2020 Annual Results - Current Trading & Outlook

RNS Number : 9594V

Flowtech Fluidpower PLC

20 April 2021

 

Issued on behalf of Flowtech Fluidpower PLC Date: Tuesday, 20 April 2021 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.

FLOWTECH FLUIDPOWER PLC ("Flowtech" or the "Group" or "Company") leading specialist supplier of technical fluid power components and services Current Trading and Outlook Highlights · Encouraging performance in Q1 with revenue and margin slightly above expectations · Benefits of operational cost savings supporting investment in online platform · Potential recovery to 2019 activity levels by the end of 2021 · Looking to reintroduce a final dividend in respect of FY2021 and thereafter, adopt a balanced approach to dividend policy

2020 Annual Financial Results and Publication of the 2020 Annual report and Financial Statements and Notice of Annual General Meeting

Flowtech Fluidpower plc (AIM: FLO) today releases its Annual financial results for the twelve-month period ended 31 December 2020.

The following information contained within this announcement is a summary taken from the Group's audited Annual report and Financial statements for the year ended 31 December 2020; the full Annual Report can be viewed via this link

http://www.rns-pdf.londonstockexchange.com/rns/9594V_1-2021-4-19.pdf

FINANCIAL AND OPERATIONAL HIGHLIGHTS

· Revenue reduction restricted to 15.4% full year, largely caused by COVID-19, with improving trend since April 2020 · Targeted operational cost savings achieved · Generated £10.1m net cash from operating activities driven by effective management of working capital · Net Debt reduced by £5.0m · Ongoing investment in e-business platform to deliver future organic growth · Multi-disciplinary Management Board established

OPERATIONAL REVIEW	2020	2019	Change
· Group revenue	£95.1m	£112.4m	-15.4%
· Gross profit	£32.6m	£40.2m	-18.9%
· Gross profit %	34.3%	35.7%	-146bps
· Group operating (loss)/profit	-£1.4m	£5.7m	-£7.1m
· Net Debt (**)	£11.6m	£16.6m	-£5.0m

(**) Net debt at 31 December 2020 comprises £10.7m Bank debt and £0.9m of COVID-19 related HMRC support but excludes lease liabilities under IFRS 16.

"I am encouraged by the recent momentum in our business, and while mindful that COVID-19 and Brexit might still be disruptive in the medium term, the benefits from the progress we have made, and the dedication of our employees, mean that the longer-term outlook is positive."

Bryce Brooks Chief Executive Officer

ENQUIRIES:

FLOWTECH FLUIDPOWER PLC

Roger McDowell, Non-Executive Chairman Bryce Brooks, Chief Executive Officer Russell Cash, Chief Financial Officer Tel: [phone] Email : [e-mail] For more information please visit, www.flowtechfluidpower.com

Zeus Capital Limited (Nominated Adviser and Joint Broker) Andrew Jones, Kieran Russell (Corporate Finance) Dominic King, John Goold (Sales & Broking) Tel: + 44 (0) 20 3829 5000

finnCap Limited (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: [phone] or email: [e-mail]

FLOWTECH FLUIDPOWER PLC

("Flowtech" or the "Group" or "Company")

2020 Annual Financial Results

for the year ended 31 December 2020

"What has become clear is that Flowtech Fluidpower is a fundamentally good business, and there is

significant opportunity for future growth."

Roger McDowell Non-Executive Chair

Chairman's Statement

Emphasis will be on Long-term Growth in Market Share

Introduction

My first annual report as Chairman is set against the background of the COVID-19 pandemic which has impacted all our personal lives and businesses in an unprecedented manner. Throughout this time, the Board has prioritised the health and safety of our employees above all else and I'm grateful to everyone who has continued to support the business and work so hard through this difficult period.

Review of Business & Strategy  

My normal practice when assuming a new Chairman role would be to perform a full review, including site visits, to assess the relative strengths of the organisation. Notwithstanding the fact that movements were restricted between locations during the peak of the pandemic, I have visited the Group's principal sites, and as soon as practicably possible after the lockdown is relaxed I will seek to complete this process.

What has become clear is that Flowtech Fluidpower is a fundamentally good business, and there is significant opportunity for future growth. The staff are both skilled and enthusiastic, with considerable domain knowledge and good technical capability. I have therefore sought to ensure the Executive team are well supported, as the strong market position and capabilities of the organisation are clear.

As part of the process of building on these strengths, during the latter part of 2020 we completed a full strategy review, to create focus and provide a framework for the future. The main elements of this thinking will be outlined in the Annual Report. However, emphasis will be on long-term growth in market share to exploit the clear market opportunities available to us, and further enhance profitability and cash generation. Of particular note is the commitment that the Group is making with its e-business capabilities, and the operational resources to support this initiative. I firmly believe that the investment now being made in this area will prove fruitful over the medium term, enhancing organic sales growth, and be a key differentiator between Flowtech and its competitors.

We will also have input and support from our Non-Executive Director Paul Gedman, who joined us in July, having held senior positions including as Divisional CEO at The Hut Group. Paul has extensive experience in the e-business arena and a wealth of practical knowledge in growing international businesses through leveraging data and digital capabilities.

In addition to commercial matters, we have established improved processes to our governance of health and safety at work, led by the Chief Executive, and enhanced the overall functioning of the various Board subcommittees, with a strong platform built.

Also included in the Annual Report is our first consolidated sustainability review, covering all aspects of how Group strategy impacts on our major stakeholders, and with a particular focus on our employees and our environmental footprint. This is clearly the start of a long journey, but it is the Board's intention to set targets for improvement in material areas, ensuring that we are all accountable for affecting positive change through the business.

Banking & Net Debt  

It is pleasing to note that the Executive team has continued to manage the debt position carefully, obviating any need to raise new finance to strengthen the balance sheet. This careful management has been reflected in the fact that across the year net debt has reduced by £5.0m, from £16.6m to £11.6m, and the stability that comes from this will stand the business in good stead.

In addition, as a reflection of the faith that our bankers show in the Group, we have successfully renewed our facilities with Barclays for a further three year period to June 2023, without any material change in terms, and with appropriate 'carve out' in covenants to cover the demanding 2020 trading period.

However, in any distribution business, the right inventory is the key to success. Whilst sensible management of the supply chain and availability has to be undertaken, I firmly believe that they should never be at the expense of the upside that comes from being the sector's largest stock holder, particularly when we are seeing some extended lead times as the world's supply lines recover from the disruption of COVID-19. We are highly regarded by our key suppliers and considered a vital link in the supply chain.

Dividend

We recognise that dividends are important to shareholders. However, we believe it is prudent to assess the capital needs of both growing and investing in the business in considering the size and timing of any future distributions. The Board remain keen to reintroduce a final payment for the financial year 2021, and thereafter adopt a balanced approach to dividend policy.

Summary

In the short term, we continue to work hard to finalise the process of cost reduction. Whilst clearly the COVID-19 lockdown position has delayed some of this progress, notwithstanding it is pleasing to note that meaningful results have been achieved. Absolute focus remains on cash and cost management, and a key aspect of the approach will be to ensure that the Executive team, and the Management Board beneath them, remain action orientated, continuing the pace of change throughout 2021 and beyond.

With the relatively high operational gearing that the Group possesses, any significant increase in sales produces magnified growth at the bottom line, albeit naturally reversing some of the reductions seen in working capital. However, with the immediate concerns associated with COVID-19 hopefully now receding, albeit now with the difficulties of adapting to Brexit, the Board is cautiously optimistic that we should see a return to the sales levels seen in 2019 within the medium term.

Finally, I would like to pay thanks to my predecessor Malcolm Diamond, who has clearly supported the business well and provided wise guidance to help create the platform on which we can now move forward. In the handover process, Malcolm emphasised the passion and commitment of everyone he met within the Group, and my own interaction to date has confirmed that this enthusiasm remains in place.

CEO's Year in Review

Dealing with the Effects of the COVID-19 Pandemic

"We end 2020 having made progress in creating the platform that will ensure our future growth. We have extracted efficiencies and associated cost savings from our network, tightened our working capital position, invested in systems, and strengthened our management skills and bandwidth."

Bryce Brooks Chief Executive Officer

Any review of the year would have to cover the considerable impact that the COVID-19 pandemic had on not just UK economic activity, but also in our other 'home' geographies of the Republic of Ireland and the Benelux.

Our financial performance has been considerably impacted with the significant reduction in Revenue in the middle and latter part of the year having a resultant effect on profitability, and we detail below some of the direct effects.

It is some comfort that data we obtain from the British Fluid Power Association suggests we have achieved a modest increase in market share in 2020, but it has overall been a year of ensuring a pragmatic approach to customer service and supply chain management. However, it is particularly satisfying that with pre-tax cash flow from operating activities of £10.7m during the year (2019: £16.3m) mostly derived from our management of working capital, we have been able to ensure that our balance sheet has been well protected.

Dealing with the Effects of the COVID-19 Pandemic  

Prior to the first national lockdown in March 2020, revenue was slightly ahead of our expectations. However, the impact of the pandemic resulted in Q2 of 2020 ending 33% down, H1 overall being 22% down and H2 8% down against comparative 2019 periods.

Unlike other industries where the immediate impact of the lockdown measures were quite clear, in our case we had many variables affecting us as we sought to understand the best course of action in the Spring of 2020. For example, in Northern Ireland, and in particular the centre for the fluid power dependent industries in County Tyrone, the reaction from customers was to effectively close entirely for a number of weeks.

In stark contrast, with many of the health related industries dependent on pneumatic product supply, Flowtechnology UK, Beaumanor and Indequip were able to counteract some of the across-the-board reductions in activity, with clearly identifiable pockets of high demand. The position was best illustrated by the fact that our industry body, the BFPA, quickly lobbied Parliament and the sector was designated as an essential industry, and its workers also identified as such. Overall therefore we worked hard to ensure that we remained 'open for business'.

With the level of demand dropping off at different rates across the Group, we made an early decision to take advantage of the various government furlough schemes. In order to ensure that implementation was immediate, and our workforce remained united, we covered all employees affected by guaranteeing to pay a full salary in April. This ensured there was broad acceptance of the rapid measures that we took, and at its peak we had over 200 employees being supported by the various government schemes, with a reduction in company contribution only applied when the long-term position was becoming clear.

In total, the support we received was £1.2m from a combination of the UK, Irish and Dutch authorities, and this ensured that we were able to protect employment in the short term, as well as ensure that our investment programmes continued throughout the year.

At the same time we were able to comply with the Work From Home ('WFH') directives. We have adapted to the use of video communications technology, and now firmly believe that this enforced experiment will be a permanent part of our toolkit. We have kept in good contact throughout with both customers and suppliers alike, albeit the ability to negotiate new pricing and alternative sourcing has had to give way, for the time being, to security of supply.

In terms of the direct effects of the COVID-19 virus on our workforce, our other main focus was on ensuring that our warehousing and engineering facilities had the lowest possible risk of a COVID-19 outbreak; whilst office activities would likely deal well with this issue, any enforced shut down elsewhere would have been significantly detrimental to service and sales. To date, despite office staff on occasion being hard hit, and particularly in our North West of England facilities in October, we have managed to achieve this protection and not a single days' operation has been lost due to a need to isolate staff.

Currently the biggest short term obstacle as we seek to rebound from 2020 is the knock on effects of the past twelve months to the natural balance of global supply chains. Whilst our direct dependence on China has reduced as the Group has expanded over recent years, it is also clear that some of our European partners have outsourced parts of supply to the low cost economies. With the fluid power industry worldwide seeing evidence of a strong rebound as stock levels are replenished, the prioritisation of supply and physical movement of goods via container is currently disrupted. Whilst our own supply chain teams are actively managing the situation as best as possible, our view is that availability will hinder some growth in 2021 and the circumstances behind this are likely to persist for the majority of the year; we do not expect this to impact on the quality of our gross margin. On top of the natural system driven increase to match demand, it is therefore likely there will also be a need to add further elements of buffer to protect against this situation.

Almost all of the Group's key suppliers are based overseas, either in Europe or the Far East, and with the recent travel restrictions this has meant that our trading relationships have by necessity migrated to being online rather than face-to-face. Whilst the status of the Group has ensured that these relationships have remained sound, we will be particularly vigorous in ensuring that close contact is re-established as the sector rebounds from the restrictions of lockdown.

Delivering on Operational Cost Savings  

In our previous reports, we outlined a plan to reduce our warehouse operating costs by transferring the majority of pick and ship activities from the network of local facilities in the UK and Ireland to a centrally operated structure based on our centres in Skelmersdale and Leicester. All of the savings indicated have now been achieved, albeit the in-year timing of implementation was effected by the various lockdowns. In total, we have reduced our operational sites by five and warehouse headcount by 43. The cash outlay on the changes implemented in the year was £1.1m with £0.6m relating to costs and the balance investment most predominantly in IT systems and plant. Throughout, there has been a continuous process of 'lessons learned', and we expect this experience to stand us in good stead for future activities in the same vein.

In the last completed change, in December 2020, Nelson Hydraulics in Lisburn, Northern Ireland, and Dublin in the RoI, closed its operations and relocated to an existing site in Dungannon, County Tyrone and the Hi Power site in Dublin - creating a combined Components business, Nelson Hi-Power, covering the whole Island of Ireland. This plan was amended relatively late in the process to take account of the post Brexit trading arrangements implemented from 1 January 2021. Whilst the vast majority of the targeted cost savings were made, no day-to-day warehouse activities were transferred to our central functions, a change to our original intention as we saw a need to ensure that the new business was not immediately impeded by any cross Irish Sea delivery issues.

However, it was necessary to make pragmatic decisions to defer further initiatives, as the need to balance short-term risk to customer service whilst working under lockdown conditions was deemed disproportionately high. Once conditions allow, we will therefore continue to pursue and implement identified operating cost reductions with necessary rigour.

Of particular note is that we have now established an Engineering & Modifications Centre (EMC) in the main logistics hub in Skelmersdale. For the first time at a single key location, the Group has a mix of sector-leading logistics along with engineering and test capabilities. In the short term, this will allow us to reduce operating costs, but in the medium term we can expand the offer for all Group entities, as well as be a key differentiator when our e-business platform starts to drive sales to a wider market.  Mixing logistics and engineering with online capabilities is a key requirement for our global supplier partners and a strong base is being built.

Services Division  

The Services division entered 2020 with a strong order book and it was initially able to continue at satisfactory levels.  However, with around 40% of its normal activities being 'on-site', and by definition subject to much more stringent working environments, principally as a subcontractor, a number of key orders were deferred and the negative effects of COVID-19 became equally as pronounced as elsewhere in the sector. That said, and partly as a result of the cost reduction programme centred on the Components segment creating a clearly defined cost profile, the mechanics of its methods for pricing, cost control and organisation have been exposed and it is now midway through a 'root and branch' review to ensure all areas are improved.

Developments in Group Strategy & Progress in 2020  

Our first consolidated sustainability review forms part of the Annual Report. In it, we highlight the most material impacts our business has on its most important stakeholder groups. Suffice it to say, we believe an ongoing process of setting and refining improvement targets in this area will further ensure the success and longevity of our business model. In addition, our strategy has been developed with the following key areas of enhancement:

Ø Branding Style & Organisation

In 2019, we changed our reporting structure to a two segment approach - Components and Services. Much of the cost out initiatives described above had an element of physically separating Components operations from Services, for example Nelson Hi-Power has aggregated its industrial component distribution, whilst Hi-Power Truck is now separately identified. In 2021, this will allow both elements to have a clear delineation of operating resources, and develop strategies to suit their specific characteristics and requirements.

As a next step, we reviewed our trading styles, including branding, as we seek to further co-ordinate our approach. Previously, each Profit Centre has traded under its legacy name and style to ensure a focus on local identity. We firmly believe that with the market moving to a more online led approach, in a way that is now working through many business to business environments, we must adapt to this change. Therefore, from 2021, we will evolve to two branding styles depending on the precise sector in which each Profit Centre operates. The new branding of 'Flowtech' and 'The Fluidpower Group' will eventually create commercial identities that will marry together both offline and online capabilities and ensure the Group maximises the opportunities that are available. As described further in the Financial Review on page 34 of the Annual report, from a reporting perspective we will operate three segments from 2021, with Flowtech and Fluidpower Group Solutions forming what is now 'Components', and Fluidpower Group Services the remainder. Branding logos can be viewed on page 8 of the Annual report.

Ø E-Business  

We have previously outlined how our strategy is to develop a fully-fledged e-business operation, and transition from being essentially a highly efficient customer 'order-portal'. During 2020, a dedicated team has been working on the next stage of this, and identified early in the year a path to redesign our online infrastructure, covering microservices architecture, front-end website capability, and insight from a Customer Data Platform. Behind this, we are creating the most extensive Product Information Management system in the sector. Whilst the initial £0.75m capital outlay necessary to implement this strategy was delayed from Q1 to Q3 due to COVID-19, I am pleased to report that since that date good progress has been made and we expect to have a working platform available to us in the latter part of 2021 for the Flowtech business, with The Fluidpower Group following in 2022.

Ø IT Development

We started the year with a target to reduce our operational IT systems to four by the end of the year. Whilst some progress has been made, and cyber security risk reduced, managing further change whilst under lockdown has meant that we have not achieved this objective. We are also now ensuring that appropriate priority is made in the development of our e-business platform. As such, we have deferred any further IT system implementations until a swift change can be achieved. In the meantime, we are now examining an eventual move to a single ERP provider. In outline, we believe that a move across the Group to a modern package will provide us with considerable additional functionality, particularly in Warehouse Management, Supply Chain and Management Information. The current investment in our new online platform has been designed to be functional with any standard software platform at relatively modest cost, and we therefore believe the time is now right to start the change process with a view to completing in a timely manner.

Ø Management Board  

A further aspect of the strategy review was a bolstering of the senior team's resources.

Having joined the Group with the acquisition of Indequip in 2016, and overseen a more than doubling of sales in the period since, in 2021 Ian Simpson has now stepped up to combine running Flowtechnology UK with leadership of the Flowtech division. At the same time, Nick Fossey has moved from the Chief Operating Officer role to focus entirely on The Fluidpower Group as Divisional Director. Both Ian and Nick are responsible for the commercial development of their respective divisions and are focused on the COVID-19 recovery, re-establishing customer and supplier relationships, and leading the brand transition.

In early 2021, we recruited Stephen Ashton to become Operations Development Director, and Howard Ormesher to Director of Customer Insight. These new roles follow the appointment of Stephen Merrie in 2020 to Product Quality & Engineering Compliance Director. Along with Anne Fogg, Systems Director, the Divisional Directors and the Executive Team, the Management Board now established provides the range of skills necessary to support a sales led organisation, as well as implement any change programme.

Ø Target Markets

Since coming to market in 2014, the Group has been of the view that the commonality of supply across Europe would allow growth away from the legacy home territories of the UK, RoI and the Netherlands. In recent years, European based aggregators, almost exclusively Private Equity owned, have widened their influence in this market place. Therefore, when coupled with the clear opportunities for further growth in our existing operations, we have concluded that a focus at home for at least the medium term is essential. This has been further reinforced by Brexit, with the likelihood of diverging regulatory environments, on top of what we are already experiencing, likely to consume time and resources

People

The COVID-19 period has required a shift in focus from our normal processes of recruitment, training and improving the skill set across the Group In its place has been a constant review of our Health & Safety at Work procedures, initially identifying all the necessary changes to ensure appropriate physical distancing - a challenging process with many of our facilities 'industrial' in nature and with a wide variety of layouts. More latterly, this has turned to ensuring that the mental well-being of all staff has been at the forefront; our sector has not historically been seen as a leading light in this area. We are therefore proud of the fact that we were the first members of the BFPA to introduce mental health first aiders, and recently we have provided an Employee Assistance Programme to all staff and their immediate families, as well as mental health training for all levels of management in the Group. Our supportive approach was reflected in the significant upwards move in our overall Employment Engagement Score when tested in October 2020, and confirms the widely held team ethos across all parts of the Group, even under these trying times. The passion and commitment shown by the many staff members employed across the Group, has been exemplary. On behalf of the Executive team, and the Management Board, I would like to thank everyone for their efforts. Since the onset of the COVID-19 pandemic we have maintained a full service to our customer base, whilst protecting as best we can the health and well-being of our people. We are extremely grateful to all our employees for the resilience they have shown in the face of this adversity, from the office workers who have adapted to WFH at short notice, to the warehouse and engineering teams who have kept all our facilities open on a daily basis, and ensured that our status as an 'essential industry' was not undermined.

Current Trading & Outlook  

We have been encouraged by our performance over the past quarter, with both revenue and margins trending slightly above our expectations. The combination of Brexit and COVID-19, and in particular the current challenged nature of global supply chains, continue to make underlying trading difficult to interpret. What is clear is there has been a continued upward trend in our 'resellers' business, and evidence of restocking in our OEM customers. We believe if current patterns continue, we could exit 2021 with a run rate revenue at a similar level to 2019. We are also seeing the benefit of the actions we took to reduce operational costs being reflected in our margins, which has provided support for the significant investment in our online platforms which we expect to begin to provide a meaningful contribution in 2022 and beyond.

Summary  

This year has represented a test of our management skills right across the Group. Without question, there has been a considerable learning experience in many areas, not just at Profit Centre and Divisional Director level, but undoubtedly at Executive level. With hindsight, there are areas that we could have improved on, particularly around the pace with which we have been able to extract cost from our order, pick and drop activities, that will be essential to our future success. In addition, some of the deep-rooted inefficiencies in the constituent parts of the Services segment could have been highlighted and improved sooner. However, we end 2020 having made progress in creating the platform that will ensure our future growth. We have extracted efficiencies and associated cost savings from our network, tightened our working capital position, invested in systems, and strengthened our management skills and bandwidth. Most latterly, this has been achieved against the backdrop of a global pandemic, and although in some areas this has slowed our progress, we have been able to refine our strategy and will be rigorous in the pursuit of further efficiency initiatives once the lockdown periods are complete. With much hard work now behind us, we can now look forward positively. The Group's heritage is essentially as an 'offline' business, but our continued investment in the 'online' world will transition us to a fully-fledged e-business, with an improved customer experience and all the commercial and competitive advantages that come with being a data-driven organisation. Our market position and scale should also not be underestimated, is testimony to the positive changes we have made, and gives us the flexibility to leverage our dominant position in the industry to deliver growth and superior returns for our shareholders.

20 APRIL 2021

FLOWTECH FLUIDPOWER PLC

("Flowtech" or the "Group" or "Company")

Annual results for the year ended 31 December 2020

Consolidated income statement		2020 Audited £000	2019 Audited £000
Continuing operations
Revenue		95,081	112,418
Cost of sales		(62,487)	(72,235)
Gross profit		32,594	40,183
Distribution expenses		(4,286)	(4,547)
Administrative expenses before separately disclosed items:		(27,236)	(26,179)
- Separately disclosed items		(2,466)	(3,712)
Total administrative expenses		(29,702)	(29,891)
Operating (loss)/profit		(1,394)	5,745
Financial expenses		(754)	(1,038)
Net financing costs		(754)	(1,038)
(Loss)/Profit from continuing operations before tax		(2,148)	4,707
Taxation		(24)	(968)
(Loss)/ Profit from continuing operations		(2,172)	3,739
(Loss)/ Profit for the year attributable to:
Owners of the parent		(2,172)	3,739
		(2,172)	3,739
Earnings per share
Basic earnings per share - continuing operations		(3.54p)	6.12p
Diluted earnings per share - continuing operations		(3.54p)	6.10p

Consolidated statement of comprehensive income	2020 £000	2019 £000
(Loss)/ Profit for the year	(2,172)	3,739
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
- Exchange differences on translating foreign operations	289	(394)
Total comprehensive (loss) / income for the year	(1,883)	3,345
Total comprehensive income for the year attributable to:
Owners of the parent	(1,883)	3,345
	(1,883)	3,345

FLOWTECH FLUIDPOWER PLC

("Flowtech" or the "Group" or "Company")

Annual results for the year ended 31 December 2020

Consolidated statement of financial position		2020 Audited £000	2019 Audited £000
Assets
Non-current assets
Goodwill		63,164	63,014
Other intangible assets		5,483	6,573
Right-of-use assets		7,490	8,228
Property, plant and equipment		6,747	6,528
Total non-current assets		82,884	84,343
Current assets
Inventories		21,994	24,000
Trade and other receivables		18,415	21,377
Prepayments		477	759
Tax receivable		257	-
Cash and cash equivalents		9,235	3,446
Total current assets		50,378	49,582
Liabilities
Current liabilities
Interest-bearing borrowings		-	16,055
Lease liability		1,459	1,635
Trade and other payables		17,805	15,510
Deferred and contingent consideration		-	214
Tax payable		-	298
Total current liabilities		19,264	33,712
Net current assets		31,114	15,870
Non-current liabilities
Interest-bearing borrowings		19,887	4,008
Lease liability		6,278	6,735
Provisions		367	417
Deferred tax liabilities		1,459	1,519
Total non-current liabilities		27,991	12,679
Net assets		86,007	87,534
Equity directly attributable to owners of the Parent
Share capital		30,746	30,579
Share premium		60,959	60,959
Other reserves		187	187
Shares owned by the Employee Benefit Trust		(372)	(372)
Merger reserve		293	293
Merger relief reserve		3,646	3,599
Currency translation reserve		343	244
Retained losses		(9,795)	(7,955)
Total equity attributable to the owners of the parent		86,007	87,534

Consolidated statement of changes in equity
	Share capital	Share premium	Other reserve	Merger reserve	Shares owned by the ebt	Merger relief reserve	Currency translation reserve	Retained losses	Non- controlling interest	Total equity
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Balance at 1 January 2019	30,460	60,793	187	293	(413)	3,575	664	(8,146)	20	87,433
Profit for the year	-	-	-	-	-	-	-	3,739	-	3,739
Other comprehensive income	-	-	-	-	-	-	(420)	26	-	(394)
Total comprehensive income for the year	-	-	-	-	-	-	(420)	3,765	-	3,345
Transactions with owners
Issue of share capital	25	45	-	-	-	-	-	-	-	70
Purchase of minority shares	-	-	-	-	-	-	-	(270)	(20)	(290)
Shares issued as consideration	94	121	-	-	-	24	-	-	-	239
Other movements in share capital	-	-	-	-	-	-	-	133	-	133
Share-based payment charge	-	-	-	-	-	-	-	143	-	143
Share options settled	-	-	-	-	41	-	-	169	-	210
Equity dividends paid (note 8)	-	-	-	-	-	-	-	(3,749)	-	(3,749)
Total transactions with owners	119	166	-	-	41	24	-	(3,574)	(20)	(3,244)
Balance at 1 January 2020	30,579	60,959	187	293	(372)	3,599	244	(7,955)	-	87,534
Profit for the year								(2,172)	-	(2,172)
Other comprehensive income	-	-	-	-	-	-	381	(92)	-	289
Total comprehensive income for the year	-	-	-	-	-	-	381	(2,264)	-	(1,883)
Transactions with owners
Shares issued as consideration	167	-	-	-	-	47	-	-	-	214
Exchange reserves realised	-	-	-	-	-	-	(282)	282	-	-
Share-based payment charge	-	-	-	-	-	-	-	142	-	142
Total transactions with owners	167	-	-	-	-	47	(282)	424	-	356
Balance at 31 December 2020	30,746	60,959	187	293	(372)	3,646	343	(9,795)	-	86,007

FLOWTECH FLUIDPOWER PLC

("Flowtech" or the "Group" or "Company")

Annual results for the year ended 31 December 2020

 

Consolidated statement of cash flows		2020 Audited £000	2019 Audited £000
Cash flow from operating activities
Net cash from operating activities		10,083	13,246
Cash flow from investing activities
Acquisition of subsidiary, net of cash acquired		(164)	(38)
Acquisition of property, plant and equipment		(1,652)	(756)
Proceeds from sale of property, plant and equipment		105	39
Payment of deferred and contingent consideration		(219)	(2,635)
Net cash used in investing activities		(1,930)	(3,390)
Cash flows from financing activities
Net proceeds from issue of share capital		-	70
Repayment of Right-of-use lease liabilities		(1,550)	(1,561)
Repayment of lease liabilities		-	(71)
Interest on right-of-use leases		(264)	(282)
Other interest paid		(603)	(756)
Proceeds from sale of shares held by EBT		-	47
Share option payments to staff		-	(61)
Dividends paid		-	(3,749)
Net cash used in financing activities		(2,417)	(6,363)
Net change in cash and cash equivalents		5,736	3,493
Cash and cash equivalents at start of year		3,446	253
Exchange differences on cash and cash equivalents		53	(300)
Cash and cash equivalents at end of year		9,235	3,446

FLOWTECH FLUIDPOWER PLC

("Flowtech" or the "Group" or "Company")

Notes to the Financial statements

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 . Copies can also be requested from: The Company Secretary, Flowtech Fluidpower plc, Bollin House,

Bollin Walk, Wilmslow, SK9 1DP. Email: [e-mail] .

2.	BASIS OF PREPARATION

The figures shown for the year ended 31 December 2020 are based on the Group's statutory accounts for that period and do not constitute the Group's statutory accounts for that period as defined in section 434 of the Companies Act 2006. The statutory accounts were prepared under International Financial Reporting Standards in conformity with the Companies Act 2006 the accounting policies have been applied as described in the Annual Report.  The audit report on the accounts for the year ended 31 December 2020 was not qualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

A link via RNS to the pdf is shown on page 1 of this announcement.

The full Annual Report and Financial Statements for the year ended 31 December 2020 will be available to view and download from the Company website at www.flowtechfluidpower.com  

Copies of the 2020 Annual Report will also be sent out to those Shareholders who have elected to receive paper communications.  Further copies can also be requested by writing to The Company Secretary, Flowtech Fluidpower plc, Bollin House, Bollin Walk, Wilmslow SK9 1DP or email to [e-mail] . 

2.1	GOING CONCERN

The financial statements are prepared on a going concern   basis which the Directors believe to be appropriate for the

following reasons:

· Following the challenges presented by COVID-19 and the   impact on 2020 performance, the Directors are forecasting a   return to profitability in 2021 and beyond;

· Significant debt reduction has been achieved in both 2019   and 2020 and the Group is now operating with Debt of   approximately half of the level it had at the end of 2018;

· The Group is financed by revolving credit facilities totalling   £20m (recently extended to November 2023) and a £5m   overdraft facility, repayable on demand;

· At the end of 2020 the Group's Net Bank Debt was £10.7m   (£14.3m within the aggregate banking facilities).

The Directors have prepared forecasts covering the period to   December 2022. Naturally, these forecasts include a number of   key assumptions notably relating, inter alia, to revenue, margins, costs and working capital balances.

In any set of forecasts there are inherent risks relating to each of   these assumptions. If future trading performance significantly   underperformed expectations, management believe there would   be the ability to mitigate the impact of this by careful management   of the Group's cost base and working capital and that this would   assist in seeking to ensure all bank covenants were complied with   and the business continued to operate well within its aggregate £25m banking facility.

The Directors have based their stress tests on Revenue reduction   scenarios. This exercise resulted in the Directors believing it is still   likely that the business would continue to operate within the   aggregate £25m banking facility whilst seeking to ensure all bank   covenants were complied with.   The Group therefore continues to adopt the going concern basis in   preparing its financial statements.

3. ANNUAL GENERAL MEETING

The Annual General Meeting (AGM) is to be held at 10 am on 3 June 2021 at the Group's Headquarters , Flowtech Fluidpower plc, Bollin House, Bollin Walk, Wilmslow SK9 1DP .

The Notice convening the Company's 2021 Annual General Meeting shall be published on the Company's website by 7 May 2021.

In view of the COVID-19 pandemic and the measures that the UK Government has put in place restricting public gatherings such as these, as well as for the safety of Directors, Shareholders and Advisers, this Annual General Meeting will be a closed meeting, with two shareholders attending physically to ensure compliance with legal requirements for the Annual General Meeting as set forth in the Company's articles of association . The Board will continue to monitor developments as well as any further UK Government advice and will issue a further statement if any amendments to the arrangements for the AGM are made.

FORWARD-LOOKING STATEMENTS

These results were approved by the Board of Directors and authorised for issue on 19 April 2021 .  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.

 

END

 

 

FR DGGDSXUBDGBC