2020 Trading Update

RNS Number : 8390M

Flowtech Fluidpower PLC

26 January 2021

 

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Tuesday, 26 January 2021

FLOWTECH FLUIDPOWER PLC

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

Specialist full-service supplier of technical fluid power products and services

2020 TRADING UPDATE

The Board of Flowtech issues the following unaudited Trading Update ahead of the Group's preliminary results which are scheduled to be released during April 2021.

OVERVIEW

In line with the challenging market conditions experienced as a result of the COVID-19 pandemic, we expect to report 2020 revenue of £95.1m, a 15% reduction against a 2019 figure of £112.4m.  The majority of this reduction was seen in our Components Division.

Revenue for the year ended 31 December 2020
Divisions:	2020 Unaudited £m	2019 Audited £m	Reduction
Components	79.6	96.3	(17%)
Services	15.5	16.1	(4%)
Total Group revenue for the period	95.1	112.4	(15%)
Net debt*	11.7	16.6

Prior to the first national lockdown in March 2020, and in particular the closure of certain customer sites, revenue was slightly ahead of our expectations.  The impact of the pandemic resulted in April revenue being 41% down compared with April 2019 and Q2 33% down against Q2 2019. Since April, our revenues have recovered; H1 was 22% down and H2 8% down against comparative 2019 periods.

Data we obtain from the British Fluid Power Association (relating to the period up to November 2020) suggests we have achieved a modest increase in market share in 2020.

NET DEBT

Net debt* at 31 December 2020 was £11.7m (comprising £10.8m net bank debt and £0.9m of COVID-19 related support from HMRC which will be repaid by end March 2021).  This represents a £4.9m reduction compared with £16.6m at 31 December 2019.

Our continued focus on working capital management, combined with a small underlying profit **, has underpinned this result.  The trend of cash generation is expected to continue into 2021.

We renewed our Banking facilities in November 2020 and now have continuing aggregate £25m facilities in place for a three-year period.  The covenants have been adjusted to align with current trading conditions.

DELIVERING ON OPERATIONAL COST SAVINGS

Despite the difficulties presented by COVID-19 restrictions, we have completed all the cost reductions outlined in our 2020 half year report.  However, the lockdown measures and working from home environments, combined with restrictions on travel, have meant it was not possible to progress with certain of the further identified cost reductions.  We will complete the remaining areas in 2021.

OUTLOOK

The Group has continued to ensure that the health and wellbeing of all its stakeholders and, in particular, our employees remains paramount.  Away from this the continued progress made with reducing underlying operating costs has ensured that financial performance has, in the circumstances we have faced, remained satisfactory and provides a good base for the future.  However, it clearly remains difficult to forecast accurately given the ongoing impact of, and uncertainty caused by, COVID-19 and therefore we will continue to keep our dividend policy and re-instatement of formal earnings guidance under review and will comment further as soon as we feel it is prudent to do so.

Roger McDowell, Non-Executive Chair commented:

" In what has proven to be an extremely difficult year the wellbeing of our staff and the protection of the business have been our two key priorities. I am pleased to report the senior management team, supported by everyone throughout Flowtech, have delivered on both counts. The continued focus on cash has put us in a healthier position to deal with the prevailing market conditions. Whilst not underestimating the difficulties, we are cautiously optimistic of improving performance in 2021."

Notes

* Our reported Net debt figure does not take account of IFRS16 related debt - this has remained stable with no new significant lease commitments entered into.  The reported figure comprises £10.8m net bank debt and £0.9m of COVID-19 related support from HMRC which will be repaid by end March 2021.

** Underlying profit is profit before tax and separately disclosed items which comprise costs relating to amortisation, restructuring, acquisition and share based payments.

ENQUIRIES:

FLOWTECH FLUIDPOWER PLC

Roger McDowell, Non-Executive Chair Bryce Brooks, Chief Executive Officer Russell Cash, Chief Financial Officer Tel: [phone] Email : [e-mail]

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]

ABOUT FLOWTECH FLUIDPOWER PLC
Founded as Flowtech in 1983, the Flowtech Fluidpower Group is the UK's leading specialist supplier of technical fluid power products and services.  The business joined AIM in 2014 (AIM: Symbol FLO).  Today, the Group has two distinct divisions:
Division:	What we do:	Locations:
Components	Supply of hydraulic and pneumatic consumables, predominantly through distribution for urgent maintenance and repair operations across all industry sectors.  Additionally, support a broad range of original equipment manufacturers (OEMs) supplying off-the-shelf and tailored components and assemblies.	Flowtechnology Benelux (Deventer) Flowtechnology UK (Skelmersdale) Indequip (Skelmersdale) Beaumanor (Leicester) Hydravalve (Oldbury) Primary Fluid Power Components (Skelmersdale) Nelson Hydraulics (Dublin, Dungannon) HTL (Ludlow) Hi-Power Hydraulics (Cork, Dublin, Belfast, Knowsley) Hydroflex (Brussels, Rotterdam and OudBeijerland) Hydraulic Equipment Supermarkets (Gloucester) Derek Lane & Co (Newton Abbot) Tractec (Gloucester)
Services	Bespoke design, manufacturing, commissioning, installation, and servicing of systems to manufacturers of specialised industrial and mobile hydraulic original equipment manufacturers (OEMs) and additionally a wide range of industrial end users.	Primary Fluid Power Systems (Knowsley) Branch Hydraulic Systems (Gloucester) Lubemec (Gloucester) Fluidpower Group Services (Spennymoor, Leeds, Gloucester) Orange County (Spennymoor)
Both Group's divisions have overlapping product sets, allowing procurement synergies to be maximised.
The above divisions are supported by a centralised back office team based in Wilmslow, Cheshire, UK.  In total, the business employs c.600 people.  For more information please visit, www.flowtechfluidpower.com .

 

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