Group Trading Update & Notice of Half-Year Results

RNS Number : 2253U

Flowtech Fluidpower PLC

28 July 2020

 

NEWS RELEASE Issued on behalf of Flowtech Fluidpower plc Immediate Release

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.

FLOWTECH FLUIDPOWER PLC

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

Group Trading Update, Board Changes

and

Notice of Half-year Results

"We are delighted with the way we have reacted to the unforeseen and unprecedented challenges presented by COVID-19. Improved trading as markets recover, combined with our focus on restructuring and cost saving initiatives, should result in a profitable and cash generative second half of 2020"

London: Tuesday, 28 July 2020: AIM listed specialist technical fluid power products supplier Flowtech Fluidpower plc   (LSE: symbol FLO) , announces the following unaudited trading update on its performance for the six-month financial reporting period ended 30 June 2020

COVID-19

Since the onset of the COVID-19 lockdown we have prioritised the health and wellbeing of our people, while maintaining a full service to our customer base.  We are extremely grateful to all our employees for the resilience and adaptability they have shown in the face of this adversity.

GROUP Trading Update AND FINANCIALS

	HY1 2020 Unaudited £'m	HY1 2019 Unaudited £'m	FY 2019 Audited £'m	Change H1 2020 v H1 2019
Divisional revenue:
Components	39.1	51.2	96.3	(23.6%)
Services	7.5	8.4	16.1	(11.0%)
Total Group revenue for the period	46.6	59.6	112.4	(21.8%)
Net debt	14.6*	18.8	16.6

* Excludes IFRS16 related debt but including c.£1.6m (2019: £NIL) of deferred VAT linked to Government COVID related support schemes.  

Revenue for the six-month period to June 2020 was down £13.0m, or 22% on a like for like trading day basis. Q2 was the most materially affected by COVID-19, down 33% against prior year.  April's revenue was the most impacted, down 41% on a like-for-like basis, as a large proportion of our customers were closed.  However, we are pleased to report their gradual return resulted in an improving trend, with the like-for-like revenue down 34% and 25% in May and June, respectively.

All our key customers have now returned, our supply chain is functioning effectively, and the trends remain encouraging, with July revenue approximately 15% ahead of the same point in June.  As a result, we have welcomed back a number of UK furloughed employees and now have only 43 furloughed compared with a peak of 189 in April.

NET DEBT/BANKING FACILITIES

We continue to focus on all areas of working capital management to ensure our cash position remains well controlled, and net debt at 30 June 2020 was £14.6m.  This represents a £1.0m reduction from the position at 31 March 2020, £2.0m from the 31 December 2019, and £4.2m over the last 12 months.  There is no outstanding deferred consideration in respect of our historic acquisition activity.

In line with the normal course of business we entered into discussions with our Bank regarding the extension of facilities.  The Bank has recently approved the continuation of our aggregate £25m of facilities and this is in the process of being documented.

RESTRUCTURING/COST REDUCTION ACTIVITIES

We went into this crisis part way through a significant programme of rationalisation and streamlining.  We have previously reported anticipated annualised savings of £1.6m and are pleased that execution remains on track.  In addition, we have commenced further restructuring activities, including some redundancies and anticipate the aggregate impact of this will lead to further annualised savings of c.£1.0m.  Activity in Ireland has been slightly delayed in order to undertake a broader exercise which is expected to deliver significant benefits.  Whilst the overall annual cost savings have increased, the estimated benefit (excluding implementation costs) to our 2020 performance remains unchanged at £0.8m.

SUMMARY & OUTLOOK

We reacted quickly to the unforeseen demands caused by COVID-19 and managed our trading and cash performance effectively. Entering the second half of the year we look forward to improving trading conditions.  This coupled with our ongoing restructuring activities, should result in a profitable and cash generative second half of 2020.

While the threat of further disruption remains real, we consider it prudent to make no further commitments towards reinstating the dividend.  We recognise the importance of this income to our shareholders but wish to retain the cash in the business until the outlook is clearer.  For similar reasons, we have no immediate plans to reinstate formal earnings guidance.

BOARD CHANGES

As outlined in the announcement dated 27 March 2020, the Company had commenced a search for a new Non-Executive Director. The Board is pleased to announce that the result of this search is the appointment of Paul Gedman as Non-Executive Director with immediate effect.  Paul will sit as a member of all Board Committees.

Paul has extensive experience in the global ecommerce industry having held positions that included CEO of the Beauty, Wellness and Luxury Divisions at the Hut Group for over eight years.  Prior to this, Paul held the role of Head of Online at Littlewoods Clearance (part of the Shop Direct Group).  Paul brings with him a wealth of knowledge in growing international businesses through leveraging ecommerce and digital capabilities. The Board feel this experience will bring additional skills which can serve to benefit the Company's e-business operation, in turn expanding our online-presence and cross-border selling opportunities, placing us at the forefront of the sector as a progressive industrial distributor.

As announced on 12 May 2020, the Company confirms that as at 1 August 2020, Roger McDowell will be appointed Non-Executive Chairman with the current Non-Executive Chairman Malcolm Diamond MBE retiring from the Board.  We would like to sincerely thank Malcolm for the huge contribution he has provided over the last six years.

The Board will then comprise Roger McDowell (Non-Executive Chairman), Bryce Brooks (Chief Executive Officer), Russell Cash (Chief Financial Officer), Nigel Richens and Paul Gedman (Non-Executive Directors).

NOTICE OF RESULTS

The Group is planning to release its Half-year results for the period ended 30 June 2020 on Tuesday, 8 September.  The announcement will be available to view and download from the Company's website www.flowtechfluidpower.com .  

Enquiries: FLOWTECH FLUIDPOWER PLC Bryce Brooks, Chief Executive Russell Cash, Chief Financial Officer Tel: [phone] Email: [e-mail] To read more about the Group 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: [phone] finnCap Limited (Joint Broker) Ed Frisby, Kate Bannatyne (corporate finance) Rhys Williams, Andrew Burdis (sales & broking) Tel: [phone] TooleyStreet Communications (IR and media relations) Fiona Tooley Tel: [phone] or email : [e-mail]

Further information relating to Paul Jonathan Gedman: In accordance with Schedule 2(g) of the AIM Rules for Companies, Paul Jonathan Gedman (aged 39) holds, or has held in the past five years, the following directorships and partnerships: Current Past five years The Hut Management Company Limited The Hut Group Limited PJG Growth Limited The Hut.com Limited Lookfantastic Group Limited Lookfantastic Salons Limited Lookfantastic London Limited Lookfantastic.com Limited Lookfantastic Training Limited Mankind Direct Limited Mama Mio Limited Mama Mio Distribution Limited EI Spa Holdings (UK) Limited ESPA International (UK) Limited Illamasqua (Holdings) Limited Illamasqua Limited Primavera Aromatherapy Limited Paul holds no shares in the Company.

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.  The business joined AIM in 2014.  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 OEMs supplying off-the-shelf and tailored components and assemblies.	Flowtechnology Benelux (Deventer) Flowtechnology China ( Guangzhou ) Flowtechnology UK (Skelmersdale) Indequip (Skelmersdale) Beaumanor (Leicester) Hydravalve (Willenhall) Primary Fluid Power Components (Skelmersdale) Nelson Hydraulics (Dublin, Lisburn, Dungannon, UK) HTL (Ludlow) Hi-Power Hydraulics (Cork, Dublin, Belfast Manchester) Hydroflex (Brussels, Rotterdam and OudBeijerland) Hydraulic Equipment Supermarkets (Gloucester, Leeds) Derek Lane & Co (Newton Abbot, Devon) HES 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 and HES Automatec (Gloucester) HES Lubemec (Gloucester) HES Onsite (Leeds, Gloucester) Flow Connect (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 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 over 550 people.  For more information please visit, www.flowtechfluidpower.com

 

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