| NEWS RELEASE Issued on behalf of Flowtech Fluidpower plc Immediate Release |
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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 as amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.
London: Monday, 31 July 2023
FLOWTECH FLUIDPOWER PLC
(the "Group")
Group Trading Update and Notice of Interim Results
Flowtech Fluidpower plc (LSE: FLO), the specialist technical provider of fluid power and motion control products and engineering services provides a trading update for the six months ended 30 June 2023 (HY1 2023).
GROUP Trading Update
Overall Group revenue has grown by 2.6% in the period with a mixed performance between the divisions. The Solutions and Services divisions have continued to operate well, showing strong growth, however, the performance of the Flowtech division has been disappointing with a decline in revenue of 5.7%. Given the lower gross margins in the Solutions and Services divisions and the underperformance of the Flowtech division, Group EBITDA in HY1 2023 is behind Board expectations.
| | HY1 2023 | HY1 2022 | FY2022 | cHANGE |
| Unaudited | Unaudited (+) | Audited (+) | HY1 2023 v HY1 2022 | |
| £m | £m | £m | | |
| Segment revenue: |
| | | |
| Flowtech | 26.6 | 28.2 | 53.3 | -5.7% |
| Fluidpower Group Solutions | 22.0 | 19.8 | 40.4 | 11.2% |
| Fluidpower Group Services | 10.4 | 9.5 | 21.1 | 9.5% |
| Total Group revenue for the period | 59.0 | 57.5 | 114.8 | 2.6% |
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| Net debt (*) | 15.6 | 19.7 | 16.0 | £4.1m |
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| (*) Net debt is Bank debt less cash and cash equivalents. It excludes lease liabilities under IFRS16. (+) From January 2023 certain business which was previously accounted for within Flowtech was transferred to Solutions. To ensure meaningful comparisons are made we have restated the HY1 2022 and FY2022 numbers to reflect this. |
Pre IFRS 16 net debt was £15.6m as at 30 June 2023 (HY1 2022: £19.7m), a reduction of £4.1m in the past year, leaving an unutilised £9.4m on the Group's £25m banking facilities. Management continues to focus on working capital efficiency and net debt is expected to reduce in the second half of the year.
Mike England, who took over as CEO in April, said:
"In the Flowtech division, specific actions are in flight to address commercial and operational shortfalls adversely impacting performance, some of which require targeted new capital investment and some to address legacy issues; we intend to comment more on this at the time of the interim results. We are generally pleased with the HY1 growth and contribution from our Solutions and Services divisions. There are however adverse market headwinds into HY2 with several OEMs citing a slowdown in project velocity and a more general cooling across the broader industrial markets. For these reasons the Board now expects the out-turn for FY23 to be significantly behind previous expectations.**
In my first three months, I have made early decisive decisions to establish a stronger platform for market share growth and improved margins in 2024 and beyond. This has included a swift programme of change in managerial leadership and implementing the plan to further simplify our operating model to release the full potential of the Group, improving the overall service and value proposition for our customers and to deliver greater efficiencies as we scale. As part of this, we will continue to maintain tight control of our costs whilst making the right strategic investments for the future. Our focus on cash management will continue; this will include a refreshed review of all aspects of inventory management where we believe there is further progress to be made.
Despite these current challenges, I am excited by the potential for the Group given the quality of the brand, knowledge and technical capability of our people, the depth and breadth of the product and engineering service offering and the opportunity for expansion, market share growth and the potential for margin improvement."
NOTICE OF RESULTS
The Group is planning to announce unaudited interim results for the period ended 30 June 2023 on Wednesday, 30 August 2023, which will be available to view and download from the Group's website, www.flowtechfluidpower.com. The Group will also be holding a 'live' presentation which will be hosted by CEO Mike England and CFO Russell Cash via the Investor Meet Company platform at 10.00am on Wednesday 30 August 2023: Registration to join the event can be made following this link:
https://www.investormeetcompany.com/flowtech-fluidpower-plc/register-investor
(**) Market expectations compiled by the Company prior to this announcement for the year ending 31 December 2023 were; Group revenue c.£119.4m; underlying EBIT of c.£9.9m, and profit before tax of c.£8.8m.
| ENQUIRIES: Flowtech Fluidpower plc Mike England, Chief Executive Officer Russell Cash, Chief Financial Officer Tel: +44 (0) 1695 52759 Email: info@flowtechfluidpower.com |
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| Liberum Capital Limited (Nominated adviser and Sole Broker) Richard Lindley / Ben Cryer / Will King Tel: 44 (0) 20 3100 2000 |
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| TooleyStreet Communications (IR and media relations) Fiona Tooley Tel: +44 (0) 7785 703523 or email: fiona@tooleystreet.com |
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