Fluidpower plc
FLOWTECH FLUIDPOWER PLC 2021 HALF-YEAR REPORT
For the six months ended 30 June 2021
2021 HALF-YEAR FINANCIAL PERFORMANCE AND DIVISIONAL ANALYSIS
Revenue Six months Six months % Year
ended ended Change ended
30 June 30 June 31 December
2021 2020 2020
GBP000 GBP000 GBP000
----------------------- ----------------------- ---------------------- ------------------- -----------------------
Flowtech 26,688 22,729 17.4% 46,060
Fluidpower
Group
Solutions 20,084 16,395 22.5% 33,578
Fluidpower
Group
Services 8,522 7,443 14.5% 15,443
----------------------- ----------------------- ---------------------- ------------------- -----------------------
Total Group
revenue 55,294 46,567 18.7% 95,081
----------------------- ----------------------- ---------------------- ------------------- -----------------------
Gross
profit % 35.4% 35.1% 34.3%
----------------------- ----------------------- ---------------------- ------------------- -----------------------
Underlying Six months Six months Change Year
operating ended ended ended
result* 30 June 30 June 31 December
2021 2020 GBP000 2020
GBP000 GBP000 GBP000
----------------------- ----------------------- ---------------------- ------------------- -----------------------
Flowtech 3,962 2,908 1,054 5,038
Fluidpower
Group
Solutions 2,053 423 1,630 1,790
Fluidpower
Group
Services 194 (94) 288 (1,236)
Central
costs (2,827) (2,305) (522) (4,520)
----------------------- ----------------------- ---------------------- ------------------- -----------------------
Underlying
operating
result
* 3,382 932 2,450 1,072
----------------------- ----------------------- ---------------------- ------------------- -----------------------
* Underlying operating result is continuing operations' operating profit
before separately disclosed items (note 3).
REVENUE
Revenue was 18.7% up on H1 2020, although a more representative
comparison is with H1 2019 where it was 7.2% down. Whilst a return
to growth is encouraging, we have been impacted by supply chain
challenges in meeting customer demand, and in certain OEM sectors
for our Solutions Division where demand remains below normal
levels.
Gross profit margin
Our gross profit margin remains strong at 35.4% (2020 35.1%). It
can vary from one period to another based on market conditions and
mix of sales, but this figure demonstrates our determination to
maintain its quality.
OPERATING Costs
Our underlying operating costs are GBP0.8m higher than in H1
2020, a period which benefitted from c.GBP0.9m of Government backed
furlough support. The underlying position reflects the savings
achieved in the parts of our business which have been restructured,
offset by investment in areas such as E-business, and project
management to support our long-term growth agenda.
UNDERLYING OPERATING PROFIT
Underlying operating profit is much improved compared with H1
2020 but remains suppressed in relation to H1 2019. Despite
sectoral challenges in the lockdown period, the Services division
has returned to providing a positive contribution following our
ongoing performance improvement initiatives.
NET DEBT
Our Net Debt position has increased from GBP11.6m at 31 December
2020 to GBP13.2m at 30 June 2021. Our increased activity levels,
combined with our decision to invest in inventory to mitigate
supply chain disruption, resulted in a planned and controlled
GBP4.7m increase in working capital. Clearly our profitability has
also mitigated the impact of this.
CURRENT TRADING
It has been pleasing to see that in the first half of 2021
certain of our key customers exhibited demand levels above our
original estimates, meaning in many cases, our volumes have
returned to pre Covid-19 levels and enabled us to deliver a solid
performance.
A challenge as we entered 2021 was to predict the changes in
volume due to the lockdown which was then affecting the UK, and our
other trading territories of Republic of Ireland and the
Netherlands. The post-Brexit trading structure between the UK and
both Northern and Republic of Ireland has also been an issue, as
approximately 17% of our revenue is undertaken by Nelson Hi-Power
and Hi-Power Transport, with a further 4% from our English based
operations to the island of Ireland.
We have been focusing our efforts on managing within this new
framework, and in the first half of the year we have been able to
maintain gross margins. The Group is dependent on its own supply
chains to service increased demand, and in Q2 and now into Q3,
there have been difficulties in obtaining core product for
short-term needs. In addition, lead times from all major supply
partners are being extended, often coupled with price increases. We
are confident we can retain our gross margin position with pass
through price increases into the market.
Having successfully managed our inventory position down over
recent years, our need to support increased demand and ensure
overall stock availability and service levels are maintained, has
meant that our investment in stock is increasing. We expect this to
continue into H2 before this position rebalances.
DEVELOPMENTS IN GROUP STRATEGY
In April 2021 we detailed the key elements of our growth
strategy, and we have continued to make progress in several
areas:
-- Branding - The commercial consolidation of the constituents
of our Flowtech division is going to plan and we expect to have
completed this project in Q1 2022. Warehousing and Logistics are
already shared, and we will now integrate commercial and IT.
Customer reaction has been positive as this creates a co-ordinated
approach for many who run separate accounts at each legacy
business.
-- Digital - Our near-term objective has been to create a
fully-fledged E-business. Progress is good and we expect to have a
rebuilt Flowtech.co.uk trading platform by the end of 2021. This
will be supported by SEO capabilities that are new to the Group,
and insight from our new Customer Data Platform.
-- People - We have further strengthened our management team. Of
note is in early 2021 when we recruited into two new roles: Stephen
Ashton as Operations Development Director and Howard Ormesher as
Director of Customer Insight. Both have brought considerable
additional skills to our Management Board, with Howard heavily
involved in our digital strategy, and Stephen working on plans for
further operational cost reductions in 2022. We have also recently
welcomed Trasie Woolley as our first Director of Human Capital, and
she is leading a programme to improve our skill base across the
Group. This is particularly important for our technical agenda,
which is based on a Minimum Educational Requirement framework for
all commercial and operational employees.
Our investment in these areas has increased our central cost
base in the short-term as we remain committed to ensuring we have
the resources necessary to support long-term growth in both online
and offline trading.
BOARD CHANGES
Non-Executive Director, Paul Gedman has decided to stand down
from the Board with effect from the end of November 2021. We would
like to thank him for his significant contribution to the
development of our E-business platform and wish him well with his
new executive role. The Board will look to recruit a replacement
with appropriate experience to provide valuable support to the
Executive Team as we further develop our digital agenda.
OUTLOOK & DIVID
We remain encouraged by the way the fluid power distribution
market continues to recover. The volatility of global supply chains
will continue to be a challenge in the short-term, however we
expect our FY2021 result to be in line with current market
guidance. Overall, the Board is satisfied with the recent and
current trading performance and pleased with the progress made
against each of our key strategic objectives.
The Board remains determined to reintroduce a final dividend
payment for the financial year 2021. Thereafter we will recognise
both the growth requirements of the business and the interests of
our shareholders.
By order of the Board
7 September 2021
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2021
Notes Unaudited Unaudited Audited
--------------------------------------------- ------
Six months Six months Year
ended ended ended
--------------------------------------------- ------
30 June 30-June 31-December
2021 2020 2020
GBP000 GBP000 GBP000
--------------------------------------------- ------ ----------- ----------- ------------
Continuing operations
------
Revenue 55,294 46,567 95,081
------
Cost of sales (35,727) (30,226) (62,487)
--------------------------------------------- ------ ----------- ----------- ------------
Gross profit 19,567 16,341 32,594
Distribution expenses (2,478) (2,081) (4,286)
Administrative expenses before separately
disclosed items: (13,707) (13,328) (27,236)
- separately disclosed items 3 (676) (1,481) (2,466)
--------------------------------------------- ------ ----------- ----------- ------------
Total administrative expenses (14,383) (14,809) 29,702
Operating profit / (loss) 2,706 (549) (1,394)
Financial expenses (414) (380) (754)
--------------------------------------------- ------ ----------- ----------- ------------
Profit / (loss) from continuing operations
before tax 2,292 (929) (2,148)
Taxation 4 (435) 88 (24)
--------------------------------------------- ------ ----------- ----------- ------------
Profit /(loss) from continuing operations 1,857 (841) (2,172)
--------------------------------------------- ------ ----------- ----------- ------------
Profit / (loss) for the period attributable
to owners of the Parent Company 1,857 (841) (2,172)
--------------------------------------------- ------ ----------- ----------- ------------
Earnings / (loss) per share 5
Basic earnings / (loss) per share
- continuing operations 3.02p (1.37p) (3.54p)
--------------------------------------------- ------ ----------- ----------- ------------
Diluted earnings / (loss) per share
- continuing operations 3.01p (1.37p) (3.54p)
--------------------------------------------- ------ ----------- ----------- ------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2021
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30-June 31-December
2021 2020 2020
GBP000 GBP000 GBP000
----------- ----------- ------------
Profit /(loss) for the period 1,857 (841) (2,172)
Other comprehensive income
Items that will be reclassified subsequently
to profit or loss
-Exchange differences on translating foreign
operations (240) 334 289
----------------------------------------------- ----------- ----------- ------------
Total comprehensive income in the period
attributable to owners of the Parent Company 1,617 (507) (1,883)
----------------------------------------------- ----------- ----------- ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2021
Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
GBP000 GBP000 GBP000
----------------------------------------- ---------- ---------- -------------
Assets
Non-current assets
Goodwill 63,164 63,216 63,164
Other intangible assets 4,958 6,047 5,483
Right of use assets 7,079 7,385 7,490
Property, plant, and equipment 6,996 6,957 6,747
----------------------------------------- ---------- ----------
Total non-current assets 82,197 83,605 82,884
----------------------------------------- ---------- ---------- -------------
Current assets
Inventories 23,896 22,639 21,994
Trade and other receivables 23,503 20,050 18,415
Prepayments 1,174 1,672 477
Tax Receivable - - 257
Cash and cash equivalents 7,536 7,082 9,235
----------------------------------------- ---------- ---------- -------------
Total current assets 56,109 51,443 50,378
----------------------------------------- ---------- ---------- -------------
Liabilities
Current liabilities
Interest-bearing borrowings - 16,000 -
Lease liability 1,534 1,845 1,459
Trade and other payables 20,896 18,344 17,805
Tax Payable 875 - -
----------------------------------------- ---------- ---------- -------------
Total current liabilities 23,305 36,189 19,264
----------------------------------------- ---------- ---------- -------------
Net current assets 32,804 15,254 31,114
----------------------------------------- ---------- ---------- -------------
Non-current liabilities
Interest-bearing borrowings 19,907 4,000 19,887
Lease liability 5,742 5,773 6,278
Provisions 378 363 367
Deferred tax liabilities 1,257 1,417 1,459
----------------------------------------- ---------- ---------- -------------
Total non-current liabilities 27,284 11,553 27,991
----------------------------------------- ---------- ---------- -------------
Net assets 87,717 87,306 86,007
----------------------------------------- ---------- ---------- -------------
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) (337) (372) (372)
Merger reserve 293 293 293
Merger relief reserve 3,646 3,646 3,646
Currency translation reserve (46) 711 343
Retained losses (7,731) (8,864) (9,795)
----------------------------------------- ---------- ---------- -------------
Total equity attributable to the owners
of the parent company 87,717 87,306 86,007
----------------------------------------- ---------- ---------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2021
Share Share Other Shares Merger Merger Currency Retained Total
capital premium reserves owned reserve relief translation losses equity
by EBT reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Six months ended 30
June 2021 unaudited
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Balance at 1 January
2021 30,746 60,959 187 (372) 293 3,646 343 (9,795) 86,007
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Profit for the period 1,857 1,857
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Other comprehensive
income - - - - - - (389) 149 (240)
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Total comprehensive
income for the year - - - - - - (389) 2,006 1,617
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Transaction with owners
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Share-based payment
charge 63 63
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Share options settled - - - 35 - - - (5) 30
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Balance at 30 June
2021 30,746 60,959 187 (337) 293 3,646 (46) (7,731) 87,717
-------- -------- --------- ------- -------- -------- ------------ -------- --------
Six months ended 30
June 2020 - unaudited
Balance at 1 January
2020 30,579 60,959 187 (372) 293 3,599 244 (7,955) 87,534
------- ------- ---- ------ ---- ------ ---- --------- -------
Profit for the period - - - - - - - (841) (841)
------- ------- ---- ------ ---- ------ ---- --------- -------
Other comprehensive
income - - - - - - 467 (133) 334
------- ------- ---- ------ ---- ------ ---- --------- -------
Total comprehensive
income for the period - - - - - - 467 (974) (507)
------- ------- ---- ------ ---- ------ ---- --------- -------
Transaction with owners
------- ------- ---- ------ ---- ------ ---- --------- -------
Issue of share capital 168 - - - - 46 - - 214
------- ------- ---- ------ ---- ------ ---- --------- -------
Share-based payment
charge - - - - - - - 65 65
------- ------- ---- ------ ---- ------ ---- --------- -------
Total transactions
with owners 168 - - - 46 - 65 279
------- ------- ---- ------ ---- ------ ---- --------- -------
Balance at 30 June
2020 30,747 60,959 187 (372) 293 3,645 711 (8,864) 87,306
------- ------- ---- ------ ---- ------ ---- --------- -------
Twelve months ended
31 December 2020 -
audited
Balance at 1 January
2020 30,579 60,959 187 (372) 293 3,599 244 (7,955) 87,534
(Loss) for the period - - - - - - - (2,172) (2,172)
Other comprehensive
income - - - - - - 381 (92) 289
------- ------- ---- ------ ---- ------ ------ --------- ---------
Total comprehensive
income for the period - - - - - - 381 (2,264) (1,883)
------- ------- ---- ------ ---- ------ ------ --------- ---------
Transaction with owners
------- ------- ---- ------ ---- ------ ------ --------- ---------
Shares issued as consideration 167 47 214
------- ------- ---- ------ ---- ------ ------ --------- ---------
Share-based payment
charge 142 142
------- ------- ---- ------ ---- ------ ------ --------- ---------
Exchange reserves realised (282) 282 -
------- ------- ---- ------ ---- ------ ------ --------- ---------
Total transactions
with owners 167 - - - - 47 (282) 424 356
------- ------- ---- ------ ---- ------ ------ --------- ---------
Balance at 31 December
2020 30,746 60,959 187 (372) 293 3,646 343 (9,795) 86,007
------- ------- ---- ------ ---- ------ ------ --------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2021
Notes Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30-June 30-June 31-December
2021 2020 2020
GBP000 GBP000 GBP000
Net cash from operating activities 6 170 6,203 10,083
----------------------------------------- ------ ----------- ----------- ------------
Cash flow from investing activities
------
Acquisition of property, plant, and
equipment (808) (1,221) (1,652)
------
Proceeds from sale of property, plant,
and equipment (*) 432 189 105
Acquisition of subsidiary - (202) (164)
Payment of deferred and contingent
consideration - (218) (219)
----------------------------------------- ------ ----------- ----------- ------------
Net cash used in investing activities (376) (1,452) (1,930)
Cash flows from financing activities
Repayment of lease liabilities (*) (1,015) (792) (1,550)
Interest on right of use leases (123) (131) (264)
Other interest and loan arrangement
fee (271) (249) (603)
Repayment of loan by EBT 35 -
Share option payments to staff (5) -
----------------------------------------- ------ ----------- ----------- ------------
Net cash generated from / (used in)
financing activities (1,379) (1,172) (2,417)
----------------------------------------- ------ ----------- ----------- ------------
Net change in cash and cash equivalents (1,585) 3,579 5,736
Cash and cash equivalents at start
of period 9,235 3,446 3,446
------
Exchange differences on cash and cash
equivalents (114) 57 53
----------------------------------------- ------ ----------- ----------- ------------
Cash and cash equivalents at end of
period 7,536 7,082 9,235
----------------------------------------- ------ ----------- ----------- ------------
(*) H1 2021 includes net proceeds from disposal of right of use
property located at Willenhall GBP119k. The lease agreement
included a clause for compulsory purchase of the property on
payment of GBP300k on termination of lease, shown as repayment of
lease liabilities. The right of use asset was disposed immediately,
realising GBP419k, after expenses.
Long-term Lease liabilities Total
borrowings
GBP000 GBP000 GBP000
------------ ------------------ --------
At 1 January 2021 19,887 7,737 27,624
Cash flows
Repayment - (1,015) (1,015)
Other movements 20 (102) (82)
Non-cash
New leases - 656 656
------------------- ------------ ------------------ --------
At 30 June 2021 19,907 7,276 27,183
------------------- ------------ ------------------ --------
NOTES TO THE HALF-YEAR REPORT
For the six months ended 30 June 2021
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 2021 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
7 September 2021.
The Group's financial statements for the year ended 31 December 2020 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 .
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 .
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
2021. These are consistent with the accounting policies used in the
Financial Statements for the year ended 31 December 2020.
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 GBP3.4m
-- The Group is financed by revolving credit facilities
totalling GBP20m (recently extended to November 2023) and GBP5m
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 2021.
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 GBP25m banking facility.
The Group therefore continues to adopt the going concern basis
in preparing its financial statements.
3. OPERATING SEGMENTS
----------------------
The Group monitors and reports business performance based on
three segments, Flowtech, Fluidpower Group Solutions , and
Fluidpower Group Services. The segments "Flowtech" and "Fluidpower
Group Solutions" taken together make up what was previously called
"Components". For a description of each segment please see the
Editors note on page 2 of the release. Segment results for 6 months
ending June 20 and full year ending December 20 have been re-stated
on a comparable basis.
The Board is considered to be the chief operating decision maker
(CODM). The CODM manages the business using an underlying profit
figure. Only finance income and costs secured on the assets of the
operating segment are included in the segment results. Finance
income and costs relating to loans held by the Company are not
included in the segment result that is assessed by the CODM.
Transfer prices between operating segments are on an arm's length
basis.
The Directors believe that the underlying operating profit
provides additional useful information on key performance 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 profit / (loss) from
continuing operations is shown below. The principal adjustments
made are in respect of the separately disclosed items and are as
detailed at the end of this note. Segment information for the
reporting periods is as follows:
Half year ended 30 June 2021 Flowtech Fluidpower Fluidpower Inter-segmental Central Total
Group Group Services transactions costs continuing
Solutions GBP000 GBP000 operations
GBP000 GBP000 GBP000 GBP000
Income statement - continuing
operations:
Revenue from external customers 26,688 20,084 8,522 - - 55,294
Inter segment revenue 2,789 461 662 (3,912) - -
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Total revenue 29,477 20,545 9,184 (3,912) - 55,294
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Underlying operating result* 3,962 2,053 194 - (2,827) 3,382
Net financing costs (71) (44) (2) - (297) (414)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Underlying segment result 3,891 2,009 192 - (3,124) 2,968
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Separately disclosed items
(see note 3) (159) (376) (62) - (79) (676)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Profit before tax 3,732 1,633 130 - (3,203) 2,292
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Specific disclosure items
Depreciation on owned plant
,property and equipment 359 65 85 - - 509
Depreciation on right-of-use
assets 295 358 37 - 74 764
Amortisation 121 343 62 - - 526
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Reconciliation of underlying
operating result to operating
profit:
Underlying operating result* 3,962 2,053 194 - (2,827) 3,382
Separately disclosed items
(see note 3) (159) (376) (62) - (79) (676)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Operating profit/ (loss) 3,803 1,677 132 - (2,906) 2,706
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Half year ended 30 June 2020 Flowtech Fluidpower Fluidpower Inter-segmental Central Total
Group Group Services transactions costs continuing
Solutions GBP000 GBP000 operations
GBP000 GBP000 GBP000 GBP000
Income statement - continuing
operations:
Revenue from external customers 22,729 16,395 7,443 - - 46,567
Inter segment revenue 2,129 361 504 (2,994) - -
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Total revenue 24,858 16,757 7,947 (2,994) - 46,567
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Underlying operating result* 2,908 423 (94) - (2,305) 932
Net financing costs (74) (57) (3) - (246) (380)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Underlying segment result 2,834 366 (97) - (2,551) 552
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Separately disclosed items
(see note 3) (597) (86) - - (798) (1,481)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Profit before tax 2,237 280 (97) - (3,349) (929)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Specific disclosure items
Depreciation 790 379 132 - 46 1,347
Amortisation - - 63 - - 63
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Reconciliation of underlying
operating result to operating
profit:
Underlying operating result* 2,908 423 (94) - (2,305) 932
Separately disclosed items
(see note 3) (597) (86) - - (798) (1,481)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Operating profit/ (loss) 2,311 337 (94) - (3,103) (549)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Year ended 31 December 2020 Flowtech Fluidpower Fluidpower Inter-segmental Central Total
Group Group Services transactions costs continuing
Solutions GBP000 GBP000 operations
GBP000 GBP000 GBP000 GBP000
Income statement - continuing
operations:
Revenue from external customers 46,060 33,578 15,443 - - 95,081
Inter segment revenue 2,084 581 559 3,224 - -
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Total revenue 48,144 34,159 16,002 (3,224) - 95,081
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Underlying operating result* 5,038 1,790 (1,236) - (4,520) 1,072
Net financing costs (146) (104) (6) - (498) (754)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Underlying segment result 4,892 1,686 (1,242) - (5,018) 318
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Separately disclosed items
(see note 3) (862) (862) (240) - (502) (2,466)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Profit/(loss) before tax 4,030 824 (1,482) - (5,520) (2,148)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Specific disclosure items
Depreciation on owned plant,
property and equipment 655 206 309 - - 1,170
Depreciation on right-of-use
assets 646 771 66 - 124 1,607
Amortisation 282 684 124 - - 1,090
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Reconciliation of underlying
operating result to operating
profit:
Underlying operating result* 5,038 1,790 (1,236) - (4,520) 1,072
Separately disclosed items
(see note 3) (862) (862) (240) - (502) (2,466)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
Operating profit/(loss) 4,176 928 (1,476) - (5,022) (1,394)
--------------------------------- --------- ----------- ---------------- ---------------- -------- ------------
*Underlying operating result is continuing operations' operating
profit before separately disclosed items (note 3).
SEPARATELY DISCLOSED ITEMS
----------------------------------------------------------------------------------------------------------------------
* Acquisition costs relate to stamp duty, due diligence,
legal fees, finance fees and other professional costs
incurred in the acquisition of businesses.
* 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.
Six months Six months Year
ended ended ended
30-June 30-June 31-December
2021 2020 2020
GBP000 GBP000 GBP000
Share-based payment costs 63 65 142
Amortisation of acquired
intangibles 526 526 1,090
Changes in amounts accrued for
contingent
and deferred consideration - 218 219
Restructuring costs 84 644 921
Acquisition costs 3 28 94
-------------------------------------------- ---------------------- ---------------------- ------------------------
Total 676 1,481 2,466
-------------------------------------------- ---------------------- ---------------------- ------------------------
4. TAXATION
--------------------------------------------------------------------------------------------
Six months Six months Year
ended ended ended
30-June 30-June 31-December
2021 2020 2020
GBP000 GBP000 GBP000
--------------------------------------------------- ----------- ----------- -------------
Current tax on income for the period - continuing
operations:
UK tax 296 (57) (73)
Overseas tax 149 69 146
Deferred tax credit (114) (100) (66)
Adjustments in respect of prior year/ other
differences 104 - (31)
--------------------------------------------------- ----------- ----------- -------------
Total taxation 435 (88) (24)
--------------------------------------------------- ----------- ----------- -------------
The taxation for the period has been calculated by applying the estimated
tax rate for the financial year ending 31 December 2021.
5. EARNINGS PER SHARE
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Basic earnings / (loss) per share is calculated by dividing the earnings
/ (loss) 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 2021 30 June 2020 31 December 2020
------------ -------------------------------------------------------- ---------------------------------------------------------- ------------------------------------------------------------
Earnings Weighted Earnings Earnings Weighted Earnings Earnings Weighted Earnings
average per average per average per share
number share number share number
of shares of shares of shares
------------
GBP000 000's Pence GBP000 000's Pence GBP000 000's Pence
------------ ----------------- ------------------ ----------------- ----------------- ------------------ ------------------- ------------------- ------------------ -------------------
Basic
earnings /
(loss) per
share
Continuing
operations 1,857 61,493 3.02p (841) 61,354 (1.37p) (2,172) 61,424 (3.54)p
------------ ----------------- ------------------ ----------------- ----------------- ------------------ ------------------- ------------------- ------------------ -------------------
Diluted
earnings
/ (loss)
per share
Continuing
operations 1,857 61,702 3.01p (841) 61,354 (1.37p) (2,172) 61,488 (3.54)p
------------ ----------------- ------------------ ----------------- ----------------- ------------------ ------------------- ------------------- ------------------ -------------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP000 GBP000 GBP000
-------------------------------------------- ---------------------- ---------------------- ------------------------
Weighted average number of
ordinary shares
for basic and diluted earnings
per share 61,493 61,354 61,424
Impact of share options 209 - 64
-------------------------------------------- ---------------------- ---------------------- ------------------------
Weighted average number of
ordinary shares
for diluted earnings per share 61,702 61,354 61,488
-------------------------------------------- ---------------------- ---------------------- ------------------------
6. NET CASH FROM OPERATING ACTIVITIES
----------------------------------------------------------------------------------------------------------------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP000 GBP000 GBP000
-------------------------------------------- ---------------------- ---------------------- ------------------------
Reconciliation of profit before taxation to
net cash flows from operations:
Profit/ (loss) from continuing operations
before tax 2,292 (929) (2,148)
Depreciation on property, plant, and
equipment 497 533 1,170
Depreciation on right-of-use assets (IFRS
16) 764 814 1,607
Financial expense 414 380 754
(Profit) / Loss on sale of plant and
equipment (181) 70 184
Amortisation of intangible assets 526 526 1,090
Write back liabilities - - (19)
Equity settled share-based payment charge 63 65 142
Change in amounts accrued for contingent
and
deferred consideration - 218 219
-------------------------------------------- ---------------------- ---------------------- ------------------------
Operating cashflow before changes in
working
capital and provisions 4,375 1,677 2,999
Change in trade and other receivables (5,660) 642 3,455
Change in stocks (1,743) 1,578 2,207
Change in trade and other payables 2,694 2 705 2,118
Change in provisions 9 (51) (47)
-------------------------------------------- ---------------------- ---------------------- ------------------------
Cash generated from operations (325) 6,551 10,732
Tax received/ (paid) 495 (348) (649)
-------------------------------------------- ---------------------- ---------------------- ------------------------
Net cash generated from operating
activities 170 6,203 10,083
-------------------------------------------- ---------------------- ---------------------- ------------------------
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 2020 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.
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END
IR EANNKEEEFEFA
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